EXECUTION COPY
CME SHAREHOLDERS' AGREEMENT
CME SHAREHOLDERS' AGREEMENT dated as of March 29, 1999, among
SBS Broadcasting S.A., a Luxembourg corporation ("SBS"), and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
("RSL"), RSL Investments Corporation, RSL Capital LLC and Duna Investments, Inc.
(collectively, the "Shareholders").
WHEREAS, the Shareholders desire that Central European Media
Enterprises Ltd., a Bermuda corporation (the "Company"), and SBS enter into a
Reorganization Agreement dated as of the date hereof (as the same may be amended
from time to time, the "Reorganization Agreement"), which provides, among other
things, for the sale by the Company to SBS of all the assets, business,
properties and rights of the Company, and the assumption by SBS of any and all
liabilities of the Company, in exchange for shares of Common Stock, par value
$1.50 per share, of SBS ("SBS Common Stock"), and the subsequent liquidation of
the Company, all upon the terms and conditions set forth in the Reorganization
Agreement; and
WHEREAS, the Shareholders are executing this Agreement as an
inducement to the Company and SBS to execute and deliver the Reorganization
Agreement.
NOW THEREFORE, in consideration of the execution and delivery
by the Company and SBS of the Reorganization Agreement and the mutual covenants,
conditions and agreements contained therein and herein, the parties hereto agree
as follows:
SECTION 1. Defined Terms. Terms used herein and not otherwise
defined shall have the meanings ascribed to them in the Reorganization
Agreement.
SECTION 2. Representations and Warranties. Each of the
Shareholders represents and warrants to SBS as follows:
(a) Such Shareholder is the record and beneficial owner of the
number of Class A Shares and Class B Shares (together with any shares
of Seller Capital Stock which such Shareholder acquires after the date
hereof, the "Shares"), as set forth on Exhibit A hereto (which Exhibit
shall be amended after the date hereof to include any shares of
Seller Capital Stock which such Shareholder acquires after the date
hereof). Except for such number of Shares and except for Shares,
issuable in connection with any Seller Stock Options or Seller Warrants
outstanding as of the date hereof, which are separately set forth on
Exhibit A hereto, such Shareholder does not own, beneficially or of
record, any shares of Seller Capital Stock.
(b) Such Shareholder has the authority to execute, deliver and
perform this Agreement without the necessity of obtaining any third
party consent, approval, authorization or waiver, or giving of any
notice or otherwise, except for such consents as have been obtained,
are unconditional and are in full force and effect.
(c) This Agreement has been duly executed and delivered by
such Shareholder and, assuming due execution and delivery thereof by
Luxco, constitutes the legal, valid, and binding obligation of such
Shareholder enforceable against such Shareholder in accordance with its
terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and by general
principles of equity (whether enforcement is sought by proceedings in
equity or at law).
(d) The execution, delivery, and performance of this Agreement
by such Shareholder will not (i) result in the breach of or constitute
a default under any contract to which such Shareholder is subject, (ii)
constitute a violation of any law applicable or relating to such
Shareholder or (iii) result in the creation of any Lien.
(e) Except for this Agreement, there are no voting trusts or
other agreements or understandings, including, without limitation, any
proxies, in effect governing the voting of the Shares beneficially
owned by such Shareholder.
(f) Such Shareholder does not hold, and has not issued, any
proxies, or securities convertible into or exchangeable for or any
options, warrants, or other rights to purchase or subscribe for any
shares of Seller Capital Stock.
(g) The Shares and the certificates representing such Shares
are now and until the consummation of the Liquidation will be held by
such Shareholder, or by a nominee or
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custodian for the benefit of such Shareholder, free and clear of all
Liens, proxies, voting trusts or agreements, understandings or
arrangements or any other encumbrances whatsoever other than as created
by this Agreement.
(h) Such Shareholder understands and acknowledges that SBS is
entering into the Reorganization Agreement in reliance upon such
Shareholder's execution and delivery of this Agreement.
SECTION 3. Voting Agreement. Each Shareholder agrees with, and
covenants to, SBS as follows:
(a) At each Seller Shareholders' Meeting or at any adjournment
thereof or in any other circumstances upon which a vote, consent or
other approval will be held or solicited with respect to any of the
transactions contemplated by the Reorganization Agreement, including,
without limitation, the sale and the Liquidation, such Shareholder
shall vote (or cause to be voted) or shall consent, execute a consent
or cause to be executed a consent in respect of the Shares in favor of
each of the transactions contemplated by the Reorganization Agreement.
(b) At any meeting of shareholders of the Company or at any
adjournment thereof or in any other circumstances upon which their
vote, consent or other approval is sought while the Reorganization
Agreement remains in effect, such Shareholder shall vote (or cause to
be voted) the Shares against (i) any Acquisition Proposal or any action
which is a component of any Acquisition Proposal or would be a
component of an Acquisition Proposal if it were contained in a
proposal, or (ii) any other matter submitted to the shareholders of the
Company, which matter would in any manner partially or wholly prevent
or materially impede, interfere with or delay any of the transactions
contemplated by the Reorganization Agreement, as determined in good
faith by SBS (any of the foregoing, a "Competing Proposal").
(c) Each Shareholder represents and warrants to the SBS that
any proxies heretofore given in respect of the Shares are not
irrevocable, and that any such proxies are hereby revoked, to the
extent in conflict with this Agreement.
SECTION 4. Covenants of the Shareholder.
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(a) Each Shareholder agrees with, and covenants to, SBS that
such Shareholder shall not, prior to the final dissolution of the Company
pursuant to the Plan of Liquidation and the BCA, (i) sell, assign, pledge,
transfer or otherwise dispose of (including without limitation any indirect
Transfer effected through the Transfer of any equity interest in a Shareholder
which is not a natural person,a "Transfer") or consent to any Transfer of, any
or all the Shares or any interest therein, (ii) grant any proxy,
power-of-attorney or other authorization in or with respect to such Shares,
except under or in accordance or not in conflict with this Agreement, or (iii)
deposit such Shares into a voting trust, enter into a voting agreement or
arrangement with respect to such Shares or otherwise limit such Shareholder's
power to vote his or its Shares in a manner that conflicts with this Agreement.
RSL has indicated to SBS his intention to purchase shares of SBS Common Stock on
or prior to the Closing Date, which purchases may be in an aggregate amount of
up to 1,000,000 shares, and SBS has indicated to RSL its approval of any such
purchases.
(b) Each Shareholder agrees that, on or prior to the Closing
Date, it will not (i) initiate or solicit, directly or indirectly, any inquiries
or the making of any Acquisition Proposal or (ii) engage in negotiations or
discussions with, or furnish any information or data to, any third party
relating to an Acquisition Proposal.
(c) Each Shareholder hereby irrevocably grants to, and
appoints, SBS and ▇▇▇▇▇ ▇▇▇▇▇, in his capacity as Chief Executive Officer of
SBS, and any individual who shall hereafter succeed to any such office of SBS,
and each of them individually, such Shareholder's proxy and attorney-in-fact
(with full power of substitution), for and in the name, place and stead of such
Shareholder, to vote all Shares for which it has or shares the power to vote, or
grant a consent or approval in respect of such Shares in any manner permitted by
the BCA, (i) in favor of any of the transactions contemplated by the
Reorganization Agreement and (ii) against any Competing Transaction. The
foregoing proxy shall terminate automatically upon the termination of this
Agreement under Section 8. It is understood that such Shareholder retains its
voting rights except to the extent specifically set forth in this Section 4(c).
Each Shareholder hereby affirms that the irrevocable proxy set forth in this
Section 4(c) is given in connection with the execution of the Reorganization
Agreement, and that such irrevocable proxy is given to secure the performance of
the duties of such Shareholder
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under this Agreement. Each Shareholder hereby further affirms that the
irrevocable proxy is coupled with an interest and may under no circumstances be
revoked. Each Shareholder hereby ratifies and confirms all that such irrevocable
proxy may lawfully do or cause to be done by virtue hereof.
(d) RSL hereby unconditionally and irrevocably guarantees to
SBS the due, prompt and faithful performance of, and compliance with, all
agreements and obligations of the other Shareholders in this Agreement.
(e) RSL hereby agrees that, effective immediately prior to the
Closing Date, the December Purchase Agreement shall be terminated without
liability to the Company or Subsidiary of the Company party thereto. Each
Shareholder agrees to execute and deliver to SBS an "affiliate" letter
contemplated by Section 6.12 of the Reorganization Agreement.
(f) On and after the Closing Date, RSL shall use all
reasonable efforts to cause the Company to consummate the Liquidation in
accordance with the Plan of Liquidation and the BCA.
(g) During the period commencing on the Closing Date and
ending on the earlier of (i) the second anniversary of the Closing Date and (ii)
180 days after the date RSL is no longer a director of SBS, each Shareholder
agrees not to Transfer any shares of SBS Common Stock acquired by such
Shareholder pursuant to the Reorganization Agreement, without the prior written
consent of the Board of Directors of SBS, except (x) in connection with any
merger, business combination or similar transaction to which SBS may be a party
or (y) in the case of RSL, for any Transfers to another Shareholder or to an
"Affiliate" of the type described in clause (ii)(x) of the definition thereof
set forth below, provided such Affiliate agrees in writing to be bound by the
provisions of this Agreement applicable to RSL with respect to the shares so
Transferred.
(h) During the period ending on the fifth anniversary of the
Closing Date, (i) each Shareholder shall give SBS at least five business days'
prior written notice of any proposed Transfer of any shares of SBS Common Stock
beneficially owned by such Shareholder and (ii) such Shareholder shall not, and
shall cause his or its Affiliates not to, without the prior written consent of
the Board of Directors of SBS,
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(A) acquire beneficial ownership (as defined in Rule 13d-3 of
the Exchange Act) of any SBS Common Stock, if after giving effect to
such acquisition, such persons would beneficially own, in the
aggregate, 20% or more of the SBS Common Stock; provided, that, (x) the
foregoing covenant shall not be deemed to be breached as a result of
any repurchase by SBS of any of its outstanding shares of SBS Common
Stock and (y) nothing contained herein shall be deemed a waiver or
other approval on the part of the Board of Directors of SBS with
respect to the applicability, at any time after the Closing Date, of
the provisions of Article 6 of the Statuts Coordonnes of SBS as in
effect any time;
(B) directly or indirectly, participate in, encourage or
support any solicitation of proxies in opposition to any proposal made
by the Board of Directors of SBS in connection with any shareholders'
meeting of SBS; or
(C) sell to any person or group of related persons in a
privately negotiated transaction (or series of related privately
negotiated transactions) shares of SBS Common Stock representing, at
the time of any such proposed sale, 5% or more of the outstanding
shares of SBS Common Stock.
As used herein, the term "Affiliate" shall mean (i) when used with reference to
a specified Person, any Person that directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control with the
specified Person, and (ii) when used with respect to RSL, shall also include (x)
his spouse or any of his minor children and (y) any Person in which any one or
more of RSL, his spouse or his minor children (individually or collectively)
beneficially own, directly or indirectly, more than 25% of the voting stock. The
term "control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether through ownership of voting securities, by contract or otherwise. The
term "beneficially own" shall have the meaning set forth in Rule 13d-3 of the
Exchange Act.
(i) SBS hereby agrees that, following the Closing Date, if SBS
fails to nominate for election to the Board of Directors of SBS (at the time the
SBS directors are nominated for election to such Board of Directors) (A) during
such time as RSL and his Affiliates beneficially own, in the aggregate, at least
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10% of the outstanding shares of SBS Common Stock, two persons designated by RSL
(who if other than any of the four persons initially to be appointed by the
Company to the SBS Board of Directors pursuant to the Reorganization Agreement,
shall be persons who are reasonably acceptable to SBS, provided that, unless
consented to in writing by SBS, no such designee shall be affiliated with or
employed by any competitor of SBS or any of its Subsidiaries or any other Person
which has (or any affiliate of which has) a material business relationship with
SBS or any of its Subsidiaries (a "Disqualified Person")), and (B) during such
time as RSL and his Affiliates beneficially own, in the aggregate, at least 5%
of the outstanding shares of SBS Common Stock, one person designated by RSL (who
if other than any of the four persons initially to be appointed by the Company
to the SBS Board of Directors pursuant to the Reorganization Agreement, shall be
a person who is reasonably acceptable to SBS and, unless consented to in writing
by SBS, is not otherwise a Disqualified Person), then the provisions of Sections
4(g) and 4(h) shall terminate. In respect of any election of directors of SBS
for which SBS has nominated for election to its Board of Directors the
designee(s) of RSL as set forth above, RSL agrees to vote, and to cause his
Affiliates to vote, any shares of SBS Common Stock beneficially owned by them in
favor of any other designees to the Board of Directors of SBS which are
nominated by SBS.
(j) Each Shareholder agrees that each certificate representing
the shares of SBS Common Stock distributed to them pursuant to the
Reorganization Agreement shall be stamped or otherwise imprinted with a legend
substantially in the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
RESTRICTIONS ON TRANSFER AND TO THE OTHER TERMS SET FORTH IN
THAT CERTAIN SELLER SHAREHOLDERS' AGREEMENT, DATED AS OF MARCH
29, 1999, BETWEEN SBS BROADCASTING S.A. AND CERTAIN
SHAREHOLDERS PARTY THERETO, A COPY OF WHICH AGREEMENT HAS BEEN
FILED WITH THE SECRETARY OF SBS BROADCASTING S.A. AND IS
AVAILABLE UPON REQUEST."
SECTION 5. Certain Events. In the event of any stock split,
stock dividend, merger, reorganization, recapitalization or other change in the
capital structure of the Company affecting the Class A Shares or Class B Shares,
or the acquisition of additional Class A Shares or Class B Shares or other
voting securities of the Company by such Shareholder, the number of
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Shares set forth in Section 2(a) hereof shall be adjusted appropriately and this
Agreement and the obligations hereunder shall attach to any additional Class A
Shares or Class B Shares or other voting securities of the Company issued to or
acquired by such Shareholder.
SECTION 6. Shareholder Capacity. No person executing this
Agreement who is or becomes a director of the Company makes any agreement or
understanding herein in his or her capacity as such director. Each Shareholder
signs solely in such Shareholder's capacity as the record and beneficial owner
of the Shares.
SECTION 7. Further Assurances. Each Shareholder shall, upon
request of SBS, execute and deliver any additional documents and take such
further actions as may reasonably be deemed by SBS to be necessary or desirable
to carry out the provisions hereof.
SECTION 8. Termination. This Agreement, and all rights and
obligations of the parties hereunder, shall terminate upon the date on which the
Reorganization Agreement is terminated in accordance with its terms, except that
no Shareholder shall be relieved of any liability for breach of this Agreement
by such Shareholder prior to such termination.
SECTION 9. Notices. All notices, requests, claims, demands and
other communications under this Agreement shall be sufficiently given if sent by
registered or certified mail, postage prepaid, or overnight air courier service,
or telecopy or facsimile transmission (with hard copy to follow) to the parties
at the following addresses (or at such other address for a party as shall be
specified by like notice): (i) if to SBS, to the address set forth in Section
9.2 of the Reorganization Agreement; and (ii) if to any Shareholder, to the
address set forth opposite such Shareholder's name on Exhibit A hereto.
SECTION 10. Headings. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 11. Counterparts; Effectiveness. This Agreement may be
executed in two or more counterparts, all of which shall be considered one and
the same agreement and shall become effective as to any Shareholder when one or
more counterparts have been signed by SBS and such Shareholder and delivered to
SBS and such Shareholder.
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SECTION 12. Entire Agreement. This Agreement (including the
documents and instruments referred to herein) constitutes the entire agreement,
and supersedes all prior agreements and understandings, both written and oral,
among the parties with respect to the subject matter hereof.
SECTION 13. Governing Law. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of New York, without
regard to any applicable conflicts of law principles of such State.
SECTION 14. Successors and Assigns. Neither this Agreement nor
any of the rights, interests or obligations under this Agreement shall be
assigned, in whole or in part, by any of the parties without the prior written
consent of the other parties. Any assignment in violation of the foregoing shall
be void.
SECTION 15. Enforcement. Each Shareholder agrees that
irreparable damage would occur and that SBS would not have any adequate remedy
at law in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that SBS shall be entitled to an injunction or injunctions
to prevent breaches by the other parties hereto of this Agreement and to enforce
specifically the terms and provisions of this Agreement in any court of the
United States located in the State of New York or in New York State court, this
being in addition to any other remedy to which SBS is entitled at law or in
equity. In addition, each Shareholder (i) consents to submit such party to the
personal jurisdiction of any Federal court located in the State of New York or
any New York State court in the event any dispute arises out of this Agreement
or any of the transactions contemplated hereby and (ii) agrees that such
Shareholder will not attempt to deny or defeat such personal jurisdiction by
motion or other request for leave from any such court.
SECTION 16. Severability. If any term or provision hereof, or
the application thereof to any circumstance, shall, to any extent, be held by a
court of competent jurisdiction to be invalid or unenforceable with respect to
such jurisdiction, and only to such extent, and the remainder of the terms and
provisions hereof, and the application thereof to any other circumstance, shall
remain in full force and effect, shall not in any way be affected, impaired or
invalidated, and shall be enforced to the fullest extent permitted by law, and
the parties
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hereto shall reasonably negotiate in good faith a substitute term or provision
that comes as close as possible to the invalidated or unenforceable term or
provision, and that puts each party in a position as nearly comparable as
possible to the position each such party would have been in but for the finding
of invalidity or unenforceability, while remaining valid and enforceable.
SECTION 17. Amendment; Modification; Waiver. No amendment,
modification or waiver in respect of this Agreement shall be effective against
any party unless it shall be in writing and signed by such party.
IN WITNESS WHEREOF, SBS and the Shareholders have caused this Agreement to be
duly executed and delivered as of the date first written above.
SBS BROADCASTING S.A.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chairman of the Board and
Chief Executive Officer
SHAREHOLDERS:
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
RSL INVESTMENTS CORPORATION
RSL CAPITAL LLC
DUNA INVESTMENTS, INC.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Authorized Signatory
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