RISK FACTORS

         Any exercise of the Rights or investment in the New Notes and Unit Warrants and shares of Class A Common Stock issuable upon exercise of the Unit Warrants involves a high degree of risk. Before making a decision to exercise the Rights and invest in the New Notes and Unit Warrants and shares of Class A Common Stock issuable upon exercise of the Unit Warrants, you should carefully consider each of the following risks and the risk factors described in our most recent periodic reports, as well as the other information contained in or incorporated by reference into this prospectus and any related prospectus supplement or free writing prospectus. This prospectus and the following discussion of risk factors contain forward-looking statements as discussed on page iii of this prospectus. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, including the risks and uncertainties described below and elsewhere in this prospectus. These risks and uncertainties are not the only ones we may face. Additional risks and uncertainties of which we are not aware, or that we currently deem immaterial, may also become important factors that affect our financial condition, results of operations and cash flows. See "Where You Can Find More Information" and "Incorporation of Certain Documents by Reference."

Risks relating to our financial position

         We continue to face significant liquidity constraints and require the closing of the Rights Offering and other transactions contemplated by the Framework Agreement, or other additional external sources of capital, to fund our operations and for our debt service obligations.

        Our attempts to increase television advertising prices in 2013 were met with significant resistance from certain advertisers and agencies in the Czech Republic. This resulted in a significant decline in revenues for 2013 compared to 2012. Looking forward, we expect the impact of the challenging environment in the Czech Republic to continue as we endeavor to attract back advertising clients while continuing to seek improvements in pricing compared to 2012. While we expect a significant improvement in Czech advertising revenues in 2014, we do not expect advertising revenues in the Czech Republic to reach 2012 levels in 2014. We anticipate a similar trend in our consolidated results for 2014, and expect to build upon them in 2015. Our financial situation in 2013 was also impacted by a further decline in advertising revenues in the Slovak Republic due to the reaction to our pricing initiatives in the Czech Republic from clients who also advertise in the Slovak Republic. Furthermore, carriage fee negotiations in the Czech Republic during 2013 did not advance to the extent that we had expected. As a result, we continue to take actions to conserve cash, including targeted reductions to our operating cost base through cost optimization programs and restructuring efforts, the deferral of programming commitments and capital expenditures and the deferral or cancellation of development projects. We have also delayed the settlement of payment obligations with a number of key suppliers, including payments due under contracts for acquired programming, which has resulted in our accounts payable and accrued liabilities increasing to $296.4 million at December 31, 2013 compared to $255.7 million at December 31, 2012 and $240.0 million at December 31, 2011. Despite the expectation of significantly improved revenue and OIBDA performance in 2014, our cash interest costs and the need to improve our payables position will result in increased operating cash outflows during 2014 compared to 2013. We expect that our cash flows from operating activities will continue to be insufficient to cover operating expenses and interest payments and we will need other capital resources this year to fund our operations, our debt service and other obligations as they become due, including the settlement of such deferred payment obligations.

        We have been evaluating options to improve our liquidity in light of our results for 2013, our outlook for 2014 and our plan to improve our payables position. In this respect, following the end of the third quarter of 2013 we began discussions with Time Warner regarding a potential capital transaction, including the potential issuance of debt, to address our liquidity position. Following the publication of our third quarter earnings, we held investor meetings with certain of our debt and equity

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investors. We subsequently began exploring the availability of other financing options, including equity financing, a combination of debt and equity financing and asset sales. Based on information received during our investor meetings and the exploration of our financing alternatives, we concluded that any financing involving equity was not viable without the upfront significant committed participation of Time Warner, which Time Warner did not provide. In addition, we received proposals from several potential purchasers regarding the acquisition of certain assets. The proposals we received, however, were generally from opportunistic purchasers who expected to purchase such assets at a substantial discount to the value of these businesses or such offers came with significant timing or execution risk.

        After consideration of these discussions and inquiries and in light of the continued severe pressure on our liquidity during the latter part of 2013 and our expectation that this will continue through 2014, our Disinterested Directors determined that the Rights Offering together with the other financing transactions with the participation of Time Warner was in the best interests of the Company and we entered into the Framework Agreement pursuant to which we and Time Warner have committed, subject to the terms and conditions thereof, to undertake and facilitate the financing transactions described herein, including the Rights Offering, Backstop Private Placement and TW Unit Private Placement. The principal purpose of these financing transactions is to enhance our overall liquidity and cash flow by refinancing the remaining €273.0 million aggregate principal amount of the 2016 Fixed Rate Notes, which are cash pay indebtedness, with non-cash pay indebtedness, including the New Notes (including the New Notes issuable in connection with the Backstop Purchase Commitment and TW Unit Private Placement), the Time Warner Term Loan and the Time Warner Revolving Credit Facility. We are seeking to raise up to $339.1 million in new indebtedness through the Rights Offering, an additional $57.7 million in new indebtedness through the TW Unit Private Placement and $30.0 million in new indebtedness through the Time Warner Term Loan to enable us to refinance the 2016 Fixed Rate Notes in the manner described in this prospectus and for general corporate purposes.

        If the Rights Offering (including the Backstop Private Placement), TW Unit Private Placement and other financing transactions contemplated by the Framework Agreement are not closed, we will need other external sources of capital to continue our operations, including through other debt or equity financing transactions or asset sales, which may not be available or may not be available on acceptable terms. If these actions are not successful, and we are unable to continue to delay payments to some of our major suppliers, we will not have sufficient liquidity to continue to fund our operations in the middle of 2014.

         There is uncertainty regarding our ability to continue as a going concern.

        We expect that our cash flows from operating activities will continue to be insufficient to cover operating expenses and interest payments. If we do not close the Rights Offering, the TW Unit Private Placement, the Time Warner Term Loan and the Time Warner Revolving Credit Facility, we will need other capital resources this year to fund our operations, debt service and other obligations as they become due, including the settlement of delayed payment obligations to some of our key suppliers, such as payments due under contracts for acquired programming. While we have entered into the Framework Agreement with Time Warner relating to the Rights Offering and other financing transactions contemplated therein, our ability to close these transactions is subject to our obtaining the consent of the holders of the 2017 Fixed Rate Notes pursuant to the 2017 Fixed Rate Noteholder Consent Solicitation (as herein defined). There can be no assurances that we will obtain this consent or that these transactions will be closed. As a result, the report of our independent registered public accounting firm for the year ended December 31, 2013 contains an explanatory paragraph relating to our ability to continue as a going concern. This uncertainty may materially and adversely affect our stock price and our ability to raise new capital.

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         Our operating results will continue to be adversely affected if we cannot generate strong advertising sales.

        We generate most of our revenues from the sale of advertising airtime on our television channels. In addition to general economic conditions, other factors that may affect our advertising sales are the pricing of advertising time as well as audience ratings, changes in programming strategy, changes in audience preferences, our channels' technical reach, technological developments relating to media and broadcasting, competition from other broadcasters and operators of other media platforms, seasonal trends in the advertising market, increased competition for the leisure time of audiences and shifts in population and other demographics. In addition, the occurrence of disasters, acts of terrorism, civil or military conflicts or general political instability may create further economic uncertainty that reduces advertising spending. The reduction in advertising spending in our markets over the past few years has had a negative effect on television advertising prices because of pressure to reduce prices from advertisers and discounting by competitors. We attempted to combat this fall in prices by implementing a new pricing strategy in 2013. There was an adverse reaction to this strategy from agencies and advertisers, particularly in the Czech Republic, which resulted in a significant decrease in revenues compared to 2012 and was the main cause of a decline in our net revenues and in the television advertising market in that country. While we expect a significant improvement in Czech advertising revenues in 2014, we do not expect advertising revenues in the Czech Republic to reach 2012 levels in 2014.

        Advertising spending may also be affected by the expansion of distribution platforms and changing preferences in how and when people view content and the accompanying advertising. Our ability to maintain audience ratings and to generate GRPs also depends on our maintaining investments in television programming and productions at a sufficient level to continue to attract audiences. Significant or sustained reductions in investments in programming that attracts such audiences or other operating costs in response to reduced advertising spending in our markets have had and may continue to have an adverse impact on our television viewing levels. Reduced advertising spending, resistance to our price increases and the discounting of television advertising prices in our markets as well as competition for ratings from broadcasters seeking to attract similar audiences have had and may continue to have an adverse impact on our ability to maintain our advertising sales. The significant decline in advertising sales has had and could continue to have a material adverse effect on our financial position, results of operations and cash flows.

         The global economic slowdown, credit crisis and concerns regarding the Eurozone have adversely affected our financial position and results of operations. We cannot predict if or when economic conditions in the countries in which we operate will recover or how long any recovery may last. A failure to achieve prompt and lasting recoveries will continue to adversely affect our results of operations.

        The results of our operations depend heavily on advertising revenue, and demand for advertising is affected by prevailing general and regional economic conditions. The economic uncertainty affecting the global financial markets and banking system since the beginning of 2009 has had an adverse impact on economic growth in our operating countries across Central and Eastern Europe, some of which are still contending with recession. There has been a widespread withdrawal of investment funding from the Central and Eastern European markets and companies with investments in them. Furthermore, the economic downturn has adversely affected consumer and business spending, access to credit, liquidity, investments, asset values and employment rates. These adverse economic conditions have had a material negative impact on the advertising spending in our markets, leading our customers to continue to spend less on advertising than at the peak period in 2008 as they modify, delay or cancel plans to purchase advertising. This has negatively impacted our financial position, results of operations and cash flows since 2008. While gross domestic product and private consumption returned to growth in 2011 in most of our operating countries, they weakened again during 2012 due to continuing concerns regarding Europe's sovereign debt crisis, the stability of the Eurozone, the sustainability of the Euro as

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a common currency and the growth prospects of major emerging market and developed market economies globally. After adjusting for inflation, we estimate that GDP in our territories remained flat overall during 2013, compared to 2012. As a result, the economic conditions of our operating countries remain challenging, particularly in Slovenia where recent banking sector problems and ongoing political instability contributed to a significant increase of the country's sovereign risk. Recent economic events related to the continuing sovereign debt crisis in several European Union countries have highlighted issues relating to the strength of the banking sector in Europe and its ability to safeguard depositors' funds and the long-term stability of the Euro as a single currency. Though the European Union has created external funding and stability mechanisms to provide liquidity and financial assistance to Eurozone member states and financial institutions, there can be no assurance that the recent market disruptions in Europe related to sovereign debt and the banking sector, including the increased cost of funding for certain governments and financial institutions, will not continue, nor can there be any assurance that future assistance packages will be available or, even if provided, will be sufficient to stabilize the affected banks, countries and markets in Europe or elsewhere. Furthermore, the departure of a country from the Euro or the dissolution of the Euro by its members could negatively impact our business as well as cause significant volatility and disruption in the global economy. Any of these developments would have a significant negative effect on our financial position, results of operations and cash flows.

         We may not be successful in our attempts to diversify and enhance our revenues.

        We are focused on creating additional revenue streams from our broadcast operations as well as enhancing revenues generated from broadcast advertising, which is how we generate the substantial majority of our revenues. Our main efforts with respect to this strategy are on increasing carriage fees from cable and direct-to-home ("DTH") operators for carriage of our channels as well as continuing to seek improvements in advertising pricing compared to 2012. Changes to our advertising sales policies introduced in 2013 that were designed to boost revenues and to support pricing increases across our markets were met with significant resistance from certain advertisers and agencies in the Czech Republic. This resulted in a significant decline in revenues for 2013 compared to 2012. Our financial situation in 2013 was also impacted by a further decline in advertising revenues in the Slovak Republic due to the reaction to our pricing initiatives in the Czech Republic from clients who also advertise in the Slovak Republic. Furthermore, carriage fee negotiations in the Czech Republic during 2013 did not advance to the extent that we had expected. Some cable and DTH operators temporarily suspended the broadcast of our channels during the implementation of our carriage fees strategy, which affects the reach and audience shares of those operations and as a result, advertising revenues. There is a risk that clients may continue to withdraw advertising from our channels or reduce spending, or that operators may refuse to carry our channels while carriage fee negotiations are ongoing. If we are ineffective in achieving carriage fee increases our profitability will continue to be dependent primarily on television advertising revenues, which places additional pressures on our ability to generate advertising revenues. There can be no assurances that these initiatives will ultimately be successful and this may have an adverse impact on our results of operations and cash flows.

         Our debt service obligations may restrict our ability to fund our operations.

        We and certain of our subsidiaries have significant debt service obligations under the 2017 Fixed Rate Notes, 2016 Fixed Rate Notes and 5.0% Convertible Notes due 2015 (the "2015 Convertible Notes") and will continue to have significant debt service obligations following the issuance of the New Notes to refinance the 2016 Fixed Rate Notes and the drawdown of the Time Warner Term Loan, assuming the closing of the Rights Offering, or following the drawdown of the Time Warner Term Loan (including the Refinancing Portion of the Term Loan), assuming the Rights Offering is not closed by the Bridge Date. We will be obligated to pay to Time Warner a commitment fee of 1.25% of the entire Time Warner Term Loan and, if we drawdown the Refinancing Portion of the Term Loan, a funding fee

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of 1.25% of the Refinancing Portion of the Term Loan, a portion of which funding fee may be refunded to us depending on when we repay the Refinancing Portion of the Term Loan. In addition, while the New Notes will be non-cash pay indebtedness, the New Notes will accrue interest at a significantly higher rate than the 2016 Fixed Rate Notes, which obligations will be required to be repaid in cash by the maturity date of the New Notes, and the payment of interest expense in kind will increase our already significant leverage. As a result of our debt service obligations and covenants contained in the related indentures, we and our restricted subsidiaries are restricted under the 2017 Fixed Rate Notes, 2016 Fixed Rate Notes (until redeemed following the closing of the transactions described herein) and 2015 Convertible Notes and will be restricted under the New Notes, the Time Warner Term Loan and the Time Warner Revolving Credit Facility in the manner in which our business is conducted, including but not limited to our ability to obtain additional debt financing to fund future working capital, capital expenditures, business opportunities and other corporate requirements. Furthermore, we may have a proportionally higher level of debt than our competitors, which may put us at a competitive disadvantage. Servicing our high level of debt may limit our flexibility in planning for, or reacting to, changes in our business, economic conditions and our industry.

         A further downgrading of our ratings may adversely affect our ability to raise additional financing.

        Following a downgrade in September 2013, our corporate credit is rated as Caa1 and the 2017 Fixed Rate Notes are rated B1 by Moody's Investors Services, which placed these ratings under review for downgrade following the release of our third quarter 2013 earnings. Standard & Poor's rates our corporate credit B- and the 2017 Fixed Rate Notes B- and placed these ratings on negative watch in February 2014. These ratings reflect each agency's opinion of our financial strength, operating performance and ability to meet our debt obligations as they become due. Credit rating agencies monitor companies very closely and have made liquidity and the key ratios associated with it, such as gross leverage ratio, a particular priority. We are unlikely to be able to operate with sufficient liquidity in the next twelve months to maintain our current ratings if we do not secure additional financing or if we are not able to improve our financial performance. In the event our debt or corporate credit ratings are further lowered by the ratings agencies, it will be more difficult for us to refinance indebtedness or raise new indebtedness that may be permitted under our indentures and we will have to pay higher interest rates, which would have an adverse effect on our financial position, results of operations and cash flows.

         If our goodwill, other intangible assets and long-lived assets become impaired, we may be required to record significant charges to earnings.

        We review our long-lived assets for impairment when events or changes in circumstances indicate the carrying amount may not be recoverable. Goodwill and indefinite-lived intangible assets are required to be assessed for impairment at least annually. Factors that may be considered a change in circumstances indicating that the carrying amount of our goodwill, indefinite-lived intangible assets or long-lived assets may not be recoverable include slower growth rates in our markets, reduced expected future cash flows, increased country risk premium as a result of political uncertainty and a decline in stock price and market capitalization. We consider available current information when calculating our impairment charge. We recorded an impairment charge of $79.7 million with respect to goodwill and other intangible assets in our Bulgaria and Slovenia reporting units during the three months ended December 31, 2013 as a result of significant downward revisions in our estimates of the cash flows our operations will generate in future periods. If there are indicators of impairment, our long-term cash flow forecasts for our operations deteriorate or discount rates increase, we may be required to recognize additional impairment charges in later periods. Please refer to our annual report on Form 10-K for the year ended December 31, 2013, incorporated herein by reference, for the carrying amounts of goodwill in each of our reporting units.

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         Changes to our business could result in future costs or charges.

        We periodically adjust our business strategy in response to particular events and circumstances, including economic conditions, industry changes and technological developments, as reflected by the change in our reporting segments starting January 1, 2013. In connection with the implementation of new strategies, we may decide to restructure certain of our operations, business or assets in order to optimize our cost structure and capture operating efficiencies. For example, we have expanded the scope of our previously announced restructuring plans to operate with a more effective cost base and incurred charges in 2013 of approximately $18.6 million. We also incurred total severance costs of approximately $7.1 million during the third and fourth quarters of 2013. Additional similar events could also result in restructuring and other charges and the incurrence of additional costs or may require significant management time to implement. If any such charges are material, they could have an adverse impact on our results of operations and cash flows.

         A default by us in connection with our obligations under our outstanding indebtedness could result in our inability to continue to conduct our business.

        Pursuant to the terms of the indentures governing the 2017 Fixed Rate Notes, 2016 Fixed Rate Notes (until discharged following the closing of the transactions described herein) and the 2015 Convertible Notes, we pledged, and under the Indenture governing the New Notes, assuming the closing of the Rights Offering and under the agreement for the Time Warner Term Loan as well as under the Time Warner Revolving Credit Facility, we will pledge, all of the shares in CME NV and all of the shares of CME BV, which together own substantially all of the interests in our operating subsidiaries, as security for this indebtedness. In addition, pursuant to the indenture governing the 2017 Fixed Rate Notes, we pledged our ownership interests in CET 21 and substantially all of CET 21's assets, including issued shares of CME Slovak Holdings B.V. If we or our restricted subsidiaries were to default under the terms of any of the indentures governing such notes or the Time Warner Term Loan Agreement or Time Warner Revolving Credit Facility, the secured parties under such indentures or agreements would have the ability to sell all or a portion of the assets pledged to them in order to pay amounts outstanding under such debt instruments. In addition, in the event of a default under the indenture governing the 2017 Fixed Rate Notes, the secured parties thereunder can enforce against assets that are not part of the collateral for the 2016 Fixed Rate Notes (until redeemed following the closing of the transactions described herein), the 2015 Convertible Notes, the Time Warner Term Loan or the Time Warner Revolving Credit Facility and, assuming the closing of the Rights Offering, will not be part of the collateral of the New Notes, including the shares and business of CET 21. Any such event would have a material adverse effect on our financial position, results of operations and cash flows.

         We may be unable to refinance our existing indebtedness and may not be able to obtain favorable refinancing terms.

        We face the risk that our indebtedness will not be able to be renewed, repaid or refinanced when due, or that the terms of any renewal or refinancing will not be as favorable as the terms of such indebtedness being refinanced. This risk is exacerbated by the current volatility in the capital markets, which has resulted in tightened lending requirements and in some cases the inability to refinance indebtedness. Following the issuances of the New Notes to refinance the 2016 Fixed Rate Notes and the drawdown of the Time Warner Term Loan as well as any drawdown of the Time Warner Revolving Credit Facility, we will continue to have a substantial amount of indebtedness, including approximately $261.0 million of 2015 Convertible Notes that mature on November 15, 2015.

        In addition, following the termination on June 18, 2013 of the Irrevocable Voting Deed and Proxy dated May 18, 2009 among an affiliate of Time Warner, Ronald Lauder and certain of his affiliates and us, as amended by a Letter Agreement dated April 29, 2013 (the "voting agreement"), Time Warner is

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no longer subject to an agreement not to own more than 49.9% of our voting securities. The acquisition by Time Warner (or any other person or group (as such term is defined in Section 13(d)(3) of the Exchange Act)) of more than 50% of our outstanding shares of Class A Common Stock would constitute a fundamental change under the indenture governing the 2015 Convertible Notes. If such a fundamental change occurs, we would need to repurchase or refinance the 2015 Convertible Notes in the event the holders thereof exercise their repurchase option under the indenture governing the 2015 Convertible Notes. If we were unable to repurchase or refinance our indebtedness on acceptable terms or at all, we might be forced to dispose of assets on disadvantageous terms or reduce or suspend operations, any of which would materially and adversely affect our financial condition, results of operations and cash flows.

         Fluctuations in exchange rates may adversely affect our results of operations.

        Our reporting currency is the dollar but our consolidated revenues and costs, including programming rights expenses and interest on debt, are divided across a range of currencies. The 2017 Fixed Rate Notes and 2016 Fixed Rate Notes (until redeemed following the closing of the transactions described herein) are denominated in Euros. We have not attempted to hedge the foreign exchange exposure on the principal amount of these notes. Furthermore, continuing instability in the Eurozone may increase our exposure to currency fluctuations. We may continue to experience significant gains and losses on the translation of our revenues or the 2017 Fixed Rate Notes and 2016 Fixed Rate Notes (until redeemed following the closing of the transactions described herein) into U.S. dollars due to movements in exchange rates between the Euro, applicable local currency of our operations and the U.S. dollar, which may have a material adverse effect on our financial position, results of operations and cash flows.

Risks relating to our operations

         Programming content may become more expensive to produce or acquire or we may not be able to develop or acquire content that is attractive to our audiences.

        Television programming is one of the most significant components of our operating costs. The ability of programming to generate advertising revenues depends substantially on our ability to develop, produce or acquire programming that matches audience tastes and attracts high audience shares, which is difficult to predict. The commercial success of a program depends on several tangible and intangible factors, including the impact of competing programs, the availability of alternate forms of entertainment and leisure time activities, our ability to anticipate and adapt to changes in consumer tastes and behavior, and general economic conditions. Furthermore, the cost of acquiring content attractive to our viewers, such as feature films and popular television series and formats, has increased as a result of greater competition from existing and new television broadcasting channels at the same time as our revenues from advertising has declined. Our expenditures in respect of locally produced programming may also increase due to the implementation of new laws and regulations mandating the broadcast of a greater number of locally produced programs, changes in audience tastes in our markets in favor of locally produced content, and competition for talent. In addition, we typically acquire syndicated programming rights under multi-year commitments before we can predict whether such programming will perform well in our markets. In the event any such programming does not attract adequate audience share, it may be necessary to increase our expenditures by investing in additional programming, subject to the availability of adequate financial resources, as well as to write down the value of such underperforming programming, as has been the case in certain of our operating segments in 2013. Any increase in content costs could have a material adverse effect on our financial condition, results of operations and cash flows.

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         Our operating results are dependent on the importance of television as an advertising medium.

        We generate most of our revenues from the sale of our advertising airtime on television channels in our markets. Television competes with various other media, such as print, radio, the internet and outdoor advertising, for advertising spending. In all of the countries in which we operate, television constitutes the single largest component of all advertising spending. There can be no assurances that the television advertising market will maintain its current position among advertising media in our markets. Furthermore, there can be no assurances that changes in the regulatory environment or improvements in technology will not favor other advertising media or other television broadcasters. Increases in competition among advertising media arising from the development of new forms of advertising media and distribution could result in a decline in the appeal of television as an advertising medium generally or of our channels specifically. A decline in television advertising spending as a component of total advertising spending in any period or in specific markets would have an adverse effect on our financial position, results of operations and cash flows.

         Our businesses are vulnerable to significant changes in technology that could adversely affect us.

        The television broadcasting industry is affected by rapid innovations in technology. The implementation of new technologies and the introduction of broadcasting distribution systems other than analog terrestrial broadcasting, such as digital terrestrial television ("DTT") broadcasting, direct-to-home cable and satellite distribution systems, the internet, video-on-demand, user-generated content sites and the availability of television programming on portable digital devices, have changed consumer behavior by increasing the number of entertainment choices available to audiences and the methods for the distribution, storage and consumption of content. This has fragmented television audiences in more developed markets and could adversely affect our ability to retain audience share and attract advertisers as such technologies penetrate our markets. New business initiatives of ours to expand our distribution capabilities to adapt to changing patterns of consumption of content may not be embraced by consumers and therefore may not develop into profitable business models. New technologies that enable viewers to choose when, how, where and what content to watch, as well as to fast-forward or skip advertisements, may cause changes in consumer behavior that could impact our businesses. In addition, compression techniques and other technological developments allow for an increase in the number of channels that may be broadcast in our markets and expanded programming offerings that may be offered to highly targeted audiences. Reductions in the cost of launching additional channels could lower entry barriers for new channels and encourage the development of increasingly targeted niche programming on various distribution platforms. Our television broadcasting operations may be required to expend substantial financial and managerial resources to ensure necessary access to new broadcasting technologies or distribution systems. In addition, an expansion in competition due to technological innovation may increase competition for audiences and advertising revenue as well as the competitive demand for programming. Any requirement for substantial further investment to address competition that arises on account of technological innovations in broadcasting may have an adverse effect on our financial position, results of operations and cash flows.

         Piracy of our content may decrease revenues we can earn from our content and adversely impact our business and profitability.

        Piracy of our content poses significant challenges in our markets. Technological developments, including digital copying, file compressing, the use of international proxies and the growing penetration of high bandwidth internet connections, have made it easier to create, transmit and distribute high quality unauthorized copies of content in unprotected digital formats. Furthermore, there are a growing number of video streaming sites, increasing the risk of online transmission of our content without consent. The proliferation of such sites broadcasting content pirated from us could result in a reduction of revenues that we receive from the legitimate sale and distribution of our content, including revenues

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generated by Voyo, our subscription video-on-demand service and other revenue streams. Protection of our intellectual property is dependent on the manner in which applicable intellectual property laws in the countries in which we operate are construed and enforced. We seek to limit the threat of content piracy. However, detecting and policing the unauthorized use of our intellectual property is often difficult and remedies may be limited under applicable law. Steps we take may not prevent the infringement by third parties. There can be no assurance that our efforts to enforce our rights and protect our intellectual property will be successful in preventing piracy, which limits our ability to generate revenues from our content.

         We rely on network and information systems and other technology that may be subject to disruption or misuse, which could harm our business or our reputation.

        We make extensive use of network and information systems and other technologies, including those related to our internal network management as well as our new media operations. These systems are central to many of our business activities. Network and information systems-related events, such as computer hackings, computer viruses, worms or other destructive or disruptive software, process breakdowns, malicious activities or other security breaches could result in a disruption or degradation of our services, the loss of information or the improper disclosure of personal data. The occurrence of any of these events could negatively impact our business by requiring us to expend resources to remedy such a security breach or by harming our reputation. In addition, improper disclosure of personal data could subject us to liability under laws that protect personal data in the countries in which we operate. The development and maintenance of systems to prevent these events from occurring requires ongoing monitoring and updating as efforts to overcome security measures become more sophisticated. As technologies evolve, we will need to expend additional resources to protect our technology and information systems, which could have an adverse impact on our results of operations.

         The transition to digital television broadcasting may require substantial additional investments and the effectiveness of such investments is uncertain.

        Countries in which we have operations are migrating from analog terrestrial broadcasting to DTT broadcasting. Each country has independent plans for its digital switchover with its own timeframe, operating model and regulatory and investment regime. Bulgaria, Croatia, the Czech Republic, the Slovak Republic and Slovenia have completed the analog switch-off. In Romania, which is in the initial stages of migration, completion is expected by 2015. We cannot predict the full effect of the migration to DTT broadcasting on existing operations or the take up of DTT broadcasting by their audiences. We also cannot predict whether our Romanian operations will receive rights or licenses to broadcast any existing or additional channels if additional rights or licenses to such broadcasting should be required once the digital switchover in Romania is completed. Our operations may be required to make substantial investment and commit substantial other resources to implement DTT broadcasting and secure distribution in advance of knowing the take up of DTT broadcasting versus competing alternative distribution systems, such as direct-to-home platforms. We may not have access to resources sufficient to make such investments when required.

         Our operations are in developing markets where there is a risk of economic uncertainty, biased treatment and loss of business.

        Our revenue-generating operations are located in Central and Eastern Europe where we must comply with various regulatory obligations related to our businesses, including in respect of broadcasting and competition. We believe that we are in compliance with all our regulatory obligations in all material respects but it is not possible to predict how regulatory authorities or courts that have been or may be asked to resolve any allegations or claims will decide such issues. Our markets pose different risks to those posed by investments in more developed markets and the impact in our markets

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of unforeseen circumstances on economic, political or social life is greater. The economic and political systems, legal and tax regimes, standards of corporate governance and business practices of countries in this region continue to develop. Government policies may be subject to significant adjustments, especially in the event of a change in leadership. This may result in social or political instability or disruptions, potential political influence on the media, inconsistent application of tax and legal regulations, arbitrary treatment before judicial or other regulatory authorities and other general business risks, any of which could have a material adverse effect on our financial position, results of operations and cash flows. Other potential risks inherent in markets with evolving economic and political environments include exchange controls, higher tariffs and other levies as well as longer payment cycles. The relative level of development of our markets and the influence of local political parties also present a potential for biased treatment of us before regulators or courts in the event of disputes involving our investments. If such a dispute occurs, those regulators or courts might favor local interests over our interests. Ultimately, this could lead to the loss of one or more of our business operations. The loss of a material business would have an adverse impact on our financial position, results of operations and cash flows.

         We may not be aware of all related party transactions, which may involve risks of conflicts of interest that result in transactions being concluded on less favorable terms than could be obtained in arm's-length transactions.

        In certain of our markets, the officers, general directors or other members of the management of our operating companies have other business interests, including interests in television and other media-related companies. We may not be aware of all business interests or relationships that exist with respect to entities with which our operating companies enter into transactions. Transactions with companies, whether or not we are aware of any business relationship between our employees and third parties, may present conflicts of interest which may in turn result in the conclusion of transactions on terms that are not arm's-length. It is likely that we and our subsidiaries will continue to enter into related party transactions in the future. In the event there are transactions with persons who subsequently are determined to be related parties, we may be required to make additional disclosure and, if such contracts are material, may not be in compliance with certain covenants under the indentures governing the 2017 Fixed Rate Notes and 2016 Fixed Rate Notes (until redeemed following the closing of the transactions described herein) or the covenants under the Indenture governing the New Notes or the Time Warner Term Loan or Time Warner Revolving Credit Facility. Any related party transaction that is entered into on terms that are not arm's-length may result in a negative impact on our financial position, results of operations and cash flows.

         Our broadcasting licenses may not be renewed and may be subject to revocation.

        We require broadcasting and, in some cases, other operating licenses as well as other authorizations from national regulatory authorities in our markets in order to conduct our broadcasting business. Our broadcasting licenses for our operations in Slovenia and the Slovak Republic are valid for indefinite time periods and our remaining broadcasting licenses expire at various times through 2028. While we expect that our material licenses and authorizations will be renewed or extended as required to continue to operate our business, we cannot guarantee that this will occur or that they will not be subject to revocation, particularly in markets where there is relatively greater political risk as a result of less developed political and legal institutions. The failure to comply in all material respects with the terms of broadcasting licenses or other authorizations or with applications filed in respect thereto may result in such licenses or other authorizations not being renewed or otherwise being terminated. Furthermore, no assurances can be given that renewals or extensions of existing licenses will be issued on the same terms as existing licenses or that further restrictions or conditions will not be imposed in the future. Any non-renewal or termination of any other broadcasting or operating licenses or other

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authorizations or material modification of the terms of any renewed licenses may have a material adverse effect on our financial position, results of operations and cash flows.

         Our success depends on attracting and retaining key personnel.

        Our success depends partly upon the efforts and abilities of our key personnel and our ability to attract and retain key personnel. Our management teams have significant experience in the media industry and have made important contributions to our growth and success. Although we have been successful in attracting and retaining such people in the past, competition for highly skilled individuals is intense. There can be no assurance that we will continue to be successful in attracting and retaining such individuals in the future. The loss of the services of any of these individuals could have an adverse effect on our businesses, results of operations and cash flows.

Risks relating to enforcement rights

         We are a Bermuda company and enforcement of civil liabilities and judgments may be difficult.

        We are a Bermuda company. Substantially all of our assets and all of our operations are located, and all of our revenues are derived, outside the United States. In addition, several of our directors and officers are non-residents of the United States, and all or a substantial portion of the assets of such persons are or may be located outside the United States. As a result, investors may be unable to effect service of process within the United States upon such persons, or to enforce against them judgments obtained in the United States courts, including judgments predicated upon the civil liability provisions of the United States federal and state securities laws. There is uncertainty as to whether the courts of Bermuda and the countries in which we operate would enforce (a) judgments of United States courts obtained against us or such persons predicated upon the civil liability provisions of the United States federal and state securities laws or (b) in original actions brought in such countries, liabilities against us or such persons predicated upon the United States federal and state securities laws.

         Our bye-laws restrict shareholders from bringing legal action against our officers and directors.

        Our bye-laws contain a broad waiver by our shareholders of any claim or right of action in Bermuda, both individually and on our behalf, against any of our officers or directors. The waiver applies to any action taken or concurred in by an officer or director, or the failure of an officer or director to take any action, in the performance of his or her duties, except with respect to any matter involving any fraud or dishonesty on the part of the officer or director. This waiver limits the right of shareholders to assert claims against our officers and directors unless the act or failure to act involves fraud or dishonesty.

Risks relating to our Common Stock

         Our share price may be adversely affected by sales of unrestricted or unregistered shares or future issuances of our shares.

        Time Warner is the largest holder of shares of our Class A Common Stock, holding 61,407,775 unregistered shares of Class A Common Stock, and also holds one share of Series A Preferred Stock, and 200,000 shares of Series B Preferred Stock. The share of Series A Preferred Stock is convertible into 11,211,449 shares of Class A Common Stock on the date that is 61 days after the date on which the ownership of our outstanding shares of Class A Common Stock by a group that includes Time Warner Media Holdings, B.V. ("TW Investor") and its affiliates would not be greater than 49.9% of the outstanding shares of Class A Common Stock. The shares of Series B Preferred Stock are convertible into shares of Class A Common Stock after three years from the date of issuance (June 25, 2013) at the option of Time Warner (subject to certain exceptions) at a conversion price of $3.1625, subject to adjustment in the event of equity issuances at a price per share less than this conversion price

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(including in respect of the warrants to be offered in connection with the financing transactions), on the date that is 61 days after the earlier of (a) the date on which the ownership of our outstanding shares of Class A Common Stock by a group would not be greater than 49.9% of the outstanding shares of Class A Common Stock and (b) the date on which such beneficial ownership would not give to any person any right of redemption, repurchase or acceleration under any indenture or other document governing any of our indebtedness outstanding as of June 25, 2013. The initial stated value of $1,000 per share of the Series B Preferred Stock accretes at a rate of 7.5% per annum, compounded quarterly, for the first three years from the date of issuance and 3.75% per annum, compounded quarterly, for the fourth and fifth years. Time Warner has registration rights with respect to all its shares of Class A Common Stock now held or hereafter acquired by Time Warner. As of December 25, 2013, the 200,000 shares of Series B Preferred Stock were convertible into 65,641,500 shares of Class A Common Stock.

        We are party to an amended investor rights agreement (the "Investor Rights Agreement") with Time Warner and the other parties thereto under which, among other things, Time Warner was granted a contractual preemptive right (subject to certain exclusions) with respect to issuances of the Company's equity securities that applies to the issuance of the Units in the Rights Offering. We have executed the Framework Agreement, pursuant to which we and Time Warner have committed, subject to the terms and conditions thereof, to undertake the financing transactions described herein, including the Rights Offering, as described elsewhere in this Prospectus (see "The Rights Offering—Framework Agreement" and "The Rights Offering—Purchase Agreement").

        The 2015 Convertible Notes are convertible into shares of our Class A Common Stock and mature on November 15, 2015. Prior to August 15, 2015, the 2015 Convertible Notes will be convertible following certain events and from that date at any time to November 15, 2015. Furthermore, there are additional unregistered or restricted shares of our Class A Common Stock outstanding, as well as securities convertible into shares of Class A Common Stock, that may enter the market. We cannot predict what effect, if any, the entry into trading of previously issued unregistered or restricted shares of Class A Common Stock will have on the market price of our shares. We may also issue additional equity or indebtedness convertible into our equity in the future. If more shares of our Class A Common Stock (or securities convertible into or exchangeable for shares of our Class A Common Stock) are issued to Time Warner, the economic interests of current shareholders may be diluted and the price of our shares may be adversely affected.

         The interests of our controlling shareholders may conflict with the interests of other shareholders.

        Following the termination of the voting agreement in June 2013, Time Warner is able to exercise voting power in us with respect to 49.6% of our outstanding shares of Class A Common Stock. As such, Time Warner is in a position to exercise significant influence over the outcome of corporate actions requiring shareholder approval, such as the election of directors or certain transactions, including the transactions contemplated by the Framework Agreement. Immediately after the issuance of the TW Initial Warrant to Time Warner in connection with the transactions contemplated by the Framework Agreement, the aggregate economic interest of Time Warner in us will increase from 65.0%, immediately prior to the execution of the Framework Agreement, to approximately 70%, immediately prior to the closing of the Rights Offering. If no other shareholders exercise Rights in the Rights Offering, the aggregate interests in our Class A Common Stock of Time Warner following its purchase of Backstop Units pursuant to the Purchase Agreement will increase to approximately 78.5% on a fully diluted basis (without giving effect to the accretion of the Series B Preferred Stock after December 25, 2013). Under Bermuda law, there is no takeover code or similar legislation requiring an acquirer of a certain percentage of our Class A Common Stock to tender for the remaining publicly held shares. In certain circumstances, the interests of Time Warner as controlling shareholder could be in conflict with the interests of minority shareholders.

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         The price of our Class A Common Stock is likely to remain volatile.

        The market price of shares of our Class A Common Stock may be influenced by many factors, some of which are beyond our control, including those described above under "—Risks Relating to Our Operations" as well as the following: general economic and business trends, variations in quarterly operating results, license renewals, regulatory developments in our operating countries and the European Union, the condition of the media industry in our operating countries, the volume of trading in shares of our Class A Common Stock, future issuances of shares of our Class A Common Stock and investors' and securities analysts' perception of us and other companies that investors or securities analysts deem comparable in the television broadcasting industry. In addition, stock markets in general have experienced extreme price and volume fluctuations that have often been unrelated to and disproportionate to the operating performance of broadcasting companies. These broad market and industry factors may materially reduce the market price of shares of our Class A Common Stock, regardless of our operating performance. (See "Price Range of Class A Common Stock" for more information.)

Risks related to the Rights Offering

         The Rights are not transferable and there is no market for the Rights.

        The Rights will not be transferable. You may not sell, transfer or assign your Rights to anyone else. Because the Rights are not transferable, there is no market or other means for you to directly realize any value associated with the Rights. You must exercise (or cause your bank, broker or other organization to exercise) the Rights and acquire the New Notes and Unit Warrants to realize any value from your Rights.

         The Subscription Price determined for the Units may not be an indication of the fair value of the New Notes, Unit Warrants or shares of Class A Common Stock issuable upon exercise of the Unit Warrants. As a result, you may not be able to sell the New Notes or the Unit Warrants at a price equal to or greater than the Subscription Price or at a price you believe may be indicated by the price per Unit, if at all. Additionally, the exercise price for the Unit Warrants does not reflect the trading prices for our shares of Class A Common Stock and you may not be able to sell the shares of Class A Common Stock issuable upon exercise of the Unit Warrants at a price equal to or higher than the exercise price for such shares, which may exceed the then current market price of our Class A Common Stock.

        The Disinterested Directors set the Subscription Price of $100.00 per Unit. The Subscription Price was set with reference to the amount of financing we require in order to redeem and repay in full all outstanding 2016 Fixed Rate Notes, including the early redemption premium, after deciding that the transaction should be made widely available to our shareholders. This amount of financing has been allocated pro rata over the Units to be offered pursuant to the Rights Offering and the TW Unit Private Placement. (See "Determination of the Subscription Price" and "The Rights Offering—Reasons for the Rights Offering" for more information.) The price per Unit in the Rights Offering may not be indicative of the market value of the New Notes or Unit Warrants underlying each Unit. We cannot assure you that the trading price of our Class A Common Stock will not decline during or after the Rights Offering. We do not intend to change the Subscription Price or the terms of the Units in response to changes in the trading price of our Class A Common Stock prior to the closing of the Rights Offering.

        The Disinterested Directors set the exercise price of the TW Initial Warrant, Unit Warrants and Term Loan Warrants at $1.00 per share based on negotiations with Time Warner. (See "The Rights Offering—Reasons for the Rights Offering" for more information.) The exercise price per Unit Warrant in the Rights Offering may not be indicative of the market value of the shares of Class A Common Stock underlying the TW Initial Warrant, Unit Warrants and Term Loan Warrants. We cannot

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assure you that the trading price of our Class A Common Stock will not decline below the exercise price of the TW Initial Warrant or the Unit Warrants prior to the date on which such warrants become exercisable or subsequent to the exercise thereof.

        We cannot assure you that you will be able to sell the New Notes or Unit Warrants underlying each Unit at a price equal to or greater than the Subscription Price or at a price you believe may be indicated by the price per Unit, if at all. We also cannot assure you that you will be able to sell the shares of Class A Common Stock issuable upon exercise of the Unit Warrants at a price equal to or higher than the exercise price for such shares, which may exceed the then-current market price of our Class A Common Stock. Prior to the issuance of the New Notes and Unit Warrants, there has been no market for these securities and you may not be able to sell the New Notes or Unit Warrants at a price you believe may be indicated by the price per Unit, if at all. We cannot provide you any assurances as to the liquidity of or the trading market for the New Notes or Unit Warrants issued in connection with the Rights Offering. Moreover, the New Notes and Unit Warrants to be issued to Time Warner pursuant to the TW Unit Private Placement and the Backstop Private Placement and the TW Initial Warrant will be "restricted securities" as that term is defined in Rule 144 under the Securities Act, and may be resold only pursuant to an effective registration statement or under the requirements of Rule 144 or other applicable exemption from registration under the Securities Act and as required under applicable state securities laws. All New Notes and Unit Warrants issued to Time Warner pursuant to the Rights Offering (excluding the Backstop Private Placement) will not be considered "restricted securities," but will nevertheless be subject to the limitations on resale set forth in Rule 144 relating to the resale of securities held by an affiliate of the issuer. These restrictions may further impede the development of a market for the New Notes and Unit Warrants.

         You may not revoke your decision to exercise your Rights after you send us your rights certificate.

        If you change your mind about exercising your Rights, you may not revoke or change the amount of your exercise after you send in your required documents and payment.

         You may not be able to resell any of the New Notes or Unit Warrants that you purchase pursuant to the exercise of Rights immediately upon expiration of the Subscription Period.

        The New Notes will be issued in book-entry form and will be represented by one or more permanent global certificates deposited with a custodian for, and registered in the name of a nominee of, DTC, or, for record holders of shares of our Class A Common Stock not exercising their Rights through a DTC participant, the New Notes will be issued in physical form that is not deposited with DTC, record of which will be maintained by the trustee. Unit Warrants will be issued in book-entry only form and will be represented by one or more permanent global certificates deposited with a custodian for, and registered in the name of a nominee of, DTC, or, if you are a record holder of shares of our Class A Common Stock and are not exercising your rights through a DTC participant, in the DRS, record of which will be maintained by the Warrant Agent Beneficial owners of our Class A Common Stock whose shares are held in "street name" will have their New Notes or Unit Warrants, as applicable, credited to the account of their broker, dealer, custodian bank or other nominee. The Company will determine the date for the delivery of the New Notes and the Unit Warrants being issued in the Rights Offering following the expiration of the Subscription Period and will announce the anticipated delivery date of the New Notes and the Unit Warrants at a later date. Until the New Notes and Unit Warrants are delivered following the expiration of the Subscription Period, you will not be able to sell the New Notes or Unit Warrants that you purchase in the Rights Offering. Additionally, the Unit Warrants will not be exercisable until the second anniversary of the date of issuance. You will not be able to sell any of the shares of Class A Common Stock underlying the Unit Warrants until such Unit Warrants are exercised (and then, solely to extent of exercise).

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         We do not intend to list the Unit Warrants on any exchange, and a market may not develop for the Unit Warrants.

        We do not intend to list the Unit Warrants on any exchange. There is no assurance that an active trading market will develop for the Unit Warrants. If no active trading market develops, you may not be able to resell the Unit Warrants at the exercise price for the Unit Warrants, if at all. In addition, a minimum of approximately 65% of the Unit Warrants issued pursuant to the Rights Offering will initially be held by Time Warner, an affiliate of CME, and possibly more pursuant to Time Warner's Backstop Purchase Commitment, which may impede the development of a market for the Unit Warrants if Time Warner chooses not to trade the Unit Warrants that it so acquires, in whole or in part. Moreover, the New Notes and Unit Warrants to be issued to Time Warner pursuant to the TW Unit Private Placement and the Backstop Private Placement and the TW Initial Warrant will be "restricted securities" as that term is defined in Rule 144 under the Securities Act, and may be resold only pursuant to an effective registration statement or under the requirements of Rule 144 or other applicable exemption from registration under the Securities Act and as required under applicable state securities laws. All New Notes and Unit Warrants issued to Time Warner pursuant to the Rights Offering (excluding the Backstop Private Placement) will not be considered "restricted securities," but will nevertheless be subject to the limitations on resale set forth in Rule 144 relating to the resale of securities held by an affiliate of the issuer. These restrictions may further impede the development of a market for the New Notes and Unit Warrants. Consequently, there may not be an active market for Unit Warrants and you may not be able to sell your Unit Warrants at a profit, at the exercise price or at all.

         Because we may terminate or cancel the Rights Offering at any time, your participation in the Rights Offering is not assured.

        We may terminate or cancel the Rights Offering at any time before the expiration of the Subscription Period at 5:00 p.m., New York City time, on                                  , 2014 (or any extension thereof), for any reason. If the Rights Offering is terminated or cancelled for any reason, then we will not issue you any of the New Notes or Unit Warrants you may have subscribed for and we will not have any obligation with respect to the Rights except to return any Subscription Price payments, as soon as practicable, without interest or penalty.

         We may amend the terms of the Rights Offering or modify the Subscription Period of the Rights Offering at any time prior to the expiration of the Subscription Period, subject to the approval of Time Warner under the Framework Agreement and Purchase Agreement.

        We may amend the terms of the Rights Offering or modify the Subscription Period of the Rights Offering at any time prior to the expiration of the Subscription Period, subject to the approval of Time Warner; however, we do not intend to do so. We may amend the terms of the Rights Offering for any reason, subject to the approval of Time Warner. However, if we make any fundamental change to the terms set forth in this prospectus, we will file a post-effective amendment to the registration statement in which this prospectus is included announcing the cancellation of the Rights Offering and instituting a new offering on such revised terms and giving our shareholders the opportunity to subscribe to such new offering. In such event, all payments of the aggregate Subscription Price received by the Subscription and Information Agent will be returned as soon as practicable, without interest or penalty, and at least contemporaneously with our filing of such post-effective amendment. The terms of the Rights Offering cannot be modified or amended after the expiration of the Subscription Period, as may be extended from time to time.

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         If you do not act promptly and follow the subscription instructions, then your exercise of Rights may be rejected.

        Eligible Securityholders who desire to purchase shares in the Rights Offering must act promptly to ensure that all required forms and payments are actually received by the Subscription and Information Agent before 5:00 p.m., New York City time, on                                  , 2014 (or any extension thereof), the expiration of the Subscription Period. If your shares are held in "street name" through a broker, dealer, custodian bank or other nominee, as the record holder, then you must act promptly to ensure that your broker, dealer, bank or other nominee acts for you and that all required forms and payments are actually received by the Subscription and Information Agent before the expiration of the Subscription Period. We will not be responsible if your broker, dealer, bank, financial institution or other nominee fails to ensure that all required forms and payments are actually received by the Subscription and Information Agent before the expiration of the Subscription Period. If you fail to complete and sign the rights certificate or the forms specified by your broker, dealer, custodian bank or other nominee, send an incorrect payment amount, pay by an unauthorized payment form, or otherwise fail to follow the subscription procedures that apply to your exercise of Rights in the Rights Offering, then the Subscription and Information Agent may, depending on the circumstances, reject your subscription or accept it only to the extent of the payment received. Neither we nor the Subscription and Information Agent undertakes to contact you concerning an incomplete or incorrect subscription form or payment, nor are we under any obligation to correct such forms or payment. We have the sole discretion to determine whether a Rights exercise follows the proper procedures. You bear the risk of delivery of all documents and payments, and neither us nor the Subscription and Information Agent has any responsibility for such documents and payments.

         Your percentage ownership and voting rights will decrease in connection with the TW Unit Private Placement and TW Initial Warrant. In addition, if you do not exercise your Rights in full, subject to satisfying the minimum subscription amount, then your percentage ownership and, if Unit Warrants or the TW Initial Warrant are exercised, your voting rights will further decrease.

        Time Warner has agreed to purchase 576,968 TW Private Placement Units at the Subscription Price in the TW Unit Private Placement. The TW Private Placement Units are not included in the 3,391,403 Units that we are offering in the Rights Offering and, following the exercise of the TW Initial Warrant, your percentage ownership and voting rights will decrease relative to Time Warner.

        In addition, if you choose not to exercise your Rights in full, subject to satisfying the minimum subscription amount, then your relative ownership and voting interest will be further diluted to the extent other shareholders exercise their Rights. Pursuant to the Purchase Agreement, Time Warner has committed, subject to the satisfaction or waiver of certain conditions, including the funding of the Time Warner Term Loan (if the Rights Offering is closed prior to the Bridge Date), to exercise in full its subscription privilege at the Subscription Price in respect of all of the Rights allocated to Time Warner in the Rights Offering and to purchase the TW Private Placement Units. In total, the Rights allocated to Time Warner in the Rights Offering and the TW Unit Private Placement represent approximately 70% of all Units that will be issued by the Company, which Time Warner is obligated to purchase under the Purchase Agreement. Under the Purchase Agreement, Time Warner has also committed to purchase at the Subscription Price in the Backstop Private Placement any and all remaining Units that are not purchased through the exercise of Rights in the Rights Offering. The exact amount of Backstop Units to be purchased by Time Warner pursuant to the Backstop Purchase Commitment will vary depending upon the number of Units purchased through the exercise of Rights in the Rights Offering by our Eligible Securityholders (other than Time Warner). If our Eligible Securityholders (other than Time Warner) do not purchase any Units in the Rights Offering, Time Warner will purchase all of the Units offered by the Company in the Rights Offering and the TW Unit Private Placement following which its economic ownership interest in our Class A Common Stock would be approximately 78.5% on

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a fully diluted basis (without giving effect to the accretion of the Series B Preferred Stock after December 25, 2013). Therefore, given these agreements with Time Warner, your percentage ownership and voting rights will decrease relative to Time Warner and if you do not exercise your Rights in full, subject to satisfying the minimum subscription amount, then your percentage ownership and voting rights will further decrease.

         We are not making a recommendation as to whether you should participate in the Rights Offering.

        None of our board of directors, Dealer Manager, Subscription and Information Agent or Time Warner is making any recommendation regarding your exercise of Rights in the Rights Offering or the sale or transfer of the underlying New Notes or Unit Warrants or shares of Class A Common Stock issuable upon exercise of the Unit Warrants. Further, we have not authorized anyone to make any recommendation.

         You will not receive interest on subscription funds, including any funds ultimately returned to you as soon as practicable.

        You will not earn any interest on your payment of the Subscription Price while it is being held by the Subscription and Information Agent pending the closing of the Rights Offering. In addition, if we cancel the Rights Offering, or you do not satisfy the minimum subscription amount, neither we nor the Subscription and Information Agent will have any obligation with respect to the Rights except to return to you, without interest or penalty, any payment of the Subscription Price.

         If the Company is subject to insolvency proceedings, the Unit Warrants may be treated as executory contracts subject to rejection.

        If a bankruptcy, reorganization, receivership, liquidation or other insolvency proceeding (an "Insolvency Proceeding") is commenced by or against the Company or any of its subsidiaries, it cannot be assured where such proceeding would be commenced. Accordingly, it cannot be certain which country's insolvency laws would govern any Insolvency Proceeding commenced by or against the Company or any of its subsidiaries. Nor can it be certain what country's non-insolvency law may govern issues in any Insolvency Proceeding.

        For purposes of the insolvency risk factor discussions herein, however, it is assumed that an Insolvency Proceeding would be commenced in the Company's country of formation, Bermuda, and that the substantive insolvency law of Bermuda would govern the Insolvency Proceeding. Importantly, however, the guarantors of the Company's indebtedness are entities formed under the laws of the Netherlands and Curaçao and the insolvency and other laws of these countries differ in material respects from the law of Bermuda and there can be no certainty as to how that may impact any Insolvency Proceeding commenced in Bermuda. Furthermore, certain laws in other jurisdictions may provide creditors residing in those jurisdictions with certain rights and remedies that may or may not be respected under principles of comity or otherwise in an Insolvency Proceeding commenced in Bermuda or another jurisdiction. Accordingly, the disclosure set forth herein is qualified entirely by the foregoing.

        In the event an Insolvency Proceeding is commenced by or against the Company or any of its subsidiaries in Bermuda, a court in Bermuda might hold that unexercised Unit Warrants are executory contracts that may be subject to rejection by the Company with approval of the court and might hold that unexercised Unit Warrants are ineffective without approval of the court. As a result, holders of the Unit Warrants might not, even if sufficient funds are otherwise available, be entitled to receive any consideration or might receive an amount less than they would be entitled to receive if they had exercised their Unit Warrants prior to the commencement of any such Insolvency Proceeding.

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         Eligible Securityholders participating in the Rights Offering will be subject to risks as holders of the New Notes and Unit Warrants and, upon exercise of their Unit Warrants, such Eligible Securityholders will be subject to risks as holders of our Class A Common Stock.

        If you purchase the Units offered in the Rights Offering, you will be subject to the risks relating to the New Notes and Unit Warrants that are described below. Additionally, if you exercise the Unit Warrants issued as part of such Units, you will be subject to risks relating to our Class A Common Stock.

Risks relating to the New Notes

         Covenant restrictions under the indenture relating to the New Notes, the indenture relating to the 2017 Fixed Rate Notes, the Time Warner Term Loan Agreement and the Time Warner Revolving Credit Facility impose significant operating and financial restrictions on us and may limit our ability to operate our business and consequently to make payments on the New Notes.

        The indenture relating to the 2017 Fixed Rate Notes and the indenture relating to the New Notes contain, and the Time Warner Term Loan Agreement and the Time Warner Revolving Credit Facility will contain, covenants that restrict our ability to finance future operations or capital needs or to take advantage of other business opportunities that may be in our interest. These covenants restrict the ability to, among other things:

•

incur or guarantee additional debt;



•

pay dividends or make distributions on, or redeem or repurchase, capital stock or subordinated debt;



•

make investments or other restricted payments;



•

create liens;



•

enter into certain transactions with affiliates;



•

enter into agreements restricting the ability of our subsidiaries to pay dividends or other distributions or create intercompany indebtedness; and



•

consolidate, amalgamate, merge or sell, transfer, lease or otherwise dispose of all or substantially all of our assets of or those of certain of our subsidiaries.

        Events beyond our control, including changes in general business and economic conditions, may affect our ability to meet these requirements. A breach of any of these covenants could result in a default under the Indenture or the indenture governing the 2017 Fixed Rate Notes or the Time Warner Term Loan Agreement and the Time Warner Revolving Credit Facility.

         Despite current debt levels, we will be able to incur more debt, which could increase the risks described in this section.

        We have the right to incur additional debt in the future. Although the Indenture and the indenture relating to the 2017 Fixed Rate Notes contain, and the Time Warner Term Loan Agreement and the Time Warner Revolving Credit Facility will contain, restrictions on the incurrence of additional debt, these restrictions are subject to a number of qualifications and exceptions, and additional debt incurred in compliance with these restrictions could be substantial. In addition, the interest payable under each of the New Notes, the Time Warner Revolving Credit Facility and the Time Warner Term Loan will, until November 15, 2015 and at our option thereafter, be payable by adding the amount of such interest to the principal amount of the New Notes or the applicable loan, thereby increasing the aggregate original principal amount of the New Notes or the applicable loan, which in turn would

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further increase our substantial debt. Any additional debt would likely exacerbate the risks to CME that are described under "—Risks relating to our financial position."

         The New Notes are structurally subordinated to all obligations of our subsidiaries which are not guarantors of the New Notes, including their obligations in respect of the 2017 Fixed Rate Notes, and effectively subordinated to indebtedness of us and our subsidiaries which are secured by assets other than the Collateral.

        The New Notes are obligations of ours and are effectively subordinated to all debt and other obligations, including trade payables, of our subsidiaries which are not guarantors of the New Notes, including their obligations in respect of the 2017 Fixed Rate Notes. The effect of this subordination is that, in the event of a bankruptcy, liquidation, dissolution, reorganization or similar proceeding involving a subsidiary which is not a guarantor of the New Notes, the assets of the affected entity could not be used to pay you until after all other claims against that subsidiary, including trade payables, have been fully paid. In addition, the New Notes will be effectively subordinated to any present and future indebtedness which is secured by assets other than the Collateral, to the extent of the value of such assets. As of December 31, 2013, our subsidiaries which are not guarantors of the New Notes had $675.4 million of total outstanding liabilities (after eliminating transactions between and among the non-guarantor subsidiaries, but including inter-company liabilities to CME, CME NV and CME BV), certain of which, including the 2017 Fixed Rate Notes, are secured by assets that do not also secure the New Notes. As of December 31, 2013, us and our subsidiaries had no secured indebtedness outstanding other than the 2017 Fixed Rate Notes, the 2016 Fixed Rate Notes, the 2015 Convertible Notes and indebtedness incurred under capital leases, although the indentures governing the 2017 Fixed Rate Notes permit certain secured debt to be incurred both at the our and restricted subsidiary levels.

         Our holding company structure may limit our access to cash flow and our ability to service the New Notes, the Time Warner Term Loan and the Time Warner Revolving Credit Facility.

        We are a holding company that conducts its operations through certain subsidiaries and affiliates. The primary internal source of our cash to fund our operating expenses as well as service our existing and future debt, including the New Notes, Time Warner Term Loan and the Time Warner Revolving Credit Facility depends on repayments of intercompany debt by our subsidiaries to us and distribution of earnings of our operating subsidiaries. Substantially all of our assets consist of shares in and loans to our subsidiaries. We rely on the repayment of inter-company indebtedness and the declaration of dividends to receive distributions of cash from our operating subsidiaries. If any of our operating subsidiaries or affiliates were prevented from distributing such portion of reserves to us to which we are entitled, we may be unable to meet our operating expenses and debt service requirements which would have a material adverse effect on our ability to service the New Notes, the Time Warner Term Loan and the Time Warner Revolving Credit Facility and our results of operations.

         We may not be able to repurchase the New Notes upon a change of control and a ratings decline.

        Upon the occurrence of a "change of control" (as defined in the Indenture) which is accompanied by a decline in the ratings of the New Notes (a "Change of Control Triggering Event"), we will be required to make an offer to you in cash to repurchase all or any part of the New Notes at 101% of their principal amount, plus accrued and unpaid interest. If a Change of Control Triggering Event occurs, we may not have sufficient funds at that time to pay the purchase price for all tendered notes, particularly if that change of control event triggers a similar repurchase requirement for, or results in the acceleration of, any of our other debt, including the 2017 Fixed Rate Notes, the Time Warner Term Loan and the Time Warner Revolving Credit Facility. Any debt agreements we enter into in the future may contain similar provisions. Certain transactions that constitute a change of control under our existing and future debt instruments may not constitute a "Change of Control" under the Indenture.

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         The interests of Time Warner, CME's largest shareholder, may conflict with the interests of the Holders of the Notes.

        Assuming that the Rights Offering and the transactions contemplated by the Purchase Agreement are closed (including the TW Unit Private Placement and, if applicable, the Backstop Private Placement), Time Warner will not only continue to be CME's largest shareholder but also will be the largest creditor of CME due to its position as a lender under the Time Warner Term Loan Agreement and the Time Warner Revolving Credit Facility and as the holder of the majority of the New Notes, to the extent issued. Subject to certain exceptions provided for by the Trust Indenture Act that would apply to the New Notes that, among other things, limit its voting rights as a holder of the New Notes, Time Warner will be entitled to vote or otherwise make decisions in its capacity as a holder of the New Notes or as a lender of under the Time Warner Term Loan Agreement and the Time Warner Revolving Credit Facility. Such indebtedness, in certain respects, including with respect to certain financial covenants and events of defaults, will have more restrictive provisions than with respect to equivalent provisions contained in the indenture governing the 2017 Fixed Rate Notes. As such, Time Warner could determine whether to waive defaults or accelerate such indebtedness or take other steps in light of its dual role as principal equityholder and creditor of the CME group in a manner that might not be consistent with the interests of the holders of the 2017 Fixed Rate Notes. While the principal purpose of the financing transactions is to enhance our liquidity and operating cashflow position, by, in part, substituting certain cash pay indebtedness with non-cash pay indebtedness and undertaking other associated transactions, the terms and conditions of the Time Warner Term Loan Agreement and the Time Warner Revolving Credit Facility may be modified or amended or such indebtedness could be refinanced in the future with new indebtedness having different terms and conditions. Such modifications or amendments or refinancing indebtedness could, for example, result in the replacement of such indebtedness which permit interest that is payable in kind with interest that is payable in cash in compliance with the Indenture. While it is not currently our intention to do so, such modifications, amendments or refinancing or other replacement indebtedness, as the case may be, would be permitted by the Indenture and could adversely affect the interests of the holders of the New Notes. In addition, Time Warner could seek to effect such modification, amendments or refinancings through its position as our largest equityholder and creditor in a manner that may not be consistent with the interests of the holders of the New Notes. Moreover, the indenture governing the New Notes excludes from the limitation on affiliate transactions covenant all transactions between CME and its restricted subsidiaries and Time Warner and its affiliates. Accordingly, the indenture will not require that any such affiliate transactions be made on arms length terms in compliance with the covenant and, as a consequence, such affiliate transactions permitted under the indenture could conflict with the interests of the holders of the New Notes.

         We cannot assure you that an active trading market will develop for the New Notes; your ability to sell the New Notes will be limited.

        In the Indenture, we have agreed to use our commercially reasonable efforts to have the New Notes admitted to the Euro MTF Market of the Luxembourg Stock Exchange within a reasonable period after the issue date. We cannot assure you as to:

•

whether the liquidity of the market for the New Notes will be sustained;



•

your ability to sell the New Notes; or



•

the prices at which you would be able to sell the New Notes.

        Future trading prices of the New Notes will depend on many factors, including, among other things, prevailing interest rates, our operating results and the market for similar securities. Historically, the market for non-investment grade securities has been subject to disruptions that have caused substantial volatility in the prices of securities similar to the New Notes. The liquidity of a trading

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market for the New Notes may be adversely affected by a general decline in the market for similar securities and is subject to disruptions that may cause volatility in prices. It is possible that the market for the New Notes will be subject to disruptions. Any such disruption may have a negative effect on you, as a holder of the New Notes, regardless of our prospects and financial performance. There is no assurance that an active trading market will develop for the New Notes. If no active trading market develops, you may not be able to resell the New Notes at the Subscription Price, if at all.

        Although we have, in the Indenture, agreed to use our commercially reasonable efforts to have the New Notes admitted to the Euro MTF Market of the Luxembourg Stock Exchange within a reasonable period after the issue date and to maintain such listing as long as the New Notes are outstanding, we cannot assure you that the New Notes will become or remain listed. In addition, a minimum of approximately 65% of the New Notes and Unit Warrants issued pursuant to the Rights Offering will initially be held by Time Warner, an affiliate of CME, and possibly more pursuant to Time Warner's Backstop Purchase Commitment. Moreover, the New Notes and Unit Warrants to be issued to Time Warner pursuant to the TW Unit Private Placement and the Backstop Private Placement and the TW Initial Warrant will be "restricted securities" as that term is defined in Rule 144 under the Securities Act, and may be resold only pursuant to an effective registration statement or under the requirements of Rule 144 or other applicable exemption from registration under the Securities Act and as required under applicable state securities laws. All New Notes and Unit Warrants issued to Time Warner pursuant to the Rights Offering (excluding the Backstop Private Placement) will not be considered "restricted securities," but will nevertheless be subject to the limitations on resale set forth in Rule 144 relating to the resale of securities held by an affiliate of the issuer. These restrictions may further impede the development of a market for the New Notes and Unit Warrants. Although no assurance is made as to the liquidity of the New Notes as a result of listing on the Euro MTF Market of the Luxembourg Stock Exchange, failure to be approved for listing of the New Notes or the delisting of the New Notes from the Euro MTF Market of the Luxembourg Stock Exchange in accordance with the Indenture may have a material adverse effect on a holder's ability to resell the New Notes in the secondary market.

         The New Notes will be issued with original issue discount for U.S. federal income tax purposes.

        The New Notes will have OID for U.S. federal income tax purposes equal to the excess of a New Note's stated redemption price at maturity over its issue price. A New Note's stated redemption price at maturity is the sum of all payments provided by the terms of the New Note, other than qualified stated interest. Qualified stated interest generally means stated interest that is unconditionally payable in cash or in property (other than debt instruments of the issuer) at least annually at a single fixed rate. Because prior to November 15, 2015 we will pay interest on the New Notes by adding such interest to the principal balance of the New Notes ("PIK Interest") and may elect to do so thereafter, none of the interest on the New Notes (including any cash interest actually paid) will be qualified stated interest. Additionally, the issue price of a New Note is likely to be significantly less that the face amount of such New Note. See "Certain Material U.S. Federal Income Tax Considerations—Issue Price of a New Note and a Unit Warrant." For these reasons, the New Notes will be issued with OID for U.S. federal income tax purposes and the amount of such OID is likely to be significant. U.S. investors in the New Notes may generally be required to include amounts representing OID in their gross income as it accrues in advance of the receipt of cash payments attributable to such income using the constant yield method. See "Certain Material U.S. Federal Income Tax Considerations."

        Notwithstanding the aforementioned tax treatment, the amount of the New Notes and the Term Loan outstanding, for non-tax purposes, shall be equal to the aggregate principal face amount of such New Notes or Term Loan outstanding at any such time, without giving effect to the tax treatment or accounting standards used in respect thereof (including any discount thereto).

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         The 2015 Convertible Notes and the 2017 Fixed Rate Notes will mature prior to the New Notes unless certain trigger events occur that are associated with the acceleration, repayment or termination of the Time Warner Term Loan, and the Time Warner Term Loan Agreement and the Time Warner Revolving Loan Agreement may be redeemed or prepaid at any time at CME's option, including prior to or in connection with the maturity of the Notes.

        The New Notes mature on December 1, 2017 unless certain trigger events associated with the acceleration, repayment or termination of the Time Warner Term Loan occur. If the 2017 Fixed Rate Noteholder Consent Solicitation is approved, the Company and certain of our subsidiaries will be able to incur certain indebtedness contemplated by the financing transactions described herein, some of which could mature prior to the New Notes or otherwise be redeemed or prepaid ahead of the New Notes in compliance with the Indenture. The Time Warner Term Loan will mature on the Initial Term Loan Maturity Date. If the Rights Offering, Backstop Private Placement and TW Unit Private Placement have not been closed on or before the Initial Term Loan Maturity Date, the Initial Term Loan Maturity Date will be extended to December 1, 2017, and the Company shall issue and deliver to Time Warner the Term Loan Warrants. Moreover, the Time Warner Term Loan and the Time Warner Revolving Credit Facility are redeemable or prepayable, as the case may be, at any time at our option. As a consequence, if the Time Warner Term Loan, if drawn, is not extended beyond the Initial Term Loan Maturity Date, we may not be able to refinance such indebtedness, which would trigger an event of default under the Indenture. In addition, if the Time Warner Term Loan is, in any case, redeemed or prepaid in advance of the maturity of the New Notes, despite the triggering of the maturity date clause, the Company and our subsidiaries may not be able to refinance or otherwise repay the New Notes at maturity or otherwise.

         CME may, at its option, redeem all or part of the New Notes at any time at par plus accrued and unpaid interest, and the New Notes may mature prior to December 1, 2017 upon the occurrence of certain trigger events.

        Pursuant to the Indenture governing the New Notes, we may, at our option, redeem all or part of the New Notes at any time at par plus accrued and paid interest, and the New Notes may mature prior to December 1, 2017 upon the occurrence of certain trigger events. As a consequence of the foregoing, investors in the New Notes may not obtain the return expected from an investment in the New Notes and no redemption or early maturity premium will be payable to holders of the New Notes in connection with such events.

Risks relating to the Collateral and the Guarantees

         The value of the Collateral securing our obligations under the New Notes, the Time Warner Term Loan, the Time Warner Revolving Credit Facility, the 2015 Convertible Notes and the 2017 Fixed Rate Notes may not be sufficient to satisfy those obligations, and the ability of the trustee to act with respect to the Collateral may be limited.

        The New Notes, the Time Warner Term Loan and the Time Warner Revolving Credit Facility will be secured by first priority (after taking into account intercreditor arrangements) perfected pledges of the outstanding share capital of CME NV and CME BV, which pledges shall be pari passu with the existing share pledges of those shares that secure the obligations under the 2017 Fixed Rate Notes and the 2015 Convertible Notes, with such new perfected pledges being the sole security for New Notes, the Time Warner Term Loan and the Time Warner Revolving Credit Facility (See "Description of other indebtedness—Intercreditor Agreements—CME Intercreditor Agreement"). However, under applicable local law, the 2017 Fixed Rate Notes and the 2015 Convertible Notes, which received their pledge of the Collateral prior in time to the New Notes, the Time Warner Term Loan and the Time Warner Revolving Credit Facility, have priority. On or about the Issue Date, the trustee of the New Notes offered hereby, along with Time Warner as the lender under the Time Warner Term Loan and the

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Time Warner Revolving Credit Facility, will accede to the CME Intercreditor Agreement, which will be amended and restated in connection therewith. The CME Intercreditor Agreement will provide for sharing of the proceeds of any joint enforcement action on a pari passu basis between holders of the New Notes offered hereby and Time Warner, as the lender under the Time Warner Term Loan Agreement and the Time Warner Revolving Credit Facility, with the enforcing holders of the 2017 Fixed Rate Notes and the 2015 Convertible Notes, irrespective of the ranking of the security documents granting security over such collateral, the CME Intercreditor Agreement does not give the trustee for the New Notes or Time Warner the right to compel an enforcement of the Collateral by the prior ranking of creditors. Subject to receipt of the 2017 Fixed Rate Noteholder Consent in respect of an amendment to the indenture governing the 2017 Fixed Rate Notes and the CME Intercreditor Agreement, we will amend the CME Intercreditor Agreement in connection with the closing of the Rights Offering, Backstop Private Placement and TW Unit Private Placement to provide that all secured parties to the CME Intercreditor Agreement will accelerate their indebtedness and cooperate in respect of enforcement of the relevant collateral subject to the CME Intercreditor Agreement if any secured party seeks enforcement. Under the CME Intercreditor Agreement, each of the trustees and the security agents or security trustees which are party thereto will have the right to request the other parties to join in any enforcement action commenced by such trustee, security agent or security trustee. In addition, due to the provisions of the CME Intercreditor Agreement, although the security interest in the Collateral under the New Notes, the Time Warner Term Loan and the Time Warner Revolving Credit Facility ranks junior to the security interest in the collateral securing the 2017 Fixed Rate Notes and the 2015 Convertible Notes, each of the security agents or trustee for the New Notes, the Time Warner Term Loan and the Time Warner Revolving Credit Facility is entitled to share ratably with such other indebtedness in the proceeds from any enforcement action in respect of the Collateral. If the security agent or the holders of the New Notes receive proceeds of any enforcement of the security documents while obligations of any other pari passu debt are outstanding, the security agent or the holders of the New Notes, as applicable, will, subject to certain exceptions, turn over such amounts to the security agent to be applied in the order provided by the CME Intercreditor Agreement. See "Description of other indebtedness—Intercreditor agreements—CME Intercreditor Agreement."

        In the event that additional indebtedness is also secured by the Collateral, such indebtedness will also have a right to a pro rata share of any enforcement proceeds. We can give no assurance that the proceeds obtained from enforcement of the security will be sufficient to satisfy the obligations under the New Notes, the Time Warner Term Loan, the Time Warner Revolving Credit Facility, the 2017 Fixed Rate Notes, the 2015 Convertible Notes or any additional senior secured debt that we may incur.

        In addition, no appraisal of the value of the Collateral is required in connection with the New Notes, the Time Warner Term Loan or the Time Warner Revolving Credit Facility and the value of the Collateral in the event of liquidation will depend on market and economic conditions, the availability of buyers and other factors. Consequently, liquidating the Collateral securing the New Notes may not produce proceeds in an amount sufficient to pay any amounts due on the New Notes, the Time Warner Term Loan, the Time Warner Revolving Credit Facility, the 2017 Fixed Rate Notes and the 2015 Convertible Notes to the extent that they are also secured by the Collateral.

        The Collateral securing the New Notes will be subject to any and all exceptions, defects, encumbrances, liens and other imperfections as may be accepted by the trustee and any other creditors that also have the benefit of liens on the Collateral from time to time, whether on or after the date the New Notes were issued. The existence of any such exceptions, defects, encumbrances, liens and other imperfections could adversely affect the value of the Collateral securing the New Notes as well as the ability of the security agent to realize or foreclose on such Collateral.

        The security interest of the security agent will be subject to practical problems generally associated with the realization of security interests in Collateral. For example, enforcement of the Collateral in Bermuda may be time-consuming and the security agent may need to obtain the consent of a third

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party to obtain or enforce a security interest in a contract. We cannot assure you that the security agent will be able to obtain any such consent. We also cannot assure you that the consents of any third parties will be given when required to facilitate a foreclosure on such assets. Accordingly, the security agent may not have the ability to foreclose upon those assets and the value of the Collateral may significantly decrease.

         The validity and enforceability of the Collateral and Guarantees may be affected by Dutch or Curaçao law.

        Under Dutch or Curaçao law, a security interest may be affected by (a) the standards of reasonableness and fairness (in Dutch: " maatstaven van redelijkheid en billijkheid "), (b) force majeure (in Dutch: " niet-toerekenbare tekortkoming ") and unforeseen circumstances (in Dutch: " onvoorziene omstandigheden "), and (c) the other general defenses available to debtors under Dutch or Curaçao law in respect of the validity, binding effect and enforceability of such security interest. Other general defenses include claims that a security interest should be nullified (in Dutch: " vernietigd ") because it was entered into through undue influence (in Dutch: " misbruik van omstandigheden "), fraud (in Dutch: " bedrog "), duress (in Dutch: " bedreiging ") or error (in Dutch: " dwaling "). Other impeding factors include dissolution of contract (in Dutch: " ontbinding ") and set-off (in Dutch: " verrekening ").

        The validity and enforceability of a security interest may be successfully contested by a Dutch or Curaçao company (or its administrator (in Dutch: " bewindvoerder ") in suspension of payments or its receiver (in Dutch: " curator ") in bankruptcy) on the basis of an ultra vires claim, which will be successful if both (i) the granting of the security interest does not fall within the scope of the objects clause as set out in the company's articles of association (in Dutch: " doeloverschrijding ") and (ii) the company's counterparty under the relevant security interest knew or ought to have known (without inquiry) of this fact. In determining whether the granting of a security interest is in furtherance of the objects and purposes of a Dutch or Curaçao company, a court will consider (i) the text of the objects clause in the company's articles of association; (ii) whether the granting of such security interest is in the company's corporate interests (in Dutch: " vennootschappelijk belang ") and to its benefit; and (iii) whether the company's subsistence is jeopardized by the granting of such security interest. The mere fact that a certain legal act (in Dutch: " rechtshandeling ") is explicitly reflected in a Dutch or Curaçao company's objects clause may not be conclusive evidence that such legal act is not ultra vires.

        Under Dutch or Curaçao law, a security interest granted by a legal entity may be nullified by any of its creditors, if (i) the security interest was granted without prior existing legal obligation to do so (in Dutch: " onverplicht "), (ii) the creditor(s) concerned was/were prejudiced as a consequence of the granting of the security interest (irrespective of whether a creditor's claim arose prior to or after the granting of the security interest) and (iii) at the time the security interest was granted both the legal entity and, unless the security interest was granted for no consideration (in Dutch: " om niet "), the beneficiary of the security interest knew or should have known that one or more of the entities' creditors would be prejudiced (in Dutch: " action pauliana "). A receiver (in Dutch: " curator ") in bankruptcy may nullify a security interest on behalf of and for the benefit of the joint insolvent debtor's creditors, and the burden of proof of the abovementioned elements of fraudulent conveyance in principle rests on the receiver. Knowledge of prejudice is however presumed by law for certain transactions performed within a "suspect period" of one year prior to an adjudication of bankruptcy. This goes for certain transactions only, the most important being if the obligations of the bankrupt materially exceed those of the other party, the satisfaction of existing obligations of the bankrupt which are not yet due, and acts between the bankrupt and its counterparty when the shares in both are held (indirectly) by the same shareholder or if the bankrupt and its counterparty are part of the same group of companies. The foregoing requirements for invoking fraudulent transfer provisions outside of a bankruptcy apply mutatis mutandis when invoking fraudulent transfer provisions during a bankruptcy. In addition, the receiver may challenge the security interest if it was granted on the basis of a prior

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existing legal obligation to do so (in Dutch: " verplichte rechtshandeling "), if (i) the security interest was granted at a time when the beneficiary of such security interest knew that a request for bankruptcy had been filed or (ii) such security interest was granted as a result of deliberation between the debtor and the beneficiary of such security interest with a view to giving preference to the beneficiary over the debtor's other creditors. Consequently, the validity of any security interests granted by a Dutch or Curaçao legal entity may be challenged and it is possible that such challenge would be successful.

         The security over the Collateral will not be granted directly to the holders of the New Notes under Dutch or Curaçao law.

        Under Dutch or Curaçao law, it is uncertain as to whether security interests can be granted to a party other than the creditor of the claim which is purported to be secured by such security interests. As a consequence, the Indenture will provide for the creation of parallel debt ("Parallel Debt") obligations in favor of the security agent mirroring our obligations and the obligations of the Guarantors towards the holders of the New Notes under or in connection with the Indenture (the "Principal Obligations"). The Dutch or Curaçao law security interests will be granted to the security agent as security for the Parallel Debt and will not directly secure the Principal Obligations. The Parallel Debt will be at all times in the same amount and payable at the same time as the Principal Obligations. Any payment in respect of the Principal Obligations shall discharge the corresponding Parallel Debt and any payment in respect of the Parallel Debt shall discharge the corresponding Principal Obligations. In respect of the security interest granted to secure the Parallel Debt, the holders of the New Notes will not have direct security and will not be entitled to take enforcement actions in respect of such security except through the security agent. As a result, the holders of the New Notes bear some risks associated with a possible insolvency or bankruptcy of the security agent. In addition, the Parallel Debt construct has not been tested under Dutch or Curaçao law and, to the extent that the security interests in the collateral created to secure the Parallel Debt are successfully challenged by other parties, holders of the New Notes will not (directly) receive any payments from an enforcement of the security interests in the Collateral.

         Fraudulent conveyance laws and other limitations on the enforceability and the amount of the Guarantees may adversely affect the validity and enforceability of the Guarantees.

        The Guarantors have jointly and severally guaranteed the payment of the New Notes on a senior basis and at closing will guarantee the New Notes on a senior basis. The Guarantees may be subject to claims that they should be limited, subordinated or voided in favor of existing and future creditors under the laws of the Netherlands and/or Curaçao. The Guarantees are limited to the maximum amount that can be guaranteed by the Guarantors without rendering the Guarantees voidable or otherwise ineffective under applicable law. Recent case law has called into doubt whether such limitations are valid to permit apportion of a guarantee that would otherwise be a fraudulent conveyance to survive. Moreover, enforcement of the Guarantees would be subject to certain generally available defenses. Although laws differ among these jurisdictions, in general, these laws and defenses include those that relate to corporate benefit, fraudulent conveyance or transfer, voidable preference, financial assistance, corporate purpose, capital maintenance or similar laws, regulations or defenses affecting the rights of creditors generally. Although laws differ among various jurisdictions, in general, under fraudulent conveyance laws, a court could subordinate or void any guarantee (or uphold an act by which the same was done) and, if a payment had already been made under the relevant guarantee, require that the recipient return the payment to the relevant guarantor, if it found that:

•

the guarantee was incurred with actual intent to hinder, delay or defraud current or prospective creditors or shareholders of the guarantor or, in certain jurisdictions, even when the recipient was simply aware that the guarantor was insolvent when it granted the relevant guarantee;

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•

the guarantor did not receive fair consideration or reasonably equivalent value for incurring the debt represented by the guarantee;



•

the guarantor was insolvent or was rendered insolvent because of the guarantee;



•

the guarantor was undercapitalized or became undercapitalized because of the guarantee;



•

the guarantor intended to incur, or believed that it would incur, debts beyond our ability to pay at maturity;



•

the guarantee was held to exceed the corporate objects of the guarantor or not to be in the best interests or for the corporate benefit of the guarantor; or



•

the amount paid or payable under the guarantee was in excess of the maximum amount permitted under applicable law.

        The measure of insolvency for purposes of fraudulent conveyance laws varies depending on the law applied which may impose different requirements in order for those actions to be successful. Generally, however, a guarantor would be considered insolvent if its liabilities exceeded the fair market value of its assets, it could not pay its debts as they became due or it is demonstrated that it would no longer be able to regularly meet its obligations as they became due, or the present saleable value of its assets were less than the amount required to pay its total existing debts and liabilities, including contingent and prospective liabilities, as they matured or become absolute.

        If a court decided that any guarantee was a fraudulent conveyance and voided such guarantee, or held it unenforceable for any other reason, you may cease to have any claim in respect of the guarantor and would be a creditor solely of the remaining guarantors. An overview of the enforceability issues as they relate to the Guarantees and the Collateral is set forth under "—You may have difficulty enforcing your rights or judgments obtained in U.S. courts against us, the Guarantors and their respective directors and members of senior management."

         Enforcement of your rights as a holder of the New Notes under the Guarantees and the Collateral across multiple jurisdictions may be difficult.

        We are incorporated under the laws of Bermuda and the Guarantors are incorporated under the laws of the Netherlands and Curaçao. In the event of bankruptcy, insolvency or a similar event, proceedings could be initiated in any of these and other applicable jurisdictions. The rights of the holders of the New Notes under the Indenture will thus be subject to the laws of a number of jurisdictions, and it may be difficult to effectively enforce such rights in multiple bankruptcies, insolvencies and other similar proceedings. Moreover, such multi-jurisdictional proceedings involving multiple creditors are typically complex and costly for creditors and often result in substantial uncertainty and delay in the enforcement of creditors' rights.

         Dutch and Curaçao statutes allow Dutch and Curaçao courts, under specific circumstances, to void guarantees and security interests and require the holders of the New Notes or Time Warner to return payments received from guarantors.

        CME BV, which is organized under the laws of the Netherlands, and CME NV, which is organized under the laws of Curaçao, will be Guarantors. Dutch and Curaçao statutes allow Dutch and Curaçao courts, under specific circumstances, to void guarantees and security interests and require the holders of the New Notes or Time Warner to return payments received from guarantors. The issuance of the Guarantees in respect of the New Notes, the granting of the right of pledge over the shares in the capital of CME BV and the entering into of the Guarantees by the Guarantors may be subject to review under Dutch or Curaçao laws if a bankruptcy, liquidation or reorganization case or a lawsuit, including in circumstances in which bankruptcy is not involved, were commenced at some future date

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by, or on behalf of, the unpaid creditors of a Guarantor. If a Dutch or a Curaçao court voided a Guarantee or ruled that a creditor or receiver in bankruptcy has rightfully voided a Guarantee, you would no longer have a claim against such Guarantor for amounts owed in respect of such Guarantee. In addition, a Dutch or a Curaçao court might direct you to repay any amounts already received from such Guarantor. If a Dutch or a Curaçao court were to void any Guarantee or rule that a creditor or bankruptcy trustee has rightfully voided a Guarantee, funds may not be available from any other source to satisfy our obligations under the New Notes, the Time Warner Term Loan or the Time Warner Revolving Credit Facility.

         You may have difficulty enforcing your rights or judgments obtained in U.S. courts against us, the Guarantors and their respective directors and members of senior management.

        The New Notes will be issued under the Indenture, which is governed by New York law. We are incorporated and organized under the laws of Bermuda, CME BV is incorporated and organized under the laws of the Netherlands and CME NV is incorporated under the laws of the former Netherlands Antilles and is existing under the laws of Curaçao. As of the date of the Rights Offering, substantially all of our assets and the assets of the Guarantors are located, and our cash flow is generated, outside the United States. As a result, it may not be possible for investors to effect service of process within the U.S. upon our directors and officers and the directors and officers of the Guarantors, or to enforce against any of them judgments obtained in U.S. courts predicated upon civil liability provisions of the federal securities laws of the United States.

        Bermuda counsel has advised us that there is doubt as to whether the Courts of Bermuda would enforce judgments of U.S. courts obtained in actions against us or our directors or officers predicated upon the civil liability provisions of the U.S. federal securities laws or original actions brought in Bermuda against us or such persons predicated solely upon U.S. federal securities laws. Further, we have been advised that there is no treaty in force between the United States and Bermuda providing for the reciprocal recognition and enforcement of judgments in civil and commercial matters. As a result, whether a U.S. judgment would be enforceable in Bermuda against us or our directors or officers depends on whether the U.S. court that entered the judgment is recognized by the Bermuda court as having jurisdiction over us or our directors or officers, as determined by reference to Bermuda conflict of law rules. A judgment debt from a U.S. court that is final and for a sum certain based on U.S. federal securities laws will not be enforceable in Bermuda unless the judgment debtor had submitted to the jurisdiction of the U.S. court, and the issue of submission and jurisdiction is a matter of Bermuda (not U.S.) law.

        We have been advised by Dutch and Curaçao counsel that there is no treaty between the United States and the Netherlands or Curaçao providing for the reciprocal recognition and enforcement of judgments. Under current practice, however, a final judgment rendered by a federal or state court in the United States and enforceable in the United States will usually be followed by a Netherlands or a Curaçao court in a new court procedure in the Netherlands or Curaçao if:

•

the U.S. judgment results from proceedings compatible with Dutch or Curaçao concepts of due process (as applicable);



•

the U.S. judgment does not contravene public policy of the Netherlands or Curaçao (as applicable); and



•

the jurisdiction of the federal or state court in the United States has been based on an internationally acceptable ground.

        There is also doubt as to whether a Dutch or Curaçao court would have the requisite power and authority to adjudicate or grant remedies sought in an original action brought in the Netherlands or Curaçao (as applicable), on the basis of violations of the U.S. securities laws or other foreign laws.

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         Insolvency laws could negatively affect your ability to enforce your rights under the New Notes, the Unit Warrants, and the Guarantees.

        If an Insolvency Proceeding is commenced by or against the Company or any of its subsidiaries, it cannot be assured where such proceeding would be commenced. Accordingly, it cannot be certain which country's insolvency laws would govern any Insolvency Proceeding commenced by or against the Company or any of its subsidiaries. Nor can it be certain what country's non-insolvency law may govern issues in any Insolvency Proceeding.

        For purposes of the insolvency risk factor discussions herein, however, it is assumed that an Insolvency Proceeding would be commenced in the Company's country of formation, Bermuda, and that the substantive insolvency law of Bermuda would govern the Insolvency Proceeding. Importantly, however, the guarantors of the Company's indebtedness are entities formed under the laws of the Netherlands and Curaçao and the insolvency and other laws of these countries differ in material respects from the law of Bermuda and there can be no certainty provided as to how that may impact any Insolvency Proceeding commenced in Bermuda. Furthermore, certain laws in other jurisdictions may provide creditors residing in those jurisdictions with certain rights and remedies that may or may not be respected under principles of comity or otherwise in an Insolvency Proceeding commenced in Bermuda or another jurisdiction. Accordingly, the disclosure set forth herein is qualified entirely by the foregoing.

        Due to the issuance of the Unit Warrants for no additional cash consideration in connection with the issuance of the New Notes, there would be certain risks to holders of the New Notes and Unit Warrants.

        Original Issue Discount Risk.     In connection with the issuance of the New Notes and Unit Warrants, the Company will for accounting purposes allocate the value received by the Company between the New Notes and the Unit Warrants. Additionally, for U.S. federal income tax purposes, the issue price of a Unit is required to be allocated between the New Notes and Unit Warrants based on their relative fair market values. See "Certain Material U. S. Federal Income Tax Considerations—Issue Price of a New Note and a Warrant." No assurance can be provided that these and related factors would not cause a court to determine that a claim arising from the New Notes would be the value of such New Notes as of the date of commencement of the Insolvency Proceeding after factoring in such original issue discount (so that only that portion of the original issue discount deemed to then be matured interest could then be claimed) rather than such claim being the full face principal amount plus any accrued and unpaid stated interest remaining due on the New Notes. In effect, as the original issue discount amount would be considered to constitute interest that accrues over the term of the New Notes, if an Insolvency Proceeding is commenced by or against the Company or any of its subsidiaries, the unaccrued portion might be deemed to be "unmatured interest." Under U.S. bankruptcy law, such unaccrued portion might not be an allowed claim and if such law were applied, holders of the New Notes may not receive payment of such unaccrued portion. It is uncertain whether a Bermuda court would treat such unaccrued portion in the same way as a U.S. court.

        Fraudulent Transfer Risk.     Avoidance of a constructive fraudulent transfer does not exist under Bermuda law. Under Bermuda law, a creditor may seek to set aside a disposition of property at an undervalue if that disposition was made in circumstances where the transferor's dominant purpose was to put the property beyond the reach of a person or class of persons who is making, or may make, a claim against the transferor. However, such a claim can only be made by an "eligible creditor," which is a person who (i) is owed a debt by the transferor on or within two years after the transfer; (ii) on the date of the transfer is owed a contingent liability by the transferor, where the contingency giving rise to the obligation has occurred and the obligation remains unsatisfied on the date of the action or proceeding to set aside the transfer, or (iii) on the date of the action to set aside the transfer, is owed an obligation arising from a cause of action which occurred prior to or within two years after the date

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of the transfer. Where the obligation did not exist at the date of the disposal, the disposition will not be set aside by a Bermuda court unless it is satisfied that it was reasonably foreseeable on the part of the transferor that an obligation might become owed by him to the creditor in question. The limitation period for an eligible creditor to make a claim to set aside such dispositions is six years from the date of transfer or (where sub-paragraphs (i) or (iii) apply) from the date when the obligation arose or cause of action accrued, if later. It cannot be assured that such an action would not be commenced in Bermuda.

        There is also a risk that an action could be commenced by a creditor of the Company or any of its Subsidiaries in which the laws of the United States are applied, and if no original issue discount were applied to the New Notes (as to the Company's obligations), there is a risk that the transaction in which the New Notes and Unit Warrants were issued could be found by a court to be avoidable as a constructive fraudulent transfer under U.S. federal and state laws. The theory of such a claim would be that as of the date of such transaction, the consideration received by the Company (or the Guarantor) was not reasonably equivalent value for the Company in exchange for the issuance of the New Notes (at face value) plus the value of the Unit Warrants on the date of issuance (or for the Guarantor in exchange for the incurrence of its Guaranty obligation). A constructive fraudulent transfer finding also would require that the Company (or applicable Guarantor) met a financial distress test at the time of issuance of the New Notes and Unit Warrants. Should that transaction be found to have been a fraudulent transfer, then the relevant court could fashion one of several remedies, including, without limitation: (a) finding that the New Notes and Unit Warrants could not be enforced and instead the holders thereof would have an unsecured (or subordinated) claim against the Company for the original purchase price for the New Notes and Unit Warrants; or (b) requiring the original purchasers of the New Notes and Unit Warrants to pay back the value of the Unit Warrants at the time of issuance or amounts already received on the New Notes and Unit Warrants (or the applicable Guaranty); and/or (c) the applicable Guaranty could not be enforced or only could be enforced to a limited extent (as provided in such Guaranty) to avoid it having been a fraudulent transfer.

        Description of Certain Aspects of Netherlands and Curaçao Insolvency Laws.     We are incorporated and organized in Bermuda and the Guarantors are incorporated and organized in the Netherlands and Curaçao. The insolvency laws of the Netherlands and Curaçao may not be as favorable to your interests as creditors as the laws of the United States or other jurisdictions with which you may be familiar. The following is a brief description of certain aspects of the insolvency law of the Netherlands and Curaçao:

        Dutch and Curaçao insolvency laws differ significantly from the insolvency laws of the United States and might make it more difficult for holders of the New Notes to recover amounts in respect of the security and guarantees in proceedings in the Netherlands or Curaçao than such holders would have recovered in a liquidation or bankruptcy case in the United States. There are two corporate insolvency regimes under Dutch and Curaçao insolvency law: suspension of payments (in Dutch: " surseance van betaling "), which is intended to give the debtor temporary relief against pressing creditors in order to facilitate the reorganization of a debtor's debts and enable the debtor to continue as a going concern, and bankruptcy (in Dutch: " faillissemen t"), which is primarily designed to liquidate the legal entity and distribute the proceeds of the sale of the assets of a debtor to our creditors.

        Suspension of Payments.     Only the (management board of the) debtor itself may apply for suspension of payments if the debtor foresees that it will no longer be able to pay its debts when due and payable. The court will grant the debtor a provisional suspension of payments (in Dutch: " voorlopige surseance van betaling ") and appoint one or more administrators (in Dutch: " bewindvoerder(s) ") who, together with the debtor's directors, would be in charge of the debtor's assets and co-manage its business undertakings, as well as (in most cases) a supervisory judge (in Dutch: " rechter-commissaris ") who will supervise the activities of the administrator. The courts will grant the debtor a definite suspension of payments unless opposed by a significant group of unsecured and unpreferred creditors. The court, however, may deny granting a definite suspension of payments, or

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even revoke the suspension of payments and declare bankruptcy, if there is sufficient reason to assume that the debtor will try to damage the creditors during the suspension of payments or that the debtor will not be able to satisfy its creditors. A definite suspension of payments is granted for a maximum period of one and a half years and may be extended one or more times for a (new) period of another one and a half years, provided that the request is filed before the end of the prior suspension period. During a definite or provisional suspension of payments, unsecured and unpreferred creditors with preexisting claims will be precluded from attempting to recover their claims from the debtor's assets.

        Unlike chapter 11 cases under U.S. bankruptcy law, which generally prohibit both secured and unsecured creditors from seeking to recover on their claims during the case, during Dutch or Curaçao suspension of payments proceedings, secured creditors and preferred creditors such as tax and social security authorities may recoup their claims on assets that secure their claims or to which they have preferential rights. However, at the request of any interested party or at its own discretion, the court could effect a "freeze period" (in Dutch: " afkoelingsperiode ") for up to four months in the Netherlands and up to two months in Curaçao. During this "freeze period," all creditors (including secured and preferred creditors) would be in principle prohibited from recouping their claims on assets of the debtor or demanding the return of their property from the debtor.

        During a suspension of payments, a debtor may offer a composition (in Dutch: " akkoord ") to its creditors that are affected by the suspension of payments. In the Netherlands a proposed composition must be approved by at least 50% of the debtor's admitted and recognized unsecured and unpreferred creditors who represent at least 50% of the admitted and recognized claims. In Curaçao, a proposed composition must be approved by at least two thirds of the debtor's admitted and recognized unsecured and unpreferred creditors who represent at least 75% of the admitted and recognized claims.

        The court will refuse to ratify the composition if, inter alia :

•

the liquidation value of the debtor's assets exceeds the amount agreed to be paid pursuant to the composition;



•

the performance of the composition is not sufficiently guaranteed;



•

the composition was reached by means of a fraudulent act or the preferential treatment of one or more creditors or by other unfair means, regardless of whether or not the debtor or any party cooperated to that effect;



•

the fees and expenses of the experts and the administrator(s) have not been paid to the administrator(s), or security has not been issued for them; or



•

with respect to Dutch courts only: if the trustee in main proceedings as referred to in the Council regulation (EC) No 1346/2000 of 29 May 2000 on insolvency proceedings withheld his consent to the composition, unless the court is of the opinion that the composition does not adversely affect the financial interests of the creditors in the main proceedings.

        The court may also refuse to ratify the composition on other grounds, for example, if there is no provision included in the composition to compensate creditors with unadmitted claims in the event that such claims are recognized at a later stage. The court may declare the debtor bankrupt simultaneously with its refusal to ratify the composition. Under Dutch and Curaçao bankruptcy laws, a debtor may only offer a composition once, and if one is offered, but not accepted in a suspension of payments procedure, no composition may be offered in any subsequent bankruptcy proceeding.

        Please note that under Dutch and Curaçao insolvency laws, a successful composition does not release any joint and several co-debtors of their obligation to pay that part of the debt that was not (re)covered by the plan of composition.

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        As the suspension of payments does not affect the secured and preferred creditors, these creditors are not allowed to file their claims in order to vote on a plan of composition offered by the debtor. Should they nevertheless file their claims and vote, they would lose their security right or right of preference.

        Bankruptcy.     Any creditor, the debtor itself, or, in exceptional cases, the public prosecutor if the public interest so requires, may initiate bankruptcy proceedings in the Netherlands or Curaçao in respect of a Dutch legal entity or a branch in the Netherlands or a Curaçao legal entity or a branch in Curaçao, respectively. The court will declare the debtor bankrupt if the debtor has at least two creditors (one of them being the filing creditor if the filing is involuntary) and at least one of these two debts is due and payable. The court appoints one or more bankruptcy trustees (in Dutch: " curator(en) "), who have the statutory duty to dispose of and administer the estate of the debtor, as well as a supervisory judge (in Dutch: " rechter-commissaris "). The supervisory judge has to approve certain actions of the bankruptcy trustee and, in general, supervises the bankruptcy trustee. The management of the assets of the debtor and the power to dispose of those assets is no longer vested in the debtor, but solely in the bankruptcy trustee. Under Dutch and Curaçao insolvency laws, there is no concept of one or more secured creditors operating the business of the debtor as a going concern for their benefit. In connection with Dutch or Curaçao bankruptcy proceedings, the assets of a debtor are generally liquidated and the proceeds distributed to the debtor's creditors on the basis of the relative priority of the claims of those creditors, and on a pari passu basis to the extent claims of certain creditors have equal priority. Secured creditors (including holders of the New Notes) have the right to act and to enforce their rights as if there is no bankruptcy at all.

        However, the supervisory judge may, at the request of any interested party or at its own discretion, order a "freeze period" (in Dutch: " afkoelingsperiode ") for up to four months in the Netherlands and up to two months in Curaçao. A bankruptcy trustee may require that the secured creditors must enforce their security interests within a certain reasonable period of time. If such secured creditors fail to do so within such period, the bankruptcy trustee may sell the relevant secured assets and distribute the proceeds (net of bankruptcy costs, which may be significant), without prejudice to the rights of the secured creditors to the proceeds, at the end of the bankruptcy.

        Any interest accrued under the New Notes after the Guarantors have been declared bankrupt may not be submitted to the trustee in bankruptcy, unless covered by rights of pledge or mortgage. If secured creditors pursue their rights outside of bankruptcy, then the proceeds from the sale of collateral (up to the amount of the claim of such creditor) will not become part of the bankruptcy estate. To the extent that secured creditors cannot recover their claim in full with the proceeds of the sale of collateral, any remaining claim will rank alongside claims of ordinary creditors in the bankruptcy proceeding. Proceeds that form part of the bankruptcy estate will be paid first to the estate creditors of the bankruptcy estate in accordance with their respective priority, then to the secured and preferred creditors in accordance with their rank, and any remaining proceeds would be distributed to unpreferred and unsecured creditors.

        In addition, a power of attorney granted by the debtor automatically terminates as a matter of law following placement of the debtor into bankruptcy. In the event of a suspension of payments, a power of attorney will not terminate, but the attorney will no longer be authorized to administer the debtor's assets without the cooperation of the administrator. Insofar as certain provisions of the Guarantees explicitly or implicitly provide for or institute powers of attorney, including the appointment of agents for service of process, such powers of attorney or appointments would not be effective in the event of bankruptcy or (to a certain extent) suspension of payments.

        Dutch and Curaçao Fraudulent Conveyance Law.     Under Dutch and Curaçao bankruptcy law any guarantees of the New Notes, and under Dutch bankruptcy law any right of pledge (in Dutch: " pandrecht "), could be voided as described under "Risk Factors—Risks relating to the Collateral and the Guarantees—the validity and enforceability of the Collateral and Guarantees may be affected by Dutch or Curaçao law."

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