1
EXHIBIT 10.7
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT (the "Agreement") is made effective as
of the first day of January, 1997, by and between ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III, of
Hartford, Connecticut ("Employee"), and Poland Communications, Inc., a New York
corporation ("PCI" or the "Company").
WITNESSETH:
WHEREAS, Employee desires to serve as Chief Executive Officer of the
Company, and the Company desires to employ Employee as Chief Executive Officer,
and Employee and the Company desire to embody in this Agreement the terms and
conditions under which Employee shall be employed;
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Employee and the Company,
intending to be legally bound hereby, AGREE AS FOLLOWS:
1. DEFINITIONS
For the purposes of this agreement, the following definitions shall apply:
a. "Affiliate" of the Company shall mean any other Person controlling,
controlled by, or under common control with the Company.
b. "Associated Company" of the Company shall mean any Affiliate of the
Company or any Subsidiary.
c. "Business" means: (i) providing cable television services anywhere
in Poland; (ii) providing television programming in any city in Poland
where the Company or any Associated Company provides such programming;
(iii) providing local-loop telephony in any city in Poland where the
Company or any Associated Company provides such telephony; and (iv)
providing direct to home service anywhere in Poland.
d. The "Company" shall mean Poland Communications, Inc., a New York
corporation.
e. "Dollars" and "$" each mean the lawful currency of the United
States of America.
f. "Effective Date" shall mean the date first above written.
g. "Employee" shall mean ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III.
h. "Person" shall mean a natural person, a juridical person of any
kind, a general or limited partnership, a corporation, a limited liability
company or partnership, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization or other entity, or a
governmental entity or any department, agency or political subdivision
thereof.
i. "Subsidiary" shall mean each Person, in which the Company, at the
time as of which such determination is being made, owns, directly or
indirectly, any of the outstanding voting securities or equity interests.
2. EMPLOYMENT, DUTIES AND RESPONSIBILITIES
a. Performance of Job Duties. Employee shall be the Chief Executive
Officer of the Company, and shall perform the services and duties customary for
that position, all subject to the general supervision of the Board of Directors
of the Company. Employee shall also perform such services and duties with
respect to Associated Companies as may be assigned to him by the Company's Board
of Directors, so long as such services and duties are consistent with his
position as a senior executive officer of the Company. Among other things,
Employee shall have general supervision over all of the operations of the
Company and its Subsidiaries operating in Poland, and the General Managers of
such Subsidiaries shall report to Employee. Employee shall
1
2
devote all of his skill, time, attention, and best efforts to furthering the
Company's businesses, affairs, interests and welfare.
b. Appointment to Management Board or Supervisory Board. The parties
contemplate that Employee will be appointed to the Management Board or
Supervisory Board of one or more Associated Companies operating in Poland. The
compensation arrangements in connection with such appointment(s) shall be the
subject of a separate agreement between Employee and each such Associated
Company.
c. Compliance with Laws. Employee agrees to comply with all federal,
state, local, and foreign laws, and to comply with all of the Company's rules,
regulations, and policies in force during his employment, as well as with all
the rules, regulations and policies prescribed for all Associated Companies for
whom or with respect to the business of which he performs services during the
term of this Agreement.
d. Location. Employee's office and principal place of employment shall be
in Warsaw, Poland, but Employee's personal residence shall be in London,
England, and he shall travel to the United States, the Netherlands or such other
location(s) as necessary to fulfill his duties as described in Section 2(a).
Employee's status in the Company, while based outside the United States, will be
that of a U.S. employee assigned to a non-U.S. post.
3. TERM OF AGREEMENT
This Agreement shall go into effect as of the Effective Date, and shall
continue until the third anniversary of the Effective Date unless terminated
earlier as provided in Section 8.
4. COMPENSATION
As compensation and consideration for the performance by Employee of his
obligations under this Agreement, Employee shall be entitled to the following:
a. Base Salary. During the term of this Agreement, the Company shall
pay to Employee a base annual salary (the "Base Salary") totaling Twenty
Seven Thousand Eighty Three Dollars and Thirty Three Cents (U.S.
$27,083.33) per month, less any compensation paid to Employee pursuant to
any separate agreement entered into as contemplated by Section 2(b) above.
This Base Salary may be increased by the Company in its sole discretion.
The Base Salary shall be paid in installments payable every second week.
b. Payment of Bonuses During First Year. The Company shall pay
Employee guaranteed bonuses of Forty Three Thousand Seven Hundred Fifty
Dollars ($43,750) on the last business day in March, June and September of
1997 and on the first anniversary of the Effective Date, regardless of
whether the employment of Employee hereunder has been terminated for any
reason or no reason prior to those dates. In addition, the Company shall
pay Employee a bonus of $250,000 upon the execution of this Agreement by
both parties.
c. Eligibility for Subsequent Bonuses. Employee shall be eligible for
discretionary annual bonuses reflecting the value of his services during
1998 and 1999. The performance criteria, amounts, if any, and payment dates
for such annual bonuses shall be determined on a yearly basis by the Board
of Directors of the Company in its sole discretion.
d. Adjustments to Reflect Foreign Taxes. If Employee (i) becomes
liable for employment-related taxes and/or social contributions arising out
of employment compensation hereunder in Poland or any other country in
addition to the United States, and (ii) should his combined income taxes,
employment related taxes and/or social contributions arising out of
employment compensation legally owed to the United States, Poland or any
other country exceed the amount of such taxes and social contributions
which would have been due if he had served exclusively in the United
States, then the Company will hold Employee harmless for any such tax
and/or social contribution payments made in excess of the amount of such
taxes and social contributions which would have been due if he had served
exclusively in the
2
3
United States. Employee shall cooperate fully with the Company, within the
bounds of applicable laws, in an attempt to minimize the burden placed on
the Company by this Section 4(d).
e. Allowances. The Company shall provide Employee with allowances for
the relocation of his personal residence, temporary housing in London, a
car and personal/family travel, each as set forth on Exhibit A.
f. Expenses. The Company shall reimburse Employee for reasonable
out-of-pocket expenses incurred by Employee in connection with the business
of the Company and in performance of his duties under this Agreement, upon
his presentation to the Company of an itemized accounting of such expenses
with reasonable supporting data, subject, however, to the Company's
policies relating to business-related expenses as in effect from time to
time.
g. Additional Employee Benefits and Perquisites. In addition to the
foregoing, Employee shall receive the following benefits and perquisites:
(1) Benefits. During the term of this Agreement, Employee and his
spouse and children shall be eligible to participate in such life
insurance, disability, health, dental, and major medical insurance
benefits as set forth on Exhibit B. The benefits set forth in Exhibit B
shall include (i) continuation of Employee's Chase Enterprises life and
disability insurance benefits or the substantial equivalent thereof and
(ii) provision of health care benefits in the United Kingdom comparable
to those Employee received in the United States immediately prior to the
Effective Date.
(2) Vacation. Employee shall be entitled to twenty (20) days of
paid vacation during each calendar year. Employee shall also be entitled
to all paid holidays given by the Company to its executives.
h. Deduction and Withholding; Place of Payment. All compensation and
other benefits to or on behalf of Employee pursuant to this Agreement shall
be subject to such deductions and withholding as may be agreed to by
Employee or required by applicable law. All cash compensation payable to
Employee hereunder shall be paid at such bank or other place within or
without the United States and/or Poland, as Employee may direct, subject to
applicable laws.
i. Stock Options. Employee is hereby granted a non-transferable
option to purchase One Thousand Two Hundred Eighty Six (1,286) shares of
the Company's common stock, $0.01 par value per share, upon the terms and
conditions of a stock option agreement in the form of Exhibit C, at a price
of Three Thousand Seven Hundred Seven (U.S. $3,707) per share.
5. CONFIDENTIALITY
a. Confidentiality. Employee acknowledges that during the course of his
employment with the Company he will, from time to time, be invested with
confidential information (including without limitation) trade secrets relating
to, inter alia, the business practices, technology, products, business plans,
marketing, financial information and plans, and research activities of the
Company, Associated Companies, and customers and suppliers of the foregoing.
Employee hereby agrees to keep all such information confidential, regardless
whether documents containing such information are marked as confidential, if he
has been told, or should reasonably know or expect, that such information is
confidential. Employee also agrees that he will not, except as required in the
conduct of Company business, or as authorized in writing by the Company,
publish, disclose or make use of any such information or knowledge unless and
until such information or knowledge shall have ceased to be secret or
confidential without his fault.
b. Exclusive Property. Employee confirms that all confidential information
is the exclusive property of the Company. All business records, papers and other
documents kept or made by Employee relating to the business of the Company or an
Associated Company shall be and remain the property of the Company or the
Associated Company. Upon the termination of his employment with the Company or
upon the request of the Company at any time, Employee shall promptly deliver to
the Company, and shall retain no copies of, any
3
4
written materials, records and documents made by Employee or coming into his
possession concerning the business or affairs of the Company or an Associated
Company other than personal notes or correspondence of Employee not containing
proprietary information relating to such business or affairs.
c. Inventions, Rights to Improvements. Employee hereby sells, transfers
and assigns to the Company any right, title and interest in any and all
inventions, improvements, discoveries, and ideas (whether or not patentable or
copyrightable) (collectively the "Inventions") which Employee may make or
conceive while acting in his capacity as an employee of the Company during the
term of this Agreement, and which relate to or are applicable to any phase of
the Company's and the Associated Companies' businesses. Employee hereby agrees
to communicate promptly and disclose to the Company all information, details and
data pertaining to the aforementioned Inventions and to execute any documents
and do any act reasonably necessary to perform Employee's duties under this
Section 5(c). Employee also affirms that if any such Inventions shall be deemed
confidential by the Company, he will not disclose any such Inventions without
prior written authorization from a majority of the members of the Company's
Board of Directors.
d. Survival of Section. The provisions of this Section 5 shall survive the
termination of this Agreement for any reason whatsoever.
6. EXCLUSIVITY/NON-COMPETITION
a. Exclusivity/No Competing Employment. For the term of this Agreement and
a period of one (1) year following the date Employee is no longer employed by
the Company or any Associated Company (the "Restricted Period"), Employee shall
not directly or indirectly compete with the Company or any Associated Company,
and he shall not directly or indirectly own an interest in, manage, operate,
join, control, perform services for, lend money to, render financial or other
assistance to, participate in, or be connected with, as an officer, employee,
partner, stockholder, consultant or otherwise, any individual, partnership,
firm, corporation or other business organization or entity that at such time is
engaged in the Business.
b. No Interference. During the Restricted Period, Employee shall not,
whether for his own account or for the account of any other individual,
partnership, firm, corporation or other business organization or entity,
intentionally solicit, endeavor to entice away from the Company or an Associated
Company, or otherwise interfere with the relationship of the Company or an
Associated Company with any person who is employed by the Company or an
Associated Company, or any person or entity who is, or was within the
twelve-month period immediately preceding, a customer, supplier or client of the
Company or an Associated Company.
c. Stock Ownership. Nothing in this Agreement shall prohibit Employee from
acquiring or holding any securities of any company listed on a national
securities exchange or quoted on the automated quotation system of the National
Association of Securities Dealers, Inc., provided that at any time during the
Restricted Period Employee and members of his immediate family do not own more
than five percent (5%) of any voting securities of any company engaged in the
Business.
d. Scope. The prohibitions in Sections 6(a) and 6(b) shall apply to Poland
and any other place where the Company or any Subsidiary is doing Business on the
first day of the Restricted Period. Said prohibitions shall also apply with
respect to any Person (or any subsidiary thereof) located within or without the
United States that is doing Business, directly or indirectly, in Poland.
e. Survival of Section. The provisions of this Section 6 shall survive the
termination of this Agreement for any reason whatsoever.
7. REMEDIES
a. Arbitration. The Parties agree, expressly renouncing any other forum
for the resolution of disputes, that except as provided in Section 7(b), any
disputes arising out of, relating to, or arising in connection with this
Agreement or arising out of, relating to, or arising in connection with
Employee's employment, shall be finally settled by arbitration in accordance
with the Commercial Arbitration Rules of the American Arbitration Association
(except insofar as those rules are modified by the terms of this Section 7). The
arbitration will be held in Hartford, Connecticut, USA; and it shall be held as
promptly as possible at such
4
5
time as the arbitration tribunal may determine. The arbitration will be held in
the English language. The arbitrator(s) shall state the reasons upon which the
award is based. Judgment upon the arbitration award may be entered in any court
of competent jurisdiction (including without limitation the courts of the United
States, any country where the Company or any Associated Company is engaged in
business, and the respective political subdivisions of each of the foregoing),
or application may be made to any such court for a judicial acceptance of the
award and an order of enforcement, as the case may be. If any Party employs an
attorney or commences legal or arbitral proceedings to enforce the provisions of
this Agreement, the prevailing Party shall be entitled (unless the relevant
tribunal decides otherwise) to recover from the other, reasonable costs incurred
in connection with such enforcement, including but not limited to, attorney's
fees and costs of investigation and litigation/arbitration. Except as otherwise
specifically provided in this Section 7, no Party shall institute any action or
proceeding against any other Party in any court with respect to any dispute
which is or could be the subject of a claim or proceeding pursuant to this
Section 7.
b. Equitable Remedies. Employee hereby acknowledges that breaches of
Sections 5 or 6 of this Agreement may result in material irreparable injury to
the Company for which there is no adequate remedy at law, that it will not be
possible to measure damages for such breaches, and that in the event of such a
breach or threat thereof the Company shall be entitled (notwithstanding the
provisions of Section 7(a)) to seek and obtain a temporary restraining order, a
preliminary injunction, a permanent injunction or other equitable relief
restraining Employee from engaging in activities prohibited by this Agreement.
Employee further acknowledges that in the event of such a breach or threat
thereof the Company shall be entitled to obtain such other or further relief as
may be required to specifically enforce any of the covenants of this Agreement.
Employee hereby agrees and consents that such injunctive or other relief may be
sought in any court of competent jurisdiction, including, without limitation,
any court in the nation, state and/or political subdivision thereof in which
such violation may occur, at the election of the Company. Employee agrees to and
hereby does submit to in personam jurisdiction before each and every such court
for that purpose.
c. Suspension of Payments. Should an alleged breach by Employee of
Sections 5 or 6 of this Agreement occur, the Company shall not be entitled to
suspend any payments otherwise due to Employee during litigation of any action
it may bring against Employee for injunctive and/or monetary relief.
d. Remedies not Exclusive. The remedies of this Section shall be
cumulative and not exclusive, and shall be in addition to any other remedy which
the Company may have.
e. Survival of Remedies. This Section 7 shall survive the termination of
this Agreement for any reason whatsoever.
8. TERMINATION OF EMPLOYMENT
This Agreement and Employee's employment hereunder may be terminated
without any breach of this Agreement under the following conditions:
a. Termination by Employee. Employee may terminate this Agreement,
with or without cause, by sending written notice thereof at least three (3)
months in advance of the date of his proposed termination.
b. Termination by the Company for Cause. The Company may terminate
the Agreement and Employee's employment for Cause prior to the expiration
of this Agreement as provided in this Section 8(b). If the Cause is
susceptible of remedy by Employee, then the Company shall first deliver to
Employee written notice of such Cause; and if Employee has not remedied the
Cause within thirty (30) days after receipt of that notice, the Company may
terminate this agreement forthwith thereafter by written notice effective
immediately. If the Cause is not susceptible of remedy by Employee, then
the Company may terminate this agreement forthwith by written notice
effective immediately. For purposes of this Section 8(b) "Cause" shall mean
(1) dishonesty or fraud resulting in damage to the business of the Company
or any of its Associated Companies; (2) embezzlement or theft of assets of
the Company or any of its Associated Companies; (3) competing with the
Company or aiding a competitor of the Company or any of its Associated
Companies to the detriment of the Company or any of its Associated
5
6
Companies; (4) a substantial breach of this Agreement; (5) conduct of an
illegal or criminal nature under the laws of the United States, the United
Kingdom, Poland, or any political subdivision thereof (except for minor
traffic offenses and other minor offenses which do not indicate moral
turpitude), or (6) a substantial violation of any applicable polices and
procedures set forth in the Chase Enterprises Personnel Policy Manual, any
successor document or any such other policy manual as may be adopted by the
Board of Directors of the Company.
c. Termination by the Company without Cause. Notwithstanding the
provisions of Section 8(b) above, the Company may terminate this Agreement
and Employee's employment upon one (1) month's written notice without
cause. In the event that this Agreement is terminated pursuant to this
section 8(c), Employee shall be entitled to an additional two (2) months'
of Base Salary after the effective date of termination.
d. Later Employment With Successor in Interest of Company. Employee
shall not be deemed to have been terminated under this Agreement if he is
offered employment on substantially the same or better terms by any
Associated Company; by any successor in interest or assign of the Company;
or by any purchaser of substantially all of the Company's assets.
e. Death. Notwithstanding anything to the contrary herein contained,
Employee's employment and this Agreement shall terminate upon his death or
his inability due to disability to perform the essential functions of his
position for a continuous period of ninety (90) days.
f. Delivery of Material. Employee agrees that upon the termination of
this Agreement he will deliver to the Company all documents, papers,
materials and other property of the Company relating to its affairs which
may then be in his possession or under his control.
g. Accrual. If the Company or Employee terminates this Agreement,
Employee shall not be entitled to any compensation or benefits after the
effective date of his termination except as provided in section 8(c) or in
Exhibits A and C.
9. NOTICES
a. All notices required to be given under the terms of this Agreement or
which any of the Parties may desire to give hereunder shall be in writing and
delivered personally or sent by express delivery, by facsimile, or by registered
or certified mail with proof of receipt, postage and expenses prepaid and with
return receipt requested, addressed as follows:
If to the Company:
Poland Communications, Inc.
c/o Chase Enterprises
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇. S. A.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
With a copy to:
▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
U. S. A.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
6
7
If to Employee:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III
c/o ▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇
1301 K Street, N.W.
Washington, D.C. 20005
U. S. A.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
b. Notice given in accordance with this Section 9 shall be deemed to have
been given when delivered personally, or when received if sent via express
delivery, facsimile, or registered or certified mail, postage prepaid and return
receipt requested.
c. Any party may change its address for notices by communicating its new
address in writing to the other party.
10. MISCELLANEOUS
a. Agreement is Non-Assignable. This Agreement is a personal service
contract and shall not be assignable by Employee or by the Company, except that
the Company may assign this Agreement to an Associated Company or any Person
that succeeds to the Company's rights and liabilities by merger, sale of assets
as a going concern, or consolidation with the Company.
b. Binding Effect. All rights and obligations and agreements of the
parties under this Agreement shall be binding upon and enforceable against, and
inure to the benefit of the parties and their personal representatives, heirs,
legatees and devises, and any Person succeeding by operation of law to their
rights under this Agreement, except that such personal representatives, heirs,
legatees, devises and other persons shall have no obligation to perform
Employee's duties described in Section 2 hereof.
c. Further Assurances. Employee and the Company, as the case may be, shall
execute and deliver such further instruments and do such further acts and things
as may be required to carry out the terms or conditions of this Agreement or as
may be consistent with the intent and purpose of this Agreement.
d. Rights of Third Parties. Nothing in this Agreement, expressed or
implied, is intended to confer upon any person other than the parties hereto any
rights or remedies under or by reason of this Agreement (except that any option
which has vested in Employee as of the date of his death, as well as any accrued
but unpaid compensation as of the date of his death, shall pass to his estate on
death, subject to the limitations on exercise of the option contained in Exhibit
C).
e. Effect of Waiver. A waiver of, or failure to exercise, any rights
provided for in this Agreement, in any respect, shall not be deemed a waiver of
any further or future rights hereunder. Except for rights which must be
exercised within a specified time period under this Agreement or Exhibit C, no
rights herein shall be considered as waived, whether intentionally or not,
unless waived in a writing signed by the party to be charged with the waiver.
f. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York applicable to contracts made
and performed in that jurisdiction, without regard to the principles of
conflicts of laws.
g. Amendments. This Agreement may not be changed or amended orally, but
only by an agreement in writing signed by all parties hereto.
h. Counterparts. This Agreement may be executed in several counterparts,
each of which shall be an original, and such counterparts shall together
constitute but one and the same instrument.
7
8
i. Severability. If a court of competent jurisdiction declares that any
term or provision of this Agreement is invalid or unenforceable, then:
(1) the remaining terms and provisions hereof shall be unimpaired, and
(2) the invalid or unenforceable term or provision shall be deemed
replaced by a term or provision that is valid and enforceable and that
comes closest to expressing the intention of the invalid or unenforceable
term or provision.
j. No Conflicts. Employee represents and warrants that he is not prevented
by any other employment agreement, arrangement, contract, understanding, court
order or otherwise, which in any way directly or indirectly conflicts, is
inconsistent with, or restricts or prohibits him from fully performing the
duties of the Employment, in accordance with the terms and conditions of this
Agreement.
k. Entire Agreement. This Agreement supersedes all prior agreements, oral
or written, between the parties hereto with respect to the employment of
Employee by the Company. This Agreement contains the entire agreement of the
parties with respect to the employment of Employee by the Company, and the
parties shall not be bound by any terms, conditions, statements, covenants,
representations or warranties, oral or written, not herein contained.
l. Employee Acknowledgment. EMPLOYEE REPRESENTS THAT HE HAS HAD AMPLE
OPPORTUNITY TO REVIEW THIS AGREEMENT AND EMPLOYEE ACKNOWLEDGES THAT HE
UNDERSTANDS THAT IT CONTAINS IMPORTANT CONDITIONS OF THE EMPLOYMENT AND THAT IT
EXPLAINS POSSIBLE CONSEQUENCES, BOTH FINANCIAL AND LEGAL, IF EMPLOYEE BREACHES
THE AGREEMENT.
IN WITNESS WHEREOF, the parties have executed this Executive Employment
Agreement effective as of the date first above written.
Poland Communications, Inc., a
New York corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III
--------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III
8
9
EXHIBIT A
1. The Company will provide Employee with a temporary housing allowance of
1,400 pounds sterling per week for the period beginning April 1, 1997 and ending
July 31, 1997 for a total of 17 weeks and 3 days. Accordingly the total
allowance for the said period is 24,400 pounds sterling. Said 24,400 pounds
sterling shall be paid in full upon execution of this Agreement by both parties.
The Company will also reimburse Employee for the reasonable expenses of moving
him and his family back to the United States, with business class air travel
(based on a terminal location in Hartford, Connecticut) in the event that his
employment under this Agreement is terminated.
2. In connection with the establishment of Employee's personal residence in
London, the Company will reimburse Employee for the reasonable expenses incurred
by him for the following:
a. Two trips to London by Employee and his wife to seek a suitable personal
residence.
b. The reasonable cost of transferring Employee's personal property to his
new residence in London, of transferring such personal property back to the
United States (based on a terminal location in Hartford, Connecticut) upon
termination of Employee's employment hereunder or upon his transfer by the
Company back to the United States, and the reasonable cost of storing in the
United States any personal property of Employee not taken to London.
c. The expenses of closing a rental or purchase agreement for Employee's
new residence in London.
d. The cost of terminating the leases on Employee's two automobiles in the
United States, such cost not to exceed $20,000.
e. Once each calendar year beginning with 1997, round-trip air
transportation, business class, from London to the United States and return, for
Employee and his family. (For purposes of this provision, "family" shall include
Employee, Employee's wife, their children, and one additional adult such as a
"nanny".)
f. The cost of (i) commuting, business class, from London to the Company's
office in Warsaw, Poland, (ii) housing and other reasonable living expenses in
Warsaw for the time Employee is physically present in Warsaw, and (iii)
providing an automobile and driver reasonably satisfactory to Employee for his
exclusive use while in Warsaw. The Company intends to satisfy the housing
expense requirement under f.(ii) by requiring that Employee use the Company's
apartment in Warsaw for housing while in Warsaw with the understanding that the
apartment may be utilized by the Company to house other Company employees and
visitors when Employee is not in Warsaw. So long as the Company's apartment is
available to Employee when he is in Warsaw, Employee shall use such apartment
for housing when in Warsaw.
3. The Company shall purchase Employee's present personal residence at ▇▇▇
▇▇▇▇▇▇ ▇▇▇., ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇. The Company shall purchase such
personal residence from Employee and his wife for $358,078 and closing and
payment therefor shall occur no later than August 1, 1997.
4. The Company shall reimburse Employee for his reasonable attorneys' fees
and costs incurred in connection with his negotiation, execution and delivery of
this Agreement.
10
EXHIBIT C
STOCK OPTION AGREEMENT BETWEEN
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III
AND POLAND COMMUNICATIONS, INC.
THIS STOCK OPTION AGREEMENT ("Option Agreement") is made effective as of
January 1, 1997 (the "Effective Date"), by and between ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III
("▇▇▇▇▇▇") and Poland Communications, Inc., a New York corporation ("PCI" or the
"Company").
1. GRANT OF OPTION AND OPTION PERIOD. a. The Company hereby grants ▇▇▇▇▇▇
an option (the "Option") to purchase One Thousand Two Hundred Eighty Six (1,286)
shares (the "Shares") of the Company's common stock (the "Common Stock"), with a
par value of $0.01 per share, pursuant to the terms and conditions set forth in
this Option Agreement. The exercise price for the Option (the "Exercise Price")
shall be Three Thousand Seven Hundred Seven Dollars (U.S. $3,707) per share.
b. The option to purchase 515 of these Shares will vest upon execution of
this Agreement by both parties. The option to purchase 257 of these Shares will
vest on December 31 of each of the three contract years; provided, however, that
notwithstanding any other provision of this Agreement, all unvested options
shall vest on the date that is the earlier of (i) the date of an Initial Public
Offering or subsequent Public Offering (each as hereinafter defined), and (ii)
the date of change in control of the Company (for purposes of this Option
Agreement, the term "change in control" shall have the same meaning as that term
has in the Indenture dated as of October 31, 1996, between PCI and Sate Street
Bank and Trust Company, as trustee with respect to those certain 9 7/8% Senior
Notes of the Company due 2003) (the "Indenture"); provided further that no
portion of such option shall vest after the date (the "Cut-Off Date") that is
the earlier of (i) the date that the Executive Employment Agreement (as
described in Section 14 of this Agreement) is terminated, and (ii) the date on
which the Company sends ▇▇▇▇▇▇ a notice referred to in Section 8(b) of the
Executive Employment Agreement. For purposes of this Agreement, "Initial Public
Offering" means the closing of an underwritten public offering of shares of
common stock of PCI to be listed on the New York Stock Exchange, the London
Stock Exchange, the Warsaw Stock Exchange or the American Stock Exchange, or to
be quoted on the National Association of Securities Dealers Automated Quotation
System or the National Market System of the National Association of Securities
Dealers pursuant to an effective registration statement under the Securities Act
of 1933, as amended, covering the offer and sale of at least twenty percent
(20%) of the common stock of PCI outstanding immediately after such closing. For
purposes of this Agreement, the term "Public Offering" shall mean an Initial
Public Offering or a subsequent closing of an underwritten public offering of
shares of common stock of PCI to be listed or quoted in any manner described in
the preceding sentence.
c. If ▇▇▇▇▇▇'▇ employment with the Company is terminated for any reason,
▇▇▇▇▇▇ shall have only sixty (60) days after the Cut-Off Date to exercise that
portion of the Option that has vested as of the Cut-Off Date, and ▇▇▇▇▇▇ shall
have no right to exercise any portion of the Option that has not then vested.
d. Notwithstanding any other provision of this Option Agreement, the Option
shall expire and be of no further force or effect with respect to any Shares on
the earlier to occur of (i) the tenth anniversary of the Effective Date or (ii)
sixty days after the date that ▇▇▇▇▇▇ ceases to be an employee of the company
for any reason whatsoever (including but not limited to ▇▇▇▇▇▇'▇ death,
disability, voluntary termination or involuntary termination).
Provided, however, that in no event shall the Option or any portion thereof
expire until sixty (60) days after the later of:
(x) the date that the Company amends its Restated Certificate of
Incorporation, and
(y) the date that those shareholders to that certain Shareholders
Agreement dated as of March 29, 1996, as amended, amend the said
Shareholder Agreement in accordance with Section 19 thereof,
in each case to protect the negative control rights of ECO Holdings III Limited
Partnership and Polish Investments Holding L.P. (currently secured at their
present stockholding levels by certain supermajority
C-1
11
voting requirements requiring the approval of more than sixty-one one-hundredths
of the Voting Power (as defined in the Shareholders Agreement)) by increasing
the supermajority voting requirement to an appropriate greater percentage of the
Voting Power (such amendments are hereinafter referred to as "the Amendments").
The foregoing sentence shall not accelerate or have any effect on the vesting
schedule of the Option or any portion thereof.
e. Each exercise of the Option shall reduce, by an equal number the total
number of shares of Company Common stock that may thereafter be purchased by
▇▇▇▇▇▇ under the Option.
f. Notwithstanding any other provision of this Option Agreement, neither
the Option nor any portion thereof may be exercised until the earliest to occur
of (i) the date of an Initial Public Offering or a subsequent Public Offering,
(ii) the date of a "change in control" of the Company as defined in the
Indenture, or (iii) the first date on which both Amendments are effective. The
occurrence of the events in clauses (i), (ii) or (iii) shall not accelerate or
have any effect on the vesting schedule of the Option or any portion thereof.
2. MANNER OF EXERCISE. Subject to the conditions and restrictions
contained in Section 3 below, the Option shall be exercised by delivering
written notice of exercise to the Secretary of the Company. Such notice shall be
irrevocable and must be accompanied by payment in cash, banker's draft or such
other form of consideration as the Company may approve, and a signed
Subscription Agreement, reasonably acceptable to both parties.
3. NON-TRANSFERABILITY. Neither this Option nor any interest therein may
be sold, pledged, assigned, hypothecated, transferred or disposed of in any
manner (other than by gifts in trust to family members, will or by the laws of
descent and distribution during the option period described in Section 1). This
Option is not assignable by operation of law or subject to execution, attachment
or similar process. During ▇▇▇▇▇▇'▇ lifetime, the Option can only be exercised
by ▇▇▇▇▇▇. Any attempted sale, pledge, assignment, hypothecation or other
transfer of the Option or any interest therein contrary to the provisions
hereof, or the levy of any execution, attachment or similar process upon the
Option or any interest therein shall be null and void and without force or
effect. No transfer of the Option by gift in trust to a family member, by will
or by the laws of descent and distribution shall be effective to bind the
Company unless the Company shall have been furnished written notice thereof
executed by the trustee(s) of a trust established for a family member or the
personal representative of the estate of ▇▇▇▇▇▇ which shall be accompanied by an
authenticated copy of the documents appointing such trustee(s) or of the letters
testamentary appointing such personal representative, or such other evidence as
the Company may deem reasonably necessary to establish the validity of the
transfer, and also evidence as the Company may deem reasonably necessary to
establish the acceptance by the transferee or transferees of the terms and
conditions of the Option. The terms of the Option transferred by will or by the
laws of descent and distribution shall be binding upon the executors,
administrators, heirs and successors of ▇▇▇▇▇▇. The terms of the Option
transferred in trust shall be binding upon the trustee(s) of such trust.
4. ADJUSTMENT IN THE EVENT OF CHANGE IN STOCK. In the event of any change
in the outstanding Common Stock of the Company due to stock dividends,
recapitalizations, reorganizations, mergers, consolidations, split-ups, rights
offering, warrants, or exchange of shares, the number and kind of the Shares
and/or the purchase price per Share will be appropriately adjusted, upwards or
downwards, consistent with such change. The reasonable determination of the
Company regarding any adjustment will be final and conclusive. Except as
expressly provided herein, no issuance by the Company of shares of stock of any
class shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of the Shares.
5. RESTRICTIONS ON TRANSFER OF THE SHARES. a. For as long as ▇▇▇▇▇▇ is an
employee of the Company or any Associated Company (as that term is used in the
Executive Employment Agreement that is described in Section 14 of this Option
Agreement), ▇▇▇▇▇▇ shall not transfer any Shares to any person or entity other
than PCI, unless such shares shall have been registered pursuant to a Public
Offering.
b. After ▇▇▇▇▇▇ is no longer an employee of the Company or any Associated
Company and provided further that such shares shall not have been registered
pursuant to a Public Offering, ▇▇▇▇▇▇ shall not sell, encumber, pledge,
transfer, hypothecate, assign or otherwise dispose of any of the Shares until
▇▇▇▇▇▇ shall
C-2
12
have first offered to sell such Shares to the Company (the "Offer") in
accordance with the following provisions.
c. The Offer made pursuant to Subsection (b) above shall be in writing, and
shall state that ▇▇▇▇▇▇ offers to sell to the Company a specified number of the
Shares owned by ▇▇▇▇▇▇. For every Offer of the shares pursuant to Subsection (b)
above, the Company shall have a period of fifteen (15) days from the time of
receiving the Offer to accept it; such acceptance shall be in writing and shall
be sent to ▇▇▇▇▇▇.
d. The purchase price of any of the Shares sold pursuant to the provisions
of Subsection (b) above shall be equal to the price offered to ▇▇▇▇▇▇ for such
shares by a bona fide third party purchaser, as evidenced by a written offer to
purchase executed by such third party. The purchase price shall be paid to
▇▇▇▇▇▇ in cash within fifteen (15) days of the Company's acceptance of the
Offer. If any of the Shares which are offered for purchase pursuant to the
provisions of Subsection (c) above are not accepted for purchase by the Company
within the time limitations described in Subsection (c), ▇▇▇▇▇▇ may transfer
such shares to such bona fide third party purchaser in accordance with the terms
of such purchaser's offer to purchase referred to in this Subsection (d).
e. As a condition to the transfer of any of the shares issued pursuant to
this Option Agreement, the Company may require an opinion of Counsel, reasonably
satisfactory to the Company, to the effect that such transfer will not be in
violation of the Securities Act of 1933, as amended (such Act, or any similar
Federal statute then in effect, being hereinafter referred to as the "Act"), or
any other applicable securities laws, rules or regulations, or that such
transfer has been registered under Federal and all other applicable securities
laws.
f. Unless and until the Company shall have received a legal opinion
described in subparagraph (e) hereof, all certificates evidencing any of the
Shares, whether upon initial issuance or any transfer thereof, shall bear the
following legends:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY OTHER
SECURITIES LAWS, AND THEREFORE CANNOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR ASSIGNED UNLESS THEY ARE REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, AND UNDER ALL OTHER APPLICABLE SECURITIES LAWS, OR
UNLESS AN EXEMPTION THEREFROM IS AVAILABLE.
THIS CERTIFICATE IS TRANSFERABLE ONLY UPON COMPLIANCE WITH THE
PROVISIONS OF THAT CERTAIN STOCK OPTION AGREEMENT, EFFECTIVE AS OF JANUARY
1, 1997, BETWEEN ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III AND POLAND COMMUNICATIONS, INC., A
COPY OF WHICH IS ON FILE IN THE OFFICE OF THE SECRETARY OF POLAND
COMMUNICATIONS, INC.
6. NO STOCK RIGHTS. ▇▇▇▇▇▇ shall not be entitled to vote, be deemed the
holder of any Shares, have the right to receive dividends with respect to any
Shares, or otherwise have any of the rights of a stockholder of the Company with
respect to any Shares, unless and until ▇▇▇▇▇▇ has exercised the Option with
respect to such Shares in accordance with the terms and conditions of this
Option Agreement.
7. RESERVATION AND ISSUANCE OF SHARES. a. The Company will at all times
have authorized, and reserve and keep available, free from preemptive rights,
for the purpose of enabling it to satisfy any obligation to issue the number of
shares of Common Stock deliverable upon exercise of the Option.
b. The Company covenants that all Shares will, upon issuance in accordance
with the terms of this Agreement, be duly authorized, fully paid and
non-assessable.
8. LOCK-UP AGREEMENT. a. Agreement. During the term of this Option
Agreement, ▇▇▇▇▇▇, if requested by the Company and the lead underwriter of any
public offering of the Common Stock or other securities of the Company (the
"Lead Underwriter"), hereby irrevocably agrees not to sell, contract to sell,
grant any option to purchase, transfer the economic risk of ownership in, make
any short sale of, pledge or otherwise transfer or dispose of any interest in
any Common Stock or any securities convertible into or exchangeable or
exercisable for or any other rights to purchase or acquire Common Stock (except
Common
C-3
13
Stock included in such public offering or acquired on the public market after
such offering) during the 180-day period following the effective date of a
registration statement of the Company filed under the Securities Act of 1933, as
amended, or such shorter period of time as the Lead Underwriter shall specify.
▇▇▇▇▇▇ further agrees to sign such documents as may be requested by the Lead
Underwriter to effect the foregoing and agrees that the Company may impose
stop-transfer instructions with respect to such Common Stock or such other
securities subject until the end of such period. The Company and ▇▇▇▇▇▇
acknowledge that each Lead Underwriter of a public offering of the Company's
stock, during the period of such offering and for the 180-day period thereafter,
is an intended beneficiary of this Section 8.
9. REGISTRATION RIGHTS. a. Incidental Rights. If the Company at any time
proposes to file with the Securities and Exchange Commission (the "Commission")
on its behalf and/or on behalf of any of its security holders (the "demanding
security holders") a Registration Statement under the Securities Act of 1933, as
amended (the "Securities Act") on any form (other than a Registration Statement
on Form S-4 or S-8 or any successor form for securities to be offered in a
transaction of the type referred to in Rule 145 under the Securities Act or to
employees of the Company pursuant to any employee benefit plan, respectively)
for the general registration of securities to be sold for cash with respect to
its Common Stock or any other class of equity security (as defined in Section
3(a)(11) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) of the Company, it will give written notice to ▇▇▇▇▇▇ at least sixty (60)
days before the initial filing with the Commission of such Registration
Statement, which notice shall set forth the intended method of disposition of
the securities proposed to be registered by the Company and the intended price
range if known. The notice shall offer to include in such filing the aggregate
number of Shares as ▇▇▇▇▇▇ may request.
▇▇▇▇▇▇ shall advise the Company in writing within thirty (30) days after
the date of receipt of such offer from the Company, setting forth the amount of
such Shares for which registration is requested. The Company shall thereupon
include in such filing the number of Shares for which registration is so
requested, subject to the next sentence, and shall use its best efforts to
effect registration under the Securities Act of such Shares. If the managing
underwriter of a proposed public offering shall advise the Company in writing
that, in its opinion, the distribution of the Shares requested to be included in
the registration concurrently with the securities being registered by the
Company or such demanding security holder would materially and adversely affect
the distribution of such securities by the Company or such demanding security
holder, then ▇▇▇▇▇▇ shall reduce the amount of securities he intended to
distribute through such offering on a pro rata basis with all other shareholders
requesting registration of a specified number of their shares (other than any
demanding security holder who initially requested such registration) based on
the number of shares ▇▇▇▇▇▇ requested to be registered divided by the total
number of shares requested to be registered which are subject to decrease
pursuant to this sentence, multiplied by the total number of such shares as the
managing underwriter approves to be registered. Except as otherwise provided in
Section 9(c), all expenses of such registration shall be borne by the Company.
b. Registration Procedures. If the Company is required by the provisions
of this Section 9 to use its best efforts to effect the registration of any of
its securities under the Securities Act, the Company will, as expeditiously as
possible:
(i) prepare and file with the Commission a Registration Statement with
respect to such securities and use its best efforts to cause such
Registration Statement to become and remain effective for a period of time
required for the disposition of such securities by ▇▇▇▇▇▇, but not to
exceed one hundred eighty (180) days.
(ii) prepare and file with the Commission such amendments and
supplements to such Registration Statement and the prospectus used in
connection therewith as may be necessary to keep such Registration
Statement effective and to comply with the provisions of the Securities Act
with respect to the sale or other disposition of all securities covered by
such Registration Statement until the earlier of such time as all of such
securities have been disposed of in a public offering or the expiration of
one hundred eighty (180) days;
C-4
14
(iii) furnish to ▇▇▇▇▇▇ such number of copies of a summary prospectus
or other prospectus, including a preliminary prospectus, in conformity with
the requirements of the Securities Act, and such other documents, as ▇▇▇▇▇▇
may reasonably request; and
(iv) use its best efforts to register or qualify the securities
covered by such Registration Statement under such other securities or blue
sky laws of such jurisdictions within the United States and Puerto Rico as
▇▇▇▇▇▇ shall reasonably request (provided, however, that the Company shall
not be obligated to qualify as a foreign corporation to do business under
the laws of any jurisdiction in which it is not then qualified or to file
any general consent to service of process), and do such other reasonable
acts and things as may be required of it to enable ▇▇▇▇▇▇ to consummate the
disposition in such jurisdiction of the securities covered by such
Registration Statement.
It shall be a condition precedent to the obligation of the Company to take
any action pursuant to this Section 9 in respect of the securities which are to
be registered at the request of ▇▇▇▇▇▇ that ▇▇▇▇▇▇ shall furnish to the Company
such information regarding the securities held by ▇▇▇▇▇▇ and the intended method
of disposition thereof as the Company shall reasonably request and as shall be
required in connection with the action taken by the Company.
c. Expenses. All expenses incurred in complying with Section 9, including,
without limitation, all registration and filing fees (including all expenses
incident to filing with the NASD), printing expenses, fees and disbursements of
counsel for the Company, expenses of any special audits incident to or required
by any such registration and expenses of complying with the securities or blue
sky laws of any jurisdictions pursuant to this Section 9, shall be paid by the
Company, except that (i) the Company shall not be liable for any fees, discounts
or commissions to any underwriter in respect of the securities sold by ▇▇▇▇▇▇;
and (ii) the Company shall not be liable for any fees or expenses of counsel for
▇▇▇▇▇▇ in connection with any registration.
d. Indemnification and Contribution. (i) In the event of any registration
of any of the Shares under the Securities Act pursuant to this Section 9, the
Company shall indemnify and hold harmless ▇▇▇▇▇▇, against any losses, claims,
damages or liabilities, joint or several, to which ▇▇▇▇▇▇ may become subject
under the Securities Act or any other statute or at common law, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon (1) any alleged untrue statement of any material fact
contained, on the effective date thereof, in any Registration Statement under
which such securities were registered under the Securities Act, any preliminary
prospectus or final prospectus contained therein, or any amendment or supplement
thereto, or (2) any alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
and shall reimburse ▇▇▇▇▇▇ for any legal or any other expenses reasonably
incurred by ▇▇▇▇▇▇ in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the Company shall
not be liable in any such case to the extent that any such loss, claim, damage
or liability arises out of or is based upon any alleged untrue statement or
alleged omission made in such Registration Statement, preliminary prospectus,
prospectus or amendment or supplement in reliance upon and in conformity with
written information regarding ▇▇▇▇▇▇ or his stock furnished to the Company by
▇▇▇▇▇▇ specifically for use therein or so furnished for such purposes by any
underwriter. Such indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of ▇▇▇▇▇▇, and shall survive the transfer
of such securities by ▇▇▇▇▇▇.
(ii) ▇▇▇▇▇▇ by acceptance hereof, agrees to indemnify and hold
harmless the Company, its directors and officers and each other person, if
any, who controls the Company within the meaning of the Securities Act
against any losses, claims, damages or liabilities, joint or several, to
which the Company or any such director or officer or any such person may
become subject under the Securities Act or any other statute or at common
law, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon information regarding
▇▇▇▇▇▇ or his stock in writing provided to the Company by ▇▇▇▇▇▇
specifically for use in the following documents and contained, on the
effective date thereof, in any Registration Statement under which
securities were registered under the Securities Act at the request of
▇▇▇▇▇▇, any preliminary prospectus or final prospectus contained therein,
or any amendment or supplement thereto.
C-5
15
(iii) If the indemnification provided for in this Section 9 from the
indemnifying party is unavailable to an indemnified party hereunder in
respect of any losses, claims, damages, liabilities or expenses referred to
therein, then the indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities
or expenses in such proportion as is appropriate to reflect the relative
fault of the indemnifying party and indemnified parties in connection with
the actions which resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The
relative fault of such indemnifying party and indemnified parties shall be
determined by reference to, among other things, whether any action in
question, including any untrue or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact, has been
made by, or relates to information supplied by such indemnifying party or
indemnified parties, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action. The amount
paid or payable by a party as a result of the losses, claims, damages,
liabilities and expenses referred to above shall be deemed to include any
legal or other fees or expenses reasonably incurred by such party in
connection with any investigation or proceeding.
(iv) The parties hereto agree that it would not be just and equitable
if contribution pursuant to this Section 9(d) were determined by pro rata
allocation or by any other method of allocation which does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
10. REPRESENTATIONS AND WARRANTIES OF ▇▇▇▇▇▇. In order to induce the
Company to accept this Option Agreement, ▇▇▇▇▇▇ hereby represents and warrants
to the Company as follows:
▇. ▇▇▇▇▇▇ has received no solicitation or general advertisement
concerning the Company, but rather has become knowledgeable regarding the
business of the Company through personal interaction with the Company.
▇. ▇▇▇▇▇▇ confirms that no representations or warranties have been
made to ▇▇▇▇▇▇ regarding the Company and that ▇▇▇▇▇▇ has not relied upon
any representation or warranty in making or confirming this Option
Agreement.
▇. ▇▇▇▇▇▇ has the ability to bear the economic investment, and can
afford a complete loss of his investment, with respect to the Option and to
the Shares.
▇. ▇▇▇▇▇▇, either by himself or together with his purchaser
representative, has sufficient knowledge and experience in financial and
business matters so as to be capable of evaluating the merits and risks of
his investment in the Option and in the Shares.
▇. ▇▇▇▇▇▇ is accepting the Option, and will be purchasing the Shares,
for investment purposes, for ▇▇▇▇▇▇'▇ own account and not with a view to,
or for sale in connection with, the distribution thereof.
▇. ▇▇▇▇▇▇ is familiar with the nature of, and the risks attending,
investments in securities such as the Option and the Shares, and he has
determined that the acceptance of the Option and the purchase of the Shares
is and will be consistent with his investment objectives.
▇. ▇▇▇▇▇▇ has been advised and understands that an investment in the
Option and in the Shares is speculative and involves a high degree of risk.
▇. ▇▇▇▇▇▇ has no reason to anticipate any change in his personal
circumstances, financial or otherwise, which may cause or require sale or
distribution by him of all or any part of the Option or the Shares.
▇. ▇▇▇▇▇▇ confirms that he has been given an opportunity to make any
inquiries of the Company and its representatives that he desires to make.
▇. ▇▇▇▇▇▇ is at least twenty-one (21) years of age.
C-6
16
▇. ▇▇▇▇▇▇ is aware of and understands the following:
(i) The business of the Company and the risks inherent in that
business;
(ii) That no federal or state agency has made a finding or
determination as to the advisability or fairness of an investment in the
Option or in the Shares or any recommendation or endorsement of the
Option or of the Shares;
(iii) That the Option and the Shares have not been registered for
sale under the Securities Act of 1933, as amended, or under any state
"Blue Sky Law"; and
(iv) That there are substantial restrictions on the transferability
of the Option and of the Shares; there is no public market, and there
will not necessarily be any public market, for the Option or the Shares
in the United States; ▇▇▇▇▇▇ will not be able to avail himself of the
provisions of Rule 144 adopted by the Securities and Exchange Commission
under the Securities Act of 1933, as amended, unless all of the
conditions of Rule 144 are met, and accordingly, ▇▇▇▇▇▇ may have to hold
the Option and the Shares and bear the economic risk of this investment
for an indefinite period.
l. If in the future ▇▇▇▇▇▇ desires to offer or dispose of the Option
or any of the Shares or any interest therein, he will do so only in
compliance with applicable securities laws and this Option Agreement.
▇. ▇▇▇▇▇▇ understands and agrees that the Company has no obligation to
complete any public or private offering and sale of its Common Stock to
other investors, and that the Company shall have no liability to ▇▇▇▇▇▇ if
it cannot complete any such offering and sale upon terms which, in the
Company's sole discretion, are favorable to the Company.
▇. ▇▇▇▇▇▇ acknowledges that there may be restrictions under the
securities laws of the jurisdiction(s) in which he resides on the sale of
the Shares he obtains on exercise of the Option, and that he should seek
legal assistance before proceeding with the purchase or sale of said
Shares.
▇. ▇▇▇▇▇▇ agrees that the representations and warranties of ▇▇▇▇▇▇ set
forth in this Section 10 shall survive the exercise of the Option and the
termination or expiration of this Option Agreement for a period of six
months.
11. GOVERNING LAW. This Option Agreement shall be construed in accordance
with and governed by the laws of the State of New York without regard to the
principles of conflicts of laws or choice of law.
12. BENEFIT. This Option Agreement shall be binding upon the Company,
▇▇▇▇▇▇, their heirs, executors, administrators, legal representatives,
successors, and permitted assigns, and ▇▇▇▇▇▇ in furtherance thereof may execute
a will directing ▇▇▇▇▇▇'▇ executor to perform this Option Agreement and to
execute all documents necessary to effectuate the purposes of this Option
Agreement, but the failure to execute such a will shall not affect the rights of
the Company or the obligations of ▇▇▇▇▇▇'▇ estate as provided in this Option
Agreement. Nothing in this Option Agreement, expressed or implied, is intended
to confer upon any person, other than the parties hereto, any rights or remedies
under or by reason of this Option Agreement.
13. SPECIFIC PERFORMANCE. a. The parties to this Option Agreement hereby
agree that an award of damages alone is inadequate to remedy a breach of terms
of this Option Agreement and that specific performance, injunctive relief or
other equitable remedy is the only way by which the intent of this Option
Agreement may be adequately realized upon breach by one or more of the parties.
Such remedy shall, however, be cumulative and not exclusive, and shall be in
addition to any other remedy which the parties may have.
b. In furtherance of and not in limitation of the foregoing, should any
dispute arise concerning a sale, purchase, encumbrance, pledge, transfer,
hypothecation, assignment or other disposition of the Option or any of the
Shares which is alleged to contravene the provisions of this Option Agreement,
an injunction may be issued restraining any such transaction pending the
determination of such controversy.
14. WAIVER. Failure to insist upon strict compliance with any of the
terms, covenants or conditions of this Option Agreement shall not be deemed a
waiver of such terms, covenants or conditions, nor shall any
C-7
17
waiver or relinquishment of any right or power hereunder at any one time or more
times be deemed a waiver or relinquishment of such right or power at any other
time or times.
15. NOTICE. a. All notices required to be given under the terms of this
Agreement or which any of the Parties may desire to give hereunder shall be in
writing and delivered personally or sent by express delivery, by facsimile, or
by registered or certified mail with proof of receipt, postage and expenses
prepaid and with return receipt requested addressed as follows:
If to the Company:
Poland Communications, Inc.
c/o Chase Enterprises
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇. S. A.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
With a copy to:
▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
U. S. A.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to Employee:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III
c/o ▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇
1301 K Street, N.W.
Washington, D.C. 20005
U. S. A.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
b. Notice given in accordance with this Section 15 shall be deemed to have
been given when delivered personally, or when received if sent via express
delivery, facsimile, or registered or certified mail, postage prepaid and return
receipt requested.
c. Any party may change its address for notices by communicating its new
address in writing to the other party.
16. ENTIRE AGREEMENT. This Option Agreement is subject to that certain
Executive Employment Agreement between ▇▇▇▇▇▇ and the Company of even date
herewith (the "Executive Employment Agreement"), and in the event of a conflict
between them, the provisions of the Executive Employment Agreement shall
prevail. Except as provided in the foregoing sentence, this Option Agreement
constitutes the entire agreement between the parties hereto with respect to the
subject matter hereof and may be amended only by writing executed by all of the
parties.
17. SEVERABILITY. The invalidity or unenforceability of any provisions of
this Option Agreement shall in no way affect the validity or enforceability of
any other provision hereof.
18. HEADINGS. The headings to the sections of this Option Agreement are
used for reference only and are not to be construed as limiting or extending the
provisions hereof.
▇-▇
▇▇
▇▇. ▇▇▇▇▇▇▇▇▇▇▇▇. This Option Agreement may be executed in any number of
counterparts, each of which shall be considered an original but all of which
shall constitute the Option Agreement by and among the parties.
IN WITNESS THEREOF, the undersigned have executed this Option Agreement
effective as of the date first above written.
Poland Communications, Inc., a
New York corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III
--------------------------------------
Its:
--------------------------------------
--------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III
C-9
19
ECO Holdings III Limited Partnership and Polish Investments Holding L.P.
hereby execute this Option Agreement for the purposes of this paragraph only,
and each hereby irrevocably covenants (1) to vote its shares of Company stock in
support of, and to execute all documents required to cause the adoption and
effectiveness of, the Amendments defined in Section 1.d hereof, including
without limitation voting such shares in favor of an Amendment(s) when such
Amendment comes up for vote at a meeting of the shareholders (or subgroup
thereof) of the Company, and (2) to cause their representatives on the Company's
Board of Directors to propose and approve the Amendment mentioned in Section
1.d.(x) at the next meeting of the Board of Directors and to propose and approve
the call for a meeting of the shareholders of the Company in order to consider
and approve such Amendment at the shareholder level.
ECO HOLDINGS III LIMITED PARTNERSHIP
By: Advent ECO III L.L.C., general
partner
By: Global Private Equity II Limited
Partnership, member
By: Advent International Limited
Partnership,
general partner
By: Advent International Corporation,
general partner
By:
--------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Vice President
POLISH INVESTMENTS HOLDING L.P.,
a Delaware limited partnership
By: Chase Polish Enterprises, Inc.,
a Delaware corporation
By:
--------------------------------------
Its:
--------------------------------------
C-10