EXHIBIT 1.1
EXECUTION COPY
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@ENTERTAINMENT, INC.
(a Delaware corporation)
256,800 Units Consisting of
14 1/2 Senior Discount Notes due 2009 and
1,027,200 Warrants to Purchase an Aggregate of
1,813,665 Shares of Common Stock
PURCHASE AGREEMENT
Dated: January 22, 1999
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@ENTERTAINMENT, INC.
(a Delaware corporation)
256,800 Units Consisting of
14 1/2 Senior Discount Notes due 2009 and
1,027,200 Warrants to Purchase an Aggregate of
1,8133,665 Shares of Common Stock
PURCHASE AGREEMENT
January 22, 1999
XXXXXXX XXXXX & CO.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
Xxxxx Xxxxx
Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Deutsche Bank Securities Inc.
000 Xxxxxxxxxxx
Xxxxxx
XX0X 0XX
Ladies and Gentlemen:
@Entertainment, Inc., a Delaware corporation (the "Company"), confirms
its agreement with Xxxxxxx Xxxxx & Co., Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated ("Xxxxxxx Xxxxx") and Deutsche Bank Securities Inc. (collectively,
the "Initial Purchasers"), with respect to the issue and sale by the Company and
the purchase by the Initial Purchasers of 256,800 of the Company's units (the
"Units"), each 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 "Warrant" and collectively, the "Warrants" and, together with
the Units and the Notes, the "Securities"), each Warrant initially entitling the
holder thereof to purchase 1.7656 shares of common stock, par value $0.01 per
share (the "Common Stock"), of the Company. The Units, Notes and Warrants are
more fully described in Schedule C hereto. The Notes are to be issued pursuant
to an indenture to be dated on or about January 27, 1999 (the "Indenture")
between the Company and Bankers Trust Company, as trustee (the "Trustee") and
the Warrants are to be issued pursuant to a warrant agreement dated on or about
January 27, 1999 (the "Warrant Agreement"), between the Company and Bankers
Trust Company, as warrant agent (the "Warrant Agent") in substantially the form
attached hereto as Exhibit B. 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 with the sale of the Securities the Company has entered
into separate agreements for the sale of shares ("Preference Shares") and
warrants ("Preference Warrants" and, together with the Preference Shares, the
"Preference Securities") for aggregate gross proceeds of $50 million.
On January 20, 1999 the Company completed the sale of $36,001,321
principal amount at maturity of Series C Senior Discount Notes due 2008 (the
"Series C Notes"). The Series C Notes were issued at a discount to their
aggregate principal for gross proceeds to the Company of approximately $9.8
million.
The holders of Securities will be entitled to the benefits of a
Registration Rights Agreement, in substantially the form attached hereto as
Exhibit A with such changes as shall be agreed to by the parties hereto (the
"Registration Rights Agreement"), pursuant to which the Company will file a
registration statement (the "Registration Statement") with the Securities and
Exchange Commission (the "Commission") registering the Securities or the
Exchange Notes referred to in the Registration Rights Agreement under the
Securities Act of 1933, as amended (the "1933 Act").
The holders of Warrants will be entitled to the benefits of a Warrant
Registration Rights Agreement in substantially the form attached hereto as
Exhibit C, with such changes as shall be agreed to by the parties hereto (the
"Warrant Registration Rights Agreement") which provides for the registration of
the Warrants under the 1933 Act under certain circumstances set forth therein.
The Company understands that the Initial Purchasers propose to make an
offering of the Securities on the terms and in the manner set forth herein and
agrees that the Initial Purchasers may resell, subject to the conditions set
forth herein, all or a portion of the Securities to purchasers ("Subsequent
Purchasers") at any time after the date of this Agreement. The Securities are to
be offered and sold through the Initial Purchasers without being registered
under the 1933 Act, in reliance upon exemptions therefrom. Pursuant to the terms
of the Securities and the Indenture, investors that acquire Securities may only
resell or otherwise transfer such Securities if such 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 delivered to each Initial Purchaser,
copies of a preliminary offering memorandum dated January 14, 1999 (the
"Preliminary Offering Memorandum") and has prepared and will deliver to each
Initial Purchaser on the date hereof or the next succeeding day, copies of a
final Offering Memorandum dated January 22, 1999
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(the "Final Offering Memorandum") for use by the Initial Purchasers in
connection with their solicitation of purchases of, or offering of, the
Securities. "Offering Memorandum" means with respect to any date or time
referred to in this Agreement, the most recent offering memorandum (whether
Preliminary Offering Memorandum or the Final Offering Memorandum and including
any amendment or supplement to either such document), including exhibits thereto
and any documents incorporated therein by reference, which has been prepared and
delivered by the Company to the Initial Purchasers in connection with their
solicitation of purchases of, or offering of, the Securities.
All references in this Agreement to financial statements and schedules
and other information which are "contained," "included" or "stated" in the
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 Offering Memorandum.
SECTION 1. REPRESENTATIONS AND WARRANTIES.
(a) REPRESENTATIONS AND WARRANTIES BY THE COMPANY. The Company
represents and warrants to the Initial Purchasers as of the date hereof and as
of the Closing Time referred to in Section 2(b) hereof, and agrees with the
Initial Purchasers 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 Securities in a manner
that would require the Securities to be registered under the 1933 Act.
(ii) OFFERING MEMORANDUM. Neither of its date nor as of the
Closing Time the Final 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; except that
this representation and warranty does not apply to statements or
omissions made in reliance upon and in conformity with information
furnished in writing to the Company by the Initial Purchasers expressly
for use in the Final Offering Memorandum, including any amendment or
supplement thereto.
(iii) INDEPENDENT ACCOUNTANTS. The accountants who certified
the financial statements and supporting schedules included in the
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.
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(iv) FINANCIAL STATEMENTS. The financial statements, together
with the related schedules and notes, of the Company included in the
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 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 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 Offering Memorandum.
(v) NO MATERIAL ADVERSE CHANGE IN BUSINESS. Since the
respective dates as of which information is given in the 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 Offering Memorandum and to enter into and
perform its obligations under this Agreement, the Warrant Agreement,
the Registration Rights Agreement, the Warrant Registration Rights
Agreement, the Indenture, the Securities 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 United Kingdom is listed on Schedule C hereto (each subsidiary
listed on Schedule C
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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 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
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 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" under the heading "Actual" in the
Offering Memorandum and, as of the date hereof,
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there has been no material change in the authorized, issued and
outstanding capital stock since the date of the Offering Memorandum
other than (i) issuances of shares of Common Stock upon the exercise of
options disclosed to be outstanding in the Offering Memorandum and (ii)
the authorization and issuance of the Series A Cumulative Preference
Shares, the Series B Cumulative Preference Shares, the Preference
Warrants and the Warrants as described in the 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 REGISTRATION RIGHTS AGREEMENT. The
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 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 INDENTURE. The Indenture 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 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.
(xiii) 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
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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 Registration Rights Agreement.
(xiv) AUTHORIZATION OF THE WARRANT AGREEMENT. The 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 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 general principles of equity
(regardless of whether enforcement is considered in a proceeding in
equity or at law).
(xv) AUTHORIZATION OF THE WARRANTS. The 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 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 Warrant Agreement and the Warrant Registration Rights
Agreement.
(xvi) AUTHORIZATION OF THE WARRANT SHARES. The shares of
Common Stock issuable upon exercise of the Warrants (the "Warrant
Shares") have been duly authorized and reserved by the Company and,
when executed by the Company and countersigned by the Warrant Agent and
issued and delivered upon exercise of the Warrants in accordance with
the terms of the Warrants and the Warrant Agreement, will be validly
issued, fully paid and non-assessable and will not be subject to any
preemptive or similar rights.
(xvii) AUTHORIZATION OF THE WARRANT REGISTRATION RIGHTS
AGREEMENT. The 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
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(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.
(xviii) AUTHORIZATION OF PREFERENCE SECURITIES. The Preference
Securities have been duly authorized by the Company and will conform in
all respects to all statements relating thereto contained in the
Offering Memorandum and the descriptions thereof in the Offering
Memorandum conform in all material respects to the rights set forth in
the instruments defining same. At Closing Time the Preference Shares
will have been validly issued, fully paid and non assessable. The
Preference Warrants will have been duly authorized, and when executed
and issued in the manner provided for in the governing instruments and
delivered against payment of the purchase price will constitute valid,
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).
(xix) DESCRIPTION OF THE REGISTRATION RIGHTS AGREEMENT,
WARRANT REGISTRATION RIGHTS AGREEMENT, THE UNITS, THE NOTES, THE
WARRANTS, THE COMMON STOCK, THE WARRANT AGREEMENT AND THE INDENTURE.
The Registration Rights Agreement, Warrant Registration Rights
Agreement, the Units, the Notes, the Warrants, the Common Stock, the
Warrant Agreement, the Indenture and the Preference Securities will
conform in all material respects to the respective statements relating
thereto contained in the Offering Memorandum and will be in
substantially the respective forms previously delivered to the Initial
Purchasers.
(xx) 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 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
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jurisdiction over the Company or any of its subsidiaries or any of
their assets or properties, except as described in the Offering
Memorandum; and the execution, delivery and performance of this
Agreement, the Warrant Agreement, the Registration Rights Agreement,
the Warrant Registration Rights Agreement, the Indenture, the
Securities and the Preference Securities 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 Offering
Memorandum and the consummation of the transactions contemplated herein
and in the Offering Memorandum (including the issuance and sale of the
Securities and the use of the proceeds from the sale of the Securities
as described in the 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
Initial Purchasers comply with all of their 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.
(xxi) 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.
(xxii) ABSENCE OF PROCEEDINGS. Except as disclosed in the
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 Offering
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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 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 Warrant
Agreement, the Registration Rights Agreement, the Warrant Registration
Rights Agreement, the Indenture or the Securities, 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 Offering Memorandum, including ordinary routine litigation
incidental to the business, could not reasonably be expected to result
in a Material Adverse Effect.
(xxiii) POSSESSION OF INTELLECTUAL PROPERTY. Except as
disclosed in the 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 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.
(xxiv) 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 Registration Rights Agreement, the
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 Securities
hereunder or the consummation of the transactions contemplated by this
Agreement, the Warrant Agreement, the Registration Rights Agreement,
the Warrant Registration Rights Agreement, the Offering Memorandum or
the Preference Securities or (y) to permit the Company to (1) effect
payments of principal of and premium and interest on the Notes and, if
issued, the Exchange Notes referred to in the Registration Rights
Agreement, or
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(2) perform its other obligations under the Indenture, the Warrant
Agreement, the Warrant Registration Rights Agreement, or the Preference
Securities.
(xxv) POSSESSION OF LICENSES AND PERMITS. Except as disclosed
in the 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 Offering Memorandum; the Company and its subsidiaries,
except as disclosed in the 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 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 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 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.
(xxvi) NO ADDITIONAL DOCUMENTS. There are no contracts or
documents of a character that would be required to be described in the
Offering Memorandum, if it were a prospectus filed as part of a
registration statement on Form S-1 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.
(xxvii) 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.
11
(xxviii) TITLE TO PROPERTY. The Company and its subsidiaries
own no real property, except as described in the Final 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
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 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.
(xxix) TAX RETURNS. Except as disclosed in the 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.
(xxx) ENVIRONMENTAL LAWS. Except as described in the 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
12
or 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.
(xxxi) INVESTMENT COMPANY ACT. The Company is not, and upon
the issuance and sale of the Securities as herein contemplated and the
application of the net proceeds therefrom as described in the 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").
(xxxii) 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 Offering Memorandum if it were a
prospectus filed as part of a registration statement on Form S-1 under
the 1933 Act.
(xxxiii) TAXES ON SUBSIDIARY INDEBTEDNESS. Except as described
in the 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, penalties or other
13
amounts payable under any indebtedness of any of the Company's
subsidiaries held by the Company.
(xxxiv) INSURANCE. Except as otherwise disclosed in the
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.
(xxxv) RULE 144A ELIGIBILITY. The 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.
(xxxvi) 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 Initial Purchasers, as to whom the Company makes no
representation) has engaged or will engage, in connection with the
offering of the Securities or Preference Securities, in any form of
general solicitation or general advertising within the meaning of Rule
502(c) under the 1933 Act.
(xxxvii) NO REGISTRATION REQUIRED. Subject to compliance by
the Initial Purchasers 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
Securities to the Initial Purchasers and to each Subsequent Purchaser
in the manner contemplated by this Agreement, the Warrant Agreement and
the Offering Memorandum to register the Securities under the 1933 Act
or to qualify the Indenture under the Trust Indenture Act of 1939, as
amended (the "1939 Act").
(xxxviii) NO REGISTRATION OF PREFERENCE SECURITIES REQUIRED.
Subject to compliance by the purchasers with representations and
warranties contained in the governing instruments thereto, it is not
necessary in connection with the offer, sale and delivery of the
Preference Securities to register the Preference Securities under the
1933 Act.
(xxxix) REPORTING COMPANY. The Company is subject to, and has
complied with all applicable reporting requirements of Section 13 or
Section 15(d) of the 1934 Act.
(b) OFFICERS' CERTIFICATES. Any certificate titled "Officers'
Certificate" or the "Secretary's Certificate" signed by any officer of the
Company or any of its subsidiaries which
14
is delivered to Initial Purchasers or to counsel for Initial Purchasers shall be
deemed a representation and warranty by the Company to the Initial Purchasers as
to the matters covered thereby.
SECTION 2. SALE AND DELIVERY TO THE INITIAL PURCHASERS; CLOSING.
(a) 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 Initial Purchasers and the Initial Purchasers
agree to purchase from the Company, at the price set forth in Schedule B, the
aggregate number of Units set forth in Schedule A opposite its name.
(b) PAYMENT. Payment of the purchase price ($96,752,957) for, and
delivery of certificates for, the Securities shall be made at the office of
Xxxxx & XxXxxxxx, 000 Xxxxxxxxxxx Xxxxxx, X.X., Xxxxxxxxxx D.C., or at such
other place as shall be agreed upon by the Initial Purchasers and the Company,
at 9:00 A.M. on the third business day after the date hereof (January 27, 1999)
(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 Initial Purchasers 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
each Initial Purchaser for the account of such Initial Purchaser of certificates
for the Securities to be purchased by it.
(c) QUALIFIED INSTITUTIONAL BUYER. Each Initial Purchaser severally and
not jointly 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 Securities shall
be in such denominations and registered in such names as the Initial Purchasers
may request in writing at least one full business day before the Closing Time.
The certificates representing the Units, Notes and 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 each Initial 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
Initial Purchasers as follows:
(a) OFFERING MEMORANDUM. The Company, as promptly as possible, will
furnish to the Initial Purchasers, without charge, such number of copies of the
Final Offering
15
Memorandum and any amendments and supplements thereto and documents incorporated
by reference therein as the Initial Purchasers may reasonably request. The
Company will use the Offering Memorandum only in connection with offering of the
Notes and Warrants being offered as Units and not for any other purpose.
(b) NOTICE AND EFFECT OF MATERIAL EVENTS. The Company will immediately
notify each Initial Purchaser, and confirm such notice in writing, of (x) any
filing made by the Company of information relating to the offering of the
Securities with any securities exchange or any other regulatory body in the
United States or any other jurisdiction, and (y) prior to the completion of the
placement of the Securities by the Initial Purchasers as evidenced by a notice
in writing from the Initial Purchasers to the Company, any material changes in
or affecting the condition, financial or otherwise, or the earnings, business
affairs or business prospects of the Company and its subsidiaries which (i) make
any statement in the Final Offering Memorandum (as amended or supplemented)
false or misleading or (ii) are not disclosed in the Final Offering Memorandum
(as amended or supplemented). In such event or if during such time any event
shall occur as a result of which it is necessary, in the reasonable opinion of
any of the Company, its counsel, the Initial Purchasers or counsel for the
Initial Purchasers, to amend or supplement the Final Offering Memorandum in
order that the Final Offering Memorandum not include any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein not misleading in the light of the circumstances then
existing, the Company will forthwith amend or supplement the Final Offering
Memorandum by preparing and furnishing to each Initial Purchaser an amendment or
amendments of, or a supplement or supplements to, the Final Offering Memorandum
(in form and substance satisfactory in the reasonable opinion of counsel for the
Initial Purchasers) so that, as so amended or supplemented, the Final Offering
Memorandum will not include an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in the
light of the circumstances existing at the time it is delivered to a Subsequent
Purchaser, not misleading.
(c) AMENDMENT TO OFFERING MEMORANDUM AND SUPPLEMENTS. The Company will
advise each Initial Purchaser promptly of any proposal to amend or supplement
the Offering Memorandum and will not effect such amendment or supplement without
the consent of the Initial Purchasers, which consent shall not be unreasonably
withheld. Neither the consent of the Initial Purchasers, nor the Initial
Purchasers' delivery of any such amendment or supplement, shall constitute a
waiver of any of the conditions set forth in Section 5 hereof.
(d) QUALIFICATION OF SECURITIES FOR OFFER AND SALE. The Company will
use its best efforts, in cooperation with the Initial Purchasers, to qualify the
Securities for offering and sale under the applicable securities laws of such
jurisdictions as the Initial Purchasers may designate and will maintain such
qualifications in effect as long as required for the sale of the Securities;
PROVIDED, HOWEVER, that the Company shall not be obligated to file any general
consent to service of process or to qualify as a foreign corporation or as a
dealer in securities
16
in any jurisdiction in which it is not so qualified or to subject itself to
taxation in respect of doing business in any jurisdiction in which it is not
otherwise so subject.
(e) DTC AND PORTAL. The Company will cooperate with the Initial
Purchasers and use its best efforts (i) to permit the Securities to be eligible
for clearance and settlement through the facilities of DTC and (ii) include
quotation of the Securities on PORTAL.
(f) USE OF PROCEEDS. The Company will use the net proceeds received by
it from the sale of the Securities in the manner specified in the Offering
Memorandum under "Use of Proceeds".
(g) RESTRICTION ON SALE OF SECURITIES. During a period of 180 days from
the date of the Offering Memorandum, the Company will not, without the prior
written consent of Xxxxxxx Xxxxx, directly or indirectly, issue, sell, offer or
agree to sell, grant any option for the sale of, or otherwise dispose of, any
other debt securities of the Company or securities of the Company that are
convertible into, or exchangeable for, the Securities or such other debt
securities, other than the Exchange Notes referred to in the Registration Rights
Agreement.
(h) NOTIFICATION OF CURRENT ACCUMULATED EARNINGS & 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 report. Thereafter, the Company will provide such information to any holder
of 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 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 Initial Purchasers of this Agreement,
the Warrant Agreement, the Registration Rights Agreement, the Warrant
Registration Rights Agreement, the Indenture and such other documents as may be
required in connection with the offering, purchase, sale, issuance or delivery
of the Securities, (iii) the preparation, issuance and delivery of the
certificates for the Securities to the Initial Purchasers, including any charges
of DTC in connection therewith, (iv) the fees and disbursements of the Company's
counsel, accountants and other advisors, (v) the qualification of the Securities
under securities laws in accordance with the provisions of Section 3(d) hereof
and any filing for review of the offering with the National Association of
Securities Dealers (the "NASD"), including filing fees and the reasonable fees
and disbursements of counsel for the Initial Purchasers in connection therewith
and in connection with the preparation of the Blue Sky Survey, any supplement
thereto and any Legal Investment Survey, (vi) the fees and expenses of the
Trustees and paying agents, including the fees and disbursements of counsel for
the Trustees in
17
connection with the Indenture and the Securities, (vii) any fees payable in
connection with the rating of the Securities and (viii) any fees payable to the
NASD and any fees and expenses payable in connection with the initial and
continued designation of the 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
Initial Purchasers in accordance with the provisions of Section 5 or Section
10(a)(i) hereof, the Company shall reimburse the Initial Purchasers for all of
its out-of-pocket expenses, including the reasonable fees and disbursements of
counsel for the Initial Purchasers incurred through the date of termination.
SECTION 5. CONDITIONS OF THE INITIAL PURCHASERS' OBLIGATIONS. The
obligations of the several Initial Purchasers 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
Initial Purchasers 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 Initial Purchasers, one to the effect
as set forth in Exhibit D hereto and one to the effect set forth in Exhibit E
hereto and each to such further effect as counsel to the Initial Purchasers may
reasonably request.
(ii) At the Closing Time, the Initial Purchasers 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 Initial Purchasers, to the effect set forth in
Exhibit F hereto and to such other effect as counsel to the Initial Purchasers
may reasonably request.
(iii) At the Closing Time, the Initial Purchasers 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 Initial Purchasers, to the effect set forth in Exhibit G hereto
and to such other effect as counsel to the Initial Purchasers may reasonably
request.
(b) OPINION OF UNITED STATES COUNSEL FOR THE INITIAL PURCHASERS. At the
Closing Time, the Initial Purchasers shall have received the favorable opinion,
dated as of the Closing Time, of Shearman & Sterling, counsel for the Initial
Purchasers, with respect to certain of the matters set forth in Exhibit D hereto
and to such other effect as the Initial Purchasers and such counsel may
reasonably agree.
18
(c) OPINION OF POLISH COUNSEL FOR THE INITIAL PURCHASERS. At the
Closing Time, the Initial Purchasers 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 Initial Purchasers, in form satisfactory to the
Initial Purchasers with respect to certain of the matters set forth in
paragraphs (i) through (vii), inclusive, of Exhibit E 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 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
Initial Purchasers 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, the Initial Purchasers shall have received from KPMG Polska Sp. z
o.o. a letter dated such date, in form and substance satisfactory to the Initial
Purchasers, containing statements and information of the type ordinarily
included in accountants' "comfort letters" to the Initial Purchasers with
respect to the financial statements and certain financial information contained
in the Offering Memorandum.
(f) BRING-DOWN COMFORT LETTER. At the Closing Time, the Initial
Purchasers 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) PORTAL. At the Closing Time, the Securities shall have been
designated for trading on PORTAL.
(h) ADDITIONAL DOCUMENTS. At the Closing Time, counsel for the Initial
Purchasers shall have been furnished with such documents and opinions as it may
require for the purpose of enabling it to pass upon the issuance and sale of the
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 Securities as herein contemplated
shall be satisfactory in form and substance to the Initial Purchasers and
counsel for the Initial Purchasers.
19
(i) EXECUTION OF AGREEMENTS. At the Closing Time, the Warrant
Agreement, the Registration Rights Agreement, the Warrant Registration Rights
Agreement and the Indenture, each in form and substance reasonably satisfactory
to the Initial Purchasers, shall have been duly executed and delivered and shall
be in full force and effect.
(j) CONSUMMATION OF SALE OF PREFERENCE SECURITIES. The sale of
Preference Securities shall have been consummated on or before the Closing Time
stipulated in Section 2 of this Agreement.
(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 Initial Purchasers 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 SECURITIES.
(a) OFFER AND SALE PROCEDURES. Each of the Initial Purchasers and the
Company hereby establish and agree to observe the following procedures in
connection with the offer and sale of the Securities:
(i) OFFERS AND SALES ONLY TO QUALIFIED INSTITUTIONAL BUYERS.
Offers and sales of the 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). Each Initial
Purchaser agrees that it will not offer, sell or deliver any of the
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 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 Securities.
(iii) PURCHASES BY NON-BANK FIDUCIARIES. In the case of a
non-bank Subsequent Purchaser of a Security acting as a fiduciary for
one or more third parties, each third party shall, in the judgment of
the applicable Initial Purchaser, be a Qualified Institutional Buyer.
20
(iv) SUBSEQUENT PURCHASER NOTIFICATION. Each Initial Purchaser
will take reasonable steps to inform, and cause each of its U.S.
Affiliates to take reasonable steps to inform, persons acquiring
Securities from such Initial Purchaser or affiliate, as the case may
be, in the United States that the 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 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 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 Offering Memorandum under the
heading "Notice to Investors", including the legend required thereby,
shall apply to the Securities except as otherwise agreed by the Company
and the Initial Purchasers. Following the sale of the Securities by the
Initial Purchasers to Subsequent Purchasers pursuant to the terms
hereof, the Initial Purchasers 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 each Initial
Purchaser as follows:
(i) DUE DILIGENCE. In connection with the original
distribution of the Securities, the Company agrees that, prior to any
offer or resale of the Securities by the Initial Purchasers, the
Initial Purchasers and counsel for the Initial Purchasers shall have
the right to make reasonable inquiries into the business of the Company
and its subsidiaries. The Company also agrees to provide answers to
each prospective Subsequent Purchaser of Securities who so requests
concerning the Company and its subsidiaries (to the extent that such
information is available or can be acquired and made available to
prospective Subsequent Purchasers without unreasonable effort or
expense and to the extent the provision thereof is not prohibited by
applicable law) and the terms and conditions of the offering of the
Securities, as provided in the Offering Memorandum.
21
(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 Securities by
the Company to the Initial Purchasers, (ii) the resale of the
Securities by the Initial Purchasers to Subsequent Purchasers or (iii)
the resale of the 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.
(iii) RULE 144A INFORMATION. The Company agrees that, in order
to render the Securities eligible for resale pursuant to Rule 144A
under the 1933 Act, while any of the Securities remain outstanding, it
will make available, upon request, to any holder of Securities or
prospective purchasers of 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 Securities, the Company will
not, and will cause its Affiliates not to, purchase or agree to
purchase or otherwise acquire any 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 submit such Securities to the Trustees for
cancellation.
(c) RESALE PURSUANT TO RULE 144A. Each Initial Purchaser
understands that the 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. Each Initial Purchaser severally
represents and agrees, that, except as permitted by Section 6(a) above, it has
offered and sold Securities and will offer and sell 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.
Each Initial Purchaser severally agrees that, at or prior to confirmation of a
sale of Securities (other than a sale of 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 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")
22
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. Each Initial
Purchaser has advised the Company and hereby represents and warrants to and
agrees with the Company that it will not offer or sell the Securities in Poland
except in accordance with Polish foreign exchange regulations under
circumstances which do not constitute a public offering or distribution of
securities under Polish laws and regulations. Each Initial Purchaser further
agrees they will not offer or sell the 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. Each Initial 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
Securities will not offer to sell by means of any document any 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 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 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 INITIAL PURCHASERS. Each Initial
Purchaser represents and agrees that it has not entered and will not enter into
any contractual arrangements with respect to the distribution of the Securities,
except with its affiliates or with the prior written consent of the Company.
SECTION 7. INDEMNIFICATION.
(a) INDEMNIFICATION OF THE INITIAL PURCHASERS. The Company agrees to
indemnify and hold harmless each Initial Purchaser and each person, if any, who
controls such Initial Purchaser within the meaning of Section 15 of the 1933 Act
or Section 20 of the 1934 Act as follows:
23
(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 Final
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 Xxxxxxx
Xxxxx), 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 any
Initial Purchaser expressly for use in the Offering Memorandum (or any amendment
thereto), and PROVIDED FURTHER that the foregoing indemnity with respect to any
untrue statement contained in or omission from the Preliminary Offering
Memorandum shall not inure to the benefit of the Initial Purchasers (or any
party controlling the Initial Purchasers) if the person asserting such loss,
liability, claim, damage or expense purchased the Securities which are the
subject thereof directly from the Initial Purchasers and if the Company shall
sustain the burden of proving that such person did not receive a copy of the
Final Offering Memorandum and the untrue statement contained in or omission from
such Preliminary Offering Memorandum was corrected in such Final Offering
Memorandum subject to the Company complying with its obligations under Sections
3(a), 3(b) and 3(c) of this Agreement.
(b) INDEMNIFICATION OF THE COMPANY, DIRECTORS AND OFFICERS. Each
Initial 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
24
statements or omissions, or alleged untrue statements or omissions, made in the
Offering Memorandum in reliance upon and in conformity with written information
furnished to the Company by the Initial Purchasers expressly for use in the
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 Xxxxxxx Xxxxx, 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
25
party shall contribute to the aggregate amount of such losses, liabilities,
claims, damages and expenses 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 Initial Purchasers on the other
hand from the offering of the 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 Initial Purchasers 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
Initial Purchasers on the other hand in connection with the offering of the
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
Securities pursuant to this Agreement (before deducting expenses) received by
the Company and the total underwriting discount received by the Initial
Purchasers, bear to the aggregate initial offering price of the Securities.
The relative fault of the Company on the one hand and the Initial
Purchasers 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 Initial Purchasers and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The Company and the Initial Purchasers 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, no Initial Purchaser
shall be required to contribute any amount in excess of the amount by which the
total price at which the Securities underwritten by it and distributed to the
Subsequent Purchasers were offered to the Subsequent Purchasers exceeds the
amount of any damages which such Initial Purchaser has otherwise been required
to pay by reason of such untrue or alleged untrue statement or omission or
alleged omission.
26
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.
For purposes of this Section 8, each person, if any, who controls an
Initial 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 such Initial
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 any Initial
Purchaser or controlling person, or by or on behalf of the Company, and shall
survive delivery of the Securities to the Initial Purchasers.
SECTION 10. TERMINATION OF AGREEMENT.
(a) TERMINATION; GENERAL. The Initial Purchasers 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 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
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 Initial Purchasers, impracticable to market the Securities or to enforce
contracts for the sale of the 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.
27
(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.
SECTION 11. DEFAULT BY ONE OR MORE OF THE INITIAL PURCHASERS. If one of
the Initial Purchasers shall fail at the Closing Time to purchase the Securities
which it is obligated to purchase under this Agreement (the "Defaulted
Securities"), the non-defaulting Initial Purchaser shall have the right, within
24 hours thereafter, to make arrangements for itself, or any other Initial
Purchasers, to purchase all, but not less than all, of the Defaulted Securities
in such amounts as may be agreed upon and upon the terms herein set forth; if,
however, the non-defaulting Initial Purchaser shall not have completed such
arrangements within such 24-hour period, then this Agreement shall terminate
without liability on the part of any non-defaulting Initial Purchaser.
No action taken pursuant to this Section shall relieve any defaulting
Initial Purchaser from liability in respect of its default.
In the event of any such default which does not result in a termination
of this Agreement, either the non-defaulting Initial Purchaser or the Company
shall have the right to postpone the Closing Time for a period not exceeding
seven days in order to effect any required changes in the Offering Memorandum or
in any other documents or arrangements. As used herein, the term "Initial
Purchaser" includes any person substituted for an Initial Purchaser under this
Section 11.
SECTION 12. 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 Initial Purchasers shall be directed to the
Initial Purchasers at Xxxxxxx Xxxxx & Co., North Tower, World Financial Center,
New York, New York 10281-1209 attention of Xxxx Xxxxx; and at Deutsche Bank
Legal Dept., 00 Xxxx 00xx Xxxxxx, Xxx Xxxx, XX 00000-0000 attention of Xxxxxx
Xxxxxxx, Esq.; notices to the Company shall be directed to it at Xxx Xxxxxxxxxx
Xxxxx, Xxxxxxxx, Xxxxxxxxxxx 00000-0000, attention of Xxxxxx X. Xxxxxx, III.
SECTION 13. PARTIES. This Agreement shall inure to the benefit of and
be binding upon the Initial Purchasers 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
Initial Purchasers 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 Initial Purchasers and the
Company and their respective successors, and said controlling
28
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
Securities from the Initial Purchasers shall be deemed to be a successor by
reason merely of such purchase.
SECTION 14. 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 15. 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 16. 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.
29
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 Initial Purchasers and the Company in accordance with its terms.
Very truly yours,
@ENTERTAINMENT, INC.
By
/s/
-----------------------------------------
Title:
By
/s/
-----------------------------------------
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
XXXXXXX XXXXX & CO.
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
By /s/
----------------------------------------
Authorized Signatory
DEUTSCHE BANK SECURITIES INC.
By /s/
----------------------------------------
Authorized Signatory
SCHEDULE A
Number of
Name of Underwriter Units
------------------- ---------
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated......................................... 179,760
Deutsche Bank Securities Inc................................... 77,040
--------
Total.......................................................... 256,800
--------
Sch A - 1
SCHEDULE B
@ENTERTAINMENT, INC.
256,800 Units, each Unit consisting of one $1,000 aggregate principal
amount at maturity of 14 1/2% Senior Discount Notes due 2009 and four Warrants,
each Warrant initially entitling the holder thereof to purchase 1.7656 shares of
Common Stock.
1. The initial offering price of the Units shall be $389.42 per Unit,
plus accreted amortization of original issue discount on the Notes, if any, from
January 27, 1999.
2. The purchase price to be paid by the Initial Purchasers for the
Units shall be $376.6764 per Unit, plus accreted amortization of original issue
discount on the Notes, if any, from January 27, 1999.
3. The interest rate on the Notes shall be 14 1/2% per annum; interest
will be payable semiannually in arrears on February 1 and August 1, commencing
August 1, 2004.
Cash interest will not accrue prior to February 1, 2004.
4. The Notes will mature on February 1, 2009 and will be issued in
denominations of $1,000 aggregate principal amount at maturity or integral
multiples thereof.
5. The redemption price supplied on page 150 of the Offering Memorandum
(and correspondingly in the Indenture) with respect to redemptions of Notes from
the proceeds of Public Equity Offerings shall be 117 1/2% of the Accreted Value
thereof, plus accrued and unpaid interest, if any, to the redemption date.
6. The redemption prices supplied on page 150 of the Offering
Memorandum (and correspondingly in the Indenture) relating to the Notes shall
be:
Redemption
Year Price
--- ----------
February 1, 2004 108.750%
February 1, 2005 105.833
February 1, 2006 102.917
February 1, 2007 and thereafter 100.000
Sch B-1
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. ProCable Sp. z.o.o.
13. Szczecinska Telewizja Kablowa Sp. z o.o.
14. TV Kabel Sp. z o.o.
15. At Entertainment Limited
16. Poland Communications, Inc.
17. Poland Cablevision (Netherlands) B.V.
18. Sereke Holding B.V.
19. Wizja TV Sp. z o.o.
20. WPTS Sp. z o.o.
21. @Entertainment Programming, Inc.
Sch C-1
Exhibit A
FORM OF REGISTRATION RIGHTS AGREEMENT
[Separately Attached]
A-1
Exhibit B
FORM OF WARRANT AGREEMENT
[Separately Attached]
B-1
Exhibit C
FORM OF WARRANT REGISTRATION RIGHTS AGREEMENT
[Separately Attached]
X-0
Xxxxxxx X
XXXX XX XXXXXX XXXXXX LAW OPINION OF COMPANY'S
COUNSEL TO BE DELIVERED PURSUANT TO
SECTION 5(a)(i)
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Delaware;
(ii) The Company has corporate power and authority to own,
lease and operate its properties and to conduct its business as described in the
Offering Memorandum and to enter into and perform its obligations under the
Purchase Agreement, the Warrant Agreement, the Registration Rights Agreement,
the Warrant Registration Rights Agreement, the Indenture and the Securities;
(iii) The Company is duly qualified as a foreign corporation
to transact business and is in good standing in each 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;
(iv) Each Designated Subsidiary incorporated in a jurisdiction
in the United States (collectively, the "U.S. Designated Subsidiaries") of the
Company has been duly incorporated and is validly existing as a corporation in
good standing under the laws of its jurisdiction of incorporation; and all of
the issued shares of capital stock of each such subsidiary have been duly and
validly authorized and issued, are fully paid and non-assessable, and are owned
directly or indirectly by the Company, free and clear of all liens,
encumbrances, equities or claims;
(v) The authorized, issued and outstanding capital stock of
the Company is as set forth in the Offering Memorandum under the caption
"Capitalization" under the heading "--atual" (except for subsequent issuances,
if any, pursuant to employee benefit plans referred to in the Offering
Memorandum or pursuant to the exercise of convertible securities or options
referred to in the 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; and none of the outstanding shares of capital
stock of the Company was issued in violation of any preemptive or other similar
rights of any security holder of the Company;
(vi) The Preference Securities have been duly authorized and
conform in all material respects to all statements relating thereto contained in
the Offering Memorandum, and the descriptions thereof in the Offering Memorandum
conform in all material respects to the rights set forth in the instruments
defining same. The Preference Shares are validly issued, fully paid and
non-assessable. The Preference Warrants, when executed by the Company and
D-1
duly issued and delivered in accordance with the instruments governing the
Preference Securities, 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 other similar laws relating to or affecting enforcement of
creditors' rights generally, and except as enforcement thereof is subject to
general principles of equity (regardless of whether enforceability is considered
in a proceeding in equity or at law). No holder of Preference Securities will be
subject to personal liability by reason of being such a holder.
(vii) The Purchase Agreement has been duly authorized,
executed and delivered by the Company;
(viii) The Warrant Agreement has been duly authorized,
executed and delivered by the Company and (assuming the due authorization,
execution and delivery thereof by the Warrant Agent) constitutes a valid and
legally binding agreement of the Company, enforceable against the Company in
accordance with its terms, except as the enforcement 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, 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);
(ix) The Registration Rights Agreement has been duly
authorized, executed and delivered by the Company and (assuming due
authorization, execution and delivery thereof by the Initial Purchasers)
constitutes a valid and binding agreement of the Company, enforceable against
the Company in accordance with its terms, except as (x) the enforcement 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 enforcement thereof is subject to 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;
(x) The Warrant Registration Rights Agreement has been duly
authorized, executed and delivered by the Company and (assuming due
authorization, execution and delivery thereof by the Initial Purchasers)
constitutes a valid and binding agreement of the Company, enforceable against
the Company in accordance with its terms, except as (x) the enforcement 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 enforcement thereof is subject to 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;
D-2
(xi) The Indenture has been duly authorized, executed and
delivered by the Company and (assuming the due authorization, execution and
delivery thereof by the Trustee) constitutes a valid and binding agreement of
the Company, enforceable against the Company in accordance with its terms,
except as the enforcement 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;
(xii) The Notes are in the form contemplated by the Indenture,
have been duly authorized by the Company and, assuming that the Notes have been
duly executed by the Company and authenticated by the Trustee in the manner
described in its certificate delivered to you today (which fact such counsel
need not determine by an inspection of the Notes), the Notes have been duly
issued and delivered by the Company and 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 enforceability is considered in a
proceeding in equity or at law), and will be entitled to the benefits of the
Indenture;
(xiii) The Warrants are in the form contemplated by the
Warrant Agreement, have been duly authorized by the Company and, when executed
by the Company and authenticated by the Warrant Agent in the manner provided in
the Warrant Agreement and issued 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
enforcement 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, and except as enforcement thereof is subject to
general principles of equity (regardless of whether enforceability is considered
in a proceeding in equity or at law) and will be entitled to the benefits of the
Warrant Agreement and the Warrant Registration Rights Agreement;
(xiv) The Warrant Shares have been duly authorized and
reserved by the Company and, when executed by the Company and countersigned by
the Warrant Agent and issued and delivered upon exercise of the Warrants in
accordance with the terms of the Warrants and the Warrant Agreement, will be
validly issued, fully paid and non-assessable and will not be subject to any
preemptive or similar rights;
(xv) The Registration Rights Agreement, the Warrant
Registration Rights Agreement, the Securities, the Common Stock, the Warrant
Agreement, the Indenture and the
D-3
Preference Securities conform in all material respects to the descriptions
thereof contained in the Offering Memorandum;
(xvi) Except as described in the Offering Memorandum, there is
not pending or, to the best of their knowledge, threatened any action, suit,
proceeding, inquiry or investigation, to which the Company or any subsidiary is
a party, or to which the property of the Company or any subsidiary thereof is
subject, before or brought by any court or governmental agency or body, which
might reasonably be expected to result in a Material Adverse Effect, or which
might reasonably be expected to materially and adversely affect the properties
or assets thereof or the consummation of (1) the transactions contemplated in
the Purchase Agreement, the Warrant Agreement, the Registration Rights
Agreement, the Warrant Registration Rights Agreement, the Indenture, the
Securities or the Preference Securities or the performance by the Company of its
obligations thereunder or (2) the transactions contemplated by the Offering
Memorandum;
(xvii) The information in the Offering Memorandum under
"Compensation Plans", "Certain Relationships and Related Transactions",
"Description of Indebtedness", "Description of the Units", "Description of the
Notes", "Description of the Warrants", "Description of Capital Stock", "United
States Income Tax Considerations" and "Plan of Distribution", to the extent that
it constitutes matters of law, summaries of legal matters or legal proceedings,
or legal conclusions, has been reviewed by them and is correct in all material
respects;
(xviii) All descriptions in the Offering Memorandum of
contracts, licenses and other documents to which the Company or any of its
subsidiaries is a party are accurate in all material respects; to the best of
their knowledge, there are no franchises, contracts, indentures, mortgages, loan
agreements, notes, leases or other instruments that would be required to be
described in the Offering Memorandum, if the Offering Memorandum were a
prospectus filed as part of a registration statement on Form S-1 under the 1933
Act, that are not described or referred to in the Offering Memorandum other than
those described or referred to therein or incorporated by reference thereto, and
the descriptions thereof or references thereto are correct in all material
respects;
(xix) Neither the Company nor any of its U.S. Designated
Subsidiaries is in violation of its certificate of incorporation or by-laws (or
other similar organizational documents) nor is the Company or any of its
subsidiaries 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 for such violations as
are specifically identified as such and described in the Offering Memorandum, or
for such violations as would not have a Material Adverse Effect, and no default
by the Company or any of its subsidiaries exists in the due performance or
observance of any obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, loan agreement, note, lease or other
D-4
agreement or instrument that is described or referred to in the Offering
Memorandum, except such defaults as are specifically identified as such and
described in the Offering Memorandum and except for such defaults that would not
result in a Material Adverse Effect;
(xx) No authorization, approval, consent or order of any court
or governmental authority or agency (other than such as may be required under
the applicable securities laws of the various jurisdictions in which the Notes,
the Warrants and the Units will be offered or sold, as to which they need
express no opinion) is required in connection with the due authorization,
execution and delivery of the Purchase Agreement, the Warrant Agreement, the
Registration Rights Agreement, the Warrant Registration Rights Agreement or the
Indenture, for the offering, issuance, sale or delivery of the Units to the
Initial Purchasers or the resale thereof by the Initial Purchasers in accordance
with the Purchase Agreement;
(xxi) It is not necessary in connection with the offer, sale
and delivery of the Notes, the Warrants and the Units to the Initial Purchasers
and to each Subsequent Purchaser in the manner contemplated by the Purchase
Agreement and the Offering Memorandum to register the Units under the 1933 Act
or to qualify the Indenture under the Trust Indenture Act;
(xxii) The execution, delivery and performance of the Purchase
Agreement, the Warrant Agreement, the DTC Agreement, the Registration Rights
Agreement, the Warrant Registration Rights Agreement, the Indenture and the
Securities and the consummation of the transactions contemplated in the Purchase
Agreement, the Warrant Agreement, the DTC Agreement, the Registration Rights
Agreement, the Warrant Registration Rights Agreement, the Indenture and in the
Offering Memorandum (including the use of the proceeds from the sale of the
Units as described in the Offering Memorandum under the caption "Use Of
Proceeds") and compliance by the Company with its obligations under the Purchase
Agreement, the Warrant Agreement, the DTC Agreement, the Registration Rights
Agreement, the Warrant Registration Rights Agreement, the Indenture, the
Securities and the Preference Securities will not, whether with or without the
giving of notice or lapse of time or both, conflict with or constitute a breach
of, or default or Repayment Event 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 any contract, indenture, mortgage, deed of
trust, loan or credit agreement, note, lease or any other agreement or
instrument to which the Company or any of its subsidiaries is a party or by
which it 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 (except for such conflicts,
breaches or defaults or liens, charges or encumbrances that would not have a
Material Adverse Effect), nor will such action result in any violation of the
provisions of the charter or by-laws of the Company, 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 subsidiary thereof or any of their respective
properties, assets or operations, that is identified to such counsel by the
Company;
D-5
(xxiii) The Company is not an "investment company" or an
entity "controlled" by an "investment company," as such terms are defined in the
1940 Act;
(xxiv) There are no restrictions (legal, contractual or
otherwise) on the ability of the U.S. 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 Offering Memorandum; and
(xxv) The form of certificate used to evidence the Securities
and Preference Securities complies in all material respects with all applicable
statutory requirements and with any applicable requirements of the charter and
by-laws of the Company.
Such counsel may state that they have not verified, and are
not passing upon and do not assume any responsibility for, the accuracy,
completeness or fairness of the statements contained in the Offering Memorandum
(except for their opinions under paragraphs (vi), (xv), (xvii) and (xviii) above
insofar as such statements concern legal matters) and that they have
participated in conferences with the Company, representatives of the Initial
Purchasers and their counsel and the independent public accountants for the
Company at which the Offering Memorandum was prepared and the contents thereof
and related matters were discussed. In the course of these conferences and
discussions, no facts have come to their attention that would lead them to
believe that the Offering Memorandum or any amendment or supplement thereto
(except for financial statements and schedules and other financial data included
or incorporated by reference therein, as to which such counsel need make no
statement), at the time the Offering Memorandum was issued, at the time any such
amended or supplemented Offering Memorandum was issued or at the Closing Time,
included or includes an untrue statement of a material fact or omitted or omits
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.
In rendering such opinion, such counsel may rely (A) as to
matters involving the application of Dutch law, upon the opinion of Xxxxx &
XxXxxxxx, special Netherlands counsel to Poland Cablevision (Netherlands) B.V.
(which opinion shall be delivered to the Initial Purchasers at the Closing Time
pursuant to the provisions of Section 5(a)(ii)) of the Purchase Agreement, (B)
as to matters involving the application of English law, upon the opinion of
Ashurst Xxxxxx Xxxxx, special English counsel to the Company (which opinion
shall be delivered to the Initial Purchasers at the Closing Time pursuant to the
provisions of Section 5(a)(iii)) of the Purchase Agreement, (C) as to matters
involving the application of Polish law, upon the opinion of Xxxxx & XxXxxxxx Xx
z.o.o., special Polish counsel to the Company (which opinion shall be delivered
to the Initial Purchasers at the Closing Time pursuant to the provisions of
Section 5(a)(i)) of the Purchase Agreement and (D) as to matters of fact (but
not as to legal conclusions), to the extent they deem proper, on certificates of
responsible officers of the Company and public officials. Such opinion shall not
state that it is to be governed or qualified by, or that it is otherwise subject
to, any treatise, written policy or other document
D-6
relating to legal opinions, including, without limitation, the Legal Opinion
Accord of the ABA Section of Business Law (1991).
D-7
Exhibit E
FORM OF POLISH LAW OPINION OF COMPANY'S COUNSEL
TO BE DELIVERED PURSUANT TO
SECTION 5(a)(i)
(i) Each Polish Designated Subsidiary has been duly
incorporated and is validly existing as a corporation under the laws of the
Republic of Poland, has corporate power and authority to own, lease and operate
its properties and to conduct its business as described in the Offering
Memorandum and is not required to be qualified as a foreign corporation to
transact business in any jurisdiction in which it owns or leases property or
conducts business; all of the issued and outstanding capital stock of each
Polish Designated Subsidiary has been duly authorized and validly issued, is
fully paid and non-assessable and, to the best of their knowledge and
information, except as otherwise disclosed in the Offering Memorandum, is owned
by the Company, directly or through subsidiaries, free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equity, except in the
case of any Polish limited liability company, any statutory liability for taxes
and for the Share Pledges;
(ii) Except as described in the Offering Memorandum, there is
not pending or, to the best of their knowledge, threatened, any action, suit,
proceeding, inquiry or investigation, to which the Company or any subsidiary is
a party, or to which the property of the Company or any subsidiary is subject,
before or brought by any court or governmental agency or body, which might
reasonably be expected to result in a Material Adverse Effect, or which might
reasonably be expected to materially and adversely affect the properties or
assets thereof or the consummation of (1) the transactions contemplated in the
Purchase Agreement, the Warrant Agreement, the Registration Rights Agreement,
the Warrant Registration Rights Agreement, the Indenture or the Securities or
the performance by the Company of its obligations thereunder or (2) the
transactions contemplated by the Offering Memorandum;
(iii) The Company and its Polish Designated Subsidiaries have
good and marketable title to all real property owned by them, in each case free
and clear of all liens, encumbrances and defects, except the Asset Encumbrances,
such as are described in the Offering Memorandum or such as do not result in a
Material Adverse Effect; and any real property and buildings held under lease by
the Company and its Polish Designated Subsidiaries are held by them under valid,
subsisting and enforceable leases with such exceptions as do not result in a
Material Adverse Effect;
(iv) The information in the Offering Memorandum under "Risk
Factors Regulation of the Polish Cable Television Industry", "Risk Factors -
Polish Regulation of the DTH Market", "Risk Factors - Limitations on Foreign
Ownership of Multi-Channel Pay Television Operators and Broadcasters", the first
four paragraphs of "Risk Factors - Regulation of Competition", the first,
second, third and fifth paragraph of "Risk Factors - Political and Economic
Risks; Enforcement of Foreign Judgments", "Business -Property", "Business -
Legal
E-1
Proceedings", "Regulation", and "Certain Relationships and Related
Transactions", to the extent that it constitutes matters of law, summaries of
legal matters, the charter and bylaws (or similar organizational documents) of
any subsidiaries of the Company or legal proceedings, or legal conclusions, has
been reviewed by them and is correct in all material respects;
(v) All descriptions in the Offering Memorandum of contracts
and other documents to which the Company or any of its subsidiaries is a party
are accurate in all material respects; to the best of their knowledge, there are
no franchises, contracts, indentures, mortgages, loan agreements, notes, leases
or other instruments that would be required to be described in the Offering
Memorandum, if the Offering Memorandum were a prospectus filed as part of a
registration statement on Form S-1 under the 1933 Act, that are not described or
referred to in the Offering Memorandum other than those described or referred to
therein or incorporated by reference thereto, and the descriptions thereof or
references thereto are correct in all material respects;
(vi) None of the Polish Designated Subsidiaries is in
violation of its charter or by-laws (or other similar organizational documents)
nor is the Company or any of its subsidiaries 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 for such violations as are specifically identified as such
and described in the Offering Memorandum and except for such violations that
would not result in a Material Effect and no default by the Company or any of
its subsidiaries exists in the due performance or observance of any obligation,
agreement, covenant or condition contained in any contract, indenture, mortgage,
loan agreement, note, lease or other agreement or instrument that is described
or referred to in the Offering Memorandum, except such defaults as are
specifically identified and described in the Offering Memorandum and except for
such defaults that would not result in a Material Adverse Effect;
(vii) The execution, delivery and performance of the Purchase
Agreement, the Warrant Agreement, the DTC Agreement, the Registration Rights
Agreement, the Warrant Registration Rights Agreement, the Indenture and the
Securities and the consummation of the transactions contemplated in the Purchase
Agreement and in the Offering Memorandum (including the use of the proceeds from
the sale of the Securities as described in the Offering Memorandum under the
caption "Use Of Proceeds") and compliance by the Company with its obligations
under the Purchase Agreement, the Warrant Agreement, the DTC Agreement, the
Registration Rights Agreement, the Warrant Registration Rights Agreement, the
Indenture and the Securities will not, whether with or without the giving of
notice or lapse of time or both, conflict with or constitute a breach of, or
default or Repayment Event under or result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of the Company or any
subsidiary thereof pursuant to any contract, indenture, mortgage, deed of trust,
loan or credit agreement, note, lease or any other agreement or instrument,
known to them, to which the Company or any subsidiary thereof is a party or by
which it or any of them
E-2
may be bound, or to which any of the property or assets of the Company or any
subsidiary thereof is subject (except for such conflicts, breaches or defaults
or liens, charges or encumbrances that would not have a Material Adverse Effect)
nor will such action result in any violation of the provisions of the charter or
by-laws (or other similar organizational documents) of any Polish subsidiary of
the Company, 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 subsidiary thereof or
any of their respective properties, assets or operations that is identified to
them by the Company;
(viii) Except as described in the Offering Memorandum, each of
the Polish Designated Subsidiaries owns or possesses or has obtained all
material governmental licenses, certificates, permits, concessions, consents,
orders, approvals and other authorizations necessary to hold all concessions,
leases and permits or own its properties, including, without limitation, all
licenses and permits relating to intellectual property, and to carry on its
business as presently conducted and as contemplated in the Offering Memorandum,
and, to the best of their knowledge after due inquiry, none of the Designated
Subsidiaries has received any notice relating to the revocation or modification
of any such concession, license, certificate, permit, consent, order, approval
or other authorizations;
(ix) Each of the Management Agreements (as such term is
defined in the Indenture) has been duly authorized, executed and delivered by
the parties thereto and constitutes a valid and binding agreement of each of the
parties thereto, enforceable against each of the parties thereto in accordance
with its terms, except as the enforcement 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 enforceability is considered in a proceeding in
equity or at law);
(x) There are no restrictions (legal, contractual or
otherwise) on the ability of the Polish Designated Subsidiaries to declare and
pay dividends or make any payment or transfer of property or assets to their
shareholder other than those described in the Offering Memorandum and except for
the Share Pledges and the Asset Encumbrances; and such descriptions, if any,
fairly summarize such restrictions; and
(xi) No authorization, approval, consent or order of any court
or governmental authority or agency (other than such as may be required under
the applicable securities laws of the various jurisdictions in which the Units
will be offered or sold, as to which they need express no opinion) is required
in connection with the due authorization, execution and delivery of the Purchase
Agreement, the Warrant Agreement, the Registration Rights Agreement, the Warrant
Registration Rights Agreement or the Indenture or for the offering, issuance,
sale or delivery of the Units to the Initial Purchasers or the resale by the
Initial Purchasers in accordance with the Purchase Agreement.
E-3
Such counsel may state that they have not verified, and are
not passing upon and do not assume any responsibility for, the accuracy,
completeness or fairness of the statements contained in the Offering Memorandum
(except for their opinions under paragraphs (iv), (v) and (x) above insofar as
such statements concern legal matters) and that they have participated in
conferences with the Company, representatives of the Initial Purchasers and
their counsel and the independent public accountants for the Company at which
the Offering Memorandum was prepared and the contents thereof and related
matters were discussed. In the course of these conferences and discussions, no
facts have come to their attention that would lead them to believe that the
Offering Memorandum (except for financial statements and schedules and other
financial data included or incorporated by reference therein as to which they
need make no statement), contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein not misleading or that the Offering Memorandum or
any amendment or supplement thereto (except for financial statements and
schedules and other financial data included or incorporated by reference
therein, as to which such counsel need make no statement), at the time the
Offering Memorandum was issued, at the time any such amended or supplemented
Offering Memorandum was issued or at the Closing Time, included or includes an
untrue statement of a material fact or omitted or omits 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.
In rendering such opinion, such counsel may rely (A) as to
matters involving the application of Netherlands law, upon the opinion of Xxxxx
& XxXxxxxx, special Netherlands counsel to the Company (which opinion shall be
delivered to the Initial Purchasers at the Closing Time pursuant to the
provisions of section 5(a)(ii)) of the Purchase Agreement, (B) as to matters
involving the application of English law, upon the opinion of Ashurst Xxxxxx
Xxxxx, special English counsel to the Company (which opinion shall be delivered
to the Initial Purchasers at the Closing Time pursuant to the provisions of
Section 5(a)(iii) of the Purchase Agreement and (C) as to matters involving the
application of the law of the State of New York, the General Corporation Law of
the State of Delaware and the federal law of the United States, upon the opinion
of Xxxxx & XxXxxxxx, United States counsel to the Company (which opinion shall
be delivered to the Initial Purchasers at the Closing Time pursuant to the
provisions of Section 5(a)(i) of the Purchase Agreement as to matters of fact
(but not as to legal conclusions), to the extent they deem proper, on
certificates of responsible officers of the Company and public officials. Such
opinion shall not state that it is to be governed or qualified by, or that it is
otherwise subject to, any treatise, written policy or other document relating to
legal opinions, including, without limitation, the Legal Opinion Accord of the
ABA Section of Business Law (1991).
E-4
Exhibit F
FORM OF OPINION OF COMPANY'S DUTCH COUNSEL
TO BE DELIVERED PURSUANT TO
SECTION 5(a)(ii)
(i) Poland Cablevision ("PCBV") has been duly incorporated and
is validly existing as a corporation in good standing under the laws of the
Netherlands, has corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the Offering Memorandum
and is duly registered with the local Dutch trade register. Under Dutch law,
PCBV is not required to be qualified as a foreign corporation to transact
business in the Netherlands. All of the issued and outstanding capital stock of
PCBV, consisting of 200,000 shares, has been duly authorized and validly issued,
is fully paid and non-assessable. @ Entertainment owns 189,600 out of such
200,000 shares (92.3%) free and clear of any security interest, mortgage,
pledge, lien, encumbrance, claim or equity;
(ii) There are no restrictions (legal, contractual or
otherwise) on the ability of PCBV to declare and pay dividends or make any
payment or transfer of property or assets to its shareholders other than those
described in the Offering Memorandum and such descriptions, if any, fairly
summarize such restrictions;
(iii) Except as described in the Offering Memorandum there is
not pending or, to the best of their knowledge, threatened any action, suit,
proceeding, inquiry or investigation, to which PCBV is a party, or to which the
property of PCBV is subject, before or brought by any Dutch court or
governmental agency or body, which might be expected to result in a Material
Adverse Effect, or which might reasonably be expected to materially and
adversely affect the properties or assets thereof or the consummation of (1)
this Agreement or the performance by the Company of its obligations hereunder
(if any) or (2) the transactions contemplated by the Offering Memorandum;
(iv) All descriptions in the Offering Memorandum of contracts
and other documents to which PCBV is a party are accurate in all material
respects; to the best of their knowledge, there are no franchises, contracts,
indentures, mortgages, loan agreements, notes, leases or other instruments that
would be required to be described in the Offering Memorandum if it were a
prospectus filed as part of a registration statement on Form S-1 under the 1933
Act that are not described or referred to in the Offering Memorandum other than
those described or referred to therein, and the descriptions thereof and
references thereto are correct in all material respects;
(v) PCBV is not in violation of its statutes or by-laws (or
other similar organizational documents) nor, to the best of their knowledge, is
PCBV in violation of any applicable Dutch law, statute, rule, regulation,
judgment, order, writ or decree of any Dutch government, government
instrumentality or court having jurisdiction over PCBV or any of its assets or
properties, except as described in the Offering Memorandum, and no default by
PCBV exists
F-1
in the due performance or observance of any obligation, agreement, covenant or
condition contained in any contract, license, indenture, mortgage, loan
agreement, note, lease or other agreement or instrument that is described or
referred to in the Offering Memorandum, except as described in the Offering
Memorandum and except for such defaults that would not result in a Material
Adverse Effect;
(vi) Except as otherwise disclosed in the Offering Memorandum,
PCBV owns or possesses or has obtained all material licenses, certificates,
permits, concessions, consents, orders, approvals and other governmental
authorizations necessary to hold all its concessions, leases and permits or own
its properties, including, without limitation, all licenses and permits relating
to intellectual property, and to carry on its business as presently conducted
and as contemplated in the Offering Memorandum, and PCBV has not received any
notice relating to the revocation or modification of any such concession,
license, certificate, permit, consent, order, approval or other authorizations;
(vii) No authorization, approval, consent or order of any
Dutch court or Dutch governmental authority or agency (other than such as may be
required under the applicable securities laws of the various jurisdictions in
which the Units will be offered or sold, as to which they need express no
opinion) is required in connection with the due authorization, execution and
delivery by the Company of the Purchase Agreement, the Warrant Agreement, the
Registration Rights Agreement, the Warrant Registration Rights Agreement or the
Indenture or for the offering, issuance, sale or delivery of the Units to the
Initial Purchasers; and
(viii) The information in the Offering Memorandum under the
seventh paragraph of "Risk Factors - Political and Economic Risks; Enforcement
of Foreign Judgments", to the extent that it constitutes matters of law,
summaries of legal matters, or legal conclusions, has been reviewed by them and
is correct in all material respects.
F-2
Exhibit G
FORM OF OPINION OF COMPANY'S ENGLISH COUNSEL
TO BE DELIVERED PURSUANT TO SECTION 5(a)(iii)
(i) At Entertainment Limited ("AEL") has been duly
incorporated and is validly existing as a limited liability company under the
laws of England and Wales, has corporate power and authority to own and lease
its properties and to conduct its business as described in the Offering
Memorandum and is not required to obtain further authorization to transact
business or to own or lease property in England and Wales; all of the issued and
outstanding shares of AEL have been duly authorized, validly issued and are
fully paid up. Their searches at Companies House in respect of AEL did not
reveal any security interest, mortgage, pledge, lien, encumbrance, claim or
equity affecting the issued shares of AEL;
(ii) They have not been instructed by the Company, AEL or any
subsidiary nor have any notice from our searches of the registry of the High
Court of England and Wales of any action, suit, proceeding, inquiry or
investigation, to which the Company or any subsidiary is a party, or to which
the property of AEL is subject, before or brought by any court or governmental
agency or body, which might be expected to result in a Material Adverse Effect
on AEL;
(iii) They have no notice that any real property has been
acquired by AEL whether by purchase or lease other than Maidstone Studios,
Vinters Park, Kent and lease of premises in Xxxxxxx Xxxxxx, Xxxxxx;
(iv) The information in the Offering Memorandum under "Risk
Factors Dependence on Philips as Principal Supplier", "Risk Factors - Dependence
on Satellites", "Risk Factors - Availability of Programming and Dependence on
Third Party Programmers; Program Development Risk" (other than the specification
of any financial commitments of the Company), "Risk Factors - United Kingdom
Regulation of D-DTH Business", "Risk Factors - European Union Regulation of
D-DTH Business", "Risk Factors - Regulation of Competition" (insofar as it does
not relate to Poland), the sixth paragraph of "Risk Factors - Political and
Economic Risks; Enforcement of Foreign Judgments", "Regulation - United
Kingdom", and "Regulation - European Union", to the extent that it constitutes
matters of law, summaries of legal matters, or legal proceedings, or legal
conclusions, has been reviewed by them and is correct in all material respects;
(v) All summaries in the Offering Memorandum of the satellite
television services license issued by the Independent Television Commission (the
"ITC License") for the channels known as Atomic TV, Wizja 1, Wizja Sport, Wizja
Pogoda and Twoja Wizja Na Zywo and of the contracts for transponders on Astra 1E
and 1F satellites, the Commercial Cooperation Agreement with Xxxxxxxx or
agreements set out at Schedule 1 to which AEL is a party are accurate summaries
of the matters summarized; they have no notice that there are any franchises,
contracts,
G-1
licenses, indentures, mortgages, loan agreements, notes, leases or other
instruments relating to AEL that are not described or referred to in the
Offering Memorandum, and the descriptions thereof and references thereto are
correct in all material respects;
(vi) AEL is not in violation of its Memorandum and Articles of
Association and, they have no notice that AEL is in violation of any applicable
English law, statute, rule, regulation, judgment, order, writ or decree of any
government, government instrumentality or court having jurisdiction over AEL in
England or any of its assets or properties in England, except as described in
the Offering Memorandum, they have no notice that any default by AEL exists in
the due performance or observance of any obligation, agreement, covenant or
condition of AEL contained in any contract, license, indenture, mortgage, loan
agreement, note, lease or other agreement or instrument that is described or
referred to in those sections of the Offering Memorandum referred to in
paragraph (iv) above or on the Schedule 1 attached to the opinion;
(vii) The execution, delivery and performance of the Purchase
Agreement, the Warrant Agreement, the Registration Rights Agreement, the Warrant
Registration Rights Agreement and the Indenture and the consummation of the
transactions contemplated therein and in the Offering Memorandum (including the
use of proceeds from the sale of the Securities and described in the Offering
Memorandum under the caption "Use of Proceeds") and compliance by the Company
with its obligations under the Purchase Agreement, the Warrant Agreement, the
Registration Rights Agreement, the Warrant Registration Rights Agreement the
Securities and the Indenture, will not, whether with or without the giving of
notice or lapse of time or both, conflict with or constitute a breach of, or
default under or result in the creation or imposition of any lien, charge or
encumbrance under English law upon any property or assets of AEL pursuant to any
contract, indenture, mortgage, deed of trust, loan or credit agreement, note,
lease or any other agreement or instrument, notified to them, to which AEL is a
party or by which it may be bound, or to which any of the property or assets of
AEL is subject, nor will such action result in any violation of the provisions
of the Memorandum and Articles of Association of AEL, or any applicable English
law, statute, rule, regulation, judgment, order, writ or decree, of any
government, government instrumentality or court having jurisdiction in England
over AEL or any of its respective properties, assets or operations in England;
(viii) AEL owns or possesses or has obtained all material
governmental licenses, certificates, permits, concessions, consents, orders,
approvals and other authorizations in England, as disclosed in the Offering
Memorandum, necessary to hold all concessions, leases and permits or own its
properties, including, without limitation, all broadcasting licenses and permits
relating to intellectual property, and to carry on its business as presently
conducted and as contemplated in the Offering Memorandum, and they have no
notice that AEL has received any notice relating to the revocation or
modification of any such concession, license, certificate, permit, consent,
order, approval or other authorizations;
(ix) Other than as described in the Offering Memorandum, there
are no restrictions (legal, contractual or otherwise) on the ability of AEL to
declare and pay dividends in
G-2
accordance with applicable English company law, and other than as imposed by law
on English companies generally, there are no restrictions (legal, contractual or
otherwise) on the ability of AEL to make any payment or transfer of property or
assets to its shareholder; and
(x) No authorization, approval, consent or order of any court
or governmental authority or agency in England which regulates the operations of
AEL is required in connection with the due authorization, execution and delivery
of the Purchase Agreement, the Warrant Agreement, the Registration Rights
Agreement, the Warrant Registration Rights Agreement and the Indenture, or for
the offering, issuance, sale or delivery of the Units to the Initial Purchasers.
They need give no opinion as to whether the due authorization, execution and
delivery by the Company of the Purchase Agreement, the Warrant Agreement, the
Registration Rights Agreement, the Warrant Registration Rights Agreement and the
Indenture or the offering, issuance, sale or delivery of the Units to the
Initial Purchasers complies with applicable securities laws in England and Wales
or any other jurisdiction.
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TABLE OF CONTENTS
PURCHASE AGREEMENT.................................................................................................1
SECTION 1. REPRESENTATIONS AND WARRANTIES........................................................3
(a) REPRESENTATIONS AND WARRANTIES BY THE COMPANY.........................................3
(i) SIMILAR OFFERINGS..........................................................3
(ii) OFFERING MEMORANDUM........................................................3
(iii) INDEPENDENT ACCOUNTANTS....................................................4
(iv) FINANCIAL STATEMENTS.......................................................4
(v) NO MATERIAL ADVERSE CHANGE IN BUSINESS.....................................4
(vi) GOOD STANDING OF THE COMPANY...............................................4
(vii) CORPORATE STANDING OF DESIGNATED SUBSIDIARIES..............................5
(viii) RESTRICTIONS ON PAYMENTS OF DIVIDENDS......................................5
(ix) CAPITALIZATION.............................................................6
(x) AUTHORIZATION OF AGREEMENT.................................................6
(xi) AUTHORIZATION OF THE REGISTRATION RIGHTS AGREEMENT.........................6
(xii) AUTHORIZATION OF THE INDENTURE.............................................6
(xiii) AUTHORIZATION OF THE NOTES.................................................7
(xiv) AUTHORIZATION OF THE WARRANT AGREEMENT.....................................7
(xv) AUTHORIZATION OF THE WARRANTS..............................................7
(xvi) AUTHORIZATION OF THE WARRANT SHARES........................................7
(xvii) AUTHORIZATION OF THE WARRANT REGISTRATION RIGHTS AGREEMENT.................8
(xviii) AUTHORIZATION OF PREFERENCE SECURITIES.....................................8
(xix) DESCRIPTION OF THE REGISTRATION RIGHTS AGREEMENT, WARRANT
REGISTRATION RIGHTS AGREEMENT, THE UNITS, THE NOTES, THE
WARRANTS, THE COMMON STOCK, THE WARRANT AGREEMENT AND THE
INDENTURE..................................................................8
(xx) ABSENCE OF DEFAULTS AND CONFLICTS..........................................8
(xxi) ABSENCE OF LABOR DISPUTE...................................................9
(xxii) ABSENCE OF PROCEEDINGS....................................................10
(xxiii) POSSESSION OF INTELLECTUAL PROPERTY.......................................10
(xxiv) ABSENCE OF FURTHER REQUIREMENTS...........................................10
(xxv) POSSESSION OF LICENSES AND PERMITS........................................11
(xxvi) NO ADDITIONAL DOCUMENTS...................................................11
(xxvii) MANAGEMENT AGREEMENTS.....................................................12
(xxviii) TITLE TO PROPERTY.........................................................12
(xxix) TAX RETURNS...............................................................12
(xxx) ENVIRONMENTAL LAWS........................................................12
(xxxi) INVESTMENT COMPANY ACT....................................................13
(xxxii) INTERNAL CONTROLS.........................................................13
(xxxiii) TAXES ON SUBSIDIARY INDEBTEDNESS..........................................14
(xxxiv) INSURANCE.................................................................14
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(xxxv) RULE 144A ELIGIBILITY.....................................................14
(xxxvi) NO GENERAL SOLICITATION...................................................14
(xxxvii) NO REGISTRATION REQUIRED..................................................14
(xxxviii) NO REGISTRATION OF PREFERENCE SECURITIES REQUIRED.........................14
(xxxix) REPORTING COMPANY.........................................................15
(b) OFFICERS' CERTIFICATES...............................................................15
SECTION 2. SALE AND DELIVERY TO THE INITIAL PURCHASERS; CLOSING.................................15
(a) SECURITIES...........................................................................15
(b) PAYMENT..............................................................................15
(c) QUALIFIED INSTITUTIONAL BUYER........................................................15
(d) DENOMINATIONS; REGISTRATION..........................................................15
SECTION 3. COVENANTS OF THE COMPANY.............................................................16
(a) OFFERING MEMORANDUM..................................................................16
(b) NOTICE AND EFFECT OF MATERIAL EVENTS.................................................16
(c) AMENDMENT TO OFFERING MEMORANDUM AND SUPPLEMENTS.....................................16
(d) QUALIFICATION OF SECURITIES FOR OFFER AND SALE.......................................16
(e) DTC AND PORTAL.......................................................................17
(f) USE OF PROCEEDS......................................................................17
(g) RESTRICTION ON SALE OF SECURITIES....................................................17
(h) NOTIFICATION OF CURRENT ACCUMULATED EARNINGS & PROFITS...............................17
SECTION 4. PAYMENT OF EXPENSES..................................................................17
(a) EXPENSES.............................................................................17
(b) TERMINATION OF AGREEMENT.............................................................18
SECTION 5. CONDITIONS OF THE INITIAL PURCHASERS' OBLIGATIONS....................................18
(a) OPINIONS OF COUNSEL FOR THE COMPANY..................................................18
(b) OPINION OF UNITED STATES COUNSEL FOR THE INITIAL PURCHASERS..........................18
(c) OPINION OF POLISH COUNSEL FOR THE INITIAL PURCHASERS.................................18
(d) OFFICERS' CERTIFICATE................................................................19
(e) ACCOUNTANTS' COMFORT LETTER..........................................................19
(f) BRING-DOWN COMFORT LETTER............................................................19
(g) PORTAL...............................................................................19
(h) ADDITIONAL DOCUMENTS.................................................................19
(i) EXECUTION OF AGREEMENTS..............................................................20
(j) CONSUMMATION OF SALE OF PREFERENCE SECURITIES........................................20
(k) TERMINATION OF AGREEMENT.............................................................20
SECTION 6. SUBSEQUENT OFFERS AND RESALES OF THE SECURITIES......................................20
(a) OFFER AND SALE PROCEDURES............................................................20
(i) OFFERS AND SALES ONLY TO QUALIFIED INSTITUTIONAL BUYERS...................20
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(ii) NO GENERAL SOLICITATION...................................................20
(iii) PURCHASES BY NON-BANK FIDUCIARIES.........................................20
(iv) SUBSEQUENT PURCHASER NOTIFICATION.........................................21
(v) RESTRICTIONS ON TRANSFER..................................................21
(b) COVENANTS OF THE COMPANY.............................................................21
(i) DUE DILIGENCE.............................................................21
(ii) INTEGRATION...............................................................22
(iii) RULE 144A INFORMATION.....................................................22
(iv) RESTRICTION ON REPURCHASES................................................22
(c) RESALE PURSUANT TO RULE 144A..............................................22
(d) OFFERS AND SALES IN POLAND AND THE NETHERLANDS.......................................23
(e) OFFERS AND SALES IN THE UNITED KINGDOM...............................................23
(f) REPRESENTATION AND WARRANTY OF THE INITIAL PURCHASERS................................23
SECTION 7. INDEMNIFICATION......................................................................23
(a) INDEMNIFICATION OF THE INITIAL PURCHASERS............................................23
(b) INDEMNIFICATION OF THE COMPANY, DIRECTORS AND OFFICERS...............................24
(c) ACTIONS AGAINST PARTIES; NOTIFICATION................................................25
(d) SETTLEMENT WITHOUT CONSENT IF FAILURE TO REIMBURSE...................................25
SECTION 8. CONTRIBUTION.........................................................................25
SECTION 9. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY.......................27
SECTION 10. TERMINATION OF AGREEMENT.............................................................27
(a) TERMINATION; GENERAL.................................................................27
(b) LIABILITIES..........................................................................28
SECTION 11. DEFAULT BY ONE OR MORE OF THE INITIAL PURCHASERS............................................28
SECTION 12. NOTICES...................................................................28
SECTION 13. PARTIES...................................................................28
SECTION 14. GOVERNING LAW AND TIME....................................................29
SECTION 15. EFFECT OF HEADINGS........................................................29
SECTION 16. COUNTERPARTS..............................................................29
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