INTERIM CONSORTIUM AGREEMENT
THIS INTERIM CONSORTIUM AGREEMENT (this "AGREEMENT") is made as of August 21,
2005 among:
(1) KKR Millennium Fund (Overseas), Limited Partnership and KKR European
Fund, Limited Partnership (collectively "KKR INVESTORS");
(2) Permira Europe III L.P.1, Permira Europe III L.P.2, Permira Europe III
GmbH & Co KG, Permira Europe III Co-investment Scheme, Permira
Investments Limited (collectively "PERMIRA INVESTORS"); and
(3) PKS Media S.a x.X., a limited liability company organized under the
laws of the Grand Duchy of Luxembourg ("HOLDCO" and together with KKR
Investors and Permira Investors, the "PARTIES").
WHEREAS:
(A) KKR Investors and Permira Investors (each, an "INVESTOR" and
collectively, the "INVESTORS") wish to acquire from SBS Broadcasting
S.A. (the "SELLER") all or substantially all of its assets and assume
all or substantially all of its liabilities (collectively the
"TRANSACTION").
(B) On or around the date hereof, (i) Holdco will sign a share purchase
agreement with the Seller (the "SPA") in respect of the Transaction,
(ii) each of the Investors will sign an equity commitment letter (an
"EQUITY COMMITMENT LETTER") committing such Investor, subject to the
conditions described therein, to fund its equity commitment to
capitalize Holdco on the date of closing of the Transaction (the
"CLOSING DATE") and (iii) Holdco will enter into definitive financing
agreements for the purpose of financing the Transaction (collectively,
the "FINANCING DOCUMENTS"). The Transaction ultimately will be effected
through one or more acquisition vehicles (collectively, "BIDCO"), which
ultimately shall be jointly owned by the Investors (or entities formed
by them) indirectly through Holdco and/or its subsidiaries (each, an
"INTERMEDIATE HOLDCO"). Accordingly, on or around the Closing Date,
Holdco will assign its rights and obligations under the SPA and the
Financing Documents to the Intermediate Holdcos and Bidco, as
contemplated by the Transaction Structure (defined below).
(C) The Parties now wish to enter into this Agreement to agree various
matters relating to conduct of the Transaction.
NOW THEREFORE, THE INVESTORS DECLARE AND AGREE AS FOLLOWS:
1. INTERIM PERIOD MATTERS
1.1 The Parties will cooperate reasonably and in good faith with each other
with the aim of agreeing upon all of the terms and conditions of the
Transaction. On the date hereof (i) the Investors will sign their
respective Equity Commitment Letters, (ii) Holdco will sign the SPA and
the Financing Documents, and (iii) the Parties will sign or cause to be
signed such other documents as may be necessary or appropriate to be
executed by the Parties in connection with the Transaction (such other
documents, together with the Equity Commitment Letters, the SPA, and
the Financing Documents, collectively, the "TRANSACTION DOCUMENTS").
1.2 Prior to the Closing Date, any amendment to, waiver or other voluntary
action under or termination of any Transaction Document, or any
determination that a condition precedent to closing of the Transaction
has been satisfied, or any determination to not consummate the
Transaction (whether or not conditions have been satisfied) shall
require the consent of each Investor.
1.3 The Investors have agreed a transaction structure as contained in the
Ernst & Young memorandum dated August 11, 2005, as supplemented and
amended by memorandum dated August 16, 2005 (collectively, the
"TRANSACTION STRUCTURE"). Any amendment to the Transaction Structure
shall require the consent of each Investor. If such consent is not
given, the relevant amendment shall not be made and the Transaction
Structure previously agreed by the Investors shall continue to bind the
Investors.
1.4 The Investors acknowledge that they, together with Holdco, and (when
formed) the Intermediate Holdcos and Bidco, are a "group" within the
meaning of Section 13(d)(3) of the U.S. Securities Exchange Act of
1934, as amended (the "EXCHANGE ACT") and Regulation 13D promulgated
thereunder ("REGULATION 13D"). Each Investor agrees to comply with
Section 13(d) of the Exchange Act and Regulation 13D in respect of its
and the group's beneficial ownership of shares of SBS Broadcasting S.A.
Each Investor further agrees that as and when the Investors (and any
other members of the group) are required to file a Schedule 13D or any
amendment thereto in respect of the group's beneficial ownership of
shares of SBS Broadcasting S.A. they will do so jointly as a group, and
each Investor shall cooperate reasonably with the other Investors in
connection with the making of such filing, including, without
limitation, by furnishing documents and information required to be
disclosed in such filing and otherwise assisting in the preparation of
such filing, all within the time limits required for such filing. For
the avoidance of doubt, this Agreement constitutes the agreement
contemplated by Rule 13d-1(k) under the Exchange Act.
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1.5 The Parties agree that no person who serves as a director of Holdco,
any Intermediate Holdco or Bidco on or prior to the Closing Date (an
"INTERIM DIRECTOR") shall have any liability to any Party, any
Intermediate Holdco, Bidco or any of their respective affiliates and
shall be fully exculpated, to the fullest extent permitted by law, from
any and all such liability. Each Party hereby agrees, to the fullest
extent permitted by law, that it will not, and will use its best
efforts to the extent of its power and authority to cause Holdco, each
Intermediate Holdco and Bidco not to, commence any action or otherwise
make any claim against an Interim Director for any damage, liability,
loss, cost or expense arising from or otherwise relating to or in
connection with any act or failure to act of such Interim Director in
the capacity as a director of Holdco, any Intermediate Holdco or Bidco.
Each Investor agrees to indemnify and hold harmless, to the fullest
extent permitted by law, pro rata to its equity investment in Holdco
(on or following the Closing Date) or its equity commitment as set
forth in Article 2 (prior to the Closing Date), each Interim Director
from and against any and all claims, damages, liabilities, losses,
damages, costs or expenses incurred by such Interim Director as arising
from or otherwise relating to or in connection with any act or failure
to act of such Interim Director in the capacity as a director of
Holdco, any Intermediate Holdco or Bidco. The Investors agree to cause
Holdco to enter into a domiciliary agreement to establish its domicile
in Luxembourg and such other documents as are reasonably required by
the Luxembourg domiciliary agent, each on terms reasonably acceptable
to the Parties.
2. EQUITY INVESTMENT
2.1 Subject to the terms and conditions of each Investor's Equity
Commitment Letter and subject to any adjustment required pursuant to
Articles 2.2 or 2.3, on the Closing Date, each Investor's equity
commitment (direct or indirect) to Holdco (each, an "EQUITY
COMMITMENT") will be as set forth in Exhibit 2.1 attached hereto.
2.2 If the total equity investment ultimately is either higher or lower
than the aggregate amount set forth on Exhibit 2.1 (which shall be
subject to the consent of each Investor), then each Investor's equity
commitment will be increased or reduced pro rata to its percentage
interest.
2.3 Subject to the provisions of this Article 2.3, the Investors will
coordinate with each other and agree on an equity syndication strategy,
including on potential equity syndicatees and the timing and amount of
equity syndication, and will cooperate reasonably with each other in
connection with such equity syndication. Notwithstanding the foregoing,
each Investor shall be entitled to syndicate its equity investment in
Holdco (i.e., "direct" syndication) to one or more new investors (each,
a "NEW INVESTOR") and the other Investor may elect to participate, on a
pro rata basis, in such equity syndication; provided that, failing
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such election, the syndicating Investor shall have the right to cause
the other Investor to syndicate such other Investor's equity investment
in Holdco to such New Investor on a pro rata basis. In addition to the
foregoing, each Investor shall have the right to syndicate its equity
investment in Holdco on a "silent" basis (i.e., by syndicating economic
or beneficial interests in an entity wholly controlled by such Investor
or its affiliate) without the consent of the other Investor, provided
that, for the avoidance of doubt, any syndicatee in any such silent
syndication shall not be entitled to exercise any governance, liquidity
or other rights vis-a-vis the Parties under this Agreement or,
following the Closing Date, the Investors' Agreement. Each Investor
shall inform the other of their respective intent to silently syndicate
as set out in the preceding provisions of this Article 2.3 and shall
provide basic details (name, investment amount, etc.) regarding any
such syndicatee. Notwithstanding the foregoing provisions of this
Article 2.3, neither Investor shall be permitted, nor required by the
other Investor, to directly or silently syndicate its equity such that
its aggregate equity investment in Holdco (after giving effect to such
syndication) is less than the equity threshold (valued at an initial
cost basis and as defined in Exhibit 2.1). Each New Investor shall be
required to become a party to this Agreement and shall execute an
equity commitment letter in the amount of its equity commitment on the
same terms as executed and delivered by the Investors to Holdco,
mutatis mutandis. Holdco agrees to amend and restate the respective
Equity Commitment Letter with each syndicating Investor in the amount
reflecting such Investor's equity commitment (after giving effect to
such syndication) on otherwise the same terms as contained in such
Investors' initial Equity Commitment Letter.
2.4 If the provisions of Articles 2.2 or 2.3 result in any change to the
equity commitments of Investors, the amounts and (if applicable)
percentages specified in Exhibit 2.1 will be deemed adjusted
accordingly.
2.5 The amounts committed to be invested by the Investors in Holdco as
contemplated in this Article 2 may be in the form of shares,
convertible or non-convertible preferred equity certificates,
shareholder loans or other securities (as specified in the Transaction
Structure). The Investors will invest in the same type and proportion
of such securities.
2.6 The Investors acknowledge and agree to commit to fund, on a pro rata
basis, the equity portion of the purchase price to acquire the shares
of SBS Broadcasting B.V. as and when required to be committed pursuant
to the terms of (a) any Financing Documents (it being understood that
the Investors may satisfy their obligations under this Article 2.7 by
executing the agreed form of equity commitment letter attached to the
Financing Documents) as provided in Facility E of the agreed form debt
financing documents for the Transaction on the terms and conditions
contained therein or (b) the Equity Commitment Letters.
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3. INVESTORS' AGREEMENT
3.1 The Parties agree to negotiate in good faith to conclude, as soon as
practicable hereafter but in any event no later than the Closing Date,
a definitive investors' agreement (the "INVESTORS' AGREEMENT") that
will incorporate the substance of the principle terms set forth in
Exhibit 3.1, and all of the other matters on which agreement must be
reached including provisions relating to tax and providing for each
Investor to receive the management rights required under ERISA. On or
prior to the Closing Date, the Investors (or entities formed by them)
and Holdco shall execute and deliver the Investors' Agreement.
4. ADVISERS AND COSTS
4.1 Any transaction fee, together with any other fees and expense
reimbursement provisions that Permira and KKR shall mutually agree,
shall be documented in a transaction and advisory services agreement to
be executed by Bidco, Permira and KKR on or around the Closing Date, in
each case in accordance with the provisions set forth in Exhibit 3.1.
4.2
4.2.1 If the Transaction is completed, Bidco (or another entity
determined by the Investors in consideration of legal and tax
advice) will pay (or reimburse each Investor for) (i) the
actual and documented reasonable fees and expenses of the
professional advisers and consultants in connection with the
Transaction from the initial date of such advisers' respective
engagements and the lead arrangers and/or underwriters for the
financing of the Transaction, all of which are set forth in
Exhibit 4.2 and (ii) the actual and documented out-of-pocket
travel, lodging and related costs and expenses incurred by
each Investor or its affiliates in connection with the
Transaction.
4.2.2 If the Transaction is not completed; and
(i) if Bidco does not receive a cost reimbursement, break
up fee or other amount in accordance with the terms
of the SPA or otherwise, the Investors will share on
a pro rata basis as per the percentages set out in
Exhibit 2.1 (as may be adjusted) the aggregate amount
of all fees and expenses in accordance with the terms
of Articles 4.2.1(i)-(ii); or
(ii) if Bidco receives a cost reimbursement, break-up fee
or other amount in accordance with the terms of the
SPA or otherwise, then such payment shall be applied
as follows: (A) first, to pay all fees and expenses
in accordance with the terms of Articles
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4.2.1(i)-(ii), provided that in the event such cost
reimbursement, break-up fee or other amount is not
sufficient to pay all such fees and expenses, the
provisions of Article 4.2.2(i) will apply to the
payment of such shortfall, and (B) second, to the
Investors (or their designees) pro rata to the equity
commitments set forth in Article 2.1 (as may be
adjusted).
4.3 Notwithstanding the provisions of Article 4.2.2(i), if (i) the
Transaction does not complete and such failure to complete occurs
directly and solely as a result of the failure of one of the Investors
to fund its equity commitment in accordance with the terms of its
Equity Commitment Letter, or (ii) following a determination by the
Investors to not consummate the Transaction, if one of the Investors
fails to pay its liquidated damages under its Equity Commitment Letter
(the "LIQUIDATED DAMAGES") and the non-defaulting Investor suffers any
damage, loss, liability, cost or expense in excess of its Liquidated
Damages as a result of such failure by the defaulting Investor (the
"EXCESS LOSS"), then, in each case, the defaulting Investor shall (x)
indemnify the non-defaulting Investor for its Excess Loss, (y) pay all
amounts due under Article 4.2.2(i) and (z) in the case of clause (i)
only, reimburse the non-defaulting Investor for its Liquidated Damages.
4.4 Other than as set forth herein, each Investor will be responsible for
all other costs and expenses incurred by it and its affiliates in
connection with the Transaction. For avoidance of doubt, any reasonable
out-of-pocket costs or expenses incurred by any of the Investors in
connection with the incorporation of Holdco, the Intermediate Holdcos,
Bidco or any other transactions or steps contemplated by the
Transaction Structure shall be reimbursed (whether or not the
Transaction is completed) in accordance with Article 4.2. For avoidance
of doubt, these reimbursement amounts do not include the amount of any
equity investment to be funded in accordance with Article 2.
5. CONFIDENTIALITY AND ANNOUNCEMENTS
5.1 Nothing in this Agreement shall prejudice any other confidentiality
undertakings the Investors (or their affiliates) have executed and
delivered to each other in connection with the Transaction.
5.2 Any announcement to be made by the Investors, Holdco, any Intermediate
Holdco or Bidco (or their affiliates) in connection with the
Transaction shall be jointly co-ordinated and agreed by the Investors
(each Investor acting reasonably in connection therewith).
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6. ASSIGNMENT
Neither Investor may assign all or any portion of any of its rights or
obligations under this Agreement (other than as contemplated by this
Agreement), without the prior written consent of the other Party,
provided that each Investor may assign and transfer its rights and
obligations to one or more of its affiliated investment funds
(excluding, for the avoidance of doubt, limited partners in any of its
affiliated investment funds, unless such assignment to limited partners
is in accordance with the syndication provisions of Article 2.3) and,
if the assignee is not then a party to this Agreement, it shall execute
and deliver (a) an undertaking pursuant to which it agrees to be bound
by all of the terms and conditions in this Agreement applicable to the
assignor and (b) if such assignment occurs prior to the Closing Date,
an equity commitment letter in the amount of its equity commitment on
the same terms as executed and delivered by the Investors to Holdco,
mutatis mutandis. If clause (b) of the foregoing proviso is applicable,
then Holdco agrees to amend and restate the respective Equity
Commitment Letter with the applicable assignor to reflect the amount of
such assignor's equity commitment (after giving effect to such
syndication) on otherwise the same terms as such Equity Commitment
Letter.
7. TERMINATION
This Agreement shall terminate on the earlier to occur of (i) the date
the Investors' Agreement has been executed by the Investors and (ii)
the date of termination of the SPA prior to any closing thereunder.
Notwithstanding the foregoing, (w) the obligations relating to Schedule
13D Filings pursuant to Article 1.4 shall survive with the last filing
required to be filed by the group described in Article 1.4 pursuant to
Regulation 13D, (x) the provisions of Article 4 shall survive any
termination of this Agreement until any and all amounts payable
thereunder have been paid, (y) the provisions of Articles 6 through 10
shall survive any termination of this Agreement for so long as any
other provision of this Agreement survives, and (z) all accrued rights
and obligations of the Parties under this Agreement shall survive any
termination of this Agreement.
8. ENTIRE AGREEMENT
8.1 This Agreement (together with all Exhibits and Schedules hereto)
constitutes the entire agreement between the Parties with respect to
the subject matter hereof.
9. THIRD PARTIES; SEVERAL LIABILITY OF INVESTORS
9.1 Except as expressly stated in this Agreement, no person who is not a
party to this Agreement shall have any rights to enforce this
Agreement.
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9.2 The obligations of the Parties under this Agreement are several only
(and not joint or joint and several).
10. GOVERNING LAW AND ARBITRATION
10.1 This Agreement shall be construed in accordance with, and this
Agreement and all matters arising out of or relating in any way
whatsoever (whether in contract, tort or otherwise) to this Agreement
shall be governed by, the law of the State of New York. Any dispute,
controversy or claim of any kind or nature between the parties arising
out of, relating to, or in connection with this Agreement, or the
breach, termination or validity thereof (each, a "DISPUTE") shall be
finally settled by binding arbitration ("ARBITRATION") under the Rules
of Arbitration (the "RULES") of the London Court of International
Arbitration in force at the time of such Arbitration, by three
arbitrators appointed in accordance with the Rules. The seat of the
arbitration shall be London, England. The language of the arbitration
shall be English. The arbitral award shall be in writing, shall detail
the disputed matters and reasons on which the arbitral award is based,
shall not include any punitive damages and shall be the sole and
exclusive remedy between the Parties regarding any Dispute. The Parties
expressly agree that leave to appeal under Section 69(1) or an
application for the determination of a preliminary point of law under
Section 45 of the Arbitration Xxx 0000 may be sought with respect to
any question of law arising from an award. The arbitral award shall be
final and binding upon the Parties and shall not be subject to appeal
of any court or other authority. Notwithstanding the foregoing, any
Party may file an application in the United States federal courts
sitting in the Borough of Manhattan seeking injunctive or other forms
of interim relief to compel or aid or facilitate the arbitration.
Judgment upon the award or order may be entered in the Supreme Court of
the State of New York sitting in the Borough of Manhattan, or the
United States District Court for the Southern District of New York for
enforcement thereof. Each Party agrees not to oppose the registration
or enforcement of any such judgment in any other jurisdiction and to
consent to jurisdiction and venue in any applicable court for purposes
of registration or enforcement of any such judgment. Each Party accepts
and submits to the jurisdiction of the seat of arbitration referenced
above and to the New York State and United States federal courts
sitting in the Borough of Manhattan (and to any court in which appeals
from those courts may be heard) with regard to enforcement of the
arbitral award or in connection with any action or application for
injunctive or other interim relief, as provided in this Article 10.
Each Party waives any defence or objection based on diplomatic
immunity, lack of jurisdiction, improper venue, inconvenient forum or
competence that it could raise in any action or proceeding relating to
this Agreement. Process in any action or proceeding relating to this
Agreement may be served on any Party anywhere in the world. Each party
irrevocably consents to the service of any and
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all process in any action or proceeding relating to this Agreement by
the mailing or delivery of copies of such process to it at its address
for notices specified in this Agreement. This Agreement and the rights
and obligations of the Parties shall remain in full force and effect
pending the award in any arbitration proceeding hereunder. Any monetary
award shall be made and payable in euros without deduction or set off
and the arbitral panel shall be authorized in its discretion to grant
pre-award and post-award interest at commercial rates.
11. COUNTERPARTS
This Agreement may be executed in counterparts, each of which shall be
an original and all of which, when taken together, shall constitute one
and the same agreement.
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Executed on the date first above written.
KKR MILLENNIUM FUND (OVERSEAS), LIMITED PARTNERSHIP
By: KKR Associates Millennium (Overseas), Limited Partnership, its general
partner
By: KKR Millennium Limited, its general partner
By: /s/ Xxxxx X. Xxxxxxx
------------------------
Name: Xxxxx X. Xxxxxxx
Title: Authorized Signatory
KKR EUROPEAN FUND, LIMITED PARTNERSHIP
By: KKR Associates Europe, Limited Partnership, its general partner
By: KKR Europe Limited, its general partner
By: /s/ Xxxxx X. Xxxxxxx
------------------------
Name: Xxxxx X. Xxxxxxx
Title: Authorized Signatory
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Signed by )
for and on behalf of )
Permira Europe III G.P. Limited as general partner of ) /s/ Xxxx Xxxxxx
Permira Europe III G.P. L.P. as ) Xxxx Xxxxxx
general partner of PERMIRA EUROPE III L.P. 1 ) Director
Signed by )
for and on behalf of )
Permira Europe III G.P. Limited as general partner of ) /s/ Xxxx Xxxxxx
Permira Europe III G.P. L.P. as ) Xxxx Xxxxxx
general partner of PERMIRA EUROPE III L.P. 2 ) Director
Signed by )
for and on behalf of )
Permira Europe III G.P. Limited as general partner of ) /s/ Xxxx Xxxxxx
Permira Europe III G.P. L.P. as ) Xxxx Xxxxxx
managing limited partner of ) Director
PERMIRA EUROPE III GMBH & CO. KG )
Signed by )
for and on behalf of ) /s/ Xxxx Xxxxxx
Permira Nominees Limited as nominee for ) Xxxx Xxxxxx
Permira Investments Limited ) Director
Signed by )
for and on behalf of ) /s/ Xxxx Xxxxxx
Permira Europe III G.P. Limited as administrator of ) Xxxx Xxxxxx
PERMIRA EUROPE III CO-INVESTMENT SCHEME ) Director
PKS MEDIA S.A X.X.
By: /s/ Xxxxxxx Xxxxxx By: /s/ Xxxxxxx Xxxxxx
------------------------ ------------------------
Name: Xxxxxxx Xxxxxx Name: Xxxxxxx Xxxxxx
Title: Pursuant to a power Title: Manager
of attorney issued
on August 19, 2004
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