EXHIBIT 10.29
CONFORMED COPY
FIRST AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
Among
United Pan-Europe Communications N.V.,
Priority Telecom N.V.,
Priority Acquisition Subsidiary, Inc.
and
Cignal Global Communications, Inc.
Dated as of August 11, 2000
XXXXX & XXXXX
New York
CONTENTS
CLAUSE PAGE
------ --------
1. THE MERGER.................................................. 3
1.1 The Merger.................................................. 3
1.2 Closing..................................................... 3
1.3 Effective Time.............................................. 4
1.4 Effects of the Merger....................................... 4
1.5 Certificate of Incorporation and By-laws.................... 4
1.6 Directors................................................... 4
1.7 Officers.................................................... 4
2. CONVERSION AND EXCHANGE OF SECURITIES....................... 4
2.1 Conversion of Capital Stock................................. 4
2.2 Exchange of Certificates.................................... 5
3. REPRESENTATIONS AND WARRANTIES.............................. 7
3.1 Representations and Warranties of the Company............... 7
Representations and Warranties of UPC, Parent and Merger
3.2 SUB......................................................... 19
4. COVENANTS RELATING TO CONDUCT OF BUSINESS................... 21
4.1 Conduct of Business......................................... 21
4.2 Confidentiality............................................. 24
5. ADDITIONAL AGREEMENTS....................................... 25
5.1 Preparation of the Information Statement.................... 25
5.2 Access to Information; Confidentiality...................... 25
5.3 Commercially Reasonable Efforts; Notification............... 25
5.4 Company Stock Options....................................... 26
5.5 Outstanding Warrants........................................ 27
5.6 Outstanding Unit Options.................................... 27
5.7 Indemnification and Exculpation............................. 28
5.8 Fees and Expenses........................................... 28
5.9 Information Supplied........................................ 28
5.10 Benefits Matters............................................ 29
5.11 Public Announcements........................................ 29
5.12 Resignations................................................ 29
5.13 Escrow Agreement............................................ 29
5.14 License Renewals............................................ 30
5.15 Registration Rights Agreements.............................. 30
5.16 Reorganization.............................................. 30
Non-United States Real Property Holding Corporation
5.17 Status...................................................... 30
6. CONDITIONS PRECEDENT........................................ 31
Conditions to Each Party's Obligation to Effect the
6.1 Merger...................................................... 31
6.2 Conditions to Obligations of Parent and Merger Sub.......... 31
6.3 Conditions to Obligation of the Company..................... 33
7. TERMINATION, AMENDMENT AND WAIVER........................... 34
7.1 Termination................................................. 34
1
CLAUSE PAGE
------ --------
7.2 Effect of Termination....................................... 35
7.3 Amendment................................................... 35
7.4 Extension; Waiver........................................... 35
8. GENERAL PROVISIONS.......................................... 36
8.1 Survival.................................................... 36
8.2 Notices..................................................... 36
8.3 Definitions................................................. 37
8.4 Interpretation.............................................. 38
8.5 Counterparts................................................ 38
8.6 Entire Agreement; No Third-Party Beneficiaries.............. 38
8.7 Governing Law; Waiver of Jury Trial......................... 38
8.8 Assignment.................................................. 39
8.9 Enforcement................................................. 39
8.10 Severability................................................ 39
2
FIRST AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER dated as of
August 11, 2000 (this "AGREEMENT"), by and among UNITED PAN-EUROPE
COMMUNICATIONS N.V., a public company incorporated with limited liability under
the laws of The Netherlands ("UPC"), PRIORITY TELECOM N.V. a private company
incorporated with limited liability under the laws of The Netherlands
("PARENT"), PRIORITY ACQUISITION SUBSIDIARY, INC., a Delaware corporation and a
wholly owned direct subsidiary of Parent ("MERGER SUB"), and CIGNAL GLOBAL
COMMUNICATIONS, INC., a Delaware corporation (the "COMPANY").
WHEREAS, UPC, Parent, Merger Sub and the Company have entered into an
Agreement and Plan of Merger dated as of May 19, 2000 (the "ORIGINAL AGREEMENT")
providing for the merger of Merger Sub with and into the Company (the "MERGER");
WHEREAS, UPC, Parent, Merger Sub and the Company wish to amend and restate
the Original Agreement in its entirety, to provide for certain modifications;
WHEREAS the Board of Directors of each of the Company and Merger Sub has
approved and declared advisable, and the Board of Directors of each of UPC and
Parent has approved, this Agreement and the merger of Merger Sub with and into
the Company (the "MERGER"), upon the terms and subject to the conditions set
forth in this Agreement;
WHEREAS, it is intended that, for U.S. federal income tax purposes, the
Merger shall qualify as a reorganization under the provisions of Section 368(a)
of the Internal Revenue Code of 1986, as amended, and the rules and regulations
promulgated thereunder (the "CODE");
WHEREAS UPC, Parent, Merger Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger; and
WHEREAS it is intended that, UPC, Parent and all of the shareholders of the
Company will enter into a shareholders agreement in the form attached as
Exhibit A hereto (the "SHAREHOLDERS AGREEMENT"), pursuant to which the parties
thereto make certain covenants and give certain representations and warranties
in furtherance of the Merger.
NOW, THEREFORE, in consideration of the foregoing and the representations,
warranties, covenants and agreements set forth herein, the parties hereto agree
as follows:
1. THE MERGER
1.1 THE MERGER
Upon the terms and subject to the conditions set forth in this Agreement,
and in accordance with the Delaware General Corporation Law (the "DGCL"),
Merger Sub shall be merged with and into the Company at the Effective Time
(as defined in Clause 1.3). At the Effective Time, the separate corporate
existence of Merger Sub shall cease and the Company shall continue as the
surviving corporation (the "SURVIVING CORPORATION") and shall succeed to and
assume all the rights and obligations of Merger Sub in accordance with the
DGCL.
1.2 CLOSING
Upon the terms and subject to the conditions set forth in this Agreement,
the closing of the Merger (the "CLOSING") shall take place at 11:00 a.m.,
New York time, on the second business day after the satisfaction or (to the
extent permitted by applicable law) waiver of the conditions set forth in
Clause 6 (other than those that by their terms cannot be satisfied until the
time of the Closing, but subject to the satisfaction or waiver of such
conditions at the time of Closing), at the offices of Xxxxx & Overy, 00 Xxxx
00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such other time,
3
date or place agreed to in writing by Parent and the Company. The date on
which the Closing occurs is referred to in this Agreement as the "CLOSING
DATE".
1.3 EFFECTIVE TIME
Upon the terms and subject to the conditions set forth in this Agreement, as
soon as practicable on or after the Closing Date, a certificate of merger or
other appropriate documents (in any such case, the "CERTIFICATE OF MERGER")
shall be duly prepared, executed and acknowledged by the parties in
accordance with the relevant provisions of the DGCL and filed with the
Secretary of State of the State of Delaware. The Merger shall become
effective upon the filing of the Certificate of Merger with the Secretary of
State of the State of Delaware or at such subsequent time or date as Parent
and the Company shall agree and specify in the Certificate of Merger. The
time at which the Merger becomes effective is referred to in this Agreement
as the "EFFECTIVE TIME".
1.4 EFFECTS OF THE MERGER
The Merger shall have the effects set forth in the DGCL.
1.5 CERTIFICATE OF INCORPORATION AND BY-LAWS
(a) The Certificate of Incorporation of the Company, as amended at the
Effective Time, shall be the Certificate of Incorporation of the
Surviving Corporation until thereafter changed or amended as provided
therein or by applicable law.
(b) The By-laws of the Company as in effect immediately prior to the
Effective Time shall be the By-laws of the Surviving Corporation until
thereafter changed or amended as provided therein or by applicable law.
1.6 DIRECTORS
The directors of Merger Sub immediately prior to the Effective Time shall be
the directors of the Surviving Corporation until the earlier of their
resignation or removal or until their respective successors are duly elected
and qualified, as the case may be.
1.7 OFFICERS
The officers of Merger Sub immediately prior to the Effective Time shall be
the officers of the Surviving Corporation until the earlier of their
resignation or removal or until their respective successors are duly elected
and qualified, as the case may be.
2. CONVERSION AND EXCHANGE OF SECURITIES
2.1 CONVERSION OF CAPITAL STOCK
At the Effective Time, by virtue of the Merger and without any action on the
part of the holder of any shares of capital stock of the Company, Parent or
Merger Sub:
(a) CAPITAL STOCK OF MERGER SUB. Each issued and outstanding share of common
stock of Merger Sub shall be converted into and become one fully paid and
non-assessable share of common stock of the Surviving Corporation.
(b) CANCELATION OF TREASURY STOCK. Each share of common stock, par value
$.01 per share, of the Company ("COMPANY COMMON STOCK") that is owned by
the Company (as treasury stock) immediately prior to the Effective Time
shall automatically be canceled and retired and shall cease to exist and
no consideration shall be delivered in exchange therefor.
4
(c) CONVERSION OF COMPANY COMMON STOCK. Each share of Company Common Stock
issued and outstanding immediately prior to the Effective Time (other
than shares to be canceled in accordance with Clause 2.1 (b) and the
Appraisal Shares) shall be converted into and shall be cancelled in
exchange for the right to receive (subject to the terms of the Escrow
Agreement defined in Section 5.13) one fully paid registered ordinary
share of Parent ("PARENT SHARES"), of nominal value - 0.10 each (the
"MERGER CONSIDERATION"). At the Effective Time, all such shares of
Company Common Stock shall no longer be outstanding and shall
automatically be canceled and shall cease to exist, and each holder of a
certificate that immediately prior to the Effective Time represented any
such shares (a "CERTIFICATE") shall cease to have any rights with respect
thereto, except the right to receive the Merger Consideration. Each
Parent Share issued as Merger Consideration shall be validly issued,
fully paid and non-assessable and will not be subject to any liens or
pre-emptive rights. The right to receive the Merger Consideration is
conditional upon (i) all conditions set forth in Clause 6.2 being
satisfied to the satisfaction of the Parent and UPC, and (ii) all
documents listed in Clause 2.2(b) being duly executed by every
shareholder of the Company and returned to the Parent.
(d) APPRAISAL RIGHTS.
(i) Notwithstanding anything in this Agreement to the contrary, shares
(the "APPRAISAL SHARES") of Company Common Stock issued and
outstanding immediately prior to the Effective Time that are held by
any holder who is entitled to demand and properly demands appraisal
of such shares pursuant to, and who complies in all respects with,
the provisions of Section 262 of the DGCL ("SECTION 262") shall not
be converted into the right to receive the Merger Consideration as
provided in Clause 2.1(c), but instead such holder shall be entitled
to payment of the fair value of such shares in accordance with the
provisions of Section 262. At the Effective Time, all Appraisal
Shares shall no longer be outstanding and shall automatically be
canceled and shall cease to exist, and each holder of Appraisal
Shares shall cease to have any rights with respect thereto, except
the right to receive the fair value of such shares in accordance
with the provisions of Section 262. Notwithstanding the foregoing,
if any such holder shall fail to perfect or otherwise shall waive,
withdraw or lose the right to appraisal under Section 262 or a court
of competent jurisdiction shall determine that such holder is not
entitled to the relief provided by Section 262, then the right of
such holder to be paid the fair value of such holder's Appraisal
Shares under Section 262 shall cease and such Appraisal Shares shall
be deemed to have been converted at the Effective Time into, and
shall have become, the right to receive the Merger Consideration as
provided in Clause 2.1 (c). The Company shall serve prompt notice to
Parent of any demands for appraisal of any shares of Company Common
Stock, and Parent shall have the right to participate in and direct
all negotiations and proceedings with respect to such demands. Prior
to the Effective Time, the Company shall not, without the prior
written consent of Parent, make any payment with respect to, or
settle or offer to settle, any such demands, or agree to do any of
the foregoing.
(ii) Any and all amounts paid by the Surviving Corporation to holders of
Appraisal Shares shall be paid by the Surviving Corporation solely
out of its own cash on hand or out of its own borrowings.
2.2 EXCHANGE OF CERTIFICATES
(a) EXCHANGE AGENT
Parent shall designate, or shall cause to be designated, a bank or trust
company reasonably acceptable to the Company to act as exchange agent
(the "EXCHANGE AGENT") for the purpose
5
of exchanging Certificates for Parent Shares. At or prior to the
Effective Time, and subject to the terms of the Escrow Agreement, Parent
shall deposit with the Exchange Agent, in trust for the benefit of
holders of shares of Company Common Stock, certificates representing the
Parent Shares issuable in accordance with Clause 2.1(c) in exchange for
the outstanding shares of Company Common Stock.
(b) EXCHANGE PROCEDURE
As soon as reasonably practicable after the date of this Agreement, the
Company shall send to each holder of record of a Certificate (i) a form
of letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates held by such
person shall pass, only upon proper delivery of the Certificates to the
Exchange Agent and shall be in customary form and have such other
provisions as Parent may reasonably specify), (ii) instructions for use
in effecting the surrender of the Certificates in exchange for the Merger
Consideration, (iii) the Information Statement (as defined in
Clause 5.1(a)), (iv) the Shareholders Agreement, (v) the Merger
Agreement, (vi) a waiver of registration rights under the Registration
Rights Agreements (as defined in Clause 3.1(u)) (vii) the Escrow
Agreement (as defined in Clause 5.13), and (viii) a Written Consent in
Lieu of a Shareholders Meeting Solicitation (the "WRITTEN CONSENT
SOLICITATION").
Each holder of any Company Common Stock that has been converted into the
right to receive the Merger Consideration shall, upon surrender of a
Certificate for cancelation to the Exchange Agent or to such other agent
or agents as may be appointed by Parent, together with such letter of
transmittal, Shareholders Agreement, Escrow Agreement, and the waiver of
registration rights under the Registration Rights Agreement, each duly
completed and validly executed, and such other documents as may
reasonably be required by the Exchange Agent, be entitled to receive in
exchange therefor the number of whole Parent Shares included in the
Merger Consideration in respect of such Company Common Stock, and the
Certificate so surrendered shall forthwith be canceled.
No Parent Shares are to be issued to a person other than the registered
holder of the Company Common Stock represented by a Certificate or
Certificates surrendered with respect thereto.
(c) NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK
All Merger Consideration paid upon the surrender of a Certificate in
accordance with the terms of this Clause 2 shall be deemed to have been
paid in full satisfaction of all rights pertaining to the shares of
Company Common Stock formerly represented by such Certificate. At the
close of business on the day prior to which the Effective Date occurs,
the stock transfer books of the Company shall be closed, and there shall
be no further registration of transfers on the stock transfer books of
the Surviving Corporation of the shares of Company Common Stock that were
outstanding immediately prior to the Effective Time.
(d) NO LIABILITY
None of Parent, Merger Sub, the Company or the Exchange Agent shall be
liable to any person in respect of any amount delivered to a public
official pursuant to any applicable abandoned property, escheat or
similar law. If any Certificates shall not have been surrendered prior to
two years after the Effective Time (or immediately prior to such earlier
date on which any Merger Consideration would otherwise escheat to or
became the property of any Governmental Entity (as defined in Clause 3.1
(d)), any such Merger Consideration in respect thereof shall, to the
extent permitted by applicable law, become the property of the Surviving
Corporation, free and clear of all claims or interest of any person
previously entitled thereto.
6
(e) LOST CERTIFICATES
If any Certificate shall have been lost, stolen or destroyed, upon the
making of an affidavit of that fact by the person claiming such
Certificate to be lost, stolen or destroyed and, if required by the
Surviving Corporation, the posting by such person of a bond in such
reasonable amount as the Parent may direct as indemnity against any claim
that may be made against it with respect to such Certificate, the
Exchange Agent shall pay in respect of such lost, stolen or destroyed
Certificate the Merger Consideration.
3. REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth on the disclosure schedule (with specific reference to
the Clause or Subclause of this Agreement to which the information stated in
such disclosure relates and such other Clauses or Subclauses of this
Agreement to the extent a matter is disclosed in such a way as to make its
relevance to the information called for by such other Clause or Subclause
readily apparent) delivered by the Company to Parent prior to the execution
of this Agreement (the "COMPANY DISCLOSURE SCHEDULE"), the Company
represents and warrants to Parent and Merger Sub as of the date hereof as
follows:
(a) ORGANIZATION, STANDING AND POWER. Each of the Company and its
subsidiaries (as defined in Clause 8.3) (i) is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization, (ii) has all requisite corporate, company or partnership
power and authority to carry on its business as now being conducted and
(iii) is duly qualified or licensed to do business and is in good
standing in each jurisdiction in which the nature of its business or the
ownership, leasing or operation of its properties makes such
qualification or licensing necessary, other than where the failure to be
so organized, existing, qualified or licensed or in good standing,
individually and in the aggregate, would not reasonably be expected to
have a material adverse effect (as defined in Clause 8.3). The Company
has delivered to Parent true and complete copies of its Certificate of
Incorporation and By-laws and the certificate of incorporation and
by-laws (or similar organizational documents) of each of its
subsidiaries, in each case as amended to the date of this Agreement. The
Company has made available to Parent and its representatives true and
complete copies of the minutes of all meetings of the shareholders, the
Board of Directors and each committee of the Board of Directors of the
Company and each of its subsidiaries held since April 1, 1998.
(b) SUBSIDIARIES. Section 3.1 (b)(1) of the Company Disclosure Schedule
lists each subsidiary of the Company. Except as set forth in
Section 3.1(b)(2) of the Company Disclosure Schedule, all the outstanding
shares of capital stock or other equity or voting interests of each such
subsidiary are owned by the Company or by another wholly owned subsidiary
of the Company, free and clear of all pledges, claims, liens, charges,
encumbrances and security interests of any kind or nature whatsoever
(collectively, "LIENS"), and are duly authorized, validly issued, fully
paid and nonassessable. Except for the capital stock of, or other equity
or voting interests in, its subsidiaries, the Company does not own,
directly or indirectly, any capital stock of, or other equity or voting
interests in, any corporation, partnership, joint venture, association or
other entity.
(c) CAPITAL STRUCTURE.
(i) The authorized capital stock of the Company consists of 50,000,000
shares of Company Common Stock, 2,000,000 shares of preferred stock,
par value $0.01 per share (the "COMPANY PREFERRED STOCK") and
300,000 shares of Class A preferred stock, par value $0.01 per share
(the "COMPANY CLASS A PREFERRED STOCK"). As of the close of business
on July 14, 2000, (A) 32,012,606 shares of Company Common Stock
(excluding treasury
7
shares) were issued and outstanding, (B) zero shares of Company
Common Stock were held by the Company in its treasury,
(C) 6,414,877 shares of Company Common Stock were reserved for
issuance pursuant to the Company's 1997 Stock Incentive Plan (the
"COMPANY STOCK PLAN") (of which 6,414,877 shares were subject to
outstanding Company Stock Options (as defined below)) (D) 840,000
shares of Company Common Stock were subject to outstanding warrants
and reserved for issuance pursuant to the Company's Warrant
Agreements (as defined in Clause 8.3) (the "WARRANTS"),
(E) 2,961,000 shares of Company Common Stock were subject to
outstanding unit options and unit purchase warrants and reserved for
issuance pursuant to the Company's Unit Purchase Option Agreement
(as defined in Clause 8.3) (the "UNIT OPTIONS"), and (F) no shares
of Company Preferred Stock or Company Class A Preferred Stock were
issued and outstanding or were held by the Company in its treasury.
There are no outstanding stock appreciation rights or other rights
that are linked to the price of Company Common Stock granted under
the Company Stock Plan. No shares of Company Common Stock are owned
by any subsidiary of the Company.
(ii) The Company has delivered to Parent a true, correct and complete
list, as of the close of business on July 14, 2000, of the names of
the registered holders of all outstanding Company Common Stock, and
the number of shares of Company Common Stock held by each
registered holder (the "SHAREHOLDERS LIST"). Each individual or
entity listed on the Shareholders List is the record holder of, or
is a trustee of a trust that is record holder of, a number of
shares of Company Common Stock set forth opposite such individual's
or entity's name on the Shareholders List.
(iii) The Company has delivered to Parent a true, correct and complete
list, as of the close of business on July 14, 2000, of all
outstanding stock options to purchase Company Common Stock granted
under the Company Stock Plan (collectively, the "COMPANY STOCK
OPTIONS") and all other rights to purchase or receive Company
Common Stock granted under the Company Stock Plan, the number of
shares subject to each such Company Stock Option, the grant dates
and exercise prices of each such Stock Option and the names of the
holder thereof.
(iv) The Company has delivered to Parent a true, correct and complete
list, as of the close of business on July 14, 2000, of all
outstanding Warrants and unit options to purchase Company Common
Stock granted under the Warrant Agreements or the Unit Purchase
Option Agreement, the number of shares subject to such Warrants or
unit options, the grant dates and exercise prices of each such
warrant and option and the names of the holder thereof.
(v) Except as set forth above, as of the close of business on July 14,
2000, no shares of capital stock of, or other equity or voting
interests in, the Company, or options, warrants or other rights to
acquire any such stock or securities were issued, reserved for
issuance or outstanding.
(vi) All outstanding shares of capital stock of the Company are, and all
shares that may be issued pursuant to the Company Stock Plan will
be when issued in accordance with the terms thereof, duly
authorized, validly issued, fully paid and nonassessable and not
subject to preemptive rights.
(vii) Except as set forth in Section 3.1 (c)(vii) of the Company
Disclosure Schedule, there are no bonds, debentures, notes or other
indebtedness of the Company or any of it subsidiaries, and no
securities or other instruments or obligations of the Company or
any of its subsidiaries the value of which is in any way based upon
or derived from any capital or voting stock of the Company, having
the right to vote (or convertible into, or
8
exchangeable for, securities having the right to vote) on any
matters on which shareholders of the Company may vote.
(viii) Except as set forth above and in Section 3.1(c)(viii) of the
Company Disclosure Schedule and except as specifically permitted
under Clause 4.1 (a), there are no Contracts (as defined in
Clause 3.1 (e)) of any kind to which the Company or any of its
subsidiaries is a party or by which the Company or any of its
subsidiaries is bound, obligating the Company or any of its
subsidiaries to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock of, or other
equity or voting interests in, or securities convertible into, or
exchangeable or exercisable for, shares of capital stock of, or
other equity or voting interests in, the Company or any of its
subsidiaries or obligating the Company or any of its subsidiaries
to issue, grant, extend or enter into any such security, option,
warrant, call, right or Contract. There are no outstanding
contractual obligations of the Company or any of its subsidiaries
to (x) repurchase, redeem or otherwise acquire any shares of
capital stock of, or other equity or voting interests in, the
Company or any of its subsidiaries or (y) vote or dispose of any
shares of the capital stock of, or other equity or voting interests
in, any of its subsidiaries.
(ix) Except as set forth in Section 3.1(c)(ix) of the Company Disclosure
Schedule, to the knowledge of the Company as of the date of this
Agreement, there are no irrevocable proxies and no voting
agreements with respect to any shares of the capital stock or other
voting securities of the Company or any of its subsidiaries, other
than pursuant to the Shareholders Agreement.
(d) AUTHORITY. The Company has the requisite corporate power and authority
to execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by the
Company and the consummation by the Company of the transactions
contemplated hereby have been duly authorized by all necessary corporate
action on the part of the Company and no other corporate proceedings on
the part of the Company are necessary to approve this Agreement or to
consummate the transactions contemplated hereby, subject, in the case of
the consummation of the Merger, to obtaining the Company Shareholder
Approval (as defined in Clause 3.1 (u)). This Agreement has been duly
executed and delivered by the Company and (assuming the due execution and
delivery by the other parties hereto) constitutes a valid and binding
obligation of the Company, enforceable against the Company in accordance
with its terms, subject to the effects of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally, and general
equitable principles (whether considered in a proceeding at equity or at
law). The Board of Directors of the Company, at a meeting duly called and
held at which all directors of the Company were present, duly and
unanimously adopted resolutions (i) approving and declaring fair and
advisable the Merger, this Agreement and the Shareholders Agreement and
the transactions contemplated hereby and thereby, (ii) declaring that it
is in the best interests of the Company's shareholders that the Company
enter into this Agreement and consummate the Merger on the terms and
subject to the conditions set forth in this Agreement, (iii) declaring
that the consideration to be paid to the Company's shareholders in the
Merger is fair to such shareholders, (iv) directing that this Agreement
be submitted to a vote of the Company's shareholders and
(v) recommending that the Company's shareholders adopt this Agreement.
(e) NONCONTRAVENTION. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby and compliance with
the provisions hereof do not and will not conflict with, or result in any
violation or breach of, or default (with or without notice or lapse of
time, or both) under, or give rise to a right of, or result in,
termination, cancelation or acceleration of any obligation or to loss of
a material benefit under, or result in
9
the creation of any Lien in or upon any of the properties or assets of
the Company or any of its subsidiaries under, or give rise to any
increased, additional, accelerated or guaranteed rights or entitlements
under, any provision of (i) the Certificate of Incorporation or By-laws
of the Company or the certificate of incorporation or by-laws (or similar
organizational documents) of any of its subsidiaries, (ii) any Loan or
credit agreement, bond, debenture, note, mortgage, indenture, guarantee,
lease or other contract, commitment, agreement, instrument, arrangement,
understanding, obligation, undertaking, permit, concession, franchise or
license, (each, including all amendments thereto, a "CONTRACT"), to which
the Company or any of its subsidiaries is a party or any of their
respective properties or assets is subject or (iii) subject to the
governmental filings and other matters referred to in the following
sentence, any (A) statute, law, ordinance, rule or regulation or
(B) judgment, order or decree, in each case applicable to the Company or
any of its subsidiaries or their respective properties or assets, other
than, in the case of clauses (ii) and (iii), any such conflicts,
violations, breaches, defaults, rights, losses, Liens or entitlements
that, individually and in the aggregate, would not reasonably be expected
to have a material adverse effect. No consent, approval, order or
authorization of, or registration, declaration or filing with, any
domestic or foreign (whether national, federal, state, provincial, local
or otherwise) government or any court, administrative agency or
commission or other governmental or regulatory authority or agency,
domestic, foreign or supranational (a "GOVERNMENTAL ENTITY"), is required
by or with respect to the Company or any of its subsidiaries in
connection with the execution and delivery of this Agreement or the
Shareholders Agreement by the Company or the consummation by the Company
of the transactions contemplated hereby or thereby or compliance with the
provisions hereof and thereof, except for (1) the filing of a premerger
notification and report form by the Company under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended (the "HSR ACT"), or any
other applicable competition, merger control, antitrust or similar law or
regulation, (2) the filing of the Certificate of Merger with the
Secretary of State of the State of Delaware and appropriate documents
with the relevant authorities of other states in which the Company or any
of its subsidiaries is qualified to do business, (3) approval by the
Federal Communications Commission, (4) with respect to the Austrian
merger control proceedings: legal validity of a decree by the Cartel
Court Vienna that the Merger is not subject to a pre-merger filing
requirement; legal validity of a decree pursuant to which within the
legally provided time period no examination of the contemplated Merger
has been requested; or legal validity of a decree consenting to the
Merger at conditions which are acceptable to all parties to this
Agreement (5) with respect to the German merger control proceedings: the
issue (or deemed issue) of the approval or other necessary confirmation,
consent or clearance to the Merger by the German Federal Cartel Office
(Bundeskartellamt) for each of the parties having been obtained on terms
reasonably satisfactory to the parties, and (6) such other consents,
approvals, orders, authorizations, registrations, declarations and
filings the failure of which to be obtained or made, individually and in
the aggregate, would not reasonably be expected to have a material
adverse effect.
(f) FINANCIAL STATEMENTS. The Company has heretofore made available to
Parent true and complete copies of the audited financial statements
listed on Section 3.1(f) of the Company Disclosure Schedule (the
"FINANCIAL STATEMENTS"). Neither the Company nor any subsidiary of the
Company is required, or has been required, to file any form, report,
schedule, statement or other document with the SEC. The audited
consolidated balance sheets of the Company (including the related notes
and schedules) for the years ended 1999 and 1998 fairly present in all
material respects, the consolidated financial position of the Company and
its subsidiaries as of their respective dates, and each of the related
audited and unaudited consolidated statements of income, shareholders'
equity and cash flows (including any related notes and schedules) for the
years ended 1999 and 1998 fairly presents in all material respects, the
10
consolidated results of operations, retained earnings and cash flows, as
the case may be, of the Company and its subsidiaries for the periods set
forth therein, in each case in accordance with generally accepted
accounting principles in the United States ("U.S. GAAP") consistently
applied during the periods involved except as may be noted therein.
(g) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in
Section 3.1(g) of the Company Disclosure Schedule, since December 31,
1999, the Company and its subsidiaries have conducted their respective
businesses only in the ordinary course consistent with past practice, and
there has not been (i) any statement of facts, change, development,
effect, event, condition or occurrence that individually or in the
aggregate, constitutes, has had, or would reasonably be expected to have,
a material adverse effect, (ii) any declaration, setting aside or payment
of any dividend on, or other distribution (whether in cash, stock or
property) in respect of, any of the Company's or any of its subsidiaries'
capital stock, except for dividends by a wholly owned subsidiary of the
Company to its parent, (iii) any purchase, redemption or other
acquisition of any shares of capital stock or any other securities of the
Company or any of its subsidiaries or any options, warrants, calls or
rights to acquire such shares or other securities, (iv) any split,
combination or reclassification of any of the Company's or any of its
subsidiaries' capital stock or any issuance or the authorization of any
issuance of any other securities in respect of, in lieu of or in
substitution for shares of capital stock or other securities of the
Company or any of its subsidiaries, (v) (x) any granting by the Company
or any of its subsidiaries to any current or former director, officer,
employee or consultant of any increase in compensation, bonus or other
benefits or any such granting of any type of compensation or benefits to
any current or former director, officer, employee or consultant not
previously receiving or entitled to receive such type of compensation or
benefit, except for increases of cash compensation in the ordinary course
of business consistent with past practice or required under any agreement
or benefit plan in effect as of December 31, 1999, or (y) any granting to
any current or former director, officer, employee or consultant of the
right to receive any severance or termination pay, or increases therein,
(vi) except as set forth in Section 3.1(g) of the Company Disclosure
Schedule, any payment of any benefit or the grant or amendment of any
award (including in respect of stock options, stock appreciation rights,
performance units, restricted stock or other stock-based or stock-related
awards or the removal or modification of any restrictions in any Company
Benefit Agreement or Company Benefit Plan or awards made thereunder)
except as required to comply with any applicable law or any Company
Benefit Agreement or Company Benefit Plan (each as defined in
Clause 3.1(l)) existing on such date, (viii) any change in financial or
tax accounting methods, principles or practices by the Company or any of
its subsidiaries, except insofar as may have been required by a change in
U.S. GAAP or applicable law, or (x) any revaluation by the Company or any
of its subsidiaries of any of the material assets of the Company or any
of its subsidiaries.
(h) LITIGATION. There is no suit, claim, action, investigation or proceeding
pending or to the knowledge of the Company threatened against or
affecting the Company or any of its subsidiaries or any of their
respective assets that, individually or in the aggregate, would
reasonably be expected to have a material adverse effect, nor is there
any statute, law, ordinance, rule, regulation, judgment, order,
injunction or decree, of any Governmental Entity or arbitrator
outstanding against, or investigation, proceeding, notice of violation,
order of forfeiture or complaint by any Governmental Entity involving,
the Company or any of its subsidiaries that, individually or in the
aggregate, would reasonably be expected to have a material adverse
effect. There has been no settlement or similar agreement in respect of
any pending or threatened suit, claim, action, investigation, proceeding,
rule, judgment, order, injunction or decree of any Governmental Entity or
arbitrator which the Company or any of its subsidiaries has entered into
or become bound by since December 31, 1999.
11
(i) CONTRACTS. Section 3.1 (i) of the Company Disclosure Schedule sets forth
a true and complete list of:
(i) all Contracts of the Company or any of its subsidiaries having an
aggregate value, or involving payments by or to the Company, of more
than $250,000;
(ii) all Contracts of the Company which require consents or approvals
from, or notice to be given to, third parties in the event of a
change of control of the Company, or in the event of any assignment
or transfer of such Contract;
(iii) all Contracts to which the Company or any of its subsidiaries is a
party, or that purports to be binding upon the Company, any of its
subsidiaries or any of its affiliates, that contain a covenant
restricting the ability of the Company or any of its subsidiaries (or
which, following the consummation of the Merger, could restrict the
ability of Parent or any of its subsidiaries, including the Surviving
Corporation and its subsidiaries) to compete with any person or
engage in any business or activity in any geographic area or pursuant
to which any benefit is required to be given or lost as a result of
so competing or engaging;
(iv) all confidentiality, standstill or similar agreements to which the
Company or any of its subsidiaries is a party;
(v) all joint venture, partnership, business alliance or other similar
agreements (including all amendments thereto);
(vi) all Contracts pursuant to which the Company or any of its
subsidiaries is restricted in any material respect in the
development, marketing or distribution of their respective products
or services;
(vii) all Contracts or other agreements, whether written or oral, that
contain any guarantees as to the Company's or any of its
subsidiaries' future revenues;
(viii)all loan agreements, capital leases, operating leases, credit
agreements, notes, debentures, bonds, mortgages, indentures and other
Contracts pursuant to which any indebtedness of the Company or any of
its subsidiaries is outstanding or may be incurred and all guarantees
of or by the Company or any of its subsidiaries of any indebtedness
of any other person including the respective aggregate principal
amounts outstanding as of the date of this Agreement; and
(ix) all Contracts or other agreements pursuant to which the Company or
any of its subsidiaries (i) engages in any foreign currency or other
futures or options trading or (ii) is a party to any price swaps,
xxxxxx, futures or similar instruments.
None of the Company or any of its subsidiaries is in violation of or
default (with or without notice or lapse of time or both) under, or has
waived or failed to enforce any rights or benefits under, any Contract to
which it is a party or by which it or any of its properties or assets is
bound, and, to the knowledge of the Company or such subsidiary, no other
party to any of its Contracts is in violation or default (with or without
notice or lapse of time or both) under, or has waived or failed to
enforce any rights or benefits under, and there has occurred no event
giving to others any right of termination, amendment or cancelation of,
with or without notice or lapse of time or both, any such Contract
except, in each case, for violations, defaults, waivers or failures to
enforce benefits that individually and in the aggregate, would not
reasonably be expected to have a material adverse effect. The Company has
made available to Parent or its representatives true and complete copies
of all Contracts listed on Section 3.1 (i) of the Company Disclosure
Schedule.
12
(j) COMPLIANCE WITH LAWS. The Company and its subsidiaries and their
relevant personnel and operations are, and since August, 1997 have been,
in compliance in all respects with all statutes, laws, ordinances, rules,
regulations, judgments, orders and decrees of any Governmental Entity
applicable to their businesses or operations, except where such failure
to comply would not reasonably be expected to have a material adverse
effect. None of the Company or any of its subsidiaries has received,
since August, 1997, a notice or other written communication alleging or
relating to a possible violation of any statute, law, ordinance, rule,
regulation, judgment, order or decree of any Governmental Entity
applicable to its businesses or operations, which violation would
reasonably be expected to have a material adverse effect. The Company is
not required to register any of its securities under the U.S. Securities
Exchange Act of 1934.
(k) LICENSES.
(i) Each of the Company and its subsidiaries has all material permits,
licenses, certificates, waivers or authorizations ("LICENSES") from
all Governmental Entities having jurisdiction over any part of its
business necessary for the conduct of any of its activities,
including, without limitation, licenses and authorizations from the
United States Federal Communications Commission (the "FCC")
("COMMUNICATIONS LICENSES") and all such material Licenses are valid
and in full force and effect, except for any such Licenses the
failure of which to have or to be in full force and effect would not,
individually or in the aggregate, reasonably be expected to have a
material adverse effect. Section 3.1(k)(i) of the Company Disclosure
Schedule contains a complete list of all of the Licenses of the
Company and its subsidiaries, including the renewal date of each
License.
(ii) Except as disclosed on Section 3.1(k)(ii) of the Company Disclosure
Schedule, no Licenses of the Company require consents or approvals
from, or notice to be given to, any Governmental Entity or other
third party in the event of a change of control of the Company, and
all Licenses will remain valid and otherwise unaffected upon a change
of control of the Company.
(iii) Neither the Company nor any of its subsidiaries has made any untrue
statement of material fact, nor has it omitted to disclose any
material fact, to any Governmental Entity nor has it or any of its
subsidiaries taken or failed to take any action which misstatements,
omissions, actions or failures to act, individually or in the
aggregate, would subject or would reasonably be expected to subject
any of the material Licenses held by it or any of its subsidiaries to
revocation or failure to renew or to the imposition of material
conditions on any of such Licenses or the renewal thereof; no event
has occurred or other fact exists with respect to any of the material
Licenses held by it or any of its subsidiaries which permits, or
after notice or lapse of time or both would permit, revocation or
termination thereof or would result in any other material impairment
of the rights of the holder of any of the material Licenses.
(iv) There is no pending, or to the knowledge of the Company Officers,
threatened, application, complaint, petition, objection or other
pleading with the FCC or other Governmental Entity which challenges
or questions the validity of, or any rights of the holders under, any
License held by the Company or any of its subsidiaries, except for
such applications, complaints, petitions, objections or other
pleadings, that, individually or in the aggregate, have not had and
would not reasonably be expected to have (taking into account both
the likelihood of success and the likely relief) a material adverse
effect. It has no reason to believe that any such material License
held by it or any of its subsidiaries is not likely to be renewed in
the ordinary course and without new material conditions or, in the
case of such material U.S. Licenses, that the holder of any such
13
License would not be entitled to a renewal expectancy as such term is
defined in 47 C.F.R. section 22.941 or any successor provisions and
associated FCC policies.
(l) ABSENCE OF CHANGES IN COMPANY BENEFIT PLANS; EMPLOYMENT AGREEMENTS.
Except as listed on Section 3.1(l) of the Company Disclosure Schedule,
since December 31, 1999:
(i) None of the Company or any of its subsidiaries has terminated,
adopted, amended or agreed to amend in any material respect any
bonus, pension, profit sharing, deferred compensation, incentive
compensation, stock ownership, stock purchase, stock appreciation,
restricted stock, stock option, phantom stock, performance,
retirement, thrift, savings, stock bonus, cafeteria, paid time-off,
perquisite, fringe benefit, vacation, severance, disability, death
benefit, hospitalization, medical, welfare benefit or other plan,
program, policy, arrangement or understanding (whether or not legally
binding) providing benefits to any of its current or former
directors, officers, employees or consultants of the Company or any
of its subsidiaries and which is maintained or contributed to or
required to be maintained or contributed to by the Company or any of
its subsidiaries (collectively, "COMPANY BENEFIT PLANS").
(ii) There exist no employment, consulting, deferred compensation,
severance, termination or indemnification agreements or arrangements
between the Company or any of its subsidiaries, on the one hand, and
any current or former director, officer, employee or consultant of
the Company or any of its subsidiaries, on the other hand
(collectively, "COMPANY BENEFIT AGREEMENTS").
(iii) No Company Benefit Agreement or Company Benefit Plan provides
benefits that are contingent, or the terms of which are materially
altered, upon the occurrence of a transaction involving the Company
or its subsidiaries of the nature contemplated by this Agreement or
the Shareholders Agreement. The Board of Directors of the Company
will resolve that Company Stock Options will not become exercisable
and will not vest as a result of a change of control of the Company,
except to the extent required pursuant to the terms of any Company
Benefit Plan or Company Benefit Agreement.
(m) LABOR MATTERS. Neither the Company nor any of its subsidiaries is a
party to, or is bound by any collective bargaining agreement, contract or
other agreement or understanding with a labor union or labor
organization, nor is it or any of its subsidiaries the subject of a
proceeding asserting that it or any such subsidiaries has committed an
unfair labor practice (within the meaning of the National Labor Relations
Act) or seeking to compel it or such subsidiaries to bargain with any
labor organization as to wages and conditions of employment.
(n) ERISA COMPLIANCE
(i) Section 3.1(n)(i) of the Company Disclosure Schedule contains a true
and complete list of all "EMPLOYEE WELFARE BENEFIT PLANS" (as defined
in Section 3 (1) of the Employee Retirement Income Security Act of
1974, as amended "ERISA")), or "EMPLOYEE PENSION BENEFIT PLANS" (as
defined in Section 3 (2) of ERISA) ("COMPANY PENSION PLANS") and all
other Company Benefit Plans maintained or contributed to or required
to be maintained or contributed to by the Company or any of its
subsidiaries or any person or entity that, together with the Company
or any of its subsidiaries, is treated as a single employer (a
"COMMON CONTROLLED ENTITY") under Section 414(b), (e), (m) or (s) of
the Code or Section 4001 of ERISA, for the benefit of any current or
former directors, officers, employees, agents, independent
contractors or consultants of the Company or any of its subsidiaries.
The Company has provided to Parent true, correct and complete copies
of (1) each Company Benefit Plan (or, in the case of any unwritten
Company Benefit Plans, descriptions thereof), (2) the most recent
annual report on Form 5500 filed with the Internal Revenue Service
(the "IRS") with respect to each Company Benefit
14
Plan (if any such report was required), (3) the most recent summary
plan description or similar document for each Company Benefit Plan
for which such summary plan description is required or was otherwise
provided to plan participants or beneficiaries and (4) each trust
agreement and insurance annuity contract relating to any Company
Benefit Plan. Each Company Benefit Plan has been administered, in all
material respects, in accordance with its terms. The Company and its
subsidiaries and all the Company Benefit Plans are in compliance, in
all material respects, with all applicable provisions of ERISA and
the Code and all other applicable laws.
(ii) All Company Pension Plans have received favorable determination
letters from the Internal Revenue Service with respect to "TRA" (as
defined in Section 1 of Rev. Proc. 93-39, 1993-2 C.B. 513), to the
effect that such Company Pension Plans are qualified and exempt from
Federal income taxes under Sections 401 (a) and 501 (a),
respectively, of the Code, and no such determination letter has been
revoked nor, to the knowledge of the Company, has revocation been
threatened, nor has any such Company Pension Plan been amended since
the date of its most recent determination letter or application
therefor in any respect that would adversely affect its qualification
or materially increase its costs. All other Company Benefit Plans
are, wherever required by applicable law, approved by the relevant
governmental or taxation authority such as to enable the plan, its
beneficiaries and assets to enjoy the most favorable taxation status
possible and the Company is not aware of any ground on which such
approval may be withdrawn to any extent. There is no material pending
or, to the knowledge of the Company, threatened litigation,
investigation or dispute relating to the Company Benefit Plans.
(iii) No Company Pension Plan is subject to Title IV of ERISA. No
liability under Subtitle C or D of Title IV of ERISA has been or is
expected to be incurred by the Company or any of its subsidiaries
with respect to any ongoing, frozen or terminated "SINGLE-EMPLOYER
PLAN", within the meaning of Section 4001 (a) (15) of ERISA,
currently or formerly maintained by any of them, or the
single-employer plan of a Commonly Controlled Entity. None of the
Company, any of its subsidiaries, any officer of the Company or any
of its subsidiaries or any of the Company Benefit Plans which are
subject to ERISA, including the Company Pension Plans, any trusts
created thereunder or, to the knowledge of the Company, any trustee
or administrator thereof, has engaged in a "PROHIBITED TRANSACTION"
(as such term is defined in Section 406 of ERISA or Section 4975 of
the Code) or any other breach of fiduciary responsibility that could
subject the Company, any subsidiaries of the Company or any officer
of the Company or any of its subsidiaries to the tax or penalty on
prohibited transactions imposed by such Section 4975 or to any
liability under Section 502 (i) or 502 (1) of ERISA. None of such
Company Benefit Plans and trusts has been terminated, nor has there
been any "REPORTABLE EVENT" (as that term is defined in Section 4043
of ERISA) for which the 30-day reporting requirement has not been
waived with respect to any Company Benefit Plan during the last five
years and no notice of a reportable event may be required to be filed
in connection with the Transaction. Neither the Company nor any of
its subsidiaries has incurred a "COMPLETE WITHDRAWAL" or a "PARTIAL
WITHDRAWAL" (as such terms are defined in Sections 4203 and 4205,
respectively, of ERISA) since the effective date of such Sections
4203 and 4205 with respect to any Company Multiemployer Pension Plan.
All contributions and premiums required to be made under the terms of
any Company Benefit Plan as of the date hereof have been timely made
or have been reflected on the most recent consolidated balance sheet
filed or incorporated by reference in the Filed SEC Documents.
Neither any Company Pension Plan nor any single-employer plan of a
Commonly Controlled Entity has an "ACCUMULATED FUNDING DEFICIENCY"
(as such term is defined in Section 302 of ERISA or Section 412 of
the Code), whether or not waived.
15
(iv) With respect to any Company Benefit Plan that is an employee welfare
benefit plan, except as disclosed in the Company Disclosure Letter,
(i) no such Company Benefit Plan is unfunded or funded through a
"WELFARE BENEFIT FUND" (as such term is defined in Section 419
(e) of the Code), and (ii) each such Company Benefit Plan that is a
"GROUP HEALTH PLAN" (as such term is defined in Section 5000 (b) (1)
of the Code), complies with the applicable requirements of
Section 4980B (f) of the Code. Neither the Company nor any of its
subsidiaries has any obligations for retiree health and life benefits
under any Company Benefit Plan or Company Benefit Agreement other
than as required by Section 4980B of the Code.
(v) Except as disclosed in Section 3.1(n)(v) of the Company Disclosure
Schedule, the consummation of the Merger or any other transaction
will not (x) entitle any employee, officer or director of the Company
or any of its subsidiaries to severance pay, (y) accelerate the time
of payment or vesting or trigger any payment or funding (through a
grantor trust or otherwise) of compensation or benefits under,
increase the amount payable or trigger any other material obligation
pursuant to, any of the Company Benefit Plans or Company Benefit
Agreements or (z) result in any breach or violation of, or a default
under, any of the Company Benefit Plans or Company Benefit
Agreements. Set forth in Section 3.1 (n) (v) of the Company
Disclosure Schedule is the estimated maximum amount that could be
paid to in respect of each individual thereby affected by the Merger.
(vi) Other than payments that may be made to the persons listed in
Section 3.1(n)(vi) of the Company Disclosure Schedule (the "PRIMARY
COMPANY EXECUTIVES"), any amount or economic benefit that could be
received (whether in cash or property or the vesting of property) as
a result of the Merger or any other transaction (including as a
result of termination of employment on or following the Effective
Time) by any employee, officer or director of the Company or any of
its affiliates who is a "DISQUALIFIED INDIVIDUAL" (as such term is
defined in proposed Treasury Regulation Section l.280G-l) under any
Company Benefit Plan or Company Benefit Agreement or otherwise would
not be characterized as an "EXCESS PARACHUTE PAYMENT" (as defined in
Section 280G (b) (1) of the Code), and no disqualified individual is
entitled to receive any additional payment from the Company or any of
its subsidiaries or any other person in the event that the excise tax
under Section 4999 of the Code is imposed on such disqualified
individual. Set forth in the Company Disclosure Schedule is (i) the
estimated maximum amount that could be paid to each Primary Company
Executive as a result of the Merger and the other transactions under
all Company Benefit Plans and Company Benefit Agreements and
(ii) the "BASE AMOUNT" (as defined in Section 280G (b) (3) of the
Code) for each Primary Company Executive calculated as of the date of
this Agreement.
(o) TAXES. (i) Each of the Company and its subsidiaries has filed all Tax
Returns required to have been filed (or extensions have been duly
obtained) and has paid all Taxes required to have been paid by it, except
where failure to file such Tax Returns or pay such Taxes would not, in
the aggregate, reasonably be expected to have a material adverse effect
on the Company; and (ii) no material audit, examination, litigation or
other proceeding with respect to any Tax Return or Taxes is pending. For
purposes of this Agreement: (a) "TAX" (and with correlative meaning,
"TAXES") means any federal, state, local or foreign income, gross
receipts, property, sales, use, license, excise, franchise, employment,
payroll, withholding, alternative or add on minimum, ad valorem, transfer
or excise tax, or any other tax, custom, duty, governmental fee or other
like assessment or change of any kind whatsoever, together with any
interest or penalty, imposed by any governmental authority and (B) "TAX
RETURN" means any return, report or similar statement required to be
filed with respect to any Tax (including any
16
attached schedules), including, without limitation, any information
return, claim for refund, amended return or declaration of estimated Tax.
(p) ASSETS. Each of the Company and its subsidiaries has good and marketable
title to, or valid leasehold interests in, all of its material properties
and assets except for such as are no longer used or useful in the conduct
of its businesses or as have been disposed of in the ordinary course of
business and except for defects in title, easements, restrictive
covenants and similar encumbrances that individually and in the
aggregate, would not reasonably be expected to have a material adverse
effect. All such material assets and properties, other than assets and
properties in which the Company or any of its subsidiaries has a
leasehold interest, are free and clear of all Liens, except for Liens
that, individually and in the aggregate, do not materially interfere with
the ability of the Company and its subsidiaries to conduct their
respective businesses as currently conducted.
(q) INTELLECTUAL PROPERTY
(i) A list and brief description of all trademarks, service marks, trade
names, brands, copyrights and patents, all applications for
registration and registrations for such trademarks, copyrights and
patents and all mask works, trade secrets, confidential and
proprietary information, compositions of matter, formulas, designs,
proprietary rights, know-how and processes owned by or licensed to
or used (all of the foregoing collectively hereinafter referred to
as the "INTELLECTUAL PROPERTY RIGHTS") by the Company or any of its
subsidiaries, and all licenses, contracts, rights and arrangements
with respect to the foregoing, are set forth in Section 3.1 (q) of
the Company Disclosure Schedule. To the Company's knowledge, all the
Intellectual Property Rights of the Company are valid, enforceable
and in full force and effect. The Company and its subsidiaries own,
free and clear of all Liens, or are validly licensed or otherwise
have the right to use all of the Company's Intellectual Property
Rights which are material to the conduct of the business of the
Company and its subsidiaries.
(ii) To the Company's knowledge, none of the Company or any of its
subsidiaries has interfered with, infringed upon, misappropriated
or otherwise come into conflict with any Intellectual Property
Rights or other proprietary information of any other person. None
of the Company or any of its subsidiaries has received any written
charge, complaint, claim, demand or notice alleging any such
interference, infringement, misappropriation or other conflict
(including any claim that the Company or any of its subsidiaries
must license or refrain from using any Intellectual Property Rights
or other proprietary information of any other person) that has not
been settled or otherwise fully resolved. To the Company's
knowledge, no other person has interfered with, infringed upon,
misappropriated or otherwise come into conflict with any
Intellectual Property Rights which are material to the conduct of
the business of the Company or any of its subsidiaries.
(iii) As the business of the Company and its subsidiaries is presently
conducted and proposed to be conducted without giving effect to any
change with respect thereto that may be made by Parent, to the
Company's knowledge, Parent's use after the Closing of the
Intellectual Property Rights which are material to the conduct of
the business of the Company and its subsidiaries taken as a whole
will not interfere with, infringe upon, misappropriate or otherwise
come into conflict with the Intellectual Property Rights or other
proprietary information of any other person.
(r) INSURANCE. Section 3.1 (r) of the Company Disclosure Schedule contains a
list of all material policies of fire, liability, workmen's compensation
and other forms of insurance owned or held by or covering the Company any
of its subsidiaries or all or any portion of their property and
17
assets. All such policies are in full force and effect and no notice of
cancellation or termination has been received with respect to any such
policy. Such policies are sufficient for compliance with all requirements
of law and of all agreements to which the Company and its subsidiaries
are parties and, to the best knowledge of the Company, are valid,
outstanding and enforceable policies and provide, in the reasonable
judgment of management, adequate insurance coverage for the assets and
operations of the Company and its subsidiaries. No insurance has been
refused with respect to any operations or property assets of the Company
or any of its subsidiaries, nor has the coverage of any insurance been
limited, by any insurance carrier which has carried, or received any
application for, any such insurance during the last three years.
(s) ENVIRONMENTAL MATTERS. Except as would not, individually or in the
aggregate, reasonably be expected to have a material adverse effect:
(i) Each of the Company and its subsidiaries possesses all Environmental
Permits (as defined below) necessary to conduct its businesses and
operations as currently conducted.
(ii) Each of the Company and its subsidiaries is in compliance in all
respects with all Environmental Laws (as defined below) and all
Environmental Permits.
(iii) There are no Environmental Claims (as defined below) pending or, to
the knowledge of the Company, threatened against the Company or any
of its subsidiaries.
(iv) There have been no Releases (as defined below) of any Hazardous
Materials by the Company or any of its subsidiaries that could
reasonably be expected to result in a material Environmental Claim
against the Company or any of its subsidiaries.
(v) DEFINITIONS
"ENVIRONMENTAL CLAIMS" means any and all administrative, regulatory or
judicial actions, orders, decrees, suits, demands, demand letters,
directives, claims, liens, investigations, proceedings or notices of
noncompliance or violation by any Governmental Entity or other person
alleging potential responsibility or liability under any Environmental
Law.
"ENVIRONMENTAL LAWS" means all applicable laws, rules, regulations,
orders, decrees, common law, judgments or binding agreements issued,
promulgated or entered into by or with any Governmental Entity relating
to pollution or protection of the environment (including ambient air,
surface water, groundwater, soils or subsurface strata) or protection of
human health as it relates to the environment, including laws and
regulations relating to Releases or threatened Releases of Hazardous
Materials or otherwise relating to the generation, manufacture,
processing, distribution, use, treatment, storage, transport, handling of
or exposure to Hazardous Materials.
"ENVIRONMENTAL PERMITS" means all permits, licenses, registrations and
other authorizations required under applicable Environmental Laws.
"HAZARDOUS MATERIALS" means all hazardous, toxic, explosive or
radioactive substances, wastes or other pollutants, including petroleum
or petroleum distillates, asbestos or asbestos-containing material,
polychlorinated biphenyls ("PCBS") or PCB-containing materials or
equipment, radon gas, infectious or medical wastes and all other
substances or wastes of any nature regulated pursuant to any
Environmental Law.
"RELEASE" means any release, spill, emission, leaking, dumping,
injection, pouring, deposit, disposal, discharge, dispersal, leaching or
migration into or through the environment (including ambient air, surface
water, groundwater, land surface or subsurface strata) or within any
building, structure, facility or fixture.
18
(t) STATE TAKEOVER STATUTES. The approval of the Merger by the Board of
Directors of the Company referred to in Clause 3.1 (d) constitutes
approval of this Agreement and the Shareholders Agreement and the
consummation of the Merger and the other transactions contemplated by
this Agreement and the Shareholders Agreement by the Board of Directors
of the Company for purposes of Section 203 of the DGCL and represents the
only action necessary to ensure that Section 203 of the DGCL does not and
will not apply to the execution or delivery of this Agreement or the
Shareholders Agreement or the consummation of the Merger and the other
transactions contemplated hereby or thereby. No other state takeover or
similar statute or regulation is applicable to this Agreement, the
Shareholders Agreement, the Merger or the other transactions contemplated
hereby or thereby.
(u) VOTING REQUIREMENTS. The affirmative vote of the majority of the
outstanding shares of Company Common Stock in favor of adopting this
Agreement (the "COMPANY SHAREHOLDER APPROVAL") is the only vote of the
holders of any class or series of the Company's capital stock necessary
to approve or adopt this Agreement or the Merger. The affirmative vote of
the holders of the Company Common Stock is not necessary to approve any
transaction contemplated by this Agreement or the Shareholders Agreement
(other than the consummation of the Merger).
(v) BROKERS; SCHEDULE OF FEES AND EXPENSES. Other than as set forth on
Section 3.1(v) of the Company Disclosure Schedule, no broker, investment
banker, financial advisor or other person, other than (i) the Company's
legal advisors: approximately $750,000; (ii) Xxxxxx Xxxxxxx:
approximately $5,500,000; and (iii) Ernst & Young and Xxxxxxxx
Consulting: approximately $100,000, is entitled to any broker's,
finder's, financial or legal advisor's or other similar fee or commission
in connection with the transactions contemplated by this Agreement based
upon arrangements made by or on behalf of the Company.
(w) PRIVATE PLACEMENT. The offer of Parent Shares to the Company
shareholders as contemplated in this Agreement can be effected on the
basis of the private placement exemption from registration under the U.S.
Securities Act of 1933, as amended (the "SECURITIES ACT") afforded under
Regulation D of the Securities Act.
(x) NO GENERAL SOLICITATION OR ADVERTISING. Neither the Company, nor any of
its affiliates, nor any person acting on its or their behalf has engaged
in any form of general solicitation or general advertising (within the
meaning of Regulation D of the Securities Act) in connection with any
offer or sale of the Parent Shares.
(y) INFORMATION STATEMENT. The Company has not distributed and shall not
distribute, and shall not permit any of its directors, officers or
employees to distribute, any materials or information in connection with
the offer or sale of the Parent Shares, other than the Information
Statement and such other materials, if any, approved in advance in
writing by the Parent.
3.2 REPRESENTATIONS AND WARRANTIES OF UPC, PARENT AND MERGER SUB
UPC, Parent and Merger Sub represent and warrant to the Company as of the
date hereof as follows:
(a) ORGANIZATION. Each of the Parent and its subsidiaries is a corporation
duly incorporated or organized, validly existing and in good standing
under the laws of the jurisdiction in which it is incorporated or
organized and has all requisite corporate power and authority to carry on
its business as now being conducted. Parent has delivered to the Company
true and complete copies of its articles of association of the Parent and
the certificate of incorporation and by-laws of Merger Sub, in each case
amended to the date of this Agreement.
19
(b) AUTHORITY. UPC, Parent and Merger Sub have the requisite corporate power
and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby (subject to those approvals and consents
required by Parent and UPC outlined in Section 6 hereto). The execution
and delivery of this Agreement by Parent and Merger Sub and the
consummation by UPC, Parent and Merger Sub of the transactions
contemplated hereby have been duly authorized by all necessary corporate
action on the part of UPC, Parent and Merger Sub and no other corporate
proceedings on the part of UPC, Parent or Merger Sub are necessary to
approve this Agreement or to consummate the transactions contemplated
hereby, subject to obtaining the approval of this Agreement and the
transactions contemplated hereby, including the Merger, from the
Supervisory Board of UPC ("UPC APPROVAL"). This Agreement has been duly
executed and delivered by UPC, Parent and Merger Sub, as applicable, and
(assuming the due execution and delivery by the other parties hereto)
constitutes a valid and binding obligation of UPC, Parent and Merger Sub,
as applicable, enforceable against UPC, Parent and Merger Sub, as
applicable, in accordance with its terms, subject to the effects of
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and other similar laws relating to or affecting creditors' rights
generally, and general equitable principles (whether considered in a
proceeding at equity or at law).
(c) NONCONTRAVENTION. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby and compliance with
the provisions of this Agreement do not and will not conflict with, or
result in any violation or breach of, or default (with or without notice
or lapse of time, or both) under, or give rise to a right of, or result
in, termination, cancelation or acceleration of any obligation or to loss
of a material benefit under, or result in the creation of any Lien upon
any of the properties or assets of UPC or the Parent under, or give rise
to any increased, additional, accelerated or guaranteed rights or
entitlements under, any provision of (i) the articles of organization or
by-laws or similar organizational documents of UPC or the Parent or the
certificate of incorporation or by-laws or similar organizational
documents of any of its subsidiaries (including Merger Sub), (ii) any
Contract applicable to UPC, Parent or Merger Sub or their respective
properties or assets or (iii) subject to the governmental filings and
other matters referred to in the following sentence, any (A) statute,
law, ordinance, rule or regulation or (B) judgment, order or decree, in
each case applicable to UPC, Parent or Merger Sub or their respective
properties or assets, other than, in the case of clauses (ii) and (iii),
any such conflicts, violations, defaults, rights, losses or Liens that
individually and in the aggregate, would not reasonably be expected to
have a material adverse effect. No consent, approval, order or
authorization of, or registration, declaration or filing with, any
Governmental Entity is required by or with respect to UPC, Parent or
Merger Sub in connection with the execution and delivery of this
Agreement by UPC, Parent and Merger Sub and the execution and delivery of
the Shareholders Agreement by UPC, Parent or the consummation by UPC,
Parent and Merger Sub of the transactions contemplated hereby and thereby
or the compliance with the provisions of this Agreement and the
Shareholders Agreement, except for (1) the filing of a premerger
notification and report form under the HSR Act or any other applicable
competition, merger control, antitrust or similar law or regulation,
(2) the filing of the Certificate of Merger with the Secretary of State
of the State of Delaware and appropriate documents with the relevant
authorities of other states in which the Company is qualified to do
business, (3) UPC Approval, (4) the conditions precedent identified in
Clauses 6.2(f) and (g) herein, (5) with respect to the Austrian merger
control proceedings: legal validity of a decree by the Cartel Court
Vienna that the Merger is not subject to a pre-merger filing requirement;
legal validity of a decree pursuant to which within the legally provided
time period no examination of the contemplated Merger has been requested;
or legal validity of a decree consenting to the Merger at conditions
which are acceptable to all parties to this Agreement (6) with respect to
the
20
German merger control proceedings: the issue (or deemed issue) of the
approval or other necessary confirmation, consent or clearance to the
Merger by the German Federal Cartel Office (Bundeskartellamt) for each of
the parties having been obtained on terms reasonably satisfactory to the
parties and (7) such other consents, approvals, orders, authorizations,
registrations, declarations and filings the failure of which to be
obtained or made, individually and in the aggregate, would not reasonably
be expected to have a material adverse effect.
(d) INTERIM OPERATIONS OF MERGER SUB. Merger Sub was formed solely for the
purpose of engaging in the transactions contemplated hereby and has not
conducted any activities other than in connection with the organization
of Merger Sub, the negotiation and execution of this Agreement and the
consummation of the transactions contemplated hereby. Merger Sub has no
subsidiaries.
(e) CAPITAL STRUCTURE. As of the close of business on May 17, 2000, the
authorized capital stock of Parent consists of NLG 500,000 divided into
500 shares of NLG 1,000 each Parent Shares. There are currently 100
shares of NLG 1,000 each Parent Shares outstanding. Except as set forth
above, no shares of capital stock of, or other equity or voting interests
in, Parent, or options, warrants or other rights to acquire any such
stock or securities are issued, reserved for issuance or outstanding.
4. COVENANTS RELATING TO CONDUCT OF BUSINESS
4.1 CONDUCT OF BUSINESS
(a) CONDUCT OF BUSINESS BY THE COMPANY
During the period from the date of this Agreement to the Effective Time
or the termination of this Agreement, except as consented to in writing
by Parent or as specifically contemplated by this Agreement, the Company
shall, and shall cause its subsidiaries to, carry on their respective
businesses in the ordinary course consistent with past practice and use
their commercially reasonable efforts to comply with all applicable laws,
rules and regulations and, to the extent consistent therewith, use their
commercially reasonable efforts to preserve their assets and technology
and preserve their relationships with customers, suppliers, licensors,
licensees, distributors and others having business dealings with them.
Without limiting the generality of the foregoing, during the period from
the date of this Agreement to the Effective Time, except as consented to
in writing by Parent or as specifically contemplated by this Agreement,
the Company shall not, and shall not permit any of its subsidiaries to:
(i) (w) declare, set aside or pay any dividends on, or make any other
distributions (whether in cash, stock or property) in respect of,
any of its capital stock except for cash dividends by a direct or
indirect wholly owned subsidiary of the Company to its parent,
(x) purchase, redeem or otherwise acquire any shares of capital
stock or any other securities of the Company or its subsidiaries or
any options, warrants, calls or rights to acquire any such shares or
other securities (except for repurchases or redemptions in the case
of the Warrant Agreements or the Unit Purchase Option Agreement),
(y) 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 or any of
its other securities or (z) liquidate or merge with any subsidiaries
of the Company;
(ii) issue, deliver, sell, pledge or otherwise transfer or encumber any
shares of its capital stock, any other equity or voting interests
or any securities convertible into, or exchangeable for, or any
options, warrants, calls or rights to acquire, any such shares,
voting securities or convertible securities or any stock
appreciation rights or other rights that are linked to the price of
Company Common Stock (other than the issuance of
21
shares of Company Common Stock upon the exercise of Company Stock
Options, Warrants or Unit Options in accordance with the terms of
such Warrants and Unit Options as in effect on the date of this
Agreement);
(iii) amend its Certificate of Incorporation or by-laws (or similar
organizational documents);
(iv) directly or indirectly acquire or agree to acquire (A) by merging
or consolidating with, or by purchasing all or a substantial
portion of the assets of, or by any other manner, any assets
constituting a business or any corporation, partnership, joint
venture or association or other entity or division thereof, or any
direct or indirect interest in any of the foregoing, or (B) any
assets other than assets in the ordinary course of business
consistent with past practice;
(v) directly or indirectly sell, lease, license, sell and leaseback,
mortgage or otherwise encumber or subject to any Lien or otherwise
dispose of any of its properties or assets or any interest therein,
except sales of assets in the ordinary course of business consistent
with past practice;
(vi) (x) repurchase, accelerate, prepay or incur any indebtedness or
guarantee any indebtedness of another person or issue or sell any
debt securities or options(,) warrants, calls or other rights to
acquire any debt securities of the Company or any of its
subsidiaries, guarantee any debt securities of another person,
enter into any "KEEP WELL" or other agreement to maintain any
financial statement condition of another person or enter into any
arrangement having the economic effect of any of the foregoing,
except for borrowings incurred in the ordinary course of business
consistent with past practice, and except for the working credit
facility of the equivalent of - 20,000,000 to be entered into
pursuant to the credit facility agreement dated on or about
May 19, 2000 among the Company, as borrower and UPC, as lender (the
"CREDIT FACILITY AGREEMENT") or (y) make any loans, advances or
capital contributions to, or investments in, any other person,
other than the Company or any direct or indirect wholly owned
subsidiary of the Company;
(vii) incur or modify any significant indebtedness or other liability
except in the ordinary and usual course of business or pursuant to
financial plans previously communicated to UPC, or for long-term
indebtedness incurred in connection with the refinancing of
existing indebtedness, without the prior written consent of UPC; or
make any decision or commitment with respect to a significant
investment or divestment except in the ordinary and usual course of
business or pursuant to financial plans previously communicated to
UPC without the prior written consent of UPC;
(viii) (A) grant to any employee, officer, director, consultant or
independent contractor of the Company or any of its subsidiaries
any increase in compensation, without the prior written consent of
the Parent or as required by applicable law, (B) grant to any
employee, officer, director, consultant or independent contractor
of the Company or any of its subsidiaries any increase in severance
or termination pay, without the prior written consent of the Parent
or as required by applicable law, (C) establish, adopt, enter into
or amend any Company Benefit Agreement, without the prior written
consent of the Parent or as required by applicable law,
(D) establish, adopt, enter into or amend in any material respect
any collective bargaining agreement or Company Benefit Plan, other
than required by applicable law, (E) take any action to accelerate
any rights or benefits, take any action to fund or in any other way
secure the payment of compensation or benefits under any Company
Benefit Agreement, Company Benefit Plan or any other Contract, or
make any material determinations not in the ordinary course of
business consistent with past practice, or Company Benefit Plan or
Company Benefit Agreement, other than pursuant to the provisions of
Clause 5.4 hereof, including any payment of cash pursuant
22
thereto, (F) amend or modify or grant any Company Stock Option,
(G) pay any bonuses after the date of this Agreement, without the
prior written consent of the Parent or as required by applicable
law, or (H) materially change any actuarial or other assumption
used to calculate funding obligations with respect to any Company
Pension Plan or change the manner in which contributions to any
Company Pension Plan are made or the basis on which such
contributions are determined;
(ix) transfer or license to any person or entity or otherwise extend,
amend or modify any rights to the Intellectual Property Rights of
the Company and its subsidiaries other than in the ordinary course
of business consistent with past practices; provided that in no
event shall the Company license on an exclusive basis or sell any
Intellectual Property Rights of the Company or its subsidiaries;
(x) except as required by a Governmental Entity or as may be required by
a change in U.S. GAAP as concurred in by the Company's independent
auditors, make any changes in accounting methods, principles or
practices; or
(xi) authorize any of, or commit, resolve or agree to take any of, the
foregoing actions.
(b) CONDUCT OF BUSINESS BY PARENT
During the period from the date of this Agreement to the Effective Time
or the termination of this Agreement, (i) UPC and Parent agree to comply
with the provisions of Article 5 of the Shareholders Agreement, to the
extent applicable, and (ii) Parent will use its reasonable best efforts
to provide periodic updates to Xxxxxxxxxxx Xxxxxx regarding any transfer
of assets or operations from UPC to the Parent, and will use its
reasonable efforts to provide a description of any known encumbrances on
such assets at the time such updates are given.
(c) CERTAIN TAX MATTERS
During the period from the date of this Agreement to the Effective Time,
the Company shall, and shall cause each of its subsidiaries to,
(i) timely file (including extensions) all tax returns ("POST-SIGNING
RETURNS") required to be filed by each such entity; (ii) timely pay all
taxes due and payable in respect of such Post-Signing Returns that are so
filed; (iii) accrue a reserve in the books and records and financial
statements of any such entity in accordance with past practice for all
taxes payable by such entity for which no Post-Signing Return is due
prior to the Effective Time; (iv) promptly notify Parent upon receipt of
notice of any suit, claim, action, investigation, proceeding or audit
(collectively, "ACTIONS") pending against or with respect to the Company
or any of its subsidiaries in respect of any tax and not settle or
compromise any material Action without Parent's consent; (v) not change
its fiscal year; (vi) not make any material tax election without Parent's
consent; and (vii) except for those set forth in Section 4.1(c) of the
Company Disclosure Schedule, cause all existing tax sharing agreements,
tax indemnity obligations and similar agreements, arrangements and
practices with respect to taxes to which the Company or any of its
subsidiaries is a party or by which the Company or any of its
subsidiaries is otherwise bound to be terminated as of the Closing Date
(unless directed otherwise by Parent in writing delivered to the Company
at least five business days prior to the Closing) so that after such date
neither the Company nor any of its subsidiaries shall have any further
rights or liabilities thereunder.
(d) ADVICE OF CHANGES; FILINGS
(e) The Company shall (i) confer with Parent on a regular and frequent basis
to report on operational matters and other matters requested by Parent
and (ii) promptly advise Parent orally and in writing of any change or
event that would reasonably be expected to have a material adverse
effect. The Company and Parent shall each promptly provide the other
23
copies of all filings made by such party with any Governmental Entity in
connection with this Agreement and the transactions contemplated hereby,
other than the portions of such filings that include confidential
information.
4.2 CONFIDENTIALITY
(a) None of the parties hereto shall disclose or permit any of its
shareholders or subsidiary or affiliates to disclose any information
directly or indirectly relating to the transactions contemplated hereby
or the existence of this Agreement or any information relating to the
other party hereto or relating to any business conducted by the other
party hereto or by any other company belonging to the same group to which
such party belongs (all of the foregoing together "CONFIDENTIAL
INFORMATION"), to any third party. Each of the parties hereto shall
ensure that its (and its shareholders', subsidiaries' and affiliates')
directors, officers, agents and employees shall not disclose any
Confidential Information to any third party. The Company shall ensure
that the Company's shareholders to which it discloses Confidential
Information shall be legally bound by confidentiality obligations which
are not in any respect less strict than the provisions of this
Clause 4.2.
(b) The confidentiality obligations imposed by this Clause 4.2 do not apply
with respect to any Confidential Information which is:
(i) in the public domain (other than that which has come into the public
domain by virtue of a breach of the confidentiality obligations
hereunder);
(ii) required to be disclosed by mandatory provisions of law or by Dutch
merger code provisions or by any stock exchange or similar
regulations (provided that if disclosure is required to be made under
such provisions of law or regulations, the parties shall reasonably
liaise as to the timing and contents of such disclosure);
(iii) required to be disclosed in order to obtain any regulatory
approvals in furtherance of the Merger;
(iv) to be disclosed to the Company's shareholders (provided that such
disclosure is given subject to a confidentiality undertaking of such
Company's shareholders which is not in any respect less strict than
this Clause);
(v) to be disclosed to professional advisers instructed to advise on the
Merger (provided that such disclosure is given subject to a
confidentiality undertaking of such professional advisers which is
not in any respect less strict than this Clause); or
(vi) to be disclosed in the course of legal proceedings to which either
party are a party or in which either party is otherwise involved in
relation to this Agreement or the Merger if such disclosure is in the
reasonable opinion of the party concerned necessary to be disclosed
in order to safeguard its legitimate interests in such legal
proceedings; provided that prompt notice shall be given to the
non-disclosing party so that it may seek a protective order
protecting the confidentiality of such information prior to such
disclosure.
(c) The confidentiality undertakings in this Clause 4.2 will not restrict
the disclosure by the Company, the Parent or UPC of Confidential
Information to employees of the Company, the Parent or UPC to the extent
deemed reasonably necessary to implement the Merger.
(d) The confidentiality undertakings in this Clause will apply to the
parties hereto (and to the Company's shareholders and the parties'
professional advisers) for a period of 24 months after the Closing Date,
and regardless whether or not the Merger will be consummated hereunder.
24
5. ADDITIONAL AGREEMENTS
5.1 PREPARATION OF THE INFORMATION STATEMENT
(a) As promptly as practicable following the date of this Agreement, the
Company and Parent shall prepare an information statement (the
"INFORMATION STATEMENT") and the Company shall use its commercially
reasonable efforts to cause the materials and agreements listed in
Clause 2.2(b)(i)-(viii) to be mailed to the Company's shareholders as
promptly as practicable following the date of this Agreement.
Notwithstanding the foregoing, prior to mailing the Information Statement
and Written Consent Solicitation (or any amendment or supplement
thereto), the Company (i) shall provide Parent an opportunity to review
and comment on such document or response, and (ii) shall not mail such
document prior to receiving Parent's written approval of the contents of
the Information Statement, such approval not to be unreasonably withheld.
(b) The Company shall, through its Board of Directors, recommend to its
shareholders that they adopt this Agreement, the Shareholders Agreement,
the Escrow Agreement, the waiver of registration rights under the
Registration Rights Agreements, and shall include such recommendation in
the Information Statement.
5.2 ACCESS TO INFORMATION; CONFIDENTIALITY
The Company shall, and shall cause each of its subsidiaries to, afford to
Parent, and to Parent's officers, employees, investment bankers, attorneys,
accountants and other advisors and representatives, reasonable and prompt
access during normal business hours during the period prior to the Effective
Time or the termination of this Agreement to all their respective
properties, assets, books, contracts, commitments, directors, officers,
employees, attorneys, accountants, auditors, other advisors and
representatives and records and, during such period, the Company shall, and
shall cause each of its subsidiaries to, make available to Parent on a
prompt basis (a) a copy of each report, schedule, form, statement and other
document filed or received by it during such period pursuant to the
requirements of domestic or foreign (whether national, federal, state,
provincial, local or otherwise) laws and (b) all other information
concerning its business, properties and personnel as Parent may reasonably
request. Except as required by law, UPC and Parent will hold, and will
direct their respective officers, employees, investment bankers, attorneys,
accountants and other advisors and representatives to hold, any and all
information received from the Company, directly or indirectly, in confidence
in accordance with Section 4.2.
5.3 COMMERCIALLY REASONABLE EFFORTS; NOTIFICATION
(a) Upon the terms and subject to the conditions set forth in this
Agreement, each of the parties agrees to use all commercially reasonable
efforts to take, or cause to be taken, all actions, that are necessary,
proper or advisable to consummate and make effective the Merger and the
other transactions contemplated by this Agreement and the Shareholders
Agreement, including using all commercially reasonable efforts to
accomplish the following: (i) the taking of all commercially reasonable
acts necessary to cause the conditions precedent set forth in Clause 6 to
be satisfied, (ii) the obtaining of all necessary actions or nonactions,
waivers, consents, approvals, orders and authorizations from Governmental
Entities and the making of all necessary registrations, declarations and
filings (including under the HSR Act) and (iii) the obtaining of all
necessary consents, approvals or waivers from third parties.
(b) Notwithstanding anything foregoing to the contrary, Parent will not be
required to agree to, or proffer to, (i) divest or hold separate any
portion of Parent's, the Company's or any of their respective affiliates'
businesses or assets, (ii) any operating or similar restrictions or
(iii) cease to conduct business or operations in any jurisdiction in
which Parent, the Company or any of
25
the Parent's subsidiaries conducts business or operations as of the date
of this Agreement. In connection with and without limiting the foregoing,
the Company and its Board of Directors shall, if any state takeover
statute or similar statute or regulation is or becomes applicable to this
Agreement, the Shareholders Agreement, the Merger or any of the other
transactions contemplated hereby or thereby, use its commercially
reasonable efforts to ensure that the Merger and the other transactions
contemplated by this Agreement or the Shareholders Agreement may be
consummated as promptly as practicable on the terms contemplated by this
Agreement or the Shareholders Agreement and otherwise to minimize the
effect of such statute or regulation on this Agreement or the
Shareholders Agreement, the Merger and the other transactions
contemplated hereby or thereby.
(c) The Company, on the one hand, and Parent and UPC, on the other hand,
will provide such assistance, information and cooperation to each other
as is reasonably required to obtain any such waivers, consents,
approvals, orders and authorizations and, in connection therewith, will
notify the other person promptly following the receipt of any comments
from any Governmental Entity and of any request by any Governmental
Entity for amendments, supplements or additional information in respect
of any registration, declaration or filing with such Governmental Entity
and will supply the other person with copies of all correspondence
between such person or any of its representatives, on the one hand, and
any Governmental Entity, on the other hand, other than the portions of
such correspondence that include confidential information.
(d) The Company shall give prompt notice to Parent of any representation or
warranty made by it contained in this Agreement becoming untrue or
inaccurate such that the condition set forth in Clause 6.2 (a) would not
be satisfied; provided that no such notification shall affect the
representations, warranties, covenants or agreements of the parties or
the conditions to the obligations of the parties under this Agreement.
(e) UPC or Parent shall give prompt notice to the Company of any
representation or warranty made by them or Merger Sub contained in this
Agreement becoming untrue or inaccurate such that the condition set forth
in Clause 6.3 (a) would not be satisfied; provided that no such
notification shall affect the representations, warranties, covenants or
agreements of the parties or the conditions to the obligations of the
parties under this Agreement.
5.4 COMPANY STOCK OPTIONS
(a) At the Effective Time, all Company Stock Options, whether vested or
unvested, which are then outstanding and unexercised shall cease to
represent a right to acquire Company Common Stock and shall be converted
automatically into options to purchase Parent Shares, and Parent shall
assume each such Company Stock Option. As a result of the conversion,
each Company Stock Option to acquire one share of Company Common Stock
shall be converted into an option to acquire one Parent Share and the
terms of such options shall be substantially the same terms as currently
apply to the Company Stock Options. Parent shall reserve for issuance
6,414,877 Parent Shares for the exercise of such converted options
pursuant to this Clause 5.4. At or prior to the Effective Time, Company
shall make all necessary arrangements and amendments with respect to the
Company Stock Plans, and each Company Benefit Agreement, to permit the
assumption by Parent of any unexercised Company Stock Options.
(b) Prior to the Closing Date, the Company shall obtain all consents of the
holders of the Company Stock Options, if such consents are determined to
be necessary to effectuate the foregoing as determined by UPC and the
Parent. In addition, the Company shall enter into agreements with all
holders of Company Stock Options, to ensure that such holder of
26
Company Stock Options will execute and accede to the terms of the
Shareholders Agreement upon the exercise of such Company Stock Option and
resulting issuance of Parent Shares to such holder of the Company Stock
Option.
5.5 OUTSTANDING WARRANTS
(a) At the Effective Time, all Warrants, whether vested or unvested, which
are then outstanding and unexercised shall cease to represent a right to
acquire Company Common Stock and shall be converted automatically into
warrants to purchase Parent Shares, and Parent shall assume each such
Warrant. As a result of the conversion, each Warrant to purchase one
share of Company Common Stock shall be converted into a warrant to
acquire one Parent Share and the terms of such warrants shall be
substantially the same terms that currently apply to the Warrants,
subject to any arrangements entered into as set forth below. Parent shall
reserve for issuance 840,000 Parent Shares for the exercise of such
converted warrants pursuant to this Clause 5.5. At or prior to the
Effective Time, Company shall make all necessary arrangements with
respect to the Warrant Agreements to permit the assumption by Parent of
any unexercised Warrants.
(b) Prior to the Closing Date, the Company shall obtain all consents of the
holders of the Warrants, if such consents are determined to be necessary
to effectuate the foregoing as determined by UPC and the Parent. In
addition, the Company shall enter into agreements with all holders of
Warrants, to ensure that such holder of Warrants will execute and accede
to the terms of the Shareholders Agreement upon the exercise of such
Warrants and resulting issuance of Parent Shares to such holder of the
Warrants.
5.6 OUTSTANDING UNIT OPTIONS
(a) At the Effective Time, all Unit Options, whether vested or unvested,
which are then outstanding and unexercised shall cease to represent a
right to acquire Company Common Stock and shall be converted
automatically into options to purchase Parent Shares, and Parent shall
assume each such Unit Option, subject to the terms of the Unit Purchase
Option Agreement under which it was issued. As a result of the
conversion, each Unit Option shall be converted into a unit option
(i) to acquire 100,000 Parent Shares, and (ii) a warrant to acquire
50,000 Parent Shares, and the terms of such unit options shall be
substantially the same terms that currently apply to the Unit Options,
except for any arrangements entered into as set forth below. Parent shall
reserve for issuance 2,961,000 Parent Shares for the exercise of such
converted options pursuant to this Clause 5.6. At or prior to the
Effective Time, Company shall make all necessary arrangements with
respect to the Unit Purchase Option Agreement to permit the assumption by
Parent of any unexercised Unit Options.
(b) Prior to the Closing Date, the Company shall obtain all consents of the
holders of the Unit Options, if such consents are determined to be
necessary to effectuate the foregoing as determined by UPC and the
Parent. In addition, the Company shall enter into supplemental agreements
with all holders of Unit Options, to ensure that such holder of Unit
Options will execute and accede to the terms of the Shareholders
Agreement upon the exercise of such Unit Options and resulting issuance
of Parent Shares to such holder of the Unit Options.
27
5.7 INDEMNIFICATION AND EXCULPATION
(a) Parent and Merger Sub agree that all rights to indemnification and
exculpation from liabilities for acts or omissions occurring at or prior
to the Effective Time now existing in favor of the current or former
directors or officers of the Company and its subsidiaries as provided in
their respective certificates of incorporation or by-laws (or similar
organizational documents) shall be assumed by the Surviving Corporation
in the Merger, without further action, at the Effective Time and shall
survive the Merger and shall continue in full force and effect in
accordance with their terms.
(b) Parent shall cause the Surviving Corporation to maintain in effect for
three years from the Effective Time policies of directors' and officers'
liability insurance containing terms and conditions which are not less
advantageous in any material respect (including with respect to the
payment of reasonable attorneys' fees, to the extent so provided) than
those policies maintained by the Company at the date hereof, with respect
to matters occurring prior to the Effective Time, and having the maximum
available coverage under the current policies of directors' and officers'
liability insurance.
(c) In the event that the Surviving Corporation or any of its successors or
assigns (i) consolidates with or merges into any other person and is not
the continuing or surviving corporation or entity of such consolidation
or merger or (ii) transfers or conveys all or substantially all its
properties and assets to any person, then, and in each such case, Parent
shall cause proper provision to be made so that the successors and
assigns of the Surviving Corporation assume the obligations set forth in
this Clause 5.7.
(d) The provisions of this Clause 5.7 are intended to be for the benefit of,
and will be enforceable by, each indemnified party, his or her heirs and
his or her representatives.
5.8 FEES AND EXPENSES
All fees and expenses incurred in connection with this Agreement, the Merger
and the other transactions contemplated by this Agreement shall be paid by the
party incurring such fees or expenses, whether or not the Merger is consummated.
Any real property transfer, stamp or similar tax imposed on the shareholders of
the Company in connection with this Agreement and the transactions contemplated
hereby shall be paid solely by the Surviving Corporation.
5.9 INFORMATION SUPPLIED
(a) The Company agrees that none of the information included in the
Information Statement, including, without limitation, the information in
those sections entitled "Business of Cignal," "Management's Discussion
and Analysis of Financial Condition and Results of Operation--Cignal,"
"The Merger--Background of the Merger," and "The Merger--Recommendation
of the Board of Directors--Reasons for the Merger", will, at the date it
is mailed to the Company's shareholders or at the time of any amendment
or supplement thereof, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading, except that no
covenant is made by the Company with respect to statements made in the
Information Statement based on information supplied by Parent or Merger
Sub specifically for inclusion or incorporation by reference therein.
(b) Parent and Merger Sub agree that none of the information supplied or to
be supplied by Parent or Merger Sub specifically for inclusion in the
Information Statement will (except to the extent revised or superseded by
amendments or supplements contemplated hereby), at the date the
Information Statement mailed to the Company's shareholders, contain any
untrue
28
statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading.
5.10 BENEFITS MATTERS
(a) Prior to the Closing Date, Parent shall have entered into contracts of
employment with the Company's Key Employees (as defined in Section 8.3)
and with the Company's Essential Staff (as defined in Section 8.3), each
on terms mutually satisfactory to the Parent and the parties thereto.
(b) Prior to the Closing Date, all other Company employment, severance and
termination agreements, plans and policies, as disclosed in the Company
Disclosure Schedule, shall be amended to the mutual satisfaction of the
Parent and the Company.
(c) Nothing contained in this Clause 5.10 or elsewhere in this Agreement
shall be construed to prevent the termination of employment of any
individual Company Employee or any change in the employee benefits
available to any individual Company Employee or the amendment or
termination of any particular Company Benefit Plan to the extent
permitted by its terms as in effect immediately prior to the Effective
Time.
(d) With regard to any U.S. employees who are not subject to a contract of
employment with Parent or Company, as of the Effective Time, Parent
shall, for a period ending on the date one year after the Closing Date,
maintain (or cause its subsidiaries to maintain) employee benefit plans,
agreements, programs, policies and arrangements for the benefit of each
employee of the Company (each a "BUSINESS EMPLOYEE") that are no less
favourable in the aggregate to the Company Benefit Plans and Company
Benefit Agreements in effect immediately prior to the Closing Date with
respect to such Business Employee.
5.11 PUBLIC ANNOUNCEMENTS
UPC, Parent and Merger Sub, on the one hand, and the Company, on the other
hand, shall consult with each other before issuing, and give each other a
reasonable opportunity to review and comment upon, any press release or other
public statements with respect to this Agreement, the Merger and the other
transactions contemplated by this Agreement. The parties agree that the initial
press release to be issued with respect to the transactions contemplated by this
Agreement shall be in the form heretofore agreed to by the parties.
5.12 RESIGNATIONS
Prior to the Effective Time, the Company shall cause each member of its
Board of Directors to execute and deliver a letter effectuating his or her
resignation as a director of such Board effective immediately prior to the
Effective Time.
5.13 ESCROW AGREEMENT
(a) An Escrow Agreement (the "ESCROW AGREEMENT") substantially in the form
as attached hereto as Exhibit B shall be entered into among each Company
shareholder and the Escrow Agent whereby (i) 12.5% of Parent Shares,
including the Parent Shares reserved for issuance and transfer pursuant
to warrants, stock options or unit options (the "GENERAL ESCROW SHARES")
are to be held in escrow for a period expiring on the date which is one
year after the Effective Date, to secure (1) any claims for breach of
representations, warranties or covenants in the Merger Agreement which
Parent or UPC may have against the Company, or (2) any claims for breach
of representations, warranties or covenants in the Shareholders
Agreement, which
29
Parent or UPC may have against the Company or any Shareholders, and
(ii) 12.5% of Parent shares, including shares of Parent reserved for
issuance or transfer pursuant to any outstanding warrants, stock options
or unit options (the "LITIGATION ESCROW SHARES") are to be held in escrow
for a period not to exceed five years to secure the liability of the
Shareholders for any losses, liabilities, damages, costs and expenses
incurred by the Company, Parent or UPC resulting from or in connection
with the Gerzof Litigation (as defined in the Escrow Agreement).
(b) The Merger Consideration shall be decreased by the value of any payments
to UPC or Parent made by or on behalf of the Company and/or the
shareholders of the Company which are due as a result of a breach of
representations and warranties and covenants in this Agreement, whether
these payments are made in cash or in the form of Parent Shares or
otherwise.
5.14 LICENSE RENEWALS
Prior to the Closing Date, the Company shall renew all Licenses which would
otherwise expire or require renewal up to two months after the Closing Date.
5.15 REGISTRATION RIGHTS AGREEMENTS.
The Company will take all necessary action with respect to all of the
outstanding registration rights so that, as of immediately prior to the
Effective Time, (A) neither the Company nor Parent will have any obligations
under (i) the Registration Rights Agreement dated as of February 8, 1999 among
the Company, Xxxxxxx Corporate Finance and each Investor thereto; and (ii) the
Registration Rights Agreement dated as of October 29, 1997 among the Company,
Xxxxxxx Xxxxx Securities, Incorporated, ST Partners, L.P. and each of persons
listed on the signature page thereto under the heading "The Xxxxx Group" and
each of the other Investors thereto, (together, the "REGISTRATION RIGHTS
AGREEMENTS") and (B) the holders of the registration rights will have no rights
under the Registration Rights Agreements.
5.16 REORGANIZATION
Prior to the Effective Time, each party shall take all actions which are
reasonably necessary in order for the Merger to qualify as a reorganization
within the meaning of Section 368(a) of the Code in which the shareholders of
the Company do not recognize gain or loss on their exchange of Company Common
Stock for Parent Shares (except with respect to the value of the UPC Stock
Purchase Option, as described in Article 7 of the Shareholders Agreement,
granted and issued to the Shareholders by UPC); provided, however, that the
foregoing shall not be construed as either a representation by Parent or an
obligation on the part of the Parent that it will transfer any assets that would
be required for the Merger to qualify as a reorganization within the meaning of
Section 368(a) of the Code that it is not otherwise required to do so as
specifically set forth in this Agreement. Furthermore, no party hereto will
take, or permit any of its subsidiaries to take, any action that would
reasonably be expected to prevent the Merger from qualifying as a reorganization
within the meaning of Section 368(a) of the Code.
5.17 NON-UNITED STATES REAL PROPERTY HOLDING CORPORATION STATUS.
Prior to the Effective Time, the Company shall deliver prior to Closing to
Parent a statement, as described in Treasury Regulation
section 1.1445-5(b)(4)(iii), certifying that interests in the Company are not
United States real property interests.
30
6. CONDITIONS PRECEDENT
6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER
The obligation of each party to effect the Merger is subject to the
satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) SHAREHOLDER APPROVAL. The Company Shareholder Approval and UPC Approval
shall have been obtained.
(b) ANTITRUST. (i) Any requisite waiting period (and any extension thereof)
applicable to the Merger under the HSR Act and any other applicable
competition, merger, control, antitrust or similar law or regulation
(whether domestic or foreign) shall have been terminated or shall have
expired (ii) with respect to the Austrian merger control proceedings:
legal validity of a decree by the Cartel Court Vienna that the Merger is
not subject to a pre-merger filing requirement; legal validity of a
decree pursuant to which within the legally provided time period no
examination of the contemplated Merger has been requested; or legal
validity of a decree consenting to the Merger at conditions which are
acceptable to all parties to this Agreement (iii) with respect to the
German merger control proceedings: the issue (or deemed issue) of the
approval or other necessary confirmation, consent or clearance to the
Merger by the German Federal Cartel Office (Bundeskartellamt) for each of
the parties having been obtained on terms reasonably satisfactory to the
parties.
(c) NO INJUNCTIONS OR LEGAL RESTRAINTS. No temporary restraining order,
preliminary or permanent injunction or other order or decree issued by
any court of competent jurisdiction or other legal restraint or
prohibition (collectively, "LEGAL RESTRAINTS") that has the effect of
preventing the consummation of the Merger shall be in effect.
6.2 CONDITIONS TO OBLIGATIONS OF PARENT AND MERGER SUB
The obligations of Parent and Merger Sub to effect the Merger are further
subject to the satisfaction or waiver on or prior to the Closing Date of the
following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties of
the Company contained herein that are qualified as to materiality shall
be true and correct, and the representations and warranties of the
Company contained herein that are not so qualified shall be true and
correct in all material respects, in each case as of the date of this
Agreement and as of the Closing Date with the same effect as though made
as of the Closing Date, except that the accuracy of representations and
warranties that by their terms speak as of a specified date will be
determined as of such date and Parent shall have received a certificate
signed on behalf of the Company by the chief executive officer or the
chief financial officer of the Company to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF THE COMPANY. The Company shall have
performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Closing Date and
Parent shall have received a certificate signed on behalf of the Company
by the chief executive officer or the chief financial officer of the
Company to such effect.
(c) NO LITIGATION. There shall not be pending or threatened any suit, action
or proceeding by any Governmental Entity, or by any other person having a
reasonable likelihood of success, (i) challenging the acquisition by
Parent or Merger Sub of any shares of Company Common Stock, seeking to
restrain or prohibit consummation of the Merger or seeking to place
limitations on the ownership of shares of Company Common Stock (or shares
of common stock of the Surviving Corporation) by Parent or Merger Sub,
(ii) seeking to prohibit or limit
31
the ownership or operation by the Company or Parent and their respective
subsidiaries of any portion of the business or assets of the Company or
Parent and their respective subsidiaries taken as a whole, or to compel
the Company or Parent and their respective subsidiaries to dispose of or
hold separate any material portion of the business or assets of the
Company or Parent and their respective subsidiaries taken as a whole, as
a result of the Merger or any of the other transactions contemplated by
this Agreement or the Shareholders Agreement, (iii) seeking to prohibit
Parent or any of its subsidiaries from effectively controlling in any
material respect the business or operations of the Company or Parent and
their respective subsidiaries taken as a whole or (iv) which otherwise
would reasonably be expected to have a material adverse effect on the
Company.
(d) CONSENTS. Parent shall have received evidence, in form and substance
satisfactory to it, that Parent or the Company shall have obtained
(i) all material consents, approvals, authorizations, qualifications and
orders of all Governmental Entities legally required in connection with
this Agreement and the transactions contemplated by this Agreement and
(ii) all other consents, approvals, authorizations, qualifications and
orders of Governmental Entities or third parties required in connection
with this Agreement and the transactions contemplated by this Agreement,
except, in the case of this clause (ii), for those the failure of which
to be obtained, individually and in the aggregate, would not reasonably
be expected to have a material adverse effect.
(e) CONSENTS TO CHANGE OF CONTROL AND WAIVERS. Parent shall have received
the requisite consents in writing consenting to the transactions
contemplated by this Agreement and waiving any conditions with respect to
changes of control contained in the Contracts set forth in Clause 3.1
(i)(ii) of the Company Disclosure Schedule.
(f) TAX RULINGS. UPC shall have obtained tax rulings from the Netherlands
and Austria, to the satisfaction of UPC in respect of the transfers or
contributions of assets or operations or contributions by UPC or a
subsidiary of UPC, to Parent or a subsidiary of Parent.
(g) WORKS COUNCIL. (i) The Works Council (ONDERNEMINGSRAAD) of UPC Nederland
B.V. shall have given its positive advice on any transfer of employees
from UPC to the Parent, to the satisfaction of UPC, (ii) the Austrian
Workers Council shall have given its positive advice on any transfer of
employees from UPC to the Parent, to the satisfaction of UPC, (iii) if
necessary, the Norwegian Workers Council shall have given its positive
advice on any transfer of employees from UPC to the Parent, to the
satisfaction of UPC, and (iv) if necessary, the French Workers Council
shall have given its positive advice on any transfer of employees from
UPC to the Parent, to the satisfaction of UPC.
(h) TRANSFER OF LICENSES. Company shall have received requisite consents or
approvals in writing consenting or approving the transfer of all of the
Company's Licenses, as requested by the Parent or UPC, from the relevant
Governmental Entity regulating the transfer of such Licenses in each
jurisdiction in which the Company holds such a License.
(i) EMPLOYMENT CONTRACTS. Parent shall have entered into contracts of
employment with the Company's Key Employees (as defined in Section 8.3)
and the Company's Essential Staff (as defined in Section 8.3), to the
mutual satisfaction of the Parent and the parties thereto. All other
Company employment, severance and termination agreements, plans and
policies, as disclosed in the Company Disclosure Schedule, shall have
been amended to the mutual satisfaction of the Parent and the Company.
All such contracts of employment shall not have been terminated.
(j) RECEIPT OF CERTIFICATES. The Exchange Agent shall have received for
cancellation all outstanding Certificates from all Company shareholders,
together with letters of transmittal,
32
duly completed and validly executed by all such Company shareholders, as
provided for in Clause 2.2(b). At the Closing Date, the Certificates
received for cancellation shall constitute the entire issued and paid up
Company Common Stock.
(k) OTHER AGREEMENTS. All Company shareholders shall have executed the
Shareholders Agreement, the Escrow Agreement and a waiver of registration
rights under the Registration Rights Agreements.
(l) INDEBTEDNESS. The aggregate amount of the Company's Indebtedness (as
defined in Section 8.3) shall not exceed $150 million (excluding any
amounts drawn down on the Credit Facility Agreement) on the Closing Date.
(m) OPINION OF COMPANY'S FINANCIAL ADVISOR. The Company shall have received
an opinion from Xxxxxx Xxxxxxx Xxxx Xxxxxx, financial advisor to the
Company in connection with the Merger, with regard to the fairness, from
a financial point of view, to the Company of the Merger and the Merger
Consideration.
(n) ADDITIONAL DOCUMENTS. The Company shall have furnished the Parent with
(i) an opinion from general counsel to the Company, reasonably
satisfactory to the Parent (ii) an opinion from Xxxxxxx Xxxxxxx &
Xxxxxxxx, Company's U.S. counsel, reasonably satisfactory to the Parent,
stating that no registration of Priority Common Stock under the
Securities Act is required in connection with this Merger Agreement and
the transactions herein contemplated, (iii) a Company officer's
certificate regarding the Company's constitutive documents, and (vi) a
good standing certificate and certificates regarding the Company's
qualification to do business as a foreign corporation, each dated the
Closing Date.
(o) COMPANY SHAREHOLDERS. All Company shareholders shall be (i) accredited
investors as defined by Regulation D under the Securities Act, or (ii) a
relative, spouse or relative of the spouse of a Company shareholder who
is an accredited investor, and who has the same principal residence as
such Company shareholder.
(p) OPINION OF PARENT'S COUNSEL. The Parent shall have received an opinion
from Xxxxx & Overy, reasonably satisfactory to the Parent, stating that
no registration of Priority Common Stock under the Securities Act is
required in connection with this Merger Agreement and the transactions
herein contemplated.
(q) OPINION OF HOLME XXXXXXX & XXXX LLP. The Parent shall have received an
opinion from Holme Xxxxxxx & Xxxx LLP dated as of the Effective Time, to
the satisfaction of the Parent.
6.3 CONDITIONS TO OBLIGATION OF THE COMPANY
The obligation of the Company to effect the Merger is further subject to the
satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties of
Parent and Merger Sub contained herein that are qualified as to
materiality shall be true and correct, and the representations and
warranties of Parent contained herein that are not so qualified shall be
true and correct in all material respects, in each case as of the date of
this Agreement and as of the Closing Date with the same effect as though
made as of the Closing Date, except that the accuracy of representations
and warranties that by their terms speak as of a specified date will be
determined as of such date. The Company shall have received a certificate
signed on behalf of Parent by an authorized signatory of Parent to such
effect.
(b) PERFORMANCE OF OBLIGATIONS OF PARENT AND MERGER SUB. Parent and Merger
Sub shall have performed in all material respects all obligations
required to be performed by them under this
33
Agreement at or prior to the Closing Date and the Company shall have
received a certificate signed on behalf of Parent by an authorized
signatory of Parent to such effect.
(c) TAX OPINION. The Company shall have received an opinion from Xxxxxxx
Xxxxxxx & Xxxxxxxx, dated as of the Effective Time, substantially to the
effect that, on the basis of the facts, representations and assumptions
set forth in such opinion, (i) the Merger will be treated for U.S.
federal income tax purposes as a reorganization within the meaning of
Section 368(a) of the Code, (ii) Parent, the Company and Merger Sub will
each be a party to such reorganization within the meaning of
Section 368(b) of the Code, and (iii) except with respect to the value of
the UPC Stock Purchase Option, as described in Article 7 of the
Shareholders Agreement, granted and issued to the Shareholders by UPC, no
income or gain will be recognized by a shareholder of the Company as a
result of the Merger; PROVIDED THAT, in the case of (iii), the
shareholder (A) will own less than five per cent of the total voting
power and less than five per cent of the total value of the Parent's
outstanding stock immediately after the Merger (determined by treating
stock owned by an entity that is treated as a partnership for U.S.
federal income tax purposes as owned proportionately by its partners (as
determined under Treasury Regulation section 1.367(a)-1T(c)(3)(i)) and by
taking into account the attribution rules of Section 318 of the Code, as
modified by the rules of Section 958(b) of the Code) or (B) will enter
into a five year agreement to recognize gain with respect to the Company
Common Stock exchanged in the Merger in accordance with the requirements
of Treasury Regulation sections 1.367(a)-3(c)(1)(iii) and 1.367(a)-8.
(d) REPRESENTATION LETTERS. Prior to Closing, UPC and Parent agree to
execute representation letters in a form reasonably acceptable to Xxxxxxx
Xxxxxxx & Xxxxxxxx in connection with its delivery of the opinion
described in Clause 6.3(c) in this Agreement.
(e) OPINION OF HOLME XXXXXXX & XXXX LLP. The Company shall have received an
opinion from Holme Xxxxxxx & Xxxx LLP dated as of the Effective Time, to
the satisfaction of the Company.
7. TERMINATION, AMENDMENT AND WAIVER
7.1 TERMINATION
This Agreement may be terminated, and the Merger contemplated hereby may be
abandoned, at any time prior to the Effective Time, whether before or after the
Company Shareholder Approval or UPC Approval has been obtained:
(a) by mutual written consent of UPC, Parent, Merger Sub and the Company;
(b) if the Merger or any condition in Clause 6.2 shall not have been
consummated by August 31, 2000;
(c) by either Parent or the Company:
(i) if any Legal Restraint set forth in Clause 6.1 (c) shall be in effect
and shall have become final and nonappealable; or
(ii) if (A) the Company Shareholder Approval shall not have been obtained
or (B) the UPC Approval shall not have been obtained;
(d) by Parent if the Board of Directors of the Company or any committee
thereof shall have withdrawn or modified the recommendation of such Board
of Directors of this Agreement or the Merger;
(e) by Parent (i) if the Company shall have breached any of its
representations, warranties or covenants contained in this Agreement,
which breach (A) would give rise to the failure of a
34
condition set forth in Clause 6.2 (a) or 6.2 (b) and (B) has not been or
is incapable of being cured by the Company within 30 business days after
its receipt of written notice thereof from Parent, or (ii) if any suit,
action or proceeding set forth in Clause 6.2 (c) shall have prevailed and
become final and nonappealable; or
(f) by the Company if Parent shall have breached any of its representations,
warranties or covenants contained in this Agreement, which breach
(i) would give rise to the failure of a condition set forth in
Clause 6.3 (a) or 6.3 (b) and (ii) has not been or is incapable of being
cured by Parent within 30 business days after its receipt of written
notice thereof from the Company.
7.2 EFFECT OF TERMINATION
In the event of termination of this Agreement by either the Company or
Parent as provided in Clause 7.1, this Agreement shall forthwith become void and
have no effect, without any liability or obligation on the part of Parent,
Merger Sub or the Company, other than the provisions of Clause 4.3, the last
sentence of Clause 5.2, Clause 5.6, this Clause 7.2 and Clause 8; provided that
no such termination shall relieve any party hereto from any liability or damages
resulting from a willful breach by a party of any of its representations,
warranties or covenants set forth in this Agreement.
7.3 AMENDMENT
This Agreement may be amended by the parties hereto at any time, whether
before or after the Company Shareholder Approval or UPC Approval has been
obtained; provided that after the Company Shareholder Approval or UPC Approval
has been obtained, there shall be made no amendment that by law requires further
approval by shareholders or shareholders of the parties without the further
approval of such shareholders or shareholders. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties
hereto.
7.4 EXTENSION; WAIVER
At any time prior to the Effective Time, the parties may (a) extend the time
for the performance of any of the obligations or other acts of the other
parties, (b) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto or (c) waive
compliance with any of the agreements or conditions contained herein; provided
that after the Company Shareholder Approval or UPC Approval has been obtained,
there shall be made no waiver that by law requires further approval by
shareholders or shareholders of the parties without the further approval of such
shareholders or shareholders. Any agreement on the part of a party to any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such party. The failure or delay by any party to this
Agreement to assert any of its rights under this Agreement or otherwise shall
not constitute a waiver of such rights nor shall any single or partial exercise
by any party to this Agreement of any of its rights under this Agreement
preclude any other or further exercise of such rights or any other rights under
this Agreement.
35
8. GENERAL PROVISIONS
8.1 SURVIVAL
This Article 8 and the agreements of the Company and Parent contained in
Article 1, Clauses 5.9 and 5.10 shall survive the Effective Time. All other
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall not survive the Effective Time. This
Clause 8.1 shall not limit any covenant or agreement of the parties which by its
terms contemplates performance after the Effective Time.
8.2 NOTICES
All notices, requests, claims, demands and other communications hereunder
shall be in writing and shall be deemed given if delivered personally or sent by
overnight courier (providing proof of delivery) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
If to UPC, to:
United Pan-Europe Communications X.X.
X.X. Xxx 00000
0000 XX
Xxxxxxxxx
Xxx Xxxxxxxxxxx
For the attention of:
Anton Tuijten
If to Parent or Merger Sub, to:
Priority Telecom N.V.
Kon. Xxxxxxxxxxxxxxx 0-0
0000 XX Xxxxxxxxx
Xxx Xxxxxxxxxxx
Attention:
Xxx Xxxx
with a copy to:
Xxxxx & Overy
00 Xxxx 00xx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx XxXxxxxxxx, Esq.
If to the Company, to:
Cignal Global Communications
00 Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000-0000
Attention:
Xxxxx Xxxxxx
36
with a copy to:
Xxxxxxx, Xxxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attention: Xxxx Xxxxxxxx, Esq.
8.3 DEFINITIONS
For purposes of this Agreement:
(a) an "AFFILIATE" of any person means another person that directly or
indirectly, through one or more intermediaries, controls, is controlled
by, or is under common control with, such first person;
(b) "CONTROL" (including the terms "CONTROLLED BY" and "UNDER COMMON CONTROL
WITH") means the possession, directly or indirectly, of the power to
direct or cause the direction of the management policies of that person,
whether through the ownership of voting securities, by contract, or
otherwise.
(c) "ESSENTIAL STAFF" means Xxxxx Xxxxxxxx, Xxxxxxx Xxxxxx, Xxxxxx Xxx,
Xxxxxx Xxxx, Xxxxxx X'Xxxxx, Xxxxx Xxxxxxx, Xxxxx Xxxxxx, Xxxx Xxxx,
Xxxxxxx Soemita, Xxx Xxxxxxxx, Xxxxxxx Xxxxxxx, XxXx Xxxxx, Xxxx Xxxxxx,
Xxxxxxx Roeptgers and Andreas Debauer.
(d) "INDEBTEDNESS" means any indebtedness, whether or not contingent,
(1) in respect of borrowed money, (2) evidenced by bonds, notes,
debentures or similar instruments or letters of credit, (3) in respect of
banker's acceptances, (4) representing operating and capital lease
obligations, (4) purchase commitments, (5) deferred revenues or (6) the
balance deferred and unpaid of the purchase price of any assets, except
any such balance that constitutes an accrued expense or trade payable.
(e) "KEY EMPLOYEES" means Xxxxxxxxxxx Xxxxxx, Xxxxx Xxxxxxxx, Xxx X'Xxxxx,
Xxxxx Xxx, Xxxxx Xxxxxxxxxx, Xxxxx xxx Xxxxxx, Xxxx Xxxxxxxx, Xxxxxx
Xxxxxxx and Xxxx Land.
(f) "MATERIAL ADVERSE EFFECT" means any state of facts, change, development,
effect, event, condition or occurrence that would reasonably be expected
to be material and adverse to the business, assets, properties, condition
(financial or otherwise) or results of operations of the Company and its
subsidiaries, taken as a whole, or to prevent or materially impede or
delay the consummation of the Merger or the other transactions
contemplated by this Agreement;
(g) "PERSON" means an individual, corporation, partnership, joint venture,
association, trust, limited liability company, Governmental Entity,
unincorporated organization or other entity;
(h) a "SUBSIDIARY" of any person means another person, an amount of the
voting securities, other voting ownership or voting partnership interests
of which is sufficient to elect at least a majority of its Board of
Directors or other governing body (or, if there are no such voting
interests, 50 per cent. or more of the equity interests of which) is
owned directly or indirectly by such first person;
(i) "UNIT PURCHASE OPTION AGREEMENT" means the Unit Purchase Option
Agreement dated October 29, 1997 among the Company and Xxxxxxx Xxxxx
Securities Incorporated.
(j) "WARRANT AGREEMENTS" means each of (i) the Common Stock Purchase
Warrants dated and issued by the Company on August 29, 1997, and
(ii) the Warrant Agreements dated as of February 8th, 1999 among Cignal
and the parties thereto.
37
8.4 INTERPRETATION
When a reference is made in this Agreement to a Clause, Subclause or
Schedule, such reference shall be to a Clause or Subclause of, or a Schedule to,
this Agreement unless otherwise indicated. The table of contents and headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. Whenever the words
"INCLUDE", "INCLUDES" or "INCLUDING" are used in this Agreement, they shall be
deemed to be followed by the words "WITHOUT LIMITATION". The words "HEREOF",
"HEREIN" and "HEREUNDER" and words of similar import when used in this Agreement
shall refer to this Agreement as a whole and not to any particular provision of
this Agreement. The term "OR" is not exclusive. The definitions contained in
this Agreement are applicable to the singular as well as the plural forms of
such terms. Any agreement or instrument defined or referred to herein or in any
agreement or instrument that is referred to herein means such agreement or
instrument as from time to time amended, modified or supplemented. References to
a person are also to its permitted successors and assigns.
8.5 COUNTERPARTS
This Agreement may be executed in one or more counterparts, all of which
shall be considered one and the same agreement and shall become effective when
one or more counterparts have been signed by each of the parties and delivered
to the other parties.
8.6 ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES
This Agreement (a) constitutes the entire agreement, and supersedes all
prior agreements and understandings, both written and oral, among the parties
with respect to the subject matter of this Agreement and (b) except for the
provisions of Clauses 5.4, 5.5, 5.6 and 5.7 is not intended to confer upon any
person other than the parties hereto (and their respective successors and
assigns) any rights or remedies.
8.7 GOVERNING LAW; WAIVER OF JURY TRIAL
(a) THIS AGREEMENT SHALL BE DEEMED TO BE MADE IN NEW YORK, AND IN ALL
RESPECTS SHALL BE INTERPRETED, CONSTRUED AND GOVERNED BY AND IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS
TO BE PERFORMED WHOLLY IN SUCH STATE, EXCEPT TO THE EXTENT THAT IN THE
CASE OF THE COMPANY OR MERGER SUB, THE DELAWARE GENERAL CORPORATION LAW,
AND IN THE CASE OF PARENT AND UPC, THE LAWS OF THE NETHERLANDS ARE
APPLICABLE. The parties hereto hereby irrevocably submit to the
jurisdiction of the federal courts of the United States of America
located in the Borough of Manhattan, New York State solely in respect of
the interpretation and enforcement of the provisions of this Agreement
and in respect of the transactions contemplated hereby waive, and agree
not to assert, as a defence in any action, suit or proceeding for the
interpretation or enforcement hereof, that it is not subject thereto or
that such action, suit or proceeding may not be brought or is not
maintainable in said courts or that the venue thereof may not be
appropriate or that this Agreement may not be enforced in or by such
courts, and the parties irrevocably agree that all claims with respect to
such action or proceeding shall be heard and determined in such a federal
court. The parties hereby consent to and grant any such court
jurisdiction over the person of such Parties and over the subject matter
of such dispute and agree that mailing of process or other papers in
connection with any such action or proceeding in the manner provided in
Section 8.2 (Notices), or in such other manner as may be permitted by
law, shall be valid and sufficient service thereof.
38
(b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE
UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT
ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT. EACH PARY CERTIFIES AND ACKNOWLEDGES THAT (i) NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH SUCH PARTY
UNDERSTANDS AND WITH THE ADVICE OF COUNSEL HAS CONSIDERED THE
IMPLICATIONS OF THIS WAIVER, AND (iii) EACH SUCH PARTY HAS BEEN INDUCED
TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
AND CERTIFICATIONS IN THIS CLAUSE 8.7.
8.8 ASSIGNMENT
Neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned, in whole or in part (except by operation of law) by
any of the parties hereto without the prior written consent of the other parties
hereto. Subject to the preceding sentence, this Agreement shall be binding upon,
inure to the benefit of and be enforceable by, the parties hereto and their
respective successors and assigns.
8.9 ENFORCEMENT
The parties 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 breaches of
this Agreement and to enforce specifically the terms and provisions of this
Agreement.
8.10 SEVERABILITY
If any term or other provision of this Agreement is invalid, illegal or
incapable of being enforced by any rule of law or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible to the fullest extent permitted by
applicable law in an acceptable manner to the end that the transactions
contemplated hereby are fulfilled to the extent possible.
IN WITNESS WHEREOF, UPC, Parent, Merger Sub and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the date first written above.
39
UNITED PAN-EUROPE COMMUNICATIONS, N.V.,
by: /s/ XXXXXX XXXXX
----------------------------------------------------
Xxxxxx Xxxxx
SENIOR CORPORATE COUNSEL
By: /s/ XXXXXX XXXXXX XXXXXXXXX
----------------------------------------------------
Xxxxxx Xxxxxx Xxxxxxxxx
MEMBER OF SUPERVISORY BOARD
PRIORITY TELECOM N.V.
By: /s/ XXX XXXX
----------------------------------------------------
Xxx Xxxx
DIRECTOR
By: /s/ XXXXXX XXXXXX XXXXXXXXX
----------------------------------------------------
Xxxxxx Xxxxxx Xxxxxxxxx
MEMBER OF SUPERVISORY BOARD
PRIORITY ACQUISITION SUBSIDIARY, INC.
By: /s/ XXXX XXXXXXXX
----------------------------------------------------
Xxxx Xxxxxxxx
DIRECTOR
CIGNALGLOBAL COMMUNICATIONS, INC.
By: /s/ XXXXX XXXXXX
----------------------------------------------------
Xxxxx Xxxxxx
CHIEF EXECUTIVE OFFICER
EXHIBIT A
SHAREHOLDERS AGREEMENT
This Shareholders Agreement is made as of this day of ,
2000 by and between (1) the shareholder (the "SHAREHOLDER") of Priority Telecom
N.V. named on the signature page of this Agreement, (2) United Pan-Europe
Communications N.V. ("UPC"), and (3) Priority Telecom N.V. (the "COMPANY").
40
WHEREAS
(A) UPC, the Company, Priority Acquisition Subsidiary Inc. ("MERGER SUB") and
Cignal Global Communications, Inc ("CIGNAL") have entered into that certain
First Amended and Restated Agreement and Plan of Merger (the "MERGER
AGREEMENT") dated August 11, 2000. The Merger Agreement inter alia
contemplates that, subject to the conditions precedent as stated therein, on
the Effective Date, Merger Sub will merge with and into Cignal, and in
consideration therefore the Company will issue a certain number of new
shares in the Company (the "COMPANY SHARES") to the Shareholder, and to the
Escrow Agent (as defined below) for the contingent benefit of the
Shareholder, upon surrender by the Shareholder to the Company of title of
ownership and all certificates representing his entire shareholding in
Cignal (the "CIGNAL SHARES"). Such transaction will hereinafter be referred
to as the "SHARES EXCHANGE."
(B) On the assumption that and subject to the condition that the Shares Exchange
will take place on the Closing Date, the Shareholder and the Company
herewith agree that the following terms and conditions will apply to the
Shareholder in his/her capacity of holder of the Company Shares and to the
holding by him/her of the Company Shares.
IT IS AGREED AS FOLLOWS:
1. ARTICLE 1: DEFINITIONS
1.1 In this Agreement, capitalised terms not defined herein will unless the
context otherwise requires have the meanings ascribed thereto in the Merger
Agreement.
6.2 In this Agreement, the following terms will have the following meanings
unless the context otherwise requires:
"AGGREGATE COMPANY SHARES" means the aggregate number of Company Shares
issued by the Company to all former Cignal shareholders, and to the Escrow
Agent for the contingent benefit of all such Shareholders, pursuant to the
Shares Exchange. The term Aggregate Company Shares as used in this Agreement
shall further include all such shares in the Company (i) that are
hereinafter issued by the Company to such former Cignal shareholder
(including without limitation as a result of the exercise of any options or
warrants), and/or (ii) that are acquired by such shareholder from any other
shareholder.
"AGREEMENT" means this Agreement as the same may be amended between the
parties thereto from time to time, including all Appendices and Schedules
attached thereto. Such Appendices and Schedules form an integral part of
this Agreement.
"ARTICLES" means the Articles of Association ("STATUTEN") of the Company as
the same may be amended from time to time.
"CIGNAL SHARES" means the shares held by the Shareholder in Cignal that are
the subject of the Shares Exchange.
"COMPANY SHARES" means the shares which will be issued by the Company to the
Shareholder, and to the Escrow Agent for the contingent benefit of the
Shareholder, pursuant to the Shares Exchange. The term Company Shares as
used in this Agreement shall further include all such shares in the Company
(i) that are hereinafter issued by the Company to the Shareholder (including
without limitation as a result of the exercise of any options or warrants),
and/or (ii) that are acquired by the Shareholder from any other Shareholder.
"ESCROW AGENT" means the Escrow Agent under the Escrow Agreement.
"ESCROW AGREEMENT" means the agreement among the Company, MeesPierson Trust
B.V., as Escrow Agent, and the Shareholder, dated the date hereof.
41
"GENERAL MEETING" means a general meeting of shareholders, being either an
extraordinary general meeting of shareholders or the annual general meeting
of shareholders, of the Company.
"GROUP" means at any time collectively a company and its ultimate parent
company and all the subsidiaries and group companies of the latter as
defined in Articles 2:24a and 2:24b of the Netherlands Civil Code.
"GROUP COMPANY" means a company or other legal entity which forms part of a
Group.
"IPO" means the listing of new shares in the Company and/or any existing
shares in the Company on the Stock Exchange and/or the New York Stock
Exchange, Nasdaq National Market System, London Stock Exchange or on any
other similar major stock exchange selected for that purpose by the Company
in consultation with UPC, which listing results in an active public trading
market for the class of shares so listed on such stock exchange.
"MANAGEMENT BOARD" means the board of managing directors ("BESTUUR") of the
Company
"MANAGING DIRECTORS" means the members of the Management Board from time to
time.
"MERGER AGREEMENT" means the agreement as described in Recital A to this
Agreement, as the same may be amended between the parties thereto from time
to time, together with all Appendices and Annexes which are attached
thereto.
"REGISTRATION RIGHTS AGREEMENTS" means each of (i) the registration rights
agreement dated as of February 8, 1999 among Cignal, Xxxxxxx Corporate
Finance and each Investor named therein, and (ii) the registration rights
agreement dated as of October 29, 1997 among Cignal, Xxxxxxx Xxxxx
Securities, Incorporated, ST Partners L.P. and each of the persons listed on
the signature pages thereto under the heading the "Xxxxx Group" and each of
the other Investors named therein.
"SECURITIES ACT" means the U.S. Securities Act of 1933, as amended.
"SHAREHOLDER" and "SHAREHOLDERS" means a signatory or signatories to this
Agreement who hold shares in the Company, excluding UPC and the Company.
The "SHAREHOLDERS REPRESENTATIVE" means Xxxxx Xxxxxx or his replacement
appointed as contemplated by Article 4.5.
"SHAREHOLDERS' VOTE" means a vote at a General Meeting in favour of a matter
put before the shareholders of the Company meeting all corporate law
requirements under the laws of the Netherlands, including quorum, notice and
percentage vote.
"SPONSOR" means the lead manager and/or arranger, appointed by the Company
(and/or by UPC) to lead manage and/or arrange the IPO. If there are more
than one lead manager and/or arranger, the term Sponsor as used in this
Agreement refers to the lead managers and/or arrangers jointly.
"STOCK EXCHANGE" means the Amsterdam Stock Exchange or any successor stock
exchange with or into which the Amsterdam Stock Exchange may hereafter be
merged.
"SUPERVISORY BOARD" means the supervisory board ("RAAD VAN COMMISSARISSEN")
of the Company.
"SUPERVISORY DIRECTORS" means the members of the Supervisory Board from time
to time.
"UPC SHARE PRICE" shall be the average per share price of the UPC Shares for
the five consecutive business days prior to the Option Trigger Date.
1.3 In this Agreement, unless otherwise specified:
(a) references to Articles, Paragraphs, Schedules and Appendices are to
articles and, paragraphs in, and schedules and appendices to this
Agreement;
42
(b) a reference to any statute or statutory provision shall be construed as
a reference to the same as it may have been, or may from time to time be,
amended, modified or re-enacted except to the extent that any amendment
or modification made after the date of this Agreement would increase or
alter the liability of the Parties under this Agreement;
(c) references to a "person" shall be construed so as to include any
individual, firm, company, government, state or agency of a state or any
joint venture, association or partnership (whether or not having separate
legal personality);
(d) references to writing shall include any modes of reproducing words in a
legible and non-transitory form;
(e) references to times of the day are to Amsterdam time;
(f) headings to Articles, Schedules and Appendices are for convenience only
and do not affect the interpretation of this Agreement;
(g) the Schedules and Appendices form part of this Agreement and shall have
the same force and effect as if expressly set out in the body of this
Agreement, and any reference to this Agreement shall include the
Schedules and Appendices; and
(h) references to words importing the singular will include the plural and
vice versa and references to words importing one gender will include both
genders.
2. ARTICLE 2: CONDITIONS
The rights and obligations of each of the parties hereto is subject to the
condition precedent ("OPSCHORTENDE VOORWAARDE") that the Shares Exchange takes
place.
3. ARTICLE 3: REPRESENTATIONS AND WARRANTIES
3.1 The Company makes the following representations and warranties to the
Shareholder in relation to itself as of the date hereof:
(a) It is duly incorporated and validly existing under the laws of the
Netherlands.
(b) It has the power to enter into this Agreement and to exercise its rights
and to fulfil its obligations hereunder. All necessary or appropriate
corporate, governmental or statutory approvals have been obtained and any
other action required to authorise the execution of this Agreement by it
and the fulfilment by it of its obligations hereunder has been duly
taken.
(c) This Agreement constitutes its legal, valid and binding obligations,
enforceable in accordance with its terms.
(d) The execution of this Agreement and the exercising of its rights and the
fulfilment of its obligations hereunder do not conflict with the laws of
the Netherlands, do not constitute a violation of any terms of its
articles of association (or other comparable constitutional documents)
and do not constitute and will not result in a breach of any agreement,
law, regulation, government policy, license, approval, judgment or order
of any court or any other instrument having legal effect to which it is a
party.
(e) No license, approval, consent, filing, registration or any other act or
deed is required to be obtained or made in the Netherlands by it in
connection with the execution of this Agreement and the exercise of its
rights and the fulfilment of its obligations under this Agreement.
43
3.2 UPC makes the following representations and warranties to the Shareholder in
relation to itself as of the date hereof:
(a) It is duly incorporated and validly existing under the laws of the
Netherlands.
(b) It has the power to enter into this Agreement and to exercise its rights
and to fulfil its obligations hereunder. All necessary or appropriate
corporate, governmental or statutory approvals have been obtained and any
other action required to authorise the execution of this Agreement by it
and the fulfilment by it of its obligations hereunder has been duly
taken.
(c) This Agreement constitutes its legal, valid and binding obligations,
enforceable in accordance with its terms.
(d) The execution of this Agreement and the exercising of its rights and the
fulfilment of its obligations hereunder do not conflict with the laws of
the Netherlands, do not constitute a violation of any terms of its
articles of association (or other comparable constitutional documents)
and do not constitute and will not result in a breach of any agreement,
law, regulation, government policy, license, approval, judgment or order
of any court or any other instrument having legal effect to which it is a
party.
(e) No license, approval, consent, filing, registration or any other act or
deed is required to be obtained or made in the Netherlands by it in
connection with the execution of this Agreement and the exercise of its
rights and the fulfilment of its obligations under this Agreement.
3.3 The Shareholder hereby makes the following representations, warranties and
covenants to each of the Company and to UPC with regard to itself as of the
date hereof:
(a) The Shareholder has the power to enter into this Agreement and to
exercise his/her rights hereunder and to fulfil his/her obligations
hereunder.
(b) This Agreement constitutes the legal, valid and binding obligations of
the Shareholder, enforceable in accordance with its terms.
(c) The execution of this Agreement by the Shareholder and the exercise of
his/her rights hereunder and the fulfilment of his/her obligations
hereunder do not conflict with the laws of the Netherlands or of the
United States of America or of any State thereof and do not constitute
and will not result in a breach of any agreement, law, regulation,
government policy, license, approval, judgment or order of any court or
any other instrument having legal effect to which he/she is a party.
(d) If the Shareholder is a legal entity rather than an individual: the
execution of this Agreement by the Shareholder and the exercise of its
rights hereunder and the fulfilment of its obligations hereunder do not
conflict with its Articles of Incorporation or by-laws, and have been
duly authorised by all corporate and other action by or in respect of the
Shareholder.
(e) The Shareholder has full title of ownership to the Cignal Shares, the
Cignal Shares are free of any encumbrances, liens, pledges or other
security rights, and there are no third parties who have a right to
purchase the Cignal Shares or any other contractual rights in relation to
the Cignal Shares.
(f) The Shareholder understands that the Company Shares have not been
registered under the Securities Act. The Shareholder also understands
that the Company Shares are being offered and sold pursuant to an
exemption from registration contained in the Securities Act based in part
upon the Shareholder's representations contained in this Agreement. The
Shareholder
44
hereby represents and warrants, for purposes of compliance on the part of
the Company with the Securities Act, that:
(1) he/she has experience in evaluating and investing in private
placement transactions of securities in companies similar to the
Company so that it is capable of evaluating the merits and risks of
its investment in the Company and has the capacity to protect its own
interests.
(2) he/she must bear the economic risk of this investment indefinitely
unless the Company Shares are registered pursuant to the Securities
Act, or an exemption from registration is available.
(3) he/she understands that there is no assurance that any exemption from
registration under the Securities Act will be available and that,
even if available, such exemption may not allow the Shareholder to
transfer all or any portion of the Company Shares under the
circumstances, in the amounts or at the times the Shareholder might
propose.
(4) he/she is acquiring the Company Shares for his/her own account for
investment only, and not with a view towards their distribution.
(5) by reason of his/her, or of its management's, business or financial
experience, he/she has the capacity to protect his/her own interests
in connection with the acquisition of the Company Shares.
(6) he/she is an accredited investor within the meaning of Regulation D
under the Securities Act, which definition is attached hereto as
Exhibit L.
(7) the Company Shares have not been registered with or approved by the
Securities and Exchange Commission (the "SEC") or any securities
regulatory authority of any state or other jurisdiction, nor has the
SEC or any such authority passed upon the adequacy or accuracy of the
Information Statement.
(8) he/she has read and received the Information Statement (as defined in
the Merger Agreement) and has had an opportunity to discuss the
Company's business, management and financial affairs with directors,
officers and management of the Company. The Shareholder understands
and acknowledges that neither audited historical financial
information with respect to all of the entities and businesses that
have been or will be acquired by the Company as described in the
Information Statement nor audited or unaudited pro forma financial
information for the Company that gives effect to the acquisition by
the Company of such entities and businesses are available and,
accordingly, it would be impracticable to include such information in
the Information Statement at this time. The Shareholder acknowledges
and agrees that, notwithstanding that the foregoing information is
not provided in the Information Statement, the Information Statement
contains such other information as the Shareholder deems necessary or
appropriate to review in order to make his/her investment decision.
The Shareholder has also had the opportunity to ask questions of and
receive answers from, the Company and its management regarding the
terms and conditions of the Merger and the Company.
(9) he/she acknowledges and agrees that the Company Shares must be held
indefinitely unless they are subsequently registered under the
Securities Act, an exemption from such registration is available, or
their resale is otherwise permitted under applicable securities laws.
(10) he/she has been advised of and is aware of the provisions of
Rule 144 promulgated under the Securities Act as in effect from time
to time, which permits limited resale of shares purchased in a
private placement subject to the satisfaction of certain conditions,
45
including, among other things: the availability of certain current
public information about the Company, the resale occurring following
the required holding period under Rule 144 and the number of shares
being sold during any three-month period not exceeding specified
limitations.
(11) he/she acknowledges that the Company Shares may be legended as
appropriate to comply with applicable securities laws.
(g) No license, approval, consent, filing, registration or any other act or
deed is required to be obtained or made in the United States of America
or in the Netherlands by the Shareholder in connection with the execution
of this Agreement and the exercise of his/her rights and the fulfilment
of his/her obligations under this Agreement.
(h) The Shareholder shall pay any transfer, stamp or similar tax imposed on
such Shareholder in connection with this Agreement, the Merger Agreement
and the transactions contemplated hereby and thereby, including the
Shares Exchange.
(i) The Shareholder has not relied on any oral statements or representations
from any person in connection with this Agreement.
(j) The Shareholder acknowledges that upon the Effective Date, such
Shareholder will cease to be an owner of Cignal Shares and will instead
become an owner of Company Shares and, accordingly, all rights,
obligations, entitlements and claims relating to such Shareholder's share
ownership will thereafter arise solely from ownership of Company Shares,
and such rights shall be as provided in or pursuant to the Company's
articles of association, this Agreement, the Merger Agreement, the
Shareholders Agreement, the Escrow Agreement and the laws of The
Netherlands. Upon the Effective Date, the Shareholder hereby waives any
and all rights, entitlements and obligations with respect to, and any and
all claims relating to, the Cignal Shares owned by such Shareholder,
whether contained in or pursuant to Cignal's articles of incorporation or
by-laws or in any written or oral agreement or understanding, other than
the right to receive Company Shares pursuant to the Merger Agreement. The
Shareholder agrees that any and all of the aforementioned rights,
entitlements, obligations or claims with respect to their ownership of
Cignal Shares will terminate on the Effective Date in all such cases,
except with respect to and to the extent of any claim that has been
asserted by the Shareholder in any legal proceedings against Cignal which
may exist at the date hereof, in which case such Shareholder agrees not
to initiate any new or additional proceedings, or otherwise attempt to
extend or expand the scope of the pending proceedings, with respect to
the alleged right or entitlement that is the subject of such claim.
4. ARTICLE 4: SUPERVISORY BOARD AND MANAGEMENT BOARD
4.1 The Supervisory Board will consist of 6 (six) Supervisory Directors, who
will be appointed by a shareholders' vote at the General Meeting. As
provided in the Articles, the Supervisory Directors will be appointed by a
shareholders' vote taken at a General Meeting from a binding nomination of
UPC as long as UPC holds the special rights share ("PRIORITEITSAANDEEL").
UPC hereby agrees to nominate and vote in favour of the candidate nominated
by the Shareholders Representative (the "Shareholders Representative
Nominee") as Supervisory Director. The other five Supervisory Directors
shall be nominated and appointed at the discretion of UPC and the General
Meeting. Without prejudice to article 4.2 hereof, UPC shall exercise its
nomination and voting rights in such a manner that the Shareholders
Representative Nominee shall remain a Supervisory Director until the later
of December 31, 2001 and the date 6 (six) months after the consummation of
the IPO (for purposes of this Agreement, the consummation of the IPO will be
deemed to occur on the date upon which public trading in shares in the
Company will commence on the relevant stock exchange). Effective as of such
date, the Shareholders will cooperate with the removal of the
46
Shareholders Representative Nominee as a Supervisory Director. The foregoing
is without prejudice to the right of a shareholders' vote taken at a General
Meeting to dismiss the Shareholders Representative Nominee effective as of
such date.
4.2 If in a shareholders' vote taken at a General Meeting the Shareholders
Representative Nominee is deemed to no longer function in the manner he
should reasonably be expected to function as a Supervisory Director of a
Dutch company such as the Company, the shareholders of the Company may
dismiss the Shareholders Representative Nominee as a Supervisory Director.
In such case, the Shareholders Representative may designate another
Shareholders Representative Nominee as a replacement Supervisory Director.
Such replacement will be effected as soon as practicable after such
designation is made. The provisions of this article 4 will MUTATIS MUTANDIS
also apply with respect to any such replacement Supervisory Director.
4.3 The Management Board will consist of such number of Managing Directors as
the shareholders of the Company may from time to time determine. As provided
in the Articles, the Managing Directors will be appointed by a shareholders'
vote taken at a General Meeting from a binding nomination of UPC as long as
UPC holds the special rights share ("PRIORITEITSAANDEEL"). UPC hereby agrees
to nominate and vote in favour of the election of the Shareholders
Representative as Managing Director. Without prejudice to article 4.4
hereof, UPC shall exercise its nomination and voting rights in such a manner
that the Shareholders Representative shall remain a Managing Director until
the later of December 31, 2001 and the date 6 (six) months after the
consummation of the IPO. Effective as of such date, the shareholders will
cooperate in the removal of the Shareholders Representative as a Managing
Director. The foregoing is without prejudice to the right of a shareholders'
vote taken at a General Meeting to dismiss the Shareholders Representative
effective as of such date.
4.4 If in a shareholders' vote taken at a General Meeting the Shareholders
Representative is deemed to no longer function in the manner he should
reasonably be expected to function as a Managing Director of a Dutch company
such as the Company, the shareholders of the Company may dismiss the
Shareholders Representative as a Managing Director. In such case, UPC agrees
to nominate and vote in favour of the election of such other candidate as
the Shareholders may designate for that purpose. Such replacement will be
effected as soon as practicable after such designation is made. If such
replacement is made, such replacement Managing Director will not affect
Xxxxxxxxxxx Xxxxxx'x or such other person's status as the Shareholders
Representative. The provisions of this article 4 will MUTATIS MUTANDIS also
apply with respect to any such replacement Managing Director.
4.5 The initial Shareholders Representative is Xxxxxxxxxxx X. Xxxxxx. The
Shareholders may appoint a replacement Shareholders Representative at any
time by a majority vote.
5. ARTICLE 5: CONDUCT OF BUSINESS BY THE COMPANY
5.1 Until the earlier of the IPO or the Option Expiration Date (as defined in
Section 7.1), the Company and UPC agree to the following:
The Company's activities will include, but not be limited to, providing
telecommunications services (listed in Exhibit A hereto) to business customers
in Europe (defined in Exhibit B hereto), both inside and outside the UPC
Affiliate Area. Expansion by the Company outside of Europe, excluding the
activities included in the Cignal's current business plan as presented to the
Board of Directors of Cignal, will be at the discretion of the Company but will
require UPC consent, for which a consideration may be agreed upon at the time of
such expansion; provided, however, that the Company shall not in any event be
required to conduct any activity if (A) such activity would result in a breach
or violation of any agreement or contract among UPC, UGC or the Company,
respectively, and any third parties, (B) such activity would result in a breach
of any law, regulation, government policy,
47
license, governmental or regulatory approval, judgement or order of any court,
or (C) such activity would constitute a taxable transaction, for which no tax
ruling or exemption, satisfactory to UPC, is available; provided further,
however, that UPC and the Company shall use their reasonable efforts to resolve
any impediment created under (A), (B) or (C), so long as such efforts do not
require the expenditure of cash to third parties, are in accordance with prudent
business practices and are not impracticable.
5.2 Until the earlier of the IPO of the Company or the Option Expiration Date,
the Company and UPC agree to the following:
(i) to set up local Company entities identified in Exhibit C and to
contribute the existing relevant business customers and associated revenues;
and (ii) to the extent legally possible, to grant for value to the Company
from its current operations exclusive rights of use on commercial
arms-length terms, on an un-encumbered basis (to the explicit exclusion of
Mundi Telecom), required to support the Company's subscriber base at the
Closing Date; provided, however, that UPC shall not in any event be required
to take any of the actions in (i) or (ii) above if (A) such action would
result in a breach or violation of any indenture or financing arrangement,
among UPC, UGC or the Company, respectively, and any third parties,
(B) such activity would result in a breach or violation of any agreement or
contract among UPC, UGC or the Company, respectively, and any third parties,
(C) such action would require consent or approval from any municipality,
workers council, trade union or shareholder, and such consent or approval is
withheld, (D) such activity would result in a breach of any law, regulation,
government policy, license, governmental or regulatory approval, judgement
or order of any court, or (E) such activity would constitute a taxable
transaction, for which no tax ruling or exemption, satisfactory to UPC, is
available; provided further, however, that UPC and the Company shall use
their reasonable efforts to resolve any impediment created under (A),
(B) or (C), so long as such efforts do not require the expenditure of cash
to third parties, are in accordance with prudent business practices and are
not impracticable.
5.3 Until the earlier of the IPO of the Company or such time when UPC and the
Company have entered into a separate agreement with regard to their
affiliate relationship, such agreement to be on terms no less favorable than
those provided below, UPC and the Company agree to the following:
The Company will have the exclusive right (subject to any restriction
imposed by applicable laws, including without limitation any law regulating
competition) to the use of the existing UPC fiber footprint for a term of
seven years for the purpose of the Company's activities. The Company will be
UPC's primary vehicle to provide national and international, retail and
wholesale, CLEC products and services to business customers throughout
Europe for a period of not less than seven years. The Company will have the
sales and marketing functions to serve business customers, with the
exception of the legacy chello broadband N.V. ("CHELLO") customers.
Notwithstanding the foregoing, UPC shall not in any event be required to
take any of the actions in this clause 5.3 if such action would result in a
breach of any law, regulation, government policy, license, governmental or
regulatory approval, judgement or order of any court; provided further,
however, that UPC and the Company shall use their reasonable efforts to
resolve any impediment created under (A), (B) or (C), so long as such
efforts do not require the expenditure of cash to third parties, are in
accordance with prudent business practices and are not impracticable.
5.4 Until the earlier of the IPO of the Company or such time when UPC and the
Company have entered into a separate agreement with regard to their
affiliate relationship, such agreement to be
48
on terms no less favorable than those provided below, UPC and the Company
agree to the following:
For any acquisitions completed by UPC which extend its existing fiber
footprint and in which it has at least a majority ownership interest, UPC
will, to the extent legally possible or allowed for pursuant to the
transaction documents underlying any such acquisition, grant for value to
the Company the rights of use of relevant assets and infrastructure (in the
form of either IRU contracts, leasing agreements, distribution contracts
and/or other legal contracts and arrangements) on a preferred basis (as
described in Exhibit D) without any obligation on the part of the Company to
contribute to the associated UPC acquisition costs; provided, however, that
UPC shall not in any event be required to make any of the above grants if
(A) such grant would result in a breach or violation of any agreement or
contract among UPC, UGC or the Company, respectively, and any third parties,
(B) such grant would result in a breach of any law, regulation, government
policy, license, governmental or regulatory approval, judgement or order of
any court, or (C) such grant would constitute a taxable transaction, for
which no tax ruling or exemption, satisfactory to UPC, is available;
provided further, however, that UPC and the Company shall use their
reasonable efforts to resolve any impediment created under (A), (B) or (C),
so long as such efforts do not require the expenditure of cash to third
parties, are in accordance with prudent business practices and are not
impracticable.
5.5 Until the earlier of the IPO of the Company or such time when UPC and the
Company have entered into a separate agreement with regard to their
affiliate relationship, such agreement to be on terms no less favorable than
those provided below, UPC and the Company agree to the following:
For any acquisitions completed by UPC in which all or a material portion of
the acquired operations directly relate to the Company's activities and will
result in a majority ownership by UPC of that acquired business, UPC will,
to the extent legally possible or allowed for pursuant to the transaction
documents underlying any such acquisition, offer to transfer, for value, the
relevant operations or a material portion thereof; provided, however, that
UPC shall not in any event be required to make any of the above transfers if
(A) such transfer would result in a breach or violation of any agreement or
contract among UPC, UGC or the Company, respectively, and any third parties,
(B) such transfer would result in a breach of any law, regulation,
government policy, license, governmental or regulatory approval, judgement
or order of any court, or (C) such transfer would constitute a taxable
transaction, for which no tax ruling or exemption, satisfactory to UPC, is
available; provided further, however, that UPC and the Company shall use
their reasonable efforts to resolve any impediment created under (A),
(B) or (C), so long as such efforts do not require the expenditure of cash
to third parties, are in accordance with prudent business practices and are
not impracticable.
5.6 Until the earlier of the IPO of the Company and the Option Expiration Date,
UPC will use reasonable efforts to integrate any acquired business customer
which falls within the Company's activities; provided, however, that UPC
shall not in any event be required to take any of the above actions if
(A) such actions would result in a breach or violation of any agreement or
contract among UPC, UGC or the Company, respectively, and any third parties,
(B) such actions would result in a breach of any law, regulation, government
policy, license, governmental or regulatory approval, judgement or order of
any court, or (C) such actions would constitute a taxable transaction, for
which no tax ruling or exemption, satisfactory to UPC, is available;
provided further, however, that UPC and the Company shall use their
reasonable efforts to resolve any impediment created under (A), (B) or (C),
so long as such efforts do not require the expenditure of cash to third
parties, are in accordance with prudent business practices and are not
impracticable.
49
5.7 Until the earlier of the IPO of the Company or the Option Expiration Date,
UPC and the Company agree that irrespective of the price paid by UPC in the
acquisitions described in Article 5.5 above, valuation of such acquisitions
will need to be agreed upon by UPC, the Company and the Shareholders
Representative, or otherwise through the independent appraisal process
described in Article 10.1 of this Agreement.
5.8 Until the earlier of the IPO of the Company and the Option Expiration Date,
the Company and UPC agree to the following:
For any acquisition consummated by the Company directly, any such
acquisition may be funded through the incurrence of debt or the issue of
stock. The Company will fund its operations in the first instance with debt
(including vendor financing) to the extent reasonably practicable; provided,
however, that the Company will not be obligated to incur any indebtedness if
such incurrence would, in the opinion of the Management Board of the
Company, unduly prejudice its operating and financial flexibility. The
availability and cost of such debt, as well as the Company's debt capacity,
will be determined by the Management Board of the Company in consultation
with internationally recognised banks and/or investment banks based on the
Company's business plan and the Company's then current financial position;
provided, however, that the Company shall not in any event be required to
incur such debt if such incurrence would result in a breach or violation of
any agreement or contract among UPC, UGC or the Company, respectively, and
any third parties. If the Company requires additional funding beyond its
determined debt capacity, then such funding shall come from UPC or other
parties in the form of equity at the time such funding is provided.
5.9 Until the earlier of the IPO of the Company and the Option Expiration Date,
the Company and UPC agree that any shareholder loans, including accrued
interest, provided by UPC and/or its affiliates to the Company after the
date hereof will be repaid by the Company either (a) from available cash or
(b) from proceeds of the Company IPO (if consummated), subject to
acceptability of such use of proceeds by the IPO underwriters; provided,
however, that the Company shall not in any event be required to take any of
the above actions if such actions would result in a breach or violation of
any agreement or contract among UPC, UGC or the Company, respectively, and
any third parties.
5.10 Until the earlier of the IPO of the Company and the Option Expiration Date,
the Company and UPC agree to that if for any reason such shareholder loans
may not be repaid at the time of the IPO, they will immediately convert to
equity in the Company at a price equal to the high end of the initial filing
range utilised to market the IPO (the "IPO Filing Price"); provided,
however, that UPC and the Company shall not in any event be required to take
any of the above actions if such actions would result in a breach or
violation of any agreement or contract among UPC, UGC or the Company,
respectively, and any third parties.
5.11 The Shareholder agrees that any lawsuit against UPC, the Company or any
affiliates of UPC or the Company under this Article 5 can only be brought if
it is supported in writing by Shareholders owning directly or indirectly the
majority of the aggregate equity interest in the Company owned by all
Shareholders.
5.12 Notwithstanding the foregoing, the Company shall retain the right to
dispose of any assets or operations, without compensation to the Company
therefor, at any time, that are unrelated to the Company's activities,
including, but not limited to, the disposition of the businesses of Cesky
Mobil AS and Priority Wireless Communication Gmbh.
5.13 Notwithstanding the foregoing, UPC retains the right to allow third parties
to participate in the Company's or its subsidiaries' activities, as
shareholders or otherwise, to the extent that UPC is required, as of the
date hereof, to do so pursuant to any agreement or contract among UPC or
50
any affiliate of UPC, or UGC or any affiliate of UGC, respectively, and any
such third parties. In addition, until the earlier of the IPO of the Company
and the Option Expiration Date, with the consent of the Shareholders
Representative, UPC may allow third parties to participate in the Company's
or its subsidiaries' activities, as shareholders or otherwise.
5.14 For the purpose of this Article 5:
(i) "assets" means physical assets, IRU contracts, leasing agreements,
distribution contracts and/or other legal contracts and arrangements.
(ii) "business subscribers" means for profit and non-profit entities with
more than five employees.
(iii) "CLEC" means competitive local exchange carrier.
(iv) "fiber footprint" means UPC's national and metropolitan fiber networks,
excluding HFC networks.
(v) "IRU" means indefeasible rights of use.
(vi) "legacy chello" means customers of chello broadband N.V. as of the
Closing Date in the Merger Agreement.
(vii) "Mundi Telecom" means a voice and data reseller operating in the
Spanish market since 1997.
(viii)"UPC Affiliate Area" means the current and future fiber footprint.
6. ARTICLE 6: THE IPO
6.1 It is the intention of UPC and the Company that the IPO is consummated on or
prior to October 1, 2001, and that UPC and the Company will use their
reasonable endeavours to effect the IPO. The Shareholders shall have no
remedy or claim against UPC or the Company (or against any of UPC's or the
Company's supervisory directors, managing directors, officers, employees or
agents) of any kind whatsoever if such IPO is not effected on or prior to
October 1, 2001 other than the exercise of their UPC Stock Purchase Option
as set out in Article 7 below (and except for remedies which may be
available to the Shareholders in the case of a willful breach of contract
under this Agreement or in case of gross negligence or willful misconduct).
The Shareholder hereby irrevocably and unconditionally waives any such right
or claim against UPC or the Company (or UPC's or the Company's supervisory
directors, managing directors, officers, employees or agents) for UPC's or
the Company's failure to consummate the IPO, except as set forth above.
6.2 If and when an IPO is effected and it is determined by UPC and the Company
together with the Sponsor that existing shares in the Company will be
offered for sale as part of such IPO:
(a) the Shareholder shall have the right to offer, on the same terms as
those agreed pursuant to a shareholders' vote at a General Meeting, all
the Company Shares or, in case the IPO only concerns a portion of the
then existing ordinary shares in the Company, excluding the Escrow Shares
(as defined in the Escrow Agreement), the Shareholder shall be entitled
to include in the IPO such portion of the Company Shares pro rata with
the portion of existing ordinary shares in the Company which is offered
for sale through the IPO, subject always to the provisions of
Article 6.3; and
(b) the Shareholder shall do all things required or appropriate to effect
the IPO in accordance with the relevant resolutions made at the General
Meeting and in accordance with the rules of the Stock Exchange and/or
other stock exchange at which the ordinary shares in the Company will be
listed.
51
6.3 If in the judgement of the Sponsor, in consultation with the management
board of the Company, the total number of shares of the Company proposed to
be offered in the IPO exceeds that which could be sold in then current
market conditions without an adverse effect on the pricing of such shares,
then the Sponsor shall limit the total number of existing shares to be
included in the IPO. All reductions of existing shares to be offered in the
IPO shall be made on a pro rata basis among all selling shareholders.
6.4 If the IPO is effected, the Shareholder shall not sell any Company Shares
which remain owned by him/her for the longer of (i) six months after the
consummation of the IPO, without the consent of the Company which shall not
be unreasonably withheld or (ii) for such period as may be required by the
relevant stock exchange.
6.5 The net proceeds of the IPO for shares sold by the Company may be used by
the Company to (a) fund the Business Plan (as the same may hereafter be
amended from time to time) and/or (b) repay shareholder loans then
outstanding (provided that such use of proceeds is acceptable to the Sponsor
of such use of proceeds) or (c) to the extent such proceeds are not used in
accordance with (a) or (b) and to the extent required by indentures entered
into by UPC or affiliates of UPC, grant inter-company loans to UPC or such
affiliate.
6.6 In the event of an IPO of the same class of securities as the Company
Shares, the Company will list such securities on the relevant stock
exchange. In the event the Company decides to list only a separate class of
ordinary shares in the Company other than the Company Shares, the
Shareholder shall have the right to convert his Company Shares into the
listed class of ordinary shares at any time, so that he or she may trade the
shares at the relevant stock exchange.
7. ARTICLE 7: STOCK PURCHASE OPTION
7.1 UPC hereby grants and issues to the Shareholder and the Escrow Agent (to the
extent it holds Company Shares for the contingent benefit of the
Shareholder) an option (the "UPC STOCK PURCHASE OPTION") to purchase UPC
ordinary shares ("UPC SHARES") upon the terms and conditions set forth in
this Article 7. If the IPO is not consummated on or prior to October 1,
2001, (the "OPTION TRIGGER DATE"), the Shareholders Representative shall be
entitled to exercise and exchange the UPC Stock Purchase Option in whole,
but not in part, on behalf of all the Shareholders and the Escrow Agent, for
such number of UPC Shares as is determined pursuant to Article 7.2, by
delivering to UPC an exercise notice (the "EXERCISE NOTICE"), substantially
in the form of Exhibit E hereto, together with all Aggregate Company Shares
and all of the options, unit options and warrants relating to the Aggregate
Company Shares then owned by such Shareholders or any owner who would be
obligated to become a Shareholder upon exercise of their warrant, unit
option or options (which shares and rights shall constitute the exchange
exercise price). The Exercise Notice must be received by UPC on October 30,
2001 (the "OPTION EXPIRATION DATE") at 17:00 hrs EST. UPC may elect to treat
its acquisition of Aggregate Company Shares and options, unit options and
warrants relating to Aggregate Company Shares pursuant to this Article 7 as
arising from a contribution to UPC's equity in exchange for UPC shares, or
UPC's purchase of Aggregate Company Shares, as the case may be.
Notwithstanding anything to the contrary in this Article 7, UPC shall have
the option to permit the UPC Stock Purchase Option to be exercised in part,
subject to applicable law, with such partial exercise being entirely in the
discretion of UPC after consultation with the Shareholders Representative
with respect to which Shareholders and what portion of Aggregate Company
Shares will be exercised.
7.2 The number of UPC Shares to be delivered by UPC pursuant to Article 7.1
shall be determined by (x) dividing the Company Share Value (as defined
below) by the UPC Share Price and (y) multiplying such result by the number
of Aggregate Company Shares on a fully converted basis
52
assuming conversion of the options, warrants and unit options relating to
the Aggregate Company Shares.. "COMPANY SHARE VALUE" shall be an amount
equal to:
(a) the higher of (i) the fair market value of the Aggregate Company Shares
on a fully converted basis assuming conversion of the options, warrants
and unit options, relating to the Aggregate Company Shares owned or held
by the Shareholders, the Escrow Agent, option holders, warrant holders or
unit option holders, as the case may be, as at the Option Expiration Date
determined in accordance with the provisions of Article 7.3, and
(ii) US$200,000,000 plus the aggregate strike prices that would be
payable on all of the options, unit options and warrants relating to
Aggregate Company Shares and participating in the exercise of the UPC
Stock Purchase Option,
(b) divided by the total number of Aggregate Company Shares on a fully
converted basis assuming conversion of the options, warrants and unit
options relating to the Aggregate Company Shares.
Notwithstanding the foregoing, however, the number of UPC Shares to be
delivered by UPC pursuant to Article 7.1 to holders of options, warrants and
unit options shall be reduced by any strike price that would have been paid
by such holder upon exercise of its options, warrants or unit options, as
applicable for Aggregate Company Shares.
The UPC Shares to be delivered to the Shareholders pursuant to Section 7.1
shall, to the extent other UPC Shares are listed on the primary stock
exchange, be listed on such primary stock exchange, and shall have no
greater restrictions on transfer than any other UPC Shares so listed.
7.3 Notwithstanding anything to the contrary in this Article 7, if the
Shareholders Representative exercises the UPC Stock Purchase Option, UPC
shall have (a) the option to redeem the UPC Stock Purchase Option for such
amount of cash equal to the Company Share Value times the number of
Aggregate Company Shares, and (b) the option, which UPC may assign to any
subsidiary or affiliate of UPC or to any third party (provided that,
notwithstanding any such assignments, UPC shall remain obligated under this
Article 7) (the "COMPANY STOCK PURCHASE OPTION"), to purchase all or any
portion of the Aggregate Company Shares and all or any portion of the
options, unit options and warrants relating to Aggregate Company Shares for
such amount of (i) cash, or (ii) if agreed by the Shareholders
Representative acting on behalf of the Shareholders participating in the UPC
Stock Purchase Option, marketable securities, equal to the Company Share
Value times the number of Aggregate Company Shares. UPC's right to redeem
any UPC Stock Purchase Option under this Article 7.3 will be exercisable by
UPC by the delivery of a redemption notice substantially in the form of
Exhibit F hereto to the Shareholders Representative on behalf of the
Shareholders concerned. In connection with the completion of any such
redemption or partial exercise, the UPC Stock Purchase Option shall be
redeemed and all Aggregate Company Shares and all of the options, unit
options and warrants relating to Aggregate Company Shares owned by the
Shareholders concerned will be surrendered. UPC and the Shareholders
concerned will implement the provisions of the redemption notice delivered
pursuant to this Article 7.3 in accordance with its terms.
7.4 The fair market value of the Aggregate Company Shares owned by the
Shareholders will be determined in accordance with the following provisions:
(a) UPC and the Shareholders Representative shall first as soon as
practicable after the Option Expiration Date consult with each other to
arrive at a fair market value of the Aggregate Company Shares held by the
Shareholders.
(b) If UPC and the Shareholders Representative shall not agree on the fair
market value on or prior to the date 30 days after the Option Expiration
Date, then each of UPC and the Shareholders Representative shall appoint
an independent appraiser to perform the valuation.
53
Such appointment shall be made on or prior to the date 30 days after the
Option Expiration Date. If either party fails to timely appoint such
independent appraiser, the other party may make such appointment on
behalf of the failing party. The independent appraisers will be
instructed to provide their appraisals on or prior to the date 60 days
after the Option Expiration Date.
(c) If the valuations made in these two appraisals are within 10% of each
other, the fair market value shall be deemed to be the average of the two
valuations. If the valuations are more than 10% apart, a third
independent appraiser will be appointed by mutual agreement between UPC
and the Shareholders Representative. If no such mutual agreement is
reached prior to the date 65 days after the Option Expiration Date, the
third independent appraiser shall be appointed by the two independent
appraisers acting jointly.
(d) The third independent appraiser shall be instructed to provide its
appraisal on or prior to the date 90 days after the Option Expiration
Date. The third independent appraiser shall be given the earlier two
valuations and any underlying data used or developed by the two
independent appraisers which the third independent appraiser may
reasonably require. The fair market value shall be deemed to be the
average of the third valuation and the closest of the earlier two
valuations.
(e) The fair market value arrived at pursuant to this Article 7 shall be
final and binding on all parties.
(f) Only internationally recognised investment banks may be appointed as
independent appraisers.
(g) The Company and UPC will, subject to the condition that appropriate
confidentiality agreements have been concluded between the Company, UPC
and such independent appraiser, provide to each independent appraiser
such information in relation to the Company and its business as such
independent appraiser may reasonably require to complete its appraisal.
Information provided by any party to the independent appraisers shall be
provided in such manner as will reasonably ensure that each of the
independent appraisers makes its valuation on the basis of the same
information.
(h) The fact that the Aggregate Company Shares owned by the Shareholders
represent a minority interest in the Company shall not affect the
valuation given to such shares under this Article 7.
7.5 On the date not later than 3 days after the date upon which the Company
Share Value has been finally determined in accordance with the provisions of
Article 7.3 (the "Value Determination Date"), the Company will notify the
Shareholders in writing of the Company Share Value so determined.
7.6 The date upon which the Shareholder shall exchange the Company Shares owned
by the Shareholder (the "STOCK OPTIONS COMPLETION DATE") for the UPC Shares
will be a date, determined by UPC, being a date not less than 30 days and
not more than 60 days after the Value Determination Date.
7.7 UPC will notify the Shareholders Representative and, if applicable, the
Escrow Agent of the Stock Options Completion Date. On the Stock Options
Completion Date, the Shareholders and the Escrow Agent shall exchange the
UPC Stock Purchase Option and transfer all of the Aggregate Company Shares
owned by them and all of the options, unit options and warrants relating to
Aggregate Company Shares owned by them or any other warrant holder or option
holder participating in the UPC Stock Purchase Option to UPC or its designee
for such number of UPC Shares, as determined in accordance with Article 7.2
or such amount of cash or marketable securities as determined in accordance
with Article 7.3, as the case may be. In case the Company
54
Stock Purchase Option is settled in whole or in part in cash, such amount of
cash will be paid into a separate bank account (and/or, in case the UPC
Stock Purchase Option or the Company Stock Purchase Option is settled in
whole or in part in securities, a separate securities account) designated
for that purpose by the Shareholders Representative.
7.8 If not all Shareholders and the Escrow Agent appropriately deliver their
Aggregate Company Shares pursuant to the UPC Stock Purchase Option following
exercise thereof in accordance with Section 7.1, then UPC may (but will not
be obliged to) redeem any such undelivered Aggregate Company Shares and the
related Aggregate Company Shares, options, unit options or warrants, on the
Stock Options Completion Date (or any date not more than 30 days thereafter
to be determined by UPC in its discretion), for the consideration paid to
the other Shareholders under Sections 7.2 and 7.3. UPC's right to redeem any
UPC Stock Purchase Option under this Article 7.8 will be exercisable by UPC
by the delivery of a redemption notice substantially in the form of
Exhibit G hereto to the Shareholders Representative on behalf of the
Shareholders and the Escrow Agent concerned. In connection with the
completion of any such redemption, the UPC Stock Purchase Option shall be
redeemed and all the shares in the Company and all of the options and
warrant rights relating to shares in the Company owned by the Shareholders
and the Escrow Agent concerned will be surrendered. UPC and the Shareholders
and the Escrow Agent concerned will implement the provisions of the
redemption notice delivered pursuant to this Article 7.8 in accordance with
its terms.
7.9 The Shareholder, the Escrow Agent, UPC and/or the Company shall perform all
such acts as may be reasonably requested in order to give effect to the
provisions of this Article 7.
8. ARTICLE 8: SALE OF THE COMPANY
8.1 If UPC sells and transfers any shares in the Company to any third party on
or prior to October 1, 2001, the Shareholder shall have the right to
simultaneously sell and transfer to such third party the same percentage of
his Company Shares for a consideration which is equal to the per share
consideration which UPC will receive for its shares in the Company and the
same percentage of his option rights and warrants relating to shares in the
Company for the same per option right or per warrant consideration minus the
applicable strike price, and on the same terms and conditions and with the
same representations and warranties and covenants (MUTATIS MUTANDIS) which
UPC will in its discretion agree upon with such third party. If UPC intends
to so sell and transfer its shares as contemplated in this Article 8.1, it
shall issue a sale notice (the "NOTICE OF SALE") substantially in the form
of Exhibit H hereto to the Shareholders. If the Shareholder wishes to
exercise its rights under this Article 8.1, it shall within 15 days of the
date of its receipt of a Notice of Sale issue an exercise notice (a "SALE
EXERCISE NOTICE") substantially in the form of Exhibit I hereto. Any Sale
Exercise Notice shall be irrevocable. If a Sale Exercise Notice is not
timely issued, it shall be deemed for all purposes not to have been issued.
8.2 If UPC sells and transfers at least 50% of its shares in the Company to any
third party who is not affiliated with UPC on or prior to October 1, 2001,
UPC may require all of the Shareholders and the Escrow Agent who have not
issued a Sale Exercise Notice, to simultaneously sell and transfer to UPC
(or, at the option of UPC, to such third party) the same percentage of their
Company Shares for a per share consideration which is equal to the greater
of (i) the Company Share Value or (ii) the per share consideration received
by UPC in such transaction, and the same percentage of their option rights
and warrants relating to shares in the Company for a per option right or per
warrant consideration which is equal to the Company Share Value or
transaction value, as the case may be, minus the applicable strike price. In
such case, the valuation provisions of Article 7 shall apply MUTATIS
MUTANDIS, and UPC and the Company will ensure that such consideration is
determined prior to the date upon which the Company Shares, option rights
and warrants are transferred to UPC (or such third party). The date of the
receipt of the Notice of Sale for the
55
purpose of applying MUTATIS MUTANDIS the valuation provisions of
Article 7.5 shall be deemed to be the Option Trigger Date.
8.3 After October 1, 2001, if an IPO has not occurred and the Shareholders
Representative has not exercised the UPC Stock Purchase Option pursuant to
the provisions of Article 7 or if any Shareholder or the Escrow Agent has
retained (all or some of) the Company Shares, if UPC sells and transfers its
shares in the Company to any third party who is not affiliated with UPC, UPC
may require the Shareholder and the Escrow Agent to simultaneously sell and
transfer to UPC (or, at the option of UPC, to such third party) all of their
shares in the Company for a per share consideration which is equal to the
per share consideration which UPC will receive for its shares in the
Company, and all option rights and warrants relating to shares in the
Company for the same per option right or per warrant consideration minus the
applicable strike price, and on the same terms and conditions and with the
same representations and warranties and covenants (MUTATIS MUTANDIS) which
UPC will in its discretion agree upon with such third party.
8.4 The Shareholder, the Escrow Agent, UPC and/or the Company shall perform all
such acts as may be reasonably requested in order to give effect to the
provisions of this Article 8.
9. ARTICLE 9: TRANSFER OF COMPANY SHARES
9.1 A transfer of any Company Shares by the Shareholder or the Escrow Agent
shall be made only in accordance with the relevant provisions of the
Articles and applicable law. A Shareholder or the Escrow Agent wishing to
transfer any of the Company Shares needs to fill out and sign the share
certificate and send the share certificate to the Company. The Company will
then instruct a Dutch civil law notary to effect the transfer by a Dutch
notarial deed. Upon completion of the transfer the Company will provide the
relevant Shareholders or the Escrow Agent with new share certificates.
9.2 The Company Shares shall be characterised as "RESTRICTED SECURITIES" for
purposes of Rule 144 under the Securities Act. As set out in Article 3.2
(g), the Company Shares are being issued to the Shareholder and the Escrow
Agent in reliance on an exemption from registration under the Securities
Act. All certificates representing the Company Shares shall have endorsed
thereon a legend in substantially the following form:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE OFFERED, SOLD
OR OTHERWISE TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS
REGISTERED UNDER THE ACT OR UNLESS AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE ACT IS AVAILABLE. THE COMPANY OF THESE SECURITIES
REQUIRES AN OPINION OF COUNSEL IN FORM AND SUBSTANCE REASONABLY
SATISFACTORY TO THE COMPANY TO THE EFFECT THAT ANY PROPOSED TRANSFER OR
RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES
LAWS. IN ADDITION, NO HEDGING TRANSACTION MAY BE CONDUCTED WITH RESPECT
TO THESE SECURITIES UNLESS SUCH TRANSACTION IS IN COMPLIANCE WITH THE
ACT. IN ADDITION, THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT
TO TRANSFER RESTRICTIONS AS SET OUT IN THE SHAREHOLDERS AGREEMENT DATED
[ ], 2000.
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A SHAREHOLDER
AGREEMENT DATED AS OF [ ], 2000 AND THE TRANSFER AND VOTING THEREOF
ARE SUBJECT TO THE TERMS OF SUCH AGREEMENT. COPIES OF SUCH AGREEMENT MAY
BE OBTAINED AT THE PRINCIPAL EXECUTIVE OFFICES OF THE COMPANY."
56
9.3 Any transfer of ordinary Shares by any Shareholder or the Escrow Agent to a
third party in accordance with the provisions of this Article and
article 10 of the Articles, shall be subject to the condition that the third
party transferee, as of the date of transfer, becomes a party to this
Agreement and is legally bound by the terms thereof, by entering into a deed
of accession in the form attached hereto as Exhibit J. No Party shall effect
any such transfer unless the condition described above is fulfilled. The
term "third party" means any third party (including, without limitation, any
other Shareholder).
9.4 In the event that any of the options or warrants held by the Shareholders
are not exercised for any reason, the Company Shares reserved for issuance
to such Shareholders shall be released to the Shareholders Representative
who shall be obligated to distribute such Company Shares to the Shareholders
based on their proportionate ownership as of the Effective Time as set forth
on Exhibit K.
10. ARTICLE 10: VALUATION OF ACQUISITIONS
10.1 For the purposes of Article 5.8, valuation of future acquisitions will be
determined in accordance with the following provisions:
(a) UPC, the Company and the Shareholders Representative shall first consult
with each other to arrive at a fair market value of the acquisition.
(b) If UPC and the Shareholders Representative shall not agree on the
valuation, then each of UPC and the Shareholders Representative shall
appoint an independent appraiser to perform the valuation. If either
party fails to timely appoint such independent appraiser, the other party
may make such appointment on behalf of the failing party.
(c) If the valuations made in these two appraisals are within 10% of each
other, the valuation shall be deemed to be the average of the two
valuations. If the valuations are more than 10% apart, a third
independent appraiser will be appointed by mutual agreement between UPC
and the Shareholders Representative. If no such mutual agreement is
reached, the third independent appraiser shall be appointed by the two
independent appraisers acting jointly.
(d) The third independent appraiser shall be given the earlier two
valuations and any underlying data used or developed by the two
independent appraisers which the third independent appraiser may
reasonably require. If the third valuation is not more than 10% higher or
lower than either of the earlier two appraisals, the fair market value
shall be deemed to be the average of the third valuation and the closest
of the earlier two valuations. If the third valuation is more than 10%
higher or lower than either of the earlier two appraisals, the fair
market value shall be deemed to be equal to the amount of the third
valuation.
(e) The valuation arrived at pursuant to this Article 10 shall be final and
binding on all parties.
(f) Only internationally recognised investment banks may be appointed as
independent appraisers.
(g) The Company and UPC will, subject to the condition that appropriate
confidentiality agreements have been concluded between the Company, UPC
and such independent appraiser, provide to each independent appraiser
such information in relation to the Company and its business as such
independent appraiser may reasonably require. Information provided by any
party to the independent appraisers shall be provided in such manner as
will reasonably ensure that each of the independent appraisers makes its
valuation on the basis of the same information.
(h) The independent appraisers shall be instructed to consider the assets to
be transferred by UPC in the context of the value that they provide to
the Company relative to its then existing scope of operations and its
then current business plan.
57
11. ARTICLE 11: FEES AND EXPENSES
The Shareholder shall pay his/her own costs and expenses, including fees of
legal, tax and other advisers, (other than the fees and expenses of Cignal
counsel) in relation to the preparation, execution and implementation of this
Agreement.
12. ARTICLE 12: NOTICES
12.1 Any notice or other communications required or permitted under this
Agreement, shall be given in writing and personally delivered or sent by
airmail, postage prepaid, or by international air courier, or by telefax
addressed as follows or to such other address as the party concerned shall
have given notice of pursuant to this Article 12:
If to UPC, to:
United Pan-Europe Communications X.X.
X.X. Xxx 00000
0000 XX
Xxxxxxxxx
Xxx Xxxxxxxxxxx
For the attention of:
Anton Tuijten
If to the Company:
Priority Telecom N.V.
Kon. Xxxxxxxxxxxxxxx 0-0
Xxxxxxxx Xxxxx
0000 HIC Amsterdam
The Netherlands
For the attention of:
Xxx Xxxx
If to the Shareholders Representative:
Xxxxxxxxxxx X. Xxxxxx
c/o Priority Telecom N.V.
Kon. Xxxxxxxxxxxxxxx 0-0
Xxxxxxxx Xxxxx
0000 HIC Amsterdam
The Netherlands
If to the Shareholder, to:
The address of the Seller as recorded at the relevant time
in the share register of the Company
12.2 Any notice or other document shall be deemed to have been served:
(a) if delivered by hand, then at the time of delivery, if delivered between
the hours of 9.30 a.m. and 5.30 p.m. (local time at the place of receipt)
if sent on a Business Day; or if not, then at 9.30 a.m. (local time) on
the next following Business Day;
58
(b) if posted, then at 10.00 a.m. (local time) on the day four (4) Business
Days after it was put in the post; or
(c) if sent by air courier, then at 10.00 a.m. (local time) on the day two
(2) Business Days after it was sent; or
(d) if sent by telefax, then at the time sent, if sent between the hours of
9.30 a.m. and 5.30 p.m. (local time at the place of receipt) if sent on a
Business Day; or, if not, then at 9.30 a.m. (local time) on the next
following Business Day.
For the purposes of this Article 12, a Business Day shall be deemed a day on
which banks' branches situated in Amsterdam and New York are open to their
clients for general business purposes.
13. ARTICLE 13: POWER OF ATTORNEY
13.1 The Shareholder herewith gives unconditional (save as expressly provided in
this Article 13) and irrevocable power of attorney to the Shareholders
Representative and to any replacement of the Shareholders Representative as
contemplated in Article 4.5, on behalf of the Shareholder:
(a) to take such action which this Agreement contemplates may be taken by
the Shareholders Representative on behalf of the Shareholders;
(b) to take such action as may reasonably be deemed necessary or appropriate
by the Shareholders Representative to implement the provisions of this
Agreement and of the Merger Agreement in accordance with its terms; and
(c) to take all further action as are ancillary to the actions mentioned in
(a) above;
13.2 The Shareholder agrees that he/she will be bound by any action taken by the
Shareholders Representative in accordance with the provisions of
Article 13.1 above, and that he/she will if requested by the Shareholders
Representative, UPC and/or the Company confirm in writing to be so bound and
to ratify the action so taken.
13.3 If for any reason the Shareholders Representative will not take any action
which this Agreement contemplates he will take on behalf of the Shareholder,
then UPC or the Company, as the case may be, may request that the
Shareholder him/herself to take such action.
14. ARTICLE 14: AMENDMENTS
This Agreement may not be amended, supplemented or changed except by a
written instrument making specific reference to this Agreement signed by the
parties hereto. Any amendments which are not materially adverse to the position
of the Shareholder as holder of the Company Shares may be negotiated and agreed
on behalf of the Shareholder by the Shareholders Representative.
15. ARTICLE 15: SAVING CLAUSE
If any provision of this Agreement shall be held by any court of competent
jurisdiction or arbitral tribunal to be illegal, void or unenforceable, such
provision shall (i) be of no force and effect, but the illegality or
unenforceability of such provision shall have no effect upon and shall not
impair the enforceability of any other provision of this Agreement and (ii) the
parties shall commit themselves to replace the non-binding and/or
non-enforceable provisions by provisions that are binding and enforceable and
differ as little as possible, taking into account the object and purpose of this
Agreement, from the non-binding and/or non-enforceable provisions. The
Shareholder will in this instance be represented by the Shareholders
Representative, whose agreement on the replacement of such provisions shall be
binding on the Xxxxxxxxxxx.
00
00. ARTICLE 16: ASSIGNMENT
None of the rights or obligations under this Agreement may be assigned or
transferred by the Shareholder without the prior written consent of UPC and the
Company. None of the rights or obligations under this Agreement may be assigned
or transferred other than pursuant to Article 21 herein by the Company or UPC
without the prior written consent of the Shareholders Representative.
17. ARTICLE 17: ANNULMENT, RESCISSION AND DISSOLUTION
The parties to this Agreement waive their rights, if any, to annul, (partly)
rescind, (partly) dissolve ("ONTBINDEN") or cancel this Agreement, or to request
annulment, (partly) rescission, (partly) dissolution ("ONTBINDEN") or
cancellation of this Agreement after the Closing Date on the basis of articles
6:265 or 6:228 of the Dutch Civil Code.
18. ARTICLE 18: GOVERNING LAW AND ARBITRATION
18.1 This Agreement shall be governed by and construed in accordance with the
laws of the Netherlands.
18.2 It is agreed that any power of attorney executed in connection with this
Agreement or any other document executed pursuant to the transactions
contemplated hereby shall be governed by and construed in accordance with
the laws of the Netherlands.
18.3 All disputes arising out of or in connection with this Agreement which
cannot be amicably settled between the parties hereto shall be submitted to
the exclusive jurisdiction of the competent courts in Amsterdam, The
Netherlands.
19. ARTICLE 19: COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original, but all of which taken together shall constitute
one and the same instrument.
20. ARTICLE 20: TERMINATION
This Agreement shall terminate upon the IPO, except for Articles 4, 5.11, 6,
8, 9 and 11 through 21 that pursuant to their terms survive the IPO or require
performance after the IPO. This Agreement shall terminate in its entirety
vis-a-vis a Shareholder upon the sale of all Company Shares owned by the
Shareholder. This agreement shall terminate automatically in the event the
Merger Agreement is terminated.
21. ARTICLE 21: SUCCESSION
The provisions of this Agreement shall be binding upon and inure to the
benefit of the parties and their respective successors and assigns.
60
22. ARTICLE 22: BENEFICIARY
Articles 7, 8 and 9 hereof shall be construed as clauses irrevocably
granting to the Escrow Agent as third party beneficiary the right to claim
performance thereof (ONHERROEPELIJK DERDENBEDING).
IN WITNESS WHEREOF, this Agreement is signed by UPC and the Company on
August 11, 2000 and by the Shareholder on the day and date hereinbelow specified
by the Shareholder.
UNITED PAN-EUROPE COMMUNICATIONS N.V.
By:
-------------------------------------------
By:
-------------------------------------------
PRIORITY TELECOM N.V.
By:
-------------------------------------------
By:
-------------------------------------------
SHAREHOLDER
By:
-------------------------------------------
Date:
THE SHAREHOLDER IS REQUIRED TO FILL IN THE DATA BELOW:
The Shareholder executing this Agreement is:
Name:
Address:
Number of Cignal Shares owned by him/her:
Number of Company Shares to be issued to him/her on the Closing Date:
By signing this Agreement, the Shareholder agrees that the above data will
be entered into the share register of the Company upon completion of the Shares
Exchange.
61
EXHIBIT A
TELECOMMUNICATIONS SERVICES
For purposes of Section 5.1, CLEC services--traditional voice and data
services, as well as any services based on IP technology, include, but are not
limited to, the following:
1. Traditional Services
(i) Line Rental
(ii) Local, national and international calls
(iii) HFC telephone
(iv) Centrex central PBX services
(v) ATM connectivity
(vi) Voice over ATM
(vii) Local, national and international private leased lines
(viii)SDH based data services
(ix) InterLAN
(x) ISDN 10/20/30
(xi) The resale of mobile telephony as part of bundled fixed/mobile offers
(xii) Local, national and International IRUs and rights of way
2. Access-dependent IP-services:
(i) Internet access and transit
(ii) Secure Internet access/managed firewall
(iii) Private IP and VPN LAN Interconnection
(iv) VPN management
(v) Videoconferencing
(vi) Broadband teleworking and remote access
(vii) IP-based voice (retail telephony)
3. Access-Independent services:
(i) Server and web site Hosting
(ii) E-mail hosting
(iii) Intranet hosting
(iv) Application hosting
(v) Dial-up Internet access
(vi) Dial-up remote teleworking
(vii) Unified Messaging
(viii)IP telephony (retail and wholesale)
62
(ix) Content delivery (including: hosting, caching, IP connectivity, and
peering/transit)
(x) Facilities management and collocation
(xi) Server, router, and PABX resale and/or management
(xii) Applications Service Provider (ASP) services (outsourced software,
applications, storage
(xiii)Web/professional services
(a) Site design
(b) E-mail hosting
(c) IP address and domain name registration
(d) General LAN/WAN/Web consultancy
(xiv) E-commerce services
63
EXHIBIT B
EUROPEAN COUNTRIES
For purposes of Section 5.1, the following countries constitute Europe:
Albania
Andorra
Austria
Belarus
Belgium
Bosnia
Bulgaria
Croatia
Czech Republic
Denmark
Estonia
Finland
France
Germany
Greece
Hungary
Ireland (including Northern Ireland)
Israel
Italy Switzerland
Latvia
Lithuania
Luxembourg
Malta
Moldova
Monaco
Netherlands
Norway
Poland
Portugal
Romania
Russia
Slovak Republic
Spain
Sweden
Turkey
Ukraine
United Kingdom
Vatican City
Yugoslavia
64
EXHIBIT C
LOCAL COMPANY ENTITIES
1. Priority Austria GmbH
2. Priority France S.A.S.
3. Priority Italy S.r.L.
4. Priority Sweden A.B.
5. Priority Norway A.S.
6. Priority Hungary Kft
7. Priority Belgium S.A.
8. Priority Telecom Netherlands B.V. (license holder)
9. Priority Germany GmbH
65
EXHIBIT D
RELATIONSHIP WITH UPC AND ITS AFFILIATES, INCLUDING CHELLO
1. UPC and its affiliates, including chello, will be preferred suppliers to the
Company.
2. The Company will be the preferred supplier of products and services for UPC
and its affiliates, including chello.
3. All such relationships will be on a contractual, arms-length basis.
(a) All goods and services will be provided through contracts with a service
level agreement.
4. The purchase and supply of goods and services will be at the lowest of:
(a) Competitive market prices; or
(b) Lowest rates to similar third parties.
5. The Company retains the right to purchase goods and services in the open
market, should the goods and services of UPC and its affiliates, including
chello, not meet agreed service levels or not be priced competitively
relative to comparable goods and services available in the open market;
provided however, that in the UPC Affiliate Areas, for a period of seven
years, if the services are available and the agreed service level agreement
is met, chello will be the sole provider to the Company of the Company
branded IP connectivity services (including access and portal) for business
customers with 50 or fewer employees.
6. Within the UPC Affiliate Area, chello will act as a wholesale provider of
certain services to either the UPC cable company (residential and SOHO(1)
market) or the Company (business customers). Notwithstanding the foregoing,
legacy customers of chello will continue to remain with chello.
66
EXHIBIT E
FORM OF EXERCISE NOTICE OF UPC STOCK PURCHASE OPTION
[DATE]
United Pan-Europe Communications
X.X. Xxx 00000
0000 XX Xxxxxxxxx
Xxx Xxxxxxxxxxx
Dear Sirs:
In accordance with Article 7.1 of the Shareholders Agreement, dated
, 2000, between the Shareholders in Priority Telecom N.V. named
therein, United Pan-Europe Communications N.V. and Priority Telecom N.V. (the
"SHAREHOLDERS AGREEMENT"), the undersigned, as Shareholders Representative under
the Shareholder Agreement and on behalf of all of the Shareholders (as defined
in the Shareholders Agreement), hereby gives notice of the exercise of the UPC
Stock Purchase Option (as defined in the Shareholders Agreement). Attached
herewith are all of the shares in the Company and all of the options, unit
options and warrant rights relating to shares in the Company owned by all of the
Shareholders, or any owner who would be obligated to become a Shareholder upon
exercise of their warrants, unit options or options.
Cordially,
------------------------
Name:
67
EXHIBIT F
FORM OF REDEMPTION NOTICE UNDER ARTICLE 7.3
[DATE]
Shareholders Representative
[Address]
Dear Sirs:
In accordance with Article 7.3 of the Shareholders Agreement, dated ,
2000, between the Shareholders in Priority Telecom N.V. named therein, United
Pan-Europe Communications N.V. and Priority Telecom N.V. (the "SHAREHOLDERS
AGREEMENT"), you are hereby notified that:
/ / we are exercising our option to redeem the UPC Stock Purchase Option (as
defined in the Shareholders Agreement) for such amount of cash equal to the
Company Share Value (as defined in the Shareholders Agreement). The Company
Share Value equals $ per UPC Stock Purchase Option.
/ / we are exercising our option to purchase shares in Priority Telecom N.V.
(the "COMPANY") and options, unit options and warrants relating to the shares
in the Company for [such amount of cash or marketable securities equal to the
Company Share Value]. [Insert description of consideration to be received.]
Cordially,
------------------------
United Pan-Europe Communications N.V.
68
EXHIBIT G
FORM OF REDEMPTION NOTICE UNDER ARTICLE 7.8
[DATE]
Shareholders Representative
[Address]
Dear Sirs:
In accordance with Article 7.8 of the Shareholders Agreement, dated
, 2000, between the Shareholders in Priority Telecom N.V. named
therein, United Pan-Europe Communications N.V. and Priority Telecom N.V. (the
"SHAREHOLDERS AGREEMENT"), we hereby notify you that we have chosen to redeem
shares of Priority Telecom N.V. undelivered pursuant to the UPC Stock
Purchase Option, as defined in the Shareholders Agreement, for the consideration
of .
Cordially,
------------------------
United Pan-Europe Communications N.V.
69
EXHIBIT H
FORM OF NOTICE OF SALE
[DATE]
[Name of Shareholder]
[Address]
Dear Sirs:
In accordance with Article 8.1 of the Shareholders Agreement dated
, 2000 (the "SHAREHOLDERS AGREEMENT") between the Shareholders in
Priority Telecom N.V. named therein, United Pan-Europe Communications N.V. and
Priority Telecom N.V. (the "COMPANY"), we hereby notify you of our intention to
sell and transfer , or % of our Company Shares (as defined in the
Shareholders Agreement) to . You have the right to simultaneously sell the
same percentage of your Company Shares for a consideration equal to the per
share consideration which we will receive, which is per Company
Share. You also have the right to simultaneously sell the same percentage of
your options, unit options and warrants relating to the Company Shares for the
same per option right or per warrant consideration minus the applicable strike
price.
Cordially,
------------------------
United Pan-European Communications
70
EXHIBIT I
FORM OF SALE EXERCISE NOTICE
[DATE]
United Pan-Europe Communications
X.X. Xxx 00000
0000 XX Xxxxxxxxx
Xxx Xxxxxxxxxxx
Dear Sirs:
In accordance with Article 8.1 of the Shareholders Agreement dated ,
2000 between the Shareholders in Priority Telecom N.V. named therein (the
"COMPANY"), United Pan-Europe Communications N.V. and Priority Telecom N.V. (the
"SHAREHOLDERS AGREEMENT") the undersigned owner hereby irrevocably notifies you
of [his/her] wish to exercise our rights to sell Company Shares (as defined in
the Shareholders Agreement) to on the same terms and conditions, and for
the same per share consideration which UPC will receive for its Company Shares.
Attached hereto are the certificates representing Company Shares.
[The undersigned owner hereby irrevocably notifies you of the exercise of
his/her right to sell [options/warrants] relating to the Company Shares for
the same per option right or per warrant consideration minus the applicable
strike price.]
Cordially,
------------------------
Name:
71
EXHIBIT J
FORM OF DEED OF ACCESSION
The undersigned,
name:
address:
hereby declares to have purchased ordinary shares in the Dutch
company Priority Telecom N.V. ("Priority") from (insert
name of transferor) (the "Selling Shareholder");
hereby declares to United Pan-Europe Communications N.V. ("UPC") and
Priority that he/she assumes all terms of the "Shareholders Agreement" by, among
others, UPC and Priority as his or her own and that he/she is bound thereto as
if he/she had originally been party thereto as a Shareholder.
This deed shall be governed by Dutch law. The undersigned agrees that all
disputes arising in connection with this deed shall to the exclusive
jurisdiction of the competent court in Amsterdam, the Netherlands.
Date:
------------------------
(Signature)
THIS DOCUMENT MUST BE MAILED TO:
United Pan-Europe Communications N.V.
Attention: Ms Xxxx van der Werf
X.X. Xxx 00000
0000 XX XXXXXXXXX
Xxx Xxxxxxxxxxx
72
EXHIBIT K
SHARE OWNERSHIP
NUMBER OF
NAME OF SHAREHOLDERS SHARES
-------------------- ---------
1141 Inc.................................................... 75,000
555 Genesee/Beta Partners................................... 37,500
A.R.H. Business Partnership L.T.D........................... 37,500
Xxxx-Xxxxxx Partners I...................................... 12,500
Abco Fund Ltd............................................... 127,500
Xxxxxxxxx X. Xxxxxx and Xxxxxxxx Xxxxxx 1997 Trust.......... 37,500
Xxxxx, Xxxxx X.............................................. 525,600
Xxxxx, Xxxxxxx X............................................ 372,300
Xxxxx, Xxxxx X.............................................. 65,700
Xxxxx, Xxxxxxx X............................................ 438,000
American High Growth Equities Retirement Trust.............. 50,000
American High Growth Equities Retirement Trust.............. 100,000
Anes Family Trust........................................... 150,000
Xxxxxxxxxxx Xxxxxx.......................................... 67,233
April X. Xxxxxx and Xxxxx X. Xxxxxxx, MD, as tenants in
common.................................................... 36,000
Xxxxxx, M.D., Jan........................................... 149,600
ARS Revocable Family Trust U/A/D 8/11/97.................... 75,000
Xxxxxx X. Xxxx Revocable Trust U/A dtd. 9/26/83............. 12,500
Xxxx, Xxxxxx X.............................................. 30,000
Avanti Technology Inc....................................... 35,000
Xxxxxxxxx, Xxxx X........................................... 35,000
Xxxxx, Xxxxx X.............................................. 150,000
Banque Nationale de Paris (Switzerland) S.A................. 2,000,000
Banque SCS Alliance S....................................... 199,000
Xxxxxx, Xxxxx X. and Xxxxxxxxxx X........................... 37,500
Xxxxx, Xxxx................................................. 18,750
Xxxx, Xxxxx Xxxxxxxxxx...................................... 18,750
Xxxx, Xxxxxx................................................ 75,000
Xxxxxxx, Xxxx X............................................. 11,250
Xxxxxxx, Xxxx X and Xxxx M.S................................ 22,500
Xxxxxxxx, Xxxxxxx........................................... 30,000
Xxxxxxxxx, Xxxxx............................................ 2,500
Berthoumleux, Xxxxxx........................................ 60,000
Xxxx Family Trust dated 10/17/95............................ 37,500
Xxxxx, Xxxxxx............................................... 11,000
Xxxxxx, X. Xxxxx............................................ 75,000
Xxxxxxxxx, Xxxxx............................................ 135,000
Xxxxxx, Xxxx................................................ 18,750
Xxxx Xxxxx Capital Inc...................................... 5,900
Xxxx Xxxxx Capital International............................ 27,600
Xxxx Xxxxx Capital Ventures, L.P............................ 41,500
Xxxx Xxxxx Capital, L.P..................................... 66,200
Xxxxxxx Resources Company................................... 210,000
Xxxxx, C. Xxxxxx............................................ 45,000
Xxxxx, Xxxxxx Xxxxx......................................... 37,500
Xxxxx Brothers Xxxxxxxx, New York........................... 37,000
73
NUMBER OF
NAME OF SHAREHOLDERS SHARES
-------------------- ---------
Xxxxx, Xxxx Xxxx............................................ 37,500
Xxxxxxxxx, Xxxxxxx.......................................... 37,500
Xxxx, Xxxxxxx and Xxxx Xxxx................................. 37,500
Xxxxxxxx, X.X............................................... 25,000
Xxxxx Xxxxx Living Trust dated 8/9/97....................... 20,000
Xxxxxxxxx, Xxxxxxxx......................................... 500
Xxxxxx, Xxxxxxx............................................. 1,000
Xxxxxxx, Xxxxxxxx X......................................... 10,123
Xxxxxxxx, Xxxx X............................................ 25,000
Xxxxxx, Xxxxxx.............................................. 80,000
CITCO GLOBAL CUSTODY NV-CASH................................ 100,000
Xxxxxx, Xxxxx X............................................. 18,750
Xxxxxxx, Xxxxxxx............................................ 37,500
Constructor's West, Inc..................................... 30,000
Xxxx, Xxxxxxxx X............................................ 45,000
Csiliag, Xxxxxx............................................. 50,000
Xxxxxx, Xxxxxx.............................................. 37,500
Xxxxx, X. Xxxxxx and Xxxx X................................. 32,500
Xxxxxx, Xxxx X.............................................. 12,500
Darier, Xxxxxxx & Cle....................................... 30,000
Xxxxx, Xxxxxxx.............................................. 20,000
Xxxxx, Xxxxx................................................ 20,000
Xxxx Xxxxxx Custodian for the Xxxxxxx X. XxXxxx XXX A/C #663
88093104.................................................. 18,750
Delaware Charter Guarantee & Trust Co....................... 67,000
Delaware Charter Guarantee & Trust Co., C/F Xxxxx X. Xxxxxx,
MD XXX.................................................... 37,500
Delaware Charter Guarantee & Trust Co., C/F Xxxxx X. Most
XXX....................................................... 27,000
Delaware Charter Guarantee & Trust Co., C/F Xxxxxx Xxxxxxx
XXX....................................................... 18,750
Delaware Charter Guarantee & Trust Co., C/F Xxxx X. Xxxxxx
XXX....................................................... 12,500
Delaware Charter Guarantee & Trust Co., C/F Xxxxxxxx Xxxxxxx
XXX Rollover.............................................. 37,500
Delaware Charter Guarantee & Trust Co., C/F Xxxxxx Xxxxxx
XXX....................................................... 34,600
Delaware Charter Guarantee & Trust Co., FBO Xxxxxx X.
Xxxxxxxx XXX.............................................. 112,500
Xxxxxxx, Xxxxxxx X.......................................... 60,000
des Gachons, Xxxxxx X....................................... 150,000
Xxxxxxxxx, Xxxxxxx X........................................ 100,000
Domino, Xxxx X.............................................. 150,000
Xxxxxx Xxxxxx Inter-Vivos Trust............................. 10,000
Xxxxx, Xxxxxxx X............................................ 15,000
Xxxxxxx, Xxxxx X............................................ 30,000
X.X. Xxxx Co. Inc........................................... 37,500
Xxxxxx Xxxxxx, Xx. and Xxxxxxxxx X. Xxxxxxx, as Joint
Tenant.................................................... 37,500
Xxxxx & Co.................................................. 35,000
Xxxxx, Xxxxxxx.............................................. 56,000
Xxxxxx, Xxxxxx X............................................ 27,500
Xxxxxx, Xxxxx............................................... 18,750
Xxxxxxx, Xxxxx.............................................. 18,750
Xxxxxx, Xxxxxx.............................................. 37,500
Fidulex Manager, Inc........................................ 80,000
Xxxxxx, X. Xxxxxx........................................... 56,250
Xxxxx, Xxxxxx............................................... 12,500
74
NUMBER OF
NAME OF SHAREHOLDERS SHARES
-------------------- ---------
Xxxxxxx, Xxxxxxx............................................ 35,000
Xxxxxxx, Xxxxx.............................................. 75,000
Xxxxxxxxxx, Xxxx............................................ 30,000
Xxxxxx, Xxxxxxx............................................. 9,375
Xxxxxx, Xxxxxx.............................................. 9,375
Gamzu, S. Zelda............................................. 30,000
Xxxx, Xxxxxx X.............................................. 37,500
Garfield Associates LLC..................................... 150,000
Xxxxxxx, Xxxxxxx X.......................................... 150,000
Xxxxxxxx, Xxxx Xxxxx........................................ 50,000
Xxxxx, Xxxxxx X............................................. 37,500
Gensec Corporation NV....................................... 75,000
Xxxxxx X. Xxxxx Trust....................................... 37,500
Gerzof Investment Limited Partnership I..................... 180,000
Gerzof Investment Limited Partnership II.................... 90,000
Gestori Patrimoniali Associati SA........................... 75,000
GHI, Ltd.................................................... 40,000
Gili Xxxxxxx and Xxxxxxx Xxxxxxx............................ 26,250
Xxxxxxxx, Xxxxx............................................. 75,000
Goeljian, Xxxxxx X.......................................... 71,250
Xxxxxxx, Xxxx X............................................. 37,500
Xxxxxxx, Xxxx X............................................. 37,500
Xxxxxxxx, R. Nathan and Xxxxx X............................. 29,000
Xxxxxxxxx, Xxxxxx X. and Xxxx X., as joint tenants.......... 30,000
Xxxxxxx, Xxxxxxx............................................ 30,000
Xxxxx, Xxxxxx............................................... 60,000
Gross Foundation, Inc....................................... 187,500
Xxxxxxxx, Xxxxx X........................................... 37,500
Xxxxxxxxx, Xxxxx............................................ 60,000
Gulfstream Asset Management Corp. Retirement Trust.......... 37,500
Xxxxxx, Xxxxxx.............................................. 36,000
Xxxxxx, Xxxxx X............................................. 37,500
Hare & Co................................................... 75,000
Henningsson, Bragi.......................................... 33,750
Xxxxx X. & Xxxxxxxxx X. Xxxxxxxxxxx Community
Property Trust UAD 9/1/86................................... 75,000
Xxxxxxxxxxxx, Xxxxxxx....................................... 6,000
Xxxxxxxx, Xxxxxx X.......................................... 18,750
Xxxxx, Xxxxxx............................................... 18,750
Xxxxx, Xxxxxx............................................... 75,000
Xxxxxxx, Xxxxxxx X.......................................... 37,500
Xxxxxx, Xxxxx X............................................. 75,000
Horberg, Xxxxxx Xxxx........................................ 40,000
Xxxxxx, Xxxxx X............................................. 37,500
Xxxxxx, Xxxxxxxxxxx X. and Xxxxxx X......................... 22,500
Xxxxxxx, Xxxxxx and Xxxxxx, as tenants by the entireties.... 15,000
Intergalactic Growth Fund Inc............................... 75,000
Xxxxxxxx, Xxxx.............................................. 647,400
Xxxxxxxx, as Custodian for Xxxx X. Xxxxxxxx, u/Mass UTMA,
Xxxxx X................................................... 9,200
75
NUMBER OF
NAME OF SHAREHOLDERS SHARES
-------------------- ---------
Xxxxxxxx, as Custodian for Xxxx X. Xxxxxxxx u/ Mass UTMA,
Xxxxx X................................................... 9,200
Xxxxxxxx, as Custodian for Xxxx X. Xxxxxxxx u/ Mass UTMA,
Xxxxx X................................................... 9,200
Isell, Andre................................................ 75,000
Italian Jewelry Designs Inc................................. 37,500
Jamscor Inc................................................. 135,000
Xxxx X. Xxxxxxx MD, PC Profit Sharing Plan & Trust, PC
Profit
Sharing and Trust........................................... 112,500
Xxxxx, X. Xxxxxxx........................................... 120,000
Xxxxxx X. XxXxxxx Trust..................................... 37,500
Xxxxx, Ltd.................................................. 75,000
Xxxxx, Xxxxxx............................................... 30,000
Xxxx, Xxxx and Xxxxx, as joint tenants...................... 37,500
Xxxxxxx, Xxxxxxx............................................ 37,500
Xxxx, Xxxx.................................................. 37,500
Xxxxxxx, Xxxxxxx X and Xxxxxxx X., as joint tenants......... 37,500
Xxxxxxxx, Xxxxxx X.......................................... 40,000
Xxxxx Xxxxxxxxx Partners, L.P............................... 1,125,000
Xxxxxxxx, Xxxxxxx X......................................... 42,500
Kings Dental Group Profit Sharing Plan U/A/ 01/01/97 F.B.O.
Xxxxxxx X. Zweifier D.D.S................................... 37,500
Xxxxxxx, Xxxxx Xxxxx........................................ 1,000
Xxxxxxx, Xxxxxx and Xxxxxx, as joint tenants................ 37,500
Xxxxxx, Xxxxxx.............................................. 25,000
Xxxxxx, Xxxxx and Xxxxxxxx, as joint tenants................ 37,500
Xxxxxx, Xxxxxxx............................................. 22,500
Xxxxxxx, Xxxxxx X........................................... 50,000
Xxxxxxxx, Xxxx X. and Xxxxxx X., as joint tenants........... 36,500
Xxxxxxx, Xxxxxxx X.......................................... 18,750
Kunzweller, Xxxxxxx......................................... 75,000
Lambda IV, LLC.............................................. 150,000
Xxxxxx, Xxxxx............................................... 37,500
Land, Xxxxxx X.............................................. 10,000
Land, Xxxxxxx Xxxxxxxx...................................... 10,000
Land, Xxxx.................................................. 10,000
Land, Xxxx X................................................ 1,550,000
Xxxx, Xxx and Xxxxx......................................... 18,750
Xxxxx X. Xxxxxx & Xxxx X. Xxxxxx, JTWROS.................... 75,000
Xxxxxxx, Xxxx............................................... 37,500
Xxxxxx, Xxxxxxxx X.......................................... 20,000
Xxxxxxxxxxx, Xxxxxxx X...................................... 39,000
Xxxxxx, Xxxxx X............................................. 37,500
Xxxxxxx, DDS, Jan........................................... 37,500
Xxxx Xxxxx, Custodian for Xxx Xxxxx UGMA/IL................. 4,000
Xxxx, Xxxxxx X., TTEE U/A DTD 9/26/63....................... 25,000
Xxxxx Xxxxxxx Part B Trust.................................. 75,000
Xxxxx, Xxxxxx X.X........................................... 15,750
Xxxxxxxxx, Xxxxxxx X........................................ 37,500
Mallampati, Xxxxxxxxx Xxx................................... 49,500
Xxxxxxx, Xxxxx.............................................. 37,500
76
NUMBER OF
NAME OF SHAREHOLDERS SHARES
-------------------- ---------
Xxxxxxx Xxxxxxx Successor Trust............................. 22,500
Xxxxxxxxx, Xxxxxxx.......................................... 37,500
Xxxxxx X. Xxxxxx, M.D., P.A., Profit Sharing Plan........... 10,000
Xxxxx, Xxxxx X.............................................. 254,500
XxXxxx, Xxxxxxx X........................................... 37,500
Xxxxxxxxx, Xxxx............................................. 59,600
Xxxxxxx, Xxxxxx X. and Xxxxx A.............................. 37,500
Xxxxx, Xxxxx X.............................................. 75,000
Xxxxxx, Xxxx X.............................................. 36,000
Moazez Family Limited Partnership........................... 75,000
Xxxxxxxxxxx, Xxxxx.......................................... 5,000
Xxxxxxxxxxx, Xxxxx.......................................... 2,000
Xxxxxx, Xxxxxx X............................................ 25,000
Most, Xxxxx X. and Xxxxxxx X................................ 10,500
Mover, J/T/W/R/O/S, Xxxxxx Mover and Xxxx................... 262,800
Mower, Morton............................................... 37,500
MSSS Family Partners, Ltd................................... 58,000
Nano-Cap Hyper Growth Partnership L.P....................... 75,000
Xxxx, Xxxxxxxxx Xxxxx....................................... 262,800
Neko Enterprises Limited.................................... 37,500
Nexus Group LLC............................................. 127,500
Xxxxxxxxx, Xxxxxxx X........................................ 56,000
Xxxxxx, Xxxxxx X. and Xxxxxxx X., as joint tenants.......... 25,000
Xxxxxx X. Xxxxxx Trust dated 9/4/74......................... 37,500
Xxxxxx, Xxxxx X............................................. 100,000
Xxxxx, Xxxxx................................................ 1,000
Xxxxx, Xxx.................................................. 120,000
Xxxxx, Xxxxxx............................................... 1,000
Xxxxxxxxxx, Xxxxxxx X....................................... 37,500
Oshkim Limited Partners, L.P................................ 1,156,000
Xxxxx, Xxxx X............................................... 36,000
Xxx, Xxxxxx X............................................... 112,500
Pace Capital Inc............................................ 25,000
Xxxx X. Xxxxx Foundation for Medical Research............... 127,500
Xxxx X. Xxxxx Revocable Trust............................... 127,500
Pennygrows Ltd.............................................. 9,500
Xxxxxxxx, Xxxxxx and Xxxxxxxx, JTWROS....................... 18,750
Xxxxxxx, Xxxx Xxxx.......................................... 14,350
Xxxxxxx, Xxxxxx X........................................... 2,251,250
Xxxxxxx, Xxxxxx X........................................... 14,700
Xxxxxxx, Xxxxxx X........................................... 14,700
Xxxxxxx, Xxxx X. and Xxxxxxx X.............................. 150,000
Xxxxxx, Xxxx X.............................................. 37,500
Xxxxxxxx, Xxxx X............................................ 36,000
Pintsov, Xxxx X............................................. 28,000
Xxxxx, Xxxx X............................................... 18,750
Xxxxxx, Xxxx X.............................................. 31,000
Porcelain Partners, L.P..................................... 127,500
Progressive Ins. Agency Inc................................. 33,750
77
NUMBER OF
NAME OF SHAREHOLDERS SHARES
-------------------- ---------
Prudential Securities C/F Xxxx X. Xxxxxx XXX Rollover....... 25,000
Xxxxxxx, Xxxxxx X........................................... 37,500
Rich, Xxxxxx X. and Xxxxxxx X., JTWROS...................... 75,000
Xxxxxx, Jr., Sheffield C.................................... 25,000
Ringier AG.................................................. 150,000
Xxxxxxxx, Xxxxxx X.......................................... 37,500
Rockford Income Partnership................................. 37,500
Rolls, Xxxxxxxxx X.......................................... 37,500
Xxxxxx X. Xxxxxx & Xxxxxxx X. Xxxxxx JTWROS................. 8,500
Xxxxxx X. Xxxxxxx, as Trustee, or his successors in trust,
of the
Xxxxxx X. Xxxxxxx Trust, dated November 9, 1998............. 37,500
Xxxxxxxxx, Xxxxx............................................ 30,000
Xxxxx, Xxxxxxx.............................................. 37,500
Xxxxx, Xxxxxx X............................................. 56,250
Xxxxx X. Xxxx Marital Trust U/W Xxxx Xxxx 6/17/87........... 33,750
Xxxx, Xxxx and Xxxxx........................................ 22,500
Xxxxxx X. Xxxxxxxx Trust.................................... 100,000
SANPAOLO BANK S.A........................................... 30,000
Xxxxxxxxxx, Xxxx X.......................................... 37,500
Xxxxx, Xxxxx and Xxxx, as joint tenants..................... 37,500
Xxxxxx, Xxxxxxx............................................. 30,000
Xxxxxxxx, Xxxxxx and Xxxxxx X., as joint tenants............ 18,750
Xxxxxxx, Xxxxxx............................................. 76,500
Sharomart Limited Partners, L.P............................. 17,000
Xxxxxx, Xx. Xxxx X. and Xxxx, as joint tenants.............. 37,500
Sigma Services Corp......................................... 37,500
Xxxxxx, Xxxxxxx X........................................... 33,750
Xxxxxxx, Xxxxx.............................................. 37,500
Xxxxxxx Xxxxx Securities, Inc............................... 184,500
Xxxxxxxx, Xxxxx and Xxxx X., as joint tenants............... 33,750
State Street Bank and Trust Co, TTEEAIG Trading Group Inc.
Deferred Compensation Plan FBO Xxxxx Xxxxxxxxxxx............ 22,500
Xxxxxxx Xxxxx Xxxxxx Trust "A".............................. 37,500
Swedroe Family Limited Partnership.......................... 52,500
Xxxxxx, Xxxxxxx............................................. 1,000
The Xxxxx Investment Company, LP............................ 18,750
The Xxxxxxx X. Xxxxxx Foundation............................ 150,000
Xxxxxx Xxxxxxx, Inc. C/F Xxxxxxx X. Xxxxxx XXX DTD
11/08/99.................................................. 37,500
UBS AG, Zurich.............................................. 240,000
Venturetec, Inc............................................. 6,000,000
Xxxxxxxxxxx, Xxxxxxx........................................ 18,750
Viatel, Inc................................................. 1,000,000
Xxxx Xxxxxxx Family Ltd. Pshp............................... 18,750
Xxxx, Xxxxx X............................................... 150,000
Xxxxxx, Xxxxx and Xxxxxxx X., as joint tenants.............. 35,000
Xxxxxxxxx, Xxxx............................................. 105,000
Xxxxxxxxxx, Xxxxxx.......................................... 60,000
Wierner Charitable Remainder Unitrust....................... 37,500
Xxxxxxxx, M.D., Xxxxx X..................................... 37,500
78
NUMBER OF
NAME OF SHAREHOLDERS SHARES
-------------------- ---------
Xxxxxxx X. Xxxxxx, Xx. Trust A.............................. 25,000
Xxxxxxx X. Xxx Xxxxx Trust dated 6/19/95.................... 17,500
Xxxxxxxx X. Xxxxxx, Xx. Trust A............................. 50,000
Xxxxxxxx X. Xxx Xxxxx Trust dated 6/19/95................... 35,000
Xxxxxx Xxxxxx & Xxxxx Xxxxxx, JTWROS........................ 4,000
Xxxxx, Xxxxx Xxxxx.......................................... 262,800
Xxxxx, J. Michael........................................... 75,000
Xxxxxx, Xxxxx............................................... 2,000
Xxxx, Xxxxxxx Xxxxxxx and Xxxxxxx, tenants in common........ 18,750
Wood Asset Management, LTD.................................. 37,500
Xxxxx, Xxxxxx and Xxxxxxx, tenants in common................ 31,250
Xxxxx, Xxxxxxx and Xxxxxxxx, as joint tenants............... 6,250
Xxxxxx, Xxxxxx.............................................. 15,000
Zeiman TIC, Xxxxxx and Xxxxxx............................... 60,000
Xxxxxxxx, J/T/W/R/O/S, Xxxxxxxx X. Xxxxxxxx and Xxxx X...... 37,500
Xxxxxx, Xxxxxx X............................................ 22,500
79
EXHIBIT L
DEFINITION OF ACCREDITED INVESTOR PURSUANT TO REGULATION D
ACCREDITED INVESTOR. "Accredited investor" shall mean any person who comes
within any of the following categories, or who the issuer reasonably believes
comes within any of the following categories, at the time the sale of the
securities to that person:
(1) Any bank as defined in Section 3(a) (2) of the Act, or any savings and loan
association or other institution as defined in Section 3(a)(5)(A) of the Act
whether acting in its individual or fiduciary capacity; any broker or dealer
registered pursuant to Section 15 of the Securities Exchange Act of 1934;
any insurance company as defined in Section 2(13) of the Act; any investment
company registered under the Investment Company Act of 1940 or a business
development company as defined in Section 2(a)(48) of that Act; any Small
Business Investment Company licensed by the U.S. Small Business
Administration under Section 301(c) or (d) of the Small Business Investment
Act of 1958; any plan established and maintained by a state, its political
subdivisions, or any agency or instrumentality of a state or its political
subdivisions, for the benefit of its employees, if such plan has total
assets in excess of $5,000,000; any employee benefit plan within the meaning
of the Employee Retirement Income Security Act of 1974 if the investment
decision is made by a plan fiduciary, as defined in Section 3(21) of such
Act, which is either a bank, savings and loan association, insurance
company, or registered investment adviser, or if the employee benefit plan
has total assets in excess of $5,000,000 or, if a self directed plan, with
investment decisions made solely by persons that are accredited investors;
(2) Any private business development company as defined in Section 202(a)(22) of
the Investment Advisers Act of 1940;
(3) Any organization described in Section 501(c)(3) of the Internal Revenue
Code, corporation, Massachusetts or similar business trust, or partnership,
not formed for the specific purpose of acquiring the securities offered,
with total assets in excess of $5,000,000;
(4) Any director, executive officer, or general partner of the issuer of the
securities being offered or sold, or any director, executive officer, or
general partner of a general partner of that issuer;
(5) Any natural person whose individual net worth, or joint net worth with that
person's spouse, at the time of his purchase exceeds $1,000,000;
(6) Any natural person who had an individual income in excess of $200,000 in
each of the two most recent years or joint income with that person's spouse
in excess of $300,000 in each of those years and has a reasonable
expectation of reaching the same income level in the current year;
(7) Any trust, with total assets in excess of $5,000,000, not formed for the
specific purpose of acquiring the securities offered, whose purchase is
directed by a sophisticated person as described in Rule 506(b)(2)(ii); and
(8) Any entity in which all of the equity owners are accredited investors.
80
EXHIBIT B
ESCROW AGREEMENT
THIS ESCROW AGREEMENT is made as of this th day of , 2000 by
and between (1) the shareholder (the "SHAREHOLDER") of Cignal Global
Communications, Inc. (the "COMPANY") named on the signature page of this
Agreement, (2) United Pan-Europe Communications N.V. ("UPC"), (3) Priority
Telecom N.V. (the "PARENT"), and (4) MeesPierson Trust B.V. (the "ESCROW
AGENT").
WHEREAS
(A) UPC, the Parent and the Company have entered into that certain First
Amended and Restated Agreement and Plan of Merger (the "MERGER
AGREEMENT") dated August 11, 2000. The Merger Agreement contemplates in
Clause 5.13 that an escrow agreement will be entered into whereby
(i) the General Escrow Shares (as defined herein) are to be held in
escrow for a period expiring on the date which is one year after the
Effective Date (as defined in the Merger Agreement), to secure (1) any
claims for breach of representations, warranties or covenants in the
Merger Agreement which Parent or UPC may have against the Company, or
(2) any claims for breach of representations, warranties or covenants in
the Shareholders Agreement, which Parent or UPC may have against the
Company or any Shareholders, and (ii) the Litigation Escrow Shares (as
defined herein) are to be held in escrow for a period not to exceed five
years to secure the liability of the Shareholders for any losses,
liabilities, damages, costs and expenses incurred by the Company, Parent
or UPC resulting from or in connection with the Gerzof Litigation (as
defined herein).
(B) It is intended that, UPC, Parent and all of the Shareholders will enter
into a shareholders agreement in the form attached to the Merger
Agreement as Exhibit A (the "SHAREHOLDERS AGREEMENT"), pursuant to which
the parties thereto make certain covenants and give certain
representations and warranties in furtherance of the Merger.
(C) The parties wish to set out herein their mutual rights and obligations
in respect of such escrow arrangements.
IT IS AGREED AS FOLLOWS:
1. DEFINITIONS
1.1. In this Agreement, capitalised terms not defined herein will unless the
context otherwise requires have the meanings ascribed thereto in the Merger
Agreement.
1.2. In this Agreement, the following terms will unless the context otherwise
requires have the following meanings:
"AGGREGATE ESCROW SHARES" means the aggregate number of Aggregate General
Escrow Shares and Aggregate Litigation Escrow Shares which the Escrow Agent will
hold in escrow pursuant to the Escrow Agreements.
"AGGREGATE GENERAL ESCROW SHARES" means the aggregate number of General
Escrow Shares which the Escrow Agent will hold in escrow pursuant to the Escrow
Agreements.
"AGGREGATE LITIGATION ESCROW SHARES" means the aggregate number of
Litigation Escrow Shares which the Escrow Agent will hold in escrow pursuant to
the Escrow Agreements.
"AGGREGATE SHARES VALUE" means the value attributed to the number of
Aggregate General Escrow Shares or Aggregate Litigation Escrow Shares which are
used to satisfy a General Claim Amount or Litigation Claim Amount, respectively.
The Aggregate Share Value shall be determined using the valuation methodologies
set forth in Section 7.4 of the Shareholders Agreement; provided, however, that
if ordinary shares of the Parent are publicly traded on a stock exchange, the
Aggregate Shares
81
Value shall be calculated using the average per share price of Parent ordinary
shares for the five consecutive business days prior to the date of the Execution
Notice.
"ESCROW SHARES" means the General Escrow Shares and the Litigation Escrow
Shares, collectively.
"GENERAL CLAIM" has the meaning described in Article 3.
"GENERAL CLAIM AMOUNT" has the meaning described in Article 3.
"GENERAL CLAIM NOTICE" has the meaning described in Article 3.
"GENERAL ESCROW RELEASE DATE" means the date which is one year after the
Effective Date.
"GENERAL ESCROW SHARES" means such number of ordinary registered shares in
the Parent which represent 12.5% of those ordinary registered shares in the
Parent, including shares of the Parent reserved for issuance or transfer
pursuant to any outstanding warrants, stock options or unit options, which
constitute the Merger Consideration to which the Shareholder is entitled.
"GENERAL EXECUTION NOTICE" has the meaning described in Article 3.
"GENERAL RELEASE NOTICE" has the meaning described in Article 3.
"GERZOF LITIGATION" means the complaint served on the Company from Xxxxxxx
Xxxxxx, a shareholder of the Company, dated July 25, 2000 seeking damages for
wrongful dilution by the Company of his shareholding in the Company, and any
resulting litigation or proceedings arising from or related to such complaint
and any other related or ancillary litigation or proceedings.
"LITIGATION CLAIM AMOUNT" has the meaning described in Article 5.
"LITIGATION ESCROW SHARES" means such number of ordinary registered shares
in the Parent which represent 12.5% of those ordinary registered shares in the
Parent, including shares of the Parent reserved for issuance or transfer
pursuant to any outstanding warrants, stock options or unit options, which
constitute the Merger Consideration to which the Shareholder is entitled, minus
such number of ordinary registered shares in the Parent, if any, used to satisfy
the General Claim Amount pursuant to Section 3.3 hereof.
"LITIGATION EXECUTION NOTICE" has the meaning described in Article 5.
"LITIGATION ESCROW RELEASE NOTICE" has the meaning described in Article 5.
"SHAREHOLDERS" means all shareholders of the Company at the Effective Date.
2. ESCROW ARRANGEMENTS
2.1 The parties hereto hereby appoint MeesPierson Trust B.V. as Escrow Agent to
hold the Escrow Shares in its own name subject to the terms and conditions
of this Agreement.
2.2 The parties hereto agree that the Parent shall issue the Escrow Shares
directly to the Escrow Agent (in lieu of to the Shareholder as contemplated
in the Merger Agreement), and that the Escrow Agent will hold the Escrow
Shares in its own name subject to the terms and conditions of this
Agreement.
2.3 The Shareholder hereby agrees that, pursuant to this Agreement, the General
Escrow Shares shall secure, and to the extent provided hereby, the
Shareholder shall be liable for (i) any claims for breach of
representations, warranties or covenants in this Agreement which Parent or
UPC may have against the Company, or (ii) any claims for breach of
representations, warranties or covenants in the Shareholders Agreement,
which Parent or UPC may have against the Company or any Shareholders. The
Shareholder hereby waives any right of recourse he/she may have against the
Company resulting from a payment made in relation to a breach by the Company
of a representation or covenant in the Merger Agreement.
2.4 The Shareholder hereby agrees that, pursuant to this Agreement, the
Litigation Escrow Shares shall secure, and to the extent provided hereby,
the Shareholder shall be liable for all losses,
82
liabilities, damages, costs and expenses incurred by the Company, Parent or
UPC resulting from or in connection with the Gerzof Litigation, including,
without limitation, attorneys fees and other defense costs, amounts paid in
settlement and amounts pursuant to judgement. The Shareholder hereby waives
any right of recourse he/she may have against the Company, UPC or the Parent
resulting from a payment made in relation to the Gerzof Litigation.
2.5 Each of the parties hereto agrees to indemnify the Escrow Agent against any
loss it may suffer as a result of, or through a breach of, any of the terms
hereof by such party.
2.6 The Escrow Agent shall have no right or liability whatsoever to transfer or
otherwise dispose of or grant any interest in any of the Escrow Shares
except in accordance with the terms and conditions of this Agreement.
2.7 The voting rights in respect of the Escrow Shares held by the Escrow Agent
shall be exercised by or on behalf of the Shareholders or the Shareholders
Representative (as defined in the Shareholders Agreement) in his capacity as
authorized agent of the Shareholders.
2.8 The dividend rights in respect of the Escrow Shares, if any, shall be
distributed currently to the Shareholders, provided, however, that any
dividend rights in respect of the Escrow Shares payable in additional shares
of Parent shall be collected by the Escrow Agent and held in escrow together
with the Escrow Shares.
2.9 The Shareholder shall have no right, title or interest to and in the Escrow
Shares except only for such rights to have such Escrow Shares (in whole or
in part) transferred to it in accordance with and subject to the terms of
this Agreement, and the Shareholder herewith irrevocably waives any further
rights to the Escrow Shares which he might have had but for the provisions
of this Agreement.
2.10 Neither UPC nor the Parent shall have any right, title or interest to and
in the Escrow Shares except only for such rights to have such Escrow Shares
(in whole or in part) transferred to it in accordance with and subject to
the terms of this Agreement in satisfaction of a General Claim Amount or
Litigation Claim Amount, and each of UPC and the Parent herewith irrevocably
waives any further rights to the Escrow Shares which it might have had but
for the provisions of this Agreement.
2.11 The Parent, UPC and the Escrow Agent shall take all necessary corporate
action to give effect to the provisions of this Agreement.
2.12 The parties acknowledge and agree that upon the commencement of any claim
involving a third party giving rise to a claim under this Agreement, UPC
shall, if a claim in respect thereof is to be made against the Escrow
Shares, notify the Shareholders Representative in writing of the claim, the
commencement of that action or state of facts or circumstances; provided
that the failure to notify the Shareholders Representative shall not relieve
the Shareholders from any liability which it may have to UPC, except to the
extent that such failure to notify shall materially prejudice the defense of
such claim. In the case of the Gerzof Litigation, or in the event any other
claim shall be brought against the Escrow Shares, UPC shall notify the
Shareholders Representative and the Shareholders Representative shall be
entitled to control the defense of such claim, settlement or other
disposition of any such claim (and shall give notice to that effect to UPC)
with counsel reasonably satisfactory to the Shareholders Representative and
UPC. With respect to the defense of any such claim controlled by the
Shareholders Representative, if requested by the Shareholders
Representative, UPC shall provide the funds to defend such claims and any
such fees or expenses shall be included in the Litigation Claim Amount or
General Claim Amount, as the case may be, as stated in Section 3 of this
Agreement. UPC reserves the right to retain its own counsel in connection
with the observation or coordinated defense of any claim (including the
Gerzof Litigation). However, no amounts for separate counsel of UPC shall be
included in the Litigation Claim Amount or General Claim Amount in the event
that the Shareholders Representative elects
83
to control the defense of any such claim with counsel reasonably
satisfactory to UPC. For the avoidance of doubt, in the event the
Shareholders Representative does not elect to control the defense of any
such claim, all fees and expenses incurred by UPC shall be included in the
Litigation Claim. The parties agree that no settlement or other disposition
of any claim giving rise to a disposition of the Escrow Shares shall be made
without the prior written consent of the Shareholders Representative and
UPC. The parties each agree to render to the other parties such assistance
as may reasonably be requested in order to insure the proper and adequate
defense of any such claim or proceeding.
3. GENERAL CLAIMS
3.1 If the Parent and/or UPC shall determine that it has a claim (a "GENERAL
CLAIM") on the Company and/or on any of the Shareholders for breach of any
representation and warranty or covenant under or in connection with the
Merger Agreement and/or the Shareholders Agreement, it will issue a written
notice (a "GENERAL CLAIM NOTICE") to each of the other parties hereto;
however, notices to any Shareholders shall be made to the Shareholders
Representative on behalf of such Shareholders. A General Claim Notice may
not be issued after the General Escrow Release Date.
3.2 If a General Claim Notice is issued, the Escrow Agent shall hold the General
Escrow Shares until such date upon which it receives:
(a) a written notice (the "GENERAL ESCROW RELEASE NOTICE") executed by UPC
and the Parent confirming that the General Escrow Shares may be released
and transferred by the Escrow Agent to the Shareholder on the General
Escrow Release Date; or
(b) a written notice (the "GENERAL EXECUTION NOTICE") executed either by UPC
and the Shareholders Representative (as defined in the Shareholders
Agreement) jointly or executed by UPC by itself, in which it is set out
that the General Claim has been finally determined at a certain amount
(the "GENERAL CLAIM AMOUNT"). The determination of the General Claim
Amount in the General Execution Notice shall be done either by UPC and
the Shareholders Representative acting jointly or by UPC acting
severally, but in the latter case the General Execution Notice must be
accompanied by a copy of a final nonappealable court judgement (or, as
the case may be, final binding arbitral award) in which the General Claim
Amount is awarded to UPC and/or the Parent. The determination of the
General Claim Amount shall be binding on all parties hereto. Any costs
incurred regarding the valuation of the Aggregate Shares Value shall be
added to the General Claim Amount.
3.3 If a General Execution Notice is issued, then the Escrow Agent shall
transfer such number of the Aggregate General Escrow Shares to UPC and/or
Parent (as may be directed by UPC and the Parent, depending on to whom the
General Claim Amount is awarded) with an Aggregate Shares Value equal to the
General Claim Amount or if the Aggregate Shares Value is less than the
General Claim Amount, all of the Aggregate Escrow Shares. Notwithstanding
any other provision in this Agreement, in the event that the Aggregate
Shares Value attributable to the General Escrow Shares is less than the
General Claim Amount, Parent and UPC at their option may elect to use all or
any portion of the Litigation Escrow Shares to satisfy the remainder of the
General Claim Amount, in which case the number of Litigation Escrow Shares
shall be reduced accordingly.
3.4 Notwithstanding the provisions of Article 3.3, if a General Execution Notice
is issued with respect to a General Claim that relates exclusively to a
breach of a representation and warranty or covenant by one or more
Shareholders, then the Escrow Agent shall transfer only such number of the
Aggregate General Escrow Shares to UPC and/or the Parent (as may be directed
by UPC and the Parent, depending on to whom the General Claim Amount is
awarded) which is equal to the aggregate number of escrow shares to which
such Shareholder(s) would have been entitled but for
84
the existence of such General Claim (provided that the Aggregate Shares
Value of the shares to be so transferred shall not exceed the General Claim
Amount).
4. GENERAL ESCROW RELEASE
4.1 If no General Claim Notice has been issued before the General Escrow Release
Date, the Escrow Agent shall release and transfer to the Shareholders the
Aggregate General Escrow Shares on the General Escrow Release Date on the
basis of the ownership percentages set forth on Exhibit K of the
Shareholders Agreement.
4.2 If a General Claim Notice has been issued before the General Escrow Release
Date, the Escrow Agent shall not release and transfer the Aggregate General
Escrow Shares to any party except in accordance with the terms of a General
Release Notice or a General Execution Notice.
4.3 At the General Escrow Release Date, any Aggregate General Escrow Shares not
reserved for a pending claim covered by a General Claim Notice shall be
distributed to the Shareholders on the basis of the ownership percentages
set forth on Exhibit K of the Shareholders Agreement.
5. LITIGATION ESCROW RELEASE
5.1 The Escrow Agent shall hold the Litigation Escrow shares until such date
upon which it receives
(a) a written notice (the "LITIGATION ESCROW RELEASE NOTICE") executed by
UPC and the Parent confirming that the Litigation Escrow Shares may be
released and transferred by the Escrow Agent to the Shareholder; or
(b) a written notice (the "LITIGATION EXECUTION NOTICE") executed either by
UPC and the Shareholders Representative (as defined in the Shareholders
Agreement) jointly or executed by UPC by itself, in which it is set out
that the claims against the Company, the Parent and UPC in connection
with the Gerzof Litigation has been finally determined at a certain
amount (the "LITIGATION CLAIM AMOUNT"), which may be zero. The
determination of the Litigation Claim Amount in the Litigation Execution
Notice shall be done either by UPC and the Shareholders Representative
acting jointly or by UPC acting severally, but in the latter case the
Litigation Execution Notice must be accompanied by a copy of a final
nonappealable court judgement (or, as the case may be, final binding
arbitral award or settlement agreement). The determination of the
Litigation Claim Amount shall be binding on all parties hereto. Any costs
incurred regarding the valuation of the Aggregate Shares Value and any
losses, liabilities, damages, costs and expenses incurred by UPC,
Priority or the Company in connection with the Gerzof Litigation,
including, without limitation, attorneys fees and other defense costs,
amounts paid in settlement and amounts pursuant to judgement, shall be
added to the Litigation Claim Amount.
5.2 If a Litigation Execution Notice is issued, then the Escrow Agent shall
transfer such number of the Aggregate Litigation Escrow Shares to UPC with
an Aggregate Shares Value equal to the Litigation Claim Amount or if the
Aggregate Shares Value is less than the Litigation Claim Amount, all of the
Aggregate Escrow Shares.
5.3 The Escrow Agent shall not release and transfer the Aggregate Litigation
Escrow Shares to any party except in accordance with the terms of a
Litigation Escrow Release Notice or a Litigation Execution Notice.
5.4 Upon release of Aggregate Litigation Escrow Shares pursuant to the terms of
a Litigation Release Notice or Litigation Execution Notice, any Aggregate
Litigation Escrow Shares remaining and not reserved for any further claim in
connection with the Gerzof Litigation shall be distributed to the
Shareholders on the basis of the ownership percentages set forth on
Exhibit K of the Shareholders Agreement.
85
5.5 In the event that no Litigation Execution Notice has been issued prior to
five years after the date of this Agreement, UPC and the Parent shall issue
a Litigation Escrow Release Notice confirming that the Litigation Escrow
Shares may be released and transferred by the Escrow Agent to the
Shareholder.
6. ESCROW AGENT
6.1 The Escrow Agent shall:
(a) have the right to rely on the genuineness of any notice or communication
made to it by any of the parties hereto;
(b) not be required to enquire as to the nature of any Claim or the
correctness of any Claim Amount or as to whether a Claim Amount is
properly payable;
(c) not be liable for any loss or alleged loss arising on the part of any
party hereto from the implementation of the terms of this Agreement or
any other action taken by the Escrow Agent in the implementation of this
Agreement (except only where such action constitutes gross negligence or
wilful misconduct of the Escrow Agent);
(d) have the right to engage independent legal counsel and to rely on the
advice of such legal counsel;
(e) have the right to comply with any judgement or order issued by a court
of competent jurisdiction directing it to act in a certain manner with
respect to the Escrow Shares or with respect to its rights and
obligations hereunder;
(f) have the right to do business as a bank or financial institution with
any party hereto fully as if it were not the Escrow Agent hereunder.
7. IPO; UPC STOCK PURCHASE OPTION; RELATED MATTERS
7.1 If the IPO (as defined in the Shareholders Agreement) occurs on a date on
which any Escrow Shares are still in escrow hereunder, and if there shall be
an offer of existing shares in the Parent as contemplated by Article 6.2 of
the Shareholders Agreement of which all of the Parent Shares are to be part,
then the parties shall negotiate in good faith and enter into such
arrangements as will enable such Escrow Shares to be offered for sale in
such IPO and as will ensure that the proceeds of the offer for sale of such
Escrow Shares will be held in escrow by the Escrow Agent under the terms
(mutatis mutandis) of this Agreement in lieu of such Escrow Shares.
7.2 If not all but only a part of the Parent Shares (as defined in the
Shareholders Agreement) will be offered for sale by the Shareholder in such
IPO as contemplated by Article 6.2 of the Shareholders Agreement, then the
Escrow Shares will not be among the Parent Shares to be offered for sale by
the Shareholder in the IPO.
7.3 If the UPC Stock Purchase Option (as defined in the Shareholders Agreement)
is exercised by the Shareholders Representative on behalf of the Escrow
Agent or redeemed or purchased by UPC or a designee pursuant to Article 7 of
the Shareholders Agreement, or if any Parent Shares are sold by the Escrow
Agent pursuant to Article 8 of the Shareholders Agreement, all ordinary UPC
shares, cash, marketable securities or other property to be delivered in
exchange for the UPC Stock Purchase Option or Escrow Shares held by the
Escrow Agent shall be delivered to the Escrow Agent and shall be subject to
the same terms and conditions in this Agreement as the Litigation Escrow
Shares.
7.4 The Escrow Agent agrees to be bound by the provisions of the Shareholders
Agreement that are applicable to the Escrow Agent.
86
8. REPRESENTATIONS AND WARRANTIES
8.1 The Escrow Agent represents and warrants to each of the other parties hereto
as follows:
(a) It is duly incorporated and validly existing under the laws of the
Netherlands;
(b) It has the power to enter into this Agreement and to exercise its rights
and to perform its obligations hereunder. All necessary corporate action,
governmental and statutory approvals have been obtained and all other
action required to authorise the execution of this Agreement by it and
the fulfilment by it of it obligations hereunder has been duly taken;
(c) This Agreement constitutes its legal valid and binding obligations,
enforceable in accordance with its terms;
(d) The execution of this Agreement and the exercise of its rights and the
fulfilment of its obligations hereunder do not conflict with the laws of
the Netherlands or any provision of its Articles of Association (or other
comparable constitutional documents) and do not constitute and will not
result in a breach of any agreement, law, regulation, government policy,
license, approval, judgement or order of any court or any other
instrument having legal effect to which it is a party.
8.2 Each of UPC and the Parent represent to each of the other parties hereto as
follows:
(a) It is duly incorporated and validly existing under the laws of the
Netherlands;
(b) It has the power to enter into this Agreement and to exercise its rights
and to perform its obligations hereunder. All necessary corporate action,
governmental and statutory approvals have been obtained and all other
action required to authorise the execution of this Agreement by it and
the fulfilment by it of it obligations hereunder has been duly taken;
(c) This Agreement constitutes its legal valid and binding obligations,
enforceable in accordance with its terms;
(d) The execution of this Agreement and the exercise of its rights and the
fulfilment of its obligations hereunder do not conflict with the laws of
the Netherlands or any provision of its Articles of Association (or other
comparable constitutional documents) and do not constitute and will not
result in a breach of any agreement, law, regulation, government policy,
license, approval, judgement or order of any court or any other
instrument having legal effect to which it is a party.
8.3 The Shareholder represents and warrants to each of the other parties hereto
as follows:
(a) (if a corporation:) It is duly incorporated and validly existing under
the laws of its governing jurisdiction;
(b) He/she has the power to enter into this Agreement and to exercise
his/her rights and to perform his/her obligations hereunder. All
necessary corporate action (if the Shareholder is a corporation),
governmental and statutory approvals have been obtained and all other
action required to authorise the execution of this Agreement by him/her
and the fulfilment by him/ her of his/her obligations hereunder has been
duly taken;
(c) This Agreement constitutes his/her legal valid and binding obligations,
enforceable in accordance with its terms;
(d) The execution of this Agreement and the exercise of his/her rights and
the fulfilment of his/her obligations hereunder do not conflict with the
laws of the Netherlands or of the United States of America or any State
thereof or (if the Shareholder is a corporation) any provision of its
Articles of Association (or other comparable constitutional documents)
and do not constitute and will not result in a breach of any agreement,
law, regulation, government policy, license, approval, judgement or order
of any court or any other instrument having legal effect to which he/she
is a party.
87
9. ESCROW AGENT FEE
9.1 The Escrow Agent's fee shall be in an amount and shall be payable by the
Company as set forth in a separate letter between UPC, the Parent, the
Company and the Escrow Agent.
10. RESIGNATION OF ESCROW AGENT
If the Escrow Agent wishes to resign, it may give the parties hereto not
less than 60 days advance notice of resignation. Following receipt of such
notice of resignation, the Shareholders Representative, UPC and the Parent shall
endeavour promptly to appoint a successor Escrow Agent, who will by virtue of a
transfer of contract ("contractsoverneming") replace the existing Escrow Agent.
A successor Escrow Agent shall be a bank of international standing. The
Shareholder hereby agrees to accept such appointment and agrees to cooperate in
effecting any such transfer of contract (including any amendment of this
Agreement thereby necessitated) and in taking any such further action as may be
necessary to ensure a smooth and efficient transfer of contract (including a
transfer of the Escrow Shares) to the successor Escrow Agent. The Shareholder
hereby gives unconditional and irrevocable power of attorney to each of UPC, the
Parent and the Shareholders Representative severally in its name and on its
behalf to do all that is necessary to effect such transfer of contract.
11. NOTICES
11.1 Any notice or other communications required or permitted under this
Agreement, shall be given in writing and personally delivered or sent by
airmail, postage prepaid, or by international air courier, or by telefax
addressed as follows or to such other address as the party concerned shall
have given notice of pursuant to this Article 11:
If to UPC, to:
United Pan-Europe Communications X.X.
X.X. Xxx 00000
0000 XX
Xxxxxxxxx
Xxx Xxxxxxxxxxx
For the attention of: Ton Tuijten
If to the Parent:
Priority Telecom N.V.
Kon. Xxxxxxxxxxxxxxx 0-0
Xxxxxxxx Xxxxx
0000 HIC Amsterdam
The Netherlands
For the attention of: Xxx Xxxx
If to the Escrow Agent:
MeesPierson Trust B.V.
Xxxxxxxxxxx 000
0000 XX Xxxxxxxxx
For the attention of: Otger X.X. van der Nap
If to the Shareholders Representative, to:
Priority Telecom N.V.
Kon. Xxxxxxxxxxxxxxx 0-0
Xxxxxxxx Xxxxx
0000 HIC Amsterdam
The Netherlands
For the attention of: Xxxxx Xxxxxx
88
If to the Shareholder, to:
The address of the Shareholder as recorded at the relevant time
In the share register of the Parent
11.2 Any notice or other document shall be deemed to have been served:
(a) If delivered by hand, then at the time of delivery, if delivered between
the hours of 9.30 a.m. and 5.30 p.m. (local time at place of receipt) if
sent on a Business Day; or if not, then at 9.30 a.m. (local time) on the
next following Business Day;
(b) If posted, then at 10.00 a.m. (local time) on the day four (4) Business
Days after it was put in the post; or
(c) If sent by air courier, then at 10.00 a.m. (local time) on the day two
(2) Business Days after it was sent; or
(d) If sent by telefax, then at the time sent, if sent between the hours of
9.30 a.m. and 5.30 p.m. (local time at the place of receipt) if sent on
the Business Day; or, if not, then at 9.30 a.m. (local time) on the next
following Business Day.
For the purpose of this Article 9, a Business Day shall be deemed a day on
which bank's branches situated in Amsterdam and New York are open to their
clients for general business purposes.
12. POWER OF ATTORNEY
12.1 The Shareholder herewith gives unconditional (save as expressly provided in
this Article 12) and irrevocable power of attorney to the Shareholders
Representative and to any replacement of the Shareholders Representative as
contemplated in Article 4.5 of the Shareholders Agreement, on behalf of the
Shareholder:
(a) to take such action which this Agreement contemplates may be taken by
the Shareholder;
(b) to take such action as may reasonably be deemed necessary or appropriate
by the Shareholders Representative to implement the provisions of this
Agreement in accordance with its term; and
(c) to take all further action as are ancillary to the actions mentioned in
(a) and (b) above.
12.2 The Shareholder agrees that he/she will be bound by any action taken by the
Shareholders Representative in accordance with the provisions of
Article 12.1 above, and he/she will if requested by UPC and/or the Parent
confirm in writing to be so bound and to ratify the action so taken.
12.3 If for any reason the Shareholders Representative will not take any action
which this Agreement contemplates he may take on behalf of the Shareholder,
then UPC or the Parent, as the case may be, may require the shareholder
himself/herself to take such action, and the Shareholder will comply with
any such requirement.
13. AMENDMENTS
This Agreement may not be amended, supplemented or changed except by a
written instrument making specific reference to this Agreement signed by the
parties hereto. Any amendments which are not materially adverse to the position
of the Shareholder may be negotiated and agreed on behalf of the Shareholder by
the Shareholders Representative.
14. SAVING CLAUSE
If any position of this Agreement shall be held by any court of competent
jurisdiction or arbitral tribunal to be illegal, void or unenforceability of
such provision shall (i) be of no force and effect, but the illegality or
unenforceability of provision shall have no effect upon and shall not impair the
enforceability of any other provision of this Agreement and (ii) the parties
shall commit themselves to replace the non-binding and/or non-enforceable
provisions by provisions that are binding and
89
enforceable and differ as little as possible--taking into account the object and
purpose of this Agreement--from the non-binding and/or non-enforceable
provisions. The Shareholder will in this instance be represented by the
Shareholders Representative, whose agreement on the replacement of such
provisions shall be binding on the Shareholder.
15. ASSIGNMENT
None of the rights or obligations under this Agreement may be undersigned or
transferred by the Shareholder or the Escrow Agent without prior written consent
of UPC and the Parent.
16. ANNULMENT, RESCISSION AND DISSOLUTION
The parties to this Agreement waive their rights, if any, to annul, (partly)
rescind, (partly) dissolve ("ONTBINDEN") or cancel this Agreement, or to request
annulment, (partly) dissolution ("ONTBINDEN") or cancellation of this Agreement
after the Closing Date on the basis of articles 6:265 or 6:228 of the Dutch
Civil Code.
17. GOVERNING LAW AND JURISDICTION
17.1 This Agreement shall be governed by and construed in accordance with the
laws of the Netherlands.
17.2 It is agreed that any power of attorney executed in connection with this
Agreement or any other document executed pursuant to the transactions
contemplated hereby shall be governed by and constructed in accordance with
the laws of the Netherlands.
17.3 All disputes arising out or in connection with this Agreement which cannot
be amicably settled between the parties hereto shall be submitted to the
exclusive jurisdiction of the competent courts in Amsterdam, the
Netherlands.
18. COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original, but all of which taken together shall constitute
one and the same instrument.
19. TERMINATION
This Agreement shall terminate automatically in the event the Merger
Agreement is terminated.
90
IN WITNESS WHEREOF, this Agreement is signed by UPC and the Parent on
August 11, 2000 and by the Shareholder on the day and date hereinbelow specified
by the Shareholder.
_____________________________________
United Pan-Europe Communications N.V.
_____________________________________
Priority Telecom N.V.
_____________________________________
The Shareholder
Date of Signature:
_____________________________________
MeesPierson Trust B.V.
91
