EXECUTION COPY
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@ENTERTAINMENT, INC.
(a Delaware corporation)
5,000 Shares of Series B Cumulative Preference Stock and
5,000 Warrants to Purchase an Aggregate of
550,000 Shares of Common Stock
PURCHASE AGREEMENT
Dated: January 22, 1999
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Table of Contents
PURCHASE AGREEMENT 5
SECTION 1. Representations and Warranties 7
(a) Representations and Warranties by the Company 7
(i) Similar Offerings 7
(ii) Preference Offering Memorandum 7
(iii) Independent Accountants 7
(iv) Financial Statements 8
(v) No Material Adverse Change in Business 8
(vi) Good Standing of the Company 8
(vii) Corporate Standing of Designated Subsidiaries 8
(viii) Restrictions on Payments of Dividends 9
(ix) Capitalization 9
(x) Authorization of Agreement 10
(xi) Authorization of the Preference Registration Rights Agreement 10
(xii) Authorization of the Certificate of Designation and the
Preference Shares 10
(xiii) Authorization of the Preference Warrant Agreement 10
(xiv) Authorization of the Preference Warrants 11
(xv) Authorization of the Preference Warrant Shares 11
(xvi) Authorization of the Preference Warrant Registration Rights
Agreement 11
(xvii) Authorization of the Indenture 12
(xviii) Authorization of the Notes 12
(xix) Authorization of the Note Registration Rights Agreement 12
(xx) Authorization of the Note Warrant Agreement 12
(xxi) Authorization of the Note Warrant Registration Rights Agreement 13
(xxii) Description of the Preference Registration Rights Agreement,
the Preference Warrant Registration Rights Agreement, the Preference
Shares, the Preference Warrants, the Common Stock, the Preference
Warrant Agreement, the MG Securities, the Note Securities, and the
Note Agreements 13
(xxiii) Absence of Defaults and Conflicts 13
(xxiv) Absence of Labor Dispute 14
(xxv) Absence of Proceedings 14
(xxvi) Possession of Intellectual Property 15
(xxvii) Absence of Further Requirements 15
(xxviii) Possession of Licenses and Permits 16
(xxix) No Additional Documents 16
(xxx) Management Agreements 16
(xxxi) Title to Property 17
(xxxii) Tax Returns 17
(xxxiii) Environmental Laws 17
(xxxiv) Investment Company Act 18
(xxxv) Internal Controls 18
(xxxvi) Taxes on Subsidiary Indebtedness 18
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(xxxvii) Insurance 19
(xxxviii) Rule 144A Eligibility 19
(xxxix) No General Solicitation 19
(xl) No Registration Required 19
(xli) Reporting Company 19
(xlii) Funds 19
(xliii) Subscribers 20
(b) Officers' Certificates 20
SECTION 2. Sale and Delivery to the Purchaser; Closing 20
(a) Preference Securities 20
(b) Payment 20
(c) Qualified Institutional Buyer 20
(d) Denominations; Registration 20
SECTION 3. Covenants of the Company 21
(a) Preference Offering Memorandum 21
(b) Notice and Effect of Material Events 21
(c) Reserved. 21
(d) Reserved. 21
(e) Reserved. 21
(f) DTC 21
(g) Use of Proceeds 21
(h) Reserved. 21
SECTION 4. Payment of Expenses 21
(a) Expenses 21
(b) Termination of Agreement 22
SECTION 5. Conditions of the Chase Purchasers' Obligations 22
(a) Reserved 22
(b) Reserved 22
(c) Reserved 22
(d) Officers' Certificate 22
(e) Reserved 22
(f) Reserved 23
(g) Consummation of Sale of MG Securities and Note Securities 23
(h) Reserved 23
(i) Additional Documents 23
(j) Execution of Agreements 23
(k) Termination of Agreement 23
SECTION 6. Resales of the Preference Securities 23
(a) Representation and Warranty of the 23
(c) Covenants of the Company 24
(i) Due Diligence 24
(ii) Integration 24
(iii) Rule 144A Information 24
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(d) Resales 25
(e) Offers and Sales in Poland and The Netherlands 25
(f) Offers and Sales in the United Kingdom 25
(g) Xxxxxxx 26
SECTION 7. Indemnification 26
(a) Indemnification of the Chase Purchasers 26
(b) Indemnification of the Company, Directors and Officers 27
(c) Actions Against Parties; Notification 27
(d) Settlement Without Consent if Failure to Reimburse 27
SECTION 8. Contribution 28
SECTION 9. Representations, Warranties and Agreements to Survive Delivery 29
SECTION 10. Termination of Agreement 29
(a) Termination; General 29
(b) Liabilities 30
SECTION 11. Notices 30
SECTION 12. Parties 30
SECTION 13. GOVERNING LAW AND TIME 30
SECTION 14. Effect of Headings 30
SECTION 15. Counterparts 30
EXHIBITS
Exhibit A - Form of Certificate of Designation ............................A-1
Exhibit B - Form of Preference Warrant Agreement ..........................B-1
Exhibit C - Form of Preference Registration Rights Agreement ..............C-1
Exhibit D - Form of Preference Warrant Registration Rights Agreement ......D-1
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@ENTERTAINMENT, INC.
(a Delaware corporation)
5,000 Shares of Series B Cumulative Preference Stock and
5,000 Warrants to Purchase an Aggregate of
4,950,000 Shares of Common Stock
PURCHASE AGREEMENT
January 22, 1999
Xx. Xxxxxx Xxxxx
Ms. Xxxxxx Xxxxx
Xx. Xxxxx Xxxxx
c/x Xxxxx Enterprises
Xxx Xxxxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxxx 06103-3585
Ladies and Gentlemen:
@Entertainment, Inc., a Delaware corporation (the "Company"), confirms its
agreement with Xx. Xxxxxx Xxxxx, Ms. Xxxxxx Xxxxx and Xx. Xxxxx Xxxxx (the
"Xxxxx Purchasers") with respect to the issue and sale by the Company and the
purchase by the Chase Purchasers, severally and not jointly, of an aggregate of
5,000 of the Company's Series B Cumulative Preference Shares (the "Preference
Shares") and 5,000 warrants (each a "Preference Warrant" and collectively, the
"Preference Warrants" and, together with the Preference Shares, the "Preference
Securities"). The Preference Warrants entitling the holders thereof to purchase
an aggregate of 550,000 shares of common stock, par value $0.01 per share (the
"Common Stock"), of the Company. The number of Preference Shares and Preference
Warrants to be purchased, severally and not jointly, by each of the Chase
Purchasers is set forth on Schedule A. The Preference Shares and Preference
Warrants are more fully described in Schedule B hereto. The Preference Shares
are to be issued pursuant to the Certificate of Designation of the Company in
substantially the form attached hereto as Exhibit A and the Preference Warrants
are to be issued pursuant to a warrant agreement dated as of January 27, 1999
(the "Preference Warrant Agreement"), between the Company and Bankers Trust
Company, as warrant agent (the "Preference Warrant Agent") in substantially the
form attached hereto as Exhibit A. Under the Preference Warrant Agreement, the
Chase Purchasers will have certain preemptive rights in relation to the
Company's Common Stock. Preference Securities issued in book-entry form will be
issued to Cede & Co. as nominee of The Depository Trust Company ("DTC") pursuant
to a letter agreement, to be dated as of the Closing Time (as defined in Section
2(b)) (the "DTC Agreement"), among the Company, the Trustee and DTC.
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Concurrently, the Company has entered into a separate purchase agreement
(the "MG Purchase Agreement") for the sale of an aggregate of 45,000 of the
Company's Series A Cumulative Preference Shares (the "Series A Preference
Shares") and 45,000 Warrants (the MG Warrants") to purchase and aggregate of
4,950,000 shares of Common Stock to Xxxxxx Xxxxxxxx Private Equity Limited (the
"MG Purchaser"). The MG Warrants will be issued pursuant to the Preference
Warrant Agreement. The Series A Preference Shares and the MG Warrants being sold
to the MG Purchaser are sometimes hereinafter referred to as the "MG
Securities."
The holders of Preference Shares and the Series A Preference Shares will
be entitled to the benefits of a Registration Rights Agreement, in substantially
the form attached hereto as Exhibit C with such changes as shall be agreed to by
the parties hereto and the MG Purchaser (the "Preference Registration Rights
Agreement"), pursuant to which the Company will file a registration statement
(the "Preference Registration Statement") with the Securities and Exchange
Commission (the "Commission") registering the Preference Shares and the Series A
Preference Shares under the Securities Act of 1933, as amended (the "1933 Act").
The holders of Preference Warrants and the MG Warrants will be entitled to
the benefits of a Preference Warrant Registration Rights Agreement in
substantially the form attached hereto as Exhibit D, with such changes as shall
be agreed to by the parties hereto and the MG Purchaser (the "Preference Warrant
Registration Rights Agreement") which provides for the registration of the
Preference Warrants and the MG Warrants under the 1933 Act under certain
circumstances set forth therein.
Pursuant to the terms of the Preference Securities, investors that acquire
Preference Securities may only resell or otherwise transfer such Preference
Securities if such Preference Securities are hereafter registered under the 1933
Act or if an exemption from the registration requirements of the 1933 Act is
available (including the exemption afforded by Rule 144A ("Rule 144A") of the
rules and regulations promulgated under the 1933 Act by the Commission).
The Company has prepared and will deliver to the Chase Purchasers, on the
date hereof or the next succeeding day, copies of an offering memorandum dated
January 22, 1999 which was prepared by the Company in connection with the sale
of the MG Securities. "Preference Offering Memorandum" means with respect to any
date or time referred to in this Agreement, the final Preference Offering
Memorandum (including any amendment or supplement thereto) including exhibits
thereto and any documents incorporated by reference, which has been prepared and
delivered by the Company to the Chase Purchasers in connection with the sale of
the MG Securities.
Simultaneously with the execution of this Agreement , the Company is
entering into a separate purchase agreement (the "Note Purchase Agreement") for
the sale of 256,800 the Company's units (the "Note Units"), each Note Unit
consisting of $1,000 aggregate principal amount at maturity of the Company's 14
1/2 Senior Discount Notes due 2009 (the "Notes") and four warrants (each a "Note
Warrant" and collectively, the "Note Warrants" and, together with
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the Note Units and the Notes, the "Note Securities"). The Note Warrants entitle
the holders thereof to purchase an aggregate of 1,813,665 shares of Common
Stock. The Notes are to be issued pursuant to an indenture dated as of January
27, 1999 (the "Indenture") between the Company and Bankers Trust Company, as
trustee (the "Trustee") and the Note Warrants are to be issued pursuant to a
warrant agreement dated as of January 27,1999 (the "Note Warrant Agreement")
between the Company and Bankers Trust Company, as warrant agent (the "Note
Warrant Agent"). The holders of the Note and the Note Warrants will be entitled
to the benefits of two Registration Rights Agreements (the "Note Registration
Rights Agreement" and the "Note Warrant Registration Rights Agreement",
respectively) which provide for the registration of the Notes and the Note
Warrants under the 1933 Act under certain circumstances set forth therein. The
Indenture, the Note Warrant Agreement, the Note Registration Rights Agreement
and the Note Warrant Registration Rights Agreement are sometimes referred to
herein as the "Note Agreements."
All references in this Agreement to financial statements and schedules and
other information which are "contained," "included" or "stated" in the
Preference Offering Memorandum (or other references of like import) shall be
deemed to mean and include all such financial statements and schedules and other
information, if any, which are incorporated by reference in the Preference
Offering Memorandum.
SECTION 1. Representations and Warranties.
(a) Representations and Warranties by the Company. The Company represents
and warrants to the Chase Purchasers as of the date hereof and as of the Closing
Time referred to in Section 2(b) hereof, and agrees with the Chase 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 Preference Securities in a manner that would require
the Preference Securities to be registered under the 1933 Act.
(ii) Preference Offering Memorandum. Neither of its date nor as of
the Closing Time the Preference Offering Memorandum, including any
amendment or supplement thereto, includes or will include an untrue
statement of a material fact or omits or will omit to state a material
fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
(iii) Independent Accountants. The accountants who certified the
financial statements and supporting schedules included in the Preference
Offering Memorandum are independent certified public accountants with
respect to the Company and its subsidiaries within the meaning of
Regulation S-X under the 1933 Act.
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(iv) Financial Statements. The financial statements, together with
the related schedules and notes, of the Company included in the Preference
Offering Memorandum present fairly the financial position of the Company
and its consolidated subsidiaries at the dates indicated and the statement
of operations, stockholders' equity and cash flows of the Company and its
consolidated subsidiaries for the periods specified; said financial
statements have been prepared in conformity with United States generally
accepted accounting principles ("GAAP") applied on a consistent basis
throughout the periods involved. The supporting schedules, if any,
included in the Preference Offering Memorandum present fairly in
accordance with GAAP the information required to be stated therein. The
selected financial data and the summary financial information included in
the Preference Offering Memorandum present fairly the information shown
therein and have been compiled on a basis consistent with that of the
audited financial statements included in the Preference Offering
Memorandum.
(v) No Material Adverse Change in Business. Since the respective
dates as of which information is given in the Preference Offering
Memorandum, except as otherwise stated therein, (A) there has been no
material adverse change in the condition, financial or otherwise, or in
the earnings, business affairs or business prospects of the Company and
its subsidiaries considered as one enterprise (a "Material Adverse
Effect"), whether or not arising in the ordinary course of business, (B)
there have been no transactions entered into by the Company or any of its
subsidiaries, other than transactions entered into in the ordinary course
of business, which are material with respect to the Company and its
subsidiaries considered as one enterprise, and (C) there has been no
dividend or distribution of any kind declared, paid or made by the Company
on any class of its capital stock.
(vi) Good Standing of the Company. The Company has been duly
organized and is validly existing as a corporation in good standing under
the laws of the State of Delaware and has corporate power and authority to
own, lease and operate its properties and to conduct its business as
described in the Preference Offering Memorandum and to enter into and
perform its obligations under this Agreement, the Preference Warrant
Agreement, the Preference Registration Rights Agreement, the Preference
Warrant Registration Rights Agreement, the Certificate of Designation, the
Note Securities, the Note Agreements, and the Preference Securities; and
the Company is duly qualified as a foreign corporation to transact
business and is in good standing in each other jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing
of property or the conduct of business, except where the failure so to
qualify or to be in good standing would not result in a Material Adverse
Effect.
(vii) Corporate Standing of Designated Subsidiaries. Each subsidiary
of the Company that (i) is a "significant subsidiary" (as that term is
defined in Regulation S-X under the 1933 Act) or (ii) that holds any valid
permits or licenses to operate the cable television business in Poland or
a digital direct-to-home business uplinking from the
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United Kingdom is listed on Schedule C hereto (each subsidiary listed on
Schedule C hereto is hereinafter referred to as a "Designated Subsidiary"
and, collectively, the "Designated Subsidiaries"), and has been duly
organized and is validly existing as a corporation under the laws of the
jurisdiction of its incorporation, has corporate power and corporate
authority to own, lease and operate its properties and to conduct its
business as described in the Preference Offering Memorandum and is not
required to be qualified as a foreign corporation to transact business or
to own or lease property in any jurisdiction where it owns or leases
property or transacts business; except as otherwise disclosed in the
Preference Offering Memorandum or in Schedule C, all of the issued and
outstanding capital stock of each Designated Subsidiary has been duly
authorized and validly issued, is fully paid and non-assessable and is
owned by the Company, directly or through subsidiaries, free and clear of
any security interest, mortgage, pledge, lien, encumbrance, claim or
equity, except for (i) in the case of any Polish limited liability
company, any statutory liability for taxes, (ii) the pledge of 3,583,457
shares of Polska Telewizja Kablowa Warszawa S.A. and of 2,514,291 shares
of Polska Telewizja Kablowa Krakow S.A. held by Poland Cablevision
(Netherlands) B.V. ("PCBV") and 2,400 shares of Polska Telewizja Kablowa
Lublin S.A. held by Poltelkab Sp. z o.o. as security for the loan of $6.5
million granted on August 28, 1996 by the American Bank in Poland to
Poland Communications, Inc. ("PCI"), and (iii) the pledge of 1,818 shares
of Szczecinska Telewizja Kablowa Sp. z o.o. ("SzTK") for the security of
certain obligations undertaken by PTK Szczecin Sp. z o.o. ("PTK Szczecin")
with respect to the sellers of those shares (collectively, the "Share
Pledges"); none of the outstanding shares of capital stock of the
Designated Subsidiaries was issued in violation of any preemptive or
similar rights arising by operation of law, or under the statute or
by-laws (or other similar organizational documents) of any Designated
Subsidiary or under any agreement to which the Company or any Designated
Subsidiary is a party. The subsidiaries of the Company other than the
Designated Subsidiaries, considered in the aggregate as a single
subsidiary, do not constitute a "significant subsidiary" as defined in
Rule 1-02 of Regulation S-X.
(viii) Restrictions on Payments of Dividends. There are no
restrictions (legal, contractual or otherwise) on the ability of the
Designated Subsidiaries to declare and pay dividends or make any payment
or transfer of property or assets to their shareholders other than those
referred to in the Preference Offering Memorandum and except for (i)
restrictions relating to the Share Pledges, (ii) encumbrances on certain
assets of Telewizja Kablowa GOSAT Sp. z o.o. ("GOSAT") consisting of the
transfer of title to such assets as security for the loan of $0.5 million
granted on October 7, 1996 by Polski Bank Rozwoju (which was bought by
Bank Rozucju Eksportu S.A. in July of 1998) to GOSAT, and (iii) the
restrictions discussed in Schedule D to the Indenture (collectively, the
"Asset Encumbrances").
(ix) Capitalization. The authorized, issued and outstanding capital
stock of the Company at September 30, 1998 was as set forth under the
caption "Capitalization"
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under the heading "Actual" in the Preference Offering Memorandum and, as
of the date hereof, there has been no material change in the authorized,
issued and outstanding capital stock since the date of the Preference
Offering Memorandum other than (i) issuances of shares of Common Stock
upon the exercise of options disclosed to be outstanding in the Preference
Offering Memorandum and (ii) the authorization and issuance of the
Preference Shares, the Warrants, the Series A Preference Shares, the MG
Warrants and the Note Securities as described in the Preference Offering
Memorandum. The shares of issued and outstanding capital stock of the
Company have been duly authorized and validly issued and are fully paid
and non-assessable; none of the outstanding shares of capital stock of the
Company was issued in violation of the preemptive or other similar rights
of any securityholder of the Company.
(x) Authorization of Agreement. This Agreement has been duly
authorized, executed and delivered by the Company.
(xi) Authorization of the Preference Registration Rights Agreement.
The Preference Registration Rights Agreement has been duly authorized by
the Company, and, at the Closing Time, will have been duly executed and
delivered by the Company and, when executed and delivered by the MG
Purchaser and the Chase Purchasers, will constitute a valid and binding
agreement of the Company, enforceable against the Company in accordance
with its terms except as (x) the enforceability thereof may be limited by
bankruptcy, insolvency (including, without limitation, all laws relating
to fraudulent transfers), reorganization, moratorium or other similar laws
relating to or affecting enforcement of creditors' rights generally, (y)
the enforceability thereof may be limited by general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity
or at law) and (z) any rights to indemnity and contribution may be limited
by federal and state securities laws and public policy considerations.
(xii) Authorization of the Certificate of Designation and the
Preference Shares. The Certificate of Designation has been duly authorized
by the Board of Directors of the Company and, at the Closing Time, will
have been duly filed with the Secretary of State of Delaware. The
Preference Shares have been duly authorized by the Company for issuance
and sale to the Chase Purchasers pursuant to this Agreement and the
Preference Shares when issued and delivered against payment therefor in
accordance with the terms hereof, will be validly issued, fully paid and
non-assessable and the Chase Purchasers will receive title to the
Preference Shares free and clear of all liens and encumbrances. The
security holders of the Company have no preemptive rights with respect to
the Preference Shares.
(xiii) Authorization of the Preference Warrant Agreement. The
Preference Warrant Agreement has been duly authorized by the Company and,
at the Closing Time, will have been duly executed and delivered by the
Company and, when duly executed and delivered by the Preference Warrant
Agent, will constitute a valid and binding
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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).
(xiv) Authorization of the Preference Warrants. The Preference
Warrants have been duly authorized by the Company and, at the Closing
Time, will have been duly executed by the Company and, when executed and
issued in the manner provided for in the Preference Warrant Agreement and
delivered against payment of the purchase price therefor as provided in
this Agreement, (A) will constitute valid and binding obligations of the
Company, enforceable against the Company in accordance with their terms,
except as the enforcement thereof may be limited by bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or similar laws affecting
enforcement of creditors' rights generally and except as enforcement
thereof is subject to general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law), and (B)
will be in the form contemplated by, and entitled to the benefits of, the
Preference Warrant Agreement and the Preference Warrant Registration
Rights Agreement.
(xv) Authorization of the Preference Warrant Shares. The shares of
Common Stock issuable upon exercise of the Preference Warrants (the
"Preference Warrant Shares") have been duly authorized and reserved by the
Company and, when executed by the Company and countersigned by the
Preference Warrant Agent and issued and delivered upon exercise of the
Preference Warrants in accordance with the terms of the Preference
Warrants and the Preference Warrant Agreement, will be validly issued,
fully paid and non-assessable and will not be subject to any preemptive or
similar rights.
(xvi) Authorization of the Preference Warrant Registration Rights
Agreement. The Preference Warrant Registration Rights Agreement has been
duly authorized by the Company and, at the Closing Time, will have been
duly executed and delivered by the Company and, when executed and
delivered by the MG Purchaser and the Chase Purchasers, will constitute a
valid and binding agreement of the Company, enforceable against the
Company in accordance with its terms except as (x) the enforceability
thereof may be limited by bankruptcy, insolvency (including, without
limitation, all laws relating to fraudulent transfers), reorganization,
moratorium or other similar laws relating to or affecting enforcement of
creditor's rights generally, (y) the enforceability thereof may be limited
by general principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law) and (z) any rights to
indemnity and contribution may be limited by federal and state securities
laws and public policy considerations.
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(xvii) Authorization of the Indenture. The Indenture has been duly
authorized by the Company and, at the Closing Time, will have been duly
executed and delivered by the Company and, when executed and delivered by
the Trustee, will constitute a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms, except as
the enforceability thereof may be limited by bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or other similar laws relating to
or affecting enforcement of creditors' rights generally or by general
principles of equity (regardless of whether enforcement is considered in a
proceeding in equity or at law) and the waiver contained in Section 514
thereof may be unenforceable due to interests of public policy.
(xviii) Authorization of the Notes. The Notes have been duly
authorized and, at the Closing Time, will have been duly executed by the
Company and, when authenticated in the manner provided for in the
Indenture and delivered against payment of the purchase price therefor
will constitute valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or other similar laws relating to
or affecting enforcement of creditors' rights generally or by general
principles of equity (regardless of whether enforcement is considered in a
proceeding in equity or at law), and will be in the form contemplated by,
and entitled to the benefits of, the Indenture and the Note Registration
Rights Agreement.
(xix) Authorization of the Note Registration Rights Agreement. The
Note Registration Rights Agreement has been duly authorized by the
Company, and, at the Closing Time, will have been duly executed and
delivered by the Company and will, when executed and delivered by the
Initial Purchasers, constitute a valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms
except as (x) the enforceability thereof may be limited by bankruptcy,
insolvency (including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or other similar laws relating to
or affecting enforcement of creditors' rights generally, (y) the
enforceability thereof may be limited by general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity
or at law) and (z) any rights to indemnity and contribution may be limited
by federal and state securities laws and public policy considerations.
(xx) Authorization of the Note Warrant Agreement. The Note Warrant
Agreement has been duly authorized by the Company and, at the Closing
Time, will have been duly executed and delivered by the Company and, when
duly executed and delivered by the Note Warrant Agent, will constitute a
valid and binding agreement of the Company, enforceable against the
Company in accordance with its terms, except as enforceability thereof may
be limited by bankruptcy, insolvency (including, without limitation, all
laws relating to fraudulent transfers), reorganization, moratorium or
other
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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).
(xxi) Authorization of the Note Warrant Registration Rights
Agreement. The Note Warrant Registration Rights Agreement has been duly
authorized by the Company and, at the Closing Time, will have been duly
executed and delivered by the Company and, when executed and delivered by
the Initial Purchasers, will constitute a valid and binding agreement of
the Company, enforceable against the Company in accordance with its terms
except as (x) the enforceability thereof may be limited by bankruptcy,
insolvency (including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or other similar laws relating to
or affecting enforcement of creditor's rights generally, (y) the
enforceability thereof may be limited by general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity
or at law) and (z) any rights to indemnity and contribution may be limited
by federal and state securities laws and public policy considerations.
(xxii) Description of the Preference Registration Rights Agreement,
the Preference Warrant Registration Rights Agreement, the Preference
Shares, the Preference Warrants, the Common Stock, the Preference Warrant
Agreement, the MG Securities, the Note Securities, and the Note
Agreements. The Preference Registration Rights Agreement, the Preference
Warrant Registration Rights Agreement, the Preference Shares, the
Preference Warrants, the Common Stock, the Preference Warrant Agreement,
the MG Securities, the Note Securities and the Note Agreements will
conform in all material respects to the respective statements relating
thereto contained in the Preference Offering Memorandum and will be in
substantially the respective forms previously delivered to the Chase
Purchasers.
(xxiii) Absence of Defaults and Conflicts. Neither the Company nor
any of its subsidiaries is (1) in violation of its charter or statute, as
applicable, or by-laws (or other similar organizational documents), (2) in
default in the performance or observance of any obligation, agreement,
covenant or condition contained in any contract, indenture, mortgage, deed
of trust, loan or credit agreement, note, lease or other agreement or
instrument to which the Company or any of its subsidiaries is a party or
by which or any of them may be bound, or to which any of the property or
assets of the Company or any of its subsidiaries is subject (collectively,
"Agreements and Instruments"), except as described in the Preference
Offering Memorandum and except for such defaults that would not result in
a Material Adverse Effect or (3) in violation of any applicable law,
statute, rule, regulation, judgment, order, writ or decree of any
government, government instrumentality or court, domestic or foreign,
having jurisdiction over the Company or any of its subsidiaries or any of
their assets or properties, except as described in the Preference Offering
Memorandum; and the execution, delivery and performance of this Agreement,
the Preference Warrant Agreement, the Preference Registration Rights
-13-
Agreement, the Preference Warrant Registration Rights Agreement, the
Certificate of Designation, the Preference Securities, the Note
Securities, the Note Agreements, and any other agreement or instrument
entered into or issued or to be entered into or issued by the Company or
any Designated Subsidiary in connection with the transactions contemplated
hereby or thereby or in the Preference Offering Memorandum and the
consummation of the transactions contemplated herein and in the Note
Purchase Agreement and the Preference Offering Memorandum (including the
issuance and sale of the Preference Securities and the Note Securities and
the use of the proceeds from the sale of the Preference Securities and the
Note Securities as described in the Preference Offering Memorandum under
the caption "Use of Proceeds") and compliance by the Company with its
obligations hereunder have been duly authorized by all necessary corporate
action and do not and will not, whethe r 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 Chase Purchasers
comply with all of its obligations under Section 6 hereof. As used herein,
a "Repayment Event" means any event or condition which gives the holder of
any note, debenture or other evidence of indebtedness (or any person
acting on such holder's behalf) the right to require the repurchase,
redemption or repayment of all or a portion of such indebtedness by the
Company or any of its subsidiaries.
(xxiv) Absence of Labor Dispute. No labor dispute with the employees
of the Company or any of its subsidiaries exists or, to the knowledge of
the Company, is imminent, and the Company is not aware of any existing or
imminent labor disturbance by the employees of any of its or any of its
subsidiaries' principal suppliers, customers or contractors, which, in
either case, may reasonably be expected to result in a Material Adverse
Effect.
(xxv) Absence of Proceedings. Except as disclosed in the Preference
Offering Memorandum, there is no action, suit, proceeding, inquiry or
investigation before or by any court or governmental agency or body,
domestic or foreign, now pending, or, to the knowledge of the Company,
threatened, against or affecting the Company or any subsidiary thereof,
which would be required to be disclosed in the Preference Offering
Memorandum (other than as disclosed therein) if it were a prospectus filed
as part of a
-14-
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 Preference Warrant Agreement, the Preference Registration Rights
Agreement, the Preference Warrant Registration Rights Agreement, the
Certificate of Designation, the Preference Securities, the Note Securities
or the Note Agreements, or the performance by the Company of its
obligations hereunder or thereunder. The aggregate of all pending legal or
governmental proceedings to which the Company or any subsidiary thereof is
a party or of which any of their respective property or assets is the
subject which are not described in the Preference Offering Memorandum,
including ordinary routine litigation incidental to the business, could
not reasonably be expected to result in a Material Adverse Effect.
(xxvi) Possession of Intellectual Property. Except as disclosed in
the Preference Offering Memorandum, the Company and its subsidiaries own
or possess, or can acquire on reasonable terms, adequate patents, patent
rights, licenses, inventions, copyrights, know-how (including trade
secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures), trademarks, service
marks, trade names or other intellectual property (collectively,
"Intellectual Property") necessary to carry on the business now operated
by them. Except as disclosed in the Preference Offering Memorandum,
neither the Company nor any of its subsidiaries has received any notice or
is otherwise aware of any infringement of or conflict with asserted rights
of others with respect to any Intellectual Property or of any facts or
circumstances which would render any Intellectual Property invalid or
inadequate to protect the interest of the Company or any of its
subsidiaries therein, and which infringement or conflict (if the subject
of any unfavorable decision, ruling or finding) or invalidity or
inadequacy, singly or in the aggregate, would result in a Material Adverse
Effect.
(xxvii) Absence of Further Requirements. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or agency
(other than (A) under the 1933 Act and the rules and regulations
thereunder with respect to the Preference Registration Rights Agreement,
the Preference Warrant Registration Rights Agreement, the Note
Registration Rights
-15-
Agreement, the Note Warrant Registration Rights Agreement, and the
transactions contemplated thereunder, (B) under the securities or "blue
sky" laws of the various states and (C) the Polish Anti-Monopoly Act) is
necessary or required (x) for the performance by the Company of its
obligations hereunder, in connection with the offering, issuance or sale
of the Preference Securities hereunder or the consummation of the
transactions contemplated by this Agreement, the Preference Warrant
Agreement, the Preference Registration Rights Agreement, the Preference
Warrant Registration Rights Agreement, the Note Registration Rights
Agreement, the Note Warrant Registration Rights Agreement, or the
Preference Offering Memorandum or (y) to permit the Company to (1) effect
payments of dividends on or redemption of the Preference Shares, or (2)
perform its other obligations under the Certificate of Designation, the
Preference Warrant Agreement, the Preference Warrant Registration Rights
Agreement, the Note Registration Rights Agreement, and the Note Warrant
Registration Rights Agreement.
(xxviii) Possession of Licenses and Permits. Except as disclosed in
the Preference Offering Memorandum, the Company and its subsidiaries
possess such permits, licenses, approvals, concessions, consents and other
authorizations (including, without limitation, all permits required for
the operation of the business of the Company and its subsidiaries by the
Republic of Poland and the United Kingdom) (collectively, "Governmental
Licenses") issued by the appropriate domestic or foreign regulatory
agencies or bodies, other governmental authorities or self regulatory
organizations necessary to conduct the business now operated by them or
any business currently proposed to be conducted by them as described in
the Preference Offering Memorandum; the Company and its subsidiaries,
except as disclosed in the Preference Offering Memorandum and except where
the failure to so comply would not, singly or in the aggregate, have a
Material Adverse Effect, are in compliance with the terms and conditions
of all such Governmental Licenses; all of the Governmental Licenses are
valid and in full force and effect, except as disclosed in the Preference
Offering Memorandum and except when the invalidity of such Governmental
Licenses or the failure of such Governmental Licenses to be in full force
and effect would not have a Material Adverse Effect; and except as
disclosed in the Preference Offering Memorandum, neither the Company nor
any of its subsidiaries has received any notice of proceedings relating to
the revocation or modification of any such Governmental Licenses which,
singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would result in a Material Adverse Effect. To the
knowledge of the Company, except as described in the Preference Offering
Memorandum, there exists no reason or cause that could justify the
variation, suspension, cancellation or termination of any such
Governmental Licenses held by the Company or any of its subsidiaries with
respect to the construction or operation of their respective businesses,
which variation, suspension, cancellation or termination could reasonably
be expected to have a Material Adverse Effect.
(xxix) No Additional Documents. There are no contracts or documents
of a character that would be required to be described in the Preference
Offering Memorandum, if it were a prospectus filed as part of a
registration statement on Form S-3 under the 1933 Act, that are not
described as would be so required. All such contracts to which the Company
is party have been duly authorized, executed and delivered by the Company
and constitute valid and binding agreements of the Company.
(xxx) Management Agreements. Each of the Management Agreements (as
such term is defined in the Indenture) to which any subsidiary of the
Company is a party has
-16-
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.
(xxxi) Title to Property. The Company and its subsidiaries own no
real property, except as described in the Preference Offering Memorandum
and except for approximately 3,200 square meters of real property owned by
a Designated Subsidiary, and have good title to all other properties owned
by them, in each case, free and clear of all mortgages, pledges, liens,
security interests, claims, restrictions or encumbrances of any kind
except such as (a) are described in the Preference Offering Memorandum or
(b) do not, singly or in the aggregate, materially affect the value of
such property and do not interfere with the use made and proposed to be
made of such property by the Company or any of its subsidiaries; and all
of the leases and subleases material to the business of the Company and
its subsidiaries, considered as one enterprise, and under which the
Company or any of its subsidiaries holds properties described in the
Preference Offering Memorandum, are in full force and effect, and neither
the Company nor any of its subsidiaries has any notice of any claim of any
sort that has been asserted by anyone adverse to the rights of the Company
or any of its subsidiaries under any of the leases or subleases mentioned
above, or affecting or questioning the rights of the Company or any
subsidiary thereof to the continued possession of the leased or subleased
premises under any such lease or sublease, except for such claims as could
not reasonably be expected to result in a Material Adverse Effect.
(xxxii) Tax Returns. Except as disclosed in the Preference Offering
Memorandum, the Company and its subsidiaries have filed all domestic and
foreign tax returns that are required to be filed or have duly requested
extensions thereof and have paid all taxes required to be paid by any of
them and any related assessments, fines or penalties, except for any such
tax, assessment, fine or penalty that is being contested in good faith and
by appropriate proceedings, and except for such claims as could not result
in a Material Adverse Effect; and adequate charges, accruals and reserves
have been provided for in the financial statements referred to in Section
1(a)(iv) above in respect of all domestic and foreign taxes for all
periods as to which the tax liability of the Company or any of its
subsidiaries has not been finally determined or remains open to
examination by applicable taxing authorities.
(xxxiii) Environmental Laws. Except as described in the Preference
Offering Memorandum and except such matters as would not, singly or in the
aggregate, result in a Material Adverse Effect, (A) neither the Company
nor any of its subsidiaries is in violation of any domestic or foreign
statute, law, rule, regulation, ordinance, code, policy or rule of common
law or any judicial or administrative interpretation thereof including any
judicial or administrative order, consent, decree or judgment, relating to
pollution or protection of human health, the environment (including,
without limitation, ambient air, surface water, groundwater, land surface
or subsurface strata) or wildlife, including, without limitation, laws and
regulations relating to the release or threatened release of
-17-
chemicals, pollutants, contaminants, wastes, toxic substances, hazardous
substances, petroleum or petroleum products (collectively, "Hazardous
Materials") or to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Hazardous Materials
(collectively, "Environmental Laws"), (B) the Company and its subsidiaries
have all permits, authorizations and approvals required under any
applicable Environmental Laws and are each in compliance with their
requirements, (C) there are no pending or threatened administrative,
regulatory or judicial actions, suits, demands, demand letters, claims,
liens, notices of noncompliance or violation, investigation or proceedings
relating to any Environmental Law against the Company or any of its
subsidiaries and (D) there are no events or circumstances that might
reasonably be expected to form the basis of an order for clean-up or
remediation, or an action, suit or proceeding by any private party or
governmental body or agency, against or affecting the Company or any of
its subsidiaries relating to Hazardous Materials or Environmental Laws.
(xxxiv) Investment Company Act. The Company is not, and upon the
issuance and sale of the Preference Securities, the MG Securities and the
Note Securities as herein contemplated and the application of the net
proceeds therefrom as described in the Preference Offering Memorandum will
not be, an "investment company" or an entity "controlled" by an
"investment company" as such terms are defined in the Investment Company
Act of 1940, as amended (the "1940 Act").
(xxxv) Internal Controls. The Company and each of its subsidiaries
maintain a system of internal accounting controls sufficient to provide
reasonable assurances that (A) transactions are executed in accordance
with management's general or specific authorization; (B) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain
accountability for assets; (C) access to assets is permitted only in
accordance with management's general or specific authorization; and (D)
the recorded accountability for assets is compared with the existing
assets at reasonable intervals and appropriate action is taken with
respect to any differences. The Company and its subsidiaries have not
made, and, to the knowledge of the Company, no employee or agent of the
Company or any subsidiary has made, any payment of the Company's funds or
any subsidiary's funds or received or retained any funds (A) in violation
of the Foreign Corrupt Practices Act, as amended, or (B) in violation of
any other applicable law, regulation or rule (except, in the case of this
clause (B), for such violations as could not reasonably be expected to
result in a Material Adverse Effect) or that would be required to be
disclosed in the Preference Offering Memorandum if it were a prospectus
filed as part of a registration statement on Form S-1 under the 1933 Act.
(xxxvi) Taxes on Subsidiary Indebtedness. Except as described in the
Preference Offering Memorandum, as of the date hereof, no material income,
stamp or other taxes or levies, imposts, deductions, charges, compulsory
loans or withholdings
-18-
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 amounts
payable under any indebtedness of any of the Company's subsidiaries held
by the Company.
(xxxvii) Insurance. Except as otherwise disclosed in the Preference
Offering Memorandum, the Company and each of its subsidiaries carry, or
are covered by, insurance in such amounts and covering such risks as is
adequate for the conduct of their respective businesses and the value of
their respective properties and as is customary for companies engaged in
similar businesses or similar industries in similar locations.
(xxxviii) Rule 144A Eligibility. The Preference Securities are
eligible for resale pursuant to Rule 144A and will not be, at the Closing
Time, of the same class as securities listed on a national securities
exchange registered under Section 6 of the Securities Exchange Act of
1934, as amended (the "1934 Act"), or quoted in a U.S. automated
interdealer quotation system.
(xxxix) No General Solicitation. None of the Company, its
affiliates, as such term is defined in Rule 501(b) under the 1933 Act
("Affiliates"), or any person acting on its or any of their behalf (other
than Chase Purchasers, the MG Purchaser and the Initial Purchasers, as to
whom the Company makes no representation) has engaged or will engage, in
connection with the offering of the Preference Securities, in any form of
general solicitation or general advertising within the meaning of Rule
502(c) under the 1933 Act.
(xl) No Registration Required. Subject to compliance by the Chase
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 Preference Securities
to the Chase Purchasers in the manner contemplated by this Agreement, the
Preference Warrant Agreement and the Preference Offering Memorandum to
register the Preference Securities under the 1933 Act.
(xli) Reporting Company. The Company is subject to, and has complied
with all applicable reporting requirements of Section 13 or Section 15(d)
of the 1934 Act.
(xlii) Funds. With the net proceeds of the sale of the Preference
Securities and the MG Securities pursuant to this Agreement and the MG
Purchase Agreement, respectively, the sales of the Note Securities
pursuant to the Note Purchase Agreement and the sale of the Company's
Series C Senior Discount Notes which was consummated on January 20, 1999,
together with cash on hand, the Company has sufficient capital to fulfill
its current business plan and to fund its commitments until the Company
achieves
-19-
positive cash flow from operations, subject to the matters disclosed in
the Preference Offering Memorandum.
(xliii) Subscribers. As of December 31, 1998, the Company had at
least 675,000 basic cable subscribers and had sold approximately 125,000
Wizja TV packages to authorized retailers in Poland (as described in the
Preference Offering Memorandum).
(b) Officers' Certificates. Any certificate titled "Officers'
Certificate" or "Secretary's Certificate" signed by any officer of the Company
or any of its subsidiaries which is delivered to the Chase Purchasers or to
counsel for the Chase Purchasers shall be deemed a representation and warranty
by the Company to the Chase Purchasers as to the matters covered thereby.
SECTION 2. Sale and Delivery to the Purchaser; Closing.
(a) Preference Securities. On the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, the Company agrees to sell to the Chase Purchasers and the Chase
Purchasers, severally and not jointly, agree to purchase from the Company, at an
aggregate purchase price of $5,000,000 (less a commission of $150,000), the
aggregate number of Preference Shares and Preference Warrants set forth in
Schedule A opposite its name.
(b) Payment. Payment of the purchase price for, and delivery of
certificates for, the Preference Securities shall be made at the office of
Shearman & Sterling, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such
other place as shall be agreed upon by the Chase Purchasers and the Company, at
9:00 A.M. on the third business day after the date hereof (unless postponed in
accordance with the provisions of Section 11), or such other time not later than
ten business days after such date as shall be agreed upon by the Chase
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 of the Chase Purchasers for the account of such Chase Purchasers of
certificates for the Preference Securities to be purchased by it.
(c) Qualified Institutional Buyer. Each Chase Purchaser represents
and warrants to, and agrees with, the Company that it is an "accredited
investor" within the meaning of Rule 501(a) under the 1933 Act (an "Accredited
Investor").
(d) Denominations; Registration. Certificates for the Preference
Securities shall be in such denominations and registered in such names as the
Chase Purchasers may request in writing at least one full business day before
the Closing Time. The certificates representing the Preference Shares and the
Preference Warrants shall be registered in the name of Cede & Co. pursuant to
the DTC Agreement and shall be made available for examination and packaging by
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the Chase Purchasers 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 Chase
Purchasers as follows:
(a) Preference Offering Memorandum. The Company, as promptly as possible,
will furnish to each Chase Purchaser, without charge, such number of copies of
the Preference Offering Memorandum and any amendments and supplements thereto
and documents incorporated by reference therein as the Chase Purchaser may
reasonably request.
(b) Notice and Effect of Material Events. The Company will immediately
notify the Chase Purchasers, and confirm such notice in writing, of any filing
made by the Company of information relating to the offering of the Preference
Securities with any securities exchange or any other regulatory body in the
United States or any other jurisdiction.
(c) Reserved.
(d) Reserved.
(e) Reserved.
(f) DTC. The Company will cooperate with the Chase Purchasers and use its
best efforts (i) to permit the Preference Securities to be eligible for
clearance and settlement through the facilities of DTC.
(g) Use of Proceeds. The Company will use the net proceeds received by it
from the sale of the Preference Securities in the manner specified in the
Preference Offering Memorandum under "Use of Proceeds."
(h) Reserved.
(i) Notification of Current Accumulated Earnings and Profits. The Company
will disclose its current and accumulated earnings and profits, if any, for each
fiscal year in its annual report on Form 10-K so long as it is required to file
such a report. Thereafter, the Company will provide such information to any
holder of Preference Securities upon receipt of a written request from such
holder.
SECTION 4. Payment of Expenses.
(a) Expenses. The Company will pay all expenses incident to the
performance of its obligations under this Agreement, including (i) the
preparation, printing and any filing of the Preference Offering Memorandum
(including financial statements and any schedules or exhibits and any document
incorporated therein by reference) and of each amendment or supplement
-21-
thereto, (ii) the preparation, printing and delivery to the Chase Purchasers of
this Agreement, the Preference Warrant Agreement, the Preference Registration
Rights Agreement, the Preference Warrant Registration Rights Agreement, the
Certificate of Designation and such other documents as may be required in
connection with the offering, purchase, sale, issuance or delivery of the
Preference Securities, (iii) the preparation, issuance and delivery of the
certificates for the Preference Securities to the Chase Purchasers, including
any charges of DTC in connection therewith, (iv) the fees and disbursements of
the Company's counsel, accountants and other advisors, (v) any filing for review
of the offering with the National Association of Securities Dealers (the
"NASD"), and (vi) any fees payable to the NASD.
(b) Termination of Agreement. If this Agreement is terminated by the Chase
Purchasers in accordance with the provisions of Section 5 or Section 10(a)(i)
hereof, the Company shall reimburse the Chase Purchasers for all of its
out-of-pocket expenses, including the reasonable fees and disbursements of
counsel for the Chase Purchasers incurred through the date of termination.
SECTION 5. Conditions of the Chase Purchasers' Obligations. The
obligations of the Chase 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) Reserved
(b) Reserved
(c) Reserved
(d) Officers' Certificate. At the Closing Time, there shall not have been,
since the date hereof or since the respective dates as of which information is
given in the Preference Offering Memorandum, any material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and its subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business, and the
Chase 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) Reserved
-22-
(f) Reserved
(g) Consummation of Sale of MG Securities and Note Securities. The sale of
the Note Securities and the sale of MG Securities to the MG Purchasers pursuant
to the MG Purchase Agreement shall have been consummated at the Closing Time.
(h) Reserved
(i) Additional Documents. At the Closing Time, counsel for the Chase
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
Preference Securities as herein contemplated, or in order to evidence the
accuracy of any of the representations or warranties, or the fulfillment of any
of the conditions, herein contained; and all proceedings taken by the Company in
connection with the issuance and sale of the Preference Securities as herein
contemplated shall be satisfactory in form and substance to the Chase Purchasers
and counsel for the Chase Purchasers.
(j) Execution of Agreements. At the Closing Time, the Preference Warrant
Agreement, the Preference Registration Rights Agreement, the Preference Warrant
Registration Rights Agreement and the Certificate of Designation, each in form
and substance reasonably satisfactory to the Chase Purchasers, shall have been
duly executed and delivered and shall be in full force and effect.
(k) Termination of Agreement. If any condition specified in this Section
shall not have been fulfilled when and as required to be fulfilled, this
Agreement may be terminated by the Chase 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. Resales of the Preference Securities.
(a) Representation and Warranty of the Chase Purchasers. Each Chase
Purchaser represents and agrees that (i) it has not entered and will not enter
into any contractual arrangements with respect to the distribution of the
Preference Securities, except with its affiliates or with the prior written
consent of the Company; (ii) it has received and carefully reviewed the
Preference Offering Memorandum prior to the execution of this Agreement; (iii)
it has been furnished by the Company during the course of this transaction with
all information regarding the Company which it had requested or desired to know,
all documents which could be reasonably provided have been made available for
its inspection and review and it has been afforded the opportunity to ask
questions of and receive answers from duly authorized officers or other
representatives of the Company concerning the terms and conditions of the
offering and any additional information which it had requested; (iv) except as
set forth herein, no representations or warranties have been made to it by the
Company or any agent, employee or
-23-
affiliate of the Company and in entering into this transaction, it is not
relying on any information, other than that contained herein or in the
Preference Offering Memorandum and the results of its independent investigation;
(v) no person other than the Company has made any representations to the Chase
Purchaser concerning this Offering and the Chase Purchaser has relied on no
representations or documentation other than that supplied by the Company and in
particular, for avoidance of doubt, the Chase Purchaser is not relying on
information supplied in connection with (X) the concurrent sale of the Note
Securities by the Initial Purchasers or (Y) the sale of the Company's Series C
Senior Discount Notes which was consummated on January 20, 1999; (vi) it is
purchasing the Preference Securities for investment purposes only for its
account and not with any view toward a distribution thereof; and (vii) it has
evaluated the risks of investing in the Preference Securities and has determined
that the Preference Securities are a suitable investment, and that it can bear
the economic risk of this investment and can afford a complete loss of its
investment.
(b) Restrictions on Transfer. The transfer restrictions and the other
provisions set forth in the Preference Offering Memorandum under the heading
"Notice to Investors", including the legend required thereby, shall apply to the
Preference Securities except as otherwise agreed by the Company and the Chase
Purchasers.
(c) Covenants of the Company. The Company covenants with the Chase
Purchasers as follows:
(i) Due Diligence. In connection with the original purchase of the
Preference Securities, the Company agrees that, prior to any offer or
resale of the Preference Securities by the Chase Purchasers, the Chase
Purchasers and counsel for the Chase Purchasers shall have the right to
make reasonable inquiries into the business of the Company and its
subsidiaries.
(ii) Integration. The Company agrees that it will not and will cause
its Affiliates not to solicit any offer to buy or make any offer or sale
of, or otherwise negotiate in respect of, securities of the Company of any
class if, as a result of the doctrine of "integration" referred to in Rule
502 under the 1933 Act, such offer or sale would render invalid (for the
purpose of the sale of the Preference Securities by the Company to the
Chase Purchasers the exemption from the registration requirements of the
1933 Act provided by Section 4(2) thereof or otherwise.
(iii) Rule 144A Information. The Company agrees that, in order to
render the Preference Securities eligible for resale pursuant to Rule 144A
under the 1933 Act, while any of the Preference Securities remain
outstanding, it will make available, upon request, to any holder of
Preference Securities or prospective purchasers of Preference Securities
the information specified in Rule 144A(d)(4), unless the Company furnishes
information to the Commission pursuant to Section 13 or 15(d) of the 1934
Act (such information,
-24-
whether made available to holders or prospective purchasers or furnished
to the Commission, is herein referred to as "Additional Information").
(d) Resales. The Chase Purchasers understand that the Preference
Securities have not been and will not be registered under the 1933 Act and may
not be offered or sold within the United States or to, or for the account or
benefit of, U.S. persons except pursuant to an exemption from the registration
requirements of the 1933 Act. Each Chase Purchaser represents and agrees, that
it will offer and sell Preference Securities at any time only in accordance with
an applicable exemption from the registration provisions of the 1933 Act. Each
Chase Purchaser agrees that, at or prior to confirmation of a sale of Preference
Securities it will have sent to each distributor, dealer or person receiving a
selling concession, fee or other remuneration that purchases Preference
Securities from it or through it during the restricted period a confirmation or
notice to substantially the following effect:
"The securities covered hereby have not been registered under the
United States Securities Act of 1933 (the "Securities Act") and may
not be offered or sold within the United States or to or for the
account or benefit of U.S. persons as part of their distribution at
any time except in accordance with an exemption from the
registration requirements of the Securities Act."
(e) Offers and Sales in Poland and The Netherlands. Each Chase Purchaser
has advised the Company and hereby represents and warrants to and agrees with
the Company that it will not offer or sell the Preference Securities in Poland
except in accordance with Polish foreign exchange regulations under
circumstances which do not constitute a public offering or distribution of
securities under Polish laws and regulations. Each Chase Purchaser further
agrees it will not offer or sell the Preference Securities in The Netherlands
except under circumstances which do not constitute a public offering or
distribution (aanbod buiten besloten xxxxx) of securities under the laws and
regulations of The Netherlands.
(f) Offers and Sales in the United Kingdom. Each Chase Purchaser hereby
represents, warrants and agrees that (i) it has not offered or sold and prior to
the expiration of the period six months after the date of issue of the
Preference Securities will not offer to sell by means of any document any
Preference Securities to persons in the United Kingdom except to persons whose
ordinary activities involve them in acquiring, holding, managing or disposing of
investments (as principal or agent) for the purposes of their businesses or
otherwise in circumstances which have not resulted and will not result in an
offer to the public in the United Kingdom within the meaning of the Public
Offers of Securities Regulations 1995; (ii) it has complied and will comply with
all applicable provisions of the Financial Services Act 1986 with respect to
anything done by it in relation to the Preference Securities in, from or
otherwise involving the United Kingdom and (iii) it has only issued or passed
on, and will only issue or pass on in the United Kingdom any document received
by it in connection with the issue of the Preference Securities to a person who
is of a kind described in Article 11(3) of the Financial
-25-
Services Act 1986 (Investment Advertisements) (Exemptions) Order 1995 or is a
person to whom such document may otherwise lawfully be issued or passed on.
(g) Xxxxxxx. Xxxxxx Xxxxx may assign any or all of her right to purchase
Preference Securities to The Xxxxxxx Trust and the Company hereby consents to
such assignment.
SECTION 7. Indemnification.
(a) Indemnification of the Chase Purchasers. The Company agrees to
indemnify and hold harmless each of the Chase Purchasers and each person, if
any, who controls the Chase Purchasers within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Preference Offering
Memorandum (or any amendment or supplement thereto), or the omission or
alleged omission therefrom of a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission; provided that (subject to Section
7(d) below) any such settlement is effected with the written consent of
the Company; and
(iii) against any and all expense whatsoever, as incurred (including
the fees and disbursements of counsel chosen by the Purchaser), reasonably
incurred in investigating, preparing or defending against any litigation,
or any investigation or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or
omission, to the extent that any such expense is not paid under (i) or
(ii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by the
Chase Purchasers or the Initial Purchasers expressly for use in the Preference
Offering Memorandum (or any amendment thereto) and provided further 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 which
-26-
was, at any time prior to the sales of the Preference Securities by the Chase
Purchaser, known or believed to be untrue or omitted by the Chase Purchaser
seeking indemnification.
(b) Indemnification of the Company, Directors and Officers. Each Chase
Purchaser agrees to indemnify and hold harmless the Company and each person, if
any, who controls the Company within the meaning of Section 15 of the 1933 Act
or Section 20 of the 1934 Act against any and all loss, liability, claim, damage
and expense described in the indemnity contained in subsection (a) of this
Section, as incurred, but only with respect to untrue statements or omissions,
or alleged untrue statements or omissions, made in the Preference Offering
Memorandum in reliance upon and in conformity with written information furnished
to the Company by the Chase Purchasers expressly for use in the Preference
Offering Memorandum.
(c) Actions Against Parties; Notification. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to Section 7(a) above,
counsel to the indemnified parties shall be selected by Xxxxxx 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
-27-
indemnifying party of the aforesaid request, (ii) such indemnifying party shall
have received notice of the terms of such settlement at least 30 days prior to
such settlement being entered into and (iii) such indemnifying party shall not
have reimbursed such indemnified party in accordance with such request prior to
the date of such settlement.
SECTION 8. Contribution. If the indemnification provided for in Section 7
hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
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 Chase Purchasers on the other hand from the offering of the
Preference Securities pursuant to this Agreement or (ii) if the allocation
provided by clause (i) is not permitted by applicable law, in such proportion as
is appropriate to reflect not only the relative benefits referred to in clause
(i) above but also the relative fault of the Company on the one hand and of the
Chase 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
Chase Purchasers on the other hand in connection with the offering of the
Preference Securities pursuant to this Agreement shall be deemed to be in the
same respective proportions as the total net proceeds from the offering of the
Preference Securities pursuant to this Agreement (before deducting expenses)
received by the Company and the total commission received by the Chase
Purchasers, bear to the aggregate initial offering price of the Preference
Securities.
The relative fault of the Company on the one hand and the Chase 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 Chase Purchasers and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The Company and the Chase 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.
-28-
Notwithstanding the provisions of this Section 8, the Chase Purchasers
shall not be required to contribute any amount in excess of the amount by which
the total price at which the Preference Securities purchased by it and
distributed to the subsequent purchasers were offered to the subsequent
purchasers exceeds the amount of any damages which the Chase Purchasers has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) 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 the
Chase Purchasers 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 Chase
Purchasers, and each person, if any, who controls the Company within the meaning
of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall have the same
rights to contribution as the Company.
SECTION 9. Representations, Warranties and Agreements to Survive Delivery.
All representations, warranties and agreements contained in this Agreement or in
certificates of officers of the Company or any of its subsidiaries submitted
pursuant hereto shall remain operative and in full force and effect, regardless
of any investigation made by or on behalf of the Chase Purchasers or controlling
person, or by or on behalf of the Company, and shall survive delivery of the
Preference Securities to the Chase Purchasers.
SECTION 10. Termination of Agreement.
(a) Termination; General. The Chase 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 Preference Offering
Memorandum, any material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business, or (ii) if there has occurred any
material adverse change in the financial markets in the United States, the
Republic of Poland or the international financial markets, any outbreak of
hostilities or escalation thereof or other calamity or crisis or any change or
development involving a prospective change in national or international
political, financial or economic conditions, or in Polish taxation affecting the
Company or any subsidiary thereof or the transactions contemplated by the
Preference Offering Memorandum, or currency exchange rates for the U.S. dollar
into the Polish Zloty or exchange controls applicable to the U.S. dollar or the
Polish Zloty, in each case the effect of which is such as to make it, in the
judgment of the Chase Purchasers, impracticable to market the Preference
Securities or to enforce contracts for the sale of the Preference Securities, or
(iii) if trading in any securities of the Company has been suspended or
materially limited by the Commission, or if trading generally on the American
-29-
Stock Exchange, the New York Stock Exchange or in the Nasdaq National Market has
been suspended or materially limited, or minimum or maximum prices for trading
have been fixed, or maximum ranges for prices have been required, by any of said
exchanges or by such system or by order of the Commission, the National
Association of Securities Dealers, Inc. or any other governmental authority, or
(iv) if a banking moratorium has been declared by Polish, United States Federal
or New York authorities.
(b) Liabilities. If this Agreement is terminated pursuant to this Section,
such termination shall be without liability of any party to any other party
except as provided in Section 4 hereof, and provided further that Sections 1, 7,
8 and 9 shall survive such termination and remain in full force and effect.
SECTION 11. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given if mailed, sent by
courier or express delivery company or transmitted by any standard form of
telecommunication. Notices to the Chase Purchasers shall be directed to the
Chase Purchasers c/o Chase Enterprises, Inc., Xxx Xxxxxxxxxx Xxxxx, Xxxxxxxx,
Xxxxxxxxxxx 00000-3585, attention of Xxxx Xxxxxxx. Notices to the Company shall
be directed to it at Xxx Xxxxxxxxxx Xxxxx, Xxxxxxxx, Xxxxxxxxxxx 06103-3585,
attention of Xxxxxx X. Xxxxxx, III.
SECTION 12. Parties. This Agreement shall inure to the benefit of and be
binding upon the Chase 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 Chase
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 Chase Purchasers and the Company and their
respective successors, and said controlling persons and officers and directors
and their heirs and legal representatives, and for the benefit of no other
person, firm or corporation. No purchaser of Preference Securities from the
Chase Purchasers shall be deemed to be a successor by reason merely of such
purchase.
SECTION 13. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. SPECIFIED
TIMES OF DAY REFER TO NEW YORK CITY TIME.
SECTION 14. Effect of Headings. The Article and Section headings herein
and the Table of Contents are for convenience only and shall not affect the
construction hereof.
SECTION 15. Counterparts. This Agreement may be executed in one or more
counterparts and when a counterpart has been executed by each party, all such
counterparts taken together shall constitute one and the same agreement.
-30-
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 Chase Purchasers and the Company in accordance with its terms.
Very truly yours,
@ENTERTAINMENT, INC.
By
Title:
By
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
XXXXXX XXXXX XXXXXX XXXXX
---------------- ----------------
Xxxxxx Xxxxx Xxxxxx Xxxxx
XXXXX XXXXX
----------------
Xxxxx Xxxxx
-31-
SCHEDULE A
Name Number of Number of Price
---- Preference Preference -----
Shares Warrants
------ --------
$2,000,000 (less a
Xxxxxx Xxxxx 2,000 2,000 commission of $60,000)
$2,000,000 (less a
Xxxxxx Xxxxx* 2,000 2,000 commission of $60,000)
$1,000,000 (less a
Xxxxx Xxxxx 1,000 1,000 commission of $30,000)
$5,000,000 (less
=====================================================
Total ........... 5,000 5,000 commissions of $150,000)
===== =====
* Xxxxxx Xxxxx has assigned her right to purchase 1,000 Preference Shares and
1,000 Preference Warrants for a price of $1,000,000 (less a commission of
$30,000) to The Xxxxxxx Trust.
-32-
SCHEDULE B
@ENTERTAINMENT, INC.
[Separately Attached]
-33-
SCHEDULE C
LIST OF DESIGNATED SUBSIDIARIES
1. ETV Sp. z o.o.
2. Telewizja Kablowa GOSAT Sp. z o.o.
3. Ground Zero Media Sp. z o.o.
4. Otwocka Telewizja Kablowa Sp. z o.o.
5. Polska Telewizja Kablowa S.A.
6. Polska Telewizja Kablowa Krakow S.A.
7. Polska Telewizja Kablowa Lublin S.A.
8. Polska Telewizja Kablowa Operator Sp. z o.o.
9. Polska Telewizja Kablowa Szczecin Sp. z o.o.
10. Polska Telewizja Kablowa Warszawa S.A.
11. Poltelkab Sp. z o.o.
12. Szczecinska Telewizja Kablowa Sp. z o.o.
13. TV Kabel Sp. z o.o.
14. At Entertainment Limited
15. Poland Communications, Inc.
16. Poland Cablevision (Netherlands) B.V.
17. Sereke Holding B.V.
18. Wizja TV Sp. z o.o.
19. WPTS Sp. z o.o.
20. @Entertainment Programming, Inc.
21. ProCable Sp. z o.o.
-34-
Exhibit A
FORM OF CERTIFICATE OF DESIGNATION
[Separately Attached]
-35-
Exhibit B
FORM OF PREFERENCE WARRANT AGREEMENT
[Separately Attached]
-36-
Exhibit C
FORM OF PREFERENCE REGISTRATION RIGHTS AGREEMENT
[Separately Attached]
-37-
Exhibit D
FORM OF PREFERENCE WARRANT REGISTRATION RIGHTS AGREEMENT
[Separately Attached]
-38-
