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STOCK PURCHASE AGREEMENT
between
CENTRAL EUROPEAN MEDIA ENTERPRISES LTD.
and
RSL CAPITAL LLC
dated as of December 3, 1998
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of December 3, 1998, by and
among, RSL Capital LLC, a New York limited liability company (the "Buyer"), and
Central European Media Enterprises Ltd., a company organized under the laws of
Bermuda (the "Company").
RECITALS:
WHEREAS, Xxxxxx X. Xxxxxx, the non-executive Chairman of the
Company, owns all the capital stock of and is the Chairman of the Buyer;
WHEREAS, the Company has requested to the Buyer to commit to
subscribe for 1,515,000 newly issued shares of the Company's Class B Common
Stock, $.01 par value per share ("Class B Shares"), at a price of $15 per share
(subject to adjustment as provided herein), and the Buyer has agreed to make
such a commitment on the terms and subject to the conditions set forth in this
Agreement; and
WHEREAS, all capitalized terms used herein without definition
are used as defined in Section 8;
NOW THEREFORE, and in consideration of the foregoing and the
covenants and conditions hereof, the Company and the Buyer (the "Parties") agree
as follows:
AGREEMENT:
SECTION 1
SUBSCRIPTION AND ISSUANCE OF CLASS B SHARES
1.1 Commitment. Subject to the terms and conditions of this
Agreement, upon written notice by the Company given on or prior to December 31,
1998 (the "Expiration Date"), the Buyer agrees to subscribe for 1,515,000 Class
B Shares, for a subscription price per share of $15.00 (the "Per Share Price"),
subject to adjustment as set forth in Section 1.4, and an aggregate subscription
price of $22,725,000 (the "Subscription Price").
1.2 Commitment Fee. In consideration of the Buyer's
willingness to agree to subscribe for the Class B Shares, the Company shall pay
the Buyer a sum of $227,250 (the "Commitment Fee"), payable in cash on the
earlier of the Closing Date and January 4, 1999.
1.3 Exercise of Commitment; Issuance and Sale of Shares. (a)
The Company may exercise the commitment set forth in Section 1.1 by delivering
to the Buyer a written notice in the form set forth in Exhibit A hereto (an
"Exercise Notice") to such effect on or prior to the Expiration Date.
(b) The closing of the subscription and purchase of the Class
B Shares (the "Closing") shall take place on the tenth Business Day following
the receipt by Buyer of the Exercise Notice (the "Closing Date") at 10:00 a.m.
at the offices of Debevoise & Xxxxxxxx, 875 Third Avenue, New York, New York, or
at such other time and place as the Parties shall agree.
(c) At the Closing, subject to the satisfaction of the
conditions set forth in Section 2, (i) the Buyer shall pay or cause to be paid
the Subscription Price to the Company by wire transfer of immediately available
funds to the account of the Company designated at least two Business Days prior
to the Closing Date and (ii) concurrently therewith the Company shall issue and
deliver to the Buyer (or to an Affiliate of the Buyer designated by the Buyer no
less than two Business Days prior to the Closing Date) one or more certificates
(as shall be designated by the Buyer) representing 1,515,000 Class B Shares, and
shall take all such other actions as may be required to vest legal title to the
Class B Shares in the Buyer (or such Affiliate), free and clear of all Liens,
restrictions on sales or pre-emptive rights.
1.4 Post-Closing Adjustment. (a) Subject to paragraphs (b) and
(c) below, on November 19, 1999 (the "Adjustment Date"), the Company will issue
to the Buyer (or to an Affiliate of the Buyer designated in writing by the Buyer
no less than two Business Days prior to the Adjustment Date), for no additional
consideration, such number of additional Class B Shares that, when added to the
1,515,000 Class B Shares issued to the Buyer on the Closing Date, will result in
the average Per Share Price for all Class B Shares issued to the Buyer (and any
Affiliate of the Buyer) pursuant to this Agreement being equal to the average of
the last reported trading price of the Company's Class A Common Stock, $.01 par
value per share, (the "Class A Shares") on NASDAQ (the "Final Trading Price")
for each NASDAQ trading day during the period from and including November 13,
1998 to and including November 12, 1999 (the "Measurement Period").
(b) If the last reported trading price of the Class A Shares
on NASDAQ equals or exceeds $15.00 for twenty or more consecutive NASDAQ trading
days during the Measurement Period, then there will be no adjustment to the Per
Share Price and no additional Class B Shares will be issued pursuant to
paragraph (a) of this Section 1.4.
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(c) The maximum number of additional Class B Shares issuable
to the Buyer (or an Affiliate of the Buyer) pursuant to this Section 1.4 shall
be 757,500 (corresponding to a Per Share Price of $10.00).
(d) In the event that any additional Class B Shares are issued
to the Buyer (or an Affiliate of the Buyer) pursuant to this Section 1.4, the
Company will deliver to the Buyer (or its Affiliate), on the Adjustment Date,
one or more certificates (as instructed by the Buyer) representing additional
Class B Shares and take all such other actions as may be required to vest legal
title to such additional Class B Shares in the Buyer (or its Affiliate), free
and clear of all Liens, restrictions on sales or pre-emptive rights.
1.5 Legend. (a) Except as provided in Section 1.5(b), each
certificate for Class B Shares issued to the Buyer shall be stamped or otherwise
imprinted with a legend in substantially the following form:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT
OF 1933, AS AMENDED. NEITHER THESE SECURITIES NOR ANY INTEREST OR
PARTICIPATION THEREIN MAY BE SOLD, ASSIGNED, PLEDGED, HYPOTHECATED,
ENCUMBERED OR IN ANY OTHER MANNER TRANSFERRED OR DISPOSED OF EXCEPT IN
COMPLIANCE WITH THE U.S. SECURITIES ACT OF 1933, AS AMENDED, AND THE
APPLICABLE RULES AND REGULATIONS THEREUNDER.
(b) The legend requirements of Section 1.5(a) shall terminate
(i) when and so long as the Class B Shares in question shall have been
effectively registered under the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder (the "Securities Act") and disposed
of pursuant thereto or (ii) when the Company shall have received an opinion of
counsel reasonably satisfactory to it that such legend is not required in order
to ensure compliance with the Securities Act.
SECTION 2
CONDITIONS
The obligations of the Buyer to consummate the transactions
contemplated hereby and to pay the Subscription Price to the Company shall be
subject to the fulfillment on or prior to the Closing Date of the following
additional conditions, which the Company agrees to use reasonable efforts to
cause to be fulfilled:
2.1 Representations, Performance. (a) The representations and
warranties of the Company contained in Section 3 shall be true and correct in
all material respects at
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and as of the date hereof, and shall be repeated and shall be true and correct
in all material respects on and as of the Closing Date with the same effect as
though made on and as of the Closing Date.
(b) The Company shall have in all material respects duly
performed and complied with all agreements, covenants and conditions required by
this Agreement to be performed or complied with by the Company prior to or on
the Closing Date.
(c) The Company shall have delivered to the Buyer a
certificate in the form set forth in Exhibit B hereto, dated the Closing Date
and signed by a duly authorized officer of the Company.
2.2 Delivery of Shares. At the Closing, the Company shall have
delivered all of the certificates for the Class B Shares as provided in Section
1.3 hereof.
2.3 Consents. All Consents of any Governmental Authority
required to be made or obtained by the Company in connection with the execution
and delivery of this Agreement or the consummation of the transactions
contemplated hereby shall have been made or obtained.
2.4 Injunction, etc. The consummation of the transactions
contemplated hereby shall not have been restrained, enjoined or otherwise
prohibited or made illegal by any applicable Law, including any order,
injunction, decree or judgment of any court or other Governmental Authority; and
no such Law that would have such an effect shall have been promulgated, entered,
issued or determined by any court or other Governmental Authority to be
applicable to this Agreement. No action or proceeding shall be pending or
threatened by any Governmental Authority or other Person on the Closing Date
before any court or other Governmental Authority to restrain, enjoin or
otherwise prevent the consummation of the transactions contemplated hereby, or
to recover any material damages or obtain other material relief as a result of
such transactions, or that otherwise relates to the application of any such Law.
2.5 No Material Adverse Effect. No event, occurrence, fact,
condition, change, development or effect shall exist or have occurred or come to
exist or been threatened since September 30, 1998 that, individually or in the
aggregate, has had or resulted in, or could reasonably be expected to become or
result in, a Material Adverse Effect.
2.6 Opinion of Counsel. The Buyer shall have received an
opinion, addressed to it and dated the Closing Date, from counsel to the
Company, in the form set forth in Exhibit C hereto.
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2.7 Corporate and Other Proceedings. All corporate proceedings
of the Company in connection with the transactions contemplated by this
Agreement, and all documents and instruments incident thereto, shall be
satisfactory in form and substance to the Buyer and its counsel, and the Buyer
and its counsel shall have received all such docu ments and instruments, or
copies thereof, certified if requested, as may be reasonably requested.
2.8 Change of Control. No Change of Control of the Company
shall have occurred.
2.9 Buyer Expenses. The Company shall have reimbursed the
Buyer for its reasonable out-of-pocket expenses referred to in Section 9.4
hereof.
2.10 Commitment Fee. The Company shall have paid the
Commitment Fee as provided in Section 1.2 hereof.
SECTION 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Buyer, as of the
date hereof and as of the Closing Date, as follows:
3.1 Corporate Existence and Power. The Company is a company
duly organized, validly existing and in good standing under the laws of Bermuda
and has all corporate, partnership or other applicable powers and all material
governmental licenses, authorizations, consents, and approvals required to carry
on its business as now conducted.
3.2 Corporate and Governmental Authorization; No
Contravention. The execution, delivery and performance by the Company of this
Agreement is within the Company's corporate powers, have been duly authorized by
all necessary corporate action, require no action by or in respect of, or filing
with, any governmental body, agency or official and do not contravene, or
constitute a default under, any provision of applicable law or regulation or of
the organizational documents of the Company or of any agreement, judgment,
injunction, order, decree or other instrument binding upon the Company or result
in the creation or imposition of any Lien on any asset of the Company or any of
its Subsidiaries.
3.3 Title to Shares, Capitalization, etc. (a) Upon delivery of
the Class B Shares as provided for in Section 1.3 and Section 1.4, (i) such
Class B Shares will be duly authorized and validly issued, (ii) the Buyer (or
its Affiliate, as the case may be) will
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acquire good and valid title to all such Class B Shares, free and clear of any
Lien other than any Lien created by the Buyer (or such Affiliate), and (iii)
such Class B Shares shall be fully paid and nonassessable.
(b) The authorized capital of the Company consists of (i)
100,000,000 Class A Shares, of which 18,070,789 are issued and outstanding, and
(ii) 15,000,000 Class B Shares, 6,062,329 of which are issued and outstanding
prior to the issuance contemplated by Section 1.3 hereof and 7,577,329 of which
will be issued and outstanding upon the consummation of such issuance. All of
the issued and outstanding Class A Shares and Class B Shares have been duly
authorized and validly issued, are fully paid and nonassessable.
(c) There are no preemptive or similar rights on the part of
any holders of any class of securities of the Company. Except for (i) this
Agreement, (ii) the options and warrants previously granted to the Buyer, (iii)
the options to purchase Class A Shares granted under the 1994 Amended and
Restated Stock Option Plan, (iv) the options to purchase Class A Shares granted
under the 1995 Amended and Restated Stock Option Plan, (v) the options to
purchase 32,500 Class A Shares granted to Xxxxxxx X. Xxxxxxxxx, and (vi) the
warrants to purchase 100,000 Class A Shares granted to each of MAWA Holding
N.V., Lavender Foundation and Staffordshire Corporation N.V., there are no
subscription, option, warrant, conversion or other rights, agreements,
commitments, arrangements or understandings of any kind obligating the Company
or any Subsidiary or any other Person, contingently or otherwise, to issue or
sell, or cause to be issued or sold, any Class A Shares or any securities
convertible into or exchangeable for any Class A Shares, and no authorization
therefor has been given. There are no outstanding contractual or other rights or
obligations to or of the Company or any Subsidiary or any other Person to
repurchase, redeem or otherwise acquire any outstanding shares or other equity
interests of the Company or any Subsidiary.
3.4 Binding Effect. This Agreement has been duly and validly
executed and delivered by the Company, and assuming the due authorization,
execution and delivery by the Buyer, constitutes the valid and binding
obligation of the Company enforceable against the Company in accordance with its
terms, except as such 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.
3.5 SEC Reports and Financial Statements. (a) The Company has
filed all required forms, reports and documents with the Securities Exchange
Commission (hereinafter collectively referred to as the "Company Reports")
required to be filed by it pursuant to the Securities Act and the Exchange Act
of 1934, as amended, and the rules and regulations promulgated thereunder (the
"Exchange Act"), all of which have
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complied in all material respects with all applicable requirements of the
Securities Act and the Exchange Act.
(b) None of the Company Reports, including, without
limitation, any financial statements or schedules included therein, at the time
filed, contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(c) The consolidated balance sheets and the related
consolidated statements of income, cash flow and shareholders' equity (including
without limitation the related notes thereto) of the Company and its
consolidated Subsidiaries included in the financial statements contained in the
Company's Annual Report on Form 10-K for the year ended December 31, 1997 (the
"Company 10-K") and in the Company's Quarterly Reports on Form 10-Q for the
quarters ended March 31, 1998, June 30, 1998 and September 30, 1998 (the
"Company 10-Qs"), present fairly the consolidated financial position of the
Company and its consolidated Subsidiaries as of their respective dates, and the
results of consolidated operations and cash flows for the periods then ended,
all in conformity with United States generally accepted accounting principles
applied on a consistent basis, except as otherwise noted therein and in the case
of unaudited financial statements subject to normal year-end audit adjustments,
and except for certain footnote disclosures required by United States generally
accepted accounting principles.
3.6 Absence of Undisclosed Liabilities. Except for liabilities
reflected or reserved against in the consolidated balance sheet of the Company
and its Subsidiaries as of September 30, 1998 or reflected in the notes thereto,
or as has been disclosed in the Company Reports, none of the Company and its
Subsidiaries has any liabilities or obligations (absolute or accrued or
contingent, whether accrued or unaccrued and whether due or to become due) other
than liabilities and obligations incurred in the ordinary course of business
since September 30, 1998 or liabilities or obligations which, individually or in
the aggregate, would not reasonably be expected to have a Material Adverse
Effect.
3.7 Litigation. There is no action, suit or proceeding pending
against, or to the knowledge of the Company threatened against or affecting, the
Company or any of its Subsidiaries before any court or arbitrator or any
governmental body, agency or official in which there is a reasonable probability
of an adverse decision that would have a Material Adverse Effect or which in any
manner draws into question the validity or enforceability of this Agreement.
3.8 Taxes. Each of the Company and its Subsidiaries has filed
or caused to be filed all income tax returns and all other material tax returns
which are required to
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be filed and has paid (i) all taxes shown to be due and payable on such returns
and (ii) all taxes shown to be due and payable on any assessments of which it
has received notice made against it or any of its property and all other taxes,
fees or other governmental charges imposed on it or any of its property and no
tax Lien has been filed, and no claim is being asserted, with respect to any
such tax, fee or other charge (other than any (x) taxes, fees or other charges
with respect to which the failure to pay, in the aggregate, would not have a
Material Adverse Effect or (y) taxes, fees or other charges the amount or
validity of which are currently being contested in good faith by appropriate
proceedings diligently conducted and with respect to which adequate reserves in
accordance with United Stated generally accepted accounting principles have been
maintained).
SECTION 4
REPRESENTATIONS AND WARRANTIES OF THE BUYER
4.1 Organization and Authorization. The Buyer is a limited
liability company duly organized, validly existing and in good standing under
the laws of New York and the execution, delivery and performance by the Buyer of
this Agreement are within the Buyer's limited liability company powers and have
been duly authorized by all necessary limited liability company action.
4.2 Binding Effect. This Agreement has been duly and validly
executed and delivered by the Buyer and, assuming the due authorization,
execution and delivery by the Company, constitutes the valid and binding
obligation of the Buyer enforceable against the Buyer in accordance with its
terms, except as such 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.
4.3 Purchase for Investment. The Buyer is purchasing the Class
B Shares solely for investment, with no present intention to resell such Class B
Shares. The Buyer hereby acknowledges that the Class B Shares have not been
registered pursuant to the Securities Act and may not be transferred in the
absence of such registration or an exemption therefrom under such Act.
SECTION 5
COVENANTS OF THE COMPANY
On and after the date hereof to the Closing Date (and in case
of Section 5.5, to the Adjustment Date), except as expressly permitted or
required by this Agreement:
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5.1 Conduct of Business. The Company will, and will cause each
Subsidiary to:
(a) carry on its business in, and only in, the ordinary course
of business consistent with its past practice;
(b) not increase any obligations of the Company or any
Subsidiary with respect to Indebtedness, prepay any accounts payable,
delay payment of any trade payables other than in the ordinary course
of business, or make any other cash payments other than in the ordinary
course of business consistent with its past practice;
(c) comply in all material respects with all Laws applicable
to it or any of its properties, assets or business;
(d) not merge or consolidate with, or agree to merge or
consolidate with, or purchase substantially all of the assets of, or
otherwise acquire, any business, business organization or division
thereof, or any other Person;
(e) promptly advise the Buyer in writing of any event,
occurrence, fact, condition, change, development or effect that,
individually or in the aggregate, could have or result in a Material
Adverse Effect or a breach of this Section 5.1; and
(f) not agree or otherwise commit to take any of the actions
described in the foregoing paragraphs (a) through (e).
5.2 Access and Information. The Company will give the Buyer
and its Representatives full access during reasonable business hours to all of
the Company's and its Subsidiaries' respective properties, assets, books,
contracts, commitments, reports and records, and furnish to them all such
documents, records and information and copies of any work papers relating
thereto as the Buyer shall from time to time reasonably request. The Company
will keep the Buyer generally informed as to the affairs of the Business.
5.3 Financial Statements and Reports. The Company will deliver
to Buyer:
(a) From the date hereof to and including the Closing Date,
monthly management reports in scope and detail consistent with those
management reports that have historically been distributed to the
Company's senior management and have previously been delivered to the
Buyer, and timely prepare, and promptly deliver to the Buyer, monthly
financial statements, to be in scope and detail con-
9
sistent with such monthly financial statements as historically
distributed to the Company's senior management and as previously
delivered to the Buyer. Each such financial statement shall present
fairly the financial position, assets and lia bilities of the Company
as at the date thereof and the results of its operations and its cash
flows for the period then ended, in accordance with accounting policies
and procedures consistent with those historically used by the Company
in the preparation of such monthly financial statements;
(b) promptly upon the mailing thereof to the shareholders of
the Company generally, copies of all financial statements, reports and
proxy statements so mailed; and
(c) promptly upon the filing thereof, copies of all
registration statements (other than the exhibits thereto and any
registration statements on Form S-8 or its equivalent) and reports on
Forms 10-K, 10-Q and 8-K (or their equivalents) which the Borrower
shall have filed with the Securities and Exchange Commission.
5.4 Public Announcements. Except as required by applicable
Law, the Company shall not, and shall not permit any Subsidiary to, make any
public announcement in respect of this Agreement or the transactions
contemplated hereby without the prior written consent of the Buyer.
5.5 Price Per Share Calculation; Additional Class B Shares.
(a) Not later than one day prior to the Adjustment Date, the Company shall
deliver to Buyer its determination of the Final Trading Price for each day
during the Measurement Period, the average of all such Final Trading Prices, and
the number of additional Class B Shares, if any, to be issued to the Buyer on
the Adjustment Date pursuant to Section 1.4.
(b) The Company shall cause to be reserved 757,500 of Class B
Shares for issuance and delivery to the Buyer on the Adjustment Date in
accordance with Section 1.4 hereof. All such Class B shares shall be duly
authorized and, when issued upon the Per Share Price adjustment, shall be
validly issued, fully paid and nonassessable, free and clear of all Liens,
restrictions on sale and preemptive rights.
5.6 Further Actions. (a) The Company shall use all reasonable
efforts to take or cause to be taken all actions, and to do or cause to be done
all other things, necessary, proper or advisable in order for the Company to
fulfill and perform its ob ligations in respect of this Agreement, or otherwise
to consummate and make effective the transactions contemplated hereby.
(b) The Company shall, as promptly as practicable, (i) make,
or cause to be made, all filings and submissions required under any Law, and
give such reasonable
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undertakings as may be required in connection therewith, and (ii) use all
reasonable efforts to obtain or make, or cause to be obtained or made, all
Consents of any Governmental Authority necessary to be obtained or made by it,
in each case in connection with this Agreement, the sale and transfer of the
Class B Shares pursuant hereto, or the consummation of the other transactions
contemplated hereby.
(c) The Company shall coordinate and cooperate with the Buyer
in exchanging such information and supplying such reasonable assistance as may
be reasonably requested by the Buyer.
(d) At all times prior to the Closing Date, the Company shall
promptly notify the Buyer in writing of any fact, condition, event or occurrence
that could result in the failure of any of the conditions contained in Section 2
to be satisfied, promptly upon becoming aware of the same.
SECTION 6
INDEMNIFICATION
In the event that the Buyer or any of its officers, directors
or controlling Persons (each, an "Indemnified Party") becomes involved in any
capacity in any action, proceeding or investigation brought by or against any
Person, including, without limitation, the Company or any equity holders or
creditors of the Company, in connection with or as a result of any matter
referred to in this Agreement, including but not limited to the purchase by the
Buyer of Class B Shares, the Company periodically will reimburse such
Indemnified Party for all of its out-of-pocket legal, expert and other expenses
(including the out-of-pocket cost of any investigation and preparation) incurred
in connection therewith. The Company also will indemnify and hold each
Indemnified Party harmless against any and all losses, claims, damages,
expenses, actions, demands, assessments, costs, judgments, awards, fines,
sanctions, penalties, amounts paid in settlement, or liabilities ("Damages") to
any such Person in connection with or as a result of any matter referred to in
this Agreement and without regard to the exclusive or contributory negligence of
any of the Indemnified Parties, except to the extent that any such Damages is
finally judicially determined to have resulted from the gross negligence,
willful misconduct or bad faith of such Indemnified Party in connection with the
subject matter of this Agreement (and in the event of such a determination, the
Indemnified Party will reimburse the Company for any expenses advanced to such
Indemnified Party by the Company pursuant to the immediately preceding
sentence). If for any reason the foregoing indemnification is unavailable to any
Indemnified Party or insufficient to hold it harmless, then the Company shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such Damages in such proportion as is appropriate to reflect the relative
economic interests of the Company and its equity holders, on the one hand, and
such Indemnified Party, on the other hand, in the matters contemplated by this
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Agreement as well as the relative fault of the Company, on the one hand, and
such Indemnified Party, on the other hand, with respect to such loss, claim,
damage or liability and any other relevant equitable considerations. The
reimbursement, indemnity and contribution obligations of the Company under this
Section 7 will be in addition to any liability which the Company may otherwise
have, shall extend upon the same terms and conditions to any Affiliate of any
Indemnified Party and the directors, agents, advisors, employees and controlling
Persons of such Indemnified Party and any such Affiliate, and shall be binding
upon and inure to the benefit of any successors, assigns, heirs and Personal
representatives of the Company, such Indemnified Party, any such Affiliate and
any such Person. The Company will not be responsible, in connection with any one
action or proceeding (or separate but substantially similar proceedings arising
out of the same general allegations), for the fees and expenses of more than one
firm of attorneys at any time for all Indemnified Parties, except to the extent
local counsel, in addition to its regular counsel, is required to effectively
defend against such action, provided if counsel to the Indemnified Parties
reasonably determines that there is a conflict of interest among the Indemnified
Parties, then the Indemnified Party with respect to which such conflict of
interest relates may employ separate counsel at the cost and expense of the
Company. The Company also agrees that neither any Indemnified Party nor any of
such Affiliates, directors, agents, advisors, employees or controlling Persons
will have any liability based on its or their exclusive or contributory
negligence or otherwise to the Company, any Person asserting claims on behalf or
in the right of the Company, or any other Person in connection with or as a
result of any matter referred to in this Agreement except to the extent that any
Damages incurred by the Company result from the gross negligence, willful
misconduct or bad faith of such Indemnified Party in connection with the subject
matter of this Agreement. Prior to entering into any agreement or arrangement
with respect to, or effecting, any merger, statutory exchange or other business
combination or proposed sale, exchange, dividend or other distribution or
liquidation of all or a significant portion of its assets in one or a series of
transactions or any significant recapitalization, or reclassification of its
outstanding securities, the Company shall notify the Indemnified Parties in
writing thereof (if not previously so notified) and, if requested by the
Indemnified Parties, shall arrange in connection therewith alternative means of
providing for the obligations of the Company set forth in this Section 7
including the assumption of such obligations by another party, insurance, surety
bonds or the creation of an escrow, in each case in an amount and upon terms and
conditions satisfactory to the Indemnified Parties.
SECTION 7
TERMINATION
This Agreement shall terminate on January 1, 1999 if no
Exercise Notice is given on or prior to December 31, 1998. In addition, this
Agreement may be terminated at any time prior to the Closing:
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(a) by the written agreement of the Company and the Buyer;
(b) upon notice given by the Buyer if the Company breaches any
material covenant or agreement in this Agreement or any other document
or agreement delivered pursuant to this Agreement or in furtherance of
the transactions con templated herein (collectively, the "Transaction
Documents") or if any representation or warranty made by the Company in
or pursuant to any Transaction Document is false in any material
respect when made; or
(c) upon notice given by either the Company or the Buyer if
consummation of the transactions contemplated hereby would violate, in
whole or in part, any nonappealable final order, decree or judgment of
any court or governmental body having competent jurisdiction.
If this Agreement is terminated as provided in this Section 7, this Agreement
shall become null and void and of no further force or effect, except for Section
1.2 relating to the payment of the Commitment Fee, Section 5.4 relating to
publicity, Section 6 relating to indemnification and Section 9.4 relating to
certain expenses. Nothing in this Section 7 shall be deemed to release either
Party from any liability for any breach by such Party of the terms and
provisions of this Agreement or to impair the right of either Party to compel
specific performance by the other Party of its obligations under this Agreement.
SECTION 8
DEFINITIONS
In this Agreement, the following terms shall have the
following respective meanings:
"Adjustment Date" shall have the meaning assigned to it in
Section 1.4(a).
"Affiliate" means, with regard to any person, any other person
who, individually or as a part of a "group" for purposes of Section
13(d) of the Securities Exchange Act, controls, is controlled by or is
under common control with, such person.
"Agreement" means this Stock Purchase Agreement, including any
exhibits and schedules hereto, as it may be supplemented or amended
from time to time in accordance with its terms.
"Business Day" means a day other than a Saturday, Sunday or
other day on which commercial banks in New York City are authorized or
required by law to close.
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"Buyer" shall have the meaning assigned to it in the preamble.
"Change of Control of the Company" means the occurrence of any
of the following events:
(a) any "Person" (as such term is used in Sections
13(d) and 14(d) of the Exchange Act), other than one or more
Permitted Holders, is or becomes the beneficial owner (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act,
except that a Person shall be deemed to have "beneficial
ownership" of all shares that any such Person has the right to
acquire within one year), directly or indirectly, of more than
eighteen percent (18%) of the total voting power of the equity
securities of the Company and obtains the contractual right to
elect or designate for election a majority of the Board of
Directors of the Company; or
(b) Permitted Holders cease to beneficially own,
directly or indirectly, such amount of the equity securities
of the Company that gives them over 50% of the total voting
power of such securities.
"Class A Shares" shall have the meaning assigned to it in
Section 1.4(a).
"Class B Shares" shall have the meaning assigned to it in the
recitals.
"Closing" shall have the meaning assigned to it in Section
1.3(b).
"Closing Date" shall have the meaning assigned to it in
Section 1.3(b).
"Commitment Fee" shall have the meaning assigned to it in
Section 1.2.
"Commitment Letter" means the letter, dated November 12, 1998,
from the Buyer to the Company relating to the subject matter of this
Agreement.
"Company" shall have the meaning assigned to it in the
preamble.
"Company 10-K" shall have the meaning assigned to it in
Section 3.5(c).
"Company 10-Qs" shall have the meaning assigned to it in
Section 3.5(c).
"Consent" means any consent, approval, authorization, waiver,
permit, grant, franchise, concession, agreement, license, certificate,
exemption, order, registration, declaration, filing, report or notice
of, with or to any Person.
14
"Damages" shall have the meaning assigned to it in Section 7.
"Exchange Act" shall have the meaning assigned to it in
Section 3.5(a).
"Exercise Notice" shall have the meaning assigned to it in
Section 1.3(a).
"Expiration Date" shall have the meaning assigned to it in
Section 1.1.
"Final Trading Price" shall have the meaning assigned to it in
Section 1.4(a).
"Governmental Authority" means any nation or government, any
state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government including, without limitation,
the European Union.
"Indebtedness", as applied to any Person, means, without
duplication, (i) all indebtedness for borrowed money, (ii) all
obligations evidenced by a note, bond, debenture, letter of credit,
draft or similar instrument, (iii) that portion of obli gations with
respect to capital leases that is properly classified as a liability on
a balance sheet in conformity with GAAP, (iv) notes payable and drafts
accepted representing extensions of credit, (v) any obligation owed for
all or any part of the deferred purchase price of property or services,
which purchase price is due more than six months from the date of
incurrence of the obligation in respect thereof, and (vi) all
indebtedness and obligations of the types described in the foregoing
clauses (i) through (vi) to the extent secured by any Lien on any
property or asset owned or held by that Person regardless of whether
the indebtedness secured thereby shall have been assumed by that Person
or is nonrecourse to the credit of that Person.
"Indemnified Party" shall have the meaning assigned to it in
Section 7.
"Law" means all applicable provisions of all (i)
constitutions, treaties, statutes, laws (including the common law),
codes, rules, regulations, ordinances or orders of any Governmental
Authority and (ii) orders, decisions, injunctions, judg ments, awards,
Consents and decrees of or agreements with any Governmental Authority.
"Lien" means any lien, mortgage, pledge, charge, security
interest or encumbrance of any kind.
15
"Material Adverse Effect" means a material adverse effect on
the financial condition, business, operations, assets (taken as a
whole), liabilities (taken as a whole) or prospects of the Company and
its Subsidiaries, taken as a whole, or on the ability of the Company to
perform its obligations hereunder, provided that the results of
Company's investments and operations in Poland shall be excluded from
the determination of a Material Adverse Effect.
"Measurement Period" shall have the meaning assigned to it in
Section 1.4(a).
"NASDAQ" means The Nasdaq National Market of The Nasdaq Stock
Market operated by The Nasdaq Stock Market, Inc., a wholly-owned
subsidiary of the National Association of Security Dealers, Inc.
"Party" shall have the meaning assigned to it in the recitals.
"Per Share Price" shall have the meaning assigned to it in
Section 1.1.
"Permitted Holders" means Xxxxxx X. Xxxxxx and Persons with
respect to whom Xxxxxx X. Xxxxxx possesses the power to direct such
Person's management and policies, whether through the ownership of
voting securities, by contract or otherwise (which power shall be
deemed to exist upon the ownership of more than 50% of any class of
voting securities or equity interest in any such Person).
"Person" means, an individual, corporation, partnership,
association, trust or other entity or organization, including a
government or political subdivision or any agency or instrumentality
thereof.
"Representatives" as to any Person, means its accountants,
counsel, consultants (including actuarial, environmental and industry
consultants), officers, directors, employees, agents and other advisors
and representatives.
"Securities Act" shall have the meaning assigned to it in
Section 1.5(b).
"Subscription Price" shall have the meaning assigned to it in
Section 1.1.
"Subsidiary" means, as to any Person, any corporation,
association, partnership or other business entity of which more than
50% of the total voting power of shares of capital stock or other
interests (including partnership interests) entitled (without regard to
the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time owned or
16
controlled, directly or indirectly, by (i) such Person or (ii) one or
more Subsidiaries of such Person.
"Transaction Documents" shall have the meaning assigned to it
in Section 7(b).
SECTION 9
MISCELLANEOUS
9.1 Amendments and Waivers. This Agreement cannot be altered
or otherwise amended except prior to the Closing pursuant to an instrument in
writing signed by Buyer and the Company. Any of the terms and conditions of this
Agreement may be waived in writing at any time on or prior to the Closing by the
Party entitled to the benefits thereof.
9.2 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the Company and the Buyer and their respective
heirs, personal representatives, successors and assigns, provided that any
assignment, by operation of law or otherwise, by the Company shall require the
prior written consent of the Buyer and any purported assignment or other
transfer without such consent shall be void and unenforceable.
9.3 Notices. All notices, requests and other communications to
any Party hereunder shall be in writing (including bank wire, telex, facsimile
transmission or similar writing) and shall be effective (i) if given by mail, 72
hours after such communication is deposited in the mail with first class postage
prepaid, or (ii) if given by any other means, when delivered at the address
specified below in this Section 9.3.
The Company: Central European Media Enterprises Ltd.
c/o CME Development Corporation
00 X'Xxxxxx Xxxxxx
Xxxxxx X0X 0XX
Xxxxxx Xxxxxxx
Attention: Legal Department
telecopy number: 011-44-171-292-7948
17
with a copy to:
Rosenman & Colin
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxx, Esq.
telecopy number: 000-000-0000
The Buyer: RSL Capital LLC
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, X.X. 00000
Attention: Xxxxxx X. Xxxxxx
telecopy number: 000-000-0000
with a copy to:
Debevoise & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx Xxxxxx
telecopy number: 000-000-0000
9.4 Expenses. The Company shall reimburse the Buyer for its
reasonable out-of-pocket expenses (including fees and disbursements of Debevoise
& Xxxxxxxx, counsel for the Buyer) incurred in connection with the preparation
of the Transaction Documents. The Company shall indemnify the Buyer against any
transfer taxes, docu mentary taxes, assessments or charges made by any
Governmental Authority by reason of the execution, delivery, amendment or
enforcement of any of the Transaction Documents.
9.5 Survival of Representations and Warranties. The
representations and warranties made by the Company and Buyer hereunder or in
connection herewith shall survive until the second anniversary of the Closing,
provided that the representations and warranties of the Company contained in
Sections 3.1, 3.2, 3.3 and 3.8 shall survive with out limitation (subject, in
the case of Section 3.8, to any statutes of limitations applicable to the
particular tax at issue).
9.6 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without, to
the extent permitted by law, invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not, to the
extent permitted by law, invalidate or render unenforceable such provision in
any other jurisdiction.
18
9.7 Integration. This Agreement represent the entire agreement
of the Company and the Buyer with respect to the subject matter hereof, and
supersede any and all prior arrangements and understandings, oral or written,
relating to the subject matter hereof; provided that Section 2 of the Commitment
Letter (concerning payment of certain fees) and Exhibit B thereto (concerning
indemnification and other maters set forth therein) shall continue in full force
and effect.
9.8 No Third Party Beneficiaries. Except as provided in
Section 6, nothing in this Agreement shall confer any rights upon any Person or
entity which is not a Party or a successor or permitted assignee of a Party to
this Agreement.
9.9 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be considered an original but all of
which together shall constitute one and the same instrument.
9.10 Governing Law and Jurisdiction. (a) THIS AGREEMENT AND
THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO SHALL FOR ALL PURPOSES BE
GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF NEW YORK, WITHOUT GIVING EFFECT TO ITS PRINCIPLES OR RULES OF CONFLICT OF
LAWS TO THE EXTENT SUCH PRINCIPLES OR RULES WOULD REQUIRE OR PERMIT THE
APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.
(b) EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND
UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE EXCLUSIVE
JURISDICTION OF ANY NEW YORK STATE COURT OR FEDERAL COURT OF THE UNITED STATES
OF AMERICA SITTING IN NEW YORK CITY, AND ANY APPELLATE COURT FROM ANY THEREOF,
IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR FOR RECOGNITION OR ENFORCEMENT OF ANY
JUDGMENT RELATING THERETO, AND EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND
UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE
EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO
AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE
CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR
IN ANY OTHER MANNER PROVIDED BY LAW.
9.11 Trial Without Jury. EACH OF THE COMPANY AND THE BUYER
AGREES THAT ANY LITIGATION GROWING OUT OF ANY
19
CONTROVERSY WITH RESPECT TO, IN CONNECTION WITH OR ARISING OUT OF THIS
AGREEMENT, ANY NOTE OR ANY OTHER LOAN DOCUMENT WILL BE TRIED BY A JUDGE SITTING
WITHOUT A JURY AND HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY
IN ANY SUCH LEGAL PROCEEDING.
IN WITNESS WHEREOF, the Parties have caused this Agreement to
be executed as of the date first above written:
CENTRAL EUROPEAN MEDIA
ENTERPRISES LTD.
By:
-------------------------------------
Name: Xxxxxx Xxxxxxx
Title: President and Chief
Executive Officer
RSL CAPITAL LLC
By:
-------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chairman
20
Exhibit A
EXERCISE NOTICE
Pursuant to Section 1.3 of the Stock Purchase Agreement, dated
as of December __, 1998, by and among, RSL Capital LLC, a New York limited
liability company (the "Buyer"), and Central European Media Enterprises Ltd., a
company organized under the laws of Bermuda (the "Company"), the Company hereby
notifies the Buyer that it wishes to exercise the commitment set forth in
Section 1.1 of such Agreement and issue and sell to Buyer 1,515,000 Class B
Shares for the consideration set forth in such Agreement.
This notice is the Exercise Notice referred to in Section 1.3
of such Agreement.
WITNESS the signature of the undersigned this __ day of
________ 199_.
CENTRAL EUROPEAN MEDIA
ENTERPRISES LTD.
By:
-------------------------------------
Name:
Title:
Exhibit B
OFFICER'S CERTIFICATE
The undersigned ________________, hereby certifies that he is
the _______________ of Central European Media Enterprises Ltd., a company
organized under the laws of Bermuda (the "Company"), and that, as such, he is
authorized to execute and deliver this Certificate on behalf of the Company and,
with reference to the Stock Purchase Agreement, dated as of December __, 1998,
by and among, RSL Capital LLC, a New York limited liability company (the
"Buyer") and the Company (the "Stock Purchase Agreement"), further certifies,
represents and warrants on behalf of the Company as follows (each capitalized
term used herein without definition having the meaning specified in the Stock
Purchase Agreement):
1. As of the date hereof, the representations and warranties
of the Company set forth in Section 2 of the Stock Purchase
Agreement are true and correct in all material respects.
2. All of the agreements, covenants and conditions required by
the Stock Purchase Agreement to be performed or complied with
by the Company on or prior to the Closing Date have been duly
performed and complied with in all material respects.
WITNESS the signature of the undersigned this __ day of
________ 199_ [insert Closing Date].
CENTRAL EUROPEAN MEDIA
ENTERPRISES LTD.
By:
--------------------------------------
Name:
Title:
Exhibit C
OPINION OF COUNSEL
A. OPINION OF A BERMUDA COUNSEL
1. The Company is a corporation duly incorporated, validly existing and
in good standing under the laws of Bermuda, and has full corporate power and
authority to own its properties and conduct its business.
2. The Stock Purchase Agreement has been duly authorized, executed and
delivered by the Company, and is a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency, moratorium
and similar laws affecting the rights of creditors generally and by general
equitable principles.
3. The Class B Shares have been duly and validly authorized by the
Company and, when such Class B Shares are issued and delivered on the Closing
Date, all such Class B Shares will be duly and validly issued, fully paid and
non-assessable and the issuance of such Class B Shares is not subject to any
presently existing preemptive or other similar rights.
[Need to expand to cover Class B Shares to be issued following the price
adjustment]
4. The execution and delivery by the Company of the Stock Purchase
Agreement, and the performance by the Company of its obligations thereunder,
will not contravene or conflict with the Bermuda Companies Act of 1981, any
other Bermuda law or regulation, any judgment, order, decree, rule or regulation
of any Bermuda court or arbitrator or governmental agency or body having
jurisdiction over the Company or any of its respective properties or assets, or
the memorandum of association or by-laws of the Company.
B. OPINION OF A NEW YORK COUNSEL
1. Assuming that the Stock Purchase Agreement has been duly authorized,
executed and delivered by the Company, the Stock Purchase Agreement is a valid
and binding agreement of the Company, enforceable against the Company in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, moratorium and similar laws affecting the
rights of creditors generally and by general equitable principles.
2. The execution and delivery by the Company of the Stock Purchase
Agreement, and the performance by the Company of its obligations thereunder,
will not contravene or conflict with any United States Federal or New York
statute or regulation, any judgment, order, decree, rule or regulation of any
United States Federal or New York court or arbitrator or governmental agency or
body having jurisdiction over the Company or any of its respective properties or
assets.
24
