TERM PROMISSORY NOTE
October 2, 1996
FOR VALUE RECEIVED, Central European Media Enterprises Ltd., a Bermuda
corporation ("CME"), promises to pay to the order of Ronald S. Lauder
("Lauder"), or assigns, on the earlier of the date of closing of the public
offering of CME's Class A Common Stock covered by SEC Registration Statement No.
333-12699 (or any public offering in lieu thereof) (in either case, a "Public
Offering") or October 1, 1998, at Lauder's New York City offices or at such
other place as Lauder may from time to time designate, the lesser of (i)
$20,000,000, and (ii) the unpaid principal amount as reflected on Annex A
hereto, which amount shall be payable in United States dollars. Lauder is hereby
authorized by CME to record on Annex A hereto the amount of (i) loans made by
Lauder to CME and (ii) each payment of principal received by Lauder, it being
understood, however, that failure to make any such notation shall not affect the
rights of Lauder or the obligations of CME hereunder in respect of this Note.
Loans hereunder shall be made only in $2,000,000 increments on five days prior
written notice to Lauder and shall not exceed an aggregate of $20,000,000,
provided that Lauder shall not be obligated to make any advance if an Event of
Default (or any event which with the giving of notice would constitute an Event
of Default) has occurred and is continuing, provided further that Lauder shall
not be required to make any advance on or after the maturity date hereof.
The following terms shall apply to this Note:
I. Interest. Interest shall accrue and be payable on the outstanding
principal amount of this Note at an annual rate from time to time of LIBOR plus
2%, payable on November 1, 1996 and the first business day of each month
thereafter (each a "Payment Date"). LIBOR for this purpose shall be one month
LIBOR as such rate shall appear on the business day prior to each Payment Date
on the Telerate page 3750 (rounded upward, if necessary, to the nearest 1/16th
of 1%) for deposits in U.S. dollars for a one-month period.
2. Payment not on a Business Day. If any payment of principal of or
interest on this Note shall become due on a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required to close,
such payment shall be made on the next succeeding business day and such
extension of time shall in such case be included in computing interest in
connection with such payment.
3. Prepayment. CME may, upon at least five days' notice, prepay this Note,
in whole or in increments of $2,000,000, without premium or penalty, provided
that CME shall reimburse Lauder within five days after demand for any resulting
loss or expense incurred by him in prepaying his funding sources, but only those
funding sources which have provided him with funding carrying an interest rate
based on LIBOR, after any prepayment (or payment upon the closing of a Public
Offering) by CME of $10,000,000 or more. In the event that the interest period
under Lauder's funding sources expires after CME delivers a notice of prepayment
(or payment in the case of a Public Offering) but before CME makes the
prepayment (or payment in the case of a Public Offering), Lauder agrees that any
borrowings (or continuation of outstanding borrowings) from his funding sources
supporting his loan to CME will be made using the shortest interest period
available to him.
4. Costs and Expenses. CME shall pay all reasonable costs and
expenses, including reasonable attorneys' fees, incurred by Lauder in
collecting or enforcing this Note.
5. Defaults. (a) The occurrence of any of the following shall
constitute an "Event of Default", but, in the case of clauses (iv), (v) or
(vi) below, only after Lauder has given written notice to the Company
declaring such event an "Event of Default":
(i) failure to pay principal when due;
(ii) the commencement by CME of any case, proceeding or other
action relating to it in bankruptcy or seeking any relief under any
bankruptcy, insolvency, or similar act or law of any jurisdiction,
domestic or foreign, now or hereafter existing; CME shall apply for a
receiver, custodian or trustee for itself or for all or a substantial part
of its property; CME shall make a general assignment for the benefit of
its creditors; CME shall be unable to, or shall admit in writing its
inability to, pay its debts as they become due; or CME shall take any
action indicating its consent to, approval of, or acquiescence in any of
the foregoing;
(iii) any other commencement of any case, proceeding or other
action against CME in bankruptcy or seeking any relief under any
bankruptcy, insolvency, or similar act or law of any jurisdiction,
domestic or foreign, now or hereafter existing; or a receiver, custodian
or trustee for CME or for all or a
substantial part of its property shall be appointed; and in each such case
such condition shall continue unstayed and in effect for a period of 90
days;
(iv) failure to pay within five days of the due date thereof
any interest, fees or other amounts (other than principal) payable
hereunder;
(v) judgments or orders for the payment of money individually,
or in the aggregate, in excess of $10,000,000 shall be rendered against
CME and such judgments or orders shall continue unpaid, unstayed on or
pending appeal, undischarged, unbonded or undismissed, in each case for a
period of 30 days or more; and
(vi) CME shall fail to make payment in respect of any Debt
which individually, or in the aggregate, is outstanding in a principal
amount of at least 10,000,000, when due or within the applicable grace
period, or any event of condition shall occur which results in the
acceleration of the maturity of any such Debt or enables (or, with the
giving of notice or lapse of time or both, would enable) the holder of
such Debt or any person acting on such holder's behalf to accelerate the
maturity thereof.
"Debt" of any person means at any date, without duplication, (i) all
obligations of such person for borrowed money, (ii) all obligations of such
person evidenced by bonds, debentures, notes or other similar instruments, (iii)
all obligations of such person to pay the deferred purchase price of property or
services, except trade accounts payable arising in the ordinary course of
business, (iv) all obligations of such person as lessee which are capitalized in
accordance with generally accepted accounting principles, (v) all non-contingent
obligations of such person to reimburse any bank or other person in respect of
amounts paid under a letter of credit or similar instrument, (vi) all Debt
secured by a lien on any asset of such person, whether or not such Debt is
otherwise an obligation of such person and (vii) all Debt of others guaranteed
by such person.
(b) CME shall notify Lauder of the occurrence of any Event of
Default promptly after CME obtains knowledge thereof;
(c) Upon the occurrence of any Event of Default, all amounts payable
hereunder shall automatically and immediately become due and payable and
commitments to make any further advances shall terminate;
6. Waivers. (a) CME hereby waives presentment, demand for payment, notice
of dishonor, notice of protest, and protest in connection with the delivery,
acceptance, performance, default, endorsement or guaranty of this Note.
(b) No delay by Lauder in exercising any power or right hereunder
shall operate as a waiver of any power or right, nor shall any single or partial
exercise of any power or right preclude other or further exercise thereof, or
the exercise of any other power or right hereunder or otherwise. No waiver or
modification of the terms hereof shall be valid unless set forth in writing by
Lauder.
7. Subordination. (a) Principal, interest on and any other amount due in
respect of loans under this Note shall, as provided in (b) and (c) below, be
subordinated and made junior to the payment of the principal, interest and any
other amount due in respect of amounts due (the "ING Loan") to ING Bank N.V.
("ING").
(b) Subject to subparagraph (c) below, until the ING Loan shall have
been paid in full, the Company shall not make any direct or indirect payment or
reduction (whether by way of loan, set-off or otherwise) in respect of the
principal amount of, or interest on or any other amount due in respect of this
Note, whether such amount shall have become payable on maturity, by acceleration
or otherwise, if on the date such payment would (but for this Section (b)) be
payable pursuant to this Note (hereinafter referred to as a "Payment Date"), (i)
the Company shall have failed to make payments required to be made on or with
respect to the ING Loan as and when the same became or becomes due and payable
and such failures to pay have not been cured or waived, (ii) any Default (as
defined in the agreement pursuant to which the ING Loan was extended by ING) or
event of default shall have occurred and be continuing under such agreement,
whether or not ING shall, pursuant to such agreement, have declared all or any
portion of the ING Loan due and payable in full on the basis of the occurrence
of such default or event of default, or (iii) if such a Default or event of
default shall not be continuing, but ING shall, pursuant to the ING Loan, have
declared all or any portion of the ING Loan due and payable in full on the basis
of the occurrence of such Default or event of default and such acceleration
shall not have been specifically rescinded in writing by ING.
Payments on this Note which are not otherwise prohibited pursuant to this
Section 7 from being made, may be made, but only upon, subject and pursuant to
the other terms and provisions set forth herein.
(c) In the event of (x) any insolvency, bankruptcy, receivership,
custodianship, liquidation, reorganization, readjustment of debt, arrangement,
composition, assignment for the benefit of creditors, or other similar
proceeding relative to the Company, as such, or its property, or (y) any
proceeding for voluntary liquidation, dissolution or other winding up or
bankruptcy proceedings relative to the Company, then the ING Loan shall first be
paid in full before any payment or distribution of any character, whether in
cash, securities, obligations or other property, shall be made in respect to
this Note.
8. Assignability. This Note may be assigned by the holder hereof, in whole
or in part, at any time or from time to time but shall not be assignable by the
Company without the prior written consent of the holder.
9. Binding Nature. This Note shall inure to the benefit of and be
enforceable by Lauder and his heirs, executors, successors and assigns and shall
be binding and enforceable against CME and its assigns and successors.
10. Severability. It is the desire and intent of the parties that the
provisions of this Note be enforced to the fullest extent permissible under the
law and public policies applied in each jurisdiction in which enforcement is
sought. Accordingly, if any provision of this Note would be held to be invalid,
prohibited or unenforceable in any jurisdiction for any reason, such provision,
as to such jurisdiction, shall be ineffective, without invalidating the
remaining provisions of this Note or affecting the validity or enforceability of
such provision in any other jurisdiction. Notwithstanding the foregoing, if such
provision could be more narrowly drawn so as not to be invalid, prohibited or
unenforceable in such jurisdiction, it shall, as to such jurisdiction, be so
narrowly drawn, without invalidating the remaining provisions of this Note or
affecting the validity or enforceability of such provision in any other
jurisdiction.
11. Indemnity. CME agrees to indemnify Lauder and hold Lauder harmless
from and against any and all liabilities, losses, damages, costs and expenses of
any kind, including, without limitation, the reasonable fees and disbursements
of counsel, which may be incurred by Lauder in connection with any
investigative, administrative or judicial proceeding (whether or not Lauder
shall be designated a party thereto) brought or threatened relating to or
arising out of or in connection with this Note or any actual or proposed use of
proceeds hereunder, provided that Lauder shall not have the right to be
indemnified under this Section 11 for his own gross negligence or willful
misconduct.
12. Appointment of Agent. CME hereby appoints Andrew Gaspar with offices
at the date of this Note at 767 Fifth Avenue, Suite 4200, New York, New York
10153, as its authorized agent on which any and all legal process may be served
in any action, suit or proceeding, which is brought in any New York Court (as
defined in Section 13). CME agrees that service of process in respect of it upon
such agent shall be deemed to be effective service of process upon it in any
action, suit or proceeding referred to in this Section which is brought in any
New York Court. CME agrees that the failure of such agent to give notice to it
of any such service shall not impair or affect the validity of such service or
any judgment rendered in any action, suit or proceeding based thereon. If for
any reason such agent shall cease to be available to act as such, CME agrees to
designate a new agent in the Borough of Manhattan, The City of New York, on the
terms and for the purposes of this Section, and CME shall, as soon as
practicable, give notice to Lauder of such new agent. Nothing herein shall be
deemed to limit the ability of Lauder to serve any such legal process in any
other manner permitted by applicable law or to obtain jurisdiction over CME or
bring actions, suits or proceedings against CME in such other jurisdictions, and
in such manner, as may be permitted by applicable law.
13. Governing Law; Jurisdiction. This Note shall be governed by and
construed in accordance with the laws of the State of New York, without giving
effect to principles of conflicts of law. Any action or proceedings to enforce
or arising out of this Note may be commenced in any court of the State of New
York or in the United States District Court for the Southern District of New
York (any such court, a "New York Court"). CME agrees that venue will be proper
in such courts in any such matters, and agrees that New York is the most
convenient forum for litigation in any suit, action or legal proceeding. CME
agrees that a final judgment in any such action or proceeding may be enforced in
other jurisdictions by suit on the judgment or in any other manner provided by
law.
Section 14. Successors and Assigns. The provisions hereof shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
IN WITNESS WHEREOF, CME has executed this Note as of the date first above
written.
CENTRAL EUROPEAN MEDIA ENTERPRISES LTD.
By: _____________________________________
Name:
Title:
Agreed to and acknowledged by:
______________________________
Ronald S. Lauder
ANNEX A
CENTRAL EUROPEAN MEDIA ENTERPRISES LTD.
Schedule of Loans Owed to
Ronald S. Lauder Pursuant to Note
Date Amount Borrowed Amount Repaid Unpaid Principal
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