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KONINKLIJKE PHILLIPS ELECTRONICS N.V.
Xxxxxxxxxxxxxxx 0
0000 XX Xxxxxxxxx, Xxx Xxxxxxxxxxx
June 21, 1998
THE SEAGRAM COMPANY LTD.
0000 Xxxx Xxxxxx
Xxxxxxxx, Xxxxxx, Xxxxxx X0X 0X0
Dear Sirs:
Reference is made to the (i) Offer Agreement dated as of June 21,
1998 among The Seagram Company Ltd. ("you"), PolyGram N.V. (the "Company") and
us (the "Offer Agreement"; capitalized terms used but not defined herein shall
have the meanings set forth in the Offer Agreement), pursuant to which you have
agreed, subject to the terms and conditions thereof, to commence an Offer to
purchase all the issued and outstanding shares of the Company, and (ii) the
Tender Agreement dated as of June 21, 1998 between you and us (the "Tender
Agreement"), pursuant to which we have agreed, subject to the terms and
conditions thereof, to, among other things, tender our Stockholder Shares into
the Offer. As a condition to your willingness to enter into the Offer Agreement
and to consummate the transactions contemplated thereby, you have required that
we agree, among other things, on certain voting arrangements with respect to the
voting of our Stockholder Shares and to grant to you a proxy to vote the
Stockholder Shares on the terms and conditions set forth below.
1. During the time the Offer Agreement is in effect, at any meeting
of the shareholders of the Company, however called, or at any adjournment
thereof or in any other circumstances upon which a vote, consent or other
approval is sought, we shall vote all the Stockholder Shares (a) against any
action or agreement that would result in a breach in any material respect of any
covenant, representation or warranty or any other obligation or agreement of the
Company or us under the Offer Agreement or of us under this letter agreement and
(b) against any action or agreement (other than the Offer Agreement or the
transactions contemplated thereby) that could reasonably be expected to impede,
interfere with, delay, postpone or attempt to discourage the Offer, including,
but not limited to, (i) any acquisition or sale of all or any significant
portion of the assets of, or any equity interest in, the Company or any of its
Subsidiaries or any tender offer (including a self tender offer) or exchange
offer, merger, consolidation, business combination, recapitalization,
liquidation, dissolution or similar transaction involving the Company or any of
the Company's Subsidiaries; (ii) any other action or agreement that could be
reasonably expected to materially diminish the benefits to you of the
transactions contemplated hereby and by the Offer Agreement; (iii) any change in
the key management, Supervisory Board or Board of Management of the Company,
except as otherwise agreed to in writing by you prior to such change; (iv) any
material change in the present capitalization or dividend policy of the Company;
or (v) any other material change in the Company's corporate structure or
business and (c) in favor of any action or agreement or proposal submitted in
any general meeting of shareholders of the Company that is necessary or
desirable in connection with the transactions contemplated in the Offer
Agreement, provided, however, that this paragraph 1 shall not
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require us to vote any Stockholder Shares with respect to any matters set forth
in or contemplated by Article II of the Offer Agreement except to the extent we
are required to so vote, in accordance with the provisions of such Article. We
agree not to enter into any agreement, arrangement or understanding with any
Person the effect of which would be inconsistent with any of the foregoing.
2. We hereby grant to you, and this letter agreement shall
constitute, an irrevocable proxy to vote the Stockholder Shares in accordance
with paragraph 1, but otherwise in your sole discretion; provided, however, that
the proxy granted hereby shall not extend to or encompass any vote of the
Stockholder Shares with respect to any matters set forth in or contemplated by
Article II of the Offer Agreement. This proxy is irrevocable and, for so long as
the Offer Agreement is in effect, coupled with an interest, and we will take
such further action or execute such other instruments as may be necessary to
effectuate the intent of this proxy.
3. At least 10 days prior to any meeting of shareholders of the
Company, we shall confirm in writing to you (i) how we will be voting all of the
Stockholder Shares during such meeting with respect to each of the items that is
on the agenda of such meeting of shareholders and (ii) that such voting by us
will fully comply with paragraph 1 of this letter agreement. In the event (i) we
do not provide the confirmation in accordance with the preceding sentence or
(ii) if the confirmation is provided, you do not concur with the statement in
the confirmation that the intended voting by us will fully comply with paragraph
1 hereof, you may notify us that you will use the proxy granted to you pursuant
to paragraph 2 hereof. Following such notification, we will abstain from casting
any votes of the Stockholder Shares and we will not contest, in the meeting of
shareholders or otherwise, your exclusive right to vote the Stockholder Shares
in your sole discretion.
4. This letter agreement shall be governed and construed in
accordance with the Laws of The Netherlands.
5. The provisions of Sections 6.1 through 6.4 and Sections 6.7
through 6.10 of the Tender Agreement are incorporated by reference as if made
herein.
6. This letter agreement constitutes the entire agreement and
supersedes all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter hereof, other than the Offer
Agreement, the Tender Agreement, the Stockholders Agreement and the
Confidentiality Agreement (except as provided in the next sentence), each of
which shall survive the execution and delivery of this letter agreement. The
second paragraph (other than the last two sentences thereof) of the letter dated
May 5, 1998 constituting part of the Confidentiality Agreement shall terminate
upon execution and delivery of the Offer Agreement and the seventh paragraph of
such letter shall terminate upon the effectiveness of the Stockholders
Agreement.
7. This letter agreement shall be binding upon and inure solely to
the benefit of each party hereto, and nothing in this letter agreement, express
or implied, is intended to or shall confer upon any other Person any right,
benefit or remedy of any nature whatsoever under or by reason of this letter
agreement.
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8. This letter agreement and all of our obligations hereunder shall
terminate only upon the termination, in accordance with its terms, of the Offer
Agreement.
If the foregoing is acceptable to you, please execute a copy of this
letter agreement in the space below, at which time this instrument will
constitute a binding agreement between us.
Very truly yours,
KONINKLIJKE PHILIPS ELECTRONICS N.V.
By: /s/ Cor Xxxxxxxx
---------------------------------------
Name: Cor Xxxxxxxx
Title: Chairman of the Board of
Management and Chief Executive
Officer
By: /s/ Xxx Xxxxxx
---------------------------------------
Name: Xxx Xxxxxx
Title: Chief Financial Officer
ACCEPTED AND AGREED as
of the date written above
THE SEAGRAM COMPANY LTD.
By: /s/ Xxxxxx Xxxxxxxxxxx
--------------------------------------
Name: Xxxxxx Xxxxxxxxxxx
Title: Vice Chairman and Chief Financial
Officer
