Exhibit 10.4
==============================================================================
EXECUTION COPY
@ENTERTAINMENT, INC.
(a Delaware corporation)
45,000 Shares of Series A Cumulative Preference Stock and
45,000 Warrants to Purchase an Aggregate of
4,950,000 Shares of Common Stock
PURCHASE AGREEMENT
Dated: January 22, 1999
================================================================================
Table of Contents
PURCHASE AGREEMENT 6
SECTION 1. Representations and Warranties 8
(a) Representations and Warranties by the Company 8
(i) Similar Offerings 8
(ii) Preference Offering Memorandum 8
(iii) Independent Accountants 8
(iv) Financial Statements 9
(v) No Material Adverse Change in Business 9
(vi) Good Standing of the Company 9
(vii) Corporate Standing of Designated Subsidiaries 9
(viii) Restrictions on Payments of Dividends 10
(ix) Capitalization 10
(x) Authorization of Agreement 11
(xi) Authorization of the Preference Registration Rights
Agreement 11
(xii) Authorization of the Certificate of
Designation and the Preference Shares 11
(xiii) Authorization of the Preference Warrant
Agreement 11
(xiv) Authorization of the Preference Warrants 12
(xv) Authorization of the Preference Warrant Shares 12
(xvi) Authorization of the Preference Warrant
Registration Rights Agreement 12
(xvii) Authorization of the Indenture 12
(xviii) Authorization of the Notes 13
(xix) Authorization of the Note Registration Rights
Agreement 13
(xx) Authorization of the Note Warrant Agreement 13
(xxi) Authorization of the Note Warrant Registration
Rights Agreement 14
(xxii) Description of the Preference Registration
Rights Agreement, the Preference Warrant
Registration Rights Agreement, the Preference
Shares, the Preference Warrants, the Common Stock,
the Preference Warrant Agreement, the Chase
Securities, the Note Securities, and the Note
Agreements 14
(xxiii) Absence of Defaults and Conflicts 14
(xxiv) Absence of Labor Dispute 15
(xxv) Absence of Proceedings 15
(xxvi) Possession of Intellectual Property 16
(xxvii) Absence of Further Requirements 16
(xxviii) Possession of Licenses and Permits 17
(xxix) No Additional Documents 17
(xxx) Management Agreements 17
(xxxi) Title to Property 18
(xxxii) Tax Returns 18
(xxxiii) Environmental Laws 18
(xxxiv) Investment Company Act 19
(xxxv) Internal Controls 19
(xxxvi) Taxes on Subsidiary Indebtedness 19
-2-
(xxxvii) Insurance 20
(xxxviii) Rule 144A Eligibility 20
(xxxix) No General Solicitation 20
(xl) No Registration Required 20
(xli) Reporting Company 20
(xlii) Funds 20
(xliii) Subscribers 21
(b) Officers' Certificates 21
SECTION 2. Sale and Delivery to the Purchaser; Closing 21
(a) Preference Securities 21
(b) Payment 21
(c) Qualified Institutional Buyer 21
(d) Denominations; Registration 21
SECTION 3. Covenants of the Company 21
(a) Preference Offering Memorandum 22
(b) Notice and Effect of Material Events 22
(c) Reserved. 22
(d) Reserved. 22
(e) Reserved. 22
(f) DTC and PORTAL 22
(g) Use of Proceeds 22
(h) Reserved. 22
SECTION 4. Payment of Expenses 22
(a) Expenses 22
(b) Termination of Agreement 23
SECTION 5. Conditions of the Purchaser's Obligations 23
(a) Opinions of Counsel for the Company 23
(b) Opinion of United States Counsel for the Purchaser 23
(c) Opinion of Polish Counsel for the Purchaser 23
(d) Officers' Certificate 24
(e) Accountants' Comfort Letter 24
(f) Bring-down Comfort Letter 24
(g) Consummation of Sale of Chase Securities and Note Securities 24
(h) PORTAL 24
(i) Additional Documents 24
(j) Execution of Agreements 25
(k) Termination of Agreement 25
SECTION 6. Subsequent Offers and Resales of the Preference Securities 25
(a) Offer and Sale Procedures 25
(i) Offers and Sales only to Qualified Institutional Buyers 25
(ii) No General Solicitation 25
(iii) Purchases by Non-Bank Fiduciaries 25
(iv) Subsequent Purchaser Notification 25
-3-
(v) Restrictions on Transfer 26
(b) Covenants of the Company 26
(i) Due Diligence 26
(ii) Integration 26
(iii) Rule 144A Information 27
(iv) Restriction on Repurchases 27
(c) Resale Pursuant to Rule 144A 27
(d) Offers and Sales in Poland and The Netherlands 27
(e) Offers and Sales in the United Kingdom 28
(f) Representation and Warranty of the Purchaser 28
SECTION 7. Indemnification 29
(a) Indemnification of the Purchaser 29
(b) Indemnification of the Company, Directors and Officers 29
(c) Actions Against Parties; Notification 30
(d) Settlement Without Consent if Failure to Reimburse 30
SECTION 8. Contribution 30
SECTION 9. Representations, Warranties and Agreements to Survive Delivery 32
SECTION 10. Termination of Agreement 32
(a) Termination; General 32
(b) Liabilities 32
SECTION 11. Notices 33
SECTION 12. Parties 33
SECTION 13. GOVERNING LAW AND TIME 33
SECTION 14. Effect of Headings 33
SECTION 15. Counterparts 33
EXHIBITS
Exhibit A - Form of Certificate of Designation ....................... A-1
Exhibit B - Form of Preference Warrant Agreement ..................... B-1
Exhibit C - Form of Preference Registration Rights Agreement ......... C-1
Exhibit D - Form of Preference Warrant Registration Rights Agreement . X-0
Xxxxxxx X - Xxxx xx Xxxxxx Xxxxxx Law Opinion of Company's Counsel ... E-1
Exhibit F - Form of Polish Law Opinion of Company's Counsel .......... F-1
Exhibit G - Form of Opinion of Company's Dutch Counsel ............... G-1
Exhibit H - Form of Opinion of Company's English Counsel ............. H-1
-4-
@ENTERTAINMENT, INC.
(a Delaware corporation)
45,000 Shares of Series A Cumulative Preference Stock and
45,000 Warrants to Purchase an Aggregate of
4,950,000 Shares of Common Stock
PURCHASE AGREEMENT
January 22, 1999
Xxxxxx Xxxxxxxx Private Equity Limited,
on behalf of
Xxxxxx Xxxxxxxx Development Capital Syndication Limited
00 Xxxxx Xxxxxxxxxx Xxxxxx
Xxxxxx XX0X 0XX
Great Britain
Ladies and Gentlemen:
@Entertainment, Inc., a Delaware corporation (the "Company"), confirms its
agreement with Xxxxxx Xxxxxxxx Private Equity Limited ("Xxxxxx Xxxxxxxx" or the
"Purchaser"), with respect to the issue and sale by the Company and the purchase
by the Purchaser of 45,000 of the Company's Series A Cumulative Preference
Shares (the "Preference Shares") and 45,000 warrants (each a "Preference
Warrant" and collectively, the "Preference Warrants" and, together with the
Preference Shares, the "Preference Securities"); the Preference Warrants
entitling the holder thereof to purchase an aggregate of 4,950,000 shares of
common stock, par value $0.01 per share (the "Common Stock"), of the Company.
The Preference Shares and Preference Warrants are more fully described in
Schedule B hereto. The Preference Shares are to be issued pursuant to the
Certificate of Designation of the Company in substantially the form attached
hereto as Exhibit A and the Preference Warrants are to be issued pursuant to a
warrant agreement dated as of January 27, 1999 (the "Preference Warrant
Agreement"), between the Company and Bankers Trust Company, as warrant agent
(the "Preference Warrant Agent") in substantially the form attached hereto as
Exhibit A. Under the Preference Warrant Agreement, the Purchaser will have
certain preemptive rights in relation to the Company's Common Stock. Preference
Securities issued in book-entry form will be issued to Cede & Co. as nominee of
The Depository Trust Company ("DTC") pursuant to a letter agreement, to be dated
as of the Closing Time (as defined in Section 2(b)) (the "DTC Agreement"), among
the Company, the Trustee and DTC.
Concurrently, the Company has entered into a separate purchase agreement
(the "Chase Purchase Agreement") for the sale of an aggregate of 5,000 of the
Company's Series B Cumulative Preference Shares (the "Series B Preference
Shares") and 5,000 Warrants (the Chase
-6-
Warrants") to purchase and aggregate of 550,000 shares of Common Stock to Xx.
Xxxxxx Xxxxx, Xx. Xxxxxx X. Xxxxx and Xx. Xxxxx Xxxxx (collectively, the "Chase
Purchasers"). The Chase Warrants will be issued pursuant to the Preference
Warrant Agreement. The Series B Preference Shares and the Chase Warrants being
sold to the Chase Purchasers are sometimes hereinafter referred to as the "Chase
Securities."
The holders of Preference Shares and the Series B Preference Shares will
be entitled to the benefits of a Registration Rights Agreement, in substantially
the form attached hereto as Exhibit C with such changes as shall be agreed to by
the parties hereto and the Chase Purchasers (the "Preference Registration Rights
Agreement"), pursuant to which the Company will file a registration statement
(the "Preference Registration Statement") with the Securities and Exchange
Commission (the "Commission") registering the Preference Shares and the Series B
Preference Shares under the Securities Act of 1933, as amended (the "1933 Act").
The holders of Preference Warrants and the Chase Warrants will be entitled
to the benefits of a Preference Warrant Registration Rights Agreement in
substantially the form attached hereto as Exhibit D, with such changes as shall
be agreed to by the parties hereto and the Chase Purchasers (the "Preference
Warrant Registration Rights Agreement") which provides for the registration of
the Preference Warrants and the Chase Warrants under the 1933 Act under certain
circumstances set forth therein.
Pursuant to the terms of the Preference Securities, investors that acquire
Preference Securities may only resell or otherwise transfer such Preference
Securities if such Preference Securities are hereafter registered under the 1933
Act or if an exemption from the registration requirements of the 1933 Act is
available (including the exemption afforded by Rule 144A ("Rule 144A") of the
rules and regulations promulgated under the 1933 Act by the Commission).
The Company has prepared and will deliver to the Purchaser, on the date
hereof or the next succeeding day, copies of an offering memorandum dated
January 22, 1999 which was prepared by the Company in connection with the sale
of Preference Securities. "Preference Offering Memorandum" means with respect to
any date or time referred to in this Agreement, the final Preference Offering
Memorandum (including any amendment or supplement thereto) including exhibits
thereto and any documents incorporated by reference, which has been prepared and
delivered by the Company to the Purchaser in connection with the sale of
Preference Securities.
Simultaneously with the execution of this Agreement , the Company is
entering into a separate purchase agreement (the "Note Purchase Agreement") for
the sale of 256,800 the Company's units (the "Note Units"), each Note Unit
consisting of $1,000 aggregate principal amount at maturity of the Company's
14 1/2 Senior Discount Notes due 2009 (the "Notes") and four warrants (each a
"Note Warrant" and collectively, the "Note Warrants" and, together with the Note
Units and the Notes, the "Note Securities"). The Note Warrant entitle the
holders thereof to purchase an aggregate of 1,813,665 shares of Common Stock.
The Notes are to be
-7-
issued pursuant to an indenture dated as of January 27, 1999 (the "Indenture")
between the Company and Bankers Trust Company, as trustee (the "Trustee") and
the Note Warrants are to be issued pursuant to a warrant agreement dated as of
January 27,1999 (the "Note Warrant Agreement") between the Company and Bankers
Trust Company, as warrant agent (the "Note Warrant Agent"). The holders of the
Note and the Note Warrants will be entitled to the benefits of two Registration
Rights Agreements (the "Note Registration Rights Agreement" and the "Note
Warrant Registration Rights Agreement", respectively) which provide for the
registration of the Notes and the Note Warrants under the 1933 Act under certain
circumstances set forth therein. The Indenture, the Note Warrant Agreement, the
Note Registration Rights Agreement and the Note Warrant Registration Rights
Agreement are sometimes referred to herein as the "Note Agreements."
All references in this Agreement to financial statements and schedules and
other information which are "contained," "included" or "stated" in the
Preference Offering Memorandum (or other references of like import) shall be
deemed to mean and include all such financial statements and schedules and other
information, if any, which are incorporated by reference in the Preference
Offering Memorandum.
SECTION 1. Representations and Warranties.
(a) Representations and Warranties by the Company. The Company represents
and warrants to the Purchaser as of the date hereof and as of the Closing Time
referred to in Section 2(b) hereof, and agrees with the Purchaser as follows:
(i) Similar Offerings. The Company and its Affiliates (as defined in
Section 1(a)(xxxv)) have not, directly or indirectly, solicited any offer
to buy or offered to sell, and will not, directly or indirectly, solicit
any offer to buy or offer to sell, in the United States or to any United
States citizen or resident, any security which is or would be integrated
with the sale of the Preference Securities in a manner that would require
the Preference Securities to be registered under the 1933 Act.
(ii) Preference Offering Memorandum. Neither of its date nor as of
the Closing Time the Preference Offering Memorandum, including any
amendment or supplement thereto, includes or will include an untrue
statement of a material fact or omits or will omit to state a material
fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
(iii) Independent Accountants. The accountants who certified the
financial statements and supporting schedules included in the Preference
Offering Memorandum are independent certified public accountants with
respect to the Company and its subsidiaries within the meaning of
Regulation S-X under the 1933 Act.
-8-
(iv) Financial Statements. The financial statements, together with
the related schedules and notes, of the Company included in the Preference
Offering Memorandum present fairly the financial position of the Company
and its consolidated subsidiaries at the dates indicated and the statement
of operations, stockholders' equity and cash flows of the Company and its
consolidated subsidiaries for the periods specified; said financial
statements have been prepared in conformity with United States generally
accepted accounting principles ("GAAP") applied on a consistent basis
throughout the periods involved. The supporting schedules, if any,
included in the Preference Offering Memorandum present fairly in
accordance with GAAP the information required to be stated therein. The
selected financial data and the summary financial information included in
the Preference Offering Memorandum present fairly the information shown
therein and have been compiled on a basis consistent with that of the
audited financial statements included in the Preference Offering
Memorandum.
(v) No Material Adverse Change in Business. Since the respective
dates as of which information is given in the Preference Offering
Memorandum, except as otherwise stated therein, (A) there has been no
material adverse change in the condition, financial or otherwise, or in
the earnings, business affairs or business prospects of the Company and
its subsidiaries considered as one enterprise (a "Material Adverse
Effect"), whether or not arising in the ordinary course of business, (B)
there have been no transactions entered into by the Company or any of its
subsidiaries, other than transactions entered into in the ordinary course
of business, which are material with respect to the Company and its
subsidiaries considered as one enterprise, and (C) there has been no
dividend or distribution of any kind declared, paid or made by the Company
on any class of its capital stock.
(vi) Good Standing of the Company. The Company has been duly
organized and is validly existing as a corporation in good standing under
the laws of the State of Delaware and has corporate power and authority to
own, lease and operate its properties and to conduct its business as
described in the Preference Offering Memorandum and to enter into and
perform its obligations under this Agreement, the Preference Warrant
Agreement, the Preference Registration Rights Agreement, the Preference
Warrant Registration Rights Agreement, the Certificate of Designation, the
Note Securities, the Note Agreements, and the Preference Securities; and
the Company is duly qualified as a foreign corporation to transact
business and is in good standing in each other jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing
of property or the conduct of business, except where the failure so to
qualify or to be in good standing would not result in a Material Adverse
Effect.
(vii) Corporate Standing of Designated Subsidiaries. Each subsidiary
of the Company that (i) is a "significant subsidiary" (as that term is
defined in Regulation S-X under the 1933 Act) or (ii) that holds any valid
permits or licenses to operate the cable television business in Poland or
a digital direct-to-home business uplinking from the
-0-
Xxxxxx Xxxxxxx is listed on Schedule C hereto (each subsidiary listed on
Schedule C hereto is hereinafter referred to as a "Designated Subsidiary"
and, collectively, the "Designated Subsidiaries"), and has been duly
organized and is validly existing as a corporation under the laws of the
jurisdiction of its incorporation, has corporate power and corporate
authority to own, lease and operate its properties and to conduct its
business as described in the Preference Offering Memorandum and is not
required to be qualified as a foreign corporation to transact business or
to own or lease property in any jurisdiction where it owns or leases
property or transacts business; except as otherwise disclosed in the
Preference Offering Memorandum or in Schedule C, all of the issued and
outstanding capital stock of each Designated Subsidiary has been duly
authorized and validly issued, is fully paid and non-assessable and is
owned by the Company, directly or through subsidiaries, free and clear of
any security interest, mortgage, pledge, lien, encumbrance, claim or
equity, except for (i) in the case of any Polish limited liability
company, any statutory liability for taxes, (ii) the pledge of 3,583,457
shares of Polska Telewizja Kablowa Warszawa S.A. and of 2,514,291 shares
of Polska Telewizja Kablowa Krakow S.A. held by Poland Cablevision
(Netherlands) B.V. ("PCBV") and 2,400 shares of Polska Telewizja Kablowa
Lublin S.A. held by Poltelkab Sp. z o.o. as security for the loan of $6.5
million granted on August 28, 1996 by the American Bank in Poland to
Poland Communications, Inc. ("PCI"), and (iii) the pledge of 1,818 shares
of Szczecinska Telewizja Kablowa Sp. z o.o. ("SzTK") for the security of
certain obligations undertaken by PTK Szczecin Sp. z o.o. ("PTK Szczecin")
with respect to the sellers of those shares (collectively, the "Share
Pledges"); none of the outstanding shares of capital stock of the
Designated Subsidiaries was issued in violation of any preemptive or
similar rights arising by operation of law, or under the statute or
by-laws (or other similar organizational documents) of any Designated
Subsidiary or under any agreement to which the Company or any Designated
Subsidiary is a party. The subsidiaries of the Company other than the
Designated Subsidiaries, considered in the aggregate as a single
subsidiary, do not constitute a "significant subsidiary" as defined in
Rule 1-02 of Regulation S-X.
(viii) Restrictions on Payments of Dividends. There are no
restrictions (legal, contractual or otherwise) on the ability of the
Designated Subsidiaries to declare and pay dividends or make any payment
or transfer of property or assets to their shareholders other than those
referred to in the Preference Offering Memorandum and except for (i)
restrictions relating to the Share Pledges, (ii) encumbrances on certain
assets of Telewizja Kablowa GOSAT Sp. z o.o. ("GOSAT") consisting of the
transfer of title to such assets as security for the loan of $0.5 million
granted on October 7, 1996 by Polski Bank Rozwoju (which was bought by
Bank Rozucju Eksportu S.A. in July of 1998) to GOSAT, and (iii) the
restrictions discussed in Schedule D to the Indenture (collectively, the
"Asset Encumbrances").
(ix) Capitalization. The authorized, issued and outstanding capital
stock of the Company at September 30, 1998 was as set forth under the
caption "Capitalization"
-10-
under the heading "Actual" in the Preference Offering Memorandum and, as
of the date hereof, there has been no material change in the authorized,
issued and outstanding capital stock since the date of the Preference
Offering Memorandum other than (i) issuances of shares of Common Stock
upon the exercise of options disclosed to be outstanding in the Preference
Offering Memorandum and (ii) the authorization and issuance of the
Preference Securities, the Series B Preference Shares, the Chase Warrants
and the Note Securities as described in the Preference Offering
Memorandum. The shares of issued and outstanding capital stock of the
Company have been duly authorized and validly issued and are fully paid
and non-assessable; none of the outstanding shares of capital stock of the
Company was issued in violation of the preemptive or other similar rights
of any securityholder of the Company.
(x) Authorization of Agreement. This Agreement has been duly
authorized, executed and delivered by the Company.
(xi) Authorization of the Preference Registration Rights Agreement.
The Preference Registration Rights Agreement has been duly authorized by
the Company, and, at the Closing Time, will have been duly executed and
delivered by the Company and, when executed and delivered by the Purchaser
and the Chase Purchasers, will constitute a valid and binding agreement of
the Company, enforceable against the Company in accordance with its terms
except as (x) the enforceability thereof may be limited by bankruptcy,
insolvency (including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or other similar laws relating to
or affecting enforcement of creditors' rights generally, (y) the
enforceability thereof may be limited by general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity
or at law) and (z) any rights to indemnity and contribution may be limited
by federal and state securities laws and public policy considerations.
(xii) Authorization of the Certificate of Designation and the
Preference Shares. The Certificate of Designation has been duly authorized
by the Board of Directors of the Company and, at the Closing Time, will
have been duly filed with the Secretary of State of Delaware. The
Preference Shares have been duly authorized by the Company for issuance
and sale to the Purchaser pursuant to this Agreement and the Preference
Shares when issued and delivered against payment therefor in accordance
with the terms hereof, will be validly issued, fully paid and
non-assessable and the Purchaser will receive title to the Preference
Shares free and clear of all liens and encumbrances. The security holders
of the Company have no preemptive rights with respect to the Preference
Shares.
(xiii) Authorization of the Preference Warrant Agreement. The
Preference Warrant Agreement has been duly authorized by the Company and,
at the Closing Time, will have been duly executed and delivered by the
Company and, when duly executed and delivered by the Preference Warrant
Agent, will constitute a valid and binding agreement of the Company,
enforceable against the Company in accordance with its
-11-
terms, except as enforceability thereof may be limited by bankruptcy,
insolvency (including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or other similar laws relating to
or affecting enforcement of creditors' rights generally or by general
principles of equity (regardless of whether enforcement is considered in a
proceeding in equity or at law).
(xiv) Authorization of the Preference Warrants. The Preference
Warrants have been duly authorized by the Company and, at the Closing
Time, will have been duly executed by the Company and, when executed and
issued in the manner provided for in the Preference Warrant Agreement and
delivered against payment of the purchase price therefor as provided in
this Agreement, (A) will constitute valid and binding obligations of the
Company, enforceable against the Company in accordance with their terms,
except as the enforcement thereof may be limited by bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or similar laws affecting
enforcement of creditors' rights generally and except as enforcement
thereof is subject to general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law), and (B)
will be in the form contemplated by, and entitled to the benefits of, the
Preference Warrant Agreement and the Preference Warrant Registration
Rights Agreement.
(xv) Authorization of the Preference Warrant Shares. The shares of
Common Stock issuable upon exercise of the Preference Warrants (the
"Preference Warrant Shares") have been duly authorized and reserved by the
Company and, when executed by the Company and countersigned by the
Preference Warrant Agent and issued and delivered upon exercise of the
Preference Warrants in accordance with the terms of the Preference
Warrants and the Preference Warrant Agreement, will be validly issued,
fully paid and non-assessable and will not be subject to any preemptive or
similar rights.
(xvi) Authorization of the Preference Warrant Registration Rights
Agreement. The Preference Warrant Registration Rights Agreement has been
duly authorized by the Company and, at the Closing Time, will have been
duly executed and delivered by the Company and, when executed and
delivered by the Purchaser and the Chase Purchasers, will constitute a
valid and binding agreement of the Company, enforceable against the
Company in accordance with its terms except as (x) the enforceability
thereof may be limited by bankruptcy, insolvency (including, without
limitation, all laws relating to fraudulent transfers), reorganization,
moratorium or other similar laws relating to or affecting enforcement of
creditor's rights generally, (y) the enforceability thereof may be limited
by general principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law) and (z) any rights to
indemnity and contribution may be limited by federal and state securities
laws and public policy considerations.
(xvii) Authorization of the Indenture. The Indenture has been duly
authorized by the Company and, at the Closing Time, will have been duly
executed and delivered by
-12-
the Company and, when executed and delivered by the Trustee, will
constitute a valid and binding agreement of the Company, enforceable
against the Company in accordance with its terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or other similar laws relating to
or affecting enforcement of creditors' rights generally or by general
principles of equity (regardless of whether enforcement is considered in a
proceeding in equity or at law) and the waiver contained in Section 514
thereof may be unenforceable due to interests of public policy.
(xviii) Authorization of the Notes. The Notes have been duly
authorized and, at the Closing Time, will have been duly executed by the
Company and, when authenticated in the manner provided for in the
Indenture and delivered against payment of the purchase price therefor
will constitute valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or other similar laws relating to
or affecting enforcement of creditors' rights generally or by general
principles of equity (regardless of whether enforcement is considered in a
proceeding in equity or at law), and will be in the form contemplated by,
and entitled to the benefits of, the Indenture and the Note Registration
Rights Agreement.
(xix) Authorization of the Note Registration Rights Agreement. The
Note Registration Rights Agreement has been duly authorized by the
Company, and, at the Closing Time, will have been duly executed and
delivered by the Company and will, when executed and delivered by the
Initial Purchasers, constitute a valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms
except as (x) the enforceability thereof may be limited by bankruptcy,
insolvency .(including, without limitation, all laws relating to
fraudulent transfers), reorganization, moratorium or other similar laws
relating to or affecting enforcement of creditors' rights generally, (y)
the enforceability thereof may be limited by general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity
or at law) and (z) any rights to indemnity and contribution may be limited
by federal and state securities laws and public policy considerations.
(xx) Authorization of the Note Warrant Agreement. The Note Warrant
Agreement has been duly authorized by the Company and, at the Closing
Time, will have been duly executed and delivered by the Company and, when
duly executed and delivered by the Note Warrant Agent, will constitute a
valid and binding agreement of the Company, enforceable against the
Company in accordance with its terms, except as enforceability thereof may
be limited by bankruptcy, insolvency (including, without limitation, all
laws relating to fraudulent transfers), reorganization, moratorium or
other similar laws relating to or affecting enforcement of creditors'
rights generally or by
-13-
general principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law).
(xxi) Authorization of the Note Warrant Registration Rights
Agreement. The Note Warrant Registration Rights Agreement has been duly
authorized by the Company and, at the Closing Time, will have been duly
executed and delivered by the Company and, when executed and delivered by
the Initial Purchasers, will constitute a valid and binding agreement of
the Company, enforceable against the Company in accordance with its terms
except as (x) the enforceability thereof may be limited by bankruptcy,
insolvency (including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or other similar laws relating to
or affecting enforcement of creditor's rights generally, (y) the
enforceability thereof may be limited by general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity
or at law) and (z) any rights to indemnity and contribution may be limited
by .federal and state securities laws and public policy considerations.
(xxii) Description of the Preference Registration Rights Agreement,
the Preference Warrant Registration Rights Agreement, the Preference
Shares, the Preference Warrants, the Common Stock, the Preference Warrant
Agreement, the Chase Securities, the Note Securities, and the Note
Agreements. The Preference Registration Rights Agreement, the Preference
Warrant Registration Rights Agreement, the Preference Shares, the
Preference Warrants, the Common Stock, the Preference Warrant Agreement,
the Chase Securities, the Note Securities and the Note Agreements will
conform in all material respects to the respective statements relating
thereto contained in the Preference Offering Memorandum and will be in
substantially the respective forms previously delivered to the Purchaser.
(xxiii) Absence of Defaults and Conflicts. Neither the Company nor
any of its subsidiaries is (1) in violation of its charter or statute, as
applicable, or by-laws (or other similar organizational documents), (2) in
default in the performance or observance of any obligation, agreement,
covenant or condition contained in any contract, indenture, mortgage, deed
of trust, loan or credit agreement, note, lease or other agreement or
instrument to which the Company or any of its subsidiaries is a party or
by which or any of them may be bound, or to which any of the property or
assets of the Company or any of its subsidiaries is subject (collectively,
"Agreements and Instruments"), except as described in the Preference
Offering Memorandum and except for such defaults that would not result in
a Material Adverse Effect or (3) in violation of any applicable law,
statute, rule, regulation, judgment, order, writ or decree of any
government, government instrumentality or court, domestic or foreign,
having jurisdiction over the Company or any of its subsidiaries or any of
their assets or properties, except as described in the Preference Offering
Memorandum; and the execution, delivery and performance of this Agreement,
the DTC Agreement, the Preference Warrant Agreement, the Preference
Registration Rights Agreement, the Preference Warrant Registration Rights
Agreement,
-14-
the Certificate of Designation, the Preference Securities, the Note
Securities, the Note Agreements, and any other agreement or instrument
entered into or issued or to be entered into or issued by the Company or
any Designated Subsidiary in connection with the transactions contemplated
hereby or thereby or in the Preference Offering Memorandum and the
consummation of the transactions contemplated herein and in the Note
Purchase Agreement and the Preference Offering Memorandum (including the
issuance and sale of the Preference Securities and the Note Securities and
the use of the proceeds from the sale of the Preference Securities and the
Note Securities as described in the Preference Offering Memorandum under
the caption "Use of Proceeds") and compliance by the Company with its
obligations hereunder have been duly authorized by all necessary corporate
action and do not and will not, whether with or without the giving of
notice or passage of time or both, conflict with or constitute a breach
of, or default or Repayment Event (as defined below) under, or result in
the creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any of its subsidiaries pursuant to,
the Agreements and Instruments except for such conflicts, breaches,
Repayment Events or defaults or liens, charges or encumbrances that,
singly or in the aggregate, would not result in a Material Adverse Effect,
nor will such action result in any violation of the provisions of the
charter or statute, as applicable, or by-laws (or other similar
organizational documents) of the Company or any of its subsidiaries or any
applicable law, statute, rule, regulation, judgment, order, writ or decree
of any government, government instrumentality or court, domestic or
foreign, having jurisdiction over the Company or any of its subsidiaries
or any of their assets or properties, assuming that the Purchaser complies
with all of its obligations under Section 6 hereof. As used herein, a
"Repayment Event" means any event or condition which gives the holder of
any note, debenture or other evidence of indebtedness (or any person
acting on such holder's behalf) the right to require the repurchase,
redemption or repayment of all or a portion of such indebtedness by the
Company or any of its subsidiaries.
(xxiv) Absence of Labor Dispute. No labor dispute with the employees
of the Company or any of its subsidiaries exists or, to the knowledge of
the Company, is imminent, and the Company is not aware of any existing or
imminent labor disturbance by the employees of any of its or any of its
subsidiaries' principal suppliers, customers or contractors, which, in
either case, may reasonably be expected to result in a Material Adverse
Effect.
(xxv) Absence of Proceedings. Except as disclosed in the Preference
Offering Memorandum, there is no action, suit, proceeding, inquiry or
investigation before or by any court or governmental agency or body,
domestic or foreign, now pending, or, to the knowledge of the Company,
threatened, against or affecting the Company or any subsidiary thereof,
which would be required to be disclosed in the Preference Offering
Memorandum (other than as disclosed therein) if it were a prospectus filed
as part of a registration statement on Form S-1 under the 1933 Act, or
which might reasonably be
-15-
expected to result in a Material Adverse Effect, or which might reasonably
be expected to adversely affect the properties or assets of the Company or
any of its subsidiaries in a manner that is material and adverse to the
Company and its subsidiaries considered as one enterprise or the
consummation of the transactions contemplated by this Agreement, the
Preference Warrant Agreement, the Preference Registration Rights
Agreement, the Preference Warrant Registration Rights Agreement, the
Certificate of Designation, the Preference Securities, the Note Securities
or the Note Agreements, or the performance by the Company of its
obligations hereunder or thereunder. The aggregate of all pending legal or
governmental proceedings to which the Company or any subsidiary thereof is
a party or of which any of their respective property or assets is the
subject which are not described in the Preference Offering Memorandum,
including ordinary routine litigation incidental to the business, could
not reasonably be expected to result in a Material Adverse Effect.
(xxvi) Possession of Intellectual Property. Except as disclosed in
the Preference Offering Memorandum, the Company and its subsidiaries own
or possess, or can acquire on reasonable terms, adequate patents, patent
rights, licenses, inventions, copyrights, know-how (including trade
secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures), trademarks, service
marks, trade names or other intellectual property (collectively,
"Intellectual Property") necessary to carry on the business now operated
by them. Except as disclosed in the Preference Offering Memorandum,
neither the Company nor any of its subsidiaries has received any notice or
is otherwise aware of any infringement of or conflict with asserted rights
of others with respect to any Intellectual Property or of any facts or
circumstances which would render any Intellectual Property invalid or
inadequate to protect the interest of the Company or any of its
subsidiaries therein, and which infringement or conflict (if the subject
of any unfavorable decision, ruling or finding) or invalidity or
inadequacy, singly or in the aggregate, would result in a Material Adverse
Effect.
(xxvii) Absence of Further Requirements. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or agency
(other than (A) under the 1933 Act and the rules and regulations
thereunder with respect to the Preference Registration Rights Agreement,
the Preference Warrant Registration Rights Agreement, the Note
Registration Rights Agreement, the Note Warrant Registration Rights
Agreement, and the transactions contemplated thereunder, (B) under the
securities or "blue sky" laws of the various states and (C) the Polish
Anti-Monopoly Act) is necessary or required (x) for the performance by the
Company of its obligations hereunder, in connection with the offering,
issuance or sale of the Preference Securities hereunder or the
consummation of the transactions contemplated by this Agreement, the
Preference Warrant Agreement, the Preference Registration Rights
Agreement, the Preference Warrant Registration Rights Agreement, the Note
Registration Rights Agreement, the Note Warrant Registration Rights
Agreement, or the Preference Offering Memorandum or (y) to permit the
Company to (1)
-16-
effect payments of dividends on or redemption of the Preference Shares, or
(2) perform its other obligations under the Certificate of Designation,
the Preference Warrant Agreement, the Preference Warrant Registration
Rights Agreement, the Note Registration Rights Agreement, and the Note
Warrant Registration Rights Agreement.
(xxviii) Possession of Licenses and Permits. Except as disclosed in
the Preference Offering Memorandum, the Company and its subsidiaries
possess such permits, licenses, approvals, concessions, consents and other
authorizations (including, without limitation, all permits required for
the operation of the business of the Company and its subsidiaries by the
Republic of Poland and the United Kingdom) (collectively, "Governmental
Licenses") issued by the appropriate domestic or foreign regulatory
agencies or bodies, other governmental authorities or self regulatory
organizations necessary to conduct the business now operated by them or
any business currently proposed to be conducted by them as described in
the Preference Offering Memorandum; the Company and its subsidiaries,
except as disclosed in the Preference Offering Memorandum and except where
the failure to so comply would not, singly or in the aggregate, have a
Material Adverse Effect, are in compliance with the terms and conditions
of all such Governmental Licenses; all of the Governmental Licenses are
valid and in full force and effect, except as disclosed in the Preference
Offering Memorandum and except when the invalidity of such Governmental
Licenses or the failure of such Governmental Licenses to be in full force
and effect would not have a Material Adverse Effect; and except as
disclosed in the Preference Offering Memorandum, neither the Company nor
any of its subsidiaries has received any notice of proceedings relating to
the revocation or modification of any such Governmental Licenses which,
singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would result in a Material Adverse Effect. To the
knowledge of the Company, except as described in the Preference Offering
Memorandum, there exists no reason or cause that could justify the
variation, suspension, cancellation or termination of any such
Governmental Licenses held by the Company or any of its subsidiaries with
respect to the construction or operation of their respective businesses,
which variation, suspension, cancellation or termination could reasonably
be expected to have a Material Adverse Effect.
(xxix) No Additional Documents. There are no contracts or documents
of a character that would be required to be described in the Preference
Offering Memorandum, if it were a prospectus filed as part of a
registration statement on Form S-3 under the 1933 Act, that are not
described as would be so required. All such contracts to which the Company
is party have been duly authorized, executed and delivered by the Company
and constitute valid and binding agreements of the Company.
(xxx) Management Agreements. Each of the Management Agreements (as
such term is defined in the Indenture) to which any subsidiary of the
Company is a party has been duly authorized, executed and delivered by
each of the parties thereto and constitutes a valid and binding agreement
of each of the parties thereto.
-17-
(xxxi) Title to Property. The Company and its subsidiaries own no
real property, except as described in the Preference Offering Memorandum
and except for approximately 3,200 square meters of real property owned by
a Designated Subsidiary, and have good title to all other properties owned
by them, in each case, free and clear of all mortgages, pledges, liens,
security interests, claims, restrictions or encumbrances of any kind
except such as (a) are described in the Preference Offering Memorandum or
(b) do not, singly or in the aggregate, materially affect the value of
such property and do not interfere with the use made and proposed to be
made of such property by the Company or any of its subsidiaries; and all
of the leases and subleases material to the business of the Company and
its subsidiaries, considered as one enterprise, and under which the
Company or any of its subsidiaries holds properties described in the
Preference Offering Memorandum, are in full force and effect, and neither
the Company nor any of its subsidiaries has any notice of any claim of any
sort that has been asserted by anyone adverse to the rights of the Company
or any of its subsidiaries under any of the leases or subleases mentioned
above, or affecting or questioning the rights of the Company or any
subsidiary thereof to the continued possession of the leased or subleased
premises under any such lease or sublease, except for such claims as could
not reasonably be expected to result in a Material Adverse Effect.
(xxxii) Tax Returns. Except as disclosed in the Preference Offering
Memorandum, the Company and its subsidiaries have filed all domestic and
foreign tax returns that are required to be filed or have duly requested
extensions thereof and have paid all taxes required to be paid by any of
them and any related assessments, fines or penalties, except for any such
tax, assessment, fine or penalty that is being contested in good faith and
by appropriate proceedings, and except for such claims as could not result
in a Material Adverse Effect; and adequate charges, accruals and reserves
have been provided for in the financial statements referred to in Section
1(a)(iv) above in respect of all domestic and foreign taxes for all
periods as to which the tax liability of the Company or any of its
subsidiaries has not been finally determined or remains open to
examination by applicable taxing authorities.
(xxxiii) Environmental Laws. Except as described in the Preference
Offering Memorandum and except such matters as would not, singly or in the
aggregate, result in a Material Adverse Effect, (A) neither the Company
nor any of its subsidiaries is in violation of any domestic or foreign
statute, law, rule, regulation, ordinance, code, policy or rule of common
law or any judicial or administrative interpretation thereof including any
judicial or administrative order, consent, decree or judgment, relating to
pollution or protection of human health, the environment (including,
without limitation, ambient air, surface water, groundwater, land surface
or subsurface strata) or wildlife, including, without limitation, laws and
regulations relating to the release or threatened release of chemicals,
pollutants, contaminants, wastes, toxic substances, hazardous substances,
petroleum or petroleum products (collectively, "Hazardous Materials") or
to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or
-18-
handling of Hazardous Materials (collectively, "Environmental Laws"), (B)
the Company and its subsidiaries have all permits, authorizations and
approvals required under any applicable Environmental Laws and are each in
compliance with their requirements, (C) there are no pending or threatened
administrative, regulatory or judicial actions, suits, demands, demand
letters, claims, liens, notices of noncompliance or violation,
investigation or proceedings relating to any Environmental Law against the
Company or any of its subsidiaries and (D) there are no events or
circumstances that might reasonably be expected to form the basis of an
order for clean-up or remediation, or an action, suit or proceeding by any
private party or governmental body or agency, against or affecting the
Company or any of its subsidiaries relating to Hazardous Materials or
Environmental Laws.
(xxxiv) Investment Company Act. The Company is not, and upon the
issuance and sale of the Preference Securities, the Chase Securities and
the Note Securities as herein contemplated and the application of the net
proceeds therefrom as described in the Preference Offering Memorandum will
not be, an "investment company" or an entity "controlled" by an
"investment company" as such terms are defined in the Investment Company
Act of 1940, as amended (the "1940 Act").
(xxxv) Internal Controls. The Company and each of its subsidiaries
maintain a system of internal accounting controls sufficient to provide
reasonable assurances that (A) transactions are executed in accordance
with management's general or specific authorization; (B) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain
accountability for assets; (C) access to assets is permitted only in
accordance with management's general or specific authorization; and (D)
the recorded accountability for assets is compared with the existing
assets at reasonable intervals and appropriate action is taken with
respect to any differences. The Company and its subsidiaries have not
made, and, to the knowledge of the Company, no employee or agent of the
Company or any subsidiary has made, any payment of the Company's funds or
any subsidiary's funds or received or retained any funds (A) in violation
of the Foreign Corrupt Practices Act, as amended, or (B) in violation of
any other applicable law, regulation or rule (except, in the case of this
clause (B), for such violations as could not reasonably be expected to
result in a Material Adverse Effect) or that would be required to be
disclosed in the Preference Offering Memorandum if it were a prospectus
filed as part of a registration statement on Form S-1 under the 1933 Act.
(xxxvi) Taxes on Subsidiary Indebtedness. Except as described in the
Preference Offering Memorandum, as of the date hereof, no material income,
stamp or other taxes or levies, imposts, deductions, charges, compulsory
loans or withholdings whatsoever are or will be, under applicable law in
the Republic of Poland, imposed, assessed, levied or collected by the
Republic of Poland or any political subdivision or taxing authority
thereof or therein or on or in respect of principal, interest, premiums,
-19-
penalties or other amounts payable under any indebtedness of any of the
Company's subsidiaries held by the Company.
(xxxvii) Insurance. Except as otherwise disclosed in the Preference
Offering Memorandum, the Company and each of its subsidiaries carry, or
are covered by, insurance in such amounts and covering such risks as is
adequate for the conduct of their respective businesses and the value of
their respective properties and as is customary for companies engaged in
similar businesses or similar industries in similar locations.
(xxxviii) Rule 144A Eligibility. The Preference Securities are
eligible for resale pursuant to Rule 144A and will not be, at the Closing
Time, of the same class as securities listed on a national securities
exchange registered under Section 6 of the Securities Exchange Act of
1934, as amended (the "1934 Act"), or quoted in a U.S. automated
interdealer quotation system.
(xxxix) No General Solicitation. None of the Company, its
affiliates, as such term is defined in Rule 501(b) under the 1933 Act
("Affiliates"), or any person acting on its or any of their behalf (other
than the Purchaser and the Initial Purchasers, as to whom the Company
makes no representation) has engaged or will engage, in connection with
the offering of the Preference Securities, in any form of general
solicitation or general advertising within the meaning of Rule 502(c)
under the 1933 Act.
(xl) No Registration Required. Subject to compliance by the
Purchaser with the representations and warranties set forth in Section 2
and the procedures set forth in Section 6 hereof, it is not necessary in
connection with the offer, sale and delivery of the Preference Securities
to the Purchaser in the manner contemplated by this Agreement, the
Preference Warrant Agreement and the Preference Offering Memorandum to
register the Preference Securities under the 1933 Act.
(xli) Reporting Company. The Company is subject to, and has complied
with all applicable reporting requirements of Section 13 or Section 15(d)
of the 0000 Xxx.
(xlii) Funds. With the net proceeds of the sale of the Preference
Securities and the Chase Securities pursuant to this Agreement and the
Chase Purchase Agreement, respectively, the sales of the Note Securities
pursuant to the Note Purchase Agreement and the sale of the Company's
Series C Senior Discount Notes which was consummated on January 20, 1999,
together with cash on hand, the Company has sufficient capital to fulfill
its current business plan and to fund its commitments until the Company
achieves positive cash flow from operations, subject to the matters
disclosed in the Preference Offering Memorandum.
-20-
(xliii) Subscribers. As of December 31, 1998, the Company had at
least 675,000 basic cable subscribers and had sold approximately 125,000
Wizja TV packages to authorized retailers in Poland (as described in the
Preference Offering Memorandum).
(b Officers' Certificates. Any certificate titled "Officers' Certificate"
or "Secretary's Certificate" signed by any officer of the Company or any of its
subsidiaries which is delivered to the Purchaser or to counsel for the Purchaser
shall be deemed a representation and warranty by the Company to the Purchaser as
to the matters covered thereby.
SECTION 2. Sale and Delivery to the Purchaser; Closing.
(a) Preference Securities. On the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, the Company agrees to sell to the Purchaser and the Purchaser agrees to
purchase from the Company, at an aggregate purchase price of $45,000,000 (less a
commission of $1,350,000), the aggregate number of Preference Shares and
Preference Warrants set forth in Schedule A opposite its name.
(b) Payment. Payment of the purchase price for, and delivery of
certificates for, the Preference Securities shall be made at the office of
Shearman & Sterling, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such
other place as shall be agreed upon by the Purchaser and the Company, at 9:00
A.M. on the third business day after the date hereof (unless postponed in
accordance with the provisions of Section 11), or such other time not later than
ten business days after such date as shall be agreed upon by the Purchaser and
the Company (such time and date of payment and delivery being herein called the
"Closing Time").
Payment shall be made to the Company by wire transfer of immediately
available funds to a bank account designated by the Company, against delivery to
the Purchaser for the account of the Purchaser of certificates for the
Preference Securities to be purchased by it.
(c) Qualified Institutional Buyer. The Purchaser represents and warrants
to, and agrees with, the Company that it is a "qualified institutional buyer"
within the meaning of Rule 144A under the 1933 Act (a "Qualified Institutional
Buyer") and an "accredited investor" within the meaning of Rule 501(a) under the
1933 Act (an "Accredited Investor").
(d) Denominations; Registration. Certificates for the Preference
Securities shall be in such denominations and registered in such names as the
Purchaser may request in writing at least one full business day before the
Closing Time. The certificates representing the Preference Shares and the
Preference Warrants shall be registered in the name of Cede & Co. pursuant to
the DTC Agreement and shall be made available for examination and packaging by
the Purchaser in the City of New York not later than 10:00 A.M. on the last
business day prior to the Closing Time.
SECTION 3. Covenants of the Company. The Company covenants with the
Purchaser as follows:
-21-
(a) Preference Offering Memorandum. The Company, as promptly as possible,
will furnish to the Purchaser, without charge, such number of copies of the
Preference Offering Memorandum and any amendments and supplements thereto and
documents incorporated by reference therein as the Purchaser may reasonably
request.
(b) Notice and Effect of Material Events. The Company will immediately
notify the Purchaser, and confirm such notice in writing, of any filing made by
the Company of information relating to the offering of the Preference Securities
with any securities exchange or any other regulatory body in the United States
or any other jurisdiction.
(c) Reserved.
(d) Reserved.
(e) Reserved.
(f) DTC and PORTAL. The Company will cooperate with the Purchaser and use
its best efforts (i) to permit the Preference Securities to be eligible for
clearance and settlement through the facilities of DTC and (ii) include
quotation of the Preference Securities on PORTAL.
(g) Use of Proceeds. The Company will use the net proceeds received by it
from the sale of the Preference Securities in the manner specified in the
Preference Offering Memorandum under "Use of Proceeds."
(h) Reserved.
(i) Notification of Current Accumulated Earnings and Profits. The Company
will disclose its current and accumulated earnings and profits, if any, for each
fiscal year in its annual report on Form 10-K so long as it is required to file
such a report. Thereafter, the Company will provide such information to any
holder of Preference Securities upon receipt of a written request from such
holder.
SECTION 4. Payment of Expenses.
(a) Expenses. The Company will pay all expenses incident to the
performance of its obligations under this Agreement, including (i) the
preparation, printing and any filing of the Preference Offering Memorandum
(including financial statements and any schedules or exhibits and any document
incorporated therein by reference) and of each amendment or supplement thereto,
(ii) the preparation, printing and delivery to the Purchaser of this Agreement,
the Preference Warrant Agreement, the Preference Registration Rights Agreement,
the Preference Warrant Registration Rights Agreement, the Certificate of
Designation and such other documents as may be required in connection with the
offering, purchase, sale, issuance or delivery of the Preference Securities,
(iii) the preparation, issuance and delivery of the certificates for the
Preference Securities to the Purchaser, including any charges of DTC in
connection therewith,
-22-
(iv) the fees and disbursements of the Company's counsel, accountants and other
advisors, (v) any filing for review of the offering with the National
Association of Securities Dealers (the "NASD"), and (vi) any fees payable to the
NASD and any fees and expenses payable in connection with the initial and
continued designation of the Preference Securities as PORTAL securities under
the PORTAL Market Rules pursuant to NASD Rule 5322.
(b) Termination of Agreement. If this Agreement is terminated by the
Purchaser in accordance with the provisions of Section 5 or Section 10(a)(i)
hereof, the Company shall reimburse the Purchaser for all of its out-of-pocket
expenses, including the reasonable fees and disbursements of counsel for the
Purchaser incurred through the date of termination.
SECTION 5. Conditions of the Purchaser's Obligations. The obligations of
the Purchaser hereunder are subject to the accuracy of the representations and
warranties of the Company contained in Section 1 hereof or in certificates of
any officer of the Company or any of its subsidiaries delivered pursuant to the
provisions hereof, to the performance by the Company of its covenants and other
obligations hereunder, and to the following further conditions:
(a) Opinions of Counsel for the Company. (i) At the Closing Time, the
Purchaser shall have received two favorable opinions, each dated as of the
Closing Time, of Xxxxx & XxXxxxxx, counsel for the Company, each in form and
substance satisfactory to counsel for the Purchaser, one to the effect as set
forth in Exhibit E hereto and one to the effect set forth in Exhibit F hereto
and each to such further effect as counsel to the Purchaser may reasonably
request.
(ii) At the Closing Time, the Purchaser shall have received the
favorable opinion, dated as of the Closing Time, of Xxxxx & XxXxxxxx,
Amsterdam, special Dutch counsel to the Company, in form and substance
satisfactory to counsel to the Purchaser, to the effect set forth in
Exhibit G hereto and to such other effect as counsel to the Purchaser may
reasonably request.
(iii) At the Closing Time, the Purchaser shall have received the
favorable opinion, dated as of the Closing Time, of Ashurst Xxxxxx Xxxxx,
special English counsel to the Company, in form and substance satisfactory
to counsel to the Purchaser, to the effect set forth in Exhibit H hereto
and to such other effect as counsel to the Purchaser may reasonably
request.
(b) Opinion of United States Counsel for the Purchaser. At the Closing
Time, the Purchaser shall have received the favorable opinion, dated as of the
Closing Time, of Shearman & Sterling, counsel for the Purchaser, with respect to
certain of the matters set forth in Exhibit E hereto and to such other effect as
the Purchaser and such counsel may reasonably agree.
(c) Opinion of Polish Counsel for the Purchaser. At the Closing Time, the
Purchaser shall have received the favorable opinion, dated as of the Closing
Time, of Salans Xxxxxxxxx & Heilbronn Sp. z o.o., special Polish counsel to the
Purchaser, in form satisfactory to the
-23-
Purchaser with respect to certain of the matters set forth in paragraphs (i)
through (vii), inclusive, of Exhibit F hereto.
(d) Officers' Certificate. At the Closing Time, there shall not have been,
since the date hereof or since the respective dates as of which information is
given in the Preference Offering Memorandum, any material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and its subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business, and the
Purchaser shall have received a certificate of the chief executive officer of
the Company and of the chief financial or chief accounting officer of the
Company, dated as of the Closing Time, to the effect that (i) there has been no
such material adverse change, (ii) the representations and warranties in Section
1 hereof are true and correct with the same force and effect as though expressly
made at and as of the Closing Time, and (iii) the Company has complied with all
agreements and satisfied all conditions on its part to be performed or satisfied
at or prior to the Closing Time.
(e) Accountants' Comfort Letter. At the time of the execution of this
Agreement and upon delivery of an underwriters' request for comfort letter (the
"Request Letter") in form and substance satisfactory to KPMG Polska Sp. z o.o.,
the Purchaser shall have received from KPMG Polska Sp. z o.o. a letter dated
such date, in form and substance satisfactory to the Purchaser, containing
statements and information of the type ordinarily included in accountants'
"comfort letters" to the Purchaser with respect to the financial statements and
certain financial information contained in the Preference Offering Memorandum.
If the Purchaser is unable or unwilling to provider the Request Letter, at the
time of the execution of this Agreement, the Purchaser shall have received from
KPMG Polska Sp. z o.o. a letter dated such date, in form and substance
satisfactory to the Purchaser, containing statements and information of the type
ordinarily included in accountants' "agreed procedures letter" to the Purchaser
with respect to the financial statements and certain financial information
contained in the Preference Offering Memorandum.
(f) Bring-down Comfort Letter. At the Closing Time, the Purchaser shall
have received from KPMG Polska Sp. z o.o. a letter, dated as of the Closing
Time, to the effect that they reaffirm the statements made in the letter
furnished pursuant to subsection (e) of this Section, except that the specified
date referred to shall be a date not more than three business days prior to the
Closing Time.
(g) Consummation of Sale of Chase Securities and Note Securities. The sale
of the Note Securities and the sale of Chase Securities to the Chase Purchasers
pursuant to the Chase Purchase Agreement shall have been consummated at the
Closing Time.
(h) PORTAL. At the Closing Time, the Preference Securities shall have been
designated for trading on PORTAL.
(i) Additional Documents. At the Closing Time, counsel for the Purchaser
shall have been furnished with such documents and opinions as it may require for
the purpose of enabling it
-24-
to pass upon the issuance and sale of the Preference Securities as herein
contemplated, or in order to evidence the accuracy of any of the representations
or warranties, or the fulfillment of any of the conditions, herein contained;
and all proceedings taken by the Company in connection with the issuance and
sale of the Preference Securities as herein contemplated shall be satisfactory
in form and substance to the Purchaser and counsel for the Purchaser.
(j) Execution of Agreements. At the Closing Time, the Preference Warrant
Agreement, the Preference Registration Rights Agreement, the Preference Warrant
Registration Rights Agreement and the Certificate of Designation, each in form
and substance reasonably satisfactory to the Purchaser, shall have been duly
executed and delivered and shall be in full force and effect.
(k) Termination of Agreement. If any condition specified in this Section
shall not have been fulfilled when and as required to be fulfilled, this
Agreement may be terminated by the Purchaser by notice to the Company at any
time at or prior to the Closing Time, and such termination shall be without
liability of any party to any other party except as provided in Section 4 and
except that Sections 1, 7, 8 and 9 shall survive any such termination and remain
in full force and effect.
SECTION 6. Subsequent Offers and Resales of the Preference Securities.
(a) Offer and Sale Procedures. The Purchaser and the Company hereby
establish and agree to observe the following procedures in connection with the
offer and sale of the Preference Securities:
(i) Offers and Sales only to Qualified Institutional Buyers. Offers
and sales of the Preference Securities shall only be made to persons whom
the offeror or seller reasonably believes to be qualified institutional
buyers (as defined in Rule 144A under the 1933 Act). The Purchaser agrees
that it will not offer, sell or deliver any of the Preference Securities
in any jurisdiction except under circumstances that will result in
compliance with the applicable laws thereof, and that it will take at its
own expense whatever action is required to permit its purchase and resale
of the Preference Securities in such jurisdictions.
(ii) No General Solicitation. No general solicitation or general
advertising (within the meaning of Rule 502(c) under the 0000 Xxx) will be
used in the United States in connection with the offering or sale of the
Preference Securities.
(iii) Purchases by Non-Bank Fiduciaries. In the case of a non-bank
subsequent purchaser of a Preference Security acting as a fiduciary for
one or more third parties, each third party shall, in the judgment of the
Purchaser, be a Qualified Institutional Buyer.
(iv) Subsequent Purchaser Notification. The Purchaser will take
reasonable steps to inform, and cause each of its U.S. Affiliates to take
reasonable steps to inform,
-25-
persons acquiring Preference Securities from the Purchaser or affiliate,
as the case may be, in the United States that the Preference Securities
(A) have not been and will not be registered under the 1933 Act, (B) are
being sold to them without registration under the 1933 Act in reliance on
Rule 144A or in accordance with another exemption from registration under
the 1933 Act, as the case may be, and (C) may not be offered, sold or
otherwise transferred prior to (x) the date which is two years (or such
shorter period of time as permitted by Rule 144(k) under the 1933 Act or
any successor provision thereunder) after the later of the date of
original issue of the Preference Securities and (y) such later date, if
any, as may be required under applicable laws except (1) to the Company or
any of its subsidiaries, (2) inside the United States in accordance with
(x) Rule 144A to a person whom the seller reasonably believes is a
Qualified Institutional Buyer that is purchasing such Preference
Securities for its own account or for the account of a Qualified
Institutional Buyer to whom notice is given that the offer, sale or
transfer is being made in reliance on Rule 144A or (y) pursuant to another
available exemption from registration under the 1933 Act, or (3) pursuant
to an effective registration statement.
(v) Restrictions on Transfer. The transfer restrictions and the
other provisions set forth in the Preference Offering Memorandum under the
heading "Notice to Investors", including the legend required thereby,
shall apply to the Preference Securities except as otherwise agreed by the
Company and the Purchaser. Following the sale of the Preference Securities
by the Purchaser to subsequent purchasers pursuant to the terms hereof,
the Purchaser shall not be liable or responsible to the Company for any
losses, damages or liabilities suffered or incurred by the Company,
including any losses, damages or liabilities under the 1933 Act, arising
from or relating to any resale or transfer of any Security.
(b) Covenants of the Company. The Company covenants with the Purchaser as
follows:
(i) Due Diligence. In connection with the original purchase of the
Preference Securities, the Company agrees that, prior to any offer or
resale of the Preference Securities by the Purchaser, the Purchaser and
counsel for the Purchaser shall have the right to make reasonable
inquiries into the business of the Company and its subsidiaries.
(ii) Integration. The Company agrees that it will not and will cause
its Affiliates not to solicit any offer to buy or make any offer or sale
of, or otherwise negotiate in respect of, securities of the Company of any
class if, as a result of the doctrine of "integration" referred to in Rule
502 under the 1933 Act, such offer or sale would render invalid (for the
purpose of (i) the sale of the Preference Securities by the Company to the
Purchaser, (ii) the resale of the Preference Securities by the Purchaser
to subsequent purchasers or (iii) the resale of the Preference Securities
by such subsequent purchasers to others) the exemption from the
registration requirements of the 1933 Act provided by Section 4(2) thereof
or by Rule 144A or otherwise.
-26-
(iii) Rule 144A Information. The Company agrees that, in order to
render the Preference Securities eligible for resale pursuant to Rule 144A
under the 1933 Act, while any of the Preference Securities remain
outstanding, it will make available, upon request, to any holder of
Preference Securities or prospective purchasers of Preference Securities
the information specified in Rule 144A(d)(4), unless the Company furnishes
information to the Commission pursuant to Section 13 or 15(d) of the 1934
Act (such information, whether made available to holders or prospective
purchasers or furnished to the Commission, is herein referred to as
"Additional Information").
(iv) Restriction on Repurchases. Until the expiration of two years
after the original issuance of the Preference Securities, the Company will
not, and will cause its Affiliates not to, purchase or agree to purchase
or otherwise acquire any Preference Securities which are "restricted
securities" (as such term is defined under Rule 144(a)(3) under the 1933
Act), whether as beneficial owner or otherwise (except as agent acting as
a securities broker on behalf of and for the account of customers in the
ordinary course of business in unsolicited broker's transactions) unless,
immediately upon any such purchase, the Company or any Affiliate shall
cancel such Preference Securities.
(c) Resale Pursuant to Rule 144A. The Purchaser understands that the
Preference Securities have not been and will not be registered under the 1933
Act and may not be offered or sold within the United States or to, or for the
account or benefit of, U.S. persons except pursuant to an exemption from the
registration requirements of the 1933 Act. The Purchaser represents and agrees,
that, except as permitted by Section 6(a) above, it has offered and sold
Preference Securities and will offer and sell Preference Securities as part of
their distribution at any time only in accordance with Rule 144A under the 1933
Act or another applicable exemption from the registration provisions of the 1933
Act. The Purchaser agrees that, at or prior to confirmation of a sale of
Preference Securities (other than a sale of Preference Securities pursuant to
Rule 144A) it will have sent to each distributor, dealer or person receiving a
selling concession, fee or other remuneration that purchases Preference
Securities from it or through it during the restricted period a confirmation or
notice to substantially the following effect:
"The securities covered hereby have not been registered under the
United States Securities Act of 1933 (the "Securities Act") and may
not be offered or sold within the United States or to or for the
account or benefit of U.S. persons as part of their distribution at
any time except in accordance with Rule 144A under the Securities
Act or another exemption from the registration requirements of the
Securities Act."
(d) Offers and Sales in Poland and The Netherlands. The Purchaser has
advised the Company and hereby represents and warrants to and agrees with the
Company that it will not offer or sell the Preference Securities in Poland
except in accordance with Polish foreign exchange regulations under
circumstances which do not constitute a public offering or
-27-
distribution of securities under Polish laws and regulations. The Purchaser
further agrees it will not offer or sell the Preference Securities in The
Netherlands except under circumstances which do not constitute a public offering
or distribution (aanbod buiten besloten xxxxx) of securities under the laws and
regulations of The Netherlands.
(e) Offers and Sales in the United Kingdom. The Purchaser hereby
represents, warrants and agrees that (i) it has not offered or sold and prior to
the expiration of the period six months after the date of issue of the
Preference Securities will not offer to sell by means of any document any
Preference Securities to persons in the United Kingdom except to persons whose
ordinary activities involve them in acquiring, holding, managing or disposing of
investments (as principal or agent) for the purposes of their businesses or
otherwise in circumstances which have not resulted and will not result in an
offer to the public in the United Kingdom within the meaning of the Public
Offers of Securities Regulations 1995; (ii) it has complied and will comply with
all applicable provisions of the Financial Services Xxx 0000 with respect to
anything done by it in relation to the Preference Securities in, from or
otherwise involving the United Kingdom and (iii) it has only issued or passed
on, and will only issue or pass on in the United Kingdom any document received
by it in connection with the issue of the Preference Securities to a person who
is of a kind described in Article 11(3) of the Financial Services Xxx 0000
(Investment Advertisements) (Exemptions) Order 1995 or is a person to whom such
document may otherwise lawfully be issued or passed on.
(f) Representation and Warranty of the Purchaser. The Purchaser represents
and agrees that (i) it has not entered and will not enter into any contractual
arrangements with respect to the distribution of the Preference Securities,
except with its affiliates or with the prior written consent of the Company;
(ii) it has received and carefully reviewed the Preference Offering Memorandum
prior to the execution of this Agreement; (iii) it has been furnished by the
Company during the course of this transaction with all information regarding the
Company which it had requested or desired to know, all documents which could be
reasonably provided have been made available for its inspection and review and
it has been afforded the opportunity to ask questions of and receive answers
from duly authorized officers or other representatives of the Company concerning
the terms and conditions of the offering and any additional information which it
had requested; (iv) except as set forth herein, no representations or warranties
have been made to it by the Company or any agent, employee or affiliate of the
Company and in entering into this transaction, it is not relying on any
information, other than that contained herein or in the Preference Offering
Memorandum and the results of its independent investigation; (v) no person other
than the Company has made any representations to the Purchaser concerning this
Offering and the Purchaser has relied on no representations or documentation
other than that supplied by the Company and in particular, for avoidance of
doubt, the Purchaser is not relying on information supplied in connection with
(X) the concurrent sale of the Note Securities by the Initial Purchasers or (Y)
the sale of the Company's Series C Senior Discount Notes which was consummated
on January 20, 1999; (vi) it is purchasing the Preference Securities for
investment purposes only for its account and not with any view toward a
distribution thereof; and (vii) it has evaluated the risks of investing in the
Preference Securities and has determined that the
-28-
Preference Securities are a suitable investment, and that it can bear the
economic risk of this investment and can afford a complete loss of its
investment.
SECTION 7. Indemnification.
(a) Indemnification of the Purchaser. The Company agrees to indemnify and
hold harmless the Purchaser and each person, if any, who controls the Purchaser
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act
as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Preference Offering
Memorandum (or any amendment or supplement thereto), or the omission or
alleged omission therefrom of a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission; provided that (subject to Section
7(d) below) any such settlement is effected with the written consent of
the Company; and
(iii) against any and all expense whatsoever, as incurred (including
the fees and disbursements of counsel chosen by the Purchaser), reasonably
incurred in investigating, preparing or defending against any litigation,
or any investigation or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or
omission, to the extent that any such expense is not paid under (i) or
(ii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by the
Purchaser expressly for use in the Preference Offering Memorandum (or any
amendment thereto).
(b) Indemnification of the Company, Directors and Officers. The Purchaser
agrees to indemnify and hold harmless the Company and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act or Section
20 of the 1934 Act against any and all loss, liability, claim, damage and
expense described in the indemnity contained in subsection (a) of this Section,
as incurred, but only with respect to untrue statements or omissions, or alleged
untrue statements or omissions, made in the Preference Offering
-29-
Memorandum in reliance upon and in conformity with written information furnished
to the Company by the Purchaser expressly for use in the Preference Offering
Memorandum.
(c) Actions Against Parties; Notification. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to Section 7(a) above,
counsel to the indemnified parties shall be selected by the Purchaser, and, in
the case of parties indemnified pursuant to Section 7(b) above, counsel to the
indemnified parties shall be selected by the Company. An indemnifying party may
participate at its own expense in the defense of any such action; provided,
however, that counsel to the indemnifying party shall not (except with the
consent of the indemnified party) also be counsel to the indemnified party. In
no event shall the indemnifying parties be liable for fees and expenses of more
than one counsel (in addition to any local counsel) separate from their own
counsel for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances. No indemnifying party shall,
without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section 7 or Section
8 hereof (whether or not the indemnified parties are actual or potential parties
thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim and (ii) does not include
a statement as to or an admission of fault, culpability or a failure to act by
or on behalf of any indemnified party.
(d) Settlement Without Consent if Failure to Reimburse. If at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for reasonable fees and expenses of counsel, such indemnifying
party agrees that it shall be liable for any settlement of the nature
contemplated by Section 7(a)(ii) effected without its written consent if (i)
such settlement is entered into more than 45 days after receipt by such
indemnifying party of the aforesaid request, (ii) such indemnifying party shall
have received notice of the terms of such settlement at least 30 days prior to
such settlement being entered into and (iii) such indemnifying party shall not
have reimbursed such indemnified party in accordance with such request prior to
the date of such settlement.
SECTION 8. Contribution. If the indemnification provided for in Section 7
hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
-30-
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and the Purchaser on the other hand from the offering of the Preference
Securities pursuant to this Agreement or (ii) if the allocation provided by
clause (i) is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company on the one hand and of the
Purchaser on the other hand in connection with the statements or omissions which
resulted in such losses, liabilities, claims, damages or expenses, as well as
any other relevant equitable considerations.
The relative benefits received by the Company on the one hand and the
Purchaser on the other hand in connection with the offering of the Preference
Securities pursuant to this Agreement shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of the
Preference Securities pursuant to this Agreement (before deducting expenses)
received by the Company and the total underwriting discount received by the
Purchaser, bear to the aggregate initial offering price of the Preference
Securities.
The relative fault of the Company on the one hand and the Purchaser on the
other hand shall be determined by reference to, among other things, whether any
such untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact relates to information supplied by the
Company or by the Purchaser and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or omission.
The Company and the Purchaser agree that it would not be just and
equitable if contribution pursuant to this Section 8 were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to above in this Section 8. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section 8 shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
Notwithstanding the provisions of this Section 8, the Purchaser shall not
be required to contribute any amount in excess of the amount by which the total
price at which the Preference Securities underwritten by it and distributed to
the subsequent purchasers were offered to the subsequent purchasers exceeds the
amount of any damages which the Purchaser has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 0000 Xxx) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
-31-
For purposes of this Section 8, each person, if any, who controls the
Purchaser within the meaning of Section 15 of the 1933 Act or Section 20 of the
1934 Act shall have the same rights to contribution as the Purchaser, and each
person, if any, who controls the Company within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act shall have the same rights to
contribution as the Company.
SECTION 9. Representations, Warranties and Agreements to Survive Delivery.
All representations, warranties and agreements contained in this Agreement or in
certificates of officers of the Company or any of its subsidiaries submitted
pursuant hereto shall remain operative and in full force and effect, regardless
of any investigation made by or on behalf of the Purchaser or controlling
person, or by or on behalf of the Company, and shall survive delivery of the
Preference Securities to the Purchaser.
SECTION 10. Termination of Agreement.
(a) Termination; General. The Purchaser may terminate this Agreement, by
notice to the Company, at any time at or prior to the Closing Time (i) if there
has been, since the time of execution of this Agreement or since the respective
dates as of which information is given in the Preference Offering Memorandum,
any material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business, or (ii) if there has occurred any material adverse
change in the financial markets in the United States, the Republic of Poland or
the international financial markets, any outbreak of hostilities or escalation
thereof or other calamity or crisis or any change or development involving a
prospective change in national or international political, financial or economic
conditions, or in Polish taxation affecting the Company or any subsidiary
thereof or the transactions contemplated by the Preference Offering Memorandum,
or currency exchange rates for the U.S. dollar into the Polish Zloty or exchange
controls applicable to the U.S. dollar or the Polish Zloty, in each case the
effect of which is such as to make it, in the judgment of the Purchaser,
impracticable to market the Preference Securities or to enforce contracts for
the sale of the Preference Securities, or (iii) if trading in any securities of
the Company has been suspended or materially limited by the Commission, or if
trading generally on the American Stock Exchange, the New York Stock Exchange or
in the Nasdaq National Market has been suspended or materially limited, or
minimum or maximum prices for trading have been fixed, or maximum ranges for
prices have been required, by any of said exchanges or by such system or by
order of the Commission, the National Association of Securities Dealers, Inc. or
any other governmental authority, or (iv) if a banking moratorium has been
declared by Polish, United States Federal or New York authorities.
(b) Liabilities. If this Agreement is terminated pursuant to this Section,
such termination shall be without liability of any party to any other party
except as provided in Section 4 hereof, and provided further that Sections 1, 7,
8 and 9 shall survive such termination and remain in full force and effect.
-32-
SECTION 11. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given if mailed, sent by
courier or express delivery company or transmitted by any standard form of
telecommunication. Notices to the Purchaser shall be directed to the Purchaser
at 00 Xxxxx Xxxxxxxxxx Xxxxxx, Xxxxxx XX0X 0XX
Great Britain, attention of Xxxxx Xxxxxxxx. Notices to the Company shall be
directed to it at Xxx Xxxxxxxxxx Xxxxx, Xxxxxxxx, Xxxxxxxxxxx 00000-0000,
attention of Xxxxxx X. Xxxxxx, III.
SECTION 12. Parties. This Agreement shall inure to the benefit of and be
binding upon the Purchaser and the Company and their respective successors.
Nothing expressed or mentioned in this Agreement is intended or shall be
construed to give any person, firm or corporation, other than the Purchaser and
the Company and their respective successors and the controlling persons and
officers and directors referred to in Sections 7 and 8 and their heirs and legal
representatives, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision herein contained. This Agreement and
all conditions and provisions hereof are intended to be for the sole and
exclusive benefit of the Purchaser and the Company and their respective
successors, and said controlling persons and officers and directors and their
heirs and legal representatives, and for the benefit of no other person, firm or
corporation. No purchaser of Preference Securities from the Purchaser shall be
deemed to be a successor by reason merely of such purchase.
SECTION 13. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. SPECIFIED
TIMES OF DAY REFER TO NEW YORK CITY TIME.
SECTION 14. Effect of Headings. The Article and Section headings herein
and the Table of Contents are for convenience only and shall not affect the
construction hereof.
SECTION 15. Counterparts. This Agreement may be executed in one or more
counterparts and when a counterpart has been executed by each party, all such
counterparts taken together shall constitute one and the same agreement.
-33-
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
between the Purchaser and the Company in accordance with its terms.
Very truly yours,
@ENTERTAINMENT, INC.
By
----------------------------------
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
XXXXXX XXXXXXXX
PRIVATE EQUITY LIMITED,
on behalf of
XXXXXX XXXXXXXX DEVELOPMENT
CAPITAL SYNDICATION LIMITED
By
------------------------
Authorized Signatory
-34-
SCHEDULE A
Number of Number of
Preference Preference
Name Shares Warrants
---- ------ --------
Xxxxxx Xxxxxxxx Private Equity Limited
on behalf of
Xxxxxx Xxxxxxxx Development
Capital Syndication Limited.................. 45,000 45,000
------ ------
Total........................................ 45,000 45,000
====== ======
-35-
SCHEDULE B
@ENTERTAINMENT, INC.
[Separately attached]
-36-
SCHEDULE C
LIST OF DESIGNATED SUBSIDIARIES
1. ETV Sp. z o.o.
2. Telewizja Kablowa GOSAT Sp. z o.o.
3. Ground Zero Media Sp. z o.o.
4. Otwocka Telewizja Kablowa Sp. z o.o.
5. Polska Telewizja Kablowa S.A.
6. Polska Telewizja Kablowa Krakow S.A.
7. Polska Telewizja Kablowa Lublin S.A.
8. Polska Telewizja Kablowa Operator Sp. z o.o.
9. Polska Telewizja Kablowa Szczecin Sp. z o.o.
10. Polska Telewizja Kablowa Warszawa S.A.
11. Poltelkab Sp. z o.o.
12. Szczecinska Telewizja Kablowa Sp. z o.o.
13. TV Kabel Sp. z o.o.
14. At Entertainment Limited
15. Poland Communications, Inc.
16. Poland Cablevision (Netherlands) B.V.
17. Sereke Holding B.V.
18. Wizja TV Sp. z o.o.
19. WPTS Sp. z o.o.
20. @Entertainment Programming, Inc.
21. ProCable Sp. z o.o.
-37-
Exhibit A
FORM OF CERTIFICATE OF DESIGNATION
[Separately Attached]
-38-
Exhibit B
FORM OF PREFERENCE WARRANT AGREEMENT
[Separately Attached]
-39-
Exhibit C
FORM OF PREFERENCE REGISTRATION RIGHTS AGREEMENT
[Separately Attached]
-40-
Exhibit D
FORM OF PREFERENCE WARRANT REGISTRATION RIGHTS AGREEMENT
[Separately Attached]
-00-
Xxxxxxx X
XXXX XX XXXXXX XXXXXX LAW OPINION OF COMPANY'S
COUNSEL TO BE DELIVERED PURSUANT TO
SECTION 5(a)(i)
[Separately Attached]
-42-
Exhibit F
FORM OF POLISH LAW OPINION OF COMPANY'S COUNSEL
TO BE DELIVERED PURSUANT TO
SECTION 5(a)(i)
[Separately Attached]
-43-
Exhibit G
FORM OF OPINION OF COMPANY'S DUTCH COUNSEL
TO BE DELIVERED PURSUANT TO
SECTION 5(a)(ii)
[Separately Attached]
-44-
Exhibit H
FORM OF OPINION OF COMPANY'S ENGLISH COUNSEL
TO BE DELIVERED PURSUANT TO SECTION 5(a)(iii)
[Separately Attached]
-45-
