THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933. NEITHER THIS WARRANT NOR SUCH
SECURITIES NOR ANY INTEREST OR PARTICIPATION HEREIN OR THEREIN MAY BE SOLD,
ASSIGNED, PLEDGED, HYPOTHECATED, ENCUMBERED OR IN ANY OTHER MANNER TRANSFERRED
OR DISPOSED OF EXCEPT IN COMPLIANCE WITH THE SECURITIES ACT OF 1933 AND THE
APPLICABLE RULES AND REGULATIONS THEREUNDER.
CENTRAL EUROPEAN MEDIA ENTERPRISES LTD.
Warrant for the Purchase of Shares of Common Stock
up to 100,000 Shares
FOR VALUE RECEIVED, CENTRAL EUROPEAN MEDIA ENTERPRISES LTD. (the
"Company"), a Bermuda corporation, hereby certifies that XXXXXX X. XXXXXX, or
his registered assigns (the "Holder") is entitled, subject to the provisions of
this Warrant, to purchase from the Company, at any time or from time to time
during the Exercise Period, as hereinafter defined, an aggregate (subject to
adjustment from time to time as hereinafter set forth) of up to 100,000 fully
paid and nonassessable shares of Class A Common Stock of the Company, par value
$0.01 per share, at a purchase price per share equal to the Exercise Price as
hereinafter defined. The number of Warrant Shares issuable upon exercise of this
Warrant shall be subject to reduction based on the highest amount of principal
payable, at any one time, by the Company to the Holder (the "Maximum Loan"),
pursuant to that certain Term Promissory Note (the "Note"), dated October 2,
1996, by the Company and payable to the Holder, after the date of the Note and
prior to the date of repayment in full thereof. Such reduction shall be computed
by reducing the number of Warrant Shares (as defined herein) in proportion to
the amount (if any) by which $20,000,000 exceeds the Maximum Loan as provided in
Exhibit A hereto. The term "Common Stock" shall mean the aforementioned Class A
Common Stock, par value $0.01 per share, of the Company, together with any other
equity securities that may be issued by the Company in substitution therefor.
The number of shares of Common Stock to be received upon the exercise of this
Warrant and the Exercise Price are subject to adjustment from time to time as
hereinafter set forth.
Section I. Definitions. The following terms, as used herein, have the
following respective meanings:
"Act" means the Securities Act of 1933, as amended.
"Business Day" means any day other than a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required to close.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exercise Period" means the period of time from October 2, 1997 until 5:00
P.M., local time in New York City, on October 1, 2001.
"Exercise Price" shall be the lesser of 110% of the price to public as set
forth on the cover of the final prospectus contained in Registration Statement
No. 333-12699 or $32.00 per share of Common Stock (subject to adjustment from
time to time as hereinafter set forth).
"Warrant Shares" means the shares of Common Stock deliverable upon
exercise of this Warrant, as adjusted from time to time, except as provided in
Section 9 hereof.
Section 2. Exercise of Warrant. Subject to the provisions of Section 10,
this Warrant may be exercised in whole or in part, at any time or from time to
time, during the Exercise Period, by presentation and surrender hereof to the
Company at its principal office at the address set forth on the signature page
hereof (or at such other address as the Company may hereafter notify the Holder
in writing), or at the office of its stock transfer agent or warrant agent, if
any, with the Purchase Form annexed hereto duly executed and accompanied by
proper payment of the Exercise Price for the number of Warrant Shares specified
in such form. The Exercise Price shall be paid in cash, in currency of the
United States of America or by reduction in outstanding amounts due under the
Note. If this Warrant should be exercised in part only, the Company shall, upon
surrender of this Warrant, execute and deliver a new Warrant evidencing the
rights of the Holder thereof to purchase the balance of the Warrant Shares
purchasable hereunder. Upon receipt by the Company of this Warrant and such
Purchase Form, together with the applicable Exercise Price, at such office, in
proper form for exercise, the Holder shall be deemed to be the holder of record
of the Warrant Shares, notwithstanding that the stock transfer books of the
Company shall then be closed or that certificates representing such Warrant
Shares shall not then be actually delivered to the Holder. The Company shall pay
any and all documentary stamp or similar issue taxes payable in respect of the
issue of the
2
Warrant Shares. The Company shall not, however, be required to pay any tax which
may be payable in respect of any transfer involved in the issuance or delivery
of certificates representing Warrants or Warrant Shares in a name other than
that of the Holder at the time of surrender for exercise and, until the payment
of such tax, shall not be required to issue such Warrant Shares.
Section 3. Reservation of Shares. The Company hereby agrees that at all
times there shall be reserved for issuance and delivery upon exercise of this
Warrant all shares of its Common Stock or other shares of capital stock of the
Company from time to time issuable upon exercise of this Warrant. All such
shares shall be duly authorized and, when issued upon such exercise, shall be
validly issued, fully paid and nonassessable, free and clear of all liens,
security interests, charges and other encumbrance or restrictions on sale and
free and clear of all preemptive rights, subject, however, to the provisions of
Section 10.
Section 4. Fractional Shares. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant. With
respect to any fraction of a share called for upon any exercise hereof, the
Company shall pay to the Holder an amount in cash equal to such fraction
multiplied by the current market value of such fractional share, determined as
follows:
(i) If the Common Stock is listed on a national securities
exchange or admitted to unlisted trading privileges on such an exchange,
the current market value shall be the last reported sale price of the
Common Stock on such exchange on the last Business Day prior to the date
of exercise of this Warrant or if no such sale is made on such day, the
mean of the closing bid and asked prices for such day on such exchange; or
(ii) If the Common Stock is not so listed or admitted to
unlisted trading privileges, the current market value shall be the mean of
the last bid and asked prices reported on the last Business Day prior to
the date of the exercise of this Warrant (A) by the National Association
of Securities Dealers, Inc. Automated Quotation System or (B) if reports
are unavailable under clause (A) above by the National Quotation Bureau
Incorporated; or
(iii) If the Common Stock is not so listed or admitted to
unlisted trading privileges and bid and asked prices are not so reported,
the current market
3
value shall be an amount determined in such reasonable manner as may be
prescribed by the Board of Directors of the Company.
Section 5. Exchange, Transfer, Assignment or Loss of Warrant. This Warrant
is exchangeable, without expense, at the option of the Holder, upon presentation
and surrender hereof to the Company for other Warrants of different
denominations, entitling the Holder or Holders thereof to purchase in the
aggregate the same number of Warrant Shares. The Holder of this Warrant shall be
entitled without obtaining the consent of the Company, to assign its interest in
this Warrant in whole or in part to any person or persons, subject to the
provisions of Section 10. Subject to the provisions of Section 10, upon
surrender of this Warrant to the Company, with the Assignment Form annexed
hereto duly executed and funds sufficient to pay any transfer tax, the Company
shall, without charge, execute and deliver a new Warrant or Warrants in the name
of the assignee or assignees named in such instrument of assignment and, if the
Holder's entire interest is not being assigned, in the name of the Holder, and
this Warrant shall promptly be cancelled. This Warrant may be divided or
combined with other Warrants that carry the same rights upon presentation hereof
at the office of the Company, together with a written notice specifying the
names and denominations in which new Warrants are to be issued and signed by the
Holder hereof. The term "Warrant" as used herein includes any Warrants into
which this Warrant may be divided or for which it may be exchanged. Upon receipt
by the Company of evidence satisfactory to it of the loss, theft, destruction or
mutilation of this Warrant, and (in the case of loss, theft or destruction) of
reasonably satisfactory indemnification, and upon surrender and cancellation of
this Warrant, if mutilated, the Company shall execute and deliver a new Warrant
of like tenor and date.
Section 6. Rights of the Holder. The Holder shall not, by virtue hereof,
be entitled to any rights of a stockholder in the Company, either at law or
equity, and the rights of the Holder are limited to those expressed in this
Warrant.
Section 7. Anti-dilution Provisions. In case the Company shall, while this
Warrant remains in effect, (i) declare a dividend or make a distribution on its
Common Stock payable in shares of its capital stock (whether shares of Common
Stock or of capital stock of any other class), (ii) subdivide shares of its
Common Stock into a greater number of shares, (iii) combine its outstanding
Common Stock into a smaller number of shares, or (iv) issue any shares of its
capital stock by reclassification of its Common Stock (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing corporation), the Holder shall be entitled to purchase
the aggregate number and kind of shares which, if the Warrant had
4
been exercised immediately prior to such event, the Holder would have owned upon
such exercise and been entitled to receive by virtue of such dividend,
distribution, subdivision, combination or reclassification; and the Exercise
Price shall automatically be adjusted immediately after the record date, in the
case of a dividend or distribution, or the effective date, in the case of a
subdivision, combination or reclassification, to allow the purchase of such
aggregate number and kind of shares for an aggregate Exercise Price no greater
than the aggregate Exercise Price that would have been payable if this Warrant
had been exercised in full immediately prior to such event. Such adjustments
shall be made successively whenever any event listed above shall occur.
No adjustment pursuant to this Section 7 in the number of Warrant Shares
purchasable hereunder shall be required unless such adjustment would require an
increase or decrease of at least one whole share; provided however, that any
adjustments which by reason of this sentence are not required to be made shall
be carried forward and taken into account in any subsequent adjustment. All
calculations under this Section 7 shall be made to the nearest share. In the
event that at any time, as a result of an adjustment made pursuant to this
Section 7, the Holder shall become entitled to receive any shares of the capital
stock of the Company other than Common Stock, thereafter the number of such
other shares so receivable upon exercise of this Warrant shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Common Stock contained in this
Section 7, and the provisions of this Warrant with respect to the Common Stock
shall apply on like terms to any such other shares.
Section 8. Officers' Certificate. Whenever the number of Warrant Shares
purchasable hereunder shall be adjusted as required by the provisions of Section
7, the Company shall forthwith file in the custody of its Secretary or an
Assistant Secretary at its principal office an officers' certificate showing the
adjusted number of Warrant Shares purchasable hereunder determined as herein
provided, setting forth in reasonable detail the facts requiring such adjustment
and the manner of computing such adjustment. Each such officers' certificate
shall be signed by the chairman, president or chief financial officer of the
Company and by the secretary or any assistant secretary of the Company. Each
such officers' certificate shall be made available at all reasonable times for
inspection by the Holder or any holder of a Warrant executed and delivered
pursuant to Section 4 hereof and the Company shall, forthwith after each such
adjustment, mail a copy, by certified mail, of such certificate to the Holder or
any such holder.
Section 9. Reclassification, Reorganization, Consolidation
5
or Merger. In case of any Reorganization Transaction (as hereinafter defined),
the Company shall, as a condition precedent to such transaction, cause effective
provisions to be made so that the Holder shall have the right thereafter, by
exercising this Warrant, to purchase the kind and amount of shares of stock and
other securities and property receivable upon such Reorganization Transaction by
a holder of the number of shares of Common Stock that might have been received
upon exercise of this Warrant immediately prior to such Reorganization
Transaction. Any such provision shall include provision for adjustments in
respect of such shares of stock and other securities and property that shall be
as nearly equivalent as may be practicable to the adjustments provided for in
this Warrant. The foregoing provisions of this Section 9 shall similarly apply
to successive Reorganization Transactions. For purposes of this Section 9,
"Reorganization Transaction" shall mean (excluding any transaction covered by
Section 7) any reclassification, capital reorganization or other change of
outstanding shares of Common Stock of the Company (other than a subdivision or
combination of the outstanding Common Stock and other than a change in the par
value of the Common Stock) or any consolidation or merger of the Company with or
into another corporation (other than a merger in which the Company is the
continuing corporation and that does not result in any reclassification, capital
reorganization or other change of outstanding shares of Common Stock issuable
upon exercise of this Warrant) or any sale, lease transfer or conveyance to
another corporation of the property and assets of the Company as an entirety.
Section 10. Transfer to Comply with the Securities Act of 1933. The
Holder, by his acceptance hereof, represents and warrants that he is acquiring
the Warrants and any Warrant Shares for investment purposes, for his own account
and not in conjunction with any other person, directly or indirectly, and not
with an intent to sell or distribute the Warrants or any Warrant Shares except
in compliance with applicable United States federal and state securities law in
a manner which would not result in the issuance of the Warrants being treated as
a public offering. Neither this Warrant nor any of the Warrant Shares, nor any
interest in either, may be sold, assigned, pledged, hypothecated, encumbered or
in any other manner transferred or disposed of, in whole or in part, except in
compliance with applicable United States federal and state securities laws and
the terms and conditions hereof. Each Certificate for Warrant Shares issued upon
exercise of this Warrant, unless at the time of exercise such Warrant Shares are
registered under the Act, shall bear the following legend:
This certificate and the securities evidenced hereby have not been
registered under the Securities Act of 1933. Neither this certificate nor
such
6
securities nor any interest or participation therein may be sold,
assigned, pledged, hypothecated, encumbered or in any other manner
transferred or disposed of except in compliance with the Securities Act of
1933 and the applicable rules and regulations thereunder.
Any certificate issued at any time in exchange or substitution for any
certificate bearing such legend shall also bear such legend unless, in the
reasonable opinion of counsel for the Company, the securities represented
thereby need no longer be subject to the restriction contained herein. The
provisions of this Section 10 shall be binding upon all subsequent holders of
certificates bearing the above legend and all subsequent holders of this
Warrant, if any.
Section 11. Listing on Securities Exchanges. The Company shall use its
best efforts to list on each national securities exchange on which any Common
Stock may at any time be listed, subject to official notice of issuance upon the
exercise of this Warrant, and shall use its best efforts to maintain, so long as
any other shares of its Common Stock shall be so listed, such listing of all
shares of Common Stock from time to time issuable upon the exercise of this
Warrant; and the Company shall use its best efforts to so list on each national
securities exchange, and shall use its best efforts to maintain such listing of,
any other shares of capital stock of the Company issuable upon the exercise of
this Warrant if and so long as any shares of capital stock of the same class
shall be listed on such national securities exchange by the Company. Any such
listing shall be at the Company's expense.
Section 12. Availability of Information. The Company shall comply with the
reporting requirements of Sections 13 and 15(d) of the Exchange Act to the
extent it is required to do so under the Exchange Act. The Company shall also
cooperate with each Holder of any Warrants and holder of any Warrant Shares in
supplying such information as may be necessary for such holder to complete and
file any information reporting forms currently or hereafter required by the
Securities and Exchange Commission as a condition to the availability of an
exemption from the Act for the sale of any Warrants or Warrant Shares. The
provisions of this Section 12 shall survive termination of this Warrant, whether
upon exercise of this Warrant in full or otherwise.
Section 13. Taxes. (a) Withholding Taxes. All payments made by or on
behalf of the Company pursuant to or in connection with this Warrant or the Note
to or for the account of the Holder, shall be made free and clear of, and
without deduction or withholding for or on account of any Indemnifiable Taxes,
unless such deduction or withholding is required by applicable law. If
7
any such deduction or withholding is required by applicable law, the Company
shall(i) promptly notify the Holder of such requirement, (ii) pay the amount so
required to be deducted or withheld to the applicable taxing authority on a
timely basis, and (iii) pay to such Holder such additional amounts ("Additional
Amounts") as may be necessary in order that the net amount received by such
Holder, after and free and clear of any required deduction or withholding for or
on account of Indemnifiable Taxes (including any required deduction or
withholding for or on account of Indemnifiable Taxes with respect to such
Additional Amounts), shall equal the amount such Holder would have received had
no such deduction or withholding for or on account of Indemnifiable Taxes been
required.
(b) Other Taxes. The Company shall pay and shall indemnify and hold
harmless the Holder against all Taxes, excluding income taxes, that may be
payable in respect of the preparation, execution, delivery, filing, recordation,
registration or enforcement of this Warrant or the Note or any document to be
furnished under or in connection with any thereof or the offer, issue or initial
sale of the Notes, or any modification, amendment or waiver under or in respect
of this Warrant or the Note.
(c) Survival. Notwithstanding anything else to the contrary herein
provided, the right of the Holder to receive payments under this Section 13
shall survive the sale, exchange or other disposition of the Note, any
prepayment or payment in whole or in part of any Note and the termination of
this Warrant.
(d) Definitions. "Taxes" mean any present or future taxes, levies,
imposts, duties, charges or fees of any nature whatsoever, together with any
related penalties, interest thereon or additions thereto, now or hereafter
imposed by any government or any political subdivision or taxing authority
thereof or therein. "Indemnifiable Taxes" mean all Taxes other than Taxes
imposed on the net income of the Holder imposed by (i) the jurisdiction under
the laws of which such Holder is organized (or, in the case of an individual,
the jurisdiction of which such individual is a citizen) or (ii) a jurisdiction
in which the Holder has a permanent establishment or permanent representative to
which the Note is attributable.
Section 14. Successors and Assigns. The provisions
hereof shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns.
IN WITNESS WHEREOF, the Company has duly caused this Warrant to be signed
by its duly authorized officer and to be dated as of
8
October 2, 1996.
CENTRAL EUROPEAN MEDIA ENTERPRISES, LTD.
By:______________________________________
Title:
9
EXHIBIT A
The number of Warrant Shares shall be computed as follows. If the Maximum
Loan is less than $20,000,000, or equal to an amount between the Maximum Loan
Amounts shown on this table, the related Warrant Share amount shall be computed
on a pro rata basis on a ratio of 10,000 Warrant Shares per $2,000,000 payable
pursuant to the Note.
Maximum Loan Warrant Shares
------------ --------------
$20,000,000 100,000
$18,000,000 90,000
$16,000,000 80,000
$14,000,000 70,000
$12,000,000 60,000
$10,000,000 50,000
$ 8,000,000 40,000
$ 6,000,000 30,000
$ 4,000,000 20,000
$ 2,000,000 10,000
WARRANT EXERCISE FORM
Dated ________________, 19__
The undersigned hereby irrevocably elects to exercise the within Warrant
to the extent of purchasing _____________ shares of Common Stock and hereby
makes payment of _____________ in payment of the exercise price thereof.
----------
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name____________________________________________________________________________
(please typewrite or print in block letters)
Address_________________________________________________________________________
Signature______________________________________________
----------
ASSIGNMENT FORM
FOR VALUE RECEIVED, ______________________________________________________
hereby sells, assigns and transfers unto
Name____________________________________________________________________________
(please typewrite or print in block letters)
Address_________________________________________________________________________
its right to purchase ___________ shares of Common Stock represented by this
Warrant and does hereby irrevocably constitute and appoint ___________________
Attorney, to transfer the same on the books of the Company, with full power of
substitution in the premises.
Date: ______________________, 19__
Signature________________________________
