EXHIBIT 10
STANDSTILL AGREEMENT
This Standstill Agreement is entered into as of February 12, 1999,
between United Pan-Europe Communications, N.V., a company formed under the laws
of the Netherlands, (the "Company") and Microsoft Corporation, a Washington
corporation (the "Stockholder").
Background
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The Stockholder proposes to acquire approximately 10,000,000 shares of
the Company's ordinary shares either directly or in the form of American
Depository Shares ("ADSs") and may in the future acquire warrants to purchase
additional shares. Shares of the Company beneficially owned by Stockholder,
including, without limitation, any ADSs or shares that may be purchased by the
Stockholder pursuant to the exercise of warrants, are referred to in this
Agreement as the "Shares." If Stockholder purchaser all Shares contemplated,
Stockholder will own approximately 8 percent of the outstanding ordinary shares
and may acquire warrants to purchase an additional 3 percent of the outstanding
ordinary shares. To induce the Company to sell the Shares to the Stockholder,
the Stockholder has agreed to the restrictions set forth below on the
acquisition, ownership and disposition of Equity Securities (as defined below)
by the Stockholder or its Affiliates (as defined below).
Agreement
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The Company and the Stockholder agree as follows:
Section 1. Definitions. As used in this Agreement, the following
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terms have the meanings indicated below.
Acquisition. As defined in Section 2(a).
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Affiliate. An Affiliate of a specified person means each person or
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entity that, directly or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, the person
specified.
Beneficial Ownership and Derivative Terms. As determined pursuant to
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Rule 13d-3 under the Exchange Act and any successor regulation, except that in
calculating Beneficial Ownership, notwithstanding any such rule or regulation,
there shall be given effect to the issuance of such Equity Securities as may be
issuable upon the exercise, conversion or exchange of Rights beneficially owned
by such person or Group (if immediately exercisable) but not any other Rights.
For purposes of determining the Equity Securities or Rights beneficially owned
by any person or Group, the Equity Securities or Rights beneficially owned by
the Stockholder and any other person that is a party to this Agreement shall be
included.
Disinterested Director. Any member of the Supervisory Board of the
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Company who is not (i) an Affiliate or associate (as such term is defined in the
rules under the Exchange Act) of any member of the Stockholder Group or (ii) a
designee or representative of the Stockholder.
Disposition. As defined in Section 4(a).
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Equity Securities. Ordinary shares of the Company and any other
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shares that are entitled to vote generally at a general meeting of shareholders
(including those represented by ADSs).
Exchange Act. The Securities Exchange Act of 1934, as amended, and
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the rules and regulations thereunder.
Group. As defined in Section 13(d) of the Exchange Act and the rules
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and regulations thereunder.
Maximum Percentage. Fifteen percent of the number of outstanding
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Equity Securities of the Company.
Rights. Securities of the Company (which may include Equity
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Securities) exercisable, convertible or exchangeable for or into Equity
Securities (with or without consideration) or that carry any right to subscribe
for or acquire Equity Securities.
Securities Act. The Securities Act of 1933, as amended, and the rules
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and regulations thereunder.
Shares. As defined under Background.
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Stockholder Equity Securities. The Equity Securities and Rights
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beneficially owned from time to time by the Stockholder or any of its
Affiliates.
Stockholder Group. The Stockholder, each of its Affiliates and all
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members of any Group of which the Stockholder or any of its Affiliates is a
member.
Term. The term of this agreement shall be for a period of five (5)
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years from the date of acquisition of the initial ADSs by Stockholder.
Voting Power. The number of votes an Equity Security has in a general
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election of Directors.
Section 2. Acquisition of Equity Securities or Rights. (a)(i)
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Except as specifically permitted by this Section 2 or as specifically consented
to by a majority of the Disinterested Directors, the Stockholder shall not, and
shall cause each of its Affiliates not to, directly or indirectly acquire
beneficial ownership of any Equity Securities or Rights (an
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"Acquisition") during the Term if the Stockholder Group then beneficially
owns, or after such Acquisition would beneficially own, in the aggregate, Shares
constituting more than the Maximum Percentage.
(ii) The Stockholder shall not be in breach of this Section 2
solely because the Stockholder Group becomes the beneficial owners of a number
of shares exceeding the Maximum Percentage after and solely because of (A) any
action taken by the Company (including, without limitation, the repurchase or
redemption by the Company of Equity Securities or Rights, the issuance of Equity
Securities pursuant to an offer by the Company to its security holders of rights
to subscribe for Equity Securities or the declaration by the Company of a
dividend in respect of any class of Equity Securities payable at the election of
such security holders either in cash or in Equity Securities) in respect of
which no member of the Stockholder Group shall have taken any action except as
permitted to be taken by holders of Equity Securities or Rights in their
capacities as such (including, without limitation, an election not to tender any
Stockholder Equity Securities pursuant to any such offer to repurchase, an
election to purchase Equity Securities or Rights pursuant to any such
subscription offer or an election to be paid a dividend in respect of
Stockholder Equity Securities in Equity Securities or Rights instead of cash);
or (B) after any other action taken by the Company to reduce the number of
outstanding Equity Securities.
(b) During the Term the Stockholder shall not, and shall cause each of
its Affiliates not to, solicit proxies with respect to Equity Securities or
become a participant in a solicitation of proxies with respect to Equity
Securities, in either case within the meaning of Regulation 14A under the
Exchange Act (or any successor regulation).
(c) During the term the Stockholder shall not, and shall cause each of
its Affiliates not to, participate in concert with any Group with respect to
Equity Securities if the combined Voting Power of the Equity Securities of
Stockholder and such Group would exceed the Maximum Percentage of the Voting
Power of all outstanding Equity Securities.
(d) During the Term the Stockholder shall not, and shall cause each of
its Affiliates not to, deposit any Stockholder Equity Securities in any voting
trust or subject any Stockholder Equity Securities to a voting agreement or
other arrangement with similar effect.
(e) If the Stockholder Group acquires beneficial ownership of any
Equity Securities (other than the initial purchase of Shares) or Rights, during
the Term the Stockholder shall give notice to the Company as provided in Section
5 of this Agreement. If such Equity Securities are acquired by an Affiliate
during the Term that has not previously delivered to the Company an undertaking
pursuant to Section 4(c) of this Agreement, the Stockholder shall promptly cause
such Affiliate to deliver to the Company an undertaking to be bound by all
provisions of this Agreement applicable to the Stockholder. The Stockholder has
separately disclosed the extent and nature of any beneficial ownership of Equity
Securities by the Stockholder or its Affiliates as of the date of this
Agreement.
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3. Disposition in Case of Excess Voting Power. (a) Subject to
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Section 3(c), if the number of Equity Securities or the Voting Power of the
Equity Securities in relation to the outstanding Equity Securities beneficially
owned by the Stockholder Group exceeds in the aggregate the Maximum Percentage
at any time then, in addition to any remedies that the Company may have for any
breach of this Agreement, the Company shall have the remedies specified in
Section 3(b).
(b) (i) the Stockholder Group shall, as promptly as commercially
practicable, dispose of a number of Equity Securities sufficient to reduce the
total Voting Power of the outstanding Equity Securities beneficially owned by
the Stockholder Group to a percentage less than or equal to the Maximum
Percentage, and
(ii) until making the disposition required by Section 3(b)(i)
above, the Stockholder Group shall cause persons duly authorized to vote the
number of Stockholder Equity Securities in excess of the Maximum Percentage (the
"Excess Securities") entitled to vote to be present at all meetings of the
stockholders of the Company at which such Stockholder Equity Securities shall be
entitled to vote, or shall cause proxies to be present at all such meetings, to
enable all such Excess Securities to be counted for quorum purposes, and shall
cause all such Excess Securities to be voted with respect to any matter
submitted for approval of the stockholders of the Company at such meetings
either (A) in the manner recommended by the Board of Directors of the Company
with the approval of a majority of the Disinterested Directors or (B) in the
same proportion as the holders of the remaining Equity Securities voting on any
matter vote with respect to such matter.
(c) This Section 3 shall apply to the Stockholder Group and each
other person or Group that is or becomes a party to this Agreement in the
following manner. If any Acquisition or Disposition by the Stockholder Group
results in a violation described in Section 3(a) of this Agreement, the
Stockholder and its Affiliates shall comply with Section 3(b). If any
Acquisition or Disposition by another person or Group results in a violation of
this Agreement described in Section 3(a) without any Acquisition or Disposition
on the part of the Stockholder Group, such person or Group shall comply with
Section 3(b) and the Stockholder and its Affiliates need not do so.
Section 4. Dispositions of Shares. (a) During the Term except as
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provided below in Section 4(b), the Stockholder shall not, and shall cause each
of its Affiliates not to, transfer beneficial ownership of any Equity Securities
or Rights (including without limitation a pledge) (a "Disposition"), to a person
or Group, unless the person or Group acquiring such Equity Securities or Rights
first executes and delivers to the Company an undertaking to be bound by all
provisions of this Agreement applicable to the Stockholder as though such person
or Group were the Stockholder. During the Term the Stockholder shall not, and
shall cause each of its Affiliates not to, pledge or otherwise encumber any
Equity Securities or Rights without making arrangements satisfactory to the
Company to ensure that any transfer upon foreclosure or similar action will
satisfy the requirements of the preceding sentence. Any attempted transfer in
violation of this Agreement shall be void.
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(b) Section 4(a) shall not apply to (i) a transfer to one or more
underwriters in connection with a bona fide public offering registered under the
Securities Act (ii) transfers in the open market (except block sales), (iii)
block sales provided that the Stockholder knows the identity of the ultimate
purchaser or purchasers and has no reason to believe that such person or Group
(including such person) would acquire as a result of such a transfer or
transfers beneficial ownership of more than 15% of the outstanding units or
Voting Power of Equity Securities of the Company (iv) bona fide transactions
(after the first six (6) months following commencement of the Term) with
nationally recognized investment firms that constitute xxxxxx in the market
place of the Equity Securities or (v) pursuant to any tender or exchange offer
approved by the Supervisory Board of the Company or in connection with any
merger or consolidation in which the Company is acquired or pursuant to a plan
of liquidation of the Company.
(c) If during the Term, Stockholder and any of its Affiliates
transfer Equity Securities exceeding 7.5% of the outstanding Equity Securities
in a single block transaction (or a series of transactions with the same
purchaser substantially equivalent to a block transaction) the restrictions in
this Agreement shall apply to the purchaser who shall sign and deliver to the
Company as a condition to the transfer an agreement containing such
restrictions.
(d) The Stockholder and any of its Affiliates may transfer any or
all the Equity Securities or Rights owned by it to one or more Affiliates of the
Stockholder if any such Affiliates acquiring Equity Securities first executes
and delivers to the Company an undertaking to be bound by all provisions of this
Agreement applicable to the Stockholder.
Section 5. Reporting Requirements. (a) The Stockholder shall give,
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and shall cause each of its Affiliates to give, written notice to the Company of
any Acquisition or Disposition of Equity Securities or Rights by any member of
the Stockholder Group not later than the tenth business day following the end of
the calendar month in which such Acquisition or Disposition occurred. Such
notice shall state the date of each such Acquisition or Disposition, the number
and type of Equity Securities or Rights involved in each such Acquisition and
Disposition and, in the case of each Acquisition, the identity of the person
acquiring beneficial ownership of such Equity Securities or Rights and in the
case of each Disposition, to the extent known, the identity of the persons
acquiring Equity Securities or Rights in each such Disposition. The Stockholder
shall comply and shall cause each of its Affiliates to comply, with their
respective obligations under Section 13 of the Exchange Act as relates to
beneficial ownership of the Company's equity securities.
(b) The Stockholder shall promptly (but in any event within three
business days) give the Company notice of any change of control of the
Stockholder or any of its Affiliates that beneficially own Equity Securities, or
any change in control of any other member of the Stockholder Group that comes to
the Stockholder's attention or any change in the composition of the Stockholder
Group affecting the determination of Beneficial Ownership.
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Section 6. Legend. (a) The Company shall cause a legend
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substantially to the following effect to be placed on each certificate
representing any Equity Securities or Rights issued to the Stockholder or its
Affiliates:
"The right to attend, and vote the securities
represented by this certificate at, any
meeting of the stockholders of United Pan-
European Communications, N.V. (the "Company")
is subject to a Standstill Agreement dated
February __, 1999, among the Company and
Microsoft Corporation, a copy of which is
available from the Company upon request, and
any sale, pledge, hypothecation, transfer,
assignment or other disposition of such
securities is subject to such Agreement."
(b) Upon surrender to the Company of any certificate representing
any Equity Securities or Rights disposed of by the Stockholder or any Affiliate
of the Stockholder in a transaction not subject to Section 4 of this Agreement,
the Company shall promptly cause to be issued (i) to the transferee or
transferees of such Equity Securities or Rights one or more certificates without
the legend set forth in Section 6(a) above and (ii) to the holder of Equity
Securities or Rights represented by such certificates so surrendered one
certificate representing such Equity Securities or Rights, if any, as shall not
have been so disposed of, with the legend set forth in Section 6(a). Upon
termination of the obligations of the parties under Sections 1, 2, 3, 4 and 5 of
this Agreement pursuant to Section 8 below and the surrender to the Company of
any certificate representing Equity Securities or Rights, the Company shall
cause to be issued to the holder of such Equity Securities or Rights one or more
certificates without the legend set forth in Section 6(a).
Section 7. Remedies. The parties each acknowledge and agree that in
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the event of any breach of this Agreement, the nonbreaching party would be
irreparably harmed and could not be made whole by monetary damages.
Accordingly, the parties to this Agreement, in addition to any other remedy to
which they may be entitled hereunder or at law or in equity, shall be entitled
to compel specific performance of this Agreement.
Section 8. Termination. The obligations of the parties under
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Sections 1, 2, 3, 4, and 5 shall terminate at the end of the Term.
Section 9. Notices. All notices, requests, demands and other
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communications required or permitted hereunder shall be in writing, shall be
deemed to have been duly given when delivered personally or mailed in the United
States by registered or certified mail, postage prepaid, or sent by telecopy,
addressed as follows:
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(a) If to the Company, to it at:
United Pan-European Communications, N.V.
Xxxx Xxxxxxxxxxxx 000, 0000 XX
Xxxxxxxxx, Xxx Xxxxxxxxxxx
Attention: General Counsel
Fax: 000-0000-000-0000
with copies to:
United International Holdings, Inc.
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attention: General Counsel
Fax: (000) 000-0000
Xxxxx Xxxxxxx & Xxxx
0000 Xxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attention: W. Xxxx Xxxxxx, Esq.
Fax: (000) 000-0000
(b) If to Stockholder, to it at:
Microsoft Corporation
Xxx Xxxxxxxxx Xxx, Xxxxxxxx 0
Xxxxxxx, XX 00000-0000
Fax: 000-000-0000
Attention: Xxxx Xxxxxx, Chief Financial Officer
with a copy to:
Microsoft Corporation
Xxx Xxxxxxxxx Xxx, Xxxxxxxx 0
Xxxxxxx, XX 00000-0000
Fax: 000-000-0000
Attention: Xxxxxx Xxxxxxxx, General Counsel/Finance and
Administration
Xxxxxxx Xxxxx & Xxxxx
0000 Xxxxxxxx Xxxxxx
Xxxxxxx, XX 00000-0000
Fax: 000-000-0000
Attention: Xxxx Xxxxxxx
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or to such other person or address or addresses as either party shall specify by
notice in accordance with this Section 9. All notices, requests, demands,
waivers and communications shall be deemed to have been received on the date of
delivery or on the third business day after mailing, except that any change of
address shall be effective only upon actual receipt. Written notice given by
telecopy shall be deemed effective only when received by the party to whom
given.
Section 10. Entire Agreement. This Agreement contains all the terms
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and conditions agreed upon by the parties hereto, and no other agreements, oral
or otherwise, regarding the subject matter hereof shall have any effect unless
in writing and executed by the parties after the date of this Agreement.
Section 11. Applicable Law. This Agreement shall be governed by
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Colorado law without regard to conflicts of law rules.
Section 12. Headings. The headings in this Agreement are for
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convenience only and are not to be considered in interpreting this Agreement.
Section 13. Counterpart Execution. This Agreement may be executed in
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any number of counterparts, each of which shall be deemed an original but all of
which will constitute a single agreement.
Section 14. Successors; Assignment. This Agreement shall be binding
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upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
Section 15. Parties in Interest. Nothing in this Agreement, express
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or implied, is intended to confer upon any person or entity other than the
parties hereto and their permitted successors and assigns any benefits, rights
or remedies.
Section 16. Severability. The invalidity or unenforceability of any
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provision of this Agreement in any application shall not affect the validity or
enforceability of such provision in any other application or the validity or
enforceability of any other provision.
Section 17. Waivers and Amendments. No waiver of any provision of
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this Agreement shall be deemed a further or continuing waiver of that provision
or a waiver of any other provision of this Agreement. This Agreement may not be
amended except in a writing
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signed by both parties. The Company may waive rights under this Agreement only
with the prior approval of a majority of the Disinterested Directors.
Executed as of the date set forth above.
UNITED PAN-EUROPE COMMUNICATIONS, N.V.,
a Netherlands company
By: /s/ J. Xxxxxxx Xxxxx
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Title: President
MICROSOFT CORPORATION,
a Washington corporation
By: /s/ Xxxxxx X. [illegible]
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Title: Assistant Secretary
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