Exhibit 2.1
CONFORMED COPY
INVESTMENT AGREEMENT
by and between
SBS BROADCASTING S.A.,
UNITED PAN-EUROPE COMMUNICATIONS N.V.
and
UNITED INTERNATIONAL HOLDINGS, INC., d/b/a UNITEDGLOBALCOM
Dated as of June 29, 1999
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS......................................................2
ARTICLE II
PURCHASE OF COMMON SHARES........................................2
Section 2.1. Redemption of Convertible Debentures;
Conversion into Common Shares......................2
Section 2.2. Private Placement of Common Shares..........................5
Section 2.3. Standstill..................................................6
Section 2.4. Exceptions to Standstill and Transfer
Restrictions....................................8
Section 2.5. Registration Rights.........................................9
ARTICLE III
SETTLEMENT OF CONVERTIBLE DEBENTURES; CLOSING OF
PRIVATE PLACEMENT SHARES; CONDITIONS............................11
Section 3.1. Purchase of Convertible Debentures and
Issuance of Common Shares....................11
Section 3.2. Closing of Private Placement Shares........................12
Section 3.3. Conditions to Obligations of United
Parties......................................12
Section 3.4. Conditions to Obligations of Company.......................15
ARTICLE IV
REPRESENTATIONS AND WARRANTIES..................................17
Section 4.1. Representations and Warranties of
Company ....................................................17
(a) Corporate Existence ..............................................17
(b) Authorization; Enforcement..........................................18
(c) Compliance with Obligations.........................................19
(d) Consents and Approvals..............................................19
(e) Exchange Act Reports ..............................................20
(f) Outstanding Capital Stock...........................................21
(g) Convertible Debentures..............................................22
(h) Listing of Common Shares............................................22
Section 4.2. Representations and Warranties of United
Parties.............................................22
(a) Corporate Existence ..............................................23
(b) Authorization; Enforcement..........................................23
(c) Compliance with Obligations.........................................23
(d) Consents and Approvals..............................................24
(e) Investor Exchange Act Reports.......................................24
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(g) Status and Investment Intent........................................26
(h) Financial Advisors and Brokers......................................26
(i) Ownership of Common Shares..........................................26
(j) Permitted Basket Investments and Sale of
Qualified Capital Stock.....................27
ARTICLE V
COVENANTS.......................................................27
Section 5.1. Covenants of Company.......................................27
(a) Registration Rights ..............................................27
(b) Conversion Rights and Sale of Common
Shares ..............................................27
(c) Information ..............................................28
(d) Director of Company ..............................................28
(e) Actions Affecting Share Price.......................................30
(f) Dividends or Stock Splits...........................................31
(g) Listings Outside the United States..................................31
Section 5.2. Covenants of Parent and Investor...........................32
(a) Transfers ..............................................32
(b) Voting of Common Shares and Other Voting
Securities..................................32
(c) Actions Affecting Share Price.......................................33
(d) Permitted Investments ..............................................34
ARTICLE VI
FURTHER AGREEMENTS..............................................36
Section 6.1. Cooperation................................................36
Section 6.2. Fees and Expenses..........................................36
Section 6.3. Publicity..................................................36
ARTICLE VII
TRANSFER RESTRICTIONS...........................................37
Section 7.1. Transfer Restrictions......................................37
Section 7.2. Company's Right of First Refusal...........................38
ARTICLE VIII
MISCELLANEOUS...................................................41
Section 8.1. Termination................................................41
Section 8.2. Survival of Representations and
Warranties...............................................43
Section 8.3. Legend ....................................................43
Section 8.4. Severability...............................................44
Section 8.5. Specific Enforcement.......................................44
Section 8.6. Entire Agreement...........................................45
Section 8.7. Counterparts...............................................45
Section 8.8. Notices....................................................45
Section 8.9. Waivers....................................................47
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Section 8.10. Beneficial Ownership......................................47
Section 8.11. Adjustment of Amounts of Common
Shares..................................................48
Section 8.12. Submission to Jurisdiction; Consent to
Service of Process............................48
Section 8.13. Headings..................................................49
Section 8.14. Successors and Assigns....................................49
Section 8.15. Governing Law.............................................50
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EXHIBITS
1 Definitions
2 Registration Rights
3 Form of Certificate of Officers of Company,
pursuant to Section 3.3(iii) of the Agreement
4A Form of Opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, pursuant
to Section 3.3(iv) of the Agreement
4B Form of Opinion of ▇.▇. ▇▇▇▇▇▇, pursuant to
Section 3.3(iv) of the Agreement
5 Form of Letter Agreement, pursuant to Section
3.3(vi) of the Agreement
6A Form of Certificate of Officers of Parent,
pursuant to Section 3.4(iii) of the Agreement
6B Form of Certificate of Officers of Investor, pursuant to
Section 3.4(iii) of the Agreement
7A Forms of Opinions of ▇▇▇▇▇▇▇▇ Chance, pursuant to Section
3.4(iv) of the Agreement
7B Form of Opinion of Holme ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, pursuant to
Section 3.4(iv) of the Agreement
8 Articles of Incorporation of Company
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INVESTMENT AGREEMENT, dated as of June 29, 1999 (the
"Agreement"), by and between SBS Broadcasting S.A., a company organized under
the laws of Luxembourg (the "Company"), on the one hand, and United Pan-Europe
Communications N.V., a public corporation organized with limited liability under
the laws of The Netherlands (the "Investor"), and United International Holdings,
Inc., a Delaware corporation doing business as UnitedGlobalCom and the holder of
approximately 62.5% of the outstanding capital stock of the Investor (the
"Parent", and together with the Investor, the "United Parties").
WHEREAS, the Company and the Investor want to strengthen their
existing relationship, and are currently discussing pursuing additional business
opportunities together, including broadcasting or programming ventures in their
respective areas of operation;
WHEREAS, the Company and the United Parties want to provide
for the acquisition by the Investor of up to 20% of the outstanding share
capital of the Company, subject to the terms and conditions provided herein;
WHEREAS, the Company wants to redeem $155,250,000 aggregate
principal amount of its 7.25% Convertible Subordinated Debentures Due 2005 (the
"Convertible Debentures"), issued under an Indenture, dated as of August 2, 1995
(the "Indenture"), between the Company and State Street Bank and Trust Company,
as Trustee (the "Trustee"), which are convertible, at the option of the holder
thereof, into Common Shares;
WHEREAS, in order to acquire Common Shares, the
Company and the United Parties want the Investor to provide a
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backstop facility to purchase Convertible Debentures that would otherwise be
tendered for redemption, to convert any such Convertible Debentures into Common
Shares and to fund the redemption of any Convertible Debentures actually
redeemed in exchange for the issuance of Common Shares by the Company; and
WHEREAS, if sufficient Common Shares are not acquired by the
Investor pursuant to the backstop facility, the Company and the United Parties
want the Investor to acquire by private placement a number of Common Shares
sufficient to bring the aggregate number of Common Shares owned by it up to
3,000,000 Common Shares;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Unless otherwise indicated, defined terms in this Agreement
and in the Exhibits to this Agreement have the meanings assigned to them in
Exhibit 1.
ARTICLE II
PURCHASE OF COMMON SHARES
Section 2.1. Redemption of Convertible Debentures;
Conversion into Common Shares. Subject to the terms and conditions stated
herein, the Company and the United Parties agree as follows:
(a) In connection with the redemption by the Company of the
Convertible Debentures, the Investor agrees to make arrangements
whereby holders of Convertible Debentures may, should they so elect,
sell their Convertible Debentures to the Investor following notice of
such
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redemption and prior to the close of business (at the place where the
Convertible Debentures may be presented for conversion) on the
redemption date specified in such notice (the "Expiration Time"). Such
sales shall be at the Redemption Price then applicable under the
Indenture, plus accrued interest from the first preceding interest
payment date under the Indenture to the date of redemption (the
"Redemption Consideration"). In the event that any holder tenders its
Convertible Debentures for redemption and not for purchase, the
Investor agrees that the Redemption Consideration deposited by it with
the Purchase Agent pursuant to Section 3.1 allocable to such
Convertible Debentures shall be applied by the Trustee to the
redemption of such Convertible Debentures in exchange for the issuance
by the Company of Common Shares pursuant to Section 3.1. The obligation
of the Investor to purchase such Convertible Debentures and provide
funds for such redemption is referred to hereinafter as the "Backstop
Facility". The Investor hereby authorizes the Company to advise holders
of Convertible Debentures of this Agreement and of any agreement
entered into between the Investor and the Purchase Agent (as defined
below) in any notice of redemption or other similar notice or
communication regarding the redemption mailed or published by the
Company. The notice of redemption to holders of Convertible Debentures
shall provide that in the event any holder does not surrender the
Convertible Debentures held by it for redemption, purchase or
conversion into Common Shares prior to the Expiration Time, then such
Convertible Debentures shall be deemed to have been tendered for
purchase by the Investor.
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(b) The Investor agrees to appoint State Street Bank and Trust
Company as its agent (the "Purchase Agent") to accept tenders of
Convertible Debentures by holders. Immediately following payment by the
Investor for any Convertible Debentures tendered to the Purchase Agent
pursuant to Sections 2.1(a) and 3.1 and prior to the Expiration Time,
the Investor shall give the conversion notice required by the Indenture
to the Conversion Agent requesting that all Convertible Debentures
purchased by the Investor be converted into Common Shares in accordance
with the Indenture, and shall instruct the Purchase Agent to surrender
to the Conversion Agent all such Convertible Debentures. The equivalent
price per Common Share paid by the Investor for the Common Shares
acquired pursuant to the Backstop Facility, calculated based on the
total Redemption Consideration paid by the Investor, is referred to
herein as the "Backstop Price".
(c) If the number of Common Shares acquired by the Investor
pursuant to paragraphs (a) and (b) above results in the United Group
having direct or indirect beneficial ownership, immediately following
acquisition of such Common Shares, of Common Shares or other Voting
Securities in excess of the Standstill Amount, the Company shall,
within twelve (12) months following the Expiration Time, purchase or
arrange for the purchase from the Investor, at a price per Common Share
equal to the price determined in accordance with paragraph (d) below, a
number of Common Shares sufficient to reduce the total number of Common
Shares and other Voting Securities beneficially owned directly or
indirectly by the United Group to a number that immediately following
such purchase is not more than
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the Standstill Amount, provided that the Company shall have no
obligation to purchase or arrange for the purchase of Common Shares
held by the United Group pursuant to this paragraph (c) if the United
Group is required to sell or transfer Common Shares pursuant to Section
7.1 because the Company has been designated a Restricted Affiliate and
is still so designated on August 31, 1999.
(d) The price per Common Share to be paid by the Company to
the Investor pursuant to any repurchase under paragraph (c) above shall
be equal to (X) the Backstop Price plus (Y) interest accrued on such
price at an annual rate of 7 1/4% from and excluding the date of
acquisition of the Common Shares pursuant to the Backstop Facility to
and including the date of purchase under paragraph (c).
Section 2.2. Private Placement of Common Shares. If,
immediately following the conversion into Common Shares of all Convertible
Debentures (if any) purchased by the Investor prior to the Expiration Time or
the issuance of Common Shares by the Company in exchange for Redemption
Consideration paid by the Investor for Convertible Debentures that are redeemed
and not purchased (but at no time thereafter), the United Group shall have
direct or indirect beneficial ownership of less than 3,000,000 Common Shares,
the Company agrees to issue and sell to the Investor, and the Investor agrees to
purchase from the Company, on and subject to the terms and conditions set forth
in this Agreement, at a price per Common Share of $35.25, a number of Common
Shares (the "Private Placement Shares") sufficient to bring the total number of
Common Shares beneficially owned directly or indirectly by the United Group,
including any Common Shares otherwise owned by the United
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Group, to 3,000,000 Common Shares, subject to adjustment of such number pursuant
to Section 8.11 (the "Minimum Stake").
Section 2.3. Standstill.
(a) During the period from the date hereof until December 29,
2001 (the "Standstill Period"), the United Parties agree that the
United Group shall not: (i) obtain direct or indirect beneficial
ownership, or cause or permit any agent to obtain beneficial ownership
on its behalf, of any Common Shares or any other Voting Securities, or
any securities convertible into or exchangeable for Common Shares or
such Voting Securities; or (ii) take any action intended to result in
the direct or indirect beneficial ownership by the United Group or by
any agent on its behalf of any Common Shares or other Voting
Securities, or any securities convertible into or exchangeable for
Common Shares or such Voting Securities; in each case if such
acquisition or action would result in direct or indirect beneficial
ownership by the United Group or by any agent on its behalf of Common
Shares or other Voting Securities, or any securities convertible into
or exchangeable for Common Shares or such Voting Securities, that taken
together would exceed the Standstill Amount, except to the extent
Common Shares in excess of the Standstill Amount are acquired in
accordance with and subject to the terms set forth in Section 2.1
above.
(b) In addition, if at any time during the Standstill Period
the Company expects that as a result of a proposed repurchase of Common
Shares or other Voting Securities by the Company the United Group would
have
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direct or indirect beneficial ownership of Common Shares or other
Voting Securities that would exceed the Standstill Amount, the Company
shall so notify the United Parties. If such repurchase offer is made
generally to holders of Common Shares or other Voting Securities (if
any) held by the United Group, the United Parties agree to tender or
cause to be tendered, and the Company agrees to repurchase, at a price
per Voting Security that is no less favorable than the price offered to
other holders of Voting Securities, a sufficient number of Common
Shares or other Voting Securities held by the United Group such that
the United Group's direct or indirect ownership of Voting Securities
immediately following such repurchase does not exceed the Standstill
Amount. If such repurchase offer is made only to specific Persons
holding Common Shares or other Voting Securities, the United Parties
agree to sell or cause to be sold, and the Company agrees to
repurchase, a sufficient number of Common Shares or other Voting
Securities (if any) held by the United Group such that the United
Group's direct or indirect ownership of Voting Securities immediately
following such repurchase does not exceed the Standstill Amount,
provided that any repurchase of Common Shares or other Voting
Securities by the Company pursuant to this sentence shall be at a price
per Voting Security that is equal to the weighted average price per
Voting Security paid by the Company to other Persons in connection with
such repurchase.
(c) Any acquisition of Common Shares by the United Group
during the Standstill Period other than pursuant to the Backstop
Facility or at the Private Placement Closing shall be in open market
transactions for cash.
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Section 2.4. Exceptions to Standstill and Transfer
Restrictions. The provisions set forth in Sections 2.3 and 7.1 shall terminate
immediately if: (i) a tender or exchange offer is made by any Person or 13D
Group (as hereinafter defined) to acquire Common Shares or other Voting
Securities that, if added to the Voting Securities (if any) already owned by
such Person or 13D Group, would represent more than the greater of (X) 10% of
the total combined voting power of all Voting Securities then outstanding
(exclusive of treasury Voting Securities held by the Company) and (Y) the
percentage that the voting power represented by the Common Shares and other
Voting Securities directly or indirectly beneficially owned by the United Group
or by any agent on its behalf bears to the total combined voting power of Voting
Securities then outstanding (exclusive of treasury Voting Securities held by the
Company) (the "Threshold Amount"); (ii) Voting Securities and/or Acquisition
Rights have been acquired subsequent to the date hereof such that any Person or
13D Group (not including any such Person or 13D Group whose shareholding exceeds
the Threshold Amount at the date hereof) directly or indirectly beneficially
owns, or becomes entitled to beneficially own, Voting Securities and/or
Acquisition Rights representing voting power in excess of the Threshold Amount;
or (iii) any Person or 13D Group (not including institutional investors holding
Voting Securities and/or Acquisition Rights as investments in the ordinary
course of their business) whose shareholding exceeds the Threshold Amount at the
date hereof acquires any Voting Securities and/or Acquisition Rights (not
including rights issued under any employee stock option plan) that (X) exceed
one (1) percent of the aggregate combined voting power of all Voting Securities
then outstanding (exclusive of treasury Voting Securities held by the Company)
and (Y) taken together with that Person's or
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13D Group's shareholding at that time represents voting power that exceeds the
Threshold Amount; provided in the case of (i), (ii) and (iii) that the United
Group did not participate in, facilitate, propose, initiate or encourage such
tender or exchange offer or acquisition in any way. Notwithstanding the
foregoing, the acquisition of Common Shares by any Person or 13D Group in
connection with the acquisition by the Company of the assets of Central European
Media Enterprises, Ltd. and the related acquisition of Common Shares by ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇ (so long as the Voting Securities held by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ do not
represent more than 20% of the combined voting power of the Voting Securities
than outstanding (exclusive of treasury Voting Securities held by the Company)),
or as a result of the exercise of currently held options to acquire Common
Shares, shall not result in the termination of any such provisions. As used
herein, the term "13D Group" shall mean a group of persons formed for the
purpose of acquiring, holding, voting or disposing of Voting Securities and/or
Acquisition Rights that would be required under Section 13(d) of the U.S.
Securities Exchange Act of 1934, as amended (the "Exchange Act"), to file a
statement on Schedule 13D with the U.S. Securities and Exchange Commission (the
"SEC") as a "person" within the meaning of Section 13(d)(3) of the Exchange Act
if such group beneficially owned Voting Securities and/or Acquisition Rights
representing more than 5% of the total combined voting power of all Voting
Securities (with such requirements and such terms being interpreted in
accordance with the Exchange Act and the rules and regulations adopted
thereunder, all as in effect on the date hereof).
Section 2.5. Registration Rights. (a) Subject to
the Company's rights of first refusal set out in Section 7.2
9
and to Section 8.1(b), the United Parties shall have the rights to registration
under the U.S. Securities Act of 1933, as amended (the "Securities Act"), of all
the Common Shares acquired by the Investor pursuant to Sections 2.1 and 2.2 of
this Agreement on the terms and subject to the conditions set forth in Exhibit
2.
(b) Notwithstanding any provision in this Agreement to the
contrary, solely to facilitate a possible sale or transfer of Common Shares by
the United Group pursuant to Section 7.1(a) because the Company has been
designated a Restricted Affiliate and is still so designated on August 31, 1999,
the Company agrees that it shall promptly after the date hereof commence
preparation of a registration statement relating to and shall use its best
efforts to register under the Securities Act all the Common Shares acquired by
the Investor pursuant to Sections 2.1 and 2.2 of this Agreement on the terms and
conditions set forth in Exhibit 2 (except Section 1, the notice provisions in
Section 2, Sections 2.1(a),(b) and (d), 2.2 and 2.3 and Section 3 of Exhibit 2),
provided that all Registration Expenses (as defined in Exhibit 2) shall be paid
by the United Parties, and provided further, that the Company's obligations
under this paragraph (b) shall terminate immediately if the events or
circumstances set forth in clauses (A), (B) or (C) of Section 3.3(vi) occur
prior to the RA Status Date (as defined below), if the United Group delivers a
Basket Availability Notice to the Company pursuant to Section 5.2(d)(i) or a RA
Status Termination Event occurs.
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ARTICLE III
SETTLEMENT OF CONVERTIBLE DEBENTURES; CLOSING OF
PRIVATE PLACEMENT SHARES; CONDITIONS
Section 3.1. Purchase of Convertible Debentures and Issuance
of Common Shares. Prior to the Expiration Time and in accordance with the
Indenture, the Investor shall deposit with the Purchase Agent an amount of money
sufficient to pay the Redemption Consideration for all the Convertible
Debentures that have been called for redemption on that date other than any
Convertible Debentures that have been converted by the holders of such
Convertible Debentures prior to the time of such deposit. If any of the
Convertible Debentures called for redemption are converted, the Company agrees
to cause any money deposited with the Purchase Agent in respect of such
Convertible Debentures to be repaid promptly to the Investor in accordance with
the Indenture. In the event that any Redemption Consideration deposited by the
Investor is applied to the actual redemption of Convertible Debentures tendered
for redemption and not purchase, the Company agrees to issue to the Investor a
number of Common Shares equal to the number of Common Shares the Investor would
have received had such Convertible Debentures been purchased and converted by
the Investor pursuant to Sections 2.1(a) and (b).
The Company agrees that, following delivery by the Investor of
the conversion notice under the Indenture referred to in Section 2.1(b) above
and surrender to the Conversion Agent of the Convertible Debentures purchased by
the Investor or payment to holders of Convertible Debentures of Redemption
Consideration deposited by the Investor in respect of Convertible Debentures
that are actually redeemed in exchange for the issuance by the Company of Common
Shares to the
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Investor, the Company shall deliver to the Investor a certificate or
certificates representing such Common Shares in accordance with the Indenture.
Such certificate or certificates shall be registered in the name of the Investor
and shall bear the restrictive legend specified in Section 8.3 regarding
transfers and registration under the Securities Act.
Section 3.2. Closing of Private Placement Shares. The closing
of any sale of Private Placement Shares provided for under Section 2.2 above
shall take place promptly at a date mutually agreed between the parties (which
date shall in no event later than five Business Days after the Expiration Time),
at 10:00 A.M., London time on such date, at the offices of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇,
St. ▇▇▇▇▇'▇ House, 9a Ironmonger Lane, London, or at such other time and place
as the parties determine in writing (the "Private Placement Closing"). The
actual date on which the Private Placement Closing shall occur is referred to
herein as the "Private Placement Closing Date". At the Private Placement
Closing, (i) the Investor shall deliver to the Company the aggregate purchase
price for the Private Placement Shares and (ii) the Company shall deliver to the
Investor a certificate or certificates representing the Private Placement
Shares, registered in the name of the Investor, and bearing the restrictive
legend specified in Section 8.3 regarding transfers and registration under the
Securities Act. The aggregate purchase price for the Private Placement Shares
shall be paid by the Investor to the Company by wire transfer of immediately
available funds to an account or accounts designated in writing by the Company
not less than two Business Days prior to the Private Placement Closing.
Section 3.3. Conditions to Obligations of United
Parties. At the option of the United Parties (which shall be
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jointly exercised) the obligations of the Investor to deposit the Redemption
Consideration and consummate the purchase of Convertible Debentures pursuant to
Sections 2.1 and 3.1 above are subject to the satisfaction prior to or at the
date on which the notice of redemption of the Convertible Debentures is duly
given pursuant to the Indenture and the Convertible Debentures (the "Call Date")
(or, in the case of paragraph (vi) below, the RA Status Date (as defined
below)), and the obligations of the Investor under Sections 2.2 and 3.2 above to
consummate the purchase of the Private Placement Shares are subject to the
satisfaction prior to or at the Private Placement Closing Date, of each of the
following conditions precedent:
(i) Representations and Warranties. The repre sentations and
warranties made by the Company in this Agreement shall have been true
and correct when made, and shall be true and correct on such date as
though such representations and warranties were made on and as of such
date.
(ii) Compliance with Agreements and Conditions. The Company
shall have performed and complied in all material respects with all
agreements, obligations and conditions required by this Agreement to be
performed or complied with by the Company at or before such date.
(iii) Certificate. The United Parties shall have received a
certificate executed on behalf of the Company by its Vice Chairman and
Chief Operating Officer and by its Chief Financial Officer (or other
executive officers reasonably acceptable to the Investor) and dated
such date, to the effect that the conditions set forth in
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clauses (i) and (ii) above have been satisfied, substantially in the
form set forth in Exhibit 3.
(iv) Opinions. The United Parties shall have received the
written opinion or opinions, dated the Call Date, of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
(as to matters of Luxembourg law) and/or ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, General
Counsel of the Company (as to matters of U.S. Federal law and the laws
of the State of New York), substantially in the forms set forth in
Exhibits 4A and 4B, respectively.
(v) Market Price per Common Share. The market price per
Common Share on the first Business Day immediately prior to the Call
Date shall not be less than 80% of the market price per Common Share on
the first Business Day immediately prior to the date of this Agreement.
For purposes of this paragraph, "market price" shall mean the last
quoted sale price per Common Share for such day as reported by the U.S.
National Association of Securities Dealers, Inc. Automated Quotation
System, or if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market for such day.
(vi) Restricted Affiliate Status. Immediately prior to (X)
the date of transfer of funds to the Purchase Agent for payment by the
Investor of any Redemption Consideration to the Purchase Agent for
Convertible Debentures pursuant to Sections 2.1 and 3.1 or (Y) if all
the Convertible Debentures that have been called for redemption are
converted by the holders of such Convertible Debentures prior to the
date any Redemption Consideration is required to be paid by the
Investor, the Private Placement Closing Date (the earlier of such dates
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being referred to herein as the "RA Status Date"), the Company shall
execute and deliver to the United Parties a letter agreement consenting
to its designation as a Restricted Affiliate under the United
Indentures substantially in the form attached as Exhibit 5, unless (A)
at or any time prior to the RA Status Date the Parent shall have
received Net Cash Proceeds from the sale of its Qualified Capital Stock
of not less than $80,000,000, (B) at or any time prior to the RA Status
Date the United Parties shall be permitted to make Permitted Basket
Investments (in addition to existing Permitted Basket Investments at
that time) in an aggregate amount that exceeds $150,000,000 (less any
Permitted Basket Investments made pursuant to the Temporary United
Basket) or (C) as a result of an amendment to the United Indentures or
otherwise, entry into such a letter agreement is not required under the
United Indentures to permit the United Parties to provide the
Redemption Consideration or purchase Convertible Debentures pursuant to
the Backstop Facility or the Private Placement Shares, in which case
(X), (Y) or (Z) the Company shall be under no obligation to enter into,
and there shall be no condition precedent to the obligations of the
United Parties under this Agreement relating to, entry into such a
letter agreement.
Section 3.4. Conditions to Obligations of Company. At the
option of the Company, the obligations of the Company under this Agreement are
subject to the satisfaction prior to or at the Call Date (or, in the case of
paragraph (vi) below, the RA Status Date), and the obligations of the Company to
consummate the sale of Private Placement Shares pursuant to
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Sections 2.2 and 3.2 above are subject to the satisfaction prior to or at the
Private Placement Closing Date, of each of the following conditions precedent:
(i) Representations and Warranties. The representations and
warranties made by the United Parties in this Agreement shall have been
true and correct when made, and shall be true and correct on the Call
Date as though such representations and warranties were made on and as
of such date.
(ii) Compliance with Agreements and Conditions. The United
Parties shall have performed and complied in all material respects with
all agreements, obligations and conditions required by this Agreement
to be performed or complied with by the United Parties at or before the
Call Date.
(iii) Certificate. The Company shall have received
certificates executed on behalf of the United Parties by the Chairman
and Chief Executive Officer and Chief Financial Officer (or other
executive officers acceptable to the Company) of each of the Parent and
Investor, dated the Call Date, to the effect that the conditions set
forth in clauses (i) and (ii) above have been satisfied with respect to
the United Parties, substantially in the forms set forth in Exhibits 6A
and 6B, respectively.
(iv) Opinions. The Company shall have received the written
opinion or opinions, dated the Call Date, of ▇▇▇▇▇▇▇▇ Chance (as to
matters of the law of The Netherlands and of U.S. Federal law and the
laws of the State of New York) and Holme ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP (as to
matters of U.S. Federal law and the laws of the State of
16
New York), substantially in the forms set forth in Exhibits 7A and 7B,
respectively.
(v) Market Price per Common Share. The market price per
Common Share on the first Business Day immediately prior to the Call
Date shall not be less than 80% of the market price per Common Share on
the first Business Day immediately prior to the date of this Agreement.
For purposes of this paragraph, "market price" shall mean the last
quoted sale price per Common Share for such day as reported by the U.S.
National Association of Securities Dealers, Inc. Automated Quotation
System, or if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market for such day.
(vi) Restricted Affiliate Status. If the Company has executed
and delivered to the UPC Parties pursuant to Section 3.3(vi) above a
letter agreement consenting to its designation as a Restricted
Affiliate, each of the Parent and Investor shall execute and deliver
such letter agreement to the Company.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.1. Representations and Warranties of
Company. The Company hereby makes the following
representations and warranties to, and agreements with, the
United Parties:
(a) Corporate Existence. The Company is a
corporation duly organized and validly existing under the
laws of Luxembourg and has full corporate power and
authority to own and operate its properties and conduct
17
its business as now conducted by it. Each of the Company's Subsidiaries
is a corporation duly organized and validly existing under the laws of
its jurisdiction of incorporation and has full corporate power to own
and operate its properties and conduct its business as now conducted by
it in all material respects.
(b) Authorization; Enforcement. The Company has full corporate
power and authority to execute and deliver this Agreement and to
perform its obligations under this Agreement in accordance with its
terms, to redeem the Convertible Debentures and to issue and deliver
Common Shares upon conversion of the Convertible Debentures, to issue
and deliver the Private Placement Shares and to consummate the other
transactions on the part of the Company contemplated hereby. The
Company has taken, or will take on or prior to the Call Date or Private
Placement Closing Date, as the case may be, all necessary corporate
action to authorize the execution and delivery of this Agreement, the
redemption of the Convertible Debentures and the issuance and delivery
of Common Shares upon conversion of the Convertible Debentures, the
issuance and delivery of the Private Placement Shares and the
consummation of the other transactions on the part of the Company
contemplated hereby. This Agreement is a valid and legally binding
obligation of the Company enforceable in accordance with its terms
(assuming in each case due authorization, execution and delivery by
each of the United Parties), subject to bankruptcy, insolvency,
reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity
principles.
18
(c) Compliance with Obligations.
(i) The execution and delivery by the Company of
this Agreement does not, and the redemption of the Convertible
Debentures and the issuance and delivery of Common Shares
receivable upon conversion of the Convertible Debentures, the
issuance and delivery of the Private Placement Shares, the
performance by the Company of its obligations under this
Agreement and the consummation of the other transactions on
the part of the Company contemplated hereby will not (i)
violate or constitute a breach of, or a default under, its
Articles of Incorporation, or any other agreement or
instrument material to Company and its Subsidiaries, taken as
a whole, to which it or any of its Subsidiaries is a party, or
which is binding on it or any of its Subsidiaries or any of
their respective assets, (ii) result in the creation of any
lien on, or security interest in, any of such assets or (iii)
violate any law, rule, regulation, judgment, order or decree
of any court or any public, governmental or regulatory agency
or body in Luxembourg having jurisdiction over the Company or
any of its Subsidiaries or any of their respective properties
or assets (excluding in the cases of clauses (i) and (ii) any
violation, breach, default, lien or security interest that may
arise under the United Indentures related to this Agreement or
the Company's designation as a Restricted Affiliate).
(d) Consents and Approvals. All consents, approvals,
authorizations and orders of governmental or other third parties
required for the Company to execute
19
and deliver this Agreement, to redeem the Convertible Debentures and to
issue the Common Shares receivable upon conversion of the Convertible
Debentures, to issue the Private Placement Shares and otherwise to
consummate the other transactions on the part of the Company
contemplated hereby have been obtained or will be obtained on or prior
to the Call Date or the Private Placement Closing Date, as the case may
be (excluding any consents, authorizations or approvals that may be
required under the United Indentures).
(e) Exchange Act Reports. Each of the Company's Annual Report
on Form 20-F for the fiscal year ended December 31, 1998 and Current
Report on Form 6-K dated June 9, 1999 (collectively, the "SEC
Documents") has been duly and timely filed or furnished, and when filed
or furnished was in substantial compliance with the requirements of the
Exchange Act and the applicable rules and regulations of the SEC
thereunder. Each of the SEC Documents was correct in all material
respects as of its date and, as of its date, did not contain any untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not
misleading. Except as disclosed in the SEC Documents, since December
31, 1998, there has not been any change, or any development involving a
prospective change, which has affected or may affect materially and
adversely the business, assets or prospects or the financial position
or results of operations of the Company and its Subsidiaries considered
as a whole.
20
(f) Outstanding Capital Stock. The authorized capital stock of
the Company consists of 75,000,000 Common Shares. At the date hereof,
the number of Common Shares outstanding is 14,858,720 (exclusive of
47,500 treasury shares held by the Company), all of which shares are
validly issued, fully paid and nonassessable. Except as set forth in or
contemplated by the SEC Documents, and except for the Common Shares
issuable under the terms of the Convertible Debentures and the Private
Placement Shares, no other shares of capital stock of the Company are
issuable prior to the later of the Expiration Time and the Private
Placement Closing Date. There are no preemptive rights in respect of
the Common Shares of the Company to be issued pursuant to this
Agreement. The Private Placement Shares have been duly and validly
authorized and, if issued and delivered in accordance with this
Agreement, will be validly issued, fully paid and non-assessable.
Exhibit 8 contains a true, complete and correct copy of the Articles of
Incorporation of the Company that are in full force and effect on the
date hereof. The Company currently does not intend to issue any Voting
Securities during the six-month period beginning on the date hereof,
except for Voting Securities issuable (i) in connection with the
acquisition by the Company of the assets of Central European Media
Enterprises Ltd., (ii) under the terms of the Convertible Debentures,
in connection with the Backstop Facility or as Private Placement Shares
or (iii) pursuant to rights or options currently held under the
Company's share incentive or employee benefit plans, the warrant held
by Paramount Television Group, or in respect of its 7.0% Convertible
21
Subordinated Notes due 2004, each as set forth in or contemplated by
the SEC Documents.
(g) Convertible Debentures. At the date hereof, $155,250,000
aggregate principal amount of the Convertible Debentures was
outstanding; prior to the Call Date, the Company will duly authorize
the redemption of all outstanding Convertible Debentures on the
Expiration Time for the Redemption Consideration; the Common Shares to
be issued upon conversion of the Convertible Debentures have been duly
and validly authorized and when issued and delivered in accordance with
the provisions of the Indenture and the Convertible Debentures will be
validly issued, fully paid and non-assessable; the Convertible
Debentures (in denominations of $1,000 or integral multiples thereof)
are convertible into Common Shares credited as fully paid (rounded down
to the nearest Common Share if not an integral number of Common Shares)
at the adjusted conversion price per Common Share provided in the
Indenture at the Expiration Time by surrender thereof to the Conversion
Agent prior to the Expiration Time, and will continue to be so
convertible until the Expiration Time;
(h) Listing of Common Shares. The outstanding Common Shares
are listed on the NASDAQ National Market, and no action has been taken
or, to the knowledge of the Company, threatened by NASDAQ with respect
to the delisting or permanent suspension from trading of the Common
Shares.
Section 4.2. Representations and Warranties of
United Parties. Each of the United Parties hereby makes the
22
following representations and warranties to, and agreements with, the Company
(with such representations, warranties and agreements being made by the Investor
only with respect to itself):
(a) Corporate Existence. The Investor is a company duly
organized and validly existing as a public limited liability company
under the laws of The Netherlands, and the Parent is a corporation duly
organized and validly existing under the laws of the State of Delaware.
(b) Authorization; Enforcement. Each of the United Parties has
full power and authority to execute and deliver this Agreement and to
perform its obligations under the Agreement in accordance with its
terms. Each of the United Parties has taken all necessary action to
authorize the execution and delivery of this Agreement and the
transactions contemplated hereby. This Agreement is a valid and legally
binding obligation of each of the United Parties enforceable in
accordance with its terms (assuming due authorization, execution and
delivery by the Company), subject, as to enforcement, to bankruptcy,
insolvency, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general
equity principles.
(c) Compliance with Obligations. The execution and delivery by
each of the United Parties of this Agreement does not, and the
performance by each of the United Parties of its obligations hereunder
and the transactions contemplated hereby will not (i) violate or
constitute a breach of, or a default under, any charter or similar
instrument, or any other agreement or instrument material
23
to the United Group, taken as a whole, to which any member of the
United Group is a party or which is binding on such member or any of
their respective assets, (ii) violate or constitute a breach of, or a
default under any indenture, credit agreement or similar instrument to
which the Parent or Investor is a party or under which it may be bound,
including without limitation the United Indentures, or (iii) violate
any law, rule, regulation, judgment, order or decree of any court or
any public, governmental or regulatory agency or body having
jurisdiction over any member of the United Group or any of their
respective properties or assets.
(d) Consents and Approvals. All consents, approvals,
authorizations and orders of governmental or other third parties
required for each of the United Parties to execute and deliver this
Agreement and to consummate the transactions contemplated hereby have
been obtained.
(e) Investor Exchange Act Reports. Each of the Investor's
Annual Report on Form 10-K for the fiscal year ended December 31, 1998,
Quarterly Report on Form 10-Q for the fiscal quarter ended March 31,
1999, Preliminary Proxy Statement dated June 21, 1999 and Current
Reports on Form 8-K dated June 15, 1999 and May 10, 1999 (collectively,
the "Investor SEC Documents") has been duly and timely filed, and when
filed was in substantial compliance with the requirements of the
Exchange Act and the applicable rules and regulations of the SEC
thereunder. Each of the Investor SEC Documents was correct in all
material respects as of its date and, as of its date, did not contain
any untrue statement of a material fact or omit to
24
state a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under
which they were made, not misleading. Except as disclosed in the
Investor SEC Documents, since December 31, 1998, there has not been any
change, or any development involving a prospective change, which has
affected or may affect materially and adversely the business, assets or
prospects or the financial position or results of operations of the
Investor and its Subsidiaries considered as a whole.
(f) Parent Exchange Act Reports. Each of the Parent's Annual
Report on Form 10-K for the fiscal year ended December 31, 1998,
Quarterly Report on Form 10-Q for the fiscal quarter ended March 31,
1999, Proxy Statement dated June 24, 1999 and Current Reports on Form
8-K dated June 16, 1999, May 10, 1999 and April 26, 1999 (collectively,
the "Parent SEC Documents") has been duly and timely filed, and when
filed was in substantial compliance with the requirements of the
Exchange Act and the applicable rules and regulations of the SEC
thereunder. Each of the Parent SEC Documents was correct in all
material respects as of its date and, as of its date, did not contain
any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading. Except as disclosed in the Parent SEC Documents, since
December 31, 1998, there has not been any change, or any development
involving a prospective change, which has affected or may affect
materially and adversely the business, assets or prospects
25
or the financial position or results of operations of the
Parent and its Subsidiaries considered as a whole.
(g) Status and Investment Intent. The Investor is an
"accredited investor" within the meaning of Regulation D under the
Securities Act and is accepting for delivery hereunder the Common
Shares issuable upon conversion of the Convertible Debentures and the
Private Placement Shares for its own account and (subject to its
property being at all times within its control) not with a view to any
public resale or distribution or other disposition thereof. The United
Parties understand that any such Common Shares have not been registered
under the Securities Act and, therefore, cannot be offered or resold
without such registration under the Securities Act or unless an
exemption from registration is available.
(h) Financial Advisors and Brokers. No investment banker,
broker or finder is entitled to any financial advisory, brokerage or
finder's fee or other similar payment from the United Parties based on
agreements, arrangements or undertakings made by the United Parties,
any of their Affiliates or any of their respective directors, officers
or employees in connection with the transactions contemplated hereby,
except that the Investor has agreed to pay compensation to ▇▇▇▇▇▇▇
Sachs International for their assistance in connection with such
transactions.
(i) Ownership of Common Shares. As of the date hereof and as
of the Call Date, the United Group does not beneficially own and will
not beneficially own, directly or indirectly, any Common Shares.
26
(j) Permitted Basket Investments and Sale of Qualified Capital
Stock. As of the Business Day immediately prior to the date hereof, the
aggregate outstanding amount of Permitted Basket Investments made by
the United Group was approximately $50,000,000, and the maximum
aggregate amount of Permitted Basket Investments that could be made was
approximately $120,000,000. The sale by the Parent of its Series C
Cumulative Convertible Preferred Stock, as described in the preliminary
offering memorandum, dated June 22, 1999, if completed, shall
constitute a sale of Qualified Capital Stock for purposes of the United
Indentures. Each of the United Parties has kept, observed, performed
and fulfilled each and every covenant contained in the United
Indentures in all material respects and is not in default in the
performance or observance of any of the terms, provisions and
conditions of the United Indentures.
ARTICLE V
COVENANTS
Section 5.1. Covenants of Company.
(a) Registration Rights. The Company shall comply with the
respective provisions regarding registration rights contained in
Exhibit 2 and Section 2.5.
(b) Conversion Rights and Sale of Common Shares. The Company
shall comply with the relevant provisions of the Indenture relating to
the conversion by the Investor of any Convertible Debentures acquired
by the Investor, including without limitation Section 1207 (Ability to
Perform) thereof, and shall take all action necessary to ensure that
any Common Shares to be issued and sold by it
27
pursuant to Section 2.2 hereof are available to be issued and sold at
the Private Placement Closing Date.
(c) Information. So long as the United Group owns directly or
indirectly Common Shares in an amount at least equal to the Minimum
Stake, the Company shall furnish to the Investor (i) as soon as
publicly available after the close of each of the Company's fiscal
years, a copy of the annual audit report relating to the Company and
its consolidated subsidiaries prepared in accordance with U.S.
generally accepted accounting principles ("U.S. GAAP") by the Company's
independent public accountants, together with consolidated financial
statements consisting of a balance sheet as of the end of such fiscal
year and statements of operations and comprehensive income,
shareholders' equity and cash flows for such fiscal year; and (ii) as
soon as publicly available, copies of all financial statements and
information, reports, notices and proxy statements sent by the Company
in a general mailing to all its shareholders or otherwise made publicly
avail able, of all reports on Forms 20-F and 6-K filed or furnished by
the Company under the Exchange Act (if any), and of all final
prospectuses included in registration statements of the Company at the
time of effectiveness of such registration statements under the
Securities Act, or filed pursuant to Rule 424 under the Securities Act.
(d) Director of Company.
(i) So long as the United Group directly or
indirectly owns Common Shares in an amount at least equal to
the lesser of the Minimum Stake and eight (8) percent of the
then outstanding Common Shares
28
(exclusive of any treasury Voting Securities held by the
Company), the Company shall use its best efforts to cause one
seat on its Board of Directors to be occupied by a person
designated by the Investor (who shall be a member of the Board
of Management or senior executive of the Investor, a national
of a member state of the European Community and acceptable to
the Company), and shall: (X) reserve one vacancy on the Board
of Directors of the Company to be filled exclusively by such
designee; (Y) include such designee in the slate of nominees
recommended by the Board of Directors to the shareholders of
the Company for election as director at each annual meeting of
shareholders of the Company commencing with the next annual
meeting of shareholders; and (Z) vote or cause to be voted all
shares for which management of the Company holds proxies or is
otherwise entitled to vote in favor of the election of such
designee, provided, however, that the Company's best efforts
shall not include the removal or resignation and replacement
of an existing member of its Board of Directors. Until such
designee of the Investor is elected to the Board of Directors
of the Company, such designee shall have the right to attend
and participate (but not vote) as an observer in the meetings
of the Board of Directors as if such designee were a member of
the Board of Directors. If a vacancy on the Company's Board of
Directors occurs prior to the next general meeting of its
shareholders, the Investor's designee shall be appointed to,
and shall, fill the vacancy. The Investor agrees that any such
designee shall enter
29
into an agreement with the Investor, and the Investor shall
cause such designee, to resign from the Board of Directors of
the Company within a reasonable time if such designee shall
cease to be a member of the Board of Management or senior
executive of the Investor. In the event that any such designee
shall cease to serve as a member of the Board of Directors of
the Company for any reason (including his having ceased to be
a member of the Board of Management or senior executive of the
Investor), the Company shall use its best efforts to cause the
vacancy resulting thereby to be filled by another designee of
the Investor (who shall be a member of the Board of Management
or senior executive of the Investor, a national of a member
state of the European Community and acceptable to the
Company).
(ii) The Company agrees that any designee of the
Investor who is elected to serve or who is acting as an
observer on the Board of Directors of the Company shall be
furnished with all information generally provided to the Board
of Directors of the Company and shall be entitled to the same
perquisites and subject to the same obligations as the
Company's other outside Directors (i.e., those directors who
are not employees of the Company).
(e) Actions Affecting Share Price. From the date of this
Agreement to the later of the Expiration Time and the Private Placement
Closing Date, the Company shall, and shall procure that its Affiliates
shall, refrain from taking any action that could reasonably be expected
to result in a material adverse change in the publicly quoted
30
price of the Common Shares, including, without limitation, the issuance
of new Voting Securities by the Company, but excluding any action taken
by the Company or an Affiliate to comply with applicable laws or
regulations and excluding the issuance of Voting Securities upon the
exercise of or pursuant to any rights to acquire such Voting Securities
held by a Person at the date hereof.
(f) Dividends or Stock Splits. Prior to the date of
acquisition by the Investor of Common Shares pursuant to the Backstop
Facility and the Private Placement Closing Date (if greater than
3,000,000 Common Shares are not acquired by the Investor pursuant to
the Backstop Facility), the Company shall not, and except in the
ordinary cause of business shall not permit any of its Subsidiaries to
(i) declare, set aside or pay any dividends on, or make any other
distributions in respect of, any of its capital stock, other than
dividends and distributions in the ordinary course of business by a
direct or indirect Subsidiary of the Company to its shareholders in
accordance with their respective interests, or (ii) split, combine or
reclassify any of its capital stock or issue or authorize the issuance
of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock.
(g) Listings Outside the United States. If at any time the
Common Shares are admitted to listing on a securities exchange outside
the United States, the Company agrees to amend or modify the legends or
notations on the certificates representing the Common Shares acquired
by the United Group pursuant to Sections 2.1 or 2.2 of this Agreement
(and to issue replacement share certificates if
31
necessary) to incorporate such legends or notations as are required
under the rules of such exchange to permit trading of such Common
Shares on such exchange, provided that such Common Shares shall bear
the legend set forth in Section 8.3 and that any sale or transfer of
such Common Shares shall be in accordance with and subject to the terms
and conditions set forth in this Agreement.
Section 5.2. Covenants of Parent and Investor.
(a) Transfers. Subject to Sections 2.4 and except as set forth
in Section 2.3(b), all of the Common Shares acquired by the United
Group under Sections 2.1 and 2.2 of this Agreement (collectively, the
"Covered Securities") shall be transferable to Persons that are not
members of the United Group only in accordance with the transfer
restrictions set forth in Article VII of this Agreement.
(b) Voting of Common Shares and Other Voting
Securities. The United Parties agree with the Company
that during the Standstill Period:
(i) The United Group will not (X) deposit any Common Shares or
other Voting Securities in a voting trust or subject any
Common Shares or other Voting Securities to any arrangement or
agreement with respect to the voting of such Common Shares or
Voting Securities if the purpose of such voting trust or
arrangement relates to control of the Company; or (Y) solicit
or grant proxies or become a participant in a "solicitation"
(as such term is defined in Regulation 14A under the Exchange
Act as in effect on the date hereof, and notwithstanding that
the Company is not subject to Regulation 14A) if such proxy
32
relates to control of the Company, in opposition to
the recommendation of the Board of Directors of the
Company;
(ii) The United Group will at all times vote or cause
to be voted its Common Shares and other Voting Securities in
accordance with the recommendation of the Board of Directors
of the Company with respect to (X) any nominations for the
Board of Directors of the Company; and (Y) the proposed merger
of the Company with Central European Media Enterprises Ltd.,
unless in each case voting in accordance with such
recommendation would constitute an actionable breach of the
statutory fiduciary obligations of the management of the
United Parties to their shareholders; and
(iii) The Investor, as holder of Common Shares, and
any other member of the United Group that is the direct or
indirect beneficial owner of Common Shares and other Voting
Securities, shall be present or cause to be present, in person
or by proxy, at all meetings of shareholders of the Company
with respect to which each such holder receives notice, so
that all Common Shares or other Voting Securities owned by
each such holder may be counted for the purpose of determining
the presence of a quorum at such meetings.
(c) Actions Affecting Share Price. From the date of this
Agreement to the later of the Expiration Time and the Private Placement
Closing Date, the United Parties shall, and shall procure that their
Affiliates and any financial advisors shall, refrain from taking any
action that could
33
reasonably be expected to result in a material change in the publicly
quoted price of the Common Shares, excluding any action taken by the
United Parties or an Affiliate to comply with applicable laws and
regulations.
(d) Permitted Investments.
(i) The United Group shall not make any Permitted Basket
Investment (other than pursuant to Sections 2.1 and 2.2 of
this Agreement or Permitted Basket Investments that in the
aggregate do not exceed $45,000,000 (such amount, the
"Temporary United Basket")) prior to the RA Status Date,
unless and solely to the extent the United Parties shall be
permitted under the United Indentures to make Permitted Basket
Investments (in addition to existing Permitted Basket
Investments at that time) in an aggregate amount that exceeds
$150,000,000 (less the amount of any Permitted Basket
Investments made under the Temporary United Basket), in which
circumstance the United Parties shall promptly so notify the
Company (such notice, a "Basket Availability Notice"). If the
United Parties are permitted to deposit the Redemption
Consideration and purchase the Convertible Debentures to be
acquired by the Investor pursuant to the Backstop Facility and
the Private Placement Shares as Permitted Basket Investments
without a default under the United Indentures occurring as a
consequence of such purchases, such purchases shall be made as
Permitted Basket Investments, provided that, subject to
Section 3.3, the United Parties shall not be relieved of their
obligations to purchase Convertible Debentures or
34
Private Placement Shares under this Agreement if they are not
permitted to make such purchases as Permitted Basket
Investments.
(ii) If at the RA Status Date the Company is
designated a Restricted Affiliate pursuant to Sections 3.3(vi)
and 3.4(vi) and the letter agreement the form of which is
attached as Exhibit 5, the United Group shall not make any
Permitted Basket Investments other than Permitted Basket
Investments the aggregate amount of which does not exceed the
Temporary United Basket until (X) the Company (and any
Subsidiary or Affiliate of the Company that has been
designated by the Board of Directors of the Parent as a
Restricted Affiliate) are designated by the Board of Directors
of the Parent not to be Restricted Affiliates and the Company
is notified of such designation in writing by the Parent, (Y)
the United Group disposes of all Voting Securities directly or
indirectly owned by it (subject to and in accordance with the
terms and conditions of this Agreement) or (Z) as a result of
an amendment to the United Indentures or otherwise, the
Company (and any Subsidiary or Affiliate of the Company that
has been designated by the Board of Directors of the Parent as
a Restricted Affiliate) are not Restricted Affiliates and are
not subject to any obligations under this Agreement or the
letter agreement entered into pursuant to Sections 3.3(vi) and
3.4(vi) as a result of such status (each of the events or
circumstances described in clauses (X),(Y) and (Z)
35
being referred to herein as a "RA Status Termination
Event")
ARTICLE VI
FURTHER AGREEMENTS
Section 6.1. Cooperation. Subject to the terms and conditions
of this Agreement, the Company and the United Parties agree to use their best
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective, as soon as reasonably practicable,
the terms of this Agreement and the transactions contemplated hereby.
Section 6.2. Fees and Expenses. Whether or not the
transactions contemplated hereby are consummated or this Agreement is terminated
pursuant to Section 8.1 hereof, and except as may otherwise be specifically
provided in this Agreement, each party shall pay the fees and expenses of its
counsel, accountants, investment bankers, brokers, finders and other advisors
and all other expenses incurred by such party incident to the negotiation,
preparation, execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby.
Section 6.3. Publicity. The Company and the United Parties
agree to consult with each other and to coordinate the issuance of any press
release or similar public announcement or communication relating to the
execution or performance of this Agreement or to the transactions contemplated
hereby; provided, however, that no party shall be restrained, after consultation
with the other party, from making such disclosure as it shall be advised by
counsel it is required to make by law,
36
administrative regulation or guidance or by the regulations of
any stock exchange.
ARTICLE VII
TRANSFER RESTRICTIONS
Section 7.1. Transfer Restrictions. (a) Except as otherwise
expressly permitted by this Agreement and subject to the exceptions set forth in
Section 2.4, prior to one year from the date hereof, the United Group shall not
sell or otherwise transfer any Covered Securities or interest therein without
obtaining the prior written approval of the Company, provided that if the
Company or any of its Subsidiaries or Affiliates have been designated Restricted
Affiliates and are still so designated on August 31, 1999, the United Parties
shall, commencing on such date, promptly sell or otherwise transfer all the
Common Shares acquired pursuant to Sections 2.1 and 2.2 (or less than all such
Common Shares if as a result of and immediately following such sale or transfer
the Board of Directors of the Parent shall be permitted under the United
Indentures to, and shall, designate the Company (and any of its Subsidiaries or
Affiliates that have been designated Restricted Affiliates) not to be Restricted
Affiliates), which sale or transfer shall not be subject to the Company's rights
of first refusal set forth in Section 7.2 and the Company (and any Subsidiaries
or Affiliates that have been so designated) shall remain Restricted Affiliates
until the earlier of (i) the date a RA Status Termination Event occurs and (ii)
the later of (X) August 31, 1999 and (Y) the date 10 Business Days after a
registration statement covering such Common Shares is declared effective by the
U.S. Securities and Exchange Commission, provided that during such 10 Business
Day period no stop order covering such registration statement has been issued,
such
37
registration statement has not been withdrawn by the Company and such
registration statement is not required to be amended. Immediately following such
date the Board of Directors of the Parent shall designate the Company (and any
of its Subsidiaries or Affiliates that have been designated Restricted
Affiliates) not to be Restricted Affiliates.
(b) Commencing one year from the date hereof, the United Group shall be
permitted to sell or transfer Covered Securities, subject to the Company's
rights of first refusal set forth in Section 7.2 below, provided that all such
sales or transfers of Common Shares shall be in compliance with all applicable
laws and regulations, including securities laws and regulations. For avoidance
of doubt, the United Group shall not be required to sell or transfer Common
Shares pursuant to the registration rights set forth in Section 2.5 and Exhibit
2 if other means of sale or transfer that are exempt from the registration
requirements of the Securities Act and otherwise in compliance with this
Agreement are available, although any registration of Common Shares shall be in
accordance with such provisions.
Section 7.2. Company's Right of First Refusal
Subject to the other provisions of this Agreement and except
as provided in Section 7.1(a), prior to making any offer to sell, sale or
transfer of any Covered Securities or request for registration of Common Shares,
the United Parties shall give the Company the opportunity to purchase such
Covered Securities in the following manner:
(a) The United Parties shall give notice (the "Transfer
Notice") to the Company in writing of such intention, specifying the
name of the proposed
38
transferee(s) or the proposed manner of sale to trans ferees not then
known, the amount of Covered Securities proposed to be sold, the
proposed price per share therefor (which price may be a price
determined by application of a formula, such as the average closing
price for such Covered Securities on NASDAQ or the principal stock
exchange on which such Covered Securities are then listed for a
specified number of days prior to a sale date) (the "Transfer Price"),
the other material terms upon which such sale is proposed to be made
and all other relevant information reasonably requested by the Company.
In the case of proposed sales to be made in accordance with the volume
limitations set forth in paragraphs (e)(1) and (e)(2) of Rule 144 under
the Securities Act (in the case of paragraph (e)(2), without giving
effect to the reference to subsection (k) of such Rule), the Transfer
Price shall be deemed to be the Average Market Price per Common Share
on the day prior to the giving of the Transfer Notice.
(b) The Company shall have the right, exercisable by written
notice given by the Company to the Parent or Investor within five (5)
Business Days after receipt of such Transfer Notice, to purchase all or
a portion of the Covered Securities specified in the Transfer Notice,
for cash at a price per share equal to the Transfer Price.
(c) If the Company exercises its right of first refusal
hereunder, the closing of the purchase of the Covered Securities with
respect to which such right has been exercised shall take place no
later than fifteen (15) Business Days after the later of (i) the
Company's giving of notice of such exercise and (ii) the end of such
period
39
of time as the Company and the United Parties may reasonably require in
order to comply with applicable laws and regulations. Upon exercise by
the Company of the right of first refusal under this Section 7.2, the
Company and the United Parties shall be legally obligated to consummate
the purchase contemplated thereby and shall use their best efforts to
secure any approvals required and to comply with all applicable laws
and regulations and stock exchange listing requirements in connection
therewith as soon as practicable.
(d) If the Company does not exercise its right of first
refusal hereunder within the time specified for such exercise, the
United Group shall be free (i) during the period of 60 calendar days
following the earlier of the giving of notice by the Company that it
does not intend to exercise such right of first refusal and the
expiration of such time for exercise or (ii) in the case of a
registration of such securities for sale in accordance with Section
5.1(a), within 90 calendar days of the related registration statement
becoming effective, to sell or contract to sell the Covered Securities
specified in such Transfer Notice, provided that the price per Covered
Security is (X) at least as high as the Transfer Price, (Y) determined
by the same formula as the Transfer Price or a formula that is more
favorable economically to the United Parties or (Z) in the case of
proposed sales to be made in accordance with the volume limitations set
forth in paragraphs (e)(1) and (e)(2) of Rule 144 under the Securities
Act (in the case of paragraph (e)(2), without giving effect to the
reference to subsection (k) of such Rule), determined in accordance
with the provisions of
40
Rule 144 in the manner and on terms no less favorable economically to
the United Parties than were specified in the Transfer Notice. Covered
Securities not so sold or contracted to be sold by the United Parties
within such period shall remain subject to Section 7.1 and shall again
become subject to the procedures provided in this Section 7.2.
ARTICLE VIII
MISCELLANEOUS
Section 8.1. Termination. (a) This Agreement may
be terminated at any time prior to the Call Date:
(i) By mutual action of the Company and the United Parties.
(ii) By the United Parties, if the conditions set forth in
Section 3.3 hereof shall not have been complied with or performed and
such noncompliance or nonperformance shall not have been cured or
eliminated (or by its nature cannot be cured or eliminated) or waived
on or before the Call Date.
(iii) By the Company, if the conditions set forth in Section
3.4 hereof shall not have been complied with or performed and such
noncompliance or nonperformance shall not have been cured or eliminated
(or by its nature cannot be cured or eliminated) or waived on or before
the Call Date.
(iv) By either the Company or the United Parties if the Call
Date shall not have occurred on or before June 30, 1999 as a result of
events or circumstances not directly controlled by the Company, and by
the United
41
Parties only if the Call Date shall not have occurred on or before June
30, 1999 because of events or circumstances directly controlled by the
Company.
In the event of the termination of this Agreement pursuant to
this clause (a), this Agreement shall thereafter become void and have no effect,
and no party hereto shall have any liability to the other party hereto or its
shareholders, or directors or officers in respect thereof, except for the
obligations of the parties in Section 6.2, and except that nothing herein will
relieve any party from liability for any breach of this Agreement (except a
breach of the repre sentations and warranties of the Company or the United
Parties in Sections 4.1 or 4.2, as the case may be) prior to such termination.
No party shall in any event be liable to the other party for loss of anticipated
profits from the transactions contemplated by this Agreement or for any other
consequential damages arising out of the termination of this Agreement.
(b) All rights and obligations of the United Parties under
this Agreement shall terminate at such time as the United Group ceases to own,
directly or indirectly (not as a result of a breach of this Agreement) at least
one percent (1%) of the then outstanding Common Shares (exclusive of treasury
Voting Securities held by the Company) or, at the option of the United Parties
(which shall be exercised jointly), if the Investor acquires less than 7.5% of
the then outstanding Common Shares (exclusive of treasury Voting Securities held
by the Company) in connection with the Backstop Facility and the Investor does
not acquire any Private Placement Shares as a result of a failure of the
conditions precedent set forth in Section 3.3, provided that if the Company has
been designated a Restricted
42
Affiliate, at the time of such termination the Company (and any Subsidiary or
Affiliate that may be subject to or affected by Restricted Affiliate status)
have been designated by the Board of Directors of the Parent not to be
Restricted Affiliates and are not subject to any obligations under this
Agreement or the letter agreement entered into pursuant to Sections 3.3(vi) and
3.4(vi) as a result of such status.
(c) The United Parties' rights and obligations under Section
2.5 and Exhibit 2 shall terminate at such time as the United Group ceases to own
at least five percent (5%) of the then outstanding Common Shares (exclusive of
treasury Voting Securities held by the Company), unless the United Group holds
at least one percent (1%) of the then outstanding Common Shares (exclusive of
treasury Voting Securities held by the Company) and in connection with a request
for registration the United Parties provide the Company with an opinion
satisfactory to the Company of nationally recognized U.S. counsel that the
United Parties are "affiliates" of the Company at that time for purposes of Rule
144 under the Securities Act, in which case such rights and obligations shall
not terminate with respect to the registration requested.
Section 8.2. Survival of Representations and Warranties. The
representations, warranties, agreements and covenants contained in this
Agreement shall survive the acquisition by the Investor of Common Shares
pursuant to the Backstop Facility or at the Private Placement Closing.
Section 8.3. Legend. The certificates evidencing the Covered
Securities (unless a registration statement with respect to such securities
referred to in Exhibit 2 is then effective) shall bear the following legend
until such time as the United Parties or any transferee thereof deliver an
opinion
43
of nationally recognized U.S. counsel, such opinion and counsel
to be reasonably acceptable to the Company, to the effect that
such legend is no longer required under the Securities Act:
THESE SECURITIES WERE ACQUIRED WITHOUT REGISTRATION UNDER THE
U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND MAY BE OFFERED OR SOLD ONLY IF REGISTERED UNDER THE
SECURITIES ACT OR IF AN EXEMPTION FROM REGISTRATION IS
AVAILABLE. THESE SECURITIES ARE SUBJECT TO THE PROVISIONS OF
THE INVESTMENT AGREEMENT, DATED AS OF JUNE 29, 1999, BY AND
BETWEEN SBS BROADCASTING S.A. AND UNITED PAN-EUROPE
COMMUNICATIONS N.V. AND UNITED INTERNATIONAL HOLDINGS, INC.
AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT IN ACCORDANCE
THEREWITH.
The Company may also instruct its transfer agent, State Street
Bank and Trust Company, not to register the transfer of any Covered Securities
except under the circumstances contemplated herein.
Section 8.4. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect.
Section 8.5. Specific Enforcement. Each of the Company and the
United Parties acknowledge and agree that irreparable damage would occur in the
event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent or cure breaches of the provisions of this Agreement and
to enforce specifically the terms and provisions hereof and thereof in any court
of the
44
United States, Luxembourg or The Netherlands thereof having jurisdiction, this
being in addition to any other remedy to which they may be entitled by law or
equity.
Section 8.6. Entire Agreement. This Agreement contains the
entire understanding of the parties with respect to the matters covered hereby
and will supersede and replace all prior oral or written agreements covering the
matters contemplated in this Agreement, including the Indicative Term Sheet,
dated 20 May 1999, initialed by the Company and the Investor (except for the
paragraph headed "The Joint Venture Transaction" thereof), and the Letter of
Intent, dated June 8, 1999, by and between the Company and the Investor. This
Agreement may be amended only by an agreement in writing executed by the parties
hereto. Time shall be of the essence of this Agreement.
Section 8.7. Counterparts. This Agreement may be
executed by the parties hereto in counterparts each of which
shall be deemed an original, but all of which together shall
constitute one and the same instrument.
Section 8.8. Notices. All notices or services of process
provided for herein shall be validly given or served, as the case may be, if in
writing and delivered personally, or by confirmed facsimile (followed promptly
by an original copy of such notice or service of process delivered by registered
mail), if to:
45
The Company:
SBS Broadcasting S.A.
▇-▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇-▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Attention: Corporate Secretary
Facsimile: ▇▇▇ ▇ ▇▇ ▇▇▇▇
With copies to:
SBS Broadcasting S.A.
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇
Attention: Corporate Secretary
Facsimile: ▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇
and
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
St. Olave's House
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Facsimile: ▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇
The Investor:
United Pan-Europe Communications N.V.
▇▇▇▇. ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Attention: Anton Tuijten
Facsimile: 1-20-778-9871
The Parent:
United International Holdings, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, #▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇.▇.▇.
46
Attention: President and Legal Department
Facsimile: ▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇
With copies to:
▇▇▇▇▇▇▇▇ Chance
▇▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Attention: ▇.▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile: ▇▇▇-▇▇-▇▇▇-▇▇▇▇
and
Holme ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇.▇.▇.
Attention: W. ▇▇▇▇ ▇▇▇▇▇▇
Facsimile: ▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇
or to such other address or facsimile number as either party may, from time to
time, designate in a written notice given to the other party in a like manner.
Section 8.9. Waivers. No waiver by either party of any default
with respect to any provision, condition or requirement hereof shall be deemed
to be a waiver of any other provision, condition or requirement hereof; nor
shall any delay or omission of either party to exercise any right hereunder in
any manner impair the exercise of any such right accruing to it thereafter.
Section 8.10. Beneficial Ownership. In determining
any Person's ("First Person") direct or indirect beneficial
47
ownership of the securities of any other Person ("Second Person") pursuant to
this Agreement, there shall not be included any securities of the Second Person
held by any other Person ("Third Person") with respect to which the First Person
owns directly or indirectly less than 10% of such Third Person's outstanding
Voting Securities solely as a result of such ownership.
Section 8.11. Adjustment of Amounts of Common Shares. If at
any time, the Company shall (i) pay a dividend or make a distribution on the
Common Shares in Common Shares, (ii) subdivide or reclassify its outstanding
Common Shares into a greater number of shares or (iii) combine or reclassify its
outstanding Common Shares into a smaller number of shares, then in each such
case the Minimum Stake specified in Section 2.2 shall be adjusted so that, after
the happening of any of the events described above in this sentence, the Minimum
Stake shall equal a number equal to the Minimum Stake (or such other amount as
the Minimum Stake may have been adjusted to from time to time) multiplied by the
number of Common Shares (including fractions, if applicable) that a holder of
Common Shares would hold or be entitled to receive immediately after such
happening in respect of each Common Share held by such holder immediately prior
to such happening. Any adjustments made pursuant to the immediately preceding
sentence shall become effective immediately after the date of payment, in the
case of a dividend or distribution, or immediately after the effective date, in
the case of a subdivision, combination or reclassification.
Section 8.12. Submission to Jurisdiction; Consent to
Service of Process. With respect to any claim arising out of
this Agreement (a) each of the Company and the United Parties
48
irrevocably submits to the nonexclusive jurisdiction of the courts of the State
of New York and the United States District Court located in the Borough of
Manhattan in The City of New York and (b) each of the Company and the United
Parties irrevo cably waives any objection which it may have at any time to the
laying of venue of any suit, action or proceeding arising out of or relating to
this Agreement brought in any such court, irrevocably waives any claim that any
such suit, action or proceeding brought in any such court has been brought in an
inconvenient forum and further irrevocably waives the right to object, with
respect to such suit, action or proceeding brought in any such court, that such
court does not have jurisdiction over such party; provided, however, that
nothing in this Section 8.12 shall be deemed to preclude the Company, or the
United Parties from bringing an action or proceeding in respect of any such
agreement in any other jurisdiction. Each of the Company and the United Parties
agrees that service of process upon it in any such suit, action or proceeding
shall be deemed in every respect effective service of process upon it if given
in the manner set forth in Section 8.8. EACH PARTY HERETO HEREBY WAIVES ANY
RIGHT TO A TRIAL BY JURY IT MAY HAVE IN CONNECTION WITH ANY SUCH SUIT, ACTION OR
PROCEEDING.
Section 8.13. Headings. The headings herein are for
convenience only, do not constitute a part of this Agreement,
and shall not be deemed to limit or affect any of the
provisions hereof.
Section 8.14. Successors and Assigns. This
Agreement shall be binding upon and inure to the benefit of the
parties and their successors and legal representatives. No
third party is intended to have any rights by reason of, or to
enforce, any provision of this Agreement. Neither party may
49
assign this Agreement or any rights hereunder. The assignment by a party of this
Agreement or any rights hereunder shall not affect the obligations of such party
under this Agreement.
Section 8.15. Governing Law. This Agreement shall
be governed by and construed and enforced in accordance with
the laws of the State of New York.
50
IN WITNESS WHEREOF, each of the Company, the Parent and the
Investor have caused this Agreement to be duly executed by their respective
authorized directors or officers as of the date first above written.
SBS BROADCASTING S.A.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chairman and Chief
Executive Officer
UNITED PAN-EUROPE COMMUNICATIONS N.V.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Managing Director
By: /s/ A.H.E. van Voskuijlen
Name: A.H.E. van Voskuijlen
Title: Managing Director
UNITED INTERNATIONAL HOLDINGS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
51
Exhibit 1 to
Investment Agreement
DEFINITIONS
"Acquired Indebtedness" has the meaning assigned to
it in each United Indenture.
"Acquisition Rights" means rights to acquire beneficial
ownership of Voting Securities that are exerciseable within 60 days, including
but not limited to any right to acquire Voting Securities:
(i) through the exercise of any option, warrant or
right;
(ii) through the conversion of a security;
(iii) pursuant to the power to revoke a trust,
discretionary accounts or similar arrangement;
or
(iv) pursuant to the automatic termination of a
trust, discretionary account or similar
arrangement;
provided, that any Voting Securities not outstanding that are subject to such
options, warrants, rights or conversion privileges shall be deemed to be
outstanding for the purpose of computing the percentage of outstanding Voting
Securities owned by such Person or 13D Group but shall not be deemed to be
outstanding for the purpose of computing the percentage of Voting Securities
held by any other Person or 13D Group.
"Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of Voting Securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Agreement" means the Investment Agreement, dated as of June
29, 1999, by and between the Company and the United Parties, as it may be
amended from time to time.
1
"Average Market Price" of any security on any date means the
average of the daily closing prices for such security for the 20 consecutive
trading days prior to the day before the day in question. The closing price for
each day shall be the last reported sales price regular way or, in case no such
reported sale takes place on such day, the average of the reported closing bid
and asked prices regular way, in either case on the NASDAQ National Market or,
if such security is not listed or admitted to trading on such Market or the
principal securities exchange on which such security is then listed or admitted
to trading or, if not listed or admitted to trading on any securities exchange,
the average of the closing bid and asked prices in the over-the-counter market
as furnished by any New York Stock Exchange member firm selected from time to
time by the issuer of such security for that purpose. For the purposes of this
definition, the term "trading day" shall mean each Monday, Tuesday, Wednesday,
Thursday and Friday, other than any day on which securities are not traded on
such exchange or in such market.
"Backstop Facility" has the meaning ascribed to it in
Section 2.1(a) of the Agreement.
"Backstop Price" has the meaning ascribed to it in
Section 2.1(b) of the Agreement.
"Basket Availability Notice" has the meaning ascribed
to it in Section 5.2(d)(i) of the Agreement.
"Business Day" means any Monday, Tuesday, Wednesday,
Thursday or Friday on which banks are open for business, are
not required or permitted to be closed and are carrying out
transactions in U.S. Dollars in Amsterdam, London or The City
of New York.
"Call Date" has the meaning ascribed to it in Section
3.3 of the Agreement.
"Common Shares" means the common shares of the Company, par
value $1.50 per share, subject to Section 8.11.
"Company" has the meaning ascribed to it in the
recitals to the Agreement.
"Conversion Agent" means, for purposes of the Backstop
Facility, State Street Bank and Trust Company, acting in its capacity as
"Conversion Agent" under the Indenture.
2
"Convertible Debentures" has the meaning ascribed to
it in the recitals to the Agreement.
"Covered Securities" has the meaning ascribed to it
in Section 5.2(a) of the Agreement.
"Disqualified Capital Stock" has the meaning assigned
to it in each United Indenture.
"Equity Interest" has the meaning assigned to it in
each United Indenture.
"Exchange Act" has the meaning ascribed to it in
Section 2.4 of the Agreement.
"Expiration Time" has the meaning ascribed to it in
Section 2.1(a) of the Agreement.
"First Person" has the meaning ascribed to it in
Section 8.10 of the Agreement.
"Group" means a group of Persons or their Affiliates acting in
concert in connection with any of the activities contemplated by the Agreement.
"Indebtedness" has the meaning assigned to it in each
United Indenture.
"Indenture" has the meaning ascribed to it in the
recitals to the Agreement.
"Investment" has the meaning assigned to it in the
United Indentures.
"Investor" has the meaning ascribed to it in the
recitals to the Agreement.
"Investor SEC Documents" has the meaning ascribed to
it in Section 4.2(e) of the Agreement.
"Minimum Stake" has the meaning ascribed to it in
Section 2.2 of the Agreement.
"Net Cash Proceeds" has the meaning ascribed to it in
each United Indenture.
3
"Parent" has the meaning ascribed to it in the
recitals to the Agreement.
"Parent SEC Documents" has the meaning ascribed to it
in Section 4.2(f) to the Agreement.
"Parent's Share" means, from time to time, the Parent's Pro
Rata Share (as defined in each United Indenture) in the Investor at that time.
"Permitted Basket Investment" means any Investment permitted
under clause (e) of the definition of "Permitted Investment" in each United
Indenture.
"Person" means any individual, corporation, partnership, joint
venture, trust, unincorporated organization or government or any agency or
political subdivision thereof.
"Private Placement Closing" and "Private Placement Closing
Date" have the meanings ascribed to them in Section 3.2 of the Agreement.
"Private Placement Shares" has the meaning ascribed
to it in Section 2.2 of the Agreement.
"Purchase Agent" has the meaning ascribed to it in
Section 2.1(b) of the Agreement.
"Qualified Capital Stock" has the meaning assigned to
it in each United Indenture.
"RA Status Date" has the meaning ascribed to it in
Section 3.3(vi) of the Agreement.
"RA Status Termination Event" has the meaning
ascribed to it in Section 5.2(d)(ii) of the Agreement.
"Redemption Consideration" has the meaning ascribed
to it in Section 2.1(a) of the Agreement.
"Redemption Price" has the meaning ascribed to it in
the Indenture.
"Registrable Securities" means any Common Shares and any
securities of the Company distributed with respect to such Common Shares, in
each case directly or indirectly beneficially owned by the Investor in
accordance with Article II of the Investment Agreement.
4
"Related Business" has the meaning assigned to it in
each United Indenture.
"Restricted Affiliate" has the meaning assigned to it
under the United Indentures.
"Restricted Payment" has the meaning assigned to it
in each United Indenture.
"SEC" has the meaning ascribed to it in Section 2.4
of the Agreement.
"SEC Documents" has the meaning ascribed to it in
Section 4.1(e) of the Agreement.
"Second Person" has the meaning ascribed to it in
Section 8.10 of the Agreement.
"Securities Act" has the meaning ascribed to it in
Section 2.5 of the Agreement.
"Standstill Amount" means, at any time, Common Shares and
other Voting Securities that, taken together, represent 20% of the aggregate
voting rights in the Company attributable to all Common Shares and other Voting
Securities outstanding at that time (exclusive of any treasury Voting Securities
held by the Company).
"Standstill Period" has the meaning ascribed to it in
Section 2.3(a) of the Agreement.
"Subsidiary" means, with respect to any Person, any other
Person of which shares of capital stock or other interests having a majority of
the general voting power in electing the board of directors (or body exercising
similar authority) are, at the time as of which any determination is being made,
beneficially owned by the first Person.
"Temporary United Basket" has the meaning ascribed to
it in Section 5.2(d)(i) of the Agreement.
"Third Person" has the meaning ascribed to it in
Section 8.10 of the Agreement.
"13D Group" has the meaning ascribed to it in Section
2.4 of the Agreement.
5
"Threshold Amount" has the meaning ascribed to it in
Section 2.4 of the Agreement.
"Transfer Notice" has the meaning ascribed to it in
Section 7.2(a) of the Agreement.
"Transfer Price" has the meaning ascribed to it in
Section 7.2(a) of the Agreement.
"Trustee" has the meaning ascribed to it in the
recitals to the Agreement.
"United Group" means the Parent and its Affiliates and
Subsidiaries (excluding any Affiliate that is a Person exercising control over
the Parent, except members of the ▇▇▇▇▇▇▇▇▇ family and their agents or
affiliates and any Persons exercising control that have acquired their
shareholding from members of the ▇▇▇▇▇▇▇▇▇ family or their agents or affiliates,
for so long as such Persons do not hold Voting Securities as part of a voting
arrangement, group or pursuant or subject to an agreement with the other Persons
in the United Group).
"United Indentures" means the Indenture, dated as of February
5, 1998, by and between the Parent and Firstar Bank of Minnesota, N.A., as
trustee, and the Indenture, dated as of April 29, 1999, by and between the
Parent and Firstar Bank of Minnesota, N.A., as trustee.
"United Parties" has the meaning assigned to it in
the recitals to the Agreement.
"U.S. GAAP" has the meaning assigned in Section
5.1(c) of the Agreement.
"Voting Securities" of the Company (or in the case of Section
8.10, the Third Person) means every share of any class of capital stock of the
Company (or in the case of Section 8.10, the Third Person) that ordinarily has
voting power for the election of directors (or similar governing body) of the
Company (or in the case of Section 8.10, the Third Person), whether at all times
or only so long as no senior class of capital stock has such voting power by
reason of the occurrence of any contingency.
6
Exhibit 2 to
Investment Agreement
REGISTRATION RIGHTS
Section 1. Effectiveness of Registration Rights. The
registration rights pursuant to Sections 2 and 3 hereof shall become effective
one year after the later of the Expiration Time and the Private Placement
Closing Date, unless the transfer restrictions set out in Section 7.1(a) of the
Agreement shall not apply solely because of the acquisition of Common Shares by
a Person or 13D Group in the circumstances described in Section 2.4(ii) of the
Agreement, in which case such registration rights shall become effective at such
time as such transfer restrictions become inapplicable.
Section 2. Registration on Request.
2.1. Notice. Upon written notice of the United Parties
requesting that the Company effect the registration under the Securities Act of
all or part of the Registrable Securities held by them, which notice shall
specify, subject to the terms of the Agreement, the intended method or methods
of disposition of such Registrable Securities, and subject to the Company's
right of first refusal under Section 7.2 of the Agreement, the Company will use
its best efforts to effect (at the earliest possible date) the registration,
under the Securities Act, of such Registrable Securities for disposition in
accordance with the intended method or methods of disposition stated in such
request, provided that:
(a) if the Company shall have previously effected a
registration with respect to Registrable Securities pursuant to this
Section 2 or Section 3, the Company shall not be required to effect a
registration pursuant to this Section 2 until a period of 60 days shall
have elapsed from the effective date of the most recent such previous
registration;
(b) if, in the reasonable judgment of the Company, a
registration at the time and on the terms requested would adversely
affect any public financing by the Company that had been contemplated
by the Company prior to the notice
1
by the United Parties requesting registration, the Company shall not be
required to file a registration statement in connection with such
request pursuant to this Section 2 until the earlier of (i) 150 days
after the date of the request for such registration and (ii) the
termination of any "black out" period required by the underwriters, if
any, in connection with such financing;
(c) if, while a registration request is pending pursuant to
this Section 2, the Company determines in good faith that the filing of
a registration statement would require the disclosure of material
information which the Company has a bona fide business purpose for
preserving as confidential or the Company is unable to comply with SEC
requirements, the Company shall not be required to file a registration
statement in connection with such request pursuant to this Section 2
until the earlier of (i) the date upon which such material information
is disclosed to the public or ceases to be material and (ii) 150 days
after the date of the request for such registration; and
(d) the United Parties shall have the right to exercise
registration rights pursuant to this Section 2 up to two times;
provided, however, that any such exercise shall relate to not less than
1,000,000 Registrable Securities with respect to the first registration
requested or 500,000 Registrable Securities with respect to the second
registration requested.
2.2. Registration Expenses. The United Parties shall pay up to
the first $200,000 of the expenses of the Company related to the registration,
offer and sale of Registrable Securities pursuant to this Section 2, including
without limitation filing and registration fees, accounting fees and
disbursements, printing costs, fees and expenses of counsel to the Company and
listing fees and expenses (collectively, the "Shared Expenses"). The United
Parties shall pay all underwriting fees and expenses, roadshow expenses incurred
by the Company, the United Parties and the underwriters and transfer taxes
attributable to Common Shares sold by them and all fees and expenses of their
counsel (collectively, "Other Expenses"); provided that in no event shall the
United Parties be required to pay any internal costs of the Company. The Shared
Expenses and Other Expenses are referred to herein collectively as the
"Registration Expenses".
2
2.3. Third Person Shares. The Company shall have the right to
cause the registration of securities for sale for the account of any Person
(excluding the Company in a primary offering of its Voting Securities) as part
of any registration of Registrable Securities requested pursuant to this Section
2, provided that the Company shall not have the right to cause the registration
of such securities if:
(a) in the reasonable judgment of the United Parties,
registration of such securities would adversely affect the offering and
sale of Registrable Securities then contemplated by United Parties,
until the earlier of (i) 90 days after the completion or abandonment of
such financing and (ii) the termination of any "black-out" period
required by the underwriters, if any, in connection with such
financing, or
(b) the United Parties do not receive assurances satisfactory
to them that the Person for which such securities are being registered
will pay its pro rata share of the Registration Expenses pursuant to
Section 2.2, including their pro rata share of the first $200,000 of
the Shared Expenses (provided that for purposes of this clause (b), the
guarantee by the Company to the United Parties of payment of such
Registration Expenses shall be satisfactory assurance to the United
Parties).
2.4. Broad Distribution. The Company shall be required to
register Registrable Securities pursuant to this Section 2 only if such
Registrable Securities are to be offered and sold in a broad distribution within
or outside the United States (or simultaneously in both).
Section 3. Incidental Registration
3.1. Notice and Registration. If the Company proposes to
register any of its Voting Securities ("Other Securities") for public sale under
the Securities Act, on a form and in a manner which would permit registration of
Registrable Securities for sale to the public under the Securities Act, it will
give prompt written notice to the United Parties of its intention to do so, and
upon the written request of the United Parties delivered to the Company within
15 Business Days after the giving of any such notice (which request shall
specify the Registrable Securities intended to be disposed of by the United
Parties and the intended method of disposition thereof), subject to the
Company's right of first
3
refusal under Section 7.2 of the Investment Agreement, the Company will use its
best efforts to effect, in connection with the registration of the Other
Securities, the registration under the Securities Act of all Registrable
Securities which the Company has been so requested to register by the United
Parties, to the extent required to permit the disposition (in accordance with
the intended method or methods thereof as aforesaid) of the Registrable
Securities so to be registered, provided that:
(a) if, at any time after giving such written notice of its
intention to register any Other Securities and prior to the effective
date of the registration statement filed in connection with such
registration, the Company shall determine for any reason not to
register the Other Securities, the Company shall give written notice of
such determination to the United Parties and thereupon the Company
shall be relieved of its obligation to register such Registrable
Securities in connection with the registration of such Other Securities
(but not from its obligation to pay Registration Expenses to the extent
incurred in connection therewith as provided in Section 3.2, which for
purposes of this paragraph 3.1(a) shall include its pro rata share of
the first $100,000 of the Shared Expenses), without prejudice, however,
to the rights of the United Parties immediately to request that such
registration be effected as a registration under Section 2;
(b) the Company will not be required to effect any
registration of Registrable Securities under this Section 3 if, in the
reasonable judgment of the Company, inclusion of any Registrable
Securities in the Company's registration statement at that time would
adversely affect the Company's own financing; and
(c) the Company shall not be required to effect any
registration of Registrable Securities under this Section 3 incidental
to the registration of any of its securities in connection with
mergers, acquisitions, exchange offers, subscription offers, dividend
reinvestment plans or stock option or other employee benefit plans.
4
(d) subject to Section 2.1(d), no registration of Registrable
Securities effected under this Section 2 shall relieve the Company of
its obligation to effect registrations of Registrable Securities
pursuant to Section 2.
3.2. Registration Expenses. The Company will pay all Shared
Expenses related to the registration, offer and sale of securities pursuant to
Section 3; provided that with respect to any such registration the United
Parties shall pay (i) to the Company up to the first $100,000 of the Shared
Expenses; and (ii) their share of all Other Expenses attributable to the
Registrable Securities (which shall include all the fees and expenses of their
own counsel); and provided further, that in no event shall the United Parties be
required to pay any internal costs of the Company.
3.3. Broad Distribution. The Company shall be required to
register Registrable Securities pursuant to this Section 3 only if such
Registrable Securities are to be offered and sold in a broad distribution within
or outside the United States (or simultaneously in both).
Section 4. Registration Procedures.
4.1. Registration and Qualification. (a) If and whenever the
Company is required to use its best efforts to effect the registration of any
Registrable Securities under the Securities Act as provided in Sections 2 and 3,
the Company will as promptly as is reasonably practicable:
(i) prepare, file and use its best efforts to cause to become
effective a registration statement under the Securities Act regarding
the Registrable Securities to be offered;
(ii) prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective and to comply with the provisions of the Securities
Act with respect to the disposition of all Registrable Securities until
the earlier of such time as all of such Registrable Securities have
been disposed of in accordance with the intended methods of disposition
by the United Parties and the expiration of 90 days after such
registration statement becomes effective;
5
(iii) furnish to the United Parties, and to any underwriter of
such Registrable Securities such number of conformed copies of such
registration statement and of each such amendment and supplement
thereto (in the case of the United Parties, or managing underwriter,
including all exhibits), such number of copies of the prospectus
included in such registration statement (including each preliminary
prospectus and any summary prospectus) or filed under Rule 424(b) under
the Securities Act in accordance with Rule 430A thereunder, in
conformity with the requirements of the Securities Act, such documents
incorporated by reference in such registration statement or prospectus,
and such other documents, as the United Parties or such underwriter may
reasonably request;
(iv) use its best efforts to register or qualify all
Registrable Securities covered by such registration statement under
such other securities or blue sky laws of such States of the United
States as the United Parties or any underwriter of such Registrable
Securities shall reasonably request, and do any and all other acts and
things which may be necessary or advisable to enable the United Parties
or any underwriter to consummate the disposition in such States of the
United States of its Registrable Securities covered by such
registration statement, except that the Company shall not for any such
purpose be required to qualify generally to do business as a foreign
corporation in any jurisdiction wherein it is not so qualified, or to
subject itself to taxation in any such jurisdiction, or to consent to
general service of process in any such jurisdiction;
(v) furnish to the United Parties, addressed to each of them,
(A) an opinion of counsel for the Company, dated the date of the
closing under the underwriting agreement relating to any underwritten
offering, and (B) a "cold comfort" letter signed by the independent
public accountants who have certified the Company's financial
statements included in such registration statement, covering
substantially the same matters with respect to such registration
statement (and the prospectus included therein) and, in the case of
such accountants' letter, with respect to events subsequent to the date
of such financial statements, as are customarily covered in opinions of
issuer's counsel and in accountants' letters delivered to underwriters
in underwritten public offerings
6
of securities and such other matters as the United Parties
may reasonably request; and
(vi) immediately notify the United Parties at any time when
the Company is aware that a prospectus relating to a registration
pursuant to Section 2 or 3 is required to be delivered under the
Securities Act, of the happening of any event as a result of which the
prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances
then existing, and at the request of the United Parties, prepare and
furnish to the United Parties a reasonable number of copies of a
supplement to or an amendment of such prospectus as may be necessary so
that, as thereafter delivered to the purchasers of such Registrable
Securities, such prospectus shall not include an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in
the light of the circumstances then existing.
The Company may require the United Parties to furnish the Company such
information regarding themselves and the distribution of such securities as the
Company may from time to time reasonably request in writing and as shall be
required by law or by the SEC in connection with any registration.
(b) Each of the United Parties agrees that, upon receipt of
any notice from the Company of the happening of any event of the kind described
in Section 4.1(a)(vi) hereof, it will forthwith discontinue dispositions of
Registrable Securities pursuant to the Registration Statement covering such
Registrable Securities until receipt by it of the copies of the supplemented or
amended prospectus contemplated by Section 4.1(a)(vi) hereof.
(c) Subject to Section 3.1(a) and Section 4.1(a)(ii), if a
public offering is not completed within 90 days after the effective date of any
registration statement filed pursuant to Section 2 or Section 3, the Company
shall, at its option or at the request of the United Parties, withdraw from
registration any Registrable Securities which have not been sold during such
period.
7
4.2. Underwriting. (a) If requested by the underwriters for
any underwritten offering of Registrable Securities pursuant to a registration
requested hereunder, the Company will enter into an underwriting agreement with
such underwriters for such offering, such agreement to contain such
representations and warranties by the Company and such other terms and
provisions as are customarily contained in the underwriting agreements with
respect to secondary distributions, including, without limitation, indemnities
and contribution to the effect and to the extent provided in Section 7 and the
provision of opinions of counsel and accountants' letters to the effect and to
the extent provided in Section 4.1(v). Each of the United Parties shall be a
party to any such underwriting agreement and the representations and warranties
by, and the other agreements on the part of, the Company to and for the benefit
of such underwriter, shall also be made to and for the benefit of the United
Parties.
(b) In the event that any registration pursuant to Section 3
shall involve, in whole or in part, an underwritten offering, the Company may
require the Registrable Securities requested to be registered pursuant to
Section 3 to be included in such underwriting on the same terms and conditions
as shall be applicable to the Other Securities being sold through underwriters
under such registration. In such case, each of the United Parties shall be a
party to any such underwriting agreement. Such agreement shall contain such
representations, warranties and covenants by the United Parties and such other
terms and provisions as are customarily contained in underwriting agreements
with respect to secondary distributions, including, without limitation,
indemnities and contribution to the effect and to the extent provided in Section
7. The representations and warranties in such underwriting agreement by, and the
other agreements on the part of, the Company to and for the benefit of such
underwriters, shall also be made to and for the benefit of the United Parties.
Section 5. Preparation; Reasonable Investigation. In
connection with the preparation and filing of each registration statement
registering Registrable Securities under the Securities Act, the Company will
give the United Parties and the underwriters, if any, and their respective
counsel (collectively, the "Inspectors"), such reasonable and customary access
to its books and records (collectively, the "Records") and such opportunities to
discuss the business of the Company with its officers and the independent public
accountants who
8
have certified its financial statements as shall be necessary, in the opinion of
the United Parties and the Inspectors, to conduct a reasonable investigation
within the meaning of the Securities Act. Records which the Company reasonably
determines to be confidential and which it notifies the Inspectors in writing
are confidential shall not be disclosed by the Inspectors unless (i) the
disclosure of such Records is necessary or appropriate to avoid or correct a
misstatement or omission in the registration statement, (ii) the portion of the
Records to be disclosed has otherwise become publicly known, (iii) the
information in such Records is to be used in connection with any litigation or
governmental investigation or hearing relating to any registration statement or
(iv) the release of such Records is ordered pursuant to a subpoena or other
order. Each Holder agrees that it will, upon learning that disclosure of such
Records is sought in a court of competent jurisdiction, give notice to the
Company.
Section 6. Holdback Agreements.
(a) Restriction on Public Sale by the United Parties. Each of
the United Parties agrees not to effect any substantial public sale or
distribution of Voting Securities of the Company during the ten days prior to,
and during the 30-day period beginning on, the later of the effective date of a
registration statement and the commencement of a public offering under a
registration statement (except as part of such registration statement or
offering), if requested by the Company in the case of a non-underwritten public
offering or if requested by the managing underwriter (or underwriters) in the
case of an underwritten public offering.
(b) Restriction on Public Sale by the Company. The
-----------------------------------------
Company agrees not to effect any substantial public sale or
distribution of its Voting Securities (other than any sale or
distribution of such securities in connection with any offering
of securities under an employee or director benefit plan or
dividend reinvestment plan) during the ten days prior to, and
during the 30-day period beginning on, the later of the
effective date of a registration statement, and the
commencement of a public offering under a registration
statement, filed pursuant to Section 2 hereof (except as part
of such registration statement or offering).
Section 7. Indemnification and Contribution. (a)
In the event of any registration of any Registrable Securities
hereunder, the Company will enter into customary
9
indemnification arrangements to indemnify and hold harmless the United Parties,
their respective directors and officers, each other person who participates as
an underwriter in the offering or sale of such securities, each officer and
director of each underwriter, and each other person, if any, who controls the
United Parties or any such underwriter within the meaning of the Securities Act
against any losses, claims, damages, liabilities and expenses, joint or several,
to which such person may be subject under the Securities Act or otherwise
insofar as such losses, claims, damages, liabilities or expenses (or actions or
proceedings in respect thereof) arise out of or are based upon (i) any untrue
statement or alleged untrue statement of any material fact contained in any
registration statement under which such securities were registered under the
Securities Act, any preliminary prospectus or final prospectus included therein
or filed under Rule 424(b) under the Securities Act, or any amendment or
supplement thereto, or any document incorporated by reference therein, or (ii)
any omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
the Company will reimburse each such person for any legal or any other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, liability, action or proceeding; provided that the Company
shall not be liable in any such case to the extent that any such loss, claim,
damage, liability (or action or proceeding in respect thereof) or expense arises
out of or is based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in such registration statement, any such
preliminary prospectus or final prospectus, amendment or supplement in reliance
upon and in conformity with written information expressly furnished to the
Company by the United Parties or such underwriter for use in connection with the
preparation thereof. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of the United Parties or
any such underwriter and shall survive the transfer of such securities by the
United Parties. The Company also shall agree to provide provision for
contribution as shall be reasonably requested by any underwriters in
circumstances where such indemnity is held unenforceable.
(b) Each of the United Parties, by virtue of exercising its
registration rights hereunder, agrees and undertakes severally to enter into
customary indemnification arrangements to indemnify and hold harmless (in the
same manner and to the same extent as set forth in clause (a) of this
10
Section 7) the Company, each director of the Company, each officer of the
Company who shall sign such registration statement, each other person who
participates as an underwriter in the offering or sale of such securities, each
officer and director of each underwriter, and each other person, if any, who
controls the Company or any such underwriter within the meaning of the
Securities Act, with respect to any statement in or omission from such
registration statement, any preliminary prospectus or final prospectus included
therein, or any amendment or supplement thereto, if such statement or omission
was made in reliance upon and in conformity with written information expressly
furnished by it to the Company for use in connection with such registration
statement, preliminary prospectus or final prospectus included therein or any
amendment or supplement thereto. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of the Company or
any such director, officer or controlling person and shall survive the transfer
of the registered securities by such holder of Registered Securities. Each of
the United Parties also shall agree to provide provision for contribution as
shall reasonably be requested by the Company or any underwriters in
circumstances where such indemnity is held unenforceable.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any indemnified Person in respect
of which indemnity may be sought pursuant to this Section, such indemnified
Person shall promptly notify the indemnifying Person in writing and the
indemnifying Person, upon request of the indemnified Person, shall retain
counsel satisfactory to the indemnified Person to represent the indemnified
Person and any others the indemnifying Person may designate in such proceeding
and shall pay the fees and disbursements of such counsel related to such
proceeding. In any such proceeding, any indemnified Person shall have the right
to retain its own counsel, but the fees and disbursements of such counsel shall
be at the expense of such indemnified Person unless (i) the indemnifying Person
shall have failed to retain counsel for the indemnified Person as aforesaid,
(ii) the indemnifying Person and such indemnified Person shall have mutually
agreed to the retention of such counsel or (iii) in the reasonable opinion of
such indemnified Person representation of such indemnified Person by the counsel
retained by the indemnifying Person would be inappropriate due to actual or
potential differing interests between such indemnified Person and any other
Person represented by such counsel in such proceeding. The indemnifying Person
shall not
11
be liable for any settlement of any proceeding effected without its written
consent but if settled with such consent or if there by a final judgment for the
plaintiff, the indemnifying Person agrees to indemnify the indemnified Person
from and against any loss or liability by reason of such settlement or judgment.
(d) Indemnification and contribution similar to that specified
in the preceding subdivisions of this Section 7 (with appropriate modifications)
shall be given by the Company and the United Parties with respect to any
required registration or other qualification of such Registrable Securities
under any federal or state law or regulation of governmental authority of the
United States other than the Securities Act.
Section 8. Participation in Underwritten Registrations. Each
of the United Parties may not participate in any underwritten registration
hereunder unless it (a) agrees to sell its securities on the basis provided in
any underwriting arrangements approved by the Company and (b) completes and
executes all questionnaires, powers of attorney, indemnities, agreements of
contribution, underwriting agreements and other documents reasonably required
under the terms of such underwriting arrangement.
Section 9. Benefits of Registration Rights. The
-------------------------------
Company shall not be obligated to effect any registration
pursuant to Section 2.1 or Section 3.1 hereof if, in the
written opinion of counsel to the Company who shall be
reasonably satisfactory to the United Parties, the intended
method or methods of disposition of any Registrable Securities
by the United Parties may be effected without registration
under the Securities Act and any certificate evidencing the
Registrable Securities so to be disposed need not bear the
restrictive legend set forth in Section 8.3 of the Agreement.
12
Exhibit 3 to
Investment Agreement
SBS BROADCASTING S.A.
Officer's Certificate
Each of ___________________, the ______________ of SBS
Broadcasting S.A., a company organized under the laws of Luxembourg (the
"Company"), and ________, the __________ of the Company, pursuant to Section 3.3
(iv) of the Investment Agreement, dated as of June 29, 1999 (the "Agreement"),
between the Company, on the one hand, and United Pan-Europe Communications N.V.,
a public corporation organized with limited liability under the laws of The
Netherlands, and United International Holdings, Inc., a corporation organized
under the laws of the State of Delaware doing business as UnitedGlobalCom, on
the other hand, hereby certifies that, to the best of his knowledge, after
reasonable investigation:
(1) The representations and warranties made by the Company in
the Agreement were true and correct when made and are true and correct
on the date hereof as though made on and as of this date.
(2) The Company has performed and complied in all material
respects with all agreements, obligations and conditions required by
the Agreement to be performed or complied with by the Company at or
before the date hereof.
1
IN WITNESS WHEREOF, each of the undersigned has hereunto
signed his name.
Date: June __, 1999
By:
By:
2
Exhibit 4A to
Investment Agreement
1
Exhibit 4B to
Investment Agreement
1
Exhibit 5 to
Investment Agreement
__________, 1999
United International Holdings, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, #▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇.▇.▇.
United Pan-Europe Communications N.V.
▇▇▇▇. ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Dear Sirs:
Reference is made to the Investment Agreement, dated as of
June 29, 1999 (the "Investment Agreement"), by and between you and us.
Capitalized terms used but not defined herein have the meanings assigned to them
in the Investment Agreement. You and we hereby agree as follows:
(1) The Company consents to the designation of the Company by
the Board of Directors of the Parent as a Restricted Affiliate, and
agrees that as of the date hereof and for so long as the Company
remains a Restricted Affiliate, the Company shall, and shall cause each
of its Subsidiaries, not to do any of the following in contravention of
each United Indenture without the prior written approval of the United
Parties:
(a) make any Investment that is restricted by Section
4.7 (Limitation on Restricted Payments) of each
United Indenture or that is a Permitted Basket
Investment;
1
(b) make any dividend or other distribution in
respect of the Equity Interests of the Company
and its Subsidiaries or any purchase,
redemption or other acquisition or retirement
of such Equity Interests or Equity Interest of
the United Parties or their Subsidiaries or
any other Restricted Payment that is not
permitted by Section 4.7 (Limitation on
Restricted Payments) of each United Indenture;
(c) incur any Indebtedness (including Acquired
Indebtedness and Indebtedness pursuant to clause
(a) of the third sentence of Section 4.9 of each
United Indenture) or Disqualified Capital Stock
that is not permitted by Section 4.9 (Additional
Indebtedness and Disqualified Capital Stock) of
each United Indenture;
(d) engage to any substantial extent in any line or
lines of business activity other than that which
is a Related Business as set out in Section 4.12
of each United Indenture; and
(e) take any other action that Restricted Affiliates
are not permitted to take under the United
Indentures.
(2) The Company hereby agrees that if the acquisition by the
Company of the assets of Central European Media Enterprises Ltd. is
consummated during such time as the Company is designated and remains a
Restricted Affiliate, CME Media Enterprises B.V., which will become a
wholly owned Subsidiary of the Company as a result of such acquisition,
shall be designated by the Parent's Board of Directors to be a
Restricted Affiliate immediately upon the consummation of such
acquisition, and the Company
2
shall procure that such Subsidiary shall comply with the terms and
conditions set forth in Section (1) above.
(3) The agreements set forth in Sections (1) and (2) above
shall terminate immediately upon the earlier of (a) the date that a RA
Status Termination Event occurs and (b) the later of (i) August 31,
1999 and (ii) the date 10 Business Days after a registration statement
is declared effective by the U.S. Securities and Exchange Commission
covering the Common Shares acquired by the Investor pursuant to
Sections 2.1 and 2.2 of the Investment Agreement provided that during
such 10 Business Day period no stop order covering such registration
statement has been issued, such registration statement has not been
withdrawn by the Company and such registration statement is not
required to be amended. Immediately following such date the Board of
Directors of the Parent shall designate the Company (and any of its
Subsidiaries or Affiliates that have been designated Restricted
Affiliates) not to be Restricted Affiliates. After such date,
irrespective of any action the United Parties may have taken or not
taken under the United Indentures, the Company and its Subsidiaries and
Affiliates shall be deemed not to be Restricted Affiliates and shall
not have any obligations under this letter agreement or the Investment
Agreement relating to such status.
(4) The Company shall not be deemed to have incurred or to
have any obligation under the United Indentures or any securities
outstanding under the United Indentures, including without limitation
any obligation to the holders of any such securities or the trustee
under the United Indentures, or any other creditors of the United Group
or any other Person, and the United Parties hereby jointly
3
and severally agree to indemnify and hold harmless the Company and its
Subsidiaries and Affiliates and its and their employees, officers,
directors, agents and advisers against any claims, losses, expenses,
costs (including reasonable fees and expenses of counsel) or damages of
any kind suffered or incurred by the Company or its Subsidiaries or
Affiliates as a result of any claims or actions by Persons other than
the United Parties arising out of or relating to the designation of the
Company or any of its Subsidiaries or Affiliates as a Restricted
Affiliate pursuant to or in connection with this letter agreement and
the Investment Agreement.
(5) Notwithstanding Section 8.6 of the Investment Agreement,
this letter agreement shall be deemed upon execution to be incorporated
in, and a part of, the Investment Agreement.
4
(6) This letter agreement shall be governed by and construed
in accordance with the laws of the State of New York.
SBS BROADCASTING S.A.
By:
Name:
Title:
Accepted and Agreed:
UNITED INTERNATIONAL HOLDINGS, INC.
By:
Name:
Title:
UNITED PAN-EUROPE COMMUNICATIONS N.V.
By:
Name:
Title:
5
Exhibit 6A to
Investment Agreement
UNITED INTERNATIONAL HOLDINGS, INC.
Officer's Certificate
Each of ___________________, the ______________ of United
International Holdings, Inc., a corporation organized under the laws of the
State of Delaware (the "Parent"), and ________, the __________ of the Parent,
pursuant to Section 3.4 (iv) of the Investment Agreement, dated as of June 29,
1999 (the "Agreement"), between the Parent and United Pan-Europe Communications
N.V., a public corporation organized with limited liability under the laws of
The Netherlands doing business as UnitedGlobalCom, on the one hand, and SBS
Broadcasting S.A., a company organized under the laws of Luxembourg, on the
other hand, hereby certifies that, to the best of his knowledge, after
reasonable investigation:
(1) The representations and warranties made by the Parent in
the Agreement were true and correct when made and are true and correct
on the date hereof as though made on and as of this date.
(2) The Parent has performed and complied in all material
respects with all agreements, obligations and conditions required by
the Agreement to be performed or complied with by the Parent at or
before the date hereof.
6
IN WITNESS WHEREOF, each of the undersigned has hereunto
signed his name.
Date: June __, 1999
By:
By:
7
Exhibit 6B to
Investment Agreement
UNITED PAN-EUROPE COMMUNICATIONS N.V.
Officer's Certificate
Each of ___________________, the ______________ of United
Pan-Europe Communications N.V., a public corporation organized with limited
liability under the laws of The Netherlands (the "Investor"), and ________, the
__________ of the Investor, pursuant to Section 3.4 (iv) of the Investment
Agreement, dated as of June 29, 1999 (the "Agreement"), between the Investor and
United International Holdings, Inc., a corporation organized under the laws of
the State of Delaware doing business as UnitedGlobalCom, on the one hand, and
SBS Broadcasting S.A., a company organized under the laws of Luxembourg, on the
other hand, hereby certifies that, to the best of his knowledge, after
reasonable investigation:
(1) The representations and warranties made by the Investor in
the Agreement were true and correct when made and are true and correct
on the date hereof as though made on and as of this date.
(2) The Investor has performed and complied in all material
respects with all agreements, obligations and conditions required by
the Agreement to be performed or complied with by the Investor at or
before the date hereof.
1
IN WITNESS WHEREOF, each of the undersigned has hereunto
signed his name.
Date: June __, 1999
By:
By:
2
Exhibit 7A to
Investment Agreement
1
Exhibit 7B to
Investment Agreement
