EXHIBIT 10.14
[EXHIBIT D
TO
OPTION AGREEMENT]
FORM OF
SHAREHOLDERS' AGREEMENT
EXHIBIT D
SHAREHOLDERS' AGREEMENT
This Shareholders' Agreement ("AGREEMENT"), dated as of November __, 1998, is
between and among [UIH Europe, Inc., a corporation organized and existing under
the laws of Delaware, U.S.A.] ("UIH"), [HOLDER] ("HOLDER"), and United Pan-
Europe Communications N.V., a company organized and existing under the laws of
The Netherlands (together with its successors and assigns, the "COMPANY").
Holder and UIH (and their respective permitted assigns), are sometimes referred
to individually as a "SHAREHOLDER" and collectively as the "SHAREHOLDERS". The
Shareholders and the Company are sometimes referred to individually as a
"PARTY" and collectively as the "PARTIES."
WHEREAS, as of the date hereof the authorized capital stock of the Company
consists of _____ Ordinary Shares (as defined below), of which _____ are issued
and outstanding;
WHEREAS, as of the date hereof the Shareholders together own the number and
percentage of outstanding Ordinary Shares set forth below:
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Number of Percentage
Record Holder Ordinary Shares Outstanding
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UIH [ ] [ ]
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Holder [ ] [ ]
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WHEREAS, the Shareholders wish to regulate their relationship as shareholders
of the Company.
NOW, THEREFORE, the Parties hereto agree as follows:
ARTICLE I
Definitions
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In addition to the other terms defined in this Agreement, the following
terms shall have the meanings given to them below:
"AFFILIATE" shall mean, with respect to any Person, any entity that
directly or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with such Person. For purposes of
this definition, the term "control" means the ownership of fifty percent (50%)
or more of the Voting Interests of such Person.
"AGREEMENT" shall mean this Shareholders' Agreement between UIH, Holder and
the Company, as the same may be amended, modified, restated or replaced from
time to time.
"APPLICABLE EXCHANGE" means the primary U.S. or European securities market
or exchange on which the Company's publicly trading securities are listed or
qualified.
"APPROVED SALE" shall have the meaning set forth in Section 3.4.
"BUSINESS DAY" shall mean any day on which banks in each of Tel Aviv,
Israel, Amsterdam, The Netherlands and New York, New York, United States of
America are generally open to the public for the conduct of commercial banking
transactions.
"COMPETITOR" shall mean any Person that is materially engaged, directly or
indirectly through Affiliates, in the business of providing video, voice or
data services to commercial and residential customers in any of the countries
where the Company is or intends in the next 12 months to be materially engaged,
directly or indirectly through its controlled Affiliates, in such business at
any given time.
"CONFIDENTIAL INFORMATION" shall have the meaning set forth in Section
4.1(a).
"CONTROLLING INTEREST" shall mean fifty percent (50%) or more of all issued
and outstanding Ordinary Shares at any given time.
"DIC" shall mean DIC Communication and Technology Ltd., a corporation
organized and existing under the laws of the State of Israel.
"DOLLARS" or "US $" means United States dollars, the lawful currency of the
United States of America.
"DPC GROUP" shall mean DIC, PEC and their respective Affiliates.
"DPC NOMINEE" shall have the meaning set forth in Section 2.2.
"ENCUMBRANCE" shall mean any debt, charge, attachment, lien, claim or any
other third party right.
"EQUITY PERCENTAGE" shall mean, as to each Shareholder, the percentage of
the total outstanding Ordinary Shares owned by such Shareholder, including all
Ordinary Shares owned by all Affiliates of such Shareholder.
"GAAP" shall mean generally accepted accounting principles as applied in
The Netherlands.
"GOVERNING DOCUMENTS" shall mean the charter, articles of association, by-
laws and similar governing documents of any Person on the date hereof and as
hereafter amended from time to time.
"HOLDER'S PUT SHARES" shall have the meaning set forth in Section 3.3(a).
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"IDB" shall mean IDB Development Corporation Ltd., a corporation organized
and existing under the laws of the State of Israel and the current owner of a
majority of the issued and outstanding Voting Interests of each of DIC and PEC.
"LAW" shall mean any statute, ordinance, code or other law, rule,
regulation, order, technical or other standard, requirement or procedure
enacted, adopted, promulgated, applied, enforced or followed by any court,
governmental agency or competent authority of any country, including any
political subdivision thereof.
"MINORITY INTEREST" shall have the meaning set forth in Section 3.5(a).
"NEGOTIATION PERIOD" shall have the meaning set forth in Section 3.5(a).
"OFFER NOTICE" shall have the meaning set forth in Section 3.2(a).
"OFFERED SHARES" shall have the meaning set forth in Section 3.2(a).
"OPTION AGREEMENT" shall mean the Option Agreement dated as of November __,
1998 among the Company, DIC and PEC.
"ORDINARY SHARES" shall mean the ordinary shares of the Company with a par
value of one Dutch Guilder each, together with any other shares of the Company
that may be issued by the Company in substitution therefor.
"PEC" shall mean PEC Israel Economic Corporation, a corporation organized
and existing under the laws of the State of Maine, United States of America.
"PERSON" shall mean any natural person, company, corporation, partnership,
joint venture, trust, association, investment company, fund, unincorporated
entity of any kind, or governmental agency or authority.
"PROHIBITED PERSON" shall mean, with respect to a proposed Transfer of
Ordinary Shares, any Person who, in the reasonable opinion of the Supervisory
Board, could cause the Company to be in breach of or default under or otherwise
lose material rights with respect to any of the Company's or its Affiliate's
licenses, permits, concessions or other approvals upon the consummation of such
Transfer of Ordinary Shares to such Person, taking into consideration such
Person's existing ownership or control of Ordinary Shares, if any.
"PROPOSED TRANSFEREE" shall have the meaning set forth in Section 3.2(a).
"PURCHASE NOTICE" shall have the meaning set forth in Section 3.2(a).
"PUBLIC OFFERING" shall mean an underwritten public offering by the Company
of Ordinary Shares (or depositary receipts with respect thereto) registered
under the United States Securities
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Act of 1933, as amended, together with the listing or quoting of Ordinary
Shares or such depositary receipts on a Securities Exchange, or a similar
public offering by the Company, together with the listing on a regulated stock
exchange, of Ordinary Shares in London, Amsterdam or such other location as the
Company determines to be appropriate.
"QUALIFIED COURIER" shall have the meaning set forth in Section 6.1.
"REGISTRATION RIGHTS AGREEMENT" shall mean the Registration Rights
Agreement of even date herewith between and among the Company and Holder.
"SALE OF THE COMPANY" shall have the meaning set forth in Section 3.4.
"SECURITIES EXCHANGE" shall mean the New York Stock Exchange, the American
Stock Exchange or the Nasdaq Stock Market in the United States of America.
"SIGNIFICANT INTEREST" shall mean the direct or indirect ownership of, or
voting rights with respect to, individually or together with any group, (i)
thirty three percent (33%) or more of the issued and outstanding Ordinary
Shares at any time prior to an IPO, and (ii), twenty five percent (25%) or more
of the issued and outstanding Ordinary Shares at any time following an IPO.
"STRATEGIC PARTNER" shall mean an investor in the Company that is
materially engaged in business operations in one or more of the areas of
business conducted by the Company and will participate actively in the
operation and management of the Company or any significant Subsidiary of the
Company.
"SUBSIDIARY OF THE COMPANY" means any Person that is controlled, directly
or indirectly, by the Company. For purposes of this definition, "control"
shall mean (i) the contractual authority to appoint or cause the election of
thirty three percent (33%) or more of the members of the board of directors of
such Person or individuals performing similar functions, and (ii) the ownership
of, or ability to direct the voting with respect to, directly or indirectly,
thirty three percent (33%) or more of the voting securities or similar equity
interests of such Person.
"SUPERVISORY BOARD" shall mean the Supervisory Board of the Company as
appointed from time to time in accordance with the Company's Governing
Documents.
"TAG ALONG NOTICE" shall have the meaning set forth in Section 3.3.
"THIRD PARTY SALE" shall have the meaning set forth in Section 3.3.
"TRANSFER" shall mean to transfer, sell, assign, give, or in any other way
dispose of any Shares. "TRANSFER" shall also mean to pledge, create or permit
to exist a security interest in or lien on, or in any other way Encumber,
directly or indirectly, any Shares (excluding a pledge to secure debt from
banks or other institutional lenders or trustees for holders of public debt,
provided that such pledgee agrees in writing that any execution or realization
against such pledge
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will be subject to the provisions of Article III of this Agreement). "TRANSFER"
shall also have the meaning set forth in Section 3.10.
"UIH GROUP" shall mean UIH and any Affiliate, successor or permitted assign
of UIH.
"UIH PARTIES" shall have the meaning set forth in Section 3.2(a).
"VOTING INTERESTS" shall mean the aggregate number of votes exercisable by
holders of shares of capital stock of, or other equity interests in, any Person
in connection with the election of members of such Person's board of directors,
supervisory board or similar governing body and the adoption of resolutions of
shareholders or other equity holders.
ARTICLE II
Supervisory Board; Shareholder Voting
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2.1 Supervisory Board. The Supervisory Board shall consist of at least
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three members, who shall not be executive officers of the Company. The number
of members of the Board may be increased or decreased (but not below three) in
accordance with the Company's Articles of Association.
2.2 Appointment of DPC Nominee. During the period (the "Applicable
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Period") beginning on the date hereof and ending on the date that the DPC Group
ceases to own in the aggregate at least fifty percent (50%) of the number of
Ordinary Shares owned by it on the date hereof (adjusted for any stock splits,
distributions of Ordinary Shares, and similar events resulting in an increase
or decrease in the DPC Group's Ordinary Shares), the member or members of the
DPC Group then owning Ordinary Shares (collectively, the "DPC HOLDER") shall be
entitled to appoint (i) the number of Supervisory Board members that
corresponds to the DPC Holder's Equity Percentage (rounded to the nearest whole
number), but in any event not less than one member; and (ii) the number of
members of each committee of the Supervisory Board (rounded to the nearest
whole number) that corresponds to the DPC Holder's Equity Percentage, but in
any event not less than one member. In each such case, the appointment shall
be on the basis of a binding nomination submitted by the DPC Holder (the "DPC
NOMINEE(S)") to the Company. Each DPC Nominee shall, subject to Section 2.5,
hold office until it is vacated or until such DPC Nominee's successor is duly
appointed and qualified.
2.3 Vacancy. During any period in which the DPC Group is entitled to
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appoint one or more of the members of the Supervisory Board or any committee of
the Supervisory Board pursuant to Section 2.2, whenever any DPC Nominee ceases
to be a member of the Supervisory Board or committee thereof, due to the
resignation, death, disability or removal (subject to Section 2.4) or any other
reason, such vacancy shall be filled by another nominee of the DPC Holder, and
the person so nominated and appointed shall become a DPC Nominee and shall hold
such office until it is vacated or until such Nominee's successor is duly
appointed and qualified.
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2.4 Removal. During any period in which the DPC Group is entitled to
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appoint one or more of the members of the Supervisory Board or any committee
thereof pursuant to Section 2.2, no DPC Nominee may be removed as a member of
the Supervisory Board or committee, as applicable, without the express written
consent of the DPC Holder. If the DPC Holder notifies the members of the UIH
Group in writing of the DPC Holder's desire to remove any DPC Nominee from the
Supervisory Board or committee, as applicable, the Parties shall cause a
meeting of the Company's shareholders to be held as soon as practicable
thereafter, and at such meeting the Shareholders shall vote, or cause to be
voted, all of their respective Ordinary Shares in favor of the removal of such
DPC Nominee. The term of the DPC Nominee so removed shall terminate forthwith
and there shall be a vacancy on the Supervisory Board or committee, as
applicable, to be filled in accordance with Section 2.3.
2.5 Resignation. At such time as the DPC Group ceases to be entitled to
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appoint a member of the Supervisory Board pursuant to Section 2.2, the DPC
Holder shall, at the request of UIH, take all such action as is necessary to
cause each DPC Nominee then in office to resign as a member of the Supervisory
Board and each committee thereof, as applicable.
2.6 Articles of Association. During the term hereof, the Company's
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Articles of Association may not be amended in such a way as would prejudice the
DPC Holder's rights hereunder without the prior written consent of the DPC
Holder, which consent will not be unreasonably withheld. The DPC Holder hereby
agrees that amendments to the Company's Articles of Incorporation required in
order for the Company to be able to issue Ordinary Shares in the circumstances
described in subparagraphs (a) through (e) of Section 1 of Schedule 1 of this
Agreement will not prejudice Holder's rights hereunder. This Section 2.6 will
terminate and have no further effect upon the completion of a Public Offering.
2.7 Voting.
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(a) Attendance at Shareholder Meetings. Each Shareholder agrees to
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cause all of its Ordinary Shares to be represented at each duly convened
shareholder meeting, in person or by proxy, for the purpose of obtaining a
quorum for such meeting.
(b) Voting. Whenever any DPC Nominee is to be appointed as a member
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of the Supervisory Board or any committee thereof, as applicable, pursuant to
this Article II, the Parties shall cause a meeting of the Company's
shareholders to be held as soon as practicable thereafter, and at such meeting
the Shareholders shall vote, or cause to be voted, all of their respective
Ordinary Shares in favor of such appointment in accordance with the terms of
this Article II. At each meeting of the shareholders of the Company voting on
the appointment of members of the Supervisory Board or any committee thereof,
the Shareholders shall vote or cause to be voted, all of their respective
Ordinary Shares in favor of each nominee of UIH to be appointed as a member of
the Supervisory Board or committee thereof, as applicable, proposed to be
appointed by UIH at such meeting. In addition, to the maximum extent permitted
by applicable laws, each Shareholder will cause each member of the Supervisory
Board appointed
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by such Shareholder to vote at Supervisory Board meetings as may be required to
implement the provisions of this Article II.
2.8 DPC Group Action. Each notice, appointment, or other action required
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or permitted to be given, made or taken, as applicable, by the DPC Group or the
members of the DPC Group under this Article II shall be effective only if
given, made or taken jointly, which shall be deemed to have occurred if UIH
receives written notice thereof signed by holders of a majority of the Ordinary
Shares held by the DPC Group in accordance with this Article II and Section
6.1. Neither UIH nor the Company shall have any obligation to take any action
hereunder other than pursuant to a written notice of the DPC Group that
complies with the requirements of this Section 2.8.
ARTICLE III
Transfers of Ordinary Shares
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3.1 Non-Conforming Transfers Null and Void. If a Shareholder desires to
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Transfer all or any of such Shareholder's Ordinary Shares or any interest
therein to any Person other than (i) any Transfer, in the case of a member of
the UIH Group, to another member of the UIH Group and, in the case of a member
of the DPC Group, to another member of the DPC Group, in either case, in
compliance with the requirements of Section 3.6, or (ii) any Transfer effected
by means of a Registration Statement (as defined in the Registration Rights
Agreement) and in accordance with the Registration Rights Agreement, or (iii)
sales on the Applicable Exchange following a Public Offering where the identity
of the purchaser is not known, provided that such sales do not exceed the same
periodical volume limitations set forth in Rule 144 promulgated under the
United States Securities Act of 1933, as amended, then such Shareholder must
first comply with each of the procedures set forth in this Article III
applicable to such Shareholder. Any Transfer or purported Transfer by a
Shareholder of Ordinary Shares or any interest therein that does not comply
with this Article III shall be null and void and shall have no effect on the
Company.
3.2 Right of First Refusal.
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(a) Offer. If Holder desires to Transfer any Ordinary Shares or any
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interest therein (the "OFFERED SHARES") in any manner other than as permitted
under Section 3.1 above, Holder must first provide each of UIH and the Company
(referred to collectively for purposes of this Section 3.2 and Section 3.6 as
the "UIH PARTIES") with written notice (the "OFFER NOTICE") stating that Holder
is proposing to sell the Offered Shares to a Person (the "PROPOSED TRANSFEREE")
pursuant to a bona fide agreement between Holder and the Proposed Transferee.
The Offer Notice shall identify the name of the Proposed Transferee (including
any Person that, to Holder's knowledge or belief, controls such Proposed
Transferee), the number of Ordinary Shares or other interests therein to be
sold, the purchase price, which shall consist solely of cash consideration, the
terms of payment, the date by which the closing of the sale must occur, which
date shall not be less than 90 nor more than 150 days after delivery of the
Offer Notice, and each other material term applicable to such proposed
Transfer. The UIH Parties shall have the
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opportunity thereafter, by sending written notice (the "PURCHASE NOTICE") to
Holder on or before the date that is 30 days following the date that each of
the UIH Parties received the Offer Notice, stating that one or more of the UIH
Parties or any designee of such UIH Parties has elected to purchase all, but
not less than all, of the Offered Shares on the same terms and conditions set
forth in the Offer Notice.
(b) Election to Purchase; Closing. If a Purchase Notice is timely
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delivered to Holder by more than one of the UIH Parties, then the Offered
Shares shall be allocated among them and their designees equally unless
otherwise notified in writing to Holder by all such UIH Parties. Each of the
Parties agrees to use all commercially reasonable efforts to promptly make such
filings and obtain such regulatory approvals as are required to allow the UIH
Parties (or their designees, as the case may be) to purchase the Offered
Shares. The closing of the sale of the Offered Shares to the UIH Parties or
their designees pursuant to this Section 3.2(b) shall occur at 11:00 a.m.
Amsterdam time at the principal offices of the Company on or before the later
of (i) the date that is ten (10) Business Days prior to the closing date set
forth in the Offer Notice, or (ii) the date that is ten (10) Business Days
after all such regulatory approvals for the sale have been obtained and all
applicable waiting periods have expired; provided, however, that if such
regulatory approvals or waiting periods have not been obtained or expired, as
applicable, or for any other reason (except due to Holder's fault) the closing
of such sale does not occur on or before the date that is 150 days after the
date of delivery of the Purchase Notice, Holder shall be free to sell all (but
not less than all) of the Offered Shares as set forth in Section 3.2(c). The
sale to the UIH Parties (or their designees, as the case may be) shall be
effected by the Holder's delivery to the UIH Parties (or their designees, as
the case may be) of a certificate or certificates evidencing the Offered Shares
to be purchased thereby, which Offered Shares shall be free and clear of any
Encumbrances, together with an executed contract for Transfer of such Shares to
the UIH Parties (or their designees, as the case may be), and the delivery to
the Holder by the UIH Parties (or their designees, as the case may be) of the
purchase price therefor in immediately available and freely transferable funds
in the currency included in the Offer Notice, or the equivalent thereof in
Dollars at such time, at the election of the UIH Parties.
(c) Sale Upon Election Not to Purchase. If none of the UIH Parties
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delivers a Purchase Notice in accordance with Section 3.2(a), then all (but not
less than all) of the Offered Shares may be sold by the Holder to the Proposed
Transferee in accordance with the terms set forth in the Offer Notice. In
connection with such sale, each of the Parties shall use all commercially
reasonable efforts to promptly make such filings and obtain such regulatory
approvals as are required to allow the Proposed Transferee to purchase the
Offered Shares. The closing of the sale of the Offered Shares to the Proposed
Transferee may occur no later than on the closing date set forth in the Offer
Notice. Such sale shall be to the Proposed Transferee only and shall be (i) for
all of the Ordinary Shares included in the Offer Notice, (ii) at the same or
higher aggregate price as the price set forth in the Offer Notice, (iii) on
payment terms (including any deferred payment terms) no more favorable to the
Proposed Transferee than the terms set forth in the Offer Notice, and (iv)
subject to each of the other terms and conditions set forth in the Offer
Notice. If the Transfer of the Offered Shares to the Proposed Transferee is
not completed in accordance with each of the terms as required under the
preceding sentence, the
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Offered Shares may not be Transferred unless first offered to the UIH Parties
pursuant to this Section 3.2., and any Offered Shares that are not so
Transferred shall continue to be subject to the requirements of this Section
3.2.
3.3 Tag Along Rights.
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(a) If UIH agrees to Transfer any of its Ordinary Shares or any
interest therein in a bona fide transaction with an unaffiliated third party (a
"THIRD PARTY SALE"), UIH shall deliver written notice thereof (the "TAG ALONG
NOTICE") to Holder. The Tag Along Notice shall identify the name of the
proposed purchaser (including any Person that, to UIH's knowledge or belief,
controls such purchaser), the number of Ordinary Shares or other interests
therein to be sold, the purchase price; the terms of payment, the date by which
the closing of the Third Party Sale must occur, which date shall not be less
than thirty (30) nor more than 150 days after delivery of the Tag Along Notice
(plus any additional time required to obtain any necessary governmental and
regulatory approvals), and each other material term applicable to such Third
Party Sale. Holder shall have the right, but not the obligation, to
participate in such Third Party Sale on the same terms and conditions as UIH by
giving written notice of such participation by Holder to UIH not less than
fifteen (15) Business Days after the date that UIH delivers the Tag Along
Notice to Holder. The total number of Ordinary Shares that Holder shall be
entitled to sell in connection with such Third Party Sale ("HOLDER'S PUT
SHARES") shall, subject to Section 3.3(b), be equal to the product of (i) the
total number of Ordinary Shares sold in the Third Party Sale, multiplied by
(ii) a fraction the numerator of which is the total number of Ordinary Shares
then owned by Holder and the denominator of which is the aggregate number of
Ordinary Shares then owned by Holder and UIH. In the event that Holder duly
exercises its right to participate in the Third Party Sale, UIH shall cause
Holder's Put Shares to be purchased from Holder accordingly. No Person shall
have any rights or obligations under this Section if the Third Party Sale is
not completed.
(b) If any Third Party Sale involves a Transfer by UIH of a
Controlling Interest, then Holder shall be entitled to sell in connection with
such Third Party Sale all of the Ordinary Shares owned by Holder on the date
hereof (adjusted for stock splits, distributions to shareholders of Ordinary
Shares and similar actions by the Company resulting in an increase or decrease
of Holder's Ordinary Shares), and the provisions of Section 3.3(a) shall apply
with respect thereto mutatis mutandis.
3.4 Drag Along Rights. If UIH proposes at any time to Transfer all of the
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Company's Ordinary Shares or assets in a bona fide transaction with an
unaffiliated third party (an "APPROVED SALE") whether by means of a merger, or
consolidation, sale of Ordinary Shares sale of assets, or otherwise (each, a
"SALE OF THE COMPANY"), Holder shall consent to and raise no objections against
such Approved Sale, provided that except as otherwise set forth hereinafter in
this Section 3.4 all material terms and conditions applicable to UIH in
connection with the Approved Sale apply also mutatis mutandis to Holder. If
the Approved Sale is structured as a merger or consolidation of the Company, or
a sale of all or substantially all of the Company's assets, then Holder shall
waive all of Holder's dissenter's rights, appraisal rights or similar rights
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in connection with such merger, consolidation or asset sale to the same extent
that such rights shall be waived by UIH. If the Approved Sale is structured as
a sale of Ordinary Shares, then Holder shall agree to sell its Ordinary Shares
on the terms and conditions of sale applicable to UIH. Holder shall take all
necessary and desirable actions reasonably requested by UIH in connection with
the consummation of the Approved Sale, including the execution of such
agreements and such instruments and other actions reasonably necessary to (a)
provide the representations, warranties, indemnities, covenants, conditions,
escrow agreements and other provisions and agreements relating to Holder's
title to and interest in Ordinary Shares of Holder to be sold in connection
with the Approved Sale, and (b) effectuate the allocation and distribution of
the aggregate consideration upon consummation of the Approved Sale. UIH agrees
not to exercise its rights under this Section 3.4 unless it has determined in
good faith that the terms and conditions of the Approved Sale are fair and
reasonable to the Shareholders and obtains an appropriate fairness opinion with
respect to such sale, addressed to the DPC Holder and to UIH.
3.5 Sale of Minority Interest.
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(a) If during any 12-month period UIH proposes to Transfer a number of
its Ordinary Shares that represents less than a Controlling Interest (the
"MINORITY INTEREST") but more than 5% of its Ordinary Shares other than to an
Affiliate of UIH or a Strategic Partner, UIH shall promptly give written notice
thereof (a "TRANSFER NOTICE") to the DPC Holder. The DPC Holder shall have the
exclusive right for a period of 30 days following delivery of the Transfer
Notice (the "NEGOTIATION PERIOD"), to negotiate in good faith with UIH
regarding the Transfer of the Minority Interest to the DPC Holder. If UIH and
the DPC Holder are able to agree in writing on the terms and conditions of sale
of the Minority Interest to the DPC Holder during the Negotiation Period, the
closing of the Transfer shall occur in accordance with the terms of such
agreement.
(b) If UIH and the DPC Holder are unable to agree upon the terms and
conditions of Transfer of the Minority Interest to the DPC Holder prior to the
expiration of the Negotiation Period, UIH may sell the Minority Interest to an
unaffiliated third party purchaser in a bona fide transaction provided that (i)
the purchase price is greater than that set forth in a written offer to
purchase the Minority Interest received from the DPC Holder during the
Negotiation Period and none of the other terms and conditions of sale are less
favorable to UIH than those set forth in such offer, and (ii) the sale of the
Minority Interest to the third party purchaser is completed on or before 150
days after the expiration of the Negotiation Period. UIH agrees to use all
commercially reasonable efforts to make such regulatory filings and obtain such
regulatory approvals as promptly as possible. If the sale of the Minority
Interest does not occur in accordance with this Section 3.5(b), UIH shall be
required to repeat the procedures set forth in this Section 3.5 prior to
selling a Minority Interest to any other Person other than an Affiliate of UIH
or a Strategic Partner.
(c) This Section 3.5 shall be effective only during the Applicable
Period and not otherwise.
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3.6 Acknowledgment and Acceptance of the Shareholders' Agreement by
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Proposed Transferees. No Transfer of Ordinary Shares by any Shareholder (or
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its respective successors and permitted assigns) to any Affiliate of such
Shareholder or to any other Person (other than Transferees receiving Ordianry
Shares under Section 3.1(ii) or 3.1(iii)) shall be valid unless the proposed
transferee has first agreed in writing addressed to the other Parties to hold
such Ordinary Shares subject to and to be bound by all of the terms, conditions
and restrictions of this Agreement applicable to the transferring Shareholder
immediately prior to such Transfer. Each of UIH and Holder shall remain liable
hereunder for any failure by such Shareholder's direct or indirect Affiliate
Transferee to comply with the terms hereof.
3.7 Cooperation. The Parties agree that they shall, and that they shall
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cause their respective Affiliates to, take all such commercially reasonable
actions as may in the reasonable opinion of one of the Parties be necessary or
appropriate to effect a Transfer which is or shall be permitted by the terms of
this Agreement, including, without limitation, granting such permissions or
voting in support of such resolutions, as may under the terms of any relevant
Governing Documents, be requisite to consummate any such Transfer.
3.8 Pre-emptive Rights. The DPC Group shall have the pre-emptive rights
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set forth in Schedule 1 hereto. The Shareholders will not vote or cause to be
voted their respective Ordinary Shares in favor of any amendment of the
Company's Governing Documents or other resolution of the Company's shareholders
restricting or excluding, or authorizing any other corporate body of the
Company to restrict or exclude, such pre-emptive rights other than with respect
to any issuance identified in subparagraphs (a) through (e) of Section 1 of
Schedule 1 hereto, in each case as determined to be in the best interests of
the Company by the Supervisory Board.
3.9 Certain Restrictions.
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(a) No Transfers Related to Acquisition of Significant Interest.
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Holder shall not, and, to the maximum extent permitted under applicable law,
will use its best efforts to ensure that each of its Affiliates that owns
Ordinary Shares does not, Transfer any of Holder's or such Affiliate's Ordinary
Shares to any Person or group, in any single transaction or series of
transactions, or enter into any voting or similar agreement with any Person or
group, if, to Holder's knowledge or belief, such Person or group is seeking to
obtain, or has obtained, directly or indirectly, a Significant Interest in the
Company unless such interest has been or is being acquired with the consent of
UIH or the Company. Holder shall be presumed to have knowledge of a Person's
intent to acquire a Significant Interest in the Company if UIH or the Company
provides Holder with written notice thereof supported by reasonable evidence of
such attempt.
(b) No Transfer to Prohibited Persons. Each Shareholder shall not,
---------------------------------
and to the maximum extent permitted under applicable law, will use its best
efforts to ensure that each of its Affiliate that owns Ordinary Shares does
not, sell, assign or otherwise Transfer its or their Ordinary Shares to any
Prohibited Person.
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(c) No Transfer of Rights. Notwithstanding any other provision hereof
---------------------
to the contrary, neither Holder nor any Affiliate of Holder may assign its
rights under Article II or Section 3.5 hereof to any Person, in connection with
a Transfer of Ordinary Shares or otherwise, other than to a member of the DPC
Group in connection with a Transfer of Ordinary Shares to such Affiliate of
Holder permitted hereunder. No Transferee of Ordinary Shares pursuant to
Section 3.1 (ii) or (iii) shall receive any rights under this Agreement.
3.10 Change of Control. Any event or circumstance that results in a change
-----------------
of control of any Shareholder, other than DIC and PEC, that was a member of the
DPC Group when such Shareholder obtained any Ordinary Shares, shall be deemed
to be a Transfer of Ordinary Shares to a non-Affiliate of Holder subject to the
terms and conditions of this Agreement. For purposes of this Section 3.10, a
"change of control" of a member of the DPC Group Shareholder shall have
occurred when, for any reason, more than fifty percent (50%) of the Voting
Interests of such member of the DPC Group are no longer owned, directly or
indirectly, by IDB.
ARTICLE IV
Certain Business Arrangements
-----------------------------
4.1 Confidential Information.
------------------------
(a) No Shareholder shall, without the prior written consent of the
Supervisory Board of the Company in compliance with its legal obligations under
applicable Dutch laws, disclose to third parties or use for any commercial
purpose any proprietary or confidential information (other than information
that enters (i) the public domain through no fault of the disclosing party or
any of its Affiliates or their respective officers, directors, employees or
agents, or (ii) was in the possession of the disclosing party prior to the
disclosure thereof by the Company or any of its subsidiaries to such party, or
(iii) was obtained by the disclosing party from any third party through no
breach of a confidentiality obligation of such third party to the Company or
any of its subsidiaries) developed by or belonging to the Company or any
Subsidiary of the Company ("CONFIDENTIAL INFORMATION"). Each Shareholder shall
use its best efforts to cause its partners, directors, officers, employees,
representatives and agents to comply with the foregoing. Notwithstanding the
foregoing, for the purpose of any proposed disposition of Ordinary Shares, a
Shareholder may disclose Confidential Information to any Person whom the
Shareholder believes has expressed a bona fide interest in acquiring part or
all of its Ordinary Shares, if:
(i) each recipient first signs a non-disclosure agreement
containing terms and conditions customary for such purpose
in The Netherlands and the U.S.A. under similar
circumstances;
(ii) such Shareholder discloses only such Confidential
Information as is reasonably required to enable the proposed
purchaser to evaluate an acquisition of Ordinary Shares; and
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(iii) neither the Person to whom such information is proposed to
be disclosed nor any Affiliate thereof is a Competitor.
(b) In addition to the foregoing, Confidential Information may be
disclosed (x) to banks and other financial institutions and trustees for
holders of public debt in connection with existing or proposed credit
facilities to be provided to or on behalf of any member of the UIH Group, the
DPC Group or the Company or any of their Affiliates (so long as such banks or
other financial institutions or trustees shall have signed a confidentiality
agreement in customary form) and (y) to the extent necessary or reasonably
believed advisable for any such Person or its Affiliates to comply with
applicable securities laws and regulations, other applicable laws and stock
exchange requirements.
4.2 Financial Information and Auditors. The Company shall deliver to the
----------------------------------
Shareholders the following financial information at the following times:
(a) Quarterly Financial Statements. Within 35 days after the close of
------------------------------
each quarterly accounting period of the Company ending after the date hereof,
the consolidated balance sheet of the Company and its subsidiaries as at the
end of such quarterly period and the related statements of income,
shareholders' equity and cash flow for such quarterly period and (if different)
for that portion of the fiscal year that has elapsed with the last day of such
quarterly period, in each such case setting forth comparative figures for the
corresponding periods in the prior fiscal year, all of which shall be prepared
in accordance with GAAP.
(b) Annual Financial Statements. Within 70 days after the close of
---------------------------
each fiscal year of the Company, the consolidated balance sheet of the Company
and its subsidiaries as of the end of such fiscal year and the related
statements of income, shareholders' equity and cash flow for such fiscal year,
in each case setting forth comparative figures for the preceding fiscal year,
all of which shall be prepared in accordance with GAAP and audited by the
Company's external auditors, and shall include also the adjustments in the
information presented therein as required for purpose of reconciling any
differences between the GAAP and generally accepted accounting principles
applied in the United States of America.
(c) Other Financial Information. Such additional financial
---------------------------
information and data as shall be reasonably requested by any Shareholder to
assist such Shareholder, its Affiliates or associated companies in preparing
financial statements or other documents in accordance with the requirements of
any applicable Law or of relevant regulatory authorities. The requesting
Shareholder shall reimburse the Company for any additional or incremental cost
incurred by the Company (e.g., in addition to costs already incurred by the
Company to produce or prepare such information) producing and preparing such
information and data to such Shareholder.
ARTICLE V
Termination
-----------
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5.1 Termination.
-----------
(a) This Agreement may be terminated at any time by mutual written
agreement of UIH and the DPC Holder.
(b) This Agreement shall terminate automatically as to all Parties
upon any liquidation or dissolution of the Company.
ARTICLE VI
Miscellaneous; Effectiveness of Agreement
-----------------------------------------
6.1 Notices. Any notices, requests or other communications required or
-------
permitted to be given to any Party hereunder shall be in writing and shall be
delivered (i) by hand delivery, (ii) by Federal Express or another reputable
international courier (a "QUALIFIED COURIER"), or (iii) by telecopy, confirmed
by Qualified Courier, in each case to such Party at its address or telecopy
number set forth below or such other address or telecopy number as such Party
may hereafter specify by five (5) Business Days' prior notice to the other
Parties as provided herein:
(a) if to the Company, to:
▇▇▇▇. ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Attn: General Counsel
(b) if to UIH, any member of the UIH Group, or any permitted
Transferee of UIH, to:
UIH Europe, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇.▇.▇.
Attn: President
with a copy (which does not constitute notice) to:
United International Holdings, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇.▇.▇.
Attn: President
and
14
Holme ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
1700 Lincoln, Suite 4100
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇.▇.▇.
Attn: W. ▇▇▇▇ ▇▇▇▇▇▇
(c) if to Holder, any member of the DPC Group, or any permitted
Transferee of Holder, to:
The DPC Holder at such time
c/o Discount Investment Corporation Ltd.
14 ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇
Telephone: ▇▇▇▇ ▇ ▇▇▇▇▇▇▇
Facsimile No.: ▇▇▇▇ ▇ ▇▇▇▇▇▇▇
Attention: Managing Director
with a copy (which does not constitute notice) to:
DIC Communication and Technology Ltd.
14 ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇
Telephone: ▇▇▇▇ ▇ ▇▇▇▇▇▇▇
Facsimile No.: ▇▇▇▇ ▇ ▇▇▇▇▇▇▇
Attention: Managing Director
and
PEC Israel Economic Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇.▇.▇.
Telephone: ▇▇ ▇▇▇ ▇▇▇▇▇▇▇
Facsimile No.: ▇▇ ▇▇▇ ▇▇▇▇▇▇▇
Attention: President
All notices, requests or other communications shall be deemed delivered (i) on
the first Business Day immediately following the date of (a) delivery if hand
delivered, or (b) confirmation of delivery by telecopy transmission if sent by
telecopy transmission, provided that delivery by Qualified Courier is effected
within five Business Days thereafter or, (ii) on the third business day after
being deposited with such Qualified Courier for overnight (or its nearest
equivalent) delivery, if sent by Qualified Courier. Rejection or other refusal
to accept or the inability to deliver because of changed address of which no
notice was given as herein required shall be deemed to be receipt of the
notice, request or other communication.
6.2 Amendments; No Waivers.
----------------------
15
(a) Any provision of this Agreement may be amended or waived at any
time if, and only if, such amendment or waiver is in writing and is executed by
all Parties hereto.
(b) No failure or delay by any Party hereto in exercising any right,
power or privilege hereunder shall operate as a waiver thereof nor shall any
single or partial exercise thereof or the exercise of any other right, power or
privilege preclude other or further exercise thereafter of any right, power or
privilege. The rights and remedies herein provided shall be cumulative and not
be exclusive of any rights or remedies provided by law or by any other
agreement between the Parties.
6.3 Entire Agreement. This Agreement constitutes the entire agreement
----------------
between the Parties with respect to the subject matter hereof and supersedes
all prior agreements, understandings and negotiations, both written and oral,
between the Parties with respect to the subject matter of this Agreement. No
representation, inducement, promise, understanding, condition or warranty not
set forth herein has been made or relied upon by any Party. In the event of
any conflict between this Agreement and any provision of the Company's
Governing Documents, the terms of this Agreement shall control to the maximum
extent permitted under applicable laws.
6.4 Governing Law. This Agreement shall be governed and construed in
-------------
accordance with the laws of The Netherlands.
6.5 Dispute Resolution. Any dispute arising under or in connection with
------------------
this Agreement shall be settled by the competent courts in Amsterdam, The
Netherlands.
6.6 Successors and Assigns. The provisions of this Agreement are
----------------------
covenanted indivisibly and shall be binding upon and inure to the benefit of
the Parties hereto and their respective successors and assigns; provided,
however, that except as otherwise provided in this Agreement, no Party may
transfer any of its rights or obligations under this Agreement without the
prior written consent of the other Parties hereto.
6.7 Counterparts. This Agreement may be executed simultaneously in any
------------
number of counterparts, each of which shall be an original but all of which
together shall constitute one and the same instrument.
6.8 Severability. If any one or more provisions of this Agreement shall,
------------
for any reason, be held to be invalid, illegal or unenforceable in any respect,
such invalidity, illegality or unenforceability shall not affect any other
provision of this Agreement, but this Agreement shall be construed as if such
invalid, illegal or unenforceable provision had never been contained herein.
16
6.9 Captions. The captions herein are included for convenience of
--------
reference only and shall be ignored in the construction or interpretation
hereof.
6.10 Representations and Warranties.
------------------------------
Each Party hereto represents and warrants to the other Parties that:
(a) it is a corporation duly incorporated and validly existing under
the laws of the jurisdiction referred to in the introduction to this Agreement,
with the power to own its assets and to conduct its business in the manner
presently conducted;
(b) it has full corporate power and capacity and has obtained all
corporate and other approvals necessary to enter into this Agreement and all
further documents required to be entered into pursuant hereto, as well as to
perform its obligations hereunder and thereunder as and when due;
(c) this Agreement constitutes its binding and valid obligations,
enforceable in accordance with its terms;
(d) neither its execution of this Agreement nor its consummation of
the transactions contemplated hereby will constitute a violation of, or be in
conflict with, or constitute or create a default under its Governing Documents
or any agreement binding on it; and
(e) no Law is in effect on the date hereof which restrains or
prohibits it entering into this Agreement and the further documents required to
be entered into pursuant hereto, or consummating the transactions contemplated
hereby or thereby, nor is there (to its knowledge) pending or threatened any
action, suit, proceeding or investigation by any Person which questions or
might jeopardize the validity of this Agreement.
17
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to
be duly executed by their respective duly authorized officers, all as of the
date and year first above written.
UNITED PAN-EUROPE COMMUNICATIONS N.V.
By:
---------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
[UIH EUROPE, INC.]
By:
---------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
[HOLDER]
By:
---------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
18
SCHEDULE 1
DPC GROUP PRE-EMPTIVE RIGHTS
This Schedule 1 is a part of the Shareholders' Agreement (the "AGREEMENT"),
dated as of [_________], between and among [UIH Europe, Inc., a corporation
organized and existing under the laws of Delaware, U.S.A.] ("UIH"), [HOLDER]
("HOLDER"), and United Pan-Europe Communications N.V., a company organized and
existing under the laws of The Netherlands. Terms used but not otherwise
defined in this Schedule have the meanings given to such terms in the
Agreement.
The following provisions define the pre-emptive rights of the DPC Group
Shareholders, their successors and permitted assigns referenced in Section 3.8
of the Agreement:
1. Each shareholder of the Company that is, at the time of any issue of
shares of capital stock by the Company or any grant of rights or issue of
securities carrying the right to subscribe for or otherwise acquire shares of
capital stock of the Company (each, an "ISSUANCE"), a member of the DPC Group
or a permitted assign thereof (a "DPC GROUP SHAREHOLDER") shall, with respect
to such Issuance, have a right (a "PRE-EMPTIVE RIGHT") to acquire or receive a
pro rata share of such Issuance in the same ratio that the aggregate amount of
Ordinary Shares then held by such DPC Group Shareholder bears to the total
outstanding Ordinary Shares at such time, and on the same terms and conditions
afforded to other Persons. Notwithstanding the foregoing, such DPC Group
Shareholders shall not have any Pre-emptive Right in respect of:
(a) any Issuance for a non-cash contribution to the Company (and for
this purpose, any contribution in the form of a debt instrument shall be deemed
to be a cash contribution);
(b) any Issuance, directly or indirectly through trusts or similar
entities, to employees of the Company or of a Subsidiary of the Company;
(c) any Issuance to a Strategic Partner; or
(d) any Issuance in connection with a Public Offering;
(e) any Issuance as compensation for services rendered or to be
rendered to the Company or any Subsidiary of the Company.
2. Notwithstanding the foregoing, any Ordinary Shares acquired by a DPC
Group Shareholder from a Transferor that did not have the contractual right to
Transfer Pre-emptive Rights (or rights substantially similar thereto) to such
DPC Group Shareholder in connection with such Transfer shall not be included in
the calculation of the number of Ordinary Shares owned by such DPC Group
Shareholder for purposes of Section 1 above.
19
3. Each of the Pre-emptive Rights set forth in Section 1 above shall
terminate immediately upon the sale of Ordinary Shares by the Company
pursuant to a Public Offering.
4. A notice of any Issuance in respect of which there is a Pre-emptive
Right of the DPC Group Shareholders, identifying the period during, and the
terms and conditions on, which such right can be exercised, shall be sent by the
Company to the DPC Group Shareholders at such time in accordance with Section
6.1 of the Agreement. Such Pre-emptive Right may be exercised during the period
set forth in the notice, which shall not be less than two weeks after the date
such notice is delivered to such DPC Group Shareholders in accordance with
Section 6.1 of the Agreement.
20
