Document:

Exhibit 10.1

 

 

 

RESTRUCTURING AGREEMENT

 

by and among

 

UPC POLSKA, INC.,

 

UPC TELECOM B.V.,

 

BELMARKEN HOLDING B.V.

 

and

 

THE NOTEHOLDERS SET FORTH ON ANNEX A HERETO

 

DATED AS OF June 19, 2003

 

 

 

 

RESTRUCTURING AGREEMENT

 

THIS
RESTRUCTURING AGREEMENT (this “Agreement”), dated as of June 19, 2003,
by and among UPC POLSKA, INC. (f/k/a @Entertainment, Inc.), a corporation
organized under the laws of the State of Delaware (“UPC Polska”), UPC
TELECOM B.V., a private company with limited liability (besloten vennootschap) organized under the
laws of The Netherlands (“UPC Telecom”), BELMARKEN HOLDING B.V., a
private company with limited liability (besloten
vennootschap) organized under the laws of The Netherlands (“Belmarken”
and, together with UPC Telecom, the “UPC Entities”) and each of the
holders of UPC Polska Notes (as defined below) set forth on Annex A
attached hereto (each such holder a “Participating Noteholder” and,  collectively, the “Participating
Noteholders”).

 

W  I  T  N  E  S
S  E  T  H

 

WHEREAS,
UPC Polska has issued 141⁄2% Senior Discount Notes due 2008 (the “2008 Notes”),
with an aggregate principal amount at maturity of $252,000,000, pursuant to an
Indenture, dated July 14, 1998, between UPC Polska and Deutsche Bank Trust
Company Americas (f/k/a Bankers Trust Company), as Trustee (the “2008
Indenture”); and

 

WHEREAS,
UPC Polska has issued 141⁄2% Senior Discount Notes due 2009 (the “2009 Notes”),
with an aggregate principal amount at maturity of $256,800,000, pursuant to an
Indenture, dated January 27, 1999, between UPC Polska and Deutsche Bank Trust
Company Americas (f/k/a Bankers Trust Company), as Trustee (the “2009
Indenture”); and

 

WHEREAS,
UPC Polska has issued Series C Senior Discount Notes due 2008 (the “Series C
Notes” and, collectively with the 2008 Notes and the 2009 Notes, the “UPC
Polska Notes”) with an aggregate principal amount at maturity of
$36,001,321, pursuant to an Indenture, dated January 20, 1999, between UPC
Polska and Deutsche Bank Trust Company Americas (f/k/a Bankers Trust Company),
as Trustee (the “Series C Indenture” and, collectively with the 2008
Indenture and the 2009 Indenture, the “Indentures”); and

 

WHEREAS,
as a result of the August 6, 1999 acquisition by UPC (as defined below) of UPC
Polska, which constituted a Change of Control under the Indentures (as that
term is defined under the Indentures), UPC Polska purchased $49,139,000
aggregate principal amount at stated maturity of the UPC Polska Notes for an
aggregate price of $26,455,014; and

 

WHEREAS,
UPC Telecom is the holder of (w) all of the issued and outstanding capital
stock of UPC Polska, (x) UPC Polska Notes with an aggregate principal amount at
maturity of $83,435,000 (the “Telecom Owned UPC Polska Notes”), (y)
$243,926,000 in aggregate principal amount (including capitalized interest
through May 31, 2003)  of
promissory notes evidencing other indebtedness of UPC Polska to UPC Telecom
which notes rank pari  passu with the UPC Polska Notes (together
with accrued and unpaid interest thereon in the amount of $11,254,000, as of May
31, 2003, the “Telecom Pari Passu Notes”) and (z) $150,000,000 in
aggregate principal amount of promissory notes evidencing other indebtedness of
UPC Polska ranking junior to the UPC Polska Notes and the Belmarken Notes (as
defined herein) (together

 

 

with approximately $56,427,000
of accrued and unpaid interest thereon, as of May 31, 2003, the “Telecom
Junior Notes” and, collectively with the Telecom Owned UPC Polska Notes and
the Telecom Pari Passu Notes, the “UPC Telecom Notes”), in each case as
further set forth on Annex B, attached hereto; and

 

WHEREAS,
Belmarken is the holder of $14,942,000 in aggregate principal amount (including
capitalized interest through May 31, 2003) of promissory notes evidencing other
indebtedness of UPC Polska to Belmarken (together with accrued and unpaid
interest thereon in the amount of $689,000, as of May 31, 2003, the “Belmarken
Notes” and, together with the Telecom Pari Passu Notes and the Telecom
Junior Notes, the “Other UPC Polska Notes”); and

 

WHEREAS,
the Participating Noteholders are the beneficial owners of that aggregate
principal amount of each outstanding series of UPC Polska Notes as set forth on
Annex A attached hereto; and

 

WHEREAS,
the parties to this Agreement have determined that it is in the best interests
of UPC Polska, UPC Polska’s Affiliates and UPC Polska’s stakeholders to effect
a restructuring of the indebtedness of UPC Polska and to provide the financial
arrangements to UPC Polska contemplated hereby (the “Restructuring”), in
order to (i) maximize the value of UPC Polska as a going concern for the
benefit of UPC Polska and its stakeholders, all on the terms and subject to the
conditions set forth in this Agreement, (ii) reduce the debt obligations of UPC
Polska and (iii) provide for the working capital needs and stability of the
business of UPC Polska; and

 

WHEREAS,
certain of the Participating Noteholders have formed an informal committee (the
“Committee”) of the holders of the UPC Polska Notes and have engaged in
good faith negotiations with UPC Polska and the UPC Entities with the objective
of reaching an agreement regarding the terms of the Restructuring; and

 

WHEREAS,
in furtherance of the implementation of the Restructuring, UPC Polska shall,
subject to the terms and conditions of this Agreement, (a) file (i) a voluntary
case (the “Chapter 11 Case”) under Chapter 11 of title 11 of the United
States Code, 11 U.S.C. 
§§ 101-1330, as amended (the “US Bankruptcy Code”) in the
United States Bankruptcy Court (the “US Bankruptcy Court”) for the Southern
District of New York on or as soon as reasonably practicable after the date of
this Agreement, (ii) a plan of reorganization (the “Plan”) consistent in
all material respects with this Agreement and approved by a
Majority-in-Interest of the Participating Noteholders in accordance with
Section 3.1 of this Agreement  (as in
effect on the date hereof with such amendments and changes as are agreed to in
accordance with the terms hereof), on or as soon as reasonably practicable
after the date of the filing of the Chapter 11 Case and (iii) an accompanying
disclosure statement (the “Disclosure Statement”) consistent with the
terms set forth in this Agreement and the requirements of the US Bankruptcy
Code and (b) use its reasonable best efforts to have such Disclosure Statement
approved and such Plan confirmed by the US Bankruptcy Court as expeditiously as
practicable under the US Bankruptcy Code and the Federal Rules of Bankruptcy
Procedure (the “US Bankruptcy Rules”); and

 

2

 

WHEREAS,
in connection with the Restructuring, the parties hereto have agreed that the
UPC Polska Notes (other than the Telecom Owned UPC Polska Notes) are intended
to be exchanged for a combination of cash and New UPC Polska Notes (as defined
below)  on the terms set forth in this
Agreement; and

 

WHEREAS,
to facilitate the implementation of the Restructuring, including, without
limitation, the Plan, each Participating Noteholder is prepared, subject to the
terms and conditions of this Agreement, to vote its Restricted Claims in favor
of the Plan, as it may be modified in accordance with the terms of this
Agreement; and

 

WHEREAS,
in furtherance of the transactions contemplated hereby, each of the parties
hereto has agreed to take certain other actions, all as more fully set forth
herein;

 

NOW,
THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth below, the
parties hereto agree as follows:

 

ARTICLE I

 

DEFINITIONS; CROSS-REFERENCES; INTERPRETATION

 

Section 1.1             Definitions.  For purposes of this Agreement, each of the
following terms shall have the respective meaning ascribed thereto.

 

“Affiliate”
means, with respect to any specific Person, any other Person that directly or
indirectly through one or more intermediaries controls, or is controlled by, or
is under common control with, such specified Person.

 

“Affiliate
Indebtedness” means the debt owed by UPC Polska to UPC or any of its
Affiliates (other than UPC Polska or any of its controlled Affiliates) as set
forth on Schedule 1.1 hereto.

 

“beneficial
ownership” shall have the meaning attributed to it in Rules 13d-3 and 13d-5
under the Exchange Act (as in effect on the date hereof), whether or not
applicable.

 

“Business
Day” shall mean any day, other than a Saturday, Sunday or a day on which
banks located in New York, New York, London, England, or Warsaw, Poland, shall
be authorized or required by law to close.

 

“Confirmation
Date” shall mean the date on which the Plan is confirmed by the US
Bankruptcy Court.

 

“control”
shall mean with respect to any Person (i) the power, directly or indirectly by
contract, proxy or otherwise, to vote or cause to be voted more than 50% of the
voting power of the Voting Securities of such Person or (ii) the power (as
general partner, manager, or otherwise) to control the management and affairs
of such Person.  The words “controlling”
and “under common control with” shall have correlative meanings.

 

3

 

“Effective
Date” shall mean the Business Day that is no more than eleven (11) Business
Days following the date on which all conditions precedent to the consummation
of the Plan have either been satisfied or, to the extent permitted in the Plan,
duly waived and on which such day the Plan becomes effective and final.

 

“Exchange
Act” shall mean the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.

 

“Expense
Reimbursement Agreement” shall mean that certain Agreement dated as of
December 11, 2002, among GoldenTree Asset Management LLC, SISU Capital Limited,
Strong Capital Management, Cahill Gordon & Reindel LLP and UPC Polska, Inc.
and Poland Communications, Inc.

 

“Filing
Date” shall mean the date on which the Chapter 11 Case is commenced under
US Bankruptcy Law.

 

“GAAP”
shall mean, as of any date of determination, United States generally accepted
accounting principles as in effect on such date of determination.

 

“General
Unsecured Creditors” means all general unsecured creditors of UPC Polska,
other than holders of the UPC Polska Notes, the UPC Telecom Notes, the
Belmarken Notes or the Affiliate Indebtedness, in their capacities as such.

 

“Governmental
Entity” shall mean any national, state, provincial, municipal, local or
foreign government, any court, arbitral tribunal, administrative agency or
commission or other governmental or regulatory authority, commission or any
national securities exchange, market or automated quotation system.

 

“Judgment”
shall mean any order, writ, injunction, award, judgment, ruling or decree of
any Governmental Entity.

 

“Law”
shall mean any statute, law, code, ordinance, rule or regulation of any
Governmental Entity.

 

“Lien”
shall mean any pledge, claim, equity, option, lien, charge, mortgage, easement,
right-of-way, call right, right of first refusal, “tag”- or “drag”- along
right, encumbrance, security interest or other similar restriction of any kind
or nature whatsoever, but excluding any of the foregoing created or imposed by
or pursuant to this Agreement.

 

“Majority-in-Interest
of the Participating Noteholders” shall mean, with respect to any date of
determination, Participating Noteholders holding a majority of the claims
arising under the UPC Polska Notes held by all of the Participating Noteholders
on such date of determination.

 

“New
UPC” shall mean UGC Europe, Inc.

 

4

 

“Person”
shall mean and include an individual, a partnership, a joint venture, a
corporation, a limited liability company, a limited liability partnership, a
trust, an incorporated organization and a government or any department or
agency thereof.

 

“Planned
Filing Date” shall mean July 7, 2003, or any other date that UPC Polska
designates as the date on which UPC Polska proposes to commence the Chapter 11
Case.

 

“Reece
Note” shall mean that certain Promissory Note due August 28, 2003, in the
original principal amount of $10,000,000 and an outstanding principal amount of
$6,000,000 payable by UPC Polska, Inc. to Reece Communications, Inc. and
guaranteed by UPC, as amended by that certain Rescission and Amendment
Agreement effective March 22, 2002.

 

“Restricted
Claims” shall mean, with respect to any Person, any UPC Polska Notes, Other
UPC Polska Notes, Affiliate Indebtedness, UPC Polska Voting Securities or other
claims against, or interests in, UPC Polska that such Person or its controlled
Affiliates now owns or controls, together with any UPC Polska Notes, Other UPC
Polska Notes, Affiliate Indebtedness, UPC Polska Voting Securities or other
claims against, or interests in, UPC Polska which such Person or its controlled
Affiliates may come to own or control between the date hereof and the
termination of this Agreement.

 

“Restriction”
with respect to any capital stock, partnership interest, membership interest in
a limited liability company or other equity interest or security, shall mean
any voting or other trust or agreement, option, warrant, preemptive right,
right of first offer, right of first refusal, escrow arrangement, proxy,
buy-sell agreement, power of attorney or other contract (but excluding this
Agreement), any Law, license,
permit or Judgment that, conditionally or unconditionally:  (i) grants to any Person the right to
purchase or otherwise acquire, or obligates any Person to sell or otherwise
dispose of or issue, or otherwise results or, whether upon the occurrence of
any event or with notice or lapse of time or both or otherwise, may result in
any Person acquiring; (x) any of such capital stock, partnership interest,
membership interest in a limited liability company or other equity interest or
security; (y) any of the proceeds of, or any distributions paid or that are or
may become payable with respect to, any of such capital stock, partnership
interest, membership interest in a limited liability company or other equity
interest or security; or (z) any interest in such capital stock, partnership
interest, membership interest in a limited liability company or other equity
interest or security or any such proceeds or distributions; (ii) restricts or,
whether upon the occurrence of any event or with notice or lapse of time or
both or otherwise, is reasonably likely to restrict the transfer or voting of,
or the exercise of any rights or the enjoyment of any benefits arising by
reason of ownership of, any such capital stock, partnership interest,
membership interest in a limited liability company or other equity interest or
security or any such proceeds or distributions; or (iii) creates or, whether
upon the occurrence of any event or with notice or lapse of time or both or
otherwise, is reasonably likely to create a Lien or purported Lien affecting
such capital stock, partnership interest, membership interest in a limited
liability company or other equity interest or security, proceeds or
distributions.

 

“SEC”
shall mean the United States Securities and Exchange Commission, or any
successor agency.

 

5

 

“Securities
Act” shall mean the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.

 

“Subsidiary”
with respect to any Person shall mean (i) a corporation, a majority in voting
power of whose capital stock with voting power, under ordinary circumstances,
to elect directors is at the time, directly or indirectly owned by such Person,
by a Subsidiary of such Person, or by such Person and one or more Subsidiaries
of such Person, without regard to whether the voting of such stock is subject
to a voting agreement or similar Restriction, (ii) a partnership or limited
liability company in which such Person or a Subsidiary of such Person is, at
the date of determination, (x) in the case of a partnership, a general partner
of such partnership with the power affirmatively to direct the policies and
management of such partnership or (y) in the case of a limited liability
company, the managing member or, in the absence of a managing member, a member
with the power affirmatively to direct the policies and management of such
limited liability company or (iii) any other Person (other than a corporation)
in which such Person, a Subsidiary of such Person or such Person and one or
more Subsidiaries of such Person, directly or indirectly, at the date of
determination thereof, has (x) the power to elect or direct the election of a
majority of the members of the governing body of such Person (whether or not
such power is subject to a voting agreement or similar Restriction) or (y) in
the absence of such a governing body, a majority ownership interest.

 

“UGC”
shall mean UnitedGlobalCom, Inc., a Delaware corporation.

 

“UPC”
shall mean United Pan-Europe Communications N.V., a corporation incorporated
under the laws of The Netherlands.

 

“UPC
Polska Voting Securities” shall mean all equity securities of UPC Polska
entitled to vote at a meeting of shareholders or by consent obtained without a
meeting of the sole stockholder of UPC Polska.

 

“Voting
Securities” shall mean, with respect to any Person, any equity interest of
such Person having general voting power under ordinary circumstances to
participate in the election of members of the governing body of such Person
(irrespective of whether at the time any other class of equity interest of such
Person shall have or might have voting power by reason of the happening of any
contingency).

 

Section 1.2             Cross-references.  For purposes of this Agreement, each of the
following terms shall have the meaning ascribed thereto in the respective
Section of this Agreement indicated on the table below.

 

	
  2008
  Indenture

  	
   

  	
  Recitals

  
	
  2009
  Indenture

  	
   

  	
  Recitals

  
	
  2008 Notes

  	
   

  	
  Recitals

  
	
  2009 Notes

  	
   

  	
  Recitals

  
	
  Agreement

  	
   

  	
  Preamble

  
	
  Belmarken

  	
   

  	
  Preamble

  
	
  Belmarken
  Notes

  	
   

  	
  Recitals

  
	
  Cash
  Consideration

  	
   

  	
  2.2

  
	
  Chapter 11
  Case

  	
   

  	
  Recitals

  
	
  Committee

  	
   

  	
  Recitals

  
	
  Critical
  Creditors

  	
   

  	
  2.5

  
	
  Disclosure
  Statement

  	
   

  	
  Recitals

  
	
  Indentures

  	
   

  	
  Recitals

  
	
  New UPC
  Polska Notes

  	
   

  	
  2.2

  
	
  New UPC
  Polska Stock

  	
   

  	
  2.3

  
	
  Other Cash
  Consideration

  	
   

  	
  2.3

  

 

6

 

	
  Other UPC
  Polska Notes

  	
   

  	
  Recitals

  
	
  Participating
  Noteholder(s)

  	
   

  	
  Preamble

  
	
  Plan

  	
   

  	
  Recitals

  
	
  Required UPC
  Polska Consents

  	
   

  	
  5.4

  
	
  Restructuring

  	
   

  	
  Recitals

  
	
  Series C
  Indenture

  	
   

  	
  Recitals

  
	
  Series C
  Notes

  	
   

  	
  Recitals

  
	
  Telecom
  Junior Notes

  	
   

  	
  Recitals

  
	
  Telecom
  Owned UPC Polska Notes

  	
   

  	
  Recitals

  
	
  Telecom Pari
  Passu Notes

  	
   

  	
  Recitals

  
	
  Third Party
  Noteholder Consideration

  	
   

  	
  2.2

  
	
  UPC Entities

  	
   

  	
  Preamble

  
	
  UPC Entities
  Consideration

  	
   

  	
  2.3

  
	
  UPC Polska

  	
   

  	
  Preamble

  
	
  UPC Polska
  Equity

  	
   

  	
  2.8

  
	
  UPC Polska
  Notes

  	
   

  	
  Recitals

  
	
  UPC Polska
  SEC Documents

  	
   

  	
  5.5

  
	
  UPC Polska
  Stock

  	
   

  	
  5.2

  
	
  UPC Telecom

  	
   

  	
  Preamble

  
	
  UPC Telecom
  Notes

  	
   

  	
  Recitals

  
	
  US
  Bankruptcy Code

  	
   

  	
  Recitals

  
	
  US
  Bankruptcy Court

  	
   

  	
  Recitals

  
	
  US
  Bankruptcy Rules

  	
   

  	
  Recitals

  

 

Section 1.3             Interpretation.  When a reference is made in this Agreement
to Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated.  Capitalized terms
used in this Agreement shall have meanings equally applicable to both the
singular and plural forms and masculine, feminine and neuter genders.  Whenever the words “include,” “includes” or
“including” are used in this Agreement they shall be deemed to be followed by
the words “without limitation.”

 

ARTICLE II

 

RESTRUCTURING

 

Section 2.1             The
Restructuring.

 

(a)           General Structure.  The Restructuring is intended to be
implemented in compliance with the applicable laws of the United States of
America.  In order to achieve this
objective, the Restructuring will consist of several different elements, each
of which is an integral aspect of the Restructuring and, as such, are
non-severable, and which will provide the holders of claims against, and
interests in, UPC Polska with certain treatment in connection with the
satisfaction of their claims and interests.

 

(b)           Alternate Structures.  All parties agree that in the event that UPC
Polska and UPC Telecom determine, with the written consent of a
Majority-in-Interest of the Participating Noteholders that it is necessary to
effect material changes to the transaction structure described in this
Agreement in order to more effectively achieve the economic and other
objectives contemplated by this Agreement or to comply with the requests of any
tax or regulatory authority, each party hereto will consent to and take such
actions as may be reasonably necessary to facilitate such changes.

 

Section 2.2             Treatment
of UPC Polska Notes (Other than the Telecom Owned UPC Polska Notes).

 

(a)           Treatment of UPC Polska
Notes (Other than the Telecom Owned UPC Polska Notes).  The Plan shall provide that, on
or as soon as practicable after the Effective Date,

 

7

 

and on the terms and conditions
set forth herein and in the Plan, UPC Polska shall exchange (i) an
aggregate amount of cash equal to $80,000,000.00 (the “Cash Consideration”)
and (ii) new notes to be issued by UPC Polska in the aggregate principal amount
of $60,000,000.00, which will be subject to the Indenture in substantially the
form attached hereto as Annex C and otherwise reasonably satisfactory to
the Participating Noteholders (the “New UPC Polska Notes” and,
collectively with the Cash Consideration, the “Third Party Noteholder
Consideration”) for the outstanding UPC Polska Notes (other than the
Telecom Owned UPC Polska Notes).  The
holders of the UPC Polska Notes (other than the Telecom Owned UPC Polska Notes)
shall each receive a pro  rata amount of the Third Party
Noteholder Consideration based on the amount of their claims in respect of the
UPC Polska Notes (other than the Telecom Owned UPC Polska Notes) on the Filing
Date.

 

(b)           Equal
Payment Consideration.  Except as provided in Section 8.9, all holders of the UPC Polska
Notes (other than the Telecom Owned UPC Polska Notes) shall receive the Third
Party Noteholder Consideration regardless of whether they are a Participating
Noteholder.

 

(c)           UPC
Polska Notes Impaired.  The holders of each series of UPC Polska Notes shall be deemed to
be impaired for purposes of the US Bankruptcy Code and the US Bankruptcy Rules
and shall be entitled to vote upon the Plan.

 

(d)           Full Satisfaction and
Discharge.  The receipt of
the Third Party Noteholder Consideration in accordance with the terms of this
Agreement and the Plan by the holders of UPC Polska Notes (other than the
Telecom Owned UPC Polska Notes) shall constitute a full satisfaction,
settlement, release and discharge of all the claims of each holder of UPC
Polska Notes pursuant to the UPC Polska Notes (other than the Telecom Owned UPC
Polska Notes) and the related Indentures.

 

Section 2.3             Treatment
of Telecom Owned UPC Polska Notes, Telecom Pari Passu Notes, Belmarken Notes
and Affiliate Indebtedness.

 

(a)           Treatment of Telecom
Owned UPC Polska Notes, Telecom Pari Passu Notes, Belmarken Notes and Affiliate
Indebtedness.  The Plan shall
provide that, on or as soon as practicable after the Effective Date, and on the
terms and conditions set forth herein and in the Plan, the holders of the
Telecom Owned UPC Polska Notes, the Telecom Pari Passu Notes, the Belmarken
Notes and the Affiliate Indebtedness shall receive (i) an aggregate amount of
cash equal to $15,000,000.00 (the “Other Cash Consideration”) and (ii)
100% of the newly issued common stock of UPC Polska (the “New UPC Polska
Stock” and, collectively with the Other Cash Consideration, the “UPC
Entities Consideration”) for the Telecom Owned UPC Polska Notes, the
Telecom Pari Passu Notes, the Belmarken Notes and the Affiliate
Indebtedness.  The holders of the
Telecom Owned UPC Polska Notes, Telecom Pari Passu Notes, Belmarken Notes and
Affiliate Indebtedness, shall each receive a pro  rata amount of
the UPC Entities Consideration based on the amount of their claims in respect of
the Telecom Owned UPC Polska Notes, Telecom Pari Passu Notes, Belmarken Notes
and Affiliate Indebtedness on the Filing Date.

 

8

 

(b)           Telecom Owned UPC
Polska Notes, Telecom Pari Passu Notes and Belmarken Notes Impaired.  The holders of the Telecom Owned UPC Polska
Notes, the Telecom Pari Passu Notes, the Belmarken Notes and the Affiliate
Indebtedness shall be deemed to be impaired for purposes of the US Bankruptcy
Code and the US Bankruptcy Rules and shall be entitled to vote upon the Plan.

 

(c)           Full Satisfaction and
Discharge.  The receipt of
the UPC Entities Consideration by the UPC Entities in accordance with the terms
of this Agreement and the Plan shall constitute a full satisfaction,
settlement, release and discharge of the claims and interests of each holder of
Telecom Owned UPC Polska Notes, Telecom Pari Passu Notes, Belmarken Notes and
Affiliate Indebtedness pursuant to the Telecom Owned UPC Polska Notes, Telecom
Pari Passu Notes, Belmarken Notes, in the case of the Telecom Owned UPC Polska
Notes, the related Indentures, and in the case of the Affiliate Indebtedness,
the related documents.

 

Section 2.4             Treatment
of Telecom Junior Notes.

 

(a)           Treatment of Telecom
Junior Notes.  The Plan shall
provide that the holders of the Telecom Junior Notes shall receive no
consideration in exchange for the Telecom Junior Notes, which shall be
cancelled on the Effective Date by operation of the Plan and shall thereafter
be of no further force and effect.

 

(b)           Telecom Junior Notes
Impaired.   The holders of
the Telecom Junior Notes  shall be
deemed to be impaired for purposes of the US Bankruptcy Code and the US
Bankruptcy Rules and shall be deemed to reject the Plan and shall not be
entitled to vote upon the Plan.

 

(c)           Full Satisfaction and
Discharge.  The occurrence of
the Effective Date and the consummation of the Plan in accordance with the
terms of this Agreement shall result in a full satisfaction, settlement,
release and discharge of the claims of each holder of Telecom Junior Notes
pursuant to the Telecom Junior Notes.

 

Section 2.5             Treatment
of Critical Creditors.  The parties
hereto agree that certain creditors of UPC Polska identified on Schedule 2.5
hereto by UPC Polska (the “Critical Creditors”) are critical to the
operation of the business of UPC Polska as a going concern.  As such, the parties hereto agree that UPC
Polska will use commercially reasonable efforts to pay such Critical Creditors
in full before the Filing Date and, to the extent that any are not paid in full
as of the Filing Date, the parties hereto agree to support a motion in the US
Bankruptcy Court to permit the payment in full of such Critical Creditors on or
as soon as is possible after the Filing Date, subject to the approval of the US
Bankruptcy Court.  Furthermore, the Plan
will provide that the obligations of UPC Polska to the Critical Creditors, to
the extent remaining unpaid on the Effective Date, will be left unimpaired,
assumed and reinstated under the Plan and, subject to the approval of the US
Bankruptcy Court, paid in full in cash on or as soon as practicable after the
Effective Date.  UPC Polska shall,
subject to the approval of the US Bankruptcy Court, pay the claims of such
Critical Creditors in full in cash on or as soon as practicable after the
Filing Date.

 

9

 

Section 2.6             Treatment
of General Unsecured Creditors.

 

(a)           Treatment of General
Unsecured Creditors.  The
Plan shall provide that, on or as soon as practicable after the Effective Date,
and on the terms and conditions set forth herein and in the Plan, UPC Polska
shall exchange the amount and type of consideration per $1,000.00 of claim
amount of each undisputed General Unsecured Creditor of UPC Polska as set forth
on Schedule 2.6 (including the holder of the Reece Note) which is equal
to the amount and type of consideration per $1,000.00 of claim amount payable
to the holders of UPC Polska Notes (other than the Telecom Owned UPC Polska
Notes) pursuant to Section 2.2 of this Agreement.

 

(b)           General Unsecured
Creditors’ Claims Impaired. 
The claims of all General Unsecured Creditors shall be deemed to be
impaired for purposes of the US Bankruptcy Code and the US Bankruptcy Rules and
shall be entitled to vote upon the Plan.

 

(c)           Full Satisfaction and
Discharge.  The receipt of
the consideration contemplated by and in accordance with the terms of this
Agreement and the Plan shall constitute a full satisfaction, settlement,
release and discharge of the claims of each General Unsecured Creditor.

 

Section 2.7             Administrative
and Other Priority Claims.  The Plan
will provide that on or as soon as practicable after the Effective Date, each
holder of allowed administrative or other priority claims under the US
Bankruptcy Code shall receive cash equal to the full amount of its allowed
claim or will otherwise be left unimpaired and reinstated or shall be accorded
such other treatment as UPC Polska and such holder agree to in writing.

 

Section 2.8             Treatment
of UPC Polska Equity.

 

(a)           Treatment
of UPC Polska Equity.  The
Plan shall provide that the holders of all outstanding shares of UPC Polska
Stock (as defined below) and the holders of all rights, options and warrants to
acquire shares of UPC Polska Stock (collectively with the shares of UPC Polska
Stock, the “UPC Polska Equity”) shall receive no consideration in
exchange for such shares of UPC Polska Stock or such rights, options or
warrants, as the case may be, and such shares of UPC Polska Stock and such
rights, options or warrants, as the case may be, shall be cancelled on the
Effective Date by operation of the Plan and shall thereafter be of no further
force and effect.

 

(b)           UPC
Polska Equity Impaired.  The
holders of the UPC Polska Equity shall be deemed to be impaired for purposes of
the US Bankruptcy Code and the US Bankruptcy Rules and shall be deemed to
reject the Plan and shall not be entitled to vote upon the Plan.

 

(c)           Full
Satisfaction and Discharge. 
The occurrence of the Effective Date and the consummation of the Plan in
accordance with the terms of this Agreement shall result in a full
satisfaction, settlement, release and discharge of the claims of each holder of
UPC Polska Equity.

 

10

 

ARTICLE III

 

DISCLOSURE STATEMENT; PLAN

 

Section 3.1             Disclosure Statement and Plan.  As promptly as practicable, but not less
than fifteen (15) calendar days prior to the Planned Filing Date, UPC Polska
shall prepare and circulate the Plan to UPC Telecom and the Participating
Noteholders.  The Plan shall contain
customary conditions precedent to the consummation of the Plan including,
without limitation, the requirements that (i) the New UPC Polska Notes be
listed on The PORTAL Market and (ii) the New UPC Polska Notes shall have been
rated by either Standard and Poor’s Ratings Group or Moody’s Investors Service,
Inc.  Provided that (a) a
Majority-in-Interest of the Participating Noteholders does not give written
notice within fifteen (15)-days of receipt of the Plan that the contents of the
Plan are inconsistent in any material respect with this Agreement, stating such
inconsistencies with specificity, or (b) if such notice has been provided, any
such inconsistency has been remedied to the satisfaction of a
Majority-in-Interest of the Participating Noteholders, UPC Polska shall,
subject to the approval of UPC Telecom, file the Plan with the US Bankruptcy
Court as promptly as practicable thereafter, but in any event within no more
than three (3) Business Days following the last to occur of the Filing Date,
the expiration of the fifteen (15)-day period provided for in the immediately
preceding subsection (a) or the satisfaction of the requirements in the
immediately preceding subsection (b). 
If the Participating Noteholders object to the contents of the Plan and
UPC Polska continues to work in good faith to resolve such objections, the
right of the Participating Noteholders to terminate this Agreement pursuant to
Section 9.1(a)(ii) and 9.1(a)(iii) hereof, shall not be available until thirty
(30) calendar days following the date on which UPC Polska receives the
Participating Noteholders’ objections. 
Within not more than fifteen (15) calendar days after the Filing Date,
UPC Polska shall prepare and circulate the Disclosure Statement to UPC Telecom
and the Participating Noteholders. 
Provided that (x) a Majority-in-Interest of the Participating
Noteholders does not give notice within fifteen (15) days of receipt of the
Disclosure Statement that the contents of the Disclosure Statement are
inconsistent in any material respect with this Agreement, stating such
inconsistencies with specificity, or (y) if such notice has been provided, any
such inconsistency has been remedied to the satisfaction of a
Majority-in-Interest of the Participating Noteholders, UPC Polska shall,
subject to the approval of UPC Telecom, file the Disclosure Statement with the
US Bankruptcy Court as promptly as practicable thereafter, but in any event
within no more than three (3) Business Days following the last to occur of
fifteen (15) calendar days after the Filing Date, the expiration of the fifteen
(15)-day period provided for in the immediately preceding subsection (x) or the
satisfaction of the requirements in the immediately preceding subsection (y).
If the Participating Noteholders object to the contents of the Disclosure
Statement and UPC Polska continues to work in good faith to resolve such
objections, the right of the Participating Noteholders to terminate this
Agreement pursuant to Section 9.1(a)(iii) hereof, shall not be available until
thirty (30) calendar days following the date on which UPC Polska receives the
Participating Noteholders’ objections. 
The UPC Entities, the Participating Noteholders and UPC Polska shall
cooperate with each other in good faith (including with respect to the
resolution of any dispute with respect to the Chapter 11 Case, the Plan or the
Disclosure Statement) and provide each other with all additional information
necessary for inclusion in the Disclosure Statement and the Plan.  The terms of the Restructuring set forth in
Article II hereof will be described in the Disclosure Statement and the
Plan.  Each of UPC

 

11

 

Polska, the UPC Entities and
the Participating Noteholders shall use its respective commercially reasonable
efforts to (i) have the Disclosure Statement and the Plan approved by the US
Bankruptcy Court as promptly as practicable after such filing and (ii) cause
the Disclosure Statement, together with any amendment or supplement thereto, to
be mailed to the holders of the Belmarken Notes, the UPC Polska Notes, the UPC
Telecom Notes, the Affiliate Indebtedness and the UPC Polska Equity, as well as
to the General Unsecured Creditors, the Critical Creditors and to all other
holders of claims against, and interests in, UPC Polska who are entitled to
receive such Disclosure Statement and the Plan, as promptly as practicable
after the Disclosure Statement is approved by the US Bankruptcy Court.  If a Majority-in-Interest of the
Participating Noteholders has not given notice as provided in this paragraph
3.1, or if the inconsistencies set forth in such notice have been remedied as
provided in this paragraph 3.1, the Participating Noteholders, in their
individual capacities and as member of the Committee, agree not to object to
the approval of the Plan and the Disclosure Statement and to vote in favor of
the Plan.

 

Section 3.2             Amendments.  To the extent practicable, UPC Polska shall
provide each of the UPC Entities and the Participating Noteholders with a reasonable
opportunity, but in no event less than two (2) Business Days, in the case of
any amendment or supplement to the Plan or the Disclosure Statement filed with
the US Bankruptcy Court, prior to filing such amendment or supplement with the
US Bankruptcy Court and shall provide each with a copy of all such filings made
with the US Bankruptcy Court.  Provided
that (a) a Majority-in-Interest of the Participating Noteholders does not give
notice within two (2)-days of receipt of the amendment or supplement that the
contents of any such amendment or supplement to the Plan or the Disclosure
Statement are inconsistent in any material respect with this Agreement, stating
such inconsistencies with specificity, or (b) if such notice has been provided,
any such inconsistency has been remedied to the satisfaction of a
Majority-in-Interest of the Participating Noteholders, UPC Polska shall,
subject to the approval of UPC Telecom, file such amendment or supplement with
the US Bankruptcy Court as promptly as practicable thereafter, but in any event
within no more than three (3) Business Days following either the expiration of
the two (2)-day period provided for in subsection (a) or the satisfaction of
the requirements in subsection (b).  If
the Participating Noteholders object to the contents of any amendment or
supplement to the Plan or the Disclosure Statement and UPC Polska continues to
work in good faith to resolve such objections, the right of the Participating
Noteholders to terminate this Agreement pursuant to Section 9.1(b)(i) hereof,
shall not be available until thirty (30) calendar days following the date on
which UPC Polska receives the Participating Noteholders’ objections.

 

Section 3.3             Response
to Comments.  UPC Polska shall use
its commercially reasonable efforts to provide the Participating Noteholders
and the UPC Entities with a draft of any proposed response to any objections
raised by parties in interest before the US Bankruptcy Court with respect to
the Disclosure Statement and the Plan. 
UPC Polska shall notify each of the UPC Entities and the Participating
Noteholders as promptly as practicable of the receipt of any such objections to
the Disclosure Statement and the Plan and shall supply each of them with copies
of all material correspondence received, if any, with respect to the Disclosure
Statement and the Plan.

 

12

 

ARTICLE IV

 

VOTING PROVISIONS

 

Section 4.1             Certain
Voting Matters.  Each party hereto,
including without limitation, UPC Telecom and Belmarken (each on its own behalf
and on behalf of the other) and each of the Participating Noteholders, agrees
that, for so long as this Agreement remains in effect, such party shall cause
all UPC Polska Notes now beneficially owned or the beneficial ownership of
which is hereafter acquired by such party, to be voted at all meetings, or
consents obtained without meetings, of holders of UPC Polska Notes against the
enforcement of any remedies under the relevant Indentures and shall take all
such action as may be necessary to instruct the trustees under the relevant
Indentures to act in a manner consistent with this Agreement, including,
without limitation, by voting to instruct such trustees to rescind any action
taken to accelerate the UPC Polska Notes or to enforce remedies under the
relevant Indentures.

 

Section 4.2             Voting After the Filing Date.

 

(a)           Agreement to Vote for
Plan.  Subject to Section 4.4
hereof, the UPC Entities and each Participating Noteholder irrevocably agree,
during the period commencing on the date of this Agreement and continuing until
the termination of this Agreement, as provided in Article IX of this Agreement,
(i) to vote, when properly solicited to do so, timely all of its Restricted
Claims in favor of the Plan, as the Plan may be modified from time to time in
accordance with the terms of Section 4.2(b), below, by timely executing ballots
in favor of the Plan, (ii) not to attempt to modify, condition, revoke or
withdraw such vote in favor of the Plan so long as the Plan is not modified in
violation of Section 4.2(b), (iii) not to support or encourage, directly or
indirectly, any financial restructuring concerning UPC Polska, other than as
set forth in this Agreement or the Plan, and (iv) not to oppose the approval of
the Disclosure Statement or the confirmation of the Plan or take any action
inconsistent with this Agreement or the Plan; provided, that the terms
and conditions set forth in this Agreement are substantially consistent with
the terms and conditions set forth in the Plan, as modified by any revisions
thereto permitted hereby.  Each party
agrees that its agreement hereunder may be disclosed in solicitation materials
prepared in connection with the Plan.

 

(b)           Modifications.  Notwithstanding any provision of this
Agreement, UPC Polska, may with the written consent of the UPC Entities and a
Majority-in-Interest of the Participating Noteholders, make such changes and
modifications to the Plan and/or the Disclosure Statement as UPC Polska, in its
reasonable discretion deems necessary and appropriate, and to the extent
permissible under the US Bankruptcy Code, in order to have the Disclosure
Statement approved by the US Bankruptcy Court and the Plan confirmed by the US
Bankruptcy Court; provided that no party hereto shall be required to
support a Plan that alters the principal amount or payment terms of the New UPC
Polska Notes or the Cash Consideration unless such modification has been
approved by each of the Participating Noteholders; provided, further,
that no party hereto shall be required to support a Plan that deviates from the
terms and conditions of this Agreement in a manner that is materially adverse
to such party, unless (i) with respect to Participating Noteholders, such
deviations are applicable generally to the UPC Polska Notes, and have been
approved by holders of UPC Polska Notes owning, as of the date of such

 

13

 

modification, a majority of the
aggregate principal amount of the outstanding UPC Polska Notes (which such
majority shall include a Majority-in-Interest of the Participating
Noteholders), in each case excluding for this purpose any Telecom Owned UPC
Polska Notes, or (ii) with respect to holders of any other class of claims
against, or interests in, UPC Polska, such deviations are applicable generally
to the claims or interests of such class and have been approved by holders of
claims or interests of such class owning, as of the date of such modification,
a majority-in-interest of the aggregate outstanding claims or interests of such
class, other than claims or interests of such class owned by the UPC Entities.

 

Section 4.3             Direction
of Trustees.  Each of the
Participating Noteholders agrees that it shall use commercially reasonable
efforts to cause each of the trustees under the Indentures to take such action
as is necessary or desirable and which is consistent with the Trust Indenture
Act of 1939, as amended to date, and any other applicable Law to implement the
actions and achieve the results contemplated in this Agreement; provided
that no Participating Noteholder should be required to expend its own funds in
doing so or be required to provide the applicable Trustee with indemnity for
its actions pursuant hereto.

 

Section 4.4             Acknowledgement.  This Agreement is not, and shall not be
deemed to be, a solicitation of votes to accept the Plan or an offering of any
securities to be issued under the Plan. 
Neither UPC Telecom, UPC Polska nor any of their respective controlled
Affiliates shall solicit acceptances of the Plan from, or offer such securities
to, the Participating Noteholders or any other creditor or holder of any other
claim against, or interest in, UPC Polska until the Disclosure Statement has
been approved by the US Bankruptcy Court and the holders of the Belmarken
Notes, the UPC Polska Notes, the UPC Telecom Notes, the Affiliate Indebtedness,
the UPC Polska Equity, the General Unsecured Creditors, the Critical Creditors
and the other creditors and holders of any other claims against, or interests
in, UPC Polska have been provided with all applicable solicitation materials
and related ballots.

 

ARTICLE V

 

REPRESENTATIONS AND WARRANTIES OF UPC POLSKA

 

UPC
Polska hereby represents and warrants to each of the other parties hereto that
the statements contained in this Article V are true and correct.

 

Section 5.1             Organization.  UPC Polska is a corporation duly organized
and validly existing under the Laws of the State of Delaware and has all
requisite corporate power and authority to own, lease and operate its properties
and assets and to carry on its business as now being conducted.

 

Section 5.2             Capitalization.  (a)  The authorized capital stock
of UPC Polska now consists, and immediately prior to the Effective Date will
consist, solely of 1,000 shares of authorized common stock (the “UPC Polska
Stock”), par value $.01 per share, of which 1,000 shares are currently
issued and outstanding as of the close of business on the date hereof.  All of the outstanding share capital or
other equity interests, as the case may be, of UPC Polska are duly authorized,
validly issued, fully paid and non-assessable, are owned by UPC Telecom, and

 

14

 

are not subject to, nor were
they issued in violation of, any preemptive rights, purchase option, call
option, right of first refusal, subscription right or any similar right, and
were issued in compliance with applicable securities laws and regulations.

 

(b)           Except as set forth above or on Annex D attached
hereto, and except for the transactions contemplated by this Agreement, (i)
there is no capital stock or other security (voting or nonvoting) of UPC Polska
that is authorized, issued or outstanding, (ii) there are no outstanding or
authorized options, warrants, calls, preemptive rights, subscriptions or other
rights, convertible or exchangeable securities, “phantom” stock rights, stock
appreciation rights, stock-based performance units, agreements, arrangements,
commitments or claims of any character, contingent or otherwise, relating to
the issued or unissued capital stock of UPC Polska or obligating UPC Polska to
issue, transfer or sell or cause to be issued, transferred or sold any capital
stock or other equity interests in UPC Polska or securities convertible into or
exchangeable for such shares or equity interests, or obligating UPC Polska to
grant, extend or enter into any such option, warrant, call, preemptive right,
subscription or other right, convertible or exchangeable security, agreement,
arrangement, commitment or claim, and (iii) there are no outstanding
contractual obligations of UPC Polska to repurchase, redeem or otherwise
acquire any capital stock of UPC Polska.

 

Section 5.3             Authorization;
Validity of Agreement; Corporate Action. 
UPC Polska has full corporate power and authority to execute, deliver
and, in respect of all actions referenced in the remainder of this sentence,
subject to obtaining the approval of the US Bankruptcy Court, perform this
Agreement and execute, deliver and perform each instrument required hereby to
be executed and delivered and performed by UPC Polska pursuant to this
Agreement, to perform its obligations hereunder and thereunder and to
consummate the transactions contemplated hereby and thereby.  The execution, delivery and performance by
UPC Polska of this Agreement and each instrument required hereby to be executed
and delivered by UPC Polska pursuant to this Agreement and the performance of
its obligations hereunder and thereunder and the consummation by it of the
transactions contemplated hereby and thereby have been duly authorized by UPC
Polska’s board of directors, and no other corporate action on the part of UPC
Polska is necessary to authorize the execution, delivery and performance by UPC
Polska of this Agreement and the consummation of the transactions contemplated
hereby and thereby.  This Agreement has
been duly executed and delivered by UPC Polska, and, assuming due and valid
authorization, execution and delivery hereof by each other party hereto, is a
valid and binding obligation of UPC Polska enforceable against UPC Polska in
accordance with its terms, subject to the approval of the US Bankruptcy Court.

 

Section 5.4             Consents
and Approvals; No Violations.  The
execution and delivery of this Agreement does not, and the consummation of the
transactions contemplated hereby and compliance by UPC Polska with the
provisions of this Agreement will not:

 

(a)           violate
or conflict with or result in any material breach of any provision of the
Certificate of Incorporation or By-laws or other organizational documents of
UPC Polska;

 

15

 

(b)           require
any filing, recordation, declaration or registration with, or permit, order,
authorization, consent, waiver or approval of, or action by or in respect of,
or the giving of notice to, any Governmental Entity to which UPC Polska is
subject, except for (i) the filing with the SEC of such reports under the
Exchange Act as may be required in connection with this Agreement, the
Restructuring and the transactions contemplated hereby and thereby and (ii) the
commencement of the Chapter 11 Case and the receipt of the requisite approvals
of the US Bankruptcy Court (collectively, the “Required UPC Polska  Consents”); or

 

(c)           subject
to obtaining the Required UPC Polska Consents, materially violate any of the
terms, conditions or provisions of any Law or Judgment of any Governmental
Entity to which UPC Polska is subject or by which UPC Polska or any of UPC
Polska’s assets are bound;

 

excluding from preceding clauses (b) and (c) such
matters that have not resulted in, do not result in, and would not reasonably
be likely to result in, individually or in the aggregate, a material adverse
effect on the ability of UPC Polska or its Subsidiaries to perform its
respective material obligations under this Agreement, and to consummate the
Restructuring and the transactions contemplated hereby and thereby.

 

Section 5.5             SEC
Reports and Financial Statements. 
Except for such delays as are the subject of Forms 12b-25 timely filed
with the SEC, UPC Polska has filed with the SEC all forms, reports, schedules,
statements and other documents (including, in each case, exhibits, schedules,
amendments or supplements thereto, and any other information incorporated by
reference therein) required to be filed by it since January 1, 1999 under the
Exchange Act or the Securities Act (as such documents have been amended or
supplemented between the time of their respective filing and the date hereof,
the “UPC Polska SEC Documents”). 
Except to the extent amended or superseded by a subsequent filing with
the SEC made prior to the date hereof, as of their respective dates (and if so
amended or superseded, then on the date of such filing prior to the date
hereof), the UPC Polska SEC Documents (including, without limitation, any
financial statements or schedules included therein), (a) did not contain any
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading and (b)
complied in all material respects with the applicable requirements of the
Exchange Act and the Securities Act, as the case may be, and the applicable
rules and regulations of the SEC thereunder. 
Each of the financial statements contained in the UPC Polska SEC
Documents (including, in each case, any related notes and schedules) has been
prepared from, and is in accordance with, the books and records of UPC Polska
and its consolidated Subsidiaries, complies in all material respects with
applicable accounting requirements and with the published rules and regulations
of the SEC with respect thereto, has been prepared in accordance with GAAP as
in effect during such periods (except as may be indicated in the notes thereto)
and fairly presents, in all material respects, the consolidated financial
position and the consolidated results of operations and cash flows of UPC
Polska and its consolidated Subsidiaries at the dates and for the periods covered
thereby.

 

16

 

Section 5.6             Brokers.  Except for the fees and expenses of FTI
Consulting, Inc. (whose fees and expenses shall be paid by UPC Polska in
accordance with UPC Polska’s  agreements
with such firms), no agent, broker, Person or firm acting on behalf of UPC
Polska is or will be entitled to any advisory or other fee, commission or
broker’s or finder’s fee from any party hereto (or any of their respective
Affiliates) in connection with this Agreement, the Restructuring or any of the
transactions contemplated hereby or thereby.

 

ARTICLE VI

 

REPRESENTATIONS AND WARRANTIES OF

THE UPC ENTITIES

 

Each
UPC Entity hereby represents and warrants to each of the other parties hereto
(other than each other UPC Entity) that the statements contained in this
Article VI are true and correct.

 

Section 6.1             Organization.  Such UPC Entity is a private company with
limited liability (besloten vennootschap) duly organized and validly existing
under the Laws of The Netherlands and has all requisite company power and
authority to own, lease and operate its properties and assets and to carry on
its business as now being conducted.

 

Section 6.2             Authorization;
Validity of Agreement; Corporate Action. 
Such UPC Entity has the full company power and authority to execute and
deliver this Agreement and each instrument required hereby to be executed and
delivered by it pursuant to this Agreement, to perform its obligations
hereunder and thereunder, and to consummate the transactions contemplated
hereby and thereby.  The execution,
delivery and performance by such UPC Entity of this Agreement and each
instrument required hereby to be executed and delivered by such UPC Entity
pursuant to this Agreement and the performance of its obligations hereunder and
thereunder and the consummation by it of the transactions contemplated hereby
have been duly authorized by the Board of Management of such UPC Entity and no
other company action on the part of such UPC Entity is necessary to authorize
the execution, delivery and performance by such UPC Entity of this Agreement
and the consummation of the transactions contemplated hereby.  This Agreement has been duly executed and
delivered by such UPC Entity and, assuming due and valid authorization,
execution and delivery hereof by each other party hereto, is a valid and
binding obligation of such UPC Entity enforceable against such Person in
accordance with its terms, except that the enforceability thereof may be
subject to bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or other similar laws now or hereafter in effect or to the
discretion of any court before which a proceeding is brought.

 

Section 6.3             Consents
and Approvals; No Violations.  The
execution and delivery of this Agreement does not, and the consummation of the
transactions contemplated by this Agreement and compliance by such UPC Entity
with the provisions of this Agreement will not:

 

(a)           violate
or conflict with or result in any breach of any provision of the Articles of
Association or other organizational documents of such UPC Entity;

 

17

 

(b)           require
any filing, recordation, declaration or registration with, or permit, order,
authorization, consent, waiver or approval of, or action by or in respect of,
or the giving of notice to, any Governmental Entity to which such UPC Entity or
any of its Subsidiaries is subject, except for the receipt of any requisite US
Bankruptcy Court approvals; or

 

(c)           subject
to obtaining the approvals specified in Section 6.3(b), materially violate any
of the terms, conditions or provisions of any Law or Judgment of any
Governmental Entity to which such UPC Entity or any of its respective
Subsidiaries is subject or by which any of the foregoing or any of their
respective assets are bound;

 

excluding from
preceding clauses (b) and (c) such matters that have not resulted in, do not
result in, and would not reasonably be likely to result in, individually or in
the aggregate, a material adverse effect on the ability of such UPC Entity to
perform its obligations under this Agreement, and to consummate the
Restructuring and the transactions contemplated hereby and thereby.

 

Section 6.4             Ownership of Securities.

 

(a)           UPC Telecom.  UPC Telecom is the record and beneficial
owner of the UPC Telecom Notes, the UPC Polska Stock and the other claims and
interests in UPC Polska set forth on Schedule 6.4(a) hereto, free and
clear of all Liens, encumbrances and adverse claims, and UPC Telecom has no
claim or interest, contingent or otherwise, against UPC Polska except for the
claims or interests set forth on Schedule 6.4(a) hereto.

 

(b)           Belmarken.  Belmarken is the record and beneficial owner
of the Belmarken Notes and the other claims and interests in UPC Polska set forth
on Schedule 6.4(b) hereto, free and clear of all Liens, encumbrances and
adverse claims, and Belmarken has no claim or interest, contingent or
otherwise, against UPC Polska except for the claims or interests set forth on Schedule
6.4(b) hereto.

 

Section 6.5             Certain
Securities Law Matters.  Each of the
UPC Entities hereby further represents and warrants for itself that:

 

(a)           Such
Person, by virtue of such Person’s expertise, the advice available to such
Person, and its previous investment experience, has extensive knowledge and
experience in financial and business matters, investments, securities and
private placements and the capability to evaluate the merits and risks of this
Agreement, the Restructuring and the transactions contemplated hereby and thereby.

 

(b)           Such
Person is entering into this Agreement, the Restructuring and the transactions
contemplated hereby and thereby for such Person’s own account and such Person
intends to acquire any New UPC Polska Stock issued in connection with the
Restructuring for investment purposes only and not with a view to, or the
intention of, distributing any such securities in violation of the Securities
Act or any other applicable securities laws of the United States or any
political subdivision thereof, and any such securities will not be disposed of
in contravention of the Securities Act or any other applicable securities laws
of the United States or any political subdivision thereof.

 

18

 

(c)           Such
Person is able to bear the economic risk of the transactions contemplated by
this Agreement and the Restructuring (including, without limitation, the
complete loss of such investment) for an indefinite period of time.

 

(d)           Such
Person has had an opportunity to ask questions and receive answers concerning
the business and affairs of UPC Polska and such other matters concerning its
current loans to UPC Polska, the Restructuring and the transactions
contemplated hereby and thereby and has had full access to such other information
concerning UPC Polska, the Restructuring and the transactions contemplated
hereby and thereby as such Person has requested.

 

(e)           Such
Person is a “qualified institutional buyer”, as such term is defined pursuant
to Rule 144A(a) promulgated under the Securities Act, or, if not such a
“qualified institutional buyer”, such Person is an “accredited investor” as
such term is defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D,
promulgated under the Securities Act.

 

Section 6.6             Brokers.  No agent, broker, Person or firm acting on
behalf of any of the UPC Entities is or will be entitled to any advisory or
other fee, commission or broker’s or finder’s fee from any party hereto (or any
of their respective Affiliates) in connection with this Agreement, the
Restructuring or any of the transactions contemplated hereby or thereby other
than J.P. Morgan & Co. and Credit Suisse First Boston LLC, whose fees and
expenses shall be paid by UPC Polska in accordance with its agreement with the
UPC Entities.

 

ARTICLE VII

 

REPRESENTATIONS AND WARRANTIES OF
PARTICIPATING NOTEHOLDERS 

 

Each
Participating Noteholder, for itself and no other party, hereby represents and
warrants to each of the other parties hereto that the statements contained in
this Article VII are true and correct.

 

Section 7.1             Organization.  Such Participating Noteholder is duly
organized, validly existing and in good standing under the Laws of its
jurisdiction of organization.

 

Section 7.2             Authorization;
Validity of Agreement; Noteholder Action. 
Such Participating Noteholder has the full institutional power and
authority to execute and deliver this Agreement and each instrument required
hereby to be executed and delivered by it pursuant to this Agreement, to
perform its obligations hereunder and thereunder, and to consummate the
transactions contemplated hereby and thereby. 
The execution, delivery and performance by such Participating Noteholder
of this Agreement and each instrument required hereby to be executed and
delivered by such Participating Noteholder pursuant to this Agreement, and the
performance of such Participating Noteholder’s obligations hereunder and
thereunder and the consummation by it of the transactions contemplated hereby
and thereby have been duly authorized by its Board of Directors or other
governing body or appropriate authorized officers or representatives and no
other institutional action on the part of such Participating Noteholder is
necessary to authorize

 

19

 

the execution, delivery and
performance by such Participating Noteholder of this Agreement and the
consummation of the transactions contemplated hereby.  This Agreement has been duly executed and delivered by such
Participating Noteholder and, assuming due and valid authorization, execution
and delivery hereof by each other party hereto, is a valid and binding
obligation of such Participating Noteholder enforceable against such
Participating Noteholder in accordance with its terms, except that the
enforceability thereof may be subject to bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other similar laws now or
hereafter in effect or to the discretion of any court before which a proceeding
is brought.

 

Section 7.3             Consents
and Approvals; No Violations.  The
execution and delivery of this Agreement does not, and the consummation of the
transactions contemplated by this Agreement and compliance by such
Participating Noteholder with the provisions of this Agreement will not:

 

(a)           violate
or conflict with or result in any breach of any provision of the Certificate of
Incorporation, By-laws or other organizational documents of such Participating
Noteholder;

 

(b)           require
any filing, recordation, declaration or registration with, or permit, order,
authorization, consent, waiver or approval of, or action by or in respect of,
or the giving of notice to, any Governmental Entity to which such Participating
Noteholder or any of its Affiliates is subject, except for (i) the filing with
the SEC of such reports under the Exchange Act, as may be required in
connection with this Agreement, the Restructuring and the transactions
contemplated hereby and thereby and (ii) the receipt of requisite US Bankruptcy
Court approvals; or

 

(c)           subject
to obtaining the approvals specified in Section 7.3(b), materially violate any
of the terms, conditions or provisions of any Law or Judgment of any
Governmental Entity to which such Participating Noteholder is subject or by
which such Participating Noteholder or any of its assets are bound;

 

excluding from
preceding clauses (b) and (c) such matters that have not resulted in, do not
result in, and would not reasonably be likely to result in, individually or in
the aggregate, a material adverse effect on the ability of such Participating Noteholder
to perform its obligations under this Agreement, and to consummate the
Restructuring and the transactions contemplated hereby and thereby.

 

Section 7.4             Ownership
of Securities.  Such Participating
Noteholder is the lawful beneficial owner of the UPC Polska Notes and other
claims against, or interests in, UPC Polska set forth on Schedule 7.4
hereto, free and clear of all Liens, encumbrances and adverse claims, and such
Participating Noteholder has no claims or interests, contingent or otherwise, against
UPC Polska except for the claims and interests set forth on Schedule 7.4
hereto.

 

Section 7.5             Certain
Securities Law Matters.

 

(a)           Such Participating Noteholder, by virtue of such
Participating Noteholder’s expertise, the advice available to such Participating
Noteholder, and its previous

 

20

 

investment experience, has
extensive knowledge and experience in financial and business matters,
investments, securities and private placements and the capability to evaluate
the merits and risks of this Agreement, the Restructuring and the transactions
contemplated hereby and thereby.

 

(b)           Such Participating Noteholder is entering into this
Agreement, the Restructuring and the transactions contemplated hereby and
thereby for such Participating Noteholder’s own account and such Participating
Noteholder intends to acquire any New UPC Polska Notes issued in connection
with the Restructuring for investment purposes only and not with a view to, or
the intention of, distributing any such notes in violation of the Securities
Act or any other applicable securities laws of the United States or any
political subdivision thereof, and any such securities will not be disposed of
in contravention of the Securities Act or any other applicable securities laws
of the United States or any political subdivision thereof.

 

(c)           Such Participating Noteholder is able to bear the economic
risk of the transactions contemplated by this Agreement and the Restructuring
(including, without limitation, the complete loss of such investment) for an
indefinite period of time.

 

(d)           Such Participating Noteholder has had an opportunity to
ask questions and receive answers concerning the business and affairs of UPC
Polska and such other matters concerning its current investment in UPC Polska,
the Restructuring and the transactions contemplated thereby and has had full
access to such other information concerning UPC Polska, the Restructuring and
the transactions contemplated thereby as such Participating Noteholder has
requested.

 

(e)           Such Participating Noteholder is a “qualified
institutional buyer”, as such term is defined pursuant to Rule 144A(a)
promulgated under the Securities Act, or, if not such a “qualified
institutional buyer”, such Participating Noteholder is an “accredited investor”
as such term is defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D,
promulgated under the Securities Act.

 

Section 7.6             Brokers.  No agent, broker, Person or firm acting on
behalf of the Participating Noteholders is or will be entitled to any advisory
or other fee, commission or broker’s or finder’s fee from any party hereto (or
any of their respective Affiliates) in connection with this Agreement, the
Restructuring or any of the transactions contemplated hereby or thereby.

 

ARTICLE VIII

 

CERTAIN COVENANTS

 

Section 8.1             Commercially
Reasonable Efforts.  Subject to the
terms and conditions provided herein, each of the parties hereto shall, and
shall cause each of its controlled Affiliates to, cooperate and use its commercially
reasonable efforts to take, or cause to be taken, all appropriate action, and
do, or cause to be done, and assist and cooperate with the other parties hereto
in doing, all things necessary, proper or advisable to consummate and make
effective, in the most expeditious manner practicable, the Restructuring and
the other transactions

 

21

 

contemplated hereby and thereby
and to make, or cause to be made, all filings necessary, proper or advisable
under applicable Laws, to consummate and make effective the Restructuring and
the transactions contemplated hereby and thereby.  Without limiting the generality of the foregoing, each of the
parties hereto shall, and shall cause each of their controlled Affiliates to,
cooperate and use their commercially reasonable efforts promptly to:

 

(a)           make
any and all filings, recordations, declarations or registrations with, obtain
any and all actions or non-actions, licenses, permits, consents, approvals,
waivers, authorizations, qualifications and orders of, give any and all notices
to, and take reasonable steps to avoid an action or proceeding by, any and all
Governmental Entities and parties to contracts with UPC Polska, in each case
prior to the Effective Date, as are necessary, proper or advisable to
consummate and make effective, in the most expeditious manner practicable, the
Restructuring and the other transactions contemplated hereby and thereby;

 

(b)           defend
any lawsuits or other legal proceedings, whether judicial or administrative,
challenging this Agreement or the consummation of the Restructuring or any of
the other transactions contemplated hereby and thereby (including seeking to
have any stay or temporary restraining order entered by any court or Governmental
Entity vacated or reversed); it being understood and agreed that each party
hereto shall promptly notify the other parties of any litigation (including any
stockholder litigation), against such party and/or its directors relating to
the Restructuring or any of the transactions contemplated hereby and thereby;
and

 

(c)           execute
and deliver any additional instruments necessary to consummate the
Restructuring and the transactions contemplated hereby and thereby and to carry
out fully the purposes of this Agreement.

 

Section 8.2             Notification
of Certain Matters.  Each party
hereto shall give prompt written notice to each other party of (a) the
occurrence or non-occurrence of any event, known to such party, the occurrence
or non-occurrence of which has resulted in, or is reasonably likely to result
in, any representation or warranty set forth in this Agreement made by such
party to be untrue or inaccurate in any material respect; (b) any material
failure by such party to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder; or (c) any action,
suit or proceeding by any Person or any inquiry or investigation by any
Governmental Entity pending, or, to the knowledge of such party, threatened,
that questions or challenges this Agreement or the consummation of the
Restructuring or of any of the transactions contemplated hereby and thereby; provided
that the delivery of any notice pursuant to this Section 8.2 shall not limit or
otherwise affect the remedies available hereunder to the party receiving such
notice and that no such notification shall modify the representations or
warranties of any party or the conditions to the obligations of any party
hereunder.

 

Section 8.3             Forbearance.  As long as this Agreement remains in effect
with respect to said party, each Person party hereto (other than UPC Polska)
acknowledges and agrees that it shall forbear from (w) exercising the right to
receive principal of, and interest or dividends on, any security of UPC Polska
held by such Person, (x) the filing of a notice of default, the

 

22

 

taking of any action to
accelerate or otherwise collect on any such security, (y) pursuing any rights
or remedies (including acceleration of amounts due thereunder) available to
such Person under any such security and (z) the commencement of litigation or
proceedings (including arbitration) of any kind or nature against UPC Polska or
any of its Subsidiaries, arising as the result of, or in connection with, any
failure to pay the principal of, or interest on, any such security or a default
under any such security or in respect of any other rights or remedies under
applicable law or otherwise of such Person under any such security or any
indenture that governs any security of UPC Polska held by such Person or any
agreement among UPC Polska and any such Person or Persons.  Notwithstanding the preceding sections,
after UPC Polska becomes a debtor under the US Bankruptcy Code, the Persons
party hereto (other than UPC Polska) shall be entitled to exercise any rights
or remedies they have in connection with the Chapter 11 Case in all cases
consistent with this Agreement, subject to any stay or modifications of such
rights or remedies which may exist or be entered in connection with such
proceedings; provided that so long as this Agreement remains in effect,
such Persons agree to exercise such rights and remedies only in a manner
consistent with the provisions of this Agreement.  Notwithstanding anything in this Section 8.3 to the contrary, if
the Plan is confirmed other than substantially on the terms set forth in this
Agreement (after giving effect to any permitted modifications made pursuant to
Section 4.2(b)) the obligations under this Section 8.3 of each Person party
hereto shall terminate.  For purposes of
certainty, the parties hereto acknowledge that the Participating Noteholders
specifically preserve whatever rights they may have to compel UPC Polska to
fulfill its fiduciary duties, subject to the terms and conditions of this
Agreement, in connection with this Agreement or in the Chapter 11 Case.

 

Section 8.4             Restrictions
on Transfer.  Until the Effective
Date, each Person party hereto (other than UPC Polska) agrees that it shall
not, without the prior written consent of each other party hereto, (a) sell,
transfer, assign, pledge, gift or otherwise dispose of any of its claims
against, or interests in, UPC Polska (including, without limitation, any
Belmarken Notes, UPC Polska Notes, UPC Telecom Notes and UPC Polska Equity), in
whole or in part, or any interest therein, unless the transferee thereof
accepts such claim against, or interest in, UPC Polska subject to the terms of
this Agreement, as evidenced by an agreement executed by such transferee that
provides in an enforceable manner, among other things, that each of the other
parties to this Agreement is an express third-party beneficiary of such
agreement or (b) grant any proxies, deposit any of its claims against, or
interests in, UPC  Polska (including,
without limitation, any Belmarken Notes, UPC Polska Notes, UPC Telecom Notes or
UPC Polska Equity) into a voting trust, or enter into a voting or tendering
agreement with respect to any claims against, or interests in, UPC Polska,
unless such arrangement provides in an enforceable manner for compliance with
this Agreement.  In the event that a
party to this Agreement transfers any such claim against, or interest in, UPC
Polska prior to the final vote on the Plan, the transferee of such claim
against, or interest in, UPC Polska shall comply with and be subject to all the
terms of this Agreement, including, but not limited to, the transferring
party’s obligations to vote in favor of the Plan and shall, as a condition
precedent to such transfer, execute an agreement on terms substantially
identical (including with respect to termination events and withdrawal rights)
in all respects to the terms of this Agreement.

 

Section 8.5             Further
Acquisition of Claims or Interests. 
This Agreement shall in no way be construed to preclude any party hereto
from acquiring additional claims against, or

 

23

 

interests in, UPC Polska; provided
that if any such Person acquires any additional claims against, or interests
in, UPC Polska after the date of this Agreement, such additional claims
against, or interests in, UPC Polska shall immediately upon such acquisition
without further action on the part of UPC Polska or the acquiring Person become
subject to the terms of this Agreement.

 

Section 8.6             Impact
of Appointment of Creditors’ Committee. 
If an official committee of unsecured creditors is appointed by the
United States Trustee in the Chapter 11 Case, UPC Polska shall cooperate
reasonably with the Participating Noteholders in seeking to cause the United
States Trustee to appoint some or all of the Participating Noteholders to be
members of such official committee pursuant to Section 1102 of the Bankruptcy
Code.  Nothing contained in this Agreement
shall limit the ability of any Participating Noteholder appointed to such
committee to take such acts as a committee member that are required by or
consistent with the fiduciary duties of a committee member; provided
that the freedom to act as a committee member (including the freedom to vote in
committee meetings and to instruct committee professionals to act on behalf of
such committee) shall not affect the obligations of the Participating
Noteholder to vote its Restricted Claims as provided herein and shall not
affect the continuing obligations of such Participating Noteholder(s) under
this Agreement or the validity or enforceability of this Agreement.

 

Section 8.7             Releases
and Exculpation.

 

(a)           Releases.  The Plan will contain provisions addressing
releases, in each case substantially as follows:

 

“Effective on the
Confirmation Date, but subject to the occurrence of the Effective Date, the UPC
Entities, UPC Polska, UPC, New UPC, UGC, each Participating Noteholder, each
holder of UPC Polska Notes, UPC Telecom Notes, Belmarken Notes, Affiliate
Indebtedness, UPC Polska Equity and each of the foregoing’s respective
officers, directors, Affiliates, Subsidiaries, stockholders, partners, members,
managers, representatives, employees, attorneys, financial advisors,
accountants and agents, and any of their respective successors and assigns, and
their respective property, shall be released from any and all claims,
obligations, rights, causes of action, choses in action, demands, suits,
proceedings and liabilities which UPC Polska or any holder of a claim against,
or interest in, UPC Polska or its bankruptcy estate may be entitled to assert,
whether for fraud, tort, contract, violations of applicable securities laws, or
otherwise, whether known or unknown, foreseen or unforeseen, existing or
hereafter arising, contingent or non-contingent, based in whole or in part upon
any act, omission, transaction, state of facts, circumstances or other
occurrence or failure of an event to occur, taking place before the
Confirmation Date and in any way relating to the UPC Entities, UPC, UGC, New
UPC, each Participating Noteholder, UPC Polska, the issuance, purchase or sale
of the Belmarken Notes, UPC Polska Notes, UPC Telecom Notes, Affiliate
Indebtedness, UPC Polska Equity, the Restructuring, the Chapter 11 Case, the solicitation
of acceptances of the Plan, the pursuit of confirmation of the Plan, the
consummation of the Plan or administration of the Plan or the property to be
distributed under the Plan; provided, however, that nothing
herein shall release any Person from any claims, obligations, rights, causes of
action, choses in action, demands, suits, proceedings or liabilities based

 

24

 

upon any act or omission
arising out of such Person’s gross negligence or willful misconduct; provided
further, that nothing herein shall release UPC Polska, the UPC Entities or
any Participating Noteholder from any claims, obligations, rights, causes of
action, choses in action, demands, suits, proceedings or liabilities based upon
such Person’s failure to comply, in all respects, with, or breach of such
Person’s obligations under, this Plan or the Restructuring Agreement.  Effective as of the Confirmation Date, but
subject to the occurrence of the Effective Date, all holders of Belmarken
Notes, UPC Polska Notes, UPC Telecom Notes, Affiliate Indebtedness and UPC
Polska Equity, shall be deemed to release, and shall be permanently enjoined
from bringing, maintaining, facilitating or assisting any action, demand, suit
or proceeding against, UGC, the UPC Entities, New UPC, UPC, UPC Polska and
their respective officers, directors, Subsidiaries, Affiliates, members,
managers, representatives, employees, attorneys, stockholders, partners,
accountants, financial advisors and agents, or any of their respective
successors and assigns, and their respective property, in respect of any
claims, obligations, rights, causes of action, demands, suits, proceedings and
liabilities related to, or arising from, any and all claims or interests
arising under, in connection with, or related to the Belmarken Notes, the UPC
Polska Notes, the UPC Telecom Notes, the Affiliate Indebtedness or the UPC
Polska Equity, or the issuance, purchase, or sale of any thereof, the
Restructuring, the Chapter 11 Case, the solicitation of acceptances of the
Plan, the pursuit of confirmation of the Plan, the consummation of the Plan or
administration of the Plan or the property to be distributed under the Plan.”

 

“Nothing in the Plan
shall effect a release in favor of any released party from any liability
arising under (i) the Internal Revenue Code, or any state, city or municipal
tax code, (ii) the environmental laws of the United States, any state, city or
municipality, or (iii) any criminal laws of the United States, any state, city
or municipality; nor shall anything in the Plan enjoin the United States
government or any state, city or municipality, as applicable, from bringing any
claim, suit, action or other proceeding against any released party for any
liability arising under (i) the Internal Revenue Code, or any state, city or
municipal tax code, (ii) the environmental laws of the United States, any
state, city or municipality, or (iii) any criminal laws of the United States,
any state, city or municipality; provided, however, that this
paragraph shall in no way affect or limit the discharge granted to UPC Polska
under Chapter 11 of the U.S. Bankruptcy Code and pursuant to the Plan.”

 

“Solely in the case of
attorneys, nothing in the Plan shall effect a release from any liability arising
under any applicable professional disciplinary rule, including Disciplinary
Rule 6-102 of the New York Code of Professional Conduct.”

 

(b)           Exculpation.  The Plan will contain provisions addressing
exculpation and limitation of liability, in each case substantially as follows:

 

“None of the UPC
Entities, New UPC, UPC, UPC Polska, UGC, any Participating Noteholder, any
holder of UPC Polska Notes, Belmarken Notes, UPC Telecom Notes, Affiliate
Indebtedness, UPC Polska Equity, or any of the foregoing’s respective officers,
directors, Subsidiaries, Affiliates, members, managers, stockholders, partners,

 

25

 

representatives,
employees, attorneys, financial advisors, accountants and agents, or any of
their respective successors and assigns, or any of their respective property,
shall have or incur any liability to any holder of a claim or an interest, or
any other party in interest, or any of their respective officers, directors,
Subsidiaries, Affiliates, members, managers, stockholders, partners,
representatives, employees, attorneys, financial advisors, accountants and
agents, or any of their respective successors and assigns, and their respective
property, for any act or omission in connection with, relating to, or arising
out of, the Restructuring, the Chapter 11 Case, the solicitation of acceptances
of the Plan, the pursuit of confirmation of the Plan, the consummation of the
Plan, or the administration of the Plan or the property to be distributed under
the Plan, except for (i) their gross negligence or willful misconduct, (ii)
solely in the case of attorneys, to the extent that such exculpation would
violate any applicable professional disciplinary rules, including Disciplinary
Rule 6-102 of the New York Code of Professional Conduct and (iii) solely in the
case of UPC Polska, the UPC Entities or any Participating Noteholder, any
liability for failure to comply with, or breach of such Person’s obligations
under, this Plan or the Restructuring Agreement, and in all respects UPC
Polska, the UPC Entities and the Participating Noteholders shall be entitled to
reasonably rely upon the advice of counsel with respect to their duties and
responsibilities under this Plan and the Restructuring Agreement.

 

“Notwithstanding any
other provision of the Plan, no holder of a claim or interest, no other party
in interest, none of their respective officers, directors, Subsidiaries,
Affiliates, members, managers, stockholders, partners, representatives,
employees, attorneys, financial advisors, accountants and agents, or any of
their respective successors and assigns, and their respective property, shall
have any right of action, demand, suit or proceeding against, the UPC Entities,
UPC Polska, UGC, New UPC, UPC, each Participating Noteholder, each holder of
UPC Polska Notes, Belmarken Notes, Affiliate Indebtedness, UPC Polska Equity,
UPC Telecom Notes, and each of the foregoing’s respective officers, directors,
Subsidiaries, Affiliates, members, managers, stockholders, partners, representatives,
employees, attorneys, financial advisors, accountants and agents, or any of
their respective successors and assigns, and their respective property, for any
act or omission in connection with, relating to or arising out of, the
Restructuring, the Chapter 11 Case, the solicitation of acceptances of the
Plan, the pursuit of confirmation of the Plan, the consummation of the Plan or
the administration of the Plan or the property to be distributed under the
Plan, except (i) for their gross negligence or willful misconduct, (ii) solely
in the case of attorneys, to the extent that such exculpation would violate any
applicable professional disciplinary rules, including Disciplinary Rule 6-102
of the New York Code of Professional Conduct and (iii) solely in the case of
the UPC Entities, UPC Polska or any Participating Noteholder, for failure to
comply with, or breach of such Person’s obligations under, this Plan or the
Restructuring Agreement, and in all respects UPC Polska, the UPC Entities and
the Participating Noteholders shall be entitled to reasonably rely upon the
advice of counsel with respect to their duties and responsibilities under this
Plan and the Restructuring Agreement.”

 

Section 8.8             Advisors.  UPC Polska shall pay the reasonable fees and
expenses for services of financial advisors and legal services of attorneys for
the UPC Entities and the

 

26

 

Participating Noteholders in
connection with the preparation, negotiation, execution and performance of (i)
this Agreement, (ii) the Restructuring and (iii) any of the transactions
contemplated hereby or thereby, subject in the case of the Participating
Noteholders to the terms and conditions of the Expense Reimbursement Agreement.

 

Section 8.9             Adjustment
to Third Party Noteholder Consideration. 
In the event that, on or prior to the Effective Date, UPC or any of its
direct or indirect Affiliates purchases, redeems or otherwise acquires for
value any UPC Polska Notes for a consideration that is different than the Third
Party Noteholder Consideration, then the Plan shall provide that each of the
Participating Noteholders shall have the right to elect to receive such
alternate consideration in respect of their UPC Polska Notes upon consummation
of the Restructuring, on the same terms and conditions as those pursuant to
which such other UPC Polska Notes were purchased, redeemed or otherwise
acquired for value, in lieu of the receiving the Third Party Noteholder
Consideration for such UPC Polska Notes. The UPC Entities and/or UPC Polska
shall promptly notify each Participating Noteholder of each such purchase
including the amount(s) and type(s) of consideration paid in connection
therewith.

 

ARTICLE IX

 

TERMINATION AND ABANDONMENT

 

Section 9.1             Termination.

 

(a)           This Agreement may be terminated at any time prior to the
Effective Date:

 

(i)            by the mutual written consent of UPC
Polska, the UPC Entities, and a Majority-in-Interest of the Participating
Noteholders;

 

(ii)           by a Majority-in-Interest of the
Participating Noteholders, subject to the provisions of Section 3.1, if the
Filing Date has not occurred on or prior to July 7, 2003; provided, that
the right to terminate this Agreement under this Section 9.1(a)(ii) shall not
be available to the extent that the failure by Participating Noteholders to
fulfill any obligation under this Agreement caused the failure of the Filing
Date to have occurred on or prior to such date;

 

(iii)          by a Majority-in-Interest of the
Participating Noteholders, subject to the provisions of Section 3.1, if the
Plan and the Disclosure Statement have not been filed with the Bankruptcy Court
on or prior to July 24, 2003; provided, that the right to terminate this
Agreement under this Section 9.1(a)(iii) shall not be available to the extent
that the failure by Participating Noteholders to fulfill any obligation under
this Agreement caused the failure of the Plan and the Disclosure Statement to
be filed with the Bankruptcy Court on or prior to such date; or

 

(iv)          by the UPC Entities or a Majority-in-Interest
of the Participating Noteholders, if the Disclosure Statement contains
information materially different from information provided in writing to the
UPC Entities or the Participating Noteholders, as the case may be, by UPC
Polska in connection with the negotiation and execution of this

 

27

 

Agreement,
which information materially adversely impacts the value of the consideration
being received by the UPC Entities or the Participating Noteholders, as the
case may be, pursuant to the Plan, and (i) within ten (10) days after receipt
of the Disclosure Statement, the UPC Entities or the Participating Noteholders
have given written notice to UPC Polska specifying in reasonable detail the
alleged differences and (ii) within ten (10) days after receipt of such notice,
UPC Polska has not advised the UPC Entities or the Participating Noteholders,
as the case may be, that (A) it concurs with the claimed difference in the
Disclosure Statement and will take steps to conform the disclosure to the
previous disclosure (in which case UPC Polska shall have thirty (30) days to
effect a cure) or (B) it disagrees with the UPC Entities’ notice, or the
Participating Noteholders’ notice, as the case may be, and submits the issue to
the US Bankruptcy Court for resolution (in which case the parties shall be
bound by the determination of the US Bankruptcy Court).

 

(b)           Any party to this Agreement may terminate its obligations
under this Agreement:

 

(i)            at any time after the date which is
nine (9) months after the Filing Date, subject to the provisions of Section
3.2, if the Effective Date shall not have occurred by such date;

 

(ii)           upon the earliest to occur of (A) the
conversion of the Chapter 11 Case to a case under Chapter 7 of the US
Bankruptcy Code, (B) the appointment of a Chapter 11 trustee, (C) the Plan is
not confirmed without any option being available to UPC Polska to challenge
such decision or amend the Plan or (D) the Plan is confirmed by the US
Bankruptcy Court on terms materially inconsistent with the terms set forth in
this Agreement, including after giving effect to any changes in the transaction
structure made in accordance with Section 4.2(b);

 

(iii)          if the representations or warranties
of any other party to this Agreement shall fail to be true in any material
respect, causing a material adverse effect upon the terminating party;

 

(iv)          if any other party fails to perform in
any material respect any covenant or agreement of such other party pursuant to
this Agreement; provided that no party may terminate this Agreement
pursuant to this Section 9.1 (b)(iv) if such party’s conduct has contributed in
any material respect to the non-performance alleged as the basis for
terminating this Agreement or if such party is otherwise in material breach of
its obligations hereunder;

 

(v)           if UPC Polska or the UPC Entities
change the transaction structure in a manner that reduces the Cash
Consideration or materially alters the terms of the New UPC Polska Notes to be
offered to the holders of the UPC Polska Notes as set forth in Section 2.2(a);
or

 

28

 

(vi)          if, within ten (10) days of the date
on which this Agreement becomes effective as between the UPC Entities and the
Participating Noteholders, UPC Polska does not execute and deliver this
Agreement.

 

Section 9.2             Effect
of Termination.  Except for any
willful and material breach of this Agreement by any party hereto (which breach
and liability therefor shall not be affected by the termination of this
Agreement), if this Agreement is terminated by any Party as provided in Section
9.1, this Agreement shall become void and have no further effect, without any
liability or obligation on the part of any Party, other than the provisions of
this Section 9.2 and Sections 10.1, 10.2, 10.3, 10.4, 10.8, 10.9, 10.10, 10.12,
10.15, 10.16 and 10.17 which shall survive termination.

 

ARTICLE X

 

MISCELLANEOUS

 

Section 10.1           Nonsurvival
of Representations and Warranties. 
The respective representations and warranties of the parties hereto
contained in this Agreement shall not be deemed waived or otherwise affected by
any investigation made by any other party. 
Each and every such representation and warranty shall expire with, and
be terminated and extinguished upon the occurrence of, the Effective Date, and
thereafter no party shall be under any liability whatsoever with respect to any
such representation and warranty.

 

Section 10.2           Notices.  All notices, requests, claims and demands
and other communications hereunder shall be in writing and shall be deemed duly
delivered (i) four (4) Business Days after being sent by registered or
certified mail, return receipt requested, postage prepaid, or (ii) one (1)
Business Day after being sent for next business day delivery, fees prepaid, via
a reputable internationally recognized overnight courier service, in each case
to the intended recipient as set forth below:

 

(a)           if
to the UPC Entities to:

 

c/o United Pan-Europe Communications N.V.

Boeing Avenue 53

1119 PE Schiphol Rijk

The Netherlands

Telephone: +31-20-778-9872

Facsimile: +31-20-778-9841

Attention:  General Counsel

 

with a copy (which shall not constitute
notice) to:

 

White & Case LLP

1155 Avenue of the Americas

New York, New York 
10036

Attention:       William F. Wynne, Jr., Esq.

 

29

 

Telephone:      +1-212-819-8200

Facsimile:        +1-212-354-8113

 

if to UPC Polska to:

 

c/o UPC Telewizja Kablowa

ul. Szturmowa 2A

02-678 Warszawa

Attention:       Chief Executive Officer

Telephone:      +48-22-70-10-808

Facsimile:        +48-22-70-10-809

 

with a copy (which shall not constitute
notice) to:

 

Baker &
McKenzie

815 Connecticut Avenue, N.W.

Washington, D.C.  20006

Attention:  Marc R. Paul, Esq.

Telephone:  +1-202-452-7034

Facsimile:   +1-202-452-7074

 

(b)           if
to the Participating Noteholders, to the address and attention of such parties set forth on Annex
A hereto,

 

with a copy (which shall not constitute
notice) to:

 

Cahill Gordon
& Reindel LLP

80 Pine Street 

New York, New York 10005

Attention:  Roger Meltzer, Esq.

Telephone: +1-212-701-3000

Facsimile:  +1-212-269-5420

 

Any party hereto may give any notice or other
communication hereunder using any other means (including personal delivery,
messenger service, facsimile or ordinary mail), but no such notice or other
communication shall be deemed to have been duly given unless and until it
actually is received by the party for whom it is intended.  Any party may change the address to which
notices and other communications hereunder are to be delivered by giving the
other parties to this Agreement notice in the manner herein set forth.

 

Section 10.3           Entire
Agreement.  This Agreement,
including the Annexes and the other attachments hereto referenced herein,
constitutes the entire agreement among the parties hereto and supersedes any
prior understandings, agreements or representations by or among the parties, or
any of them, written or oral, with respect to the subject matter hereof.

 

Section 10.4           No
Third-Party Beneficiaries.  This
Agreement is not intended, and shall not be deemed, to confer any rights or
remedies upon any Person other than the parties

 

30

 

hereto and their respective
successors and permitted assigns, to create any agreement of employment with
any Person or to otherwise create any third-party beneficiary hereto.

 

Section 10.5           Amendment.  Subject to Section 4.2(b), this Agreement
may not be amended except by an instrument in writing signed by each of UPC
Polska, the UPC Entities and a Majority-in-Interest of the Participating
Noteholders.

 

Section 10.6           Assignment.  Neither this Agreement nor any of the
rights, interests or obligations under this Agreement may be assigned or
delegated, in whole or in part, by operation of law or otherwise by any of the
parties hereto without the prior written consent of the other parties, and any
such assignment without such prior written consent shall be null and void.  Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of, and be enforceable by,
the parties and their respective successors and assigns.

 

Section 10.7           Counterparts.  This Agreement may be executed in two (2) or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when two (2) or more counterparts have been signed
by each of the parties hereto and delivered to the other parties.

 

Section 10.8           Severability.  If any term, provision, covenant or
restriction of this Agreement is held by a Governmental Entity of competent
jurisdiction to be invalid, void, unenforceable or against its regulatory
policy, the remainder of the terms, provisions, covenants and restrictions of
this Agreement shall remain in full force and effect and shall in no way be
affected, impaired or invalidated.

 

Section 10.9           Governing
Law.  This Agreement shall be
governed by and construed in accordance with the internal laws of the State of
New York without giving effect to any choice or conflict of law provision or
rule (whether of the State of New York or any other jurisdiction) that would
cause the application of laws of any jurisdiction other than those of the State
of New York; provided that all matters with respect to the Chapter 11
Case shall be governed by the US Bankruptcy Code and the US Bankruptcy Rules.

 

Section 10.10         Submission
to Jurisdiction.  Any suit, action
or proceeding seeking to enforce any provision of, or based on any matter
arising out of or in connection with, this Agreement, the Restructuring or the
transactions contemplated hereby and thereby shall be brought in any federal or
state court located in the County and State of New York and each of the parties
hereto hereby consents to the jurisdiction of such courts (and of the
appropriate appellate courts therefrom) in any such suit, action or proceeding
and irrevocably waives, to the fullest extent permitted by law, any objection
that it may now or hereafter have to the laying of the venue of any such suit,
action or proceeding in any such court or that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient forum.  Process in any such suit, action or
proceeding may be served on any party hereto anywhere in the world, whether
within or without the jurisdiction of any such court.  Without limiting the foregoing, each party agrees that service of
process on such party as provided in Section 10.2 as to giving notice hereunder
shall be deemed effective service of process on such party.  Notwithstanding the foregoing consent to
jurisdiction, upon the commencement of the Chapter 11 Case each of

 

31

 

the parties hereto agrees, to
the extent permitted by applicable law, that the US Bankruptcy Court or such
other courts that may have jurisdiction over the Chapter 11 Case shall have
exclusive jurisdiction of all matters arising out of or in connection with this
Agreement, the Restructuring and the transactions contemplated hereby and
thereby.

 

Section 10.11         Remedies.  Except as otherwise provided herein, any and
all remedies herein expressly conferred upon a party shall be deemed cumulative
with and not exclusive of any other remedy conferred hereby, or by law or
equity upon such party.  No failure or
delay on the part of any party hereto in the exercise of any right hereunder
shall impair such right or be construed to be a waiver of, or acquiescence in,
any breach of any representation, warranty or agreement herein, nor shall any
single or partial exercise of any such right preclude other or further exercise
thereof or of any other right.  Each of
the parties hereto agrees that irreparable damage would occur to each other
party hereto in the event that any of the provisions of this Agreement were not
performed by such Person in accordance with their specific terms or were
otherwise breached.  It is accordingly
agreed that each party hereto shall be entitled to an injunction or injunctions
to prevent breaches of this Agreement and to enforce specifically the terms and
provisions hereof in any court as to which the parties have agreed to submit to
jurisdiction pursuant to Section 10.10 of this Agreement, this being in
addition to any other remedy to which they are entitled at law or in
equity.  Each party hereto further agrees
to waive any requirement for the securing or posting of any bond in connection
with obtaining any such injunction or other equitable relief.

 

Section 10.12         Waiver
of Jury Trial.  EACH PARTY HERETO
HEREBY IRREVOCABLY WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THE
ACTIONS OF ANY OTHER PARTY HERETO IN THE NEGOTIATION, ADMINISTRATION,
PERFORMANCE AND ENFORCEMENT OF THIS AGREEMENT.

 

Section 10.13         Consideration.  It is acknowledged by the parties hereto
that no consideration shall be due or paid to any Participating Noteholder for
its agreement to vote to accept the Plan in accordance with the terms and
conditions of this Agreement, other than UPC Polska’s agreement to use its
reasonable best efforts to obtain approval of the Disclosure Statement and
confirmation of the Plan in accordance with the terms and conditions of this
Agreement.

 

Section 10.14         Acknowledgment
of Risks.  Each of the Participating
Noteholders has received and reviewed this Agreement and believes that it has
received “adequate information” with respect to its decision to vote in favor
of the Plan, as such term is defined in 11 U.S.C.  § 1125(a), subject however to approval by a US Bankruptcy Court
of a disclosure statement under Section 1125 that contains information not
materially different from the information provided to the Participating
Noteholders.  This Section 10.14 does
not waive whatever rights a Participating Noteholder may have under Sections
1125-26 of the US Bankruptcy Code.

 

32

 

Section 10.15         Disclosure of Individual Holdings.  Except as otherwise required by any
Governmental Entity or applicable law or regulation, UPC Polska shall not
disclose (i) the amount of a Participating Noteholder’s holdings of UPC Polska
Notes, or (ii) the terms of this Agreement, without the prior written consent
of such Participating Noteholder or the Participating Noteholders, as
applicable; and if such announcement or disclosure is required by any such
Governmental Entity or law or regulation, UPC Polska shall afford the
Participating Noteholder or Noteholders, as applicable, a reasonable
opportunity to review and comment upon any such announcement or disclosure
prior to such announcement or disclosure by UPC Polska.  Without otherwise limiting the generality of
the foregoing, the previous clauses (i) and (ii) shall not prohibit UPC Polska
from (i) disclosing the approximate aggregate holdings of UPC Polska Notes by
the Participating Noteholders or the holders of the UPC Polska Notes as a group
or (ii) disclosing the holdings of the Participating Noteholders to its
Affiliates, counsel, financial advisors, agents or other representatives.

 

Section 10.16         Fees and Expenses. 
Upon the execution of this Agreement by the Participating Noteholders,
UPC Polska shall, notwithstanding any agreement to the contrary, pay in full
the reasonable outstanding fees and costs of Cahill Gordon & Reindel LLP,
counsel to the Participating Noteholders and shall timely pay in the ordinary
course of business any reasonable additional bills submitted to UPC Polska by
such counsel through consummation of the Restructuring, subject to any rules
and restrictions contained in the US Bankruptcy Code, US Bankruptcy Rules and
any applicable local rules of the bankruptcy court.  In addition, five (5) calendar days prior to the filing of the
Petition, UPC Polska shall pay in full any reasonable outstanding bills of
Cahill Gordon & Reindel LLP, counsel to the Participating Noteholders, plus
an estimate of such counsel’s reasonable unbilled fees and costs up to the filing
of the Petition.

 

Section 10.17         Reservation
of Rights.  This Agreement and the
Restructuring are part of a proposed settlement of a dispute among the parties
hereto.  Except as expressly provided in
this Agreement (including Sections 8.3, 8.5 and 8.7), nothing herein is
intended to, or does, in any manner waive, limit, impair or restrict the
ability of any party hereto (or any Trustee under any of the Indentures) to protect
and preserve its rights, remedies and interests in respect of any other party,
including its claims against UPC Polska. 
Except as otherwise provided herein, nothing herein shall be deemed an
admission of any kind.  Except as
expressly provided in this Agreement (including Sections 8.3, 8.5 and 8.7),
nothing contained herein effects a modification of the UPC Entities’, the
Participating Noteholders’ or the Trustees’ rights under the Indentures, the
UPC Polska Notes, the Other UPC Polska Notes, Affiliate Indebtedness or any
other documents and agreements unless and until the Restructuring becomes effective.  If the transactions contemplated herein are
not consummated or this Agreement is terminated for any reason, the parties
hereto fully reserve any and all of their rights.

 

Section 10.18         Effectiveness
of this Agreement.  (a)  This Agreement shall become effective as to
the UPC Entities, on the one hand, and the Participating Noteholders, on the
other hand, at such time as this Agreement has been executed and delivered by
each of the UPC Entities and by one or more Participating Noteholders holding
an aggregate amount of UPC Polska Notes representing sixty-six and two-thirds
percent (662/3%) in amount of the claims eligible to be
filed in respect of the UPC Polska Notes by holders of UPC Polska Notes (other
than the UPC Entities).

 

33

 

(b)           As to UPC Polska, this Agreement
shall become effective at such time as it has become effective for the UPC
Entities and the Participating Noteholders pursuant to clause (a) of this Section
10.18 and this Agreement has been executed and delivered by UPC Polska.

 

[Remainder of this page intentionally left blank]

 

34

 

IN WITNESS
WHEREOF, the parties hereto have executed this Agreement as of the date first
written above.

 

 

	
   

  	
   

  	
  UPC POLSKA,
  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Simon
  Boyd

  	
   

  
	
   

  	
   

  	
   

  	
  Name:  Simon
  Boyd

  
	
   

  	
   

  	
   

  	
  Title:  Chief
  Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  UPC TELECOM
  B.V.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Charles
  Bracken

  	
   

  
	
   

  	
   

  	
   

  	
  Name:  Charles
  Bracken

  
	
   

  	
   

  	
   

  	
  Title:  CFO

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ J.F.
  Riordan

  	
   

  
	
   

  	
   

  	
   

  	
  Name:  J.F.
  Riordan

  
	
   

  	
   

  	
   

  	
  Title

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  BELMARKEN
  HOLDING B.V.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Charles
  Bracken

  	
   

  
	
   

  	
   

  	
   

  	
  Name:  Charles
  Bracken

  
	
   

  	
   

  	
   

  	
  Title:  CFO

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ J.F.
  Riordan

  	
   

  
	
   

  	
   

  	
   

  	
  Name:  J.F.
  Riordan

  
	
   

  	
   

  	
   

  	
  Title

  

 

 

	
   

  	
   

  	
  PARTICIPATING
  NOTEHOLDER:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
    Deutsche
  Bank

  	
   

  
	
   

  	
   

  	
  (Insert
  Name)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
    /s/
  Jaime Vieser

  	
   

  
	
   

  	
   

  	
   

  	
  Name:  Jaime
  Vieser

  
	
   

  	
   

  	
   

  	
  Title:
  Managing Director

  
						

 

 

	
   

  	
   

  	
  PARTICIPATING
  NOTEHOLDER:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
    GOLDENTREE
  ASSET MANAGEMENT

  	
   

  
	
   

  	
   

  	
  (Insert
  Name)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
    /s/
  Steven Shapiro

  	
   

  
	
   

  	
   

  	
   

  	
  Name:  Steven
  Shapiro

  
	
   

  	
   

  	
   

  	
  Title:
  Portfolio Manager

  
						

 

 

	
   

  	
   

  	
  PARTICIPATING
  NOTEHOLDER:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  GOLDMAN,
  SACHS & CO.

  	
   

  
	
   

  	
   

  	
  (Insert
  Name)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
    /s/
  Donald Mullen

  	
   

  
	
   

  	
   

  	
   

  	
  Name:  Donald
  Mullen

  
	
   

  	
   

  	
   

  	
  Title:
  Partner Managing Director

  
						

 

 

 

	
   

  	
  PARTICIPATING
  NOTEHOLDER:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  GOLDMAN
  SACHS INTERNATIONAL

  	
   

  
	
   

  	
  (Insert
  Name)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ D. Henderson

  	
   

  	 

	
   

  	
   

  	
  Name:

  	
  D. Henderson

  
	
   

  	
   

  	
  Title:

  	
  Managing
  Director

  
							

 

 

	
   

  	
  PARTICIPATING
  NOTEHOLDER:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MACKAY
  SHIELDS, LLC

  	
   

  
	
   

  	
  (Insert
  Name)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Don E. Morgan III

  	
   

  	 

	
   

  	
   

  	
  Name:

  	
  Don E.
  Morgan III

  
	
   

  	
   

  	
  Title:

  	
  Senior
  Managing Director

  
							

 

 

	
   

  	
  PARTICIPATING
  NOTEHOLDER:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MORGAN
  STANLEY INVESTMENT MANAGEMENT

  
	
   

  	
  (Insert
  Name)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Gorden W. Loory

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Gorden W.
  Loory

  
	
   

  	
   

  	
  Title:

  	
  Executive
  Director

  
						

 

 

	
   

  	
  PARTICIPATING
  NOTEHOLDER:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  STRONG
  CORPORATE BOND FUND (2/09 MATURITY)

  
	
   

  	
  (Insert
  Name)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Gilbert L. Southwell, III

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Gilbert L.
  Southwell, III

  
	
   

  	
   

  	
  Title:

  	
  Assistant
  Secretary

  
						

 

 

	
   

  	
  PARTICIPATING
  NOTEHOLDER:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  STRONG HIGH
  YIELD CBO II BY

  STRONG CAPITAL MANAGEMENT INC.

  AS COLLATERAL MANAGER (7/08 MATURITY)

  
	
   

  	
  (Insert
  Name)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Gilbert L. Southwell, III

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Gilbert L.
  Southwell, III

  
	
   

  	
   

  	
  Title:

  	
  Assistant
  Secretary

  
						

 

 

	
   

  	
  PARTICIPATING
  NOTEHOLDER:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  STRONG HIGH YIELD BOND FUND

  (7/08 MATURITY)

  
	
   

  	
  (Insert
  Name)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Gilbert L. Southwell, III

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Gilbert L.
  Southwell, III

  
	
   

  	
   

  	
  Title:

  	
  Assistant
  Secretary

  
						

 

 

	
   

  	
  PARTICIPATING
  NOTEHOLDER:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  STRONG
  ADVISOR STRATEGIC INCOME

  FUND (2/09 MATURITY)

  
	
   

  	
  (Insert
  Name)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Gilbert L. Southwell, III

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Gilbert L.
  Southwell, III

  
	
   

  	
   

  	
  Title:

  	
  Assistant
  Secretary

  
						

 

 

	
   

  	
  PARTICIPATING
  NOTEHOLDER:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  STRONG
  ADVISOR STRATEGIC

  INCOME FUND (7/08)

  
	
   

  	
  (Insert
  Name)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Gilbert L. Southwell, III

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Gilbert L.
  Southwell, III

  
	
   

  	
   

  	
  Title:

  	
  Assistant
  Secretary

  
						

 

 

	
   

  	
  PARTICIPATING
  NOTEHOLDER:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  STRONG HIGH
  YIELD BOND

  FUND (2/09 MATURITY)

  
	
   

  	
  (Insert
  Name)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Gilbert L. Southwell, III

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Gilbert L.
  Southwell, III

  
	
   

  	
   

  	
  Title:

  	
  Assistant
  Secretary

  
						

 

 

ANNEX A

 

UPC Polska Notes held by the Participating
Noteholders – Approximate Amounts as of May 31, 2003

 

	
   

  	
   

  	
  2008

  	
   

  	
  2009

  	
   

  	
  Series C

  	
   

  	
  TOTAL

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  GoldenTree Asset Management LLC

  	
   

  	
  61.350

  	
   

  	
  53.618

  	
   

  	
  0.0

  	
   

  	
  114.968

  	
   

  
	
  MacKay Shields LLC

  	
   

  	
  51.600

  	
   

  	
  0.000

  	
   

  	
  0.0

  	
   

  	
  51.600

  	
   

  
	
  Strong Capital Management, Inc.

  	
   

  	
  20.050

  	
   

  	
  12.850

  	
   

  	
  0.0

  	
   

  	
  32.900

  	
   

  
	
  Morgan Stanley Investment Management(1)

  	
   

  	
  0.000

  	
   

  	
  0.000

  	
   

  	
  36.001

  	
   

  	
  36.001

  	
   

  
	
  Deutsche Bank

  	
   

  	
  8.400

  	
   

  	
  35.093

  	
   

  	
  0.0

  	
   

  	
  43.493

  	
   

  
	
  Goldman Sachs & Co.

  	
   

  	
  5.000

  	
   

  	
  0.000

  	
   

  	
  0.0

  	
   

  	
  5.000

  	
   

  
	
  Goldman Sachs International

  	
   

  	
  5.000

  	
   

  	
  0.000

  	
   

  	
  0.0

  	
   

  	
  5.000

  	
   

  
	
  Total

  	
   

  	
  151.4

  	
   

  	
  101.6

  	
   

  	
  36.0

  	
   

  	
  289.0

  	
   

  

 

(1) Purchased entire amount at
issue.

 

 

ANNEX B

 

Notes held by UPC Telecom B.V. – Approximate
Amounts as of May 31, 2003

 

1.               UPC
Polska Notes- $76.7 million (accreted value)

2.               Telecom
Pari Passu Notes- $255.2 (principal plus accrued interest)

3.               Telecom
Junior Notes- $206.4 million (principal plus accrued interest)

 

 

ANNEX C

 

 

UPC POLSKA, INC.

 

AND

 

UPC POLSKA FINANCE, INC.

 

TO

 

WILMINGTON TRUST COMPANY

 

Trustee

 

 

 

INDENTURE

 

Dated as of [     ], 2003

 

 

$[            ](1)
aggregate principal amount at maturity

 

Senior Notes due [September 30, 2006]

 

(1)           Principal amount to be determined based on amount of
claims and other general unsecured creditors.

 

 

 

 

TABLE OF CONTENTS

 

	
  PARTIES

  
	
  RECITALS OF
  THE ISSUERS

  
	
   

  	
   

  
	
  ARTICLE
  ONE

  DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION

  
	
   

  	
   

  
	
  SECTION 101.  

  	
  DEFINITIONS

  
	
  SECTION 102.  

  	
  OFFICER’S CERTIFICATES AND OPINIONS

  
	
  SECTION 103.  

  	
  FORM OF DOCUMENTS DELIVERED TO TRUSTEE

  
	
  SECTION 104.  

  	
  ACTS OF HOLDERS

  
	
  SECTION
  105.  

  	
  NOTICES,
  ETC., TO TRUSTEE, ISSUERS

  
	
  SECTION 106.  

  	
  NOTICE TO HOLDERS; WAIVER

  
	
  SECTION 107.  

  	
  EFFECT OF HEADINGS AND TABLE OF CONTENTS

  
	
  SECTION 108.  

  	
  SUCCESSORS AND ASSIGNS

  
	
  SECTION 109.  

  	
  SEPARABILITY CLAUSE

  
	
  SECTION 110.  

  	
  BENEFITS OF INDENTURE

  
	
  SECTION 111.  

  	
  GOVERNING LAW

  
	
  SECTION 112.  

  	
  LEGAL HOLIDAYS

  
	
   

  	
   

  
	
  ARTICLE
  TWO

  SECURITY FORMS

  
	
   

  	
   

  
	
  SECTION 201.  

  	
  FORMS GENERALLY

  
	
  SECTION 202.  

  	
  RESTRICTIVE LEGENDS

  
	
   

  	
   

  
	
  ARTICLE
  THREE

  THE SECURITIES

  
	
   

  	
   

  
	
  SECTION
  301.  

  	
  TITLE
  AND TERMS

  
	
  SECTION
  302.  

  	
  DENOMINATIONS

  
	
  SECTION
  303.  

  	
  EXECUTION,
  AUTHENTICATION, DELIVERY AND DATING

  
	
  SECTION
  304.  

  	
  TEMPORARY
  SECURITIES

  
	
  SECTION
  305.  

  	
  REGISTRATION,
  REGISTRATION OF TRANSFER AND EXCHANGE

  
	
  SECTION
  306.  

  	
  BOOK-ENTRY
  PROVISIONS FOR GLOBAL SECURITIES

  
	
  SECTION
  307.  

  	
  SPECIAL
  TRANSFER PROVISIONS

  
	
  SECTION
  308.  

  	
  MUTILATED,
  DESTROYED, LOST AND STOLEN SECURITIES

  
	
  SECTION
  309.  

  	
  PAYMENT
  OF INTEREST; INTEREST RIGHTS PRESERVED

  
	
  SECTION
  310.  

  	
  PERSONS
  DEEMED OWNERS

  

 

i

 

	
  SECTION
  311.  

  	
  CANCELLATION

  
	
  SECTION
  312.  

  	
  COMPUTATION
  OF INTEREST

  
	
  SECTION
  313.  

  	
  FORM
  OF REGULATION S CERTIFICATE

  
	
   

  	
   

  
	
  ARTICLE
  FOUR

  SATISFACTION AND DISCHARGE

  
	
   

  	
   

  
	
  SECTION
  401.  

  	
  SATISFACTION
  AND DISCHARGE OF INDENTURE

  
	
  SECTION
  402.  

  	
  APPLICATION
  OF TRUST MONEY

  
	
   

  	
   

  
	
  ARTICLE
  FIVE

  REMEDIES

  
	
   

  	
   

  
	
  SECTION
  501.  

  	
  EVENTS
  OF DEFAULT

  
	
  SECTION
  502.  

  	
  ACCELERATION
  OF MATURITY; RESCISSION AND ANNULMENT

  
	
  SECTION
  503.  

  	
  COLLECTION
  OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY TRUSTEE

  
	
  SECTION
  504.  

  	
  TRUSTEE
  MAY FILE PROOFS OF CLAIM

  
	
  SECTION
  505.  

  	
  TRUSTEE
  MAY ENFORCE CLAIMS WITHOUT POSSESSION OF SECURITIES

  
	
  SECTION
  506.  

  	
  APPLICATION
  OF MONEY COLLECTED

  
	
  SECTION
  507.  

  	
  LIMITATION
  ON SUITS

  
	
  SECTION
  508.  

  	
  UNCONDITIONAL
  RIGHT OF HOLDERS TO RECEIVE PRINCIPAL AND INTEREST

  
	
  SECTION
  509.  

  	
  RESTORATION
  OF RIGHTS AND REMEDIES

  
	
  SECTION
  510.  

  	
  RIGHTS
  AND REMEDIES CUMULATIVE

  
	
  SECTION
  511.  

  	
  DELAY
  OR OMISSION NOT WAIVER

  
	
  SECTION
  512.  

  	
  CONTROL
  BY HOLDERS

  
	
  SECTION
  513.  

  	
  WAIVER
  OF PAST DEFAULTS

  
	
  SECTION
  514.  

  	
  WAIVER
  OF STAY OR EXTENSION LAWS

  
	
   

  	
   

  
	
  ARTICLE
  SIX

  THE TRUSTEE

  
	
   

  	
   

  
	
  SECTION
  601.  

  	
  NOTICE
  OF DEFAULTS

  
	
  SECTION
  602.  

  	
  CERTAIN
  RIGHTS OF TRUSTEE

  
	
  SECTION
  603.  

  	
  TRUSTEE
  NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES

  
	
  SECTION
  604.  

  	
  MAY
  HOLD SECURITIES

  
	
  SECTION
  605.  

  	
  MONEY
  HELD IN TRUST

  
	
  SECTION
  606.  

  	
  COMPENSATION
  AND REIMBURSEMENT

  
	
  SECTION
  607.  

  	
  CORPORATE
  TRUSTEE REQUIRED; ELIGIBILITY

  
	
  SECTION
  608.  

  	
  RESIGNATION
  AND REMOVAL; APPOINTMENT OF SUCCESSOR

  
	
  SECTION
  609.  

  	
  ACCEPTANCE
  OF APPOINTMENT BY SUCCESSOR

  

 

ii

 

	
  SECTION
  610.  

  	
  MERGER,
  CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS

  
	
   

  	
   

  
	
  ARTICLE
  SEVEN

  
	
   

  	
   

  
	
   

  	
   

  
	
  ARTICLE
  EIGHT

  CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE

  
	
   

  	
   

  
	
  SECTION
  801.  

  	
  ISSUERS
  MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS

  
	
  SECTION
  802.  

  	
  SUCCESSOR
  SUBSTITUTED

  
	
  SECTION
  803. 

  	
   SECURITIES TO BE SECURED IN CERTAIN EVENTS

  
	
   

  	
   

  
	
  ARTICLE
  NINE

  SUPPLEMENTAL INDENTURES

  
	
   

  	
   

  
	
  SECTION 901.  

  	
  SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF
  HOLDERS

  
	
  SECTION 902.  

  	
  SUPPLEMENTAL INDENTURES WITH CONSENT OF
  HOLDERS

  
	
  SECTION 903.  

  	
  EXECUTION OF SUPPLEMENTAL INDENTURES

  
	
  SECTION 904.  

  	
  EFFECT OF SUPPLEMENTAL INDENTURES

  
	
  SECTION 905.  

  	
  [RESERVED]

  
	
  SECTION 906.  

  	
  REFERENCE IN SECURITIES TO SUPPLEMENTAL
  INDENTURES

  
	
  SECTION 907.  

  	
  NOTICE OF SUPPLEMENTAL INDENTURES

  
	
   

  	
   

  
	
  ARTICLE
  TEN

  COVENANTS

  
	
   

  	
   

  
	
  SECTION 1001.  

  	
  PAYMENT OF PRINCIPAL AND INTEREST

  
	
  SECTION 1002.  

  	
  MAINTENANCE OF OFFICE OR AGENCY

  
	
  SECTION 1003.  

  	
  MONEY FOR SECURITY PAYMENTS TO BE HELD IN
  TRUST

  
	
  SECTION 1004.  

  	
  CORPORATE EXISTENCE

  
	
  SECTION 1005.  

  	
  PAYMENT OF TAXES AND OTHER CLAIMS

  
	
  SECTION 1006.  

  	
  MAINTENANCE OF PROPERTIES

  
	
  SECTION 1007.  

  	
  INSURANCE

  
	
  SECTION 1008.  

  	
  STATEMENT BY OFFICERS AS TO DEFAULT

  
	
  SECTION 1009.  

  	
  PROVISION OF FINANCIAL STATEMENTS AND
  REPORTS

  
	
  SECTION 1010.  

  	
  LIMITATION ON ADDITIONAL INDEBTEDNESS

  
	
  SECTION 1011.  

  	
  LIMITATION ON RESTRICTED PAYMENTS

  
	
  SECTION 1012.  

  	
  LIMITATION ON ISSUANCES AND SALES OF
  CAPITAL STOCK OF RESTRICTED SUBSIDIARIES

  
	
  SECTION 1013.  

  	
  LIMITATION ON TRANSACTIONS WITH AFFILIATES

  
	
  SECTION 1014.  

  	
  LIMITATION ON LIENS

  
	
  SECTION 1015.  

  	
  LIMITATION ON ISSUANCES OF GUARANTEES OF
  INDEBTEDNESS BY SUBSIDIARIES

  

 

iii

 

	
  SECTION 1016.  

  	
  PURCHASE OF SECURITIES UPON A CHANGE OF
  CONTROL

  
	
  SECTION 1017.  

  	
  LIMITATION ON SALE OF ASSETS

  
	
  SECTION 1018.  

  	
  LIMITATION ON DIVIDENDS AND OTHER PAYMENT
  RESTRICTIONS AFFECTING RESTRICTED SUBSIDIARIES

  
	
  SECTION 1019.  

  	
  LIMITATION ON INVESTMENTS IN UNRESTRICTED
  SUBSIDIARIES

  
	
  SECTION 1020.  

  	
  LIMITATION ON LINES OF BUSINESS

  
	
  SECTION 1021.  

  	
  WAIVER OF CERTAIN COVENANTS

  
	
   

  	
   

  
	
  ARTICLE
  ELEVEN

  REDEMPTION OF SECURITIES

  
	
   

  	
   

  
	
  SECTION 1101.  

  	
  RIGHT OF REDEMPTION

  
	
  SECTION 1102.  

  	
  APPLICABILITY OF ARTICLE

  
	
  SECTION 1103.  

  	
  ELECTION TO REDEEM; NOTICE TO TRUSTEE

  
	
  SECTION 1104.  

  	
  SELECTION BY TRUSTEE OF SECURITIES TO BE
  REDEEMED

  
	
  SECTION 1105.  

  	
  NOTICE OF REDEMPTION

  
	
  SECTION 1106.  

  	
  DEPOSIT OF REDEMPTION PRICE

  
	
  SECTION 1107.  

  	
  SECURITIES PAYABLE ON REDEMPTION DATE

  
	
  SECTION 1108.  

  	
  SECURITIES REDEEMED IN PART

  
	
   

  	
   

  
	
  ARTICLE
  TWELVE

  [RESERVED]

  
	
   

  	
   

  
	
  ARTICLE THIRTEEN

  DEFEASANCE AND COVENANT DEFEASANCE

  
	
   

  	
   

  
	
  SECTION 1301.  

  	
  ISSUERS’ OPTION TO EFFECT DEFEASANCE OR
  COVENANT DEFEASANCE

  
	
  SECTION 1302.  

  	
  DEFEASANCE AND DISCHARGE

  
	
  SECTION 1303.  

  	
  COVENANT DEFEASANCE

  
	
  SECTION 1304.  

  	
  CONDITIONS TO DEFEASANCE OR COVENANT
  DEFEASANCE

  
	
  SECTION 1305.  

  	
  DEPOSITED MONEY AND U.S. GOVERNMENT
  OBLIGATIONS TO BE HELD IN TRUST; OTHER MISCELLANEOUS PROVISIONS

  
	
  SECTION 1306.  

  	
  REINSTATEMENT

  
	
   

  	
   

  
	
  SCHEDULE A – Existing Management
  Contracts, Overhead Agreements, Service Agreements and Organizational
  Contracts

  
	
   

  
	
  SCHEDULE B- Indebtedness Outstanding on the
  Issue Date

  
	
   

  
	
  SCHEDULE C – Liens Existing on the Issue
  Date

  

 

iv

 

	
  SCHEDULE D- Agreements Not Restricted Under
  Section 1018

  
	
   

  
	
  EXHIBIT A – Form of Security

  
	
   

  	
   

  
	
  EXHIBIT B – Form of Rule 144A Certificate

  
	
   

  	
   

  
	
  EXHIBIT C – Form of Certificate to be
  Delivered in Connection with Transfers Pursuant to Regulation S

  

 

v

 

INDENTURE
dated as of [     ], 2003 (this “Indenture”), between
(i) UPC POLSKA, INC., a corporation duly organized and existing under the laws
of the State of Delaware (the “Company”), having its principal office at 4643
Ulster Street, Suite 1300, Denver, Colorado 80237, (ii) UPC POLSKA FINANCE,
INC., a corporation duly organized and existing under the laws of the State of
Delaware and a wholly owned subsidiary of UPC Telecom B.V. (“UPC Polska
Finance,” and together with the Company, the “Issuers” and each individually,
an “Issuer”), having its principal office at [   ], and (iii)
Wilmington Trust Company, a Delaware banking corporation, Trustee (herein
called the “Trustee”).

 

W I T N E S S E T H:

 

WHEREAS, the
Issuers have duly authorized the creation of an issue of Senior Notes due 2006
(herein called the “Securities”), of substantially the tenor and amount
hereinafter set forth, and, to provide therefor, the Issuers have duly
authorized the execution and delivery of this Indenture; and

 

WHEREAS, all
things necessary have been done to make the Securities, when executed by the
Issuers and authenticated and delivered hereunder and duly issued by the
Issuers, the valid obligations of the Issuers and to make this Indenture a
valid agreement of the Issuers, in accordance with their and its terms.

 

NOW,
THEREFORE, THIS INDENTURE WITNESSETH:

 

For and in
consideration of the premises and the purchase of the Securities by the Holders
(as such term is defined in Section 101) thereof, it is mutually covenanted and
agreed, for the equal and proportionate benefit of all Holders of the
Securities, as follows:

 

ARTICLE ONE

 

DEFINITIONS AND OTHER PROVISIONS

OF GENERAL APPLICATION

 

SECTION
101.  DEFINITIONS.

 

For all
purposes of this Indenture, except as otherwise expressly provided or unless
the context otherwise requires:

 

(a)           the terms defined in this Article
have the meanings assigned to them in this Article, and include the plural as
well as the singular;

 

(b)           all other terms used but not defined
herein which are defined in the Trust Indenture Act, either directly or by
reference therein, have the meanings assigned to them therein, and the terms
“cash transaction” and “self-liquidating paper”, as used in Trust Indenture Act
Section 311, shall have the meanings assigned to them in the rules of the
Commission adopted under the Trust Indenture Act;

 

 

(c)           all accounting terms not otherwise
defined herein have the meanings assigned to them in accordance with generally
accepted accounting principles, and, except as otherwise herein expressly
provided, the term “generally accepted accounting principles” with respect to
any computation required or permitted hereunder shall mean such accounting
principles as are generally accepted on the Issue Date; and

 

(d)           the words “herein”, “hereof” and
“hereunder” and other words of similar import refer to this Indenture as a
whole and not to any particular Article, Section or other subdivision.

 

“Acquired Indebtedness” means Indebtedness of
a Person (a) existing at the time such Person becomes a Restricted Subsidiary
or (b) assumed in connection with the acquisition of assets from such Person,
in each case, other than Indebtedness incurred in connection with, or in
contemplation of, such Person becoming a Restricted Subsidiary or such
acquisition; provided, that, for
purposes of Section 1010, such Indebtedness shall be deemed to be incurred on
the date of the related acquisition of assets from any Person or the date the
acquired Person becomes a Restricted Subsidiary.

 

“Act”, when used with respect to any Holder,
has the meaning specified in Section 104.

 

“Additional
Amounts” has the meaning set forth in Section 804(b).

 

“Affiliate”
means, with respect to any specified Person, (a) any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person or (b) any other Person that owns, directly
or indirectly, 10% or more of such specified Person’s Voting Stock or any
executive officer or director of any such specified Person or other Person or,
with respect to any natural Person, any Person having a relationship with such
Person by blood, marriage or adoption not more remote than first cousin.  For the purposes of this definition,
“control,” when used with respect to any specified Person, means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms “controlling” and “controlled” have meanings correlative to the
foregoing.

 

“Agent
Members” has the meaning specified in Section 306.

 

“Asset Acquisition” means (a) any capital contribution
(by means of transfers of cash or other property to others or payments for
property or services for the account or use of others, or otherwise) by an
Issuer or any Restricted Subsidiary in any other Person, or any acquisition or
purchase of Capital Stock of any other Person by an Issuer or any Restricted
Subsidiary, in either case pursuant to which such Person shall become a
Restricted Subsidiary or shall be merged with or into an Issuer, or any
Restricted Subsidiary or (b) any acquisition by an Issuer or any Restricted
Subsidiary of the assets of any Person which constitute substantially all of an
operating unit or line of business of such person or which is otherwise outside
of the ordinary course of business.

 

“Asset Sale” means any direct or indirect
sale, conveyance, transfer or lease (that has the effect of a disposition and
is not for security purposes) or other disposition (that is not for

 

2

 

security purposes) to any Person other than an Issuer or a Restricted
Subsidiary in one transaction or a series of related transactions, of (a) any
Capital Stock of any Restricted Subsidiary, (b) any material governmental
license or other governmental authorization of an Issuer or any Restricted Subsidiary
pertaining to a Cable/Telecommunications Business, a DTH Business or an
Entertainment/Programming Business, (c) any assets of an Issuer or any
Restricted Subsidiary which constitute substantially all of an operating unit
or line of business of such Issuer and its Restricted Subsidiaries or (d) any
other property or asset of an Issuer or any Restricted Subsidiary outside of
the ordinary course of business.  For
the purposes of this definition, the term “Asset Sale” shall not include (a)
any disposition of properties and assets of an Issuer that is governed under
Article VIII, (b) sales of property or equipment that have become worn out,
obsolete or damaged or otherwise unsuitable for use in connection with the
business of such Issuer or its Restricted Subsidiary, as the case may be, (c)
for purposes of Section 1017, any sale, conveyance, transfer, lease or other
disposition of any property or asset, whether in one transaction or a series of
related transactions, either (i) involving assets with a Fair Market Value not
in excess of $500,000 (or, if non-U.S. Dollar denominated, the U.S. Dollar
Equivalent thereof) or (ii) as part of a Capitalized Lease Obligation, and (d)
any transfer by an Issuer or a Restricted Subsidiary of property or equipment
to a Person who is not an Affiliate of such Issuer in exchange for property or
equipment that has a fair market value at least equal to the fair market value
of the property or equipment so transferred; provided,
that in the event of a transfer described in this clause (d), such Issuer shall
deliver to the Trustee an Officer’s Certificate certifying that such exchange
complies with this clause (d).

 

“Average Life” means, as of the date of
determination with respect to any Indebtedness, the quotient obtained by dividing
(a) the sum of the products of (i) the number of years from the date of
determination to the date or dates of each successive scheduled principal
payment (including, without limitation, any sinking fund requirements) of such
Indebtedness multiplied by (ii) the amount of each such principal payment by (b) the sum of all such
principal payments.

 

“Board of Directors” means, with respect to
any Person, either the board of directors of such Person or any duly authorized
committee of that board or any equivalent body of such Person or committee of
such equivalent body.

 

“Board Resolution” means, with respect to any
Person,  a copy of a resolution
certified by the Secretary or an Assistant Secretary of such Person to have
been duly adopted by the Board of Directors and to be in full force and effect
on the date of such certification, and delivered to the Trustee.

 

“Business Day” means each Monday, Tuesday,
Wednesday, Thursday and Friday which is not a day on which banking institutions
in The City of New York, the city of Wilmington, Delaware, or the city of
Warsaw, Poland, is located are authorized or obligated by law or executive
order to close.

 

“Cable
Television Newco” means any Person (i) of whom the Company or a Restricted
Subsidiary owns the greater of 49% of the outstanding Capital Stock or the
maximum amount of the outstanding Capital Stock the Company or such Restricted
Subsidiary may own under applicable law and (ii) that holds Capital Stock in a
Management Company.

 

3

 

“Cable/Telecommunications
Acquisition” means an Asset Acquisition, including, without limitation, the
portion of the consideration paid for an Asset Acquisition that is allocated to
non-compete arrangements, of properties or assets to be used in a
Cable/Telecommunications Business or of the Capital Stock of any Person that
becomes a Subsidiary; provided, such Person’s assets and properties consist
principally of properties or assets that will be used in a
Cable/Telecommunications Business.

 

“Cable/Telecommunications Business” means any
business operating a cable, Internet or telephone or telecommunications or
broadcasting system (other than an Entertainment/Programming Business or a DTH
Business), including, without limitation, any business (other than an
Entertainment/Programming Business or a DTH Business) conducted by the Company
or any Restricted Subsidiary on the Issue Date and any programming guide or
telephone directory business.

 

“Capital Stock” of any Person means any and
all shares, interests, rights to purchase, warrants, options, participations,
rights in or other equivalents (however designated) of such Person’s capital
stock or other equity participations, including partnership interests, whether
general or limited, in such Person, including any Preferred Stock, and any
rights (other than debt securities convertible into capital stock), warrants or
options exchangeable for or convertible into such capital stock, whether now
outstanding or issued after the date of this Indenture.

 

“Capitalized Lease Obligation” of any Person
means any obligation of such Person and its subsidiaries on a consolidated
basis under a lease of (or other agreement conveying the right to use) any
property (whether real, personal or mixed) that is required to be classified
and accounted for as a capital lease obligation under GAAP, and, for the
purpose of this Indenture, the amount of such obligation at any date shall be
the capitalized amount thereof at such date, determined in accordance with
GAAP.

 

“Cash Equivalents” means (a) any evidence of
Indebtedness with a maturity of 180 days or less issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof); (b) certificates of deposit
or acceptances with a maturity of 180 days or less of any financial institution
that is a member of the Federal Reserve System, in each case having combined
capital and surplus and undivided profits of not less than $500,000,000; (c)
commercial paper with a maturity of 180 days or less issued by a corporation
that is not an Affiliate of the Issuers and is organized under the laws of any
state of the United States or the District of Columbia and rated at least A-1
by S&P or at least P-l by Moody’s; and (d) any Capital Stock of any mutual
funds at least 95% of the assets of which are invested in the foregoing.

 

“Change of Control” means the occurrence of
any of the following events: (a) any “person” or “group” (as such terms are
used in Sections 13(d) and 14(d) of the Exchange Act), other than Permitted
Holders, is or becomes the “beneficial owner” (as defined in Rules 13d-3 and
l3d-5 under the Exchange Act), directly or indirectly, of more than 50% of the
total outstanding Voting Stock of the Company; (b) the Company consolidates
with, or merges with or into another Person or conveys, transfers, leases or
otherwise disposes of all or substantially all of its assets to any Person, or
any Person consolidates with or merges with or into the

 

4

 

Company, in any such event pursuant to a transaction in which the
outstanding Voting Stock of the Company is converted into or exchanged for
cash, securities or other property, other than any such transaction where (i)
the outstanding Voting Stock of the Company is not converted or exchanged at
all (except to the extent necessary to reflect a change in the jurisdiction of
incorporation of the Company) or is converted into or exchanged for (A) Voting
Stock (other than Redeemable Capital Stock) of the surviving or transferee
corporation or (B) Voting Stock (other than Redeemable Capital Stock) of the
surviving or transferee corporation and cash, securities and other property
(other than Capital Stock of the Surviving Entity) in an amount that could be
paid by the Company as a Restricted Payment as described under Section 1011 and
(ii) immediately after such transaction, no “person” or “group” (as such terms
are used in Sections 13(d) and 14(d) of the Exchange Act), other than Permitted
Holders, is the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under
the Exchange Act,) directly or indirectly, of more than 50% of the total
outstanding Voting Stock of the surviving or transferee corporation; (c) during
any consecutive two year period, individuals who at the beginning of such
period constituted the Board of Directors (together with any new directors
whose election to such Board of Directors, or whose nomination for election by
the stockholders of the Company, was approved by either (x) a majority vote of
the directors then still in office who were either directors at the beginning
of such period or whose election or nomination for election was previously
approved in accordance with this clause (x) or the following clause (y) or (y)
a majority vote of the stockholders of the Company) cease for any reason to
constitute a majority of the Board of Directors of the Company then in office;
or (d) the Company is liquidated or dissolved or a special resolution is passed
by the shareholders of the Company approving the plan of liquidation or
dissolution other than in a transaction which complies with Article VIII; provided that no Change of Control shall
be deemed to occur at any time that UPC beneficially owns, directly or
indirectly, a majority of the Voting Stock of the Company.

 

“Change of
Control Offer” has the meaning specified in Section 1016.

 

“Change of
Control Purchase Date” has the meaning specified in Section 1016.

 

“Change of
Control Purchase Price” has the meaning specified in Section 1016.

 

“Code” shall have the meaning specified in
Section 804(b)(1)(C).

 

“Commission” means the Securities and
Exchange Commission, as from time to time constituted, created under the
Securities Exchange Act of 1934, or, if at any time after the execution of this
Indenture such Commission is not existing and performing the duties now
assigned to it under the Trust Indenture Act, then the body performing such duties
at such time.

 

“Common Stock” means, with respect to any
Person, any and all shares, interests or other participations in, and other
equivalents (however designated and whether voting or nonvoting) of such
Person’s common stock or ordinary shares, whether or not outstanding at the
Issue Date, and includes, without limitation, all series and classes of such
common stock or ordinary shares.

 

5

 

“Company”
means the Person named as the “Company” in the first paragraph of this
Indenture, until a successor Person shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter “Company” shall mean
such successor Person.

 

“Consolidated Income Tax Expense” means, with
respect to any period, the provision for United States corporation, local,
foreign and other income taxes of the Company and the Restricted Subsidiaries
for such period as determined on a consolidated basis in accordance with GAAP.

 

“Consolidated Interest Expense” means, for
any period, without duplication, the sum of (a) the interest expense of the
Company and its Restricted Subsidiaries for such period, including, without
limitation, (i) amortization of original issue discount, (ii) the net cost of
Interest Rate Agreements (including amortization of discounts), (iii) the
interest portion of any deferred payment obligation, (iv) accrued interest, (v)
the consolidated amount of any interest capitalized by the Company and the
Restricted Subsidiaries and (vi) all commissions, discounts and other fees and
charges owed with respect to letters of credit and bankers’ acceptance
financing, PLUS (b) the interest component of Capitalized Lease Obligations of
the Company and its Restricted Subsidiaries paid, accrued or scheduled to be
paid or accrued during such period, in each case as determined on a
consolidated basis in accordance with GAAP.

 

“Consolidated Net Income” means, for any
period, the consolidated net income (or loss) of the Company and all Restricted
Subsidiaries for such period as determined in accordance with GAAP, adjusted by
excluding, without duplication, (a) any net after-tax extraordinary gains or
losses (in each case less all fees and expenses relating thereto), (b) any net
after-tax gains or losses (in each case less all fees and expenses relating
thereto) attributable to asset dispositions other than in the ordinary course
of business, (c) the portion of net income (or loss) of any Person (other than
the Company or a Restricted Subsidiary), including Unrestricted Subsidiaries,
in which the Company or any Restricted Subsidiary has an ownership interest,
except to the extent of the amount of dividends or other distributions actually
paid to the Company or any Restricted Subsidiary in cash dividends or
distributions during such period, (d) net income (or loss) of any Person
combined with the Company or any Restricted Subsidiary on a “pooling of
interests” basis attributable to any period prior to the date of combination
and any non-cash items of the Company and any Restricted Subsidiary (including
monetary corrections) increasing or decreasing Consolidated Net Income for such
period (other than items that will result in the receipt or payment of cash),
and (e) except with respect to any encumbrance or restriction described in
clause (ii) of Section 1018, the net income of any Restricted Subsidiary to the
extent that the declaration or payment of dividends or similar distributions by
such Restricted Subsidiary is not at the date of determination permitted,
directly or indirectly, by operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule or governmental
regulation (other than any decree, order, statute, rule or governmental
regulation of Poland and any political subdivision thereof) applicable to such
Restricted Subsidiary or its stockholders.

 

“Consolidated Operating Cash Flow” means,
with respect to any period, the Consolidated Net Income of the Company and its
Restricted Subsidiaries for such period (x) increased by (in each case to the
extent taken into account in computing Consolidated Net Income) the sum of (a)
the Consolidated Income Tax Expense of the Company and its Restricted

 

6

 

Subsidiaries accrued according to GAAP for such period (other than
taxes attributable to extraordinary, unusual or non-recurring gains or losses);
(b) Consolidated Interest Expense for such period; (c) depreciation of the
Company and its Restricted Subsidiaries for such period, including any
impairment charges with respect to long lived assets; (d) amortization of the
Company and its Restricted Subsidiaries for such period, including, without
limitation, amortization of capitalized debt issuance costs for such period,
all determined on a consolidated basis in accordance with GAAP and, to the
extent not duplicative, the amount of any write-downs or write-offs of goodwill
in accordance with FAS 142  and (e) any
net increase in accrued and unpaid management fees during such period, and (y)
decreased by (to the extent not taken into account in calculating Consolidated
Net Income) any net decrease in accrued and unpaid management fees during such
period; provided, that if any
Restricted Subsidiary is not a Wholly Owned Restricted Subsidiary, Consolidated
Operating Cash Flow shall be reduced (to the extent not otherwise reduced in
accordance with GAAP) by an amount equal to (i) the amount of Consolidated Net
Income attributable to such Restricted Subsidiary multiplied by (ii) the
quotient of (1) the number of shares of outstanding Common Stock of such
Restricted Subsidiary not owned on the last day of such period by the Company,
or any of its Restricted Subsidiaries divided by (2) the total number of shares
of outstanding Common Stock of such Restricted Subsidiary on the last day of
such period.

 

“Corporate Trust Office” means the principal
corporate trust office of the Trustee, at which at any particular time its
corporate trust business shall be administered, which office at the date of
execution of this Indenture is located at 1100 North Market Street, Wilmington,
Delaware 19890, except that with respect to presentation of Securities for
payment or for registration of transfer or exchange, such term shall mean the
office or agency of the Trustee at which, at any particular time, its corporate
agency business shall be conducted.

 

“Cumulative Available Cash Flow” means, as at
any date of determination, the positive cumulative Consolidated Operating Cash
Flow realized during the period commencing on the Issue Date and ending on the
last day of the most recent fiscal quarter immediately preceding the date of
determination for which consolidated financial information of the Company is
available or, if such cumulative Consolidated Operating Cash Flow for such
period is negative, the negative amount by which cumulative Consolidated
Operating Cash Flow is less than zero.

 

“Currency Agreement” means any foreign
exchange contract, currency swap agreement or other similar agreement or
arrangement entered into by a Person that is designed to protect such Person
against fluctuations in currency values.

 

“Default” means any event that after notice
or passage of time or both would be an Event of Default.

 

“Defaulted Interest” has the meaning
specified in Section 309.

 

“Depositary”
means Euroclear System, its nominees and their respective successors.

 

7

 

“Disinterested Director” means, with respect
to any Person, any transaction or series of transactions in respect of which
the Board of Directors of such Person is required to deliver a resolution of
the Board of Directors of such Person under this Indenture, a member of the
Board of Directors of such Person who does not have any material direct or
indirect ownership interest in the Company or the counterparty to such
transaction or series of transactions.

 

“DTH Business” means the business of (i)
developing, managing, operating or providing services relating to direct to
home satellite systems for the distribution of subscription programming
services directly to homes and cable systems in areas covered by the
“footprint” of the satellites utilized by the Company and the Restricted
Subsidiaries, and activities to accomplish the foregoing (other than the
Cable/Telecommunications Business or the Entertainment/Programming Business) or
(ii) evaluating, participating or pursuing any other activity or opportunity
that is primarily related to those identified above.

 

“Entertainment/Programming Business” means a
business engaged primarily in the management, ownership, operation,
acquisition, development, production, distribution or syndication of general
entertainment, sports, movies, advertising, children’s or other programming or
publishing.

 

“Event of Default” has the meaning specified
in Section 501.

 

“Excess
Proceeds” has the meaning specified in Section 1017(b).

 

“Excess
Proceeds Offer” has the meaning specified in Section 1017(c).

 

“Exchange Act”
means the Securities Exchange Act of 1934, as amended.

 

“Fair Market Value” means, with respect to
any asset or property, the sale value that would be obtained in an arm’s length
transaction between an informed and willing seller under no compulsion to sell
and an informed and willing buyer, as determined by the Board of Directors of
the Company and evidenced by a resolution thereof.

 

“Federal Bankruptcy Code” means the
Bankruptcy Act of Title 11 of the United States Code, as amended from time to
time.

 

“Regulation S Certificate” shall have the
meaning specified in Section 307(b).

 

“Generally
Accepted Accounting Principles” or “GAAP” means generally accepted accounting
principles in effect in the United States on the Issue Date.

 

“Global
Security” has the meaning provided in Section 201.

 

“guarantee” means, as applied to any
obligation, (a) a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner, of any part or all of such obligation and (b) an
agreement, direct or indirect, contingent or otherwise, the practical effect of
which is to assure in any way the payment or performance (or payment of damages
in the event of non-performance) of all or any

 

8

 

part of such obligation, including, without limiting the foregoing, the
payment of amounts drawn down by letters of credit.

 

“Holder” means
a Person in whose name a Security is registered in the Security Register.

 

“Incur” or
“incur” means, with respect to any Indebtedness, to create, issue, assume,
guarantee or in any manner become directly or indirectly liable for the payment
of, or otherwise incur such Indebtedness; provided,
that neither the accrual of interest nor the accretion of original issue
discount shall be considered an incurrence of Indebtedness and provided further that the incurrence of
any particular Indebtedness by the Company or any Restricted Subsidiary shall
occur only once and any obligation of the Company or any Restricted Subsidiary
arising under any guarantee supporting such Indebtedness shall be disregarded.

 

“Indebtedness”
means, with respect to any Person, without duplication, (a) all liabilities of
such Person for borrowed money (including overdrafts) or for the deferred
purchase price of property or services, excluding any trade payables and other
accrued current liabilities (including outstanding disbursements) incurred in
the ordinary course of business (whether or not evidenced by a note), but
including, without limitation, all obligations, contingent or otherwise, of
such Person in connection with any letters of credit and acceptances issued
under letter of credit facilities, acceptance facilities or other similar
facilities, (b) all obligations of such Person evidenced by bonds, notes,
debentures or other similar instruments, (c) all indebtedness of such Person
created or arising under any conditional sale or other title retention
agreement with respect to property acquired by such Person (even if the rights
and remedies of the seller or lender under such agreement in the event of
default are limited to repossession or sale of such property), but excluding
trade accounts payable arising in the ordinary course of business, (d) all
Capitalized Lease Obligations of such Person, (e) all Indebtedness referred to
in (but not excluded from) the preceding clauses of other Persons and all
dividends of other Persons, the payment of which is secured by (or for which
the holder of such Indebtedness has an existing right, contingent or otherwise,
to be secured by) any Lien upon or with respect to property (including, without
limitation, accounts and contract rights) owned by such Person, even though
such Person has not assumed or become liable for the payment of such
Indebtedness (the amount of such obligation being deemed to be the lesser of the
value of such property or asset or the amount of the obligation so secured),
(f) all guarantees by such Person of Indebtedness referred to in this
definition of any other Person, (g) all Redeemable Capital Stock of such Person
valued at the greater of its voluntary or involuntary maximum fixed repurchase
price plus accrued and unpaid dividends and (h) any liability of such Person
under or in respect of Interest Rate Agreements or Currency Agreements.  For purposes hereof, the “maximum fixed
repurchase price” of any Redeemable Capital Stock which does not have a fixed
repurchase price shall be calculated in accordance with the terms of such
Redeemable Capital Stock as if such Redeemable Capital Stock were purchased on
any date on which Indebtedness shall be required to be determined pursuant to
this Indenture, and if such price is based upon, or measured by, the fair
market value of such Redeemable Capital Stock, such fair market value shall be
determined in good faith by the board of directors of the issuer of such
Redeemable Capital Stock.  For purposes
of Sections 1010 and 1011 and the definition of “Events of Default”, in
determining the principal amount of any Indebtedness to be incurred by the
Company or a Restricted Subsidiary or which is outstanding at any date, (x) the
principal amount of any Indebtedness which provides

 

9

 

that an amount less than the
principal amount at maturity thereof shall be due upon any declaration of
acceleration thereof shall be the accreted value thereof at the date of
determination and (y) effect shall be given to the impact of any Currency
Agreement with respect to such Indebtedness.

 

“Indebtedness
Instrument” has the meaning specified in Section 1018.

 

“Indenture”
means this instrument as originally executed and as it may from time to time be
supplemented or amended by one or more indentures supplemental hereto entered
into pursuant to the applicable provisions hereof.

 

“Interest
Payment Date” means the Stated Maturity of an installment of cash interest on
the Securities.

 

“Interest Rate
Agreements” means any interest rate protection agreements and other types of
interest rate hedging agreements or arrangements (including, without
limitation, interest rate swaps, caps, floors, collars and similar agreements)
designed to protect against or manage exposure to fluctuations in interest
rates in respect of Indebtedness.

 

“Investment”
means, with respect to any Person, any direct or indirect advance, loan or
other extension of credit or capital contribution to such Person (by means of
any transfer of cash or other property to others or any payment for property or
services for the account or use of others), or any purchase, acquisition or
ownership by such Person of any Capital Stock (including ownership of Capital
Stock through share leasing arrangements), bonds, notes, debentures or other
securities or evidences of Indebtedness issued or owned by any other Person and
all other items that would be classified as investments on a balance sheet
prepared in accordance with GAAP.  In
addition, the Fair Market Value of the net assets of any Restricted Subsidiary
at the time that such Restricted Subsidiary is designated an Unrestricted
Subsidiary shall be deemed to be an “Investment” made by an Issuer in such
Unrestricted Subsidiary at such time. 
“Investments” shall exclude extensions of trade credit on commercially
reasonable terms in accordance with normal trade practices.

 

“Issue Date”
means [     ], 2003.

 

“Issuer Request” or “Issuer Order” means a
written request or order signed in the name of an Issuer by its Chairman, its
president, any managing director, any Vice President, its treasurer or any assistant
treasurer, and delivered to the Trustee.

 

“Issuers”
means each of the Persons named as the “Issuers” in the first paragraph of this
Indenture, until a successor Person becomes an Issuer pursuant to the
applicable provisions of this Indenture and, thereafter, “Issuers” shall
include such successor Person.

 

“Liberty Media
Corporation” means Liberty Media Corporation, a Delaware corporation, and any
successor (by merger, consolidation, transfer or otherwise, and in one or a
series of transactions) to all or substantially all of its assets.

 

“Lien” means
any mortgage, charge, pledge, lien (statutory or otherwise), privilege,
security interest, hypothecation, assignment for security, claim, or preference
or

 

10

 

priority or other encumbrance
upon or with respect to any property of any kind, real or personal, movable or
immovable, now owned or hereafter acquired. 
A Person shall be deemed to own subject to a Lien any property which
such Person has acquired or holds subject to the interest of a vendor or lessor
under any conditional sale agreement, capital lease or other title retention
agreement.

 

“Management
Agreement” means (a) any agreement between the Company or a Restricted
Subsidiary and a Management Company pursuant to which the Management Company
shall lease or otherwise employ assets of the Company or a Restricted
Subsidiary to operate a Cable/Telecommunications Business, a DTH Business or an
Entertainment/Programming Business, (b) any agreement or instrument (i)
governing Indebtedness of a Management Company to the Company or a Restricted Subsidiary
or (ii) governing corporate procedures or control of a Management Company and
(c) any agreement listed on Schedule A to this Indenture under the subheading
“Management Agreements.”

 

“Management
Company” means any Person, a portion of whose Capital Stock is held by the
Company or a Restricted Subsidiary, that (i) holds or has applied for a license
or permit to operate a Cable/Telecommunications Business, a DTH Business or an
Entertainment/Programming Business in the Republic of Poland or elsewhere in
continental Europe and (ii) manages the operations of a Restricted Subsidiary
pursuant to a Management Agreement.

 

“Maturity”
means, with respect to any Security, the date on which any principal of such
Security becomes due and payable as therein or herein provided, whether at the Stated Maturity
with respect to such principal or by declaration of acceleration, call for
redemption or purchase or otherwise.

 

“Moody’s”
means Moody’s Investors Service, Inc. and its successors.

 

“Net Cash
Proceeds” means, (a) with respect to any Asset Sale, the proceeds thereof in
the form of cash or Cash Equivalents including payments in respect of deferred
payment obligations or escrowed funds, but only when received in the form of,
or stock or other assets when disposed for, cash or Cash Equivalents (except to
the extent that such obligations are financed or sold with recourse to the
Company or any Restricted Subsidiary), net of (i) brokerage commissions and
other fees and expenses (including fees and expenses of legal counsel,
accountants, consultants and investment banks) related to such Asset Sale, (ii)
provisions for all taxes payable as a result of such Asset Sale, (iii) payments
made to retire Indebtedness where payment of such Indebtedness is secured by
the assets or properties the subject of such Asset Sale, (iv) amounts required
to be paid to any Person (other than the Company or any Restricted Subsidiary)
owning a beneficial interest in the assets subject to the Asset Sale and (v)
appropriate amounts to be provided by the Company or any Restricted Subsidiary,
as the case may be, as a reserve required in accordance with GAAP against any
liabilities associated with such Asset Sale and retained by the Company or any
Restricted Subsidiary, as the case may be, after such Asset Sale, including,
without limitation, pension and other post-employment benefit liabilities,
liabilities related to environmental matters and liabilities under any
indemnification obligations associated with such Asset Sale, all as reflected
in an Officer’s Certificate delivered to the Trustee and (b) with respect to
any capital contribution or issuance or sale of Capital Stock as

 

11

 

referred to under Section 1011
and the definition of “Permitted Indebtedness”, the proceeds of such capital
contribution, issuance or sale in the form of cash or Cash Equivalents,
including payments in respect of deferred payment obligations when received in
the form of, or stock or other assets when disposed for, cash or Cash
Equivalents (except to the extent that such obligations are financed or sold
with recourse to the Company or any Restricted Subsidiary), net of attorney’s
fees, accountant’s fees and brokerage, consultation, underwriting and other
fees and expenses actually incurred in connection with such capital
contribution, issuance or sale and net of taxes paid or payable as a result
thereof.

 

“Non-Registration
Opinion and Supporting Evidence” shall have the meaning specified in Section
307(b).

 

“Non-U.S.
Person” means a person who is not a “U.S. Person” (as defined in Regulation S).

 

“Offer Date”
has the meaning specified in Section 1017.

 

“Offered
Price” has the meaning specified in Section 1017.

 

“Officer’s
Certificate” means a certificate signed by the chairman of the Board of
Directors, the president, any managing director, any Vice President, the
treasurer, any assistant treasurer, the secretary or any assistant secretary of
an Issuer, and delivered to the Trustee.

 

“Opinion of
Counsel” means a written opinion of counsel, who may be counsel for an Issuer,
including an employee of such Issuer, and who shall be acceptable to the
Trustee.

 

“Organizational
Contract” means any agreement to which an Issuer or any Restricted Subsidiary
is a party pursuant to which, among other things, fees are paid to such Issuer
or a Restricted Subsidiary in exchange for organizational, consulting or
similar services, including, without limitation, the agreements listed on
Schedule A to this Indenture under the subheading “Organizational Contracts.”

 

“Outstanding”,
when used with respect to Securities, means, as of the date of determination,
all Securities theretofore authenticated and delivered under this Indenture,
except:

 

(i)            Securities theretofore cancelled by
the Trustee or delivered to the Trustee for cancellation;

 

(ii)           Securities, or portions thereof, for
whose payment or redemption money in the necessary amount has been theretofore
deposited with the Trustee or any Paying Agent (other than the Issuers) in
trust or set aside and segregated in trust by the Issuers (if an Issuer shall
act as its own Paying Agent) for the Holders of such Securities; provided, that if such Securities are to
be redeemed, notice of such redemption has been duly given pursuant to this
Indenture or provision therefor satisfactory to the Trustee has been made;

 

(iii)          Securities, except to the extent
provided in Sections 1302 and 1303, with respect to which the Issuers have
effected defeasance and/or covenant defeasance as provided in Article Thirteen;
and

 

12

 

(iv)          Securities which have been paid
pursuant to Section 306 or in exchange for or in lieu of which other Securities
have been authenticated and delivered pursuant to this Indenture, other than
any such Securities in respect of which there shall have been presented to the
Trustee proof satisfactory to it that such Securities are held by a bona fide
purchaser in whose hands the Securities are valid obligations of the Issuers;

 

provided, however, that in determining whether
the Holders of the requisite principal amount at maturity of Outstanding
Securities have given any request, demand, authorization, direction, consent,
notice or waiver hereunder and, for the purposes of making the calculations
required by TIA Section 313, Securities owned by the Issuers or any other
obligor upon the Securities or any Affiliate of the Issuers or such other
obligor shall be disregarded and deemed not to be Outstanding, except that, in
determining whether the Trustee shall be protected in making such calculation
or in relying upon any such request, demand, authorization, direction, notice,
consent or waiver, only Securities which the Trustee knows to be so owned shall
be so disregarded.  Securities so owned
which have been pledged in good faith may be regarded as Outstanding if the
pledgee establishes to the satisfaction of the Trustee the pledgee’s right so
to act with respect to such Securities and that the pledgee is not the Issuers
or any other obligor upon the Securities or any Affiliate of the Issuers or
such other obligor.

 

“Overhead
Agreement” means any agreement to which an Issuer or any Restricted Subsidiary
is a party pursuant to which, among other things, costs are allocated among the
parties thereto, including, without limitation, the agreements listed on
Schedule A to this Indenture under the subheading “Overhead Agreements”.

 

“Pari Passu
Indebtedness” means Indebtedness of the Issuers that is pari passu in right of payment to the
Securities.

 

“Paying Agent”
means any Person (including an Issuer acting as Paying Agent) authorized by the
Issuers to pay the principal of or interest on any Securities on behalf of the
Issuers.  The initial paying agent shall
be the Trustee.

 

“Permitted
Holders” means, as of any relevant date of determination, (a) UnitedGlobalCom,
Inc. (b) UGC Europe, Inc., (c) United Pan-Europe Communications N.V.; (d)
Liberty Media Corporation, (e) any or all of Gene W. Schneider, G. Schneider
Holdings, Co., The Gene W. Schneider Family Trust, The MLS Family Partnership
LLP, Rochelle Limited Partnership, Marian H. Rochelle Revocable Trust, Carollo
Company, Albert & Carolyn Company, James R. Carollo Living Trust and John
B. Carollo Living Trust(2) and (f) any of the respective Affiliates of any one
or more of the foregoing.

 

“Permitted
Indebtedness” means any of the following:

 

(a)           Indebtedness under the Securities (or
any guarantee thereof) and this Indenture;

 

(2)  Subject to confirmation

 

13

 

(b)           Indebtedness of the Issuers or any
Restricted Subsidiary outstanding on the Issue Date and listed on Schedule B to
this Indenture;

 

(c)           [Reserved];

 

(d)           (i) Indebtedness of any Restricted
Subsidiary owed to and held by the Company or a Restricted Subsidiary and (ii)
Indebtedness of the Company owed to and held by any Restricted Subsidiary that
is Subordinated Indebtedness; provided,
that an incurrence of Indebtedness shall be deemed to have occurred upon (x)
any sale or other disposition (excluding assignments as security to financial
institutions) of any Indebtedness of the Company or Restricted Subsidiary
referred to in this clause (d) to a Person (other than the Company or a
Restricted Subsidiary) or (y) any sale or other disposition of Capital Stock of
a Restricted Subsidiary which holds Indebtedness of the Company or another
Restricted Subsidiary such that such Restricted Subsidiary, in any such case,
ceases to be a Restricted Subsidiary;

 

(e)           Obligations under any Interest Rate
Agreement of the Company or any Restricted Subsidiary to the extent relating to
(i) Indebtedness of the Company or such Restricted Subsidiary, as the case may
be (which Indebtedness (x) bears interest at fluctuating interest rates and (y)
is otherwise permitted to be incurred under Section 1010), or (ii) Indebtedness
for which a lender has provided a commitment in an amount reasonably
anticipated to be incurred by the Company or a Restricted Subsidiary in the
following 12 months after such Interest Rate Agreement has been entered into, but
only to the extent that the notional principal amount of such Interest Rate
Agreement does not exceed the principal amount of the Indebtedness (or
Indebtedness subject to commitments) to which such Interest Rate Agreement
relates;

 

(f)            Indebtedness of the Company or any
Restricted Subsidiary under Currency Agreements to the extent relating to (i)
Indebtedness of the Company or a Restricted Subsidiary (which Indebtedness is
otherwise permitted to be incurred under Section 1010) or (ii) obligations to purchase
assets, properties or services incurred in the ordinary course of business of
the Company or any Restricted Subsidiary; provided,
that such Currency Agreements do not increase the Indebtedness or
other obligations of the Company and its Restricted Subsidiaries outstanding
other than as a result of fluctuations in foreign currency exchange rates or by
reason of fees, indemnities and compensation payable thereunder;

 

(g)           Indebtedness of the Company or any
Restricted Subsidiary in respect of performance bonds of the Company or any
Restricted Subsidiary or surety bonds provided by the Company or any Restricted
Subsidiary incurred in the ordinary course of business in connection with the
construction or operation of a Cable/Telecommunications Business, a DTH
Business or an Entertainment/Programming Business;

 

(h)           Indebtedness of the Company or any
Restricted Subsidiary to the extent it represents a replacement, renewal,
refinancing or extension of outstanding Indebtedness of the Company or of any
Restricted Subsidiary incurred or outstanding pursuant to clause (b) of this
definition or the proviso of Section 1010; provided,
that (i) Indebtedness of the Company may not be replaced, renewed,
refinanced or extended to such extent under this clause (i) with Indebtedness
of any Restricted Subsidiary and (ii) any such replacement, renewal,
refinancing or extension (x) shall not result in a lower Average Life of such
Indebtedness as compared with the

 

14

 

Indebtedness being replaced,
renewed, refinanced or extended, (y) shall not exceed the sum of the principal
amount (or, if such Indebtedness provides for a lesser amount to be due and
payable upon a declaration of acceleration thereof, an amount no greater than
such lesser amount) of the Indebtedness being replaced, renewed, refinanced or
extended plus the amount of accrued interest thereon and the amount of any
reasonably determined prepayment premium necessary to accomplish such
replacement, renewal, refinancing or extension and such reasonable fees and
expenses incurred in connection therewith, and (z) in the case of any
replacement, renewal, refinancing or extension by the Company of Pari Passu
Indebtedness or Subordinated Indebtedness, such new Indebtedness is made pari passu with or subordinate to the
Securities, at least to the same extent as the Indebtedness being replaced,
renewed, refinanced or extended;

 

(i)            [Reserved];

 

(j)            Subordinated Indebtedness of an
Issuer not to exceed $50 million (or, if non-U.S. Dollar denominated, the U.S.
Dollar Equivalent thereof) at any one time outstanding; provided, that
not more than $40 million of such Subordinated Indebtedness may require
interest to be paid in cash prior to the date which is ninety (90) days after
the Stated Maturity of the Securities; and

 

(k)           in addition to the items referred to
in clauses (a) through (j) above, Indebtedness of an Issuer having an aggregate
principal amount not to exceed $10 million (or, if non-U.S. Dollar denominated,
the U.S. Dollar Equivalent thereof) at any time outstanding.

 

“Permitted
Investments” means (a) Cash Equivalents; (b) Investments in prepaid expenses,
negotiable instruments held for collection and lease, utility and workers’
compensation, performance and other similar deposits; (c) loans and advances to
directors or employees made in the ordinary course of business; (d) Interest
Rate Agreements and Currency Agreements; (e) bonds, notes, debentures or other
securities received as a result of Asset Sales permitted under Section 1017, provided, that the Company or the
Restricted Subsidiaries, as the case may be, have received at least 75% of the
aggregate consideration therefrom in cash or Cash Equivalents; (f) Investments
made in the ordinary course of business as partial payment for constructing a
network relating principally to a Cable/Telecommunications Business or for
supplying equipment used or useful in the Cable/Telecommunications Business or
the DTH Business; (g) Investments (other than through share leasing
arrangements) in any Person engaged in any business in which the Company or any
Restricted Subsidiary is engaged on the Issue Date not to exceed $20 million
(or, if non-U.S. Dollar denominated, the U.S. Dollar Equivalent thereof)
outstanding at any time; provided,
that immediately after giving effect to any Investment made under this clause
(g), the Company and its Restricted Subsidiaries shall own at least 25% of the
outstanding Capital Stock of the Person in which the Investment was made; (h)
Investments (other than through share leasing arrangements) in any Person
engaged in any business in which the Company or any Restricted Subsidiary is
engaged on the Issue Date not to exceed $5 million (or, if non-U.S. Dollar
denominated, the U.S. Dollar Equivalent thereof) outstanding at any time; (i)
Investments (other than through share leasing arrangements) in the Capital
Stock of any Person to the extent the consideration therefor paid by the
Company or any Restricted Subsidiary consists of a lease or other right to use
the capacity of a cable television network of the Company or such Restricted
Subsidiary and so long as the capacity leased or used is used by such Person
solely to provide telephony or Internet access services; provided, that the

 

15

 

Board of Directors shall have
determined (as evidenced by a Board Resolution) that any such capacity is in
excess of the cable television network capacity required to operate the
Cable/Telecommunications Business of the Company or such Restricted Subsidiary
in the area in which such cable television network is located; and (j)
investments by any Restricted Subsidiary in the Company.

 

“Permitted
Liens” means the following types of Liens:

 

(a)           Liens on any property or assets of a
Restricted Subsidiary granted in favor of the Company or any Restricted
Subsidiary;

 

(b)           Liens securing the Securities;

 

(c)           Liens securing Acquired Indebtedness
created prior to (and not in connection with or in contemplation of) the
incurrence of such Indebtedness by the Company or any Restricted Subsidiary; provided, that such Lien does not extend
to any property or assets of the Company or any Restricted Subsidiary other
than the assets acquired in connection with the incurrence of such Acquired
Indebtedness;

 

(d)           statutory Liens of landlords and
carriers, warehousemen, mechanics, suppliers, materialmen, repairmen or other
like Liens arising in the ordinary course of business of the Company or any
Restricted Subsidiary and with respect to amounts not yet delinquent or being
contested in good faith by appropriate proceeding;

 

(e)           Liens for taxes, assessments,
government charges or claims that are being contested in good faith by
appropriate proceedings promptly instituted and diligently conducted;

 

(f)            easements, rights-of-way,
restrictions and other similar charges or encumbrances not interfering in any
material respect with the business of the Company or any Restricted Subsidiary
incurred in the ordinary course of business;

 

(g)           Liens arising by reason of any judgment,
decree or order of any court so long as such Lien is adequately bonded and any
appropriate legal proceedings that may have been initiated for the review of
such judgment, decree or order shall not have been finally terminated or the
period within which such proceedings may be initiated shall not have expired;

 

(h)           Liens incurred or deposits made in
the ordinary course of business in connection with workers’ compensation,
unemployment insurance and other types of social security;

 

(i)            any extension, renewal or
replacement, in whole or in part, of any Lien described in the foregoing
clauses (a) through (h); provided,
that any such extension, renewal or replacement shall be no more restrictive in
any material respect than the Lien so extended, renewed or replaced and shall
not extend to any additional property or assets;

 

(j)            any interest or title of a lessor
under any Capitalized Lease Obligation or seller under any Purchase Money
Obligation;

 

16

 

(k)           [Reserved];

 

(l)            [Reserved];

 

(m)          Liens in favor of Polish governmental
fiscal authorities created without the knowledge of and without fault on the
part of the Company;

 

(n)           Liens existing on the Issue Date and
listed on Schedule C to this Indenture;

 

(o)           Liens in favor of the Screen Actors
Guild, the Writers Guild of America, the Directors Guild of America or any
other unions, guilds or collective bargaining units under collective bargaining
agreements, which Liens are incurred in the ordinary course of business solely
to secure the payment of residuals and other collective bargaining obligations
required to be paid by the Company or any of its Restricted Subsidiaries under
any such collective bargaining agreement;

 

(p)           Liens arising in connection with
completion guarantees entered into in the ordinary course of business and
consistent with then current industry practices, securing obligations (other
than Indebtedness for borrowed money) of the Company or any of its Restricted
Subsidiaries not yet due and payable;

 

(q)           Liens in favor of suppliers and/or
producers of any programming that are incurred in the ordinary course of
business solely to secure the purchase or license price of such programming and
such directly related rights or the rendering of services necessary for the
production of such programming; provided,
however, that no such Lien shall extend to or cover any property or
assets other than the programming or license and the rights directly related
thereto being so acquired or produced; and provided
further, that any payment obligations secured by such Liens shall by
their terms be payable solely from the revenues that are derived directly from
the exhibition, syndication, exploitation, distribution or disposition of such
item of programming and/or such directly related rights; and

 

(r)            Liens on assets or Capital Stock of
a Special Purpose Vehicle.

 

“Person” means
any individual, corporation, limited liability company, partnership, joint
venture, association, joint-stock company, S.A., Sp. z o.o., trust,
unincorporated organization or government or any agency or political
subdivision thereof.

 

“Physical
Security” has the meaning specified in Section 201.

 

“Predecessor
Security” of any particular Security means every previous Security evidencing
all or a portion of the same debt as that evidenced by such particular
Security; and for the purpose of this definition, any Security authenticated
and delivered under Section 308 in exchange for a mutilated security or in lieu
of a lost, destroyed or stolen Security shall be deemed to evidence the same
debt as the mutilated, destroyed, lost or stolen Security.

 

“Preferred
Stock” means, with respect to any Person, any and all shares, interests,
participations or other equivalents (however designated) of such Person’s
preferred or preference

 

17

 

stock whether now outstanding,
or issued after the Issue Date, and including, without limitation, all classes
and series of preferred or preference stock of such Person.

 

“Private
Placement Legend” has the meaning specified in Section 202.

 

“Pro Forma Consolidated Operating Cash Flow”
means Consolidated Operating Cash Flow for the latest four fiscal quarters (the
“Four Quarter Period”).  For purposes of
calculating “Consolidated Operating Cash Flow” for any Four Quarter Period for
purposes of this definition, (a) all Restricted Subsidiaries of the Company on
the date of the transaction giving rise to the need to calculate “Pro Forma
Consolidated Operating Cash Flow” (the “Transaction Date”) shall be deemed to
have been Restricted Subsidiaries at all times during such Four Quarter Period
and (b) any Unrestricted Subsidiary on the Transaction Date shall be deemed to
have been an Unrestricted Subsidiary at all times during such Four Quarter
Period.  In addition to and without
limitation of the foregoing, for purposes of this definition, “Consolidated
Operating Cash Flow” shall be calculated after giving effect on a pro forma basis for the applicable Four
Quarter Period to, without duplication, any Asset Sales or Asset Acquisitions
(including, without limitation, any Asset Acquisition giving rise to the need
to make such calculation as a result of the Company or a Restricted Subsidiary
(including any Person who becomes a Restricted Subsidiary as a result of the
Asset Acquisition) incurring, assuming or otherwise being liable for Acquired
Indebtedness) occurring during the period commencing on the first day of such
Four Quarter Period to and including the Transaction Date, as if such Asset
Sale or Asset Acquisition occurred on the first day of the Four Quarter Period.

 

“Purchase
Money Obligation” means Indebtedness of the Company or any Restricted
Subsidiary (a) issued to finance or refinance the purchase or construction of
any assets of the Company or any Restricted Subsidiary or (b) secured by a Lien
on any assets of the Company or any Restricted Subsidiary where the lender’s
sole recourse is to the assets so encumbered, in either case to the extent the
purchase or construction prices for such assets are or should be included in
“addition to property, plan or equipment” in accordance with GAAP.

 

“Qualified
Institutional Buyer” or “QIB” shall have the meaning specified in Rule 144A.

 

“Redeemable
Capital Stock” means any class or series of Capital Stock that, either by its
terms, by the terms of any security into which it is convertible or
exchangeable or by contract or otherwise, is, or upon the happening of an event
or passage of time would be, required to be redeemed prior to the final Stated
Maturity of the Securities or is redeemable at the option of the holder thereof
at any time prior to such final Stated Maturity, or is convertible into or
exchangeable for debt securities at any time prior to such final Stated
Maturity; provided, however, that
Redeemable Capital Stock shall not include any Common Stock the holder of which
has a right to put to the Company upon certain terminations of employment.

 

“Redemption
Date”, when used with respect to any Security to be redeemed, in whole or in part,
means the date fixed for such redemption by or pursuant to this Indenture.

 

“Redemption
Price”, when used with respect to any Security to be redeemed, means the price
at which it is to be redeemed pursuant to this Indenture.

 

18

 

“Regular
Record Date” for the interest payable on any Interest Payment Date means the
[       or
       ] (whether or not a Business Day), as
the case may be, next preceding such Interest Payment Date.

 

“Regulation S”
means Regulation S under the Securities Act.

 

“Required
Filing Date” shall have the meaning set forth in Section 1009.

 

“Responsible
Officer”, when used with respect to the Trustee, means any officer in its
corporate trust department or similar group, and also means, with respect to a
particular corporate trust matter, any other officer to whom such matter is
referred because of his knowledge of and familiarity with the particular
subject.

 

“Restricted
Payment” has the meaning specified in Section 1011.

 

“Restricted Subsidiary”
means a Subsidiary other than an Unrestricted Subsidiary.

 

“Rule 144A”
means Rule 144A under the Securities Act.

 

“Rule 144A
Certificate” shall mean the Rule 144A Certificate in the form of Exhibit B
attached to this Indenture.

 

“S&P”
means Standard and Poor’s Ratings Group, a division of The McGraw-Hill, Inc.
and its successors.

 

“Securities”
has the meaning stated in the first recital of this Indenture and more
particularly means any Securities authenticated and delivered under this
Indenture.

 

“Securities
Act” means the Securities Act of 1933, as amended.

 

“Security
Register” and “Security Registrar” have the respective meanings specified in
Section 305.

 

“Senior Bank
Indebtedness” means Indebtedness of the Company or any Restricted Subsidiary under
one or more other term loans or revolving credit or similar facilities (which
may include any guarantee, bonding or letter of credit facility) with a bank or
other financial institution which is not subordinated to any other Indebtedness
of the Company or any Restricted Subsidiary.

 

“Service
Agreement” means any agreement to which the Company or any Restricted
Subsidiary is a party pursuant to which, among other things, the Company or a
Restricted Subsidiary provides various services, which may include
administrative, technical, managerial, financial, operational and marketing
services, to the other party or parties thereto, including, without limitation,
the agreements listed on Schedule A to this Indenture under the subheading
“Service Agreements.”

 

“Significant
Subsidiary” means, with respect to any Person at any particular time, any
Subsidiary of such Person that, together with the subsidiaries of such
Subsidiary, (a)

 

19

 

accounted for more than 10% of
the consolidated revenues of such Person and its Subsidiaries for their most
recently completed fiscal year or (b) is or are the owner(s) of more than 10%
of the consolidated assets of such Person and its Subsidiaries as at the end of
such fiscal year, all as calculated in accordance with GAAP and as shown on the
consolidated financial statements of such Person and its Subsidiaries for such
fiscal year.

 

“Special
Purpose Vehicle” means a Person which is, or was, established: (i) with
separate legal identity and limited liability; and (ii) for the sole purpose of
a single transaction, or series of related transactions, and which has no
assets and liabilities other than those directly acquired or incurred in
connection with such transaction(s).

 

“Special Record
Date” for the payment of any Defaulted Interest means a date fixed by the
Trustee pursuant to Section 309.

 

“Stated
Maturity” means, when used with respect to any Security or any installment of
interest thereon, the date specified in such Security as the fixed date on
which the principal of such Security or such installment of interest is due and
payable, and, when used with respect to any other Indebtedness, means the date
specified in the instrument governing such Indebtedness as the fixed date on which
the principal of such Indebtedness, or any installment of interest thereon, is
due and payable.

 

“Subordinated
Indebtedness” means Indebtedness of the Company that is expressly subordinated
in right of payment to the Securities.

 

“Subsidiary”
means (a) any Person a majority of the equity ownership or Voting Stock of
which is at the time owned, directly or indirectly, by the Company or by one or
more other Subsidiaries or by the Company and one or more other Subsidiaries
and (b) any Cable Television Newco and any Management Company.

 

“Surviving
Entity” has the meaning specified in Section 801.

 

“Taxes” has
the meaning specified in Section 804(a).

 

“Taxing
Jurisdiction” has the meaning specified in Section 804(a).

 

“Total
Consolidated Indebtedness” means, at any date of determination, an amount equal
to the aggregate amount of all Indebtedness of an Issuer and its Restricted
Subsidiaries outstanding as of the date of determination.

 

“Transaction
Date” has the meaning specified in the definition of Pro Forma Consolidated
Operating Cash Flow in this Section 101.

 

“Trust
Indenture Act” or “TIA” means the Trust Indenture Act of 1939, as amended.

 

20

 

“Trustee”
means the Person named as the “Trustee” in the first paragraph of this
Indenture until a successor Trustee shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter “Trustee” shall mean
such successor Trustee.

 

“UPC” means
United Pan-Europe Communications N.V. and any successor (by merger,
consolidation, transfer or otherwise in one or a series of transactions) to all
or substantially all of its assets.

 

“United
States” shall have the meaning specified in Section 804(c).

 

“United States
Alien” shall have the meaning specified in Section 804(c).

 

“Unrestricted
Subsidiary” means (a) any Subsidiary that at the time of determination shall be
an Unrestricted Subsidiary (as designated by the Board of Directors of the
Company, as provided below) and (b) any subsidiary of an Unrestricted
Subsidiary.  The Board of Directors of
the Company, subject to the foregoing, may designate any newly acquired or
newly formed Subsidiary (other than a Management Company) to be an Unrestricted
Subsidiary so long as (i) neither the Company nor any Restricted Subsidiary is
directly or indirectly liable for any Indebtedness of such Subsidiary, (ii) no
default with respect to any Indebtedness of such Subsidiary would permit (upon
notice, lapse of time or otherwise) any holder of any other Indebtedness of the
Company or any Restricted Subsidiary to declare a default on such other
Indebtedness or cause the payment thereof to be accelerated or payable prior to
its stated maturity, (iii) any Investment in such Subsidiary made as result of
designating such Subsidiary an Unrestricted Subsidiary will not violate the
provisions of Section 1019, (iv) neither the Company nor any Restricted
Subsidiary has a contract, agreement, arrangement, understanding or obligation
of any kind, whether written or oral, with such Subsidiary other than those
that might be obtained at the time from persons who are not Affiliates of the
Company and (v) neither the Company nor any Restricted Subsidiary has any
obligation (1) to subscribe for additional shares of Capital Stock or other equity
interest in such Subsidiary or (2) to maintain or preserve such Subsidiary’s
financial condition or to cause such Subsidiary to achieve certain levels of
operating results.  Any such designation
by the Board of Directors of the Company shall be evidenced to the Trustee by
filing a board resolution with the Trustee giving effect to such
designation.  The Board of Directors of
the Company may designate any Unrestricted Subsidiary as a Restricted
Subsidiary if immediately after giving effect to such designation, there would
be no Default or Event of Default under this Indenture and the Company could
incur $1.00 of additional Indebtedness (other than Permitted Indebtedness)
pursuant to Section 1010.

 

“U.S. Dollar”
means United States currency.

 

“U.S. Dollar
Equivalent” means with respect to any monetary amount in a currency other than
U.S. Dollars, at any time for the determination thereof, the amount of U.S.
Dollars obtained by converting such foreign currency involved in such
computation into U.S. Dollars at the spot rate for the purchase of U.S. Dollars
with the applicable foreign currency as quoted by the National Bank of Poland
at approximately noon (New York City time) on the date two Business Days prior
to such determination.

 

“U.S.
Government Obligations” has the meaning specified in Section 1304.

 

21

 

“Vice
President”, when used with respect to the an Issuer or the Trustee, means any
vice president, whether or not designated by a number or a word or words added
before or after the title “vice president”.

 

“Voting Stock”
means, with respect to any Person, any class or classes of Capital Stock
pursuant to which the holders thereof have the general voting power under
ordinary circumstances to elect at least a majority of the board of directors,
managers or trustees of such Person (irrespective of whether or not, at the
time, stock of any other class or classes shall have, or might have, voting
power by reason of the happening of any contingency).

 

“Wholly Owned”
means, with respect to any Restricted Subsidiary, such Restricted Subsidiary if
all the outstanding Capital Stock of such Restricted Subsidiary (other than any
directors’ qualifying shares) is owned directly or indirectly by the Company
and one or more Wholly Owned Restricted Subsidiaries.

 

SECTION
102.  OFFICER’S CERTIFICATES AND
OPINIONS.

 

Upon any
application or request by the Issuers to the Trustee to take any action under
any provision of this Indenture, the Issuers shall furnish to the Trustee an
Officer’s Certificate stating that all conditions precedent, if any, provided
for in this Indenture (including any covenant compliance with which constitutes
a condition precedent) relating to the proposed action have been complied with
and an Opinion of Counsel stating that in the opinion of such counsel all such
conditions precedent, if any, have been complied with, except that in the case
of any such application or request as to which the furnishing of such documents
is specifically required by any provision of this Indenture relating to such
particular application or request, no additional certificate or opinion need be
furnished.

 

Every
Officer’s Certificate or Opinion of Counsel with respect to compliance with a
condition or covenant provided for in this Indenture (other than pursuant to
Section 1008(a)) shall include:

 

(1)           a statement that
each individual or firm signing such Officer’s Certificate or Opinion of
Counsel has read such covenant or condition and the definitions herein relating
thereto;

 

(2)           a brief statement as
to the nature and scope of the examination or investigation upon which the
statements or opinions contained in such Officer’s Certificate or Opinion of
Counsel are based;

 

(3)           a statement that, in
the opinion of each such individual, he has made such examination or
investigation as is necessary to enable him to express an informed opinion as
to whether or not such covenant or condition has been complied with; and

 

(4)           a statement as to
whether, in the opinion of each such individual, such condition or covenant has
been complied with.

 

22

 

SECTION
103.  FORM OF DOCUMENTS DELIVERED TO
TRUSTEE.

 

In any case
where several matters are required to be certified by, or covered by an opinion
of, any specified Person, it is not necessary that all such matters be
certified by, or covered by the opinion of, only one such Person, or that they
be so certified or covered by only one document, but one such Person may
certify or give an opinion with respect to some matters and one or more other
such Persons as to other matters, and any such Person may certify or give an
opinion as to such matters in one or several documents.

 

Any
certificate or opinion of an officer of an Issuer may be based, insofar as it
relates to legal matters, upon a certificate or opinion of, or representations
by, counsel, unless such officer knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations with respect to
the matters upon which his certificate or opinion is based are erroneous.  Any such certificate or Opinion of Counsel
may be based, insofar as it relates to factual matters, upon a certificate or
opinion of, or representations by, an officer or officers of such Issuer stating
that the information with respect to such factual matters is in the possession
of such Issuer, unless such counsel knows, or in the exercise of reasonable
care should know, that the certificate or opinion or representations with
respect to such matters are erroneous.

 

Where any
Person is required to make, give or execute two or more applications, requests,
consents, certificates, statements, opinions or other instruments under this
Indenture, they may, but need not, be consolidated and form one instrument.

 

SECTION
104.  ACTS OF HOLDERS.

 

(a)           Any request, demand, authorization,
direction, notice, consent, waiver or other action provided by this Indenture
to be given or taken by Holders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Holders in person or
by agents duly appointed in writing; and, except as herein otherwise expressly
provided, such action shall become effective when such instrument or
instruments are delivered to the Trustee and, where it is hereby expressly
required, to the Issuers.  Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the “Act” of the Holders signing
such instrument or instruments.  Proof
of execution of any such instrument or of a writing appointing any such agent
shall be sufficient for any purpose of this Indenture and conclusive in favor
of the Trustee and the Issuers, if made in the manner provided in this Section.

 

(b)           The fact and date of the execution by
any Person of any such instrument or writing may be proved by the affidavit of
a witness of such execution or by a certificate of a notary public or other
officer authorized by law to take acknowledgments of deeds, certifying that the
individual signing such instrument or writing acknowledged to him the execution
thereof.  Where such execution is by a
signer acting in a capacity other than his individual capacity, such
certificate or affidavit shall also constitute sufficient proof of authority.  The fact and date of the execution of any
such instrument or writing, or the authority of the Person executing the same,
may also be proved in any other manner that the Trustee deems sufficient.

 

23

 

(c)           The principal amount at maturity and
serial numbers of Securities held by any Person, and the date of holding the
same, shall be proved by the Security Register.

 

(d)           If the Issuers shall solicit from the
Holders of Securities any request, demand, authorization, direction, notice,
consent, waiver or other Act, the Issuers may, at their option, by or pursuant
to a Board Resolution, fix in advance a record date for the determination of
Holders entitled to give such request, demand, authorization, direction,
notice, consent, waiver or other Act, but the Issuers shall have no obligation
to do so.  Notwithstanding TIA Section
316(c), such record date shall be the record date specified in or pursuant to
such Board Resolution, which shall be a date not earlier than the date 60 days
prior to the first solicitation of Holders generally in connection therewith
and not later than the date such solicitation is completed.  If such a record date is fixed, such
request, demand, authorization, direction, notice, consent, waiver or other Act
may be given before or after such record date, but only the Holders of record
at the close of business on such record date shall be deemed to be Holders for
the purposes of determining whether Holders of the requisite proportion of Outstanding
Securities have authorized or agreed or consented to such request, demand,
authorization, direction, notice, consent, waiver or other Act, and for that
purpose the Outstanding Securities shall be computed as of such record date; provided, that no such authorization,
agreement or consent by the Holders on such record date shall be deemed
effective unless it shall become effective pursuant to the provisions of this
Indenture not later than eleven months after the record date.

 

(e)           Any request, demand, authorization,
direction, notice, consent, waiver or other Act of the Holder of any Security
shall bind every future Holder of the same Security and the Holder of every
Security issued upon the registration of transfer thereof or in exchange
therefor or in lieu thereof in respect of anything done, omitted or suffered to
be done by the Trustee or the Issuers in reliance thereon, whether or not
notation of such action is made upon such Security.

 

SECTION 105.  NOTICES, ETC., TO TRUSTEE, ISSUERS.

 

Any request,
demand, authorization, direction, notice, consent, waiver or Act of Holders or
other document provided or permitted by this Indenture to be made upon, given
or furnished to, or filed with,

 

(1)           the Trustee by any
Holder or by the Issuers shall be sufficient for every purpose hereunder if
made, given, furnished or filed in writing to or with the Trustee at its
Corporate Trust Office, Attention: Corporate Trust Trustee Administration, or

 

(2)           the Issuers by the
Trustee or by any Holder shall be sufficient for every purpose hereunder
(unless otherwise herein expressly provided) if in writing and mailed,
first-class postage prepaid, to the Issuers addressed to them at the address of
their principal offices specified in the first paragraph of this Indenture, or at
any other address previously furnished in writing to the Trustee by the
Issuers.

 

SECTION
106.  NOTICE TO HOLDERS; WAIVER.

 

Where this
Indenture provides for notice of any event to Holders by the Issuers or the
Trustee, such notice shall be sufficiently given (unless otherwise herein
expressly provided)

 

24

 

if in writing and mailed,
first-class postage prepaid, to each Holder affected by such event, at his
address as it appears in the Security Register, not later than the latest date,
and not earlier than the earliest date, prescribed for the giving of such
notice.  In any case where notice to
Holders is given by mail, neither the failure to mail such notice, nor any
defect in any notice so mailed, to any particular Holder shall affect the
sufficiency of such notice with respect to other Holders.  Any notice mailed to a Holder in the manner
herein prescribed shall be conclusively deemed to have been received by such Holder,
whether or not such Holder actually receives such notice.  Where this Indenture provides for notice in
any manner, such notice may be waived in writing by the Person entitled to
receive such notice, either before or after the event, and such waiver shall be
the equivalent of such notice.  Waivers
of notice by Holders shall be filed with the Trustee, but such filing shall not
be a condition precedent to the validity of any action taken in reliance upon
such waiver.

 

In case by
reason of the suspension of or irregularities in regular mail service or by
reason of any other cause, it shall be impracticable to mail notice of any
event to Holders when such notice is required to be given pursuant to any
provision of this Indenture, then any manner of giving such notice as shall be
satisfactory to the Trustee shall be deemed to be a sufficient giving of such
notice for every purpose hereunder.

 

SECTION
107.  EFFECT OF HEADINGS AND TABLE OF
CONTENTS.

 

The Article
and Section headings herein and the Table of Contents are for convenience only
and shall not affect the construction hereof.

 

SECTION
108.  SUCCESSORS AND ASSIGNS.

 

All covenants
and agreements in this Indenture by the Issuers shall bind their successors and
assigns, whether so expressed or not.

 

SECTION
109.  SEPARABILITY CLAUSE.

 

In case any
provision in this Indenture or in the Securities shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.

 

SECTION
110.  BENEFITS OF INDENTURE.

 

Nothing in
this Indenture or in the Securities, express or implied, shall give to any
Person, other than the parties hereto, any Paying Agent, any Security Registrar
and their successors hereunder and the Holders any benefit or any legal or
equitable right, remedy or claim under this Indenture.

 

SECTION
111.  GOVERNING LAW

 

This Indenture
and the Securities shall be governed by and construed in accordance with the
law of the State of New York.  This
Indenture shall be subject to the provisions of the Trust Indenture Act that
are required to be part of this Indenture and shall, to the extent applicable,
be governed by such provisions, and, if and to the extent that any provision

 

25

 

of this Indenture limits,
qualifies or conflicts with any other provision included in this Indenture
which is required to be included in this Indenture by any of Sections 310 to
318, inclusive, of the Trust Indenture Act, such required provision shall
control.

 

SECTION
112.  LEGAL HOLIDAYS

 

In any case
where any Interest Payment Date, Redemption Date or Stated Maturity or Maturity
of any Security shall not be a Business Day, then (notwithstanding any other
provision of this Indenture or of the Securities) payment of principal or interest
need not be made on such date, but may be made on the next succeeding Business
Day with the same force and effect as if made on the Interest Payment Date or
Redemption Date, or at the Stated Maturity or Maturity; provided, that no interest shall accrue
for the period from and after such Interest Payment Date, Redemption Date,
Stated Maturity or Maturity, as the case may be.

 

ARTICLE TWO

 

SECURITY FORMS

 

SECTION
201.  FORMS GENERALLY.

 

The definitive
Securities shall be typed, printed, lithographed or engraved or produced by any
combination of these methods or may be produced in any other manner permitted
by the rules of any securities exchange on which the Securities may be listed,
all as determined by the officers executing such Securities, as evidenced by
their execution of such Securities.

 

The Securities
shall be known as the “Senior Notes due 2006.” The Securities and the Trustee’s
certificate of authentication shall be substantially in the form annexed hereto
as Exhibit A.  The Securities may
have such appropriate insertions, omissions, substitutions and other variations
as are required or permitted by this Indenture and may have such letters,
notations, numbers or other marks of identification and such legends or
endorsements placed thereon as the Issuers may deem appropriate (and as are not
prohibited by the terms of this Indenture) or as may be required or appropriate
to comply with any law or with any rules made pursuant thereto or with any
rules of any securities exchange on which such Securities may be listed, or to
conform to general usage, or as may, consistently herewith, be determined by
the officers executing such Securities, as evidenced by their execution of such
Securities.  Any portion of the text of
any Security may be set forth on the reverse thereof, with an appropriate
reference thereto on the face of the Security. 
The Issuers shall approve the form of the Securities and any notation,
legend or endorsement on the Securities. 
Each Security shall be dated the date of its authentication.

 

The terms and
provisions contained in the form of the Securities annexed hereto as Exhibit
A shall constitute, and are hereby expressly made, a part of this
Indenture.  Each of the Issuers and the
Trustee, by its execution and delivery of this Indenture, expressly agrees to
the terms and provisions of the Securities applicable to it and to be bound
thereby.

 

26

 

Securities
offered and sold in offshore transactions in reliance on Regulation S shall be
issued initially in the form of a single permanent global Security in
registered form, substantially in the form set forth in Exhibit A (the
“Global Security”), registered in the name of the nominee of the Depositary,
deposited with the Trustee, as custodian for the Depositary, duly executed by
each of the Issuers and authenticated by the Trustee as hereinafter
provided.  The aggregate principal
amount at maturity of the Global Security may from time to time be increased or
decreased by adjustments made on the records of the Trustee, as custodian for
the Depositary or its nominee, as hereinafter provided.

 

Securities
issued pursuant to Section 306 or Section 307 in exchange for interests in the
Global Security shall be in the form of permanent certificated Securities in
registered form in substantially the form set forth in Exhibit A (the
“Physical Securities”).

 

SECTION
202.  RESTRICTIVE LEGENDS.

 

Unless and
until a Security is sold under an effective Registration Statement each Global
Security and each Physical Security shall bear the following legend set forth
below (the “Private Placement Legend”) on the face thereof until at least the
41st day after the Closing Date and receipt by the Issuers and the Trustee of a
certificate substantially in the form of Exhibit B hereto.

 

THIS SECURITY
HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), AND ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE
UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS
SET FORTH IN THE FOLLOWING SENTENCE.  BY
ITS ACQUISITION HEREOF, THE HOLDER OF THIS SECURITY (1) REPRESENTS THAT IT IS
(A) A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT (“RULE 144A”)) OR (B) IT IS AN INSTITUTIONAL “ACCREDITED
INVESTOR” (AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER
THE SECURITIES ACT) (AN “INSTITUTIONAL ACCREDITED INVESTOR”) OR (C) IT IS NOT A
U.S. PERSON AND IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE
WITH REGULATION S UNDER THE SECURITIES ACT, (2) AGREES THAT IT WILL NOT WITHIN
THE TIME PERIOD REFERRED TO UNDER RULE 144(k) UNDER THE SECURITIES ACT AS IN
EFFECT ON THE DATE OF TRANSFER OF THIS NOTE, RESELL OR OTHERWISE  TRANSFER THIS NOTE EXCEPT (A) TO THE ISSUERS
OR ANY SUBSIDIARY THEREOF, (B) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE
WITH RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN
INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER FURNISHES TO THE
TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS NOTE (THE FORM OF WHICH LETTER
CAN BE OBTAINED FROM THE TRUSTEE), AND IF SUCH TRANSFER IS IN RESPECT OF AN
AGGREGATE ACCRETED VALUE OF NOTES AT THE TIME OF TRANSFER OF LESS THAN
$100,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE

 

27

 

ISSUERS THAT
SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (D) OUTSIDE THE UNITED
STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE
SECURITIES ACT, (E) PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE
144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (3) AGREES THAT IT WILL
DELIVER TO EACH PERSON TO WHOM THIS NOTE IS TRANSFERRED A NOTICE SUBSTANTIALLY
TO THE EFFECT OF THIS LEGEND.  IN
CONNECTION WITH ANY TRANSFER OF THIS NOTE WITHIN THE TIME PERIOD REFERRED TO
ABOVE, THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE
HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO
THE TRUSTEE.  IF THE PROPOSED TRANSFEREE
IS AN INSTITUTIONAL ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO SUCH TRANSFER,
FURNISH TO THE TRUSTEE AND THE ISSUERS SUCH CERTIFICATIONS, LEGAL OPINIONS OR
OTHER INFORMATION AS ANY OF THEM MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH
TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM , OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENT OF THE SECURITIES ACT.  AS USED HEREIN, THE TERMS “OFFSHORE
TRANSACTION”, “UNITED STATES” AND “U.S. PERSON” HAVE THE MEANINGS GIVEN TO THEM
BY REGULATION S UNDER THE SECURITIES ACT. 
THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO
REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING RESTRICTIONS.

 

Each Global
Security shall also bear the following legend on the face thereof:

 

UNLESS THIS
CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY
TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE COMPANY OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO.
OR SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC),
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS
AN INTEREST HEREIN.

 

TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO DTC OR NOMINEES OF DTC OR TO A SUCCESSOR OF DTC OR
SUCH SUCCESSOR’S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY
SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET
FORTH IN SECTIONS 306 AND 307 OF THE INDENTURE.

 

28

 

ARTICLE THREE

 

THE SECURITIES

 

SECTION 301.  TITLE AND TERMS.

 

The aggregate principal amount at maturity of the Securities which may
be authenticated and delivered under this Indenture is limited to
$[                    ],(3)
except for Securities authenticated and delivered upon registration of transfer
of, or in exchange for, or in lieu of, other Securities pursuant to Section
304, 305, 306, 801, 906, 1017 or 1108.

 

The Securities shall be known and designated as the “Senior Notes due
2006” of the Issuers.  The Stated
Maturity of the Senior Notes due 2006 shall be [September 30,
2006(4)].  The  Senior Notes due 2006 will bear cash interest at the rate of 9%
per annum on the principal amount at maturity of
$[                ]
from
[              ],
2003, or from the most recent Interest Payment Date to which interest has been
paid or duly provided for, payable on
[                ,
2003) and semi-annually thereafter on
[           and
          ] in each year and
at said Stated Maturity, until the principal thereof is paid or duly provided
for.  In the case of a default in
payment of the amount due at Maturity, the amount due on the Securities shall
bear interest at a rate of 11% per annum (to the extent that the payment of
such interest shall be legally enforceable), which shall accrue from the date
of such default to the date the payment of such amount has been made or duly
provided for.  Interest on any overdue
principal amount shall be payable on demand.

 

The principal of and interest on the Securities shall be payable at the
office or agency of the Issuers maintained for such purpose in The City of New
York, or at such other office or agency of the Issuers as may be maintained for
such purpose; provided, however,
that, at the option of the Issuers, interest may be paid by check mailed to
addresses of the Persons entitled thereto as such addresses shall appear on the
Security Register.

 

The Securities shall be redeemable as provided in Article Eleven.

 

SECTION 302.  DENOMINATIONS.

 

The Securities shall be issuable only in registered form without
coupons and only in denominations of $1,000 principal amount at maturity and
any integral multiple thereof; provided,
that at the Issue Date the Securities may be issued in denomination of $1.00
principal amount at maturity and any integral amounts thereof.  The Issuers may convert, at their option and
to the extent practical, the Securities to denominations of $1,000 aggregate
principal amount at maturity so long as such conversion is not adverse to the
Holders.

 

(3) Amount to be authorized by
the Bankruptcy Court and will be paid on amount of Senior Notes and general
unsecured claims.

 

(4) This date will be the last
day of the quarter in which the third anniversary of the Issue Date occurs.

 

29

 

SECTION 303.  EXECUTION, AUTHENTICATION, DELIVERY AND
DATING.

 

The Securities shall be executed on behalf of each Issuer by any of
such Issuer’s  chairman, president, any
managing director or any Vice President, the chief executive officer or the
chief financial officer under such Issuer’s corporate seal reproduced thereon
and attested by its secretary or any assistant secretary.  The signature of any of these officers on
the Securities may be manual or facsimile signatures of the present or any
future such authorized officer and may be imprinted or otherwise reproduced on
the Securities.

 

Securities bearing the manual or facsimile signatures of individuals
who were at any time the proper officers of an Issuer shall bind such Issuer,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities.

 

At any time and from time to time after the execution and delivery of
this Indenture, the Issuers may deliver Securities executed by the Issuers to
the Trustee for authentication, together with an Issuer Order for the
authentication and delivery of such Securities, and the Trustee in accordance
with such Issuer Order shall authenticate and deliver such Securities.

 

Each Security shall be dated the date of its authentication.

 

No Security shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
duly executed by the Trustee by manual signature of an authorized officer, and
such certificate upon any Security shall be conclusive evidence, and the only
evidence, that such Security has been duly authenticated and delivered
hereunder and is entitled to the benefits of this Indenture.

 

In case an Issuer, pursuant to Article Eight, shall be consolidated or
merged with or into any other Person or shall convey, transfer, lease or
otherwise dispose of its properties and assets substantially as an entirety to
any Person, and the successor Person resulting from such consolidation, or
surviving such merger, or into which such Issuer shall have been merged, or the
Person which shall have received a conveyance, transfer, lease or other
disposition as aforesaid, shall have executed an indenture supplemental hereto
with the Trustee pursuant to Article Eight, any of the Securities authenticated
or delivered prior to such consolidation, merger, conveyance, transfer, lease
or other disposition may, from time to time, at the request of the successor
Person, be exchanged for other Securities executed in the name of the successor
Person with such changes in phraseology and form as may be appropriate, but
otherwise in substance of like tenor as the Securities surrendered for such
exchange and of like principal amount; and the Trustee, upon Issuer Request of
the successor Person, shall authenticate and deliver Securities as specified in
such request for the purpose of such exchange. 
If Securities shall at any time be authenticated and delivered in any
new name of a successor Person pursuant to this Section in exchange or
substitution for or upon registration of transfer of any Securities, such
successor Person, at the option of the Holders but without expense to them,
shall provide for the exchange

 

30

 

of all Securities at the time
Outstanding for Securities authenticated and delivered in such new name.

 

SECTION 304.  TEMPORARY SECURITIES.

 

Pending the preparation of definitive Securities, the Issuers may
execute, and upon Issuer Order the Trustee shall authenticate and deliver,
temporary Securities which are printed, lithographed, typewritten, mimeographed
or otherwise produced, in any authorized denomination, substantially of the
tenor of the definitive Securities in lieu of which they are issued and with
such appropriate insertions, omissions, substitutions and other variations as
the officers executing such Securities may determine, as conclusively evidenced
by their execution of such Securities.

 

If temporary Securities are issued, the Issuers will cause definitive
Securities to be prepared without unreasonable delay.  After the preparation of definitive Securities, the temporary
Securities shall be exchangeable for definitive Securities upon surrender of
the temporary Securities at the office or agency of the Issuers designated for
such purpose pursuant to Section 1002, without charge to the Holder.  Upon surrender for cancellation of any one
or more temporary Securities, the Issuers shall execute and the Trustee shall
authenticate and deliver in exchange therefor a like principal amount of
definitive Securities of authorized denominations.  Until so exchanged, the temporary Securities shall in all
respects be entitled to the same benefits under this Indenture as definitive
Securities.

 

SECTION 305.  REGISTRATION, REGISTRATION OF TRANSFER
AND EXCHANGE.

 

The Issuers shall cause to be kept at the Corporate Trust Office a
register (the register maintained in such office and in any other office or
agency designated pursuant to Section 1002 being herein sometimes referred to
as the “Security Register”) in which, subject to such reasonable regulations as
it may prescribe, the Issuers shall provide for the registration of Securities
and of transfers of Securities.  The
Security Register shall be in written form or any other form capable of being
converted into written form within a reasonable time.  At all reasonable times, the Security Register shall be open to
inspection by the Trustee.  The Trustee
is hereby initially appointed as security registrar (the “Security Registrar”)
for the purpose of registering Securities and transfers of Securities as herein
provided.

 

Upon surrender for registration of transfer of any Security at the
office or agency of the Issuers designated pursuant to Section 1002, the
Issuers shall execute, and the Trustee shall authenticate and deliver, in the
name of the designated transferee or transferees, one or more new Securities of
any authorized denomination or denominations of a like aggregate principal
amount.

 

At the option of the Holder, Securities may be exchanged for other
Securities of any authorized denomination and of a like aggregate principal
amount at maturity, upon surrender of the Securities to be exchanged at such
office or agency.  Whenever any
Securities are so surrendered for exchange, the Issuers shall execute, and the
Trustee shall authenticate and deliver, the Securities which the Holder making
the exchange is entitled to receive.

 

31

 

All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Issuers, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Securities
surrendered upon such registration of transfer or exchange.

 

Every Security presented or surrendered for registration of transfer or
for exchange shall (if so required by the Issuers or the Security Registrar) be
duly endorsed, or be accompanied by a written instrument of transfer, in form
satisfactory to the Issuers and the Security Registrar, duly executed by the
Holder thereof or his attorney duly authorized in writing.

 

No service charge shall be made for any registration of transfer or
exchange or redemption of Securities, but the Issuers may require payment of a
sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any registration of transfer or exchange of
Securities, other than exchanges pursuant to Section 304, 801, 906, 1017 or
1108 not involving any transfer.

 

The Issuers shall not be required (i) to issue, register the transfer
of or exchange any Security during a period beginning at the opening of
business 15 days before the selection of Securities to be redeemed under
Section 1104 and ending at the close of business on the day of such mailing of
the relevant notice of redemption, or (ii) to register the transfer of or
exchange any Security so selected for redemption in whole or in part, except
the unredeemed portion of any Security being redeemed in part.

 

SECTION 306.  BOOK-ENTRY PROVISIONS FOR GLOBAL
SECURITIES.

 

(a)                                  The
Global Security initially shall (i) be registered in the name of the Depositary
for such Global Securities or the nominee of such Depositary, (ii) be delivered
to the Trustee as custodian for such Depositary and (iii) bear legends as set
forth in Section 202.  Members of, or
participants in, the Depositary (“Agent Members”) shall have no rights under
this Indenture with respect to any Global Security held on their behalf by the
Depositary, or the Trustee as its custodian, or under any Global Security, and
the Depositary may be treated by the Issuers, the Trustee and any agent of the
Issuers or the Trustee as the absolute owner of such Global Security for all
purposes whatsoever.  Notwithstanding
the foregoing, nothing herein shall prevent the Issuers, the Trustee or any
agent of the Issuers or the Trustee from giving effect to any written
certification, proxy or other authorization furnished by the Depositary or
impair, as between the Depositary and its Agent Members, the operation of
customary practices governing the exercise of the rights of a beneficial owner
of any Security.

 

(b)                                 Transfers
of a Global Security shall be limited to transfers of such Global Security in
whole, but not in part, to the Depositary, its successors or their respective
nominees and, in part, in the circumstances described in paragraph (d)
hereof.  Interests of beneficial owners
in a Global Security may be transferred in accordance with the applicable rules
and procedures of the Depositary and the provisions of Section 307.  Beneficial owners may obtain Physical
Securities (which shall bear the Private Placement Legend if required by Section
202) in exchange for their beneficial interests in a Global Security upon
request in accordance with the Depositary’s and the Security Registrar’s
procedures at any time.  In addition,
Physical

 

32

 

Securities shall be transferred
to all beneficial owners in exchange for their beneficial interests in the
Global Security if (i) the Depositary notifies the Issuers that it is unwilling
or unable to continue as Depositary for the Global Security or the Depositary
ceases to be a “Clearing Agency” registered under the Exchange Act and a
successor depositary is not appointed by the Issuers within 90 days or (ii) an
Event of Default has occurred and Holders of more than 25% in aggregate
principal amount of the Securities at the time outstanding represented by the
Global Securities advise the Trustee through the Depositary in writing that the
continuation of a book-entry system through the Depositary with respect to the
Global Securities is no longer required.

 

(c)                                  In
connection with any transfer pursuant to paragraph (b) of this Section of a
portion of the beneficial interest in the Global Security to beneficial owners,
upon receipt of written instructions from the Depositary, the Security
Registrar shall reflect on its books and records the date and a decrease in the
principal amount at maturity of the Global Security in an amount equal to the
principal amount at maturity of the beneficial interest in the Global Security
to be transferred, and the Issuers shall execute, and the Trustee shall
authenticate and deliver, one or more Physical Securities of like tenor and
amount.

 

(d)                                 In
connection with the transfer of the entire Global Security to beneficial owners
pursuant to paragraph (b) of this Section, the Global Security shall be deemed
to be surrendered to the Trustee for cancellation, and the Issuers shall
execute, and the Trustee shall authenticate and deliver, to each beneficial
owner identified by the Depositary in exchange for its beneficial interest in
the Global Security an equal aggregate principal amount at maturity of Physical
Securities of authorized denominations.

 

(e)                                  Any
Physical Security delivered in exchange for an interest in the Global Security
pursuant to paragraph (b) or (c) of this Section shall, except as otherwise
provided by  Sections 306 and 307, bear
the legend regarding transfer restrictions applicable to the Physical Security
set forth in Section 202.

 

(f)                                    The
registered holder of a Global Security may grant proxies and otherwise authorize
any person, including Agent Members and persons that may hold interests through
Agent Members, to take any action which a Holder is entitled to take under this
Indenture or the Securities.

 

(g)                                 In
connection with the execution, authentication and delivery of Physical
Securities in exchange for beneficial interests in a Global Security pursuant
to Section 306(b), the Security Registrar shall reflect on its books and
records a decrease in the principal amount at maturity of the relevant Global
Security equal to the principal amount at maturity of such Physical Securities
and the Issuers shall execute and the Trustee shall authenticate and deliver
one or more Physical Securities having an equal aggregate principal amount at
maturity.

 

SECTION 307.  SPECIAL TRANSFER PROVISIONS.

 

(a)                                  The
provisions of this Section 307 shall apply to all transfers involving any
Physical Security and any beneficial interest 
in any Global Security.

 

(b)                                 As
used in this Section 307 only, “delivery” of a certificate by a transferee or
transferor means the delivery to the Security Registrar by such transferee or
transferor of the

 

33

 

applicable certificate duly
completed; “holding” includes both possession of a Physical Security and ownership
of a beneficial interest in a Global Security, as the context requires;
“transferring” a Global Security means transferring that portion of the
principal amount of the transferor’s beneficial interest therein that the
transferor has notified the Security Registrar that it has agreed to transfer;
and “transferring” a Physical Security means transferring that portion of the
principal amount thereof that the transferor has notified the Security
Registrar that it has agreed to transfer. 
As used in this Indenture, Form of “Regulation S Certificate” means a
certificate substantially in the form referenced in Section 313, and
“Non-Registration Opinion and Supporting Evidence” means a written opinion of
counsel reasonably acceptable to the Issuers to the effect that, and such other
certification or information as the Issuers may reasonably require to confirm
that, the proposed transfer is being made pursuant to an exemption from, or in
a transaction not subject to, the registration requirements of the Securities
Act.

 

(c)                                  Prior
to the 41st day following the Closing Date, the Registrar shall register any
transfer of any Note to a Non-U.S. Person upon the receipt of a certificate
substantially in the form of Exhibit A hereto from the proposed
transferor.

 

(d)                                 A
Rule 144A Certificate, if not actually delivered, will be deemed delivered if
(A) (i) the transferor advises the Issuers and the Trustee in writing that the
relevant offer and sale were made in accordance with the provisions of Rule
144A (or, in the case of a transfer of a Physical Security, the transferor
checks the box provided on the Physical Security to that effect) and (ii) the
transferee advises the Issuers and the Trustee in writing that (x) it and, if
applicable, each account for which it is acting in connection with the relevant
transfer, is a qualified institutional buyer within the meaning of Rule 144A,
(y) it is aware that the transfer of Securities to it is being made in reliance
on the exemption from the provisions of Section 5 of the Securities Act
provided by Rule 144A, and (z) prior to the proposed date of transfer it has
been given the opportunity to obtain from the Issuers the information referred
to in Rule 144A(d)(4), and has either declined such opportunity or has received
such information (or, in the case of a transfer of a Physical Security, the
transferee signs the certification provided on the Physical Security to that
effect); or (B) the transferor holds the Global Security and is transferring to
a transferee that will take delivery in the form of the Global Security.

 

(e)                                  If
the proposed transferor holds:

 

(A)                                                      a
Physical Security which is surrendered to the Security Registrar, and the
proposed transferee or transferor, as applicable:

 

(i)             delivers (or is deemed to have delivered
pursuant to clause (d) above) a Rule 144A Certificate and the proposed
transferee requests delivery in the form of a Physical Security, then the
Security Registrar shall (x) register such transfer in the name of such
transferee and record the date thereof in its books and records, (y) cancel
such surrendered Physical Security and (z) deliver a new Physical Security to
such transferee duly registered in the name of such transferee in principal
amount equal to the principal amount being transferred of such surrendered
Physical Security; or

 

34

 

(ii)          delivers (or is deemed to have delivered
pursuant to clause (d) above) a Rule 144A 
Certificate and the proposed transferee is or is acting through an Agent
Member and requests that the proposed transferee receive a beneficial interest
in the Global Security, then the Security Registrar shall (x) cancel such
surrendered Physical Security, (y) record an increase in the principal amount
of the Global Security equal to the principal amount being transferred of such
surrendered Physical Security and (z) notify the Depositary in accordance with
the procedures of the Depositary that it approves of such transfer.  In any of the cases described in this
Section 307(e)(A), the Security Registrar shall deliver to the transferor a new
Physical Security in principal amount equal to the principal amount not being
transferred of such surrendered Physical Security, as applicable.

 

(B)                                                        the
Global Security, and the proposed transferee or transferor, as applicable:

 

(i)             delivers (or is deemed to have delivered
pursuant to clause (d) above) a Rule 144A Certificate and the proposed
transferee requests delivery in the form of a Physical Security, then the
Security Registrar shall (w) register such transfer in the name of such
transferee and record the date thereof in its books and records, (x) record a
decrease in the principal amount of the Global Security in an amount equal to
the beneficial interest therein being transferred, (y) deliver a new Physical
Security to such transferee duly registered in the name of such transferee in
principal amount equal to the amount of such decrease and (z) notify the
Depositary in accordance with the procedures of the Depositary that it approves
of such transfer; or

 

(ii)          delivers (or is deemed to have delivered
pursuant to clause (d) above) a Rule 144A Certificate and the proposed
transferee is or is acting through an Agent Member and requests that the
proposed transferee receive a beneficial interest in the Global Security, then
the transfer shall be effected in accordance with the procedures of the
Depositary therefor.

 

(f)                                    In
any case in which the Security Registrar is required to deliver a Physical
Security to a transferee or transferor, the Issuers shall execute, and the
Trustee shall authenticate and make available for delivery, such Physical
Security.

 

(g)                                 Any
transferee entitled to receive a Physical Security may  request that the principal amount thereof be
evidenced by one or more  Physical
Securities in any authorized denomination or denominations and  the Security Registrar shall comply with
such request if all other transfer restrictions are satisfied.

 

(h)                                 The
Security  Registrar shall effect and
record, upon receipt of a written request 
from the Issuers so to do, a transfer not otherwise permitted by  Section 307(e), such recording to be done in
accordance with the  otherwise
applicable provisions of Section 307(e), upon the furnishing  by the proposed transferor or transferee of
a Non-Registration Opinion and Supporting Evidence.

 

35

 

(i)                                     By
its acceptance of any Security bearing the 
Private Placement Legend, each Holder of such Security acknowledges
the  restrictions on transfer of such
Security set forth in this Indenture 
and in the Private Placement Legend and agrees that it will
transfer  such Security only as provided
in this Indenture.  The Security  Registrar shall not register a transfer of
any Security unless such  transfer
complies with the restrictions with respect thereto set forth  in this Indenture.  The Security Registrar shall not be required to  determine (but may rely upon a determination
made by the Issuers) the  sufficiency of
any such certifications, legal opinions or other  information.

 

(j)                                     Upon
the transfer, exchange or  replacement
of Securities not bearing the Private Placement Legend, the  Security Registrar shall deliver Securities
that do not bear the  Private Placement
Legend.  Upon the transfer, exchange or
replacement of  Securities bearing the
Private Placement Legend, the Security Registrar  shall deliver only Securities that bear the Private Placement
Legend  unless (i) the requested
transfer is at least two years after the 
original issue date of the Security (with respect to any  Physical Security), or (ii) there is
delivered to the Security Registrar  an
Opinion of Counsel in form reasonably satisfactory to the Issuers  and the Trustee to the effect that neither
such legend nor the related 
restrictions on transfer are required in order to maintain compliance
with the provisions of the Securities Act.

 

SECTION 308.  MUTILATED, DESTROYED, LOST AND STOLEN
SECURITIES.

 

If (i) any mutilated Security is surrendered to the Trustee, or (ii)
the Issuers and the Trustee receive evidence to their satisfaction of the
destruction, loss or theft of any Security, and there is delivered to the
Issuers and the Trustee such security or indemnity as may be required by them
to save each of them harmless, then, in the absence of notice to the Issuers or
the Trustee that such Security has been acquired by a bona fide purchaser, the Issuers shall
execute and upon Issuer Order the Trustee shall authenticate and deliver, in
exchange for any such mutilated Security or in lieu of any such destroyed, lost
or stolen Security, a new Security of like tenor and principal amount at
maturity, bearing a number not contemporaneously outstanding.

 

In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, the Issuers in their discretion
may, instead of issuing a new Security, pay such Security.

 

Upon the issuance of any new Security under this Section, the Issuers
may, as a condition to such issuance, require the payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in relation
thereto and any other expenses (including the fees and expenses of the Trustee)
connected therewith.

 

Every new Security issued pursuant to this Section in lieu of any
mutilated, destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Issuers, whether or not the mutilated,
destroyed, lost or stolen Security shall be at any time enforceable by anyone,
and shall be entitled to all benefits of this Indenture equally and
proportionately with any and all other Securities duly issued hereunder.

 

36

 

The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities.

 

SECTION 309.  PAYMENT OF INTEREST; INTEREST RIGHTS
PRESERVED.

 

Interest on any Security which is payable, and is punctually paid or
duly provided for, on any Interest Payment Date shall be paid to the Person in
whose name such Security (or one or more Predecessor Securities) is registered
at the close of business on the Regular Record Date for such interest at the
office or agency of the Issuers maintained for such purpose pursuant to Section
1002; provided, however, that
each installment of interest may at the Issuers’ option be paid by (i) mailing
a check for such interest, payable to or upon the written order of the Person
entitled thereto pursuant to Section 310, to the address of such Person as it
appears in the Security Register at the close of business on the Regular Record
Date for such interest payment or (ii) transfer to an account located in the
United States maintained by the payee.

 

Any interest on any Security which is payable, but is not punctually
paid or duly provided for, on any Interest Payment Date shall forthwith cease
to be payable to the Holder on the Regular Record Date by virtue of having been
such Holder, and such defaulted interest and (to the extent lawful) interest on
such defaulted interest at the rate borne by the Securities (such defaulted
interest and interest thereon herein collectively called “Defaulted Interest”)
may be paid by the Issuers, at their election in each case, as provided in
clause (1) or (2) below:

 

(1)                                  The
Issuers may elect to make payment of any Defaulted Interest to the Persons in
whose names the Securities (or their respective Predecessor Securities) are
registered at the close of business on a Special Record Date for the payment of
such Defaulted Interest, which shall be fixed in the following manner.  The Issuers shall notify the Trustee in
writing of the amount of Defaulted Interest proposed to be paid on each Security
and the date of the proposed payment, and at the same time the Issuers shall
deposit with the Trustee an amount of money equal to the aggregate amount
proposed to be paid in respect of such Defaulted Interest or shall make
arrangements satisfactory to the Trustee for such deposit prior to the date of
the proposed payment, such money when deposited to be held in trust for the
benefit of the Persons entitled to such Defaulted Interest as in this clause
provided.  Thereupon the Trustee shall
fix a Special Record Date for the payment of such Defaulted Interest which
shall be not more than 15 days and not less than 10 days prior to the date of
the proposed payment and not less than 10 days after the receipt by the Trustee
of the notice of the proposed payment. The Trustee shall promptly notify the
Issuers of such Special Record Date, and in the name and at the expense of the
Issuers, shall cause notice of the proposed payment of such Defaulted Interest
and the Special Record Date therefor to be given in the manner provided for in
Section 106, not less than 10 days prior to such Special Record Date.  Notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor having been so given,
such Defaulted Interest shall be paid to the Persons in whose names the
Securities (or their respective Predecessor Securities) are registered at the
close of business on such Special Record Date and shall no longer be payable
pursuant to the following clause (2).

 

37

 

(2)                                  The
Issuers may make payment of any Defaulted Interest in any other lawful manner
not inconsistent with the requirements of any securities exchange on which the
Securities may be listed, and upon such notice as may be required by such
exchange, if, after notice given by the Issuers to the Trustee of the proposed
payment pursuant to this clause, such manner of payment shall be deemed
practicable by the Trustee.

 

Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Security shall carry the rights to interest accrued
and unpaid, and to accrue, which were carried by such other Security.

 

SECTION 310.  PERSONS DEEMED OWNERS.

 

Prior to the due presentment of a Security for registration of
transfer, the Issuers, the Trustee and any agent of the Issuers or the Trustee
may treat the Person in whose name such Security is registered as the owner of
such Security for the purpose of receiving payment of principal of and (subject
to Sections 305 and 309) interest on such Security and for all other purposes
whatsoever, whether or not such Security be overdue, and none of the Issuers,
the Trustee or any agent of the Issuers or the Trustee shall be affected by
notice to the contrary.

 

SECTION 311.  CANCELLATION.

 

All Securities surrendered for payment, redemption, registration of
transfer or exchange shall, if surrendered to any Person other than the
Trustee, be delivered to the Trustee and shall be promptly cancelled by
it.  The Issuers may at any time deliver
to the Trustee for cancellation any Securities previously authenticated and
delivered hereunder which the Issuers may have acquired in any manner
whatsoever, and may deliver to the Trustee (or to any other Person for delivery
to the Trustee) for cancellation any Securities previously authenticated
hereunder which the Issuers have not issued and sold, and all Securities so
delivered shall be promptly cancelled by the Trustee.  If the Issuers shall so acquire any of the Securities, however,
such acquisition shall not operate as a redemption or satisfaction of the
indebtedness represented by such Securities unless and until the same are
surrendered to the Trustee for cancellation. 
No Securities shall be authenticated in lieu of or in exchange for any
Securities cancelled as provided in this Section, except as expressly permitted
by this Indenture.  All cancelled
Securities held by the Trustee shall be disposed of by the Trustee in accordance
with its customary procedures and certification of their disposal delivered to
the Issuers unless by Issuer Order the Issuers shall direct that cancelled
Securities be returned to it.

 

SECTION 312.  COMPUTATION OF INTEREST.

 

Interest on the Securities shall be computed on the basis of a 360-day
year of twelve 30-day months.

 

SECTION 313.  FORM OF REGULATION S CERTIFICATE.

 

Upon any transfer of the Securities pursuant to Regulation S, the
transferor of such Securities shall deliver to the Trustee a certificate in the
form of Exhibit C hereto.

 

38

 

ARTICLE FOUR

SATISFACTION AND DISCHARGE

 

SECTION 401.  SATISFACTION AND DISCHARGE OF INDENTURE.

 

This Indenture shall upon Issuer Request cease to be of further effect
(except as to surviving rights of registration of transfer or exchange of
Securities expressly provided for herein or pursuant hereto and the rights,
powers, trusts, duties and immunities of the Trustee) and the Trustee, at the
expense of the Issuers, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture when

 

(1)                                  either

 

(a)                                  all
Securities theretofore authenticated and delivered (other than (i) Securities
which have been destroyed, lost or stolen and which have been replaced or paid
as provided in Section 308) and (ii) Securities for whose payment money has
theretofore been deposited in trust with the Trustee or any Paying Agent or
segregated and held in trust by the Issuers and thereafter repaid to the
Issuers or discharged from such trust, as provided in Section 1003) have been
delivered to the Trustee for cancellation; or

 

(b)                                 all
such Securities not theretofore delivered to the Trustee for cancellation

 

(i)                                     have
become due and payable, or

 

(ii)                                  will
become due and payable at their Stated Maturity within one year, or

 

(iii)                               are
to be called for redemption within one year under arrangements satisfactory to
the Trustee for the giving of notice of redemption by the Trustee in the name,
and at the expense, of the Issuers,

 

and the Issuers, in the case of (i), (ii) or (iii) above, have
irrevocably deposited or caused to be deposited with the Trustee as trust funds
in trust for such purpose an amount sufficient to pay and discharge the entire
Indebtedness on such Securities not theretofore delivered to the Trustee for
cancellation, for principal of and interest on such Securities to the date of
such deposit (in the case of Securities which have become due and payable) or
to the Stated Maturity or Redemption Date, as the case may be;

 

(2)                                  the
Issuers have paid or caused to be paid all other sums payable hereunder by the
Issuers; and

 

(3)                                  the
Issuers have delivered to the Trustee an Officer’s Certificate and an Opinion
of Counsel, each stating that all conditions precedent herein provided for
relating to the satisfaction and discharge of this Indenture have been complied
with.

 

39

 

Notwithstanding the satisfaction and
discharge of this Indenture, the obligations of the Issuers to the Trustee
under Section 606 and, if money shall have been deposited with the Trustee
pursuant to subclause (b) of clause (1) of this Section, the obligations of the
Trustee under Section 402 and the last paragraph of Section 1003 shall survive.

 

SECTION 402.  APPLICATION OF TRUST MONEY.

 

Subject to the provisions of the last paragraph of Section 1003, all
money deposited with the Trustee pursuant to Section 401 shall be held in trust
and applied by it, in accordance with the provisions of the Securities and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Issuers acting as their own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal and interest for
whose payment such money has been deposited with the Trustee; but such money
need not be segregated from other funds except to the extent required by law.

 

ARTICLE FIVE

REMEDIES

 

SECTION 501.  EVENTS OF DEFAULT.

 

“Event of
Default”, wherever used herein, means any one of the following events (whatever
the reason for such Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):

 

(1)                                  default
in the payment of any interest on any Security when it becomes due and payable
and continuance of such default for a period of 30 days;

 

(2)                                  default
in the payment of the principal of any Security, at its Maturity;

 

(3)                                  default
in the performance, or breach, of the provisions described in Article Eight of
this Indenture, the failure to make or consummate a Change of Control Offer in
accordance with the provisions of Section 1016 or the failure to make or
consummate an Excess Proceeds Offer in accordance with the provisions of
Section 1017;

 

(4)                                  default
in the performance, or breach, of any covenant or agreement of the Issuers
contained in this Indenture (other than a default in the performance, or
breach, of a covenant or warranty which is specifically dealt with elsewhere in
this Indenture) and continuance of such default or breach for a period of 30
days after written notice shall have been given to the Issuers by the Trustee
or to the Issuers and the Trustee by the holders of at least 25% in aggregate
principal amount at maturity of the then Outstanding Securities, as the case
may be;

 

(5)                                  (i) one or more
defaults in the payment of principal on Indebtedness of the Company or any
Significant Subsidiary of the Company aggregating $5 million or more,

 

40

 

when the same becomes due  and
payable at the stated maturity thereof, and such default or  defaults shall have continued after any
applicable grace period and shall not have been cured or waived or (ii) Indebtedness
of the Company or any Significant Subsidiary of the Company aggregating $5
million or more shall  have been
accelerated or otherwise declared due and payable, or required to be prepaid or
repurchased (other than by regularly scheduled required prepayment) prior to
the stated maturity thereof;

 

(6)                                  any holder or holders (or any Person acting on
any such holder’s behalf) of any Indebtedness in excess of $5 million in the
aggregate of the Company or any Significant Subsidiary of the Company shall, subsequent
to the occurrence of a default with respect to such Indebtedness, notify the
Trustee of the intended sale or disposition of any assets of the Company or any
Restricted Subsidiary that have been pledged to or for the benefit of such
Person to secure such Indebtedness or shall commence proceedings, or take
action to retain in satisfaction of any such Indebtedness, or to collect on,
seize, dispose of or apply, any such assets of the Company or any Restricted
Subsidiary pursuant to the terms of any agreement or instrument evidencing any
such Indebtedness of the Company or any Restricted Subsidiary or in accordance
with applicable law;

 

(7)                                  one
or more final judgments, orders or decrees of any court or regulatory agency
shall be rendered against the Company or any Significant Subsidiary of the
Company or their respective properties for the payment of money, either
individually or in an aggregate amount, in excess of $5 million and either (i)
an enforcement proceeding shall have been commenced by any creditor upon such
judgment or order or (ii) there shall have been a period of 30 consecutive days
during which a stay of enforcement of such judgment or order, by reason of a
pending appeal or otherwise, was not in effect;

 

(8)                                  the
entry of a decree or order by a court having jurisdiction in the premises
adjudging an Issuer or any Significant Subsidiary of the Company a bankrupt or
insolvent, or approving as properly filed a petition seeking reorganization,
arrangement, adjustment or composition of or in respect of an Issuer or any
Significant Subsidiary of the Company under the Federal Bankruptcy Code or any
other applicable federal or state law, or appointing a receiver, liquidator,
assignee, trustee, sequestrator (or other similar official) of an Issuer or any
Significant Subsidiary of the Company or of any substantial part of its
property, or ordering the winding up or liquidation of its affairs, and the
continuance of any such decree or order unstayed and in effect for a period of
60 consecutive days; and

 

(9)                                  the
institution by an Issuer or any Significant Subsidiary of the Company of
proceedings to be adjudicated a bankrupt or insolvent, or the consent by it to
the institution of bankruptcy or insolvency proceedings against it, or the
filing by it of a petition or answer or consent seeking reorganization or
relief under the Federal Bankruptcy Code or any other applicable federal or
state law, or the consent by it to the filing of any such petition or to the
appointment of a receiver, liquidator, assignee, trustee, sequestrator (or
other similar official) of such Issuer or any Significant Subsidiary of the
Company or of any substantial part of its property, or the making by it of an
assignment for the benefit of creditors, or the admission by it in writing of
its inability to pay its debts generally as they become due.

 

41

 

SECTION 502.  ACCELERATION OF MATURITY; RESCISSION AND
ANNULMENT.

 

If an Event of Default (other than an Event of Default specified in
Section 501(8) or 501(9)) shall occur and be continuing, the Trustee or the
Holders of not less than 25% in aggregate principal amount of the Securities
then Outstanding, by written notice to the Issuers (and to the Trustee if such
notice is given by the Holders), may, and the Trustee upon the written request
of such Holders, shall declare the principal of and accrued interest on all of
the Outstanding Securities immediately due and payable, and upon any such
declaration all such amounts payable in respect of the Securities shall become
immediately due and payable.  If an
Event of Default specified in Section 501(8) or 501(9) occurs and is
continuing, then the principal of and accrued interest on all of the
Outstanding Securities shall ipso facto
become and be immediately due and payable without any declaration or other act
on the part of either the Trustee or any Holder.

 

At any time after a declaration of acceleration hereunder, but before a
judgment or decree for payment of the money due has been obtained by the
Trustee, the Holders of a majority in aggregate principal amount of the
Outstanding Securities, by written notice to the Issuers and the Trustee, may
rescind such declaration and its consequences if

 

(1)                                  the
Issuers have paid or deposited with the Trustee a sum sufficient to pay:

 

(A)                              all
overdue interest on all Outstanding Securities,

 

(B)                                all
unpaid principal of any Outstanding Securities that have become due otherwise
than by such declaration of acceleration, and interest thereon at the rate
borne by such Securities,

 

(C)                                to
the extent that payment of such interest is lawful, interest upon overdue
interest and overdue principal at the rate borne by such Securities, and

 

(D)                               all
sums paid or advanced by the Trustee hereunder and the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel;
and

 

(2)                                  all
Events of Default, other than the non-payment of amounts of principal of or
interest on Securities that have become due solely by such declaration of
acceleration, have been cured or waived as provided in Section 513.

 

No such rescission shall affect any subsequent default or impair any
right consequent thereon.

 

SECTION 503.  COLLECTION OF INDEBTEDNESS AND SUITS FOR
ENFORCEMENT BY TRUSTEE.

 

The Issuers covenant that if

 

42

 

(a)                                  default
is made in the payment of any installment of interest on any Security when such
interest becomes due and payable and such default continues for a period of 30
days, or

 

(b)                                 default
is made in the payment of the principal of any Security at the Maturity
thereof,

 

the Issuers will, upon demand of the Trustee, pay to the Trustee for
the benefit of the Holders of such Securities, the whole amount then due and
payable on such Securities for principal and interest, and interest on any
overdue principal and, to the extent that payment of such interest shall be
legally enforceable, upon any overdue installment of interest, at the rate
borne by the Securities, and, in addition thereto, such further amount as shall
be sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel.

 

If the Issuers fail to pay such amounts forthwith upon such demand, the
Trustee, in its own name as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, may
prosecute such proceeding to judgment or final decree and may enforce the same
against the Issuers or any other obligor upon the Securities and collect the
moneys adjudged or decreed to be payable in the manner provided by law out of
the property of the Issuers or any other obligor upon the Securities, wherever
situated.

 

If an Event of Default occurs and is continuing, the Trustee may in its
discretion proceed to protect and enforce its rights and the rights of the
Holders by such appropriate judicial proceedings as the Trustee shall deem most
effectual to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy.

 

SECTION 504.  TRUSTEE MAY FILE PROOFS OF CLAIM.

 

In case of the
pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial
proceeding relative to the Issuers or any other obligor upon the Securities or
the property of the Issuers or of such other obligor or their creditors, the
Trustee (irrespective of whether the principal of the Securities shall then be
due and payable as therein expressed or by declaration or otherwise and
irrespective of whether the Trustee shall have made any demand on the Issuers
for the payment of overdue principal, or interest) shall be entitled and
empowered, by intervention in such proceeding or otherwise,

 

(i)                                     to
file and prove a claim for the whole amount of principal and interest owing and
unpaid in respect of the Securities and to file such other papers or documents
and take such other actions, including participating as a member of any
official creditors committee appointed in the matter as it may deem necessary
or advisable in order to have the claims of the Trustee (including any claim
for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel) and of the Holders allowed in such judicial
proceeding, and

 

43

 

(ii)                                  to
collect and receive any moneys or other property payable or deliverable on any
such claims and to distribute the same;

 

and any custodian, receiver, assignee, trustee, liquidator,
sequestrator or similar official in any such judicial proceeding is hereby
authorized by each Holder to make such payments to the Trustee and, in the
event that the Trustee shall consent to the making of such payments directly to
the Holders, to pay the Trustee any amount due it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 606.

 

Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof, or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.

 

SECTION 505.  TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION
OF SECURITIES.

 

All rights of action and claims under this Indenture or the Securities
may be prosecuted and enforced by the Trustee without the possession of any of
the Securities or the production thereof in any proceeding relating thereto, and
any such proceeding instituted by the Trustee shall be brought in its own name
and as trustee of an express trust, and any recovery of judgment shall, after
provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Holders of the Securities in respect of which such
judgment has been recovered.

 

SECTION 506.  APPLICATION OF MONEY COLLECTED.

 

Any money collected by the Trustee pursuant to this Article shall be
applied in the following order, at the date or dates fixed by the Trustee and,
in case of the distribution of such money on account of principal or interest,
upon presentation of the Securities and the notation thereon of the payment if
only partially paid and upon surrender thereof if fully paid:

 

FIRST:  To the payment of all
amounts due the Trustee under Section 606;

 

SECOND:  To the payment of the
amounts then due and unpaid for principal of 
and interest on the Securities in respect of which or for the benefit of
which such money has been collected, ratably, without preference or priority of
any kind, according to the amounts due and payable on such Securities for
principal and interest, respectively; and

 

THIRD:  The balance, if any, to
the Person or Persons entitled thereto.

 

SECTION 507.  LIMITATION ON SUITS.

 

No Holder of any Securities shall have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless

 

44

 

(1)                                  such
Holder has previously given written notice to the Trustee of a continuing Event
of Default;

 

(2)                                  the
Holders of not less than 25% in principal amount of the Outstanding Securities
shall have made written request to the Trustee to institute proceedings in
respect of such Event of Default in its own name as Trustee hereunder;

 

(3)                                  such
Holder or Holders have offered to the Trustee reasonable indemnity against the
costs, expenses and liabilities to be incurred in compliance with such request;

 

(4)                                  the
Trustee for 60 days after its receipt of such notice, request and offer of
indemnity has failed to institute any such proceeding; and

 

(5)                                  no
direction inconsistent with such written request has been given to the Trustee
during such 60-day period by the Holders of a majority or more in principal
amount of the Outstanding Securities;

 

it being understood and intended that no one or more Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other
Holders, or to obtain or to seek to obtain priority or preference over any
other Holders or to enforce any right under this Indenture, except in the
manner herein provided and for the equal and ratable benefit of all the
Holders.

 

SECTION 508.  UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE
PRINCIPAL AND INTEREST.

 

Notwithstanding any other provision in this Indenture, the Holder of
any Security shall have the right, which is absolute and unconditional, to
receive payment, as provided herein and in such Security of the principal of
and (subject to Section 309) interest on such Security on the respective Stated
Maturities expressed in such Security (or, in the case of redemption, on the
Redemption Date) and to institute suit for the enforcement of any such payment,
and such rights shall not be impaired without the consent of such Holder.

 

SECTION 509.  RESTORATION OF RIGHTS AND REMEDIES.

 

If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case, subject to any
determination in such proceeding, the Issuers, the Trustee and the Holders
shall be restored severally and respectively to their former positions
hereunder and thereafter all rights and remedies of the Trustee and the Holders
shall continue as though no such proceeding had been instituted.

 

SECTION 510.  RIGHTS AND REMEDIES CUMULATIVE.

 

Except as otherwise provided with respect to the replacement or payment
of mutilated, destroyed, lost or stolen Securities in the last paragraph of
Section 308, no right or remedy herein conferred upon or reserved to the
Trustee or to the Holders is intended to be

 

45

 

exclusive of any other right or
remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise.  The assertion or employment of any right or
remedy hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.

 

SECTION 511.  DELAY OR OMISSION NOT WAIVER.

 

No delay or omission of the Trustee or of any Holder of any Security to
exercise any right or remedy accruing upon any Event of Default shall impair
any such right or remedy or constitute a waiver of any such Event of Default or
an acquiescence therein.  Every right
and remedy given by this Article or by law to the Trustee or to the Holders may
be exercised from time to time, and as often as may be deemed expedient, by the
Trustee or by the Holders, as the case may be.

 

SECTION 512.  CONTROL BY HOLDERS.

 

The Holders of not less than a majority in principal amount at maturity
of the Outstanding Securities shall have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the Trustee,
or exercising any trust or power conferred on the Trustee, provided that

 

(1)                                  such
direction shall not be in conflict with any rule of law or with this Indenture,

 

(2)                                  the
Trustee may take any other action deemed proper by the Trustee which is not
inconsistent with such direction, and

 

(3)                                  the
Trustee need not take any action which might involve it in personal liability
or be unjustly prejudicial to the Holders not consenting.

 

SECTION 513.  WAIVER OF PAST DEFAULTS.

 

The Holders of not less than a majority in aggregate principal amount
at maturity of the Outstanding Securities may, on behalf of the Holders of all
the Securities, waive any past defaults hereunder, except a default

 

(1)                                  in
the payment of the principal of or interest on any such Security, or

 

(2)                                  in
respect of a covenant or provision hereof which under Article Nine cannot be
modified or amended without the consent of the Holder of each Outstanding
Security.

 

Upon any such waiver, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or Event of Default or impair any right consequent thereon.

 

46

 

SECTION 514.  WAIVER OF STAY OR EXTENSION LAWS.

 

The Issuers
covenant (to the extent that it may lawfully do so) that it will not at any
time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay or extension law wherever enacted, now or at
any time hereafter in force, which may affect the covenants or the performance
of this Indenture; and the Issuers (to the extent that it may lawfully do so)
hereby expressly waive all benefit or advantage of any such law and covenants
that it will not hinder, delay or impede the execution of any power herein
granted to the Trustee, but will suffer and permit the execution of every such
power as though no such law had been enacted.

 

ARTICLE SIX

THE TRUSTEE

 

SECTION 601.  NOTICE OF DEFAULTS.

 

Within 90 days
after the occurrence of any Default or Event of Default hereunder, the Trustee
shall transmit in the manner and to the extent provided in TIA Section 313(c),
notice of such Default hereunder known to the Trustee, unless such Default
shall have been cured or waived; provided,
however, that, except in the case of a Default in the payment of the
principal of or interest on any Security, the Trustee shall be protected in
withholding such notice if a committee of its trust officers in good faith
determines that the withholding of such notice is in the interest of the
Holders; and provided further,
that in the case of any Default of the character specified in Section 501(4) no
such notice to Holders shall be given until at least 30 days after the
occurrence thereof.

 

SECTION 602.  CERTAIN RIGHTS OF TRUSTEE.

 

Subject to the provisions of TIA Sections 315(a) through 315(d):

 

(1)                                  the
Trustee may conclusively rely and shall be fully protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document believed by it
to be genuine and to have been signed or presented by the proper party or
parties;

 

(2)                                  any
request or direction of the Issuers mentioned herein shall be sufficiently
evidenced by an Issuer Request or Issuer Order (unless other evidence in
respect thereof is herein specifically prescribed) and any resolution of the
Board of Directors may be sufficiently evidenced by a Board Resolution;

 

(3)                                  whenever
in the administration of this Indenture the Trustee shall deem it desirable
that a matter be proved or established prior to taking, suffering or omitting
any action hereunder, the Trustee (unless other evidence be herein specifically
prescribed) shall be entitled to receive and may require and, in the absence of
bad faith on its part, conclusively rely upon an Officer’s Certificate;

 

47

 

(4)                                  the
Trustee may consult with counsel and the written advice of such counsel or any
Opinion of Counsel shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted by it hereunder in good faith
and in reliance thereon;

 

(5)                                  the
Trustee shall be under no obligation to exercise any of the rights or powers
vested in it by this Indenture at the request or direction of any of the
Holders pursuant to this Indenture, unless such Holders shall have offered to
the Trustee security or indemnity reasonably satisfactory to it against the
costs, expenses and liabilities which might be incurred by it in compliance
with such request or direction;

 

(6)                                  the
Trustee shall not be bound to make any investigation into the facts or matters
stated in any resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note, other
evidence of indebtedness or other paper or document, but the Trustee, in its
discretion, may make such further inquiry or investigation into such facts or
matters as it may see fit, and, if the Trustee shall determine to make such
further inquiry or investigation, it shall be entitled to examine the books,
records and premises of the Issuers, personally or by agent or attorney;

 

(7)                                  the
Trustee may execute any of the trusts or powers hereunder or perform any duties
hereunder either directly or by or through agents or attorneys and the Trustee
shall not be responsible for any misconduct or negligence on the part of any
agent or attorney appointed with due care by it hereunder;

 

(8)                                  the
Trustee shall not be liable for any action taken, suffered or omitted by it in
good faith and believed by it to be authorized or within the discretion or
rights or powers conferred upon it by this Indenture; and

 

(9)                                  the
Trustee shall not be deemed to have knowledge of any default, breach or Event
of Default or other matter upon the occurrence of which it may be required to
take action hereunder unless one of its Responsible Officers has actual
knowledge thereof.

 

The Trustee shall not be required to expend or risk its own funds or
otherwise incur any financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers if it shall have
reasonable grounds for believing that repayment of such funds or indemnity
satisfactory to it against such risk or liability is not reasonably assured to
it.

 

SECTION 603.  TRUSTEE NOT RESPONSIBLE FOR RECITALS OR
ISSUANCE OF SECURITIES.

 

The recitals contained herein and in the Securities, except for the
Trustee’s certificates of authentication, shall be taken as the statements of
the Issuers, and the Trustee assumes no responsibility for their
correctness.  The Trustee makes no
representations as to the validity or sufficiency of this Indenture or of the
Securities, except that the Trustee represents that it is duly authorized to
execute and deliver this Indenture, authenticate the Securities and

 

48

 

perform its obligations
hereunder and that the statements made by it in any Statement of Eligibility on
Form T-1 supplied to the Issuers will be true and accurate, subject to the
qualifications set forth therein.  The
Trustee shall not be accountable for the use or application by the Issuers of
Securities or the proceeds thereof.

 

SECTION 604.  MAY HOLD SECURITIES.

 

The Trustee, any Paying Agent, any Security Registrar or any other
agent of the Issuers or of the Trustee, in its individual or any other
capacity, may become the owner or pledgee of Securities and, subject to TIA
Sections 310(b) and 311, may otherwise deal with the Issuers with the same
rights it would have if it were not Trustee, Paying Agent, Security Registrar
or such other agent.

 

SECTION 605.  MONEY HELD IN TRUST.

 

Money held by the Trustee in trust hereunder need not be segregated
from other funds except to the extent required by law.  The Trustee shall be under no liability for
interest on any money received by it hereunder except as otherwise agreed in
writing with the Issuers.

 

SECTION 606.  COMPENSATION AND REIMBURSEMENT.

 

The Issuers agree:

 

(1)                                  to
pay to the Trustee from time to
time reasonable compensation for all services rendered by it hereunder (which
compensation shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust);

 

(2)                                  except
as otherwise expressly provided herein, to reimburse the Trustee upon its
request for all reasonable expenses, disbursements and advances incurred or
made by the Trustee in accordance with any provision of this Indenture
(including the reasonable compensation and the expenses and disbursements of
its agents and counsel), except any such expense, disbursement or advance as
may be attributable to its negligence or bad faith; and

 

(3)                                  to
indemnify the Trustee for, and to hold it harmless against, any loss, liability
or expense incurred without negligence or bad faith on its part, arising out of
or in connection with the acceptance or administration of this trust, including
the costs and expenses of investigating or defending itself against any claim
or liability in connection with the exercise or performance of any of its
powers or duties hereunder.

 

The obligations of the Issuers under this Section to compensate the
Trustee, to pay or reimburse the Trustee for expenses, disbursements and
advances and to indemnify and hold harmless the Trustee shall constitute
additional indebtedness hereunder and shall survive the satisfaction and
discharge of this Indenture.  As
security for the performance of such obligations of the Issuers, the Trustee
shall have a claim prior to the Securities upon all property and funds held or
collected by the Trustee as such, except funds held in trust for the payment of
principal of or interest on particular Securities.

 

49

 

When the Trustee incurs expenses or renders services in connection with
an Event of Default specified in Section 501(8) or (9), the expenses (including
the reasonable charges and expenses of its counsel) of and the compensation for
such services are intended to constitute expenses of administration under any
applicable Federal or State bankruptcy, insolvency or other similar foreign or
domestic law; provided, however,
that to the extent unpaid as such expenses, they shall be paid as provided in Section
506.

 

The provisions of this Section shall survive the termination of this
Indenture.

 

SECTION 607.  CORPORATE TRUSTEE REQUIRED; ELIGIBILITY.

 

There shall be at all times a Trustee hereunder which shall be eligible
to act as Trustee under TIA Section 310(a)(i) and shall have a combined capital
and surplus of at least $50,000,000.  If
such corporation publishes reports of condition at least annually, pursuant to
law or to the requirements of Federal, State, territorial or District of
Columbia supervising or examining authority, then for the purposes of this
Section, the combined capital and surplus of such corporation shall be deemed
to be its combined capital and surplus as set forth in its most recent report
of condition so published.  If at any
time the Trustee shall cease to be eligible in accordance with the provisions
of this Section, it shall resign immediately in the manner and with the effect
hereinafter specified in this Article.

 

SECTION 608.  RESIGNATION AND REMOVAL; APPOINTMENT OF
SUCCESSOR.

 

(a)                                  No
resignation or removal of the Trustee and no appointment of a successor Trustee
pursuant to this Article shall become effective until the acceptance of
appointment by the successor Trustee in accordance with the applicable
requirements of Section 609.

 

(b)                                 The
Trustee may resign at any time by giving written notice thereof to the
Issuers.  If the instrument of
acceptance by a successor Trustee required by Section 609 shall not have been
delivered to the Trustee within 30 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee.

 

(c)                                  The
Trustee may be removed at any time by Act of the Holders of not less than a
majority in principal amount of the Outstanding Securities, delivered to the
Trustee and to the Issuers.

 

(d)                                 If
at any time:

 

(1)                                  the
Trustee shall fail to comply with the provisions of TIA Section 310(b) after
written request therefor by an Issuer or by any Holder who has been a bona fide
Holder of a Security for at least six months, or

 

(2)                                  the
Trustee shall cease to be eligible under Section 607 and shall fail to resign
after written request therefor by the Issuers or by any Holder who has been a
bona fide Holder of a Security for at least six months, or

 

50

 

(3)                                  the
Trustee shall become incapable of acting or shall be adjudged a bankrupt or
insolvent or a receiver of the Trustee or of its property shall be appointed or
any public officer shall take charge or control of the Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation,

 

then, in any such case, (i) an Issuer, by a Board Resolution, may
remove the Trustee, or (ii) subject to TIA Section 315(e), any Holder who has
been a bona fide Holder of a Security for at least six months may, on behalf of
himself and all others similarly situated, petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
Trustee.

 

(e)                                  If
the Trustee shall resign, be removed or become incapable of acting, or if a
vacancy shall occur in the office of Trustee for any cause, an Issuer, by a
Board Resolution, shall promptly appoint a successor Trustee. If, within one year
after such resignation, removal or incapability, or the occurrence of such
vacancy, a successor Trustee shall be appointed by Act of the Holders of a
majority in principal amount of the Outstanding Securities delivered to the
Issuers and the retiring Trustee, the successor Trustee so appointed shall,
forthwith upon its acceptance of such appointment, become the successor Trustee
and supersede the successor Trustee appointed by the Issuers.  If no successor Trustee shall have been so
appointed by the Issuers or the Holders and accepted appointment in the manner
hereinafter provided, any Holder who has been a bona fide Holder of a Security
for at least six months may, on behalf of himself and all others similarly
situated, petition any court of competent jurisdiction for the appointment of a
successor Trustee.

 

(f)                                    The
Issuers shall give notice of each resignation and each removal of the Trustee
and each appointment of a successor Trustee to the Holders of Securities in the
manner provided for in Section 106. 
Each notice shall include the name of the successor Trustee and the
address of its Corporate Trust Office.

 

SECTION 609.  ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.

 

Every successor Trustee appointed hereunder shall execute, acknowledge
and deliver to the Issuers and to the retiring Trustee an instrument accepting
such appointment, and thereupon the resignation or removal of the retiring
Trustee shall become effective and such successor Trustee, without any further
act, deed or conveyance, shall become vested with all the rights, powers,
trusts and duties of the retiring Trustee; but, on request of the Issuers or
the successor Trustee, such retiring Trustee shall, upon payment of its
charges, execute and deliver an instrument transferring to such successor
Trustee all the rights, powers and trusts of the retiring Trustee and shall
duly assign, transfer and deliver to such successor Trustee all property and
money held by such retiring Trustee hereunder. 
Upon request of any such successor Trustee, the Issuers shall execute
any and all instruments for more fully and certainly vesting in and confirming
to such successor Trustee all such rights, powers and trusts.

 

No successor Trustee shall accept its appointment unless at the time of
such acceptance such successor Trustee shall be qualified and eligible under
this Article.

 

51

 

SECTION 610.  MERGER, CONVERSION, CONSOLIDATION OR
SUCCESSION TO BUSINESS.

 

Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Trustee shall be a party, or
any corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto.  In
case any Securities shall have been authenticated, but not delivered, by the
Trustee then in office, any successor by merger, conversion or consolidation to
such authenticating Trustee may adopt such authentication and deliver the
Securities so authenticated with the same effect as if such successor Trustee
had itself authenticated such Securities. 
In case at that time any of the Securities shall not have been
authenticated, any successor Trustee may authenticate such Securities either in
the name of any predecessor hereunder or in the name of the successor
Trustee.  In all such cases such
certificates shall have the full force and effect which this Indenture provides
for the certificate of authentication of the Trustee shall have; provided, however, that the right to adopt
the certificate of authentication of any predecessor Trustee or to authenticate
Securities in the name of any predecessor Trustee shall apply only to its
successor or successors by merger, conversion or consolidation.

 

ARTICLE SEVEN

HOLDERS LISTS AND REPORTS BY TRUSTEE AND COMPANY

 

SECTION 701.  DISCLOSURE OF NAMES AND ADDRESSES OF
HOLDERS.

 

Every Holder of Securities, by receiving and holding the same, agrees
with the Issuer and the Trustee that none of the Issuers or the Trustee or any
agent of any of them shall be held accountable by reason of the disclosure of
any information as to the names and addresses of the Holders in accordance with
Section 312 of the Trust Indenture Act, regardless of the source from which
such information was derived, and that the Trustee shall not be held
accountable by reason of mailing any material pursuant to a request made under
Section 312(b) of the Trust Indenture Act.

 

SECTION 702.  REPORTS BY TRUSTEE.

 

Within 60 days after May 15 of each year commencing with the first
May 15 after the first issuance of Securities, the Trustee shall transmit
to the Holders, in the manner and to the extent provided in Section 313(c) of
the Trust Indenture Act, a brief report dated as of such May 15 if
required by Section 313(a) of the Trust Indenture Act.

 

52

 

ARTICLE EIGHT

CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE

 

SECTION 801.  ISSUERS MAY CONSOLIDATE, ETC., ONLY
ON CERTAIN TERMS.

 

(a)  UPC Polska Finance shall
not, in a single transaction or through a series of related transactions,
consolidate with or merge with or into any other Person or sell, assign,
convey, transfer, lease or otherwise dispose of all or substantially all of its
properties and assets substantially as an entirety to any other Person or
Persons; provided that UPC Polska
Finance may merge with and into the Company and the Company may merge with and
into UPC Polska Finance.

 

(b)  The Company shall not, in a
single transaction or through a series of related transactions, consolidate
with or merge with or into any other Person or sell, assign, convey, transfer,
lease or otherwise dispose of all or substantially all of its properties and
assets substantially as an entirety to any other Person or Persons, and the
Company shall not permit any Restricted Subsidiary to enter into any such
transaction or series of transactions if such transaction or series of
transactions, in the aggregate, would result in the sale, assignment,
conveyance, transfer, lease or other disposition of all or substantially all of
the properties and assets of the Company and its Restricted Subsidiaries on a
consolidated basis to any Person or Persons, unless:

 

(1)                                  either
(i) the Company shall be the surviving corporation or (ii) the Person (if other
than the Company) formed by such consolidation or into which the Company or the
Company and its Restricted Subsidiaries is merged or the Person which acquires
by sale, conveyance, transfer, lease or other disposition, all or substantially
all of the properties and assets of the Company or the Company and its
Restricted Subsidiaries, as the case may be, (the “Surviving Entity”) (x) shall
be a corporation or limited liability company organized and validly existing
under the laws of the United States of America, any state thereof or the
District of Columbia or a corporation, limited liability company or similar
entity organized under the laws of a member state of the European Union as of
the Issue Date, and (y) shall expressly assume, by an indenture supplemental to
this Indenture executed and delivered to the Trustee, in form satisfactory to
the Trustee, the Company’s obligations for the due and punctual payment of the
principal of and interest on all the Securities and the performance and observance
of every covenant of this Indenture on the part of the Company to be performed
or observed; provided, that if
the Surviving Entity is a limited liability company organized under the laws of
the United States of America, any state thereof or the laws of the District of
Columbia pursuant to (x) above, UPC Polska Finance or another corporation
organized under the laws of the United States of America, any state thereof or
the District of Columbia shall at all times be a joint and several co-issuer of
the Notes;

 

(2)                                  immediately
before and after giving effect to such transaction or series of transactions on
a pro forma basis (and treating
any obligation of the Company or any Restricted Subsidiary in connection with
or as a result of such transaction as having been

 

53

 

incurred at
the time of such transaction), no Default or Event of Default shall have
occurred and be continuing;

 

(3)                                  immediately
after giving effect to such transaction or series of transactions on a pro forma basis (on the assumption that
the transaction or series of transactions occurred on the first day of the
latest fiscal quarter for which consolidated financial statements of the
Company are available prior to the consummation of such transaction or series
of transactions with the appropriate adjustments with respect to the
transaction or series of transactions being included in such pro forma calculation), the Company or the
Surviving Entity would be able to incur at least $1.00 of additional
Indebtedness (other than Permitted Indebtedness) under the proviso of Section
1010(a);

 

(4)                                  if
any of the property or assets of the Company or any of its Restricted
Subsidiaries would thereupon become subject to any Lien, the provisions of
Section 1014 are complied with; and

 

(5)                                  the
Company or the Surviving Entity shall have delivered to the Trustee an
Officer’s Certificate and an opinion of counsel, each stating that such
consolidation, merger, sale, assignment, conveyance, transfer, lease or other
disposition and such supplemental indenture comply with the terms of this
Indenture.

 

SECTION 802.  SUCCESSOR SUBSTITUTED.

 

Upon any consolidation or merger, or any sale, assignment, conveyance,
transfer, lease or disposition of all or substantially all of the properties
and assets of the Company in accordance with Section 801(b) in which the
Company is not the continuing obligor under this Indenture, the Surviving
Entity shall succeed to, and be substituted for, and may exercise every right
and power of, the Company under this Indenture with the same effect as if such
successor had been named as the Company herein.  When a successor assumes all the obligations of its predecessor
under this Indenture and the Securities, the predecessor shall be released from
those obligations; provided, that
in the case of a transfer by lease, the predecessor shall not be released from
the payment of principal and interest on the Securities.

 

SECTION 803.  SECURITIES TO BE SECURED IN CERTAIN
EVENTS

 

If, upon any such consolidation of an Issuer with or merger of an
Issuer into any other corporation, or upon any conveyance, lease or transfer of
the property of an Issuer substantially as an entirety to any other Person, any
property or assets of such Issuer would thereupon become subject to any Lien,
then unless such Lien could be created pursuant to Section 1014 without equally
and ratably securing the Securities, such Issuer, prior to or simultaneously
with such consolidation, merger, conveyance, lease or transfer, will as to such
property or assets, secure the Securities Outstanding (together with, if such
Issuer shall so determine any other Indebtedness of the Issuer now existing or
hereinafter created which is not subordinate in right of payment to the
Securities) equally and ratably with (or prior to) the Indebtedness which upon
such consolidation, merger, conveyance, lease or transfer is to become secured
as to such property or assets by such Lien, or will cause such Securities to be
so secured; provided, that for
the purpose of providing such equal and ratable security, the principal amount

 

54

 

of the Securities shall mean
that amount which would at the time of making such effective provision be due
and payable pursuant to Section 502 upon a declaration of acceleration of the
Maturity thereof, and the extent of such equal and ratable security shall be
adjusted, to the extent permitted by law, as and when said amount changes over
time as provided in Section 502.

 

SECTION 804.  ADDITIONAL AMOUNTS.

 

(a)  All payments of principal
and interest (including any discount or premium) in respect of the Securities
by the Issuers  to a holder that is a
United States Alien (as defined below) shall be made without withholding or
deduction for or on account of any present or future tax, duty, levy, impost,
assessment or other governmental charge (including penalties, interest and
other liabilities related thereto) (hereinafter, “Taxes”) imposed or levied by or on behalf of the government of
the United States (as defined below) or any political subdivision or taxing authority
or agency thereof or therein (any of the aforementioned being a “Taxing Jurisdiction”), unless the
Issuer is required to withhold or deduct any such Taxes by law or by the interpretation
or administration thereof.

 

(b)                                 If
the Issuer is so required to withhold or deduct any amount for or on account of
Taxes from any payment made under or with respect to the Securities, the Issuer
shall pay such additional amounts (“Additional Amounts”) as may be necessary so
that the net amount received by the Holder of such Securities (including
Additional Amounts) after such withholding or deduction of such Taxes will not
be less than the amount such Holder would have received if such Taxes had not
been required to be withheld or deducted. 
Notwithstanding the foregoing, Additional Amounts will not be paid with
respect to:

 

(1) 
any Taxes that would not have been so imposed, deducted or withheld but
for the existence of any present or former connection between the Holder or
beneficial owner of the Securities (or between a fiduciary, settlor,
beneficiary, member or shareholder of, or possessor of power over, the Holder
or beneficial owner of such Securities, if the Holder or beneficial owner is an
estate, nominee, trust, partnership or corporation) and the relevant Taxing
Jurisdiction (other than the mere receipt of such payment or the ownership or
holding of or the execution, delivery, registration or enforcement of such
Note), including, but not limited to, such Holder being considered as:

 

(A)                              being or having been
present or engaged in a trade or business in the United States or having or
having had a permanent establishment therein; or

 

(B)                                having a current or
former relationship with the United States, including a relationship as a
citizen or resident or being treated as a resident thereof; or

 

(C)                                being or having been a
“personal holding company,” a “controlled foreign corporation,” a “passive
foreign investment company,” as defined for federal income tax purposes in
section 542, section 957 and section 1297, respectively, of the Internal
Revenue Code of 1986, as amended (“Code”)); or

 

55

 

(D)                               an actual or
constructive “10 percent shareholder” of the Issuer as defined in section
871(h)(3) of the Code, or a bank receiving interest described under section
881(c)(3)(A) of the Code or a direct or indirect subsidiary of the Issuer; or

 

(2)                                  any estate,
inheritance, gift, sales, excise, transfer or personal property tax or similar
tax, assessment or governmental charge; or

 

(3)                                  any Taxes payable
otherwise than by deduction or withholding from payments under or with respect
to such Securities; or

 

(4)                                  any Taxes that would
not have been so imposed, deducted or withheld if the Holder or beneficial
owner of the Securities or beneficial owner of any payment on such Securities
had (i) made a declaration of non-residence, or any other claim or filing
for exemption, to which it is entitled or (ii) complied with any certification,
identification, information, documentation or other reporting requirement
concerning the nationality, residence, identity or connection with the relevant
Taxing Jurisdiction of such Holder or beneficial owner of such Securities or
any payment on such Securities (provided that such declaration of non-residence
or other claim or filing for exemption or such compliance is required by the
applicable law of the Taxing Jurisdiction as a precondition to exemption from,
or reduction in the rate of the imposition, deduction or withholding of, such
Taxes; or

 

(5)                                  any Taxes that would
not have been so imposed, deducted or withheld if the beneficiary of the
payment had presented the Securities for payment within 30 days after the date
on which such payment or such Securities became due and payable or the date on
which payment thereof is duly provided for, whichever is later (except to the extent
that the Holder would have been entitled to Additional Amounts had the
Securities been presented on the last day of such 30-day period); or

 

(6)                                  any payment under or
with respect to Securities to any Holder that is a fiduciary or partnership or
any person other than the sole beneficial owner of such payment or Securities,
to the extent that a beneficiary or settlor with respect to such fiduciary, a
member of such a partnership or the beneficial owner of such payment or
Securities would not have been entitled to the Additional Amounts had such
beneficiary, settlor, member or beneficial owner been the actual holder of such
Securities; or

 

(7)                                  any Taxes that would
not have been imposed, deducted or withheld but for the treatment of the
interest paid by the Issuer as contingent interest described in section
871(h)(4) of the Code; or

 

(8)                                  any Taxes that would
not have been imposed, deducted or withheld but for an election by a Holder the
effect of which is to make the payment of principal of, or interest (or any
other amount) on, the Securities subject to United States federal income tax;
or

 

(9)                                  any combination of
items (1) through (8) above.

 

56

 

(c)           As used in this
Section 804, the term “United States” means the United States of America, the
Commonwealth of Puerto Rico and each territory and possession of the United
States of America and the area subject to its jurisdiction, and the term
“United States Alien” means any (i) individual who is not a citizen or resident
of the United States, (ii) a corporation which is not created or organized in
the United States or under the laws of the United States or any political
subdivision thereof, (iii) an estate the income of which is not subject to
United States federal income taxation regardless of its source, (iv) a trust
that (x)
is not subject to both the primary supervision of a court within the United
States and the control of one or more United States persons as described in
section 7701(a)(30) of the Code and (y) does not have a valid election in
effect under applicable United States Treasury regulations to be treated as a
United States person, (v) a partnership (as defined for United States federal
income tax purposes) that is not created or organized in theUnited States or
under the laws of the United States or any political subdivision thereof,
except to the extent one or more of its partners are United States persons as
defined under section 7701(a)(30) of the Code or to the extent the United
States Internal Revenue Service provides by regulation that a partnership that
is not so created or organized will be treated as a domestic partnership under
section 7701(a)(4) of the Code, or (vi) a partnership that is created or
organized in the United States or under the laws of the United States or any
political subdivision thereof to the extent the Internal Revenue Service
provides by regulation that a partnership that is so created or organized will
not be treated as a domestic partnership.

 

(d)           The foregoing
provisions shall survive any termination or discharge of the Indenture and
shall apply mutatis
mutandis to any Taxing Jurisdiction with respect to any successor to
the Issuer.

 

(e)           At least 30 days
prior to each date on which any payment under or with respect to any Securities
is due and payable, unless such obligation to pay Additional Amounts arises
after the 30th day prior to such date, in which case it shall be promptly paid
thereafter, if the Issuer shall be obligated to pay Additional Amounts with
respect to such payment, the Issuer shall deliver to the Trustee and the Paying
Agent an officers’ certificate stating the fact that such Additional Amounts
will be payable and the amounts so payable and will set forth such other information
necessary to enable the Trustee and Paying Agent to pay such Additional Amounts
to Holders of such Securities on the payment date.  Each officers’ certificate shall be relied upon until receipt of
a further officers’ certificate addressing such matters.

 

Whenever in
the Indenture there is mentioned, in any context, the payment of principal,
premium, if any, interest or of any other amount payable under or with respect
to any Note, such mention shall be deemed to include mention of the payment of
Additional Amounts to the extent that, in such context, Additional Amounts are,
were or would be payable in respect thereof.

 

The Issuer
shall pay any present or future stamp, court or documentary taxes or any other
excise or property taxes, charges or similar levies that arise in any
jurisdiction from the execution, delivery, enforcement or registration of the
Securities, this Indenture or any other document or instrument in relation
thereto, excluding all such taxes, charges or similar levies imposed by any
jurisdiction outside any jurisdiction in which the Issuer or any successor is organized
or resident for tax purposes or any jurisdiction in which the Paying Agent is
located,

 

57

 

and the Issuer shall agree to
indemnify the Holders of the Securities for any such non-excluded taxes paid by
such Holders.

 

ARTICLE NINE

 

SUPPLEMENTAL INDENTURES

 

SECTION
901.  SUPPLEMENTAL INDENTURES WITHOUT
CONSENT OF HOLDERS.

 

Without the consent of any Holders, the Issuers, when authorized by a
Board Resolution, and the Trustee, at any time and from time to time, may enter
into one or more indentures supplemental hereto, in form satisfactory to the
Trustee, for any of the following purposes:

 

(1)           to
evidence the succession of another Person to one or both of the Issuers and the
assumption by any such successor of the covenants of any such Issuer or Issuers
contained herein and in the Securities; or

 

(2)           to
add to the covenants of the Issuers for the benefit of the Holders or to
surrender any right or power herein conferred upon the Issuers; or

 

(3)           to
add any additional Events of Default; or

 

(4)           to
evidence and provide for the acceptance of appointment hereunder by a successor
Trustee pursuant to the requirements of Section 609; or

 

(5)           to
cure any ambiguity, to correct or supplement any provision herein which may be
inconsistent with any other provision herein, or to make any other provisions
with respect to matters or questions arising under this Indenture; provided, that such action shall not
adversely affect the interests of the Holders in any material respect; or

 

(6)           to
secure the Securities pursuant to the requirements of Section 1014 or
otherwise; or

 

(7)           to
qualify, or maintain the qualification of, this Indenture under the TIA.

 

SECTION
902.  SUPPLEMENTAL INDENTURES WITH
CONSENT OF HOLDERS.

 

With the consent of the Holders of not less than a majority in
aggregate principal amount at maturity of the Outstanding Securities, by Act of
said Holders delivered to the Issuers and the Trustee, the Issuers, when
authorized by a Board Resolution, and the Trustee may enter into an indenture
or indentures supplemental hereto for the purpose of adding any provisions to

 

58

 

or changing in
any manner or eliminating any of the provisions of this Indenture or of
modifying in any manner the rights of the Holders under this Indenture; provided, however, that no such
supplemental indenture shall, without the consent of the Holder of each
Outstanding Security affected thereby:

 

(1)           change
the Stated Maturity of the principal of, or any installment of interest on, any
Security, or reduce the rate of interest thereon or payable upon the redemption
thereof, or change the coin or currency in which any Security or any interest
thereon is payable, or impair the right to institute suit for the enforcement
of any such payment after the Stated Maturity thereof (or, in the case of
redemption, on or after the Redemption Date), or

 

(2)           reduce
the percentage in principal amount at maturity of the Outstanding Securities,
the consent of whose Holders is required for any such supplemental indenture,
or the consent of whose Holders is required for any waiver of compliance with
certain provisions of this Indenture or certain defaults hereunder and their
consequences provided for in this Indenture, or

 

(3)           modify
any of the provisions of this Section, Section 1021 or Article Five, except to
increase the percentage of Outstanding Securities required for such actions or
to provide that certain other provisions of this Indenture cannot be modified
or waived without the consent of the Holder of each Outstanding Security, or

 

(4)           amend,
change or modify the redemption provisions of this Indenture or the Securities
or the obligation of the Issuers to make and consummate an Excess Proceeds
Offer with respect to any Asset Sale or modify any of the provisions or
definitions with respect thereto.

 

It shall not
be necessary for any Act of Holders under this Section to approve the
particular form of any proposed supplemental indenture, but it shall be
sufficient if such Act shall approve the substance thereof.

 

SECTION
903.  EXECUTION OF SUPPLEMENTAL
INDENTURES.

 

In executing,
or accepting the additional trusts created by, any supplemental indenture
permitted by this Article or the modifications thereby of the trusts created by
this Indenture, the Trustee shall be entitled to receive, and shall be fully
protected in relying upon, an Opinion of Counsel stating that the execution of
such supplemental indenture is authorized or permitted by this Indenture.  The Trustee may, but shall not be obligated
to, enter into any such supplemental indenture which adversely affects the
Trustee’s own rights, duties or immunities under this Indenture or otherwise.

 

SECTION
904.  EFFECT OF SUPPLEMENTAL
INDENTURES.

 

Upon the
execution of any supplemental indenture under this Article, this Indenture shall
be modified in accordance therewith, and such supplemental indenture shall form
a part of this Indenture for all purposes; and every Holder of Securities
theretofore or thereafter authenticated and delivered hereunder shall be bound
thereby.

 

59

 

SECTION
905.  CONFORMITY WITH TRUST INDENTURE
ACT.

 

Every
Supplemental Indenture executed pursuant to this Article shall conform to the
requirements of the Trust Indenture Act as then in effect.

 

SECTION
906.  REFERENCE IN SECURITIES TO
SUPPLEMENTAL INDENTURES.

 

Securities
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article may, and shall if required by the Trustee, bear a
notation in form approved by the Trustee as to any matter provided for in such
supplemental indenture.  If the Issuers
shall so determine, new Securities so modified as to conform, in the opinion of
the Trustee and the Issuers, to any such supplemental indenture may be prepared
and executed by the Issuers and authenticated and delivered by the Trustee in
exchange for Outstanding Securities. 
Failure to make the appropriate notation or to issue a new Security
shall not affect the validity of such amendment.

 

SECTION
907.  NOTICE OF SUPPLEMENTAL INDENTURES.

 

Promptly after
the execution by the Issuers and the Trustee of any supplemental indenture
pursuant to the provisions of Section 902, the Issuers shall give notice
thereof to the Holders of each Outstanding Security affected, in the manner
provided for in Section 106, setting forth in general terms the substance of
such supplemental indenture.  Failure to
provide such notice shall not affect the validity of such amendment.

 

ARTICLE TEN

 

COVENANTS

 

SECTION
1001.  PAYMENT OF PRINCIPAL AND
INTEREST.

 

The Issuers
covenant and agree for the benefit of the Holders that they will duly and
punctually pay the principal of and interest on the Securities in accordance
with the terms of the Securities and this Indenture.

 

SECTION
1002.  MAINTENANCE OF OFFICE OR AGENCY.

 

The Issuers
will maintain in The City of New York, an office or agency where Securities may
be presented or surrendered for payment, where Securities may be surrendered
for registration of transfer or exchange and where notices and demands to or upon
the Issuers in respect of the Securities and this Indenture may be served.  The office of Wilmington Trust Company at
1100 North Market Street, Wilmington, Delaware 19890, shall be such office or
agency of the Issuers, unless the Issuers shall designate and maintain some
other office or agency for one or more of such purposes.  The Issuers will give prompt written notice
to the Trustee of any change in the location of any such office or agency.  If at any time the Issuers shall fail to
maintain any such required office or agency or shall fail to furnish the
Trustee with the address thereof, such presentations, surrenders, notices and
demands may be made or served at the

 

60

 

Corporate Trust Office of the
Trustee, and the Issuers hereby appoint the Trustee as their agent to receive
all such presentations, surrenders, notices and demands.

 

The Issuers
may also from time to time designate one or more other offices or agencies (in
or outside of The City of New York) where the Securities may be presented or
surrendered for any or all such purposes and may from time to time rescind any
such designation; provided, however,
that no such designation or rescission shall in any manner relieve the Issuers
of their obligation to maintain an office or agency in The City of New York for
such purposes.  The Issuers will give
prompt written notice to the Trustee of any such designation or rescission and
any change in the location of any such other office or agency.

 

SECTION 1003.  MONEY FOR SECURITY PAYMENTS TO BE HELD IN
TRUST.

 

If the Issuers
shall at any time act as their own Paying Agent, they will, on or before each
due date of the principal of or interest on any of the Securities, segregate
and hold in trust for the benefit of the Persons entitled thereto a sum
sufficient to pay the principal of or interest so becoming due until such sums
shall be paid to such Persons or otherwise disposed of as herein provided and
will promptly notify the Trustee of its action or failure so to act.

 

Whenever the
Issuers shall have one or more Paying Agents for the Securities, they will, on
or before 10:00 a.m. (New York City time) two business days prior to the due
date of the principal of or interest on any Securities, deposit with a Paying
Agent a sum sufficient to pay the principal or interest so becoming due, such
sum to be held in trust for the benefit of the Persons entitled to such
principal or interest, and (unless such Paying Agent is the Trustee) the
Issuers will promptly notify the Trustee of such action or any failure so to
act.

 

Each amount
payable according to the preceding paragraph shall be paid unconditionally by
credit transfer in the payment currency and in same day, freely transferable
cleared funds no later than 10:00 a.m. (New York City time) on the relevant day
to such account at such bank as the Paying Agent may from time to time specify
for such purpose by written notice to the Issuers at least two business days
prior to the date on which the Issuers must effectuate such wire transfer.  The Issuers shall before 10:00 a.m. on the
second business day prior to the day on which the Paying Agent receives
payment, procure that the bank effecting payment for it confirm by telex or
SWIFT MT100 message to the Paying Agent the payment instructions relating to
such payment.

 

The Issuers
will cause each Paying Agent (other than the Trustee) to execute and deliver to
the Trustee an instrument in which such Paying Agent shall agree with the
Trustee, subject to the provisions of this Section, that such Paying Agent
will:

 

(1)           hold
all sums held by it for the payment of the principal of or interest on
Securities in trust for the benefit of the Persons entitled thereto until such
sums shall be paid to such Persons or otherwise disposed of as herein provided;

 

(2)           give
the Trustee notice of any default by the Issuers (or any other obligor upon the
Securities) in the making of any payment of principal or interest; and

 

61

 

(3)           at
any time during the continuance of any such default, upon the written request
of the Trustee, forthwith pay to the Trustee all sums so held in trust by such
Paying Agent.

 

The Issuers
may at any time, for the purpose of obtaining the satisfaction and discharge of
this Indenture or for any other purpose, pay, or by Issuer Order direct any
Paying Agent to pay, to the Trustee all sums held in trust by the Issuers or
such Paying Agent, such sums to be held by the Trustee upon the same trusts as
those upon which such sums were held by the Issuers or such Paying Agent; and,
upon such payment by any Paying Agent to the Trustee, such Paying Agent shall
be released from all further liability with respect to such sums.

 

Any money
deposited with the Trustee or any Paying Agent, or then held by the Issuers, in
trust for the payment of the principal of or interest on any Security and
remaining unclaimed for two years after such principal or interest has become
due and payable shall be paid to the Issuers on Issuer Request, or (if then
held by the Issuers) shall be discharged from such trust; and the Holder of
such Security shall thereafter, as an unsecured general creditor, look only to
the Issuers for payment thereof, and all liability of the Trustee or such
Paying Agent with respect to such trust money, and all liability of the Issuers
as trustee thereof, shall thereupon cease; provided,
however, that the Trustee or such Paying Agent, before being
required to make any such repayment, may at the expense of the Issuers cause to
be published once, in a newspaper published in the English language,
customarily published on each Business Day and of general circulation in the
Borough of Manhattan, The City of New York, notice that such money remains
unclaimed and that, after a date specified therein, which shall not be less
than 30 days from the date of such publication, any unclaimed balance of such
money then remaining will be repaid to the Issuers.

 

SECTION
1004.  CORPORATE EXISTENCE.

 

Subject to
Article Eight, the Issuers will do or cause to be done all things necessary to
preserve and keep in full force and effect the corporate existence, rights
(charter and statutory) and franchises of the Issuers and each Subsidiary; provided, however, that the Issuers shall
not be required to preserve any such right or franchise, or the existence of
any Subsidiary, if the Board of Directors of an Issuer shall determine that the
preservation thereof is no longer desirable in the conduct of the business of
such Issuer and its Subsidiaries as a whole and that the loss thereof is not
disadvantageous in any material respect to the Holders; provided further that UPC Polska Finance
may dissolve or liquidate or merge with or into the Company to the extent
otherwise permitted hereunder.

 

SECTION
1005.  PAYMENT OF TAXES AND OTHER
CLAIMS.

 

The Issuers
will pay or discharge or cause to be paid or discharged, before the same shall
become delinquent, (a) all taxes, assessments and governmental charges levied
or imposed upon an Issuer or any Subsidiary or upon the income, profits or
property of an Issuer or any Subsidiary and (b) all lawful claims for labor,
materials and supplies, which, if unpaid, might by law become a Lien upon the
property of an Issuer or any Subsidiary; provided,
however, that the Issuers shall not be required to pay or discharge
or cause to be paid or discharged any such

 

62

 

tax, assessment, charge or
claim whose amount, applicability or validity is being contested in good faith
by appropriate proceedings.

 

SECTION
1006.  MAINTENANCE OF PROPERTIES.

 

The Company
will cause all properties owned by the Company or any Subsidiary or used or
held for use in the conduct of its business or the business of any Subsidiary
to be maintained and kept in good condition, repair and working order and
supplied with all necessary equipment and will cause to be made all necessary
repairs, renewals, replacements, betterments and improvements thereof, all as
in the judgment of the Company may be necessary so that the business carried on
in connection therewith may be properly and advantageously conducted at all
times; provided, however, that
nothing in this Section shall prevent the Company from discontinuing the
maintenance of any of such properties if such discontinuance is, in the
judgment of the Company, desirable in the conduct of its business or the
business of any Subsidiary and not disadvantageous in any material respect to
the Holders.

 

SECTION
1007.  INSURANCE.

 

The Company
will at all times keep all of its and its Subsidiaries’ properties which are of
an insurable nature insured with insurers, believed by the Company to be
responsible, against loss or damage to the extent that property of similar
character is usually so insured by corporations similarly situated and owning
like properties.

 

SECTION
1008.  STATEMENT BY OFFICERS AS TO
DEFAULT.

 

(a)           The Issuers will
deliver to the Trustee, within 120 days after the end of each fiscal year and
within 45 days after the end of each fiscal quarter (other than the last fiscal
quarter of a year), a brief certificate from the principal executive officer,
principal financial officer or principal accounting officer as to his or her
knowledge of such Issuer’s compliance with all conditions and covenants under
this Indenture.  For purposes of this
Section 1008(a), such compliance shall be determined without regard to any
period of grace or requirement of notice under this Indenture.

 

(b)           When any Default has
occurred and is continuing under this Indenture, or if the trustee for or the
holder of any other evidence of Indebtedness of an Issuer or any Subsidiary
gives any notice or takes any other action with respect to a claimed default
(other than with respect to Indebtedness in the principal amount of less than
$5,000,000), such Issuer shall deliver to the Trustee by registered or
certified mail or by telegram, telex or facsimile transmission an Officer’s
Certificate specifying such event, notice or other action within five Business
Days of its occurrence.

 

SECTION
1009.  PROVISION OF FINANCIAL
STATEMENTS AND REPORTS.

 

Whether or not
the Company is subject to Section 13(a) or 15(d) of the Exchange Act, or any
successor provision thereto, the Company shall file with the Commission (if
permitted by Commission practice and applicable law and regulations) the annual
reports, quarterly reports and other documents which are required to be filed
with the Commission

 

63

 

pursuant to such Section 13(a) or 15(d) or
any successor provision thereto, such documents to be filed with the Commission
on or prior to the respective dates (the “Required Filing Dates”) required by
such Section 13(a) or 15(d) of the Exchange Act regardless of whether the
Company is required to file such documents. The Company shall also in any event
(a) within 15 days of each Required Filing Date (whether or not permitted or
required to be filed with the Commission) (i) transmit (or cause to be
transmitted) by mail to all holders of Securities, as their names and addresses
appear in the applicable Security Register, without cost to such holders, and
(ii) file with the Trustee copies of the annual reports, quarterly reports and
other documents which the Company is required to file with the Commission
pursuant to the preceding sentence, or, if such filing is not so permitted,
information and data of a similar nature, and (b) if, notwithstanding the
preceding sentence, filing such documents by the Company with the Commission is
not permitted by Commission practice or applicable law or regulations,
promptly upon written request supply copies of such documents to any holder of
Securities.

 

SECTION
1010.  LIMITATION ON ADDITIONAL
INDEBTEDNESS.

 

(a)           The Company will
not, and will not permit any Restricted Subsidiary, directly or indirectly, to
incur, contingently or otherwise, any Indebtedness, except for Permitted
Indebtedness; provided, that the
Company will be permitted to incur Indebtedness if after giving pro forma effect to such incurrence
(including the application of the net proceeds therefrom), the ratio of (x)
Total Consolidated Indebtedness outstanding as of the date of such incurrence
to (y) Pro Forma Consolidated Operating Cash Flow would be greater than zero
and less than or equal to 4 to 1.

 

(b)           The Company will not
issue any Subordinated Indebtedness unless such Indebtedness by its terms
expressly prohibits the payment by the Company of any assets or securities
(including Common Stock) to the holders of such Subordinated Indebtedness prior
to the payment in full of the Securities in the event of a bankruptcy or
reorganization.

 

(c)           UPC Polska Finance
will not incur any Indebtedness other than Indebtedness under the Securities or
this Indenture.

 

SECTION
1011.  LIMITATION ON RESTRICTED
PAYMENTS.

 

(a)           The Company will not
take, and will not permit any Restricted Subsidiary to, directly or indirectly,
take any of the following actions:

 

(i)            declare
or pay any dividend or any other distribution on Capital Stock of the Company
or any payment made to the direct or indirect holders (in their capacities as
such) of Capital Stock of the Company (other than dividends or distributions
payable solely in Capital Stock (other than Redeemable Capital Stock) of the
Company);

 

(ii)           purchase,
redeem or otherwise acquire or retire for value any Capital Stock of the
Company (other than any such Capital Stock owned by the Company or a Restricted
Subsidiary) or any Affiliate of the Company (other than any Restricted
Subsidiary);

 

64

 

(iii)          make
any principal payment on, or repurchase, redeem, defease or otherwise acquire
or retire for value, prior to any scheduled principal payment, sinking fund
payment or maturity, any Subordinated Indebtedness of the Company (other than
any Subordinated Indebtedness held by a Restricted Subsidiary);

 

(iv)          make
any Investment (other than a Permitted Investment) in any Person (other than an
Investment by the Company or a Restricted Subsidiary in either (1) a Restricted
Subsidiary or the Company or (2) a Person that becomes a Restricted Subsidiary
as a result of such Investment);

 

(v)           create
or assume any guarantee of Indebtedness of any Affiliate of the Company (other
than guarantees of any Indebtedness of any Restricted Subsidiary by the Company
or any Restricted Subsidiary); or

 

(vi)          declare
or pay any dividend or any other distribution on any Capital Stock of any
Restricted Subsidiary to any Person (other than (1) dividends or distributions
paid to the Company or a Restricted Subsidiary and/or (2) pro rata dividends or distributions on
Common Stock of Restricted Subsidiaries held by minority stockholders, provided
that such dividends or distributions do not in the aggregate exceed the
minority stockholders’ pro rata
share of such Restricted Subsidiaries’ net income from the first day of the
fiscal quarter beginning immediately following the Issue Date);

 

(such payments or other actions
described in (but not excluded from) clauses (i) through (vi) are collectively
referred to as “Restricted Payments”), unless at the time of, and immediately
after giving effect to, the proposed Restricted Payment: (1) no Default or
Event of Default shall have occurred and be continuing, (2) the Company would
be able to incur at least $1.00 of additional Indebtedness (other than
Permitted Indebtedness) under the proviso of Section 1010(a); and (3) the
aggregate amount of all Restricted Payments declared or made after the Issue
Date would not exceed an amount equal to the sum of: (A) the difference between
(x) the Cumulative Available Cash Flow determined at the time of such proposed
Restricted Payment and (y) the product of (I) 1.5 and (II) the cumulative
Consolidated Interest Expense of the Company determined for the period
commencing on the Issue Date and ending on the last day of the latest fiscal
quarter for which consolidated financial statements of the Company are
available preceding the date of such Restricted Payment (or if such difference
shall be a negative number, minus 100% of such number), plus (B) the aggregate Net Cash Proceeds
received by the Company either as capital contributions to the Company after
the Issue Date or from the issue or sale (other than to a Restricted
Subsidiary) of Capital Stock of the Company (other than Redeemable Capital
Stock) on or after the Issue Date, excluding in each case any Net Cash Proceeds
that are, promptly following receipt, invested in accordance with clause (ii),
(iii) or (vi) of clause (b) below and except to the extent such Net Cash
Proceeds are used to incur Indebtedness pursuant to clause (i) of the
definition of Permitted Indebtedness, plus
(C) the aggregate Net Cash Proceeds received by the Company on or after the
Issue Date from the issuance or sale (other than to a Restricted Subsidiary) of
debt securities or Redeemable Capital Stock of the Company that have been
converted into or exchanged for Capital Stock (other than Redeemable Capital
Stock) of the Company to the extent such securities were originally sold for
cash, together with the aggregate Net Cash Proceeds received by the Company (other
than from a Restricted Subsidiary) at the time of such conversion or exchange, plus (D) in the case of the disposition or
repayment of any

 

65

 

Investment (other than through
share leasing arrangements) constituting a Restricted Payment made after the
Issue Date (other than in the case contemplated by clause (E) hereof) an amount
equal to the lesser of the return of capital with respect to such Investment
and the cost of such Investment, in either case, less the cost of the
disposition of such Investment, plus
(E) in the case of Investments (other than through share leasing arrangements)
made in any Person other than a Restricted Subsidiary, an amount equal to the
lesser of the Fair Market Value of such Investments and the total amount of
such Investments constituting Restricted Payments if and when such Person
becomes a Restricted Subsidiary less any amounts previously credited pursuant
to clause (D).

 

For purposes of determining the amount expended for Restricted
Payments, cash distributed shall be valued at the face amount thereof and
property other than cash shall be valued at its Fair Market Value.

 

(b)           The provisions of
this covenant shall not prohibit, so long as, with respect to clauses (ii)
through (vi), (viii) and (ix) below, no Default or Event of Default shall have
occurred and be continuing:

 

(i) the payment of any dividend or other
distribution within 60 days after the date of declaration thereof if at such
date of declaration such payment complied with the provisions of this
Indenture;

 

(ii) the purchase, redemption, retirement or
other acquisition of any shares of Capital Stock of the Company in exchange
for, or out of the net cash proceeds of the substantially concurrent issue and
sale (other than to a Restricted Subsidiary) of, shares of Capital Stock of the
Company (other than Redeemable Capital Stock);

 

(iii) the purchase, redemption, retirement, defeasance or other
acquisition of Subordinated Indebtedness made by exchange for, or out of the
net cash proceeds of, a substantially concurrent issue or sale (other than to a
Restricted Subsidiary) of (1) Capital Stock (other than Redeemable Capital
Stock) of the Company or (2) other Subordinated Indebtedness so long as (A) the
principal amount of such new Indebtedness does not exceed the principal amount
(or, if such Subordinated Indebtedness being refinanced provides for an amount
less than the principal amount thereof to be due and payable upon a declaration
of acceleration thereof, such lesser amount as of the date of determination) of
the Subordinated Indebtedness being so purchased, redeemed, defeased, acquired
or retired, plus the lesser of
the amount of any premium required to be paid in connection with such
refinancing pursuant to the terms of the Subordinated Indebtedness being
refinanced or the amount of any premium reasonably determined by the Company as
necessary to accomplish such refinancing, plus, in either case, the amount of
expenses of the Company incurred in connection with such refinancing, (B) such
new Subordinated Indebtedness is subordinated to the Securities to the same
extent as such Subordinated Indebtedness so purchased, redeemed, defeased,
acquired or retired and (C) such new Subordinated Indebtedness has an Average
Life longer than the Average Life of the Securities and a final Stated Maturity
of principal later than the Stated Maturity of principal of the Securities;

 

66

 

(iv) the extension by the Company and its Restricted Subsidiaries of
trade credit to Unrestricted Subsidiaries, represented by accounts receivable,
extended on usual and customary terms in the ordinary course of business;

 

(v) Investments in a Person (other than a Restricted Subsidiary) that
operates or has been formed to operate a Cable/Telecommunications Business or
that holds a license to operate a Cable/Telecommunications Business in an
amount not to exceed $5 million (or the U.S. Dollar Equivalent thereof) at any
one time outstanding;

 

(vi) Investments (other than through share leasing arrangements) in any
Person promptly made with the proceeds of a substantially concurrent issue or
sale of Capital Stock (other than Redeemable Capital Stock) of the Company;

 

(vii) the payment of reasonable and customary regular compensation and
fees to directors of an Issuer or any Restricted Subsidiary who are not
employees of such Issuer or any Restricted Subsidiary;

 

(viii) Investments in a Person (including any Management Company or any
Unrestricted Subsidiary) that produces or has been formed to produce television
programming or operates a business reasonably related thereto in an amount not
to exceed $5 million (or the U.S. Dollar Equivalent thereof) in any year and
not to exceed $10 million (of the U.S. Dollar Equivalent thereof) at any one
time outstanding;

 

(ix) any other Restricted Payments in an aggregate amount not to exceed
$1.0 million (or, if non-U.S. Dollar denominated, the U.S. Dollar Equivalent
thereof) at any one time outstanding.

 

In determining
the amount of Restricted Payments permissible under this covenant, amounts
expended pursuant to clauses (i), (v), (vi), (viii) and (ix) above shall be
included as Restricted Payments.

 

SECTION 1012.  LIMITATION ON ISSUANCES AND SALES OF CAPITAL STOCK OF RESTRICTED
SUBSIDIARIES.

 

(a)           The Company will not and will not
permit any Restricted Subsidiary to issue or sell any shares of Capital Stock
of a Restricted Subsidiary (other than to the Company or a Restricted
Subsidiary); provided, however,
that this covenant shall not prohibit (i) the issuance and sale of all, but not
less than all, of the issued and outstanding Capital Stock of any Restricted
Subsidiary in compliance with the other provisions of this Indenture, (ii)
issuances or sales of Common Stock of a Restricted Subsidiary if (x) the
proceeds of such issuance or sale are applied in accordance with Section 1017
and (y) immediately after giving effect thereto, the Company and its other
Restricted Subsidiaries own no less than 51% of the outstanding Voting Stock of
such Restricted Subsidiary, (iii) issuances or sales of Capital Stock of any
Restricted Subsidiary in connection with a Cable/Telecommunications
Acquisition, or (iv) the ownership by directors of directors’ qualifying shares
or the ownership by foreign nationals of Capital Stock of any Restricted
Subsidiary, to the extent mandated by applicable law.

 

67

 

(b)           The Company will not permit the
direct or indirect ownership of the Company or any Restricted Subsidiary in the
Capital Stock of any Management Company to fall below the lesser of (i) the
maximum ownership percentage permitted by applicable law and (ii) 51% of the
outstanding Capital Stock of such Management Company, provided, that any increase in such
ownership of the Capital Stock of any Management Company required by any change
in applicable law shall not be required to be completed prior to 365 days from
the effective date of such change in applicable law, provided further, that the Company and the Restricted
Subsidiaries may sell all, but not less than all, of their Capital Stock of any
Management Company in accordance with the provisions of Section 1017.

 

SECTION 1013.  LIMITATION ON TRANSACTIONS WITH AFFILIATES.

 

(a)           The Company will not, and will not
permit any Restricted Subsidiary to, directly or indirectly, enter into or
suffer to exist any transaction or series of related transactions (including,
without limitation, the sale, purchase, exchange or lease of assets, property
or services) with, or for the benefit of, any Affiliate of the Company (other
than the Company or a Restricted Subsidiary) unless (i) such transaction or
series of related transactions is on terms that are no less favorable to the
Company or such Restricted Subsidiary, as the case may be, than those that
could have been obtained in an arm’s-length transaction with unrelated third
parties who are not Affiliates, (ii) with respect to any transaction or series
of related transactions involving aggregate consideration equal to or greater
than $5 million, the Company shall have delivered an Officer’s Certificate to
the Trustee certifying that such transaction or series of related transactions
complies with clause (i) above and such transaction or series of related
transactions has been approved by a majority of the Directors of the Board of
Directors of the Company concluding that such transaction complies with clause
(i) above, and (iii) with respect to any transaction or series of related
transactions including aggregate consideration in excess of $15 million, the
Company shall obtain an opinion as to the fairness of such Transaction to the
Company from a financial point of view from a nationally recognized investment
banking firm (or if an investment banking firm is generally not qualified to
give such an opinion, by a nationally recognized appraisal firm or accounting
firm); provided, however, that
this provision will not restrict (1) any transaction by the Company or any
Restricted Subsidiary with an Affiliate directly related to the purchase, sale
or distribution of products in the ordinary course of business, including,
without limitation, transactions related to the purchase, sale or distribution
of programming, subscriber management services, transmission services and services
related to the publication of programming guides, provided, that such
transaction is determined in good faith by the Board of Directors of the
Company to be fair and reasonable (2) the Company from paying reasonable and
customary regular compensation and fees to directors of the Company or any
Restricted Subsidiary who are not employees of the Company or any Restricted
Subsidiary, including, without limitation, any such fees which the Company has
agreed to pay to any director pursuant to an agreement in effect on the Issue
Date and listed on Schedule A to this Indenture, (3) the payment of
compensation (including stock options and other incentive compensation) to
officers and other employees the terms of which are approved by the Board of
Directors of the Company, (4) any transactions pursuant to a Management
Agreement, (5) the Company or any Restricted Subsidiary from making any
Restricted Payment in compliance with Section 1011, (6) (x) transactions
pursuant to any Management Agreement, Overhead Agreement or Service Agreement
that is entered into prior to the Issue Date and is listed in Schedule A to
this Indenture; or (y) transactions pursuant to any Organizational Contract,
Overhead Agreement or

 

68

 

Service
Agreement that is entered into after the Issue Date and has substantially
identical terms as, and is no less favorable to the Company or any Restricted
Subsidiary than, the Organizational Contracts, Overhead Agreements or Service
Agreements, as the case may be, listed in Schedule A to this Indenture or, (7)
amendments, modifications or alterations of Management Agreements,
Organizational Contracts, Overhead Agreements and Service Agreements under (b)
below.

 

(b)           The Company will not, and will not
permit any Restricted Subsidiary to, amend, modify, or in any way alter the
terms of any Management Agreement, Organizational Contract, Overhead Agreement
or Service Agreement in a manner materially adverse to the Company other than
(i) by adding new Restricted Subsidiaries to a Management Agreement, (ii)
substituting one Restricted Subsidiary in place of another Restricted
Subsidiary under an Organizational Contract, (iii) amendments, modifications or
alterations required by applicable law, (iv) amendments, modifications or
alterations made to increase the Company’s control over, or interest in, any
Management Company or (v) amendments, modifications or alterations that are
approved by a majority of the Disinterested Directors of the Board of Directors
of the Company as not materially adverse to the Company.

 

SECTION 1014.  LIMITATION ON LIENS.

 

The Company
will not, and will not permit any Restricted Subsidiary to, directly or
indirectly, create, incur, assume or suffer to exist any Lien of any kind,
except for Permitted Liens, on or with respect to any of its property or
assets, whether owned at the date of this Indenture or thereafter acquired, or
any income, profits or proceeds therefrom, or assign or otherwise convey any
right to receive income thereon, unless (x) in the case of any Lien securing
Subordinated Indebtedness, the Securities are secured by a Lien on such
property, assets or proceeds that is senior in priority to such Lien and (y) in
the case of any other Lien, the Securities are equally and ratably secured.

 

SECTION 1015.  LIMITATION ON ISSUANCES OF GUARANTEES OF INDEBTEDNESS BY
SUBSIDIARIES.

 

(a)           The Company will not permit any
Restricted Subsidiary, directly or indirectly, to guarantee, assume or in any
other manner become liable with respect to any Indebtedness of the Company
unless such Restricted Subsidiary simultaneously executes and delivers a
supplemental indenture providing for the guarantee of payment of the Securities
by such Restricted Subsidiary on a basis senior to any guarantee of Subordinated
Indebtedness or at least pari passu
with any guarantee of Pari Passu Indebtedness; provided,
that this paragraph (a) shall not be applicable to (i) any guarantee of any
Restricted Subsidiary that existed at the time such Person became a Restricted Subsidiary
(and was not incurred in contemplation of such Person becoming a Restricted
Subsidiary), or (ii) any guarantee of any Restricted Subsidiary of Senior Bank
Indebtedness.

 

(b)           Notwithstanding the foregoing, any
guarantee of the Securities created pursuant to the provisions described in the
foregoing paragraph (a) shall provide by its terms that it shall be
automatically and unconditionally released and discharged upon (i) any sale,
exchange or transfer, to any Person who is not an Affiliate of the Company, of
all of the Company’s Capital Stock in, or all or substantially all the assets
of, such Restricted Subsidiary (which sale,

 

69

 

exchange or
transfer is not prohibited by this Indenture), or (ii) the release by the
holders of the Indebtedness of the Company described in the preceding paragraph
of their guarantee by such Restricted Subsidiary (including any deemed release
upon payment in full of all obligations under such Indebtedness, except by or as
a result of payment under such guarantee), at a time when (A) no other
Indebtedness of the Company has been guaranteed by such Restricted Subsidiary
or (B) the holders of all such other Indebtedness which is guaranteed by such
Restricted Subsidiary also release their guarantee by such Restricted
Subsidiary (including any deemed release upon payment in full of all
obligations under such Indebtedness).

 

SECTION 1016.  PURCHASE OF SECURITIES UPON A CHANGE OF CONTROL.

 

If a Change of
Control shall occur at any time, then each holder of Securities shall have the
right to require that the Issuers purchase such holder’s Securities, in whole
or in part in integral multiples of $1,000 principal amount at maturity, at a
purchase price (the “Change of Control Purchase Price”) in cash in an amount
equal to 100% of the principal amount at maturity of the Securities plus
accrued and unpaid interest, if any, to the date of purchase (the “Change of
Control Purchase Date”), pursuant to the offer described below (the “Change of
Control Offer”) and the other procedures set forth in this Indenture.

 

Within 30 days
following any Change of Control, the Issuers shall notify the Trustee thereof
and give written notice of such Change of Control to each holder of Securities
by first-class mail, postage prepaid, at the address of such holder appearing
in the Security Register, stating, among other things, (a) the purchase price
and the purchase date, which shall be a Business Day no earlier than 30 days
nor later than 60 days from the date such notice is mailed, or such later date
as is necessary to comply with requirements under the Exchange Act; (b) that
any Security not tendered will continue to accrue interest or accrete original
issue discount, as applicable; (c) that, unless the Issuers default in the
payment of the purchase price, any Securities accepted for payment pursuant to
the Change of Control Offer shall cease to accrue interest after the Change of
Control Purchase Date; and (d) certain other procedures that a holder of Securities
must follow to accept a Change of Control Offer or to withdraw such acceptance.

 

The Issuers
will comply with the applicable tender offer rules, including Rule 14e-l under
the Exchange Act, and any other applicable securities laws and regulations in
connection with a Change of Control Offer.

 

The Issuers
will not enter into any agreement that would prohibit the Issuers from making a
Change of Control Offer to purchase the Securities or, if such Change of
Control Offer is made, to pay for the Securities tendered for purchase.

 

SECTION 1017.  LIMITATION ON SALE OF ASSETS.

 

(a)           The Company will not, and will not
permit any Restricted Subsidiary to, directly or indirectly, engage in any
Asset Sale unless (i) the consideration received by the Company or such
Restricted Subsidiary for such Asset Sale is not less than the Fair Market
Value of the shares or assets sold (as determined by the Board of Directors of
the Company, whose determination shall be conclusive and evidenced by a Board
Resolution) and (ii) the

 

70

 

consideration
received by the Company or the relevant Restricted Subsidiary in respect of
such Asset Sale consists of at least 75% cash or Cash Equivalents.  Notwithstanding the preceding sentence, the
Company and its Restricted Subsidiaries may consummate an Asset Sale without
complying with clause (ii) of the immediately preceding sentence if at least
75% of the consideration for such Asset Sale consists of any combination of
cash, Cash Equivalents and those items described in clause (b)(ii) or (b)(iii)
below.

 

(b)           If the Company or any Restricted
Subsidiary engages in an Asset Sale, the Company may use the Net Cash Proceeds
thereof, within 12 months after the later of such Asset Sale or the receipt of
such Net Cash Proceeds, (i) to permanently repay or prepay any then outstanding
Senior Bank Indebtedness of the Company or a Restricted Subsidiary, any then
outstanding Indebtedness of a Restricted Subsidiary or any other then
outstanding unsubordinated Indebtedness of the Company, (ii) to invest in the
Capital Stock of any Person that becomes a Restricted Subsidiary as a result of
such investment or that is received in connection with a Permitted Investment
made under clause (g), (h) or (i) of the definition thereof, make capital
expenditures (including lease payments for one or more capital assets) or
invest in other tangible assets of the Company or any Restricted Subsidiary, in
each case, engaged, used or useful in the Cable/Telecommunications Business,
the DTH Business or the Entertainment/Programming Business of the Company and
its Restricted Subsidiaries (or enter into a legally binding agreement to do so
within six months of the date on which such agreement is executed) or (iii) to
invest in properties or assets that replace the properties and assets that are
the subject to such Asset Sale (or enter into a legally binding agreement to do
so within six months of the date on which such agreement is executed).  If any such legally binding agreement to
invest such Net Cash Proceeds is terminated, then the Company may, within 90
days of such termination or within 12 months of such Asset Sale, whichever is
later, apply or invest such Net Cash Proceeds as provided in clause (ii) or
(iii) (without regard to the parenthetical contained in clauses (ii) or (iii))
above.  The amount of such Net Cash
Proceeds not so used as set forth above in this paragraph (b) constitutes
“Excess Proceeds.”

 

(c)           When the aggregate amount of Excess
Proceeds exceeds $5 million the Issuers shall, within 30 business days, make an
offer to purchase (an “Excess Proceeds Offer”) from all holders of Securities,
on a pro rata basis, in
accordance with the procedures set forth below, the maximum principal amount of
Securities that may be purchased with the Excess Proceeds.  The offer price shall be payable in cash in
an amount equal to 100% of the principal amount of such Securities plus accrued
and unpaid interest, if any (the “Offered Price”), to the date such Excess
Proceeds Offer is consummated (the “Offer Date”).  To the extent that the aggregate principal amount of the
Securities tendered pursuant to an Excess Proceeds Offer is less than the
Excess Proceeds relating thereto, the Issuers may use such additional Excess
Proceeds for general corporate purposes. 
If the principal amount of Securities validly tendered and not withdrawn
by holders thereof exceeds the Excess Proceeds, Securities to be purchased will
be selected on a pro rata
basis.  Upon completion of such offer to
purchase, the amount of Excess Proceeds shall be reset to zero.

 

(d)           If the Issuers become obligated to
make an Excess Proceeds Offer pursuant to clause (c) above, the Securities
shall be purchased by the Issuers, at the option of the holder thereof, in
whole or in part in integral multiples of $1,000 on a date that is not earlier
than 30 days and not later than 60 days from the date the notice is given to
holders, or such later date

 

71

 

as may be
necessary for the Issuers to comply with any applicable requirements under the
Exchange Act, subject to proration in the event the amount of Excess Proceeds
is less than the aggregate Offered Price of all Securities tendered.

 

(e)           The Issuers will comply with the
tender offer rules under the Exchange Act, if applicable, in connection with an
Excess Proceeds Offer.

 

SECTION 1018.  LIMITATION ON DIVIDENDS AND OTHER PAYMENT RESTRICTIONS
AFFECTING RESTRICTED SUBSIDIARIES.

 

The Company
will not, and will not permit any Restricted Subsidiary to, directly or
indirectly, create or otherwise cause or suffer to exist or become effective
any encumbrance or restriction of any kind on the ability of any Restricted
Subsidiary to (a) pay dividends, in cash or otherwise, or make any other distributions
to the Company or any Restricted Subsidiary on or in respect of its Capital
Stock, (b) pay any Indebtedness owed to the Company or any other Restricted
Subsidiary, (c) make loans or advances to the Company or any other Restricted
Subsidiary, (d) transfer any of its properties or assets to the Company or any
other Restricted Subsidiary or (e) guarantee Indebtedness of the Company or any
Restricted Subsidiary, except in all such cases for such encumbrances or
restrictions existing under or by reason of (i) any agreement or instrument in
effect on the Issue Date and listed on Schedule D attached to this Indenture,
(ii) applicable law or regulation (including corporate governance provisions
required by applicable law and regulations of the National Bank of Poland),
(iii) customary non-assignment provisions of any lease governing a leasehold
interest of the Company or any Restricted Subsidiary, (iv) any agreement or
other instrument of a Person acquired by the Company or any Restricted
Subsidiary in existence at the time of such acquisition (but not created in
contemplation thereof), which encumbrance or restriction is not applicable to
any Person, or the properties or assets of any Person, other than the Person,
or the property or assets of the Person, so acquired, (v) any mortgage or other
Lien on real property acquired or improved by the Company or any Restricted
Subsidiary after the Issue Date that prohibits transfers of the type described
in (d) above with respect to such real property, (vi) with respect to a
Restricted Subsidiary, an agreement that has been entered into for the sale or
disposition of all or substantially all of the Company’s Capital Stock in, or
substantially all the assets of, such Restricted Subsidiary, (vii) the
refinancing of Indebtedness incurred under the agreements listed on Schedule D
attached to this Indenture or described in clause (v) above, so long as such
encumbrances or restrictions are no less favorable in any material respect to
the Company or any Restricted Subsidiary than those contained in the respective
agreement as in effect on the date of this Indenture, (viii) any such customary
encumbrance or restriction contained in a security document creating a Lien
permitted under this Indenture to the extent relating to the property or asset
subject to such Lien, (ix) any agreement or instrument governing or relating to
Senior Bank Indebtedness (an “Indebtedness Instrument”) if such encumbrance or
restriction applies only (X) to amounts which at any point in time (other than
during such periods as are described in the following clause (Y)) (1) exclude
amounts due and payable (or which are to become due and payable within 30 days)
in respect of the Securities or this Indenture for interest and principal
(after giving effect to any realization by the Company under any applicable
Currency Agreement), or (2) if paid, would result in an event described in the
following clause (Y) of this sentence, or (Y) during the pendency of any event
that causes, permits or, after notice or lapse of time, would cause or permit
the holder(s) of the Senior Bank Indebtedness governed by the

 

72

 

Indebtedness
Instrument to declare any such Indebtedness to be immediately due and payable
or require cash collateralization or cash cover for such Indebtedness for so
long as such cash collateralization or cash cover has not been provided, (x)
any agreement, instrument, encumbrance or restriction arising or agreed to in
the ordinary course of business, not relating to any Indebtedness and that do
not individually, or together with all such encumbrances or restrictions,
detract from the value of property or assets of the Company or any Restricted
Subsidiary in any manner material to the Company or any Restricted Subsidiary
and (xi) with respect to clause (d) above, any license agreement entered in the
ordinary course of business whereby the Company or any other Restricted
Subsidiary grants a license of programming or other intellectual property to
any other Person and such license agreement prohibits or encumbers the transfer
of the licensed property.

 

SECTION 1019.  LIMITATION ON INVESTMENTS IN UNRESTRICTED SUBSIDIARIES.

 

The Company will not make,
and will not permit any of its Restricted Subsidiaries to make, any Investments
in Unrestricted Subsidiaries (other than Permitted Investments) if, at the time
thereof, the amount of such Investment would exceed the amount of Restricted
Payments then permitted to be made pursuant to Section 1011. Any Investments in
Unrestricted Subsidiaries permitted to be made pursuant to this covenant (a)
will be treated as the making of a Restricted Payment in calculating the amount
of Restricted Payments made by the Company or a Restricted Subsidiary (without
duplication under the provisions of clause (a) of paragraph (iv) of Section
1011 and (b) may be made in cash or property (if made in property, the Fair
Market Value thereof as determined by the Board of Directors of the Company
(whose determination shall be conclusive and evidenced by a Board Resolution)
shall be deemed to be the amount of such Investment for the purpose of clause
(a)).

 

SECTION 1020.  LIMITATION ON LINES OF BUSINESS.

 

(a)           The Company will not, and will not
permit any Restricted Subsidiary to, engage in any business other than the
Cable/Telecommunications Business, the Entertainment/Programming Business or
the DTH Business or any business or activity reasonably related thereto,
including the operation of a subscriber management or service business.

 

(b)           UPC Polska Finance shall not have any
Subsidiaries nor shall it have any business operations or source of income of
its own.

 

SECTION 1021.  WAIVER OF CERTAIN COVENANTS.

 

The Issuers
may omit in any particular instance to comply with any term, provision or
condition set forth in Sections 1007 through 1020, inclusive, if before or
after the time for such compliance the Holders of at least a majority in
principal amount of the Outstanding Securities, by Act of such Holders, waive
such compliance in such instance with such term, provision or condition, but no
such waiver shall extend to or affect such term, provision or condition except
to the extent so expressly waived, and, until such waiver shall

 

73

 

become effective, the obligations of the
Issuers and the duties of the Trustee in respect of any such term, provision or
condition shall remain in full force and effect.

 

SECTION 1022.  RELATIONSHIP OF ISSUERS.

 

Each Issuer,
jointly and severally, covenants and agrees to be bound by the terms and
conditions of this Indenture.

 

ARTICLE ELEVEN

 

REDEMPTION OF SECURITIES

 

SECTION 1101.  RIGHT OF REDEMPTION.

 

(a)           The Securities will be redeemable at
the option of the Issuers, in whole or in part, from time to time, at any time
after the Issue date on not less than 15 or more than 30 days’ prior notice
upon payment of the outstanding principal amount of the Securities to be
redeemed, together with accrued and unpaid interest thereon, if any, to the
redemption date.

 

(b)           The Issuers will redeem or purchase
Securities in denominations of $1,000 principal amount at maturity and integral
multiples thereof in accordance with the terms of this Indenture unless the
Securities are in denominations of less than $1,000 principal amount at maturity.  In such events, the Securities will be
redeemed or purchased in multiples of the denomination in which the Securities
are then denominated.

 

SECTION
1102.  APPLICABILITY OF ARTICLE.

 

Redemption of
Securities at the election of the Issuers or otherwise, as permitted or
required by any provision of this Indenture, shall be made in accordance with
such provision and this Article.

 

SECTION 1103.  ELECTION TO REDEEM; NOTICE TO TRUSTEE.

 

The election
of the Issuers to redeem any Securities pursuant to Section 1101 shall be
evidenced by a Board Resolution of each Issuer.  In case of any redemption at the election of the Issuers, the
Issuers shall, at least 30 days prior to the Redemption Date fixed by the
Issuers (unless a shorter notice shall be satisfactory to the Trustee), notify
the Trustee in writing of such Redemption Date and of the principal amount of
Securities to be redeemed and shall deliver to the Trustee such documentation
and records as shall enable the Trustee to select the Securities to be redeemed
pursuant to Section 1104.

 

74

 

SECTION 1104.  SELECTION BY TRUSTEE OF SECURITIES TO BE REDEEMED.

 

If less than
all the Securities are to be redeemed, the particular Securities to be redeemed
shall be selected not more than 30 days prior to the Redemption Date by the
Trustee by such method as the Trustee shall deem fair and appropriate; provided, however, that no partial
redemption shall reduce the portion of the principal amount of a Security not
redeemed to less than $100.

 

The Trustee
shall promptly notify the Issuers in writing of the Securities selected for
redemption and, in the case of any Securities selected for partial redemption,
the principal amount thereof to be redeemed.

 

For all
purposes of this Indenture, unless the context otherwise requires, all
provisions relating to redemption of Securities shall relate, in the case of
any Security redeemed or to be redeemed only in part, to the portion of the
principal amount of such Security which has been or is to be redeemed.

 

SECTION 1105.  NOTICE OF REDEMPTION.

 

Notice of
redemption shall be given in the manner provided for in Section 106 not less
than 15 or more than 30 days prior to the Redemption Date, to each Holder of
Securities to be redeemed at its registered address.

 

All notices of
redemption shall state:

 

(1)           the
Redemption Date,

 

(2)           the
Redemption Price and the amount of accrued interest to the Redemption Date
payable as provided in Section 1107, if any,

 

(3)           if
less than all Outstanding Securities are to be redeemed, the identification
(and, in the case of a partial redemption, the principal amounts) of the
particular Securities to be redeemed,

 

(4)           in
case any Security is to be redeemed in part only, the notice which relates to
such Security shall state that on and after the Redemption Date, upon surrender
of such Security, the holder will receive, without charge, a new Security or
Securities of authorized denominations for the principal amount thereof
remaining unredeemed,

 

(5)           that
on the Redemption Date the Redemption Price (and accrued interest, if any, to
the Redemption Date payable as provided in Section 1107) will become due and
payable upon each such Security, or the portion thereof, to be redeemed, and
that interest thereon will cease to accrue on and after said date, and

 

(6)           the
place or places where such Securities are to be surrendered for payment of the
Redemption Price and accrued interest, if any.

 

75

 

Notice of
redemption of Securities to be redeemed at the election of the Issuers shall be
given by the Issuers or, at the Issuers’ request, by the Trustee in the name
and at the expense of the Issuers.

 

SECTION
1106.  DEPOSIT OF REDEMPTION PRICE.

 

Prior to any
Redemption Date, the Issuers shall deposit with the Trustee or with a Paying
Agent (or, if the Issuers are acting as their own Paying Agent, segregate and
hold in trust as provided in Section 1003) an amount of money sufficient to pay
the Redemption Price of, and accrued interest on, all the Securities which are
to be redeemed on that date.

 

SECTION
1107.  SECURITIES PAYABLE ON
REDEMPTION DATE.

 

Notice of
redemption having been given as aforesaid, the Securities so to be redeemed
shall, on the Redemption Date, become due and payable at the Redemption Price
therein specified (together with accrued interest, if any, to the Redemption
Date), and from and after such date (unless the Issuers shall default in the
payment of the Redemption Price and accrued interest) such Securities shall
cease to bear interest.  Upon surrender
of any such Security for redemption in accordance with said notice, such
Security shall be paid by the Issuers at the Redemption Price, together with
accrued interest, if any, to the Redemption Date; provided, however, that installments of interest whose
Stated Maturity is on or prior to the Redemption Date shall be payable to the
Holders of such Securities, or one or more Predecessor Securities, registered
as such at the close of business on the relevant Record Dates according to
their terms and the provisions of Section 309.

 

If any
Security called for redemption shall not be so paid upon surrender thereof for
redemption, the principal shall, until paid, bear interest from the Redemption
Date at the rate borne by the Securities.

 

SECTION
1108.  SECURITIES REDEEMED IN PART.

 

Any Security
which is to be redeemed only in part shall be surrendered at the office or
agency of the Issuers maintained for such purpose pursuant to Section 1002
(with, if the Issuers or the Trustee so requires, due endorsement by, or a
written instrument of transfer in form satisfactory to the Issuers and the
Trustee duly executed by, the Holder thereof or such Holder’s attorney duly
authorized in writing), and the Issuers shall execute, and the Trustee shall
authenticate and deliver to the Holder of such Security without service charge,
a new Security or Securities, of any authorized denomination as requested by
such Holder, in aggregate principal amount equal to and in exchange for the
unredeemed portion of the principal of the Security so surrendered.

 

76

 

ARTICLE TWELVE

 

[RESERVED]

 

ARTICLE
THIRTEEN

 

DEFEASANCE AND COVENANT DEFEASANCE

 

SECTION
1301.  ISSUERS’ OPTION TO EFFECT
DEFEASANCE OR COVENANT DEFEASANCE.

 

The Issuers
may, at their option and at any time, with respect to the Securities, elect to
have either Section 1302 or Section 1303 be applied to all Outstanding
Securities upon compliance with the conditions set forth below in this Article
Thirteen.

 

SECTION
1302.  DEFEASANCE AND DISCHARGE.

 

Upon the
Issuers’ exercise under Section 1301 of the option applicable to this Section
1302, the Issuers shall be deemed to have been discharged from their
obligations with respect to all Outstanding Securities on the date the
conditions set forth in Section 1304 are satisfied (hereinafter,
“defeasance”).  For this purpose, such
defeasance means that the Issuers shall be deemed to have paid and discharged
the entire Indebtedness represented by the Outstanding Securities, which shall
thereafter be deemed to be “Outstanding” only for the purposes of Section 1305
and the other Sections of this Indenture referred to in clauses (A) and (B) of
this Section 1302, and to have satisfied all its other obligations under such
Securities and this Indenture insofar as such Securities are concerned (and the
Trustee, at the expense of the Issuers, shall execute proper instruments
acknowledging the same), except for the following which shall survive until
otherwise terminated or discharged hereunder: (A) the rights of Holders of
Outstanding Securities to receive, solely from the trust fund described in
Section 1304 and as more fully set forth in such Section, payments in respect
of the principal of and interest on such Securities when such payments are due,
(B) the Issuers’ obligations with respect to such Securities under Sections
304, 305, 308, 1002 and 1003, (C) the rights, powers, trusts, duties and
immunities of the Trustee hereunder and (D) this Article Thirteen.  Subject to compliance with this Article
Thirteen, the Issuers may exercise its option under this Section 1302
notwithstanding the prior exercise of its option under Section 1303 with
respect to the Securities.

 

SECTION
1303.  COVENANT DEFEASANCE.

 

Upon the Issuers’
exercise under Section 1301 of the option applicable to this Section 1303, the
Issuers shall be released from their obligations under any covenant contained
in Section 801 (3) and in Sections 1007 through 1020 with respect to the
Outstanding Securities on and after the date the conditions set forth in
Section 1304 are satisfied (hereinafter, “covenant defeasance”), and the
Securities shall thereafter be deemed not to be “Outstanding” for the purposes
of any direction, waiver, consent or declaration or Act of Holders (and the
consequences of any thereof) in connection with such covenants, but shall
continue to be deemed “Outstanding” for all other purposes hereunder.  For this purpose, such covenant defeasance
means that, with respect to the Outstanding Securities, the Issuers may omit to
comply with and

 

77

 

shall have no liability in
respect of any term, condition or limitation set forth in any such covenant,
whether directly or indirectly, by reason of any reference elsewhere herein to
any such covenant or by reason of any reference in any such covenant to any
other provision herein or in any other document and such omission to comply
shall not constitute a Default or an Event of Default under Section 501(4),
but, except as specified above, the remainder of this Indenture and such
Securities shall be unaffected thereby.

 

SECTION
1304.  CONDITIONS TO DEFEASANCE OR
COVENANT DEFEASANCE.

 

The following
shall be the conditions to application of either Section 1302 or Section 1303
to the Outstanding Securities:

 

(1)           The
Issuers shall irrevocably deposit or cause to be deposited with the Trustee (or
another trustee satisfying the requirements of Section 607 who shall agree to
comply with the provisions of this Article Thirteen applicable to it) as trust
funds in trust for the purpose of making the following payments, specifically
pledged as security for, and dedicated solely to, the benefit of the Holders of
such Securities, (A) money in United States Dollars, (B) U.S. Government
Obligations, or (C) a combination thereof, in such amounts as will be
sufficient, in the opinion of a nationally recognized firm of independent
public accountants, or a nationally recognized investment banking firm, to pay
and discharge (i) the principal of and interest on the relevant Outstanding
Securities on the Stated Maturity (or upon redemption, if applicable) of such
principal or installment of interest and (ii) any mandatory redemption or
analogous payments applicable to the Outstanding Securities on the day on which
such payments are due and payable in accordance with the terms of this
Indenture and of such Securities; provided,
that the Trustee shall have been irrevocably instructed to apply such money or
the proceeds of such U.S. Government Obligations to said payments with respect
to the Securities.  For this purpose,
“U.S. Government Obligations” means securities that are (x) direct obligations
of the United States of America for the timely payment of which its full faith
and credit is pledged or (y) obligations of a Person controlled or supervised
by and acting as an agency or instrumentality of the United States of America
the timely payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which, in either case, are
not callable or redeemable at the option of the issuer thereof, and shall also
include a depository receipt issued by a bank (as defined in Section 3(a)(2) of
the Securities Act), as custodian with respect to any such U.S. Government
Obligation or a specific payment of principal of or interest on any such U.S.
Government Obligation held by such custodian for the account of the holder of
such depository receipt, provided,
that (except as required by law) such custodian is not authorized to make any
deduction from the amount payable to the holder of such depository receipt from
any amount received by the custodian in respect of the U.S. Government
Obligation or the specific payment of principal of or interest on the U.S.
Government Obligation evidenced by such depository receipt.

 

(2)           No
Default or Event of Default with respect to the Securities shall have occurred
and be continuing on the date of such deposit or, insofar as paragraphs (8) and
(9) of Section 501 hereof are concerned, at any time during the period ending
on the 91st

 

78

 

day after the date of such deposit (it being understood that this
condition shall not be deemed satisfied until the expiration of such period).

 

(3)           Such
defeasance or covenant defeasance shall not result in a breach or violation of,
or constitute a default under any material agreement or instrument (other than
this Indenture) to which an Issuer is a party or by which it is bound.

 

(4)           In
the case of an election under Section 1302, each Issuer shall have delivered to
the Trustee an Opinion of Counsel in the United States stating that (x) the
Issuers have received from, or there has been published by, the Internal
Revenue Service a ruling, or (y) since the effective date of the Registration
Statement there has been a change in the applicable federal income tax law, in
either case to the effect that, and based thereon such opinion shall confirm
that, the Holders of the Outstanding Securities will not recognize income, gain
or loss for federal income tax purposes as a result of such defeasance and will
be subject to federal income tax on the same amounts, in the same manner and at
the same times as would have been the case if such defeasance had not occurred.

 

(5)           In
the case of an election under Section 1303, each Issuer shall have delivered to
the Trustee an Opinion of Counsel in the United States to the effect that the
Holders of the Outstanding Securities will not recognize income, gain or loss
for federal income tax purposes as a result of such covenant defeasance and
will be subject to federal income tax on the same amounts, in the same manner
and at the same times as would have been the case if such covenant defeasance
had not occurred.

 

(6)           Each
Issuer shall have delivered to the Trustee an Opinion of Counsel in the United
States to the effect that after the 91st day following the deposit or after the
date such opinion is delivered, the trust funds will not be subject to the
effect of any applicable bankruptcy, insolvency, reorganization or similar laws
affecting creditors’ rights generally.

 

(7)           Each
Issuer shall have delivered to the Trustee an Officer’s Certificate stating
that the deposit was not made by such Issuer with the intent of preferring the
Holders of the Securities over the other creditors of the Issuers with the
intent of hindering, delaying or defrauding creditors of the Issuers.

 

(8)           Each
Issuer shall have delivered to the Trustee an Officer’s Certificate and an
Opinion of Counsel, each stating that all conditions precedent provided for
relating to either the defeasance under Section 1302 or the covenant defeasance
under Section 1303 (as the case may be) have been complied with.

 

SECTION
1305.  DEPOSITED MONEY AND U.S.
GOVERNMENT OBLIGATIONS TO BE HELD IN TRUST; OTHER MISCELLANEOUS PROVISIONS.

 

Subject to the
provisions of the last paragraph of Section 1003, all money and U.S. Government
Obligations (including the proceeds thereof) deposited with the Trustee (or
other qualifying trustee, collectively for purposes of this Section 1305, the
“Trustee”) pursuant to Section 1304 in respect of the Outstanding Securities
shall be held in trust and applied by the

 

79

 

Trustee, in accordance with the
provisions of such Securities and this Indenture, to the payment, either
directly or through any Paying Agent (including the Issuers acting as their own
Paying Agent) as the Trustee may determine, to the Holders of such Securities
of all sums due and to become due thereon in respect of principal and interest,
but such money need not be segregated from other funds except to the extent
required by law.

 

The Issuers
shall pay and indemnify the Trustee against any tax, fee or other charge imposed
on or assessed against the U.S. Governmental Obligations deposited pursuant to
Section 1304 or the principal and interest received in respect thereof other
than any such tax, fee or other charge which by law is for the account of the
Holders of the Outstanding Securities.

 

Anything in
this Article Thirteen to the contrary notwithstanding, the Trustee shall
deliver or pay to the Issuers from time to time upon Issuer Request any money
or U.S. Government Obligations held by it as provided in Section 1304 which, in
the opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee, are in
excess of the amount thereof which would then be required to be deposited to
effect an equivalent defeasance or covenant defeasance, as applicable, in
accordance with this Article.

 

SECTION
1306.  REINSTATEMENT.

 

If the Trustee
or any Paying Agent is unable to apply any money in accordance with Section
1305 by reason of any order or judgment of any court or governmental authority
enjoining, restraining or otherwise prohibiting such application, then the
Issuers’ obligations under this Indenture and the Securities shall be revived
and reinstated as though no deposit had occurred pursuant to Section 1302 or
1303, as the case may be, until such time as the Trustee or Paying Agent is
permitted to apply all such money in accordance with Section 1305; provided, however, that if the Issuers
make any payment of principal of or interest on any following the reinstatement
of their obligations, the Issuers shall be subrogated to the rights of the
Holders to receive such payment from the money held by the Trustee or Paying
Agent.

 

80

 

IN WITNESS
WHEREOF, the parties hereto have caused this Indenture to be duly executed, and
their respective corporate seals to be hereunto affixed and, in the case of the
Issuers, attested, all as of the day and year first above written.

 

	
   

  	
  UPC POLSKA,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
  [SEAL]

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
  Attest:

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  UPC POLSKA
  FINANCE, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
  [SEAL]

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
  Attest:

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  WILMINGTON
  TRUST COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
  [SEAL]

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
									

 

81

 

SCHEDULE A

 

EXISTING MANAGEMENT AGREEMENTS, OVERHEAD AGREEMENTS,

SERVICE AGREEMENTS AND
ORGANIZATIONAL CONTRACTS

 

 

SCHEDULE B

 

ISSUER AND RESTRICTED SUBSIDIARY INDEBTEDNESS OUTSTANDING ON THE ISSUE
DATE

 

 

SCHEDULE C

 

LIENS EXISTING ON THE ISSUE DATE

 

 

SCHEDULE D

 

AGREEMENTS NOT RESTRICTED UNDER SECTION 1018

 

 

EXHIBIT A

 

CUSIP No:

 

(Front of Security)

 

	
  No.

  	
   

  	
  $
                 

  

 

UPC POLSKA, INC.

 

UPC POLSKA FINANCE, INC.

 

Senior Note due 2006

 

UPC POLSKA, INC. (“UPC
Polska”), a Delaware corporation, and UPC POLSKA FINANCE, INC. (“UPC Polska
Finance,” and together with UPC Polska, the “Issuers,” which term includes any
successor under the Indenture hereinafter referred to), a Delaware corporation,
for value received, promise to pay to [                ],
or its registered assigns, the principal sum of
[                ]
($[          ]) on [September
30, 2006].

 

Interest Payment Dates:
[          ], and
[                ],
commencing [     ], 2003.

 

Record Dates:
[                ]
and
[                ]
(whether or not a Business Day).

 

Additional provisions of this
Security are set forth on the other side of this Security.

 

	
   

  	
  Dated:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  UPC POLSKA,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

	
   

  	
  UPC POLSKA
  FINANCE, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

2

 

(Trustee’s Certificate of
Authentication)

 

This is one of the Securities
referred

to in the within-mentioned Indenture

 

	
  WILMINGTON
  TRUST COMPANY, as Trustee

  
	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Authorized
  Signatory

  	
   

  

 

3

 

UPC POLSKA,
INC.

UPC POLSKA
FINANCE, INC.

Senior Note
due 2006

 

1.                                       PRINCIPAL
AND INTEREST

 

The Issuers will pay the principal of this
Senior Note on [September 30, 2006].

 

The Issuers promise to pay cash interest on
the principal amount of this Senior Note on each Interest Payment Date, as set
forth below, at the rate of 9% per annum on the principal amount at maturity of
$[           ]
commencing on
[                    ],
2003, or from the most recent Interest Payment Date to which interest has been
paid or duly provided for, payable on
[              ,
2003] and semi-annually thereafter on
[                ]
and
[                ]
in each year and at said Stated Maturity, until the principal thereof is paid
or duly provided for.

 

In the case of a default in payment of the
amount due at Maturity, the amount due on the Securities shall bear interest at
a rate of 11% per annum (to the extent that the payment of such interest shall
be legally enforceable), which shall accrue from the date of such default to
the date the payment of such amount has been made or duly provided for.  Interest on any overdue principal amount
shall be payable on demand.

 

Cash Interest on this Senior Note will accrue
from the most recent date to which interest has been paid on this Senior Note
or, if no interest has been paid, from
[              ],
2003; provided, that if there is
no existing default in the payment of interest and if this Senior Note is
authenticated between a Regular Record Date referred to on the face hereof and
the next succeeding Interest Payment Date, interest shall accrue from such
Interest Payment Date. Interest will be computed on the basis of a 360-day year
comprised of twelve 30-day months. Interest of 9% will be calculated on the
principal amount at maturity of
$[          ].

 

The Issuers shall pay interest on overdue
principal and interest on overdue installments of interest, to the extent
lawful, at a rate per annum of [11%].

 

2.                                       METHOD
OF PAYMENT

 

The Issuers will pay cash interest (except
defaulted interest) on the principal amount of the Senior Notes on each
[                ]
and [                    ],
commencing
[                ],
2003, to the persons who are Holders (as reflected in the Senior Note Register
at the close of business on the April 1 and October 1 immediately preceding the
Interest Payment Date), in each case; provided,
that with respect to the payment of principal, the Issuers will make payment to
the Holder that surrenders this Senior Note to any Paying Agent on or after
[             ,
2006].

 

The Issuers will pay principal and interest
in money of the United States that at the time of payment is legal tender for
payment of public and private debts. However, the Issuers may pay principal and
interest by its check payable in such money. The Issuers may mail an interest
check to a Holder’s registered address (as reflected in the Senior Note
Register). If a payment date is a

 

4

 

date other than a Business Day at a place of
payment, payment may be made at that place on the next succeeding day that is a
Business Day and no interest shall accrue for the intervening period.

 

3.                                       PAYING
AGENT AND SENIOR NOTE REGISTRAR.

 

Initially, the Trustee will act as Paying
Agent and Senior Note Registrar. The Issuers may change any Paying Agent or
Senior Note Registrar upon written notice thereto. The Issuers, any Subsidiary
or any Affiliate of any of them may act as Paying Agent, Senior Note Registrar
or co-registrar.

 

4.                                       INDENTURE;
LIMITATIONS.

 

The Issuers issued the Senior Notes under an
Indenture dated as of [September     ], 2003 (the
“Indenture”), between the Issuers and Wilmington Trust Company, as trustee (the
“Trustee”). Capitalized terms herein are used as defined in the Indenture
unless otherwise indicated. The terms of the Senior Notes include those stated
in the Indenture and those made part of the Indenture by reference to the Trust
Indenture Act.  The Senior Notes are
subject to all such terms, and Holders are referred to the Indenture for a
statement of all such terms. To the extent permitted by applicable law, in the
event of any inconsistency between the terms of this Senior Note and the terms
of the Indenture, the terms of the Indenture shall control.

 

The Senior Notes are senior unsecured
obligations of the Issuers ranking pari
passu in right of payment with all other existing and future
unsubordinated obligations of the Issuers and senior in right of payment to any
existing and future obligations of the Issuers expressly subordinated in right
of payment to the Senior Notes. The Indenture limits the aggregate principal
amount at maturity of the Senior Notes to
$[           ].

 

5.                                       OPTIONAL
REDEMPTION.

 

The Senior Notes will be redeemable at the
option of the Issuers, in whole or in part, from time to time, at any time on
or after the Issue Date on not less than 30 or more than 60 days’ prior notice
upon payment of the outstanding principal amount of the Securities, together
with accrued interest, if any, to the redemption date.

 

The Issuers will redeem or purchase Senior
Notes in denominations of $1,000 principal amount at maturity and integral
multiples thereof in accordance with the terms of the Indenture unless the
Senior Notes are in denominations of less than $1,000 principal amount at
maturity.  In such events, the Senior
Notes will be redeemed or purchased in multiples of the denomination in which
the Senior Notes are then denominated.

 

Notice of a redemption will be mailed at
least 30 days but not more than 60 days before the Redemption Date to each
Holder to be redeemed at such Holder’s last address as it appears in the Senior
Note Register. Senior Notes in original denominations larger than $1.00 principal
amount at maturity may be redeemed in part in integral multiples of $1.00
principal amount at maturity. On and after the Redemption Date, interest will
cease to accrue on Senior Notes or portions of Senior Notes called for
redemption, unless the Issuers default in the payment of the Redemption Price.

 

5

 

6.             REPURCHASE
UPON A CHANGE IN CONTROL AND ASSET SALES.

 

(a) Upon the occurrence of a Change of
Control, each holder of Senior Notes shall have the right to require that the
Issuers purchase such holder’s Senior Notes, in whole or in part in integral
multiples of $1.00 principal amount at maturity, at a purchase price in cash of
100% of the outstanding principal amount thereof on the redemption date, plus
accrued and unpaid interest, if any, to the date of purchase (subject to the
right of holders of record on relevant record dates to receive interest due on
relevant interest payment dates), and (b) upon the occurrence of an Asset Sale,
the Issuers may be obligated to make an offer to purchase all or a portion of
the outstanding Senior Notes with a portion of the Net Cash Proceeds of such
Asset Sale at a redemption price of 100% of the outstanding principal amount
thereof on the redemption date plus accrued and unpaid interest, if any, to the
date of purchase.

 

7.                                       DENOMINATIONS;
TRANSFER; EXCHANGE.

 

The Senior Notes are in registered form
without coupons, in denominations of $1.00 principal amount at maturity and any
integral multiple thereof. Under the Terms of the Indenture, the Issuers may
convert, at its option and to the extent practical, the Senior Notes to
denominations of $1,000 principal amount at maturity, so long as such
conversion is not adverse to Holders. A Holder may register the transfer or
exchange of Senior Notes in accordance with the Indenture. The Senior Note
Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay any taxes and fees required by
law or permitted by the Indenture. The Senior Note Registrar need not register
the transfer or exchange of any Senior Notes selected for redemption (except
the unredeemed portion of any Senior Note being redeemed in part). Also, it
need not register the transfer or exchange of any Senior Notes for a period of
15 days before a selection of Senior Notes to be redeemed is made.

 

8.                                       PERSONS
DEEMED OWNERS.

 

A Holder may be treated as the owner of a
Senior Note for all purposes.

 

9.                                       UNCLAIMED
MONEY.

 

If money for the payment of principal or
interest remains unclaimed for two years, the Trustee and the Paying Agent will
pay the money back to the Issuers at their request. After that, Holders
entitled to the money must look to the Issuers for payment, unless an abandoned
property law designates another Person, and all liability of the Trustee and
such Paying Agent with respect to such money shall cease.

 

10.                                 AMENDMENT;
SUPPLEMENT; WAIVER.

 

Subject to certain exceptions, the Indenture
or the Senior Notes may be amended or supplemented with the consent of the
Holders of at least a majority in aggregate principal amount at maturity of the
Senior Notes then outstanding, and any existing default or compliance with any
provision may be waived with the consent of the Holders of a majority in
aggregate principal amount at maturity of the Senior Notes then outstanding.
Without notice to or the

 

6

 

consent of any Holder, the parties thereto
may amend or supplement the Indenture or the Senior Notes to, among other
things, cure any ambiguity or inconsistency and make any change that does not
materially adversely affect the rights of any Holder.

 

12.                                 RESTRICTIVE
COVENANTS.

 

The Indenture contains certain covenants,
including, without limitation, covenants with respect to the following matters:
(i) Indebtedness; (ii) Restricted Payments; (iii) issuances and sales of
Subsidiary stock; (iv) transactions with Affiliates; (v) Liens; (vi) guarantees
of Indebtedness by Subsidiaries; (vii) purchase of Notes upon a Change of
Control; (viii) Asset Sales and disposition of the proceeds thereof; (ix)
dividends and other payment restrictions affecting Subsidiaries; (x)
investments in Unrestricted Subsidiaries; (xi) merger and certain transfers of
assets; and (xii) lines of business. At the end of each quarter and fiscal
year, the Issuers must report to the Trustee on compliance with such
limitations.

 

13.                                 SUCCESSOR
PERSONS.

 

When a successor person or other entity
assumes all the obligations of its predecessor under the Senior Notes and the
Indenture, the predecessor person will be released from those obligations.

 

14.                                 REMEDIES
FOR EVENTS OF DEFAULT.

 

If an Event of Default, as defined in the
Indenture, occurs and is continuing, the Trustee or the Holders of not less
than 25% in principal amount at maturity of the Senior Notes then outstanding,
by written notice to the Issuers (and to the Trustee, if such notice is given
by the Holders) may declare all the Senior Notes to be immediately due and
payable and upon any such declaration all such amounts payable in respect of
the Senior Notes shall become immediately due and payable. If a bankruptcy or
insolvency default with respect to the Issuers or any of the Significant
Subsidiaries occurs and is continuing, the Senior Notes and all such amounts
payable in respect of the Senior Notes shall automatically become immediately
due and payable without any declaration or other act on the part of the Trustee
or any Holder of Senior Notes. Holders may not enforce the Indenture or the
Senior Notes except as provided in the Indenture. The Trustee may require
indemnity satisfactory to it before it enforces the Indenture or the Senior
Notes. Subject to certain limitations, Holders of at least a majority in
principal amount of the Senior Notes then outstanding may direct the Trustee in
its exercise of any trust or power.

 

15.                                 TRUSTEE
DEALINGS WITH ISSUERS.

 

The Trustee under the Indenture, in its
individual or any other capacity, may become the owner or pledgee of Senior
Notes and may make loans to, accept deposits from, perform services for, and
otherwise deal with, the Issuers and their Affiliates as if it were not the
Trustee.

 

16.                                 AUTHENTICATION.

 

This Senior Note shall not be valid until the
Trustee signs the certificate of authentication on the other side of this
Senior Note.

 

7

 

17.                                 ABBREVIATIONS.

 

Customary abbreviations may be used in the
name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN
ENT (= tenants by the entireties), JT TEN (= joint tenants with right of
survivorship and not as tenants in common), CUST (= Custodian) and U/G/M/A (=
Uniform Gifts to Minors Act).

 

18.                                 DEFEASANCE.

 

The Indenture contains provisions for
defeasance, at any time, of the Indebtedness represented by this Senior Note or
the covenants governing the Indebtedness represented by this Senior Note, upon
compliance by the Issuers with certain conditions set forth in the Indenture.

 

8

 

FORM OF TRANSFER
NOTICE

 

FOR VALUE RECEIVED the undersigned registered
holder hereby sell(s), assign(s) and transfer(s) unto

 

 

(Insert assignee’s soc. sec. or tax I.D. no.)

 

 

 

 

 

(Print or type assignee’s name, address and zip code)

 

and irrevocably appoint
                                                                                                                                      
agent to transfer this Security on the books of the Issuers.  The agent may substitute another to act for
him.

 

9

 

OPTION OF
HOLDER TO ELECT PURCHASE

 

If you wish to have this Senior Note
purchased by the Issuers pursuant to Section 917 of the Indenture, check the
Box: o. If you wish to
have a portion of this Senior Note purchased by the Issuers pursuant to Section
917 of the Indenture, state the amount (in original principal amount) below:

 

 

	
   

  	
  $                      .

  
	
   

  
	
  Date:

  	
   

  	
   

  
	
   

  
	
   

  	
  Your
  Signature:

  	
   

  
	
   

  	
  (Sign
  exactly as your name appears on the face of this Security)

  
	
   

  	
   

  
	
   

  	
   

  
	
  Signature
  Guarantee:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
							

 

Signatures must be guaranteed by an “eligible
guarantor institution” meeting the requirements of the [Registrar], which
requirements include membership or participation in the Security Transfer Agent
Medallion Program (“STAMP”) or such other “signature guarantee program” as may
be determined by the [Registrar] in addition to, or in substitution for, STAMP,
all in accordance with the Securities Exchange Act of 1934, as amended.

 

10

 

EXHIBIT B

 

Form of Rule 144A
Certificate

 

	
  To:

  	
  Wilmington Trust Company

  
	
   

  	
  1100 North
  Market Street

  
	
   

  	
  Wilmington,
  Delaware 19890

  

 

Attention: Corporate Trust Trustee Administration

 

Re: UPC Polska, Inc. (the “Company”) and UPC Polska Finance,
Inc. (and together with the Company, the “Issuers”) Senior Notes due
[September 30, 2006] (the “Senior Notes”)

 

Ladies and Gentlemen:

 

In connection with our
proposed sale of $        aggregate
principal amount of Senior Notes, we confirm that such sale has been effected
pursuant to and in accordance with Rule 144A (“Rule 144A”) under the Securities
Act of 1933, as amended (the “Securities Act”). We are aware that the transfer
of Senior Notes to us is being made in reliance on the exemption from the
provisions of Section 5 of the Securities Act provided by Rule 144A. Prior to
the date of this Certificate we have been given the opportunity to obtain from
the Issuers the information referred to in Rule 144A(d)(4), and have either
declined such opportunity or have received such information.  You and the Issuers are entitled to rely
upon this Certificate and are irrevocably authorized to produce this
Certificate or a copy hereof to any interested party in any administrative or
legal proceeding or official inquiry with respect to the matters covered
hereby.

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [NAME OF PURCHASER]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
  Address:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
   

  	
   

  
						

 

 

EXHIBIT C

 

FORM OF
CERTIFICATE TO BE DELIVERED IN CONNECTION WITH TRANSFERS PURSUANT TO REGULATION
S

 

	
  To:

  	
  Wilmington Trust Company

  
	
   

  	
  1100 North
  Market Street

  
	
   

  	
  Wilmington,
  Delaware 19890

  
	
   

  	
  Attention:
  Corporate Trust Trustee Administration

  
	
   

  	
   

  	
  Re:      UPC
  Polska, Inc. (the “Company”) and UPC Polska Finance, Inc. (and together with
  the Company, the “Issuers”) Senior Notes due [September 30, 2006] (the
  “Senior Notes”)

  

 

Ladies and Gentlemen:

 

In connection with our proposed sale of
$[                       ]
aggregate principal amount at maturity of Senior Notes, we confirm that such
sale has been effected pursuant to and in accordance with Regulation S under
the Securities Act of 1933 and, accordingly, we represent that:

 

(1) the offer
of the Senior Notes was not made to a person in the United States;

 

(2) at the
time the buy order was originated, the transferee was outside the United States
or we and any person acting on our behalf reasonably believed that the
transferee was outside the United States;

 

(3) no direct
selling efforts have been made by us in the United States in contravention of
the requirements of Rule 903(b) or Rule 904(b) of Regulation S, as applicable;
and

 

(4) the
transaction is not part of a plan or scheme to evade the registration
requirements of the U.S. Securities Act of 1933.

 

You and the Issuers are entitled to rely upon
this letter and are irrevocably authorized to produce this letter or a copy
hereof to any interested party in any administrative or legal proceeding or
official inquiry with respect to the matters covered hereby. The terms used in
this letter have the meanings set forth in Regulation S.

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  [NAME OF TRANSFEROR]

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
  Address:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date of this Certificate:

  	
   

  	
   

  
						

 

2

 

ANNEX D

 

Capitalization of UPC Polska, Inc.

 

a. Capital Stock or other security of UPC
Polska that is authorized, issued and outstanding:

 

1,000 shares of capital stock,
par value $0.01 per share, owned by UPC Telecom B.V.

 

b. Outstanding or authorized options,
warrants, call, preemptive rights, subscriptions or other rights, convertible
or exchangeable securities, “phantom” stock rights, stock appreciation rights,
stock-based performance units, agreements, arrangements commitments or claims
of any character, contingent or otherwise, relating to the issued or unissued
capital stock of UPC Polska or obligating UPC Polska to issue, transfer or sell
or casue to be issued, transferred or sold any capital stock or other equity
interests in UPC Polska or securities convertible into or exchangeable for such
shares or equity interests, or obligating UPC Polska to grant, extend or enter
into any such option, warrant, call, preemptive right, subscription or other
right, convertible or exchangeable security, agreement, arrangement, commitment
or claim:

 

None.

 

c. Outstanding contractual obligations of UPC
Polska to repurchase, redeem or otherwise acquire any capital stock of UPC
Polska:

 

None.

 

 

Schedule 1.1

Affiliate Indebtedness

 

Affiliate Indebtedness – Approximate Amounts
as of May 31, 2003

 

	
  1.  UPC
  Operations B.V.

  	
   

  	
  $4.4 million

  

 

 

Schedule 2.5

Critical Creditors

 

Critical Creditors – as of May 31, 2003

 

None

 

 

Schedule 2.6

General Unsecured Creditors

 

 

General Unsecured Creditors – Approximate
Amounts as of May 31, 2003

 

1.                                       Reece
Communications - $6.3 million (loan plus interest)

 

UPC Polska also has the following regular
suppliers that may become General Unsecured Creditors from time to time and
whose claims are expected to be paid in full in the ordinary course of business
prior to the Filing Date:(1)

 

2.                                       Baker
& McKenzie - $250,000

 

3.                                       KPMG Polska Sp. z o.o. - $200,000

 

4.                                       Merrill
Corporation - $0

 

5.                                       Holme
Roberts & Owen, LLP - $50,000

 

6.                                       Deutsche
Bank Trust Company Americas - $0

 

7.                                       Cahill
Gordon & Reindel LLP - $59,225

 

8.                                       FTI
Consulting, Inc. - $100,000

 

9.                                       Pricewaterhouse
Coopers Polska Sp. z o.o. - $40,000

 

10.                                 KPMG
LLP - $50,000

 

(1) Approximate amounts are as
of May 31, 2003.

 

 

Schedule 6.4(a)

 

Claims and Interests in UPC Polska, Inc.
owned by UPC Telecom B.V. – as of May 31, 2003 

 

1.               UPC
Polska common stock- 1,000 shares of capital stock, par value $0.01 per share

2.               UPC
Polska Notes- $76.7 million (accreted value)

3.               Telecom
Pari Passu Notes- $255.2 (principal plus accrued interest)

4.               Telecom
Junior Notes- $206.4 million (principal plus accrued interest)

 

 

Schedule 6.4(b)

 

Claims and Interests in UPC Polska, Inc.
owned by Belmarken Holding B.V. – as of May 31, 2003  

 

1.               Belmarken Notes- $15.6 million
(principal plus accrued interest)

 

 

Schedule 7.4

 

Claims and Interests in UPC Polska, Inc.
owned by Participating Noteholders – as of May 31, 2003  

 

	
   

  	
   

  	
  As of 31
  May 2003

  	
   

  
	
   

  	
   

  	
  Principal
  ($mm)

  	
   

  	
  Accreted
  ($mm)

  	
   

  
	
   

  	
   

  	
  2008

  	
   

  	
  2009

  	
   

  	
  Series C

  	
   

  	
  TOTAL

  	
   

  	
  2008

  	
   

  	
  2009

  	
   

  	
  Series C

  	
   

  	
  TOTAL

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  GoldenTree Asset Management LLC

  	
   

  	
  61.350

  	
   

  	
  53.618

  	
   

  	
  0.0

  	
   

  	
  114.968

  	
   

  	
  60.3

  	
   

  	
  47.3

  	
   

  	
  0.0

  	
   

  	
  107.6

  	
   

  
	
  MacKay Shields LLC

  	
   

  	
  51.600

  	
   

  	
  0.000

  	
   

  	
  0.0

  	
   

  	
  51.600

  	
   

  	
  50.7

  	
   

  	
  0.0

  	
   

  	
  0.0

  	
   

  	
  50.7

  	
   

  
	
  Strong Capital Management, Inc.

  	
   

  	
  20.050

  	
   

  	
  12.850

  	
   

  	
  0.0

  	
   

  	
  32.900

  	
   

  	
  19.7

  	
   

  	
  11.3

  	
   

  	
  0.0

  	
   

  	
  31.1

  	
   

  
	
  Morgan Stanley Investment Management LLC(1)

  	
   

  	
  0.000

  	
   

  	
  0.000

  	
   

  	
  36.001

  	
   

  	
  36.001

  	
   

  	
  0.0

  	
   

  	
  0.0

  	
   

  	
  21.3

  	
   

  	
  21.3

  	
   

  
	
  Deutsche Bank

  	
   

  	
  8.400

  	
   

  	
  35.093

  	
   

  	
  0.0

  	
   

  	
  43.493

  	
   

  	
  8.3

  	
   

  	
  31.0

  	
   

  	
  0.0

  	
   

  	
  39.2

  	
   

  
	
  Goldman Sachs & Co.

  	
   

  	
  5.000

  	
   

  	
  0.000

  	
   

  	
  0.0

  	
   

  	
  5.000

  	
   

  	
  4.9

  	
   

  	
  0.0

  	
   

  	
  0.0

  	
   

  	
  4.9

  	
   

  
	
  Goldman Sachs International

  	
   

  	
  5.000

  	
   

  	
  0.000

  	
   

  	
  0.0

  	
   

  	
  5.000

  	
   

  	
  4.9

  	
   

  	
  0.0

  	
   

  	
  0.0

  	
   

  	
  4.9

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total

  	
   

  	
  151.4

  	
   

  	
  101.6

  	
   

  	
  36.0

  	
   

  	
  289.0

  	
   

  	
  148.9

  	
   

  	
  89.6

  	
   

  	
  21.3

  	
   

  	
  259.8

  	
   

  

 

(1) Purchased entire amount at
issue.

 

 

	
  ARTICLE I DEFINITIONS; CROSS-REFERENCES;
  INTERPRETATION

  
	
   

  
	
   

  	
  Section
  1.1

  	
  Definitions

  
	
   

  	
  Section
  1.2

  	
  Cross-references

  
	
   

  	
  Section
  1.3

  	
  Interpretation

  
	
   

  	
   

  	
   

  
	
  ARTICLE II RESTRUCTURING

  
	
   

  
	
   

  	
  Section
  2.1

  	
  The
  Restructuring

  
	
   

  	
  Section
  2.2

  	
  Treatment
  of UPC Polska Notes (Other than the Telecom Owned UPC Polska Notes)

  
	
   

  	
  Section
  2.3

  	
  Treatment
  of Telecom Owned UPC Polska Notes, Telecom Pari Passu Notes, Belmarken Notes
  and Affiliate Indebtedness

  
	
   

  	
  Section
  2.4

  	
  Treatment
  of Telecom Junior Notes

  
	
   

  	
  Section
  2.5

  	
  Treatment
  of Critical Creditors

  
	
   

  	
  Section
  2.6

  	
  Treatment
  of General Unsecured Creditors

  
	
   

  	
  Section
  2.7

  	
  Administrative
  and Other Priority Claims

  
	
   

  	
  Section
  2.8

  	
  Treatment
  of UPC Polska Equity

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  III DISCLOSURE STATEMENT; PLAN

  
	
   

  
	
   

  	
  Section
  3.1

  	
  Disclosure
  Statement and Plan

  
	
   

  	
  Section
  3.2

  	
  Amendments

  
	
   

  	
  Section
  3.3

  	
  Response
  to Comments

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV VOTING PROVISIONS

  
	
   

  
	
   

  	
  Section
  4.1

  	
  Certain
  Voting Matters

  
	
   

  	
  Section
  4.2

  	
  Voting
  After the Filing Date

  
	
   

  	
  Section
  4.3

  	
  Direction
  of Trustees

  
	
   

  	
  Section
  4.4

  	
  Acknowledgement

  
	
   

  	
   

  	
   

  
	
  ARTICLE V REPRESENTATIONS AND WARRANTIES OF
  UPC POLSKA

  
	
   

  
	
   

  	
  Section
  5.1

  	
  Organization

  
	
   

  	
  Section
  5.2

  	
  Capitalization

  
	
   

  	
  Section
  5.3

  	
  Authorization;
  Validity of Agreement; Corporate Action

  
	
   

  	
  Section
  5.4

  	
  Consents
  and Approvals; No Violations

  
	
   

  	
  Section
  5.5

  	
  SEC
  Reports and Financial Statements

  
	
   

  	
  Section
  5.6

  	
  Brokers

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI REPRESENTATIONS AND WARRANTIES
  OF THE UPC ENTITIES

  
	
   

  
	
   

  	
  Section
  6.1

  	
  Organization

  

 

i

 

	
   

  	
  Section
  6.2

  	
  Authorization;
  Validity of Agreement; Corporate Action

  
	
   

  	
  Section
  6.3

  	
  Consents
  and Approvals; No Violations

  
	
   

  	
  Section
  6.4

  	
  Ownership
  of Securities

  
	
   

  	
  Section
  6.5

  	
  Certain
  Securities Law Matters

  
	
   

  	
  Section
  6.6

  	
  Brokers

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  VII REPRESENTATIONS AND WARRANTIES OF PARTICIPATING NOTEHOLDERS

  
	
   

  
	
   

  	
  Section
  7.1

  	
  Organization

  
	
   

  	
  Section
  7.2

  	
  Authorization;
  Validity of Agreement; Noteholder Action

  
	
   

  	
  Section
  7.3

  	
  Consents
  and Approvals; No Violations

  
	
   

  	
  Section
  7.4

  	
  Ownership
  of Securities

  
	
   

  	
  Section
  7.5

  	
  Certain
  Securities Law Matters

  
	
   

  	
  Section
  7.6

  	
  Brokers

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  VIII CERTAIN COVENANTS

  
	
   

  
	
   

  	
  Section
  8.1

  	
  Commercially
  Reasonable Efforts

  
	
   

  	
  Section
  8.2

  	
  Notification
  of Certain Matters

  
	
   

  	
  Section
  8.3

  	
  Forbearance

  
	
   

  	
  Section
  8.4

  	
  Restrictions
  on Transfer

  
	
   

  	
  Section
  8.5

  	
  Further
  Acquisition of Claims or Interests

  
	
   

  	
  Section
  8.6

  	
  Impact
  of Appointment of Creditors’ Committee

  
	
   

  	
  Section
  8.7

  	
  Releases
  and Exculpation

  
	
   

  	
  Section
  8.8

  	
  Advisors

  
	
   

  	
  Section
  8.9

  	
  Adjustment
  to Third Party Noteholder Consideration

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX TERMINATION AND ABANDONMENT

  
	
   

  
	
   

  	
  Section
  9.1

  	
  Termination

  
	
   

  	
  Section
  9.2

  	
  Effect
  of Termination

  
	
   

  	
   

  	
   

  
	
  ARTICLE X MISCELLANEOUS

  
	
   

  
	
   

  	
  Section
  10.1

  	
  Nonsurvival
  of Representations and Warranties

  
	
   

  	
  Section
  10.2

  	
  Notices

  
	
   

  	
  Section
  10.3

  	
  Entire
  Agreement

  
	
   

  	
  Section
  10.4

  	
  No
  Third-Party Beneficiaries

  
	
   

  	
  Section
  10.5

  	
  Amendment

  
	
   

  	
  Section
  10.6

  	
  Assignment

  
	
   

  	
  Section
  10.7

  	
  Counterparts

  
	
   

  	
  Section
  10.8

  	
  Severability

  
	
   

  	
  Section
  10.9

  	
  Governing
  Law

  
	
   

  	
  Section
  10.10

  	
  Submission
  to Jurisdiction

  
	
   

  	
  Section
  10.11

  	
  Remedies

  

 

ii

 

	
   

  	
  Section
  10.12

  	
  Waiver
  of Jury Trial

  
	
   

  	
  Section
  10.13

  	
  Consideration

  
	
   

  	
  Section
  10.14

  	
  Acknowledgment
  of Risks

  
	
   

  	
  Section
  10.15

  	
  Disclosure
  of Individual Holdings

  
	
   

  	
  Section
  10.16

  	
  Fees
  and Expenses

  
	
   

  	
  Section
  10.17

  	
  Reservation
  of Rights

  
	
   

  	
  Section
  10.18

  	
  Effectiveness
  of this Agreement

  

 

iiiExhibit 10.1

 

GOING FORWARD AGREEMENT

 

This GOING FORWARD AGREEMENT is entered into this 2nd day of
May, 2003, by and among Xmark Fund, L.P. and Xmark Fund, Ltd. (collectively, “Xmark”),
and Photogen Technologies, Inc., a Nevada corporation (“Photogen”).

 

WHEREAS, Xmark has entered into a Secured Note Purchase Agreement,
dated July 23, 2002, with Alliance Pharmaceutical Corp., a New York corporation
(“Alliance”) (as amended, modified, supplemented or restated from time
to time, the “Loan Agreement”) pursuant to which, Xmark has purchased
Secured Promissory Notes from Alliance in an outstanding stated value of
$3,750,000 (the “Notes”);

 

WHEREAS, the obligations of Alliance under the Notes and the Loan
Agreement are secured by perfected, first priority security interests in
certain assets of Alliance (the “Collateral”) pursuant to the terms of a
Security Agreement, dated July 23, 2002 (the “Security Agreement”);

 

WHEREAS, Alliance is in default on the Notes and, as of the date
hereof, $5,287,501.53 in outstanding stated value and accrued interest is due
and owing under the Notes;

 

WHEREAS, Xmark has the right under the Notes, the Loan Agreement and
the Security Agreement (collectively, the “Loan Documents”) to foreclose
on the Collateral;

 

WHEREAS, Photogen is contemplating a purchase (the “Asset Purchase”)
of substantially all of Alliance’s imaging modalities assets used in connection
with Alliance’s imaging and diagnostic imaging business, including without
limitation with respect to development, manufacture, marketing and sale of the
Imagent® products;

 

WHEREAS, Xmark, Alliance and Photogen have previously entered into a
Standstill and Make-Whole Agreement, dated as of December 30, 2002 (the “Standstill
Agreement”), pursuant to which, among other things, Photogen issued to
Xmark 750,000 shares (the “Standstill Shares”) of its Common Stock, par
value $0.01 per share (“Photogen Common Stock”);

 

WHEREAS, pursuant to the terms of the Standstill Agreement Photogen was
obligated to have registered the Standstill Shares for resale by Xmark under
the Securities Act of 1933, as amended (the “Securities Act”), and
applicable state securities law on or before April 29, 2003;

 

WHEREAS, as of the date hereof Photogen has not effected the
registration of the Standstill Shares as required by the Standstill Agreement;

 

WHEREAS, Photogen wishes to induce Xmark to forbear from exercising its
remedies under the Loan Documents to allow Photogen to complete the Asset
Purchase;

 

WHEREAS, pursuant to a Participation Agreement, dated of even date
herewith (the “Participation Agreement”), Photogen has purchased a
one-third participation interest in the Notes (the “Participation”);

 

 

WHEREAS, the parties hereto wish to set forth herein the terms and
conditions pursuant to which, at the closing of the Asset Purchase (i) Photogen
will pay Xmark the amounts set forth herein, (ii) Xmark will cancel the Notes,
(iii) Xmark will consent to the Asset Purchase, and (iv) Xmark, Alliance and
Photogen will release each other from certain claims.

 

NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound, hereby agree as follows.

 

1.                                       Asset
Purchase.  Attached hereto as Exhibit
A is a true and complete summary of the terms and conditions on which
Photogen intends to effect the Asset Purchase (the “Term Sheet”).  Photogen shall use its commercially
reasonable efforts to effect the Asset Purchase on substantially the terms set
forth in the Term Sheet as soon as practicable after the date hereof and in no
event after July 15, 2003 (the “Termination Date”).  No amendment, supplement or modification to
the Term Sheet shall be made that would (i) increase the total consideration to
be paid in connection with the Asset Purchase, (ii) increase the cash to be
paid in connection with the Asset Purchase or (iii) have a material adverse
effect on the New Collateral (as hereinafter defined) without the prior written
consent of Xmark, which shall not be unreasonably withheld or delayed.  In the event that a closing of the Asset
Purchase on substantially the terms set forth on the Term Sheet, with such
changes therein as are permitted or approved hereunder (the “Closing”),
does not occur for any reason on or prior to 5:00 p.m., New York time, on the
Termination Date, this Agreement shall immediately terminate and be of no
further force and effect, provided, however, that the provisions of Sections 6,
7, 8 and 11 shall survive such termination. 
The date on which the Closing occurs is hereinafter referred to as the “Closing
Date”.

 

2.                                       Transactions
to Occur at the Closing.  (a)  Photogen shall notify Xmark at least 48
hours in advance of the scheduled Closing Date.  Photogen shall provide Xmark with written evidence, reasonably
satisfactory to Xmark, that the Closing has occurred or will occur
simultaneously with the transactions set forth in this Section 2.

 

(b)                                 As
of the Closing, Photogen shall become unconditionally obligated to make the
following payments to Xmark:

 

(i)                                     a
total of $2,500,000, in cash, paid as follows: (A) $1,250,000, to be paid no
later than the earlier to occur of (x) the 90th day after the
Closing Date and (y) August 5, 2003, and (B) $1,250,000, to be paid no later
than the earlier to occur of (1) the 180th day after the Closing
Date and (2) November 3, 2003; provided, however, that Photogen shall pay such
installments immediately in the event that Photogen completes after the Closing
Date and prior to either August 5, 2003 or November 3, 2003, as the case may
be, one or more institutional financings resulting in aggregate gross proceeds
to Photogen of at least $18 million; and

 

(ii)                                  interest
on the installment payments set forth in clause (i) above, payable monthly on
the first business day of every month, commencing on the first business day of
the month immediately following the month in which the Closing occurs, at a
rate per annum equal

 

2

 

to the Prime Rate (as defined herein) plus 3% (the “New Interest
Rate”) until such installments have been paid in full.  Such interest shall be paid in shares of
Photogen Common Stock (the “Interest Shares”) valued for this purpose at
the Share Value (as defined herein).  As
used herein, “Prime Rate” shall mean the Prime Rate published in the Wall Street
Journal, Eastern Edition, under the heading “Money Rates” on the
Closing Date.

 

(iii)                               The
obligations of Photogen hereunder shall be secured by a first priority security
interest in the assets acquired by Photogen pursuant to the Asset Purchase (the
“New Collateral”).

 

(c)                                  At
the Closing, Photogen shall deliver to Xmark (i) a number of newly issued,
fully paid and non-assessable shares of Photogen Common Stock (the “Accrued
Interest Shares”) having a value (for this purpose each share of Photogen
Common Stock shall be deemed to have a value equal to $1.00, subject to
adjustment in the event of any stock split, stock dividend, reverse stock
split, recapitalization or reclassification of the Photogen Common Stock occurring
on or after the date hereof (the “Share Value”)) equal to the Interest
Factor (as such term is defined below) less the number of Standstill Shares,
(ii) a number of newly issued, fully paid and non-assessable shares of Photogen
Common Stock (the “Default Shares”) in payment of the registration
penalties accrued from and including April 30, 2003 through and including the
Closing Date pursuant to Section 7(b) hereof, valued for this purpose at the
Share Value, (iii) a fully executed security agreement (the “Security
Agreement”) creating a first priority security interest in the New
Collateral in favor of Xmark, (iv) acknowledgment copies of UCC-1s evidencing
such security interest and filed in such jurisdictions as Xmark may request,
(v) an opinion of counsel to Photogen in form and effect satisfactory to Xmark
covering such matters (including the enforceability of this Agreement and the
perfection (but not priority) of the security interests created by the Security
Agreement) as Xmark may reasonably request, and (vi) such other documents
(including a secretary’s certificate) as Xmark may reasonably request.  The Security Agreement shall provide that
the security interest created therein shall terminate upon the indefeasible
payment in full of all amounts payable hereunder and the full performance by
Photogen of its obligations hereunder. 
As used herein, the term “Interest Factor” shall mean
$1,537,501.53 plus $5,556.22 for each day in the period commencing on the day
after the date of this Agreement and ending on and including the Closing Date.

 

(d)                                 Also
at the Closing, Xmark shall deliver to Photogen (i) the Notes marked “canceled”
or otherwise properly endorsed for transfer, (ii) a release in the form of Exhibit
B attached hereto (in exchange for executed counterparts thereof from
Alliance and Photogen)and (iii) such other documents as Photogen may reasonably
request.

 

(e)                                  Section
5 hereof shall terminate and be of no further force and effect.

 

(f)                                    The
Participation Agreement shall terminate and be of no further force and effect.

 

3.                                       [Intentionally
Omitted]

 

4.                                       Put
Right.  (a)  From and after the Closing, Xmark shall have
the transferable right (the “Put Right”) at its option, exercisable as
specified herein, to require Photogen to

 

3

 

repurchase any or all of the Standstill Shares, the Accrued Interest
Shares, the Default Shares, the Interest Shares, any Late Payment Shares (as
defined below) and any Late Registration Shares (as defined below)
(collectively, the “Redeemable Shares”) at a repurchase price of $1.00
per share (subject to adjustment in the event of any stock split, stock
dividend, reverse stock split, recapitalization or reclassification of the
Photogen Common Stock occurring on or after the date hereof).  The Put Right shall expire on 5:00 p.m., New
York time, on the second anniversary of the Closing Date (the “Expiration
Date”).

 

(b)                                 Prior
to the Expiration Date, the Put Right shall be fully exercisable at any time
from and after the earlier to occur of (i) the 13 month anniversary of the
Closing Date and (ii) the completion by Photogen after the date hereof of one
or more institutional financings resulting in aggregate gross proceeds to
Photogen of at least $20 million (the earlier of such dates, the “Full
Exercise Date”).

 

(c)                                  If
the Closing occurs, prior to the Full Exercise Date, the Put Right will be
exercisable in four (4) equal quarterly installments commencing on the 90th
day after the Closing Date (the “Initial Exercise Date”); provided,
however, that Photogen shall not be obligated (i) to repurchase more than an
aggregate of one-quarter of the Redeemable Shares in any consecutive 90-day
period, subject to adjustment as provided below (the “Quarterly Amount”),
and (ii) have the right not to comply with any Put Right (and accordingly not
to repurchase the Shares covered by such Put Right) by notifying Xmark in
writing (the “Shortfall Notice”) that Photogen, by action of its Board
of Directors, has determined in good faith that the Financing Condition (as
defined below) is not satisfied. 
Photogen shall use its commercially reasonable efforts to cause the
Financing Condition to be met as soon as practicable after the date hereof.  As used herein, the term “Financing
Condition” means that Photogen has sufficient cash, based on its current
Board approved operating plan, to satisfy its operating and working capital
requirements for the immediately succeeding 18-month period.

 

(d)                                 Prior
to the Full Exercise Date, Photogen shall provide Xmark with written notice on
the first day of each quarterly period, commencing on the Initial Exercise
Date, specifying the maximum number of Shares, if any, for which the Put Right
may be exercised without violating the Financing Condition (the “Maximum
Quarterly Amount”).  The excess of
the Quarterly Amount over the Maximum Quarterly Amount is hereinafter referred
to as the “Shortfall Amount”. 
The Quarterly Amount for any quarterly period shall be increased by the
Shortfall Amount, if any, in respect of the immediately preceding quarterly
period.

 

(e)                                  The
Put Right may be exercised by providing written notice thereof to Photogen
prior to the Expiration Date, which notice shall specify the amount of
Redeemable Shares to be repurchased (the “Repurchase Amount”), which,
prior to the Full Exercise Date shall not exceed the Maximum Quarterly Amount,
and the date on which such repurchase is to occur (the “Repurchase Date”),
which shall be not less than three business days after the date of the
notice.  On the Repurchase Date, Xmark
shall deliver to Photogen a certificate or certificates for the Redeemable
Shares being repurchased on the Repurchase Date, accompanied by appropriately
executed stock powers or otherwise in proper form for transfer, and Photogen
shall pay the Repurchase Amount to Xmark by wire transfer of immediately
available funds to an account previously specified by Xmark.

 

4

 

(f)                                    In
the event that the Company fails to purchase Redeemable Shares on any Repurchase
Date, Xmark shall be entitled to payment in an amount equal to 1.5% of the
value of the Redeemable Shares not so purchased at the Share Value for any
30-day period or pro rata for any portion thereof during which such failure is
continuing.  Also, Xmark shall be
entitled to payment in an amount equal to 1.5% of the Shortfall Amount (valued
at the Share Value) in effect from time to time, for any 30-day period or pro
rata for any portion thereof during which such Shortfall Amount exists;
provided, however, that such payment shall not commence to accrue until the 90th
day after the date on which the first Shortfall Notice is delivered to
Xmark.  Such payments may be made, at
Photogen’s election, in cash or Photogen Common Stock (valued at the Share
Value).  Such payments shall be in
partial compensation to Xmark, and shall not constitute Xmark’s exclusive
remedy for such events.  Any shares of
Photogen Common Stock so issued pursuant to this Section 4(f) are referred to
herein as “Late Payment Shares”.

 

(g)                                 Photogen
shall not create, assume or suffer to exist any limitation or restriction on
its ability to repurchase Redeemable Shares pursuant to the Put Right.

 

5.                                       Standstill.

 

(a)                                  Xmark
shall not exercise any rights against Alliance as a creditor, whether secured
or unsecured, or otherwise for a period (the “Standstill Period”)
commencing on the date hereof, and ending on the earliest to occur of (i) the
Termination Date, (ii) the determination by Photogen not to pursue the Asset
Purchase, (iii) the written termination of negotiations between Photogen and
Alliance with respect to the Asset Purchase, (iv) the exercise of any remedies
against the assets of Alliance by any creditor other than Xmark or its
affiliates, (v) Alliance’s filing of a petition under any bankruptcy,
insolvency or debtor’s relief law or making an assignment for the benefit of
its creditors, (vi) a court of competent jurisdiction entering an order or
decree under any federal or state bankruptcy law and (X) is for relief against
Alliance in an involuntary case, (Y) appoints a custodian, receiver or other
similar official for all or substantially all of Alliance’s property, or (Z)
orders the liquidation of Alliance (each of the events specified in clauses (v)
and (vi) of this Section 5(a) are referred to as, a “Bankruptcy Proceeding”),
or (vii) the date specified in a notice by Photogen on one day’s written notice
to Xmark.  Photogen shall notify Xmark
in writing within one day following the occurrence of any event specified in
clauses (ii) or (iii) above.

 

(b)                                 During
the Standstill Period, Xmark shall not pursue, institute, encourage or join in
any proceeding against Alliance at law or equity to realize upon any collateral
or otherwise.  Xmark agrees that until
the end of the Standstill Period, Xmark will not, directly or indirectly ask,
demand for, accelerate, accept or receive any payments of, or other amounts or
consideration on account of, the Notes (including by way of subrogation) or any
other debt from Alliance or commence, or join with any creditor in commencing,
any suit, action or judicial proceeding or bankruptcy, reorganization,
insolvency or similar proceedings with respect to Alliance or the Notes or any
other Alliance debt or assets; nor shall Xmark and Alliance agree to or effect any
amendment or change to the terms of the Loan Documents except as contemplated
in this Agreement or to preserve the perfection and priority of Xmark’s
security interest; provided, however, Xmark may transfer the Notes and its
interest in the Loan Documents to a

 

5

 

third party upon the prior written consent of Photogen, which shall not
be unreasonably withheld or delayed, and provided that such third party
purchaser agrees in writing to be bound by the terms of this Agreement.  Xmark shall execute and deliver to Photogen
instruments confirming this Agreement if and to the extent necessary to enforce
the provisions of this Agreement.  The
terms of this Agreement, the standstill effected hereby, and the rights of
Photogen which are created hereunder, shall not be affected by (i) any
amendment, addition, modification, extension, increase, restatement or
supplement of or to any of the Notes or the Loan Documents or any instrument,
document or agreement relating thereto, (ii) any exercise or non-exercise of
any right, power or remedy under or in respect of the Notes or the Loan
Documents or any instrument, document or agreement relating thereto, (iii) any
claim or defense as to the validity or enforceability of any instruments,
documents or agreements relating to the proposed Asset Purchase, or (iv) any
other circumstance which might otherwise constitute a defense available to, or
a discharge of Alliance, Xmark or any other party.

 

6.                                       Termination
of the Standstill Agreement.  The
Standstill Agreement is hereby terminated and of no further force and effect.

 

7.                                       Registration
Requirements.

 

(a)                                  Photogen
shall use its reasonable best efforts to register (i) the Standstill Shares and
(ii) the Accrued Interest Shares, the Default Shares, the Interest Shares, any
Late Payment Shares and any Late Registration Shares (collectively, the “Registrable
Securities”), for resale by Xmark or its transferees under the Securities
Act within 60 days from the date hereof (the 60th day following the
date hereof is referred to as, the “Registration Date”).

 

(b)                                 Xmark
shall be entitled to payment in an amount equal to 1.5% of the Standstill
Shares, valued at the Share Value, for each 30-day period or pro rata for any
portion thereof from and including April 30, 2003 through the Registration
Date.

 

(c)                                  Xmark
shall be entitled to payment in an amount equal to 1.5% of the Registrable
Securities, valued at the Share Value, for any 30-day period or pro rata for
any portion thereof following the Registration Date until such time as a
registration statement is made effective with respect to the Registrable
Securities.

 

(d)                                 Any
payments pursuant to clauses (b) and (c) above may be made, at Photogen’s
election, in cash or Photogen Common Stock (valued at the Share Value).  Such payments shall be in partial
compensation to Xmark, and shall not constitute Xmark’s exclusive remedy for
such events.  Any shares of Photogen
Common Stock so issued pursuant to this Section 7 are referred to herein as “Late
Registration Shares”.

 

8.                                       Waiver
of Claims.  Photogen hereby
acknowledges that it has had an opportunity to review the Loan Documents.  Whether or not the Closing occurs, Photogen
hereby irrevocably acknowledges that the Loan Documents are valid and enforceable
and that Xmark has a valid, perfected and first priority security interest in
the Collateral prior to the claims of any other person, including, without
limitation, Photogen, and hereby irrevocably waives any claim, right, defense
or offset that Photogen may now have or may hereafter acquire that the Loan
Documents

 

6

 

are not valid and enforceable or that such security interests are
invalid, unperfected, do not constitute first priority security interests in
the Collateral, constitute a fraudulent transfer or fraudulent conveyance or
should be subordinated (equitably or otherwise) to the claims or security
interests of any other person, including, without limitation, any interests of
Photogen in the Collateral.  Such waiver
is expressly intended to cover known as well as unknown claims, rights,
defenses and offsets.

 

9.                                       Indemnification.

 

(a)                                  From
and after the Closing, Photogen shall indemnify and hold harmless Xmark, its
partners and its and their officers, directors, managers, shareholders,
members, employees, agents and representatives from and against any loss,
liability, claim, damage or expense (including reasonable legal fees and
expenses) (“Losses”), as incurred (payable promptly upon written request),
to the extent arising from, in connection with or otherwise with respect to any
claim that the Asset Purchase or the transactions contemplated hereby
constitute a fraudulent transfer or fraudulent conveyance or violate the
provisions of the United States Bankruptcy Code or any applicable state
insolvency law or that the security interests of Xmark in Alliance’s assets
should be invalidated or subject to equitable subordination or otherwise
modified as a result of the Asset Purchase or the transactions contemplated
hereby, if and only if, such Losses are incremental to the Losses that Xmark
would have otherwise incurred as a result of it being a lender to, and secured
creditor of, Alliance, if the Asset Purchase and the other transactions
contemplated hereby (other than the waivers contained in Section 8) had not
been consummated and Xmark had realized on its Collateral directly as a secured
creditor of Alliance.

 

(b)                                 any
party entitled to indemnification hereunder (an “indemnified party”)
such indemnified party must notify Photogen in writing of a claim for which
such indemnified party seeks indemnification hereunder (a “Claim”)
promptly following receipt by such indemnified party of written notice of the
Claim; provided, however, that failure to give such notification
shall not affect the indemnification provided hereunder except to the extent
Photogen shall have been actually and materially prejudiced as a result of such
failure.  Thereafter, the indemnified
party shall deliver to Photogen, promptly following the indemnified party’s
receipt thereof, copies of all notices and documents (including court papers)
received by the indemnified party relating to the Claim.

 

(c)                                  Photogen
shall be entitled to participate in the defense of any Claim as to which Photogen
has admitted indemnification and, if it so chooses, to assume the defense
thereof with counsel selected by Photogen; provided, however,
that such counsel is not reasonably objected to by the indemnified party.  Should Photogen so elect to assume the defense
of a Claim, Photogen shall not be liable to the indemnified party for any legal
expenses subsequently incurred by the indemnified party in connection with the
defense thereof.  If Photogen assumes
such defense, the indemnified party shall have the right to participate in the
defense thereof and to employ counsel, at its own expense, separate from the
counsel employed by Photogen, it being understood that Photogen shall control
such defense.  Photogen shall be liable
for the fees and expenses of counsel employed by the indemnified party for any
period during which Photogen has not assumed the defense thereof.  If Photogen chooses to defend or prosecute a
Claim, all the indemnified parties shall cooperate in the defense or
prosecution thereof.  Such cooperation
shall

 

7

 

include the retention and (upon Photogen’s request) the provision to
Photogen of records and information that are reasonably relevant to such Claim,
and making employees available on a mutually convenient basis to provide
additional information and explanation of any material provided hereunder.  Whether or not Photogen assumes the defense
of a Claim, the indemnified party shall not admit any liability with respect
to, or settle, compromise or discharge, such Claim without Photogen’s prior
written consent, which consent shall not be unreasonably withheld or
delayed.  If Photogen assumes the
defense of a Claim, the indemnified party shall agree to any settlement,
compromise or discharge of a Claim that Photogen may recommend and that by its
terms (i) releases the indemnified party completely in connection with such
Claim, (ii) does not require the indemnified party to make any admission of
liability or to make or forego any payment to or from Photogen or any third
party and (iii) does not obligate the indemnified party to take or refrain from
taking any action.

 

10.                                 Representations
and Warranties of the Parties.

 

10.1                           Xmark.  Xmark represents and warrants to Photogen as
follows.

 

(a)                                  The
execution, delivery and performance of each of this Agreement and the
Participation Agreement (i) have been duly authorized by all necessary
corporate or partnership action on behalf of Xmark, (ii) do not and will not
violate any provision of law, rules, regulations, or orders or any provision of
the charter, bylaws or other organizational documents of or binding on Xmark,
and (iii) do not and will not violate, result in the breach of, or constitute a
default or require any consent under, any contract, agreement, indenture or
instrument to which Xmark is a party or by which Xmark or Xmark’s property may
be bound or subject.  Each of this
Agreement and the Participation Agreement has been duly and validly executed
and delivered by Xmark and constitutes the legal, valid and binding obligation
of Xmark, enforceable against Xmark in accordance with the terms hereof,
subject as to enforceability (x) to applicable bankruptcy, insolvency,
reorganization or moratorium and other similar laws affecting creditors’ rights
generally and (y) to the application of general principles of equity.  No governmental or other approval is
required in connection with the execution and delivery by Xmark of, and the
performance of the obligations of Xmark under, this Agreement or the Participation
Agreement.

 

(b)                                 Xmark
has not sold, transferred, assigned, pledged or otherwise hypothecated or
disposed of any of its rights to the Notes, including, without limitation, any
participation interest in the Notes, or any other rights of Xmark as a secured
or unsecured creditor of Alliance.

 

(c)                                  Xmark
is an “accredited investor” as such term is defined in Regulation D under the
Securities Act.  The shares of Photogen
Common Stock to be received by Xmark hereunder will be acquired for Xmark’s own
account, not as nominee or agent, and not with a view to the resale or
distribution of any part thereof in violation of the Securities Act, and Xmark
has no intention of selling, granting any participation in, or otherwise
distributing the same in violation of the Securities Act.  Xmark acknowledges that it can bear the
economic risk and complete loss of its investment in the shares of Photogen
Common Stock it may receive hereunder and has such knowledge and experience in
financial or business matters that it is

 

8

 

capable of evaluating the merits and risks of the investment
contemplated hereby.  Xmark understands
that the shares of Photogen Common Stock are characterized as “restricted
securities” under the U.S. federal securities laws inasmuch as they are being
acquired from Photogen in a transaction not involving a public offering and
that under such laws and applicable regulations such securities may be resold
without registration under the Securities Act only in certain limited
circumstances, and the certificate(s) for the shares of Photogen Common Stock
will bear a legend to that effect. 
Xmark has had an opportunity to receive additional information related
to Photogen requested by it and to ask questions of and receive answers from
Photogen regarding Photogen, its business and the terms and conditions of the
offering of shares of Photogen Common Stock. 
Xmark acknowledges access to copies of Photogen’s most recent Annual Report
on Form 10-K for the fiscal year ended December 31, 2002, as amended (the “2002
10-K”), and all other reports and amendments thereto filed by Photogen
pursuant to the Securities Exchange Act of 1934, as amended (the “1934 Act”),
since the filing of the 2002 10-K and prior to the date hereof (collectively,
the “SEC Filings”) through EDGAR. 
Xmark did not learn of the investment in shares of Photogen Common Stock
as a result of any public advertising or general solicitation.

 

10.2                           Photogen.  Photogen represents and warrants to Xmark as
follows.

 

(a)                                  The
execution, delivery and performance of each of this Agreement and the
Participation Agreement, including the issuance of the shares of Photogen
Common Stock contemplated hereby, (i) have been duly authorized by all
necessary corporate action on behalf of Photogen, (ii) do not and will not
violate any provision of law, rules, regulations, or orders or any provision of
the charter, bylaws or other organizational documents of or binding on
Photogen, and (iii) do not and will not violate, result in the breach of, or
constitute a default or require any consent under, any contract, agreement,
indenture or instrument to which Photogen is a party or by which Photogen or
Photogen’s property may be bound or subject. 
Each of this Agreement and the Participation Agreement has been duly and
validly executed and delivered by Photogen and constitutes the legal, valid and
binding obligation of Photogen, enforceable against Photogen in accordance with
the terms hereof, subject as to enforceability (x) to applicable bankruptcy,
insolvency, reorganization or moratorium and other similar laws affecting
creditors’ rights generally and (y) to the application of general principles of
equity.  No governmental or other
approval is required in connection with the execution and delivery by Photogen
of, and the performance of the obligations of Photogen under, this Agreement or
the Participation Agreement.

 

(b)                                 Photogen
is a corporation duly organized, validly existing and in corporate good
standing under the laws of the State of Nevada and is qualified to do business
as a foreign corporation in each jurisdiction in which such qualification is
required, except where the failure to be so qualified would not have, either
individually or in the aggregate, a material adverse effect on the business,
operations, financial condition, assets, prospects, liabilities or contractual
rights of Photogen, whether individually or taken as a whole (a “Material
Adverse Effect”).  Photogen has duly
authorized the sale and issuance, pursuant to the terms of this Agreement an
adequate number shares of its common stock authorized and available for
issuance hereunder, having the rights, restrictions, privileges and preferences
set forth in the Amended and Restated Articles of Incorporation, as amended to
date.

 

9

 

(c)                                  The
issuance, sale and delivery of shares of Photogen Common Stock in accordance
with this Agreement have been duly authorized by all necessary corporate action
on the part of Photogen.  The shares of
Photogen Common Stock issuable hereunder when so issued, sold and delivered
against payment therefor in accordance with the provisions of this Agreement
will be duly and validly issued, fully paid and non-assessable.

 

(d)                                 The
SEC Filings are the only filings required of Photogen pursuant to the 1934 Act
for such periods.  At the time of filing
thereof, the SEC Filings complied as to form in all material respects with the
requirements of the 1934 Act and did not contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements made therein, as amended and in the light of the circumstances under
which they were made, not misleading. 
During the preceding two years, except as set forth in the SEC
Filings:  Each registration statement
and any amendment thereto filed by Photogen pursuant to the Securities Act and
the rules and regulations thereunder, as of the date such statement or
amendment became effective, complied as to form in all material respects with
the Securities Act and did not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary
in order to make the statements made therein, in light of the circumstances
under which they were made, not misleading; and each prospectus filed pursuant
to Rule 424(b) under the Securities Act, as of its issue date and as of the
closing of any sale of securities pursuant thereto did not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements made therein, in
the light of the circumstances under which they were made, not misleading.  Photogen is engaged only in the business
described in the SEC Filings and the SEC Filings contain a complete and
accurate description in all material respects of the business of Photogen,
taken as a whole, as required to be disclosed.

 

(e)                                  The
financial statements included in each SEC Filing present fairly, in all
material respects, the consolidated financial position of Photogen as of the
dates shown and its consolidated results of operations and cash flows for the
periods shown, and such financial statements have been prepared in conformity
with United States generally accepted accounting principles applied on a
consistent basis (except as may be disclosed therein or in the notes thereto,
and, in the case of quarterly financial statements, as permitted by Form 10-Q
under the 1934 Act).  Except as set
forth in the financial statements of Photogen included in the SEC Filings filed
prior to the date hereof Photogen has not incurred any liabilities, contingent
or otherwise, except those incurred in the ordinary course of business,
consistent (as to amount and nature) with past practices since the date of such
financial statements, none of which, individually or in the aggregate, have had
or could reasonably be expected to have a Material Adverse Effect.

 

(f)                                    Except
as disclosed in the SEC Filings or on Schedule 9.2(f) hereto, there are no
pending actions, suits or proceedings against Photogen or its subsidiaries
which affect any of its or their properties; and to Photogen’s knowledge, no
such actions, suits or proceedings are threatened or contemplated.

 

10

 

(g)                                 Photogen
is in compliance with all applicable Nasdaq SmallCap Market continued listing
requirements.  There are no proceedings
pending or to Photogen’s knowledge threatened against Photogen relating to the
continued listing of its common stock on the Nasdaq SmallCap Market and
Photogen has not received any notice of, nor to Photogen’s knowledge is there
any basis for, the delisting of its common stock from the Nasdaq SmallCap
Market.  The shares of Photogen Common
Stock issuable hereunder have been approved for listing on the Nasdaq SmallCap
Market and will be listed on the Nasdaq SmallCap Market upon official notice of
issuance.

 

(h)                                 Neither
Photogen nor any person or entity acting on its behalf has conducted any
general solicitation or general advertising (as those terms are used in
Regulation D) in connection with the offer or sale of any of the shares of
Photogen Common Stock issuable hereunder.

 

11.                                 General.

 

11.1                           Notices.  All notices, requests, consents and other
communications under this Agreement shall be in writing and shall be delivered
by hand, by telecopier, by express overnight courier service or mailed by first
class mail, postage prepaid, to the respective addresses set forth on the
signature pages of this Agreement, as such addresses may be modified by notice
given pursuant to this Section 11.1, with copies provided simultaneously to
counsel as set forth on the signature pages of this Agreement.  Notices provided in accordance with this
Section 11.1 shall be deemed delivered upon personal delivery, receipt by
telecopy or overnight mail, or 48 hours after deposit in the mail in accordance
with the above.

 

11.2                           Entire
Agreement.  This Agreement, together
with the instruments and other documents hereby contemplated to be executed and
delivered in connection herewith, contains the entire agreement and
understanding of the parties hereto, and supersedes any prior agreements,
negotiations or understandings between or among them, with respect to the
subject matter hereof.  Except as
expressly set forth in this Agreement, no party makes any representation or
warranty, express or implied, with respect to the transactions contemplated by
this Agreement or any such other agreements. 
Except as expressly set forth in this Agreement, Photogen makes no
representation or warranty, express or implied, with respect to the business of
Photogen, Photogen, Photogen’s assets or its future prospects (including any of
the foregoing with respect to Alliance). 
No party is relying on any understandings, agreements or representations
other than those expressly contained in this Agreement or such other written
agreements.

 

11.3                           Amendments
and Waivers.  This Agreement may
only be amended or modified by a writing dated after the date hereof and signed
by the parties hereto.  No waivers of or
exceptions to any term, condition or provision of this Agreement, in any one or
more instances, shall be deemed to be, or construed as, a further or continuing
waiver of any such term, condition or provision.

 

11

 

11.4                           Counterparts.  This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

 

11.5                           Captions.  The captions of the sections, subsections
and paragraphs of this Agreement have been added for convenience only and shall
not be deemed to be a part of this Agreement.

 

11.6                           Severability.  Each provision of this Agreement shall be
interpreted in such manner as to validate and give effect thereto to the
fullest lawful extent, but if any provision of this Agreement is determined by
a court of competent jurisdiction to be invalid or unenforceable under
applicable law, such provision shall be ineffective only to the extent so
determined and such invalidity or unenforceability shall not affect the
remainder of such provision or the remaining provisions of this Agreement.

 

11.7                           Governing
Law.  This Agreement shall be
governed by and interpreted and construed in accordance with the laws of the
State of New York.  The parties
irrevocably submit to the exclusive jurisdiction of the state and federal
courts located in New York, New York for the purpose of any suit, action,
proceeding or judgment relating to or arising out of this Agreement and the
transactions contemplated hereby. 
Service of process in connection with any such suit, action or
proceeding may be served on each party hereto anywhere in the world by the same
methods as are specified for the giving of notices under this Agreement.  The parties irrevocably consent to the
jurisdiction of any such court in any such suit, action or proceeding and to
the laying of venue in such court. The parties irrevocably waive any objection
to the laying of venue of any such suit, action or proceeding brought in such
courts and irrevocably waive any claim that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient forum.

 

11.8                           Injunctive
Relief.  In the event of any breach
or threatened breach of the provisions of this Agreement by any party hereto or
its representatives, the other party shall be entitled to all legal and
equitable remedies available to it, and without limiting any other available
remedies, such party shall be entitled to equitable relief without the
necessity of posting a bond, including injunction and specific
performance.  No failure or delay by any
party in exercising any right, power or privilege hereunder will operate as a
waiver thereof, nor will any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any right, power or
privilege hereunder.  In any action to
enforce the provisions of this Agreement, the non-prevailing party shall pay
the reasonable attorneys fees and related reasonable costs and expenses
incurred by the prevailing party in connection therewith.

 

[Next Page is Signature Page.]

 

12

 

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.

 

	
   

  	
  Xmark Fund, L.P.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mitchell D. Kaye

  	
   

  
	
   

  	
  Name: Mitchell D. Kaye

  
	
   

  	
  Title: Chief Investment Officer

  
	
   

  	
  Address:

  	
  Carnegie Hall Tower

  
	
   

  	
   

  	
  152 West 57th Street, 21st Floor

  
	
   

  	
   

  	
  New York, New York 10019

  
	
   

  	
   

  	
  Fax:  (212) 247-1329

  
	
   

  	
   

  	
  Attention:  David Cavalier

  
	
   

  	
   

  
	
   

  	
  Xmark Fund, Ltd.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mitchell D. Kaye

  	
   

  
	
   

  	
  Name: Mitchell D. Kaye

  
	
   

  	
  Title: Chief Investment Officer

  
	
   

  	
  Address:

  	
  Carnegie Hall Tower

  
	
   

  	
   

  	
  152 West 57th Street, 21st Floor

  
	
   

  	
   

  	
  New York, New York 10019

  
	
   

  	
   

  	
  Fax:  (212) 247-1329

  
	
   

  	
   

  	
  Attention:  David Cavalier

  
	
   

  	
   

  
	
   

  	
  Photogen Technologies, Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Brooks Boveroux

  	
   

  
	
   

  	
  Name: Brooks Boveroux

  
	
   

  	
  Title: Chief Financial Officer

  
	
   

  	
  Address:

  	
  140 Union Square Drive

  
	
   

  	
   

  	
  New Hope, Pennsylvania 18938

  
	
   

  	
   

  	
  Fax:  (215) 862-7139

  
	
   

  	
   

  	
  Attention:  Taffy J. Williams

  
									

 

13

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