SHARE PURCHASE AGREEMENT
between
the Sellers
represented by
EQT Scandinavia Limited
and
United Pan-Europe Communications N.V.
the Purchaser
concerning the acquisition of
NBS Nordic Broadband Services XX
XXXXXXXXXX XXXXXXXXX
TABLE OF CONTENTS
1. DEFINITIONS...............................................................2
2. SALE OF THE SHARES AND THE INSTRUMENTS....................................8
3.CLOSING 10
4. WARRANTIES AND REPRESENTATIONS OF THE SELLERS............................14
5. COMPENSATION AND LIMITATION OF SELLERS'LIABILITY.........................26
6. SETTLEMENT OF CLAIMS AND ESCROW ARRANGEMENT..............................35
7. WARRANTIES AND REPRESENTATIONS OF THE PURCHASER..........................38
8. INDEMNITY 41
9. CLOSING CONDITIONS.......................................................41
10. CO-INVESTMENT RIGHT AND NON-COMPETITION.................................43
11. CONFIDENTIALITY.........................................................44
12. NON-SOLICITATION........................................................45
13. MISCELLANEOUS...........................................................45
14. NOTICES 45
15. ASSIGNMENT..............................................................47
16. EXPENSES 47
17. WAIVER 47
18. PUBLICITY 48
19. SELLERS'PRIMARY AND SECONDARY LIABILITY, ATTORNEY IN FACT AND
PROCESS AGENT...........................................................48
20. DISPUTES AND GOVERNING LAW..............................................49
LIST OF EXHIBITS
Exhibit A Powers of Attorney
Exhibit 1.A Convertible Debenture Holders
Exhibit 1.B Data Room Index
Exhibit 1.C Financial Statements
Exhibit 1.D Management
Exhibit 1.E Material Contracts
Exhibit 1.F The Note
Exhibit 1.G Shareholders
Exhibit 1.H Subsidiaries
Exhibit 1.I Warrant Holders
Exhibit 3.2 (b) Guarantees
Exhibit 3.3 (e) Intra Group Debt
Exhibit 4.1.3 Change of Control
Exhibit 4.1.5 Encumbrances
Exhibit 4.1.7 Rights to Shares
Exhibit 4.1.9 Registration Certificates and Articles of
Association
Exhibit 4.2.2 Liabilities outside the Ordinary Course of
Business
Exhibit 4.2.4 Contingent Liabilities
Exhibit 4.4 Insurance
Exhibit 4.5.1 Intellectual Property
Exhibit 4.6.3 Compliance with Law
Exhibit 4.7.1 Litigation
Exhibit 4.8.5 Collective Bargaining Agreements
Exhibit 4.8.6 Pensions
Exhibit 4.8.7 Compensation to Management
Exhibit 4.9.2 Assets and Property
Exhibit 4.11.2 Intra Group Arrangements
Exhibit 4.12 Loans and Financial Facilities
Exhibit 4.13 Year 2000 Compliance
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THIS AGREEMENT is made and entered into as of 9 July 1999
by and between
the Sellers, represented by EQT Scandinavia Limited, a company duly incorporated
and organised under the laws of Guernsey, having its principal office in
Guernsey, the Channel Islands (hereinafter referred to as "EQT"), as set forth
in Exhibit A.
and
United Pan-Europe Communications N.V., a company duly incorporated and organised
under the laws of the Netherlands, having its principal office in Amsterdam,
(hereinafter referred to as the "Purchaser").
WITNESSETH
WHEREAS the Shareholders together hold all of the twenty-two million seven
hundred thousand (22,700,000) issued and outstanding shares, divided into
twenty-two million one hundred and fifteen thousand nine hundred and
eighty-three (22,115,983) class A shares and five hundred and eighty-four
thousand seventeen (584,017) class B shares, with a par value of SEK 1.00 per
share, in NBS Nordic Broadband Services AB, Reg. no. 556536-1598, a company duly
incorporated and organised under the laws of Sweden, having its principal office
in Stockholm (hereinafter referred to as the "Company");
WHEREAS the Convertible Debenture Holders hold the Convertible Debentures, as
defined, and the Warrant Holders hold the Warrants, as defined, and whereas
StjarnTVnatet AB, Reg. no. 556497-8210, a company duly incorporated and
organised under the laws of Sweden and a wholly-owned subsidiary of the Company,
for the purpose of transferring them to future managers and employees of the
Group Members, holds a number of subordinated convertible debt instruments and
debt instruments with detachable warrants, representing the remaining part of
such instruments issued by the Company;
WHEREAS the Shareholders, considering an initial public offering of all class A
shares in the Company, have drawn up the Management Presentation and the
Preliminary Offering Circular, as defined, concerning the Company, both of which
have been provided to the Purchaser; and
WHEREAS the Sellers have offered to sell their respective shares, convertible
debt instruments and warrants in the Company to the Purchaser and the Purchaser
desires to purchase the Sellers' respective shares, convertible debt instruments
and warrants.
NOW THEREFORE
In consideration of the mutual covenants and undertakings set forth herein and
in the Exhibits hereto, the parties agree as follows:
1. DEFINITIONS
In this Agreement, the following terms and expressions shall have the following
meanings:
"AEX" shall mean AEX Effectenbeurs N.V. of Amsterdam Exchanges N.V., the
Amsterdam stock exchange.
"Agreement" shall mean this Share Purchase Agreement by and between the
Sellers and the Purchaser including all Exhibits hereto, each of
which constitutes an integral part of this Agreement, as it may be
amended from time to time.
"Agreement Date" shall mean the date on which this Agreement is signed by the
Sellers, represented by EQT, and the Purchaser.
"Balance Sheet Date" shall mean December 31, 1998.
"Business Day" shall mean any day when banks are open for general banking
business in Stockholm and in Amsterdam.
"Closing" shall mean the completion of the sale and purchase of the Shares
and the Instruments in accordance with the provisions of this
Agreement.
"Closing Date" shall mean 30 July 1999, such other later date as
specifically agreed between the parties or three (3) days after
the day that UPC has raised sufficient financial means to effect
the Closing, provided that the Closing Date shall occur on 30
September 1999 at the latest.
"Connected Home" shall mean each household or enterprise connected to any of
the networks for cable based services of StjarnTVnatet AB or
Stockholms Kabel TV AB.
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"Convertible Debentures" shall mean the subordinated convertible debt
instruments held by the Convertible Debenture Holders at the
Closing, giving a right to obtain a total of two hundred and
ninety thousand five hundred (290,500) class A shares in the
Company. The Convertible Debentures together with the convertible
debt instruments held by StjarnTVnatet AB equal 100 per cent of
the issued and outstanding convertible debt instruments in the
Company.
"Convertible Debenture Holders" shall mean the holders of the Convertible
Debentures, as listed in Exhibit 1.A.
"Data Room" shall mean a data room containing information on the Company
and its Subsidiaries, as listed in the Data Room Index, which room
was available to the Purchaser and its advisers during the period
of 22 May through 26 May 1999 at the offices of Xxxxxxxxxx
Swartling Advokatbyra in Stockholm, Sweden.
"Data Room Index" shall mean the list of documents available in the Data
Room, attached hereto as Exhibit 1.B.
"Escrow Account" shall have the meaning given in Section 2.4 (ii).
"Escrow Agent" shall mean the third party appointed by EQT and the
Purchaser prior to the Closing to hold the Escrow Account.
"Escrow Agreement" shall have the meaning given in Section 2.4 (ii).
"Exhibits" shall mean the attachments to this Agreement designated as such
and incorporated into this Agreement by reference.
"Financial Statements" shall mean the consolidated audited balance sheet and
profit and loss account of the Company and its subsidiaries as of
the Balance Sheet Date, attached hereto as Exhibit 1.C.
"GAAP" shall mean the generally accepted accounting principles applied in
Sweden.
"Group" shall mean the Company and the Subsidiaries collectively.
"Group Member" shall mean the Company and each of the Subsidiaries
collectively and/or individually, as the case may be.
"Instruments" shall mean the Warrants and Convertible Debentures collectively or
any Warrant or Convertible Debenture individually, as the case may
be. For the avoidance of any doubt, the Instruments shall not
include the subordinated convertible debt instruments and the debt
instruments with detachable warrants held by StjarnTVnatet AB as
of the Closing.
"Intellectual Property" shall mean patents, trademarks, registered designs,
applications for any of the foregoing, copyrights and registerable
business names and any similar rights in any country and all
rights under licences and consents in relation to any of the
foregoing.
"Issuer" shall mean United Pan-Europe Communications N.V., which company
will issue the Note to EQT on the Closing Date.
"Know-How" shall mean inventions, customer lists and other information
related to customers and any other information which is kept
confidential by any Group Member.
"Lock-up Period" shall mean the period of six (6) months following
Conversion (as defined in the Note), during which EQT is not
entitled to dispose of the LV Shares acquired through the
Conversion.
"LV Shares" shall mean the common low-voting shares with a nominal
value of EUR 0.02 in the outstanding share capital of the Issuer.
"Management" shall mean the individuals listed in Exhibit 1.D.
"Management Presentation" shall mean the management presentation of the
Company as prepared by the management of StjarnTVnatet AB, dated
28 April 1999, a copy of which the Purchaser has been provided
with prior to the signing of this Agreement.
"Material Contracts" shall mean the agreements listed in Exhibit 1.E to
which a Group Member is a party.
"Net Debt" shall mean all consolidated interest-bearing debt less all
consolidated cash and cash equivalents of the Company and the
Subsidiaries on 30 July 1999.
"Note" shall mean the USD 100 million Unsecured Subordinated Convertible
Loan Note to be issued by the Issuer to EQT as part payment of the
Purchase Price, in the form attached hereto as Exhibit 1.F.
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"Preliminary Offering Circular" shall mean the preliminary offering circular
prepared by the board of directors of the Company, dated 27 May
1999, for the purpose of an initial public offering of the
Company's class A shares, a copy of which the Purchaser has been
provided with prior to the signing of this Agreement.
"Property Owner" shall mean each owner of a building to which StjarnTVnatet
AB or Stockholms Kabel TV AB provides cable based services.
"Purchase Price" shall have the meaning given in Section 2.4.
"Sellers" shall mean the Shareholders, the Warrant Holders and the
Convertible Debenture Holders collectively.
"Shareholders" shall mean the holders of the Shares, as listed in Exhibit 1.G.
"Shares" shall mean the twenty-two million seven hundred thousand
(22,700,000) shares in the Company, divided into twenty-two
million one hundred and fifteen thousand nine hundred and
eighty-three (22,115,983) class A shares and five hundred and
eighty-four thousand seventeen (584,017) class B shares with a par
value of SEK 1.00 per share, held by the Shareholders and
equalling 100 per cent of the total issued and outstanding shares
in the Company as of the Closing Date.
"Subscriber" shall mean a customer of StjarnTVnatet AB or Stockholms Kabel TV
AB, who is authorised to receive cable-TV services other than
"must carry"-channels.
"Subsidiary" shall mean each of the companies wholly owned, directly or
indirectly, by the Company as listed in Exhibit 1.H.
"Tax" shall mean income tax, corporate tax, capital gains tax,
securities transfer tax, value added tax, social securities fees,
salary tax, sales tax and capital duty tax and all other forms of
income, employment, capital and sales or other tax and all
penalties, charges and interest relating to any of the foregoing.
"Warrants" shall mean the debt instruments with detachable warrants held by
the Warrant Holders at the Closing, giving a right to subscribe
for a total of three million five hundred and forty-one thousand
(3,541,000) class A shares in the Company, divided into Class I
warrants representing one million six hundred and fifty thousand
five hundred (1,650,500) class A shares and Class II warrants
representing one million eight hundred and ninety thousand five
hundred (1,890,500) class A shares in the Company. The Warrants
together with the debt instruments with detachable warrants held
by StjarnTVnatet AB equal 100 per cent of the issued and
outstanding warrants in the Company.
"Warrant Holders" shall mean the holders of the Warrants, as listed in Exhibit
1.I.
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SALE OF THE SHARES and the instruments
2.1 Upon the terms and subject to the conditions set forth in this
Agreement, each Shareholder hereby sells the number of Shares set
forth opposite its name in Exhibit 1.G hereto, free and clear of
all liens, claims, charges or encumbrances of any kind, together
with all rights attached and accruing thereto to the Purchaser and
the Purchaser agrees to purchase the Shares from the Shareholders
on the Closing Date.
2.2 Upon the terms and subject to the conditions set forth in this
Agreement, each Warrant Holder hereby sells the number of Warrants
set forth opposite its name in Exhibit 1.I hereto, free and clear
of all liens, claims, charges or encumbrances of any kind,
together with all rights attached and accruing thereto to the
Purchaser and the Purchaser agrees to purchase the Warrants from
the Warrant Holders on the Closing Date.
2.3 Upon the terms and subject to the conditions set forth in this
Agreement, each Convertible Debenture Holder hereby sells the
number of Convertible Debentures set forth opposite its name in
Exhibit 1.A hereto, free and clear of all liens, claims, charges
or encumbrances of any kind, together with all rights attached and
accruing thereto to the Purchaser and the Purchaser agrees to
purchase the Convertible Debentures from the Convertible Debenture
Holders on the Closing Date.
2.4 In consideration for the Shares and the Instruments, the Purchaser
shall pay a total of USD 447 million less the Net Debt (the
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"Purchase Price"), of which amount USD 347 million less the Net
Debt shall be paid in cash and the remainder in the form of the
Note as follows:
(i) The amount payable in cash shall be paid by the
Purchaser before 10.00 a.m. Stockholm time on the
Closing Date by wire transfer of immediately available
funds to a bank account designated by EQT; and
(ii) The Note in the amount of USD 100 million issued to EQT
shall on the Closing Date be delivered by the Issuer to
a separate interest earning account in the name of EQT
(the "Escrow Account"), to be held by the Escrow Agent
pursuant to the escrow agreement to be entered into by
the Sellers, represented by EQT, and the Purchaser
prior to the Closing, which agreement shall implement
the terms and conditions of Section 6 (the "Escrow
Agreement").
2.5 In order to determine the amount payable on the Closing Date in
cash in accordance with Section 2.4 (ii), the amount of USD 347
million shall be reduced by the amount of the Net Debt. For
purposes of determining the value of the Net Debt in USD, the
buying rate of USD for SEK of SE-Banken at 11 a.m. on 30 July
1999 shall be applied. If the Net Debt and/or the buying rate are
not known at the Closing, then the latest available information
shall be applied and an adjustment made as soon as the required
information is available.
2.6 Interest at the annual rate of 8 per cent, calculated on the basis
of a year of 365 days, shall be paid on the Purchase Price from 30
July 1999 or, provided that the Closing Date is not postponed due
to the acts or omissions, including the lack of financing, of the
Purchaser, from such later date as mutually agreed between the
parties to be the new Closing Date, if the Closing is delayed
beyond such date due to the acts or omissions, including the lack
of financing, of the Purchaser. Any interest due hereunder, shall
at the Closing be paid to the Sellers by means of an unsecured
subordinated convertible loan note issued by the Issuer to EQT on
the same terms and conditions, except as to the amount, as the
Note. Provided that the Closing is not postponed beyond 30
September 1999, interest on the Purchase Price according to the
above shall be the Sellers sole remedy if the Closing is postponed
due to the acts or omissions, including the lack of financing, of
the Purchaser.
3. CLOSING
3.1 Closing shall take place on the Closing Date at the offices of
Xxxxxxxxxx Xxxxxxxxx Advokatbyra, Stockholm.
3.2 At the Closing the Purchaser shall:
(a) against delivery by the Sellers of the documents set
forth in Section 3.3, pay to the Sellers the amount
payable in cash in accordance with Section 2.4 (i) and
deliver the Note issued by the Issuer to the Escrow
Agent pursuant to Section 2.4 (ii);
(b) deliver to EQT proof that the guarantees given by EQT
for the benefit of the Company or any of the
Subsidiaries, as listed in Exhibit 3.2 (b), have been
released and settled effective as of the Closing Date
in accordance with Section 9.2.2. Any and all costs,
charges or fees to obtain such release and settlement
shall be borne by the Purchaser;
(c) deliver to EQT the legal opinion on the Note referred to in Section 9.2.3.
(d) deliver to EQT the legal opinion on the due
authorisation of the Purchaser referred to in Section
9.2.4.
(e) deliver to the Sellers all certificates and other
documents required to be delivered by the Purchaser
under this Agreement and such further documents as the
Sellers may reasonably require in connection with the
Closing, provided that the Purchaser has been notified
of such a request not later than 10 days before the
Closing Date; and
immediately following the Closing, cause an extra ordinary general
shareholder's meeting of the Company and the Subsidiaries to be
held in order to appoint new directors of the Board of Directors
of the Company and the Subsidiaries in replacement of those
appointed by the Sellers who resign at the Closing.
3.3 At the Closing the Sellers shall:
5
(a) instruct the account operating institutions, which
operate Sellers' securities accounts (Sw.
avstamningskonton) on which the Shares and the
Instruments are registered, to cause the Shares and the
Instruments to be transferred to the Purchaser's
securities account;
(b) deliver to the Purchaser a copy of the share register
(Sw: aktieboken) of the Company;
(c) deliver to the Purchaser all available certificates of
floating charges on the assets of any Group Member;
(d) have caused all members of the Board of Directors of
the Company and the Subsidiaries (including deputies),
which have been nominated by the Shareholders, to
deliver resignation letters at the Closing pursuant to
which they resign as members of the Board of Directors
and waive all claims in relation to the Company other
than ordinary compensation for services rendered to
that date;
(e) deliver to the Purchaser evidence that all intra group
debt between the Sellers or EQT, as the case may be, on
the one hand and the Company or any of the Subsidiaries
on the other, as listed in Exhibit 3.3 (e), has been
released and settled effective as of the Closing Date.
Any and all costs, charges or fees to obtain such
release and settlement shall be borne by the Sellers;
(f) deliver to the Purchaser a letter signed by Investor AB
regarding co-investment and non-competition; and
(g) deliver to the Purchaser all certificates and other
documents required to be delivered by the Sellers under
this Agreement and such further documents as the
Purchaser may reasonably require in connection with the
Closing, provided that EQT has been notified of such a
request not later than 10 days before the Closing Date.
3.4 The Purchaser shall procure that the retiring board members and
deputies as well as the managing directors of each of the Group
Members shall be discharged from liability at the respective
following Ordinary General Shareholders' Meeting, provided that
the statutory auditor(s) of the respective Group Member shall so
recommend.
No legal action shall be taken against any of the retiring board
members, deputies or managing directors on account of any act or
omission made or omitted by any of them during their term of
office, save for acts or omissions made by any of them wilfully or
through negligence, which acts or omissions have caused a Group
Member to suffer damage.
3.5 If Closing has not occurred by 30 September 1999, due to the non-fulfilment
of any of the conditions described in Section 9 below, this Agreement
shall, upon the expiry of said period, and provided that the parties do not
agree otherwise in writing, terminate and become null and void without any
party having any liability towards the other, provided, however, that if
the Closing has not duly occurred by reason of the Purchaser's breach of
any of its obligations hereunder or the Sellers' breach of any of their
obligations hereunder, the non-defaulting party may terminate the Agreement
and such termination shall be without prejudice to the rights of the
non-defaulting party in its discretion to obtain any other available
remedies, such as damages and specific performance.
3.6 If Closing does not occur according to the above, each party will:
(i) redeliver all documents, work papers, data files and
other materials of any other party relating to the
transactions contemplated hereby, whether so obtained
before or after the execution of this Agreement, to the
party furnishing the same; and
(ii) destroy all documents, work papers, data files and
other materials developed by its auditors, advisers,
agents and employees in connection with the
transactions contemplated hereby which embody
proprietary information or trade secrets furnished by
any party hereto or deliver such documents, work papers
and other materials to the party furnishing the
information.
All information provided to any party hereto with respect to the
business of the other party or any of its subsidiaries, has been
provided solely for the purpose of consummating the transaction
contemplated herein and, in the event Closing does not occur, such
information shall not at any time be used for any other purpose
whatsoever and shall not be disclosed by such party to any third
6
person to the detriment of the party furnishing such information
or any of its subsidiaries or affiliates.
4. WARRANTIES AND REPRESENTATIONS OF THE SELLERS
Each of the Sellers hereby represents and warrants to the
Purchaser on the date hereof and on the Closing Date that:
4.1 Corporate
4.1.1 The Purchaser will acquire good and legal title to the Shares and
the Instruments subject to no liens, encumbrances or rights of
third parties of any kind.
4.1.2 EQT is a corporation duly organised and validly existing under the
laws of Guernsey. This Agreement has been duly authorised and
approved by all required corporate action of EQT. EQT has, and
will have, the corporate power and authority to make, execute,
deliver and perform all of the Sellers' obligations under this
Agreement on its own behalf and on behalf of each other Seller.
This Agreement constitutes and will constitute a legal, valid and
binding obligation of EQT and the other Sellers, enforceable
against them in accordance with its terms.
4.1.3 The execution of, and the performance by the Sellers of their
obligations under this Agreement (i) will comply with all
relevant laws and regulations, (ii) will not require, conflict
with or result in a breach of any registration, licence, consent
or approval of any governmental or regulatory authority or third
party, (iii) will not conflict with or result in a breach of any
provisions of any agreement, instrument, judgement or order to
which the Company or any of the Subsidiaries is a party, or by
which any Group Member is bound, or of their respective Articles
of Associations or equivalent constituent documents, and (iv)
except as set forth in Exhibit 4.1.3, will not entitle the other
party to any Material Contract, by which any Group Member is
bound, to terminate such agreement.
4.1.4 The Shares constitute the entire issued capital stock of the
Company. The Shares are legally and validly issued and fully paid
and not subject to any pre-emptive rights.
4.1.5 Except as set forth in Exhibit 4.1.5, the Company owns the entire
issued capital stock of each of the Subsidiaries, directly or
indirectly, free and clear of any lien, encumbrance or other
restriction whatsoever.
4.1.6 None of the Company and the Subsidiaries owns, directly or
indirectly, any share capital or other equity or ownership or
proprietary interest in any corporation, partnership, association,
joint venture or other entity, except in another Group Member.
4.1.7 Except for the Instruments and as set forth in Exhibit 4.1.7,
there are no outstanding subscriptions, options or similar rights
relating to the Shares in the Company or the shares in the
Subsidiaries and no securities giving a right to conversion into,
or any agreement or arrangement which accords to any person the
right to acquire, shares in any of the Group Members.
4.1.8 Each of the Group Members is duly incorporated and validly
existing under their respective laws of jurisdiction of domicile
and each has the corporate power and all necessary licences,
permits and authorisations to own its property and to carry on its
business as presently conducted.
4.1.9 The Registration Certificates and Articles of Association included
in Exhibit 4.1.9 hereto reflect the present status of the Group
Members.
4.1.10 The shareholder registers and all minutes from shareholders'
meetings and board meetings of each of the Group Members have been
properly kept and are in the possession of each respective company
and contain accurate records in all respects of the matters which
should by law be addressed in such shareholder registers and
minutes.
4.1.11 The Group Members are the only entities, which directly,
indirectly or through subcontractors conduct the business of the
Group as described in the Preliminary Offering Circular.
4.1.12 Since 1 January 1995, no Group Member has transferred shares,
other interests in or the entire or a substantial part of the
assets of any subsidiary previously or still owned by such company
under which transactions a Group Member as of the Closing Date is
bound by any representations or warranties with respect to such
shares, interests or assets against a third party.
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4.2 Financial
4.2.1 The Financial Statements have been made in conformity with
applicable law and GAAP for each Group Member. The Financial
Statements state all liabilities which are required to be stated
by applicable law and GAAP.
4.2.2 Except as set forth in the Management Presentation, in the
Preliminary Offering Circular and in Exhibit 4.2.2, the Group
Members' activities during the period from the Balance Sheet Date
to the Agreement Date have been conducted, and from the Agreement
Date to the Closing Date will be conducted, in accordance with the
ordinary course of business with a view to maintaining each of
their respective businesses as a going concern and there has not
occurred or arisen since the Balance Sheet Date, or will not occur
until the Closing Date, with respect to any of the Group Members:
(i) any material adverse change in the operation of its business;
(ii) any material obligations, commitments or liabilities, liquidated
or unliquidated, contingent or otherwise, whether for Tax or
otherwise, except obligations, commitments and liabilities
arising in the ordinary course of business;
(iii) any change of accounting methods, principles or practices;
(iv) any increase in the rates of compensation (including bonuses)
payable or to become payable to any officer, employee or
consultant other than increases in the ordinary course of
business, or acceleration in the rate at which any such
compensation accrues;
(v) any payment of management fees;
(vi) any declaration or payment of dividends or interim dividends or
any other payment or distribution of any property, including any
sales at an undervalue and any purchases at an overvalue in
relation to any of the respective Group Members' shareholders,
other than as reflected in the Financial Statements; or
(vii) any transactions other than in the ordinary course of business
and on arm's length conditions; and
(viii) no Group Member has agreed or arranged to do any of the foregoing.
For purposes of the foregoing, "material" shall mean a financial
effect of SEK five (5) million or more.
4.2.3 The accounting books and records of each of the Group Members have
been maintained in accordance with applicable laws and GAAP and
are up-to-date.
4.2.4 Except as set forth in Exhibit 4.2.4, no Group Member will have
any material contingent liabilities (Sw. villkorad forpliktelse)
of any kind as of the Closing date towards a party other than
another Group Member, including but not limited to any conditional
shareholders' contributions.
4.2.5 To the reasonable commercial knowledge of the Sellers there is no
fact or event relating to the potential loss of the benefit of any
relationship with any suppliers or customers which loss would have
a material adverse effect on the business of the Company or any
Subsidiary. For purposes hereof "material adverse effect" shall
mean a loss of no less than SEK 5 million.
4.2.6 As of 1 June 1999, the number of Connected Homes was not less than
240,000 and there has not as of the Agreement Date been, or will
not prior to the Closing Date be, any material adverse change in
that number. For purposes of the foregoing, "material adverse
change" shall mean that the actual number of Connected Homes is
inferior to 240,000 by more than two (2) per cent. As of 30 June
1999, the number of Subscribers was 137,000.
4.3
Tax and other charges
4.3.1 All necessary Tax and other returns and reports required to be
filed prior to the Closing Date by the Group Members are complete
and accurate and have been properly filed with appropriate
authorities.
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4.3.2 All Tax assessed or due by any of the Group Members on or before
the Closing Date has, where applicable, been fully paid or an
adequate reserve or provision therefore has been set up in the
books. There have not since 1 January 1993 been any circumstances,
and there will prior to Closing be no circumstances, which will
result in the imposition of any additional Tax on any Group
Member, including without limitation any liability for social
security charges resulting from the issuance of the Convertible
Debentures and the Warrants to employees.
4.3.3 Except as provided for in the Financial Statements and with the
reservation set forth in Exhibit 4.3.2, all amounts due and
payable by the Group Members as of the Closing for the purpose of
social security, insurance, pensions and the like have been duly
and punctually paid and all amounts required to be deducted from
monies paid to its employees for the purpose of social security,
insurance, pensions and the like have been deducted and have been
accounted for to the appropriate authority or person.
4.3.4 As of the Agreement Date, there are no Tax audits pending with respect to
any Group Member.
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4.4 Insurances
The assets of the Group Members are insured under the insurance
policies listed in Exhibit 4.4. The insurance coverage pursuant to
said policies will be maintained until the Closing Date.
4.5 Intellectual Property and Know-How
4.5.1 All Intellectual Property which is currently used in the business
of the Group Members, as listed in Exhibit 4.5.1, is owned by or
licensed to the Group Members and is not subject to any liens or
encumbrances.
4.5.2 No Group Member has as of the Agreement Date received any notice
of any infringement by any third party of any Intellectual
Property owned by or licensed to any Group Member.
4.5.3 The registrations of all registered Intellectual Property are in
force and the renewal fees for all such registrations have
heretofore been paid.
4.5.4 To the best of Sellers' knowledge, the use by the Group Members of
the Intellectual Property and Know-How and the conduct of their
business until Closing shall not have constituted an infringement
of the intellectual property rights of third parties.
4.5.5 No Group Member is in breach of any licence or other agreement
relating to Intellectual Property or Know-How.
4.6
Compliance
4.6.1 All necessary licences, consents, permits and authorisations have
been obtained by the Group Members to carry on their businesses in
the places and in the manner in which such businesses are now
conducted and all such licences, consents, permits and
authorisations are valid and subsisting and have been complied
with in all material respects.
4.6.2 No circumstances have as of the Agreement Date occurred which
result in or may result in any material limitation or restriction
in the conduct of the present activities of the Group, with
respect to licences, consents, permits or authorisations obtained.
4.6.3 Each Group Member has, with the reservations set forth in Exhibit
4.6.3, complied in all material respects with applicable laws in
the conduct of the business of such Group Member.
4.7 Litigation and investigations
4.7.1 Except as disclosed in Exhibit 4.7.1, the Group Members are not as
of the Agreement Date involved in, or to the best of Sellers'
knowledge, under the threat of any litigation, arbitration
proceedings in any court or tribunal, Tax proceedings or
administrative proceedings or any other actions, suits, claims,
10
proceedings or investigations affecting their businesses or
assets, and Sellers are not aware of any claims or circumstances
likely to give rise to the same.
4.7.2 To the best of the Sellers' knowledge, no investigation or inquiry
is as of the Agreement Date being or has been conducted since and
including 1996 by any governmental, fiscal, regulatory or other
body in respect of the affairs of any Group Member, and no such
investigation is pending, threatened or expected.
4.8 Employees
4.8.1 Each Group Member employs, or has by other means contracted, all
persons necessary for it to carry on its business as conducted on
the Agreement Date.
4.8.2 There is as of the Agreement Date no dispute between any of the
Group Members and any employee or former employee, trade union,
local or national, pending or, to the best of Sellers' knowledge,
threatened.
4.8.3 The consummation of the transaction contemplated by this Agreement
will not (i) entitle any employee of any Group Member to severance
pay, unemployment compensation or any other payment or (ii)
accelerate the time of payment or vesting of, or increase the
amount of compensation due to any such employee, or (iii) entitle
any employee to terminate or shorten his or her employment.
4.8.4 All employment contracts of the Group Members in respect of their
ordinary employees contain terms and conditions normal for the
particular line of business.
4.8.5 All collective bargaining agreements in force on the Agreement
Date in respect of any of the Group Members are listed in Exhibit
4.8.5.
4.8.6 Except as set forth in Exhibit 4.8.6, no Group Member is liable to
pay any pension to any present or former employee, except the
payment of premiums for pension insurance under the ITP Plan.
4.8.7 Except as set forth in Exhibit 4.8.7, neither the Company nor any
of the Subsidiaries has any contractual or other obligation to pay
a pension, a payment in lieu of notice or any compensation or
damages, whether to any person or trade unions, as a consequence
of labour disputes or for loss of office to any President,
Director or employee or former President, Director or employee or
to any other person.
4.8.8 As of signing, no management member of any Group Member has given
notice of termination of his/her employment.
4.9 Assets and property
4.9.1 All assets, properties and rights, whether or not recorded in the
books of the Group Members, that are presently owned by the Group
Members and being used in the business of the Group Members, are
included in the transfer to the Purchaser under the terms of this
Agreement.
4.9.2 Except as set forth in Exhibit 4.9.2, each Group Member is the
owner of each of such assets referred to in Section 4.9.1,
including the assets that are reflected in the Financial
Statements, plus any assets acquired since the Balance Sheet Date
and less any assets disposed of since that date in the normal
course of business, and has good and marketable title to all of
such assets, free and clear of any lien or other encumbrance
(including retention of title clauses) in respect of assets
acquired in its ordinary course of business. All floating charges
on the assets of the Group Members are listed in Exhibit 4.9.2
and no such floating charge is currently pledged.
4.9.3 Each Group Member owns or leases all assets necessary for it to
carry on its business as presently conducted and such assets are
in good working order, fully maintained and serviced on a timely
basis, ordinary wear and tear excepted.
4.9.4 No Group Member is subject to any obligation to purchase any Euroboxes.
4.10 Agreements
4.10.1 The Group Members are not bound by any agreement or undertaking
which is not made in connection with its business or which has
been made on non-commercial terms. The Group Members have
fulfilled all material obligations under such agreements.
4.10.2 There are no other material contracts than those listed in Exhibit
1.E. The Material Contracts are in full force and effect and the
Group Members have, to the best of Sellers' knowledge, fulfilled
all material obligations under such agreements. No Group Member
11
has entered into any agreement whereby such Group Member has
granted any third party a licence or other exclusive right to
provide portal or telephony services. For purposes hereof,
"material contract" shall mean all agreements with an expenditure
of more than SEK one (1) million during a period of twelve (12)
consecutive months.
4.11 Relationship with the Sellers
4.11.1 As of Closing, no Seller shall have any claim of any kind against
any Group Member except (as the case may be) for any agreed
remuneration in his or her capacity of employee or director in the
Group Member, and vice versa.
4.11.2 Except as set forth in Exhibit 4.11.2 and except for such ordinary
arrangements, liabilities and obligations, which have been made or
incurred by any of the Sellers in their capacity as employee or
director of any Group Member, there exist no agreements or
arrangements between any Group Member on the one hand and the
Sellers on the other hand, no liabilities and obligations
(contingent or otherwise) owed by any Group Member in respect of
the Sellers and no guarantees or similar commitments issued by any
Group Member for obligations owed by any of the Sellers.
4.11.3 No payments of any kind, including but not limited to dividends
and management charges, have been made by any Group Member to the
Sellers after the Balance Sheet Date, or will be made prior to the
Closing Date, save for payments under contracts or arrangements
made on normal commercial conditions in the ordinary course and
thus on arm's length basis.
4.12 Loans and other financial facilities
Except as set forth in Exhibit 4.12, as of the Closing there is no
event which will give, or after notice or lapse of time (or both)
would give, any third party the right to call for repayment from
any Group Member prior to normal maturity of any loan or other
financial instrument.
4.13 Year 2000 Compliance
The Group Members have, after due investigation and inquiry, used
all reasonable commercial efforts to ensure Year 2000 Compliance
(as defined below) of all internal computer systems, computer
software or technology that are material to the business, finances
or operations of the Company and the Subsidiaries (collectively,
"Material Systems"), except in the functional areas described in
Exhibit 4.13. Year 2000 Compliance shall mean that the Material
Systems are (i) able to receive, record, store, process,
calculate, manipulate and output dates from and after 4 September
1999, time periods which include the Relevant Dates and
information that is dependent on or relates to such dates or time
periods, in the same manner and with the same accuracy,
functionality, data integrity and performance as when dates and
time periods prior to 4 September 1999 are involved, and (ii) able
to store and output date information in a manner which is
unambiguous as to century. The "Relevant Dates" shall mean 4 and 9
September and 31 December 1999, 1 January, 28 and 29 February, 1
March, 31 December 2000 and 1 January 2001.
12
5. COMPENSATION AND LIMITATION OF SELLERS' LIABILITY
5.1 Subject to the provisions of this Section 5, the Sellers shall
compensate the Purchaser on a USD for USD basis for any losses or
costs incurred or suffered as a consequence of misrepresentation
or breach of any of the Sellers' representations and warranties in
this Agreement, including without limitation reasonable attorney's
fees, costs of investigation and amounts paid in settlement of
third party claims. The Purchaser's sole remedy in the event of
any misrepresentation or breach of warranty or representation
shall be reduction of the Purchase Price.
5.2 Any warranty or representation qualified by the expression "to the
best of Sellers' knowledge", "Sellers are not aware" or any
similar expression shall mean that such warranty or representation
is made after due and careful enquiry with the Management and
shall be deemed to cover such knowledge as those officers of
Sellers who have the task to prepare the transaction regulated by
this Agreement had at the date of the execution of this Agreement.
5.3 Subject to the above overriding limitations the Purchaser shall in
no event be entitled to be compensated by an amount exceeding:
(i) 25 per cent of the Purchase Price for claims raised
during the twelve (12) month period immediately
following the Closing Date, provided that the market
value of EQT's LV Shares, where applicable, is not less
than 25 per cent of the Purchase Price (the "Initial
Cap");
(ii) an amount corresponding to the market value of EQT's LV
Shares, where applicable, for claims raised during the
twelve (12) month period immediately following the
Closing Date, if the market value of EQT's LV Shares is
less than 25 per cent but more than 18.75 per cent of
the Purchase Price (the "First Step-Down Cap");
(iii) 18.75 per cent of the Purchase Price for claims raised
during the twelve (12) month period immediately
following the Closing Date, if the market value of
EQT's LV Shares, where applicable, is less than 18.75
per cent of the Purchase Price (the "Second Step-Down
Cap");
(iv) 6.25 per cent of the Purchase Price for claims raised
after the expiry of the twelve (12) month period
immediately following the Closing Date, whether or not
raised during the Lock-up Period (the "Final Cap").
For purposes of this Section 5.3, the market value of EQT's LV
Shares shall be calculated as the average of the closing share
price of those shares as listed on the AEX or any other foreign
publicly regulated major stock exchange during a ten (10) Business
Day period commencing five (5) Business Days prior to the final
day of the Lock-up Period, multiplied by the number of LV Shares
corresponding to complete conversion of the initial amount of the
Note, according to its terms and conditions. For purposes of
determining the market value of the LV Shares in USD, the buying
rate of USD for EUR of a major, recognised commercial bank in
Amsterdam on the final day of the Lock-up Period shall be applied.
The limitations in this Section 5.3 shall not apply to breach of
the warranties and representations in Sections 4.1.1, 4.1.2,
4.1.4, 4.1.5 and 4.1.7, for which the limit shall be the Purchase
Price. For the avoidance of any doubt, it is explicitly agreed
that the Sellers maximum aggregate liability under this Agreement
is limited to an amount equal to the Purchase Price.
5.4 For the avoidance of any doubt, it is explicitly agreed that the
Sellers and the Purchaser shall bear their own respective costs,
expenses and other liabilities, including, without limitation, for
Tax, that may directly or indirectly be levied, in connection with
the transaction contemplated by this Agreement.
5.5 The Purchaser shall not be entitled to any compensation for any
misrepresentation or breach of warranties or representations under
this Agreement unless and until:
(i) the aggregate amount of all claims exceeds SEK
125,000,000, in which event the Sellers shall be liable
for the aggregate amount of all claims, subject to
Section 5.5 (ii) below; and
13
(ii) the amount of any individual claim included in the
above aggregate amount of SEK 125,000,000 exceeds SEK
5,000,000, or if related to a claim from a Subscriber
or Property Owner SEK 900,000.
The thresholds in sub-clauses (i) and (ii) above shall not apply
to claims raised for breach of the Sellers' representations and
warranties with respect to liability for social security charges
resulting from the issuance of the Convertible Debentures and the
Warrants to employees, as set forth in Section 4.3.2. Such claims
shall not be included in the calculation of the aggregate amount
of claims under sub-clause (i) above.
5.6 Without prejudice to Section 5.8 (i) below the Purchaser shall not
be entitled to bring any claim against the Sellers for any
misrepresentation or breach of any warranties or representations
under this Agreement unless a notice in writing of any such claim
has been given by the Purchaser to the Sellers as soon as
reasonably practicable but in no event later than forty-five (45)
days after the date when the Purchaser becomes aware, or
reasonably ought to become aware, of any circumstance giving rise
to a claim. The written notice shall be accompanied by reasonable
particulars thereof specifying the nature of the misrepresentation
or breach giving rise to the claim and, so far as practicable, the
amount claimed in respect thereof.
The Purchaser's right to claim for misrepresentation or breach of
warranties and representations shall be exercised prior to the
expiry of the twelve (12) month period immediately following the
Closing Date, on which date the Sellers liability hereunder shall
expire, provided, however, that (i) the warranties in Sections
4.1.1, 4.1.2, 4.1.4, 4.1.5 and 4.1.7 shall be valid for a period
of five (5) years after the Closing Date and (ii) the warranty in
Article 4.3.2 shall be valid until three (3) months after the date
the Taxes in question have been finally and irrevocably
determined, however not longer than eighteen (18) months from the
Closing Date.
Prior to the expiry of the eighteen (18) month period immediately
following the Closing Date, the Purchaser shall have the right to
perform, at EQT's reasonable expense, by means of independent
experts an audit of the Tax matters relative to the Group Members
for such past and current period as is open for reassessment by
the tax authorities. If any potential Tax liability is identified,
the Purchaser shall notify EQT thereof. EQT shall have the option
of indemnifying the Purchaser in respect thereof in accordance
with the terms of this Agreement. To the extent that EQT declines
to do so, the Purchaser may report the issue to the tax
authorities prior to the expiry of the eighteen (18) month period.
EQT shall in accordance with the terms of this Agreement indemnify
the Purchaser against the ultimate Tax liability resulting from
such action.
5.7 The Purchaser shall not be entitled to make claims for
misrepresentation or breach of warranties or representations in
respect of facts and circumstances set forth in or derived from
this Agreement, any Exhibits hereto, the Management Presentation
and the Preliminary Offering Circular, as well as all written
disclosures, documents and other written information supplied to
the Purchaser or any of its advisers and all information
contained in the Data Room and as specifically referred to in the
Data Room Index, provided that such facts, circumstances,
disclosures and information are true and correct as of the
Closing Date. Facts and circumstances set forth in any Exhibit
hereto as a disclosure made with respect to any of the Sellers'
representations or warranties given herein shall be deemed to
have been disclosed also with respect to all other
representations and warranties given by the Sellers herein.
5.8 Upon the Purchaser becoming aware of any third party claim, action
or demand, or any matter likely to give rise to any of these, in
respect of the warranties or representations under this Agreement
for which the Sellers may be liable, the Purchaser shall, or shall
procure that the Group Members shall
(i) as soon as reasonably practicable, but in no event
later than forty-five (45) days after the date it
appeared to the Purchaser or any of the Group Members
that the Sellers are or may become liable under the
warranties or representations under this Agreement,
give written notice thereof to the Sellers;
14
(ii) not make any admission of liability, agreement,
settlement or compromise with any third party in
relation to any such claim or adjudication, without
obtaining the prior written consent of the Sellers;
(iii) take such action as the Sellers may reasonably request
to avoid dispute, or resist, appeal, compromise or
defend a claim, with the provison, however, that the
Purchaser shall not, and shall procure that the Group
Members shall not, accept or pay or compromise or make
any submission in respect of such claim, without the
Sellers' prior consent thereto;
(iv) give the Sellers, or the Sellers' duly authorised
representatives, reasonable access to the personnel of
the Purchaser and the Group Members, and to any
relevant premises, accounts, documents and records
within their respective power, and allow the Sellers
and the Sellers' duly authorised representatives to
take copies and photocopies thereof, all to enable the
Sellers, or the Sellers' duly authorised
representatives, to examine the grounds for and merits
of such claim;
(v) at the request of the Sellers, allow the Sellers to handle
any negotiation, dispute or litigation relating thereto with
any third party and grant the Sellers all authorisations and
all assistance as the Sellers may reasonably require to
enable the Sellers to defend any claim and to properly
conduct any litigation resulting therefrom. Notwithstanding
the foregoing, the Sellers shall have no obligation to
satisfy a claim with respect to any taxation matter, before
the Purchaser or any of the Group Members, as the case may
be, is obliged to make payment to the relevant tax
authority; and
(vi) take all reasonable action to mitigate any loss
suffered by it or any of the Group Members in respect
of which a claim could be made under the warranties and
representations under this Agreement.
15
When pursuant to the foregoing any of the Sellers' consent is
required or the Sellers may require certain action to be taken,
then the Sellers shall respond to the Purchaser's request therefor
within thirty (30) days or such shorter time as may reasonably be
required due to the time limits the Purchaser has to adhere to in
relation to third parties. If the Sellers fail to do so, the
Purchaser may proceed as the Purchaser reasonably deems fit, and
the Sellers shall be deemed to have accepted the Purchaser's
reasonable actions or omissions in such regard.
5.9 The Purchaser shall not be entitled to recover damages or
otherwise obtain reimbursement or restitution more than once in
respect of any individual breach of the warranties or
representations under this Agreement.
5.10 The Sellers shall not be liable for any misrepresentation or
breach of warranty or representation under this Agreement to the
extent that the subject of the claim has been or is made good or
is otherwise compensated.
5.11 If, in respect of any matter which would give rise to a
misrepresentation or breach of any warranty or representation
under this Agreement, the Purchaser or any of the Group Members
is entitled to claim under any policy of insurance, then no such
matter shall be the subject of a claim under the warranties or
representations under this Agreement, unless and until the
Purchaser or the Group Members shall have made a claim against
its insurers, and any amount recovered under any such insurance
policy, less the increase in the insurance premiums or loss of
insurance bonuses (if any) directly and exclusively caused by a
claim against the insurance company as a direct result of a
misrepresentation or a breach of any warranty or representation,
shall then reduce any claims for misrepresentation or breach of
any warranty or representation under this Agreement accordingly.
5.12 In addition to what is otherwise expressed in this Agreement, no
claim for any misrepresentation or breach of any warranty or
representation under this Agreement shall be brought by the
Purchaser against the Sellers, if and to the extent that any such
claim occurs as a result of any legislation not in force or any
practice of any authorities deviating from or not being an
established practice at the date hereof, or which takes effect
retrospectively, or occurs as a result of any increase in the
rate of tax in force at the date hereof or any change in the
practice of the relevant tax authorities. For the avoidance of
doubt, any practice relating to the period after the Closing,
merely confirming the contents of a statute in force before the
Closing, shall be deemed to be an established practice as of the
date hereof.
5.13 No matter shall be the subject of a claim for any
misrepresentation or breach of warranties and representations
under this Agreement to the extent that allowance, provision or
reserve has been made for such matter in the Financial Statements,
or has been otherwise taken account of or reflected in the
Financial Statements.
5.14 The Sellers make no warranties or representations other than
those expressly set forth in this Agreement and shall not be
liable in respect of any warranty, representation, liability
under any statute (including but not limited to the Swedish Sale
of Goods Act (Sw: koplagen 1990:931) as amended) or legal
principle or otherwise arising out of, or in connection with, the
transactions hereunder, except where the same is expressly
contained in this Agreement and the Purchaser confirms that it
has not relied on any warranty, representation or liability under
any statute (including but not limited to the Swedish Sale of
Goods Act as amended) or legal principle which is not expressly
contained in this Agreement.
5.15 The remedies provided to the Purchaser in this Agreement shall be
exclusive and hence it is specifically agreed that no remedy
whatsoever under the Swedish Sale of Goods Act (as amended) or
under any other statute or legal principle, including (but not
limited to) rescission of this Agreement, except for the right to
interest under the Interest Act (Sw. Rantelag), shall be
available to the Purchaser. The foregoing shall not apply in
respect of a breach of the warranties and representations in
Sections 4.1.1, 4.1.2, 4.1.4, 4.1.5 and 4.1.7.
5.16 In case of a breach of the warranty in Section 4.2.6 a specific
remedy shall apply in the form of a reduction of the Purchase
Price calculated as follows:
16
(i) if the number of Connected Homes is inferior to 240,000
by more than two (2) percent, [the total Purchase Price
reduction] shall be equal to [the difference between
the actual number of Connected Homes and 240,000]
multiplied by [the Purchase Price divided by 240,000].
(ii) if the actual number of Subscribers as of 30 June 1999
was inferior to 137,000 by more than two (2) per cent,
[the total Purchase Price reduction] shall be equal to
[the difference between the actual number of
Subscribers and 137,000] multiplied by [the Purchase
Price divided by 137,000].
Sections 5.3 and 5.5 shall not apply to the remedy under this
Section 5.16.
6.
settlement of claims and escrow arrangement
6.1 As from the Closing Date, the Note in the amount of USD 100
million shall be deposited in the Escrow Account in accordance
with Section 2.4 (ii). When the Note is converted into cash,
listed common shares of the Issuer with a nominal value of EUR
0.30 and/or LV Shares, or when any shares or LV Shares have been
converted into cash, then such cash or shares (as the case may
be) shall in lieu of the converted Note or the sold shares,
subject to the provisions of this Section 6, be delivered to the
Escrow Account to be held by the Escrow Agent on the Escrow
Account in accordance with the terms and conditions of the Escrow
Agreement.
6.2 Without prejudice to any of the provisions of Section 5, any
settlement made by the Sellers in respect of any claim shall be in
the form of a reduction of the Purchase Price, paid from the
Escrow Account. The Sellers shall be entitled to settle a claim
with LV Shares in case settlement shall occur during the Lock-up
Period or with a set-off against the Note, in case the conversion
of the Note has not been completed on the date of settlement.
Otherwise, settlement shall be made in cash and/or in common
shares, if any.
In case of settlement with LV Shares, the value of the LV Shares
transferred by EQT to the Purchaser shall for purposes of this
section be the average of the closing share price of the LV Shares
as listed on the AEX or any other foreign publicly regulated major
stock exchange during ten (10) days of trading immediately prior
to the date of settlement. The foregoing shall apply equally,
mutatis mutandis, in case of settlement with common shares, if
any, in the Escrow Account.
6.3 If the Purchaser has asserted a claim in accordance with Section
5.6 for a misrepresentation or breach of warranties or
representations by delivering a written notice to the Sellers and
the Sellers do not dispute such claim, the parties shall jointly
instruct the Escrow Agent to pay, set-off or transfer the number
of LV Shares corresponding to the amount of such claim to the
Purchaser. Insofar as the amount in the Escrow Account shall not
suffice for such purpose due to a claim for a breach of the
warranties and representations in Sections 4.1.1, 4.1.2, 4.1.4,
4.1.5 and 4.1.7, EQT shall promptly pay the difference.
In case settlement due to a claim raised within the twelve (12)
month period immediately following the Closing Date occurs prior
to the final day of the Lock-up Period, the Sellers shall not be
obliged to settle an amount exceeding the Second Step-Down Cap
reduced by any amounts previously settled (excluding settlement of
breach of the warranties and representations in Sections 4.1.1,
4.1.2, 4.1.4, 4.1.5 and 4.1.7). The remaining settlement amount,
if any, shall be paid immediately after the relevant cap has been
calculated in accordance with the terms of Section 5.3.
6.4 If there shall arise any dispute regarding a misrepresentation or
breach of warranties or representations, or the amount by which
the Purchase Price shall be reduced, such dispute shall be
resolved and finally determined by arbitration pursuant to
Section 20 below or by other agreed means. Upon the final
resolution and determination of such dispute the Escrow Agent
shall pay, set-off or transfer the number of LV Shares
corresponding to the amount to which the Purchaser is entitled
pursuant to such final resolution, to the Purchaser from the
Escrow Account. Insofar as the amount in the Escrow Account shall
not suffice for such purpose due to a claim for a breach of the
warranties and representations in Sections 4.1.1, 4.1.2, 4.1.4,
4.1.5 and 4.1.7, EQT shall promptly pay the difference.
17
In case settlement due to a claim raised within the twelve (12)
month period immediately following the Closing Date occurs prior
to the final day of the Lock-up Period, the Sellers shall not be
obliged to settle an amount exceeding the Second Step-Down Cap
reduced by any amounts previously settled (excluding settlement of
breach of the warranties and representations in Sections 4.1.1,
4.1.2, 4.1.4, 4.1.5 and 4.1.7). The remaining settlement amount,
if any, shall be paid immediately after the relevant cap has been
calculated in accordance with the terms of Section 5.3.
6.5 Provided that it occurs during the twelve (12) month period
immediately following the Closing Date, the Purchaser and the
Sellers shall on the first Business Day following the final day
of the Lock-up Period jointly instruct the Escrow Agent to
release, where applicable, any amounts or shares in the Escrow
Account exceeding the amount of the First Step-Down Cap or the
Second Step-Down Cap, as the case may be, reduced by any amounts
previously settled from the Escrow Account, subject to the
provisions of Section 6.6.
On the anniversary of the Closing Date, the Purchaser and the
Sellers shall jointly instruct the Escrow Agent to release any
amounts or shares in the Escrow Account exceeding the amount of
the Final Cap reduced by any amounts previously settled from the
Escrow Account, subject to the provisions of Section 6.6.
If, on the date of expiry of the eighteen (18) month period
immediately following the Closing, there shall be any amounts or
shares remaining in the Escrow Account after payment by the Escrow
Agent to the Purchaser of the amounts to which the Purchaser is
entitled pursuant to Section 6.3 and 6.4 above, the parties shall
jointly instruct the Escrow Agent to immediately pay all such
remaining amounts or shares, together with accrued interest
thereon, to the Sellers, subject to the provisions of Section 6.6.
6.6 If, on the date of expiry of the twelve (12) month period
immediately following the Closing Date or on the date of expiry
of the eighteen (18) month period immediately following the
Closing Date as set forth in Section 6.5 above, there are any
outstanding claims (whether arbitration proceedings are pending
pursuant to Section 20 below or not) with respect to any actual
or alleged misrepresentation or breach of warranties or
representations or the amount of reduction in the Purchase Price
to which the Purchaser is entitled under Section 6.3 and 6.4
above, the Purchaser and the Sellers shall promptly and jointly
instruct the Escrow Agent to immediately pay to the Sellers the
positive difference, if any, between the amounts or shares on
deposit in the Escrow Account releasable under Section 6.5 above
and the amount reasonably deemed by the Sellers and the
Purchaser, acting in good faith, as sufficient to satisfy its
claim(s). Upon the final resolution of such claim(s), the Escrow
Agent shall pay (A) to the Purchaser from the Escrow Account the
amount or the shares, if any, that the Purchaser is entitled to
pursuant to such final resolution, and (B) to the Sellers such
redundant amounts or shares remaining on deposit in the Escrow
Account (after payment to the Purchaser of the amount referred to
in clause (A) above), together with interest accrued thereon.
7. WARRANTIES and representations of the purchaser
The Purchaser hereby represents and warrants to the Sellers on the
date hereof and on the Closing Date that:
7.1 Power and Authority of the Purchaser
The Purchaser is a corporation duly organised and validly existing
under the laws of the Netherlands. The Purchaser has and will have
the corporate power and authority to make, execute, deliver and
perform all of its obligations under this Agreement, and this
Agreement has been duly authorized and approved by all required
corporate action of the Purchaser. This Agreement constitutes and
will constitute a legal, valid and binding obligation of the
Purchaser enforceable against the Purchaser in accordance with its
terms.
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7.2 No Violation of Laws and Regulations
Assuming that the Purchaser's conditions precedent set forth in
Section 9.1 are fulfilled, the execution and delivery of this
Agreement by the Purchaser and the consummation by the Purchaser
of the transactions contemplated hereby will not:
(i) violate any provisions of the Articles of Associations
or other similar organizational document of the
Purchaser;
(ii) violate any statute, rule, regulation, order or decree
of any public body or authority by which the Purchaser
or any of its properties or assets is bound; and
(iii) result in a violation or breach of, constitute a
default under, or give rise to a right of termination
or acceleration of the performance required by any
license, permit, agreement or other instrument to which
the Purchaser is a party, or by which the Purchaser or
any of its properties or assets is bound,
excluding from the foregoing clauses (i) through (iii) violations,
breaches or defaults which, either individually or in the
aggregate, would not prevent the Purchaser from performing its
obligations under this Agreement or consummation of the
transactions contemplated by this Agreement.
7.3 The Note and shares in the Issuer
7.3.1 The Note is legally and validly issued, fully paid and enforceable
in accordance with its terms. EQT will acquire good and legal
title to the Note subject to no liens, encumbrances or rights of
third parties of any kind other than under the terms of this
Agreement.
7.3.2 The shares into which the Note may be converted are, at the time
of each conversion, legally and validly issued, fully paid and
free and clear of any lien, encumbrance, pre-emptive right or
other restriction whatsoever and are listed on the AEX or any
other foreign publicly regulated major stock exchange. The Issuer
will adhere to all rules and regulations of the stock exchange
where the shares are listed. The Issuer has good and transferable
title to such shares and has the absolute right, power and
capacity to issue, sell, assign and deliver such shares to EQT in
accordance with the terms of this Agreement.
7.4 Financing
The Purchaser will on the Closing Date have sufficient cash,
available lines of credit or other sources of immediately
available funds to enable the Purchaser to make all payments it
may be required to make hereunder.
8.
Indemnity
In case of a breach of any of the Purchaser's warranties and
representations, the Sellers shall have the remedies available
under Swedish law. Notwithstanding the Purchaser's obligation to
pay the Purchase Price, the Purchaser's aggregate liability for
breach of this Agreement shall not exceed an amount equalling the
Purchase Price.
If Closing occurs, the Purchaser undertakes to indemnify and hold
harmless EQT against any and all loss, damage or costs suffered or
incurred by EQT as a result of its undertaking against Nordbanken
AB (publ.) to inject capital in the amount of SEK 50 million into
the Company under certain circumstances, as set forth in a letter
from Nordbanken AB (publ.) to EQT, dated 30 June 1999.
9. CLOSING CONDITIONS
9.1 Conditions precedent to the Purchaser's obligation to purchase the
Shares and the Instruments
The obligation of the Purchaser to purchase the Shares and the
Instruments is subject to the fulfilment or waiver by the
Purchaser prior to or on the Closing of the following conditions:
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9.1.1 The Sellers and the Purchaser, respectively, shall have obtained
all regulatory approvals and authorisations required to be
obtained by the Sellers or the Purchaser, as the case may be, in
connection with the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated
hereby, including all approvals of antitrust or merger control
authorities in all relevant jurisdictions (or, to the extent such
antitrust approval is not required, all required antitrust filings
or notices shall have been duly made).
9.1.2 The Purchaser shall have received a written confirmation from
Nordbanken AB (publ.), whereby Nordbanken AB (publ.) waives its
right to claim breach of the financial covenants and/or change of
control provisions in a loan agreement between the Company and
Nordbanken AB (publ.), dated December 1998, for a period of sixty
(60) days following the Closing Date.
9.1.3 The Purchaser shall have received a letter from Investor AB
regarding co-investment and non-competition, reasonably
satisfactory to the Purchaser.
9.1.4 All of the representations, warranties and covenants of the
Sellers contained in this Agreement are true and accurate in all
material respects, not only as of the Agreement Date but also as
of the Closing Date with the same force and effect as if made at
and as of the Closing Date, or Sellers shall have remedied any
material deviations.
9.2 Conditions precedent to the Sellers' obligation to sell the Shares and
the Instruments
The obligation of the Sellers to sell the Shares and the
Instruments is subject to the fulfilment or waiver by the Sellers
prior to or on the Closing of the following conditions:
9.2.1 The Sellers and the Purchaser, respectively, shall have obtained
all regulatory approvals and authorisations required to be
obtained by the Sellers or the Purchaser, as the case may be, in
connection with the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated
hereby, including all approvals of antitrust or merger control
authorities in all relevant jurisdictions (or, to the extent such
antitrust approval is not required, all required antitrust filings
or notices shall have been duly made).
9.2.2 The Purchaser has released all the guarantees granted by EQT for
the benefit of the Company or any of the Subsidiaries, as listed
in Exhibit 3.2 (b) effective as of the Closing Date.
9.2.3 The Sellers shall have obtained a legal opinion on the Note,
reasonably satisfactory to the Sellers, from a well-reputed legal
counsel engaged by the Purchaser, substantially in the form
attached hereto as Exhibit 9.2.3.
9.2.4 The Sellers shall have obtained a legal opinion on the due
authorisation of the Purchaser to execute this Agreement,
reasonably satisfactory to the Sellers, from a well-reputed legal
counsel engaged by the Purchaser.
9.2.5 All of the representations, warranties and covenants of the
Purchaser contained in this Agreement are true and accurate in all
material respects, not only as of the Agreement Date but also as
of the Closing Date with the same force and effect as if made at
and as of the Closing Date, or the Purchaser shall have remedied
any material deviations.
9.3 Each party agrees to use its best efforts to cause the conditions
precedent to its own obligations to be fulfilled.
10. co-investment right and non-competition
The Purchaser is planning to make an investment in the cable-TV
assets of the merged company between Telia AB and Telenor A/S. EQT
and the Purchaser have agreed that, provided that such investment
shall in fact be realised before the second anniversary of the
Closing Date, EQT shall have a right, but not an obligation, to
acquire 20 % of such investment in the form of shares or other
securities in the merged company between Telia AB and Telenor A/S,
as the case may be, from the Purchaser, for a consideration
corresponding to 20 % of the purchase price paid by the Purchaser
for the total investment and otherwise on the same terms and
conditions as the Purchaser made the total investment. EQT is
entitled to assign its rights hereunder (in whole or in part) to
Investor AB or the other Sellers.
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EQT, but not the other Sellers, hereby agrees that, for a period
of two (2) years from the Closing Date, it will not be involved or
invest in any cable TV business in Sweden which is competitive
with the cable TV business currently conducted by any of the Group
Members, and will not be involved or invest in any cable TV
business or assets, directly or indirectly conducted or owned by
Telia AB or the merged company between Telia AB and Telenor A/S,
except as provided for in this Agreement.
11. CONFIDENTIALITY
The Sellers and EQT for themselves and any affiliated entities
undertake up to and including the second anniversary of the
Closing Date to maintain in strict confidence and not to disclose
any confidential information which is a business or trade secret
in any of the Group Member's business as of the Closing Date. The
non-disclosure obligation shall not, however, apply to any
information which:
(i) was generally available to the public;
(ii) has become - through no act or failure of the Sellers -
public information or generally available to the
public; or which
(iii) is disclosed pursuant to applicable law or called for
by the requirements of any Stock Exchange.
12.
non-solicitation
EQT, but not the other Sellers, hereby unconditionally and
irrevocably agrees that, for a period of two (2) years from the
Closing Date, it will refrain from, directly or indirectly,
soliciting to employ any members of the Management on its own
behalf or on behalf of other parties.
13. MISCELLANEOUS
This Agreement supersedes any prior oral or written agreement
between the parties and any undertaking or warranty of any kind
with respect to all matters referred to herein.
14. NOTICES
All notices, requests and other communications hereunder shall be
in writing and shall be deemed to have been duly given if
delivered or sent by certified mail (postage prepaid) or by
facsimile with confirmation by certified mail (postage prepaid),
addressed as follows:
7
If to the Sellers:
EQT Scandinavia Limited
XX Xxx 000
National Westminster House
Le Truchot
St Xxxxx Port
Guernsey GY1 4PW
Channel Islands
Attention: Xxxxx Xxxxxxxx
Facsimile: x00-0000-000 493
With copies to:
(i) Xxxxxxxxxx Swartling Advokatbyra AB
Xxxxxxxxxxxxx 0
Xxx 0000
000 00 Xxxxxxxxx, Xxxxxx
Attention: Xxxxxx Ericsson, Esq.
Facsimile: +46-8-613 55 01
If to the Purchaser:
United Pan-Europe Communications N.V.
XX Xxx 000 00
0000 XX Xxxxxxxxx
Xxx Xxxxxxxxxxx
Attention: the Managing Director
Facsimile: x00-00-000 98 81
or to such other address as may have been furnished in writing to
the party giving the notice by the party to whom notice is to be
given. Any notice, request or other communication hereunder shall
be deemed to be received (i) if made by registered mail, postage
prepaid and return receipt requested, on the date of receipt
thereof; and (ii) if made by facsimile, on the date of receipt of
such facsimile as evidenced by the receipt issued by the sender's
21
fax machine, unless the sender failed to send a confirmation and
copy of such notice, request or other communication by registered
mail, postage prepaid and return receipt requested no later than
the Business Day next succeeding the date on which such facsimile
has been sent, in which case such notice, request or other
communication shall be deemed to be received on the date of the
receipt thereof by registered mail, postage prepaid and return
receipt requested. The provision of copies is for convenience only
and shall not be deemed to be a condition for the effectiveness of
any notices.
15.
ASSIGNMENT
This Agreement and the rights and obligations specified herein
shall be binding upon and inure to the benefit of the parties and
may not be assigned by any party without the prior written consent
of the other party, except for a right for the Purchaser to assign
this Agreement to any of its wholly-owned subsidiaries. In the
event the Purchaser assigns this Agreement to such a wholly-owned
subsidiary, the Purchaser shall remain as guarantor for the
fulfilment of all the Purchaser's obligations under this
Agreement. For the avoidance of doubt, the Purchaser shall not
have the right to assign its rights and obligations under this
Agreement in its capacity as the Issuer.
16. Expenses
Whether or not the Closing is consummated, except as otherwise
provided in this Agreement, each of the parties will pay all of
its own legal and accounting fees and other expenses, including
broker's or finder's fees, incurred in the preparation of this
Agreement and the performance of the terms and provisions of this
Agreement.
17. Waiver
The parties hereto may by written agreement (i) extend the time
for or waive or modify the performance of any of the obligations
or other acts of the parties hereto or (ii) waive any inaccuracies
in the representations and warranties contained in this Agreement
or in any document delivered pursuant to this Agreement.
18.
publicity
The parties shall jointly inform the employees of the Group and
discuss the release of Stock Exchange information and any other
disclosure concerning the transaction regulated herein as well as
public relations actions to be taken subsequent to the Agreement
Date. The parties are not allowed to disclose information
regarding this Agreement to third parties, unless explicitly
agreed between the parties.
19. sellers' primary and secondary liability, attorney in fact and
process agent
19.1 Any claim for misrepresentation, breach of warranties or
representations contained herein or any other breach of the
provisions in this Agreement made by the Purchaser, shall be
brought, and any proceedings initiated by the Purchaser shall be
held against EQT exclusively. EQT has the primary liability for
breach of this Agreement and no claims may be raised or
proceedings initiated for breach of this Agreement against any
other Sellers unless and until EQT has been found insolvent,
bankrupt, under liquidation, otherwise financially unable to
fulfil its obligations or has failed to comply with its
obligations under a final arbitration award, not subject to
appeal, or other final determination as agreed between the
parties, within thirty (30) days from the date of that award or
determination. For purposes hereof, all other Sellers also hereby
agree to be bound by such final award or determination.
19.2 In the event that the Purchaser notifies or makes a claim under
this Agreement the Sellers agree and the Purchaser acknowledges
that such claim shall be dealt with by EQT on behalf of the
Sellers as their appointed attorney in fact and that EQT shall be
entitled to bind the Sellers for the purposes of pursuing,
agreeing or disputing a claim and that EQT is irrevocably
authorised to represent Sellers for purposes of any legal
proceedings, including any proceedings pursuant to Section 20.
The amount of any claim which is agreed or determined by the
tribunal under Section 20 to be paid by EQT or the Sellers, as
the case may be, shall be paid by EQT or the Sellers to the
Purchaser within 10 Business Days of the date of agreement or
determination of the claim and in the event it is not so paid the
Purchaser shall be entitled to demand the amount of the claim so
agreed or determined from all or any of the Sellers.
19.3 The Sellers hereby irrevocably appoint as their agent for purposes
of service of process in all matters under this Agreement
Xxxxxxxxxx Xxxxxxxxx Advokatbyra, attention of Xxxxxx Ericsson, at
the address set forth in Section 14.
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20. DISPUTES AND GOVERNING LAW
20.1 Any dispute, controversy or claim arising out of or in connection
with this Agreement, or the breach, termination or invalidity
hereof, shall be finally settled by arbitration in accordance with
the Rules of the Arbitration Institute of the Stockholm Chamber of
Commerce. The arbitral tribunal shall be composed of three
arbitrators. The place of arbitration including the making of the
award shall be Stockholm, Sweden. The language to be used in the
arbitral proceedings shall be English.
20.2 The arbitration proceedings shall be confidential and the
arbitral tribunal shall issue appropriate protective orders to
safeguard each party's confidential information. Except as
required by law, no party shall make (or instruct the arbitral
tribunal to make) any public announcement with respect to the
proceedings or decision of the arbitral tribunal without the
prior written consent of the other party. The existence of any
dispute submitted to arbitration, and the award of the arbitral
tribunal, shall be kept in confidence by the parties and the
arbitral tribunal, except as required in connection with the
enforcement of such award or as otherwise required by applicable
law.
20.3 This Agreement, including the above arbitration agreement, shall
be governed by and construed in accordance with the substantive
laws of Sweden.
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IN WITNESS WHEREOF, the Sellers and the Purchaser have executed this Agreement
on the day and year first above written to be effective as and from that day:
EQT SCANDINAVIA LIMITED UNITED PAN-EUROPE
For itself and on behalf of COMMUNICATIONS N.V.
the Shareholders, the Warrant Holders
and the Convertible Debenture Holders
/s/ Xxx Xxxx /s/
By: Xxx Xxxx By:
as of Power of Attorney
