EXHIBIT 10.1
EXECUTION COPY
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AMENDED AND RESTATED
SECURITIES PURCHASE AND CONVERSION AGREEMENT
Dated as of December 1, 1997
By and Among
PHILIPS MEDIA B.V.,
PHILIPS MEDIA NETWORKS B.V.,
UNITED INTERNATIONAL HOLDINGS, INC.,
JOINT VENTURE, INC.
and
UNITED AND PHILIPS COMMUNICATIONS B.V.
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AMENDED AND RESTATED
SECURITIES PURCHASE AND CONVERSION AGREEMENT
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AMENDED AND RESTATED SECURITIES PURCHASE AND CONVERSION AGREEMENT
dated as of December 1, 1997 by and among PHILIPS MEDIA B.V., a private company
with limited liability (besloten venootschap) organized under the laws of The
Netherlands ("PHILIPS MEDIA"), PHILIPS MEDIA NETWORKS B.V., a private company
with limited liability (besloten venootschap) organized under the laws of The
Netherlands and a wholly-owned subsidiary of Philips Media ("PHILIPS NETWORKS",
and together with Philips Media, the "SELLERS"), UNITED INTERNATIONAL HOLDINGS,
INC., a corporation organized under the laws of the State of Delaware ("UIHI"),
JOINT VENTURE, INC., a corporation organized under the laws of the State of
Delaware and a wholly-owned subsidiary of UIHI ("JVI", and together with UIHI,
the "UIHI PARTIES"), and UNITED AND PHILIPS COMMUNICATIONS B.V., a private
company with limited liability (besloten venootschap) organized under the laws
of The Netherlands ("UPC").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, Philips Networks owns 25,000,000 ordinary shares (the "UPC
SHARES") of the common stock, par value NLG 1 per share, of UPC ("UPC ORDINARY
SHARES") and JVI owns 25,000,000 UPC Ordinary Shares, which shares collectively
represent approximately 92.6% of the issued and outstanding capital shares of
UPC; and
WHEREAS, Philips Media owns $61,593,016.45 in aggregate principal
amount of 9.96% Series A Convertible Notes due 2005 of UPC, as of January 1,
1997, and $92,479,507.32 in aggregate principal amount of 10.03% Series B
Convertible Notes due 2005 of UPC, as of January 1, 1997, (collectively the "PIK
NOTES"); and
WHEREAS, Philips Networks owns 3,169,151 shares of the Class A Common
Stock, par value $.01 per share, of UIHI (the "UIHI SHARES" and collectively
with the UPC Shares and the PIK Notes, the "SECURITIES");
WHEREAS, upon the terms and subject to the conditions set forth in
this Agreement, UPC desires to purchase from the Sellers, and the Sellers desire
to sell or otherwise transfer to UPC, the PIK Notes and the UIHI Shares; and
WHEREAS, upon the terms and subject to the conditions set forth in
this Agreement, UPC and the Sellers desire to convert the UPC Shares into the
Initial Preference Shares and for UPC to pay to the Sellers, in partial
consideration therefor, the Conversion Fee and to issue to the Sellers the SAR
(as such terms are hereinafter defined).
NOW, THEREFORE, IT IS AGREED:
ARTICLE I
DEFINITIONS
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(S)1.1 Definitions. When used in this Agreement, the following terms
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shall have the respective meanings specified below:
"Additional Preference Shares" shall mean any Preference Shares issued
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to Philips Media in settlement of the SAR.
"Affiliate" shall mean and include, with reference to any Person, any
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other Person Controlling, Controlled by or under common Control with such
Person.
"Agreement" and "this Agreement" shall mean this Securities Purchase
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and Conversion Agreement, together with each of the exhibits and schedules
attached hereto as amended, supplemented or modified from time to time.
"Alternate Consideration Event" shall have the meaning specified in
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Section 8.5 hereof.
"Appraisal Date" shall mean the date of the delivery of a notice of
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redemption, in accordance with Section 8.6 hereof, of the UPC Ordinary Shares
issued upon the conversion of the Increasing Rate Preference Shares into UPC
Ordinary Shares.
"Austrian Subsidiaries" shall mean CNA, Telekabel Wien GmbH and
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Telekabel Fernsehnetz Wiener Neustadt/Neunkirchen Betriebsgesellschaft mbh.
"Business Day" shall mean any day, excluding Saturday, Sunday or any
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day which shall be a legal holiday in the States of New York or Colorado, in The
Netherlands or in England.
"Closing" shall mean the consummation of the transactions contemplated
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by this Agreement in accordance with the terms hereof and shall take place at
the offices of White & Case, ▇-▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, at 10:00 A.M. local
time on a Business Day occurring not more than five Business Days after the
satisfaction or waiver of all the conditions set forth in Article VII hereof or
such other place or time as the Parties hereto may agree (the date of the
Closing being referred to as the "Closing Date").
"Closing Exchange Rate" shall have the meaning specified in Section
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2A.3(b) hereof.
"CNA" shall have the meaning specified in Section 9.1 hereof.
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"Control" shall mean the power to vote more than 50% of the Voting
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Securities of an Entity or otherwise control the management and affairs of such
Entity (including by way of
(2)
the power to veto any material act or decision).
"Control Person" shall have the meaning specified in Section 8.4(a)
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hereof.
"Conversion Date" shall have the meaning specified in Section 10.1(b)
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hereof.
"Conversion Fee" shall mean an amount of Dutch Guilders equal to U.S.
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$267.2 million minus (i) the aggregate principal amount of the PIK Notes on
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January 1, 1997 and (ii) an amount equal to the Fair Market Value of the UIHI
Shares on the Closing Date, all as converted to Dutch Guilders at the Exchange
Rate.
"Conversion Transaction" shall have the meaning specified in Section
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2.2(a) hereof.
"Converted Shares" shall have the meaning specified in Section
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2.2(a).
"Damages" shall have the meaning specified in Section 8.4(a) hereof.
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"Designated Dollar Amount" shall mean an amount in U.S. Dollars equal
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to the difference between (i) if the transactions contemplated by this Agreement
are consummated on or prior to December 11, 1997, $156.0 million and (ii) the
sum of (x) the aggregate principal amount of the JVI Notes purchased pursuant to
Section 2A.2 hereof and (y) the aggregate principal amount of the Remaining PIK
Notes purchased pursuant to Section 2A.4 hereof.
"Designated Guilder Amount" shall mean an amount in Dutch Guilders
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equal to the difference between (i) the difference between (x) U.S. $267.2
million and (y) an amount in U.S. Dollars equal to the UIHI Share Price, such
amount to be converted into Dutch Guilders at the Exchange Rate and (ii) the JV1
Share Price, such amount to be converted into Dutch Guilders at the Closing
Exchange Rate.
"DLJ" shall mean ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Securities Corporation.
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"Dollar Note" shall have the meaning specified in Section 2A.6(a)
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hereof.
"Election Date" shall have the meaning specified in Section 12.5
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hereof.
"Encumbrance" shall have the meaning specified in Section 3.1(a).
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"Entity" shall mean any Person that is not a natural person.
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"Exchange Act" shall mean the Securities Exchange Act of 1934, as
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amended.
"Exchange Rate" shall mean the rate of NLG 1.9009 per U.S. $1.00.
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"Fair Market Value" shall mean (x) with respect to the UIHI Shares,
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the amount determined by multiplying the number of shares of UIHI Class A Common
Stock comprising the UIHI Shares as of the date on which such fair market value
is being determined by the average of
(3)
the closing prices for the Class A Common Stock of UIHI on the Nasdaq National
Market ("NASDAQ") for the thirty NASDAQ trading days immediately preceding the
determination date, and (y) with respect to the Preference Shares, the fair
market value of such Preference Shares on a fully-distributed basis as
determined by the investment advisors of UIHI and Philips Media and (z) with
respect to the UPC Ordinary Shares, the amount determined as of the Appraisal
Date pursuant to the Valuation Procedure set forth in Section 8.6 hereof.
"Finance Documents" shall have the meaning specified in Section 10.4
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hereof.
"Finance Party" shall mean any Person, other than UPC or its
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Subsidiaries, which is a party to any Finance Document.
"Financing Period" shall mean the period beginning on the date hereof
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and ending on September 15, 1997.
"Foundation" shall mean Stichting Administratiekantoor UPC.
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"Foundation Rights" shall have the meaning specified in Section 3.1(d)
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hereof.
"▇▇▇▇▇▇▇, Sachs" shall mean ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.
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"Governmental Authority" shall mean any nation, state or supranational
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body or any political subdivision thereof or any body, agency, entity or other
Person thereof that exercises executive, legislative, judicial, regulatory or
administrative functions.
"Governmental Consents" shall have the meaning specified in Section
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6.1 hereof.
"Guilder Note" shall have the meaning specified in Section 2A.6(a)
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hereof.
"Increasing Rate Preference Shares" shall have the meaning specified
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in Section 8.5 hereof.
"Indemnified Party" shall have the meaning specified in Section 8.4(c)
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hereof.
"Indemnifying Party" shall have the meaning specified in Section
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8.4(c) hereof.
"Independent Investment Banker" shall have the meaning specified in
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Section 8.6(d) hereof.
"Initial Preference Shares" shall have the meaning specified in
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Section 2.2(a) hereof.
"Initial Purchasers" shall have the meaning specified in Section 8.2
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hereof.
"JVI" shall have the meaning specified in the preliminary statement
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hereof.
"JVI Notes" shall have the meaning specified in Section 2A.2 hereof.
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(4)
"JVI Shares" shall have the meaning specified in Section 2A.3 hereof.
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"JVI Share Price" shall have the meaning specified in Section 2A.3
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hereof.
"KTV" shall have the meaning specified in Section 9.1 hereof.
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"Major Subsidiary" shall have the meaning specified in Section 10.4(g)
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hereof.
"Material Adverse Effect" shall mean, with respect to any Entity, a
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material adverse effect on the business, assets, condition (financial or
otherwise) or results of operations of such Entity and its Subsidiaries, taken
as whole.
"Newco" shall have the meaning specified in Section 2A.6(a) hereof.
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"Newco Stock" shall have the meaning specified in Section 2A.6(b)
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hereof.
"Option Agreement" shall mean the Option Agreement, dated as of July
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13, 1995, by and between Philips Media and UIHI.
"Other Expenses" shall have the meaning specified in Section 8.3
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hereof.
"Party" shall mean any party to this Agreement, and "Parties" shall
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mean all of the Parties to this Agreement, collectively.
"PENV" shall mean Philips Electronics N.V., a corporation organized
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under the laws of The Netherlands.
"Permitted Liens" shall mean (i) encumbrances granted in connection
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with any indebtedness incurred by the UIHI Parties or UPC for the purpose of
financing the transactions contemplated hereby or refinancing any such
indebtedness (including, but not limited to, encumbrances granted in connection
with the TD Facility), (ii) encumbrances in favor of UPC or its Subsidiaries,
(iii) encumbrances to secure the performance of statutory obligations, surety or
appeal bonds, performance bonds or other obligations of a similar nature
incurred in the ordinary course of business and (iv) liens for taxes,
assessments or governmental charges, claims or encumbrances otherwise created by
operation of law.
"Person" shall mean and include any individual, partnership,
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association, joint stock company, joint venture, corporation, trust, limited
liability company, unincorporated organization, or a government, agency or
entity or any political subdivision thereof.
"Philips" shall mean PENV, Philips Media, Philips Networks and their
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respective Affiliates (other than UPC and its Controlled Affiliates).
"Philips Media" shall have the meaning specified in the preliminary
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statement hereof.
"Philips Media Nominee" shall have the meaning specified in Section
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10.2(a)
(5)
hereof.
"Philips Networks" shall have the meaning specified in the preliminary
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statement hereof.
"Philips Person" shall mean Philips Networks and any Affiliate of
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Philips Networks which may acquire any Initial Preference Shares prior to the
consummation of the Private Placement.
"Philips Required Consents" shall mean (x) the Governmental Consents
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and Third Party Consents set forth on Schedule 3.3 attached hereto and (y) any
Governmental Consent required to be obtained by any Party hereto of which the
Parties hereto first become aware after the date hereof, which such Governmental
Consent, if not made, obtained or provided, will have a Material Adverse Effect
on Philips Media or UPC, as the case may be.
"PIK Notes" shall have the meaning specified in the recitals hereto.
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"Pre-Closing Period" shall have the meaning specified in Section 6.4
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hereof.
"Preference Shares" shall have the meaning specified in Section 2.2(a)
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hereof.
"Private Placement" shall have the meaning specified in Section 8.2(a)
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hereof.
"Purchase Agreement" shall have the meaning specified in Section
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7.1(g) hereof.
"Purchase Transaction" shall have the meaning specified in Section 2.1
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hereof.
"Redemption Price" shall have the meaning specified in Section 2A.5(b)
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hereof.
"Remaining PIK Notes" shall have the meaning specified in Section
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2A.5(a) hereof.
"Required Consents" shall mean the Philips Required Consents, the UPC
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Required Consents and the UIHI Required Consents.
"Rule 144A Offering" shall have the meaning specified in Section
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8.2(a).
"SAR" shall mean a stock appreciation right in the form of Exhibit A
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attached hereto, which such right shall entitle Philips Networks, upon the
occurrence of certain events and the exercise or deemed exercise thereof, to
receive ten percent (10%) of the incremental equity value of UPC (as determined
pursuant to the terms of such right) in excess of (A) if UIHI elects, pursuant
to Section 12.5 of this Agreement, to comply with Article II hereof, U.S. $480.0
million or (B) if UIHI elects, pursuant to Section 12.5 of this Agreement, to
comply with Article IIA hereof, an amount equal to (x) U.S. $480.0 million,
minus (y) U.S. $162.5 million, plus (z) an amount in U.S. Dollars equal to the
aggregate principal amount of the JVI Notes purchased pursuant to Section 2A.2
hereof.
(6)
"SAR Cash Payment Amount" shall mean an amount in U.S. Dollars equal
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to (x) U.S. $7.5 million minus (y) an amount of U.S. Dollars equal to NLG
9,975,000 such Guilder amount to be converted into U.S Dollars at the Closing
Exchange Rate.
"Securities" shall have the meaning specified in the recitals hereto.
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"Securities Act" shall mean the Securities Act of 1933, as amended.
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"Security Documents" means any document pursuant to which any security
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is granted in connection with or pursuant to the TD Facility.
"Sellers" shall have the meaning specified in the preliminary
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statement hereof.
"Selling Expenses" shall have the meaning specified in Section 8.3
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hereof.
"Shareholders' Agreement" shall mean the Shareholders' Agreement,
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dated as of July 13, 1995, by and among Philips Media, Philips Network, UIHI and
JVI.
"Strategic Plan" shall have the meaning specified in Section 8.6(a)
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hereof.
"Subsidiary" shall mean, with respect to any Person, (a) any
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partnership of which such Person is a general partner or of which such Person's
Subsidiary is a general partner and (b) any other Entity which, at the time as
of which any determination is being made, is Controlled by such Person.
"Tax Matter" shall have the meaning specified in Section 6.4(b)
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hereof.
"Taxes" shall mean all taxes, public fees, public assessments and
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public charges, including, without limitation, all income taxes, trade taxes,
value added taxes, property taxes, withholding taxes, capital taxes, transfer
taxes, profit sharing taxes, stamp taxes, import duties, social security taxes
and all interest and penalties relating thereto.
"TD Facility" shall have the meaning specified in Section 8.9 hereof.
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"TD Lenders" shall have the meaning specified in Section 8.6(d)
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hereof.
"Third Party Consents" shall have the meaning specified in Section 6.1
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hereof.
"Transaction" shall have the meaning specified in Section 2.2(a)
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hereof.
"UIHI" shall have the meaning specified in the preliminary statement
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hereof.
"UIHI Parties" shall have the meaning specified in the preliminary
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statement hereof.
"UIHI Required Consents" shall mean (x) the Governmental Consents and
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Third Party Consents set forth on Schedule 4.2 attached hereto and (y) any
Governmental Consent
(7)
required to be obtained by any Party hereto of which the Parties hereto first
become aware after the date hereof, which such Governmental Consent, if not
made, obtained or provided, will have a Material Adverse Effect on UIHI or UPC,
as the case may be.
"UIHI Share Price" shall have the meaning specified in Article 2A.4(b)
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hereof.
"UIHI Shares" shall mean have the meaning specified in the recitals
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hereto.
"UPC" shall have the meaning specified in the preliminary statement
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hereof.
"UPC Ordinary Shares" shall have the meaning specified in the recitals
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hereto.
"UPC Required Consents" shall mean (x) the Governmental Consents and
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Third Party Consents set forth on Schedule 5.2 attached hereto and (y) any
Governmental Consent required to be obtained by any Party hereto of which the
Parties hereto first become aware after the date hereof, which such Governmental
Consent, if not made, obtained or provided, will have a Material Adverse Effect
on UPC.
"UPC Shares" shall have the meaning specified in the recitals hereto.
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"Valuation Procedure" shall have the meaning specified in Section
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8.6(d) hereof.
"Vienna Agreements" shall have the meaning specified in Section 9.1
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hereof.
"Vienna Guaranty" shall have the meaning specified in Section 9.1
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hereof.
"Voting Securities" shall mean, with respect to any Person, any shares
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of stock or other equity interest thereof having general voting power under
ordinary circumstances (irrespective of whether at the time any other class or
classes of equity interests of such Entity shall have or might have voting power
by reason of the happening of any contingency).
ARTICLE II
SALE, PURCHASE AND CONVERSION OF SECURITIES
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(S)2.1 Purchase of Securities. (a) Purchase and Sale. Subject to
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the terms and conditions set forth herein, and assuming that UIHI has not
complied with Article IIA hereof, the Sellers agree to sell, assign and transfer
to UPC on the Closing Date, against the receipt of the consideration specified
in Section 2.1(b) hereof, and UPC agrees to purchase from the Sellers on the
Closing Date, the UIHI Shares and the PIK Notes (the "PURCHASE TRANSACTION").
(b) Purchase Price. In full consideration for the sale and transfer
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by the Sellers of the UIHI Shares and the PIK Notes, UPC shall on the Closing
Date:
(i) deliver (x) to Philips Networks an amount of Dutch Guilders equal
to the Fair Market Value of the UIHI Shares as of the Closing Date and (y)
to Philips Media an amount of Dutch Guilders equal to the aggregate
principal amount of the outstanding PIK
(8)
Notes on January 1, 1997, in each case converted into Dutch Guilders at the
Exchange Rate by wire transfer of immediately available funds to an account
specified by Philips Media at least two Business Days prior to the Closing
Date; and
(ii) deliver to Philips Media an amount in cash, payable in U.S.
Dollars, equal to the accrued and unpaid interest on the PIK Notes from and
including January 1, 1997 through the Closing Date, such amount to be paid
by wire transfer of immediately available funds to an account specified by
Philips Media at least two Business Days prior to the Closing Date.
(c) In connection with, and as an inducement to UIHI to approve the
Purchase Transaction and the other transactions completed hereby, Philips
Networks shall, on the Closing Date, transfer to JVI, without further
consideration, 21.75 million shares of the UPC Shares and shall execute all
notarial deeds and other documents necessary to give effect to such transfer.
(S)2.2 Conversion of Securities. (a) Upon the terms and subject to
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the conditions set forth herein and assuming that UIHI has not complied with
Article IIA hereof, upon the Closing Date Philips Networks and JVI shall cause
UPC to execute a notarial deed amending UPC's Articles of Association to effect
the conversion (such conversion being hereinafter referred to as the "CONVERSION
TRANSACTION" and the Conversion Transaction and the Purchase Transaction being
hereinafter referred to as the "TRANSACTION") of 3.25 million of the UPC Shares
(the "CONVERTED SHARES") into (i) 32.5 million preference shares of UPC with a
liquidation preference of $5.00 per share (the "INITIAL PREFERENCE SHARES"), par
value NLG 0.10 per share (the "PREFERENCE SHARES") (x) which shall be readily
marketable and for which a liquid market shall exist as of the Closing Date, (y)
which shall have a Fair Market Value on the Closing Date of U.S. $162.5 million
and (z) which shall have rights and be issued on terms reasonably acceptable to
each of Philips Media, UIHI and UPC or (ii) the Increasing Rate Preference
Shares in accordance with Section 8.5(a) hereof; provided that nothing in this
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Section 2.2(a) or elsewhere in this Article II shall relieve any Party of its
obligations under Article VIII hereof in respect of the Private Placement.
(b) Conversion Price. In consideration of Philips Networks'
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converting the Converted Shares into the Initial Preference Shares or the
Increasing Rate Preference Shares, as the case may be on the Closing Date, UPC
shall:
(i) deliver to Philips Networks an amount of Dutch Guilders equal to
the Conversion Fee, such amount to be paid by wire transfer of immediately
available funds to an account specified by Philips Networks at least two
Business Days prior to the Closing Date; and
(ii) issue to Philips Networks the SAR.
(S)2.3 Actions at Closing. At the Closing, (a) the Sellers shall (i)
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deliver to UPC the PIK Notes, for cancellation, (ii) deliver or cause to be
delivered to UPC certificates representing the UIHI Shares, together with stock
powers duly executed in blank, (iii) take all such actions as may be necessary
to effect the conversion of the Converted Shares into the Initial
(9)
Preference Shares or the Increasing Rate Preference Shares, as the case may be,
(iv) deliver to JVI 21.75 million shares of the UPC Shares in accordance with,
and otherwise comply with the terms of, Section 2.1(c) hereof and (v) assign to
JVI the Foundation Rights and take such other actions as are required by Section
6.6(b) hereof, and (b) UPC will deliver or cause to be delivered to the Sellers
(i) the cash payments referred to in Section 2.1(b) and Section 2.2(b)(i) of
this Agreement, (ii) the Initial Preference Shares or the Increasing Rate
Preference Shares, as the case may be, and (iii) the SAR. On or after the
Closing Date, each Party shall execute and deliver such notarial deeds and other
instruments of conveyance, assignment and transfer and shall take, or cause to
be taken, such other actions as any other party may reasonably request to effect
the transactions contemplated hereby.
(S)2.4 Coordination with Article IIA. If UIHI elects, in accordance
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with Section 12.5 hereof, to comply with Article IIA hereof in lieu of complying
with this Article II, then the parties hereto shall have no further obligation
under this Article II or in respect of the Private Placement, it being
understood that all other obligations of the parties under this Agreement shall
remain unaffected; provided that the parties hereto shall comply with this
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Article II to the extent required as the result of the occurrence of an
Alternate Consideration Event as a result of the operation of Section 2A.1
hereof.
ARTICLE IIA
CASH ALTERNATIVE TRANSACTION;
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SALE AND PURCHASE OF SECURITIES
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(S)2A.1 Cash Alternative. Notwithstanding anything to the contrary
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contained herein, UIHI may elect not to consummate the transactions contemplated
by Article II, in which case UIHI, JVI and UPC shall, and UIHI shall cause JVI
and UPC to, consummate the transactions contemplated in this Article IIA.
Notwithstanding an election by UIHI, in accordance with Section 12.5 hereof, to
proceed pursuant to this Article IIA, failure to consummate all of the
transactions contemplated by this Article IIA on or prior to December 11, 1997,
shall be deemed to constitute an Alternate Consideration Event pursuant to
Section 8.5 hereof.
(S)2A.2 Purchase, Sale and Conversion of JVI Notes. (a) Purchase
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and Sale. Subject to the terms and conditions set forth in this Agreement,
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Philips Media agrees to sell, assign and transfer to JVI on the Closing Date,
against the receipt of the consideration specified in Section 2A.2(b) hereof,
and JVI agrees to purchase from Philips Media on the Closing Date, an aggregate
principal amount of PIK Notes which, together with the amount of accrued and
unpaid interest thereon from January 1, 1997, equals U.S. $84,291,973 (such PIK
Notes, the "JVI NOTES").
(b) Purchase Price. In full consideration for the sale, assignment
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and transfer by Philips Media to JVI of the JVI Notes, JVI shall, on the Closing
Date, deliver to Philips Media cash in the amount of U.S. $84,291,973, such
amount to be paid by wire transfer of immediately available funds to an account
specified by Philips Media at least two Business Days prior to the Closing Date.
(10)
(c) Conversion. On the Closing Date, JVI shall convert the JVI Notes
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into UPC Ordinary Shares at the conversion price set forth in the PIK Notes and
on the other terms specified in the PIK Notes.
(S)2A.3 Purchase and Sale of JVI Shares. (a) Purchase and Sale.
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Subject to the terms and conditions set forth in this Agreement, Philips
Networks agrees to sell, assign and transfer to JVI on the Closing Date, against
the receipt of the consideration specified in Section 2A.3(b) hereof, and JVI
agrees to purchase from Philips Networks on the Closing Date, 8,756,077 of the
UPC Ordinary Shares comprising the UPC Shares (the "JVI SHARES").
(b) JVI Share Price. In full consideration for the sale, assignment
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and transfer by Philips Networks to JVI of the JVI Shares, JVI shall, on the
Closing Date, deliver to Philips Media cash in the amount of US$78,208,027 (the
"JVI SHARE PRICE") , such amount to be payable in Dutch Guilders, such amount to
be converted into Dutch Guilders at the exchange rate in effect on the Closing
Date (the "Closing Exchange Rate") and to be paid by wire transfer of
immediately available funds to an account specified by Philips Networks at least
two Business Days prior to the Closing Date.
(S)2A.4 Purchase of UIHI Shares. (a) Purchase and Sale. Subject to
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the terms and conditions set forth in this Agreement, Philips Networks agrees to
sell, assign and transfer to UPC on the Closing Date, against receipt of the
consideration specified in Section 2A.4(b) hereof, and UPC agrees to purchase
from Philips Networks on the Closing Date, the UIHI Shares.
(b) Purchase Price. In full consideration of the sale, assignment and
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transfer by Philips Networks to UPC of the UIHI Shares, UPC shall, on the
Closing Date, deliver to Philips Networks an amount (the "UIHI SHARE PRICE") in
Dutch Guilders equal to the Fair Market Value of the UIHI Shares (calculated in
U.S. Dollars) as of December 11, 1997, such amount to be converted into Dutch
Guilders at the Exchange Rate and to be paid by wire transfer of immediately
available funds to an account specified by Philips Networks at least two
Business Days prior to the Closing Date.
(S)2A.5 Redemption of Remaining PIK Notes. (a) Redemption. Subject
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to the terms and conditions set forth in this Agreement, UPC agrees to redeem on
the Closing Date, and Philips Media agrees to surrender for redemption on the
Closing, all outstanding PIK Notes (other than the JVI Notes) (such PIK Notes,
the "REMAINING PIK NOTES") held by Philips.
(b) Redemption Price. In full consideration for the surrender for
----------------
redemption of the Remaining PIK Notes by Philips Media, UPC shall pay to Philips
Media an amount payable in U.S. Dollars (the "REDEMPTION PRICE") equal to the
sum of (x) the aggregate principal amount of the Remaining PIK Notes and (y) an
amount equal to the total accrued and unpaid interest (calculated from January
1, 1997) on the Remaining PIK Notes, such amount to be paid by wire transfer of
immediately available funds to an account specified by Philips Media at least
two Business Days prior to the Closing Date.
(S)2A.6 UPC Shares. (a) Formation of Philips Subsidiary. Prior to
---------- -------------------------------
the Closing
(11)
Date, Philips Networks shall sell, assign and transfer to a direct or indirect
subsidiary of PENV ("NEWCO") prior to the Closing Date, and Newco shall
purchase, the UPC Shares (other than the JVI Shares, which shall be purchased by
JVI pursuant to Section 2A.3 hereof) against delivery by Newco to Philips
Networks of (x) a demand promissory note denominated in U.S. Dollars (the
"DOLLAR NOTE") in a principal amount equal to the Designated Dollar Amount and
(y) a demand promissory note denominated in Dutch Guilders (the "GUILDER NOTE")
in a principal amount equal to the Designated Guilder Amount.
(b) Sale of Acquisition Sub.
-----------------------
(i) Purchase and Sale. Subject to the terms and conditions set forth
-----------------
in this Agreement, Philips Networks agrees to sell, assign and transfer to
UPC on the Closing Date, against the consideration specified in Section
2A.6(b)(ii) hereof, and UPC agrees to purchase from Philips Networks on the
Closing Date, all of the outstanding capital shares of Newco (the "NEWCO
STOCK").
(ii) Purchase Price. In full consideration for the sale, assignment
--------------
and transfer by Philips Networks to UPC of the Newco Stock, UPC shall, on
the Closing Date, pay to Philips Networks an amount in Dutch Guilders equal
to NLG 53,000.
(iii) Satisfaction of Indebtedness. Concurrently with the
----------------------------
consummation of the sale of the Newco Stock, UPC shall, on the Closing Date
pay and satisfy in full or cause Newco to pay and satisfy in full, the
Dollar Note and the Guilder Note.
(S)2A.7 Actions at Closing; Closing Date. At the Closing, (a)
--------------------------------
Sellers shall (i) deliver to JVI (x) the JVI Notes, together with bond powers
duly executed in blank and (y) the JVI Shares, and (ii) deliver to UPC (x) the
Remaining PIK Notes for cancellation, (y) the UIHI Shares, together with stock
powers duly executed in blank, and (z) the Newco Stock, and (iii) assign to JVI
the Foundation Rights and take such other actions as are required by Section
6.6(b) hereof, and (b) UPC will deliver or cause to be delivered to the Sellers
(i) the cash payments referred to in Sections 2A.2, 2A.3, 2A.4, 2A.5 and 2A.6
hereof and (ii) either (x) the SAR or (y) the SAR Cash Payment Amount, as the
case may be. At the Closing, JVI shall surrender to UPC the JVI Notes, together
with a notice of conversion in respect thereof, and UPC will deliver, or cause
to be delivered, to JVI a number of UPC Ordinary Shares equal to the number of
UPC Ordinary Shares deliverable upon the conversion of the JVI Notes, in
accordance with their terms. On or after the Closing Date, each party shall
execute and deliver such notarial deeds and other instruments of conveyance,
assignment and transfer and shall take, or cause to be taken, such actions as
any other party may reasonably request to effect the transactions contemplated
hereby. Promptly after the Closing, a notarial deed amending UPC's Articles of
Association to effect the conversion of UPC from private company with limited
liability (besloten venootschap) to a public limited liability company (naamloze
venootschap) under the laws of The Netherlands shall be executed.
(S)2A.8 SAR. As an additional inducement to ▇▇▇▇▇▇ to enter into the
---
transaction contemplated hereby, UPC shall, in accordance with the election made
pursuant to Section 12.5(b) of this Agreement, either (x) issue to Philips
Networks the SAR or (y) pay to Philips
(12)
Networks an amount in U.S. Dollars equal to SAR Cash Payment Amount.
(S)2A.9 Coordination with Article II. If UIHI elects, in accordance
----------------------------
with Section 12.5 hereof, to comply with Article II hereof in lieu of complying
with this Article IIA, then the parties hereto shall have no further obligation
under this Article IIA, it being understood that the parties' obligations under
any other Article of this Agreement shall remain unaffected. If each of UIHI,
JVI and UPC complies with each of its obligations under this Article IIA on or
prior to December 11, 1997, then no Alternate Consideration Event shall occur
and UPC shall have no further obligation to issue the Increasing Rate Preference
Shares.
ARTICLE III
REPRESENTATIONS OF THE SELLERS
------------------------------
(S)3. Representations of the Sellers. The Sellers hereby jointly and
------------------------------
severally represent and warrant to the UIHI Parties as follows:
(S)3.1 Ownership of Securities; Foundation Rights. (a) Philips
------------------------------------------
Networks is the record and beneficial owner of the UPC Shares, free and clear of
all liens, encumbrances, restrictions and claims of every kind ("Encumbrances"),
other than those imposed by the Shareholders' Agreement or by operation of law;
it being understood that, if UIHI elects pursuant to Section 12.5 hereof to
-------------------
consummate the transactions contemplated by Article IIA hereof in lieu of those
contemplated by Article II hereof, Philips Networks will, prior to the Closing
Date, sell, assign and transfer the UPC Shares to Newco in accordance with
(S)2A.5 hereof, and after such sale, assignment and transfer, Newco will be the
record and beneficial owner of the UPC Shares, free and clear of all
Encumbrances, other than those imposed by the Shareholders' Agreement or by
operation of law.
(b) Philips Networks is the record and beneficial owner of the UIHI
Shares, free and clear of all Encumbrances, other than those imposed by
operation of law. The transfer to UPC of the UIHI Shares pursuant to the
provisions of this Agreement will transfer to UPC valid title thereto, free and
clear of any and all adverse claims, subject to the exception in the immediately
preceding sentence.
(c) Philips Media is the record and beneficial owner of the PIK
Notes, free and clear of all Encumbrances, other than those imposed by the
Option Agreement or by operation of law. The transfer to UPC and/or JVI, as the
case may be, of the PIK Notes pursuant to the provisions of this Agreement will
transfer to UPC and/or JVI, as the case may be, valid title thereto, free and
clear of any and all adverse claims, subject to the exception in the immediately
preceding sentence.
(d) Philips Networks has the right, title and interest (collectively
the "FOUNDATION RIGHTS") in and to (i) all the property and assets of the
Foundation to which it is entitled by virtue of the Articles of Association of
the Foundation dated July 26, 1996 (including, without limitation, its rights in
and to any surplus liquidation balance pursuant to Article 12.2 of such
Articles), and the Agreement dated June 13, 1996, between JVI, Philips Networks
and the
(13)
Foundation and (ii) all of Philips Networks' other rights under such Agreement
and any other document, agreement or instrument related thereto, free and clear
of any and all adverse claims other than those imposed by such Articles, such
Agreement or by operation of law.
(e) In the event that the parties elect to consummate the
transactions contemplated by Article IIA hereof pursuant to Section 12.5 hereof,
Philips Networks will be, on the Closing Date, the record and beneficial owner
of the Newco Stock, free and clear of all Encumbrances, other than those imposed
by the Shareholders' Agreement or by operation of law. The transfer to UPC of
the Newco Stock pursuant to the provisions of Article IIA of this Agreement will
transfer to UPC valid title thereto, free and clear of any and all adverse
claims, subject to the exception in the immediately preceding sentence.
(S)3.2 Organization, Authorization and Validity of Agreement. Each
-----------------------------------------------------
of the Sellers is a limited liability company duly organized and validly
existing under the laws of The Netherlands. Each of the Sellers has full
corporate power and authority to enter into this Agreement and perform its
obligations hereunder and to consummate the transactions contemplated hereby.
This Agreement has been duly authorized and approved by all required corporate
action of each of the Sellers. This Agreement has been duly executed and
delivered by each of the Sellers and, assuming the due execution and delivery of
this Agreement by each other Party hereto, is a valid and legally binding
obligation of each of the Sellers, enforceable against each of the Sellers in
accordance with its terms, except to the extent that its enforceability may be
subject to applicable bankruptcy, insolvency, reorganization, moratorium and
similar laws affecting the enforcement of creditor's rights generally and to
general equitable principles.
(S)3.3 No Violations; Consents and Approvals. Assuming that the
-------------------------------------
applications, registrations, declarations, filings, authorizations, orders,
consents and approvals set forth on Schedule 3.3 attached hereto are made or
------------
obtained, as the case may be, the execution and delivery of this Agreement by
each of the Sellers and the consummation of the transactions contemplated hereby
(a) will not violate any provision of the Articles of Association of either
Seller, (b) will not violate any statute, rule, regulation, order or decree of
any Governmental Authority by which either Seller or any of their respective
properties or assets is bound, (c) will not require any other filing with, or
permit, consent or approval of, or the giving of any notice to, any Governmental
Authority and (d) will not result in a violation or breach of, or constitute a
default under, any license, franchise, permit, indenture, agreement or other
instrument to which either Seller is a party, or by which either Seller or any
of their respective assets or properties is bound.
(S)3.4 Broker's or Finder's Fee. Except for ▇▇▇▇▇▇▇, Sachs (whose
------------------------
fees and expenses will be paid by PENV), no agent, broker, Person or firm acting
on behalf of the Sellers is, or will be, entitled to any broker's, finder's or
other similar fee from any Party, or from any Person Controlling, Controlled by,
or under common Control with any Party, in connection with this Agreement or any
of the transactions contemplated hereby.
(S)3.5 Investment Company Act. Neither of the Sellers is an
----------------------
"investment company" or a company "controlled by" an investment company, as such
terms are defined in
(14)
the U.S. Investment Company Act of 1940, as amended.
ARTICLE IV
REPRESENTATIONS OF THE UIHI PARTIES
-----------------------------------
(S)4. Representations of the UIHI Parties. The UIHI Parties hereby
-----------------------------------
jointly and severally represent and warrant to the Sellers as follows:
(S)4.1 Organization, Authorization and Validity of Agreement. Each
-----------------------------------------------------
of the UIHI Parties is a corporation duly organized and validly existing and is
in good standing under the laws of the State of Delaware. Each of the UIHI
Parties has full corporate power and authority to enter into this Agreement and
perform its obligations hereunder and to consummate the transactions
contemplated hereby. This Agreement has been duly authorized and approved by
all required corporate action of each of the UIHI Parties. This Agreement has
been duly executed and delivered by each of the UIHI Parties and, assuming the
due execution and delivery of this Agreement by each other Party hereto, is a
valid and legally binding obligation of each of the UIHI Parties, enforceable
against each of the UIHI Parties in accordance with its terms, except to the
extent that its enforceability may be subject to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting the
enforcement of creditor's rights generally and to general equitable principles.
(S)4.2 No Violations; Consents and Approvals. Assuming that the
-------------------------------------
applications, registrations, declarations, filings, authorizations, orders,
consents and approvals set forth on Schedule 4.2 attached hereto are made or
------------
obtained, as the case may be, the execution and delivery of this Agreement by
each of the UIHI Parties and the consummation of the transactions contemplated
hereby (a) will not violate any provision of the Certificate of Incorporation or
the Bylaws of either UIHI Party, (b) will not violate any statute, rule,
regulation, order or decree of any Governmental Authority by which either UIHI
Party or any of their respective properties or assets is bound, (c) will not
require any other filing with, or permit, consent or approval of, or the giving
of any notice to, any Governmental Authority and (d) will not result in a
violation or breach of, or constitute a default or event of default under, any
license, franchise, permit, indenture, agreement or other instrument to which
either UIHI Party is a party, or by which either UIHI Party or any of their
respective assets or properties is bound.
(S)4.3 Broker's or Finder's Fee. Except for DLJ (whose fees and
------------------------
expenses will be paid by UIHI or, in the event the Transaction is consummated,
at UIHI's option, by UPC), no agent, broker, Person or firm acting on behalf of
either UIHI Party is, or will be, entitled to any broker's, finder's or other
similar fee from any Party, or from any Person Controlling, Controlled by, or
under common Control with any Party, in connection with this Agreement or any of
the transactions contemplated hereby.
(15)
ARTICLE V
REPRESENTATIONS OF UPC
----------------------
(S)5. Representations of UPC. UPC hereby represents and warrants to
----------------------
the other Parties hereto as follows:
(S)5.1 Authority and Validity of Agreement. UPC is a limited
-----------------------------------
liability company duly organized and validly existing under the laws of The
Netherlands. UPC has full corporate power and authority to enter into this
Agreement and perform its obligations hereunder and to consummate the
transactions contemplated hereby. This Agreement and the transactions
contemplated hereby have been duly authorized and approved by all required
corporate action of UPC. This Agreement has been duly executed and delivered by
UPC and, assuming the due execution and delivery of this Agreement by each other
Party hereto, is a valid and legally binding obligation of UPC, enforceable
against UPC in accordance with its terms, except to the extent that its
enforceability may be subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting the enforcement of
creditor's rights generally and to general equitable principles.
(S)5.2 No Violations; Consents and Approvals. Assuming the
-------------------------------------
applications, registrations, declarations, filings, authorizations, orders,
consents and approvals set forth on Schedule 5.2 attached hereto are made or
------------
obtained, as the case may be, the execution and delivery of this Agreement by
UPC and the consummation of the transactions contemplated hereby (a) will not
violate any provision of the Articles of Association of UPC, (b) will not
violate any statute, rule, regulation, order or decree of any Governmental
Authority by which UPC or any of its properties or assets is bound, (c) will not
require any other filing with, or permit, consent or approval of, or the giving
of any notice to, any Governmental Authority and (d) will not result in a
violation or breach of, or constitute a default or event of default under, any
license, franchise, permit, indenture, agreement or other instrument to which
UPC is a party, or by which UPC or any of its assets or properties is bound.
(S)5.3 Capitalization. (a) On the Closing Date and after giving
--------------
effect to the consummation of the Transaction and assuming that (x) no Alternate
Consideration Event has occurred and (y) UIHI has not complied with Article IIA
hereof, UPC will have an authorized capitalization consisting of (i) 78.5
million UPC Ordinary Shares, par value NLG 1 per share and (ii) 134,375,000
preference shares, par value NLG 0.16 per share. If an Alternate Consideration
Event does occur, UPC will have an authorized capitalization on the Closing Date
of (i) 78.5 million UPC Ordinary Shares, par value NLG 1 per share and (ii)
134,375,000 Increasing Rate Preferred Shares, par value NLG 0.16 per share.
Assuming UIHI has compiled with Article IIA hereof, UPC shall have an authorized
capitalization consisting of 100.0 million UPC Ordinary Shares and no preference
share. On the Closing Date, after giving effect to the transactions
contemplated hereby, all outstanding UPC Ordinary Shares and preference shares
of UPC will be duly authorized and validly issued and will be fully paid and
nonassessable.
(b) Except for (i) the PIK Notes, (ii) rights contained in the
Shareholders' Agreement, (iii) the Option Agreement and (iv) options and rights
issued pursuant to that certain
(16)
Stock Option Plan of UPC adopted on June 13, 1996, there will be no outstanding
options, warrants, rights, calls, commitments, conversion rights, rights of
exchange, plans or other agreements of any character providing for the purchase,
issuance or sale of any shares of the capital stock of UPC, other than as
contemplated by this Agreement.
(S)5.4 Securities. When and if issued, the Preference Shares or the
----------
shares of Increasing Rate Preference Shares, as the case may be, to be received
by Philips Networks in accordance with the terms of this Agreement and after
giving effect to the transactions contemplated hereby will be duly authorized,
validly issued, fully paid and nonassessable. The SAR to be received by Philips
Networks in accordance with the terms of this Agreement and after giving effect
to the transactions contemplated hereby will be duly authorized and issued and
will constitute a valid and legally binding obligation of UPC. The delivery by
UPC of the Preference Shares and the SAR to Philips Networks in accordance with
the terms of this Agreement and after giving effect to the transaction
contemplated hereby will transfer to Philips Networks valid title to such
securities, free and clear of any and all adverse claims other than those
imposed by operation of law. The conversion of the UPC Shares into the Initial
Preference Shares or the Increasing Rate Preference Shares, as the case may be,
and the terms of the Preference Shares or the Increasing Rate Preference Shares,
as the case may be, will not require UPC to accrue any amounts or establish any
reserves in respect thereof that will not be so accrued or established in
accordance with the laws of The Netherlands.
(S)5.5 No Registration. The conversion of the UPC Shares into the
---------------
Preference Shares or shares of Increasing Rate Preference Shares, as the case
may be, by UPC and the issuance and transfer of the SAR by UPC to the Sellers in
accordance with the terms hereof will not require registration of either the
Preference Shares or the SAR under the Securities Act, the securities laws,
rules and regulations of The Netherlands or of any other jurisdiction outside
the United States or any applicable United States State "blue sky" or other
securities laws.
(S)5.6 Investment Company Act. UPC is not an "investment company" or
----------------------
a company "controlled by" an investment company, as such terms are defined in
the U.S. Investment Company Act of 1940, as amended.
(S)5.7 Broker's or Finder's Fee. Except for DLJ (whose fees may, if
------------------------
the Transaction is consummated, be paid by UPC at UIHI's option) no agent,
broker, Person or firm acting on behalf of UPC is or will be, entitled to any
broker's, finder's or other similar fee from any Party, or from any Person
Controlling, Controlled by, or under common Control with any Party, in
connection with this Agreement or any of the transactions contemplated hereby.
ARTICLE VI
COVENANTS
---------
(S)6.1 Reasonable Best Efforts; Voting of UPC Ordinary Shares. (a)
------------------------------------------------------
Each Party agrees to use its reasonable best efforts to take, or cause to be
taken, all actions, and to do, or cause to be done, and to assist and cooperate
with each other Party hereto in doing, all things necessary, proper or advisable
to consummate the transactions contemplated by this Agreement
(17)
in the most expeditious manner possible and shall, in furtherance thereof (but
without limiting the generality of the foregoing), use its reasonable best
efforts to (i) obtain all waivers, consents, authorizations, licenses and
approvals from, make all filings with and provide all notifications to, all
Governmental Authorities (collectively "GOVERNMENTAL CONSENTS") that are
necessary or advisable to obtain, make or provide in order to consummate the
transactions (including, but not limited to, the Transaction) contemplated by
this Agreement and take all other steps that are necessary or advisable to
ensure that all Governmental Authorities approve (if necessary or advisable) the
consummation of the transactions (including, but not limited to, the
Transaction) contemplated by this Agreement or do not take any action that
obstructs or delays the consummation of such transactions, and (ii) obtain all
waivers, consents, authorizations, licenses and approvals from and provide all
notifications to, all third Parties other than Governmental Authorities
(collectively "THIRD PARTY CONSENTS") that are necessary or advisable to obtain,
make or provide in order to consummate the transactions (including, but not
limited to, the Transaction) contemplated by this Agreement and take all other
steps that are necessary or advisable to ensure that all such third Parties
approve (if necessary or advisable) the consummation of the transactions
(including, but not limited to, the Transaction) contemplated by this Agreement
or do not take any action that obstructs or delays the consummation of such
transactions; provided, however, that, except as otherwise specifically provided
for by this Agreement, no Party shall be required to make any cash payment or
incur any financial obligation to obtain such waiver, consent, authorization or
approval.
(b) Each Seller and each UIHI Party hereby agrees (i) to cause their
respective representatives on the Supervisory Board of UPC to take all such
actions as may be necessary (except that no such representative shall be
required to violate any fiduciary duty imposed by law in connection with any
such action), and (ii) if necessary, to vote all UPC Ordinary Shares held or
controlled by such Party to consummate the Transaction in the most expeditious
manner possible and to otherwise ensure compliance with Section 6.1 hereof.
(S)6.2 Notices of Certain Events. Each Party shall promptly notify
-------------------------
the other Parties of:
(a) any notice or other communication received by such Party from any
Person alleging that the consent of such Person is or may be required in
connection with the transactions contemplated by this Agreement;
(b) any notice or other communication received by such Party from any
Governmental Authority concerning or relating to the transactions
contemplated by this Agreement;
(c) any pending or threatened action, suit, claim, investigation or
proceeding that may have a material adverse effect upon the condition
(financial or otherwise), business, results of operations or prospects of
UPC or that relates to, involves or has or may have a material adverse
effect upon the transactions contemplated by this Agreement (including, but
not limited to, the Transaction);
(d) such Party's obtaining knowledge of the occurrence, or failure to
occur, of any
(18)
event which occurrence or failure to occur will be likely to cause (i) any
representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect, or (ii) any material failure of any
Party to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it under this Agreement;
(e) such party's obtaining knowledge of the occurrence, or failure to
occur, of any event or development or series of events or developments
(including, but not limited to, any development or series of developments
in respect of the proposed financing of the transactions contemplated
hereby) which, individually or in the aggregate, are likely to materially
affect the proposed timing of, or likelihood of the consummation of, the
transactions contemplated hereby; and
(f) the occurrence, or failure to occur, prior to the Closing Date,
of any event or series of events which would have a Material Adverse Effect
on UPC;
such notice to be given as promptly as practicable (i) following receipt of a
notice or communication referred to in clause (a) or (b) above, (ii) after
learning of any pending or threatened action, suit, claim, investigation or
proceeding referred to in clause (c) above and (iii) after learning of the
occurrence or failure to occur of any event referred to in clause (d), (e) or
(f) above. No such notification shall affect the representations, warranties
and obligations of the Parties hereunder or the conditions to any Party's
obligations hereunder.
(S)6.3 Amendment of UPC Governance Documents. The Parties expressly
-------------------------------------
acknowledge that certain amendments to the Articles of Association of UPC and
the Regulations of the Supervisory Board of UPC (including, without limitation,
amendments necessary to effect (x) the conversion of UPC from a private company
with limited liability (besloten venootschap) to a public limited liability
company (naamloze venootschap) under the laws of The Netherlands and (y) and,
assuming UIHI does not comply with Article IIA hereof, the conversion of the UPC
Shares into the Initial Preference Shares or the Increasing Rate Preferred
Shares, as the case may be) will be necessary to consummate the transactions
contemplated by this Agreement. The Parties agree to cooperate and use their
respective reasonable best efforts to effect all such amendments necessary or
advisable to consummate and make effective the transactions contemplated by this
Agreement (including, but not limited to, the Transaction).
(S)6.4 Post-Closing Access and Cooperation. (a) Cooperation. UPC
----------------------------------- -----------
shall provide the Sellers with such information relating to UPC and its business
or such other assistance as may be reasonably requested by the Sellers in
connection with the preparation by any of the Sellers of any Tax return, the
preparation by any of the Sellers for any audit, or the prosecution or defense
by any of the Sellers of any claim, suit, proceeding, or proposed adjustment
relating to any taxable year or other taxable period or any accounting period
ending on or prior to the Closing Date and, with respect to any taxable year or
other taxable period or any accounting period beginning before, and ending
after, the Closing Date, the portion of such taxable year or taxable or
accounting period ending on and including the Closing Date ("PRE-CLOSING
PERIODS"). UPC shall retain all Tax returns, schedules, work papers and all
records or other documents relating to Tax matters relating to UPC and its
business for the first taxable year or other taxable
(19)
period ending after the Closing Date and for all taxable years or other taxable
periods ending prior to the Closing Date for at least six (6) years after the
Closing Date, and provide the Seller with such records or information (including
making employees available to the Sellers during normal business hours for
reasonable periods of time) which may be relevant to such Tax return, audit,
claim, suit, proceeding or adjustment. If UPC wishes to destroy such records
during the period commencing at the end of such six (6) year period and ending
on the date which is four (4) years after the end of such six (6) year period,
UPC will first give 90 days' prior written notice to the Sellers, and any of the
Sellers shall have the right, at its option and expense, upon prior written
notice to UPC within such 90-day period, to take possession of such records as
relate to it within 180 days after the date of its notice to UPC hereunder. Upon
the expiration of the ten (10) year period referred to in the previous sentence,
UPC may destroy such records without any notice to Sellers.
(b) Controversies. UPC shall promptly notify the Sellers in writing
-------------
upon receipt by UPC or any Affiliate of UPC of written notice of any inquiries,
claims, assessments, audits or similar events with respect to Taxes relating to
a Pre-Closing Period (any such inquiry, claim, assessment, audit or similar
event with respect to taxes for Pre-Closing Periods is herein referred to as a
"TAX MATTER"). UPC shall have the authority to represent any interests relating
to UPC and its Controlled Affiliates with respect to any Tax Matter before any
taxing authority, any other Governmental Authority or any court and shall have
the sole right to control the defense, compromise or other resolution of any Tax
Matter, including responding to inquiries, filing Tax returns, settling audits
and receiving refunds; provided, however, that neither UPC, nor any of its
affiliates shall enter into any settlement of or otherwise compromise any such
Tax Matter that adversely affects a Tax liability of Philips for any Pre-Closing
Period in any material respect without the prior written consent of the affected
Sellers, which consent shall not be unreasonably withheld. UPC shall keep the
Sellers informed with respect to the commencement, status and nature of any Tax
Matter.
(c) Sellers' Access to Records; Financial Reporting and Audit
---------------------------------------------------------
Cooperation. In addition to and not in limitation of any other rights of the
-----------
Seller under this Agreement, after the Closing UPC shall afford any of the
Sellers and their respective attorneys, accountants, officers and other
representatives reasonable access, during normal business hours, to UPC's books
and records to the extent that such access is reasonably necessary or
appropriate to assist the Sellers in the preparation of any Tax return or
financial statements of the Sellers or responding to any audit, investigation or
other inquiry of any taxing authority relating to any Pre-Closing Period (and
shall permit such persons to examine and copy such books and records to the
extent reasonably requested by the affected Seller).
(d) UPC's Access to Information. After the Closing, Philips shall
---------------------------
provide to UPC such information relating to the business or affairs of any UPC
subsidiary which, prior to July 13, 1995, was an affiliate of Philips, as UPC
shall reasonably request in connection with the preparation of any Tax return or
responding to any audit, investigation or other inquiry of any taxing authority
relating to any period prior to July 13, 1995.
(S)6.5 Philips Name and ▇▇▇▇. (a) Philips Designations. The
--------------------- --------------------
Parties hereto
(20)
acknowledge that the name "Philips" is a trademark of PENV, and that all rights
thereto (including, but not limited to all intellectual property rights thereto)
are the exclusive property of PENV. As soon as is practicable, but in no event
more than 30 days after the Closing Date, UPC, UIHI and JVI will cease to use,
and in the case of UIHI and JVI shall cause UPC to cease to use, the designation
"Philips" in connection with the operation of UIHI, JVI, UPC and their
respective Subsidiaries and will eliminate the use of any other designation
indicating affiliation after the Closing Date with Philips; it being understood
that the use of the initials "UPC" is permitted and the use of the designation
"Philips" and of any other designation indicating the affiliation before the
Closing Date with Philips is permitted in connection with any press release,
announcement or other disclosure which any party hereto reasonably determines to
be required under applicable law or the applicable rules and regulations of any
stock exchange, automated quotation system or self-regulatory organization on
which such party's securities are listed or of which such party is a member or
participant. Upon the request of Philips Media, UPC will provide, no later than
60 days after the Closing Date, Philips Media with a certificate signed by a
responsible office of UPC to the effect that the second sentence of this
paragraph has been complied with.
(b) Name Change. Promptly following the Closing Date, UPC shall
-----------
change, and each of Philips Media, Philips Networks, UIHI and JVI shall take all
such action as is necessary to cause UPC to change, its corporate name to remove
the word "Philips" therefrom.
(c) Certain Actions Not Required. Anything contained in this
----------------------------
Agreement to the contrary notwithstanding, neither UPC nor any Subsidiary
thereof shall be required to amend any contract, or financing statement or
similar document or instrument solely to evidence the change in corporate name
of UPC.
(S)6.6 Certain Resignations. (a) Resignations. On the Closing Date
-------------------- ------------
Philips shall cause (i) each Person who has been nominated to the Supervisory
Board of UPC pursuant to the provisions of the Shareholders' Agreement (other
than any such Person who is also designated by Philips Media to serve on the
Supervisory Board of UPC pursuant to Section 10.2(a) hereof) and (ii) each
Person who is an officer, director, employee, agent or representative of any of
the Sellers and who is serving as an officer or director of any Entity in which
UPC has an interest and by virtue of which interest or otherwise, UPC has
appointed any such Person as an officer or director of such Entity, to resign
from such position effective as of the Closing Date.
(b) Stichting Administratiekantoor UPC. On the Closing Date Philips
----------------------------------
shall cause each employee of Philips who is currently a trustee of, or who
otherwise serves in any position with, the Foundation to resign from such
position, effective as of the Closing Date, and shall take all such action as is
reasonably necessary to cooperate with UIHI and JVI in the appointment of
successors to all such Persons. To the extent necessary, in the reasonable
judgment of UIHI, to give effect to Section 2.3(a)(v) or Section 2A.6(a)(iii),
as the case may be, the Sellers and the UIHI Parties shall amend, or cause to be
amended, on the Closing Date and in such manner as UIHI shall reasonably
request: (i) the Articles of Association of the Foundation, (ii) the Agreement,
dated June 13, 1996 between JVI, Philips Networks and the Foundation, (iii) the
conditions under which the Foundation administers its property and assets, (iv)
the Agreement,
(21)
dated June 13, 1996 between the Foundation and UPC and (v) any other document or
instrument related to any of the documents or matters referred to in the
immediately preceding clauses (i) through (v).
(S)6.7 Transfer of Preference Shares. Philips Networks hereby agrees
-----------------------------
that it will not offer, sell or otherwise transfer the Initial Preference Shares
or the Increasing Rate Preference Shares, as the case may be, except (a)
pursuant to an exemption from, or in a transaction not subject to, the
registration requirements under the Securities Act or (b) pursuant to an
effective registration statement under the Securities Act.
ARTICLE VII
CONDITIONS TO THE OBLIGATIONS OF THE
SELLERS, UPC AND THE UIHI PARTIES
---------------------------------
(S)7.1 Conditions to the Obligations of the Sellers. The obligations
--------------------------------------------
of the Sellers to consummate the transactions contemplated by this Agreement are
subject to the satisfaction or waiver, on or before the Closing Date, of the
following conditions precedent:
(a) Truth of Representations and Warranties. The representations and
---------------------------------------
warranties of UPC and the UIHI Parties contained in this Agreement shall be
true and correct in all material respects on and as of the Closing Date
with the same effect as though such representations and warranties had been
made on such date, and UPC and each of the UIHI Parties shall have
delivered to the Sellers, with respect to such Party's representations and
warranties, a certificate dated the Closing Date to such effect.
(b) Fulfillment of Obligations. UPC and the UIHI Parties shall have
--------------------------
fulfilled all their respective material obligations under this Agreement
required to have been fulfilled at or before the Closing.
(c) No Injunction. No action, suit or proceeding shall be pending or
-------------
threatened before any court or other Governmental Authority or before any
arbitrator wherein an unfavorable judgment, injunction, order, decree,
ruling or charge would restrain or prohibit any Seller from completing the
transactions contemplated hereby.
(d) Approvals and Consents. All Philips Required Consents shall have
----------------------
been obtained or made, as the case may be.
(e) Registration Rights Agreement. Philips Media and UPC shall have
-----------------------------
entered into a Registration Rights Agreement substantially in the form of
Exhibit B hereto; provided that if UIHI (x) elects to comply with Article
---------
IIA hereof, in accordance with Section 12.5(a) hereof and actually delivers
the cash payments contemplated by such Article IIA and (y) UIHI makes
elects to deliver the SAR Cash payment Amount in lieu of the SAR and
actually delivers such SAR Cash Payment Amount, this condition shall not be
required to be satisfied.
(22)
(f) Opinions of Counsel. The UIHI Parties shall have furnished the
-------------------
Sellers with an opinion of counsel, dated the Closing Date, in form and
substance reasonably satisfactory to Philips Media, and UPC shall have
furnished the Sellers with an opinion of counsel, dated the Closing Date,
in form and substance reasonably satisfactory to Philips Media.
(g) Purchase Agreement. At least three Business Days prior to the
------------------
Closing Date, Goldman, Sachs, DLJ and UPC shall have executed and delivered
to Philips Networks a Purchase Agreement in customary form for a
transaction involving an immediate resale of the Initial Preference Shares
pursuant to Rule 144A under the Securities Act (the "PURCHASE AGREEMENT")
in respect of the Initial Preference Shares, which Purchase Agreement will
provide for gross proceeds to Philips Networks (as adjusted pursuant to
confidential Exhibit C) upon the Closing Date of U.S. $162.5 million for
---------
the sale of the Initial Preference Shares; provided that if (x) the
Increasing Rate Preference Shares are issued in accordance with Section 8.5
hereof or (y) UIHI or UPC complies with Article IIA hereof, this condition
shall not be required to be satisfied.
(h) Articles of Association. The Articles of Association of UPC
-----------------------
shall have been amended and restated to convert UPC into a public limited
liability company (naamloze venootschap) under the laws of The Netherlands,
to authorize the Preference Shares or the Increasing Rate Preference
Shares, as the case may be (to the extent such authorization is required),
and to effect such other amendments as the Sellers shall reasonably request
and as are reasonably necessary to give effect to the provisions of this
Agreement and a ministerial declaration of non-objection shall have been
received with respect to such Articles of Association.
(i) Philips Coordination Center. Philips Media and each other
---------------------------
relevant Philips Entity and UPC shall have entered into a tax
indemnification agreement in relation to certain tax liabilities in respect
of (x) UPC's transactions with Philips Coordination Center Of Brussels,
Belgium, from and after the formation of UPC and (y) arising out of the
demerger ruling granted prior to the formation of UPC in respect of the
demerger ruling of Radio Public N.V./S.A., such agreement to contain
substantially the terms discussed between such parties as of the date
hereof and otherwise to contain terms mutually satisfactory to the parties
thereto.
(S)7.2 Conditions to the Obligations of UPC. The obligations of UPC
------------------------------------
to consummate the transactions contemplated by this Agreement are subject to the
satisfaction or waiver, on or before the Closing Date, of the following
conditions precedent:
(a) Truth of Representations and Warranties. The representations and
---------------------------------------
warranties of the Sellers contained in this Agreement shall be true and
correct in all material respects on and as of the Closing Date with the
same effect as though such representations and warranties had been made on
such date, and the Sellers shall have delivered to UPC a certificate dated
the Closing Date to such effect.
(b) Fulfillment of Obligations. The Sellers shall have fulfilled all
--------------------------
of their
(23)
material obligations under this Agreement required to have been fulfilled at or
before the Closing.
(c) No Injunction. No action, suit or proceeding shall be pending or
-------------
threatened before any court or other Governmental Authority or before any
arbitrator wherein an unfavorable judgment, injunction, order, decree,
ruling or charge would restrain or prohibit UPC from completing the
transactions contemplated hereby.
(d) Approvals and Consents. All UPC Required Consents shall have
----------------------
been obtained or made, as the case may be.
(e) Financing. UIHI and/or UPC shall have obtained financing which,
---------
together with any other cash available to UPC, shall enable UPC to fund its
obligations hereunder and related fees and expenses and provide UPC with
adequate working capital.
(f) Opinions of Counsel. The Sellers shall have furnished UPC with
-------------------
an opinion of counsel, dated the Closing Date, in form and substance
reasonably satisfactory to UPC.
(g) Philips Coordination Center. Philips Media and each other
---------------------------
relevant Philips Entity and UPC shall have entered into a tax
indemnification agreement in relation to certain tax liabilities in respect
of (x) UPC's transactions with Philips Coordination Center Of Brussels,
Belgium, from and after the formation of UPC and (y) arising out of the
demerger ruling granted prior to the formation of UPC in respect of the
demerger ruling of Radio Public N.V./S.A., such agreement to contain
substantially the terms discussed between such parties as of the date
hereof and otherwise to contain terms mutually satisfactory to the parties
thereto.
(S)7.3 Conditions to the Obligations of the UIHI Parties. The
-------------------------------------------------
obligations of the UIHI Parties to consummate the transactions contemplated by
this Agreement are subject to the satisfaction or waiver, on or before the
Closing Date, of the following conditions precedent:
(a) Truth of Representation and Warranties. The representations and
--------------------------------------
warranties of the Sellers contained in this Agreement shall be true and
correct in all material respects on and as of the Closing Date with the
same effect as though such representations and warranties had been made on
such date, and the Sellers shall have delivered to the UIHI Parties a
certificate dated the Closing Date to such effect.
(b) Fulfillment of Obligations. The Sellers shall have fulfilled all
--------------------------
their material obligations under this Agreement required to have been
fulfilled at or before the Closing.
(c) No Injunction. No action, suit or proceeding shall be pending or
-------------
threatened before any court or other Governmental Authority or before any
arbitrator wherein an unfavorable judgment, injunction, order, decree,
ruling or charge would restrain or prohibit any UIHI Party from completing
the transactions contemplated hereby.
(d) Approvals and Consents. All UIHI Required Consents shall have
----------------------
been
(24)
obtained or made, as the case may be.
(e) Financing. UIHI and/or UPC shall have obtained financing which,
---------
together with any other cash available to UPC, shall enable UPC to fund its
obligations hereunder and related fees and expenses and provide UPC with
adequate working capital.
(f) Opinions of Counsel. The Sellers shall have furnished the UIHI
-------------------
Parties with an opinion of counsel, dated the Closing Date, in form and
substance reasonably satisfactory to UIHI.
(g) Articles of Association. The Articles of Association of UPC
-----------------------
shall have been amended and restated to convert UPC into a public limited
liability company (naamloze venootschap) under the laws of The Netherlands,
to authorize the Preference Shares or the Increasing Rate Preference
Shares, as the case may be (to the extent such authorization is required
hereby), and to effect such other amendments as the UIHI Parties shall
reasonably request and as are reasonably necessary to give effect to the
provisions of this Agreement and a ministerial declaration on non-objection
shall have been received with respect to such Articles of Association.
(h) Philips Coordination Center. Philips Media and each other
---------------------------
relevant Philips Entity and UPC shall have entered into a tax
indemnification agreement in relation to certain tax liabilities in respect
of (x) UPC's transactions with Philips Coordination Center Of Brussels,
Belgium, from and after the formation of UPC and (y) arising out of the
demerger ruling granted prior to the formation of UPC in respect of the
demerger ruling of Radio Public N.V./S.A., such agreement to contain
substantially the terms discussed between such parties as of the date
hereof and otherwise to contain terms mutually satisfactory to the parties
thereto.
ARTICLE VIII
DISPOSITION OF PREFERENCE SHARES; FINANCING
-------------------------------------------
(S)8.1 Disposition of Preference Shares. The Parties expressly
--------------------------------
acknowledge that it is their intention that the Initial Preference Shares, if
issued, will be disposed of in a transaction that will close on the Closing
Date. In furtherance of this objective and subject to UIHI's rights pursuant to
Section 8.2 of this Agreement, the Sellers, the UIHI Parties and UPC shall use
their reasonable best efforts to cause the Initial Preference Shares to be
offered and sold to third parties in connection with the financing of the
Transaction; provided, that such offer and sale shall be at a price and on other
terms acceptable to the Sellers in their sole discretion; provided, further,
that an offer that (i) results in gross proceeds to Philips Networks of $162.5
million, (ii) does not require Philips Networks to incur Other Expenses in an
amount in excess of the amount of such expenses customary in a transaction of
the type involved in such offer and sale, (iii) does not require Philips to (x)
make any representation or warranty in respect of the business or affairs of UPC
or (y) undertake any obligation not customarily undertaken by selling
shareholders in offerings of this type, and (iv) complies with all applicable
laws, rules and regulations, including, without limitation, the Securities Act,
the Securities Exchange Act of 1934, as amended, and the
(25)
rules and regulations of the Securities and Exchange Commission thereunder,
shall be deemed to be acceptable to the Sellers; provided, further, that nothing
contained in the immediately preceding sentence, shall be construed to require
the Sellers to approve any offer using a preliminary Offering Memorandum, final
Offering Memorandum or other marketing materials which any Seller believes
contains an untrue statement of a material fact or omits to state a material
fact necessary to make a statement therein not misleading or which otherwise
unreasonably exposes the Sellers to any liability under any applicable
securities laws or otherwise. The parties hereby acknowledge that UPC may, at
its sole option, cause the offer in respect of the Initial Preference Shares
contemplated by this Section 8.1 and Section 8.2 of this Agreement to be in the
form of non-voting Dutch Depositary Receipts.
(S)8.2 Private Placement. (a) The Parties hereto will use their
-----------------
reasonable best efforts to cause UPC to (i) conduct a private placement in the
United States and such other jurisdictions as it shall deem appropriate of the
Initial Preference Shares (or of Dutch Depository Receipts representing such
shares) (the "PRIVATE PLACEMENT") and (ii) consummate the Private Placement as
soon as practicable after September 1, 1997 and in no event later than December
11, 1997. The Private Placement will be conducted in a manner that will enable
the initial purchasers to immediately resell the Initial Preference Shares
pursuant to Rule ▇▇▇▇ (▇▇▇ "▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇") promulgated under the
Securities Act, will have accompanying registration rights and will be on terms
customary for offerings of its type.
(b) DLJ and ▇▇▇▇▇▇▇, ▇▇▇▇▇ (the "INITIAL PURCHASERS") shall be co-
lead managers (and DLJ shall be the book-runner) of the Rule 144A Offering and,
together with such other persons as they shall designate, shall be the initial
purchasers of the Initial Preference Shares.
(c) The terms of the Initial Preference Shares will be such that the
Private Placement will result in gross proceeds of $162.5 million to Philips
Networks, as such sum may be adjusted pursuant to confidential Annex C, attached
-------
hereto.
(d) Immediately upon the execution hereof the Parties will, and the
UIHI Parties shall cause DLJ and Philips shall cause ▇▇▇▇▇▇▇, ▇▇▇▇▇ to, commence
any and all actions necessary and appropriate to enable UPC to consummate the
Private Placement as soon as practicable after September 1, 1997. In
furtherance thereof, the Parties will cooperate with the Initial Purchasers to
prepare a preliminary Offering Memorandum, a final Offering Memorandum, a "road
show" presentation and such other marketing materials as Philips Networks and
the Initial Purchasers shall reasonably request, and shall take all such other
steps, including, but not limited to, participating in customary "road show"
presentations, as the Initial Purchasers shall reasonably request in order to
market the Initial Preference Shares. UPC will provide Philips Networks and the
Initial Purchasers with all information concerning the business and affairs of
UPC as Philips Networks and the Initial Purchasers reasonably deem necessary to
effect the disposition of the Initial Preference Shares.
(S)8.3 Private Placement Expenses. All expenses incident to UPC's
--------------------------
performance of or compliance with Section 8.2 hereof, including, without
limitation, all United States
(26)
Securities and Exchange Commission and securities exchange or self-regulatory
organization registration and filing fees, fees and expenses of compliance with
securities laws of any jurisdiction (including reasonable fees and disbursements
of counsel in connection with the qualification of the Preference Shares),
rating agency fees, internal expenses (including, without limitation, all
salaries and expenses of UPC's officers and employees performing legal or
accounting duties), the fees and expenses incurred in connection with the
listing of the securities to be registered, if any, on each securities exchange
on which similar securities issued by UPC are then listed and reasonable fees
and disbursement of counsel for UPC and its independent certified public
accountants (including the expenses of any special audit or "cold comfort"
letters required by or incident to such performance), insurance for liabilities
under the Act (if UPC elects to obtain such insurance), the reasonable fees and
expenses of any special experts retained by UPC in connection with such
registration, and any "road show" expenses incurred by UPC or any UIHI Party
(all such expenses being herein called "SELLING EXPENSES") will be borne by UPC;
provided, that "Selling Expenses" shall not include, and UPC shall not be
responsible for, any (x) customary underwriting fees, discounts or commissions
(including selling commissions) attributable to the sale of the Initial
Preference Shares, (y) any printing expenses incurred in connection with the
Private Placement and (z) Philips Networks' own (1) legal fees and expenses, (2)
accountants' fees and expenses and (3) "road show" and other out-of-pocket
expenses (collectively the "OTHER EXPENSES"), all of which shall be paid by
Philips Networks; provided, further, that Philips Networks shall not be
responsible for any Other Expenses (other than the fees of its legal counsel),
and UPC shall pay all such Other Expenses, if the Private Placement is not
consummated prior to or on December 11, 1997.
(S)8.4 Indemnification by UPC. (a) UPC agrees to indemnify and hold
----------------------
harmless each Philips Person and the officers, directors, employees,
representatives, agents and advisors of each Philips Person (including, but not
limited to Goldman, Sachs, DLJ, any other placement agent or underwriter of any
Initial Preference Shares sold pursuant to the Purchase Agreement), each
Affiliate of a Philips Person and each person who controls any Philips Person
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act (each such person, a "CONTROL PERSON") against any losses, claims,
damages, liabilities or expenses (including reasonable attorneys' fees and
expenses) (collectively, "DAMAGES") to which they may become subject, under the
laws (including, but not limited to, the securities laws) of the United States
or any other jurisdiction, insofar as such Damages (or actions in respect
thereof) arise out of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in any registration statement,
prospectus, offering memorandum, offering circular, listing particulars or
similar document (either in preliminary or final form) used in connection with
the disposition of any Initial Preference Shares by any Philips Person, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact necessary to make the
statements therein not misleading, and will reimburse each Philips Person and/or
the officers, directors, employees, representatives, agents, advisors
(including, but not limited to Goldman, Sachs, DLJ, any other placement agent or
underwriter of any Initial Preference Shares sold pursuant to the Purchase
Agreement, each Affiliate of any Philips Person and Control Persons of such
Philips Person for any other expenses reasonably incurred by them in connection
with investigating or defending any such action or claim as such expenses are
incurred; provided that UPC shall not be liable in any such case to the
(27)
extent that any such Damages arise out of or are based upon an untrue statement
or alleged untrue statement or omission or alleged omission by any Philips
Person contained in any registration statement, prospectus, offering memorandum,
offering circular or similar document (either in preliminary or final form) used
in connection with the disposition of the Initial Preference Shares or any
amendment or supplement thereto in reliance upon and in conformity with
information furnished by such Philips Person to UPC expressly for use therein
which information was not corrected in a subsequent writing by such Philips
Person prior to or concurrently with the sale of the Registrable Securities to
the Person asserting the loss, claim, damage, liability or expense.
(b) Each Philips Person whose Initial Preference Shares are sold
pursuant to the Purchase Agreement, severally but not jointly, agrees to
indemnify and hold harmless UPC and the officers, directors, employees,
representatives, agents and advisors of UPC, each Affiliate of UPC and each
Control Person of UPC against any Damages to which they may become subject,
under the laws (including, but not limited to, the securities laws) of the
United States or any other jurisdiction, insofar as such Damages (or actions in
respect thereof) arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained in any registration statement,
prospectus, offering memorandum, offering circular, listing particulars or
similar document (either in preliminary or final form) used in connection with
the disposition of any Initial Preference Shares by any Philips Person, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact necessary to make the
statements therein not misleading, and will reimburse UPC and its officers,
directors, employees, representatives, agents, advisors, each Affiliate of UPC
and each Control Person of UPC for any other expenses reasonably incurred by
them in connection with investigating or defending such action or claim as such
expenses are incurred, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in such registration statement, prospectus, offering
memorandum, offering circular, listing particulars (either in preliminary or
final form) or any amendment or supplement thereto in reliance upon any written
information furnished in writing to UPC by Philips Person expressly for use
therein and which was not corrected in a subsequent such writing by such Philips
Person prior to or concurrently with the sale of the Initial Preference Shares
to the Person asserting such Damages. In no event shall the liability of any
Philips Person hereunder be an amount greater than the dollar amount of the
proceeds received by such Philips Person upon the sale of the Initial Preference
Shares giving rise to such indemnification obligation.
(c) Each Person entitled to indemnification pursuant to Section
8.4(a) or 8.4(b) hereof (each an "INDEMNIFIED PARTY") shall give prompt notice
to the party obligated to indemnify such Indemnified Party (each an
"INDEMNIFYING PARTY") of any action threatened or commenced against it in
respect of which indemnity may be sought hereunder, but failure to so notify any
Indemnifying Party shall not relieve such Indemnifying Party from any liability
which it may have otherwise than on account of the indemnity agreement provided
in Section 8.4(a) or 8.4(b) hereof, as the case may be. In case of any notice
under this indemnity agreement with respect to any loss, liability, claim,
damage or expense with respect to any claim made against an Indemnified Party,
the Indemnifying Party shall be entitled to participate at its own expense in
(28)
the defense, or if it so elects within a reasonable time after receipt of such
notice, to assume the defense, of any such claim; but if it so elects to assume
the defense, such defense shall be conducted by counsel chosen by such
Indemnifying Party and approved by the Indemnified Party. If the Indemnifying
Party does not elect within a reasonable time after receipt of such notice to
assume the defense of any such claim, the Indemnified Party shall be entitled to
assume the control of such defense, in which case the fees and expenses incurred
by such Indemnified Party in the conduct of such defense, including the
reasonable fees and expenses of counsel, shall be reimbursed by the Indemnifying
Party as the same are incurred from time to time by such Indemnified Party. If
the Indemnifying Party elects to assume the defense and retain such counsel, the
Indemnified Party shall bear the fees and expenses of any additional counsel
thereafter retained by such Indemnified Party; provided, however, that such
Indemnified Party shall have the right to employ counsel to represent it or any
Person who controls it who may be subject to liability arising out of any action
in respect of which indemnity may be sought against the Indemnifying Party if,
in the reasonable judgment of the Indemnified Party's counsel, there may be a
conflict of interest between the Indemnifying Party and the Indemnified Party,
in which event the fees and expenses of appropriate separate counsel shall be
borne by such Indemnifying Party. The Indemnifying Party shall not, without the
written consent of each relevant Indemnified Party, effect the settlement or
compromise of, or consent to the entry of any judgment with respect to, any
pending or threatened action or claim in respect of which indemnification or
contribution may be sought hereunder (whether or not any such Indemnified Party
is an actual or potential party to such action or claim) unless such settlement,
compromise or judgment (i) includes an unconditional release of each such
Indemnified Party from all liability arising out of such action or claim and
(ii) does not include a statement as to or an admission of fault, culpability or
a failure to act, by or on behalf of any Indemnified Party. No Indemnified Party
shall, without the written consent of each relevant Indemnifying Party (not to
be unreasonably withheld) effect the settlement or compromise of, or consent to
the entry of any judgment with respect to, any such action or claim.
(d) If the indemnification provided for in this Section 8.4 is
unavailable to or insufficient to hold harmless an Indemnified Party under
subsection (a) or (b) above in respect of any Damages (or actions in respect
thereof) referred to therein, then the Indemnifying Party shall contribute to
the amount paid or payable by such Indemnified Party as a result of such Damages
(or actions in respect thereof) in such proportion as is appropriate to reflect
the relative fault of such Indemnifying Party on the one hand and the
Indemnified Party on the other in connection with the statements or omissions
which resulted in such losses, claims, damages or liabilities (or actions in
respect thereof), as well as any other relevant equitable considerations. The
relative fault of the Indemnifying Party and the Indemnified Party shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Indemnifying Party on the
one hand or the Indemnified Party on the other and the Parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Indemnifying Party and the Indemnified Parties agree
that it would not be just and equitable if contributions pursuant to this
subsection (c) were determined by pro rata allocation (even if the Indemnified
Parties were treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable considerations
(29)
referred to above in this subsection (c). The amount paid or payable by an
indemnified party as a result of the losses, claims, damages or liabilities (or
actions in respect thereof) referred to above in this subsection (c) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this subsection (c), no Indemnified
Party shall be required to contribute any amount in excess of the amount by
which the total price at which the Initial Preference Shares sold by it and
distributed to the public were offered to the public exceeds the amount of any
damages which such Indemnified Party has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
(S)8.5 Alternate Transactions. (a) If UIHI or UPC has not, on or
----------------------
before December 11, 1997, either (i) both (x) consummated the Private Placement
and (y) consummated each of the other transactions contemplated by Article II
hereof or (ii) consummated each of the transactions contemplated by Article IIA
hereof (such failure, an "ALTERNATE CONSIDERATION EVENT"), then, provided that
each of the conditions set forth in Article VII hereof (other than the condition
set forth in Section 7.1(g)) has been satisfied or waived, on the next Business
Day thereafter, UPC shall otherwise consummate the transactions contemplated by
Article II hereof, including the delivery to Philips Networks of preference
shares of UPC with an aggregate liquidation preference equal to U.S. $162.5
million and containing the terms set forth on confidential Exhibit D hereto and
---------
such other terms as may be mutually acceptable to the Philips Networks and UIHI
(the "INCREASING RATE PREFERENCE SHARES").
(b) During the period from December 11, 1997, through September 1,
1998, UPC shall, and the UIHI Parties shall cause UPC to, use its reasonable
best efforts to refinance the Increasing Rate Preference Shares, such that the
Increasing Rate Preference Shares are redeemed or otherwise monetized in a
manner that provides Philips Networks with net cash proceeds in an amount equal
to the aggregate liquidation preference of the outstanding Increasing Rate
Preference Shares plus all accrued and unpaid dividends thereon; provided that,
----
the TD Facility may require that any additional equity interests newly issued
and sold in connection with such refinancing will contain terms and entitle the
holders thereof to rights no less favorable to UPC than the Increasing Rate
Preference Shares.
(c) All expenses, including, but not limited to, expenses of the sort
or type which would be considered to be Selling Expenses and Other Expenses if
incurred in connection with the Private Placement, which are incurred in
connection with the refinancing referred to in paragraph (b) of this Section 8.5
shall be for the sole account of UPC.
(S)8.6 Strategic Plan. (a) In the event of an Alternate
--------------
Consideration Event, each of Philips Media and UIHI will, on or before September
1, 1998, appoint a financial advisor (which such financial advisor will be an
internationally recognized investment banking firm) and such financial advisors
will meet to consider the potential strategic alternatives available to UPC and
develop a strategic plan for UPC (a "STRATEGIC PLAN") to be submitted to the
Supervisory Board
(30)
of UPC, which Strategic Plan shall provide, among other things, that, upon the
consummation thereof, UPC shall redeem or otherwise monetize the Increasing Rate
Preference Shares and/or the UPC Ordinary Shares then held by Philips Networks,
as the case may be, such that Philips Networks receives net proceeds upon such
consummation equal to (x) if Philips Networks has not converted the Increasing
Rate Preference Shares into UPC Ordinary Shares, the aggregate liquidation
preference of the outstanding Increasing Rate Preference Shares plus all accrued
----
and unpaid dividends thereon, or (y) if Philips Networks has converted the
Increasing Rate Preference Shares into UPC Ordinary Shares, the Fair Market
Value of such UPC Ordinary Shares. In the event that Philips Media's and UIHI's
financial advisors cannot agree upon a Strategic Plan which meets the
requirements of Section 8.6(a) hereof prior to March 1, 1999, then, prior to
March 15, 1999, such financial advisors shall agree upon and appoint a third
financial advisor (which such financial advisor will be an internationally
recognized investment banking firm), which such third financial advisor shall,
within thirty (30) days of its appointment, propose a Strategic Plan to be
submitted to the Supervisory Board of UPC for its approval. Within ten (10) days
of the submission of a Strategic Plan to the Supervisory Board of UPC, the
Supervisory Board of UPC shall meet and the parties to this Agreement shall
cause their nominees to the Supervisory Board of UPC to vote in favor of
implementing such Strategic Plan, with such amendments or modifications as shall
be approved by a unanimous vote of the members of the Supervisory Board then
holding office; provided, that no such nominee will be required to violate any
fiduciary duty imposed by law in approving such Strategic Plan.
(b) Prior to the implementation of any Strategic Plan, Philips
Network shall either convert the Increasing Rate Preference Shares into UPC
Ordinary Shares or irrevocably waive the right to convert the Increasing Rate
Preference Shares into such ordinary shares.
(c) All expenses, including but not limited to all expenses of the
sort or type which would be considered to be Selling Expenses and Other Expenses
if incurred in connection with the Private Placement, which are incurred in
connection with any Strategic Plan or any other redemption or monetization of
the Increasing Rate Preference Shares and/or any UPC Ordinary Shares held by
Philips Networks, as the case may be, shall be for the sole account of UPC.
(d) The TD Facility may require that (x) any additional equity
interests newly issued and sold in connection with any Strategic Plan contain
terms and entitle the holders thereof to rights no less favorable to UPC than
the Increasing Rate Preference Shares and (y) the lenders under the TD Facility
(the "TD LENDERS") be entitled to require that the proceeds of any sales of the
assets of UPC or its Subsidiaries in connection with such Strategic Plan be used
to reduce the outstanding indebtedness under the TD Facility to zero prior to
the payment of any such proceeds to Philips or its Affiliates to refinance the
Increasing Rate Preference Shares.
(e) For purposes of this Section 8.6, the Fair Market Value of the
UPC Ordinary Shares shall be determined by the following procedure (the
"VALUATION PROCEDURE"):
(i) Each of Philips Networks and JVI shall , as promptly as possible
after the Appraisal Date, designate an independent investment banking firm
with experience valuing companies in the multi-channel subscription
television industry in the United
(31)
States or Western Europe (each, an "INDEPENDENT INVESTMENT BANKER").
(ii) UPC shall afford each Independent Investment Banker and its
representatives full access during normal business hours to the properties,
books and records of UPC and its Subsidiaries and shall cause UPC's
officers and employees and the officers and employees of UPC's Subsidiaries
to furnish such additional financial and operating data and other
information as the Independent Investment Bankers and their representatives
shall from time to time reasonably request.
(iii) Each of JVI and Philips Networks shall cause the Independent
Investment Banker designated by it to submit its written determination of
the fair market value of one UPC Ordinary Share, to JVI and to Philips
Networks within 30 days after the date of its retention. If the higher of
the two such fair market values, as determined by the two Independent
Investment Bankers is not greater than 110% of the lower of such fair
market values, the Fair Market Value of one UPC Ordinary Share shall be the
average of such two determinations.
(iv) If the higher determination of such fair market value is greater
than 110% of the lower determination, then such two Independent Investment
Bankers shall jointly select, within ten days after the date on which they
are informed of such difference by UPC and Philips Networks, a third
Independent Investment Banker to be retained by UPC. Such third
Independent Investment Banker shall deliver its written determination
of the fair market value of one UPC Ordinary Share as of the Appraisal
Date, within 30 days after its retention, and the Fair Market Value of one
UPC Ordinary Share shall be the average of the two closest determinations
of such fair market value or, if there are not two closest determinations
of such fair market value, the average of all three determinations of such
fair market value.
(v) The Fair Market Value of the UPC Ordinary Shares shall be
expressed in U.S. Dollars and shall be determined without regard to any
minority discount or the illiquidity of the UPC Ordinary Shares. The fees
and expenses of such Independent Investment Bankers shall paid by UPC.
(S)8.7 Sale of UPC. Notwithstanding anything to the contrary
-----------
contained herein or in the Shareholders' Agreement, (x) in the event that UPC
fails to consummate the transactions necessary to complete a Strategic Plan by
September 1, 1999, or (y) the completion of such Strategic Plan does not result
in Philips Networks receiving the minimum net proceeds specified in Section
8.6(a), Philips Networks shall have the right to cause UIHI and JVI to vote,
and, to cause UIHI and JVI to cause their representatives on the Supervisory
Board of UPC to vote, to sell 100% of UPC, in whole or in part, by way of a
stock sale or an asset sale (the proceeds of which will be used, subject to the
claims of the TD Lenders, to redeem the Increasing Rate Preference Shares or any
UPC Ordinary Shares held by Philips, as the case may be) at a price and on such
other terms as are satisfactory to Philips Media in its sole discretion. To the
extent necessary to give full effect to this paragraph, this paragraph shall
serve as a waiver of UIHI and JVI's rights under the Shareholders' Agreement.
(32)
(S)8.8 Restoration of Foundation Rights. As soon as practicable
--------------------------------
after Philips converts the Increasing Rate Preference Shares into UPC Ordinary
Shares, each of UIHI, JVI and UPC will take all such actions as may be necessary
to restore Philips to the position it held in respect of the Foundation prior to
February 23, 1997.
(S)8.9 Financing. UPC shall use its reasonable best efforts to, and
---------
the UIHI Parties shall use their reasonable best efforts to cause UPC to, on or
prior to the end of the Financing Period, enter into a binding commitment letter
or commitment letters in respect of a credit facility or credit facilities with
Toronto-Dominion Bank the terms of which reflect inter alia, the terms of this
Agreement (any such facilities, as from time to time amended, varied, extended,
restated, replaced, or refinanced by the same or other financial institutions in
accordance with the terms thereof, collectively, the "TD FACILITY"), which
credit facility or facilities will provide UPC with sufficient proceeds to fund
the transactions contemplated hereby; provided, however, that none of the UIHI
Parties shall be required to make any cash payment or incur any financial
obligation to obtain such financing for UPC.
ARTICLE IX
VIENNA GUARANTY
---------------
(S)9.1 Vienna Guaranty. Each of the UIHI Parties and UPC agree to
---------------
use their respective reasonable best efforts to obtain, on or prior to the
Closing Date or as promptly as practicable thereafter, the release of Philips
from all obligations which Philips may have to Kabel-TV Wien GmbH ("KTV") or the
municipality of Vienna under that certain Guaranty, dated June 28, 1995, by and
among PENV, UIHI, and KTV, the Syndikatsvereinbarung, dated June 28, 1995 (the
"VIENNA GUARANTY") among Osterreichische Philips Industrie GmbH, Cable Network
Austria Holdings B.V. ("CNA") and KTV and each other agreement relating to the
cable network indirectly operated by UPC in concert with KTV (collectively, the
"VIENNA AGREEMENTS"); provided, however, that except as otherwise specifically
provided for by this Agreement, none of the UIHI Parties shall be required to
make any cash payment or incur any financial obligation to obtain such release;
provided, further, that, prior to the Closing, neither UPC nor the UIHI Parties
-------
shall take any action which adversely affects the prospects of obtaining the
release of Philips contemplated hereby. The Parties agree to cooperate and
coordinate their efforts to obtain the release of Philips from all its
obligations under the Vienna Agreements. Philips Media agrees to take, and
agrees to use its reasonable best efforts to cause its Affiliates to take, all
such action as UPC or UIHI shall reasonably request in writing in order to
obtain the release of Philips from its obligations under the Vienna Agreements;
provided, that, notwithstanding the foregoing, the obligations of Philips Media
pursuant to this sentence shall not require the payment of money or the
incurrence of any other financial obligation by Philips. To the extent that UPC
and UIHI cannot obtain a full and complete release of Philips from its
obligations under the Vienna Agreements, UPC and UIHI shall use their reasonable
best efforts to obtain the agreement of any obligee under the Vienna Agreements
to proceed first against UPC and its Affiliates (other than Philips) when
seeking to satisfy such obligations; provided that, notwithstanding the
--------
foregoing, the obligations of UIHI to obtain such agreement shall not require
the payment of money or the incurrence of any financial obligation by UIHI.
(33)
(S)9.2 Indemnification. (a) UPC Indemnification. To the extent
--------------- -------------------
that after the Closing Date, and for so long thereafter as Philips remains
obligated under the Vienna Agreements, Philips is required to make any payment
or perform any obligation on behalf of UPC thereunder, UPC shall indemnify and
hold harmless Philips for any Damages incurred by Philips relating to or arising
out of the payment of any amounts due or the performance of any obligation under
the Vienna Agreements.
(b) UIHI Indemnification. At such time as UIHI enters into
--------------------
negotiations to refinance any of its existing indebtedness that is governed by
documents which prohibit UIHI from indemnifying Philips for any Damages suffered
by Philips relating to or arising out of the Vienna Agreements, UIHI agrees to
use its reasonable best efforts to refinance such indebtedness on terms that
permit UIHI to enter into such indemnity arrangements, and, if successful, shall
enter into such indemnity arrangements, all to the extent that Philips remains
obligated under the Vienna Agreements.
(c) Indemnification Procedures. Philips shall give prompt notice to
--------------------------
UPC and to UIHI of any claim asserted, or action threatened or commenced against
it in respect of which indemnity may be sought under this Section 9.2, but
failure to so notify UIHI or UPC shall not relieve UPC or UIHI from any
liability which it may otherwise have on account of the indemnity agreements
provided in Sections 9.2(a) and 9.2(b) hereof. In the case of any notice under
this indemnity agreement with respect to any loss, liability, claim, damage or
expense with respect to any claim made against Philips, each of UPC and UIHI
shall be entitled to participate at its own expense in the defense of such
claim; provided that Philips shall control such defense, which shall be
conducted by counsel chosen by Philips in its reasonable discretion, after
consultation with UPC and UIHI. The fees and expenses incurred by Philips in
conducting such defense (including the reasonable fees and expenses of counsel)
shall be reimbursed by UPC (or UIHI, to the extent UIHI has entered into the
indemnity arrangements contemplated by Section 9.2(b) hereof) as the same are
incurred from time to time by Philips. Philips shall not, without the written
consent of UPC or UIHI, as the case may be, settle or compromise, or consent to
the entry of judgment with respect to, any claim or pending or threatened action
in respect of which indemnification may be sought hereunder; provided that such
consent may not be unreasonably withheld; provided, further, in the event that
UPC and UIHI shall be liable for any damages (including consequential damages)
to Philips resulting from UPC or UIHI's refusal to consent to any such
settlement or compromise.
(d) Certain Events. The Parties hereto agree that, to the extent
--------------
that after the Closing Date and for so long thereafter as Philips remains
obligated under the Vienna Agreements, UPC shall not, and the UIHI Parties shall
cause UPC not to, (i) sell, transfer or otherwise dispose of or (ii) allow UPC,
CNA or Telekabel Wien to issue or sell, transfer or otherwise dispose of, in
either case, to any Person any equity interest in CNA or Telekabel Wien (other
than pro rata issuances or sales to existing Shareholders of the Entity
effecting such issuance or sale) without the consent of Philips unless UPC or
the purchaser or other transferee of such equity interests first obtains the
release of Philips from all obligations which Philips may have to KTV or the
Municipality of Vienna under the Vienna Agreements; provided, that,
--------
notwithstanding the foregoing, in the event that the lenders under the TD
Facility seek to enforce
(34)
their rights under the Security Documents in a manner that requires the sale of
any equity interest in CNA or Telekabel Wien, Philips will consent to the sale
of such equity interest if: (i) in Philips' reasonable judgment, the acquiring
party has sufficient financial resources and technical expertise to continue to
fulfill Telekabel Wien's obligations under the Vienna Agreements, (ii) the
purchase or such equity interest by such acquiror has been approved by the City
of Vienna and all other applicable third parties and regulatory authorities, and
(iii) such acquiror agrees to assume UPC's indemnity obligations pursuant to
this Article IX of this Agreement and grant Philips management rights identical
to those which Philips is afforded pursuant to Section 10.5 hereof.
(e) UPC Liability Primary. The Parties hereto agree that, to the
---------------------
extent that UPC or any of its Affiliates (other than Philips), on the one hand,
and Philips, on the other hand, are jointly liable for any amounts due or the
performance of any obligation under the Vienna Agreements, UPC shall, as between
UPC and its Affiliates (other than Philips) and Philips, be primarily liable for
the payment of any such amounts or the performance of any such obligation.
(f) Termination Upon Occurrence of Certain Events. Notwithstanding
---------------------------------------------
anything to the contrary contained in this Section 9.2, if (i) UPC issues the
Increasing Rate Preference Shares to Philips Networks and (ii) Philips Networks
elects to convert the Increasing Rate Preference Shares into UPC Ordinary
Shares, in accordance with the terms of Increasing Rate Preference Shares, then,
on the Conversion Date, UPC and UIHI shall be liable to Philips only for the
consequences of events which occur after the Closing Date and prior to such
Conversion Date but shall not have any liability under Sections 9.2(a) and
9.2(b) hereof, respectively for the consequences of any events which occur
thereafter.
(g) Subordination. (i) Philips hereby agrees, for the benefit of
-------------
the TD Lenders, that at any time at which (x) there are advances or loans
outstanding under the TD Facility and (y) UPC is unable to make cash
distributions in respect of its equity interests pursuant to the terms of TD
Facility, Philips will take no action, and will cause each of its Affiliates not
to take any action, to enforce or otherwise collect any claim or claims for
indemnity under this Section 9.2 until the date on which UPC is able to make
cash distributions in respect of the terms of its equity interests pursuant to
the terms of the TD Facility; provided, that, if such claim or claims exceed
--------
$5.0 million in the aggregate Philips may take action to enforce such claim or
claims on the 181st day following the date that the Agent under the TD Facility
is notified of such claims. This Agreement shall be solely for the benefit of
the TD Lenders and shall in no way affect the obligations of UPC to Philips or
its Affiliates under this Agreement.
(ii) UPC hereby agrees that, to the extent that is entitled to make
any cash distributions in respect of its equity interests pursuant to the terms
of the TD Facility, it shall, nonetheless not make any such cash distributions
until such time as all outstanding claims under this Section 9.2 have been paid
in full.
(35)
ARTICLE X
GOVERNANCE OF UPC
-----------------
(S)10.1 Interim Governance of UPC. (a) From the date of this
-------------------------
Agreement through earliest to occur of, (i) the date upon which Philips Media
and UIHI reasonably determine in writing that the Transaction cannot be
consummated and (ii) December 11, 1997, the UIHI Parties shall have control of
the day-to-day management of UPC.
(b) Notwithstanding the immediately preceding paragraph (a), if an
Alternate Consideration Event occurs and UPC issues the Increasing Rate
Preference Shares to Philips Networks pursuant to Section 8.5 hereof, the UIHI
Parties shall have control of the day-to-day management of UPC until the date
(the "CONVERSION DATE") of the conversion of the Increasing Rate Preference
Shares into UPC Ordinary Shares pursuant to the terms thereof; provided, that,
during such period, Philips shall have all of the management rights to which it
is entitled pursuant to this Article X.
(c) Notwithstanding anything contained in the foregoing paragraphs
(a) and (b), none of the Sellers shall be deemed to have forfeited, waived or
agreed to forbear the enforcement of any of its rights under the Shareholders'
Agreement including, without limitation, any right to require that any "Major
Decision" (as such term is defined in the Shareholders' Agreement) be approved
by a unanimous vote of each Philips Nominee and each UIHI Nominee (as such terms
are defined in the Shareholders' Agreement); provided, that the Sellers shall,
and shall procure that each of the Philips Nominees shall, approve all matters
reasonably necessary to finance the Transaction; provided, further, that nothing
contained herein shall require any Philips Nominee to violate any fiduciary duty
or other requirement imposed by law in connection with such vote.
Notwithstanding anything to the contrary contained in this Agreement, at all
times prior to the later of the Closing Date or the Conversion Date, as the case
may be, UPC shall, and UIHI and JVI shall cause UPC to, provide to Philips
Networks and each Philips Nominee (as such term is defined in the Shareholders'
Agreement) information substantially similar in type, amount and scope of detail
to the information provided to Philips Networks and each Philips Nominee
immediately prior to February 24, 1997.
(S)10.2 Post-Closing Governance. (a) Supervisory Board
----------------------- -----------------
Representation. During the period beginning on the Closing Date and ending on
--------------
the date of the last to occur of (i) the first date on which the disposition by
the Sellers and their Affiliates of Preference Shares (including, without
limitation, any Preference Shares issued to the Sellers or their Affiliates in
connection with the settlement of UPC's obligations under the SAR) or Increasing
Rate Preference Shares, as the case may be, results in the Sellers and their
Affiliates collectively owning Preference Shares or Increasing Rate Preference
Shares, as the case may be, with a Fair Market Value of less than U.S. $50.0
million, (ii) the full release of Philips from any and all obligations or
liabilities under the Vienna Agreements, and (iii) the date on which Philips is
fully reimbursed for all Damages incurred by Philips relating to or arising out
of the payment of any amounts due or the performance of any obligation under the
Vienna Agreements, Philips Media shall be entitled to nominate one member of the
Supervisory Board of UPC (the "PHILIPS MEDIA
(36)
NOMINEE") who shall, subject to Section 10.2(d) hold office until the next
annual general meeting of the shareholders of UPC or until such person's
successor is duly appointed and qualified. Philips Networks and JVI shall take
all such action as may be necessary to amend the Articles of Association of UPC
to provide that Philips Media may directly appoint the Philips Media Nominee to
the Supervisory Board of UPC in conformity with Section 2:143 of the Dutch Civil
Code. Notwithstanding the preceding sentence, if for any reason Philips Media is
unable to directly appoint the Philips Media Nominee to the Supervisory Board of
UPC, during such period, UIHI and JVI shall vote, or cause to be voted, each of
the UPC Ordinary Shares directly or indirectly owned or controlled by either of
them in favor of the election of such Philips Media Nominee.
(b) Vacancy. During any period in which Philips Media is entitled to
-------
nominate a Philips Media Nominee to the Supervisory Board of UPC, whenever a
vacancy shall occur on the Supervisory Board of UPC as a result of the death,
resignation, removal (subject to paragraph (c) below) or other action or
inaction of the Philips Media Nominee, such vacancy shall be filled by a nominee
of Philips Media and the person so nominated and elected shall become the
Philips Media Nominee and shall hold office until the next annual general
meeting of the shareholders of UPC or until such Person's successor is duly
appointed and qualified. At any time and to the extent that Philips Media is
unable to directly appoint such Philips Media Nominee to the UPC Supervisory
Board in conformity with the Section 2:143 of the Dutch Civil Code, during such
period, UIHI and JVI shall vote, or cause to be voted, each of the UPC Ordinary
Shares directly or indirectly owned or controlled by either of them in favor of
the appointment of the Person so nominated.
(c) Removal. During any period in which Philips Media is entitled to
-------
nominate a member of the Supervisory Board of UPC, no Philips Media Nominee may
be removed as a member of the Supervisory Board of UPC without the express
written consent of Philips Media. UIHI and JVI agree that if Philips Media
notifies the UIHI Parties in writing of Philips Media's desire to remove the
Philips Media Nominee from the Supervisory Board of UPC, UIHI and JVI shall do
all things necessary pursuant to UPC's Articles of Association and the law of
The Netherlands to remove such Philips Media Nominee and UIHI and JVI shall
vote, or cause to be voted, each of the shares of UPC Ordinary Shares directly
or indirectly owned or controlled by either of them in favor of the removal of
such Philips Media Nominee. The term of any Philips Media Nominee so removed
shall forthwith terminate and there shall be a vacancy on the Supervisory Board
of UPC to be filled in accordance with Section 10.2(b) of this Agreement.
(d) Resignation. At such time as Philips Media ceases to be entitled
-----------
to nominate a member of the Supervisory Board of UPC, Philips Media shall, at
the request of UIHI or JVI, take all such action as is necessary to cause such
Philips Media Nominee to resign as a member of the Supervisory Board of UPC or
take all such action as may be necessary pursuant to UPC's Articles of
Association and the law of The Netherlands to remove such Philips Media Nominee.
(S)10.3 Meetings; Committees. (a) Notice; Access to Information.
-------------------- -----------------------------
UPC shall afford the Philips Media Nominee reasonable notice of all meetings of
the Supervisory Board of UPC, which notice shall be given at least as far in
advance of such meetings as such notice is
(37)
afforded to the other members of the Supervisory Board of UPC and not fewer than
five Business Days in advance of the meeting with respect to which such notice
applies. The Philips Media Nominee shall be entitled to receive all information
provided to all other members of the Supervisory Board of UPC in such nominee's
capacity as a member of the Supervisory Board of UPC and shall have such access
to the management and books and records of UPC as is afforded to the other
members of the Supervisory Board of UPC or is necessary to protect the rights of
Philips under this Agreement.
(b) Quorum. A quorum for the transaction of business shall be
------
present at a meeting of the Supervisory Board of UPC if a majority of the
members then in office are present (unless such members are present solely to
object to such meeting). Each of UIHI and JVI shall do all things necessary,
including, but not limited to, voting, or causing to be voted, any UPC Ordinary
Shares directly or indirectly owned or controlled by either of them to amend the
Articles of Association of UPC, to give effect to the preceding sentence. If at
any meeting of the Supervisory Board of UPC there shall be less than a quorum
present, a majority of those present may adjourn the meeting from time to time
until a quorum shall have been obtained.
(c) Committees. The Supervisory Board of UPC may, in its discretion,
----------
designate from among its members one or more committees. Such committees shall
have and may exercise such powers as shall be conferred or authorized by the
resolution appointing them; provided that, during any period in which Philips
Media is entitled to nominate a member of the UPC Supervisory Board, (x) such
Philips Media Nominee shall be entitled to receive notice of and attend meetings
of any such committee and (y) no such committee shall be empowered to take any
of the actions requiring the consent of the Philips Media Nominee pursuant to
Sections 10.4 and 10.5 of this Agreement unless the Philips Media Nominee is a
member of such committee and votes in favor of taking such action. Each of UIHI
and JVI shall do all things necessary, including, but not limited to, voting, or
causing to be voted, any UPC Ordinary Shares directly or indirectly owned or
controlled by either of them to amend the Articles of Association of UPC, to
give effect to the preceding sentences.
(S)10.4 Approval of Certain Actions. During such period as the
---------------------------
Sellers and their Affiliates continue to hold Preference Shares or Increasing
Rate Preference Shares (including, without limitation, any Preference Shares
issued to UPC in settlement of the SAR), as the case may be, with an aggregate
Fair Market Value in excess of $50.0 million, the following actions shall
require the approval of the Philips Media Nominee to the Supervisory Board of
UPC, which approval shall not be unreasonably withheld:
(a) a merger or consolidation of UPC with or into (x) UIHI or (y) any
other entity which is not a direct or indirect wholly owned subsidiary of
UPC;
(b) the sale, transfer or other disposition or encumbrance (other than
Permitted Liens), in one transaction or a series of related transactions,
by UPC or any Subsidiary of UPC of assets aggregating more than 30% of the
consolidated assets or generating more than 30% of the consolidated revenue
from continuing operations of UPC to an entity that is not a direct or
indirect majority owned Subsidiary of UPC; provided that Philips Media
(38)
shall cause the Philips Media Nominee to vote to approve any encumbrance
granted, or proposed to be granted, by UPC or any Subsidiary of UPC in
connection with any bona fide financing transaction entered into, or
proposed to be entered into, by UPC or any Subsidiary of UPC;
(c) the sale, transfer or other disposition or encumbrance (other than
Permitted Liens), in one transaction or a series of related transactions of
any assets of UPC or any of its Subsidiaries that have a fair market value
in excess of U.S. $5.0 million or for which the net proceeds received in
connection therewith exceeds U.S. $5.0 million, to any person or entity for
less than fair market value or otherwise on terms less favorable to UPC or
any such Subsidiary than those generally found in an arm's-length
transaction; provided that Philips Media shall cause the Philips Media
Nominee to vote to approve any encumbrance granted, or proposed to be
granted, by UPC or any Subsidiary of UPC in connection with any bona fide
financing transaction entered into, or proposed to be entered into, by UPC
or any Subsidiary of UPC;
(d) the acquisition by UPC or any Subsidiary of UPC of any asset at a
price in excess of fair market value or otherwise on terms less favorable
to UPC or any such Subsidiary than those generally found in an arm's length
transaction;
(e) except to the extent provided in Sections 10.4(b), (c) or (f),
hereof, the issuance, sale, transfer or other disposition or encumbrance
(other than Permitted Liens), in one transaction or a series of related
transactions, of any debt or equity interest in UPC or any Subsidiary of
UPC for less than fair market value;
(f) a proposal to declare any dividend or to redeem or otherwise make
any distribution in respect of the equity interests of UPC, other than
dividends or distributions which are (i) made in the ordinary course of
business consistent with past practice, (ii) payable in UPC Ordinary Shares
or (iii) contemplated by this Agreement;
(g) the discontinuance, winding up, dissolution or liquidation of the
affairs of UPC or of any Subsidiary of UPC with assets or earnings for the
previous fiscal year aggregating more than 20% of UPC's consolidated assets
or revenue from operations (a "MAJOR SUBSIDIARY") unless in connection
therewith, such affairs will be continued in any Subsidiary of UPC or in
UPC itself;
(h) the taking of any action which would subject UPC to the "large
company" (struktuur) regime under the law of The Netherlands;
(i) any amendment, change, modification, revision, rescission or
repeal of the Articles of Association or the Rules and Regulations of the
Supervisory Board of UPC which could have an adverse effect on the rights
or interests of Philips Media in respect of the governance of UPC or any
voluntary adoption by UPC of the struktuur regime under the law of The
Netherlands; and
(j) the making by UPC or any Major Subsidiary of a general assignment
for the
(39)
benefit of the creditors of UPC or such Major Subsidiary, the appointment
of a trustee, receiver, assignee, liquidator or similar official for UPC or
any Major Subsidiary or for substantially all of the property of UPC or any
Major Subsidiary, the commencement by UPC or any Major Subsidiary of any
proceeding under any reorganization, arrangement, adjustment of debt,
relief of debtors, dissolution, insolvency or liquidation or similar law of
any jurisdiction relating to UPC or any Major Subsidiary, or the
determination to leave unstayed or otherwise forbear objection to any such
proceeding or action taken or commenced by any person other than UPC or any
UPC Major Subsidiary or the taking of any step preparatory to taking any of
the foregoing actions by UPC or any Major Subsidiary;
provided that, this Section 10.4 shall not apply to (i) any grant of any
security interest pursuant to any Security Document, (ii) any action taken by
UPC or any Subsidiary of UPC with the agreement of all of the relevant Finance
Parties after the occurrence of any material default under the TD Facility which
continues unremedied and unwaived for a period of 30 consecutive days, so long
as (x) such action does not require any Austrian Subsidiary to upstream any
funds which Philips has been required to advance to any Austrian Subsidiary
pursuant to its obligations under the Vienna Guaranty or the other Vienna
Agreements and (y) such action would not materially and adversely affect the
magnitude of the potential exposure of Philips under the Vienna Guaranty or the
other Vienna Agreements or would not result in a claim being made against
Philips pursuant to the Vienna Guaranty or the other Vienna Agreements, and
(iii) any action taken by any Finance Party under the TD Facility or any
Security Document entered into in connection with the TD Facility (collectively
the "FINANCE DOCUMENTS") in connection with the enforcement of any security
interest created by any Security Document, so long as such action is either (x)
required or permitted to be taken by a Finance Party under any Finance Document
or (y) required to be taken by UPC or any Subsidiary of UPC under any Finance
Document.
(S)10.5 Actions with Respect to the Vienna Agreements. During any
---------------------------------------------
period of time during which Philips retains any liability pursuant to or on
account of the Vienna Guaranty or the other Vienna Agreements the following
matters shall require the approval of the Philips Media Nominee, unless such
transaction results in the irrevocable elimination of any and all liability of
Philips relating to or arising out of the Vienna Guaranty and the other Vienna
Agreements:
(a) a merger or consolidation of UPC with or into (x) UIHI or (y) any
other entity which is not a direct or indirect wholly-owned subsidiary of
UPC;
(b) the issuance or sale, transfer or other disposition of any debt
or equity interest in any Austrian Subsidiary other than in compliance with
Section 8.6(d) or other than (i) loans or advances to any Austrian
Subsidiary made for contemporaneous value (x) by UPC or (y) by a TD Lender
pursuant to, and in accordance with the terms of, the TD Facility or (ii)
indebtedness of any Austrian Subsidiary (other than CNA) to trade creditors
incurred in the ordinary course of business for bona fide commercial
purposes;
(c) a proposal to declare any dividend or to redeem or otherwise make
any
(40)
distribution in respect of the equity interests of Telekabel Wien if, after
giving effect to (x) such dividend, redemption or other distribution and
(y) any budgeted losses projected to occur at Telekabel Wien through the
end of the next succeeding full fiscal year, such dividend, redemption or
other distribution would cause the equity capital of such TeleKabel Wien to
fall below 337.3 million Austrian Schillings.
(d) the sale, transfer or other disposition or encumbrance (other
than Permitted Liens), in one transaction or a series of related
transactions, by CNA or any Subsidiary of CNA of assets aggregating more
than 30% of the consolidated assets or generating more than 30% of the
consolidated revenues from continuing operations of CNA to an entity that
is not a direct or indirect wholly-owned Subsidiary of CNA;
(e) the sale, transfer or other disposition or encumbrance (other
than Permitted Liens), in one transaction or a series of related
transactions of any assets of CNA or any of its Subsidiaries that have a
fair market value in excess of U.S. $5.0 million or for which the net
proceeds received in connection therewith exceeds U.S. $5.0 million, to any
person or entity for less than fair market value or otherwise on terms less
favorable to CNA or any such Subsidiary than those generally found in an
arm's-length transaction;
(f) the acquisition by CNA or any Subsidiary of CNA of any asset
which has a fair market value in excess of U.S. $5.0 million or of which
the aggregate purchase price (whether in cash, securities or other assets
and whether or not contingent) exceeds $ 5.0 million from any person or
entity at a price in excess of fair market value or otherwise on terms less
favorable to CNA or any such Subsidiary than those generally found in an
arm's length transaction;
(g) the making by CNA or any Subsidiary of CNA of a general
assignment for the benefit of the creditors of CNA or any such Subsidiary,
the appointment of a trustee, receiver, assignee, liquidator or similar
official for CNA or any Subsidiary of CNA or for substantially all of the
property of CNA or any Subsidiary of CNA, the commencement by CNA or any
Subsidiary of CNA of any proceeding under any reorganization, arrangement,
adjustment of debt, relief of debtors, dissolution, insolvency or
liquidation or similar law of any jurisdiction relating to CNA or any
Subsidiary of CNA, or the determination to leave unstayed or otherwise
forbear objection to any such proceeding or action taken or commenced by
any person other than CNA or any Subsidiary of CNA or the taking of any
step preparatory to taking any of the foregoing actions by CNA or any
Subsidiary of CNA;
(h) any amendment, change, modification, revision, rescission or
repeal of any Vienna Agreement or the Articles of Association of any
Austrian Subsidiary that would increase Philips' exposure to Damages on
account of any obligation under any Vienna Agreement; and
(i) any other action including, but not limited to, (A) the
acquisition by Telekabel Wien of any debt or equity interest in any Person,
(B) the selection of management of Telekabel Wien which does not comply
with the requirements of Section II.1.d of the
(41)
Vienna Guaranty, (C) any action which would cause the development of the
Vienna cable network to fall below normally applicable European standards
and (D) any action which results in the cash flow of Vienna being used
primarily for any other purpose other than the fulfillment of the
objectives of Section II of the Vienna Guaranty, which, in any such case,
would materially and adversely affect the magnitude of the potential
exposure of Philips under the Vienna Guaranty or the other Vienna
Agreements or would result in a claim being made against Philips pursuant
to the Vienna Guaranty or the other Vienna Agreements; provided, that
--------
unless such action would result in a claim being made against Philips
pursuant to the Vienna Agreements, this clause 10.5(i) shall not restrict
the ability of any Austrian Subsidiary to upstream funds to UPC;
provided that, this Section 10.5 shall not apply to (i) any grant of any
security interest pursuant to any Security Document, (ii) any action taken by
UPC or any Subsidiary of UPC with the agreement of all of the relevant Finance
Parties after the occurrence of any material default under the TD Facility which
continues unremedied and unwaived for a period of 30 consecutive days, so long
as (x) such action does not require any Austrian Subsidiary to upstream any
funds which Philips has been required to advance to any Austrian Subsidiary
pursuant to its obligations under the Vienna Guaranty or the other Vienna
Agreements and (y) such action would not materially and adversely affect the
magnitude of the potential exposure of Philips under the Vienna Guaranty or the
other Vienna Agreements or would not result in a claim being made against
Philips pursuant to the Vienna Guaranty or the other Vienna Agreements, or (iii)
any action taken by any Finance Party in connection with the enforcement of any
security interest created by any Security Document, so long as such action is
either (x) required or permitted to be taken by a Finance Party under any
Finance Document or (y) required to be taken by UPC or any Subsidiary of UPC
under any Finance Document.
(S)10.6 Effectiveness of Article X. Notwithstanding anything to the
--------------------------
contrary under this Article X, Sections 10.2 through 10.5 shall become effective
upon the Closing and shall have no force or effect otherwise.
ARTICLE XI
TERMINATION; EFFECT OF TERMINATION
----------------------------------
(S)11.1 Events of Termination. This Agreement may be terminated and
---------------------
the transactions contemplated hereby may be abandoned at any time prior to the
Closing:
(a) by mutual consent of the Parties;
(b) by Philips Media, if, upon the expiration of the Financing
Period, UPC has not entered into the TD Facility, or any other credit
facility meeting the requirements of Section 8.9(a) hereof, on terms which
provide UPC with sufficient funds to finance the transactions contemplated
hereby;
(c) by UIHI or Philips Media, if UIHI and Philips Media at any time
agree in writing that (i) the Required Consents cannot be obtained, (ii)
UIHI and/or UPC will be
(42)
unable to obtain financing in an amount sufficient to consummate the
Transaction or (iii) the Transaction cannot otherwise be consummated;
(d) by UIHI or Philips Media, if the Closing Date shall not have
occurred on or prior to December 11, 1997, unless the failure of the
Closing Date to occur on or prior to December 11, 1997 is due to the
material breach of any representation or warranty, or material failure to
perform any of its covenants or agreements contained in this Agreement by
the Party seeking to so terminate; or
(e) by UIHI or Philips Media, if there shall be any law or regulation
of any Governmental Authority that makes consummation of the transactions
contemplated by this Agreement illegal or otherwise prohibited, or if any
judgment, injunction, order or decree of any competent authority
prohibiting such transaction is entered and such judgment, injunction,
order or decree shall have become final and nonappealable.
(S)11.2 Effect of Termination. In the event that this Agreement
---------------------
shall be terminated pursuant to Section 11.1 hereof all further obligations of
the Parties hereto under this Agreement (other than the obligations of UIHI and
JVI pursuant to Sections 11.3 and 12.3, which obligations will remain in full
force and effect) shall terminate without further liability or obligation of any
Party to the other hereunder; provided, however, that no Party shall be released
from liability hereunder if this Agreement is terminated and the transactions
abandoned by reason of (i) willful failure of such Party to have performed its
obligations hereunder or (ii) any knowing misrepresentation made by such Party
of any matter set forth herein.
(S)11.3 Actions upon Termination. Upon any termination of this
------------------------
Agreement (other than a termination of this Agreement by UIHI pursuant to
Section 11.1(d) which is occasioned by the material untruth or inaccuracy of any
representation or warranty made by any Seller in Article III of this Agreement
or the material breach by Philips Media of any of its covenants or agreements
contained herein), UIHI and JVI will, upon the request of Philips Media, cause
their representatives on the Supervisory Board of UPC to vote, and will, if
necessary, vote their respective shares in UPC, to cause UPC (i) to refinance
(and to redeem for cash) the PIK Notes on commercially reasonable terms and for
a price equal to the aggregate principal amount thereof plus all accrued and
----
unpaid interest thereon and (ii) to purchase for cash the UIHI Shares at a price
equal to the Fair Market Value of such securities determined as of the date on
which such purchase is made; provided that nothing contained herein shall
require any such representative to violate any fiduciary duty or other
requirement imposed by law in connection therewith. If applicable, UIHI and UPC
shall use their reasonable best efforts (including the arranging of interim
financing) to cause the transactions contemplated by the immediately preceding
sentence to be consummated on or prior to December 11, 1997.
ARTICLE XII
MISCELLANEOUS
-------------
(S)12.1 Survival of Representations and Warranties. Except for the
------------------------------------------
representations and warranties of the Sellers set forth in Sections 3.1 and 3.2
hereof, the representations and
(43)
warranties of the UIHI Parties set forth in Section 4.1 hereof and the
representations and warranties of UPC set forth in Sections 5.1 and 5.4 hereof,
which shall survive indefinitely, the representations and warranties of the
Parties hereto contained in this Agreement shall not survive the Closing.
(S)12.2 Applicable Law; Submission to Jurisdiction. (a) This
------------------------------------------
Agreement and the legal relations between the Parties shall be governed by and
construed in accordance with the laws of the State of New York, without regard
to the conflict of laws rules thereof.
(b) Each of the Parties agrees that any legal action or proceeding
with respect to this Agreement may be brought in the Courts of the State of New
York or the United States District Court for the Southern District of New York
and, by execution and delivery of this Agreement, each Party hereby irrevocably
submits itself in respect of its property, generally and unconditionally to the
non-exclusive jurisdiction of the aforesaid courts in any legal action or
proceeding arising out of this Agreement. Each Party irrevocably waives any
objection which it may now or hereafter have to the laying of venue of any of
the aforesaid actions or proceedings arising out of or in connection with this
Agreement brought in the courts referred to in the preceding sentence. Each
Party consents to process being served in any such action or proceeding by the
mailing of a copy thereof to the address set forth opposite its name below and
agrees that such service upon receipt shall constitute good and sufficient
service of process or notice thereof. Nothing in this paragraph shall affect or
eliminate any right to serve process in any other matter permitted by law.
(S)12.3 Confidentiality. (a) Each Party will, and will cause its
---------------
Affiliates to, maintain the confidentiality of this Agreement and the
transaction contemplated hereby. No Party (nor any Affiliate thereof) shall
issue any press release or make any other statement intended for public
distribution or any announcement or other disclosure relating to, or connected
with this Agreement and the transaction contemplated hereby without obtaining
the prior approval of the other Parties; provided, that UIHI and UPC may
disclose such terms of the transactions contemplated hereby as they reasonably
consider necessary to obtain financing for such transactions or to obtain the
Necessary Consents.
(b) Notwithstanding the foregoing provisions, each of the Sellers,
the UIHI Parties and UPC may, upon written notice to and consultation with the
other Parties, issue or make a press release, announcement or other disclosure
regarding this Agreement and the transactions contemplated hereby which such
party reasonably determines to be required under applicable law or the
applicable rules and regulations of any stock exchange, automated quotation
system or self-regulatory organization on which such Party's securities are
listed or of which such Party is a member or participant.
(c) Each party will, and will cause its Affiliates and the Philips
Media Nominee to, maintain in confidence all information received from UPC
concerning the business, finances or methods of doing business used by UPC, any
of its Subsidiaries or any other Entity in which UPC or any of its Subsidiaries
directly or indirectly owns any interest or of their respective dealings,
transactions or affairs, and shall use such information only for the benefit of
UPC, such
(44)
Subsidiary or other Entity as the case may be, and shall not disclose any such
information to a third party or make any unauthorized use thereof. Each Party
will, and will cause its Affiliates and the Philips Media Nominee to, treat all
such information with the same degree of care against disclosure or unauthorized
use that it affords to its own confidential information. Notwithstanding the
foregoing provisions, the obligation of confidentiality and non-use shall not
apply to any information that (a) was not previously treated as confidential by
UPC, such Subsidiary or other Entity, (b) is or becomes generally available to
the public through no fault of the receiving party, (c) is independently
developed by the receiving party, (d) is received in good faith from a third
party who discloses such information to the receiving party on a non-
confidential basis or (e) the receiving party reasonably determines is required
to be disclosed by it under applicable law or the applicable rules and
regulations of any stock exchange, automated quotation system or self-regulatory
organization on which such party's securities are listed or of which such party
is a member or participant. In addition, the obligation of confidentiality shall
not apply to the following information with respect to each of the multi-channel
television operating systems in which UPC has a direct or indirect interest:
homes in service area, homes passed, basic subscribers, premium subscribers,
basic penetration, revenues per subscriber, system capitalization per
subscriber, and EBITDA.
(S)12.4 Effect on Shareholder's Agreement. (a) Pre-Closing Effect.
--------------------------------- ------------------
Prior to the Closing Date, the Shareholders' Agreement shall remain in full
force and effect; provided, that the UIHI Parties shall have control of the day-
to-day management of UPC, as provided in Section 10.1 hereof, during the period
from the date hereof up to and including the Closing Date.
(b) Consummation of the Private Placement; Cash Alternative. If (x)
-------------------------------------------------------
the Private Placement is, or (y) the transactions contemplated by Article IIA
hereof are, consummated, the Shareholders' Agreement shall terminate upon the
consummation thereof and Philips' sole rights to participate in the management
of UPC shall be those rights afforded to it under Article X hereof or under
applicable law.
(c) Alternate Consideration Event. If there occurs an Alternate
-----------------------------
Consideration Event then, notwithstanding anything contained therein, the
Shareholders' Agreement shall remain in full force and effect until such time as
all of the equity interests (including, but not limited to, any ordinary or
preference shares) in UPC held by Philips are redeemed or repurchased by UPC;
provided, that the UIHI Parties shall have control of the day-to-day management
of UPC, as provided in Section 10.1 hereof, until the Conversion Date; provided,
further, that, after the Conversion Date, Philips shall be entitled to
participate fully in the day-to-day management of UPC, including, but not
limited to, participation in the selection of the management board of UPC and
the provisions of the immediately preceding proviso shall be of no further force
and effect.
(S)12.5 Election. (a) On or prior to the date (such date the
--------
"Election Date") which is the earlier to occur of (x) October 31, 1997, and (y)
the first Business Day immediately succeeding the date of the consummation of
the pending sale by a subsidiary of UIHI of certain Argentine cable interests as
previously publicly disclosed in UIHI's Form 8-K filed with the U.S. Securities
and Exchange Commission on September 10, 1997, UIHI shall, on its own behalf and
(45)
on behalf of JVI and UPC, by written notice delivered to Philips Media,
irrevocably elect to comply with either Article II or Article IIA hereof. JVI
and UPC hereby agree that, notwithstanding anything to the contrary contained
herein or any notice to the contrary, the Sellers shall be entitled to rely
conclusively on such notice, and JVI and UPC shall be bound by such election.
(b) At UIHI's option, UIHI may on its own behalf, and on behalf of
JVI and UPC, on or prior to the Election Date, irrevocably elect, by written
notice delivered to Philips Media, to cause UPC to satisfy its obligation to
issue the SAR on the Closing Date by agreeing to pay Philips Media an amount in
U.S. Dollars equal to the SAR Cash Payment Amount at Closing in lieu of issuing
the SAR. Failure to make such elections in a timely fashion shall obligate UIHI
to issue the SAR. JVI and UPC hereby agree that, notwithstanding anything to
the contrary contained herein or any notice to the contrary, the Sellers shall
be entitled to rely conclusively on such notice, and JVI and UPC shall be bound
by such election.
(S)12.6 Headings. The descriptive headings of the several Articles
--------
and Sections of this Agreement are inserted for convenience only, do not
constitute a part of this Agreement and shall not affect in any way the meaning
or interpretation of this Agreement.
(S)12.7 Binding Effect; Benefit; Assignment. This Agreement shall
-----------------------------------
inure to the benefit of and be binding upon the Parties hereto and their
respective successors and permitted assigns, but neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned by any of
the Parties without the prior written consent of the other Parties; provided
that any Seller under this Agreement may assign its rights hereunder in whole,
but not in part, to any wholly-owned Subsidiary of PENV. Nothing in this
Agreement, expressed or implied, is intended to confer on any person other than
the Parties or their respective successors and permitted assigns, any rights,
remedies, obligations or liabilities under or by reason of this Agreement.
(S)12.8 Counterparts. This Agreement may be executed in two or more
------------
counterparts, all of which taken together shall constitute one instrument.
(S)12.9 Entire Agreement. This Agreement and the other documents
----------------
referred to herein or delivered pursuant hereto, collectively contain the entire
understanding of the Parties with respect to the subject matter contained herein
and supersede all prior agreements and understandings, oral and written, with
respect thereto unless specifically set forth to the contrary herein.
(S)12.10 Waiver; Amendments. (a) General. At any time prior to the
------------------ -------
Closing, the Parties hereto may (i) extend the time for the performance of any
of the obligations or other acts of any Party hereto, (ii) waive any
inaccuracies in the representations and warranties contained herein or in any
document, certificate or writing delivered pursuant hereto, or (iii) waive
compliance with any of the agreements or conditions contained herein. Such
extension or waiver shall be valid only if set forth in an instrument in writing
signed by all the Parties hereto. This Agreement may not be changed orally, but
only by an agreement in writing signed by all of the Parties. Each other
Philips Person shall be bound by any amendment or waiver authorized under
(46)
this Section 12.10, whether or not it consents to such amendment or waiver.
(b) Certain Matters. The parties hereto acknowledge that
---------------
modifications to Articles II and IIA of this Agreement may become necessary
prior to the Closing in order to facilitate the closing of the TD Facility and
to meet local legal requirements. Each party hereto agrees to negotiate in good
faith in respect of any such modification requested by each other party, so long
as the substantive provisions (including without limitation the economic
benefits) of the Agreement relating to the consenting party's rights and
obligations are not adversely affected.
(S)12.11 Severability. If any term, provision, covenant or
------------
restriction contained in this Agreement is held by a court of competent
jurisdiction or other authority to be invalid, void, unenforceable or against
its regulatory policy, the remainder of the terms, provisions, covenants and
restrictions contained in this Agreement shall remain in full force and effect
and shall in no way be affected, impaired or invalidated.
(S)12.12 Fees and Expenses. Except for costs associated with hedging
-----------------
currency risks, which costs shall be borne by UPC and as otherwise expressly
agreed herein, all costs and expenses incurred in connection with this Agreement
and the consummation of the transactions contemplated hereby and thereby shall
be paid by the Party incurring such costs and expenses.
(S)12.13 Notices. All notices, requests, demands, waivers and other
-------
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given if delivered in person or
by mail or overnight courier, postage prepaid, or sent by telex, telegram or
telecopier (confirmed by mail with postage prepaid), as follows:
(a) if to either Seller, to it at:
Philips Media B.V.
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Attention: Corporate Legal Department
with a copy to:
White & Case
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., Esq.
(b) if to UPC, to it at:
(47)
United and Philips Communications B.V.
▇▇▇▇. ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇
Attention: Senior Managing Director
Telephone: (▇▇-▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇-▇▇) ▇▇▇-▇▇▇▇
(c) and if to either UIHI Party, to it at
United International Holdings, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: President and Legal Department
with a copy to:
Holme ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
Suite 4100
1700 Lincoln
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: W. ▇▇▇▇ ▇▇▇▇▇▇, Esq.
or to such other Person or address as any Party shall specify by notice in
writing to each of the other Parties. Except for a notice of a change of
address, which shall be effective only upon receipt thereof, all such notices,
requests, demands, waivers and communications shall be deemed to have been
received on the date of delivery unless if mailed, in which case on the third
Business Day after the mailing thereof, and unless if by overnight courier, in
which case on the second Business Day after the dispatch thereof.
(S)12.14 Currency. All references in this Agreement to "U.S.
--------
Dollars" or "U.S. $" are references to the lawful currency of the United States.
All references to "NLG" or "Dutch Guilders" are references to the lawful
currency of The Netherlands.
[SIGNATURE PAGE FOLLOWS]
(48)
IN WITNESS WHEREOF, the each of the Parties hereto have caused this
Agreement to be duly executed as of the date first above written.
PHILIPS MEDIA B.V.
By /s/ M.F.L. SEVENANS
______________________________________
Name: M.F.L. Sevenans
Title: Managing Director
By /s/ R.J.A. ▇▇ ▇▇▇▇▇
______________________________________
Name: R.J.A. de Lange
Title: Managing Director
PHILIPS MEDIA NETWORKS B.V.
By /s/ M.F.L. SEVENANS
______________________________________
Name: M.F.L. Sevenans
Title: Managing Director
By /s/ R.J.A. ▇▇ ▇▇▇▇▇
______________________________________
Name: R.J.A. de Lange
Title: Managing Director
UNITED INTERNATIONAL HOLDINGS, INC.
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
_____________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Executive Vice President
JOINT VENTURE, INC.
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
_____________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Senior Vice President
(49)
UNITED AND PHILIPS COMMUNICATIONS B.V.
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
______________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Senior Managing Director
By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇-▇▇▇▇▇
_____________________________________
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇-▇▇▇▇▇
Title: Managing Director
(50)
