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SCHEDULE 14D-9
INFORMATION REQUIRED FOR SOLICITATIONS AND RECOMMENDATIONS IN
CONNECTION WITH PROXY SOLICITATIONS COVERED BY THE 1934 ACT
REPORTING REQUIREMENTS
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(D)(4) OF THE
SECURITIES EXCHANGE ACT OF 1934
@ ENTERTAINMENT, INC.
(Name of Subject Company)
@ ENTERTAINMENT, INC.
(Name of Person Filing Statement)
COMMON STOCK, PAR VALUE $.01 PER SHARE
(Title of Class of Securities)
045920 10 5
(CUSIP Number of Class of Securities)
ROBERT E. FOWLER, III
CHIEF EXECUTIVE OFFICER
@ ENTERTAINMENT, INC.
ONE COMMERCIAL PLAZA
HARTFORD, CONNECTICUT
(860) 549-1674
(Name, address and telephone number of
person authorized to receive notice and communications
on behalf of the person filing statement)
Copy to:
MARC R. PAUL
BAKER & MCKENZIE
815 CONNECTICUT AVENUE
WASHINGTON, D.C. 20006-4078
(202) 452-7034
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ITEM 1. SECURITY AND SUBJECT COMPANY
The name of the subject company is @ Entertainment, Inc., a Delaware
corporation (the "Company"), and the address of the principal executive offices
of the Company is One Commercial Plaza, Hartford, Connecticut 06103-3585. The
title of the class of equity securities to which this
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9")
relates is the Company's common stock, par value $.01 per share (the "Common
Stock").
ITEM 2. TENDER OFFER OF THE BIDDER
This statement relates to the tender offer (the "Offer") described in the
Tender Offer Statement on Schedule 14D-1 (the "Schedule 14D-1"), dated June 8,
1999, filed by Bison Acquisition Corp., a Delaware corporation ("Purchaser"),
and United Pan-Europe Communications N.V., a public company with limited
liability incorporated under the laws of The Netherlands ("Parent"), with the
Securities and Exchange Commission (the "Commission") relating to an offer by
Purchaser to purchase all of the Company's issued and outstanding shares of
Common Stock at a purchase price of $19.00 per share (such amount, or any
greater amount per share paid pursuant to the Offer, being hereinafter referred
to as the "Offer Price"), net to each seller in cash, without interest, upon the
terms and subject to the conditions set forth in Purchaser's Offer to Purchase,
dated June 8, 1999 filed as Exhibit (a)(1) hereto, and the related Letter of
Transmittal filed as Exhibit (a)(2) hereto (which together constitute the "Offer
Documents").
The Offer is being made pursuant to the Agreement and Plan of Merger, dated
as of June 2, 1999 (the "Merger Agreement"), among the Company, Parent and
Purchaser. A copy of the Merger Agreement is filed as Exhibit (c)(1) to this
Schedule 14D-9 and is incorporated herein by reference in its entirety.
The Offer is conditioned upon, among other things, (i) there being validly
tendered and not properly withdrawn prior to the expiration of the Offer a
number of shares of Common Stock which represents at least a majority of all of
the issued and outstanding shares of Common Stock on a fully diluted basis, on
the date the Offer is consummated (the "Minimum Condition"), (ii) the
satisfaction of the HSR Condition (as defined herein), (iii) the satisfaction of
the PAMC Condition (as defined herein) and (iv) if required by applicable law,
the satisfaction of the EC Condition (as defined herein). "HSR Condition" means
the expiration or termination of any applicable waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, (and any
extension thereof) (the "HSR Act"). "PAMC Condition" means the granting of all
applicable approvals of the Polish Anti-Monopoly Commission prior to the
Expiration Date. "EC Condition" means the receipt, if applicable, prior to the
Expiration Date of a decision of the Commission of the European Community that
the purchase of the Common Stock pursuant to the Offer and the Merger are
compatible with the Common Market. "Regulatory Condition" shall mean the HSR
Condition, the PAMC Condition and the EC Condition, collectively. The Offer is
also conditioned upon the satisfaction of certain other terms and conditions
described in Item 3--"Identity and Background--Merger Agreement--Conditions of
the Offer."
The Merger Agreement provides that, promptly upon consummation of the Offer,
Parent will cause the Purchaser to be merged with and into the Company (the
"Merger"). At the Effective Time (as defined herein) of the Merger, (a) each
share of Common Stock then issued and outstanding (other than (i) any shares of
Common Stock which are held by any subsidiary of the Company or in the treasury
of the Company, or which are held, directly or indirectly, by Parent or any
direct or indirect subsidiary of Parent (including the Purchaser), all of which
shall be canceled and none of which shall receive any payment with respect
thereto and (ii) shares of Common Stock held by stockholders exercising their
rights to dissent in accordance with Delaware law) shall be canceled and
converted into and shall represent the right to receive an amount in cash equal
to $19.00, without interest; and
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(b) each share of the Company's outstanding preference shares shall be canceled
and no further consideration shall be payable in respect thereof. The Merger
Agreement is more fully described in Item 3 --"Identity and Background--Merger
Agreement." Under the General Corporation Law of the State of Delaware (the
"DGCL"), if the Purchaser acquires, pursuant to the Offer or otherwise, at least
90% of the issued and outstanding shares of Common Stock and of each series of
the Company's preference shares, the Purchaser will be able to approve and
effect the Merger without a vote of the Company's stockholders pursuant to
Section 253 of the DGCL. If, however, the Purchaser does not acquire at least
90% of the issued and outstanding shares of the Common Stock and of each series
of the Company's preference shares, pursuant to the Offer or otherwise, a vote
of the Company's stockholders to effect the Merger is required under the DGCL
and a longer period of time will be required to effect the Merger. The Company
has been advised that Purchaser intends to obtain the funds necessary to
purchase the Shares in the Offer and the Merger from Parent. In the Schedule
14D-1, Parent stated that it anticipates that it will obtain such funds from a
planned private placement of high-yield notes. As of the date of the Schedule
14D-1, Parent stated in the Schedule 14D-1 that it had not completed such
financing; that Parent had approached its customary financing sources in order
to arrange interim financing for the Offer; that no commitment letter had been
entered into with respect to such financing; and that based on conversations
with its financing sources, Parent is confident that such financing can be
arranged.
Parent and the Purchaser have entered into Stockholder Agreements, dated as
of June 2, 1999 (the "Common Stockholder Agreements"), with certain relatives of
David T. Chase and certain of their respective affiliates (the "Chase Group"),
Samuel Chisolm, David Chance, Robert E. Fowler III, certain affiliates of Advent
International Group and Morgan Grenfell Capital Development Syndications Limited
("Morgan Grenfell") (collectively, the "Stockholders") who are the record and
beneficial owners of, in the aggregate, 16,175,431 shares of Common Stock,
warrants exercisable for 5,500,000 shares of Common Stock and options to
purchase 2,286,000 shares of Common Stock (together with all additional shares
of Common Stock, warrants exercisable for Common Stock and options to purchase
Common Stock thereafter acquired by the Stockholders, the "Option Securities")
(representing approximately 48.4% of the outstanding Common Stock and
approximately 51.5% of the Common Stock on a fully diluted basis). Mr. Chase is
the Chairman of the Board of Directors of the Company, Mr. Fowler is the Chief
Executive Officer and a Director of the Company and Messrs. Chisholm and Chance
are Directors of the Company. Pursuant to the Stockholder Agreements, such
Stockholders have agreed (i) to irrevocably tender pursuant to the Offer (and
not withdraw) all shares of Common Stock held by such Stockholders, (ii) to
grant to the Purchaser an option to purchase all of the Option Securities held
by such Stockholders and (iii) with respect to certain questions put to the
stockholders of the Company for a vote, to vote such Stockholder's shares of
Common Stock in accordance with the terms and conditions of the Common
Stockholder Agreement to which such Stockholder is a party. Pursuant to the
Common Stockholder Agreements, the Purchaser has agreed to purchase the Option
Securities (other than shares of Common Stock) held by the Stockholders after
the consummation of the Offer.
Parent and the Purchaser also have entered into Stockholder Agreements,
dated as of June 2, 1999 (the "Preferred Stockholder Agreements" and,
collectively with the Common Stockholder Agreements, the "Stockholder
Agreements"), with certain members of the Chase Group and Morgan Grenfell (the
"Preferred Stockholders") who are the holders of all of the outstanding Series A
12% Cumulative Preference Shares of the Company and all of the outstanding
Series B 12% Cumulative Preference Shares of the Company (collectively, the
"Preference Shares") pursuant to which each of the Preferred Stockholders has
agreed (i) to grant to the Purchaser an option to purchase all of the Preference
Shares held by such Preferred Stockholder and (ii) with respect to certain
questions put to the stockholders of the Company for a vote, to vote such
Preferred Stockholder's Preference Shares in accordance with the terms and
conditions of the applicable Preferred Stockholder Agreement to which such
Preferred Stockholder is a party. Pursuant to the Preferred Stockholder
Agreements, the
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Purchaser has agreed to purchase the Preference Shares held by the Preferred
Stockholders after the consummation of the Offer.
As of June 2, 1999, there were (x) 33,406,000 shares of Common Stock issued
and outstanding, (y) warrants to purchase 9,138,179 shares of Common Stock
issued and outstanding, and (z) stock options issued under the Company's Stock
Option Plans (as defined herein) covering 3,998,000 shares of Common Stock. As a
result, as of such date, the Minimum Condition would be satisfied if at least
23,271,090 shares of Common Stock are validly tendered and not properly
withdrawn prior to the Expiration Date (as defined herein).
The Offer Documents indicate that the principal executive offices of Parent
and Purchaser are located at Fred. Roeskestraat 123, P.O. Box 74763, 1070 BT
Amsterdam, The Netherlands, Telephone: 31-20-778-9840. Parent and Purchaser are
sometimes referred to herein as the "bidders."
ITEM 3. IDENTITY AND BACKGROUND
(a) The name and address of the Company, which is the person filing this
Schedule 14D-9, are set forth in Item 1 above.
(b) Certain contracts, agreements, arrangements or understandings between
the Company or its affiliates and certain of its executive officers, directors
or affiliates are described in the Company's Information Statement set forth on
Annex A hereto, the information in which is incorporated herein by reference in
its entirety.
Except for the matters set forth in Items 3 and 5 and in Annex A hereto,
there are no material contracts, agreements, arrangements or understandings or
actual or potential conflicts of interest between the Company or its affiliates
and (i) its executive officers, directors or affiliates, or (ii) to the
knowledge of the Company, the bidders, their executive officers, directors or
affiliates.
MERGER AGREEMENT
The following is a summary of the Merger Agreement, which summary is
qualified in its entirety by reference to the Merger Agreement.
THE OFFER. The Merger Agreement provides that the Purchaser will commence
the Offer and that the obligation of the Purchaser to consummate the Offer and
to accept for payment and to pay for any Common Stock tendered pursuant to the
Offer shall be subject to only those conditions set forth herein. The
obligations of the Purchaser to accept for payment and to pay for any shares of
Common Stock tendered shall be subject only to those conditions set forth in
"--Conditions of the Offer", any of which may be waived by Parent or the
Purchaser in their sole discretion; PROVIDED, HOWEVER, that the Purchaser may
not waive the Minimum Condition without the prior written consent of the
Company. The conditions to the Offer are for the sole benefit of Parent and the
Purchaser and may be asserted by Parent and the Purchaser regardless of the
circumstances giving rise to any such conditions or, except as expressly set
forth herein, may be waived by Parent and the Purchaser in whole or in part.
Parent and the Purchaser expressly reserve the right to modify the terms of the
Offer; PROVIDED, HOWEVER, that without the prior written consent of the Company,
the Purchaser shall not (i) reduce the number of shares of Common Stock to be
purchased in the Offer, (ii) reduce the Offer Price, (iii) modify or add to the
conditions to the Offer, (iv) change the form of consideration payable in the
Offer or (v) make any other change in the terms of the Offer which is materially
adverse to the holders of Common Stock. Notwithstanding the foregoing sentence,
the Purchaser may, without the consent of the Company, (i) extend the Offer, if
at the then scheduled expiration date of the Offer any of the conditions to the
Purchaser's obligations to purchase shares of Common Stock have not been
satisfied or waived, until the third business day after the day the Purchaser
reasonably believes to be the earliest date on which such conditions will be
satisfied, (ii) extend the Offer from time to time up to a
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maximum of an aggregate of thirty (30) days beyond the first day all of the
conditions to the Offer have been met, and/or (iii) extend the Offer for any
period required by any rule, regulation, interpretation or position of the
Commission or the staff thereof applicable to the Offer. Notwithstanding the
foregoing, (x) the Offer may not, without the Company's written consent, be
extended beyond September 30, 1999, and (y) the Offer may not, without the
Company's prior written consent, be extended pursuant to clause (i) of the
immediately preceding sentence if the failure to satisfy any condition of the
Offer was caused by a material breach by Parent or the Purchaser of any of their
representations, warranties, covenants or agreements set forth in the Merger
Agreement. Notwithstanding anything to the contrary in the Merger Agreement,
Parent and the Purchaser agree that if immediately prior to any scheduled
expiration date of the Offer, the Regulatory Condition shall not have been
satisfied, but at such scheduled expiration date each of the other conditions
set forth in "--Conditions of the Offer" (other than the Minimum Condition)
shall then be satisfied, at the request of the Company, the Purchaser shall
extend the Offer from time to time, subject to the right of Parent, the
Purchaser or the Company to terminate the Merger Agreement pursuant to the terms
thereof. Upon the terms and subject to the conditions of the Offer, Purchaser
shall, and Parent shall cause Purchaser to, promptly purchase all shares of
Common Stock which are validly tendered on or prior to the expiration of the
Offer and not withdrawn. Parent shall provide, or cause to be provided, to
Purchaser on a timely basis all funds necessary to accept for payment, and pay
for, all shares of Common Stock that Purchaser becomes obligated to purchase
pursuant to the Offer.
Pursuant to the terms of the Merger Agreement, the Company has approved of
and consented to the Offer and (a) its Board of Directors (at a meeting duly
called and held) has by the unanimous vote of the directors, (i) has determined
that each of the Offer and the Merger is (x) advisable and (y) fair to, and in
the best interests of, the holders of shares of capital stock of the Company,
including but not limited to the Holders, (ii) approved the Offer and the Merger
and approved and adopted the Merger Agreement, the Stockholder Agreements and
the transactions contemplated hereby and thereby in accordance with the
provisions of the DGCL, (iii) recommended acceptance of the Offer, approval of
the Merger and approval and adoption of the Merger Agreement by the stockholders
of the Company, (iv) approved the changes in the Company's options and warrants
and the Company's Stock Incentive Plans (as defined herein) contemplated by the
Merger Agreement, and (v) taken all other applicable action necessary to render
(x) Section 203 of the DGCL and any other applicable state takeover statutes and
(y) Article VIII of the Company's Amended and Restated Certificate of
Incorporation inapplicable to the Offer and the Merger, and (b) Goldman Sachs
International, the Company's financial advisor ("Goldman Sachs"), has delivered
to the Board of Directors of the Company its opinion that the Offer Price to be
received by the Company's stockholders pursuant to the Merger Agreement is fair,
from a financial point of view, to the stockholders subject to the assumptions
and qualifications contained in such opinion.
CONDITIONS OF THE OFFER. Notwithstanding any other provision of the Offer
or the Merger Agreement, the Purchaser shall not be required to accept for
payment or, subject to any applicable rules and regulations of the Commission,
including Rule 14e-1(c) under the Exchange Act (relating to the Purchaser's
obligation to pay for or return tendered shares promptly after termination or
withdrawal of the Offer), pay for any shares of Common Stock tendered pursuant
to the Offer and may terminate or amend the Offer and may postpone the
acceptance of, and payment for, any shares of Common Stock, if (i) there shall
not have been validly tendered and not properly withdrawn prior to the
expiration of the Offer a number of shares of Common Stock which represents at
least a majority of all of the issued and outstanding shares of Common Stock, on
a fully diluted basis, on the date the Offer is consummated, (ii) any applicable
waiting period (and any extension thereof) under the HSR Act shall not have
expired or been terminated, (iii) all applicable approvals of the Polish
Anti-Monopoly Commission shall not have been granted prior to the expiration of
the Offer, (iv) if required by applicable law, a decision of the Commission of
the European Community that the purchase of shares of Common Stock pursuant to
the Offer and the Merger are compatible with the
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Common Market has not been received prior to the expiration of the Offer, or (v)
if, at any time on or after June 2, 1999, and at or before the time of payment
for any such shares of Common Stock (whether or not any shares of Common Stock
have theretofore been accepted for payment or paid for pursuant to the Offer)
any of the following shall occur:
(a) there shall be instituted or pending any action or proceeding by any
supranational, national, provincial, county, local, municipal or other
legislative or executive body or governmental department, authority, commission,
court, board, bureau, agency or instrumentality, including, without limitation,
any of the foregoing constituted by the Republic of Poland, the United Kingdom,
the United States of America or any of their respective political subdivisions
(each a "Governmental Body") or by any other person or entity, domestic or
foreign, before any court of competent jurisdiction or governmental authority or
agency, domestic or foreign (other than existing claims disclosed to Parent),
(i) challenging or seeking to, or which could reasonably be expected to make
illegal, impede, delay or otherwise directly or indirectly restrain, prohibit or
make materially more costly the Offer or the Merger or would reasonably be
expected to result in material damages, (ii) seeking to prohibit or materially
limit the ownership or operation by Parent or the Purchaser of all or any
material portion of the business or assets of the Company and its subsidiaries
taken as a whole or to compel Parent or the Purchaser to dispose of or hold
separately all or any material portion of the business or assets of Parent and
its subsidiaries taken as a whole or the Company and its subsidiaries taken as a
whole, or seeking to impose any limitation on the ability of Parent or the
Purchaser to conduct its business or own such assets, (iii) seeking to impose
limitations on the ability of Parent or the Purchaser effectively to exercise
full rights of ownership of the shares of the capital stock of the Company,
including, without limitation, the right to vote any such shares of capital
stock acquired or owned by the Purchaser or Parent on all matters properly
presented to the Company's stockholders, (iv) seeking to require divestiture by
Parent or the Purchaser of any shares of capital stock of the Company, (v)
requiring or permitting the Company's competitors to share access to the
Company's broadcast systems (other than access required under Polish law on the
date of the Merger Agreement), or (vi) otherwise directly or indirectly relating
to the Offer or the Merger and which would have a Material Adverse Effect or a
material adverse effect on the business, properties, assets, liabilities,
operations, results of operations or condition (financial or otherwise) of
Parent and its subsidiaries, taken as a whole;
(b) there shall be any statute, rule, regulation, legislation,
interpretation, judgment, order or injunction, enacted, enforced, promulgated,
amended or issued and applicable to or deemed by a Governmental Body to be
applicable to (i) Parent, the Purchaser, the Company or any subsidiary or (ii)
the Offer or the Merger, by any Governmental Body, court, administrative or
regulatory authority or agency, other than the routine application of the
waiting period provisions of the HSR Act, the approval process of the Polish
Anti-Monopoly Commission and, if required by applicable law, the approval
process of the Commission of the European Community to the Offer or to the
Merger, which could reasonably be expected to, directly or indirectly, result in
any of the consequences referred to in clauses (i) through (vi) in the
immediately preceding paragraph;
(c) any change shall have occurred, or Parent shall have become aware of any
fact, that has had or would have a Material Adverse Effect;
(d) there shall have occurred (i) any general suspension of trading in, or
limitation on prices for, securities on the Nasdaq National Market (excluding
any coordinated trading halt triggered solely as a result of a specified
decrease in a market index), (ii) any decline in the Nasdaq Composite Index in
excess of 30% measured from the close of business on the trading day immediately
preceding June 2, 1999, (iii) a suspension of the currency exchange markets for
the U.S. Dollar which continues in effect for three business days or for the
Dutch Guilder which continues in effect for five business days, (iv) a
declaration of a banking moratorium or any suspension of payments in respect of
banks in the United States or The Netherlands, (v) any material limitation
(whether or not mandatory) by any United States or Dutch Governmental Body on
the extension of credit by banks or other lending institutions, (vi) the
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actual declaration of war on or by the United States, The Netherlands or Poland,
or the invasion of the territory of a NATO member state by a non-NATO member
state, or (vii) in the case of any of the foregoing existing at the time of the
commencement of the Offer, a material acceleration or material worsening
thereof;
(e) any of the representations or warranties made by the Company in the
Merger Agreement that are qualified as to materiality shall be untrue or
incorrect in any respect or any such representations and warranties that are not
so qualified shall be untrue or incorrect in any material respect, in each case
as of the date of the Merger Agreement and the scheduled expiration date of the
Offer, except (i) for changes specifically permitted by the Merger Agreement and
(ii) that those representations and warranties which address matters only as of
a particular date shall remain true and correct as of such date;
(f) the Company shall have failed to perform any material obligation or to
comply with any material agreement or material covenant of the Company to be
performed or complied with by it under the Merger Agreement;
(g) the Company's Board of Directors or any committee thereof shall have
withdrawn, or shall have modified or amended in a manner adverse to Parent or
the Purchaser, the approval, adoption or recommendation, as the case may be, of
the Offer, the Merger or the Merger Agreement, or approved or recommended, or
announced a neutral position with respect to, any merger, consolidation, other
business combination, sale of material assets, takeover proposal or other
acquisition of shares of Common Stock other than the Offer and the Merger or
upon request by Parent, shall fail to reaffirm its approval and recommendation
of the Offer, the Merger or the Merger Agreement;
(h) it shall have been publicly disclosed, or the Purchaser shall have
otherwise learned, that beneficial ownership (determined for the purposes of
this paragraph (h) as set forth in Rule 13d-3 promulgated under the Exchange
Act) of 30% or more of the shares of Common Stock has been acquired by any
person or entity (including the Company or any of its subsidiaries or
affiliates) or group (as defined in Section 13(d)(3) under the Exchange Act),
which person or group is not, on the date of the Merger Agreement, the
beneficial owner of 30% or more of the shares of Common Stock;
(i) the Merger Agreement shall have been terminated in accordance with its
terms;
(j) any Stockholder Agreement shall fail or cease to be in full force and
effect or any party to any such agreement (other than Parent or the Purchaser)
shall materially breach or repudiate any such agreement;
which, in the reasonable judgment of the Purchaser, in any such case and
regardless of the circumstances giving rise to any such condition, makes it
inadvisable to proceed with such acceptance for payment or payment.
"Material Adverse Effect" means a material adverse effect on the business,
properties, assets, liabilities, operations, results of operations or condition
(financial or otherwise) of the Company and its subsidiaries taken as a whole.
The foregoing conditions are for the sole benefit of Parent and the
Purchaser and may be asserted by Parent or the Purchaser, or may be waived by
Parent or the Purchaser, in whole or in part at any time and from time to time
in their respective reasonable discretion. The failure by Parent or the
Purchaser at any time to exercise any of the foregoing rights shall not be
deemed a waiver of any such right and each such right shall be deemed an ongoing
right which may be asserted at any time and from time to time. Any determination
by Parent or the Purchaser concerning the events described in this section shall
be final and binding upon all parties.
THE MERGER. The Merger Agreement provides that, subject to the terms and
conditions thereof, and in accordance with the DGCL, the Purchaser shall be
merged with and into the Company on the
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later of the date the Certificate of Merger is accepted for recording or such
later time established by the Certificate of Merger (such date, the "Effective
Time"). The filing of the Certificate of Merger shall be made on the closing
date of the Merger or as soon as practicable after the satisfaction or waiver of
the conditions to the Merger. Following the Merger, the separate corporate
existence of the Purchaser shall thereupon cease and the Company shall be the
surviving corporation (the "Surviving Corporation") and shall continue its
corporate existence as a wholly owned subsidiary of Parent and shall continue to
be governed by the laws of the State of Delaware.
At the Effective Time, by virtue of the Merger and without any action on the
part of Parent, the Purchaser or the Company, each share of Common Stock then
issued and outstanding (other than (i) any shares of Common Stock which are held
by any subsidiary of the Company or in the treasury of the Company, or which are
held, directly or indirectly, by Parent or any direct or indirect subsidiary of
Parent (including the Purchaser), all of which shall be canceled and none of
which shall receive any payment with respect thereto and (ii) shares of Common
Stock, if any, held by stockholders who perfect their appraisal rights under
Delaware law) shall be canceled and converted into and represent the right to
receive an amount in cash, without interest, equal to the price paid for each
share of Common Stock pursuant to the Offer (the "Merger Consideration"). In
addition, at the Effective Time, each issued and outstanding share of the
capital stock of the Purchaser will be converted into and become one fully paid
and nonassessable share of common stock of the Surviving Corporation.
The Merger Agreement provides that in the event that the Purchaser shall
acquire in the aggregate at least 90 percent of the outstanding shares of Common
Stock, and 90 percent of the outstanding shares of each outstanding class of
Preference Shares, the Company, Parent and the Purchaser shall take all
necessary action to cause the Merger to become effective as soon as practicable
after the expiration of the Offer, without a meeting of the stockholders of the
Company, in accordance with Section 253 of the DGCL.
The Merger Agreement provides that the respective obligations of Parent and
the Purchaser, on the one hand, and the Company, on the other hand, to effect
the Merger are subject to the fulfillment, at or prior to the Effective Time, of
each of the following conditions: (i) to the extent required by applicable law,
the Merger Agreement and the Merger shall have been approved and adopted by the
holders of a majority of the outstanding shares of Common Stock; (ii) the HSR
Condition shall have been satisfied; (iii) (a) the PAMC Condition shall have
been satisfied and (b) the EC Condition shall have been satisfied; (iv) no
preliminary or permanent injunction or other order shall have been issued by any
court or by any governmental or regulatory agency, body or authority which
prohibits the consummation of the Offer or the Merger and the transactions
contemplated by the Merger Agreement and which is in effect at the Effective
Time; PROVIDED, HOWEVER, that, in the case of a decree, injunction or other
order, each of the parties shall have used reasonable best efforts to prevent
the entry of any such injunction or other order and to appeal as promptly as
possible any injunction, decree or other order that may be entered; (v) no
statute, rule, regulation, executive order, decree or order of any kind shall
have been enacted, entered, promulgated or enforced by any court or governmental
authority which prohibits the consummation of the Offer or the Merger or has the
effect of making the purchase of the Common Stock illegal; (vi) the Purchaser
shall have purchased shares of Common Stock pursuant to the Offer in a number
sufficient to satisfy the Minimum Condition; and (vii) the Purchaser shall have
purchased all of the outstanding Preference Shares from the owners thereof and
shall be the sole record and beneficial owner of all of the Company's issued and
outstanding Preference Shares; PROVIDED, HOWEVER, that Parent and the Purchaser
will not be entitled to assert the condition described in this clause (vii) if
Parent or the Purchaser shall have failed to purchase any Preference Shares in
breach of their obligations under the Preferred Stockholder Agreements.
CERTIFICATE OF INCORPORATION AND BYLAWS; DIRECTORS AND OFFICERS OF THE
SURVIVING CORPORATION. The Merger Agreement provides that, at the Effective
Time, the directors of the Purchaser immediately prior to the Effective Time
shall be the directors of the Surviving Corporation and the officers of the
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Company immediately prior to the Effective Time shall be the officers of the
Surviving Corporation, in each case until their successors have been duly
elected or appointed and qualified or until their earlier death, resignation or
removal in accordance with the Surviving Corporation's Certificate of
Incorporation and By-Laws. In addition, the Certificate of Incorporation (as
amended to change the name of the Purchaser to "@ Entertainment, Inc.") and
By-Laws of the Purchaser, as in effect immediately prior to the Effective Time,
shall be the Certificate of Incorporation and By-Laws of the Surviving
Corporation until thereafter duly amended as provided therein or by applicable
law.
COMPANY STOCKHOLDERS' MEETING. Pursuant to the Merger Agreement, promptly
following the purchase of shares of Common Stock pursuant to the Offer, if
required by the DGCL in order to consummate the Merger, the Company, acting
through its Board of Directors, shall, in accordance with applicable law, duly
call, give notice of, convene and hold a meeting of the holders of Common Stock
and Preference Shares (the "Company Stockholders' Meeting") for the purpose of
voting upon the Merger Agreement and the Merger. The Company has agreed that it
will use its reasonable best efforts to solicit from its stockholders proxies,
and shall take all other action necessary and advisable, to secure the vote of
stockholders required by applicable law and the Company's Amended and Restated
Certificate of Incorporation or By-Laws to obtain the approval for the Merger
Agreement.
The Company has agreed that, if stockholder approval of the Merger is
required by applicable law or by the Company's Amended and Restated Certificate
of Incorporation or By-Laws, as promptly as practicable, following Parent's
request, the Company will prepare and file a preliminary Proxy Statement with
the Commission and will use its reasonable best efforts to respond to the
comments of the Commission, if any, in connection therewith and to furnish all
information regarding the Company required in the definitive Proxy Statement
(including, without limitation, financial statements and supporting schedules
and certificates and reports of independent public accountants). Parent, the
Purchaser and the Company will cooperate with each other in the preparation of
the Proxy Statement. Without limiting the generality of the foregoing, each of
Parent and the Purchaser have agreed to furnish to the Company the information
relating to each of them required by the Exchange Act to be set forth in the
Proxy Statement. The Company has agreed that it will include in the Proxy
Statement the recommendation of its Board of Directors that holders of Common
Stock and Preference Shares approve and adopt the Merger Agreement and approve
the Merger. Parent will cause all shares of Common Stock and Preference Shares
owned by Parent and its subsidiaries (including the Purchaser) to be voted in
favor of the Merger Agreement and the Merger.
BOARD REPRESENTATION. The Merger Agreement provides that promptly upon the
Purchaser having acquired a majority of the outstanding shares of Common Stock,
the Purchaser shall be entitled to designate such number of directors on the
Board of Directors of the Company, rounded up to the next whole number, as will
give the Purchaser, subject to compliance with Section 14(f) of the Exchange
Act, representation on such Board of Directors equal to at least that number of
directors which equals the product of the total number of directors on the Board
of Directors (giving effect to the directors elected pursuant to this sentence)
multiplied by a fraction, the numerator of which shall be the number of shares
of Common Stock beneficially owned by the Purchaser and Parent and the
denominator of which shall be the number of shares of Common Stock then
outstanding, and the Company and its Board of Directors shall, at such time,
take any and all such action needed to cause the Purchaser's designees to be
appointed to the Company's Board of Directors (including using its reasonable
best efforts to cause directors to resign).
Subject to applicable law, the Company has agreed to take all action
requested by Parent which is reasonably necessary to effect any such election.
In furtherance thereof, the Company will increase the size of the Company's
Board of Directors (subject to the limitations set forth in the Company's
Amended and Restated Certificate of Incorporation and By-Laws), or use its
reasonable efforts to secure the resignation of directors, or both, as is
necessary to permit the Purchaser's designees to be elected to the Company's
Board of Directors. At the Effective Time, the Company, if so requested, will
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use its reasonable efforts to cause persons designated by the Purchaser to
constitute the same percentage of each committee of such board, each board of
directors of each subsidiary and each committee of each such board (in each case
to the extent of the Company's ability to elect such persons and subject to any
applicable stock exchange regulations). Following the election or appointment of
the Purchaser's designees as described herein and prior to the Effective Time,
any amendment or termination of the Merger Agreement or the Company's Amended
and Restated Certificate of Incorporation or By-Laws, any termination of the
Merger Agreement by the Company, any extension by the Company of the time for
the performance of any of the obligations or other acts of Parent and the
Purchaser or waiver of any of the Company's rights under the Merger Agreement,
and any other consent or action by the Board of Directors under the Merger
Agreement, will require the concurrence of a majority (which shall be at least
two) of the directors of the Company then in office who were directors on June
2, 1999 and who voted to approve the Merger Agreement or are designated by a
majority of the directors of the Company who were directors on June 2, 1999 and
who voted to approve this Agreement.
INTERIM OPERATIONS. The Merger Agreement provides that except as otherwise
expressly contemplated thereby or as described in the Company's disclosure
statement (the "Company Disclosure Statement") delivered concurrently with the
delivery of the Merger Agreement, as required by any change in applicable law,
or as otherwise agreed by Parent in writing (which agreement shall not be
unreasonably withheld), during the period from the date of the Merger Agreement
to the Effective Time, (i) the Company will, and will cause each of its
subsidiaries to, conduct the Company's business in the ordinary course of
business consistent with past practice, and (ii) to the extent consistent with
the foregoing, the Company will, and will cause each of its subsidiaries to, use
their reasonable best efforts to preserve intact their current business
organizations, keep available the service of their current officers and
employees, and preserve their relationships with customers, suppliers and others
having business dealings with them (but without the obligation to pay any
additional compensation to any such officers, employees, customers, suppliers
and other persons), in each case with respect to the Company's current business,
with the objective that the goodwill and ongoing businesses of the Company shall
be materially unimpaired at the Effective Time. Without limiting the generality
of the foregoing, from and including the date of the Merger Agreement to the
Effective Time, the Company will not, and will not permit any of its
subsidiaries to, without the prior written consent of Parent (except to the
extent set forth in the Company Disclosure Statement):
(a) except for (i) Company Common Stock issued upon exercise of options or
other rights outstanding as of the date of the Merger Agreement under existing
employee benefit plans in accordance with the terms thereof, and (ii) securities
issued in connection with the conversion of convertible or exchangeable
securities of the Company or its subsidiaries outstanding as of June 2, 1999 in
accordance with the terms of such securities, issue, deliver, sell, dispose of,
pledge or otherwise encumber, or authorize or propose the issuance, sale,
disposition or pledge or other encumbrance (in each instance, whether through
the issuance or granting of options, warrants, commitments, subscriptions,
rights to purchase or otherwise) of (A) any additional shares of its capital
stock of any class, or any Voting Debt (as defined in the Merger Agreement), or
any securities or rights convertible into, exchangeable for, or evidencing the
right to subscribe for any shares of its capital stock or Voting Debt or any
rights, warrants, options, calls, commitments or any other agreements of any
character to purchase or acquire any shares of its capital stock or Voting Debt
or any securities or rights convertible into, exchangeable for, or evidencing
the right to subscribe for, any shares of its capital stock, or (B) any other
securities in respect of, in lieu of, or in substitution for, Company Common
Stock outstanding on June 2, 1999;
(b) redeem, purchase or otherwise acquire, or propose to redeem, purchase or
otherwise acquire, any of its outstanding securities, other than pursuant to
existing agreements requiring the Company to
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repurchase or acquire any shares of its capital stock (provided that such
repurchase or acquisition is in accordance with the terms of such agreement as
in effect on the date of the Merger Agreement);
(c) split, combine, subdivide or reclassify any shares of its capital stock
or declare, set aside for payment or pay any dividend, or make any other actual,
constructive or deemed distribution in respect of any shares of its capital
stock or otherwise make any payments to stockholders in their capacity as such
(other than dividends or distributions paid by any wholly owned subsidiary of
the Company, of the Company to the Company or another wholly owned subsidiary of
the Company);
(d) (i) grant any increases in the compensation of any of its directors,
officers or employees, except for increases granted to employees other than
officers in the ordinary course of business consistent with past practice, (ii)
pay or award or agree to pay or award any pension, retirement allowance, or
other non-equity incentive awards, or other employee benefit, not required by
any of the Employee Plans (as defined in the Merger Agreement), to any current
or former director, officer or employees, whether past or present, or to any
other person or entity, except for payments or awards to current employees other
than officers that are in the ordinary course of business, consistent with past
practice, (iii) pay or award or agree to pay or award any stock option or equity
incentive awards, (iv) except as provided for in the Company's business plan as
provided by the Company to Parent and the Purchaser (the "Business Plan"), enter
into any new or amend any existing employment agreement with any director,
officer or employee except for employment agreements with new employees entered
into in the ordinary course of business consistent with past practice and except
for amendments in the ordinary course of business, consistent with past
practice, that do not materially increase benefits or payments, (v) enter into
any new, or amend any existing, severance agreement with any current or former
director, officer or employee, except for agreements or amendments in the
ordinary course of business, consistent with past practice, that do not provide
for material benefits, or (vi) become obligated under any new Employee Plan
which was not in existence on June 2, 1999, or amend any such Employee Plan in
existence on June 2, 1999, except for any such amendment in the ordinary course
of business, consistent with past practice, that does not provide for material
additional benefits;
(e) adopt a plan of complete or partial liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or other reorganization of the
Company or any subsidiary of the Company not constituting an inactive subsidiary
(other than the Merger, and other than any such merger, consolidation,
restructuring, recapitalization or other reorganization that is used to effect
an acquisition permitted pursuant to the immediately succeeding clause (f) and
which does not result in a change of control of the Company or change the
Company's Common Stock into a different number or kind of securities);
(f) make any acquisition, by means of stock or asset purchase,
recapitalization, merger, consolidation or otherwise, of (i) any direct or
indirect ownership interest in or assets comprising any business enterprise or
operation or (ii) except in the ordinary course and consistent with past
practice, any other assets; PROVIDED, FURTHER, that such acquisitions do not and
would not prevent or materially delay the consummation of the Merger; and
PROVIDED, FURTHER, that the foregoing shall not prevent the Company from
exploring on a preliminary basis and conducting diligence investigations
(including having discussions with any potential acquisition target) with
respect to any potential acquisition that would require Parent's consent under
the Merger Agreement, for the purpose of determining the desirability of such
potential acquisition and developing the basis on which to seek Parent's
consent, so long as the Company does not submit any formal proposal or
indication of interest with respect to such an acquisition to such acquisition
target, or make any binding commitments with respect to such potential
acquisition, without obtaining Parent's consent;
(g) (i) dispose of any interest in any material business enterprise or
operation of the Company, (ii) make any other disposition of any other direct or
indirect ownership interest in any material assets of the Company (except for
the replacement or upgrade of assets, or disposition of unnecessary assets,
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in the ordinary course and consistent with past practice), or (iii) except in
the ordinary course and consistent with past practice, dispose of any other
assets of the Company;
(h) adopt any amendments to the Company's Amended and Restated Certificate
of Incorporation or the By-Laws or alter through merger, liquidation,
reorganization, restructuring or in any other fashion the corporate structure or
ownership of any subsidiary of the Company;
(i) incur any indebtedness for borrowed money or guarantee any indebtedness
of any other person or entity or make any loans, advances or capital
contributions to, or investments in, any other person or entity (other than to
the Company or any wholly owned subsidiary of the Company);
(j) except as provided for in the Business Plan, engage in the conduct of
any business other than the Company's existing businesses;
(k) enter into any agreement or exercise any discretion providing for
acceleration of payment or performance as a result of a change of control of the
Company or its subsidiaries, except in connection with the Offer and the Merger;
provided that this clause (k) shall not restrict the Company's right to respond
or take action in response to any such acceleration so long as such action is
permitted under the terms of the Merger Agreement;
(l) enter into any contracts, arrangements or understandings requiring in
the aggregate the purchase of equipment, materials, supplies or services in
excess of $2 million individually or $20 million in the aggregate other than any
such contracts, arrangements or understandings providing for capital spending of
the Company or its subsidiaries in accordance with the Business Plan;
(m) enter into or amend, modify, terminate or waive any right under any
agreement with any affiliates of the Company (other than its subsidiaries),
other than any of the foregoing as may be done in the ordinary course of
business and that (x) would not be reasonably be expected, individually or in
the aggregate, to have a material adverse effect on the business, properties,
assets, liabilities, operations, results of operations or condition (financial
or otherwise) of the Company and its subsidiaries, taken as a whole (a "Material
Adverse Effect"), or (y) would be reasonably likely to prevent or materially
delay consummation of the transactions contemplated by the Merger Agreement;
(n) settle or compromise any material litigation or material tax
controversy, with respect to the Company or its subsidiaries or waive, release
or assign any material rights or claims with respect to the Company or its
subsidiaries, except in the ordinary course of business consistent with past
practice;
(o) effect any material change in any of its methods of accounting, except
as may be required by law or generally accepted accounting principles;
(p) take any action, engage in any transaction or enter into any agreement
which would cause any of the representations or warranties of the Company
contained in the Merger Agreement that are subject to, or qualified by, a
"Material Adverse Effect", "material adverse change" or other materiality
qualification to be untrue as of the Effective Time, or any such representations
and warranties that are not so qualified to be untrue in any respect which would
have a Material Adverse Effect;
(q) take any action, including without limitation, the adoption of any
shareholder rights plan or amendments to the Certificate of Incorporation, which
would, directly or indirectly, restrict or impair the ability of Parent to vote,
or otherwise to exercise the rights and receive the benefits of a stockholder
with respect to, securities of the Company that may be acquired or controlled by
Parent or the Purchaser or permit any shareholder to acquire securities of the
Company on a basis not available to Parent in the event that Parent were to
acquire securities of the Company; or
(r) authorize, recommend or propose (other than to Parent), or announce an
intention to do any of the foregoing, or enter into any contract, agreement,
commitment or arrangement to do any of the foregoing.
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NO SOLICITATION. The Merger Agreement provides as follows:
(a) The Company and its Affiliates (as defined in the Merger Agreement) and
each of their respective officers, directors, employees, representatives,
consultants, investment bankers, attorneys, accountants and other agents shall
immediately cease any discussions or negotiations with any other parties that
may be ongoing with respect to any Acquisition Proposal (as defined herein).
Neither the Company nor any of its Affiliates shall, directly or indirectly,
take (and the Company shall not authorize or permit its or its Affiliates,
officers, directors, employees, representatives, consultants, investment
bankers, attorneys, accountants or other agents or affiliates, to so take) any
action to (i) encourage, solicit, initiate or facilitate the making of any
Acquisition Proposal, (including, without limitation, by taking any action that
would make Article VIII of the Company's Amended and Restated Certificate of
Incorporation or Section 203 of the DGCL inapplicable to an Acquisition
Proposal), (ii) enter into any agreement with respect to any Acquisition
Proposal or enter into any arrangement, understanding or agreement requiring it
to abandon, terminate or fail to consummate the Merger or any other transactions
contemplated by the Merger Agreement, or (iii) participate in any way in
discussions or negotiations with, or, furnish or disclose any information to,
any person or entity (other than Parent or the Purchaser) in connection with, or
take any other action to facilitate any inquiries or the making of any proposal
that constitutes, or may reasonably be expected to lead to, any Acquisition
Proposal; PROVIDED, HOWEVER, that the Company, in response to an unsolicited
Acquisition Proposal and in compliance with its obligations under paragraph (b)
below, may participate in discussions or negotiations with or furnish
information (pursuant to a confidentiality agreement with terms not more
favorable to such third party than the terms of the Confidentiality Agreement
described below) to any third party which makes an Acquisition Proposal if (i)
the Board of Directors reasonably determines (based upon the advice of an
independent, nationally recognized financial advisor) that such Acquisition
Proposal will lead to a Superior Proposal (as defined below) and (ii) the Board
of Directors believes (and has been so advised in writing by independent outside
nationally recognized legal counsel) that failing to take such action would
constitute a breach of its fiduciary duties. In addition, neither the Board of
Directors of the Company nor any committee thereof shall (A) withdraw or modify,
or propose to withdraw or modify, in a manner adverse to Parent or the Purchaser
the approval and recommendation of the Offer and the Merger Agreement or (B)
approve or recommend, or propose to approve or recommend, any Acquisition
Proposal; PROVIDED that the Company may recommend to its stockholders an
Acquisition Proposal and in connection therewith withdraw or modify its approval
or recommendation of the Offer or the Merger if (1) a third party makes a
Superior Proposal (as defined herein), and (2) (a) five (5) business days have
elapsed following delivery to Parent of a written notice of the determination by
the Board of Directors of the Company to take such action and during such five
(5) business day period the Company has fully co-operated with Parent including,
without limitation, informing Parent of the terms and conditions of such
Superior Proposal, and the identity of the person or entity making such Superior
Proposal, with the intent of enabling both parties to agree to a modification of
the terms and conditions of the Merger Agreement, and (b) at the end of such
five (5) business day period the Acquisition Proposal continues to constitute a
Superior Proposal.
"Acquisition Proposal" shall mean (i) any inquiry, proposal or offer from
any person or entity relating to any direct or indirect acquisition or purchase
of a substantial amount of assets of the Company or any of its subsidiaries or
of over 10% of any class of equity securities of the Company or any of its
subsidiaries, (ii) any tender offer or exchange offer that, if consummated,
would result in any person or entity beneficially owning 10% or more of any
class of equity securities of the Company or any of its subsidiaries, (iii) any
merger, consolidation, business combination, sale of substantially all the
assets, recapitalization, liquidation, dissolution or similar transaction
involving the Company or any of its subsidiaries, or (iv) any other transaction
the consummation of which could reasonably be expected to impede, interfere
with, prevent or materially delay the Offer or the Merger or which could
reasonably be expected to dilute materially the benefits to Parent of the
transactions contemplated hereby.
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<PAGE>
"Superior Proposal" shall mean a BONA FIDE proposal made by a third party to
acquire all of the shares of Common Stock pursuant to a tender offer, a merger
or a sale of all of the assets of the Company (w) on terms which a majority of
the members of the Board of Directors of the Company determines in their good
faith reasonable judgment (based on the advice of an independent outside
nationally recognized financial advisor (relating to financial matters) and
independent outside nationally recognized legal advisors (relating to legal
matters)) to be more favorable to the Company and its stockholders than the
transactions contemplated by the Merger Agreement, (x) for which financing is
then available (it being understood that financing evidenced by highly confident
letters and similar letters shall not be considered "available"), (y) which is
not subject to any financing or due diligence condition and (z) which an
independent nationally recognized financial advisor has advised the Board of
Directors is more favorable to the Company's stockholders from a financial point
of view than the transactions contemplated by the Merger Agreement, as proposed
to be modified by Parent in accordance with the proviso in the last sentence of
the first paragraph of this paragraph (a).
(b) From and after the date of the Merger Agreement, in addition to the
obligations of the Company set forth in paragraph (a), on the date of receipt
thereof, the Company shall advise Parent of any request for information or of
any Acquisition Proposal, or any inquiry, proposal, discussions or negotiation
with respect to any Acquisition Proposal, the terms and conditions of such
request, Acquisition Proposal, inquiry, proposal, discussion or negotiation and
the Company shall promptly provide to Parent copies of any written materials
received by the Company in connection with any of the foregoing, and the
identity of the person or entity making any such Acquisition Proposal or such
request, inquiry or proposal or with whom any discussion or negotiation is
taking place. The Company shall keep Parent fully informed of the status and
details (including amendments or proposed amendments) of any such request or
Acquisition Proposal and keep Parent fully informed as to the details of any
information requested of or provided by the Company and as to the details of all
discussions or negotiations with respect to any such request, takeover proposal
or inquiry. The Company shall promptly provide to Parent any non-public
information concerning the Company provided to any other person or entity in
connection with any Acquisition Proposal which was not previously provided to
Parent.
(c) Immediately following the execution of the Merger Agreement, the Company
shall request each person or entity which has prior to June 2, 1999 executed a
confidentiality agreement in connection with its consideration of acquiring the
Company or any portion thereof to return all confidential information furnished
prior to June 2, 1999 to such person or entity by or on behalf of the Company.
DIRECTORS' AND OFFICERS' INDEMNIFICATION. The Merger Agreement provides
that, from and after the Effective Time, Parent and the Surviving Corporation
will jointly and severally indemnify, defend and hold harmless certain
individuals specified on the Company Disclosure Statement, and each of the
present and former officers and directors of the Company and any of its
subsidiaries, former subsidiaries and their predecessors, and any person who is
or was serving at the request of the Company as an officer, director or employee
or agent of another person or entity (collectively, the "Indemnified Parties"),
against all losses, expenses, claims, damages or liabilities arising out of
actions or omissions occurring on or prior to the Effective Time (including the
transactions contemplated by the Merger Agreement) to the fullest extent
permitted under applicable law (and shall also, subject to certain limitations,
advance expenses as incurred to the fullest extent permitted under applicable
law; PROVIDED that, the person to whom expenses are advanced provides an
undertaking reasonably satisfactory to the Company to repay such advances if it
is ultimately determined that such person is not entitled to indemnification);
PROVIDED, HOWEVER, that such indemnification shall be provided only to the
extent any directors' and officers' liability insurance policy of the Company or
its subsidiaries does not provide coverage and actual payment thereunder with
respect to the matters that would otherwise
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<PAGE>
be subject to indemnification hereunder (it being understood that Parent or the
Surviving Corporation shall, subject to certain limitations, advance expenses on
a current basis as provided in this paragraph notwithstanding such insurance
coverage to the extent that payments thereunder have not yet been made, in which
case Parent or the Surviving Corporation, as the case may be, shall be entitled
to repayment of such advances from the proceeds of such insurance coverage).
Parent and Surviving Corporation have agreed that all rights to indemnification,
including provisions relating to advances of expenses incurred in defense of any
action, suit or proceeding, whether civil, criminal, administrative or
investigative (each, a "Claim"), existing in favor of the Indemnified Parties as
provided in the Company's Amended and Restated Certificate of Incorporation or
By-Laws or pursuant to other agreements, or certificates of incorporation or
by-laws or other similar documents of any of the Company's subsidiaries, as in
effect as of the date of the Merger Agreement, with respect to matters occurring
through the Effective Time, shall survive the Merger and shall continue in full
force and effect for a period of not less than six years from the Effective
Time; PROVIDED, HOWEVER, that all rights to indemnification in respect of any
Claim asserted, made or commenced within such period shall continue until the
final disposition of such Claim.
The Merger Agreement also provides that the Surviving Corporation shall
maintain in effect for not less than six years after the Effective Time the
current policies of directors' and officers' liability insurance maintained by
the Company and the Company's subsidiaries with respect to matters occurring
prior to the Effective Time; PROVIDED, HOWEVER, that in no event shall Parent be
required to expend in any one year an amount in excess of 150% of the annual
premiums currently paid by the Company for such insurance; PROVIDED, FURTHER,
however, that the Surviving Corporation may substitute therefor policies of at
least the same coverage containing terms and conditions which are no less
advantageous to the Indemnified Parties with an insurance company or companies,
the claims paying ability of which is substantially equivalent to the claims
paying ability of the insurance company or companies providing such insurance
coverage for directors and officers of Parent.
OPTIONS AND COMPANY WARRANTS. Prior to the date on which shares of Common
Stock are accepted for payment in the Offer, both the Board of Directors of the
Company (or, if appropriate, any committee thereof) and the Company will use
their reasonable best efforts to obtain the consent of all of the holders of
options to purchase Common Stock (the "Company Options") heretofore granted
under any stock option plans of the Company (the "Stock Plans") and the holders
of any outstanding warrants to purchase shares of the Common Stock of the
Company ("Company Warrants") to provide for the cancellation, of all the
outstanding Company Options and Company Warrants on the terms set forth in the
Merger Agreement.
Within three business days after the date on which shares of Common Stock
are accepted for payment pursuant to the Offer, each Company Option, whether or
not then vested or exercisable, and each Company Warrant, whether or not then
vested or exercisable, shall, subject to the receipt by the Company of any
required consents from the holder of such Company Options and Company Warrants
pursuant to the immediately preceding paragraph, no longer be exercisable for
the purchase of shares of Common Stock but shall entitle each holder thereof, in
cancellation and settlement therefor, to payments in cash (subject to any
applicable withholding taxes, the "Cash Payment") equal to the product of (x)
the total number of shares of Common Stock subject to such Company Option or
Company Warrant, as the case may be, as to which such Company Option or Company
Warrant could have been exercisable (assuming such Company Option or Company
Warrant was fully vested) and (y) the excess, if any, of the price per share of
Common Stock paid pursuant to the Offer over the exercise price per share of
Common Stock subject to such Company Option or Company Warrant. The Company will
pay each such Cash Payment to be paid to each holder of an outstanding Company
Option or Company Warrant, as the case may be, within six business days of the
date on which shares of Common Stock are accepted for payment pursuant to the
Offer; PROVIDED that such holder has
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delivered the consent described in the immediately preceding paragraph to the
Company. Parent has agreed, pursuant to the Merger Agreement, to provide, or
cause to be provided, to the Company on a timely basis all funds necessary to
pay such Cash Payments.
To the extent that Company Options and Company Warrants were not canceled in
accordance with the immediately preceding paragraph, prior to the Effective
Time, each of the Board of Directors of the Company (or, if appropriate, any
committee thereof) and the Company shall use its best efforts to obtain the
consent of all of the holders of Company Options heretofore granted under any
Stock Plans to provide for the cancellation, effective at the Effective Time, of
all the outstanding Company Options, as follows: immediately prior to the
Effective Time, each Company Option, whether or not then vested or exercisable,
and each Company Warrant, whether or not then vested or exercisable, shall no
longer be exercisable for the purchase of shares of Common Stock but shall
entitle each holder thereof, in cancellation and settlement therefor, to
payments in cash, subject to any applicable withholding taxes, of the Cash
Payment, at the Effective Time, each such Cash Payment to be paid to each holder
of an outstanding Company Option or Company Warrant, as the case may be, at the
Effective Time. The Company will ensure that any then-outstanding stock
appreciation rights or limited stock appreciation rights shall be canceled as of
immediately prior to the Effective Time without any payment therefor. As
provided in the Merger Agreement, the Stock Plans and any other plan, program or
arrangement providing for the issuance or grant of any other interest in respect
of the capital stock of the Company or any subsidiary (collectively with the
Stock Plans, referred to as the "Stock Incentive Plans") shall terminate as of
the Effective Time. The Merger Agreement provides that the Company will ensure
that neither the Company nor any of its subsidiaries is or will be bound by any
Company Options, other options, Company Warrants, other warrants, rights or
agreements which would entitle any Person, other than Parent or its Affiliates
(including Purchaser), to own any capital stock of the Surviving Corporation or
any of its subsidiaries or to receive any payment in respect thereof. The
Company will ensure that after the Effective Time, the only rights of the
holders of Company Options to purchase shares of Common Stock or Company
Warrants in respect of such Company Options and Company Warrants will be to
receive the Cash Payment in cancellation and settlement thereof.
CERTAIN EMPLOYEE BENEFITS. Pursuant to the Merger Agreement, from and after
the Effective Time, Parent will cause the Surviving Corporation to honor, in
accordance with their terms, the employment contracts, severance agreements and
similar agreements with officers and employees of the Company and its
subsidiaries disclosed to Parent in the Company Disclosure Statement (the
"Executive Agreements"); PROVIDED, HOWEVER, that nothing in the Merger Agreement
shall preclude any change in any Executive Agreement effective on a prospective
basis that is permitted pursuant to the terms of the Merger Agreement or the
applicable Employee Plan. Company performance in respect of any performance or
other programs shall be calculated without taking into account any expenses or
costs directly associated with or arising as a result of the transactions
contemplated by the Merger Agreement or any non-recurring charges that would not
reasonably be expected to have been incurred had the transactions contemplated
by the Merger Agreement not occurred. With respect to employees of the Company
and its subsidiaries, Parent will assume the obligations of the Company and its
subsidiaries under the Employee Plans as in effect immediately prior to the
Effective Time and will provide employee benefit plans with aggregate employee
benefits to Company employees that are no less favorable than the aggregate
benefits provided to them immediately prior to the Effective Time pursuant to
the plans set forth in the Company Disclosure Statement; PROVIDED that Parent at
its sole option may provide employee benefits to Company employees which, in the
aggregate, are no less favorable than those applicable to similarly situated
employees of Parent. With respect to any plans established by Parent, to the
extent a Company employee becomes eligible to participate in any such plans,
Parent shall grant to such Company employee from and after the Effective Time,
credit for all service with the Company and its affiliates and predecessors (and
any other service credited by the Company under similar Employee Plans) prior to
the Effective Time for eligibility to participate,
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benefit accrual and vesting purposes. To the extent Parent benefit plans provide
medical or dental welfare benefits, such plans shall waive any preexisting
conditions and actively at-work exclusions with respect to Company employees
(but only to the extent such Company employees were provided coverage under the
Employee Plans) and shall provide that any expenses incurred on or before the
Effective Time in the applicable plan year by or on behalf of any Company
employees shall be taken into account under the Parent benefit plans for the
purposes of satisfying applicable deductible, co-insurance and maximum out-of-
pocket provisions for such Company employees.
AGREEMENT TO USE REASONABLE BEST EFFORTS. Pursuant to the Merger Agreement
and subject to the terms and conditions thereof, the Company and Parent shall,
and shall use their reasonable best efforts to cause their respective
subsidiaries, as applicable, to: (i) promptly make all filings and seek to
obtain all authorizations (including, without limitation, all filings required
under the HSR Act, the applicable merger regulations of the European Community
and all applicable Polish competition statutes) required under all applicable
laws with respect to the Merger and the other transactions contemplated by the
Merger Agreement and will reasonably consult and cooperate with each other with
respect thereto; (ii) not take any action (including effecting or agreeing to
effect or announcing an intention or proposal to effect, any acquisition,
business combination or other transaction except as previously disclosed to
Parent in the Company Disclosure Statement) which would impair the ability of
the parties to consummate the Merger; and (iii) use their reasonable best
efforts to promptly (x) take, or cause to be taken, all other actions and (y)
do, or cause to be done, all other things reasonably necessary, proper or
appropriate to satisfy the conditions set forth in Item 3--"Identity and
Background--Merger Agreement--Conditions of the Offer" and the conditions
precedent to the obligations of Parent, the Purchaser and the Company to effect
the Merger (as further described in "--The Merger") (unless waived) and to
consummate and make effective the transactions contemplated by the Merger
Agreement on the terms and conditions set forth in the Merger Agreement
(including seeking to remove promptly any injunction or other legal barrier that
may prevent such consummation); PROVIDED, HOWEVER, that no loan agreement or
contract for borrowed money shall be repaid except as currently required by its
terms, in whole or in part, and, subject to the terms of the Merger Agreement,
no contract shall be amended to increase the amount payable thereunder or
otherwise to be more burdensome to the Company or any of its subsidiaries in
order to obtain any such consent, approval or authorization without first
obtaining the written approval of Parent and the Purchaser.
REPRESENTATIONS AND WARRANTIES. In the Merger Agreement, the Company has
made customary representations and warranties to Parent and the Purchaser with
respect to, among other things, its organization, corporate authority, capital
structure, financial statements, public filings, litigation, compliance with
applicable laws, consent and approvals, employee benefit plans, brokers' or
finders' fees, state takeover statutes, voting requirements, taxes, intellectual
property, Year 2000 compliance and the absence of any material adverse changes
in the Company since December 31, 1998.
TERMINATION. The Merger Agreement may be terminated and the Merger may be
abandoned at any time prior to the Effective Time, whether before or after any
approval by the stockholders of the Company:
(a) by mutual written consent of Parent and the Company; or
(b) by Parent or the Company if:
(i) the Purchaser shall not have accepted for payment and paid for shares
of Common Stock pursuant to the Offer by September 30, 1999 (the
"Termination Date"); PROVIDED THAT the right to terminate the Merger
Agreement under this clause shall not be available to any party whose
failure to fulfill any obligation under the Merger Agreement has been
the
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cause of or resulted in the failure of the Effective Time to occur on
or before the Termination Date; or
(ii) any court of competent jurisdiction or Governmental Body shall have
issued an order, decree or ruling or taken any other action
permanently restraining, enjoining or otherwise prohibiting the
acceptance for payment of, or payment for, shares of Common Stock
pursuant to the Offer or the payment for shares of Common Stock or
the making of any Cash Payment pursuant to the Merger and such order,
decree, ruling or other action shall have become final and
nonappealable.
(c) by the Company if:
(i) Parent or the Purchaser breaches or fails in any material respect to
perform or comply with its covenants and agreements contained in the
Merger Agreement or breaches its representations and warranties in
any material respect and such breach cannot or has not been cured
within fifteen (15) days after the giving of written notice of such
breach to the Parent and the Purchaser, other than any breach or
breaches which is or are not reasonably likely to affect adversely
Parent's or the Purchaser's ability to complete the Offer or the
Merger; or
(ii) Parent or the Purchaser shall have (A) failed to commence the Offer
within five (5) business days following the date of the Merger
Agreement, (B) terminated the Offer in violation of its terms or the
Merger Agreement; or (C) failed to pay for shares of Common Stock in
accordance with the terms of the Offer and, in any event, on or prior
to the Termination Date, unless, in the case of (A), (B) or (C), such
failure shall have been caused by the failure of the Company to
satisfy the conditions set forth in clauses (v)(e) or (v)(f) of Item
3--"Identity and Background--Merger Agreement--Conditions of the
Offer".
(d) by Parent or the Purchaser if:
(i) the Board of Directors of the Company shall have withdrawn or
modified its approval or recommendation of the Merger Agreement, the
Offer or the Merger in a manner adverse to Parent or the Purchaser;
(ii) the Offer is terminated or expires in accordance with its terms
without the Purchaser having purchased any Common Stock thereunder
due to an occurrence which would result in a failure to satisfy any
one or more of the conditions set forth in Item 3-- "Identity and
Background--Merger Agreement--Conditions of the Offer", unless any
such failure shall have been caused by or resulted from the failure
of Parent or the Purchaser to perform in any material respect any
covenant or agreement of either of them contained in the Merger
Agreement or the material breach by Parent or the Purchaser of any
representation or warranty of either of them contained in the Merger
Agreement;
(iii) in the event of a breach by the Company of any representation,
warranty, covenant or agreement contained in the Merger Agreement
which (A) would give rise to the failure of a condition set forth in
clause (v)(e) or (v)(f) of Item 3--"Identity and Background-- Merger
Agreement--Conditions of the Offer", (B) cannot or has not been cured
prior to the earlier of (x) fifteen (15) days after the giving of
written notice of such breach to the Company and (y) two (2) business
days prior to the date on which the Offer expires and (C) has not
been waived by Parent pursuant to the provisions of the Merger
Agreement;
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(iv) any condition contained in Item 3--"Identity and Background--Merger
Agreement-- Conditions of the Offer" shall not have been satisfied by
the expiration date of the Offer and on or prior to such date it
shall have been publicly disclosed, or Parent shall have otherwise
learned, that beneficial ownership (determined for the purposes of
this clause (iv) as set forth in Rule 13d-3 promulgated under the
Exchange Act) of 30% or more of the Common Stock has been acquired by
any person, entity or group (as defined in Section 13(d)(3) under the
Exchange Act); or
(v) any Stockholder Agreement shall have ceased to be in full force and
effect or any party to any such agreement (other than Parent or the
Purchaser) shall materially breach or repudiate any such agreement.
The Merger Agreement provides that, in the event of termination of the
Merger Agreement and the abandonment of the Merger pursuant to the terms of the
Merger Agreement, no party to the Merger Agreement (or any such party's
directors and officers) shall have any liability or further obligation to any
other party to the Merger Agreement, except with respect to the provisions
described under "--Directors' and Officers' Indemnification" and "--Payment of
Certain Fees and Expenses Upon Termination."
PAYMENT OF CERTAIN FEES AND EXPENSES UPON TERMINATION.
Except as provided in the two next succeeding paragraphs, all costs and
expenses incurred in connection with the Merger Agreement and the transactions
contemplated thereby shall be paid by the party incurring such costs and
expenses, except as expressly set forth in the Merger Agreement.
If the Merger Agreement is terminated (i) by Parent in accordance with
paragraph (d)(ii) or (d)(iii) under "--Termination" by reason of the occurrence
of any event not resulting from the willful action or willful omission or gross
negligence of the Company or any of its subsidiaries and which is specified in
clause (v)(e) of Item 3--"Identity and Background--Merger Agreement--Conditions
of the Offer", then the Company shall reimburse Parent in immediately available
funds for the reasonable documented expenses of Parent and the Purchaser
incurred in connection with the transactions contemplated by the Merger
Agreement (including, without limitation, printing fees, filing fees and fees
and expenses of its legal and financial advisors and all fees and expenses
payable to any financing sources) not to exceed $8,000,000, such payment to be
made by the Company not later than the second business day after receipt by the
Company of documentation evidencing such expenses.
If the Merger Agreement is terminated (i) by Parent in accordance with
paragraph (d)(ii) under "--Termination" by reason of the occurrence of any event
specified in clauses (v)(f) or (g) of Item 3-- "Identity and Background--Merger
Agreement--Conditions of the Offer" or any event specified in clause (v)(e) of
Item 3--"Identity and Background--Merger Agreement--Conditions of the Offer" and
resulting from willful action or willful omission or gross negligence of the
Company or any of its subsidiaries; (ii) by Parent in accordance with paragraph
(d)(i) or (d)(iii) under "--Termination" (but, in the case of paragraph (d)(iii)
under "--Termination", only to the extent such event results from the willful
act or willful omission or gross negligence of the Company or any of its
subsidiaries); or (iii) by Parent pursuant to paragraph (d)(iv), if within
twelve (12) months of the date of such termination the Company enters into a
definitive agreement for a transaction in respect of an Acquisition Proposal
with any person or entity other than Parent or its affiliates, the Company shall
pay to Parent, on the business day next succeeding the date of termination (or
in the case of a termination pursuant to clause (iii) of this paragraph, the
date on which such definitive agreement is entered into), by wire transfer in
immediately available funds an amount equal to $32,000,000.
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STOCKHOLDER AGREEMENTS
THE FOLLOWING IS A SUMMARY OF THE MATERIAL TERMS OF THE COMMON STOCKHOLDER
AGREEMENTS AND THE PREFERRED STOCKHOLDER AGREEMENTS. THE SUMMARY IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO THE RELEVANT STOCKHOLDER AGREEMENTS, EACH OF WHICH
IS INCORPORATED HEREIN BY REFERENCE AND COPIES OF THE FORMS OF SUCH AGREEMENTS
WHICH HAVE BEEN FILED WITH THE COMMISSION AS EXHIBITS (C)(4) AND (C)(5) TO THIS
SCHEDULE 14D-9.
COMMON STOCKHOLDER AGREEMENTS.
Parent and the Purchaser have entered into the Common Stockholder Agreements
with Samuel Chisolm, David Chance, Robert E. Fowler III, certain affiliates of
Advent International Group and the Chase Group and Morgan Grenfell who are the
record and beneficial owners of, in the aggregate, 16,175,431 shares of Common
Stock, warrants exercisable for 5,500,000 shares of Common Stock and options to
purchase 2,286,000 shares of Common Stock (representing approximately 48.4% of
the outstanding Common Stock and approximately 51.5% of the Common Stock on a
fully-diluted basis).
AGREEMENT TO TENDER COMMON STOCK. Pursuant to each Common Stockholder
Agreement, each Stockholder has agreed to validly tender (and not to withdraw)
pursuant to and in accordance with the terms of the Offer, in a timely manner
for acceptance by the Purchaser in the Offer, all of such Stockholder's Option
Securities which constitute shares of Common Stock. The Common Stockholder
Agreement provides that each Stockholder shall be entitled to receive the
highest price per share of Common Stock paid by the Purchaser pursuant to the
Offer for the shares of Common Stock so tendered and, additionally, provides
that the price per share of Common Stock paid in the Offer shall not be less
than $19.00, payable in cash.
OPTION TO PURCHASE COMMON STOCK; CERTAIN PURCHASE OBLIGATIONS. Each
Stockholder has granted to the Purchaser (x) an irrevocable option (the "Stock
Option") to purchase all shares of Common Stock constituting Option Securities
owned by such Stockholder at a purchase price per share equal to $19.00, payable
in cash, and (y) an irrevocable option (the "Securities Option" and, together
with the Stock Option, the "Option") to purchase the Option Securities (other
than Option Securities constituting shares of Common Stock) at a price per
Option Security equal to the $19.00 LESS the exercise price of such Option
Security, payable in cash, in each case until the termination date of the
applicable Common Stockholder Agreement. Until such termination date, if (i) the
Offer is terminated, abandoned or withdrawn by Parent or the Purchaser (whether
due to the failure of any of the conditions thereto or otherwise), (ii) the
Offer is consummated but the Stockholder has not validly tendered into the Offer
such Stockholder's Option Securities constituting shares of Common Stock or
(iii) the Merger Agreement is terminated in accordance with its terms, the
Option shall, in any such case, become exercisable, in whole but not in part,
upon the first to occur of any such event and remain exercisable, in whole but
not in part, until the date which is 90 days after the date of the occurrence of
such event, but shall not be exercisable in each case unless: (x) all waiting
periods under the HSR Act, required for the purchase of Option Securities upon
the exercise of the Option shall have expired or been waived and all other
necessary governmental consents required for the Purchaser to purchase Option
Securities upon the exercise of the Option, including, but not limited to, all
necessary approvals of the Polish Anti-Monopoly Commission, and (y) there shall
not then be in effect any preliminary or final injunction or other order issued
by any court or governmental, administrative or regulatory agency or authority
prohibiting the exercise of the Option pursuant to the applicable Common
Stockholder Agreement. Provided that the applicable Common Stockholder Agreement
has not been terminated, in the event that the Option is not exercisable because
the circumstances described in clauses (x) and (y) have not occurred, then the
Option shall be exercisable for the 90 day period commencing on the date that
the circumstances set forth in clauses (x) and (y) have occurred.
In the event that the Purchaser shall have purchased shares of Common Stock
in the Offer in an amount necessary to satisfy the Minimum Condition in
accordance with the terms of the Merger Agreement, the Purchaser shall
thereafter purchase all of the Option Securities (other than shares of
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Common Stock) then held by the Stockholders no later than the date which is the
third business day after the date of such consummation, at a purchase price per
Option Security equal to the price paid per share of Common Stock in the Offer,
LESS the exercise price of such Option Security.
CERTAIN COVENANTS. Pursuant to the Common Stockholder Agreements, each
Stockholder has agreed that during the period commencing on June 2, 1999, and
continuing until the first to occur of (i) the Effective Time, (ii) the last
date the Option is exercisable as set forth under the heading "--Option to
Purchase Common Stock; Certain Purchase Obligations" and (iii) the termination
date of the applicable Common Stockholder Agreement, at any meeting of the
holders of shares of Common Stock, however called, or in connection with any
written consent of the holders of shares of Common Stock, such Stockholder shall
vote (or cause to be voted) the shares of Common Stock (if any) owned by such
Stockholder whether issued, heretofore owned or hereafter acquired, (i) in favor
of the Merger, the execution and delivery by the Company of the Merger Agreement
and the approval of the terms thereof and each of the other actions contemplated
by the Merger Agreement and the applicable Common Stockholder Agreement and any
actions required in furtherance thereof; (ii) against any action or agreement
that would result in a breach in any respect of any covenant, representation or
warranty or any other obligation or agreement of the Company under the Merger
Agreement; and (iii) except as otherwise agreed to in writing in advance by
Parent, against the following actions (other than the Merger and the
transactions contemplated by the Merger Agreement): (A) any extraordinary
corporate transaction, such as a merger, consolidation or other business
combination involving the Company or its subsidiaries; (B) a sale, lease or
transfer of a material amount of assets of the Company or its subsidiaries, or a
reorganization, recapitalization, dissolution or liquidation of the Company or
its subsidiaries; (C) (1) any change in a majority of the persons who constitute
the Board of Directors of the Company; (2) any change in the present
capitalization of the Company or any amendment of the Company's Amended and
Restated Certificate of Incorporation or By-laws; (3) any other material change
in the Company's corporate structure or business; or (4) any other action
involving the Company or its subsidiaries which is intended, or could reasonably
be expected, to impede, interfere with, delay, postpone, or materially adversely
affect the Merger and the transactions contemplated by the applicable Common
Stockholder Agreement and the Merger Agreement. Each Stockholder has also agreed
not to enter into any agreement or understanding with any person or entity the
effect of which would be to violate the provisions and agreements contained in
this paragraph.
Each Stockholder has also agreed as follows:
(a) Beginning on June 2, 1999, and ending on the last date the Option is
exercisable as set forth under the heading "--Option to Purchase Common
Stock; Certain Purchase Obligations", such Stockholder shall not, in its
capacity as such, directly or indirectly, initiate, solicit (including by
way of furnishing information), encourage or respond to or take any other
action knowingly to facilitate, any inquiries or the making of any proposal
by any person or entity (other than Parent or any affiliate of Parent) with
respect to the Company that constitutes or reasonably may be expected to
lead to, an Acquisition Proposal (as defined in Item 3--"Identity and
Background-- Merger Agreement--No Solicitation"), or enter into or maintain
or continue discussions or negotiate with any person or entity in
furtherance of such inquiries or to obtain any Acquisition Proposal, or
agree to or endorse any Acquisition Proposal, or authorize or permit any
person or entity acting on behalf of such Stockholder to do any of the
foregoing. If a Stockholder receives any inquiry or proposal regarding any
Acquisition Proposal, such Stockholder shall promptly inform Parent of that
inquiry or proposal and the details thereof.
(b) Beginning on June 2, 1999, and ending on the last date the Stock
Option is exercisable as set forth under the heading "--Option to Purchase
Common Stock; Certain Purchase Obligations", except as expressly
contemplated by the applicable Common Stockholder Agreement, such
Stockholder shall not (i) directly or indirectly, offer for sale, sell,
transfer, tender, pledge, encumber, assign or otherwise dispose of, or enter
into any contract, option or other arrangement
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or understanding with respect to or consent to the offer for sale, transfer,
tender, pledge, encumbrance, assignment or other disposition of, any or all
of such Stockholder's Option Securities or any interest therein; PROVIDED
that a Stockholder may transfer any Option Securities to any affiliate of
such Stockholder; PROVIDED, FURTHER, that such transferee shall have become
a party to the applicable Common Stockholder Agreement (or an agreement
identical to such agreement) and shall be deemed to make all representations
and warranties set forth in the applicable Common Stockholder Agreement on
the date of the transfer of such Option Securities; (ii) grant any proxies
or powers of attorney (except for powers of attorney granted to affiliates
of such Stockholder solely for administrative purposes and which require the
holder thereof to vote any and all shares of Common Stock subject to such
powers in accordance with the applicable Common Stockholder Agreement),
deposit any Option Securities into a voting trust or enter into a voting
agreement with respect to any Option Securities; or (iii) take any action
that would make any representation or warranty of such Stockholder contained
in the applicable Common Stockholder Agreement untrue or incorrect or have
the effect of preventing such Stockholder from performing the Stockholder's
obligations under the applicable Common Stockholder Agreement.
(c) Such Stockholder irrevocably waives any rights of appraisal or
rights to dissent from the Merger that such Stockholder may have.
(d) Such Stockholder shall not request that the Company register the
transfer (book-entry or otherwise) of any Certificate or uncertificated
interest representing any of such Stockholder's Option Securities, unless
such transfer is made in compliance with the applicable Common Stockholder
Agreement.
REPRESENTATIONS AND WARRANTIES. In the Common Stockholder Agreements, each
Stockholder has made customary representations and warranties to Parent with
respect to, among other things, ownership of, and capacity with respect to the
Option Securities subject to the Common Stockholder Agreement, legal capacity to
enter into the Common Stockholder Agreement, absence of conflicts or of
violations of laws and absence of liens in respect of the securities subject to
such agreements.
TERMINATION. Pursuant to the Common Stockholder Agreements, the obligations
of the Stockholder under each such agreement terminate upon the fifth day after
the earlier of (i) the expiration of the 90 day exercise period described under
"--Option to Purchase Common Stock; Certain Purchase Obligations", (ii) at the
Stockholder's option, upon the valid termination of the Merger Agreement by the
Company pursuant to the conditions described in paragraph (c) in Item 3--
"Identity and Background--Merger Agreement--Termination" or (iii) the date which
is 180 days after the date of the Common Stockholder Agreement.
PREFERRED STOCKHOLDER AGREEMENTS.
Parent and the Purchaser have entered into the Preferred Stockholder
Agreements with certain members of the Chase Group and Morgan Grenfell who are
the holders of all of the outstanding Preference Shares.
OPTION TO PURCHASE PREFERENCE SHARES; CERTAIN PURCHASE OBLIGATIONS. Each
Preferred Stockholder has granted to the Purchaser (x) an irrevocable option
(the "Preferred Stock Option") to purchase all Preference Shares owned by such
Preferred Stockholder at a purchase price per Preference Share equal to the
liquidation preference of such Preference Share PLUS all accrued and unpaid
dividends thereon on the date of purchase, payable in cash, until the
termination date of the applicable Preferred Stockholder Agreement. Until such
termination date, if (i) the Offer is terminated, abandoned or withdrawn by
Parent or the Purchaser (whether due to the failure of any of the conditions
thereto or otherwise), (ii) the Offer is consummated but the Purchaser has not
accepted for payment and paid for shares of Common Stock, or (iii) the Merger
Agreement is terminated in accordance with its terms, the Preferred Stock Option
shall, in any such case, become exercisable, in whole but not in part, upon the
first to occur of any such event and remain exercisable, in whole but not in
part, until the date which is
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90 days after the date of the occurrence of such event, but shall not be
exercisable in each case unless: (x) all waiting periods under the HSR Act,
required for the purchase of Preference Shares upon the exercise of the
Preferred Stock Option, shall have expired or been waived and all other
necessary governmental consents required for the Purchaser to purchase
Preference Shares upon the exercise of the Preferred Stock Option, including,
but not limited to, all necessary approvals of the Polish Anti-Monopoly
Commission, and (y) there shall not then be in effect any preliminary or final
injunction or other order issued by any court or governmental, administrative or
regulatory agency or authority prohibiting the exercise of the Preferred Stock
Option pursuant to the applicable Preferred Stockholder Agreement. Provided that
the applicable Preferred Stockholder Agreement has not been terminated, in the
event that the Preferred Stock Option is not exercisable because the
circumstances described in clauses (x) and (y) have not occurred, then the
Preferred Stock Option shall be exercisable for the 90 day period commencing on
the date that the circumstances set forth in clauses (x) and (y) have occurred.
In the event that the Purchaser shall have purchased shares of Common Stock
in the Offer in an amount necessary to satisfy the Minimum Condition in
accordance with the terms of the Merger Agreement, the Purchaser shall
thereafter purchase all of the Preference Shares held by the Stockholders no
later than the date which is the third business day after the date of such
consummation, at a purchase price per Preference Share equal to the liquidation
preference of such Preference Share PLUS all accrued and unpaid dividends
thereon on the date of purchase, payable in cash.
CERTAIN COVENANTS. Pursuant to the Preferred Stockholder Agreements, each
Stockholder has agreed that during the period commencing on June 2, 1999, and
continuing until the first to occur of (i) the Effective Time, (ii) the last
date the Option is exercisable as set forth under the heading "--Option to
Purchase Preference Shares; Certain Purchase Obligations" and (iii) the
termination date of the applicable Preferred Stockholder Agreement, at any
meeting of the holders of Preference Shares (or of the Holders, to the extent
the holders of Preference Shares are entitled to vote with the Holders, whether
as a single class or otherwise) however called, or in connection with any
written consent of the holders of Preference Shares, such Preferred Stockholder
shall vote (or cause to be voted) the Preference Shares owned by such Preferred
Stockholder whether issued, heretofore owned or hereafter acquired, (i) in favor
of the Merger, the execution and delivery by the Company of the Merger Agreement
and the approval of the terms thereof and each of the other actions contemplated
by the Merger Agreement and the applicable Preferred Stockholder Agreement and
any actions required in furtherance thereof; (ii) against any action or
agreement that would result in a breach in any respect of any covenant,
representation or warranty or any other obligation or agreement of the Company
under the Merger Agreement; and (iii) except as otherwise agreed to in writing
in advance by Parent, against the following actions (other than the Merger and
the transactions contemplated by the Merger Agreement): (A) any extraordinary
corporate transaction, such as a merger, consolidation or other business
combination involving the Company or its subsidiaries; (B) a sale, lease or
transfer of a material amount of assets of the Company or its subsidiaries, or a
reorganization, recapitalization, dissolution or liquidation of the Company or
its subsidiaries; (C) (1) any change in a majority of the persons who constitute
the Board of Directors of the Company; (2) any change in the present
capitalization of the Company or any amendment of the Company's Amended and
Restated Certificate of Incorporation or By-Laws; (3) any other material change
in the Company's corporate structure or business; or (4) any other action
involving the Company or its subsidiaries which is intended, or could reasonably
be expected, to impede, interfere with, delay, postpone, or materially adversely
affect the Merger and the transactions contemplated by the applicable Preferred
Stockholder Agreement and the Merger Agreement. Each Preferred Stockholder has
also agreed not to enter into any agreement or understanding with any person or
entity the effect of which would be to violate the provisions and agreements
contained in this paragraph.
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Each Preferred Stockholder has also agreed as follows:
(a) Beginning on June 2, 1999, and ending on the last date the Preferred
Stock Option is exercisable as set forth under the heading "--Option to
Purchase Preference Shares; Certain Purchase Obligations", such Preferred
Stockholder shall not, in its capacity as such, directly or indirectly,
initiate, solicit (including by way of furnishing information), encourage or
respond to or take any other action knowingly to facilitate, any inquiries
or the making of any proposal by any person or entity (other than Parent or
any affiliate of Parent) with respect to the Company that constitutes or
reasonably may be expected to lead to, an Acquisition Proposal (as defined
in Item 3--"Identity and Background--Merger Agreement--No Solicitation"), or
enter into or maintain or continue discussions or negotiate with any person
or entity in furtherance of such inquiries or to obtain any Acquisition
Proposal, or agree to or endorse any Acquisition Proposal, or authorize or
permit any person or entity acting on behalf of such Preferred Stockholder
to do any of the foregoing. If a Preferred Stockholder receives any inquiry
or proposal regarding any Acquisition Proposal, such Preferred Stockholder
shall promptly inform Parent of that inquiry or proposal and the details
thereof.
(b) Beginning on June 2, 1999, and ending on the last date the Preferred
Stock Option is exercisable as set forth under the heading "--Option to
Purchase Preference Shares; Certain Purchase Obligations", except as
expressly contemplated by the applicable Preferred Stockholder Agreement,
such Preferred Stockholder shall not (i) directly or indirectly, offer for
sale, sell, transfer, tender, pledge, encumber, assign or otherwise dispose
of, or enter into any contract, option or other arrangement or understanding
with respect to or consent to the offer for sale, transfer, tender, pledge,
encumbrance, assignment or other disposition of, any or all of such
Stockholder's Preference Shares or any interest therein; PROVIDED that a
Preferred Stockholder may transfer any Preference Shares to any affiliate of
such Preferred Stockholder; PROVIDED, FURTHER, that such transferee shall
have become a party to the applicable Preferred Stockholder Agreement (or an
agreement identical to such agreement) and shall be deemed to make all
representations and warranties set forth in the applicable Preferred
Stockholder Agreement on the date of the transfer of such Preference Shares;
(ii) grant any proxies or powers of attorney (except for powers of attorney
granted to affiliates of such Preferred Stockholder solely for
administrative purposes and which require the holder thereof to vote any and
all Preference Shares subject to such powers in accordance with the
applicable Preferred Stockholder Agreement), deposit any Preference Shares
into a voting trust or enter into a voting agreement with respect to any
Preference Shares; or (iii) take any action that would make any
representation or warranty of such Preferred Stockholder contained in the
applicable Preferred Stockholder Agreement untrue or incorrect or have the
effect of preventing such Preferred Stockholder from performing such
Preferred Stockholder's obligations under the applicable Preferred
Stockholder Agreement.
(c) Such Preferred Stockholder irrevocably waives any rights of
appraisal or rights to dissent from the Merger that such Preferred
Stockholder may have.
(d) Such Preferred Stockholder shall not request that the Company
register the transfer (book-entry or otherwise) of any Certificate or
uncertificated interest representing any of the Stockholder's Preference
Shares, unless such transfer is made in compliance with the applicable
Preferred Stockholder Agreement.
REPRESENTATIONS AND WARRANTIES. In the Preferred Stockholder Agreements,
each Preferred Stockholder has made customary representations and warranties to
Parent with respect to, among other things, ownership of, and capacity with
respect to the Preference Shares subject to the Preferred Stockholder
Agreements, legal capacity to enter into the Preferred Stockholder Agreements,
absence of conflicts or of violations of laws and absence of liens in respect of
the shares subject to such agreements.
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TERMINATION. Pursuant to the Preferred Stockholder Agreements, the
obligations of the Preferred Stockholder under each such agreement terminate
upon the fifth day after the earlier of (i) the expiration of the 90 day
exercise period described under "--Option to Purchase Preference Shares; Certain
Purchase Obligations", (ii) at the Stockholder's option, upon the valid
termination of the Merger Agreement by the Company under the conditions
described in paragraph (c) in Item 3-- "Identity and Background--Merger
Agreement--Termination" or (iii) the date which is 180 days after the date of
the Preferred Stockholder Agreements.
CONFIDENTIALITY AGREEMENT
THE FOLLOWING IS A SUMMARY OF THE CONFIDENTIALITY AGREEMENT, DATED AS OF
APRIL 12, 1999, BETWEEN PARENT AND THE COMPANY (THE "CONFIDENTIALITY
AGREEMENT"). THE SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE
CONFIDENTIALITY AGREEMENT, A COPY OF WHICH HAS BEEN FILED WITH THE COMMISSION AS
EXHIBIT (C)(2) TO THIS SCHEDULE 14D-9.
Pursuant to the Confidentiality Agreement, Parent has agreed, among other
things, (i) to keep confidential, except as required by law or regulation or
rule of any stock exchange on which Parent's shares are listed, all non-public,
confidential or proprietary information furnished to Parent by the Company,
together with analyses, compilations, forecasts, studies or other documents
prepared by Parent which contain such information ("the Information") and to
disclose any of the Information only to its Representatives (as defined below)
who need to know the Information and for the purposes of evaluating the proposed
transaction and (ii) to indemnify and hold the Company harmless from and against
all liabilities, claims, losses, costs, damages and reasonable expenses
(including reasonable counsel's fees and expenses) in any way caused by, or
arising directly or indirectly from, or in consequence of any breach of the
Confidentiality Agreement by Parent or any of its Representatives.
The "Information" does not include information which (i) is or becomes
generally available to the public other than as a result of a disclosure by
Parent or its directors, officers, employees, and advisors (collectively,
"Representatives"), (ii) is received on a non-confidential basis from an
independent third party who had obtained the information lawfully and was not
subject to a confidentiality agreement or other obligation of secrecy in respect
of such information, (iii) Parent can show was in its possession before Parent
received such information from the Company, or (iv) Parent can show was
independently developed by it or on its behalf by personnel having no access to
the Information at the time of independent development.
EXECUTIVE OFFICERS
The Schedule 14D-1 of Parent indicates that Parent currently intends to
cause the Company's operations to continue to be run and managed by, amongst
others, the Company's existing executive officers; that Parent will continue to
evaluate all aspects of the business, operations, capitalization and management
of the Company during the pendency of the Offer and after the consummation of
the Offer and the Merger and will take such further actions as it deems
appropriate under the circumstances then existing; that Parent intends to seek
additional information about the Company during this period; and that Parent
intends to review such information as part of a comprehensive review of the
Company's business, operations, capitalization and management.
ITEM 4. THE SOLICITATION OR RECOMMENDATION
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors of the Company has unanimously (i) determined that
each of the Offer and the Merger are advisable and fair to, and in the best
interests of, the holders of the capital stock of the Company, including, but
not limited to, the holders of shares of Common Stock (ii) approved the Offer
and the Merger and (iii) recommended the acceptance of the Offer, the approval
of the Merger and the approval and adoption of the Merger Agreement by the
stockholders of the Company.
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<PAGE>
This recommendation is based in part upon an opinion received from Goldman
Sachs International, the Company's financial advisors ("Goldman Sachs"), that
the Offer Price to be offered to the Company's stockholders pursuant to the
Merger Agreement is fair, from a financial point of view, to the holders of
Common Stock, subject to the assumptions and qualifications contained in such
opinion. THE FULL TEXT OF THE FAIRNESS OPINION RECEIVED BY THE COMPANY FROM
GOLDMAN SACHS IS ATTACHED HERETO AS ANNEX B. STOCKHOLDERS ARE URGED TO READ SUCH
OPINION IN ITS ENTIRETY.
As set forth in Purchaser's Offer to Purchase, Purchaser will purchase
shares of Common Stock tendered prior to the close of the Offer if the Minimum
Condition shall have been satisfied by that time and if all other conditions to
the Offer have been satisfied (or waived). Stockholders considering not
tendering their shares of Common Stock in order to wait for the Merger should
note that Purchaser is not obligated to purchase any shares of Common Stock, and
can terminate the Offer and the Merger Agreement and not proceed with the
Merger, if the Minimum Condition or any of the other conditions to the Offer are
not satisfied. See Item 3--"Identity and Background--Merger
Agreement--Conditions of the Offer."
Under the DGCL and the Company's Amended and Restated Certificate of
Incorporation, the approval of the Board of Directors of the Company and the
affirmative vote of the holders of a majority of the outstanding shares of
Common Stock and of two-thirds of each class of Preference Shares (voting
separately) (unless at least 90% of the outstanding shares of Common Stock and
of each class of Preference Shares are held by the Purchaser) are required to
approve the Merger. Accordingly, if the conditions to the Offer are satisfied
and the Purchaser fulfills its obligation to purchase all of the outstanding
Preference Shares pursuant to the Preferred Stockholder Agreements, the
Purchaser will have sufficient voting power to cause the approval of the Merger
without the affirmative vote of any other stockholder. Under the DGCL, if
Purchaser acquires at least 90% of the then outstanding shares of Common Stock
and of each class of Preference Shares, the Purchaser will be able to approve
and adopt the Merger Agreement and the Merger without a vote of the Company's
stockholders. Parent, Purchaser and the Company have agreed to use their
reasonable efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, and to assist and cooperate with the other parties in doing,
all things necessary, proper or advisable to consummate and make effective, in
the most expeditious manner practicable, the Offer, the Merger and the other
transactions contemplated by the Merger Agreement. If Purchaser does not acquire
at least 90% of the then outstanding shares of Common Stock and of each class of
Preference Shares and a vote of the Company's stockholders is required under the
DGCL, a longer period of time will be required to effect the Merger.
BACKGROUND OF THE OFFER
In January 1998, the Company approached Parent regarding the possibility of
acquiring Parents' Hungarian cable assets. Parent rejected this approach.
In October 1998, the Company engaged Goldman Sachs to review its strategic
alternatives and to assist in negotiations with a potential joint venture
partner ("Potential Joint Venture Partner").
In December 1998, representatives of Parent contacted Robert E. Fowler, the
Chief Executive Officer of the Company, to discuss the possibility of a
cooperative relationship between the two parties. Mr. Fowler agreed to discuss
this possibility and efforts were made to arrange a meeting between Mr. Fowler
and Mark Schneider, the Chairman of the Management Board and Chief Executive
Officer of Parent. This meeting never occurred due to the scheduling demands of
the principals and, according to the bidders' Schedule 14D-1, due to Parent's
need to focus its resources on the successful completion of its March 1999
initial public offering.
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<PAGE>
Towards the end of 1998, Mr. Fowler was contacted by a potential strategic
partner (a "Potential Strategic Partner") regarding a possible investment in the
Company. Mr. Fowler subsequently met with representatives of that Potential
Strategic Partner to discuss potential strategic alternatives for the Company.
Such Potential Strategic Partner entered into a Confidentiality Agreement with
the Company on February 24, 1999 and began conducting its due diligence on the
Company soon after.
At the Company's February 1999 Board of Director's meeting, Mr. Fowler
informed the Board of several potential business opportunities in connection
with the selection of an industry investor for the Company. It was reported to
the Board that such investor would invest either at the parent company level or
at the level of a relevant subsidiary. A number of companies, including the
Parent, were identified to the Board as potential partners.
By the end of March 1999, discussions with Potential Joint Venture Partner
were placed on hold following the inability of the Company and Potential Joint
Venture Partner to reach agreement on a variety of key issues surrounding a
proposed joint venture arrangement. In March 1999, Mr. Fowler asked Goldman
Sachs to approach a wider universe of potential interested parties (each, a
"Potential Interested Party") in order to determine if any other such person
would be willing to consider making an investment in the Company.
Between late March and early May 1999, Goldman Sachs approached a total of
approximately 15 Potential Interested Parties, including certain diversified
media groups, telecommunications companies and cable network operators. Of such
persons approached by Goldman Sachs, several Potential Interested Parties
indicated interest in pursuing further discussions with the Company.
In late March 1999, representatives of Parent contacted Goldman Sachs to
inquire as to whether the Company would consider a possible business
combination. On April 1, 1999, Charles Bracken, the Managing Director, Strategy
Acquisitions and Corporate Development at Parent, met with Mr. Fowler to discuss
Parent's interest in a possible business combination with the Company. Parent
stated in its Schedule 14D-1 that in the first week of April 1999, Parent
retained Morgan Stanley & Co. Limited ("Morgan Stanley") to represent it in any
possible transaction with the Company. Thereafter, representatives of Morgan
Stanley contacted representatives of Goldman Sachs to discuss the procedures for
participating in any contemplated sale process. Parent entered into a
Confidentiality Agreement with the Company on April 12, 1999. Parent began
conducting financial, operational and legal due diligence on the Company soon
after.
During the period from April 12, 1999 to May 18, 1999, Goldman Sachs and
senior management of the Company held a series of meetings and telephonic
discussions with members and representatives of Parent and other Potential
Interested Parties who had also entered into confidentiality agreements with the
Company (each also a "Potential Strategic Partner") to assist each of them in
their respective due diligence efforts.
In the period through May 1999, the Company also received unsolicited
expressions of interest from various other Potential Interested Parties.
In mid to late April 1999, Goldman Sachs separately informed each Potential
Strategic Partner, including Parent, that the Company wished to receive
proposals from each of them on or before May 19, 1999.
On May 11, 1999, the Company made a public announcement stating that it had
retained Goldman Sachs to advise its Board of Directors in discussions it was
having with potential strategic investors and that these discussions could
entail the sale of all or part of the Company.
On May 19, 1999, in a telephone call with Goldman Sachs, Parent indicated
its continued interest in acquiring all of the outstanding Common Stock. Parent
also indicated that it would require the opportunity to conduct further due
diligence and a period of exclusivity in which to complete that due
26
<PAGE>
diligence and negotiate definitive transaction documentation. During the course
of this call, Parent and Goldman Sachs discussed the valuation of the Company.
Parent subsequently agreed to value the Common Stock at $19.00 per share
contingent upon receiving an exclusive negotiation period to allow it to perform
legal due diligence and other confirmatory due diligence and to negotiate a
definitive transaction agreement. The consideration to be paid pursuant to this
proposal was to be comprised of $9.50 in cash, and shares in a new class of
equity securities of Parent which Parent valued at $9.50. At this point Parent
also indicated that, as a condition to its willingness to offer $19.00 per share
of Common Stock, Parent would require that stockholders of the Company
representing a majority of the issued and outstanding Common Stock agree to
support the proposed transaction.
During the period from May 21, 1999, to May 23, 1999, representatives of
Parent and its advisors, Morgan Stanley and White & Case LLP, conducted further
legal, business and financial due diligence regarding the Company in London,
Warsaw and Washington, D.C. During this period, members of Parent's senior
management and the Company's senior management met to discuss potential
synergies that could be achieved in combining the businesses of Parent and the
Company.
On May 22, 1999, Baker & McKenzie, counsel to the Company, delivered to
Parent a draft of a proposed Merger Agreement which called for a single-step
merger of the Company with and into a subsidiary of Parent in exchange for cash
and securities of Parent, including a contingent value right.
On May 24, 1999 the Board of Directors of the Company met at the Company's
offices in London to evaluate the various proposals received by Goldman Sachs on
behalf of the Company. Present at the meeting, in person or by telephone, were
representatives of the Company's financial advisors, Goldman Sachs, and the
Company's legal counsel, Baker & McKenzie and Young Conaway Stargatt & Taylor,
LLP. Goldman Sachs made a presentation of the Company's business plan (which
business plan was prepared by the Company's management) and a comparison of the
business plan with public market projections for other cable and pay television
companies. Following a discussion of the proposals received from other Potential
Strategic Partners by the Company to date, the Board of Directors of the Company
authorized Goldman Sachs and a designated sub-committee to conduct further
negotiations with Parent. The Board of Directors of the Company authorized the
Company's management to grant Parent an exclusive negotiating period through the
morning of June 1, 1999, subject to receipt and review of Parent's comments on
the draft Merger Agreement.
As a result of further discussions among the principals and their advisors,
Parent agreed that any transaction between the parties would be an all-cash
transaction.
On May 26, 1999 Parent delivered to the Company a revised draft of the
Merger Agreement marked to reflect its required changes to the Merger Agreement,
including the requirement that any potential transaction be a cash transaction.
On May 26 and 27, representatives of the Company's legal counsel, Baker &
McKenzie, and Parent's legal counsel, White & Case LLP, had numerous telephone
conversations regarding the proposed Merger Agreement. On May 28, 1999
representatives of Baker & McKenzie and White & Case LLP met in London to
continue negotiations on a possible Merger Agreement among the Company, Parent
and Purchaser. These negotiations continued over the Memorial Day/Bank Holiday
weekend (May 28 through May 31). Representatives of the Company's financial
advisors, Goldman Sachs, and Parent's financial advisors, Morgan Stanley, also
participated in these negotiations as needed.
Simultaneously therewith, Parent and its advisors negotiated the terms of
the Stockholder Agreements which, subject to the approval of the Board of
Directors of the Company, were to be entered into, in the event the Merger
Agreement was executed, with representatives of the Stockholders and the
Preferred Stockholders and those agreements were revised to reflect the outcome
of such negotiations. During this period, Parent finalized its due diligence
review of the Company.
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<PAGE>
During this time, the Company also received proposals from other Potential
Strategic Partners. One consortium offered to purchase a substantial minority
interest in the Company in the form of newly issued securities at a price per
share of Common-Stock-equivalent that was less than the Offer Price. This
consortium subsequently raised its offer to an acquisition of all of the
outstanding shares of Common Stock at a price per share slightly below the Offer
Price. Another consortium, which included Potential Joint Venture Partner, made
an offer for all of the outstanding shares of Common Stock. The base price per
share was slightly below the Offer Price and was subject to adjustment down or
up depending on due diligence and unspecified criteria. At the upper end of the
adjustment range, the price offered could have been higher than the Offer Price,
and at the lower end of the adjustment range, the price offered would have been
lower than the Offer Price. The offer was also subject to a two-week exclusivity
period for due diligence and negotiation.
On May 31, 1999, the Board of Directors of the Company held a telephonic
meeting to review the current status of negotiations with Parent and to again
consider other strategic alternatives for the Company. Present at the meeting,
in person or by telephone, were representatives of the Company's financial
advisors, Goldman Sachs, and the Company's legal counsel, Baker & McKenzie and
Young Conaway Stargatt & Taylor, LLP. Goldman Sachs informed the Board of
Directors that it was prepared to provide an opinion as to the fairness to the
Company's stockholders from a financial point of view of the Offer Price to be
paid pursuant to the Merger Agreement, subject to certain assumptions and
qualifications contained in such opinion. Having considered all the information
presented to them, the members of the Board of Directors voted unanimously to
approve Parent's offer, the Merger, the Merger Agreement and the Stockholder
Agreements, subject to the satisfactory finalization of definitive
documentation.
On June 1, 1999, Parent's and the Company's respective legal and financial
advisors met to finalize the Merger Agreement and on the evening of June 1,
1999, Messrs. Schneider and Fowler met to resolve certain final issues. Early in
the morning of June 2, 1999, the Merger Agreement was executed by Parent, the
Purchaser and the Company and the Stockholder Agreements were executed by
Parent, the Purchaser and the various Stockholders and Preferred Stockholders.
Parent, the Purchaser and the Company then issued a joint press release
announcing the signing of the Merger Agreement.
On June 8, 1999, the Purchaser and Parent commenced the Offer.
REASONS FOR THE RECOMMENDATION
In approving the Offer and the Merger Agreement and recommending that all
shareholders tender their shares of Common Stock pursuant to the Offer, the
Board considered a number of factors including:
(a) possible alternatives to the Offer and the Merger, including, without
limitation, those resulting from the search for Potential Strategic Partners
conducted by Goldman Sachs and continuing to operate the Company as an
independent entity, and the risks associated therewith;
(b) the familiarity of the Board with the business, results of operations
and prospects of the Company and the nature of its industry;
(c) the Company's existing competition in the industry in which it operates
and future competition, the relevant size of other participants in the industry
in which it operates and the available capital and other resources of such other
participants as compared to the available capital and other resources of the
Company;
(d) the presentations of Goldman Sachs at the May 24 and May 31, 1999 Board
of Directors meetings and the opinion of Goldman Sachs that the Offer Price to
be offered to the Company's stockholders pursuant to the Merger Agreement is
fair, from a financial point of view, to the holders of Common Stock, subject to
the assumptions and qualifications contained in such opinion. THE FULL TEXT
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OF THE WRITTEN OPINION OF GOLDMAN SACHS DATED JUNE 2, 1999, WHICH SETS FORTH
ASSUMPTIONS MADE, MATTERS CONSIDERED AND LIMITATIONS ON THE REVIEW UNDERTAKEN IN
CONNECTION WITH THE OPINION, IS ATTACHED HERETO AS ANNEX B. STOCKHOLDERS ARE
URGED TO, AND SHOULD, READ SUCH OPINION CAREFULLY IN ITS ENTIRETY;
(e) that the Offer Price represents (i) a premium of approximately 134% over
the $8 1/8 closing price for the Common Stock on the Nasdaq National Market on
May 10, 1999, the last trading day prior to the announcement that Goldman Sachs
had been retained by the Company, and (ii) a premium of approximately 52% over
the $12 1/2 closing price on the Nasdaq National Market for the Shares on June
1, 1999, the last trading day prior to the announcement of the Offer;
(f) the financial and other terms and conditions of the Offer and Merger
Agreement;
(g) the fact (i) that holders of approximately 48.4% of the outstanding
Common Stock and approximately 51.5% of the Common Stock on a fully diluted
basis were prepared, subject to the approval of the Board of Directors, to enter
into Common Stockholder Agreements with Purchaser and Parent and (ii) that the
holders of all of the outstanding Preference Shares were prepared, subject to
the approval of the Board of Directors, to enter into Preferred Stockholder
Agreements with Purchaser and Parent;
(h) the fact that the Offer and the Merger were not subject to a financing
condition; and
(i) the likelihood that the Offer and the Merger would be consummated.
The Board of Directors did not assign relative weights to the factors or
determine that any factor was of particular importance. Rather, the Board of
Directors viewed its position and recommendation as being on the totality of the
information presented to and considered by it.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED
Goldman Sachs is acting as the Company's financial advisor in connection
with the Offer and the Merger. Pursuant to its agreement with the Company,
Goldman Sachs is entitled to a transaction fee of 0.8% of the Aggregate
Consideration of the transaction (less $1 million previously paid by the Company
in connection with the Company's retention of Goldman Sachs). The Aggregate
Consideration for the purpose of calculating the transaction fee shall mean (i)
in the case of the issue, sale, transfer or other disposal of securities, the
total consideration paid for such securities (including amounts paid or to be
offered to holders of options, warrants and convertible securities) plus the
principal amount of all indebtedness (other than trade creditors) as set forth
on the most recent consolidated balance sheet of the Company or other relevant
company prior to the completion of the relevant transaction or as determined by
Goldman Sachs; and (ii) in the case of a sale, transfer or other disposal of
businesses or assets, the total consideration paid for such businesses or
assets, plus the net value of any current assets attributable to such businesses
or assets not so sold, transferred or disposed of and the principal amount of
all indebtedness (other than trade creditors) assumed by the purchaser. The
transaction fee will become payable in cash upon the closing of the Offer and
the Merger. In addition, whether or not the Offer or the Merger is completed,
the Company has agreed to reimburse Goldman Sachs periodically for their
reasonable out-of-pocket expenses, including the fees and disbursements of its
counsel, and to indemnify Goldman Sachs against certain expenses and liabilities
incurred in connection with its engagement, including liabilities under Federal
securities laws. As set forth in Goldman Sach's opinion, which is attached
hereto as Annex B, Goldman Sachs has performed and continues to perform
investment banking services for Parent and its subsidiaries.
Except as set forth above, neither the Company nor any person acting on its
behalf has or currently intends to employ, retain or compensate any person to
make solicitations or recommendations to the shareholders of the Company on its
behalf with respect to the Offer.
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ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES
(a) On June 2, 1999, the Company waived any nontransferability provisions
contained in the Stock Option Agreements between the Company and Robert Fowler,
Samuel Chisholm, and David Chase in order to permit such persons to perform
their obligations under their respective Stockholder Agreements.
(b) On June 2, 1999, the Company waived the restrictions contain in Section
2.02(g) of the Preference Warrant Agreement, dated January 27, 1999, prohibiting
the transfer of shares of Common Stock underlying the Preference Warrants prior
to January 27, 2000. Such waiver only effects and constitutes a waiver in
connection with the transfer of the underlying shares of Common Stock to Parent
and/or Purchaser as contemplated in the Merger Agreement and the Preferred
Stockholder Agreements.
(c) To the best of the Company's knowledge, all of the Company's executive
officers and directors who own shares of Common Stock currently intend to tender
all of their shares pursuant to the Offer.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY
(a) Except as set forth herein, no negotiation is being undertaken or is
underway by the Company in response to the Offer which relates to or would
result in (i) an extraordinary transaction, such as a merger or reorganization,
involving the Company or any subsidiary thereof; (ii) a purchase, sale or
transfer of a material amount of assets by the Company or any subsidiary
thereof; (iii) a tender offer for or other acquisition of securities by or of
the Company; or (iv) any material change in the present capitalization or
dividend policy of the Company.
(b) Except as set forth herein, there is no transaction, board resolution,
agreement in principle or signed contract in response to the Offer that relate
to or would result in one or more of the events referred to in Item 7(a) above.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED
SECTION 203 OF THE DGCL
As a Delaware corporation, the Company is subject to Section 203 ("Section
203") of the DGCL. Under Section 203, certain "business combinations" between a
Delaware corporation whose stock is publicly traded or held of record by more
than 2,000 stockholders and an "interested stockholder" are prohibited for a
three-year period following the date that such a stockholder became an
interested stockholder, unless, among other things the transaction in which the
stockholder became an interested stockholder or the business combination was
approved by the Board of Directors of the corporation before the other party to
the business combination became an interested stockholder. The term "business
combination" is defined generally to include mergers or consolidations between a
Delaware corporation and an "interested stockholder," transactions with an
"interested stockholder" involving the assets or stock of the corporation or its
majority-owned subsidiaries and transactions which increase an "interested
stockholder's" percentage ownership of stock. The term "interested stockholder"
is defined generally as a stockholder who, together with affiliates and
associates, owns (or, within three years prior, did own) 15% or more of a
Delaware corporation's voting stock.
In accordance with the Merger Agreement and Section 203, the Board approved
the Offer, the Merger, the Merger Agreement, the Stockholders Agreements, and
the transactions contemplated by the Merger Agreement and the Stockholders
Agreements. Accordingly, the restrictions of Section 203 are inapplicable to the
Offer, the Merger and the related transactions.
Article VIII of the Company's Amended and Restated Certificate of
Incorporation provides that "no Business Combination shall be consummated or
effected, directly or indirectly, unless such
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Business Combination shall have been approved or authorized by the affirmative
vote of the holders of not less than sixty-six and two-thirds percent (66 2/3)%
of the shares of Voting Stock which are not Beneficially Owned by the Related
Person or an Affiliate or Associate of such Related Person." The prohibition of
Article VIII does not apply, however, where, among other things, the "Business
Combination" has been expressly approved by not less than two-thirds ( 2/3) of
the "Continuing Directors." For purposes of Article VIII, the term "Continuing
Director" is defined to mean, among other things, "any member of the Board of
Directors of the Corporation who is not the Related Person, and not an
Affiliate, Associate, representative or nominee of the Related Person or of such
an Affiliate or Associate, that is involved in the relevant Business
Combination, and . . . was a member of the Board of Directors prior to the
Determination Date with respect to such Related Person."
The Offer, the Merger, the Merger Agreement, the Stockholders Agreement, and
the transactions contemplated thereby were unanimously approved by the Board of
Directors of the Company, all of whom are "Continuing Directors" as that term is
defined in Article VIII. Accordingly, the super-majority stockholder voting
requirement of Article VIII is not applicable to the Merger, the Merger
Agreement and the related transactions.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- --------- --------------------------------------------------------------------------------------------------------
<S> <C>
(a)(1) Purchaser's Offer to Purchase, dated June 8, 1999
(a)(2) Purchaser's Letter of Transmittal, dated June 8, 1999
(a)(3) Opinion of Goldman Sachs International, dated June 2, 1999 (filed as Annex B hereto)
(a)(4) Joint Press Release of @ Entertainment, Inc., United Pan-Europe Communications N.V., and Bison
Acquisition Corp., dated June 2, 1999
(c)(1) Merger Agreement among @ Entertainment, Inc., United Pan-Europe Communications N.V., and Bison
Acquisition Corp., dated as of June 2, 1999
(c)(2) Confidentiality Agreement between @ Entertainment, Inc. and United Pan-Europe Communications N.V., dated
April 12, 1999
(c)(3) The Company's Information Statement filed pursuant to Section 14(f) of the Securities Exchange Act of
1934 and Rule 14f-1 (filed as Annex A hereto)
(c)(4) Form of Common Stockholder Agreement, dated as of June 2, 1999, between United Pan-Europe Communications
N.V., Bison Acquisition Corp. and certain common stockholders of @ Entertainment, Inc.
(c)(5) Form of Preferred Stockholder Agreement, dated as of June 2, 1999, among United Pan-Europe
Communications N.V., Bison Acquisition Corp. and each of the holders of preference shares of @
Entertainment, Inc.
</TABLE>
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Schedule 14D-9 is true, complete
and correct.
<TABLE>
<S> <C> <C>
@ENTERTAINMENT, INC.
By: /s/ ROBERT E. FOWLER, III
-----------------------------------------
Robert E. Fowler, III
CHIEF EXECUTIVE OFFICER
</TABLE>
June 15, 1999
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ANNEX A
INFORMATION STATEMENT PURSUANT TO SECTION 14(F) OF THE SECURITIES EXCHANGE ACT
OF 1934 AND RULE 14F-1 THEREUNDER
NO VOTE OR OTHER ACTION OF THE COMPANY'S SHAREHOLDERS IS REQUIRED IN
CONNECTION WITH THIS INFORMATION STATEMENT. NO PROXIES ARE BEING SOLICITED
AND YOU ARE REQUESTED NOT TO SEND THE COMPANY A PROXY.
This Information Statement, which is being mailed on or about June 15, 1999
to the holders of shares of the common stock, par value $.01 per share (the
"Common Stock"), of @ Entertainment, Inc., a Delaware corporation (the "Company"
or "@ Entertainment"), is being furnished in connection with the designation by
Bison Acquisition Corp., a Delaware corporation ("Purchaser"), of persons (the
"Purchaser Designees") to the Board of Directors of the Company (the "Board").
Such designation is to be made pursuant to an Agreement and Plan of Merger dated
as of June 2, 1999 (the "Merger Agreement") among the Company, United Pan-Europe
Communications N.V., a public company with limited liability incorporated under
the laws of The Netherlands ("Parent"), and Purchaser. This Information
Statement is attached as Annex A to the Schedule 14D-9 (the "Schedule 14D-9") of
the Company with respect to the Offer (as defined below).
Pursuant to the Merger Agreement, among other things, Purchaser is to
commence a cash tender offer no later than June 8, 1999 to purchase all of the
issued and outstanding shares of Common Stock (the "Shares") at a price of
$19.00 per Share, net to the seller in cash, as described in Purchaser's Offer
to Purchase dated June 8, 1999 and the related Letter of Transmittal (which
Offer to Purchase and related Letter of Transmittal together constitute the
"Offer"). The Offer is scheduled to expire at 12:00 midnight, New York City
time, on Tuesday, July 6, 1999, unless extended. THE OFFER IS CONDITIONED UPON,
AMONG OTHER THINGS, (I) THERE BEING VALIDLY TENDERED AND NOT PROPERLY WITHDRAWN
PRIOR TO THE EXPIRATION OF THE OFFER A NUMBER OF SHARES OF COMMON STOCK WHICH
REPRESENTS AT LEAST A MAJORITY OF ALL OF THE ISSUED AND OUTSTANDING SHARES OF
COMMON STOCK ON A FULLY DILUTED BASIS, ON THE DATE THE OFFER IS CONSUMMATED (THE
"MINIMUM CONDITION"), (II) THE SATISFACTION OF THE HSR CONDITION (AS DEFINED
HEREIN), (III) THE SATISFACTION OF THE PAMC CONDITION (AS DEFINED HEREIN) AND
(IV) IF REQUIRED BY APPLICABLE LAW, THE SATISFACTION OF THE EC CONDITION (AS
DEFINED HEREIN). THE OFFER IS ALSO CONDITIONED UPON THE SATISFACTION OF CERTAIN
OTHER TERMS AND CONDITIONS DESCRIBED IN ITEM 3--"IDENTITY AND BACKGROUND--MERGER
AGREEMENT--CONDITIONS OF THE OFFER" OF THE SCHEDULE 14D-9. The Merger Agreement
also provides for the merger (the "Merger") of Purchaser with and into the
Company as soon as practicable after consummation of the Offer. Following the
consummation of the Merger (the "Effective Time"), the Company will be the
surviving corporation (the "Surviving Corporation") and a wholly owned
subsidiary of Parent. In the Merger, each Share issued and outstanding
immediately prior to the Effective Time (other than Shares held in the treasury
of the Company or, directly or indirectly, by Parent, or any indirect or direct
subsidiary of Parent or the Company, all of which will be canceled, and other
than Shares, if any, held by shareholders who have perfected rights as
dissenting shareholders under the Delaware General Corporation Law) will be
canceled and converted into and represent the right to receive cash in an amount
of $19.00, without interest.
BOARD REPRESENTATION. The Merger Agreement provides that promptly upon the
Purchaser having acquired a majority of the outstanding shares of Common Stock,
the Purchaser shall be entitled to designate such number of directors on the
Board of Directors of the Company, rounded up to the next whole number, as will
give the Purchaser, subject to compliance with Section 14(f) of the Exchange
Act, representation on such Board of Directors equal to at least that number of
directors which equals the product of the total number of directors on the Board
of Directors (giving effect to the directors elected pursuant to this sentence)
multiplied by a fraction, the numerator of which shall be the number of shares
of Common Stock beneficially owned by the Purchaser and Parent and the
denominator of which shall be the number of shares of Common Stock then
outstanding, and the Company and its
A-1
<PAGE>
Board of Directors shall, at such time, take any and all such action needed to
cause the Purchaser's designees to be appointed to the Company's Board of
Directors (including using its reasonable best efforts to cause directors to
resign).
Subject to applicable law, the Company has agreed to take all action
requested by Parent which is reasonably necessary to effect any such election.
In furtherance thereof, the Company will increase the size of the Company's
Board of Directors (subject to the limitations set forth in the Company's
Amended and Restated Certificate of Incorporation and By-Laws), or use its
reasonable efforts to secure the resignation of directors, or both, as is
necessary to permit the Purchaser's designees ("Purchaser's Designees") to be
elected to the Company's Board of Directors. At the Effective Time, the Company,
if so requested by the Purchaser, will use its reasonable efforts to cause
persons designated by the Purchaser to constitute the same percentage of each
committee of such board, each board of directors of each subsidiary and each
committee of each such board (in each case to the extent of the Company's
ability to elect such persons and subject to any applicable stock exchange
regulations). Following the election or appointment of the Purchaser's Designees
as described herein and prior to the Effective Time, any amendment or
termination of the Merger Agreement or the Company's Amended and Restated
Certificate of Incorporation or By-Laws, any termination of the Merger Agreement
by the Company, any extension by the Company of the time for the performance of
any of the obligations or other acts of Parent and the Purchaser or waiver of
any of the Company's rights under the Merger Agreement, and any other consent or
action by the Board of Directors under the Merger Agreement, will require the
concurrence of a majority (which shall be at least two) of the directors of the
Company then in office who were directors on June 2, 1999 and who voted to
approve the Merger Agreement or are designated by a majority of the directors of
the Company who were directors on June 2, 1999 and who voted to approve the
Merger Agreement.
The terms of the Merger Agreement, a summary of the events leading up to the
Offer and the execution of the Merger Agreement and other information concerning
the Offer and the Merger are contained in the Offer to Purchase and in the
Solicitation/Recommendation Statement on Schedule 14D-9 with respect to the
Offer, copies of which are being delivered to shareholders of the Company
contemporaneously herewith. Certain other documents (including the Merger
Agreement) were filed with the Securities and Exchange Commission (the
"Commission") as exhibits to the Schedule 14D-9 and as exhibits to the Tender
Offer Statement on Schedule 14D-1 of Parent and Purchaser (the "Schedule
14D-1"). The exhibits to the Schedule 14D-9 and the Schedule 14D-1 may be
examined at, and copies thereof may be obtained from, the regional offices of
and public reference facilities maintained by the Commission (except that the
exhibits thereto cannot be obtained from the regional offices of the Commission)
in the manner set forth in Section 7 of the Offer to Purchase. The Company has
been advised that Purchaser intends to obtain the funds necessary to purchase
the Shares in the Offer and the Merger from Parent. In the Schedule 14D-1,
Parent stated that it anticipates that it will obtain such funds from a planned
private placement of high-yield notes. As of the date of the Schedule 14D-1,
Parent stated in the Schedule 14D-1 that it had not completed such financing;
that Parent had approached its customary financing sources in order to arrange
interim financing for the Offer; that no commitment letter had been entered into
with respect to such financing; and that based on conversations with its
financing sources, Parent is confident that such financing can be arranged.
No action is required by the shareholders of the Company in connection with
the election of Purchaser Designees to the Board. However, Section 14(f) of the
Exchange Act requires the mailing to the Company's shareholders of the
information set forth in this Information Statement prior to a change in a
majority of the Company's directors other than at a meeting of the Company's
shareholders.
The information contained in this Information Statement concerning Parent
and Purchaser Designees has been furnished to the Company by such persons, and
the Company assumes no responsibility for the accuracy or completeness of such
information. The Schedule 14D-1 indicates that the principal executive offices
of Parent and Purchaser are located at Fred. Roeskestraat 123, P.O. Box 74763,
1070 BT Amsterdam, The Netherlands, Telephone: 31-20-778-9840.
A-2
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of @Entertainment's common stock, par value $.01 per share ("Common
Stock"), at June 1, 1999 by: (i) each person known by @Entertainment to own
beneficially 5% or more of @Entertainment's Common Stock, (ii) the directors,
the Chief Executive Officer and the four other highest paid executive officers
("Named Executive Officers") of the Company and a former executive officer who
would have been one of the four most highly compensated executive officers of
the Company at the end of the fiscal year 1998 and (iii) all directors and
executive officers of the Company as a group. All percentages in this section
were calculated on the basis of outstanding securities plus securities deemed
outstanding under Rule 13d-3 of the Exchange Act.
<TABLE>
<CAPTION>
PERCENTAGE OF
SHARES OF COMMON STOCK
NAME OF BENEFICIAL OWNER COMMON STOCK OUTSTANDING
- ------------------------------------------------------------------------------- -------------- -----------------
<S> <C> <C>
FIVE PERCENT STOCKHOLDERS:
Arnold L. Chase(1)(2)(18)
One Commercial Plaza
Hartford, Connecticut 06103.................................................. 9,926,000 29.5%
Chase Polish Enterprises, Inc.(1)
One Commercial Plaza
Hartford, Connecticut 06103.................................................. 9,703,000 29.1%
Cheryl A. Chase(1)(3)(19)(21)
One Commercial Plaza
Hartford, Connecticut 06103.................................................. 10,546,000 31.5%
Polish Investments Holding L.P.(1)
One Commercial Plaza
Hartford, Connecticut 06103.................................................. 9,703,000 29.1%
Advent International Group(4)
75 State Street
Boston, MA 02109............................................................. 5,216,431 15.6%
Morgan Grenfell Private Equity Limited(17)
23 Great Winchester Street
London, EC2P 2AX
England...................................................................... 4,950,000 12.9%
Goldman, Sachs & Co.(15)
85 Broad Street
New York, NY 10004........................................................... 2,630,706 7.9%
The Goldman Sachs Group, L.P.(15)
85 Broad Street
New York, NY 10004........................................................... 2,630,706 7.9%
DIRECTORS AND EXECUTIVE OFFICERS:
David T. Chase(5).............................................................. -- --
Robert E. Fowler, III(6)(7).................................................... 1,301,000 3.8%
Arnold L. Chase(1)(2)(18)...................................................... 9,926,000 29.5%
Scott A. Lanphere.............................................................. -- --
Jerzy Z. Swirski(8)............................................................ -- --
Samuel Chisholm(9)............................................................. 500,000 1.5%
David Chance(10)............................................................... 500,000 1.5%
Agnieszka Holland.............................................................. -- --
Przemyslaw Szmyt(7)(12)........................................................ 208,000 *
David Warner(7)(13)............................................................ 206,000 *
Donald Miller-Jones(11)........................................................ 205,000 *
David Keefe(16)................................................................ 263,000 *
</TABLE>
A-3
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE OF
SHARES OF COMMON STOCK
NAME OF BENEFICIAL OWNER COMMON STOCK OUTSTANDING
- ------------------------------------------------------------------------------- -------------- -----------------
<S> <C> <C>
George Z. Makowski(7)(14)...................................................... -- --
Dorothy Hansberry(22).......................................................... 52,000 --
Warren Mobley(23).............................................................. 200,000 --
ALL DIRECTORS AND OFFICERS AS A GROUP (15 PERSONS):............................ 13,361,000(20) 40.0%
</TABLE>
- ------------------------
* less than 1%.
(1) This amount includes 9,703,000 shares of Common Stock owned directly by
PIHLP. As a result of their control over the management of PIHLP, Arnold L.
Chase, Chase Polish Enterprises, Inc. ("CPEI") and Cheryl A. Chase may be
deemed to beneficially own the 9,703,000 shares of Common Stock owned by
PIHLP. CPEI is the sole general partner of PIHLP. As general partner, CPEI
manages PIHLP, which includes directing the voting and disposition of shares
of Common Stock owned by PIHLP. Arnold L. Chase and Cheryl A. Chase each own
50% of the outstanding capital stock of CPEI and are its sole directors and
executive officers.
(2) 3,000 of these shares are held by Arnold L. Chase as custodian for his son.
(3) This amount includes 733,000 shares of Common Stock owned by the Cheryl A.
Chase Marital Trust, a trust of which Cheryl A. Chase is a trustee. Cheryl
A. Chase may be deemed to be a beneficial owner, as defined by Rule 13d-3(a)
under the Exchange Act, of the shares of Common Stock owned by the Cheryl
Anne Chase Marital Trust.
(4) Includes the ownership by the following venture capital funds managed by
Advent International Corporation; 206,019 shares owned by Advent
Euro-Italian Direct Investment Program Limited Partnership, 838,856 shares
owned by Advent Private Equity Fund-Central Europe Limited Partnership,
1,447,024 shares owned by Advent Global GECC Limited Partnership, 2,110,420
shares owned by Global Private Equity II Limited Partnership, 239,522 shares
owned by Global Private Equity II-Europe Limited Partnership, 324,308 shares
owned by Global Private Equity II-PGGM Limited Partnership, and 50,282
shares owned by Advent Partners Limited Partnership. In its capacity as
manager of these funds, Advent International Corporation exercises sole
voting and investment power with respect to all shares held by these funds.
(5) Does not include 505,000 shares of Common Stock and warrants to purchase
110,000 shares of Common Stock owned by Rhoda L. Chase, the wife of David T.
Chase.
(6) Mr. Fowler has been granted options to purchase 1,286,000 shares of Common
Stock at a price of $3.707 per share, subject to the terms and conditions of
a stock option agreement. All of Mr. Fowler's options are exercisable.
(7) Messrs. Fowler, Makowski, Szmyt and Warner, in connection with the Initial
Public Equity Offering, entered into agreements with Goldman, Sachs & Co.
and Merrill Lynch, Pierce, Fenner & Smith Incorporated in which the parties
have agreed, in part, that during the two-year period beginning July 30,
1997, such individuals will not offer, sell, contract to sell or otherwise
dispose of any securities of @Entertainment which are substantially similar
to shares of Common Stock or which are convertible into or exchangeable for
securities which are substantially similar to shares of Common Stock without
the prior written consent of Goldman, Sachs & Co. and Merrill Lynch, Pierce,
Fenner & Smith Incorporated.
(8) Mr. Swirski disclaims beneficial ownership of the shares held by the Advent
International Group.
(9) Mr. Chisholm has been granted options to purchase 500,000 shares of Common
Stock, vesting ratably over a two-year period, at an exercise price of
$12.00 per share. All of Mr. Chisholm's options are exercisable as of the
date hereof.
(10) Mr. Chance has been granted options to purchase 500,000 shares of Common
Stock, vesting ratably over a two-year period, at an exercise price of
$12.00 per share. All of Mr. Chance's options are exercisable as of the date
hereof.
(11) Mr. Miller-Jones has been granted options to purchase 200,000 shares of
Common Stock at a price of $14.30 per share, subject to the terms and
conditions of a stock option agreement, which
A-4
<PAGE>
options vest ratably over a three-year period. All of Mr. Miller-Jones'
options will vest and be exercisable upon the consummation of the Offer.
(12) Mr. Szmyt has been granted options to purchase 131,000 shares of Common
Stock at a price of $15.24 per share, subject to the terms and conditions of
a stock option agreement dated June 1997, which options vest ratably over a
three year period. Additionally, on January 26, 1998, Mr. Szmyt was granted
options to purchase 75,000 shares of Common Stock at a price of $12.24 per
share, subject to the terms and conditions of a stock option agreement which
options vest ratably over a three-year period. All of Mr. Szmyt's options
will vest and be exercisable upon the consummation of the Offer.
(13) Mr. Warner has been granted options to purchase 131,000 shares of Common
Stock at a price of $15.24 per share, subject to the terms and conditions of
a stock option agreement, which options vest ratably over a five-year
period. Additionally, on January 26, 1998, Mr. Warner was granted options to
purchase 75,000 shares of Common Stock at a price of $12.24 per share,
subject to the terms and conditions of a stock option agreement which
options vest ratably over a three-year period. All of Mr. Warner's options
will vest and be exercisable upon the consummation of the Offer.
(14) Mr. Makowski was the Chief Operating Officer of PCI. Mr. Makowski's
employment was terminated effective as of May 1998.
(15) Pursuant to a Schedule 13G jointly filed on February 13, 1998 by Goldman
Sachs & Co. and The Goldman Sachs Group, L.P., Goldman Sachs & Co. and The
Goldman Sachs Group, L.P. may be deemed to share the power to direct the
vote and disposition of 2,630,706 shares of Common Stock beneficially owned
by Goldman Sachs & Co. and The Goldman Sachs Group, L.P.
(16) Mr. Keefe has been granted options to purchase 250,000 shares of Common
Stock at a price of $12.00 per share, subject to the terms and conditions of
a stock option agreement, which options vest quarterly over a two-year
period. All of Mr. Keefe's options will vest and be exercisable upon the
consummation of the Offer.
(17) MGPE holds warrants to purchase 4,950,000 shares of Common Stock, which
warrants are immediately exercisable as of the date hereof.
(18) Includes warrants to purchase 220,000 shares of Common Stock which are
immediately exercisable as of the date hereof.
(19) Includes warrants to purchase 110,000 shares of Common Stock which are
immediately exercisable as of the date hereof.
(20) Includes 3,398,000 options which will vest and be exercisable upon the
consummation of the Offer.
(21) Does not include warrants to purchase 110,000 shares of Common Stock owned
by The Darland Trust, of which Cheryl A. Chase and her children are
beneficiaries.
(22) Ms. Hansberry has been granted options to purchase 50,000 shares of Common
Stock at a price of $14.30 per share, subject to the terms and conditions of
a stock option agreement dated February 1, 1999, which options vest ratably
over a three year period. All of Ms. Hansberry's options will vest and be
exercisable upon the consummation of the Offer.
(23) Mr. Mobley has been granted options to purchase 200,000 shares of Common
Stock at a price of $14.30 per share, subject to the terms and conditions of
a stock option agreement dated February 1, 1999, which options vest ratably
over a three year period. All of Mr. Mobley's options will vest and be
exercisable upon the consummation of the Offer.
A-5
<PAGE>
The following table sets forth certain information regarding the beneficial
ownership of @Entertainment's Series A 12% Cumulative Preference Shares, par
value $0.01 per share ("Series A Preference Shares"), at June 1, 1999 by: (i)
each person known by @Entertainment to own beneficially 5% or more of the issued
and outstanding Series A Preference Shares, (ii) the directors, the Chief
Executive Officer, the four other highest paid executive officers ("Named
Executive Officers") of the Company, and a former executive officer who would
have been one of the four most highly compensated executive officers of the
Company at the end of the fiscal year 1998, and (iii) all directors and
executive officers of the Company as a group. All percentages in this section
were calculated on the basis of outstanding securities plus securities deemed
outstanding under Rule 13d-3 of the Exchange Act.
The terms of the Series A Cumulative Preference Shares provide Morgan
Grenfell Private Equity Limited ("MGPE"), the initial holder of such shares,
certain rights of appointing members of the Board of Directors (both immediately
and in the future) and certain special voting rights (including at the Board of
Directors level, where the approval of a majority of directors, including at
least one MGPE Director (as defined) of the @Entertainment Board of Directors,
will be required for certain matters).
<TABLE>
<CAPTION>
PERCENTAGE OF
SHARES OF SERIES A
SERIES A 12% CUMULATIVE
12% CUMULATIVE PREFERENCE
PREFERENCE SHARES
NAME OF BENEFICIAL OWNER SHARES OUTSTANDING
- -------------------------------------------------------------------------------- --------------- -------------------
<S> <C> <C>
FIVE PERCENT STOCKHOLDERS:
Morgan Grenfell Private Equity Limited
23 Great Winchester Street
London, EC2P 2AX
England....................................................................... 45,000 100%
DIRECTORS AND EXECUTIVE OFFICERS:
David T. Chase.................................................................. -- --
Robert E. Fowler, III........................................................... -- --
Arnold L. Chase................................................................. -- --
Scott A. Lanphere............................................................... -- --
Jerzy Z. Swirski................................................................ -- --
Samuel Chisholm................................................................. -- --
David Chance.................................................................... -- --
Agnieszka Holland............................................................... -- --
Przemyslaw Szmyt................................................................ -- --
David Warner.................................................................... -- --
Donald Miller-Jones............................................................. -- --
David Keefe..................................................................... -- --
George Z. Makowski.............................................................. -- --
Dorothy Hansberry............................................................... -- --
Warren Mobley................................................................... -- --
ALL DIRECTORS AND OFFICERS AS A GROUP (15 PERSONS):............................. -- --
</TABLE>
- ------------------------
A-6
<PAGE>
The following table sets forth certain information regarding the beneficial
ownership of @Entertainment's Series B Cumulative Preference Shares, par value
$0.01 per share ("Series B Preference Shares" and together with the Series A
Preference Shares, the "Preference Shares"), at June 1, 1999 by: (i) each person
known by @Entertainment to own beneficially 5% or more of the issued and
outstanding Series B Cumulative Preference Shares, (ii) the directors, the Chief
Executive Officer, the Named Executive Officers of the Company, and a former
executive officer who would have been one of the four most highly compensated
executive officers of the Company at the end of the fiscal year 1998, and (iii)
all directors and executive officers of the Company as a group. All percentages
in this section were calculated on the basis of outstanding securities plus
securities deemed outstanding under Rule 13d-3 of the Exchange Act.
<TABLE>
<CAPTION>
PERCENTAGE OF SERIES B
SHARES OF SERIES B 12% CUMULATIVE
12% CUMULATIVE PREFERENCE SHARES
NAME OF BENEFICIAL OWNER PREFERENCE SHARES(1) OUTSTANDING(1)
- ---------------------------------------------------------------------- --------------------- -------------------------
<S> <C> <C>
FIVE PERCENT STOCKHOLDERS:
Arnold L. Chase
One Commercial Plaza
Hartford, Connecticut 06103......................................... 2,000 40%
Cheryl A. Chase
One Commercial Plaza
Hartford, Connecticut 06103......................................... 1,000 20%
Rhoda L. Chase
One Commercial Plaza
Hartford, Connecticut 06103......................................... 1,000 20%
The Darland Trust(2)
P.O. Box 472
St. Peter's House, Le Bordage St.
Peter Port
Guernsey GYI6AX
Channel Islands..................................................... 1,000 20%
DIRECTORS AND EXECUTIVE OFFICERS:
David T. Chase(3)..................................................... -- --
Robert E. Fowler, III................................................. -- --
Arnold L. Chase....................................................... 2,000 40%
Scott A. Lanphere..................................................... -- --
Jerzy Z. Swirski...................................................... -- --
Samuel Chisholm....................................................... -- --
David Chance.......................................................... -- --
Agnieszka Holland..................................................... -- --
Przemyslaw Szmyt...................................................... -- --
David Warner.......................................................... -- --
Donald Miller-Jones................................................... -- --
George Z. Makowski.................................................... -- --
David Keefe........................................................... -- --
Dorothy Hansberry..................................................... -- --
Warren Mobley......................................................... -- --
----- --
ALL DIRECTORS AND OFFICERS AS A GROUP (15 PERSONS):................... 2,000 40%
</TABLE>
- ------------------------
(1) Pursuant to the Certificate of Designations, Preferences and Rights of
Series A 12% Cumulative Preference Shares and Series B 12% Cumulative
Preference Shares, upon the sale of shares of Series A Preference Shares,
such shares will be automatically converted into shares of Series B
Preference Shares. Therefore, these figures do not include up to 45,000
shares of Series B Preference Shares which will be issued upon the sale and
automatic conversion of Series A Preference Shares.
(2) A trust of which Cheryl A. Chase and her children are the beneficiaries.
(3) Does not include 1,000 shares of Series B Preference Shares owned by Rhoda
L. Chase, the wife of David T. Chase.
A-7
<PAGE>
PURCHASER'S DESIGNEES
None of Purchaser's Designees or their associates is a director of, or holds
any position with, the Company. To the best of the Company's knowledge, none of
the Purchaser Designees or their associates beneficially owns any equity
securities, or rights to acquire any equity securities, of the Company or has
been involved in any transactions with the Company or any of its directors or
executive officers that are required to be disclosed pursuant to the rules and
regulations of the Commission. Purchaser has informed the Company that each of
the Purchaser Designees listed below has consented to act as a director of the
Company.
Unless indicated below, the current business address for each individual
listed below is Fred. Roeskestraat 123, P.O. Box 74763, 1070 BT Amsterdam, The
Netherlands, Telephone: 31-20-778-9840. Each such person is, unless indicated
below, a citizen of the United States.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME AND CURRENT BUSINESS ADDRESS AGE MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- ------------------------------------ --- ---------------------------------------------------------------------
<S> <C> <C>
Michael T. Fries.................... 36 Member of the Supervisory Board of Parent since September 1998 and
Chairman since February 1999; President of United International
Holdings, Inc. ("UIH") and President and Chief Executive Officer of
UIH Latin America, Inc. (a wholly-owned subsidiary of UIH) since
September 1998; President of UIH Asia/Pacific Communications, Inc. (a
majority-owned subsidiary of UIH) since June 1995 and Chief Executive
Officer since December 1996; Senior Vice President, Development of
UIH from March 1990 to June 1995.
John P. Cole, Jr.................... 68 Member of the Supervisory Board of Parent since February 1999;
Director of UIH since March 1998; Director of Century Communication
Corporation; partner of the law firm of Cole, Raywid & Braverman
since 1966.
Richard De Lange.................... 53 Member of the Supervisory Board of Parent since April 1996; Chairman
of the Dutch Philips organization (Philips Nederland B.V. and
Nederlandse Philips Bedrijven B.V.) since October 1998; President and
Chief Executive Officer of Philips Media B.V. since February 1996;
Chairman and Managing Director of Philips Electronics UK Ltd. from
April 1995 to October 1998; President of Philips Lighting Europe from
December 1990 to April 1995. Mr. De Lange is a citizen of The
Netherlands.
Antony P. Ressler................... 38 Member of the Supervisory Board of Parent since February 1999;
Director of UIH since October 1993; principal of Apollo Advisors,
L.P., Lion Advisors, L.P. and Ares Management, L.P. since prior to
1994. Director of Allied Waste Industries, Inc., Berlitz
International, Inc., Communications Corporation of America, Prandium,
Inc., Vail Resorts, Inc. and Koo Koo Roo Enterprises, Inc.
Ellen P. Spangler................... 50 Member of the Supervisory Board of Parent since February 1999; Senior
Vice President, Business and Legal Affairs and Secretary of UIH since
December 1996; Vice President of UIH from January 1991 to December
1996.
</TABLE>
A-8
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME AND CURRENT BUSINESS ADDRESS AGE MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- ------------------------------------ --- ---------------------------------------------------------------------
<S> <C> <C>
Tina Wildes......................... 38 Member of the Supervisory Board of Parent since February 1999; Senior
Vice President, Operations and Development Oversight of UIH since May
1998; Director MGM Latin America since December 1998; Senior Vice
President, Programming of UIH from October 1997 to May 1998; Regional
Vice President of UIH Latin America, Inc. from 1993 to October 1997.
Gene W. Schneider................... 72 Advisor to the Supervisory Board of Parent since February 1999 and
Member from July 1995 to February 1999; Chairman of the Board of
Directors of UIH since May 1989, Chief Executive Officer of UIH since
October 1995 and President of UIH from October 1995 to September
1998.
Mark L. Schneider................... 43 Chairman of the Board of Management and Chief Executive Officer of
Parent since April 1997; Executive Vice President of UIH since
December 1996; President and Chief Executive Officer of UIH
Europe/Middle East Communications, Inc. since December 1996; Chief of
Strategic Planning and Operational Oversight of UIH from May 1996 to
December 1996; Consultant to UIH from March 1995 to May 1996;
President of UIH from July 1992 to March 1995; Member of the board of
directors of UIH since 1993.
John F. Riordan..................... 55 Member of the Board of Management of Parent since September 1998 and
Executive Vice President of Parent since March 1998; Vice Chairman
and President of Advanced Communications (a division of Parent) since
September 1998; CEO of chello broadband since March 1999; Member of
the Supervisory Board of Parent from April 1997 to March 1998;
Chairman and Chief Executive Officer of Princes Holdings Limited from
1992 to November 1998. Mr. Riordan is a citizen of Ireland.
J. Timothy Bryan.................... 38 Member of the Board of Management, President and Chief Financial
Officer of Parent since September 1998; Member of the Supervisory
Board of Parent from December 1996 to September 1998; Chief Financial
Officer, Treasurer and Assistant Secretary of UIH from December 1996
to September 1998; Treasurer of Jones Financial Group, Inc. from 1993
to December 1996.
Anton H.E. v. Voskuijlen............ 41 Member of the Board of Management of Parent since September 1998;
Senior Vice President and Managing Director, Legal and General
Counsel of Parent since April 1997, Vice President and General
Counsel from July 1996 to April 1997; Vice President, Business
Affairs and Legal Counsel of Philips Media, Inc. from March 1994 to
July 1996. Mr. Voskuijlen is a citizen of The Netherlands.
</TABLE>
A-9
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME AND CURRENT BUSINESS ADDRESS AGE MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- ------------------------------------ --- ---------------------------------------------------------------------
<S> <C> <C>
Nimrod J. Kovacs.................... 49 Member of the Board of Management of Parent since September 1998;
Managing Director, Eastern Europe of Parent since March 1998;
President of UIH Programming, Inc. since December 1996; President,
Eastern Europe Distribution & Global Programming Group of UIH from
January to December 1996; Senior Vice President, Central/Eastern
Europe of UIH from March 1991 to December 1995.
Scott Bachman....................... 43 Managing Director, Technology and Purchasing of Parent since February
1998; Vice President, Engineering and Chief Technology Officer of
Parent from March 1996 to February 1998; Vice President, Operations &
Technology Projects of Cable Television Laboratories, Inc. from April
1991 to March 1996.
Charles H.R. Bracken................ 32 Managing Director, Strategy, Acquisitions and Corporate Development
since March 1999; Executive Director, Communications, Media and
Technology and various other positions with Goldman Sachs
International from 1994 to March 1999. Mr. Bracken is a citizen of
the United Kingdom.
Steven D. Butler.................... 39 Managing Director of UPC Capital and Treasurer of Parent since
February 1998; Vice President and Treasurer of Parent from July 1995
to February 1998; Director of Finance of UIH from May 1991 to July
1995.
Simon Oakes......................... 42 Managing Director, Programming of Parent since March 1998;
independent feature film producer from 1994 to March 1998;
Co-chairman of Crossbow Films from 1989 to 1994. Mr. Oakes is a
citizen of the United Kingdom.
Ray D. Samuelson.................... 45 Managing Director, Finance and Accounting of Parent since February
1998 and Vice President, Finance and Accounting from July 1995 to
February 1998; Vice President, Finance and Administration of Cable
Operations Division of UIH from 1992 to July 1995.
Joseph Webster...................... 36 Managing Director, Telephony Services of Parent and Chief Executive
Officer of Priority Telecom since February 1998; Regional Vice
President & General Manager, Time Warner Communications from February
1997 to February 1998 and Vice President & General Manager from
February 1994 to January 1997.
</TABLE>
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<PAGE>
THE COMPANY'S DIRECTORS AND EXECUTIVE OFFICERS
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The current directors and executive officers of the Company are:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ----------------------------------------------------- --- -----------------------------------------------------
<S> <C> <C>
David T. Chase....................................... 70 Chairman of the Board of Directors
Robert E. Fowler, III................................ 40 Chief Executive Officer and Director
Arnold L. Chase...................................... 47 Director
Samuel Chisholm...................................... 59 Director
David Chance......................................... 42 Director
Agnieszka Holland.................................... 50 Director
Scott A. Lanphere.................................... 33 Director
Jerzy Z. Swirski..................................... 42 Director
Donald Miller-Jones.................................. 54 Chief Financial Officer, Vice President and Treasurer
Dorothy E. Hansberry................................. 46 Vice President and General Counsel of PCI
David Keefe.......................................... 50 Chief Executive Officer of PCI
Warren L. Mobley, Jr................................. 51 Chief Operating Officer and Vice President of
Marketing and Sales of PCI
Przemyslaw A. Szmyt.................................. 36 Senior Vice President Business Development, General
Counsel and Secretary
David Warner......................................... 52 Chief Executive Officer of @EL
</TABLE>
CERTAIN INFORMATION CONCERNING DIRECTORS AND EXECUTIVE OFFICERS
Information with respect to the business experience and affiliations for the
past five years of the current directors and executive officers of the Company
is set forth below.
DAVID T. CHASE has served as Chairman of the Board of Directors of
@Entertainment since its inception. He has been a director of PCI since its
inception in 1990, and was the Chairman of the Board of Directors of PCI from
March 1996 until December 1997. Since January 1990, Mr. Chase has been a
director and President of D. T. Chase Enterprises, Inc. and David T. Chase
Enterprises, Inc., a diversified conglomerate with extensive holdings in real
estate and previously in media. He is also a director of ACCEL International
Corporation ("ACCEL"), an insurance holding company.
ROBERT E. FOWLER, III has served as Chief Executive Officer of
@Entertainment since its inception, and has served as a director of
@Entertainment since its inception and of PCI since March 1996. Mr. Fowler has
served as Chairman of the Board of Directors of PCI since December 1997, and he
served as its Chief Executive Officer from December 1996 to December 1997, its
Vice President from August 1993 to December 1996 and its Treasurer from April
1991 to December 1996. From December 1993 to February 1997, he served as Vice
President of D.T. Chase Enterprises, Inc. From March 1995 to late 1996, Mr.
Fowler served as a director of ACCEL. Since April 1, 1998, Mr. Fowler has served
on the Supervisory Board of Twoj Styl. During the period of 1994 to 1996, Mr.
Fowler devoted approximately 35% of his working time to PCI and approximately
65% of his working time to companies that were affiliated with PCI.
ARNOLD L. CHASE has served as a director of @Entertainment since its
inception and of PCI since December 1996. Mr. Chase has also served as director
and Executive Vice President and as Treasurer
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<PAGE>
of D.T. Chase Enterprises, Inc. since December 1990 and October 1992,
respectively. Mr. Chase served PCI as Co-Chairman of the Board of Directors from
April 1991 to March 1996 and as its President from October 1992 to March 1996.
Mr. Chase has been a director of International Bancorp, Inc. (the parent company
of First National Bank of New England) since 1985 and has been a director of
First National Bank of New England since 1972.
SAMUEL CHISHOLM has served as a director of @Entertainment since January
1998. From September 1990 to November 1997, Mr. Chisholm served as the Chief
Executive and Managing Director of British Sky Broadcasting Plc. Mr. Chisholm
has also been an Executive Director of The News Corporation Limited since
December 1993, a director of Star Television since July 1993, a director of
BSkyB (U.K.) since 1990, and a director of Sky New Zealand since 1997.
Previously, he was chief executive of the Nine Network Australia.
DAVID CHANCE has served as a director of @Entertainment since January 1998.
From January 1994 to December 1997, Mr. Chance served as the Deputy Managing
Director of BSkyB. From 1989 to January 1994, he served as Marketing
Distribution Manager of BSkyB. From 1987 until 1989, Mr. Chance served as the
U.K. Marketing Manager for the Astra System for SES. Mr. Chance has also been a
director of BSkyB (U.K.) since February 1995 and Modern Times Group Stockholm
since March 1998.
AGNIESZKA HOLLAND has served as a director of @Entertainment since January
1998. Since October 1995, Ms. Holland has also served as President and as a
director of the Lato Productions Company, a company providing writing and
directing services for the motion picture and television industry. Prior to
October 1995, Ms. Holland worked as an internationally known feature film writer
and director.
SCOTT A. LANPHERE has served as a director of @Entertainment since its
inception and of PCI since March 1996. He served as a Managing Director of PCBV
from May 1996 to October 1997. Mr. Lanphere has served as a Director at Morgan
Grenfell Private Equity Ltd. since October 1998. Mr. Lanphere served as a
Director of Investments for Advent International plc from December 1994 to
October 1998, and from May 1991 to December 1994 served as an Investment Manager
of Advent International plc.
JERZY Z. SWIRSKI has served as a director of @Entertainment since its
inception and as a director of PCI since October 1996. Mr. Swirski has served as
an Investment Director for Advent International plc since July 1995. From
January 1995 to July 1995, Mr. Swirski was a consultant to Enterprise Investors,
a Polish equity firm. From 1991 to 1994, he was an officer of E. Wedel S.A., a
Polish subsidiary of PepsiCo Foods, International ("Wedel"), and General Manager
of Frito-Lay, Poland.
DONALD MILLER-JONES has served as Chief Financial Officer of @Entertainment
since June 1998 and as Vice President and Treasurer of @ Entertainment since
July 1998. From November 1995 through January 1998 Mr. Miller-Jones served as
the Finance Director of United Pan-Europe Communications N.V. From January 1988
through October 1995, Mr. Miller-Jones served as the Vice President of Treasury
and Investor Relations of PolyGram N.V. Mr. Miller-Jones has served as a
non-executive director of Parallel Pictures Group plc since January 1999.
DOROTHY E. HANSBERRY has served as Vice President and General Counsel of PCI
since January 1998. Since May 1996, Ms. Hansberry has served as the President of
Hansberry Consultants, Inc. From July 1997 to January 1998, she worked as an
attorney at Dewey Ballantine Sp. z o.o., a Warsaw law firm. From May 1996 to
July 1997, Ms. Hansberry was an attorney at Beata Gessel and Partners, a Warsaw
law firm, and was of-counsel to Bondurant, Mixson & Elmore, an Atlanta, Georgia
law firm. From December 1991 to October 1996, she served as legal advisor to
Eastern European anti-monopoly offices. From March 1994 to August 1995, Ms.
Hansberry acted as resident
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<PAGE>
legal advisor to the Polish Anti-Monopoly Office. From October 1980 to May 1996,
she worked as a senior trial attorney in the Antitrust Division of the U.S.
Department of Justice.
WARREN L. MOBLEY, JR. has served as Chief Operating Officer of PCI since
December 1998, and has served as Vice President of Marketing and Sales since May
1998. From March 1997 to May 1998. Mr. Mobley served as President of World
Channel Ltd. From March 1993 to February 1997, Mr. Mobley served as Vice
President of Development of United International Holdings Asia.
DAVID KEEFE has served as Chief Executive Officer and director of PCI since
January 1998. From December 1995 to December 1997, Mr. Keefe was Chief Executive
Officer of Kabelkom Hungary, a Hungarian cable company. From January 1994 to
December 1995, Mr. Keefe served as Cable Operations Director and a member of the
Board of Directors of Wharf Cable, a cable company in Hong Kong.
PRZEMYSLAW A. SZMYT has served as Senior Vice President of Business
Development of @Entertainment since January 1999, as Vice President, General
Counsel and Secretary of @Entertainment since its inception, and as Vice
President and General Counsel of PCI from February 1997 until December 1997. Mr.
Szmyt has served as director of PCI since December 1997 and as a member of the
Supervisory Board of Twoj Styl since April 1998. From September 1995 to February
1997, Mr. Szmyt was a director for Poland of MeesPierson EurAmerica, an
investment banking firm and affiliate of MeesPierson N.V., a Dutch merchant
bank. From early 1992 to August 1995, Mr. Szmyt was a senior associate at
Soltysinski, Kawecki & Szlezak, a law firm in Warsaw. From October 1994 to late
1996, Mr. Szmyt served on the Management Board of TKP, a holding company of
Canal+ Polska. Mr. Szmyt is also a Board Member of United Way Poland and of
Litewska Childrens' Hospital Foundation.
DAVID WARNER has served as the Chief Executive Officer of @EL since November
1998. Mr. Warner served as the Chief Operating Officer of @EL from April 1997
until November 1998. He was a Vice President of @Entertainment from its
inception until March 1998. From August 1996 to April 1997, Mr. Warner was
General Manager for FilmNet Central Europe of the NetHold Group. From October
1995 to August 1996, Mr. Warner served as a television operations consultant to
Rapture Channel. From May 1993 to October 1995, Mr. Warner worked as Operations
Director of the Family Channel UK of the International Family Entertainment
Group. From 1983 to May 1993, Mr. Warner served as the general manager of TVS
Main ITV Terrestrial Broadcaster. Mr. Warner is also an advisor to and a board
member of the Ravensbourne Communication College.
BOARD OF DIRECTORS
@Entertainment's Bylaws (the "Bylaws") provide that the Board of Directors
shall consist of at least one and no more than eleven directors and that the
number of directors shall be subject to change pursuant to resolutions duly
adopted by a majority of the Board of Directors. The current number of directors
is eight. Morgan Grenfell Private Equity Ltd. ("MGPE"), the principal initial
holder of all of the outstanding Series A Cumulative Preference Shares, has the
right to appoint two directors to the Company's Board of Directors. It is
expected that MGPE will make such appointments shortly and that Mr. Lanphere (a
Director of the Company and of MGPE) will be one of MGPE's appointees to the
Company's Board of Directors. In addition, under the terms of the Series A
Cumulative Preference Shares, holders of such shares may have the right, in the
future, to appoint additional directors to the Board of Directors.
@Entertainment's Amended and Restated Certificate of Incorporation (the
"Certificate") and Bylaws provide that the directors shall be classified, with
respect to the time for which they severally hold office, into three classes, as
nearly equal in number as possible. The first class of directors consists of two
directors (Messrs. Swirski and A. Chase) whose terms shall expire in 2001; the
second class consists of three directors (Messrs. D. Chase and Lanphere and Ms.
Holland) whose terms shall expire
A-13
<PAGE>
in 1999; and the third class consists of three directors (Messrs. Fowler,
Chisholm and Chance) whose terms shall expire in 2000. Each class of directors
will hold office until its respective successors are duly elected and qualified.
At each annual meeting of the stockholders, the successors of the class of
directors whose term expires at that meeting shall be elected to hold office for
a term expiring at the annual meeting of stockholders to be held in the third
year following the year of their elections. Any decrease in the authorized
number of directors shall not be effective until the expiration of the terms of
the directors then in office, unless at the time of such decrease there shall be
vacancies on the Board of Directors which are being eliminated by such decrease.
The Certificate and Bylaws provide that any director may resign at any time
by giving written notice to the Chairman of the Board of Directors, the Chief
Executive Officer or the Board of Directors. If, at any other time than the
annual meeting of the stockholders, any vacancy occurs in @Entertainment's Board
of Directors caused by resignation, death, retirement, disqualification or
removal from office of any director or otherwise, or any new directorship is
created by an increase in the authorized number of directors, a majority of the
directors then in office, although less than a quorum, may choose a successor,
or fill the newly created directorship, and the director so chosen shall hold
office until the next election for that class of directors by the stockholders
and until his successor shall be duly elected and qualified, unless sooner
displaced. The Certificate and Bylaws provide that any director may be removed
from office only with cause and only by the affirmative vote of the holders of
at least two-thirds of the voting power of all shares entitled to vote, unless
two-thirds of the Continuing Directors (as defined below) vote to recommend to
the stockholders the removal of a director with or without cause and such
recommendation is approved by the affirmative vote of the holders of at least a
majority of the outstanding shares entitled to vote.
The term "Continuing Director" shall mean any member of the Board of
Directors of the Company who is not the Related Person (as hereinafter defined)
and not an affiliate, associate, representative or nominee of the Related Person
or of such an affiliate or associate, that is involved in the relevant business
combination, and (a) was a member of the Board of Directors prior to the
Determination Date with respect to such Related Person or (b) whose initial
election as a director of the Corporation suceeds a Continuing Director and was
recommended by a majority vote of the Continuing Directors then in office;
PROVIDED, THAT in either case, such Continuing Director shall have continued in
office after becoming a Continuing Director.
The term "Related Person" shall mean any person who alone or together with
any affiliates or associates is: (a) the beneficial owner, directly or
indirectly, of an aggregate percentage of the Company's voting stock equal to or
exceeding ten percent (10%), or (b) an assignee of or otherwise has succeeded to
the beneficial ownership of any shares of the Company's voting stock which were
at any time within the two-year period immediately prior to the date in question
beneficially owned by the Related Person, if such assignment or succession shall
have occurred in the course of a transaction or series of transactions not
involving a public offering within the meaning of the Securities Act of 1933, as
amended; PROVIDED, HOWEVER, that the term "Related Person" shall not include:
(x) the Company or any subsidiary of the Company, all of the capital stock of or
other ownership interest in which is directly or indirectly owned by the
Company; (y) any person or entity whose acquisition of such aggregate percentage
of the Company's voting stock was approved by not less than a two-thirds (2/3)
vote of the Continuing Directors prior to such acquisition; or (z) any pension,
profit sharing, employee stock ownership or other employee benefit plan of the
Company or any subsidiary of the Company or any trustee or fiduciary when acting
in such capacity with respect to any such plan.
The Bylaws provide that a majority of the total number of directors then in
office constitutes a quorum of the Board of Directors. The Bylaws further
provide that the act of a majority of all of the directors present at a meeting
for which there is a quorum shall be the act of the Board of Directors, except
as otherwise provided by statute or in the Certificate. The Certificate provides
that the Board of Directors or stockholders shall have the power to amend the
Bylaws by majority vote, except for certain
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<PAGE>
provisions of the Bylaws for which the affirmative vote of two-thirds of the
Continuing Directors or of the holders of at least two-thirds of the voting
power of all shares entitled to vote is required. In addition, under the terms
of the Certificate of Designation governing the Preference Shares, certain
matters will require the approval of the majority of the Board of Directors of
the Company including at least one of the Board members appointed by MGPE, and
any resolution adversely affecting the economic or ranking provisions relating
to the Preference Shares will require the affirmative approval or consent of all
the holders of the outstanding Preference Shares.
The Bylaws provide that regular meetings of the Board of Directors may be
held without notice immediately following the annual meeting of the stockholders
of @Entertainment. Special meetings of the Board of Directors may be called by
the Chairman of the Board, the Chief Executive Officer or any two directors.
The Board of Directors of @Entertainment elected Messrs. Chisholm and Chance
(the "Business Independent Directors") and Ms. Holland (the "Artistic
Independent Director") to serve as three directors who are not affiliated with
or employed by the Company and who, in the opinion of the Board of Directors, do
not have a relationship which would interfere with the exercise of independent
judgment in carrying out the responsibilities of a director.
The Board of Directors of @Entertainment currently maintains an Audit
Committee and a Compensation Committee.
The Audit Committee is comprised of Messrs. Chisholm and Chance. The Audit
Committee's function is to recommend to the Board of Directors the independent
public accountants to be employed by @Entertainment, to confer with the
independent public accountants concerning the scope of their audit, to review
the accountants' findings and recommendations and to review the adequacy of
@Entertainment's internal accounting controls. KPMG Polska Sp. z o.o. presently
serves as the independent public accountants of @Entertainment. The Audit
Committee meets as necessary but at least once a year. In 1998 the Audit
Committee met once.
The Compensation Committee is comprised of Messrs. Fowler, D. Chase,
Lanphere, Chisholm and Chance. The Compensation Committee's function is to
approve, and in some instances to recommend to the Board of Directors of
@Entertainment, compensation arrangements involving the executive officers and
certain other employees of the Company. The Compensation Committee meets as
necessary. In 1998 the Compensation Committee met once.
REMUNERATION OF DIRECTORS
Each non-employee director may receive such fees and other compensation,
along with reimbursement of expenses incurred on behalf of the Company or in
connection with attendance at meetings, as the Board of Directors may from time
to time determine. Each Business Independent Director receives $5,000 for
attendance at each of the five regular meetings of the Board of Directors, and
an additional $5,000 for attendance at any special meetings of the Board of
Directors. Each Artistic Independent Director receives $5,000 for attendance at
each of the five regular meetings of the Board of Directors.
A-15
<PAGE>
CERTAIN TRANSACTIONS
THE COMPANY'S REGISTRATION RIGHTS AGREEMENT
The Company entered into a registration rights agreement (the "Stockholder
Registration Rights Agreement") with Polish Investments Holding LP ("PIHLP"),
ECO Holdings III Limited Partnership ("ECO"), Mr. Roger Freedman, the Steele
LLC, the Aesop Fund L.P. ("AESOP") and the Cheryl Anne Chase Marital Trust
("CACMT") (collectively, the "Rightsholders") on June 22, 1997. ECO, PIHLP, Mr.
Freedman, AESOP, CACMT and the Steele LLC were the holders of all of the
outstanding shares of capital stock of the Company prior to the Company's
initial public equity offering. Pursuant to the Stockholder Registration Rights
Agreement, each of PIHLP and ECO has the right under certain circumstances to
demand that the Company register its shares of Common Stock under the Securities
Act of 1933. After March 29, 2001, each of PIHLP and ECO will have the right to
demand that the Company register its shares of Common Stock in a shelf
registration under Rule 415 of the Securities Act. In addition, if the Company
proposes to register any of its securities under the Securities Act (other than
registrations in connection with employee stock ownership plans, offerings of
debt securities and certain shelf registrations), all of the Rightsholders will
have the right to have their shares of Common Stock included in such
registration. The registration rights described above expire on March 29, 2004,
and are subject to certain limitations, including limitations on the number of
shares of Common Stock to be included by the Rightsholders in particular
registrations and on the number of registrations that can be demanded by PIHLP
and ECO. ECO has transferred its shares of Common Stock to certain Advent
International Group entities, which have succeeded to ECO's rights under the
Stockholder Registration Rights Agreement.
PCBV STOCKHOLDERS' AGREEMENT
Poland Communications, Inc. ("PCI"), a wholly owned subsidiary of the
Company, holds 92.3% of the issued and outstanding capital stock of Poland
Cablevision (Netherlands) B.V. ("PCBV"), which owns 100% of the issued and
outstanding capital stock of each of PTK-Krakow and PTK-Warsaw, and 46.8% of the
issued and outstanding capital stock of PTK Operator, as well as approximately
98% of the issued and outstanding capital stock of PTK S.A.
The following is a summary of the stockholders' agreement (the "PCBV
Stockholders' Agreement") entered into by and among Frank N. Cooper, Reece
Communications, Inc., Rutter-Dunn Communications, Inc., and Poland Cablevision
U.S.A., Inc. (collectively, the "Minority Stockholders"), PCI, and PCBV on March
8, 1990, as amended. The Minority Stockholders own the 7.7% of outstanding PCBV
capital stock that is not owned by PCI. The following summary does not purport
to be complete, and it is qualified in its entirety by reference to the PCBV
Stockholders' Agreement. The parties to the PCBV Stockholders' Agreement other
than PCBV are hereinafter referred to as the "PCBV Stockholders." Shares of the
capital stock of PCBV are hereinafter referred to as "PCBV shares."
The PCBV Stockholders' Agreement protects shareholdings of each Minority
Stockholder from dilution, by requiring that the PCBV shares of each Minority
Stockholder must continue to represent a constant percentage of the total equity
in PCBV and of the total votes to be cast by the PCBV Stockholders on any
subject, regardless of changes to the capital structure of PCBV and regardless
of any additional equity funds that may be contributed to PCBV by PCI.
The PCBV Stockholders' Agreement contains restrictions on the PCBV
Stockholders' ability to sell, pledge, hypothecate or otherwise transfer or
encumber their PCBV shares. In addition, PCBV Stockholders have the right of
first refusal to purchase PCBV shares upon the death of an individual PCBV
Stockholder, and upon the liquidation, dissolution or other termination of a
corporate PCBV Stockholder. Furthermore, PCI has the right of first refusal to
purchase PCBV shares from Minority
A-16
<PAGE>
Stockholders, and the Minority Stockholders have the right of first refusal to
purchase PCBV shares from PCI, before such shares can be sold to a third party.
The PCBV Stockholders' Agreement includes certain limitations on payments
that can be paid by PCBV to the PCBV Stockholders. If the managing board of PCBV
solicits and receives loans from any of the PCBV Stockholders, the loans cannot
bear interest at a rate exceeding 10% per annum.
Under the PCBV Stockholders' Agreement, PCI has the option to purchase the
PCBV shares owned by the Minority Stockholders upon the satisfaction of certain
conditions. These conditions involve the number of subscribers obtained by PTK,
S.A. in nine specified cities in Poland. On each occasion when the subscriber
count in one of these specified cities reaches the number prescribed in the PCBV
Stockholders' Agreement, one-ninth of the Minority Stockholders' PCBV shares
becomes available for purchase by PCI for a period of approximately 60 to 90
days. The option periods have expired with respect to a number of the specified
cities.
The PCBV Stockholders' Agreement also includes covenants against competition
that limit the ability of each PCBV Stockholder to engage directly or indirectly
in any aspect of the cable television business in Poland for a period ending ten
years after such PCBV Stockholder ceases to be a PCBV Stockholder. PCI has
direct or indirect ownership interests in a number of entities that engage in
certain aspects of the cable television business in Poland. Under the PCBV
Stockholders' Agreement, the Minority Stockholders have a claim against 7.7% of
the profits and equity of such entities and, under a supplemental agreement, PCI
has agreed to share the profits of these entities with the Minority Stockholders
on a pro rata basis. In addition, PCI is negotiating to buy, and has made an
offer to buy, the outstanding PCBV shares held by the Minority Stockholders,
although there can be no assurance that an agreement can be reached with any of
the Minority Stockholders on satisfactory terms.
CLAIM OF PCBV MINORITY STOCKHOLDERS
Several of the minority stockholders of PCBV claim that the behavior of PCBV
and its majority stockholder, PCI, has prejudiced them, and that PCI (through
its direct and indirect ownership interest in a number of entities that engage
in certain aspects of the pay television in Poland) and certain of its
affiliates have violated certain covenants against competition in the PCBV
Stockholders' Agreement and certain other duties and obligations. Such
stockholders have threatened to litigate these claims.
SERVICE AGREEMENTS
PCI, a wholly owned subsidiary of the Company, has entered into service
agreements with PCBV and other of its direct and indirect subsidiaries (the
"Service Agreements"), including Poltelkab Sp. z o.o. ("Poltelkab"), Telkat Sp.
z o.o. ("Telkat"), PTK-Szczecin Sp. z o.o. ("PTK-Szczecin"), PTK-Lublin S.A.
("PTK-Lublin"), ETV Sp. z o.o. ("ETV"), PTK S.A., PTK-Operator, PTK-Warsaw and
PTK-Krakow, pursuant to which PCI provides various services, including
administrative, technical, managerial, financial, operational and marketing
services to each of the subsidiaries and PCBV serves as PCI's agent. PCI also
entered into a service agreement, dated August 31, 1995, with PCBV and ETV,
whereby PCBV is the principal service provider and PCI acts as agent to PCBV
(the "ETV Service Agreement"). The services provided under these agreements are
intended to enable the subsidiaries to construct, develop, operate and manage
cable television systems throughout Poland. Except for the ETV Service
Agreement, which requires ETV to pay $18,740 per calendar quarter to PCBV, the
Service Agreements provide that the subsidiaries will each pay to PCI or PCBV,
as the case may be, a fee of $10,000 per calendar quarter for performing general
administrative services, and a commercially reasonable rate for legal, financial
and other specific professional services. With the exception of the ETV Service
Agreement, if a subsidiary is obligated to pay fees to PCI pursuant to a
management agreement (described below), any fee payable under the Service
Agreements is waived. The Service
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<PAGE>
Agreements also typically require the subsidiaries to reimburse PCBV for any
reasonable out-of-pocket expenses incurred by PCBV or PCI, acting as agent for
PCBV, including salaries and benefits, housing allowances, travel expenses, and
equipment supply or other goods costs. The Service Agreements expired on
December 31, 1998, but were automatically extended for successive one-year
periods as no party gave notice on or before January 31, 1999.
MANAGEMENT AGREEMENTS
PCI, a wholly owned subsidiary of the Company, entered into management
agreements with certain of its direct or indirect subsidiaries, namely
Poltelkab, Telkat, PTK-Szczecin, PTK-Lublin, ETV, PTK S.A., PTK-Operator,
PTK-Warsaw and PTK-Krakow. The agreements typically provide that the subsidiary
will pay to PCI an annual consulting fee of $320,000 when and to the extent that
the subsidiary's net income exceeds zero and in exchange for organizational and
consulting services rendered by PCI. Telkat pays to PCI an annual consulting fee
of $160,000. The management agreements also provide for an initial term ending
as of the end of the calendar year during which they became effective, and
provide for successive renewals for one-year periods unless the agreement is
terminated in writing with at least thirty days notice by either party.
CORPORATE OVERHEAD ALLOCATION AGREEMENT
PCI, a wholly owned subsidiary of the Company, entered into a Corporate
Overhead Allocation Agreement, dated January 1, 1996 (the "Allocation
Agreement"), with certain of its direct or indirect subsidiaries, namely PTK
S.A., PTK-Warsaw, PTK-Operator, PTK-Krakow, PTK-Szczecin, PTK-Lublin, ETV,
Telkat and Poltelkab (collectively the "PTK Companies"), and PCBV. The
Allocation Agreement provides that costs incurred by PCI or PCBV, acting as
PCI's agent, with regard to the Service Agreements and as otherwise requested by
the PTK Companies shall be allocated and charged to particular PTK Companies in
the event they are directly attributable to such subsidiaries, and shall
otherwise be allocated equally among each of the PTK Companies. With regard to
services rendered and costs incurred by subsidiaries for the benefit of some or
all of the PTK Companies, which include costs associated with maintaining a
central office in Warsaw, legal expenses, expenses relating to governmental
relationships and approvals, programming services, accounting, management
information systems services, and salaries associated with personnel whose
duties clearly benefit other PTK Companies, the Allocation Agreement provides
that such expenses shall be allocated between the PTK Companies. The Allocation
Agreement was due to terminate on December 31, 1998, but was automatically
renewed for successive one-year periods as no written notice of termination was
provided by PCI or PCBV or any subsidiary, with respect to itself.
PURCHASE OF HOUSE
Pursuant to Mr. Fowler's employment contract, and in part to induce Mr.
Fowler, the Chief Executive Officer and a director of the Company, to move
closer to the Company's operations in Europe, the Company purchased Mr. Fowler's
house in Connecticut for approximately $354,000 in June 1997 (including payments
of $295,000 to extinguish the mortgages relating to the house), and sold the
house shortly thereafter to a third party for approximately $267,000. In
September 1998 the Company paid Mr. Fowler the difference between the mortgage
amounts of $295,000 and the purchase price of $354,000.
CONSULTING ARRANGEMENTS
The Company has entered into a two-year consultancy arrangement, effective
January 1, 1998, with Samuel Chisholm and David Chance (each individually a
"Consultant"), pursuant to which the Company pays to a Consultant a fee of
$10,000 per consultancy day which shall be a single day of at least seven hours
during which a Consultant provides consulting services to the Company
("Consulting
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Day"), based on a minimum, on average over each 12 month period, of a total of 4
Consultancy Days per month, and the Company will pay an additional fee of
$10,000 to a Consultant for any additional days in any month on which a
Consultant provides consulting services to the Company. The consultancy
agreement is not subject to cancellation by either party except as a result of a
breach of the consultancy agreement.
The Company has entered into a two-year consultancy arrangement with
Agnieszka Holland, pursuant to which the Company pays to Ms. Holland a fee of
$25,000 per year, in 12 equal prorated amounts, for artistic consultancy
services.
PURCHASE AND SALE AGREEMENT FOR CUMULATIVE PREFERENCE SHARES
On January 22, 1999 the Company sold Preference Shares and Warrants
(collectively, the "Preference Securities") to Morgan Grenfell Private Equity
("MGPE"), Arnold Chase, Cheryl Chase and Rhoda Chase for total gross proceeds of
$50 million (less an aggregate commission of $1.5 million to be paid by the
Company to the purchasers). MGPE purchased $45 million of the 12% Series A
Cumulative Preference Shares. Mr. Scott Lanphere is a director of the Company
and is also a director at MGPE. Mr. Lanphere was primarily responsible for
negotiating the terms of purchase of the Preference Securities. Arnold Chase,
who is a director of the Company, purchased $2 million of the 12% Series B
Cumulative Preference Shares. Cheryl Chase, who is the sister of Arnold Chase
and the daughter of David Chase, the Chairman of the Board of Directors of the
Company, purchased $2 million of the 12% Series A Cumulative Preference
Shares--$1 million directly and $1 million through the Darland Trust. Rhoda
Chase who is the mother of Arnold Chase and the wife of David Chase, purchased
$1 million of the 12% Series B Cumulative Preference Shares. David Chase, Arnold
Chase and Mr. Lanphere did not vote as directors of the Company on the
resolutions proposing the acceptance of the terms of the Preference Securities
and the sale of such securities to MGPE, Arnold Chase, Cheryl Chase and/or Rhoda
Chase.
STOCKHOLDERS AGREEMENTS
Parent and Purchaser have entered into the Common Stockholder Agreements
with certain holders of Common Stock of the Company (including Messrs. Chisholm,
Chance, Fowler, William Chase, and Arnold Chase, certain Advent International
Group entities, Polish Investments Holding L.P., The Cheryl Anne Chase Marital
Trust, Mmes. Rhoda Chase and Cheryl A. Chase, Morgan Grenfell Development
Capital Syndications Limited, and The Darland Trust) and the Preferred
Stockholder Agreements with each of the holders of Preference Shares of the
Company. For a summary of the Common Stockholder Agreements and the Preferred
Stockholder Agreements, see Item 3--"Identity and Background--Stockholder
Agreements" in the Schedule 14D-9.
WAIVER OF NONTRANSFERABILITY PROVISIONS IN STOCK OPTION AGREEMENTS
On June 2, 1999, the Company waived any nontransferability provisions
contained in the Stock Option Agreements between the Company and Robert Fowler,
Samuel Chisholm, and David Chase in order to permit such persons to perform
their obligations under their respective Stockholder Agreements.
WAIVER OF RESTRICTIONS ON TRANSFER OF PREFERENCE WARRANTS
On June 2, 1999, the Company waived the restrictions contained in Section
2.02(g) of the Preference Warrant Agreement, dated January 27, 1999, prohibiting
the transfer of the shares of Common Stock underlying the Preference Warrants
prior to January 27, 2000. Such waiver only effects and constitutes a waiver in
connection with the transfer of the shares of Common Stock underlying the
Preference Warrants to Parent and/or Purchaser as contemplated in the Merger
Agreement and the Common Stockholder Agreements.
A-19
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
EXECUTIVE COMPENSATION
The following table sets forth certain information regarding all
compensation awarded to, earned by or paid to the Company's Chief Executive
Officer, each of the other four most highly compensated executive officers of
the Company and a former executive officer who would have been one of the four
most highly compensated executive officers at the end of the fiscal year 1998
(collectively, the "Named Executive Officers") for services rendered in all
capacities to the Company for the last three fiscal years, to the extent that
those officers were in the employ of the Company. Columns relating to long-term
compensation have been omitted from the table as the Company did not have
capital stock-related award plans and there has been no compensation arising
from long-term incentive plans during the years reflected in the table.
<TABLE>
<CAPTION>
OTHER ANNUAL SECURITIES ALL OTHER
COMPENSATION UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) ($) OPTIONS/SAR ($)
- --------------------------------------------- --------- ----------- ----------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Robert E. Fowler, III........................ 1998 325,000 43,750 -- 58,568(2)
Chief Executive Officer and Director 1997 337,500 381,250 -- 1,268,000
1996 66,000(1) 66,000(1) --
Donald Miller-Jones.......................... 1998 114,457 -- 50,423(7) 200,000 --
Chief Financial Officer, 1997 -- -- -- --
Vice President and Treasurer 1996 -- -- --
David Keefe.................................. 1998 220,000 200,000 68,175(8) 250,000 --
Chief Executive Officer of PCI 1997 -- -- -- -- --
1996 -- -- -- -- --
George Z. Makowski(3)........................ 1998 169,770 -- 34,300(6) -- --
1997 156,000 175,000(4) 68,400(5) 385,000 --
1996 -- -- -- -- --
David Warner................................. 1998 182,061 93,168 62,580(9) 75,000
Chief Executive Officer--@EL 1997 120,708 248,500 -- 131,000
1996 -- -- -- --
Przemyslaw Szmyt............................. 1998 182,216 40,000 -- -- --
Senior Vice President of Business 1997 146,667 70,000(4) -- 131,000 --
Development, General Counsel and 1996 -- -- -- -- --
Secretary
</TABLE>
- ------------------------
(1) Represents only that portion of annual compensation attributable to services
performed on behalf of the Company. Additional compensation may have been
provided by companies that are affiliated with @Entertainment and
beneficially owned by the Chase Family for services rendered to those
companies.
(2) Represents amounts paid to Mr. Fowler in connection with the purchase of Mr.
Fowler's previous residence. See "Certain Transactions--Purchase of House."
(3) Mr. Makowski was the Chief Operating Officer of PCI. Mr. Makowski's
employment with PCI was terminated, effective as of May 1998.
(4) Represents one-time bonus paid upon completion of @Entertainment's initial
public equity offering.
(5) Represents amounts paid pursuant to housing and tuition allowances.
(6) Represents amounts paid pursuant to housing allowance.
(7) Represents amounts paid to purchase car.
(8) Includes amounts paid pursuant to housing allowance.
(9) Represents amounts contributed to private pension fund and car allowance.
A-20
<PAGE>
COMPENSATION PLANS
EMPLOYMENT AGREEMENTS
@Entertainment has employment agreements with each of Messrs. Fowler, Szmyt,
Warner and Miller-Jones. PCI has employment agreements with each of Mr. Keefe,
Ms. Hansberry and Mr. Mobley. @Entertainment has entered into consultancy
arrangements with Messrs. Chisholm and Chance and Ms. Holland.
Mr. Fowler entered into a three-year employment agreement with PCI effective
at January 1, 1997. The employment agreement was assigned to @Entertainment in
June 1997 in connection with the Company's reorganization. Pursuant to such
agreement, Mr. Fowler serves as the Chief Executive Officer of @Entertainment.
Mr. Fowler receives a base annual salary of $325,000, plus a travel allowance of
approximately $30,000 per annum and an unspecified annual incentive bonus.
Pursuant to Mr. Fowler's employment contract, and in part to induce Mr. Fowler
to move closer to the Company's operations in Europe, @Entertainment purchased
Mr. Fowler's house in Connecticut for approximately $354,000 in June 1997
(including payments of $295,000 to extinguish the mortgages relating to the
house), and sold the house shortly thereafter to a third party for approximately
$267,000. @Entertainment has paid Mr. Fowler the difference between the mortgage
amounts of $295,000 and the purchase price of $354,000. Mr. Fowler may terminate
the employment agreement at any time upon three months' written notice, and
@Entertainment may terminate the agreement at any time upon one month's written
notice (with an obligation to pay Mr. Fowler an additional two months' base
salary). In addition, @Entertainment may terminate the agreement immediately
without further obligation to Mr. Fowler for cause (as defined in the employment
agreement).
Mr. Szmyt entered into a five-year agreement with PCI effective at February
7, 1997, which was assigned to @Entertainment in June 1997 in connection with
the Company's reorganization and was amended effective January 1, 1999. Pursuant
to such agreement, Mr. Szmyt serves as Senior Vice President of Business
Development, General Counsel and Secretary of @Entertainment. He is eligible to
receive an annual bonus at the discretion of the Chief Executive Officer of
@Entertainment. Pursuant to an employment agreement with Wizja TV Sp. z o.o. and
a services agreement with PCI, Mr. Szmyt receives annual remuneration totaling
$180,000. He is eligible to receive an annual performance-based bonus of up to
$40,000 per year. Mr. Szmyt may terminate his contract with @Entertainment at
any time upon two months' written notice and @Entertainment may terminate the
contract at any time upon six months' written notice. In addition,
@Entertainment may terminate the contract without further obligation to Mr.
Szmyt for cause (as defined in the agreement). Mr. Szmyt's employment agreement
with Wizja TV Sp. z o.o. may be terminated by either party upon one month's
written notice.
Mr. Warner entered into a five-year employment agreement with PCI effective
at April 7, 1997, which was assigned to @Entertainment in June 1997 in
connection with the Company's reorganization and was amended effective January
1, 1998. Pursuant to such agreement, Mr. Warner serves as Chief Operating
Officer of @EL. Mr. Warner receives an annual salary of L115,000 (approximately
$192,050, based on the exchange rate of L1.00=$1.67 at December 31, 1998), and
receives an annual performance-based bonus of up to L45,000 (approximately
$75,150 based on the exchange rate of L1.00=$1.67 at December 31, 1998). Mr.
Warner and @Entertainment may terminate the contract at any time with six
months' written notice. In addition, @Entertainment may terminate the contract
without further obligation to Mr. Warner for cause (as defined in the
agreement).
Mr. Miller-Jones entered into a three-year employment agreement with
@Entertainment effective at June 8, 1998. Pursuant to such agreement, Mr.
Miller-Jones serves as the Chief Financial Officer of @Entertainment and
receives a base annual remuneration of L122,700 (approximately $204,900 based on
the exchange rate of L1.00=$1.67 at December 31, 1998), and an allowance of
L30,000 (approximately $51,000 based on the exchange rate of L1.00=$1.70 of June
8, 1998) for the purchase of
A-21
<PAGE>
an automobile. The allowance was paid to Mr. Miller-Jones in July 1998. Mr.
Miller-Jones is also eligible to receive an annual performance-based bonus
during his first year of up to L30,500 (approximately $50,900, based on the
exchange rate of L1.00=$1.67 at December 31, 1998). Of such amount, Mr.
Miller-Jones is guaranteed to receive at least L18,300 (approximately $30,600,
based on the exchange rate of L1.00=$1.67 at December 31, 1998). In subsequent
years, Mr. Miller-Jones will be eligible to receive a discretionary performance
bonus, the amount of which shall be determined by the Board of Directors of the
Company.
Mr. Keefe entered into a two-year employment agreement with PCI effective at
January 1, 1998. Pursuant to such agreement, Mr. Keefe serves as the Chief
Executive Officer of PCI. Mr. Keefe receives a base annual salary of
approximately $220,000, a monthly allowance for additional housing and cost of
living expenses of $5,000, an allowance for relocation expenses of up to
$20,000, and reimbursement of educational and tax planning expenses of up to an
aggregate amount of $23,000 per year. Mr. Keefe also receives a guaranteed bonus
of $100,000 in the first year of his employment and unspecified incentive
bonuses thereafter. He received an additional bonus of $200,000 upon the signing
of the employment agreement. Mr. Keefe may terminate the employment agreement at
any time upon three months' written notice, and PCI may terminate the agreement
at any time upon one month's written notice (with an obligation to pay Mr. Keefe
an additional five months' salary). In addition, PCI may terminate the agreement
immediately without further obligation to Mr. Keefe for cause (as defined in the
employment agreement).
Ms. Hansberry entered into a two-year employment agreement with PCI
effective at January 1, 1998. Pursuant to such agreement, Ms. Hansberry serves
as Vice President and General Counsel of PCI and receives an annual remuneration
totaling $150,000. She is eligible to receive annual performance-based bonuses
of up to $40,000 per year. Ms. Hansberry's initial year bonus of $40,000 is
guaranteed. Ms. Hansberry or PCI may terminate the agreement at any time upon
six months' written notice. In addition, PCI may terminate the agreement without
further obligation to Ms. Hansberry for cause (as defined in the agreement).
Mr. Mobley entered into a three-year employment agreement with PCI,
effective December 14, 1998. Pursuant to such agreement, Mr. Mobley serves as
Chief Operating Officer of PCI and receives an annual remuneration totaling
$220,000. Mr. Mobley's initial year bonus of $100,000 is guaranteed. In
subsequent years, Mr. Mobley will be eligible to receive a discretionary
performance bonus, the amount of which shall be determined by the Board of
Directors of the Company. In addition, Mr. Mobley may terminate the employment
agreement at any time upon three months written notice, and PCI may terminate
the agreement at any time upon three months' written notice.
The Company has entered into a two-year consultancy arrangement, effective
January 1, 1998, with Samuel Chisholm and David Chance (each individually a
"Consultant"), pursuant to which the Company pays to a Consultant a fee of
$10,000 per consultancy day, which shall be a single day of at least seven hours
during which a Consultant provides consulting services to the Company
("Consultancy Day"), based on a minimum, on average over each 12 month period,
of a total of 4 Consultancy Days per month, and the Company will pay an
additional fee of $10,000 to a Consultant for any additional days in any month
on which a Consultant provides consulting services to the Company. The
consultancy agreement is not subject to cancellation by either party except as a
result of a breach of the consultancy agreement.
The Company has entered into a two-year consultancy arrangement with
Agnieszka Holland, pursuant to which the Company pays to Ms. Holland a fee of
$25,000 per year, in 12 equal prorated amounts, for artistic consultancy
services.
1997 STOCK OPTION PLAN
@Entertainment's 1997 Stock Option Plan, as amended (the "1997 Plan") was
adopted on May 22, 1997 and approved by a majority of the stockholders. The 1997
Plan provides for the grant to
A-22
<PAGE>
employees of the Company (including officers, employee directors, and
non-employee directors) of incentive stock options within the meaning of Section
422 of the Internal Revenue Code of 1986, as amended (the "Code"), and for the
grant of qualified stock options to employees and consultants of the Company
(collectively, the "Options"). The 1997 Plan is currently administered by the
Board of Directors which selects the optionees (from among those eligible),
determines the number or shares to be subject to each Option and determines the
exercise price of each Option. The Board of Directors may also appoint a Stock
Option Committee to perform such functions in the future. Currently,
approximately 21 individuals (including Messrs. Fowler and Makowski, whose
option agreements with PCI became subject to the 1997 Plan pursuant to
Assignment and Assumption Agreements with @Entertainment, Messrs. Szmyt and
Warner, whose option agreements became subject to the 1997 Plan pursuant to a
resolution of the Board of Directors of @Entertainment, and Messrs. Chisholm,
Chance, Keefe, Miller-Jones and Mobley and Ms. Hansberry) participate in the
1997 Plan.
In addition, the Board of Directors has the authority to interpret the 1997
Plan and to prescribe, amend and rescind rules and regulations relating to the
1997 Plan. The Board of Directors' interpretation of the 1997 Plan and
determinations pursuant to the 1997 Plan are final and binding on all parties
claiming an interest under the 1997 Plan. The maximum number of shares of Common
Stock that may be subject to Options under the 1997 Plan is 4,436,000 shares,
subject to adjustment in accordance with the terms of the 1997 Plan. At June 1,
1999, options for 3,998,000 shares had been granted and 438,000 shares remained
available for future grants. The exercise price of all incentive stock options
granted under the 1997 Plan must be at least equal to the fair market value of
the Common Stock on the date of grant. With respect to any participant who owns
stock possessing more than 10% of the voting power of all classes of stock of
@Entertainment, the exercise price of any incentive stock option granted must
equal at least 110% of the fair market value on the grant date and the maximum
term of an incentive stock option must not exceed five years.
The term of all options granted under the 1997 Plan may not exceed ten
years. Options become exercisable at such times as determined by the Board of
Directors and as set forth in the individual stock option agreements. Payment of
the purchase price of each Option will be payable in full in cash upon the
exercise of the Option. In the discretion of the Board of Directors, payment may
also be made by surrendering shares owned by the optionee which have a fair
market value on the date of exercise equal to the purchase price, by delivery of
a full recourse promissory note meeting certain requirements or in some
combination of the above payment methods.
In the event of a merger of the Company with or into another corporation, as
a result of which @Entertainment is not the surviving corporation, the 1997 Plan
requires that outstanding Options be assumed or an equivalent option substituted
by the successor corporation or a parent or subsidiary of such successor
corporation. If the successor corporation does not assume or substitute for the
Options, the optionee will have the right to exercise the Option as to those
shares which are vested for a period beginning not less than fifteen days prior
to the proposed consummation of such transaction and ending immediately prior to
the consummation of such transaction, at which time the Options will terminate.
The number of shares covered by the 1997 Plan and the number of shares for
which each Option is exercisable shall be proportionately adjusted for any
change in the number of issued shares resulting from any reorganization of
@Entertainment. In the event of dissolution or liquidation of @Entertainment,
each Option shall terminate immediately prior to the consummation of such
action.
No Options may be granted under the 1997 Plan after ten years from its
effective date. The Board of Directors has authority to amend or terminate the
1997 Plan subject to certain limitations set forth in the 1997 Plan.
A-23
<PAGE>
On May 31, 1999, in connection with the negotiation of the Merger Agreement,
the Company's Board of Directors approved an amendment to the 1997 Plan to
provide for the assignability to Parent and/or Purchaser of options to purchase
shares of Common Stock granted pursuant to the 1997 Plan.
The following table lists all grants of Options under the 1997 Plan to the
Named Executive Officers during 1998 and contains certain information about the
potential value of these Options based upon certain assumptions as to the
appreciation of the Common Stock over the life of the Options.
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF TOTAL
SECURITIES OPTIONS/SARS EXERCISE
UNDERLYING GRANTED TO OR GRANT DATE
OPTIONS/SARS EXECUTIVES IN BASE PRICE EXPIRATION PRESENT VALUE
NAME GRANTED(#) FISCAL YEAR (%) ($) DATE ($)(1)
- ------------------------------------------- ------------- ----------------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Donald Miller-Jones........................ 200,000 12.50% $ 14.30 6/8/08 975,000
David Keefe................................ 250,000 15.63% $ 12.00 1/1/08 1,029,266
David Warner............................... 75,000 4.69% $ 12.24 1/26/08 317,303
Przemyslaw Szmyt........................... 75,000 4.69% $ 12.24 1/26/08 317,303
Samuel Chisholm............................ 500,000 31.25% $ 12.00 1/1/08 2,058,532
David Chance............................... 500,000 31.25% $ 12.00 1/1/08 2,058,532
</TABLE>
- ------------------------
(1) Calculated based upon a variation of the Black-Scholes option pricing model
in which the following assumptions were used: the expected volatility of the
Common Stock was 43.0%; the risk-free rate of return was 5.62%, 5.77%,
5.42%, 5.42%, 5.77% and 5.77% for Messrs. Miller-Jones, Keefe, Warner,
Szmyt, Chisholm and Chance, respectively; the dividend yield was 0.0%; and
the expected time of exercise was four (4) years from the month of the
grant.
The following table provides certain information with respect to the number
of shares of Common Stock represented by outstanding options held by the Named
Executive Officers at December 31, 1998. Also reported are the values for
"in-the-money" options which represent the position spread between the exercise
price of any such existing stock options and the price of the Common Stock at
December 31, 1998.
FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS
SHARES AT FISCAL AT FISCAL
ACQUIRED ON VALUE YEAR-END (#) YEAR-END ($)
NAME EXERCISE (#) REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- --------------------------------------- ------------ --------- ----------------------- -----------------------
<S> <C> <C> <C> <C>
Robert E. Fowler, III.................. -- -- 1,286,000/ 3,913,298/0
Donald Miller-Jones.................... -- -- /200,000 --
David Keefe............................ -- -- 125,000/125,000 --
George Z. Makowski..................... -- -- 385,000/ 1,143,142/0
David Warner........................... -- -- 26,200/179,800 --
Przemyslaw Szmyt....................... -- -- 26,200/179,800 --
Samuel Chisholm........................ -- -- 250,000/250,000 --
David Chance........................... -- -- 250,000/250,000 --
</TABLE>
In addition, in February 1999, the following employees of the Company were
granted options to purchase shares of Common Stock at a price of $14.30 per
share, subject to the terms and conditions of their respective stock option
agreements: Dorothy Hansberry (50,000); Mickey Kalifa (75,000 shares); Tomasz
Karasinski (50,000 shares); Eric Lennon (75,000 shares); Piot Majrchak (50,000
shares); Warren Mobley (200,000 shares); Ross Newens (75,000 shares); Kelly
Shewmaker (50,000 shares); and Blake Williams (75,000 shares).
A-24
<PAGE>
PERFORMANCE OF THE COMMON STOCK
The following graph compares the cumulative total stockholder return on the
Company's Common Stock for the period beginning July 31, 1997 (the date on which
the Company's Common Stock was first publicly traded) and ending on December 31,
1998 with the Center for Research in Securities Prices ("CRSP") Total Return
Index for the Nasdaq Stock Market (U.S. and Foreign Companies) and the CRSP
Total Return Index for Nasdaq Telecommunications Stocks. Although the graph
would normally cover a five-year period, the Company's Common Stock has been
publicly traded only since July 31, 1997 and therefore the graph commences as of
such date. The comparisons in the graph are required by the U.S. Securities and
Exchange Commission and are not intended to forecast or be indicative of
possible future performance of the Company's Common Stock.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
SYMBOL CRSP TOTAL RETURNS INDEX FOR:
<S> <C>
@ Entertainment Inc.
06/30/1997
07/31/1997 $100.00
08/29/1997 $73.21
09/30/1997 $75.00
10/31/1997 $54.76
11/28/1997 $51.79
12/31/1997 $52.98
01/30/1998 $54.17
02/27/1998 $52.38
03/31/1998 $67.86
04/30/1998 $80.95
05/29/1998 $80.95
06/30/1998 $52.36
07/31/1998 $64.86
08/31/1998 $41.67
09/30/1998 $40.48
10/30/1998 $32.14
11/30/1998 $34.52
12/31/1998 $32.14
NOTES:
A. The lines represent monthly index levels derived from compounded daily returns that include all
dividends.
B. The indexes are reweighted daily, using the market capitalization on the previous trading day.
C. If the monthly interval, based on the fiscal year-end, is not a trading day, the preceding
trading day is used.
D. The index level for all series was set to $100.0 on 07/31/1997.
<CAPTION>
SYMBOL 07/1997
<S> <C> <C>
Nasdaq Stock Market (US &
Foreign)
06/30/1997 $90.56
07/31/1997 $100.00
08/29/1997 $99.75
09/30/1997 $105.98
10/31/1997 $100.25
11/28/1997 $100.46
12/31/1997 $98.63
01/30/1998 $101.65
02/27/1998 $111.34
03/31/1998 $115.58
04/30/1998 $117.54
05/29/1998 $111.18
06/30/1998 $118.22
07/31/1998 $116.66
08/31/1998 $93.24
09/30/1998 $105.37
10/30/1998 $110.17
11/30/1998 $121.29
12/31/1998 $136.37
NOTES:
A. The lines represent monthly index levels derived from compounded daily returns that include all
dividends.
B. The indexes are reweighted daily, using the market capitalization on the previous trading day.
C. If the monthly interval, based on the fiscal year-end, is not a trading day, the preceding
trading day is used.
D. The index level for all series was set to $100.0 on 07/31/1997.
<CAPTION>
SYMBOL 12/1997
NASDAQ Stocks (SIC 4800-4899
US + Foreign)
Communications
06/30/1997 $94.20
07/31/1997 $100.00
08/29/1997 $96.58
09/30/1997 $109.11
10/31/1997 $112.23
11/28/1997 $113.22
12/31/1997 $118.36
01/30/1998 $126.25
02/27/1998 $137.48
03/31/1998 $150.66
04/30/1998 $148.55
05/29/1998 $145.57
06/30/1998 $159.34
07/31/1998 $165.71
08/31/1998 $125.15
09/30/1998 $141.03
10/30/1998 $154.02
11/30/1998 $163.13
12/31/1998 $194.81
NOTES:
A. The lines represent monthly index levels derived from compounded daily returns that include all
dividends.
B. The indexes are reweighted daily, using the market capitalization on the previous trading day.
C. If the monthly interval, based on the fiscal year-end, is not a trading day, the preceding
trading day is used.
D. The index level for all series was set to $100.0 on 07/31/1997.
<CAPTION>
SYMBOL 06/1998 12/1998
06/30/1997
07/31/1997
08/29/1997
09/30/1997
10/31/1997
11/28/1997
12/31/1997
01/30/1998
02/27/1998
03/31/1998
04/30/1998
05/29/1998
06/30/1998
07/31/1998
08/31/1998
09/30/1998
10/30/1998
11/30/1998
12/31/1998
NOTES:
A. The lines represent monthly index levels derived from compounded daily returns that include all
dividends.
B. The indexes are reweighted daily, using the market capitalization on the previous trading day.
C. If the monthly interval, based on the fiscal year-end, is not a trading day, the preceding
trading day is used.
D. The index level for all series was set to $100.0 on 07/31/1997.
</TABLE>
A-25
<PAGE>
SECTION 16(A)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely upon a review of the Reports on Forms 3, 4, and 5 and any
amendments thereto furnished to the Company pursuant to Section 16 of the
Exchange Act, the Company believes that all of such reports were filed on a
timely basis by its executive officers and directors during 1998.
A-26
<PAGE>
EXECUTIVE COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
Neither the report of the Compensation Committee of the Board of Directors
nor the stock performance graph which preceded such report shall be deemed
incorporated by reference by any general statement incorporating by reference
this Information Statement into any filing under the Securities Exchange Act of
1933, as amended, or under the Securities Exchange Act of 1934, as amended,
except to the extent that the Company specifically incorporates such information
by reference, and shall not otherwise be deemed filed under such Acts.
COMPENSATION PHILOSOPHY. The Compensation Committee believes that a link
should exist between executive compensation and the return on investment
provided to stockholders as reflected by the appreciation in the price of the
Company's Common Stock. In applying this philosophy, the Compensation Committee
has developed a compensation policy which seeks to attract and retain highly
skilled and effective executives with the business experience and acumen
necessary to achievement of the long-term business objectives of the Company and
to align the financial interest of the Company's senior executives with those of
its stockholders. The Company attempts to realize these goals by providing
competitive compensation and linking a substantial portion of compensation to
the enhancement of stockholder value.
The Company's executive compensation is based principally on three
components -- salary, cash bonuses and equity-based incentives -- each of which
is intended to serve the Company's overall compensation philosophy.
BASE SALARY. Base salary for executive officers is generally targeted at or
below the median for executives with comparable qualifications, experience and
responsibilities of other companies in the international media industry. In the
aggregate, executive salaries are consistent with this philosophy. Base salary
levels are also based on the employee's relative level of seniority and
responsibility. In addition, under certain circumstances base salary levels of
certain expatriate senior and highly-qualified executives, may be based on their
committment to relocate to Poland or the United Kingdom, as the case may be.
CASH BONUSES. The Company typically pays cash bonuses to its senior
executives. These bonuses are usually fixed and guaranteed in the first year of
an executive's employment, and thereafter are based on performance in subsequent
years. The cash bonuses are designed to provide short-term incentives for the
executives to maximize the performance of the Company, and in some instances to
achieve certain specified non-recurring goals. For example, in 1997 the Company
was contractually committed to pay, and did pay, one-time, non-recurring bonuses
to certain of its senior executives upon the successful completion of the
Company's initial public equity offering.
EQUITY-BASED INCENTIVES. In order to make the overall compensation packages
of the Company's executives and other key employees competitive with other
companies in the international media industry, the Compensation Committee has
emphasized equity-based incentives. The Compensation Committee believes that
reliance upon such incentives is advantageous to the Company because they foster
a long-term committment by the recipients to the Company and motivate the
recipients to seek to improve the long-term market performance of the Common
Stock.
A-27
<PAGE>
ANNEX B
Goldman Sachs International, Peterborough Court, 133 Fleet Street,
London EC4A 2BB, England Tel: 0171-774 1000,
Telex: 94015777, Cable: GOLDSACHS LONDON
Regulated by The Securities and Futures Authority
PERSONAL AND CONFIDENTIAL
June 2, 1999
Board of Directors
@Entertainment, Inc.
40-41 Conduit Street
London W1R 9FB
United Kingdom
Ladies and Gentlemen,
You have requested our opinion as to the fairness from a financial point of
view to the holders of the outstanding shares of Common Stock, par value US$.01
per share (the "Shares"), of @Entertainment, Inc., (the "Company"), of the
US$19.00 per Share in cash to be received by such holders pursuant to the
Agreement and Plan of Merger, dated as of June 2, 1999, among United Pan-Europe
Communications N.V. ("UPC"), Bison Acquisition Corp., a wholly owned subsidiary
of UPC, and the Company (the "Agreement").
Goldman Sachs International, as part of its investment banking business, is
continually engaged in the valuation of businesses and their securities in
connection with mergers and acquisitions, negotiated underwritings, competitive
biddings, secondary distributions of listed and unlisted securities, private
placements and valuations for estate, corporate and other purposes. We are
familiar with the Company having provided investment banking services to the
Company from time to time, including having acted as lead managing underwriter
of the initial public offering by the Company of 9,500,000 Shares in July 1997,
and having acted as its financial advisor in connection with, and having
participated in certain of the negotiations leading to, the Agreement.
We also have provided from time to time, and are currently providing,
certain investment banking services to UPC and its subsidiaries, including
having acted as lead managing underwriter of the initial public offering of
40,000,000 shares of Common Stock, par value NLG 0.667 per share, of UPC ("UPC
Common Stock") in February 1999, having committed to act as arranger of a
US$117,000,000 aggregate principal amount bridge loan in February 1999, such
bridge loan never having been consummated, and as sole financial advisor in the
negotiations leading to an agreement with Microsoft Corporation in February
1999, pursuant to which Microsoft Corporation acquired 10,157,750 shares of UPC
Common Stock. Goldman Sachs International expects to provide investment banking
services to UPC and its subsidiaries in the future. In that regard, Goldman
Sachs International has had discussions with both the Company and UPC about the
possibility of Goldman Sachs International participating in and/or arranging
interim or other financing in order to finance UPC's purchase of the Shares.
Goldman Sachs International provides a full range of financial advisory and
securities services and, in the course of its normal trading activities, may
from time to time effect transactions and hold securities,
B-1
<PAGE>
@Entertainment, Inc.
June 2, 1999
Page 2
including derivative securities, of the Company or UPC for its own account and
for the accounts of customers. As of the date hereof, Goldman Sachs
International and its affiliates have accumulated long and short positions in
various securities of the Company and UPC, including a long position of
1,716,041 Shares.
In connection with this opinion, we have reviewed, among other things, the
Agreement and those certain Stockholders Agreements referenced therein each
dated June 2, 1999; the Registration Statement on Form S-1 dated July 29, 1997
relating to the initial public offering of the Company, including the Prospectus
therein; Annual Reports to Stockholders and Annual Reports on Form 10-K of the
Company for the two years ended December 31, 1998; certain interim reports to
stockholders and Quarterly Reports on Form 10-Q of the Company; certain other
communications from the Company to its stockholders; and certain internal
financial analyses and forecasts for the Company prepared by its management. We
also have held discussions with members of the senior management of the Company
regarding its past and current business operations, financial condition and
future prospects. In addition, we have reviewed the reported price and trading
activity for the Shares, compared certain financial and stock market information
for the Company with similar information for certain other companies the
securities of which are publicly traded, reviewed the financial terms of certain
recent business combinations and performed such other studies and analyses as we
considered appropriate.
We have relied upon the accuracy and completeness of all of the financial
and other information reviewed by us and have assumed such accuracy and
completeness for purposes of rendering this opinion. In addition, we have not
made an independent evaluation or appraisal of the assets and liabilities of the
Company and we have not been furnished with any such evaluation or appraisal.
Our advisory services and the opinion expressed herein are provided for the
information and assistance of the Board of Directors of the Company in
connection with its consideration of the transaction contemplated by the
Agreement and such opinion does not constitute a recommendation as to whether or
not any holder of Shares should tender such Shares in connection with, or how
any holder of Shares should vote with respect to, such transaction.
Based upon and subject to the foregoing and based upon such other matters as
we consider relevant, it is our opinion that as of the date hereof the US$19.00
per Share in cash to be received by the holders of Shares pursuant to the
Agreement is fair from a financial point of view to such holders.
<TABLE>
<S> <C> <C>
Very truly yours
GOLDMAN SACHS INTERNATIONAL
</TABLE>
B-2
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- --------- --------------------------------------------------------------------------------------------------------
<S> <C>
(a)(1) Purchaser's Offer to Purchase, dated June 8, 1999
(a)(2) Purchaser's Letter of Transmittal, dated June 8, 1999
(a)(3) Opinion of Goldman Sachs International, dated June 2, 1999 (filed as Annex B hereto)
(a)(4) Joint Press Release of @ Entertainment, Inc., United Pan-Europe Communications N.V., and Bison
Acquisition Corp., dated June 2, 1999
(c)(1) Merger Agreement among @ Entertainment, Inc., United Pan-Europe Communications N.V., and Bison
Acquisition Corp., dated as of June 2, 1999
(c)(2) Confidentiality Agreement between @ Entertainment, Inc. and United Pan-Europe Communications N.V., dated
April 12, 1999
(c)(3) The Company's Information Statement filed pursuant to Section 14(f) of the Securities Exchange Act of
1934 and Rule 14f-1 (filed as Annex A hereto)
(c)(4) Form Of Common Stockholder Agreement, dated as of June 2, 1999, between United Pan-Europe Communications
N.V., Bison Acquisition Corp. and certain common stockholders of @ Entertainment, Inc.
(c)(5) Form of Preferred Stockholder Agreement, dated as of June 2, 1999, among United Pan-Europe
Communications N.V., Bison Acquisition Corp. and each of the holders of preference shares of @
Entertainment, Inc.
</TABLE>
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OF THE OUTSTANDING SHARES OF COMMON STOCK
OF
@ ENTERTAINMENT, INC.
AT
$19.00 NET PER SHARE
BY
BISON ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
UNITED PAN-EUROPE COMMUNICATIONS N.V.
---------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON TUESDAY, JULY 6, 1999, UNLESS THE OFFER IS EXTENDED.
------------------------
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY
TENDERED AND NOT PROPERLY WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A
NUMBER OF SHARES OF COMMON STOCK, PAR VALUE $.01 PER SHARE (THE "COMMON STOCK"),
OF @ ENTERTAINMENT, INC. (THE "COMPANY") WHICH REPRESENTS AT LEAST A MAJORITY OF
ALL THE ISSUED AND OUTSTANDING SHARES OF COMMON STOCK, ON A FULLY DILUTED BASIS,
ON THE DATE THE OFFER IS CONSUMMATED, (II) THE EXPIRATION OR TERMINATION OF ANY
APPLICABLE WAITING PERIOD (AND ANY EXTENSION THEREOF) UNDER THE
HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED, (III) THE
GRANTING OF ALL APPLICABLE APPROVALS OF THE POLISH ANTI-MONOPOLY COMMISSION
PRIOR TO THE EXPIRATION OF THE OFFER AND (IV) IF REQUIRED BY APPLICABLE LAW, THE
RECEIPT PRIOR TO THE EXPIRATION OF THE OFFER OF A DECISION OF THE COMMISSION OF
THE EUROPEAN COMMUNITY THAT THE PURCHASE OF SHARES OF COMMON STOCK PURSUANT TO
THE OFFER AND THE MERGER (AS DEFINED HEREIN) ARE COMPATIBLE WITH THE COMMON
MARKET. THE OFFER IS ALSO CONDITIONED UPON THE SATISFACTION OF CERTAIN OTHER
TERMS AND CONDITIONS DESCRIBED IN SECTION 14--"CONDITIONS OF THE OFFER".
--------------------------
THE OFFER IS BEING MADE PURSUANT TO THE AGREEMENT AND PLAN OF MERGER, DATED AS
OF JUNE 2, 1999 (THE "MERGER AGREEMENT"), AMONG UNITED PAN-EUROPE COMMUNICATIONS
N.V. ("PARENT"), BISON ACQUISITION CORP. (THE "PURCHASER") AND THE COMPANY. SEE
SECTION 11--"PURPOSE OF THE OFFER; PLANS FOR THE COMPANY; CERTAIN AGREEMENTS".
--------------------------
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY (I) DETERMINED THAT EACH
OF THE OFFER AND THE MERGER (AS DEFINED HEREIN) ARE ADVISABLE AND ARE FAIR TO,
AND IN THE BEST INTERESTS OF, THE HOLDERS OF THE CAPITAL STOCK OF THE COMPANY,
INCLUDING, BUT NOT LIMITED TO, THE HOLDERS OF THE COMMON STOCK (THE "HOLDERS"),
(II) APPROVED THE OFFER AND THE MERGER AND (III) RECOMMENDED THE ACCEPTANCE OF
THE OFFER, THE APPROVAL OF THE MERGER AND THE APPROVAL AND ADOPTION OF THE
MERGER AGREEMENT BY THE STOCKHOLDERS OF THE COMPANY.
--------------------------
THE DEALER MANAGER FOR THE OFFER IS:
MORGAN STANLEY DEAN WITTER
JUNE 8, 1999.
<PAGE>
IMPORTANT
ANY HOLDER DESIRING TO TENDER ALL OR ANY PORTION OF THE SHARES OF COMMON STOCK
OWNED BY SUCH HOLDER SHOULD EITHER (I) COMPLETE AND SIGN THE LETTER OF
TRANSMITTAL OR A COPY THEREOF IN ACCORDANCE WITH THE INSTRUCTIONS IN SUCH LETTER
OF TRANSMITTAL AND MAIL OR DELIVER IT, TOGETHER WITH THE CERTIFICATE(S)
EVIDENCING TENDERED SHARES OF COMMON STOCK, AND ANY OTHER REQUIRED DOCUMENTS, TO
THE DEPOSITARY, (II) WHERE APPLICABLE, CAUSE SUCH HOLDER'S BROKER, DEALER,
COMMERCIAL BANK OR TRUST COMPANY TO TENDER SUCH SHARES OF COMMON STOCK PURSUANT
TO THE PROCEDURES FOR BOOK-ENTRY TRANSFER OF SHARES OF COMMON STOCK OR (III)
COMPLY WITH THE GUARANTEED DELIVERY PROCEDURES, IN EACH CASE, UPON THE TERMS SET
FORTH IN SECTION 3--"PROCEDURES FOR TENDERING COMMON STOCK". ANY HOLDER WHOSE
SHARES OF COMMON STOCK ARE REGISTERED IN THE NAME OF A BROKER, DEALER,
COMMERCIAL BANK, TRUST COMPANY OR OTHER NOMINEE MUST CONTACT SUCH BROKER,
DEALER, COMMERCIAL BANK OR TRUST COMPANY IF SUCH HOLDER DESIRES TO TENDER SUCH
SHARES OF COMMON STOCK. SEE SECTION 3--"PROCEDURES FOR TENDERING COMMON STOCK".
ANY HOLDER WHO DESIRES TO TENDER SHARES OF COMMON STOCK AND WHOSE CERTIFICATE(S)
EVIDENCING SUCH SHARES OF COMMON STOCK ARE NOT IMMEDIATELY AVAILABLE, OR WHO
CANNOT COMPLY WITH THE PROCEDURES FOR BOOK-ENTRY TRANSFER DESCRIBED IN THIS
OFFER TO PURCHASE ON A TIMELY BASIS, MAY TENDER SUCH SHARES OF COMMON STOCK BY
FOLLOWING THE PROCEDURES FOR GUARANTEED DELIVERY SET FORTH IN SECTION
3--"PROCEDURES FOR TENDERING COMMON STOCK".
QUESTIONS AND REQUESTS FOR ASSISTANCE MAY BE DIRECTED TO MACKENZIE PARTNERS,
INC., THE INFORMATION AGENT, OR MORGAN STANLEY & CO. INCORPORATED, THE DEALER
MANAGER, AT THEIR RESPECTIVE ADDRESSES AND TELEPHONE NUMBERS SET FORTH ON THE
BACK COVER OF THIS OFFER TO PURCHASE. ADDITIONAL COPIES OF THIS OFFER TO
PURCHASE, THE LETTER OF TRANSMITTAL OR OTHER RELATED TENDER OFFER MATERIALS MAY
BE OBTAINED FROM THE INFORMATION AGENT OR FROM BROKERS, DEALERS, COMMERCIAL
BANKS OR TRUST COMPANIES.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C> <C>
INTRODUCTION........................................ 1
THE TENDER OFFER.................................... 3
1. Terms of the Offer....................... 3
2. Acceptance for Payment and Payment for
Common Stock............................. 5
3. Procedures for Tendering Common Stock.... 7
4. Withdrawal Rights........................ 9
5. Certain United States Federal Income Tax
Consequences............................. 10
6. Price Range of Common Stock; Dividends... 11
7. Certain Information Concerning the
Company.................................. 12
8. Certain Information Concerning the
Purchaser and Parent..................... 16
9. Source and Amount of Funds............... 19
<CAPTION>
PAGE
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<S> <C> <C>
10. Background of the Offer.................. 19
11. Purpose of the Offer; Plans for the
Company; Certain Agreements.............. 21
12. Dividends and Distributions.............. 40
13. Effect of the Offer on the Market for the
Common Stock; Exchange Act
Registration............................. 40
14. Conditions of the Offer.................. 42
15. Certain Legal Matters; Regulatory
Approvals................................ 44
16. Fees and Expenses........................ 48
17. Miscellaneous............................ 49
Schedule I--Information Concerning the Directors and
Executive Officers of United Pan-Europe
Communications N.V., Bison Acquisition Corp. and
United International Holdings, Inc.
</TABLE>
<PAGE>
INTRODUCTION
Bison Acquisition Corp., a Delaware corporation (the "Purchaser"), and a
wholly owned subsidiary of United Pan-Europe Communications N.V., a public
company with limited liability incorporated under the laws of The Netherlands
("Parent"), hereby offers to purchase all of the issued and outstanding shares
of common stock, par value $.01 per share (the "Common Stock"), of @
Entertainment, Inc., a Delaware corporation (the "Company"), at a price of
$19.00 per share, net to the seller in cash, without interest thereon (the
"Offer Price"), upon the terms and subject to the conditions set forth in this
Offer to Purchase and in the related Letter of Transmittal (which, as they may
be amended and supplemented from time to time, together constitute the "Offer").
Holders of Common Stock ("Holders") whose shares of Common Stock are
registered in their own name and who tender directly to Continental Stock
Transfer & Trust Company, as Depositary (the "Depositary"), will not be
obligated to pay brokerage fees or commissions or, except as set forth in
Instruction 6 of the Letter of Transmittal, stock transfer taxes on the purchase
of shares of Common Stock pursuant to the Offer. The Purchaser will pay all
charges and expenses of Morgan Stanley & Co. Incorporated, as Dealer Manager
(the "Dealer Manager" or "Morgan Stanley"), the Depositary and MacKenzie
Partners, Inc., as Information Agent (the "Information Agent"), in each case
incurred in connection with the Offer. See Section 16--"Fees and Expenses".
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY
TENDERED AND NOT PROPERLY WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A
NUMBER OF SHARES OF COMMON STOCK WHICH REPRESENTS AT LEAST A MAJORITY OF ALL OF
THE ISSUED AND OUTSTANDING SHARES OF COMMON STOCK ON A FULLY DILUTED BASIS, ON
THE DATE THE OFFER IS CONSUMMATED (THE "MINIMUM CONDITION"), (II) THE
SATISFACTION OF THE HSR CONDITION (AS DEFINED HEREIN), (III) THE SATISFACTION OF
THE PAMC CONDITION (AS DEFINED HEREIN) AND (IV) IF REQUIRED BY APPLICABLE LAW,
THE SATISFACTION OF THE EC CONDITION (AS DEFINED HEREIN). THE OFFER IS ALSO
CONDITIONED UPON THE SATISFACTION OF CERTAIN OTHER TERMS AND CONDITIONS
DESCRIBED IN SECTION 14--"CONDITIONS OF THE OFFER".
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY (I) DETERMINED THAT
EACH OF THE OFFER AND THE MERGER (AS DEFINED HEREIN) ARE ADVISABLE AND FAIR TO,
AND IN THE BEST INTERESTS OF, THE HOLDERS OF THE CAPITAL STOCK OF THE COMPANY,
INCLUDING, BUT NOT LIMITED TO, THE HOLDERS, (II) APPROVED THE OFFER AND THE
MERGER AND (III) RECOMMENDED THE ACCEPTANCE OF THE OFFER, THE APPROVAL OF THE
MERGER AND THE APPROVAL AND ADOPTION OF THE MERGER AGREEMENT BY THE STOCKHOLDERS
OF THE COMPANY.
THE COMPANY HAS ADVISED PARENT THAT GOLDMAN SACHS INTERNATIONAL ("GOLDMAN
SACHS"), THE FINANCIAL ADVISOR TO THE COMPANY, HAS DELIVERED TO THE BOARD OF
DIRECTORS OF THE COMPANY ITS WRITTEN OPINION DATED JUNE 2, 1999, THAT, AS OF
SUCH DATE, THE OFFER PRICE TO BE RECEIVED BY THE HOLDERS PURSUANT TO THE MERGER
AGREEMENT IS FAIR, FROM A FINANCIAL POINT OF VIEW, TO SUCH HOLDERS SUBJECT TO
THE ASSUMPTIONS AND QUALIFICATIONS CONTAINED IN SUCH OPINION. THE COMPANY HAS
ADVISED PARENT THAT A COPY OF THE OPINION OF GOLDMAN SACHS, WHICH SETS FORTH THE
ASSUMPTIONS AND QUALIFICATIONS MADE, FACTORS CONSIDERED AND SCOPE OF REVIEW
UNDERTAKEN BY GOLDMAN SACHS, WILL BE CONTAINED IN THE COMPANY'S
SOLICITATION/RECOMMENDATION STATEMENT ON SCHEDULE 14D-9 (THE "SCHEDULE 14D-9"),
WHICH THE COMPANY HAS INFORMED THE PARENT WILL BE MAILED TO THE HOLDERS BY THE
COMPANY. HOLDERS ARE URGED TO READ THE FULL TEXT OF THAT OPINION.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of June 2, 1999 (the "Merger Agreement"), among Parent, the Purchaser and the
Company. The Merger Agreement provides that, promptly upon consummation of the
Offer, Parent will cause the Purchaser to be merged with and into the Company
(the "Merger"). At the Effective Time (as defined herein) of the Merger, (a)
each share of Common Stock then issued and outstanding (other than (i) any
shares of Common Stock which are held by any subsidiary of the Company or in the
treasury of the Company, or which are held, directly or indirectly, by Parent or
any direct or indirect subsidiary of Parent (including the Purchaser), all of
which shall be canceled and none of which shall receive any payment with respect
thereto and (ii) shares of Common Stock held by stockholders exercising their
rights to dissent in accordance with Delaware law) shall be canceled and
converted into and shall represent the right to receive an amount in cash equal
to
1
<PAGE>
$19.00, without interest; and (b) each share of the Company's outstanding
preferred stock shall be canceled and no further consideration shall be payable
in respect thereof. The Merger Agreement is more fully described in Section
11--"Purpose of the Offer; Plans for the Company; Certain Agreements". Under the
General Corporation Law of the State of Delaware (the "DGCL"), if the Purchaser
acquires, pursuant to the Offer or otherwise, at least 90% of the issued and
outstanding shares of Common Stock and of each series of the Company's
preference shares, the Purchaser will be able to approve and effect the Merger
without a vote of the Company's stockholders pursuant to Section 253 of the
DGCL. If, however, the Purchaser does not acquire at least 90% of the issued and
outstanding shares of the Common Stock and of each series of the Company's
preference shares, pursuant to the Offer or otherwise, a vote of the Company's
stockholders to effect the Merger is required under the DGCL and a longer period
of time will be required to effect the Merger. See Section 11--"Purpose of the
Offer; Plans for the Company; Certain Agreements".
Parent and the Purchaser have entered into Stockholder Agreements, dated as
of June 2, 1999 (the "Common Stockholder Agreements"), with certain relatives of
David T. Chase, the Chairman of the Board of Directors of the Company, and
certain of their respective affiliates (the "Chase Group"), Samuel Chisolm,
David Chance, Robert E. Fowler III, certain affiliates of Advent International
Group and Morgan Grenfell Capital Development Syndications Limited ("Morgan
Grenfell") (the "Stockholders") of Common Stock, options and/or warrants to
purchase Common Stock who are the record and beneficial owners of, in the
aggregate, 16,175,431, shares of Common Stock, warrants exercisable for
5,500,000 shares of Common Stock and options to purchase 2,286,000 shares of
Common Stock (together with all additional shares of Common Stock, warrants
exercisable for Common Stock and options to purchase Common Stock thereafter
acquired by the Stockholders, the "Option Securities") (representing
approximately 48.4% of the outstanding Common Stock and approximately 51.5% of
the Common Stock on a fully diluted basis) pursuant to which such Stockholders
have agreed (i) to irrevocably tender pursuant to the Offer (and not withdraw)
all shares of Common Stock held by such Stockholders, (ii) grant to the
Purchaser an option to purchase all of the Option Securities held by such
Stockholders and (iii) with respect to certain questions put to the stockholders
of the Company for a vote, to vote such Stockholder's shares of Common Stock in
accordance with the terms and conditions of the Common Stockholder Agreement to
which such Stockholder is a party. Pursuant to the Common Stockholder
Agreements, the Purchaser has agreed to purchase the Option Securities (other
than shares of Common Stock) held by the Stockholders after the consummation of
the Offer. Parent and the Purchaser also have entered into Stockholder
Agreements, dated as of June 2, 1999 (the "Preferred Stockholder Agreements"
and, collectively with the Common Stockholder Agreements, the "Stockholder
Agreements"), with certain members of the Chase Group and Morgan Grenfell who
are the holders (the "Preferred Stockholders") of all of the outstanding Series
A 12% Cumulative Preference Shares of the Company and all of the outstanding
Series B 12% Cumulative Preference Shares of the Company (the "Preference
Shares") pursuant to which each of the Preferred Stockholders have agreed (i) to
grant to the Purchaser an option to purchase all of the Preference Shares held
by such Preferred Stockholders and (ii) with respect to certain questions put to
the stockholders of the Company for a vote, to vote such Preferred Stockholder's
Preference Shares in accordance with the terms and conditions of the applicable
Preferred Stockholder Agreement to which such Preferred Stockholder is a party.
Pursuant to the Preferred Stockholders Agreements, the Purchaser has agreed to
purchase the Preference Shares held by the Preferred Stockholders after the
consummation of the Offer.
The Company has informed the Purchaser that, as of June 2, 1999, there were
(x) 33,406,000 shares of Common Stock issued and outstanding, (y) warrants to
purchase 9,138,179 shares of Common Stock issued and outstanding, and (z) stock
options issued under the Company's Stock Option Plans (as defined herein)
covering 3,998,000 shares of Common Stock. As a result, as of such date, the
Minimum Condition would be satisfied if at least 23,271,090 shares of Common
Stock are validly tendered and not properly withdrawn prior to the Expiration
Date (as defined herein). The Company has been advised, and has informed Parent,
that each of its directors and executive officers intends to tender pursuant to
the Offer all shares of
2
<PAGE>
Common Stock owned of record and beneficially by him or her, except to the
extent that such tender would violate applicable securities laws.
"HSR Condition" means the expiration or termination of any applicable
waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended, (and any extension thereof) (the "HSR Act"). "PAMC Condition" means
the granting of all applicable approvals of the Polish Anti-Monopoly Commission
prior to the Expiration Date. "EC Condition" means the receipt prior to the
Expiration Date of a decision of the Commission of the European Community that
the purchase of the Common Stock pursuant to the Offer and the Merger are
compatible with the Common Market. "Regulatory Condition" shall mean the HSR
Condition, the PAMC Condition and the EC Condition, collectively. See Section
14--"Conditions of the Offer" for a complete description of the conditions of
the Offer.
THIS OFFER TO PURCHASE AND THE LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
THE TENDER OFFER
1. TERMS OF THE OFFER. Upon the terms and subject to the conditions of the
Offer (including, if the Offer is extended or amended, the terms and conditions
of any extension or amendment), the Purchaser will accept for payment and pay
for all shares of Common Stock validly tendered prior to the Expiration Date (as
hereinafter defined) and not withdrawn in accordance with Section 4--"Withdrawal
Rights". The term "Expiration Date" means 12:00 Midnight, New York City time, on
Tuesday, July 6, 1999, unless and until the Purchaser, in its sole discretion
(but subject to the terms of the Merger Agreement), shall have extended the
period of time during which the Offer is open, in which event the term
"Expiration Date" shall mean the latest time and date at which the Offer, as so
extended by the Purchaser, shall expire.
The Offer is conditioned upon, among other things, satisfaction of (i) the
Minimum Condition, (ii) the HSR Condition, (iii) the PAMC Condition, and (iv) if
required by applicable law, the EC Condition. The Offer is also subject to
certain other conditions set forth in Section 14--"Conditions of the Offer". If
these or any of the other conditions referred to in Section 14--"Conditions of
the Offer" are not satisfied or any of the events specified in Section
14--"Conditions of the Offer" have occurred or are reasonably determined by the
Purchaser to have occurred prior to the Expiration Date, the Purchaser, subject
to the terms of the Merger Agreement, expressly reserves the right (but is not
obligated) to (i) decline to purchase any of the shares of Common Stock tendered
in the Offer and terminate the Offer, and return all tendered shares of Common
Stock to the tendering Holders, (ii) waive or amend any or all conditions to the
Offer and, to the extent permitted by applicable law and applicable rules and
regulations of the Securities and Exchange Commission (the "Commission")
purchase all shares of Common Stock validly tendered or (iii) subject to the
limitations described below, extend the Offer and, subject to the right of a
tendering Holder to withdraw its shares of Common Stock until the Expiration
Date, retain the shares of Common Stock which have been tendered during the
period or periods for which the Offer is extended; PROVIDED, HOWEVER, that,
subject to the terms of the Merger Agreement, without the prior written consent
of the Company, the Purchaser will not waive the Minimum Condition. Parent and
the Purchaser have agreed that if immediately prior to any scheduled expiration
date of the Offer, the Regulatory Condition has not been satisfied, but at such
scheduled expiration date each of the other conditions specified in Section 14--
"Conditions of the Offer" (other than the Minimum Condition) shall have been
satisfied, at the request of the Company, Purchaser shall extend the Offer from
time to time, subject to the right of Parent, the Purchaser or the Company to
terminate the Merger Agreement pursuant to the terms thereof.
Subject to the terms of the Merger Agreement and the applicable rules and
regulations of the Commission and to applicable law, the Purchaser expressly
reserves the right, in its sole discretion, at any time and from time to time,
to extend for any reason the period of time during which the Offer is open,
including upon the occurrence of any of the events specified in Section
14--"Conditions of the Offer", by
3
<PAGE>
giving notice of such extension to the Depositary and by making a public
announcement thereof. There can be no assurance that the Purchaser will exercise
its right to extend the Offer. During any such extension, all shares of Common
Stock previously tendered and not withdrawn will remain subject to the Offer,
subject to the rights of a tendering Holder to withdraw its shares of Common
Stock. See Section 4--"Withdrawal Rights".
Subject to the applicable rules and regulations of the Commission and to
applicable law, the Purchaser also expressly reserves the right, in its sole
discretion (subject to the terms of the Merger Agreement), at any time and from
time to time (i) to delay acceptance for payment of, or, regardless of whether
such shares of Common Stock were theretofore accepted for payment, payment for,
any Common Stock (a) if the HSR Condition has not been satisfied, (b) the PAMC
Condition has not been satisfied, (c) if required by applicable law, the EC
Condition has not been satisfied or (d) in order to comply in whole or in part
with any other applicable law, (ii) to terminate the Offer and not accept for
payment any shares of Common Stock if any of the conditions referred to in
Section 14--"Conditions of the Offer" are not satisfied or any of the events
specified in Section 14--"Conditions of the Offer" have occurred and (iii)
subject to the terms of the Merger Agreement, to waive any condition or
otherwise amend the Offer in any respect by giving oral or written notice of
such delay, termination, waiver or amendment to the Depositary and by making a
public announcement thereof, PROVIDED, HOWEVER, that, subject to the terms of
the Merger Agreement, without the prior written consent of the Company, the
Purchaser will not (A) reduce the number of shares of Common Stock to be
purchased in the Offer, (B) reduce the Offer Price, (C) modify or add to any
conditions of the Offer, (D) change the form of consideration payable in the
Offer, or (E) make any other change in the terms of the Offer which is
materially adverse to the Holders.
The Purchaser reserves the right to modify the terms of the Offer including,
without limitation, except as provided below, the right to extend the Offer
beyond any scheduled expiration date, provided that, without the prior written
consent of the Company, the Purchaser will not (i) waive the Minimum Condition,
(ii) reduce the number of shares of Common Stock to be purchased in the Offer,
(iii) modify or add to any conditions of the Offer, (iv) change the form of
consideration payable in the Offer, (v) reduce the Offer Price, or (vi) make any
other change in the terms of the Offer which is materially adverse to the
Holders. Parent and the Purchaser have agreed that if immediately prior to any
scheduled expiration date of the Offer, the Regulatory Condition has not been
satisfied, but at such scheduled expiration date each of the other conditions
specified in Section 14--"Conditions of the Offer" (other than the Minimum
Condition) shall have been satisfied, at the request of the Company, Purchaser
shall extend the Offer from time to time, subject to the right of Parent, the
Purchaser or the Company to terminate the Merger Agreement pursuant to the terms
thereof. The Purchaser also expressly reserves the right (but will not be
obligated) to, extend the Offer, without the consent of the Company, if (i) at
the then scheduled expiration date of the Offer any of the conditions to the
Purchaser's obligations to accept for payment and pay for shares of Common Stock
set forth in Section 14--"Conditions of the Offer" shall not have been satisfied
or waived, until the third business day after the day the Purchaser reasonably
believes to be the earliest date on which such conditions will be satisfied;
(ii) from time to time up to a maximum of an aggregate of thirty (30) days
beyond the first day all of the conditions of the Offer have been met and/or
(iii) extend the Offer for any period required by any rule, regulation,
interpretation or position of the Commission or the staff thereof applicable to
the Offer. Notwithstanding the foregoing, (x) the Offer may not, without the
Company's written consent, be extended beyond September 30, 1999, and (y) the
Offer may not, without the Company's prior written consent, be extended pursuant
to clause (i) of the immediately preceding sentence, if the failure to satisfy
any condition of the Offer was caused by a material breach of the Parent or the
Purchaser of any of their representations, warranties or agreements set forth in
the Merger Agreement.
The Purchaser acknowledges that (i) Rule 14e-1(c) under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), requires the Purchaser to
pay the consideration offered or return the
4
<PAGE>
shares of Common Stock tendered promptly after the termination or withdrawal of
the Offer and (ii) the Purchaser may not delay acceptance for payment of, or
payment for (except as provided in clause (i) of the second preceding
paragraph), any shares of Common Stock upon the occurrence of any of the
conditions specified in Section 14--"Conditions of the Offer" without extending
the period of time during which the Offer is open.
During any such extension, all shares of Common Stock previously tendered
and not withdrawn will remain subject to the Offer, subject to the right of a
tendering Holder to withdraw its shares of Common Stock. Any such extension,
delay, termination, waiver or amendment will be followed, as promptly as
practicable, by public announcement thereof, with such announcement in the case
of an extension to be made no later than 9:00 a.m., New York City time, on the
next business day after the previously scheduled Expiration Date. Subject to
applicable law (including Rules 14d-4(c), 14d-6(d) and 14e-1 under the Exchange
Act, which require that material changes be promptly disseminated to Holders in
a manner reasonably designed to inform them of such changes) and without
limiting the manner in which the Purchaser may choose to make any public
announcement, the Purchaser will have no obligation to publish, advertise or
otherwise communicate any such public announcement other than by issuing a press
release to the Dow Jones News Service or as otherwise may be required by
applicable law.
If the Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer, or if it waives a material condition of the
Offer, the Purchaser will extend the Offer to the extent required by Rules
14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act. The minimum period during
which an offer must remain open following material changes in the terms of the
offer or information concerning the offer, other than a change in price or a
change in the percentage of securities sought, will depend upon the facts and
circumstances then existing, including the relative materiality of the changed
terms or information. With respect to a change in price or a change in the
percentage of securities sought, a minimum period of ten (10) business days is
generally required to allow for adequate dissemination to Holders and investor
response.
The Company has provided the Purchaser with the Company's shareholder lists
and security position listings in respect of the shares of Common Stock for the
purpose of disseminating the Offer to Purchase, the Letter of Transmittal and
other relevant materials to Holders. This Offer to Purchase, the Letter of
Transmittal and other relevant materials will be mailed to record holders of
shares of Common Stock whose names appear on the Company's list of holders of
shares of Common Stock and will be furnished, for subsequent transmittal to
beneficial owners of shares of Common Stock, to brokers, dealers, commercial
banks, trust companies and similar persons whose names, or the names of whose
nominees, appear on the Company's list of holders of the shares of Common Stock
or, where applicable, who are listed as participants in the security position
listing of The Depository Trust Company ("DTC").
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR COMMON STOCK. Upon the terms and
subject to the conditions of the Offer (including, if the Offer is extended or
amended, the terms and conditions of any such extension or amendment), the
Purchaser will purchase, by accepting for payment, and will pay for, all shares
of Common Stock validly tendered prior to the Expiration Date (and not properly
withdrawn in accordance with Section 4--"Withdrawal Rights") as promptly as
practicable after the later to occur of (i) the Expiration Date and (ii) the
satisfaction or waiver of the conditions set forth in Section 14-- "Conditions
of the Offer", including, but not limited to, the receipt of the regulatory
approvals specified in Section 15--"Certain Legal Matters; Regulatory
Approvals." Subject to applicable rules of the Commission and the terms of the
Merger Agreement, the Purchaser expressly reserves the right, in its discretion,
to delay acceptance for payment of, or payment for, shares of Common Stock in
order to comply, in whole or in part, with any applicable law. If, following
acceptance for payment of shares of Common Stock, the Purchaser asserts such
regulatory approvals as a condition and does not promptly pay for shares of
Common Stock tendered, the Purchaser will promptly return such shares of Common
Stock.
5
<PAGE>
In all cases, payment for shares of Common Stock accepted for payment
pursuant to the Offer will be made only after timely receipt by the Depositary
of (i) the certificates evidencing such shares of Common Stock (the
"Certificates") or timely confirmation of a book-entry transfer (a "Book-Entry
Confirmation") of such shares of Common Stock into the Depositary's account at
DTC (the "Book-Entry Transfer Facility"), pursuant to the procedures set forth
in Section 3--"Procedures for Tendering Common Stock", (ii) the Letter of
Transmittal (or a copy thereof), properly completed and duly executed with any
required signature guarantees, or an Agent's Message (as defined below) in
connection with a book-entry transfer and (iii) any other documents required to
be included with the Letter of Transmittal under the terms and subject to the
conditions thereof and to this Offer to Purchase.
The term "Agent's Message" means a message, transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary forming a part of a
Book-Entry Confirmation system, which states that the Book-Entry Transfer
Facility has received an express acknowledgment from a participant in the
Book-Entry Transfer Facility tendering the shares of Common Stock that such
participant has received and agrees to be bound by the terms of the Letter of
Transmittal and that the Purchaser may enforce such agreement against such
participant.
For purposes of the Offer, the Purchaser will be deemed to have accepted for
payment (and thereby purchased) shares of Common Stock validly tendered and not
properly withdrawn if, as and when the Purchaser gives oral or written notice to
the Depositary of the Purchaser's acceptance for payment of such shares of
Common Stock. Upon the terms and subject to the conditions of the Offer, payment
for shares of Common Stock accepted pursuant to the Offer will be made by
deposit of the purchase price therefor with the Depositary, which will act as
agent for tendering Holders for the purpose of receiving payments from the
Purchaser and transmitting payments to such tendering Holders whose shares of
Common Stock have been accepted for payment. UNDER NO CIRCUMSTANCES WILL
INTEREST ON THE PURCHASE PRICE FOR SHARES OF COMMON STOCK BE PAID BY THE
PURCHASER, REGARDLESS OF ANY DELAY IN MAKING SUCH PAYMENT OR EXTENSION OF THE
EXPIRATION DATE. Upon the deposit of funds with the Depositary for the purpose
of making payments to tendering Holders, the Purchaser's obligation to make such
payment shall be satisfied, and tendering Holders must thereafter look solely to
the Depositary for payment of amounts owed to them by reason of the acceptance
for payment of shares of Common Stock pursuant to the Offer.
If any tendered shares of Common Stock are not accepted for payment for any
reason pursuant to the terms and conditions of the Offer, or if Certificates are
submitted evidencing more shares of Common Stock than are tendered, Certificates
evidencing shares of Common Stock not purchased will be returned, without
expense to the tendering Holder (or, in the case of shares of Common Stock
tendered by book-entry transfer into the Depositary's account at the Book-Entry
Transfer Facility pursuant to the procedure set forth in Section 3--"Procedures
for Tendering Common Stock", such shares of Common Stock will be credited to an
account maintained at the Book-Entry Transfer Facility), as promptly as
practicable following the expiration or termination of the Offer.
If, prior to the Expiration Date, the Purchaser increases the consideration
to be paid per share of Common Stock pursuant to the Offer, the Purchaser will
pay such increased consideration for all such shares of Common Stock purchased
pursuant to the Offer, whether or not such shares of Common Stock were tendered
prior to such increase in consideration.
Subject to the terms of the Merger Agreement, the Purchaser reserves the
right to assign to Parent, or to any other direct or indirect wholly owned
subsidiary of Parent, the right to purchase all or any portion of the shares of
Common Stock tendered pursuant to the Offer, but any such assignment will not
relieve the Purchaser of its obligations under the Offer and will in no way
prejudice the rights of tendering Holders to receive payment for shares of
Common Stock validly tendered and accepted for payment pursuant to the Offer.
6
<PAGE>
3. PROCEDURES FOR TENDERING COMMON STOCK.
VALID TENDER OF COMMON STOCK. In order for shares of Common Stock to be
validly tendered pursuant to the Offer, a Holder must, prior to the Expiration
Date, either (i) deliver to the Depositary at one of its addresses set forth on
the back cover of this Offer to Purchase (a) a properly completed and duly
executed Letter of Transmittal (or a copy thereof) with any required signature
guarantees, (b) the Certificates representing shares of Common Stock to be
tendered and (c) any other documents required to be included with the Letter of
Transmittal under the terms and subject to the conditions thereof and of this
Offer to Purchase, (ii) cause such Holder's broker, dealer, commercial bank or
trust company to tender applicable shares of Common Stock pursuant to the
procedures for book-entry transfer described below or (iii) comply with the
guaranteed delivery procedures described below.
THE METHOD OF DELIVERY OF SHARES OF COMMON STOCK, CERTIFICATES, THE LETTER
OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE
BOOK-ENTRY TRANSFER FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING HOLDER,
AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE
DEPOSITARY. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
BOOK-ENTRY TRANSFER. The Depositary will establish an account with respect
to the Common Stock at the Book-Entry Transfer Facility for purposes of the
Offer within two business days after the date of this Offer to Purchase. Any
financial institution that is a participant in the Book-Entry Transfer
Facility's system may make book-entry delivery of shares of Common Stock by (i)
causing such securities to be transferred in accordance with the Book-Entry
Transfer Facility's procedures into the Depositary's account and (ii) causing
the Letter of Transmittal to be delivered to the Depositary by means of an
Agent's Message. Although delivery of shares of Common Stock may be effected
through book-entry transfer, either the Letter of Transmittal (or a manually
signed facsimile thereof), properly completed and duly executed, together with
any required signature guarantees, or an Agent's Message in lieu of the Letter
of Transmittal, and any other required documents, must, in any case, be
transmitted to and received by the Depositary prior to the Expiration Date at
one of its addresses set forth on the back cover of this Offer to Purchase, or
the tendering Holder must comply with the guaranteed delivery procedures
described below. DELIVERY OF DOCUMENTS OR INSTRUCTIONS TO THE BOOK-ENTRY
TRANSFER FACILITY IN ACCORDANCE WITH THE BOOK-ENTRY TRANSFER FACILITY'S
PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
SIGNATURE GUARANTEE. All signatures on a Letter of Transmittal must be
guaranteed by a financial institution (including most banks, savings and loan
associations and brokerage houses) that is a participant in the Security
Transfer Agents Medallion Program, the New York Stock Exchange Medallion
Signature Guarantee Program or the Stock Exchange Medallion Program (an
"Eligible Institution"), unless the shares tendered thereby are tendered (i) by
the registered holder of shares of Common Stock who has not completed either the
box entitled "Special Payment Instructions" or the box entitled "Special
Delivery Instructions" on the Letter of Transmittal or (ii) for the account of
an Eligible Institution. See Instruction 1 to the Letter of Transmittal.
If a Certificate is registered in the name of a person or entity other than
the signer of the Letter of Transmittal, or if payment is to be made, or a
Certificate not accepted for payment or not tendered is to be returned to a
person or entity other than the registered holder(s), then the Certificate must
be endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name(s) of the registered holder(s) appear(s) on the Certificate,
with the signature(s) on such certificate or stock powers guaranteed as
described above. See Instructions 1, 5 and 7 to the Letter of Transmittal.
GUARANTEED DELIVERY. If a Holder desires to tender shares of Common Stock
pursuant to the Offer and such Holder's Certificates are not immediately
available or time will not permit all required documents to reach the Depositary
prior to the Expiration Date or the procedure for book-entry transfer cannot be
7
<PAGE>
completed on a timely basis, such shares of Common Stock may nevertheless be
tendered if all the following conditions are satisfied:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed Delivery,
substantially in the form provided by the Purchaser, is received by the
Depositary as provided below prior to the Expiration Date; and
(iii) the certificates for all tendered shares of Common Stock in proper form
for transfer, together with a properly completed and duly executed
Letter of Transmittal (or a copy thereof) with any required signature
guarantee (or, in the case of a book-entry transfer, a Book-Entry
Confirmation along with an Agent's Message) and any other documents
required by such Letter of Transmittal, are received by the Depositary
within three (3) trading days after the date of execution of the Notice
of Guaranteed Delivery. A "trading day" is any day on which Nasdaq
Stock Market's National Market (the "Nasdaq National Market") is open
for business.
Any Notice of Guaranteed Delivery may be delivered by hand to the Depositary
or transmitted by facsimile transmission, or by mail to the Depositary and must
include a guarantee by an Eligible Institution in the form set forth in the
Notice of Guaranteed Delivery. In the case of shares of Common Stock held
through the Book-Entry Transfer Facility, the Notice of Guaranteed Delivery must
be delivered to the Depositary by a participant by means of the confirmation
system of the Book-Entry Transfer Facility.
OTHER REQUIREMENTS. Notwithstanding any other provision hereof, payment for
shares of Common Stock accepted for payment pursuant to the Offer will, in all
cases, be made only after timely receipt by the Depositary of (i) certificates
evidencing such shares of Common Stock or a Book-Entry Confirmation of the
delivery of such shares of Common Stock (unless the Purchaser elects, in its
sole discretion, to make payment for such shares of Common Stock pending receipt
of the certificates or a Book-Entry Confirmation, if available, with respect to
such certificates), (ii) a properly completed and duly executed Letter of
Transmittal or a copy thereof with any required signature guarantees (or, in the
case of a book-entry transfer, an Agent's Message) and (iii) any other documents
required by the Letter of Transmittal. Accordingly, tendering Holders may be
paid at different times depending upon when certificates for shares of Common
Stock or Book-Entry Confirmations with respect to shares of Common Stock are
actually received by the Depositary. UNDER NO CIRCUMSTANCES WILL INTEREST ON THE
PURCHASE PRICE OF THE COMMON STOCK BE PAID BY THE PURCHASER, REGARDLESS OF ANY
DELAY IN MAKING SUCH PAYMENT OR EXTENSION OF THE EXPIRATION DATE.
TENDER CONSTITUTES AN AGREEMENT. The valid tender of shares of Common Stock
pursuant to one of the procedures described above will constitute a binding
agreement between the tendering Holder and the Purchaser on the terms and
subject to the conditions of the Offer.
DETERMINATION OF VALIDITY. All questions as to the validity, form,
eligibility (including, but not limited to, time of receipt) and acceptance for
payment of any tendered shares of Common Stock pursuant to any of the procedures
described above will be determined by the Purchaser, in its sole discretion,
whose determination will be final and binding on all parties. The Purchaser
reserves the absolute right to reject any or all tenders of any shares of Common
Stock determined by it not to be in proper form or if the acceptance for payment
of, or payment for, such shares of Common Stock may, in the opinion of the
Purchaser's counsel, be unlawful. The Purchaser also reserves the absolute
right, in its sole discretion, to waive any of the conditions of the Offer
(subject to the terms of the Merger Agreement) or any defect or irregularity in
any tender with respect to shares of Common Stock of any particular Holder,
whether or not similar defects or irregularities are waived in the case of other
Holders. No tender of shares of Common Stock will be deemed to have been validly
made until all defects and irregularities have been cured or
8
<PAGE>
waived. None of the Purchaser, Parent, the Company, the Dealer Manager, the
Depositary, the Information Agent or any other person will be under any duty to
give notification of any defects or irregularities in tenders or incur any
liability for failure to give any such notification.
The Purchaser's interpretation of the terms and conditions of the Offer
(including the Letter of Transmittal and the instructions thereto) will be final
and binding.
APPOINTMENT AS PROXY. By executing a Letter of Transmittal (or delivering
an Agent's Message) as set forth above, a tendering Holder irrevocably appoints
each designee of the Purchaser as such Holder's attorney-in-fact and proxy, with
full power of substitution, to vote in such manner as such attorney-in-fact and
proxy (or any substitute thereof) shall deem proper in its sole discretion, and
to otherwise act (including pursuant to written consent) to the full extent of
such Holder's rights with respect to the shares of Common Stock tendered by such
Holder and accepted for payment by the Purchaser (and any and all dividends,
distributions, rights or other securities issued or issuable in respect of such
shares of Common Stock on or after June 2, 1999). All such proxies shall be
considered coupled with an interest in the tendered Common Stock and shall be
irrevocable. This appointment will be effective if, when, and only to the extent
that, the Purchaser accepts such shares of Common Stock for payment pursuant to
the Offer. Upon such acceptance for payment, all prior proxies given by such
Holder with respect to such shares of Common Stock and other securities will,
without further action, be revoked, and no subsequent proxies may be given (and,
if given, will not be deemed effective). The designees of the Purchaser will,
with respect to the shares of Common Stock and other securities for which the
appointment is effective, be empowered to exercise all voting and other rights
of such Holder as they in their sole discretion may deem proper at any annual,
special, adjourned or postponed meeting of the Company's stockholders, by
written consent in lieu of any such meeting or otherwise. The Purchaser reserves
the right to require that, in order for shares of Common Stock to be deemed
validly tendered, immediately upon the Purchaser's acceptance for payment of
such shares of Common Stock, the Purchaser must be able to exercise all rights
(including, without limitation, all voting rights) with respect to such shares
of Common Stock and receive all dividends and distributions thereon.
BACKUP WITHHOLDING. UNDER UNITED STATES FEDERAL INCOME TAX LAW, THE AMOUNT
OF ANY PAYMENTS MADE BY THE DEPOSITARY TO HOLDERS (OTHER THAN CORPORATE AND
CERTAIN OTHER EXEMPT HOLDERS) PURSUANT TO THE OFFER MAY BE SUBJECT TO BACKUP
WITHHOLDING TAX AT A RATE OF 31%. TO AVOID SUCH BACKUP WITHHOLDING TAX WITH
RESPECT TO PAYMENTS PURSUANT TO THE OFFER, A NON-EXEMPT, TENDERING U.S. HOLDER
(AS DEFINED IN SECTION 5-- "CERTAIN UNITED STATES FEDERAL INCOME TAX
CONSEQUENCES") MUST PROVIDE THE DEPOSITARY WITH SUCH HOLDER'S CORRECT TAXPAYER
IDENTIFICATION NUMBER AND CERTIFY UNDER PENALTY OF PERJURY THAT SUCH HOLDER IS
NOT SUBJECT TO BACKUP WITHHOLDING TAX BY COMPLETING THE SUBSTITUTE FORM W-9
INCLUDED AS PART OF THE LETTER OF TRANSMITTAL. IF BACKUP WITHHOLDING APPLIES
WITH RESPECT TO A HOLDER OR IF A HOLDER FAILS TO DELIVER A COMPLETED SUBSTITUTE
FORM W-9 TO THE DEPOSITARY OR OTHERWISE ESTABLISH AN EXEMPTION, THE DEPOSITARY
IS REQUIRED TO WITHHOLD 31% OF ANY PAYMENTS MADE TO SUCH HOLDER. SEE SECTION
5--"CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES" OF THIS OFFER TO
PURCHASE AND THE INFORMATION SET FORTH UNDER THE HEADING "IMPORTANT TAX
INFORMATION" CONTAINED IN THE LETTER OF TRANSMITTAL.
4. WITHDRAWAL RIGHTS. Tenders of shares of Common Stock made pursuant to
the Offer are irrevocable except that such shares of Common Stock may be
withdrawn at any time prior to the Expiration Date and, unless theretofore
accepted for payment by the Purchaser pursuant to the Offer, may also be
withdrawn at any time after August 6, 1999, or at such later time as may apply
if the Offer is extended.
If the Purchaser extends the Offer, is delayed in its acceptance for payment
of shares of Common Stock or is unable to accept shares of Common Stock for
payment pursuant to the Offer for any reason, then, without prejudice to the
Purchaser's rights under the Offer, the Depositary may, nevertheless, on behalf
of the Purchaser, retain tendered shares of Common Stock, and such shares of
Common Stock may not be withdrawn except to the extent that tendering Holders
are entitled to withdrawal rights as described
9
<PAGE>
in this Section 4--"Withdrawal Rights". Any such delay will be an extension of
the Offer to the extent required by law.
For a withdrawal to be effective, a written or facsimile transmission notice
of withdrawal must be timely received by the Depositary at one of its addresses
set forth on the back cover of this Offer to Purchase. Any such notice of
withdrawal must specify the name of the person who tendered the shares of Common
Stock to be withdrawn, the number of shares of Common Stock to be withdrawn, and
the name of the registered holder of such shares of Common Stock, if different
from that of the person who tendered such shares of Common Stock. If
Certificates evidencing shares of Common Stock to be withdrawn have been
delivered or otherwise identified to the Depositary, then, prior to the physical
release of such Certificates, the serial numbers shown on such Certificates must
be submitted to the Depositary and the signature(s) on the notice of withdrawal
must be guaranteed by an Eligible Institution, unless such shares of Common
Stock have been tendered for the account of an Eligible Institution. Shares of
Common Stock tendered pursuant to the procedure for book-entry transfer as set
forth in Section 3--"Procedures for Tendering Common Stock", may be withdrawn
only by means of the withdrawal procedures made available by the Book-Entry
Transfer Facility, must specify the name and number of the account at the
Book-Entry Transfer Facility to be credited with the withdrawn shares of Common
Stock and must otherwise comply with the Book-Entry Transfer Facility's
procedures.
Withdrawals of tendered shares of Common Stock may not be rescinded without
the Purchaser's consent and any shares of Common Stock properly withdrawn will
thereafter be deemed not validly tendered for purposes of the Offer. All
questions as to the form and validity (including time of receipt) of notices of
withdrawal will be determined by the Purchaser, in its sole discretion, which
determination will be final and binding. None of Parent, the Purchaser, the
Company, the Depositary, the Information Agent, the Dealer Manager or any other
person will be under any duty to give notification of any defects or
irregularities in any notice of withdrawal or incur any liability for failure to
give any such notification.
Any shares of Common Stock properly withdrawn may be re-tendered at any time
prior to the Expiration Date by following any of the procedures described in
Section 3--"Procedures for Tendering Common Stock".
5. CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES. The receipt of
cash for shares of Common Stock pursuant to the Offer or the Merger by a U.S.
Holder (defined below) will be a taxable transaction for United States federal
income tax purposes and may also be a taxable transaction under applicable
state, local or foreign tax laws. For purposes of this discussion, a "U.S.
Holder" is a beneficial owner of shares of Common Stock who for United States
federal income tax purposes is (i) a citizen or resident of the United States;
(ii) a corporation or partnership organized in or under the laws of the United
States or any State thereof (including the District of Columbia); (iii) an
estate the income of which is subject to United States federal income taxation
regardless of its source; or (iv) a trust if such trust has validly elected to
be treated as a United States person for United States federal income tax
purposes or a trust (a) the administration over which a United States court can
exercise primary supervision and (b) all of the substantial decisions of which
one or more United States persons have the authority to control.
In general, a U.S. Holder will recognize gain or loss for United States
federal income tax purposes equal to the difference, if any, between the amount
realized from the sale of shares of Common Stock and such U.S. Holder's adjusted
tax basis in such shares of Common Stock. Assuming that the shares of Common
Stock constitutes a capital asset in the hands of the U.S. Holder, such gain or
loss will be capital gain or loss. In the case of a noncorporate U.S. Holder,
the maximum marginal United States federal income tax rate applicable to such
gain will be lower than the maximum marginal United States federal income tax
rate applicable to ordinary income if such U.S. Holder's holding period for such
shares of Common Stock exceeds one year.
The foregoing discussion may not be applicable to certain types of holders,
including holders who acquired shares of Common Stock pursuant to the exercise
of stock options or otherwise as compensation,
10
<PAGE>
holders that are not U.S. Holders and holders that are otherwise subject to
special tax rules, such as financial institutions, insurance companies, dealers
or traders in securities or currencies, tax-exempt entities, persons that hold
shares of Common Stock as a position in a "straddle" or as part of a "hedging"
or "conversion" transaction for tax purposes and persons that have a "functional
currency" other than the United States dollar.
BACKUP WITHHOLDING TAX. As noted in Section 3--"Procedures for Tendering
Common Stock", a Holder (other than an "exempt recipient", including a
corporation, a non-U.S. Holder that provides appropriate certification (if the
payor does not have actual knowledge that such certificate is false) and certain
other persons that receive cash in exchange for shares of Common Stock may be
subject to United States federal backup withholding tax at a rate equal to 31%,
unless such Holder provides its taxpayer identification number and certifies
that such Holder is not subject to backup withholding tax by submitting a
completed Substitute Form W-9 to the Depositary. Accordingly, each U.S. Holder
should complete, sign and submit the Substitute Form W-9 included as part of the
Letter of Transmittal in order to avoid the imposition of such backup
withholding tax.
The United States federal income tax discussion set forth above is included
for general information and is based upon income tax laws, regulations, rulings
and decisions now in effect, all of which are subject to change (possibly
retroactively). HOLDERS ARE URGED TO CONSULT THEIR TAX ADVISORS WITH RESPECT TO
THE SPECIFIC TAX CONSEQUENCES OF THE OFFER TO THEM, INCLUDING THE APPLICATION
AND EFFECT OF THE ALTERNATIVE MINIMUM TAX AND STATE, LOCAL AND FOREIGN TAX LAWS.
6. PRICE RANGE OF COMMON STOCK; DIVIDENDS. The Common Stock is listed and
traded on the Nasdaq National Market under the symbol "ATEN". The following
table sets forth, for the periods indicated, the high and low sales prices per
Share as reported by the Dow Jones News Service:
<TABLE>
<CAPTION>
HIGH LOW
------- -------
<S> <C> <C>
1997:
Quarter ended 9/30/97(*)......................................................... 21 3/4 14 1/2
Quarter ended 12/31/97........................................................... 15 3/4 9
1998:
Quarter ended 3/31/98............................................................ 14 3/4 10
Quarter ended 6/30/98............................................................ 19 3/8 10 7/8
Quarter ended 9/30/98............................................................ 15 1/4 8
Quarter ended 12/31/98........................................................... 9 1/2 3 7/8
1999:
Quarter ended 3/31/99............................................................ 11 1/4 6 3/8
Period 4/1/99 through 6/7/99..................................................... 18 5/8 7 3/8
</TABLE>
- ------------------------
* Partial period beginning July 30, 1997
On May 10, 1999, the day before the Company announced that it had retained
Goldman Sachs to advise its Board of Directors, the reported closing sales price
of the Common Stock on the Nasdaq National Market was $8 1/8 per share of Common
Stock. On June 1, 1999, the last full trading day prior to the public
announcement of the Offer, the reported closing sales price of the Common Stock
on the Nasdaq National Market was $12 1/2 per share of Common Stock. On June 7,
1999, the last full trading day prior to the date of this Offer to Purchase, the
reported closing sales price of the Common Stock on the Nasdaq National Market
was $18 1/4 per share. HOLDERS OF COMMON STOCK ARE URGED TO OBTAIN CURRENT
MARKET QUOTATIONS FOR THE COMMON STOCK.
11
<PAGE>
As of June 7, 1999, no dividends had ever been paid on the shares of Common
Stock. The Merger Agreement prohibits the Company from declaring or paying any
dividends until the effective date of the Merger.
7. CERTAIN INFORMATION CONCERNING THE COMPANY.
THE COMPANY. The information concerning the Company contained in this Offer
to Purchase, including financial information, has been taken from or is based
upon publicly available documents and records on file with the Commission and
other public sources. None of Parent, the Purchaser or the Dealer Manager
assumes any responsibility for the accuracy or completeness of the information
concerning the Company contained in such documents and records or for any
failure by the Company to disclose events which may have occurred or may affect
the significance or accuracy of any such information but which are unknown to
Parent or the Purchaser.
The Company is the leading provider of pay television services in Poland and
is engaged principally in providing cable television services, providing
satellite television services and developing, packaging and delivering high
quality Polish-language programming. The Company operates the largest cable
television system in Poland with approximately 1,624,000 homes passed and
approximately 948,200 total subscribers as of March 31, 1999. The Company's
cable subscribers are located in regional clusters encompassing eight of the ten
largest cities in Poland. The Company is a Delaware corporation. The address of
the Company's principal executive offices is One Commercial Plaza, Hartford,
Connecticut 06103. The telephone number of the Company at such offices is (860)
549-1674.
12
<PAGE>
@ENTERTAINMENT, INC.
SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA
Set forth below is certain selected consolidated financial information
relating to the Company and its subsidiaries which has been excerpted or derived
from the financial statements contained in the Company's Annual Report on Form
10-K for the year ended December 31, 1998 (the "Company's 1998 10-K") and its
Quarterly Reports on Form 10-Q for the quarters ended March 31, 1998, and March
31, 1999. More comprehensive financial information is included in these reports
and other documents filed by the Company with the Commission. The financial
information that follows is qualified in its entirety by reference to these
reports and other documents, including the financial statements and related
notes contained therein. These reports and other documents may be inspected at,
and copies may be obtained from, the same places and in the manner set forth
under "--Available Information".
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------------------ ----------------------
1996 1997 1998 1998 1999
---------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS:
Revenues................................................... $ 24,923 $ 38,138 $ 61,859 $ 12,686 $ 18,799
Operating expenses:
Direct operating expenses................................ (7,193) (14,621) (61,874) 8,648 18,017
Selling, general and administrative expenses (1)......... (9,289) (49,893) (74,494) 13,447 15,620
Depreciation and amortization............................ (9,788) (16,294) (26,304) 4,949 9,405
---------- ----------- ----------- ---------- ----------
Operating income/(loss).................................... (1,347) (42,670) (100,813) (14,358) (24,243)
Interest and investment income........................... 1,274 5,754 3,355 850 1,494
Interest expense......................................... (4,687) (13,902) (21,957) (3,649) (11,845)
Equity in losses of affiliated companies................. -- (368) (6,310) 270 1,025
Foreign exchange loss, net............................... (761) (1,027) (130) 73 (1,038)
---------- ----------- ----------- ---------- ----------
Loss before income taxes, minority interest and
extraordinary item..................................... (5,521) (52,213) (125,855) (16,814) (34,607)
Income tax (expense)/benefit............................... (1,273) 975 (210) (333) (19)
Minority interest.......................................... 1,890 (3,586) -- (149) --
---------- ----------- ----------- ---------- ----------
Loss before extraordinary item............................. (4,904) (54,824) (126,065) -- --
Extraordinary item-loss on early extinguishment of debt
(2)...................................................... (1,713) -- -- -- --
---------- ----------- ----------- ---------- ----------
Net loss................................................. (6,617) (54,824) (126,065) (17,296) (34,626)
Accretion of redeemable preferred stock.................... (2,870) (2,436) -- -- (791)
Preferred stock dividends.................................. (1,738) -- -- -- --
(Excess)/deficit of carrying value of preferred stock
(over)/under consideration paid (3)...................... 3,549 (33,806) -- -- --
---------- ----------- ----------- ---------- ----------
Net loss applicable to holders of common stock............. $ (7,676) $ (91,066) $ (126,065) $ (17,296) $ (35,417)
---------- ----------- ----------- ---------- ----------
---------- ----------- ----------- ---------- ----------
Basic and diluted loss per common share.................... $ (0.44) $ (3.68) $ (3.78) $ (0.52) $ (1.06)
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED DECEMBER 31, ENDED MARCH 31,
-------------------------------- ----------------------
1996 1997 1998 1998 1999
--------- ---------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents............................ $ 68,483 $ 105,691 $ 13,055 $ 58,589 $ 128,002
Property, plant and equipment, net................... 84,833 117,579 213,054 139,231 195,783
Total assets......................................... 217,537 307,096 348,374 303,794 447,540
Total notes payable.................................. 130,074 130,110 263,954 132,297 367,169
Redeemable preferred stock........................... 34,955 -- -- -- 29,603
Total stockholders' equity........................... 31,048 152,355 33,656 137,826 (3,811)
</TABLE>
- ------------------------
(1) The year ended December 31, 1997 includes a non-cash compensation expense of
$18,102,000 relating to the granting of certain management stock options.
See "Management's Discussion and Analysis of Financial Condition and Results
of Operations" and note 15 to the Consolidated Financial Statements, each
contained in the Company's 1998 10-K.
(2) See Note 11 to the Consolidated Financial Statements contained in the
Company's 1998 10-K.
(3) Represents the amount paid to preferred stockholders in excess of or less
than the carrying value of such shares.
------------------------
CERTAIN PROJECTED FINANCIAL DATA OF THE COMPANY. Prior to entering into the
Merger Agreement, Parent conducted a due diligence review of the Company and in
connection with such review received certain non-public information provided by
the Company, including certain projected financial data (the "Projections"). The
Company does not in the ordinary course publicly disclose projections and the
Projections were not prepared with a view to public disclosure. The Company has
advised Parent and the Purchaser that the Projections were prepared by the
Company's management based on numerous assumptions including, among others,
projections of revenues, operating income, benefits and other expenses,
depreciation and amortization, capital expenditure and working capital
requirements. The Projections do not give effect to the Offer or the potential
combined operations of Parent and the Company or any alterations Parent may make
to the Company's operations or strategy after the consummation of the Offer. The
information set forth below is presented for the limited purpose of giving the
Holders access to the material financial projections prepared by the Company's
management that were made available to Parent and the Purchaser in connection
with the Merger Agreement and the Offer.
14
<PAGE>
@ ENTERTAINMENT, INC.
SELECTED PROJECTED FINANCIAL DATA
<TABLE>
<CAPTION>
1999(E) 2000 2001 2002 2003
----------- ----------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Total Revenue................................... $ 153,791 $ 274,013 $ 355,059 $ 413,191 $ 475,842
Profit/(Loss) after tax......................... $ (245,013) $ (50,795) $ (11,642) $ 6,022 $ 6,113
EBITDA(1)....................................... $ (148,941) $ 51,612 $ 108,285 $ 144,991 $ 189,007
</TABLE>
- ------------------------
(1) EBITA means earnings before interest, income taxes and amortization from
continuing operations, calculated by adjusting the loss from operations for
non-recurring charges, amortization expense and other income.
CAUTIONARY STATEMENTS CONCERNING FORWARD-LOOKING STATEMENTS
Certain matters discussed herein, including, but not limited to the
Projections, are forward-looking statements that involve risks and
uncertainties. Forward-looking statements include the information set forth
above in "--Certain Projected Financial Data of the Company".
While presented with numerical specificity, the Projections were not
prepared by the Company in the ordinary course and are based upon a variety of
estimates and hypothetical assumptions which may not be accurate, may not be
realized, and are also inherently subject to significant business, economic and
competitive uncertainties and contingencies, all of which are difficult to
predict, and most of which are beyond the control of the Company. Accordingly,
there can be no assurance that any of the Projections will be realized and the
actual results for the years ending December 31, 1999, 2000, 2001, 2002 and 2003
may vary materially from those shown above.
In addition, the Projections were not prepared in accordance with generally
accepted accounting principles, and neither the Company's nor Parent's
independent accountants has examined or compiled any of the Projections or
expressed any conclusion or provided any other form of assurance with respect to
the Projections and accordingly assume no responsibility for the Projections.
The Projections were prepared with a limited degree of precision, and were not
prepared with a view to public disclosure or compliance with the published
guidelines of the Commission or the guidelines established by the American
Institute of Certified Public Accountants regarding projections, which would
require a more complete presentation of data than as shown above. The inclusion
of the Projections herein should not be regarded as a representation by Parent
and the Purchaser or any other person that the projected results will be
achieved. In particular, Parent and the Company may apply differing accounting
methods to various aspects of their businesses, including the treatment of
certain equipment provided to subscribers. These differences in accounting
treatment may materially affect the Company's results. The Projections should be
read in conjunction with the historical financial information of the Company
included above. None of Parent, the Purchaser, or any other person assumes any
responsibility for the accuracy or validity of the foregoing Projections.
Forward-looking statements also include those preceded by, followed by or that
include the words "believes", "expects", "anticipates" or similar expressions.
Such statements should be viewed with caution.
AVAILABLE INFORMATION. The Company is subject to the information and
reporting requirements of the Exchange Act and is required to file reports and
other information with the Commission relating to its business, financial
condition and other matters. Information, as of particular dates, concerning the
Company's directors and officers, their remuneration, stock options granted to
them, the principal holders of the Company's securities, any material interests
of such persons in transactions with the Company and other matters is required
to be disclosed in reports filed with the Commission. These reports and other
information should be available for inspection at the public reference
facilities of the Commission located in Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and also should be available for
15
<PAGE>
inspection and copying at prescribed rates at regional offices of the Commission
located at Seven World Trade Center, New York, New York 10048 and 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of this material may
also be obtained by mail, upon payment of the Commission's customary fees, from
the Commission's principal office at 450 Fifth Street, N.W., Washington, D.C.
20549. Electronic filings filed through the Commission's Electronic Data
Gathering, Analysis and Retrieval system ("EDGAR"), including those made by or
in respect of the Company, are publicly available through the Commission's home
page on the Internet at http://www.sec.gov.
8. CERTAIN INFORMATION CONCERNING THE PURCHASER AND PARENT.
THE PURCHASER. The Purchaser, a newly incorporated Delaware corporation,
has not conducted any business other than in connection with the Offer and the
Merger Agreement. All of the issued and outstanding shares of capital stock of
the Purchaser are beneficially owned by Parent. The principal address of the
Purchaser is c/o United Pan-Europe Communications, N.V., Fred. Roeskestraat 123,
P.O. Box 74763, 1070 BT Amsterdam, The Netherlands. The telephone number is
011-31-20-778-9840.
PARENT. Parent, a public company with limited liability incorporated under
the laws of The Netherlands, owns and operates cable-based communications
networks in ten countries in Europe and in Israel. Parent provides cable
television services. Some of its systems also provide telephone and Internet
access services. Its systems together have the largest number of subscribers of
any group of broadband communications networks operated across Europe. Parent
has systems in The Netherlands, Austria, Norway, Belgium and France. These
systems are strategically located in the capital cities of Amsterdam, Vienna,
Oslo, Brussels and suburban Paris. Parent also has systems in Israel, Malta and
Eastern Europe. The principal executive offices of Parent are located at Fred.
Roeskestraat 123, P.O. Box 74763, 1070 BT Amsterdam, The Netherlands. The
telephone number is 011-31-20-778-9840. Parent is a subsidiary of United
International Holdings, Inc. ("UIH"), a leading international provider of video,
telephone and data services. The principal executive officers of UIH are located
at 4643 South Ulster Street, Suite 1300, Denver, Colorado 80237. The telephone
number is 303-770-4001.
During the last five years, none of UIH, Parent, the Purchaser or, to the
best of their knowledge, any of the persons listed in Schedule I hereto (i) has
been convicted in a criminal proceeding (excluding traffic violations and
similar misdemeanors) or (ii) was a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting activities subject to, federal or state securities
laws or finding any violation of such laws.
Except as described in this Offer to Purchase (i) none of UIH, Parent, the
Purchaser or, to the best of their knowledge, any of the persons listed in
Schedule I to this Offer to Purchase, or any associate or majority-owned
subsidiary of UIH, Parent or the Purchaser, beneficially owns or has any right
to acquire, directly or indirectly, any equity securities of the Company and
(ii) none of UIH, Parent, the Purchaser, or to the best of their knowledge, any
of the persons or entities referred to above or any director, executive officer
or subsidiary of any of the foregoing has effected any transaction in such
equity securities during the past sixty (60) days. The Purchaser, Parent and UIH
disclaim beneficial ownership of any Common Stock owned by any pension plans of
Parent or UIH or any affiliate of Parent or the Purchaser.
Except as described in this Offer to Purchase, none of UIH, Parent, the
Purchaser or, to the best of their knowledge, any of the persons listed in
Schedule I to this Offer to Purchase has any contract, arrangement,
understanding or relationship with any other person with respect to any
securities of the Company, including, but not limited to, any contract,
arrangement, understanding or relationship concerning the transfer or voting of
such securities, joint ventures, loan or option arrangements, puts or calls,
guaranties of loans, guaranties against loss or the giving or withholding of
proxies. Except as set forth in this Offer to Purchase, since January 1, 1995,
none of UIH, Parent, the Purchaser or, to the best of their knowledge, any of
the persons listed on Schedule I hereto has had any business relationship or
transaction
16
<PAGE>
with the Company or any of its executive officers, directors or affiliates that
is required to be reported under the rules and regulations of the Commission
applicable to the Offer. Except as set forth in this Offer to Purchase, since
January 1, 1995, there have been no contacts, negotiations or transactions
between any of UIH, Parent, the Purchaser or any of their subsidiaries or, to
the best knowledge of UIH, Parent, or the Purchaser, any of the persons listed
in Schedule I to this Offer to Purchase, on the one hand, and the Company or its
affiliates, on the other hand, concerning a merger, consolidation or
acquisition, tender offer or other acquisition of securities, an election of
directors or a sale or other transfer of a material amount of assets.
AVAILABLE INFORMATION. Parent is subject to the information and reporting
requirements of the Exchange Act and is required to file reports and other
information with the Commission relating to its business, financial condition
and other matters. Information, as of particular dates, concerning Parent's
directors and officers, their remuneration, stock options granted to them, the
principal holders of Parent's securities, any material interests of such persons
in transactions with Parent and other matters is required to be disclosed in
reports filed with the Commission. These reports and other information should be
available for inspection at the public reference facilities of the Commission
located in Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and
also should be available for inspection and copying at prescribed rates at
regional offices of the Commission located at Seven World Trade Center, New
York, New York 10048 and 500 West Madison Street, Suite 1400, Chicago, Illinois
60661. Copies of this material may also be obtained by mail, upon payment of the
Commission's customary fees, from the Commission's principal office at 450 Fifth
Street, N.W., Washington, D.C. 20549. Electronic filings filed through the
Commission's Electronic Data Gathering, Analysis and Retrieval system ("EDGAR"),
including those made by or in respect of the Company, are publicly available
through the Commission's home page on the Internet at http://www.sec.gov. Copies
of these documents are also filed with the Amsterdam Stock Exchange.
The financial data relating to Parent set forth below are presented in Dutch
Guilders ("Guilders" or "NLG") and are prepared in accordance with accounting
principles generally accepted in The Netherlands ("Dutch GAAP"). As of each of
December 31, 1996, December 31, 1997, December 31, 1998 and June 7, 1999, the
rate in New York City for cable transfers in foreign currencies as certified for
custom purposes by the Federal Reserve Bank of New York (the "Noon Buying
Rate"), was NLG 1.73 = U.S. $1.00, NLG 2.03 = U.S. $1.00, NLG 1.88 = U.S. $1.00
and NLG 2.14 = U.S. $1.00, respectively.
17
<PAGE>
UNITED PAN-EUROPE COMMUNICATIONS N.V.
SELECTED CONSOLIDATED FINANCIAL DATA
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31
------------------------------------------- -------------------------------
1996 1997 1998 1998 1999
------------- ------------- ------------- -------------- ---------------
(DUTCH GUILDERS, IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Service and other revenue.............. 245,179 337,255 408,970 95,005 148,820
Operating expense...................... (82,439) (118,508) (138,459) (30,899) (67,067)
Selling, general & administrative
expense.............................. (81,176) (119,067) (481,703) (27,551) (104,333)
Depreciation and amortization.......... (79,832) (132,888) (187,646) (48,457) (63,198)
------------- ------------- ------------- -------------- ---------------
Net operating income (loss)............ 1,732 (33,208) (398,838) (11,902) (85,778)
Interest income........................ 2,757 6,512 7,397 814 4,911
Interest expense....................... (38,475) (70,738) (104,355) (22,734) (38,245)
Provision for loss on investment
related costs........................ -- (18,888) (6,230) -- --
Gain on sale of assets................. -- -- -- -- 14,625
Foreign exchange gain (loss) and other
expense.............................. (21,200) (41,063) 2,690 (4,894) (15,335)
------------- ------------- ------------- -------------- ---------------
Net income (loss) before income taxes
and other items...................... (55,186) (157,385) (499,336) (38,716) (119,822)
Shares in result of affiliated
companies, net....................... (30,712) (25,458) (63,823) (14,139) (20,272)
Minority interests in subsidiaries..... (2,208) 152 1,153 241 (77)
Income tax benefit (expense)........... (509) 1,649 (1,215) 719 (368)
------------- ------------- ------------- -------------- ---------------
Net income (loss)...................... (88,615) (181,042) (563,221) (51,895) (140,539)
------------- ------------- ------------- -------------- ---------------
------------- ------------- ------------- -------------- ---------------
Basic and diluted loss per ordinary
share................................ (0.96) (1.98) (6.80) (0.56) (1.31)
------------- ------------- ------------- -------------- ---------------
------------- ------------- ------------- -------------- ---------------
Weighted-average number of ordinary
shares outstanding................... 92,062,589 91,533,381 82,869,342 92,062,589 107,395,811
SELECTED BALANCE SHEET DATA:
Non-restricted cash and cash
equivalents.......................... 43,649 100,144 29,571 65,777 1,062,002
Other current assets................... 83,265 85,421 136,046 83,835 280,212
Investments in affiliated companies.... 260,468 413,649 493,051 388,316 390,767
Property, plant and equipment.......... 415,989 484,982 602,997 590,290 1,528,580
Intangible assets...................... 270,407 690,046 680,032 758,486 1,454,742
Total assets........................... 1,076,552 1,915,704 2,067,779 2,071,107 5,003,572
Short-term debt........................ 449,892 257,515 351,853 262,829 64,802
Other current liabilities.............. 120,649 185,442 244,514 196,825 421,085
Long-term debt......................... 275,802 966,100 1,174,749 1,124,099 1,279,240
Total liabilities...................... 858,059 1,467,184 2,116,019 1,635,570 1,819,841
Total shareholders' equity (deficit)... 213,938 439,805 (74,174) 426,547 3,156,492
</TABLE>
18
<PAGE>
9. SOURCE AND AMOUNT OF FUNDS. The Offer is not conditioned upon any
financing arrangements. The amount of funds required by the Purchaser to
purchase all of the outstanding Common Stock pursuant to the Offer and to pay
related fees and expenses is expected to be approximately $925 million. The
Purchaser will obtain such funds from Parent. Parent anticipates that it will
obtain such funds from a planned private placement of high-yield notes. As of
the date hereof, Parent had not completed such financing. Parent has also
approached its customary financing sources in order to arrange interim financing
for the Offer. No commitment letter has been entered into with respect to such
financing, however, Parent, based on conversations with its financing sources,
is confident that such financing can be arranged.
The margin regulations promulgated by the Board of Governors of the Federal
Reserve System (the "Federal Reserve Board") place restrictions on the amount of
credit that may be extended for the purposes of purchasing margin stock,
including if such credit is secured directly or indirectly by margin stock. The
Purchaser believes that the financing of the acquisition of the Common Stock
will be in full compliance with, or not subject to, the margin regulations.
10. BACKGROUND OF THE OFFER. In January, 1998, the Company approached
Parent regarding the possibility of acquiring Parent's Hungarian cable assets.
Parent rejected this approach. Subsequently in December, 1998, representatives
of Parent contacted Robert Fowler, the Chief Executive Officer of the Company to
discuss the possibility of a cooperative relationship between the two parties.
Mr. Fowler agreed to discuss this possibility and efforts were made to arrange a
meeting between Mr. Fowler and Mark Schneider, the Chairman of the Management
Board and Chief Executive Officer of Parent. This meeting never occurred due to
the scheduling demands of the principals and Parent's need to focus its
resources on the successful completion of its March, 1999, initial public
offering.
In late March, 1999, representatives of Parent contacted Goldman Sachs to
inquire as to whether the Company would consider a possible business
combination. On April 1, 1999, Charles Bracken, the Managing Director, Strategy
Acquisitions and Corporate Development at Parent, met with Mr. Fowler over lunch
at the offices of Goldman Sachs to discuss Parent's interest in a possible
business combination with the Company. In the first week of April, 1999, Parent
retained Morgan Stanley to represent it in any possible transaction with the
Company. Thereafter, representatives of Morgan Stanley contacted representatives
of Goldman Sachs to discuss the procedures for participating in any contemplated
sale process. On April 12, 1999, the Company entered into the Confidentiality
Agreement (as defined herein) and thereafter received certain confidential
information regarding the business and operations of the Company. During the
week of April 12, 1999, Parent and its representatives began their review of the
Company and representatives of Morgan Stanley and Goldman Sachs had various
additional conversations regarding the business and operations of the Company.
On April 19, 1999, representatives of Parent and Morgan Stanley met with
representatives of the Company in Warsaw. During these meetings, members of the
Company's senior management made presentations regarding various aspects of the
business of the Company. In addition, representatives of Parent and Morgan
Stanley had the opportunity to discuss the Company and the Company's business
plan with members of the Company's senior management.
During the succeeding weeks, the Company and Morgan Stanley performed
further analysis on the information received from the Company. In addition,
during this period, representatives of Parent and Morgan Stanley had various
contacts with representatives of the Company and Goldman Sachs, in which Parent
and Morgan Stanley sought to understand better the business plan of the Company
and in which they requested further confidential information regarding the
Company and its business. During the week of May 10, 1999, Parent and Morgan
Stanley sought to finalize their valuation of the Company.
On May 11, 1999, the Company publicly announced that it had retained Goldman
Sachs to advise its Board of Directors in discussions it was having with
potential strategic investors. Such discussions were reported to entail the sale
of all or part of the Company.
On May 19, 1999, in a telephone call with Goldman Sachs, Parent indicated
its continued interest in acquiring all of the outstanding Common Stock. Parent
also indicated that it would require the opportunity
19
<PAGE>
to conduct further due diligence and a period of exclusivity in which to
complete that due diligence and negotiate definitive transaction documentation.
During the course of this call, Parent and Goldman Sachs discussed the valuation
of the Company. Parent subsequently agreed to value the Common Stock at $19.00
per share of, contingent upon receiving an exclusive negotiation period to allow
it to perform legal due diligence and other confirmatory due diligence and to
negotiate a definitive transaction agreement. The consideration to be paid
pursuant to this proposal was to be comprised of $9.50 in cash, and shares in a
new class of equity securities of Parent which Parent valued at $9.50. At this
point Parent also indicated that, as a condition to its willingness to offer
$19.00 per share of Common Stock, Parent would require that stockholders of the
Company representing a majority of the issued and outstanding Common Stock agree
to support the proposed transaction.
On May 20, 1999, Parent retained White & Case LLP as its legal advisor in
respect of any potential acquisition of the Company.
On May 22, 1999, Baker & McKenzie, counsel to the Company, delivered to
Parent a draft of a proposed Merger Agreement which called for a single-step
merger of the Company with and into a subsidiary of Parent in exchange for cash
and securities of Parent, including a contingent value right.
During the period from May 21, 1999, to May 23, 1999, representatives of
Parent, Morgan Stanley and White & Case conducted further legal, business and
financial due diligence regarding the Company at the offices of the Company's
counsel in London, Warsaw and Washington, D.C. During this period, members of
Parent's senior management and the Company's senior management met to discuss
potential synergies that could be achieved in combining the businesses of Parent
and the Company. As a result of further discussions among the principals and
their advisors, Parent agreed that any transaction between the parties would be
an all-cash transaction. Parent is advised that, based on the preliminary
results of this review and Parent's indication that it remained prepared to
offer $19.00 per share of Common Stock, at a meeting held on May 24, 1999, the
Board of Directors of the Company authorized the Company's management to grant
Parent an exclusive negotiating period through the morning of June 1, 1999,
subject to receipt and review of Parent's comments on the draft Merger
Agreement.
On May 26, 1999, Parent delivered to the Company a revised draft of the
Merger Agreement marked to reflect its required changes to the Merger Agreement,
including the requirement that any potential transaction be a cash transaction.
On May 26 and 27, representatives of White & Case and Baker & McKenzie had
numerous telephone conversations regarding the proposed Merger Agreement. On May
28, 1999, representatives of the parties' legal and financial advisors met in
London to discuss the Merger Agreement, the Stockholder Agreements and certain
aspects of the proposed transaction structure. On May 28, 1999, the Supervisory
Board of Parent met and approved the making of the Offer, the Merger and the
execution and delivery of a Merger Agreement at a price not to exceed $19.00 per
share of Common Stock.
During the period from May 28, 1999 through June 1, 1999, the parties and
their advisors continued to negotiate the terms of the Merger Agreement and the
Merger Agreement was revised to reflect the outcome of such negotiations.
Simultaneously therewith, Parent and its advisors negotiated the terms of the
Stockholder Agreements which, subject to the approval of the Board of Directors,
were to be entered into in the event the Merger Agreement was executed with
representatives of the Stockholders and the Preferred Stockholders and those
agreements were revised to reflect the outcome of such negotiations. In
addition, during this period, Parent finalized its due diligence review of the
Company.
Parent is advised that on the evening of May 31, 1999, the Board of
Directors of the Company met and approved Parent's offer, the Merger, the Merger
Agreement and the Stockholder Agreements, subject to the finalization of
definitive documentation. Thereafter, Parent's and the Company's respective
legal and financial advisors met to finalize the Merger Agreement and on the
evening of June 1, 1999, Messrs. Schneider and Fowler met to resolve certain
final issues. Early in the morning of June 2, 1999, the Merger Agreement was
executed by Parent, the Purchaser and the Company and the Stockholder Agreements
were executed by Parent, the Purchaser and the various Stockholders and
Preferred Stockholders.
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11. PURPOSE OF THE OFFER; PLANS FOR THE COMPANY; CERTAIN AGREEMENTS.
PURPOSE OF THE OFFER. The purpose of the Offer is to enable Parent to
acquire as many outstanding shares of Common Stock as possible as a first step
in acquiring the entire equity interest in the Company. The purpose of the
Merger is for Parent to acquire all shares of Common Stock not purchased
pursuant to the Offer. Upon consummation of the Merger, the Company will become
a direct wholly owned subsidiary of Parent. The Offer is being made pursuant to
the Merger Agreement.
Under the DGCL, the approval of the Company's Board of Directors and the
affirmative vote of the holders of a majority of the outstanding Common Stock is
required to approve and adopt the Merger Agreement and the transactions
contemplated thereby, including the Merger. In addition, the Company's
Certificate of Incorporation provides that the affirmative vote of the holders
of two-thirds of the issued and outstanding Series A 12% Cumulative Preference
Shares of the Company and two-thirds of the issued and outstanding Series B 12%
Cumulative Preference Shares is required to approve and adopt the Merger
Agreement and the transactions contemplated thereby, including the Merger. The
Company's Board of Directors has unanimously (i) determined that each of the
Offer and the Merger are advisable and are fair to, and in the best interests
of, the holders of capital stock of the Company, including but not limited to,
the Holders; (ii) approved the Offer and the Merger and (iii) recommended the
acceptance of the Offer, the approval of the Merger and the approval and
adoption of the Merger Agreement by the stockholders of the Company. Unless the
Merger is consummated pursuant to the "short-form" merger provisions under
Section 253 of the DGCL described below (in which case no vote of the Holders is
required), the only remaining required corporate action of the Company is the
approval and adoption of the Merger Agreement and the transactions contemplated
thereby by the affirmative vote of the holders of a majority of the shares of
Common Stock and the holders of two-thirds of the issued and outstanding shares
of each series of the Company's preference shares. Pursuant to the Preferred
Stockholder Agreements the Purchaser has agreed to purchase all of the
outstanding preference shares of the Company shortly after the consummation of
the Offer. As a result, the affirmative vote of the requisite holders of each
series of preference shares is assured.
In the Merger Agreement, the Company has agreed to take all action necessary
to convene a meeting of its stockholders as soon as practicable after the
consummation of the Offer for the purpose of considering and taking action on
the Merger Agreement and the transactions contemplated thereby if such action is
required by the DGCL. However, under the DGCL, if the Purchaser acquires,
pursuant to the Offer or otherwise, at least 90% of the outstanding shares of
Common Stock and each outstanding series of the Company's preference shares, the
Purchaser will be able to approve the Merger without a vote of the Company's
stockholders. Accordingly, if the Purchaser acquires at least 90% of the
outstanding shares of Common Stock and each outstanding series of the Company's
preference shares, it will have sufficient voting power to cause the approval
and adoption of the Merger Agreement and the transactions contemplated thereby
without a vote of the Company's stockholders. In such event, Parent, the
Purchaser and the Company have agreed in the Merger Agreement to take, at the
request of the Purchaser, all necessary and appropriate action to cause the
Merger to become effective without a meeting of the Company's stockholders. If,
however, the Purchaser does not acquire at least 90% of the outstanding shares
of Common Stock and each outstanding series of the Company's preference shares
pursuant to the Offer or otherwise and a vote of the Company's stockholders is
required under the DGCL, a significantly longer period of time would be required
to effect the Merger.
If Purchaser purchases shares of Common Stock pursuant to the Offer, the
Merger Agreement provides that the Purchaser will be entitled to designate
representatives to serve on the Board of Directors of the Company in proportion
to the Purchaser's ownership of shares of Common Stock following such purchase.
The Purchaser expects that such representation would permit the Purchaser to
exert substantial influence over the Company's conduct of its business and
operations.
PLANS FOR THE COMPANY. Subject to certain matters described below, it is
currently expected that, initially following the Merger, the business and
operations of the Company will generally continue as they are
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currently being conducted. Parent currently intends to cause the Company's
operations to continue to be run and managed by, amongst others, the Company's
existing executive officers. Parent will continue to evaluate all aspects of the
business, operations, capitalization and management of the Company during the
pendency of the Offer and after the consummation of the Offer and the Merger and
will take such further actions as it deems appropriate under the circumstances
then existing. Parent intends to seek additional information about the Company
during this period. Thereafter, Parent intends to review such information as
part of a comprehensive review of the Company's business, operations,
capitalization and management.
As a result of the Offer, the interest of Parent in the Company's net book
value and net earnings will be in proportion to the number of shares of Common
Stock acquired in the Offer. If the Merger is consummated, Parent's interest in
such items and in the Company's equity generally will equal 100% and Parent and
its subsidiaries will be entitled to all benefits resulting from such interest,
including all income generated by the Company's operations and any future
increase in the Company's value. Similarly, Parent will also bear the risk of
losses generated by the Company's operations and any future decrease in the
value of the Company after the Merger. Subsequent to the Merger, current
stockholders of the Company will cease to have any equity interest in the
Company, will not have the opportunity to participate in the earnings and growth
of the Company after the Merger and will not have any right to vote on corporate
matters. Similarly, stockholders will not face the risk of losses generated by
the Company's operations or a decline in the value of the Company after the
Merger.
Shares of Common Stock are currently traded on the Nasdaq National Market.
Following the consummation of the Merger, shares of Common Stock will no longer
be quoted on the Nasdaq National Market and the registration of the Common Stock
under the Exchange Act will be terminated. Accordingly, after the Merger there
will be no publicly-traded equity securities of the Company outstanding. See
Section 13--"Effect of the Offer on the Market for the Common Stock; Exchange
Act Registration". It is expected that, if shares of Common Stock are not
accepted for payment by the Purchaser pursuant to the Offer and the Merger is
not consummated, the Company's current management, under the general direction
of the Board of Directors, will continue to manage the Company as an ongoing
business.
Except as otherwise discussed in this Offer to Purchase, Parent has no
present plans or proposals that would result in any extraordinary corporate
transaction, such as a merger, reorganization, liquidation involving the Company
or any of its subsidiaries, or sale or transfer of a material amount of assets
of the Company or any of its subsidiaries or in any other material changes to
the Company's capitalization, dividend policy, corporate structure, business or
composition of the Board of Directors or the management of the Company except
that Parent intends to review the composition of the boards of directors (or
similar governing bodies) of the Company and its subsidiaries and to cause the
election to such boards of directors (or similar governing bodies) of certain of
its representatives.
MERGER AGREEMENT
THE FOLLOWING IS A SUMMARY OF THE MATERIAL TERMS OF THE MERGER AGREEMENT.
THE SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE MERGER AGREEMENT
WHICH IS INCORPORATED HEREIN BY REFERENCE AND A COPY OF WHICH HAS BEEN FILED
WITH THE COMMISSION AS AN EXHIBIT TO THE SCHEDULE 14D-1. THE MERGER AGREEMENT
MAY BE INSPECTED AT, AND COPIES MAY BE OBTAINED FROM, THE SAME PLACES AND IN THE
MANNER SET FORTH IN SECTION 7--"CERTAIN INFORMATION CONCERNING THE COMPANY".
THE OFFER. The Merger Agreement provides that the Purchaser will commence
the Offer and that the obligation of the Purchaser to consummate the Offer and
to accept for payment and to pay for any Common Stock tendered pursuant to the
Offer shall be subject to only those conditions set forth herein. The
obligations of the Purchaser to accept for payment and to pay for any shares of
Common Stock tendered shall be subject only to those conditions set forth in
Section 14--"Conditions of the Offer", any of which may be waived by Parent or
the Purchaser in their sole discretion; PROVIDED, HOWEVER, that the Purchaser
may not waive the Minimum Condition without the prior written consent of the
Company. The conditions to the Offer are for the sole benefit of Parent and the
Purchaser and may be asserted by Parent and the Purchaser regardless of the
circumstances giving rise to any such conditions or, except as expressly
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set forth herein, may be waived by Parent and the Purchaser in whole or in part.
Parent and the Purchaser expressly reserve the right to modify the terms of the
Offer; PROVIDED, HOWEVER, that without the prior written consent of the Company,
the Purchaser shall not (i) reduce the number of shares of Common Stock to be
purchased in the Offer, (ii) reduce the Offer Price, (iii) modify or add to the
conditions to the Offer, (iv) change the form of consideration payable in the
Offer or (v) make any other change in the terms of the Offer which is materially
adverse to the holders of Common Stock. Notwithstanding the foregoing sentence,
the Purchaser may, without the consent of the Company, (i) extend the Offer, if
at the then scheduled expiration date of the Offer any of the conditions to the
Purchaser's obligations to purchase shares of Common Stock have not been
satisfied or waived, until the third business day after the day the Purchaser
reasonably believes to be the earliest date on which such conditions will be
satisfied, (ii) extend the Offer from time to time up to a maximum of an
aggregate of thirty (30) days beyond the first day all of the conditions to the
Offer have been met, and/or (iii) extend the Offer for any period required by
any rule, regulation, interpretation or position of the Commission or the staff
thereof applicable to the Offer. Notwithstanding the foregoing, (x) the Offer
may not, without the Company's written consent, be extended beyond September 30,
1999, and (y) the Offer may not, without the Company's prior written consent, be
extended pursuant to clause (i) of the immediately preceding sentence if the
failure to satisfy any condition of the Offer was caused by a material breach by
Parent or the Purchaser of any of their representations, warranties, covenants
or agreements set forth in the Merger Agreement. Notwithstanding any thing to
the contrary in the Merger Agreement, Parent and the Purchaser agree that if
immediately prior to any scheduled expiration date of the Offer, the Regulatory
Condition shall not have been satisfied, but at such scheduled expiration date
each of the other conditions set forth in Section 14--"Conditions of the Offer"
(other than the Minimum Condition) shall then be satisfied, at the request of
the Company, the Purchaser shall extend the Offer from time to time, subject to
the right of Parent, the Purchaser or the Company to terminate the Merger
Agreement pursuant to the terms thereof.
Pursuant to the terms of the Merger Agreement, the Company has approved of
and consented to the Offer and has represented that (a) its Board of Directors
(at a meeting duly called and held) has by the unanimous vote of the directors,
(i) has determined that each of the Offer and the Merger is (x) advisable and
(y) fair to, and in the best interests of, the holders of shares of capital
stock of the Company, including but not limited to the Holders, (ii) approved
the Offer and the Merger and approved and adopted the Merger Agreement, the
Stockholder Agreements and the transactions contemplated hereby and thereby in
accordance with the provisions of the DGCL, (iii) recommended acceptance of the
Offer, approval of the Merger and approval and adoption of the Merger Agreement
by the stockholders of the Company, (iv) approved the changes in the Company's
options and warrants and the Company's Stock Incentive Plans (as defined herein)
contemplated by the Merger Agreement, and (v) taken all other applicable action
necessary to render (x) Section 203 of the DGCL and any other applicable state
takeover statutes and (y) Article VIII of the Company's Amended and Restated
Certificate of Incorporation inapplicable to the Offer and the Merger; and (b)
Goldman Sachs has delivered to the Board of Directors of the Company its opinion
that the consideration to be received by the Holders, other than Parent and the
Purchaser, pursuant to the Offer and the Merger is fair to such holders of
Common Stock from a financial point of view, subject to the assumptions and
qualifications contained in such opinion.
THE MERGER. The Merger Agreement provides that, subject to the terms and
conditions thereof, and in accordance with the DGCL, the Purchaser shall be
merged with and into the Company on the later of the date the Certificate of
Merger is accepted for recording or such later time established by the
Certificate of Merger (such date, the "Effective Time"). The filing of the
Certificate of Merger shall be made on the closing date of the Merger or as soon
as practicable after the satisfaction or waiver of the conditions to the Merger.
Following the Merger, the separate corporate existence of the Purchaser shall
thereupon cease and the Company shall be the surviving corporation (the
"Surviving Corporation") and shall continue its corporate existence as a wholly
owned subsidiary of Parent and shall continue to be governed by the laws of the
State of Delaware.
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At the Effective Time, by virtue of the Merger and without any action on the
part of Parent, the Purchaser or the Company, each share of Common Stock then
issued and outstanding (other than (i) any shares of Common Stock which are held
by any subsidiary of the Company or in the treasury of the Company, or which are
held, directly or indirectly, by Parent or any direct or indirect subsidiary of
Parent (including the Purchaser), all of which shall be canceled and none of
which shall receive any payment with respect thereto and (ii) shares of Common
Stock, if any, held by stockholders who perfect their appraisal rights under
Delaware law) shall be canceled and converted into and represent the right to
receive an amount in cash, without interest, equal to the price paid for each
share of Common Stock pursuant to the Offer (the "Merger Consideration"). In
addition, at the Effective Time, each issued and outstanding share of the
capital stock of the Purchaser will be converted into and become one fully paid
and nonassessable share of common stock of the Surviving Corporation.
The Merger Agreement provides that in the event that the Purchaser shall
acquire in the aggregate at least 90 percent of the outstanding shares of Common
Stock, and 90 percent of the outstanding shares of each outstanding class of
Preference Shares, the Company, Parent and the Purchaser shall take all
necessary action to cause the Merger to become effective as soon as practicable
after the expiration of the Offer, without a meeting of the stockholders of the
Company, in accordance with Section 253 of the DGCL.
The Merger Agreement provides that the respective obligations of Parent and
the Purchaser, on the one hand, and the Company, on the other hand, to effect
the Merger are subject to the fulfillment, at or prior to the Effective Time, of
each of the following conditions: (i) to the extent required by applicable law,
the Merger Agreement and the Merger shall have been approved and adopted by the
holders of a majority of the outstanding shares of Common Stock; (ii) the HSR
Condition shall have been satisfied; (iii) (a) the PAMC Condition shall have
been satisfied and (b) the EC Condition shall have been satisfied; (iv) no
preliminary or permanent injunction or other order shall have been issued by any
court or by any governmental or regulatory agency, body or authority which
prohibits the consummation of the Offer or the Merger and the transactions
contemplated by the Merger Agreement and which is in effect at the Effective
Time; PROVIDED, HOWEVER, that, in the case of a decree, injunction or other
order, each of the parties shall have used reasonable best efforts to prevent
the entry of any such injunction or other order and to appeal as promptly as
possible any injunction, decree or other order that may be entered; (v) no
statute, rule, regulation, executive order, decree or order of any kind shall
have been enacted, entered, promulgated or enforced by any court or governmental
authority which prohibits the consummation of the Offer or the Merger or has the
effect of making the purchase of the Common Stock illegal; (vi) the Purchaser
shall have purchased shares of Common Stock pursuant to the Offer in a number
sufficient to satisfy the Minimum Condition; and (vii) the Purchaser shall have
purchased all of the outstanding Preference Shares from the owners thereof and
shall be the sole record and beneficial owner of all of the Company's issued and
outstanding Preference Shares; PROVIDED, HOWEVER, that Parent and the Purchaser
will not be entitled to assert the condition described in this clause (vii) if
Parent or the Purchaser shall have failed to purchase any Preference Shares in
breach of their obligations under the Preferred Stockholder Agreements.
CERTIFICATE OF INCORPORATION AND BYLAWS; DIRECTORS AND OFFICERS OF THE
SURVIVING CORPORATION. The Merger Agreement provides that, at the Effective
Time, the directors of the Purchaser immediately prior to the Effective Time
shall be the directors of the Surviving Corporation and the officers of the
Company immediately prior to the Effective Time shall be the officers of the
Surviving Corporation, in each case until their successors have been duly
elected or appointed and qualified or until their earlier death, resignation or
removal in accordance with the Surviving Corporation's Certificate of
Incorporation and By-Laws. In addition, the Certificate of Incorporation (as
amended to change the name of the Purchaser to "@ Entertainment, Inc.") and
By-Laws of the Purchaser, as in effect immediately prior to the Effective Time,
shall be the Certificate of Incorporation and By-Laws of the Surviving
Corporation until thereafter duly amended as provided therein or by applicable
law.
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COMPANY STOCKHOLDERS' MEETING. Pursuant to the Merger Agreement, promptly
following the purchase of shares of Common Stock pursuant to the Offer, if
required by the DGCL in order to consummate the Merger, the Company, acting
through its Board of Directors, shall, in accordance with applicable law, duly
call, give notice of, convene and hold a meeting of the holders of Common Stock
and Preference Shares (the "Company Stockholders' Meeting") for the purpose of
voting upon the Merger Agreement and the Merger. The Company has agreed that it
will use its reasonable best efforts to solicit from its stockholders proxies,
and shall take all other action necessary and advisable, to secure the vote of
stockholders required by applicable law and the Company's Amended and Restated
Certificate of Incorporation or By-Laws to obtain the approval for the Merger
Agreement.
The Company has agreed that, if stockholder approval of the Merger is
required by applicable law or by the Company's Amended and Restated Certificate
of Incorporation or By-Laws, as promptly as practicable, following Parent's
request, the Company will prepare and file a preliminary Proxy Statement with
the Commission and will use its reasonable best efforts to respond to the
comments of the Commission, if any, in connection therewith and to furnish all
information regarding the Company required in the definitive Proxy Statement
(including, without limitation, financial statements and supporting schedules
and certificates and reports of independent public accountants). Parent, the
Purchaser and the Company will cooperate with each other in the preparation of
the Proxy Statement. Without limiting the generality of the foregoing, each of
Parent and the Purchaser have agreed to furnish to the Company the information
relating to each of them required by the Exchange Act to be set forth in the
Proxy Statement. The Company has agreed that it will include in the Proxy
Statement the recommendation of its Board of Directors that holders of Common
Stock and Preference Shares approve and adopt the Merger Agreement and approve
the Merger. Parent will cause all shares of Common Stock and Preference Shares
owned by Parent and its subsidiaries (including the Purchaser) to be voted in
favor of the Merger Agreement and the Merger.
BOARD REPRESENTATION. The Merger Agreement provides that promptly upon the
Purchaser having acquired a majority of the outstanding shares of Common Stock,
the Purchaser shall be entitled to designate such number of directors on the
Board of Directors of the Company, rounded up to the next whole number, as will
give the Purchaser, subject to compliance with Section 14(f) of the Exchange
Act, representation on such Board of Directors equal to at least that number of
directors which equals the product of the total number of directors on the Board
of Directors (giving effect to the directors elected pursuant to this sentence)
multiplied by a fraction, the numerator of which shall be the number of shares
of Common Stock beneficially owned by the Purchaser and Parent and the
denominator of which shall be the number of shares of Common Stock then
outstanding, and the Company and its Board of Directors shall, at such time,
take any and all such action needed to cause the Purchaser's designees to be
appointed to the Company's Board of Directors (including using its reasonable
best efforts to cause directors to resign).
Subject to applicable law, the Company has agreed to take all action
requested by Parent which is reasonably necessary to effect any such election.
In furtherance thereof, the Company will increase the size of the Company's
Board of Directors (subject to the limitations set forth in the Company's
Amended and Restated Certificate of Incorporation and By-Laws), or use its
reasonable efforts to secure the resignation of directors, or both, as is
necessary to permit the Purchaser's designees to be elected to the Company's
Board of Directors. At the Effective Time, the Company, if so requested, will
use its reasonable efforts to cause persons designated by the Purchaser to
constitute the same percentage of each committee of such board, each board of
directors of each subsidiary and each committee of each such board (in each case
to the extent of the Company's ability to elect such persons and subject to any
applicable stock exchange regulations). Following the election or appointment of
the Purchaser's designees as described herein and prior to the Effective Time,
any amendment or termination of the Merger Agreement or the Company's Amended
and Restated Certificate of Incorporation or By-Laws, any termination of the
Merger Agreement by the Company, any extension by the Company of the time for
the performance of any of the obligations or other acts of Parent and the
Purchaser or waiver of any of the Company's rights under the
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Merger Agreement, and any other consent or action by the Board of Directors
under the Merger Agreement, will require the concurrence of a majority (which
shall be at least two) of the directors of the Company then in office who are
directors on June 2, 1999 and who voted to approve the Merger Agreement or are
designated by a majority of the directors of the Company who are directors on
June 2, 1999 and who voted to approve this Agreement.
INTERIM OPERATIONS. The Merger Agreement provides that except as otherwise
expressly contemplated thereby or as described in the Company's disclosure
statement (the "Company Disclosure Statement") delivered concurrently with the
delivery of the Merger Agreement, as required by any change in applicable law,
or as otherwise agreed by Parent in writing (which agreement shall not be
unreasonably withheld), during the period from the date of the Merger Agreement
to the Effective Time, (i) the Company will, and will cause each of its
subsidiaries to, conduct the Company's business in the ordinary course of
business consistent with past practice, and (ii) to the extent consistent with
the foregoing, the Company will, and will cause each of its subsidiaries to, use
their reasonable best efforts to preserve intact their current business
organizations, keep available the service of their current officers and
employees, and preserve their relationships with customers, suppliers and others
having business dealings with them (but without the obligation to pay any
additional compensation to any such officers, employees, customers, suppliers
and other persons), in each case with respect to the Company's current business,
with the objective that the goodwill and ongoing businesses of the Company shall
be materially unimpaired at the Effective Time. Without limiting the generality
of the foregoing, from and including the date of the Merger Agreement to the
Effective Time, the Company will not, and will not permit any of its
subsidiaries to, without the prior written consent of Parent (except to the
extent set forth in the Company Disclosure Statement): (a) except for (i)
Company Common Stock issued upon exercise of options or other rights outstanding
as of the date of the Merger Agreement under existing employee benefit plans in
accordance with the terms thereof, and (ii) securities issued in connection with
the conversion of convertible or exchangeable securities of the Company or its
subsidiaries outstanding as of June 2, 1999 in accordance with the terms of such
securities, issue, deliver, sell, dispose of, pledge or otherwise encumber, or
authorize or propose the issuance, sale, disposition or pledge or other
encumbrance (in each instance, whether through the issuance or granting of
options, warrants, commitments, subscriptions, rights to purchase or otherwise)
of (A) any additional shares of its capital stock of any class, or any Voting
Debt (as defined in the Merger Agreement), or any securities or rights
convertible into, exchangeable for, or evidencing the right to subscribe for any
shares of its capital stock or Voting Debt or any rights, warrants, options,
calls, commitments or any other agreements of any character to purchase or
acquire any shares of its capital stock or Voting Debt or any securities or
rights convertible into, exchangeable for, or evidencing the right to subscribe
for, any shares of its capital stock, or (B) any other securities in respect of,
in lieu of, or in substitution for, Company Common Stock outstanding on June 2,
1999; (b) redeem, purchase or otherwise acquire, or propose to redeem, purchase
or otherwise acquire, any of its outstanding securities, other than pursuant to
existing agreements requiring the Company to repurchase or acquire any shares of
its capital stock (provided that such repurchase or acquisition is in accordance
with the terms of such agreement as in effect on the date of the Merger
Agreement); (c) split, combine, subdivide or reclassify any shares of its
capital stock or declare, set aside for payment or pay any dividend, or make any
other actual, constructive or deemed distribution in respect of any shares of
its capital stock or otherwise make any payments to stockholders in their
capacity as such (other than dividends or distributions paid by any wholly owned
subsidiary of the Company, of the Company to the Company or another wholly owned
subsidiary of the Company); (d) (i) grant any increases in the compensation of
any of its directors, officers or employees, except for increases granted to
employees other than officers in the ordinary course of business consistent with
past practice, (ii) pay or award or agree to pay or award any pension,
retirement allowance, or other non-equity incentive awards, or other employee
benefit, not required by any of the Employee Plans (as defined in the Merger
Agreement), to any current or former director, officer or employees, whether
past or present, or to any other person or entity, except for payments or awards
to current employees other than officers that are in the ordinary course of
business, consistent with past practice, (iii) pay or award or agree to pay or
award
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any stock option or equity incentive awards, (iv) except as provided for in the
Company's business plan as provided by the Company to Parent and the Purchaser
(the "Business Plan"), enter into any new or amend any existing employment
agreement with any director, officer or employee except for employment
agreements with new employees entered into in the ordinary course of business
consistent with past practice and except for amendments in the ordinary course
of business, consistent with past practice, that do not materially increase
benefits or payments, (v) enter into any new, or amend any existing, severance
agreement with any current or former director, officer or employee, except for
agreements or amendments in the ordinary course of business, consistent with
past practice, that do not provide for material benefits, or (vi) become
obligated under any new Employee Plan which was not in existence on June 2,
1999, or amend any such Employee Plan in existence on June 2, 1999, except for
any such amendment in the ordinary course of business, consistent with past
practice, that does not provide for material additional benefits; (e) adopt a
plan of complete or partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization of the Company or any
subsidiary of the Company not constituting an inactive subsidiary (other than
the Merger, and other than any such merger, consolidation, restructuring,
recapitalization or other reorganization that is used to effect an acquisition
permitted pursuant to the immediately succeeding clause (f) and which does not
result in a change of control of the Company or change the Company's Common
Stock into a different number or kind of securities); (f) make any acquisition,
by means of stock or asset purchase, recapitalization, merger, consolidation or
otherwise, of (i) any direct or indirect ownership interest in or assets
comprising any business enterprise or operation or (ii) except in the ordinary
course and consistent with past practice, any other assets; PROVIDED, FURTHER,
that such acquisitions do not and would not prevent or materially delay the
consummation of the Merger; and PROVIDED, FURTHER, that the foregoing shall not
prevent the Company from exploring on a preliminary basis and conducting
diligence investigations (including having discussions with any potential
acquisition target) with respect to any potential acquisition that would require
Parent's consent under the Merger Agreement, for the purpose of determining the
desirability of such potential acquisition and developing the basis on which to
seek Parent's consent, so long as the Company does not submit any formal
proposal or indication of interest with respect to such an acquisition to such
acquisition target, or make any binding commitments with respect to such
potential acquisition, without obtaining Parent's consent; (g) (i) dispose of
any interest in any material business enterprise or operation of the Company,
(ii) make any other disposition of any other direct or indirect ownership
interest in any material assets of the Company (except for the replacement or
upgrade of assets, or disposition of unnecessary assets, in the ordinary course
and consistent with past practice), or (iii) except in the ordinary course and
consistent with past practice, dispose of any other assets of the Company; (h)
adopt any amendments to the Company's Amended and Restated Certificate of
Incorporation or the By-Laws or alter through merger, liquidation,
reorganization, restructuring or in any other fashion the corporate structure or
ownership of any subsidiary of the Company; (i) incur any indebtedness for
borrowed money or guarantee any indebtedness of any other person or entity or
make any loans, advances or capital contributions to, or investments in, any
other person or entity (other than to the Company or any wholly owned subsidiary
of the Company); (j) except as provided for in the Business Plan, engage in the
conduct of any business other than the Company's existing businesses; (k) enter
into any agreement or exercise any discretion providing for acceleration of
payment or performance as a result of a change of control of the Company or its
subsidiaries, except in connection with the Offer and the Merger; provided that
this clause (k) shall not restrict the Company's right to respond or take action
in response to any such acceleration so long as such action is permitted under
the terms of the Merger Agreement; (l) enter into any contracts, arrangements or
understandings requiring in the aggregate the purchase of equipment, materials,
supplies or services in excess of $2 million individually or $20 million in the
aggregate other than any such contracts, arrangements or understandings
providing for capital spending of the Company or its subsidiaries in accordance
with the Business Plan; (m) enter into or amend, modify, terminate or waive any
right under any agreement with any affiliates of the Company (other than its
subsidiaries), other than any of the foregoing as may be done in the ordinary
course of business and that (x) would not be reasonably be expected,
individually or in the aggregate, to have a material adverse effect on the
business, properties, assets, liabilities, operations, results of
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operations or condition (financial or otherwise) of the Company and its
subsidiaries, taken as a whole (a "Material Adverse Effect"), or (y) would be
reasonably likely to prevent or materially delay consummation of the
transactions contemplated by the Merger Agreement; (n) settle or compromise any
material litigation or material tax controversy, with respect to the Company or
its subsidiaries or waive, release or assign any material rights or claims with
respect to the Company or its subsidiaries, except in the ordinary course of
business consistent with past practice; (o) effect any material change in any of
its methods of accounting, except as may be required by law or generally
accepted accounting principles; (p) take any action, engage in any transaction
or enter into any agreement which would cause any of the representations or
warranties of the Company contained in the Merger Agreement that are subject to,
or qualified by, a "Material Adverse Effect", "material adverse change" or other
materiality qualification to be untrue as of the Effective Time, or any such
representations and warranties that are not so qualified to be untrue in any
respect which would have a Material Adverse Effect; (q) take any action,
including without limitation, the adoption of any shareholder rights plan or
amendments to the Certificate of Incorporation, which would, directly or
indirectly, restrict or impair the ability of Parent to vote, or otherwise to
exercise the rights and receive the benefits of a stockholder with respect to,
securities of the Company that may be acquired or controlled by Parent or the
Purchaser or permit any shareholder to acquire securities of the Company on a
basis not available to Parent in the event that Parent were to acquire
securities of the Company; or (r) authorize, recommend or propose (other than to
Parent), or announce an intention to do any of the foregoing, or enter into any
contract, agreement, commitment or arrangement to do any of the foregoing.
NO SOLICITATION. The Merger Agreement provides as follows:
(a) The Company and its Affiliates (as defined in the Merger Agreement) and
each of their respective officers, directors, employees, representatives,
consultants, investment bankers, attorneys, accountants and other agents shall
immediately cease any discussions or negotiations with any other parties that
may be ongoing with respect to any Acquisition Proposal (as defined herein).
Neither the Company nor any of its Affiliates shall, directly or indirectly,
take (and the Company shall not authorize or permit its or its Affiliates,
officers, directors, employees, representatives, consultants, investment
bankers, attorneys, accountants or other agents or affiliates, to so take) any
action to (i) encourage, solicit, initiate or facilitate the making of any
Acquisition Proposal, (including, without limitation, by taking any action that
would make Article VIII of the Company's Amended and Restated Certificate of
Incorporation or Section 203 of the DGCL inapplicable to an Acquisition
Proposal), (ii) enter into any agreement with respect to any Acquisition
Proposal or enter into any arrangement, understanding or agreement requiring it
to abandon, terminate or fail to consummate the Merger or any other transactions
contemplated by the Merger Agreement, or (iii) participate in any way in
discussions or negotiations with, or, furnish or disclose any information to,
any person or entity (other than Parent or the Purchaser) in connection with, or
take any other action to facilitate any inquiries or the making of any proposal
that constitutes, or may reasonably be expected to lead to, any Acquisition
Proposal; PROVIDED, HOWEVER, that the Company, in response to an unsolicited
Acquisition Proposal and in compliance with its obligations under paragraph (b)
below, may participate in discussions or negotiations with or furnish
information (pursuant to a confidentiality agreement with terms not more
favorable to such third party than the terms of the Confidentiality Agreement
described below) to any third party which makes an Acquisition Proposal if (i)
the Board of Directors reasonably determines (based upon the advice of an
independent, nationally recognized financial advisor) that such Acquisition
Proposal will lead to a Superior Proposal (as defined below) and (ii) the Board
of Directors believes (and has been so advised in writing by independent outside
nationally recognized legal counsel) that failing to take such action would
constitute a breach of its fiduciary duties. In addition, neither the Board of
Directors of the Company nor any committee thereof shall (A) withdraw or modify,
or propose to withdraw or modify, in a manner adverse to Parent or the Purchaser
the approval and recommendation of the Offer and the Merger Agreement or (B)
approve or recommend, or propose to approve or recommend, any Acquisition
Proposal; PROVIDED that the Company may recommend to its stockholders an
Acquisition Proposal and in connection therewith withdraw or modify its approval
or
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recommendation of the Offer or the Merger if (1) a third party makes a Superior
Proposal (as defined herein), and (2) (a) five (5) business days have elapsed
following delivery to Parent of a written notice of the determination by the
Board of Directors of the Company to take such action and during such five (5)
business day period the Company has fully co-operated with Parent including,
without limitation, informing Parent of the terms and conditions of such
Superior Proposal, and the identity of the person or entity making such Superior
Proposal, with the intent of enabling both parties to agree to a modification of
the terms and conditions of the Merger Agreement, and (b) at the end of such
five (5) business day period the Acquisition Proposal continues to constitute a
Superior Proposal.
"Acquisition Proposal" shall mean (i) any inquiry, proposal or offer from
any person or entity relating to any direct or indirect acquisition or purchase
of a substantial amount of assets of the Company or any of its subsidiaries or
of over 10% of any class of equity securities of the Company or any of its
subsidiaries, (ii) any tender offer or exchange offer that, if consummated,
would result in any person or entity beneficially owning 10% or more of any
class of equity securities of the Company or any of its subsidiaries, (iii) any
merger, consolidation, business combination, sale of substantially all the
assets, recapitalization, liquidation, dissolution or similar transaction
involving the Company or any of its subsidiaries, or (iv) any other transaction
the consummation of which could reasonably be expected to impede, interfere
with, prevent or materially delay the Offer or the Merger or which could
reasonably be expected to dilute materially the benefits to Parent of the
transactions contemplated hereby.
"Superior Proposal" shall mean a BONA FIDE proposal made by a third party to
acquire all of the shares of Common Stock pursuant to a tender offer, a merger
or a sale of all of the assets of the Company (w) on terms which a majority of
the members of the Board of Directors of the Company determines in their good
faith reasonable judgment (based on the advice of an independent outside
nationally recognized financial advisor (relating to financial matters) and
independent outside nationally recognized legal advisors (relating to legal
matters)) to be more favorable to the Company and its stockholders than the
transactions contemplated by the Merger Agreement, (x) for which financing is
then available (it being understood that financing evidenced by highly confident
letters and similar letters shall not be considered "available"), (y) which is
not subject to any financing or due diligence condition and (z) which an
independent nationally recognized financial advisor has advised the Board of
Directors is more favorable to the Company's stockholders from a financial point
of view than the transactions contemplated by the Merger Agreement, as proposed
to be modified by Parent in accordance with the proviso in the last sentence of
the first paragraph of this paragraph (a).
(b) From and after the date of the Merger Agreement, in addition to the
obligations of the Company set forth in paragraph (a), on the date of receipt
thereof, the Company shall advise Parent of any request for information or of
any Acquisition Proposal, or any inquiry, proposal, discussions or negotiation
with respect to any Acquisition Proposal, the terms and conditions of such
request, Acquisition Proposal, inquiry, proposal, discussion or negotiation and
the Company shall promptly provide to Parent copies of any written materials
received by the Company in connection with any of the foregoing, and the
identity of the person or entity making any such Acquisition Proposal or such
request, inquiry or proposal or with whom any discussion or negotiation is
taking place. The Company shall keep Parent fully informed of the status and
details (including amendments or proposed amendments) of any such request or
Acquisition Proposal and keep Parent fully informed as to the details of any
information requested of or provided by the Company and as to the details of all
discussions or negotiations with respect to any such request, takeover proposal
or inquiry. The Company shall promptly provide to Parent any non-public
information concerning the Company provided to any other person or entity in
connection with any Acquisition Proposal which was not previously provided to
Parent.
(c) Immediately following the execution of the Merger Agreement, the Company
shall request each person or entity which has prior to June 2, 1999 executed a
confidentiality agreement in connection with its consideration of acquiring the
Company or any portion thereof to return all confidential information furnished
prior to June 2, 1999 to such person or entity by or on behalf of the Company.
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DIRECTORS' AND OFFICERS' INDEMNIFICATION. The Merger Agreement provides
that, from and after the Effective Time, Parent and the Surviving Corporation
will jointly and severally indemnify, defend and hold harmless certain
individuals specified on the Company Disclosure Statement, and each of the
present and former officers and directors of the Company and any of its
subsidiaries, former subsidiaries and their predecessors, and any person who is
or was serving at the request of the Company as an officer, director or employee
or agent of another person or entity (collectively, the "Indemnified Parties"),
against all losses, expenses, claims, damages or liabilities arising out of
actions or omissions occurring on or prior to the Effective Time (including the
transactions contemplated by the Merger Agreement) to the fullest extent
permitted under applicable law (and shall also, subject to certain limitations,
advance expenses as incurred to the fullest extent permitted under applicable
law; PROVIDED that, the person to whom expenses are advanced provides an
undertaking reasonably satisfactory to the Company to repay such advances if it
is ultimately determined that such person is not entitled to indemnification);
PROVIDED, HOWEVER, that such indemnification shall be provided only to the
extent any directors' and officers' liability insurance policy of the Company or
its subsidiaries does not provide coverage and actual payment thereunder with
respect to the matters that would otherwise be subject to indemnification
hereunder (it being understood that Parent or the Surviving Corporation shall,
subject to certain limitations, advance expenses on a current basis as provided
in this paragraph notwithstanding such insurance coverage to the extent that
payments thereunder have not yet been made, in which case Parent or the
Surviving Corporation, as the case may be, shall be entitled to repayment of
such advances from the proceeds of such insurance coverage). Parent and
Surviving Corporation have agreed that all rights to indemnification, including
provisions relating to advances of expenses incurred in defense of any action,
suit or proceeding, whether civil, criminal, administrative or investigative
(each, a "Claim"), existing in favor of the Indemnified Parties as provided in
the Company's Amended and Restated Certificate of Incorporation or By-Laws or
pursuant to other agreements, or certificates of incorporation or by-laws or
other similar documents of any of the Company's subsidiaries, as in effect as of
the date of the Merger Agreement, with respect to matters occurring through the
Effective Time, shall survive the Merger and shall continue in full force and
effect for a period of not less than six years from the Effective Time;
PROVIDED, HOWEVER, that all rights to indemnification in respect of any Claim
asserted, made or commenced within such period shall continue until the final
disposition of such Claim.
The Merger Agreement also provides that the Surviving Corporation shall
maintain in effect for not less than six years after the Effective Time the
current policies of directors' and officers' liability insurance maintained by
the Company and the Company's subsidiaries with respect to matters occurring
prior to the Effective Time; provided, however, that in no event shall Parent be
required to expend in any one year an amount in excess of 150% of the annual
premiums currently paid by the Company for such insurance; PROVIDED, FURTHER,
however, that the Surviving Corporation may substitute therefor policies of at
least the same coverage containing terms and conditions which are no less
advantageous to the Indemnified Parties with an insurance company or companies,
the claims paying ability of which is substantially equivalent to the claims
paying ability of the insurance company or companies providing such insurance
coverage for directors and officers of Parent.
OPTIONS AND COMPANY WARRANTS. Prior to the date on which shares of Common
Stock are accepted for payment in the Offer, both the Board of Directors of the
Company (or, if appropriate, any committee thereof) and the Company will use
their reasonable best efforts to obtain the consent of all of the holders of
options to purchase Common Stock (the "Company Options") heretofore granted
under any stock option plans of the Company (the "Stock Plans") and the holders
of any outstanding warrants to purchase shares of the Common Stock of the
Company ("Company Warrants") to provide for the cancellation, of all the
outstanding Company Options and Company Warrants on the terms set forth in the
Merger Agreement.
Within three business days after the date on which shares of Common Stock
are accepted for payment pursuant to the Offer, each Company Option, whether or
not then vested or exercisable, and each
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Company Warrant, whether or not then vested or exercisable, shall, subject to
the receipt by the Company of any required consents from the holder of such
Company Options and Company Warrants pursuant to the immediately preceding
paragraph, no longer be exercisable for the purchase of shares of Common Stock
but shall entitle each holder thereof, in cancellation and settlement therefor,
to payments in cash (subject to any applicable withholding taxes, the "Cash
Payment") equal to the product of (x) the total number of shares of Common Stock
subject to such Company Option or Company Warrant, as the case may be, as to
which such Company Option or Company Warrant could have been exercisable
(assuming such Company Option or Company Warrant was fully vested) and (y) the
excess, if any, of the price per share of Common Stock paid pursuant to the
Offer over the exercise price per share of Common Stock subject to such Company
Option or Company Warrant. The Company will pay each such Cash Payment to be
paid to each holder of an outstanding Company Option or Company Warrant, as the
case may be, within six business days of the date on which shares of Common
Stock are accepted for payment pursuant to the Offer; PROVIDED that such holder
has delivered the consent described in the immediately preceding paragraph to
the Company. Parent has agreed, pursuant to the Merger Agreement, to provide, or
cause to be provided, to the Company on a timely basis all funds necessary to
pay such Cash Payments.
To the extent that Company Options and Company Warrants were not canceled in
accordance with the immediately preceding paragraph, prior to the Effective
Time, each of the Board of Directors of the Company (or, if appropriate, any
committee thereof) and the Company shall use its best efforts to obtain the
consent of all of the holders of Company Options heretofore granted under any
Stock Plans to provide for the cancellation, effective at the Effective Time, of
all the outstanding Company Options, as follows: immediately prior to the
Effective Time, each Company Option, whether or not then vested or exercisable,
and each Company Warrant, whether or not then vested or exercisable, shall no
longer be exercisable for the purchase of shares of Common Stock but shall
entitle each holder thereof, in cancellation and settlement therefor, to
payments in cash, subject to any applicable withholding taxes, of the Cash
Payment, at the Effective Time, each such Cash Payment to be paid to each holder
of an outstanding Company Option or Company Warrant, as the case may be, at the
Effective Time. The Company will ensure that any then-outstanding stock
appreciation rights or limited stock appreciation rights shall be canceled as of
immediately prior to the Effective Time without any payment therefor. As
provided in the Merger Agreement, the Stock Plans and any other plan, program or
arrangement providing for the issuance or grant of any other interest in respect
of the capital stock of the Company or any subsidiary (collectively with the
Stock Plans, referred to as the "Stock Incentive Plans") shall terminate as of
the Effective Time. The Merger Agreement provides that the Company will ensure
that neither the Company nor any of its subsidiaries is or will be bound by any
Company Options, other options, Company Warrants, other warrants, rights or
agreements which would entitle any Person, other than Parent or its Affiliates
(including Purchaser), to own any capital stock of the Surviving Corporation or
any of its subsidiaries or to receive any payment in respect thereof. The
Company will ensure that after the Effective Time, the only rights of the
holders of Company Options to purchase shares of Common Stock or Company
Warrants in respect of such Company Options and Company Warrants will be to
receive the Cash Payment in cancellation and settlement thereof.
CERTAIN EMPLOYEE BENEFITS. Pursuant to the Merger Agreement, from and after
the Effective Time, Parent will cause the Surviving Corporation to honor, in
accordance with their terms, the employment contracts, severance agreements and
similar agreements with officers and employees of the Company and its
subsidiaries disclosed to Parent in the Company Disclosure Statement (the
"Executive Agreements"); PROVIDED, HOWEVER, that nothing in the Merger Agreement
shall preclude any change in any Executive Agreement effective on a prospective
basis that is permitted pursuant to the terms of the Merger Agreement or the
applicable Employee Plan. Company performance in respect of any performance or
other programs shall be calculated without taking into account any expenses or
costs directly associated with or arising as a result of the transactions
contemplated by the Merger Agreement or any non-recurring charges that would not
reasonably be expected to have been incurred had the transactions contemplated
by the Merger Agreement not occurred. With respect to employees of the Company
and its subsidiaries,
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Parent will assume the obligations of the Company and its subsidiaries under the
Employee Plans as in effect immediately prior to the Effective Time and will
provide employee benefit plans with aggregate employee benefits to Company
employees that are no less favorable than the aggregate benefits provided to
them immediately prior to the Effective Time pursuant to the plans set forth in
the Company Disclosure Statement; PROVIDED that Parent at its sole option may
provide employee benefits to Company employees which, in the aggregate, are no
less favorable than those applicable to similarly situated employees of Parent.
With respect to any plans established by Parent, to the extent a Company
employee becomes eligible to participate in any such plans, Parent shall grant
to such Company employee from and after the Effective Time, credit for all
service with the Company and its affiliates and predecessors (and any other
service credited by the Company under similar Employee Plans) prior to the
Effective Time for eligibility to participate, benefit accrual and vesting
purposes. To the extent Parent benefit plans provide medical or dental welfare
benefits, such plans shall waive any preexisting conditions and actively at-work
exclusions with respect to Company employees (but only to the extent such
Company employees were provided coverage under the Employee Plans) and shall
provide that any expenses incurred on or before the Effective Time in the
applicable plan year by or on behalf of any Company employees shall be taken
into account under the Parent benefit plans for the purposes of satisfying
applicable deductible, co-insurance and maximum out-of- pocket provisions for
such Company employees.
AGREEMENT TO USE REASONABLE BEST EFFORTS. Pursuant to the Merger Agreement
and subject to the terms and conditions thereof, the Company and Parent shall,
and shall use their reasonable best efforts to cause their respective
subsidiaries, as applicable, to: (i) promptly make all filings and seek to
obtain all authorizations (including, without limitation, all filings required
under the HSR Act, the applicable merger regulations of the European Community
and all applicable Polish competition statutes) required under all applicable
laws with respect to the Merger and the other transactions contemplated by the
Merger Agreement and will reasonably consult and cooperate with each other with
respect thereto; (ii) not take any action (including effecting or agreeing to
effect or announcing an intention or proposal to effect, any acquisition,
business combination or other transaction except as previously disclosed to
Parent in the Company Disclosure Statement) which would impair the ability of
the parties to consummate the Merger; and (iii) use their reasonable best
efforts to promptly (x) take, or cause to be taken, all other actions and (y)
do, or cause to be done, all other things reasonably necessary, proper or
appropriate to satisfy the conditions set forth in Section 14--"Conditions of
the Offer" and the conditions precedent to the obligations of Parent, the
Purchaser and the Company to effect the Merger (as further described in "--The
Merger") (unless waived) and to consummate and make effective the transactions
contemplated by the Merger Agreement on the terms and conditions set forth in
the Merger Agreement (including seeking to remove promptly any injunction or
other legal barrier that may prevent such consummation); PROVIDED, HOWEVER, that
no loan agreement or contract for borrowed money shall be repaid except as
currently required by its terms, in whole or in part, and, subject to the terms
of the Merger Agreement, no contract shall be amended to increase the amount
payable thereunder or otherwise to be more burdensome to the Company or any of
its subsidiaries in order to obtain any such consent, approval or authorization
without first obtaining the written approval of Parent and the Purchaser.
REPRESENTATIONS AND WARRANTIES. In the Merger Agreement, the Company has
made customary representations and warranties to Parent and the Purchaser with
respect to, among other things, its organization, corporate authority, capital
structure, financial statements, public filings, litigation, compliance with
applicable laws, consent and approvals, employee benefit plans, brokers' or
finders' fees, state takeover statutes, voting requirements, taxes, intellectual
property, Year 2000 compliance and the absence of any material adverse changes
in the Company since December 31, 1998.
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TERMINATION. The Merger Agreement may be terminated and the Merger may be
abandoned at any time prior to the Effective Time, whether before or after any
approval by the stockholders of the Company:
(a) by mutual written consent of Parent and the Company; or
(b) by Parent or the Company if:
(i) the Purchaser shall not have accepted for payment and paid for shares
of Common Stock pursuant to the Offer by September 30, 1999 (the
"Termination Date"); PROVIDED THAT the right to terminate the Merger
Agreement under this clause shall not be available to any party whose
failure to fulfill any obligation under the Merger Agreement has been
the cause of or resulted in the failure of the Effective Time to
occur on or before the Termination Date; or
(ii) any court of competent jurisdiction or Governmental Body shall have
issued an order, decree or ruling or taken any other action
permanently restraining, enjoining or otherwise prohibiting the
acceptance for payment of, or payment for, shares of Common Stock
pursuant to the Offer or the payment for shares of Common Stock or
the making of any Cash Payment pursuant to the Merger and such order,
decree, ruling or other action shall have become final and
nonappealable.
(c) by the Company if:
(i) Parent or the Purchaser breaches or fails in any material respect to
perform or comply with its covenants and agreements contained in the
Merger Agreement or breaches its representations and warranties in
any material respect and such breach cannot or has not been cured
within fifteen (15) days after the giving of written notice of such
breach to the Parent and the Purchaser, other than any breach or
breaches which is or are not reasonably likely to affect adversely
Parent's or the Purchaser's ability to complete the Offer or the
Merger; or
(ii) Parent or the Purchaser shall have (A) failed to commence the Offer
within five (5) business days following the date of the Merger
Agreement, (B) terminated the Offer in violation of its terms or the
Merger Agreement; or (C) failed to pay for shares of Common Stock in
accordance with the terms of the Offer and, in any event, on or prior
to the Termination Date, unless, in the case of (A), (B) or (C), such
failure shall have been caused by the failure of the Company to
satisfy the conditions set forth in clauses (v)(e) or (v)(f) of
Section 14-- "Conditions of the Offer".
(d) by Parent or the Purchaser if:
(i) the Board of Directors of the Company shall have withdrawn or
modified its approval or recommendation of the Merger Agreement, the
Offer or the Merger in a manner adverse to Parent or the Purchaser;
(ii) the Offer is terminated or expires in accordance with its terms
without the Purchaser having purchased any Common Stock thereunder
due to an occurrence which would result in a failure to satisfy any
one or more of the conditions set forth in Section 14--"Conditions of
the Offer", unless any such failure shall have been caused by or
resulted from the failure of Parent or the Purchaser to perform in
any material respect any covenant or agreement of either of them
contained in the Merger Agreement or the material breach by Parent or
the Purchaser of any representation or warranty of either of them
contained in the Merger Agreement;
(iii) in the event of a breach by the Company of any representation,
warranty, covenant or agreement contained in the Merger Agreement
which (A) would give rise to the failure of a condition set forth in
clause (v)(e) or (v)(f) of Section 14--"Conditions of the Offer",
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(B) cannot or has not been cured prior to the earlier of (x) fifteen
(15) days after the giving of written notice of such breach to the
Company and (y) two (2) business days prior to the date on which the
Offer expires and (C) has not been waived by Parent pursuant to the
provisions of the Merger Agreement;
(iv) any condition contained in Section 14--"Conditions of the Offer"
shall not have been satisfied by the expiration date of the Offer and
on or prior to such date it shall have been publicly disclosed, or
Parent shall have otherwise learned, that beneficial ownership
(determined for the purposes of this clause (iv) as set forth in Rule
13d-3 promulgated under the Exchange Act) of 30% or more of the
Common Stock has been acquired by any person, entity or group (as
defined in Section 13(d)(3) under the Exchange Act); or
(v) any Stockholder Agreement shall have ceased to be in full force and
effect or any party to any such agreement (other than Parent or the
Purchaser) shall materially breach or repudiate any such agreement.
The Merger Agreement provides that, in the event of termination of the
Merger Agreement and the abandonment of the Merger pursuant to the terms of the
Merger Agreement, no party to the Merger Agreement (or any such party's
directors and officers) shall have any liability or further obligation to any
other party to the Merger Agreement, except with respect to the provisions
described under "--Directors' and Officers' Indemnification" and "--Payment of
Certain Fees and Expenses Upon Termination."
PAYMENT OF CERTAIN FEES AND EXPENSES UPON TERMINATION.
Except as provided in the two next succeeding paragraphs, all costs and
expenses incurred in connection with the Merger Agreement and the transactions
contemplated thereby shall be paid by the party incurring such costs and
expenses, except as expressly set forth in the Merger Agreement.
If the Merger Agreement is terminated (i) by Parent in accordance with
paragraph (d)(ii) or (d)(iii) under "--Termination" by reason of the occurrence
of any event not resulting from the willful action or willful omission or gross
negligence of the Company or any of its subsidiaries and which is specified in
clause (v)(e) of Section 14--"Conditions of the Offer", then the Company shall
reimburse Parent in immediately available funds for the reasonable documented
expenses of Parent and the Purchaser incurred in connection with the
transactions contemplated by the Merger Agreement (including, without
limitation, printing fees, filing fees and fees and expenses of its legal and
financial advisors and all fees and expenses payable to any financing sources)
not to exceed $8,000,000, such payment to be made by the Company not later than
the second business day after receipt by the Company of documentation evidencing
such expenses.
If the Merger Agreement is terminated (i) by Parent in accordance with
paragraph (d)(ii) under "--Termination" by reason of the occurrence of any event
specified in clauses (v)(f) or (g) of Section 14-- "Conditions of the Offer" or
any event specified in clause (v)(e) of Section 14--"Conditions of the Offer"
and resulting from willful action or willful omission or gross negligence of the
Company or any of its subsidiaries; (ii) by Parent in accordance with paragraph
(d)(i) or (d)(iii) under "--Termination" (but, in the case of paragraph (d)(iii)
under "--Termination", only to the extent such event results from the willful
act or willful omission or gross negligence of the Company or any of its
subsidiaries); or (iii) by Parent pursuant to paragraph (d)(iv), if within
twelve (12) months of the date of such termination the Company enters into a
definitive agreement for a transaction in respect of an Acquisition Proposal
with any person or entity other than Parent or its affiliates, the Company shall
pay to Parent, on the business day next succeeding the date of termination (or
in the case of a termination pursuant to clause (iii) of this paragraph, the
date on which such definitive agreement is entered into), by wire transfer in
immediately available funds an amount equal to $32,000,000.
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STOCKHOLDER AGREEMENTS
THE FOLLOWING IS A SUMMARY OF THE MATERIAL TERMS OF THE COMMON STOCKHOLDER
AGREEMENT AND THE PREFERRED STOCKHOLDER AGREEMENT. THE SUMMARY IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO THE RELEVANT STOCKHOLDER AGREEMENTS, EACH OF WHICH
IS INCORPORATED HEREIN BY REFERENCE AND COPIES OF THE FORMS OF WHICH HAVE BEEN
FILED WITH THE COMMISSION AS AN EXHIBIT TO THE SCHEDULE 14D-1. THE STOCKHOLDER
AGREEMENTS MAY BE INSPECTED AT, AND COPIES MAY BE OBTAINED FROM, THE SAME PLACES
AND IN THE MANNER SET FORTH IN SECTION 7--"CERTAIN INFORMATION CONCERNING THE
COMPANY".
COMMON STOCKHOLDER AGREEMENTS.
Parent and the Purchaser have entered into the Common Stockholder Agreements
with Samuel Chisolm, David Chance, Robert E. Fowler III, certain affiliates of
Advent International Group and the Chase Group and Morgan Grenfell who are the
record and beneficial owners of, in the aggregate, 16,175,431 shares of Common
Stock, warrants exercisable for 5,500,000 shares of Common Stock and options to
purchase 2,286,000 shares of Common Stock (representing approximately 48.4% of
the outstanding Common Stock and approximately 51.5% of the Common Stock on a
fully-diluted basis).
AGREEMENT TO TENDER COMMON STOCK. Pursuant to each Common Stockholder
Agreement, each Stockholder has agreed to validly tender (and not to withdraw)
pursuant to and in accordance with the terms of the Offer, in a timely manner
for acceptance by the Purchaser in the Offer, all of such Stockholder's Option
Securities which constitute shares of Common Stock. The Common Stockholder
Agreement provides that each Stockholder shall be entitled to receive the
highest price per share of Common Stock paid by the Purchaser pursuant to the
Offer for the shares of Common Stock so tendered and, additionally, provides
that the price per share of Common Stock paid in the Offer shall not be less
than $19.00, payable in cash.
OPTION TO PURCHASE COMMON STOCK; CERTAIN PURCHASE OBLIGATIONS. Each
Stockholder has granted to the Purchaser (x) an irrevocable option (the "Stock
Option") to purchase all shares of Common Stock constituting Option Securities
owned by such Stockholder at a purchase price per share equal to $19.00, payable
in cash, and (y) an irrevocable option (the "Securities Option" and, together
with the Stock Option, the "Option") to purchase the Option Securities (other
than Option Securities constituting shares of Common Stock) at a price per
Option Security equal to the $19.00 LESS the exercise price of such Option
Security, payable in cash, in each case until the termination date of the
applicable Common Stockholder Agreement. Until such termination date, if (i) the
Offer is terminated, abandoned or withdrawn by Parent or the Purchaser (whether
due to the failure of any of the conditions thereto or otherwise), (ii) the
Offer is consummated but the Stockholder has not validly tendered into the Offer
such Stockholder's Option Securities constituting shares of Common Stock or
(iii) the Merger Agreement is terminated in accordance with its terms, the
Option shall, in any such case, become exercisable, in whole but not in part,
upon the first to occur of any such event and remain exercisable, in whole but
not in part, until the date which is 90 days after the date of the occurrence of
such event, but shall not be exercisable in each case unless: (x) all waiting
periods under the HSR Act, required for the purchase of Option Securities upon
the exercise of the Option shall have expired or been waived and all other
necessary governmental consents required for the Purchaser to purchase Option
Securities upon the exercise of the Option, including, but not limited to, all
necessary approvals of the Polish Anti-Monopoly Commission, and (y) there shall
not then be in effect any preliminary or final injunction or other order issued
by any court or governmental, administrative or regulatory agency or authority
prohibiting the exercise of the Option pursuant to the applicable Common
Stockholder Agreement. Provided that the applicable Common Stockholder Agreement
has not been terminated, in the event that the Option is not exercisable because
the circumstances described in clauses (x) and (y) have not occurred, then the
Option shall be exercisable for the 90 day period commencing on the date that
the circumstances set forth in clauses (x) and (y) have occurred.
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In the event that the Purchaser shall have purchased shares of Common Stock
in the Offer in an amount necessary to satisfy the Minimum Condition in
accordance with the terms of the Merger Agreement, the Purchaser shall
thereafter purchase all of the Option Securities (other than shares of Common
Stock) then held by the Stockholders no later than the date which is the third
business day after the date of such consummation, at a purchase price per Option
Security equal to the price paid per share of Common Stock in the Offer, LESS
the exercise price of such Option Security.
CERTAIN COVENANTS. Pursuant to the Common Stockholder Agreements, each
Stockholder has agreed that during the period commencing on June 2, 1999, and
continuing until the first to occur of (i) the Effective Time, (ii) the last
date the Option is exercisable as set forth under the heading "--Option to
Purchase Common Stock; Certain Purchase Obligations" and (iii) the termination
date of the applicable Common Stockholder Agreement, at any meeting of the
holders of shares of Common Stock, however called, or in connection with any
written consent of the holders of shares of Common Stock, such Stockholder shall
vote (or cause to be voted) the shares of Common Stock (if any) owned by such
Stockholder whether issued, heretofore owned or hereafter acquired, (i) in favor
of the Merger, the execution and delivery by the Company of the Merger Agreement
and the approval of the terms thereof and each of the other actions contemplated
by the Merger Agreement and the applicable Common Stockholder Agreement and any
actions required in furtherance thereof; (ii) against any action or agreement
that would result in a breach in any respect of any covenant, representation or
warranty or any other obligation or agreement of the Company under the Merger
Agreement; and (iii) except as otherwise agreed to in writing in advance by
Parent, against the following actions (other than the Merger and the
transactions contemplated by the Merger Agreement): (A) any extraordinary
corporate transaction, such as a merger, consolidation or other business
combination involving the Company or its subsidiaries; (B) a sale, lease or
transfer of a material amount of assets of the Company or its subsidiaries, or a
reorganization, recapitalization, dissolution or liquidation of the Company or
its subsidiaries; (C) (1) any change in a majority of the persons who constitute
the Board of Directors of the Company; (2) any change in the present
capitalization of the Company or any amendment of the Company's Amended and
Restated Certificate of Incorporation or By-laws; (3) any other material change
in the Company's corporate structure or business; or (4) any other action
involving the Company or its subsidiaries which is intended, or could reasonably
be expected, to impede, interfere with, delay, postpone, or materially adversely
affect the Merger and the transactions contemplated by the applicable Common
Stockholder Agreement and the Merger Agreement. Each Stockholder has also agreed
not to enter into any agreement or understanding with any person or entity the
effect of which would be to violate the provisions and agreements contained in
this paragraph.
Each Stockholder has also agreed as follows:
(a) Beginning on June 2, 1999, and ending on the last date the Option is
exercisable as set forth under the heading "--Option to Purchase Common
Stock; Certain Purchase Obligations", such Stockholder shall not, in its
capacity as such, directly or indirectly, initiate, solicit (including by
way of furnishing information), encourage or respond to or take any other
action knowingly to facilitate, any inquiries or the making of any proposal
by any person or entity (other than Parent or any affiliate of Parent) with
respect to the Company that constitutes or reasonably may be expected to
lead to, an Acquisition Proposal (as defined under the heading "--Merger
Agreement--No Solicitation"), or enter into or maintain or continue
discussions or negotiate with any person or entity in furtherance of such
inquiries or to obtain any Acquisition Proposal, or agree to or endorse any
Acquisition Proposal, or authorize or permit any person or entity acting on
behalf of such Stockholder to do any of the foregoing. If a Stockholder
receives any inquiry or proposal regarding any Acquisition Proposal, such
Stockholder shall promptly inform Parent of that inquiry or proposal and the
details thereof.
(b) Beginning on June 2, 1999, and ending on the last date the Stock
Option is exercisable as set forth under the heading "--Option to Purchase
Common Stock; Certain Purchase Obligations",
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except as expressly contemplated by the applicable Common Stockholder
Agreement, such Stockholder shall not (i) directly or indirectly, offer for
sale, sell, transfer, tender, pledge, encumber, assign or otherwise dispose
of, or enter into any contract, option or other arrangement or understanding
with respect to or consent to the offer for sale, transfer, tender, pledge,
encumbrance, assignment or other disposition of, any or all of such
Stockholder's Option Securities or any interest therein; PROVIDED that a
Stockholder may transfer any Option Securities to any affiliate of such
Stockholder; PROVIDED, FURTHER, that such transferee shall have become a
party to the applicable Common Stockholder Agreement (or an agreement
identical to such agreement) and shall be deemed to make all representations
and warranties set forth in the applicable Common Stockholder Agreement on
the date of the transfer of such Option Securities; (ii) grant any proxies
or powers of attorney (except for powers of attorney granted to affiliates
of such Stockholder solely for administrative purposes and which require the
holder thereof to vote any and all shares of Common Stock subject to such
powers in accordance with the applicable Common Stockholder Agreement),
deposit any Option Securities into a voting trust or enter into a voting
agreement with respect to any Option Securities; or (iii) take any action
that would make any representation or warranty of such Stockholder contained
in the applicable Common Stockholder Agreement untrue or incorrect or have
the effect of preventing such Stockholder from performing the Stockholder's
obligations under the applicable Common Stockholder Agreement.
(c) Such Stockholder irrevocably waives any rights of appraisal or
rights to dissent from the Merger that such Stockholder may have.
(d) Such Stockholder shall not request that the Company register the
transfer (book-entry or otherwise) of any Certificate or uncertificated
interest representing any of such Stockholder's Option Securities, unless
such transfer is made in compliance with the applicable Common Stockholder
Agreement.
REPRESENTATIONS AND WARRANTIES. In the Common Stockholder Agreements, each
Stockholder has made customary representations and warranties to Parent with
respect to, among other things, ownership of, and capacity with respect to the
Option Securities subject to the Common Stockholder Agreement, legal capacity to
enter into the Common Stockholder Agreement, absence of conflicts or of
violations of laws and absence of liens in respect of the securities subject to
such agreements.
TERMINATION. Pursuant to the Common Stockholder Agreements, the obligations
of the Stockholder under each such agreement terminate upon the fifth day after
the earlier of (i) the expiration of the 90 day exercise period described under
"--Option to Purchase Common Stock; Certain Purchase Obligations", (ii) at the
Stockholder's option, upon the valid termination of the Merger Agreement by the
Company pursuant to the conditions described in paragraph (c) under the heading
"--Merger Agreement-- Termination" or (iii) the date which is 180 days after the
date of the Common Stockholder Agreement.
PREFERRED STOCKHOLDER AGREEMENTS.
Parent and the Purchaser have entered into the Preferred Stockholder
Agreements with certain members of the Chase Group and Morgan Grenfell who are
the holders of all of the outstanding Preference Shares.
OPTION TO PURCHASE PREFERENCE SHARES; CERTAIN PURCHASE OBLIGATIONS. Each
Preferred Stockholder has granted to the Purchaser (x) an irrevocable option
(the "Preferred Stock Option") to purchase all Preference Shares owned by such
Preferred Stockholder at a purchase price per Preference Share equal to the
liquidation preference of such Preference Share PLUS all accrued and unpaid
dividends thereon on the date of purchase, payable in cash, until the
termination date of the applicable Preferred Stockholder Agreement. Until such
termination date, if (i) the Offer is terminated, abandoned or withdrawn by
Parent or the Purchaser (whether due to the failure of any of the conditions
thereto or otherwise), (ii) the Offer is
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consummated but the Purchaser has not accepted for payment and paid for shares
of Common Stock, or (iii) the Merger Agreement is terminated in accordance with
its terms, the Preferred Stock Option shall, in any such case, become
exercisable, in whole but not in part, upon the first to occur of any such event
and remain exercisable, in whole but not in part, until the date which is 90
days after the date of the occurrence of such event, but shall not be
exercisable in each case unless: (x) all waiting periods under the HSR Act,
required for the purchase of Preference Shares upon the exercise of the
Preferred Stock Option, shall have expired or been waived and all other
necessary governmental consents required for the Purchaser to purchase
Preference Shares upon the exercise of the Preferred Stock Option, including,
but not limited to, all necessary approvals of the Polish Anti-Monopoly
Commission, and (y) there shall not then be in effect any preliminary or final
injunction or other order issued by any court or governmental, administrative or
regulatory agency or authority prohibiting the exercise of the Preferred Stock
Option pursuant to the applicable Preferred Stockholder Agreement. Provided that
the applicable Preferred Stockholder Agreement has not been terminated, in the
event that the Preferred Stock Option is not exercisable because the
circumstances described in clauses (x) and (y) have not occurred, then the
Preferred Stock Option shall be exercisable for the 90 day period commencing on
the date that the circumstances set forth in clauses (x) and (y) have occurred.
In the event that the Purchaser shall have purchased shares of Common Stock
in the Offer in an amount necessary to satisfy the Minimum Condition in
accordance with the terms of the Merger Agreement, the Purchaser shall
thereafter purchase all of the Preference Shares held by the Stockholders no
later than the date which is the third business day after the date of such
consummation, at a purchase price per Preference Share equal to the liquidation
preference of such Preference Share PLUS all accrued and unpaid dividends
thereon on the date of purchase, payable in cash.
CERTAIN COVENANTS. Pursuant to the Preferred Stockholder Agreements, each
Stockholder has agreed that during the period commencing on June 2, 1999, and
continuing until the first to occur of (i) the Effective Time, (ii) the last
date the Option is exercisable as set forth under the heading "--Option to
Purchase Preference Shares; Certain Purchase Obligations" and (iii) the
termination date of the applicable Preferred Stockholder Agreement, at any
meeting of the holders of Preference Shares (or of the Holders, to the extent
the holders of Preference Shares are entitled to vote with the Holders, whether
as a single class or otherwise) however called, or in connection with any
written consent of the holders of Preference Shares, such Preferred Stockholder
shall vote (or cause to be voted) the Preference Shares owned by such Preferred
Stockholder whether issued, heretofore owned or hereafter acquired, (i) in favor
of the Merger, the execution and delivery by the Company of the Merger Agreement
and the approval of the terms thereof and each of the other actions contemplated
by the Merger Agreement and the applicable Preferred Stockholder Agreement and
any actions required in furtherance thereof; (ii) against any action or
agreement that would result in a breach in any respect of any covenant,
representation or warranty or any other obligation or agreement of the Company
under the Merger Agreement; and (iii) except as otherwise agreed to in writing
in advance by Parent, against the following actions (other than the Merger and
the transactions contemplated by the Merger Agreement): (A) any extraordinary
corporate transaction, such as a merger, consolidation or other business
combination involving the Company or its subsidiaries; (B) a sale, lease or
transfer of a material amount of assets of the Company or its subsidiaries, or a
reorganization, recapitalization, dissolution or liquidation of the Company or
its subsidiaries; (C) (1) any change in a majority of the persons who constitute
the Board of Directors of the Company; (2) any change in the present
capitalization of the Company or any amendment of the Company's Amended and
Restated Certificate of Incorporation or By-Laws; (3) any other material change
in the Company's corporate structure or business; or (4) any other action
involving the Company or its subsidiaries which is intended, or could reasonably
be expected, to impede, interfere with, delay, postpone, or materially adversely
affect the Merger and the transactions contemplated by the applicable Preferred
Stockholder Agreement and the Merger Agreement. Each Preferred Stockholder has
also agreed not to enter into any agreement or understanding with any person or
entity the effect of which would be to violate the provisions and agreements
contained in this paragraph.
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Each Preferred Stockholder has also agreed as follows:
(a) Beginning on June 2, 1999, and ending on the last date the Preferred
Stock Option is exercisable as set forth under the heading "--Option to
Purchase Preference Shares; Certain Purchase Obligations", such Preferred
Stockholder shall not, in its capacity as such, directly or indirectly,
initiate, solicit (including by way of furnishing information), encourage or
respond to or take any other action knowingly to facilitate, any inquiries
or the making of any proposal by any person or entity (other than Parent or
any affiliate of Parent) with respect to the Company that constitutes or
reasonably may be expected to lead to, an Acquisition Proposal (as defined
under the heading "--Merger Agreement--No Solicitation"), or enter into or
maintain or continue discussions or negotiate with any person or entity in
furtherance of such inquiries or to obtain any Acquisition Proposal, or
agree to or endorse any Acquisition Proposal, or authorize or permit any
person or entity acting on behalf of such Preferred Stockholder to do any of
the foregoing. If a Preferred Stockholder receives any inquiry or proposal
regarding any Acquisition Proposal, such Preferred Stockholder shall
promptly inform Parent of that inquiry or proposal and the details thereof.
(b) Beginning on June 2, 1999, and ending on the last date the Preferred
Stock Option is exercisable as set forth under the heading "--Option to
Purchase Preference Shares; Certain Purchase Obligations", except as
expressly contemplated by the applicable Preferred Stockholder Agreement,
such Preferred Stockholder shall not (i) directly or indirectly, offer for
sale, sell, transfer, tender, pledge, encumber, assign or otherwise dispose
of, or enter into any contract, option or other arrangement or understanding
with respect to or consent to the offer for sale, transfer, tender, pledge,
encumbrance, assignment or other disposition of, any or all of such
Stockholder's Preference Shares or any interest therein; PROVIDED that a
Preferred Stockholder may transfer any Preference Shares to any affiliate of
such Preferred Stockholder; PROVIDED, FURTHER, that such transferee shall
have become a party to the applicable Preferred Stockholder Agreement (or an
agreement identical to such agreement) and shall be deemed to make all
representations and warranties set forth in the applicable Preferred
Stockholder Agreement on the date of the transfer of such Preference Shares;
(ii) grant any proxies or powers of attorney (except for powers of attorney
granted to affiliates of such Preferred Stockholder solely for
administrative purposes and which require the holder thereof to vote any and
all Preference Shares subject to such powers in accordance with the
applicable Preferred Stockholder Agreement), deposit any Preference Shares
into a voting trust or enter into a voting agreement with respect to any
Preference Shares; or (iii) take any action that would make any
representation or warranty of such Preferred Stockholder contained in the
applicable Preferred Stockholder Agreement untrue or incorrect or have the
effect of preventing such Preferred Stockholder from performing such
Preferred Stockholder's obligations under the applicable Preferred
Stockholder Agreement.
(c) Such Preferred Stockholder irrevocably waives any rights of
appraisal or rights to dissent from the Merger that such Preferred
Stockholder may have.
(d) Such Preferred Stockholder shall not request that the Company
register the transfer (book-entry or otherwise) of any Certificate or
uncertificated interest representing any of the Stockholder's Preference
Shares, unless such transfer is made in compliance with the applicable
Preferred Stockholder Agreement.
REPRESENTATIONS AND WARRANTIES. In the Preferred Stockholder Agreements,
each Preferred Stockholder has made customary representations and warranties to
Parent with respect to, among other things, ownership of, and capacity with
respect to the Preference Shares subject to the Preferred Stockholder
Agreements, legal capacity to enter into the Preferred Stockholder Agreements,
absence of conflicts or of violations of laws and absence of liens in respect of
the shares subject to such agreements.
TERMINATION. Pursuant to the Preferred Stockholder Agreements, the
obligations of the Preferred Stockholder under each such agreement terminate
upon the fifth day after the earlier of (i) the expiration of the 90 day
exercise period described under "--Option to Purchase Preference Shares; Certain
Purchase
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Obligations", (ii) at the Stockholder's option, upon the valid termination of
the Merger Agreement by the Company under the conditions described in paragraph
(c) under the heading "--Merger Agreement-- Termination" or (iii) the date which
is 180 days after the date of the Preferred Stockholder Agreements.
CONFIDENTIALITY AGREEMENT
THE FOLLOWING IS A SUMMARY OF THE CONFIDENTIALITY AGREEMENT, DATED AS OF
APRIL 12, 1999, BETWEEN PARENT AND THE COMPANY (THE "CONFIDENTIALITY
AGREEMENT"). THE SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE
CONFIDENTIALITY AGREEMENT, A COPY OF WHICH HAS BEEN FILED WITH THE COMMISSION AS
AN EXHIBIT TO THE SCHEDULE 14D-1. THE CONFIDENTIALITY AGREEMENT CAN BE INSPECTED
AT, AND COPIES MAY BE OBTAINED FROM, THE SAME PLACES AND IN THE MANNER SET FORTH
IN SECTION 7--"CERTAIN INFORMATION CONCERNING THE COMPANY".
Pursuant to the Confidentiality Agreement, Parent has agreed, among other
things, (i) to keep confidential, except as required by law or regulation or
rule of any stock exchange on which Parent's shares are listed, all non-public,
confidential or proprietary information furnished to Parent by the Company,
together with analyses, compilations, forecasts, studies or other documents
prepared by Parent which contain such information ("the Information") and to
disclose any of the Information only to its Representatives (as defined below)
who need to know the Information and for the purposes of evaluating the proposed
transaction and (ii) to indemnify and hold the Company harmless from and against
all liabilities, claims, losses, costs, damages and reasonable expenses
(including reasonable counsel's fees and expenses) in any way caused by, or
arising directly or indirectly from, or in consequence of any breach of the
Confidentiality Agreement by Parent or any of its Representatives.
The "Information" does not include information which (i) is or becomes
generally available to the public other than as a result of a disclosure by
Parent or its directors, officers, employees, and advisors (collectively,
"Representatives"), (ii) is received on a non-confidential basis from an
independent third party who had obtained the information lawfully and was not
subject to a confidentiality agreement or other obligation of secrecy in respect
of such information, (iii) Parent can show was in its possession before Parent
received such information from the Company, or (iv) Parent can show was
independently developed by it or on its behalf by personnel having no access to
the Information at the time of independent development.
12. DIVIDENDS AND DISTRIBUTIONS. As described above, the Merger Agreement
provides the Company shall not, and shall not permit any of its subsidiaries to,
without the prior written consent of Parent: (i) declare, set aside or pay any
dividends on, or make any other actual, constructive or deemed distributions in
respect of, any of its capital stock, or otherwise make any payments to
stockholders of the Company in their capacity as such, other than dividends
payable to the Company declared by any of the Company's subsidiaries, (ii)
split, combine, subdivide or reclassify any of its capital stock or make any
other actual, constructive or deemed distribution in respect of any shares of
its capital stock or (iii) redeem, purchase or otherwise acquire any of its
outstanding securities, other than pursuant to existing agreements requiring the
Company to repurchase or acquire any shares of its capital stock (provided that
such repurchase or acquisition is in accordance with the terms of such agreement
as in effect on June 2, 1999).
Pursuant to the terms of the Merger Agreement, the Company is prohibited
from taking any of the actions described in the preceding paragraphs except as
permitted, required or specifically contemplated by the Merger Agreement and
nothing therein shall constitute a waiver by Parent or the Purchaser of any of
its rights under the Merger Agreement or a limitation of remedies available to
Parent or the Purchaser for any breach of the Merger Agreement, including
termination thereof.
13. EFFECT OF THE OFFER ON THE MARKET FOR THE COMMON STOCK; EXCHANGE ACT
REGISTRATION.
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MARKET FOR SHARES. The purchase of shares of Common Stock pursuant to the
Offer will reduce the number of shares of Common Stock that might otherwise
trade publicly and could adversely affect the liquidity and market value of the
remaining shares of Common Stock held by the public.
STOCK QUOTATION. The Common Stock is traded on the Nasdaq National Market.
According to published guidelines of the Nasdaq National Market, the Common
Stock might no longer be eligible for quotation on the Nasdaq National Market
if, among other things, either (i) the number of shares of Common Stock publicly
held was less than 750,000, there were fewer than 400 holders of round lots, the
aggregate market value of the publicly held shares of Common Stock was less than
$5,000,000, net tangible assets were less than $4,000,000 or there were fewer
than two registered and active market makers for the Common Stock, or (ii) the
number of shares of Common Stock publicly held was less than 1,100,000, there
were fewer than 400 holders of round lots, the aggregate market value of
publicly held shares of Common Stock was less than $15,000,000, or either (x)
the Company's market capitalization was less than $50,000,000 or (y) the total
assets and total revenue of the Company for the most recently completed fiscal
year or two of the last three most recently completed fiscal years did not
exceed $50,000,000, or there were fewer than four registered and active market
makers. Shares of Common Stock held directly or indirectly by directors,
officers or beneficial owners of more than 10 percent of the Common Stock are
not considered as being publicly held for this purpose. According to the
Company, as of June 2, 1999, there were 44 holders of record of Common Stock
(not including beneficial holders of Common Stock in street name), and there
were 33,406,000 shares of Common Stock outstanding.
If the Common Stock was to cease to be quoted on the Nasdaq National Market,
the market for the Common Stock could be adversely affected. It is possible that
the Common Stock would be traded or quoted on other securities exchanges or in
the over-the-counter market, and that price quotations would be reported by such
exchanges, or through Nasdaq or other sources. The extent of the public market
for the Common Stock and the availability of such quotations would, however,
depend upon the number of stockholders and/or the aggregate market value of the
Common Stock remaining at such time, the interest in maintaining a market in the
Common Stock on the part of securities firms, the possible termination of
registration of the shares under the Exchange Act and other factors.
EXCHANGE ACT REGISTRATION. The Common Stock is currently registered under
the Exchange Act. Such registration under the Exchange Act may be terminated
upon application of the Company to the Commission if the Common Stock is neither
listed on a national securities exchange nor held by 300 or more holders of
record. Termination of registration under the Exchange Act would substantially
reduce the information required to be furnished by the Company to its
stockholders and to the Commission and would make certain provisions of the
Exchange Act no longer applicable to the Company, such as the short-swing profit
recovery provisions of Section 16(b) of the Exchange Act, the requirement of
furnishing a proxy statement pursuant to Section 14(a) of the Exchange Act in
connection with stockholders' meetings, the related requirement of furnishing an
annual report to stockholders and the requirements of Rule 13e-3 under the
Exchange Act with respect to "going private" transactions. Furthermore, the
ability of "affiliates" of the Company and persons holding "restricted
securities" of the Company to dispose of such securities pursuant to Rule 144
promulgated under the Securities Act of 1933, as amended, may be impaired or
eliminated. The Purchaser intends to seek to cause the Company to apply for
termination of registration of the Common Stock under the Exchange Act as soon
after the completion of the Offer as the requirements for such termination are
met.
If registration of the Common Stock is not terminated prior to the Merger,
then the Common Stock will be delisted from all stock exchanges and the
registration of the Common Stock under the Exchange Act will be terminated
following the consummation of the Merger.
MARGIN REGULATIONS. The shares of Common Stock are currently "margin
securities," as such term is defined under the regulations of the Federal
Reserve Board, which has the effect, among other things, of allowing brokers to
extend credit on the collateral of the Common Stock. Depending upon factors
similar
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to those described above regarding listing and market quotations, it is possible
that, following the Offer, the Common Stock would no longer constitute "margin
securities" for the purposes of the margin regulations of the Federal Reserve
Board and therefore could no longer be used as collateral for loans made by
brokers. In any event, the Common Stock will cease to be "margin securities" if
registration of the Common Stock under the Exchange Act is terminated.
14. CONDITIONS OF THE OFFER. Notwithstanding any other provision of the
Offer or the Merger Agreement, the Purchaser shall not be required to accept for
payment or, subject to any applicable rules and regulations of the Commission,
including Rule 14e-1(c) under the Exchange Act (relating to the Purchaser's
obligation to pay for or return tendered shares promptly after termination or
withdrawal of the Offer), pay for any shares of Common Stock tendered pursuant
to the Offer and may terminate or amend the Offer and may postpone the
acceptance of, and payment for, any shares of Common Stock, if (i) there shall
not have been validly tendered and not properly withdrawn prior to the
expiration of the Offer a number of shares of Common Stock which represents at
least a majority of all of the issued and outstanding shares of Common Stock, on
a fully diluted basis, on the date the Offer is consummated, (ii) any applicable
waiting period (and any extension thereof) under the HSR Act shall not have
expired or been terminated, (iii) all applicable approvals of the Polish
Anti-Monopoly Commission shall not have been granted prior to the expiration of
the Offer, (iv) if required by applicable law, a decision of the Commission of
the European Community that the purchase of shares of Common Stock pursuant to
the Offer and the Merger are compatible with the Common Market has not been
received prior to the expiration of the Offer, or (v) if, at any time on or
after June 2, 1999, and at or before the time of payment for any such shares of
Common Stock (whether or not any shares of Common Stock have theretofore been
accepted for payment or paid for pursuant to the Offer) any of the following
shall occur:
(a) there shall be instituted or pending any action or proceeding by any
supranational, national, provincial, county, local, municipal or other
legislative or executive body or governmental department, authority, commission,
court, board, bureau, agency or instrumentality, including, without limitation,
any of the foregoing constituted by the Republic of Poland, the United Kingdom,
the United States of America or any of their respective political subdivisions
(each a "Governmental Body") or by any other person or entity, domestic or
foreign, before any court of competent jurisdiction or governmental authority or
agency, domestic or foreign (other than existing claims disclosed to Parent),
(i) challenging or seeking to, or which could reasonably be expected to make
illegal, impede, delay or otherwise directly or indirectly restrain, prohibit or
make materially more costly the Offer or the Merger or would reasonably be
expected to result in material damages, (ii) seeking to prohibit or materially
limit the ownership or operation by Parent or the Purchaser of all or any
material portion of the business or assets of the Company and its subsidiaries
taken as a whole or to compel Parent or the Purchaser to dispose of or hold
separately all or any material portion of the business or assets of Parent and
its subsidiaries taken as a whole or the Company and its subsidiaries taken as a
whole, or seeking to impose any limitation on the ability of Parent or the
Purchaser to conduct its business or own such assets, (iii) seeking to impose
limitations on the ability of Parent or the Purchaser effectively to exercise
full rights of ownership of the shares of the capital stock of the Company,
including, without limitation, the right to vote any such shares of capital
stock acquired or owned by the Purchaser or Parent on all matters properly
presented to the Company's stockholders, (iv) seeking to require divestiture by
Parent or the Purchaser of any shares of capital stock of the Company, (v)
requiring or permitting the Company's competitors to share access to the
Company's broadcast systems (other than access required under Polish law on the
date of the Merger Agreement), or (vi) otherwise directly or indirectly relating
to the Offer or the Merger and which would have a Material Adverse Effect or a
material adverse effect on the business, properties, assets, liabilities,
operations, results of operations or condition (financial or otherwise) of
Parent and its subsidiaries, taken as a whole;
(b) there shall be any statute, rule, regulation, legislation,
interpretation, judgment, order or injunction, enacted, enforced, promulgated,
amended or issued and applicable to or deemed by a Governmental Body to be
applicable to (i) Parent, the Purchaser, the Company or any subsidiary or (ii)
the Offer or the
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Merger, by any Governmental Body, court, administrative or regulatory authority
or agency, other than the routine application of the waiting period provisions
of the HSR Act, the approval process of the Polish Anti-Monopoly Commission and,
if required by applicable law, the approval process of the Commission of the
European Community to the Offer or to the Merger, which could reasonably be
expected to, directly or indirectly, result in any of the consequences referred
to in clauses (i) through (vi) in the immediately preceding paragraph;
(c) any change shall have occurred, or Parent shall have become aware of any
fact, that has had or would have a Material Adverse Effect;
(d) there shall have occurred (i) any general suspension of trading in, or
limitation on prices for, securities on the Nasdaq National Market (excluding
any coordinated trading halt triggered solely as a result of a specified
decrease in a market index), (ii) any decline in the Nasdaq Composite Index in
excess of 30% measured from the close of business on the trading day immediately
preceding June 2, 1999, (iii) a suspension of the currency exchange markets for
the U.S. Dollar which continues in effect for three business days or for the
Dutch Guilder which continues in effect for five business days, (iv) a
declaration of a banking moratorium or any suspension of payments in respect of
banks in the United States or The Netherlands, (v) any material limitation
(whether or not mandatory) by any United States or Dutch Governmental Body on
the extension of credit by banks or other lending institutions, (vi) the actual
declaration of war on or by the United States, The Netherlands or Poland, or the
invasion of the territory of a NATO member state by a non-NATO member state, or
(vii) in the case of any of the foregoing existing at the time of the
commencement of the Offer, a material acceleration or material worsening
thereof;
(e) any of the representations or warranties made by the Company in the
Merger Agreement that are qualified as to materiality shall be untrue or
incorrect in any respect or any such representations and warranties that are not
so qualified shall be untrue or incorrect in any material respect, in each case
as of the date of the Merger Agreement and the scheduled expiration date of the
Offer, except (i) for changes specifically permitted by the Merger Agreement and
(ii) that those representations and warranties which address matters only as of
a particular date shall remain true and correct as of such date;
(f) the Company shall have failed to perform any material obligation or to
comply with any material agreement or material covenant of the Company to be
performed or complied with by it under the Merger Agreement;
(g) the Company's Board of Directors or any committee thereof shall have
withdrawn, or shall have modified or amended in a manner adverse to Parent or
the Purchaser, the approval, adoption or recommendation, as the case may be, of
the Offer, the Merger or the Merger Agreement, or approved or recommended, or
announced a neutral position with respect to, any merger, consolidation, other
business combination, sale of material assets, takeover proposal or other
acquisition of shares of Common Stock other than the Offer and the Merger or
upon request by Parent, shall fail to reaffirm its approval and recommendation
of the Offer, the Merger or the Merger Agreement;
(h) it shall have been publicly disclosed, or the Purchaser shall have
otherwise learned, that beneficial ownership (determined for the purposes of
this paragraph (h) as set forth in Rule 13d-3 promulgated under the Exchange
Act) of 30% or more of the shares of Common Stock has been acquired by any
person or entity (including the Company or any of its subsidiaries or
affiliates) or group (as defined in Section 13(d)(3) under the Exchange Act),
which person or group is not, on the date of the Merger Agreement, the
beneficial owner of 30% or more of the shares of Common Stock;
(i) the Merger Agreement shall have been terminated in accordance with its
terms;
(j) any Stockholder Agreement shall fail or cease to be in full force and
effect or any party to any such agreement (other than Parent or the Purchaser)
shall materially breach or repudiate any such agreement;
43
<PAGE>
which, in the reasonable judgment of the Purchaser, in any such case and
regardless of the circumstances giving rise to any such condition, makes it
inadvisable to proceed with such acceptance for payment or payment.
"Material Adverse Effect" means a material adverse effect on the business,
properties, assets, liabilities, operations, results of operations or condition
(financial or otherwise) of the Company and its subsidiaries taken as a whole.
The foregoing conditions are for the sole benefit of Parent and the
Purchaser and may be asserted by Parent or the Purchaser, or may be waived by
Parent or the Purchaser, in whole or in part at any time and from time to time
in their respective reasonable discretion. The failure by Parent or the
Purchaser at any time to exercise any of the foregoing rights shall not be
deemed a waiver of any such right and each such right shall be deemed an ongoing
right which may be asserted at any time and from time to time. Any determination
by Parent or the Purchaser concerning the events described in this Section 14
shall be final and binding upon all parties.
15. CERTAIN LEGAL MATTERS; REGULATORY APPROVALS.
GENERAL. Except as otherwise disclosed herein, neither Parent nor the
Purchaser is aware of (i) any license or regulatory permit that appears to be
material to the business of the Company and its subsidiaries, taken as a whole,
that might be adversely affected by the acquisition of shares of Common Stock by
the Purchaser pursuant to the Offer, Merger or otherwise or (ii) any approval or
other action by any governmental, administrative or regulatory agency or
authority, domestic or foreign, that would be required for the acquisition or
ownership of shares of Common Stock by the Purchaser as contemplated herein.
Should any such approval or other action be required, the Purchaser currently
contemplates that it would seek such approval or action. The Purchaser's
obligation under the Offer to accept for payment and pay for shares of Common
Stock is subject to certain conditions. See Section 14--"Conditions of the
Offer". While, except as described in this Offer to Purchase, the Purchaser does
not currently intend to delay the acceptance for payment of shares of Common
Stock tendered pursuant to the Offer pending the outcome of any such matter,
there can be no assurance that any such approval or action, if needed, would be
obtained or would be obtained without substantial conditions or that adverse
consequences might not result to the business of the Company, Parent or the
Purchaser or that certain parts of the businesses of the Company, Parent or the
Purchaser might not have to be disposed of in the event that such approvals were
not obtained or any other actions were not taken.
STATE TAKEOVER LAWS. The Company is incorporated under the laws of the
State of Delaware. In general, Section 203 of the DGCL prevents an "interested
stockholder" (generally a person who owns or has the right to acquire 15% or
more of a corporation's outstanding voting stock, or an affiliate or associate
thereof) from engaging in a "business combination" (defined to include mergers
and certain other transactions) with a Delaware corporation for a period of
three years following the date such person became an interested stockholder
unless, among other things, prior to the date the interested stockholder became
an interested stockholder, the board of directors of the corporation approved
either the business combination or the transaction in which the interested
stockholder became an interested stockholder. The Company has represented to
Parent and the Purchaser in the Merger Agreement that the Board of Directors of
the Company has taken all action (including appropriate approvals of the Board
of Directors of the Company) necessary to exempt Parent, its subsidiaries, their
affiliates, the Merger, the Merger Agreement, the Stockholder Agreements and the
transactions contemplated thereby from Section 203 of the DGCL.
A number of other states have adopted laws and regulations applicable to
attempts to acquire securities of corporations which are incorporated, or have
substantial assets, stockholders, principal executive offices or principal
places of business, or whose business operations otherwise have substantial
economic effects, in such states. In EDGAR V. MITE CORP., the Supreme Court of
the United States
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invalidated on constitutional grounds the Illinois Business Takeover Statute,
which, as a matter of state securities law, made takeovers of corporations
meeting certain requirements more difficult. However, in 1987 in CTS CORP. V.
DYNAMICS CORP. OF AMERICA, the Supreme Court held that the State of Indiana may,
as a matter of corporate law and, in particular, with respect to those aspects
of corporate law concerning corporate governance, constitutionally disqualify a
potential acquirer from voting on the affairs of a target corporation without
the prior approval of the remaining stockholders. The state law before the
Supreme Court was by its terms applicable only to corporations that had a
substantial number of holders in the state and were incorporated there.
The Company, directly or through subsidiaries, conducts business or has
stockholders in a number of states throughout the United States, some of which
have enacted takeover laws. Based on representations made by the Company in the
Merger Agreement, the Purchaser does not believe that any state takeover
statutes apply to the Offer. Neither Parent nor the Purchaser has currently
complied with any state takeover statute or regulation. The Purchaser reserves
the right to challenge the applicability or validity of any state law
purportedly applicable to the Offer or the Merger and nothing in this Offer to
Purchase or any action taken in connection with the Offer or the Merger is
intended as a waiver of such right. In the event it is asserted that one or more
state takeover laws is applicable to the Offer or the Merger, and an appropriate
court does not determine that it is inapplicable or invalid as applied to the
Offer or the Merger, the Purchaser might be required to file certain information
with, or receive approvals from, the relevant state authorities. In addition, if
enjoined, the Purchaser might be unable to accept for payment any shares of
Common Stock tendered pursuant to the Offer, or might be delayed in continuing
or consummating the Offer and the Merger. In such case, the Purchaser may not be
obligated to accept for payment any Common Stock tendered. See Section
14--"Conditions of the Offer".
APPRAISAL RIGHTS. No appraisal rights are available to Holders in
connection with the Offer.
However, if the Merger is consummated, a Holder of shares of Common Stock
will have certain rights under Section 262 of the DGCL to dissent and demand
appraisal of, and payment in cash for the fair value of, such Holder's shares of
Common Stock. Those rights, if the statutory procedures are complied with, could
lead to a judicial determination of the fair value (excluding any value arising
from the Merger) required to be paid in cash to dissenting stockholders for
their Common Stock. Any judicial determination of the fair value of the shares
of Common Stock could be based upon considerations other than or in addition to
the Offer Price and the market value of the Common Stock, including asset values
and the investment value of such shares of Common Stock. The value so determined
could be more or less than the Offer Price. Failure to follow the steps required
by Section 262 of the DGCL for perfecting appraisal rights may result in the
loss of those rights.
If a Holder who demands appraisal under Section 262 of the DGCL fails to
perfect, or effectively withdraws or loses, its right to appraisal, as provided
in the DGCL, the shares of Common Stock of that Holder will be converted into
the Merger Consideration in accordance with the Merger Agreement. A Holder may
withdraw his demand for appraisal by delivering to the Purchaser a written
notice withdrawing such demand for appraisal and acceptance of the Merger.
THE FOREGOING SUMMARY OF THE RIGHTS OF OBJECTING HOLDERS DOES NOT PURPORT TO
BE A COMPLETE STATEMENT OF THE PROCEDURES TO BE FOLLOWED BY HOLDERS DESIRING TO
EXERCISE ANY AVAILABLE APPRAISAL RIGHTS.
The preservation and exercise of appraisal rights require strict adherence
to the applicable provisions of Delaware law. The provisions of Section 262 of
the DGCL are complex and technical in nature. Holders desiring to exercise their
appraisal rights may wish to consult counsel, since the failure to comply
strictly with these provisions will result in the loss of their appraisal
rights.
GOING PRIVATE TRANSACTIONS. Rule 13e-3 under the Exchange Act is applicable
to certain "going private" transactions. The Purchaser does not believe that
Rule 13e-3 will be applicable to the Merger, unless, among other things, the
Merger is completed more than one year after termination of the Offer. If
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<PAGE>
applicable, Rule 13e-3 would require, among other things, that certain financial
information regarding the Company and certain information regarding the fairness
of the Merger and the consideration offered to stockholders of the Company
therein be filed with the Commission and disclosed to stockholders of the
Company prior to consummation of the Merger.
REGULATORY APPROVALS.
(A) ANTITRUST--US. Under the HSR Act and the rules that have been
promulgated thereunder by the Federal Trade Commission ("FTC"), certain mergers
and acquisitions may not be consummated unless certain information has been
furnished to the Antitrust Division of the Department of Justice (the "Antitrust
Division") and the FTC and certain waiting period requirements have been
satisfied. The acquisition of shares of Common Stock by the Purchaser pursuant
to the Offer is subject to the HSR Act requirements.
Under the provisions of the HSR Act applicable to the purchase of shares of
Common Stock pursuant to the Offer, such purchase may not be made until the
expiration of a 15-calendar day waiting period following the required filing of
a Notification and Report Form under the HSR Act by Parent, which Parent will
submit as soon as reasonably possible. Accordingly, the waiting period under the
HSR Act will expire at 11:59 P.M., New York City time, on the fifteenth calendar
day following filing of the Notification and Report Form by Parent, unless early
termination of the waiting period is granted or Parent receives a request for
additional information or documentary material prior thereto. If either the FTC
or the Antitrust Division were to request additional information or documentary
material from Parent prior to the expiration of the 15-day waiting period, the
waiting period would be extended and would expire at 11:59 P.M., New York City
time, on the tenth calendar day after the date of substantial compliance by
Parent with such request. Thereafter, the waiting period could be extended only
by court order or by consent of Parent. If the acquisition of shares of Common
Stock is delayed pursuant to a request by the FTC or the Antitrust Division for
additional information or documentary material pursuant to the HSR Act, the
purchase of and payment for shares of Common Stock pursuant to the Offer will be
deferred until 10 days after the request is substantially complied with unless
the waiting period is terminated sooner by the FTC or the Antitrust Division
(and assuming all of the other Offer conditions have been satisfied or waived).
See Section 2--"Acceptance for Payment and Payment for Common Stock". Only one
extension of such waiting period pursuant to a request for additional
information or documentary material is authorized by the rules promulgated under
the HSR Act, except by court order or by consent. Although the Company is
required to file certain information and documentary material with the Antitrust
Division and the FTC in connection with the Offer, neither the Company's failure
to make such filings nor a request to the Company from the Antitrust Division or
the FTC for additional information or documentary material will extend the
waiting period. However, if the Antitrust Division or the FTC raises substantive
issues in connection with a proposed transaction, the parties frequently engage
in negotiations with the relevant governmental agency concerning possible means
of addressing these issues and may agree to delay consummation of the
transaction while such negotiations continue.
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions such as the proposed acquisition of shares of
Common Stock by the Purchaser pursuant to the Offer. At any time before or after
the Purchaser's purchase of shares of Common Stock, either the Antitrust
Division or the FTC could take such action under the antitrust laws as it deems
necessary or desirable in the public interest, including seeking to enjoin the
acquisition of shares of Common Stock pursuant to the Offer or seeking
divestiture of shares of Common Stock acquired by the Purchaser or divestiture
of substantial assets of Parent, the Company or any of their respective
subsidiaries. State attorneys general may also bring legal action under the
antitrust laws, and private parties may bring such action under certain
circumstances. Parent and Purchaser believe that the acquisition of shares of
Common Stock by the Purchaser will not violate the antitrust laws. Nevertheless,
there can be no assurance that a challenge to the Offer on antitrust grounds
will not be made or, if a challenge is made, what the
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<PAGE>
result will be. See Section 14--"Conditions of the Offer" for certain conditions
to the Offer, including conditions with respect to litigation and certain
governmental actions.
(B) ANTITRUST--EC. The EC Merger Regulation (Council Regulation No. 4064/89
of December 21, 1989, as amended) requires notification to the European
Commission, within seven days of the conclusion of an agreement to acquire a
controlling interest or the launch of a cash tender offer therefor, of all
concentrations between companies which are deemed to have a "Community
dimension" because they exceed certain global, European or Member State turnover
thresholds. Such concentrations may not be consummated until the European
Commission, acting within fixed deadlines, approves them as being "compatible
with the Common Market". A concentration is compatible with the Common Market if
it does not create or strengthen a dominant position as a result of which
effective competition would be significantly impeded in the European Economic
Area (the "EEA"), or in a substantial part of it.
The European Commission has exclusive competence for approving or
prohibiting concentrations with a Community dimension--however, it may, upon
request and at its discretion, refer all or part of the case to the national
antitrust authority of a particular member state if the concentration has a
specific effect on the territory of the requesting member state.
The notification involves the disclosure to the European Commission of
detailed information, especially regarding the structure of the relevant markets
and the parties' competitive position. Upon receipt of a complete notification,
the European Commission conducts a preliminary review with a maximum duration of
one month from notification, which may be extended to six weeks in certain
circumstances. This preliminary review concludes with a decision either to
approve the notified concentration (with or without conditions) or to initiate
an in-depth investigation if the concentration raises serious doubts as to its
compatibility with the Common Market. Such an in-depth investigation has a
maximum duration of four months, and must end with a European Commission
decision either approving the concentration (with or without conditions) or
prohibiting it. If the European Commission raises substantive issues in
connection with the proposed concentration, the parties may negotiate with the
European Commission to find a solution, which may take the form of an
undertaking to make structural modifications to the entity resulting from the
concentration on conditions and within a timeframe agreed with the European
Commission.
Parent and the Company, including their respective affiliates, each conduct
substantial operations within the EEA. If the Parent and the Company satisfy the
applicable thresholds, the acquisition of shares of Common Stock will amount to
a concentration with a Community dimension and, therefore, be subject to the
requirement of notification to, and approval by, the European Commission.
Parent and the Purchaser believe that, to the extent that notification of,
and approval by, the European Commission is required, the concentration effected
by the acquisition of the Company by the Purchaser will be considered to be
compatible with the Common Market, and approved by the European Commission
during the preliminary review phase. However, it cannot be ruled out that the
European Commission might seek to require structural undertakings as a condition
to its approval, and/or to open a second phase investigation to examine serious
doubts as regards compatibility with the Common Market.
(C) POLISH ANTI-MONOPOLY ACT.
The Law on Counteracting the Monopolistic Practices dated February 24, 1990,
as amended (the "Anti-Monopoly Law") creates a requirement to notify the Office
for the Protection of Consumers and Competition (the "Anti-Monopoly Office")
regarding the intention to merge business entities. A merger according to the
Anti-Monopoly Law refers not only to a typical merger but also to other actions
resulting in the concentration of business entities, most notably the direct or
indirect acquisition of shares.
Generally, the intent to acquire or purchase shares or an interest in
another business entity which would result in reaching or exceeding 25%, 33% or
50% of the votes at the shareholders' meeting of such business entity is subject
to a pre-merger notification to the Anti-Monopoly Office if the total value of
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annual sales of both entities (i.e. the acquiring entity and the entity which
shares are to be acquired), for the previous calendar year, exceeds [EURO]25
million. In addition, any form of concentration, which results in obtaining
indirect or direct control over the target entity if the above sales threshold
is satisfied, requires pre-merger notification.
The Anti-Monopoly Law does not directly address the issue of whether any
merger combination outside of Poland resulting in indirect change of control
over Polish entities are subject to the pre-merger notification in Poland, where
the acquiror has no previous business or significant sales in Poland. In
general, the Anti-Monopoly Office supports an interpretation of the
Anti-Monopoly requiring that if such a foreign indirect change of control causes
or may cause consequences in Poland, then pre-merger notification in Poland is
required. This position may raise difficulties in interpretation, particularly
because there is no materiality rule. In theory, a transaction of the type
mentioned above may entail consequences in Poland, and therefore the
Anti-Monopoly Office should be notified if both or even one of the companies
involved makes sales or conducts activities in Poland. As of the date hereof,
the Anti-Monopoly Office has not adopted an official interpretation as to the
nature of consequences in Poland which triggers the requirement of the
pre-merger notification. With respect to each merger/combination, the
Anti-Monopoly Office considers circumstances and factors particular to such a
merger on an individual basis.
The Anti-Monopoly Law places a 14-day deadline on filing with the
Anti-Monopoly Office. This period begins upon "performance of any act by which
such obligation arises". The Anti-Monopoly Law does not provide any guidance as
to how the above language should be interpreted. In practice, pre-merger
notification should be filed before the intended acquisition, but not earlier
than the date a concrete intent of acquisition is formed (e.g. letters of
intent, preliminary or conditional agreements).
Within a period of two (2) months from obtaining all the documents and
information required to be submitted, the Anti-Monopoly Office may issue (i) a
statement expressing its lack of objection to the intended acquisition; or (ii)
a decision prohibiting the acquisition, if as a result the entities involved
would achieve or strengthen their dominant position on the market. The term
"dominant position" pursuant to the Anti-Monopoly Law means the position of a
business entity which does not encounter any significant competition in national
or local markets. Pursuant to the Anti-Monopoly Law a business entity is
presumed to hold a dominant position if its market share exceeds 40%, although
this presumption is rebuttable. The decision of the Anti-Monopoly Office may be
appealed to the Anti-Monopoly Court. The Anti-Monopoly Office, having reviewed
the pre-merger notification, may notify the parties concerned that it is ready
to approve the transaction, PROVIDED that certain conditions are fulfilled. In
such a case, the Anti-Monopoly Office will request that the parties respond
within a specified time whether they wish to fulfill such conditions. Following
the parties' response, the Anti-Monopoly Office will decide whether to grant or
deny its approval of the transaction. In practice, decisions of the
Anti-Monopoly Office are usually issued within 3-6 weeks from the submission of
complete filing. The pre-merger notification are not subject to any filing fees.
The pre-merger notification is in a prescribed form, contains extensive
financial, legal and economic information concerning the entities participating
in the transaction and should be filed by both business entities. The detailed
contents of the notification is regulated by the Ordinance of the Council of
Ministers dated July 13, 1995, as amended (the "Ordinance"). The Ordinance
provides that the pre-merger notification must contain, among others:
description of the intended merger/combination; basic information about merging
entities and its shareholders; information about business and organization of
merging entities including the nature of their activities and sale volume, if
applicable; information about the market concerned by the merger/combination;
and certain miscellaneous information.
16. FEES AND EXPENSES. Except as set forth below, neither Parent nor the
Purchaser will pay any fees or commissions to any broker, dealer or other person
for soliciting tenders of shares of Common Stock pursuant to the Offer.
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Parent and the Purchaser have engaged Morgan Stanley as the Dealer Manager
in connection with the Offer and as financial advisor to Parent in connection
with its proposed acquisition of the Company. Morgan Stanley will receive
reasonable and customary compensation for their services as Dealer Manager and
financial advisor, as the case may be, will be reimbursed for certain reasonable
out-of-pocket expenses and will be indemnified against certain liabilities and
expenses in connection therewith, including certain liabilities under the United
States federal securities laws. Morgan Stanley has rendered various investment
banking and other advisory services to Parent and its affiliates and is expected
to continue to render such services, for which it has received and will continue
to receive customary compensation from Parent and its affiliates. In the
ordinary course of business, Morgan Stanley and its affiliates may actively
trade or hold the securities of the Company for their own account or for the
account of customers, and, accordingly, may at any time hold a long or short
position in such securities.
The Purchaser and Parent have also retained Continental Stock Transfer &
Trust Company as the Depositary. The Depositary has not been retained to make
solicitations or recommendations in its role as Depositary. The Depositary will
receive reasonable and customary compensation for its services, will be
reimbursed for certain reasonable out-of-pocket expenses and will be indemnified
against certain liabilities and expenses in connection therewith, including
certain liabilities under the United States federal securities laws.
In addition, the Purchaser and Parent have retained MacKenzie Partners, Inc.
to act as the Information Agent in connection with the Offer. The Information
Agent will receive reasonable and customary compensation for its services, will
be reimbursed for certain reasonable out-of-pocket expenses and will be
indemnified against certain liabilities and expenses in connection therewith,
including certain liabilities under the United States federal securities laws.
Brokers, dealers, commercial banks and trust companies will be reimbursed by
the Purchaser for customary mailing and handling expenses incurred by them in
forwarding offering material to their customers.
17. MISCELLANEOUS. The Purchaser is not aware of any state or jurisdiction
where the making of the Offer or the acceptance of shares of Common Stock is
prohibited by any applicable law. If the Purchaser becomes aware of any state or
jurisdiction where the making of the Offer or the acceptance of shares of Common
Stock is not in compliance with any applicable law, the Purchaser will make a
good faith effort to comply with such law or seek to have such law declared
inapplicable to the Offer. If, after such good faith effort, the Purchaser
cannot comply with any such law, the Offer will not be made to (nor will tenders
be accepted from or on behalf of) the holders of shares of Common Stock in such
state or jurisdiction. In any state or jurisdiction where the securities, blue
sky or other laws require the Offer to be made by a licensed broker or dealer,
the Offer shall be deemed to be made on behalf of the Purchaser by the Dealer
Manager or one or more registered brokers or dealers which are licensed under
the laws of such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF PARENT OR THE PURCHASER NOT CONTAINED IN THIS OFFER
TO PURCHASE OR IN THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
Parent and the Purchaser have filed with the Commission the Schedule 14D-1,
together with exhibits, pursuant to Section 14(d)(1) of the Exchange Act and
Rule 14d-3 promulgated thereunder, furnishing certain additional information
with respect to the Offer, and may file amendments thereto. The Schedule 14D-1
and any amendments thereto, including exhibits, may be inspected at, and copies
may be obtained from, the same places and in the manner set forth in Section
7--"Certain Information Concerning the Company" (except that they will not be
available at the regional offices of the Commission).
BISON ACQUISITION CORP.
June 8, 1999
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SCHEDULE I
INFORMATION CONCERNING THE DIRECTORS AND EXECUTIVE
OFFICERS OF UNITED PAN-EUROPE COMMUNICATIONS N.V.
AND BISON ACQUISITION CORP.
1. SUPERVISORY BOARD AND EXECUTIVE OFFICERS OF UNITED PAN-EUROPE
COMMUNICATIONS N.V.
Set forth below is the name, present principal occupation or employment and
material occupations, positions, offices or employments for the past five years
of each member of the Supervisory Board and the Board of Management of United
Pan-Europe Communications N.V. ("Parent"). Mr. Gene Schneider resigned from the
Supervisory Board in February 1999. Pursuant to the rules and procedures of the
Supervisory Board, he became a non-voting advisor to the Supervisory Board and
has the right to attend and participate in the meetings of the Supervisory
Board. The principal address of Parent and, unless indicated below, the current
business address for each individual listed below is Fred. Roeskestraat 123,
P.O. Box 74763, 1070 BT Amsterdam, The Netherlands, Telephone: 31-20-778-9840.
Each such person is, unless indicated below, a citizen of the United States.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME AND CURRENT BUSINESS ADDRESS AGE MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- ------------------------------------ --- ---------------------------------------------------------------------
<S> <C> <C>
Michael T. Fries.................... 36 Member of the Supervisory Board of Parent since September 1998 and
Chairman since February 1999; President of United International
Holdings, Inc. ("UIH") and President and Chief Executive Officer of
UIH Latin America, Inc. (a wholly-owned subsidiary of UIH) since
September 1998; President of UIH Asia/Pacific Communications, Inc. (a
majority-owned subsidiary of UIH) since June 1995 and Chief Executive
Officer since December 1996; Senior Vice President, Development of
UIH from March 1990 to June 1995.
John P. Cole, Jr.................... 68 Member of the Supervisory Board of Parent since February 1999;
Director of UIH since March 1998; Director of Century Communication
Corporation; partner of the law firm of Cole, Raywid & Braverman
since 1966.
Richard De Lange.................... 53 Member of the Supervisory Board of Parent since April 1996; Chairman
of the Dutch Philips organization (Philips Nederland B.V. and
Nederlandse Philips Bedrijven B.V.) since October 1998; President and
Chief Executive Officer of Philips Media B.V. since February 1996;
Chairman and Managing Director of Philips Electronics UK Ltd. from
April 1995 to October 1998; President of Philips Lighting Europe from
December 1990 to April 1995. Mr. De Lange is a citizen of The
Netherlands.
Antony P. Ressler................... 38 Member of the Supervisory Board of Parent since February 1999;
Director of UIH since October 1993; principal of Apollo Advisors,
L.P., Lion Advisors, L.P. and Ares Management, L.P. since prior to
1994. Director of Allied Waste Industries, Inc., Berlitz
International, Inc., Communications Corporation of America, Prandium,
Inc., United International Holdings, Inc., Vail Resorts, Inc. and Koo
Koo Roo Enterprises, Inc.
</TABLE>
50
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<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME AND CURRENT BUSINESS ADDRESS AGE MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- ------------------------------------ --- ---------------------------------------------------------------------
<S> <C> <C>
Ellen P. Spangler................... 50 Member of the Supervisory Board of Parent since February 1999; Senior
Vice President, Business and Legal Affairs and Secretary of UIH since
December 1996; Vice President of UIH from January 1991 to December
1996.
Tina Wildes......................... 38 Member of the Supervisory Board of Parent since February 1999; Senior
Vice President, Operations and Development Oversight of UIH since May
1998; Director MGM Latin America since December 1998; Senior Vice
President, Programming of UIH from October 1997 to May 1998; Regional
Vice President of UIH Latin America, Inc. from 1993 to October 1997.
Gene W. Schneider................... 72 Advisor to the Supervisory Board of Parent since February 1999 and
Member from July 1995 to February 1999; Chairman of the Board of
Directors of UIH since May 1989, Chief Executive Officer of UIH since
October 1995 and President of UIH from October 1995 to September
1998.
Mark L. Schneider................... 43 Chairman of the Board of Management and Chief Executive Officer of
Parent since April 1997; Executive Vice President of UIH since
December 1996; President and Chief Executive Officer of UIH
Europe/Middle East Communications, Inc. since December 1996; Chief of
Strategic Planning and Operational Oversight of UIH from May 1996 to
December 1996; Consultant to UIH from March 1995 to May 1996;
President of UIH from July 1992 to March 1995; Member of the board of
directors of UIH since 1993.
John F. Riordan..................... 55 Member of the Board of Management of Parent since September 1998 and
Executive Vice President of Parent since March 1998; Vice Chairman
and President of Advanced Communications (a division of Parent) since
September 1998; CEO of chello broadband since March 1999; Member of
the Supervisory Board of Parent from April 1997 to March 1998;
Chairman and Chief Executive Officer of Princes Holdings Limited from
1992 to November 1998. Mr. Riordan is a citizen of Ireland.
J. Timothy Bryan.................... 38 Member of the Board of Management, President and Chief Financial
Officer of Parent since September 1998; Member of the Supervisory
Board of Parent from December 1996 to September 1998; Chief Financial
Officer, Treasurer and Assistant Secretary of UIH from December 1996
to September 1998; Treasurer of Jones Financial Group, Inc. from 1993
to December 1996.
</TABLE>
51
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME AND CURRENT BUSINESS ADDRESS AGE MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- ------------------------------------ --- ---------------------------------------------------------------------
<S> <C> <C>
Anton H.E. v. Voskuijlen............ 41 Member of the Board of Management of Parent since September 1998;
Senior Vice President and Managing Director, Legal and General
Counsel of Parent since April 1997, Vice President and General
Counsel from July 1996 to April 1997; Vice President, Business
Affairs and Legal Counsel of Philips Media, Inc. from March 1994 to
July 1996. Mr. Voskuijlen is a citizen of The Netherlands.
Nimrod J. Kovacs.................... 49 Member of the Board of Management of Parent since September 1998;
Managing Director, Eastern Europe of Parent since March 1998;
President of UIH Programming, Inc. since December 1996; President,
Eastern Europe Distribution & Global Programming Group of UIH from
January to December 1996; Senior Vice President, Central/Eastern
Europe of UIH from March 1991 to December 1995.
Scott Bachman....................... 43 Managing Director, Technology and Purchasing of Parent since February
1998; Vice President, Engineering and Chief Technology Officer of
Parent from March 1996 to February 1998; Vice President, Operations &
Technology Projects of Cable Television Laboratories, Inc. from April
1991 to March 1996.
Charles H.R. Bracken................ 32 Managing Director, Strategy, Acquisitions and Corporate Development
since March 1999; Executive Director, Communications, Media and
Technology and various other positions with Goldman Sachs
International from 1994 to March 1999. Mr. Bracken is a citizen of
the United Kingdom.
Steven D. Butler.................... 39 Managing Director of UPC Capital and Treasurer of Parent since
February 1998; Vice President and Treasurer of Parent from July 1995
to February 1998; Director of Finance of UIH from May 1991 to July
1995.
Simon Oakes......................... 42 Managing Director, Programming of Parent since March 1998;
independent feature film producer from 1994 to March 1998;
Co-chairman of Crossbow Films from 1989 to 1994. Mr. Oakes is a
citizen of the United Kingdom.
Ray D. Samuelson.................... 45 Managing Director, Finance and Accounting of Parent since February
1998 and Vice President, Finance and Accounting from July 1995 to
February 1998; Vice President, Finance and Administration of Cable
Operations Division of UIH from 1992 to July 1995.
Joseph Webster...................... 36 Managing Director, Telephony Services of Parent and Chief Executive
Officer of Priority Telecom since February 1998; Regional Vice
President & General Manager, Time Warner Communications from February
1997 to February 1998 and Vice President & General Manager from
February 1994 to January 1997.
</TABLE>
52
<PAGE>
2. DIRECTORS AND EXECUTIVE OFFICERS OF BISON ACQUISITION CORP.
Set forth below is the name, present principal occupation or employment and
material occupations, positions, offices or employments for the past five years
of each director and executive officer of Bison Acquisition Corp. (the
"Purchaser"). Each person identified below has held his position since the
formation of the Purchaser on May 28, 1999. The principal address of the
Purchaser is c/o United Pan-Europe Communications N.V., Fred. Roeskestraat 123,
P.O. Box 74763, 1070 BT Amsterdam, The Netherlands, Telephone: 31-20-778-9840.
The current business address for each individual listed below is Fred.
Roeskestraat 123, P.O. Box 74763, 1070 BT Amsterdam, The Netherlands, Telephone:
31-20-778-9840. Each such person is, unless indicated below, a citizen of the
United States. Directors are identified by an asterisk.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME AND CURRENT BUSINESS ADDRESS AGE MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- ------------------------------------ --- ---------------------------------------------------------------------
<S> <C> <C>
J. Timothy Bryan*................... 38 President and Treasurer of Purchaser; Member of the Board of
Management, President and Chief Financial Officer of Parent since
September 1998; Member of the Supervisory Board of Parent from
December 1996 to September 1998; Chief Financial Officer, Treasurer
and Assistant Secretary of UIH from December 1996 to September 1998;
Treasurer of Jones Financial Group, Inc. from 1993 to December 1996.
Anton H.E. v. Voskuijlen*........... 41 Vice President and Secretary of Purchaser; Member of the Board of
Management of Parent since September 1998; Senior Vice President and
Managing Director, Legal and General Counsel of Parent since April
1997, Vice President and General Counsel from July 1996 to April
1997; Vice President, Business Affairs and Legal Counsel of Philips
Media from March 1994 to July 1996. Mr. Voskuijlen is a citizen of
The Netherlands.
</TABLE>
3. DIRECTORS AND EXECUTIVE OFFICERS OF UNITED INTERNATIONAL HOLDINGS, INC.
Set forth below is the name, present principal occupation or employment and
material occupations, positions, offices or employments for the past five years
of each director and executive officer of UIH. The principal address of UIH and,
unless indicated below, the current business address for each individual listed
below is 4643 S. Ulster Street, Suite 1300, Denver, Colorado 80237, Telephone:
303-770-4001. Each such person is, unless indicated below, a citizen of the
United States.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME AND CURRENT BUSINESS ADDRESS AGE MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- ------------------------------------ --- ---------------------------------------------------------------------
<S> <C> <C>
Michael T. Fries.................... 36 Member of the Supervisory Board of Parent since September 1998 and
Chairman since February 1999; President of UIH and President and
Chief Executive Officer of UIH Latin America, Inc. (a wholly-owned
subsidiary of UIH) since September 1998; President of UIH
Asia/Pacific Communications, Inc. (a majority-owned subsidiary of
UIH) since June 1995 and Chief Executive Officer since December 1996;
Senior Vice President, Development of UIH from March 1990 to June
1995.
</TABLE>
53
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME AND CURRENT BUSINESS ADDRESS AGE MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- ------------------------------------ --- ---------------------------------------------------------------------
<S> <C> <C>
John P. Cole, Jr.................... 68 Member of the Supervisory Board of Parent since February 1999;
Director of UIH since March 1998; Director of Century Communication
Corporation; partner of the law firm of Cole, Raywid & Braverman
since 1966.
Antony P. Ressler................... 38 Member of the Supervisory Board of Parent since February 1999;
Director of UIH since October 1993; principal of Apollo Advisors,
L.P., Berlitz International, Inc. and Ares Management, L.P. since
prior to 1994. Director of Allied Waste Industries, Inc., Berlitz
International, Inc., Prandium, Inc., Vail Resorts, Inc. Berlitz
International, Inc. and Koo Koo Roo Enterprises, Inc.
Gene W. Schneider................... 72 Advisor to the Supervisory Board of Parent since February 1999 and
Member from July 1995 to February 1999; Chairman of the Board of
Directors of UIH since May 1989, Chief Executive Officer of UIH since
October 1995 and President of UIH from October 1995 to September
1998.
Mark L. Schneider................... 43 Chairman of the Board of Management and Chief Executive Officer of
Parent since April 1997; President of Parent from April 1997 until
September 1998. Executive Vice President of UIH since December 1996;
President and Chief Executive Officer of UIH Europe/Middle East
Communications, Inc. since December 1996; Chief of Strategic Planning
and Operational Oversight of UIH from May 1996 to December 1996;
Consultant to UIH from March 1995 to May 1996; President of UIH from
July 1992 to March 1995; Member of the board of directors of UIH
since 1993.
John F. Riordan..................... 55 Member of the Board of Management of Parent since September 1998 and
Executive Vice President of Parent since March 1998; Vice Chairman
and President of Advanced Communications (a division of Parent) since
September 1998; CEO of chello broadband since March 1999; Member of
the Supervisory Board of Parent from April 1997 to March 1998;
Chairman and Chief Executive Officer of Princes Holdings Limited from
1992 to November 1998. Mr. Riordan is a citizen of Ireland.
Lawrence F. DeGeorge................ 52 Director of UIH since June 1997. Chief Executive Officer of LPL
Group, Inc., LPL Investments Group, Inc., LPL Management Group, Inc.
and DeGeorge Holding Ltd. since 1991. Director of CompleTel, LLC
since May 1998. President of Amphenol Corporation from May 1989 to
January 1991 and Executive Vice President and Chief Financial Officer
from September 1986 to May 1989. Director of Amphenol Corporation
from June 1987 until January 1991. Director of Advance Display
Technologies, Inc.
</TABLE>
54
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME AND CURRENT BUSINESS ADDRESS AGE MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- ------------------------------------ --- ---------------------------------------------------------------------
<S> <C> <C>
Bruce H. Spector.................... 56 Director of UIH since October 1993. Consultant to Apollo Advisors,
L.P. from October 1992 through 1994; Partner of Apollo Advisors, L.P.
since 1995; Former member of Stutman, Treister & Glatt Professional
Corporation; Director of Telemundo Group, Inc., Metropolis Realty
Trust, Inc., NextHealth, Inc. and Veil Resorts, Inc.
Curtis W. Rochelle.................. 82 Director of UIH since April 1993; Director of United International
Holdings, a Colorado general partnership from September 1989 until
its dissolution in December 1993; Owner of Rochelle Livestock.
Albert M. Carollo................... 84 Director of UIH since April 1993; Director of the Partnership from
December 1990 until its dissolution in December 1993; President and
Chairman of Sweetwater Television Company from 1955 to 1997.
Lawrence J. DeGeorge................ 81 Director of UIH since April 1993; Chairman of the Board and Chief
Executive Officer of Ampherol Corporation from May 1987 to May 1997;
Chief Executive Officer of Times Fiber Television Communications,
Inc., from 1985 to May 1997.
</TABLE>
4. OWNERSHIP OF SHARES BY DIRECTORS AND EXECUTIVE OFFICERS.
To the best knowledge of Parent and the Purchaser, none of the persons
listed on this Schedule I beneficially owns or has a right to acquire directly
or indirectly any Common Stock, and none of the persons listed on this Schedule
I has effected any transactions in the Common Stock during the past 60 days.
55
<PAGE>
COPIES OF THE LETTERS OF TRANSMITTAL, PROPERLY COMPLETED AND DULY SIGNED, WILL
BE ACCEPTED. THE LETTER OF TRANSMITTAL, CERTIFICATES AND ANY OTHER REQUIRED
DOCUMENTS SHOULD BE SENT BY EACH HOLDER OR SUCH HOLDER'S BROKER, DEALER,
COMMERCIAL BANK, TRUST COMPANY OR OTHER NOMINEE TO THE DEPOSITARY AT ONE OF THE
ADDRESSES SET FORTH BELOW:
THE DEPOSITARY FOR THE OFFER IS:
CONTINENTAL STOCK TRANSFER &
TRUST COMPANY
<TABLE>
<S> <C> <C>
BY HAND: BY MAIL: BY OVERNIGHT COURIER:
CONTINENTAL STOCK TRANSFER & CONTINENTAL STOCK TRANSFER & CONTINENTAL STOCK TRANSFER &
TRUST COMPANY TRUST COMPANY TRUST COMPANY
Two Broadway, 19th Floor Two Broadway, 19th Floor Two Broadway, 19th Floor
Reorganization Window Reorganization Window Reorganization Window
New York, New York 10004 New York, New York 10004 New York, New York 10004
</TABLE>
<TABLE>
<S> <C>
FACSIMILE TRANSMISSION: CONFIRMATION OF FAX:
(212) 509-5150 (212) 509-4000
</TABLE>
Questions and requests for assistance may be directed to the Information Agent
or the Dealer Manager at their respective addresses and telephone numbers as set
forth below. Additional copies of this Offer to Purchase, the Letter of
Transmittal, or other related tender offer materials may be obtained from the
Information Agent or from brokers, dealers, commercial banks or trust companies.
THE INFORMATION AGENT FOR THE OFFER IS:
[LOGO]
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (Call Collect)
or
CALL TOLL-FREE: (800) 322-2885
THE DEALER MANAGER FOR THE OFFER IS:
MORGAN STANLEY DEAN WITTER
1585 Broadway
New York, New York 10036
(212) 761-7055
<PAGE>
LETTER OF TRANSMITTAL
TO TENDER
SHARES OF COMMON STOCK
OF
@ ENTERTAINMENT, INC.
PURSUANT TO THE OFFER TO PURCHASE
DATED JUNE 8, 1999
BY
BISON ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
UNITED PAN-EUROPE COMMUNICATIONS N.V.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON TUESDAY, JULY 6, 1999, UNLESS THE OFFER IS EXTENDED.
THE DEPOSITARY FOR THE OFFER IS:
CONTINENTAL STOCK TRANSFER & TRUST COMPANY
<TABLE>
<CAPTION>
BY HAND: BY MAIL: BY OVERNIGHT COURIER:
<S> <C> <C>
CONTINENTAL STOCK TRANSFER & CONTINENTAL STOCK TRANSFER & CONTINENTAL STOCK TRANSFER &
TRUST COMPANY TRUST COMPANY TRUST COMPANY
Two Broadway, 19(th) Floor Two Broadway, 19(th) Floor Two Broadway, 19(th) Floor
Reorganization Window Reorganization Window Reorganization Window
New York, NY 10004 New York, NY 10004 New York, NY 10004
</TABLE>
<PAGE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY TO THE DEPOSITARY.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be completed by holders of certificates
representing shares of common stock, par value $.01 per share, (the "Common
Stock") of @ Entertainment, Inc., a Delaware Corporation (such holders of Common
Stock, collectively, the "Holders"). If you hold Common Stock in book-entry
form, you may tender your Common Stock by book-entry transfer to the account
maintained by the Depositary at The Depository Trust Company (the "Book-Entry
Transfer Facility"), along with an Agent's Message (as defined in the Offer to
Purchase), pursuant to the procedures set forth in Section 3--"Procedures for
Tendering Common Stock" of the Offer to Purchase. Holders who tender Common
Stock by book-entry transfer are referred to herein as "Book-Entry Holders" and
other Holders are referred to herein as "Certificate Holders."
Holders whose certificates evidencing Common Stock (the "Certificates") are
not immediately available or who cannot deliver their Certificates and all other
documents required hereby to the Depositary on or prior to the Expiration Date
(as defined in Section 1--"Terms of the Offer" of the Offer to Purchase), or who
cannot comply with the book-entry transfer procedures on a timely basis, may
nevertheless tender their Common Stock according to the guaranteed delivery
procedures set forth in Section 3--"Procedures for Tendering Common Stock" of
the Offer to Purchase. See Instruction 2 of this Letter of Transmittal. DELIVERY
OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO
THE DEPOSITARY.
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
DESCRIPTION OF COMMON STOCK TENDERED
- ------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S)
APPEAR(S) COMMON STOCK TENDERED
ON THE CERTIFICATE(S)) (ATTACH ADDITIONAL LIST IF NECESSARY)
- ------------------------------------------------------------------------------------------------------
TOTAL NUMBER OF
SHARES OF COMMON
STOCK EVIDENCED NUMBER OF SHARES
CERTIFICATE BY OF COMMON STOCK
NUMBER(S)* CERTIFICATE(S)* TENDERED:**
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
----------------------------------------------------
----------------------------------------------------
----------------------------------------------------
----------------------------------------------------
----------------------------------------------------
TOTAL SHARES OF COMMON STOCK
TENDERED........................
- ------------------------------------------------------------------------------------------------------
</TABLE>
* Need not be completed by Book-Entry Holders.
** Unless otherwise indicated, it will be assumed that all shares of Common
Stock evidenced by any share Certificate(s) delivered to the Depositary
are being tendered. See Instruction 4.
/ / CHECK HERE IF COMMON STOCK IS BEING TENDERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
Name(s) of Registered Holder(s) ____________________________________________
Window Ticket Number (if any) ______________________________________________
Date of Execution of Notice of Guaranteed Delivery _________________________
Name of Institution which Guaranteed Delivery ______________________________
DTC Account Number (if delivered by Book-Entry Transfer) ___________________
Transaction Code Number ____________________________________________________
/ / CHECK HERE IF TENDER IS BEING MADE IN RESPECT OF LOST OR MUTILATED
SECURITES. SEE INSTRUCTION 9.
NOTE: SIGNATURES MUST BE PROVIDED BELOW
<PAGE>
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to Bison Acquisition Corp. (the "Purchaser"),
a Delaware corporation and a wholly owned subsidiary of United Pan-Europe
Communications N.V., a public company with limited liability incorporated under
the laws of The Netherlands ("Parent"), the above-described shares of common
stock, par value $.01 per share (the "Common Stock"), of @ Entertainment, Inc.,
a Delaware corporation (the "Company"), upon the terms and subject to the
conditions set forth in the Offer to Purchase dated June 8, 1999 (the "Offer to
Purchase"), receipt of which is hereby acknowledged, and in this Letter of
Transmittal (which, as they may be amended and supplemented from time to time,
together constitute the "Offer"). The undersigned understands that, subject to
the terms of the Merger Agreement, the Purchaser reserves the right to assign to
an affiliate of Parent the right to purchase all or any portion of the Common
Stock tendered pursuant to the Offer, but the undersigned further understands
that any such assignment will not relieve the Purchaser of its obligations under
the Offer and that any such assignment will in no way prejudice the rights of
tendering Holders to receive payment for the Common Stock validly tendered and
accepted for payment pursuant to the Offer.
Subject to, and effective upon acceptance for payment of, and payment for,
the Common Stock tendered herewith in accordance with the terms of the Offer
(including, if the Offer is extended or amended, the terms and conditions of
such extension or amendment), the undersigned hereby sells, assigns and
transfers to, or upon the order of, the Purchaser, all right, title and interest
in and to all of the shares of Common Stock that are being tendered hereby and
any and all dividends, distributions, rights, or other securities issued or
issuable in respect of such shares of Common Stock on or after June 2, 1999
(collectively, "Distributions"), and irrevocably appoints the Depositary the
true and lawful agent and attorney-in-fact of the undersigned with respect to
such Common Stock and all Distributions with full power of substitution (such
power of attorney being deemed to be an irrevocable power coupled with an
interest) to (a) transfer ownership of such Common Stock and all Distributions,
together with all accompanying evidences of transfers and authenticity, to or
upon the order of the Purchaser, (b) present such Common Stock and all
Distributions for transfer on the books of the Company and (c) receive all
benefits and otherwise exercise all rights of beneficial ownership of such
Common Stock and all Distributions, all in accordance with the terms and subject
to the conditions of the Offer as set forth in the Offer to Purchase.
The undersigned hereby irrevocably appoints each designee of the Purchaser
as attorney-in-fact and proxy of the undersigned, with full power of
substitution, to vote in such manner as each such attorney-in-fact and proxy (or
any substitute thereof) shall deem proper in its sole discretion, and to
otherwise act (including pursuant to written consent) to the full extent of the
undersigned's rights with respect to the shares of Common Stock and all
Distributions tendered hereby and accepted for payment by the Purchaser prior to
the time of such vote or action. All such proxies shall be considered coupled
with an interest in the tendered Common Stock and shall be irrevocable and are
granted in consideration of, and are effective upon, the acceptance for payment
of such Common Stock and all Distributions by the Purchaser in accordance with
the terms of the Offer. Such acceptance for payment by the Purchaser shall
revoke, without further action, any other proxy or power of attorney granted by
the undersigned at any time with respect to such Common Stock and all
Distributions and no subsequent proxies or powers of attorney will be given (or,
if given, will not be deemed effective) with respect thereto by the undersigned.
The designees of the Purchaser will, with respect to the shares of Common Stock
for which the appointment is effective, be empowered to exercise all voting and
other rights as they in their sole discretion may deem proper at any annual,
special, adjourned or postponed meeting of the Company's stockholders, by
written consent or otherwise, and the Purchaser reserves the right to require
that, in order for shares of Common Stock or any Distributions to be deemed
validly tendered, immediately upon the Purchaser's acceptance for payment of
such shares of Common Stock, the Purchaser must be able to exercise all rights
(including, without limitation, all voting rights) with respect to such shares
of Common Stock and receive all Distributions.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Common Stock and
all Distributions tendered hereby and that, when the same are accepted for
payment by the Purchaser, the Purchaser will acquire good, marketable and
unencumbered title thereto, free and clear of all liens, restrictions, charges
and encumbrances, and the same will not be subject to any adverse claim. The
undersigned will, upon request, execute and deliver any additional documents
deemed by the Depositary or the Purchaser to be necessary or desirable to
complete the sale, assignment, and transfer of the Common Stock and all
Distributions tendered hereby. In addition, the undersigned shall promptly remit
and transfer to the Depositary for the account of the Purchaser any and all
Distributions in respect of the Common Stock tendered hereby, accompanied by
appropriate documentation of transfer and, pending such remittance or
appropriate assurance thereof, the Purchaser shall be entitled to all rights and
privileges as owner of any such Distributions and may withhold the entire
purchase price or deduct from the purchase price the amount or value thereof, as
determined by the Purchaser in its sole discretion.
<PAGE>
No authority herein conferred or agreed to be conferred shall be affected
by, and all such authority shall survive, the death or incapacity of the
undersigned. All obligations of the undersigned hereunder shall be binding upon
the heirs, personal representatives, successors and assigns of the undersigned.
Subject to the withdrawal rights set forth in Section 4--"Withdrawal Rights" of
the Offer to Purchase, the tender of the Common Stock and related Distributions
hereby made is irrevocable.
The undersigned understands that tenders of the Common Stock pursuant to any
of the procedures described in Section 3--"Procedures for Tendering Common
Stock" of the Offer to Purchase and in the instructions hereto will constitute
the undersigned's acceptance of the terms and conditions of the Offer. The
Purchaser's acceptance for payment of such Common Stock will constitute a
binding agreement between the undersigned and the Purchaser upon the terms and
subject to the conditions set forth in the Offer. The undersigned recognizes
that under certain circumstances set forth in the Offer to Purchase, the
Purchaser may not be required to accept for payment any of the Common Stock
tendered hereby.
Unless otherwise indicated herein under "Special Payment Instructions,"
please issue the check for the purchase price and/or return any Common Stock
Certificates not tendered or not accepted for payment in the name(s) of the
registered holder(s) appearing under "Description of Common Stock Tendered."
Similarly, unless otherwise indicated under "Special Delivery Instructions,"
please mail the check for the purchase price and/or return any Certificates not
tendered or not accepted for payment (and accompanying documents, as
appropriate) to the address(es) of the registered holder(s) appearing under
"Description of Common Stock Tendered." In the event that both the Special
Delivery Instructions and the Special Payment Instructions are completed, please
issue the check for the purchase price and/or issue any Certificates not so
tendered or accepted for payment in the name of, and deliver said check and/or
return such certificates to, the person or persons so indicated. The undersigned
recognizes that the Purchaser has no obligation, pursuant to the Special Payment
Instructions, to transfer any Common Stock from the name of the registered
holder thereof if the Purchaser does not accept for payment any of the Common
Stock so tendered.
<PAGE>
- --------------------------------------------------------------------------------
- ------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if Certificate(s) not tendered or not purchased and/or
the check for the purchase price of Common Stock purchased is to be issued
in the name of someone other than the undersigned.
Issue check and Certificate(s) to:
Name: ______________________________________________________________________
PLEASE TYPE OR PRINT
Address: ___________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
(INCLUDE ZIP CODE)
*
__________________________________________________________________________
(TAX IDENTIFICATION OR SOCIAL SECURITY NO.) (SEE SUBSTITUTE FORM W-9
INCLUDED HEREWITH)
__________________________________________________________________________
* SIGNATURE GUARANTEE REQUIRED
- ------------------------------------------------------------
- ------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if Certificate(s) not tendered or not purchased and/or
the check for the purchase price of Common Stock purchased is to be sent to
someone other than the undersigned, or to the undersigned at an address
other than that shown above.
Mail check and Certificate(s) to:
Name: ______________________________________________________________________
PLEASE TYPE OR PRINT
Address: ___________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
(INCLUDE ZIP CODE)
*
__________________________________________________________________________
(TAX IDENTIFICATION OR SOCIAL SECURITY NO.) (SEE SUBSTITUTE FORM W-9
INCLUDED HEREWITH)
- -----------------------------------------------------
<PAGE>
IMPORTANT
HOLDER(S) SIGN HERE
(SEE INSTRUCTIONS 1 AND 5)
(ALSO PLEASE COMPLETE SUBSTITUTE FORM W-9 CONTAINED HEREIN)
Signature(s) of Holder(s): ___________________________________________________
Date: _________________________________, 1999
(Must be signed by registered holder(s) exactly as name(s) appear(s) on
Certificate(s) or on a security position listing or by person(s) authorized to
become registered holder(s) by certificate(s) and documents transmitted with
this Letter of Transmittal. If signature is by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or
other person acting in a fiduciary or representative capacity, please provide
the following information and see Instruction 5.)
Name(s): _____________________________________________________________________
(PLEASE PRINT)
Capacity (Full Title): _______________________________________________________
Address: _____________________________________________________________________
______________________________________________________________________________
(INCLUDE ZIP CODE)
____________________________
(DAYTIME AREA CODE AND TELEPHONE NO.)
____________________________
(TAX IDENTIFICATION AND SOCIAL SECURITY NO.)
GUARANTEE OF SIGNATURE(S)
(See Instructions 1 and 5)
FOR USE BY FINANCIAL INSTITUTIONS ONLY.
FINANCIAL INSTITUTIONS: PLACE MEDALLION GUARANTEE IN SPACE BELOW
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. Except as otherwise provided below, all
signatures on this Letter of Transmittal must be guaranteed by a financial
institution (including most banks, savings and loan associations and brokerage
houses) that is a participant in the Security Transfer Agents Medallion Program,
the New York Stock Exchange Medallion Signature Guarantee Program or the Stock
Exchange Medallion Program (an "Eligible Institution"). Signatures on this
Letter of Transmittal need not be guaranteed (a) if this Letter of Transmittal
is signed by the registered holder(s) of the Common Stock tendered herewith and
such holder(s) have not completed either the box entitled "Special Payment
Instructions" or the box entitled "Special Delivery Instructions" on this Letter
of Transmittal or (b) if such Common Stock is tendered for the account of an
Eligible Institution. See Instruction 5 of this Letter of Transmittal.
2. DELIVERY OF LETTER OF TRANSMITTAL AND SHARE CERTIFICATES OR BOOK-ENTRY
CONFIRMATIONS. This Letter of Transmittal is to be used if Certificates are to
be forwarded herewith. Certificates evidencing all physically tendered Common
Stock along with this Letter of Transmittal or a copy thereof, properly
completed and duly executed with any required signature guarantees, and any
other documents required by this Letter of Transmittal, must be received by the
Depositary at one of its addresses set forth herein on or prior to the
Expiration Date (as defined in Section 1-- "Terms of the Offer" of the Offer to
Purchase). Common Stock held through The Depository Trust Company must be
tendered to the Depositary by means of delivery of an Agent's Message (as more
fully described in the Offer to Purchase).
Holders whose Certificates are not immediately available or who cannot
deliver their Certificates and all other required documents to the Depositary on
or prior to the Expiration Date or who cannot complete the procedures for
book-entry transfer on a timely basis may nevertheless tender their Common Stock
by properly completing and duly executing a Notice of Guaranteed Delivery
pursuant to the guaranteed delivery procedure set forth in Section
3--"Procedures for Tendering Common Stock" of the Offer to Purchase. Pursuant to
such procedure: (i) such tender must be made by or through an Eligible
Institution; (ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by the Purchaser, must be received
by the Depositary on or prior to the Expiration Date; and (iii) Certificates for
all tendered shares of Common Stock in proper form for transfer, as well as a
Letter of Transmittal, properly completed and duly executed with any required
signature guarantees, and all other documents required by this Letter of
Transmittal must be received by the Depositary within three Nasdaq National
Market trading days after the date of execution of such Notice of Guaranteed
Delivery.
If Certificates are forwarded to the Depositary in multiple deliveries, a
properly completed and duly executed Letter of Transmittal (or copy thereof)
must accompany each such delivery.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, COMMON STOCK,
CERTIFICATES AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE
BOOK-ENTRY TRANSFER FACILITY, IS AT THE OPTION AND THE RISK OF THE TENDERING
HOLDER AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE
DEPOSITARY. IF SUCH DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted and no
fractional shares of Common Stock will be purchased. All tendering Holders, by
execution of this Letter of Transmittal or a copy hereof, waive any right to
receive any notice of the acceptance of their Common Stock for payment.
3. INADEQUATE SPACE. If the space provided under "Description of Common
Stock Tendered" is inadequate, the share Certificate numbers and/or the number
of Common Stock shares should be listed on a separate schedule and attached
hereto.
4. PARTIAL TENDERS (APPLICABLE TO HOLDERS OF SHARE CERTIFICATES ONLY). If
fewer than all the Common Stock evidenced by any Certificate submitted are to be
tendered, fill in the number of Common Stock shares which are to be tendered in
the box entitled "Number of Shares of Common Stock Tendered." In such cases, new
Certificate(s) evidencing the remainder of the Common Stock that was evidenced
by Certificate(s) delivered to the Depositary will be sent to the person signing
this Letter of Transmittal, unless otherwise provided in the box entitled
"Special Delivery Instructions" on this Letter of Transmittal, as soon as
practicable after the Expiration Date. All Common Stock represented by
Certificates delivered to the Depositary will be deemed to have been tendered
unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL; STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holders of the Common
Stock tendered hereby, the signatures must correspond with the names as written
on the face of the Certificates without alteration, enlargement or any change
whatsoever.
<PAGE>
If any of the Common Stock tendered hereby are owned of record by two or
more joint owners, all such owners must sign this Letter of Transmittal.
If any of the tendered Common Stock is registered in different names on
several certificates, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal as there are different registrations of the
Common Stock.
If this Letter of Transmittal or any Certificate or stock power is signed by
a trustee, executor, administrator, attorney-in-fact, officer of a corporation
or other person acting in a fiduciary or representative capacity, such person
should so indicate when signing, and evidence satisfactory to the Depositary and
the Purchaser of such person's authority so to act must be submitted.
If this Letter of Transmittal is signed by the registered holder(s) of the
Common Stock transmitted hereby, no endorsements of certificates or separate
stock powers are required unless payment is to be made to, or Certificates
evidencing the Common Stock not tendered or purchased are to be issued in the
name of, a person other than the registered holder(s). Signatures on such
Certificates or stock powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder of the Common Stock tendered hereby, the Certificate(s) must
be endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name or names of the registered holder or holders appear(s) on
such Certificate(s). Signatures on such Certificates or stock powers must be
guaranteed by an Eligible Institution.
6. TRANSFER TAXES. Except as otherwise provided in this Instruction 6, the
Purchaser will pay or cause to be paid any transfer taxes with respect to the
transfer and sale of purchased Common Stock to it or its order pursuant to the
Offer. If, however, payment of the purchase price of any Common Stock purchased
is to be made to or, in the circumstances permitted hereby, if Certificates for
the Common Stock not tendered or purchased is to be registered in the name of,
any person other than the registered holder, or if tendered Certificates are
registered in the name of any person other than the person(s) signing this
Letter of Transmittal, the amount of any transfer taxes (whether imposed on the
registered holder or such person) payable on account of the transfer to such
person will be deducted from the purchase price if satisfactory evidence of the
payment of such taxes, or exemption therefrom, is not submitted.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE CERTIFICATES LISTED IN THIS LETTER OF
TRANSMITTAL.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check for the purchase
price is to be issued in the name of, and/or Certificates for the Common Stock
not tendered or not accepted for payment are to be issued in the name of a
person other than the signer of this Letter of Transmittal or if a check and/or
such Common Stock is to be mailed to someone other than the signer of this
Letter of Transmittal or to an address other than that shown above, the
appropriate boxes on this Letter of Transmittal should be completed.
8. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions or requests for
assistance may be directed to, or additional copies of the Offer to Purchase,
this Letter of Transmittal, the Notice of Guaranteed Delivery and other tender
offer materials may be obtained from, the Information Agent or the Dealer
Manager at their respective addresses set forth below or from your broker,
dealer, commercial bank or trust company.
9. LOST OR DESTROYED COMMON STOCK CERTIFICATES. If any Certificates have
been lost or destroyed, the Holder should promptly notify the Company's transfer
agent, Continental Stock Transfer & Trust Company. The Holder will then be
instructed as to the procedure to be followed in order to replace the relevant
Certificates. This Letter of Transmittal and related documents cannot be
processed until the procedures for replacing lost or destroyed Certificates have
been followed.
<PAGE>
IMPORTANT TAX INFORMATION
Under United States federal income tax law, a tendering Holder may be
subject to backup withholding tax at a rate of 31% with respect to payments by
the Depositary pursuant to the Offer unless such Holder (i) is a corporation or
other exempt recipient and, if required, establishes its exemption from backup
withholding, (ii) provides its correct taxpayer identification number ("TIN"),
certifies that it is not currently subject to backup withholding and otherwise
complies with applicable requirements of the backup withholding rules, or (iii)
certifies as to its non-United States status. Completion of a Substitute Form
W-9, in the case of a U.S. Holder, provided in this Letter of Transmittal should
be used for this purpose. Failure to provide such Holder's TIN on the Substitute
Form W-9, if applicable, may subject the tendering Holder (or other payee) to a
$50 penalty imposed by the Internal Revenue Service ("IRS"). More serious
penalties may be imposed for providing false information which, if willfully
done, may result in fines and/or imprisonment. The box in part 3 of the
Substitute Form W-9 may be checked if the tendering Holder (or other payee) is
required to submit a Substitute Form W-9 and has not been issued a TIN and has
applied for a TIN or intends to apply for a TIN in the near future. If the box
in Part 3 is so checked and the Depositary is not provided with a TIN by the
time of payment, the Depositary will withhold 31% on all such payments of the
Offer Price until a TIN is provided to the Depositary. In order for a foreign
Holder to qualify as an exempt recipient, that Holder should submit an IRS Form
W-8 or a Substitute Form W-8, signed under penalties of perjury, attesting to
that Holder's exempt status. Such forms can be obtained from the Depositary.
Failure to provide the information on the form may subject tendering Holders to
31% United States federal income tax withholding on the payment of the purchase
price of cash pursuant to the Offer.
IMPORTANT: THIS LETTER OF TRANSMITTAL OR A COPY HEREOF TOGETHER WITH
CERTIFICATES AND ALL OTHER REQUIRED DOCUMENTS OR THE NOTICE OF
GUARANTEED DELIVERY MUST BE RECEIVED BY THE DEPOSITARY ON OR PRIOR TO
THE EXPIRATION DATE.
<PAGE>
TO BE COMPLETED BY ALL TENDERING HOLDERS
(SEE INSTRUCTION 9)
<TABLE>
<S> <C> <C>
PAYER'S NAME:
PART 1-PLEASE PROVIDE YOUR TIN IN Social Security Number
THE BOX AT RIGHT AND CERTIFY BY or
SIGNING AND DATING BELOW Employer Identification
Number:
------------------
SUBSTITUTE PART 2-If you are exempt from PART 3-If you are
FORM W-9 backup withholding, please check awaiting TIN, check
the box: / / box: / /
PART 4-CERTIFICATION-Under penalties of perjury, I certify
that:
(1) The number shown on this form is my correct Taxpayer
Identification Number (or I am waiting for a number to be
issued to me), and
(2) I am not subject to backup withholding because (i) I am
exempt from backup withholding, (ii) I have not been
notified by the Internal Revenue Service (the "IRS") that I
DEPARTMENT OF THE TREASURY am subject to backup withholding as a result of a failure to
INTERNAL REVENUE SERVICE report all interest or dividends, or (iii) the IRS has
PAYER'S REQUEST FOR
TAXPAYER IDENTIFICATION
NUMBER ("TIN")
AND CERTIFICATION notified me that I am no longer subject to backup
withholding.
CERTIFICATION INSTRUCTIONS-You must cross out item (2) above
if you have been notified by the IRS that you are subject to
backup withholding because of under-reporting interest or
dividends on your tax return.
SIGNATURE DATE
NAME (Please Print)
ADDRESS
CITY, STATE AND ZIP CODE
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW THE
ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON
SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
NOTE: YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART
3 OF THE SUBSTITUTE FORM W-9
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (1) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration office or (2)
I intend to mail or deliver an application in the near future. I understand that
if I do not provide a taxpayer identification number by the time of payment, 31%
of all reportable cash payments made to me thereafter will be withheld until I
provide a taxpayer identification number.
Signature: ______________________________ Date: _____________________________
<PAGE>
THE INFORMATION AGENT FOR THE OFFER IS:
[LOGO]
156 Fifth Avenue
New York, New York 10010
Call Collect: (212) 929-5500
Toll Free: (800) 322-2885
THE DEALER MANAGER FOR THE OFFER IS:
MORGAN STANLEY DEAN WITTER
1585 Broadway
New York, New York 10036
(212) 761-7055
<PAGE>
Exhibit (a)(4)
UNITED PAN-EUROPE COMMUNICATIONS EXPANDS ITS EASTERN
EUROPEAN FOOTPRINT BY ACQUIRING POLAND'S LEADING CABLE, DTH
AND PROGRAMMING NETWORK
@Entertainment Merger adds 948,150 Subscribers
Amsterdam. United Pan-Europe Communications (UPC) today announced that it has
signed a definitive agreement to acquire @Entertainment, Inc. (ATEN), the
leading Polish cable, DTH, and programming provider, in an all cash transaction
valuing ATEN at $19.00 per share.
The merger agreement, which has been unanimously approved by the Board of
Directors of UPC and @Entertainment, provides that UPC through a wholly owned
subsidiary, will launch a tender offer to acquire all of the outstanding shares
of @Entertainment's common stock. Concurrent with the execution of the merger
agreement, certain holders of common stock, warrants, and options of
@Entertainment representing 48.7% of the issued and outstanding common stock and
51.7% of the common stock on a fully diluted basis have entered into agreements
to tender all of their equity interests in ATEN.
@Entertainment is the leading integrated provider of pay cable television and
digital satellite direct-to-home (DTH) services in Poland. @Entertainment also
has significant interests in the packaging and delivery of high quality
television programming and owns the Polish rights to valuable programming such
as Wizja Sports Channel (with football, basketball, and local sports
programming), HBO (on DTH), Discovery Channel, Fox Kids and CNN. UPC intends to
capitalize upon this across its cable networks in the Eastern European region.
As of April 30, 1999 @Entertainment's cable systems passed 1,659,000 homes with
approximately 948,150 subscribers, of which 245,713 subscribe to its broadcast
cable TV package and 702,439 subscribe to an expanded basic programming
offering. Seventy three percent of @Entertainment's subscribers are served by
860 Mhz plant, with only modest additional investment required to upgrade the
network to fully two-way interactive cable capable of delivering UPC's "triple
play" of video, voice and data services.
Announcing the merger agreement, Mark Schneider, Chairman and CEO of UPC,
commented today:
"@Entertainment is a critical addition to our pan-European strategy and
compliments UPC's stated ambition of making selective complementary
acquisitions in Europe. UPC is the leading provider of broadband cable
<PAGE>
services in Central Europe with strong positions in Hungary and the
Slovak Republic, a sizable stake in the Czech Republic, and now a
premiere position in Poland. UPC has built a substantial platform for
itself in Eastern Europe to which it can provide its broadband cable
multi-media services. Our chello broadband Internet service will be made
available in Poland as quickly as possible as will our Priority Telecom
service when regulations permit. @Entertainment's programming is a
valuable asset to us as we seek to expand our network to the nearly 7.2
million television homes in Poland not served already by cable or DTH,
while DTH itself gives us the capacity to serve those customers outside
the reach of our other wireline cable networks throughout Europe. Poland
is one of the fastest growing economies in Europe, with an average GDP
growth rate in excess of 6% over the past 5 years. Poland's population of
approximately 38 million people spend an average of 252 minutes per
(adult) day watching television, one of the highest rates in Europe.
Poland is geographically the closest Central European economy to Germany
and has been accepted for membership to NATO, and is on the "fast track"
to membership in the EU. It has enormous potential for the development of
UPC's services in the future."
Robert E. Fowler, Chief Executive Officer of @Entertainment said:
"The merger of @Entertainment and UPC will bring significant benefits to
our customers by introducing them to high speed broadband internet
access, data communications and telephony and further expanding their
programming choices. We at @Entertainment are excited to be joining such
a European market leader in the provision of integrated cable services as
UPC."
UPC was advised by Morgan Stanley Dean Witter in this transaction. Goldman
Sachs International advised @Entertainment.
Headquartered in Amsterdam, UPC is one of the most innovative broadband
communications companies in the Europe and owns and operates the largest
pan-European group of broadband communication networks. UPC provides cable
television, telephony, high speed internet access and programming services in
ten countries across Europe and Israel. As of March 31, 1999, UPC's systems
passed approximately 4.7 million homes with 3.4 basic video subscribers, of
which approximately 500,000 take an expanded tier service. In addition, UPC had
97,221 telephony access lines and 20,760 carrier select telephone customers, as
well as 35,449 broadband Internet access subscribers. UPC completed an IPO in
February 1999 and its shares are listed on the Amsterdam Stock Exchange ("UPC")
and NASDAQ ("UPCOY").
UPC is a consolidated subsidiary of United International Holdings. Inc. (UIH)
<PAGE>
(NASDAQ: "UIHIA"). Microsoft Corporation has an interest of approximately
7.8% in UPC.
@Entertainment is the leading provider of pay television services in Poland. The
company owns and operates Polska Telewizja Kablowa (PTK), the largest cable
television network in Poland with approximately 948,000 subscribers at March 31,
1999. The company also owns and operates Wizja TV, Poland's first digital DTH
broadcasting service, which was officially launched in September 18, 1998.
@Entertainment also owns Wizja TV Spolka Produkcyjna, a company that invests in
the Polish television and film industry. @Entertainment is traded on the NASDAQ
under the symbol: ATEN.
For further information contact:
UPC
Steve Butler, Managing Director of Capital Markets/Treasurer/Investor Relations
31 20 778 9860
email: [email protected]
Henrietta Hirst, Communications Director of UPC
44 171 518 7980
email: [email protected]
@Entertainment Inc.
Robert E. Fowler III, Chief Executive Officer of @Entertainment
44 171 478 3800
Donald Muller Jones, Chief Financial Officer of @Entertainment
44 171 478 3810
The preceding remarks contain forward-looking statements that involve risks and
uncertainties including, without limitation, that the conditions to the tender
offer and the merger will not be met and thus the transactions will not be
consummated.
<PAGE>
Exhibit 99(c)(1)
AGREEMENT AND PLAN OF MERGER
AMONG
@ENTERTAINMENT, INC.,
UNITED PAN-EUROPE COMMUNICATIONS N.V.
AND
BISON ACQUISITION CORP.
DATED AS OF JUNE 2, 1999
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of June 2, 1999, among
@Entertainment, Inc., a corporation organized under the laws of the State of
Delaware (the "Company"), United Pan-Europe Communications N.V., a corporation
organized under the laws of The Netherlands ("Parent") and Bison Acquisition
Corp., a corporation organized under the laws of the State of Delaware ("Merger
Sub").
RECITALS
WHEREAS, the Executive Board of Parent and the respective Boards of
Directors of Merger Sub and the Company have approved the acquisition of the
Company by Merger Sub;
WHEREAS, in contemplation thereof it is proposed that Merger Sub will
make a tender offer (as it may be amended from time to time as permitted by this
Agreement, the "Offer") to purchase all the issued and outstanding shares of
Common Stock, subject to the terms and conditions of this Agreement, at a price
of $19.00 per share net to the seller in cash (such amount, or any other amount
per share of Common Stock to be paid pursuant to the Offer, the "Offer Price");
WHEREAS, to complete such acquisition, the Executive Board of Parent
and the respective Boards of Directors of Merger Sub and the Company, have
approved the merger of Merger Sub into the Company (the "Merger"), pursuant to
and subject to the terms and conditions of this Agreement; and
WHEREAS, the Board of Directors of the Company has unanimously (x)
determined that each of the Offer and the Merger are advisable and fair to, and
in the best interests of, the holders of the capital stock of the Company,
including, but not limited to, the holders of the Common Stock, (y) approved the
Offer and the Merger and (z) recommended the acceptance of the Offer, the
approval of the Merger and the approval and adoption of this Agreement by the
stockholders of the Company; and
WHEREAS, Parent and Merger Sub are unwilling to enter into this
Agreement unless certain holders of Common Stock immediately following the
execution and delivery of this Agreement, enter into stockholders agreements
(the "Common Stockholders Agreements") among Parent, Merger Sub and each of
certain holders of Common Stock, Options and Company Warrants providing for,
among other things, the agreement of such holders to tender all shares of Common
Stock owned by such persons pursuant to the Offer, the granting to Parent and
Merger Sub of an option to purchase all such shares of Common Stock, Options and
Company Warrants owned by such Person and requiring the Parent and Merger Sub to
purchase the Options and Company Warrants if such option is no exercised, in
each case under the circumstances set forth in such agreements; and
1
<PAGE>
WHEREAS, Parent and Merger Sub are unwilling to enter into this
Agreement unless each of the holders of Company Preference Shares immediately
following the execution and delivery of this Agreement, enter into stockholders
agreements with Parent and Merger Sub (the "Preferred Stockholders Agreements"
and, collectively with the Common Stockholders Agreements, the "Stockholders
Agreements") among Parent, Merger Sub and each such holder providing for, among
other things, the agreement of such holders to grant to Parent and Merger Sub an
option to purchase all such Company Preference Shares and requiring Parent and
Merger Sub to purchase such Company Preference Shares if such option is not
exercised, in each case, under the circumstances set forth in such agreements;
and
WHEREAS the Board of Directors of the Company has (i) approved the
terms of the Stockholders Agreements and the transactions contemplated thereby,
including for the purposes of Section 203 of the DGCL and (ii) approved Parent
and Merger Sub and the Stockholders party thereto entering into the Stockholders
Agreements which are to be executed following the execution hereof; and
WHEREAS, Parent, Merger Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger;
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements set forth herein, Parent, Merger Sub and
the Company hereby agree as follows:
ARTICLE I
Definitions
As used in this Agreement, the following terms shall have the
respective meanings set forth below:
"Acquisition Proposal": As defined in Section 8.2(a).
"Affiliate": As defined in Rule 12b-2 under the Exchange Act.
"Agreement": as defined in the preamble hereto.
"Agreements and Instruments": as defined in Section 6.8.
"Authorization": Any consent, approval or authorization of, expiration
or termination of any waiting period requirement (including pursuant to the
HSR Act) by, or filing, registration, qualification, declaration or designation
with, any Governmental Body.
"Business Plan": As defined in Section 8.1(d).
"By-Laws": The by-laws of the Company.
"Cash Payment": As defined in Section 8.11(b).
2
<PAGE>
"Certificate of Merger": The certificate of merger with respect to
the merger of the Company with and into Merger Sub, containing the provisions
required by, and executed in accordance with, Section 251 of the DGCL.
"Claim": As defined in Section 8.7(a).
"Closing": The closing of the Merger.
"Closing Date": The date on which the Closing occurs.
"Code": The Internal Revenue Code of 1986, as amended, and all
regulations promulgated thereunder, as in effect from time to time.
"Common Stock": The Company's common stock, par value $0.01 per share.
"Common Stockholders Agreements": As defined in the fifth recital
hereof.
"Company": @Entertainment, Inc., a Delaware corporation.
"Company Certificates": As defined in Section 5.2(a).
"Company Charter": The Amended and Restated Certificate of
Incorporation of the Company, as amended to the date hereof and as it may be
further amended prior to the Effective Date with the consent of Parent pursuant
to Section 8.1.
"Company Disclosure Statement": The disclosure statement, dated the
date of this Agreement, delivered by the Company to Parent.
"Company Preference Shares": The Company's Series A and Series B 12%
Cumulative Preference Shares, par value $0.01 per share.
"Company SEC Reports": As defined in Section 6.12.
"Company Stockholders' Meeting": As defined in Section 8.4.
"Company Warrants": Warrants to purchase shares of Common Stock.
"Confidentiality Agreement": The Confidentiality Agreement between
Parent and the Company.
"Control": With respect to any Person, the possession, direct or
indirect, of the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting securities, by
contract, or otherwise.
"DGCL": The Delaware General Corporation Law.
"Dissenting Stockholder": As defined in Section 5.2(c).
3
<PAGE>
"Effective Time": As defined in Section 3.2.
"Employee Plan": As defined in Section 6.9(a).
"Employees": As defined in Section 6.9(a).
"ERISA": The Employee Retirement Income Security Act of 1974, as
amended, and all regulations promulgated thereunder, as in effect from time to
time.
"ERISA Affiliates": Any trade or business, whether or not incorporated,
that is treated as a single employer with the Company or any of its Subsidiaries
under Section 414 of the Code.
"Exchange Act": The Securities Exchange Act of 1934, as amended.
"Executive Agreements": As defined in Section 8.9(a).
"Executive Officer": Any "officer" (determined in accordance with
Rule 16a-1(f) under the Exchange Act as in effect on the date hereof) of an
entity.
"Governmental Body": Any supranational, national, provincial, county,
local, municipal or other legislative or executive body or governmental
department, authority, commission, court, board, bureau, agency or
instrumentality, including without limitation, any of the foregoing constituted
by the Republic of Poland, the United Kingdom, the United States of America or
any of their respective political subdivisions.
"Government Licenses": As defined in Section 6.4.
"HSR Act": The Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended.
"Indemnified Parties": As defined in Section 8.7(a).
"Information Statement": As defined in Section 2.3.
"Intellectual Property": As defined in Section 6.11.
"knowledge": With respect to the Company, the actual knowledge of any
Executive Officer of the Company and, with respect to Parent or Merger Sub, the
actual knowledge of any Executive Officer of Parent or Merger Sub, as the case
may be.
"Law": Any foreign or domestic law, statute, code, ordinance, rule,
regulation promulgated, or order, judgment, writ, stipulation, award, injunction
or decree entered by any Governmental Body.
4
<PAGE>
"Letter of Transmittal": As defined in Section 2.1(b).
"Lien": As defined in Section 6.17.
"Material Adverse Effect": A material adverse effect on the business,
properties, assets, liabilities, operations, results of operations or condition
(financial or otherwise) of the Company and its Subsidiaries taken as a whole.
"Material Systems": As defined in Section 6.22.
"Merger": As defined in the third recital hereto.
"Merger Consideration": As defined in Section 5.1(b).
"Merger Sub": Bison Acquisition Corp., a Delaware corporation.
"Merger Sub Common Stock": Merger Sub's common stock, par value $0.01
per share.
"Minimum Condition": As defined in Annex A to this Agreement.
"NASDAQ": The Nasdaq Stock Market, National Market System.
"Offer": As defined in the second recital hereof.
"Offer Documents": As defined in Section 2.1(b).
"Offer Price": As defined in the second recital hereof.
"Offer to Purchase": As defined in Section 2.1(b).
"Option": As defined in Section 8.11(a).
"Parent": United Pan-Europe Communications N.V., a corporation
organized under the laws of The Netherlands.
"Parent Disclosure Statement": The disclosure statement, dated the date
of this Agreement, delivered by Parent to the Company.
"Parent Representatives": As defined in Section 8.6.
"Paying Agent": As defined in Section 5.2.
"Payment Date": The date which is the third business day after the
Tender Offer Acceptance Date.
"Payment Fund": As defined in Section 5.2(c).
5
<PAGE>
"PCI": Poland Communications Inc., a New York corporation and Wholly
Owned Subsidiary of the Company.
"Permitted Investments": As defined in Section 5.2(c).
"Permitted Liens": As defined in Section 6.17.
"Person": Any individual or corporation, company, partnership, trust,
incorporated or unincorporated association, joint venture or other entity of any
kind.
"Preferred Stockholders Agreements": As defined in the sixth recital
herein.
"Proxy Statement": As defined in Section 6.16
"Relevant Date": Each of the following dates: September 4, 1999,
September 9, 1999, December 31, 1999, January 1, 2000, February 28, 2000,
February 29, 2000, March 1, 2000, December 31, 2000, and January 1, 2001.
"Schedule 14D-1": As defined in Section 2.1(b).
"Schedule 14D-9": As defined in Section 2.2.
"SEC": The Securities and Exchange Commission.
"Securities Act": The Securities Act of 1933, as amended.
"Stockholders Agreements": As defined in the sixth recital hereof.
"Stock Incentive Plans": As defined in Section 5.5(a).
"Stock Options": As defined in Section 5.5(a).
"Stock Plans": As defined in Section 5.5(a).
"Subsidiary": As to any Person, any other Person of which more than
(i) 50% of the equity and (ii) 50% of the voting interests are owned,
directly or indirectly, by such first Person; PROVIDED THAT, for purposes of
the covenants set forth in Article VIII, references to Subsidiaries shall not
include any Person as to which such first Person's voting interests are
subject to a voting agreement, proxy, management contract or other
arrangement as a result of which such first Person does not Control such
other Person. For the avoidance of doubt, the term "Subsidiary", when applied
to the Company, includes any Person listed as a Subsidiary on Schedule 6.2 to
the Company Disclosure Statement.
"Superior Proposal": As defined in Section 8.4(a).
"Surviving Corporation": Shall mean the Company in its capacity as the
surviving corporation in the Merger pursuant to Section 3.1 of this Agreement.
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"Tax": As defined in Section 6.10(e).
"Tax Controversy": As defined in Section 6.10(b).
"Tax Return": As defined in Section 6.10(e).
"Tender Offer Acceptance Date": The date on which Merger Sub shall have
accepted for payment the shares of Common Stock validly tendered and not
withdrawn prior to the expiration date of the Offer.
"Tender Offer Conditions": As defined in Section 2.1(a).
"Wholly Owned Subsidiary": As to any Person, a Subsidiary of such
Person 100% of the equity and voting interest in which (other than directors'
qualifying shares) is owned, directly or indirectly, by such Person.
"Voting Debt": As defined in Section 6.6(a).
"Year 2000 Compliant": As defined in Section 6.22.
ARTICLE II
The Offer
2.1 THE OFFER. (a) Provided that this Agreement shall not have been
terminated in accordance with Article X hereof and so long as none of the events
set forth in Annex A hereto (the "Tender Offer Conditions") shall have occurred
and are continuing (unless such event shall have been waived by Parent or Merger
Sub), as promptly as practicable, but in no event later than the fifth business
day after the date of this Agreement, Parent and Merger Sub shall, and Parent
shall cause Merger Sub to, commence the Offer at the Offer Price. The initial
expiration date for the Offer shall be the twentieth business day following the
commencement of the Offer. The obligations of Merger Sub to accept for payment
and to pay for any shares of Common Stock tendered shall be subject only to the
Tender Offer Conditions, any of which may be waived by Parent or Merger Sub in
their sole discretion; PROVIDED, HOWEVER, that Merger Sub shall not waive the
Minimum Condition without the prior written consent of the Company. The Tender
Offer Conditions are for the sole benefit of Parent and Merger Sub and may be
asserted by Parent and Merger Sub regardless of the circumstances giving rise to
any such Tender Offer Conditions or, except as expressly set forth herein, may
be waived by Parent and Merger Sub in whole or in part. Parent and Merger Sub
expressly reserve the right to modify the terms of the Offer; PROVIDED HOWEVER,
that without the prior written consent of the Company, Merger Sub shall not
(i) reduce the number of shares of Common Stock to be purchased in the Offer,
(ii) reduce the Offer Price, (iii) modify or add to the Tender Offer Conditions,
(iv) change the form of consideration payable in the Offer or (v) make any other
change in the terms of the Offer which is materially adverse to the holders of
Common Stock. Notwithstanding the foregoing sentence, Merger Sub may, without
the consent of the Company, (A) extend the Offer, if at the then scheduled
expiration date
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of the Offer any of the conditions to Merger Sub's obligations to purchase the
shares of Common Stock have not been satisfied or waived, until the third
business day after the day Merger Sub reasonably believes to be the earliest
date on which such conditions will be satisfied, (B) extend the Offer from time
to time up to a maximum of an aggregate of 30 days beyond the first day all of
the Tender Offer Conditions have been met, and/or (C) extend the Offer for any
period required by any rule, regulation, interpretation or position of the SEC
or the staff thereof applicable to the Offer. Notwithstanding the foregoing, (x)
the Offer may not, without the Company's written consent, be extended beyond the
date of termination of this Agreement pursuant to Section 10.1(a) and (y) the
Offer may not, without the Company's prior written consent, be extended pursuant
to clause (A) above if the failure to satisfy any condition was caused by a
material breach by Parent or Merger Sub of any of their representations,
warranties, covenants or agreements set forth in this Agreement. Notwithstanding
any thing to the contrary in this Agreement, Parent and Merger Sub agree that if
immediately prior to any scheduled expiration date of the Offer, the Regulatory
Conditions (as defined in Annex A) shall not have been satisfied, but at such
scheduled expiration date each of the other conditions set forth in Annex A
(other than the Minimum Condition) shall then be satisfied, at the request of
the Company, Merger Sub shall extend the Offer from time to time, subject to the
right of Parent, Merger Sub or the Company to terminate this Agreement pursuant
to the terms hereof. Upon the terms and subject to the conditions of the Offer,
Merger Sub shall, and Parent shall cause Merger Sub to, promptly purchase all
shares of Common Stock which are validly tendered on or prior to the expiration
of the Offer and not withdrawn. Parent shall provide, or cause to be provided,
to Merger Sub on a timely basis all funds necessary to accept for payment, and
pay for, all shares of Common Stock that Merger Sub becomes obligated to
purchase pursuant to the Offer.
(b) As soon as reasonably practicable on the date the Offer is
commenced, Parent and Merger Sub shall file, and Parent shall cause Merger Sub
to file, with the SEC and disseminate to the holders of shares of Common Stock
to the extent required by law a Tender Offer Statement on Schedule 14D-1
(together with all amendments and supplements thereto, the "Schedule 14D-1")
with respect to the Offer. The Schedule 14D-1 shall contain (included as an
exhibit) or shall incorporate by reference an offer to purchase (the "Offer to
Purchase") and a form of the related letter of transmittal (the "Letter of
Transmittal"), as well as all other information and exhibits required by law
(which Schedule 14D-1, Offer to Purchase, Letter of Transmittal and such other
information and exhibits, together with any supplements or amendments thereto,
are referred to herein collectively as the "Offer Documents"). The Company and
its counsel shall be given the opportunity to review and comment upon the
Schedule 14D-1 and any amendments thereto prior to their filing with the SEC.
The Schedule 14D-1 will comply in all material respects with the provisions of
applicable federal securities laws and, on the date filed with the SEC and the
date first published, sent or given to the Company's stockholders, shall not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading, except that no representation is made by Parent or Merger Sub with
respect to any information supplied by the Company expressly in writing for
inclusion or incorporation by reference in the Schedule 14D-1. Parent and Merger
Sub agree to promptly provide the Company and its counsel with (i) any comments
Parent, Merger Sub or their counsel may receive from the SEC or its staff with
respect to the Schedule 14D-1 after the receipt of such
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comments and (ii) copies of any responses by Merger Sub or Parent to such
comments. Each of Parent and Merger Sub agrees to promptly correct any
information provided by it for use in the Offer Documents that shall be, or have
become, false or misleading in any material respect, and Parent and Merger Sub
further agree to take all steps necessary to cause the Schedule 14D-1 as so
corrected to be filed with the SEC and the other Offer Documents as so corrected
to be disseminated to holders of Common Stock, in each case as and to the extent
required by applicable federal securities laws. In the event that the Offer is
terminated or withdrawn by Merger Sub, Parent and Merger Sub shall cause all of
the tendered shares of Common Stock to be returned to the registered holders of
the shares of Common Stock represented by the certificate or certificates
surrendered to the Paying Agent.
2.2 COMPANY ACTIONS. (a) The Company hereby consents to the Offer and
the Merger and represents that (X) its Board of Directors (at a meeting duly
called and held) has by the unanimous vote of the directors, (i) determined that
each of the Offer and the Merger is (x) advisable and (y) fair to, and in the
best interests of, the holders of shares of capital stock of the Company,
including but not limited to holders of shares of Common Stock, (ii) approved
the Offer and the Merger and approved and adopted this Agreement, the
Stockholder Agreements and the transactions contemplated hereby and thereby in
accordance with the provisions of the DGCL, (iii) recommended acceptance of the
Offer, approval of the Merger and approval and adoption of this Agreement by the
stockholders of the Company, (iv) approved the changes in the Options, Company
Warrants, Stock Incentive Plans and Stock Plans contemplated by this Agreement,
and (v) taken all other applicable action necessary to render (x) Section 203 of
the DGCL and any other applicable state takeover statutes and (y) Article VIII
of the Company Charter inapplicable to the Offer and the Merger; and (B) Goldman
Sachs International has delivered to the Board of Directors of the Company its
opinion that the consideration to be received by the holders of Common Stock,
other than Parent and Merger Sub, pursuant to the Offer and the Merger is fair
to such holders of Common Stock from a financial point of view, subject to the
assumptions and qualifications contained in such opinion.
(b) The Company shall file with the SEC, as soon as practicable on the
date of the commencement of the Offer, a Solicitation/Recommendation Statement
on Schedule 14D-9 (together with all amendments and supplements thereto, the
"Schedule 14D-9") containing the recommendations referred to in clause (X) of
Section 2.2(a) and shall disseminate the Schedule 14D-9 as required by Rule
14d-9 under the Exchange Act. Parent and Merger Sub and their counsel shall be
given the opportunity to review and comment upon the Schedule l4D-9 and any
amendments thereto prior to their filing with the SEC. The Schedule 14D-9 will
comply in all material respects with the provisions of applicable federal
securities laws and, on the date filed with the SEC and on the date first
published, sent or given to the Company's stockholders, shall not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading, except
that no representation is made by the Company with respect to information
supplied by Parent or Merger Sub in writing for inclusion in the Schedule 14D-9.
The Company agrees to provide Parent and its counsel with any comments the
Company or its counsel may receive from the SEC or its staff with respect to the
Schedule 14D-9 promptly after the receipt of such comments and shall provide
Parent and its counsel an
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opportunity to participate, including by participating with the Company and its
counsel in any discussions with the SEC or its staff, in the response of the
Company to such comments.
(c) In connection with the Offer, the Company will promptly furnish
Merger Sub with mailing labels, security position listings and any available
listing or computer list containing the names and addresses of the record
holders of the Common Stock as of the most recent practicable date and shall
furnish Merger Sub with such additional information (including, but not limited
to, updated lists of holders of Common Stock and their addresses, mailing labels
and lists of security positions) and such other assistance as Merger Sub or its
agents may reasonably request in communicating the Offer to the Company's
stockholders. Subject to the requirements of applicable law, and except for such
steps as are necessary to disseminate the Offer Documents and any other
documents necessary to consummate the Merger, Parent and its Affiliates and
associates (as defined in Rule 12b-2 under the Exchange Act) shall hold in
confidence the information contained in any such labels, listings and files,
will use such information only in connection with the Offer and the Merger and,
if this Agreement shall be terminated in accordance with Article X, shall
promptly deliver to the Company all copies of such information then in their
possession and shall certify in writing to the Company their compliance with
this Section 2.2(c).
(d) The Company has been advised that each of its directors and
Executive Officers intends to tender pursuant to the Offer all shares of Common
Stock owned of record and beneficially by him or her, if any, except to the
extent such tender would violate applicable securities laws.
2.3 COMPOSITION OF THE BOARD OF DIRECTORS. (a) Promptly upon the
acceptance for payment of, and payment by Merger Sub in accordance with the
Offer for, shares of Common Stock equal to at least a majority of the
outstanding shares of Common Stock, pursuant to the Offer, Merger Sub shall be
entitled to designate up to such number of directors on the Board of Directors
of the Company, rounded up to the next whole number, as will give Merger Sub,
subject to compliance with Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder, representation on such Board of Directors equal to at
least that number of directors which equals the product of the total number of
directors on the Board of Directors (giving effect to the directors elected
pursuant to this sentence) multiplied by a fraction, the numerator of which
shall be the number of shares of Common Stock beneficially owned by Merger Sub
and Parent and the denominator of which shall be the number of shares of Common
Stock then outstanding, and the Company and its Board of Directors shall, at
such time, take any and all such action needed to cause Merger Sub's designees
to be appointed to the Company's Board of Directors (including using its
reasonable best efforts to cause directors to resign). Subject to applicable
law, the Company shall take all action requested by Parent which is reasonably
necessary to effect any such election, including mailing to its stockholders an
information statement containing the information required by Section 14(f) of
the Exchange Act and Rule 14f-1 promulgated thereunder (the "Information
Statement"), and the Company agrees to make such mailing with the mailing of the
Schedule 14D-9 so long as Merger Sub shall have provided to the Company on a
timely basis all information required to be included in the Information
Statement with respect to Merger Sub's designees. Parent or Merger Sub will be
solely responsible for any information with respect to either of them and their
nominees, officers, directors and affiliates required by Section 14(f) and
Rule 14f-1. In furtherance thereof, the Company will increase the size of the
Company's
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Board of Directors (subject to the limitations set forth in the Company Charter
and By-Laws), or use its reasonable efforts to secure the resignation of
directors, or both, as is necessary to permit Merger Sub's designees to be
elected to the Company's Board of Directors. At the Effective Time, the Company,
if so requested, will use its reasonable efforts to cause persons designated by
Merger Sub to constitute the same percentage of each committee of such board,
each board of directors of each Subsidiary and each committee of each such board
(in each case to the extent of the Company's ability to elect such persons and
subject to any applicable stock exchange regulations).
(b) Following the election or appointment of Merger Sub's designees
pursuant to this Section 2.3 and prior to the Effective Time, any amendment or
termination of this Agreement or the Company Charter or By-Laws, any termination
of this Agreement by the Company, any extension by the Company of the time for
the performance of any of the obligations or other acts of Parent and Merger Sub
or waiver of any of the Company's rights hereunder, and any other consent or
action by the Board of Directors hereunder, will require the concurrence of a
majority (which shall be at least two) of the directors of the Company then in
office who are directors on the date hereof and who voted to approve this
Agreement or are designated by a majority of the directors of the Company who
are directors on the date hereof and who voted to approve this Agreement.
ARTICLE III
The Merger
3.1. THE MERGER. Subject to the terms and conditions of this Agreement,
at the Effective Time, the Merger Sub shall be merged with and into the Company
in accordance with the provisions of Section 251 of the DGCL and with the effect
provided in Sections 259 and 261 of the DGCL. The separate corporate existence
of Merger Sub shall thereupon cease and the Company shall be the Surviving
Corporation and shall continue its corporate existence as a Subsidiary of Parent
and shall continue to be governed by the laws of the State of Delaware. The name
of the Surviving Corporation shall be "@Entertainment, Inc."
3.2. EFFECTIVE TIME. The Merger shall become effective on the date and
at the time (the "Effective Time") that the Certificate of Merger shall have
been accepted for filing by the Secretary of State of the State of Delaware (or
such later date and time as may be specified in the Certificate of Merger as
Parent, Merger Sub and the Company may agree), which shall be on the Closing
Date or as soon as practicable thereafter.
3.3. CLOSING. Subject to the fulfillment or waiver of the conditions
set forth in Article IX, the Closing shall take place at the offices of White &
Case LLP, 1155 Avenue of the Americas, New York, New York, at 10:00 a.m. on the
earliest practicable date (but no later than the fifth business day) following
the satisfaction or waiver of the conditions set forth in Article IX (other than
those conditions to be satisfied or waived at the Closing) or at such other
place and/or time and/or on such other date as Parent, Merger Sub and the
Company may agree.
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ARTICLE IV
Terms of Merger
4.1. CERTIFICATE OF INCORPORATION. The Certificate of Incorporation of
Merger Sub (amended to change the name of Merger Sub to "@Entertainment, Inc.")
in effect immediately prior to the Effective Time shall be the Certificate of
Incorporation of the Surviving Corporation, until duly amended in accordance
with the terms thereof and of the DGCL.
4.2. THE BY-LAWS. The by-laws of Merger Sub immediately prior to the
Effective Time shall be the by-laws of the Surviving Corporation, until duly
amended in accordance with the terms thereof, of the Certificate of
Incorporation of the Surviving Corporation and of the DGCL.
4.3. DIRECTORS. The directors of Merger Sub immediately prior to the
Effective Time, shall be the directors of the Surviving Corporation until their
successors have been duly elected or appointed and qualified or until their
earlier death, resignation or removal in accordance with the Surviving
Corporation's Certificate of Incorporation and by-laws.
4.4. OFFICERS. The officers of the Company immediately prior to the
Effective Time, be the officers of the Surviving Corporation until their
successors have been duly elected or appointed and qualified or until their
earlier death, resignation or removal in accordance with the Surviving
Corporation's Certificate of Incorporation and by-laws.
ARTICLE V
Share Consideration; Conversion or
Cancellation of Shares in the Merger
5.1. SHARE CONSIDERATION; CONVERSION OR CANCELLATION OF SHARES IN THE
MERGER. Subject to the provisions of this Article V, at the Effective Time, by
virtue of the Merger and without any action on the part of Parent, Merger Sub,
the Company or the holders thereof, the shares, options and warrants of the
constituent corporations shall be converted or canceled as follows:
(a) Each share of Merger Sub Common Stock that is issued and
outstanding immediately prior to the Effective Time shall become one fully paid
and nonassessable share of common stock, par value $0.01 per share, of the
Surviving Corporation.
(b) Each share of Common Stock then issued and outstanding (other
than (i) any shares of Common Stock which are held by any Subsidiary
or in the treasury of the Company, or which are held, directly or
indirectly, by Parent or any direct or indirect Subsidiary of Parent
(including Merger Sub), all of which shall be canceled and none of
which shall receive any payment with respect thereto and (ii) shares
of Common Stock held by Dissenting Stockholders) shall be canceled and
converted into and represent the right to receive an amount in cash,
without interest, equal to the Offer Price for each share of Common
Stock pursuant to the Offer (the "Merger Consideration").
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(c) Each Company Preference Share shall be canceled and no further
consideration shall be payable in respect thereof.
5.2. SURRENDER OF CERTIFICATES; PAYMENT. The manner of making payment
for Shares in the Merger shall be as follows:
(a) (i) Prior to the Effective Time, Parent shall designate a
bank or trust company located in the United States reasonably
satisfactory to the Company to act as Paying Agent (the
"Paying Agent") for the holders of shares of Common Stock in
connection with the Merger and to receive the funds which
holders of shares of Common Stock will be entitled to receive
pursuant to Section 5.1(b). Promptly after the Effective Time,
the Paying Agent shall mail to each holder of record of a
certificate or certificates which immediately prior to the
Effective Time represented outstanding Common Stock (the
"Company Certificates") (other than those which are held by
any Subsidiary of the Company or in the treasury of the
Company or which are held directly or indirectly by Parent or
any direct or indirect Subsidiary of Parent (including Merger
Sub)) (1) a form of letter of transmittal (which shall specify
that delivery shall be effected, and risk of loss and title to
the Company Certificates shall pass, only upon proper delivery
of the Company Certificates to the Paying Agent) and (2)
instructions for use in effecting the surrender of the Company
Certificates for payment therefor. Upon surrender of Company
Certificates for cancellation to the Paying Agent, together
with such letter of transmittal duly executed and any other
required documents, the holder of such Company Certificates
shall be entitled to receive the Merger Consideration
deliverable in respect thereof and the Company Certificates
shall forthwith be cancelled. Until so surrendered, Company
Certificates shall represent solely the right to receive the
Merger Consideration payable in respect of the shares of
Common Stock represented thereby.
(ii) If the Merger Consideration is to be paid to or
issued in a name other than that in which the Company
Certificate surrendered in exchange therefor is
registered, it shall be a condition of such exchange
that the Company Certificate so surrendered shall be
properly endorsed and otherwise in proper form for
transfer and that the Person requesting such exchange
shall pay to the Paying Agent any transfer or other
taxes required by reason of the foregoing or shall
establish to the reasonable satisfaction of the
Paying Agent that such tax has been paid or is not
applicable.
(b) In the event that any Company Certificate has been lost, stolen
or destroyed, upon the making of an affidavit of that fact by the
Person claiming such Company Certificate to be lost, stolen or
destroyed and, if required by the Surviving Corporation, the posting by
such Person of a bond in such reasonable amount as Parent may direct as
indemnity against any claim that may be made against it with respect to
such Company Certificate, the Paying Agent will deliver to the Person
delivering such affidavit the Merger Consideration payable in respect
of the Common Shares represented by such lost, stolen or destroyed
Company Certificates.
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(c) Concurrently with or immediately prior to the Effective Time,
Parent shall, or shall cause Merger Sub to, shall deposit in trust with
the Paying Agent cash in United States dollars in an aggregate amount
equal to the product of (i) the number of shares of Common Stock
outstanding immediately prior to the Effective Time (other than shares
of Common Stock which are held by any Subsidiary or in the treasury of
the Company or which are held directly or indirectly by Parent or any
direct or indirect Subsidiary of Parent (including Merger Sub) or a
Person known at the time of such deposit to be a Dissenting
Stockholder) and (ii) the Merger Consideration (such amount being
hereinafter referred to as the "Payment Fund"). The Payment Fund shall
be invested by the Paying Agent as directed by Parent in direct
obligations of the United States, obligations for which the full faith
and credit of the United States is pledged to provide for the payment
of principal and interest, commercial paper rated of the highest
quality by Moody's Investors Services, Inc. or Standard & Poor's
Ratings Group or certificates of deposit, bank repurchase agreements or
bankers' acceptances of a commercial bank having at least $100,000,000
in assets (collectively "Permitted Investments") or in money market
funds which are invested in Permitted Investments, and any net earnings
with respect thereto shall be paid to Parent as and when requested by
Parent. The Paying Agent shall, pursuant to irrevocable instructions,
make the payments referred to in Section 5.1(b) hereof out of the
Payment Fund. The Payment Fund shall not be used for any other purpose
except as otherwise agreed to by Parent. Promptly following the date
which is six months after the Effective Time, the Paying Agent shall
return to the Surviving Corporation all cash, certificates and other
instruments in its possession that constitute any portion of the
Payment Fund (other than net earnings on the Payment Fund which shall
be paid to Parent), and the Paying Agent's duties shall terminate.
Thereafter, each holder of a Company Certificate may surrender such
Company Certificate to the Surviving Corporation and (subject to
applicable abandoned property, escheat and similar laws) receive in
exchange therefor the Merger Consideration, without interest, but shall
have no greater rights against the Surviving Corporation or Parent than
may be accorded to general creditors of the Surviving Corporation or
Parent under applicable law. Notwithstanding the foregoing, neither the
Paying Agent nor any party hereto shall be liable to a holder of shares
of Common Stock for any Merger Consideration delivered to a public
official pursuant to applicable abandoned property, escheat and similar
laws.
5.3. TRANSFER OF COMPANY SHARES AFTER THE EFFECTIVE TIME. No transfers
of Common Stock shall be made on the stock transfer books of the Company after
the close of business on the day prior to the date of the Effective Time. No
transfer of shares of Common Stock shall be made on the stock transfer books of
the Surviving Corporation. Company Certificates presented to the Surviving
Corporation after the Effective Time shall be canceled and exchanged for cash as
provided in this Article V. At and after the Effective Time, each holder of a
Company Certificate shall cease to have any rights as a stockholder of the
Company, except for, in the case of a holder of a Company Certificate (other
than shares to be canceled pursuant to Section 5.1(b) hereof and other than
shares held by Dissenting Stockholders), the right to surrender his or her
Company Certificate in exchange for payment of the Merger Consideration or, in
the case of a Dissenting Stockholder, to perfect his or her right to receive
payment for his or her shares pursuant to
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Delaware law if such holder has validly perfected and not withdrawn his or her
right to receive payment for his or her shares.
5.4 DISSENTING STOCK. Notwithstanding anything contained in this
Agreement to the contrary but only to the extent required by the DGCL, shares of
Common Stock that are issued and outstanding immediately prior to the Effective
Time and are held by holders of Common Stock who comply with all the provisions
of the law of the State of Delaware concerning the right of holders of Common
Stock to dissent from the Merger and require appraisal of their shares of Common
Stock (such holders, "Dissenting Stockholders") shall not be converted into the
right to receive the Merger Consideration but shall become the right to receive
such consideration as may be determined to be due such Dissenting Stockholder
pursuant to the law of the State of Delaware; PROVIDED, HOWEVER, that (i) if any
Dissenting Stockholder shall subsequently deliver a written withdrawal of his or
her demand for appraisal (with the written approval of the Surviving
Corporation, if such withdrawal is not tendered within 60 days after the
Effective Time), or (ii) if any Dissenting Stockholder fails to establish and
perfect his or her entitlement to appraisal rights as provided by applicable
law, or (iii) if within 120 days of the Effective Time neither any Dissenting
Stockholder nor the Surviving Corporation has filed a petition demanding a
determination of the value of all shares of Common Stock outstanding at the
Effective Time and held by Dissenting Stockholders in accordance with applicable
law, then such Dissenting Stockholder or Dissenting Stockholders, as the case
may be, shall forfeit the right to appraisal of such shares and such shares
shall thereupon be deemed to have been converted into the right to receive, as
of the Effective Time, the applicable Merger Consideration, without interest, as
provided in Section 5.2, and such shares shall no longer be Dissenting Shares.
The Company shall give Parent and Merger Sub (x) prompt notice of any written
demands for appraisal, withdrawals of demands for appraisal and any other
related instruments received by the Company, and (y) the opportunity to direct
all negotiations and proceedings with respect to demands for appraisal. The
Company shall not voluntarily make any payment with respect to any demands for
appraisal and shall not, except with the prior written consent of Parent, settle
or offer to settle any such demand.
5.5 STOCK OPTION AND OTHER PLANS; COMPANY WARRANTS. (a) To the
extent that Options and Company Warrants were not cancelled pursuant to Section
8.11, prior to the Effective Time, each of the Board of Directors of the Company
(or, if appropriate, any committee thereof) and the Company shall use its best
efforts to obtain the consent of all of the holders of Options heretofore
granted under any Stock Plans to provide for the cancellation, effective at the
Effective Time, of all the outstanding Options, as follows: Immediately prior to
the Effective Time, each Option, whether or not then vested or exercisable, and
each Company Warrant, whether or not then vested or exercisable, shall no longer
be exercisable for the purchase of shares of Common Stock but shall entitle each
holder thereof, in cancellation and settlement therefor, to payments in cash,
subject to any applicable withholding taxes, of the Cash Payment, at the
Effective Time, equal to the product of (x) the total number of shares of Common
Stock subject to such Option (or Company Warrant, as the case may be) as to
which such Option (or Company Warrant) could have been exercisable and (y) the
excess, if any, of the Merger Consideration over the exercise price per share of
Common Stock subject to such Option (or Company Warrant), each such Cash Payment
to be paid to each holder of an outstanding Option or Company Warrant, as the
case may be, at the Effective Time. The Company will ensure that any
then-outstanding stock appreciation rights or limited stock appreciation rights
shall be canceled as of
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immediately prior to the Effective Time without any payment therefor. As
provided herein, the Stock Plans and any other plan, program or arrangement
providing for the issuance or grant of any other interest in respect of the
capital stock of the Company or any Subsidiary (collectively with the Stock
Plans, referred to as the "Stock Incentive Plans") shall terminate as of the
Effective Time. The Company will ensure that neither the Company nor any of its
Subsidiaries is or will be bound by any Options, other options, Company
Warrants, other warrants, rights or agreements which would entitle any Person,
other than Parent or its Affiliates (including Merger Sub), to own any capital
stock of the Surviving Corporation or any of its Subsidiaries or to receive any
payment in respect thereof. The Company will ensure that after the Effective
Time, the only rights of the holders of Options to purchase shares of Common
Stock or Company Warrants in respect of such Options and Company Warrants will
be to receive the Cash Payment in cancellation and settlement thereof.
(b) All Stock Plans shall terminate as of the Effective Time
and the provisions in any other Employee Plan providing for
the issuance, transfer or grant of any capital stock of the
Company or any interest in respect of any capital stock of the
Company shall be deleted as of the Effective Time, and the
Company shall use its reasonable best efforts to ensure that
following the Effective Time no holder of an option to
purchase Common Stock or any participant in any Stock Plan
shall have any right thereunder to acquire any capital stock
of the Company, Parent or the Surviving Corporation.
ARTICLE VI
Representations and Warranties of the Company
The Company hereby represents and warrants to Parent and Merger Sub:
6.1. ORGANIZATION, ETC. OF THE COMPANY. The Company is a corporation
duly organized, validly existing and, except as set forth in Schedule 6.1 to the
Company Disclosure Statement, in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to own, lease and
operate its properties and to carry on its business as now conducted and
proposed by the Company to be conducted. The Company is duly qualified and in
good standing in each other jurisdiction in which the property owned, leased or
operated by it or the nature of the business conducted by it makes such
qualification necessary and where the failure to be so qualified or in good
standing has or would reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect. The Company has made available to Parent
and Merger Sub complete and correct copies of the Company Charter and By-Laws
and the certificate of incorporations, by-laws or other similar organizational
documents of its Subsidiaries, in each case as amended to the date of this
Agreement. The respective certificates of incorporation and by-laws or other
similar organizational documents of the Subsidiaries do not contain any
provision limiting or otherwise restricting the ability of the Company to
control such Subsidiaries other than as required under Polish law.
6.2. SUBSIDIARIES. Schedule 6.2 of the Company Disclosure Statement
contains a complete and accurate list of all of the Subsidiaries of the Company
as of the date hereof. Each
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Subsidiary of the Company is a corporation or other legal entity duly organized,
validly existing and (if applicable) in good standing under the laws of the
jurisdiction of its organization and has all requisite corporate, partnership or
similar power and authority to own its properties and conduct its business and
operations as currently conducted. Except as set fourth in Schedule 6.2 of the
Company Disclosure Statement, each Subsidiary of the Company is duly qualified
and in good standing in each jurisdiction in which the property owned, leased or
operated by it or the nature of the business conducted by it makes such
qualification necessary, except where the failure to be so qualified or in good
standing does not and would not reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect.
6.3. AGREEMENT. The Company has all necessary corporate power and
authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. This Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized and unanimously approved by the Board of Directors of the Company and
have been duly authorized by all other necessary corporate action on the part of
the Company, and no other corporate action on the part of the Company is
necessary to authorize the execution, delivery and performance of this Agreement
by the Company and the consummation of the transactions contemplated hereby
except for the approval of the Company's stockholders contemplated by Section
8.4. This Agreement has been duly executed and delivered by a duly authorized
officer of the Company and (assuming the due execution and delivery of this
Agreement by the other parties hereto) constitutes a valid and binding agreement
of the Company, enforceable against the Company in accordance with its terms,
except that such enforceability may be subject to bankruptcy, insolvency and
other similar laws effecting debtors' rights or creditors' rights generally and
except that the remedies of specific performance, injunction and other forms of
equitable relief may not be available. The Board of Directors of the Company has
approved the transactions contemplated by this Agreement, including the Merger,
so as to render the provisions of (x) Section 203 of the DGCL and (y) Article
VIII of the Company Charter, inapplicable to the transactions contemplated by
this Agreement and to Parent and Merger Sub in connection with this Agreement.
The Board of Directors of the Company has directed that this Agreement be
submitted to the stockholders of the Company for their approval. The affirmative
approval, by vote or written consent, of the holders of Company Common Stock
representing a majority of the votes that may be cast by such holders, and the
holders of each class of Company Preference Shares (voting as separate classes)
representing 66 2/3% of the votes that may be cast by the holders of each such
class of Company Preference Shares, are the only votes of the holders of any
class or series of capital stock of the Company necessary to approve and adopt
this Agreement and approve the Merger.
6.4. PERMITS; COMPLIANCE. Except as disclosed in Schedule 6.4 of the
Company Disclosure Statement, the Company and its Subsidiaries possess such
permits, licenses, approvals, concessions, consents and other authorizations
(including, without limitation, all permits required for the operation of the
business of the Company and its Subsidiaries by the Republic of Poland and the
United Kingdom) (collectively, "Governmental Licenses") issued by the
appropriate Governmental Body or self regulatory organizations necessary to
conduct the business now operated by them except where the failure to possess
such Governmental Licenses would not, singly or in the aggregate, reasonably be
expected to (i) have a Material Adverse Effect or (ii) prevent or materially
delay the consummation of the transactions contemplated by this
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Agreement; the Company and its Subsidiaries, except as disclosed in Schedule 6.4
of the Company Disclosure Statement and except where the failure to so comply
would not, singly or in the aggregate, reasonably be expected to (i) have a
Material Adverse Effect or (ii) prevent or materially delay the consummation of
the transactions contemplated by this Agreement, are in compliance with the
terms and conditions of all such Governmental Licenses; all of the Governmental
Licenses are valid and in full force and effect, except as disclosed in Schedule
6.4 to the Company Disclosure Statement and except when the invalidity of such
Governmental Licenses or the failure of such Governmental Licenses to be in full
force and effect would not reasonably be expected to (i) have a Material Adverse
Effect, or (ii) prevent or materially delay the consummation of the transactions
contemplated by this Agreement; and except as disclosed in Schedule 6.4 to the
Company Disclosure Statement, neither the Company nor any of its Subsidiaries
has received any notice of proceedings relating to the revocation or
modification of any such Governmental Licenses which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding, would
reasonably be expected to (i) have a Material Adverse Effect or (ii) prevent or
materially delay the consummation of the transactions contemplated by this
Agreement. To the knowledge of the Company, except as described in Schedule 6.4
of the Company Disclosure Statement, there exists no reason or cause that could
justify the variation, suspension, cancellation or termination of any such
Governmental Licenses held by the Company or any of its Subsidiaries with
respect to the construction or operation of their respective businesses, which
variation, suspension, cancellation or termination could reasonably be expected
to (i) have a Material Adverse Effect or (ii) prevent or materially delay the
consummation of the transactions contemplated by this Agreement.
6.5. OPINION OF THE COMPANY'S FINANCIAL ADVISOR. The Board of Directors
of the Company has received the written opinion, dated as of the date hereof, of
Goldman Sachs International to the effect that the Merger is fair to the
stockholders of the Company from a financial point of view, subject to the
assumptions and qualifications contain in such opinion, and a complete and
correct signed copy of such opinion has been, or promptly upon receipt thereof
will be, delivered to Parent.
6.6. CAPITAL STOCK. (a) Each of the authorized, issued and outstanding
shares of capital stock of the Company as of the date hereof is as set forth in
Schedule 6.6 to the Company Disclosure Statement. The shares of issued and
outstanding capital stock of the Company have been duly authorized and validly
issued and are fully paid and non-assessable; none of the outstanding shares of
capital stock of the Company was issued in violation of the preemptive or other
similar rights of any securityholder of the Company. Except as disclosed in
Section 6.6 of the Company Disclosure Statement, (i) there are no shares of
capital stock of the Company authorized, issued or outstanding and (ii) there
are not as of the date hereof, and at the Effective Time there will not be, any
outstanding or authorized options, warrants, rights, subscriptions, claims of
any character, agreements, obligations, convertible or exchangeable securities,
or other commitments, contingent or otherwise, relating to Common Stock or any
other shares of capital stock of the Company, pursuant to which the Company is
or may become obligated to issue shares of Common Stock, any other shares of its
capital stock or any securities convertible into, exchangeable for, or
evidencing the right to subscribe for, any shares of the capital stock of the
Company. The Company has no authorized or outstanding bonds, debentures, notes
or other indebtedness the holders of which have the right to vote (or
convertible or exchangeable into or
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exercisable for securities having the right to vote) with the stockholders of
the Company or any of its Subsidiaries on any matter ("Voting Debt"). After the
Effective Time, the Surviving Corporation will have no obligation to issue,
transfer or sell any shares of Common Stock of the Surviving Corporation
pursuant to any Employee Plan.
(b) No class of capital stock of the Company is entitled to
pre-emptive rights.
(c) The outstanding Options and Company Warrants are as set
forth in Schedule 6.6 to the Company Disclosure Statement.
There are no Company Warrants or Options held in the treasury
of the Company.
(d) Except as disclosed in Schedule 6.6 of the Company
Disclosure Statement, all of the issued and outstanding
capital stock of each Subsidiary of the Company has been duly
authorized and validly issued, is fully paid and
non-assessable and is owned by the Company, directly or
through its Subsidiaries, free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equity
and none of the outstanding shares of capital stock of such
Subsidiaries was issued in violation of any preemptive or
similar rights arising by operation of law, or under the
statute or by-laws (or other similar organizational documents)
of any Subsidiary of the Company or under any agreement to
which the Company or any of its Subsidiaries is a party. No
shares of capital stock of any of the Subsidiaries are
reserved for issuance and there are no outstanding or
authorized options, warrants, rights, subscriptions, claims of
any character, agreements, obligations, convertible or
exchangeable securities, or other commitments, contingent or
otherwise, relating to the capital stock of any Subsidiary of
the Company, pursuant to which such Subsidiary is or may
become obligated to issue any shares of capital stock of such
Subsidiary or any securities convertible into, exchangeable
for, or evidencing the right to subscribe for, any shares of
such Subsidiary. Except as disclosed in Schedule 6.6 of the
Company Disclosure Statement and except as required by
applicable Law, there are no restrictions of any kind which
prevent the payment of dividends by any of the Subsidiaries of
the Company. Except as disclosed in Schedule 6.6 of the
Company Disclosure Statement, the Company does not own,
directly or indirectly, any capital stock or other equity
interest in any Person or have any direct or indirect equity
or ownership interest in any Person and neither the Company
nor any of its Subsidiaries is subject to any obligation or
requirement to provide funds for or to make any investment (in
the form of a loan, capital contribution or otherwise) to or
in any Person. The Company's Subsidiaries have no Voting Debt.
6.7. LITIGATION. Except as disclosed in the Company SEC Reports filed
prior to the date hereof or as set forth in Schedule 6.7 to the Company
Disclosure Statement, there are, as of the date hereof, no actions, proceedings,
suits, inquiries or investigations before or by any Governmental Body or any
arbitrator or any other alternative dispute resolution forum, now pending or, to
the knowledge of the Company, threatened against the Company or any of its
Subsidiaries, except actions, proceedings, suits, inquiries or investigations
which, individually or in the aggregate, would not reasonably be expected, if
adversely determined to (a) have a Material
19
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Adverse Effect or (b) prevent or materially delay the consummation of the
transactions contemplated by this Agreement. Except as disclosed in the Company
SEC Reports filed prior to the date hereof, neither the Company nor any of its
subsidiaries is subject to any judgment, order or decree entered in any lawsuit
or proceeding which could reasonably be expected to have a Material Adverse
Effect.
6.8. COMPLIANCE WITH OTHER INSTRUMENTS, ETC.; NO CONFLICT. Neither the
Company nor any Subsidiary of the Company is (1) in violation of its charter or
statute, as applicable, or by-laws (or other similar organizational documents),
(2) in violation or default in the performance or observance of any obligation,
agreement, covenant or condition contained in any contract, indenture, mortgage,
deed of trust, loan or credit agreement, note, lease or other agreement or
instrument to which the Company or any of its Subsidiaries is a party or by
which or any of them may be bound, or to which any of the property or assets of
the Company or any of its subsidiaries is subject (collectively, "Agreements and
Instruments"), except, with respect to clause (2) only, for such violations or
defaults which, whether individually or in the aggregate, do not or would not
reasonably be expected to (i) have a Material Adverse Effect or (ii) prevent or
materially delay the consummation of the transactions contemplated by this
Agreement. Assuming (i) the approval of the Company's stockholders as
contemplated by Section 8.4, (ii) the filings required under the Exchange Act
relating to the Offer, the Proxy Statement and the Merger, (iii) the filing of
the Certificate of Merger and other appropriate merger documents, if any, as
required by the DGCL, and (iv) the approval from the Governmental Bodies listed
on Schedule 6.8 of the Company Disclosure Statement, the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby will not (i) result in any violation of or conflict with, or
constitute a default under, the charter, bylaws or other organizational
documents of the Company (or any of its Subsidiaries) or (ii) result in any
violation of or conflict with or require any consent, waiver, or notice under
any Law. Except as set forth in Section 6.8 of the Company Disclosure Statement,
the execution, delivery and performance of this Agreement and the consummation
of the transactions contemplated hereby will not result in any violation of or
conflict with, constitute a default under, require any consent, filing, waiver
or notice under any term of, or result in the reduction or loss of any benefit
or the creation or acceleration of any right or obligation under, any agreement,
note, bond, mortgage, indenture, contract, lease, Governmental License or other
obligation or right (excluding options, restricted stock, employment contracts
and other employee related obligations or rights which are addressed in Section
6.9) to which the Company or any of its Subsidiaries is a party or by which any
of the assets or properties of the Company or any of its Subsidiaries is bound,
or any instrument or Law, or result in the creation of (or impose any obligation
on the Company or any of its Subsidiaries to create) any mortgage, lien, charge,
security interest or other encumbrance upon any of the properties or assets of
the Company or any of its Subsidiaries pursuant to any such term, except where
any of the foregoing, individually or in the aggregate, does not and would not
reasonably be expected to (i) have a Material Adverse Effect or (ii) prevent or
materially delay the consummation of the transactions contemplated by this
Agreement.
6.9. EMPLOYEE BENEFIT PLANS. (a) Schedule 6.9 of the Company Disclosure
Statement sets forth as of the date hereof a true and complete list of each
material "employee benefit plan" (as defined in Section 3(3) of ERISA) of the
Company and its Subsidiaries in which current or former employees, agents,
directors, or independent contractors of the Company or its
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Subsidiaries ("Employees") participate or pursuant to which the Company or any
of its Subsidiaries may have a liability with respect to Employees (each, an
"Employee Plan"). Except as disclosed on the Company Disclosure Statement, each
Employee Plan is exempt from coverage under ERISA pursuant to Section 4(b)(4) of
ERISA, and neither the Company nor any of its Subsidiaries has any commitment to
establish any additional Employee Plans or to modify or change materially any
existing Employee Plan. The Company has made available to Parent with respect to
each Employee Plan: (i) a true and complete copy of all written documents
comprising such Employee Plan (including amendments and individual agreements
relating thereto) or, if there is no such written document, an accurate and
complete description of such Employee Plan; and (ii) the most recent financial
statements and actuarial reports, if any.
(b) Each Employee Plan has been established and maintained in
accordance with its terms and in compliance with all
applicable local Laws, and all contributions required to be
made to the Employee Plans have been made in a timely fashion,
except where such failure to establish, maintain or comply, or
to make such contributions, individually or in the aggregate,
does not and would not reasonably be expected to have a
Material Adverse Effect on the Company.
(c) Except as set forth in Schedule 6.9 of the Company
Disclosure Statement, the Company has not at any time in the
past five years contributed to or been obligated to contribute
to a "multiemployer plan" (as defined in Section 3(37) of
ERISA) or a "multiple employer plan" described in
Section 4063(a) of ERISA.
(d) Except as set forth in Section 5.5 and in Schedule 6.9 of
the Company Disclosure Statement, none of the execution or
delivery of this Agreement, stockholder approval of the Merger
by the stockholders of the Company at the Company
Stockholders' Meeting or otherwise, or the consummation of the
transactions contemplated hereby or thereby (either alone or
together with any additional or subsequent events),
constitutes an event under any Employee Plan, loan to, or
individual agreement or contract with, an Employee that may
result in any material payment (whether of severance pay or
otherwise), restriction or limitation upon the assets of any
Employee Plan, acceleration of payment or vesting, increase in
benefits or compensation, or required funding, with respect to
any Employee, or the forgiveness of any loan or other
commitment of any Employees.
(e) There are no actions, suits, arbitrations, inquiries,
investigations or other proceedings (other than routine claims
for benefits) pending or, to the Company's knowledge,
threatened, with respect to any Employee Plan, except for any
of the foregoing that do not and would not reasonably be
expected to have, individually or in the aggregate, a Material
Adverse Effect.
(f) No material amounts paid or payable by the Company or any
Subsidiary of the Company to or with respect to any Employee
(including any such amounts that may be payable as a result of
the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby or
thereby) will fail to be
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deductible for United States federal income tax purposes by
reason of Section 280G of the Code.
(g) Except as set forth in Schedule 6.9 of the Company
Disclosure Statement, there are no agreements with, or pending
petitions for recognition of, a labor union or association as
the bargaining agent for any of the employees of the Company
or any of its Subsidiaries; no such petitions have been
pending at any time within two years of the date of this
Agreement and, to the knowledge of the Company, there has not
been any organizing effort by any union or other group seeking
to represent any employees of the Company or any of its
Subsidiaries as their bargaining agent at any time within two
years of the date of this Agreement. There are no labor
strikes, work stoppages or other labor troubles, other than
routine grievance matters, now pending, or, to the Company's
knowledge, threatened, against the Company or any of its
Subsidiaries which have or would reasonably be expected to
have, individually or in the aggregate, a Material Adverse
Effect and there have not been any such labor strikes, work
stoppages or other labor troubles, other than routine
grievance matters, with respect to the Company or any of its
Subsidiaries at any time within two years of the date of this
Agreement. Except as set forth on Schedule 6.9 of the Company
Disclosure Statement, the Company and its Subsidiaries are in
substantial compliance with all applicable Laws respecting
employment and employment practices, terms and conditions and
wages and hours.
6.10. TAXES. Except as set forth on Schedule 6.10 to the Company
Disclosure Statement:
(a) The Company and its Subsidiaries have timely filed or
caused to be timely filed all income Tax Returns and all
material other United States federal, state, county, local and
foreign Tax Returns required to be filed by or with respect to
them. Such Tax Returns have accurately reflected all liability
for Taxes of the Company and its Subsidiaries for the periods
covered thereby in all material respects. All Taxes shown to
be payable on such Tax Returns or on subsequent assessments
with respect thereto have been paid in full on a timely basis.
The amount of the liability of the Company and its
Subsidiaries for unpaid Taxes or all periods ending on or
before December 31, 1998, does not, in the aggregate, exceed
the amount of the current liability accrual for Taxes
(including reserves for deferred Taxes) reflected on the
Company's December 31, 1998 balance sheet.
(b) There are no material Tax assessments or adjustments that
have been asserted against the Company or its Subsidiaries for
any period.
(c) There are no audits, examinations, actions, suits,
proceedings, investigations, claims or assessments pending or
threatened to the knowledge of the officer of the Company and
each Subsidiary responsible for tax matters, against the
Company or any of its Subsidiaries for any alleged deficiency
in any Tax (a "Tax Controversy") and the Company has not been
notified in writing of any
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proposed material Tax Controversy against the Company or any
of its Subsidiaries (other than a Tax Controversy set forth in
Schedule 6.10 of the Company Disclosure Statement which is
being contested in good faith or which is immaterial in
amount). There are no material "deferred intercompany
transactions" or "intercompany transactions" the gain or loss
in which has not yet been taken into account under the
consolidated return Treasury Regulations currently or
previously in effect. Neither the Company nor any of its
Subsidiaries have been included in any "consolidated,"
"unitary" or "combined" Tax Return provided for under the law
of the United States, any foreign jurisdiction or any state or
locality with respect to Taxes for any taxable period for
which the statute of limitations has not expired. The Company
has delivered to Parent correct and complete copies of all
United States federal, state, and foreign income Tax Returns
(to the extent filed as of the date hereof or, if not filed,
correct and complete copies of extensions thereof),
examination reports, statements of deficiencies assessed
against or agreed to by the Company and any of its
Subsidiaries, or any other similar correspondence from a
taxing authority, relating to taxable years 1996 and 1997.
(d) There are no liens for Taxes on the assets of the Company
or any of its Subsidiaries, except for statutory liens for
current Taxes not yet due and payable.
(e) (i) Neither the Company nor any of its Subsidiaries (A)
has entered into an agreement or waiver or been requested to
enter into an agreement or waiver extending any statute of
limitations relating to the payment or collection of Taxes of
the Company or any of its Subsidiaries.
(ii) All Taxes which the Company or any of its
Subsidiaries is (or was) required by law to withhold or
collect (other than immaterial amounts) have been duly
withheld or collected, and have been timely paid over to the
proper authorities to the extent due and payable.
(iii) No claim has ever been made by any taxing
authority in a jurisdiction where the Company or any of its
Subsidiaries does not file Tax Returns that the Company or any
of its Subsidiaries is or may be subject to taxation by that
jurisdiction.
(iv) There are no tax sharing, allocation,
indemnification or similar agreements (excluding customary Tax
gross-up clauses contained in financing agreements and
excluding commercial agreements entered into in the ordinary
course of business requiring payments to be made net of taxes)
in effect as between the Company or its Subsidiaries or any
predecessor or affiliate thereof and any other party under
which the Company, Parent or Merger Sub could be liable for
Taxes or other claims of any party.
(v) Neither the Company nor any of its Subsidiaries
has applied for, been granted, or agreed to any accounting
method change for which it will be required to take into
account any adjustment under Section 481 of the Code or any
similar
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provision of the Code or the corresponding tax laws of any
nation, state or locality.
(vi) No election under Section 341(f) of the Code has
been made or shall be made prior to the Effective Time to
treat the Company or any of its Subsidiaries as a consenting
corporation, as defined in Section 341 of the Code.
(vii) Neither the Company nor any of its Subsidiaries
is a party to any agreement that would require the Company or
any of its subsidiaries or any affiliate thereof to make any
payment that would constitute an "excess parachute payment"
for purposes of Sections 280G and 4999 of the Code.
(viii) Neither the Company nor any of its
Subsidiaries is a "United States real property holding
corporation" within the meaning of Section 897(c)(2) of
the Code.
(f) For purposes of this Agreement, the term "Tax" means any
United States federal, state, county or local, or foreign or
provincial income, gross receipts, profits, capital gains,
capital stock, occupation, severance, stamp, withholding,
property, sales, use, license, excise, franchise, employment,
payroll, value added, alternative or added minimum, ad valorem
or transfer tax, or any other tax, levy, custom, duty or
governmental fee or other like assessment or charge of any
kind whatsoever, together with any interest or penalty imposed
by any Governmental Body, and shall include any liability for
such amounts as a result either of being a member of a
combined, consolidated, unitary or affiliated group or of a
contractual obligation to indemnify any person or other
entity. The term "Tax Return" means a report, return or other
information (including any attached schedules or any
amendments to such report, return or other information)
required to be supplied to or filed with any Governmental Body
with respect to any Tax, including an information return,
claim for refund, amended return or declaration or
estimated Tax.
6.11. INTELLECTUAL PROPERTY. Except as disclosed in Schedule 6.11 to
the Company Disclosure Statement, the Company and its Subsidiaries own or have a
valid and enforceable license to use the rights to all patents, trademarks,
tradenames, service marks and copyrights, together with any registrations and
applications therefor, licenses, inventions, know-how (including trade secrets
and other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures), trademarks, service marks, trade names or
other intellectual property (collectively, "Intellectual Property") used in and
necessary to carry on the business now operated by them; PROVIDED, HOWEVER, that
the enforceability of such license may be subject to bankruptcy, insolvency and
other, similar laws effecting debtors' rights or creditors' rights generally and
except that the remedies of specific performance, injunction and other forms of
equitable relief may not be available. Except as disclosed on Schedule 6.11 of
the Company Disclosure Statement, the operation of the business of the Company
and its Subsidiaries as currently conducted requires no material rights of
performance or display or their equivalent or to the knowledge of the Company,
other rights, including, but not limited to, "moral rights" under
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copyrights other than copyrights owned by the Company or its Subsidiaries or
licensed by any of them pursuant to license agreements. Except as disclosed in
Schedule 6.11 to the Company Disclosure Statement, neither the Company nor any
of its Subsidiaries has received any notice or is otherwise aware of any
infringement of or conflict with asserted rights of others with respect to any
Intellectual Property or of any facts or circumstances which would render any
Intellectual Property invalid or inadequate to protect the interest of the
Company or any of its Subsidiaries therein, and which infringement or conflict
(if the subject of any unfavorable decision, ruling or finding) or invalidity or
inadequacy, singly or in the aggregate, would result in a Material Adverse
Effect.
6.12. REPORTS AND FINANCIAL STATEMENTS. (a) The Company and PCI have
filed all forms, reports and documents with the SEC required to be filed by them
since January 1, 1997 pursuant to the federal securities laws and the SEC rules
and regulations thereunder (collectively, the "Company SEC Reports"). None of
the Company SEC Reports, as of their respective dates, contained any untrue
statement of material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. Each of the
consolidated balance sheets (including the related notes) included in the
Company SEC Reports presents fairly, in all material respects, the consolidated
financial position of the Company and its Subsidiaries as of the respective
dates thereof, and the other related statements (including the related notes)
included in the Company SEC Reports present fairly, in all material respects,
the results of operations and the changes in financial position of the Company
and its Subsidiaries for the respective periods or as of the respective dates
set forth therein, all in conformity with generally accepted accounting
principles consistently applied during the periods involved, except as otherwise
noted therein and subject, in the case of the unaudited interim financial
statements, to normal year-end adjustments. All of the Company SEC Reports, as
of their respective dates, complied as to form in all material respects with the
requirements of the Exchange Act, the Securities Act and the applicable rules
and regulations thereunder.
(b) Except (i) as and to the extent disclosed or reserved
against on the balance sheet of the Company as of December 31,
1998 included in the Company SEC Reports or (ii) as incurred
after the date thereof in the ordinary course of business
consistent with prior practice and not prohibited by this
Agreement and not involving borrowing by the Company or its
Subsidiaries, the Company does not have any liabilities or
obligations of any nature, absolute, accrued, contingent or
otherwise and whether due or to become due, that, individually
or in the aggregate, have or would reasonably be expected to
have a Material Adverse Effect on the Company.
6.13. ABSENCE OF CERTAIN CHANGES OR EVENTS. During the period since
December 31, 1998, except as disclosed in the Company SEC Reports filed prior to
the date hereof:
(a) the business of the Company and its Subsidiaries has been
conducted only in the ordinary course, consistent with past
practice, except for the execution and delivery of this
Agreement and the consummation of the transactions
contemplated
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hereby, and except as otherwise expressly permitted or
required by this Agreement;
(b) neither the Company nor any of its Subsidiaries has taken
any action or omitted to take any action, or entered into any
contract, agreement, commitment or arrangement to take any
action or omit to take any action, which, if taken or omitted
after the date hereof, would violate Section 8.1; and
(c) there has not been, and, to the best knowledge of the
Company, nothing has occurred that would reasonably be
expected to have, a Material Adverse Effect.
6.14. AFFILIATED TRANSACTIONS, REGISTRATION RIGHTS AND CERTAIN OTHER
AGREEMENTS. Set forth in Schedule 6.14 of the Company Disclosure Statement is an
accurate and complete listing, as of the date hereof, of (a) all contracts,
leases, agreements or understandings, whether written or oral, to which the
Company or any of its Subsidiaries is a party or is otherwise bound which
contain any restriction or limitation on the ability of the Company or any of
its Affiliates (other than the Stockholders and their non-Company Affiliates) to
engage in any business anywhere in the world, other than (i) any such contracts,
leases, agreements or understandings the loss or breach of which, individually
or in the aggregate, does not and would not reasonably be expected to have a
Material Adverse Effect, (ii) the financing documents set forth on Schedule 6.18
to the Company Disclosure Statement and (iii) geographical, functional and
temporal limitations in programming contracts and licenses and (b) all
contracts, leases, agreements or understandings, whether written or oral, giving
any Person the right to require the Company to register securities or any type
or to participate in any registration of securities of any type. The Company has
previously provided or made available to Parent true and complete copies of each
of the foregoing agreements. Except as disclosed in the Company SEC Reports,
there are no relationships or transactions of a type required to be disclosed in
the Company SEC Reports pursuant to Item 404 of Regulation S-K promulgated under
the Securities Act.
6.15. BROKERS AND FINDERS. Except for the fees and expenses payable to
Goldman Sachs International (whose fees and expenses will be paid by the
Company), which fees and expenses are reflected in its agreements with the
Company, copies of which have been furnished to Parent by the Company, no agent,
broker, Person or firm acting on behalf of the Company is, or will be, entitled
to any fee, commission or broker's or finder's fees from any of the parties
hereto, or from any Person controlling, controlled by, or under common control
with any of the parties hereto, in connection with this Agreement or any of the
transactions contemplated hereby.
6.16. PROXY STATEMENT, SCHEDULE 14D-9 AND SCHEDULE 14D-1. The
definitive proxy statement and related materials, if required, to be furnished
to the holders of Common Stock in connection with the Merger pursuant to Section
8.3 hereof (the "Proxy Statement") and the Information Statement will comply in
all material respects with the Exchange Act and the rules and regulations
thereunder and any other applicable laws. If at any time prior to the Company
Stockholders' Meeting any event occurs which should be described in an amendment
or supplement to the Proxy Statement, the Company will file and disseminate, as
required, an amendment or supplement which complies in all material respects
with the Exchange Act
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and the rules and regulations thereunder and any other applicable laws. Prior
to its filing with the SEC, the amendment or supplement shall be delivered to
Parent and Merger Sub and their counsel. None of the information supplied by
the Company for inclusion or incorporation by reference in (i) the documents
pursuant to which the Offer will be made, including the Offer Documents, or
(ii) the Proxy Statement, will, in the case of the Offer Documents, at the
respective times the Offer Documents are filed with the SEC, or in the case
of the Proxy Statement at the date such information is supplied and at the
Effective Time, contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements made, in
light of the circumstance under which they are made, not misleading. None of
the information supplied by the Company in the Schedule 14D-9, at the
respective times the Schedule 14D-9 is filed with the SEC, will contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under
which they are made, not misleading. Notwithstanding the foregoing, no
representation or warranty is made with respect to any information with
respect to Parent, Merger Sub or their officers, directors or affiliates
provided to the Company by Parent or Merger Sub expressly in writing for
inclusion or incorporation by reference in the Schedule 14D-9, the Proxy
Statement or the Information Statement. The Schedule 14D-9 will comply in all
material respects with the Exchange Act and the rules and regulations
thereunder and any other applicable laws. If at any time prior to the
expiration or termination of the Offer any event occurs which should be
described in an amendment or supplement to the Schedule l4D-9 or any
amendment or supplement thereto, the Company will file and disseminate, as
required, an amendment or supplement which complies in all material respects
with the Exchange Act and the rules and regulations thereunder and any other
applicable laws. Prior to its filing with the SEC, the amendment or
supplement shall be delivered to Parent and Merger Sub and their counsel.
6.17. TITLE TO ASSETS. Except as reflected in the Company's financial
statements as of December 31, 1998 or disclosed in Schedule 6.17 of the Company
Disclosure Statement, the Company and each of its Subsidiaries has good and
marketable title to (or in the case of leases or other contracts, the full and
unencumbered right to exercise its rights under such leases or other agreements)
the properties and assets used by it, free and clear of all mortgages, deeds of
trust, liens, security interests, pledges, encumbrances, encroachments,
easements, leases, agreements, covenants, charges, restrictions, option, joint
ownership or adverse claims or rights whatsoever (collectively, "Liens"), except
for Permitted Liens, and except for properties and assets disposed of in the
ordinary course of business since December 31, 1998. "Permitted Liens" means:
(i) rights of lessors or lessee under the terms of leases (x) which have been
disclosed to Parent in this Agreement or Schedule 6.17 of the Company Disclosure
Statement or (y) for office equipment entered into in the ordinary course of
business; (ii) Liens for Taxes not yet due or payable; (iii) Liens reflected in
the Company SEC Reports; (iv) Liens imposed by applicable law and incurred in
the ordinary course of business for obligations not yet due and payable to
laborers, materialmen and the like; (v) zoning and other restrictions,
variances, covenants, rights-of-way, encumbrances, easements and or other minor
irregularities of title, none of which, individually or in the aggregate, would
reasonably be expected to have a material adverse effect on the value of any of
the real property of the Company, or would impair in any material respect the
ability of the Company or the relevant Subsidiary of the Company to sell such
property for its current use, (vi) with respect to items of personal property,
unperfected purchase money security interests existing
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in the ordinary course of business without the execution of a security agreement
and (vii) Liens which, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect.
6.18. CONTRACTS. Schedule 6.18 of the Company Disclosure Statement sets
forth the following oral or written contracts and other agreements to which the
Company or any of its Subsidiaries is a party:
(a) any agreement (or group of related agreements, with the
same third party or any of its Affiliates) for the lease of
personal property providing for lease payments in excess of
One Hundred Thousand Dollars ($100,000) per annum;
(b) any agreement (or group of related agreements for the
purchase or sale of supplies, products or other personal
property, or for the furnishing or receipt of services, the
performance of which involve consideration in excess of One
Hundred Thousand Dollars ($100,000) per annum; PROVIDED,
HOWEVER, that this clause (b) shall not include any employment
agreement included pursuant to clause (e) below or excluded
from clause (e) below by virtue of the monetary threshold set
forth therein;
(c) any agreement concerning a partnership or joint venture;
(d) any agreement (or group of related agreements, with the
same third party or any of its Affiliates) under which the
Company or any of its Subsidiaries has created, incurred,
assumed, or guaranteed any indebtedness for borrowed money, or
any capitalized lease obligation, in excess of One Hundred
Thousand Dollar ($100,000) per annum or under which it has
imposed a lien on any of its material assets, tangible or
intangible;
(e) any agreement with an employee of the Company or any of
its Subsidiaries, providing for a base salary per annum in
excess of One Hundred Thousand Pounds Sterling
((pound)100,000);
(f) any other agreement (or group of related agreements with
the same third party) the performance of which involves
consideration in excess of One Hundred Thousand Dollars
($100,000) per annum; PROVIDED HOWEVER, that this clause
(f) shall not include any employment agreement excluded from
clause (e) above by virtue of the monetary threshold set forth
therein.
The foregoing are referred to hereafter as the "Material
Contracts". With respect to the Material Contracts, except as set forth
in Schedule 6.18 of the Company Disclosure Statement: (i) all are in
full force and effect against the Company or any of its Subsidiaries in
accordance with their terms, except that such enforceability may be
subject to bankruptcy, insolvency and other similar laws effecting
debtors' rights or creditors' rights generally and except that the
remedies of specific performance, injunction and other forms of
equitable relief may not be available; (ii) neither the Company nor any
of its Subsidiaries
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and to the Company's knowledge no other party thereto is, in breach or
default, and no event has occurred which with notice or lapse of time
would constitute a breach or default, or permit termination,
modification, or acceleration, under the agreement; (iii) neither the
Company nor any of its Subsidiaries has assigned any of its rights or
obligations under any of the Material Contracts; (iv) neither the
Company nor any of its Subsidiaries has received any outstanding notice
of cancellation or termination in connection with any of them; and (v)
neither the Company nor any of its Subsidiaries is, and to the
Company's knowledge no party thereto is the subject of bankruptcy
proceedings, nor has had a trustee appointed on its behalf or is
insolvent. The Company has delivered to the Parent and Merger Sub a
correct and complete copy of each written Material Contract (as amended
to the date of this Agreement), except for the Coop Agreements and
Conduit Agreements listed on Schedule 6.11 of the Company Disclosure
Statement, and a written summary setting forth the terms and conditions
of each oral agreement constituting a Material Contract referred to in
Schedule 6.18 of the Company Disclosure Statement.
6.19. COMPLIANCE. Except as set forth in Schedule 6.19 of the Company
Disclosure Statement, neither the Company or any of its Subsidiaries is in
conflict with, or in default or violation of any law, rule, regulation, order
judgment or decree applicable to the Company or any of its Subsidiaries or by
which any property or asset of the Company or any of its Subsidiaries is bound
or affected, except for such conflicts, defaults or violations that would not
reasonably be expected to, individually or in the aggregate, have a Material
Adverse Affect or would not be reasonably likely to prevent or materially delay
consummation of the transactions contemplated by this Agreement.
6.20. INSURANCE. The Company and its Subsidiaries have obtained and
maintained in full force and effect insurance (including director's and
officer's insurance) with insurance companies or associations in such amounts,
on such terms and covering such risks as disclosed in Schedule 6.20 of the
Company Disclosure Statement.
6.21. COMPANY PREFERENCE SHARES. Except as set forth in Section 6.21 of
the Company Disclosure Statement, neither the holders of the Company's 12%
Series A Preference Shares nor the holders of the Company's 12% Series B
Preference Shares are entitled to (i) receive any accrued dividends which have
not been paid when due or (ii) elect members to the Company's Board of Directors
in accordance with the terms of their respective Certificate of Designation.
6.22. YEAR 2000. All internal computer systems, computer software or
technology that are material to the business, finances or operations of the
Company and its Subsidiaries or were sold or licensed to customers of the
Company and its Subsidiaries (collectively, "Material Systems") are (i) able to
receive, record, store, process, calculate, manipulate and output dates from and
after September 4, 1999, time periods that include any Relevant Date and
information that is dependent on or relates to such dates or time periods, in
the same manner and with the same accuracy, functionality, data integrity and
performance as when dates or time periods prior to September 4,1999, are
involved and (ii) able to store and output date information in a manner that is
unambiguous as to century (the circumstances set forth in clauses (i) and (ii),
collectively,
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"Year 2000 Compliant"). All Material Systems that are not Year 2000 Compliant as
of the date of this Agreement are set forth on Schedule 6.22 of the Company
Disclosure Statement.
ARTICLE VII
Representations and Warranties of Parent and Merger Sub
Parent and Merger Sub each, jointly and severally, represents and
warrants to the Company that:
7.1. ORGANIZATION, ETC. OF PARENT. Parent is a corporation duly
organized, validly existing and in good standing under the laws of the Kingdom
of the Netherlands.
7.2. SUBSIDIARIES. Merger Sub is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and is a
Wholly Owned Subsidiary of Parent.
7.3. AGREEMENT. Each of Parent and Merger Sub has all necessary
corporate power and authority to execute and deliver this Agreement and the
Stockholder Agreements, to perform its obligations hereunder and to consummate
the transactions contemplated hereby and thereby. This Agreement and the
Stockholders Agreements and the consummation of the transactions contemplated
hereby and thereby have been approved by the Executive Board of Parent and Board
of Directors of Merger Sub and by Parent as the sole stockholder of Merger Sub,
and have been duly authorized by all other necessary corporate action on the
part of Parent or Merger Sub. This Agreement and the Stockholders Agreements
have been duly executed and delivered by a duly authorized officer of each of
Parent and of Merger Sub and (assuming the due execution and delivery of this
Agreement by the other parties thereto) constitutes a valid and binding
agreement of Parent and Merger Sub, enforceable against Parent and Merger Sub in
accordance with its terms, except as such enforceability may be subject to
bankruptcy, insolvency, and other similar laws affecting debtors' rights or the
rights and remedies of creditors generally, and except that the remedies of
specific performance injunction and other forms of equitable of relief may not
be available.
7.4. COMPLIANCE WITH OTHER INSTRUMENTS, ETC.; NO CONFLICT. Assuming
(i) the filings required under the Exchange Act relating to the Proxy
Statement and the Merger, (ii) the filing of the Certificate of Merger and
other appropriate merger documents, if any, as required by the DGCL, and
(iii) the approval of the Government Bodies listed on Schedule 7.4 of the
Parent Disclosure Statement, the execution, delivery and performance of this
Agreement and the Stockholders Agreements and the consummation of the
transactions contemplated hereby and thereby will not (A) result in any
violation of or conflict with, or constitute a default under, the charter,
bylaws or other organizational documents of Parent (or any of its
Subsidiaries) or (B) result in any violation of or conflict with or require
any consent, waiver, or notice under any Law. Except as set forth in Section
7.4 of the Parent Disclosure Statement, the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby
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will not result in any violation of or conflict with, constitute a default
under, require any consent, waiver or notice under any term of, or result in the
reduction or loss of any benefit or the creation or acceleration of any
obligation under, any agreement, note, bond, mortgage, indenture, contract,
lease, Permit or other obligation or any instrument to which Parent or Merger
Sub is a party or by which any of the assets or properties of Parent or Merger
Sub is bound or any instrument, except where any of the foregoing, individually
or in the aggregate, does not and would not prevent or materially delay the
consummation of the transactions contemplated hereby.
7.5. BROKERS AND FINDERS. Except for the fees and expenses payable to
Morgan Stanley & Co., Limited, which fees and expenses will be paid by Parent,
no agent, broker, Person or firm acting on behalf of Parent or Merger Sub is, or
will be, entitled to any fee, commission or broker's or finder's fees from any
of the parties hereto, or from any Person controlling, controlled by, or under
common control with any of the parties hereto, in connection with this Agreement
or any of the transactions contemplated hereby.
7.6 OFFER DOCUMENTS, SCHEDULE 14D-9 AND PROXY STATEMENT. The Offer
Documents will comply in all material respects with the Exchange Act and the
rules and regulations thereunder and any other applicable laws. If at any time
prior to the expiration or termination of the Offer any event occurs which
should be described in an amendment or supplement to the Schedule 14D-1 or any
amendment or supplement thereto, Merger Sub will, and Parent will cause Merger
Sub to, file and disseminate, as required, an amendment or supplement which
complies in all material respects with the Exchange Act and the rules and
regulations thereunder and any other applicable laws. Prior to its filing with
the SEC, the amendment or supplement shall be delivered to the Company and its
counsel. The information supplied or to be supplied by Parent and Merger Sub for
inclusion or incorporation by reference in the Proxy Statement, the Schedule
14D-9 and the Information Statement of the Company, at the time such documents
are supplied to the stockholders of the Company, and with respect to the Proxy
Statement and the Information Statement, at the time of the Company Stockholders
Meeting and at the Effective Time, will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements made, in light of the circumstances
under which they are made, not misleading. Notwithstanding the foregoing, no
representation or warranty is made with respect to any information with respect
to the Company or its officers, directors and affiliates provided to Parent or
Merger Sub by the Company expressly in writing for inclusion or incorporation by
reference in the Offer Documents or amendments or supplements thereto.
ARTICLE VIII
Additional Covenants and Agreements
8.1. CONDUCT OF BUSINESS OF THE COMPANY. Except as set forth in
Schedule 8.1 of the Company Disclosure Statement, as expressly permitted by this
Agreement (including any transaction permitted by Schedule 8.1 of the Company
Disclosure Statement), as required by any change in applicable Law, or as
otherwise agreed by Parent in writing (which agreement shall not be unreasonably
withheld), during the period from the date of this Agreement to the Effective
Time, (i) the Company will, and will cause each of its Subsidiaries to, conduct
the Company's
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business in the ordinary course of business consistent with past practice, and
(ii) to the extent consistent with the foregoing, the Company will, and will
cause each of its Subsidiaries to, use their reasonable best efforts to preserve
intact its current business organizations, keep available the service of its
current officers and employees, and preserve its relationships with customers,
suppliers and others having business dealings with it (but without the
obligation to pay any additional compensation to any such officers, employees,
customers, suppliers and other persons), in each case with respect to the
Company's current business, with the objective that the goodwill and ongoing
businesses of the Company shall be materially unimpaired at the Effective Time.
Without limiting the generality of the foregoing, from and including the date
hereof to the Effective Time, the Company will not, and will not permit any of
its Subsidiaries to, without the prior written consent of Parent (except to the
extent set forth in Schedule 8.1 of the Company Disclosure Statement):
(a) except for (i) Company Common Stock issued upon exercise
of options or other rights outstanding as of the date hereof
under Employee Plans in accordance with the terms thereof and
(ii) securities issued in connection with the conversion of
convertible or exchangeable securities of the Company or its
Subsidiaries outstanding as of the date hereof in accordance
with the terms of such securities, issue, deliver, sell,
dispose of, pledge or otherwise encumber, or authorize or
propose the issuance, sale, disposition or pledge or other
encumbrance (in each instance, whether through the issuance or
granting of options, warrants, commitments, subscriptions,
rights to purchase or otherwise) of (A) any additional shares
of its capital stock of any class, or any Voting Debt or any
securities or rights convertible into, exchangeable for, or
evidencing the right to subscribe for any shares of its
capital stock or Voting Debt or any rights, warrants, options,
calls, commitments or any other agreements of any character to
purchase or acquire any shares of its capital stock or Voting
Debt or any securities or rights convertible into,
exchangeable for, or evidencing the right to subscribe for,
any shares of its capital stock, or (B) any other securities
in respect of, in lieu of, or in substitution for, Company
Common Stock outstanding on the date hereof;
(b) redeem, purchase or otherwise acquire, or propose to
redeem, purchase or otherwise acquire, any of its outstanding
securities, other than pursuant to existing agreements
requiring the Company to repurchase or acquire any shares of
its capital stock (provided that such repurchase or
acquisition is in accordance with the terms of such agreement
as in effect on the date hereof);
(c) split, combine, subdivide or reclassify any shares of its
capital stock or declare, set aside for payment or pay any
dividend, or make any other actual, constructive or deemed
distribution in respect of any shares of its capital stock or
otherwise make any payments to stockholders in their capacity
as such (other than dividends or distributions paid by any
Wholly Owned Subsidiary of the Company to the Company or
another Wholly Owned Subsidiary of the Company);
(d) (i) grant any increases in the compensation of any of its
directors, officers or employees, except for increases granted
to employees other than officers in the
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ordinary course of business consistent with past practice,
(ii) pay or award or agree to pay or award any pension,
retirement allowance, or other non-equity incentive awards, or
other employee benefit, not required by any of the Employee
Plans to any current or former director, officer or employees,
whether past or present, or to any other Person, except for
payments or awards to current employees other than officers
that are in the ordinary course of business, consistent with
past practice, (iii) pay or award or agree to pay or award any
stock option or equity incentive awards, (iv) except as
provided for in the business plan previously dated April 29,
1999 provided by the Company to Parent and Merger Sub (the
"Business Plan"), enter into any new or amend any existing
employment agreement with any director, officer or employee
except for employment agreements with new employees entered
into in the ordinary course of business consistent with past
practice and except for amendments in the ordinary course of
business, consistent with past practice, that do not
materially increase benefits or payments, (v) enter into any
new or amend any existing severance agreement with any current
or former director, officer or employee, except for agreements
or amendments in the ordinary course of business, consistent
with past practice, that do not provide for material benefits,
or (vi) become obligated under any new Employee Plan which was
not in existence on the date hereof, or amend any such
Employee Plan in existence on the date hereof, except for any
such amendment in the ordinary course of business, consistent
with past practice, that does not provide for material
additional benefits;
(e) adopt a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring,
recapitalization or other reorganization of the Company or
any Subsidiary of the Company not constituting an inactive
Subsidiary (other than the Merger and other than any such
merger, consolidation, restructuring, recapitalization or
other reorganization that is used to effect an acquisition
permitted pursuant to Section 8.1(f) and which does not result
in a change of control of the Company or change the Company's
Common Stock into a different number or kind of securities);
(f) make any acquisition, by means of stock or asset purchase,
recapitalization, merger, consolidation or otherwise, of
(i) any direct or indirect ownership interest in or assets
comprising any business enterprise or operation or (ii) except
in the ordinary course and consistent with past practice, any
other assets; PROVIDED FURTHER that such acquisitions do not
and would not prevent or materially delay the consummation of
the Merger; and PROVIDED FURTHER that the foregoing shall not
prevent the Company from exploring on a preliminary basis and
conducting diligence investigations (including having
discussions with any potential acquisition target) with
respect to any potential acquisition that would require
Parent's consent hereunder, for the purpose of determining the
desirability of such potential acquisition and developing the
basis on which to seek Parent's consent, so long as the
Company does not submit any formal proposal or indication of
interest with respect to such an acquisition to such
acquisition target,
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or make any binding commitments with respect to such potential
acquisition, without obtaining Parent's consent;
(g) (i) dispose of any interest in any material business
enterprise or operation of the Company, (ii) make any other
disposition of any other direct or indirect ownership interest
in any material assets of the Company (except for the
replacement or upgrade of assets, or disposition of
unnecessary assets, in the ordinary course and consistent with
past practice), or (iii) except in the ordinary course and
consistent with past practice, dispose of any other assets of
the Company;
(h) adopt any amendments to the Company Charter or the by-laws
or alter through merger, liquidation, reorganization,
restructuring or in any other fashion the corporate structure
or ownership of any Subsidiary of the Company;
(i) incur any indebtedness for borrowed money or guarantee any
indebtedness of any other Person or make any loans, advances
or capital contributions to, or investments in, any other
Person (other than to the Company or any Wholly Owned
Subsidiary of the Company);
(j) except as provided for in the Business Plan, engage in the
conduct of any business other than the Company's existing
businesses;
(k) enter into any agreement or exercise any discretion
providing for acceleration of payment or performance as a
result of a change of control of the Company or its
Subsidiaries, except in connection with the Offer and the
Merger; PROVIDED THAT this paragraph (k) shall not restrict
the Company's right to respond or take action in response to
any such acceleration so long as such action is permitted
under this Section 8.1;
(l) enter into any contracts, arrangements or understandings
requiring in the aggregate the purchase of equipment,
materials, supplies or services in excess of $2 million
individually or $20 million in the aggregate other than any
such contracts, arrangements or understandings providing for
capital spending of the Company or its Subsidiaries in
accordance with the Business Plan;
(m) enter into or amend, modify, terminate or waive any right
under any agreement with any Affiliates of the Company (other
than its Subsidiaries), other than any of the foregoing as may
be done in the ordinary course of business and that (x) would
not reasonably be expected, individually or in the aggregate,
to have a Material Adverse Effect or (y) would not be
reasonably likely to prevent or materially delay consummation
of the transactions contemplated by this Agreement;
(n) settle or compromise any material litigation or material
Tax Controversy with respect to the Company or its
Subsidiaries or waive, release or assign any
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material rights or claims with respect to the Company or its
Subsidiaries, except in the ordinary course of business
consistent with past practice;
(o) effect any material change in any of its methods of
accounting, except as may be required by law or generally
accepted accounting principles;
(p) take any action, engage in any transaction or enter into
any agreement which would cause any of the representations or
warranties set forth in Article VI hereof that are subject to,
or qualified by, a "Material Adverse Effect", "material
adverse change" or other materiality qualification to be
untrue as of the Closing Date, or any such representations and
warranties that are not so qualified to be untrue in any
respect which would have a Material Adverse Effect;
(q) take any action, including without limitation, the
adoption of any shareholder rights plan or amendments to the
Certificate of Incorporation, which would, directly or
indirectly, restrict or impair the ability of Parent to vote,
or otherwise to exercise the rights and receive the benefits
of a shareholder with respect to, securities of the Company
that may be acquired or controlled by Parent or Merger Sub or
permit any shareholder to acquire securities of the Company on
a basis not available to Parent in the event that Parent were
to acquire securities of the Company;
(r) authorize, recommend or propose (other than to Parent), or
announce an intention to do any of the foregoing, or enter
into any contract, agreement, commitment or arrangement to do
any of the foregoing.
8.2. NO SOLICITATION OF OTHER OFFERS. (a) The Company and its
Affiliates and each of their respective officers, directors, employees,
representatives, consultants, investment bankers, attorneys, accountants and
other agents shall immediately cease any discussions or negotiations with any
other parties that may be ongoing with respect to any Acquisition Proposal
(as defined below). Neither the Company nor any of its Affiliates shall,
directly or indirectly, take (and the Company shall not authorise or permit
its or its Affiliates, officers, directors, employees, representatives,
consultants, investment bankers, attorneys, accountants or other agents or
Affiliates, to so take) any action to (i) encourage, solicit, initiate or
facilitate the making of any Acquisition Proposal (including, without
limitation, by taking any action that would make the Article VIII of the
Company Charter or Section 203 of the Delaware General Corporation Law
inapplicable to an Acquisition Proposal), (ii) enter into any agreement with
respect to any Acquisition Proposal or enter into any arrangement,
understanding or agreement requiring it to abandon, terminate or fail to
consummate the Merger or any other transactions contemplated by this
Agreement or (iii) participate in any way in discussions or negotiations
with, or, furnish or disclose any information to, any Person (other than
Parent or Merger Sub) in connection with, or take any other action to
facilitate any inquiries or the making of any proposal that constitutes, or
may reasonably be expected to lead to, any Acquisition Proposal; PROVIDED,
HOWEVER, that the Company, in response to an unsolicited Acquisition Proposal
and in compliance with its obligations under Section 8.2(b) hereof, may
participate in discussions or negotiations with or furnish information
(pursuant to a confidentiality agreement with terms not more favourable to
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such third party than the terms of the Confidentiality Agreement) to any third
party which makes an Acquisition Proposal if (i) the Board of Directors
reasonably determines (based upon the advice of an independent, nationally
recognized financial advisor) that such Acquisition Proposal will lead to a
Superior Proposal (as defined below) and (ii) the Board of Directors believes
(and has been so advised in writing by independent outside nationally recognized
legal counsel) that failing to take such action would constitute a breach of its
fiduciary duties. In addition, neither the Board of Directors of the Company nor
any Committee thereof shall (A) withdraw or modify, or propose to withdraw or
modify, in a manner adverse to Parent or Merger Sub the approval and
recommendation of the Offer and this Agreement or (B) approve or recommend, or
propose to approve or recommend, any Acquisition Proposal; PROVIDED THAT the
Company may recommend to its stockholders an Acquisition Proposal and in
connection therewith withdraw or modify its approval or recommendation of the
Offer or the Merger if (1) a third party makes a Superior Proposal, and (2) (a)
five (5) business days have elapsed following delivery to Parent of a written
notice of the determination by the Board of Directors of the Company to take
such action and during such five (5) business day period the Company has fully
co-operated with Parent including, without limitation, informing Parent of the
terms and conditions of such Superior Proposal, and the identity of the Person
making such Superior Proposal, with the intent of enabling both parties to agree
to a modification of the terms and conditions of this Agreement, and (b) at the
end of such five (5) business day period the Acquisition Proposal continues to
constitute a Superior Proposal.
"ACQUISITION PROPOSAL" shall mean (i) any inquiry, proposal or
offer from any Person relating to any direct or indirect acquisition or purchase
of a substantial amount of assets of the Company or any of its Subsidiaries or
of over 10% of any class of equity securities of the Company or any of its
Subsidiaries, (ii) any tender offer or exchange offer that, if consummated,
would result in any Person beneficially owning 10% or more of any class of
equity securities of the Company or any of its Subsidiaries, (iii) any merger,
consolidation, business combination, sale of substantially all the assets,
recapitalization, liquidation, dissolution or similar transaction involving the
Company or any of its Subsidiaries, or (iv) any other transaction the
consummation of which could reasonably be expected to impede, interfere with,
prevent or materially delay the Offer or the Merger or which could reasonably be
expected to dilute materially the benefits to Parent of the transactions
contemplated hereby.
"SUPERIOR PROPOSAL" shall mean a BONA FIDE proposal made by a
third party to acquire all of the Shares pursuant to a tender offer, a merger or
a sale of all of the assets of the Company (w) on terms which a majority of the
members of the Board of Directors of the Company determines in its good faith
reasonable judgment (based on the advice of an independent outside nationally
recognized financial advisor (relating to financial matters) and independent
outside nationally recognized legal advisors (relating to legal matters)) to be
more favorable to the Company and its stockholders than the transactions
contemplated hereby, (x) for which financing is then available (it being
understood that financing evidenced by highly confident letters and similar
letters shall not be considered "available" for purposes of this Section),
(y) which is not subject to any financing or due diligence condition and
(z) which an independent nationally recognized financial advisor has advised
the Board of Directors is more favorable to the Company's stockholders from a
financial point of view than the transactions contemplated hereby,
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as proposed to be modified by Parent in accordance with the proviso to the last
sentence of the first paragraph of this Section 8.2 (a).
(b) From and after the date hereof, in addition to the obligations of
the Company set forth in paragraph (a), on the date of receipt thereof, the
Company shall advise Parent of any request for information or of any Acquisition
Proposal, or any inquiry, proposal, discussions or negotiation with respect to
any Acquisition Proposal, the terms and conditions of such request, Acquisition
Proposal, inquiry, proposal, discussion or negotiation and the Company shall
promptly provide to Parent copies of any written materials received by the
Company in connection with any of the foregoing, and the identity of the Person
making any such Acquisition Proposal or such request, inquiry or proposal or
with whom any discussion or negotiation are taking place. The Company shall keep
Parent fully informed of the status and details (including amendments or
proposed amendments) of any such request or Acquisition Proposal and keep Parent
fully informed as to the details of any information requested of or provided by
the Company and as to the details of all discussions or negotiations with
respect to any such request, takeover proposal or inquiry. The Company shall
promptly provide to Parent any non-public information concerning the Company
provided to any other Person in connection with any Acquisition Proposal which
was not previously provided to Parent.
(c) Immediately following the execution of this Agreement, the Company
shall request each Person which has heretofore executed a confidentiality
agreement in connection with its consideration of acquiring the Company or any
portion thereof to return all confidential information heretofore furnished to
such Person by or on behalf of the Company.
8.3. PROXY STATEMENT. If stockholder approval of the Merger is required
by law or by the Company Charter or By-Laws, as promptly as practicable,
following Parent's request, the Company will prepare and file a preliminary
Proxy Statement with the SEC and will use its reasonable best efforts to respond
to the comments of the SEC, if any, in connection therewith and to furnish all
information regarding the Company required in the definitive Proxy Statement
(including, without limitation, financial statements and supporting schedules
and certificates and reports of independent public accountants). Parent, Merger
Sub and Company will cooperate with each other in the preparation of the Proxy
Statement. Without limiting the generality of the foregoing, each of Parent and
Merger Sub will furnish to the Company the information relating to it required
by the Exchange Act to be set forth in the Proxy Statement. Promptly after the
expiration or termination of the Offer, if required by the DGCL in order to
consummate the Merger, the Company will cause the definitive Proxy Statement to
be mailed to the stockholders of the Company and, if necessary, after the
definitive Proxy Statement shall have been so mailed, promptly circulate
amended, supplemental or supplemented proxy material and, if required in
connection therewith, resolicit proxies. The Company will not use any proxy
material in connection with the meeting of its stockholders without Parent's
prior approval.
8.4. STOCKHOLDER APPROVAL. (a) Promptly following the purchase of
shares of Common Stock pursuant to the Offer, if required by DGCL in order to
consummate the Merger, the Company, acting through its Board of Directors,
shall, in accordance with applicable Law, duly call, give notice of, convene and
hold a meeting of the holders of Common Stock and Company Preference Shares (the
"Company Stockholders' Meeting") for the purpose of voting upon this
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Agreement and the Merger and the Company agrees that this Agreement and the
Merger shall be submitted at such meeting. The Company shall use its reasonable
best efforts to solicit from its stockholders proxies, and shall take all other
action necessary and advisable, to secure the vote of stockholders required by
applicable law and the Company Charter or By-Laws to obtain the approval for
this Agreement. The Company agrees that it will include in the Proxy Statement
the recommendation of its Board of Directors that holders of Common Stock and
Company Preference Shares approve and adopt this Agreement and approve the
Merger. Parent will cause all shares of Common Stock and Company Preference
Shares owned by Parent and its Subsidiaries (including Merger Sub) to be voted
in favor of this Agreement and the Merger.
(b) Notwithstanding the provisions of Section 8.4(a), in the event that
Parent and Merger Sub shall acquire in the aggregate at least 90% of the
outstanding shares of Common Stock and 90% of the outstanding shares of each
class of Company Preference Shares, the parties hereto shall, at the request of
Parent, take all necessary and appropriate action to cause the Merger to become
effective as soon as practicable after such acquisition, without a meeting of
shareholders of the Company, in accordance with the DGCL.
8.5. REASONABLE BEST EFFORTS. Subject to Section 8.5(c), the Company
and Parent shall, and shall use their reasonable best efforts to cause their
respective Subsidiaries, as applicable, to: (i) promptly make all filings and
seek to obtain all Authorizations (including, without limitation, all filings
required under the HSR Act, the applicable merger regulations of the European
Community and all applicable Polish competition statutes) required under all
applicable Laws with respect to the Merger and the other transactions
contemplated hereby and will reasonably consult and cooperate with each other
with respect thereto; (ii) not take any action (including effecting or agreeing
to effect or announcing an intention or proposal to effect, any acquisition,
business combination or other transaction except as set forth in the Company
Disclosure Statement) which would impair the ability of the parties to
consummate the Merger; and (iii) use their reasonable best efforts to promptly
(x) take, or cause to be taken, all other actions and (y) do, or cause to be
done, all other things reasonably necessary, proper or appropriate to satisfy
the conditions set forth in Annex A of this Agreement and Article IX (unless
waived) and to consummate and make effective the transactions contemplated by
this Agreement on the terms and conditions set forth herein (including seeking
to remove promptly any injunction or other legal barrier that may prevent such
consummation); PROVIDED, HOWEVER, that no loan agreement or contract for
borrowed money shall be repaid except as currently required by its terms, in
whole or in part, and, subject to Section 8.1, no contract shall be amended to
increase the amount payable thereunder or otherwise to be more burdensome to the
Company or any of its Subsidiaries in order to obtain any such consent, approval
or authorization without first obtaining the written approval of Parent and
Merger Sub. Each party shall promptly notify the other party of any
communication to that party from any Governmental Body in connection with any
required filing with, or approval or review by, such Governmental Body in
connection with the Offer and the Merger and the other transactions contemplated
hereby and permit the other party to review in advance any proposed
communication to any Governmental Body in such connection to the extent
permitted by applicable law.
8.6. ACCESS TO INFORMATION. Subject to currently existing contractual
and legal restrictions applicable to the Company, the Company shall (and shall
cause each of its Subsidiaries
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to) afford to officers, employees, counsel, accountants and other authorized
representatives of Parent ("Parent Representatives") reasonable access, during
normal business hours throughout the period prior to the Effective Time, to its
properties, books and records (including, subject to execution of customary
access letters, the work papers of independent accountants), such access not to
unreasonably interfere with the Company's business or operations, and, during
such period, shall (and shall cause each of its Subsidiaries to) furnish
promptly to such Parent Representatives all information concerning its business,
properties and personnel as may reasonably be requested. All information
obtained pursuant to this Section 8.6 shall be subject to the Confidentiality
Agreement, which shall remain in full force and effect until consummation of the
Merger or, if the Merger is not consummated, for the period specified therein;
PROVIDED, HOWEVER, that neither Parent nor the Company shall be precluded from
making any disclosure which it deems required by law or applicable rule or
regulation of any Governmental Body or self-regulatory organization in
connection with the Merger.
8.7. INDEMNIFICATION OF DIRECTORS AND OFFICERS. (a) From and after the
Effective Time, Parent and the Surviving Corporation shall jointly and severally
indemnify, defend and hold harmless each of the Persons set forth in Schedule
8.7 of the Company Disclosure Statement, and each of the present and former
officers and directors of the Company and any of its Subsidiaries, former
Subsidiaries and their predecessors, and any Person who is or was serving at the
request of the Company as an officer, director, employee or agent of another
Person (collectively, the "Indemnified Parties"), against all losses, expenses,
claims, damages or liabilities arising out of actions or omissions occurring on
or prior to the Effective Time (including the transactions contemplated by this
Agreement) to the fullest extent permitted under applicable Law (and shall also,
subject to Section 8.7(b), advance expenses as incurred to the fullest extent
permitted under applicable Law; PROVIDED THAT, the Person to whom expenses are
advanced provides an undertaking reasonably satisfactory to the Company to repay
such advances if it is ultimately determined that such Person is not entitled to
indemnification); PROVIDED, HOWEVER, that such indemnification shall be provided
only to the extent any directors' and officers' liability insurance policy of
the Company or its Subsidiaries does not provide coverage and actual payment
thereunder with respect to the matters that would otherwise be subject to
indemnification hereunder (it being understood that Parent or the Surviving
Corporation shall, subject to Section 8.7(b), advance expenses on a current
basis as provided in this paragraph (a) notwithstanding such insurance coverage
to the extent that payments thereunder have not yet been made, in which case
Parent or the Surviving Corporation, as the case may be, shall be entitled to
repayment of such advances from the proceeds of such insurance coverage). Parent
and Surviving Corporation agree that all rights to indemnification, including
provisions relating to advances of expenses incurred in defense of any action,
suit or proceeding, whether civil, criminal, administrative or investigative
(each, a "Claim"), existing in favor of the Indemnified Parties as provided in
the Company Charter or By-Laws or pursuant to other agreements, or certificates
of incorporation or by-laws or other similar documents of any of the Company's
Subsidiaries, as in effect as of the date hereof, with respect to matters
occurring through the Effective Time, shall survive the Merger and shall
continue in full force and effect for a period of not less than six years from
the Effective Time; PROVIDED, HOWEVER, that all rights to indemnification in
respect of any Claim asserted, made or commenced within such period shall
continue until the final disposition of such Claim. The Surviving Corporation
shall maintain in effect for not less than six years after the Effective Time
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the current policies of directors' and officers' liability insurance maintained
by the Company and the Company's Subsidiaries with respect to matters occurring
prior to the Effective Time; PROVIDED HOWEVER, that in no event shall Parent be
required to expend in any one year an amount in excess of 150% of the annual
premiums currently paid by the Company for such insurance which the Company
represents to be $430,000 for the twelve month period ending May 1, 1999;
PROVIDED FURTHER, however, that the Surviving Corporation may substitute
therefor policies of at least the same coverage containing terms and conditions
which are no less advantageous to the Indemnified Parties with an insurance
company or companies, the claims paying ability of which is substantially
equivalent to the claims paying ability of the insurance company or companies
providing such insurance coverage for directors and officers of Parent.
(b) In the event that any Claim relating hereto or to the
transactions contemplated by this Agreement is commenced,
before the Effective Time, the parties hereto agree to
co-operate and use their respective reasonable efforts to
vigorously defend against and respond thereto. Any Indemnified
Party wishing to claim indemnification under paragraph (a) of
Section 8.7, upon learning of any such claim, action, suit,
proceeding or investigation, shall promptly notify Parent
thereof, whereupon Parent or the Surviving Corporation shall
have the right, from and after the Effective Time, to assume
and control the defense thereof, and upon such assumption, the
Surviving Corporation shall not be liable to such Indemnified
Parties for any legal expenses of other counsel or any other
expenses subsequently incurred by such Indemnified Parties in
connection with the defense thereof. Notwithstanding the
foregoing, if counsel for the Indemnified Parties advises that
there are issues which raise conflicts of interest between
Parent or the Surviving Corporation and the Indemnified
Parties, the Indemnified Parties may retain separate counsel
and the Surviving Corporation will pay all reasonable
documented fees and expenses of such counsel; PROVIDED THAT
the Surviving Corporation will not be obligated pursuant to
this sentence to pay for more than one firm of counsel for all
Indemnified Parties (plus one local counsel in each
appropriate jurisdiction for all Indemnified Parties) with
respect to any Claim. The Surviving Corporation shall not be
liable for any settlement effected without its prior written
consent.
(c) This Section 8.7 is intended to benefit the Indemnified
Parties and shall be binding on all successors and assigns of
Parent, Merger Sub and the Surviving Corporation.
8.8. NOTIFICATION OF CERTAIN MATTERS. Each of the Company and Parent
shall give prompt notice to the other party of any notice or other communication
from any third party alleging that the consent of such third party is or may be
required in connection with the transactions contemplated by this Agreement.
Parent or Merger Sub shall promptly give notice to the Company upon any of their
Executive Officers obtaining knowledge of any actual failure of any of the
Tender Offer Conditions or any event which would result in an actual failure of
the Tender Offer Conditions.
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8.9. EMPLOYEE MATTERS. (a) From and after the Effective Time, Parent
will cause the Surviving Corporation to honor, in accordance with their terms,
the employment contracts, severance agreements and similar agreements with
officers and employees of the Company and its Subsidiaries set forth in Schedule
6.9 of the Company Disclosure Statement (the "Executive Agreements"); PROVIDED,
HOWEVER, that nothing herein shall preclude any change in any Executive
Agreement effective on a prospective basis that is permitted pursuant to the
terms of this Agreement or the applicable Employee Plan. Company performance in
respect of any performance or other programs shall be calculated without taking
into account any expenses or costs directly associated with or arising as a
result of the transactions contemplated by this Agreement or any non-recurring
charges that would not reasonably be expected to have been incurred had the
transactions contemplated by this Agreement not occurred. With respect to
employees of the Company and its Subsidiaries, the obligations of the Company
and its Subsidiaries under the Employee Plans as in effect immediately prior to
the Effective Time and will provide employee benefit plans with aggregate
employee benefits to Company Employees that are no less favorable than the
aggregate benefits provided to them immediately prior to the Effective Time
pursuant to the plans set forth in Schedule 6.9 of the Company Disclosure
Statement; PROVIDED THAT Parent at its sole option may provide employee benefits
to Company Employees which, in the aggregate, are no less favorable than those
applicable to similarly situated employees of Parent. With respect to any plans
established by Parent, to the extent a Company Employee becomes eligible to
participate in any such plans, Parent shall grant to such Company Employee from
and after the Effective Time, credit for all service with the Company and its
affiliates and predecessors (and any other service credited by the Company under
similar Employee Plans) prior to the Effective Time for eligibility to
participate, benefit accrual and vesting purposes. To the extent Parent benefit
plans provide medical or dental welfare benefits, such plans shall waive any
preexisting conditions and actively at-work exclusions with respect to Company
Employees (but only to the extent such Company Employees were provided coverage
under the Employee Plans) and shall provide that any expenses incurred on or
before the Effective Time in the applicable plan year by or on behalf of any
Company Employees shall be taken into account under the Parent benefit plans for
the purposes of satisfying applicable deductible, co-insurance and maximum
out-of- pocket provisions for such Company Employees.
(b) The Company may amend and/or take action with respect to
its stock incentive plans prior to the Effective Time to
provide that upon the Merger, that options, stock appreciation
rights or other awards granted under such plan and outstanding
as of the Effective Time shall be fully vested, and in the
case of stock options or stock appreciation rights, be
immediately exercisable.
(c) For purposes of this Section 8.9, the term "Company
Employees" shall mean all individuals employed by the Company
and its Subsidiaries (including those on lay-off, disability
or leave of absence, paid or unpaid) immediately prior to the
Effective Time.
8.10 PREPARATION OF TAX RETURNS AND PAYMENT OF TAXES. The Company and
its Subsidiaries shall prepare and timely file all Tax Returns and amendments
thereto required to be filed by or with respect to them on or before the
Effective Time. Parent shall have a reasonable
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opportunity to review all such Tax Returns and amendments thereto prior to
filing. The Company and its Subsidiaries shall timely pay all Taxes shown to be
payable on such Tax Returns.
8.11 STOCK OPTION AND OTHER PLANS; COMPANY WARRANTS. (a) Prior to the
Tender Offer Acceptance Date, both the Board of Directors of the Company (or, if
appropriate, any committee thereof) and the Company shall use their reasonable
best efforts to obtain the consent of all of the holders of options to purchase
Common Stock (the "Options") heretofore granted under any stock option plans of
the Company (the "Stock Plans") and the holders of Company Warrants to provide
for the cancellation, of all the outstanding Options and Company Warrants on the
terms set forth in Sections 8.11 and 5.5.
(b) Within three business days after the Payment Date, each Option,
whether or not then vested or exercisable, and each Company Warrant, whether or
not then vested or exercisable, shall, subject to the receipt by the Company of
any required consents from the holder of such Options and Company Warrants, no
longer be exercisable for the purchase of shares of Common Stock but shall
entitle each holder thereof, in cancellation and settlement therefor, to
payments in cash (subject to any applicable withholding taxes, the "Cash
Payment") equal to the product of (x) the total number of shares of Common Stock
subject to such Option or Company Warrant, as the case may be, as to which such
Option or Company Warrant could have been exercisable (assuming such Option or
Company Warrant was fully vested) and (y) the excess, if any, of the Offer Price
over the exercise price per share of Common Stock subject to such Option or
Company Warrant. The Company will pay each such Cash Payment to be paid to each
holder of an outstanding Option or Company Warrant, as the case may be, within
six business days of the Payment Date; PROVIDED THAT such holder has delivered
the consent described in Section 8.11(a) to the Company. Parent shall provide,
or cause to provided, to the Company on a timely basis all funds necessary to
pay each such Cash Payment.
ARTICLE IX
Conditions to the Merger
9.1. CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT, MERGER SUB AND THE
COMPANY. The respective obligations of Parent and Merger Sub, on the one hand,
and the Company, on the other hand, to effect the Merger are subject to the
satisfaction or waiver (subject to applicable law) at or prior to the Effective
Time of each of the following conditions and only the following conditions:
(a) APPROVAL OF COMPANY'S STOCKHOLDERS. To the extent required
by applicable law, this Agreement and the Merger shall have
been approved and adopted by holders of a majority of the
outstanding share of the Common Stock of the Company entitled
to vote in accordance with applicable law;
(b) HSR ACT. Any waiting period applicable (and any extension
thereof) under the HSR Act applicable to the Merger shall have
expired or been terminated;
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(c) OTHER REGULATORY APPROVALS. All required approvals of the
Polish Anti-Monopoly Commission shall have been granted. A
decision of the Commission of the European Communities that
the purchase of the Common Stock pursuant to the Offer and the
Merger are compatible with the common market shall have been
received if required;
(d) INJUNCTION. No preliminary or permanent injunction or
other order shall have been issued by any court or by any
governmental or regulatory agency, body or authority which
prohibits the consummation of the Offer or the Merger and the
transaction contemplated by this Agreement and which is in
effect at the Effective Time; PROVIDED, HOWEVER, that, in the
case of a decree, injunction or other order, each of the
parties shall have used reasonable best efforts to prevent the
entry of any such injunction or other order and to appeal as
promptly as possible any decree, injunction or other order
that may be entered;
(e) STATUTES. No statute, rule, regulation, executive order,
decree or order of any kind shall have been enacted, entered,
promulgated or enforced by any court or governmental authority
which prohibits the consummation of the Offer or the Merger or
has the effect of making the purchase of the Common Stock
illegal;
(f) MINIMUM CONDITION. Merger Sub shall have purchased shares
of Common Stock pursuant to the Offer in a number sufficient
to satisfy the Minimum Condition; and
(g) COMPANY PREFERENCE SHARES. Merger Sub shall have purchased
the Company Preference Shares from the owners thereof and
shall be the sole record and beneficial owner of all of the
issued and outstanding Company Preference Shares; PROVIDED,
HOWEVER, that this Section 9.1(g) shall not be a condition to
the obligations of Parent and Merger Sub if Parent or Merger
Sub shall have failed to purchase all of the Company
Preference Shares in breach of their obligations under the
Preferred Stockholders Agreements.
ARTICLE X
Termination
10.1. TERMINATION BY MUTUAL CONSENT. This Agreement may be terminated
and the Merger may be abandoned at any time prior to the Effective Time, before
or after the approval by stockholders, by the mutual written consent of Parent
and the Company.
10.2. TERMINATION BY EITHER PARENT OR THE COMPANY. This Agreement may
be terminated (upon notice from the terminating party to the other parties) and
the Merger may be abandoned by action of the Board of Directors of either Parent
or the Company if:
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(a) the Payment Time shall not have occurred by the date (the
"Termination Date") which is 120 days after the date hereof;
PROVIDED THAT the right to terminate this Agreement under this
clause shall not be available to any party whose failure to
fulfill any obligation under this Agreement has been the cause
of or resulted in the failure of the Merger Effective Time to
occur on or before the Termination Date; or
(b) any court of competent jurisdiction or Governmental Body
shall have issued an order, decree or ruling or taken any
other action permanently restraining, enjoining or otherwise
prohibiting the acceptance for payment of, or payment for,
shares of Common Stock pursuant to the Offer or the payment
for shares of Common Stock or the making of any Cash Payment
pursuant to the Merger and such order, decree, ruling or other
action shall have become final and nonappealable.
10.3. TERMINATION BY THE COMPANY. This Agreement may be terminated
(upon notice to Parent) by the Company and the Merger may be abandoned by action
of the Board of Directors of the Company:
(a) if Parent or Merger Sub breaches or fails in any material
respect to perform or comply with its covenants and agreements
contained herein or breaches its representations and
warranties in any material respect and such breach cannot or
has not been cured within fifteen (15) days after the giving
of written notice of such breach to the Parent and Merger Sub,
other than any breach or breaches which is or are not
reasonably likely to affect adversely Parent's or Merger Sub's
ability to complete the Offer or the Merger; or
(b) if Parent or Merger Sub shall have (i) failed to commence
the Offer within five (5) business days following the date of
this Agreement, (ii) terminated the Offer in violation of its
terms or this Agreement; or (iii) failed to pay for shares of
Common Stock in accordance with the terms of the Offer and, in
any event, on or prior to the Termination Date, unless, in the
case of (i), (ii) or (iii), such failure shall have been
caused by the failure of the Company to satisfy the conditions
set forth in clauses (e) or (f) of Annex A.
10.4. TERMINATION BY PARENT AND MERGER SUB. This Agreement may be
terminated (upon notice to the Company) by Parent and Merger Sub, and the Merger
may be abandoned by action of the Board of Directors of Parent if:
(a) the Board of Directors of the Company shall have withdrawn
or modified its approval or recommendation of this Agreement,
the Offer or the Merger in a manner adverse to Parent or
Merger Sub;
(b) if the Offer is terminated or expires in accordance with
its terms without Merger Sub having purchased any Common Stock
thereunder due to an occurrence which would result in a
failure to satisfy any one or more of the
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conditions set forth on Annex A hereto, unless any such
failure shall have been caused by or resulted from the failure
of Parent or Merger Sub to perform in any material respect any
covenant or agreement of either of them contained in this
Agreement or the material breach by Parent or Merger Sub of
any representation or warranty of either of them contained in
this Agreement;
(c) in the event of a breach by the Company of any
representation, warranty, covenant or agreement contained in
this Agreement which (i) would give rise to the failure of a
condition set forth in clause (e) or (f) of Annex A,
(ii) cannot or has not been cured prior to the earlier of (x)
fifteen (15) days after the giving of written notice of such
breach to the Company and (y) two (2) business days prior to
the date on which the Offer expires and (iii) has not been
waived by Parent pursuant to the provisions hereof;
(d) if any condition contained in Annex A hereto shall not
have been satisfied by the expiration date of the Offer and on
or prior to such date it shall have been publicly disclosed,
or Parent shall have otherwise learned, that beneficial
ownership (determined for the purposes of this clause (d)(ii)
as set forth in Rule 13d-3 promulgated under the Exchange Act)
of 30% or more of the Common Stock has been acquired by any
Person or group (as defined in Section 13(d)(3) under the
Exchange Act); or
(e) any Stockholders Agreement shall have ceased to be in full
force and effect or any party to any such agreement (other
than Parent or the Merger Sub) shall materially breach or
repudiate any such agreement.
10.5. EFFECT OF TERMINATION AND ABANDONMENT. In the event of
termination of this Agreement and abandonment of the Merger pursuant to this
Article X, no party hereto (or any of its directors or officers) shall have any
liability or further obligation to any other party to this Agreement, except as
provided in Section 8.7 or Section 10.6, and except that nothing herein will
relieve any party from liability for any breach of this Agreement.
10.6. PAYMENT OF CERTAIN FEES. (a) If this Agreement is terminated by
Parent in accordance with Section 10.4(b) or 10.4(c) hereof by reason of the
occurrence of any event, not resulting from the wilful action or wilful omission
or gross negligence of the Company or any of its Subsidiaries, and which is
specified in clause (e) of Annex A, then the Company shall reimburse Parent in
immediately available funds for the reasonable documented expenses of Parent and
Merger Sub incurred in connection with the transactions contemplated by this
Agreement (including, without limitation, printing fees, filing fees and fees
and expenses of its legal and financial advisors and all fees and expenses
payable to any financing courses) not to exceed $8,000,000, such payment to be
made by the Company not later than the second business day after receipt by the
Company of documentation evidencing such expenses.
(b) If this Agreement is terminated (i) by Parent in accordance with
Section 10.4(b) because of the occurrence of any event specified in
clauses (f) or (g) of Annex A or any event specified in clause (e) of
Annex A and resulting from wilful action or wilful omission
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or gross negligence of the Company or any of its Subsidiaries; (ii) by
Parent in accordance with Section 10.4(a) or Section 10.4(c) (but, in
the case of Section 10.4(c), only to the extent such event results from
the wilful act or wilful omission or gross negligence of the Company or
any of its Subsidiaries); or (iii) by Parent pursuant to Section
10.4(d), if within twelve months of the date of such termination the
Company enters into a definitive agreement for a transaction in respect
of an Acquisition Proposal with any Person other than Parent or its
Affiliates; then the Company shall pay to Parent, on the business day
next succeeding the date of termination (or in the case of a
termination pursuant to Section 10.6(b)(iii), the date on which such
definitive agreement is entered into), by wire transfer in immediately
available funds an amount equal to $32,000,000.
ARTICLE XI
Miscellaneous and General
11.1. EXPENSES. Except as set forth in Article VIII and Section 10.6,
each party shall bear its own expenses, including the fees and expenses of any
attorneys, accountants, investment bankers, brokers, finders or other
intermediaries or other Persons engaged by it and filing fees, incurred in
connection with this Agreement and the transactions contemplated hereby.
11.2. NOTICES, ETC. All notices, requests, demands or other
communications required by or otherwise with respect to this Agreement shall be
in writing and shall be deemed to have been duly given to any party when
delivered personally (by courier service or otherwise), when delivered by
telecopy and confirmed by return telecopy, or upon receipt after being mailed by
first-class mail, postage prepaid and return receipt requested in each case to
the applicable addresses set forth below:
If to the Company:
@Entertainment, Inc.
c/o At Entertainment Limited
40-41 Conduit Street
London W1R 9FB
Attn: Robert E. Fowler, III
Facsimile: (44 171) 478 3802
with a copy to:
Baker & McKenzie
815 Connecticut Ave, N.W.
Washington, DC 20006
Attn: Marc R. Paul, Esq.
Facsimile: (202) 452-7074
46
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If to Parent or Merger Sub:
c/o United Pan-European Communications N.V.
Fred. Roeskestraat 123
1076 EE Amsterdam
The Netherlands
Attn: Timothy Bryan
Facsimile: (31 20) 778 9871
with a copy to:
White & Case LLP
1155 Avenue of the Americas
New York, NY 10036
Attn: William F. Wynne, Jr., Esq.
Facsimile: (1 212) 354 8113
or to such other address as such party shall have designated
by notice so given to each other party.
11.3. AMENDMENTS, WAIVERS, ETC. This Agreement may be amended, changed,
supplemented, waived or otherwise modified only by an instrument in writing
signed by the party (or, in the case of Section 8.7, the Indemnified Party)
against whom enforcement is sought; PROVIDED THAT, after the adoption of this
Agreement by the stockholders of the Company, no such amendment, change,
supplement or waiver shall be made without the further requisite approval of
such stockholders if such amendment, change, supplement or waiver by law
requires the further approval by such stockholders.
11.4. NO ASSIGNMENT. This Agreement shall be binding upon and shall
inure to the benefit of and be enforceable by the parties and their respective
successors and assigns; PROVIDED THAT, except as otherwise expressly set forth
in this Agreement, neither the rights nor the obligations of any party may be
assigned or delegated without the prior written consent of the other parties.
11.5. ENTIRE AGREEMENT. Except as otherwise provided herein, this
Agreement (together with the Company Disclosure Statement, the Parent Disclosure
Statement and the Confidentiality Agreement and the other agreements expressly
contemplated hereby) and Annex A to this Agreement embody the entire agreement
and understanding between the parties relating to the
47
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subject matter hereof and supersedes all prior agreements and understandings
relating to such subject matter. There are no representations, warranties or
covenants by the parties hereto relating to such subject matter other than those
expressly set forth in this Agreement (including the Company Disclosure
Statement and the Parent Disclosure Statement) and any writings expressly
required hereby.
11.6. SPECIFIC PERFORMANCE. The parties acknowledge that money damages
are not an adequate remedy for violations of this Agreement and that any party
may, in its sole discretion, apply to a court of competent jurisdiction for
specific performance or injunctive or such other relief as such court may deem
just and proper in order to enforce this Agreement or prevent any violation
hereof and, to the extent permitted by applicable Law, each party waives any
objection to the imposition of such relief.
11.7. REMEDIES CUMULATIVE. All rights, powers and remedies provided
under this Agreement or otherwise available in respect hereof at law or in
equity shall be cumulative and not alternative, and the exercise or beginning of
the exercise of any thereof by any party shall not preclude the simultaneous or
later exercise of any other such right, power or remedy by such party.
11.8. NO WAIVER. The failure of any party hereto to exercise any right,
power or remedy provided under this Agreement or otherwise available in respect
hereof at law or in equity, or to insist upon compliance by any other party
hereto with its obligations hereunder, and any custom or practice of the parties
at variance with the terms hereof, shall not constitute a waiver by such party
of its right to exercise any such or other right, power or remedy or to demand
such compliance.
11.9. NO THIRD PARTY BENEFICIARIES. This Agreement is not intended to
be for the benefit of and shall not be enforceable by any Person or entity who
or which is not a party hereto, except for the indemnification provisions
contained in Section 8.7, which provisions may be enforced by any Indemnified
Party referred to therein. Notwithstanding anything to the contrary contained in
this Agreement, the provisions of Section 8.7 of this Agreement may not be
amended or altered in any manner with respect to any Indemnified Party without
the written consent of such Indemnified Party. No assignment of this Agreement
shall relieve Parent from its obligations to any Indemnified Party contained in
Section 8.7 of this Agreement.
11.10. JURISDICTION. Each party hereby irrevocably submits to the
exclusive jurisdiction of the United States District Court for the District of
Delaware or the Chancery Court of the State of Delaware in any action, suit or
proceeding arising in connection with this Agreement, and agrees that any such
action, suit or proceeding shall be brought only in such court (and waives any
objection based on FORUM NON CONVENIENS or any other objection to venue
therein); PROVIDED, HOWEVER, that such consent to jurisdiction is solely for the
purpose referred to in this Section 11.10 and shall not be deemed to be a
general submission to the jurisdiction of said courts or in the State of
Delaware other than for such purpose. Parent, Merger Sub and the Company hereby
waive any right to a trial by jury in connection with any such action, suit or
proceeding.
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11.11. PUBLIC ANNOUNCEMENTS. Parent and the Company will agree upon the
timing and content of the initial press release to be issued describing the
transactions contemplated by this Agreement, and will not make any public
announcement thereof prior to reaching such agreement unless required to do so
by applicable Law or regulation or stock exchange requirement. To the extent
reasonably requested by any other party, each party will thereafter consult with
and provide reasonable cooperation to the others in connection with the issuance
of further press releases or other public documents describing the transactions
contemplated by this Agreement.
11.12. GOVERNING LAW. This Agreement and all disputes hereunder shall
be governed by and construed and enforced in accordance with the internal laws
of the State of Delaware, without regard to principles of conflict of laws.
11.13. NAME, CAPTIONS, ETC. The names assigned this Agreement and the
section captions used herein are for convenience of reference only and shall not
affect the interpretation or construction hereof. Unless otherwise specified,
(a) the terms "hereof", "herein" and similar terms refer to this Agreement as a
whole and (b) references herein to Articles or Sections refer to articles or
sections of this Agreement. Wherever appearing herein, the word "including"
shall be deemed to be followed by the words "without limitation."
11.14. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one instrument. Each counterpart may consist of a
number of copies each signed by less than all, but together signed by all, the
parties hereto.
11.15. SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND
AGREEMENTS. The respective representations and warranties of the parties
contained herein or in any certificates or other documents delivered prior to or
at the Closing shall survive the execution and delivery of this Agreement, but
shall terminate at the Effective Time. The respective covenants and agreements
of the parties contained herein or in any other documents delivered prior to or
at the Closing shall survive the execution and delivery of this Agreement and
shall only terminate in accordance with their respective terms.
11.16. SEVERABILITY. In case any provision in this Agreement shall be
held invalid, illegal or unenforceable in a jurisdiction, such provision shall
be modified or deleted, as to the jurisdiction involved, only to the extent
necessary to render the same valid, legal and enforceable, and the validity,
legality and enforceability of the remaining provisions hereof shall not in any
way be affected or impaired thereby nor shall the validity, legality or
enforceability of such provision be affected thereby in any other jurisdiction.
11.17. DISCLOSURE STATEMENTS. The parties acknowledge that the Company
Disclosure Statement and the Parent Disclosure Statement to this Agreement (i)
relate to certain matters concerning the disclosures required and transactions
contemplated by this Agreement, (ii) are qualified in their entirety by
reference to specific provisions of this Agreement, (iii) are not intended to
constitute and shall not be construed as indicating that such matter is required
to be disclosed, nor shall such disclosure be construed as an admission that
such information is material
49
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with respect to the Company or Parent, as the case may be, except to the extent
required by this Agreement.
50
<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed and
delivered by the parties set forth below.
@ENTERTAINMENT, INC.
By:
----------------------------------
Name: Robert E. Fowler, III
Title: Chief Executive Officer
UNITED PAN-EUROPE COMMUNICATIONS N.V.
By:
----------------------------------
Name: Mark L. Schneider
Title: Chairman of the Management Board
and Chief Executive Officer
BISON ACQUISITION CORP.
By:
----------------------------------
Name: Anton H.E. van Voskuijlen
Title: Vice President
51
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ANNEX A
The capitalized terms used in this Annex A shall have the meanings set
forth in the Agreement to which it is annexed, except that the term "Merger
Agreement" shall be deemed to refer to the Agreement to which this Annex A is
appended and "Purchaser" shall be deemed to refer to Merger Sub.
Notwithstanding any other provision of the Offer or the Merger
Agreement, Purchaser shall not be required to accept for payment or, subject to
any applicable rules and regulations of the Commission, including Rule 14e-1c
under the Exchange Act (relating to Purchaser's obligation to pay for or return
tendered shares promptly after termination or withdrawal of the Offer), pay for
any shares of Common Stock tendered pursuant to the Offer and may terminate or
amend the Offer and may postpone the acceptance of, and payment for, any shares
of Common Stock, if (i) there shall not have been validly tendered and not
properly withdrawn prior to the expiration of the Offer a number of shares of
Common Stock which represent at least a majority of all of the issued and
outstanding shares of Common Stock, on a fully diluted basis, on the date the
Offer is consummated (the "Minimum Condition"), (ii) any applicable waiting
period (and any extension thereof) under the HSR Act shall not have expired or
been terminated (the "HSR Condition"), (iii) all applicable approvals of the
Polish Anti-Monopoly Commission shall not have been granted prior to the
expiration of the Offer (the "PAMC Condition"), (iv) if required by applicable
law, a decision of the Commission of the European Community that the purchase of
the Stock pursuant to the Offer and the Merger are compatible with the common
market has not been received prior to the expiration of the Offer (the "EU
Condition" and together with the HSR Condition and PAMC Condition, the
"Regulatory Conditions"), or (v) if, at any time on or after the date of the
Merger Agreement and at or before the time of payment for any such shares of
Common Stock (whether or not any shares of Common Stock have theretofore been
accepted for payment or paid for pursuant to the Offer) any of the following
shall occur:
(a) there shall be instituted or pending any action or proceeding by
any Governmental Body, or by any other Person, domestic or foreign,
before any court of competent jurisdiction or governmental authority or
agency, domestic or foreign (other than proceedings and claims
referenced on Schedule 6.7 to the Company Disclosure Statement),
(i) challenging or seeking to, or which could reasonably be expected
to make illegal, impede, delay or otherwise directly or indirectly
restrain, prohibit or make materially more costly the Offer or the
Merger or would reasonably be expected to result in material damages,
(ii) seeking to prohibit or materially limit the ownership or operation
by Parent or Purchaser of all or any material portion of the business
or assets of the Company and its Subsidiaries taken as a whole or to
compel Parent or Purchaser to dispose of or hold separately all or any
material portion of the business or assets of Parent and its
subsidiaries taken as a whole or the Company and its Subsidiaries taken
as a whole, or seeking to impose any limitation on the ability of
Parent or Purchaser to conduct its business or own such assets,
(iii) seeking to impose limitations on the ability of the Parent or
Purchaser effectively to exercise full rights of ownership of the
share of
52
<PAGE>
the capital stock of the Company, including, without limitation, the
right to vote any such shares of capital stock acquired or owned by
Purchaser or Parent on all matters properly presented to the Company's
stockholders, (iv) seeking to require divestiture by Parent or
Purchaser of any shares of capital stock of the Company, (v) requiring
or permitting the Company's competitors to share access to the
Company's broadcast systems (other than access required under Polish
law on the date hereof), or (vi) otherwise directly or indirectly
relating to the Offer or the Merger and which would have a Material
Adverse Effect or a material adverse effect on the business,
properties, assets, liabilities, operations, results of operations or
condition (financial or otherwise) of Parent and its Subsidiaries,
taken as a whole;
(b) there shall be any statute, rule, regulation, legislation,
interpretation, judgment, order or injunction, enacted, enforced,
promulgated, amended or issued and applicable to or deemed by a
Governmental Body to be applicable to (i) Parent, Purchaser, the
Company or any Subsidiary or (ii) the Offer or the Merger, by any
Governmental Body, court, administrative or regulatory authority or
agency, other than the routine application of the waiting period
provisions of the HSR Act, the approval process of the Polish
Anti-Monopoly Commission and, if required by applicable law, the
approval process of the Commission of the European Community to the
Offer or to the Merger, which could reasonably be expected to directly
or indirectly, result in any of the consequences referred to in clauses
(i) through (vii) paragraph (a) above;
(c) any change shall have occurred, or Parent shall have become aware
of any fact, that has had or would have a Material Adverse Effect;
(d) there shall have occurred (i) any general suspension of trading in,
or limitation on prices for, securities on the Nasdaq Stock Market's
National Market (excluding any coordinated trading halt triggered
solely as a result of a specified decrease in a market index), (ii) any
decline in the Nasdaq Composite Index in excess of 30% measured from
the close of business on the trading day immediately preceding the date
of the Merger Agreement, (iii) a suspension of the currency exchange
markets for the U.S. Dollar which continues in effect for three
business days or for the Dutch Guilder which continues in effect for
five business days, (iv) a declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States or The
Netherlands, (v) any material limitation (whether or not mandatory) by
any United States or Dutch Governmental Body on the extension of credit
by banks or other lending institutions, (vi) the actual declaration of
war on or by the United States, The Netherlands or Poland, or the
invasion of the territory of a NATO member state by a non-NATO member
state, or (vii) in the case of any of the foregoing existing at the
time of the commencement of the Offer, a material acceleration or
material worsening thereof;
(e) any of the representations or warranties made by the Company in the
Merger Agreement that are qualified as to materiality shall be untrue
or incorrect
53
<PAGE>
in any respect or any such representations and warranties that are not
so qualified shall be untrue or incorrect in any material respect, in
each case as of the date of the Merger Agreement and the scheduled
expiration date of the Offer, except (i) for changes specifically
permitted by the Merger Agreement and (ii) that those representations
and warranties which address matters only as of a particular date shall
remain true and correct as of such date.
(f) the Company shall have failed to perform any material obligation or
to comply with any material agreement or material covenant of the
Company to be performed or complied with by it under this Agreement;
(g) the Company's Board of Directors or any committee thereof shall
have withdrawn, or shall have modified or amended in a manner adverse
to Parent or Purchaser, the approval, adoption or recommendation, as
the case may be, of the Offer, the Merger or the Merger Agreement, or
approved or recommended, or announced a neutral position with respect
to, any merger, consolidation, other business combination, sale of
material assets, takeover proposal or other acquisition of Stock other
than the Offer and the Merger or upon request by Parent, shall fail to
reaffirm its approval and recommendation of the Offer, the Merger or
the Merger Agreement;
(h) it shall have been publicly disclosed, or the Purchaser shall have
otherwise learned, that beneficial ownership (determined for the
purposes of this paragraph (h) as set forth in Rule 13d-3 promulgated
under the Exchange Act) of 30% or more of the Common Stock has been
acquired by any Person (including the Company or any of its
Subsidiaries or Affiliates) or group (as defined in Section 13(d)(3)
under the Exchange Act), which person or group is not, on the date of
the Merger Agreement, the beneficial owner of 30% or more of the Common
Stock;]
(i) the Merger Agreement shall have been terminated in accordance with
its terms;
(j) any Stockholders Agreement shall fail or cease to be in full force
and effect or any party to any such agreement (other than Parent or the
Purchaser) shall materially breach or repudiate any such agreement.
which, in the reasonable judgment of Purchaser, in any such case and regardless
of the circumstances giving rise to any such condition, makes it inadvisable to
proceed with such acceptance for payment or payment.
The foregoing conditions are for the sole benefit of Parent and the
Purchaser and may be asserted by Parent or the Purchaser, or may be waived by
Parent or the Purchaser, in whole or in part at any time and from time to time
in their respective reasonable discretion. The failure by Parent or the
Purchaser at any time to exercise any of the foregoing rights shall not be
deemed a waiver of any such right and each such right shall
54
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be deemed an ongoing right which may be asserted at any time and from time to
time. Any determination by Parent or the Purchaser concerning the events
described in this Annex A shall be final and binding upon all parties.
55
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Exhibit 99(c)(2)
To: @ Entertainment, Inc.
40-41 Condult Street
London W1R 9FB
Attention: Robert Fowler, Chief Executive Officer
From: United Pan-Europe Communications N.V.
Fred. Roeskestraat 123
1076 EE Amsterdam
The Netherlands
Dated:[*]April, 1999
Dear Sirs:
In connection with our possible interest in a negotiated transaction with
@ Entertainment Inc. or its affiliated companies (the "Company"), you and your
affiliates are furnishing us and our company with certain information which
is either non-public, confidential or proprietary in nature. This information
furnished to us (as defined below), together with analyses, compilations,
forecasts, studies or other documents prepared by us which contain such
information is hereinafter referred to as the "information". In consideration
of your providing such Information and as condition thereof, we agree that:
1. The Information will be kept confidential and shall not be disclosed by
us or by our company, agents, representatives or employees, in any manner
whatsoever, in whole or in part, and shall not be used by us, other than
in connection with your express instructions. Moreover, we agree to
reveal the information only to our directors, officers ,employees and
advisors ("Representatives") who need to know the information and for the
purposes of evaluating the transaction described above, who are informed
by us of the confidential nature of the information and who shall agree
to act in accordance with the terms and conditions of this Agreement. We
shall be responsible for any breach of this Agreement by our
Representatives.
2. Without your prior written consent, we will not disclose to any person
the fact that the Information has been made available, that discussions
or negotiations are taking place or have taken place concerning a possible
transaction involving ourselves and the Company or any of the terms,
conditions or other facts with respect to any such possible transaction,
including the status thereof.
3. Without your written consent, we will not make any announcement or
otherwise publicise the transaction or discussions contemplated herein.
4. All requests for information will be directed exclusively through
individuals designated in writing by you who initially shall be Robert
Fowler and/or Donald Miller-Jones at the Company and/or your
representatives at Goldman Sachs International. All copies of the
Information will be returned to you immediately upon your request. That
portion of the Information which consists of analyses, compilations,
forecasts, studies or other documents prepared by us or our
Representatives will be destroyed upon your request
<PAGE>
and any oral information will continue to be subject to the terms of
this Agreement. Upon your request, we shall provide you with a certificate
certifying as to the complete return and destruction of all information in
accordance with the terms of this paragraph. We confirm that all
correspondence and communication regarding the Information will be through
Robert Fowler and/or Donald Miller-Jones or as they shall direct.
5. The term Information shall not include such portions of the Information
which:
(a) are or become generally available to the public other than as a
result of a disclosure by us or our Representatives; or
(b) are received on a non-confidential basis from an independent third
party who had obtained the information lawfully and was not
subject to a confidentiality agreement or other obligation of
secrecy in respect of such Information; or
(c) we can show were in our posession before we received such
Information from you; or
(d) we can show were independently developed by us or on our behalf by
personnel having no access to the Information at the time of
independent development.
6. If by reason of any legal requirement or any regulation or rule of any
stock exchange on which our shares are listed or any governmental or
quasi-governmental authority, we are required to make any announcement
concerning the proposed transaction or other arrangements with you or to
disclose the information, we will be entitled to do so PROVIDED that, so
far as it is practicable to do so prior to such announcement or
disclosure, we consult with you as to such requirement and with a view to
agreeing the timing and content of such announcement or disclosure.
7. We acknowledge that neither you, your respective affiliates nor advisors
makes any express or implied representation or warranty as to the accuracy
or completeness of the Information.
8. We agree to indemnify and hold you harmless from and against all
liabilities, claims, losses, costs, damages and reasonable expenses
(including reasonable counsel's fees and expenses) in any way caused by,
or arising directly or indirectly from, or in consequence of any breach
by us or any of our Representatives of an covenant or agreement contained
herein.
9. Any provision in this Agreement which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the
extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof or affecting the validity or enforceability
of such provisions in any other jurisdiction.
10. Notwithstanding any decision not to proceed with the transaction
contemplated herein, we on behalf of our Representatives and Associates
undertake to you that we shall keep and procure our Representatives and
Associates keep, the Information confidential and shall not make use of
or otherwise deal in such information for a period of three years from the
date of this Agreement.
2
<PAGE>
11. This Agreement shall be governed and construed in accordance with the
laws of England. We irrevocably and unconditionally consent to submit to
the exclusive jurisdiction of the courts of England for any actions, suits
or proceedings arising out of or relating to this agreement and the
transactions contemplated hereby.
12. We acknowledge that disclosure of the Information may cause significant
damage and harm to you and your affiliates and that remedies at law may
be inadequate to protect against breach of this Agreement, and we hereby
in advance agree to the granting of injunctive or other equitable relief
in your favour without proof of actual damages, in addition to any other
remedy you may be entitled to.
13. Any notice, request, consent, agreement or approval which may or is
required to be given pursuant to this letter agreement shall be in
writing and shall be sufficiently given or made if delivered, or sent by
telecopier, in the case of:
(a) @ Entertainment, Inc., address as follows;
40-41 Condult Street
London W1R 9FB
Attention: Patrick Bradley, Senior Vice President,
Corporate Legal Affairs
Telecopier No: 0171 478 3802
United Pan-Europe Communications N.V., address as follows:
Fred. Roeskestraat 123
1076 EE Amsterdam
The Netherlands
Attention: [*]General Counsel
Telecopier No: [*]31-20-7789871
or to such other address as the relevant party may from time to time
advise by notice in writing given pursuant to this paragraph 10. The date
of receipt of any such notice, request, consent, agreement or approval
shall be deemed to be the date of delivery or sending thereof.
Yours faithfully
/s/
- --------------------------
[*][illegible]
For and on behalf of
United Pan-Europe Communications N.V.
<PAGE>
Exhibit 99(c)(4)
STOCKHOLDERS AGREEMENT
AGREEMENT dated as of June 2, 1999, among UNITED PAN-EUROPE
COMMUNICATIONS NV, a corporation organized under the laws of The Netherlands
("Parent"), BISON ACQUISITION CORP., a Delaware corporation and an indirect
wholly owned subsidiary of Parent ("Sub"), and the other parties signatory
hereto (individually and collectively, the "Stockholder").
W I T N E S S E T H :
WHEREAS, prior to entering into this Agreement, Parent, Sub
and Eagle, Inc., a Delaware corporation (the "Company"), entered into an
Agreement and Plan of Merger (as such agreement may hereafter be amended from
time to time, the "Merger Agreement"; capitalized terms used and not defined
herein have the respective meanings ascribed to them in the Merger Agreement),
pursuant to which Sub will be merged with and into the Company (the "Merger");
WHEREAS, in furtherance of the Merger, Parent and the Company
desire that as soon as practicable (and not later than five business days) after
the execution and delivery of the Merger Agreement, Sub commence a cash tender
offer to purchase all outstanding shares of Company Common Stock (as defined in
Section 1) including all of the Shares (as defined in Section 2); and
WHEREAS, as an inducement and a condition to entering into the
Merger Agreement, Parent has required that the Stockholder agree, and the
Stockholder has agreed, to enter into this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the
mutual premises, representations, warranties, covenants and agreements contained
herein, the parties hereto, intending to be legally bound, hereby agree as
follows:
1. DEFINITIONS. For purposes of this Agreement:
(a) "Company Common Stock" shall mean at any time the
common stock, $.01 par value, of the Company.
(b) "Company Securities" shall mean the Existing Options and
the Existing Company Warrants, together with any Options or Company Warrants
acquired by the Stockholder after the date hereof and prior to the termination
of this Agreement, whether upon the exercise of options, warrants or rights, the
conversion or exchange of convertible or exchangeable securities, or by means of
purchase, dividend, distribution or otherwise.
(c) "Existing Company Warrants" shall mean the Company
Warrants set forth opposite the Stockholder's name on Schedule I hereto.
(d) "Existing Options" shall mean the Options set forth
opposite the Stockholder's name on Schedule I hereto.
<PAGE>
(e) "Person" shall mean an individual, corporation,
partnership, joint venture, association, trust, unincorporated organization or
other entity.
2. TENDER OF SHARES.
(a) Stockholder hereby agrees to validly tender (and not to
withdraw) pursuant to and in accordance with the terms of the Offer, in a timely
manner for acceptance by Sub in the Offer, the number of shares of Company
Common Stock (if any) set forth opposite the Stockholder's name on Schedule I
hereto (the "Existing Shares" and, together with any shares of Company Common
Stock acquired by the Stockholder after the date hereof and prior to the
termination of this Agreement whether upon the exercise of options, warrants or
rights, the conversion or exchange of convertible or exchangeable securities, or
by means of purchase, dividend, distribution or otherwise, the "Shares"), owned
by it. The Stockholder hereby acknowledges and agrees that Parent's obligation
to accept for payment and pay for Company Common Stock in the Offer, including
the Shares, is subject to the terms and conditions of the Offer. The Stockholder
shall be entitled to receive the highest price paid by Sub pursuant to the
Offer. The Offer Price shall not be less than $19.00, payable in cash.
(b) The Stockholder hereby agrees to permit Parent and Sub to
publish and disclose in the Offer Documents and, if approval of the stockholders
of the Company is required under applicable law, the Proxy Statement (including
all documents and schedules filed with the Securities and Exchange Commission)
its identity and ownership of Company Common Stock and the nature of its
commitments, arrangements and understandings under this Agreement.
3. PROVISIONS CONCERNING COMPANY COMMON STOCK. The Stockholder
hereby agrees that during the period commencing on the date hereof and
continuing until the first to occur of (i) the Effective Time, (ii) the last
date the Option is exercisable pursuant to Section 4 and (iii) the termination
date set forth in Section 9, at any meeting of the holders of Company Common
Stock, however called, or in connection with any written consent of the holders
of Company Common Stock, the Stockholder shall vote (or cause to be voted) the
Shares (if any) owned by the Stockholder whether issued, heretofore owned or
hereafter acquired, (i) in favor of the Merger, the execution and delivery by
the Company of the Merger Agreement and the approval of the terms thereof and
each of the other actions contemplated by the Merger Agreement and this
Agreement and any actions required in furtherance thereof and hereof; (ii)
against any action or agreement that would result in a breach in any respect of
any covenant, representation or warranty or any other obligation or agreement of
the Company under the Merger Agreement; and (iii) except as otherwise agreed to
in writing in advance by Parent, against the following actions (other than the
Merger and the transactions contemplated by the Merger Agreement): (A) any
extraordinary corporate transaction, such as a merger, consolidation or other
business combination involving the Company or its subsidiaries; (B) a sale,
lease or transfer of a material amount of assets of the Company or its
subsidiaries, or a reorganization, recapitalization, dissolution or liquidation
of the Company or its subsidiaries; (C) (1) any change in a majority of the
persons who constitute the board of directors of the Company; (2) any change in
the present capitalization of the Company or any amendment of the Company's
Certificate of Incorporation or By-laws; (3) any other material change in the
Company's corporate structure or business; or (4) any other action involving the
Company or its subsidiaries which is intended, or
-2-
<PAGE>
could reasonably be expected, to impede, interfere with, delay, postpone, or
materially adversely affect the Merger and the transactions contemplated by this
Agreement and the Merger Agreement. The Stockholder shall not enter into any
agreement or understanding with any Person or entity the effect of which would
be to violate the provisions and agreements contained in this Section 3.
4. STOCK OPTION; CERTAIN PURCHASE OBLIGATIONS.
(a) The Stockholder hereby grants to Sub (x) an irrevocable
option (the "Stock Option") to purchase the Shares at a purchase price per Share
(the "Purchase Price") equal to $19.00, payable in cash, and (y) an irrevocable
option (the "Securities Option" and, together with the Stock Option, the
"Option") to purchase the Company Securities at a price per Company Security
equal to the Purchase Price LESS the exercise price of such Company Security,
payable in cash, in each case until the termination date set forth in Section 9.
Until the termination date set forth in Section 9, if (i) the Offer is
terminated, abandoned or withdrawn by Parent or Sub (whether due to the failure
of any of the conditions thereto or otherwise), (ii) the Offer is consummated
but the Shares have not been validly tendered into the Offer or (iii) the Merger
Agreement is terminated in accordance with its terms, the Option shall, in any
such case, become exercisable, in whole but not in part, upon the first to occur
of any such event and remain exercisable, in whole but not in part, until the
date which is 90 days after the date of the occurrence of such event, but shall
not be exercisable in each case unless: (x) all waiting periods under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), required for the purchase of Shares and/or Company Securities, as the
case may be, upon the exercise of the Option shall have expired or been waived
and all other necessary governmental consents required for Sub to purchase
Shares and/or Company Securities, as the case may be, upon the exercise of the
Option, including, but not limited to, all necessary approvals of the Polish
Anti-Monopoly Commission, and (y) there shall not then be in effect any
preliminary or final injunction or other order issued by any court or
governmental, administrative or regulatory agency or authority prohibiting the
exercise of the Option pursuant to this Agreement. Provided that this Agreement
has not been terminated, in the event that the Option is not exercisable because
the circumstances described in clauses (x) and (y) have not occurred, then the
Option shall be exercisable for the 90 day period commencing on the date that
the circumstances set forth in clauses (x) and (y) have occurred. In the event
that Parent wishes to exercise the Option, Parent shall send a written notice to
the Stockholder identifying the place for the closing of such purchase at least
three business days prior to such closing.
(b) In the event that Sub shall have purchased Shares
purchased in the Offer in an amount necessary to satisfy the Minimum Condition
in accordance with the terms of the Merger Agreement, Sub shall thereafter
purchase all of the Company Securities then held by the Stockholder no later
than the date which is the third business day after the date of such
consummation, at a purchase price per Company Security equal to the Offer Price
for the Shares underlying such Company Security less the exercise price of such
Company Security.
5. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER. The
Stockholder hereby represents and warrants to Parent as follows:
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<PAGE>
(a) OWNERSHIP OF SHARES. The Stockholder is the record and
beneficial owner of the number of Shares and Company Securities set forth
opposite such Stockholder's name on Schedule I hereto. On the date hereof, the
Existing Shares, Existing Options and Existing Company Warrants set forth
opposite such Stockholder's name on Schedule I hereto constitute all of the
Shares and Company Securities owned beneficially or of record by such
Stockholder. The Stockholder has sole voting power and sole power to issue
instructions with respect to the matters set forth in Sections 2, 3 and 4
hereof, sole power of disposition, sole power of conversion, sole power to
demand appraisal rights and sole power to agree to all of the matters set forth
in this Agreement, in each case with respect to all of the Existing Shares,
Existing Options and Existing Company Warrants set forth opposite Stockholder's
name on Schedule I hereto, with no limitations, qualifications or restrictions
on such rights, subject to applicable securities laws and the terms of this
Agreement.
(b) POWER; BINDING AGREEMENT. The Stockholder has the legal
capacity, power and authority to enter into and perform all of the Stockholder's
obligations under this Agreement. The execution, delivery and performance of
this Agreement by such Stockholder will not violate any other agreement to which
the Stockholder is a party including, without limitation, any voting agreement,
stockholders agreement or voting trust. This Agreement has been duly and validly
executed and delivered by the Stockholder and constitutes a valid and binding
agreement of such Stockholder, enforceable against such Stockholder in
accordance with its terms. There is no beneficiary or holder of a voting trust
certificate or other interest of any trust of which the Stockholder is trustee
whose consent is required for the execution and delivery of this Agreement or
the consummation by the Stockholder of the transactions contemplated hereby.
(c) NO CONFLICTS. Except for (i) filings and approvals under
the HSR Act or any other applicable Laws related to competition, antitrust,
monopoly or similar matters, (A) no filing with, and no permit, authorization,
consent or approval of, any state or federal public body or authority is
necessary for the execution of this Agreement by such Stockholder and the
performance by such Stockholder of its obligations hereunder and (B) none of the
execution and delivery of this Agreement by such Stockholder, the performance by
such Stockholder of its obligations hereunder or compliance by such Stockholder
with any of the provisions hereof shall (1) conflict with or result in any
breach of any applicable organizational documents applicable to such
Stockholder, or (2) violate any order, writ, injunction, decree, judgment,
statute, rule or regulation applicable to such Stockholder or any of such
Stockholder's properties or assets.
(d) NO FINDER'S FEES. Except as disclosed in the Merger
Agreement, no broker, investment banker, financial advisor or other person is
entitled to any broker's, finder's, financial advisor's or other similar fee or
commission in connection with the transactions contemplated hereby based upon
arrangements made by or on behalf of such Stockholder.
(e) NO ENCUMBRANCES. The Stockholder's Shares and Company
Securities and the certificates representing such Shares and Company Securities
are now, and at all times during the term hereof will be, held by such
Stockholder, or by a nominee or custodian for the benefit of such Stockholder,
free and clear of all liens, claims, security interests, proxies, voting trusts
or agreements, understandings or arrangements or any other encumbrances
whatsoever, except for any such encumbrances or proxies arising hereunder. The
transfer by the Stockholder of its
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<PAGE>
Shares and Company Securities to Sub in the Offer or hereunder shall pass to and
unconditionally vest in Sub good and valid title to all such Shares and Company
Securities, free and clear of all claims, liens, restrictions, security
interests, pledges, limitations and encumbrances whatsoever.
(f) RELIANCE BY PARENT. The Stockholder understands and
acknowledges that Parent is entering into, and causing Sub to enter into, the
Merger Agreement in reliance upon the Stockholder's execution and delivery of
this Agreement.
6. COVENANTS OF THE STOCKHOLDER. The Stockholder covenants and
agrees as follows:
(a) NO SOLICITATION. Beginning on the date hereof and ending
on the last date the Option is exercisable pursuant to Section 4 hereof, the
Stockholder shall not, in its capacity as such, directly or indirectly,
initiate, solicit (including by way of furnishing information), encourage or
respond to or take any other action knowingly to facilitate, any inquiries or
the making of any proposal by any person or entity (other than Parent or any
affiliate of Parent) with respect to the Company that constitutes or reasonably
may be expected to lead to, an Acquisition Proposal, or enter into or maintain
or continue discussions or negotiate with any person or entity in furtherance of
such inquiries or to obtain any Acquisition Proposal, or agree to or endorse any
Acquisition Proposal, or authorize or permit any Person or entity acting on
behalf of the Stockholder to do any of the foregoing. If the Stockholder
receives any inquiry or proposal regarding any Acquisition Proposal, the
Stockholder shall promptly inform Parent of that inquiry or proposal and the
details thereof.
(b) RESTRICTION ON TRANSFER, PROXIES AND NON-INTERFERENCE.
Beginning on the date hereof and ending on the last date the Stock Option is
exercisable pursuant to Section 4 hereof, except as expressly contemplated by
this Agreement, the Stockholder shall not (i) directly or indirectly, offer for
sale, sell, transfer, tender, pledge, encumber, assign or otherwise dispose of,
or enter into any contract, option or other arrangement or understanding with
respect to or consent to the offer for sale, transfer, tender, pledge,
encumbrance, assignment or other disposition of, any or all of such
Stockholder's Shares and Company Securities or any interest therein; provided
that the Stockholder may transfer any Shares and/or Company Securities to any
Affiliate of the Stockholder; provided, further that such transferee shall have
become a party to this Agreement (or an agreement identical to this Agreement)
and shall be deemed to make all representations and warranties set forth in
paragraph 5 hereof on the date of the transfer of such Shares and/or Company
Securities; (ii) grant any proxies or powers of attorney (except for powers of
attorney granted to Affiliates of the Stockholder solely for administrative
purposes and which require the holder thereof to vote any and all Shares subject
to such powers in accordance with this Agreement), deposit any Shares and/or
Company Securities into a voting trust or enter into a voting agreement with
respect to any Shares and/or Company Securities; or (iii) take any action that
would make any representation or warranty of such Stockholder contained herein
untrue or incorrect or have the effect of preventing the Stockholder from
performing the Stockholder's obligations under this Agreement.
(c) WAIVER OF APPRAISAL RIGHTS. The Stockholder hereby
irrevocably waives any rights of appraisal or rights to dissent from the Merger
that the Stockholder may have.
-5-
<PAGE>
(d) STOP TRANSFER; CHANGES IN SHARES. The Stockholder agrees
with, and covenants to, Parent that the Stockholder shall not request that the
Company register the transfer (book-entry or otherwise) of any certificate or
uncertificated interest representing any of the Stockholder's Shares or Company
Securities, unless such transfer is made in compliance with this Agreement. In
the event of a stock dividend or distribution, or any change in the Company
Common Stock by reason of any stock dividend, split-up, recapitalization,
combination, exchange of shares or the like, the term "Shares" shall be deemed
to refer to and include the Shares as well as all such stock dividends and
distributions and any shares into which or for which any or all of the Shares
may be changed or exchanged and the Purchase Price shall be appropriately
adjusted. The Stockholder shall be entitled to receive any cash dividend paid by
the Company during the term of this Agreement until Shares are purchased in the
Offer or hereunder.
7. FIDUCIARY DUTIES. Notwithstanding anything in this
Agreement to the contrary, the covenants and agreements set forth herein shall
not prevent of the Stockholder (or any of its designees) from taking any action,
subject to the applicable provisions of the Merger Agreement, while acting in
his or her (or such designee's) capacity as a director of the Company.
8. MISCELLANEOUS.
(a) FURTHER ASSURANCES. From time to time, at the other
party's request and without further consideration, each party hereto shall
execute and deliver such additional documents and take all such further lawful
action as may be necessary or desirable to consummate and make effective, in the
most expeditious manner practicable, the transactions contemplated by this
Agreement; provided that no party shall be required to incur unreasonable
expense in complying with this paragraph.
(b) ENTIRE AGREEMENT. This Agreement and the Merger Agreement
constitute the entire agreement between the parties with respect to the subject
matter hereof and supersedes all other prior agreements and understanding, both
written and oral, between the parties with respect to the subject matter hereof.
(c) CERTAIN EVENTS. The Stockholder agrees that this Agreement
and the obligations hereunder shall attach to the Stockholder's Shares and shall
be binding upon any person or entity to which legal or beneficial ownership of
such Shares shall pass, whether by operation of law or otherwise, including,
without limitation, such Stockholder's heirs, guardians, administrators or
successors. Notwithstanding any transfer of Shares, the transferor shall remain
liable for the performance of all obligations under this Agreement of the
transferor in the event such transferee does not perform such obligations.
(d) ASSIGNMENT. This Agreement shall not be assigned by
operation of law or otherwise without the prior written consent of the other
party provided that Parent may assign, at its sole discretion, its rights and
obligations hereunder to any direct or indirect wholly-owned subsidiary of
Parent, although no such assignment shall relieve Parent of its obligations
hereunder if such assignee does not perform such obligations.
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<PAGE>
(e) AMENDMENTS, WAIVERS, ETC. This Agreement may not be
amended, changed, supplemented, waived or otherwise modified or terminated,
except upon the execution and delivery of a written agreement executed by the
relevant parties hereto.
(f) NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if so given) by hand delivery, telegram, telex
or telecopy, or by mail (registered or certified mail, postage prepaid, return
receipt requested) or by any courier service, such as Federal Express, providing
proof of delivery. All communications hereunder shall be delivered to the
respective parties at the following addresses:
If to the Stockholders: At the addresses set forth on
Schedule I hereto
copy to:
If to Parent or Sub:
c/o United Pan-Europe Communications NV
Fred. Roeskestraat 123
1076 EE Amsterdam
The Netherlands
Attention: Anton H.E. van Voskuijlen
Facsimile: +31 20 778 9817
copy to: White & Case LLP
1155 Avenue of the Americas
New York, New York 10036
Attention: William F. Wynne, Jr., Esq.
Facsimile +212 354 8113
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
(g) SEVERABILITY. Whenever possible, each provision or portion
of any provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein.
(h) SPECIFIC PERFORMANCE. Each of the parties hereto
recognizes and acknowledges that a breach by it of any covenants or agreements
contained in this Agreement will cause the other party to sustain damages for
which it would not have an adequate remedy at law for money damages, and
therefore each of the parties hereto agrees that in the event of any such breach
the aggrieved party shall be entitled to the remedy of specific performance of
such covenants and agreements and injunctive and other equitable relief in
addition to any other remedy to which it may be entitled, at law or in equity;
provided that no party shall be liable for any consequential or punitive damages
or damages for lost profits or lost opportunities, whether or
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<PAGE>
not such damages, profits or opportunities were foreseen or foreseeable by such
party, except to the extent such damages are the result of a breach of this
Agreement arising out of the gross negligence or willful misconduct of such
party.
(i) REMEDIES CUMULATIVE. All rights, powers and remedies
provided under this Agreement or otherwise available in respect hereof at law or
in equity shall be cumulative and not alternative, and the exercise of any
thereof by any party shall not preclude the simultaneous or later exercise of
any other such right, power or remedy by such party.
(j) NO WAIVER. The failure of any party hereto to exercise any
right, power or remedy provided under this Agreement or otherwise available in
respect hereof at law or in equity, or to insist upon compliance by any other
party hereto with its obligations hereunder, and any custom or practice of the
parties at variance with the terms hereof shall not constitute a waiver by such
party of its right to exercise any such or other right, power or remedy or to
demand such compliance.
(k) NO THIRD PARTY BENEFICIARIES. This Agreement is not
intended to be for the benefit of, and shall not be enforceable by, any person
or entity who or which is not a party hereto.
(l) GOVERNING LAW. This Agreement shall be governed and
construed in accordance with the laws of the State of Delaware, without giving
effect to the principles of conflicts of law thereof.
(m) JURISDICTION. Each party hereby irrevocably submits to the
exclusive jurisdiction of any United States District Court or any court of the
State of Delaware, in each case located in the City of Wilmington, Delaware, in
any action, suit or proceeding arising in connection with this Agreement, and
agrees that any such action, suit or proceeding may be brought in such court
(and waives any objection based on forum non conveniens or any other objection
to venue therein); provided, however, that such consent to jurisdiction is
solely for the purpose referred to in this paragraph (m) and shall not be deemed
to be a general submission to the jurisdiction of said Courts or in the State of
Delaware other than for such purposes. EACH PARTY HERETO HEREBY WAIVES ANY RIGHT
TO A TRIAL BY JURY IN CONNECTION WITH ANY SUCH ACTION, SUIT OR PROCEEDING.
(n) DESCRIPTIVE HEADINGS. The descriptive headings used herein
are inserted for convenience of reference only and are not intended to be part
of or to affect the meaning or interpretation of this Agreement.
(o) COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but all of which,
taken together, shall constitute one and the same Agreement.
9. TERMINATION. This Agreement shall terminate, and no party
shall have any rights or obligations hereunder and this Agreement shall become
null and void and have no effect upon the fifth day after the earlier of (1) the
expiration of the 90 day exercise period set forth in
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<PAGE>
Section 4 hereof, (2) at the Stockholders, option upon the valid termination of
the Merger Agreement by the Company pursuant to Section 10.3 thereof or (3) the
date which is 180 days after the date hereof.
10. BINDING AGREEMENT. All authority and rights herein
conferred or agreed to be conferred by the Stockholder shall survive the death
or incapacity of the Stockholder. This Agreement shall inure to the benefit of
and be binding upon the parties hereto and their respective heirs, personal
representatives, successors and assigns.
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<PAGE>
IN WITNESS WHEREOF, Parent, Sub and each Stockholder have
caused this Agreement to be duly executed as of the day and year first above
written.
[ ]
By: _______________________
Name:
Title:
[ ]
By: _______________________
Name:
Title:
[ ]
By: _______________________
Name:
Title:
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<PAGE>
SCHEDULE I TO
STOCKHOLDERS AGREEMENT
<TABLE>
<CAPTION>
NAME AND ADDRESS OF STOCKHOLDER NUMBER OF SHARES AND/OR COMPANY SECURITIES OWNED
<S> <C>
</TABLE>
Attention:
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<PAGE>
Exhibit 99(c)(5)
STOCKHOLDERS AGREEMENT
AGREEMENT dated as of June 2, 1999, among UNITED PAN-EUROPE
COMMUNICATIONS NV, a corporation organized under the laws of The Netherlands
("Parent"), BISON ACQUISITION CORP., a Delaware corporation and an indirect
wholly owned subsidiary of Parent ("Sub"), and the other parties signatory
hereto (individually and collectively, the "Stockholder").
W I T N E S S E T H :
WHEREAS, prior to entering into this Agreement, Parent, Sub
and Eagle, Inc., a Delaware corporation (the "Company"), entered into an
Agreement and Plan of Merger (as such agreement may hereafter be amended from
time to time, the "Merger Agreement"; capitalized terms used and not defined
herein have the respective meanings ascribed to them in the Merger Agreement),
pursuant to which Sub will be merged with and into the Company (the "Merger");
WHEREAS, in furtherance of the Merger, Parent and the Company
desire that as soon as practicable (and not later than five business days) after
the execution and delivery of the Merger Agreement, Sub commence a cash tender
offer to purchase all outstanding shares of Company Common Stock (as defined in
Section 1) including all of the Shares (as defined in Section 2); and
WHEREAS, as a condition to entering into the Merger Agreement,
Parent has required that all of the holders of the Company Preference Shares
agree to sell such Company Preference Shares to Parent; and
WHEREAS, as an inducement and a condition to entering into the
Merger Agreement, Parent has required that the Stockholder agree, and the
Stockholder has agreed, to enter into this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the
mutual premises, representations, warranties, covenants and agreements contained
herein, the parties hereto, intending to be legally bound, hereby agree as
follows:
1. DEFINITIONS. For purposes of this Agreement:
(a) "Company Common Stock" shall mean at any time the common
stock, $.01 par value, of the Company.
(b) "Company Preference Shares" shall mean the Series A
Cumulative Preference Shares of the Company, par value $.01 per share and the
Series B Cumulative Preference Shares of the Company, par value $.01 per share.
"Existing Shares" shall mean the Company Preference Shares set
forth on Schedule I hereto.
<PAGE>
(d) "Person" shall mean an individual, corporation,
partnership, joint venture, association, trust, unincorporated organization or
other entity.
(e) "Shares" shall mean the Existing Shares, together with
any other Company Preference Shares, in each case which such Company Preference
Shares were acquired by the Stockholder after the date hereof and prior to the
termination of this Agreement, whether upon the exercise of options, warrants or
rights, the conversion or exchange of convertible or exchangeable securities, or
by means of purchase, dividend, distribution or otherwise
2. PROVISIONS CONCERNING COMPANY PREFERENCE SHARES. (a) The
Stockholder hereby agrees that during the period commencing on the date hereof
and continuing until the first to occur of (i) the Effective Time, (ii) the last
date the Stock Option is exercisable pursuant to Section 3 and (iii) the
termination date set forth in Section 8, at any meeting of the holders of
Company Preference Shares (or of the Company Common Stock, to the extent the
holders of Company Preference Shares are entitled to vote as with the holders of
Company Common Stock, whether as a single class or otherwise), however called,
or in connection with any written consent of the holders of Company Preference
Shares, the Stockholder shall vote (or cause to be voted) the Shares owned by
the Stockholder whether issued, heretofore owned or hereafter acquired, (i) in
favor of the Merger, the execution and delivery by the Company of the Merger
Agreement and the approval of the terms thereof and each of the other actions
contemplated by the Merger Agreement and this Agreement and any actions required
in furtherance thereof and hereof; (ii) against any action or agreement that
would result in a breach in any respect of any covenant, representation or
warranty or any other obligation or agreement of the Company under the Merger
Agreement; and (iii) except as otherwise agreed to in writing in advance by
Parent, against the following actions (other than the Merger and the
transactions contemplated by the Merger Agreement): (A) any extraordinary
corporate transaction, such as a merger, consolidation or other business
combination involving the Company or its subsidiaries; (B) a sale, lease or
transfer of a material amount of assets of the Company or its subsidiaries, or a
reorganization, recapitalization, dissolution or liquidation of the Company or
its subsidiaries; (C) (1) any change in a majority of the persons who constitute
the board of directors of the Company; (2) any change in the present
capitalization of the Company or any amendment of the Company's Certificate of
Incorporation or By-laws; (3) any other material change in the Company's
corporate structure or business; or (4) any other action involving the Company
or its subsidiaries which is intended, or could reasonably be expected, to
impede, interfere with, delay, postpone, or materially adversely affect the
Merger and the transactions contemplated by this Agreement and the Merger
Agreement. The Stockholder shall not enter into any agreement or understanding
with any Person or entity the effect of which would be to violate the provisions
and agreements contained in this Section 2.
(b) The Stockholder hereby agrees to permit Parent and Sub to
publish and disclose in the Offer Documents and, if approval of the stockholders
of the Company is required under applicable law, the Proxy Statement (including
all documents and schedules filed with the Securities and Exchange Commission)
its identity and ownership of Company Preference Shares and the nature of its
commitments, arrangements and understandings under this Agreement.
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<PAGE>
3. PURCHASE RIGHT. (a) The Stockholder hereby grants to Sub an
irrevocable option (the "Stock Option") to purchase the Shares at a purchase
price per Share (the "Purchase Price") equal to the liquidation preference of
such share PLUS all accrued and unpaid dividends thereon on the date of
purchase, payable in cash, until the termination date set forth in Section 8.
Until the termination date set forth in Section 8, if (i) the Offer is
terminated, abandoned or withdrawn by Parent or Sub (whether due to the failure
of any of the conditions thereto or otherwise), (ii) the Offer is consummated
but Sub has not accepted for payment and paid for the Shares or (iii) the Merger
Agreement is terminated in accordance with its terms, the Stock Option shall, in
any such case, become exercisable, in whole but not in part, upon the first to
occur of any such event and remain exercisable, in whole but not in part, until
the date which is 90 days after the date of the occurrence of such event, but
shall not be exercisable in each case unless: (x) all waiting periods under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), required for the purchase of Shares upon the exercise of the Stock Option
shall have expired or been waived and all other necessary governmental consents
required for Sub to purchase Shares upon the exercise of the Stock Option,
including, but not limited to, all necessary approvals of the Polish
Anti-Monopoly Commission, and (y) there shall not then be in effect any
preliminary or final injunction or other order issued by any court or
governmental, administrative or regulatory agency or authority prohibiting the
exercise of the Stock Option pursuant to this Agreement. Provided that this
Agreement has not been terminated, in the event that the Stock Option is not
exercisable because the circumstances described in clauses (x) and (y) have not
occurred, then the Stock Option shall be exercisable for the 90 day period
commencing on the date that the circumstances set forth in clauses (x) and (y)
have occurred. In the event that Parent wishes to exercise the Stock Option,
Parent shall send a written notice to the Stockholder identifying the place for
the closing of such purchase at least three business days prior to such closing.
(b) In the event that Sub shall have purchased Shares of
Company Common Stock in the Offer in an amount necessary to satisfy the Minimum
Condition in accordance with the terms of the Merger Agreement, Sub shall
thereafter purchase all of the Shares then held by the Stockholder no later than
the date which is the third business day after the date of such consummation at
a purchase price per Share equal to the liquidation preference of such share
PLUS all accrued and unpaid dividends thereon on the date of purchase.
4. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER. The
Stockholder hereby represents and warrants to Parent as follows:
(a) OWNERSHIP OF SHARES. The Stockholder is the record and
beneficial owner of the number of Shares set forth opposite such Stockholder's
name on Schedule I hereto. On the date hereof, the Existing Shares set forth
opposite such Stockholder's name on Schedule I hereto constitute all of the
Shares owned beneficially or of record by such Stockholder. The Stockholder has
sole voting power and sole power to issue instructions with respect to the
matters set forth in Sections 2 and 3 hereof, sole power of disposition, sole
power of conversion, sole power to demand appraisal rights and sole power to
agree to all of the matters set forth in this Agreement, in each case with
respect to all of the Existing Shares set forth opposite Stockholder's name on
Schedule I hereto, with no limitations, qualifications or restrictions on such
rights, subject to applicable securities laws and the terms of this Agreement.
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<PAGE>
(b) POWER; BINDING AGREEMENT. The Stockholder has the legal
capacity, power and authority to enter into and perform all of the Stockholder's
obligations under this Agreement. The execution, delivery and performance of
this Agreement by such Stockholder will not violate any other agreement to which
the Stockholder is a party including, without limitation, any voting agreement,
stockholders agreement or voting trust. This Agreement has been duly and validly
executed and delivered by the Stockholder and constitutes a valid and binding
agreement of such Stockholder, enforceable against such Stockholder in
accordance with its terms. There is no beneficiary or holder of a voting trust
certificate or other interest of any trust of which the Stockholder is trustee
whose consent is required for the execution and delivery of this Agreement or
the consummation by the Stockholder of the transactions contemplated hereby.
(c) NO CONFLICTS. Except for (i) filings and approvals under
the HSR Act or any other applicable Laws related to competition, antitrust,
monopoly or similar matters, (A) no filing with, and no permit, authorization,
consent or approval of, any state or federal public body or authority is
necessary for the execution of this Agreement by such Stockholder and the
performance by such Stockholder of its obligations hereunder and (B) none of the
execution and delivery of this Agreement by such Stockholder, the performance by
such Stockholder of its obligations hereunder or compliance by such Stockholder
with any of the provisions hereof shall (1) conflict with or result in any
breach of any applicable organizational documents applicable to such
Stockholder, or (2) violate any order, writ, injunction, decree, judgment,
order, statute, rule or regulation applicable to such Stockholder or any of such
Stockholder's properties or assets.
(d) NO FINDER'S FEES. Except as disclosed in the Merger
Agreement, no broker, investment banker, financial advisor or other person is
entitled to any broker's, finder's, financial advisor's or other similar fee or
commission in connection with the transactions contemplated hereby based upon
arrangements made by or on behalf of such Stockholder.
(e) NO ENCUMBRANCES. The Stockholder's Shares and the
certificates representing such Shares are now, and at all times during the term
hereof will be, held by such Stockholder, or by a nominee or custodian for the
benefit of such Stockholder, free and clear of all liens, claims, security
interests, proxies, voting trusts or agreements, understandings or arrangements
or any other encumbrances whatsoever, except for any such encumbrances or
proxies arising hereunder. The transfer by the Stockholder of its Shares to Sub
in the Offer or hereunder shall pass to and unconditionally vest in Sub good and
valid title to all Shares, free and clear of all claims, liens, restrictions,
security interests, pledges, limitations and encumbrances whatsoever.
(f) RELIANCE BY PARENT. The Stockholder understands and
acknowledges that Parent is entering into, and causing Sub to enter into, the
Merger Agreement in reliance upon the Stockholder's execution and delivery of
this Agreement.
5. COVENANTS OF THE STOCKHOLDER. The Stockholder covenants and
agrees as follows:
(a) NO SOLICITATION. Beginning on the date hereof and ending
on the last date the Stock Option is exercisable pursuant to Section 3 hereof,
the Stockholder shall not, in its
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capacity as such, directly or indirectly, initiate, solicit (including by way of
furnishing information), encourage or respond to or take any other action
knowingly to facilitate, any inquiries or the making of any proposal by any
person or entity (other than Parent or any affiliate of Parent) with respect to
the Company that constitutes or reasonably may be expected to lead to, an
Acquisition Proposal, or enter into or maintain or continue discussions or
negotiate with any person or entity in furtherance of such inquiries or to
obtain any Acquisition Proposal, or agree to or endorse any Acquisition
Proposal, or authorize or permit any Person or entity acting on behalf of the
Stockholder to do any of the foregoing. If the Stockholder receives any inquiry
or proposal regarding any Acquisition Proposal, the Stockholder shall promptly
inform Parent of that inquiry or proposal and the details thereof.
(b) RESTRICTION ON TRANSFER, PROXIES AND NON-INTERFERENCE.
Beginning on the date hereof and ending on the last date the Stock Option is
exercisable pursuant to Section 4 hereof, except as expressly contemplated by
this Agreement, the Stockholder shall not (i) directly or indirectly, offer for
sale, sell, transfer, tender, pledge, encumber, assign or otherwise dispose of,
or enter into any contract, option or other arrangement or understanding with
respect to or consent to the offer for sale, transfer, tender, pledge,
encumbrance, assignment or other disposition of, any or all of such
Stockholder's Shares or any interest therein; provided that the Stockholder may
transfer any Shares to any Affiliate of the Stockholder; provided, further that
such transferee shall have become a party to this Agreement (or an agreement
identical to this Agreement) and shall be deemed to make all representations and
warranties set forth in paragraph 4 hereof on the date of such transfer of
Shares; (ii) grant any proxies or powers of attorney (except for powers of
attorney granted to Affiliates of the Stockholder for purely administrative
purposes and which require the holder thereof to vote any and all Shares subject
to such powers in accordance with this Agreement), deposit any Shares into a
voting trust or enter into a voting agreement with respect to any Shares; or
(iii) take any action that would make any representation or warranty of such
Stockholder contained herein untrue or incorrect or have the effect of
preventing the Stockholder from performing the Stockholder's obligations under
this Agreement.
(c) WAIVER OF APPRAISAL RIGHTS. The Stockholder hereby
irrevocably waives any rights of appraisal or rights to dissent from the Merger
that the Stockholder may have.
(d) STOP TRANSFER; CHANGES IN SHARES. The Stockholder agrees
with, and covenants to, Parent that the Stockholder shall not request that the
Company register the transfer (book-entry or otherwise) of any certificate or
uncertificated interest representing any of the Stockholder's Shares, unless
such transfer is made in compliance with this Agreement. In the event of a stock
dividend or distribution, or any change in the Company Preference Shares by
reason of any stock dividend, split-up, recapitalization, combination, exchange
of shares or the like, the term "Shares" shall be deemed to refer to and include
the Shares as well as all such stock dividends and distributions and any shares
into which or for which any or all of the Shares may be changed or exchanged and
the Purchase Price shall be appropriately adjusted. The Stockholder shall be
entitled to receive any cash dividend paid by the Company during the term of
this Agreement until Shares are purchased in the Offer or hereunder.
6. FIDUCIARY DUTIES. Notwithstanding anything in this
Agreement to the contrary, the covenants and agreements set forth herein shall
not prevent of the Stockholder (or
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any of its designees) from taking any action, subject to the applicable
provisions of the Merger Agreement, while acting in his or her (or such
designee's) capacity as a director of the Company.
7. MISCELLANEOUS.
(a) FURTHER ASSURANCES. From time to time, at the other
party's request and without further consideration, each party hereto shall
execute and deliver such additional documents and take all such further lawful
action as may be necessary or desirable to consummate and make effective, in the
most expeditious manner practicable, the transactions contemplated by this
Agreement; provided that no party shall be required to incur an unreasonable
expense in complying with this paragraph.
(b) ENTIRE AGREEMENT. This Agreement and the Merger Agreement
constitute the entire agreement between the parties with respect to the subject
matter hereof and supersedes all other prior agreements and understanding, both
written and oral, between the parties with respect to the subject matter hereof.
(c) CERTAIN EVENTS. The Stockholder agrees that this Agreement
and the obligations hereunder shall attach to the Stockholder's Shares and shall
be binding upon any person or entity to which legal or beneficial ownership of
such Shares shall pass, whether by operation of law or otherwise, including,
without limitation, such Stockholder's heirs, guardians, administrators or
successors. Notwithstanding any transfer of Shares, the transferor shall remain
liable for the performance of all obligations under this Agreement of the
transferor in the event such transferee does not perform such obligations.
(d) ASSIGNMENT. This Agreement shall not be assigned by
operation of law or otherwise without the prior written consent of the other
party provided that Parent may assign, at its sole discretion, its rights and
obligations hereunder to any direct or indirect wholly-owned subsidiary of
Parent, although no such assignment shall relieve Parent of its obligations
hereunder if such assignee does not perform such obligations.
(e) AMENDMENTS, WAIVERS, ETC. This Agreement may not be
amended, changed, supplemented, waived or otherwise modified or terminated,
except upon the execution and delivery of a written agreement executed by the
relevant parties hereto.
(f) NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if so given) by hand delivery, telegram, telex
or telecopy, or by mail (registered or certified mail, postage prepaid, return
receipt requested) or by any courier service, such as Federal Express, providing
proof of delivery. All communications hereunder shall be delivered to the
respective parties at the following addresses:
If to the Stockholders: At the addresses set forth on
Schedule I hereto
copy to:
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If to Parent or Sub:
c/o United Pan-Europe Communications NV
Fred. Roeskestraat 123
1076 EE Amsterdam
The Netherlands
Attention: Anton H.E. van Voskuijlen
Facsimile: +31 20 778 9817
copy to: White & Case LLP
1155 Avenue of the Americas
New York, New York 10036
Attention: William F. Wynne, Jr., Esq.
Facsimile: +212 354 8113
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
(g) SEVERABILITY. Whenever possible, each provision or portion
of any provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein.
(h) SPECIFIC PERFORMANCE. Each of the parties hereto
recognizes and acknowledges that a breach by it of any covenants or agreements
contained in this Agreement will cause the other party to sustain damages for
which it would not have an adequate remedy at law for money damages, and
therefore each of the parties hereto agrees that in the event of any such breach
the aggrieved party shall be entitled to the remedy of specific performance of
such covenants and agreements and injunctive and other equitable relief in
addition to any other remedy to which it may be entitled, at law or in equity;
provided that no party shall be liable for any consequential or punitive damages
or damages for lost profits or lost opportunities, whether or not such damages,
profits or opportunities were foreseen or foreseeable by such party, except to
the extent such damages are the result of a breach of this Agreement arising out
of the gross negligence or willful misconduct of such party.
(i) REMEDIES CUMULATIVE. All rights, powers and remedies
provided under this Agreement or otherwise available in respect hereof at law or
in equity shall be cumulative and not alternative, and the exercise of any
thereof by any party shall not preclude the simultaneous or later exercise of
any other such right, power or remedy by such party.
(j) NO WAIVER. The failure of any party hereto to exercise any
right, power or remedy provided under this Agreement or otherwise available in
respect hereof at law or in equity, or to insist upon compliance by any other
party hereto with its obligations hereunder, and any custom or practice of the
parties at variance with the terms hereof shall not constitute a
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waiver by such party of its right to exercise any such or other right, power or
remedy or to demand such compliance.
(k) NO THIRD PARTY BENEFICIARIES. This Agreement is not
intended to be for the benefit of, and shall not be enforceable by, any person
or entity who or which is not a party hereto.
(l) GOVERNING LAW. This Agreement shall be governed and
construed in accordance with the laws of the State of Delaware, without giving
effect to the principles of conflicts of law thereof.
(m) JURISDICTION. Each party hereby irrevocably submits to the
exclusive jurisdiction of the United States District Court or any court of the
State of Delaware, in each case, located in the City of Wilmington, Delaware in
any action, suit or proceeding arising in connection with this Agreement, and
agrees that any such action, suit or proceeding may be brought in such court
(and waives any objection based on forum non conveniens or any other objection
to venue therein); provided, however, that such consent to jurisdiction is
solely for the purpose referred to in this paragraph (m) and shall not be deemed
to be a general submission to the jurisdiction of said Courts or in the State of
Delaware other than for such purposes. EACH PARTY HERETO HEREBY WAIVES ANY RIGHT
TO A TRIAL BY JURY IN CONNECTION WITH ANY SUCH ACTION, SUIT OR PROCEEDING.
(n) DESCRIPTIVE HEADINGS. The descriptive headings used herein
are inserted for convenience of reference only and are not intended to be part
of or to affect the meaning or interpretation of this Agreement.
(o) COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but all of which,
taken together, shall constitute one and the same Agreement.
8. TERMINATION. This Agreement shall terminate, and no party
shall have any rights or obligations hereunder and this Agreement shall become
null and void and have no effect upon the fifth day after the earlier of (1) the
expiration of the 90 day exercise period set forth in Section 4 hereof, (2) at
the Stockholder's option upon the valid termination of the Merger Agreement by
the Company pursuant to Section 10.3 thereof or (3) the date which is 180 days
after the date hereof.
9. BINDING AGREEMENT. All authority and rights herein
conferred or agreed to be conferred by the Stockholder shall survive the death
or incapacity of the Stockholder. This Agreement shall inure to the benefit of
and be binding upon the parties hereto and their respective heirs, personal
representatives, successors and assigns.
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IN WITNESS WHEREOF, Parent, Sub and each Stockholder have
caused this Agreement to be duly executed as of the day and year first above
written.
[ ]
By: ________________________
Name:
Title:
[ ]
By: ________________________
Name:
Title:
[ ]
By: ________________________
Name:
Title:
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SCHEDULE I TO
STOCKHOLDERS AGREEMENT
<TABLE>
<CAPTION>
NAME AND ADDRESS OF STOCKHOLDER NUMBER OF SHARES OWNED
<S> <C>
</TABLE>
Attention:
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