Execution Copy
SHAREHOLDERS AGREEMENT
This Shareholders Agreement, dated August 10, 2001 (this "Agreement"),
is hereby made by and among:
United Pan-Europe Communications N.V., a public corporation organized
under the laws of The Netherlands, having its principal executive office at
Xxxxxx Xxxxxx 00, 0000 XX Xxxxxxxx Rijk, The Netherlands ("UPC");
Polska Telewizja Cyfrowa Wizja TV Sp. z o.o., a limited liability
company organized under the laws of the Republic of Poland, having its principal
executive office at xx. Xxxxxxxxx 0X, 00-000 Xxxxxx, Xxxxxx ("PTC");
Groupe Canal+ S.A., a corporation organized under the laws of France,
having its principal executive office at 00/00 Xxxx Xxxxx Xxxxxxx, 00000 Xxxxx
Xxxxx 00, Xxxxxx ("Canal+");
Polcom Invest S.A., a joint stock company organized under the laws of
the Republic of Poland, having its registered office at xx. Xxxxxxxx 00,Xxxxxx,
Xxxxxx ("PolCom" and together with UPC, PTC and Canal+, the "Parties").
W I T N E S S E T H
WHEREAS, Canal+ owns an interest in the share capital of Telewizyjna
Korporacja Partycypacyjna S.A. ("TKP" or the "Company"), a pay-television
company which through wholly-owned subsidiaries, among other things, creates,
produces, develops and acquires programming to produce and operate a premium
pay-television channel and a digital satellite direct-to-home ("DTH")
broadcasting service targeted to audiences in Poland;
WHEREAS, UPC owns 100% of the share capital of UPC Polska Inc. ("UPC
Polska"), a company that, directly or indirectly through subsidiaries or
minority interests in Polish companies, among other things, operates cable
networks and a digital satellite DTH broadcasting service targeted to, and
creates, produces, develops and acquires programming for, audiences in Poland;
WHEREAS, Canal+ and UPC have decided to combine the operations of TKP
and the DTH operations of UPC Polska in order to create a common DTH
broadcasting platform for the distribution of programming and services targeted
to audiences in Poland;
WHEREAS, on the date hereof, Canal+, UPC, UPC Polska, PTC and TKP have
entered into a Contribution and Subscription Agreement to achieve this
combination (the "Contribution and Subscription Agreement");
WHEREAS, pursuant to the Contribution and Subscription Agreement, UPC
has agreed to cause to be contributed certain assets identified therein to TKP
in consideration for the issuance by TKP of shares of TKP to PTC;
WHEREAS, upon consummation of the transactions contemplated in the
Contribution and Subscription Agreement, Canal+ shall own 49% of the share
capital of TKP, PolCom shall own 26% of the share capital of TKP and PTC shall
own 25% of the share capital of TKP;
WHEREAS, Canal+, PolCom, UPC and PTC wish to set forth herein their
agreements with respect to the management of the Company and their respective
rights and obligations as shareholders of the Company.
NOW, THEREFORE, the Parties agree as follows:
ARTICLE I
DEFINITIONS
In addition to the terms defined elsewhere herein, for purposes of this
Agreement, the following terms shall have the meanings specified below (terms
defined in the singular or the plural include the plural or the singular, as the
case may be).
"Affiliate" means, with respect to any Person, any entity, directly or
indirectly, Controlling, Controlled by, or under common Control with,
such Person.
"Agreement" shall mean this Agreement and any schedules, exhibits and
certificates attached to this Agreement.
"Bankruptcy" shall mean, with respect to a Person, the initiation by
such Person, its creditors or public authorities of proceedings (i) to
liquidate and distribute such Person's remaining assets among its
creditors and to thereby discharge such Person from any further
obligation to repay its creditors or (ii) to restructure and reorganize
such Person's debt structure.
"Business Plan" shall mean the ten-year business plan attached as
Exhibit 4.2(b) to the Contribution and Subscription Agreement.
"Broadcasting Law" means the Polish Radio and Television Act of 1992
(Journal of Laws, 1993, no. 7, item 34), as amended from time to time,
or any law replacing such Act and covering the same subject matter.
"Competitor" shall mean, for the purposes of Article 3.1 and Article V,
with respect to any Person, any other Person who is a strategic
investor, operator or significant shareholder in a business that
directly competes with a material business unit of such Person.
"Control", as used with respect to any Person and in any tense, shall
mean the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or
otherwise.
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"DTH Business" means the ownership, management or operation of any
Pay-Television Service transmitted by direct-to-home satellite for
which a fee is received from viewers in Poland, either directly or
indirectly, through a carrier, together with all activities directly
related thereto.
"Fair Market Value" has the meaning set forth in Article 3.4.
"Group Company", with respect to a party, means any other Person in
which any Person that Controls such party holds, directly or
indirectly, a majority of the voting rights.
"Liberty Media Group" means Liberty Media Corporation, a corporation
organized under the laws of Delaware, with its principal executive
office at 0000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxx 00000.
"Operating Company" means any of the following companies: Polska
Korporacja Telewizyjna Sp. z o.o., Cyfra + S.A., UPC Broadcast Centre
Limited, Wizja TV Sp. z o.o. and their subsidiaries and any other
company or entity hereafter acquired or created by TKP.
"Pay-Television Service" means any television channel or other
television-based service for which a fee is received from viewers in
Poland, either directly, or indirectly through a carrier.
"Person" means an individual, sole proprietorship, corporation,
partnership, limited partnership, joint venture, trust, unincorporated
organization, mutual company, joint stock company, estate, union,
employee organization, bank, trust company, land trust, business trust
or other organization, or a governmental body, or their equivalent
under the applicable legal system.
"Polish Persons" shall mean individuals of Polish nationality resident
in Poland or legal entities incorporated or organized in Poland which
do not constitute foreign persons or persons controlled by foreign
persons for the purposes of the Broadcasting Law.
"Polishness" shall mean, as the case may be, the possession by a Person
of Polish Person status or the requirements of the Broadcasting Law in
respect of Polish Persons.
"Premium Pay-Television Business" means the ownership, management or
operation in Poland of any Premium Pay-Television Channel but for the
avoidance of doubt does not include the mere carriage or distribution
of the same.
"Premium Pay-Television Channel" means any Pay-Television Service
available for a monthly subscription fee and employing a programming
concept based primarily on first-run movies or premium sports or a
combination of both.
"Shareholder" means each of Canal+, PolCom and PTC and any other party
who shall become a shareholder of TKP in compliance with this Agreement
and a party to this Agreement, including but not limited to pursuant to
Article 4.8 hereof (collectively, the "Shareholders").
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"Subsidiary" means, with respect to any Person, any entity, in which
such Party holds directly or indirectly more than fifty percent (50%)
of the voting rights.
"TKP Statute" means the statute of TKP. The amended version of the TKP
Statute shall be adopted, at the latest, on the Closing Date
substantially in the form attached as Exhibit 3.1 (f) to the
Contribution and Subscription Agreement.
"Transfer" shall mean, in any tense, the direct or indirect sale,
transfer, pledge, assignment or other disposition of or mortgage,
hypothecation, or other encumbrance or permitting or suffering of any
encumbrance of all or any part of the equity interests in a Person.
"UGC" means UnitedGlobalCom Inc., a corporation organized under the
laws of Delaware, with its principal place of business at 0000 Xxxxx
Xxxxxx Xxxxxx, Xxxxxx, XX 00000, XXX.
"Victory" means Vivendi Universal S.A., a corporation organized under
the laws of France, with its principal executive office at 00, xxxxxx
xx Xxxxxxxxx, 00000 Xxxxx, Xxxxxx.
"Video On Demand Service" means the aggregation of video content for
delivery through a cable, DTH, DSL or similar distributor to end users
in Poland who pay for access to such content for a limited period of
time, including without limitation on a pay-per-view, near video on
demand or video on demand basis.
ARTICLE II
CORPORATE GOVERNANCE
2.1 General; Purpose
(a) The purpose of TKP shall be to manage, operate and develop the
DTH Business and the Premium Pay-Television Business of the
Shareholders in Poland.
(b) TKP shall be managed in accordance with the provisions of this
Agreement, the TKP Statute and the Polish Commercial Code.
2.2 Shareholder Meetings
(a) Except as set forth in Article 2.8 or otherwise required by
Polish law to be decided by a greater majority, all decisions,
proposals and actions of the General Meeting of Shareholders
of TKP shall be taken or approved only with the affirmative
vote of more than sixty percent (60%) of votes cast at a
General Meeting of Shareholders.
(b) A meeting of the Shareholders shall be valid and empowered to
adopt valid resolutions if all the Shareholders shall have
been notified of such meeting and if the holders of at least a
majority of the issued and outstanding shares of TKP are in
attendance, provided, that a meeting of the Shareholders of
TKP shall not be empowered to take a Required Joint Decision
unless at least one
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representative from PTC is in attendance. If the foregoing
quorum is not achieved at any meeting due to the absence of
PTC's representative, the immediately subsequent meeting shall
be empowered to adopt the same resolution or resolutions
(including Required Joint Decisions) independent of the number
or identity of the members present, provided that all
Shareholders were duly notified of such meeting and provided
that all decisions submitted to the Shareholders were
specifically set forth in the meeting agenda.
(c) The Shareholders agree to exercise any powers they may have as
shareholders and to vote their shares in favor of any
resolution proposed in order to give effect to this Agreement
and not to vote their shares against any resolution proposed
which would be contrary to the provisions of this Agreement.
2.3 TKP Supervisory Board
(a) The TKP Supervisory Board shall be composed of eleven (11)
members, including a Chairman.
(b) Based on the shareholding structure of TKP immediately
following the Closing (as defined in the Contribution and
Subscription Agreement), Canal+ shall be entitled to appoint
five (5) members, PolCom shall be entitled to appoint three
(3) members and PTC shall be entitled to appoint three (3)
members of the Supervisory Board. Such members shall be
appointed by the Shareholders at the Closing. In the event of
changes in the shareholding structure of TKP after the
Closing, each Shareholder shall be entitled to appoint a
number of members of the Supervisory Board proportionate to
its shareholding in TKP.
(c) Decisions and actions of the TKP Supervisory Board shall be
taken or approved only with the affirmative vote of more than
sixty percent (60%) of the votes cast at a meeting thereof,
except as provided in Article 2.8.
(d) The term of office of the members of the TKP Supervisory Board
shall be two (2) years.
(e) A member of the TKP Supervisory Board may be dismissed at any
time, with or without giving reasons, only by the Shareholder
that designated such member.
(f) If a member of the TKP Supervisory Board is dismissed or
ceases to be a member of the Board, the Shareholder that
designated such member (provided such Shareholder still holds
the necessary percentage of TKP's share capital) shall
designate a replacement member to serve out the remainder of
the departing member's term of office.
(g) The term of office of any member of the TKP Supervisory Board
shall automatically expire if the Shareholder that designated
such member ceases to own the percentage of TKP's share
capital that would be required to designate such member
pursuant to Article 2.3(b), provided, that for purposes of
determining such percentage, the composition of the TKP
Supervisory Board at Closing as set forth in the first
sentence of Article 2.3(b) shall prevail until
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changes affecting the Shareholders' respective percentage
shareholdings in TKP occur.
(h) The Chairman of the TKP Supervisory Board shall be designated
by Canal+. The Chairman shall not have a tie-breaking vote by
virtue of his position.
(i) A meeting of the TKP Supervisory Board shall be convened by
its Chairman upon his own initiative, or by request of the TKP
Management Board, or by request of any member of the TKP
Supervisory Board. The members of the TKP Supervisory Board
shall be notified of the date, time and proposed agenda of
meeting by registered letter or telefax (confirmed by a
registered letter) sent at least seven days prior to the
scheduled date of a meeting. Meetings of the TKP Supervisory
Board shall take place at the headquarters of TKP, unless all
members of the TKP Supervisory Board agree otherwise.
(j) A meeting of the TKP Supervisory Board shall be valid and
empowered to adopt valid resolutions if all the members
thereof shall have been notified of such meeting in accordance
with Article 2.3(i) and if at least a majority of the members
of the Supervisory Board are in attendance; provided, that a
meeting of the TKP Supervisory Board shall not be empowered to
take a Required Joint Decision unless at least one member of
the TKP Supervisory Board appointed by PTC is in attendance.
If the foregoing quorum is not achieved at any meeting due to
the absence of PTC's representative, the immediately
subsequent meeting shall be empowered to adopt the same
resolution or resolutions (including Required Joint Decisions)
independent of the number or identity of the members present,
provided that all members were duly notified of such meeting
in accordance with Article 2.3(i).
(k) A majority of the members of the TKP Supervisory Board shall
consist of Polish Persons. Canal+ shall have a priority right
to designate up to three (3) non-Polish Persons to the TKP
Supervisory Board. So long as PTC holds, directly or
indirectly, at least 18% of the share capital of TKP, PTC
shall have a priority right to designate up to two (2)
non-Polish Persons to the TKP Supervisory Board.
(l) No member of the TKP Supervisory Board shall be entitled to
any remuneration for their services as a TKP Supervisory Board
member and no cost or expense of such member shall be
reimbursed by TKP; provided, that the President of the TKP
Supervisory Board may be compensated and have his expenses
reimbursed in a manner consistent with the arrangements in
effect on the date of this Agreement.
2.4 TKP Management Board
(a) The TKP Management Board shall be composed of a number of
members to be determined by the TKP Supervisory Board,
including a President who shall be proposed by Canal+.
Initially, at the time of the Closing, the TKP Management
Board shall be composed of three (3) members.
(b) The members of the TKP Management Board shall be appointed by
the TKP Supervisory Board.
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(c) The by-laws of the TKP Management Board shall be adopted, and
may be amended from time to time, by the TKP Supervisory
Board. The by-laws shall set forth, among other things, the
eligibility requirements for, and term of office of, the
members of the TKP Management Board and the decision-making
procedures of the TKP Management Board.
(d) A majority of members of the TKP Management Board shall be
Polish Persons.
2.5 Related Party Transactions
Except with the consent of the other Shareholders, neither TKP nor any
of its Operating Companies shall enter into any agreement with a
Shareholder or any Affiliate or Group Company of such Shareholder
unless such agreement is first presented to the TKP Supervisory Board
and is on an arms-length basis, beneficial to TKP's business interests
and consistent with ordinary business practice.
2.6 Voting of Shares in Subsidiaries.
The voting rights of TKP as a shareholder in each Operating Company
shall be exercised by the TKP Management Board. Directors, officers and
employees of each Operating Company shall conduct the operations of
such Operating Company in a manner consistent with the policies adopted
from time to time by the TKP Management Board and the provisions of
this Agreement.
2.7 Compliance with Polish Ownership Requirements
(a) Polishness
(i) PolCom represents that it is a Polish Person as of
the date of this Agreement and will be a Polish
Person on the Closing Date.
(ii) PTC represents that it is a Polish Person as of the
date of this Agreement and will be a Polish Person on
the Closing Date.
(b) Consequence of Changes
If a Shareholder who was a Polish Person at the time it
acquired its shares of TKP ceases for any reason to be a
Polish Person, then unless such Shareholder cures the loss of
Polishness within 60 days or such shorter period as may be
required by law or by a relevant government authority to cure
a loss of Polishness, then:
(i) If the Shareholder ceases to be a Polish Person
solely due to changes in Polish law, then the shares
of such Shareholder may be redeemed without the
consent of such Shareholder upon a resolution of the
TKP General Meeting of Shareholders taken or approved
by a 60% majority of votes cast. The consideration
for the redeemed shares shall be their Fair Market
Value on the date of redemption. Each Shareholder
shall vote its shares in favor of such redemption.
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(ii) If PTC ceases to be a Polish Person for any other
reason within its control, the other Shareholders
shall be entitled, upon thirty (30) days notice to
TKP and PTC, to convert their existing shareholder
loans to TKP into equity by subscribing to additional
shares of TKP in a manner consistent with the
Broadcasting Law. The price per share of the shares
of TKP so subscribed shall be equal to one-third of
the Fair Market Value of TKP at such date, divided by
the number of TKP shares outstanding immediately
prior to such capital increase. PTC shall not be
entitled to preferential subscription rights in
respect of such capital increase. Each Shareholder
shall vote its shares in favor of such capital
increase.
(iii) If PolCom ceases to be a Polish Person for any other
reason within its control, PTC shall be entitled,
upon thirty (30) days notice to TKP and the other
Shareholders, to convert its existing shareholder
loans to TKP into equity by subscribing to additional
shares of TKP in a manner consistent with the
Broadcasting Law. The price per share of the shares
of TKP so subscribed shall be equal to one-third of
the Fair Market Value of TKP at such date, divided by
the number of TKP shares outstanding immediately
prior to such capital increase. The other
Shareholders shall not be entitled to preferential
subscription rights in respect of such capital
increase. Each Shareholder shall vote its shares in
favor of such capital increase.
(c) Transfers to Non-Polish Persons
No Shareholder that was a Polish Person at the time it
acquired its shares in TKP shall Transfer its shares to a
non-Polish Person without the prior written consent of the
other Shareholders.
(d) Termination of Polish Ownership Restrictions
The provisions of this Agreement requiring that a Shareholder
or members of the TKP Supervisory Board or TKP Management
Board be Polish Persons shall cease to have effect if at any
time the maintenance of Polishness is no longer a condition to
the maintenance by TKP and its Operating Companies of any
license material to TKP's DTH Business or Premium
Pay-Television Business.
2.8 Certain Minority Shareholder Rights and Related Covenants
(a) Required Joint Decisions
For so long as PTC holds, directly or indirectly, at least 10%
of the issued and outstanding shares of TKP, the following
actions (each a "Required Joint Decision") shall require the
prior approval of the TKP Supervisory Board including the
affirmative vote of at least one representative of PTC:
(i) amendments to the TKP Statute that would adversely
affect any rights granted to PTC under this Agreement
or the TKP Statute;
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(ii) the statutory merger of TKP with any other Person;
(iii) the dissolution of TKP;
(iv) the sale by TKP of a significant continuing business
activity to any Person;
(v) any capital increase to which all Shareholders are
not entitled to subscribe, except in each case as
otherwise provided in this Agreement;
(vi) except as provided in Article 2.7, the redemption of
shares of TKP, the repurchase by TKP of its own
shares or any reduction in the share capital of TKP;
(vii) the pursuit by TKP of any activity other than the DTH
Business or Premium Pay-Television Business; and
(viii) the incurrence by the TKP Companies of third party
indebtedness for borrowed money where such incurrence
would cause the consolidated net third party
indebtedness for borrowed money of the TKP Companies
to exceed five times estimated EBITDA (i.e. earnings
before interest, taxes, depreciation and
amortization) for the current year.
For so long as PTC holds, directly or indirectly, at least 10%
of the issued and outstanding shares of TKP, any Required
Joint Decision that requires the approval of the shareholders
of TKP under Polish law shall require the affirmative vote of
PTC, in addition to any majority otherwise required by
applicable law.
(b) Shareholder Loans
Canal+ undertakes that it shall not make directly or through
an Affiliate any shareholder loan to TKP or any of its
Subsidiaries unless such loan ranks pari passu with any
outstanding shareholder loan made to TKP by PTC, Canal+ or its
Affiliates pursuant to Article 3.1(c) and (d) of the
Contribution and Subscription Agreement.
(c) Information Rights
In advance of any meeting of the TKP Supervisory Board or the
shareholders of TKP at which a Required Joint Decision shall
be considered, TKP shall furnish PTC with appropriate factual
information concerning the Required Joint Decision to enable
PTC to make an informed decision.
(d) Capital Increases
(i) Except as otherwise provided in this Agreement, in
the event of a TKP capital increase, each Shareholder
shall have the right to subscribe to
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additional shares of TKP on a pro rata basis in order
to maintain its then-current percentage of TKP's
share capital.
(ii) Except as provided in Article 2.7 and Article 5.2(d),
all capital increases of TKP shall be made at Fair
Market Value.
(iii) Prior to subscribing to any capital increase, any
Person not a party to this Agreement shall first be
required to execute and deliver an instrument
evidencing the agreement of such Person to be bound
by the provisions of this Agreement.
(e) Financing Policy
The Shareholders agree that to the extent that TKP requires
additional funding, prior to seeking additional capital
contributions from the Shareholders, TKP shall first use
reasonable efforts to arrange third-party debt financing.
2.9 Dividend Policy
The Shareholders agree to vote their shares at the TKP General Meeting
of Shareholders to cause TKP to distribute dividends to the
Shareholders on a pro rata basis in an aggregate amount equal to 75% of
net profits legally available for distribution by TKP as dividends
(after mandatory write-offs and provision for losses) calculated in
accordance with Polish generally accepted accounting principles.
ARTICLE III
CHANGE OF CONTROL OR BANKRUPTCY
OF CERTAIN SHAREHOLDERS
3.1 Change of Control of UPC or UGC
(a) If at any time an event has occurred as a result of which a
Competitor of Canal+ or Vivendi Universal is to acquire,
directly or indirectly, Control of UPC or UGC (or Liberty
Media Group, at any time following an acquisition by Liberty
Media Group of Control of UPC or UGC), then:
(i) UPC shall give notice (a "Control Notice") to Canal+
of such event no later than sixty (60) days prior to
the closing date of such transaction (the
"Transaction Closing Date"), and Canal+ shall
thereupon have the option, exercisable by notice to
UPC within thirty (30) days of receipt of the Control
Notice, to acquire or cause to be acquired from PTC
all, but not part, of PTC's shares in TKP at a price
equal to the Fair Market Value thereof as determined
in accordance with Article 3.4;
(ii) if Canal+ gives notice within thirty (30) days of its
receipt of the Control Notice that it elects to
exercise its call option, then PTC shall take all
necessary and appropriate action to consummate the
sale of its or their shares in TKP, free and clear of
all liens and encumbrances, to
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Canal+ or its designee on the Transaction Closing
Date (or within such longer period as may be required
by law to obtain required approvals of governmental
bodies); and
(iii) if Canal+ gives notice within thirty (30) days of its
receipt of the Control Notice that it does not elect
to exercise its call option (or fails to give any
notice within such time period), then the UPC
Affiliate(s) through which UPC holds its interest in
TKP shall be free to continue to hold its or their
shares in TKP.
(b) Acquisition of Control of UPC or UGC by Liberty Media Group
shall not trigger this Article 3.1 unless a Competitor of
Canal+ or Vivendi Universal shall have acquired a majority of
the share capital of Liberty Media Group after the date of
execution of this Agreement and such Control is exercised over
UPC (e.g., not subject to a deferred voting or trust
arrangement whereby actual control is excluded or deferred).
(c) The Parties acknowledge that the spin-off of Liberty Media
Group from AT&T Corporation shall not trigger the provisions
of this Article 3.1.
3.2 Change of Control of Canal+ or Vivendi Universal
If at any time an event has occurred as a result of which a
Competitor of UPC or UGC is to acquire, directly or
indirectly, Control of Canal+ or a majority of the share
capital of Vivendi Universal, then:
(i) Canal+ shall give a Control Notice to PTC of such
event no later than sixty (60) days prior to the
Transaction Closing Date, and PTC shall thereupon
have the option, exercisable by notice to Canal+
within thirty (30) days of receipt of the Control
Notice, to sell to Canal+ all, but not part, of the
shares in TKP held by PTC at a price equal to the
Fair Market Value thereof as determined in accordance
with Article 3.4;
(ii) if PTC gives notice within thirty (30) days of its
receipt of the Control Notice that it elects to
exercise its put option, then Canal+ shall take all
necessary and appropriate action to consummate the
purchase of PTC's shares in TKP (which shall be sold
by PTC free and clear of all liens and encumbrances)
by Canal+ or its designee on the Transaction Closing
Date (or within such longer period as may be required
by law to obtain required approvals of governmental
bodies); and
(iii) if PTC gives notice within thirty (30) days of its
receipt of the Control Notice that it does not elect
to exercise its put option (or fails to give any
notice within such time period), then the put option
shall expire unexercised.
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3.3 Bankruptcy
In the event of a Bankruptcy (as defined in Article I) of UPC (or PTC
or any other Shareholder in which UPC holds an interest) or Canal+ (or
any Shareholder in which Canal + holds an interest), then:
(i) the bankrupt party shall give notice (a "Bankruptcy Notice")
to the other Party (the "Offeree") of such event no later than
sixty (60) days after the occurrence of such event, and the
Offeree shall thereupon have the option, exercisable in
accordance with applicable law and by notice to the bankrupt
party within thirty (30) days of receipt of the Bankruptcy
Notice, to acquire or cause to be acquired from the relevant
Shareholder all, but not part, of its shares in TKP at a price
equal to the Fair Market Value thereof as determined in
accordance with Article 3.4.
(ii) if the Offeree gives notice within thirty (30) days of its
receipt of the Bankruptcy Notice that it elects to exercise
its call option, then the relevant Shareholder shall take all
necessary and appropriate action to consummate the sale of its
shares in TKP, free and clear of all liens and encumbrances,
to the Offeree or its designee within sixty (60) days (or such
longer period as may be required by law to obtain required
approvals of governmental bodies); and
(iii) if the Offeree gives notice within thirty (30) days of its
receipt of the Bankruptcy Notice that it does not elect to
exercise its call option (or fails to give any notice within
such time period), then the relevant Shareholder shall be free
to continue to hold its or their shares in TKP.
3.4 Determination of Fair Market Value
"Fair Market Value" for purposes of this Agreement shall be determined
as follows:
(a) The Shareholders shall first attempt to agree on the Fair
Market Value of the assets to be valued.
(b) If the Shareholders cannot agree within 30 days, then Canal+
and Polcom, on the one hand, and UPC and PTC on the other,
shall each propose an independent investment bank of
international standing with experience in valuation of the
relevant companies or interests for the purpose of
determination of Fair Market Value. Each of the investment
banks shall prepare its valuation within 15 days and present
it to Canal+ and UPC. Costs of the valuation shall be borne by
Canal+ and UPC in equal shares. If the valuations from such
two banks do not differ by more than 20%, the Fair Market
Value shall be equal to the average of such valuations. If the
higher of the two valuations is more than 20% greater than the
lower of the two valuations, such banks shall jointly appoint
a third investment bank by mutual agreement that shall
arbitrate between the valuations prepared by such banks and
determine the final valuation, taking into account the
valuations of the first two banks, which final valuation shall
fall between the valuations of those two banks. The third bank
shall make its determination within 15 days and present the
final valuation to Canal+ and UPC. In such case, Fair Market
Value shall be as determined by the valuation of the third
investment bank, which final valuation shall fall between the
valuations of those two banks and
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shall be binding on the parties. The cost of the valuation by
the third bank shall be split between Canal+ and UPC in equal
shares.
(c) Polcom hereby appoints Canal+ as its representative for the
purpose of the procedures set forth in Article 3.4(a) and (b).
(d) PTC hereby appoints UPC as its representative for the purpose
of the procedures set forth in Article 3.4(a) and (b).
ARTICLE IV
SHARE TRANSFER RESTRICTIONS
4.1 Lock-In Period
Except as expressly permitted in this Article IV or provided for in
Article 2.7 or Article III, no Shareholder shall Transfer, directly or
indirectly, all or any of its direct or indirect interest in TKP prior
to the second anniversary of the Closing Date without the prior written
approval of the other Shareholders (which may be withheld in such other
Shareholders' sole discretion).
4.2 Right of First Refusal
(a) If at any time after the expiration of the lock-in period
provided for in Article 4.1, any Shareholder (for the purposes
of this Article IV, the "Seller") desires to accept a bona
fide written offer on arms-length terms from a third party (a
"Third Party Offer") to purchase all (but not less than all)
of its direct or indirect equity interest in TKP, the Seller
shall give notice (the "Sale Notice") to the other
Shareholders (for the purposes of this Article IV, each an
"Offeree") identifying the proposed Transferee and describing
the Third Party Offer in all material respects and each
Offeree shall thereupon have the option, exercisable by notice
to the Seller within sixty (60) days after its receipt of the
Sale Notice to acquire from the Seller all of its equity
interest and voting rights in TKP on economic terms equivalent
in value to the Third Party Offer, provided that the
consideration to be paid by the Offeree shall be in the form
of cash or marketable securities or as agreed between the
Parties.
(b) If one or more of the Offerees gives notice within sixty (60)
days of its receipt of the Sale Notice that it elects to
exercise its right of first refusal, the Seller shall promptly
take all necessary and appropriate action to consummate the
sale of the offered interest to such Offeree(s) within sixty
(60) days (or such longer period as may be required by law to
obtain required approvals of governmental bodies) of the date
of receipt by the Seller of notice of such Offeree's election
to exercise its right of first refusal. (such period, the
"Completion Period")
(c) If no Offeree gives notice within sixty (60) days of its
receipt of the Sale Notice that it elects to exercise its
right of first refusal (or if no Offeree gives
13
any notice within such time period) or if following notice
from the Offeree of its election to exercise the right of
first refusal, the sale to the Offeree is not effected before
the end of the Completion Period due to no fault of the
Seller, then the Seller shall be free to accept the Third
Party Offer; provided, that if the closing of the Third Party
Offer is not consummated within four (4) months (or such
longer period as may be required by law to obtain required
approvals of governmental bodies) after the end of the
Completion Period, the Seller's right to effect the Transfer
shall terminate and the provisions of this Article 4.2 shall
again apply to the Transfer of the offered interest.
4.3 Tag-Along Rights
If at any time Canal+ and/or PolCom (the "Seller") desire(s) to accept
a Third Party Offer to purchase any portion of its direct or indirect
equity interest in TKP, the Seller(s) shall give notice (the "Tag-Along
Notice") to PTC identifying the proposed Transferee and describing the
Third Party Offer in all material respects, whereupon PTC shall have
the option, exercisable by notice to the Seller(s) within sixty (60)
days after its receipt of the Tag-Along Notice to require as a
condition precedent to the Transfer of ownership under the proposed
sale of shares that the Seller's proposed buyer purchase on the terms
of the Third Party Offer the same percentage of PTC's shares in TKP as
the aggregate number of shares in TKP to be purchased from the
Seller(s) bears to the total number of shares in TKP held by Canal+ and
Polcom; provided, that the consideration to be paid to PTC shall be in
the form of cash or marketable securities or as agreed between the
Parties.
4.4 Drag-Along Rights
If at any time Canal+ and PolCom desire to accept a Third Party Offer
to purchase all (but not less than all) of Canal+ and PolCom's equity
interest in TKP, Canal+ and PolCom shall have the right to require, by
irrevocable notice given to PTC identifying the proposed Transferee and
describing the Third Party Offer in all material respects no later than
sixty (60) days prior to the closing of such transaction (the
"Drag-Along Notice"), to require PTC to concurrently sell its or their
interest in TKP to Canal+ and PolCom's proposed buyer on economic terms
equivalent in value to the Third Party Offer; provided, that the
consideration to be paid to PTC shall be in the form of cash or
marketable securities or as agreed between the Parties; and provided,
further, that if the closing of the Third Party Offer is not
consummated within the time period mentioned in the Third Party Offer
(or such longer period as may be required by law to obtain required
approvals of governmental bodies) of the delivery of the Drag-Along
Notice, Canal+ and Polcom's right to require PTC to effect the Transfer
shall terminate with respect to such Third-Party Offer.
4.5 Pending Sale Does Not Relieve Obligations
Notwithstanding the pendency of any sale pursuant to this Article IV,
the Seller shall remain liable for its obligations to TKP until the
consummation of such sale.
4.6 No sales in part
Except to the extent provided for in Article 4.3, no Shareholder may
Transfer its interest in TKP in part.
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4.7 Permitted Transfers
(a) Notwithstanding the foregoing, without compliance with the
provisions of Article 4.1, 4.2 or 4.3:
(i) PTC may at any time Transfer all or part of its
interests in TKP to a Polish Person in which a
Subsidiary of UGC or Liberty Media Group holds,
directly or indirectly, at least a 49% interest and
Polish individuals hold, directly or indirectly, at
least a 51% interest.
(ii) PolCom may at any time cause the Transfer of all or
part of its interest in TKP to a Polish Person in
which a Subsidiary of Vivendi Universal holds,
directly or indirectly, at least a 49% interest and
Polish individuals hold, directly or indirectly, at
least a 51% interest; and
(iii) Canal+ may at any time Transfer all or part of its
interest in TKP to a Subsidiary of Vivendi Universal
or to any Polish Person in which a Subsidiary of
Vivendi Universal holds, directly or indirectly, at
least a 49% interest and Polish individuals hold,
directly or indirectly, at least a 51% interest.
(b) Prior to a Person to which an interest in TKP has been
Transferred pursuant to Article 4.7(a) ceasing to be meet the
qualifications set forth in Article 4.7(a) under which such
Person qualified for such Transfer, the Transferring party
shall cause such Person to Transfer its interest in TKP to
such Transferring party or to another Person that meets the
applicable requirements in Article 4.7(a). The qualifications
set forth above shall be modified, as necessary or possible,
to account for changes in Polish law regarding ownership of
Polish Persons by foreign or foreign-controlled Persons.
4.8 Transferee Undertakings
No Shareholder may Transfer all or any portion of its interest in TKP
until such Shareholder receives from the Transferee and produces to the
other Shareholders an instrument evidencing the agreement of the
Transferee to be bound by the provisions of this Agreement.
4.9 UPC Exit Option
(a) Following the fifth (5th) anniversary of the execution of this
Agreement, PTC shall have the option, exercisable by notice to
Canal+ within sixty (60) days of such anniversary, to require
Canal+, at Canal+'s option, either:
(i) to purchase or cause to be purchased PTC's interest
in TKP at Fair Market Value; or
(ii) to:
(A) use its best efforts jointly with UPC to
generate a bona fide Third Party Offer to
purchase 100% of TKP at Fair Market Value;
and
15
(B) if such a Third Party Offer is available, to
sell Canal+'s interest in TKP to the third
party buyer on the terms of the Third Party
Offer.
(b) In the event that the Parties generate a bona fide Third Party
Offer for 100% of TKP pursuant to Article 4.9(a)(ii)(A), each
of PTC and PolCom agrees to sell its interest to the third
party buyer on the terms of the Third Party Offer.
(c) In the event that Canal + and UGC pursue the procedure set
forth in Article 4.9 (a)(ii) above but no bona fide Third
Party Offer is generated, then following a period of no sooner
than 12 months and no later than 36 months from PTC's initial
exercise of its option pursuant to this provision PTC may, for
a second and final time, again exercise the option set forth
in Article 4.9(a).
4.10 General Restrictions
No Shareholder or any of its Group Companies or Affiliates shall take
any action designed to circumvent the share transfer restrictions set
forth in Article IV, including, without limitation, by Transferring any
interest in any Affiliate or Group Company through which it holds its
interest in TKP.
Any purported Transfer in breach of this Article IV shall be void ab
initio.
4.11 Pledges of Shares
Notwithstanding the foregoing, without compliance with the provisions
of Article 4.1, 4.2 or 4.3, Shareholders in TKP may pledge their shares
in TKP to their direct or indirect shareholders as security for loans
made by such shareholders.
ARTICLE V
FIRST OFFER / NON-COMPETE
5.1 First Offer
(a) The Parties shall cooperate in good faith and shall cause
their subsidiaries including, in the case of UPC, Chello
Media, to cooperate in the negotiation and acquisition of
rights for any Video On Demand Service.
(b) Prior to the third anniversary of the execution of this
Agreement, Canal+ shall not, and shall not permit its
Affiliates to, own or operate any DTH service in Hungary,
Romania, the Czech Republic or Slovakia, unless such
opportunity shall have first been proposed to UPC as set forth
in Article 5.1(c).
(c) When proposing an opportunity to UPC in accordance with
Article 5.1(b), Canal + (the "Proposing Party") shall give
notice of such opportunity to UPC together with sufficient
factual information to permit the UPC to make an informed
decision regarding the proposed opportunity. UPC shall have
thirty (30) days following the receipt of such notice during
which to determine
16
whether or not to pursue such opportunity. If UPC shall not
have given notice of its decision to the Proposing Party prior
to the expiration of such thirty (30)-day period, the UPC
shall be deemed to have rejected the pursuit by TKP of such
opportunity. Any material change in any opportunity which has
the effect of changing the nature of (x) the opportunity or
(y) the participation of a Party therein shall constitute a
different opportunity and shall require submission of such
opportunity to UPC in accordance with this Article 5.1(c)
before it can be pursued by Canal + or its Affiliates.
5.2 Non-Compete
(a) Each of the Shareholders, UGC, UPC, Vivendi Universal, Canal+
and any subsequent Party to this Agreement and each of their
Subsidiaries shall own, operate or otherwise participate or
engage in the DTH Business and the Premium Pay-Television
Business solely through TKP; provided, that this covenant
shall not apply to any direct or indirect interest held as a
passive equity interest of less than 15.1% in any such entity.
(b) The restrictions in this Article 5.2 shall cease to apply to
each of the Shareholders, UGC, UPC, Vivendi Universal, Canal +
and any subsequent Party to this Agreement on the first
anniversary of the date on which it sells or causes to be sold
(other than to any Person to whom it would be permitted to
Transfer its shares in TKP under Article 4.7(a)) all of the
shares in TKP held by it and/or any company in which it has an
equity interest in accordance with the terms of Article IV.
(c) Concurrently with the execution of this Agreement, each of
Vivendi Universal and UGC shall execute a side letter
evidencing its agreement to the provisions of Article 5.2(a).
(d) In the event that at any time:
(i) Liberty Media Group at any time possesses Control of
UPC and/or UGC; and
(ii) while Liberty Media Group is in possession of such
Control, Liberty Media Group or any of its
Subsidiaries owns, operates, or otherwise
participates or engages in the DTH Business or the
Premium Pay-Television Business other than through
TKP,
then:
(A) Canal+ and Polcom shall have the right, upon thirty
(30) days notice to TKP and to UPC, to convert their
existing shareholder loans to TKP into equity by
subscribing to additional shares of TKP. The price
per share of the shares of TKP so subscribed shall be
equal to one-third of the Fair Market Value of TKP at
such date, divided by the number of TKP shares
outstanding immediately prior to such capital
increase. PTC shall not be entitled to preferential
subscription rights in respect of such capital
increase. Each Shareholder agrees to vote its shares
in favor of such capital increase.
17
(B) Canal + and Polcom's rights under this Article 5.2(d)
shall not be triggered by the mere ownership by
Liberty Media Group and its Subsidiaries of a direct
or indirect interest held as a passive equity
interest of less than 15.1% in an entity that owns,
operates or otherwise participates or engages in the
DTH Business or the Premium Pay Television Business.
ARTICLE VI
MISCELLANEOUS
6.1 Effective Date; Term
(a) This Agreement shall become effective upon consummation of the
Closing under the Contribution and Subscription Agreement.
(b) This Agreement shall terminate automatically upon the earliest
to occur of: (i) the dissolution of the Company and (ii) the
date on which PTC or Canal+ has disposed of its entire
interest in the Company (other than to a Person to whom it is
entitled to Transfer its interest under Article 4.7) in
accordance with Article 2.7, III or IV.
(c) The provisions of Articles 5.2, 6.2 and 6.3 shall survive any
termination of this Agreement.
6.2 Confidentiality
(a) The Shareholders agree and acknowledge that the provisions of
this Agreement and all information relating to this Agreement
are "Confidential Information"; provided, however, that
Confidential Information shall not include information which
(x) is already otherwise known to the recipient, or (y) is or
becomes freely and generally available to the public through
no wrongful act of the recipient, or (z) is rightfully
received by the recipient from a third party legally entitled
to disclose such information, without breach by the recipient
of this Agreement.
(b) Each Shareholder shall, and shall cause its Group Companies
and Affiliates to, hold in confidence and not disclose any
Confidential Information without the prior approval of the
other Shareholders. No Shareholder shall make, nor permit its
Group Companies or Affiliates to make, any news release or
other public disclosure with respect to the Company or this
Agreement, the Contribution and Subscription Agreement or the
transactions contemplated hereby and thereby without the prior
approval of the other Shareholders. It is specifically agreed
that no Shareholder shall disclose any Confidential
Information to any of its dealers without the prior approval
of the other Shareholders.
(c) The provisions of Article 6.2 shall not prevent disclosures by
a Shareholder:
18
(i) as part of its normal reporting or review procedures
to its Group Companies or attorneys and auditors,
(ii) as required by law or court order or by regulatory
agencies,
(iii) as required in order to enforce its rights and
perform its duties in connection with this Agreement.
6.3 Governing Law; Disputes.
(a) The mutual obligations of the Parties hereunder shall be
governed by Belgian law (excluding Belgian conflict of laws
rules and any other provision of Belgian corporate law under
which any provision hereof may be deemed unenforceable).
Accordingly, the Parties hereby irrevocably waive their right
to invoke against each other any applicable mandatory
provision of Polish law that may conflict with the provisions
of this Agreement.
(b) Any dispute arising in connection with this Agreement shall be
finally settled under the Rules of Conciliation and
Arbitration of the International Chamber of Commerce (the
"ICC") as existing as of the date of commencement of the
arbitration proceedings by an arbitral tribunal composed of
three (3) arbitrators designated by the ICC in accordance with
said Rules. The arbitration proceedings shall take place in
Brussels, Belgium and shall be conducted in the English
language. The arbitral award shall be binding upon the parties
to the arbitration and judgment upon any award rendered may be
entered in any court having jurisdiction. The prevailing
Shareholder in the arbitration shall be paid the arbitration
fees and reasonable attorneys fees and expenses incurred by
it.
(c) Notwithstanding the provisions of this Article 6.3, the
Shareholders agree that, prior to any Party submitting to
arbitration of any claim, dispute or disagreement (each, a
"Disagreement") arising in connection with this Agreement,
such Shareholder shall notify such Disagreement to the other
Shareholders involved in the Disagreement, after which the
senior management of the Shareholders involved in the
Disagreement shall negotiate in good faith for a period of
thirty (30) days to resolve such Disagreement. If at the end
of such thirty (30) day period, the Disagreement persists,
there shall be a fifteen (15) day cooling-off period, after
which there shall be a further period of thirty (30) days of
negotiations which shall include at least one face-to-face
meeting of the chief executive officer, chief operating
officer and/or chief financial officer of each of Shareholders
involved in the Disagreement.
6.4 Severability.
If any provisions of this Agreement or any part thereof are rendered
void, illegal or unenforceable in any respect, the Shareholders shall
use their reasonable efforts to substitute for such provisions valid
provisions that in their economic effect come so close to the original
provisions that it can reasonably be assumed that the Parties would
have executed this Agreement including the new provisions. In the event
that such provisions cannot be found, the invalidity, illegality or
unenforceability of any provision of this Agreement shall not affect
the validity of the Agreement as a whole,
19
unless the invalid provisions are of such essential importance to this
Agreement that it can be reasonably assumed that the Parties would not
have executed this Agreement without the invalid provisions.
6.5 Entire Agreement; Modifications.
This Agreement (including the Exhibits hereto which constitute an
integral part hereof) constitutes the entire agreement among the
Parties and supersedes any prior agreement or understanding among the
Parties with respect to the subject matter hereof. This Agreement may
not be modified or terminated except by an instrument in writing signed
by each of the Parties.
6.6 No Assignment; No Third Party Beneficiaries.
(a) Except with the written consent of the other Parties or as
otherwise provided in this Agreement, no party hereto shall
assign or otherwise Transfer any or all of its rights or
obligations under this Agreement.
(b) This Agreement is solely for the benefit of the Parties and
their respective successors, and this Agreement shall not be
deemed to confer upon any third party any remedy, claim,
liability, reimbursement, cause of action or other right.
6.7 TKP Statute.
In the event of any discrepancy between the TKP Statute and this
Agreement, the provisions of this Agreement shall prevail as between
the Parties.
6.8 Language.
The Parties shall cause this Agreement to be translated into the Polish
language, and undertake to execute such Polish translation duly
approved by them. It is expressly provided that as between the Parties,
the English version of this Agreement shall be the only binding
document and that, in the event of any discrepancy between the English
version and its Polish translation, the former shall prevail.
6.9 Headings.
The headings contained herein are for convenience only and shall not
control or affect the meaning or construction of any provision of this
Agreement.
6.10 Counterparts.
This Agreement may be executed in counterparts. Each separate
counterpart together with such other counterparts having the signatures
of all Parties shall form one original.
6.11 Successors and Assigns.
Upon the Transfer by Canal+, PTC or PolCom of its entire interest in
TKP to any Person to which such Transfer is permitted under Article
4.7, the Transferee shall benefit from all of the rights and assume all
of the obligations of the Transferor under
20
this Agreement, with the same effect as if its name had been
substituted for the name of the Transferring Shareholder wherever it
appears in this Agreement.
6.12 Notices.
All notices to be given by any party hereto to the others in connection
with this Agreement shall be given in writing in English. Such notices
may be given by personal delivery or by registered or certified air
mail, telegram, cable, telex or telefax addressed as follows:
To Canal+:
Groupe Canal+ S.A.
00/00 Xxxx Xxxxx Xxxxxxx
00000 Xxxxx Xxxxx 00, Xxxxxx
Attention: Xx. Xxxx-Xxxxx Xxxxxx, Vice President /General Counsel
Fax: 00.0.00.00.00.00
To UPC or PTC:
United Pan-Europe Communications N.V.
0 Xxxxxxxxxxxxx
Xxxxxx, XX0X 0XX
Xxxxxx Xxxxxxx
Attn: Xxxxx X'Xxxxx/Xxxx Xxxxxxxx
Fax: 00.000.000.0000
With a copy to:
United Pan-Europe Communications N.V. White & Case
Boeing Avenue 53 62 avenue de la Loi
1119 PE Schiphol Xxxx 0000 Xxxxxxxx
The Netherlands Belgium
Attn: General Counsel
Fax: 00.00.000.0000
To PolCom:
Polcom
Xx.Xxxxxxxx 00
Xxxxxx
Xxxxxx
Attn: Xxx Xxxxx
Fax: 00.00.000.0000
or to such other address as the party to receive such notice shall have
not less than thirty (30) days previously designated by written notice
to the other Parties. The effective date of any notice shall be the
date on which it is actually received by the addressee.
21
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed in
four (4) original counterparts on the date first indicated hereof.
GROUPE CANAL+ S.A.
By:
----------------------------------------
UNITED PAN-EUROPEAN COMMUNICATIONS N.V.
By:
----------------------------------------
By:
----------------------------------------
22
POLSKA TELEWIZJA CYFROWA WIZJA TV SP. Z O.O.
By:
----------------------------------------
By:
----------------------------------------
POLCOM INVEST S.A.
By:
----------------------------------------
By:
----------------------------------------
By:
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