UNITED INTERNATIONAL HOLDINGS, INC.
SECURITIES ACCOUNT AGREEMENT
This Securities Account Agreement (the "Agreement"), dated as of the 6th
day of July, 1999, by and between United International Holdings, Inc., a
Delaware corporation doing business as UnitedGlobalCom (the "Company"), and
Firstar Bank of Minnesota, N.A. (the "Deposit Agent"), for the benefit of the
holders (individually a "Holder" and collectively the "Holders") of the
depositary shares (the "Depositary Shares"), each of which is equivalent to 1/20
of a share of 7% Series C Senior Cumulative Convertible Preferred Stock (the
"Preferred Stock").
This Agreement is made to induce all present and future Holders to purchase
the Depositary Shares by establishing for their exclusive benefit a securities
account (the "Securities Account") to provide for a quarterly cash payment to
the Holders in an amount equal to $0.875 per Depositary Share (the "Quarterly
Return Amount") in the manner hereinafter provided. Notwithstanding any other
provision of this document to the contrary, pending release of the Deposit Funds
(as defined) in the manner specified herein, the parties hereto consider the
Deposit Funds and any other assets in the Securities Account (as defined) to be
assets of the Holders of Depositary Shares and not the Company.
NOW THEREFORE, the parties hereto agree as follows:
1. DEFINITIONS.
(a) "Common Stock" means the common stock of the Company, par value
$0.01 per share.
(b) "Certificate" means the Certificate of Designation filed with the
Delaware Secretary of State establishing the Preferred Stock as a series of
preferred stock of the Company designated as "7% Series C Senior Cumulative
Convertible Preferred Stock."
(c) "Closing Price" means, for each Trading Day, the last sales price
or, in case no such reported sale takes place on such day, the average of the
last reported bid and asked price, in either case on the principal national U.S.
securities exchange on which the shares of Common Stock are admitted to trading
or listed, or if not listed or admitted to trading on such exchange, the
representative closing bid price as reported by the Nasdaq National Market, or
if the Nasdaq National Market is no longer reporting such information, or if not
so available, the fair market price as determined, in good faith, by the Board
of Directors of the Company.
(d) "Deposit Fund" means $29,750,000.
(e) "Deposit Expiration Date" means June 30, 2000.
(f) "Deposit Payment Date" means March 31, June 30, September 30 and
December 31 of each year commencing September 30, 1999 and continuing through
and including Deposit Expiration Date.
(g) "Depositary" means Firstar Bank of Minnesota, N.A.
(h) "Depositary Receipt" means a written receipt evidencing ownership
of Depositary Shares.
(i) "Direction Notice" means a notice from the Company, delivered to
the Deposit Agent on or prior to the Notice Date, directing the Deposit Agent to
purchase from the Company, for transfer to each Holder, in lieu of all or a
portion of the Quarterly Return Amount on the next Deposit Payment Date, that
number of whole shares of Common Stock determined by dividing such Quarterly
Return Amount by the Market Value Amount as of the date of such notice.
(j) "Market Value" means, as of any date, the average of the daily
Closing Price for the five consecutive Trading Days ending on such date. The
Deposit Agent shall have no duty or responsibility for the calculation of the
Market Value.
(k) "Market Value Amount" means (i) 97% of the Market Value of the
Common Stock, if a shelf registration statement registering the resale of such
shares is effective or the shares of Common Stock are eligible for resale
pursuant to Rule 144(k) under the Securities Act of 1933, as amended or (ii) 93%
of the Market Value of the Common Stock, in each case determined as of the date
of such notice.
(l) "Notice Date" means the tenth day prior to any Deposit Payment
Date.
(m) "Offering" means the offering of Depositary Shares described in the
Company's Offering Memorandum dated June 29, 1999.
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(n) "Preferred Stock" has the meaning given it in the opening paragraph
of this Agreement.
(o) "Record Date" means the tenth business day prior to the Deposit
Payment Date.
(p) "Trading Day" means any business day on which the Nasdaq National
Market (or any U.S. national securities exchange or quotation system on which
the Common Stock is then listed) is open for the transaction of business.
(q) Any capitalized terms not otherwise defined herein shall have the
meaning attributed to them in the Offering Memorandum.
2. ESTABLISHMENT OF SECURITIES ACCOUNT.
(a) The Company hereby agrees that the Securities Account shall be
established in connection with the Offering and shall be held subject to the
terms and conditions of this Agreement.
(b) Simultaneously with the closing of the Offering or any
over-allotment closing of the Offering, the Initial Holders shall deliver the
Deposit Fund to the Deposit Agent against the Deposit Agent's written
acknowledgment and receipt of the Deposit Fund, in the form attached hereto as
Exhibit A, which amount the Deposit Agent will deposit into or credit to the
Securities Account and hold on behalf of and for the benefit of the Holders
pursuant to the terms of this Agreement. Any amounts held by the Deposit Agent
in the Securities Account shall be invested in any United States treasury
securities or any money market fund, sponsored by any registered broker dealer
or mutual fund distributor, investing solely in direct obligations of the United
States of America or any agency thereof or obligations fully and unconditionally
guaranteed by the United States of America or any agency thereof. All interest
accruing on moneys held in the Securities Account and any earnings realized from
investments permitted hereunder shall be credited to the Securities Account and
any loss resulting from investments permitted hereunder shall be similarly
charged. The Deposit Agent shall have no responsibility for determining whether
funds held in the Securities Account shall have been invested in such a manner
so as to comply with the requirements of this Section 2(b).
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3. DISTRIBUTION, REDUCTION AND TERMINATION OF SECURITIES ACCOUNT.
(a) Unless on or prior to a Notice Date the Company shall have
delivered to the Deposit Agent a Direction Notice, the Deposit Agent shall
deliver to each Holder the Quarterly Return Amount on each Deposit Payment Date.
If the Company shall have delivered a Direction Notice, substantially in the
form attached hereto as Exhibit B, to the Deposit Agent on or prior to the
Notice Date, the Deposit Agent shall, as instructed by the Company in such
Direction Notice, purchase from the Company, for transfer to each Holder in lieu
of all or a portion of the Quarterly Return Amount on the next Deposit Payment
Date, that number of whole shares of Common Stock determined by dividing the
Quarterly Return Amount (or portion thereof to be paid in shares of Common
Stock) by the Market Value Amount as of the Notice Date. In consideration for
the issuance of such shares the Deposit Agent shall pay to the Company all or
that portion (as the case may be) of the Quarterly Return Amount for such
period.
(b) Immediately after any conversion of the Depositary Shares, the
Company shall be paid by the Deposit Agent any funds remaining in the Securities
Account allocable to the Depositary Shares so converted. Such allocation shall
be made pro rata based upon the number of Depositary Shares so converted.
(c) On the Deposit Expiration Date, after distributing all Quarterly
Return Amounts, the Deposit Agent shall deliver to the Company any cash
remaining in the Securities Account as of such date and terminate the Securities
Account.
(d) Delivery of a Direction Notice directing the Deposit Agent to
purchase Common Stock for the accounts of Holders shall also authorize the
Company to issue and deliver such shares to the Holders immediately upon receipt
by the Company of the purchase price for them.
(e) This Agreement shall remain in full force and effect until all
amounts held hereunder by the Deposit Agent have been finally distributed in
accordance herewith.
(f) Any fractional interest in a share of Common Stock resulting from
payment of the Quarterly Return Amount in Common Stock will be paid in cash
based on the last reported sale price of the Common Stock on the Nasdaq National
Market (or any national securities exchange or authorized quotation system on
which the Common Stock is then listed) at the close of business on the trading
day next preceding the date of conversion or such later time as the Company is
legally and contractually able to pay for such fractional shares.
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4. RECORD DATE. The Quarterly Return Amount or, if a Direction Notice has
been delivered by the Company, Common Stock, shall be paid or delivered to the
Holders of record of the Depositary Shares, as they appear on the Company's
stock register 10 business days prior to each Deposit Payment Date.
5. RIGHTS, DUTIES AND IMMUNITIES OF THE DEPOSIT AGENT. In order to induce
the Deposit Agent to act as Deposit Agent hereunder, the Company hereby
covenants and agrees with the Deposit Agent as follow:
(a) The Deposit Agent shall not in any way be bound or affected by any
amendment, modification or cancellation of this Securities Account Agreement,
unless the same shall have been agreed to in writing by the Deposit Agent.
(b) The Deposit Agent shall be entitled to rely, and shall be fully
protected in acting in reliance upon, any Direction Notice or other instructions
or directions furnished to the Deposit Agent in writing by the proper party
under this Securities Account Agreement and shall be entitled to treat as
genuine, and as the document it purports to be, any letter, instruction or other
document or instrument delivered to the Deposit Agent hereunder and believed by
the Deposit Agent to be genuine and to have been presented by the proper party
or parties, without being required to determine the authenticity or correctness
of any fact stated therein, the propriety or validity thereof, or the authority
or authorization of the party or parties making and/or delivering the same to do
so.
(c) This Agreement sets forth exclusively the duties and obligations of
the Deposit Agent with respect to any and all matters pertinent to its acting as
Deposit Agent hereunder.
(d) The Deposit Agent undertakes to perform only such duties as are
expressly set forth in this Securities Account Agreement, and no other duty,
obligation or covenant shall be implied or enforceable against the Deposit Agent
by any person. Without limiting the effect of this Section 5(d), the Deposit
Agent shall have no liability or obligation to the Company, any Holder or any
person claiming by or through any of them: (i) to review or examine any
instrument, agreement or document other than this Agreement and any notice
provided for herein; (ii) to determine whether any conditions precedent to a
disbursement of funds from the Securities Account, other than the receipt of
written notices provided for in Section 3 hereof, have been or will be satisfied
or otherwise to investigate any notice received by the Deposit Agent hereunder;
(iii) to evaluate or determine the validity, legality or veracity of any action
or omission by any person; (iv) to communicate with any person other than as
expressly provided for in this Agreement; (v) to make any payment hereunder from
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any source other than funds in the Securities Account; (vi) for the issuance of,
delivery to or receipt by a Holder of Common Stock purchased by the Deposit
Agent hereunder; (vii) for any action or omission of the Deposit Agent taken or
made upon the written instructions of the Company, whether or not the persons
giving such instructions were in fact authorized to do so; (viii) for any other
action or omission of, or for errors in judgment by, the Deposit Agent under or
in connection with this Agreement taken or made in good faith and without
negligence or willful misconduct; (ix) for any action or omission of any third
party, including the Company or any Holder; (x) for any change in the value of
any asset held in the Securities Account or for any loss on disposition of any
investment of the Deposit funds; and (xi) for incidental, consequential or
punitive damages in any event.
(e) The Company covenants and agrees to indemnify and hold the Deposit
Agent and each of its directors, officers, employees and agents (the Deposit
Agent and any such person or entity seeking indemnification hereunder being
hereinafter referred to as an "Indemnified Party") harmless from and against,
and upon demand reimburse each indemnified party for, any and all losses,
claims, damages, liabilities, costs and expenses (including expenses of its
legal counsel) (collectively, "Indemnified Losses") which may be paid, incurred
or suffered by such Indemnified Party or to which such Indemnified Party may
become subject by reason of or in connection with the administration of the
Deposit Agent's duties as Deposit Agent hereunder (including, but not limited
to, any action taken or omitted by the Deposit Agent in connection with this
Agreement or any action allegedly so taken or omitted) or by reason of, or as a
result of, the Deposit Agent's compliance with the instructions set forth herein
or with any instructions delivered to the Deposit Agent pursuant hereto, except
with respect to Indemnified Losses which shall be the result of negligence or
willful misconduct on the part of such Indemnified Party.
(f) In the event of any controversy or dispute hereunder, or with
respect to any question as to the construction of this Agreement or any action
so taken by it hereunder, the Deposit Agent may, in its discretion, obtain the
advice of counsel and shall incur no liability for any action taken, suffered or
omitted by it hereunder in good faith and in accordance with the advice or
opinion of such counsel.
(g) If any part of the Deposit Fund is at any time attached, garnished
or levied upon or under any court order, or in case the payment, assignment,
transfer, conveyance or delivery of any of the Deposit Fund shall be stayed or
enjoined by any court order, or in case any order, writ, judgment or decree
shall be made or entered by any court affecting the Deposit Fund or any part
thereof, then and in any of such events, the Deposit Agent is authorized, in its
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sole discretion, to rely upon and comply with any such order, writ, judgment or
decree. The Deposit Agent shall not be liable to any of the parties hereto, to
any Holder or to any other person, firm or corporation by reason of such
compliance even though such order, writ, judgment or decree may be subsequently
reversed, modified, annulled, set aside, vacated, found to have been entered
without jurisdiction, or found to be in violation of or beyond the scope of a
constitution or a law.
(h) Notwithstanding anything to the contrary contained therein, if the
Deposit Agent shall be uncertain as to its duties or rights hereunder, shall
receive any notice, advice, direction, or other document from the Company with
respect to the Deposit Fund which, in its opinion, is in conflict with any of
the provisions of this Agreement, or should be advised that a dispute has arisen
with respect to the payment, ownership, or right of possession of the Deposit
Fund or any part thereof (or as to the delivery, non-delivery, or content of any
notice, advice, direction, or other document), the Deposit Agent shall be
entitled (but not obligated), without liability to anyone, under any
circumstance to refrain from taking any action other than to use its best
efforts to keep safely the Deposit Fund until the Deposit Agent shall be
directed otherwise in writing by the Company and a majority of the Holders or by
an order, decree or judgment of a court of competent jurisdiction which has been
finally affirmed on appeal or which by lapse of time or otherwise is no longer
subject to appeal, but the Deposit Agent shall be under no duty to institute or
defend any proceeding, although it may do so.
(i) The Company shall have the right to cause the Deposit Agent to be
relieved of its duties hereunder and to select a substitute Deposit Agent, upon
the expiration of thirty (30) days following delivery of written notice of
substitution to the Deposit Agent. Upon selection of such substitute Deposit
Agent, such substitute Deposit Agent and the Company shall enter into an
agreement substantially identical to this Agreement and, thereafter, the
replaced Deposit Agent shall be relieved of its duties and obligations to
perform hereunder, except that the replaced Deposit Agent shall transfer to the
substitute Deposit Agent upon request therefor the Securities Account and copies
of all books, records, plans and other documents in the replaced Deposit Agent's
possession relating to such funds or this Agreement.
(j) Upon not less than 30 days' written notice to the Company and the
Holders of its intention to resign under this Agreement, the Deposit Agent may
resign as Deposit Agent hereunder by selecting, as a successor Deposit Agent,
any other Deposit Agent as directed or approved by the Company (which approval
shall not be unreasonably withheld). Such resignation shall take effect upon
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delivery by the resigning Deposit Agent of the Securities Account to such
successor Deposit Agent: the resigning Deposit Agent shall thereupon be
discharged of all its duties and obligations hereunder. In addition, the Deposit
Agent shall be discharged of all of its duties and obligations hereunder upon
its deposit of the Securities Account with a court of competent jurisdiction.
The Company and the Holders each hereby irrevocably consents and submits to the
jurisdiction of such court in any such action and waives all rights to contest
the jurisdiction of such court.
(k) The Company hereby authorizes the Deposit Agent, if the Deposit
Agent is threatened with litigation or is sued, to interplead all interested
parties in any court of competent jurisdiction and to deposit the Securities
Account with the clerk of that court.
(l) The Deposit Agent's duties, obligations and liabilities hereunder,
except as a result of the Deposit Agent's negligence or willful misconduct, will
terminate upon its delivery of all the Securities Account under any provision of
this Agreement. The provisions of Section 5(e) and of this Section 5(l) shall
survive any such termination.
6. EXPENSES. The Deposit Agent shall be entitled to customary fees and
expenses for performing its duties hereunder, as may be agreed from time to time
by the Company and the Deposit Agent. The Deposit Agent shall be entitled to
prompt reimbursement of all reasonable expenses incurred by the Deposit Agent in
carrying out its duties hereunder, including, without limitation, travel and
other out-of-pocket expenses.
7. NOTICES. All notices, requests, demands and other communications
hereunder shall be deemed to have been duly given if delivered by hand or
mailed, certified or registered mail, return receipt requested, with postage
prepaid:
(a) if to the Holders, to their address as set forth in the stock
transfer records of the Company:
(b) if to the Company, to UnitedGlobalCom, 0000 Xxxxx Xxxxxx, Xxxxx
0000, Xxxxxx, Xxxxxxxx, 00000, Attn: President, or to such person or address as
the Company shall designate in writing, with a copy to Holme Xxxxxxx & Xxxx LLP,
0000 Xxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxxxxx 00000, Attn: Xxxxx X. Xxxxxx.
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(c) if to Deposit Agent, to Firstar Bank of Minnesota, N.A., 000 Xxxx
Xxxxx Xxxxxx, Xx. Xxxx, Xxxxxxxxx 00000-0000, Attn: Xxxxx Xxxxxx.
Any party may change the address (or the person to whose attention such notice
is directed) by notice given to the other parties hereto as aforesaid.
8. MISCELLANEOUS.
(a) BINDING EFFECT. This Agreement shall be binding upon the parties
hereto and their respective heirs, personal representatives, executors,
successors and assigns.
(b) COUNTERPARTS. This Agreement may be executed in any number of
counterparts all of which, taken together shall constitute one fully executed
agreement.
(c) NO AMENDMENTS. This Agreement may not be modified or amended, nor
any provision hereof be waived, except by a writing duly executed by the Deposit
Agent, the Company and by a majority of the Holders.
(d) GOVERNING LAW. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of Colorado, without
reference to or application of rules or principles of conflicts of law.
(e) HEADINGS. Headings, sections and subsections contained in this
Agreement are for convenience or reference purposes only and shall not affect
the meaning or interpretation of this Agreement.
(f) SPECIFIC PERFORMANCE. In the event of the failure by a party hereto
to give any notice required under the terms of this Agreement, the other parties
hereto shall be entitled to specific performance by such non-performing party.
(g) SEVERABILITY. If any provisions of this Agreement shall be declared
by any court of competent jurisdiction illegal, void or unenforceable, the other
provisions shall not be affected, but shall remain in full force and effect.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date and the year first above written.
UNITED INTERNATIONAL HOLDINGS, INC.
By: /s/ Xxxxx X.Xxxxxxxx
----------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Senior Vice President and Secretary
FIRSTAR BANK OF MINNESOTA, N.A.,
as Depositary
By: /s/ Xxxxx X. Xxxxxx III
----------------------------------------
Name: Xxxxx X. Xxxxxx III
Title: Vice President
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EXHIBIT A
DEPOSIT RECEIPT
THE UNDERSIGNED hereby acknowledges receipt from the Initial Purchasers (as
defined in the Offering Memorandum dated June 29, 1999) of Treasury Securities
with a value of $ representing a portion of the sales proceeds from that certain
private placement of 8,500,000 Depositary Shares (each such Depositary Share is
equivalent to 1/20 of a share of 7 % Series C Senior Cumulative Convertible
Preferred Stock, par value $0.01 per share) of the Company.
The undersigned, as Deposit Agent for the Company (the "Deposit Agent")
has, in accordance with that certain Securities Account Agreement, dated July 6,
1999 by and between the Company and the Deposit Agent, as deposit agent (the
"Securities Account Agreement"), deposited the Deposit Fund in the Securities
Account (as such term is defined in the Securities Account Agreement).
FIRSTAR BANK
OF MINNESOTA, N.A.
By:
Name:
Title:
Date: _____, 1999
EXHIBIT B
FORM OF DIRECTION NOTICE
[LETTERHEAD OF THE COMPANY]
[DATE]
[DEPOSITARY]
Re: Direction Notice No. [_______________]
Ladies and Gentlemen:
We refer to the Securities Account Agreement dated as of the 6th day of
July, 1999 between you, as Deposit Agent, and United International Holdings,
Inc., a Delaware corporation (the "Company"). Unless otherwise specified,
capitalized terms used herein shall have the meaning given in the Securities
Account Agreement. This letter constitutes a Direction Notice under the
Securities Account Agreement.
The undersigned hereby notifies you that you are directed, pursuant to
Paragraph 3(a) of the Securities Account Agreement, to purchase from the
Company, for delivery to each holder of Depositary Shares in lieu of the
Quarterly Return Amount on the next Deposit Payment Date, shares of Common Stock
for $ of Quarterly Return Amount.
In connection with the requested disbursement, the undersigned hereby
notifies you that; the Company will issue and deliver, for and on your behalf,
the shares of Common Stock acquired by you directly to the holders of the
Depositary Shares. The Deposit Agent is entitled to rely on the foregoing in
disbursing funds related to this Direction Notice.
UNITED INTERNATIONAL
HOLDINGS, INC.
By:
Name:
Title:
