Initial Public Offering (IPO): Registration Statement (General Form) — Form S-1
Filing Table of Contents
Document/Exhibit Description Pages Size
1: S-1 @Entertainment, Inc. 185 1.02M
2: EX-2.1 Form of Contribution Agreement 20 57K
3: EX-2.2 Form of Purchase Agreement 10 33K
4: EX-3.1 Amended & Restated Certificate of Incorporation 18 73K
5: EX-3.2 Bylaws of @Entertainment, Inc. 40 174K
6: EX-3.3 Form of Shareholders Agreement 80 230K
7: EX-3.4 Termination Agreement 3 14K
8: EX-3.5 Form of Registration Rights Agreement 23 74K
9: EX-5 Opinion of Baker & McKenzie 2 13K
10: EX-8 Form of Opinion of Baker & McKenzie 1 10K
11: EX-9.1 Form of Voting Agreement 7 26K
12: EX-9.2 Side Letter 5 16K
15: EX-10.11 Employment Agreement 6 37K
16: EX-10.12 Stock Option Agreement 11 54K
17: EX-10.13 Form of Employment Agreement 5 37K
18: EX-10.14 Form of Employment Agreement 6 33K
19: EX-10.15 Stock Option Agreement 11 53K
20: EX-10.16 Form of Stock Option Plan 29 74K
21: EX-10.19 Agreement for Digital Transmission 96 233K
13: EX-10.2 Form of Management Agreement 3 12K
22: EX-10.20 Agreement for Digital Transmission 95 231K
23: EX-10.21 Agreement for Digital Transmission 95 235K
14: EX-10.3 Form of Service Agreement 12 38K
24: EX-11.1 Statement Re: Calculation of Per Share Earnings 1 10K
25: EX-15 Letter From Kpmg Peat Marwick LLP 1 10K
26: EX-21 List of Subsidiaries 1 11K
27: EX-23.1 Consent of Kpmg Peat Marwick LLP 1 11K
28: EX-23.2 Consent of Kpmg Peat Marwick LLP 1 11K
29: EX-27 ƒ Financial Data Schedule 1 11K
Exhibit 3.3
_________________________________________________________
Shareholders' Agreement
among
ECO Holdings III Limited Partnership
and
Polish Investments Holding Limited Partnership,
Roger M. Freedman, Steele LLC,
The Cheryl Anne Chase Marital Trust,
The AESOP Fund, L.P.
and
@ Entertainment, Inc.
_________________________________________________________
SHAREHOLDERS' AGREEMENT
THIS SHAREHOLDERS' AGREEMENT (the "Agreement") is made and entered into on
this ____ 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"), Roger M. Freedman ("RMF"), Polish
Investments Holding L.P., a Delaware limited partnership ("PIHLP"), The Cheryl
Anne Chase Marital Trust, a Connecticut Trust ("CACMT"), Steele LLC, a
Connecticut limited liability company ("Steele"), 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 ($.01) per share (the "Common Stock"), issued and outstanding;
WHEREAS, PIHLP owns 10,303 shares of Common Stock, RMF owns 1,221,000
shares of Common Stock, Steele owns 1,429,000 shares of Common Stock, ECO owns
4,662,000 shares of Common Stock, CACMT owns 733,000 shares of Common Stock and
AESOP owns 600,000 shares of Common Stock, and together they own one hundred
percent (100%) of the issued and outstanding shares of Common Stock;
WHEREAS, ECO owns 2,500 shares of Series B Preferred Stock, par value one
cent ($.01) per share, of the Company ("Series B Preferred"), which are all of
the outstanding shares of Series B Preferred;
WHEREAS, the parties to this Agreement have agreed to enter into this
Agreement to set out certain terms relating to: (i) the conduct of activities
of the Company and its Subsidiaries (as defined below) and (ii) the relations
between the Shareholders (as defined below).
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.
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 101 Federal Street, Boston,
Massachusetts 12110, USA 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 Steele 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 David Chase. 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
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 Scott Lamphere. 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
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) Steele, if Steele 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, the Series A Preferred,
the Series B Preferred and the Series C Preferred.
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
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, Steele, 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
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
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 David T. Chase.
2.2. (i) The Chief Executive Officer of the Company shall initially be
Robert E. Fowler, 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 Steele,
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
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 Series A Preferred or
Series C Preferred, the Series A Preferred and the
Series C 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) Steele, if at the time of the proposed transfer Richard Steele
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
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
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
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 Richard Steele is
an employee of the Company or of any Subsidiary, Steele shall be a
member of the Chase Group but may not transfer its Shares pursuant to
Section 3.2 hereof. Within 30 days after the first to occur of (i) an
Initial Public Offering or (ii) the date that Richard Steele ceases to
be an employee of any of the Company or any Subsidiary, Steele may make
a one-time election to remain a member of the Chase Group, to be treated
as an Other Shareholder, or, if an only if ECO consents, to become a
member of the ECO Group. If Steele chooses to be treated as an Other
Shareholder, then from the moment of that election Steele 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
(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 foreclosure, 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 Steele at any time when Richard Steele is an
employee of the Company or any Subsidiary, 21%; and
(d) with respect to all other Shareholders, and with respect to
Steele at any time when Richard Steele is not an employee of the
Company or any Subsidiary, 100%.
12
(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
March 29, 1996, among PIHLP, RMF, AESOP and Steele;
(b) the pledge of all of the Shares of Steele, pursuant to
the terms of that certain Pledge Agreement dated
February 1, 1994, between The Steele 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 David T. Chase,
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
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
(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 Mandatory 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
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
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
defined 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
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
Majeure shall be added to the time period set forth pursuant to
Section 5.6.
(iv) In furtherance and not in imitation 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, 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 pursuant to the provisions of Section 609(f)(5)
of the Business Corporation Law of the State of New York and, to
that end, purchaser shall cause its Shares to be legended as
required by Section 609(g) of the said law.
(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.
5.8. (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 even that the members of either Group do not elect
unanimously to perform any action or decision allowed or
required by this Section 5, each 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 therefor consents to the entry of a decree of specific
performance to remedy any such breach.
19
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 five (5) years from the date of this
Agreement, 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 the date that is six (6) years
from the date of this Agreement, 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 the date that is
six (6) years from the date of this Agreement, 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) Goldman, Sachs & Co.; (ii) Morgan Stanley & Co.;
(iii) Merrill Lynch & Co., Inc.; (iv) CS First Boston Inc.; and (v)
Donaldson, Lufkin and Jenrette, 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
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, 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
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 Richard Steele, 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
(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 corporations, partnerships or other entities
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 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 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 effort 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
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 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
(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 Roger M. Freedman 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 meaning 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
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
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
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
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/c Ms. Janet Hennessey, Advent International
Corp., 101 Federal Street, Boston, MA 02110, fax: (617)
951-0571; with a copy thereof addressed to Mr. Scott Lamphere,
ECO Holdings III Limited Partnership, c/o Advent International
Plc, 123 Buckingham Palace Road, London SW1W 9Sl, 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., One
Commercial Plaza, Hartford Connecticut 06103; facsimile: (860)
293-4297, Attention: Cheryl Chase; with a copy thereof to Steele
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., One
Commercial Plaza, Hartford Connecticut 06103; facsimile: (860)
293-4297, Attention: Cheryl Chase; with a copy thereof addressed
to Baker & McKenzie, 815 Connecticut Avenue, N.W., Washington,
D.C. 20006-4078; facsimile: (202) 452-7074, Attention: Marc R.
Paul, 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. 1215 19th Street, N.W., Washington, D.C. 20036;
facsimile: (202) 467-4426, Attention: Harry Huge; with a copy
thereof addressed to The
29
AESOP Fund, L.P., 1119 Financial Center Building, Seattle,
Washington 98161; facsimile: (206) 292-8075, Attention:
Duff Kennedy.
(v) As to Steele, addressed to: Steele LLC, 19 Warren Terrace,
Longmeadow, Massachusetts 01106; facsimile: (413) 567-5160,
Attention: Richard B. Steele, Managing Member, with a copy
thereof addressed to Bergman Horowitz & Reynolds, Connecticut
Financial Center, New Haven, Connecticut 06502-0426; facsimile
(860) 785-8127, Attention: James B.
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
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 Steele.
19.3. Each party hereto who is or was a party to that certain Shareholders'
Agreement dated as of June 27, 1991 or that certain Shareholders'
Agreement dated as of March 29, 1997, represents and warrants that, as
to such party, all the terms, conditions and provisions of such
agreements 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
the Southern District of New York, or, if such Court lacks jurisdiction
over the subject matter, in a state court of competent subject-matter
jurisdiction sitting in the State of New York. 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 New York 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
New York 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 New York. 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
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: _________________________________
Name: _________________________________
Title: _________________________________
POLISH INVESTMENTS HOLDING, L.P.,
a Delaware limited partnership
By: CHASE POLISH ENTERPRISES, INC.,
a Delaware corporation
MANAGING GENERAL PARTNER
By: _________________________________
Name:
Title:
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: _____________________________________
Janet L. Hennessy
Vice President
33
THE AESOP FUND, L.P.,
a Delaware limited partnership
By: __________________________________
a _______________________
MANAGING GENERAL PARTNER
By: __________________________________
Name:
Title:
_________________________________________
Roger M. Freedman
STEELE LLC, a Connecticut limited liability company
By: __________________________________
Name:
Title:
THE CHERYL ANNE CHASE MARITAL TRUST, a
Connecticut trust
By: __________________________________
Name:
Title:
By: __________________________________
Name:
Title:
34
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 New York corporation, and the
undersigned Shareholders (as that term is defined in that certain Shareholders'
Agreement dated March __, 1996, 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.
WORLD CABLE COMMUNICATIONS, INC.
a New York corporation
BY: _________________________________
Name: ________________________
Title: ________________________
[Signature blocks for all Shareholders]
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, bill 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
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
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
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 (iii) 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, Roumania, 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
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, bill 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
owned 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
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
EXHIBIT C
REGISTRATION RIGHTS AGREEMENT
20
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (the "Agreement"), dated this ___ day
of June 1997 (the "Effective Date"), among @ ENTERTAINMENT, INC., a Delaware
corporation (the "Company"), POLISH INVESTMENTS HOLDING L.P., a Delaware
limited partnership ("PIHLP"), ECO HOLDINGS III LIMITED PARTNERSHIP, a Delaware
limited partnership ("ECO"), ROGER M. FREEDMAN, an individual resident of the
State of Connecticut ("RMF"), STEELE LLC., a Connecticut limited liability
company ("Steele"), THE AESOP FUND, L.P., a Delaware limited partnership
("AESOP"), and THE CHERYL ANNE CHASE MARITAL TRUST, a Connecticut Trust
("CACMT"). PIHLP, ECO, RMF, Steele, AESOP and CACMT shall hereinafter be
referred to as the "Shareholders".
W I T N E S S E T H:
WHEREAS, the Company and the Shareholders are on this date entering into a
Contribution Agreement to which this Agreement is an Exhibit, whereby the
Shareholders will exchange all of their shares of capital stock of Poland
Communications, Inc. ("PCI") for capital stock of the Company in a tax-free
reorganization pursuant to Section 351 of the Internal Revenue Code of 1986, as
amended (the "Code");
WHEREAS, the Shareholders constitute all of the shareholders of the
Company and on this date are entering into that certain Shareholders Agreement
(the "Shareholders Agreement"), whereby the parties will agree, among other
things, to the terms upon which the Company will conduct its activities and
upon which the relations between the shareholders of the Company will be
regulated; and
WHEREAS, in order to induce the Shareholders to enter into and perform the
Contribution Agreement and the Shareholders Agreement, the Company has agreed
to provide the Shareholders with certain rights in respect of the registration
of its common stock, par value one cent ($0.01) per share ("Common Stock").
- 2 -
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and the Shareholders agree as follows:
1. DEFINITIONS. As used in this Agreement, the following terms shall have
the respective meanings set forth below (such meanings to be equally applicable
to both the singular and plural forms of the terms defined):
"DEMAND SHAREHOLDER" means PIHLP or ECO or, if used in the plural form,
means PIHLP and ECO, and permitted assignees of same under Section 5(g).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"FOLLOWING SHAREHOLDER" means RMF, Steele, AESOP or CACMT or, if used in
the plural form, means RMF, Steele, AESOP and CACMT or any two of them.
"NATIONAL SECURITIES EXCHANGE" means the New York Stock Exchange,
American Stock Exchange, National Association of Securities Dealers Automated
Quotation System, or National Market System of the National Association of
Securities Dealers, as selected by the Company, and reasonably acceptable to the
Demand Shareholder.
"PERSON" shall mean and include any individual, partnership, joint
venture, corporation, trust, unincorporated organization or association or any
other entity or association of any kind and any authority, federal, state, local
or foreign government, any political subdivision of any thereof and any court,
panel, judge, board, bureau, commission, agency or other entity or body
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to any government.
"REGISTRABLE SHARES" means (i) shares of Common Stock held by any of the
Shareholders on the date hereof or acquired thereafter (including any shares of
Common Stock issuable upon conversion of Series B Preferred), and (ii) any
Common Stock issued in respect of such shares including, without limitation,
upon any stock split, stock dividend, recapitalization or as a distribution;
provided however, that Registrable Shares shall not include any shares of Common
Stock which have been sold pursuant to registration under the Securities Act.
- 3 -
"REQUESTING SHAREHOLDER" means either of the Demand Shareholders or any
of the Following Shareholders when the same shall have requested the Company to
register some or all of its/their Registerable Shares pursuant to this
Agreement, and permitted assignees of same under Section 5(g).
"REQUESTING SHAREHOLDER REGISTRATION EXPENSES" means with respect to any
Requesting Shareholder, (i) underwriting discounts and commissions relating to
the sale of such Requesting Shareholder's Registrable Shares, (ii) any transfer
taxes attributable to the sale of such Registrable Shares and (iii) the fees and
disbursements of counsel incurred by such Requesting Shareholder on its own
behalf.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SHAREHOLDERS" means PIHLP, ECO, RMF, Steele, AESOP and CACMT, and
permitted assignees of same under Section 5(g).
"COMPANY REGISTRATION EXPENSES" means any and all expenses incident to
the Company's performance of its obligations under Section 2, other than
Requesting Shareholder Registration Expenses. Company Registration Expenses
shall include but not be limited to (i) registration and filing fees with the
SEC and a National Securities Exchange, (ii) fees and expenses of compliance
with state securities or "blue sky" laws (including reasonable fees and
disbursements of counsel for the underwriters in connection with blue sky
qualifications of Registrable Shares), (iii) printing expenses, (iv) registrars
and transfer agents fees, (v) the fees and expenses incurred in connection with
the listing or quotation of Registrable Shares on any National Securities
Exchange, and (vi) fees and expenses of counsel for the Company and the
independent certified public accountants for the Company.
2. REGISTRATION RIGHTS.
(a) DEMAND REGISTRATION. Each Demand Shareholder shall be entitled to
request that the Company effect a registration under the Securities Act
with respect to some or all of the Registrable Shares held by it upon the
following terms and conditions:
- 4 -
(i) REQUEST FOR REGISTRATION OF REGISTRABLE SHARES. In the
event that the Company shall receive from a Demand Shareholder a
written request that the Company effect a registration under the
Securities Act with respect to all or any part of the Registrable
Shares held by such Demand Shareholder, the Company shall use its
best efforts to effect, at the earliest practicable date, such
registration, qualification and compliance (including, without
limitation, the execution of an undertaking to file post-effective
amendments, the execution and filing of a listing agreement with a
National Securities Exchange, appropriate qualification under
applicable blue sky or other state securities laws, and appropriate
compliance with applicable regulations issued under the Securities
Act) as may be so requested and as would permit or facilitate the
sale and distribution of such Registrable Shares on such National
Securities Exchange as is specified in such request (or if the
Common Stock is then listed on a National Securities Exchange, such
National Securities Exchange); provided that the Company shall not
be obligated to take any action to effect any such registration,
qualification or compliance pursuant to this Section 2(a): (A) if
the Company has effected a previous registration for any Demand
Shareholder pursuant to this Section 2(a)(i) during the preceding
six-month period; (B) if such Demand Shareholder has previously
effected three such registrations pursuant to this Section 2(a),
which registrations have been declared or ordered effective by the
SEC; (C) during the period starting with the date sixty (60) days
prior to the Company's estimated date of filing of, and ending on
the date ninety (90) days immediately following the effective date
of, any registration statement pertaining to a public offering of
securities of the Company; or (D) prior to the third anniversary of
this Agreement.
Subject to the foregoing clauses (A) through (D) the Company
shall file a registration statement covering such Registrable
Shares so requested to be registered as soon as practicable after
receipt of the request of the Requesting Shareholder. Provided,
however, that the Company may upon giving notice to the Requesting
Shareholder postpone for a reasonable period, not to exceed 90
days, the filing or the effectiveness of such registration
statement, if there exists at the time material non-public
information which, in the reasonable opinion of the Company, if
disclosed would have a material adverse effect on its business.
During such period the
- 5 -
Company shall continue to use its best efforts to prepare such
registration statement and update such registration statement with
all information necessary to make such registration statement ready
for filing and effectiveness as soon as practicable after the end
of such period.
ECO shall not be required to convert its Series B Preferred
shares into Common Stock prior to exercising its demand
registration rights hereunder with respect to shares of Common
Stock which would result from such conversion.
At no time shall any Demand Shareholder demand that less than
twenty-five percent (25%) of the number of shares of Common Stock
held by such Demand Shareholder on the date of execution of this
Agreement be registered pursuant to this Section 2(a); provided,
however, that if at any time such Demand Shareholder holds less
than twenty-five percent (25%) of the number of shares of Common
Stock held by such Demand Shareholder on the date of execution of
this Agreement, such Demand Shareholder shall have the right to
demand registration of all its Registrable Shares pursuant to this
Section 2(a).
(ii) UNDERWRITING. The right of the Requesting Shareholder
to registration pursuant to this Section 2(a) shall be conditioned
upon the Requesting Shareholder's participation in the underwriting
arrangements required by this Section 2 and the inclusion in the
underwriting of the Registrable Shares requested to be registered.
The Company and the Requesting Shareholder shall enter into an
underwriting agreement in customary form with the managing
underwriter selected for such underwriting by the Company from the
following list: (A) Goldman, Sachs & Co.; (B) Morgan Stanley & Co.
Incorporated; (C) Merrill Lynch & Co., Inc.; (D) CS First Boston
Inc.; and (E) Donaldson, Lufkin and Jenrette Inc. The Company may
select a managing underwriter for such underwriting not on the
aforementioned list, so long as such managing underwriter is
acceptable to the Requesting Shareholder. Notwithstanding any
other provision of this Section 2(a), if the managing underwriter
determines, in good faith, that marketing factors require a
- 6 -
limitation of the number of shares to be underwritten, the
managing underwriter may limit the number of Registrable Shares to
be included in the registration and underwriting to the extent such
managing underwriter deems necessary. The Company shall so advise
the Requesting Shareholder, and the number of Registrable Shares
that may be included in the registration and underwriting shall be
limited accordingly.
(iii) OTHER HOLDERS OF COMMON STOCK. Other holders of Common
Stock (including, without limitation, the other Demand Shareholder
and the Following Shareholders) to whom the Company has granted
registration rights may include their respective securities for
their own accounts in such registration if the managing underwriter
so agrees. If the managing underwriter determines, in good faith,
that marketing factors require a limitation of the number of shares
to be underwritten, the managing underwriter may limit the number
of Registrable Shares to be included by all holders of Common Stock
requesting registration hereunder (including the Demand Shareholder
exercising its demand rights under this Section 2(a)) based on the
ratio of the number of shares requested to be registered by each
such holder to the total number of shares requested to be
registered by all such holders.
(iv) EXPENSES OF REQUESTED REGISTRATION. The Company shall
pay all Company Registration Expenses incurred in connection with
each registration, qualification or compliance pursuant to Section
2(a), and the Requesting Shareholder will pay its Requesting
Shareholder Registration Expenses.
(b) PIGGY-BACK REGISTRATION.
(i) REGISTRATION INITIATED BY THE COMPANY. If the Company
at any time proposes to register an offering of its securities
under the Securities Act other than registrations in connection
with employee stock ownership plans, offerings of debt securities
and shelf registrations made pursuant to Section 2(c), either for
its own account or for the account of a security holder or holders,
and the registration form to be used may be used for the
registration of Registrable Shares, the Company will:
- 7 -
(A) give written notice thereof to the Demand
Shareholders and the Following Shareholders (which shall
include a list of the jurisdictions in which the Company
intends to attempt to qualify such securities under the
applicable blue sky or other state securities laws) within 10
days of its receipt of a request from a security holder or
holders to register securities or from its decision to effect
a registration of securities for its own account; and
(B) use its best efforts to include in such registration
(and any related qualification under blue sky laws or other
compliance), and in any underwriting involved therein, all
the Registrable Shares specified in a written request by any
Demand Shareholder or Following Shareholder made within 30
days after receipt of such written notice from the Company,
except as set forth in Sections 2(b)(ii) and 2(b)(iii) below;
provided, that if at any time after giving written notice to
the Demand Shareholders and the Following Shareholders of its
intention to register the Company securities under the
Securities Act (x) the Company in good faith shall determine
not to register such securities, the Company may, at its
election, give written notice of such determination to the
Demand Shareholders and the Following Shareholders and,
thereupon, shall be relieved of its obligation to register
such Registrable Shares pursuant to this Section 2(b) in
connection with such registration, without prejudice,
however, to any rights of either Demand Shareholder to
request that such registration be effected as a registration
under Section 2(a), or (y) the Company shall determine to
delay the registration of such securities, the Company shall
be permitted to delay the registration of such Registrable
Shares for the same period as the delay in registering the
securities to be registered by the Company for its own
account or for others.
(ii) AMOUNT TO BE INCLUDED. In the event that Registrable
Shares are requested to be included in any registration initiated
pursuant to Section 2(b)(i) that contemplates an underwritten
public offering, and if, in the good faith judgment of the managing
underwriting of such public offering, the inclusion of all of the
Registrable Shares covered by such request for
- 8 -
registration, together with the number or amount of securities
that were intended to be offered by the Company or other security
holders who hold registration rights, would interfere with the
successful marketing of such securities, then, such managing
underwriter may limit the number or amount of securities to be
included in the registration such that (A) the Company shall
include in such registration the securities it intended to offer
and (B) with respect to any additional securities which may be
included in such registration (after inclusion of the securities
referred to in clause (A)), all holders of securities (including
the holders of Registrable Shares) who hold registration rights and
who have requested registration (collectively, "Security Holders")
shall participate in the underwritten public offering pro rata
based upon the ratio of the number of shares requested to be
registered by each such Security Holder to the total number of
shares requested to be registered by all such Security Holders.
(iii) UNDERWRITING. If the registration of which the Company
gives notice is for a registered public offering involving an
underwriting, the Company shall so advise the Demand Shareholders
and the Following Shareholders as a part of the written notice
given pursuant to Section 2(b)(i)(A). In such event, the right of
each Requesting Shareholder to registration pursuant to this
Section 2(b) shall be conditioned upon its participation in such
underwriting and the inclusion of the Registrable Shares in the
underwriting to the extent provided herein. The Requesting
Shareholder shall (together with the Company and the other holders
(if any) distributing their securities through such underwriting)
enter into an underwriting agreement in customary form with the
underwriter or underwriters selected for such underwriting by the
Company from the following list: (A) Goldman, Sachs & Co.,; (B)
Morgan Stanley & Co. Incorporated; (C) Merrill Lynch & Co.; (D) CS
First Boston; and (E) Donaldson, Lufkin & Jenrette Inc. The
Company may select a managing underwriter for such underwriting not
on the aforementioned list, so long as such managing underwriter is
acceptable to the Demand Shareholders participating in such
offering. If the Requesting Shareholder disapproves of the terms
of any such underwriting, it may elect to withdraw therefrom by
written notice to the Company and the underwriter. Any Registrable
Shares
- 9 -
excluded or withdrawn from such underwriting shall be
withdrawn from such registration.
(iv) EXPENSES OF REGISTRATION. The Company shall bear all
Company Registration Expenses incurred in connection with each
registration, qualification or compliance pursuant to Section 2(b),
and each Requesting Shareholder shall pay its own Requesting
Shareholder Registration Expenses.
(c) SHELF REGISTRATION.
(i) REGISTRATION FOLLOWING FIFTH ANNIVERSARY. In the event
that the Company shall receive from a Demand Shareholder a written
request that the Company effect a registration under the Securities
Act with respect to all of the Registrable Shares pursuant to this
Section 2(c). The Company will use its best efforts to effect, at
the earliest practicable date, a shelf registration statement on an
appropriate form pursuant to Rule 415 (or any successor provision
then in force) under the Securities Act with respect to such
Registrable Shares; provided, however, that the Company shall not
be obligated to take any such action to effect any such
registration pursuant to this Section 2(c): (A) if the Company has
effected a previous registration for such Demand Shareholder
pursuant to this Section 2(c); (B) if registration pursuant to Rule
415 (or any successor provision then in force) is not available for
such offering by the Demand Shareholder; or (C) prior to the fifth
(5th) anniversary of this Agreement. The Company shall use its
best efforts to keep such registration statement continuously
effective until all of the Registrable Shares covered by such
registration are sold, and shall seek such qualification and
compliance (including, without limitation, the execution of an
undertaking to file post-effective amendments, appropriate
qualification under blue sky or other state securities laws and
appropriate compliance with applicable regulations issued under the
Securities Act) as may be requested by the Requesting Shareholder.
(ii) EXPENSES OF SHELF REGISTRATION. The Company shall bear
all Company Registration Expenses incurred in connection with each
registration, qualification or compliance pursuant to Section 2(c),
and the
- 10 -
Requesting Shareholder will pay its Requesting Shareholder
Registration Expenses.
(d) REGISTRATION PROCEDURES. In the case of each registration,
qualification or compliance effected by the Company pursuant to this
Section 2 pursuant to which Registrable Shares are included therein, the
Company will keep each Requesting Shareholder advised in writing as to
the initiation of such registration, qualification and compliance and as
to the completion thereof, at its expense, the Company shall:
(i) prepare and file with the SEC any amendments (including
post-effective amendments) and supplements as may be necessary to
keep such registration, qualification or compliance current and
effective and to comply with the provisions of the Securities Act
and the rules and regulations promulgated thereunder, and the rules
and regulations of any applicable securities exchange, with respect
to the distribution of the Registrable Shares covered by such
registration, qualification and compliance for a period of (x) in
the case of a registration, qualification and compliance pursuant
to Sections 2(a) or 2(b) hereof at least 180 days or until the
Requesting Shareholder has completed the distribution described in
the registration statement relating thereto, which ever first
occurs or (y) in the case of a registration, qualification and
compliance pursuant to Section 2(c) until all of the Registrable
Shares have been sold;
(ii) immediately notify each Requesting Shareholder and the
underwriter, if any, and confirm such notification in writing (w)
when such registration statement becomes effective, (x) when the
filing of any post-effective amendment to such registration
statement or supplement to the prospectus is required, when the
same is filed and, in the case of a post-effective amendment, when
the same becomes effective, (y) of any request by the SEC for any
amendment of or supplement to such registration statement or the
prospectus or for additional information, and (z) of the entry of
any stop order suspending the effectiveness of such registration
statement or of the initiation of any proceedings for that purpose,
and, if such stop order shall be entered, the Company shall use its
best efforts promptly to obtain the lifting thereof;
- 11 -
(iii) furnish to each Requesting Shareholder and any
underwriter acting on behalf of such Requesting Shareholder (x) at
a reasonable time prior to the filing thereof with the SEC a copy
of the registration statement in the form in which the Company
proposes to file the same, and not later than one day prior to the
filing thereof, a copy of any amendment (including any
post-effective amendment) to such registration statement, and
promptly following the effectiveness thereof, a conformed copy of
the registration statement as declared effective by the SEC and of
each post-effective amendment thereto, including financial
statements and all exhibits and reports incorporated therein by
reference, and (y) such number of copies of the preliminary, any
amended preliminary, and final prospectus and of each
post-effective amendment or supplement thereto, as may reasonably
be required in order to facilitate the disposition of the
Registrable Shares covered by such registration statement in
conformity with the requirements of the Securities Act and the
rules and regulations promulgated thereunder, but only while the
Company is required under the provisions hereof to cause the
registration statement to remain effective; and
(iv) list such Registrable Shares on each securities exchange
(if any) or qualify the Registrable Shares for trading on any over
the counter market (if any) on which the Common Stock is then
listed or traded, so long as such Registrable Shares are eligible
for such listing or qualification.
In connection with the registration of the Registrable Shares pursuant to
this Section 2, each Requesting Shareholder, for the purpose of Section 2(b)
only hereby agrees as follows:
(v) the Requesting Shareholder shall cooperate with the
Company in connection with the preparation of the registration
statement, and for so long as the Company is obligated to file and
keep effective the registration statement, shall provide to the
Company, in writing, for use in the registration statement, all
such information regarding the Requesting Shareholder and its plan
of distribution of the Registrable Shares as may be necessary to
enable the Company to prepare the registration statement and
prospectus covering the Registrable Shares, to maintain the
currency and
- 12 -
effectiveness thereof and otherwise to comply with all
applicable requirements of law in connection therewith;
(vi) during such time as the Requesting Shareholder may be
engaged in a distribution of Registrable Shares, the Requesting
Shareholder shall comply with Rules 10b-2, 10b-6 and 10b-7
promulgated under the Exchange Act, to the extent applicable, and
pursuant thereto it shall, among other things: (w) not engage in
any stabilization activity in connection with the securities in
contravention of such Rules; (x) distribute the Registrable Shares
solely in the manner described in the registration statement; (y)
cause to be furnished to each broker through whom the Registrable
Shares may be offered, if any, or to the offeree if an offer is not
made through a broker, such copies of the prospectus and any
amendment or supplement thereto and documents incorporated by
reference therein as may be required by law; and not bid for or
purchase any securities of the Company or attempt to induce any
person to purchase any securities of the Company other than as
permitted under the Exchange Act;
(vii) upon receipt of a notice pursuant to Section
2(d)(ii)(x), (y) or (z), discontinue any distribution of
Registrable Shares if such discontinuance is required under the
Securities Act; and
(viii) at least five (5) days prior to any distribution of the
Registrable Shares other than in an underwritten offering, the
Requesting Shareholder will advise the Company in writing of the
dates on which the distribution is intended to commence and
terminate, the number of the Registrable Shares to be sold and the
terms and the manner of sale; such person also shall inform the
Company and any broker/dealers through whom sales of the
Registrable Shares may be made when each distribution of such
shares is completed.
(e) INDEMNIFICATION.
(i) If Registrable Shares held by a Demand Shareholder or a
Following Shareholder are included in the securities as to which
any registration, qualification or compliance is being effected,
the Company will
- 13 -
indemnify each such Demand Shareholder and each such Following
Shareholder, each of its general and limited partners, each of the
officers and directors of it or any of its general or limited
partners and any person which controls, within the meaning of
Section 15 of the Securities Act, any of the foregoing, each
underwriter, if any, and each person who controls any underwriter
within the meaning of Section 15 of the Securities Act, against all
claims, losses, damages and liabilities (and actions in respect
thereof) ("Loss") arising out of or based on any untrue statement
(or alleged untrue statement) of a material fact contained in any
prospectus, offering circular or other document (including any
related registration statement, notification or the like) incident
to any such registration, qualification or compliance, or based on
any omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, or any violation by the Company of any rule
or regulation promulgated under the Securities Act, or of any other
federal, state or common law applicable to the Company and relating
to any action or inaction required of the Company in connection
with any such registration, qualification or compliance, and will
reimburse each such Demand Shareholder and each such Following
Shareholder, general or limited partners, or such officers or
directors of it or any of its general or limited partners, any
person which controls any of the foregoing and each such
underwriter and each person which controls such underwriter, for
any legal and any other expenses reasonably incurred in connection
with investigating or defending any such Loss; provided, that the
Company will not be liable to so indemnify or reimburse in any such
case to the extent that any such Loss arises out of or is based on
any untrue statement or omission resulting from written information
furnished to the Company by or on behalf of such Demand Shareholder
or such Following Shareholder or such underwriter for use therein.
(ii) The Requesting Shareholder will, if Registrable Shares
held by the Requesting Shareholder are included in the securities
as to which such registration, qualification or compliance is being
effected, indemnify the Company, each of its directors and
officers, each other Security Holder, each other Requesting
Shareholder, the independent accountants and legal counsel of the
Company, each underwriter, if any, of the Company's
- 14 -
securities covered by such a registration statement, and each
person who controls any of the foregoing within the meaning of
Section 15 of the Securities Act, against all Loss arising out of
or based on any untrue statement (or alleged untrue statement) of a
material fact contained in any such registration statement,
prospectus, offering circular or other document, or any omission
(or alleged omission) to state therein a material fact required to
be stated therein or necessary to make the statements therein not
misleading, or any violation by the Requesting Shareholder of any
rule or regulation promulgated under the Securities Act, or of any
other federal, state or common law applicable to the Requesting
Shareholder and relating to any action or inaction required by the
Requesting Shareholder in connection with any such registration,
qualification or compliance, and will reimburse the Company, such
directors, officers, accountants, counsel, Security Holders, the
other Requesting Shareholders, underwriters, officers, directors
and controlling persons for any legal or any other expenses
reasonably incurred in connection with investigating or defending
any such Loss in each case to the extent, but only to the extent,
that such untrue statement (or alleged untrue statement) or
omission (or alleged omission) is made in such registration
statement, prospectus, offering circular or other document in
reliance upon and in conformity with written information furnished
to the Company by or on behalf of such Requesting Shareholder for
use therein; provided, however, that (i) such obligations of such
Requesting Shareholder hereunder shall be limited to an amount
equal to the aggregate public offering price of the Registrable
Shares of such Requesting Shareholder sold as contemplated herein,
unless such liability arises out of or is based upon willful
misconduct by such Requesting Shareholder and (ii) the indemnity
for untrue statements or omissions described above, and the
reimbursements obligation relating thereto, shall not apply if such
Requesting Shareholder provides the Company with such additional
written information prior to the effectiveness of the registration
statement as is required to make the previously supplied written
information true and complete, together with a description in
reasonable detail of the information previously supplied which was
untrue or incomplete.
(iii) Each person entitled to indemnification under this
Section 2(e) (the "Indemnified Party") shall give notice to the
party required to provide
- 15 -
indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which
indemnity may be sought, and shall permit the Indemnifying Party to
assume the defense of any such claim or any litigation resulting
therefrom; provided, that counsel for the Indemnifying Party, who
shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not
unreasonably be withheld), and the Indemnified Party may
participate in such defense at such Indemnified Party's expense,
and provided further that the failure of any Indemnified Party to
give notice as provided herein shall not relieve the Indemnifying
Party of its obligations under this Section 2(e). After notice
from the Indemnifying Party to the Indemnified Party of its
election to assume the defense of such claim or litigation, the
Indemnifying Party will not be liable to such Indemnified Party for
any legal or other expenses subsequently incurred by such
Indemnified Party in connection with the defense thereof other than
reasonable costs of investigation, unless the Indemnifying Party
abandons the defense of such claim or litigation. No Indemnifying
Party in the defense of any such claim or litigation, shall, except
with the consent of each Indemnified Party, consent to entry of any
judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff
to such Indemnified Party of a release from all liability in
respect to such claim or litigation.
(f) CONTRIBUTION. If the indemnification provided for in
subsections (i) or (ii) of Section 2(e) is unavailable to or insufficient
to hold the Indemnified Party harmless in respect of any Loss referred to
therein for any reason other than as specified therein, then the
Indemnifying Party shall contribute to the amount paid or payable by such
Indemnified Party as a result of such Loss in such proportion as
appropriate to reflect the relative fault of the Indemnifying Party, on
the one hand, and such Indemnified Party, on the other, in connection
with the statements or omissions which resulted in such Loss, as well as
any other relevant equitable considerations. The relative fault shall be
determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by (or
omitted to be supplied by) the Indemnifying Party or the Indemnified
Party and the parties' relative intent, knowledge, access to information
and opportunity
- 16 -
to correct or prevent such statement or omission. The amount paid
or payable by an Indemnified Party as a result of Loss referred to in
this subsection (f) shall be deemed to include any legal or other
expenses reasonably incurred by such Indemnified Party in connection with
investigating or defending any such action or claim. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation.
(g) INFORMATION FURNISHED BY THE REQUESTING SHAREHOLDERS. Each
Requesting Shareholder shall furnish to the Company such information
regarding itself, each of its general or limited partners, and each of
its directors and officers, and any person controlling any of the
foregoing, and the distribution proposed by such Requesting Shareholder,
as the Company may reasonably request in writing and as shall be required
in connection with any registration, qualification or compliance referred
to in this Section 2.
3. HOLDBACK AGREEMENTS. If any registration of Registrable Shares or
other securities of the Company pursuant to Section 2(a) or Section 2(b) herein
shall be in connection with an underwritten public offering, each Requesting
Shareholder agrees not to effect any public sale or distribution, including any
sale under Rule 144 (or any successor provision then in effect) under the
Securities Act, of any Registrable Shares or of any shares of Common Stock or
any security convertible into or exchangeable or exercisable for any shares of
Common Stock (in each case, other than as part of such underwritten public
offering) during the seven (7) days prior to, and during the 180-day period (or
such shorter period as may be provided for in the applicable underwriting
agreement) beginning on, the effective date of the related registration
statement.
4. TERMINATION.
(a) Notwithstanding any other provision of this Agreement, the
respective covenants, agreements and obligations contained in Section 2
of this Agreement shall continue until the latter of: (i) such date as
all of the Demand Shareholders and all of the Following Shareholders
cease to own any Registrable Shares; or (ii) eight years from the date of
this Agreement; provided that (x) such covenants, agreements and
obligations shall continue with respect to any request for registration
of Registrable Shares made hereunder prior to the eighth anniversary
- 17 -
of the date of this Agreement, and (y) the indemnification
obligations contained in Section 2(e) and the contribution obligations
contained in Section 2(f) shall survive for the period of the statute of
limitations with respect thereto.
5. MISCELLANEOUS.
(a) Each of the parties acknowledges and agrees that irreparable
damage would occur in the event any of the provisions of this Agreement
were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of the
provisions of this Agreement and to enforce specifically the terms and
provisions hereof in any court of the United States or any state thereof
having jurisdiction, in addition to any other remedy to which they may be
entitled at law or equity.
(b) All notices and other communications hereunder shall be in
writing and shall be deemed given (i) when delivered personally, (ii)
when received if sent by registered or certified mail, return receipt
requested, or by air courier or (iii) when received by facsimile
transmission with electronic verification, in each case to the parties at
the following addresses (or at such other address as a party may specify
by like notice):
(A) If to the Company, addressed to: @ Entertainment, Inc.,
One Commercial Plaza, Hartford Connecticut 06103; facsimile: (860)
293-4297, Attention: Cheryl Anne Chase; with a copy thereof
addressed to Baker & McKenzie, 815 Connecticut Avenue, N.W.,
Washington, D.C. 20006-4078; facsimile: (202) 452-7074,
Attention: Marc R. Paul, Esq.;
(B) If to PIHLP, addressed to: Chase Polish Enterprises, Inc.,
One Commercial Plaza, Hartford Connecticut 06103; facsimile: (860)
293-4297, Attention: Cheryl Chase Freedman;
(C) If to ECO, addressed to: ECO Holdings III Limited
Partnership, c/o Advent International Corporation, 101 Federal
Street, Boston, Massachusetts 02110; facsimile: (617) 951-0571,
Attention: Ms. Janet Hennessy; with a copy thereof addressed to
Advent International Plc, 123
- 18 -
Buckingham Palace Road, London SW1W 9SL; facsimile: 44 (171)
333-0801, Attention: Mr. Scott Lanphere;
(D) If to RMF, addressed to: Roger M. Freedman, 67 Prospect
Avenue, West Hartford, Connecticut 06106; facsimile: (860)
231-0551, with a copy thereof addressed to Robinson & Cole, One
Commercial Plaza, Hartford Connecticut 06103; facsimile: (860)
231-0551, Attention: Richard G. Schectman;
(E) As to Steele, addressed to: Steele LLC, 19 Warren
Terrace, Longmeadow, Massachusetts 01106; facsimile: (413)
567-5160, Attention: Richard B. Steele, Managing Member; with a
copy thereof addressed to Bergman Horowitz, Connecticut Financial
Center, New Haven, Connecticut; facsimile: (860) 785-8127,
Attention: Jim Brockway, Esq.;
(F) If to CACMT, addressed to: Chase Polish Enterprises, Inc.,
One Commercial Plaza, Hartford Connecticut 06103; facsimile: (860)
293-4297, Attention: Cheryl Chase Freedman; and
(G) As to AESOP, addressed to: The AESOP Fund, L.P. c/o
Capital Investors, Inc., 1215 19th Street, N.W., Washington, D.C.
20036; facsimile: (202) 467-4426, Attention: Harry Huge; with a
copy thereof addressed to The AESOP Fund, L.P., 1119 Financial
Center Building, Seattle, Washington 98161; facsimile: (206)
292-8075, Attention: Duff Kennedy.
(c) This Agreement supersedes all prior agreements between the
parties (written or oral) relating to registration of the Registrable
Shares under the Securities Act and is intended as a complete and
exclusive statement of the terms of the agreement between the parties
with respect to such matters.
(d) This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware and shall be construed and
enforced in accordance with the laws of such state without regard to
principles of conflicts of laws thereof.
- 19 -
(e) The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
(f) Any term or provision of this Agreement may be waived at any
time by an instrument in writing signed by the party which is entitled to
the benefits thereof and this Agreement may be amended or supplemented at
any time by an instrument in writing signed by all parties hereto.
(g) Except as otherwise provided herein, the Company shall not
assign this Agreement or any part hereof or any rights or obligations
hereunder without the prior written consent of all other parties hereto.
Each Shareholder shall be entitled, without the consent of any other
party hereto, to assign and transfer any or all of its rights hereunder
to any transferee of its Registrable Shares to which it is permitted to
transfer such Registrable Shares under the provisions of the Shareholders
Agreement; provided, however, that a Demand Shareholder may only assign
and transfer any of its demand registration rights under Section 2(a) to
a permitted transferee holding at least twenty-five (25%) of the Common
Stock held by such Demand Shareholder at the date of execution of this
Agreement, and any exercise of such demand registration rights by such
transferee shall be counted as a demand registration effected on behalf
of such Demand Shareholder for the purposes of Section 2(a)(i)(B). No
assignment shall release any party of any of its obligations under this
Agreement. Except as otherwise provided herein, this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
(h) If any term or other provision of this Agreement is invalid,
illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect. Upon such determination
that any term or other provision is invalid, illegal or incapable of
being enforced, the parties hereto shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the parties
as closely as possible in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.
- 20 -
(i) This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, but all of which
together shall constitute but one and the same agreement.
(j) The number of Registrable Shares and any references herein as to
specific number of shares shall be appropriately adjusted in the event of
any stock split, reverse split, stock dividend or other reclassification
or reorganization affecting the capital stock of the Company which occurs
after the date hereof.
(k) 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 the Southern District of New York, or, if such Court lacks
jurisdiction over the subject matter, in a state court of competent
subject-matter jurisdiction sitting in the State of New York. The
parties hereby submit themselves unconditionally and irrevocably to the
personal jurisdiction of such courts. The parties further agree that
venue shall be exclusively in New York 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 New York 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 5(b) 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 New York.
(l) In any suit or proceeding brought or instituted by any of the
parties to enforce or interpret any of the provisions of this Agreement
or on account of any damages claimed to be sustained by such instituting
party by reason of another party's violation of any of the terms or
provisions of this Agreement, the prevailing party shall be entitled to
recover reasonable attorneys' fees and court costs.
- 21 -
(m) 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.
IN WITNESS WHEREOF, the Company, PIHLP, ECO, RMF, Steele, AESOP and CACMT
have caused this Agreement to be duly executed by their respective officers,
each of whom is duly authorized, all as of the day and year first above
written.
@ ENTERTAINMENT, INC.,
a Delaware corporation
BY: _______________________________
Name: ________________________
Title: ________________________
POLISH INVESTMENTS HOLDING L.P.,
a Delaware limited partnership
By: CHASE POLISH ENTERPRISES, INC.,
a Delaware corporation
MANAGING GENERAL PARTNER
By: _______________________________
Name:
Title:
ECO HOLDINGS III LIMITED PARTNERSHIP,
a Delaware limited partnership
By: ADVENT ECO III L.L.C., GENERAL PARTNER
By: GLOBAL PRIVATE EQUITY II LIMITED
PARTNERSHIP, MEMBER
- 22 -
By: ADVENT INTERNATIONAL LIMITED PARTNERSHIP,
GENERAL PARTNER
By: ADVENT INTERNATIONAL CORPORATION, GENERAL
PARTNER
By: _____________________________
Name:
Title:
THE AESOP FUND, L.P.,
a Delaware limited partnership
By: _______________________________
a ________ ___________
MANAGING GENERAL PARTNER
By: _______________________________
Name:
Title:
_______________________________
ROGER M. FREEDMAN
STEELE LLC, a Connecticut limited liability company
By: _______________________________
Name:
Title:
- 23 -
THE CHERYL ANNE CHASE MARITAL TRUST,
a Connecticut Trust
By: _______________________________
Name:
Title:
By: _______________________________
Name:
Title:
EXHIBIT D
VOTING AGREEMENT
21
VOTING AGREEMENT
THIS VOTING AGREEMENT (this "Agreement") dated as of June, __ 1997, is
being entered into by and among Polish Investments Holding Limited Partnership
("PIHLP"), Roger M. Freedman ("RMF"), Steele LLC ("Steele") and The Cheryl Anne
Chase Marital Trust, ("CACMT," and together with PIHLP, RMF and Steele the
"Shareholders") and David Chase, as the Chase Group Representative.
WITNESSETH
WHEREAS, the Shareholders are parties to that certain Shareholders'
Agreement dated the date hereof (the "Shareholders Agreement") which provides,
among other things, for the appointment of a Chase Group Representative to act
as the designated representative of the Shareholders; and
WHEREAS, the Shareholders, pursuant to the terms of the Shareholders'
Agreement, desire to appoint David Chase as the initial Chase Group
Representative and to confer on him certain powers and duties as set forth
herein.
NOW, THEREFORE, in consideration of the mutual covenants and obligations
set forth in this agreement, the parties hereto hereby agree as follows:
1. Effective Date of Agreement: Definitions
1.1 Effective Date of Agreement. This Agreement shall become effective
(the "Effective Date") upon execution of the Shareholders' Agreement.
1.2 Definitions. For purposes of this Agreement, the following terms
shall have the meanings set forth below:
(a) "Chase Group Representative" shall mean David Chase and any
person who becomes a successor Chase Group Representative pursuant to Section
5.1 hereof.
(b) "Company" shall mean @ Entertainment, Inc., a Delaware
corporation.
(c) "Non-Voting Shares" shall mean shares of the Company's Series C
Preferred Stock, par value $.01 per share, as constituted at the date of the
Shareholders'
Agreement, plus all securities hereafter attributable to such shares or
received or receivable in respect thereof by way of stock splits or stock
dividends, recapitalization or liquidation of the Company or merger or
consolidation of the Company with any other corporation or organization.
(d) "Shareholders" shall have the meaning set forth in the first
paragraph of this Agreement and shall include any transferee of the Shareholders
permitted by this Agreement. PIHLP, RMF, Steele and CACMT and any permitted
transferee of the same shall be individually referred to herein as a
"Shareholder."
(e) "Shareholders' Agreement" shall mean that certain Shareholders'
Agreement by and among the Shareholders, the Company, ECO Holdings III Limited
Partnership ("ECO"), and the AESOP Fund, L.P. ("AESOP").
(f) "Shares" shall mean all Voting Shares and all Non Voting Shares
held by any Shareholder.
(g) "Voting Shares" shall mean shares of the Company's Common
Stock, par value $.01 per share, held at any time by any Shareholder, plus all
voting securities hereinafter attributable to such shares or received or
receivable in respect thereof by way of stock splits or stock dividends,
recapitalization or liquidation of the Company or merger or consolidation of the
Company with any other corporation or organization.
2. Term of Agreement
This Agreement shall become effective upon the Effective Date specified
in Section 1.1 hereof and shall terminate upon the first to occur of the
following events: (a) the written consent of all Shareholders, (b) the
termination of the Shareholders' Agreement in accordance with its terms, or (c)
the failure of the Shareholders to appoint a successor Chase Group
Representative in accordance with Section 5.1(a) hereof within sixty (60) days
of the date on which the previous Chase Group Representative ceases, for
whatever reason, to act as the Chase Group Representative. This Agreement shall
terminate as to any Shareholder if such Shareholder ceases to be a "Shareholder"
for purposes of Section 1.28 of the Shareholders' Agreement or ceases to be a
member of the "Chase Group" pursuant to the Shareholders' Agreement.
3. Voting Provisions
3.1 Grant of Proxy. Each Shareholder grants to the Chase Group
Representative an irrevocable proxy, pursuant to the provisions of Section 212
of the Delaware General Corporation Law, coupled with an interest, to vote such
Shareholder's
2
Voting Shares as the Chase Group Representative shall in his sole discretion
determine, for the election of directors and on all other matters which may be
presented at any meeting or require the consent of stockholders of the Company.
The Chase Group Representative agrees to notify each Shareholder (if such
Shareholder is not an officer of the Company or otherwise present at the
meeting) of any exercise of such voting right (including copies of the
applicable resolutions) on behalf of such Shareholder within a reasonable
period of time after such vote is taken. Notwithstanding the foregoing, upon
the transfer of any Voting Shares (other than a transfer described in Section
4.2 hereof), such proxy shall terminate and be of no further force and effect
with respect to the Voting Shares so transferred.
3.2 Rights under Shareholders' Agreement. Each Shareholder hereby
makes, constitutes and appoints the Chase Group Representative as its
attorney-in-fact for the limited purpose performing all acts and executing all
documents, instruments, agreements, notices or certificates the Chase Group
Representative may deem necessary or desirable in all matters relating to the
rights and obligations of each Shareholder under the Shareholders' Agreement.
4. Transfer of Shares
4.1 Transfer of Shares Generally. During the term of this Agreement, no
Shareholder shall make any transfer of any Shares except for transfers
permitted by the Shareholders' Agreement.
4.2 Condition on Transfer. Any proposed transfer by any Shareholder
pursuant to Section 3.7(i) of the Shareholders' Agreement shall be conditioned
on such transferee executing and delivering to the Chase Group Representative
an agreement in form and substance satisfactory to the Chase Group
Representative pursuant to which the transferee agrees to be bound by the terms
of this Agreement.
5. The Chase Group Representative
5.1 The Chase Group Representative. David Chase hereby accepts and
agrees to act as the initial Chase Group Representative in accordance with the
terms of this Agreement.
5.2 Successor Chase Group Representative.
(a) The Chase Group Representative may at any time resign by
delivering to each Shareholder a written resignation, to take effect thirty (30)
days thereafter. Upon the resignation of the Chase Group Representative or upon
the failure of the Chase Group Representative to serve as Chase Group
Representative because of death or incapacity
3
of the Chase Group Representative, or otherwise, the Shareholders shall, by
written consent of Shareholders holding more than fifty percent (50%) of the
Voting Shares held by the Shareholders, appoint a successor Chase Group
Representative.
(b) The Shareholders may at any time, by written consent of
Shareholders holding more than fifty percent (50%) of the Voting Shares held by
the Shareholders, remove the then-current Chase Group Representative and appoint
a successor Chase Group Representative.
(c) Any successor Chase Group Representative appointed pursuant to
the terms and conditions of this Agreement shall have all the rights granted to
the Chase Group Representative named herein and all references herein to the
Chase Group Representative shall include not only the Chase Group Representative
named herein, but also any successor Chase Group Representative.
5.3. Compensation. The Chase Group Representative shall serve at all
times without compensation.
5.4 Indemnification. The Shareholders, jointly and severally, hereby
agree to assume liability for and do hereby indemnify, protect, save and keep
harmless the Chase Group Representative, and its successors, assigns, agents and
servants from and against any and all liabilities, obligations, losses, damages,
penalties, taxes, claims, actions, suits, costs, expenses, or disbursements
(including legal fees and expenses) of any kind and nature whatsoever
(collectively, "Claims") which may be imposed upon, incurred by or asserted
against the Chase Group Representative in connection with this Agreement;
provided however, that the Chase Group Representative shall not be entitled to
indemnification under this Section 5.4 with respect to Claims which are the
result of gross negligence or willful misconduct of the Chase Group
Representative. The indemnities contained in this Section 5.4. shall survive
the termination of this Agreement.
6. Legends on Shares: Filing of Agreement
6.1. Legend on Shares. All certificates representing Shares shall bear
the following legend: "THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO A VOTING AGREEMENT ON FILE AT THE OFFICES OF THE CORPORATION."
6.2 Filing of Agreement. Copies of this Agreement, and of each
amendment, modification, supplement or addendum hereto, shall be filed in the
principal office of the Company.
4
7. Miscellaneous
7.1 Notice Provisions. All notices or communications required to be
given by any person pursuant to this Agreement shall be effected in writing
either by personal delivery or by registered or certified mail, postage prepaid
with return receipt requested to address indicated under such party's signature
hereto. Any person may designate a different address to which notices or other
communications must thereafter be addressed by giving written notice of the
different address to each Shareholder and the Chase Group Representative.
7.2 Amendment of Agreement. The provision of this Agreement may be
amended only by written consent of all Shareholders and, if his obligations or
rights hereunder would be affected thereby, the Chase Group Representative.
7.3 Interpretation of Agreement. This Agreement shall be construed in
its entirety, with no emphasis or meaning being given to the headings or
captions utilized in this Agreement or the placement of the various provisions.
7.4 Entire Agreement. This Agreement and the Shareholders' Agreement
supersede any and all other agreement, either oral or in writing, between the
parties with respect to the subject matter of this Agreement and the
Shareholder's Agreement.
7.5 Severability of Provisions. Each provision of this Agreement is
intended to be severable. lf any term or provision is declared to be illegal or
invalid for any reason, such illegality or invalidity shall not effect the
validity or enforceability or any other provision of Agreement.
7.6 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware
7.7 Execution in Counterparts. This Agreement and any amendments hereto
may be executed in any number of counterparts with the same effect as if all of
the parties had signed the same document.
5
IN WITNESS WHEREOF, the undersigned have executed this Voting Agreement as
of the date first above written.
POLISH INVESTMENTS HOLDING L.P.
By: Chase Polish Enterprises, Inc.,
its general partner
By: _______________________
Its:
Address
c/o Chase Polish Enterprises, Inc.
One Commercial Plaza
Hartford, Connecticut 06103
Fax: 860/293-4297
Attn: Cheryl Chase
____________________________
ROGER M. FREEDMAN
Address
67 Prospect Avenue
West Hartford, Connecticut 06106
Fax: 860/231-0551
STEELE LLC
By: ______________________
Richard B. Steele
Managing Member
Address
c/o Steele LLC
19 Warren Terrace
Longmeadow, Massachusetts 01106
Fax: 413/567-5160
Attn: Richard B. Steele,
Managing Member
6
_____________________________________
DAVID CHASE, CHASE GROUP REPRESENTATIVE
Address
c/o Chase Polish Enterprises, Inc.
One Commercial Plaza
Hartford, Connecticut 06103
Fax: 860/293-4297
Attn: Cheryl Chase
7
EXHIBIT E
SIDE LETTER
22
June __, 1997
Steele LLC
c/o Richard B. Steele
19 Warren Terrace
Longmeadow, Massachusetts
Gentlemen:
Reference is hereby made to that certain Shareholders' Agreement, dated
as of June __, 1997 (the "Shareholders' Agreement"), by and among ECO Holdings
III Limited Partnership, a Delaware limited partnership ("ECO"), Polish
Investments Holding Limited Partnership, a Delaware limited partnership
("PIHLP"), Steele LLC, a Connecticut limited liability company ("Steele"),
Roger M. Freedman, The Cheryl Anne Chase Marital Trust, a Connecticut trust
("CACMT") and @ Entertainment, Inc., a Delaware corporation (the "Company").
Capitalized terms used but not otherwise defined herein shall have the meanings
ascribed to such terms in the Shareholders' Agreement.
This letter agreement (the "Agreement") is being entered into by PIHLP
for the benefit of Steele in connection with its execution and delivery of the
Shareholders' Agreement, the Voting Agreement between PIHLP, Steele, CACMT and
Roger M. Freedman, and by ECO for the benefit of Steele in connection with its
execution and delivery of the Shareholders' Agreement. Except as otherwise
permitted in Paragraph 2 of this Letter Agreement, each Principal Shareholder
hereby agrees that any transfer by such Principal Shareholder of Common Stock
or Series B Preferred Stock of the Company, (collectively, "Restricted Stock")
is subject to the following provisions of this Letter Agreement;
1. Tag Along Rights. Each of the Principal Shareholders covenants
to Steele that in the event it sells Common Stock and/or Series B Preferred
pursuant to Section 3.1 of the Shareholders Agreement, it shall procure that
any Covered Shareholder
Steele LLC
June __, 1997
Page 2
be given the opportunity to sell its Shares of Common Stock to the Group or
third party buying the Principal Shareholder's Shares on the same terms and
conditions and at the Applicable Price Per Share. Each of the Principal
Shareholders sending any of the notices referred to in Section 3.1 shall
simultaneously send a copy of that notice to each Covered Shareholder. The
Principal Shareholders further covenant that, from and after the date of
termination of the Shareholder Agreement through the date this Letter Agreement
terminates, in the event of any sale of Shares by either of them that would
have been governed by Section 3.1 of the Shareholders Agreement if the
Shareholders Agreement had then been in effect, each Covered Shareholder (and,
for the avoidance of doubt, only the Covered Shareholders) shall have the same
rights to have its Shares bought by a third party purchaser and to receive
notices as are set forth in the previous sentences, as though the Shareholders
Agreement had for this one purpose not been terminated; provided, however that
for avoidance of doubt the restrictions on transfer, including rights of first
refusal, contained in Section 3.1 shall not apply to any such sale of Shares by
the Principal Shareholders.
2. Inapplicable Transfers. Notwithstanding anything contained
herein to the contrary, the provisions of this Letter Agreement shall not apply
with respect to the Principal Shareholders to (i) any transfer as a result of
the exercise of the buy-sell provisions of Section 5 of the Shareholders'
Agreement, (ii) any transfers in accordance with clause (i) or (iii) of Section
3.7 of the Shareholders' Agreement or (iii) any pledge, hypothecation or
encumbrance of Restricted Stock pursuant to Section 3.6 of the Shareholders'
Agreement.
3. Definitions; Interpretation.
a. "Principal Shareholder" shall mean ECO, PIHLP and any
transferee who acquires their shares pursuant to Section 3.7(i) or (iii) of the
Shareholders' Agreement.
b. "Covered Shareholder" shall mean Steele and any
transferee who acquires Steele's Shares in accordance with the Shareholders'
Agreement.
4. Term. This Letter Agreement shall terminate upon the first to
occur of (a) the written consent of all parties, or (b) an Initial Public
Offering.
Steele LLC
June __, 1997
Page 3
This Letter Agreement and the covenants and agreements set forth herein
shall be binding upon and inure solely to the benefit of the signatory parties
hereto (and with respect to Steele, any other Covered Shareholder who executes a
counterpart of this Letter Agreement), and (ii) with respect to ECO and PIHLP,
any transferee who is a Principal Shareholder).
[Signatures on following page]
Steele LLC
June __, 1997
Page 4
Please acknowledge your understanding of and agreement with the
foregoing by signing this Letter Agreement in the spaces provided below.
Date: _____________, 1997 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: ________________________________________
Janet L. Hennessy
Vice President
Steele LLC
June __, 1997
Page 5
Date: _____________, 1997 POLISH INVESTMENTS HOLDING L.P.
a Delaware limited partnership
By: CHASE POLISH ENTERPRISES, INC.,
a Delaware corporation
By: _________________________________________
Its: _________________________________________
ACCEPTED AND AGREED TO THIS __ DAY OF MARCH, 1997:
STEELE LLC
By: ____________________________
Its: ____________________________
Dates Referenced Herein
| Referenced-On Page |
|---|
| This ‘S-1’ Filing | | Date | | First | | Last | | | Other Filings |
|---|
| |  |
| Filed on: | | 6/24/97 | | | | | | | None on these Dates |
| | 3/29/97 | | 32 |
| | 3/29/96 | | 6 | | 14 |
| | 3/21/96 | | 41 |
| | 3/1/96 | | 37 | | 40 |
| | 7/7/95 | | 25 |
| | 2/1/94 | | 14 |
| List all Filings |
↑Top
Filing Submission 0000950123-97-005255 – Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)
Copyright © 2024 Fran Finnegan & Company LLC – All Rights Reserved.
About — Privacy — Redactions — Help —
Tue., Apr. 23, 1:25:01.1pm ET 