EXECUTION COPY
SHARE PURCHASE AGREEMENT
FOR SHARES IN
KANAL A d.d.
Dated as of June 13, 2000
by and among
TV-IN d.d.,
IMPALER d.o.o.,
collectively, the Sellers
SBS BROADCASTING S.A.,
the Sellers Guarantor
Superplus HOLDING d.d.,
the Purchaser
and
CME MEDIA ENTERPRISES B.V.,
the Purchaser Guarantor
SHARE PURCHASE AGREEMENT
------------------------
THIS AGREEMENT is made as of June 13, 2000, by and among:
(1) TV-IN d.d., a company which is incorporated in Slovenia, represented by
Igor Vezovnik, General Manager ("TV-IN"),
(2) IMPALER d.o.o., a company which is incorporated in Slovenia, represented by
Igor Vezovnik, General Manager ("Impaler", and together with TV-IN, the
"Sellers", and each a "Seller"),
(3) SBS BROADCASTING S.A., a company which is incorporated in Luxembourg,
represented by Philip B. Cleland, pursuant to a power of attorney ("Sellers
Guarantor"),
(4) SUPERPLUS HOLDING d.d., a company which is incorporated in Slovenia,
represented by Marjetka Horvat, General Director (hereinafter, the
"Purchaser"), and
(5) CME MEDIA ENTERPRISES B.V., a company which is incorporated in The
Netherlands, represented by Andrea Kozma, pursuant to a power of
attorney ("Purchaser Guarantor").
WITNESSETH:
WHEREAS, Kanal A d.d., Ljubljana, Slovenia, is a joint stock company registered
in the Register of Companies held by the Regional Court (Okrozno sodisce) in
Ljubljana under no. 1/8020/00 (hereinafter, the "Company") with
a capital of SIT 118,789,000 consisting of 118,789 registered shares of the
nominal value of 1,000 SIT each;
WHEREAS, Sellers want to acquire shares in the capital stock of the Company
representing at least ninety-eight percent (98%) of the total capital stock of
the Company on a fully diluted basis;
WHEREAS, Sellers want to sell all their shares in the capital stock of the
Company (which shares shall represent all shares in the capital stock of the
Company owned by Sellers and any of their Affiliates) to Purchaser and Purchaser
wants to purchase such shares from Sellers and thereby to obtain at least
ninety-eight percent (98%) of the total capital stock of the Company on a fully
diluted basis;
NOW, THEREFORE, the parties agree as follows:
ARTICLE I
DEFINITIONS
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Section 1.1 Definitions. For purposes of this Agreement, capitalized
terms used herein and not otherwise defined shall have the following meanings:
"Accounts" means the audited financial statements of the Company for
the year ending and as at December 31, 1999, as set forth in Exhibit A attached
hereto;
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"Actual Deficiency Amount" means the sum of (i) Actual Net Working
Capital minus Preliminary Net Working Capital, plus (ii) Actual Net Program
Inventory minus Preliminary Net Program Inventory, in each case as determined on
the basis of the Closing Audit Report, where such sum is a negative number;
"Actual Excess Amount" means the sum of (i) Actual Net Working
Capital minus Preliminary Net Working Capital, and (ii) Actual Net Program
Inventory minus Preliminary Net Program Inventory, in each case as determined on
the basis of the Closing Audit Report, where such sum is a positive number;
"Actual Net Program Inventory" means the amount of Net Program
Inventory as of the Closing Date as set forth in the Closing Audit Report;
"Actual Net Working Capital" means the amount of Net Working Capital
as of the Closing Date as set forth in the Closing Audit Report;
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly, through one or more intermediaries, controlling,
controlled by, or under common control with such person. For purposes of this
definition, "control", including with correlative meanings, the terms
"controlled by" and "under common control with", means (i) with respect to any
Person being controlled, the possession, directly or indirectly, of the power by
another Person to direct or cause the direction of the management and policies
of such Person, whether through the ownership of voting securities, by contract
or otherwise, and (ii) with respect to any Person exercising control, the power
of such Person to direct, or cause the direction of, the management and policies
of another Person, whether through the ownership of voting securities, by
contract or otherwise. For the avoidance of doubt, the term "Affiliate" when
used in respect of the Sellers shall not include any member of the Polic
Family;
"Auditors" means KPMG Peat Marwick;
"Business Day" means a day on which banks are open for business in
Ljubljana, Slovenia, London, England and New York, New York;
"Closing" means the completion of the sale of the Shares in
accordance with Article VII herein;
"Closing Audit Report" means an audit report of the Auditors
prepared in accordance with Section 2.4, in which the Auditors certify the
Actual Working Capital and Actual Net Program Inventory in accordance with this
Agreement, which certificate shall based on the Auditors' audit of the
consolidated balance sheet of the Company as of the Closing Date, and include as
an attachment the consolidated balance sheet of the Company (including related
footnotes and disclosures) from which such Actual Working Capital and Actual Net
Program Inventory have been determined;
"Closing Conditions" means the conditions to Closing set forth in
Article VI herein;
"Closing Date". means the day on which the Closing takes place, as
determined pursuant to Section 7.1 herein;
"CME Associates" means each of Ivan Gorjup; Janez Ujicic;
Srecko Kukovec; Lenko Vidmar; and Marjan Jurenec;
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"CME Associates Polic Release" has the meaning set forth in
Section 5.3(d);
"CME Associates Polic Slovene Withdrawal" has the meaning set
forth in Section 5.3(d);
"CME Associates Polic UK Withdrawal" has the meaning set
forth in Section 5.3(d);
"CME Group" means Central European Media Enterprises Ltd. or any
direct or indirect wholly-owned subsidiary;
"CME Polic Euro 3 Release" has the meaning set forth in
Section 5.3(c);
"CME Polic Euro 3 Withdrawal" has the meaning set forth in
Section 5.3(c);
"CME Polic Release" has the meaning set forth in Section
5.3(a);
"CME Polic Slovene Withdrawal" has the meaning set forth in
Section 5.3(a);
"CME Polic UK Withdrawal" has the meaning set forth in
Section 5.3(a);
"CME Promissory Note" means the promissory note, substantially in
the form of Exhibit B attached hereto;
"CME Registration Withdrawal" has the meaning set forth in Section
5.3(e);
"CME SBS Release" has the meaning set forth in Section 5.3(f);
"CME SBS Slovene Withdrawal" has the meaning set forth in Section
5.3(f);
"CME SBS UK Withdrawal" has the meaning set forth in Section
5.3(f);
"Company" has the meaning set forth in the recitals to this
Agreement;
"Company Material Adverse Effect" means a material adverse effect on
the business, financial condition or result of operations of the Company;
provided, however, that any such effect resulting from any change (i) in
Slovenian law, rule or regulation (other than any suspension, termination or
other regulatory change which results in a material adverse change to the
Company's broadcast licenses) or generally accepted accounting principles or
interpretations thereof that applies, or (ii) in economic or business conditions
generally or in the broadcasting industry specifically, shall not be considered
when determining if a Company Material Adverse Effect has occurred;
"Convertible Barings Note" means the convertible note dated October
9, 1994 in the principal amount of ECU 1,618,254 and issued by the Company to
Barings Communications Equity Limited, and subsequently acquired from Barings
Communications Equity Limited by the Sellers Guarantor on July 1, 1996;
"Current Liabilities" means the sum of trade payables, customer
advances and all other debts or obligations (other than Liabilities in
connection with SBS Receivables) which must or are likely to be discharged
within one year;
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"Encumbrance" means a mortgage, lien, pledge, option, right of first
refusal, right of preemption or other security interest or encumbrance of any
kind;
"Escrow Amount" has the meaning set forth in Section 2.3 herein;
"Foreign Programming" means television programming produced outside
Slovenia regardless of the nationality of the seller of such programming;
"Governmental Authority" means any agency, board, body, bureau,
court, commission, department, instrumentality, entity established or controlled
by, or administration of any government, or any political subdivision of any of
the foregoing, including any legislative, judicial or administrative body;
"ITI Notes" has the meaning set forth in Section 2.3 hereof;
"Losses" means losses, damages, liabilities, penalties, costs or
expenses (including, without limitation, reasonable legal fees and other dispute
resolution costs) which are reasonably foreseeable direct consequences of a
breach of this Agreement;
"Liabilities" means, as to any Person, all debts, adverse claims,
fines, liabilities and obligations of any kind, direct or indirect, absolute or
contingent, known or unknown, of such Person, whether accrued, vested or
otherwise, whether in contract, tort, strict liability or otherwise and whether
or not actually reflected, or required by US GAAP to be reflected, in such
Person's financial statements (including the notes thereto) or other books and
records;
"Net Program Inventory" means (a) the sum of (i) the purchase price
of all Foreign Programming of the Company (on- and off-balance sheet), with a
license period expiring after the earlier of the Closing Date and August 31,
2000, which has not been broadcast, and (ii) the lesser of (A) forty percent
(40%) of the purchase price of all programming of the Company (on- and
off-balance sheet), with a license period expiring after the earlier of the
first anniversary of the Closing Date and August 31, 2001, which has been
broadcast not more than once and is licensed for at least one further broadcast,
and (B) US$650,000, less (b) all program liabilities of the Company (current and
non-current, on- and off-balance sheet);
"Net Working Capital" means the excess of current assets (defined as
cash, cash equivalents, trade receivables and all other assets which are
expected to be turned into cash, sold or exchanged within one year) over Current
Liabilities, all calculated in accordance with US GAAP applied on a consistent
basis;
"New Shares" has the meaning set forth in Section 6.3(e) herein;
"Option Agreement" has the meaning set forth in Section 2.3 herein;
"Permitted Encumbrances" means Encumbrances for taxes, assessments
or governmental charges, or landlords', mechanics', workmen's, materialmen's or
similar liens, in each case that are not delinquent or, if delinquent, which are
being contested in good faith.
"Person" means an individual, partnership, corporation, company,
trust, unincorporated organisation, or a government or agency or political
sub-division thereof.
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"Pledge Agreement" means the pledge to Sellers or their nominees of
the ITI Notes in the form of Exhibit C attached hereto;
"Polic Family" means Vladimir Polic, Denis Polic
and Peter Polic;
"Polic Release" has the meaning set forth in Section 5.2(g);
"Polic Withdrawal" has the meaning set forth in Section
5.2(g);
"Preliminary Net Program Inventory" means the Net Program Inventory
as at December 31, 1999 as derived from the Reconciled Accounts;
"Preliminary Net Working Capital" means Net Working Capital as at
December 31, 1999 as derived from the Reconciled Accounts;
"Purchase Price" has the meaning set forth in Section 2.2 herein;
"Purchaser" has the meaning set forth in the preamble to this
Agreement;
"Purchaser Guarantor" has the meaning set forth in the preamble to
this Agreement;
"Reconciled Accounts" means the reconciliation by the Auditors of
the balance sheet in the Accounts to US GAAP;
"Remaining SBS Receivables" means all SBS Receivables existing on
the Closing Date which have not otherwise been forgiven or converted for Shares
as contemplated by this Agreement;
"SBS Assignment Agreement" means the assignment agreement
substantially in the form of Exhibit D attached hereto, pursuant to which SBS
irrevocably assigns to Purchaser or its nominee(s) the Remaining SBS
Receivables;
"SBS Receivables" means all amounts owed by the Company to Sellers
and/or their Affiliates, whether arising from loans, advances, trade payables or
otherwise, and including the Convertible Barings Note;
"SBS Release" has the meaning set forth in Section 5.2(g);
"SBS Slovene Withdrawal" has the meaning set forth in Section
5.2(g);
"SBS UK Withdrawal" has the meaning set forth in Section 5.2(g);
"Seller" has the meaning set forth in the preamble to this
Agreement;
"Sellers Guarantor" has the meaning set forth in the preamble to
this Agreement;
"Shareholders Meeting" has the meaning set forth in Section 5.2(i);
"Shares" has the meaning set forth in Section 2.1 herein;
"SIT" means Slovenian Tolar, the lawful currency of Slovenia;
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"Slovene GAAP" means generally accepted accounting principles in
Slovenia as in effect from time to time, consistently applied;
"Tax Return" means any return, report, form, declaration, claim for
refund, information report or return, statement, supplementary or supporting
schedules or other information filed with any taxing authority with respect to
Taxes;
"Taxes" means all taxes, levies, fees, import duties and similar
government charges (including any interest, fines, assessments, penalties or
additions to tax imposed in connection therewith or with respect thereto) of any
taxing authority, including, without limitation, taxes imposed on, or measured
by, income, franchise, profits or gross receipts, ad valorem, value added,
capital gains, sales, goods and services, use, real or personal property,
capital stock, license, branch, payroll, estimated withholding, employment,
social security (or similar), unemployment, compensation, utility, severance,
production, excise, stamp, occupation, premium, windfall profits, transfer and
gains taxes, and customs duties;
"US GAAP" means generally accepted accounting principles in the
United States as in effect from time to time, consistently applied;
"US$" or "U.S. Dollars" means the United States dollar, the lawful
currency of the United States.
Section 1.2. Statutory References. Any reference to a statutory
provision shall include such provision as from time to time modified or
re-enacted or consolidated so far as such modification or re-enactment or
consolidation applies or is capable of applying to any transaction entered into
hereunder.
Section 1.3. Accounting Terms. All accounting terms used herein
shall be interpreted and all accounting classifications and determinations
hereunder shall be made in accordance with US GAAP.
Section 1.4. Interpretation.
(a) References. Unless the context otherwise requires:
(i) headings are for convenience only and do not affect the
interpretation of this Agreement;
(ii) a reference to a party in this Agreement shall include
that party's successors and permitted assigns and transferees of its rights
and/or obligations;
(iii) a reference to an Annex, Article, party, Schedule,
Exhibit or Section is a reference to that Article or Section of, or that Annex,
party, Exhibit or Schedule to, this Agreement; and
(iv) a reference to this Agreement or any other agreement,
document or instrument is a reference to this Agreement or that other agreement,
document or instrument as amended, varied, novated or substituted from time to
time.
(b) Number and Gender. Words importing the singular number shall
include the plural and vice versa, words importing any gender shall include all
genders.
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(c) Knowledge. Whenever any reference is made in this Agreement to
any of Sellers' knowledge, information, belief or awareness, it shall mean the
knowledge, information, belief or awareness of any Seller and each of its
Affiliates, including without limitation SBS Broadcasting S.A.
Section 1.5. Construction. No rule of construction shall be
applied to the disadvantage of any party because such party was responsible
for or participated in the preparation of this Agreement or any part of it.
ARTICLE II
PURCHASE AND SALE OF SHARES
---------------------------
Section 2.1 Purchase and Sale. Pursuant to the terms and subject to
the conditions set forth in this Agreement, at the Closing Sellers shall assign,
transfer and deliver to Purchaser, and Purchaser agrees to purchase from
Sellers, (a) all shares in the Company held by Sellers and their Affiliates on
the Closing Date (being shares with a face-value of 1,000 SIT), such shares to
represent at least ninety-eight percent (98%) of the total then issued and
outstanding capital stock of the Company on a fully diluted basis (the
"Shares"), free and clear of all Encumbrances, and (b) all Remaining SBS
Receivables.
Section 2.2 Purchase Price. The aggregate purchase price for the
Shares and the Remaining SBS Receivables shall be US$12,500,000 (twelve million
five hundred thousand US dollars) plus an amount equal to the sum (whether
positive or negative) of (a) Preliminary Net Working Capital and (b) Preliminary
Net Program Inventory, as determined from the Reconciled Accounts (the "Purchase
Price"). Subject to the terms and conditions of Sections 2.4 and 2.5, the
Purchase Price shall be adjusted as provided therein.
Section 2.3 Payment of Purchase Price. Payment of the Purchase Price
as contemplated above shall be paid by wire transfer in US Dollars in
immediately available funds on the Closing Date to the account so designated by
Sellers prior to the Closing Date; provided, however, in the event that
(a) at the time of Closing CME Media Enterprises B.V. or its
Affiliates have sold, whether to SBS Broadcasting S.A. or its Affiliates or
another Person, the convertible notes due December 10, 2001 issued by
International Trading and Investment Holdings S.A. in the aggregate amount of
US$40,000,000 (the "ITI Notes"), and US$12,500,000 of the proceeds from such
sale (the "Escrow Amount") have been placed in escrow pursuant to Article III of
the Option Agreement between SBS Broadcasting S.A. and Central European Media
Enterprises Ltd. dated February 21, 2000 (the "Option Agreement"), then the
Purchase Price shall be paid as follows:
(i) if the Purchase Price is greater than the Escrow Amount,
the entire Escrow Amount shall be released to Sellers and, in addition,
Purchaser shall pay to Sellers by wire transfer in US Dollars in immediately
available funds to the account so designated by Sellers prior to the Closing
Date the difference between the Purchase Price and the Escrow Amount; and
(ii) if the Purchase Price is less than the Escrow Amount,
such portion of the Escrow Amount equalling the Purchase Price shall be released
to Sellers and the remainder of the Escrow Amount shall be released to Central
European Media Enterprises Ltd.; or
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(b) at the time of Closing CME Media Enterprises B.V. or its
Affiliates have not sold, whether to SBS Broadcasting S.A. or its Affiliates or
another Person, the ITI Notes, then at the Closing CME shall execute and deliver
to Sellers the CME Promissory Note in principal amount equal to the Purchase
Price and shall execute and deliver to Sellers the Pledge Agreement.
Section 2.4 Closing Audit Report. As soon as reasonably practicable
after the Closing, Purchaser shall cause the Auditors to prepare the
consolidated balance sheet of the Company as of the Closing Date, together with
the audit reports of the Auditors to the effect that such balance sheet has been
prepared and audited in accordance with the requirements of this Section 2.4 and
the definition of Closing Audit Report and setting forth the calculations of
Actual Working Capital and Actual Net Program Inventory in accordance with the
terms of this Agreement. Such balance sheet shall be prepared in accordance with
US GAAP applied on a basis consistent with that utilized in the preparation of
the financial statements of the Company as of, and for the period ended on,
December 31, 1999 forming a part of the Accounts. Purchaser shall provide full
access to the Auditors to the premises, properties, books, accounting records
and other documents (including supporting contractual documentation) and
personnel of the Company reasonably requested by the Auditors. The Auditors
shall deliver the Closing Audit Report to each of Sellers and Purchaser no later
than forty-five (45) days after the Closing. Purchaser shall ensure that Sellers
have reasonable access to the Auditors and the information used in preparing the
Closing Audit Report. The Closing Audit Report shall be binding and conclusive
upon Purchaser and Sellers absent manifest error (i.e. an error of calculation).
The cost of the preparation of the Closing Audit Report shall be borne equally
between Sellers, on the one hand, and Purchaser, on the other hand.
Section 2.5 Adjustment. Within ten (10) business days after the
Closing Audit Report has become final and binding on Sellers and Purchaser
pursuant to Section 2.4:
(a) If there is an Actual Excess Amount which is greater than 0.3%
(zero point three percent) of the Purchase Price, then
(i) if the Purchase Price has been paid in cash at the
Closing, Purchaser shall pay to Sellers, by wire transfer in immediately
available funds, without set-off or counterclaim and to the account designated
by Sellers in writing, an amount equal to the Actual Excess Amount; or
(ii) if CME Media Enterprises B.V. has issued to Sellers or
their nominee at the Closing the Promissory Note, the Promissory Note shall be
amended and reissued by CME Media Enterprises B.V. with a principal amount equal
to the Purchase Price plus the Actual Excess Amount.
(b) If there is an Actual Deficiency Amount which is greater than
0.3% (zero point three percent) of the Purchase Price, then
(i) if Purchaser had paid the Purchase Price in cash at the
Closing, Sellers shall pay to Purchaser, by wire transfer in immediately
available funds, without set-off or counterclaim and to the account designated
by Purchaser in writing, an amount equal to the Actual Deficiency Amount; or
(ii) if CME Media Enterprises B.V. had issued to Sellers or
their nominee at the Closing the Promissory Note, the Promissory Note shall be
amended and reissued by CME
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Media Enterprises B.V. with a principal amount equal to the Purchase Price less
the Actual Deficiency Amount.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
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Each Seller jointly and severally represents and warrants to
Purchaser as follows:
Section 3.1 Authority.
(a) Seller has the requisite corporate power and authority to
execute, deliver and perform this Agreement and to consummate the transactions
contemplated herein. The execution and delivery of this Agreement by Seller and
the consummation of the transactions contemplated herein have been duly
authorized by all necessary corporate action on the part of Seller and do not
require the approval of the stockholders of Seller other than approvals already
obtained. This Agreement has been duly executed and delivered by Seller and,
assuming the due authorization, execution and delivery of this Agreement by
Purchaser, this Agreement constitutes a legal, valid and binding obligation of
Seller enforceable against it in accordance with its terms, subject to
applicable bankruptcy, reorganization, insolvency, fraudulent transfer,
moratorium and other laws affecting creditors' rights generally from time to
time in effect and to general principles of equity.
(b) No consent, approval, license, permit, order or authorization
of, or registration, declaration or filing with, any Governmental Authority is
required to be obtained or made by Seller or any of its Affiliates in connection
with the execution and delivery of this Agreement or the consummation of the
transactions contemplated herein by it, except for compliance with and filings
under the applicable competition laws and regulations in Slovenia.
(c) Impaler is an Affiliate of SBS Broadcasting S.A.
Section 3.2 No Violation. Seller's execution and delivery of
this Agreement and, subject to the fulfilment of the conditions set forth in
Article VI, completion of its obligations as contemplated by this Agreement,
does not and will not violate or constitute a default by it under (a) any
treaty, law or regulation, or any judgment, court order or decree, by which
Seller is bound (including without limitation the foreign ownership laws and
public media laws of Slovenia), (b) any provision of the organizational
documents of Seller or (c) any agreement to which Seller is party or is
otherwise bound, except in the case of paragraphs (a), (b) and (c) above for
such violations or defaults that would not reasonably be expected to have a
material adverse effect on the ability of Seller to consummate the transactions
contemplated hereby.
Section 3.3 Capital Structure; Shares. At the Closing: (a) the
statutory capital requirements of the Company through the end of 2000 shall be
satisfied in such amounts as reasonably agreed between the parties hereto, (b)
there will exist no other equity securities (or securities convertible into
equity) in the Company other than (i) the class of ordinary shares of which the
Shares form a part and (ii) the Convertible Barings Note (if not converted by
Sellers into equity to acquire the Shares or forgiven by Sellers or their
Affiliates), and such class of ordinary shares (and the shares into which the
Convertible Barings Note is convertible) shall entitle each ordinary share only
to a single vote, (c) the Shares will have been duly authorized, validly issued,
will be fully paid up and non-assessable, will be in certificated form and will
be owned of record and beneficially by Seller, free and clear of any and all
Encumbrances, (d) the Shares will represent at least ninety-eight percent (98%)
of the voting power and economic interest in the Company, (e) the
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holders of the remaining shares in the Company (other than the Shares) shall
have no rights or privileges with respect to the Company (whether as a result of
holding such shares or by separate agreement) other than those the Purchaser
shall have as holder of the Shares, (f) neither Seller nor any of its Affiliates
shall own any capital stock or other securities in the Company other than the
Shares, (g) no member of the Polic Family shall, whether directly or indirectly,
own or control any capital stock or other securities of the Company (other than
any indirect ownership by any member of the Polic Family in an immaterial
amount, which ownership is not known to Sellers), and (h) there will be no
outstanding options, warrants or other rights of any kind entitling any Person
to acquire any additional shares of capital stock of the Company, or securities
convertible into or exchangeable for any such additional shares and the Company
will not have committed to issue any such option, warrant, right or security.
Section 3.4 No Claims, Proceedings, Etc. There are no legal actions,
proceedings, claims or arbitrations pending or, to the best of Seller's
knowledge, information and belief after due enquiry, threatened against Seller
which would reasonably be expected to have a material adverse effect on the
ability of Seller to consummate the transactions contemplated herein.
Section 3.5 Corporate Organization. The Company is duly organized
and validly existing under the laws of Slovenia and is qualified to the extent
necessary under applicable law to carry on its business and has full right and
authority to own and to operate its properties and to engage in the business in
which it is now engaged in all places where such business is carried on. The
Company has no subsidiaries. Exhibit E to this Agreement is a true and complete
copy of the organisational documents of the Company, as in effect on the date
hereof.
Section 3.6 Financial Statements; No Undisclosed Liabilities.
(a) Except as disclosed therein, the Accounts were prepared in
accordance with Slovene GAAP and fairly present in all material respects the
financial position of the Company as of the dates shown and its results of
operations and cash flows for the periods shown.
(b) The Company does not have any material liabilities or
obligations (absolute, accrued, contingent or otherwise) of a nature required to
be provided for or accrued in the balance sheet of the Company under Slovene
GAAP that are not accrued or reserved against, or disclosed, in the Accounts,
except liabilities incurred since December 31, 1999 that (i) have been incurred
in the ordinary course of business and (ii) have not had and are not reasonably
likely to have, individually or in the aggregate, a Company Material Adverse
Effect.
Section 3.7 Books and Records. All minutes and records of the
meetings of the shareholders of the Company and of the Supervisory Board, and
resolutions related thereto, have been fully, properly and accurately kept and
completed in all material respects, and there are no material inaccuracies or
discrepancies of any kind contained or reflected therein. Such records, as well
as all accounts, ledgers and other records forming the basis of the Accounts, as
made available to the Purchaser and its representatives prior to Closing, are,
to the knowledge of Seller, up-to-date and in compliance with applicable law and
no notice or allegation that any of them is not correct or should be rectified
has been received by, or is known to, the Company or Seller.
Section 3.8 Title to Properties; Encumbrances. Except for such
properties and assets which have been sold or otherwise disposed of in the
ordinary course of business, the Company has good, valid and marketable title to
all of its properties and assets (real and personal, tangible and intangible),
subject to no Encumbrances, except for Permitted Encumbrances and such
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defects in title or such Encumbrances as would not, in the aggregate, reasonably
be expected to have a Company Material Adverse Effect.
Section 3.9 Absence of Certain Changes. From December 31, 1999 to
the date of this Agreement and except as otherwise contemplated by this
Agreement, (a) no event or circumstance has occurred that, individually or in
the aggregate, has had or would reasonably be expected to have, a Company
Material Adverse Effect, and (b) the Company:
(i) has conducted its business in the ordinary course and has
not entered into any material contracts or amendments or commitments outside of
the ordinary course, and has not sold, assigned or transferred any tangible or
intangible assets other than in the ordinary course of business;
(ii) has not incurred any obligation or liability (absolute or
contingent) except current liabilities incurred in the ordinary course of
business and has not mortgaged, pledged or subjected to an Encumbrance, other
than to a Permitted Encumbrance, any of its assets, tangible or intangible,
except in the ordinary course of business and as would not, in the aggregate,
reasonably be expected to have a Company Material Adverse Effect;
(iii) has maintained all accounts, ledgers and other
financial records in accordance with applicable law in all material respects;
(iv) has not suffered any damage, destruction or loss by fire
or other casualty, except as would not, in the aggregate, reasonably be expected
to have a Company Material Adverse Effect;
(v) has not made any declaration or setting aside or payment
of any dividend or any other distribution of profit or any direct or indirect
redemption, purchase or other acquisition of any shares of the Company.
(vi) has not issued or granted or agreed to issue or grant any
new shares, convertible bonds or warrants (other than, for the avoidance of
doubt, as contemplated by this Agreement);
(vii) has not, individually or in the aggregate, made or
agreed to make any capital expenditure or investment other than in the ordinary
course of business and that would not be reflected as a Current Liability at
Closing or that is in excess of US$100,000 (or its equivalent), or any increase
in net borrowings (other than borrowings which would constitute SBS Receivables)
in excess of US$50,000 (or its equivalent);
(viii) has not increased, or agreed to increase, the
compensation (including pensions and other benefits) of its employees, officers
or former employees or officers or the dependents of any former employees or
officers in any material respect other than granting usual and customary
increase in the ordinary course of business and consistent with past practice or
pursuant to applicable law; and
(ix) has not cancelled any debt or waived or released any
material right or claim or agreed to do any of the foregoing, except for such
cancellations, waivers and releases as have not had and would reasonably be
expected not to have, in the aggregate, a Company Material Adverse Effect.
12
Section 3.10 No Claims, Proceedings, Etc. Except as set forth on
Schedule 3.10 to this Agreement, there are no material legal actions,
proceedings, claims or arbitrations pending or, to the best of Seller's
knowledge, threatened against the Company, including without limitation, any
legal actions, proceedings, claims or arbitrations (other than those brought by
Purchaser, the CME Associates or their Affiliates) relating to or arising out of
(a) the convening of, or resolutions taken at, any meeting of shareholders of
the Company in connection with the issuance of the New Shares and the
subscription for such New Shares by the Sellers, or (b) the registrations of the
shareholder resolutions and the subscription for the New Shares by Sellers.
Section 3.11 Compliance with Laws. Since its incorporation, the
Company has conducted its business in accordance with all applicable laws and in
accordance with all applicable regulations and other requirements (including
licences, permits and authorities necessary for the carrying on of their
business), of all Governmental Authorities having jurisdiction over them except
where failure to comply with such laws, regulations and requirements would not,
in the aggregate, have a Company Material Adverse Effect or materially adversely
affect its ability to consummate the transactions contemplated herein.
Section 3.12 Permits. Schedule 3.12(i) to this Agreement sets forth
a complete and accurate list of all broadcast licenses of the Company. Schedule
3.12(ii) contains copies of all broadcast licenses of the Company, which copies
are true, complete and accurate in all respects. The Company has complied in all
material respects with the terms of all licenses, permits and authorities of all
Governmental Authorities having jurisdiction over the Company which are
necessary for the carrying on of its business. Each of said licenses, permits
and authorities and the rights of the Company with respect thereto are valid and
subsisting, in full force and in effect and enforceable by the Company, and
there exists no default or event of default or event, occurrence, condition or
act (including the purchase of the Shares hereunder) which, with the giving of
notice, the lapse of time or the happening of any other event or condition,
would become a default or event of default thereunder, except for such defaults
or possible defaults that, individually or in the aggregate, are not reasonably
likely to have a Company Material Adverse Effect. None of said licenses, permits
and authorities has been or, to the best of the Sellers' knowledge, information
and belief after due enquiry, is threatened to be, revoked, cancelled, suspended
or modified.
Section 3.13 Taxes.
(a) The Company has timely filed all Tax Returns for all Taxes
required by law to have been filed and all such Tax Returns are complete and
accurate in all material respects.
(b) The Company has paid all Taxes which have become due and payable
by the Closing Date whether pursuant to the said Tax Returns or pursuant to any
assessment and there is no further liability for any such Taxes and no interest
or penalties accrued or accruing with respect thereto, except with respect to
the matters listed on Schedule 3.13(b), which matters are being contested in
good faith.
(c) The Company has made adequate provisions in accordance with
Slovene GAAP for the payment of all material Taxes for which the Company may be
liable for the period before Closing, regardless of whether the liability for
such Taxes is disputed.
(d) As at the date hereof, the Company is not a party to any
agreements, waiver or other arrangement with any tax authority providing for an
extension of time for filing any Tax Return and there exists no action or
litigation between the Company and the tax authorities or
13
administrations competent for labour contributions, concerning taxes, duties,
levies or labour charges that have not been declared, paid in full or in part or
to penalties relating thereto, or concerning late or incomplete declarations,
that are reasonably likely to have a Company Material Adverse Effect.
(e) Without prejudice to the generality of this Section 3.13, there
exists no fact or omission which could give rise to any additional Tax, levy or
labour investigation, claim or obligation against the Company, according to
current legislation, and concerning the period ending on the date of the
Accounts, or to any prior period of time for which the statute of limitations
has not expired that is reasonably likely to have a Company Material Adverse
Effect.
(f) The Company has not entered into any contracts, agreements or
arrangements with third parties which could render the Company liable for the
payment of material amounts of taxes, levies or social charges due by such third
parties.
Section 3.14 Material Contracts.
(a) Except for Contracts listed in Schedule 3.14, as of the date
hereof, neither the Company nor any Subsidiary is bound by any Material Contract
(as defined below). Except for Contracts listed in Schedule 3.14 and Material
Contracts entered into in accordance with this Agreement after the date hereof
but before the Closing, as of the date of Closing, neither the Company nor any
Subsidiary will be bound by any Material Contract. Seller has heretofore
delivered or made available to Purchaser true and complete copies of all
Material Contracts outstanding as of the date of this Agreement, including all
amendments and modifications thereto.
(b) Each outstanding Material Contract constitutes a valid and
binding agreement, enforceable against the Company in accordance with its terms,
subject in each case to applicable bankruptcy, reorganization, insolvency,
fraudulent transfer, moratorium and other laws affecting creditors' rights
generally from time to time in effect and to general principles of equity. No
notice of a default has been sent or received by Seller, the Company, any
Subsidiary or any of their Affiliates under any such Material Contract which
remains uncured, except for defaults which in the aggregate have not had, and
would not reasonably be expected to have, a Company Material Adverse Effect.
(c) For purposes of this Agreement, "Material Contract" means any of
the following contracts or other agreements to which the Company or any of its
Subsidiaries is a party:
(i) any agreement (or group of related agreements, with the
same third party or any of its Affiliates) for (A) the lease of personal
property providing for lease payments in excess of US$50,000 (or its equivalent)
per annum or (B) the lease of real property providing for lease payments in
excess of US$50,000 (or its equivalent) per annum;
(ii) any agreement (or group of related agreements) for the
purchase or sale of supplies, products or other personal property, or for the
furnishing or receipt of services, the performance of which involve
consideration in excess of US$50,000 (or its equivalent) per annum;
(iii) any joint venture, shareholders', material partnership
or other similar agreement with any Person;
14
(iv) any agreement (or group of related agreements, with the
same third party or any of its Affiliates) under which the Company or any of its
Subsidiaries has created, incurred, assumed, or guaranteed any indebtedness for
borrowed money, or any capitalized lease obligation, in excess of US$50,000 (or
its equivalent) per annum or under which it has imposed an Encumbrance on any of
its material assets, tangible or intangible;
(v) any (A) agreement with an employee or consultant of the
Company or any of its Subsidiaries, providing for a salary per annum in excess
of US$50,000 (or its equivalent) or (B) agreement with work councils, labour
unions or other employee organizations;
(vi) any other agreement (or group of related agreements with
the same third party) the performance of which involves consideration in excess
of US$50,000 (or its equivalent) per annum;
(vii) any license agreement or programming agreement with a
term which has not expired or under which any payment obligation is still
outstanding;
(viii) any agreement containing a covenant not to compete,
other than those in which the Company and/or its Subsidiaries is the beneficiary
in employee-related agreements;
(ix) any take-or-pay or requirements agreements or other
agreement requiring the Company or any Subsidiary to pay regardless of whether
products or services are received; or
(x) any agreement relating to the acquisition by the Company
or any Subsidiary of any operating business or the capital stock of any other
Person.
Section 3.15 Employee Matters.
(a) Except as provided for or accrued in the Accounts or otherwise
disclosed in Schedule 3.15 to this Agreement, there are no pensions, life
insurance benefits, profit-sharing, disability benefits or other obligations
(other than those obligations covered by sub-paragraph (b) below) of the Company
for the benefit of any of its employees, officers or former employees or
officers or the dependents of any former employees or officers which,
individually or in the aggregate, are equal to or greater than US$50,000 (or its
equivalent), other than the minimum payments mandated by Slovene law, and all
liabilities of the Company with respect to such pensions, benefits or other
employee-related obligations which, individually or in the aggregate, are equal
to or greater than US$50,000 (or its equivalent) have been, as of the date
hereof, fully accrued or provided for in the Accounts.
(b) Except as provided for or accrued in the Accounts or otherwise
disclosed in Schedule 3.15 to this Agreement, there are no penalties,
indemnities or other similar payment obligations (including in respect of
severance payments) of the Company which, individually or in the aggregate, are
equal to or greater than US$50,000 (or its equivalent) for the benefit of any of
its employees, officers or former employees or officers or the dependants of any
former employees or officers, and all liabilities of the Company with respect to
such penalties, indemnities or other similar payment obligations which,
individually or in the aggregate, are equal to or greater than US$50,000 (or its
equivalent) have been as of the date hereof, fully accrued or provided for in
the Accounts.
15
(c) The Company has satisfied in all material respects all of its
obligations relating to Slovenian labour law, and has in particular made on a
timely basis all filings and/or notifications required by the competent labour
and social charge authorities and maintained up-to-date all registers and
records required by applicable labour law; and
(d) The Company has observed in all material respects all
obligations as regards employee representation, and has not committed any
material offense against applicable labour laws regarding employee
representation or collective activity.
Section 3.16 Intellectual Property. Except as disclosed in Schedule
3.16 to this Agreement or as is not reasonably likely to have a Company Material
Adverse Effect, the Company owns or has a valid and enforceable license to use
the rights to all patents, trademarks, tradenames, service marks and copyrights,
together with any registrations and applications therefor, licenses, inventions,
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") used in and necessary to carry on the business now
operated by it. Except as disclosed in Schedule 3.16 or as is not reasonably
likely to have a Company Material Adverse Effect, the operation of the business
of the Company as currently conducted requires no rights of performance or
display or their equivalent or any other rights, including, but not limited to,
"moral rights" under copyrights other than copyrights owned by the Company or
licensed by it pursuant to license agreements. Except as disclosed in Schedule
3.16 or as is not reasonably likely to have a Company Material Adverse Effect,
neither Seller nor the Company 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 therein.
Section 3.17 Insurance. The Company has obtained and maintained in
full force and effect insurance with insurance companies or associations in such
amounts, on such terms and covering such risks as disclosed in Schedule 3.17 to
this Agreement. No notice of default, cancellation or non-renewal of any such
policies has been received by the Company or any of its Affiliates.
Section 3.18 SBS Receivables; Indebtedness. All SBS Receivables as
of March 31, 2000 are set forth on Schedule 3.18 to this Agreement. All of such
SBS Receivables, and as of the date of the Closing all SBS Receivables arising
since March 31, 2000 and up to the Closing Date, have arisen in all material
respects from bona fide transactions, have been included in the Accounts as
approved by the Company's shareholders (to the extent arising prior to January
1, 2000) as due to Sellers or their Affiliates, and are, and immediately
following the Closing will be, enforceable in accordance with their terms
(subject to applicable insolvency laws and equitable principles of general
application). All loans to the Company from Sellers or their Affiliates (which,
for the avoidance of doubt, constitute SBS Receivables) are, if required,
properly registered in all material respects with the Bank of Slovenia, and all
long-term payables owed by the Company to Sellers or their Affiliates (which,
for the avoidance of doubt, constitute SBS Receivables) have been forgiven or
converted to loan commitments of the Company, or will be included in the
Accounts to the extent required by Slovene GAAP, and approved by the Company's
shareholders.
Section 3.19 Liabilities of the Company. As of the Closing Date, the
Company shall have no Liabilities, other than Current Liabilities, program
liabilities and Liabilities which constitute Remaining SBS Receivables.
16
Section 3.20 Notice of Shareholders Meeting. All shareholders of the
Company have been notified of the Shareholders Meeting (effecting, inter alia,
the increase in capital of the Company) as required by and in conformity with
applicable Slovenian laws and the charter documents of the Company.
Section 3.21 Timing of Representations and Warranties. The
representations and warranties set forth in this Article III shall be deemed to
be given upon the execution of this Agreement as well as at the Closing (unless
specifically stated otherwise).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
-------------------------------------------
Purchaser represents and warrants to Sellers as follows:
Section 4.1 Authority.
(a) Purchaser has the requisite corporate power and authority to
execute, deliver and perform this Agreement and to consummate the transactions
contemplated herein. The execution and delivery of this Agreement by Purchaser
and the consummation of the transactions contemplated herein have been duly
authorized by all necessary corporate action on the part of Purchaser and do not
require the approval of the stockholders of Purchaser or of any Affiliate of
Purchaser other than approvals already obtained. This Agreement has been duly
executed and delivered by Purchaser and, assuming the due authorization,
execution and delivery of this Agreement by Seller, this Agreement constitutes a
legal, valid and binding obligation of Purchaser enforceable against it in
accordance with its terms, subject to applicable bankruptcy, reorganization,
insolvency, fraudulent transfer, moratorium and other laws affecting creditors'
rights generally from time to time in effect and to general principles of
equity.
(b) No consent, approval, license, permit, order or authorization
of, or registration, declaration or filing with, any Governmental Authority is
required to be obtained or made by or with respect to Purchaser or any of its
Affiliates in connection with the execution and delivery of this Agreement or
the consummation of the transactions contemplated herein, except for compliance
with and filings under the applicable competition laws and regulations in
Slovenia.
Section 4.2 No Violation. Purchaser's execution and delivery of
this Agreement and, subject to the fulfilment of the conditions set forth in
Article VI, completion of its obligations as contemplated by this Agreement,
does not and will not violate or constitute a default by it under (a) any
treaty, law or regulation, or any judgment, court order or decree, by which
Purchaser is bound (including without limitation the foreign ownership laws and
public media laws of Slovenia), (b) any provision of the organizational
documents of Purchaser or (c) any agreement to which Purchaser is party or is
otherwise bound, except in the case of paragraphs (a), (b) and (c) above for
such violations or defaults that would not reasonably be expected to have a
material adverse effect on the ability of Purchaser to consummate the
transactions contemplated hereby. At Closing, Purchaser will validly hold the
Shares in accordance with Slovenian law.
Section 4.3 No Claims, Proceedings, Etc. There are no legal actions,
proceedings, claims or arbitrations pending or, to Purchaser's knowledge,
threatened against the Purchaser which
17
would reasonably be expected to have a material adverse effect on the ability of
Purchaser to consummate the transactions contemplated herein.
Section 4.4 Corporate Organization. The Purchaser is duly
organized and validly existing under the laws of Slovenia.
Section 4.5 Timing of Representations and Warranties. The
representations and warranties set forth in this Article IV shall be deemed to
be given upon the execution of this Agreement as well as at the Closing.
ARTICLE V
COVENANTS
Section 5.1 Covenants of Sellers and Purchaser.
(a) Reasonable Best Efforts to Satisfy Conditions. The parties shall
use their reasonable best efforts and fully cooperate to bring about the
fulfilment of the Closing Conditions on the earliest possible date.
(b) Further Assurances. Each of the Sellers and Purchaser shall
(and, with respect to Sellers, cause the Company to), at the request of the
other party to this Agreement, execute, acknowledge, deliver and file without
further consideration, all further assignments, conveyances, endorsements,
powers of attorney, consents and other documents and take such other action as
may be reasonably requested to complete the transactions contemplated by this
Agreement.
(c) Confidentiality. Each party undertakes that it shall, together
with its employees, officers, advisors and other agents hold in strict
confidence all data and information regarding the Company obtained pursuant to
this Agreement or otherwise, including the terms of this Agreement
("Confidential Information") and will not, and will use its best efforts to
ensure that such other persons do not, disclose such Confidential Information
to others without the prior written consent of the other party, except that
Purchaser may provide such Confidential Information in response to legal
process or applicable governmental regulations, but only that portion of the
Confidential Information which, in the written opinion of counsel for
Purchaser, is legally required to be furnished and further provided that
Purchaser notifies in writing Seller of its obligation. For purposes of this
subsection, "Confidential Information" shall not include any information that:
(i) is within the public domain other than as a result of a
breach of this Agreement
(ii) becomes available within the public domain other than (A)
as a result of a breach of this Agreement or (B) by means of other unauthorized
disclosure or use, provided, however that if the unauthorized disclosure is not
attributable to Purchaser, the terms of further disclosure will remain subject
to this subsection;
(iii) is provided to Purchaser by a person or entity (other
than the parties hereto) that is lawfully in possession of such information and
has the lawful right to disclose or use it; or
18
(iv) following the 90th day after the Closing, relates solely
to the business of the Company (it being understood that the terms of this
Agreement and the information as to the business or affairs of Sellers shall
continue to be Confidential Information).
(d) Public Announcements. The parties shall coordinate with each
other the public announcement and presentation to the press of the transactions
contemplated by this Agreement and related agreements, as well as the
disclosure of provisions of this Agreement and related agreements to
governmental or regulatory authorities or instrumentalities.
(e) Standstill Agreement. The parties agree that prior to the
consummation of the transactions contemplated by this Agreement, they shall not,
and shall cause their Affiliates not to, and Purchaser shall use its reasonable
best efforts to cause the CME Associates not to, and Sellers shall use their
reasonable best efforts to cause the Polic Family not to, institute any
legal proceedings against each other or relating to the Company or Euro 3 d.o.o.
and shall seek to postpone if possible and in any event take no action beyond
the minimum required to continue all existing actions between them, including
without limitation the actions underlying or relating to the following (unless,
in the good faith judgment of such party, initiating such action is required to
preserve such party's rights, which would otherwise lapse by reason of statute
of limitations or otherwise, or in circumstances where such party would
reasonably be expected to suffer irreparable damage if no action were taken):
(i) SBS Release;
(ii) SBS Slovene Withdrawal;
(iii) SBS UK Withdrawal;
(iv) Polic Release;
(v) Polic Withdrawals, if applicable;
(vi) CME Polic Release;
(vii) CME Polic Slovene Withdrawal;
(viii) CME Polic UK Withdrawal;
(ix) CME Polic Euro 3 Release;
(x) CME Polic Euro 3 Withdrawal;
(xi) CME Associates Polic Release;
(xii) CME Associates Polic Slovene Withdrawal;
(xiii) CME Associates Polic UK Withdrawal;
(xiv) CME Registration Withdrawal;
(xv) CME SBS Release;
(xvi) CME SBS Slovene Withdrawal;
(xvii) CME SBS UK Withdrawal.
Section 5.2 Covenants of Sellers.
(a) Conversion of SBS Receivables into Equity. Sellers shall take,
or shall cause to be taken, such actions as may be necessary or appropriate to
ensure that, prior to the Closing, Sellers have converted such amount of SBS
Receivables into shares in the Company owned by Sellers to the extent necessary
to ensure that at the Closing Sellers own, free and clear of all Encumbrances,
at least ninety-eight percent (98%) of the total then issued and outstanding
capital stock of the Company on a fully diluted basis. Each Seller further
agrees to cooperate with Purchaser to maximize the amount of SBS Receivables
converted into equity of the Company; provided that Sellers may choose to
forgive SBS Receivables or otherwise elect not to convert SBS
19
Receivables into equity of the Company in their reasonable discretion and such
that they comply with the other provisions of this Agreement.
(b) Conduct of Business. From the date of this Agreement and to the
earlier of (x) the Closing Date or (y) the date of termination of this Agreement
pursuant to Article VIII hereof and except as otherwise contemplated by this
Agreement, each Seller shall cause the Company to carry on its business in the
ordinary course and will cause the Company not to, without the prior express
written consent of the chief executive officer of Central European Media
Enterprises Ltd.:
(i) adopt or amend materially its corporate plan or operating
plan and budget (other than, for the avoidance of doubt, as contemplated by this
Agreement);
(ii) enter, or agree to enter, into any agreement concerning
any major contractual commitment or right, any major strategic acquisitions,
disposals or restructurings, including, but not limited to, through liquidation,
merger or other transfers;
(iii) enter, or agree to enter into, any agreement which
would constitute a Material Contract;
(iv) amend, or agree to amend, any Material Contract;
(v) amend, or agree to amend, any license set forth in
Section 3.12(i);
(vi) purchase, license or otherwise acquire any additional
Foreign Programming, or produce or agree to produce any additional programming
formats;
(vii) reallocate programming or amend any existing Foreign
Programming agreements;
(viii) reduce the Company's program amortization rate below
sixty percent (60%) for first runs of programs;
(ix) issue or grant, or agree to issue or grant, any new
shares, convertible bonds, options or warrants (other than, for the avoidance of
doubt, as contemplated by this Agreement);
(x) pay or declare any dividends or distributions of any
sort;
(xi) make or agree to make any capital expenditure or
investment other than in the ordinary course of business and that would not be
reflected as a Current Liability at Closing or that is in excess of US$100,000
(or its equivalent), or any borrowing (other than a borrowing which would
constitute an SBS Receivable) in excess of US$50,000 (or its equivalent);
(xii) amend its organizational documents (other than, for
the avoidance of doubt, as contemplated by this Agreement) or create any
subsidiary; or
(xiii) increase, or agree to increase, the compensation
(including pensions and other benefits) of its employees, officers or former
employees or officers or the dependents of any former employees or officers in
any material respect other than granting usual and customary increases in the
ordinary course of business and consistent with past practice or pursuant to
applicable law.
20
(c) Access to information. From the date of this Agreement and to
the earlier of (i) the Closing Date or (ii) the date of termination of this
Agreement pursuant to Article VIII hereof, Sellers shall allow, or otherwise
cause the Company to allow, the CME Group and its officers, employees, counsels,
accountants, auditors, representatives and other approved agents as reasonably
consented to by Sellers reasonable access during regular business hours to such
information, personnel and facilities of the Company as Purchaser shall
reasonably request, subject to applicable laws and confidentiality
considerations (including Purchaser's agreement that (x) it shall not photocopy
any documents relating to the Company provided to Purchaser or its
representatives without the prior consent of Sellers or the Company and (y) a
representative of the Company or Sellers shall be present in the data room where
documents are made available to Purchaser and its representatives); provided,
however, that this process will be conducted in a manner designed to minimize
disruption to the business of the Company; provided, further, that, to the
extent practicable, such access to information shall be conducted off of the
premises of the Company at such place and on such terms as reasonably agreed
among the parties.
(d) Employee Restructuring. Sellers shall cause the Company to
decrease its number of employees (zaposleni) such that, prior to Closing, the
Company shall have no more than twenty (20) employees (zaposleni); provided,
however, that Sellers shall consult with the CME Group prior to such
restructuring.
(e) Timing of Closing. Sellers shall use their reasonable best
efforts to satisfy all Closing Conditions not then satisfied within ten (10)
days, and in any event not later than August 15, 2000, after the elapse of the
thirtieth (30th) day from the date of publication in the Official Gazette of the
Registration Court of the registration of all resolutions of the general
meeting(s) of shareholders approving the issuance of the New Shares and Sellers'
subscription for such New Shares. Sellers shall notify Purchaser in writing
promptly of the date on which the aforementioned publication is made.
(f) Non-Compete. Each Seller and Sellers Guarantor undertakes not
to, and Sellers Guarantor agrees to cause its subsidiaries not to, engage,
directly or indirectly, in any activity which competes with the business of the
Company in Slovenia for a period of six (6) months subsequent to the Closing
Date. Each Seller and Sellers Guarantor undertakes not to, and Sellers Guarantor
agrees to cause its subsidiaries not to, enter into business relations in or
with respect to the territory of Slovenia with any of the Company's customers,
suppliers, employees or agents during such period.
(g) Release of Claims against CME and CME Associates. At or prior
to the Closing, Sellers shall
(i) deliver to Purchaser a release and waiver (the "SBS
Release"), substantially in the form, mutatis mutandis, of Exhibit F attached
hereto, whereunder each Seller and its Affiliates shall, effective upon Closing,
release CME, its Affiliates and the CME Associates from all claims, rights and
obligations, whether known or unknown, actual or contingent, asserted or held by
each Seller or its Affiliates against CME, its Affiliates and the CME Associates
arising out of or relating to the Company, except claims, rights or obligations
arising under this Agreement;
(ii) deliver to Purchaser a withdrawal (the "SBS Slovene
Withdrawal"), substantially in the form of Exhibit G attached hereto, whereunder
each Seller and its Affiliates shall, effective upon Closing, irrevocably
withdraw its lawsuit against, inter alia, CME, its
21
Affiliates and the CME Associates which is currently in the Slovene courts under
the identification "PG 564/96";
(iii) deliver to Purchaser a withdrawal (the "SBS UK
Withdrawal"), in form and substance reasonably satisfactory to the CME Group,
whereunder each Seller and its Affiliates shall, effective upon Closing,
irrevocably withdraw their litigation against, inter alia, CME, its Affiliates
and the CME Associates identified as Case Reference 1996 Folio No 1479; and
(iv) use their reasonable best efforts to cause the Polic
Family to deliver to Purchaser (A) a release and waiver (the "Polic
Release"), substantially in the form, mutatis mutandis, of Exhibit F attached
hereto, whereunder the Polic Family and its Affiliates shall, effective
upon Closing, release CME, its Affiliates and the CME Associates from all
claims, rights and obligations, whether known or unknown, actual or contingent,
asserted or held by the Polic Family or its Affiliates against CME, its
Affiliates and the CME Associates arising out of or relating to the Company and
Euro 3 TV d.o.o., and (B) such number of withdrawals (collectively, the
"Polic Withdrawal"), in form and substance reasonably satisfactory to the
CME Group, whereunder the Polic Family and its Affiliates shall, effective
upon Closing, irrevocably withdraw any actions, claims or counterclaims against,
inter alia, CME, its Affiliates and the CME Associates which at the time of the
Closing are currently in the Slovene or UK courts.
(h) Delivery of Programming Inventory. Sellers agree to deliver to
Purchaser as soon as practicable after the execution of this Agreement but in
any event within five (5) Business Days thereafter, a programming inventory
setting forth, as of a date on or about May 31, 2000, the programming inventory
of the Company.
(i) Notice of Company Shareholder Meetings. Without limiting Sellers
obligations under Section 5.3(e), Sellers undertake to provide Purchaser
promptly upon the adjournment of the general meeting of, and any other meeting
of, the shareholders of the Company (each, a "Shareholders Meeting"), and in any
event within three (3) Business Days thereafter, with a notice substantially in
the form of Exhibit H attached hereto, setting forth the business conducted at
such Shareholders Meeting, including without limitation detailing (A) the
resolutions passed thereat, and (B) the number of New Shares to be issued, the
number of other shares existing or remaining in the Company other than the New
Shares, and to whom such New Shares are to be issued.
(j) No Interference. Sellers and Sellers Guarantor agree not to, and
to cause their Affiliates not to, and to use its reasonable efforts to cause the
Company not to, take any legal or other actions which would reasonably be likely
to impede or otherwise frustrate the ability of Purchasers to purchase the
Shares, including without limitation any such action in respect of Purchaser's
efforts to obtain Slovene regulatory approval in connection with the
transactions contemplated herein.
Section 5.3 Covenants of Purchaser.
(a) Release of Non-Euro 3 Claims against Polic Family by CME.
As soon as practicable after the execution of this Agreement and in any event
within three (3) Business Days thereafter, Purchaser shall deliver to Sellers
(i) an executed release and waiver (the "CME Polic Release") substantially
in the form, mutatis mutandis, of Exhibit F attached hereto, whereunder
Purchaser and its Affiliates shall agree to release the Polic Family from
all claims, rights and obligations, whether known or unknown, actual or
contingent, asserted or held by Purchaser or its Affiliates against the
Polic Family arising out of or relating to the Company, (ii) an unexecuted
22
copy, which copy shall be executed as contemplated by paragraph (b) below, of a
withdrawal (the "CME Polic Slovene Withdrawal"), substantially in the form
of Exhibit G attached hereto, whereunder Purchaser and its Affiliates shall
irrevocably withdraw their lawsuit against the Polic Family which is
currently in the Slovene courts under the identification "IP 185/98", and (iii)
an unexecuted copy, which copy shall be executed as contemplated by paragraph
(b) below, of a withdrawal (the "CME Polic UK Withdrawal"), in form and
substance reasonably satisfactory to the Polic Family, whereunder Purchaser
and its Affiliates shall irrevocably withdraw their litigation against, inter
alia, the Polic Family identified as Case Reference 1996 Folio No 1479.
(b) Authorization of Sellers to Execute Non-Euro 3 CME Releases.
Purchaser hereby authorizes Sellers to (i) instruct Janko Pucnik, the CME
Group's attorney-in-fact with respect to the litigation underlying the CME
Polic Slovene Withdrawal, to execute, and Janko Pucnik shall, at the
Sellers' discretion, so execute, the CME Polic Slovene Withdrawal promptly
upon Seller's written instruction (and CME hereby gives Janko Pucnik a
power of attorney to execute such withdrawals) and (ii) instruct Herbert Smith,
the CME Group's attorney-in-fact with respect to the litigation underlying the
CME Polic UK Withdrawal, to execute, and such attorney-in-fact shall, at
the Sellers' discretion, so execute, the CME Polic UK Withdrawal promptly
upon Seller's written instruction. Notwithstanding the foregoing or anything to
the contrary, if Sellers do not have duly registered clear and valid title to
the Shares (as evidenced by documentation reasonably satisfactory to Purchaser)
prior to the earlier of August 15, 2000 and the termination of this Agreement in
accordance with Article VIII, then Sellers shall, within five (5) Business Days
thereafter, either (x) return such CME Polic Release, CME Polic
Slovene Withdrawal and CME Polic UK Withdrawal to Purchaser in such a
manner which ensures that the claims underlying such CME Polic Release, CME
Polic Slovene Withdrawal and CME Polic UK Withdrawal have in no way
been prejudiced, or (y) make a cash payment to Purchaser by wire transfer in
immediately available funds in the amount of US$250,000.
(c) Release of Euro 3 Claims against Polic Family by CME. At or
prior to the Closing, Purchaser shall, so long as Sellers are able to deliver to
Purchaser at Closing the Polic Release covering, inter alia, claims
relating to Euro 3 TV d.o.o., deliver to Sellers (i) a release and waiver (the
"CME Polic Euro 3 Release") substantially in the form, mutatis mutandis,
attached hereto as Exhibit F, whereunder Purchaser and its Affiliates shall
agree to release the Polic Family from all claims, rights and obligations,
whether known or unknown, actual or contingent, asserted or held by Purchaser or
its Affiliates against the Polic Family arising out of or relating to Euro
3 TV d.o.o. and (ii) a withdrawal (the "CME Polic Euro 3 Withdrawal"),
substantially in the form of Exhibit G attached hereto, whereunder Purchaser and
its Affiliates shall, effective upon Closing, irrevocably withdraw their
lawsuits against the Polic Family which are currently in the Slovene courts
under the identifications "VII Pg 27/97", "VII Pg 117/97", VII Pg 116/97", "Pg
932/96", "IV Pg 2/97" and "III Pg 236/96".
(d) Release of CME Associates Claims against Polic Family.
Purchaser shall use its reasonable best efforts to cause the CME Associates to
deliver to Sellers, at or prior to the Closing, (i) a release and waiver (the
"CME Associates Polic Release") substantially in the form, mutatis
mutandis, attached hereto as Exhibit F, whereunder the CME Associates and their
Affiliates shall agree to release, effective upon Closing, the Polic Family
from all claims, rights and obligations, whether known or unknown, actual or
contingent, asserted or held by Purchaser or its Affiliates against the
Polic Family arising out of or relating to the Company, and (ii) a
withdrawal (the "CME Associates Polic Slovene Withdrawal"), substantially
in the form of Exhibit G attached hereto, whereunder the CME Associates and
their Affiliates shall, effective upon Closing, irrevocably withdraw their
lawsuit against the Polic Family which is currently in the Slovene courts
under the
23
identification "IP 185/98", Pg 932/96-Koper", "VII Pg 236/96", "VII Pg 27/97",
and "R Lg 878/97", and (iii) a withdrawal (the "CME Associates Polic UK
Withdrawal"), in form and substance reasonably satisfactory to the Polic Family,
whereunder the CME Associates and their Affiliates shall, effective upon
Closing, irrevocably withdraw their litigation against, inter alia, the Polic
Family identified as Case Reference 1996 Folio No 1479.
(e) Release of Share Registration Claims. If a Shareholders Meeting
approves the restructuring of the share capital of the Company as contemplated
by this Agreement, then promptly thereafter, and in any event within twenty-four
(24) hours thereafter, Purchaser shall use its reasonable best efforts to
deliver to Sellers a withdrawal (the "CME Registration Withdrawal"), in form and
substance reasonably satisfactory to Sellers, which irrevocably withdraws the
five lawsuits relating to the registration of the share capital of the Company
which are currently in the Slovene courts under the identifications "VII PG
251/97", "VII PG 35/97", "III P 179/97", "VII PG 139/98" and "III P 280/98"; it
being understood by Purchaser that the failure of Purchaser to deliver such CME
Registration Withdrawal may prevent Sellers from registering the New Shares as
contemplated by this Agreement. In order for Purchaser to comply with its
obligations under this paragraph (e), Sellers agree to provide prompt notice to
the CME Group of (A) the date of the AGM and (B) the results of such
Shareholders Meeting.
(f) Release of Claims against Sellers and their Affiliates. At
or prior to the Closing, Purchaser shall:
(i) deliver to Sellers a release and waiver (the "CME SBS
Release"), substantially in the form, mutatis mutandis, of Exhibit F attached
hereto, whereunder Purchaser and its Affiliates shall, effective upon Closing,
release each Seller and its Affiliates from all claims, rights and obligations,
whether known or unknown, actual or contingent, asserted or held by Purchaser or
its Affiliates against Seller and its Affiliates arising out of or relating to
the Company, except claims, rights or obligations arising under this Agreement;
(ii) deliver to Sellers a withdrawal (the "CME SBS Slovene
Withdrawal"), substantially in the form of Exhibit G attached hereto, whereunder
Purchaser and its Affiliates shall, effective upon Closing, irrevocably withdraw
their lawsuits against, inter alia, each Seller and its Affiliates which are
currently in the Slovene courts under the identifications "VII Pg 391/99"
(withdrawal of an appeal against judgment) and "VII Pg 224/96" (withdrawal of
the suit); and
(iii) deliver to Sellers a withdrawal (the "CME SBS UK
Withdrawal"), in form and substance reasonably satisfactory to Sellers,
whereunder Purchaser and its Affiliates shall, effective upon Closing,
irrevocably withdraw their litigation against, inter alia, each Seller and its
Affiliates identified as Case Reference 1996 Folio No 1479.
(g) No Interference. Purchaser agrees not to, and to cause its
Affiliates not to, and to use its reasonable best efforts to cause the CME
Associates not to, take any legal or other actions which would reasonably be
likely to impede or otherwise frustrate the ability of Sellers to obtain the
Shares, including any such action in respect of the recapitalization of the
Company, bankruptcy proceeding, court-ordered settlement or any other
transactions related to Sellers' efforts to obtain the Shares or consummate the
transactions contemplated hereby.
(h) Documents Provided to Slovenian Regulatory Authorities.
Purchaser agrees to provide to Sellers for their review, in the presence of
Purchaser or its representatives, true and
24
accurate copies (including English translations) of all written documents filed,
submitted or otherwise provided by Purchaser to any Slovenian regulatory
authorities relating to the transactions contemplated hereby, including without
limitation the Slovenian anti-monopoly authorities, promptly after the date of
their filing or submission to such regulatory authority; provided, however, that
neither Sellers nor their Affiliates, representatives, employees or agents may
copy or otherwise duplicate such materials without the prior written consent of
Purchaser.
(i) Anti-Monopoly Approval. Purchaser agrees (i) to use all
reasonable efforts to obtain as soon as practicable the approval of the
Slovenian anti-monopoly authorities to the acquisition of the Shares by
Purchaser, (ii) to update Sellers on a reasonable basis as to the status of the
anti-monopoly filing (including without limitation any preliminary indications
as to the approval or rejection of such filing by the regulatory authorities),
and (iii) promptly to inform Sellers if Purchaser or its Affiliates receive a
final, binding and non-appealable decision from the Slovenian anti-monopoly
authorities prohibiting Purchaser's purchase of the Shares as contemplated
herein.
ARTICLE VI
CONDITIONS TO CLOSING
---------------------
Section 6.1 Conditions to Obligations of Sellers and Purchaser. At
the option of each of Sellers and Purchaser, the respective obligations of the
Sellers and the Purchaser to complete the sale of the Shares contemplated by
this Agreement are subject to the fulfilment, on or before the Closing, of the
following conditions:
(a) Competition Approval. All required consents or approvals of the
Slovenian anti-monopoly authorities to the acquisition of the Shares by
Purchaser have been obtained or waived, and all copies thereof delivered by
Purchaser to Sellers, or any applicable waiting period relating thereto shall
have expired.
(b) No Order, Injunction. No order of any court or governmental or
other agency or authority having jurisdiction over any party hereto shall have
been issued and be in effect which prohibits or materially restrains the
completion of the transactions contemplated hereby.
Section 6.2 Conditions to Obligations of Seller. At the option of
Sellers, the obligations of Sellers to complete the sale of the Shares are
further subject to the fulfilment, to the reasonable satisfaction of Sellers, on
or before the Closing, of the following conditions:
(a) Representations and Warranties True. The representations and
warranties set forth in Article IV shall be true and correct in all material
respects as of the date when made and on and as of the Closing Date with the
same force and effect as though such representations and warranties had been
made on and as of the Closing Date, except where such representations and
warranties make specific reference to a date as of which they apply.
(b) Performance. Purchaser shall have performed in all material
respects its covenants contained in this Agreement required to be performed on
or prior to the Closing Date.
(c) Delivery of Releases. Each of the following documents shall have
been duly authorized, executed (other than the documents noted in sub-paragraphs
(ii) and (iii) below) and delivered to Sellers by Purchaser and the CME
Associates, as applicable:
25
(i) CME Polic Release;
(ii) CME Polic Slovene Withdrawal;
(iii) CME Polic UK Withdrawal;
(iv) CME Polic Euro 3 Release (but only if Sellers are
delivering at Closing the Polic Release covering, inter alia, claims relating to
Euro 3 d.o.o.);
(v) CME Polic Euro 3 Withdrawal (but only if Sellers are
delivering at Closing the Polic Release covering, inter alia, claims relating to
Euro 3 d.o.o.);
(vi) CME Associates Polic Release;
(vii) CME Associates Polic Slovene Withdrawal;
(viii) CME Associates Polic UK Withdrawal;
(ix) CME Registration Withdrawal;
(x) CME SBS Release;
(xi) CME SBS Slovene Withdrawal;
(xii) CME SBS UK Withdrawal.
(d) Anti-Monopoly Approval. The evidence provided to Sellers of the
consent or approval of the Slovenian Anti-Monopoly authorities to the
transactions contemplated hereby shall be reasonably satisfactory to Sellers.
Section 6.3 Conditions to Obligations of Purchaser. At the option of
the Purchaser, the obligations of Purchaser to complete the sale of the Shares
are further subject to the fulfilment, to the reasonable satisfaction of
Purchaser, on or before the Closing, of the following conditions:
(a) Representations and Warranties True. The representations and
warranties set forth in Article III shall be true and correct in all material
respects as of the date when made and on and as of the Closing Date with the
same force and effect as though such representations and warranties had been
made on and as of the Closing Date, except where such representations and
warranties make specific reference to a date as of which they apply.
(b) Performance. Sellers shall have performed in all material
respects their covenants contained in this Agreement required to be performed on
or prior to the Closing Date.
(c) No Material Adverse Change. Since the date hereof, no event
or circumstance having a Company Material Adverse Effect shall have occurred.
(d) Due Diligence.
(i) Purchaser shall have conducted a reasonably satisfactory
due diligence investigation, including without limitation a review of the
Company's business, financial, tax and legal activities, of the Company and the
Shares (the "Due Diligence"), and any issues which Purchaser may have arising
from such Due Diligence have been reasonably satisfactorily resolved as
contemplated by sub-paragraph (ii) below. Such Due Diligence shall include, but
need not be limited to, corporate records, financial records, tax, inventory
(library), publisher's liability, compliance with public media and broadcasting
laws, experience and status of contractual commitments with suppliers, agents
and customers. For purposes of the Due Diligence, the Company shall provide to
the CME Group and its officers, employees, counsels, accountants, auditors,
representatives and other approved agents as reasonably consented to by Sellers
reasonable access during normal business hours throughout the period after the
signing hereof and prior to the Closing, to all locations of the Company and the
management of the Company and such books and records and other documents
relating to the business of the Company as Purchaser
26
reasonably deems necessary (including, but not exclusively, Accounts audited by
the Auditors); provided that Purchaser agrees that (w) it shall not photocopy
any documents relating to the Company provided to Purchaser or its
representatives without the prior consent of Sellers or the Company, (x) a
representative of the Company or Sellers shall be present in the data room where
documents are made available to Purchaser and its representatives, (y) this
process will be conducted in a manner designed to minimize disruption to the
business of the Company and (z) to the extent practicable, such due diligence
shall be conducted off of the premises of the Company at such place and on such
terms as reasonably agreed among the parties.
(ii) If, in the reasonable judgment of Purchaser, the Due
Diligence discloses any information not known to Purchaser at the date hereof
regarding events or circumstances with respect to the Company which have or
would reasonably be expected to have, in the aggregate, a Company Material
Adverse Effect, then Purchaser shall advise Sellers of such fact and the parties
shall engage in further negotiations to determine if Purchaser's concerns can be
resolved. If Purchaser's concerns are not, in its reasonable judgment, resolved,
then Purchaser shall so advise Sellers and Purchaser shall have the right to
terminate this Agreement.
(e) Capital Increase; Resignation of Directors. The Company's
general meeting of shareholders has duly adopted (i) a resolution waiving the
pre-emption rights of the shareholders of the Company under applicable Slovene
law, (ii) a resolution authorizing the increase of the Company's capital in such
amount as to satisfy the definition of the term "Shares" herein by issuing new
shares (the "New Shares") and allowing Sellers to subscribe and pay in such New
Shares by the cancellation of SBS Receivables, and (iii) a resolution
authorizing, upon the transfer of the Shares to Purchaser at the Closing, the
resignation or termination of the current members of the management and
supervisory board and duly appointing the nominees of Purchaser to such Board.
(f) Registration of Shareholder Resolution. The appropriate Slovene
court has registered the Company's shareholder resolutions mentioned in
paragraph (e) above.
(g) Subscription for Shares. Sellers have subscribed for the New
Shares and fully paid for such New Shares.
(h) Registration of Capital Increase. The appropriate Slovene court
has registered the increase of the Company's capital and the Company has duly
issued the New Shares, delivered such New Shares to Sellers and registered each
Seller's ownership of such New Shares in the shareholder registry of the
Company, and Sellers have provided Purchaser with evidence, to the reasonable
satisfaction of Purchaser, of (i) such registrations, (ii) the obtainment of any
consents or waivers required with respect to any preemptive or similar rights
any shareholder may have had in connection with the issuance of the New Shares,
and (iii) the expiration of any time periods under applicable law or the charter
documents of the Company for challenges to such registrations or the convening
of, or actions taken at, the shareholders meeting(s) approving the issuance of
the New Shares and the subscription by Sellers for such New Shares.
(i) Ownership by Seller; Non-Ownership by Polic Family. After the
aforementioned increase of capital, (i) Sellers hold at least ninety-eight
percent (98%) of all issued and outstanding shares of the Company on a fully
diluted basis, and (ii) no member of the Polic Family, whether directly or
indirectly, owns or controls any capital stock or other securities of the
Company (other than any indirect ownership by any member of the Polic
Family in an immaterial amount, which ownership is not known to Sellers).
27
(j) Employees. The Company has decreased the number of employees
(zaposleni) to not more than twenty (20) as contemplated by Section 5.2(d) and
Sellers have delivered to Purchaser a certificate setting forth an accurate and
complete list of all of employees of the Company as of the Closing Date, listing
their age, their position and their present annual remuneration (including any
right to a bonus, a benefit in-kind or a right to profit-sharing and any right
to a departure or retirement indemnity).
(k) Legal Opinion. Seller has delivered to Purchaser a legal opinion
of independent legal counsel reasonably acceptable to Purchaser, which legal
opinion is in form and substance satisfactory to Purchaser and addresses all of
the matters set forth in Exhibit I attached hereto.
(l) Delivery of Releases. Each of the following documents shall have
been duly authorized, executed and delivered to Purchaser by Seller and the
Polic Family, as applicable:
(i) SBS Release;
(ii) SBS Slovene Withdrawal;
(iii) SBS UK Withdrawal;
(iv) Polic Release;
(v) Polic Withdrawal, if applicable.
(m) Reconciled Accounts. The Auditors shall have prepared and
delivered to Purchaser at least ten (10) Business Days before the Closing Date
the Reconciled Accounts.
(n) Certificates Regarding Capital Structure. Sellers shall have
delivered to Purchaser at least five (5) Business Days prior to the Closing a
certificate, substantially in the form of Exhibit J attached hereto, setting
forth and certifying as of the Closing (i) the capital structure of the Company,
the number of shares owned by Sellers and the certificate numbers corresponding
to such shares, and (ii) to Sellers' knowledge based on the share register of
the Company, (A) the identity of all holders of shares in the Company, (B) the
number of shares in the Company owned by each such holder, and (C) the
certificate numbers corresponding to each holder's shares.
ARTICLE VII
CLOSING
-------
Section 7.1 Closing Date. The acquisition of the Shares pursuant to
this Agreement shall be completed on the earliest practicable Business Day
following the fulfilment (or, if applicable, waiver) of all of the Closing
Conditions set forth in Article VI hereof, at the offices of Purchaser or such
other place as the parties may agree. Either Sellers or Purchaser may provide
written notice to the other indicating that all Closing Conditions have been
either satisfied (or, if applicable, waived) and suggesting a Closing Date not
less than ten (10) nor more than fifteen (15) Business Days after the date of
such notice. Unless the party receiving such notice has a reasonable basis to
object, the Closing Date shall be the date suggested in such notice.
Section 7.2 Actions Taken at Closing. At the Closing, the parties
shall exchange the following documents and take the following actions:
(a) each party shall execute a certificate confirming the fulfilment
(or, if applicable, waiver) of the Closing Conditions running to the benefit of
such party;
28
(b) Sellers shall (i) endorse in favor of Purchaser each share
certificate representing the Shares and deliver same to Purchaser (each such
share certificate having the appropriate certificate number and the face value
of the shares marked on its face), and (ii) advise the Company of such
endorsement (and the number of Shares concerned) and cause the Company to
register the transfer of the Shares to Purchaser in the share register of the
Company;
(c) Purchaser shall, as contemplated by Section 2.3, (i) instruct
its bank to pay the Purchase Price to Sellers, or (ii) (A) instruct the escrow
agent to pay to Sellers the Purchase Price out of the Escrow Amount, and (B)
instruct its bank to pay the difference between the Escrow Amount and the
Purchase Price, if any, or (iii) execute and deliver to Sellers the Promissory
Note and the Pledge Agreement;
(d) Sellers shall, if applicable, instruct the escrow agent to pay
to Central European Media Enterprises Ltd. all amounts, if any, of the Escrow
Amount remaining in the escrow account after payment as contemplated by Section
7.2(c)(ii)(A) above;
(e) Sellers shall deliver to Purchaser the resignations of all
members of the Company's management and supervisory boards, which resignations
shall confirm in writing that such members have no claims, or otherwise waive
any claims they may have, against the Company;
(f) Sellers shall execute and deliver to Purchaser the SBS
Assignment Agreement; and
(g) Sellers and Purchaser shall execute a cross-receipt,
substantially in the form of Exhibit K attached hereto.
ARTICLE VIII
TERMINATION
-----------
Section 8.1 Right of Termination. This Agreement may be terminated
and the transactions contemplated hereby may be abandoned:
(a) at any time, upon the mutual written consent of Sellers, on
the one hand, and Purchaser, on the other hand;
(b) by Sellers, on the one hand, or Purchaser, on the other hand, at
any time after the Slovenian anti-monopoly authorities have issued a final,
binding and non-appealable decision prohibiting the consummation of the
transactions as contemplated herein; or
(c) at any time after August 18, 2000, by Sellers, on the one hand,
or Purchaser, on the other hand, if the Closing shall not have occurred on or
before such date; provided that the right to terminate this Agreement pursuant
to this Section 8.1(c) shall not be available to any party whose failure to
fulfil any of its obligations under this Agreement has been the cause of or
resulted in the failure of the Closing to occur on or before such date.
Section 8.2 Effect of Termination. If this Agreement is terminated
pursuant to Section 8.1 hereof, all further obligations of Sellers and Purchaser
hereunder shall terminate and no damages or other compensation shall be payable
by any party, except that nothing in this Section
29
8.2 shall relieve any party hereto of any liability for any breach of this
Agreement that occurred prior to the termination of this Agreement.
ARTICLE IX
INDEMNIFICATION
---------------
Section 9.1 Survival of Representations and Covenants. The
representations and warranties set forth in Articles III and IV shall survive
the Closing until the first anniversary thereof; provided that if written notice
of a claim for indemnification hereunder giving reasonable details of the claim
is delivered by a party seeking indemnification hereunder to a party obligated
to make an indemnification payment hereunder prior to the expiration of the
above mentioned survival period, then such representation and warranty shall
continue to survive with respect to that particular claim only so long as legal
proceedings are instituted and served with respect to the claim within twelve
(12) months of such written notice. Unless otherwise stated herein, the
covenants and agreements of the parties hereto shall survive the Closing without
limit.
Section 9.2 Indemnification.
(a) Indemnification by Sellers. After the Closing, Sellers shall,
subject to Section 9.3, jointly and severally indemnify Purchaser from and
against any and all Losses suffered by Purchaser resulting from, subject to the
time limitation contained in Section 9.1 hereof, (i) any breach by any Seller of
any representation or warranty under Article III hereof, and/or (ii) the failure
of any Seller to perform any of the covenants to be performed by it pursuant to
this Agreement and/or (iii) any claims by any employees or former employees of
the Company as a result of the restructuring contemplated by Section 5.2(d). In
case Purchaser receives notice of any claim against Purchaser which may be
subject to indemnification by Sellers in favor of Purchaser, it shall promptly
notify Sellers, and Sellers shall thereupon have the right to assume the defence
against such claim and to contest it or agree to any settlement or compromise of
it; provided, however, that Sellers may not compromise or settle such claim
without Purchaser's consent (which shall not be unreasonably withheld) unless
(x) there is no finding or admission of any violation of law by Purchaser and no
effect on any other claims that may be made against Purchaser and (y) the sole
relief provided is monetary damages that are paid in full by Sellers.
(b) Indemnification by Purchaser. After the Closing, Purchaser
shall, subject to Section 9.3, indemnify Sellers from and against any and all
Losses, resulting from, subject to the time limitation contained in Section 9.1
hereof, (i) any breach by Purchaser of any representation or warranty under
Article IV hereof, and/or (ii) the failure of Purchaser to perform any of the
covenants to be performed by it pursuant to this Agreement. In case Sellers
receive notice of any claim against Sellers which may be subject to
indemnification by Purchaser in favour of Sellers, Sellers shall promptly
notify Purchaser, and Purchaser shall thereupon have the right to assume the
defense against such claim and to contest it or agree to any settlement or
compromise of it; provided, however, that Purchaser may not compromise or
settle such claim without Sellers' consent (which shall not be unreasonably
withheld) unless (x) there is no finding or admission of any violation of law
by Sellers and no effect on any other claims that may be made against Sellers,
and (y) the sole relief provided is monetary damages that are paid in full by
Purchaser.
30
Section 9.3 Limitations on Indemnification.
(a) The amount of any loss indemnifiable by any indemnifying party
pursuant to this Article IX shall exclude lost profits and consequential
damages.
(b) No amount shall be payable by Sellers or Purchaser in respect of
any Loss if such Loss would not have arisen but for some voluntary act,
omission, transaction or arrangement carried out by or on behalf of the party
seeking indemnification hereunder, other than the holding of Shares and the
performance by any party of its obligations under this Agreement and any other
agreements entered into in connection with this Agreement.
(c) No party shall be entitled to be indemnified more than once
under this Agreement for the same Loss in the event that more than one
representation, warrant or covenant has been breached.
Section 9.4 Limitations on Liability. No claims arising under or in
connection with this Agreement shall be allowed unless such claims, individually
or in the aggregate, exceed US$ 10,000. For the avoidance of doubt the preceding
sentence does not require the deduction of any amounts from a permitted claim.
The liability of any party hereto for all claims under or in connection with
this Agreement shall in no event exceed US$12,500,000 (twelve million five
hundred thousand US Dollars).
Section 9.5 Exclusive Remedy. After the Closing, the indemnification
provided in this Article IX shall be the exclusive remedy for breach of this
Agreement, except that any party shall have the right (in addition to its rights
under this Article IX) to seek specific performance of the non-monetary
obligations of the other party. It is expressly understood and agreed that,
except by virtue of the indemnification provisions set forth in this Article IX,
Purchaser is not entitled to any adjustment, reduction, set-off, damages, or the
like in connection with the Purchase Price or interest thereon or otherwise in
connection with the transactions contemplated by this Agreement.
ARTICLE X
GUARANTEES
----------
Section 10.1 Guarantee of Sellers.
(a) Sellers Guarantor irrevocably and unconditionally guarantees the
payment by Sellers of any and all amounts (including without limitation damages
for breaches) which after the date hereof have become due and payable by Sellers
to Purchaser under this Agreement, up to a maximum aggregate liability of
US$12,500,000 (twelve million five hundred thousand US Dollars), but only if (i)
30 days shall have elapsed after Purchaser shall have notified Sellers that such
amounts shall have become due and payable under this Agreement (unless Sellers
have been liquidated or otherwise wound up, in which case Purchaser may
immediately turn to Sellers Guarantor for payment), or (ii) if Purchaser's claim
for such amount shall have been referred to arbitration pursuant to Section
11.2, such amount shall have been finally determined pursuant to Section 11.2 to
be due and payable by Sellers under this Agreement. If any Seller shall fail in
any respect to fulfill any such payment obligations within the applicable time
period (including any payment period permitted by a final and binding
arbitration decision) provided for in sub-paragraphs (i) and (ii) in the
immediately preceding sentence, Purchaser shall be at liberty to act, and
Sellers Guarantor shall be liable, as if Sellers Guarantor were the party
principally bound by such payment obligations.
31
(b) The obligations of Sellers Guarantor under this Section 10.1
shall not be affected by any act, omission, matter or thing which, but for these
provisions, might operate to release or otherwise exonerate Sellers Guarantor
from such obligations or affect such obligations, including and whether or not
known to Sellers Guarantor:
(i) any time, indulgence, waiver or consent at any time
given to any Seller or any other person;
(ii) any compromise or release of, or abstention from
perfecting or enforcing, any rights or remedies against any Seller or any other
person;
(iii) any legal limitation, disability, incapacity or other
circumstance relating to any Seller or any person or any amendment or supplement
to or variation of the terms of this Agreement; or
(iv) any irregularity, unenforceability or invalidity of any
obligations of any Seller under this Agreement or the dissolution, amalgamation,
reconstruction or insolvency of any Seller.
(c) Sellers Guarantor makes the following representations,
warranties and agreements:
(i) Sellers Guarantor (A) is a duly organized and validly
existing corporation under the laws of Luxembourg and (B) has the power and
authority in all material respects to own its property and assets and to
transact the business in which it is engaged.
(ii) Sellers Guarantor has the corporate power to execute and
deliver this Agreement and to consummate the transactions contemplated herein by
it and has taken all necessary corporate action to authorize the execution,
delivery and performance by it of this Agreement. Sellers Guarantor has duly
executed and delivered this Agreement and (assuming due authorization, execution
and delivery by the other parties hereto) this Agreement constitutes its legal,
valid and binding obligation enforceable against it in accordance with its
terms, subject to applicable bankruptcy, reorganization, insolvency, moratorium
and other laws affecting creditors' rights generally from time to time in effect
and to general principles of equity.
(iii) Neither the execution and delivery of this Agreement by
Sellers Guarantor, nor consummation of the transactions contemplated herein by
it, will in any material respect (A) violate or result in a breach of any
provision of, or constitute a default (or an event which, with notice or lapse
of time or both, would constitute a default) under (x) the governing documents
of Sellers Guarantor; or (y) any material agreement to which Sellers Guarantor
is a party or by which Sellers Guarantor or any of its material assets may be
bound; or (B) violate any law, order, judgment or decree of any court or other
governmental authority applicable to Sellers Guarantor.
(d) The guarantee of the Sellers Guarantor under this Section 10.1
is a continuing one and all liabilities to which it applies or may apply under
the terms hereof shall be conclusively presumed to have been created in reliance
hereon. No failure or delay on the part of Purchaser in exercising any right,
power or privilege hereunder and no course of dealing between Sellers Guarantor
or Purchaser shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, power or privilege hereunder preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
The rights, powers and remedies herein expressly provided
32
are cumulative and not exclusive of any rights, powers or remedies which
Purchaser would otherwise have. No notice to or demand on Sellers Guarantor in
any case shall entitle Sellers Guarantor to any other further notice or demand
in similar or other circumstances or constitute a waiver of the rights of
Purchaser to any other or further action in any circumstances without notice or
demand.
(e) The guarantee of the Sellers Guarantor under this Section 10.1
shall be binding upon Sellers Guarantor and its successors and assigns and shall
inure to the benefit of Purchaser and its successors and assigns, provided that
Sellers Guarantor may not transfer or assign any or all of its rights and
obligations hereunder without the prior written consent of Purchaser.
Section 10.2 Guarantee of Purchaser.
(a) Purchaser Guarantor irrevocably and unconditionally guarantees
the payment by Purchaser of any and all amounts (including without limitation
damages for breaches) which after the date hereof have become due and payable by
Purchaser to Sellers under this Agreement, up to a maximum aggregate liability
of US$12,500,000 (twelve million five hundred thousand US Dollars), but only if
(i) 30 days shall have elapsed after Sellers shall have notified Purchaser that
such amounts shall have become due and payable under this Agreement (unless
Purchaser has been liquidated or otherwise wound up, in which case Sellers may
immediately turn to Purchaser Guarantor for payment), or (ii) if Sellers' claim
for such amount shall have been referred to arbitration pursuant to Section
11.2, such amount shall have been finally determined pursuant to Section 11.2 to
be due and payable by Purchaser under this Agreement. If Purchaser shall fail in
any respect to fulfill any such payment obligations within the applicable time
period (including any payment period permitted by a final and binding
arbitration decision) provided for in sub-paragraphs (i) and (ii) in the
immediately preceding sentence, Sellers shall be at liberty to act, and
Purchaser Guarantor shall be liable, as if Purchaser Guarantor were the party
principally bound by such payment obligations.
(b) The obligations of Purchaser Guarantor under this Section 10.2
shall not be affected by any act, omission, matter or thing which, but for these
provisions, might operate to release or otherwise exonerate Purchaser Guarantor
from such obligations or affect such obligations, including and whether or not
known to Purchaser Guarantor:
(i) any time, indulgence, waiver or consent at any time
given to Purchaser or any other person;
(ii) any compromise or release of, or abstention from
perfecting or enforcing, any rights or remedies against Purchaser or any other
person;
(iii) any legal limitation, disability, incapacity or other
circumstance relating to Purchaser or any person or any amendment or supplement
to or variation of the terms of this Agreement; or
(iv) any irregularity, unenforceability or invalidity of any
obligations of Purchaser under this Agreement or the dissolution, amalgamation,
reconstruction or insolvency of Purchaser.
(c) Purchaser Guarantor makes the following representations,
warranties and agreements:
33
(i) Purchaser Guarantor (A) is a duly organized and validly
existing corporation under the laws of The Netherlands and (B) has the power and
authority in all material respects to own its property and assets and to
transact the business in which it is engaged.
(ii) Purchaser Guarantor has the corporate power to execute
and deliver this Agreement and to consummate the transactions contemplated
herein by it and has taken all necessary corporate action to authorize the
execution, delivery and performance by it of this Agreement. Purchaser Guarantor
has duly executed and delivered this Agreement and (assuming due authorization,
execution and delivery by the other parties hereto) this Agreement constitutes
its legal, valid and binding obligation enforceable against it in accordance
with its terms, subject to applicable bankruptcy, reorganization, insolvency,
moratorium and other laws affecting creditors' rights generally from time to
time in effect and to general principles of equity.
(iii) Neither the execution and delivery of this Agreement by
Purchaser Guarantor, nor consummation of the transactions contemplated herein by
it, will in any material respect (A) violate or result in a breach of any
provision of, or constitute a default (or an event which, with notice or lapse
of time or both, would constitute a default) under (x) the governing documents
of Purchaser Guarantor; or (y) any material agreement to which Purchaser
Guarantor is a party or by which Purchaser Guarantor or any of its material
assets may be bound; or (B) violate any law, order, judgment or decree of any
court or other governmental authority applicable to Purchaser Guarantor.
(d) The guarantee of the Purchaser Guarantor under this Section 10.2
is a continuing one and all liabilities to which it applies or may apply under
the terms hereof shall be conclusively presumed to have been created in reliance
hereon. No failure or delay on the part of Sellers in exercising any right,
power or privilege hereunder and no course of dealing between Purchaser
Guarantor or Sellers shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, power or
privilege. The rights, powers and remedies herein expressly provided are
cumulative and not exclusive of any rights, powers or remedies which Sellers
would otherwise have. No notice to or demand on Purchaser Guarantor in any case
shall entitle Purchaser Guarantor to any other further notice or demand in
similar or other circumstances or constitute a waiver of the rights of Sellers
to any other or further action in any circumstances without notice or demand.
(e) The guarantee of the Purchaser Guarantor under this Section 10.2
shall be binding upon Purchaser Guarantor and its successors and assigns and
shall inure to the benefit of Purchaser and its successors and assigns, provided
that Purchaser Guarantor may not transfer or assign any or all of its rights and
obligations hereunder without the prior written consent of Sellers.
ARTICLE XI
MISCELLANEOUS
-------------
Section 11.1 Governing Law. This Agreement shall be governed by, and
construed and interpreted in accordance with, the laws of the State of New York,
U.S.A.
Section 11.2 Dispute Resolution. Any dispute, controversy or claim
between the parties hereto arising out of or related to this Agreement, or the
breach, termination or invalidity thereof, shall be settled by arbitration in
accordance with the arbitration rules of the International Chamber of Commerce.
The arbitral tribunal shall be composed of a sole arbitrator, which
34
arbitrator shall not be resident in Slovenia and shall be a lawyer qualified
under New York law, appointed by the parties hereto involved in such dispute;
provided, however, if the parties are unable to agree on an arbitrator within 14
days, then an arbitrator (subject to the same criteria noted in the preceding
clause) shall be appointed by the International Chamber of Commerce. The place
of arbitration shall be London, England (unless applicable Slovene law requires
the place of arbitration to be in Slovenia, in which case the place of
arbitration shall be Ljubljana, Slovenia). The language to be used in the
arbitral proceedings shall be English. The decision of the arbitrator shall be
final and binding on the parties.
Section 11.3 Notices. All notices and other communications that are
required or permitted to be given under this Agreement shall be in writing and
shall be deemed to have been duly given if delivered personally or by registered
mail (return receipt requested) or facsimile transmission (confirmed by
registered mail). Notices shall be sent to the appropriate party at the
following addresses or facsimile numbers given below (or such other address or
facsimile number as shall be specified by notice given hereunder):
(a) If to any Seller or Seller Guarantor, to:
SBS Broadcasting S.A.
8-10 rue Mathias Hardt
L-1717 Luxembourg
Attention: Corporate Secretary
Facsimile: +35 2 40 7804
with copies to:
SBS Broadcasting S.A.
36 St. Ives Street
London SW3 2ND, England
Attention: Corporate Secretary
Facsimile: +44 020 7590 3601
and
Sullivan & Cromwell
St. Olave's House
9a Ironmonger Lane
London EC2V 8EY, England
Attention: William A. Plapinger
Facsimile: +44 020 7710 6565
(b) If to Purchaser or Purchaser Guarantor, to:
Superplus Holding d.d.
Kranjceva 26
Ljubljana, Slovenia 1000
35
Attention: Marjetka Horvat, General Director
with a copy to:
CME Group
Swan House 52-53 Poland Street,
London W1V 3DF
United Kingdom
Facsimile: 44 (0)207 292 7948
Attention: Legal Department
Section 11.4 Costs and Expenses. Except as otherwise expressly
provided, all costs and expenses incurred in connection with the preparation,
negotiation and implementation of this Agreement and the transactions
contemplated hereby shall be borne by the party incurring such costs and
expenses; provided, however, that the costs of the preparation of the Reconciled
Accounts shall be borne by Purchaser.
Section 11.5 Entire Agreement. This Agreement, together with its
exhibits and schedules (which constitute an integral part thereof) embodies and
sets forth the entire agreement and understanding of the parties and supersedes
all prior oral or written negotiations, agreements, representations
understandings or arrangements (if any) between the parties with respect to the
subject matter contained therein, including without limitation those portions of
the Termination Agreement dated September 28, 1999 between SBS Broadcasting S.A.
and Central European Media Enterprises Ltd. relating to matters in Slovenia. No
party hereto shall be entitled to rely on any document, agreement, understanding
or arrangement which is not expressly set forth in this Agreement or the
exhibits and schedules hereto.
Section 11.6 Assignment. This Agreement and all of the provisions
hereof shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns, but neither this Agreement
nor any of the rights, interests or obligations hereunder shall be assigned by
any of the parties hereto without the prior written consent of the other party.
Section 11.7 Counterparts. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same legal
document.
Section 11.8 Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be unenforceable or
invalid under applicable law, such provision shall be ineffective only to the
extent of such unenforceability or invalidity, and the remaining provisions of
this Agreement shall continue to be binding and in full force and effect.
Section 11.9 No Third Party Rights. Nothing in this Agreement,
express or implied, is intended to confer upon any person, other than the
parties hereto and their respective successors and assigns, any rights or
remedies of any nature whatsoever under or by reason of this Agreement.
Section 11.10 Waiver. None of the terms of this Agreement shall be
deemed to have been waived by any party hereto, unless such waiver is in writing
and signed by that party. The waiver by any party hereto of a breach of any
provision of this Agreement shall not operate or be
36
construed as a waiver of any other provision of this Agreement or of any further
breach of the provision so waived. No extension of time for the performance of
any obligation or act hereunder shall be deemed to be an extension of time for
the performance of any other obligation or act.
Section 11.11 Amendments; Modifications. This Agreement may not be
modified, amended or changed in any respect except in writing duly signed by the
party against whom such modification, amendment or change is sought.
Section 11.12 Release of Directors and Officers of the Company.
Purchaser hereby agrees to release the individual directors and officers of the
Company's Supervisory Board and its Executive Management Board who shall be
resigning at the Closing from and against any and all claims, rights and
obligations, whether known or unknown, actual or contingent, asserted or held by
Purchaser or its Affiliates against such officer or director arising out of or
relating to the Company or the transactions contemplated hereby, other than any
claims, rights or obligations arising out of the gross negligence or wilful
misconduct of such director or officer.
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IN WITNESS WHEREOF, the parties have signed this Agreement on the
date set forth at the beginning of this Agreement, in two original copies, each
party acknowledging receipt of one such copy.
TV-IN d.d.
- - ---------------------------------
Name:
Title:
IMPALER d.o.o.
- - ---------------------------------
Name:
Title:
SBS BROADCASTING S.A.
- - ---------------------------------
Name:
Title:
Superplus HOLDING d.d.
- - ---------------------------------
Name:
Title:
38
CME MEDIA ENTERPRISES B.V.
- - ---------------------------------
Name:
Title:
39