EXHIBIT 10.20
TAX LIABILITY AGREEMENT
This Tax Liability Agreement ("Agreement") has been made by and between UNITED
AND PHILIPS COMMUNICATIONS B.V., a private company with limited liability
organized under the laws of The Netherlands ("UPC"), PHILIPS COORDINATION
CENTER, N.V., a private company with limited liability organized under the laws
of Belgium ("PCC"); PHILIPS MEDIA B.V., a private company with limited liability
organized under the laws of The Netherlands ("Philips Media"); PHILIPS MEDIA
NETWORKS, B.V., a private company with limited liability organized under the
laws of The Netherlands and a wholly-owned subsidiary of Philips Media ("Philips
Networks"); UNITED INTERNATIONAL HOLDINGS, INC., a corporation organized under
the laws of the State of Delaware in the United States of America ("UIHI"); and
JOINT VENTURE INC., a corporation organized under the laws of the State of
Delaware and a wholly-owned subsidiary of UIHI ("JVI"), effective as of October
7, 1997.
WITNESSETH
WHEREAS, in connection with the establishment of UPC pursuant to the
Contribution and Joint Venture Agreement entered into by Philips Media and UIHI
on October 13, 1994 ("CJV Agreement"), Radio Public N.V. ("Radio Public"), a
lower tier Belgium subsidiary of Philips Electronics N.V. ("Philips N.V."),
demerged into (i) a new company also named Radio Public ("RP"), and (ii) a new
company named Philips Estate, N.V., a private company with limited liability
owned by Philips N.V., and thereafter all shares of RP were contributed to UPC;
and
WHEREAS, the said demerger was recognized as a tax-free transaction on May 16,
1995 by the Rulings Commission in Belgium according to the procedure set forth
in Article 345, section 1.1. of the Belgium Income Tax Code ("I.T.C.") (such
recognition being referred to hereafter as the "Consent"); and
WHEREAS, the application for the Consent submitted on December 23, 1994 to the
Rulings Commission stated that (i) PCC subscribed, on October 27, 1994, to a BEF
3,863,750,000 bearer bond issued by Telekabel Satelliten Fernsehnetz
Betriebsgesellshaft GmbH (Wien) ("Telekabel") in order to finance Telekabel's
take over of certain Austrian cable interests, and that (ii) the participation
in PCC held by Radio Public would be transferred in part to RP (13,750 shares)
and in part to Philips Estate (13,950 shares); and
WHEREAS, Article 2.1.(c)(iv) of the CJV Agreement provides that any tax
liability without limitation arising solely as a result of the demerger of Radio
Public will be borne by Philips Media; and
WHEREAS, JVI, UIHI and UPC, as the case may be, wish to acquire, and Philips
Media wishes to sell, all interests acquired by Philips Media or its subsidiary,
Philips Networks, in UPC and in UIHI in connection with the formation of UPC
and, to facilitate that desire, Philips Media, Philips Networks, UIHI and JVI
have agreed to cause UPC to purchase the ordinary shares of UPC and the ordinary
shares of UIHI held by Philips Networks, and JVI will purchase the "PIK
Notes" held by Philips Media (the "Purchase Transaction"), pursuant to the terms
and conditions of a Securities Purchase and Conversion Agreement dated October
7, 1997 ("SPC Agreement"); and
WHEREAS, UIHI has elected to proceed with the Purchase Transaction; and
WHEREAS, in connection with the Purchase Transaction, Philips Media, Philips
Networks, UIHI, JVI, UPC and PCC have agreed to complete the actions required to
cause the shares in PCC owned by RP to be sold to a company controlled by
Philips N.V. and to cause PCC to sell the bearer bond issued by Telekabel (all
of such actions or similar actions being referred to collectively hereafter as
the "Demerger Related Actions".
NOW, THEREFORE, THE PARTIES HERETO AGREE AS FOLLOWS.
AGREEMENT
1. Retention of All Demerger and Demerger Related Tax Liabilities by Philips
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Media. Notwithstanding any actions which Philips Media, Philips Networks, UPC,
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UIHI, JVI or any other entities may take (a) to effect the Purchase Transaction
pursuant to the SPC Agreement and (b) to carry out the Demerger Related Actions,
if any such Demerger Related Actions actually occur, the provisions of Article
2.1.(c)(iv) of the CJV Agreement shall continue in effect and, in accordance
therewith and with provisions of this Agreement, any and all tax liabilities,
without limitation, arising as a result of the demerger of Radio Public and any
tax liabilities without limitation arising as a result of any Demerger Related
Actions shall be the liability of and shall be borne exclusively by Philips
Media, and Philips Media shall hold harmless and indemnify RP, UPC, PCC, JVI
and UIHI from and against any and all losses, costs, claims or damages that
arise in relation to any such tax liabilities.
2. Allocation of All Bearer Bond Capital Gain Tax Liability to UPC. Any tax
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liability arising for PCC from the sale of the Telekabel bearer bond and which
is attributable to and imposed on proceeds received by PCC in excess of the
bonds par value shall be borne solely by and shall be the sole liability of UPC
and UPC shall hold harmless and indemnify PCC from and against any and all
losses, costs, claims or damages that arise in relation to such tax liability.
Any tax liability or tax benefit arising for PCC from the sale of the Telekabel
bearer bond shall be the sole liability or the sole benefit of PCC provided the
proceeds received by PCC from the sale thereof are less than or equal to the par
value of the Telekabel bearer bond.
3. Allocation of All Bearer Bond Interest Tax Liability to UPC. Any tax
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liability arising for PCC in relation to the interest rate applied to the bearer
bond issued by Telekabel shall be the sole liability of and shall be borne
solely by UPC and UPC shall hold harmless and indemnify PCC from and against any
and all losses, costs, claims and damages that arise in relation to such tax
liability.
4. Notice and Cooperation. PCC, Philips Networks or Philips Media shall
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immediately notify UPC of any discussions with or claims by the Belgium Tax
Administration which may
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result in the assessment of tax to PCC and the allocation of tax liability to
UPC under paragraphs two and three of this Agreement. PCC, Philips Networks and
Philips Media shall cooperate with UPC to defend UPC's interests against the
assessment of any such tax. All costs incurred by PCC, Philips Networks and
Philips Media with respect to such cooperation shall be borne by UPC. UPC, JVI
or UIHI shall immediately notify Philips Media of any discussions with or claims
by the Belgium Tax Administration which may result in the assessment of tax to
UPC and the allocation of tax liability to RP or an entity related to Philips
Media under paragraph one of this Agreement. UPC, JVI and UIHI shall cooperate
with Philips Media to defend its interests or a related entity's interests,
against the assessment of any such tax. All costs incurred by UPC, JVI and UIHI
with respect to such cooperation shall be borne by Philips Media.
All notices under this Agreement shall be in writing and shall be deemed to
have been duly given if delivered in person or by mail or overnight courier,
postage prepaid, or sent by telex, telegram or telecopier (confirmed by mail
with postage prepaid), as follows:
(a) if to Philips Media, to it at:
Philips Media B.V.
X.X. Xxx 000
0000 XX Xxxxxxxxx
Xxx Xxxxxxxxxxx
Attention: Corporate Legal Department
(b) if to UPC, to it at:
United and Philips Communications B.V.
Xxxx. Xxxxxxxxxxxx 000
0000 XX Xxxxxxxxx
Xxx Xxxxxxxxxxx
Attention: Senior Managing Director
5. Governing Law and Dispute Resolution. This Agreement shall be governed by
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and construed in accordance with the laws of the State of Colorado and any
disputes arising under or in relation to this Agreement shall be finally settled
by three arbitrators [at a location in the United States as agreed to between
UIHI and Philips Media B.V, in accordance with the International Arbitration
Rules of the American Arbitration Association (the "Rules"). The arbitration
shall be conducted in English and the arbitrators shall be appointed by
agreement of the parties hereto that are parties to the arbitration or, if those
parties cannot agree on three arbitrators by the date set for such agreement in
the Rules, shall be appointed in accordance with the Rules.
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IN WITNESS WHEREOF, the Parties hereto have duly signed this Agreement as of the
date first written above.
UNITED AND PHILIPS COMMUNICATIONS B.V.
By /s/ Xxxx X. Xxxxxxxxx
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Name
Title
By /s/ X. Xxxxxx-Xxxxx
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Name
Title
PHILIPS COORDINATION CENTER, N.V.
By /s/ X.X. xxx Xxxxx /s/ X. xxx Xxxxx
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Name X.X. xxx Xxxxx X. xxx Xxxxx
Title Director Director
PHILIPS MEDIA B.V.
By /s/ R.J.A. xx Xxxxx /s/ M. Sevenans
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Name R.J.A. xx Xxxxx M. Sevenans
Title Director Director
PHILIPS MEDIA NETWORKS, B.V.
By /s/ R.J.A. xx Xxxxx /s/ M. Sevenans
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Name R.J.A. xx Xxxxx M. Sevenans
Title Director Director
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UNITED INTERNATIONAL HOLDINGS, INC.
By /s/ Xxxx X. Xxxxxxxxx
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Name
Title
JOINT VENTURE, INC.
By /s/ Xxxx X. Xxxxxxxxx
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Name
Title
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