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EXHIBIT 4.6
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FORMUS POLSKA Sp. z o.o.
SHAREHOLDERS' AGREEMENT
Dated as of _____________ 1997
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TABLE OF CONTENTS
Page
1. Definitions........................................................ 1
2. Establishment; Purposes; Covenant Not to Compete; Other Matters.... 5
(a) Establishment of the Company.............................. 5
(b) Purposes.................................................. 5
(c) Covenant Not to Compete................................... 6
(d) Amendment of the Deed; Adoption of Rules and Regulations.. 6
(e) Compliance with Laws...................................... 6
(f) Reimbursement Obligations................................. 7z
3. Funding............................................................ 7
(a) Initial Funding........................................... 7
(b) Additional Funding........................................ 7
(c) External Funding.......................................... 8
(d) Additional Partners....................................... 8
(e) Credit for Costs; Payments from Escrow; Closing Fee....... 9
4. Economic and Voting Interests...................................... 10
(a) Economic Interest......................................... 10
(b) Voting Interest; Adjustment of Voting Interests........... 11
5. Management......................................................... 11
(a) Supervisory Board of the Company.......................... 11
(b) Management Board of the Company........................... 15
(c) Budgets; Financial Reporting.............................. 17
6. Distributions...................................................... 18
(a) First One Percent of Nonliquidating Distributions......... 18
(b) Remaining Nonliquidating Distributions.................... 18
(c) Definitions of Premium Amount............................. 19
(d) Liquidating Distributions................................. 19
(e) Exchange Rates............................................ 19
(f) Example................................................... 19
7. Transfer and Liquidity Rights...................................... 20
(a) General Restriction....................................... 20
(b) Permitted Transfers....................................... 20
(c) Right of First Refusal.................................... 20
(d) Call Option............................................... 22
(e) No Change of Domicile..................................... 24
(f) The Bonds................................................. 24
8. Disposition of Interests of a Bankrupt or Dissolved Shareholder.... 24
(a) Bankruptcy or Dissolution of Elmedia...................... 24
(b) Purchase Price............................................ 25
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(c) Company Liability......................................... 26
9. Representations and Warranties; Acknowledgment..................... 26
(a) Representations and Warranties of the Polish Partners..... 26
(b) Acknowledgment of the Polish Partners..................... 27
(c) Representations and Warranties of Formus.................. 27
10. Miscellaneous...................................................... 28
(a) Term; Consequences of Termination......................... 28
(b) Governing Law, Dispute Resolution, Remedies............... 28
(c) U.S. Tax Election......................................... 28
(d) Amendment................................................. 29
(e) No Waiver................................................. 29
(f) Assignment................................................ 29
(g) Counterparts.............................................. 29
(h) Severability.............................................. 29
(i) Interpretation............................................ 29
(j) Entire Agreement.......................................... 29
(k) No Partnership............................................ 30
(l) Costs..................................................... 30
(m) Injunctive Relief......................................... 30
(n) Representative............................................ 30
(o) Polish Law................................................ 30
(p) Notices................................................... 30
(q) Further Assurances........................................ 31
(r) Indemnification by Polish Partners........................ 31
(s) Confidentiality........................................... 31
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SHAREHOLDERS' AGREEMENT
THIS SHAREHOLDERS' AGREEMENT, dated as of November ____, 1997, is among FORMUS
INTERNATIONAL - POLAND, INC., a corporation organized and existing under the
laws of the State of Delaware, USA ("Formus"), ELMEDIA Sp. z o.o., a limited
liability company organized and existing under the laws of the Republic of
Poland ("Elmedia"), and Xxxxxxxxx Xxx XXXXXXX, Jan Xxxxx XXXXXXXXXXX, and Xxxxxx
Xxx XXXXXXXXXX. Elmedia and Messrs. Xxxxxxx, Xxxxxxxxxxx and XXXXXXXXXX are
sometimes referred to herein, individually, as a "Polish Partner" and,
collectively, as the "Polish Partners." Formus and the Polish Partners are
sometimes referred to herein, individually, as a "Party" and, collectively, as
the "Parties."
RECITALS
A. Pursuant to the agreement, dated as of July 30, 1997 (the "Formation
Agreement"), among the Parties, Formus and Elmedia formed Formus Polska
Sp. z o.o. (the "Company") as a limited liability company (Spolka z
ograniczona odpowiedzialnoscia) under the laws of the Republic of
Poland.
B. The Parties desire to enter into this Agreement to regulate the
relationship of Formus and Elmedia as Shareholders and to provide for
the operations of the Company.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and of the agreements contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties agree as follows:
1. Definitions
As used in this Agreement, the following terms will have the following
meanings:
"Additional Funding" will mean any funding of the Company or any of its
Subsidiaries in accordance with the terms of this Agreement, including
the amount specified in Section 3(b)(i)(A) and the amount identified as
Excess Funding in Section 3(b)(i)(B), but excluding the amounts
specified in Section 3(a). In relation to a particular Shareholder,
Additional Funding will mean the Additional Funding of the Company or
any of its Subsidiaries made by such Shareholder or any of its
Affiliates.
"Affiliate" will mean, with respect to any Person, any other Person
other than the Company and its Subsidiaries, controlling, controlled by
or under common control with such Person.
"Agreement" will mean this Shareholders' Agreement, together with any
exhibits and schedules attached hereto.
"Appraiser" will have the meaning specified in Section 7(d).
"Bankrupt Acceptance Notice" will have the meaning specified in Section
8(a).
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"Bankruptcy" will mean a situation in which a court has issued a
decision ordering the bankruptcy of an Entity under applicable Law.
"Bankruptcy Notice" will have the meaning specified in Section 8(a).
"Bankrupt Shareholder" will have the meaning specified in Section 8(a).
"Bonds" will have the meaning specified in Section 7(f).
"Bring Along Buyer" will have the meaning specified in Section 7(d).
"Bring Along Notice" will have the meaning specified in Section 7(d).
"Bring Along Transaction" will have the meaning specified in Section
7(d).
"Bring Along Transaction Agreements" will have the meaning specified in
Section 7(d).
"Budget" will mean a 12-month operating budget showing figures on a
monthly basis combined with projections for four additional years
showing figures on an annual basis prepared and approved in accordance
with Section 5(c), as amended, supplemented or replaced from time to
time.
"Business of the Company" will mean the businesses and activities
specified in Section 2(b).
"Business Day" will mean all days other than Saturday, Sunday or any
day which is a bank or public holiday in the State of Colorado or the
Republic of Poland.
"Buy Notice" will have the meaning specified in Section 7(c).
"Called Interest" will have the meaning specified in Section 7(d).
"Call Exercise Price" will have the meaning specified in Section 7(d).
"Call Notice" will have the meaning specified in Section 7(d).
"Closing" will have the meaning specified in Section 3(b).
"Company" will have the meaning specified in Recital A.
"Constituent Documents" will mean the deed of formation, articles or
certificate of incorporation, bylaws, managing body rules and
regulations, partnership documentation or similar organizational
documents of an Entity.
"Deed" will mean the Deed of Formation of the Company, dated August 1,
1997, as amended from time to time.
"Designated Purchaser" will have the meaning specified in Section 7(c).
"Determination Date" will have the meaning specified in Section 7(d).
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"Economic Interest" with respect to a Shareholder will have the meaning
specified in Section 4(a).
"EF" will have the meaning specified in Section 4(b).
"Election Notice" will have the meaning specified in Section 3(b).
"Elmedia" will have the meaning specified in the preamble of this
Agreement.
"Elmedia Appraiser" will have the meaning specified in Section 7(d).
"Elmedia Assistance Agreement" will mean the consulting agreement dated
the date hereof between Elmedia and the Company, as the same may be
amended, modified and replaced from time to time.
"Encumbrances" will have the meaning specified in Section 7(c).
"Entity" will mean any Person other than an individual.
"Escrow" will mean the escrow established pursuant to the Escrow
Agreement, dated as of September 15, 1997, between Formus
International, Inc. and Xxxxx & Xxxxxxx Xx. z o.o.
"Equity Interest" will mean any share, stake, interest, participation,
right or other equivalent, however designated, of an Entity, including
any share, stake, interest, participation, right or other equivalent
that confers on a Person the right to receive dividends or
distributions from such Entity, and any warrant, option or other right
to acquire any such share, stake, interest, participation, right or
other equivalent, but excluding any Indebtedness convertible into or
redeemable or exchangeable for any such share, stake, interest,
participation, right or other equivalent.
"Excess Funding" will have the meaning specified in Section 3(b).
"Fair Market Value" will mean the price at which the subject being
valued could be sold in an arm's length transaction to an unaffiliated
bona fide third party purchaser.
"Finance Director" will have the meaning specified in Section 5(b).
"Foreign Interest Company" will have the meaning specified in Section
4(b).
"Formation Agreement" will have the meaning specified in Recital A.
"Formus" will have the meaning specified in the preamble of this
Agreement.
"Indebtedness" will mean, with respect to any Person, any indebtedness
of such Person, whether or not contingent, in respect of borrowed money
or evidenced by bonds, notes, debentures or similar instruments or
letters of credit, or reimbursement agreements in respect thereof, or
lease obligations or the balance deferred and unpaid of the purchase
price of any property, or guarantees (other than by endorsement of
negotiable instruments for collection in the ordinary course of
business), of all or any part of any such indebtedness.
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"Interests" will mean, with respect to any Party to this Agreement, any
of its Equity Interests in the Company including its Shares, any of its
rights or obligations with respect to such Equity Interests arising
under this Agreement, any Indebtedness of the Company owed to it or any
of its Affiliates, any of the rights or obligations with respect to
such Indebtedness.
"Law" or "Laws" will mean the laws, statutes, decrees, ordinances,
codes, rules, regulations, orders and other instruments having the
force of law in any designated jurisdiction.
"LMDS" will mean a Local Multipoint Distribution System based on a high
frequency wireless broadband telecommunication system.
"Losses" will have the meaning specified in Section 10(r).
"Management Board" will mean the management board of an Entity.
"Managing Director" will mean any member of a Management Board.
"MVDS" will mean a Multipoint Video Distribution System based on a high
frequency wireless broadband telecommunication system.
"Nonelecting Shareholder" will have the meaning specified in Section
3(b).
"Offered Interest" will have the meaning specified in Section 7(c).
"Party" or "Parties" will have the meanings specified in the preamble
of this Agreement.
"Permitted Transfer" will have the meaning specified in Section 7(b).
"Payor Shareholder" will have the meaning specified in Section 2(f).
"Person" will mean any individual, partnership, association, joint
stock company, limited liability company, joint venture, corporation,
trust, unincorporated association or organization, or a government or
agency or political subdivision thereof.
"PLN" or "Polish zloty" or "zloty" will mean the lawful currency of the
Republic of Poland.
"Polish GAAP" will mean generally accepted accounting principles as
applied in the Republic of Poland.
"Polish Partner" and "Polish Partners" will have the meanings specified
in the preamble of this Agreement.
"Preference Distribution Amount" will have the meaning specified in
Section 6(b).
"Premium Amount" will have the meanings specified in Section 6(c).
"Qualified Person" will mean any Person (a) that is reasonably
acceptable to Formus, (b) whose ownership of Shares or any other
Interests in the Company (provided required consents are obtained) is
not reasonably likely, in Formus' opinion, to cause the Company or any
of its Subsidiaries to be in violation or breach of, or be in default
under, any material license,
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franchise, permit, indenture, agreement or other instrument and (c)
that is not reasonably likely, in Formus' opinion, to be a competitor
of Formus or any of its Affiliates.
"Sale Notice" will have the meaning specified in Section 7(c).
"Senior Managing Director" will mean a Managing Director designated as
the Senior Managing Director of the Company by Formus in accordance
with this Agreement.
"Shareholder" will mean each of the holders of the Shares and their
respective successors and permitted assigns.
"Shareholders' Meeting" will mean any general meeting of shareholders
of an Entity, whether annual, regular or extraordinary.
"Shares" will mean the shares, nominal value of 50 zloty each, of the
Company outstanding from time to time and as such shares may be
converted, transformed, subdivided, combined, reclassified or otherwise
changed from time to time.
"Subsidiary" will mean, with respect to any Person, any partnership of
which such Person is a general partner or of which such Person's
Subsidiary is a general partner, or any other Entity of which, at the
time any determination is being made, such Person has the power to vote
directly or indirectly more than 50% of the shares, stakes or other
Equity Interests of such Entity or otherwise control the management and
affairs of such Entity (including by way of the power to veto) any
material act or decision.
"Supervisory Board" will mean the supervisory board of an Entity.
"Supervisory Director" will mean any member of a Supervisory Board.
"TA Restrictions" will have the meaning specified in Section 4(b).
"Tax Liabilities" will have the meaning specified in Section 2(f).
"TEF" will have the meaning specified in Section 4(a).
"Telecommunications Act" will mean the Polish Telecommunications Act as
of November 23, 1990 (Journal of Laws No. 117/1995, item 564), as
amended, or any successor Republic of Poland Law to the Polish
Telecommunications Act, and the rules and regulations promulgated
thereunder.
"Territory" will mean the Republic of Poland.
"Third Appraiser" will have the meaning specified in Section 7(d).
"Transfer" will have the meaning specified in Section 7(a).
"US GAAP" will mean generally accepted accounting principles as applied
in the United States of America.
"US$" or "United States dollars" will mean the lawful currency of the
United States of America.
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"Voting Interest" will have, with respect to a Shareholder, the meaning
specified in Section 4(b).
"V/V/D Services" will have the meaning specified in Section 2(b).
2. Establishment; Purposes; Covenant Not to Compete; Other Matters.
(a) Establishment of the Company. On August 12, 1997, the Company
was registered in the Commercial Register kept by the District
Court for the City of Warsaw, Republic of Poland under number
RHB 51078 and presently has issued share capital of PLN 5,000,
represented by 100 Shares with a total nominal value of PLN
5,000.
(b) Purposes. The Company has the right to (i) pursue the business
of providing integrated voice, video and data services ("V/V/D
Services") in the Territory including the cities of Warsaw,
Lodz, Poznan, Gdynia, Gdansk, Krakow, Katowice, Wroclaw,
Bydgoszcz and Szczecin using the high frequency wireless
broadband technology known as LMDS and/or MVDS; (ii) obtain
appropriate licences and approvals for the ownership,
construction and operation of V/V/D Services, including data
transmission and Internet access services to business and
residential customers, multi-channel television services in
specified markets, and authorized voice telephony services in
the Territory; (iii) construct, own and operate an integrated
V/V/D Services business in the Territory; and (iv) pursue
other telecommunications businesses as approved by the
Supervisory Board of the Company.
(c) Covenant Not to Compete. During the term of this Agreement and
for one year thereafter, each Polish Partner shall be jointly
responsible with the other Polish Partners, unless Formus
otherwise consents in writing, that he, his Affiliates any of
his relatives, employees, consultants, agents and proxies and
any other Persons for which any Polish Partner is responsible
(including the employees, officers and directors of the
Company, for which any Polish Partner is responsible) will not
engage directly or indirectly (whether through his spouse,
children or stepchildren or any other relative) or as an
owner, partner, shareholder (other than a holder of less than
5% of the shares or other securities of a public company),
joint venturer, manager, investor, advisor, consultant or
otherwise), in the business of providing integrated V/V/D
Services using the high frequency wireless broadband
technology known as LMDS and/or MVDS and any related
businesses that could be in competition with the Business of
the Company in the Territory. If any court shall determine
that the duration or geographical limit of any restriction
contained in this Section 2(c) is unenforceable under
applicable Law, the restrictive covenant set forth in this
Section 2(c) will not thereby be terminated, but shall be
deemed amended to the minimum extent required to render it
valid and enforceable.
In addition, each Polish Partner shall be jointly responsible
with each other Polish Partner, unless Formus otherwise
consents in writing, that his Affiliates, any of his
relatives, employees, consultants, agents and proxies , and
any other persons for which the Polish Partner is responsible
(including the employees, officers and directors of the
Company, for which any Polish Partner is responsible) will
observe Polish Laws concerning unfair competition and
non-competition, including the following Polish Laws: the
Labor Code dated June 26,1884, the Law on Rendering Commercial
Activities dated December 23, 1988, the Commercial Code dated
June 27, 1934 and the Act on Combating Unfair Competition
dated April 16, 1993.
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(d) Amendment of the Deed; Adoption of Rules and Regulations.
Concurrently with the entering into of this Agreement, the
Shareholders will enter into a notarial deed amending the
Deed, which notarial deed will be in form and substance
reasonably satisfactory to Formus and will effect to the
fullest extent permitted by applicable Law, as advised to
Formus by its legal counsel in Poland, the provisions of this
Agreement, including the provisions of Sections 6
(Distributions) and 7 (Transfer and Liquidity Rights). As
promptly as practicable following the entering into of this
Agreement, an extraordinary Shareholders' Meeting shall be
convened and each Shareholder shall vote or consent to action
with respect to its Shares to cause rules and regulations of
the Supervisory Board and rules and regulations of the
Management Board to be adopted, which rules and regulations
will be in form and substance reasonably satisfactory to
Formus and will effect to the fullest extent permitted by
applicable Law, as advised to Formus by its legal counsel in
Poland, the provisions of this Agreement, including the
provisions of Section 5 (Management).
(e) Compliance with Laws. The Parties will cause the Company to
comply in all material respects with will the United States
Foreign Corrupt Practices Act of 1977, as amended, and any
other applicable Law, and will not engage in any activity
related to the Company's business that would cause Formus
Communications, Inc. or any of its Affiliates or the Company
to be in violation of such Laws.
(f) Reimbursement Obligations. Each Shareholder (a "Payor
Shareholder") agrees to pay the other Shareholder on demand
within 30 Business Days after such demand from time to time an
amount equal to (i) the Economic Interest of the Payor
Shareholder times the aggregate amount of Tax Liabilities paid
by the Payor Shareholder and by the other Shareholder minus
(ii) the amount of the Tax Liabilities paid by the Payor
Shareholder. "Tax Liabilities" mean liabilities for unpaid
Polish taxes and social security payments owed by the Company
with respect to which the Shareholders of the Company become
liable by operation of Polish law in their capacity as
Shareholders of the Company. Notwithstanding the foregoing to
the contrary, a Payor Shareholder will not be liable to the
other Shareholder pursuant to this Section 2(f), if and to the
extent the Tax Liabilities in question arise from the other
Shareholder's action or omission, or the action or inaction of
its Affiliates. Any payments hereunder will be made in United
States dollars (or at Formus' option in Polish zloty).
3. Funding.
(a) Initial Funding. The Company has issued to the Shareholders
and the Shareholders have taken Shares for Shareholder
contributions in the Company as follows:
Additional
Capital
Nominal Contribution Total Number
Value Exceeding Purchase of
Shareholder Funded Nominal Value Price Shares
----------- ------ ------------- ----- ------
Formus PLN2,450 PLN12,000 PLN 14,450 00
Xxxxxxx XXX0,000 -- XXX 2,550 51
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(b) Additional Funding.
(i) Except as provided in Section 3(e)(iii), no
Shareholder or any of its Affiliates will be required
to contribute any funding in addition to the amounts
specified in Section 3(a). If Additional Funding is
required to meet the funding requirements specified
in an applicable Budget or to meet other specific
investment objectives approved by the Supervisory
Board, the Senior Managing Director by written notice
to the Shareholders may request such funding from the
Shareholders pursuant to a funding methodology
approved by the Supervisory Board of the Company
(e.g. share capital contributions, Indebtedness,
additional payments and other forms of payment) for
the Additional Funding in question, and the
Shareholders will have the right to participate in
the Additional Funding according to the following
rules:
(A) Formus, directly or through any of its
Affiliates, will have the right to fund the
first US$15,000,000 of Additional Funding;
and
(B) after Formus, directly or through any of its
Affiliates, has funded US$15,000,000 of
Additional Funding to the Company as
evidenced by a resolution by the Supervisory
Board, each Shareholder, directly or through
any of its Affiliates, will have the right
to participate in any funding in excess of
US$15,000,000 of Additional Funding ("Excess
Funding") in proportion to its Economic
Interest in the Company.
(ii) A Shareholder may elect to participate in any
Additional Funding in which it is entitled to
participate by delivering a written notice (an
"Election Notice") to the Company and the other
Shareholder within 30 days after the delivery of the
Senior Managing Director's notice requesting such
funding or within such longer period as reasonably
determined by Formus. Such 30-day period may be
extended by Formus with or without notice to the
Company or Elmedia.
(iii) With respect to any Additional Funding that
constitutes Excess Funding, if a Shareholder (a
"Nonelecting Shareholder") elects to participate in
less than all of its proportionate share of such
Excess Funding or fails to deliver an Election Notice
in accordance with Section 3(b)(ii), the other
Shareholder may elect to fund all or part of the
proportionate share of such Excess Funding of the
Nonelecting Shareholder and the Nonelecting
Shareholder will have its Economic Interest diluted
relative to the Economic Interest of the Shareholder
that has funded any portion of its share of such
Excess Funding as such Economic Interests are
calculated in accordance with Section 4(a)(ii) and
will have its Voting Interest diluted to the extent
then possible under Polish Law in accordance with
Section 4(b).
(iv) The funding of any Additional Funding and adjustment
of the Economic Interests of the Shareholders (each
such funding and adjustment being hereinafter
referred to as a "Closing") will take place at such
time and place and in such manner as Formus may
reasonably determine. Each Shareholder will take, and
will instruct the Supervisory Directors and Managing
Directors of the Company nominated, elected or
appointed by it, and will vote or consent to
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action with respect to its Shares, in each case, to
take, such actions as Formus deems reasonably
necessary or appropriate in order to effect each such
Closing.
(v) If the funding methodology approved by the
Supervisory Board of the Company permits a
Shareholder to participate in Additional Funding
through one or more of its Affiliates, Formus will
have the right to approve or disapprove of any
Affiliate funding arrangements proposed by a
Shareholder. If Formus disapproves of any such
funding arrangement, the Shareholder who initially
presented such funding arrangement shall have 14 days
to present to Formus an alternative funding
arrangement for Formus' approval. If the funding
methodology approved by the Supervisory Board of the
Company provides for the issuance of Shares and
Indebtedness of the Company, Formus will have the
right to specify how the funding by the Shareholders
will be allocated between such issuance of Shares and
Indebtedness of the Company and such funding will be
completed as so specified by Formus.
(c) External Funding. Before any Excess Funding is requested from
the Shareholders or their Affiliates, each Shareholder will
instruct the Supervisory Directors of the Company nominated or
elected by it to cause the Company to use its reasonable
efforts to investigate available external sources of funding
(such as trade credit from vendors, Polish development funds
and other sources). Each Shareholder will take, and will
instruct the Supervisory Directors and Managing Directors of
the Company nominated, elected or appointed by it, and will
vote or consent to action with respect to its Shares, in each
case, to take, such actions reasonably required by Formus to
cause the Company to complete such external funding if Formus
shall have approved such external funding. The providers of
external sources of funding to the Company or any of its
Subsidiaries will not be offered or granted the benefit of any
guaranty from any Shareholder or any of its Affiliates, unless
the affected Shareholder or its Affiliates, as the case may
be, agrees otherwise.
(d) Additional Partners. Except as provided in this Section 3(d),
the issuance of Shares in the Company to any Person that will
thereby become a Shareholder will require the vote or consent
of the Shareholders in accordance with Section 13.6 of the
Deed. The Parties acknowledge that the Business of the Company
may be expanded by additional acquisitions and mergers or may
be consolidated with other businesses, which may require from
time to time acceptance of additional strategic or financial
partners. On one or more occasions, Formus may determine that
one or more additional strategic or financial partners are
required for such purposes or otherwise. In such event and
promptly after delivery by Formus to Elmedia of a notice
specifying the terms and conditions for admission of one or
more such partners, Elmedia will instruct the Supervisory
Directors and the Managing Directors of the Company nominated
by it to vote or consent to action, and, if necessary or
appropriate, Elmedia will vote or consent to action with
respect to its Shares, in each case, to cause whatever action
Formus reasonably requires in respect of such admission. In
connection therewith, none of the Polish Partners will
unreasonably withhold its vote or consent to amendments to be
made to this Agreement and the Constituent Documents of the
Company, as Formus deems reasonably necessary or appropriate
to effect the intents and purposes of this Section 3(d).
Notwithstanding anything under Section 4(a) to the contrary,
in no event will any dilution resulting from the admission of
one or more such partners be borne by the
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Shareholders other than proportionally in accordance with
their relative Economic Interests in the Company or as
otherwise agreed by Formus and Elmedia.
(e) Credit for Costs.
(i) Formus will submit for approval of the Supervisory
Board of the Company one or more schedules of costs
incurred by it and its Affiliates for the benefit of
the Company and its Subsidiaries, including expenses
incurred in completing marketing studies, Budgets,
licence application fees and other costs and
expenses. As promptly as practical after submission
of such schedules to the Supervisory Board of the
Company, it will consider such schedules for
approval. Promptly following the approval of any such
schedule, each Shareholder will instruct the
Supervisory Directors and Managing Directors of the
Company nominated, elected or appointed by it, and
will vote or consent to action with respect to its
Shares as Formus deems reasonably necessary or
appropriate, in each case, to cause the Company to
issue to Formus or any of its Affiliates it
designates Indebtedness of the Company in an amount
equal to the amount of the costs and expenses
approved. The amount of such Indebtedness, as the
case may be, issued to Formus or any of its
Affiliates will constitute Additional Funding by
Formus for purposes of Section 3(b)(i)(A).
(ii) To the extent not otherwise included in any schedule
delivered by Formus pursuant to Section 3(e)(i), each
Shareholder will instruct the Supervisory Directors
and Managing Directors of the Company nominated,
elected or appointed by it, and will vote or consent
to action with respect to its Shares as Formus deems
reasonably necessary or appropriate, in each case, to
cause the Company to issue to Formus or any of its
Affiliates it designates additional Shares,
Indebtedness of the Company or some combination of
Shares and Indebtedness of the Company as Formus
deems reasonably appropriate in an amount equal to
the amount of all payments from the Escrow or
otherwise in respect of certain unpaid fees due in
connection with Telecommunications Licence No.
LR48/95 issued to Zeta Technology Poland Sp. z o.o.
The amount of such Shares and Indebtedness, as the
case may be, issued to Formus or any of its
Affiliates will constitute Additional Funding by
Formus for purposes of Section 3(b)(i)(A).
(iii) If the approvals of the Supervisory Board have been
granted pursuant to Sections 3(e)(i) and 3(e)(ii),
promptly following the later of the date hereof and
the date on which Formus has been issued additional
Shares, Indebtedness of the Company or some
combination thereof in accordance with Sections
3(e)(i) and 3(e)(ii), Formus, directly or through an
Affiliate it designates, will pay to Elmedia or such
other Person designated by Elmedia and approved by
Formus, the amount of US$200,000 (or the equivalent
PLN funds at Formus' option) in consideration of
Elmedia's execution and delivery of this Agreement
and the efforts of the Polish Partners in bringing
this investment opportunity to Formus and the costs
and expenses incurred by them in respect thereof
through the date of this Agreement; and
(iv) Any Indebtedness of the Company issued to either
Shareholder or any of its Affiliates pursuant to this
Agreement shall bear interest at an annual rate of
20%
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(or such other lower rate as Formus approves),
compounded annually, and have such other terms and
features as Formus reasonably approves. All such
Indebtedness shall be repaid in full prior to the
Company's payment of dividends or making of other
distributions to the Shareholders with respect to
their Shares.
4. Economic and Voting Interests.
(a) Economic Interest. The "Economic Interest" in the Company for
each Shareholder at any time will be determined as follows:
(i) Until the funding of US$15,000,000 of Additional
Funding is completed and except as provided otherwise
in Section 3(d), the Economic Interest of Formus is
85% and the Economic Interest of Elmedia is 15%.
(ii) At any time and from time to time from and after the
funding of US$15,000,000 of Additional Funding has
been completed and except as provided otherwise in
Section 3(d), including at such times immediately
following each funding (whether by share capital
contributions, Indebtedness, additional payments or
other forms of payment) that constitutes Excess
Funding, the Economic Interest for each Shareholder
will equal a fraction, expressed as a percentage,
determined as follows (provided that the Elmedia
Fraction, expressed as a percentage, will not be less
than 4.5%):
Formus Fraction = 1 - Elmedia Fraction
Elmedia Fraction = the greater of 45/1000 or
(US$2,050,000 + EF)/(US$15,000,000 + TEF)
where:
"EF" means the aggregate amount of all Excess Funding
made by Elmedia and its Affiliates (including the
funding in question, if any); and
"TEF" means the aggregate amount of all Excess
Funding made by all the Shareholders and their
Affiliates (including the funding in question, if
any).
(b) Voting Interest; Adjustment of Voting Interests.
(i) The "Voting Interest" in the Company for each
Shareholder at any time will be determined in
accordance with Polish Law by reference to the
nominal value of Shares owned by each Shareholder.
(ii) Pursuant to the currently binding Telecommunications
Act, a company with foreign participation which is
formed and exists under Polish Law (a "Foreign
Interest Company") may obtain a license to render
certain telecommunications services, such as
integrated V/V/D Services using the high frequency
wireless broadband technology known as LMDS and/or
MVDS, in the territory of the Republic of Poland if
the following requirements are met: (A) the
shareholding of foreign entities in a Foreign
Interest Company's share capital does not exceed 49%;
(B) the Foreign Interest Company's Constituent
Documents stipulate that
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the majority of the members of such company's
management board and supervisory board shall be
Polish citizens domiciled in Poland; and (C) the
Foreign Interest Company's Constituent Documents
stipulate that, at the meeting of shareholders, votes
of foreign entities and entities controlled by
foreign entities cannot exceed 49% of all votes (such
limitations and requirements being hereinafter
referred to as the "TA Restrictions"). Upon receipt
of a license under the Telecommunications Act, the
Company will be required to comply with the TA
Restrictions; however, it is expected that one or
more of the TA Restrictions will be liberalized.
Promptly after the liberalization of one or more of
the TA Restrictions from time to time, the
Shareholders will instruct the chairman of the
Supervisory Board of the Company to call a meeting of
the Supervisory Board of the Company to take whatever
action Formus reasonably deems necessary to implement
any such liberalization, and each Shareholder will
instruct the Managing Directors of the Company
nominated, elected or appointed by it to vote or
consent to action to cause the Management Board of
the Company to call an extraordinary Shareholders
Meeting of the Company to implement in respect of the
Company's Constituent Documents or otherwise any such
liberalization, as Formus reasonably deems necessary.
Elmedia will instruct the Supervisory Directors and
the Managing Directors of the Company nominated,
elected or appointed by it to vote or consent to
action and, if necessary or appropriate, Elmedia will
vote or consent to action with respect to its Shares,
in each case, to cause whatever action Formus
reasonably requires to be taken so that the
shareholdings of the Shareholders will be adjusted in
the manner required by Formus to the maximum extent
then permitted by one or more such liberalizations in
order that the Shares of the Company will be owned by
the Shareholders in the same proportions as the
Economic Interests in the Company of the
Shareholders.
5. Management.
(a) Supervisory Board of the Company.
(i) Composition. The Supervisory Board will consist of
five Supervisory Directors. Two Supervisory Directors
will be elected directly by Formus and the remaining
Supervisory Directors will be elected by the
Shareholders' Meeting of the Company. Two of the
Supervisory Directors of the Company elected by the
Shareholders Meeting will be nominated by Elmedia. In
respect of the Supervisory Directors to be elected by
the Shareholders' Meeting of the Company, Formus will
be entitled to nominate such number of individuals to
serve as Supervisory Directors in order that the
requirements of the last sentence of this Section
5(a)(i) are satisfied and Elmedia will vote or
consent to action with respect to its Shares to cause
such nominees to be elected to the Supervisory Board.
The Supervisory Directors will be elected annually.
None of the Supervisory Directors may be Managing
Directors or employees of the Company or its
Subsidiaries. Each Shareholder will vote or consent
to action with respect to its Shares to cause at
least 85% of the Supervisory Board to consist of
Supervisory Directors elected or nominated by Formus,
and, if the Economic Interest of Formus exceeds 85%,
each Shareholder will vote or consent to action with
respect to its Shares so that the composition of the
12
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Supervisory Board reflects the proportionate Economic
Interests of the Shareholders.
(ii) Chairman. The Supervisory Board will elect annually a
chairman, who will preside at all meetings of the
Supervisory Board, but who will have and perform no
other special duties. Unless otherwise approved by
Formus, the chairman will be chosen from among the
Supervisory Directors who are elected directly or
nominated by Formus.
(iii) Term. The Supervisory Board will have an annual term.
Each Supervisory Director will hold his office until
the next annual Shareholders' Meeting to elect
Supervisory Directors and until his successor has
been duly elected and qualified, or until his earlier
death, resignation or removal.
(iv) Vacancies. Whenever any vacancy has occurred in the
Supervisory Board as a result of death, resignation
or other action or inaction of a Supervisory
Director, such vacancy will be filled by the
Shareholder that elected directly or nominated the
Supervisory Director, as the case may be. If the
vacant Supervisory Director position being filled is
being filled by nomination, each Shareholder will
vote or consent to action with respect to its Shares
so that the Person so nominated is elected to the
Supervisory Board. The term of office of any Person
elected directly by Formus or elected by the
Shareholders' Meeting, as the case may be, to fill a
vacant Supervisory Director position will hold office
until the next annual Shareholders' Meeting to elect
Supervisory Directors and until his successor has
been duly elected and qualified, unless sooner
removed.
(v) Removal. No Supervisory Director may be removed
without the consent of the Shareholder that elected
directly or nominated such Supervisory Director.
Formus may remove at any time any Supervisory
Director it has elected directly, and, if Formus
delivers a notice to Elmedia of Formus' desire to
remove from the Supervisory Board any Supervisory
Director nominated by Formus, the Shareholders will
promptly do all things necessary or appropriate as
Formus requests to remove such director and Elmedia
will vote or consent to action with respect to its
Shares in favor of such removal. If Elmedia delivers
a notice to Formus of Elmedia's desire to remove from
the Supervisory Board any Supervisory Director
nominated by Elmedia, the Shareholders will promptly
do all things necessary or appropriate as Elmedia
requests to remove such director and Formus will vote
or consent to action with respect to its Shares in
favor of such removal.
(vi) Meetings; Notice. Regular Supervisory Board meetings
will be held at such times, intervals and at such
places as may be fixed by resolution of the
Supervisory Board. Until the Supervisory Board
determines that the interval between its regular
meetings should be changed, regular Supervisory Board
meetings will be held at least once every three
months at such times and at such places as may be
fixed by resolution of the Supervisory Board.
Extraordinary Supervisory Board meetings may be held
at any time upon the request of its chairman or any
two Supervisory Directors. Unless all of the
Supervisory Directors waive their right to such
notice, notice of Supervisory Board meetings will be
in writing and delivered by any of the methods
described in Section 10(p)
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at least three days prior to any Supervisory Board
meeting. Supervisory Directors may participate in any
meeting of the Supervisory Board or any committee
thereof by conference telephone or other
communications equipment through which all Persons
participating in the meeting can hear each other, and
participation thereby will constitute presence in
person for purposes of Section 5(a)(vii). Supervisory
Directors will take all actions necessary to effect
any resolutions taken during a meeting of the
Supervisory Board or any committee thereof whereby
they participate by conference telephone or other
communications equipment, including the execution of
a written protocol memorializing the resolutions
taken during any such meeting.
(vii) Quorum; Manner of Acting. A quorum for transacting
business will be present at any meeting of the
Supervisory Board if 60% of the Supervisory Directors
then in office are present in person. Any action
taken by the Supervisory Board will be approved or
disapproved at a meeting, at which a quorum is
present and acting throughout, in accordance with the
votes of a majority of 60% of the Supervisory
Directors, provided that such majority includes at
least one Supervisory Director elected directly or
nominated by Formus. Any action required or permitted
to be taken at any meeting of the Supervisory Board
or any committee thereof may be taken without a
meeting if the requisite number of Supervisory
Directors or committee members, as the case may be,
necessary to take such action, consent to such action
in writing.
(viii) Duties. The duties of the Supervisory Board will be
the supervision of the conduct of management by the
Company's Management Board and the general course of
affairs of the Company. The duties and the rights of
the Supervisory Board will in particular include the
following:
(A) approving and amending the Company's Budget;
(B) advising the Shareholders' Meeting regarding
any of the following matters:
(1) the Company's financial statements,
balance sheet and profit and loss
account;
(2) the acknowledgment of the
fulfillment of the Supervisory and
Management Boards' duties;
(3) the liquidation or dissolution of
the Company;
(4) the increase of the capital of the
Company, except that any increase
on the basis of Section 11 of the
Deed will not constitute an
amendment to the Deed;
(5) amendments to the Constituent
Documents of the Company that have
been adopted by the Shareholders or
the Shareholders' Meeting;
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(6) claims to redress damage inflicted
while forming the Company or
managing it or supervising it;
(7) the sale and lease of all, or
substantially all of, the assets of
the Company and the grant of the
right of usufruct or other
encumbrance over such assets;
(8) the purchase or sale of the real
estate by the Company;
(9) the appointment of the Company's
auditors;
(10) the distribution of dividends and
preference distributions;
(11) the issuance of bonds;
(12) the redemption of Shares; and
(13) any other proposal requested by the
Shareholders' Meeting of the
Company.
(C) approving any borrowing by the Company or
any of its Subsidiaries in excess of
US$10,000 (or the equivalent amount in any
other currency) other than those borrowings
made pursuant to previously approved credit
facilities or specifically identified in the
Budget of the Company then in effect;
(D) giving consent for the grant or creation by
the Company or any of its Subsidiaries of
mortgages, usufruct, assignments or other
encumbrances on the assets of the Company or
any of its Subsidiaries other than pursuant
to previously approved credit facilities;
(E) giving consent for the purchase by the
Company or any of its Subsidiaries of any
capital stock, obligations or securities of,
or otherwise invest in, or make any capital
contribution to any Entity, other than
investments in cash deposits by the Company
or any of its Subsidiaries with leading
commercial banks;
(F) giving consent for the purchase, assumption,
guarantee or endorsement by the Company or
any of its Subsidiaries, or other act by
which the Company or any of its Subsidiaries
becomes liable for, the indebtedness of any
Person, other than pursuant to previously
approved credit facilities and other than
the endorsement by the Company or any of its
Subsidiaries of negotiable instruments for
deposit and collection in the ordinary
course of business, or contingent
liabilities incurred by the Company or any
of its Subsidiaries in connection with the
opening of documentary letters of credit in
the ordinary course of business and cash
deposits by the Company or any of its
Subsidiaries with leading commercial banks;
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(G) giving consent for the formation by the
Company or any of its Subsidiaries of any
Subsidiary;
(H) appointing and dismissing members of the
Management Board, except as Section 5(b)(i)
provides otherwise, and adopting and
changing the level of compensation and
benefits (including employee share options,
bonuses, profit-sharing or other incentive
schemes) for the Managing Directors and
other employees;
(I) giving consent for the incurrence by the
Company or any of its Subsidiaries of any
expenditure or related expenditures in
excess of US$10,000 (or the equivalent
amount in any other currency) by the Company
and which is not otherwise specifically
identified in the Budget of the Company then
in effect;
(J) giving consent for the lease by the Company
or any of its Subsidiaries of any property
or the renewal by the Company or any of its
Subsidiaries of any lease that requires
payment in excess of US$10,000 (or the
equivalent amount in any other currency) and
is not otherwise specifically identified in
the Budget of the Company then in effect;
(K) giving consent for the sale, lease,
assignment, transfer or other disposal of
the property and assets of the Company or
any of its Subsidiaries, in any transaction
or series of related transactions, for an
aggregate consideration in excess of 5% of
the consolidated assets of the Company and
its Subsidiaries, other than in the ordinary
course of business or as otherwise
specifically identified in the Budget of the
Company then in effect;
(L) giving consent for the commencement by the
Company or any of its Subsidiaries of any
voluntary proceeding seeking relief under
bankruptcy or similar law, or the suspension
by the Company or any of its Subsidiaries of
payments to its creditors; and
(M) approving the entering into or amendment of
any agreement or obligation of the Company
or any of its Subsidiaries with or for the
direct or indirect benefit of any
Shareholder or any of its Affiliates,
shareholders, officers or directors.
(b) Management Board of the Company.
(i) Composition. The Management Board will consist of at
least one and no more than five Managing Directors.
The Senior Managing Director and the Managing
Director designated by Formus as the finance director
or other equivalent title (the "Finance Director")
will be appointed directly by Formus, and the
remaining Managing Directors will be appointed by the
Shareholders Meeting of the Company from candidates
recommended by the Supervisory Board of the Company
and one of them by Elmedia. Each Shareholder will
instruct each Supervisory Director that it has
nominated or elected to vote or consent to action so
that at least 85% of the Management Board consists of
Managing Directors
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appointed or nominated by Formus, and, if the
Economic Interest of Formus exceeds 85%, each
Shareholder will instruct each Supervisory Director
that it has nominated or elected to vote or consent
to action so that the composition of the Management
Board reflects the proportionate Economic Interests
of the Shareholders. The appointment of a Managing
Director will not in itself create any contract
rights between the Company and the Person appointed.
Such contract rights, if any, will be established
under an employment or services agreement between the
Company and each of its Managing Directors.
(ii) Senior Managing Director. The Senior Managing
Director will be the chief executive officer of the
Company. Subject to the supervision of the
Supervisory Board and the provisions of this
Agreement, the Constituent Documents of the Company
and applicable Law, the Senior Managing Director
will:
(A) exercise general management and control of
the Company's affairs and its business and
general supervision of its Managing
Directors, officers, agents and employees;
(B) see that all orders and resolutions of the
Shareholders' Meeting and the Supervisory
Board are effected;
(C) have the power to make declarations and sign
in the name of the Company; and
(D) do and perform such other duties as the
Supervisory Board assigns from time to time.
(iii) Finance Director. The Finance Director will be the
chief financial officer of the Company. Subject to
the supervision of the Senior Managing Director and
the Supervisory Board and the provisions of this
Agreement, the Constituent Documents of the Company
and applicable Law, the Finance Director will:
(A) exercise the care and custody of all the
Company's funds, securities, evidences of
indebtedness and other personal property and
deposit the same in accordance with the
instructions of the Supervisory Board;
(B) receive and give receipts for moneys paid in
on account of the Company, and pay out with
funds on hand all bills, payrolls and other
just debts of the Company of whatever nature
upon maturity;
(C) be the principal accounting officer of the
Company and as such maintain the methods and
systems of accounting prescribed by Formus
to be followed, keep complete books and
records of account, prepare and file all tax
returns, prescribe and maintain an adequate
system of internal audits and prepare on a
monthly basis and furnish to the Senior
Managing Director and the Supervisory Board
a statement of accounts showing the
financial position of the Company and the
results of its operations; and
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(D) do and perform such other duties as the
Senior Managing Director or the Supervisory
Board assigns from time to time.
(iv) Other Managing Directors. Subject to the supervision
of the Senior Managing Director and the Supervisory
Board and the provisions of this Agreement, the
Constituent Documents of the Company and applicable
Law, each Managing Director other than the Senior
Managing Director will have the power to make
declarations and sign in the name of the Company with
the Senior Managing Director, but not otherwise, and
will do and perform such duties as the Senior
Managing Director on the Supervisory Board assigns
from time to time. Subject to approval of the
Supervisory Board, the Senior Managing Director may
set an amount up to which each Managing Director may
act with authority on behalf of the Company
(v) Deputy Directors. In addition, the Supervisory Board
or the Senior Managing Director may appoint such
deputy, assistant and other subordinate directors, as
the Supervisory Board or the Senior Managing Director
shall deem necessary or appropriate. Such deputy,
assistant and other subordinate directors shall not
be members of the Management Board.
(vi) Vacancies. Whenever any vacancy has occurred in the
Management Board as a result of death, resignation or
other action or inaction of a Managing Director, such
vacancy will be filled, in the case of the Senior
Managing Director and the Finance Director by Formus,
and in all other cases by the Supervisory Board from
among the candidates recommended by the Senior
Managing Director or otherwise. If the vacant
Managing Director position being filled is being
filled by the Supervisory Board, each Shareholder
will instruct each Supervisory Director that it has
nominated or elected to vote so that upon filling the
vacancy the requirements of Section 5(b)(i) are met.
(vii) Removal. The Senior Managing Director and the Finance
Director may be removed at any time by Formus by
notice to the affected Managing Director and the
Company, and if Formus delivers a notice to Elmedia
of Formus' desire to remove any Managing Director
appointed by the Supervisory Board, each Shareholder
will instruct each Supervisory Director that it has
nominated or elected to vote or consent to action to
remove such Managing Director. The removal of a
Managing Director will not in itself prejudice any
contract rights between the Company and the Person
removed.
(c) Budgets; Financial Reporting.
(i) The Shareholders approve the Budget attached as
Exhibit 5.3(c) for the periods reflect in it. Each
Shareholder will instruct the Supervisory Directors
elected or nominated by it to procure that the Senior
Managing Director and the Finance Director prepare
and revise every three months a revised Budget for
approval by the Supervisory Board of the Company. The
Company will conduct its business in accordance with
the Budget approved hereby or the most recent revised
Budget approved by the Supervisory Board, as the case
may be, in each case for the periods reflected in the
applicable Budget.
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(ii) Each Shareholder will instruct the Supervisory
Directors elected or nominated by it to vote or
consent to action and vote or consent to action with
respect to its Shares, in each case, to cause the
Company to maintain one set of financial accounts
according to Polish GAAP and one according to US
GAAP. Unless Formus approves any longer period, each
Shareholder will instruct the Supervisory Directors
elected or nominated by it to vote or consent to
action and vote or consent to action with respect to
its Shares, in each case, to cause the Company to
deliver to each Shareholder as soon as they become
available, but in no event later than:
(A) 60 days after the end of each financial year
of the Company, its audited financial
statements for such year;
(B) 30 days after the end of each quarter during
each of its financial years, its unaudited
financial statements for such quarter; and
(C) 10 days after the end of each month during
each of its financial years, its unaudited
financial statements for such month.
(iii) The Company will bear all costs and expenses
associated with the performance of its obligations
and those of its directors, officers, employees,
agents and independent contractors under this Section
5(c).
(d) Certain References. For avoidance of doubt, references in
Sections 5(a), (b) and (c) to the Shareholders' Meeting, the
Supervisory Board, Supervisory Directors, the Management Board
and Managing Directors, unless otherwise specified or the
context suggests otherwise, are to the Shareholders' Meeting,
the Supervisory Board, Supervisory Directors, the Management
Board and Managing Directors of the Company.
6. Distributions. For purposes of Sections 20 and 23 of the Deed and
notwithstanding anything to the contrary therein, each Shareholder will
instruct each Supervisory Director that it has nominated or elected to
vote or consent to action, and vote or consent to action with respect
to its Shares, in each case, to cause the profit of the Company, after
paying taxes and fulfilling other obligations (including Indebtedness
of the Company to its Shareholders and their Affiliates), to be
distributed according to the following rules. Each Shareholder hereby
agrees that it will waive any right such Shareholder may have to
require the distribution of profit of the Company to be distributed in
way other than according to the following rules at the time such
distribution is to be made. Before any distribution is made to the
Shareholders on account of their Shares, the Company shall discharge in
full all Indebtedness of the Company owing to any Shareholder or its
Affiliates.
(a) First One Percent of Nonliquidating Distributions. With
respect to the first one percent of each distribution made
pursuant to Section 20 of the Deed, each Shareholder will be
entitled to an amount of such distribution determined for each
Shareholder as of the date of the distribution equal to the
nominal value of the Shares owned by such Shareholder divided
by the total nominal value of the Shares owned by all
Shareholders.
(b) Remaining Nonliquidating Distributions. The amount of each
distribution made pursuant to Section 20 of the Deed that
remains after distribution of the amounts
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specified in Section 6(a) will be apportioned among the
Shareholders in the following order of priority:
(i) First, to each Shareholder to whom a Premium Amount
is attributable as of the date of the distribution,
in an amount (the "Preference Distribution Amount")
equal to the sum of (A) the Premium Amount
attributable to such Shareholder as of the date of
the distribution plus (B) an annual return on the
actual amounts contributed by such Shareholder to the
capital of the Company in excess of the nominal value
of the Shares owned by the Shareholder at an annual
rate of 20%, compounded annually, from the date of
each such excess contribution to the date of the
distribution. Distributions pursuant to this Section
6(b)(i) will be made among the Shareholders in
proportion to the relative Preference Distribution
Amounts attributable to each Shareholder, determined
as of the date of the distribution; and
(ii) The balance, to the Shareholders in proportion to the
relative Economic Interest attributable to each
Shareholder, determined as of the date of the
distribution.
(c) Definitions of Premium Amount.
(i) For purposes hereof and with respect to Elmedia, the
"Premium Amount" as of any date will equal all
contributions for Shares actually made in the Company
by Elmedia exceeding the nominal value of the Shares
taken by Elmedia in respect of such contributions as
of such date minus the aggregate amount of all
distributions made to Elmedia prior to such date
pursuant to Section 6(a) or Section 6(b)(i).
(ii) For purposes hereof and with respect to Formus, the
"Premium Amount" as of any date will equal all
contributions for Shares actually made in the Company
by Formus exceeding the nominal value of the Shares
taken by Formus in respect of such contributions as
of such date minus the aggregate amount of all
distributions made to Formus prior to such date
pursuant to Section 6(a) or Section 6(b)(i).
(d) Liquidating Distributions. With respect to any liquidating
distribution made pursuant to Section 23 of the Deed and
notwithstanding anything to the contrary therein, each
Shareholder will instruct each Supervisory Director that it
has nominated or elected to vote or consent to action, and
will vote or consent to action with respect to its Shares, in
each case, to cause any such liquidating distributions to be
made in the order of priority specified in Section 6(b).
(e) Exchange Rates. For purposes of this Agreement, each
contribution or funding that is made other than in United
States dollars will be converted to a United States dollar
amount at the US$-PLN exchange rate on the date such
contribution or funding is made reported in The Wall Street
Journal (Western Edition). If, for any reason, such rate
cannot be determined by reference to The Wall Street Journal
(Western Edition), or The Wall Street Journal (Western
Edition) ceases to be available, Formus will determine the
US$-PLN exchange rate using the midpoint of interbank bid and
asked quotations advised to it by one major bank selected by
Formus after consultation with the Company.
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(f) Example. For example, assuming Elmedia has contributed the
nominal value of PLN2,550 and Formus has contributed the
nominal value of PLN2,450 and the additional contribution of
PLN12,000 and no other funding has been completed, if the
Company were making a distribution of PLN50,000 pursuant to
Section 20 of the Deed one year after such contributions,
Elmedia and Formus would receive the following amounts by
virtue of Sections 6(a) and (b):
Elmedia Formus Total
------- ------ -----
(amounts in PLN)
6(a) 255 245 500
6(b)(i) 0 14,400 14,400
6(b)(ii) 5,265 29,835 35,100
----- ------ ------
5,520 44,480 50,000
----- ------ ------
7. Transfer and Liquidity Rights.
(a) General Restriction. Except as otherwise provided herein and
at all times during the term of this Agreement, no Party will,
directly or indirectly, sell, assign, pledge, hypothecate,
grant any rights of usufruct or otherwise encumber, transfer
or dispose of ("Transfer") all or any portion of its Shares or
other Interests in the Company. For -------- purposes of this
Agreement, any direct or indirect Transfer of any Equity
Interest in Elmedia (or any Equity Interest in any Entity
through which any Polish Partner owns any Shares or other
Interests in the Company) will be deemed to be a Transfer of a
corresponding portion of Elmedia's Shares and other Interests
in the Company.
(b) Permitted Transfers. Each of the following will be deemed a
"Permitted Transfer" and not subject to the restrictions on
Transfer specified in Section 7(a):
(i) the Transfer by Elmedia of all of its Shares and its
other Interests in the Company to an Entity that is
and remains organized and existing under Polish Laws
wholly owned by Elmedia, if:
(A) in the reasonable judgment of Formus, the
proposed transferee has the capacity,
financial or otherwise, to meet its
obligations hereunder; and
(B) the proposed transferee has executed and
delivered an instrument reasonably
satisfactory to Formus pursuant to which the
proposed transferee has agreed to become a
Party and to assume, perform and discharge
all the obligations and liabilities of the
transferring Party under this Agreement; and
(ii) any Transfer by Formus of all or any portion of its
Shares or its other Interests in the Company.
(iii) For purposes of this Agreement, references to an
Entity being "wholly owned" by another Person will
mean that (A) all voting and other consensual rights
with respect to such Entity may be exercised by the
other Person and (B) the other Person is solely
entitled, legally and beneficially, to all dividends,
distributions to shareholders and other economic
rights that under applicable Law accrue to
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the holders of all Equity Interests or Indebtedness
in such Entity, including the rights to proceeds
realized upon disposition of such Equity Interests or
Indebtedness.
(c) Right of First Refusal.
(i) After three years from the date hereof and if the
Transfer in question is not a Permitted Transfer,
Elmedia may Transfer all or any portion of its Shares
and other Interests in the Company (the "Offered
Interest") if it follows the procedures set forth in
this Section 7(c). If the Transfer in question is a
Permitted Transfer, Elmedia shall follow the
procedures set forth in Section 7(b). If at any time
after three years from the date hereof, Elmedia
determines to Transfer, other than by way of a
Permitted Transfer, all or any portion of the Offered
Interest in a bona fide transaction to any Person
(other than Formus or any of its Affiliates), Elmedia
will first make a written offer to sell the Offered
Interest to Formus by delivering to Formus a written
notice of its offer to sell the Offered Interest (the
"Sale Notice"), which offer will be on the same terms
and conditions as those on which Elmedia proposes to
Transfer the Offered Interest in such bona fide
transaction. Elmedia will identify in the Sale Notice
the Person it proposes to Transfer the Offered
Interest to in the bona fide transaction. If the
Person to whom Elmedia proposes to Transfer the
Offered Interests is an Entity, the Sale Notice will
identify all of the direct and indirect owners of
such Entity. A transaction shall not be a bona fide
transaction if its terms provide for consideration
other than cash or cash plus deferred payments of
cash.
(ii) Formus will have the right for a 60-day period after
receipt of the Sale Notice to negotiate with Elmedia
for the purchase of all, but not less than all, the
Offered Interest from Elmedia on such terms and
conditions as Elmedia and Formus may agree. If
agreement is reached within such 60-day period, the
Offered Interest will be sold to Formus (or one or
more other Persons designated by Formus, each
hereinafter referred to as a "Designated Purchaser")
on the terms and conditions agreed. If no agreement
is reached within such 60-day period, Formus will
have the right for 30 days after such 60-day period
ends to elect to purchase all, but not less than all,
of the Offered Interest from Elmedia on the terms and
conditions specified in the Sale Notice by delivering
to Elmedia written notice of its election (the "Buy
Notice"). If Formus delivers a Buy Notice to Elmedia
within such 30-day period, the Offered Interest will
be sold to Formus (or one or more Designated
Purchasers) against payment to Elmedia of the
purchase price specified in the Sale Notice as
promptly as practicable after delivery of the Buy
Notice (subject to delays reasonably beyond the
control of Formus and Elmedia in obtaining
governmental consents and approvals and the consent
and approvals of any other Person). In connection
with such sale, each of Elmedia and Formus will, and
will cause their respective Affiliates to, execute
and deliver such instruments of conveyance,
assignment and transfer, and will take such actions
as either Elmedia or Formus may reasonably request to
effect such sale, free and clear of all liens,
encumbrances, restrictions and claims of every kind
("Encumbrances").
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(iii) If Formus and Elmedia do not reach agreement as to
the sale of the Offered Interest within the 60-day
period specified in Section 7(c)(ii) and Formus has
not delivered a Buy Notice to Elmedia within the
30-day period specified in such Section, Elmedia may
Transfer all, but not less than all, of the Offered
Interest to the Person identified in the Sale Notice
on the conditions that:
(A) the proposed transferee is a Qualified
Person;
(B) such Transfer is at a price and on other
terms and conditions no less favorable than
the most favorable price and other terms and
conditions offered by Elmedia to Formus;
(C) such Transfer closes within 45 days after
the expiration of the 30-day period
specified in Section 7(c)(ii);
(D) in the reasonable judgment of Formus, the
proposed transferee has the capacity,
financial or otherwise, to meet its
obligations hereunder; and
(E) the proposed transferee executes and
delivers an instrument reasonably
satisfactory to Formus pursuant to which the
proposed transferee agrees to become a Party
and to assume, perform and discharge all the
obligations and liabilities of Elmedia under
this Agreement.
(d) Call Option.
(i) At any time either (x) after five years from the date
hereof or (y) after the occurrence of any breach by
any of the Polish Partners of (or in the event any
third party alleges facts that, if true, would mean
any of the Polish Partners has breached) any of their
representations, warranties or covenants under this
Agreement and within two years after Formus has
actual knowledge of such breach or alleged facts,
Formus may deliver a notice (the "Call Notice") to
Elmedia stating the intention of Formus to purchase
(or to cause one or more Designated Purchasers to
purchase) all, but not less than all, Elmedia's
Interests in the Company (the "Called Interest") at a
purchase price (the "Call Exercise Price") equal to:
(A) the price agreed by Formus and Elmedia
within 30 days after the delivery of the
Call Notice; or
(B) if Formus and Elmedia fail to so agree
within such 30-day period, the price will
equal the Fair Market Value of Elmedia's
Interests determined in accordance with
Section 7(d)(ii).
(ii) The Fair Market Value of Elmedia's Interests will be
determined as of the date on which the Call Notice
was delivered to Elmedia (the "Determination Date")
by an independent, internationally recognized
investment banking firm appointed by Formus (the
"Appraiser"); provided that the Appraiser will not
have provided services to Formus and its Affiliates
for which such appraiser was paid an aggregate amount
exceeding US$100,000 within the year prior to the
date of its appointment hereunder. The Company shall
bear all of the costs and expenses of
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the Appraiser, which costs and expenses will be
treated as a liability of the Company for purposes of
the determinations to be made according to this
Section 7(d)(ii). Elmedia will afford the Appraiser
and its representatives full access during normal
business hours to the properties, books and records
of Elmedia and cause the directors and employees of
Elmedia to furnish such other information as the
Appraiser and its representatives from time to time
reasonably request. In addition, each Shareholder
will cause the Company to afford the Appraiser and
its representatives full access during normal
business hours to the properties, books and records
of the Company and its Subsidiaries and cause the
Managing Directors of the Company and its
Subsidiaries to furnish such other information as the
Appraiser and its representatives from time to time
reasonably request. The Appraiser will submit its
written determination of the Fair Market Value of
Elmedia's Interests to Elmedia and Formus within 30
days after the date it is retained. If Elmedia
disputes the Appraiser's determination of the Fair
Market Value of Elmedia's Interests, Elmedia may hire
its own independent appraiser (the "Elmedia
Appraiser"); provided that the Elmedia Appraiser will
not have provided services to Elmedia and its
Affiliates for which such appraiser was paid an
aggregate amount exceeding US$100,000 within the year
prior to the date of its appointment hereunder.
Elmedia shall bear all the costs and expenses of the
Elmedia Appraiser. The Elmedia Appraiser will submit
its written determination of the Fair Market Value of
Elmedia's Interests as of the Determination Date to
Elmedia and Formus within 30 days after the date it
is retained. If the higher determination of the
Appraiser and the Elmedia Appraiser is not greater
than 110% of the lower determination, the Fair Market
Value of Elmedia's Interests will be the average of
such determinations. If the higher determination is
greater than 110% of the lower determination, then
the Appraiser and the Elmedia Appraiser will jointly
select, within 15 days after the date on which Formus
informs them of such difference, a third Appraiser to
be retained by Formus and Elmedia (the "Third
Appraiser"). The Third Appraiser will deliver its
written determination of the Fair Market Value of
Elmedia's Interests as of the Determination Date
within 30-days after the date it is retained, and the
Fair Market Value of Elmedia's Interests will be the
average of the two closest determinations or, if
there are not two closest determinations, the average
of all three determinations. The fees and expenses of
the Third Appraiser will be shared equally by the
Shareholders. If Elmedia breaches any of its
covenants under this Section 7(d)(ii), the Fair
Market Value of Elmedia's Interests as of the
Determination Date will be established by the
determination of the Appraiser and the fees and
expenses of the Appraiser retained will be borne
solely by Elmedia.
(iii) Within 10 days after the Call Exercise Price is
established, Formus may withdraw its Call Notice by
delivering a notice of withdrawal to Elmedia. If
Formus does not withdraw its Call Notice within such
10-day period, Elmedia will sell, and cause its
Affiliates to sell, the Called Interest to Formus (or
one or more Designated Purchasers), free and clear of
all Encumbrances, against payment to Elmedia of the
Call Exercise Price as promptly as practicable after
the expiration of such 10-day period (subject to
delays reasonably beyond the control of Formus and
Elmedia in obtaining governmental consents and
approvals and the consent and approvals of any other
Person). In connection with such sale, each of
Elmedia and Formus will, and will cause their
respective
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Affiliates to, execute and deliver such instruments
of conveyance, assignment and transfer, and will take
such actions as either Elmedia or Formus may
reasonably request to effect such sale.
(iv) (A) If Formus withdraws its Call Notice, it will
have the right, which it may exercise at any
time and from time to time thereafter,
either (x) to deliver another Call Notice
pursuant to Section 7(d)(i) or (y) to
deliver a notice (the "Bring Along Notice")
pursuant to this Section 7(d)(iv)(A) to
Elmedia stating Formus' intention to cause
the Company to be sold to a Person or
Persons, other than to Formus or an
Affiliate of Formus (such Person or Persons,
individually or collectively, referred to as
the "Bring Along Buyer"), in a transaction
or series of transactions (the "Bring Along
Transaction"), structured in any manner
(including, for example, as a sale by the
Shareholders of all of their Interests, as a
sale of the assets of the Company, or as a
merger of the Company with or into another
Entity) reasonably acceptable to Formus,
effecting the sale of all, but not less than
all, the Interests.
(B) On delivery of the Bring Along Notice to
Elmedia, Elmedia, in such manner and at such
times as Formus reasonably requests, will
take, and will instruct the Supervisory
Directors and Managing Directors of the
Company nominated, elected or appointed by
it, will vote or consent to action with
respect to its Shares, and will cause its
Affiliates, in each case, to take, such
actions as are required to complete a Bring
Along Transaction in accordance with the
terms and conditions of a definitive
agreement or agreements pursuant to which
such Bring Along Transaction is to be
completed (the "Bring Along Transaction
Agreements"). Without limiting the
generality of the foregoing, if reasonably
requested by Formus, Elmedia will, and will
cause each of its Affiliates to, Transfer
all of Elmedia's Interests to the Bring
Along Buyer.
(C) In consideration of the performance of its
obligations under this Section 7(d)(iv) and
in connection with the completion of a Bring
Along Transaction pursuant to this Section
7(d)(iv), Elmedia will be paid on completion
of such Bring Along Transaction a zloty
amount in cash (or, at Formus' option, the
equivalent amount in any other currency)
equal to the lesser of (x) the Fair Market
Value of its Interests, if determined, as
most recently determined pursuant to Section
7(d)(ii) and (y) the amount that would be
distributed to Elmedia if in connection with
the Bring Along Transaction the Company were
liquidated and the total consideration being
paid for the Shares and other Interests of
the Shareholders was distributed to the
Shareholders pursuant to Section 6(d).
Notwithstanding the foregoing to the
contrary, if any such consideration will be
deferred pursuant to the Bring Along
Transaction Agreements, the Bring Along
Buyer or Formus, as the case may be, will
have the right to defer payment of part of
the amount to be paid Elmedia hereunder.
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(D) For purposes of Section 7(d)(iv)(C)(y) and
7(d)(v)(B), if the terms and conditions of
the Bring Along Transaction Agreements
provide for consideration other than cash or
cash plus deferred payments of cash, Elmedia
will be paid the cash equivalent of
Elmedia's share of such other consideration.
Elmedia and Formus shall attempt to agree on
a cash equivalent amount of such other
consideration. If they cannot agree on such
cash equivalent amount prior to completion
of the Bring Along Transaction, (x) the
payment of any such consideration to Elmedia
will be deferred until 10 days after the
cash equivalent amount shall be determined
by the Appraiser selected in the manner
described in Section 7(d)(ii); (y) the
Appraiser will be retained promptly
following completion of the Bring Along
Transaction; and (z) the Appraiser will
submit its written determination of the cash
equivalent amount within 30 days after the
date it is retained. For purposes of this
Section 7(d)(iv)(D), the fees and expense of
the Appraiser shall be paid by the Company.
(v) (A) Notwithstanding any thing in the foregoing
to the contrary, Formus will have the right,
which it may exercise at any time and from
time to time, to deliver a Bring Along
Notice to Elmedia pursuant to this Section
7(d)(v)(A) stating Formus' intention to
cause the Company to be sold to a Bring
Along Buyer in a Bring Along Transaction
structured in any manner (including, for
example, as a sale by the Shareholders of
all of their Interests, as a sale of the
assets of the Company, or as a merger of the
Company with or into another Entity)
reasonably acceptable to Formus, effecting
the sale of all, but not less than all, the
Interests. On delivery of the Bring Along
Notice to Elmedia, Elmedia, in such manner
and at such times as Formus reasonably
requests, will take such actions as are
described in Section 7(d)(iv)(B).
(B) In consideration of the performance of its
obligations under this Section 7(d)(v) and
in connection with the completion of a Bring
Along Transaction pursuant to this Section
7(d)(v), Elmedia will be paid on completion
of such Bring Along Transaction a zloty
amount in cash (or, at Formus' option, the
equivalent amount in any other currency)
equal to the amount that would be
distributed to Elmedia if in connection with
such Bring Along Transaction the Company
were liquidated and the total consideration
being paid for the Shares and other
Interests of the Shareholders was
distributed to the Shareholders pursuant to
Section 6(d). Notwithstanding the foregoing
to the contrary, if any such consideration
will be deferred pursuant to the Bring Along
Transaction Agreements, the Bring Along
Buyer or Formus, as the case may be, will
have the right to defer payment of part of
the amount to be paid Elmedia hereunder.
(e) No Change of Domicile. Each of Messrs. Xxxxxxx, Xxxxxxxxxxx
and STRAWINSKI will at all times maintain his Polish
citizenship and domicile. Elmedia will at all times maintain
its corporate existence as a company organized and existing
under the Laws of the Republic of Poland and will at all times
maintain 100% of its shareholders being Polish citizens or
entities.
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8. Disposition of Interests of a Bankrupt or Dissolved Shareholder.
(a) Bankruptcy or Dissolution of Elmedia.
(i) Upon the dissolution or Bankruptcy of Elmedia (the
"Bankrupt Shareholder"), the Bankrupt Shareholder
will have only the rights with respect to its Shares
and other Interests provided in this Section 8. Upon
the dissolution or Bankruptcy of the Bankrupt
Shareholder:
(A) the Bankrupt Shareholder will be permitted
to Transfer any or all of its Shares and
other Interests by way of a Permitted
Transfer;
(B) the Bankrupt Shareholder will give written
notice (the "Bankruptcy Notice") to the
Company and Formus of such event and whether
all of its Shares and other Interests have
been Transferred by way of a Permitted
Transfer; and
(C) the Bankrupt Shareholder will have no right
with respect to its Shares and other
Interests except the right to receive
nonliquidating distributions and
distributions in liquidation made by the
Company prior to the purchase of the
Bankrupt Shareholder's Interests in
accordance herewith. Prior to the receipt of
the Bankruptcy Notice, the Company and
Formus may treat the Bankrupt Shareholder as
the owner of its Interests.
(ii) Upon the dissolution or Bankruptcy of the Bankrupt
Stockholder and if the Bankrupt Shareholder has not
Transferred all of its Interests by way of a
Permitted Transfer, Formus will have the right for a
period of 30 days after delivery of the Bankruptcy
Notice (unless such 30-day period is extended in
accordance with Section 8(b)) to elect to purchase
(or to cause one or more Designated Purchasers to
purchase) at the purchase price determined in
accordance with Section 8(b) the Bankrupt
Shareholder's Interests. Formus may exercise such
right by giving written notice (the "Bankrupt
Acceptance Notice") to the Bankrupt Shareholder.
(b) Purchase Price.
(i) The purchase price for the Bankrupt Shareholder's
Interests will be equal to:
(A) the price agreed by the trustee or receiver
of the Bankrupt Shareholder and Formus
within 30 days after the delivery of the
Bankrupt Acceptance Notice; or
(B) if they cannot agree within such 30-day
period, the price will equal the Fair Market
Value of the Bankrupt Shareholder's
Interests determined in accordance with
Section 7(d)(ii), except that for such
purpose the date on which the Bankruptcy
Notice was delivered to Formus will be the
Determination Date.
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(ii) If Formus has not withdrawn its Bankrupt Acceptance
Notice, the purchase price due to such trustee or
receiver for the Bankrupt Shareholder's Interests
will be paid in full at a closing to occur as
promptly as practicable after such purchase price is
determined in accordance with this Section 8(b), but
in any event within 30 days after such determination
(subject to delays reasonably beyond the control of
Formus and such trustee or receiver in obtaining
governmental consents and approvals and the consent
and approvals of any other Person). At the closing,
which will be held at the principal executive offices
of the Company, such trustee or receiver will be paid
the purchase price against delivery to Formus or one
or more Designated Purchasers, as the case may be,
of:
(A) duly executed instruments of transfer and
assignment, transferring and assigning good,
and marketable title to the Bankrupt
Shareholder's Interests, which title shall
be free and clear of Encumbrances except
those created hereby;
(B) an instrument pursuant to which such trustee
or receiver agrees to be bound by the
provisions of Section 8(c); and
(C) all other documents and instruments
necessary or appropriate under applicable
law to convey to Formus or one or more
Designated Purchasers, as the case may be,
all of the Bankrupt Shareholder's rights,
title and interests in its Interests.
(c) Company Liability. If at any time a claim is asserted against
the Company based on a state of facts arising wholly or in
part before this Section 8 became applicable to the Bankrupt
Shareholder, Formus may (unless such claim has been explicitly
taken into account in determining the purchase price for the
Bankrupt Shareholder's Interests or unless the trustee or
receiver of the Bankrupt Shareholder has otherwise provided
adequate security for the Bankrupt Shareholder's obligation in
the form of a surety bond or suitable letter of credit)
withhold from the purchase price determined in accordance with
Section 8(b) the estimated amount of such claim until the
amount of such claim shall be determined by adjudication,
settlement, compromise or otherwise, at which time so much of
the withheld amount as equals the Bankrupt Shareholder's share
of such claim will be applied toward payment thereof and the
balance, if any, will be paid to such trustee or receiver on
behalf of the Bankrupt Shareholder. If at the time the amount
of the claim is finally determined the closing referred to in
Section 8(b) has occurred or the amount withheld is not
sufficient to offset the Bankrupt Shareholder's share of such
claim, such trustee or receiver on behalf of the Bankrupt
Shareholder will reimburse Formus for any part of the Bankrupt
Shareholder's share of such claim borne by Formus in excess of
the amount withheld, if any. Nothing in this Section 8(c) will
be interpreted as releasing or relieving the Bankrupt
Shareholder from any part of the Indebtedness of the Company
of any of its Subsidiaries that the Bankrupt Shareholder
undertook during the time such Bankrupt Shareholder was a
Shareholder.
(d) The restrictions contained in this Section 8 shall be binding
for the Parties to the Agreement and be enforceable with
respect to the Company under applicable Law, but only to the
extent such restrictions will not conflict with the mandatory
provisions of applicable Law.
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9. Representations and Warranties; Acknowledgment.
(a) Representations and Warranties of the Polish Partners. Each of
the Polish Partners represents and warrants to Formus as
follows:
(i) Elmedia is a limited liability company duly organized
and validly existing under the laws of the Republic
of Poland and has full power and authority to execute
and deliver this Agreement and to perform its
obligations hereunder. The execution, delivery and
performance of this Agreement have been duly and
validly authorized by all actions necessary on the
part of Elmedia and its management and owners. Each
of Messrs. Xxxxxxx, Xxxxxxxxxxx and XXXXXXXXXX is of
the age of majority, of full legal capacity, and
lawfully entitled to execute and deliver this
Agreement and perform his obligations hereunder.
(ii) This Agreement has been duly executed and delivered
by each of the Polish Partners and constitutes the
valid and binding obligation of each of them
enforceable against them in accordance with its
terms.
(iii) The execution, delivery and performance of this
Agreement by each of the Polish Partners (A) will not
violate any provision of the Constituent Documents of
Elmedia, (B) will not violate any Law by which any of
the Polish Partners or any of their respective
properties or assets is bound, (C) will not require
any filing with, or permit, consent or approval of,
or the giving of any notice to any court,
administrative agency or governmental body or
representative, and (D) will not result in a
violation or breach of, or constitute a default under
any license, franchise, permit, indenture, agreement
or other instrument to which any of the Polish
Partners or any of their respective properties or
assets is bound.
(iv) Each of Messrs. Xxxxxxx, Xxxxxxxxxxx and XXXXXXXXXX
is domiciled in Poland and a Polish citizen, and
together they own all the issued and outstanding
shares of Elmedia. Except for an agreement in respect
of the issuance of registered bonds to Xx.
Xxxxxxxxxxx Xxxxxx and Xx. Xxxxx Xxxxxxx, there are
no other securities of Elmedia and no outstanding
subscriptions, options, warrants, puts, calls,
rights, exchangeable or convertible securities or
other commitments or agreements of any nature
relating to the shares or other securities of
Elmedia, or otherwise obligating Elmedia to issue,
transfer, sell, purchase, redeem or otherwise acquire
such shares or other securities.
(v) There are no actions, proceedings, claims or
investigations pending, or, to the best knowledge of
any of the Polish Partners, threatened by or before
any court, administrative agency or governmental body
or representative to which any Polish Partner or any
Affiliate thereof is a party or which concerns the
GHz Licences, the Business or Elmedia's participation
in the Company in which an adverse determination or
action might adversely affect the GHz Licences, the
Business or Elmedia's or Formus' participation in the
Company or that questions the validity of this
Agreement or any related agreement or seeks to
restrain or enjoin the consummation of the
transactions contemplated hereby. No Polish Partner
is aware of any fact or circumstance that might give
rise to any such action, proceeding, claim or
investigation.
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(b) Acknowledgment of the Polish Partners. Each Polish Partners
acknowledges the unique competence and experience of Formus in
the area of telecommunications activities and Formus'
capabilities in arranging for the necessary financing of the
Company's activities as described by the Agreement. Therefore,
each of the Polish Partners accepts the leading role of Formus
in implementing the project contemplated by this Agreement,
which role is express in the specific provisions of this
Agreement. Each of the Polish Partners also acknowledges that
he has been counseled regarding the provisions of this
Agreement and has received adequate consideration for his
obligations under this Agreement. Each of the Polish Partners
confirms his intention to fulfill his obligations under this
Agreement to the fullest extent permitted by Law.
(c) Representations and Warranties of Formus. Formus represents
and warrants to the Polish Partners as follows:
(i) Formus is a corporation duly organized and validly
existing under the laws of the State of Delaware and
has full power and authority to execute and deliver
this Agreement and to perform its obligations
hereunder. The execution, delivery and performance of
this Agreement have been duly and validly authorized
by all actions necessary on the part of Formus and
its management and owner.
(ii) This Agreement has been duly executed and delivered
by Formus and constitutes the valid and binding
obligation of Formus enforceable against Formus in
accordance with its terms.
10. Miscellaneous.
(a) Term; Consequences of Termination. This Agreement will be
effective on the date first written above and will terminate
on the occurrence of any of the following events: (i) the
dissolution of the Company, (ii) the acquisition of all of the
Interests in the Company of the Shareholders and their
respective Affiliates by one Shareholder and/or its Affiliates
or (iii) the written consent of all Parties. If this Agreement
terminates in accordance with this Section 10(a), it will
become null and void and of no further force and effect except
as otherwise specifically provided for in this Agreement and
except for the provisions of this Section 10, which will
remain in effect. No termination of this Agreement, however,
will affect any obligation or liability of any of the Parties
arising before or as a result of circumstances existing before
such termination.
(b) Governing Law, Dispute Resolution, Remedies.
(i) This Agreement will be governed by the laws of the
State of Colorado.
(ii) Subject to Section 10(m), any dispute arising out of
or in connection with this contract, including any
question regarding its existence, validity or
termination, will be referred to and finally resolved
by arbitration under the Rules of the London Court of
International Arbitration ("LCIA"), which Rules are
deemed to be incorporated by reference into this
clause. Such dispute will be finally resolved by one
arbitrator nominated by agreement of the Parties
within 30 days after the submission of a request for
arbitration is delivered to the LCIA, or if the
Parties cannot agree, the nomination of an arbitrator
will be made in accordance
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with the Rules. The sole arbitrator will have
substantial experience in arbitrating international
commercial disputes pursuant to the Rules. The
proceedings will unless otherwise agreed by the
Parties be held in London. The English language will
be the official language for all purposes. The
arbitrator will be authorized to order production of
evidence and witnesses reasonably required to resolve
the Parties' dispute. The decision of the sole
arbitrator will be final and binding and will be
enforceable in any court of competent jurisdiction
and the Parties hereby waive any objections to or
claims of immunity in respect of such enforcement.
(iii) The indemnification provisions of this Agreement are
in addition to, and not in derogation of, any
statutory, equitable, or common law remedies Formus
may have with respect to the transactions
contemplated by this Agreement.
(c) U.S. Tax Election. At Formus' written request to Elmedia,
which Formus may make in its sole discretion, Formus and
Elmedia will cause the Company to elect to obtain fiscal
transparency for US tax purposes.
(d) Amendment. This Agreement may be amended or modified only by
an instrument in writing signed by the Parties and designated
as such.
(e) No Waiver. No provision of this Agreement may be waived except
in a writing designated as such and signed by the Party or
Parties against which such waiver is sought. No failure or
delay by any Party in exercising any right, power or privilege
hereunder will operate as a waiver thereof, nor will any
single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any right, power
or privilege hereunder.
(f) Assignment. No Party may, without the written consent of the
other Parties, assign or delegate any of its rights or
obligations under this Agreement, except to a transferee being
Transferred its Shares and other Interests pursuant to a
Permitted Transfer or as otherwise permitted in accordance
with Section 7. This Agreement will be binding upon the
Parties and their respective successors and permitted assigns.
(g) Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be deemed an original, and
all of which together will constitute one instrument.
(h) Severability. If any provision of this Agreement or the
application thereof to any Person or circumstance is held by a
court of competent jurisdiction or the arbitrator or
arbitrators described in Section 10(b) to be invalid, void or
unenforceable to any extent, the remainder of this Agreement
and the application of such provision to other Persons or
circumstances remain in full force and effect, will not be
affected, impaired or invalidated thereby and will be enforced
to the greatest extent permitted by Law.
(i) Interpretation. Whenever the context may require, any pronoun
shall include the corresponding masculine, feminine and neuter
forms, and with respect to the Parties shall include, where
the context does not prohibit, their respective permitted
successors and assigns. The words "include," "includes" and
"including" will be deemed to be followed by the phrase
"without limitation." All references to Articles, Sections,
Exhibits and Schedules will mean Articles, Sections, Exhibits
and Schedules to this Agreement,
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unless otherwise stated. Unless otherwise specified herein,
each provision of this Agreement will be effective from the
date hereof. Article, Section, Exhibit and Schedule headings,
captions and numbers in this Agreement are for convenience
only and will not be used in its interpretation or considered
part of this Agreement. Unless otherwise expressly provided in
this Agreement, whenever this Agreement refers to a matter
requiring the action, consent, approval, agreement of, or
determination, specification, designation or exercise of any
option or other right by, Formus, such action, consent,
approval, agreement, determination, specification, designation
or exercise, unless otherwise expressly provided herein, may
be taken, given, granted, made, done, omitted, withheld or
refused, by Formus in its sole and absolute discretion.
(j) Entire Agreement. This Agreement contains the entire
understanding of the Parties with respect to the subject
matter hereof and supersedes all prior negotiations,
understandings and agreements with respect thereto. The
Formation Agreement will cease to have any force or effect
from the date hereof.
(k) No Partnership. Nothing in this Agreement will be deemed or
construed as creating a partnership or joint venture among the
Parties or permit a Party to act as a mandatory or agent of
any other Party, except as otherwise provided in Section
10(n).
(l) Costs. Except as otherwise provided herein, each Party will
bear its own costs and expenses in connection herewith and the
negotiation and consummation of the transactions contemplated
hereby and the Definitive Documents.
(m) Injunctive Relief. Each of the Polish Partners acknowledges
and agrees that Formus would be damaged irreparably in the
event any of the provisions of this Agreement are not
performed by any Polish Partner in accordance with its
specific terms or are otherwise breached by any Polish
Partner. Accordingly and notwithstanding Section 10(b)(ii) or
anything else to the contrary herein, each of the Polish
Partners agrees that Formus, in addition to any other
available legal or equitable remedy, will be entitled to
institute legal proceedings for the purpose of seeking
injunctive relief in situations involving actual or threatened
breaches of the provisions of this Agreement and to enforce
specifically this Agreement and the terms and provisions
hereof.
(n) Representative. To the fullest extent permitted by law, each
Polish Partner hereby irrevocably constitutes and appoints
Elmedia as its attorney-in-fact and legal and judicial
representative (the "Representative"), with full power of
substitution, for the purposes of receiving all notices and
communications directed to any Polish Partner under this
Agreement.
(o) Polish Law. Each Party, to the fullest extent permitted by the
Laws of the Republic of Poland, waives any rights that it may
have under the Laws of the Republic of Poland that might be
inconsistent with the terms of this Agreement and, to the
extent such rights cannot be validly waived, each Party will
exercise such rights only to the extent consistent with this
Agreement. Nothing in this Agreement will be construed to
require any Party to violate any Polish Law.
(p) Notices. All notices, demands and other communications to be
given under or by reason of this Agreement will be in writing
in the English language and delivered by reputable
international courier service or sent by telefacsimile to the
relevant Parties at their
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Addresses for Notice specified below (or such other address or
telecopy number as a Party has by five days' prior written
notice specified to the other Parties). Any notice, demand or
other communication so addressed to the relevant Party will be
deemed to have been delivered (i) if given or made by
telefacsimile, when dispatched with a confirmed transmission
report; and (ii) if given or made by courier, when actually
delivered to the relevant address.
If to the Polish Partners or any of them, to the
Representative:
Elmedia Sp. z o.o.
Poland
00336 Warsaw
M. Kopernika 28/25
Attn.: Mr. Xxxxxxxxx Xxx Xxxxxxx
Facsimile No.: x00 00 000-0000
If to Formus:
Formus International - Poland, Inc.
c/o Formus Communications, Inc.
0000 X. Xxxxxxxx Xx., Xxxxx 0000
Xxxxxxxxx, Xxxxxxxx 00000 XXX
Attn.: President
Facsimile: x0 (000) 000-0000
With copies to:
Formus International - Poland, Inc.
c/o Formus Communications, Inc.
0000 X. Xxxxxxxx Xx., Xxxxx 0000
Xxxxxxxxx, Xxxxxxxx 00000 XXX
Attn.: General Counsel
Facsimile: x0 (000) 000-0000; and
Holme Xxxxxxx & Xxxx LLP
1700 Lincoln, Suite 4100
Xxxxxx, Xxxxxxxx 00000 XXX
Attn.: Xxxx X. Xxxxxxxx, Esq
Facsimile:x0 (000) 000 0000
(q) Further Assurances. Each Party, to the fullest extent
permitted by applicable Law, will take all action and execute
and delivery all documents as reasonably necessary to fulfill
and accomplish the purposes and intents of this Agreement.
(r) Indemnification by Polish Partners. In the event that any of
the Polish Partners breaches (or in the event any third party
alleges facts that, if true, would mean any of the Polish
Partners has breached) any of their representations,
warranties or covenants herein, the Polish Partners, jointly
and severally, hereby unconditionally, absolutely and
irrevocably agree to indemnify and hold harmless Formus from
and against any and all claims, demands, liabilities, losses,
damages, causes of action, judgments, penalties, fees, costs
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and expenses (including, without limitation, attorneys' fees,
court costs and legal expenses and consultants' and experts'
fees and expenses) or other liabilities ("Losses") that Formus
may suffer through and after the date of the claim for
indemnification on account of, in connection with, or
resulting from any of the events described in this Section
10(r). All payments to be made under this Section 10(r) shall
be made to Formus upon receipt of notice by Formus of the
incurrence of any Losses, in accordance with the payment
instructions set forth in such notice.
(s) Confidentiality. Subject to the requirements of applicable
Law, each Party will maintain in confidence this Agreement and
documents and agreements entered into among any of them in
connection herewith and will maintain in confidence all
information received from the Company or its Subsidiaries and
will use such information only for the benefit of the Company
and its Subsidiaries, and will not disclose any such
information to any third party (except to such employees or
agents of the receiving Party who have been informed of this
obligation of confidentiality and agree to be bound by this
Section 10(r)) or make any unauthorized use of such
information. Each Party will treat such information with the
same degree of care against disclosure or unauthorized use
that it affords to its own confidential information. This
obligation of confidentiality and non- use will not apply to
any information that (i) was not previously treated as
confidential by the Company, (ii) is or becomes generally
available to the public through no fault of the receiving
Party, (iii) is independently developed by the receiving
party, (iv) is received in good faith from a third party who
discloses such information to the receiving Party on a
non-confidential basis or (v) is required to be disclosed
pursuant to the order of any court or governmental agency. In
addition, this obligation of confidentiality and non-use will
not apply to the use of any such information by Formus or any
of its Affiliates outside the Republic of Poland, public
announcements or disclosures that any receiving Party or any
of its Affiliates considers necessary or appropriate under the
U.S. securities laws or other applicable Laws, the use of any
such information in annual or other periodic reports and
financial statements released by Elmedia or Formus or either
of their respective Affiliates in the ordinary course of
business, or disclosures by Formus or any of its Affiliates in
connection with due diligence investigations by potential
investors in or partners of Formus or any of its Affiliates.
IN WITNESS WHEREOF, the Parties have executed and delivered this
Shareholders' Agreement to be effective on the date first above
written.
Formus:
FORMUS INTERNATIONAL - POLAND, INC.
By:
-------------------------------
Its:
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Polish Partners:
Elmedia Sp. z o.o.
By:
-------------------------------
Its:
------------------------------
Xxxxxxxxx Xxx XXXXXXX
------------------------------
Jan Xxxxx XXXXXXXXXXX
------------------------------
Xxxxxx Xxx XXXXXXXXXX
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