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EXHIBIT 1
TERMINATION AGREEMENT
September 28, 1999
1. SBS and CME have mutually agreed to terminate the Reorganization
Agreement dated March 29, 1999 and to unconditionally release one another from
all rights, claims and obligations thereunder on the condition that SBS will
immediately pay CME a break-up fee of USD 8.25 million. Each party will bear its
own expenses.
2. In recognition of the fact that each party has been provided with
confidential information regarding the businesses operated by the other, SBS
agrees, until March 28, 2000, that neither SBS or affiliated companies will
compete with CME owned or operated television stations in the advertiser
supported, free-to-air television broadcasting business in the Czech Republic,
Slovakia and the Ukraine, and CME agrees, until March 28, 2000, not to complete
with SBS in SBS' existing markets, other than Slovenia. These agreements not to
compete shall be non-transferable, but shall survive any "change of control".
3. SBS and CME will complete the transactions in Hungary
contemplated by the draft of the Heads of Agreement dated September 14, 1999,
provided, however, that the value of the programming inventory to be transferred
to SBS shall be reduced from USD 17.2 million to USD 14.7 million and SBS shall
bear the risk of securing the assignments of the Warner Brothers and Fax
contracts and shall pay CME the assigned value of such contracts at closing. The
aforesaid USD 2.5 million reduction in value shall be applied pro-rata to the
programming contracts other than Columbia.
4. CME and SBS will immediately cease all litigation in Slovenia and
elsewhere, and relinquish all claims, against each other and their associates
and affiliates pertaining to Kanal A ownership, and management and operation of
Kanal A and will cease and desist from any efforts to contest or interfere in
the corporate governance of Kanal A. In addition, CME will assign to SBS all
claims, including related liens and encumbrances, against Xxxxxxxx Xxxxx and
members of the Polic family.
5. In consideration for CME's obligations in Section 4, SBS will
grant CME an option to purchase an unencumbered 80% economic and voting interest
in Kanal A for USD 12.25 million. The option will be exercisable until the
earlier of (i) June 30, 2001, or (ii) six months from the date upon which SBS
delivers to CME a notice, which shall be in form and substance reasonably
satisfactory to CME, that SBS has the ability to transfer to CME an unencumbered
80% economic and voting interest in Kanal A. SBS shall use its best efforts to
obtain and deliver such interest as soon as practical but, in any event, the
option shall only extend to such interest as SBS is capable of delivering on or
before its expiry. The foregoing option shall be non-transferable by CME except
to an existing subsidiary or affiliate, but shall survive any "change of
control" of CME.
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6. CME and SVS agree to use their best efforts to close the
transactions contemplated herein by October 15, 1999.
7. In announcing the termination of the Reorganization Agreement,
SBS will include a statement substantially as follows:
For several months, SBS has watched with increasing concern as CME's
substantial investment in TV Nova in the Czech Republic has
materially diminished in value. It would appear that CME and its
shareholders have not been accorded the same level of protection of
their television investment that foreign investors expect and are
entitled to rely upon. Under the circumstances, we have reluctantly
concluded that it would be imprudent for SBS to expose its
shareholders to this level of on-going risk and uncertainty.
FOR SBS FOR CME
/s/ /s/
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Xxxxxx X. Xxxxxx Xxxxxxxx X. Xxxxxxxxxxx
Authorized Representative Authorized Representative
September 28, 1999 September 28, 1999
