EXHIBIT 2.02
Final Master
------------
July 18, 2000
________________________________________
MASTER TRANSACTION AGREEMENT
________________________________________
AMONG
AT HOME CORPORATION,
UNITED PAN-EUROPE COMMUNICATIONS N.V.
and
UNITEDGLOBALCOM, INC.
Table of Contents
ARTICLE I DEFINITIONS................................................................................... 1
SECTION 1.01. Certain Defined Terms............................................................ 1
ARTICLE II PURPOSE AND SCOPE OF THE AGREEMENT........................................................... 11
SECTION 2.01. Business Purpose and Formation................................................... 11
SECTION 2.02. Exclusivity...................................................................... 13
SECTION 2.03. Formation of Holding Companies................................................... 18
ARTICLE III CLOSING AND CONDITIONS TO CLOSING........................................................... 18
SECTION 3.01. Closing.......................................................................... 18
SECTION 3.02. Conditions to Obligations of all Parties......................................... 19
SECTION 3.03. Conditions to Obligations of At Home and Excite Holdings......................... 20
SECTION 3.04. Conditions to the Obligations of chello Holdings, UPC and UGC.................... 21
SECTION 3.05. Closing Deliveries............................................................... 22
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF CHELLO HOLDINGS, UPC AND UGC................................ 22
SECTION 4.01. Joint and Several Representations and Warranties of chello Holdings, UPC and XXX. 00
SECTION 4.02. Several Representations and Warranties of chello Holdings, UPC and UGC........... 24
ARTICLE V REPRESENTATIONS AND WARRANTIES OF AT HOME AND EXCITE HOLDINGS.................................. 27
SECTION 5.01. Joint and Several Representations and Warranties of At Home and Excite Holdings.. 27
SECTION 5.02. Several Representations and Warranties of At Home and Excite Holdings............ 30
ARTICLE VI COVENANTS..................................................................................... 32
SECTION 6.01. Mutual Confidentiality........................................................... 32
SECTION 6.02. Regulatory and Other Authorizations; Notices and Consents........................ 33
SECTION 6.03. Notice of Developments........................................................... 34
SECTION 6.04. No Solicitation or Negotiation................................................... 34
SECTION 6.05. No Solicitation of Employees..................................................... 35
SECTION 6.06. Compliance; Non-contravention.................................................... 35
SECTION 6.07. Further Actions.................................................................. 35
SECTION 6.08. Modifications to Structure....................................................... 35
SECTION 6.09. Equity-Based Compensation........................................................ 35
SECTION 6.10. At Home Employee Matters......................................................... 39
SECTION 6.11. chello Employee Matters.......................................................... 41
SECTION 6.12. Change of Control to a Competing Person.......................................... 44
SECTION 6.13. Access to Information; Cooperation............................................... 47
SECTION 6.14. Consents......................................................................... 48
SECTION 6.15. Certain chello Holdings, UPC and UGC Covenants................................... 50
SECTION 6.16. Certain Excite Holdings and At Home Covenants.................................... 50
SECTION 6.17. Franchise Agreements............................................................. 50
SECTION 6.18. Certain Tax Matters.............................................................. 51
SECTION 6.19. ................................................................................. 51
SECTION 6.20. Conduct of Business Pending Closing.............................................. 51
SECTION 6.21. The IPO.......................................................................... 55
SECTION 6.22. Additional Documents............................................................. 55
SECTION 6.23. Post Closing Funding............................................................. 55
SECTION 6.24. No Misuse........................................................................ 56
SECTION 6.25. [*].............................................................................. 57
SECTION 6.26. Certain Other Matters............................................................ 57
ARTICLE VII INDEMNIFICATION.............................................................................. 58
SECTION 7.01. Indemnification by chello Holdings, UPC and UGC.................................. 58
SECTION 7.02. Indemnification by At Home and Excite Holdings................................... 59
SECTION 7.03. Indemnification Procedures....................................................... 59
[*]= CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.
SECTION 7.04. Indemnification to Benefit BH and BOC............................................ 60
SECTION 7.05. Limitation on Damages............................................................ 60
ARTICLE VIII TERM AND TERMINATION........................................................................ 60
SECTION 8.01. Term of the Agreement............................................................ 60
SECTION 8.02. Termination by At Home or UPC.................................................... 61
SECTION 8.03. Effect of Termination............................................................ 62
ARTICLE IX DISPUTE RESOLUTION............................................................................ 62
SECTION 9.01. Negotiation Between Executives................................................... 62
SECTION 9.02. Jurisdiction; Waiver of Jury Trial............................................... 63
SECTION 9.03. Irreparable Harm................................................................. 63
ARTICLE X MISCELLANEOUS PROVISIONS...................................................................... 63
SECTION 10.01. No Agency or Partnership........................................................ 63
SECTION 10.02. Expenses........................................................................ 64
SECTION 10.03. Notices......................................................................... 64
SECTION 10.04. Headings........................................................................ 65
SECTION 10.05. Severability.................................................................... 65
SECTION 10.06. Entire Agreement................................................................ 65
SECTION 10.07. Assignment...................................................................... 65
SECTION 10.08. No Third Party Beneficiaries.................................................... 66
SECTION 10.09. No Broker's Fees................................................................ 66
SECTION 10.10. Amendment....................................................................... 66
SECTION 10.11. Governing Law................................................................... 66
SECTION 10.12. Counterparts.................................................................... 66
SECTION 10.13. Press Releases.................................................................. 66
SECTION 10.14. Code names...................................................................... 66
THIS MASTER TRANSACTION AGREEMENT, dated as of July 18, 2000, among At
Home Corporation, a corporation organized under the laws of Delaware ("At
--
Home"), United Pan-Europe Communications N.V., a company organized under the
----
laws of The Netherlands ("UPC") and UnitedGlobalCom, Inc., a corporation
---
organized under the laws of Delaware ("UGC").
---
W I T N E S S E T H
WHEREAS, At Home is a leading broadband internet access and content
provider in the United States and Canada, and has certain operations and
interests outside the United States and Canada;
WHEREAS, chello broadband N.V., a company organized under the laws of
the Netherlands ("chello"), is a leading international broadband internet access
------
and content provider;
WHEREAS, certain of At Home's operations and interests outside the
United States and Canada will on the Closing Date be held by Excite Holdings
Corporation ("Excite Holdings"), a Delaware corporation to be formed by At Home
---------------
prior to Closing;
WHEREAS, prior to Closing, UPC and UGC will form chello Holdings C.V.,
a Dutch commanditaire vennootschap or other type of Dutch entity ("chello
------
Holdings");
--------
WHEREAS, chello will on the Closing Date be a Subsidiary of chello
Holdings;
WHEREAS, UPC will be the ultimate parent company of chello Holdings,
and UGC is the ultimate parent company of UPC and will also hold a minority
interest in chello Holdings; and
WHEREAS, the parties intend to combine the business of chello and
certain of the businesses of At Home outside the United States and Canada as
hereinafter provided;
NOW, THEREFORE, the Parties agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.01. Certain Defined Terms
---------------------
As used in this Agreement, the following terms shall have the
following meanings:
"Acceptance Notice" has the meaning specified therefor in Section
-----------------
2.02(c)(i).
"Acquired Party" has the meaning specified therefor in Section 6.12.
--------------
"Action" means any claim, action, suit, arbitration, inquiry,
------
proceeding or investigation by or before any Governmental Authority.
1
[*]
"Affiliates" means, with respect to any specified Person, any other
----------
Person that directly, through one or more intermediaries, Controls, is
Controlled by, or is under common Control with, such specified Person.
"Agreement" means this agreement, as executed by the parties thereto
---------
and as amended from time to time, together with all annexes and exhibits
thereto.
"Announcement" means, with respect to any Change of Control, the first
------------
public announcement by an acquiring Person or group seeking to effect a Change
of Control of its intention to do so, or by the Person being acquired or any of
its Affiliates of discussions concerning a possible Change of Control, an
intention to effect a Change of Control or any agreement to effect a Change of
Control.
"At Home Contributed Assets" means (i) the At Home Equity Interests,
--------------------------
(ii) Contributed Subsidiaries, (iii) those other assets, rights or agreements of
whatsoever kind and nature, held directly or indirectly by At Home and its
Subsidiaries that are to be contributed to the Broadband Operating Company
pursuant to Section 3.01(b), as listed and more specifically described in
Section 1.01(b) of the At Home Disclosure Schedule as amended from time to time
and (iv) all other assets, rights or agreements of the At Home International
Entities, but for the avoidance of doubt excluding those assets listed in
Section 1.01(c) of the At Home Disclosure Schedule.
"At Home Covered Services" means the Category P Services and the
------------------------
Category V Services as further provided in the Technology Licensing Term Sheet.
"At Home Disclosure Schedule" has the meaning specified therefor in
---------------------------
Section 5.01.
"At Home Equity Interests" means the equity interests in the At Home
------------------------
Joint Ventures, in each case held directly or indirectly by At Home listed in
Section 1.01(d) of the At Home Disclosure Schedule intended to be contributed to
BOC at Closing.
"At Home Indemnified Parties" has the meaning specified therefor in
---------------------------
Section 7.01(a).
"At Home International Employees" has the meaning specified therefor
-------------------------------
in Section 6.10(a).
"At Home International Entities" means, collectively, the Contributed
------------------------------
Subsidiaries, the At Home Equity Interests and the At Home Joint Ventures.
"At Home IP" has the meaning specified therefor in Section 5.02(e)
----------
"At Home Joint Venture Documents" means those joint venture and other
-------------------------------
documents related thereto listed in Section 1.01(f) of the At Home Disclosure
Schedule.
"At Home Joint Ventures" means the joint ventures listed in Section
----------------------
1.01(e) of the At Home Disclosure Schedule.
[*]= CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
2
"At Home Material Documents" has the meaning specified therefor in
--------------------------
Section 5.01(d).
"At Home Party" has the meaning specified therefor in Section 8.02.
-------------
"At Home Plan" has the meaning specified therefor in Section
------------
6.09(b)(iii).
"At Home SEC Reports" means the Annual Report on Form 10-K for At Home
-------------------
for the year ended December 31, 1999 and any filings made by At Home subsequent
thereto under the Exchange Act.
"At Home Share Issuance" has the meaning specified therefor in Section
----------------------
2.02(c)(i).
"At Home Transfer Documents" means the assignments, deeds of transfer,
--------------------------
stock powers, conveyances and other transfer documents that are necessary to
effect the transfer of the At Home Contributed Assets to the Broadband Operating
Company, as listed in Annex A, as amended from time to time.
"Banks' Valuation Method" has the meaning specified therefor in
-----------------------
Section 2.02(c)(i).
"Basic Agreements" means this Agreement, the BH Shareholders'
----------------
Agreement, the BOC Limited Partnership Agreement and the Term Sheets.
"Basket Amount" has the meaning specified therefor in Section 7.03.
-------------
"BH Affiliated Companies" has the meaning specified therefor in
-----------------------
Section 6.10(a).
"BH Foundation" has the meaning specified therefor in Section 6.09(a).
-------------
"BH Group" has the meaning specified therefor in Section 7.01(b).
--------
"BH Incentive Plan" has the meaning specified therefor in Section
-----------------
6.09(a).
"BH Operating Committee" has the meaning specified therefor in Section
----------------------
2.01(f).
"BH Share Issuance" has the meaning specified therefor in Section
-----------------
2.02(c)(i).
"BH Shareholders' Agreement" means the shareholders' agreement among
--------------------------
BH, BOC, chello Holdings, and Excite Holdings, in the form attached hereto as
Annex B, as amended from time to time.
"BOC General Partner" means BH as the general partner of BOC.
-------------------
"BOC Limited Partnership Agreement" means the limited partnership
---------------------------------
agreement among BOC, Excite Holdings, BH and chello Holdings in the form
attached hereto as Annex C, as amended from time to time.
"BOC Value" has the meaning specified therefor in Section 6.20(c).
---------
3
"Broadband Holdings" or "BH" means the Dutch N.V. that will be the
------------------ --
general partner of and Control the Broadband Operating Company following the
Closing, as provided in Section 2.01.
"Broadband Holdings Articles of Association" has the meaning specified
------------------------------------------
therefor in Section 2.01(d).
"Broadband Holdings Deed of Incorporation" has the meaning specified
----------------------------------------
therefor in Section 2.01(d).
"Broadband Operating Company" or "BOC" means the Dutch C.V. which
--------------------------- ---
will, among other things, own the capital stock of chello and the At Home
International Entities and conduct and manage the Covered Business.
"Business Plan" means the five year business plan of BOC and its
-------------
Subsidiaries which shall be comprised of at least five annual plans, as approved
pursuant to the BH Shareholders' Agreement.
"Category P Services" shall have the meaning specified therefor in the
-------------------
Technology Licensing Term Sheet.
"Category P Services Right of First Offer" has the meaning specified
----------------------------------------
therefor in Section 2.02(c)(i).
"Category V Services" shall have the meaning specified therefor in the
-------------------
Technology Licensing Term Sheet; provided, that, for purposes of this Agreement,
Category V Services shall exclude therefrom Category P Services.
"Category V Services Arrangement" has the meaning specified therefor
-------------------------------
in Section 2.02(c)(iii).
"Category V Services Right of First Offer" has the meaning specified
----------------------------------------
therefor in Section 2.02(c)(iii).
"Change of Control" of a Person means (i) any merger or consolidation
-----------------
of such Person with or into any other Person or any stock purchase or sale,
reorganization recapitalization or other transaction, in each case, in one
transaction or a series of related transactions, if, immediately after giving
effect to such transaction(s), any "person" or "group" (as such terms are used
for purposes of Section 13(d) and 14(d) of the Exchange Act, whether or not
applicable) other than such Person's Affiliates on the date hereof or a group
that is controlled by one or more of such Person's Affiliates on the date
hereof, is or becomes the "beneficial owner," directly or indirectly, of more
than 50% of the total voting power in the aggregate normally entitled to vote in
the election of directors, managers, or trustees, as applicable, of such Person
or its transferee(s) or surviving entity or entities or (ii) any sale, transfer
or other conveyance, whether direct or indirect, of all or substantially all of
the assets of such Person, on a consolidated basis, in one transaction or a
series of related transactions.
"chello Covered Services" means the Category A Services, Category B
-----------------------
Services and Category C Services, as defined in the chello Relationship
Agreements, as amended hereby.
"chello Employees" has the meaning specified therefor in Section
----------------
6.10(a).
4
"chello Equity" has the meaning specified therefor in Section
-------------
6.09(b)(ii).
"chello Franchise Agreement Term Sheets" or "Franchise Term Sheets"
-------------------------------------- ---------------------
means (i) the Form of Franchise Agreement term sheet with UPC cable operators
attached hereto as Annex D, and (ii) the Form of Franchise Agreement term sheet
with UGC cable operators attached hereto as Annex E, in each case as amended in
accordance with the list of amendments attached hereto as Annex F.
"chello Holdings " means chello Holdings C.V., a newly-formed
----------------
commanditaire vennootschap under the laws of The Netherlands that will be a
limited partner of the Broadband Operating Company, will hold Preference Shares
of Broadband Holdings and that will be a Subsidiary of UPC and UGC immediately
after Closing.
"chello Option" has the meaning specified therefor in Section
-------------
6.09(b)(ii).
"chello Preliminary Prospectus" means the revised preliminary
-----------------------------
prospectus of chello, dated June 7, 2000, as part of the Registration Statement
on Form F-1 (registration number 333-11974).
"chello Relationship Agreements" means (i) the Relationship Agreement
------------------------------
between chello and UPC dated May 17, 2000 and (ii) the Relationship Agreement
between chello and UGC dated May 17, 2000, in each case as amended hereby and
from time to time.
"chello Transferred Employee Liabilities" has the meaning specified
---------------------------------------
therefor in Section 6.11(b).
"chello Transferred Employees" has the meaning specified therefor in
----------------------------
Section 6.11(a).
"chello Transition Date" has the meaning specified therefor in Section
----------------------
6.11(a).
"Closing" has the meaning specified therefor in Section 3.01(a).
-------
"Closing Date" has the meaning specified therefor in Section 3.01(a).
------------
"COC Closing Date" has the meaning specified therefor in Section
----------------
6.12(a).
"Compensation Committee" has the meaning specified therefor in Section
----------------------
6.09(a).
"Competing Business" has the meaning specified therefor in Section
------------------
2.02(b).
"Competing Category P Services Business" has the meaning specified
--------------------------------------
therefor in Section 2.02(c)(i).
"Competing Category V Services Business" has the meaning specified
--------------------------------------
therefor in Section 2.02(c)(iii).
"Competing Person" means (i) in the context of a Change of Control,
----------------
any Person (A) whose business or part thereof includes the provision of Category
P Services and (B) whose status as a direct or indirect shareholder of BOC could
reasonably be expected to have a Material Adverse Effect on BOC (it being agreed
that Liberty Media Corporation shall
5
not be considered a Competing Person in the context of a Change of Control of
UPC, UGC or chello Holdings) and (ii) in the context of an acquisition or
investment by a Party in a Person, any Person whose business or part thereof
includes Category P Services or Category V Services.
"Contributed Subsidiaries" means At Home's Subsidiaries listed in
------------------------
Section 1.01(a) of the At Home Disclosure Schedule, being those direct and
indirect Subsidiaries of At Home who are not directly or indirectly a
shareholder in an At Home Joint Venture and which are included in the At Home
Contributed Assets.
"Control" means, with respect to any Person, the power to control,
-------
directly or indirectly, greater than fifty percent (50%) of the voting interest
of such Person, or the ability to appoint or elect more than fifty percent (50%)
of the board of directors or other equivalent governing board of such Person,
whether such power is effected through ownership of shares or other securities,
by contract, by proxy or otherwise.
"Covered Business" means the business conducted by the Broadband
----------------
Operating Company and its Subsidiaries and other Persons in which the Broadband
Operating Company has ownership interests at the Closing, together with the
business to be conducted in the future by such entities, as further provided in
Section 2.01 hereof, in the chello Relationship Agreements and in the Technology
Licensing Term Sheet.
"Covered Services" means, collectively, the chello Covered Services
----------------
and At Home Covered Services.
"Cure Period" has the meaning specified therfor in Section 6.23(c).
-----------
"Default" has the meaning specified therefor in Section 6.23(b).
-------
"Default Loan" has the meaning specified therefor in Section 6.23(b).
------------
"Default Notice" has the meaning specified therefor in Section
--------------
6.23(b).
"Default Rate" has the meaning specified therefor in Section 6.23(b).
------------
"Defaulting Party" has the meaning specified therefor in Section
----------------
6.23(b).
[*]
"Dispute" has the meaning specified therefor in Section 9.01.
-------
"Drop Dead Date" has the meaning specified therefor in Section 8.01.
--------------
"Due Date" has the meaning specified therefor in Section 6.12(e).
--------
"Encumbrance" means any security interest, pledge, mortgage, lien
-----------
(including, without limitation, environmental and tax liens), charge,
encumbrance, easement, adverse claim, preferential arrangement or restriction of
any kind, including, without limitation, any restriction on the use, voting,
transfer, receipt of income or other exercise of any attributes of ownership.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
------------
[*]= CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
6
"Excite Holdings" means Excite Holdings Corporation, a newly-formed
---------------
Delaware holding corporation which will be a limited partner of the Broadband
Operating Company, will hold Preference Shares of Broadband Holdings and which
will be a Subsidiary of At Home immediately after the Closing.
"Existing Covered Services" means, collectively, all chello Existing
-------------------------
Covered Services and all At Home Existing Covered Services.
"Fair Market Value" means, in the context of a Change of Control, the
-----------------
fair market value that would be obtained in a purchase and sale on an arms'-
length basis by a buyer and seller under no compulsion to effect such
transaction and without regard to discounts for minority ownership or
illiquidity of the applicable equity ownership interests in Broadband Holdings
and the limited partnership interest in Broadband Operating Company, which Fair
Market Value shall be determined as follows:
(i) by written agreement of the Parties within 10 days of the event
requiring the determination of Fair Market Value (unless
extended by the Parties);
(ii) if the Parties do not reach agreement pursuant to sub-clause
(i) above and the Change of Control occurs prior to an IPO of
Broadband Holdings, pursuant to the Banks' Valuation Method
(provided, that each of At Home, on the one hand, and UPC and
UGC, on the other, shall appoint one of the first two banks),
which value shall be determined (A) in the event of either a
call exercised within 30 days after a Public Disclosure or of a
put, as of the date which is 10 days prior to the Announcement
related thereto and (B) in the event of a call exercised more
than 30 days and less than 120 days after a Public Disclosure
(subject to the proviso in Section 6.12(a)(i)), as of the date
of such exercise; or
(iii) if the Change of Control occurs after an IPO of Broadband
Holdings (A) in the event of either a call exercised within 30
days after a Public Disclosure or of a put, by averaging the
closing trading prices of the ordinary shares of Broadband
Holdings for the 30 trading days preceding the date which is 10
days prior to the Announcement related thereto on the principal
securities exchange on which such shares are trading and (B) in
the event of a call exercised more than 30 days and less than
120 days after a Public Disclosure (subject to the proviso in
Section 6.12(a)(i)), by averaging the closing trading prices of
the ordinary shares of Broadband Holdings for the 30 trading
days preceding the date of such exercise.
In the event a transaction requires a determination of Fair Market Value of
Preference Shares or limited partnership interests, such determination shall
assume such Preference Shares are valued at their original cost and that such
BOC limited partnership interests have been exchanged for shares of BH.
"Financial Statements" has the meaning specified therefor in Section
--------------------
5.01(c).
"Forfeited Option" has the meaning specified therefor in Section
----------------
6.09(b)(iii).
7
"Governmental Authority" means any international, supranational,
----------------------
national, provincial, state, municipal or local government, governmental,
regulatory or administrative authority, agency or commission or any court,
tribunal, or judicial or arbitral body.
"Governmental Order" means any order, writ, judgment, injunction,
------------------
decree, stipulation, determination or award entered by or with any Governmental
Authority.
[*]
"Indebtedness" shall have the meaning specified therefor in the UGC
------------
Indentures listed in Schedule 1.01(a) of the United Group Disclosure Schedule.
"Indemnified Party" has the meaning specified therefor in Section
-----------------
7.03.
"Indemnifying Party" has the meaning specified therefor in Section
------------------
7.03.
"Indentures" means those indentures of UPC and UGC listed in Schedule
----------
1.01(a) of the United Group Disclosure Schedules together with any similar
documentation governing the rights and obligations of the holders of UPC or UGC
Indebtedness.
"Intellectual Property" means all present and future (i) patents,
---------------------
patent applications and statutory invention registrations, (ii) trademarks,
service marks, domain names, trade dress, logos, and other source identifiers,
including registrations and applications for registrations thereof, (iv)
software, and (v) confidential and proprietary information, including trade
secrets and know-how.
[*]
"Knowledge" means (i) with respect to the At Home Parties, the actual
---------
Knowledge, without independent investigation, of (A) all International Vice
Presidents and senior officers of At Home with the title of Executive Vice
President or higher who are resident in Redwood City, California and (B) any
professional who directly reports to the Executive Vice President of
International Operations, in each case, as of the date hereof and (ii) with
respect to the United Group Parties, the actual Knowledge, without independent
investigation, of all executives of chello with the title of Managing Director
(other than country level Directors and Managing Directors) or higher, the
Management Board and the employees of UPC and/or UGC who are Supervisory Board
Members of chello, in each case, as of the date hereof.
"Law" means any international, supranational, national, state,
---
provincial, municipal or local statute, law, ordinance, regulation, rule, code
or order.
"Losses" has the meaning specified therefor in Section 7.01(a).
------
"Make Whole Fair Market Value" has the meaning specified therefor in
----------------------------
Section 6.14(c).
"Material Adverse Effect" means any effect on a Person that,
-----------------------
individually or in the aggregate with any other circumstances, changes in, or
effects on, such Person: (a) is, or is reasonably likely to be, materially
adverse to the business, operations, or financial condition of such Person taken
as a whole, (b) materially and adversely affects the ability of such Person to
conduct its business substantially in the manner in which it is currently
[*]= CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
8
operated, or (c) would render impossible or economically unfeasible any of the
transactions contemplated by this Agreement and the other Basic Agreements. A
"Material Adverse Change" means any change or circumstance affecting a relevant
-----------------------
Person that has had or could reasonably be expected to have a Material Adverse
Effect on such Person. For purposes hereof, a Material Adverse Effect as it
applies to (i) "At Home International" shall mean the businesses comprising the
---------------------
At Home Contributed Assets, taken as a whole or (ii) "chello" shall mean the
------
businesses comprising the United Group Contributed Assets, taken as a whole.
"Network Sharing Term Sheet" means the term sheet for network sharing
--------------------------
agreed between chello and UPC, in the form attached hereto as Annex G, as
amended from time to time.
"Non-Acquired Party" has the meaning specified therefor in Section
------------------
6.12.
"Non-Defaulting Parties" has the meaning specified therefor in Section
----------------------
6.23(b).
"Nontransferred At Home Employee Awards" has the meaning specified
--------------------------------------
therefor in Section 6.09(b)(iv).
"Non-Transferred Entities" has the meaning specified therefor in
------------------------
Section 6.14(b).
"Non-Transferred Interest" has the meaning specified therefor in
------------------------
Section 6.14(c).
"Offer Notice" has the meaning specified therefor in Section 2.02(c).
------------
"Officers' Certificate" means a certificate signed by the Chief
---------------------
Financial Officer or other senior officer of the Person whose certificate is so
required.
"Party" means Excite Holdings, At Home, chello Holdings, UPC and UGC
-----
and their respective successors and assigns.
"Payment Amount" has the meaning specified therefor in Section
--------------
6.23(a).
"Payment Date" has the meaning specified therefor in Section 6.14(c).
------------
"Performing Group" has the meaning specified therefor in Section 8.01.
----------------
"Person" means any individual, partnership, limited liability company,
------
firm, corporation, company, association, trust, unincorporated organization or
other entity.
"Phantom Option" has the meaning specified therefor in Section
--------------
6.09(b)(i).
"Preference Shares" means the preference shares of Broadband Holdings
-----------------
that will be issued to Excite Holdings and immediately thereafter chello
Holdings at the Closing.
"Public Disclosure" has the meaning specified therefor in Section
-----------------
6.12(a).
"SEC" means the U.S. Securities and Exchange Commission.
---
9
"Spread" has the meaning specified therefor in Section 6.09(b)(i).
------
"Subsidiary" means, with respect to any Person, any other Person
----------
Controlled by such Person.
"Substitute chello Equity Award" has the meaning specified therefor in
------------------------------
Section 6.09(b)(i).
"Substitute chello Option Award" has the meaning specified therefor in
------------------------------
Section 6.09(b)(ii).
"Substitute At Home Option Award" has the meaning specified therefor
-------------------------------
in Section 6.09(b)(iii).
"Supermajority Governance Rights" means, with respect to any Person,
-------------------------------
the rights of such Person or any of its Controlled Affiliates (including without
limitation chello Holdings and Excite Holdings) to (i) nominate four members to
the Supervisory Board of BH pursuant to Section 2.1 of the BH Shareholders'
Agreement, (ii) have certain matters approved by at least one BH Supervisory
Board member nominated by it pursuant to Section 2.2 of the BH Shareholders'
Agreement, and (iii) vote Preference Shares of BH on any matters. At any time
during which a Person has lost its Supermajority Governance Rights, it and its
Controlled Affiliates shall be precluded from voting as a shareholder of BH
other than as a holder of BH ordinary shares, and it and its Controlled
Affiliates shall immediately cause the resignation of such member of Supervisory
Board members of BH previously nominated by them as is necessary to make the
relative number of such directors nominated by them proportionate to their
collective Equity Interests in BOC.
"Technology Licensing Term Sheet" means the term sheet for technology
-------------------------------
licensing agreed between At Home and the Broadband Operating Company, in the
form attached hereto as Annex H, as amended from time to time.
[*]
"Term" has the meaning specified therefor in Section 8.01.
----
"Term Sheets" means, collectively, the Network Sharing Term Sheet and
-----------
the Technology Licensing Term Sheet.
"Territory" means the World exclusive of the United States and Canada,
---------
subject to the further provisions of the Technology Licensing Term Sheet.
"Transition Date" has the meaning specified therefor in Section
---------------
6.10(a).
"Transferred Employee Liabilities" has the meaning specified therefor
--------------------------------
in Section 6.10(b).
"Transferred Employees" has the meaning specified therefor in Section
---------------------
6.10(a).
"UGC SEC Reports" means the Annual Report on Form 10-K for UGC for the
---------------
year ended December 31, 1999 and any filings made by UGC subsequent thereto
under the Exchange Act.
[*]= CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMMITED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
10
"United Group Contributed Assets" means the capital stock of chello
-------------------------------
and those other assets, of whatsoever kind and nature, of UPC or UGC that are to
be contributed to the Broadband Operating Company pursuant to Section 3.01(b) as
listed and more specifically described in Section 1.01(b) of the United Group
Disclosure Schedule.
"United Group Employees" has the meaning specified therefor in Section
----------------------
6.11(a).
"United Group Obligation" has the meaning specified therefor in
-----------------------
Section 7.01(c).
"United Group Indemnified Parties" has the meaning specified therefor
--------------------------------
in Section 7.02(a).
"United Group Party" has the meaning specified therefor in Section
------------------
8.02.
"United Group Transfer Documents" means the assignments, deeds of
-------------------------------
transfer, stock powers, conveyances and other transfer documents that are
necessary to effect the transfer of the United Group Contributed Assets to the
Broadband Operating Company, as listed in Annex I, as amended from time to time.
"United States" means the District of Columbia and the fifty states of
-------------
the United States of America and bases of the United States military wherever
the same may be located.
"UPC Payment" has the meaning specified therefor in Section
-----------
6.09(b)(i).
"UPC Plans" has the meaning specified therefor in Section 6.09(b)(v).
---------
"UPC SEC Reports" means the Annual Report on Form 10-K for UPC for the
---------------
year ended December 31, 1999 and any filings made by UPC subsequent thereto
under the Exchange Act.
ARTICLE II
PURPOSE AND SCOPE OF THE AGREEMENT
SECTION 2.01. Business Purpose and Formation
------------------------------
(a) Business Purpose. The Parties are entering into the Basic
----------------
Agreements initially to conduct and manage the business of providing portal and
internet access services, both broadband and narrowband, through the Broadband
Operating Company and its Subsidiaries and At Home Joint Ventures in the
Territory and, subject to the provisions of this Agreement and the other Basic
Agreements to pursue, participate in, take an interest in any other way in, and
conduct the management of business enterprises of whatever nature and further
finance third parties and in any way provide security or undertake the
obligations of third parties, and to conduct other activities which are
incidental to or which may be conducive to any of the foregoing. Subject to the
approval of the BOC General Partner, the
11
Broadband Operating Company shall have the authority to do all things necessary
or convenient to conduct and manage any such businesses in the Territory.
(b) Names. The name of Broadband Holdings shall be "Excite chello
----- -------------
N.V.," and the name of the Broadband Operating Company "Excite chello C.V." or
--- ------------------
such other name as shall be mutually agreed by the Parties prior to Closing. All
business of the Broadband Operating Company and Broadband Holdings shall be
conducted under such names or any other names approved by the Supervisory Board
of Broadband Holdings.
(c) Principal Places of Business. The statutory seat of the Broadband
----------------------------
Operating Company and Broadband Holdings shall be in Amsterdam and their
principal places of business at which the records required to be maintained by
the laws of The Netherlands are to be kept shall be in such place or places in
The Netherlands as the BH management board may propose to its Supervisory Board
for their approval.
(d) Formation. The Parties agree to form Broadband Holdings as a
---------
naamloze vennootschap, or public company with limited liability, under the laws
of The Netherlands and hereby agree to execute the Broadband Holdings Articles
of Association (the "Broadband Holdings Articles of Association") and Deed of
------------------------------------------
Incorporation ("Broadband Holdings Deed of Incorporation"), each consistent with
----------------------------------------
Section 2.01(e) and in form and substance reasonably satisfactory to each of
UGC, UPC and At Home and to sign all other documents and to take such actions as
may be necessary or desirable to incorporate and register Broadband Holdings in
The Netherlands. The Parties agree to form Broadband Operating Company as a
commanditaire vennootschap, or limited partnership, under the laws of The
Netherlands pursuant to the BOC Limited Partnership Agreement and to sign all
other documents and to take such actions as may be necessary or desirable to
form and register the Broadband Operating Company in The Netherlands.
(e) Authorized Capital. The authorized capital of Broadband Holdings
------------------
shall be as set forth in Annex J and the capitalization of the Broadband
Operating Company shall be as set forth in Annex K.
(f) Initial Supervisory Directors. The Parties agree that prior to
-----------------------------
the Closing each of UPC and UGC, on the one hand, and At Home, on the other,
shall appoint five (5) initial Supervisory Directors of Broadband Holdings
(including among such five (5) Supervisory Directors one (1) independent
Supervisory Director) and the Parties shall mutually agree on the appointment of
one (1) additional independent Supervisory Director, all in accordance with the
BH Shareholders' Agreement. The Parties agree that they will take appropriate
actions so that (i) the Supervisory Board will have Xxxx Xxxxxxxxx and Xxxxxx
Xxxx as Co-Chairman for the first year after the Closing, and (ii) thereafter
the right to nominate and ultimately designate the Chairman of the Supervisory
Board shall rotate on an annual basis, with Excite Holdings entitled to appoint
the Chairman for the second year, and chello Holdings entitled to appoint the
Chairman for the third year, and so on. The Parties also agree that there shall
be established as a committee of the Supervisory Board of BH an operating
committee (the "BH Operating Committee"), and that the right to appoint the
----------------------
Chairman of the BH Operating Committee shall rotate on an annual basis, with
Excite Holdings entitled to appoint the Chairman for the first year after the
Closing, and chello Holdings entitled to appoint the Chairman for the second
year, and so on. Any Party's right to appoint the Chairman of BH's Supervisory
Board or the BH Operating Committee shall terminate at such time as such Party
has lost its rights to nominate four (4) members of the BH Supervisory Board
under Section 2.1 of the BH Shareholders' Agreement. The Parties
12
agree that between the date hereof and the Closing Date chello, and after the
Closing Date, BH will retain a reasonably acceptable independent search firm for
the purpose of identifying two appropriate candidates to be Independent (as
defined in the Shareholders Agreement) Supervisory Board members, and that At
Home will work with such search firm to establish appropriate criteria in the
selection of the two candidates. At Home, UPC and UGC shall have approval rights
with respect to the individuals (such approval rights not to be unreasonably
withheld.). The Parties agree that the third Independent Supervisory Board
member shall be the individual designated by Liberty Media Corporation as
provided in the Liberty Media definitive financing documentation. Replacements
for the first two Independent Supervisory Board members will be selected using
the foregoing procedures.
SECTION 2.02 Exclusivity.
-----------
Each of the Parties acknowledges and agrees that:
(a) Subject to Section 2.02(e) below, each of At Home and Excite
Holdings agrees with UPC, UGC and chello Holdings that At Home will, and will
cause each of its Subsidiaries to, provide the applicable Covered Services and
perform and observe its obligations and agreements set forth in the Technology
Licensing Term Sheet, including without limitation those relating to exclusivity
and non-competition. At Home hereby agrees that UPC and UGC shall be third
party beneficiaries of the non-competition and exclusivity provisions of the
Technology Licensing Term Sheet only.
(b) Subject to Section 2.02(e) below, each of UPC, chello Holdings and
UGC agrees with At Home and Excite Holdings that each of UPC and UGC will, and
will cause its Subsidiaries to, provide the applicable Covered Services and
perform and observe its obligations and agreements set forth in the chello
Relationship Agreements, amended as provided in Annex L, including without
limitation those relating to exclusivity and non-competition. Each of UPC and
UGC hereby agrees that At Home shall be a third party beneficiary of the non-
competition and exclusivity provisions of the chello Relationship Agreements
only. For a period of fifteen (15) years after the Closing Date, neither UPC
nor UGC (in the case of UGC, for so long as UGC Controls, directly or
indirectly, chello Holdings or any employees of UGC are members of the BH
Supervisory Board), will provide Portals or Broadband Services (as such terms
are defined in the Technology Licensing Term Sheet) in the Territory, except
through non-Affiliated third parties pursuant to, and in compliance with,
Section 2.02 of the chello Relationship Agreements; provided, that UPC and/or
UGC may develop and provide Internet Access Services (as defined in the
Technology Licensing Term Sheet) for non-cable delivery systems; provided,
further, that the Parties and, after the Closing, BOC will use commercially
reasonable efforts, in good faith to negotiate a relationship by which BOC and
its Controlled Affiliates will be permitted to offer wholesale ISP services on a
non-exclusive basis over the UPC Affiliates' cable networks. In the event of
termination of the non-competition provisions applicable to At Home in the
Technology Licensing Term Sheet, the non-competition provisions applicable to
UPC and UGC set forth this Section 2.02 shall terminate simultaneously with such
termination. For avoidance of doubt, the Parties agree that prior to Closing
the Parties shall reform this Agreement and the Basic Agreements, as
appropriate, to put all non-competition and exclusivity provisions in one
agreement.
(c) (i) (A) Except as provided in Section 2.02(d) below, no Party
will make an acquisition of or an investment in a Competing Person who
provides Category P Services (which, for purposes of this Section 2.02(c)
only, with respect to
13
UPC and UGC shall mean Portals and Broadband Services (as such terms are
defined in the Technology Licensing Term Sheet)) in the Territory unless
(1) such Party shall have received the prior written consent from BH to
such acquisition or investment or (2) promptly following a Party's
acquisition of or Controlling investment in such a Competing Person (it
being understood that this Section 2.02(c) does not permit a non-
Controlling acquisition or investment), the acquiring Party shall deliver a
notice (such notice, together with any offer notice delivered pursuant to
Sections 2.02(c)(i)(B) or 2.02(c)(v) below, an "Offer Notice") to BH
------------
offering to BH the right (such right, together with a right of first offer
described in Section 2.02(c)(i)(B), being a "Category P Services Right of
----------------------------
First Offer") to purchase that portion of the Competing Person's business
----------
which includes Category P Services (a "Competing Category P Services
-----------------------------
Business"). The Offer Notice shall disclose in reasonable detail the terms
--------
and conditions (which shall not impose unreasonable restrictions on the
buyer), including the cash purchase price (determined as set forth below),
under which the acquiring Party would be willing to sell the Competing
Category P Services Business to BH. Each Category P Services Right of First
Offer shall expire 30 days after the delivery of the Offer Notice. If BH
elects by delivery of written notice (such notice, together with any
acceptance notice delivered pursuant to Sections 2.02(c)(i)(B) or
2.02(c)(v) below, an "Acceptance Notice") of such election to the acquiring
-----------------
Party within thirty (30) days after delivery of the Offer Notice to accept
such offer and enter into the proposed transaction to purchase the
Competing Category P Services Business, then BH and the acquiring Party
shall have the obligation to consummate the proposed transaction at the
price and on the terms and conditions specified in the Offer Notice;
provided, however, that in lieu of cash BH may issue (a "BH Share
---------
Issuance") such number of its ordinary shares as consideration for such
--------
purchase as have a market value (with appropriate discount for illiquidity
if (x) BH is not a publicly traded company at the time of such purchase or
(y) BH is a public traded company at such time, such shares are restricted
shares without demand or shelf registration rights reasonably acceptable to
the acquiring Party) equal to the cash purchase price. If such shares are
publicly traded and no discount for illiquidity is required, such market
value shall be determined by averaging the closing trading prices of such
shares for the 30 days ending five business days prior to the closing of
such transaction. In all other cases, such market value of BH ordinary
shares (discounted as set forth above) shall be determined by two
internationally recognized investment banks appointed by the acquiring
Party and BH; provided that if the market values differ by more than 10%
from each other, a third international recognized investment bank will be
appointed jointly by the first two investment banks and such market value
shall be the average of the market value determined by the third bank and
the closest of the other two investment banks' market values (such process
being, the "Banks' Valuation Method"). The closing of such transaction
-----------------------
shall occur within 120 days after delivery of the Acceptance Notice.
(B) Except as provided in Section 2.02(d) below, BH will not
make an acquisition of or an investment in a Competing Person who provides
Category P Services outside the Territory unless (1) BH shall have received
prior written consent from At Home to such acquisition or investment or (2)
promptly following BH's acquisition of or Controlling investment in such a
Competing Person (it being understood that this Section 2.02(c) does not
permit a non-Controlling acquisition or investment), BH shall deliver an
Offer Notice to At Home giving to At Home a Category P Services Right of
First Offer to purchase the Competing Category P
14
Services Business. The Offer Notice shall disclose in reasonable detail the
terms and conditions (which shall not impose unreasonable restrictions on
the buyer), including the cash purchase price (determined as set forth
below), under which BH would be willing to sell the Competing Category P
Services Business to At Home. If At Home delivers to BH an Acceptance
Notice with respect to the Competing Category P Services Business within
thirty (30) days after delivery of the Offer Notice, then At Home and BH
shall have the obligation to consummate the proposed transaction at the
price and on the terms and conditions specified in the Offer Notice;
provided, however, that in lieu of cash At Home may issue (an "At Home
-------
Share Issuance") such number of shares of its common stock as consideration
--------------
for such purchase as have a market value (with appropriate discount for
illiquidity if (x) At Home is not a publicly traded company at the time of
such purchase or, (y) At Home is a public traded company at such time, such
shares are restricted shares without demand or shelf registration rights
reasonably acceptable to BH) equal to the cash purchase price. If such
shares are publicly traded and no discount for illiquidity is required,
such market value shall be determined by averaging the closing trading
prices of such shares for the 30 days ending five business days prior to
the closing of such transactions. In all other cases, such market value of
At Home shares (discounted as set forth above) shall be determined pursuant
to the Banks' Valuation Method; provided, that each of At Home and BH shall
appoint one of the first two banks. The closing of such transaction shall
occur within 120 days after delivery of the Acceptance Notice.
(ii) The cash purchase price for the Competing Category P Services
Business to be included in the Category P Services Right of First Offer
shall be the fair market value that would be obtained in a purchase and
sale on an arms'-length basis by a buyer and seller under no compulsion to
effect such transaction and without regard to discounts for minority
ownership or illiquidity, of the Competing Category P Services Business
(taking into account only that portion of the Competing Person's business
which is a Competing Category P Services Business) determined by mutual
written agreement of the Parties within 10 days after the delivery of the
Offer Notice or, in the event the Parties are unable to so agree, pursuant
to the Banks' Valuation Method.
(iii) In the event BH or At Home, as applicable, does not elect to
purchase the Competing Category P Services Business pursuant to the
Category P Services Right of First Offer, the acquiring party shall have
three (3) years from the expiration of the Category P Services Right of
First Offer to divest, as appropriate (x) its ownership interest in the
Competing Person such that neither its equity interest therein nor its
voting rights with respect thereto exceed 20% directly or indirectly with
respect to the Competing Business or (y) at least 80% of the Competing
Business such that neither its equity interest therein nor its voting
rights with respect thereto exceed 20%, in each case, at a price and on
terms not materially less favorable to the acquiring party than set forth
in the Category P Services Right of First Offer (pro rated according to the
percentage divested).
(iv) In the event such divestiture is not completed within six (6)
months of the expiration of a Category P Services Right of First Offer or
in the event the acquiring party at any time determines to sell the
Competing Category P Services Business on terms which are materially less
favorable to the acquiring party than those set forth in the most recent
Category P Services Right of First Offer, then the
15
acquiring party shall be required to repeat the Category P Services Right
of First Offer procedure described above prior to disposing of the
Competing Category P Services Business. The provisions of this Section
2.02(c)(iv) shall apply to each Category P Services Right of First Offer
until such disposition is completed within such three-year period.
(v) (A) Except as provided in Sections 2.02(c)(viii) and 2.02(d)
below, At Home will not make an acquisition of or an investment in a
Competing Person who provides Category V Services in the Territory unless
(1) At Home shall have received the prior written consent from BH to such
acquisition or investment or (2) promptly following At Home's acquisition
of or Controlling investment in such a Competing Person (it being
understood that this Section 2.02(c) does not permit a non-Controlling
acquisition or investment), At Home shall deliver an Offer Notice to BH
offering to BH the right (the "Category V Services Right of First Offer")
----------------------------------------
at At Home's election to either (x) purchase that portion of the Competing
Person's business which includes Category V Services (the "Competing
---------
Category V Services Business") or (y) enter into an arrangement (a
----------------------------
"Category V Services Arrangement") with At Home to be an operator, joint
--------------------------------
venture partner or master distributor on an exclusive basis with respect to
the Category V Services. The Offer Notice shall disclose in reasonable
detail the terms and conditions, including with respect to a sale the cash
purchase price (determined as set forth in clause (vi) below), under which
At Home would be willing to enter into such sale or Category V Services
Arrangement transaction with BH with respect to the Competing Category V
Services Business. The Parties agree that At Home and BH shall negotiate in
good faith for the thirty (30) day period after delivery of the Offer
Notice with respect to the establishment of a Category V Services
Arrangement. Each Category V Services Right of First Offer shall expire 30
days after delivery of the Offer Notice. If BH elects by delivery of an
Acceptance Notice within the thirty (30) days after delivery of the Offer
Notice to accept such offer and enter into the proposed transaction, then
BH and At Home shall have the obligation to consummate the proposed
transaction at the price and on the terms and conditions specified in the
Offer Notice (as may be modified with respect to a Category V Services
Agreement pursuant to the second preceding sentence); provided, however,
-------- -------
that, in conjunction with a purchase of the Competing Category V Services
Business, in lieu of cash BH may, as consideration for such purchase, issue
shares in a BH Share Issuance in an amount determined in accordance with
Section 2.02(c)(i)(A). The closing of such transaction shall occur within
120 days after delivery of the Acceptance Notice.
(B) Except as provided in Sections 2.02(c)(viii) and 2.02(d)
below, BH will not make an acquisition of or an investment in a Competing
Person who provides Category V Services outside the Territory unless (1) BH
shall have received the prior written consent from At Home to such
acquisition or investment or (2) promptly following BH's acquisition of or
Controlling investment in such a Competing Person (it being understood that
this Section 2.02(c) does not permit a non-Controlling acquisition or
investment), BH shall deliver an Offer Notice to At Home giving to At Home
a Category V Services Right of First Offer at BH's election to either (x)
purchase the Category V Services Business or (y) enter into a Category V
Services Arrangement with BH to be an operator, joint venture partner or
master distributor on an exclusive basis with respect to the Category V
Services. The Offer Notice shall disclose in reasonable detail the terms
and conditions, including with
16
respect to a sale the cash purchase price (determined as set forth in
clause (vi) below), under which At Home would be willing to enter into such
sale or Category V Services Arrangement transaction with At Home with
respect to the Competing Category V Services Business. The parties agree
that At Home and BH shall negotiate in good faith for the thirty (30) day
period after delivery of the Offer Notice with respect to the establishment
of a Category V Services Arrangement. Each Category V Services Right of
First Offer shall expire 30 days after delivery of the Offer Notice. If At
Home elects by delivery of an Acceptance Notice within the thirty (30) days
after delivery of the Offer Notice to accept such offer and enter into the
proposed transaction, then BH and At Home shall have the obligation to
consummate the proposed transaction at the price and on the terms and
conditions specified in the Offer Notice (as may be modified with respect
to a Category V Services Agreement pursuant to the second preceding
sentence); provided, however, that, in conjunction with a purchase of the
-------- -------
Competing Category V Services Business, in lieu of cash At Home may, as
consideration for such purchase, issue shares in an At Home Share Issuance
in an amount determined in accordance with Section 2.02(c)(i)(B). The
closing of such transaction shall occur within 120 after delivery of the
Acceptance Notice.
(vi) The cash purchase price for the Competing Category V Services
Business to be included in the Category V Services Right of First Offer
shall be the fair market value that would be obtained in an arms'-length
transaction among parties under no compulsion to effect such transaction
and without regard to discounts for minority ownership or illiquidity, of
the Competing Category V Services Business (taking into account only that
portion of the Competing Person's business which is a Competing Category V
Services Business and based on a fair allocation of the purchase price for
that portion of the business) determined in good faith by the offering
party.
(vii) In the event BH or At Home, as applicable, is not offered to or
does not elect to purchase the Competing Category V Services Business
and/or the parties are unable to reach agreement with respect to a Category
V Services Arrangement pursuant to the Category V Services Right of First
Offer, the acquiring party may retain and operate its interest in the
Competing Category V Services Business; provided, that during the initial
six (6) month period following the expiration of the Category V Services
Right of First Offer with respect thereto, the acquiring party may not
enter into a sale or other Category V Services Arrangement (or other
similar transaction) with a third party on terms less favorable to the
acquiring party than those set forth in the Offer Notice (or ultimately
offered to the non-acquiring party in connection with a Category V Services
Arrangement). Thereafter, the acquiring party may freely retain and operate
or dispose of its interest in the Competing Category V Services Business.
(viii) The provisions of Sections 2.02(c)(v) through (vii) shall not
apply to an acquisition of, or investment in, a Person which is a
traditional media company whose business includes Category V Services which
are ancillary to its primary business.
(d) Notwithstanding any provision of this Section 2.02 or any other
provision of this Agreement, non-Controlling equity interests or other
investments that
17
represent less than 20% of a Competing Person's equity ownership or voting
interest shall be permitted.
(e) Set forth in Section 2.02(e) of each of the At Home Disclosure
Schedule and the United Group Disclosure Schedule, respectively, is a list of
certain contractual obligations which are currently in existence which breach
the provisions of this Section 2.02. Prior to the Closing, each Party will
notify the other Parties of any additional event or circumstance in which such
Party is directly or indirectly providing any Covered Services (other than
through chello or the At Home International Entities) or otherwise in breach of
this Section 2.02 under a contractual obligation that is currently in existence
or will be in existence on the Closing Date. In such event, except with respect
to the matters disclosed in Section 2.02(e) of each of the At Home Disclosure
Schedule and the United Group Disclosure Schedule, such Party will use
commercially reasonable efforts to comply with the terms of this Section 2.02 as
promptly as practicable, and will in any event promptly notify the other Parties
of the circumstances as they evolve relating to such Covered Services and the
steps such Party is taking to so comply.
(f) The restrictions set forth in this Section 2.02 shall not apply
if, and only to the extent, any Party can demonstrate that it cannot fully
comply with these restrictions due to a conflict with a legal or regulatory
requirement from which it has been unable to obtain an exemption despite having
used commercially reasonable efforts to obtain the same, or due to the
intervention of a Governmental Authority. In the event of any such conflict,
such Party must as promptly as practical disclose such conflict to the other
Parties in writing. In such event, the Parties shall negotiate in good faith to
replace the provisions of this Section 2.02 with respect to such situation with
an effective clause which comes as close as reasonably possible to the economic
and other intent and purposes of this Section 2.02 and/or such Party will
cooperate with the other Parties and the relevant Governmental Authority to
resolve such conflict.
SECTION 2.03. Formation of Holding Companies. Each of At Home, UPC and
------------------------------
UGC shall use commercially reasonable efforts to promptly form Excite Holdings
and chello Holdings, respectively. At Home hereby covenants and agrees to stand
behind and be liable for the representations, warranties and covenants of Excite
Holdings set forth herein and in the other Basic Agreements as if Excite
Holdings were currently a party hereto and thereto. UPC and UGC hereby covenant
and agree to stand behind and be liable for the representations, warranties and
covenants of chello Holdings set forth herein and in the other Basic Agreements
as if chello Holdings were currently a party hereto and thereto.
ARTICLE III
CLOSING AND CONDITIONS TO CLOSING
SECTION 3.01. Closing.
-------
(a) Upon the terms and subject to the conditions of this Agreement,
the closing of the transactions contemplated by this Agreement shall take place
at a closing (the "Closing") to be held at the offices of Shearman & Sterling, 9
-------
Xxxxxx Xxxxxx, Xxxxxx, XX0X 0XX, on the fifth business day following the
satisfaction or waiver of all conditions to the obligations of the Parties set
forth in this Article III, or at such other time and place as the Parties may
agree upon in writing (the day on which the Closing takes place being the
"Closing Date").
------------
18
(b) At the Closing, the transactions contemplated by Annex M,
including without limitation, the following transactions will be completed (it
being understood that certain steps may be taken in anticipation of the Closing
to establish the contemplated corporate structure, as set forth in Section 2.01
and Annex M, and that the order of these steps shall be as set forth in Annex
M):
(i) At Home and Excite Holdings shall cause the At Home Contributed
Assets to be transferred into the Broadband Operating Company pursuant to
the At Home Transfer Documents;
(ii) chello Holdings, UPC and UGC shall cause the United Group
Contributed Assets to be transferred to the Broadband Operating Company
pursuant to the United Group Transfer Documents;
(iii) the Broadband Operating Company shall issue limited partnership
units to each of Excite Holdings and chello Holdings in exchange for the At
Home Contributed Assets and the United Group Contributed Assets referred to
above;
(iv) each of Excite Holdings and chello Holdings shall subscribe for
and purchase Preference Shares and ordinary shares of Broadband Holdings in
exchange for cash; and
(v) Broadband Holdings shall subscribe for and purchase general
partnership interests of the Broadband Operating Company in exchange for
cash.
SECTION 3.02. Conditions to Obligations of all Parties.
-----------------------------------------
The obligations of the Parties to complete the Closing shall be
subject to the fulfillment of the following conditions precedent:
(a) Consents and Approvals. Each of the Parties shall have received
----------------------
all consents, orders and approvals of all Governmental Authorities and officials
necessary to consummate the transactions contemplated by this Agreement and the
Basic Agreements, without any required modifications or amendment of the terms
hereof or thereof which are material to any Party including, without limitation,
any required consents, orders or approvals from the European Commission and any
national or other Governmental Authorities.
(b) No Order. No Governmental Authority shall have enacted, issued,
--------
promulgated, enforced or entered any Law (whether temporary, preliminary or
permanent) which is then in effect and has the effect of making illegal or
otherwise preventing or prohibiting consummation of the transactions
contemplated by this Agreement or the Basic Agreements.
(c) Commitment to Funding. A binding commitment to provide funding
---------------------
contemplated pursuant to Section 6.23 from Liberty Media Corporation, UGC and At
Home shall have been made available to BH within 10 business days from the date
hereof; provided, that (i) this condition shall not apply to UGC or At Home with
respect to its own funding commitment thereunder, and (ii) this condition shall
terminate after such 10th business day.
19
SECTION 3.03. Conditions to Obligations of At Home and Excite
-----------------------------------------------
Holdings.
--------
The obligation of At Home and Excite Holdings to complete the Closing
shall be subject to the fulfilment of the following conditions precedent:
(a) Representations, Warranties and Covenants.
-----------------------------------------
(i) The representations and warranties of each of chello Holdings,
UPC and UGC in this Agreement and the other Basic Agreements shall have
been true and correct when made and shall be true and correct as of the
Closing, with the same force and effect as if made as of the Closing Date,
other than (A) such representations and warranties as are made of another
date, which shall be true and correct as of such date and (B) any breach of
a representation or warranty which is not qualified as to Material Adverse
Effect, the breach of which has not had a Material Adverse Effect;
(ii) The covenants and agreements contained in this Agreement and the
other Basic Agreements to be complied with on or before the Closing by
chello Holdings, UPC and UGC shall have been complied with in all material
respects, and
(iii) Each of Excite Holdings and At Home shall have received from
each other Party an Officer's Certificate with respect to the matters set
forth in clauses (i) and (ii) above.
(b) Execution of Basic Agreements. Execution copies in final form of
-----------------------------
the Basic Agreements shall have been executed by each of the Parties to each
such agreement other than At Home and Excite Holdings.
(c) No Proceeding or Litigation.
----------------------------
No Action shall have been commenced by or before any Governmental
Authority which has had a Material Adverse Effect on chello.
(d) Legal Opinions. At Home and Excite Holdings shall have received
--------------
from counsel or counsels reasonably satisfactory to At Home (it being agreed
that Shearman & Sterling, Holmes, Xxxxxxx & Xxxxx, LLP and other local counsel
retained by UPC and UGC in connection with the transactions contemplated hereby
and by the Transfer Documents are satisfactory to At Home) opinions, addressing
the matters set forth in Annex N, each in form and substance reasonably
satisfactory to At Home.
(e) Material Adverse Change. Since the date of this Agreement, no
-----------------------
Material Adverse Change shall have occurred relating to chello.
(f) Resolutions. At Home shall have received a true and complete
-----------
copy, certified by the secretary or assistant-secretary of each of the other
relevant Parties, of the resolutions duly and validly adopted by the Board of
Directors or other relevant bodies of UPC and UGC evidencing their authorization
of the execution and delivery of this Agreement and the other Basic Agreements
to which they will become a party and the consummation of the transactions
contemplated hereby and thereby.
(g) Franchise Agreements. UPC will cause each UPC Affiliate listed
--------------------
in Section 3.03(g) of the United Group Disclosure Schedule to enter into binding
franchise term sheets in the form of the Franchise Term Sheets.
20
SECTION 3.04. Conditions to the Obligations of chello Holdings, UPC
-----------------------------------------------------
and UGC.
-------
The obligations of chello Holdings, UPC and UGC to complete the
Closing shall be subject to the fulfilment of the following conditions
precedent:
(a) Representations, Warranties and Covenants.
-----------------------------------------
(i) The representations and warranties of At Home and Excite
Holdings in this Agreement and the other Basic Agreements shall have been
true and correct when made and shall be true and correct as of the Closing,
with the same force and effect as if made as of the Closing Date (and the
representation and warranty in the final sentence of Section 5.01(d) shall
be true and correct without qualification as to At Home's Knowledge), other
than (A) such representations and warranties as are made of another date,
which shall be true and correct as of such date, and (B) any breach of a
representation or warranty which is not qualified as to Material Adverse
Effect, the breach of which has not had a Material Adverse Effect;
(ii) The representations and warranties of At Home and Excite
Holdings in Section 5.01(n) hereof shall be true and correct in all
material respects without qualification as to At Home's Knowledge as of the
Closing Date.
(iii) The covenants and agreements contained in this Agreement and
the other Basic Agreements to be complied with on or before the Closing by
At Home shall have been complied with in all material respects, and
(iv) Each of chello Holdings, UPC and UGC shall have received from At
Home and Excite Holdings an Officer's Certificate with respect to the
matters set forth in clauses (i) through (iii) above.
(b) Execution of Basic Agreements. Execution copies in final form of
-----------------------------
the Basic Agreements shall have been executed by each of the Parties to each
such agreement other than chello Holdings, UPC and UGC to the extent it is to be
a party to such agreements.
(c) No Proceeding or Litigation. No Action shall have been commenced
---------------------------
by or before any Governmental Authority which has had a Material Adverse Effect
on At Home International.
(d) Legal Opinions. chello Holdings, UPC and UGC shall have received
--------------
from counsel or counsels reasonably satisfactory to UPC and UGC (it being agreed
that Xxxxx Xxxxxxxxxx, Fenwick & West and other local counsel retained by At
Home in connection with the transactions contemplated hereby and by the Transfer
Documents are satisfactory to UPC and UGC) legal opinions addressing the matters
set forth in Annex O, each in form and substance reasonably satisfactory to
them.
(e) Material Adverse Change. Since the date of this Agreement, no
-----------------------
Material Adverse Change shall have occurred relating to At Home International.
(f) Resolutions. UPC and UGC shall have received a true and complete
-----------
copy, certified by the secretary or assistant-secretary of each of At Home and
Excite Holdings, of the resolutions duly and validly adopted by the Board of
Directors or other relevant body of At Home and Excite Holdings evidencing its
authorization of the execution
21
and delivery of this Agreement and the other Basic Agreements and the
consummation of the transactions contemplated hereby and thereby.
(g) Transfer of At Home Equity Interests. At Home and Excite Holdings
------------------------------------
shall have caused the transfer to BOC of (i) all of the equity interests of At
Home or Excite Holdings in the Contributed Subsidiaries and (ii) all of the At
Home Equity Interests listed in Section 3.04(g) of the At Home Disclosure
Schedule.
SECTION 3.05. Closing Deliveries. At the Closing, each Party shall
------------------
deliver to each other Party the certificates and other documents required to be
delivered pursuant to Sections 3.01, 3.02, 3.03 and 3.04.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF CHELLO HOLDINGS, UPC
AND UGC
SECTION 4.01. Joint and Several Representations and Warranties of
---------------------------------------------------
chello Holdings, UPC and UGC.
----------------------------
chello Holdings, UPC and UGC hereby jointly and severally represent
and warrant to At Home and Excite Holdings as follows, as qualified as set forth
herein by the disclosures set forth in the disclosure schedule of UPC, UGC and
chello Holdings (the "United Group Disclosure Schedule") delivered to At Home
--------------------------------
and Excite Holdings contemporaneously herewith:
(a) Organization and Authority. chello is a naamloze vennootschap
--------------------------
company duly organized and validly existing under the laws of The Netherlands
and has all necessary power and authority to carry on its business as presently
conducted and as currently contemplated to be conducted.
(b) Capital Stock of chello and Ownership of chello Shares. The
------------------------------------------------------
authorized capital stock of chello as of the date hereof is as set forth in
Section 4.01(b)(i) of the United Group Disclosure Schedule. As of the date
hereof, 33,468,000 shares of Ordinary Shares B, 3,642,035 shares of Ordinary
Shares A and 100 priority shares are issued and outstanding, all of which are
validly issued, fully paid and nonassessable. None of the issued and outstanding
shares of chello was issued in violation of any preemptive rights. Except as set
forth in the chello Preliminary Prospectus or in Section 4.01(b)(ii) of the
United Group Disclosure Schedule, (i) there are no options, warrants,
convertible securities or other rights, agreements, arrangements or commitments
of any character (including any such arrangements for the benefit of Microsoft
Corporation, Liberty Media Corporation or any Controlled Affiliate thereof)
relating to the capital stock of chello or obligating chello or any of its
shareholders to issue or sell any shares of capital stock of, or any other
interest in, chello, and (ii) there are no outstanding contractual obligations
of chello to repurchase, redeem or otherwise acquire any shares of common stock
or to provide funds to, or make any investment (in the form of a loan, capital
contribution or otherwise) in, any other Person. chello owns, directly or
indirectly, 100% of the stock of each Subsidiary listed in Section 4.01(b)(iii)
of the United Group Disclosure Schedule. Except as set forth on Section
4.01(b)(iv) of the United Group Disclosure Schedule, chello Holdings will own
100% of all outstanding shares of capital stock of chello immediately prior to
Closing.
22
(c) Corporate Books and Records. The minute books of chello and its
---------------------------
Subsidiaries contain accurate records of all meetings and accurately reflect all
other actions taken by the stockholders, the Supervisory Board, and all
committees of such Boards of chello and its Subsidiaries. Complete and accurate
copies of all such minute books and of the stock register of chello have been
provided to At Home.
(d) Litigation. Except as set forth in the chello Preliminary
----------
Prospectus or in Section 4.01(d) of the United Group Disclosure Schedule, (i)
there are no Actions by or against chello and its Subsidiaries pending before
any Governmental Authority (or to the Knowledge of chello Holdings, UPC and UGC
threatened to be brought by or before any Governmental Authority) which, if
adversely determined, would have a Material Adverse Effect on chello, and (ii)
chello is not subject to any Governmental Order (nor, to the Knowledge of chello
Holdings, UPC and UGC, are there any such Governmental Orders threatened to be
imposed by any Governmental Authority), which if adversely determined it is
reasonably likely would have a Material Adverse Effect on chello.
(e) Compliance with Laws. Except as would not, individually or in the
--------------------
aggregate, have a Material Adverse Effect on chello, chello and its Subsidiaries
have conducted and continue to conduct their business in accordance with all
Laws and Governmental Orders applicable to chello, and none of chello or its
Subsidiaries is in violation of any such Law or Governmental Order.
(f) Operating Permits, Licenses, Consents, Etc. Except as set forth
------------------------------------------
in the chello Preliminary Prospectus or in Section 4.01(f) of the United Group
Disclosure Schedule, each of chello and its Subsidiaries has obtained (or has
applied for and expects to receive) all permits, governmental licenses,
authorizations, qualifications, notifications, consents and approvals,
technology licenses and contractual consents, waivers and amendments as are
necessary for the conduct of the business of chello and each of its Subsidiaries
in all jurisdictions as carried out on the date hereof and as contemplated
hereby and by the other Basic Agreements, including, without limitation, all
franchises and telecommunication permits, licenses and consents, except in each
case to the extent that the failure to obtain or maintain such permits,
governmental licenses, authorizations, qualifications, consents and approvals,
technology licenses and contractual consents, waivers and amendments would not
have a Material Adverse Effect on chello.
(g) Intellectual Property. Except as set forth in the chello
---------------------
Preliminary Prospectus or in Section 4.01(g) of the United Group Disclosure
Schedule, chello (i) owns or possesses or is entitled to use, or can acquire on
reasonable terms, adequate Intellectual Property necessary for the conduct of
its business as currently conducted or currently proposed to be conducted and as
contemplated hereby and by the other Basic Agreements, (ii) has not received
notice of infringement of or conflict with asserted rights of others with
respect to any Intellectual Property and (iii) has taken reasonable steps
necessary to protect its confidential and proprietary information, including,
without limitation, trade secrets and know-how.
(h) Preliminary Prospectus. Except as set forth in Section 4.01(h) of
----------------------
the United Group Disclosure Schedule, (i) the chello Preliminary Prospectus, as
of its date, did not contain any untrue statement of a material fact or omit to
state a material fact (other than those matters set forth under the heading
"Risk Factors" that are no longer applicable due to cancellation of chello's
proposed initial public offering or the terms of the agreements provided for
herein and in the other Basic Agreements) necessary to make the statements
23
therein, in the light of the circumstances under which they were made, not
misleading, and complied in all material respects with the requirements of the
Securities Act of 1933 and the rules and regulations of the SEC thereunder; and
(ii) there has not occurred a Material Adverse Change as of the date of this
Agreement relating to chello since the date of the chello Preliminary
Prospectus.
(i) Tax Matters. All taxes payable by chello and its Subsidiaries
-----------
required to be paid on or prior to the date hereof have been paid (except for
such taxes as are being contested by appropriate proceedings in good faith and
with respect to which adequate reserves and allowances have been established and
identified with reasonable specificity on the applicable financial statements),
and the applicable financial statements contain adequate reserves and allowances
for all taxes of such entities that are attributable to taxable periods (or
portions thereof) through the date hereof with respect to which the payment of
such taxes is not yet due. The representations and warranties made in this
Section 4.01(i) as of the date hereof shall be remade as of the Closing Date.
(j) Set Top Box Technology. Neither UPC nor UGC has entered into any
----------------------
agreement or arrangements that requires UPC to deploy any technology or software
in set-top computers that would preclude or materially impair BOC's or its
Subsidiaries' provision of Category B Services to televisions or Category A
Services (as such terms are defined in the chello Relationship Agreements).
For the avoidance of doubt, an agreement or arrangement which would give UPC the
right to choose a provider of set-top operating system including, without
limitation, offering its own software solutions, would not be considered a
breach of this provision.
(k) Portals; Content. Except as set forth in Section 4.01(k) of the
----------------
United Group Disclosure Schedule, chello is not (i) subject to any agreements or
obligations that would restrict or prevent it from modifying its default portals
and (ii) a party to any agreements or arrangements with providers of content
which cannot be terminated without material penalty payable by chello or which
would prevent chello from contracting with providers of content, other than
local content that is not material.
SECTION 4.02. Several Representations and Warranties of chello
------------------------------------------------
Holdings, UPC and UGC. Each of chello Holdings, UPC and UGC hereby warrants and
---------------------
represents, each as to itself only and each severally and not jointly, to At
Home and Excite Holdings as follows, as qualified as set forth herein by the
United Group Disclosure Schedule:
(a) Organization and Authority. UPC is a naamloze vennootschap company
--------------------------
duly organized and validly existing under the laws of The Netherlands and has
all necessary power and authority to enter into its Relationship Agreement with
chello, this Agreement and the other Basic Agreements to which it will become a
party as contemplated hereby, to carry out its obligations hereunder and
thereunder and to consummate the transactions contemplated hereby and thereby.
chello Holdings will be a commanditaire vennootschap which as of the Closing
shall be duly organized and validly existing under the laws of The Netherlands
and shall have all necessary power and authority to enter into this Agreement
and the other basic Agreements to which it is a party, to carry out its
obligations hereunder and thereunder and consummate the transactions
contemplated hereby and thereby. UGC is a corporation duly organized, validly
existing and in good standing under the laws of Delaware, and has all the
necessary power and authority to enter into its Relationship Agreement with
chello, this Agreement and the other Basic Agreements to which it will become a
party as contemplated hereby, to carry out its obligations hereunder and
thereunder
24
and to consummate the transactions contemplated hereby and thereby. The
execution and delivery of its Relationship Agreement with chello (in the case of
UPC and UGC), this Agreement and the other Basic Agreements to which it will
become a party as contemplated hereby by each of chello Holdings, UPC and UGC,
the performance by it of its obligations hereunder and thereunder and the
consummation by it of the transactions contemplated hereby and thereby have been
(or, with respect to chello Holdings, shall be) duly authorized by all requisite
action on its part. Each of its Relationship Agreement with chello (in the case
of UPC and UGC) and this Agreement has been duly executed and delivered by each
of chello Holdings, UPC and UGC and (assuming due authorization, execution and
delivery by the other Persons signatory hereto) each of its Relationship
Agreement with chello (in the case of UPC and UGC) and this Agreement
constitutes, and upon execution and delivery thereof each other Basic Agreement
to which it will become a party will constitute, a legal, valid and binding
obligation of each of chello Holdings, UPC and UGC enforceable against it in
accordance with its terms.
(b) No Conflict. Except as set forth in Section 4.02(b) of the United
-----------
Group Disclosure Schedule, the execution, delivery and performance by each of
chello Holdings, UPC and UGC of its Relationship Agreement with chello (in the
case of UPC and UGC), this Agreement and the other Basic Agreements to which it
will become a party as contemplated hereby do not and will not (i) violate,
conflict with or result in the breach of any provision of its Articles of
Association or certificate of incorporation, as applicable, (ii) conflict with
or violate any Law applicable to chello Holdings, UPC or UGC, chello or any of
chello's Subsidiaries or any of their assets, properties or businesses or (iii)
conflict with, result in any breach of, constitute a default (or event with
which the giving of notice or lapse of time or both, would become a default)
under, require any consent under, or give to others any rights or result in any
loss of rights (including, without limitation, rights upon a change of control)
pursuant to, any material contract, agreement or arrangement by which chello
Holdings, UPC or UGC or any of their Subsidiaries is bound.
(c) Ownership of chello Shares. As of the date hereof, the ownership
--------------------------
by chello Holdings, UPC and UGC of chello capital stock is as set forth in
Section 4.02(c) of the United Group Disclosure Schedule. The chello capital
stock held by each of UPC and UGC is owned of record and beneficially solely by
each of UPC and UGC free and clear of all Encumbrances.
(d) Litigation. Except as set forth in the chello Preliminary
----------
Prospectus or in Section 4.02(d) of the United Group Disclosure Schedule, there
are no Actions by or against either chello Holdings, UPC or UGC pending before
any Governmental Authority (or, to the Knowledge of each of chello Holdings, UPC
and UGC, threatened to be brought by or before any Governmental Authority)
which, if adversely determined, would have a Material Adverse Effect on chello
Holdings, UPC, UGC or chello or any of the transactions contemplated hereby or
by the other Basic Agreements. None of chello Holdings, UPC or UGC is subject
to any Governmental Order (nor, to the Knowledge of each of UPC or UGC, are
there any such Governmental Orders threatened to be imposed by any Governmental
Authority) which, if adversely determined, it is reasonably likely would have a
Material Adverse Effect on chello Holdings, UPC, UGC or chello or any of the
transactions contemplated hereby or by the other Basic Agreements.
(e) UPC and UGC SEC Reports. Except as set forth in Section 4.02(e)
-----------------------
of the United Group Disclosure Schedule, (i) the UPC SEC Reports and the UGC SEC
Reports, as of their respective filing dates, did not contain any untrue
statement of a material fact or
25
omit to state a material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading, and
complied in all material respects with the requirements of the Exchange Act and
the rules and regulations of the SEC thereunder, and (ii) there has not occurred
a Material Adverse Change relating to UPC and its Subsidiaries or UGC and its
Subsidiaries since the dates of filing of the most recent Quarterly Report on
Form 10Q for UPC and UGC, respectively.
(f) United Group Contributed Assets. Except as set forth in Section
-------------------------------
4.02(f) or the United Group Disclosure Schedule, (i) the United Group
Contributed Assets represent all of the assets (including all rights of chello
under the chello Relationship Agreements, the Franchise Term Sheets, the Network
Sharing Term Sheet and its other contracts and agreements) of chello and its
Subsidiaries relating to any business it currently conducts in the Territory,
and there are no other assets of whatsoever nature of UGC, UPC or chello or any
of their Subsidiaries, whether held directly or indirectly (including through
minority investments), that are required to implement the Covered Business; (ii)
upon the transfer of the United Group Contributed Assets to the Broadband
Operating Company as provided in Section 3.01, the Broadband Operating Company
shall have the full rights, title and interests therein free and clear of any
Encumbrance; and (iii) the transfer of the United Group Contributed Assets as
provided in Section 3.01 shall not cause the Broadband Operating Company to
incur any liabilities or obligations relating to UGC or UPC's businesses or
operations.
(g) Full Disclosure.
---------------
(i) UPC and UGC are not aware of any facts pertaining to chello
or chello's Subsidiaries which would reasonably likely have a Material
Adverse Effect on chello and which have not been disclosed in this
Agreement or the chello Preliminary Prospectus or otherwise disclosed
to At Home by UPC, UGC or chello in writing; and
(ii) No representation or warranty of chello Holdings, UPC or UGC
in this Agreement, nor any statement or certificate furnished or to be
furnished to At Home pursuant to this Agreement or in connection with
the transactions contemplated by this Agreement, contains or will
contain any untrue statement of a material fact, or omits or will omit
to state a material fact necessary to make the statements contained
herein or therein, in the light of the circumstances under which they
were made not misleading, except as would not have a Material Adverse
Effect on chello.
(h) Financial Model Inputs. The information set forth in Section
-----------------------
4.02(h) of the United Group Disclosure Schedule relating to the economic
arrangements and agreements in existence among UPC/UGC and their respective
Affiliates and Subsidiaries is true and correct in all material respects and
such arrangements and agreements are pursuant to legal documentation which is in
full force and effect.
26
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF AT HOME
AND EXCITE HOLDINGS
SECTION 5.01. Joint and Several Representations and Warranties of At Home and
---------------------------------------------------------------
Excite Holdings.
---------------
At Home and Excite Holdings hereby jointly and severally represent and
warrant to chello Holdings, UPC and UGC as follows, as qualified as set forth
herein by the disclosures set forth in the disclosure schedule of At Home and
Excite Holdings (the "At Home Disclosure Schedule") delivered to UPC, UGC and
---------------------------
chello Holdings contemporaneously herewith:
(a) Organization and Authority. Each of the At Home International
--------------------------
Entities is organized and validly existing under the laws of the jurisdiction as
set forth on Section 5.01(a) of the At Home Disclosure Schedule and has all
necessary power and authority to carry on its business as presently conducted
and as currently contemplated to be conducted.
(b) Capital Stock of At Home International Entities. The authorized
-----------------------------------------------
capital stock of the At Home International Entities and At Home's direct and
indirect ownership in such At Home International Entities is as set forth in
Section 5.01(b)(i) of the At Home Disclosure Schedule. None of the issued and
outstanding shares of capital stock of the At Home International Entities was
issued in violation of any preemptive rights. Except as set forth in Section
5.01(b)(ii) of the At Home Disclosure Schedule, (i) there are no options,
warrants, convertible securities or other rights, agreements, arrangements or
commitments of any character relating to the capital stock of the At Home
International Entities or obligating At Home, Excite Holdings or any of the At
Home International Entities to issue or sell any shares of capital stock of, or
any other interest in, any of the At Home International Entities and (ii) there
are no outstanding contractual obligations of At Home, Excite Holdings or any of
the At Home International Entities to repurchase, redeem or otherwise acquire
any shares of common stock or to provide funds to, or make any investment (in
the form of loan, capital contribution or otherwise) in, any other Person. The
ownership of the capital stock of each At Home International Entity is as set
forth in Section 5.01(b)(iii) of the At Home Disclosure Schedule.
(c) Financial Information. True and complete copies of the financial
---------------------
information described in Section 5.01(c) of the At Home Disclosure Schedule
(collectively referred to herein as the "Financial Statements") have been
--------------------
delivered by At Home to chello, UPC and UGC. The Financial Statements, other
than budgets, forecasts and projections, (i) were prepared in accordance with
the books of account and other financial records of the respective At Home
International Entities and (ii) present fairly, in all material respects, the
financial condition and results of operations of such At Home International
Entities as of the dates thereof or for the periods covered thereby.
(d) Corporate Books and Records; Material Documents. Except as set
-----------------------------------------------
forth in Section 5.01(d) of the At Home Disclosure Schedule, the minute books of
the At Home International Entities in At Home's possession contain, in all
material respects, accurate records of all meetings and accurately reflect all
other actions taken by the stockholders, and all committees of such Boards of
the At Home International Entities.
27
Copies of all such minute books and of the stock register of each of the At Home
International Entities in At Home's possession and of all other material legal
and financial information related to the At Home International Entities and the
conduct of their business in At Home's possession (collectively, the "At Home
-------
Material Documents") have been provided to UPC. To At Home's Knowledge, the At
------------------
Home Joint Venture Documents, the Financial Statements and the At Home Material
Documents, collectively, reflect all material legal and commercial arrangements
of the At Home International Entities.
(e) Litigation. Except as set forth in the At Home 1999 Annual Report
----------
on form 10-K or in Section 5.01(e) of the At Home Disclosure Schedule, (i) there
are no Actions by or against the At Home International Entities pending before
any Governmental Authority (or, to the Knowledge of At Home and Excite Holdings,
threatened to be brought by or before any Governmental Authority) which, if
adversely determined, would have a Material Adverse Effect on At Home
International, and (ii) the At Home International Entities are not subject to
any Governmental Order (nor, to the Knowledge of At Home and Excite Holdings,
are there any such Governmental Orders threatened to be imposed by any
Governmental Authority) which, if adversely determined, it is reasonably likely,
would have a Material Adverse Effect on At Home International.
(f) Compliance with Laws. Except as would not, individually or in the
--------------------
aggregate, have a Material Adverse Effect on At Home International, the At Home
International Entities have conducted and continue to conduct their businesses
in accordance with all Laws and Governmental Orders applicable to the At Home
International Entities and no At Home International Entity is in violation of
any such Law or Governmental Order.
(g) Operating Permits, Licenses, Consents, Etc. Except as set forth
------------------------------------------
in Section 5.01(g) of the At Home Disclosure Schedule, each of the At Home
International Entities has obtained all permits, governmental licenses,
authorizations, qualifications, consents and approvals, technology licenses and
contractual consents, waivers and amendments as are necessary for the conduct of
the business of each of the At Home International Entities in all jurisdictions
as carried out on the date hereof and as contemplated hereby and by the other
Basic Agreements, including, without limitation, all franchises and
telecommunication permits, licenses and consents, except in each case to the
extent that the failure to obtain or maintain such permits, governmental
licenses, authorizations, qualifications, consents and approvals, technology
licenses and contractual consents, waivers and amendments would not have a
Material Adverse Effect on At Home International.
(h) Intellectual Property. Except as set forth in Section 5.01(h) of
---------------------
the At Home Disclosure Schedule, (i) the At Home International Entities, taken
as a whole, own or possess or are entitled to use, or can acquire on reasonable
terms, adequate Intellectual Property necessary for the conduct of the
businesses of the At Home International Entities as currently conducted or
currently proposed to be conducted and as contemplated hereby and by the other
Basic Agreements, (ii) none of the At Home International Entities has received
written notice of infringement of or conflict with asserted rights of others,
with respect to any material Intellectual Property and (iii) the At Home
International Entities, taken as a whole, have taken reasonable steps necessary
to protect their confidential and proprietary information, including, without
limitation, trade secrets and know-how.
(i) No Defaults. Except as set forth in Section 5.01(i) of the At
-----------
Home Disclosure Schedule, no event has occurred or, to the Knowledge of At Home
is likely to occur, which constitutes a default or breach by At Home or any of
its Subsidiaries or other
28
parties to the At Home Joint Ventures under any agreement, undertaking,
instrument or document to which any of the foregoing is a party or by which any
of them or their respective properties are bound, except in each case for
defaults or breaches that would not have had a Material Adverse Effect on At
Home International.
(j) At Home Joint Ventures. Except as set forth in Section 5.01(j) of
----------------------
the At Home Disclosure Schedule and except as would not have a Material Adverse
Effect on At Home International, (i) each of the representations and warranties
made by At Home and, to the Knowledge of At Home, the other parties thereto in
the At Home Joint Venture Documents to which At Home is a party was true and
correct as of the date made, and to the Knowledge of At Home, neither At Home
nor any of the other parties to the At Home Joint Venture Documents is in breach
thereunder; and (ii) all of the agreements listed in Section 1.01(f) of the At
Home Disclosure Schedule as part of the At Home Joint Venture Documents are in
full force and effect, and there is no event, circumstance or condition that has
occurred or to the Knowledge of At Home is reasonably likely to occur that would
result in the termination (prior to its scheduled termination) of any At Home
Joint Venture or any material agreement relating thereto or give At Home or the
other party or parties thereto any right to call a default under, terminate or
alter the terms thereof in a manner that would be adverse to At Home.
(k) Financial Model Inputs. The information set forth in Section
-----------------------
5.01(k) of the At Home Disclosure Schedule relating to the economic arrangements
and agreements in existence among At Home, the At Home International Entities
and, as the case may be, the cable operators distributing the At Home services,
is true and correct in all material respects and such arrangements and
agreements are pursuant to legal documentation which is in full force and
effect.
(l) Funding and Other Commitments. Except as set forth in Section
-----------------------------
5.01(l) of the At Home Disclosure Schedule or as contemplated hereby, there are
no material commitments (whether such commitments arise out of legal agreements,
resolutions or otherwise) of At Home or its Subsidiaries to fund, capitalize,
make loans to, or guaranty obligations of, the At Home International Entities.
(m) Tax Matters. All taxes payable by the At Home Joint Ventures and
-----------
Contributed Subsidiaries and required to be paid on or prior to the date hereof
have been paid (except for such taxes as are being contested by appropriate
proceedings in good faith and with respect to which adequate reserves and
allowances have been established and identified with reasonable specificity on
the applicable financial statements), and the applicable financial statements
contain adequate reserves and allowances for all taxes of such entities that are
attributable to taxable periods (or portions thereof) through the date hereof
with respect to which the payment of such taxes is not yet due. The
representations and warranties in this Section 5.02 (m) made as of the date
hereof shall be remade as of the Closing Date.
(n) Franchise Distribution Agreements. Set forth in Section 5.01(n) of
---------------------------------
the At Home Disclosure Schedule is, to the Knowledge of At Home, a true and
complete list of all affiliates of Jupiter Communications Co., Ltd. ("J-Com")
which have fully executed binding Operating Rules which are attached to a Master
Distribution Agreement pursuant to which At Home Japan Co. Ltd distributes its
services and the aggregate number of franchise nominees with respect to such
agreements.
29
(o) Services. The services which At Home is contractually obligated to
--------
provide the respective At Home Joint Ventures pursuant to the applicable At Home
Joint Venture Documents are currently being provided in all material respects.
At Home will continue to perform all obligations that At Home (or its
Subsidiaries other than the At Home International Entities) is contractually
bound to perform under the At Home Joint Venture Agreements in order to obtain
royalties, or will transfer to BOC all capabilities necessary to perform such
obligations at no cost to BOC. At Home will continue to provide all services
provided by At Home (or its Subsidiaries other than the At Home International
Entities) to the At Home Joint Ventures pursuant to the terms of the applicable
agreements, or will transfer to BOC all capabilities necessary to perform such
obligations (other than personnel) at no cost to BOC.
(p) Other Representations. (i) The matters set forth in Section
---------------------
5.01(p) of the At Home Disclosure Schedule are true and correct [*].
SECTION 5.02. Several Representations and Warranties of At Home
-------------------------------------------------
and Excite Holdings.
--------------------
Each of At Home and Excite Holdings hereby represents and
warrants, each to itself only and each severally and not jointly, to chello
Holdings, UPC and UGC as follows, qualified as set forth herein by the At Home
Disclosure Schedule:
(a) Organization and Authority. At Home is and Excite Holdings
--------------------------
shall be as of the Closing a corporation duly organized, validly existing and in
good standing under the laws of Delaware and At Home has and Excite Holdings
shall as of the Closing have all necessary power and authority to enter into
this Agreement and the other Basic Agreements to which it will be a party, to
carry out its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby. The execution and delivery by each
of At Home and Excite Holdings of this Agreement and the other Basic Agreements
to which each of At Home and Excite Holdings will be a party, the performance by
it of its obligations hereunder and thereunder and the consummation by it of the
transactions contemplated hereby and thereby has been (or, with respect to
Excite Holdings, shall be) duly authorized by all requisite action on its part.
This Agreement has been, and each of the other Basic Agreements to which it will
become a party, once executed, will have been duly executed and delivered by
each of At Home and Excite Holdings and (assuming due authorization, execution
and delivery by each other Person signatory thereto) this Agreement constitutes,
and upon execution and delivery thereof each such other Basic Agreement will
constitute, a legal, valid and binding obligation of each of At Home and Excite
Holdings enforceable against it in accordance with its terms.
(b) No Conflict. Except as set forth in Section 5.02(b) of the At
-----------
Home Disclosure Schedule, the execution, delivery and performance by each of At
Home and Excite Holdings of this Agreement do not and of the other Basic
Agreements to which it will become a party will not (i) violate, conflict with
or result in the breach of any provision of its Certificate of Incorporation,
(ii) conflict with or violate any Law applicable to Home or Excite Holdings or
any of the At Home International Entities or any of their assets, properties or
businesses or (iii) except as would not have a Material Adverse Effect on At
Home
[*]= CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.
30
International, conflict with, result in any breach of, constitute a default (or
event with which the giving of notice or lapse of time or both, would become a
default) under, require any consent under, or give to others any rights or
result in any loss of rights (including, without limitation rights upon a change
of control) pursuant to, any material contract, agreement or arrangement by
which At Home or Excite Holdings or any of the At Home International Entities is
bound.
(c) Ownership of At Home International Entities. As of the Closing
-------------------------------------------
Date hereof, the ownership by Excite Holdings of the capital stock of each of
the At Home International Entities is as set forth in Section 5.02(c)(i) of the
At Home Disclosure Schedule. The At Home International Entity capital stock held
by Excite Holdings is owned of record and beneficially by Excite Holdings free
and clear of all Encumbrances other than as set forth in the At Home Joint
Venture Documents and in Section 5.02(c)(ii).
(d) Litigation. Except as set forth in the At Home 1999 Annual Report
----------
or Form 10-K or in Section 5.02(d) of the At Home Disclosure Schedule, there are
no Actions by or against either At Home or Excite Holdings pending before any
Governmental Authority (or, to the best Knowledge of At Home and Excite
Holdings, threatened to be brought by or before any Governmental Authority)
which if adversely determined would have a Material Adverse Effect on At Home,
Excite Holdings or the At Home International Entities or any of the transactions
contemplated hereby or by the other Basic Agreements. Neither At Home nor Excite
Holdings is subject to any Governmental Order (nor, to the best Knowledge of At
Home and Excite Holdings, are there any such Governmental Orders threatened to
be imposed by any Governmental Authority) which would reasonably likely have a
Material Adverse Effect on At Home, Excite Holdings or any of the transactions
contemplated hereby or by the other Basic Agreements.
(e) Intellectual Property. Except as set forth in Section 5.02(e) of
---------------------
the At Home Disclosure Schedule, (i) each of At Home, Excite Holdings and the At
Home International Entities owns or possesses or is entitled to use, or can
acquire on reasonable terms, the Intellectual Property necessary to perform
their obligations and grant the rights granted under the Technology Licensing
Term Sheet and the conduct of the At Home International Entities businesses as
currently conducted or currently proposed to be conducted and as contemplated
hereby and by the other Basic Agreements (collectively the "At Home IP") and
----------
(ii) neither At Home, Excite Holdings nor the At Home International Entities has
received notice of infringement of or conflict with asserted rights of others
with respect to any material At Home IP.
(f) At Home SEC Reports. Except as set forth in Section 5.02(f) of
-------------------
the At Home Disclosure Schedule, (i) the At Home SEC Reports, as of their
respective dates, did not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading, and
complied in all material respects with the requirements of the Exchange Act and
the rules and regulations of the SEC thereunder, and (ii) there has not occurred
a Material Adverse Change relating to At Home or to the At Home International
Entities, taken as a whole, since the date of filing with the SEC of the most
recent Quarterly Report on Form 10-Q.
(g) At Home Contributed Assets. Except as set forth in Section
--------------------------
5.02(g) of the At Home Disclosure Schedule, (i) the At Home Contributed Assets
represent all of the assets (including, without limitation, any option rights or
rights of first offer or first refusal)
31
of At Home and its Subsidiaries relating to any business it currently conducts
in the Territory, and there are no other assets of whatsoever nature of At Home
or any of its Subsidiaries, whether held directly or indirectly (including
through minority investments ), that (taken together with the intellectual
property rights to be acquired by the Broadband Operating Company pursuant to
the Technology Licensing Term Sheet and the other Basic Agreements) are required
by the Broadband Operating Company to implement the Covered Business or to
provide the At Home Covered Services in the Territory as contemplated hereby and
by the other Basic Agreements; (ii) upon the transfer of the At Home Contributed
Assets to the Broadband Operating Company as provided in Section 3.01, the
Broadband Operating Company shall have the full rights, title and interests
therein free and clear of any Encumbrance; and (iii) the transfer of the At Home
Contributed Assets as provided in Section 3.01 shall not cause the Broadband
Operating Company to incur any liabilities or obligations relating to At Home's
business or operations outside the Territory.
(h) Full Disclosure.
---------------
(i) At Home is not aware of any facts pertaining to any At Home
International Entity which would reasonably likely have a Material
Adverse Effect on At Home International and which have not been
disclosed in this Agreement or the financial statements described in
Section 5.01(c) or otherwise disclosed to UPC, UGC and chello by At
Home or Excite Holdings in writing; and
(ii) No representation or warranty of At Home or Excite Holdings
in this Agreement, nor any statement or certificate furnished or to be
furnished to UPC, UGC or chello pursuant to this Agreement or in
connection with the transactions contemplated by this Agreement,
contains or will contain any untrue statement of a material fact, or
omits or will omit to state a material fact necessary to make the
statements contained herein or therein, in the light of the
circumstances under which they were made not misleading, except as
would not have a Material Adverse Effect on At Home International.
ARTICLE VI
COVENANTS
SECTION 6.01. Mutual Confidentiality.
----------------------
For the term of this Agreement, each Party agrees to, and shall cause
his, her or its agents, representatives, Controlled Affiliates, employees,
officers and directors to: (i) treat and hold as confidential (and not disclose
or provide access to any Person to) all information relating to trade secrets,
processes, patent and trademark applications, product development, price,
customer and supplier lists, pricing and marketing plans, policies and
strategies, details of client and consultant contracts, operations methods,
product development techniques, business acquisition plans, new personnel
acquisition plans and all other confidential information with respect to the
businesses of each of the other Parties; (ii) in the event that any such Party
or any such agent, representative, Affiliate, employee, officer or director
becomes legally compelled to disclose any such information relating to another
Party, provide the Party to whom such information relates with prompt written
notice
32
of such requirement so that such Party to whom the information relates may seek
a protective order or other remedy or waive compliance with this Section 6.01,
(iii) in the event that such protective order or other remedy is not obtained,
or the Party to whom the information relates waives compliance with this Section
6.01, furnish only that portion of such confidential information which is
legally required to be provided and exercise its best efforts to obtain
assurances that confidential treatment will be accorded such information; and
(iv) promptly furnish upon request to the Party to whom the information relates
any and all copies (in whatever form or medium) of all such confidential
information then in the possession of such Party or any of its agents,
representatives, Controlled Affiliates, employees, officers and directors and
destroy any and all additional copies then in the possession of such Party or
any of its agents, representatives, Controlled Affiliates, employees, officers
and directors of such information and of any analyses, compilations, studies or
other documents prepared, in whole or in part, on the basis thereof; provided,
--------
however, that this sentence shall not apply to any information that, at the time
-------
of disclosure, is available publicly and was not disclosed in breach of this
Agreement by such Party, its agents, representatives, Controlled Affiliates,
employees, officers or directors; provided further that, with respect to
-------- -------
Intellectual Property, specific information shall not be deemed to be within the
foregoing exception merely because it is embraced in general disclosures in the
public domain. In addition, with respect to Intellectual Property, any
combination of features shall not be deemed to be within the foregoing exception
merely because the individual features are in the public domain unless the
combination itself and its principle of operation are in the public domain. Each
Party agrees and acknowledges that remedies at law for any breach of its
obligations under this Section 6.01 are inadequate and that in addition thereto
the Party to whom the information relates shall be entitled to seek equitable
relief, including injunction and specific performance, in the event of any such
breach.
SECTION 6.02. Regulatory and Other Authorizations; Notices and
------------------------------------------------
Consents.
--------
(a) Each Party shall each use commercially reasonable efforts to
obtain all authorizations, consents, orders and approvals of all Governmental
Authorities and officials that may be or become necessary for its execution and
delivery of, and the performance of its obligations pursuant to, this Agreement
and the other Basic Agreements and each of the transactions contemplated hereby
and thereby, including, but not limited to, entering into the Basic Agreements
to which it is contemplated to become a party as provided hereby and thereby and
will cooperate fully with each other in promptly seeking to obtain all such
authorizations, consents, orders and approvals. Each Party agrees to supply as
promptly as practicable to the appropriate Governmental Authorities any
information and documentary material that may be requested pursuant to any Laws
by such Governmental Authorities for this purpose.
(b) Each Party shall give promptly such notices to third parties and
use its or their best efforts to obtain such third party consents as each of the
other Parties may in its reasonable discretion deem necessary or desirable in
connection with the transactions contemplated by this Agreement, including, but
not limited to, entering into the Basic Agreements to which it is contemplated
to become a party as provided hereby and thereby.
(c) Each Party shall cooperate and use commercially reasonable
efforts to assist each other Party in giving such notices and obtaining such
consents and estoppel certificates.
33
(d) The Parties agree that, in the event any consent, approval or
authorization necessary or desirable to preserve the United Group Contributed
Assets or the At Home Contributed Assets, or any right or benefit under any
lease, license, contract, commitment or other agreement or arrangement related
to the United Group Contributed Assets or the At Home Contributed Assets to
which any Party is a party is not obtained prior to the Closing, the Parties
will, subsequent to the Closing, cooperate in attempting to obtain such consent,
approval or authorization as promptly thereafter as practicable.
(e) To the extent required consents, approvals or authorizations are
not obtained prior to Closing with respect to the transfer of the United Group
Contributed Assets or At Home Contributed Assets, and such matters shall not
have been waived in connection with Closing, then until such consents, approvals
or authorization are obtained, the Party required to obtain such consents,
approvals or authorization shall cause BOC to obtain the benefits and BOC to
assume the obligations with respect to such items in accordance with this
Agreement by acting as subcontractor, sublicensee, sublessee or third party
beneficiary of the applicable Party and the applicable Party shall enforce for
the benefit of BOC any and all rights of such Party against a third party with
respect to any such items and such Party shall promptly pay to BOC any and all
monies received by such Party in connection with any such lease, license,
contract, commitment or other agreement or arrangement. For a period of eighteen
(18) months after the Closing Date, the applicable Party shall continue to use
all commercially reasonable efforts to obtain a consent, approval or
authorization with respect to each such item as may be required. In addition, in
the event that any lease, license, contract, commitment or other agreement or
arrangement which contains a non-competition or non-disclosure provision in
favor of BOC as successor to a Party and such provision shall not be assignable
to BOC at Closing, the applicable Party hereby covenants and agrees to enforce
at BOC's request, in accordance with BOC's instructions and at BOC's expense,
the non-competition or non-disclosure provisions of such lease, license,
contract, commitment or other agreement or arrangement.
SECTION 6.03. Notice of Developments.
----------------------
Prior to the Closing, each Party shall promptly notify each other
Party to whom it has made representations and warranties in writing of (i) all
events, circumstances, facts and occurrences arising subsequent to the date of
this Agreement which could result in any breach of a representation or warranty
or covenant in this Agreement of the Party giving the notice or which could have
the effect of making any representation or warranty in this Agreement of any
such Party untrue or incorrect in any respect and (ii) all other material
developments affecting the assets, liabilities, business, financial condition,
operations, results of operations, customer or supplier relations, employee
relations, projections or prospects of the Party giving notice.
SECTION 6.04. No Solicitation or Negotiation.
------------------------------
Each Party to this Agreement agrees that between the date of execution
of this Agreement and the earlier of (i) the Closing and (ii) the termination of
this Agreement, none of the Parties nor any of their respective Affiliates,
officers, directors, representatives or agents will (a) solicit, initiate,
consider, encourage or accept any other proposals or offers from any Person to
enter into any agreement or arrangement falling within the ambits of the purpose
and scope of this agreement as set out in Article II above, or (b) participate
in any discussions, conversations, negotiations and other communications
regarding, or furnish to any other Person any information with respect to, or
otherwise cooperate in any way, assist or
34
participate in, facilitate or encourage any effort or attempt by any other
Person to seek to do so. Each of the parties immediately shall cease and cause
to be terminated all existing discussions, conversations, negotiations and other
communications with any Persons conducted heretofore with respect to the
foregoing. Each Party shall notify all the other Parties promptly if any such
proposal or offer, or any inquiry or other contact with any Person with respect
thereto, is made or shall have been received after the date of execution of this
Agreement, and shall, in any such notice, indicate in reasonable detail the
identity of the Person making such proposal, offer, inquiry or contact and the
terms and conditions of such proposal, offer, inquiry or other contact.
SECTION 6.05. No Solicitation of Employees.
----------------------------
From and after the date hereof and for a period ending on the earlier
of (i) the date which is two years after the date of termination of this
Agreement by any Party in accordance with the provisions of Article VIII (and in
the event of such termination) and (ii) the date that is seven years from the
date hereof, none of the Parties shall, and subject to the hiring by BOC of
certain employees of the Parties contemplated by Section 6.09 hereof, the
Parties shall cause Broadband Holdings and BOC to not, solicit for employment
any officers or employees of the other Parties or of Broadband Holdings or BOC;
provided, however, that general advertisements in newspapers and other
-------- -------
periodicals or electronic media shall not be considered solicitations for
employment within the meaning of this Section 6.05 and no Party shall be
prohibited from speaking with or hiring any such officer or employee who shall
have approached the Party without having been so solicited by such Party.
SECTION 6.06. Compliance; Non-contravention.
-----------------------------
Each Party will comply with the terms of the Basic Agreements to which
it is or becomes a Party, and will use all reasonable efforts to perform its
respective obligations under each such document to which it is or becomes a
Party.
SECTION 6.07. Further Actions.
---------------
Each of the Parties to this Agreement shall use all reasonable efforts
to take, or cause to be taken, all appropriate actions, do or cause to be done
all things necessary, proper or advisable under applicable Laws, and execute and
deliver such documents and other papers, as may be required to carry out the
provisions of this Agreement and the other Basic Agreements and consummate and
make effective the transactions contemplated hereby and thereby, including,
without limitation, in order to make effective the transfer of the At Home
Contributed Assets or the United Group Contributed Assets to BOC.
SECTION 6.08. Modifications to Structure.
---------------------------
In the event any Party determines that the proposed structure for the
proposed transaction or the steps necessary to complete the transaction can be
modified in a way that would be beneficial from a tax or non-tax perspective to
such Party, the other Parties agree to cooperate in good faith and exercise
reasonable commercial efforts to effect such modification, provided that such
--------
modification is not materially adverse to such other Party or Parties or unduly
delays the transactions contemplated hereby.
SECTION 6.09. Equity-Based Compensation.
-------------------------
35
(a) Establishment of New Incentive Plan. Effective as of the Closing,
-----------------------------------
the Parties shall take all actions necessary to establish an equity-based
incentive compensation plan (the "BH Incentive Plan") substantially in
-----------------
accordance with the terms as set forth on Annex P hereof, subject to such
changes as may be agreed by the Parties or as may be necessary or desirable for
compliance with applicable law. The BH Incentive Plan shall provide for an
allocation of the total shares reserved under the plan as follows: (i) a number
of shares necessary for Nontransferred At Home Employee Awards (as defined
below) and (ii) a number of shares necessary for all other grants of awards,
including grants to new hires. All awards under the BH Incentive Plan shall be
approved by the Compensation Committee of the BH Supervisory Board (the
"Compensation Committee") and the BH Supervisory Board; provided, however, the
----------------------- -------- -------
grant of Nontransferred At Home Employee Awards shall be based upon the
recommendations of At Home subject to approval by the Compensation Committee,
which approval shall not be unreasonably withheld. Effective as of the Closing
Date, a new equity plan foundation (the "BH Foundation") shall be established by
-------------
BH for purposes of holding the shares of BH to be issued pursuant to the BH
Incentive Plan from time to time. Notwithstanding the foregoing, to the extent
awards under the BH Incentive Plan would result in adverse tax consequences for
an individual and such individual is not otherwise compensated, such
individuals' options under the existing chello Phantom Plan or chello Equity
Plan will not be cancelled and they will not be required to exchange such
options for options under the BH Incentive Plan.
(b) Treatment of Existing Equity Based Compensation Plans and
---------------------------------------------------------
Outstanding Awards.
------------------
(i) chello Phantom Plan. Prior to the Closing, UPC or UGC shall take
-------------------
all actions necessary, including obtaining all necessary consents, to have each
holder of an outstanding phantom stock option granted under the chello Phantom
Option Plan (a "Phantom Option") who is a member of the chello Supervisory Board
--------------
or Management Board to waive any right to acceleration of vesting on account of
any of the transactions contemplated in this Agreement. With respect to all
other holders of Phantom Options, UPC or UGC shall use commercially reasonable
efforts to obtain their consent to the waiver of any right to acceleration of
vesting of the Phantom Options on account of any of the transactions
contemplated in this Agreement. Effective as of the Closing, the Parties shall
use commercially reasonable efforts to obtain the consent of each holder of a
Phantom Option to cancel such Phantom Option in exchange for a grant of an
equity-based compensation award issued under the BH Incentive Plan, effective as
of the Closing Date or such later date as is mutually agreed to by the Parties
(a "Substitute chello Equity Award"). Substitute chello Equity Awards shall
------------------------------
take the form of either options to purchase shares of BH, for those Phantom
Option holders for whom such type of equity-based compensation awards will not
result in adverse tax consequences, or in such other form of award as
contemplated in the BH Incentive Plan, as would preserve a favorable tax
treatment for the Phantom Option holders, as mutually agreed by the Parties.
Moreover, to the extent such exchange would result in adverse tax consequences
for an individual and such individual is not otherwise compensated, such
individual's Phantom Options will not be cancelled and they will not be required
to effect such exchange. As of the Closing, the Spread under each Substitute
chello Equity Award shall not be less than the Spread under the Phantom Option
it is replacing. For purposes of this Section 6.11, "Spread" shall mean the
------
positive difference between the fair market value of the stock underlying an
award and the exercise price of such award. In addition, all Phantom Options
that were to be priced with reference to the initial public offering price of
chello shall be priced in reference to the fair market value of chello on the
36
Closing Date. The Substitute chello Equity Awards shall otherwise be subject to
substantially the same terms and conditions as the cancelled Phantom Option, to
the extent permissible under the BH Incentive Plan, including the same term and
vesting schedule. As promptly as reasonably practicable after the Closing, BH
shall issue to each former holder of a Phantom Option a document evidencing the
new grant under the BH Incentive Plan. Effective as of the Closing Date, the
chello Phantom Stock Option Plan shall be terminated as to new grants. Between
the date of this Agreement and the Closing Date grants will only be made from
the chello Phantom Stock Option Plan in the normal course of business consistent
with other recent grants. UPC shall assume all liabilities and obligations of
chello with respect to the satisfaction and payment of any Phantom Option that
is exercised or is otherwise required to be settled at or following the Closing
by making a payment in the form of cash or shares of UPC stock, as so elected by
UPC in its sole discretion (each, a "UPC Payment"). In the event of any UPC
-----------
Payment, the Parties shall take all actions necessary to ensure that UPC be
granted, as soon as practicable following the date of such UPC Payment, a number
of shares of BH stock with a fair market value equal to such UPC Payment either
from the BH Foundation or from newly issued shares of BH.
(ii) chello Equity Plan.
------------------
(A) Prior to the Closing, subject to the condition that no adverse
tax consequences would result with respect to each option holder and that
any transfer of transfer of their options or shares thereunder has been
approved by UGC, UPC and UGC shall use commercially reasonable efforts, to
obtain all required consents from each option holder, to (i) amend each
unexpired and unexercised stock option under the chello Foundation Stock
Option Plan (a "chello Option") so that it may be exchanged at the election
-------------
of the holder into a stock option to be issued under the BH Incentive Plan
effective as of the Closing Date (a "Substitute chello Option Award") and
------------------------------
(ii) waive all of his or her rights under the chello Plan and the option
agreements entered into thereunder including those that are triggered by
any of the transactions contemplated in this Agreement. Each Substitute
chello Option Award shall have terms comparable to the chello Option it is
replacing including, without limitation, the same term and vesting
schedule. As of the Closing, the Spread under each Substitute chello Option
Award shall not be less than the Spread under the chello Option it is
replacing. No right to exchange as contemplated in this subparagraph (A) or
(B) shall be granted unless the recipient thereof signs an agreement to the
effect that he or she will not assert any minority rights with respect to
shares of chello stock following the Closing. Effective as of the date
hereof, the chello Equity Plan shall be terminated as to new grants.
(B) As of the Closing, subject to the condition that no adverse tax
consequences would result with respect to each option holder and that of
transfer of their options or shares thereunder has been approved by UGC,
the Parties shall use commercially reasonable efforts, to obtain all
necessary consents, to convert any shares of chello stock acquired upon
exercise of an option under the chello Equity Plan (the "chello Equity")
-------------
into shares of BH stock of an equivalent fair market value.
(iii) At Home Transferred Employees. Effective as of the Closing or
-----------------------------
such later date as is mutually agreed to by the Parties, the Parties shall take
all actions necessary to provide that a stock option (a "Substitute At Home
------------------
Option Award") be granted under the BH Incentive Plan to each Transferred
------------
Employee (as defined in Section 6.10(a)) in substitution of
37
any unvested portion of a stock option under the At Home 1997 Equity Incentive
Plan, as amended (the "At Home Plan"), that will be forfeited by a Transferred
------------
Employee on account of becoming a Transferred Employee (a "Forfeited Option").
----------------
The number of shares and exercise price of each Substitute At Home Option Award
shall take into account (i) the positive spread under Phantom Options
immediately prior to the Closing held by comparable employees of chello, with
comparability determined by taking into account duties, responsibilities, tenure
and vesting status of their respective Phantom Options, and (ii) the vesting
status and the Spread, if any, of each Forfeited Option for each such
Transferred Employee. In the event it is determined that a holder of a
Substitute At Home Option Award would suffer adverse tax consequences at the
time of grant of such award, the exercise price with respect to such award will
be adjusted to the extent practicable to avoid such adverse tax consequences.
All other terms of the Substitute At Home Option Awards including, without
limitation, vesting, shall be in compliance with the general terms of the BH
Incentive Plan with respect to new grants.
(iv) Nontransferred At Home Employees. Effective as of the Closing or
--------------------------------
such later date as is mutually agreed to by the Parties, the Parties shall take
all actions necessary to provide that options under the BH Incentive Plan be
granted to certain employees of At Home who will not become Transferred
Employees, as determined by At Home (the "Nontransferred At Home Employee
-------------------------------
Awards"). The aggregate number of shares of BH stock underlying all
------
Nontransferred At Home Employee Awards shall be equal to the aggregate number of
shares of BH stock that Phantom Options and chello Options would relate to as of
the Closing pursuant to the conversions provisions contemplated in Section
6.09(b)(i) and (ii) hereof (regardless of whether such conversions actually take
place as of such date) for persons who are employees of UPC or UGC on the date
hereof or who become employees of UPC or UGC at any time prior to the Closing
Date, other than employees secunded to chello on a full time basis who have
their employment contracts assigned to BH within 90 days after the Closing Date.
UPC hereby agrees to use commercially reasonable efforts to assign to BH the
employment contract of each member of the chello Board of Management. In
addition, the exercise price with respect to each Nontransferred At Home
Employee Award shall be equal to 50% of the fair market value of a share of BH
stock on the Closing Date. All other terms of the Nontransferred At Home
Employee Awards including, without limitation, vesting, shall be in compliance
with the general terms of the BH Incentive Plan with respect to new grants. To
the extent necessary to satisfy any applicable accounting requirements, not more
than 50% of the options allocated to Supervisory Board members may be allocated
to At Home (it being the intention to minimize the number of options so
allocated to At Home).
(v) UPC Plans. On or prior to the Closing Date, UPC in its sole
---------
discretion shall take all action necessary to either (i) amend the definition of
"Affiliated Company" contained in the United Pan-Europe Communications N.V.
------------------
Amended Stock Option Plan, the United Pan-Europe Communications N.V. Phantom
Stock Option Plan (together with the United Pan-Europe Communications N.V.
Amended Stock Option Plan, the "UPC Plans") to provide that (A) the required
---------
ownership levels in order for an entity to be deemed an affiliate may be based
on either voting control or value of an entity, and (B) the Supervisory Board of
UPC shall be authorized to designate any other entity as an "Affiliated Company"
------------------
for purposes of the UPC Plans from time to time in its sole discretion or (ii)
take such other action that will have substantially the same economic effect as
(i).
38
(vi) Equity Plan Foundation. As soon as practicable following the
----------------------
conversion, exercise or lapse of all of the Phantom Option and the exercise or
conversion of the options granted under the chello Equity Plan, the foundation
for the administration of the chello Phantom Plan and the chello Equity Plan
shall be dissolved.
(vii) Valuation. Except as otherwise provided in this Section 6.09,
---------
the determination required by this Section 6.09 with respect to the fair market
values of shares shall be made, following a recommendation by the Compensation
Committee, by the Supervisory Board with reference to the values of shares
established by the transactions contemplated by this Agreement and by the
relative capitalizations of chello, At Home and BH, and shall be applied in a
manner consistent with the purposes of this Section 6.09.
SECTION 6.10. At Home Employee Matters.
------------------------
(a) Offer of Employment; Employee Liabilities. Schedule 6.10(a) sets
-----------------------------------------
forth a list of (i) the employees of the Contributed Subsidiaries and At Home
Equity Investments and (ii) those employees of At Home (the "At Home
-------
International Employees") performing services in connection with At Home's
-----------------------
international businesses that are located in Redwood City, California and other
U.S. and international locations who are to be offered employment with BH or its
affiliated companies (other than At Home, UPC or UGC with such remaining
affiliated companies hereinafter referred to as the "BH Affiliated Companies");
-----------------------
provided, however, that At Home shall have the right to amend Schedule 6.10 (a)
prior to the Closing to reflect changes in personnel in the ordinary course of
business. Schedule 6.10(a) identifies those individuals who are active
employees as of the date hereof, including those on vacation, sick leave, short-
term disability leave, family leave or personal leave of absence, but excluding
those employees on long-term disability leave. Commencing no earlier than 30
calendar days prior to the Closing Date or such later date is mutually
determined appropriate by the Parties which shall be not later than January 31,
2001, the Parties shall take all actions necessary to ensure that BH or one of
the BH Affiliated Companies shall offer to employ, subject to the remaining
terms hereof, each of the At Home International Employees on substantially the
same basis as such employees were employed by At Home immediately prior to the
date they will become employees of BH or one of the BH Affiliated Companies
(provided that the effective date of such employment (the "Transition Date")
---------------
shall occur on or after the Closing Date. The employees of the Contributed
Subsidiaries and At Home Equity Investments, and those At Home International
Employees who accept offers of employment prior to the Transition Date or, for
individuals on leave, prior to their return from leave if later than the
Transition Date, shall hereinafter be referred to as the "Transferred
-----------
Employees". At Home expressly agrees that it shall not solicit the employment
---------
of any Transferred Employee in any capacity for a period of one year following
the Transition Date other than a Transferred Employee who had voluntarily
resigned from employment with BH prior to such solicitation.
(b) Transferred Liabilities. Except as otherwise provided herein, the
-----------------------
Parties shall take all actions necessary to ensure that BH and the BH Affiliated
Companies shall assume all employer or employment related obligations to the
Transferred Employees arising after the Closing. The obligations described in
this subsection (b) and the liabilities described in this Section 6.10 are
collectively referred to herein as the "Transferred Employee Liabilities." At
--------------------------------
Home shall retain, and BH and the BH Affiliated Companies shall not assume, any
and all obligations and liabilities relating to At Home International Employees
39
who do not accept an offer of employment from BH or the BH Affiliated Companies
or who otherwise fail to become Transferred Employees pursuant to the terms
hereof.
(c) Continuation of Salary and Benefits. For a period of one year
-----------------------------------
following the Closing (or until such earlier date in the event of the
termination of employment of a Transferred Employee), each chello Transferred
Employee shall be paid a monthly salary at least equal to the monthly salary
paid to such employee immediately prior to the Closing, and Transferred
Employees shall be offered the opportunity to participate in employee benefit
(but not compensation) plans upon terms and conditions that are no less
favorable in the aggregate than those benefits provided to the Transferred
Employees immediately prior to the Transition Date, subject to the terms hereof.
Transferred Employees shall receive credit for service with At Home and its
affiliates (including any predecessors) prior to the Transition Date for all
purposes under any benefit plans established or maintained for their benefit
after the Transition Date, to the extent that they received credit for such
purposes under the applicable employee benefit plans of At Home. The Parties
expressly agree to cooperate fully with respect to the actions necessary to
effect the transactions contemplated in this Section 6.10, including, without
limitation, the provision of records and information as each may reasonably
request from the other.
(d) Previously Accrued Benefits. Benefits related to any Transferred
---------------------------
Employee or an eligible dependent under any At Home-sponsored welfare benefit
plan in which the employee or eligible dependent participated prior to the
Transition Date shall cease as of the Transition Date; provided, however, that
-------- -------
liabilities relating to claims by Transferred Employees or their eligible
dependents for medical benefits incurred for medical services rendered to, and
purchases of prescription drugs and other health care products made by, such
persons while actively employed by At Home (or while an eligible dependent of
such a person) shall be retained by At Home (including, but not limited to, the
cost of hospitalization and any related charges for any such person hospitalized
before the Transition Date and who remains continuously hospitalised after the
Transition Date, until such person's date of discharge from the hospital). BH
and the BH Affiliated Companies shall recognize any deductible and stop-loss
amounts paid by Transferred Employees and their eligible dependents under At
Home's welfare benefit plans in the calendar year in which the Transition Date
occurs toward any applicable calendar year deductibles and stop-loss amounts
under the welfare benefit plans of BH and the BH Affiliated Companies.
(e) Welfare Plans. All Transferred Employees and their eligible
-------------
dependents who are participating in At Home's welfare benefit plans on the
Transition Date shall become participants in welfare benefit plans sponsored by
BH or a BH Affiliated Company effective as of the Transition Date. The Parties
shall use commercially reasonable efforts to provide that BH and the BH
Affiliated Companies agree to waive any pre-existing medical condition
restrictions and similar restrictions contained in such welfare benefit plans.
The Parties shall use commercially reasonable efforts to provide that BH and the
BH Affiliated Companies permit all dependants of Transferred Employees who were
participating in any At Home-sponsored welfare benefit plan on the Transition
Date to participate in the welfare benefit plans of BH or the BH Affiliated
Companies effective as of the Transition Date, regardless of whether such
dependents are currently eligible to participate in such welfare benefit plans
under their terms of dependent eligibility. The eligibility of all other
dependents of Transferred Employees to participate in the welfare benefit plans
of BH or the BH Affiliated Companies will be determined in accordance with the
dependent eligibility provisions of such plans. As of the Transition Date, the
Parties shall
40
use commercially reasonable efforts to provide that BH and the BH Affiliated
Companies be solely responsible for the cost of any and all benefits to which
Transferred Employees and their eligible dependents become entitled to as
employees (or eligible dependents) of BH and the BH Affiliated Companies under
the terms of the welfare benefit plans of BH and the BH Affiliated Companies, as
in effect from time to time.
(f) Treatment of Accrued Vacation. With respect to each Transferred
-----------------------------
Employee, BH shall assume and credit each Transferred Employee with any accrued
vacation through the Transition Date up to the respective maximum cap.
(g) Nonsolicitation. At Home agrees that (i) for the period from the
---------------
date hereof until the Closing Date, At Home will not solicit the employment of
any employee of chello or any of its Subsidiaries (other than employee who
voluntarily resigns prior to such solicitation) without the consent of UPC or
UGC and (ii) for a period of one year following the date hereof, At Home will
not solicit the employment of any employee of BH, UPC or UGC of any of their
respective affiliates (other than employee who voluntarily resigns prior to such
solicitation) without the consent of UPC or UGC.
(h) Indemnification. (i) At Home shall indemnify and hold harmless BH
---------------
and the BH Affiliated Companies from any and all claims (including reasonable
attorneys' fees incurred in defending such claims) against BH or the BH
Affiliated Companies by Transferred Employees or their respective beneficiaries
that (A) pertain to a claim for severance or damages by any such Transferred
Employee with respect to his or her employment with At Home, At Home Joint
Ventures or the Contributed Subsidiaries prior to the Transition Date, (B)
pertain to the payment of any compensation, benefits, bonuses or other incentive
compensation accrued or earned by any such Transferred Employee prior to the
Transition Date, or (C) relate to actions or inactions of At Home or its
affiliates (other than BH or one of the BH Affiliated Companies) occurring prior
to the Transition Date. At Home shall further indemnify and hold harmless BH and
the BH Affiliated Companies against any and all claims against BH or the BH
Affiliated Companies by any At Home International Employee who does not accept
an offer of employment from BH or the BH Affiliated Companies or who otherwise
fails to become a Transferred Employee pursuant to the terms hereof.
(ii) The Parties shall take all actions necessary to provide that BH
and the BH Affiliated Companies shall indemnify and hold harmless At Home and
its affiliates from any and all claims (including reasonable attorneys' fees in
defending such claims) against At Home or its affiliates by any Transferred
Employee or their respective beneficiaries that (A) pertain to the payment of
any compensation, benefits, bonuses, severance or other incentive compensation
accrued or earned by any such Transferred Employee on or after the Transition
Date or (B) relate to actions or inactions of BH or any of the BH Affiliated
Companies occurring on or after the Transition Date.
SECTION 6.11 chello Employee Matters.
-----------------------
(a) Employment; Employee Liabilities. UPC and UGC will use
--------------------------------
commercially reasonable efforts to ensure that chello employees as of the date
hereof ("chello Employees") will remain employees of chello after the Closing,
----------------
unless otherwise determined by BH. Schedule 6.11(a) sets forth a list of the
employees of UPC and UGC who are to be offered employment with BH or the BH
Affiliated Companies (the "United Group Employees"); provided, however, that UPC
----------------------
shall have the right to amend Schedule 6.11(a)
41
prior to the Closing to reflect changes in personnel in the ordinary course of
business. Schedule 6.11(a) identifies those individuals who are active employees
as of the date hereof, including those on vacation, sick leave, short-term
disability leave, family leave or personal leave of absence, but excluding those
employees on long-term disability leave. The Parties shall take all actions
necessary to ensure that commencing 30 calendar days prior to the Closing Date
or such later date as is mutually determined appropriate by the Parties which
shall be not later than January 31, 2001, BH or one of the BH Affiliated
Companies shall offer to employ, subject to the remaining terms hereof, to each
of the United Group Employees on substantially the same basis as such employees
were employed by UPC or UGC immediately prior to becoming employees of BH or one
of the BH Affiliated Companies. The term "chello Transition Date" shall
----------------------
hereinafter refer to (i) in the case of chello Employees, the Closing Date, and
(ii) in the case of United Group Employees, the effective date of their
employment with a BH Affiliated Company, which shall occur on or after the
Closing Date. chello Employees who remain employees of chello or one of the BH
Affiliated Companies as of the Closing Date and United Group Employees who
accept offers of employment prior to the chello Transition Date or, for
individuals on leave, prior their return from leave if later than the chello
Transition Date, hereinafter shall be referred to as the "chello Transferred
------------------
Employees". UPC and UGC expressly agree that they shall not solicit the
---------
employment of any chello Transferred Employee in any capacity for a period of
one year following the chello Transition Date other than a chello Transferred
Employee who had voluntarily resigned from employment with BH prior to such
solicitation.
(b) Transferred Liabilities. Except as otherwise provided herein, the
-----------------------
Parties shall take all actions necessary to ensure that BH and the BH Affiliated
Companies shall assume or remain responsible for all employer or employment
related obligations to the chello Transferred Employees arising after the
Closing. The obligations described in this subsection (b) and the liabilities
described in this Section 6.11 are collectively referred to herein as the
"chello Transferred Employee Liabilities." UPC or UGC, as appropriate, shall
----------------------------------------
retain, and BH and the BH Affiliated Companies shall not assume, any and all
obligations and liabilities relating to United Group Employees who do not accept
an offer of employment from BH or a BH Affiliated Company or who otherwise fail
to become chello Transferred Employees pursuant to the terms hereof.
(c) Continuation of Salary and Benefits. For a period of one year
-----------------------------------
following the Closing (or until such earlier date in the event of the
termination of employment of a chello Transferred Employee), each Transferred
Employee shall be paid a monthly salary at least equal to the monthly salary
paid to such employee immediately prior to the Closing, and chello Transferred
Employees shall be offered the opportunity to participate in employee benefit
(but not compensation) plans upon terms and conditions that are no less
favourable in the aggregate than those benefits provided to the chello
Transferred Employees immediately prior to the chello Transition Date, subject
to the terms hereof. chello Transferred Employees shall receive credit for
service with chello and its affiliates (including any predecessors) prior to the
chello Transition Date for all purposes under any benefit plans established or
maintained for their benefit after the chello Transition Date, to the extent
that they received credit for such purposes under the applicable employee
benefit plans of chello. The Parties expressly agree to cooperate fully with
respect to the actions necessary to effect the transactions contemplated in this
Section 6.11, including, without limitation, the provision of records and
information as each may reasonably request from the other.
42
(d) Previously Accrued Benefits. Benefits related to any chello
---------------------------
Transferred Employee or an eligible dependent under any chello sponsored welfare
benefit plan in which the employee or eligible dependent participated prior to
the chello Transition Date shall cease as of the chello Transition Date;
provided, however, that liabilities relating to claims by chello Transferred
-------- -------
Employees or their eligible dependents for medical benefits incurred for medical
services rendered to, and purchases of prescription drugs and other health care
products made by, such persons while actively employed by chello (or while an
eligible dependent of such a person) shall be retained by chello (including, but
not limited to, the cost of hospitalization and any related charges for any such
person hospitalized before the chello Transition Date and who remains
continuously hospitalised after the chello Transition Date, until such person's
date of discharge from the hospital). BH and the BH Affiliated Companies shall
recognize any deductible and stop-loss amounts paid by chello Transferred
Employees and their eligible dependents under chello's welfare benefit plans in
the calendar year in which the chello Transition Date occurs toward any
applicable calendar year deductibles and stop-loss amounts under the welfare
benefit plans of BH and the BH Affiliated Companies.
(e) Welfare Benefits. All chello Transferred Employees and their
----------------
eligible dependents who are participating in chello's welfare benefit plans on
the chello Transition Date shall become participants in welfare benefit plans
sponsored by BH or a BH Affiliated Company effective as of the chello Transition
Date. The Parties shall use commercially reasonable efforts to provide that BH
and the BH Affiliated Companies agree to waive any pre-existing medical
condition restrictions and similar restrictions contained in such welfare
benefit plans. The Parties shall use commercially reasonable efforts to provide
that BH and the BH Affiliated Companies permit all dependants of chello
Transferred Employees who were participating in any UPC-sponsored welfare
benefit plan on the chello Transition Date to participate in the welfare benefit
plans of BH or the BH Affiliated Companies effective as of the chello Transition
Date, regardless of whether such dependents are currently eligible to
participate in such welfare benefit plans under their terms of dependent
eligibility. The eligibility of all other dependents of chello Transferred
Employees to participate in the welfare benefit plans of BH or the BH Affiliated
Companies will be determined in accordance with the dependent eligibility
provisions of such plans. As of the chello Transition Date, the Parties shall
use commercially reasonable efforts to provide that BH and the BH Affiliated
Companies be solely responsible for the cost of any and all benefits to which
chello Transferred Employees and their eligible dependents become entitled to as
employees (or eligible dependents) of BH and the BH Affiliated Companies under
the terms of the welfare benefit plans of BH and the BH Affiliated Companies, as
in effect from time to time.
(f) Treatment of Accrued Vacation. With respect to each chello
-----------------------------
Transferred Employee, BH shall assume and credit each chello Transferred
Employee with any accrued vacation through the chello Transition Date up to the
respective maximum cap.
(g) Nonsolicitation. UPC and UGC agree to take all actions necessary
---------------
to provide that (i) for the period from the date hereof until the Closing Date
none of UPC, UGC and chello will solicit the employment of any employee of At
Home or any of its Subsidiaries not listed on Schedule 6.10(A), as amended from
time to time in accordance with Section 6.10 (other than employee who
voluntarily resigns prior to such solicitation) without the consent of At Home
and (ii) for a period of one year following the Closing Date, none of UPC, UGC
or their respective affiliates will solicit the employment of any employee of At
43
Home or any of its Subsidiaries not listed on Schedule 6.10(A), as amended from
time to time in accordance with Section 6.10 (other than employee who
voluntarily resigns prior to such solicitation), without the consent of At Home.
(h) Indemnification. (i) UPC and UGC shall indemnify and hold
---------------
harmless At Home and its Subsidiaries, BH and the BH Affiliated Companies from
any and all claims (including reasonable attorneys' fees incurred in defending
such claims) against BH or the BH Affiliated Companies by chello Transferred
Employees or their respective beneficiaries that (A) pertain to a claim for
severance or damages by any such chello Transferred Employee with respect to his
or her employment with chello, UPC or UGC or their respective affiliates (other
than BH and the BH Affiliated Companies) prior to the chello Transition Date,
(B) pertain to the payment of any compensation, benefits, bonuses or other
incentive compensation accrued or earned by any such chello Transferred Employee
prior to the chello Transition Date, or any other liability incurred under any
employee benefit or incentive compensation plan prior to the chello Transition
Date, (C) pertain to any liability incurred as a result of an employee of UGC,
UPC or BH owning shares of chello following the Closing Date or (D) relate to
actions or inactions of chello, UPC or UGC or their respective affiliates (other
than BH and the BH Affiliated Companies) occurring prior to the chello
Transition Date. UPC and UGC shall further indemnify and hold harmless BH and
the BH Affiliated Companies against any and all claims against BH or the BH
Affiliated Companies by any UPC Employee who does not accept an offer of
employment from BH or a BH Affiliated Company or who otherwise fails to become a
chello Transferred Employee pursuant to the terms hereof.
(ii) The Parties shall take all actions necessary to provide that BH
and it affiliates shall indemnify and hold harmless UPC, UGC and their
affiliates from any and all claims (including reasonable attorneys' fees in
defending such claims) against UPC or UGC or their affiliates by any chello
Transferred Employee or their respective beneficiaries that (A) pertain to the
payment of any compensation, benefits, bonuses, severance or other incentive
compensation accrued or earned by any such chello Transferred Employee after the
chello Transition Date, (B) pertain to the payment of any compensation,
benefits, bonuses or other incentive compensation accrued or earned by any such
chello Transferred Employee prior to the chello Transition Date, or (C) relate
to actions or inactions of BH or any of its affiliates occurring after the
chello Transition Date.
SECTION 6.12. Change of Control to a Competing Person. (a)
---------------------------------------
In the event of a Public Disclosure of a proposed Change of Control to
a Competing Person of AT&T Corp. ("AT&T") (if at such time, AT&T Controls At
----
Home, it being agreed for purposes hereof that AT&T controls At Home on the date
hereof), At Home or Excite Holdings, on the one hand, or chello Holdings, UPC or
UGC (if at such time, UGC Controls UPC or chello Holdings) on the other, then
the Party which is not the subject of the Change of Control (the "Non-Acquired
------------
Party"), so long as at the time of the Change of Control such Non-Acquired Party
-----
maintains 50% of its Economic Interest (as defined in the BH Shareholders
Agreement) in BOC that it held immediately after the Closing, shall have the
right by written notice to the Party who is the subject of the Change of Control
(the "Acquired Party") within the time periods set forth in clauses (i) and (ii)
--------------
below to take the following actions:
(i) within 120 days following the public disclosure of (x) a written
agreement to effect a Change of Control, (y) the commencement of a tender
offer
44
under Section 14(d) of the Exchange Act, the consummation of which would
result in a Change of Control or (z) any transaction which has resulted in
a Change of Control (a "Public Disclosure"), the Non-Acquired Party may
-----------------
call (i.e., entitling the Non-Acquired Party to purchase) from the Acquired
---
Party or the Competing Person at the Non-Acquired Party's option either (A)
all or (B) any portion sufficient to give the Non-Acquired Party following
the consummation of such call at the Non-Acquired Party's option either (1)
a majority Economic Interest in BOC or (2) an Economic Interest in BOC
greater than the Economic Interest in BOC of the Acquired Party, in either
case, of such Acquired Party's ordinary shares of BH and/or limited
partnership interests in BOC at a cash purchase price equal to the Fair
Market Value of such ordinary shares and limited partnership interests;
provided that, with respect to a Public Disclosure described in Section
6.10(a)(i)(x) or (y), so long as the Non-Acquired Party has delivered
written notice to the Acquired Party that the Non-Acquired Party believes
the transaction disclosed in the Public Disclosure, if consummated, would
constitute a Change of Control to a Competing Person, the Acquired Party
shall deliver to the Non-Acquired Party written notice at least fifteen
(15) business days prior to the anticipated closing date (the "COC Closing
----------
Date") of the transaction constituting such Change of Control, and the Non-
----
Acquired Party shall have until the earlier of (x) 120 days following such
Public Disclosure and (y) five (5) business days prior to the COC Closing
Date to exercise its call right; or
(ii) if a Public Disclosure occurs within eighteen months after the
Closing Date, subject to applicable law, within thirty (30) days following
such Public Disclosure, the Non-Acquired Party may put (i.e., requiring the
---
Competing Person to purchase) to the Acquired Person (to the extent the
Acquired Person is not contractually precluded from effecting such
purchase) or the Competing Person 100% of the Non-Acquired Party's equity
ownership interest in BH and BOC at a cash purchase price equal to the Fair
Market Value of such equity ownership interests;
(iii) in the event that a Public Disclosure described in Section
6.12(a)(i)(x) or (y) is made and prior to the consummation of the Change of
Control contemplated thereby a subsequent Public Disclosure described in
Section 6.12(a)(i)(x) or (y) by a different Person is made, all the
provisions of this Section 6.12 and the rights and obligations of the
Parties with respect thereto shall apply to such subsequent disclosure;
provided, that, notwithstanding a subsequent Public Disclosure, the
"Announcement" for purposes of determining Fair Market Value with respect
------------
to such Change of Control shall be the Announcement relating to the first
such disclosure;
(iv) the consummation of the call or put transactions set forth in
clauses (i) and (ii) above following the timely exercise by the Non-
Acquired Party of its rights with respect thereto shall not occur (x) prior
to the date which is ten (10) business days after the consummation of the
Change of Control or (y) after the date which is 120 days after the
consummation of the Change of Control. If the Change of Control does not
occur, the put and call rights shall be of no force and effect.
(b) In the event of an announcement of a proposed Change of Control
to a Competing Person which occurs at any time after the date which is eighteen
months after the Closing Date, if the Non-Acquired Party has not exercised its
call right above and, following the consummation of such Change of Control, the
Non-Acquired Party is unable to dispose of its equity ownership interest in BH
and limited partnership interest in BOC in a reasonable time frame (not to
exceed 12 months) and at a reasonable price in the good faith judgement of
45
the Non-Acquired Party in BH and their limited partnership interests in BOC
pursuant to an auction procedure managed by an internationally recognized
investment bank selected by the independent members of BH's Supervisory Board,
with such sale to be on a tax-free basis if mutually agreed by the Parties.
(c) In the event the Parties dispute whether the Person involved in a
Change of Control is a "Competing Person" for purposes of this Section 6.12, the
----------------
Parties hereby agree to submit to binding arbitration solely for the purposes of
determining whether such Person is a Competing Person. Any such dispute
submitted to arbitration will be settled by binding arbitration administered by
the American Arbitration Association in accordance with its then current
Commercial Arbitration Rules. Arbitral proceedings shall be conducted in English
language in New York, New York by a three person arbitration panel as provided
above, one appointed by At Home, one appointed by UPC and the third appointed by
the two arbitrators appointed by At Home and UPC. In the event that At Home or
UPC fails to appoint an arbitrator within five business days of notice of the
submission of the matter to arbitration or the two arbitrators fail to appoint a
third within five business days of the appointment of the second of such
arbitrators, then any Party may request the American Arbitration Association to
appoint an arbitrator. In making any selection of arbitrators, the American
Arbitration Association shall take into consideration the expertise of potential
candidates in the fields of telecommunications, the internet and technology
business. Any determination made by the arbitration panel shall be made by a
majority vote of the arbitrators. In addition, the parties hereto agree that the
time period contemplated by this Section 6.12 shall be appropriately adjusted
for the pendency of such arbitration, but the dates for which Fair Market Value
shall be determined as provided herein shall not be so adjusted.
(d) Following the exercise by the Non-Acquired Party of its call
right and the consummation of the applicable Change of Control, the Non-Acquired
Party may at its sole discretion cause the Acquired Party and its Controlled
Affiliates to lose their Supermajority Governance Rights and may direct the
voting of the Acquired Party's and its Controlled Affiliates' Preference Shares
and ordinary shares of BH to the extent necessary to appoint Supervisory Board
members to replace the Supervisory Board members who have so resigned. The
Acquired Party will cooperate fully with the Non-Acquired Party to cause the
matters contemplated by this Section 6.12(d) to occur as promptly as
practicable. If the Non-Acquiring Party has not closed within 120 days of the
date of the consummation of the applicable Change of Control its call of the
Acquired Party's ordinary shares of BH and/or limited partnership interests in
BOC, (x) the Non-Acquired Party shall cause the resignation of the members of
the Supervisory Board elected pursuant to the first sentence of this Section
6.12(d) and shall vote its Preference Shares and ordinary shares of BH to the
extent necessary to reappoint to the Supervisory Board of BH the members
nominated by the Acquired Party that initially resigned pursuant to this Section
6.12(d), and (y) the Acquired Party's Supermajority Governance Rights shall be
reinstated until the closing of the call.
(e) In the event a Party exercises its right under Section 6.12(a)
and the other Party fails, for any reason, to pay in full the purchase price
therefor when such amount is due and payable (the "Due Date"), interest shall
--------
accrue on the unpaid amount of such purchase price from the Due Date until paid,
at a rate equal to twenty percent (20%) per annum or such lesser amount as is
the maximum permissible under applicable usury laws.
46
(f) Until such time as the cash purchase price for a purchased equity
ownership interest and limited partnership has been paid in full by the relevant
Party, the other Party shall (i) retain legal and beneficial ownership of such
equity ownership interest and limited partnership interest due to be purchased
and all voting rights with respect thereto, and (ii) be entitled to exercise all
rights with respect to such equity ownership interest and limited partnership
under this Agreement.
SECTION 6.13. Access to Information; Cooperation.
----------------------------------
(a) From the date hereof until the Closing, upon reasonable prior
notice and pursuant to a reasonable plan of action based upon the prior
consultation of the Parties, At Home shall cause (or, with respect to the At
Home Joint Ventures, use commercially reasonable efforts to cause, including
through exercise in a reasonable manner of all access and information rights of
such At Home Equity Interest under the applicable At Home Joint Venture
Documents) the At Home International Entities and each of the At Home
International Entities officers, directors, senior employees, accountants and
counsel to: (i) afford the officers, employees and authorized agents,
accountants, counsel and representatives of UPC, UGC and chello reasonably
necessary for the due diligence process, reasonable access, during reasonable
hours, to the offices, properties, plants, other facilities of the At Home
International Entities and to the books and records of each such the At Home
International Entities and to those officers, directors, senior employees,
agents, accountants and counsel of each such At Home International Entity who
have substantive knowledge relating to such At Home International Entity and
(ii) furnish to the officers, employees and authorized agents, accountants,
counsel and representatives of UPC, UGC or chello such additional financial and
operating data and other information regarding the assets, properties and
goodwill of the At Home International Entities, in each case, as UPC, UGC or
chello may from time to time reasonably request.
(b) From the date hereof until the Closing, upon reasonable notice
and pursuant to a reasonable plan of action based upon the prior consultation of
the Parties, UPC and UGC shall cause chello and its Subsidiaries and each of
chello and such Subsidiaries' officers, directors, employees, accountants and
counsel to: (i) afford the officers, senior employees and authorized agents,
accountants, counsel and representatives of At Home reasonably necessary for the
due diligence process, reasonable access, during normal business hours, to the
offices, properties, plants, other facilities of chello and each such Subsidiary
and to the books and records of each such Subsidiary and to those officers,
directors, senior employees, agents, accounts and counsel of each such
Subsidiary who have any substantive knowledge relating to chello and such
Subsidiary and (ii) furnish to the officers, employees and authorized agents,
accountants, counsel, and representatives of At Home such additional financial
and operating data and other information regarding the assets, properties and
goodwill of chello and such Subsidiaries, in each case, as At Home may from time
to time reasonably request.
(c) From and after the Closing Date, each Party shall afford to the
other and their financial advisors, legal representatives, auditing staff,
accountants and other authorized representatives full access to the books and
records of chello and the At Home International Entities for a period of six (6)
years following the Closing Date in connection with tax and accounting matters
and other reasonable business purposes. It is specifically understood that BH
and BOC may wish to audit the financial statements of such entities for such
periods. The Parties shall give BOC thirty (30) days' notice prior to discarding
or destroying any books, records or other documents relating to the business of
BOC and, if so
47
requested by BOC, the relevant Party shall deliver such books, records or other
documents to BOC. BOC shall reimburse the relevant Party for all out-of-pocket
costs incurred in complying with this Section 6.13 other than with respect to
the storage of records.
SECTION 6.14. Consents.
--------
In addition to their obligations under Section 6.02:
(a) UPC and UGC shall use commercially reasonable efforts to obtain
prior to the Closing or, in the event such consents are not obtained prior to
Closing, as promptly as possible thereafter, the following third-party consents
to the transactions contemplated by this Agreement:
(i) written and binding consents to the transactions contemplated by
this Agreement from Telekabel Wien Gessellschaft mbH and Kabel TV Wien
Gesellschaft mbH; and
(ii) a written and binding confirmation from Austar United Broadband
Pty Limited that the memorandum of understanding, dated February 19, 2000,
with chello will continue in full force and effect regardless of time
unless and until superseded by a definitive franchise agreement, subject
only to any requisite third party approvals.
(b) At Home shall use commercially reasonable efforts to obtain prior
to Closing all third-party consents necessary to transfer the At Home
Contributed Assets. With respect to any Equity Interests not transferred to BOC
at the Closing, (the At Home International Entities whose At Home Equity
Interests are not so transferred, the "Non-Transferred Entities"), At Home shall
------------------------
use commercially reasonable efforts to effect a transfer to BOC of such Non-
Transferred Entities as promptly as possible and shall promptly:
(i) assign to BOC all the rights of At Home or such At Home Equity
Interest to dividends, distributions, royalties or other payments from such
At Home Joint Venture; and
(ii) delegate or assign to BOC its rights to appoint board members
and executives of the Non-Transferred Entities so as to give BOC as much
control as possible in the management of the affairs of the Non-Transferred
Entities, provided that, if At Home is legally precluded from effecting
such delegation or assignment, it shall use its commercially reasonable
efforts to follow BOC's instructions so as to effectively give BOC as much
control as possible in the management of the affairs of the Non-Transferred
Entities.
(iii) In the event that the At Home Equity Interest in At Home Network
Australia Pty. is not transferred to BOC at Closing, in addition to At
Home's obligations under clauses (i) and (ii) above, the Parties agree to
cooperate in good faith to affect such transfer as promptly as practicable
and, if such transfer shall prove impracticable, to enter into alternative
arrangements pursuant to good faith negotiations designed to preserve the
economics and benefits that are intended to be achieved from combining the
current and future business operations in Australia of both chello and its
Subsidiaries and At Home Network Australia Pty. (pending receipt of consent
to such transfer).
48
During the period from the Closing Date until the earlier of 18 months after the
Closing Date and the date such Non-Transferred Entities are Transferred to BOC,
all funding obligations of the At Home Equity Interests or At Home with respect
to the Non-Transferred Entities shall be the responsibility of At Home. Upon
the transfer to BOC of any Non-Transferred Entity, BOC shall pay to At Home in
cash the aggregate amount of any funding obligations advanced by At Home from
the Closing Date until the date of such transfer.
(c) In the event that by the date which is 18 calendar months
following the Closing Date, At Home has not transferred all of such At Home
Equity Interests to BOC or UPC and UGC have not obtained all of the consents
described in Section 6.14(a) (any such non-transferred interest or non-consented
matter being, a "Non-Transferred Interest"), then At Home or UPC and UGC, as the
------------------------
case may be, shall determine the make whole fair market value of the Non-
Transferred Interests (the "Make Whole Fair Market Value") as set forth below
----------------------------
and shall pay to BOC on the Payment Date an amount equal to such Make Whole Fair
Market Value, which payment may be effected, (i) with respect to a Non-
Transferred Interest of At Home, at At Home's option, in cash, At Home stock or
BH stock, or any combination thereof and (ii) with respect to a Non-Transferred
Interest of UPC and UGC, at UPC and UGC's option in cash, UGC Stock, UPC Stock,
BH Stock or any combination thereof. Any Party receiving restricted stock
pursuant to clauses (i) or (ii) above shall be entitled to customary piggy-back
and F-3 or S-3 demand registration rights with respect to such stock.
The Make Whole Fair Market Value determination shall be determined
according to the following principles:
(i) In the event the Make Whole Fair Market Value is not mutually
agreed upon by the Parties within ten (10) business days following the
expiration of such 18-month period the Make Whole Fair Market Value will be
determined pursuant to the Banks' Valuation Method within 45 days
thereafter (the date which is five (5) business days after the date on
which such Make Whole Fair Market Value is determined, by either process,
being the "Payment Date"); and
------------
(ii) The Make Whole Fair Market Value will be equal to fair market
value as of the date which is 18 months after the Closing Date assuming
that (A) the other parties to the Non-Transferred Entities have provided
their consents and, as applicable, have been cooperative in managing the
Non-Transferred Entities, (B) a "free and fair" market for the Non-
Transferred Interests exists with numerous willing buyers, (C) the fair
market values are gross values and are not impacted by any (x) taxes of any
nature that a Party may incur upon a sale of the Non-Transferred Interests
or (y) discounts for minority interest or illiquidity, (D) with respect to
the non-Transferred Entities, Make Whole Fair Market Value will be
calculated with respect to equity value only and without regard to any
royalties payable to or by such entity and taking into consideration all of
the risks, uncertainties and opportunities associated with the business.
(d) In the event of the sale of the entire HFC Network (as defined in
that certain Master Agreement, dated June 9, 1999, among At Home, Optus
Multimedia Pty Limited and certain other parties thereto) to a third party
(other than UPC, UGC, Liberty or any Controlled Affiliate thereof), on or prior
to the date which is 18 calendar months following the Closing Date, the Parties
agree they shall take the actions as set forth on Annex Q hereto.
49
SECTION 6.15. Certain chello Holdings, UPC and UGC Covenants.
----------------------------------------------
chello Holdings, UPC and UGC hereby undertake and covenant:
(i) for the duration of this Agreement, (i) they will use
commercially reasonable efforts to not enter into any agreement or
instrument governing Indebtedness which by its respective terms would
limit, restrict, or apply to BH and its Controlled Affiliates, and (ii) in
any event they will not enter into any agreement or instrument governing
Indebtedness which by its respective terms, or amend the terms of any
agreement or instrument that governs Indebtedness and that is in existence
on the date hereof in a manner that, imposes any covenant or restriction
with respect to BH and its Controlled Affiliates and the operation of their
respective businesses (including, without limitation, the ability to incur
Indebtedness or make investments in third parties) that are more
restrictive than that contained in Indebtedness existing on the date
hereof;
(ii) UPC only shall use commercially reasonable efforts to deploy
advanced set top box technology in the Territory and to make available two
way homes for the period of the relevant Franchise Term Sheets;
(iii) except as a result of the exercise of any call or put provided
for in this Agreement or a purchase of an interest in BH or BOC pursuant to
Sections 2.6(a) or 3.4 of the BH Shareholders' Agreement, that they will
not and will not permit any Controlled Affiliate to cause BH or any of its
Controlled Affiliates to become a "Subsidiary" as defined in the UPC and
----------
UGC Indentures until the earlier of (a) the date that all of the Indentures
existing on the date hereof are no longer in effect, or (b) until such time
as Excite Holdings has lost its rights to nominate any members to the
Supervisory Board of BH.
(iv) if UPC acquires 100% of Telekabel Service Sud GmbH ("TSS"), UPC
---
will cause TSS to enter into the agreements referred to in Section
2.01(a)(i) of the Relationship Agreement between chello and UPC, dated May
17, 2000, as amended as set forth in Section 2.01(b)(i) thereof.
SECTION 6.16. Certain Excite Holdings and At Home Covenants.
---------------------------------------------
Excite Holdings and At Home hereby undertake and covenant to use
commercially reasonable efforts consistent with past practices to continue to
develop technological enhancements and improvements and to support the
Excite@Home brand for the Term.
SECTION 6.17. Franchise Agreements.
--------------------
UPC shall use commercially reasonable efforts to cause the UPC
Affiliates listed in Section 6.17 of the United Group Disclosure Schedule to
enter into binding franchise agreements reflecting the arrangements contemplated
in the Franchise Term Sheets.
50
SECTION 6.18. Certain Tax Matters.
-------------------
The Parties agree to cause BOC, its direct BV Subsidiary, and chello
to make a valid "check the box" election under the U.S. federal tax code so that
it is treated as a partnership or disregarded entity for U.S. federal tax
purposes.
SECTION 6.19.
In the event that any of the representations and warranties set forth
in Section 4.01(j) are untrue, UPC or UGC, as applicable, shall use commercially
reasonable efforts as are necessary to terminate any such agreement or
arrangement and UPC or UGC will be liable for any costs associated herewith.
SECTION 6.20. Conduct of Business Pending Closing.
-----------------------------------
(a) At Home agrees that, between the date of this Agreement and the
earlier of the Closing or the termination of this Agreement in accordance with
its terms, unless UPC and UGC shall otherwise agree in writing and except as
expressly contemplated by this Agreement, At Home shall cause the businesses of
the Contributed Subsidiaries to be conducted, and shall use commercially
reasonable efforts (including, without limitation, through exercise of its
governance rights) to cause each of the At Home Joint Ventures to be conducted,
only in the ordinary course of business and in a manner consistent with past
practice; and At Home shall use its reasonable commercial efforts to preserve
substantially intact the business organization of the Contributed Subsidiaries
and the At Home Joint Ventures and to preserve the current relationships of the
Contributed Subsidiaries and the At Home Joint Ventures with customers,
suppliers and other persons with which the Contributed Subsidiaries or At Home
Joint Venture has significant business relations. At Home shall use
commercially reasonable efforts to preserve the current relationships of At
Home, Excite Holdings and/or their Subsidiaries in the Territory with their
partners, shareholders or joint venturers in the At Home Joint Ventures. By way
of amplification and not limitation, except as contemplated by this Agreement
shall not, and shall cause its Subsidiaries in the Territory to not, and shall
use commercially reasonable efforts (including, without limitation, through
exercise of its governance rights) to cause the At Home Joint Ventures to not,
between the date of this Agreement and the earlier of the Closing and the
termination of this Agreement in accordance with its terms, directly or
indirectly do, or propose to do, any of the following without the prior written
consent of UPC and UGC:
(i) amend or otherwise change the organizational documents of the At
Home International Entities;
(ii) issue, sell, pledge, dispose of, grant, encumber, or authorize
the issuance, sale, pledge, disposition, grant or encumbrance of, (A) any
shares of capital stock of any class of the At Home International Entities,
or any options, warrants, convertible securities or other rights of any
kind to acquire any shares of such capital stock, or any other ownership
interest (including, without limitation, any phantom interest), of At Home
International Entities or (B) any assets of the At Home International
Entities except for sales in the ordinary course of business and in a
manner consistent with past practice;
51
(iii) declare, set aside make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect
to any of the capital stock of At Home International Entities.
(iv) with the respect to the At Home International Entities, the
same shall not (A) acquire (including, without limitation, by merger,
consolidation, or acquisition of stock or assets) any corporation,
partnership, other business organization or any division thereof or any
material amount of assets; (B) incur any indebtedness for borrowed money or
issue any debt securities or assume, guarantee or endorse, or otherwise as
an accommodation become responsible for, the obligations of any person, or
make any loans or advances, except in the ordinary course of business and
consistent with past practice; or (C) enter into any material contract or
agreement other than in the ordinary course of business, consistent with
past practice;
(v) increase the compensation payable or to become payable to the
officers or employees of the At Home International Entities, except for
increases in accordance with past practices in salaries or wages of
employees of the At Home International Entities, or grant any severance or
termination pay to, or enter into any employment or severance agreement
with any director, officer or other employee of the At Home International
Entities, or establish, adopt, enter into or amend any collective
bargaining, bonus, profit sharing, thrift, compensation, stock option,
restricted stock, pension, retirement, deferred compensation, employment,
termination, severance or other plan, agreement, trust, fund, policy or
arrangement for the benefit of any director, officer or employer in each
case, of the At Home International Entities, except, with respect to the
matters set forth in this clause (v), to the extent such actions are in the
ordinary course consistent with past practices or pursuant to contractual
obligations;
(vi) take any action, other than reasonable and usual actions in
the ordinary course of business and consistent with past practice, with
respect to accounting policies or procedures of the At Home International
Entities (including, without limitation, procedures with respect to the
payment of accounts payable and collection of accounts receivable);
(vii) make any tax election or settle or compromise any material
federal, state, local or foreign income tax liability of the At Home
International Entities;
(viii) pay, discharge or satisfy any material claim, liability or
obligation of the At Home International Entities (absolute, accrued,
asserted or unasserted, contingent or otherwise), other than the payment,
discharge or satisfaction, in the ordinary course of business and
consistent with past practice; or
(ix) enter into any partnership or joint venture arrangement with
respect to its international business operations; provided that it is
agreed that At Home may pursue (but not enter into any binding arrangements
with respect to) the formation of Joint Ventures for the benefit of BOC in
the Territory.
(b) UPC and UGC agree that, between the date of this Agreement and
the earlier of the Closing and the termination of this Agreement in accordance
with its terms, unless At Home shall otherwise agree in writing and except as
expressly contemplated by this
52
Agreement, UPC and UGC shall cause the businesses of chello and its Subsidiaries
to be conducted, only in the ordinary course of business and in a manner
consistent with past practice; and UPC and UGC shall use reasonable commercial
efforts to preserve substantially intact the business organization of chello and
its Subsidiaries and to preserve the current relationships of chello and such
Subsidiaries with customers, suppliers and other persons with which chello or
such Subsidiary has significant business relations. By way of amplification and
not limitation, except as contemplated by this Agreement UPC and UGC shall not
and shall cause chello and its Subsidiaries to not between the date of this
Agreement and the earlier of the Closing and the termination of this Agreement
in accordance with its terms, directly or indirectly do, or propose to do, any
of the following without the prior written consent of At Home:
(i) amend or otherwise change the organizational documents of
chello and its Subsidiaries;
(ii) issue, sell, pledge, dispose of, grant, encumber, or authorize
the issuance, sale, pledge, disposition, grant or encumbrance of, (A) any
shares of capital stock of any class of chello or its Subsidiaries, or any
options, warrants, convertible securities or other rights of any kind to
acquire any shares of such capital stock, or any other ownership interest
(including, without limitation, any phantom interest), of chello or its
Subsidiaries or (B) any assets of chello or its Subsidiaries except for
sales in the ordinary course of business and in a manner consistent with
past practice;
(iii) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect
to any of the capital stock of chello or its Subsidiaries;
(iv) with respect to chello and its Subsidiaries, the same shall not
(A) acquire (including, without limitation, by merger, consolidation, or
acquisition of stock or assets) any corporation, partnership, other
business organization or any division thereof or any material amount of
assets; (B) incur any indebtedness for borrowed money or issue any debt
securities or assume, guarantee or endorse, or otherwise as an
accommodation become responsible for, the obligations of any person, or
make any loans or advances, except in the ordinary course of business and
consistent with past practice; or (C) enter into any material contract or
agreement other than in the ordinary course of business, consistent with
past practice;
(v) increase the compensation payable or to become payable to the
officers or employees of chello and its Subsidiaries, except for increases
in accordance with past practices in salaries or wages of employee of
chello and its Subsidiaries, or grant any severance or termination pay to,
or enter into any employment or severance agreement with any director,
officer or other employee of chello and its Subsidiaries, or establish,
adopt, enter into or amend any collective bargaining, bonus, profit
sharing, thrift, compensation, stock option, restricted stock, pension,
retirement, deferred compensation, employment, termination, severance or
other plan, agreement, trust, fund, policy or arrangement for the benefit
of any director, officer or employee in each case of chello and its
Subsidiaries, except, with respect to the matters set forth in this clause
(v), to the extent such actions are in the ordinary course consistent with
past practices or pursuant to contractual obligations;
53
(vi) take any action, other than reasonable and usual actions in
the ordinary course of business and consistent with past practice, with
respect to accounting policies or procedures of chello and its Subsidiaries
(including, without limitation, procedures with respect to the payment of
accounts payable and collection of accounts receivable);
(vii) make any tax election or settle or compromise any material
federal, state, local or foreign income tax liability of chello and its
Subsidiaries;
(viii) pay discharge or satisfy any material claim, liability or
obligation of chello and its Subsidiaries (absolute, accrued, asserted or
unasserted, contingent or otherwise), other than the payment, discharge or
satisfaction, in the ordinary course of business and consistent with past
practice; or
(ix) with respect to chello and its Subsidiaries, enter into any
content or similar agreement with respect to its business or form any
partnership or joint venture for the provision of content.
(c) Notwithstanding the provisions of this Section 6.20, the Parties:
(i) may take such actions as are necessary to cause the At Home
International Entities and chello and its Subsidiaries, respectively, to
have a zero cash balance at Closing and (B) shall take such actions to
cause the At Home International Entities and chello and its Subsidiaries
respectively to cause Indebtedness (including Indebtedness to affiliates),
other than trade payables to third parties incurred in the ordinary course
of business, to be zero at Closing.
(ii) Subject to the further provisions of this Section 6.20(c)(ii), at
Closing, each of Excite Holdings and chello Holdings will receive an equal
interest in BOC. On or before the Closing Date the parties will agree in
writing as to the fair market value of BOC, without regard to the
provisions of this Section 6.20(c)(ii) (the "BOC Value"). In the event (A)
---------
the At Home International Entities or chello and its Subsidiaries have a
positive cash balance at Closing (taking into account the At Home Equity
Interest's percentage ownership of the At Home Joint Ventures in the case
of cash held by an At Home Joint Venture) and/or (B) the At Home
International Entities or chello and its Subsidiaries, respectively, from
and after the date hereof and prior to the Closing Date incurs a material
deposit, prepayment or capital expenditure which shall have been approved
by the other Parties hereto in writing, then Excite Holdings or chello
Holdings, as applicable, shall be entitled to additional equity interests
in BOC as if such amounts had been separately contributed to BOC
immediately following Closing. The amount of additional equity interests
shall be calculated as follows:
(1) With respect to clause (A) of paragraph (ii) above, Excite
Holdings or chello Holdings, as applicable, shall be entitled to additional
interests in BOC calculated on the basis of its pro rata share of such
positive cash balances divided by the BOC Value; and
(2) With respect to clause (B) of paragraph (ii) above, Excite
Holdings and/or chello Holdings shall be entitled to additional interests
in BOC calculated with
54
respect to each such material deposit, prepayment or capital expenditure on
the basis of the amount thereof divided by the BOC Value.
(d) For the period from the date hereof through September 30, 2000 At
Home and Excite Holdings agree to fund the expenses of the At Home International
Entities in the ordinary course of business consistent with past practice and
UPC, UGC and chello Holdings agree to fund the expenses of chello and its
Subsidiaries in the ordinary course of business consistent with past practice.
If the Closing shall not have occurred by September 30, 2000, the Parties agree
that they will continue to fund the At Home International Entities and chello
and its Subsidiaries through the earlier of the Closing or termination of this
Agreement in accordance with its terms on the same basis as set forth in the
previous sentence. At Closing the Parties agree they will calculate in good
faith the total amounts funded from October 1, 2000 through Closing for chello
and its Subsidiaries and the At Home International and divide such total by two.
Whichever among the UPC Group and the At Home Group which has paid less than the
other shall promptly pay the Group paying more the difference so that each Party
shall have borne one half of such amount during such period.
SECTION 6.21. The IPO.
-------
The Parties acknowledge and agree that their intention is to cause
Broadband Holdings to complete its initial public offering of ordinary shares
and a European stock exchange listing and quotation on NASDAQ as soon as
practicable following the Closing. The Parties agree to cooperate and use their
reasonable commercial efforts to effect such public offering and to obtain and
provide as promptly as possible such information, including without limitation
financial information relating to the At Home Contributed Assets and At Home
Joint Ventures under United States generally accepted accounting principles, as
may be necessary or appropriate in connection therewith. With a view to
marketing the IPO more effectively, the Parties agree to consider taking
appropriate steps prior to the IPO that would dissolve BOC or convert it into a
Dutch B.V. that would be treated as a partnership for U.S. federal income tax
purposes, provided, that such dissolution or conversion would not adversely
--------
affect any Party.
SECTION 6.22. Additional Documents.
--------------------
At Home and Excite Holdings shall use commercially reasonable efforts
to deliver to UPC by closing or as promptly as practicable thereafter fully
executed copies of the documents listed in Section 6.22 of the At Home
Disclosure Schedule.
SECTION 6.23. Post Closing Funding.
--------------------
(a) As at the date hereof and conditioned on Closing, Liberty Media
Corporation has agreed to provide cash funding to BH in the amount of up to
(Euro) 200 million in accordance with a funding term sheet attached hereto as
Annex R. Subject to any other third party funding which may be committed to BOC,
UPC and UGC, on the one hand, and At Home on the other hand hereby agree to fund
BOC in the amount of up to (Euro) 100 million each on a pro rata basis as to
themselves and Liberty Media ("Payment Amount") on the same terms as set out in
--------------
the funding term sheet attached hereto as Annex R.
(b) If for any reason any Party ("Defaulting Party") shall fail to
----------------
contribute any portion of its Payment Amount as and when due hereunder (a
"Default"), and if such failure continues for ten (10) days after written notice
--------
thereof (a "Default Notice") has been
--------------
55
given by the non-defaulting Party or Parties (the "Non-Defaulting Parties"), the
----------------------
Non-Defaulting Parties, if they have paid their proportionate shares of the
Payment Amount in question, shall have the right to advance to BOC on behalf of
the Defaulting Party the amount of such defaulted contribution, such advance to
be deemed a loan from the Non-Defaulting Parties to the Defaulting Party. Any
such loan (a "Default Loan") shall bear interest from the date of advance until
------------
paid at a rate (the "Default Rate") equal to twenty percent (20%) per annum or
------------
such lesser amount as is permissible under applicable usury laws and shall be
repaid with interest by the Defaulting Party as set forth below.
(c) If the Defaulting Party fails to cure such default within forty-
five (45) days after written notice thereof from the Non-Defaulting Parties that
have advanced such Default Loan to such Defaulting Party (the "Cure Period"),
-----------
such cure to include the repayment of all Default Loans, together with interest
accrued thereon, the Non-Defaulting Parties may at any time thereafter and as
long as such default remains uncured (and as the sole and exclusive remedy by
reason of such default) exercise the remedy set forth in Section 6.23(d) below.
Interest on a Default Loan subsequently paid by a Defaulting Party shall not be
deemed an additional capital contribution by such Defaulting Party. While any
such Default remains uncured after delivery of the Default Notice, a Defaulting
Party shall cease to have the right to participate in the management of BH or
BOC or exercise any approval or disapproval rights over the actions of BH or
BOC.
(d) The Non-Defaulting Parties that have advanced a Default Loan with
respect to such default shall have the right to (i) convert the Default Loan to
a capital contribution and (ii) adjust the Interests (as defined in the BOC
Limited Partnership Agreement) of the Parties in accordance with this subsection
by written notice thereof to the Defaulting Party at any time following the
expiration of the Cure Period for so long as such default remains uncured.
Effective upon the giving of such written notice of exercise, the Non-Defaulting
Parties shall be deemed to have made an additional capital contribution to BOC
equal to one hundred and fifty percent (150%) of the unpaid balance of principal
and accrued and unpaid interest of their Default Loan (whereupon the Default
Loan shall be deemed satisfied) and the relative share of the Defaulting Party
shall be decreased to the percentage obtained by multiplying such Defaulting
Parties' relative share by a fraction, the numerator of which is equal to the
amount of capital contributed by the Defaulting Party at such time (excluding
the amount theretofore represented by the Default Loan including any unpaid
interest) and the denominator of which is equal to the sum of the numerator plus
one hundred and fifty percent (150%) of the amount of the Default Loan being
contributed by the Non-Defaulting Parties. The amount by which the Defaulting
Parties' relative share has been thereby reduced shall be added (pro rata, if
applicable) to the relative shares of the Non-Defaulting Parties that have
advanced the Default Loans. All calculations made pursuant to this Section
6.23(d) shall be made based on the BOC Value determined pursuant to Section
6.20(a). The Parties obligations under this Section 6.23 to provide funding
shall terminate upon the closing of an IPO (as defined in the BH Shareholders'
Agreement).
SECTION 6.24. No Misuse.
---------
The Parties hereby undertake not to take any action, the primary
purpose or the effect of which is to circumvent or frustrate (a) the rights of
BOC under this Agreement, the chello Relationship Agreements or the Technology
Licensing Term Sheet or (b) the transfer restrictions set forth in Section
3.3(b) of the BH Shareholders' Agreement (it being understood that a transfer of
an interest in Excite Holdings or chello Holdings by the Parties is to be
treated as a transfer covered by such Section 3.3(b)).
56
SECTION 6.25. [*]
---
SECTION 6.26. Certain Other Matters.
---------------------
(a) The Parties agree that they shall and shall cause BH and BOC to
use commercially reasonable efforts to (i) finalize the definitive documentation
with respect to this Agreement, the Basic Agreements and the matters
contemplated hereby and thereby and (ii) following the Closing, operate the
business of BOC and its Subsidiaries, including without limitation, the
structuring of contractual arrangements and commitments in a manner which is
most efficient and designed to optimize BH's and BOC's position from a tax,
accounting and regulatory perspective.
(b) The Parties acknowledge and agree with and to the matters
relating to the UGC Indentures set forth on Annex S hereto.
[*]
[*]= CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.
57
(ii)
ARTICLE VII
INDEMNIFICATION
SECTION 7.01. Indemnification by chello Holdings, UPC and UGC.
-----------------------------------------------
(a) Each of chello Holdings, UPC and UGC shall, indemnify, defend and
hold harmless At Home, Excite Holdings and their Controlled Affiliates and
officers, agents, directors and employees (the "At Home Indemnified Parties")
---------------------------
from and against any and all losses, claims, damages, liabilities or expenses
(including court costs, reasonable expenses and reasonable attorney's fees)
(collectively, "Losses") incurred directly by the At Home Indemnified Parties
------
(including, without limitation, in connection with any suit or claim that may be
brought against the At Home Indemnified Parties by chello Holdings, UPC and UGC,
their Affiliates or third parties) to the extent that such Losses arise out of
or accrue from (i) the bad faith or willful misconduct of chello Holdings, UPC
or UGC, respectively; (ii) any misrepresentation or breach of any
representations or warranties of chello Holdings, UPC or UGC, respectively, set
forth in this Agreement or any other Basic Agreement; (iii) any breach by
chello Holdings, UPC or UGC, respectively, of any covenants, agreements or
undertakings of such Party contained in or made pursuant to this Agreement or
any other Basic Agreement; (iv) the failure of chello Holdings, UPC or UGC,
respectively, or any of their Controlled Affiliates' failure to comply with any
Laws; (v) matters relating to UPC or UGC or their affiliates which are unrelated
to the United Group Contributed Assets; or (vi) any unpaid taxes payable by
chello or any of its Subsidiaries with respect to taxable periods or portions
thereof ending on or prior to the Closing Date.
(b) To the extent any such Losses are suffered directly by BH and/or
its controlled Affiliates (the "BH Group") and, therefore, indirectly by the At
--------
Home Indemnified Parties the amount of any indemnification owed hereunder shall
be paid to the relevant members of the BH Group and shall be measured with
reference to the amount all Losses actually suffered by the relevant members of
the BH Group.
(c) With respect to the matters set forth in Section 4.01, chello
Holdings shall initially be liable for any Losses for which indemnification is
owed pursuant to Section 7.01(a) (a "United Group Obligation"). To the extent
-----------------------
chello Holdings has not satisfied a United Group Obligation, UPC and UGC shall
be liable for the United Group Obligation severally and not jointly up to the
amount of the portion of the United Group Obligation that is proportionate to
its respective ownership interest of chello Holdings, which ownership interests,
together, are 100%.
58
SECTION 7.02. Indemnification by At Home and Excite Holdings.
----------------------------------------------
(a) Each of At Home and Excite Holdings shall jointly and severally
with respect to the matters set forth in Section 5.01 and severally and not
jointly with respect to all other matters indemnify, defend and hold harmless
UGC, chello Holdings, UPC and their respective Controlled Affiliates and
officers, agents, directors and employees (the "United Group Indemnified
------------------------
Parties") from and against any and all Losses incurred by the United Group
-------
Indemnified Parties (including, without limitation, in connection with any suit
or claim that may be brought against the United Group Indemnified Parties by At
Home, Excite Holdings, their Affiliates or third parties) to the extent that
such Losses arise out of or accrue from (i) the bad faith or willful misconduct
of At Home, Excite Holdings or their Controlled Affiliates; (ii) any
misrepresentation or breach of any representations or warranties of At Home or
Excite Holdings set forth in this Agreement or any other Basic Agreement
(provided, that, for purposes of determining whether there has been a breach of
the representation and warranty in the final sentence of Section 5.01(d), such
representation and warranty shall be read without qualification as to At Home's
Knowledge); (iii) any breach by At Home or Excite Holdings of any covenants,
agreements or undertakings of such Party contained in or made pursuant to this
Agreement or any other Basic Agreement; (iv) the failure of At Home or Excite
Holdings or their Controlled Affiliates to comply with any Laws; (v) matters
related to At Home, its Affiliates or the At Home Joint Ventures which are
unrelated to the At Home Contributed Assets; or (vi) any unpaid taxes payable by
At Home International Entities with respect to taxable periods or portions
thereof ending on or prior to the Closing Date.
(b) To the extent any such losses, claims, damages, liabilities or
expenses are suffered directly by the BH Group and, therefore, indirectly by the
United Group Indemnified Parties the amount of any indemnification owed
hereunder shall be paid to the relevant members of the BH Group and shall be
measured with reference to the amount of all Losses actually suffered by the
relevant members of the BH Group.
SECTION 7.03. Indemnification Procedures.
---------------------------
Whenever any At Home Party or United Group Party, as the case may be
(the "Indemnified Party"), shall become aware that a claim has been asserted or
-----------------
threatened which, if valid, would subject chello Holdings, UPC, UGC, At Home or
Excite Holdings, as the case may be (the "Indemnifying Party"), to an indemnity
------------------
obligation under this Agreement, the Indemnified Party promptly will notify the
Indemnifying Party in writing of such claim in sufficient detail to enable the
Indemnifying Party to evaluate the claim. The Indemnifying Party will have the
right, but not the obligation, to assume the defense of such claim. If the
Indemnifying Party fails to assume the defense of such claim within forty five
(45) days after the receipt of notice of the claim, the Indemnified Party (upon
delivering written notice to such effect to the Indemnifying Party) shall have
the right to undertake, at the Indemnifying Party's cost and expense, the
defense, compromise or settlement of such claim, subject to the right of the
Indemnifying Party to assume the defense of such claim at any time prior to
settlement, compromise or final determination thereof, and provided, however,
-------- -------
that the Indemnified Party shall not enter into any such compromise or
settlement without the written consent of the Indemnifying Party. In the event
the Indemnified Party assumes the defense of the claim, the Indemnified Party
will keep the Indemnifying Party reasonably informed of the progress of any such
defense, compromise or settlement. Written notice of any indemnification claim
arising under Sections 7.01(a)(ii) or 7.02(a)(ii) must be given by the
Indemnified Party to the Indemnifying Party prior to the date which is eighteen
(18) months
59
following the Closing. If written notice of a claim has been given prior to the
expiration of the representations and warranties hereunder, then the relevant
representations and warranties shall survive as to such claim, until such claim
has been finally resolved. No At Home Indemnified Party or UPC Indemnified Party
shall have any right under Section 7.01(a)(ii) or Section 7.02(a)(ii) to
commence any action or pursue any claim for indemnification thereunder unless
and until the total amount of alleged Losses incurred by the At Home Indemnified
Parties or the United Group Indemnified Parties, respectively, exceeds $35
million (the "Basket Amount"), in which case indemtification may be sought for
-------------
the full amount thereof without regard to such threshold; provided that, in
determining Losses under indemnification claims arising under Section
7.01(a)(ii) and 7.02(a)(ii) all representations and warranties set forth herein
shall be read without regard to any of the materiality qualifications or
qualifications as to Material Adverse Effect set forth therein.
SECTION 7.04. Indemnification to Benefit BH and BOC.
-------------------------------------
The Parties hereto agree that each member of the BH Group is intended
to be a third-party beneficiary of the indemnification provisions set forth in
this Article VII and that Broadband Holdings shall have the right to enforce
indemnification as if it were a Party hereto.
SECTION 7.05. Limitation on Damages.
---------------------
(a) Limitation on Damages. NO PARTY SHALL BE LIABLE FOR ANY INDIRECT,
---------------------
SPECIAL, INCIDENTAL OR CONSEQUENTIAL LOSS OR DAMAGE (INCLUDING, WITHOUT
LIMITATION, LOSS OF PROFITS OR LOSS OF USE) SUFFERED BY ANY OTHER PARTY ARISING
FROM OR RELATING TO A PARTY'S PERFORMANCE, NON-PERFORMANCE, BREACH OF OR DEFAULT
UNDER A COVENANT, WARRANTY, REPRESENTATION, TERM OR CONDITION HEREOF, EACH PARTY
WAIVES AND RELINQUISHES CLAIMS FOR INDIRECT, SPECIAL, INCIDENTAL OR
CONSEQUENTIAL DAMAGES. THE LIMITATIONS ON LIABILITY AND DAMAGES SET FORTH IN
THIS SECTION APPLY TO ALL CAUSES OF ACTION THAT MAY BE ASSERTED HEREUNDER,
WHETHER SOUNDING IN BREACH OF CONTRACT, BREACH OF WARRANTY, TORT, PRODUCT
LIABILITY, NEGLIGENCE OR OTHERWISE.
(b) Contractual Limitation Period. Any arbitration, litigation,
-----------------------------
judicial reference or other legal proceeding involving the parties shall be
commenced within two (2) years after the accrual of the cause of action, except
for arbitration, litigation, judicial reference or other legal proceedings in
respect to claims for indemnification under the provisions of this Agreement for
which notice has been given within the time period specified in Section 7.03,
which indemnification claims shall be commenced within the statutory limitations
period provided by applicable Law.
ARTICLE VIII
TERM AND TERMINATION
SECTION 8.01. Term of the Agreement.
---------------------
This Agreement may be terminated by (i) At Home (for At Home and Excite
Holdings) or (ii) UPC (for chello Holdings, UPC and UGC) (A) within two business
days following the 10th
60
business day from the date hereof upon failure of the condition set forth in
Section 3.02(c) and (B) if the Closing hereunder has not occurred prior to
November 30, 2000 (the "Drop-Dead Date"); provided, that, (x) if European
--------------
Commission or other material regulatory approval has not been received by the
date which is five (5) business days prior to November 30, 2000 and review is
pending with respect thereto, the Drop-Dead Date shall be extended until the
date that is ten (10) business days after receipt of such approval, or (y) if
all of the conditions to Closing set forth in Section 3.02 have been met and
either an At Home Party, on the one hand, or a United Group Party, on the other,
has failed to satisfy its conditions to Closing, and the other parties (the
"Performing Group") have satisfied their conditions to Closing and, but for the
----------------
failure of the conditions to their obligations to close to be satisfied, are
prepared to close, the Performing Group, may, at its election extend the Drop-
Dead Date, but in no event shall the Drop-Dead Date, be extended pursuant to
clause (x) or clause (y) later than February 28, 2001. Once the Closing has
occurred, except for the representations and warranties in Articles IV and V
which shall survive for a period of eighteen months (18) following Closing and
the indemnification obligations in Article VII, which, except as otherwise set
forth in Section 7.03, shall survive indefinitely notwithstanding any
termination of this Agreement pursuant to Section 8.02, this Agreement shall
remain in force in perpetuity (the "Term") unless and until earlier terminated
----
pursuant to Section 8.02.
SECTION 8.02. Termination by At Home or UPC.
-----------------------------
From the date hereof until an IPO of Broadband Holdings has been
completed, this Agreement shall be subject to termination upon the occurrence of
any of the following events. UPC and UGC (with respect to the following events
occurring with regard to At Home or Excite Holdings (each an "At Home Party") or
-------------
BOC) or At Home (with respect to the following events occurring with regard to
chello Holdings, UPC or UGC (each a "United Group Party") or BOC), may terminate
------------------
this Agreement immediately upon notice if:
(i) an At Home Party, or a United Group Party or BOC, respectively,
files a petition for bankruptcy or is adjudicated as bankrupt (or the
equivalent in any country in which either party operates);
(ii) a petition in bankruptcy (or the equivalent in any country in
which either party operates) is filed against an At Home Party or a United
Group Party or BOC, respectively, and such petition is not removed or
resolved within ninety (90) calendar days;
(iii) an At Home Party or a United Group Party or BOC, respectively,
makes an assignment for the benefit of its creditors or an arrangement for
its creditors pursuant to any bankruptcy laws;
(iv) an At Home Party or a United Group Party or BOC, respectively,
discontinues its business; or
(v) a receiver is appointed for an At Home Party or a United Group
Party or BOC, respectively, or its business.
(b) After an IPO of Broadband Holdings has been completed, this
Agreement shall be subject to termination upon the occurrence of any of the
following events. UPC, UGC or At Home (in each case, only with respect to the
following events occurring with regard to BOC) or a committee of the Supervisory
Directors of Broadband Holdings, which committee shall be comprised only of the
independent members of such
61
Supervisory Board (with respect to the following events occurring with regard to
a United Group Party or an At Home Party) may terminate this Agreement
immediately if:
(i) an At Home Party, or a United Group Party or BOC, respectively,
files a petition for bankruptcy or is adjudicated as bankrupt (or the
equivalent in any country in which either party operates);
(ii) a petition in bankruptcy (or the equivalent in any country in
which either party operates) is filed against an At Home Party or a United
Group Party or BOC, respectively, and such petition is not removed or
resolved within ninety (90) calendar days;
(iii) an At Home Party or a United Group Party or BOC, respectively,
makes an assignment for the benefit of its creditors or an arrangement for
its creditors pursuant to any bankruptcy laws;
(iv) an At Home Party or a United Group Party or BOC, respectively,
discontinues its business; or
(v) a receiver is appointed for an At Home Party or a United Group
Party or BOC, respectively, or its business.
SECTION 8.03. Effect of Termination.
---------------------
(a) Termination of this Agreement by a Party shall not act as a waiver
of any breach of this Agreement and shall not act as a release of any Party
hereto from any liability for breach of such Party's obligations under this
Agreement.
(b) Within 90 calendar days following the termination of this
Agreement, each Party shall pay to the other Party all sums, if any, due and
owing as of the date of termination, net of any amounts due from the other Party
as of such date.
(c) Upon any termination of this Agreement pursuant to Section 8.02,
the Party terminating this Agreement may at its option cancel and terminate this
Agreement and the other Basic Agreements upon written notice to the other
Parties hereto and to BOC, and from the date of such cancellation or termination
the Party so terminating this Agreement shall be entitled to enter into such
other agreements or arrangements with respect to the Covered Business and
Covered Services as it shall deem necessary or appropriate without regard to the
provisions of this Agreement or the other Basic Agreements.
ARTICLE IX
DISPUTE RESOLUTION
SECTION 9.01. Negotiation Between Executives.
------------------------------
(a) Each of the Parties shall attempt in good faith to resolve any
dispute arising out of or relating to the interpretation, breach or termination
of this Agreement and any other Basic Agreement (a "Dispute") promptly by
-------
negotiations between executives of the disputing Parties who have authority to
settle the Dispute. Any Party who is a party to a Dispute may give the other
Parties written notice of any Dispute not resolved in the normal course of
business. Within twenty (20) days after delivery of such a notice, executives of
all
62
Parties involved in the Dispute who have authority to settle the Dispute shall
meet at a mutually acceptable time and place, and thereafter as often as they
reasonably deem necessary, to attempt to resolve the Dispute. All negotiations
pursuant to this Section 9.01 shall be confidential.
SECTION 9.02. Jurisdiction; Waiver of Jury Trial.
----------------------------------
All actions and proceedings arising out of or relating to this
Agreement shall be heard and determined exclusively in any federal court sitting
in the City of New York. The Parties hereby (i) submit to the exclusive
jurisdiction of any federal court sitting in the city of New York for the
purpose of any Action arising out of or relating to this Agreement brought by
any party hereto, and (ii) irrevocably waive, and agree not to assert by way of
motion, defense, or otherwise, in any such Action, any claim that it is not
subject personally to the jurisdiction of the above-named courts, that its
property is exempt or immune from attachment or execution, that the Action is
brought in an inconvenient forum, that the venue of the Action is improper, or
that this Agreement or the transactions contemplated hereby may not be enforced
in or by any of the above-named courts.
(b) Each of the Parties hereby waives to the fullest extent permitted
by applicable law any right it may have to a trial by jury with respect to any
litigation directly or indirectly arising out of, under or in connection with
this Agreement or the transactions contemplated hereby. Each of the Parties (i)
certifies that no representative, agent or attorney of any other party has
represented, expressly or otherwise, that such other party would not, in the
event of litigation, seek to enforce the foregoing waiver and (ii) acknowledges
that it and the other Parties have been induced to enter into this Agreement and
the transactions contemplated hereby as applicable, by, among other things, the
mutual waivers and certifications in this Section 9.02(b).
SECTION 9.03. Irreparable Harm.
----------------
The Parties hereby reserve their right to seek immediate injunctive
relief in the event of the breach of any provision of this Agreement where such
breach may cause irreparable harm, the extent of which would be difficult to
ascertain. Accordingly, they agree that, in addition to any other legal remedies
to which a non-breaching Party might be entitled, such Party may seek immediate
injunctive relief in the event of any breach of any of the provisions of this
Agreement through any federal court sitting in the City of New York.
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.01. No Agency or Partnership.
------------------------
Nothing in this Agreement or the Annexes, Exhibits or Schedules hereto
shall be deemed to create any partnership or agency relationship between any
Parties or between all the Parties, except that it is intended for U.S. federal
income tax purposes that the Broadband Operating Company shall elect to be
treated as a partnership and the Parties agree that they shall cause BOC to take
all such steps as may be necessary to effect such election. No Party shall be
entitled to act on behalf of and/or bind any one or more of the others without
prior written authorization establishing its authority to do so.
63
SECTION 10.02. Expenses.
--------
(a) Except as otherwise provided in this Agreement, all costs and
expenses, including, without limitation, fees and disbursements of counsel,
financial advisors and accountants, incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the Party incurring
such costs and expenses; provided, however, that if the Closing occurs, BOC
shall, upon receipt of proper documentation, pay the reasonable costs and
expenses, including, without limitation, applicable transfer taxes or fees, of
each Party and each Party shall have the right to be reimbursed by BOC for such
reasonable costs and expenses upon presentation of proper documentation;
provided, further, that the maximum amount to be paid or reimbursed to (i) UPC,
UGC and chello Holdings, as a group, and (ii) At Home and Excite Holdings, as a
group, hereunder by BOC shall be $17.5 million each (or $35 million in the
aggregate).
(b) From and after the Closing Date, neither UPC and UGC, on the one
hand, nor At Home on the other (nor any of their respective Affiliates) will
incur any expenses reimbursable to such Party by a member of the BH Group at any
time without the prior written approval of BH or BOC. Any such approval given
by BH or BOC will be memorialized by BOC issuing a purchase order detailing the
services to be performed and the relevant cost.
SECTION 10.03. Notices.
-------
All notices, requests, claims, demands and other communications
hereunder shall be in writing in the English language and shall be given or made
(and shall be deemed to have been duly given or made upon receipt) by delivery
in person, by courier service, by cable, by telecopy, by telegram, by telex or
by registered or certified mail (postage prepaid, return receipt requested) to
the respective Parties at the following addresses (or at such other address for
a Party as shall be specified in a notice given in accordance with this Section
9.03):
(a) if to At Home:
At Home Corporation
000 Xxxxxxxx Xxxxxx
Xxxxxxx Xxxx, XX 00000
Attention: Xxxx Xxxxxxx, Executive Vice President
with a copy to the General Counsel
Telecopy No: (000) 000 0000
(b) if to UPC:
United Pan-Europe Communications N.V.
Xxxx. Xxxxxxxxxxxx 000
0000 XX Xxxxxxxxx
Xxx Xxxxxxxxxxx
Attention: Legal Department
Telecopy No: x00 00 000-0000
with a copy to:
64
chello broadband X.X.
Xxxxxx Xxxxxx 000
0000 XX Schipol RIJK
The Netherlands
Attention: Xxxxx Xxxxx, Chief Executive Officer
Telecopy No: x00 00 0000 0000
(c) if to UGC:
UnitedGlobalCom, Inc.
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, XX 00000
Attention: Legal Department
Telecopy No: (000) 000-0000
SECTION 10.04. Headings.
--------
The descriptive headings contained in this Agreement are for
convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 10.05. Severability.
------------
If any term or other provision of this Agreement or any other Basic
Agreement is invalid, illegal or incapable of being enforced by any Law or
public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement or such other Basic
Agreement so as to effect the original intent of the Parties as closely as
possible in an acceptable manner in order that the transactions contemplated
hereby are consummated as originally contemplated to the greatest extent
possible.
SECTION 10.06. Entire Agreement.
----------------
This Agreement together with the Annexes, Exhibits and Schedules
hereto constitutes the entire agreement of the Parties hereto with respect to
the subject matter hereof and thereof and supersedes all prior agreements and
undertakings, both written and oral, between the Parties with respect to the
subject matter hereof and thereof.
SECTION 10.07. Assignment.
----------
Except as expressly provided herein or therein, neither this Agreement
nor any of the Basic Agreements may be assigned by any Party by operation of Law
or otherwise without the express written consent of each of the other Parties
(which consent may be granted or withheld in the sole discretion of each such
other party).
65
SECTION 10.08. No Third Party Beneficiaries.
----------------------------
Except as expressly set forth herein and except for BH and BOC which,
from and after the Closing, shall be a third party beneficiary entitled to
enforce the rights and shall be burdened by the obligations provided for herein
that apply to BH and BOC, this Agreement shall be binding upon and inure solely
to the benefit of the Parties and their permitted assigns and nothing herein,
express or implied, is intended to or shall confer upon any other Person any
legal or equitable right, benefit or remedy of any nature whatsoever under or by
reason of this Agreement. The Parties hereby agree to cause BH and BOC to sign
an agreement acknowledging the foregoing.
SECTION 10.09. No Broker's Fees.
----------------
Each Party agrees that no Person or entity is or will be entitled to a
brokers' fee or finders' fee or any other similar commission directly or
indirectly from such Party, except as previously disclosed in writing to the
other Parties. Each of the Parties agrees to indemnify the other Parties
against any and all liabilities that may arise due to the activities of such
Party with respect to any Person acting as a broker or finder unless previously
disclosed to the other Parties and specifically agreed to by them.
SECTION 10.10. Amendment.
---------
This Agreement may not be amended or modified except by an instrument
in writing signed by, or on behalf of, each of the Parties.
SECTION 10.11. Governing Law.
-------------
This Agreement shall be governed by, and construed in accordance with,
the Laws of the State of New York without regard to conflict of law principles
thereof.
SECTION 10.12. Counterparts.
------------
This Agreement may be executed in one or more counterparts, and by the
different Parties in separate counterparts, each of which when executed shall be
deemed to be an original but all of which taken together shall constitute one
and the same agreement.
SECTION 10.13. Press Releases.
--------------
No Party hereto shall issue any press releases or make any public
announcements of any of the transactions contemplated by this Agreement except
as may be mutually agreed to in writing by the Parties; provided, however, that
-------- -------
notwithstanding the foregoing, each Party shall be permitted upon prior notice
to the other Parties, to make such disclosures to the public or governmental
authorities as their respective counsel shall deem necessary to maintain
compliance with, or to prevent violation of, applicable laws.
SECTION 10.14. Code Names.
----------
The parties agree that each reference in the Basic Agreements to (a)
"Energy" or "Energy Corporation" shall be a reference to "At Home Corporation",
(b) "Energy Holdings" or "Energy Holdings Corporation" shall be a reference to
"Excite Holdings Corporation", (c) "Power" shall be a reference to "United Pan-
Europe Communications N.V,", (d) "Superpower" or "Superpower, Inc." shall be a
reference to "UnitedGlobalCom,
66
Inc.", (e) "Catalyst" or "Catalyst N.V." shall be a reference to "chello
broadband N.V." and (f) "Power Holdings" or "Power Holdings C.V." shall be a
reference to "chello Holdings C.V."
67
IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed as of the first date written above by their respective officers
thereunto duly authorized.
AT HOME CORPORATION
By: /s/ Xxxx Xxxxxxx
-----------------
Name: Xxxx Xxxxxxx
Title: Executive Vice President
UNITED PAN-EUROPE COMMUNICATIONS N.V.
By: /s/ Xxxxxxx Xxxxxxx
-------------------
Name: Xxxxxxx Xxxxxxx
Title: Chief Financial Officer
UNITEDGLOBALCOM, INC.
By: /s/ Xxxxx X. Xxxxxxxx
---------------------
Name: Xxxxx X. Xxxxxxxx
Title: Senior Vice President
68
