Share Sale and Purchase Agreement between Nova TV d.d. Shareholders and CME Media Enterprises BV

This Share Sale and Purchase Agreement is concluded on July 7 2004 between:

Vjenceslav Bacci, Split, Drvenicka 21, JMBG:0509951380032,

Ivan Blažicko, Zagreb, P.P.Njegoša 6, JMBG:2210961330108,

Boško Bojanovic, Zagreb, JMBG:2011961330113,

Tomislav Brezicevic, Zagreb, Jukiceva 8, JMBG:0804960302127,

Neven Cicko, Zagreb, Mlinovi 145, JMBG:1204969330065,

JADRAN FILM d.d. Zagreb, Oporovecka 12, MB ###-###-####,

Zdravko Balenovic, Zagreb, Rudolfa Ivankovica 39, JMBG: 0105963391826,

Slavica Maras, Zagreb, Kneza Mislava 2, JMBG:2802978335256,

PITOS d.o.o. Zagreb, Hrvatskog proljeca 40, MB:1524160,

Vlado Pukanic, Velika Gorica, N. pl. Škrleca Lomnickog 1, JMBG:0103963334013,

STUDIO MILLENIUM d.o.o. Zagreb, Sjeverna ulica 2/A1, MB:1607022,

Damir Tus, Crikvenica, SAD 3, JMBG:3003958350007,

Damir Vujinovic, Zagreb, B. Magovca 167, JMBG:1601963330003,

Branko Vukšic Zagreb, Vlaška 70a, JMBG:1405956330045,

Ante Župic, Lovrakova 19, JMBG:2101966330056

each hereinafter referred to as the "Seller" and collectively referred to as the "Sellers"

and

CME MEDIA ENTERPRISES BV, a limited liability company organized under the laws of Netherlands, whose registered office is located at Birkstraat 89, Soest, The Netherlands, duly represented by Daniel Penn, in his capacity of attorney, hereinafter the "Buyer".

The parties to this Agreement agreed as follows:

For the purpose of this Agreement, capitalized terms used herein and not otherwise defined shall have the following meanings:

 

"Adjustment Amount" means the calculation of the adjustment in working capital determined in accordance with Annex III;

 

"Adjustment Date" means the date on which the Adjustment Amount is calculated and reported to the Escrow Agent in accordance with Clause 6;

 

"Advisers" means CA IB d.d., Frane Petrica 2/III, 10000 Zagreb, Law firm "Župic & partneri", Draškoviceva 23, 10000 Zagreb, Law firm "Markovic & Plišo", Smiciklasova 21, 10000 Zagreb, Boris Jukic, Attorney at Law, Katanciceva 3, Zagreb and Mr. Alexander Trauttmansdorff, Kaiserstrasse 14, Munich, Germany;

 

"Advisers’ Fees" means fees in the net amount of € 850.000,00;

"Agent" is the notary public appointed jointly by the Sellers and Buyer who shall fulfill such obligations in respect of Completion as specified in clause 5 and obligations in respect of activities specified in clauses 4, 6 and 7;

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"Agent's Instruction Letter" means an instrument by which the Parties hereto shall appoint the Agent to assume his duties pursuant to clauses 5, 6 and 7 hereto, as set forth in clause 4.1(n), attached hereto as Annex IV;

 

"Agreement" means this Share Sale and Purchase Agreement (including its annexes);

 

"Audited Completion Balance Sheet " means the combined balance sheet of Nova TV and OK for the financial period ended 30 June 2004, prepared by Nova TV and OK and audited by Ernst &Young d.o.o.;

 

"Business Day" means any day banks are open for business with commercial clients in Zagreb or, in respect of any payment obligation of the Buyer, London;

 

"Claim" means (a) any claim, such as a condemnatory, declaratory and/or constitutive request or an enforcement application of a third person against Nova TV or OK, filed in a court of the Republic of Croatia, (b) any such claim filed with any competent court, arbitration panel or similar body which has jurisdiction over Nova TV or OK, or (c) any dispute which the Buyer (or Nova TV or OK) and the Sellers’ Representative agree in writing constitute a claim; provided that each such request meets the following requirements: (i) that the amount in dispute is not less than HRK 25.000,00, (ii) that such claim has not been filed by an Affiliate of CME, and (iii) that the request does not arise under any arra ngement evidenced by a document that was properly disclosed and recorded in the Completion Data Room Index.

 

"CME" means the parent company of the Buyer, bearing business name CENTRAL EUROPEAN MEDIA ENTERPRISES LTD., organized under the form of a limited company, having its registered offices at Clarendon House, 2 Church Street, Hamilton, HM CX Bermuda, whose shares are listed on NASDAQ under the trading symbol "CETV";

 

"Completion" means the performance by the Sellers and by the Buyer of their respective sale and purchase related obligations contemplated by clause 5 hereof;

 

"Completion Balance Sheet " means the combined balance sheet of Nova TV and OK for the financial period ended 30 June 2004, prepared by Nova TV and OK and delivered at Completion;

 

"Completion Certificate" means a written statement substantially in the form of Annex V attached hereto confirming that the Parties have duly fulfilled or waived, as the case may be, all the condition precedent obligations set forth in clause 4 hereto, including that the Sellers delivered to the Buyer the Transfer Statements;

 

"Completion Date" means the date on which Completion occurs under this Agreement, as detailed in clause 5;

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"Completion Data Room Index" means the Data Room Index as supplemented by any other documents delivered and recorded pursuant to clause 4.1(d);

 

"Control" means, with respect to any Person, the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership or voting rights or partnership interest, by contract or otherwise. "Controlled" and "Controlling" shall have correlative meanings;

 

"Data Room Index" means the consolidated data room index dated the date hereof and attached hereto as Annex VI;

 

"Encumbrance" means any type of security interest, encumbrance, mortgage, fiduciary ownership, pledge, lien, right of first refusal or option to acquire any of the Sale Shares;

 

"End Date" means July 20, 2004;

 

"Escrow Agent" is defined in Recital G;

 

"Escrow Agreement" is defined in Recital G;

 

"Euro" means the lawful currency of the European Community, with symbol €;

 

"HRK" means Croatian Kuna, the lawful currency of Croatia;

 

"Information Memorandum" means the information memorandum prepared by CAIB and provided to the Buyer;

 

"Invitation" means invitation by which Sellers invite the Buyer to Completion, in accordance with clause 5. The Invitation (i) must be executed in written form; (ii) containing the place and the time of the Completion; (iii) delivered to the Buyer at least 3 (three) Business Days before Completion.

 

"License" has the meaning assigned to it in recital C;

 

"List of Attorneys" means the list of attorneys prepared from time to time by the Sellers who are to be authorized by the Buyer to represent Nova TV and/or OK before any court, arbitration panel or similar body in the Republic of Croatia or which otherwise has jurisdiction over Nova TV or OK in the event of a Claim (including the Marcinko Claim);

 

"Marcinko Claim" means the lawsuit filed in front of the Municipal Court of Zagreb under file no. Pr-14013/04 in the amount of HRK 855.000,00 filed by Tomislav Marcinko against Nova TV on April 7, 2004.

 

"Net Purchase Price" means an amount (including Advisers’ Fees) equal to seventy-five percent of the Preliminary Total Purchase Price;

 

"Nova TV" has the meaning assigned to it pursuant to Recital A;

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"Nova Television Business" has the meaning assigned to it in recital C;

 

"OK" has the meaning assigned to it pursuant to recital B;

 

"Party" or "Parties" means individually either of the Sellers or the Buyer (as the context requires) or collectively the Sellers and the Buyer;

 

"Person" means any individual or legal entity, including a partnership, a joint venture, a corporation, a trust, an incorporated organization and a governmental authority;

 

"Personal Claim" means any claim, such as a condemnatory request or any other request (of declaratory and/or constitutive nature), that the Buyer has against the Sellers filed in a court of the Republic of Croatia, or any such claim submitted by the Buyer to arbitration pursuant to clause 14 hereto, with respect to a violation of the Sellers' representations, warranties and covenants hereto or any other provision of this Agreement by the Sellers, provided that each such request meets the following requirements: (i) that the amount in dispute is not less than HRK 25.000,00 and (ii) that the request does not arise as a consequence under any arrangement evidenced by a document that was properly disclosed and recorded in the Completion Data Room Index.

 

"Preliminary Adjustment Amount" means the calculation of the adjustment in working capital determined in accordance with Annex III.

 

"Preliminary Total Purchase Price" means an amount equal to €26.500.000,00 (twenty six million five hundred thousand Euros) plus an amount (whether positive or negative) equal to the Preliminary Adjustment Amount;

 

"Retained Price" means an amount equal to fifteen percent of the Total Purchase Price, payable as set forth in clause 7;

 

"Sale Shares" means any and all shares of Nova TV, each having a nominal value of HRK 500,00, as assigned to it in clause 2.1, being the subject matter of this Agreement;

 

"SDA" means "Središnja depozitarna agencija d.d", Zagreb, Ksaver 200, Croatia, or the Central Depository Agency of the Republic of Croatia, being the institution that keeps the share registry of Nova TV;

 

"Second Payment" means an amount equal to ten percent of the Total Purchase Price, payable as set forth in clause 6;

 

"Total Purchase Price" means the amount payable by the Buyer for the Sale Shares as set out in clause 3.1;

 

"Transfer Statement" means the DEP-PRV share transfer order form or another appropriate statement for re-booking of the Sale Shares from the proprietary account of each of the Sellers to the proprietary account of the Buyer opened with SDA, form of which appears in Annex VII hereto;

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The Total Purchase Price is comprised of the (i) Net Purchase Price, payable by the Buyer at Completion as the first portion of the Total Purchase Price in accordance with clause 3.3, (ii) the Second Payment, which will be paid in accordance with clause 6 hereto following the calculation of the Adjustment Amount and (ii) the Retained Price which will be paid as the subsequent portion of the Total Purchase Price in accordance with clause 7 hereto.

Boris Jukic, into the account no. 2330003-3240973439 opened with Escrow Agent,

 

Zoran Markovic, into the account no. 2330003-3240975421 opened with Escrow Agent,

 

Ante Zupic, into the account no. 2330003-3240973096 opened with Escrow Agent.

 

All such amounts shall be paid in the proportions specified in clause 3.2.

Title	Number	Type	Filing Date
StorySuperNova	Z2030713A	V	15.05.2003
SuperNOv@	Z22021179	V	07.08.2003
JackPot	Z20031248A	F	27.08.2003
SuperNova	Z20040368	V	05.03.2004
StorySuperNOv@	Z20040369	V	05.03.2004
StorySuperNov@MusicTalents	Z20040323	V	03.03.2004
StorySuperNovA@MultiTalents	Z20040322	V	03.03.2004
StorySuperNov@MusicTalents	Z20040371	F	05.03.2004
StorySuperNov@MultiTalents	Z20040370	F	05.03.2004
KRIŽIC-KRUŽIC	Z20040431	F	16.03.2004
JackPot	Z20040429	V	16.03.2004
Memory	Z20040430	F	16.03.2004

 

 

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plus

For the avoidance of doubt, the total amount received by the Sellers following the Second Payment shall be equal to the Total Purchase Price multiplied by 0.85.

 

7.1	The Retained Price shall be paid by the Buyer in accordance with the terms of this clause. The Parties explicitly confirm that they have agreed upon the following principles to apply with respect to the Retained Price and its payment to the Sellers:

 

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(iv)

the Sellers agree to defend Nova TV and OK from any Claims, by employing their own resources and at their own expense, apart from any advance payment of tribunal or court costs, thus having the opportunity to exercise direct control over the defense from Claims and consequent adjustments of the Retained Price;

 

(v)

all amounts paid to the Sellers Accounts under this clause 7 shall be paid in the percentages foreseen by clause 3.2 hereof.

 

7.2

Upon receipt of any notice that may in the reasonable judgment of the Buyer constitute the basis of a Claim or a Personal Claim, the Buyer may, or may cause Nova TV or OK to, deliver notice of such to the Sellers’ Representative. Notwithstanding the foregoing, such notice alone shall not be deemed to be notice of a Claim or Personal Claim and otherwise cause the suspension of any portion of the Retained Price hereunder.

The Agent shall have the duty to review all such notices within 5 (five) Business Days in order to confirm that proceedings in respect of the Claim or the Personal Claim have been duly instituted.

 

If the Agent concludes that such Claim or Personal Claim has not been duly instituted, he shall notify the Buyer, the Sellers' Representative and the Escrow Agent, and the Escrow Agent shall lift the suspension of the payment of the amount in dispute from the Retained Price.

In the event (i) an acknowledgement or settlement of a Claim is negotiated in good faith by an attorney from the List of Attorneys and (ii) the amount of the Claim that is the subject of such acknowledgement or settlement, either singly or together with any other Claim pending at such time exceeds the amount of the Retained Price (reduced by any Settlement Amount or Judgment Amount assessed against Nova TV or OK prior to the date thereof) available at such time, the Sellers’ Representative shall submit (i) such acknowledgement or settlement to Nova TV and OK, with a copy to the Buyer, for consent and (ii) a copy of such acknowledgement or settlement together with evidence of its delivery and the date thereof to Nova TV or OK to the Agent. The Buyer shall, or shall cause Nova TV or OK to, respond to a reque st for consent to such acknowledgement or settlement within 10 Business Days of receipt by notice to the Sellers’ Representative, with a copy to the Agent. Failure by the Buyer, Nova TV or OK to respond to a request for consent within such period shall be deemed to be a consent to such request ("Implied Consent"). Following the receipt of consent (including Implied Consent), the Sellers’ Representative shall promptly notify the Agent, the Buyer, Nova TV and OK, and the Retained Price shall be reduced by the Settlement Amount.

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(i) with respect to executed acknowledgement or settlement of a Claim, the Buyer has given his explicit consent or Implied Consent, if required, or

 

(ii) with respect to a Personal Claim, a final judgment was issued in favor of the Buyer, or with respect to a Claim, a final judgment was issued against Nova TV or OK, including the Judgment Amount.

 

The Agent shall promptly notify the Escrow Agent , the Buyer, Nova TV, OK and the Sellers' Representative that the Retained Price then payable shall be reduced by the Settlement Amount or the Judgment Amount and that an amount equal to such Judgment Amount or Settlement Amount, as applicable, be promptly released from the Escrow Account to the Buyer. Notwithstanding any other provision of this clause 7, in the event the Marcinko Claim results in a Settlement Amount or a Judgment Amount against Nova TV, the Buyer and Sellers agree that the Retained Price shall be reduced by fifty percent (50%) of such Settlement Amount or Judgment Amount and further agree to cause notice of such fact to be delivered to the Agent for purposes of notifying the Escrow Agent.

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If with respect to a Personal Claim, a final judgment was passed against the Buyer, or with respect to a Claim a final judgment was passed in favor of Nova TV or OK, the Agent shall notify the Escrow Agent, and the Escrow Agent shall lift the suspension of the payment of the amount in dispute from the Retained Price in respect of such Claim or Personal Claim.

In the event any Judgment Amount has been assessed against Nova TV or OK or in favor of the Buyer, or any Settlement Amount has been agreed prior to the end of the one-year period, the amount of the Retained Price payable to the Sellers at such time shall be reduced by any Judgment Amount or Settlement Amount that has not been previously applied to reduce the Retained Price.

Upon a final judgment or acknowledgement or settlement of any Claim or Personal Claim pending on the first anniversary of the Completion Date, the Buyer, the Sellers’ Representatives, Nova TV or OK are authorised to notify the Agent as provided in clauses 7.6 and 7.7; provided, that the Party delivering such notice to the Agent shall deliver a copy to the other Parties. The Agent shall notify the Escrow Agent and the other Parties as provided in clause 7.9. The Retained Price available at such time shall be reduced by the amount of the Judgement Amount or Settlement Amount. If no Judgement Amount or Settlement Amount is payable, the portion of the Retained Price then available in excess of any then remaining Claims or Personal Claims shall be released to the Sellers. At the time when no such Claims or Pers onal Claims remain pending, any then remaining amounts of the Retained Price shall be released to the Sellers Accounts.

 

 

7.12

The Parties agree to include in the Escrow Agreement and in the Agent's Instruction Letter the terms of this clause as well as any other terms necessary to facilitate the fulfillment of respective obligations of the Parties, the Agent and the Escrow Agent. The Buyer may substitute other adequate security for the Escrow Agreement with the prior written consent of the Sellers’ Representative; provided, that such security contains all of the material characteristics of the Escrow Agreement.

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9.1.

Except as provided in clause 9.2 below, the liability of each Seller hereunder shall be several and limited only and exclusively up to the amount of the Retained Price for all representations and warranties set out in Annex 1 and will survive until the first anniversary of the Completion Date, other than representations, warranties and related indemnities for which the Claim and/or Personal Claim shall be pending as of the end of the one-year period, in which event such indemnities shall survive with respect to such indemnification claim until the final resolution thereof. The indemnification can only and exclusively be made through the reduction of the Retained Price in accordance with clause 7.

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(a)

create or issue, or agree to create or issue, any new shares in Nova TV or OK, or to grant or agree to grant any option or any similar instrument in respect of the shares of Nova TV or OK;

 

 

 

(b)

By Sellers or the Buyer, if the Completion shall not have taken place on or before the End Date; provided, however, that the right to terminate this Agreement under this clause shall not be available to any Party whose willful failure to fulfill any obligation under this Agreement has been the cause of or resulted in the failure of the Completion to occur on or before such date.

 

 

15.6.

Fees payable to the Agent acting pursuant to the terms Letter shall be borne equally by the Buyer on the one hand and the Sellers on the other.

 

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Annex I - Sellers’ Representations and Warranties

 

Annex II - Escrow Account Agreement

 

Annex III - Preliminary Adjustment Amount and Adjustment Amount

 

Annex IV - Agent’s Instruction Letter

 

Annex V - Completion Certificate

 

Annex VI - Data Room Index

 

Annex VII - Share Transfer Form

 

Annex VIII - Affiliate Confirmation Letters

 

Annex IX - Waiver of Preemption Rights

 

Annex X - Copies of Powers of Attorneys

 

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Signature:___________________________

Name: Ante Zupic

Title: Attorney

            Name: Ante Zupic

Title: Attorney

            Name: Zoran Markovic

Title: Attorney

            Name: Zoran Markovic

Title: Attorney

            Name: Ante Zupic

Title: Attorney

Name: Zoran Markovic

Title: Attorney

Name: Boris Jukic

Title: Attorney

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Name: Ante Zupic

Title: Attorney

Name: Ante Zupic

Title: Attorney

Name: Ante Zupic

Title: Attorney

Name: Ante Zupic

Title: Attorney

 

Name: Ante Zupic

Title: Attorney

Name: Boris Jukic

Title: Attorney

Name: Ante Zupic

Title: Attorney

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Name: Ante Zupic

Title: Attorney

Name: Daniel Penn

Title: Attorney

 

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