Exhibit 10.4
EXECUTION COPY
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@ENTERTAINMENT, INC.
(a Delaware corporation)
Series C Senior Discount Notes due 2008
PURCHASE AGREEMENT
Dated: January 19, 1999
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@ENTERTAINMENT, INC.
(a Delaware corporation)
Series C Senior Discount Notes due 2008
PURCHASE AGREEMENT
January 19, 1999
Merrill Lynch International
25 Ropemaker Place
Ropemaker Street
London, England EC2Y 9LY
Ladies and Gentlemen:
@Entertainment, Inc., a Delaware corporation (the "Company"), confirms its
agreement with Merrill Lynch International ("Merrill Lynch") (the "Initial
Purchaser"), with respect to the issue and sale by the Company and the purchase
by the Initial Purchaser of $36,001,321 aggregate principal amount at maturity
of the Company's Series C Senior Discount Notes due 2008 (the "C Notes"). The C
Notes are to be issued pursuant to an indenture to be dated as of January 20,
1999 (the "Indenture") between the Company and Bankers Trust Company, as trustee
(the "Trustee"). C Notes issued in book-entry form will be issued to Bankers
Trust Company, as nominee of Euroclear System ("Euroclear").
The Company expects to enter in the near future into a separate agreement
for the sale of the Company's units, each Unit consisting of $1,000 aggregate
principal amount at maturity of the Company's Senior Discount Notes due 2009 and
warrants, each Warrant entitling the holder thereof to purchase shares of common
stock, par value $0.01 per share, of the Company (the "Units Offering").
The Company expects to enter in the near future into a separate agreement
for the sale of shares and warrants for aggregate proceeds of at least $50
million (the "Preference Offering").
The Company understands that the Initial Purchaser proposes to make an
offering of the C Notes on the terms and in the manner set forth herein and
agrees that the Initial Purchaser may resell, subject to the conditions set
forth herein, all or a portion of the C Notes to purchasers ("Subsequent
Purchasers") at any time after the date of this Agreement. The C
Notes are to be offered and sold through the Initial Purchaser without being
registered under the 1933 Act, in reliance upon exemptions therefrom. Pursuant
to the terms of the C Notes and the Indenture, investors that acquire C Notes
may only resell or otherwise transfer such C Notes if such C Notes are hereafter
registered under the 1933 Act or if an exemption from the registration
requirements of the 1933 Act is available (including the exemption afforded by
Rule 144A ("Rule 144A") of the rules and regulations promulgated under the 1933
Act by the Commission).
The Company has prepared and will deliver to the Initial Purchaser, copies
of a offering memorandum to be dated January 20, 1999, together with a Term
Sheet, a copy of which is attached as Schedule B hereto for the C Notes
(combined, the "C Notes Offering Memorandum") for use by the Initial Purchaser
in connection with its solicitation of purchases of, or offering of, the C
Notes. "C Notes Offering Memorandum" means with respect to any date or time
referred to in this Agreement, the most recent offering memorandum (including
any amendment or supplement to such document), including exhibits thereto and
any documents incorporated therein by reference, which has been prepared and
delivered by the Company to the Initial Purchaser in connection with its
solicitation of purchases of, or offering of, the C Notes.
All references in this Agreement to financial statements and schedules and
other information which are "contained," "included" or "stated" in the C Notes
Offering Memorandum (or other references of like import) shall be deemed to mean
and include all such financial statements and schedules and other information,
if any, which are incorporated by reference in the C Notes Offering Memorandum.
SECTION 1. Representations and Warranties.
(a) Representations and Warranties by the Company. The Company represents
and warrants to the Initial Purchaser as of the date hereof and as of the
Closing Time referred to in Section 2(b) hereof, and agrees with the Initial
Purchaser as follows:
(i) Similar Offerings. The Company and its Affiliates (as defined in
Section 1(a)(xxxv)) have not, directly or indirectly, solicited any offer
to buy or offered to sell, and will not, directly or indirectly, solicit
any offer to buy or offer to sell, in the United States or to any United
States citizen or resident, any security which is or would be integrated
with the sale of the C Notes in a manner that would require the C Notes to
be registered under the 1933 Act.
(ii) C Notes Offering Memorandum. Neither of its date nor as of the
Closing Time the C Notes Offering Memorandum, including any amendment or
supplement thereto, includes or will include an untrue statement of a
material fact or omits or will omit to state a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading;
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except that this representation and warranty does not apply to statements
or omissions made in reliance upon and in conformity with information
furnished in writing to the Company by the Initial Purchaser expressly for
use in the C Notes Offering Memorandum, including any amendment or
supplement thereto.
(iii) Independent Accountants. The accountants who certified the
financial statements and supporting schedules included in the C Notes
Offering Memorandum are independent certified public accountants with
respect to the Company and its subsidiaries within the meaning of
Regulation S-X under the 1933 Act.
(iv) Financial Statements. The financial statements, together with
the related schedules and notes, of the Company included in the C Notes
Offering Memorandum present fairly the financial position of the Company
and its consolidated subsidiaries at the dates indicated and the statement
of operations, stockholders' equity and cash flows of the Company and its
consolidated subsidiaries for the periods specified; said financial
statements have been prepared in conformity with United States generally
accepted accounting principles ("GAAP") applied on a consistent basis
throughout the periods involved. The supporting schedules, if any,
included in the C Notes Offering Memorandum present fairly in accordance
with GAAP the information required to be stated therein. The selected
financial data and the summary financial information included in the C
Notes Offering Memorandum present fairly the information shown therein and
have been compiled on a basis consistent with that of the audited
financial statements included in the C Notes Offering Memorandum.
(v) No Material Adverse Change in Business. Since the respective
dates as of which information is given in the C Notes Offering Memorandum,
except as otherwise stated therein, (A) there has been no material adverse
change in the condition, financial or otherwise, or in the earnings,
business affairs or business prospects of the Company and its subsidiaries
considered as one enterprise (a "Material Adverse Effect"), whether or not
arising in the ordinary course of business, (B) there have been no
transactions entered into by the Company or any of its subsidiaries, other
than transactions entered into in the ordinary course of business, which
are material with respect to the Company and its subsidiaries considered
as one enterprise, and (C) there has been no dividend or distribution of
any kind declared, paid or made by the Company on any class of its capital
stock.
(vi) Good Standing of the Company. The Company has been duly
organized and is validly existing as a corporation in good standing under
the laws of the State of Delaware and has corporate power and authority to
own, lease and operate its properties and to conduct its business as
described in the C Notes Offering Memorandum and to enter into and perform
its obligations under this Agreement and the Indenture; and the Company is
duly qualified as a foreign corporation to transact business and is in
good standing in each other jurisdiction in which such qualification is
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required, whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure so to qualify or to be in
good standing would not result in a Material Adverse Effect.
(vii) Corporate Standing of Designated Subsidiaries. Each subsidiary
of the Company that (i) is a "significant subsidiary" (as that term is
defined in Regulation S-X under the 1933 Act) or (ii) that holds any valid
permits or licenses to operate the cable television business in Poland or
a digital direct-to-home business uplinking from the United Kingdom is
listed on Schedule C hereto (each subsidiary listed on Schedule C hereto
is hereinafter referred to as a "Designated Subsidiary" and, collectively,
the "Designated Subsidiaries"), and has been duly organized and is validly
existing as a corporation under the laws of the jurisdiction of its
incorporation, has corporate power and corporate authority to own, lease
and operate its properties and to conduct its business as described in the
C Notes Offering Memorandum and is not required to be qualified as a
foreign corporation to transact business or to own or lease property in
any jurisdiction where it owns or leases property or transacts business;
except as otherwise disclosed in the C Notes Offering Memorandum or in
Schedule C, all of the issued and outstanding capital stock of each
Designated Subsidiary has been duly authorized and validly issued, is
fully paid and non-assessable and is owned by the Company, directly or
through subsidiaries, free and clear of any security interest, mortgage,
pledge, lien, encumbrance, claim or equity, except for (i) in the case of
any Polish limited liability company, any statutory liability for taxes,
(ii) the pledge of 3,583,457 shares of Polska Telewizja Kablowa Warszawa
S.A. and of 2,514,291 shares of Polska Telewizja Kablowa Krakow S.A. held
by Poland Cablevision (Netherlands) B.V. ("PCBV") and 2,400 shares of
Polska Telewizja Kablowa Lublin S.A. held by Poltelkab Sp. z o.o. as
security for the loan of $6.5 million granted on August 28, 1996 by the
American Bank in Poland to Poland Communications, Inc. ("PCI"), and (iii)
the pledge of 1,818 shares of Szczecinska Telewizja Kablowa Sp. z o.o.
("SzTK") for the security of certain obligations undertaken by PTK
Szczecin Sp. z o.o. ("PTK Szczecin") with respect to the sellers of those
shares (collectively, the "Share Pledges"); none of the outstanding shares
of capital stock of the Designated Subsidiaries was issued in violation of
any preemptive or similar rights arising by operation of law, or under the
statute or by-laws (or other similar organizational documents) of any
Designated Subsidiary or under any agreement to which the Company or any
Designated Subsidiary is a party. The subsidiaries of the Company other
than the Designated Subsidiaries, considered in the aggregate as a single
subsidiary, do not constitute a "significant subsidiary" as defined in
Rule 1-02 of Regulation S-X.
(viii) Restrictions on Payments of Dividends. There are no
restrictions (legal, contractual or otherwise) on the ability of the
Designated Subsidiaries to declare and pay dividends or make any payment
or transfer of property or assets to their shareholders other than those
referred to in the C Notes Offering Memorandum and except for (i)
restrictions relating to the Share Pledges, (ii) encumbrances on certain
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assets of Telewizja Kablowa GOSAT Sp. z o.o. ("GOSAT") consisting of the
transfer of title to such assets as security for the loan of $0.5 million
granted on October 7, 1996 by Polski Bank Rozwoju (which was bought by
Bank Rozucju Eksportu S.A. in July of 1998) to GOSAT, and (iii) the
restrictions discussed in Schedule D to the Indenture (collectively, the
"Asset Encumbrances").
(ix) Capitalization. The authorized, issued and outstanding capital
stock of the Company is as set forth under the caption "Capitalization"
under the heading "Actual" (except for subsequent issuances, if any,
pursuant to the exercise of convertible securities or options referred to
in the C Notes Offering Memorandum) in the C Notes Offering Memorandum
and, as of the date hereof, there has been no material change in the
authorized, issued and outstanding capital stock since the date of the C
Notes Offering Memorandum other than (i) issuances of shares of Common
Stock upon the exercise of options disclosed to be outstanding in the C
Notes Offering Memorandum and (ii) the authorization and issuance of
Series A Cumulative Preference Shares, the Series B Cumulative Preference
Shares, the Warrants and the Preference Warrants as described in the
Offering Memorandum. The shares of issued and outstanding capital stock of
the Company have been duly authorized and validly issued and are fully
paid and non-assessable; none of the outstanding shares of capital stock
of the Company was issued in violation of the preemptive or other similar
rights of any security holder of the Company.
(x) Authorization of Agreement. This Agreement has been duly
authorized, executed and delivered by the Company.
(xi) Authorization of the Indenture. The Indenture has been duly
authorized by the Company and, at the Closing Time, will have been duly
executed and delivered by the Company and will constitute a valid and
binding agreement of the Company, enforceable against the Company in
accordance with its terms, except as the enforceability thereof may be
limited by bankruptcy, insolvency (including, without limitation, all laws
relating to fraudulent transfers), reorganization, moratorium or other
similar laws relating to or affecting enforcement of creditors' rights
generally or by general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law) and the
waiver contained in Section 514 thereof may be unenforceable due to
interests of public policy.
(xii) Authorization of the C Notes. The C Notes have been duly
authorized and, at the Closing Time, will have been duly executed by the
Company and, when authenticated in the manner provided for in the
Indenture and delivered against payment of the purchase price therefor
will constitute valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or
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other similar laws relating to or affecting enforcement of creditors'
rights generally or by general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law), and will
be in the form contemplated by, and entitled to the benefits of, the
Indenture.
(xiii) Description of the Indenture. The Indenture will conform in
all material respects to the respective statements relating thereto
contained in the C Notes Offering Memorandum and will be in substantially
the form previously delivered to the Initial Purchaser.
(xiv) Absence of Defaults and Conflicts. Neither the Company nor any
of its subsidiaries is (1) in violation of its charter or statute, as
applicable, or by-laws (or other similar organizational documents), (2) in
default in the performance or observance of any obligation, agreement,
covenant or condition contained in any contract, indenture, mortgage, deed
of trust, loan or credit agreement, note, lease or other agreement or
instrument to which the Company or any of its subsidiaries is a party or
by which or any of them may be bound, or to which any of the property or
assets of the Company or any of its subsidiaries is subject (collectively,
"Agreements and Instruments"), except as described in the C Notes Offering
Memorandum and except for such defaults that would not result in a
Material Adverse Effect or (3) in violation of any applicable law,
statute, rule, regulation, judgment, order, writ or decree of any
government, government instrumentality or court, domestic or foreign,
having jurisdiction over the Company or any of its subsidiaries or any of
their assets or properties, except as described in the C Notes Offering
Memorandum; and the execution, delivery and performance of this Agreement
and the Indenture and any other agreement or instrument entered into or
issued or to be entered into or issued by the Company or any Designated
Subsidiary in connection with the transactions contemplated hereby or
thereby or in the C Notes Offering Memorandum and the consummation of the
transactions contemplated herein and in the C Notes Offering Memorandum
(including the issuance and sale of the C Notes and the use of the
proceeds from the sale of the C Notes as described in the C Notes Offering
Memorandum) and compliance by the Company with its obligations hereunder
have been duly authorized by all necessary corporate action and do not and
will not, whether with or without the giving of notice or passage of time
or both, conflict with or constitute a breach of, or default or Repayment
Event (as defined below) under, or result in the creation or imposition of
any lien, charge or encumbrance upon any property or assets of the Company
or any of its subsidiaries pursuant to, the Agreements and Instruments
except for such conflicts, breaches, Repayment Events or defaults or
liens, charges or encumbrances that, singly or in the aggregate, would not
result in a Material Adverse Effect, nor will such action result in any
violation of the provisions of the charter or statute, as applicable, or
by-laws (or other similar organizational documents) of the Company or any
of its subsidiaries or any applicable law, statute, rule, regulation,
judgment, order, writ or decree of any government,
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government instrumentality or court, domestic or foreign, having
jurisdiction over the Company or any of its subsidiaries or any of their
assets or properties, assuming that the Initial Purchaser comply with all
of its obligations under Section 6 hereof. As used herein, a "Repayment
Event" means any event or condition which gives the holder of any note,
debenture or other evidence of indebtedness (or any person acting on such
holder's behalf) the right to require the repurchase, redemption or
repayment of all or a portion of such indebtedness by the Company or any
of its subsidiaries.
(xv) Absence of Labor Dispute. No labor dispute with the employees
of the Company or any of its subsidiaries exists or, to the knowledge of
the Company, is imminent, and the Company is not aware of any existing or
imminent labor disturbance by the employees of any of its or any of its
subsidiaries' principal suppliers, customers or contractors, which, in
either case, may reasonably be expected to result in a Material Adverse
Effect.
(xvi) Absence of Proceedings. Except as disclosed in the C Notes
Offering Memorandum, there is no action, suit, proceeding, inquiry or
investigation before or by any court or governmental agency or body,
domestic or foreign, now pending, or, to the knowledge of the Company,
threatened, against or affecting the Company or any subsidiary thereof,
which would be required to be disclosed in the C Notes Offering Memorandum
(other than as disclosed therein) if it were a prospectus filed as part of
a registration statement on Form S-1 under the 1933 Act, or which might
reasonably be expected to result in a Material Adverse Effect, or which
might reasonably be expected to adversely affect the properties or assets
of the Company or any of its subsidiaries in a manner that is material and
adverse to the Company and its subsidiaries considered as one enterprise
or the consummation of the transactions contemplated by this Agreement the
Indenture or the C Notes, or the performance by the Company of its
obligations hereunder or thereunder. The aggregate of all pending legal or
governmental proceedings to which the Company or any subsidiary thereof is
a party or of which any of their respective property or assets is the
subject which are not described in the C Notes Offering Memorandum,
including ordinary routine litigation incidental to the business, could
not reasonably be expected to result in a Material Adverse Effect.
(xvii) Possession of Intellectual Property. Except as disclosed in
the C Notes Offering Memorandum, the Company and its subsidiaries own or
possess, or can acquire on reasonable terms, adequate patents, patent
rights, licenses, inventions, copyrights, know-how (including trade
secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures), trademarks, service
marks, trade names or other intellectual property (collectively,
"Intellectual Property") necessary to carry on the business now operated
by them. Except as disclosed in the C Notes Offering Memorandum, neither
the Company nor any of its subsidiaries has received any notice or is
otherwise aware of any infringement of or conflict with asserted rights of
others with respect to any Intellectual Property or
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of any facts or circumstances which would render any Intellectual Property
invalid or inadequate to protect the interest of the Company or any of its
subsidiaries therein, and which infringement or conflict (if the subject
of any unfavorable decision, ruling or finding) or invalidity or
inadequacy, singly or in the aggregate, would result in a Material Adverse
Effect.
(xviii) Absence of Further Requirements. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or agency
(other than (A) under the securities or "blue sky" laws of the various
states and (B) the Polish Anti-Monopoly Act) is necessary or required (x)
for the performance by the Company of its obligations hereunder, in
connection with the offering, issuance or sale of the C Notes hereunder or
the consummation of the transactions contemplated by this Agreement, the
Indenture or the C Notes Offering Memorandum or (y) to permit the Company
to effect payments of principal of and premium and interest on the C
Notes.
(xix) Possession of Licenses and Permits. Except as disclosed in the
C Notes Offering Memorandum, the Company and its subsidiaries possess such
permits, licenses, approvals, concessions, consents and other
authorizations (including, without limitation, all permits required for
the operation of the business of the Company and its subsidiaries by the
Republic of Poland and the United Kingdom) (collectively, "Governmental
Licenses") issued by the appropriate domestic or foreign regulatory
agencies or bodies, other governmental authorities or self regulatory
organizations necessary to conduct the business now operated by them or
any business currently proposed to be conducted by them as described in
the C Notes Offering Memorandum; the Company and its subsidiaries, except
as disclosed in the C Notes Offering Memorandum and except where the
failure to so comply would not, singly or in the aggregate, have a
Material Adverse Effect, are in compliance with the terms and conditions
of all such Governmental Licenses; all of the Governmental Licenses are
valid and in full force and effect, except as disclosed in the C Notes
Offering Memorandum and except when the invalidity of such Governmental
Licenses or the failure of such Governmental Licenses to be in full force
and effect would not have a Material Adverse Effect; and except as
disclosed in the C Notes Offering Memorandum, neither the Company nor any
of its subsidiaries has received any notice of proceedings relating to the
revocation or modification of any such Governmental Licenses which, singly
or in the aggregate, if the subject of an unfavorable decision, ruling or
finding, would result in a Material Adverse Effect. To the knowledge of
the Company, except as described in the C Notes Offering Memorandum, there
exists no reason or cause that could justify the variation, suspension,
cancellation or termination of any such Governmental Licenses held by the
Company or any of its subsidiaries with respect to the construction or
operation of their respective businesses, which variation, suspension,
cancellation or termination could reasonably be expected to have a
Material Adverse Effect.
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(xx) No Additional Documents. There are no contracts or documents of
a character that would be required to be described in the C Notes Offering
Memorandum, if it were a prospectus filed as part of a registration
statement on Form S-1 under the 1933 Act, that are not described as would
be so required. All such contracts to which the Company is party have been
duly authorized, executed and delivered by the Company and constitute
valid and binding agreements of the Company.
(xxi) Management Agreements. Each of the Management Agreements (as
such term is defined in the Indenture) to which any subsidiary of the
Company is a party has been duly authorized, executed and delivered by
each of the parties thereto and constitutes a valid and binding agreement
of each of the parties thereto.
(xxii) Title to Property. The Company and its subsidiaries own no
real property, except as described in the C Notes Offering Memorandum and
except for approximately 3,200 square meters of real property owned by a
Designated Subsidiary, and have good title to all other properties owned
by them, in each case, free and clear of all mortgages, pledges, liens,
security interests, claims, restrictions or encumbrances of any kind
except such as (a) are described in the C Notes Offering Memorandum or (b)
do not, singly or in the aggregate, materially affect the value of such
property and do not interfere with the use made and proposed to be made of
such property by the Company or any of its subsidiaries; and all of the
leases and subleases material to the business of the Company and its
subsidiaries, considered as one enterprise, and under which the Company or
any of its subsidiaries holds properties described in the C Notes Offering
Memorandum, are in full force and effect, and neither the Company nor any
of its subsidiaries has any notice of any claim of any sort that has been
asserted by anyone adverse to the rights of the Company or any of its
subsidiaries under any of the leases or subleases mentioned above, or
affecting or questioning the rights of the Company or any subsidiary
thereof to the continued possession of the leased or subleased premises
under any such lease or sublease, except for such claims as could not
reasonably be expected to result in a Material Adverse Effect.
(xxiii) Tax Returns. Except as disclosed in the C Notes Offering
Memorandum, the Company and its subsidiaries have filed all domestic and
foreign tax returns that are required to be filed or have duly requested
extensions thereof and have paid all taxes required to be paid by any of
them and any related assessments, fines or penalties, except for any such
tax, assessment, fine or penalty that is being contested in good faith and
by appropriate proceedings, and except for such claims as could not result
in a Material Adverse Effect; and adequate charges, accruals and reserves
have been provided for in the financial statements referred to in Section
1(a)(iv) above in respect of all domestic and foreign taxes for all
periods as to which the tax liability of the Company or any of its
subsidiaries has not been finally determined or remains open to
examination by applicable taxing authorities.
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(xxiv) Environmental Laws. Except as described in the C Notes
Offering Memorandum and except such matters as would not, singly or in the
aggregate, result in a Material Adverse Effect, (A) neither the Company
nor any of its subsidiaries is in violation of any domestic or foreign
statute, law, rule, regulation, ordinance, code, policy or rule of common
law or any judicial or administrative interpretation thereof including any
judicial or administrative order, consent, decree or judgment, relating to
pollution or protection of human health, the environment (including,
without limitation, ambient air, surface water, groundwater, land surface
or subsurface strata) or wildlife, including, without limitation, laws and
regulations relating to the release or threatened release of chemicals,
pollutants, contaminants, wastes, toxic substances, hazardous substances,
petroleum or petroleum products (collectively, "Hazardous Materials") or
to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials (collectively,
"Environmental Laws"), (B) the Company and its subsidiaries have all
permits, authorizations and approvals required under any applicable
Environmental Laws and are each in compliance with their requirements, (C)
there are no pending or threatened administrative, regulatory or judicial
actions, suits, demands, demand letters, claims, liens, notices of
noncompliance or violation, investigation or proceedings relating to any
Environmental Law against the Company or any of its subsidiaries and (D)
there are no events or circumstances that might reasonably be expected to
form the basis of an order for clean-up or remediation, or an action, suit
or proceeding by any private party or governmental body or agency, against
or affecting the Company or any of its subsidiaries relating to Hazardous
Materials or Environmental Laws.
(xxv) Investment Company Act. The Company is not, and upon the
issuance and sale of the C Notes as herein contemplated and the
application of the net proceeds therefrom as described in the C Notes
Offering Memorandum will not be, an "investment company" or an entity
"controlled" by an "investment company" as such terms are defined in the
Investment Company Act of 1940, as amended (the "1940 Act").
(xxvi) Internal Controls. The Company and each of its subsidiaries
maintain a system of internal accounting controls sufficient to provide
reasonable assurances that (A) transactions are executed in accordance
with management's general or specific authorization; (B) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain
accountability for assets; (C) access to assets is permitted only in
accordance with management's general or specific authorization; and (D)
the recorded accountability for assets is compared with the existing
assets at reasonable intervals and appropriate action is taken with
respect to any differences. The Company and its subsidiaries have not
made, and, to the knowledge of the Company, no employee or agent of the
Company or any subsidiary has made, any payment of the Company's
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funds or any subsidiary's funds or received or retained any funds (A) in
violation of the Foreign Corrupt Practices Act, as amended, or (B) in
violation of any other applicable law, regulation or rule (except, in the
case of this clause (B), for such violations as could not reasonably be
expected to result in a Material Adverse Effect) or that would be required
to be disclosed in the C Notes Offering Memorandum if it were a prospectus
filed as part of a registration statement on Form S-1 under the 1933 Act.
(xxvii) Taxes on Subsidiary Indebtedness. Except as described in the
C Notes Offering Memorandum, as of the date hereof, no material income,
stamp or other taxes or levies, imposts, deductions, charges, compulsory
loans or withholdings whatsoever are or will be, under applicable law in
the Republic of Poland, imposed, assessed, levied or collected by the
Republic of Poland or any political subdivision or taxing authority
thereof or therein or on or in respect of principal, interest, premiums,
penalties or other amounts payable under any indebtedness of any of the
Company's subsidiaries held by the Company.
(xxviii) Insurance. Except as otherwise disclosed in the C Notes
Offering Memorandum, the Company and each of its subsidiaries carry, or
are covered by, insurance in such amounts and covering such risks as is
adequate for the conduct of their respective businesses and the value of
their respective properties and as is customary for companies engaged in
similar businesses or similar industries in similar locations.
(xxix) Rule 144A Eligibility. The C Notes are eligible for resale
pursuant to Rule 144A and will not be, at the Closing Time, of the same
class as securities listed on a national securities exchange registered
under Section 6 of the Securities Exchange Act of 1934, as amended (the
"1934 Act"), or quoted in a U.S. automated interdealer quotation system.
(xxx) No General Solicitation or Directed Selling Effort in
Contravention of Regulation S of the Securities Act. None of the Company,
its affiliates, as such term is defined in Rule 501(b) under the 1933 Act
("Affiliates"), or any person acting on its or any of their behalf (other
than the Initial Purchaser, as to whom the Company makes no
representation) has engaged or will engage, in connection with the
offering of the C Notes, in any form of general solicitation or general
advertising within the meaning of Rule 502(c) under the 1933 Act. In
addition, with respect of the C Notes sold in reliance of Rule 903 of
Regulation S under the Securities Act, neither the Company nor any of its
affiliates have offered such C Notes in any directed selling efforts
within the meaning of Rule 902(b) of the Securities Act. The Company, its
affiliates and any agents acting on its or their behalf have complied and
will comply with any offering restrictions requirements of Regulation S
applicable to the transaction contemplated hereby. The Company has not
entered and will not enter into any contractual arrangement with respect
to the distribution of the C Notes except for this Agreement.
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(xxxi) No Registration Required. Subject to compliance by the
Initial Purchaser with the representations and warranties set forth in
Section 2 and the procedures set forth in Section 6 hereof, it is not
necessary in connection with the offer, sale and delivery of the C Notes
to the Initial Purchaser and to each Subsequent Purchaser in the manner
contemplated by this Agreement and the C Notes Offering Memorandum to
register the C Notes under the 1933 Act or to qualify the Indenture under
the Trust Indenture Act of 1939, as amended (the "1939 Act").
(xxxii) Reporting Company. The Company is subject to, and has
complied with all applicable reporting requirements of Section 13 or
Section 15(d) of the 1934 Act.
(b) Officers' Certificates. Any certificate titled "Officers' Certificate"
or the "Secretary's Certificate" signed by any officer of the Company or any of
its subsidiaries which is delivered to Initial Purchaser or to counsel for
Initial Purchaser shall be deemed a representation and warranty by the Company
to the Initial Purchaser as to the matters covered thereby.
SECTION 2. Sale and Delivery to the Initial Purchaser; Closing.
(a) C Notes. On the basis of the representations and warranties herein
contained and subject to the terms and conditions herein set forth, the Company
agrees to sell to the Initial Purchaser and the Initial Purchaser agrees to
purchase from the Company, at the price set forth in Schedule B, the aggregate
number of C Notes set forth in Schedule A opposite its name.
(b) Payment. Payment of the purchase price of $9,495,703 for, and delivery
of certificates for, the C Notes shall be made at the office of Baker &
McKenzie, 815 Connecticut Avenue, N.W., Washington, D.C. or at such other place
as shall be agreed upon by the Initial Purchaser and the Company, at 9:00 A.M.
on the next business day after the date hereof (January 20, 1999) (unless
postponed in accordance with the provisions of Section 11), or such other time
not later than ten business days after such date as shall be agreed upon by the
Initial Purchaser and the Company (such time and date of payment and delivery
being herein called the "Closing Time").
Payment shall be made to the Company by wire transfer of immediately
available funds to a bank account designated by the Company, against delivery to
the Initial Purchaser for the account of such Initial Purchaser of certificates
for the C Notes to be purchased by it.
(c) Qualified Institutional Buyer. The Initial Purchaser represents and
warrants to, and agrees with, the Company that it is a "qualified institutional
buyer" within the meaning of
12
Rule 144A under the 1933 Act (a "Qualified Institutional Buyer") and an
"accredited investor" within the meaning of Rule 501(a) under the 1933 Act (an
"Accredited Investor").
(d) Denominations; Registration. Certificates for the C Notes shall be in
such denominations and registered in such names as the Initial Purchaser may
request in writing at least one full business day before the Closing Time. The
certificates representing the C Notes and Warrants shall be registered in the
name of BT Globenet Nominees Limited.
SECTION 3. Covenants of the Company. The Company covenants with the
Initial Purchaser as follows:
(a) C Notes Offering Memorandum. The Company, as promptly as possible,
will furnish to the Initial Purchaser, without charge, such number of copies of
the C Notes Offering Memorandum and any amendments and supplements thereto and
documents incorporated by reference therein as the Initial Purchaser may
reasonably request. The Company will use the C Notes Offering Memorandum only in
connection with offering of the C Notes and not for any other purpose.
(b) Notice and Effect of Material Events. The Company will immediately
notify the Initial Purchaser, and confirm such notice in writing, of (x) any
filing made by the Company of information relating to the offering of the C
Notes with any securities exchange or any other regulatory body in the United
States or any other jurisdiction, and (y) prior to the completion of the
placement of the C Notes by the Initial Purchaser as evidenced by a notice in
writing from the Initial Purchaser to the Company, any material changes in or
affecting the condition, financial or otherwise, or the earnings, business
affairs or business prospects of the Company and its subsidiaries which (i) make
any statement in the C Notes Offering Memorandum (as amended or supplemented)
false or misleading or (ii) are not disclosed in the C Notes Offering Memorandum
(as amended or supplemented). In such event or if during such time any event
shall occur as a result of which it is necessary, in the reasonable opinion of
any of the Company, its counsel, the Initial Purchaser or counsel for the
Initial Purchaser, to amend or supplement the C Notes Offering Memorandum in
order that the C Notes Offering Memorandum not include any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein not misleading in the light of the circumstances then
existing, the Company will forthwith amend or supplement the C Notes Offering
Memorandum by preparing and furnishing to the Initial Purchaser an amendment or
amendments of, or a supplement or supplements to, the C Notes Offering
Memorandum (in form and substance satisfactory in the reasonable opinion of
counsel for the Initial Purchaser) so that, as so amended or supplemented, the C
Notes Offering Memorandum will not include an untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances existing at the time it is delivered
to a subsequent purchaser, not misleading.
(c) Amendment to Offering Memorandum and Supplements. The Company will
advise the Initial Purchaser promptly of any proposal to amend or supplement the
C Notes
13
Offering Memorandum and will not effect such amendment or supplement without the
consent of the Initial Purchaser, which consent shall not be unreasonably
withheld. Neither the consent of the Initial Purchaser, nor the Initial
Purchaser? delivery of any such amendment or supplement, shall constitute a
waiver of any of the conditions set forth in Section 5 hereof.
(d) Qualification of C Notes for Offer and Sale. The Company will use its
best efforts, in cooperation with the Initial Purchaser, to qualify the C Notes
for offering and sale under the applicable C Notes laws of such jurisdictions as
the Initial Purchaser may designate and will maintain such qualifications in
effect as long as required for the sale of the C Notes; provided, however, that
the Company shall not be obligated to file any general consent to service of
process or to qualify as a foreign corporation or as a dealer in C Notes in any
jurisdiction in which it is not so qualified or to subject itself to taxation in
respect of doing business in any jurisdiction in which it is not otherwise so
subject.
(e) Euroclear. The Company will cooperate with the Initial Purchaser and
use its best efforts to permit the C Notes to be eligible for clearance and
settlement through the facilities of Euroclear.
(f) Use of Proceeds. The Company will use the net proceeds received by it
from the sale of the C Notes in the manner specified in the C Note Offering
Memorandum.
(g) Restriction on Sale of C Notes. During a period of 180 days from the
date of the Offering Memorandum, the Company will not, without the prior written
consent of Merrill Lynch, directly or indirectly, issue, sell, offer or agree to
sell, grant any option for the sale of, or otherwise dispose of, any other debt
securities of the Company or securities of the Company that are convertible
into, or exchangeable for, the C Notes or such other debt securities except for
(i) the Preference Securities and securities issued in exchange for Preference
Securities and (ii) the Notes and any notes issued in exchange for the Notes,
pursuant to the terms of the documents relating to the Units Offering.
SECTION 4. Payment of Expenses.
(a) Expenses. The Company will pay all expenses incident to the
performance of its obligations under this Agreement, including (i) the
preparation, printing and any filing of the C Notes Offering Memorandum
(including financial statements and any schedules or exhibits and any document
incorporated therein by reference) and of each amendment or supplement thereto,
(ii) the preparation, printing and delivery to the Initial Purchaser of this
Agreement, the Indenture and such other documents as may be required in
connection with the offering, purchase, sale, issuance or delivery of the C
Notes, (iii) the preparation, issuance and delivery of the certificates for the
C Notes to the Initial Purchaser, including any charges of Euroclear in
connection therewith, (iv) the fees and disbursements of the Company's counsel,
accountants and other advisors, (v) the qualification of the C Notes under
securities laws in accordance with the provisions of Section 3(d) hereof and any
filing for review of the offering with the
14
National Association of Securities Dealers (the "NASD"), including filing fees
and the reasonable fees and disbursements of counsel for the Initial Purchaser
in connection therewith and in connection with the preparation of the Blue Sky
Survey, any supplement thereto and any Legal Investment Survey, (vi) the fees
and expenses of the Trustees and paying agents, including the fees and
disbursements of counsel for the Trustees in connection with the Indenture and
the C Notes, and (vii) any fees payable to the NASD.
(b) Termination of Agreement. If this Agreement is terminated by the
Initial Purchaser in accordance with the provisions of Section 5 or Section
10(a)(i) hereof, the Company shall reimburse the Initial Purchaser for all of
its out-of-pocket expenses, including the reasonable fees and disbursements of
counsel for the Initial Purchaser incurred through the date of termination.
SECTION 5. Conditions of the Initial Purchaser's Obligations. The
obligations of the several Initial Purchaser hereunder are subject to the
accuracy of the representations and warranties of the Company contained in
Section 1 hereof or in certificates of any officer of the Company or any of its
subsidiaries delivered pursuant to the provisions hereof, to the performance by
the Company of its covenants and other obligations hereunder, and to the
following further conditions:
(a) Opinions of Counsel for the Company. (i) At the Closing Time, the
Initial Purchaser shall have received two favorable opinions, each dated as of
the Closing Time, of Baker & McKenzie, counsel for the Company, each in form and
substance satisfactory to counsel for the Initial Purchaser, one to the effect
as set forth in Exhibit D hereto and one to the effect set forth in Exhibit E
hereto and each to such further effect as counsel to the Initial Purchaser may
reasonably request.
(ii) At the Closing Time, the Initial Purchaser shall have received the
favorable opinion, dated as of the Closing Time, of Baker & McKenzie, Amsterdam,
special Dutch counsel to the Company, in form and substance satisfactory to
counsel to the Initial Purchaser, to the effect set forth in Exhibit F hereto
and to such other effect as counsel to the Initial Purchaser may reasonably
request.
(iii) At the Closing Time, the Initial Purchaser shall have received the
favorable opinion, dated as of the Closing Time, of Ashurst Morris Crisp,
special English counsel to the Company, in form and substance satisfactory to
counsel to the Initial Purchaser, to the effect set forth in Exhibit G hereto
and to such other effect as counsel to the Initial Purchaser may reasonably
request.
(b) Opinion of United States Counsel for the Initial Purchaser. At the
Closing Time, the Initial Purchaser shall have received the favorable opinion,
dated as of the Closing Time, of Shearman & Sterling, counsel for the Initial
Purchaser, with respect to certain of the
15
matters set forth in Exhibit D hereto and to such other effect as the Initial
Purchaser and such counsel may reasonably agree.
(c) Opinion of Polish Counsel for the Initial Purchaser. At the Closing
Time, the Initial Purchaser shall have received the favorable opinion, dated as
of the Closing Time, of Salans Hertzfeld & Heilbronn Sp. z o.o., special Polish
counsel to the Initial Purchaser, in form satisfactory to the Initial Purchaser
with respect to certain of the matters set forth in paragraphs (i) through
(vii), inclusive, of Exhibit E hereto.
(d) Officers' Certificate. At the Closing Time, there shall not have been,
since the date hereof or since the respective dates as of which information is
given in the C Notes Offering Memorandum, any material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and its subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business, and the
Initial Purchaser shall have received a certificate of the chief executive
officer of the Company and of the chief financial or chief accounting officer of
the Company, dated as of the Closing Time, to the effect that (i) there has been
no such material adverse change, (ii) the representations and warranties in
Section 1 hereof are true and correct with the same force and effect as though
expressly made at and as of the Closing Time, and (iii) the Company has complied
with all agreements and satisfied all conditions on its part to be performed or
satisfied at or prior to the Closing Time.
(e) Accountants' Comfort Letter. At the time of the execution of this
Agreement, the Initial Purchaser shall have received from KPMG Polska Sp. z o.o.
a letter dated such date, in form and substance satisfactory to the Initial
Purchaser, containing statements and information of the type ordinarily included
in accountants' "comfort letters" to the Initial Purchaser with respect to the
financial statements and certain financial information contained in the Offering
Memorandum.
(f) Bring-down Comfort Letter. At the Closing Time, the Initial Purchaser
shall have received from KPMG Polska Sp. z o.o. a letter, dated as of the
Closing Time, to the effect that they reaffirm the statements made in the letter
furnished pursuant to subsection (e) of this Section, except that the specified
date referred to shall be a date not more than three business days prior to the
Closing Time.
(g) Euroclear. At the Closing Time, the C Notes shall have been cleared
for settlement through Euroclear.
(h) Additional Documents. At the Closing Time, counsel for the Initial
Purchaser shall have been furnished with such documents and opinions as it may
require for the purpose of enabling it to pass upon the issuance and sale of the
C Notes as herein contemplated, or in order to evidence the accuracy of any of
the representations or warranties, or the fulfillment of any of the conditions,
herein contained; and all proceedings taken by the Company in
16
connection with the issuance and sale of the C Notes as herein contemplated
shall be satisfactory in form and substance to the Initial Purchaser and counsel
for the Initial Purchaser.
(i) Termination of Agreement. If any condition specified in this Section
shall not have been fulfilled when and as required to be fulfilled, this
Agreement may be terminated by the Initial Purchaser by notice to the Company at
any time at or prior to the Closing Time, and such termination shall be without
liability of any party to any other party except as provided in Section 4 and
except that Sections 1, 7, 8 and 9 shall survive any such termination and remain
in full force and effect.
(j) Sale of C Notes to Morgan Stanley Asset Management. At the Closing
Time, the Initial Purchaser shall have received payment in full for the C Notes
from Morgan Stanley Asset Management.
SECTION 6. Subsequent Offers and Resales of the C Notes.
(a) Offer and Sale Procedures. The Initial Purchaser and the Company
hereby establish and agree to observe the following procedures in connection
with the offer and sale of the C Notes:
(i) Offers and Sales only to Qualified Institutional Buyers. Offers
and sales of the C Notes shall only be made to persons whom the offeror or
seller reasonably believes to be qualified institutional buyers (as
defined in Rule 144A under the 1933 Act) or to non-US persons acquiring
the C Notes in an offshore transaction in compliance with Regulation S
under the defined Securities Act. The Purchaser agrees that it will not
offer, sell or deliver any of the C Notes in any jurisdiction except under
circumstances that will result in compliance with the applicable laws
thereof, and that it will take at its own expense whatever action is
required to permit its purchase and resale of the C Notes in such
jurisdictions.
(ii) No General Solicitation. No general solicitation or general
advertising (within the meaning of Rule 502(c) under the 1933 Act) will be
used in the United States in connection with the offering or sale of the C
Notes.
(iii) Purchases by Non-Bank Fiduciaries. In the case of a non-bank
Subsequent purchaser of a Security acting as a fiduciary for one or more
third parties, each third party shall, in the judgment of the applicable
Initial Purchaser, be a Qualified Institutional Buyer.
(iv) Subsequent Purchaser Notification. The Initial Purchaser will
take reasonable steps to inform, and cause each of its U.S. Affiliates to
take reasonable steps to inform, persons acquiring C Notes from such
Initial Purchaser or affiliate, as the case may be, in the United States
that the C Notes (A) have not been and will not be
17
registered under the 1933 Act, (B) are being sold to them without
registration under the 1933 Act in reliance on Regulation S or in
accordance with another exemption from registration under the 1933 Act, as
the case may be, and (C) may not be offered, sold or otherwise transferred
prior to (x) the date which is two years (or such shorter period of time
as permitted by Rule 144(k) under the 1933 Act or any successor provision
thereunder) after the later of the date of original issue of the C Notes
and (y) such later date, if any, as may be required under applicable laws
except (1) to the Company or any of its subsidiaries, (2) inside the
United States in accordance with (x) Rule 144A to a person whom the seller
reasonably believes is a Qualified Institutional Buyer that is purchasing
such C Notes for its own account or for the account of a Qualified
Institutional Buyer to whom notice is given that the offer, sale or
transfer is being made in reliance on Rule 144A, (y) in accordance with
the provisions of Rule 903 or Rule 904 of the Securities Act or (z)
pursuant to another available exemption from registration under the 1933
Act, or (3) pursuant to an effective registration statement.
(v) Restrictions on Transfer. The transfer restrictions and the
other provisions set forth in the Offering Memorandum under the heading
"Notice to Investors", including the legend required thereby, shall apply
to the C Notes except as otherwise agreed by the Company and the Initial
Purchaser. Following the sale of the C Notes by the Initial Purchaser to
Subsequent Purchasers pursuant to the terms hereof, the Initial Purchaser
shall not be liable or responsible to the Company for any losses, damages
or liabilities suffered or incurred by the Company, including any losses,
damages or liabilities under the 1933 Act, arising from or relating to any
resale or transfer of any Security.
(b) Covenants of the Company. The Company covenants with the Initial
Purchaser as follows:
(i) Due Diligence. In connection with the original distribution of
the C Notes, the Company agrees that, prior to any offer or resale of the
C Notes by the Initial Purchaser, the Initial Purchaser and counsel for
the Initial Purchaser shall have the right to make reasonable inquiries
into the business of the Company and its subsidiaries. The Company also
agrees to provide answers to each prospective Subsequent Purchaser of C
Notes who so requests concerning the Company and its subsidiaries (to the
extent that such information is available or can be acquired and made
available to prospective Subsequent Purchasers without unreasonable effort
or expense and to the extent the provision thereof is not prohibited by
applicable law) and the terms and conditions of the offering of the C
Notes, as provided in the C Notes Offering Memorandum.
(ii) Integration. The Company agrees that it will not and will cause
its Affiliates not to solicit any offer to buy or make any offer or sale
of, or otherwise negotiate in respect of, securities of the Company of any
class if, as a result of the doctrine of "integration" referred to in Rule
502 under the 1933 Act, such offer or sale
18
would render invalid (for the purpose of (i) the sale of the C Notes by
the Company to the Initial Purchaser, (ii) the resale of the C Notes by
the Initial Purchaser to Subsequent Purchasers or (iii) the resale of the
C Notes by such Subsequent Purchasers to others) the exemption from the
registration requirements of the 1933 Act provided by Section 4(2) thereof
or by Rule 144A or otherwise.
(iii) Restriction on Repurchases. Until the expiration of two years
after the original issuance of the C Notes, the Company will not, and will
cause its Affiliates not to, purchase or agree to purchase or otherwise
acquire any C Notes which are "restricted C Securities" (as such term is
defined under Rule 144(a)(3) under the 1933 Act), whether as beneficial
owner or otherwise (except as agent acting as a C Notes broker on behalf
of and for the account of customers in the ordinary course of business in
unsolicited broker's transactions) unless, immediately upon any such
purchase, the Company or any Affiliate shall submit such C Notes to the
Trustees for cancellation.
(c) Resale Pursuant to Rule 144A or Regulation S. The Initial Purchaser
understands that the C Notes have not been and will not be registered under the
1933 Act and may not be offered or sold within the United States or to, or for
the account or benefit of, U.S. persons except pursuant to an exemption from the
registration requirements of the 1933 Act. The Initial Purchaser represents and
agrees, that, except as permitted by Section 6(a) above, it has offered and sold
C Notes and will offer and sell C Notes as part of their distribution at any
time only in accordance with (A) Rule 144A under the 1933 Act, (B) Regulation S
of the Securities Act, or (C) another applicable exemption from the registration
provisions of the 1933 Act. The Initial Purchaser represents and agrees that it
has offered and sold the C Notes only in compliance with Rule 903 or Rule 144A.
Accordingly, none of the Initial Purchaser nor any of its affiliates has engaged
or will engage in any directed selling efforts with respect to the C Notes, and
the Initial Purchaser, and each of its affiliates, has complied and will comply
with the offering restrictions requirements of Regulation S. The Initial
Purchaser agrees that, at or prior to confirmation of a sale of C Notes (other
than a sale of C Notes pursuant to Rule 144A) it will have sent to each
distributor, dealer or person receiving a selling concession, fee or other
remuneration that purchases C Notes from it or through it during the restricted
period a confirmation or notice to substantially the following effect:
"The Securities covered hereby have not been registered
under the United States Securities Act of 1933 (the
"Securities Act") and may not be offered or sold within
the United States or to or for the account or benefit of
U.S. persons as part of their distribution at any time
except in accordance with Rule 144A under the Securities
Act or another exemption from the registration
requirements of the Securities Act."
(d) Offers and Sales in Poland and The Netherlands. The Initial Purchaser
has advised the Company and hereby represents and warrants to and agrees with
the Company that
19
it will not offer or sell the C Notes in Poland except in accordance with Polish
foreign exchange regulations under circumstances which do not constitute a
public offering or distribution of securities under Polish laws and regulations.
The Initial Purchaser further agrees it will not offer or sell the C Notes in
The Netherlands except under circumstances which do not constitute a public
offering or distribution (aanbod buiten besloten kring) of securities under the
laws and regulations of The Netherlands.
(e) Offers and Sales in the United Kingdom. The Initial Purchaser hereby
represents, warrants and agrees that (i) it has not offered or sold and prior to
the expiration of the period six months after the date of issue of the C Notes
will not offer to sell by means of any document any C Notes to persons in the
United Kingdom except to persons whose ordinary activities involve them in
acquiring, holding, managing or disposing of investments (as principal or agent)
for the purposes of their businesses or otherwise in circumstances which have
not resulted and will not result in an offer to the public in the United Kingdom
within the meaning of the Public Offers of Securities Regulations 1995; (ii) it
has complied and will comply with all applicable provisions of the Financial
Services Act 1986 with respect to anything done by it in relation to the C Notes
in, from or otherwise involving the United Kingdom and (iii) it has only issued
or passed on, and will only issue or pass on in the United Kingdom any document
received by it in connection with the issue of the C Notes to a person who is of
a kind described in Article 11(3) of the Financial Services Act 1986 (Investment
Advertisements) (Exemptions) Order 1995 or is a person to whom such document may
otherwise lawfully be issued or passed on.
(f) Representation and Warranty of the Initial Purchaser. The Initial
Purchaser represents and agrees that it has not entered and will not enter into
any contractual arrangements with respect to the distribution of the C Notes,
except with its affiliates or with the prior written consent of the Company.
SECTION 7. Indemnification.
(a) Indemnification of the Initial Purchaser. The Company agrees to
indemnify and hold harmless the Initial Purchaser and each person, if any, who
controls such Initial Purchaser within the meaning of Section 15 of the 1933 Act
or Section 20 of the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in the C Notes Offering
Memorandum (or any amendment or supplement thereto), or the omission or
alleged omission therefrom of a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any
20
litigation, or any investigation or proceeding by any governmental
agency or body, commenced or threatened, or of any claim whatsoever
based upon any such untrue statement or omission, or any such
alleged untrue statement or omission; provided that (subject to
Section 7(d) below) any such settlement is effected with the written
consent of the Company; and
(iii) against any and all expense whatsoever, as incurred (including
the fees and disbursements of counsel chosen by Merrill Lynch), reasonably
incurred in investigating, preparing or defending against any litigation,
or any investigation or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or
omission, to the extent that any such expense is not paid under (i) or
(ii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by the
Initial Purchaser expressly for use in the C Notes Offering Memorandum (or any
amendment thereto).
(b) Indemnification of the Company, Directors and Officers. The Initial
Purchaser agrees to indemnify and hold harmless the Company and each person, if
any, who controls the Company within the meaning of Section 15 of the 1933 Act
or Section 20 of the 1934 Act against any and all loss, liability, claim, damage
and expense described in the indemnity contained in subsection (a) of this
Section, as incurred, but only with respect to untrue statements or omissions,
or alleged untrue statements or omissions, made in the C Notes Offering
Memorandum in reliance upon and in conformity with written information furnished
to the Company by the Initial Purchaser expressly for use in the C Notes
Offering Memorandum.
(c) Actions Against Parties; Notification. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to Section 7(a) above,
counsel to the indemnified parties shall be selected by Merrill Lynch, and, in
the case of parties indemnified pursuant to Section 7(b) above, counsel to the
indemnified parties shall be selected by the Company. An indemnifying party may
participate at its own expense in the defense of any such action; provided,
however, that counsel to the indemnifying party shall not (except with the
consent of the indemnified party) also be counsel to the indemnified party. In
no event shall the indemnifying parties be liable for fees and expenses of more
than one counsel (in addition to
21
any local counsel) separate from their own counsel for all indemnified parties
in connection with any one action or separate but similar or related actions in
the same jurisdiction arising out of the same general allegations or
circumstances. No indemnifying party shall, without the prior written consent of
the indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever in respect of which indemnification or contribution could be sought
under this Section 7 or Section 8 hereof (whether or not the indemnified parties
are actual or potential parties thereto), unless such settlement, compromise or
consent (i) includes an unconditional release of each indemnified party from all
liability arising out of such litigation, investigation, proceeding or claim and
(ii) does not include a statement as to or an admission of fault, culpability or
a failure to act by or on behalf of any indemnified party.
(d) Settlement Without Consent if Failure to Reimburse. If at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for reasonable fees and expenses of counsel, such indemnifying
party agrees that it shall be liable for any settlement of the nature
contemplated by Section 7(a)(ii) effected without its written consent if (i)
such settlement is entered into more than 45 days after receipt by such
indemnifying party of the aforesaid request, (ii) such indemnifying party shall
have received notice of the terms of such settlement at least 30 days prior to
such settlement being entered into and (iii) such indemnifying party shall not
have reimbursed such indemnified party in accordance with such request prior to
the date of such settlement.
SECTION 8. Contribution. If the indemnification provided for in Section 7
hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and the Initial Purchaser on the other hand from the offering of the C
Notes pursuant to this Agreement or (ii) if the allocation provided by clause
(i) is not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above but also
the relative fault of the Company on the one hand and of the Initial Purchaser
on the other hand in connection with the statements or omissions which resulted
in such losses, liabilities, claims, damages or expenses, as well as any other
relevant equitable considerations.
The relative benefits received by the Company on the one hand and the
Initial Purchaser on the other hand in connection with the offering of the C
Notes pursuant to this Agreement shall be deemed to be in the same respective
proportions as the total net proceeds from the offering of the C Notes pursuant
to this Agreement (before deducting expenses) received by the Company and the
total underwriting discount received by the Initial Purchaser, bear to the
aggregate initial offering price of the C Notes.
22
The relative fault of the Company on the one hand and the Initial
Purchaser on the other hand shall be determined by reference to, among other
things, whether any such untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact relates to information
supplied by the Company or by the Initial Purchaser and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The Company and the Initial Purchaser agree that it would not be just and
equitable if contribution pursuant to this Section 8 were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to above in this Section 8. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section 8 shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
Notwithstanding the provisions of this Section 8, the Initial Purchaser
shall not be required to contribute any amount in excess of the amount by which
the total price at which the C Notes underwritten by it and distributed to the
Subsequent Purchasers were offered to the Subsequent Purchasers exceeds the
amount of any damages which such Initial Purchaser has otherwise been required
to pay by reason of such untrue or alleged untrue statement or omission or
alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 8, each person, if any, who controls the
Initial Purchaser within the meaning of Section 15 of the 1933 Act or Section 20
of the 1934 Act shall have the same rights to contribution as such Initial
Purchaser, and each person, if any, who controls the Company within the meaning
of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall have the same
rights to contribution as the Company.
SECTION 9. Representations, Warranties and Agreements to Survive Delivery.
All representations, warranties and agreements contained in this Agreement or in
certificates of officers of the Company or any of its subsidiaries submitted
pursuant hereto shall remain operative and in full force and effect, regardless
of any investigation made by or on behalf of any Initial Purchaser or
controlling person, or by or on behalf of the Company, and shall survive
delivery of the C Notes to the Initial Purchaser.
23
SECTION 10. Termination of Agreement.
(a) Termination; General. The Initial Purchaser may terminate this
Agreement, by notice to the Company, at any time at or prior to the Closing Time
(i) if there has been, since the time of execution of this Agreement or since
the respective dates as of which information is given in the C Notes Offering
Memorandum, any material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business, or (ii) if there has occurred any
material adverse change in the financial markets in the United States, the
Republic of Poland or the international financial markets, any outbreak of
hostilities or escalation thereof or other calamity or crisis or any change or
development involving a prospective change in national or international
political, financial or economic conditions, or in Polish taxation affecting the
Company or any subsidiary thereof or the transactions contemplated by the C
Notes Offering Memorandum, or currency exchange rates for the U.S. dollar into
the Polish Zloty or exchange controls applicable to the U.S. dollar or the
Polish Zloty, in each case the effect of which is such as to make it, in the
judgment of the Initial Purchaser, impracticable to market the C Notes or to
enforce contracts for the sale of the C Notes, or (iii) if trading in any C
Notes of the Company has been suspended or materially limited by the Commission,
or if trading generally on the American Stock Exchange, the New York Stock
Exchange or in the Nasdaq National Market has been suspended or materially
limited, or minimum or maximum prices for trading have been fixed, or maximum
ranges for prices have been required, by any of said exchanges or by such system
or by order of the Commission, the National Association of Securities Dealers,
Inc. or any other governmental authority, or (iv) if a banking moratorium has
been declared by Polish, United States Federal or New York authorities.
(b) Liabilities. If this Agreement is terminated pursuant to this Section,
such termination shall be without liability of any party to any other party
except as provided in Section 4 hereof, and provided further that Sections 1, 7,
8 and 9 shall survive such termination and remain in full force and effect.
SECTION 11. [Reserved]
SECTION 12. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given if mailed, sent by
courier or express delivery company or transmitted by any standard form of
telecommunication. Notices to the Initial Purchaser shall be directed to the
Initial Purchaser at Merrill Lynch International, 25 Ropemaker Place, Ropemaker
Street, London, EC2Y 9LY, attention of Scott Hague; notices to the Company shall
be directed to it at One Commercial Plaza, Hartford, Connecticut 06103-3585,
attention of Robert E. Fowler, III.
SECTION 13. Parties. This Agreement shall inure to the benefit of and be
binding upon the Initial Purchaser and the Company and their respective
successors. Nothing
24
expressed or mentioned in this Agreement is intended or shall be construed to
give any person, firm or corporation, other than the Initial Purchaser and the
Company and their respective successors and the controlling persons and officers
and directors referred to in Sections 7 and 8 and their heirs and legal
representatives, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision herein contained. This Agreement and
all conditions and provisions hereof are intended to be for the sole and
exclusive benefit of the Initial Purchaser and the Company and their respective
successors, and said controlling persons and officers and directors and their
heirs and legal representatives, and for the benefit of no other person, firm or
corporation. No purchaser of C Notes from the Initial Purchaser shall be deemed
to be a successor by reason merely of such purchase.
SECTION 14. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.
SECTION 15. Effect of Headings. The Article and Section headings
herein and the Table of Contents are for convenience only and shall not
affect the construction hereof.
SECTION 16. Counterparts. This Agreement may be executed in one or more
counterparts and when a counterpart has been executed by each party, all such
counterparts taken together shall constitute one and the same agreement.
25
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
between the Initial Purchaser and the Company in accordance with its terms.
Very truly yours,
@ENTERTAINMENT, INC.
By /S/ ROBERT E. FOWLER III
--------------------------------------
Title:
By /S/ DONALD MILLER-JONES
-------------------------------------
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH INTERNATIONAL
By /S/ MARISA DREW
--------------------------------
Authorized Signatory
26
SCHEDULE A
Principal
Amount at
Maturity of
Name of Underwriter C Notes
- ------------------------- -----------
Merrill Lynch International.................. $36,001,321
-----------
-----------
Total........................................ $36,001,321
===========
Sch A-1
SCHEDULE B
@Entertainment Zero/Step-Up Private Placement
Issuer: @Entertainment
Status: Senior, Unsecured Notes ranking pari passu with
all other existing and unsubordinated obligations of
the Issuer
Notional Amount: US$36,001,321
Trade Date: January 18, 1999
Settlement Date: January 20, 1999
Final Maturity: July 15, 2008
Amortization: Bullet
Coupon: Zero until the Coupon Payment Period Ending July 15,
2004. Seven (7) percent per annum of the Notional
Amount thereafter . Interest begins accruing on
January 15, 2004
Coupon Payment Dates: January 15 and July 15, commencing on July 15, 2004
Issue Yield: 18 1/2%
Issue Price: 27.262% of notional
Issue Redemption: Callable by the Issuer in whole on any
Coupon Payment Date beginning July 15, 2004 at 109% of
accreted value plus accrued interest, if any, and
decreasing ratably thereafter.
Change of Control Following the occurrence of a Change of
Control (as defined in the Indenture), each holder of
Notes will have the right to require the Issuer to
purchase all or a portion of such holder?s Notes at a
purchase price in cash equal to 101% of the Accreted
Value of the Notes plus accrued and unpaid interest, if
any, to the date of purchase.
Asset Sale Proceeds The Issuer will be required in certain
circumstances to make offers to repurchase the Notes, on
a pro rata basis, at 100% of the Accreted Value of the
Notes, plus accrued interest, if any, to the date of
repurchase, with the net cash proceeds of certain sales
or dispositions of assets in one transaction or a series
of related transactions.
Restrictive Covenants The Indenture governing the Notes will include
covenants with respect to the following matters: (i)
limitation on indebtedness; (ii) limitation on
restricted payments; (iii) limitation on issuances
and sale of capital stock of restricted subsidiaries;
(iv) limitations on transactions with affiliates; (v)
limitations on liens; (vi) limitation on sale of
assets; (vii) limitation on dividend and other
payment restrictions affecting restricted
subsidiaries; (viii) consolidations, mergers, and
sale of assets; and (ix) limitation on lines of
business.
The foregoing represent indicative terms and conditions of interest in a
transaction and do not represent a definitive offering of securities. This
material is for discussion purposes and we are not soliciting any action based
upon it. We are acting solely in the capacity of an arm's-length contractual
counterparty and not in the capacity of your
Sch B-1
financial advisor or fiduciary. We or our affiliates may from time to time have
long or short positions in, and may make a market in, or otherwise buy or sell
instruments identical or economically related to any OTC derivative transaction
entered into with you, or may have an investment banking or other commercial
relationship with the issuer of any security or financial instrument underlying
an OTC derivative transaction entered into with you. THIS BRIEF STATEMENT DOES
NOT DISCLOSE ALL OF THE RISKS AND OTHER SIGNIFICANT ASPECTS OF ENTERING INTO OTC
TRANSACTIONS.
Sch B-2
SCHEDULE C
LIST OF DESIGNATED SUBSIDIARIES
1. ETV Sp. z o.o.
2. Telewizja Kablowa GOSAT Sp. z o.o.
3. Ground Zero Media Sp. z o.o.
4. Otwocka Telewizja Kablowa Sp. z o.o.
5. Polska Telewizja Kablowa S.A.
6. Polska Telewizja Kablowa Krakow S.A.
7. Polska Telewizja Kablowa Lublin S.A.
8. Polska Telewizja Kablowa Operator Sp. z o.o.
9. Polska Telewizja Kablowa Szczecin Sp. z o.o.
10. Polska Telewizja Kablowa Warszawa S.A.
11. Poltelkab Sp. z o.o.
12. ProCable Sp. z o.o.
13. Szczecinska Telewizja Kablowa Sp. z o.o.
12. TV Kabel Sp. z o.o.
13. At Entertainment Limited
14. Poland Communications, Inc.
15. Poland Cablevision (Netherlands) B.V.
16. Sereke Holding B.V.
17. Wizja TV Sp. z o.o.
Sch C-1
18. WPTS Sp. z o.o.
19. @Entertainment Programming, Inc.
Sch C-2
Exhibit D
FORM OF UNITED STATES LAW OPINION OF COMPANY'S
COUNSEL TO BE DELIVERED PURSUANT TO
SECTION 5(a)(i)
(i) The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of Delaware;
(ii) The Company has corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the C Note
Offering Memorandum and to enter into and perform its obligations under the
Purchase Agreement, the Indenture and the C Notes;
(iii) The Company is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure so to qualify or
to be in good standing would not result in a Material Adverse Effect;
(iv) Each Designated Subsidiary incorporated in a jurisdiction in
the United States (collectively, the "U.S. Designated Subsidiaries") of the
Company has been duly incorporated and is validly existing as a corporation in
good standing under the laws of its jurisdiction of incorporation; and all of
the issued shares of capital stock of each such subsidiary have been duly and
validly authorized and issued, are fully paid and non-assessable, and are owned
directly or indirectly by the Company, free and clear of all liens,
encumbrances, equities or claims;
(v) The authorized, issued and outstanding capital stock of the
Company is as set forth in the C Note Offering Memorandum under the caption
"Description of Capital Stock" (except for subsequent issuances, if any,
pursuant to employee benefit plans referred to in the C Note Offering Memorandum
or pursuant to the exercise of convertible securities or options referred to in
the C Note Offering Memorandum); the shares of issued and outstanding capital
stock of the Company have been duly authorized and validly issued and are fully
paid and non-assessable; and none of the outstanding shares of capital stock of
the Company was issued in violation of any preemptive or other similar rights of
any security holder of the Company;
(vi) The C Note Purchase Agreement has been duly authorized,
executed and delivered by the Company;
(vii) The Indenture has been duly authorized, executed and delivered
by the Company and (assuming the due authorization, execution and delivery
thereof by the Trustee) constitutes a valid and binding agreement of the
Company, enforceable against the Company in
accordance with its terms, except as the enforcement thereof may be limited by
bankruptcy, insolvency (including, without limitation, all laws relating to
fraudulent transfers), reorganization, moratorium or other similar laws relating
to or affecting enforcement of creditors' rights generally, or by general
principles of equity (regardless of whether enforcement is considered in a
proceeding in equity or at law) and the waiver contained in Section 514 thereof
may be unenforceable due to interests of public policy;
(viii) The C Notes are in the form contemplated by the Indenture,
have been duly authorized by the Company and, assuming that the C Notes have
been duly executed by the Company and authenticated by the Trustee in the manner
described in its certificate delivered to you today (which fact such counsel
need not determine by an inspection of the C Notes), the C Notes have been duly
issued and delivered by the Company and constitute valid and binding obligations
of the Company, enforceable against the Company in accordance with their terms,
except as the enforcement thereof may be limited by bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent transfers),
reorganization, moratorium or similar laws affecting enforcement of creditors'
rights generally and except as enforcement thereof is subject to general
principles of equity (regardless of whether enforceability is considered in a
proceeding in equity or at law), and will be entitled to the benefits of the
Indenture;
(ix) The C Notes and the Indenture conform in all material respects
to the descriptions thereof contained in the C Note Offering Memorandum;
(x) Except as described in the C Note Offering Memorandum, there is
not pending or, to the best of their knowledge, threatened any action, suit,
proceeding, inquiry or investigation, to which the Company or any subsidiary is
a party, or to which the property of the Company or any subsidiary thereof is
subject, before or brought by any court or governmental agency or body, which
might reasonably be expected to result in a Material Adverse Effect, or which
might reasonably be expected to materially and adversely affect the properties
or assets thereof or the consummation of (1) the transactions contemplated in
the Purchase Agreement, the Indenture or the C Notes or the performance by the
Company of its obligations thereunder or (2) the transactions contemplated by
the C Note Offering Memorandum;
(xi) The information in the C Note Offering Memorandum under
"Compensation Plans", "Certain Relationships and Related Transactions",
"Description of Indebtedness", "Description of the Series C Notes", "Description
of Capital Stock", "United States Income Tax Considerations" and "Plan of
Distribution", to the extent that it constitutes matters of law, summaries of
legal matters or legal proceedings, or legal conclusions, has been reviewed by
them and is correct in all material respects;
(xii) All descriptions in the C Note Offering Memorandum of
contracts, licenses and other documents to which the Company or any of its
subsidiaries is a party are
D-4
accurate in all material respects; to the best of their knowledge, there are no
franchises, contracts, indentures, mortgages, loan agreements, notes, leases or
other instruments that would be required to be described in the C Note Offering
Memorandum, if the C Note Offering Memorandum were a prospectus filed as part of
a registration statement on Form S-1 under the 1933 Act, that are not described
or referred to in the C Note Offering Memorandum other than those described or
referred to therein or incorporated by reference thereto, and the descriptions
thereof or references thereto are correct in all material respects;
(xiii) Neither the Company nor any of its U.S. Designated
Subsidiaries is in violation of its certificate of incorporation or by-laws (or
other similar organizational documents) nor is the Company or any of its
subsidiaries in violation of any applicable law, statute, rule, regulation,
judgment, order, writ or decree of any government, government instrumentality or
court, domestic or foreign, having jurisdiction over the Company or any of its
subsidiaries or any of their assets or properties, except for such violations as
are specifically identified as such and described in the C Note Offering
Memorandum, and no default by the Company or any of its subsidiaries exists in
the due performance or observance of any obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, loan agreement, note,
lease or other agreement or instrument that is described or referred to in the C
Note Offering Memorandum, except such defaults as are specifically identified as
such and described in the C Note Offering Memorandum and except for such
defaults that would not result in a Material Adverse Effect;
(xiv) No authorization, approval, consent or order of any court or
governmental authority or agency (other than such as may be required under the
applicable securities laws of the various jurisdictions in which the C Notes
will be offered or sold, as to which they need express no opinion) is required
in connection with the due authorization, execution and delivery of the Purchase
Agreement or the Indenture, for the offering, issuance, sale or delivery of the
C Notes to the Initial Purchaser or the resale thereof by the Initial Purchaser
in accordance with the Purchase Agreement;
(xv) It is not necessary in connection with the offer, sale and
delivery of the C Notes to the Initial Purchaser and to each Subsequent
purchaser in the manner contemplated by the Purchase Agreement and the C Note
Offering Memorandum to register the C Notes under the 1933 Act or to qualify the
Indenture under the Trust Indenture Act;
(xvi) The execution, delivery and performance of the Purchase
Agreement, the Indenture and the C Notes and the consummation of the
transactions contemplated in the Purchase Agreement, the Indenture and in the C
Note Offering Memorandum (including the use of the proceeds from the sale of the
C Notes as described in the C Note Offering Memorandum under the caption "Use Of
Proceeds") and compliance by the Company with its obligations under the Purchase
Agreement, the Indenture and the C Notes will not, whether with or without the
giving of notice or lapse of time or both, conflict with or constitute a breach
of, or default or Repayment Event under or result in the creation or imposition
of any
D-5
lien, charge or encumbrance upon any property or assets of the Company or any of
its subsidiaries pursuant to any contract, indenture, mortgage, deed of trust,
loan or credit agreement, note, lease or any other agreement or instrument
identified to them by the Company to which the Company or any of its
subsidiaries is a party or by which it or any of them may be bound, or to which
any of the property or assets of the Company or any of its subsidiaries is
subject (except for such conflicts, breaches or defaults or liens, charges or
encumbrances that would not have a Material Adverse Effect), nor will such
action result in any violation of the provisions of the charter or by-laws of
the Company, or any applicable law, statute, rule, regulation, judgment, order,
writ or decree of any government, government instrumentality or court, domestic
or foreign, having jurisdiction over the Company or any subsidiary thereof or
any of their respective properties, assets or operations, that is identified to
such counsel by the Company;
(xvii) The Company is not an "investment company" or an entity
"controlled" by an "investment company," as such terms are defined in the 1940
Act; and
(xviii) There are no restrictions (legal, contractual or otherwise)
on the ability of the U.S. Designated Subsidiaries to declare and pay dividends
or make any payment or transfer of property or assets to their shareholders
other than those referred to in the C Note Offering Memorandum.
(xix) The form of certificate used to evidence the C Notes complies
in all material respects with all applicable statutory requirements and with any
applicable requirements of the charter and by-laws of the Company.
Such counsel may state that they have not verified, and are not
passing upon and do not assume any responsibility for, the accuracy,
completeness or fairness of the statements contained in the C Note Offering
Memorandum (except for their opinions under paragraphs [(xi), (xiii) and (xiv)]
above insofar as such statements concern legal matters) and that they have
participated in conferences with the Company, representatives of the Initial
Purchaser and their counsel and the independent public accountants for the
Company at which the C Note Offering Memorandum was prepared and the contents
thereof and related matters were discussed. In the course of these conferences
and discussions, no facts have come to their attention that would lead them to
believe that the C Note Offering Memorandum (except for financial statements and
schedules and other financial data included or incorporated by reference therein
as to which they need make no statement), at the time the C Note Offering
Memorandum was issued or at the Closing Time, included or includes an untrue
statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of Dutch law, upon the opinion of Baker & McKenzie,
special Netherlands counsel
D-6
to Poland Cablevision (Netherlands) B.V. (which opinion shall be delivered to
the Initial Purchaser at the Closing Time pursuant to the provisions of Section
5(a)(ii)), of the C Note Purchase Agreement, (B) as to matters involving the
application of English law, upon the opinion of Ashurst Morris Crisp, special
English counsel to the Company (which opinion shall be delivered to the Initial
Purchaser at the Closing Time pursuant to the provisions of Section 5(a)(iii)),
(C) as to matters involving the application of Polish law, upon the opinion of
Baker & McKenzie Sp z.o.o., special Polish counsel to the Company (which opinion
shall be delivered to the Initial Purchaser at the Closing Time pursuant to the
provisions of Section 5(a)(i)) of the C Note Purchase Agreement), and (D) as to
matters of fact (but not as to legal conclusions), to the extent they deem
proper, on certificates of responsible officers of the Company and public
officials. Such opinion shall not state that it is to be governed or qualified
by, or that it is otherwise subject to, any treatise, written policy or other
document relating to legal opinions, including, without limitation, the Legal
Opinion Accord of the ABA Section of Business Law (1991).
D-7
Exhibit E
FORM OF POLISH LAW OPINION OF COMPANY'S COUNSEL
TO BE DELIVERED PURSUANT TO
SECTION 5(a)(i)
(i) Each Polish Designated Subsidiary has been duly incorporated and
is validly existing as a corporation under the laws of the Republic of Poland,
has corporate power and authority to own, lease and operate its properties and
to conduct its business as described in the C Note Offering Memorandum and is
not required to be qualified as a foreign corporation to transact business in
any jurisdiction in which it owns or leases property or conducts business; all
of the issued and outstanding capital stock of each Polish Designated Subsidiary
has been duly authorized and validly issued, is fully paid and non-assessable
and, to the best of their knowledge and information, except as otherwise
disclosed in the C Note Offering Memorandum, is owned by the Company, directly
or through subsidiaries, free and clear of any security interest, mortgage,
pledge, lien, encumbrance, claim or equity, except in the case of any Polish
limited liability company, any statutory liability for taxes and for the Share
Pledges;
(ii) Except as described in the C Note Offering Memorandum, there is
not pending or, to the best of their knowledge, threatened, any action, suit,
proceeding, inquiry or investigation, to which the Company or any subsidiary is
a party, or to which the property of the Company or any subsidiary is subject,
before or brought by any court or governmental agency or body, which might
reasonably be expected to result in a Material Adverse Effect, or which might
reasonably be expected to materially and adversely affect the properties or
assets thereof or the consummation of (1) the Purchase Agreement, the Indenture
or the C Notes or the performance by the Company of its obligations thereunder
or (2) the transactions contemplated by the C Note Offering Memorandum;
(iii) The Company and its Polish Designated Subsidiaries have good
and marketable title to all real property owned by them, in each case free and
clear of all liens, encumbrances and defects, except the Asset Encumbrances,
such as are described in the C Note Offering Memorandum or such as do not result
in a Material Adverse Effect; and any real property and buildings held under
lease by the Company and its Polish Designated Subsidiaries are held by them
under valid, subsisting and enforceable leases with such exceptions as do not
result in a Material Adverse Effect;
(iv) The information in the C Note Offering Memorandum under "Risk
Factors - Regulation of the Polish Cable Television Industry", "Risk Factors -
Polish Regulation of the DTH Market", "Risk Factors - Limitations on Foreign
Ownership of Multi-Channel Pay Television Operators and Broadcasters", the first
four paragraphs of "Risk
Factors - Regulation of Competition", the first, second, third and fifth
paragraph of "Risk Factors Political and Economic Risks; Enforcement of Foreign
Judgments", "Business -Property", "Business - Legal Proceedings", "Regulation",
and "Certain Relationships and Related Transactions", to the extent that it
constitutes matters of law, summaries of legal matters, the charter and bylaws
(or similar organizational documents) of any subsidiaries of the Company or
legal proceedings, or legal conclusions, has been reviewed by them and is
correct in all material respects;
(v) All descriptions in the C Note Offering Memorandum of contracts
and other documents to which the Company or any of its subsidiaries is a party
are accurate in all material respects; to the best of their knowledge, there are
no franchises, contracts, indentures, mortgages, loan agreements, notes, leases
or other instruments that would be required to be described in the C Note
Offering Memorandum, if the C Note Offering Memorandum were a prospectus filed
as part of a registration statement on Form S-1 under the 1933 Act, that are not
described or referred to in the C Note Offering Memorandum other than those
described or referred to therein or incorporated by reference thereto, and the
descriptions thereof or references thereto are correct in all material respects;
(vi) None of the Polish Designated Subsidiaries is in violation of
its charter or by-laws (or other similar organizational documents) nor is the
Company or any of its subsidiaries in violation of any applicable law, statute,
rule, regulation, judgment, order, writ or decree of any government, government
instrumentality or court, domestic or foreign, having jurisdiction over the
Company or any of its subsidiaries or any of their assets or properties, except
for such violations as are specifically identified as such and described in the
C Note Offering Memorandum and except for such violations that would not result
in a Material Adverse Effect and no default by the Company or any of its
subsidiaries exists in the due performance or observance of any obligation,
agreement, covenant or condition contained in any contract, indenture, mortgage,
loan agreement, note, lease or other agreement or instrument that is described
or referred to in the C Note Offering Memorandum, except such defaults as are
specifically identified and described in the C Note Offering Memorandum and
except for such defaults that would not result in a Material Adverse Effect;
(vii) The execution, delivery and performance of the Purchase
Agreement, the Indenture and the C Notes and the consummation of the
transactions contemplated in the Purchase Agreement and in the C Note Offering
Memorandum (including the use of the proceeds from the sale of the C Notes as
described in the C Note Offering Memorandum under the caption "Use Of Proceeds")
and compliance by the Company with its obligations under the Purchase Agreement,
the Indenture and the C Notes will not, whether with or without the giving of
notice or lapse of time or both, conflict with or constitute a breach of, or
default or Repayment Event under or result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of the Company or any
subsidiary thereof pursuant to any contract, indenture, mortgage, deed of trust,
loan or credit agreement, note, lease or any other agreement or instrument,
known to them, to which the Company or any subsidiary
E-2
thereof is a party or by which it or any of them may be bound, or to which any
of the property or assets of the Company or any subsidiary thereof is subject
nor will such action result in any violation of the provisions of the charter or
by-laws (or other similar organizational documents) of any Polish subsidiary of
the Company, or any applicable law, statute, rule, regulation, judgment, order,
writ or decree of any government, government instrumentality or court, domestic
or foreign, having jurisdiction over the Company or any subsidiary thereof or
any of their respective properties, assets or operations;
(viii) Except as described in the C Note Offering Memorandum, each
of the Polish Designated Subsidiaries owns or possesses or has obtained all
material governmental licenses, certificates, permits, concessions, consents,
orders, approvals and other authorizations necessary to hold all concessions,
leases and permits or own its properties, including, without limitation, all
licenses and permits relating to intellectual property, and to carry on its
business as presently conducted and as contemplated in the C Note Offering
Memorandum, and, to the best of their knowledge after due inquiry, none of the
Designated Subsidiaries has received any notice relating to the revocation or
modification of any such concession, license, certificate, permit, consent,
order, approval or other authorizations;
(ix) Each of the Management Agreements (as such term is defined in
the Indenture) has been duly authorized, executed and delivered by the parties
thereto and constitutes a valid and binding agreement of each of the parties
thereto, enforceable against each of the parties thereto in accordance with its
terms, except as the enforcement thereof may be limited by bankruptcy,
insolvency (including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or other similar laws relating to or
affecting enforcement of creditors? rights generally, or by general principles
of equity (regardless of whether enforceability is considered in a proceeding in
equity or at law);
(x) There are no restrictions (legal, contractual or otherwise) on
the ability of the Polish Designated Subsidiaries to declare and pay dividends
or make any payment or transfer of property or assets to their shareholder other
than those described in the C Note Offering Memorandum and except for the Share
Pledges and the Asset Encumbrances; and such descriptions, if any, fairly
summarize such restrictions; and
(xi) No authorization, approval, consent or order of any court or
governmental authority or agency (other than such as may be required under the
applicable securities laws of the various jurisdictions in which the C Notes
will be offered or sold, as to which they need express no opinion) is required
in connection with the due authorization, execution and delivery of the Purchase
Agreement, the Indenture or for the offering, issuance, sale or delivery of the
C Notes to the Initial Purchaser or the resale by the Initial Purchaser in
accordance with the Purchase Agreement.
Such counsel may state that they have not verified, and are not
passing upon and do not assume any responsibility for, the accuracy,
completeness or fairness of the statements
E-3
contained in the C Note Offering Memorandum (except for their opinions under
paragraphs (iv), (v) and (x) above insofar as such statements concern legal
matters) and that they have participated in conferences with the Company,
representatives of the Initial Purchaser and their counsel and the independent
public accountants for the Company at which the C Note Offering Memorandum was
prepared and the contents thereof and related matters were discussed. In the
course of these conferences and discussions, no facts have come to their
attention that would lead them to believe that the C Note Offering Memorandum
(except for financial statements and schedules and other financial data included
or incorporated by reference therein as to which they need make no statement),
contained an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading or that the C Note Offering Memorandum or any amendment or
supplement thereto (except for financial statements and schedules and other
financial data included or incorporated by reference therein, as to which such
counsel need make no statement), at the time the C Note Offering Memorandum was
issued, at the time any such amended or supplemented C Note Offering Memorandum
was issued or at the Closing Time, included or includes an untrue statement of a
material fact or omitted or omits to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of Netherlands law, upon the opinion of Baker &
McKenzie, special Netherlands counsel to the Company (which opinion shall be
delivered to the Initial Purchaser at the Closing Time pursuant to the
provisions of section 5(a)(ii) of the C Note Purchase Agreement), (B) as to
matters involving the application of English law, upon the opinion of Ashurst
Morris Crisp, special English counsel to the Company (which opinion shall be
delivered to the Initial Purchaser at the Closing Time pursuant to the
provisions of Section 5(a)(iii) of the C Note Purchase Agreement) and (C) as to
matters involving the application of the law of the State of New York, the
General Corporation Law of the State of Delaware and the federal law of the
United States, upon the opinion of Baker & McKenzie, United States counsel to
the Company (which opinion shall be delivered to the Initial Purchaser at the
Closing Time pursuant to the provisions of Section 5(a)(i) of the C Note
Purchase Agreement) and (D) as to matters of fact (but not as to legal
conclusions), to the extent they deem proper, on certificates of responsible
officers of the Company and public officials. Such opinion shall not state that
it is to be governed or qualified by, or that it is otherwise subject to, any
treatise, written policy or other document relating to legal opinions,
including, without limitation, the Legal Opinion Accord of the ABA Section of
Business Law (1991).
E-4
Exhibit F
FORM OF OPINION OF COMPANY'S DUTCH COUNSEL
TO BE DELIVERED PURSUANT TO
SECTION 5(a)(ii)
(i) Sereke has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the Netherlands, has corporate
power and authority to own, lease and operate its properties and to conduct its
business as described in the C Note Offering Memorandum and is duly registered
with the local Dutch trade register. Under Dutch law, Sereke is not required to
be qualified as a foreign corporation to transact business in the Netherlands.
Of the issued and outstanding capital stock of Sereke, consisting of 375 shares,
75 have been duly authorized and validly issued, are fully paid and
non-assessable. @Entertainment owns all 75 shares free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equity;
(ii) There are no restrictions (legal, contractual or otherwise) on
the ability of Sereke to declare and pay dividends or make any payment or
transfer of property or assets to its shareholders other than those described in
the C Note Offering Memorandum and such descriptions, if any, fairly summarize
such restrictions;
(iii) Except as described in the C Note Offering Memorandum there is
not pending or, to the best of their knowledge, threatened any action, suit,
proceeding, inquiry or investigation, to which Sereke is a party, or to which
the property of Sereke is subject, before or brought by any Dutch court or
governmental agency or body, which might be expected to result in a Material
Adverse Effect, or which might reasonably be expected to materially and
adversely affect the properties or assets thereof or the consummation of (1) the
C Note Purchase Agreement or the performance by the Company of its obligations
hereunder (if any) or (2) the transactions contemplated by the C Note Offering
Memorandum;
(iv) All descriptions in the C Note Offering Memorandum of contracts
and other documents to which Sereke is a party are accurate in all material
respects; to the best of their knowledge, there are no franchises, contracts,
indentures, mortgages, loan agreements, notes, leases or other instruments that
would be required to be described in the C Note Offering Memorandum if it were a
prospectus filed as part of a registration statement on Form S-1 under the 1933
Act that are not described or referred to in the C Note Offering Memorandum
other than those described or referred to therein, and the descriptions thereof
and references thereto are correct in all material respects;
(v) Sereke is not in violation of its statutes or by-laws (or other
similar organizational documents) nor, to the best of their knowledge, is Sereke
in violation of any
applicable Dutch law, statute, rule, regulation, judgment, order, writ or decree
of any Dutch government, government instrumentality or court having jurisdiction
over Sereke or any of its assets or properties, except as described in the C
Note Offering Memorandum, and no default by Sereke exists in the due performance
or observance of any obligation, agreement, covenant or condition contained in
any contract, license, indenture, mortgage, loan agreement, note, lease or other
agreement or instrument that is described or referred to in the C Note Offering
Memorandum, except as described in the C Note Offering Memorandum and except for
such defaults that would not result in a Material Adverse Effect;
(vi) Except as otherwise disclosed in the C Note Offering
Memorandum, Sereke owns or possesses or has obtained all material licenses,
certificates, permits, concessions, consents, orders, approvals and other
governmental authorizations necessary to hold all its concessions, leases and
permits or own its properties, including, without limitation, all licenses and
permits relating to intellectual property, and to carry on its business as
presently conducted and as contemplated in the C Note Offering Memorandum, and
Sereke has not received any notice relating to the revocation or modification of
any such concession, license, certificate, permit, consent, order, approval or
other authorizations;
(vii) No authorization, approval, consent or order of any Dutch
court or Dutch governmental authority or agency (other than such as may be
required under the applicable securities laws of the various jurisdictions in
which the C Notes will be offered or sold, as to which they need express no
opinion) is required in connection with the due authorization, execution and
delivery by the Company of the Purchase Agreement or the Indenture or for the
offering, issuance, sale or delivery of the C Notes to the Initial Purchaser;
and
(viii) The information in the C Note Offering Memorandum under the
seventh paragraph of "Risk Factors - Political and Economic Risks; Enforcement
of Foreign Judgments", to the extent that it constitutes matters of law,
summaries of legal matters, or legal conclusions, has been reviewed by them and
is correct in all material respects.
F-2
Exhibit F
FORM OF OPINION OF COMPANY'S DUTCH COUNSEL
TO BE DELIVERED PURSUANT TO
SECTION 5(a)(ii)
(i) PCBV has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the Netherlands, has corporate
power and authority to own, lease and operate its properties, to act as a
holding company and to conduct its business as described in the C Note Offering
Memorandum and is duly registered with the local Dutch trade register. Under
Dutch law, PCBV is not required to be qualified as a foreign corporation to
transact business in the Netherlands. All of the issued and outstanding capital
stock of PCBV, consisting of 200,000 shares, has been duly authorized and
validly issued, is fully paid and non-assessable. @Entertainment owns 184,600
out of such 200,000 shares (92.3% of the total) free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equity.
(ii) There are no restrictions (legal, contractual or otherwise) on
the ability of PCBV to declare and pay dividends or make any payment or transfer
of property or assets to its shareholders other than those described in the C
Note Offering Memorandum and such descriptions, if any, fairly summarize such
restrictions;
(iii) Except as described in the C Note Offering Memorandum there is
not pending or, to the best of their knowledge, threatened any action, suit,
proceeding, inquiry or investigation, to which PCBV is a party, or to which the
property of PCBV is subject, before or brought by any Dutch court or
governmental agency or body, which might be expected to result in a Material
Adverse Effect, or which might reasonably be expected to materially and
adversely affect the properties or assets thereof or the consummation of (1) the
C Note Purchase Agreement or the performance by the Company of its obligations
hereunder (if any) or (2) the transactions contemplated by the C Note Offering
Memorandum;
(iv) All descriptions in the C Note Offering Memorandum of contracts
and other documents to which PCBV is a party are accurate in all material
respects; to the best of their knowledge, there are no franchises, contracts,
indentures, mortgages, loan agreements, notes, leases or other instruments that
would be required to be described in the C Note Offering Memorandum if it were a
prospectus filed as part of a registration statement on Form S-1 under the 1933
Act that are not described or referred to in the C Note Offering Memorandum
other than those described or referred to therein, and the descriptions thereof
and references thereto are correct in all material respects;
(v) PCBV is not in violation of its statutes or by-laws (or other
similar organizational documents) nor, to the best of their knowledge, is PCBV
in violation of any
F-3
applicable Dutch law, statute, rule, regulation, judgment, order, writ or decree
of any Dutch government, government instrumentality or court having jurisdiction
over PCBV or any of its assets or properties, except as described in the C Note
Offering Memorandum, and no default by PCBV exists in the due performance or
observance of any obligation, agreement, covenant or condition contained in any
contract, license, indenture, mortgage, loan agreement, note, lease or other
agreement or instrument that is described or referred to in the C Note Offering
Memorandum, except as described in the C Note Offering Memorandum and except for
such defaults that would not result in a Material Adverse Effect;
(vi) Except as otherwise disclosed in the C Note Offering
Memorandum, PCBV owns or possesses or has obtained all material licenses,
certificates, permits, concessions, consents, orders, approvals and other
governmental authorizations necessary to hold all its concessions, leases and
permits or own its properties, including, without limitation, all licenses and
permits relating to intellectual property, and to carry on its business as
presently conducted and as contemplated in the C Note Offering Memorandum, and
PCBV has not received any notice relating to the revocation or modification of
any such concession, license, certificate, permit, consent, order, approval or
other authorizations;
(vii) No authorization, approval, consent or order of any Dutch
court or Dutch governmental authority or agency (other than such as may be
required under the applicable securities laws of the various jurisdictions in
which the C Notes will be offered or sold, as to which they need express no
opinion) is required in connection with the due authorization, execution and
delivery by the Company of the Purchase Agreement or the Indenture or for the
offering, issuance, sale or delivery of the C Notes to the Initial Purchaser;
and
(viii) The information in the C Note Offering Memorandum under the
seventh paragraph of "Risk Factors - Political and Economic Risks; Enforcement
of Foreign Judgments", to the extent that it constitutes matters of law,
summaries of legal matters, or legal conclusions, has been reviewed by them and
is correct in all material respects.
F-4
Exhibit G
FORM OF OPINION OF COMPANY'S ENGLISH COUNSEL
TO BE DELIVERED PURSUANT TO SECTION 5(a)(iii)
(i) At Entertainment Limited ("AEL") has been duly incorporated and
is validly existing as a limited liability company under the laws of England and
Wales, has corporate power and authority to own and lease its properties and to
conduct its business as described in the C Note Offering Memorandum and is not
required to obtain further authorization to transact business or to own or lease
property in England and Wales; all of the issued and outstanding shares of AEL
have been duly authorized and validly issued. Of the issued and outstanding
shares of AEL, two shares with a par value of ?1 each are fully paid and the
remaining 9,998 shares of AEL with a par value of ?1 each are paid to an amount
of 10 pence per share and such shares are subject to a call by AEL in accordance
with its Articles of Association. Apart from the foregoing call, their searches
at Companies House in respect of AEL did not reveal any security interest,
mortgage, pledge, lien, encumbrance, claim or equity affecting the issued shares
of AEL;
(ii) They have not been instructed by the Company, AEL or any
subsidiary nor have any notice from our searches of the registry of the High
Court of England and Wales of any action, suit, proceeding, inquiry or
investigation, to which the Company or any subsidiary is a party, or to which
the property of AEL is subject, before or brought by any court or governmental
agency or body, which might be expected to result in a Material Adverse Effect
on AEL;
(iii) They have no notice that any real property has been acquired
by AEL whether by purchase or lease other than Maidstone Studios, Vinters Park,
Kent and lease of premises in Conduit Street, London;
(iv) The information in the C Note Offering Memorandum under "Risk
Factors - Dependence on Philips as Principal Supplier", "Risk Factors Dependence
on Satellites", "Risk Factors - Availability of Programming and Dependence on
Third Party Programmers; Program Development Risk" (other than the specification
of any financial commitments of the Company), "Risk Factors - United Kingdom
Regulation of D-DTH Business", "Risk Factors - European Union Regulation of
D-DTH Business", "Risk Factors - Regulation of Competition" (insofar as it does
not relate to Poland), the sixth paragraph of "Risk Factors - Political and
Economic Risks; Enforcement of Foreign Judgments", "Regulation - United
Kingdom", and "Regulation - European Union", to the extent that it constitutes
matters of law, summaries of legal matters, or legal proceedings, or legal
conclusions, has been reviewed by them and is correct in all material respects;
(v) All summaries in the C Note Offering Memorandum of the satellite
television services license issued by the Independent Television Commission (the
"ITC License")
for the channels known as Atomic TV, Wizja 1, Wizja Sport, Wizja Pogoda and
Twoja Wizja Na Zywo and of the contracts for transponders on Astra IE and IF
satellites, the Commercial Co-operation Agreement with Philips or agreements set
out at Schedule 1 to which AEL is a party are accurate summaries of the matters
summarized; they have no notice that there are any franchises, contracts,
licenses, indentures, mortgages, loan agreements, notes, leases or other
instruments relating to AEL that are not described or referred to in the C Note
Offering Memorandum and the descriptions thereof and references thereto are
correct in all material respects;
(vi) AEL is not in violation of its Memorandum and Articles of
Association and, we have no notice that AEL is in violation of any applicable
English law, statute, rule, regulation, judgment, order, writ or decree of any
government, government instrumentality or court having jurisdiction over AEL in
England or any of its assets or properties in England, except as described in
the C Note Offering Memorandum, and as set out in paragraph D of this Opinion we
have no notice that any default by AEL exists in the due performance or
observance of any obligation, agreement, covenant or condition of AEL contained
in any contract, license, indenture, mortgage, loan agreement, note, lease or
other agreement or instrument that is described or referred to in the C Note
Offering Memorandum referred to in paragraph (iv) above or in a Schedule
attached to the opinion.
(vii) The execution, delivery and performance of the Purchase
Agreement and the Indenture and the consummation of the transactions
contemplated therein and in the C Note Offering Memorandum (including the use of
proceeds from the sale of the C Notes and described in the C Note Offering
Memorandum under the caption "Use of Proceeds") and compliance by the Company
with its obligations under the Purchase Agreement, the C Notes and the
Indenture, will not, whether with or without the giving of notice or lapse of
time or both, conflict with or constitute a breach of, or default under or
result in the creation or imposition of any lien, charge or encumbrance under
English law upon any property or assets of AEL pursuant to any contract,
indenture, mortgage, deed of trust, loan or credit agreement, note, lease or any
other agreement or instrument, notified to them, to which AEL is a party or by
which it may be bound, or to which any of the property or assets of AEL is
subject, nor will such action result in any violation of the provisions of the
Memorandum and Articles of Association of AEL, or any applicable English law,
statute, rule, regulation, judgment, order, writ or decree, of any government,
government instrumentality or court having jurisdiction in England over AEL or
any of its respective properties, assets or operations in England;
(viii) AEL owns or possesses or has obtained all material
governmental licenses, certificates, permits, concessions, consents, orders,
approvals and other authorizations in England, as disclosed in the C Note
Offering Memorandum, necessary to hold all concessions, leases and permits or
own its properties, including, without limitation, all broadcasting licenses and
permits relating to intellectual property, and to carry on its business as
presently conducted and as contemplated in the C Note Offering Memorandum, and
they have no notice that AEL has received any notice relating to the revocation
or modification of any such concession, license, certificate, permit, consent,
order, approval or other authorizations;
G-2
(ix) Other than as described in the C Note Offering Memorandum,
there are no restrictions (legal, contractual or otherwise) on the ability of
AEL to declare and pay dividends in accordance with applicable English company
law, and other than as imposed by law on English companies generally, there are
no restrictions (legal, contractual or otherwise) on the ability of AEL to make
any payment or transfer of property or assets to its shareholder; and
(x) No authorization, approval, consent or order of any court or
governmental authority or agency in England which regulates the operations of
AEL is required in connection with the due authorization, execution and delivery
of the Purchase Agreement and the Indenture, or for the offering, issuance, sale
or delivery of the C Notes to the Initial Purchaser. They need give no opinion
as to whether the due authorization, execution and delivery by the Company of
the Purchase Agreement and the Indenture or the offering, issuance, sale or
delivery of the C Notes to the Initial Purchaser complies with applicable
securities laws in England and Wales or any other jurisdiction.
G-3
Table of Contents
PURCHASE AGREEMENT...........................................................1
SECTION 1. Representations and Warranties...........................2
(a) Representations and Warranties by the Company............2
(i) Similar Offerings...............................2
(ii) C Notes Offering Memorandum.....................2
(iii) Independent Accountants.........................3
(iv) Financial Statements............................3
(v) No Material Adverse Change in Business..........3
(vi) Good Standing of the Company....................3
(vii) Corporate Standing of Designated Subsidiaries...4
(viii) Restrictions on Payments of Dividends...........4
(ix) Capitalization..................................5
(x) Authorization of Agreement......................5
(xi) Authorization of the Indenture..................5
(xii) Authorization of the C Notes....................5
(xiii) Description of the Indenture....................6
(xiv) Absence of Defaults and Conflicts...............6
(xv) Absence of Labor Dispute........................7
(xvi) Absence of Proceedings..........................7
(xvii) Possession of Intellectual Property.............7
(xviii) Absence of Further Requirements.................8
(xix) Possession of Licenses and Permits..............8
(xx) No Additional Documents.........................9
(xxi) Management Agreements...........................9
(xxii) Title to Property...............................9
(xxiii) Tax Returns.....................................9
(xxiv) Environmental Laws.............................10
(xxv) Investment Company Act.........................10
(xxvi) Internal Controls..............................10
(xxvii) Taxes on Subsidiary Indebtedness...............11
(xxviii) Insurance......................................11
(xxix) Rule 144A Eligibility..........................11
(xxx) No General Solicitation or Directed Selling Effort
in Contravention of Regulation S of the Securities
Act............................................11
(xxxi) No Registration Required.......................12
(xxxii) Reporting Company..............................12
(b) Officers' Certificates..................................12
SECTION 2. Sale and Delivery to the Initial Purchaser; Closing.....12
(a) C Notes.................................................12
(b) Payment.................................................12
G-i
(c) Qualified Institutional Buyer...........................12
(d) Denominations; Registration.............................13
SECTION 3. Covenants of the Company................................13
(a) C Notes Offering Memorandum.............................13
(b) Notice and Effect of Material Events....................13
(c) Amendment to Offering Memorandum and Supplements........13
(d) Qualification of C Notes for Offer and Sale.............14
(e) Euroclear...............................................14
(f) Use of Proceeds.........................................14
(g) Restriction on Sale of C Notes..........................14
SECTION 4. Payment of Expenses.....................................14
(a) Expenses................................................14
(b) Termination of Agreement................................15
SECTION 5. Conditions of the Initial Purchaser' Obligations........15
(a) Opinions of Counsel for the Company.....................15
(b) Opinion of United States Counsel for the Initial
Purchaser...............................................15
(c) Opinion of Polish Counsel for the Initial Purchaser.....16
(d) Officers' Certificate...................................16
(e) Accountants' Comfort Letter.............................16
(f) Bring-down Comfort Letter...............................16
(g) Euroclear...............................................16
(h) Additional Documents....................................16
(i) Termination of Agreement................................17
SECTION 6. Subsequent Offers and Resales of the C Notes............17
(a) Offer and Sale Procedures...............................17
(i) Offers and Sales only to Qualified Institutional
Buyers...........................................17
(ii) No General Solicitation..........................17
(iii) Purchases by Non-Bank Fiduciaries................17
(iv) Subsequent Purchaser Notification................17
(v) Restrictions on Transfer.........................18
(b) Covenants of the Company................................18
(i) Due Diligence....................................18
(ii) Integration......................................18
(iii) Restriction on Repurchases.......................19
(c) Resale Pursuant to Rule 144A or Regulation S............19
(d) Offers and Sales in Poland and The Netherlands..........19
(e) Offers and Sales in the United Kingdom..................20
(f) Representation and Warranty of the Initial Purchaser....20
SECTION 7. Indemnification.........................................20
(a) Indemnification of the Initial Purchaser................20
(b) Indemnification of the Company, Directors and Officers..21
(c) Actions Against Parties; Notification...................21
(d) Settlement Without Consent if Failure to Reimburse......22
G-ii
SECTION 8. Contribution............................................22
SECTION 9. Representations, Warranties and Agreements to Survive
Delivery................................................23
SECTION 10. Termination of Agreement................................24
(a) Termination; General....................................24
(b) Liabilities.............................................24
SECTION 11. [Reserved]..............................................24
SECTION 12. Notices.................................................24
SECTION 13. Parties.................................................24
SECTION 14. GOVERNING LAW AND TIME..................................25
SECTION 15. Effect of Headings......................................25
SECTION 16. Counterparts............................................25
G-iii