Exhibit 10.41
AGREEMENT
THIS AGREEMENT, dated effective as of February __, 1999 (the "Agreement"),
is by and between UNITED INTERNATIONAL HOLDINGS, INC. ("UIH"), a corporation
organized under the laws of the State of Delaware, U.S.A., and UNITED PAN-EUROPE
COMMUNICATIONS N.V. ("UPC"), a company organized under the laws of The
Netherlands.
RECITALS
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A. UIH is the majority shareholder of UPC. UIH currently consolidates
the financial results of UPC in UIH's financial statements. As a subsidiary of
UIH, UPC is subject to the covenants and restrictions of the indenture governing
UIH's debt securities.
B. In connection with this shareholder relationship, UIH and UPC have
agreed to take certain actions and restrict certain activities with respect to
one another, all as more particularly set forth in this Agreement.
AGREEMENT
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1. Covenant Not to Compete. For so long as UIH holds 50% or more of the
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outstanding ordinary shares of UPC on a fully diluted basis:
(a) UIH shall not, and shall not permit its majority-owned affiliates
to, pursue any video services, telephone or Internet access or content business
opportunities specifically directed to the Europe (as defined below) or Israel
markets unless: (i) UIH has first presented such opportunity in writing to the
Supervisory Board of UPC and (ii) the members of the Supervisory Board of UPC
who are not directors or officers of UIH or UPC have declined to pursue such
opportunity in writing to UIH. UPC will respond with reasonable promptness
after the presentation of the opportunity.
(b) UPC shall not, and shall not permit to its majority-owned
affiliates to, pursue any video services, telephone or Internet access or
content business opportunities in Saudi Arabia or in other markets outside of
Europe or the Middle East as defined below unless: (i) UPC has first presented
such opportunity in writing to the Board of Directors of UIH and (ii) the
members of the Board of Directors of UIH who are not officers or directors of
UPC have declined to pursue such opportunity in writing to UPC. UIH will
respond with reasonable promptness after the presentation of the opportunity.
(c) Either party may pursue any business in the United States and its
territories and possessions without regard to activities of the other.
For purposes of this section 1, "Europe" shall include Albania, Austria,
Belarus, Belgium, Bosnia, Bulgaria, Croatia, Czech Republic, Denmark, Estonia,
Finland, France, Germany, Greece, Hungary,
Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Moldova, The
Netherlands, Norway, Poland, Portugal, Romania, Russia, Slovak Republic, Spain,
Sweden, Switzerland, Ukraine and the United Kingdom and the "Middle East" shall
include Armenia, Azerbaijan, Bahrain, Cyprus, Egypt, Georgia, Iran, Iraq,
Israel, Jordan, Kuwait, Lebanon, Oman, Palestine, Qatar, Syria, Turkey, United
Arab Emirates and Yemen, as such territories are currently constituted or as
they may be constituted in the future.
2. Sale of UIH Class A Common Stock Held by UPC. (a) UPC shall sell to
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UIH or any designee of UIH all or any portion of UIH's Class A Common Stock (the
"Class A Stock") held by UPC or any of its subsidiaries, free and clear of any
liens, pledges or other encumbrances, upon receipt by the Supervisory Board of
UPC of a written request by UIH (the "Sale Notice") that UPC do so. UIH shall
set a closing date for the sale of the Class A Stock specified in the Sale
Notice, which shall be a business day in the United States and The Netherlands
and which is at least ten days and no more than 30 days after receipt of the
Sale Notice by UPC. The selling price of the Class A Stock shall be the average
closing price of the Class A Stock as reported on the Nasdaq National Market for
the ten trading days preceding the closing date.
(b) UPC shall not sell directly or indirectly, nor permit any of its
subsidiaries to sell, any shares of Class A Stock unless UPC has first offered
in writing (the "Offer Notice") to sell to UIH the shares of Class A Stock that
it proposes to sell. UIH shall have 45 days following receipt of the Offer
Notice in which to advise UPC whether it intends to purchase the Class A Stock
so offered. If UIH elects to purchase the Class A Stock, it shall notify UPC in
writing and shall designate a closing date that is a business day in The
Netherlands and the United States that is not less than five business days or
more than ten business days after the date of UIH's notice of acceptance. The
price for each share of Class A Stock shall be the average closing price of the
Class A Stock as reported on the Nasdaq National Market for the ten trading days
preceding the date of the Offer Notice. At the closing, UPC shall deliver the
Class A Stock free and clear of liens and encumbrances and with appropriate
signature guarantee against delivery of the purchase price by wire transfer. If
UIH elects not to purchase the Class A Stock or does not respond to UPC within
45 days after receipt of the Offer Notice, UPC may sell the Class A Stock that
was offered pursuant to the Offer Notice in a manner approved by UIH to assure
that any disposition of the Class A Stock into the public market is conducted in
an orderly manner and so as not to disrupt the orderly trading market for UIH
shares. UIH may insist that the sale be through an underwritten offering and
will assist UPC as is reasonably practicable in effecting a registration
statement covering such shares. UIH may require UPC to defer the sale at any
time such sale would interfere with a pending transaction of UIH. If UPC does
not sell the shares within 60 days after the end of the 45 days specified in the
Offer Notice, it shall again offer the shares to UIH before selling them. (Such
60 days to be increased by any period that UIH has requested UPC to not sell
shares.) All certificates evidencing the Class A Stock held by UPC or any of
its subsidiaries shall be marked with a legend to show that it is subject to the
terms of this Agreement. UIH may designate a purchaser for the Class A Stock
who will purchase the shares in lieu of UIH.
3. Compliance with UIH's Reporting Requirements. In order to assist UIH
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in complying with its reporting obligations under the Securities Act of 1933, as
amended, the Securities Exchange Act of 1934, as amended, and all other U.S.
federal and state securities laws (collectively, the "U.S.
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Securities Laws") or to avoid potential liability by UIH thereunder, UPC shall
(a) timely provide UIH with audited financial statements of UPC in such form and
with respect to such periods as UIH shall reasonably request, until UIH is no
longer required to include financial statements of UPC in UIH's filings under
the U.S. Securities Laws, and (b) not alter or amend its accounting principles
without the prior written consent of UIH, until such time as UIH no longer
consolidates UPC's financial results. UPC hereby consents to the public
disclosure by UIH of all matters deemed necessary or appropriate by UIH in its
sole discretion in order to comply with or satisfy its public disclosure
obligations o UIH or any affiliate of UIH under the U.S. Securities Laws.
4. Indemnification by UPC. (a) As additional consideration for UIH to
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execute the underwriting agreement in connection with UPC's initial public
offering of securities (the "Underwriting Agreement"), UPC shall defend,
indemnify and hold UIH harmless from and against any and all losses, claims,
damages, obligations, liens, assessments, judgments, fines, liabilities, and
other costs and expenses (including without limitation interest, penalties and
any investigation, legal and other expenses incurred in connection with, and any
amount paid in settlement of, any action, suit or proceeding or any claim
asserted, as the same are incurred (collectively, "Liabilities")) that UIH may
sustain or suffer based upon, arising out of, by reason of or otherwise in
respect of or in connection with the Underwriting Agreement; provided, however,
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that UPC will not be liable to UIH (i) to the extent that in finally judicially
determined that such Liabilities resulted from the willful misconduct or gross
negligence of UIH; or (ii) to the extent that it is finally judicially
determined that such Liabilities resulted solely from the material breach by UIH
of any representation, warranty, covenant or other agreement of UIH contained in
the Underwriting Agreement; provided, further, that if and to the extent that
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such indemnification is unenforceable for any reason, UPC shall make the maximum
contribution to the payment and satisfaction of such indemnified liability which
shall be permissible under applicable laws. The indemnification and
contribution provided for in this Section 4 will remain in full force and effect
regardless of any investigation made by or on behalf of UIH.
(b) Indemnification Procedure; Notice; Defense. Promptly after
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becoming aware of any Liabilities or the making of any claim or demand by any
third party that may result in the incurrence of any Liabilities, UIH shall
notify UPC of such incurrence, claim or demand; provided, that the failure of
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UIH to so notify UPC shall not relieve UPC of any liability under Section 4(a)
hereof, except if UPC has been materially prejudiced by such failure to be so
notified. In case of any notice to UPC, UPC shall be entitled to participate
in, and, if it wishes, to assume, the defense of any such claim or demand and,
after notice of its intent to assume such defense, UPC will not be liable for
any attorney's fees or other expenses subsequently incurred by UIH in connection
with such claim; provided that UIH shall have the right to employ counsel to
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represent it if, in the reasonable judgment of UIH's counsel, there is
reasonably likely to be a conflict of interest such that representation of UIH
and UPC by the same counsel would violate the Code of Professional
Responsibility or similar rules, in which event the reasonable fees and expenses
of appropriate separate counsel shall be borne by UPC. If UPC does not elect
within a reasonable time after receipt of notice to assume the defense of any
suit brought to enforce a claim or demand referred to above, UIH shall be
entitled to assume the control of such defense, in which case the reasonable
fees and expenses incurred by UIH in the conduct of such defense, including the
reasonable fees and expenses of counsel, shall be reimbursed by UPC as the same
are incurred from time to time by UIH (in
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addition to local counsel) in connection with any one action or separate but
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances. UPC shall not, without the prior written
consent of UIH, effect any settlement of any pending or threatened claim or
action in respect of which UIH is or could have been a party and indemnity could
have been sought hereunder by UIH unless such settlement includes an
unconditional release of UIH from all liability on any claims that are the
subject matter of such action.
5. Compliance by UPC with UIH Indenture. UPC shall take no action or
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inaction that will or reasonably could result in a breach of the Indenture,
dated as of February 5, 1998, by and between UIH and Firstar Bank of Minnesota,
N.A., as trustee, as the same may be amended or supplemented (the "Indenture")
or any other indenture or agreement to which UIH is a party governing
indebtedness of UIH that replaces or refinances any indebtedness governed by the
Indenture, provided that UIH shall use reasonable efforts to assure that any
such replacement or refinancing indentures or agreements do not contain
covenants that are materially more restrictive on actions of UPC by reason of
this paragraph, taken as a whole, than the Indenture. UPC shall assure that its
subsidiaries and controlled affiliates comply with this paragraph 5.
6. Term; Termination. This Agreement shall be effect from the date set
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forth above until this Agreement is terminated pursuant to this Section 6. This
Agreement shall terminate, except with respect to any claims for breach of this
Agreement arising before such termination, (i) for purposes of Section 1, when
UIH ceases to hold 50% or more of the outstanding ordinary shares of UPC on a
fully diluted basis, (ii) for purposes of Section 2, at such time as UPC or its
subsidiaries no longer holds any Class A Stock, (iii) for purposes of Section
3, when UIH or its affiliates are no longer subject to periodic reporting
requirements under the U.S. Securities Laws or financial information about UPC
is no longer required to be reported by UIH under the U.S. Securities Laws, (iv)
for purposes of Section 4, when UIH no longer has any obligations or liabilities
under the Underwriting Agreement and (v) for purposes of Section 5, when UPC no
longer can affect compliance by UIH with the terms of the UIH Indenture or any
replacement indenture or agreement.
7. Assignment Successors. Except as otherwise provided herein, neither
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party hereto may assign or transfer any of its interests, or delegate any of its
obligations, hereunder without the prior written consent of the other party.
UIH, upon written notice to UPC, may assign its interests in this Agreement to
any affiliate of UIH. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective successor and assigns.
8. Miscellaneous.
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(a) Amendment; Waiver. The Agreement may not be amended nor may any
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rights hereunder be waived except by an instrument in writing signed by the
parties hereto. The waiver of any breach of any term or condition hereof shall
not be deemed a waiver of any other or subsequent breach. No failure to
exercise and no delay in exercising, on the part of either party hereto, any
right, power or privilege hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise of any right, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies herein provided are
cumulative and not exclusive of any rights or remedies at law.
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(b) Further Assurances. Each party hereto shall execute, acknowledge,
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deliver, file and record such further certificates, amendments, instruments,
agreements and documents, and do all such other acts and things, as may be
required by law or as, in the reasonable opinion of either party hereto, may be
necessary or advisable to carry out the intents and purposes hereof.
(c) Headings. Titles and headings of the sections of this Agreement
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are for convenience of reference only and do not form a part of this Agreement
and shall not in any way affect the interpretation of this Agreement.
(d) Entire Agreement. This Agreement is the entire agreement and
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understanding between the parties hereto concerning the subject matter hereof
and supersedes and replaces all prior agreements and understandings between the
parties hereto with respect thereto.
(e) Severability. If any provision of this Agreement or the
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application thereof to any person or circumstance is held by a court of
competent jurisdiction to be invalid, void or unenforceable, the remaining
provisions hereof, or the application of such provisions to such persons or
circumstances other than those to which it has been invalid or unenforceable,
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated thereby.
(f) Governing Law. This Agreement shall be governed by and construed
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in accordance with the laws of the State of Colorado, USA, other than its rules
of conflicts of laws to the extent that the application of the laws of another
jurisdiction would be required thereby.
(g) Notices. All notices, demands or other communications to be given
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under or by reason of this Agreement shall be in writing and shall be deemed to
have been received when delivered personally, by facsimile or mailed by
certified or registered mail, return receipt requested and postage prepaid, as
follows:
(i) If to UIH, to it at:
United International Holdings, Inc.
0000 Xxxxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000, X.X.X.
Facsimile: + 0 (000) 000-0000
Attention: President
Copy to: Legal Department
(ii) If to UPC, to it at:
United Pan-Europe Communications N.V.
Xxxx. Xxxxxxxxxxxx 000
0000 XX Xxxxxxxxx
Xxx Xxxxxxxxxxx
Facsimile: + 00 (00) 000-0000
Attention: President
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Copy to: General Counsel
Either party hereto may change its address for notices, demands and other
communications hereunder by giving notice of such change to the other party in
accordance with this Section 8(g).
(h) No Third-Party Beneficiaries. Notwithstanding anything to the
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contrary herein, no person shall be a third-party beneficiary to this Agreement.
(i) Counterparts. This Agreement may be executed in one or more
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counterparts, each of which, when executed, shall constitute an original of this
Agreement, and all of which together shall constitute one instrument.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement to
be effective in accordance with Section 6 hereof.
UNITED INTERNATIONAL HOLDINGS, INC.
By: /s/ Xxxxxxx X. Xxxxx
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Xxxxxxx X. Xxxxx, President
UNITED PAN-EUROPE COMMUNICATIONS N.V.
By: /s/ J. Xxxxxxx Xxxxx
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J. Xxxxxxx Xxxxx, President
By: /s/ Anton H.E. v. Voskuijlen
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Anton H.E. v. Voskuijlen, Senior Vice President,
Legal
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