1
Exhibit 3.3
_________________________________________________________
Shareholders' Agreement
among
ECO Holdings III Limited Partnership
and
Polish Investments Holding Limited Partnership,
Xxxxx X. Xxxxxxxx, Xxxxxx LLC,
The Xxxxxx Xxxx Xxxxx Marital Trust,
The AESOP Fund, L.P.
and
@ Entertainment, Inc.
_________________________________________________________
2
SHAREHOLDERS' AGREEMENT
THIS SHAREHOLDERS' AGREEMENT (the "Agreement") is made and entered into as
of the 22nd day of June, 1997 by and between ECO Holdings III Limited
Partnership, a Delaware limited partnership ("ECO"), The AESOP Fund, L.P., a
Delaware limited partnership ("AESOP"), Xxxxx X. Xxxxxxxx ("RMF"), Polish
Investments Holding L.P., a Delaware limited partnership ("PIHLP"), The Xxxxxx
Xxxx Xxxxx Marital Trust, a Connecticut Trust ("CACMT"), Xxxxxx LLC, a
Connecticut limited liability company ("Xxxxxx"), and @ Entertainment, Inc., a
Delaware corporation (the "Company").
WITNESSETH
WHEREAS, there are 18,948,000 shares of Common Stock of the Company, par
value one cent ($.01) per share (the "Common Stock"), issued and outstanding;
WHEREAS, PIHLP owns 10,303,000 shares of Common Stock, RMF owns 1,221,000
shares of Common Stock, Xxxxxx owns 1,429,000 shares of Common Stock, ECO owns
4,662,000 shares of Common Stock, CACMT owns 733,000 shares of Common Stock and
AESOP owns 600,000 shares of Common Stock, and together they own one hundred
percent (100%) of the issued and outstanding shares of Common Stock;
WHEREAS, ECO owns 2,500 shares of Series B Preferred Stock, par value one
cent ($.01) per share, of the Company ("Series B Preferred"), which are all of
the outstanding shares of Series B Preferred;
WHEREAS, additional classes of preferred stock of the Company are
authorized but are not yet issued and outstanding.
NOW, THEREFORE, in consideration of the premises and in further
consideration of the mutual covenants, promises and agreements hereinafter
contained, it has been and IT IS HEREBY AGREED AS FOLLOWS;
1. DEFINITIONS
1.1. The term "Accession Agreement" means an agreement in the form attached
hereto as Exhibit A.
3
1.2. The term "Advent" means Advent International Corporation, a Delaware
corporation.
1.3. The term "Affiliate" means a person that is any one or more of the
following: (a) in relation to any person or entity, another person or
entity that controls, is controlled by or is under common control with
such person or entity; (b) in relation to any partnership, any of its
partners who control the partnership; (c) in relation to any
Shareholder which holds Shares as trustee, the beneficial owner of
those Shares or a trustee for the same beneficial owner; (d) in
relation to any Shareholder, a person which holds Shares as trustee
pursuant to a grantor trust in which that Shareholder is the sole
beneficiary; (e) in relation to any individual, any Family Member (as
defined below); and (f) in respect of ECO, any company, partnership or
fund which is under the management of the Advent International network,
the headquarters of which are at 000 Xxxxxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxxxxx 00000, XXX or any Affiliate of any such company,
partnership or fund. For the purposes of this Agreement, the term
"control" (including with correlative meanings, the terms "controlling,"
"controlled by," and "under common control with"), as applied to any
person means the possession, directly or indirectly, of more than 50%
of the voting power (or in the case of a person which is not a
corporation, 50% or more of the ownership interest, beneficial or
otherwise) of such person or the power otherwise to direct or cause
the direction of the management and policies of that person, whether
through voting power, by control of that person's general partner (if
that person is a limited partnership), by contract or otherwise.
1.4. The term "Business Day" means a day (not being a Saturday, Sunday or
public holiday) on which banks are open for general business in the
City of New York.
1.5. The term "Chase Group" means RMF, PIHLP, CACMT and Xxxxxx and any
Affiliate of any such Shareholder (or trust for the benefit of such
Affiliate) to whom such Shareholder transfers shares pursuant to
Section 3.7(i) hereof.
1.6. The term "Chase Group Representative" means the one (1) person who
shall, at all times during the term of this Agreement, act as the
designated representative of the Chase Group. The initial Chase Group
Representative shall be Xxxxx Xxxxx. Any replacement of the Chase
Group Representative shall be determined by majority vote of the
Voting Power (as hereinafter defined) of the members of the Chase
Group, provided however that no change (whether by replacement as
provided in the first clause of this sentence or otherwise) in the
Chase Group Representative shall be effective until the ECO Group shall
have received (pursuant to the notice provisions of Section 13) a
notice signed by members of the Chase Group holding a majority of the
Voting Power of the Chase Group naming a new Chase Group
Representative. Every reference to the Chase Group Representative in
this Agreement shall be a reference to the Chase Group Representative
as changed pursuant to the foregoing sentence from time to time.
2
4
1.7. The term "Chase Group Voting Agreement" means that certain voting
agreement, as amended or modified from time to time, by and among the
members of the Chase Group.
1.8. The term "ECO Group" means ECO, any limited partner to whom ECO
transfers Shares pursuant to Section 3.7(iii), and any Affiliate of any
such Shareholder (or trust for the benefit of such Affiliate) to whom
such Shareholder transfers shares pursuant to Section 3.7(i) hereof.
1.9. The term "ECO Group Representative" means the One (1) person who shall,
at all times during the term of this Agreement, act as the designated
representative of the ECO Group. The initial ECO Group Representative
shall be Xxxxx Xxxxxxxx. Any replacement of the ECO Group Representative
shall be determined by majority vote of the Voting Power of the members
of the ECO Group, provided however that no change (whether by
replacement as provided in the first clause of this sentence or
otherwise) in the ECO Group Representative shall be effective until the
Chase Group shall have received (pursuant to the notice provisions of
Section 13) a notice signed by members of the Chase Group holding a
majority of the Voting Power of the Chase Group naming a new Chase Group
Representative. Every reference to the ECO Group Representative in this
Agreement shall be a reference to the ECO Group Representative as
changed pursuant to the foregoing sentence from time to time.
1.10. The term "Equity Subscriber Amount" means, with respect to any Polish
Cable Company, that number that is the product of (i) the number of
Subscribers (as that term is defined to the Stock Purchase Agreement),
and (ii) the fraction equal to the percentage of total shares of capital
stock of such Polish Cable Company held directly by the Company, Poland
Communications, Inc. ("PCI") or PCBV (as the case may be).
1.11. The term "Family Member" in relation to a Shareholder means the spouse,
brothers, sisters and parents of the Shareholder and the Shareholder's
children and grandchildren (including step and adopted children and
grandchildren), and the spouse of any brother or sister of such
Shareholder.
1.12. The term "Group" means either the Chase Group or the ECO Group, as the
case may be.
1.13. The terms "Initial Public Offering" means the closing of an underwritten
public offering of Shares of Common Stock to be listed on the New York
Stock Exchange or the American Stock Exchange, or to be quoted on the
National Association of Securities Dealers Automated Quotation System
or the National Market System of the National Association of Securities
Dealers pursuant to an effective registration statement under the
Securities Act of 1933, as amended, covering the offer and sale
3
5
to the public of at least twenty percent (20%) of the Common Stock of
the Company outstanding immediately after such closing.
1.14. The term "Other Shareholders" means (i) AESOP, (ii) any person to whom
Shares are transferred in accordance with this Agreement other than an
Affiliate of or member of the same Group as the transferring
Shareholder, and (iii) Xxxxxx, if Xxxxxx elects to become such pursuant
to Section 3.5 hereof.
1.15. The term "PAR" means the State Agency for Radio Communications of
Poland.
1.16. The term "Parties" means the ECO Group, the Chase Group, AESOP and the
Company, collectively.
1.17. The term "PCBV" means Poland Cablevision (Netherlands) B.V., a
partially-owned subsidiary of PCI (as hereinafter defined).
1.18. The term "PCI" means Poland Communications, Inc., a New York
corporation, a wholly-owned subsidiary of the Company.
1.19. The term "person" means a natural person, a partnership, a corporation,
an association, a joint stock company, a trust, a joint venture, an
unincorporated organization or other entity, or a governmental entity or
any department, agency or political subdivision thereof.
1.20. The term "Polish Cable Companies" means all Subsidiaries that, at the
date as of which such determination is made, are engaged in the business
of cable television including programming, telecommunications and
telephony in Poland. The term "Material Polish Cable Companies" means
those Polish Cable Companies about which at the date as of which such
determination is made, any of the following is true: (i) at least 50% of
the equity interests thereof are owned directly or indirectly by the
Company; (ii) it is (or is the successor of) Polska Telewizja
Kablowa-Ryntronik S.A., a Polish joint stock company, or ProCable Sp.
z o.o., a Polish limited liability company; or (iii) the Equity
Subscriber Amount of such Polish Cable Company is at least 5% of the
total Equity Subscriber Amount of all Polish Cable Companies in the
aggregate.
1.21. The term "Preferred Stock" means, collectively, all of the issued and
outstanding Shares of all classes of preferred stock of the Company as
of the date hereof or any date hereafter.
1.22. The term "Qualified Person" means any person (a) who does not engage in
any of the businesses of telephony, telecommunications, digital
satellite broadcasting programming, or cable television in or to any
city in Poland or the United Kingdom where the Company or any Subsidiary
engages in that line of business, and (b) whose
4
6
ownership of capital stock of the Company (or rights related thereto)
would not be reasonably likely to result in (i) the loss of, or failure
to obtain, a license, permit, certificate or deed or other regulatory
approval or authorization of or for the Company or any Subsidiary
material to the operations of the Company or any such Subsidiary, or
(ii) the imposition of any condition, modification, or limitation on
such certificate, license, permit, approval, authorization or
reimbursement that would be materially adverse to the operations of the
Company or any Subsidiary, and (c) to whom the transfer of Shares of the
Company would not cause the Company to become a reporting company
pursuant to Section 12 of the Securities Exchange Act of 1934, as
amended.
1.23. The term "Shareholder" means the following persons:
(i) ECO, RMF, PIHLP, Xxxxxx, CACMT and AESOP; and
(ii) any person who becomes a Shareholder pursuant to Section 7.1
hereof.
1.24. The term "Shares" means shares of any class of the issued and
outstanding equity securities of the Company from time to time.
1.25. The term "Stake" for the purposes of Section 5 hereof shall mean all
Shares in the aggregate owned by the Shareholders comprising the Chase
Group or the ECO Group, as the case may be.
1.26. The term "Stock Purchase Agreement" shall mean that certain Stock
Purchase Agreement entered into among ECO, World Cable Communications,
Inc. and PIHLP on March 29, 1996.
1.27. The term "Subsidiary" shall mean each person, other than a natural
person, in which the Company, at the time as of which such
determination is being made, owns, directly or indirectly, any of the
outstanding voting securities or equity interests.
1.28. The term "U.S. GAAP" shall mean generally accepted accounting principles
as in effect from time to time in the United States of America.
1.29. The term "Voting Power" shall mean, with respect to the holder or
holders of any Shares entitled to voting rights pursuant to the
Certificate of Incorporation, the total number of votes represented
by such Shares.
1.30. Words indicating a gender include all genders.
1.31. The singular includes the plural and vice versa where the context
permits or requires.
5
7
1.32. References to Sections, Paragraphs, Exhibits and Schedules are to
sections and paragraphs of, and exhibits and schedules to, this
Agreement, except where the context requires otherwise.
1.33. The headings in this Agreement are for convenience only and shall not
affect its construction or interpretation.
1.34. References to any of the Shareholders (whether individually or
collectively) shall be deemed to exclude any of the Shareholders which
has transferred all of its Shares and no longer has any interest in any
Shares except that this shall not apply to Sections 10 and 11 hereof.
1.35. References to the Certificate of Incorporation shall be construed to
mean the Certificate of Incorporation of the Company as amended or
restated from time to time.
1.36. With respect to actions to be taken by the Chase Group hereunder, any
document signed, or action assented to, by the Chase Group
Representative shall be binding on all persons forming part of the Chase
Group. With respect to actions to be taken by the ECO Group hereunder,
any document signed, or action assented to, by the ECO Group
Representative shall be binding on all persons forming part of the ECO
Group.
2. THE BOARD OF DIRECTORS
2.1. Each of the Shareholders agrees to take all action necessary including,
without limitation, the voting of his Shares, the execution of written
consents, the calling of special meetings, the removal of directors, the
filling of vacancies of the Board of Directors, the waiving of notice
and the attending of meetings, so as to cause the number of members of
the Board of Directors of the Company to be five (5) and to cause the
Board of Directors to consist of the following:
(i) two (2) persons designated from time to time by the ECO Group;
(ii) two (2) persons designated from time to time by the Chase
Group; and
(iii) The Chief Executive Officer of the Company.
Each Shareholder also agrees to take all action necessary to remove
forthwith any director when (and only when) such removal is requested
for any reason with or without cause by the Group that designated such
director and in the case of death, resignation or other removal as
herein provided of such a director, to elect forthwith
6
8
any director when (and only when) such removal is requested for any
reason with or without cause by the Group that designated such director
and in the case of death, resignation or other removal as herein
provided of such a director, to elect forthwith another director
designated by the same Group that designated the deceased, resigning or
removed director.
The Chairman of the Board of Directors shall be a director chosen by the
Chase Group, and shall initially be Xxxxx X. Xxxxx.
2.2. (i) The Chief Executive Officer of the Company shall initially be
Xxxxxx X. Xxxxxx, III.
(ii) The Chief Executive Officer of the Company shall be removed only
by a vote of the Board of Directors in accordance with the
Restated Certification of Incorporation. In the event of the
resignation or removal of the Chief Executive Officer of the
Company, a replacement who shall be acceptable to the ECO Group
shall be designated by the Chase Group.
2.3. The provisions of Sections 2.1 and 2.2 of this Agreement shall terminate
and cease to be in effect if a conveyance of voting rights is deemed to
have occurred pursuant to Section 5.4 hereof, or if either Group holds
no Shares.
3. TRANSFER OR SALE OF SHARES
3.1. Prior to an Initial Public Offering, any Shareholder (other than Xxxxxx,
CACMT or RMF) who is a member of a Group may transfer twenty-one percent
(21%) and/or more of its Shares of Common Stock, and/or twenty-one
percent (21%) or more of its Shares of any class of Preferred Stock, to
a Qualified Person, but in accordance with the terms and conditions of
this Section 3.1:
(i) upon receipt of a bona fide third party offer ("Offer") from a
Qualified Person to purchase twenty-one (21%) or more of the
Shares of Common Stock owned by such Shareholder, and/or
twenty-one percent (21%) or more of its Shares of any class of
Preferred Stock owned by such Shareholder, the recipient of such
offer (the "Initiating Shareholder") shall, if it desires to
accept the offer, (a) procure an offer (to be included in the
Offer) from said third party to purchase all of the outstanding
Shares of Applicable Stock (as hereinafter defined) at the
Applicable Price per Share and on the same terms as contained in
the Offer, and (b) send a notice ("Initiating Notice") in
accordance with the provisions of Section 13 to the members of
the other Group (the "Responding Group") setting forth the price
and other terms of such Offer and naming the proposed purchaser;
and
(ii) on the 60th calendar day (the "Response Date") following receipt
of the Initiating Notice, the Responding Group shall have the
right to purchase all
7
9
of the Shares of Applicable Stock owned by the Initiating
Shareholder at the Applicable Price per Share and on the terms
set forth in the Offer. If, on the Response Date, the Responding
Group does not purchase all the Shares of Applicable Stock owned
by the Initiating Shareholder or notify the Initiating
Shareholder on such date that the Responding Group will sell its
Shares of Applicable Stock to the person who made the Offer,
the Responding Group will be deemed to have consented to the
sale of the Initiating Shareholder's Shares of Applicable Stock,
and the Initiating Stockholder may thereupon sell such Shares to
the person who made the Offer on the terms and conditions
contained in the Offer. If the Responding Group notifies the
Initiating Shareholder of its intention to sell its Shares of
Applicable Stock, the person who made the Offer must, on or
before the 15th day after the Response Date, purchase all Shares
of Applicable Stock held by the Initiating Shareholder, all
members of the Responding Group, and any other Shareholder who
elects to sell.
(iii) For the purposes of this Section 3.1., the term "Applicable
Stock" shall mean:
(a) with respect to an offer for Common Stock and/or Series
B Preferred, the Common Stock and the Series B
Preferred, and
(b) with respect to an offer for any class of Preferred
Stock other than Series B Preferred, all of the issued
and outstanding Shares of all classes of Preferred
Stock other than Series B Preferred.
(iv) For the purposes of this Section 3.1., the term "Applicable
Price" shall mean the price per Share contained in the Offer,
except that for this purpose the Series B Preferred shall be
priced or valued as if it had been converted into Common Stock
as provided in the Certificate of Incorporation.
3.2. Prior to an Initial Public Offering:
(a) any Shareholder which is a member of a Group may transfer fewer
than twenty-one (21%) of its Shares of Common Stock, and/or
fewer than twenty-one percent (21%) of its Shares of any class
of Preferred Stock,
(b) Xxxxxx, if at the time of the proposed transfer Xxxxxxx Xxxxxx
is not an employee of the Company or any Subsidiary, may
transfer all or any portion of its Shares, and
(c) RMF may transfer all or any portion of his Shares,
8
10
to a Qualified Person, but in accordance with the terms and conditions of this
Section 3.2. If a Shareholder wishes to make a sale of the kind described in
subsection 3.2(a), 3.2(b) or 3.2(c) above (such Shareholder, regardless of
whether 3.2(a), 3.2(b) or 3.2(c) applies, being referred to hereinafter as the
"Minority Initiating Shareholder"):
(i) such Minority Initiating Shareholder shall send a notice ("Minority
Initiating Notice") to the other members of the Minority Initiating
Shareholder's Group announcing his intention to make such a sale and
specifying the amount and class of Shares that he intends to sell (the
"Shares For Sale"); and
(ii) after receipt of the Minority Initiating Notice, any one or more of the
other members of the Minority Initiating Shareholder's Group may make an
offer to purchase the Shares For Sale, and the Minority Initiating
Shareholder shall negotiate with such other members of its Group. If
the Minority Initiating Shareholder and one or more of such other
members of its Group are able to reach agreement on the price and other
terms of sale, the Minority Initiating Shareholder may sell the Shares
For Sale to the member or members of its Group with whom it reaches such
an agreement; and
(iii) if no sale of the Shares For Sale is consummated between the Minority
Initiating Shareholder and any other members of his Group within 60
calendar days after the date of the Minority Initiating Notice, such
Minority Initiating Shareholder shall send a notice ("Second Minority
Initiating Notice") to the members of the other Group repeating his
intention to make such a sale and repeating the amount and class of
Shares that he intends to sell; and
(iv) after receipt of the Second Minority Initiating Notice, any one or more
of the other members of the other Group may make an offer to purchase
the Shares For Sale, and the Minority Initiating Shareholder shall
negotiate with such other members of that Group. If the Minority
Initiating Shareholder and one or more of such other members of that
Group are able to reach agreement on the price and other terms of sale,
the Minority Initiating Shareholder may sell the Shares For Sale to the
member or members of that Group with whom it reaches such an agreement,
and
(v) if no sale of the Shares For Sale is consummated between the Minority
Initiating Shareholder and any members of the Group that is not his
Group within 60 calendar days after the date of the Second Minority
Initiating Notice, then the Minority Initiating Shareholder shall be
free, for a period of 150 days after the expiration of such sixty-day
period, to sell the Shares For Sale to any Qualified Person.
9
11
For the avoidance of doubt, any Shareholder may elect to exercise its
transfer rights under this Section 3.2 more than once, but, with respect
to transfers described in Section 3.2(a), only to the extent that the
aggregate amount of Shares that it seeks to sell under one or more
transfers pursuant to this Section 3.2 does not exceed 50% of any class
of the Shares which it holds on the date hereof; and, no attempt by a
Shareholder to transfer any quantity of Shares that would bring the
aggregate number of Shares transferred by such Shareholder to an amount
equal to or greater than 50% of any class of the Shares which it holds
on the date hereof is permitted by this Section 3.2. Notwithstanding
anything in this Section 3.2 to the contrary, the Initiating Shareholder
may, at any time after initiating the process under this Section 3.2,
elect to terminate this process without proceeding further, and having
initiated such process shall not be precluded from transferring his
Shares to an Affiliate or to a member of such Initiating Shareholder's
Group pursuant to Section 3.7 hereof.
3.3 Prior to an Initial Public Offering, each of the Other Shareholders may
transfer any or all of its Shares to a Qualified Person in accordance
with the terms and conditions of this Section 3.3.
(i) if any of the Other Shareholders wishes to sell any or all of
its Shares, such Shareholder shall send a notice ("the Other
Shareholder Initiating Notice") to the members of the Chase
Group announcing his intention to make such a sale and
specifying the amount and class of Shares that such Other
Shareholder intends to sell (the "Other Shareholder Shares For
Sale"); and
(ii) after receipt of the Other Shareholder Initiating Notice, any
one or more of the other members of the Chase Group may make an
offer to purchase the Other Shareholder Shares For Sale, and the
Other Shareholder shall negotiate with such members of the Chase
Group. If the Other Shareholder and one or more of the members
of the Chase Group are able to reach agreement on the price and
other terms of sale, then the Other Shareholder may sell the
Other Shareholder Shares For Sale to the members of the Chase
Group with whom it reaches such an agreement; and
(iii) if no sale of the Other Shareholders Shares For Sale is
consummated between the Other Shareholder and any member of the
Chase Group within 60 calendar days after the date of the Other
Shareholder Initiating Notice, the Other Shareholder shall send
a notice ("the Other Shareholder Second Initiating Notice") to
the members of the ECO Group repeating its intention to make
such a sale and repeating the amount and class of Shares that
the Other Shareholder intends to sell; and
(iv) after receipt of the Other Shareholder Second Initiating Notice,
any one or more of the other members of the ECO Group may make
an offer to purchase
10
12
the Other Shareholder Shares For Sale, and the Other Shareholder
shall negotiate with such other members of the ECO Group. If the
Other Shareholder and one or more of such other members of the
ECO Group are able to reach agreement on the price and other
terms of sale, the Other Shareholder may sell the Other
Shareholder Shares For Sale to the members of the ECO Group with
whom it reaches such an agreement; and
(v) if no sale of the Other Shareholder Shares For Sale is
consummated between the Other Shareholder and any members of the
ECO Group within 60 calendar days after the date of the Other
Shareholder Second Initiating Notice, then the Other Shareholder
shall be free, for a period of 150 days after the expiration of
such sixty-day period, to sell the Other Shareholder Shares For
Sales to any Qualified Person.
3.4. For the purposes of this Agreement, each Shareholder agrees that AESOP
shall not be deemed to be a member of either the Chase Group or the ECO
Group, except as specifically provided in Section 3.6.
3.5. Notwithstanding any other provision in this Agreement to the contrary,
prior to any Initial Public Offering, and as long as Xxxxxxx Xxxxxx is
an employee of the Company or of any Subsidiary, Xxxxxx shall be a
member of the Chase Group but may not transfer its Shares pursuant to
Section 3.2 hereof. Within 120 days after the first to occur of (i) an
Initial Public Offering or (ii) the date that Xxxxxxx Xxxxxx ceases to
be an employee of any of the Company or any Subsidiary, Xxxxxx may make
a one-time election to remain a member of the Chase Group, to be treated
as an Other Shareholder, or, if and only if ECO consents, to become a
member of the ECO Group. If Xxxxxx chooses to be treated as an Other
Shareholder, then from the moment of that election Xxxxxx shall have the
same rights, privileges and protections that the Other Shareholders
enjoy under this Agreement, but shall no longer have all the rights,
privileges and protection that members of the Chase Group enjoy under
this Agreement.
3.6. Any Shareholder shall have the right at any time to pledge, hypothecate
or encumber up to, but no more than, the Pledgeable Percentage (as
hereinafter defined) of its Shares in the aggregate, and to maintain any
pledge, hypothecation, or encumbrance subsisting on its Shares on the
date hereof, but in each case only in accordance with the provisions of
this Section 3.6.
(i) No pledge, hypothecation, or encumbrance of any Shares shall be
effected or maintained until each and every person receiving an
interest of any kind in such Shares shall have executed and
delivered to the Company and each of the Shareholders an
agreement in the form of the Accession Agreement; and
11
13
(ii) No pledge, hypothecation, or encumbrance of any Shares shall be
effected or maintained except in a bona fide transaction; and
(iii) No pledge, hypothecation, or encumbrance of any Shares shall be effected
or maintained except under a written pledge agreement that provides that
before any right to foreclose, to sell in lieu of foreclosure, or to
exercise any similar or equivalent remedy may be exercised, the pledgee
shall:
(a) first obtain from a third party a commercially reasonable offer
for the sale of the Shares (the "Redemption Offer");
(b) notify the members of both Groups of the Redemption Offer;
(c) offer the pledgor's Group the opportunity to purchase the Shares
at the amount of the Redemption Offer within 30 days of receipt
of such offer;
(d) if the members of the pledgor's Group refuse the pledgee's
offer, then the pledgee shall offer the members of the other
Group the opportunity to purchase the Shares at the amount of
the Redemption Offer within 30 days of such offer; and
(e) only if the members of neither Group accept the pledgee's offer
shall the pledgee foreclose the pledge, sell the Shares in lieu
of foreclosure, or exercise any similar or equivalent remedy.
(iv) For the purposes of Section 3.6(iii) only, in the case of a pledge,
hypothecation, or encumbrance of any Other Stockholder's Shares only,
such Other Stockholder shall be deemed to be a member of the Chase
Group.
(v) The "Pledgeable Percentage" shall mean:
(a) with respect to ECO, 21%;
(b) with respect to PIHLP, 21%;
(c) with respect to Xxxxxx at any time when Xxxxxxx Xxxxxx is an
employee of the Company or any Subsidiary, 21%; and
(d) with respect to all other Shareholders, and with respect to
Xxxxxx at any time when Xxxxxxx Xxxxxx is not an employee of the
Company or any Subsidiary, 100%.
12
14
(vi) Exempted from the requirements of this Section 3.6 are the
following three pledges (the "Existing Pledges"):
(a) the pledge of up to 3,983,000 Shares of Common Stock in
the aggregate, pursuant to the terms of that certain
Contribution Agreement that was entered into on or about
Xxxxx 00, 0000, xxxxx XXXXX, XXX, XXXXX and Xxxxxx;
(b) the pledge of all of the Shares of Xxxxxx, pursuant to
the terms of that certain Pledge Agreement dated
February 1, 1994, between The Xxxxxx Family
Partnership, a Connecticut general partnership,
and PIHLP; and
(c) the pledge of 652,000 Shares of Common Stock of PIHLP,
pursuant to the terms of that certain Pledge Agreement
dated April 15, 1991, between PIHLP and
Xxxxx X. Xxxxx, as from time to time amended and/or
restated.
3.7. Notwithstanding anything to the contrary contained in this Agreement,
but subject to the requirements of Section 7 hereof:
(i) any Shareholder shall have the right to transfer any Shares to
any Affiliate of such Shareholder or a trust set up entirely for
the benefit of an Affiliate, if such Shareholder is a member of
the Chase Group, such Affiliate shall enter into the Chase Group
Voting Agreement. If such transferring Shareholder is a member
of the ECO Group, such Affiliate shall enter into a voting
agreement or voting trust agreement pursuant to which such
Affiliate's voting rights in the Shares acquired from the
transferring Shareholder shall be held by Advent.
(ii) any Shareholder shall have the right at any time to transfer
its Shares to any other Shareholder within the same Group.
(iii) ECO shall have the right to transfer any or all of its Shares at
any time to any one or more of its limited partners, provided
that such limited partner enters into a voting agreement or
voting trust agreement pursuant to which such limited partner's
voting rights in the Shares acquired from such transferring
Shareholder shall be held by Advent.
(iv) no Shareholder shall transfer any Shares at any time if such
action would constitute a violation of any federal or state
securities or blue sky laws or a breach of the conditions to any
exemption from registration of any transfer of any Shares under
any such laws or a breach of any undertaking or agreement
13
15
of such Shareholder entered into pursuant to such laws or in
connection with obtaining an exemption thereunder;
(v) Advent, as the sole general partner of ECO, shall not permit the
transfer of any partnership interests in ECO to any person other
than either a Qualified Person, a person controlled by a
Qualified Person, or a person that is a fund managed by Advent;
and
(vi) During the term of this Agreement, Advent shall at all times be
the sole general partner of ECO and at all times funds managed
by Advent shall own at least 51% of the partnership interests in
ECO;
(vii) any Shareholder may transfer Shares in connection with a
registration of such Shares undertaken pursuant to that certain
Registration Rights Agreement by and among the Shareholders.
4. SALE OF THE COMPANY.
In the event that either:
(a) an offeror makes an irrevocable offer open for acceptance for
not less than thirty days to acquire all of the Shares held by
the Shareholders, and the offer is accepted by Shareholders
holding sixty-five percent (65%) or more of the then issued and
outstanding Voting Power,
(b) an offeror makes an irrevocable offer open for acceptance for
not less than thirty days to acquire all or substantially all of
the assets of the Company, and the offer is accepted (subject to
Shareholder approval) by the Board of Directors of the Company
in accordance with the provisions of the Company's Certificate
of Incorporation,
then each Shareholder:
(i) in the case of (a) above, undertakes to accept the offer within
the thirty day period and to execute all such documents and to
do all such other acts or things which are necessary to transfer
his Shares to the offeror in accordance with the terms of the
offer;
(ii) in the case of (b) above, undertakes to take all steps necessary
or desirable to cause the Company to accept the offer and to
consummate the transactions proposed in the offer; and
14
16
(iii) in either case, agrees that money damages would be an inadequate
remedy for its breach of its obligations under this Section 4,
and therefore consents to the entry of a decree of specific
performance to remedy any such breach.
5. BUY-SELL OPTION.
5.1. The Shareholders agree that the buy-sell provisions of this Section 5
shall be available in accordance with the provision of this Section 5.1
as follows:
(i) In the event that:
(a) a matter set forth in Exhibit D hereof is submitted to
the Board of Directors for approval and is not passed,
(b) within 30 days thereafter a director from the Group that
originally submitted the matter to the Board of
Directors re-submits it to the Board of Directors for
approval, and
(c) after re-submission that matter is once again not
passed,
the Group whose director re-submitted the matter shall have the
right to initiate the buy-sell option contained in this Section
5 during the thirty (30) day period following the second vote of
the Board of Directors.
(ii) If there shall not be a quorum at any two or more successive
Board of Directors meetings for which notice was given to all
directors in accordance with the By-Laws of the Company, the ECO
Group (if at least one director chosen by it attended each such
meeting) and/or the Chase Group (if at least two directors
chosen by it attended each such meeting) shall be entitled to
initiate the buy-sell option contained in this Section 5 for a
period of 30 days following the date of the second and each
subsequent meeting in the series.
(iii) The holder of any series of preferred stock which the Company
shall fail to redeem upon the Series B Redemption Date (as
defined in the Certificate of Incorporation) or upon any date
set by the Company for redemption pursuant to the optional
redemption provisions of Article IV of the Certificate of
Incorporation of the Company shall have the right to initiate
the buy-sell option contained in this Section 5.
(iv) If PCI shall refuse to accept, or shall waive its rights to
receive payment of amounts due and payable to it by PIHLP
pursuant to Article XVII of the Stock Purchase Agreement, or if
PCI shall waive any of ECO's rights and remedies
15
17
under Article XVII of the Stock Purchase Agreement, then the ECO
Group shall have the right to initiate the buy-sell option
contained in this Section 5.
(v) If the Company shall fail to comply with its obligations in
Section 7.1 of the Stock Purchase Agreement and such failure
continues for a period of 30 days after written notice thereof
from ECO, then the ECO Group shall have the right to initiate
the buy-sell option contained in this Section 5.
(vi) If the ECO Group (or a director chosen by such Group) fails to
comply with Section 8.2, the Chase Group may initiate the
buy-sell option contained in this Section 5. If the Chase Group
fails to comply with Section 8.2, the ECO Group may initiate the
buy-sell option contained in this Section 5.
5.2. Upon the availability pursuant to any subsection of Section 5.1 to
either or both of the Groups of the buy-sell provisions of this Section
5, then the Group or Groups having the right to initiate such buy-sell
provisions shall have the right to make an offer (the "Buy-Sell Offer")
pursuant to this Section 5. If both Groups are entitled to make the
Buy-Sell Offer following the occurrence of one of the events specified
in Section 5.1., the first such Group making the Buy-Sell Offer is
referred to hereinafter as the "Offeror," and the other Group is
referred to hereinafter as the "Offeree." The Buy-Sell Offer shall
contain a valuation of all the outstanding capital stock of the Company
(the "Valuation Amount") based on which the Offeror is willing to
purchase the Offeree's Stake in the Company or, in the alternative and
at the election of the Offeree, to sell its Stake in the Company to the
Offeree. If the ECO Group shall be the Offeror, its offer must state
whether it will convert the Series B Preferred into Common Stock. If the
Chase Group shall be the Offeror, the ECO Group may at its option and in
its sole discretion convert its shares of Series B Preferred into Common
Stock prior to responding to such Buy-Sell Offer.
5.3. The Offeror shall initiate the Buy-Sell Offer by giving notice
("Buy-Sell Notice") to the Offeree. The Buy-Sell Notice shall state all
of the following:
(i) The Valuation Amount, together with a calculation of the
purchase price for the Offeree's Stake and for the Offeror's
Stake (with one calculation assuming that all of the then issued
and outstanding Series B Preferred is converted into Common
Stock, and one calculation assuming that none of the Series B
Preferred is so converted); and
(ii) The exact terms, other than the purchase price, on which the
Offeror is willing to purchase the Stake owned by the Offeree,
and on which the Offeror is willing to sell his Stake to the
Offeree. Such purchase terms and sale terms in the Buy-Sell
Notice shall be the exactly same terms.
16
18
5.4. The Buy-Sell Offer contained in the Buy-Sell Notice shall be irrevocable
for a period of ninety (90) calendar days after delivery of the Buy-Sell
Notice. The Offeree shall, on or before the 90th calendar day after
receiving the Buy-Sell Notice, either accept the Buy-Sell Offer and
agree to sell its Stake to the Offeror (in which case the Offeree is the
"seller" and the Offeror is the "purchaser" for the purposes of the
remaining provisions of this Section 5), or elect to purchase the
Offeror's Stake (in which case the Offeree is the "purchaser" and the
Offeror is the "seller" for the remaining provisions of this Section
5), in either case upon the terms and conditions set forth in the
Buy-Sell Notice. The election shall be effective upon the Offeror's
receipt of a notice from the Offeree, pursuant to the terms of Section
13, specifying the Offeree's election. If the Offeree shall not have
made an effective election to purchase the Offeror's Stake on or
before the 90th day following the date of giving of the Buy-Sell
Offer, the Offeree shall be deemed to have elected on the 90th day to
become the seller of its Stake to the Offeror.
5.5. With respect to the Buy-Sell Offer, the price which the purchaser shall
pay the seller for the seller's Stake shall be computed by: (i)
subtracting from the Valuation Amount the Liquidation Preference (as
described in the certificate of incorporation) of all of the outstanding
Shares of Preferred Stock; (ii) multiplying the difference obtained in
subsection (i) by the percentage of the issued and outstanding Common
Stock owned by the seller; (iii) if the seller shall tender (or be
deemed to have tendered) pledged, hypothecated, or encumbered Shares,
subtracting the amount required to redeem or discharge any such pledge,
hypothecation or encumbrance (provided that, in the event that the
seller consists of more than one Shareholder, this distinction shall be
borne by that or those Shareholder(s) who tender, or are deemed to have
tendered, pledged, hypothecated, or encumbered Shares in proportion to
the amount required to clear title with respect to each such
Shareholder's Shares), and (iv) adding to the price an amount equal to
the Liquidation Preference of all Shares of Preferred Stock owned by the
seller. In calculating seller's Stake pursuant to this Section 5.5, the
ECO Group's election pursuant to Section 5.2 with respect to conversion
of Series B Preferred into Common shall be given effect.
5.6. The resulting sale and purchase of Shares shall take place upon the
terms and conditions set forth in the Buy-Sell Notice. If the Offeree
elects to become the buyer, the sale and purchase shall occur on or
before the 120th day following the effective date of the Offeree's
election; if the Offeree elects, or is deemed to have elected, to become
the seller, the sale and purchase shall occur on or before the 90th day
following the effective date (or deemed effective date) of the Offeree's
election. At the closing of the sale and purchase, the Shareholder(s)
selling his (their) Shares shall deliver to the purchasing
Shareholder(s) such duly executed documents and instruments as the
purchasing Shareholder(s) may reasonably request to vest in the
purchasing Shareholder(s) all right, title and interest to the Shares
being transferred free and clear of any liens and encumbrances.
17
19
5.7. The Shareholders agree that, in addition to all of the other
requirements of this Section 5:
(i) Upon making the Buy-Sell Offer, the Offeror shall place into an
escrow account with an escrow agent reasonably acceptable to
Offeree an amount equal to 10% of the price which, if it became
the purchaser pursuant to Section 5.2, it would be required to
pay to the Offeree calculated in accordance with Section 5.5. If
the Offeree elects to become the purchaser pursuant to Section
5.2, the Offeror's cash shall immediately be released from
escrow and returned to the Offeror (together with any interest
accrued thereon), and the Offeree shall immediately place into
an escrow account with an escrow agent reasonably acceptable to
Offeror an amount equal to 10% of the price which it is required
to pay to the Offeror calculated in accordance with Section 5.5.
(ii) Furthermore, upon the making of the Buy-Sell Offer, each of the
Offeror and the Offeree shall immediately deposit the
certificates (other than pledged certificates not in its
possession) representing its respective Shares into escrow, with
an escrow agent reasonably acceptable to the other Party, on
such terms as will (a) permit the purchaser to obtain the
seller's Shares and certificates therefor upon closing of the
purchase and sale called for by Section 5.6. (b) permit the
purchaser to obtain its Shares immediately after the Offeree
makes or is deemed to make an effective election pursuant to
Section 5.4, and (c) permit both parties to obtain their
respective Shares if the purchase and sale is excused or is not
consummated.
(iii) In the event that the purchaser fails for any reason other than,
(A) Force Majeure (as hereinafter defined) or (B) subsection (v)
of this Section 5.7 to purchase the seller's Shares upon the
terms and conditions of the Buy-Sell Notice within the time
period set forth pursuant to Section 5.6, then (C) the escrowed
funds referred to in subsection (i) above shall immediately
become the property of the seller, and (D) the purchaser shall
be deemed to have irrevocably conveyed to the seller the
purchaser's voting rights with respect to all Shares owned by
the purchaser with respect to all matters relating to the
authorization of the sale of all or substantially all of the
capital stock or assets of the Company, including without
limitation the replacement of directors immediately upon receipt
by the Company of an offer meeting the requirements of Section
4(b) (all such matters being referred to herein collectively as
"Company Sale Matters"). In the event that an event of Force
Majeure prevents the purchaser from purchasing the seller's
Shares upon the terms and conditions of the Buy-Sell Notice
within the time period set forth pursuant to Section 5.6, then
any period of delay caused by such Force
18
20
Majeure shall be added to the time period set forth pursuant to
Section 5.6.
(iv) In furtherance and not in limitation of the provisions of
subsection (iii) above, the Parties agree that if the purchaser
shall be deemed to have irrevocably conveyed its voting rights,
then the purchaser shall thereafter vote its shares on all
Company Sale Matters exclusively as directed by the Seller, and
the purchaser shall immediately execute and deliver to seller an
irrevocable proxy, coupled with an interest, entitled as such,
in favor of the seller, authorizing the seller to vote all of
the purchaser's Shares in all Company Sale Matters; the Parties
intend for this proxy to be irrevocable and votable for
a period of time longer than three years pursuant to the
provisions of Section 215(b) of the General Corporation Law of
the State of Delaware, and the proxy delivered pursuant to
this sub-section (iv) shall so state.
(v) Notwithstanding any provision in this Agreement to the contrary,
the purchaser shall be excused from its obligation to purchase
the seller's Shares under this Section 5 in the event that there
is a decrease of ten percent (10%) or more in the fair market
value of the Company between the date that the Buy-Sell Notice
is given and the date by which purchase and sale is due to occur
pursuant to Section 5.6, or in the event that, due to Force
Majeure, the purchase and sale is postponed 30 days or more
beyond the time set forth in Section 5.6., or in the event that
seller fails to comply with its obligations under the last
sentence of Section 5.6.
55.8. (i) For the purposes of this Section 5, members of the Chase Group
shall be deemed to be one entity, which entity shall act in
concert and under the direction of the Chase Group
Representative, including for the purpose of initiating,
responding to, and performing any Buy-Sell Offer. For the
purposes of this Section 5, members of the ECO Group shall be
deemed to be one entity, which entity shall act in concert and
under the direction of the ECO Group Representative, including
for the purpose of initiating, responding to, and performing any
Buy-Sell Offer.
(ii) In the event that the members of either Group do not elect
unanimously to perform any action or decision allowed or
required by this Section 5, each such member shall be bound by
the action of its Group representative, and the other Group is
entitled to rely upon the Group representative's action as
binding upon each member of the other Group;
(iii) Each Group agrees that money damages would be an inadequate
remedy for its breach of its obligations under this Section 5,
and therefore consents to the entry of a decree of specific
performance to remedy any such breach.
19
21
5.9 For the purposes of this Section 5, "Force Majeure" means:
(i) any governmental prohibition against the purchase and sale or
any inability to secure or any failure of a governmental agency
to supply a necessary approval for the purchase and sale;
(ii) any closing of or extraordinary cessation or curtailment of
trading on the London Stock Exchange or the New York Stock
Exchange on a day when such exchange would otherwise ordinarily
be open for trading; and
(iii) any banking moratorium declared by the Federal Reserve Board.
6. AUCTION OF COMPANY
The Shareholders agree that on or about March 29, 2001, they shall cause
the Company to employ the services of an investment bank to evaluate
alternatives, including, without limitation, the sale, refinancing, or
public offering for maximizing the value of the Common Stock of the
Company and to report to the Board of Directors of the Company
thereupon. If the investment bank's report is not presented to the Board
of Directors by March 29, 2002, or if the Board of Directors
does not by a vote of at least four (4) directors adopt a plan for
maximizing the value of the Common Stock in response to such report by
March 29, 2002, then the Shareholders shall cause the Company to employ
the services of an investment bank to secure a purchaser for the
Company. The investment banks to be chosen to undertake the tasks
referred to in this Section 6 shall be selected from the following list:
(i) Xxxxxxx, Xxxxx & Co.; (ii) Xxxxxx Xxxxxxx & Co.; (iii) Xxxxxxx Xxxxx
& Co., Inc.; (iv) CS First Boston Inc.; and (v) Xxxxxxxxx, Lufkin and
Xxxxxxxx, Inc.
7. TRANSFERS/ACCESSION AGREEMENT
7.1 The Shareholders agree that no Shareholder shall transfer any Shares
except in accordance with Section 3, Section 4 or Section 5 of this
Agreement, and that in addition to any requirements elsewhere contained
in this Agreement no Shareholder shall transfer any of its Shares to any
person which is not a party to this Agreement unless the transferee is a
Qualified Person and shall prior to such transfer have entered into an
Accession Agreement, provided, however, that nothing in this sentence
shall be construed to prohibit the maintenance of the Existing Pledges.
On receipt of such Accession Agreement by the Company and upon
completion of the transfer the transferee shall be deemed for all
purposes of this Agreement to be a Shareholder and to have the benefits
and obligations of all covenants and undertakings of a Shareholder
20
22
contained herein; provided however, that such transferee shall not have
the benefits and obligations of the transferor Shareholder who is a
member of a Group unless that transferee is otherwise a member of such
Group. The term "transfer" as used in this Agreement shall include a
sale, gift, mortgage, pledge, exchange, assignment or other disposition,
including a disposition under judicial order, legal process, execution,
attachment or enforcement of an encumbrance.
7.2. The Shareholders agree that they shall cause the Company not to issue
any shares of capital stock, or options or warrants to acquire capital
stock, or securities convertible into capital stock, to a person who has
not executed and delivered an Accession Agreement and thereby agreed to
become a Shareholder for the purposes of this Agreement, provided,
however, that the Company may issue such Shares as may be required to
honor any options for Shares that are issued by the Company in exchange
for PCI common stock options that are outstanding on the date hereof.
7.3. Notwithstanding any provisions of Section 3 to the contrary no transfer
of any Shares pursuant to Section 3 shall take place from the date of
any Buy-Sell Notice through the date on which the sale and purchase of
Shares pursuant to that Buy-Sell Notice is consummated, or the date on
which such sale and purchase is excused, whichever first occurs.
8. DRAG-DOWN OF RIGHTS
8.1. Each of the Shareholders agrees to take all action necessary or
desirable, including without limitation the voting of its Shares, the
execution of written consents, the calling of special meetings, the
removal of directors, the filling of vacancies of the Board of
Directors, the waiving of notice and the attending of meetings, so as to
cause the Company to cause there to be only two directors of PCI (unless
such number of directors would cause PCI to breach the provisions of
that certain Indenture to the State Street Bank and Trust Company dated
as of October 31, 1996), one of whom shall be chosen by the ECO Group
and one of whom shall be chosen by the Chase Group, and two managing
directors ("direkteuren") of PCBV, one of whom shall be chosen by the
ECO Group and the other of whom shall be chosen by the Chase Group, and
to amend the constituent documents of PCI and PCBV, as the case may be,
to require that the signatures of both managing directors shall be
required in order to bind PCI or PCBV. The provisions of this Section 8
shall also apply mutatis mutandis to any companies or entities created
after the date of this Agreement.
8.2. Each of the Shareholders agrees to take all action necessary or
desirable, including without limitation the voting of its Shares, the
execution of written consents, the calling of special meetings, the
removal of directors, the filling of vacancies of the Board of
Directors, the waiving of notice and the attending of meetings, so as to
cause the Company, PCI and/or PCBV (as the context may require) to
exercise all of their rights with respect to each Polish Cable Company,
whether as direct or indirect equity holder or as a holder of debt, to
cause each such Polish Cable Company (i) to amend,
21
23
within 90 days of the date of this Agreement, its Articles of
Association or Statutes (as the case may be), so that such Articles or
Statutes contain provisions substantially in the form set out in Exhibit
C; (ii) to ensure that initially Xxxxxxx Xxxxxx, and at all times
thereafter the person then holding the position of Chief Executive
Officer of the Company, be appointed Chairman of each of the Polish
Cable Companies; (iii) to ensure that each of the Polish Cable Companies
shall, prior to taking any of the actions set forth in Exhibit B, give
notice of the proposed action, specifying reasonable details of the
proposed action, to each of its shareholders; and (iv) to amend, within
90 days of the date of this Agreement, its Articles of Association or
Statutes (as the case may be) so that they include provisions which
substantially provide that no Polish Cable Company shall be able to take
any of the actions listed on Exhibit B without the prior consent of its
shareholders. The Shareholders in the ECO Group and the Chase Group
agree that as soon as practicable they shall review the mechanisms
available to them to exercise their Shareholder rights in the Polish
Cable Companies. With respect to the amendments of the Articles of
Association and the Statutes called for by this Section 8.2, if any such
amendment shall present a conflict with an existing agreement of a
particular Polish Cable Company, that Polish Cable Company will seek a
waiver of the conflict, and if the waiver is not granted, the Polish
Cable Company shall not be required to make the amendment that presents
the conflict.
9. FUTURE COVENANTS
9.1. Each of the Shareholders shall use its reasonable efforts to cause the
Company to, and to cause PCBV to, cause the Material Polish Cable
Companies to:
(i) Unless it is not, under the exercise of prudent business
judgment, in the best interest of a particular Material Polish
Cable Company to do so, to obtain all licenses, permits,
certificates and renewals thereof which are necessary to conduct
the business of the Material Polish Cable Companies in
accordance with all applicable laws, including but not limited
to any such licenses, permits and certificates and renewals
thereof that have lapsed, expired or been refused for issuance
and any such licenses, permits and certificates granted by PAR.
In addition, unless it is not, under the exercise of prudent
business judgment, in the best interest of a particular Material
Polish Cable Company to do so, the Company shall cause the
Material Polish Cable Companies to file all applications for
such licenses, permits and certificates and renewals thereof
reasonably in advance of the date on which such applications are
required by law to be filed.
9.2. The Company shall furnish each of the following documents:
22
24
(i) Within 60 days after the end of each of the first three fiscal
quarters in each fiscal year, (i) the Company's unaudited
consolidated financial statements, with consolidating schedules,
for such fiscal quarter, certified by its principal financial
officer, prepared in accordance with U.S. GAAP (except as
otherwise noted in the accompanying footnotes) and (ii) a report
listing the number of cable television subscribers and
subscribers to its digital satellite direct-to-home ("DTH")
service of all Subsidiaries engaged in the business of providing
DTH services and of the Material Polish Cable Companies as of
the end of such fiscal quarter, shall be furnished to all
Shareholders;
(ii) Within 45 days following the end of each month, management
reports for each Material Polish Cable Company and for each
Subsidiary engaged in the business of providing DTH services
shall be furnished to the ECO Group and the Chase Group; and
(iii) Within 120 days after the end of each fiscal year, (i) the
Company's audited consolidated financial statements, with
consolidating schedules, covering such fiscal year, certified by
a firm of independent auditors as having been prepared in
accordance with U.S. GAAP and (ii) a report listing the number
of cable television subscribers of the Material Polish Cable
Companies and the number of cable television subscribers and
subscribers to its digital satellite DTH service of all
Subsidiaries engaged in the business of providing DTH services
as of the end of such fiscal year, shall be furnished to all
Shareholders.
9.3. The ECO Group Representative or his duly authorized agents shall be
entitled during normal business hours, upon reasonable notice, to
inspect all records, documents and papers belonging to the Company or
any of the Subsidiaries or relating to the subject matter of this
Agreement. The Chase Group Representative or his duly authorized agents
shall be entitled during normal business hours, upon reasonable notice,
to inspect all records, documents and papers belonging to the Company or
any of the Subsidiaries or relating to the subject matter of this
Agreement.
9.4. Upon the occurrence of a change in the Polish regulations governing the
foreign ownership of applicable permits, each of the Shareholders shall
use its reasonable efforts to cause the Company to, and to cause PCI,
PCBV and the Polish Cable Companies to, convert all minority interests
in entities in which it or they own less than 50% into the maximum
percentage ownership allowable by law (subject to the contractual rights
of any other owners of such entities). To the extent that new entities
are formed for the purpose of conducting telephony, telecommunications,
cable television, or programming in Poland, and the Company, PCI, PCBV
and the Polish Cable Companies own, in the aggregate, more than zero and
less than 100% of any such subsidiary, the Shareholders shall use
reasonable efforts to cause the Company, PCI, PCBV or the Polish Cable
Companies, as the case may be, to convert their minority interest into
the maximum percentage ownership allowable by law (subject to the
contractual rights of any other owners of such entities) upon the
23
25
occurrence of a change in the Polish regulations governing the foreign
ownership of PAR permits granted after July 7, 1995. However, the
Shareholders shall not be required to cause the Company, PCI, PCBV
and/or the Polish Cable Companies to convert any minority ownership
interest into a majority ownership interest if, under the exercise of
prudent business judgment, such conversion would lead to the revocation
of any PAR permits held by such entities.
10. COVENANT NOT TO COMPETE
10.1. Each Shareholder covenants to the Company and to each of the other
Shareholders not to, nor to permit or suffer any Covered Person (as
hereinafter defined) to, engage, directly or indirectly, as a
proprietor, stockholder, partner, employee, independent contractor or
otherwise in a Prohibited Competing Business (as hereinafter defined) at
all, and not to engage, directly or indirectly, as a proprietor,
stockholder, partner, employee, independent contractor or otherwise in a
Permissible Competing Business (as hereinafter defined), and Advent
covenants to all Shareholders and the Company not to permit or suffer
any Covered Person to directly manage any Prohibited or Permissible
Competing Business, all except as otherwise provided in Section 10.5.
10.2. (i) For the purposes of this Section 10 only, the term "Prohibited
Competing Business" means
(a) providing cable television services anywhere in Poland;
(b) providing programming in a city in Poland where a
Polish Cable Company provides programming; and
(c) providing local-loop telephony in a city in Poland
where a Polish Cable Company provides telephony.
provided, however, that any business otherwise falling within
the scope of subsections (b), (c), or (d) shall not be a
Prohibited Competing Business if a Shareholder or Covered Person
is already engaging in a Permissible Competing Business at the
time such business is first begun by a Polish Cable Company.
(ii) For the purposes of this Section 10 only, the term "Permissible
Competing Business" means
(a) providing programming in a city in Poland other than
one where a Polish Cable Company, at the time that the
applicable offer referred to in Section 10.5 is first
delivered, provides programming;
24
26
(b) providing local-loop telephony in a city in Poland
other than one where a Polish Cable Company, at the time
that the applicable offer referred to in Section 10.5 is
first delivered, provides telephony; and
(c) with respect to Xxxxx X. Xxxxxxxx and his Affiliates
only the term "Permissible Competing Business" also
means RMF Cable Programming, as hereinafter defined.
10.3. The covenants not to compete in Section 10.1 shall terminate on the
first of the following to occur; (i) seven (7) years from the date
hereof, and (ii) upon the sale of substantially all of the capital stock
or assets of the Company to a third-party purchaser or purchasers.
10.4. Any Shareholder who ceases to own Shares shall be released from its
obligations under the covenants not to compete in Section 10.1 on the
earlier of (i) the date that is two years after that Shareholder ceases
to own Shares (provided that such Shareholder shall not during such
two-year period have acquired any Shares), and (ii) the date that the
covenants not to compete terminate in accordance with Section 10.3.
10.5. If a Covered Person wishes to engage in a Permissible Competing
Business, it may do so provided that the party shall have (i) negotiated
with any necessary third parties terms and conditions upon which such
party shall engage in a Permissible Competing Business, (ii) offered the
opportunity to engage in such Permissible Competing Business to the
Company on materially the same terms and conditions negotiated with the
various third parties and (iii) the Company shall have refused to engage
in such Permissible Competing Business. The Shareholders shall cause the
Company to hold a meeting of its Board of Directors within 30 days of
the offer being made to the Company. No director chosen by a Group whose
Covered Person wishes to engage in a Permissible Competing Business
shall be entitled to vote on such a matter.
10.6. For the purposes of this Section 10, the term "Covered Person" shall
have the meanings as given in this Section 10.6
(i) With respect to ECO, "Covered Person" means funds in which
Advent is the general partner (but, for the avoidance of doubt,
does not include the limited partners of such funds); and
(ii) With respect to any other Shareholder, "Covered Person" means
that Shareholder, that Shareholder's Affiliates, and officers
and directors of such Shareholder.
(iii) With respect to Advent, "Covered Person" means Advent and any
officer or director of Advent.
25
27
10.7. Sections 10.1 and 10.5 shall not apply to conduct by RMF and RMF's
affiliates of the RMF Business and RMF Promotions and Programming, as
hereinafter defined, provided, however, that Sections 10.1 and 10.5 do
apply to RMF Cable Programming. The definitions referred to in Section
10.2(ii) and in this Section 10.7 are as follows:
(i) The term "RMF Business" means conducting the businesses of
researching, building, constructing, developing, owning,
manufacturing, distributing, operating or promoting (i) physical
fitness health centers and other recreational, athletic and
sports facilities of all types; (ii) family entertainment and
fun centers, nightclubs and other entertainment centers,
including without limitation, arcades, video games, bowling and
recreational activities of all types; and (iii) various hard
goods, dry goods and food products of all kinds, including
without limitation, health food, clothing products and fitness,
bowling and other sport and recreational equipment.
(ii) The term "RMF Promotions and Programming" means the production,
directing, distribution, publishing, and broadcasting by RMF in
all types of communications media of advertisements,
commercials, promotions and programming relating to the RMF
Business and the activities associated with the RMF Business.
(iii) The term "RMF Cable Programming" shall mean the transmission,
delivery, provision, or furnishing anywhere in or into Poland,
directly or indirectly, by any medium other than terrestrial
broadcast transmission, of television programming developed or
produced by RMF or any of RMF's Affiliates. For the avoidance of
doubt, the term "television programming" as used in the previous
sentence does not include video cassettes or short
advertisements, but does include the rebroadcast of such video
cassettes and does include infomercials.
10.8. Each party to this covenant not to compete acknowledges that the breach
of the obligations contained in this Section 10 would result in
substantial but indeterminable harm, that the restraints imposed are
reasonable, that there is no adequate remedy at law for a breach of such
obligations, and therefore, that injunctive relief, specific performance
or other equitable remedies are appropriate to enforce the obligations
undertaken in this Section 10. Nothing in this Section 10 shall operate
as a waiver of any party to seek monetary damages from the breaching
party to the extent that the same are quantifiable and recoverable.
11. CONFIDENTIALITY
26
28
11.1. Each Shareholder undertakes to the others that, subject to Section
11.2, he will keep secret and confidential, and shall not disclose to
any person, any information obtained by him concerning the Company,
the Subsidiaries or the Shareholders which is of a confidential nature.
11.2. For the purpose of this Section 11, the following information shall be
deemed, without limitation, to be of a confidential nature:
(i) all financial information of the Company, any Subsidiary or
Shareholder, including, without limitation all information
provided pursuant to Section 9.2 hereof;
(ii) the marketing and sales strategy of the Company, any Subsidiary
or Shareholder;
(iii) the terms of any agreements entered into between the Company,
any Subsidiary or Shareholder and/or a third party which would
normally be regarded as confidential;
(iv) all unpublished technical information relating to the products
of the Company, any Subsidiary or Shareholder; and
(v) all other information relating to the Company, any Subsidiary
or Shareholder which would normally be regarded as confidential
to some or all of them; but no Shareholder shall be required to
treat as confidential any information which legally enters the
public domain, or is legally obtained by that Shareholder
otherwise than from another party.
11.3. Section 11 shall not prevent the disclosure of information:
(i) as otherwise expressly provided by this Agreement;
(ii) as ordered by a court of competent jurisdiction;
(iii) by any Shareholder in providing its own investors, potential
investors, pledgees, or potential pledgees with financial
information and periodic management statements, with attendant
management commentary regarding the performance of its
investments, provided, however, that such investor, potential
investor, pledgee, or potential pledgee has entered into
obligations of confidentiality, enforceable by the Company and
the other Shareholders, identical to those contained herein,
provided, however, that no Shareholder shall provide
information other than quarterly summary financial data and a
management letter to any of its investors who the Shareholder
knows is
27
29
engaging, directly or indirectly, in a Permissible Competing
Business or a Prohibited Competing Business;
(iv) to any adviser to the Company, any of the Subsidiaries, or any
of the Shareholders;
(v) by any Shareholder to a Qualified Person who is a potential
purchaser of all or any of its Shares, which potential
purchaser has entered into obligations of confidentiality, to
be enforced by such Shareholder, identical to those contained
herein;
(vi) as required in connection with an Initial Public Offering; and
(vii) to any person in any circumstances approved by the Board of
Directors of the Company or the Shareholders in accordance
with Certificate of Incorporation and By-Laws of the Company.
12. LEGEND ON STOCK CERTIFICATE.
The certificates representing the Shares shall bear legends on their
face, or on the reverse thereof with a reference thereto on the face,
as follows:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended, or under any
state securities laws, and therefore cannot be sold, transferred,
pledged, hypothecated or assigned unless they are registered under the
Securities Act of 1933, as amended,and under all applicable state
securities laws, or unless an exemption therefrom is available.
The securities represented by this certificate may not be sold,
transferred, pledged, hypothecated, encumbered or assigned unless such
sale transfer, pledge, hypothecation, encumbrance or assignment complies
with the terms and conditions set forth in that certain Shareholders'
Agreement dated June __, 1997, (the "Shareholders' Agreement") a copy
of each which is on file with the Secretary of the Company and which
will be furnished by the Company to the holder hereof upon written
request and without charge.
The securities represented by this certificate are issued
pursuant to the provisions of the Shareholders' Agreement, which
provides that certain actions of the Board of Directors of the Company
shall require a supermajority vote of the members of the Board of
Directors of the
28
30
Company, a copy of which Shareholders' Agreement is on file with the
Secretary of the Company and which will be furnished by the Company
to the holder hereof upon written request and without charge."
13. NOTICES
13.1. All notices required to be given under the terms of this Agreement or
which any of the Parties may desire to give hereunder (including without
limitation notices of directors meetings to such persons whose names
appear in this Section 13.1) shall be in writing and delivered
personally or sent by express delivery, or (except as to notice pursuant
to subsection (i) below) by facsimile, or by registered or certified
mail, with proof of receipt, postage and expenses prepaid, return
receipt requested, addressed as follows:
(i) As to the ECO Group, addressed to: ECO Holdings III Limited
Partnership, c/o Xx. Xxxxx Xxxxxxxxx, Advent International
Corp., 000 Xxxxxxx Xxxxxx, Xxxxxx, XX 00000, fax: (617)
951-0571; with a copy thereof addressed to Xx. Xxxxx Xxxxxxxx,
ECO Holdings III Limited Partnership, c/o Advent International
Plc, 000 Xxxxxxxxxx Xxxxxx Xxxx, Xxxxxx XX0X 0Xx, fax: (44-171)
333-0801; or to such other address or addresses and to the
attention of such other person or persons as the Chase Group may
from time to time designate in writing to the Chase Group, the
Company and AESOP.
(ii) As to the Cash Group, addressed to: @ Entertainment, Inc., Xxx
Xxxxxxxxxx Xxxxx, Xxxxxxxx Xxxxxxxxxxx 00000; facsimile: (860)
293-4297, Attention: Xxxxxx Xxxxx; with a copy thereof to Xxxxxx
as provided below; or to such other address or addresses and to
the attention of such other person or persons as the Chase Group
may from time to time designate in writing to the ECO Group, the
Company and AESOP.
(iii) As to the Company, addressed to: @ Entertainment, Inc., Xxx
Xxxxxxxxxx Xxxxx, Xxxxxxxx Xxxxxxxxxxx 00000; facsimile: (860)
293-4297, Attention: Xxxxxx Xxxxx; with a copy thereof addressed
to Xxxxx & XxXxxxxx, 000 Xxxxxxxxxxx Xxxxxx, X.X., Xxxxxxxxxx,
X.X. 00000-0000; facsimile: (000) 000-0000, Attention: Xxxx X.
Xxxx, Esq., or to such other address or addresses and to the
attention of such other person or persons as the Company may
from time to time designate in writing to the ECO Group, the
Chase Group and AESOP.
(iv) As to AESOP, addressed to: The AESOP Fund, L.P. c/o Capital
Investors, Inc., 0000 00xx Xxxxxx, X.X., Xxxxxxxxxx, X.X. 00000;
facsimile: (000) 000-0000, Attention: Xxxxx Xxxx; with a copy
thereof addressed to The
29
31
AESOP Fund, L.P., 0000 Xxxxxxxxx Xxxxxx Xxxxxxxx, Xxxxxxx,
Xxxxxxxxxx 00000; facsimile: (000) 000-0000, Attention:
Duff Xxxxxxx.
(v) As to Xxxxxx, addressed to: Xxxxxx LLC, 00 Xxxxxx Xxxxxxx,
Xxxxxxxxxx, Xxxxxxxxxxxxx 00000; facsimile: (000) 000-0000,
Attention: Xxxxxxx X. Xxxxxx, Managing Member, with a copy
thereof addressed to Xxxxxxx Xxxxxxxx & Xxxxxxxx, Connecticut
Financial Center, Xxx Xxxxx, Xxxxxxxxxxx 00000-0000; facsimile
(000) 000-0000, Attention: Xxxxx X. Xxxxxxxx, Esq.
14. SEVERABILITY
The invalidity or unenforceability of any term of or any right arising
pursuant to this Agreement shall not in any way affect the remaining
terms or rights.
15. TERMINATION
Subject as provided herein, this Agreement shall enter into effect as
of the date hereof and shall remain in full force and effect until the
earliest of the following events:
(i) the date on which Shareholders holding in aggregate not less
than 65% of all the total Voting Power held by all Shareholders
in the aggregate agree to terminate this Agreement;
(ii) an Initial Public Offering; or
(iii) the date on which no Shareholder is the holder of any Shares.
Termination shall be without prejudice to any rights accrued prior to
the date of the termination, and shall not affect the obligations of
the Shareholders under Sections 10 and 11.
16. NO PARTNERSHIP
Nothing in this Agreement shall constitute or be deemed to constitute
a partnership between all or any of the Shareholders, and except as
otherwise expressly provided in this Agreement none of them shall have
authority to bind the other in any way.
17. WAIVER
No failure to exercise and no delay in exercising on the part of any
of the Shareholders of any right, power or privilege under this
Agreement shall operate as
30
32
a waiver thereof, nor shall any single or partial exercise of any right,
power or privilege preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies
provided in this Agreement are cumulative and not exclusive.
18. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the
laws of the State of Delaware without regard to principles of conflicts
of laws.
19. ENTIRE AGREEMENT; AMENDMENT
19.1. This Agreement and the other instruments and documents referred to
herein or delivered pursuant hereto, contains the entire agreement among
the parties with respect to the subject matter hereof and thereof and
supersedes all prior and oral or written agreements, commitments or
understandings with respect to such matter, provided however that
nothing in this Agreement shall be deemed to supersede or amend, or to
aid in the interpretation of, the Stock Purchase Agreement.
19.2. No amendment, modification or waiver of any provision of this Agreement
shall be valid or binding unless set forth in writing and duly executed
by Shareholder holding at least sixty-five percent (65%) of the then
issued and outstanding Voting Power, provided, however, that (i) any
amendment, modification or waiver of any provision of this Agreement
that increases the obligations hereunder of any Shareholder in any
material respect shall also be executed by such adversely affected
Shareholder, (ii) any amendment or modification of Section 3.3 or 3.6
shall also be executed by the Other Shareholders, and (iii) any
amendment, modification or waiver of Section 3.5 shall also be executed
by Xxxxxx.
19.3. Each party hereto who is or was a party to that certain Shareholders'
Agreement dated as of June 27, 1991 represents and warrants that, as to
such party, all the terms, conditions and provisions of such agreement
are hereby superseded and that no rights or obligations arising under
such agreements shall survive the execution of this Agreement.
20. CHOICE OF FORUM; VENUE; SERVICE OF PROCESS; ATTORNEY'S FEES
Any claim, suit, action, or proceeding among any or all of the parties
hereto relating to this Agreement, to any document, instrument, or
agreement delivered pursuant hereto, referred to herein, or contemplated
hereby, or in any other manner arising out of or relating to the
transactions contemplated by or referenced in this Agreement, shall be
commenced and maintained exclusively in the United States District Court
for
31
33
the District of Delaware, or, if such Court lacks jurisdiction over the
subject matter, in a state court of competent subject-matter
jurisdiction sitting in the State of Delaware. The parties hereby submit
themselves unconditionally and irrevocably to the personal jurisdiction
of such courts. The parties further agree that, unless otherwise
required by law, venue shall be exclusively in [ ] County in
the State of New York. The parties irrevocably waive any objection to
such personal jurisdiction or venue including, but not limited to, the
objection that any suit, action, or proceeding brought in the State of
Delaware has been brought in an inconvenient forum. The parties
irrevocably agree that process issuing from such courts may be served on
them, either personally or by certified mail, return receipt requested,
at the addresses given in Section 13 hereof; and further irrevocably
waive any objection to service of process made in such manner and at
such addresses, including without limitation any objection that service
in such manner and at such addresses is not authorized by the local or
procedural laws of the State of Delaware. The parties agree that the
prevailing party's legal fees, costs and all expenses arising in
connection with any litigation under this Agreement, any document,
instrument, or agreement delivered pursuant hereto, referred to herein,
or contemplated hereby, or in any other manner arising out of or
relating to the transactions contemplated by or referenced in this
Agreement, shall be paid by the non-prevailing party.
21. EFFECTIVE AS TO LESS THAN ALL PARTIES
This Agreement shall be effective as to all parties other than AESOP as
soon as all such other parties have signed it, and with respect to
AESOP's rights and obligations it shall be effective as soon as all
parties including AESOP have signed it.
[Signatures on following page]
32
34
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the day and year first above written.
@ ENTERTAINMENT, INC.,
a Delaware corporation
By: /s/ Xxxxxx X. Xxxxxx, III
---------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chief Executive Officer
POLISH INVESTMENTS HOLDING L.P.,
a Delaware limited partnership
By: CHASE POLISH ENTERPRISES, INC.,
a Delaware corporation
MANAGING GENERAL PARTNER
By: /s/ Xxxxxx X. Xxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxx
Title: Executive Vice President
ECO HOLDINGS III LIMITED PARTNERSHIP
By: Advent ECO III L.L.C., general partner
By: Global Private Equity II Limited
Partnership, member
By: Advent International Limited Partnership,
general partner
By: Advent International Corporation,
general partner
By: /s/ Xxxxx X. Xxxxxxxx
------------------------------------
Xxxxx X. Xxxxxxxx
Vice President
33
35
THE AESOP FUND, L.P.,
a Delaware limited partnership
By: Capital Investors, G.P.
__________________________________
a General Partner
_______________________
MANAGING GENERAL PARTNER
By: /s/ Duff Xxxxxxx
__________________________________
Name: Duff Xxxxxxx
Title: Chairman
/s/ Xxxxx X. Xxxxxxxx
_________________________________________
Xxxxx X. Xxxxxxxx
XXXXXX LLC, a Connecticut limited liability company
By: /s/ Xxxxxxx Xxxxxx
__________________________________
Name: Xxxxxxx Xxxxxx
Title: Managing Member
THE XXXXXX XXXX XXXXX MARITAL TRUST, a
Connecticut trust
By: /s/ Xxxxxx X. Xxxxx
__________________________________
Name: Xxxxxx X. Xxxxx
Title: Trustee, and not individually or in any
other capacity
By: /s/ Xxxxxxx Xxxxx
__________________________________
Name: Xxxxxxx Xxxxx
Title: Trustee, and not individually or in any
other capacity
34
36
EXHIBIT A
---------
ACCESSION AGREEMENT
-------------------
Date: _________________
This Accession Agreement made between [NAME OF ENTITY] (the "Acceding
Party"), a [FORM OF ENTITY] organized under the laws of [JURISDICTION], @
Entertainment, Inc. ("the Company"), a Delaware corporation, and the undersigned
Shareholders (as that term is defined in that certain Shareholders' Agreement
dated as of June 22, 1997, by and among the Company and the Shareholders (the
"Shareholders' Agreement"), a copy of which is attached hereto and initialed by
the Acceding Party),
WITNESSETH:
WHEREAS, the Acceding Party intends to become a shareholder of the
Company and intends to take on the benefits and obligations of a Shareholder as
and to the extent explicitly provided for in the Shareholder Agreement, a copy
of which is attached hereto and has been initialled by the Acceding Party;
NOW, THEREFORE, the Acceding Party, intending to be legally bound,
hereby agrees with the Company and each of the Shareholders to comply with and
to be bound by all of the provisions of the Shareholders' Agreement in all
respects as if the Acceding Party were a party to such Shareholders' Agreement
and were named therein as a Shareholder. Notice to the Acceding Party shall be
given to the following address and facsimile number: _________________________
______________________________________________________________________________.
IN WITNESS WHEREOF, the parties have caused this Accession Agreement to
be executed as of the day and year first above WRITTEN.
@ ENTERTAINMENT, INC.,
a Delaware corporation
BY: _________________________________
Name: ________________________
Title: ________________________
[Signature blocks for all Shareholders]
37
EXHIBIT B
---------
A. Any action to effect a fundamental change in the business of the
Subsidiary. For the purposes of this Section, the term "business" shall mean
cable television, programming, telecommunications and telephony in the
geographic territories which as of March 1, 1996 were within the boundaries of
Poland;
B. [Intentionally Omitted.]
C. The expenditure during any fiscal year of the Subsidiary, whether by
purchase, lease or otherwise, for securities, other capital assets or in
connection with entering into any joint venture, partnership or consortium
arrangement, of an amount in excess of $500,000 in the aggregate for all such
expenditures;
D. A merger or other business combination or the sale, lease, transfer or
other disposition of all or any material portion of the assets of the
Subsidiary, whether by a single transaction or a series of related
transactions. For purposes of this subsection, any portion of the assets of the
Subsidiary accounting for 15% or more of the asset value of the Subsidiary
shall be deemed to be material;
E. The creation of an encumbrance on any asset of the Subsidiary or on any
of the capital stock of any Subsidiary which would exceed U.S. $100,000. For
the purpose of this subsection, the term "encumbrance" shall mean any interest
or equity of any person (including any right to acquire, option or right of
pre-emption), voting arrangement, mortgage, charge, pledge, xxxx of sale, lien,
deposit, hypothecation, assignment or any other encumbrance, priority or
security interest or arrangement or interest under any contract or trust or any
other third party interest of whatever nature over or in the relevant property;
F. [Intentionally omitted.]
G. The issuance by the Subsidiary of third party debt in the aggregate
exceeding U.S. $100,000;
H. The issuance by the Subsidiary of any capital stock;
I. The declaration of dividends or other distributions on outstanding
capital stock of the Subsidiary;
J. [Intentionally omitted.]
K. The dissolution or liquidation of the Subsidiary;
36
38
L. Amending the Statutes or Articles of Association of the Subsidiary;
M. The giving of any guarantee or indemnity in an amount in excess of U.S.
$100,000 in the aggregate;
N. [Intentionally omitted.]
O. [Intentionally omitted.]
P. the changing of the auditors, the fiscal year end date or the
registered office of the Subsidiary;
Q. commencing, prosecuting, settling or compromising any claims, tax
matters, debts and/or legal actions involving more than U.S. $250,000 in the
aggregate per fiscal year;
R. [Intentionally omitted.]
S. the taking of any steps to have the Subsidiary wound up, or voluntarily
taking advantage of any provisions of any applicable bankruptcy or insolvency
laws.
37
39
EXHIBIT C
---------
A. In Polish Cable Companies in which either the Company or a
Company-controlled entity has a majority of the capital stock, the
Company, PCI, or PCBV, the case may be, shall cause the statute to be
amended to provide that:
MANAGEMENT BOARD
----------------
1. Each Member of the Management Board shall serve for a two (2)
year term.
2. The authority to make statements and to sign on behalf of the
Company, is exercisable by the Chairman of the Management Board
acting individually or one member of the Management Board acting
together with the Chairman.
B. In Polish Cable Companies in which neither the Company nor any
Company-controlled entity has a majority of the capital stock, the
Company, PCI, or PCBV shall use its best efforts to cause the companies
to adopt the following clause with respect to the Management Board.
MANAGEMENT BOARD
----------------
1. The Management Board consists of three members appointed by the
Shareholders' Meeting. Each shareholder representing at least 33% of the
share capital shall have the right to designate one candidate for the
Management Board, whom the Shareholders' Meeting shall elect. If the
number of candidates is less than three then the remaining members of
the Management Board will be appointed by the Shareholders' Meeting.
2. Each member of the Management Board shall serve for a two (2)
year term.
3. The authority to make statements and to sign on behalf of the
Company requires unanimous action of all members of the
Management Board.
38
40
EXHIBIT D
---------
ACTIONS REQUIRING SUPERMAJORITY VOTE
------------------------------------
The following actions shall require (i) the affirmative vote of at
least four directors, followed by the affirmative vote of the percentage of
issued and outstanding capital stock entitled to vote thereon at a meeting of
the shareholders as required under the Delaware General Corporation Law
("DGCL"), if such action shall be required to be submitted to the shareholders
under the DGCL, or (ii) if any such action is not approved by at least four
directors, then any such action shall require the affirmative vote of at least
sixty-one one-hundredths of the total number of shares of capital stock issued
and outstanding and entitled to vote thereon, provided however that if board
approval of such action is required under the DGCL, the action shall also
require the approval of the Board of Directors at a special meeting of the
Board of Directors for which (and for no purposes other than the approval of
actions taken pursuant to this subsection (ii)) two-fifths of the total number
of directors shall constitute a quorum.
A. any action to effect a fundamental change in the business of the
Corporation or any wholly owned or partially owned, direct or indirect
subsidiary (whether in the form of a corporation, partnership or
otherwise) of the Corporation that the Corporation controls through
voting rights, contractual arrangements or otherwise (hereinafter a
"Subsidiary"). For the purposes of this Section, the term "business"
shall mean cable television, programming, telecommunications and
telephony in the geographic territories which as of March 1, 1996 were
within the boundaries of Poland, the Czech Republic, Russia, Ukraine,
Slovakia, Hungary, Romania, Bulgaria, Albania, Latvia, Lithuania,
Estonia, Slovenia, Yugoslavia, Bosnia-Hercegovina, Croatia, and
Macedonia.
B. The adoption of, and approval of any modification of, the annual
budget of the Corporation (the "Budget") for each fiscal year, which
Budget shall at a minimum include (i) an income statement that will
show in reasonable detail the revenues and expenses projected for the
fiscal year, (ii) a cash flow statement that will show in reasonable
detail the receipts and disbursements projected for the fiscal year as
well as any anticipated cash surplus or deficiency, and (iii) any
contemplated borrowings for the fiscal year.
C. the expenditure during any fiscal year of the Corporation,
whether by purchase, lease or otherwise, for securities, other capital
assets or in connection with entering into any joint venture,
partnership or consortium arrangement, of an amount in excess of
$5,000,000, provided, however, that such restrictions shall not apply to
expenditures included in the Budget for such fiscal year approved by the
Board of Directors in accordance with Subsection B or for capital
expenditures which, in the aggregate, do not exceed by five percent (5%)
the amount contained in the Budget for capital expenditures;
39
41
D. a merger or other business combination or the sale, lease,
transfer or other disposition of all or any material portion of the
assets of the Corporation, whether by a single transaction or a series
of related transactions. For purposes of this subsection, any portion of
the assets of the Corporation accounting for 10% or more of the gross
revenue or net asset value of the Corporation shall be deemed to be
material;
E. the creation of an encumbrance on any material portion of the
assets of the Corporation or on any of the capital stock of any
Subsidiary, other than (i) security interests arising in connection with
actions not requiring approval under Subsections G or M, below, (ii)
encumbrances not requiring the consent of the Corporation, and (iii) any
encumbrance in existence, or required under agreements in existence, as
of March 21, 1996. For purposes of this subsection, any portion of the
assets of the Corporation accounting for 10% or more of the gross
revenues or net asset value of the Corporation shall be deemed material.
For the purpose of this subsection, the term "encumbrance" shall mean
any interest or equity of any person (including any right to acquire,
option or right of pre-emption), voting arrangement, mortgage, charge,
pledge, xxxx of sale, lien, deposit, hypothecation, assignment or any
other encumbrance, priority or security interest or arrangement or
interest under any contract or trust or any other third party interest
of whatever nature over or in the relevant property;
F. transactions with (i) a shareholder of the Corporation or of any
Subsidiary, (ii) a member of the immediate family of any such
shareholder, or (iii) any entity controlled by, controlling or under
common control with any such shareholder (the persons and entities in
(i)-(iii) being referred to herein as "Related Parties") and any action
permitting any Subsidiary to enter into a transaction with any one or
more Related Parties;
G. the issuance by the Corporation of, third party debt if as a
result thereof, the aggregate principal balance of all third party debt
owed by the Corporation, not including trade credit extended to the
Corporation in the normal course of business, would exceed U.S.
$25,000,000;
H. the issuance by the Corporation of any capital stock other than
(i) in connection with the issuance of capital stock which underlies
convertible debt, which convertible debt was previously approved
pursuant to subsection G or did not require approval thereunder, (ii)
issuance of Common Stock pursuant to conversion of the Series B
Preferred Stock, (iii) in an initial public offering at an equity
valuation, including any shares of preferred stock then outstanding, in
excess of $225,000,000;
I. the declaration of the dividends or other distributions on
outstanding capital stock of the Corporation;
40
42
J. the repurchase or redemption of any capital stock of the
Corporation or the taking of any action that would cause an adjustment
in the Conversion Ratio under Sections 4(D)(4), 4(D)(5) or 4(D)(6) of
Article IV, except for any mandatory redemptions referenced in Article
IV;
K. the dissolution or liquidation of the Corporation;
L. amending the Certificate of Incorporation or Bylaws other than
in connection with an issuance of capital stock permitted under
subsection H;
M. the giving of any guarantee or indemnity, other than (i) in
connection with indebtedness permitted under subsection G of this
Article VIII and (ii) in the normal course of business in relation to
the purchase or supply of goods or services;
N. the election or removal of the Chief Executive Officer or the
Chairman of the Board;
O. the entering into, varying the terms of or termination of any
contract of employment of any director of the Corporation or of any
executive whose aggregate salary exceeds $100,000 per annum;
P. the changing of the auditors, the fiscal year end date or the
registered office of the Corporation;
Q. settling or otherwise resolving any claim by or against the
Corporation with respect to income taxes or any other type of tax, for
which the amount in dispute is greater than $250,000;
R. the commencement, prosecution, or compromise by the Corporation
of any legal or arbitration proceedings, other than (i) routine debt
collection (ii) any claim the amount in dispute under which is less
than $250,000 (iii) actions by the Corporation against its
shareholders, (iv) counterclaims and cross-claims in actions brought
against the Corporation, and (v) any settlement involving expenditure
by the Corporation of less than $250,000; and
S. the taking of any steps to have the Corporation wound up, or
voluntarily taking advantage of any provisions of any applicable
bankruptcy laws.
41
