EXHIBIT 99.1
AGREEMENT TO BE BOUND BY
IRREVOCABLE PROXY,
RIGHT OF REFUSAL AND TAG-ALONG AGREEMENT
between
▇▇▇▇▇ ▇▇▇▇▇▇▇, III
and
CEA INVESTORS PARTNERSHIP II, LTD.
Dated as of the 30th day of November, 1995
AGREEMENT TO BE BOUND BY IRREVOCABLE PROXY, RIGHT OF REFUSAL AND
TAG-ALONG AGREEMENT
AGREEMENT, dated as of the 30th day of November, 1995 by and between
▇▇▇▇▇ ▇▇▇▇▇▇▇, III (herein referred to as ▇▇▇▇▇▇▇ or the "Affiliated
Stockholder") and CEA INVESTORS PARTNERSHIP II, LTD., a Florida limited
partnership ("CEA II, Ltd."), of which CEA Investors, Inc., a Florida
corporation ("CEA Investors") is the general partner.
WHEREAS, ▇▇▇▇▇▇▇, Venture LW Corporation ("VLW Corp.") and CEA II, Ltd.
are parties to an Irrevocable Proxy, Right of Refusal and Tag-Along Agreement
dated as of August 27, 1993 (the "Proxy Agreement") a copy of which is attached
hereto as Exhibit A;
WHEREAS, VLW Corp. has transferred 697,067 shares of Common Stock of
Video Jukebox Network, Inc. (the "Company") to ▇▇▇▇▇▇▇ (the "Shares");
WHEREAS, such shares and any proposed transfer of such shares are
subject to certain restrictions on transfer under the terms of the Proxy
Agreement and to an irrevocable proxy executed by VLW Corp. in favor of CEA II,
Ltd.; and
WHEREAS, ▇▇▇▇▇▇▇ is willing to agree to be bound by the terms of the
Proxy Agreement with respect to the Shares.
NOW, THEREFORE, in consideration of the foregoing, of the mutual promises herein
and in the Proxy Agreement, and of other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto,
intending legally to be bound, hereby agree as follows:
1. CONSENT. CEA II, Ltd. hereby acknowledges and consents to the transfer of the
Shares from VLW Corp. to ▇▇▇▇▇▇▇ in the amount specified above subject to
▇▇▇▇▇▇▇'▇ execution of this Agreement and his delivery to CEA II, Ltd. of
documentation confirming his grant of the proxy for such Shares in the form of
the proxy attached as Exhibit A to the Proxy Agreement upon the execution of
this Agreement and the issuance by the Company of certificates representing the
Shares issued in the names of ▇▇▇▇▇▇▇. CEA II, Ltd.'s consent is also subject to
placement of legends on such newly issued stock certificates in the form as the
legends attached to the certificate or certificates representing the Shares
issued in the name of VLW Corp.
2. AGREEMENT TO BE BOUND. ▇▇▇▇▇▇▇ hereby reaffirms that he is bound by the terms
of the Proxy Agreement which remains in full force and effect and confirms that
those of the Shares to be issued to ▇▇▇▇▇▇▇ are subject to the Proxy Agreement
and the Proxy to be executed and delivered to CEA II, Ltd. by ▇▇▇▇▇▇▇ upon the
execution of this Agreement.
3. RIGHTS UNDER PROXY AGREEMENT. Each of the parties hereto acknowledges and
agrees that ▇▇▇▇▇▇▇ is entitled to the rights granted under the Proxy Agreement
in favor of VLW (as defined therein), including without limitation the rights of
first refusal and tag-along rights applicable and running in favor of VLW
therein.
4. INCORPORATION BY REFERENCE. This Agreement is hereby incorporated by
reference into and made a part of the Proxy Agreement and all of its provisions,
as applicable, including without limitation notice and miscellaneous provisions,
shall apply to the interpretation and enforcement of this Agreement.
IN WITNESS WHEREOF, this Agreement has been executed as of the day and
year first above written.
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇, III
----------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇, III
CEA INVESTORS PARTNERSHIP II,
LTD.
By: CEA Investors, Inc.
General Partner
By: /s/ T.W. CARDY
------------------
Name: T.W. Cardy
Title: Vice President
EXHIBIT A
IRREVOCABLE PROXY,
RIGHT OF REFUSAL AND TAG-ALONG AGREEMENT
BY AND AMONG
VENTURE LW CORPORATION
AND
▇▇▇▇▇ ▇▇▇▇▇▇▇, III
AND
CEA INVESTORS PARTNERSHIP II, LTD.
DATED AS OF THE 27TH DAY OF AUGUST, 1993
TABLE OF CONTENTS
BACKGROUND STATEMENT
SECTION 1 PAY-OFF OF ▇▇▇▇▇▇ NOTE
SECTION 2 IRREVOCABLE WAIVER OF
VJN PARTNERSHIP FIRST REFUSAL RIGHTS
2.1 Irrevocable Waiver
2.2 Confirmation of Waiver
SECTION 3 GRANT OF IRREVOCABLE PROXY; TERMS
3.1 Grant of Irrevocable Proxy
3.2 Irrevocability; Term of Proxy
3.3 Limited Power of Substitution;
Assignability
3.4 Confirming Documentation
SECTION 4 RIGHT OF FIRST REFUSAL
4.1 Right of First Refusal For Third Party
Offers
4.2 Right of First Refusal for Sales in
Registered Offerings
4.3 Right of First Refusal for Rule 144 Sales
During 1994
4.4 Right of First Refusal for Rule 144 Sales
During 1995 and Thereafter
4.5 Prohibition Against Encumbrances
4.6 CEA II, Ltd. Right to Designate
SECTION 5 TAG-ALONG RIGHTS
5.1 Right to Participate in Certain
Transactions Involving Company
Shares or the Company
5.2 Right to Participate in Certain
Transactions Involving StarNet/
CEA Interests
5.3 Rights with Respect to Registrations
SECTION 6 GOING PRIVATE TRANSACTIONS
SECTION 7 EFFECTIVE DATE;
DEFERRED PROXY EFFECTIVE DATE
7.1 Effective Date
7.2 Deferred Proxy Effective Date
SECTION 8 DEFINITIONS
SECTION 9 LEGEND
9.1 Form
9.2 Procedures
SECTION 10 MISCELLANEOUS
10.1 Notice
10.2 Binding Effect; Benefits
10.3 Entire Agreement
10.4 Governing Law
10.5 Headings
10.6 Severability
10.7 Assignability
10.8 Arbitration
10.9 Remedies
10.10 Costs and Expenses
IRREVOCABLE PROXY,
RIGHT OF REFUSAL AND TAG-ALONG AGREEMENT
AGREEMENT, dated as of the 27th day of August, 1993 by and between
VENTURE LW CORPORATION, a Florida corporation ("VLW Corp."), and ▇▇▇▇▇
▇▇▇▇▇▇▇ III (herein referred to as the "Affiliated Stockholder") (VLW Corp. and
the Affiliated Stockholder are herein collectively referred to as "VLW"); and
CEA INVESTORS PARTNERSHIP II, LTD., a Florida limited partnership ("CEA
II, Ltd."), of which CEA Investors, Inc., a Florida corporation ("CEA
Investors") is the general partner.
BACKGROUND STATEMENT
WHEREAS, VLW Corp. is the beneficial owner of 1,417,453 shares of the
common stock, par value $.001 per share (the "VLW Corp. Shares") of Video
Jukebox Network, Inc., a Florida corporation (the "Company"). Affiliated
Stockholder is the beneficial owner of 310,194 shares of common stock, par value
$.001 per share (the "Affiliated Stockholder Shares") of the Company acquired or
to be acquired from New Vision Music, a Florida general partnership ("NVM").
The VLW Corp. Shares and the Affiliated Stockholder Shares are herein
collectively referred to as the "Existing VLW Shares");
WHEREAS, the VLW Corp. Shares are comprised of 834,120 shares of the
Company's common stock held directly of record by VLW Corp., and of 583,333
shares of the Company's common stock (the VLW Escrow Shares) beneficially owned,
but held of record by "VJN Partners", a dissolved Florida general partnership
(the "VJN Partnership"), and held in escrow by ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, P.A.
("Escrow Agent") pursuant to that certain Stock Escrow Agreement, dated as of
June 3, 1988 (the "Escrow Agreement") between the VJN Partnership and ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇ ("▇▇▇▇▇▇"), which escrow arrangement relates to the purchase by VJN
Partnership of 3,500,000 shares of the Company's common stock from ▇▇▇▇▇▇,
payment for which was made by the VJN Partnership's payment of $2,000,000 and
delivery of its $1,175,000 promissory note payable to ▇▇▇▇▇▇ (the "▇▇▇▇▇▇
Note");
WHEREAS, pursuant to a Dissolution Agreement, dated as of December 7,
1992 (the "VJN Dissolution Agreement") among VLW Corp., CEA II, Ltd., NVM, and
Video Holdings Corporation, a Florida corporation ("VHC Corp."), as the then
partners of the VJN Partnership, such partners dissolved the VJN Partnership and
agreed that each of them (a) would have direct beneficial ownership of its
respective PRO RATA interest in the shares of the Company's common stock held
pursuant to the Escrow Agreement including the right to vote such shares; (b)
would be directly obligated for its respective PRO RATA shares of the ▇▇▇▇▇▇
Note obligation; and (c) would
have rights of refusal, through December 7, 1993, as to the transfer or
assignment by any other former partner of the VJN Partnership of certain of the
Company's shares of common stock held by each such former partner, as
specifically provided in Section 13 of the Dissolution Agreement (which rights
as set forth therein are herein referred to as the "VJN Partnership First
Refusal Rights);
WHEREAS, CEA II, Ltd. is a substantial investor in the Company and
presently is the beneficial owner of 2,834,908 shares of the Company's common
stock (the "Existing CEA II, Ltd. Shares"); and J. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Jr.
("Michaels") has a financial interest in CEA II, Ltd. through his stock
ownership interest in CEA Investors;
WHEREAS, CEA II, Ltd. and StarNet Interactive Entertainment, Inc.
("StarNet") have formed a partnership known as "StarNet/CEA II Partners" (herein
referred to as "StarNet/CEA"), pursuant to a Partnership Agreement dated as of
August 24, 1993 (as amended and modified from time to time, the "StarNet/CEA
Partnership Agreement");
WHEREAS, CEA II, Ltd. intends to capitalize StarNet/CEA in part by the
transfer of the Existing CEA II, Ltd. Shares;
WHEREAS, StarNet/CEA and NVM have agreed to enter into an Agreement (the
"NVM/CEA Purchase Agreement"), pursuant to which, subject to certain conditions,
StarNet/CEA will purchase from NVM, and NVM will sell and transfer to
StarNet/CEA, up to 2,014,520 shares of the Company's common stock (the "NVM/CEA
Shares") for an aggregate purchase price of $1,611,616, or $.80 per share;
WHEREAS, Affiliated Stockholder and NVM have agreed to enter into an
Agreement (the "NVM/▇▇▇▇▇▇▇ Purchase Agreement"), pursuant to which, subject to
certain conditions, Affiliated Stockholder will purchase from NVM and NVM will
sell and transfer to Affiliated Stockholder, 310,194 shares of the Company's
common stock (the "NVM/▇▇▇▇▇▇▇ Shares"), for an aggregate purchase price of
$248,155.20, or $.80 per share;
WHEREAS, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇ (the "▇▇▇▇▇▇") and ▇▇▇
Puck and NVM have agreed to enter into agreements (the "NVM/Blank Purchase
Agreement"), pursuant to which, subject to certain conditions, ▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ and ▇▇▇ Puck will each purchase from NVM and NVM will
sell and transfer to the Blanks and ▇▇▇ Puck, an aggregate of 310,194 shares of
the Company's common stock (the "NVM/Blank Shares"), for an aggregate purchase
price of $248,155.20, or $.80 per share;
WHEREAS, CEA II, Ltd., StarNet and the Company have entered into a Stock
and Note Purchase Agreement dated as of August 24, 1993 (the "Company Stock and
Note Purchase Agreement") pursuant to which, subject to certain conditions,
StarNet/CEA will invest up to $1,750,000 in the Company through the purchase
from the Company of (i) convertible promissory notes (the "Convertible Notes"),
convertible into shares of common stock of the Company (the "Converted Company
Shares"), and (ii) newly issued shares of the Company's authorized but unissued
common stock (the "Initial New Company Shares") (the Initial New Company Shares
and the Converted New Company shares are herein referred to as the "New Company
Shares");
WHEREAS, pursuant to the Company Stock and Note Purchase Agreement, the
Company will enter into (a) with StarNet/CEA, a Registration Rights Agreement
(the "Registration Rights Agreement") covering the New Company Shares; (b) with
StarNet and/or its affiliates, a Consulting Agreement, a Management Agreement
and a Service Agreement (the "StarNet Agreements"); and (c) with Communications
Equity Associates, Inc. ("CEA"), an affiliate of CEA II, Ltd., agreements as to
its domestic and international investment banking arrangements (the "CEA
Agreements"), all as more particularly specified in the Company Stock and Note
Purchase Agreement;
WHEREAS, in connection with the foregoing transactions and the other
transactions contemplated herein, each of NVM, CEA II, Ltd., VLW Corp. and VHC
Corp. have agreed to terminate and irrevocably and permanently waive the VJN
Partnership First Refusal Rights;
WHEREAS, in connection with the organization of StarNet/CEA, and the
entering into of the NVM/VHC Purchase Agreement, and the Company Stock and Note
Purchase Agreement, VHC Corp., ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ and ▇▇▇ Puck
(all five parties herein collectively referred to as "VHC"), VHC and CEA II,
Ltd. have on the date hereof entered into an Irrevocable Proxy, Right of Refusal
and Tag-Along Agreement relating to the voting and disposition of the shares of
Common Stock of the Company acquired or to be acquired by VHC; and
WHEREAS, in connection with the organization of StarNet/CEA, and the
entering into of the NVM/▇▇▇▇▇▇▇ Purchase Agreement and the Company Stock and
Note Purchase Agreement, VLW, Affiliated Stockholder and CEA II, Ltd. have
agreed to enter into certain agreements relating to the voting and disposition
of the Existing VLW Shares and certain other shares acquired or to be acquired
by VLW or Affiliated Stockholder as set forth herein.
NOW, THEREFORE, in consideration of the foregoing, of the mutual promises
herein contained, and of other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending
legally to be bound, hereby agree as follows:
SECTION 1. PAY-OFF OF ▇▇▇▇▇▇ NOTE. Prior to or concurrently with the
"Effective Date", as hereinafter defined, VLW Corp. shall pay its PRO RATA share
of the ▇▇▇▇▇▇ Note obligation (provided that all of the other former partners of
the VJN Partnership pay their similar obligations) and use its best efforts (i)
to obtain the release of the VLW Escrow Shares from the escrow arrangement
relating to the purchase of such VLW Escrow Shares; and (ii) to obtain the
release of the certificate representing the VLW Escrow Shares from the Escrow
Agent. CEA II, Ltd. shall pay its PRO RATA share of the ▇▇▇▇▇▇ Note obligation
and will use its best efforts to obtain the release of the certificates
representing the shares beneficially owned by CEA II, Ltd. held by the Escrow
Agent.
SECTION 2. IRREVOCABLE WAIVER OF VJN PARTNERSHIP FIRST REFUSAL RIGHTS.
2.1 IRREVOCABLE WAIVER. Effective on the "Effective Date", as hereinafter
defined, VLW Corp. hereby irrevocably and permanently waives any and all rights
it has or may have under the VJN Partnership First Refusal Rights to purchase or
otherwise acquire any shares of the Company's common stock from any party under
any arrangement or agreement heretofore or hereafter entered into, including any
of the Existing CEA II, Ltd. Shares in connection with the proposed transfer
thereof to StarNet/CEA and the shares held by NVM in connection with the
transactions contemplated by the NVM/CEA Purchase Agreement, or the NVM/VHC
Purchase Agreement.
2.2 CONFIRMATION OF WAIVER
Subject to execution of this Agreement by all parties, VLW Corp. agrees
to enter into, or has entered into, a separate agreement with VHC, NVM and CEA
II, Ltd. confirming VLW's irrevocable waiver of its rights with respect to the
VJN Partnership First Refusal Rights on the terms set forth in Section 2.1.
SECTION 3. GRANT OF IRREVOCABLE PROXY; TERMS.
3.1 GRANT OF IRREVOCABLE PROXY. Effective upon the Effective Date as to
the 310,194 Affiliated Stockholder Shares and 689,806 of the VLW Corp. Shares
for an aggregate of one million (1,000,000) Existing VLW Shares, and effective
upon the "Deferred Proxy Effective Date" (as hereinafter defined) as to the
balance of the VLW Voting Shares (as hereinafter defined) (the "Deferred Proxy
Shares"), VLW hereby grants to CEA II, Ltd., with power of substitution as set
forth herein (CEA II, Ltd. and its permitted substitute in its capacity as
substitute being herein referred to as the "Proxy"), an irrevocable proxy with
respect to the Existing VLW Shares, and with respect to any other shares of the
Company's common stock hereafter acquired by VLW Corp. or Affiliated Stockholder
in respect of any of the Existing VLW Shares, including any capital stock of the
Company or subsidiaries or affiliated companies acquired by operation of law,
such as by merger, or consolidation or spin-off; or by reason of any stock
split, reclassification, share exchange or other reconstitution of the
outstanding capital stock of the Company (all of which shares, however acquired,
are herein referred to as the "VLW Voting Shares"), such proxy to specifically
extend to the following rights and authorizations:
(a) to attend any and all meetings of the stockholders of the
Company in the name, place and stead of VLW with respect to any or all of the
VLW Voting Shares, including the right to present such shares to be counted as
attending the meeting by proxy for purposes of
establishing a quorum, or the right to withhold such Shares in whole or in part
from attendance at any such meeting;
(b) to cast such votes at any meeting of the stockholders and
any adjournment thereof as shall be entitled to be cast by the holders of the
VLW Voting Shares in such manner as the Proxy shall, in its sole discretion,
determine, or to withhold such Shares in whole or in part from voting at any
time or for any reason;
(c) to execute any documents required or advisable, in the sole
discretion of the Proxy, to be executed by the holder of the VLW Voting Shares,
including the call of any special meeting of the stockholders, waiver of notice
of any meeting of the stockholders, written consents of stockholders, whether
unanimous or otherwise, ballots, attendance records or any other similar
document; and
(d) to do any or all of the foregoing on behalf of the holder of
the VLW Voting Shares to the same effect as if such holder had taken such
actions directly, notwithstanding any actual or alleged conflict of interest on
the part of any holder of the VLW Voting Shares or of CEA II, Ltd. or the Proxy
or any of their respective affiliates. As used herein, the "holder of the VLW
Voting Shares" shall mean the record or beneficial holder of such shares, as the
case may be, or any other person, in each case who or which is the person
entitled or permitted to exercise the voting rights or other stockholder rights,
as applicable, with respect to the VLW Voting Shares involved.
3.2 IRREVOCABILITY; TERM OF PROXY.
(a) The proxy granted hereby shall be IRREVOCABLE during its
term. The term of this proxy shall be for a period commencing on the Effective
Date with respect to the one million (1,000,000) Existing VLW Shares identified
above in Section 3.1, and the "Deferred Proxy Effective Date" (as hereinafter
defined) with respect to the balance of the VLW Voting Shares, and ending on
June 30, 2003 unless on such date CEA II, Ltd. directly or through StarNet/CEA
or others, is the beneficial owner of twenty percent (20%) or more of the
outstanding voting stock of the Company, in which event the term shall extend
for such period until CEA II, Ltd. is the beneficial owner of less than twenty
percent (20%) of such outstanding voting stock (which period, as it may be
extended, is herein referred to as the "Term"), provided that the proxy shall
expire as to any of the VLW Voting Shares which are (i) acquired by CEA II,
Ltd., pursuant to the exercise of the Rights of Refusal granted pursuant to
Section 4 hereof, (ii) transferred to a third party pursuant to the exercise of
the Tag-Along Rights granted pursuant to Section 5 hereof, (iii) transferred to
a Third Party, as defined in Section 4.1, in a transaction in which CEA II, Ltd.
has been afforded the Rights of Refusal provided for in Section 4 hereof and has
not exercised such Rights, (iv) sold in a Proposed 1933 Act Sale in a
transaction in which CEA II, Ltd. has been afforded the Rights of Refusal
provided for in Section 4.2, 4.3 or 4.4, as applicable, and CEA II, Ltd. has not
exercised such Rights, (v) acquired by CEA II, Ltd., pursuant to the exercise of
the option granted pursuant to Section 6 hereof, or (vi) not subject to Rights
of Refusal under this Agreement as a result of paragraph (b) of this Section 3.2
or otherwise.
(b) In addition, this proxy, and the Rights of Refusal (as
defined below) granted and the Tag-Along Rights (as set forth in Section 5)
provided to VLW pursuant to this Agreement shall terminate and shall be of no
further force and effect with respect to the number of VLW Voting Shares
determined by applying Section 3.2(b)(i), (ii) or (iii) (whichever is
applicable) below, in the event CEA II, Ltd. shall have exercised the Rights of
Refusal (as defined below) with respect to such VLW Voting Shares and shall have
failed to pay the purchase price in cash by cashiers check or wire transfer for
the then Offered VLW Shares or offered VLW 144 Shares on or prior to the date by
which payment is required under Section 4 (or as extended under this Section
3.2(b)); provided, however, VLW gives written notice ("Remedy Election Notice")
to CEA II, Ltd. of VLW's election to so terminate the proxy, all Rights of
Refusal and Tag-Along Rights with respect to such VLW Voting Shares no later
than five (5) business days following the latest date on which CEA II, Ltd. had
the opportunity to pay but failed to pay the purchase price. If VLW elects to so
terminate the proxy and such Rights, they shall terminate and shall be of no
further force and effect on the date on which the Remedy Election Notice is
delivered to CEA II, Ltd. pursuant to Section 10.1. VLW shall deliver, by the
same method as the Remedy Election Notice is delivered to CEA II, Ltd. under
Section 10.1, a copy of the Remedy Election Notice to the office of the Company.
Delivery of the copy shall be conclusive evidence that the proxy and Rights of
Refusal and Tag-Along Rights have been terminated as of the date of delivery to
CEA II, Ltd. VLW's election to terminate the proxy and Rights of Refusal and
Tag-Along Rights (collectively the "Rights") shall be in lieu of any other
remedy available to VLW under this Agreement for enforcement of breach of
contract by CEA II, Ltd. for such failure to pay the purchase price, which other
remedies (such as recovery of damages or injunctive relief for specific
performance) shall thereupon be deemed permanently and irrevocably waived as to
such which did not close due to CEA II, Ltd.'s failure to pay.
If VLW does not send a Remedy Election Notice it may sell the VLW Voting
Shares which had been subject to the exercised Rights of Refusal as if such
Rights of Refusal had not been exercised; provided that the period during which
such shares may be sold shall commence on the date following the latest date on
which CEA II, Ltd. had the opportunity to pay for the Offered VLW Shares or
Offered VLW 144 Shares without being in breach of this Agreement and failed to
make the payment. In addition, if VLW does not send a Remedy Election Notice VLW
may pursue all other remedies to which it is entitled at law or in equity.
In the event CEA II, Ltd. exercises Rights of Refusal and fails to pay
the purchase price due under Section 4.1, 4.2, 4.3 and 4.4 hereof with respect
to such exercise and VLW delivers a Remedy Election Notice when due then the
rights shall terminate with respect to the following number of Shares:
(i) If the purchase price payable is less than or equal to
$50,000, this proxy and such Rights of Refusal and
Tag-Along Rights shall terminate with respect to those VLW
Voting Shares which were the subject of the exercise of the
Rights of Refusal;
(ii) If the purchase price is more than $50,000 and less than or
equal to $750,000, the proxy and such Rights shall
terminate with respect to a number of VLW Voting Shares
equal to the shares which were subject to the exercised
Rights of Refusal multiplied by two, provided CEA II, Ltd.
shall have been first afforded a period of 10 business days
(as opposed to 5 business days) to close the purchase of
such shares if the Rights of Refusal were exercised under
Section 4.3 or 4.4 hereof; or
(iii) If the purchase price is more than $750,000, the proxy and
such Rights shall terminate and expire with respect to all
of the VLW Voting Shares; provided, CEA II, Ltd. shall have
been first afforded a period of 20 business days (as
opposed to 5 business days) to close the purchase of such
shares if the Rights of Refusal were exercised under
Section 4.3 or 4.4 hereof.
3.3 LIMITED POWER OF SUBSTITUTION; ASSIGNABILITY.
(a) The proxy granted hereby may be exercised by CEA II, Ltd.,
acting through any person designated in writing by CEA Investors, provided that
CEA II, Ltd. or CEA Investors may designate a substitute Proxy, which
designation shall be limited to Michaels (but only so long as he is the Chief
Executive Officer or controlling stockholder of CEA),, the Trustee of the ▇▇▇▇
▇. ▇▇▇▇▇▇▇▇, ▇▇. Family Trust, or any other person who is the Chairman,
President or Chief Executive Officer of CEA or CEA Investors. In connection with
the exercise of the proxy, CEA II, Ltd. or any other Proxy may agree to exercise
its proxy rights in conjunction with one or more other Persons, including, but
not limited to StarNet/CEA or its partners.
(b) Notwithstanding the foregoing, in the event that StarNet/CEA
transfers shares of the Company's common stock to a single person or related
group (the "Major Block Transferee") in one transaction or a series of related
transactions within any six (6) month period amounting to more than twenty-five
percent (25%) of the then outstanding common stock of the Company (which
transaction or related series of transactions is herein referred to as a "Major
Block Transfer"), and in connection with such Major Block Transfer, VLW has been
afforded the benefit of the "Tag-Along Rights" set forth in Section 5 hereof,
and shall not have elected to exercise such Tag-Along Rights, then CEA II, Ltd.
may assign to the Major Block Transferee the irrevocable proxy rights granted
hereunder to the extent of that portion of the VLW Voting Shares which is equal
to the percentage which (x) the shares of the Company's common stock transferred
to the Major Block Transferee in the Major Block Transfer bears to (y) the total
outstanding shares of the Company's common stock held by StarNet/CEA immediately
prior to the first transaction which was a part of the Major Block Transfer. In
such event, the Major Block Transferee shall have full power of substitution
under the proxy and the proxy shall terminate on June 30, 2003.
3.4 CONFIRMING DOCUMENTATION. In order to facilitate the exercise of the
proxy granted hereby, VLW will, promptly upon the request of CEA II, Ltd.,
execute and deliver written confirmation of the grant of the proxy for the VLW
Voting Shares substantially in the form annexed hereto as Exhibit A.
SECTION 4. RIGHT OF FIRST REFUSAL.
4.1 RIGHT OF FIRST REFUSAL FOR THIRD PARTY OFFERS. If, after the
Effective Date and prior to the expiration of the Term of the proxy (as defined
in Section 3.2), VLW shall have received a bona fide written offer (a "Third
Party Offer") from a Third Party to purchase any of the VLW Voting Shares (the
Shares subject to such offer being referred to as the "Offered VLW Shares") and
VLW desires to accept such Third Party Offer, VLW may accept such Third Party
Offer only after it has afforded CEA II, Ltd. the following rights of first
refusal (including the rights of first refusal set forth in Sections 4.2, 4.3
and 4.4 collectively herein referred to as the "Rights of Refusal") and complied
strictly with the below described procedure:
(a) VLW shall notify CEA II, Ltd. of its desire to sell the
Offered VLW Shares to a Third Party, the price and terms of the Third Party
Offer, and the identity of the Third Party.
(b) For a period of ten (10) business days after the date of
receipt of such notice, CEA II, Ltd. shall have the option to purchase the
Offered VLW Shares at the same price and on the same terms as the Third Party
Offer, such option to be exercised by written notice thereof given in compliance
with Section 10.1 of this Agreement.
(c) If at the end of such ten (10) business day period, CEA II,
Ltd. does not elect to exercise its right to first refusal pursuant to this
Section 4.1, VLW shall have a period of the longer of sixty (60) calendar days
or the number of days required to obtain regulatory approval, if any is
required, in which to sell to the Third Party all or part of the Offered VLW
Shares, at the price and on terms not less favorable to VLW as the terms set
forth in the Third Party Offer.
(d) If, at the end of such period, VLW has not completed the
sale of the Offered VLW Shares to a Third Party pursuant to the Third Party
Offer, all of the restrictions on the sale, transfer or assignment set forth in
this Section 4 shall again apply with respect to the Offered VLW Shares.
(e) If CEA II, Ltd. does exercise its option to acquire the
Offered VLW Shares, pursuant to Section 4.1(b), the closing of such purchase
shall take place at the principal office of the Company on a date specified by
CEA II, Ltd. within sixty (60) days after receipt of the Third Party Offer, at
which time VLW shall deliver the certificates representing the Offered VLW
Shares, together with stock powers executed in blank with signature guaranteed,
against payment of the purchase price as required by the Third Party Offer. Each
of the seller and purchaser in any such transaction shall be entitled to receive
such representations, warranties, certificates and other instruments as shall be
reasonably required by any other party.
(f) Any Third Party Offer shall be reduced to writing and signed
by the Third Party and shall state that such Third Party has or will have at the
closing of the purchase of the Offered VLW Shares, sufficient funds to
consummate such offer (giving reasonably satisfactory
confirming evidence thereof), and a copy thereof shall be delivered to CEA II,
Ltd. pursuant to Section 10.1 hereof.
(g) A Third Party Offer shall not include the sale, transfer or
other disposition of any of the VLW Voting Shares, to an affiliate of VLW Corp.
or the Affiliated Stockholder, if the transferee ("VLW Transferee") agrees to
all of the terms of this Agreement including without limitation the execution
and delivery of confirming documentation under Section 3.4.
(h) Any sale or proposed sale through a registered public
offering or a proposed sale under Rule 144 promulgated under the Securities Act
of 1933, as amended (the "1933 Act") shall be subject to the Rights of Refusal
granted hereby (any such proposed sales being herein referred to as "Proposed
1933 Act Sales") as set forth and described in Section 4.2 and 4.3 below.
4.2 RIGHT OF FIRST REFUSAL FOR SALES IN REGISTERED OFFERINGS. In
connection with any Proposed 1933 Act Sales in a registered offering, the Rights
of Refusal shall apply to all VLW Voting Shares which the lead underwriter has
agreed to be included in the registration statement, when effective, all as
confirmed by such underwriter in writing to CEA II, Ltd. no later than five (5)
days prior to the proposed effective date of such registration statement. CEA
II, Ltd. shall have one (1) business day, following CEA II, Ltd.'s receipt of
such confirmation from the underwriter, to exercise such Rights of Refusal with
respect to some or all of the VLW Voting shares to be included, such right to be
exercised by written notice to VLW thereof delivered no later than one (1)
business day after the date on which it is sent. The closing of any such
purchase shall take place on the date of, and to be subject to the conditions
of, the closing of the sale of the shares of the Company common stock pursuant
to the registered offering at a price per share equal to the public offering
price per share of Company common stock sold in the registered offering subject
to such conditions, the parties shall close the purchase of the VLW Voting
Shares pursuant to paragraph (f) of Section 4.4.
4.3 RIGHT OF FIRST REFUSAL FOR RULE 144 SALES DURING 1994. In
connection with any Proposed 1933 Act Sales by VLW under Rule 144 during 1994:
(a) VLW will not sell any of the VLW Shares under Rule 144
before March 1, 1994.
(b) If VLW desires to sell shares under Rule 144 during 1994,
VLW shall deliver to CEA II, Ltd. Notice of such intent to sell (a "1994
Notice") as follows:
(i) on or before March 1, 1994 for its intended Rule 144 Sales
between March 1 and June 15, 1994.
(ii) on or before June 16, 1994 for its intended Rule 144 sales
between June 16 and September 30, 1944.
(iii) on or before October 1, 1994 for its intended Rule 144 sales
between October 1 and December 31, 1994.
The above "1994 Notices" shall be effective ("1994 Notice Effective Date") as of
the first day of the period specified or on the first business day following the
day sent, if later. The 1994 Notices shall be effective for the persons
specified, and cover intended Rule 144 Sales during the periods specified in
4.3(b)(i), (ii) or (iii) (the "1994 Notice Period"). Each 1994 Notice shall
specify the number of VLW Shares VLW intends to sell (the "Offered VLW 144
Shares") and the minimum price ("Minimum Price") per share at which VLW would be
willing to sell such shares under Rule 144 during each respective 1994 Notice
Period.
(c) The maximum number ("Maximum Amount") of VLW Shares which
VLW may specify in any 1994 Notice or sell under Rule 144 in any such three
month period will be the greater of 1% of the outstanding shares of common stock
of the Company at the time the 1994 Notice is delivered or the average weekly
trading volume during the four calendar weeks preceding delivery of each
respective 1994 Notice subject to any other applicable limits under Rule 144.
(d) For a period of five (5) business days after the 1994 Notice
Effective Date of a 1994 Notice, CEA II, Ltd. may exercise its right of first
refusal ("Rights of Refusal" as previously defined) to purchase all or a part of
the Offered VLW 144 Shares at the Minimum Price per share such Right of Refusal
to be exercised by written notice thereof (the "Election Notice"), specifying
the number of shares to be purchased, delivered no later than one (1) business
day after the date on which it is sent in compliance with Section 10.1 of this
Agreement. If CEA II, Ltd. exercises such Right of Refusal it shall close the
purchase of the specified Offered VLW 144 Shares pursuant to paragraph (f) of
Section 4.4 within the number of business days specified in Section 3.2(b)(i),
(ii) or (iii) (as applicable based on the aggregate purchase price for each
respective purchase) following its delivery of its Election Notice.
(e) If at the end of such five (5) business day period, VLW has
not received an Election Notice from CEA II, Ltd. pursuant to this Section 4.3,
VLW shall have the balance of the applicable 1994 Notice Period following
delivery of any 1994 Notice to sell under Rule 144 up to but not exceeding the
Maximum Amount of Offered VLW 144 Shares at a price of at least the Minimum
Price per share.
(f) If, at the end of the applicable 1994 Notice Period, VLW has
not completed the sale of the Offered VLW 144 Shares under Rule 144, all of the
restrictions on the sale, transfer or assignment set forth in this Section 4
shall again apply with respect to any unsold Offered VLW 144 Shares.
(g) In the event VLW desires to sell any of such Offered VLW 144
Shares under Rule 144 during any applicable 1994 Notice Period at a price less
than the Minimum Price, then VLW shall first give CEA II, Ltd. notice of its
desire to sell such Offered VLW 144 Shares at such new minimum price. Such
notice will be treated as a 1994 Notice affording CEA II, Ltd. the Right of
Refusal to purchase all or part of such Offered VLW 144 Shares at such new
minimum price in accordance with the foregoing provisions. Once VLW has
delivered a 1994 Notice for a respective 1994 Notice Period, VLW shall be
afforded the opportunity to send a new 1994 Notice
reflecting a reduced minimum price no more than two times during each applicable
1994 Notice Period.
4.4 RIGHT OF REFUSAL FOR RULE 144 SALES DURING 1995 and THEREAFTER. In
connection with any Proposed 1933 Act Sales by VLW under Rule 144 during 1995
and thereafter:
(a) During 1995 and thereafter VLW shall deliver written notice
(a "Post 1994 Notice") to CEA II, Ltd. no more frequently than on a monthly
basis of its desire to sell VLW Shares under Rule 144 during the thirty (30) day
period following delivery of the Post 1994 Notice, which Post 1994 Notice shall
specify the number of Offered VLW 144 Shares VLW intends to sell and the Minimum
Price per share at which VLW would be willing to sell such shares under Rule 144
during such thirty (30) day period.
(b) For a period of five (5) business days after the date of
receipt of the Post 1994 Notice, CEA II, Ltd. may exercise its Rights of Refusal
to purchase all or a part of the Offered VLW 144 Shares at the Minimum Price per
share, such Rights of Refusal to be exercised by written notice thereof (the
"Post 1994 Election Notice"), specifying the number of shares to be purchased,
delivered no later than one (1) business day after the date on which it is sent
in compliance with Section 10.1 of this Agreement. If CEA II, Ltd. exercises
such Rights of Refusal it shall close the purchase of the specified Offered VLW
144 Shares pursuant to paragraph (f) of this Section 4.4 within the number of
business days specified in Section 3.2(b)(i), (ii) and (iii) (as applicable
based on the aggregate purchase price for each respective purchase) following
its delivery of its Post 1994 Election Notice.
(c) If at the end of such five (5) business day period, VLw has
not received a Post 1994 Election Notice from CEA II, Ltd. pursuant to this
Section 4.4, VLW shall have a period of thirty (30) days from and after the
fifth business day following delivery of any Post 1994 Notice to sell under Rule
144 up to but not exceeding the number of Offered VLW 144 Shares specified in
such Post 1994 Notice at a price of at least the Minimum Price per share.
(d) In the event VLW desires to sell any of such Offered VLW 144
Shares under Rule 144 during any applicable 1994 Notice Period at a price less
than the Minimum Price, then VLW shall first give CEA II, Ltd. notice of its
desire to sell such Offered VLW 144 Shares at such new minimum price. Such
notice will be treated as a Post 1994 Notice affording CEA II, Ltd. Rights of
Refusal to purchase all or a part of such Offered VLW 144 Shares at such new
minimum price in accordance with the foregoing provisions. Once VLW has
delivered a Post 1994 Notice for a respective thirty (30) day period VLW shall
be affored the opportunity to send a new Post 1994 Notice reflecting a reduced
Minimum Price no more than two times during each applicable thirty (30) day
period.
(e) If, at the end of such thirty (30) day period from and after
the fifth business day following delivery of any Post 1994 Notice, VLW has not
completed the sale of any of the Offered VLW 144 Shares under Rule 144, all of
the restrictions on the sale, transfer or assignment set forth in this Section 4
shall again apply with respect to any unsold Offered VLW 144 Shares.
(f) If CEA II, Ltd. does exercise its right to acquire any of
the VLW Voting Shares pursuant to Section 4.2 or 4.3 or 4.4, the closing of such
purchase shall take place at the principal office of the Company on a date
specified by CEA II, Ltd. no later than the date set forth for closing in
Section 4.2, 4.3 or 4.4, as the case may be. At which time VLW shall deliver the
certificates representing the VLW Voting Shares to be purchased, together with
stock powers executed in blank with signature guaranteed, against payment of the
purchase price in cash by cashier's check or wire transfer as required by this
Agreement. Each of the seller and purchaser in any such transaction shall be
entitled to receive such representations, warranties, certificates and other
instruments relating to the transaction as shall be reasonably requested by the
other party to the transaction.
4.5 PROHIBITION AGAINST ENCUMBRANCES. VLW shall have no right to pledge,
margin, hypothecate or otherwise encumber any of the VLW Shares, and any attempt
to do any of the foregoing shall be null and void.
4.6 CEA II, LTD. RIGHT TO DESIGNATE. CEA II, Ltd. may from time to time
designate any other Person or Persons, including StarNet/CEA, to exercise its
Rights of Refusal pursuant to Sections 4.1, 4.2, 4.3 and 4.4 hereof, which
designation shall be sufficient if in writing and delivered to VLW at the time
of and together with notice of the exercise of any such Rights of Refusal. In
such event, any notice to be given thereafter by VLW hereunder shall also be
given to such designated Person but only with respect to the particular
transaction. Initially, CEA II, Ltd. hereby designates StarNet/CEA to exercise
such Rights of Refusal and no additional written notice as to such designation
shall be required to be delivered to VLW with respect to such initial
designation.
4.7 COVENANT WITH RESPECT TO RULE 144 SALES. CEA II, Ltd. agrees it will
not sell or permit StarNet/CEA to sell any of its shares of common stock of the
Company under Rule 144 during 1994 to the extent aggregation of such sales will
be required with respect to sales by VLW of its shares under Rule 144.
SECTION 5. TAG-ALONG RIGHTS.
5.1 RIGHT TO PARTICIPATE IN CERTAIN TRANSACTIONS INVOLVING COMPANY
SHARES OR THE COMPANY.
(a) In the event that, after the Effective Date,
StarNet/CEA, StarNet or CEA II, Ltd. (to the extent any of them holds any shares
of the Company's common stock), (StarNet/CEA, StarNet and CEA, Ltd. even if only
one of them is involved, is herein referred to as a "Selling Group"):
(i) proposes to sell or transfer to any Person, other than
in a public offering of the Company's common stock
registered under the 1993 Act (provided such sale or
transfer affords VLW Tag-Along Rights under Section 5.2
herein), and other than to its or their respective
partners or Affiliates (as long as the
transferee agrees in writing to the terms of this
Agreement), in a single transaction or series of
related transactions, shares of the Company's common
stock (other than a sale or transfer of shares of the
Company's common stock which when aggregated with all
prior sales by one or more members of the Selling Group
as to which Tag-Along Rights were not afforded to VLW
pursuant to this Section 5, does not exceed two percent
(2%) of the aggregate shares of common stock
outstanding, assuming no exercise of any outstanding
options to acquire, or the conversion of any
outstanding securities into, common stock of the
Company) as of the date of such proposed sale or
transfer (herein referred to as a "Sale Transaction");
or
(ii) participates in, or agrees with any one or more Persons
to participate in, any transaction which will result in
the merger of the Company with any other corporation,
or exchange of a majority of the outstanding common
stock of the Company (herein referred to as an
"Acquisition Transaction") the Sale Transaction and the
Acquisition Transaction shall be conditioned upon VLW
having the rights to participate in the transaction as
set forth herein; and CEA II, Ltd. and StarNet/CEA
shall, within a reasonable time prior to consummating
its or their participation in any such Sale Transaction
or Acquisition Transaction:
(x) afford and cause any other member of the Selling
Group to afford VLW the right to include in such
Sale Transaction or Acquisition Transaction up to
that percentage of the VLW Voting Shares then
owned by VLW and its Affiliates who have agreed
to the terms of this Agreement that is equal to
the percentage of the Selling Group's aggregate
beneficial holdings (measured by dispositive
power) of the Company's common stock proposed to
be sold or transferred in any Sale Transaction or
proposed to be covered by any Acquisition
Transaction, on the same terms and conditions as
the Company common stock proposed to be so sold
or transferred by the Selling Group;
(y) deliver written notice (the "Tag-Along Rights
Notice") and a copy of the definitive agreement
evidencing the Sale Transaction or the
Acquisition Transaction, as the case may be, to
VLW in accordance with Section 10.1 identifying
the terms and conditions of the proposed Sale
Transaction or Acquisition Transaction at least
twenty (20) days, if possible, prior to the date
of the closing of the proposed transaction; and
(z) advise VLW in the Tag Along Rights Notice of its
Tag Along Rights to so participate in the
proposed transaction.
(b) If VLW desires to participate in a Sale Transaction or
Acquisition Transaction, VLW shall give written notice to CEA II, Ltd. of its
level of participation in such sale or transfer within ten (10) business days of
delivery of the Tag Along Rights Notice. If VLW elects to so participate, VLW
shall thereupon be included as a party to, and shall be required to comply at
its own cost with all the provisions of the pertinent purchase agreement (in the
case of the Sale Transaction) or merger or acquisition agreement (in the case of
an Acquisition Transaction), applicable to VLW Voting Shares to be included.
5.2 RIGHT TO PARTICIPATE IN CERTAIN TRANSACTIONS INVOLVING
STARNET/CEA INTERESTS.
(a) In the event that CEA II, Ltd. proposes to sell or transfer
to any Person, other than to its partners or Affiliates who have agreed to the
terms of this Agreement, any partnership interest in StarNet/CEA which when
aggregated with all prior sales or other transfers or dispositions by CEA II,
Ltd. as to which Tag Along Rights were not afforded to VLW pursuant to this
Section 5, does not exceed two percent (2%) of the total aggregate interests in
the profits or capital of StarNet/CEA as of the date of such proposed sale or
transfer (herein referred to as "CEA II, Ltd. Sale Transaction"), then CEA II,
Ltd. shall condition its participation in the CEA II, Ltd. Sale Transaction on
VLW receiving the Tag Along Rights set forth herein and shall, prior to
consummating its participation in such CEA II, Ltd. Sale Transaction:
(i) offer VLW the right to include in such CEA II, Ltd. Sale
Transaction that percentage of the VLW Voting Shares then
owned by VLW or its Affiliates that have agreed to the terms
of this Agreement that is equal to the percentage of the
partnership interest in StarNet/CEA held by CEA II, Ltd.
that CEA II, Ltd. proposes to sell in the CEA II, Ltd. Sale
Transaction, on the same terms and conditions as CEA II,
Ltd. proposes to sell its interest in StarNet/CEA (with the
VLW Voting Shares to be valued for such purpose either by
agreement of VLW Corp. and CEA II, Ltd. or failing such
agreement at the applicable purchase price per share based
on the number of shares represented by the partnership
interest proposed to be sold, as hereinafter defined);
(ii) give a Tag-Along Notice to VLW identifying the terms and
conditions of the proposed CEA II, Ltd. Sale Transaction at
least twenty (20) days prior to the date of closing thereof;
and
(iii) advise VLW in the Tag-Along Notice of its Tag-Along Rights
to participate in the proposed transaction.
(b) If VLW desires to participate in a CEA II, Ltd. Sale
Transaction, VLW shall give written notice to CEA II, Ltd. of its level of
participation in such sale or transfer within ten (10) business days of delivery
of the Tag-Along Rights Notice. If VLW elects to so participate, VLW shall
thereupon be included as a party to, and shall be required to comply at its own
cost with all the provisions of the CEA II, Ltd. Sale Transaction purchase
agreement applicable to VLW Voting Shares to be included.
(c) In the event VLW, VHC or StarNet/CEA elect to exercise
contractual rights to participate in or purchase part of a proposed CEA II, Ltd.
Sale Transaction, the amount CEA II, Ltd. proposes to sell in the CEA II, Ltd.
Sale Transaction and accordingly, the amount VLW may include in such transaction
may be proportionately reduced.
5.3 RIGHTS WITH RESPECT TO REGISTRATIONS.
In the event that the Selling Group proposes to include any of its shares
of common stock of the Company for sale in a registration statement to be filed
by the Company under the 1993 Act:
(a) CEA II, Ltd. will deliver written notice to VLW of the
proposed inclusion of shares of common stock of the Company owned by the Selling
Group in such registration statement.
(b) Upon receipt of written notice from VLW delivered to CEA II,
Ltd. of VLW's election to include some of its shares in such registration
statement, CEA II, Ltd. will ask the Company to add VLW Voting Shares to the
registration statement, but only to the extent that the maximum number of VLW
Voting Shares so included shall not exceed the percentage (the "VLW Percentage")
of the total number of shares included in the registration statement which are
then owned by the Selling Group, VHC or VLW which percentage is equal to the
number of VLW Voting Shares then beneficially owned by VLW or any of its
Affiliates who have agreed to the terms of this Agreement (based on dispositive
power) divided by the total number of shares of the Company's common stock then
beneficially owned by the Selling Group, VLW or VHC or any of their partners or
Affiliates who have agreed to the terms of this Agreement (based on dispositive
power).
(c) In the event the Company will not permit VLW to add its
shares to the registration statement as described in Section 5.3(b) above, or in
the event, at any time, the underwriter or underwriting group requires a
decrease in the aggregate number of shares held by shareholders to be included
in any registration statement, then CEA II, Ltd. shall cause Selling Group to
reduce, and Selling Group shall reduce the number of shares it proposes to
include in the registration statement to permit VLW to include a number of
shares (also reduced) in the registration statement but only to the extent that
the maximum number of VLW Voting Shares so included shall not exceed the VLW
Percentage of the shares to be included by the Selling Group, VLW, or VHC or any
of its Affiliates who have agreed to the terms of this Agreement.
SECTION 6. GOING PRIVATE TRANSACTIONS. In the event the Company,
StarNet/CEA, any of its partners or Affiliates who have agreed to the terms of
this Agreement or a third party proposes (i) to make a tender offer for less
than all shares of the Company's common stock or (ii) to initiate any other
transaction or series of transactions or action, such tender offer, transaction
or action shall be referred to as the "Going Private Transaction." (For purposes
of this agreement a merger reorganization consolidation or share exchange
between the Company or its shareholders and a company resulting in ownership by
the Company's shareholders of publicly traaded shares shall not be treated as or
deemed a "Going Private Transaction.") If after any such
Going Private Transaction the Company's shares of common stock would not be
listed or otherwise registered with the Securities and Exchange Commission, any
stock exchange or Nasdaq (Nasdaq/NMS; Nasdaq; the Nasdaq bulletin board or the
pink sheets) and as a result the use of Rule 144 under the 1933 Act would not be
available for the sale of their respective securities by VLW Corp. or the
Affiliated Stockholder, then StarNet/CEA will not vote its shares of Company
common stock or, to the extent StarNet/CEA can control the decision through its
representatives on the Board of Directors, permit the Company or such parties to
approve and to close such parties to approve and to close such a Going Private
Transaction unless: StarNet/CEA or CEA II, Ltd. shall first, at its option, make
an offer or cause a third party to make an offer to VLW to purchase ("Going
Private Option Purchase") all of the then issued and outstanding VLW Voting
Shares then subject to this proxy at a purchase price equal to the lower of:
(i) the following prices during the three periods
indicated:
(A) $2.00 per share if the purchase and sale is closed
on or before December 31, 1994;
(B) $2.50 per share if the purchase and sale is closed
in 1995;
(C) $3.00 per share if the purchase and sale is closed
in 1996, 1997 or 1998; or
(ii) the price per share offered and paid to shareholders
who sell their shares in the Going Private Transaction.
(b) VLW shall have the right to accept or reject the Going
Private Option Purchase offer. The closing of the Going Private Option Purchase
shall be conditioned on and subject to the closing of the Going Private
Transaction. The closing of the purchase shall take place on the date of the
closing of the Going Private Transaction in the same manner as sales of shares
under the provisions of Section 4.4(f) of this Agreement.
(c) So long as the Going Private Option Purchase offer is made
and rejected or, if accepted, such sale is closed, then the Going Private
Transaction may proceed.
SECTION 7. EFFECTIVE DATE: DEFERRED PROXY EFFECTIVE DATE.
7.1 EFFECTIVE DATE. The effective date (the "Effective Date") for
the following transactions contemplated by this Agreement:
(a) The irrevocable waiver and termination of the VJN Partnership
First Refusal Rights as provided in Section 2.1;
(b) The grant of the irrevocable proxy as to One Million (1,000,000)
VLW Voting Shares as provided in Section 3.1;
(c) The grant of the Rights of Refusal as provided in Section 4.1,
4.2, 4.3 and 4.4; and
(d) The grant and availability of the Tag-Along Rights as provided in
Sections 5.1, 5.2 and 5.3, shall be that date, on or before September 15, 1993,
which is specified by written notice (the "Effective Date Notice") from CEA II,
Ltd. to VLW Corp., provided that the following events (the "Conditions
Precedent") shall have occurred on or prior to such date:
(i) StarNet and CEA shall have entered into the StarNet/CEA
Partnership Agreement and each of them shall have made the contributions
to the capital of StarNet/CEA provided for therein;
(ii) StarNet/CEA shall have entered into the NVM/CEA Purchase
Agreement with NVM, and the transactions contemplated thereby shall have
been consummated;
(iii) Affiliated Stockholder shall have entered into the
NVM/▇▇▇▇▇▇▇ Purchase Agreement with NVM, and the transactions
contemplated thereby shall have been consummated;
(iv) Each of the Blanks and ▇▇▇ Puck shall have entered into the
NVM/Blank Purchase Agreement with NVM, and the transactions contemplated
thereby shall have been consummated;
(v) NVM, VLW Corp., VHC and CEA II, Ltd. shall have paid their
respective obligations under the ▇▇▇▇▇▇ Note, and all shares of the
Company's common stock held pursuant to the Escrow Agreement shall have
been released to an authorized representative of the former partners of
the VJN Partnership or such representative's counsel; and
(vi) StarNet/CEA and the Company shall have entered into the
Company Stock and Note Purchase Agreement and all transactions
contemplated thereby, including the issuance of the New Company Shares
and the New Company Convertible Notes, and the execution and delivery of
the Registration Rights Agreement, the StarNet Agreements and the CEA
Agreements, shall have been consummated to the extent contemplated
therein to be consummated on the Closing Date, as defined therein. If the
Effective Date does not occur on or before September 15, 1993, then this
Agreement shall terminate upon written notice from either VLW Corp. to
CEA II, Ltd. or from CEA II, Ltd. to VLW Corp., and no party shall have
any obligation hereunder.
7.2 DEFERRED PROXY EFFECTIVE DATE. The effective date for the grant of
the proxy under Section 3.1 as to the Deferred Proxy Shares (the "Deferred Proxy
Effective Date") shall be that date, on or before the first anniversary of the
Effective Date, as specified by written notice from CEA II, Ltd. to VLW Corp.
which date shall be on or after the date on which either (a) the Federal
Communications Commission ("FCC") shall have granted approval to the change of
control of the Company contemplated by the Stock and Note Purchase Agreement,
and the grant of proxy rights to CEA II, Ltd. pursuant to this Agreement and a
similar agreement with VHC
(the "Change of Control Transactions") and such grant of approval shall have
become final and non-appealable, or (b) the Company shall have effectuated the
disposition of its operations subject to licensing and regulation by the FCC,
and no FCC approval of the Change of Control Transactions is required. If the
Deferred Proxy Effective Date shall not have occurred on or before the first
anniversary of the Effective Date, then, upon written notice from VLW Corp. to
CEA II, Ltd., CEA II, Ltd. shall have no further rights under this Agreement
with respect to the Deferred Proxy Shares, but such Deferred Proxy Shares shall
remain subject to the Rights of Refusal set forth in Section 4 hereof and
entitled to the benefits of the Tag-Along Rights set forth in Section 5 hereof.
VLW shall cooperate with CEA II, Ltd., StarNet/CEA and the Company in connection
with all applications for FCC approval of the Change of Control Transactions.
SECTION 8. DEFINITIONS. As used herein, the following terms shall have
the definitions set forth:
"Affiliate" as to any Person shall mean any other Person controlled by,
under common control with or controlling such Person.
"Tag-Along Rights" shall mean the rights granted pursuant to Section 5 of
this Agreement.
"Person" shall mean an individual, partnership, joint venture,
corporation, trust, limited liability company or a government or any department,
subdivision or agency thereof.
"Rights of Refusal" shall mean the rights granted pursuant to Section 4
of this Agreement.
"Third Party" in any proposed arrangement shall mean any Person who is
not an Affiliate of any Person entering into the arrangement.
"VLW Shares" shall mean any VLW Voting Shares owned beneficially by VLW
Corp., the Affiliated Stockholder or VLW Transferees.
SECTION 9. LEGEND.
9.1 FORM. Each certificate evidencing the Existing VLW Shares or
representing any other VLW Voting Shares, and each certificate issued in
exchange for or upon the transfer of any such Shares during the term of this
Agreement shall be stamped or otherwise imprinted with a legend in substantially
the following form:
The securities represented by this certificate are subject to
(a) an agreement as to the exercise of voting rights, and (b)
certain restrictions on transfer (including certain restrictions
on pledging, granting a security interest in, or otherwise
encumbering such securities), as set forth in an Irrevocable
Proxy, Right of Refusal and Tag-Along Agreement dated as of
August 27, 1993, between Venture LW Corporation, ▇▇▇▇▇ ▇▇▇▇▇▇▇
III and CEA Investors Partnership II, Ltd. A copy of such
Agreement will be furnished without charge by the registered
holder of this certificate upon written request.
9.2 PROCEDURES. On the Effective Date, VLW shall produce the certificates
representing the Existing VLW Shares and the shares purchased under the NWM/VLW
purchase Agreement so that the legend set forth above may be added to such
certificates. In addition, VLW shall assure that each certificate for any VLW
Shares acquired by VLW Corp. or the Affiliated Stockholder in the future in
respect of the Existing VLW Shares is stamped or imprinted with the legend set
forth above, and appropriate evidence thereof provided to CEA II, Ltd.
SECTION 10. MISCELLANEOUS.
10.1 NOTICE. (a) Any notice required or permitted hereunder shall be in
writing and shall be sufficiently given if personally delivered, delivered by
facsimile telephone transmission, delivered by express delivery service (such as
Federal Express), or mailed first class U.S. mail (unless delivery is required
in less than three days), postage prepaid, addressed as follows:
If to Venture LW Corporation or Affiliated Stockholder:
Venture LW Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇, III
Fax: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
Steel ▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, P.A.
Fax: ▇▇▇-▇▇▇-▇▇▇▇
If to CEA Investors Partnership II, Ltd.:
CEA Investors Partnership II, Ltd.
c/o Communications Equity Associates, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Fax No.: ▇▇▇-▇▇▇-▇▇▇▇
and
StarNet/CEA II Partners
c/o StarNet Interactive Entertainment, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
Fax No.: ▇▇▇-▇▇▇-▇▇▇▇
(or to such other address as any party shall specify by written notice so
given), and shall be deemed to have been delivered as of the date so delivered
or three (3) days after mailing.
(b) VLW Corp. shall act as the representative of VLW and VLW
Transferees and VLW Corp. shall deliver any notice or elections or consents
under this Agreement, from VLW Corp., Affiliated Stockholder and VLW
Transferees, such that only one notice, election or consent reflecting the
combined instructions or directions of all such parties shall be delivered to or
by VLW Corp. on behalf of all such parties. CEA II, Ltd. shall not be
responsible for allocating, coordinating or apportioning any of the rights of
VLW or VLW Transferees under this Agreement. [Any notice as to the Rights of
Refusal, Offered VLW Shares and Offered VLW 144 Sales shall specify only one
price per share per notice.]
10.2 BINDING EFFECT; BENEFITS. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective permitted
successors and assigns. Notwithstanding anything contained in this Agreement to
the contrary, nothing in this Agreement, expressed or implied, is intended to
confer on any person other than the parties hereto or their respective heirs,
successors, executors, administrators or assigns any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
10.3 ENTIRE AGREEMENT. This Agreement constitutes the final written
expression of all of the agreements between the parties with respect to the
subject matter hereof, supersedes all understandings and negotiations concerning
the matters specified herein. No addition to or modification of any provision of
this Agreement shall be binding upon any party unless made in writing and signed
by all parties.
10.4 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida as such laws are applied by
Florida courts to agreements entered into and to be performed in Florida by and
between residents of Florida.
10.5 HEADINGS. Headings of the Sections of this Agreement are for the
convenience of the parties only, and shall be given no substantive or
interpretive effect whatsoever.
10.6 SEVERABILITY. If for any reason whatsoever, any one or more of the
provisions of this Agreement shall be held or deemed to be inoperative,
unenforceable or invalid as applied to any particular case or in all cases, such
circumstances shall not have the effect of rendering such provision invalid in
any other case or of rendering any of the other provisions of this Agreement
inoperative, unenforceable or invalid.
10.7 ASSIGNABILITY. Except as specifically provided herein, neither this
Agreement nor any of the parties' rights hereunder shall be assignable by any
party hereto without the prior written consent of the other parties hereto.
10.8 ARBITRATION. Any controversy or claim arising out of or relating to
this Agreement, or its breach which is not settled between the parties, shall be
settled by arbitration in accordance with the then governing rules of the
American Arbitration Association, with proceedings to take place in Miami,
Florida. Judgment upon any arbitration award may be entered and enforced in any
court of competent jurisdiction. An arbitration award may cover all costs, legal
fees and other charges reasonably incurred by the prevailing party in such
proceedings.
10.9 REMEDIES. Subject to the election and waiver of remedies under
Section 3.2(b) the parties hereto shall be entitled to enforce their rights
under this Agreement specifically, to recover damages by reason of any breach of
any provision hereof, and to exercise all other rights existing in their favor.
VLW and CEA II, Ltd. agree and acknowledge that money damages may not be an
adequate remedy for any breach of the provisions of this Agreement and that
either of them may apply to any court of law or equity of competent jurisdiction
for specific performance and/or injunctive relief in order to enforce or prevent
any violation of the provisions of this Agreement, notwithstanding the
provisions hereof requiring arbitration of other controversies or claims
hereunder.
10.10 COSTS AND EXPENSES. If any legal action or other proceeding is
brought for the enforcement of this Agreement, or because of a dispute or
alleged breach or default in connection with any of the provisions of this
Agreement, the successful or prevailing party shall be entitled to recover
reasonable attorney's fees, expenses, and other costs incurred in that action or
proceeding, at both trial and appellate levels.
Balance of This Page
Intentionally Left Blank
IN WITNESS WHEREOF, this Irrevocable Proxy, Right of Refusal and
Tag-Along Agreement has been executed as of the day and year first above
written.
VENTURE LW CORPORATION
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇, III
--------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇, III
Title: President
--------------------------------
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇, III
--------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇, III, individually
CEA INVESTORS PARTNERSHIP II, LTD.
By: CEA Investors, Inc.,
general partner
By: /s/ T.W. CARDY
--------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
Title: Vice President
-------------------------
The undersigned hereby acknowledges and agrees to be bound by the provisions of
Section 5 and Section 6 of this Agreement and any other reference to it in the
Agreement.
STARNET/CEA II Partners
a Delaware general partnership
By: CEA INVESTORS PARTNERSHIP II,
LTD., general partner
By: CEA INVESTORS, INC. its
general partner
By: /s/ T.W. CARDY
--------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
Title: Vice President
--------------------------
By: STARNET INTERACTIVE
ENTERTAINMENT, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------
Title: President
----------------------
EXHIBIT A
IRREVOCABLE PROXY
The undersigned stockholder of Video Jukebox Network, Inc., a Florida
corporation (the "Company"), hereby irrevocably appoints ___________________
_______________ (the "Proxy"), a designee of CEA Investors
Partnership II, Ltd., a limited partnership organized under the State of
Florida, the attorney and proxy of the undersigned, with full power of
substitution, to vote in such manner as each such attorney and proxy of his
substitute shall in his sole discretion deem proper, and otherwise to act with
respect to all the shares of Common Stock, par value $.001 per share, of the
Company (the "Common Stock") which are (a) owned of record by the undersigned,
(b) beneficially owned by the undersigned where the record owner thereof has
agreed to, or is required to, permit the undersigned to exercise any voting or
other stockholder rights, with respect to such shares, or (c) subject to a proxy
in favor of the undersigned which permits the undersigned to designate another
person or substitute to exercise such proxy rights (collectively, the "Voting
Shares"). The attorney and proxy so appointed and designated is specifically
granted the rights and authorizations:
(a) to attend any and all meetings of the stockholders of the
Company in the name, place and stead of the undersigned with respect to any or
all of the Voting Shares, including the right to present such shares to be
counted as attending the meeting by proxy for purposes of establishing a quorum,
or the right to withhold such Shares in whole or in part from attendance at any
such meeting;
(b) to cast such votes at any meeting of the stockholders and
any adjournment thereof as shall be entitled to be cast by the holders of the
Voting Shares in such manner as the Proxy shall, in its sole discretion,
determine, or to withhold such Shares in whole or in part from voting at any
time or for any reason;
(c) to execute any documents required or advisable, in the sole
discretion of the Proxy, to be executed by the holder of the Voting Shares,
including the call of any special meeting of the stockholders, waiver of notice
of any meeting of the stockholders, written consents of stockholders, whether
unanimous or otherwise, ballots, attendance records or any other similar
document; and
(d) to do any or all of the foregoing on behalf of the holder of
the Voting Shares to the same effect as if such holder had taken such actions
directly, notwithstanding any actual or alleged conflict of interest on the part
of any holder of the Voting Shares or of CEA II, Ltd. or the Proxy or any of
their respective affiliates. As used herein, the "holder of the Voting Shares"
shall mean the record or beneficial holder of such shares, as the case may be,
or any other person, in each case who or which is the person entitled or
permitted to exercise the voting rights or other stockholder rights, as
applicable, with respect to the Voting Shares involved.
This Irrevocable Proxy is subject to all the terms and conditions of that
certain Irrevocable Proxy, Right of Refusal and Tag-Along Agreement between the
undersigned and CEA Investors Partnership II, Ltd., dated as of August 27, 1993
(the "Agreement"), and shall terminate in accordance with that document. The
terms and conditions of the Agreement shall be binding on the Proxy, its
successors and permitted assigns.
The officer or representative of the undersigned executing this instrument
certifies that he/she is authorized to execute this instrument on behalf of the
undersigned stockholder of the Company, and will provide evidence of such
authorization upon request.
Dated:
--------------------
VENTURE LW CORPORATION
By:
--------------------------------
Name:
---------------------------
Title:
--------------------------
-----------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇, III
IRREVOCABLE PROXY
The undersigned stockholder of VIDEO JUKEBOX NETWORK, INC., a Florida
corporation (the "Company"), hereby irrevocably appoints _____________________
(the "Proxy"), a designee of CEA Investors Partnership II, Ltd., a limited
partnership organized under the laws of the State of Florida, the attorney and
proxy of the undersigned, with full power of substitution, to the extent
permitted under the Agreement (defined herein), to vote in such manner as each
such attorney and proxy of his substitute shall in his sole discretion deem
proper, and otherwise to act with respect to the 697,067 shares of Common Stock,
par value $.001 per share, of the Company (the "Common Stock") which are (a)
owned of record by the undersigned, or (b) beneficially owned by the undersigned
and held of record by VJN Partners, a dissolved Florida general partnership, and
with respect to any other shares of the Company's Common Stock hereafter
acquired by the undersigned in respect of any of such shares, including any
capital stock of the Company or subsidiaries or affiliated companies acquired by
operation of law, such as by merger, or consolidation or spin-off; or by reason
of any stock split, reclassification, share exchange or other reconstitution of
the outstanding capital stock of the Company (all of which shares, however
acquired, are herein referred to as the "Voting Shares"). The attorney and proxy
so appointed and designated is specifically granted the rights and
authorizations:
(a) To attend any and all meetings of the stockholders of the Company
in the name, place and stead of the undersigned with respect to any or all of
the Voting Shares, including the right to present such shares to be counted as
attending the meeting by proxy for purposes of establishing a quorum, or the
right to withhold such Shares in whole or in part from attendance at any such
meeting;
(b) To cast such votes at any meeting of the stockholders and any
adjournment thereof as shall be entitled to be cast by the holders of the Voting
Shares in such manner as the Proxy shall, in its sole discretion, determine, or
to withhold such Shares in whole or in part from voting at any time or for any
reason;
(c) To execute any documents required or advisable, in the sole
discretion of the Proxy, to be executed by the holder of the Voting Shares,
including the call of any special meeting of the stockholders, waiver of notice
of any meeting of the stockholders, written consents of stockholders, whether
unanimous or otherwise, ballots, attendance records or any other similar
document; and
(d) To do any or all of the foregoing on behalf of the holder of the
Voting Shares to the same effect as if such holder had taken such actions
directly, notwithstanding any actual or alleged conflict of interest on the part
of any holder of the Voting Shares or of CEA Investors
Partnership II, Ltd. or the Proxy of any of their respective affiliates. As used
herein, the "holder of the Voting Shares" shall mean the record or beneficial
holder of such shares, as the case may be, or any other person, in each case who
or which is the person entitled or permitted to exercise the voting rights or
other stockholder rights as described above, with respect to the Voting Shares
involved.
This Irrevocable Proxy is subject to all the terms and conditions of
that certain Irrevocable Proxy, Right of Refusal and Tag-Along Agreement between
the undersigned and CEA Investors Partnership II, Ltd., dated as of August 27,
1993 (the "Agreement"), and shall terminate in accordance with that document.
The terms and conditions of the Agreement shall be binding on the Proxy, its
successors and permitted assigns.
Date executed:
------------------------
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇, III