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FILE NO.
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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UNITED PAN-EUROPE COMMUNICATIONS N. V.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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THE NETHERLANDS 4841
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER)
<S> <C>
THE NETHERLANDS 98-0191997
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
</TABLE>
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UNITED PAN-EUROPE COMMUNICATIONS N. V.
FRED. ROESKESTRAAT 123,
P.O. BOX 74763
1076 EE AMSTERDAM, THE NETHERLANDS
31-20-778-9840
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
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UNITED PAN-EUROPE COMMUNICATIONS N.V.
P.O. BOX 74763
1076 EE AMSTERDAM
THE NETHERLANDS
31-20-778-9840
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MICHAEL T. FRIES, CHAIRMAN OF UPC SUPERVISORY BOARD
C/O UNITEDGLOBALCOM, INC.
4643 SOUTH ULSTER STREET, SUITE 1300
DENVER, COLORADO 80237
(303) 770-4001
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
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COPIES TO:
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BONNIE A. BARSAMIAN, ESQ. WILLIAM A. PLAPINGER, ESQ.
CLIFFORD CHANCE ROGERS & WELLS LLP SULLIVAN & CROMWELL
200 PARK AVENUE ST. OLAVE'S HOUSE
NEW YORK, NEW YORK 10166 9A IRONMONGER LANE
(212) 878-8000 LONDON, ENGLAND EC2V 8EY
+44-20-7710-6500
</TABLE>
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: As soon as practicable after this registration statement becomes
effective and upon completion of the transactions described in the enclosed
prospectus.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act,
check the following box. [X]
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
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CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM PROPOSED
TITLE OF EACH CLASS OF SECURITIES AMOUNT TO BE OFFERING PRICE MAXIMUM AGGREGATE AMOUNT OF
TO BE REGISTERED(1)(4) REGISTERED(2) PER UNIT(3) OFFERING PRICE(3) REGISTRATION FEE
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Ordinary Shares A, nominal value
Euro 1.00 per share............... 26,392,782 shares N/A N/A U.S.$107,949
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</TABLE>
(1) This Registration Statement relates to the securities of the Registrant
exchangeable for shares of common stock of SBS Broadcasting S.A., a public
limited liability company (societe anonyme) organized and existing under the
laws of Luxembourg (SBS), par value U.S.$1.50 per share (the SBS shares), in
the exchange offer by the Registrant (the exchange offer) for all of the
outstanding SBS shares.
(2) Based on the maximum number of shares expected to be issued in connection
with the exchange offer calculated as the product of (a) 26,329,591,
representing the aggregate number of SBS shares outstanding on May 5, 2000
(other than shares owned by SBS and the Registrant) plus the maximum number
of SBS shares issuable upon exercise of options, warrants and convertible
notes outstanding at the same date and (b) the exchange ratio of 1.0024
ordinary shares A of the registrant for each SBS share.
(3) Estimated solely for the purpose of calculating the registration fee. The
registration fee has been calculated pursuant to Rule 457(f)(1) and (3)
under the Securities Act based on (i) the maximum aggregate price of the
securities to be received by the Registrant in the exchange offer, less (ii)
the total amount of cash to be paid by the Registrant in the exchange offer.
The maximum aggregate price of the securities to be received by the
Registrant is $1,462,082,188, determined as follows: the product of (i) the
sum of the aggregate number of SBS shares outstanding on May 5, 2000 (other
than shares owned by SBS and the Registrant) and the maximum number of SBS
shares issuable upon exercise of options, warrants and convertible notes
outstanding on the same date, and (ii) $55.53 (the average of the high and
low per share trading prices of the SBS shares on Nasdaq on May 5, 2000. The
total amount of cash to be paid by the Registrant in the exchange offer is
approximately $1,053,183,642, based on the number of SBS shares outstanding
and the number of SBS shares issuable upon exercise of outstanding options
as described in the immediately preceding sentence.
(4) A separate registration statement on Form F-6 (File No. 333-9850) has been
filed for the registration of American depositary shares, each representing
one fully paid ordinary share A of the Registrant, issuable upon deposit of
the ordinary shares A registered hereby.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN
OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED [ ], 2000
OFFER TO EXCHANGE EACH OUTSTANDING SHARE OF COMMON STOCK
OF
SBS BROADCASTING S.A.
FOR [ ] AMERICAN DEPOSITARY SHARES
REPRESENTING ORDINARY SHARES A
OF
UNITED PAN-EUROPE COMMUNICATIONS N.V.
PLUS CASH
SUBJECT TO CERTAIN ELECTIONS DESCRIBED BELOW
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON [DAY], [DATE], 2000 UNLESS EXTENDED. SBS SHARES TENDERED PURSUANT
TO THIS EXCHANGE OFFER MAY BE WITHDRAWN AT ANY TIME PRIOR TO THE EXPIRATION OF
THE EXCHANGE OFFER.
We are offering to exchange [ ] UPC ADSs plus U.S.$[ ] in cash,
without interest, for each outstanding SBS share that is validly tendered in the
exchange offer and not properly withdrawn.
You may elect to vary the proportions of UPC ADSs and cash that you receive
in the exchange offer. Citibank, N.A., whom we have appointed to act as the
exchange agent for the exchange offer, will allocate the exchange offer
consideration among SBS shareholders based on the number of tendered SBS shares
for which holders elect to receive a higher proportion of UPC ADSs and the
number of tendered SBS shares for which holders elect to receive a higher
proportion of cash. The exchange agent's ability to satisfy an SBS shareholder's
election will depend on other shareholders making offsetting elections so you
may not receive the total mix of UPC ADSs and cash that you requested.
ON MARCH 9, 2000, WE ENTERED INTO AN EXCHANGE OFFER AGREEMENT WITH SBS. THE
BOARD OF DIRECTORS OF SBS (EXCEPT THE CURRENT BOARD MEMBER NOMINATED BY UPC, WHO
ABSTAINED) HAS UNANIMOUSLY APPROVED THE EXCHANGE OFFER AGREEMENT, DETERMINED
THAT THE EXCHANGE OFFER IS FAIR TO AND IN THE BEST INTERESTS OF SBS AND ITS
SHAREHOLDERS (OTHER THAN UPC), AND RECOMMENDS THAT THE SBS SHAREHOLDERS ACCEPT
THE EXCHANGE OFFER AND TENDER THEIR SHARES PURSUANT TO THE EXCHANGE OFFER.
OUR OBLIGATION TO EXCHANGE AMERICAN DEPOSITARY SHARES REPRESENTING UPC
ORDINARY SHARES A AND CASH FOR SBS COMMON STOCK IN THE EXCHANGE OFFER DESCRIBED
IN THIS PROSPECTUS IS SUBJECT TO THERE BEING VALIDLY TENDERED AND NOT WITHDRAWN
A NUMBER OF SBS SHARES THAT, TOGETHER WITH THE SBS SHARES HELD BY UPC AND ITS
AFFILIATES, REPRESENT AT LEAST TWO-THIRDS OF THE OUTSTANDING SBS SHARES ON A
FULLY DILUTED BASIS. THE EXCHANGE OFFER IS ALSO SUBJECT TO THE OTHER CONDITIONS
LISTED UNDER "THE EXCHANGE OFFER -- CONDITIONS OF THE EXCHANGE OFFER."
The UPC ADSs are quoted on the National Market System of the Nasdaq Stock
Market, Inc. under the symbol "UPCOY." The UPC ordinary shares A are traded in
the Netherlands on the Official Segment of the Stock Market of Amsterdam
Exchanges N.V., referred to as the Amsterdam Stock Exchange, under the symbol
"UPC." The SBS shares are quoted on Nasdaq under the symbol "SBTV" and trade on
the Amsterdam Stock Exchange under the symbol "SBS."
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IMPORTANT
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If you wish to tender your SBS shares in the exchange offer, you should (A)
complete and sign the Letter of Transmittal provided to you with this prospectus
(or a copy of it) in accordance with the instructions included in the Letter of
Transmittal and mail or deliver it, together with the certificate(s)
representing your tendered shares and any other required documents, to the
exchange agent named on the back cover of this prospectus or (B) use the
procedures for book-entry transfer described in "The Exchange Offer -- How to
Tender Your SBS Shares," below. If you hold your SBS shares through a broker,
dealer, commercial bank, trust company or other nominee, you should read the
letter received from the broker, dealer, commercial bank, trust company or other
nominee, and you must complete the instructions accompanying that letter (or
contact them if such materials have not been received) if you wish to tender
your SBS shares.
If you wish to tender your SBS shares, but your certificates are not
immediately available, or if you cannot comply with the procedures for
book-entry transfer described in this prospectus on a timely basis, you may
tender your shares by following the procedures for guaranteed delivery described
in "The Exchange Offer -- How to Tender Your SBS Shares -- Guaranteed Delivery,"
below.
Questions and requests for assistance, or for additional copies of this
prospectus, the Letter of Transmittal, or other exchange offer materials, may be
directed to the information agent at its addresses and telephone numbers printed
on the back cover of this prospectus. Holders of shares may also contact their
brokers, dealers or banks for additional copies of this prospectus, the Letter
of Transmittal or other exchange offer materials.
SEE "RISK FACTORS" BEGINNING ON PAGE 25 AND "SPECIAL FACTORS" BEGINNING ON
PAGE 36 FOR A DISCUSSION OF CERTAIN FACTORS THAT YOU SHOULD CONSIDER IN
CONNECTION WITH THE EXCHANGE OFFER.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR A SOLICITATION IN ANY
JURISDICTION IN WHICH AN OFFER OR SOLICITATION IS UNLAWFUL. WE ARE NOT MAKING
THE EXCHANGE OFFER IN OR INTO -- AND YOU MAY NOT ACCEPT THE EXCHANGE OFFER IN OR
FROM -- AUSTRALIA, CANADA OR JAPAN.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE EXCHANGE OFFER, PASSED UPON THE
MERITS OR FAIRNESS OF THE EXCHANGE OFFER OR THE ADEQUACY OR ACCURACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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The date of this prospectus is [ ], 2000
THE DEALER MANAGER FOR THIS EXCHANGE OFFER IS:
GOLDMAN, SACHS & CO.
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TABLE OF CONTENTS
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PAGE
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QUESTIONS AND ANSWERS ABOUT THE PROPOSED ACQUISITION........ 1
WHERE YOU CAN FIND MORE INFORMATION......................... 5
SUMMARY..................................................... 7
The Companies............................................. 7
The Proposed Combination.................................. 8
Reasons for the Exchange Offer............................ 8
Support of SBS's Board Of Directors and Management........ 9
The Exchange Offer........................................ 9
Risk Factors.............................................. 13
Special Factors........................................... 14
Market Prices of UPC ADSs, UPC Ordinary Shares A and SBS
Shares................................................. 14
Material U.S. Federal Income Tax Consequences of the
Exchange Offer......................................... 15
Selected Historical Consolidated Financial Data of UPC.... 16
Unaudited Pro Forma Condensed Consolidated Financial
Data................................................... 18
Selected Historical Consolidated Financial Data of SBS.... 22
Comparative Per Share Information......................... 24
RISK FACTORS................................................ 25
Risks Related to the Exchange Offer....................... 25
Risks Related to UPC...................................... 29
SPECIAL FACTORS............................................. 36
Background of the Exchange Offer.......................... 36
Recommendation of SBS's Board; Fairness of the Exchange
Offer.................................................. 38
Opinion of Donaldson, Lufkin & Jenrette International,
SBS's Financial Adviser................................ 38
Certain Projected Financial Information................... 50
Position of UPC Regarding Fairness of the Exchange
Offer.................................................. 51
Purposes of the Exchange Offer............................ 52
Reasons for the Exchange Offer............................ 53
Plans for SBS after the Exchange Offer.................... 54
Certain Effects of the Exchange Offer..................... 55
Material U.S. Federal Income Tax Consequences of the
Exchange Offer......................................... 56
Other Agreements and Relationships with SBS............... 60
Appraisal Rights.......................................... 62
THE COMPANIES............................................... 63
THE EXCHANGE OFFER.......................................... 65
Basic Terms............................................... 65
Acceptance for Exchange and Payment for SBS Shares........ 69
Cash Instead of Fractional UPC ADSs....................... 70
Withdrawal Rights......................................... 70
How to Tender Your SBS Shares............................. 71
Conditions of the Exchange Offer.......................... 75
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Regulatory Consents and Approvals......................... 78
Source and Amount of Funds................................ 79
Accounting Treatment...................................... 80
Fees and Expenses......................................... 80
Stock Exchange Listings................................... 81
Miscellaneous............................................. 81
THE EXCHANGE OFFER AGREEMENT AND THE SHARE EXCHANGE
AGREEMENT................................................. 83
The Exchange Offer Agreement.............................. 83
The Share Exchange Agreement.............................. 94
MARKET PRICES AND DIVIDENDS................................. 97
EXCHANGE RATE DATA.......................................... 99
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL
INFORMATION............................................... 100
DESCRIPTION OF UPC'S SHARE CAPITAL.......................... 108
Ordinary Shares........................................... 108
Priority Shares........................................... 109
Preference Shares......................................... 109
Transfer and Dividend Paying Agent and Registrar.......... 110
SUMMARY OF ADDITIONAL MATERIAL PROVISIONS OF THE ARTICLES OF
ASSOCIATION AND OTHER MATTERS............................. 111
DESCRIPTION OF AMERICAN DEPOSITARY SHARES................... 114
COMPARISON OF RIGHTS OF HOLDERS OF UPC ADSs AND HOLDERS OF
SBS SHARES................................................ 123
MATERIAL TAX CONSEQUENCES UNDER NETHERLANDS LAW............. 131
FORWARD-LOOKING STATEMENTS.................................. 136
LEGAL MATTERS............................................... 137
EXPERTS..................................................... 138
SCHEDULE I.................................................. A-1
UPC Directors and Executive Officers...................... A-1
UnitedGlobalCom, Inc. Directors and Executive Officers.... A-7
SCHEDULE II................................................. B-1
Opinion of Donaldson, Lufkin & Jenrette International..... B-1
</TABLE>
ii
<PAGE> 5
THIS PROSPECTUS INCORPORATES IMPORTANT BUSINESS AND FINANCIAL INFORMATION
ABOUT UNITED PAN-EUROPE COMMUNICATIONS N.V. AND SBS BROADCASTING S.A. THAT IS
NOT INCLUDED IN OR DELIVERED WITH THIS PROSPECTUS. THAT INFORMATION IS AVAILABLE
WITHOUT CHARGE TO YOU UPON WRITTEN OR ORAL REQUEST. YOU MAY REQUEST THAT
INFORMATION IN WRITING OR BY TELEPHONE FROM THE RELEVANT COMPANY.
<TABLE>
<S> <C>
UNITED PAN-EUROPE COMMUNICATIONS SBS BROADCASTING S.A.
12 STANHOPE GATE 36 IVES STREET
LONDON W1Y 5LB LONDON SW3 2ND
ENGLAND ENGLAND
TEL: 011-44-20-7518-7980 TEL: 011-44-20-7590-3600
ATTENTION: INVESTOR RELATIONS ATTENTION: CORPORATE SECRETARY
OR
C/O SBS SERVICES (U.S.), INC.
1266 EAST MAIN STREET
STAMFORD, CONNECTICUT 06902
TEL: (203) 921-0359
ATTENTION: CORPORATE SECRETARY
</TABLE>
IF YOU WOULD LIKE TO REQUEST DOCUMENTS FROM UPC OR SBS, PLEASE DO SO BY
[DATE 10 DAYS BEFORE EXPIRATION DATE] TO RECEIVE THEM PRIOR TO THE EXPIRATION OF
THE EXCHANGE OFFER.
The information regarding SBS and its affiliates contained in this
prospectus, particularly in the sections captioned "Summary -- The
Companies -- SBS," "-- Support of SBS's Board of Directors and Management,"
"-- Market Prices of UPC ADSs, UPC Ordinary Shares A and SBS Shares,"
"-- Selected Historical Consolidated Financial Data of SBS," and "-- Comparative
Per Share Information," "Special Factors -- Recommendation of SBS's Board,
Fairness of the Exchange Offer," "-- Opinion of Donaldson, Lufkin & Jenrette
International, SBS's Financial Adviser," "-- Certain Projected Financial
Information," "-- Other Agreements and Relationships with SBS" and "-- Interests
of Directors and Executive Officers of SBS"; "The Companies" and "The Exchange
Offer -- Regulatory Consents and Approvals"; "Market Prices and Dividends"; SBS
financial information contained in "Unaudited Pro Forma Condensed Combined
Financial Information"; and "Comparison of Rights of Holders of UPC ADSs and
Holders of SBS Shares", was prepared, based on or extracted from documents filed
publicly by SBS, or provided to us by SBS during the course of the preparation
of this prospectus.
THIS PROSPECTUS AND THE ACCOMPANYING LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH YOU SHOULD READ CAREFULLY BEFORE YOU MAKE ANY
DECISION WITH RESPECT TO THE EXCHANGE OFFER.
iii
<PAGE> 6
TO THE SBS SHAREHOLDERS:
QUESTIONS AND ANSWERS ABOUT THE PROPOSED ACQUISITION
Q: WHAT ARE UPC AND SBS PROPOSING?
A: We have entered into an Exchange Offer Agreement with SBS in which we have
agreed to offer to exchange UPC ADSs and cash for each outstanding SBS share.
We are offering UPC ADSs and cash to SBS shareholders resident in the United
States and UPC ordinary shares A and cash to SBS shareholders resident
outside the United States.
For a period of six months following the completion of the exchange offer, we
will use our reasonable best efforts, subject to applicable law, to acquire
any remaining shares of SBS held by minority shareholders that are not
tendered in the exchange offer at a purchase price that is equal to the price
paid in the exchange offer, or if such consideration is not permitted by
applicable law, at a purchase price substantially equivalent to the price
paid in the exchange offer. How we will conduct this buyout of minority
shareholders (which we refer to as the minority buy-out) will be at our
discretion and may include redemption, merger or other corporate actions, as
permitted under Luxembourg or other applicable law. We cannot assure you that
there will be a minority buy-out of any remaining shares after the completion
of the exchange offer or that it will be successful.
The purpose of the exchange offer is to acquire all of the outstanding SBS
shares that we do not already own. We already own approximately [ %] of
the SBS shares on a fully diluted basis. This exchange offer will permit us
to acquire control of, and will facilitate our intended acquisition of the
entire equity interest in, SBS. If we successfully acquire all of the
outstanding SBS shares in the exchange offer and any subsequent minority
buy-out SBS would become a wholly-owned subsidiary of UPC.
Q: WHAT WILL I RECEIVE IN EXCHANGE FOR MY SBS SHARES?
A: We are offering to exchange [ ] UPC ADSs plus U.S.$[ ] in
cash, without interest, for each outstanding SBS share that you validly
tender and do not properly withdraw. Therefore, the total value of the
consideration that you will receive in exchange for each SBS share is equal
to [$ ] plus [ ] UPC ADSs multiplied by the market value of
a UPC ADS at the time of the closing of the exchange offer. Based on the
closing sales price of a UPC ADS on Nasdaq on [DATE], 2000 of [$ ],
the total value of the consideration you would have received for each SBS
share on that date would have been approximately [$ ]. Of course,
the total value of the consideration you will receive in the exchange offer
will fluctuate with the market value of UPC ADSs, as described below. You may
elect to vary the proportions of UPC ADSs and cash that you receive in the
exchange offer, as explained below.
Q: WILL THE EXCHANGE RATIO AND THE VALUE OF THE UPC ADSs I WILL RECEIVE CHANGE
BETWEEN NOW AND THE TIME THE EXCHANGE OFFER CLOSES?
A: The exchange ratio, which determines the number of UPC ADSs that you will
receive for each SBS share, is fixed and will not change between now and the
time the exchange offer closes. The exchange ratio was based on
U.S.$ , which is the average of the closing sales prices of the UPC
ADSs on Nasdaq over a ten day trading period that ended on [DATE], 2000.
The value of the UPC ADSs you receive will fluctuate based on changes in the
market price for the UPC ADSs and UPC ordinary shares A. Any fluctuation in
the market price of UPC ADSs or ordinary shares A between now and the closing
of the exchange offer will change the value of the UPC ADSs that you will
receive. Therefore, the value of the UPC ADSs that you will receive could be
1
<PAGE> 7
higher or lower than the price on which the exchange ratio was based.
Q: WILL THE VALUE OF THE CASH PORTION OF THE EXCHANGE OFFER CONSIDERATION
CHANGE?
A: No. The cash portion of the purchase price is fixed at U.S.$[ ] per
SBS share.
Q: WILL THE UPC ADSs THAT I RECEIVE IN THE EXCHANGE OFFER BE LISTED ON A
NATIONAL STOCK EXCHANGE OR ELSEWHERE?
A: Yes. UPC ADSs are presently quoted and principally traded on Nasdaq, and UPC
ordinary shares A also trade on the Amsterdam Stock Exchange. The UPC ADSs
that will be issued in the exchange offer will be quoted and traded on
Nasdaq. The UPC ordinary shares A to be issued in the exchange offer will be
traded on the Amsterdam Stock Exchange.
Q: WHAT IF I WANT TO RECEIVE MORE UPC ADSs AND LESS CASH, OR MORE CASH AND FEWER
UPC ADSs IN EXCHANGE FOR MY SBS SHARES?
A: You may elect to vary the proportions of UPC ADSs and cash that you receive
in the exchange offer. Citibank, N.A., whom we have appointed to act as the
exchange agent for the exchange offer, will allocate the exchange offer
consideration among SBS shareholders based on the number of tendered SBS
shares for which shareholders elect to receive a higher proportion of cash
and the number of tendered SBS shares for which shareholders elect to receive
a higher proportion of UPC ADSs. The exchange agent's ability to satisfy an
SBS shareholder's election to receive a higher proportion of UPC ADSs or cash
will depend on other shareholders making offsetting elections. In other
words, in order for SBS shareholders who request a higher proportion of cash
to receive a higher proportion of cash, other shareholders will have to
request a higher proportion of UPC ADSs. As a result, you may not receive the
total mix of UPC ADSs and cash that you request.
This election is described more fully in this prospectus under the caption,
"The Exchange Offer -- Basic Terms -- Shareholder Election." Any shareholder
who wishes to elect to receive a higher proportion of cash or UPC ADSs should
carefully read and comply with the instructions accompanying the Letter of
Transmittal.
Q: WHAT HAPPENS IF I DO NOT MAKE AN ELECTION?
A: SBS shareholders who do not elect to receive a higher proportion of UPC ADSs
or cash will receive [ ] UPC ADSs and [$ ] in cash for each
SBS share tendered.
Q: WHEN WILL THE EXCHANGE OFFER EXPIRE?
A: The exchange offer will expire at 12:00 midnight, New York City time, on
[DAY], [DATE], 2000, subject to extension, as discussed in "Extension of
Exchange Offer Period" under the caption, "The Exchange Offer -- Summary of
the Exchange Offer."
Q: WHEN WILL THE MINORITY BUY-OUT, IF ANY, OCCUR?
A: If not all of the SBS shares are tendered in the exchange offer, for a period
of six months after the completion of the exchange offer we will use our
reasonable best efforts, subject to applicable law, to acquire any remaining
shares of SBS held by minority shareholders. The timing of a minority
buy-out, if any, will depend on the form of buy-out we select, such as a
redemption, merger or other corporate action.
Q: WHY SHOULD I TENDER MY SHARES IN THE EXCHANGE OFFER RATHER THAN WAIT FOR THE
MINORITY BUY-OUT?
A: If not enough SBS shares are tendered in the exchange offer to satisfy the
minimum tender condition discussed below, we are not obligated to complete
the exchange offer and, therefore, no minority buy-out will occur. Also, we
cannot assure you that the minority buy-out will occur or that, if commenced,
it will be successfully completed.
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<PAGE> 8
Q: WHAT PERCENTAGE OF THE EQUITY INTEREST IN UPC WILL SBS SHAREHOLDERS OWN AFTER
THE EXCHANGE OFFER AND THE MINORITY BUY-OUT?
A: If we were to acquire all of the SBS shares through the exchange offer and
the minority buy-out, if any, the former shareholders of SBS would own
approximately [ %] of the total equity interest in UPC, based upon the
exchange ratio of [ ] and the number of UPC ordinary shares A
(including UPC ordinary shares A represented by UPC ADSs) and the number of
SBS shares outstanding on [DATE], 2000.
After giving effect to the foregoing, our majority shareholder,
UnitedGlobalCom, Inc. would own approximately [ %] of the UPC ordinary
shares A and all of our priority shares.
Q: WHAT IS MEANT BY THE "SPECIAL FACTORS" DESCRIBED IN THIS PROSPECTUS?
A: Because we hold approximately % of the SBS shares and are seeking to
acquire the remaining shares that we do not yet hold, for the purposes of the
U.S. federal securities laws the exchange offer is considered a "going
private" transaction. As a result, we are required to include in this
prospectus, among other things, certain financial information regarding SBS
and certain information about the fairness of the transaction to SBS
shareholders other than UPC. You will find this important information in the
"Special Factors" section of this prospectus, and you should read it
carefully before you decide to tender your SBS shares in the exchange offer.
Q: WILL I HAVE TO PAY ANY FEES OR COMMISSIONS?
A: If you are the record owner of your shares and you tender your shares in the
exchange offer, you will not have to pay brokerage fees or incur similar
expenses. If you own your shares through a broker or other nominee, and your
broker tenders the shares on your behalf, your broker may charge you a fee
for doing so. You should consult your broker or nominee to determine whether
any charges will apply.
Except as described in the instructions to the accompanying Letter of
Transmittal, transfer taxes on the tender of SBS shares pursuant to the
exchange offer will be paid by us or on our behalf. However, any tendering
shareholder or other payee who fails to complete and sign the Substitute Form
W-9 included in the accompanying Letter of Transmittal may be subject to a
required backup federal income tax withholding of 31% of the total
consideration payable to such shareholder or other payee pursuant to the
exchange offer.
Q: DOES SBS SUPPORT THE EXCHANGE OFFER?
A: Yes. The board of directors of SBS (except the current board member nominated
by UPC, who abstained):
- has unanimously approved entering into the Exchange Offer Agreement;
- has determined that the exchange offer is fair to and in the best interests
of SBS and its shareholders (other than UPC); and
- recommends that the SBS shareholders accept the exchange offer and tender
their shares.
Information about the recommendation of SBS's board of directors is more
fully set forth in SBS's Solicitation/Recommendation Statement on Schedule
14D-9, which is being mailed to SBS shareholders together with this
prospectus.
Q: HAS SBS RECEIVED A FAIRNESS OPINION IN CONNECTION WITH THE EXCHANGE OFFER?
A: Yes. SBS has received a written opinion from Donaldson, Lufkin & Jenrette
International, or DLJ, dated March 9, 2000, to the effect that, as of that
date, based on and subject to the assumptions, limitations and qualifications
included in that written opinion, the consideration to be received by SBS
shareholders pursuant to the exchange offer was fair to those shareholders
(other than shareholders who are affiliates of SBS, including UPC) from a
financial point of view. You will find a copy of this opinion attached as
Schedule II to this prospectus.
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<PAGE> 9
Q: HAVE ANY SBS SHAREHOLDERS AGREED TO TENDER THEIR SHARES?
A: Yes. Four directors and executive officers of SBS have each entered into a
Share Exchange Agreement with UPC in which, among other things, each of them
has agreed to tender all the SBS shares he owns in the exchange offer, upon
the terms and subject to the conditions of the Share Exchange Agreement.
These directors and executive officers currently hold a total of
approximately % of SBS's outstanding shares, and % on a fully
diluted basis (taking into account the options to acquire SBS shares held by
these persons, although they are not required to tender the shares subject to
those options in the exchange offer unless those options are exercised).
Q: ARE THERE CONDITIONS TO THE EXCHANGE OFFER?
A: Yes. The exchange offer is subject to several conditions, which we can waive
if we so choose. You will find a summary of these conditions in this
prospectus under the caption "The Exchange Offer -- Conditions of the
Exchange Offer."
Q: HOW DO I PARTICIPATE IN THE EXCHANGE OFFER?
A: To tender your SBS shares, you should do the following:
- If you hold your SBS shares in your own name, in certificated form,
complete and sign the accompanying Letter of Transmittal and return it with
your share certificates to Citibank, N.A., the exchange agent for the
exchange offer, at one of its addresses on the back cover of this
prospectus.
- If you hold your SBS shares in "book entry," or uncertificated form,
through a broker, ask your broker to tender your shares by completing the
instructions to broker.
- For more information on procedures for tendering shares the timing of the
exchange offer, extensions of the exchange offer period and your rights to
withdraw your shares from the exchange offer before the expiration date,
please refer to "The Exchange Offer."
Q: WILL I BE TAXED ON THE CASH AND UPC ADSs THAT I RECEIVE?
A: Yes. If you are a U.S. taxpayer, your receipt of UPC ADSs and cash in the
exchange offer is a taxable exchange for U.S. federal income tax purposes.
You will be required to report the amount of any gain or loss recognized on
the exchange. The amount of gain or loss that you will recognize will be
equal to the difference between (x) the sum of the fair market value of the
UPC ADSs and the amount of cash you receive in the exchange offer and (y)
your adjusted tax basis in your SBS shares.
If you are not a U.S. taxpayer, you should consult your tax adviser
concerning the U.S. federal income tax consequences to you of the exchange
offer.
The U.S. federal income tax consequences that will apply to you in connection
with the exchange offer will depend on your particular circumstances. For a
discussion of the material tax consequences of the exchange offer you should
read "Special Factors -- Material U.S. Federal Income Tax Consequences of the
Exchange Offer." For a discussion of the material tax consequences to you
under Netherlands law as a holder of UPC ADSs, you should read "Material Tax
Consequences under Netherlands Law." You are urged to consult your tax
adviser for a full understanding of these tax consequences.
Q: WHERE CAN I FIND MORE INFORMATION ABOUT UPC AND SBS?
A: The section captioned "Where You Can Find More Information" describes where
you can find more information about UPC and SBS.
Q: WHAT SHOULD I DO IF I HAVE QUESTIONS?
A: If you have any questions about the exchange offer or the proposed
combination of UPC and SBS, please call our information agent, D.F. King &
Co., Inc., toll-free at (800) 769-4414 or collect at (212) 269-5550. In
Europe, you can call collect at +44 207 920 9700.
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<PAGE> 10
WHERE YOU CAN FIND MORE INFORMATION
UPC files annual, quarterly and special reports and other information with
the SEC. SBS files or furnishes annual and special reports and other information
with the SEC. You may read and copy any reports, statements or other information
filed by UPC or SBS at the SEC's public reference room at 450 Fifth Street,
N.W., Washington, D.C. 20549, or at the SEC's public reference rooms in New
York, New York and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for
further information on the public reference rooms. SEC filings by UPC are also
available to the public from commercial document retrieval services and at the
Internet world wide web site maintained by the SEC at www.sec.gov. UPC filed a
registration statement on Form S-4 to register with the SEC the UPC ordinary
shares A represented by UPC ADSs to be issued pursuant to the exchange offer and
the proposed minority buy-out. This prospectus is a part of that registration
statement. In accordance with SEC rules, this prospectus does not contain all
the information you can find in the registration statement or the exhibits to
the registration statement.
We also filed with the SEC a statement on Schedule TO/Schedule 13E-3
pursuant to Rule 14d-3 and Rule 13e-3 under the Exchange Act furnishing certain
information about the exchange offer. You may read and copy the Schedule
TO/Schedule 13E-3 and any amendments to it at the SEC's public reference rooms
referred to above.
The SEC allows us to "incorporate by reference" information into this
prospectus, which means that we can disclose important information to you by
referring you to another document filed separately with the SEC. The information
incorporated by reference is deemed to be part of this prospectus, except for
any information superseded by information contained directly in this prospectus.
This prospectus incorporates by reference the documents specified below that UPC
or SBS have previously filed or furnished to with the SEC. These documents
contain important information about UPC and SBS and their financial condition.
Shareholders may obtain UPC or SBS documents incorporated by reference in
this prospectus by requesting them in writing or by telephone from the relevant
company:
<TABLE>
<S> <C>
United Pan-Europe Communications SBS Broadcasting S.A.
12 Stanhope Street 36 Ives Street
London W1Y 5LB London SW3 2ND
England England
Tel: 011-44-20-7518-7980 Tel: 011-44-20-7590-3600
Attention: Investor Relations Attention: Corporate Secretary
or
c/o SBS Services (U.S.), Inc.
1266 East Main Street
Stamford, Connecticut 06902
Tel: (203)921-0359
Attention: Corporate Secretary
</TABLE>
Documents incorporated by reference are available without charge, excluding
all exhibits unless an exhibit has been specifically incorporated in this
prospectus. These documents are also available at the SEC's public reference
rooms referred to above.
If you would like to request documents from UPC or SBS, please do so by
[DATE 10 DAYS BEFORE EXPIRATION DATE] to receive them prior to the expiration of
the exchange offer.
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<PAGE> 11
DOCUMENTS FILED BY UPC
The following documents filed by UPC with the SEC are hereby incorporated
by reference:
- Annual Report on Form 10-K for the fiscal year ended December 31, 1999.
- Current Reports on Form 8-K filed February 18, 2000, March 14, 2000,
March 20, 2000, April 18, 2000, April 19, 2000 and Form 8-K/A filed on
September 17, 1999 and May 12, 2000.
- Proxy Statement for the Annual Meeting of Shareholders to be held on June
9, 2000.
DOCUMENTS FILED OR FURNISHED BY SBS
The following documents filed or furnished by SBS to the SEC are hereby
incorporated by reference:
- Annual Report on Form 20-F for the fiscal year ended December 31, 1999
- Reports on Form 6-K furnished on February 1, 2000, February 23, 2000,
March 10, 2000, March 21, 2000 and May 5, 2000.
SUBSEQUENT REPORTS
All documents filed by UPC or SBS pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act, and certain reports on Form 6-K furnished by SBS to
the SEC, to the extent indicated in those reports, in each case, from the date
of this prospectus to the date on which SBS shares are accepted for exchange
pursuant to the exchange offer (or the date on which the exchange offer is
terminated) and, if later, until the date on which the minority buy-out, if any,
is completed, are also incorporated by reference in this prospectus. Information
contained in documents that are incorporated by reference in this prospectus
will be deemed to be modified or superseded by information contained in
subsequently filed documents that are incorporated by reference in this
prospectus. If any information is modified or superseded by a subsequent
document, it will not be deemed to be a part of this prospectus (except as
modified or superseded).
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<PAGE> 12
SUMMARY
This summary highlights selected information from this prospectus and may
not contain all the information that is important to you. To better understand
the exchange offer, you should read this entire document carefully, as well as
those additional documents to which we refer you. Please read "Where You Can
Find More Information."
THE COMPANIES
UNITED PAN-EUROPE COMMUNICATIONS N.V.
Fred. Roeskestraat 123,
P.O. Box 74763
1076 EE Amsterdam
The Netherlands
011 31 20 778 9840
Our network footprint covers 17 countries in Europe and Israel. We provide
communications services in many European countries through our business lines:
cable television, direct-to-home satellite television services and programming,
telephone and Internet/data services. Our subscriber base is the largest of any
group of broadband communications networks operated across Europe. As of
December 31, 1999, our operating systems had approximately 5.8 million aggregate
subscribers to their basic tier video services, excluding 254,092 subscribers
who subscribe for our direct-to-home service in Poland. At the same date, we
also had approximately 202,800 telephone lines in service for our residential
and business customers offering local, national and international voice services
and approximately 118,000 residential and 3,500 business subscribers to our
chello broadband branded Internet access service.
UnitedGlobalCom, Inc. owns approximately 53% of our outstanding ordinary
shares A and all of our outstanding priority shares. UnitedGlobalCom is the
largest broadband communications provider outside the United States. It provides
multi-channel television services in 23 countries and telephone and
Internet/data services in a growing number of its international markets. In
addition to its interests in us, UnitedGlobalCom has operations in the
Asia/Pacific region and in Latin America. As of December 31, 1999,
UnitedGlobalCom's systems had an aggregate of 7.2 million multi-channel
television subscribers, 323,000 telephone lines in service and 129,000
Internet/data subscribers. UnitedGlobalCom's principal place of business is
located at 4643 South Ulster Street, Suite 1300, Denver, Colorado 80237. Its
telephone number is (303) 770-4001.
SBS BROADCASTING S.A.
8-10 Rue Mathias Hardt
L-1717 Luxembourg, Luxembourg
011 352 40 78 78
SBS is a European broadcasting company that creates, acquires, packages and
distributes programming and other content via television channels, radio
stations and the Internet. SBS owns and/or operates 11 television and 17 radio
stations across ten countries in Europe together with various related
destinations and promotional web sites. SBS currently broadcasts in or into
Norway, Sweden, Denmark, Finland, Flemish Belgium, The Netherlands, Slovenia,
Hungary, German-speaking Switzerland, Romania and Greece and has Internet
activities or investments in Norway, Sweden, Denmark, Finland, Belgium, The
Netherlands and the United States. SBS has announced that it has agreed to
acquire a 33% interest in a Polish television station and that the launch of a
home shopping channel is planned for Italy. SBS sells advertising to
multinational, regional and local advertisers.
As of December 31, 1999, SBS had approximately 1,300 employees. SBS
reported approximately U.S.$412.6 million in revenues for the fiscal year ended
December 31, 1999.
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<PAGE> 13
As of [DATE], 2000, there were [ ] SBS shares issued and
outstanding, held by approximately [ ] shareholders of record. Because
certain of these shares are held by brokers or other nominees, the [ ]
number of record holders may not be representative of the number of beneficial
owners.
As of the date of this prospectus, UPC is the beneficial owner of 6,000,000
SBS shares, representing approximately [ %] of the issued and outstanding
SBS shares ([ %] on a fully diluted basis). Under the U.S. federal
securities laws, UnitedGlobalCom, the majority shareholder of UPC, is also
deemed to be the beneficial owner of these 6,000,000 SBS shares. UPC has the
right to nominate one member of the board of directors of SBS. Mark Schneider,
the chief executive officer and chairman of UPC's management board, is currently
a member of the board of directors of SBS.
THE PROPOSED COMBINATION
We and SBS have entered into an Exchange Offer Agreement in which we have
agreed to make this exchange offer. We are offering UPC ADSs and cash to SBS
shareholders resident in the United States and UPC ordinary shares A and cash to
SBS shareholders resident outside the United States. The purpose of the exchange
offer is to acquire all of the outstanding SBS shares that we do not already
own. This exchange offer will permit us to acquire control of, and will
facilitate our intended acquisition of the entire equity interest in, SBS.
If not all SBS shares are tendered in the exchange offer, for a period of
six months following the completion of the exchange offer, we will use our
reasonable best efforts, subject to applicable law, to acquire any remaining
shares of SBS held by minority shareholders that are not tendered in the
exchange offer at a purchase price that is equal to the price paid in the
exchange offer, or if such consideration is not permitted by applicable law, at
a purchase price substantially equivalent to the price paid in the exchange
offer. How we will conduct this minority buy-out will be at our discretion and
may include redemption, merger or other corporate actions, as permitted under
Luxembourg or other applicable law. We cannot assure you that there will be a
minority buy-out of any remaining shares after the completion of the exchange
offer or that it will be successful.
If we successfully acquire all of the outstanding SBS shares in the
exchange offer or a subsequent minority buy-out, if any, SBS would become a
wholly-owned subsidiary of UPC.
The Exchange Offer Agreement is filed as an exhibit to the registration
statement of which this prospectus is a part and is incorporated by reference in
this prospectus. We encourage you to read the Exchange Offer Agreement. Please
read "The Exchange Offer" and "The Exchange Offer Agreement and the Share
Exchange Agreement" for a more detailed description of the Exchange Offer
Agreement.
REASONS FOR THE EXCHANGE OFFER
We believe that the proposed combination of UPC and SBS will produce the
following benefits:
- creation of a pan-European multimedia platform
- geographic synergies and use of local content
- strengthening content acquisition position
- development of additional thematic channels
- multiplexing of existing channels
- improved use of advertising inventory
- enhanced offering to advertisers
- leverage of SBS's advertising expertise
- cost savings
Please read "Special Factors -- Reasons for the Proposed Combination."
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<PAGE> 14
The reasons for the SBS recommendation are included in SBS's
Solicitation/Recommendation Statement on Schedule 14D-9, which is being mailed
to SBS shareholders with this prospectus.
SUPPORT OF SBS'S BOARD OF DIRECTORS AND MANAGEMENT
The board of directors of SBS (except the current board member nominated by
UPC, who abstained):
- has unanimously approved entering into the Exchange Offer Agreement;
- has determined that the exchange offer is fair to and in the best
interests of SBS and its shareholders (other UPC); and
- recommends that the SBS shareholders accept the exchange offer and tender
their shares.
Information about the recommendation of SBS's board of directors is more
fully described in SBS's Solicitation/Recommendation Statement on Schedule
14D-9, which is being mailed to SBS shareholders together with this prospectus.
Four directors and executive officers of SBS have each entered into a Share
Exchange Agreement with UPC in which, among other things, each of them has
agreed to tender all the SBS shares he owns in the exchange offer, upon the
terms and subject to the conditions of the Share Exchange Agreement. These
directors and executive officers currently hold a total of approximately %
of SBS's outstanding shares, and % on a fully diluted basis (taking into
account the options to acquire SBS shares held by these persons, although they
are not required to tender the shares subject to those options in the exchange
offer unless those options are exercised).
THE EXCHANGE OFFER
Summary of the Exchange Offer
Exchange Of UPC ADSs and Cash. We are offering to exchange [ ]
UPC ADSs, each representing one UPC ordinary share A, plus U.S.$[ ] in
cash, without interest for each outstanding SBS share that you validly tender
and do not properly withdraw (subject to a shareholder election, discussed
below). We sometimes refer to this fixed number of UPC ADSs that you will
receive in respect of each validly tendered SBS share as the "exchange ratio."
As discussed below, the exchange offer also includes a shareholder election that
will entitle you to elect to vary the proportions of the UPC ADSs and cash that
you receive in the exchange offer subject to the offsetting elections of other
shareholders.
The exchange ratio is fixed and will not change between now and the time
the exchange offer closes. The exchange ratio is based on [$ ], which
is the average of the closing sales prices of the UPC ADSs on Nasdaq over a ten
day trading period that ended on [DATE], 2000. The value of the UPC ADSs you
receive will fluctuate, based on changes in the market price for the UPC ADSs
and UPC ordinary shares A. Any fluctuation in the market price of UPC ADSs or
ordinary shares A between now and the closing of the exchange offer will change
the value of the UPC ADSs that you will receive. Therefore, the value of the UPC
ADSs that you will receive could be higher or lower than the price on which the
exchange ratio was based. For information on the range of trading prices of UPC
ADSs on Nasdaq, please read "Market Prices and Dividends."
The amount of cash you will receive in the exchange offer is fixed at
U.S.$ per SBS share that you exchange (subject to your shareholder election,
if any, described below). This amount will not be affected by fluctuations in
the market price of UPC ADSs or SBS shares.
Therefore, the total value of the consideration that you will receive in
exchange for each SBS share is equal to [$ ] plus [ ] UPC
ADSs multiplied by the market value of a UPC ADS at the closing of the exchange
offer. Based on the closing sales price of a UPC ADS on Nasdaq on [DATE], 2000,
of approximately [$ ], the total value of the consideration you
9
<PAGE> 15
would have received for each SBS share on that date would have been
approximately [$ ]. Of course, the total value of the consideration you
will receive in the exchange offer will fluctuate with the market value of UPC
ADSs as described above.
Shareholder Election. You may elect to vary the proportions of UPC ADSs
and cash that you receive in the exchange offer. The exchange agent will
allocate the exchange offer consideration among SBS shareholders based on the
number of tendered SBS shares for which holders elect to receive a higher
proportion of cash and the number of tendered SBS shares for which holders elect
to receive a higher proportion of UPC ADSs. The exchange agent's ability to
satisfy an SBS shareholder's election will depend on other shareholders making
offsetting elections. In other words, in order for shareholders who request a
higher proportion of cash to receive a higher proportion of cash, other
shareholders will have to request a higher proportion of UPC ADSs. As a result,
you may not receive the total mix of UPC ADSs and cash that you request.
SBS shareholders who do not elect to receive a higher proportion of cash or
UPC ADSs will receive [ ] UPC ADSs and [$ ] in cash for
each SBS share validly tendered.
This election is described more fully in this prospectus under the caption
"The Exchange Offer -- Basic Terms -- Shareholder Election," below. Any
shareholder who wishes to make a shareholder election should carefully read that
section of this prospectus and comply with the instructions accompanying the
Letter of Transmittal.
Minority Buy-Out. The purpose of the exchange offer is to acquire all of
the outstanding SBS shares that we do not already own. For a period of six
months following the completion of the exchange offer, we will use our
reasonable best efforts, subject to applicable law, to acquire any remaining
shares of SBS held by minority shareholders that are not tendered in the
exchange offer at a purchase price that is equal to the price paid in the
exchange offer, or if such consideration is not permitted by applicable law, at
a purchase price substantially equivalent to the price paid in the exchange
offer. How we will conduct this minority buy-out will be at our discretion and
may include redemption, merger or other corporate actions, as permitted under
Luxembourg or other applicable law. We cannot assure you that there will be a
minority buy-out of any remaining shares after the completion of the exchange
offer or that it will be successful.
Conditions of the Exchange Offer. Our obligation to accept or pay for any
shares that you tender in the exchange offer is subject to various conditions,
as more fully described in "The Exchange Offer -- Conditions of the Exchange
Offer," including the conditions summarized below.
- enough SBS shares having been tendered and not withdrawn that, together
with the SBS shares beneficially owned by UPC and its affiliates,
represent two-thirds of the total number of outstanding SBS shares on a
fully diluted basis on the date of purchase (referred to as the "minimum
tender condition");
- subject to certain exceptions, waiting periods or approvals under
applicable antitrust or competition laws having expired, been terminated
or received, as applicable;
- there not having occurred and be continuing (1) any general suspension
of, or limitation on trading on The New York Stock Exchange or Nasdaq
(except as a result of a computerized trading limit or a suspension due
to "circuit breakers"), (2) any banking moratorium, suspension of bank
payments or any limitation on the extension of credit by lending
institutions in the United States, the United Kingdom or Germany or (3) a
decline for any three trading days in any consecutive five trading day
period of both (A) 30% or more in the Eurotop 300 index, as measured
against the closing value on March 8, 2000, and (B) 20% or more in the
closing sales price per UPC ADS, as reported by Nasdaq, as measured
against U.S.$70.00;
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<PAGE> 16
- no person or "group" (as defined in Section 13(d)(3) of the Exchange Act)
other than UPC or any of its affiliates having become the beneficial
owner (as that term is used in Rule 13d-3 under the Exchange Act) of more
than 25% of the outstanding SBS shares;
- no occurrence of any event that has had or is reasonably likely to have
(individually or in the aggregate), a material adverse effect on the
condition (financial or otherwise), business, properties, assets,
liabilities or results of operations of SBS and its subsidiaries taken as
a whole (other than effects resulting from any adverse change (1) in
applicable law relating to the broadcasting or television industries or
in generally accepted accounting principles or (2) economic or business
conditions in the broadcasting or television industries); and
- subject to certain exceptions, SBS not having breached any covenant,
representation or warranty under the Exchange Offer Agreement in any
material respect.
Subject to certain exceptions, the exchange offer is also conditioned upon
the receipt prior to the completion of the exchange offer of a number of
consents and approvals, including under applicable media or broadcast laws and
regulations in the European Union and in the United States from various
governmental agencies with respect to the Exchange Offer Agreement, the exchange
offer and the other transactions contemplated by the Exchange Offer Agreement.
Please read "The Exchange Offer -- Regulatory Consents and Approvals."
The above conditions and other conditions to the exchange offer are
discussed in this prospectus under "The Exchange Offer -- Conditions of the
Exchange Offer."
SBS has informed us that as of the close of business on [DATE], 2000, there
were [ ] outstanding SBS shares and [ ] SBS shares reserved
for issuance upon the exercise of outstanding options. At the date of this
prospectus, UPC and its affiliates own 6,000,000 SBS shares. Therefore, the
minimum tender condition will be satisfied if at least [ ] shares are
validly tendered and not withdrawn prior to the expiration of the exchange
offer.
Expiration of the Exchange Offer; Extension of Exchange Offer Period. The
exchange offer is currently scheduled to expire at 12:00 midnight, New York City
time, on [DAY], [DATE], 2000, subject to extension as described below.
We reserve the right, at any time and from time to time (except as limited
by the Exchange Offer Agreement), to extend the period during which the exchange
offer is open, by giving oral or written notice to the exchange agent and by
making public announcement of the extension as described below.
Under the Exchange Offer Agreement, without the consent of SBS:
- We may extend the initial offering period of the exchange offer if at any
scheduled expiration time of the initial offering period any of the
exchange offer conditions has not been satisfied or waived.
- We may extend the exchange offer for any period required by any
regulation of the SEC or any foreign governmental regulatory authority
applicable to the exchange offer.
- We may increase the offer price and extend the exchange offer in
connection with such increase, to the extent required by any applicable
law.
- We may extend the exchange offer on one or more occasions (but not beyond
September 30, 2000) if on any expiration date a number of SBS shares
which, together with any SBS shares that we or any of our affiliates
beneficially own, represents at least 90% of the total outstanding SBS
shares on a fully-diluted basis has not been validly tendered and not
withdrawn.
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<PAGE> 17
If requested by SBS, we will extend the initial offering period:
- for a total of not more than 10 business days if at any scheduled
expiration of the initial offering period any of the exchange offer
conditions have not been satisfied or waived and all such conditions are
reasonably capable of being satisfied; and
- for a total of not more than 15 business days if the exchange offer
period has not been previously extended and at the expiration of the
initial offer period a number of shares which, together with any shares
that we beneficially own, represents at least 90% of the total
outstanding SBS shares on a fully-diluted basis, has not been validly
tendered and not withdrawn.
If the exchange offer is extended for any reason, we will make an
announcement to that effect before 9:00 A.M., New York City time, on the next
business day after the previously scheduled expiration date. During any
extension of the exchange offer, all SBS shares previously tendered and not
withdrawn will remain subject to the exchange offer, subject to your right to
withdraw your SBS shares. You should read the discussions under the caption "The
Exchange Offer -- Withdrawal Rights" and "The Exchange Offer Agreement and the
Share Exchange Agreement -- The Exchange Offer Agreement -- The Exchange Offer"
for more details.
UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE OF THE
SBS SHARES TO BE PAID BY UPC, REGARDLESS OF ANY EXTENSION OF THE EXCHANGE OFFER
OR ANY DELAY IN MAKING OF SUCH PAYMENT.
Delay; Termination; Waiver; Amendment. Subject to the SEC's rules and
regulations and the terms of the Exchange Offer Agreement, which, among other
things, limit our ability to amend or terminate the exchange offer, we also
reserve the right, in our sole discretion, at any time or from time to time:
- to delay acceptance for exchange and payment of, or, regardless of
whether we previously accepted SBS shares for exchange and payment,
exchange and payment for, any SBS shares pursuant to the exchange offer
upon the failure of any of the conditions of the exchange offer to be
satisfied;
- to terminate the exchange offer and not accept for exchange and payment
any SBS shares, upon the failure of any of the conditions of the exchange
offer to be satisfied; and
- to waive any condition or otherwise amend the exchange offer in any
respect,
in each case by giving oral or written notice of the delay, termination, waiver
or amendment to the exchange agent and by making a public announcement.
Withdrawal Rights. Your tender of SBS shares pursuant to the exchange
offer is irrevocable, except that SBS shares tendered pursuant to the exchange
offer may be withdrawn at any time prior to the expiration time of the exchange
offer, and, unless we previously accepted them for exchange pursuant to the
exchange offer, may also be withdrawn at any time after [DATE], 2000. Please
read "The Exchange Offer -- Withdrawal Rights" for more details.
Acceptance for Exchange and Payment for SBS Shares. On the terms and
subject to the conditions of the exchange offer (including, if the exchange
offer is extended or amended, the terms and conditions of any such extension or
amendment), we will accept, and will exchange and pay for, SBS shares validly
tendered and not withdrawn as promptly as practicable after the expiration time.
Subject to the terms of the Exchange Offer Agreement, any determination
concerning the satisfaction of the terms and conditions of the exchange offer
will be in the sole discretion of UPC. The conditions to the exchange offer are
for our sole benefit, and we may assert or waive them, in whole or in part, at
any time at our sole discretion, subject to the terms and conditions of the
Exchange Offer Agreement. We expressly reserve the right to delay acceptance for
exchange and payment of,
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<PAGE> 18
or subject to the applicable SEC rules, exchange and payment for shares in order
to comply in whole or in part with any applicable law.
Appraisal Rights. The exchange offer does not entitle you to appraisal
rights with respect to your SBS shares. Dissenting shareholders would only have
the right to seek legal relief in Luxembourg courts under general principles of
legal protection of minority shareholders. Whether or not you would have any
appraisal or dissenter's rights under Luxembourg law in a subsequent minority
buy-out would depend on how we choose to conduct the minority buy-out, if any.
How to Tender Your SBS Shares. If you wish to tender your SBS shares in
the exchange offer, you should determine how you hold your SBS shares and follow
the instructions below:
If You Hold SBS Shares in Uncertificated (or Book-Entry) Form
If you hold your SBS shares in a brokerage or custodian account through an
agent, including a broker, dealer, bank, trust company, custodian, participant
in The Depository Trust Company (DTC) or other nominee, you will need to
instruct your agent to follow the exchange offer procedures for SBS shares in
book-entry form before the expiration time, as described in the section
captioned "The Exchange Offer -- How to Tender Your SBS Shares -- If You Hold
Your Shares Through an Agent." Please refer to any materials forwarded to you by
your agent to determine how you can instruct your agent to take these actions.
If You Hold SBS Shares in Certificated Form
If you hold your SBS shares in certificated form (that is, in the form of
stock certificates registered in your name), you must deliver to the exchange
agent before the expiration time a properly completed and signed Letter of
Transmittal and your SBS share certificates, together with the applicable
signature guarantees from an eligible institution. Alternatively, you may
arrange for an agent to hold your securities on your behalf in book-entry form
and then follow the procedures described above. (Your agent may arrange for SBS
shares to be held in book-entry form through any participant in DTC. You and
your agent should contact the dealer-manager for the exchange offer if you have
questions in this regard.) For more information about how to tender your SBS
shares in certificated form, please read "The Exchange Offer -- How to Tender
Your SBS Shares -- If You Hold Your SBS Shares in Certificated Form."
IN ORDER TO TENDER YOUR SBS SHARES VALIDLY, YOU MUST COMPLETE ALL OF THESE
PROCEDURES BY THE EXPIRATION TIME FOR THE EXCHANGE OFFER. FOR MORE INFORMATION
ON HOW TO TENDER YOUR SBS SHARES IN THE EXCHANGE OFFER, PLEASE REFER TO "THE
EXCHANGE OFFER -- HOW TO TENDER YOUR SBS SHARES."
RISK FACTORS
In deciding whether to tender your shares pursuant to the exchange offer,
you should read carefully this prospectus and the documents to which we refer
you. You also should consider carefully the following factors as well as the
other factors described under "Risk Factors" in this prospectus:
RISKS RELATED TO THE EXCHANGE OFFER
- The trading price of UPC ADSs may be affected by factors different from
those affecting the price of SBS shares.
- The fixed exchange ratio could work to your disadvantage if the market
value of the UPC ADSs declines.
- The fairness opinion delivered by SBS's financial adviser does not
address changes in the relative value of UPC and SBS since March 9, 2000,
the date of the opinion.
13
<PAGE> 19
- The directors and executive officers of SBS have interests that may be
different from those of other SBS shareholders.
- Any SBS shareholders who remain as minority shareholders after the
exchange offer may be adversely affected.
- We may not successfully complete a minority buy-out.
- You may not receive the proportions of UPC ADSs and cash that you elect.
- If you tender your SBS shares, you will become a shareholder of a
Netherlands company instead of a Luxembourg company, resulting in
different shareholder rights under law.
- Under some circumstances, you might not be able to vote your UPC ADSs.
- Preemptive rights may not be available to holders of UPC ADSs.
- Need for governmental approvals may delay completion of the exchange
offer.
- We may not be able to comply with media regulations in Hungary, Belgium
and Finland.
- Our plans for SBS may not be successful.
RISKS RELATED TO UPC
- We expect to continue to make net losses for the next five to ten years.
- Our high level of debt and limitations on our capacity to borrow and
invest could slow down growth in subscribers and revenue.
- Failure to raise necessary capital could hinder our acquisitions strategy
and restrict the development of our network and the introduction of new
services.
- Our acquisitions strategy involves significant risks.
- Our operations are regulated and an adverse change in regulation could
hurt our business.
- We face competition from other providers, especially in our telephone and
Internet businesses.
Please read "Risk Factors" for a more complete discussion of these factors.
SPECIAL FACTORS
Because we hold approximately % of the issued and outstanding SBS
shares and are seeking to acquire the remaining shares that we do not yet hold,
for the purposes of the U.S. federal securities laws this transaction is
considered a "going private" transaction. As a result, we are required to
include in this prospectus, among other things, certain financial information
regarding SBS and certain information about the fairness of the transaction to
SBS shareholders other than UPC.
You will find this important information in the "Special Factors" section
of this prospectus, and you should read it carefully before you decide to tender
your SBS shares in the exchange offer.
MARKET PRICES OF UPC ADSS, UPC ORDINARY SHARES A AND SBS SHARES
UPC ADSs are quoted on Nasdaq under the symbol "UPCOY," and UPC ordinary
shares A are traded on the Amsterdam Stock Exchange under the symbol "UPC." Both
began trading on February 12, 1999, at the time of our initial public offering.
To date, we have not paid dividends on the UPC ordinary shares A and do not
intend to do so for the foreseeable future.
SBS shares trade on Nasdaq under the symbol "SBTV" and on the Amsterdam
Stock Exchange under the symbol "SBS." SBS shares began trading on Nasdaq on
March 10, 1993 and
14
<PAGE> 20
on the Amsterdam Stock Exchange on August 4, 1999. According to its filings with
the SEC, to date SBS has not paid dividends on the SBS shares and it does not
intend to do so for the foreseeable future. Luxembourg law does not currently
permit SBS to make any dividend payments.
SBS has informed us that as of the close of business on [DATE], 2000, there
were outstanding SBS shares and SBS shares
reserved for issuance upon the exercise of outstanding options.
The following table shows the last reported sale price of UPC ordinary
shares A, UPC ADSs, and SBS shares, in each case, as of (1) March 8, 2000, the
last day of trading before the day on which UPC and SBS announced signing the
Exchange Offer Agreement, and (2) [DATE], 2000, the last day for which such
information could be practicably calculated prior to the date of this
prospectus. The March 8, 2000 sale prices for UPC ordinary shares A and UPC ADSs
are adjusted to reflect a March 20, 2000 three-for-one share split.
<TABLE>
<CAPTION>
UPC ORDINARY SHARES A
(AMSTERDAM STOCK UPC ADSS SBS SHARES
DATE EXCHANGE) (NASDAQ) (NASDAQ)
- ---- --------------------- -------- ----------
<S> <C> <C> <C>
March 8, 2000.......................... Euro 83.317 U.S.$79 U.S.$57
[DATE], 2000........................... Euro U.S.$ U.S.$
</TABLE>
For information about U.S. dollar/euro exchange rates, see the section
captioned "Exchange Rate Data."
MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE EXCHANGE OFFER
If you are a U.S. taxpayer, your receipt of UPC ADSs and cash in exchange
for each of your outstanding SBS shares will constitute for U.S. federal income
tax purposes a taxable exchange upon which you will recognize gain or loss. The
amount of gain or loss that you will recognize will be equal to the difference
between (x) the sum of the fair market value of the UPC ADSs and the amount of
cash you receive in the exchange offer and (y) your adjusted tax basis in your
SBS shares.
If you are not a U.S. taxpayer, you should consult your tax adviser
concerning the U.S. federal income tax consequences to you of the exchange
offer.
The U.S. federal income tax consequences that will apply to you in
connection with the exchange offer will depend on your particular circumstances.
For a more detailed discussion of the material U.S. federal income tax
consequences of the exchange offer, you should read "Special Factors -- Material
U.S. Federal Income Tax Consequences of the Exchange Offer." For a discussion of
the material tax consequences to you under Netherlands law as a holder of UPC
ADSs, you should read "Material Tax Consequences under Netherlands Law." You are
urged to consult your tax adviser for a full understanding of these tax
consequences.
15
<PAGE> 21
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF UPC
The following is a summary of selected historical consolidated financial
data of UPC for each of the years in the five-year period ended December 31,
1999. You should read this summary together with the audited consolidated
financial statements and their accompanying notes and in conjunction with
management's discussion and analysis of operations and financial conditions of
UPC in our Annual Report on Form 10-K for the year ended December 31, 1999,
which is incorporated by reference in this prospectus. Please read "Where You
Can Find More Information."
The following selected consolidated financial data for the years ended
December 31, 1999, 1998, 1997 and 1996 and for the six months ended December 31,
1995 have been derived from our audited consolidated financial statements. These
financial statements have been restated to include Monor Communications Group,
Inc., Tara Television Limited and Ibercom, Inc., which UPC acquired from
UnitedGlobalCom in December 1998 and February 1999, respectively, for all
periods in which their operations were part of UnitedGlobalCom's consolidated
results prior to our acquisition of these companies. Since the acquisitions were
between entities under common control, the transactions were accounted for at
historical cost, under which UPC's prior period financial statements have been
restated as if UPC had acquired the assets from UnitedGlobalCom as of the date
of UnitedGlobalCom's initial investment. The following consolidated financial
data for the six months ended June 30, 1995 have been derived from unaudited
financial statements that, in our opinion, reflect all adjustments, consisting
of normal recurring adjustments, necessary to present fairly the financial data
for such periods and as of such date. Due to the relative value of the assets
contributed by UnitedGlobalCom and Philips Electronics N.V. (Philips) upon our
formation, the cable television properties contributed by Philips are deemed to
be our predecessor. On December 11, 1997, UnitedGlobalCom acquired the 50% of
UPC that it did not already own from Philips. As a result of this acquisition
and the associated push-down of UnitedGlobalCom's basis on December 11, 1997,
the financial information for the years ended December 31, 1999 and 1998 is
presented on a "post-acquisition" basis. UPC adopted the euro as its reporting
currency effective December 31, 1999 and has retroactively restated financial
information for all periods presented using the exchange rate fixed on January
1, 1999 of Euro 1.0 to 2.20371 Dutch Guilders. For information about U.S.
dollar/euro exchange rates, please see the section captioned "Exchange Rate
Data."
<TABLE>
<CAPTION>
PREDECESSOR
INTEREST
-----------
UPC SIX MONTHS SIX MONTHS
----------------------------------------------------- ENDED ENDED
YEAR ENDED DECEMBER 31, DEC. 31, JUNE 30,
1999 1998 1997 1996 1995 1995
---- ---- ---- ---- ---------- ----------
(EURO, IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Service and other revenue.... 447,501 185,582 153,040 111,257 45,459 41,339
Operating expense............ (293,778) (62,830) (53,777) (37,409) (14,887) (10,437)
Selling, general &
administrative expense..... (466,260) (218,587) (54,030) (36,836) (15,255) (10,709)
Depreciation and
amortization............... (266,070) (85,150) (60,302) (36,226) (15,417) (9,575)
----------- ----------- ----------- ----------- ----------- -------
Net operating income
(loss)..................... (578,607) (180,985) (15,069) 786 (100) 10,618
Interest income.............. 28,064 3,357 2,955 1,251 2,906 --
Interest expense............. (186,408) (47,355) (32,100) (17,459) (9,018) --
Gain on sale of assets....... 1,501 -- -- -- -- --
Provision for loss on
investment related costs... -- (2,827) (8,571) -- -- --
Foreign exchange gain (loss)
and other expense.......... (22,561) 1,221 (18,634) (9,620) (1,532) --
----------- ----------- ----------- ----------- ----------- -------
</TABLE>
16
<PAGE> 22
<TABLE>
<CAPTION>
PREDECESSOR
INTEREST
-----------
UPC SIX MONTHS SIX MONTHS
----------------------------------------------------- ENDED ENDED
YEAR ENDED DECEMBER 31, DEC. 31, JUNE 30,
1999 1998 1997 1996 1995 1995
---- ---- ---- ---- ---------- ----------
(EURO, IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
Net income (loss) before
income taxes and other
items...................... (758,011) (226,589) (71,419) (25,042) (7,744) 10,618
Shares in results of
affiliated companies,
net........................ (29,760) (28,962) (11,552) (13,936) (14,410) (1,044)
Minority interests in
subsidiaries............... 1,651 523 69 (1,002) (87) --
Income tax benefit
(expense).................. 1,822 (551) 748 (231) 70 --
----------- ----------- ----------- ----------- ----------- -------
Net income (loss)............ (784,298) (255,579) (82,154) (40,211) (22,171) 9,574
=========== =========== =========== =========== =========== =======
Basic and diluted loss per
ordinary share............. (2.08) (1.03) (0.30) (0.15) (0.08) n/a
=========== =========== =========== =========== =========== =======
Weighted-average number of
ordinary shares
outstanding................ 377,969,829 247,915,834 275,421,933 261,187,767 261,187,767 n/a
</TABLE>
<TABLE>
<CAPTION>
PREDECESSOR
UPC INTEREST
------------------------------------------------- -----------
DECEMBER 31, JUNE 30,
1999 1998 1997 1996 1995 1995
---- ---- ---- ---- ---- --------
(EURO, IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
SELECTED BALANCE SHEET DATA:
Non-restricted cash and cash
equivalents....................... 1,025,460 13,419 45,443 19,807 56,221 182
Other current assets................ 311,202 61,735 38,762 37,784 78,362 4,538
Investments in affiliated
companies......................... 242,847 223,737 187,706 118,195 122,822 2,360
Property, plant and equipment....... 1,908,414 273,628 220,075 188,768 126,053 87,126
Intangible assets................... 2,611,413 308,585 313,129 122,705 94,964 998
Total assets............... 6,802,272 938,317 869,309 488,518 478,781 100,013
Short-term debt..................... 213,532 159,664 116,855 204,152 201,207 --
Other current liabilities........... 565,207 110,956 84,150 54,748 42,008 60,035
Long-term debt...................... 3,903,410 533,078 438,397 125,153 107,156 --
Total liabilities.......... 4,770,177 960,208 665,779 389,370 352,817 60,035
Total shareholders' equity
(deficit)................ 2,020,200 (33,659) 199,575 97,081 125,329 39,343
</TABLE>
17
<PAGE> 23
SELECTED UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL DATA
The following unaudited pro forma condensed consolidated financial data of
UPC are presented to reflect the pro forma effect of:
- our acquisition of an initial approximately 23.5% interest in SBS and
successful completion of our offer to acquire the remaining 76.5% of SBS;
- our acquisition in March 2000 of 100% of the K&T Group, a Dutch cable
television company; and
- our offering of senior notes and discount notes in January 2000.
The unaudited pro forma condensed consolidated statement of operations for
the year ended December 31, 1999 also reflects our acquisition of Stjarn
TVnatet, a Swedish cable television company, in July 1999 and our acquisition of
@Entertainment, a Polish cable television and satellite-delivered programming
company, in August 1999, which were are largest acquisitions in 1999.
The unaudited pro forma condensed consolidated data do not include the
realization of any potential cost savings from operating efficiencies, synergies
or other restructuring that may result from the acquisition and combination of
these businesses. The selected unaudited pro forma condensed consolidated
balance sheet and statement of operations and the notes thereto do not purport
to represent what our results of operations would actually have been if such
transactions had in fact occurred on such dates or what such results will be in
the future. See "Unaudited Pro Forma Condensed Consolidated Financial
Information." For information about U.S. dollar/euro exchange rates, please see
the section captioned "Exchange Rate Data."
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
PRO FORMA ADJUSTMENT
---------------------------------
JANUARY NOTE
OFFERING AND
UPC K&T GROUP SBS UPC
HISTORICAL ACQUISITION(1) TRANSACTIONS(2) PRO FORMA
---------- -------------- --------------- ---------
(IN THOUSANDS OF EURO)
<S> <C> <C> <C> <C>
ASSETS:
Current assets
Cash and cash equivalents........ 1,025,460 520,103 (1,023,207)(3) 522,356
Other current assets............. 311,202 15,052 216,218 542,472
--------- --------- ---------- ----------
Total current assets.......... 1,336,662 535,155 (806,989) 1,064,828
Goodwill and other intangible
assets, net...................... 2,611,413 862,103 2,071,432(4) 5,544,948
Other assets....................... 2,854,197 239,841 58,299 3,152,337
--------- --------- ---------- ----------
Total assets.................. 6,802,272 1,637,099 1,322,742 9,762,113
========= ========= ========== ==========
LIABILITIES AND SHAREHOLDERS
EQUITY:
Long-term debt..................... 3,903,410 1,618,110 33,444 5,554,964
Other liabilities.................. 866,767 18,842 216,745 1,102,354
--------- --------- ---------- ----------
Total liabilities............. 4,770,177 1,636,952 250,189 6,657,318
--------- --------- ---------- ----------
Minority interest in
subsidiaries..................... 11,395 147 7,184 19,226
--------- --------- ---------- ----------
Total shareholders' equity.... 2,020,200 -- 1,065,369(5) 3,085,569
--------- --------- ---------- ----------
Total liabilities and
shareholders' equity........ 6,802,272 1,637,099 1,322,742 9,762,113
========= ========= ========== ==========
</TABLE>
18
<PAGE> 24
- ---------------
(1) Gives effect to (a) the offering of E1.6 billion of our notes and discount
notes, and related swaps, in January 2000, and (b) our acquisition of K&T
Group in March 2000, as if each had occurred on December 31, 1999.
(2) This gives effect to the SBS Transactions as if each had occurred on
December 31, 1999, in July 1999, we closed the purchase of approximately
4.8% of SBS for E22.7 million. In August we acquired an additional 8.5% of
SBS for E70.2 million. In February 2000, we further increased our investment
in SBS for E70.2 million. In February 2000, we further increased our
investment in SBS by acquiring an additional 10.2% for E163.5 million. In
March 2000, we announced an offer to acquire the remaining approximately
76.5% of SBS which we do not currently own. For purposes of these pro forma
statements, we have used our closing share price of U.S.$73.34 (Euro 73.85)
on March 9, 2000, the date we announced our offer. On [DATE], 2000, our
closing share price was U.S.$ (Euro ). We have also assumed for
purposes of the pro formas, that all holders of SBS's stock options tender
their options, for a net payment to be made by us, 60% in cash and the
remaining 40% value in our shares. Under the terms of the share exchange
agreement, the option holders have the right to choose up to 60% cash, our
shares or a combination, in exchange for their options. The following
represents the historical amounts included in the SBS balance sheet as of
December 31, 1999, except as indicated in (3), (4) and (5), converted from
US dollars to euro at the spot exchange rate as of December 31, 1999.
(3) Represents the pro forma decreases in cash equivalents as a result of the
SBS transactions:
<TABLE>
<S> <C>
Historical SBS cash and cash equivalents.................... 68,245
Net cash received by SBS related to UPC's purchase of
3,000,000 newly issued SBS shares in February 2000........ 161,624
Cash paid by UPC related to UPC's purchase of 3,000,000
newly issued SBS shares in February 2000.................. (163,512)
Net cash paid by UPC related to tender offer for remaining
shares of SBS............................................. (1,089,564)
----------
(1,023,207)
==========
</TABLE>
(4) Represents the pro forma increase in goodwill and other intangibles as a
result of the SBS transactions:
<TABLE>
<S> <C> <C>
Historical SBS goodwill and other intangibles............... 54,374
Additional pro forma goodwill and other intangibles due to
the SBS Transactions:
Historical SBS shareholders' equity..................... (162,101)
Increase in SBS shareholders' equity related to shares
issued to UPC in February 2000........................ (161,624)
Conversion of SBS warrants and convertible debt to
equity................................................ (74,115)
Purchase price page by UPC.............................. 2,414,898
---------
2,017,058
---------
2,071,432
=========
</TABLE>
<TABLE>
<S> <C> <C>
(5) Represents the increase in shareholder's equity as a
result of the issuance of 14,425,457 UPC ordinary shares
A, assuming a price of U.S.$73.34 (Euro 73.85) per
share, to the holders of SBS's outstanding shares and
option holders in UPC's tender offer.................... 1,065,369
=========
</TABLE>
19
<PAGE> 25
UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
PRO FORMA ADJUSTMENTS
------------------------------------------------------------------
@ENTERTAINMENT,
STJARN AND
K&T GROUP SBS
UPC HISTORICAL ACQUISITION(2) TRANSACTIONS(5) UPC PRO FORMA
-------------- --------------- --------------- -------------
(IN THOUSANDS OF EURO, EXCEPT SHARE AND PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Service and other revenue........ 447,501 135,936 440,075 1,023,512
Operating expense.............. (293,778) (101,497) (326,958) (722,233)
Selling, general and
administrative expense......... (466,260) (71,285) (100,480) (638,025)
Depreciation and amortization.... (266,070) (147,801)(3) (155,733)(6) (569,604)
----------- -------- -------- -----------
Net operating loss........... (578,607) (184,647) (143,096) (906,350)
Interest expense, net............ (158,344) (188,471)(4) (128,647)(7) (475,462)
Foreign exchange (loss) and other
income (expense), net.......... (21,060) (13,374) (15,812) (50,246)
----------- -------- -------- -----------
Net loss before income taxes
and other items........... (758,011) (386,492) (287,555) (1,432,058)
Net loss..................... (784,298) (451,932) (294,267) (1,467,297)
=========== ======== ======== ===========
Basic and diluted net loss
per ordinary share(1)..... (2.08) (3.54)
=========== ===========
Weighted-average number of
ordinary shares
outstanding(1)............ 377,969,829 414,832,880
</TABLE>
- ---------------
(1) As adjusted for our 3-for-1 stock split in March 2000.
(2) Gives effect to (1) our acquisition of @Entertainment in August 1999, (2)
our acquisition of Stjarn in July 1999, and (3) our acquisitions of the K&T
Group in March 2000, as if each had occurred on January 1, 1999.
(3) Represents the increase in depreciation and amortization expense as a result
of the acquisitions described in (2) above as if each had occurred on
January 1, 1999.
(4) Represents the increase in interest expense, net, as a result of the
acquisitions described in (2) above as if each had occurred on January 1,
1999.
(5) This gives effect to the SBS Transactions as if each had occurred on January
1, 1999. Represents the historical results of operations of SBS for the year
ended December 31, 1999, except as indicated in (6) and (7) converted for US
dollar to euro using the average exchange rate for the year ended December
31, 1999.
(6) Represents the increase in depreciation and amortization expense as a result
of the SBS transactions:
<TABLE>
<CAPTION>
<S> <C>
Historical amortization and depreciation expense of SBS..... (21,658)
Elimination of historical amortization related to SBS
warrants.................................................. 395
Amortization of the goodwill purchase price allocation for
the SBS transactions under purchase accounting, based on a
l5 year life.............................................. (134,470)
--------
(155,733)
========
</TABLE>
20
<PAGE> 26
(7) Represents the net increase in interest expense, net, as a result of the SBS
transactions:
<TABLE>
<CAPTION>
<S> <C>
Historical interest expense, net, of SBS.................... (15,443)
Elimination of historical interest expense due to conversion
of SBS convertible debt to equity......................... 5,600
Interest expense as a result of UPC's October 1999 and
January 2000 senior notes incurred for UPC's offer to
acquire the remaining shares of SBS, at blended weighted
average interest rate of 11.4%............................ (118,804)
--------
(128,647)
========
</TABLE>
(8) For pro forma purposes, the purchase price for UPC's acquisition in
July/August 1999 of 13.3% of SBS for approximately Euro 95.0 million and
UPC's acquisition in January 2000 of an additional 10.2% interest in SBS for
approximately Euro 163.5 million, are assumed to have been funded from the
proceeds of UPC's initial public offering and secondary offering,
respectively. Consequently, the pro forma weighted shares outstanding for
the year ended December 31, 1999 assumes the issuance of 10,339,211 ordinary
shares A at the initial offering price and 8,507,369 ordinary shares A at
the secondary offering price of Euro 9.18 and Euro 19.22, respectively, net
of underwriters commissions.
Additionally, for pro forma purposes, 14,425,457 ordinary shares A are
assumed to be outstanding for the year ended December 31, 1999, related to
UPC's ordinary shares A to be issued for the SBS tender offer.
21
<PAGE> 27
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF SBS
The selected consolidated historical financial data set forth below for
each of the five years in the period ended December 31, 1999 were derived from
the audited Consolidated Financial Statements of SBS. The data should be read in
conjunction with the audited Consolidated Financial Statements and notes thereto
included in SBS's annual report on Form 20-F for the fiscal year ended December
31, 1999, which is incorporated by reference in this prospectus and is qualified
in its entirety by that document. Please read "Where You Can Find More
Information." You should read this summary together with these financial
statements and their accompanying notes and in conjunction with management's
discussion and analysis of operations and financial conditions of SBS contained
in such report. The comparability of the operating data in different periods is
affected by the dates of acquisitions of ownership interests in television and
radio stations by SBS.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
1999 1998(1) 1997 1996 1995
---- ------- ---- ---- ----
(IN THOUSANDS OF U.S. DOLLARS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenue.............................. $412,557 $350,535 $242,838 $182,434 $108,788
Station operating expenses............... 296,689 262,665 204,316 179,563 109,762
Selling, general and administrative
expenses............................... 81,205 68,779 55,190 50,266 41,631
Corporate expenses....................... 10,930 9,576 9,177 7,822 6,404
Non-cash compensation.................... 2,062 1,142 2,676 -- --
Depreciation and amortization expenses... 20,303 20,093 14,899 11,697 8,857
Termination of CME Reorganization
Agreement.............................. 9,825 -- -- -- --
-------- -------- -------- -------- --------
Operating loss........................... (8,457) (11,720) (43,420) (66,914) (57,866)
Equity in income (loss) of unconsolidated
subsidiaries........................... (14,078) (3,536) (3,150) (1,301) 553
Interest income (expense), net........... (14,477) (18,390) (10,864) (5,853) 487
Foreign exchange gains (losses), net..... (9,083) (3,202) (4,665) (193) 926
Investment gains (losses), net........... 423 376 (801) -- (1,442)
Other income (expense), net.............. (89) (2,638) 7,213 (587) --
Income taxes and income tax benefit,
net.................................... 537 (636) (29) (250) (289)
Minority interest in losses, net......... 3,464 6,027 11,866 7,559 282
-------- -------- -------- -------- --------
Net loss................................. $(42,834) $(33,719) $(43,850) $(67,539) $(57,349)
======== ======== ======== ======== ========
Net loss per common share, basic and
diluted(2)............................. $ (2.38) $ (2.30) $ (3.18) $ (4.96) $ (4.23)
======== ======== ======== ======== ========
Average common shares outstanding (in
thousands)............................. 18,027 14,677 13,780 13,605 13,551
SUPPLEMENTAL INFORMATION:
Station operating cash flow(3)........... $ 34,663 $ 19,091 $(16,668) $(47,395) $(42,605)
Cash flow from operations................ $(49,854) $(30,533) $(62,130) $(67,595) $(67,992)
</TABLE>
22
<PAGE> 28
<TABLE>
<CAPTION>
DECEMBER 31,
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
(IN THOUSANDS OF U.S. DOLLARS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Current assets........................... $282,485 $253,981 $270,908 $214,360 $209,397
Total assets............................. 491,558 427,821 427,560 339,755 316,701
Current liabilities...................... 171,600 117,870 124,248 102,854 68,480
Long-term debt, less current
portion(4)............................. 108,212 281,264 283,366 168,542 155,486
Shareholders' equity (deficit)........... 160,974 (17,975) (12,863) 35,125 82,516
</TABLE>
- ---------------
(1) An amount of U.S.$819,000 has been reclassified from station operating
expenses to depreciation and amortization expenses, affecting station
operating cash flow, as compared to previous years' presentation, in order
to make 1998 comparable to 1999.
(2) SBS has not paid any dividends for any of the periods presented.
(3) Station operating cash flow is equal to operating loss plus corporate
expenses, non-cash compensation, depreciation and amortization expenses and,
for 1999 only, a $8.25 million "break-up" fee paid by SBS to CME Media
Enterprises Ltd. (CME) under the March 29, 1999 reorganization agreement
between CME and SBS. SBS believes that station operating cash flow is
accepted by the broadcasting industry as a generally recognized measure of
performance and is used by analysts who report publicly on the performance
of broadcasting companies. Station operating cash flow is not meant to
represent funds available for debt service, dividends, reinvestment or other
discretionary uses. Station operating cash flow is not, and should not be
used as, an indicator or alternative to operating income, net income, or
cash flow from operations as reflected in the consolidated financial
statements and is not a measure of financial performance under generally
accepted accounting principles.
(4) Includes capitalized lease obligations.
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<PAGE> 29
COMPARATIVE PER SHARE INFORMATION
The following table summarizes unaudited per share information for UPC and
SBS on a historical, pro forma combined and equivalent pro forma combined basis.
The following information should be read in conjunction with the audited
consolidated financial statements of UPC and SBS and the selected historical
condensed consolidated financial data and the unaudited pro forma condensed
combined financial information included elsewhere or incorporated by reference
in this prospectus. The pro forma information is presented for illustrative
purposes only and is not necessarily indicative of the operating results or
financial position that would have occurred if the exchange offer (assuming all
SBS shares are tendered in the exchange offer) had been completed as of the
beginning of the respective periods presented, nor is it necessarily indicative
of the future operating results or financial position of the combined companies.
The historical book value per share is computed by dividing total shareholders'
equity by the number of shares outstanding at the end of the period. The pro
forma per share loss from continuing operations is computed by dividing the pro
forma loss from continuing operations by the pro forma weighted average number
of shares outstanding. The pro forma combined book value per share is computed
by dividing total pro forma shareholders' equity by the pro forma number of
common shares outstanding at the end of the period. The SBS equivalent pro forma
combined per share amounts are calculated by multiplying the UPC pro forma
combined per share amounts by the exchange ratio of [ ]. For
information about U.S. dollar/euro exchange rates, please see the section
captioned "Exchange Rate Data."
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1999
-----------------
<S> <C>
UPC
Historical Per Ordinary Share Data:
Basic and diluted loss per share........................... Euro(2.08)
Book value................................................. 4.64
Dividends declared......................................... --
Equivalent Pro Forma Combined Per Ordinary Share Data:
Basic and diluted loss per share........................... Euro(3.54)
Book value (at year end)................................... 6.86
Dividends declared......................................... --
SBS
Historical Per Common Share Data:
Basic and diluted loss per share........................... U.S.$(2.38)
Book value................................................. 7.14
Dividends declared......................................... --
Equivalent Pro Forma Combined Per Common Share Data:
Basic and diluted loss per share........................... U.S.$
Book value (at year end)...................................
Dividends declared......................................... --
</TABLE>
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<PAGE> 30
RISK FACTORS
In deciding whether to tender your shares pursuant to the exchange offer,
you should read carefully this prospectus, the accompanying Schedule 14D-9 of
SBS and the documents to which we refer you. You also should consider carefully
the following factors:
RISKS RELATED TO THE EXCHANGE OFFER
THE TRADING PRICE OF UPC ADSS MAY BE AFFECTED BY FACTORS DIFFERENT FROM THOSE
AFFECTING THE PRICE OF SBS SHARES.
After you tender your SBS shares and receive the exchange offer
consideration, you will no longer be a shareholder of SBS and will instead be a
shareholder of UPC. UPC's business differs from that of SBS, and UPC's business,
results of operations, as well as the trading price of UPC ADSs may be affected
by factors different from those affecting SBS's business, results of operations
and the trading prices of SBS shares.
For information on UPC's and SBS's respective businesses, refer to UPC's
Annual Report on Form 10-K for the fiscal year ended December 31, 1999, SBS's
Annual Report on Form 20-F for the fiscal year ended December 31, 1999, and the
other documents filed with or furnished to the SEC by UPC and SBS and
incorporated by reference in this prospectus described under "Where You Can Find
More Information."
THE FIXED EXCHANGE RATIO COULD WORK TO YOUR DISADVANTAGE.
Because the exchange ratio, or the number of UPC ADSs that you will receive
in respect of each SBS share that is validly tendered and not properly
withdrawn, is fixed and will not be adjusted in the event of any increase or
decrease in the price of UPC ADSs or SBS shares, the market value of the UPC
ADSs that you will receive in the exchange offer will fluctuate with the trading
price of a UPC ADS on Nasdaq. The trading price will fluctuate for any number of
reasons, including those specific to UPC and those that influence the trading
prices of equity securities generally. Because the exchange ratio was based on
the average of the closing sales prices of the UPC ADSs on Nasdaq over a ten day
trading period that ended on [DATE], 2000, the market value of the UPC ADSs that
you are entitled to receive in the exchange offer is likely to be different from
the market value on the date on which the exchange offer is completed. Of
course, the fixed exchange ratio would only be disadvantageous if the market
value of the UPC ADSs declines. You should read the section in this prospectus
captioned "Market Prices and Dividends" for information on the range of trading
prices of UPC ADSs on Nasdaq and you are urged to obtain current market
quotations.
THE FAIRNESS OPINION DELIVERED BY SBS'S FINANCIAL ADVISER DOES NOT ADDRESS
CHANGES IN THE RELATIVE VALUE OF UPC AND SBS SINCE MARCH 9, 2000, THE DATE OF
THE OPINION.
The fairness opinion prepared by Donaldson, Lufkin & Jenrette International
at the request of the SBS board of directors, as described in "Opinion of
Donaldson, Lufkin & Jenrette International, SBS's Financial Adviser," was
delivered on March 9, 2000 and speaks only as of that date. It does not address
any changes in relative value or prospects of UPC and SBS since that date, and
will not be updated or amended. Accordingly, the opinion of SBS's financial
adviser may not accurately address the fairness of the exchange offer
consideration to be received by SBS shareholders other than UPC at the time the
exchange offer is completed.
THE DIRECTORS AND EXECUTIVE OFFICERS OF SBS HAVE INTERESTS IN CONNECTION WITH
THE EXCHANGE OFFER THAT MAY BE DIFFERENT FROM THOSE OF OTHER SBS SHAREHOLDERS.
In considering the position of the SBS board with respect to the exchange
offer, you should be aware that the directors and executive officers of SBS have
interests in connection with the exchange offer that may be different from those
of other SBS shareholders.
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<PAGE> 31
Certain directors and executive officers of SBS have substantial holdings
of SBS shares and are in a position to realize substantial economic benefits if
the exchange offer is completed. As of [DATE], the SBS directors and executive
officers owned in the aggregate [ ] SBS shares. In addition, as of
[DATE], these directors and executive officers held options to acquire an
aggregate of [ ] SBS shares, and the exchange offer would automatically
accelerate those options at the time of the exchange offer. The persons
described above would receive payment for their shares in the aggregate amount
of [$ ] if they were to exercise all of their options and tender all of
their SBS shares in the exchange offer. Any amounts received by these directors
and executive officers of SBS pursuant to the Exchange Offer Agreement will be
the same on a per share basis as other SBS shareholders.
In addition, we anticipate that after the completion of the exchange offer
Mr. Harry Evans Sloan, the present chief executive officer of SBS, will be
nominated to our supervisory board.
ANY SBS SHAREHOLDERS WHO REMAIN AS MINORITY SHAREHOLDERS AFTER THE EXCHANGE
OFFER MAY BE ADVERSELY AFFECTED.
If we do not acquire all of the outstanding SBS shares not already owned by
us, either through the exchange offer or through a subsequent minority buy-out,
any remaining shareholder of SBS other than us or our affiliates will be
adversely affected in the following ways:
- controlling stockholder -- If the minimum tender condition is satisfied
and not waived, we will have the ability to elect all of the directors of
SBS. Under the Exchange Offer Agreement, we are entitled to designate a
majority of the board promptly upon our purchase of SBS shares in the
exchange offer if the minimum tender condition is satisfied. We also will
be able to control substantially all action to be taken by the
shareholders of SBS and effectively will have control of the policies and
affairs of SBS.
- reduced liquidity -- The resulting reduction in the number of SBS shares
that would trade publicly could adversely affect the liquidity and market
value of the remaining SBS shares.
- possible delisting -- Following completion of the exchange offer, SBS
shares may no longer be eligible for continued listing on Nasdaq and also
may be withdrawn from listing on the Amsterdam Stock Exchange. If the SBS
shares are delisted, the market for the shares could be adversely
affected and share price quotations might or might not still be available
from other sources.
- availability of public information -- After we purchase SBS shares
through the exchange offer, the SBS shares no longer may be eligible for
inclusion on Nasdaq, and we may be able to terminate the registration of
the shares under the Exchange Act. If that is the case, we intend to seek
to cause SBS to terminate the registration of its shares under the
Exchange Act as soon as practicable after they are no longer quoted on
Nasdaq. This means that requirements under the Exchange Act to file an
annual report to shareholders no longer would apply with respect to SBS
shares.
For more information on how the exchange offer may affect any remaining SBS
shareholders, you should read the section "Special Factors -- Certain Effects of
the Exchange Offer."
WE MAY NOT SUCCESSFULLY COMPLETE A MINORITY BUY-OUT.
For a period of six months following completion of the exchange offer, we
will use our reasonable best efforts, subject to applicable law, to acquire any
remaining shares of SBS held by minority shareholders that are not tendered in
the exchange offer. How we will conduct this buy-out of minority shareholders
will be at our discretion and may include redemption, merger or other corporate
actions, as permitted under Luxembourg or other applicable law. If we waive the
minimum tender condition, and after the exchange offer own less than two-thirds
of the outstanding SBS shares, we may have difficulty in obtaining any
shareholder approvals that may be necessary to
26
<PAGE> 32
effect the minority buy-out. If we are not successful in carrying out a minority
buy-out during such six-month period, we are not obligated to effect any
purchases of SBS shares not tendered in the exchange offer. We cannot assure you
that there will be a minority buy-out of any remaining shares after the
completion of the exchange offer or that it will be successful. Therefore, after
the completion of the exchange offer, the SBS shares not acquired by UPC may
remain outstanding indefinitely and any SBS shareholders who remain as minority
shareholders may be adversely affected as described above.
YOU MAY NOT RECEIVE THE PROPORTIONS OF UPC ADSS AND CASH THAT YOU ELECT.
The exchange agent will allocate the exchange offer consideration among SBS
shareholders based on the number of tendered SBS shares for which holders elect
to receive a higher proportion of cash and the number of tendered SBS shares for
which holders elect to receive a higher proportion of UPC ADSs. The exchange
agent's ability to satisfy an SBS shareholder's election will depend on other
shareholders making offsetting elections. In other words, in order for
shareholders who request a higher proportion of cash to receive a higher
proportion of cash, other shareholders will have to request a higher proportion
of UPC ADSs. As a result, you may not receive the mix of UPC ADSs and cash that
you request.
As explained above under "Fixed Exchange Ratio Could Work To Your
Disadvantage," the market value of the UPC ADSs that you actually receive will
fluctuate with the trading price of a UPC ADS. Therefore, the total value of the
consideration you actually receive in the exchange offer will also fluctuate and
will depend upon the proportion of the UPC ADSs relative to the amount of cash
you elect to receive. For example, your choice of a higher proportion of UPC
ADSs than cash would result in a lower total value if the trading price of UPC
ADS declines. None of UPC, SBS or their respective boards of directors or
financial advisers make any recommendation as to whether you should make a
shareholder election, or what mix of the UPC ADSs and cash you should elect to
receive if you make a shareholder election.
IF YOU TENDER YOUR SBS SHARES, YOU WILL BECOME A SHAREHOLDER OF A NETHERLANDS
COMPANY INSTEAD OF A LUXEMBOURG COMPANY.
SBS is a company organized under the laws of Luxembourg, and UPC is a
company organized under the laws of The Netherlands. If you tender your SBS
shares in exchange for UPC ADSs, your rights as a holder of ADSs of a
Netherlands company will be governed by Netherlands law and UPC's articles of
association and other governing documents. Therefore, your rights as a holder of
UPC ADSs will be different from your rights as a holder of SBS shares. You
should carefully read the section "Description of UPC's Share Capital," "Summary
of Additional Material Provisions of the Articles of Associations and Other
Matters" and "Description of American Depositary Shares." You should also
carefully read "Comparison of Rights of Holders of UPC ADSs and Holders of SBS
Shares."
UNDER SOME CIRCUMSTANCES, YOU MAY NOT BE ABLE TO VOTE YOUR UPC ADSS.
As a holder of UPC ADSs, you would generally have the right to vote the UPC
ordinary shares A represented by your UPC ADSs. At our request, the depositary
bank would mail you notices explaining how to vote. The ability of the
depositary bank to carry out your voting instructions may be limited by
practical and legal limitations, as well as by the terms of the UPC ordinary
shares A. We cannot assure you that you would receive voting materials in time
to enable you to return voting instructions to the depositary bank in order to
vote your UPC ADSs. Please read the section captioned "Description of American
Depositary Shares -- Voting Rights" for more information about voting the UPC
ADSs.
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<PAGE> 33
PREEMPTIVE RIGHTS MAY NOT BE AVAILABLE TO HOLDERS OF UPC ADSS.
Holders of UPC ADSs may be unable to exercise preemptive rights granted to
holders of UPC ordinary shares A, in which case holders of UPC ADSs could be
substantially diluted. If we grant preemptive rights to holders of UPC ordinary
shares A, as a holder of UPC ADSs, you may not be able to exercise these
preemptive rights to acquire new shares unless both the rights and the new
shares were registered in the United States under the Securities Act or an
exemption from registration were available. We cannot assure you that any
exemption will be available or that we would file a registration statement at
the time any preemptive rights were granted, and we are not obligated to do so.
NEED FOR GOVERNMENTAL APPROVALS MAY DELAY COMPLETION OF THE EXCHANGE OFFER.
The exchange offer is conditioned upon the receipt prior to the completion
of the exchange offer of consents and approvals, including under appropriate
competition, antitrust, media or broadcast laws, from various governmental
agencies with respect to the Exchange Offer Agreement, the exchange offer and
the other transactions contemplated by the Exchange Offer Agreement. You should
be aware that all required regulatory approvals may not be obtained in time and
could result in a significant delay in the completion of the exchange offer and
the purchase of your shares. Also, governmental agencies may seek restrictions
on the combined operations of UPC and SBS as a condition to obtaining such
approvals which could adversely affect the value of the combined companies.
WE MAY NOT BE ABLE TO COMPLY WITH MEDIA REGULATIONS IN HUNGARY, BELGIUM AND
FINLAND.
Although we and SBS do not believe that media regulations in the various
countries in which we and SBS operate would have a material adverse effect on
the combined businesses and operations of UPC and SBS after the completion of
the exchange offer, you should be aware of the following:
Hungary. Upon the completion of the exchange offer, we will be in
violation of a cross-media ownership provision of the Hungarian media law
because we already control Hungarian cable operators and we will indirectly own
over 25% of the national broadcaster, TV2. We cannot assure you that the
ownership interests of the subsidiaries of UPC and SBS can be restructured to
comply with Hungarian law, and this is not a condition of the exchange offer.
Belgium. Under Belgian law, cable television operators such as UPC are not
permitted to take part in the management or to hold more than 24% of the share
capital or voting rights in cable TV channels in the Brussels region. We cannot
assure you that the relevant law would not be construed against us. If it was,
we currently believe that our interest in VT4 Limited can be restructured in
order to comply with Belgian law. We cannot assure you, however, that a
restructuring of this kind will be successful.
Finland. The radio licenses held by certain Finnish subsidiaries of SBS
may technically terminate under Finnish law on a change of control of SBS. SBS
has informed us that it has begun discussions with the Finnish Ministry of
Communication about the relevant legislation. Although we believe that these
radio licenses can be continued under the terms that are now in effect, we
cannot assure you that these licenses will remain in place. Please read "The
Exchange Offer -- Conditions of the Exchange Offer" and "-- Regulatory Consents
and Approvals" for more information.
OUR PLANS FOR SBS MAY NOT BE SUCCESSFUL.
We are seeking to acquire the SBS shares that we do not already own in
order to facilitate our strategy to become one of Europe's leading providers of
multimedia content. As part of this strategy, we currently plan to combine SBS
with UPCtv, our programming subsidiary, into UPC Media, a subsidiary we intend
to form. We also anticipate that the acquisition of SBS will produce benefits
like the ones described in this prospectus under the caption "Special
Factors -- Reasons
28
<PAGE> 34
for the Exchange Offer." We may not be successful in implementing our strategy
or in combining our two businesses, and the acquisition of SBS may not result in
the benefits that we anticipate or in any benefits at all. Plans that we may
have for SBS after the completion of the exchange offer are described more fully
under "Special Factors -- Plans for SBS after the Exchange Offer." Our plans for
our combined businesses may not succeed and our plans may change.
RISKS RELATED TO UPC
WE EXPECT TO CONTINUE TO MAKE NET LOSSES FOR THE NEXT FIVE TO TEN YEARS.
We have experienced net losses every year since we started business in July
1995. Through December 31, 1999, we had recognized cumulative losses of
approximately Euro 1,114.2 (U.S.$1,125.3 million) million, excluding
approximately Euro 70.2 million (U.S.$70.9 million) in losses allocated to a
former shareholder, Philips, through December 11, 1997. New lines of business,
in particular, generally have negative cash flow. We expect negative cash flow
from the new business ventures to increase as these operations expand. We expect
to incur net losses for at least the next five to ten years. Continuing net
losses will increase our capital needs.
OUR HIGH LEVEL OF DEBT AND LIMITATIONS ON OUR CAPACITY TO BORROW AND INVEST
COULD SLOW DOWN GROWTH IN SUBSCRIBERS AND REVENUE.
We are highly leveraged. Our high level of debt and limitations on our
capacity to borrow and invest reduce our financial flexibility. This could
reduce the amount of money available to develop our businesses and result in
slower growth in subscribers and revenues than we plan. On a pro forma basis,
including our January 2000 offering of senior notes and the completion of our
acquisition of the K&T Network Diensten B.V. and Kabel TV & Telecom B.V. and
SBS, as of December 31, 1999, we would have owed Euro 5.6 billion (U.S.$5.7
billion) in consolidated debt. Although there can be no assurance that we will
be successful in doing so, we may need to seek significant additional financing
in the future which could result in our incurring significant additional
indebtedness. Please read "-- Failure to raise necessary capital could hinder
our acquisitions strategy and restrict the development of our network and the
introduction of new services," below. Many of our unconsolidated subsidiaries
and affiliates also have long- and short-term debt.
As a subsidiary of UnitedGlobalCom, we are restricted by the terms of
UnitedGlobalCom's debt instruments in addition to our own debt instruments. We
have agreed with UnitedGlobalCom not to take any action that would result in a
breach of these terms. This limits our ability to incur more debt and issue
certain preferred stock. Our freedom to invest in entities that we do not
control is also limited. Even if we do not cause a breach of the terms of
UnitedGlobalCom's debt securities, a breach that is caused by UnitedGlobalCom or
one of its other subsidiaries could still restrict us from incurring more debt
or taking other actions.
FAILURE TO RAISE NECESSARY CAPITAL COULD HINDER OUR ACQUISITIONS STRATEGY AND
RESTRICT THE DEVELOPMENT OF OUR NETWORK AND THE INTRODUCTION OF NEW SERVICES.
We will need to raise more capital in the future to fund our acquisitions
strategy, continue to develop our network and introduce new services. We may
raise further capital by selling assets, issuing debt or equity or borrowing
funds. We are not sure whether we will be successful in raising capital through
any of these or other methods. If we cannot raise capital, we may not be able to
grow by acquiring systems as we intend. Further, we may not be able to develop
our network, including building a digital distribution platform, and introduce
new services as planned.
Technological change may make further upgrades necessary if our operating
companies are to compete effectively in their markets and continue introducing
new and enhanced services. Failure to upgrade our operating systems or make
other planned capital expenditures could harm our operations and competitive
position.
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<PAGE> 35
OUR ACQUISITIONS STRATEGY INVOLVES SIGNIFICANT RISKS.
A key element of our growth strategy is to continue to acquire systems, and
to increase the percentage we own in some systems, in order to expand our
coverage and implement our branded package of video, voice and Internet/data
offerings. We are often, and currently are, engaged in discussions or
negotiations regarding the acquisition of businesses and systems, some
potentially significant in relation to our size. Our acquisitions strategy is
accompanied by challenges such as the following:
- Identifying appropriate acquisitions. Our growth may suffer if we are
not able to identify and acquire cable/telephone systems that are either
near our existing networks or are large enough to serve as the basis for
expanded operations.
- Completing acquisitions. We may not be able to satisfy conditions that
sellers of networks may demand in order to close acquisitions. In
addition, there may be significant legal, regulatory and contractual
issues in connection with acquisitions, such as change of control
provisions in licenses and agreements, that could delay or prevent
completion.
- Entering into new markets. If we complete acquisitions in markets in
which we have not previously operated, we will have no prior experience
in dealing with local regulators or with local market conditions.
In addition, our acquisitions strategy may expose us to the risk of
unanticipated expenditures. At the time of closing any new acquisition, we may
waive conditions to closing, either because we believe that the condition will
be satisfied in the future or because we believe an unsatisfactory resolution
would not materially adversely affect us and our subsidiaries as a whole. For
example, although we normally negotiate customary warranty protection when
acquiring new systems, we may be liable for undisclosed liabilities, or we may
have to incur greater capital expenditures than we intended, in relation to a
particular acquisition. There is a risk that our beliefs in some of these
instances will prove to be incorrect.
WE CANNOT BE CERTAIN THAT WE WILL BE SUCCESSFUL IN INTEGRATING ACQUIRED
BUSINESSES WITH OUR EXISTING BUSINESSES.
Our success depends, in part, upon the successful integration of our new
acquisitions and any future acquisitions we make. Although we believe that the
completion of our new acquisitions, including the acquisition of SBS, will
result in significant benefits and synergies, the integration of these
businesses also will present significant challenges, including:
- realizing economies of scale in interconnection, programming and network
operations, and eliminating duplicate overheads; and
- integrating networks, financial systems and operational systems.
We cannot assure you, with respect to the acquisition of SBS, our new
acquisitions or future acquisitions, that we will realize any anticipated
benefits or will successfully integrate any acquired business with our existing
operations.
ADVERSE REGULATION OF OUR VIDEO SERVICES COULD LIMIT OUR REVENUES AND GROWTH
PLANS AND EXPOSE US TO VARIOUS PENALTIES.
In most of our markets, regulation of video services takes the form of
price controls and programming content restrictions.
- In The Netherlands and Austria, local municipalities have contractual
rights that restrict our flexibility to increase prices, change
programming and introduce new services.
- Laws in Belgium may require us to obtain special authorization for
distributing programming from non-European Union sources (which we are
currently distributing without such authori-
30
<PAGE> 36
zation), and to distribute certain digital multiplexed programming (which
we are not distributing).
- In Israel, our subscription fees and program offerings are restricted by
franchise agreements and are subject to review by governmental agencies,
including the Restrictive Trade Practices Tribunal. We are subject to
pending claims in Israel alleging that we have engaged in certain
unlawful acts, including violation of our cable television franchise
agreements.
- @Entertainment, our Polish operating company, is currently operating in
certain areas without the necessary permits. Failure to obtain these
permits could lead to governmental orders requiring @Entertainment to
stop operating in those areas, the imposition of monetary penalties, and
forfeiture of our cable networks. Poland also has restrictions with
respect to rights to install and operate cable television and
direct-to-home broadcasting networks by entities in which foreign
ownership exceeds certain limits and in which the majority of governing
bodies are not Polish citizens residing in Poland. @Entertainment may not
be deemed to be in full compliance with these or other restrictions or
regulations. In addition, @Entertainment's permits could be revoked or
limited in scope upon a direct or indirect change of control of PTK
Operator Sp.z o.o. There is a risk that our acquisition of @Entertainment
constituted an indirect change of control of PTK Operator Sp.z o.o.
REGULATION MAY INCREASE THE COST OF OFFERING INTERNET/DATA SERVICES AND SLOW
DEMAND.
The Internet access business has, to date, not been materially restricted
by regulation in our markets. The legal and regulatory environment of Internet
access and electronic commerce is uncertain, however, and may change. New laws
and regulations may be adopted for Internet service offerings. Existing laws may
be applied to the new forms of electronic commerce. Uncertainty and new
regulation could increase our costs. It could also slow the growth of electronic
commerce on the Internet significantly. This could delay growth in demand for
our Internet/data services and limit the growth of our revenues. New and
existing laws may cover issues such as:
- user privacy
- cross-border commerce
- libel and defamation
- copyright and trademark infringement
- pornography and indecency and
- other claims based on the nature and content of Internet materials
OUR BUSINESS IS ALMOST ENTIRELY DEPENDENT ON VARIOUS TELECOMMUNICATIONS AND
MEDIA LICENSES GRANTED AND RENEWED BY VARIOUS NATIONAL REGULATORY AUTHORITIES IN
THE TERRITORIES IN WHICH WE DO BUSINESS AND WITHOUT THESE LICENSES, A NUMBER OF
OUR BUSINESSES COULD BE SEVERELY CURTAILED OR PREVENTED.
- Licenses are granted for a limited term and they may not be renewed when
they expire.
- Regulatory authorities may have the power, at their discretion, to
terminate a license (or amend any provisions, including those related to
license fees) without cause.
- If we were to breach a license or applicable law, regulatory authorities
could revoke, suspend, cancel or shorten the term of a license or impose
fines.
- Regulatory authorities may grant new licenses to third parties, resulting
in greater competition in territories where we are already licensed.
- New technologies may permit new competitors to compete in areas where we
hold exclusive licenses.
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<PAGE> 37
- National authorities may pass new laws or regulations requiring us to
re-bid or reapply for licenses or interpret present laws against us,
adversely affecting our business.
- Licenses may be granted on a temporary basis, and there is no assurance
that these licenses will be continued on the same terms.
- Licenses may require us to grant access to bandwidth, frequency capacity,
facilities or services to other businesses that compete for our
customers.
Accordingly, a number of our businesses could be severely curtailed if
those licenses were no longer available or were available at unfavorable terms.
LOW DEMAND, COMPETITION, UNPLANNED COSTS, REGULATION AND DIFFICULTIES WITH
INTERCONNECTION COULD HINDER THE PROFITABILITY OF OUR TELEPHONE SERVICES.
Our telephone services may not become profitable for a number of reasons.
Customer demand could be low, or we may encounter competition and pricing
pressure from incumbent and other telecommunications operators. Our network
upgrade may cost more than planned. In addition, our operating companies need to
obtain and retain licenses and other regulatory approvals for our existing and
new services. They may not succeed. Furthermore, our operating systems need to
interconnect their networks with those of the incumbent telecommunications
operators in order to provide telephone services. Problems in negotiating
interconnection agreements could delay the introduction or impede the
profitability of our telephone services. Not all of our systems have
interconnection agreements in place, and interconnection agreements have limited
duration and may be subject to regulatory and judicial review. We are
negotiating interconnection agreements for our planned telephone markets that do
not yet have them. This may involve time-consuming negotiations and regulatory
proceedings. While incumbent telecommunications operators in the European Union
are required by law to provide interconnection, incumbent telecommunications
operators may not agree to interconnect on a time scale or on terms that will
permit us to offer profitable telephone services. After interconnection
agreements are concluded, we remain reliant upon the good faith and cooperation
of the other parties to these agreements for reliable interconnection. We are
currently involved in a dispute with the Austrian telecommunications operator in
the Austrian courts over our interconnection arrangement there.
THE COMPLEXITIES OF THE OPERATING SYSTEMS WE NEED TO DEVELOP FOR OUR NEW
SERVICES COULD INCREASE THEIR COSTS AND SLOW THEIR INTRODUCTION.
We only recently began to offer local telephone and advanced Internet/data
services. We may not have planned for or be able to overcome all of the problems
in introducing these new services. Our new services may not meet our financial
expectations. This would impede our planned revenue growth and harm our
financial condition.
The new services involve many operating complexities. We will need to
develop and enhance new services, products and systems, as well as marketing
plans to sell the new services. For example, we intend to introduce a
comprehensive new billing system to support our new telephone and Internet/data
businesses. Until then, however, we plan to employ enhanced versions of our
existing customer care and billing systems for these services. Problems with the
existing or new systems could delay the introduction of the new services,
increase their costs, or slow successful marketing. These complexities and
others may cause the new services not to meet our financial expectations. This
could impede our planned revenue growth and harm our financial condition.
THE SUCCESS OF OUR NEW TELEPHONE AND INTERNET/DATA SERVICES DEPENDS ON WHETHER
WE CONTINUE TO ACHIEVE TECHNOLOGICAL ADVANCES.
Technology in the cable television and telecommunications industry is
changing very rapidly. These changes influence the demand for our products and
services. We need to be able to
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anticipate these changes and to develop successful new and enhanced products
quickly enough for the changing market. This will determine whether we can
continue to increase our revenues and the number of our subscribers and be
competitive.
We have introduced new services, including:
- additional video channels and tiers
- pay-per-view services with frequent starting times, which are known as
"impulse" pay-per-view
- high speed data and Internet access services, and cable telephone
services
The technologies used to provide these services are in operation in some of
our systems as well as systems of other providers. However, we cannot be sure
that demand for our services will develop or be maintained in light of other new
technological advances.
LACK OF NECESSARY EQUIPMENT COULD DELAY OR IMPAIR THE EXPANSION OF OUR NEW
SERVICES.
If we cannot obtain the equipment needed for our existing and planned
services, our operating results and financial condition may be harmed. For
example, a customer will need a digital set-top box to access the Internet or
receive our other enhanced services through a television set. These boxes are
being developed by several suppliers. If there are not enough affordable set-top
boxes for subscribers, however, we may have to delay our expansion plans.
INABILITY TO OBTAIN THE NECESSARY PROGRAMMING COULD REDUCE DEMAND FOR OUR
SERVICES.
Our success depends on obtaining or developing affordable and popular
programming for our subscribers. We may not be able to obtain or develop enough
competitive programming to meet our needs. This would reduce demand for our
video services, limiting their revenues. We rely on other programming suppliers
for most of our programming although we plan to commit substantial resources to
obtaining and developing new programming. We expect to seek partners for this.
We may not, however, find appropriate partners, obtain necessary broadcasting
licenses or successfully implement our programming plans.
EUROPEAN USE OF THE INTERNET, ELECTRONIC COMMERCE AND OTHER BANDWIDTH INTENSIVE
APPLICATIONS MAY NOT INCREASE AS WE EXPECT.
Our business plan assumes that Western European use of the Internet,
electronic commerce and other bandwidth intensive applications will increase
substantially in the next few years, in a manner similar to the increased use in
the United States in the past few years. Our business plan assumes a less rapid
increase in Eastern Europe. If the use of applications requiring intensive
bandwidth does not increase in Europe as anticipated, subscriptions to chello
broadband and other services involving managed bandwidth could be materially
lower than we currently anticipate. Reduced demand for our services may have a
negative effect on our pricing and our financial condition.
INCREASED COMPETITION IN VIDEO SERVICES COULD REDUCE OUR REVENUES.
The cable television industry in many of our markets is competitive and
changing rapidly. Competition could result in the loss of our customers and a
decrease in our revenues. We expect that competition will increase as new
entrants, who use multi-channel television technologies different from the
technologies our cable systems use, enter our markets. These technologies may
include direct-to-home satellite services, private cable systems used by housing
associations and multiple unit dwellings, and "wireless" cable transmitted by
low frequency radio.
We may also face competition from other communications and entertainment
media companies. These could include incumbent telecommunications operators and
providers of services over the
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Internet. In some franchise areas, our rights to provide video services are not
exclusive. We currently compete with other cable operators and in the future may
have to compete with additional cable operators.
THE COMPETITIVENESS OF THE TELEPHONE SERVICES AND INTERNET/DATA SERVICES
INDUSTRIES WILL MAKE IT DIFFICULT FOR OUR NEW SERVICES TO ENTER THE MARKET.
In the provision of our telephony and Internet/data services, we face
competition from incumbent telecommunications operators and other new entrants
to these markets. Our telephony service also competes with wireless telephone
carriers. In the provision of Internet/data services we compete with companies
that provide such services using traditional, low speed telephone lines, and we
expect to face growing competition from Internet service providers that, like
us, use higher-speed, higher-capacity cable modems and providers that use other
broadband technologies, such as fiber, microwave, satellite and digital
subscriber lines. Some of our competitors have more experience in providing
telephone and/or Internet services than we have and others may be able to devote
more capital to these services than we can.
Developing a profitable telephone service will depend, among other things,
on whether we can attract and retain customers, maintain competitive prices, and
provide high quality customer care and billing services without incurring
significant additional costs. Prices for long distance calls have decreased
significantly in recent years and we expect them to continue to drop. Increased
competition may also push prices down for local telephone services. Regulators
may make incumbent telecommunications operators lower their rates or increase
their pricing flexibility. Because these are our principal competitors, this
could force us to lower our rates to remain competitive.
FOREIGN CURRENCY EXCHANGE RATE FLUCTUATIONS MAY CAUSE FINANCIAL LOSSES.
Changes in foreign currency exchange rates can reduce the value of our
assets and revenues and increase our liabilities and costs. In general, neither
we nor our operating companies try to reduce our exposure to these exchange rate
risks by using hedging transactions. We may therefore suffer losses solely as a
result of exchange rate changes. In each country, our operating companies
attempt to match costs, revenues, borrowings and repayments in their local
currencies. Nonetheless, they have had to pay for a lot of equipment in
currencies other than their own. They may continue to be required to do so. On
an aggregate basis, as of December 31, 1999, pro forma for our January 2000
senior note offering, including the effect of the cross-currency swaps entered
into in July and October 1999 and January 2000, about 39.7% of our consolidated
debt was denominated in currencies outside of the European Monetary Union. At
the UPC level, the value of our investment in an operating company outside the
euro "zone" is affected by the exchange rate between the euro and the local
currency of the operating company.
WE WILL CONTINUE TO BE CONTROLLED BY UNITEDGLOBALCOM, WHOSE INTERESTS MAY BE
DIFFERENT FROM THOSE OF OTHER SHAREHOLDERS.
UnitedGlobalCom owns about 53% of our outstanding ordinary shares A (51.1%
after giving effect to the exchange offer, assuming all SBS shares are tendered)
and all of our priority shares. As a result, UnitedGlobalCom is able to control
the election of all but two of the members of our Supervisory Board. Philips has
had the right to appoint one member since UnitedGlobalCom acquired 50% of us
from Philips in 1997. In addition, the Discount Group, our partner in our
Israeli system, has a contractual right to appoint one director although they
have not yet exercised this right. UnitedGlobalCom will be able to determine the
outcome of almost all corporate actions requiring the approval of our
shareholders. The priority shares give UnitedGlobalCom additional approval
rights over certain of our actions. As a result, UnitedGlobalCom will continue
to control substantially all of our business affairs and policies.
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Our Supervisory Board has the power to approve transactions in which
UnitedGlobalCom has an interest. This power is subject to directors' fiduciary
duties to our other shareholders. Nonetheless, conflicts may arise between the
interests of UnitedGlobalCom and our other shareholders. For example,
UnitedGlobalCom could cause us to provide financial resources to our
shareholders. This could limit our current strategy of investing in our new
businesses.
WE DO NOT INTEND TO PAY DIVIDENDS FOR THE FORESEEABLE FUTURE.
We have never paid dividends on our shares. We do not intend to pay
dividends in the foreseeable future. The terms of some of our existing debt
facilities and indentures prevent us from paying dividends. At the moment, we do
not have sufficient shareholders' equity under Netherlands law to make
distributions. You should therefore not expect to receive dividends on our
shares for the foreseeable future.
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SPECIAL FACTORS
BACKGROUND OF THE EXCHANGE OFFER
We began exploring ways to develop our business relationship with SBS in
the mid-1990s in markets in Western and Central Europe where our business
activities overlap. Among other things, we discussed:
- our existing relationship as a cable operator and distributor with SBS as
a programming and content supplier,
- SBS becoming involved in our programming businesses,
- the joint development of thematic channels, and
- the joint acquisition of programming packages.
These discussions were principally between Mark Schneider, our chief
executive officer, and Harry Evans Sloan, the chief executive officer of SBS,
and focused initially on the two companies' operations in The Netherlands. SBS
paid approximately U.S.$368,000 for 1997 and U.S.$629,000 for 1998 and 1999 to
our cable distribution systems in The Netherlands to carry its SBS6 and NET5
channels.
In March 1999, Mr. Schneider proposed to Mr. Sloan that as part of the
development of our business relationship we acquire a minority interest in SBS.
During this time period, we engaged Goldman Sachs International as our financial
adviser. In May 1999, SBS engaged DLJ as their financial advisor. We announced
in June 1999 that we were in discussions with SBS to form a strategic
partnership to exploit opportunities to develop extended basic cable tiers on
our cable systems, to acquire jointly sports rights and other programming
packages and to develop new thematic channels and other services. As part of the
alliance, we agreed with SBS to acquire up to 3,000,000 SBS shares, or
approximately 12.8% of the total number of SBS shares then outstanding (9.9% on
a fully diluted basis).
We entered into an investment agreement with SBS on June 29, 1999,
providing for the acquisition by us of 3,000,000 SBS shares through a backstop
guarantee of SBS's early redemption of U.S.$155 million in aggregate principal
amount of SBS convertible debentures and a private placement. UnitedGlobalCom,
which holds the majority of our shares, was also a party to the investment
agreement. The investment agreement included standstill provisions limiting our
ability to acquire additional SBS shares and provided that we would be entitled
to nominate an individual for election to SBS's board of directors. Pursuant to
the investment agreement, we acquired 847,680 SBS shares in July 1999 through
the backstop facility at a price of approximately U.S.$31.00 per share, and
2,152,320 SBS shares in August 1999 through the private placement at a price of
U.S.$35.25 per share. We acquired a total of 3,000,000 SBS shares as the result
of these transactions.
We continued meeting with SBS during the summer and fall of 1999 to explore
ways to structure a joint venture to develop thematic programming and other
business opportunities. As part of these discussions, a number of alternatives
were considered, including the possibility that we might acquire all of or a
majority interest in SBS.
In accordance with the June 1999 investment agreement, Mr. Schneider was
elected to SBS's board of directors at SBS's annual general meeting on December
9, 1999.
In December 1999, Mr. Schneider and Mr. Sloan discussed the possibility
that we might acquire additional shares in SBS as a means, among other things,
to fund SBS's contribution to our proposed joint venture to develop thematic
channels. On January 27, 2000, we entered into a private placement agreement
with SBS and UnitedGlobalCom providing for, among other things, the acquisition
by us of an additional 3,000,000 SBS shares, at a price of U.S.$54.125 per
share, increasing our ownership interest to 6,000,000 SBS shares, representing
approximately 23.4% of the total number of the then outstanding SBS shares
(approximately 18% on a fully diluted basis).
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The private placement agreement amended and restated the investment agreement in
its entirety and included standstill provisions limiting our ability to acquire
additional SBS shares. The private placement was closed on February 1, 2000. You
should read "Other Agreements and Relationship with SBS" for a more detailed
description of the terms of the private placement agreement.
We also announced at or around the time of the private placement agreement
that we intended:
- to form two new joint ventures with SBS: one to create four separate
subscription television channels; and the second with SBS and ZeniMax,
SBS's U.S.-based Internet technology and content partner, to develop
jointly entertainment portals and content for European Internet users;
- to join SBS and the European Bank for Reconstruction and Development
(EBRD) as a major investor in European Broadcasting System, an
SBS-affiliated company that has been formed for the purpose of making
broadcasting investments in Central and Eastern Europe; and
- to acquire programming jointly with SBS in The Netherlands.
In February, 2000, subject to approval by UPC's supervisory board, we
agreed to acquire from SBS 32.25% of Prima TV in Romania and to participate in
32.25% of the future costs of the Romanian project.
We also announced at that time that, in connection with our entry into
these business relationships with SBS, it was possible that we would seek to
acquire additional SBS shares, including the possible acquisition of a
controlling interest in SBS, although any acquisition of more than a 23.4%
interest in SBS would require the approval of the SBS board of directors.
Shortly after the closing of the private placement in February, Mr.
Schneider and Mr. Sloan began discussions about a possible business combination
of UPC and SBS, and they met on a number of occasions, in business as well as
social situations, discussing from time to time possible bases for agreement.
Around the end of February, we engaged Clifford Chance Rogers & Wells LLP as
U.S. legal counsel, and SBS engaged Sullivan & Cromwell as U.S. legal counsel to
advise on a possible transaction. On February 19, 2000, Mr. Schneider and Mr.
Sloan met in the United States to explore the terms of a possible combination in
more detail. On February 26, 2000, Mr. Schneider and Mr. Sloan met in London,
England, and further discussed potential terms. On March 1, 2000,
representatives of UPC and SBS discussed the formulation of an outline, in
general terms, that might be the basis of a possible acquisition of SBS through
an exchange offer. A number of meetings occurred between the parties and their
respective financial advisers and legal counsel between March 1 and March 9,
2000 to seek agreement on the terms of an exchange offer. Negotiations
addressed, among other things, the amount of the termination fee and the
circumstances under which it would be payable, provisions for imposing
restrictions on SBS's ability to enter into a competing transaction, conditions
of the exchange offer, the form of consideration and the mechanism for
calculating the consideration to be paid based on UPC ADS closing prices, and
representations and warranties. On March 8, 2000, the supervisory board of UPC
and the board of directors of SBS met separately and approved the terms of the
transaction as agreed by the parties. At the SBS board meeting DLJ delivered to
the SBS board its opinion, which was subsequently confirmed in writing on March
9, 2000, to the effect that as of that date, and based on and subject to the
assumptions, limitations and qualifications set forth in its written opinion,
the consideration to be received by the SBS shareholders (other than SBS's
affiliates, including UPC) in the exchange offer was fair from a financial point
of view. The exchange offer agreement was executed by UPC and SBS on March 9,
2000, and UPC and SBS made a joint press release announcing the signing of the
Exchange Offer Agreement.
Four directors and executive officers who are shareholders of SBS entered
into the Share Exchange Agreement on March 9, 2000, agreeing, among other
things, to tender their shares in the exchange offer. These same directors and
executive officers also entered into separate letter agreements with us, dated
as of March 9, 2000, in which each of them agreed, among other things,
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not to sell or otherwise permit the transfer of any UPC ADSs or UPC ordinary
shares A that he owns or over which he has control (as specified in the letter
agreements) for a period of six months after the completion of the exchange
offer without our prior written consent. Please read the section captioned "The
Exchange Offer Agreement and the Share Exchange Agreement -- The Share Exchange
Agreement" for more information about these agreements.
We have also entered into an agreement with SBS amending the standstill
provisions in the January 27, 2000 private placement agreement to permit us to
acquire SBS shares in the exchange offer. You should read "Other Agreements and
Relationship with SBS" for a more detailed description of this amendment.
Mr. Sloan attended our March 24, 2000, supervisory board meeting as an
observer, and we intend to nominate him for our supervisory board after the
closing of the exchange offer. We expect that Mr. Sloan will continue to attend
supervisory board meetings as an observer until he becomes a member of the board
after the completion of the exchange offer. If in the future Mr. Sloan were to
assume a management position with UPC, he would no longer be eligible to serve
on our supervisory board, in which case we anticipate that we would nominate him
to our management board.
On April 13, 2000, we and SBS jointly announced that we had selected the
first two of our initially planned four separate subscription channels for the
UPC-SBS subscription channel joint venture, a Gold channel, which will be an
archive-themed channel with broad demographic appeal, and a youth-oriented film
channel, targeted to a younger 18-to-34 demographic.
In early April 2000, a decline in our share price resulted in a "trigger
event" giving rise to a right for us to terminate the exchange offer agreement.
Instead of terminating the exchange offer agreement, we agreed with SBS on April
11, 2000, to amend the agreement to provide that we have a right to terminate
the agreement if the average closing price for our shares is below US$49 for ten
randomly chosen trading days immediately prior to the expected commencement of
the exchange offer. [UPDATE AT TIME OF MAILING] Please read the section
captioned "The Exchange Offer Agreement and the Share Exchange Agreement -- The
Exchange Offer Agreement" for a more detailed description of this amendment.
RECOMMENDATION OF SBS'S BOARD; FAIRNESS OF THE EXCHANGE OFFER
The board of directors of SBS (except the current board member nominated by
UPC, who abstained) has unanimously approved the Exchange Offer Agreement,
determined that the exchange offer is fair to and in the best interests of SBS
and its shareholders (other than UPC) and recommends that the SBS shareholders
accept the exchange offer and tender their shares. Information about the
recommendation of SBS's board of directors is more fully described in SBS's
Solicitation/Recommendation Statement on Schedule 14D-9, which is being mailed
to SBS shareholders together with this prospectus.
OPINION OF DONALDSON, LUFKIN & JENRETTE INTERNATIONAL, SBS'S FINANCIAL ADVISER
SBS asked Donaldson, Lufkin & Jenrette International, or DLJ, in its role
as financial adviser to SBS, to render an opinion to the SBS board of directors
as to the fairness, from a financial point of view, to the holders of SBS
shares, other than shareholders who are affiliates of SBS, including UPC, of the
consideration to be received by such holders in the exchange offer. At the SBS
board meeting on March 8, 2000, DLJ delivered to the SBS board its opinion,
subsequently confirmed in writing on March 9, 2000, to the effect that, as of
March 9, 2000, based on the assumptions, limitations and qualifications included
in its written opinion, the consideration to be received by the holders of SBS
shares in the exchange offer was fair to the holders of SBS shares (other than
to shareholders who are affiliates of SBS, including UPC) from a financial point
of view.
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THE FULL TEXT OF DLJ'S OPINION IS ATTACHED AS SCHEDULE II TO THIS
PROSPECTUS. THE SUMMARY OF DLJ'S OPINION SET FORTH IN THIS PROSPECTUS IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF DLJ'S OPINION. SBS
SHAREHOLDERS ARE URGED TO READ DLJ'S OPINION CAREFULLY AND IN ITS ENTIRETY FOR
THE PROCEDURES FOLLOWED, ASSUMPTIONS MADE, OTHER MATTERS CONSIDERED AND LIMITS
OF THE REVIEW BY DLJ IN CONNECTION WITH ITS OPINION.
DLJ prepared its opinion for the SBS board, and the opinion addresses only
the fairness to the holders of SBS shares (other than to shareholders who are
affiliates of SBS, including UPC) from a financial point of view, as of the date
thereof, of the consideration to be received by these shareholders. DLJ
expressed no opinion as to the price at which UPC ordinary shares A or UPC ADSs
or SBS shares would actually trade at any time. DLJ's opinion did not address
the relative merits of the exchange offer and the other business strategies
considered by the SBS board nor did it address the SBS board's decision to
proceed with the exchange offer. DLJ's opinion did not constitute a
recommendation to any SBS shareholders as to whether or not such shareholder
should tender its shares in the exchange offer. The consideration to be received
by the holders of SBS shares was determined in arm's length negotiations between
SBS and UPC, in which DLJ advised SBS.
SBS selected DLJ as its financial adviser because DLJ is an internationally
recognized investment banking firm that has substantial experience in providing
strategic advisory services. DLJ was not retained as an adviser or agent to the
shareholders of SBS or any other person. As part of its investment banking
business, DLJ is regularly engaged in the valuation of businesses and securities
in connection with mergers, acquisitions, underwritings, sales and distributions
of listed and unlisted securities, private placements and valuations for
corporate and other purposes. DLJ was not requested to, nor did it, solicit the
interest of any other party in acquiring SBS or any of its assets.
In arriving at its opinion, DLJ:
- reviewed the draft dated March 8, 2000 of the exchange offer agreement
and assumed the final form of the exchange offer agreement would not vary
in any respect material to DLJ's analysis;
- reviewed financial and other information that was publicly available or
furnished to DLJ by SBS and UPC, including information provided during
discussions with their respective managements. Included in the
information provided during discussions with the SBS management were
certain financial projections of SBS prepared by SBS management, and
certain financial projections of UPC prepared by certain industry
research analysts, which DLJ discussed with the management of UPC;
- compared certain financial and securities data of SBS and UPC with
various other companies whose securities are traded in public markets;
- reviewed the historical stock prices and trading volumes of SBS shares,
UPC ADSs and UPC ordinary shares A;
- reviewed prices and premiums paid in certain other business combinations;
and
- conducted such other financial studies, analyses and investigations as
DLJ deemed appropriate for purposes of its opinion.
In rendering its opinion, DLJ relied upon and assumed the accuracy and
completeness of all of the financial and other information that was available to
it from public sources, that was provided to it by SBS, UPC or their respective
representatives, or that was otherwise reviewed by DLJ. With respect to the
financial projections of SBS that DLJ reviewed, DLJ relied on representations
that they were reasonably prepared on the basis reflecting the best currently
available estimates and judgments of the management of SBS as to the future
operating and financial performance of SBS. With respect to the financial
projections of UPC referred to above, DLJ relied on representations that they
were not materially different from the best then available estimates and
judgments of the
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management of UPC as to the future operating performance of UPC. DLJ did not
assume responsibility for making any independent evaluation of any assets or
liabilities, or for making any independent verification of the information that
it reviewed.
DLJ's opinion was necessarily based on economic, market, financial and
other conditions as they existed on, and on the information made available to
DLJ as of, the date of its opinion. DLJ states in its opinion that, although
subsequent developments may affect its opinion, DLJ does not have any obligation
to update, revise or reaffirm its opinion.
SUMMARY OF FINANCIAL ANALYSES PERFORMED BY DLJ
The following is a summary of the financial analyses presented by DLJ to
the SBS board of directors on March 8, 2000 in connection with the preparation
of DLJ's opinion. No company or transaction used in the analyses below is
directly comparable to SBS or the contemplated transaction. In addition,
mathematical analysis such as determining the mean or median is not in itself a
meaningful method of using selected company or transaction data. The analyses
performed by DLJ are not necessarily indicative of actual values or future
results, which may be significantly more or less favorable than suggested by
these analyses. The value and prices of UPC ADSs in the following analyses do
not take into account the March 20, 2000 three-for-one stock split. The
information summarized in the tables which follow should be read in conjunction
with the accompanying text.
SBS shares trading history. DLJ examined the historical trading prices and
trading volume of SBS shares from March 6, 1998 to March 8, 2000. During this
time period, SBS shares reached a high of U.S.$60 5/8 per share and a low of
U.S.$18 9/16 per share. DLJ also examined the historical trading prices and
trading volume of UPC ADSs from February 12, 1999, the date of UPC's initial
public offering, to March 8, 2000. During this time period, UPC ADSs reached a
high of U.S.$237.00 per share and a low of U.S.$32 9/16 per share. In addition,
DLJ compared the relative indexed stock price performance of SBS shares with an
index of certain comparable companies and the Nasdaq Composite index from March
5, 1999 to March 8, 2000. The comparable companies include:
- Audiofina NPV
- Carlton Communications PLC
- Mediaset SPA
- M-6 Metropole Television
- Modern Times Group AB
- ProSieben Media AG
- Television Francaise 1 SA
DLJ noted that over the comparison period the trading price of SBS shares
increased 115.1% while the numerical average increase of the comparable
companies was 267.7% and the Nasdaq Composite index was 109.5%, respectively.
DLJ also compared the relative indexed stock price performance of UPC ADSs
with an index of certain comparable companies and the Nasdaq Composite index
from March 5, 1999 to March 8, 2000. The comparable companies include:
European comparable companies:
- NTL, Inc.
- Telewest Communications plc
U.S. comparable companies:
- Adelphia Communications Corp.
- AT&T Corp.
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- Cablevision Systems Corp.
- Charter Communications, Inc.
- Classic Communications, Inc.
- Comcast Corp.
- Cox Communications, Inc.
- Insight Communications Company, Inc.
- Mediacom Communications Corp.
- Jones Intercable, Inc.
- MediaOne Group, Inc.
DLJ noted that over the comparison period the trading price of UPC ADSs
increased 562.9% while the numerical average increase of the comparable
companies was 79.0%, and (1.1)% of the European and U.S. companies,
respectively.
Comparable publicly traded company analysis. DLJ analyzed the market
values and trading multiples of selected publicly traded European television and
radio broadcasting companies that DLJ believed were reasonably comparable to
SBS. These comparable companies consisted of:
- Audiofina NPV
- Carlton Communications PLC
- Mediaset SPA
- M-6 Metropole Television
- Modern Times Group AB
- ProSieben Media AG
- Television Francaise 1 SA
In examining these comparable companies, DLJ calculated the enterprise value of
each company as a multiple of its respective: (1) LTM revenues and projected
fiscal year 2000 and 2001 revenues and (2) projected fiscal year 2000, 2001 and
2002 EBITDA. The enterprise value of a company is equal to the value of its
fully diluted common equity plus debt, minority interests held by other entities
and the liquidation value of outstanding preferred stock, if any, minus cash and
the value of certain other assets, including minority interests in other
entities. LTM means the last twelve-month period for which financial data for
the company at issue has been reported. EBITDA means earnings before interest
expense, taxes, depreciation and amortization.
DLJ also calculated the equity value of each company as a multiple of its
prospective projected fiscal year 2000, 2001 and 2002 after-tax cash flow or
ATCF. ATCF means EBITDA less net interest expense less income tax. DLJ derived
all historical data from publicly available sources and DLJ obtained all
projected data from Wall Street research reports and I/B/E/S International, Inc.
where
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available. DLJ's analysis of the comparable companies yielded the following
multiple ranges; the averages exclude the high and low multiple in each
category:
<TABLE>
<CAPTION>
ENTERPRISE/EQUITY VALUE HIGH AVERAGE(1) MEDIAN LOW
- ----------------------- ---- ---------- ------ ---
<S> <C> <C> <C> <C>
LTM Revenues................................... 21.1x 9.1x 8.1x 2.8x
2000 Revenues.................................. 19.2 8.5 7.4 2.8
2001 Revenues.................................. 18.0 7.7 6.4 2.6
2000 EBITDA.................................... 63.4x 40.6x 42.8x 15.2x
2001 EBITDA.................................... 54.6 34.4 38.0 13.4
2002 EBITDA.................................... 45.9 27.8 28.2 12.6
2000 ATCF...................................... 93.8x 65.2x 68.5x 16.5x
2001 ATCF...................................... 82.2 44.5 49.6 15.4
2002 ATCF...................................... 70.7 38.9 42.2 15.5
</TABLE>
- ---------------
(1) Excludes high and low multiple in each category.
Based on an analysis of this data and SBS's historical and projected
results for comparable periods, DLJ estimated a value per SBS share ranging from
U.S.$60.00 to U.S.$100.00, compared implied consideration per SBS share to be
received by the holders of SBS shares of U.S.$85.14 based on the closing price
per UPC ADS on Nasdaq on March 8, 2000 of U.S.$237.00 and implied consideration
per SBS share of U.S.$77.50 at the bottom of the transaction collar.
As used in this description of the DLJ fairness opinion, "transaction
collar" refers to the possible range of consideration to be paid to holders of
SBS shares in the exchange offer, as more fully described in "The Exchange Offer
Agreement and the Share Exchange Agreement -- The Exchange Offer
Agreement -- The Exchange Offer -- Consideration."
Premiums paid analysis. DLJ determined the premium over the common stock
trading prices for one day, one week and four weeks prior to the announcement
date in all merger and acquisition transactions of U.S. public companies ranging
from U.S.$2.0 billion to U.S.$3.0 billion in size announced between March 1,
1990 and December 31, 1999. Premiums were obtained from Securities Data Company.
<TABLE>
<CAPTION>
AVERAGE MEDIAN
------- ------
<S> <C> <C>
One Day Prior............................................. 28.7% 25.8%
One Week Prior............................................ 31.9% 28.4%
Four Weeks Prior.......................................... 38.2% 35.1%
</TABLE>
Applying the above premiums to the closing price of SBS shares on comparable
days, DLJ estimated a value per SBS share ranging from U.S.$72.00 to U.S.$76.00,
compared to implied consideration per SBS share to be received by holders of SBS
shares of U.S.$85.14 based on a closing price per UPC ADS on March 8, 2000 or
U.S.$237 and implied consideration per share of U.S.$77.50 at the bottom of the
transaction collar.
Sum-of-the-Parts Analysis. DLJ reviewed and analyzed separately the
valuation of each of the businesses in which SBS held an equity stake according
to methodologies that DLJ believed most appropriate to the circumstances of each
business and applied the percentage ownership held by SBS to such valuations.
DLJ determined that SBS was composed of five main business lines: (1) core
television and radio broadcasting, (2) programming initiatives, (3) other radio
and televisions investments, (4) proprietary Internet and new media and (5)
investments in Internet and new media. DLJ's estimate of the value of each of
these business segments is summarized in the following table. These business
lines and the estimated valuations must be considered as a whole and in the
context
42
<PAGE> 48
of the narrative description of the financial analyses, including the
assumptions underlying these analyses.
<TABLE>
<CAPTION>
ESTIMATED VALUE
BUSINESS LINE RANGE TO SBS
- ------------- ---------------
($ IN MILLIONS)
<S> <C>
Core television and radio broadcasting........... 900.0 to 1,100.0
Programming initiatives.......................... 244.4 to 736.1
Other radio and television investments........... 13.0 to 13.0
Proprietary Internet and new media............... 350.0 to 650.0
Investments in Internet and new media............ 46.7 to 100.4
------------------
Total.................................. 1,554.2 to 2,599.5
</TABLE>
CORE TELEVISION AND RADIO BROADCASTING
DLJ performed a discounted cash flow, or DCF, analysis of the projected
cash flows of the core television and radio broadcasting assets of SBS for the
fiscal years ending December 31, 2000 through December 31, 2004, using
projections and assumptions provided by the management of SBS. The DCF for these
assets was estimated using discount rates ranging from 12.0% to 14.0%, based on
estimates related to the weighted average costs of capital of SBS, and terminal
multiples of estimated EBITDA for SBS's fiscal year ending December 31, 2004
ranging from 13.0x to 16.0x. Based on this analysis, DLJ estimated the value of
SBS's ownership interest in these assets ranged from U.S.$900.0 million to
U.S.$1.1 billion.
PROGRAMMING INITIATIVES
SBS's programming initiatives are composed of three segments: (1) thematic
programming joint venture with UPC, (2) home shopping joint venture and (3)
equity investment in Lion's Gate. To determine the aggregate value range of the
programming initiatives, DLJ valued each of the segments individually, as
described below.
Thematic programming joint venture with UPC. DLJ analyzed selected
publicly traded programming companies that DLJ believed were reasonably
comparable to SBS's thematic programming joint venture with UPC. These
comparable companies consisted of:
- Flextech plc
- Fox Kids Europe NV
- AT&T Corp. -- Liberty Media Group
- Money Channel plc
In examining these comparable companies, DLJ calculated the enterprise value of
each company as a multiple of its respective subscribers. All historical data
was derived from publicly available sources. DLJ's analysis of the comparable
companies yielded the following multiple ranges:
<TABLE>
<CAPTION>
HIGH AVERAGE MEDIAN LOW
---- ------- ------ ---
<S> <C> <C> <C> <C>
Enterprise Value/Subscriber................... $173.4 $130.3 $139.9 $68.0
</TABLE>
DLJ applied these multiples, focusing primarily on Money Channel plc and
Fox Kids Europe NV, to a projected number of programming subscribers based on
assumed penetration rates of UPC's existing cable subscribers. The resulting
valuations were then discounted by 50% to account for the joint venture's early
stage of development. Based on this analysis, DLJ estimated the value of SBS's
ownership interest in the thematic programming joint venture with UPC ranging
from U.S.$100.0 million to U.S.$500.0 million.
Home shopping joint venture. DLJ analyzed the multiples of the German
subsidiaries of selected home shopping companies ascribed by research analysts
that DLJ believed were reasonably comparable to its home shopping joint venture.
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<PAGE> 49
The research analysts calculated the enterprise value of each selected home
shopping company as a multiple of its addressable television households. After
reviewing the valuations and operations described by the research analysts, DLJ
estimated the value of SBS's ownership interest in the home shopping joint
venture ranging from U.S.$133.3 million to U.S.$225.0 million.
Equity investment in Lion's Gate. DLJ calculated the value of SBS's
investment in Lion's Gate as the market value of the fully diluted shares it
holds which was U.S.$11.1 million.
As a result, the total value of SBS's programming initiatives was estimated
to range from U.S.$244.4 million to U.S.$736.1 million.
OTHER RADIO AND TELEVISION INVESTMENTS
SBS's other television and radio business line is composed of three
segments: (1) its investment in Rete 105, (2) its capital invested in EBS and
(3) its investment in BTI AB. DLJ estimated the total value of SBS's other
television and radio business segment at U.S.$13.0 million.
PROPRIETARY INTERNET AND NEW MEDIA
The value of SBS's proprietary Internet and new media business line is a
result of its ownership of VT4.net. To determine the aggregate value range of
the proprietary internet and new media line, DLJ analyzed selected publicly
traded European Internet service providers that DLJ believed were reasonably
comparable to VT4.net. These comparable companies consisted of:
- Freeserve plc
- Freenet.de AG
- Tiscali S.p.A.
In examining these comparable companies, DLJ calculated the enterprise
value of each company as a multiple of its registered users and covered
population. All historical data was derived from publicly available sources.
After analyzing the valuation and operation metrics of the comparable companies
DLJ applied the following enterprise value multiple ranges to VT4.net's
operating statistics:
<TABLE>
<CAPTION>
ENTERPRISE VALUE
------------------------
REGISTERED COVERED
USERS POPULATION
---------- ----------
<S> <C> <C>
Low.................................................. 7,000 100
High................................................. 10,000 150
</TABLE>
DLJ applied a 25% discount to the multiples to reflect the smaller scale of
the Flemish market. Based on this analysis, DLJ estimated the total value of
SBS's proprietary internet and new media business segment to range from
U.S.$350.0 million to U.S.$650.0 million.
INVESTMENTS IN INTERNET AND NEW MEDIA
SBS's investments in Internet and new media businesses is composed of three
segments: (1) an equity stake in BidLet AB, (2) an equity stake in Leknet AB and
(3) an equity stake in Hollywood Stock Exchange. To determine the aggregate
value range of the proprietary internet and new media line, DLJ valued each of
the segments individually.
Equity stake in BidLet AB. DLJ analyzed the market values and trading
multiples of selected publicly traded online auction companies that DLJ believed
were reasonably comparable to BidLet. These comparable companies consisted of:
- eBay, Inc.
- QXL.com plc
- ricardo.de AG
44
<PAGE> 50
In examining these comparable companies, DLJ calculated the enterprise
value of each company as a multiple of its registered users and covered
population. All historical data was derived from publicly available sources.
After analyzing the operations and valuation metrics of the comparable
companies, DLJ applied the following enterprise value multiple ranges to
BidLet's operating statistics:
<TABLE>
<CAPTION>
ENTERPRISE VALUE
------------------------
REGISTERED COVERED
USERS POPULATION
---------- ----------
<S> <C> <C>
Low.................................................. 3,000 10
High................................................. 4,000 15
</TABLE>
DLJ applied a 25% discount to these multiples to reflect the early
development stage of BidLet in comparison to the comparable companies. Based on
this analysis, DLJ estimated the value of SBS's ownership interest in BidLet to
range from U.S.$30.0 million to U.S.$75.0 million.
Equity Stake in Leknet AB. DLJ analyzed the market values and trading
multiples of selected publicly traded online toy retail companies that DLJ
believed were reasonably comparable to Leknet. These comparable companies
consisted of:
- eToys Inc.
- Smarterkids.com, Inc.
In examining these comparable companies, DLJ calculated the enterprise value of
each company as a multiple of Leknet's LTM revenues and covered population. All
historical data was derived from publicly available sources. After analyzing the
operations and valuation metrics of the comparable companies, DLJ applied the
following multiple ranges to Leknet's operating statistics:
<TABLE>
<CAPTION>
ENTERPRISING VALUE
LTM REVENUES
------------------
<S> <C>
Low............................................... 9.0x
High.............................................. 10.0x
</TABLE>
DLJ applied a 50% discount to these multiples to reflect the early
development stage of Leknet. Based on this analysis, DLJ estimated the value of
SBS's ownership interest in Leknet ranging from U.S.$9.6 million to U.S.$11.2
million.
Equity Stake in Hollywood Stock Exchange. DLJ estimated the value of SBS's
ownership interest in Hollywood Stock Exchange to range from U.S.$7.1 million to
U.S.$14.2 million.
As a result, DLJ estimated the total value of SBS's investments in Internet
and new media businesses segment at U.S.$46.7 million to U.S.$100.4 million.
SUM-OF-THE-PARTS ANALYSIS CONCLUSION
Applying the above valuation ranges for each of SBS's business components
and adding them together, DLJ estimated an aggregate range of enterprise values
of SBS in its entirety to be from approximately U.S.$1.5542 billion to
U.S.$2.5995 billion. Subtracting pro forma debt of U.S.$55.2 million and adding
pro forma cash of U.S.$279.2 million to the enterprise value results in an
aggregate range of equity values of U.S.$1.7781 billion to U.S.$2.8235 billion.
This valuation range implies a per share value of SBS shares ranging from
U.S.$57.00 to U.S.$90.00, compared to implied consideration per share of SBS
shares to be received by the holders of SBS shares of U.S.$85.14 based on a
closing price per share of UPC ADSs on March 8, 2000 of U.S.$237.00 and implied
consideration per share of U.S.$77.50 at the bottom of the transaction collar.
45
<PAGE> 51
UPC VALUATION ANALYSIS
In making a determination regarding the fairness of the exchange offer, DLJ
performed valuation analyses in addition to those described above to determine
the reasonableness of the fair market value of the UPC ADSs being received by
SBS shareholders in the transaction.
The price of UPC ADSs as of March 8, 2000 was U.S.$237.00 per share. DLJ
performed two analyses in addition to reviewing the trading history of UPC ADSs:
- Comparable companies analysis
- Sum-of-the-parts analysis
Comparable companies analysis. DLJ analyzed the market values and trading
multiples of selected publicly traded US and European cable operators that DLJ
believed were reasonably comparable to UPC. These comparable companies consisted
of:
European comparable companies:
- NTL, Inc.
- Telewest Communications plc
U.S. comparable companies:
- Adelphia Communications Corp.
- Cablevision Corp.
- Charter Communications Inc.
- Comcast Corp.
- Cox Communications Inc.
In examining these comparable companies, DLJ calculated the adjusted
enterprise value of each company as a multiple of its homes passed. Homes passed
are the number of establishments through which the network of the cable
operators passes. The adjusted enterprise value of a company in the context of
this analysis is equal to the value of its fully diluted common equity plus
debt, minority interests held by other entities and the liquidation value of
outstanding preferred stock, if any, minus cash and the value of certain other
assets, including minority interests in other entities and, where applicable,
the fair market value of any non-cable assets. The number of homes passed for
the comparable companies was based on the information publicly disclosed in the
most recent filing for each of the companies and adjusted for any acquisition
not reflected. All historical data were derived from publicly available sources.
DLJ's analysis of the comparable companies yielded the following averages:
<TABLE>
<CAPTION>
AVERAGE
ENTERPRISE VALUE/HOMES PASSED -------
<S> <C>
European Comparables...................................... $4,603.5
U.S. Comparables.......................................... $2,378.9
</TABLE>
Based on the analysis of this data and UPC's historical and projected
results for comparable periods, DLJ estimated a value per UPC ordinary share A
ranging from U.S.$146.00 to U.S.$208.00, compared to a closing price per UPC
ordinary share A on March 8, 2000 of U.S.$237.00.
Sum-of-the-parts analysis. DLJ reviewed and analyzed separately the
valuation of each of the businesses in which UPC operates or holds equity stakes
according to methodologies that DLJ believed most appropriate to the
circumstances of each operation/business. Following is a list of all
businesses/operations examined and a description of the valuation methodology
used by DLJ:
DLJ determined that UPC was composed of eight main business segments: (1)
Cable -- Western Europe, (2) Cable -- Eastern Europe, (3) residential telephony,
(4) business telephony, (5) high speed internet access, (6) UPCTV, (7)
direct-to-home operations in Poland and (8) other investments. DLJ's estimate of
the value of each of these business segments is summarized in the
46
<PAGE> 52
following table. These business segments and the estimated valuations must be
considered as a whole and in the context of the narrative description of the
financial analyses, including the assumptions underlying these analyses.
<TABLE>
<CAPTION>
BUSINESS SEGMENT ESTIMATED VALUE RANGE
- ---------------- ---------------------
($ IN MILLIONS)
<S> <C>
Cable -- Western Europe................................ 16,213.3 to 21,333.3
Cable -- Eastern Europe................................ 4,053.3 to 5,333.3
Residential telephony.................................. 187.9 to 375.8
Business telephony..................................... 946.1 to 1,261.5
High speed internet access............................. 4,200.0 to 5,600.0
UPCTV.................................................. 823.5 to 1,631.3
Direct-to-home operations in Poland.................... 521.4 to 1,042.9
Other investments...................................... 968.8 to 1,368.9
--------------------
Total........................................ 27,914.5 to 37,946.9
</TABLE>
Cable -- Western Europe -- DLJ analyzed the market values and trading
multiples of selected publicly traded US and European cable operators that DLJ
believed were reasonably comparable to UPC's Western Europe cable operations.
DLJ calculated the adjusted enterprise value of each company as a multiple of
its respective cable subscribers. A cable subscriber is an actual customer who
subscribes to a company's cable service. The number of subscribers for the
comparable companies was based on the information disclosed in the most recent
filing for each of the companies and adjusted for any acquisitions not
reflected. DLJ's analysis of the comparable companies yielded the following
averages:
<TABLE>
<CAPTION>
AVERAGE
ENTERPRISE VALUE/SUBSCRIBER -------
<S> <C>
European Comparables..................................... $15,351.5
U.S. Comparables......................................... $ 3,670.7
</TABLE>
Based on this analysis, DLJ estimated a value of UPC's Western Europe cable
operations ranging from U.S.$16.2133 billion to U.S.$21.3333 billion.
Cable -- Eastern Europe -- DLJ analyzed the market values and trading
multiples of selected publicly traded U.S. and European cable operators that DLJ
believed were reasonably comparable to UPC's Eastern Europe cable operations.
DLJ calculated the adjusted enterprise value of each company as a multiple of
its respective cable subscribers. DLJ's analysis of the comparable companies
yielded the same averages as those illustrated above for the Western Europe
cable operations. DLJ applied a 50% discount to the Eastern Europe cable
subscribers as the profiles of such subscribers are less attractive given the
lower average revenue generated per subscriber and the less attractive nature of
the markets.
Based on this analysis, DLJ estimated values for UPC's Eastern Europe cable
operations ranging from U.S.$4.0533 billion to U.S.$5.3333 billion.
Residential telephony -- DLJ analyzed the market values and trading
multiples of selected publicly traded European residential telephony companies
that DLJ believed were reasonably comparable to UPC's residential telephony
business. DLJ calculated the adjusted enterprise value of each company as a
multiple of its respective projected fiscal year revenues for the years 2000 and
2001. DLJ's analysis of the comparable companies yielded the following multiple
ranges:
<TABLE>
<CAPTION>
AVERAGE MEDIAN
ENTERPRISE VALUE/ ------- ------
<S> <C> <C>
2000 Revenues............................................... 1.8x 2.0x
2001 Revenues............................................... 1.6x 1.6x
</TABLE>
Based on this analysis, DLJ estimated values for UPC's residential
telephony business ranging from U.S.$187.9 million to U.S.$375.8 million.
47
<PAGE> 53
Business telephony -- DLJ analyzed the market values and trading multiples
of selected publicly traded European business telephony companies that DLJ
believed were reasonably comparable to UPC's business telephony business. DLJ
calculated the adjusted enterprise value of each company as a multiple of its
respective projected fiscal year revenues for the years 2000 and 2001. DLJ's
analysis of the comparable companies yielded the following multiple ranges:
<TABLE>
<CAPTION>
AVERAGE MEDIAN
ENTERPRISE VALUE/ ------- ------
<S> <C> <C>
2000 Revenues............................................. 28.8x 28.8x
2001 Revenues............................................. 19.4x 18.8x
</TABLE>
Based on this analysis, DLJ estimated values for UPC's business telephony
business ranging from U.S.$946.1 million to U.S.$1.2615 billion.
High Speed Internet Access -- DLJ analyzed the market values and trading
multiples of selected publicly traded European and US internet service providers
that DLJ believed were reasonably comparable to UPC's broadband business, or
chello broadband. DLJ calculated the adjusted enterprise value of each company
as a multiple of its respective subscribers. DLJ's analysis of the comparable
companies yielded the following range:
<TABLE>
<CAPTION>
HIGH AVERAGE MEDIAN LOW
---- ------- ------ ---
<S> <C> <C> <C> <C>
Enterprise Value/Subscriber........ $34,938.8 $15,199.0 $11,882.8 $5,102.2
</TABLE>
DLJ also considered the reasonableness of this analysis in the context of
press releases and Wall Street analyst estimates for the value of the planned
initial public offering of chello broadband.
Based on this analysis, DLJ estimated values for chello broadband ranging
from U.S.$4.2 billion to U.S.$5.6 billion.
UPCTV -- DLJ analyzed the market values and trading multiples of selected
publicly traded television programming content providers that DLJ believed were
reasonably comparable to UPCTV. DLJ calculated the adjusted enterprise value of
each company as a multiple of its respective subscribers. DLJ's analysis of the
comparable companies yielded the following:
<TABLE>
<CAPTION>
HIGH AVERAGE MEDIAN LOW
---- ------- ------ ---
<S> <C> <C> <C> <C>
Enterprise Value/Subscriber................... $173.4 $130.3 $139.9 $68.0
</TABLE>
Based on this analysis, DLJ estimated values for UPCTV ranging from
U.S.$823.5 million to U.S.$1.6313 billion.
Direct-to-Home Operations in Poland -- DLJ analyzed the market values and
trading multiples of selected publicly traded satellite television providers
that DLJ believed were reasonably comparable to UPC's direct-to-home operations
in Poland. DLJ calculated the adjusted enterprise value of each company as a
multiple of its respective subscribers. DLJ's analysis of the comparable
companies yielded the following multiple average and median:
<TABLE>
<CAPTION>
AVERAGE MEDIAN
------- ------
<S> <C> <C>
Enterprise Value/Subscriber........................... $6,413.7 $6,009.2
</TABLE>
DLJ applied between a 50% and 75% discount to the multiples of the
comparables companies to determine an appropriate valuation for UPC's
direct-to-home business given its beginning stage of development, less
attractive customers and currently limited market.
Based on this analysis, DLJ estimated values for UPC's direct-to-home
operations in Poland ranging from U.S.$521.4 million to U.S.$1.0429 billion.
Other investments -- DLJ analyzed the market values of UPC's other
investments, namely, its interests in SBS and the programming joint venture with
SBS. The value of UPC's interest in SBS was based on the market value of the SBS
shares held by UPC. The value of UPC's programming
48
<PAGE> 54
joint venture with SBS was valued in the same manner as SBS's interest in such
joint venture. (See analysis in SBS valuation section above for detail on
analysis performed to determine joint venture valuation.) DLJ assessed 50% of
the total value of the joint venture to UPC.
Based on this analysis, DLJ estimated values for UPC's other investments
ranging from U.S.$968.8 million to U.S.$1.3689 billion.
Sum of the Parts Analysis Conclusion -- Based on the valuation ranges for
the businesses/ operations listed above as well as other factors and the
analysis of this data and UPC's historical and projected results for comparable
periods, DLJ estimated a value per share of UPC common stock ranging from
U.S.$158.00 to U.S.$223.00, compared to a closing price per share of UPC common
stock on March 8, 2000 of U.S.$237.00.
The summary set forth above does not purport to be a complete description
of the analyses performed by DLJ but describes the material elements of the
presentation that DLJ made to the SBS board on March 8, 2000 in connection with
the preparation of its written fairness opinion, dated March 9, 2000. The
preparation of a fairness opinion involves various determinations as to the most
appropriate and relevant methods of financial analysis and the application of
these methods to the particular circumstances, and, therefore, such an opinion
is not readily susceptible to summary description. DLJ conducted each of the
analyses in order to provide a different perspective on the transaction and to
add to the total mix of information available. DLJ did not form a conclusion as
to whether any individual analysis, considered in isolation, supported or failed
to support an opinion as to fairness from a financial point of view. Rather, in
reaching its conclusion, DLJ considered the results of the analyses in light of
each other and ultimately reached its opinion based on the results of all
analyses taken as a whole. DLJ did not place any particular reliance or weight
on any individual analysis, but instead concluded that its analyses, taken as a
whole, supported its determination. Accordingly, notwithstanding the separate
factors summarized above, DLJ has indicated to SBS that it believes that its
analyses must be considered as a whole and that selecting portions of its
analyses and the factors considered by it, without considering all analyses and
factors, could create an incomplete view of the evaluation process underlying
its opinion. The analyses DLJ performed are not necessarily indicative of actual
values or future results, which may be significantly more or less favorable than
suggested by these analyses.
ENGAGEMENT LETTER
Pursuant to the terms of an engagement letter dated March 2, 2000, SBS has
agreed to pay DLJ an opinion fee of U.S.$1,000,000 (which became payable upon
delivery of the DLJ fairness opinion) and a transaction fee of 0.325% of the sum
of SBS's equity value implied by the offer price plus SBS's outstanding debt if
the exchange offer is completed. The opinion fee offsets any transaction fee. In
addition, SBS agreed to reimburse DLJ, upon request by DLJ from time to time,
for all out-of-pocket expenses (including the reasonable fees and expenses of
counsel) that DLJ incurred in connection with its engagement and to indemnify
DLJ and certain related persons against certain liabilities in connection with
its engagement, including liabilities under U.S. federal securities laws. DLJ
and SBS negotiated the terms of the fee arrangement.
OTHER RELATIONSHIPS
In the ordinary course of business, DLJ and its affiliates may own or trade
the securities of SBS and UPC for their own accounts and for the accounts of
their customers and, accordingly, may at any time hold a long or short position
in SBS or UPC securities. DLJ and its affiliates have performed investment
banking and other services for SBS and UPC in the past and have been compensated
for such services. For example, DLJ has acted or is acting as lead or
co-managing underwriter for UPC, SBS and their respective affiliates on numerous
recent offerings of debt and equity securities. Affiliates of DLJ in the
aggregate own less than two percent of SBS and less than one percent of UPC.
49
<PAGE> 55
CERTAIN PROJECTED FINANCIAL INFORMATION
SBS provided its financial adviser, DLJ, and UPC and its financial adviser,
Goldman Sachs International, certain financial information and projections
relating to SBS's business during the course of the negotiation of the exchange
offer and in connection with the preparation of a fairness opinion by DLJ. In
addition, Mark Schneider, our chief executive officer, was appointed to SBS's
board of directors in December 1999, and certain analyses presented to SBS's
board after that time, including SBS's 2000 budget overview, included financial
information and projections for SBS. The following sets forth financial
information and projections that DLJ has indicated that they considered in
evaluating the fairness of the transaction to the SBS shareholders (other than
affiliates of SBS, including, UPC). This information has been included in this
prospectus for the limited purpose of giving the shareholders of SBS access to
financial projections by SBS's management that have been made available for
review by UPC, DLJ and Goldman Sachs International in connection with the
exchange offer.
SBS does not in the ordinary course make public forecasts or projections as
to future revenues, earnings or other income statement data. The projections
appearing below were not prepared with a view to public disclosure or compliance
with published guidelines of the Securities and Exchange Commission. They also
were not prepared in accordance with guidelines established by the American
Institute of Certified Public Accountants regarding forward looking information,
generally accepted accounting principles, or preparation and presentation of
financial projections. Ernst & Young LLP, SBS's independent accountants, has not
examined, compiled, performed any procedures with respect to the prospective
financial information contained in these projections, or expressed any opinion
or given any form of assurance on such information or its reliability, nor has
it assumed any responsibility for them.
The projections appearing below were prepared by SBS's management in the
regular course of its financial planning. They do not reflect any of the effects
of the exchange offer, any minority buy-out or other changes that may be deemed
appropriate by management concerning SBS and its assets, business, operations,
properties, policies, corporate structure, capitalization and management in
light of future circumstances. Furthermore, the projections appearing below
reflect a number of assumptions with respect to industry performance, general
business and economic conditions, ability of SBS to achieve its strategic goals
and other matters, many of which are beyond the control of SBS and may prove not
to have been, or may no longer be, accurate. In particular, the projections
appearing below reflect the assumption of a certain average future exchange rate
between the U.S. dollar and the euro. Over the relevant period, the assumed
average future U.S. dollar/euro exchange rate differs materially from the now
current U.S. dollar/euro exchange rates and may differ significantly from future
U.S. dollar/euro exchange rates. The preparation of this information was
necessarily based on economic, market, financial and other conditions as they
existed on the day the information was prepared. This information does not
reflect revised prospects for SBS's businesses, changes in general business and
economic conditions or any other transaction or event that has occurred or that
may occur and that was not anticipated at the time this information was
prepared. Accordingly, this information is not necessarily indicative of current
results or future performance, which may be significantly more favorable or less
favorable than as described below, and should not be regarded as a
representation by UPC, SBS, Goldman Sachs International, DLJ or any other person
that the projected results will be achieved. You should read this information in
conjunction with the historical financial information included under "Selected
Historical Consolidated Financial Data of SBS" and incorporated by reference in
this prospectus.
The material assumptions underlying the following projections include
assumptions about the markets in which SBS operates regarding (1) television
broadcasting and cable penetration rates, (2) growth of total television
advertising sales, (3) SBS's share of the television viewing audience, (4) SBS's
share of total television advertising sales, (5) economic growth, exchange rate
fluctuations and the impact of inflation on costs generally and on programming
costs in particular and (6) response of competitors to any of these factors, to
SBS's strategy or to other factors. SBS
50
<PAGE> 56
has generally assumed moderate rates of growth in developing these projections.
The projections shown on a proportionate basis reflect the impact of SBS's
minority interests and operations in The Netherlands, Hungary, Norway and
certain radio broadcasting operations.
The projections are based on SBS's currently consolidated operations and do
not reflect operations in Switzerland, Poland, Romania, Slovenia, radio
broadcasting in Greece, the introduction of a home shopping network in Italy or
the activities of SBS's New Media division.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
2000 2001 2002 2003 2004
ESTIMATED ESTIMATED ESTIMATED ESTIMATED ESTIMATED
--------- --------- --------- --------- ---------
(THOUSANDS OF U.S. DOLLARS)
<S> <C> <C> <C> <C> <C>
GAAP Basis
Revenue..................................... 507,460 546,333 592,928 648,603 690,897
Station Operating Cash Flow................. 54,757 71,457 96,670 121,068 146,098
Operating Income............................ 41,441 57,686 82,185 106,814 131,129
Net Income (Loss)........................... (14,142) 20,631 41,949 64,252 86,093
Proportionate Basis
Station Operating Cash Flow................. 48,630 64,918 84,450 100,856 120,725
</TABLE>
THESE PROJECTIONS ARE NOT GUARANTEES OF PERFORMANCE. THEY INVOLVE RISKS,
UNCERTAINTIES AND ASSUMPTIONS. THE FUTURE FINANCIAL RESULTS AND SHAREHOLDER
VALUE OF SBS MAY MATERIALLY DIFFER FROM THOSE EXPRESSED IN THESE PROJECTIONS.
MANY OF THE FACTORS THAT WILL DETERMINE SBS'S FINANCIAL RESULTS ARE BEYOND SBS'S
ABILITY TO CONTROL OR TO PREDICT. YOU SHOULD READ "FORWARD LOOKING STATEMENTS"
FOR A DISCUSSION OF FACTORS THAT MAY CAUSE ACTUAL RESULTS TO DIFFER FROM THESE
PROJECTIONS.
SBS DOES NOT INTEND TO UPDATE OR REVISE THE PROJECTIONS, AND NEITHER UPC
NOR SBS, NOR THEIR RESPECTIVE FINANCIAL ADVISERS, ASSUMES ANY RESPONSIBILITY FOR
THESE PROJECTIONS. ACCORDINGLY, SBS SHAREHOLDERS ARE CAUTIONED NOT TO RELY ON
THESE PROJECTIONS.
POSITION OF UPC REGARDING FAIRNESS OF THE EXCHANGE OFFER
The rules of the SEC require us to state our belief as to whether the
exchange offer is fair to the unaffiliated shareholders of SBS. We believe that
the consideration (UPC ADSs and cash) to be received in the exchange offer by
SBS's shareholders, other than UPC, is fair to the shareholders of SBS (other
than UPC).
We believe that the exchange offer is fair to the unaffiliated shareholders
of SBS because:
- the board of directors of SBS (except the current board member nominated
by UPC, who abstained) unanimously approved the Exchange Offer Agreement,
determined that the exchange offer is fair and in the best interests of
SBS and its shareholders (other than UPC), and recommends that the SBS
shareholders accept the exchange offer and tender their shares pursuant
the exchange offer;
- the total value of the consideration (UPC ADSs and cash) to be paid in
respect of each SBS share represents a premium of
(1) [ %] over the per share closing sales price of SBS shares on
Nasdaq on March 8, 2000, which is the last trading day prior to the
public announcement of the Exchange Offer Agreement (valuing the
portion of consideration consisting of UPC ADSs based on the closing
sales price of UPC ADSs on Nasdaq on the same date), and
(2) [ %] over the per share closing sales price of SBS shares on
Nasdaq on [DATE], 2000, the last day for which such information
could be practicably calculated prior to the date of this prospectus
(valuing the portion of consideration consisting of UPC ADSs based
on the average of the closing sales prices of UPC ADSs on Nasdaq
over
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a ten day trading period that ended on [DATE], 2000, which is the
price of the UPC ADSs upon which the exchange ratio was based);
- although the opinion of DLJ, SBS's independent financial adviser, was
provided solely for the information and assistance of the board of
directors of SBS, and UPC is not entitled to rely on that opinion, the
SBS board of directors has received a written opinion from DLJ, dated
March 9, 2000, to the effect that, as of that date, based on and subject
to the assumptions, limitations and qualifications included in its
written opinion, the consideration to be received by SBS shareholders
pursuant to the exchange offer was fair to those shareholders (other than
shareholders who are affiliates of SBS, including UPC) from a financial
point of view;
- the SBS shareholders may elect to vary the proportions of UPC ADSs and
cash that they wish to receive in the exchange offer, although SBS
shareholders may not receive the proportions that they request;
- the exchange offer is not subject to any financing condition, and UPC has
represented in the Exchange Offer Agreement that it has or will have
sufficient funds available to it to satisfy all of its obligations under
the Exchange Offer Agreement;
- four directors and executive officers of SBS entered into the Share
Exchange Agreement, each agreeing, among other things, to tender his
respective SBS shares in the exchange offer;
- there have been no competing bids for the outstanding SBS shares either
before or after the announcement of the Exchange Offer Agreement on March
9, 2000;
- the historical and projected financial performance of SBS and its
financial results; and
- the terms and conditions of the Exchange Offer Agreement were negotiated
on an arm's-length basis.
We did not find it practicable to assign, and we did not assign, relative
weights to the individual factors we considered in reaching our conclusion as to
fairness.
We have reviewed the factors that the SBS board of directors considered in
support of its decision, as described in the Schedule 14D-9 included with this
prospectus and above under the caption "-- Recommendation of SBS's Board;
Fairness of the Exchange Offer," and have no basis to question their
consideration of or reliance on those factors.
The exchange offer does not require any vote by the SBS shareholders. Each
SBS shareholder can individually determine whether to tender SBS shares in the
exchange offer.
To our knowledge, the directors of SBS who are not employees of SBS did not
retain an unaffiliated representative to act solely on behalf of the
unaffiliated SBS shareholders for purposes of negotiating the terms of the
Exchange Offer Agreement. However, as noted above, SBS received a written
opinion from DLJ, dated March 9, 2000, to the effect that, based on and subject
to the assumptions, limitations and qualifications included in its written
opinion, the consideration to be received by SBS shareholders pursuant to the
exchange offer is fair to those shareholders (other than shareholders who are
affiliates of SBS, including UPC) from a financial point of view. You will find
a copy of DLJ's opinion attached as Schedule II.
We do not intend to grant SBS shareholders (other than UPC) access to the
corporate files of UPC. Nor do we intend to obtain counsel or appraisal services
at our expense for any SBS shareholder (other than UPC).
PURPOSES OF THE EXCHANGE OFFER
The purpose of the exchange offer is to acquire all of the outstanding SBS
shares that we do not already own. We already own approximately [ %] of the
issued and outstanding SBS shares
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([ %] on a fully diluted basis). This exchange offer will permit us to
acquire control of, and will facilitate our intended acquisition of the entire
equity interest in, SBS.
If not all SBS shares are tendered in the exchange offer, we will use our
reasonable best efforts for a period of six months following completion of the
exchange offer, subject to applicable law, to acquire any remaining shares held
by minority shareholders that have not tendered in the exchange offer, at a
purchase price that is equal to the price paid in the exchange offer, or if such
consideration is not permitted by applicable law, at a purchase price
substantially equivalent to the price paid in the exchange offer. How we conduct
the minority buy-out, if any, will be at our sole discretion and may include
redemption, merger or other corporate actions, as permitted under Luxembourg and
other applicable law. We cannot assure you that there will be a minority buy-out
after the exchange offer is closed, or that it will be successful.
If we successfully acquire all of the outstanding SBS shares in the
exchange offer or a subsequent minority buy-out, if any, SBS would become a
wholly-owned subsidiary of UPC.
We and our affiliates also reserve the right to dispose of any or all SBS
shares that we acquire pursuant to the exchange offer upon such terms and at
such prices as we may determine. Subject to our obligations with respect to the
minority buyout, if any, we reserve the right to acquire, following the
completion of the exchange offer or any minority buy-out, additional SBS shares
through open market purchases, privately negotiated transactions, a tender offer
or exchange offer, or otherwise, upon such terms and at such prices as we
decide, which may be higher or lower than the offer price.
REASONS FOR THE EXCHANGE OFFER
We are seeking to acquire the SBS shares that we do not already own in
order to facilitate our strategy to become one of Europe's leading providers of
multimedia content. We believe that the acquisition of SBS will accelerate our
ability to provide high quality video and audio content to customers throughout
Europe across a variety of media platforms. The combination of SBS's
broadcasting operations with our existing distribution, programming and Internet
operations is intended to allow us to provide a broader, higher quality and more
cost effective range of services to both SBS's and UPC's customers, and to allow
us to address various new formats and distribution windows.
We believe that the proposed combination of UPC and SBS will produce
benefits that include:
- Pan-European multimedia platform. The combination of UPC and SBS will
create a pan-European multimedia content provider with operations
spanning 18 countries.
- Geographic synergies and utilization of local content. UPC and SBS
operate in six common countries, presenting the opportunity to use
content on free-to-air broadcast, cable and internet services. SBS's
strong local content will be able to be further utilized and developed
both for cable channels and as Internet content for chello broadbrand
(our broadband Internet service provider).
- Enhanced content acquisition position. UPC and SBS will become an
important acquirer of programming content in Europe, covering the
free-to-air, pay TV and internet windows across multiple territories
which is expected to strengthen our position in acquiring premium
content.
- Additional thematic channel development. UPC and SBS are already working
together to create a number of new thematic channels for distribution on
both UPC-owned and third party cable systems. The combination of the two
companies is intended to accelerate additional channel development and
improve the use of programming content.
- Multiplexing of channels. SBS's existing channels will be able to be
multiplexed on UPC's cable systems in order to provide greater choice (of
viewing times) for customers, in turn enhancing audiences and advertising
revenue potential.
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- Improved use of advertising inventory. Unused advertising capacity of
both parties can be used to cross-promote both UPC and SBS services.
- Enhanced offering to advertisers. Advertisers of all types will be
provided with a broader advertising offering which may include: the
ability to purchase on a multi-territory, multi-platform basis; the
opportunity to mix advertising more efficiently between mainstream
general audiences and targeted niche audiences; and broader and more cost
effective local advertising.
- Leverage SBS's advertising expertise. Advertising revenues are expected
to become an increasingly important element of UPC's revenues over time.
SBS's European experience in an advertising-driven business should help
us in seeking to increase advertising revenue streams. In addition, we
expect economies will result from advertising covering a broader media
spectrum.
- Production, dubbing and sub-titling cost savings. We expect to realize
operating cost benefits from more efficient use of local production
facilities and dubbing and sub-titling services.
We and SBS have structured UPC's proposed acquisition as an exchange offer
because we believe it is a relatively quick and efficient way, under applicable
law, for us to acquire all of the outstanding SBS shares that we do not already
own.
We are undertaking the exchange offer at this time because we want to
facilitate the combination of our respective businesses as described above.
The reasons for the SBS recommendation are specified in SBS's
Solicitation/Recommendation Statement on Schedule 14D-9, which is being mailed
to you together with this prospectus.
PLANS FOR SBS AFTER THE EXCHANGE OFFER
If we acquire more than two-thirds of the outstanding shares of SBS in the
exchange offer, we expect that we would exercise our rights under the terms of
the exchange offer agreement to appoint a majority of SBS's board of directors.
Subject to applicable rules and regulations, we also expect that shortly after
closing of the exchange offer we would seek to de-list the SBS shares from
Nasdaq and the Amsterdam Stock Exchange and take steps so that SBS would no
longer be a reporting company in the United States under the Exchange Act.
If we do not obtain all the outstanding SBS shares in the exchange offer,
we will use our best efforts for a period of six months following the completion
of the exchange offer to conduct a minority buy-out, as described in more detail
in "The Exchange Offer -- Basic Terms -- Minority Buy-Out."
We expect that, initially following the completion of the exchange offer
and minority buy-out, if any, we will continue the business and operations of
SBS without substantial change. We will work together with the SBS management
team to implement structures that will allow us to realize the benefits outlined
above in "-- Reasons for the Exchange Offer" and that will form the basis for
potentially generating additional revenue streams. We expect that our existing
working relationships with SBS will facilitate this integration process. We
currently intend to combine SBS with UPCtv, our programming subsidiary, into UPC
Media which is a subsidiary that we intend to form. However, we may instead
consider whether to continue SBS as a separate entity or to combine it with UPC
or with any of UPC's other subsidiaries. We would then seek in the future to
conduct an initial public offering of UPC Media (or other subsidiary that we
combine with SBS) and list the shares on the Amsterdam Stock Exchange or
elsewhere. However, our plans may change and we cannot assure you that we will
in fact take, or seek to take, any of these actions.
We expect to continue to evaluate the business and operations of SBS during
and after the exchange offer and may take any further actions from time to time
that we believe are appropriate
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under the circumstances. For example, we may take steps in the future that alter
SBS's capital structure, capitalization, business and operations, board of
directors or management. After completion of the exchange offer or the minority
buy-out, if any, we may amend and restate SBS's articles of incorporation and
other governing documents in order to change or delete provisions that might no
longer be appropriate for a privately-held company.
The liquidity of SBS's shares and value of any remaining minority
investments in SBS will likely decline significantly after completion of the
exchange offer because of the absence of a trading market for those shares. You
should read "Risk Factors -- Any SBS shareholders who remain as minority
shareholders after the exchange offer may be adversely affected" for a
description of certain of the risks associated with retaining a minority
investment in SBS after the exchange offer closes.
CERTAIN EFFECTS OF THE EXCHANGE OFFER
General
If we successfully acquire all of the outstanding SBS shares in the
exchange offer, or a subsequent minority buy-out, if any, SBS would become a
wholly-owned subsidiary of UPC and our interest in SBS's net book value and net
earnings would increase to 100%.
If the minimum tender condition is satisfied and not waived by us, after
the completion of the exchange offer we will own at least two-thirds of the SBS
shares. Accordingly, we will have the ability to elect all of the directors of
SBS. We will also be able to control substantially all actions to be taken by
the shareholders of SBS and effectively will have control of the policies and
affairs of SBS.
In addition, if the minimum tender condition is satisfied, promptly upon
our purchase of SBS shares in the exchange offer, we are entitled under the
Exchange Offer Agreement to designate a majority of SBS's board of directors.
SBS has agreed in this circumstance to take all actions required to be taken by
it to provide us majority representation on its board, on each committee of its
board and on each board or committee of each of its subsidiaries. Each of Kjell
Aamot, Michael Finkelstein, Anthony Ghee, Martin Lindskog, James McNamara,
Jorgen Nilsson and Jesper Smith has signed a conditional resignation letter,
resigning from his position as director of SBS effective upon the completion of
the exchange offer.
Reduced Liquidity; Possible Delisting
The tender of SBS shares in response to the exchange offer will reduce the
number of SBS shares that might otherwise trade publicly and possibly will
significantly reduce the number of holders of SBS shares, which could adversely
affect the liquidity and market value of the remaining SBS shares held by the
public. Depending on the number of SBS shares acquired pursuant to the exchange
offer, following completion of the exchange offer, SBS shares may no longer meet
the requirements of the Nasdaq for continued listing. For example, the Nasdaq
marketplace rules indicate that Nasdaq would consider delisting the outstanding
SBS shares if, among other things, fewer than 500,000 publicly held shares are
trading on Nasdaq (excluding any SBS shares held by UPC and its affiliates, by
any SBS officer or director, or any other person holding more than 10% of the
total outstanding shares), or if there are fewer than 300 round lot holders.
According to SBS, as of [DATE], 2000, there were approximately [ ]
SBS shares outstanding, held by approximately [ ] holders of
record. With regard to the SBS shares traded on the Amsterdam Stock Exchange,
following completion of the exchange offer, depending on the number of SBS share
we acquire, we intend to meet with the Amsterdam Exchanges N.V., the entity that
is authorized to operate the Amsterdam Stock Exchange, in order to cause the
delisting of the SBS shares.
If the SBS shares are delisted, including after the exchange of shares in
the exchange offer, the market for the shares could be adversely affected, and
quotation might or might not still be available
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from other sources. The extent of the public market for the SBS shares and the
availability of such quotations would depend, however, upon the number of
holders and/or the aggregate market value of the SBS shares remaining at that
time, the interest in maintaining a market in the SBS shares on the part of
securities firms, the possible termination of registration of SBS shares under
the Exchange Act, as described below, and other factors. If the SBS shares are
no longer eligible for inclusion on Nasdaq after we purchase SBS shares through
the exchange offer, we intend to seek to cause SBS to request delisting of the
SBS shares from Nasdaq as soon as practicable after they are no longer eligible
for inclusion.
Registration under the Exchange Act
SBS shares are currently registered under the Exchange Act. SBS can
terminate that registration upon application to the SEC if the outstanding
shares are not listed on a national securities exchange and if there are fewer
than 300 holders of record of SBS shares in the United States. Termination of
registration of the SBS shares under the Exchange Act would reduce the
information that SBS must furnish to its shareholders and to the SEC. Certain
requirements of the Exchange Act to furnish an annual report and quarterly
reports to shareholders would no longer apply with respect to SBS shares.
Furthermore, the ability of "affiliates" of SBS and persons holding "restricted
securities" of SBS to dispose of such securities pursuant to Rule 144 under the
Securities Act may be impaired or eliminated. After we purchase SBS's shares
through the exchange offer, the SBS shares may no longer be eligible for
inclusion on Nasdaq and we may be able to terminate the registration of the SBS
shares under the Exchange Act. We intend to seek to cause SBS to terminate the
registration of the SBS shares under the Exchange Act as soon as practicable
after they are no longer quoted on Nasdaq.
Status as "Margin Securities"
The SBS shares are presently "margin securities" under the regulations of
the Federal Reserve Board, which has the effect, among other things, of allowing
brokers to extend credit on the collateral of SBS shares. Depending on the
factors similar to those described above with respect to listing and market
quotations, following completion of the exchange offer, the SBS shares may no
longer constitute "margin securities" for the purposes of the Federal Reserve
Board's margin regulations, in which event the SBS shares would be ineligible as
collateral for margin loans made by brokers.
MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE EXCHANGE OFFER
The following is a description of the material U.S. federal income tax
consequences of the exchange offer and the ownership and disposition of UPC
ADSs. The U.S. federal income tax consequences of the ownership and disposition
of UPC ordinary shares A will be the same as for UPC ADSs. This discussion does
not address the taxes imposed by any political subdivision of the United States
or the tax laws of any other jurisdiction. You should be aware that this summary
is for general information only and may not address all of the tax consequences
that may be relevant to you in light of your individual circumstances.
The summary of U.S. federal income tax consequences applies only to a U.S.
holder, as defined below. In particular, this summary deals only with beneficial
owners who hold SBS shares or UPC ADSs as capital assets and does not address
the tax treatment of U.S. holders that may be subject to special treatment under
the Internal Revenue Code of 1986, as amended, which we refer to as the U.S. tax
code, such as:
- U.S. holders who own directly or by attribution at least 10% of the SBS
shares or the UPC ADSs;
- financial institutions, tax exempt organizations, insurance companies;
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- dealers in securities or currencies,
- persons that hold their SBS shares or UPC ADSs, as the case may be, as
part of a straddle, synthetic security, conversion transaction or other
integrated investment;
- traders in securities who elect to apply the mark-to-market method of
accounting;
- employee benefit plans;
- persons who acquired their SBS shares or UPC ADSs, as the case may be,
through the exercise of employee stock options or as compensation; and
- persons that have a functional currency other than the U.S. dollar.
Non-U.S. holders should consult their tax advisers concerning the U.S.
federal income tax consequences of the exchange offer and the ownership and
disposition of their UPC ADSs.
For a discussion of the material tax consequences to you under Netherlands
law as a holder of UPC ADSs, you should read "Material Tax Consequences under
Netherlands Law."
U.S. FEDERAL INCOME TAX CONSEQUENCES TO U.S. HOLDERS
A U.S. holder is a beneficial owner of SBS shares or UPC ADSs, as the case
may be, that is (1) an individual who is a citizen or resident of the United
States for U.S. federal income tax purposes, (2) a corporation or partnership
created or organized in or under the laws of the United States or of any state
(including the District of Columbia), (3) an estate the income of which is
subject to U.S. federal income taxation regardless of its source, or (4) a trust
which is subject to the supervision of a court within the United States and the
control of one or more U.S. persons over all substantial decisions of the trust.
All references to SBS shares in this discussion are to SBS shares that are
tendered in the exchange offer.
The following discussion is based upon the provisions of the U.S. tax code,
U.S. Treasury regulations, published rulings by the IRS and court decisions, all
as currently in effect. These authorities may change or may have differing
interpretations and these changes or interpretations could apply retroactively.
THE EXCHANGE OFFER
If you are a U.S. holder, your receipt of UPC ADSs and cash in exchange for
each of your outstanding SBS shares will be a taxable exchange upon which you
will recognize gain or loss. The amount of gain or loss you will recognize will
be equal to the difference between the sum of (x) the fair market value of the
UPC ADSs and the amount of cash you receive in the exchange offer and (y) your
adjusted tax basis in your SBS shares. Subject to the discussion under "Passive
Foreign Investment Company Considerations" below, the recognized gain or loss
will be long-term capital gain or loss generally if, as of the date of the
exchange, you have held your SBS shares for more than one year. The source of
any gain or loss realized by a U.S. holder in connection with the exchange offer
generally will be U.S. source.
A U.S. holder's basis in any UPC ADSs received in the exchange offer will
equal the fair market value of the UPC ADSs received by the U.S. holder. A U.S.
holder's holding period with respect to any UPC ADSs received in the exchange
will begin the day after the date on which the holder receives the UPC ADSs.
TAXATION OF DISTRIBUTIONS
Subject to the discussion under "Passive Foreign Investment Company
Considerations" below, a U.S. holder generally will be required to include in
gross income as ordinary dividend income the
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amount of any distributions paid by us on the UPC ADSs (including the amount of
any foreign taxes withheld) to the extent that the distributions are paid out of
UPC's current or accumulated earnings and profits as determined for U.S. federal
income tax purposes. Distributions greater than UPC's earnings and profits will
be applied against and will reduce the U.S. holder's tax basis in its UPC ADSs
and, to the extent in excess of the tax basis, will be treated as gain from a
sale or exchange of the UPC ADSs. UPC's dividends will not qualify for the
dividends-received deduction applicable in certain cases to U.S. corporations.
Dividends paid in a foreign currency (including the amount of any foreign taxes
withheld) will be includable in the income of a U.S. holder in a U.S. dollar
amount calculated by reference to the exchange rate in effect on the day the
dividends are actually or constructively received by the depositary, regardless
of whether the dividends are converted into U.S. dollars. In addition, any gain
or loss resulting from currency exchange fluctuations during the period from the
date the dividend is includable in the income of the U.S. holder to the date the
payment is converted into U.S. dollars will be treated as ordinary income or
loss.
FOREIGN TAX CREDIT
Any dividends that UPC pays to a U.S. holder with respect to the UPC ADSs
generally will be treated as foreign source income for U.S. foreign tax credit
purposes. Subject to the limitations in the U.S. tax code, U.S. holders may
elect to claim a foreign tax credit against their U.S. federal income tax
liability for foreign income or profits taxes withheld from dividends they
receive in respect of their UPC ADSs. Under a provision of the Dutch dividend
tax act, UPC may be entitled to a credit against the amount of dividend tax
withheld before remittance to the Dutch authorities. The credit is at most 3% of
the part of the gross dividend from which dividend tax is withheld. The U.S.
Internal Revenue Service may take the position that the Dutch withholding tax
eligible for the U.S. foreign tax credit is limited accordingly.
The rules relating to the determination of the foreign tax credit are
complex, U.S. holders should consult their own tax advisers to determine whether
and to what extent a holder would be entitled to the credit. U.S. holders who do
not elect to claim a foreign tax credit instead may claim a deduction for
foreign income tax withheld, but only for a year in which the U.S. holder elects
to do so with respect to all foreign income taxes.
SALE OR OTHER DISPOSITION OF THE UPC ADSS
A U.S. holder generally will recognize gain or loss equal to the difference
between (x) the amount realized (if the amount realized is denominated in
foreign currency other than in U.S. dollar equivalents determined at the spot
rate on the date of disposition) on the disposition and (y) the U.S. holder's
adjusted tax basis in the UPC ADSs. Subject to the discussion under "Passive
Foreign Investment Company Considerations" below, the recognized gain or loss
generally will be long-term capital gain or loss if the U.S. holder held the UPC
ADSs for more than one year before disposition. The source of gain or loss
realized by a U.S. holder in connection with the disposition of the UPC ADSs
generally will be U.S. source.
PASSIVE FOREIGN INVESTMENT COMPANY (PFIC) CONSIDERATIONS
UPC could be classified as a PFIC for any taxable year if at least 50% of
its assets (by value) produce passive income (or are held for the production of
passive income), or at least 75% of its gross income is passive income. Due to
the inherently factual nature of the determination of PFIC status, as of the
date of this prospectus, we cannot advise you whether or not UPC is or will
become a PFIC. However, we do not anticipate that UPC will be a PFIC for 2000 or
for future years. If UPC were classified as a PFIC, a U.S. holder would either:
1. include any excess distribution by UPC to the U.S. holder (which
generally means any distribution received by a U.S. holder in a taxable
year that is greater than 125% of the average annual distributions
received by the U.S. holder in the three preceding taxable years
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or, if shorter, the U.S. holder's holding period for the UPC ADSs) and the gain
from the disposition of the UPC ADSs as ordinary income (spread over the holding
period of your UPC ADS), and pay additional tax to reflect the deferral of U.S.
taxation of the excess distribution or gains;
2. elect currently to include in income its share of UPC's ordinary income
and net capital gain, irrespective of distributions by UPC (in which
event UPC would provide the necessary financial information to the U.S.
holders to make this election); or
3. elect to include as ordinary income for each taxable year the excess, if
any, of the fair market value of the U.S. holder's UPC ADSs over the
adjusted tax basis of the ADSs and deduct as an ordinary loss the
excess, if any, of the adjusted tax basis of the UPC ADSs over the fair
market value of the ADSs at the end of the taxable year, but only to the
extent of the amount previously included in income as a result of this
mark-to-market election.
If SBS were classified as a PFIC in any year in which a U.S. holder held SBS
shares, then any gain from the disposition of SBS shares in the exchange offer
would generally be taxed as ordinary income (spread over the holding period of
your SBS shares), and you would be required to pay additional tax to reflect the
deferral of U.S. taxation of these gains. Due to the inherently factual nature
of the determination of PFIC status, as of the date of this prospectus, we
cannot advise you whether or not SBS has been or will be treated as a PFIC for
the year 2000. SBS has represented to us, based upon investigations, inquiries,
and projections that SBS deems to be reasonable, that SBS does not believe it
was a PFIC in any of the years from 1993 through 1999 and that SBS does not
anticipate that it will be a PFIC in 2000, but that SBS cannot assure us that it
will not in fact be a PFIC for its taxable year ending December 31, 2000 or any
subsequent year because the determination of whether or not SBS is a PFIC will
be based on the composition of the income and the assets of SBS and can be
definitively made only after the end of each taxable year.
FOREIGN PERSONAL HOLDING COMPANY (FPHC) CONSIDERATIONS
UPC could be classified as a FPHC for any taxable year if:
1. five or fewer individuals who are U.S. citizens or residents own
(directly or constructively through certain attribution rules) more than
50% of the total voting power of all classes of our stock entitled to
vote or the total value of our stock; and
2. at least 60% (50% in certain cases) of UPC's gross income consists of
"foreign personal holding company income," which generally includes
passive income such as dividends, interest, certain gains, rents and
royalties.
Classification as a FPHC would in general require each U.S. holder who held
UPC ADSs on the last day of the taxable year to include in gross income as a
dividend the holder's pro rata portion of UPC's undistributed foreign personal
holding company income. Due to the inherently factual nature of the
determination of FPHC status, as of the date of this prospectus, we cannot
advise you whether or not UPC is or will become a FPHC. However, we do not
anticipate that UPC will be a FPHC for 2000 or for future years.
BACKUP WITHHOLDING AND INFORMATION REPORTING
Proceeds from the exchange of SBS shares, the sale or other disposition of
UPC ADSs or distributions on the UPC ADSs that are paid to a U.S. holder (other
than certain exempt recipients, such as corporations) within the U.S. (or in
certain cases, outside the U.S.) generally are subject to information reporting,
and "backup" withholding at a rate of 31% may apply to such amounts if the U.S.
holder fails to provide the payor with its taxpayer identification number and
other required information or to report interest and dividends required to be
shown on its federal income tax returns. The amount of any backup withholding
from a payment to a U.S. holder will be allowed as a credit against the U.S.
holder's U.S. federal income tax liability.
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OTHER AGREEMENTS AND RELATIONSHIPS WITH SBS
Other than the Exchange Offer Agreement, the principal agreement in place
between SBS and UPC is the private placement agreement dated as of January 27,
2000, as amended, relating to our acquisition of an additional 3,000,000 SBS
shares. We had previously acquired 3,000,000 shares from SBS pursuant to an
investment agreement with SBS dated June 29, 1999. UnitedGlobalCom is also a
party to the private placement agreement. You should read "Special Factors --
Background to the Offer" for a more detailed description of the circumstances
relating to entry into the private placement agreement.
As part of the private placement agreement, we have agreed to standstill
arrangements providing that for a period of two years from January 2000 UPC and
its affiliates, referred to as the United Group, will not directly or indirectly
obtain ownership of SBS shares or other voting securities that taken together
would exceed 23.4% of the outstanding voting rights in SBS. The private
placement agreement provides that these standstill arrangements will terminate
if any third party or group acquires SBS shares or other voting securities that
taken together represent more than 17.5% of the combined voting power of all SBS
shares and other voting securities then outstanding. SBS has granted UPC certain
anti-dilution rights to enable us to maintain our percentage ownership of voting
rights in SBS. We have also agreed that no member of the United Group may sell
or otherwise transfer, without the prior approval of SBS, the 3,000,000 shares
we acquired under the June 1999 investment agreement for a period of 12 months
from January 2000 and under the private placement agreement for a period of 18
months from January 2000. SBS has rights of first refusal on all sales or
transfers by the United Group of any securities acquired under the investment
agreement or private placement agreement. SBS has granted us certain
registration rights with respect to the SBS shares acquired under the investment
agreement and private placement agreement that become effective when the
relevant transfer restrictions expire.
On April 13, 2000, we and SBS jointly announced that we had selected the
first two of our initially planned four separate subscription channels for the
UPC-SBS subscription channel joint venture, a Gold channel, which will be an
archive-themed channel with broad demographic appeal, and a youth-oriented film
channel, targeted to a younger 18-to-34 demographic. These new channels were
jointly developed by a task force comprised of programming executives from both
UPC and SBS and outside consultants. We are working on two additional theme
channels, one of which we expect will be a shopping channel. These four channels
are part of our strategic partnership with SBS across western and central
Europe.
UPC, SBS and ZeniMax Media Inc, SBS's U.S.-based Internet technology and
content partner, are exploring the joint development of a number of European
entertainment portals and related Web sites. The portals will enable European
users to access a variety of entertainment created by ZeniMax. The portals will
be made available through chello broadband, UPC's high-speed broadband Internet
service provider, and other Internet service providers.
In February, 2000, subject to approval by UPC's supervisory board, UPC
agreed to acquire from SBS 32.25% of Amerom Television Limited, a Romanian
television broadcaster operating as "Prima TV." SBS currently holds, either
directly or indirectly, 86% of Amerom Television Limited. Prima TV holds
national and local terrestrial broadcasting licenses (as well as national
satellite licenses) and has an audience share of approximately 5% in Romania.
In 1999 UPC and SBS successfully bid on a joint basis for the rights for
the Amstel Cup, the principal Dutch soccer cup competition. Under the agreement,
which runs until the end of the 2001/2002 soccer season, SBS has the right to
transmit live games and UPC has the right to transmit re-runs on its Sport 1
channel. UPC and SBS are also contemplating bidding on a joint basis for all
free-to-air and pay TV rights for Eredivisie, the Dutch premier soccer league.
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In connection with the execution of the exchange offer agreement, SBS,
UnitedGlobalCom and we executed an amendment to the private placement agreement
on March 9, 2000, which amended the private placement agreement to permit the
purchase of SBS shares in the exchange offer and the other transactions
contemplated by the exchange offer agreement, and to permit purchases of SBS
shares by the United Group without restriction after the closing of the exchange
offer.
Four SBS officers and directors, including Mr. Sloan, have each entered
into a share exchange agreement and lock-up agreements with us. You should read
"The Share Exchange Agreement" for a detailed description of the terms of these
agreements.
Except as set forth in this prospectus, neither we nor, to the best of our
knowledge, any of our directors, executive officers or other affiliates has any
contract, arrangement, understanding or relationship with any other person with
respect to any securities of SBS, including, but not limited to, any contract,
arrangement, understanding or relationship concerning the transfer or the voting
of any such securities, joint ventures, loan or option arrangements, puts or
calls, guaranties of loans, guaranties against loss or the giving or withholding
of proxies. Except as described in this prospectus, there have been no contacts,
negotiations or transactions within the last two years, between us or, to the
best of our knowledge, any of our directors, executive officers or other
affiliates on the one hand, and SBS or its affiliates, on the other hand,
concerning a merger, consolidation or acquisition, a tender offer or other
acquisition of securities, an election of directors, or a sale or other transfer
of a material amount of assets. Except as set forth in this prospectus, neither
we, nor, to the best of our knowledge, any of our directors, executive officers
or other affiliates has within the last two years had any transaction with SBS
or any of its executive officers, directors or affiliates that would require
disclosure under the rules and regulations of the SEC applicable to the exchange
offer.
The current directors and executive officers of UPC and UnitedGlobalCom,
respectively, are described in Schedule III, which is incorporated by reference
in this prospectus. We anticipate that after the completion of the exchange
offer, Mr. Harry Evans Sloan, the present chief executive officer of SBS, will
be nominated to our supervisory board. If in the future Mr. Sloan were to assume
a management position with UPC, he would no longer be eligible to serve on our
supervisory board, in which case we anticipate that we would nominate him to our
management board. You will find biographical and other information about Mr.
Sloan in SBS's annual report on Form 20-F for the year ended December 31, 1999,
which is incorporated in this prospectus by reference as explained under "Where
You Can Find More Information."
INTERESTS OF DIRECTORS AND EXECUTIVE OFFICERS OF SBS
In considering the position of the SBS board with respect to the exchange
offer, you should be aware that the directors and executive officers of SBS have
interests in connection with the exchange offer may be different from those of
other SBS shareholders.
Certain directors and executive officers of SBS have substantial holdings
of SBS shares and are in a position to realize substantial economic benefits if
the exchange offer is completed. As of [DATE], the SBS directors and executive
officers owned in the aggregate [ ] SBS shares. In addition, as of
[DATE], these directors and executive officers held options to acquire an
aggregate of [ ] SBS shares and the exchange offer would
automatically accelerate those options at the time of the exchange offer. As a
consequence, those directors would benefit from being immediately able to
exercise their options rather than having to wait until the term of the options.
The persons described above would receive payment for their shares in the
aggregate amount of [$ ] if they were to exercise all of their options
and tender all of their SBS shares in the exchange offer. Any amounts received
by these directors and executive officers of SBS pursuant to the Exchange Offer
Agreement will be the same on a per share basis as other SBS shareholders.
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Four directors and executive officers who are shareholders of SBS entered
into the Share Exchange Agreement on March 9, 2000, agreeing, among other
things, to tender their shares in the exchange offer. At that time these four
shareholders collectively held a total of 1,142,694 outstanding SBS shares,
representing approximately 4.44% of the then issued and outstanding shares.
Collectively, these persons also had the right to acquire an additional
3,400,999 shares upon the exercise of outstanding SBS stock options. These same
directors and executive officers also entered into separate letter agreements
with UPC, dated as of March 9, 2000, in which each of them agreed, among other
things, not to sell or otherwise permit the transfer of any UPC ADSs or UPC
ordinary shares A that he owns or over which he has control (as specified in the
letter agreements) for a period of six months after the completion of the
exchange offer without UPC's prior written consent.
Except as described above, other SBS directors and executive officers are
not required, and have not indicated whether they intend, to tender their SBS
shares in the exchange offer.
In addition, we anticipate that after the completion of the exchange offer
Mr. Harry Evans Sloan, the present chief executive officer of SBS, will be
nominated to our supervisory board. If in the future Mr. Sloan were to assume a
management position with UPC, he would no longer be eligible to serve on our
supervisory board, in which case we anticipate that we would nominate him to our
management board.
INDEMNIFICATION
Under the Exchange Offer Agreement, if the exchange offer is completed, we
have agreed for a period of the earlier of two years following the completion of
the exchange offer or expiration of any limitation period in which any legal
action could be brought, subject to certain specified conditions, to indemnify
each present and former director or officer of SBS and its subsidiaries to the
full extent permitted by the General Corporation Law of the State of the State
of Delaware (GCL) (as if the GCL were to apply to SBS or UPC) against any costs
or expenses incurred in the defense of any legal action or suit. In addition, we
have agreed to provide officers' and directors' liability insurance during the
same period to all persons who were serving as directors or officers of SBS as
of March 9, 2000.
APPRAISAL RIGHTS
The exchange offer does not entitle you to appraisal rights with respect to
your SBS shares. Dissenting shareholders would only have the right to seek legal
relief in Luxembourg courts under general principles of legal protection of
minority shareholders. Whether or not you would have any appraisal or
dissenter's rights under Luxembourg law in a subsequent minority buy-out would
depend on how we choose to conduct the minority buy-out, if any.
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THE COMPANIES
UNITED PAN-EUROPE COMMUNICATIONS N.V.
Fred. Roeskestraat 123,
P.O. Box 74763
1076 EE Amsterdam
The Netherlands
011 31 20 778 9840
Our network footprint covers 17 countries in Europe and Israel. We provide
communications services in many European countries through our business lines:
cable television, direct-to-home and programming, telephone and Internet/data
services. Our subscriber base is the largest of any group of broadband
communications networks operated across Europe. Our largest systems are located
in Austria, the Czech Republic, France, Hungary, Israel, The Netherlands, Norway
and Poland.
We own and operate established cable television systems and are expanding
and upgrading those systems. As of December 31, 1999, our operating systems had
approximately 5.8 million aggregate subscribers to their basic tier video
services, excluding 254,092 subscribers who subscribe for our direct-to-home
service in Poland. Video distribution services accounted for approximately 81.2
% of our consolidated revenues 1999.
We have been involved in several country-specific programming ventures
including those dedicated to creating channels for Spain, the Slovak Republic,
Poland, Israel and Malta, as well as programming ventures for Hungary and the
Czech Republic that we have sold. Together, these programming ventures have
developed channels in key genres including sports, children, documentaries and
movies, which are subtitled or dubbed in the local language. We have launched on
a pan-European basis six channels of various genres since May 1999.
We offer local telephone services over our cable network, under the brand
name Priority Telecom, in our Austrian, Netherlands, French and Norwegian
systems. We also have a traditional telephone network in Hungary. As of December
31, 1999, we had 202,800 telephone lines in service for our residential and
business customers offering local, national and international voice services, as
well as data services to our business customers.
We initially launched our broadband Internet business in a few of our
operating systems in September 1997. chello broadband started operations in
March 1998 and was incorporated on June 8, 1998 for the purpose of developing
global broadband, Internet-based operations. chello broadband launched its
service in March 1999 and provides high-speed internet access and local portal
and integrated broadband content to our local operating companies and affiliated
operating companies. chello broadband has long-term agreements for the
distribution of Internet services to residential and business customers using
cable television, fixed wireless and satellite infrastructure of local
operators, including our operating companies, covering 14.9 million homes in
Europe, Australia, New Zealand and Latin America. At December 31, 1999, it had
approximately 118,000 residential subscribers, as well as approximately 3,500
business subscribers.
UPC is a public limited liability company organized under the laws of The
Netherlands.
UnitedGlobalCom owns approximately 53% of our outstanding ordinary shares A
and all of our outstanding priority shares. UnitedGlobalCom is the largest
broadband communications provider outside the United States. It provides
multi-channel television services in 23 countries and telephone and
Internet/data services in a growing number of its international markets. In
addition to its interests in us, UnitedGlobalCom has operations in the
Asia/Pacific region and in Latin America. As of December 31, 1999,
UnitedGlobalCom's systems had an aggregate of 7.2 million multi-channel
television subscribers, 323,000 telephone lines in service and 129,000
Internet/data subscribers.
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UnitedGlobalCom is a Delaware corporation with its headquarters in Denver,
Colorado. Its principal place of business is located at 4643 South Ulster
Street, Suite 1300, Denver, Colorado 80237. Its telephone number is (303)
770-4001.
SBS BROADCASTING S.A.
8-10 Rue Mathias Hardt
L-1717 Luxembourg, Luxembourg
011 352 40 7878
SBS is a rapidly growing European broadcasting company that creates,
acquires, packages and distributes programming and other content via television
channels, radio stations and the Internet. SBS owns and/or operates 11
television and 17 radio stations across ten countries in Europe together with
various related destinations and promotional web sites. SBS currently broadcasts
in or into Norway, Sweden, Denmark, Finland, Flemish Belgium, The Netherlands,
Slovenia, Hungary, German-speaking Switzerland, Romania and Greece and has
Internet activities or investments in Norway, Sweden, Denmark, Finland, Belgium,
The Netherlands and the United States. SBS has announced that it has agreed to
acquire a 33% interest in a Polish television station and that the launch of a
home shopping channel is planned in Italy. SBS sells advertising to
multinational, regional and local advertisers.
As of December 31, 1999, SBS had approximately 1,300 employees. SBS
reported approximately U.S.$412.6 million in revenues for the fiscal year ended
December 31, 1999.
SBS is a public limited liability company organized under the laws of
Luxembourg.
As of [DATE], 2000, there were [ ] SBS shares issued and outstanding,
held by approximately [ ] shareholders of record. Because certain of these
shares are held by brokers or other nominees, the [ ] number of record
holders may not be representative of the number of beneficial owners.
As of the date of this prospectus, UPC is the beneficial owner of 6,000,000
SBS shares, representing approximately [ %] of the issued and outstanding
SBS shares ([ %] on a fully diluted basis). UPC has the right to nominate
one member of the board of directors of SBS. Under the U.S. federal securities
laws, UnitedGlobalCom, the majority shareholder of UPC, is also deemed to be the
beneficial owner of these 6,000,000 SBS shares.
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THE EXCHANGE OFFER
BASIC TERMS
Exchange of UPC ADSs and Cash. We are offering to exchange [ ]
UPC ADSs plus U.S.$[ ] cash, without interest, for each outstanding SBS
share that is validly tendered and not properly withdrawn. As discussed below,
the exchange offer also includes a shareholder election that will enable you to
elect to vary the proportions of UPC ADSs and cash that you receive in the
exchange offer.
The exchange ratio is fixed, and will not change between now and the time
the exchange offer closes. The exchange ratio, determined according to the
Exchange Offer Agreement, was based on a price of a UPC ADS of U.S.$ ,
which is the average of the closing sales prices of the UPC ADSs on Nasdaq over
the ten day trading period that ended on [DATE], 2000. Please read "The Exchange
Offer Agreement and the Share Exchange Agreement -- The Exchange Offer
Agreement -- Consideration" for more details. The closing sales price of a UPC
ADS as reported on Nasdaq on [DATE], 2000, the last day for which such
information could be practicably obtained prior to the date of this prospectus,
was U.S.$ . The value of the UPC ADSs you receive will fluctuate, based
on changes in the market price for the UPC ADSs and UPC ordinary shares A. Any
fluctuation in the market price of UPC ADSs or ordinary shares A between now and
the closing of the exchange offer will change the value of the UPC ADSs that you
will receive and will depend upon any number of reasons, including those
specific to UPC and those that influence the trading prices of equity securities
generally. For information on the range of trading prices of UPC ADSs on Nasdaq,
please read "Market Prices and Dividends."
The amount of cash you will receive in the exchange offer is fixed at
U.S.$[ ] per SBS share that you exchange (subject to your
shareholder election, if any, described below). This amount will not be affected
by fluctuations in the market price of UPC ADSs or SBS shares.
Therefore, the total value of the consideration that you will receive in
exchange for each SBS share is equal to [$ ] plus [ ] UPC ADSs
multiplied by the market value of the UPC ADSs which, as explained above, will
fluctuate. Based on the closing sales price of [ ] UPC ADS on Nasdaq on
[DATE], 2000, of U.S.$[ ], the total value of the consideration you
would have received in the exchange offer for each SBS share on that date would
have been approximately U.S.$[ ].
Non-U.S. Residents. We are offering UPC ordinary shares A and cash to SBS
shareholders resident outside the United States. Non-U.S. residents should read
the separate materials provided to them, not this prospectus, to learn how to
tender their SBS shares.
Shareholder Election. If you validly tender your SBS shares in the
exchange offer you may elect to receive for each SBS share either:
(1) [ ] UPC ADSs, plus U.S.$[ ] in cash, without interest
(we call this the "standard election"), or
(2) [ ] UPC ADSs only (we call this the "all ADS election"), or
(3) $U.S.[ ] in cash only, without interest, (we call this the
"all cash election").
If you do not make an election, or if your election is not validly made,
you will receive the standard election consideration.
To make an election, you will need to specify, as explained in the Letter
of Transmittal:
- the number of SBS shares for which you want to make a standard election,
if any;
- the number of SBS shares for which you want to make an all ADS election,
if any; and
- the number of SBS shares for which you want to make an all cash election,
if any.
IF YOU HOLD YOUR SBS SHARES IN YOUR OWN NAME IN CERTIFICATED FORM, YOU
SHOULD READ CAREFULLY THE INSTRUCTIONS ACCOMPANYING THE LETTER OF TRANSMITTAL.
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IF YOU HOLD YOUR SBS SHARES IN BOOK-ENTRY (OR UNCERTIFICATED) FORM THROUGH
A BROKER, YOU SHOULD INSTRUCT YOUR BROKER TO MAKE A SHAREHOLDER ELECTION FOR
YOU.
The exchange agent will allocate the exchange offer consideration to the
extent practicable among SBS shareholders based on the number of tendered SBS
shares for which shareholders elect to receive a higher proportion of UPC ADS
and the number of tendered SBS shares for which shareholders elect to receive a
higher proportion of cash. The total amount of cash and the total number of UPC
ADSs and UPC ordinary shares A that we will issue in the exchange offer will not
vary as a result of shareholder elections. Accordingly, the exchange agent's
ability to satisfy the election or elections you make (other than the standard
election) will depend on other shareholders making an offsetting election. In
other words, in order for you to receive a higher proportion of cash, other
shareholders will have to elect to receive a higher proportion of UPC ADSs, and
vice versa. As a result you may not receive the mix of UPC ADSs and cash that
you request unless you make the standard election for all of your SBS shares.
- If tendering SBS shareholders elect to receive, in total, more UPC ADSs
than the total number of UPC ADSs that we would issue in the exchange
offer for a standard election, the exchange agent will pro ratably scale
down as nearly as practicable the proportion of UPC ADSs that SBS
shareholders requesting a higher proportion of UPC ADSs would otherwise
receive.
- If all tendering SBS shareholders elect to receive, in total, more cash
than the total amount of cash that we would pay in the exchange offer for
a standard election, the exchange agent will pro ratably scale down as
nearly as practicable the proportion of cash that SBS shareholders
requesting a higher proportion of cash would otherwise receive.
We will determine all questions as to the validity of any shareholder
election, in our sole discretion, which determination will be final and binding
on all parties. We also reserve the absolute right to waive any defect or
irregularity in any election, whether or not similar defects or irregularities
are waived in the case of other SBS shareholders. No election will be validly
made until all defects or irregularities have been cured or waived. Neither we
nor the dealer manager, exchange agent or information agent will have any
obligation to notify you of any defects or irregularities in elections or incur
any liability for failure to notify you.
We will not issue fractional interests in UPC ADSs. You will not receive
any interest on the cash to be given for fractional shares, even if there is a
delay in making the exchange and payment.
Subject to applicable SEC rules and regulations and subject to the terms of
the Exchange Offer Agreement, we reserve the right, in our sole discretion, at
any time or from time to time, to amend the exchange offer in such a way as to
revise the shareholder election in any respect, by giving notice of such
amendment to the exchange agent and by making a public announcement.
Holders of SBS shares who make shareholder elections will not necessarily
know the exact number of UPC ADSs they will receive until settlement of the
consideration under the exchange offer.
YOUR SHAREHOLDER ELECTION WILL NOT BE VALID UNLESS YOU VALIDLY TENDER YOUR
SBS SHARES PURSUANT TO THE EXCHANGE OFFER AND MAKE A VALID ELECTION AS DESCRIBED
IN THE INSTRUCTIONS TO THE LETTER OF TRANSMITTAL YOU RECEIVED WITH THIS
PROSPECTUS. Please read the section of this prospectus captioned "The Exchange
Offer -- How to Tender Your Shares."
Minority Buy-Out. The purpose of the exchange offer is to acquire all of
the outstanding SBS shares that we do not already own. For a period of six
months following the completion of the exchange offer, we will use our
reasonable best efforts, subject to applicable law, to acquire any remaining
shares of SBS held by minority shareholders that are not tendered in the
exchange offer at a purchase price that is equal to the price paid in the
exchange offer, or if such consideration is not permitted by applicable law, at
a purchase price substantially equivalent to the price paid in the exchange
offer. How we will conduct this minority buy-out will be at our discretion and
may include
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redemption, merger or other corporate actions, as permitted under Luxembourg or
other applicable law. We cannot assure you that there will be a minority buy-out
of any remaining shares after the completion of the exchange offer or, if there
is one, that it will be successful.
Transfer Charges. If you tender your shares, you will not be obligated to
pay any charges or expenses of the exchange agent. Except as set forth in the
instructions to the accompanying Letter of Transmittal, we will pay, or arrange
to have paid, the transfer taxes on the tender of SBS shares pursuant to the
exchange offer. If you are the record owner of your shares and you tender your
shares in the exchange offer, you will not have to pay brokerage fees or incur
similar expenses. If you own your shares through a broker or other nominee, and
your broker or nominee exchanges the shares on your behalf, your broker or
nominee may charge you a fee for doing so. You should consult your broker or
nominee to determine whether any charges will apply.
Conditions of Exchange Offer. Our obligation to accept for exchange and
pay for any SBS shares that you tender in the exchange offer is conditioned
upon, among other things, satisfaction of the minimum tender condition and the
other conditions that are described in "Conditions of the Exchange Offer."
Expiration of the Exchange Offer; Extension of Exchange Offer Period. The
exchange offer is currently scheduled to expire at 12:00 midnight, New York City
time, on [DAY], [DATE], 2000, subject to extension as described below.
We reserve the right, at any time and from time to time (except as limited
by the Exchange Offer Agreement), to extend the period during which the exchange
offer is open, by giving oral or written notice to the exchange agent and by
making public announcement of the extension as described below.
Under the Exchange Offer Agreement, without the consent of SBS:
- We may extend the initial offering period of the exchange offer if at any
scheduled expiration time of the initial offering period any of the
exchange offer conditions has not been satisfied or waived.
- We may extend the exchange offer for any period required by any
regulation of the SEC or any foreign governmental regulatory authority
applicable to the exchange offer.
- We may increase the offer price and extend the exchange offer in
connection with such increase, to the extent required by any applicable
law.
- We may extend the exchange offer on one or more occasions (but not beyond
September 30, 2000) if on any expiration date that number of SBS shares
which, together with any SBS shares beneficially owned by us or any of
our affiliates, represents at least 90% of the total outstanding SBS
shares on a fully-diluted basis has not been validly tendered and not
withdrawn.
If requested by SBS, we will extend the initial offering period:
- for a total of not more than ten business days if at any scheduled
expiration of the initial offering period any of the exchange offer
conditions have not been satisfied or waived and all such conditions are
reasonably capable of being satisfied; and
- for a total of not more than 15 business days if the exchange offer
period has not been previously extended and at the expiration of the
initial offer period if on any expiration date that number of shares
which, together with any shares beneficially owned by us, represents at
least 90% of the total outstanding SBS shares on a fully-diluted basis
has not been validly tendered and not withdrawn.
If the exchange offer is extended for any reason, we will make an
announcement to that effect before 9:00 A.M., New York City time, on the next
business day after the previously scheduled
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expiration date. During any such extension, all SBS shares previously tendered
and not withdrawn will remain subject to the exchange offer, and you will have
the right to withdraw your SBS shares as described under the caption "Withdrawal
Rights" below. Subject to the terms of the Exchange Offer Agreement, we are not
giving any assurance that we will exercise our right to extend the exchange
offer.
Delay; Termination; Waiver; Amendment. Subject to the SEC's rules and
regulations and the terms of the Exchange Offer Agreement, which, among other
things, limit our ability to amend or terminate the exchange offer, we also
reserve the right, in our sole discretion, at any time or from time to time:
- to delay acceptance for exchange and payment of, or, regardless of
whether we previously accepted SBS shares for exchange and payment,
exchange and payment for, any SBS shares pursuant to the exchange offer
upon the failure of any of the conditions of the exchange offer to be
satisfied;
- to terminate the exchange offer and not accept or exchange and pay for
any SBS shares, upon the failure of any of the conditions of the exchange
offer to be satisfied; and
- to waive any condition or otherwise amend the exchange offer in any
respect,
in each case by giving oral or written notice of the delay, termination, waiver
or amendment to the exchange agent and by making a public announcement.
Subject to applicable law (including Rules 14d-4(d) and 14d-6(c) under the
Exchange Act, which require that any material change in the information
published, sent or given to shareholders in connection with the exchange offer
be promptly sent to shareholders in a manner reasonably designed to inform them
of such change) and without limiting the manner in which we may choose to make
any public announcement, we will have no obligation to publish, advertise or
otherwise communicate any public announcement of extension of the exchange offer
period or any delay, termination, waiver or amendment other than by issuing a
press release.
If we make a material change in the terms of the exchange offer or the
information concerning the exchange offer, or if we waive a material condition
of the exchange offer, we will extend the exchange offer to the extent required
under the Exchange Act. The minimum period during which an offer must remain
open following material changes in the terms of the exchange offer or
information concerning the exchange offer, other than a change in offer price or
a change in the percentage of securities sought, will depend upon the facts and
circumstances then existing, including the materiality of the changed terms or
information. If, prior to the expiration date, we change the percentage of SBS
shares sought or the consideration offered, that change will apply to all
holders whose SBS shares are accepted for exchange pursuant to the exchange
offer. If at the time notice of that change is first published, sent or given to
you, the exchange offer is scheduled to expire at any time earlier than the
tenth business day from and including the date that such notice is first so
published, sent or given, we will extend the exchange offer until the expiration
of that ten business day period. For purposes of the exchange offer, a "business
day" means any day other than a Saturday, Sunday or U.S. federal holiday and
consists of the time period from 12:01 A.M. through 12:00 midnight, New York
City time.
Shareholder List. Communication with, and distribution of the exchange
offer to, SBS shareholders is based on SBS's shareholders list and security
position listings. This prospectus, related Letter of Transmittal and other
relevant materials are being sent to record holders of SBS shares and to
brokers, dealers, commercial banks, trust companies and similar persons whose
names, or the names of whose nominees, appear on SBS's shareholders list or, if
applicable, who are listed as participants in a clearing agency's security
position listing.
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ACCEPTANCE FOR EXCHANGE AND PAYMENT FOR SBS SHARES
On the terms and subject to the conditions of the exchange offer
(including, if the exchange offer is extended or amended, the terms and
conditions of any such extension or amendment), we will accept, and will
exchange and pay for all SBS shares validly tendered and not withdrawn as
promptly as practicable after the expiration time. Any determination concerning
the satisfaction of the terms and conditions of the exchange offer will be in
the sole discretion of UPC. The conditions to the exchange offer are for our
sole benefit, and we may assert or waive them, in whole or in part, at any time
at our sole discretion, subject to the terms and conditions of the Exchange
Offer Agreement. In addition, subject to applicable rules of the SEC, we
expressly reserve the right to delay acceptance for exchange and payment of, or
subject to applicable SEC rules, exchange and payment for, SBS shares in order
to comply in whole or in part with any applicable law.
In all cases, exchange of and payment for SBS shares tendered and accepted
for exchange pursuant to the exchange offer will be made only after timely
receipt by the exchange agent of:
- certificates for those of SBS shares or a confirmation of a book-entry
transfer of those shares in the exchange agent's account at DTC;
- a properly completed and duly executed Letter of Transmittal, or a copy
(if you are delivering certificates representing your SBS shares to the
exchange agent) or agent's message (if your SBS shares are being
delivered by means of book-entry transfer through DTC); and
- any other documents required by the Letter of Transmittal (if
applicable).
The term "agent's message" means a message, transmitted by DTC to, and
received by, the exchange agent and forming a part of a book-entry confirmation,
which states that DTC has received an express acknowledgment from the
participant in DTC exchanging the SBS shares which are the subject of such
book-entry confirmation, that such participant has received and agrees to be
bound by the terms of the exchange offer and that we may enforce that agreement
against such participant.
For purposes of the exchange offer, we will be deemed to have accepted for
exchange SBS shares validly tendered and not withdrawn if and when we notify the
exchange agent of our acceptance of SBS shares tendered in the exchange offer.
The exchange agent will deliver UPC ADSs and cash (subject to your shareholder
election, if any), in exchange for tendered SBS shares (and cash instead of
fractional interests in UPC ADSs) as soon as practicable after receipt of our
notice. The exchange agent will allocate the exchange offer consideration among
SBS shareholders based on the number of tendered SBS shares for which
shareholders elect to receive a higher proportion of UPC ADSs and the number of
tendered SBS shares for which shareholders elect to receive a higher proportion
of cash.
We will exchange and pay for SBS shares that we accept by depositing the
requisite number of UPC ADSs and the total cash portion of the purchase price
for all of the SBS shares that we accept for exchange with the exchange agent.
The exchange agent will act as agent for tendering shareholders for the purpose
of receiving UPC ADSs and cash (subject to your shareholder election, if any) in
addition to any cash to be paid instead of fractional interests in UPC ADSs from
us and transmitting such UPC ADSs and cash to you. UNDER NO CIRCUMSTANCES WILL
WE PAY INTEREST ON ANY CASH AMOUNT PAYABLE FOR SBS SHARES IN THE EXCHANGE OFFER,
REGARDLESS OF ANY DELAY IN MAKING A PAYMENT.
Upon the deposit of the requisite number of UPC ADSs and amount of funds
with the exchange agent for the purpose of making payments to tendering
stockholders, our obligation to exchange and pay for SBS shares will be
satisfied and tendering stockholders must look solely to the exchange agent for
issuance of UPC ADSs and payment of amounts owed to them by reason of the
acceptance of their SBS shares pursuant to the exchange offer. We will pay any
stock transfer taxes incident to the transfer to the exchange agent of validly
tendered shares, except as otherwise
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provided in the instructions of the Letter of Transmittal, as well as the
charges and expenses of the exchange agent and the information agent.
Subject to the terms and conditions of the exchange offer, the exchange
agent, in exchange for validly tendered SBS shares, will deliver the whole
number of UPC ADSs and any cash amount payable to you in the exchange offer
(including cash amounts in respect of fractional UPC ADSs) as follows:
- for SBS shares validly tendered to the exchange agent by your agent
through DTC, the exchange agent will deliver the whole number of UPC ADSs
and any cash amount (including cash amounts for any fractional ADSs) by
book-entry transfer to the accounts of the participant in DTC who
tendered those shares pursuant to the exchange offer.
- for SBS shares validly tendered to the exchange agent in certificated
form, the exchange agent will deliver an American depositary receipt
evidencing the whole number of UPC ADSs and a check in U.S. dollars for
any cash amount (including cash amounts for fractional UPC ADSs) to the
person(s) and at the address(es) shown for that delivery in the
applicable Letter of Transmittal.
If we do not accept any tendered SBS shares for any reason, or if
certificates are submitted for more SBS shares than are tendered, we will return
certificates for tendered SBS shares or untendered of SBS shares, as the case
may be, without expense to the tendering shareholder (or, in the case of SBS
shares tendered by book-entry transfer of such SBS shares into the exchange
agent's account at DTC, those SBS shares will be credited to an account
maintained within DTC), as soon as practicable following expiration or
termination of the exchange offer.
If we increase the consideration offered to SBS shareholders in the
exchange offer prior to the expiration date, such increased consideration will
be given to all shareholders whose interests in UPC ADSs are tendered pursuant
to the exchange offer, whether or not such SBS shares were tendered or accepted
for exchange prior to such increase in consideration.
Subject to the provisions of the Exchange Offer Agreement, we reserve the
right to transfer or assign to any of our direct or indirect subsidiaries the
right to purchase all or any portion of the SBS shares that are tendered in
response to the exchange offer, but such a transfer or assignment will not
relieve us of our obligations under the exchange offer and will in no way
prejudice the rights of tendering stockholders to receive payment for shares
that are validly tendered in response to the exchange offer and accepted for
exchange and payment.
CASH INSTEAD OF FRACTIONAL UPC ADSS
We will not issue certificates representing fractional interests in the UPC
ADSs pursuant to the exchange offer. Instead, each tendering shareholder who
otherwise would be entitled to a fractional interest in a UPC ADS will receive
cash in an amount equal to such fraction (expressed as a decimal and rounded to
the nearest 0.01 of a share) multiplied by the closing price for the UPC ADSs on
Nasdaq on the date that we accept those SBS shares. You will not receive any
interest on the cash to be given for fractional shares, even if there is a delay
in making the exchange and payment.
WITHDRAWAL RIGHTS
Your tender of SBS shares pursuant to the exchange offer is irrevocable,
except that SBS shares tendered pursuant to the exchange offer may be withdrawn
at any time prior to the expiration time, and, unless we previously accepted
them for exchange pursuant to the exchange offer, also may be withdrawn at any
time after [DATE], 2000.
If we extend the exchange offer, are delayed in our acceptance of the
shares for exchange and payment or are unable to accept SBS shares for exchange
and payment for any reason, then, without prejudice to our rights under the
exchange offer, the exchange agent, nevertheless, may
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retain tendered shares on our behalf, and those SBS shares may not be withdrawn
except to the extent that tendering stockholders are entitled to withdraw them
as described in this section. Any such delay will be accompanied by an extension
of the exchange offer to the extent required by law.
For your withdrawal to be effective, the exchange agent must receive your
written notice of withdrawal at one of its addresses printed on the back cover
of this prospectus, and your notice must include your name, the number of SBS
shares to be withdrawn and the name of the registered holder, if it is different
from that of the person who tendered the SBS shares.
A financial institution must guarantee all signatures on the notice of
withdrawal. Most banks, savings and loan associations and brokerage houses are
able to guarantee signatures for you. The financial institution must be a
participant in the Securities Transfer Agents Medallion Program, the New York
Stock Exchange Medallion Program or the Stock Exchange Medallion Program, any of
which is an "eligible institution," unless those SBS shares have been tendered
for the account of any eligible institution. If you tendered your SBS shares
pursuant to the procedures for book-entry exchange discussed under the caption
entitled "How to Tender Your SBS Shares," any notice of withdrawal must specify
the name and number of the account at DTC to be credited with the withdrawn SBS
shares and otherwise must comply with DTC's procedures for the withdrawal of
securities previously tendered in an exchange offer. If certificates have been
delivered or otherwise identified to the exchange agent, the name of the
registered holder and the serial numbers of the particular certificates
evidencing the SBS shares withdrawn also must be furnished to the exchange
agent, as stated above, prior to the physical release of such certificates. We
will decide all questions as to the form and validity (including time of
receipt) of any notice of withdrawal, in our sole discretion, and our decision
shall be final and binding. Neither we, the exchange agent, the information
agent nor any other person will be under any duty to give notification of any
defects or irregularities in any notice of withdrawal or will incur any
liability for failure to give notification. Withdrawals of SBS shares may not be
rescinded. Any SBS shares properly withdrawn will be deemed not to have been
validly tendered for purposes of the exchange offer. You may retender withdrawn
SBS shares by following one of the procedures discussed under the caption
entitled "How to Tender Your SBS Shares" at any time prior to the expiration
time.
HOW TO TENDER YOUR SBS SHARES
If you wish to tender your SBS shares in the exchange offer, you should
determine how you hold your shares and follow the instructions below for
tendering.
IF YOU HOLD SBS SHARES THROUGH AN AGENT. If you hold your SBS shares in
book-entry (or uncertificated) form in a brokerage or custodian account through
an agent, including a broker, dealer, bank, trust company, custodian, DTC
participant or other nominee, you will need to instruct your agent to tender
your securities prior to the expiration time in the manner described below and
upon the terms and conditions described in this prospectus. Please refer to any
materials forwarded to you by your agent to determine how you can instruct your
agent to take these actions.
Your agent should arrange for the DTC participant holding your SBS shares
through its DTC account to tender those shares in the exchange offer to the
exchange agent prior to the expiration time. In the event one or more brokers,
dealers, banks, trust companies, custodians or other nominees acts as an
intermediary between your agent and that DTC participant, you should instruct
your agent to arrange to deliver the tender instructions for the SBS shares to
the appropriate DTC participant.
IF YOU HOLD SBS SHARES IN CERTIFICATED FORM. If you hold your SBS shares
in your name in certificated form, you will be able to tender those securities
only if you tender your SBS shares in the manner described below or arrange for
an agent to hold your securities on your behalf in book-entry form and then
follow the procedures described above. Your agent may arrange for SBS shares to
be held in book-entry form through any participant in DTC. You and your agent
should contact the dealer-manager for this exchange offer if you have questions
in this regard.
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You may tender SBS shares registered in your name by delivering to the
exchange agent at one of its addresses printed on the back cover of this
prospectus a properly completed and duly executed Letter of Transmittal,
together with the applicable signature guarantees from an eligible guarantor
institution, and SBS shares certificate(s), as specified in the accompanying
Letter of Transmittal, in each case, on or prior to the expiration time.
If you tender SBS shares in book-entry form in the exchange offer, the UPC
ADSs that you are entitled to receive in the exchange offer will be delivered to
the account of your agent only in book-entry form through the same DTC
participant that delivered your SBS shares. If you are tendering SBS shares held
in certificated form, the UPC ADSs you are entitled to receive in the exchange
offer will be delivered only in accordance with written instructions provided in
your Letter of Transmittal.
TYPE OF SECURITY AND TENDER PROCEDURES. The following chart will assist
you in determining how you hold your SBS Shares and how you should tender those
shares in the exchange offer.
<TABLE>
<CAPTION>
SBS SHARE TYPE SECURITY IDENTIFIER HOW TO TENDER
-------------- ------------------- -------------
<S> <C> <C>
Book-entry form............ Your account statements Instruct your agent to
should identify your SBS follow the exchange offer
shares by reference to procedures for shares in
CUSIP No. L8137F-10-2. book-entry form described
above.
Certificated form.......... Your share certificate(s) Follow the exchange offer
should identify the SBS procedures for shares in
shares by reference to certificated form described
CUSIP No. L8137F-10-2. above.
</TABLE>
THE ROLE OF THE DTC PARTICIPANT
A DTC participant may tender SBS shares only by taking the following
actions prior to or on the expiration time:
- delivering SBS shares by means of book-entry transfer into the exchange
agent's applicable DTC account; and
- transmitting an agent's message to the exchange agent through the
facilities of DTC specifying that the relevant participant has received
and agrees to be bound by the terms and conditions described in this
prospectus with respect to the exchange of the tendered SBS shares for
UPC ADSs and cash.
By taking these actions, you and your agent will be deemed to have agreed
(1) to the terms and conditions of the exchange offer, as described in this
prospectus, and (2) that we and the exchange agent may enforce that agreement
against you and your agent.
The exchange agent will hold SBS shares tendered in an account established
for the benefit of the tendering shareholders until the exchange offer is
completed or terminated or withdrawal rights are exercised by the tendering
holders in accordance with the terms of the exchange offer. The exchange agent
will deliver UPC ADSs and cash only to the DTC participant, the registered
holder of SBS shares who validly tendered SBS shares to the exchange agent or to
an assignee validly designated by the registered holder, as the case may be. The
exchange agent will treat those persons as the exclusive owners of the tendered
SBS shares subject to the terms of the exchange offer.
THE ONLY TENDER DOCUMENTS THAT THE EXCHANGE AGENT WILL ACCEPT ARE LETTERS
OF TRANSMITTAL (OR COPIES OF THE LETTER OF TRANSMITTAL) OR DTC PARTICIPANTS'
AGENTS' MESSAGES. NO OTHER TENDER DOCUMENTS WILL BE ACCEPTED. REQUIRED DOCUMENTS
MUST BE RECEIVED BY THE EXCHANGE AGENT AT ONE OF THE ADDRESSES PRINTED ON THE
BACK COVER OF THIS PROSPECTUS. DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER
FACILITY OR TO UPC DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
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GENERAL PROVISIONS
The tender of your SBS shares will be deemed to have been received only:
- in the case of a tender of SBS shares in book-entry form, when the
exchange agent receives on or prior to the expiration time both a duly
completed agents' message through the facilities of DTC at the exchange
agent's DTC account and confirmation of book-entry transfer of the SBS
shares into the exchange agent's applicable DTC account;
- in the case of a tender of SBS shares held in certificated form, when the
exchange agent receives on or prior to the expiration time a properly
completed and duly signed Letter of Transmittal, together with the
applicable signature guarantees from an eligible institution, and the SBS
shares certificate(s) specified in the accompanying Letter of
Transmittal; or
- in either case, when the exchange agent receives on or prior to the
expiration time a properly completed and duly executed notice of
guaranteed delivery of the SBS shares, as described below under
"-- Guaranteed Delivery."
THE METHOD OF DELIVERY OF SBS SHARE CERTIFICATES, THE LETTER OF TRANSMITTAL
AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH DTC, IS AT YOUR
OPTION AND RISK, AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY
RECEIVED BY THE EXCHANGE AGENT. IF DELIVERY IS BY MAIL, WE RECOMMEND REGISTERED
MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED. IN ALL CASES, YOU SHOULD
ALLOW SUFFICIENT TIME TO ENSURE TIMELY DELIVERY.
Signature Guarantees. Signatures on all Letters of Transmittal must be
guaranteed by an eligible institution, except in cases in which SBS shares are
tendered either by a registered holder of SBS shares who has not completed
either the box entitled "Special Payment Instructions" on the Letter of
Transmittal or for the account of an eligible institution.
If the certificates for SBS shares are registered in the name of a person
other than the person who signs the Letter of Transmittal, or if UPC ADSs are to
be issued and payment made, or certificates for SBS shares which are not
tendered or are not accepted for payment are to be returned, to a person other
than the registered holder(s), then the certificates must be endorsed or
accompanied by appropriate stock powers, in either case signed exactly as the
name or names of the registered owner or owners appear on the certificates, with
the signature(s) on the certificates or stock powers guaranteed in the manner we
have described above.
If share certificates are delivered to the exchange agent at different
times, a properly completed and duly signed Letter of Transmittal (or copy) must
accompany each delivery.
Backup U.S. Federal Withholding Tax. UNDER THE U.S. FEDERAL INCOME TAX
LAWS, THE EXCHANGE AGENT MAY BE REQUIRED TO WITHHOLD 31% OF THE TOTAL
CONSIDERATION PAYABLE TO CERTAIN SBS SHAREHOLDERS. TO PREVENT BACKUP U.S.
FEDERAL INCOME TAX WITHHOLDING WITH RESPECT TO THE TOTAL CONSIDERATION RECEIVED
PURSUANT TO THE EXCHANGE OFFER, YOU MUST PROVIDE THE EXCHANGE AGENT WITH YOUR
CORRECT TAXPAYER IDENTIFICATION NUMBER AND CERTIFY WHETHER YOU ARE SUBJECT TO
BACKUP WITHHOLDING OF U.S. FEDERAL INCOME TAX BY COMPLETING THE SUBSTITUTE FORM
W-9 INCLUDED IN THE LETTER OF TRANSMITTAL. SOME SHAREHOLDERS (INCLUDING, AMONG
OTHERS, ALL CORPORATIONS AND SOME FOREIGN INDIVIDUALS) ARE NOT SUBJECT TO THESE
BACKUP WITHHOLDING AND REPORTING REQUIREMENTS. IN ORDER FOR A FOREIGN INDIVIDUAL
TO QUALIFY AS AN EXEMPT RECIPIENT, THE SHAREHOLDER MUST SUBMIT A FORM W-8,
SIGNED UNDER PENALTIES OF PERJURY, ATTESTING TO THAT INDIVIDUAL'S EXEMPT STATUS.
Guaranteed Delivery. If you wish to tender SBS shares pursuant to the
exchange offer and your certificates are not immediately available or you cannot
deliver the certificates and all other required documents to the exchange agent
prior to the expiration date or cannot complete the
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procedure for book-entry transfer on a timely basis, your SBS shares may
nevertheless be tendered, so long as all of the following conditions are
satisfied:
(1) you make your tender by or through an eligible institution;
(2) a properly completed and duly executed notice of guaranteed
delivery, substantially in the form made available by us, is received by
the exchange agent by hand or by mail, or in the case of a tender of SBS
shares in book-entry form, by means of an agent's message, on or prior to
the expiration time; and
(3) the certificates for all SBS shares to be tendered (or a
confirmation of a book-entry transfer of such securities into the exchange
agent account at DTC as described above), in proper form for transfer,
together with a properly completed and duly executed Letter of Transmittal
(or copy of it), with any required signature guarantees (or, in the case of
a book-entry transfer, an agent's message) and all other documents required
by the Letter of Transmittal are received by the exchange agent within
three Nasdaq trading days after the date of execution of such notice of
guaranteed delivery.
You may deliver the notice of guaranteed delivery by hand or by mail to the
exchange agent and you must include a guarantee by an eligible institution in
the form described in that notice.
In all cases, exchange of and payment for SBS shares tendered and accepted
for exchange pursuant to the exchange offer will be made only after timely
receipt by the exchange agent of:
- certificates for those of SBS shares or a confirmation of a book-entry
transfer of those shares in the exchange agent's account at DTC;
- a properly completed and duly executed Letter of Transmittal (or a copy)
or agent's message if applicable; and
- any other documents required by the Letter of Transmittal
Appointment as Proxy. By executing a Letter of Transmittal, as described
above, you irrevocably appoint our designees as your attorneys-in-fact and
proxies, each with full power of substitution, to the full extent of your rights
with respect to your SBS shares tendered and accepted for exchange by us and
with respect to any and all other SBS shares and other securities issued or
issuable to you in respect of your SBS shares on or after the date of this
prospectus. That appointment is effective, and voting rights will be affected,
when and only to the extent that we accept the tendered SBS shares for exchange
and payment pursuant to the exchange offer. All such proxies shall be considered
coupled with an interest in the tendered SBS shares and therefore shall not be
revocable. When tendered SBS shares are accepted for payment, all prior proxies
that you have given will be revoked, and you may not give any subsequent proxies
and, if given, they will not be deemed effective. Our designees will, with
respect to the SBS shares for which the appointment is effective, be empowered,
among other things, to exercise all of your voting and other rights as they, in
their sole discretion, deem proper at any annual, special or adjourned meeting
of SBS's shareholders or otherwise. We reserve the right to require that, in
order for SBS shares to be deemed validly tendered, immediately upon our
acceptance for exchange of those SBS shares, we must be able to exercise full
voting rights with respect to those SBS shares.
Proxies are effective only as to SBS shares accepted for payment pursuant
to the exchange offer. The exchange offer does not constitute a solicitation of
proxies, absent a purchase of shares, for any meeting of SBS's shareholders. Any
solicitation of proxies will be made only pursuant to separate proxy soliciting
materials complying with the Exchange Act, if and to the extent applicable.
Determination Regarding Tenders. We will determine questions as to the
validity, form, eligibility, including time of receipt, and acceptance for
exchange of any tender of SBS shares, in our sole discretion, and our
determination shall be final and binding. We reserve the absolute right to
reject any and all tenders of SBS shares that we determine are not in proper
form or the acceptance
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for exchange of or exchange for which may, in the opinion of our counsel, be
unlawful. We also reserve the absolute right to waive any of the conditions of
the exchange offer or any defect or irregularity in the tender of any SBS
shares. No tender of SBS shares will be deemed to have been validly made until
all defects and irregularities in tenders have been cured or waived. Neither we,
the exchange agent, the information agent nor any other person will be under any
duty to give notification of any defects or irregularities in the tender of any
SBS shares or will incur any liability for failure to give any notification. Our
interpretation of the terms and conditions of the exchange offer, including the
Letter of Transmittal and instructions thereto will be final and binding.
Binding Agreement. The tender of SBS shares pursuant to any of the
procedures described above will constitute a binding agreement between you and
us upon the terms and subject to the conditions of the exchange offer.
CONDITIONS OF THE EXCHANGE OFFER
Notwithstanding any other provisions of the exchange offer, and in addition
to our rights to extend and amend the exchange offer at any time in our sole
discretion (subject to the provisions of the Exchange Offer Agreement), we will
not be required to accept for exchange and payment or, subject to any applicable
rules and regulations of the SEC (including the rule relating to our obligation
to pay for or return tendered SBS shares promptly after termination or
withdrawal of the exchange offer), exchange and pay for, and may delay the
acceptance for exchange and payment of or, subject to the restriction referred
to above, the exchange and payment for, any tendered SBS shares and may
terminate the exchange offer if the following conditions have not been satisfied
or waived before the time of payment for any SBS shares.
Minimum Tender Condition
There must be validly tendered and not withdrawn, prior to the expiration
of the exchange offer, a number of SBS shares that will constitute, together
with the SBS shares that we already hold, at least two-thirds of the total
number of outstanding SBS shares on a fully diluted basis (that is, as though
all options or other securities convertible into or exercisable or exchangeable
for SBS shares had been so converted, exercised or exchanged) as of the date
that we accept the SBS shares pursuant to the exchange offer.
SBS has informed us that as of the close of business on [DATE], 2000, there
were outstanding SBS shares and SBS shares reserved for
issuance upon the exercise of outstanding options. At the date of this
prospectus, UPC and its affiliates own 6,000,000 SBS shares. Therefore, the
minimum tender condition will be satisfied if at least [ ] SBS shares
are validly tendered and not withdrawn prior to the expiration of the exchange
offer.
Registration Statement Effectiveness Condition
The registration statement on Form S-4, of which this prospectus is a part,
must have become effective under the Securities Act. This condition has already
been satisfied.
Antitrust Condition
Any applicable waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 or approval required by the European Union Merger Task
Force must have expired, been terminated or received as applicable. In addition,
any applicable waiting period or approval required or that is appropriate under
any relevant competition or antitrust laws of any member state of the European
Union or any other relevant country must have expired, been terminated, or
received, as applicable (except for any cross-media ownership restrictions in
Hungary).
However, the conditions described in the preceding paragraph will fail to
be fulfilled only if, as a consequence of such failure, it would be reasonably
likely to have any of the effects described in
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clause (a)(5) under the section captioned "Other Conditions of the Exchange
Offer," below. We call this the "antitrust condition."
Other Conditions of the Exchange Offer
In addition to the conditions described above, we will not be required to
accept for payment, purchase or pay for any SBS shares tendered in the exchange
offer if at any time and prior to the time of payment for any shares, any of the
following conditions exist and are continuing:
(a) any statute, rule, regulation, legislation, interpretation,
judgment, order or injunction, has been promulgated, enacted, entered,
enforced, issued or amended, in each case by a governmental entity
applicable to UPC, SBS or their affiliates that would reasonably be
expected to:
(1) make the acceptance for payment of, or payment for or purchase
of all or a substantial number of the SBS shares pursuant to the
exchange offer illegal, or otherwise prohibit the completion of the
exchange offer;
(2) result in a material delay in or restrict (other than in an
immaterial way) our ability to accept for payment, pay for or purchase
pursuant to the exchange offer enough SBS shares to satisfy the minimum
tender condition;
(3) render us unable to accept for payment or pay for or purchase
pursuant to the exchange offer at least enough SBS shares to satisfy the
minimum tender condition;
(4) impose material limitations, which shall not be deemed to
include any required compliance with U.S. federal securities laws, on
our ability or the ability of our subsidiaries or affiliates to acquire
or hold, transfer or dispose of, or effectively to exercise all rights
of ownership of, all or a substantial number of the SBS shares,
including the right to vote the shares purchased by us pursuant to the
exchange offer on an equal basis with all other shares on all matters
properly presented to the shareholders;
(5) require the divestiture by us of a material portion of the SBS
shares (although any divestiture causing us to own less than enough SBS
shares to satisfy the minimum tender condition will be deemed to be
material), or require us or SBS or any of our respective subsidiaries
and affiliates to dispose of or hold separate all or any material
portion of the business, assets or properties of SBS and its
subsidiaries taken as a whole (excluding Hungary by reason of
cross-media ownership restrictions), or impose any material limitations
on the ability of any of these entities to conduct their businesses or
own assets or properties material to SBS and its subsidiaries taken as a
whole (excluding Hungary by reason of cross-media ownership
restrictions) or on our ability to own a material portion of SBS shares
(provided, however, that any divestiture causing us to own less than
enough SBS shares to satisfy the minimum tender condition will be deemed
to be material), or on our ability to conduct the business of SBS and
its subsidiaries and own the assets and properties of SBS and its
subsidiaries; or
(6) impose any material limitations on our ability or the ability
of our subsidiaries or affiliates effectively to control the business or
operations of SBS and its subsidiaries;
(b) any action or proceeding by any governmental entity has been
instituted or be pending challenging the making of the exchange offer or
our acquisition of the SBS shares pursuant to the exchange offer that can
reasonably be expected to result, directly or indirectly, in any of the
consequences referred to in clauses (1) through (6) of paragraph (a) above;
(c) any of the following has occurred and be continuing: (1) any
general suspension of, or limitation on trading in securities on The New
York Stock Exchange or Nasdaq (other than any suspension or limitation on
trading in any particular security as a result of a computerized trading
limit or any intraday suspension due to "circuit breakers"), (2) the
declaration of any
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banking moratorium or any suspension of payments in respect of banks or any
limitation (whether or not mandatory) on the extension of credit by lending
institutions in the United States, the United Kingdom or Germany, or (3) a
decline at any time for any three trading days in any consecutive five
trading day period of both (A) 30% or more in the Eurotop 300 index, as
measured against the closing value on March 8, 2000, the trading day
immediately preceding the date of the Exchange Offer Agreement and (B) 20%
or more in the closing sales price per UPC ADS, as reported by Nasdaq, as
measured against U.S.$70;
(d) any person or "group" (as such term is used in Section 13(d)(3) of
the Exchange Act) other than us or any of our affiliates has become the
beneficial owner (as that term is used in Rule 13d-3 under the Exchange
Act) of more than 25% of the outstanding SBS shares;
(e) all consents, approvals, licenses, authorizations, registrations,
notices or other filings (including, without limitation, broadcast
licenses) (other than under any cross-media ownership restrictions in
Hungary) required to be obtained or made by SBS or us with or from any
governmental entity or third party (other than us or any of our affiliates)
in connection with the execution, delivery and performance of the Exchange
Offer Agreement, the exchange offer and the transactions contemplated by
the Exchange Offer Agreement have not been obtained or made and such
failure would reasonably be expected to have a material adverse effect (as
defined below) on SBS or us or a material adverse effect on the ability of
the parties to complete the transactions contemplated by the Exchange Offer
Agreement;
As used here and in the Exchange Offer Agreement, "material adverse effect"
means any change in or effect on the business of SBS that is or would be
reasonably expected to be materially adverse to the condition (financial or
otherwise), business, properties, assets, liabilities or results of
operations of SBS and its subsidiaries taken as a whole (other than effects
resulting from any adverse change (1) in applicable law relating to the
broadcasting or television industries or in generally accepted accounting
principles or their interpretations or (2) economic or business conditions
in the broadcasting or television industries);
(f) any change, condition, event or development has occurred that,
individually or in the aggregate, has had or is reasonably likely to have a
material adverse effect (as defined in paragraph (e) above);
(g) SBS has breached or failed to comply in any material respect with
any of its material obligations, covenants, or agreements under the
Exchange Offer Agreement, or any representation or warranty of SBS
contained in the Exchange Offer Agreement that is qualified by reference to
a material adverse effect is not true and correct because there has been a
material adverse effect (as defined in paragraph (e) above), or any other
representation or warranty is not true and correct in any respect that
(when taken together with all such other representations and warranties not
true and correct) has had or would reasonably be likely to have a material
adverse effect (as defined in paragraph (e) above), in each case as of when
made or at and as of any time thereafter, and which is continuing;
(h) the Exchange Offer Agreement has been terminated pursuant to its
terms or has been amended pursuant to its terms to terminate the exchange
offer; or
(i) the Committee for Merger Affairs of the Social Economic Council in
the Netherlands has issued in connection with the exchange offer a public
admonition as a consequence of infringement by SBS or any of its
subsidiaries of any of the stipulations of Chapters I, II or III of the
Netherlands Merger Code prior to the date on which the exchange offer
expires;
which, in our good faith judgment, in any case, giving rise to any condition,
makes it inadvisable to proceed with the exchange offer or with acceptance for
payment or payment for SBS shares.
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The conditions of the exchange offer are for our sole benefit, and we may
assert or waive them in whole or in part, at any time or from time to time at
our sole discretion subject to the terms and conditions of the Exchange Offer
Agreement.
REGULATORY CONSENTS AND APPROVALS
We and SBS have agreed in the Exchange Offer Agreement to use our
reasonable best efforts, and to cooperate with one another, in obtaining any
required consents and approvals from any governmental authorities or parties to
material agreements and in seeking to obtain all such required consents and
approvals.
Although we and SBS do not believe that media regulations in the various
countries in which we and SBS operate would have a material adverse effect on
the combined businesses and operations of UPC and SBS after the completion of
the exchange offer, you should be aware of the following:
- Hungary. Upon the completion of the exchange offer, we will be in
violation of a cross-media ownership provisions of the Hungarian media
law because we already control Hungarian cable operators and we will
indirectly own over 25% of the national broadcaster, TV2. Where the
interests in the relevant subsidiaries of the combined group cannot be
restructured to comply with this restriction, we would have 180 days
after official notification that we are in violation of this law to
reduce our ownership to less than 25% in either our Hungarian cable
operations or in TV2. We cannot assure you that the ownership interests
of the subsidiaries of UPC and SBS can be restructured to comply with
Hungarian law, and this is not a condition to the completion of the
exchange offer.
- Belgium. Under Belgian law, cable television operators such as UPC are
not permitted to take part in the management or to hold more than 24% of
the share capital or voting rights in cable TV channels in the Brussels
region. After the completion of the exchange offer one interpretation of
the relevant law may mean that this restriction applies to VT4 Limited, a
cable channel owned by SBS and distributed in the Brussels region by UPC
Belgium N.V., one of our subsidiaries. However, the relevant law may not
apply where the affected cable operator and cable TV Channel are sister
companies (i.e., both controlled by the same parent company). In
addition, this law may infringe certain provisions of the European Union
Treaty. We cannot assure you that the relevant law would not be construed
against us. If it was, we currently believe that our interest in VT4
Limited can be restructured in order to comply with Belgian law. We
cannot assure you, however, that a restructuring of this kind will be
successful.
- Finland. The radio licenses held by certain Finnish subsidiaries of SBS
may technically terminate under Finnish law on a change of control of
SBS. SBS has informed us that it has begun discussions with the Finnish
Ministry of Communication about the relevant legislation. Although we
believe that these radio licenses can be continued under the terms that
are now in effect, we cannot assure you that these licenses will remain
in place.
Except as may be required by any relevant competition, antitrust, media or
broadcast laws and regulations in any member state of the European Union or in
any other applicable jurisdiction, based on representations and warranties of
SBS contained in the Exchange Offer Agreement, we are not aware of:
- any other approval or action by a government or regulatory authority that
would be required for us to acquire and own the SBS shares, or
- any license or regulatory permit that appears to be material to the
business of SBS and its subsidiaries, taken as a whole, that would be
materially adversely affected by our acquisition of SBS shares.
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U.S. federal, state and foreign antitrust enforcement agencies frequently
scrutinize under the antitrust laws transactions such as our acquisition of SBS
shares pursuant to the exchange offer. At any time before or after we acquire
SBS shares, any such agency could take such action under the antitrust laws as
it deems necessary or desirable in the public interest, including seeking to
enjoin our acquisition of SBS shares pursuant to the exchange offer or otherwise
or seeking divestiture of SBS shares acquired by us or divestiture of assets of
us or SBS. Private parties may also bring legal action under the antitrust laws
under some circumstances. UPC and SBS conduct operations in a number of
jurisdictions where other regulatory filings or approvals may be required or
advisable in connection with the completion of the exchange offer.
The acquisition of SBS may require notification of the competition
authorities of various countries in which both we and/or SBS conduct business,
depending on the filing requirements and thresholds of merger regulations in
such countries. We currently believe that such filings may be required in
Belgium, Finland, Hungary, The Netherlands, Poland and Sweden prior to, or upon
the commencement of, the exchange offer. All regulatory approvals may not be
obtained in time and could result in a significant delay in the completion of
the exchange offer and the purchase of the SBS shares.
On April 20, 2000, the Dutch government presented a policy paper concerning
competition in the cable industry to the lower house of Parliament addressing,
among other concerns, the trend toward the integration of cable access
providers, such as UPC, and programming providers, such as SBS. The government
noted that a programming provider may receive preferential treatment by an
affiliated cable company over third-party providers of programming.
The government intends to debate this issue further in the coming weeks in
order to decide whether or not to enact new policies.
After the completion of the exchange offer, any contracts and relationships
between our cable systems, on the one hand, and programming businesses, on the
other, will be conducted on a commercial, arm's-length basis, as they are
presently conducted in our existing businesses.
SOURCE AND AMOUNT OF FUNDS
If all the outstanding SBS shares, including shares issuable under stock
option plans (other than shares that are owned by UPC and its affiliates), are
tendered in response to the exchange offer, UPC estimates that it would be
required to pay a total of approximately U.S.$ with respect to the cash
portion of the offer price and to pay the fees and other expenses related to the
exchange offer. The exchange offer is not conditioned on any financing
arrangements. In addition, we will pay cash to SBS shareholders tendering their
SBS shares instead of issuing fractional UPC ADSs.
Although we have not made any final decision, we currently expect that we
will obtain the funds necessary for the completion of the exchange offer through
one or more of the following sources: (1) cash on hand, (2) internally generated
funds, (3) capital contributions or advances made by our affiliates and (4)
borrowings from new credit facilities that we may seek to arrange.
Any funds we obtain through loans will be repaid from internally generated
funds (including, funds generated by SBS if we own 100% of SBS after the
completion of the exchange offer), capital contributions or advances made by our
affiliates, or from other sources, which may include the proceeds of future
refinancings or public or private sales of debt or equity securities, or a
combination of two or more of the sources described above. We have not made any
final decision as to how we would repay this indebtedness, if any, and our plans
for repayment of any borrowings will be based on our review from time to time of
the advisability of particular actions, as well as prevailing interest rates,
financial and other economic conditions and any other factors that we determine
to be appropriate.
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Our current intentions with respect to these financial arrangements,
described above, may change depending upon the factors that we determine to be
appropriate under the existing circumstances.
ACCOUNTING TREATMENT
Our acquisition of SBS would be accounted for under the purchase method of
accounting under U.S. generally accepted accounting principles, which means that
SBS's results of operations will be included with ours from the closing date and
its consolidated assets and liabilities will be recorded at their fair values at
the same date.
FEES AND EXPENSES
Except as described below, we will not pay any fees or commissions to any
broker, dealer or other persons for soliciting tenders of SBS shares pursuant to
the exchange offer.
Goldman Sachs International is acting as dealer manager in connection with
the exchange offer and is acting as our financial adviser in connection with our
effort to acquire SBS. UPC and Goldman Sachs International have entered into a
letter agreement dated March 6, 2000 relating to the services to be provided by
Goldman Sachs International in connection with the exchange offer and the
transactions related to it. These services include the provision of financial
advice and assistance in connection with the proposed exchange offer, including,
if requested by UPC, an opinion as to the fairness of the consideration offered
in the transactions from a financial point of view to UPC. Under the engagement
letter, UPC has agreed to pay Goldman Sachs International the following fees,
plus value added tax, in the context of the exchange offer and the transactions
related to it:
- a fee of U.S. $5,000,000 payable in cash upon the commencement of the
exchange offer or other public offer to acquire SBS shares from SBS
stockholders, other than UPC; and
- an additional fee of:
(1) U.S. $5,000,000 if 50% or more of the outstanding SBS shares or 50%
or more of SBS's assets (based on the book value thereof) is acquired in
one or more transactions, payable in cash upon consummation of such
acquisition; or
(2) a mutually acceptable transaction fee if less than 50% of the
outstanding SBS shares or less than 50% of SBS's assets (based on the
book value thereof) is acquired, payable in cash upon consummation of
such acquisition.
UPC and Goldman Sachs International have also entered into a Dealer Manager
Agreement, dated [DATE], 2000, pursuant to which Goldman Sachs International has
agreed to act as Dealer Manager of the exchange offer in connection with the
acquisition of SBS. Goldman Sachs International is not receiving additional
compensation for its services as Dealer Manager, except for the soliciting
dealer fees that may be payable to it as soliciting dealer in respect of
tendered shares.
UPC has agreed to reimburse Goldman Sachs International for reasonable
out-of-pocket expenses, including the fees and disbursements of its lawyers,
plus value added tax, if any, in connection with its engagement or any matter
referred to in the letter agreement. In addition, UPC has agreed to indemnify
Goldman Sachs International against certain liabilities and other expenses,
including against certain liabilities under federal securities laws, as well as
legal and other expenses resulting from Goldman Sachs International's
involvement in any action, proceeding or investigation in connection with its
engagement by UPC or any losses, claims or damages to any person in connection
with its engagement by UPC, except to the extent that the loss, claim or damages
result from the gross negligence or bad faith of Goldman Sachs International or
its affiliates. Goldman Sachs International renders various investment banking
and other general advisory services to us and our affiliates and is expected to
continue to render such services, for which it has received and will continue to
receive customary compensation from us and our affiliates.
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We have retained D. F. King & Co., Inc. to act as information agent in
connection with the exchange offer. The information agent may contact holders of
SBS shares by mail, telephone, facsimile, telegraph and personal interviews and
may request brokers, dealers and other nominee stockholders to forward materials
relating to the exchange offer to beneficial owners of SBS shares. We will pay
the information agent reasonable and customary compensation together with
reimbursement for its reasonable out-of-pocket expenses, and we will indemnify
it against certain liabilities and expenses, including certain liabilities under
the federal securities laws.
In addition, we have retained Citibank, N.A. as the exchange agent. The
exchange agent has not been retained to make solicitations or recommendations in
its role as exchange agent. The exchange agent will allocate the exchange offer
consideration among SBS shareholders based on the number of tendered SBS shares
for which shareholders elect to receive a higher proportion of UPC ADSs and the
number of tendered SBS shares for which shareholders elect to receive a higher
proportion of cash. The exchange agent will receive reasonable and customary
compensation for its services, will be reimbursed for certain reasonable
out-of-pocket expenses and will be indemnified against certain liabilities and
expenses in connection therewith. Brokers, dealers, commercial banks and trust
companies will be reimbursed by us for customary mailing and handling expenses
incurred by them in forwarding offering material to their customers. Citibank
also is the depositary bank for the ADSs.
Under the Exchange Offer Agreement, whether or not the exchange offer is
completed, we and SBS have agreed to pay our own respective costs and expenses
in connection with the exchange offer, the Exchange Offer Agreement and the
transactions contemplated under the Exchange Offer Agreement (except as
otherwise specifically provided). Please read "The Exchange Offer Agreement and
the Share Exchange Agreement -- The Exchange Offer Agreement -- Termination Fee;
Expenses."
The following table shows estimates of expenses that we expect to incur
during the exchange offer:
<TABLE>
<S> <C>
SEC Filing Fees.......................................... $
Legal fees...............................................
Accounting fees..........................................
Printing and mailing costs...............................
Investment banking fees..................................
Solicitation fees and costs..............................
Miscellaneous............................................
TOTAL.......................................... $
</TABLE>
STOCK EXCHANGE LISTINGS
UPC ADSs are quoted on Nasdaq under the symbol "UPCOY," and the UPC
ordinary shares A are traded on the Amsterdam Stock Exchange under the symbol
"UPC." The UPC ADSs that we will issue pursuant to the exchange offer and, as
required, the minority buy-out, if any, also will be listed on Nasdaq and any
UPC ordinary shares A will be listed on the Amsterdam Stock Exchange.
MISCELLANEOUS
The exchange offer is not being made to (and tenders will not be accepted
from or on behalf of) holders of SBS shares in any jurisdiction in which the
making of the exchange offer or the acceptance of the exchange offer would not
be in compliance with the laws of that jurisdiction. We are not making the
exchange offer in or into -- and you may not accept the exchange offer in or
from -- Australia, Canada or Japan. To the extent that we become aware of any
U.S. state law that would limit the class of offerees in the exchange offer, we
will amend the exchange offer and,
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depending on the timing of the amendment, if any, will extend the exchange offer
to provide adequate dissemination of such information to holders of SBS shares
prior to the expiration of the exchange offer.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON OUR BEHALF NOT CONTAINED IN THIS PROSPECTUS OR IN THE LETTER
OF TRANSMITTAL, AND IF GIVEN OR MADE, THE INFORMATION OR REPRESENTATION MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED.
We have filed with the SEC a statement on Schedule TO/Schedule 13e-3,
together with exhibits, pursuant to Rule 14d-3 and Rule 13e-3 of the Exchange
Act, furnishing certain additional information about the exchange offer and we
may file amendments to it. In addition, SBS has filed with the SEC the Schedule
14D-9 pursuant to Rule 14d-9 under the Exchange Act setting forth its
recommendation with respect to the exchange offer and the reasons for that
recommendation and furnishing certain additional related information. The
Schedule 14D-9 is enclosed with the prospectus and the Schedule TO/Schedule
13e-3 and any amendments to it, including exhibits, will be available for
inspection and copies will be obtainable in the manner set forth in the section
of this prospectus "Where You Can Find More Information" (except that they will
not be available at the regional offices of the Commission).
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THE EXCHANGE OFFER AGREEMENT AND THE SHARE EXCHANGE AGREEMENT
The Exchange Offer Agreement and the Share Exchange Agreement are filed as
exhibits to the registration statement of which this prospectus is a part and
the Exchange Offer Agreement and the Share Exchange Agreement are incorporated
by reference in this prospectus. We believe the following summary describes the
material terms of the Exchange Offer Agreement and the Share Exchange Agreement.
However, we recommend that you read carefully the complete agreements for their
precise legal terms, definitions and other information that may be important to
you. References to the Exchange Offer Agreement in this prospectus include the
amendment that the parties agreed to on April 11, 2000, as described in the
section captioned "-- Consideration" below.
THE EXCHANGE OFFER AGREEMENT
THE EXCHANGE OFFER
Commencement of the Exchange Offer. In the Exchange Offer Agreement we
agreed, provided that none of the events described above under "-- Conditions to
the Exchange Offer" had occurred or been existing, to commence the exchange
offer as promptly as practicable after the declaration by the SEC that
registration statement of which this prospectus is part had become effective.
Consideration
We calculated the exchange ratio according to the Exchange Offer Agreement,
as described below. The calculation was based on the average of the closing
sales prices of UPC ADSs on Nasdaq for the 10 trading days that ended on [DATE],
2000 (referred to below as the "UPC average price"). You should keep in mind
that these numbers do not reflect a three-for-one split of UPC ordinary shares
A, as discussed more fully below.
Under the Exchange Offer Agreement (subject to the shareholder election
described in "The Exchange Offer -- Basic Terms -- Shareholder Election"), for
each SBS share that is validly tendered in the exchange offer, we have agreed to
pay $40 in cash, plus a number of UPC ADSs and additional cash, calculated as
follows:
- if the UPC average price had been equal to or greater than U.S.$210 but
less than U.S.$241.50, then the number of UPC ADSs to be exchanged for
each SBS share would have been 0.1904762;
- if the UPC average price had been less than U.S.$210 but more than
U.S.$168 then the number of UPC ADSs to be exchanged for each SBS share
would have been U.S.$40 divided by such average price;
- If the UPC average price had been equal to or less than U.S.$168 but
greater than U.S.$147, then the number of UPC ADSs to be exchanged for
each SBS share would have been calculated on the basis of the following
formula: (U.S.$40 - (U.S.$168 - UPC average price) X 0.119047619) divided
by the UPC average price; and
- If the UPC average price had been equal to or less than U.S.$147 then the
number of UPC ADSs to be exchanged for each SBS share would have been
0.255102 plus a mixture (to be determined by us) of additional UPC ADSs
and additional cash, which mixture would have, together with the 0.255102
UPC ADSs, an aggregate value (calculating the part (if any) comprised of
UPC ADSs at the UPC average price) equal to U.S.$37.50.
Under the Exchange Offer Agreement, however, if the average closing sales
price for UPC ADSs on Nasdaq for any consecutive period of ten trading days
after the date of the Exchange Offer Agreement and prior to [DATE], 2000, the
third U.S. business day prior to the commencement of the exchange offer, had
been equal to or less than U.S.$147 (defined as a "trigger event"), then we
would have had the right, within two U.S. business days following the end of
that period to elect by giving notice to SBS to treat the Exchange Offer
Agreement as terminated, and if we had failed to do
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so within that period, we would not have been entitled to do so upon the
occurrence of any subsequent trigger event.
When the closing sales prices for UPC ADSs on Nasdaq fell in early April
2000, a trigger event occurred. At that time UPC and SBS entered into a letter
agreement dated April 11, 2000 in which they amended the provision of the
Exchange Offer Agreement described in the previous paragraph. According to the
April 11, 2000 amendment, if the average closing sales price of UPC ADSs on
Nasdaq for ten randomly selected trading days out of the 20 trading days that
end three U.S. business days before the date expected to be the commencement
date of the exchange offer, based on the terms of the exchange offer agreement
but for the operation of the provision described in this paragraph, had been
equal to or less than U.S.$147 (which number would be adjusted as described in
the following paragraph), then UPC would have had the right within one U.S.
business day to elect to terminate the Exchange Offer Agreement, subject to
giving timely notice to SBS.
You should keep in mind that the numbers specified above are taken from the
Exchange Offer Agreement and, as such, do not reflect the three-for-one split of
UPC ordinary shares A that became effective on March 20, 2000 and the
corresponding split of UPC ADSs. The Exchange Offer Agreement provides, however,
that in order to give effect to the three-for-one share split:
- the exchange ratios 0.1904762 and 0.255102 and the number 0.119047619
must be multiplied by three;
- the prices U.S.$210, U.S.$241.50, U.S.$168, and U.S.$147, must be divided
by three; and
- the formulas described above must be adjusted appropriately.
Because the UPC average price was [$ ], a price equal to or
[greater] [less] than [$ ] [but [less] [greater] than [$ ],
the number of UPC ADSs to be exchanged for each SBS share in the exchange offer,
that is, the exchange ratio, was calculated pursuant to the Exchange Offer
Agreement to be [ ].
Approval by SBS. In the Exchange Offer Agreement, SBS has represented and
warranted to us, among other things, that (with the exception of the current
board member nominated by us), the board of directors has unanimously:
- approved entering into the Exchange Offer Agreement and the transactions
contemplated by the agreement
- determined that the terms of the exchange offer are fair to and in the
best interests of SBS and its shareholders
- resolved to recommend acceptance of the exchange offer and the tender of
SBS shares by the SBS shareholders and
- resolved to (1) consent to the acquisition of SBS shares by us
contemplated by the Exchange Offer Agreement and to the voting of SBS
shares so acquired, as contemplated by SBS's articles of incorporation
and (2) elect, to the extent permitted by applicable law not to be
subject to any other form of anti-takeover laws and regulations of any
jurisdiction that may purport to be applicable to the Exchange Offer
Agreement.
Conditions. Our obligation to complete the exchange offer is subject to
the exchange offer conditions described in the section captioned "The Exchange
Offer -- Conditions to the Exchange Offer" and include the minimum tender
condition, the antitrust condition and the other conditions that are discussed
in that section.
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We expressly reserve the right to modify the terms of the exchange offer,
except that, without the prior written consent of SBS, we cannot:
- decrease the offer price or change the form of the consideration
- decrease the number of SBS shares we are offering to purchase
- impose additional conditions
- change the conditions (any of which we may waive in our sole discretion)
- make any other change in the terms of the exchange offer that is adverse
to the holders of SBS shares.
Expiration or Termination of the Exchange Offer.
We have agreed, subject to the terms and conditions of the Exchange Offer
Agreement and to the satisfaction or waiver of the exchange offer conditions, to
accept for payment and pay for SBS shares validly tendered and not withdrawn
pursuant to the exchange offer as soon as practicable after the scheduled
expiration of the initial offering period. Under the Exchange Offer Agreement,
without the consent of SBS:
- We may extend the initial offering period of the exchange offer if at any
scheduled expiration time of the initial offering period any of the
exchange offer conditions has not been satisfied or waived.
- We may extend the exchange offer for any period required by any
regulation of the SEC or any foreign governmental regulatory authority
applicable to the exchange offer.
- We may increase the offer price and extend the exchange offer in
connection with such increase, to the extent required by any applicable
law.
- We may extend the exchange offer on one or more occasions (but not beyond
September 30, 2000) if on any expiration date that number of SBS shares
which, together with any SBS shares beneficially owned by us or any of
our affiliates, represents at least 90% of the total outstanding SBS
shares on a fully-diluted basis has not been validly tendered and not
withdrawn.
If requested by SBS, we will extend the initial offering period:
- for a total of not more than ten business days if at any scheduled
expiration of the initial offering period any of the exchange offer
conditions have not been satisfied or waived and all such conditions are
reasonably capable of being satisfied; and
- for a total of not more than 15 business days if the exchange offer
period has not been previously extended and at the expiration of the
initial offer period if on any expiration date that number of shares
which, together with any shares beneficially owned by us, represents at
least 90% of the total outstanding SBS shares on a fully-diluted basis
has not been validly tendered and not withdrawn.
Payment for SBS Shares. We have agreed to pay for all SBS shares properly
tendered and not withdrawn in accordance with Rule 14e-1(c) under the Exchange
Act, all requirements of applicable Luxembourg law and applicable rules and
regulations of the Amsterdam Stock Exchange. We have agreed to pay any stamp or
transfer taxes payable in connection with our purchases of shares in the
exchange offer and any capital duty payable in The Netherlands in connection
with our issuance of UPC ordinary shares A in the exchange offer.
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THE MINORITY BUY-OUT
For a period of six months following the completion of the exchange offer,
we will use our reasonable best efforts, subject to applicable law, to acquire
any remaining shares of SBS held by minority shareholders that are not tendered
in the exchange offer at a purchase price that is equal to the price paid in the
exchange offer, or if such consideration is not permitted by applicable law, at
a purchase price substantially equivalent to the price paid in the exchange
offer. How we will conduct any minority buy-out will be at our discretion and
may include redemption, merger or other corporate actions, as permitted under
Luxembourg or other applicable law. We cannot assure you that there will be a
minority buy-out of any remaining shares after the completion of the exchange
offer or that it will be successful.
SBS DIRECTORS
If the minimum tender condition is satisfied, promptly upon our purchase of
SBS shares in the exchange offer, we are entitled under the Exchange Offer
Agreement to designate a majority of SBS's board of directors. SBS has agreed in
this circumstance to take all actions required to be taken by it to provide us
majority representation on its board, on each committee of its board and on each
board or committee of each of its subsidiaries. Each of Kjell Aamot, Michael
Finkelstein, Anthony Ghee, Martin Lindskog, James McNamara, Jorgen Nilsson and
Jesper Smith has signed a conditional resignation letter, agreeing to resign
from his position as director of SBS effective upon the completion of the
exchange offer. The other members of the SBS board of directors, Harry Evans
Sloan, Howard A. Knight, Herbert Kloiber, Mark Schneider and Adrianus Sularties,
are not parties to conditional resignation letters.
TREATMENT OF OPTIONS
SBS and we have each agreed to take all actions necessary to cause all
outstanding options or rights to acquire SBS shares under any stock option or
similar plan to become vested and exercisable on the completion date of the
exchange offer. At that time, each option holder will be entitled to elect
either option (1) or (2) below:
(1) The option holder's options will be cancelled and we will pay the
holder an amount equal to the product of the excess of the offer price over
the exercise price for that SBS option (the option spread) multiplied by
the number of shares subject to that option. We will pay this amount, at
the holder's option, in cash or UPC ADSs, with the value of UPC ADSs for
purposes of paying the option spread being equal to U.S.$[ ].
Option holders electing this option, however, will be subject to proration
such that they cannot receive in the aggregate more than 60% of their
consideration in cash.
(2) The option holder's options will be deemed to constitute options
to acquire, on the same terms and conditions as were applicable under such
SBS options, the number of UPC ADSs equal to the result (rounded down to
the nearest whole share) of multiplying the number of SBS shares subject to
the SBS option immediately prior to the completion of the exchange offer by
a specified conversion ratio (as defined below), at an exercise price per
share equal to the result (rounded down to the nearest whole share) of
dividing (A) the per share exercise price of such SBS option immediately
prior to the completion of the exchange offer by (B) the conversion ratio;
provided, however, that in the case of any SBS option to which Section 422
of the U.S. the tax code applies, these adjustments will be effected in a
manner consistent with the requirements of Section 422(a) of the tax code,
and provided, further, that each holder of an SBS option electing option
(2) will be entitled by notice to require us to purchase for cash up to 50%
of that holder's SBS options at a price equal to the product of the
applicable option spread multiplied by the number of SBS shares subject to
such SBS options, with the balance of such SBS options being converted in
accordance with this paragraph. For purposes of option (2), the term
"conversion ratio" means a fraction, the numerator of which is the average
of the high
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and low sales price of one SBS share on Nasdaq and on the three trading
days immediately preceding the completion date of the exchange offer, and
the denominator of which is the average of the high and low sales price of
one UPC ADS on Nasdaq on the trading day immediately preceding the
completion date of the exchange offer.
Holders failing to make a timely election will be deemed to have elected
option (1) above and to receive equal parts cash and UPC ADSs under option (1).
Effective as of the completion date of the exchange offer, we have agreed
to assume each SBS option in accordance with the terms of the stock option
agreement by which it is evidenced. We have agreed to take all corporate action
necessary to reserve for issuance a sufficient number of UPC ADSs for delivery
upon exercise of SBS options assumed by us and to file a registration statement
on Form S-8 or other appropriate form with the SEC and maintain the
effectiveness of such registration statement with respect to UPC ADSs that
become subject to such SBS options.
REPRESENTATIONS AND WARRANTIES
The Exchange Offer Agreement contains customary representations and
warranties relating to, among other things:
- corporate organization and similar corporate matters of each of UPC and
SBS
- the capital structure of each of UPC and SBS
- authorization, execution, delivery, performance and enforceability of,
and required consents, approvals, orders and authorizations of
governmental authorities relating to, the Exchange Offer Agreement and
related matters of each of UPC and SBS
- documents filed by each of UPC and SBS with the SEC and the accuracy of
information contained in those documents
- financial statements included in documents filed by each of UPC and SBS
with the SEC, the accuracy of such information presented by such
financial statements, compliance with applicable accounting standards and
requirements by such financial statements and the absence of undisclosed
liabilities
- the accuracy of information supplied by each of UPC and SBS in connection
with this prospectus and the registration statement of which it is a part
- the absence of material changes or events concerning UPC and SBS through
the date of the Exchange Offer Agreement
- engagement and payment of fees of brokers, investment bankers, finders
and financial advisers by UPC and SBS
- outstanding and pending material litigation of each of UPC and SBS
- compliance with laws and permit requirements by UPC and SBS
- availability of funds by UPC
- matters relating to employment benefit matters for SBS
- filing of tax returns and payment of taxes by SBS
- software, intellectual property and infringement matters concerning SBS
- ownership of properties and assets of SBS
- certain material contracts and debt instruments of SBS
- SBS's status as a "foreign private issuer" under U.S. securities laws
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- interests of directors and officers of SBS in SBS assets
- SBS board of directors' recommendation of the exchange offer
- receipt of fairness opinion by SBS from its financial adviser
All representations and warranties of UPC and SBS expire upon the
completion of the exchange offer.
CONDUCT OF BUSINESS PENDING COMPLETION OF THE EXCHANGE OFFER
Except as expressly contemplated by the Exchange Offer Agreement, SBS has
agreed to conduct its operations, and to cause each of its subsidiaries to
conduct their operations, according to the ordinary and usual course of business
and consistent with past practice and to use and to cause each of its
subsidiaries to use its reasonable efforts to preserve substantially intact its
business organization, to keep available the services of its current officers
and employees and to preserve the present relationships with those persons and
entities having significant business relationships with the SBS and its
subsidiaries, except such as would not have a material adverse effect (as
defined in paragraph (e) under the caption "-- Conditions of the Exchange
Offer -- Other Conditions of the Exchange Offer," above). Except as expressly
provided in or contemplated by the Exchange Offer Agreement, without the consent
of UPC, SBS has agreed not, and not to permit any of its subsidiaries to:
- issue, sell, grant options or rights to purchase or receive, pledge, or
authorize or propose the issuance, sale, grant of options or rights to
purchase or receive or pledge of (1) any securities of SBS or of its
subsidiaries, or grant or accelerate any right to convert or exchange any
securities of SBS or of its subsidiaries, other than SBS shares issuable
upon exercise of SBS options or (2) any other securities in respect of,
in lieu of or in substitution for SBS shares outstanding on the date of
the Exchange Offer Agreement;
- acquire or redeem, directly or indirectly, or amend any securities of SBS
or of its subsidiaries;
- split, combine or reclassify its capital stock or declare, set aside,
make or pay any dividend or distribution (whether in cash, stock or
property) on any shares of its capital stock (other than cash dividends
paid to SBS by its wholly-owned subsidiaries with regard to their capital
stock);
- (1) make or offer to make any acquisition, by means of a merger or
otherwise, of assets or securities, or any sale, lease, encumbrance or
other disposition of assets or securities, in each case involving an
amount in excess of U.S.$1,000,000, except for purchases of inventory
made in the ordinary course of business and consistent with past practice
or (2) enter into a material contract or amend any material contract or
grant any release or relinquishment of any rights under any material
contract (in each case, as defined in the Exchange Offer Agreement);
- incur or assume any long-term debt or short-term debt except in ordinary
course of business consistent with past practice or to fund payments
contemplated under the Exchange Offer Agreement;
- other than in the ordinary course of business and consistent with past
practice, assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the
material obligations of any other person except wholly-owned subsidiaries
of SBS;
- other than in the ordinary course of business and consistent with past
practice, make any loans, advances or capital contributions to, or
investments in, any other Person (other than wholly-owned subsidiaries of
SBS);
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- change any of the material accounting principles or practices used by it
unless required by U.S. generally accepted accounting principles;
- make any material tax election or settle or compromise any material
federal, state or local income tax liability;
- except as may be required to effect the minority buy-out, propose or
adopt any amendments to its governing documents;
- grant any stock-related, performance or similar awards or bonuses;
- forgive any loans to employees, officers or directors or any of their
respective affiliates or associates;
- except as contemplated by the Exchange Offer Agreement, enter into any
new, or amend any existing, employment, severance, consulting or salary
continuation agreements with or for the benefit of any officers,
directors or employees, or grant any increases in the compensation or
benefits to officers, directors and employees (other than normal
increases to persons who are not officers or directors in the ordinary
course of business consistent with past practices and that, in the
aggregate, do not result in a material increase in benefits or
compensation expense of SBS); provided, however, that nothing contained
in this provision precludes SBS from extending the current term of any
employment, severance, change in control or similar agreement,
arrangement or program which is effect on the date of the Exchange Offer
Agreement;
- except in the ordinary course of business, agree to the amendment,
revocation or termination of any material broadcasting license of SBS and
its subsidiaries or joint ventures;
- make any deposits or contributions of cash or other property to or take
any other action to fund or in any other way secure the payment of
compensation or benefits under SBS's employee benefit plans or agreements
subject to such plans or any other plan, agreement, contract or
arrangement of SBS;
- enter into, amend, or extend any material collective bargaining or other
labor agreement;
- adopt, amend or terminate any employee benefit plan of SBS or any other
bonus, severance, insurance pension or other employee benefit plan or
arrangement; provided, however, that nothing contained in this provision
precludes SBS from extending the current term of any such plan which is
effect on the date the Exchange Offer Agreement;
- other than in the ordinary course of business, settle or agree to settle
any suit, action, claim, proceeding or investigation (including any suit,
action, claim, proceeding or investigation relating to the Exchange Offer
Agreement or the transactions contemplated by it) or, except in the
ordinary course of business, pay, discharge or satisfy or agree to pay,
discharge or satisfy any claim, liability or obligation (absolute or
accrued, asserted or unasserted, contingent or otherwise) other than the
payment, discharge or satisfaction of liabilities reflected or reserved
against in full in the financial statements as at December 31, 1998 or
incurred in the ordinary course of business subsequent to December 31,
1998;
- except as specifically permitted by the provisions of the Exchange Offer
Agreement described below under "-- No Solicitation," knowingly take, or
agree to commit to take, or fail to take any action that would result or
is reasonably likely to result in any of the exchange offer conditions
not being satisfied, or would make any representation or warranty of SBS
contained in the Exchange Offer Agreement inaccurate in any material
respect at, or as of any time prior to, the completion date of the
exchange offer, or that would impair the ability to complete the exchange
offer in accordance with the terms of the Exchange Offer Agreement or
materially delay the completion; or
- agree in writing or otherwise to take any of the actions described above.
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NO SOLICITATION
(a) SBS has agreed that neither it nor any of its subsidiaries will, and
that it will direct and use its reasonable best efforts to cause its and its
subsidiaries' respective officers, directors, employees, representatives
(including investment bankers, attorneys and accountants), agents or affiliates
(other than UPC or any of its affiliates) not to, directly or indirectly,
encourage, solicit, initiate or participate in any way in any discussions or
negotiations with, or provide any information to, or afford any access to the
properties, books or records of SBS or any of its subsidiaries to, or otherwise
take any other action to assist or facilitate, any person or group (other than
UPC or any affiliate or associate of UPC) concerning any acquisition proposal
(as defined below) or the possible making of any acquisition proposal.
Notwithstanding the foregoing and subject to compliance with the provisions
of the Exchange Offer Agreement described in paragraph (c) below, SBS may only
to the extent required by Luxembourg law furnish information to or enter into
discussions or negotiations with any person or entity that has made an
unsolicited bona fide acquisition proposal that the SBS board of directors
determines constitutes or could constitute a superior proposal (as defined
below) if, and only to the extent that, the SBS board, after consultation with
outside legal counsel to SBS, determines in good faith that failure to do so
would be inconsistent with the fiduciary duty imposed by Luxembourg law on the
board to the shareholders of SBS.
(b) SBS has agreed to notify UPC promptly (and in any event within one
business day), orally and in writing, if any such information is requested or
any such negotiations or discussions are sought to be initiated and will
promptly communicate to UPC the identity of the person or group making such
request or inquiry (referred to in the Exchange Offer Agreement as a "potential
acquirer") and any other material terms of such request, inquiry or acquisition
proposal. If SBS (or any of its subsidiaries or its or their respective
officers, directors, employees, representatives, agents or affiliates)
participates in discussions or negotiation with, or provides information to, a
potential acquirer, SBS has agreed to keep UPC advised on a current basis of any
developments with respect thereto.
(c) SBS agreed to, and to cause its subsidiaries and its and their
respective officers, directors, employees, representatives, agents and
affiliates to, immediately cease and cause to be terminated any existing
activities, discussions, or negotiations with any persons other than UPC or any
of its respective affiliates or associates conducted prior to the date of the
Exchange Offer Agreement with respect to any acquisition proposal.
(d) Under the Exchange Offer Agreement, SBS has further agreed that, unless
and until the Exchange Offer Agreement has been terminated in accordance with
the provisions of the Exchange Offer Agreement described below under
"-- Termination Events," that it will not:
- approve or recommend, or propose publicly to approve or recommend, any
acquisition proposal; or
- release any third party from any confidentiality or standstill agreement
to which SBS is a party or fail to enforce to the fullest extent
permitted by law any such agreement in order to facilitate any
acquisition proposal; or
- waive a suspension of voting rights for the acquisition of more than 20%
of the voting stock of SBS to facilitate any acquisition proposal (other
than by UPC); or
- enter into any letter of intent, agreement in principle, acquisition
agreement or other agreement to effect any acquisition proposal.
(e) Nothing contained in the non-solicitation provision described above
prohibits SBS or its board of directors from taking and disclosing to SBS's
shareholders a position with respect to an acquisition proposal by a third party
pursuant to Rules 14d-9 and 14e-2(a) under the Exchange Act.
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(f) For purposes of the Exchange Offer Agreement:
- "acquisition proposal" means any offer or proposal, or any bona fide
indication of interest in making an offer or proposal, made by a person
or group at any time which is structured to permit such person or group
to acquire beneficial ownership of 20% of the consolidated assets of, or
at least 20% of the equity interest in SBS pursuant to a merger,
consolidation or other business combination, sale of shares of capital
stock, sale of assets, tender offer or exchange offer or similar
transaction, including any single or multi-step transaction or series of
related transactions, in each case other than the transactions
contemplated by the Exchange Offer Agreement, and
- "superior proposal" means any unsolicited, bona fide acquisition proposal
made in writing in respect of which the SBS board of directors has
reasonably determined in good faith after receiving the advice of its
outside counsel and independent financial advisers that (A) the potential
acquirer has the financial wherewithal to complete such acquisition
proposal, (B) such acquisition proposal would, if completed, result in a
transaction that is more favorable to SBS and its shareholders (other
than UPC and its affiliates) from a financial point of view than the
transactions contemplated by the Exchange Offer Agreement and (C) such
acquisition proposal is reasonably likely to be completed.
ACCESS TO INFORMATION
From and after the date of the Exchange Offer Agreement, SBS has agreed to:
- give UPC and its authorized accountants, investment bankers, counsel and
other representatives reasonable access (during regular business hours
upon reasonable notice and after consultation) to SBS's officers, key
employees, offices and other facilities, and to all books, contracts,
commitments and records (including tax returns) of SBS and its
subsidiaries and to cause SBS's and its subsidiaries' independent public
accountants to provide access to their work papers and such other
information as UPC may reasonably request;
- permit UPC to make such inspections as we may reasonably require;
- cause SBS's executive officers and those of its subsidiaries to furnish
UPC with such financial and operating data and other information with
respect to the business, properties and personnel of SBS and its
subsidiaries as UPC may from time to time reasonably request; and
- furnish promptly to UPC a copy of each report, schedule and other
document filed or received by SBS during such period pursuant to the
requirements of the U.S. federal or state securities laws, provided, that
the foregoing does not require SBS to permit any inspection, or to
disclose any information, which in the reasonable judgment of SBS would
result in the disclosure of any trade secrets of third parties or violate
any obligation of SBS with respect to confidentiality if SBS has used
reasonable efforts to obtain the consent of such third party to such
inspection or disclosure.
FILINGS AND APPROVALS
Subject to the terms and conditions of the Exchange Offer Agreement, each
of UPC and SBS have agreed to use its reasonable best efforts to take, or cause
to be taken, all appropriate action, and to do, or cause to be done, all things
necessary, proper or advisable under any applicable law to complete the
transactions contemplated by the Share Exchange Agreement. The parties have
specifically agreed that each of UPC and SBS will:
- use its reasonable best efforts to make promptly any required submissions
under the HSR Act or any competition filings required under applicable
law which UPC or SBS determines
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should be made with respect to the exchange offer and the transactions
contemplated by the Share Exchange Agreement; and
- cooperate with one another (A) in promptly determining whether any
filings are required to be or should be made or consents, approvals,
permits or authorizations are required to be or should be obtained under
any other U.S. federal, state or foreign law or regulation or whether any
consents, approvals or waivers are required to be or should be obtained
from other parties to indentures, loan agreements or other contracts
(including joint venture agreements) or instruments material to SBS's
business in connection with the completion of the transactions
contemplated by the Share Exchange Agreement and (B) in promptly making
any such filings, furnishing information required in connection therewith
and seeking to obtain timely any such consents, permits, authorizations,
approvals or waivers.
TERMINATION EVENTS
The Exchange Offer Agreement may be terminated at any time prior to the
completion date of the exchange offer by action taken or authorized by the board
of directors of the terminating party or parties:
(a) by mutual written consent of UPC and SBS, by action, respectively,
of UPC's Supervisory Board and Managing Board and SBS's board of directors;
(b) by UPC or SBS, if any court of competent jurisdiction or other
governmental entity has issued an order, decree or ruling (which order,
decree or ruling the parties are obligated to use reasonable efforts to
lift), or taken any other action restraining, enjoining or otherwise
prohibiting any of the transactions contemplated by the Exchange Offer
Agreement and which can reasonably be expected to result in any of the
consequences referred to in clauses (1)-(6) of paragraph (a) of the
exchange offer conditions listed above under "The Exchange Offer --
Conditions of the Exchange Offer," and such order, decree, ruling or other
action has become final and non-appealable;
(c) by SBS, if
(1) UPC fails to commence the exchange offer in violation of the
provisions of the Exchange Offer Agreement described under "-- The
Exchange Offer -- Commencement of the Exchange Offer,"
(2) UPC has not accepted, or by law is not permitted to accept, for
payment and paid for SBS shares pursuant to the exchange offer in
accordance with the terms of the Exchange Offer Agreement on or before
September 30, 2000, or
(3) UPC fails to purchase validly tendered SBS shares in violation
of the terms of the Exchange Offer Agreement;
(d) by UPC, if (A) due to an occurrence or circumstance that would
result in a failure to satisfy any of the exchange offer conditions set
forth in paragraphs (a) through (i) of the exchange offer conditions listed
above under "The Exchange Offer -- Conditions of the Exchange Offer," UPC
has not commenced the exchange offer as promptly as practicable after the
declaration by the SEC that the registration statement of which this
prospectus is part has become effective, or (B) due to an occurrence or
circumstance which would result in a failure to satisfy any of the exchange
offer conditions, UPC has either (1) terminated the exchange offer without
purchasing any shares or (2) not accepted for payment SBS shares tendered
pursuant to the exchange offer prior to September 30, 2000;
(e) by SBS, prior to the purchase by UPC of shares pursuant to the
exchange offer, if (1) SBS has given UPC at least two business days'
advance notice of its intention to accept or recommend a superior proposal
and of all of the material terms and conditions of such superior proposal
in accordance with the provisions of the Exchange Offer Agreement described
above
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under "-- No Solicitation," and (2) in response to an unsolicited
acquisition proposal, the SBS board of directors determines, after
consultation with and the receipt of the advice of its financial adviser
and outside counsel, that such acquisition proposal is a superior proposal
and that failure to terminate the Exchange Offer Agreement would be
inconsistent with the fiduciary duties of the board of directors under
Luxembourg Law (provided, however, that the termination described in this
provision will not be effective unless and until SBS has paid to UPC all of
the termination fee (as described below under "-- Termination Fee;
Expenses"), or
(f) by UPC, prior to the purchase of shares pursuant to the exchange
offer, if SBS has taken or the SBS board of directors has resolved to take,
any of the actions described in paragraph (d) of the paragraph captioned
"-- No Solicitation," above, or if SBS has withdrawn or modified, or
proposed publicly to withdraw or modify, in a manner adverse to UPC, the
approval or recommendation of the exchange offer as set forth in the
provisions of Exchange Offer Agreement described under "-- The Exchange
Offer -- Approval by SBS," above.
TERMINATION FEE; EXPENSES
(a) Whether or not the exchange offer is completed, except as otherwise
specifically provided in the Exchange Offer Agreement, all costs and expenses
incurred in connection with the exchange offer, the Exchange Offer Agreement and
the transactions contemplated by it will be paid by the party incurring such
expenses.
(b) In the event that the Exchange Offer Agreement is terminated
(1) pursuant to (e) or (f) of "-- Termination Events," above, or
(2) pursuant to (c)(ii) or (d) of "-- Termination Events," above, and
(in the case of this clause (2) only) either:
(A) prior to such termination an acquisition proposal (other than
any acquisition proposal made by or on behalf of, or encouraged,
solicited or initiated in any respect by, UPC or any of its affiliates
or any of such persons' associates) has been made or publicly announced
and
(B) within nine months thereafter any acquisition proposal that is
financially superior to the exchange offer has been completed (whether
or not with a different third party),
then SBS will be obligated to pay UPC a termination fee of U.S.$90 million
(which will be deemed to include reimbursement for all fees and expenses of UPC
related to the exchange offer, the Exchange Offer Agreement, the transactions
contemplated hereby and any related financing).
For the purposes of clause (2) of this paragraph (b) only, "acquisition
proposal" has the same meaning ascribed to it in the provisions of the Exchange
Offer Agreement described in paragraph (f) of "-- No Solicitation," above,
except each reference to "20%" will be replaced with a reference to "25%."
If the termination fee becomes payable pursuant to clause (1) of paragraph
(b) above, if SBS terminated the agreement, such fee will be payable
simultaneously with such termination, or if UPC terminated, the fee will be
payable within two business days thereafter. If the termination fee becomes
payable pursuant to clause (2) of this paragraph (b), the termination fee must
be paid simultaneously with completion of such acquisition proposal. No
termination fee will be payable pursuant to provisions described above if UPC is
in material breach of its obligations under the Exchange Offer Agreement.
(c) In the event of the payment of a termination fee by the SBS, as
described above, such termination fee will be the sole and exclusive legal
remedy UPC will have against SBS and any of its subsidiaries and their
respective officers, directors, employees, agents, advisers and other
representatives with respect to the breach of the Exchange Offer Agreement.
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(d) For purposes of the provisions of the Exchange Offer Agreement
described above in this section captioned "-- Termination Fee: Expenses," the
Exchange Offer Agreement will be deemed terminated by UPC pursuant to a
provision giving rise to the obligation to pay the termination fee if at the
time of any termination UPC was so entitled to terminate the agreement pursuant
to such provision.
THE SHARE EXCHANGE AGREEMENT
As a condition and inducement to UPC's entering into the exchange offer,
four directors and executive officers who are shareholders of SBS individually
entered into the Share Exchange Agreement.
As of March 9, 2000, these four shareholders collectively held an aggregate
of 1,092,194 outstanding SBS shares, representing approximately 4.25% of the
then issued and outstanding shares. Collectively these persons also had the
right to acquire an additional 3,401,019 shares upon the exercise of outstanding
SBS stock options. That is, if all of these shareholders were to exercise their
options, they would hold 4,501,215 SBS shares, representing approximately % of
the SBS shares on a fully diluted basis. We refer to these shareholders below as
the "shareholder parties."
AGREEMENT TO EXCHANGE SHARES
Each of the shareholder parties has individually agreed to tender all of
his respective SBS shares into the exchange offer no later than the fifth
business day following the commencement of the exchange offer, and not to
withdraw any shares unless the exchange offer is terminated or has expired. If a
shareholder party acquires additional SBS shares, under the agreement he has
agreed to exchange these shares pursuant to the exchange offer no later than the
second business day after he acquires them.
UPC has agreed to purchase all of the SBS shares so exchanged at a price
per share equal to the offer price in the exchange offer or any higher price
that may be paid in the exchange offer. UPC's obligation to accept for payment
and pay for the shares is subject to all the terms and conditions of the
exchange offer, including those described above under the caption "The Exchange
Offer -- Conditions of the Exchange Offer," above.
Except as otherwise provided in the Share Exchange Agreement, each of the
shareholder parties has agreed that he will not:
- offer for sale, sell, transfer, tender, pledge, encumber, assign, or
otherwise dispose of, any or all of his SBS shares;
- enter into any contract, option or understanding with respect to any
transfer of any or all of his SBS shares or any interest in his shares;
- except as provided in the Share Exchange Agreement, grant any proxy,
power-of-attorney or other authorization or consent in or with respect to
his SBS shares;
- deposit his SBS shares into a voting trust or enter into a voting
agreement or arrangement with respect to his shares; or
- take any other action that would in any way restrict, limit or interfere
with the performance of his obligations under the Share Exchange
Agreement or the transactions contemplated by it.
Notwithstanding the provisions of the Share Exchange Agreement described
above, each shareholder party may transfer his SBS shares:
- as a bona fide gift or gifts, provided that the donee or donees thereof
agree to be bound by the terms and provisions set forth in the Share
Exchange Agreement and executes and delivers to UPC a copy of the Share
Exchange Agreement;
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- to any trust for the direct or indirect benefit of the shareholder party
or the immediate family of the shareholder party, provided that the
trustee of the trust agrees to be bound by the terms and provisions set
forth in the Share Exchange Agreement and executes and delivers to UPC a
copy of the Share Exchange Agreement; or
- with the prior written consent of UPC.
No transfer permitted under the Share Exchange Agreement, however, will
release a transferring shareholder party from his obligations under the Share
Exchange Agreement (including the provisions described under "-- No
Solicitation," below).
NO SOLICITATION
From the date of the Share Exchange Agreement until the earlier of its
termination or the completion of the minority buy-out, if any, each shareholder
party has individually agreed not to:
- take any action to initiate, solicit, continue, encourage or facilitate
(including by way of furnishing or disclosing non-public information) any
inquiries or the making of any offer or proposal with respect to a
merger, reorganization, share exchange, consolidation, business
combination, recapitalization, liquidation, dissolution or similar
transaction involving SBS or any of its subsidiaries (other than in
connection with a project of SBS designated "Project Pluto") or any
proposal or offer to acquire in any manner, directly or indirectly, 20%
or more of the shares of any class of voting securities of SBS or any of
its subsidiaries or a substantial portion of the assets of SBS or any of
its subsidiaries, other than the transactions contemplated by or as
provided in the Exchange Offer Agreement or by the Share Exchange
Agreement (any of the foregoing being referred to as an "acquisition
proposal"); or
- except in his capacity as a director pursuant to the Exchange Offer
Agreement, engage in negotiations, discussions or communications
regarding or disclose any information relating to SBS or any of its
subsidiaries or afford access to the properties, books or records of SBS
or any of its subsidiaries to any person, corporation, partnership or
other entity or group (defined as a "potential acquirer") that may be
considering making, or has made, an acquisition proposal or knowingly
facilitate any effort or attempt to make or implement an acquisition
proposal or accept an acquisition proposal.
Each of the shareholder parties has also individually agreed:
- to notify UPC promptly of any acquisition proposal (or any indication
that any person is considering making an acquisition proposal) or any
request for non-public information relating to SBS or any of its
subsidiaries or for access to the properties, books or records of SBS or
any of its subsidiaries by any person that may be considering making, or
has made, an acquisition proposal; and
- to notify UPC promptly of any material change to any such acquisition
proposal received by him, indication or request; and
- upon reasonable request by UPC, provide UPC with all material information
about any such acquisition proposal, indication or request received by
him.
EXPENSES
Under the Share Exchange Agreement, all fees and expenses incurred by any
party hereto will be borne by the party incurring such fees and expenses.
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TERMINATION
Except as otherwise provided in the Share Exchange Agreement, it and all
rights and obligations of the parties under it, will terminate immediately upon
the earlier of:
- our acquisition of all of the SBS shares; or
- the termination of the Exchange Offer Agreement in accordance with its
terms, although the provisions of the Exchange Offer Agreement described
in the section captioned "-- Expenses," above will survive any
termination of the Share Exchange Agreement.
"LOCK-UP" LETTERS
Each of the shareholder parties also entered into a separate letter
agreement with UPC, dated as of March 9, 2000, in which each agreed, among other
things, not to sell or otherwise permit the transfer of any UPC ADSs or UPC
ordinary shares A that he owns or over which he has control (as specified in the
letter agreements) for a period of six months after the completion of the
exchange offer without UPC's prior written consent.
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MARKET PRICES AND DIVIDENDS
UPC
UPC ADSs are quoted on Nasdaq under the symbol "UPCOY," and UPC ordinary
shares A are traded on the Amsterdam Stock Exchange under the symbol "UPC." Both
began trading on February 12, 1999, at the time of our initial public offering.
To date, we have not paid dividends on the UPC ordinary shares A and do not
intend to do so for the foreseeable future. The terms of some of our existing
debt facilities and indentures prevent us from paying dividends. At the moment,
we do not have sufficient shareholders' equity under Netherlands law to make
distributions. You should therefore not expect to receive dividends on our
shares for the foreseeable future.
The following table shows the high and low per share sales prices of UPC
ADSs and UPC ordinary shares A reported on Nasdaq and the Amsterdam Stock
Exchange, respectively, for the periods indicated. The historical UPC ADS and
UPC ordinary share A sales prices have been adjusted to reflect a March 20, 2000
three-for-one share split.
<TABLE>
<CAPTION>
AMSTERDAM
NASDAQ STOCK EXCHANGE
SALES PRICE SALES PRICE
(U.S. DOLLARS) (EURO)
---------------- ----------------
HIGH LOW HIGH LOW
---- --- ---- ---
<S> <C> <C> <C> <C>
YEAR ENDING DECEMBER 31, 1999:
First Quarter 1999 (from February 12)................ 13.813 10.859 12.750 9.667
Second Quarter 1999.................................. 21.703 13.125 20.883 12.400
Third Quarter 1999................................... 23.500 18.797 23.117 17.667
Fourth Quarter 1999.................................. 43.671 20.250 43.773 19.083
YEAR ENDING DECEMBER 31, 2000:
First Quarter 2000................................... 79.000 35.078 83.317 33.333
Second Quarter (through , 2000).......
</TABLE>
On March 8, 2000, the last day of trading before the day on which UPC and
SBS announced signing the Exchange Offer Agreement, the last reported sale price
of the UPC ordinary shares A on the Amsterdam Stock Exchange was Euro 83.317 per
share, and the last reported sale price of the UPC ADSs on Nasdaq was U.S.$79
per share.
On [DATE], 2000, the last day for which such information could be
practicably calculated prior to the date of this prospectus, the last reported
sale price of the UPC ordinary shares A on the Amsterdam Stock Exchange was
[Euro ] per share, and the last reported sale price of the UPC
ADSs on Nasdaq was [$ ] per share.
For information about U.S. dollar/euro exchange rates, please see the
section captioned "Exchange Rate Data."
SBS
SBS shares trade on Nasdaq under the symbol "SBTV" and on the Amsterdam
Stock Exchange under the symbol "SBS." SBS shares began trading on Nasdaq on
March 10, 1993 and on the Amsterdam Stock Exchange on August 4, 1999.
According to its filings with the SEC, to date SBS has not paid dividends
on the SBS shares and it does not intend to do so for the foreseeable future.
Luxembourg law does not currently permit SBS to make any dividend distributions.
The Exchange Offer Agreement prohibits SBS and its subsidiaries from declaring,
making or paying any dividends or distributions (whether in cash, stock or
property) with regard to its capital stock until the acceptance for payment and
payment for SBS shares pursuant to the exchange offer (other than cash dividends
paid to SBS by its wholly-owned subsidiaries with regard to their capital stock)
without the consent of UPC.
97
<PAGE> 103
The following table shows the high and low per share sales prices of SBS
shares reported on Nasdaq and the Amsterdam Stock Exchange, respectively, for
the periods indicated. No information is reported for the Amsterdam Stock
Exchange prior to the third quarter of the fiscal year ended December 31, 1999
because the SBS shares did not begin trading on the Amsterdam Stock Exchange
until August 1999.
<TABLE>
<CAPTION>
AMSTERDAM
NASDAQ STOCK EXCHANGE
SALES PRICE SALES PRICE
(U.S. DOLLARS) (EUROS)
---------------- --------------
HIGH LOW HIGH LOW
---- --- ---- ---
<S> <C> <C> <C> <C>
YEAR ENDING DECEMBER 31, 1998:
First Quarter.......................................... 33.375 24 -- --
Second Quarter......................................... 34.125 28.375 -- --
Third Quarter.......................................... 30.250 18.563 -- --
Fourth Quarter......................................... 27 19.750 -- --
YEAR ENDING DECEMBER 31, 1999:
First Quarter.......................................... 32.250 25 -- --
Second Quarter......................................... 34.375 28.750 -- --
Third Quarter.......................................... 40.125 30.625 38.00 30.50
Fourth Quarter......................................... 48.688 34.750 50.00 35.00
YEAR ENDING DECEMBER 31, 2000:
First Quarter.......................................... 72.500 46 76.50 46
Second Quarter, (through [DATE], 2000).................
</TABLE>
On March 8, 2000, the last full day of trading before the day on which UPC
and SBS announced signing the Exchange Offer Agreement, the last reported sale
price of the SBS shares on Nasdaq was U.S.$57 per share.
On [DATE], 2000, the last day for which such information could be
practicably calculated prior to the date of this prospectus, the last reported
sale price of SBS shares on Nasdaq was [$ ] per share.
WE URGE YOU TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE UPC ADSS, ORDINARY
SHARES A AND SBS SHARES.
98
<PAGE> 104
EXCHANGE RATE DATA
Effective December 31, 1999, UPC reports all of its financial results in
euro. For your convenience, UPC has converted some amounts in non-euro
currencies to euro. These foreign currency translations for amounts prior to
January 1, 1999, when the euro was created, use the exchange rate in effect
between the non-euro currency and euro on January 1, 1999. For non-euro currency
amounts that have been derived from UPC's historical financial information, UPC
has used exchange rates described in its consolidated financial statements. For
non-euro amounts that are not derived from UPC's historical financial
information, UPC has used the March 31, 2000 exchange rate 1.04 euro per U.S.
dollar, except (1) for conversion of purchase prices of closed acquisitions, for
which we have used the actual exchange rate on the date of closing, and (2) as
otherwise indicated. These translated amounts may not currently equal such euro
amounts nor may they necessarily be converted into euro at the translation
exchange rates used.
The following table sets forth, for the periods indicated, information
concerning the exchange rate at the end of the period, the average of the
exchange rates at 12.00 p.m. Eastern Standard Time on the last day of each month
during the applicable period and the high and low exchange rates for euro
expressed in euro per U.S. dollars. Exchange rates have been rounded to the
nearest 1/100th of one U.S. dollar. The source of the information in this table
is derived from U.S. Federal Reserve Statistical Release H.10(512).
EXCHANGE RATES: EURO PER U.S. DOLLAR
<TABLE>
<CAPTION>
AS OF OR FOR THE AS OF OR FOR THE
YEAR ENDED THREE MONTHS ENDED
DECEMBER 31, 1999 MARCH 31, 2000
----------------- ------------------
<S> <C> <C>
Exchange rate at end of period......... 0.99 1.04
Average exchange rate during period.... 0.94 1.01
Highest exchange rate during period.... 1.00 1.05
Lowest exchange rate during period..... 0.85 0.97
</TABLE>
On [DATE], 2000, the latest practicable date before the date of this
prospectus, the exchange rate was [ ] euro per U.S. dollar.
99
<PAGE> 105
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL DATA
The following unaudited pro forma condensed consolidated financial data of
UPC are presented to reflect the pro forma effect of:
- our acquisition of an initial approximately 23.5% interest in SBS and
successful completion of our offer to acquire the remaining approximately
76.5% of SBS;
- our acquisition in March 2000 of 100% of the K&T Group, a Dutch cable
television company, and
- our offering of senior notes and discount notes in January 2000.
The unaudited pro forma condensed consolidated statement of operations for
the year ended December 31, 1999 also reflects our acquisition of StjarnTVnatet,
a Swedish cable television company, in July 1999 and our acquisition of
@Entertainment, a Polish cable television and satellite-delivered programming
company, in August 1999, which were material acquisitions in 1999.
The unaudited pro forma condensed consolidated data do not include the
realization of any potential cost savings from operating efficiencies, synergies
or other restructuring that may result from the acquisition and combination of
these businesses. The selected unaudited pro forma condensed consolidated
balance sheet and statement of operations and the notes thereto do not purport
to represent what our results of operations would actually have been if such
transactions had in fact occurred on such dates or what such results will be in
the future. The pro forma adjustments are based upon currently available
information and upon certain assumptions that we believe are reasonable. All
share and per share amounts have been adjusted to reflect our three-for-one
stock split in March 2000. This pro forma condensed consolidated financial data
has been derived from unaudited pro forma financial data and financial
statements contained in our Current Reports on Form 8-K filed on April 19, 2000
and Form 8-K/A filed on May 12, 2000, which are incorporated by reference in
this prospectus and is qualified by its entirety by each of those documents.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
The following unaudited pro forma condensed balance sheet as of December
31, 1999, gives effect to (1) the offering of our senior notes and discount
notes, and the related swaps, in January 2000, (2) our acquisition of the K&T
Group in March 2000, and (3) our acquisition in February 2000 of an additional
10.2% interest in SBS and the successful completion of our offer to acquire the
remaining approximately 76.5% shares of SBS which we do not already own, as if
each had occurred on December 31, 1999. For information about U.S. dollar/euro
exchange rates, please see the section captioned "Exchange Rate Data."
100
<PAGE> 106
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1999
------------------------------------------------------------------------------
PRO FORMA ADJUSTMENTS
------------------------------------------------
JANUARY NOTES K&T GROUP SBS UPC
UPC HISTORICAL OFFERING ACQUISITION(D) TRANSACTIONS(J) PRO FORMA
-------------- ------------- -------------- --------------- ---------
(IN THOUSANDS OF EURO)
<S> <C> <C> <C> <C> <C>
ASSETS:
Current assets
Cash and cash equivalents........... 1,025,460 1,585,333(a) (1,065,230)(e) (1,023,207)(k) 522,356
Restricted cash..................... 17,135 -- 1,385 18,520
Short term investments.............. -- -- 31,146 31,146
Subscriber receivables, net......... 59,860 -- 3,792 62,997 126,649
Costs to be reimbursed by affiliated
companies, net.................... 10,500 -- -- 10,500
Other current assets................ 223,707 -- 11,260 120,690 355,657
--------- --------- ---------- ---------- ----------
Total current assets......... 1,336,662 1,585,333 (1,050,178) (806,989) 1,064,828
Other investments..................... 623,341 -- -- 30,210 653,551
Investments in and advances to
affiliated companies, net........... 242,847 -- 6,318 (76,711)(l) 172,454
Property, plant and equipment, net.... 1,908,414 -- 200,746 24,810 2,133,970
Goodwill and other intangible assets,
net................................. 2,611,413 -- 862,103(f) 2,071,432(m) 5,544,948
Deferred financing costs, net......... 77,861 32,777(b) -- 2,694 113,332
Other assets.......................... 1,734 -- -- 77,296(n) 79,030
--------- --------- ---------- ---------- ----------
Total assets................. 6,802,272 1,618,110 18,989 1,322,742 9,762,113
========= ========= ========== ========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current liabilities
Accounts payable, accrued
liabilities and other current
liabilities....................... 565,207 -- 18,842 154,703 738,752
Short-term debt..................... 163,241 -- --(g) 6,551 169,792
Current portion of long-term debt... 50,291 -- --(h) 11,548 61,839
--------- --------- ---------- ---------- ----------
Total current liabilities.... 778,739 -- 18,842 172,802 970,383
Long-term debt........................ 3,903,410 1,618,110(c) --(i) 33,444(o) 5,554,964
Deferred taxes........................ 15,961 -- -- -- 15,961
Deferred compensation................. 52,702 -- -- -- 52,702
Other long term liabilities........... 19,365 -- 43,943 63,308
--------- --------- ---------- ---------- ----------
Total liabilities............ 4,770,177 1,618,110 18,842 250,189 6,657,318
--------- --------- ---------- ---------- ----------
Minority interests in subsidiaries.... 11,895 -- 147 7,184 19,226
--------- --------- ---------- ---------- ----------
Total shareholders' equity... 2,020,200 -- -- 1,065,369(p) 3,085,569
--------- --------- ---------- ---------- ----------
Total liabilities and
shareholders' equity....... 6,802,272 1,618,110 18,989 1,322,742 9,762,113
========= ========= ========== ========== ==========
</TABLE>
- ---------------
<TABLE>
<S> <C>
(a) Represents the pro forma increase in cash and cash
equivalents as a result of UPC's offering of senior
notes and discount notes in January 2000, net of
offering costs......................................... 1,585,333
==========
(b) Represents the pro forma increase in deferred offering
costs as a result of UPC's offering of senior notes and
discount notes in January 2000......................... 32,777
==========
(c) Represents the pro forma increase in long-term debt as
a result of UPC's offering of senior notes and discount
notes in January 2000.................................. 1,618,110
==========
</TABLE>
(d) In March 2000, we acquired 100% of the shares and outstanding debt of the
K&T Group, for a purchase price totaling E1.1 billion. The following
represents the historical amounts included in the K&T balance sheet as of
December 31, 1999, except as indicated in (e), (f), (g), (h) and (i),
converted from Dutch guilders to euro at the fixed exchange rate.
101
<PAGE> 107
(e) Represents the pro forma decrease in cash and cash equivalents related to
the acquisition of K&T:
<TABLE>
<S> <C> <C>
Historical K&T cash and cash equivalents.................... --
Purchase price paid by UPC for K&T shares and receivables
from N.V. Eneco........................................... (1,065,230)
----------
(1,065,230)
==========
</TABLE>
(f) Represents the pro forma increase in goodwill and other intangibles as a
result of the K&T acquisition:
<TABLE>
<S> <C> <C>
Historical K&T goodwill and other intangibles............... 46,015
Additional pro forma goodwill and other intangibles due to
the K&T acquisition:
Historical shareholder's equity............................. (8,884)
Purchase price paid by UPC for K&T shares................... 824,972
--------
816,088
----------
862,103
==========
</TABLE>
(g) Represents the pro forma decrease in short-term debt of K&T as a result of
the payment of the balance by UPC as part of the acquisition. The payment
of the debt by UPC is recorded by UPC as a receivable from K&T, which
eliminates in consolidation.
<TABLE>
<S> <C> <C>
Historical K&T short-term debt.............................. 83,991
Payment of balance by UPC................................... (83,991)
----------
--
==========
</TABLE>
(h) Represents the pro forma decrease in current portion of long-term debt of
K&T as a result of the payment of the balance by UPC as part of the
acquisition. The payment of the debt by UPC is recorded by UPC as a
receivable from K&T, which eliminates in consolidation.
<TABLE>
<S> <C> <C>
Historical K&T current portion of long-term debt............ 31,651
Payment of balance by UPC................................... (31,651)
----------
--
==========
</TABLE>
(i) Represents the pro forma decrease in long-term debt of K&T as a result of
the payment of the balance by UPC as part of the acquisition. The payment
of the debt by UPC is recorded by UPC as a receivable from K&T, which
eliminates in consolidation.
<TABLE>
<S> <C> <C>
Historical K&T long-term debt............................... 124,617
Payment of balance by UPC................................... (124,617)
----------
--
==========
</TABLE>
(j) In July 1999, we closed the purchase of approximately 4.8% of SBS for E22.7
million. In August 1999 we acquired an additional 8.5% of SBS for E70.2
million. In February 2000, we further increased our investment in SBS by
acquiring an additional 10.2% for E163.5 million. In March 2000, we
announced an offer to acquire the remaining approximately 76.5% of SBS
which we do not currently own. For purposes of these pro forma statements,
we have used our closing share price of U.S.$73.34 (euro 73.85) on March 9,
2000, the date we announced our offer. On [DATE], 2000, our closing share
price was U.S.$ (Euro ). We have also assumed for purposes of the
pro formas, that all holders of SBS's stock options tender their options,
for a net payment to be made by us, 60% in cash and the remaining 40% value
in our shares. Under the terms of the share exchange agreement, the option
holders have the right to choose up to 60% cash, our shares or a
combination, in exchange for their options. The following represents the
historical amounts included in the SBS balance sheet as of December 31,
1999, except as indicated in (k), (l), (m), (n), (o) and (p), converted
from US dollars to euro at the spot exchange rate as of December 31, 1999.
102
<PAGE> 108
(k) Represents the pro forma decreases in cash and cash equivalents as result
of the SBS transactions:
<TABLE>
<S> <C> <C>
Historical SBS cash and cash equivalents.................... 68,245
Net cash received by SBS related to UPC's purchase of
3,000,000 newly issued SBS shares in February 2000........ 161,624
Cash paid by UPC related to UPC's purchase of 3,000,000
newly issued SBS shares in February 2000.................. (163,512)
Net cash paid by UPC related to tender offer for remaining
shares of SBS............................................. (1,089,564)
----------
(1,023,207)
==========
</TABLE>
(l) Represents the pro forma net decrease in investments in and advance to
affiliated companies as a result of the SBS transactions:
<TABLE>
<S> <C> <C>
Historical SBS investments in and advances to affiliates.... 19,743
Increase in UPC investments in and advances to affiliates
due to UPC's acquisition of an additional interest in SBS
in February 2000.......................................... 163,512
Elimination of UPC's investments in and advances to
affiliates due to consolidation of SBS.................... (259,966)
----------
(76,711)
==========
</TABLE>
(m) Represents the pro forma increase in goodwill and other intangibles as a
result of the SBS transactions:
<TABLE>
<S> <C> <C>
Historical SBS goodwill and other intangibles............... 54,374
Additional pro forma goodwill and other intangibles due to
the SBS transactions:
Historical SBS shareholders' equity......................... (162,101)
Increase in SBS shareholders' equity related to shares
issued to UPC in February 2000............................ (161,624)
Conversion of SBS warrants and convertible debt to equity... (74,115)
Purchase price paid by UPC.................................. 2,414,898
--------
2,017,058
----------
2,071,432
==========
</TABLE>
<TABLE>
<S> <C> <C>
(n) Represents the pro forma decrease in other assets from
the exercise of the SBS warrants as a result of the SBS
transactions: 78,706
</TABLE>
<TABLE>
<S> <C> <C>
Historical SBS other assets................................. (1,410)
----------
Exercise of outstanding SBS warrants in UPC tender offer.... 77,296
==========
</TABLE>
(o) Represents the pro forma decrease in long-term debt from the conversion of
SBS's convertible debentures as a result of the UPC tender offer:
<TABLE>
<S> <C> <C>
Historical SBS long-term debt............................... 108,969
Conversion of SBS convertible debentures in UPC tender
offer..................................................... (75,525)
----------
33,444
==========
</TABLE>
<TABLE>
<S> <C> <C>
(p) Represents the increase in shareholders' equity as a
result of the issuance of 14,425,457 UPC ordinary
shares A, assuming a price of U.S.$73.34 (euro 73.85)
per share, to the holders of SBS's outstanding shares
and option holders in UPC's tender offer............... 1,065,369
==========
</TABLE>
103
<PAGE> 109
UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS
The following unaudited pro forma condensed statement of operations for the
year ended December 31, 1999, gives effect to (1) our acquisition of
@Entertainment in August 1999, (2) our acquisition of Stjarn in July 1999, (3)
our acquisition of the K&T Group in March 2000, and (4) our acquisition in July
and August 1999 of a 13.3% interest in SBS, our acquisition of an additional
10.2% interest in SBS in February 2000 and the successful completion of this
offer to acquire the remaining shares of SBS in March 2000, as if each had
occurred on January 1, 1999. For information about U.S. dollar/euro exchange
rates, please see the section captioned "Exchange Rate Data."
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1999
----------------------------------------------------------------------------------------------
PRO FORMA ADJUSTMENTS
------------------------------------------------------------------
UPC @ENTERTAINMENT STJARN K&T GROUP SBS UPC
HISTORICAL ACQUISITION(A) ACQUISITION(D) ACQUISITION(H) TRANSACTIONS(L) PRO FORMA
----------- -------------- -------------- -------------- --------------- ---------
(IN THOUSANDS OF EURO, EXCEPT SHARE AND PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C>
Service and other
revenue.................. 447,501 43,432 17,726 74,778 440,075 1,023,512
Operating expense........ (293,778) (65,488) (7,284) (28,725) (326,958) (722,233)
Selling, general and
administrative expense... (466,260) (47,220) (5,483) (18,582) (100,480) (638,025)
Depreciation and
amortization............. (266,070) (47,933)(b) (17,804)(e) (82,064)(i) (155,733)(m) (569,604)
----------- -------- ------- -------- -------- -----------
Net operating loss..... (578,607) (117,209) (12,845) (54,593) (143,096) (906,350)
Interest income............ 28,064 2,612 168 -- 4,428 35,272
Interest expense........... (186,408) (60,080)(c) (23,467)(f) (107,704)(j) (133,075)(n) (510,734)
Gain on sale of assets..... 1,501 -- -- -- -- 1,501
Foreign exchange gain
(loss) and other income
(expense), net........... (22,561) (2,024) (7,714)(g) (3,636)(k) (15,812)(o) (51,747)
----------- -------- ------- -------- -------- -----------
Net loss before income
taxes and other
items................ (758,011) (176,701) (43,858) (165,933) (287,555) (1,432,058)
Share in results of
affiliated companies,
net...................... (29,760) (929) -- (1,682) (9,834)(p) (42,205)
Minority interests in
subsidiaries............. 1,651 -- -- (29) 3,695 5,317
Income tax benefit
(expense)................ 1,822 (28) 258 170 (573) 1,649
----------- -------- ------- -------- -------- -----------
Net loss............... (784,298) (177,658) (43,600) (167,474) (294,267) (1,467,297)
=========== ======== ======= ======== ======== ===========
Basic and diluted net loss
per ordinary share(1).... (2.08) (3.54)
=========== ===========
Weighted-average number of
ordinary shares
outstanding(1)........... 377,969,829 414,832,880(q)
=========== ===========
</TABLE>
- ---------------
(1) As adjusted for our 3-for-1 stock split in March 2000.
(a) In August 1999, we acquired 100% of @Entertainment for E750.7 million. We
consolidated the results of @Entertainment for the last five months of 1999.
The following represents the historical results of operations of
@Entertainment for the seven months ended July 31, 1999, except as indicated
in (b) and (c), converted from U.S. dollars to euro using the average
exchange rate for the seven months ended July 31, 1999.
104
<PAGE> 110
(b) Represents the increase in depreciation and amortization expense as a
result of the @Entertainment acquisition:
<TABLE>
<S> <C>
Historical amortization and depreciation expense of
@Entertainment............................................ (22,139)
Amortization of the goodwill purchase price allocation for
the @Entertainment acquisition under purchase accounting,
based on a 15 year life................................... (25,794)
--------
(47,933)
========
</TABLE>
(c) @Entertainment acquisition:
<TABLE>
<S> <C>
Historical interest expense of @Entertainment............... (26,664)
Interest expense as a result of UPC's July 1999 senior notes
incurred for the @Entertainment acquisition, at a blended
weighted average interest rate of 8.3%.................... (33,416)
--------
(60,080)
========
</TABLE>
(d) In July 1999, we acquired 100% of Stjarn for E371.1 million. U.S.$100.0
million (E97.5 million) was paid in the form of a one-year seller's note
with interest of 8% per annum and the balance was paid in cash. Upon
maturity of the note, we will have the option to pay the note in either
cash or our shares. We consolidated the results of Stjarn for the last five
months of 1999. The following represents the historical results of
operations of NBS Nordic, Stjarn's parent holding company, for the seven
months ended July 31, 1999, except as indicated in (e), (f) and (g),
converted from Swedish kronor to euro using the average exchange rate for
the seven months ended July 31, 1999.
(e) Represents the increase in depreciation and amortization expense as a
result of the Stjarn acquisition:
<TABLE>
<S> <C>
Historical amortization and depreciation expense of
Stjarn.................................................... (5,373)
Amortization of the goodwill purchase price allocation for
the Stjarn acquisition under purchase accounting, based on
a 15 year life............................................ (12,431)
--------
(17,804)
========
</TABLE>
(f) Represents the increase in interest expense as a result of the Stjarn
acquisition:
<TABLE>
<S> <C>
Historical interest expense of Stjarn....................... (2,973)
Interest expense as a result of Stjarn seller's notes, at an
interest rate of 8.0%..................................... (4,335)
Interest expense as a result of UPC's July 1999 senior notes
incurred for the @ Stjarn acquisition, at a blended
weighted average interest rate of 10.875%................. (16,159)
--------
(23,467)
========
</TABLE>
(g) Represents the increase in foreign exchange gain (loss) and other income
(expense), net as a result of the Stjarn acquisition:
<TABLE>
<S> <C>
Historical foreign exchange gain (loss) and other income
(expense), net of Stjarn..................................
Foreign exchange loss related to the proceeds of the U.S.
dollar-denominated Stjarn seller's note................... (7,714)
--------
(7,714)
========
</TABLE>
(h) We acquired 100% of K&T Group in March 2000. The following represents the
historical results of operations of K&T Group for the year ended December
31, 1999, except as indicated in (i), (j) and (k), converted from Dutch
guilders to euro using the fixed exchange rate.
105
<PAGE> 111
(i) Represents the increase in depreciation and amortization expense as a
result of the K&T Group acquisition:
<TABLE>
<S> <C>
Historical amortization and depreciation expense of K&T
Group..................................................... (27,669)
Amortization of the goodwill purchase price allocation for
the K&T Group acquisition under purchase accounting, based
on a 15 year life......................................... (54,395)
--------
(82,064)
========
</TABLE>
(j) Represents the net increase in interest expense as a result of the K&T
Group acquisition:
<TABLE>
<S> <C>
Historical interest expense of K&T Group.................... (11,967)
Elimination of historical interest expense due to payment by
UPC of all outstanding debt of SBS........................ 11,967
Interest expense as a result of UPC's October 1999 and
January 2000 senior notes incurred for the K&T Group
acquisition, at a blended weighted average interest rate
of 10.1%.................................................. (107,704)
--------
(107,704)
========
</TABLE>
(k) Represents the increase in foreign exchange gain (loss) and other income
(expense), net as a result of the K&T Group acquisition:
<TABLE>
<S> <C>
Historical foreign exchange gain (loss) and other income
(expense), net of K&T Group............................... --
Foreign exchange loss related to the proceeds of the U.S.
dollar-denominated senior notes used to acquire K&T
Group..................................................... (3,636)
--------
(3,636)
========
</TABLE>
(l) Represents the historical results of operations of SBS for the year ended
December 31, 1999, except as indicated in (m), (n), (o) and (p), converted
from U.S. dollars to euro using the average exchange rate for the year
ended December 31, 1999.
(m) Represents the increase in depreciation and amortization expense as a
result of the SBS transactions:
<TABLE>
<S> <C>
Historical amortization and depreciation expense of SBS..... (21,658)
Elimination of historical amortization related to SBS
warrants.................................................. 395
Amortization of the goodwill purchase price allocation for
the SBS transactions under purchase accounting, based on a
15 year life.............................................. (134,470)
--------
(155,733)
========
</TABLE>
(n) Represents the net increase in interest expense as a result of the SBS
transactions:
<TABLE>
<S> <C>
Historical interest expense of SBS.......................... (19,871)
Elimination of historical interest expense due to conversion
of SBS convertible debt to equity......................... 5,600
Interest expense as a result of UPC's October 1999 and
January 2000 senior notes incurred for UPC's offer to
acquire the remaining shares of SBS, at a blended weighted
average interest rate of 11.4%............................ (118,804)
--------
(133,075)
========
</TABLE>
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(o) Represents the increase in foreign exchange gain (loss) and other income
(expense), net as a result of the SBS transactions:
<TABLE>
<S> <C>
Historical foreign exchange gain (loss) and other income
(expense), net of SBS..................................... (9,332)
Foreign exchange loss related to the proceeds of the U.S.
dollar-denominated senior notes used for the tender
offer..................................................... (6,480)
--------
(15,812)
========
</TABLE>
(p) Represents the net decrease in share results of affiliated companies as a
result of the SBS transactions:
<TABLE>
<S> <C>
Historical share in results of affiliated companies of
SBS....................................................... (15,017)
Elimination of historical share in results of affiliated
companies recorded by UPC for its 13.3% interest in SBS
for the five months ended December 31, 1999............... 5,183
--------
(9,834)
========
</TABLE>
(q) For pro forma purposes, the purchase price for UPC's acquisition in
July/August 1999 of 13.3% of SBS for approximately E95.0 million, including
direct costs, and UPC's acquisition in January 2000 of an additional 10.2%
interest in SBS for approximately E163.5 million, are assumed to have been
funded from the proceeds of UPC's initial public offering and secondary
offering, respectively. Consequently, the pro forma weighted shares
outstanding for the year ended December 31, 1999 assumes the issuance of
10,339,211 ordinary shares A at the initial offering price and 8,507,369
ordinary shares A at the secondary offering price of E9.18 and E19.22,
respectively, net of underwriters' commissions.
Additionally, for pro forma purposes, 14,425,457 ordinary shares A are
assumed to be outstanding for the year ended December 31, 1999, related to
UPC's ordinary shares A to be issued for the SBS tender offer.
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DESCRIPTION OF UPC'S SHARE CAPITAL
According to our articles of association, as amended, our authorized share
capital is Euro 1,353,000,000, and includes:
<TABLE>
<CAPTION>
NUMBER OF NOMINAL VALUE PER
AUTHORIZED SHARES TYPE OF SHARES SHARE (EURO)
- ----------------- -------------- -----------------
<C> <S> <C>
600,000,000 ordinary shares A 1.00
300,000,000 ordinary shares B 0.01
300 priority shares 1.00
149,999,700 class A preference shares 1.00
600,000,000 class B preference shares 1.00
</TABLE>
As of [DATE], 2000, [ ] ordinary shares A and 100 priority
shares were outstanding. No preference shares or ordinary shares B were
outstanding. The following description of our share capital is qualified in its
entirety by reference to the full text of the articles of association, which
have been included as an exhibit to the registration statement.
ORDINARY SHARES
We have two classes of ordinary shares: ordinary shares A and ordinary
shares B. Our ordinary shares B have similar rights to our ordinary shares A,
except for the following primary differences:
- Holders of ordinary shares B are entitled to one vote per share and
holders of ordinary shares A are entitled to 100 votes per share; and
- Our management board must obtain the approval of the meeting of holders
of the ordinary shares B before cooperating with a public offer for our
shares if the offer is limited to our ordinary shares A or the offer is
not made on equal financial terms for both the ordinary shares A and the
ordinary shares B.
Ordinary shares may, at the option of the shareholder, be registered shares
or bearer shares. Subject to certain conditions, a shareholder may convert
ordinary shares in bearer form into registered ordinary shares of the same class
at any time, and vice versa. The ordinary shares A in bearer form have already
been listed on the Amsterdam Stock Exchange.
Ordinary shares A in bearer form are embodied in a single global share
certificate, which we have deposited with Nederlands Centraal Instituut voor
Giraal Effectenverkeer B.V., the Netherlands clearing house known as NECIGEF,
for safe-keeping on behalf of the parties entitled to such ordinary shares A.
The ordinary shares A in bearer form can only be transferred through the giro-
based securities transfer system of NECIGEF.
Holders of registered ordinary shares A will be entered in our shareholders
register and share certificates will not be issued. At the request of the
registered shareholder, we will, without fee, issue a non-negotiable extract
from the shareholders register in the name of the holder. A deed of transfer,
together with our written acknowledgment, is required to transfer registered
shares.
Issue of Ordinary Shares; Preemptive Rights. Pursuant to a resolution
passed at a general meeting of our shareholders, all unissued shares of the
authorized capital may be issued by the management board upon approval of both
the Supervisory Board and UnitedGlobalCom as holder of all outstanding priority
shares. The authority of the management board to issue ordinary shares will end
July 26, 2004, unless extended by the articles of association or by resolution
of the general meeting of shareholders for a period not exceeding five years in
each instance. If no such extension is given, issues of ordinary shares will
require a resolution of the general meeting of shareholders in addition to
approval of the Supervisory Board and UnitedGlobalCom as holder of all
outstanding priority shares. A resolution of the general meeting of shareholders
to extend the authority of the
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management board to issue shares requires the approval of both the Supervisory
Board and UnitedGlobalCom as holder of all outstanding priority shares.
Except for issues of ordinary shares in return for non-cash consideration
and shares issued to our employees or employees of any of our subsidiaries, as
defined under Netherlands law, holders of ordinary shares will have preemptive
rights to subscribe for their pro rata amount of all our new ordinary share
issuances. These rights may be restricted or excluded, however, by a resolution
of the management board if approved by both the supervisory board and
UnitedGlobalCom, as the holder of our outstanding priority shares.
Dividends. Each ordinary share A and ordinary share B is entitled to the
same amount of dividend if one is declared. We may not pay a dividend to holders
of ordinary shares A without paying a dividend to holders of ordinary shares B.
Voting Rights. All ordinary shares (A and B) vote together on all matters
presented at a general meeting of shareholders. Each ordinary share A represents
the right to cast 100 votes at a general meeting of shareholders and each
ordinary share B represents the right to cast one vote at a general meeting of
shareholders.
Special Approval Rights for Ordinary Shares B. The management board must
obtain the approval of the meeting of holders of the ordinary shares B prior to
cooperating with a public offer for our shares if the offer is limited to
ordinary shares A or the offer is not made on equal financial terms for the
shares of both classes (A and B) of our ordinary shares.
PRIORITY SHARES
All of the issued and outstanding priority shares are held by
UnitedGlobalCom. Except for the transfer of priority shares to us, priority
shares can only be transferred with the approval of the management board and the
supervisory board. In addition to holding a controlling majority of ordinary
shares, UnitedGlobalCom, as the holder of the outstanding priority shares, has
some specific rights and powers over us, including:
- the right to approve the issuance by us of our shares
- the right to approve the exclusion or restriction of the preemptive
rights of existing shareholders
- the right to nominate members for appointment to the management and
supervisory boards, which nominations may only be set aside by a
resolution of the general meeting of shareholders adopted by two-thirds
of the votes cast representing more than one-half of the issued nominal
capital
- the right to approve certain decisions of our management board and
- the exclusive right to propose amendments to our articles of association
and to propose our merger, split up or dissolution.
Priority shares are issued in the same way as ordinary shares, but carry no
preemptive rights. Priority shares are entitled to an annual dividend of 5% of
their nominal value, to the extent there are distributable profits.
At such time as UnitedGlobalCom, the holder of the outstanding priority
shares, holds less than 15% of the issued and outstanding ordinary shares A,
UnitedGlobalCom is required to transfer all of the priority shares to a
foundation, the board of which will be comprised of our Supervisory Directors.
PREFERENCE SHARES
Our articles of association provide for the issuance of class A and class B
preference shares.
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<PAGE> 115
Class A preference shares may be issued exclusively for financing purposes.
Holders of class A preference shares do not share in our reserves, although they
may be entitled to a share premium reserve if it were so decided at the time of
their first issuance. Class A preference shares are not listed. The class A
preference shares will be registered shares and share certificates will not be
issued. Class A preference shares can be issued in the same way as ordinary
shares, but carry no preemptive rights. Each class A preference share will
represent the right to cast 100 votes at a general meeting of shareholders.
Class A preference shares will be paid an annual dividend, the amount of which
will be determined at the time such shares are first issued by the management
board, to the extent there are distributable profits.
Class B preference shares exist as a preventive measure against unfriendly
takeover bids. The minimum amount required to be paid on the class B preference
shares upon issuance is 25% of the nominal amount issued. In the event of a
hostile takeover bid, class B preference shares may be issued to a legal entity
charged with caring for our interests and preventing influences that may
threaten our continuity, independence or identity. Holders of class B preference
shares do not share in our reserves and such shares are not listed. The class B
preference shares will be registered shares and share certificates will not be
issued. Class B preference shares can be issued in the same way as ordinary
shares, but carry no preemptive rights. Each class B preference share will
represent the right to cast 100 votes at a general meeting of shareholders.
Class B preference shareholders will be paid a cumulative annual dividend
calculated on the basis of the deposit interest rate of the European Central
Bank to the paid up part of their nominal value, to the extent there are
distributable profits.
Class B preference shares may be issued by the management board upon
approval of both the supervisory board and UnitedGlobalCom, as the holder of our
priority shares, if such power has been granted to the management board by the
general meeting of shareholders or by the articles of association. However, if
class B preference shares are proposed to be issued and such shares would exceed
100% of all of our other outstanding shares, such issuance will require the
approval of the general meeting of shareholders. In all instances where class B
preference shares are issued, we must explain the reason for the issuance within
four weeks thereof at a general meeting of shareholders. Within two years after
the first issuance of class B preference shares, a general meeting of
shareholders must be held to vote on whether the class B preference shares
should be repurchased or canceled. If such a resolution is not adopted, another
meeting must be held within two years of the previous meeting. This procedure is
repeated until no class B preference shares are outstanding.
TRANSFER AND DIVIDEND PAYING AGENT AND REGISTRAR
Citibank, N.A. is the depositary bank for the UPC ADSs.
Mees Pierson N.V. is the transfer and dividend paying agent and registrar
for the UPC ordinary shares A.
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SUMMARY OF ADDITIONAL MATERIAL PROVISIONS OF THE ARTICLES OF
ASSOCIATION AND OTHER MATTERS
GENERAL
We were incorporated under Netherlands law on December 21, 1990 as a
private limited liability company (besloten vennootschap met beperkte
aansprakelijkheid), and were converted on December 11, 1997 into a public
limited liability company (naamloze vennootschap). We have our corporate seat in
Amsterdam, The Netherlands and are registered in the Amsterdam Commercial
Register under number 33-274-976. We are not subject to the rules for large
companies (structuurvennootschappen).
You will find below a summary of certain material provisions of the
articles of association, as amended, and Netherlands corporate law. This summary
does not purport to be complete and is qualified in its entirety by reference to
our articles of association and the law of The Netherlands. Copies of our
articles of association and our most recent annual accounts and annual report
may be obtained in both Dutch and English upon written request to us at our
principal office.
CORPORATE PURPOSE
Article 3 of our articles of association provides that our business
activity shall be, among other things:
- to own, operate, and develop subscription and multi-channel television
systems, to render related consulting, engineering and programming
services and to provide other communications services;
- to incorporate, manage and finance, and to participate in other companies
and enterprises; and
- to take up loans, land and make investments and acquire, transfer and
dispose of claims and assets in general.
ACQUISITION OF OUR OWN SHARES
We may acquire our own shares subject to certain provisions of Netherlands
law. We may only acquire our own fully paid-up shares for consideration if (1)
the shareholders' equity less the payment required to make the acquisition does
not fall below the sum of the paid-up and called portion of the share capital
and any statutory reserves, and (2) we and our subsidiaries would thereafter not
hold or hold in pledge shares with an aggregate nominal value exceeding
one-tenth of our issued share capital. Shares held by us in our own capital or
by our subsidiaries may not be voted or counted for quorum purposes at
shareholders' meetings.
Acquisitions by us of our own shares may be effected by our management
board, subject to the approval of the supervisory board and UnitedGlobalCom, as
the holder of our priority shares, only if the general meeting of shareholders
has authorized the management board to effect such acquisitions. The general
meeting adopted such a resolution on July 23, 1999. Such resolutions expire
within 18 months. Acquisitions by us of our own shares that are listed on a
stock exchange do not require the above-mentioned authorization of the general
meeting if made for the purpose of transferring such shares to our employees or
employees of a company in our group.
SHAREHOLDERS MEETING
We are required to hold a general shareholders' meeting annually.
Additionally, a general shareholders' meeting can be convened by the supervisory
board, the management board or UnitedGlobalCom, as the holder of our priority
shares. Holders of shares representing at least ten percent of the issued share
capital may seek authority from a district court in The Netherlands to
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convene a general meeting of shareholders. Unless otherwise required by law or
our articles of association, all decisions of the general meeting of
shareholders may be adopted by a majority of the votes cast.
ADOPTION OF ANNUAL ACCOUNTS AND DISCHARGE
Within five months following the end of each fiscal year, the management
board must prepare annual accounts accompanied by an annual report. This period
may be extended by the general meeting of shareholders on account of special
circumstances for up to six months. The annual accounts and report must then be
submitted to the Supervisory Board, which will present a report on it to the
general meeting of shareholders. The annual accounts and the annual report will
be available to shareholders from the day of notice convening the annual general
meeting of shareholders.
The general meeting of shareholders may discharge the members of the
management board and supervisory board from liability in respect of the exercise
of their duties during the fiscal year concerned. Such discharge is subject to
mandatory provisions of Netherlands law, including those relating to liability
of members of supervisory boards and management boards upon bankruptcy of a
company. Moreover, this discharge does not extend to actions or omissions not
disclosed in or apparent from the adopted annual accounts.
DIVIDENDS
Subject to certain exceptions, dividends are only paid by us on profits as
shown in our annual financial statements. We may not pay dividends if the
payment would reduce shareholders' equity below the sum of the paid-up capital
and any reserves required by Netherlands law. Pursuant to our articles of
association, the priority shares and preference shares have preferential
dividend rights. Please read "Description of Share Capital -- Priority Shares"
and "-- Preference Shares." Thereafter, the management board, upon approval of
the supervisory board, shall determine how much of the remaining profit shall be
allocated to our reserves before dividends are paid on the ordinary shares. To
date, we have not paid dividends on our ordinary shares and do not intend to do
so for the foreseeable future. Please read "Risk Factors -- We do not intend to
pay dividends for the foreseeable future." The management board may propose,
with the approval of the supervisory board, to the shareholders at the general
meeting that some or all of the dividends on the ordinary shares will be paid in
our shares rather than in cash. The management board may, with the prior
approval of the supervisory board and subject to certain statutory provisions,
distribute one or more interim dividends. Any dividends paid but not claimed by
the recipient within five years revert to us.
CAPITAL REDUCTION
Upon the proposal of our management board and after approval by the
supervisory board, the general meeting of shareholders may resolve to reduce the
issued share capital by cancellation of shares or by reducing the nominal value
of our shares, subject to certain statutory provisions and the provisions of our
articles of association.
AMENDMENT OF THE ARTICLES OF ASSOCIATION; DISSOLUTION; LEGAL MERGER; SPLIT-UP
The general meeting of shareholders cannot pass a resolution approving a
statutory merger, split-up or dissolution or amend our articles of association
unless the proposal is made by UnitedGlobalCom, as the holder of our priority
shares.
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LIQUIDATION RIGHTS
In the event that we are dissolved or liquidated, the assets remaining
after payment of all debts will be distributed to holders of our share capital
as follows:
- first, to any issued and outstanding class B preference shares in an
amount equal to any previously declared but unpaid dividend and the
paid-up amount of such class B preference shares;
- second, to any issued and outstanding class A preference shares in an
amount equal to any previously declared but unpaid dividend and the
paid-up amount of such class A preference shares, including any share
premium;
- third, to the holders of priority shares in an amount equal to their
nominal value; and
- fourth, any remaining assets will be distributed to the holders of
ordinary shares in proportion to the number of shares held by them
regardless of the class of ordinary shares.
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DESCRIPTION OF AMERICAN DEPOSITARY SHARES
Citibank, N.A. is the depositary bank for the American depositary shares,
or ADSs, representing the UPC ordinary shares A. Citibank's depositary offices
are located at 111 Wall Street, New York, New York 10043, U.S.A. American
depositary shares are frequently referred to as "ADSs" and represent ownership
interests in securities that are on deposit with the depositary bank. ADSs are
normally represented by certificates that are commonly known as "American
depositary receipts" or "ADRs." The depositary bank typically appoints a
custodian to safekeep the securities on deposit. In this case, the custodian is
Citibank N.A., Amsterdam located at Europlaza, Hoogoordreef 54 B, 1101 BE
Amsterdam ZO, The Netherlands.
We have appointed Citibank as depositary bank pursuant to a deposit
agreement. A copy of the deposit agreement is on file with the SEC under cover
of a Registration Statement on Form F-6. You may obtain a copy of the deposit
agreement from the SEC's Public Reference Room at 450 Fifth Street, N.W.,
Washington, D.C. 20549, U.S.A. Please refer to Registration Number 333-9850 when
retrieving a copy.
We are providing you with a summary description of the UPC ADSs and your
rights as an owner of UPC ADSs. Please remember that summaries by their nature
lack the precision of the information summarized and that a holder's rights and
obligations as an owner of ADSs will be determined by the deposit agreement and
not by this summary. We urge you to review the deposit agreement in its entirety
as well as the form of ADR attached to the deposit agreement.
Each UPC ADS represents one UPC ordinary share A. The UPC ordinary shares A
underlying the UPC ADSs have been deposited into accounts maintained by the
custodian with NECIGEF, the Netherlands central securities depository. An ADS
will also represent any other property received by the depositary bank or the
custodian on behalf of the owner of the ADS but that has not been distributed to
the owners of ADSs because of legal restrictions or practical considerations.
If you become an owner of UPC ADSs, you will become a party to the deposit
agreement and therefore will be bound by its terms as well as to the terms of
the ADR that represents your UPC ADSs. The deposit agreement and the ADR specify
our rights and obligations as well as your rights and obligations, as owner of
ADSs, and those of the depositary bank. As a UPC ADS holder you appoint the
depositary bank to act on your behalf in certain circumstances. The deposit
agreement is governed by New York law. However, our obligations to the holders
of UPC ordinary shares A will continue to be governed by the laws of The
Netherlands, which may be different from the laws of the United States.
As an owner of ADSs, you may hold your ADSs either by means of an ADR
registered in your name or through a brokerage or safekeeping account. If you
decide to hold your UPC ADSs through a brokerage or safekeeping account, you
must rely on the procedures of your broker or bank to assert your rights as an
ADS owner. Please consult with your broker or bank to determine what those
procedures are. This summary description assumes you have opted to own the UPC
ADSs directly by means of an ADR registered in your name and, therefore, we will
refer to you as the "holder."
DIVIDENDS AND DISTRIBUTIONS
As a holder, you generally have the right to receive the distributions we
make on the securities deposited with the custodian. Your receipt of these
distributions may be limited, however, by practical considerations and legal
limitations. Holders will receive such distributions under the terms of the
deposit agreement in proportion to the number of ADSs held as of a specified
record date.
Distributions of Cash
Whenever we make a cash distribution for the securities on deposit with the
custodian, we will notify the depositary bank and deposit the funds with the
custodian. Upon receipt of such notice and
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the requisite funds, the depositary bank will arrange for the funds to be
converted into U.S. dollars and for the distribution of the U.S. dollars to the
holders.
The conversion into U.S. dollars will take place only if practicable in the
reasonable judgment of the depositary bank and if the U.S. dollars are
transferable to the United States. The amounts distributed to holders will be
net of the fees, expenses, taxes and governmental charges payable by holders
under the terms of the deposit agreement. The depositary will apply the same
method for distributing the proceeds of the sale of any property (such as
undistributed rights) held by the custodian in respect of securities on deposit.
Distributions of UPC Ordinary Shares A
Whenever we make a free distribution of UPC ordinary shares A for the
securities on deposit with the custodian, we will notify the depositary bank and
deposit the UPC ordinary shares A with the custodian. Upon receipt of this
notice and deposit, the depositary bank will either distribute to holders new
ADSs representing the UPC ordinary shares A deposited or modify the UPC ADSs to
UPC ordinary shares A ratio, in which case each ADS you hold will represent
rights and interests in the additional UPC ordinary shares A so deposited. For
example, when UPC ordinary shares A were split three-for-one on March 20, 2000,
holders of UPC ADSs each received two new UPC ADSs for each UPC ADS that they
held. Only whole new ADSs will be distributed. Fractional entitlements will be
sold and the proceeds of such sale will be distributed as in the case of a cash
distribution.
The distribution of new UPC ADSs or the modification of the ADS-to-share
ratio upon a distribution of UPC ordinary shares A will be made net of the fees,
expenses, taxes and governmental charges payable by holders under the terms of
the deposit agreement. In order to pay such taxes or governmental charges, the
depositary bank may sell all or a portion of the new UPC ordinary shares A so
distributed.
No such distribution of new UPC ADSs will be made if it would violate the
law (e.g., U.S. or Netherlands securities laws) or if it is not operationally
practicable. If the depositary bank does not distribute new ADSs as described
above, it will use its best efforts to sell the UPC ordinary shares A received
and will distribute the proceeds of the sale as in the case of a distribution of
cash.
Distributions of Rights
Whenever we intend to distribute rights to purchase additional UPC ordinary
shares A, we will give prior notice to the depositary bank and we will assist
the depositary bank in determining whether it is lawful and reasonably
practicable to distribute rights to purchase additional ADSs to holders.
The depositary bank will establish procedures to distribute rights to
purchase additional UPC ADSs to holders and to enable such holders to exercise
such rights if it is lawful and reasonably practicable to make the rights
available to holders of UPC ADSs, and if we provide all of the documentation
contemplated in the deposit agreement (such as legal opinions to address the
legality of the transaction). You may have to pay fees, expenses, taxes and
other governmental charges to subscribe for the new UPC ADSs upon the exercise
of your rights. The depositary bank is not obligated to establish procedures to
facilitate the distribution and exercise by holders of rights to purchase new
UPC ordinary shares A directly rather than new UPC ADSs.
The depositary bank will not distribute the rights to you if:
- we do not request that the rights be distributed to you or we ask that
the rights not be distributed to you; or
- we fail to deliver satisfactory documents to the depositary bank; or
- it is either not lawful or not reasonably practicable to distribute the
rights.
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The depositary bank will sell the rights that are not exercised or not
distributed if such sale is lawful and reasonably practicable. The proceeds of
such sale will be distributed to holders as in the case of a cash distribution.
If the depositary bank is unable to sell the rights, it will allow the rights to
lapse.
Elective Distributions
Whenever we intend to distribute a dividend payable at the election of
shareholders either in cash or in additional UPC ordinary shares A, we will give
prior notice to the depositary bank and will indicate whether we wish the
elective distribution to be made available to you. In such case, we will assist
the depositary bank in determining whether such distribution is lawful and
reasonably practicable.
The depositary bank will make the election available to you only if it is
reasonably practicable and if we have provided all of the documentation
contemplated in the deposit agreement. In such case, the depositary bank will
establish procedures to enable you to elect to receive either cash or additional
ADSs, in each case as described in the deposit agreement.
If the election is not made available to you, you will receive either cash
or additional ADSs, depending on what a shareholder in The Netherlands would
receive for failing to make an election, as more fully described in the deposit
agreement. The depositary bank is not obligated to establish procedures to
facilitate the distribution and exercise by holders of a dividend in UPC
ordinary shares A rather than ADSs.
Other Distributions
Whenever we intend to distribute property other than cash, UPC ordinary
shares A or rights to purchase additional UPC ordinary shares A, we will notify
the depositary bank in advance and will indicate whether we wish such
distribution to be made to you. If so, we will assist the depositary bank in
determining whether such distribution to holders is lawful and reasonably
equitable and practicable.
If it is reasonably practicable to distribute such property to you and if
we provide all of the documentation contemplated in the deposit agreement, the
depositary bank will distribute the property proportionately to the holders in a
manner it deems practicable.
The distribution will be made net of fees, expenses, taxes and governmental
charges payable by holders under the terms of the deposit agreement. In order to
pay such taxes and governmental charges, the depositary bank may sell all or a
portion of the property received.
The depositary bank will not distribute the property to you and will sell
the property if:
- we do not request that the property be distributed to you or if we ask
that the property not be distributed to you; or
- we do not deliver satisfactory documents to the depositary bank; or
- the depositary bank determines that all or a portion of the distribution
to you is not reasonably practicable.
The proceeds of such a sale will be distributed to holders as in the case
of a cash distribution.
REDEMPTION
Whenever we decide to redeem any of the securities on deposit with the
custodian, we will notify the depositary bank. If it is reasonably practicable
and if we provide all of the documentation contemplated in the deposit
agreement, the depositary bank will mail notice of the redemption to the
holders.
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The custodian will be instructed to transfer the shares being redeemed to
an institution with an account at NECIGEF, which will be referred to as a
NECIGEF Participant, that we designate against payment of the applicable
redemption price. The depositary bank will convert the redemption funds received
into U.S. dollars upon the terms of the deposit agreement and will establish
procedures to enable holders to receive the net proceeds from the redemption
upon surrender of their UPC ADSs to the depositary bank. You may have to pay
fees, expenses, taxes and other governmental charges upon the redemption of your
UPC ADSs. If less than all securities on deposit are being redeemed, the UPC
ADSs to be retired will be selected by lot or on a pro rata basis, as the
depositary bank may determine.
CHANGES AFFECTING UPC ORDINARY SHARES A
The UPC ordinary shares A held on deposit for your UPC ADSs may change from
time to time. For example, there may be a change in nominal or par value, a
split-up, cancellation, consolidation or re-classification of such UPC ordinary
shares A or a recapitalization, reorganization, merger, consolidation or sale of
assets.
If any such change occurs, your UPC ADSs would, to the extent permitted by
law, represent the right to receive the property received or exchanged in
respect of the UPC ordinary shares A held on deposit. The depositary bank may in
such circumstances deliver new ADSs to you or call for the exchange of your
existing ADSs for new ADSs. If the depositary bank may not lawfully distribute
such property to you, the depositary bank may sell such property and distribute
the net proceeds to you as in the case of a cash distribution.
ISSUANCE OF ADSS UPON DEPOSIT OF UPC ORDINARY SHARES A
The UPC ordinary shares A to be represented by the UPC ADSs may be
deposited in bearer form with the custodian and credited to an account
maintained by the custodian at NECIGEF. The custodian will be the holder of
record of all of these UPC ordinary shares A. Once the custodian confirms the
deposit of the UPC ordinary shares A to its account at NECIGEF, the depositary
bank may create UPC ADSs on your behalf. The depositary bank will deliver these
UPC ADSs to the person you indicate only after you pay any applicable issuance
fees and any charges and taxes payable for the transfer of the UPC ordinary
shares A. The records maintained by NECIGEF or NECIGEF Participants will show
the ownership of the deposited UPC ordinary shares A and transfers of ownership
interests.
The issuance of ADSs may be delayed until the depositary bank or the
custodian receives confirmation that all required approvals have been given and
that the UPC ordinary shares A have been duly credited to the custodian's
NECIGEF account. The depositary bank will only issue ADSs in whole numbers.
When you, through a NECIGEF Participant, make a deposit of UPC ordinary
shares A, you will be responsible for transferring good and valid title to the
custodian. Therefore, you will be deemed to represent and warrant that:
- the UPC ordinary shares A are duly authorized, validly issued, fully
paid, non-assessable and legally obtained;
- preemptive (and similar) rights, if any, with respect to such UPC
ordinary shares A have been validly waived or exercised;
- you are duly authorized to deposit the UPC ordinary shares A;
- the UPC ordinary shares A presented for deposit are free and clear of any
lien, encumbrance, security interest, charge, mortgage or adverse claim,
and are not, and the UPC ADSs issuable upon such deposit will not be,
"restricted securities" (as defined in the deposit agreement); and
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- the UPC ordinary shares A presented for deposit have not been stripped of
any rights or entitlements.
If any of the representations or warranties are incorrect in any way, we
and the depositary bank may, at your cost and expense, take any and all actions
necessary to correct the consequences of the misrepresentations.
WITHDRAWAL OF UPC ORDINARY SHARES A UPON CANCELLATION OF ADSS
As a holder, you will be entitled to present your UPC ADSs to the
depositary bank for cancellation in order to withdraw the underlying deposited
securities. In order to withdraw the deposited securities, you will be required
to pay to the depositary bank the fees for cancellation of UPC ADSs and any
charges and taxes payable upon the transfer of the deposited securities being
withdrawn. A NECIGEF Participant you designate will then be entitled to the
delivery of the deposited securities represented by your UPC ADSs. You assume
the risk for delivery of all funds and securities upon withdrawal. Once
cancelled, you will not have any rights under the deposit agreement in respect
of the UPC ADSs.
If you hold an ADR registered in your name, the depositary bank may ask you
to provide proof of identity, the genuineness of any signature and certain other
documents the depositary bank deems appropriate before it will cancel your UPC
ADSs. The withdrawal of the deposited securities represented by your UPC ADSs
may be delayed until the depositary bank receives satisfactory evidence of
compliance with all applicable laws and regulations. Please keep in mind that
the depositary bank will only accept UPC ADSs for cancellation that represent a
whole number of securities on deposit.
You will have the right to withdraw the deposited securities represented by
your UPC ADSs at any time, except for:
- temporary delays that may arise because (1) the transfer books for the
UPC ordinary shares A or UPC ADSs are closed, or (2) UPC ordinary shares
A are immobilized on account of a shareholders' meeting or a payment of
dividends;
- obligations to pay fees, taxes and similar charges; and
- restrictions imposed because of laws or regulations applicable to ADSs or
the withdrawal of securities on deposit.
The deposit agreement may not be modified to impair your right to withdraw
the securities represented by your ADSs except to comply with mandatory
provisions of law.
VOTING RIGHTS
As a holder, you generally have the right under the deposit agreement to
instruct the depositary bank to exercise the voting rights for the UPC ordinary
shares A represented by your UPC ADSs. The voting rights of holders of UPC
ordinary shares A are described in "Description of Share Capital -- Ordinary
Shares -- Voting Rights."
At our request, the depositary bank will mail to you any notice of
shareholders' meeting received from us together with information explaining how
to instruct the depositary bank to exercise the voting rights of the securities
represented by your ADSs.
If the depositary bank timely receives voting instructions from a holder of
ADSs, it will endeavor to vote the securities represented by the holder's ADSs
in accordance with such voting instructions.
Please note that the ability of the depositary bank to carry out voting
instructions may be limited by practical and legal limitations and the terms of
the securities on deposit. We cannot assure you that you will receive voting
materials in time to enable you to return voting instructions to the
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depositary bank in a timely manner. Securities for which no voting instructions
have been received will not be voted.
FEES AND CHARGES
As an ADS holder, you will be required to pay the following service fees to
the depositary bank (although these fees will not be payable by you in
connection with the exchange offer):
<TABLE>
<CAPTION>
SERVICE FEES
- ------- ----
<S> <C>
Issuance of ADSs Up to U.S.$0.05 per ADS issued
Cancellation of ADSs Up to U.S.$0.05 per ADS cancelled
Distribution of ADSs pursuant to free
distributions or upon the exercise of
rights to purchase additional ADSs Up to U.S.$0.05 per ADS issued
Distribution of cash upon sale of
rights and other entitlements Up to U.S.$0.02 per ADS held
</TABLE>
As an ADS holder you will also be responsible to pay certain fees and
expenses incurred by the depositary bank and certain taxes and governmental
charges such as:
- fees for the transfer and registration of UPC ordinary shares A (i.e.,
upon deposit and withdrawal of UPC ordinary shares A);
- expenses incurred for converting foreign currency into U.S. dollars;
- expenses for cable, telex and fax transmissions and for delivery of
securities; and
- taxes and duties upon the transfer of securities (i.e., when UPC ordinary
shares A are deposited or withdrawn from deposit).
Note that the fees and charges you may be required to pay may vary over
time and may be changed by us and by the depositary bank. You will receive prior
notice of such changes.
AMENDMENTS AND TERMINATION
We may agree with the depositary bank to modify the deposit agreement at
any time without your consent. We undertake to give holders 30 days' prior
notice of any modifications that would prejudice any of their substantial rights
under the deposit agreement (except in very limited circumstances enumerated in
the deposit agreement).
You will be bound by the modifications to the deposit agreement if you
continue to hold your ADSs after the modifications to the deposit agreement
become effective. The deposit agreement cannot be amended to prevent you from
withdrawing the UPC ordinary shares A represented by your ADSs (except as
permitted by law).
We have the right to direct the depositary bank to terminate the deposit
agreement. Similarly, the depositary bank may, in certain circumstances, on its
own initiative, terminate the deposit agreement. In either case, the depositary
bank must give notice to the holders at least 30 days before termination. Upon
termination, the following will occur under the deposit agreement:
- For a period of six months after termination, you will be able to request
the cancellation of your UPC ADSs, the withdrawal of the UPC ordinary
shares A represented by your UPC ADSs and the delivery of all other
property held by the depositary bank in respect of those deposited
securities on the terms existing prior to the termination. During such
six month period, the depositary bank will continue to collect all
distributions received on the UPC ordinary shares A on deposit but will
not distribute any such property to you until you request the
cancellation of your UPC ADSs.
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- After the expiration of such six-month period, the depositary bank may
sell the securities held on deposit. The depositary bank will hold the
proceeds from such sale and any other funds then held for the holders of
ADSs in a non-interest bearing account. At that point, the depositary
bank will have no further obligations to holders other than to account
for the funds then held for the holders of ADSs still outstanding.
BOOKS OF DEPOSITARY BANK
The depositary bank will maintain UPC ADS holder records at its depositary
office. You may inspect the records at such office during regular business hours
but solely for the purpose of communicating with other holders in the interest
of business matters relating to the UPC ADSs and the deposit agreement. The
depositary bank will maintain facilities in New York to record and process the
issuance, cancellation, combination, split-up and transfer of ADRs. These
facilities may be closed from time to time, to the extent not prohibited by law.
LIMITATIONS ON OBLIGATIONS AND LIABILITIES
The deposit agreement limits our obligations and the depositary bank's
obligations to you. Please note the following:
- We and the depositary bank are only obligated to take the actions
specifically stated in the deposit agreement, and we must do so without
negligence or bad faith.
- The depositary bank disclaims any liability for any failure to carry out
voting instructions, for any manner in which a vote is cast and the
effect of any vote, provided it acts in good faith and in accordance with
the terms of the deposit agreement.
- The depositary bank disclaims any liability for any failure to determine
the lawfulness or practicality of any action, for the content of any
document forwarded to you on our behalf or for the accuracy of any
translation of such a document, for the investment risks associated with
investing in UPC ordinary shares A, for the validity or worth of the UPC
ordinary shares A, for any tax consequences that result from the
ownership of UPC ADSs, for the creditworthiness of any third party, for
allowing any rights to lapse under the terms of the deposit agreement,
for the timeliness of any of our notices and for our failure to give
notice.
- We and the depositary bank will not be obligated to perform any act that
is inconsistent with the terms of the deposit agreement.
- We and the depositary bank disclaim any liability if we are prevented or
forbidden from acting on account of any law or regulation, any provision
of our articles of association, any provision of any securities on
deposit or by reason of any act of God, war or other circumstances beyond
our control.
- We and the depositary bank disclaim any liability by reason of any
exercise of, or failure to exercise, any discretion provided for in the
deposit agreement, in our articles of association or in any provisions of
securities on deposit.
- We and the depositary bank disclaim any liability for any action or
inaction in reliance on the advice or information received from legal
counsel, accountants, any person presenting UPC ordinary shares A for
deposit, any holder of UPC ADSs or authorized representative thereof, or
any other person believed in good faith by either of us to be competent
to give such advice or information.
- We and the depositary bank disclaim liability for the inability of a
holder to benefit from any distribution, offering, right or other benefit
which is made available to holders of UPC ordinary shares A but is not,
under the terms of the deposit agreement, made available to you.
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- We and the depositary bank may rely without any liability upon any
written notice, request or other document which we believe to be genuine
and to have been signed or presented by the proper parties.
- We and the depositary bank will not be liable for consequential or
punitive damages for any breach of the terms of the deposit agreement.
PRE-RELEASE TRANSACTIONS
The depositary bank may, in certain circumstances, issue UPC ADSs before
receiving a deposit of UPC ordinary shares A or release UPC ordinary shares A
before receiving UPC ADSs. These transactions are commonly referred to as
"pre-release transactions." The deposit agreement limits the aggregate size of
pre-release transactions and imposes a number of conditions on such transactions
(e.g., the need to receive collateral, the type of collateral required and the
representations required from brokers). The depositary bank may retain the
compensation received from the pre-release transactions.
TAXES
You will be responsible for the taxes and other governmental charges
payable on the UPC ADSs and the securities represented by the UPC ADSs. We, the
depositary bank and the custodian may deduct from any distribution payable to
you the taxes and governmental charges payable by holders and may sell any and
all property on deposit to pay such taxes and governmental charges. You will be
liable for any deficiency if the sale proceeds do not cover the taxes or charges
that are due.
The depositary bank may refuse to issue ADSs, to deliver, transfer, split
and combine ADRs or to release securities on deposit until all taxes and charges
are paid by the applicable holder. The depositary bank and the custodian may
take reasonable administrative actions to obtain tax refunds and reduced tax
withholding for any distributions on your behalf. However, you may be required
to provide to the depositary bank and to the custodian proof of taxpayer status
and residence and such other information as the depositary bank and the
custodian may require to fulfill legal obligations. You are required to
indemnify us, the depositary bank and the custodian for any claims with respect
to taxes based on any tax benefit obtained for you.
FOREIGN CURRENCY CONVERSION
The depositary bank will arrange for the conversion of all foreign currency
received by it into U.S. dollars, if such conversion is practicable in the
reasonable judgment of the depositary bank, and it will distribute the U.S.
dollars in accordance with the terms of the deposit agreement. You may have to
pay fees and expenses incurred by the depositary bank in converting foreign
currency, such as fees and expenses incurred in complying with currency exchange
controls and other governmental requirements.
If the conversion of foreign currency is not practicable or lawful, or if
any required approvals are denied or not obtainable at a reasonable cost or
within a reasonable period, the depositary bank may take the following actions
in its discretion:
- convert the foreign currency to the extent practicable and lawful and
distribute the U.S. dollars to the holders for whom the conversion and
distribution is lawful and practicable;
- distribute the foreign currency to holders for whom the distribution is
lawful and practicable; and
- hold the foreign currency (without liability for interest) for the
applicable holders.
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OBLIGATIONS TO DISCLOSE HOLDINGS
Pursuant to the Netherlands Act on Disclosure of Holdings in Listed
Companies 1996, any holder of five percent or more of our issued capital or
voting control, even if held in the form of UPC ADSs, at the time the UPC
ordinary shares A are listed on the Amsterdam Stock Exchange must notify both us
and the Securities Board of The Netherlands. Moreover, anyone obtaining or
divesting UPC ordinary shares A after listing on the Amsterdam Stock Exchange
and thereby causing that holder's percentage of issued capital or voting control
to come under a different range must also notify us and the Securities Board of
The Netherlands. The ranges are: 0 to 5%, 5 to 10%, 10 to 25%, 25 to 50%, 50 to
66 2/3% and 66 2/3% or more. Failure of such holders to disclose said
shareholdings is a violation of the Netherlands Economic Offenses Act, and may
result in civil penalties, including suspension of voting rights. As a holder of
UPC ADSs, you agree to comply with these requirements in the deposit agreement.
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COMPARISON OF RIGHTS OF HOLDERS OF UPC ADSS AND HOLDERS OF SBS SHARES
If you tender your SBS shares in the exchange offer, upon the completion of
the exchange offer, you will become a holder of UPC ADSs representing UPC
ordinary shares A. Your rights as a shareholder will be governed by the UPC
articles of association, by Netherlands law and the deposit agreement that
governs the UPC ADSs.
If you become an owner of UPC ADSs, you will become a party to the deposit
agreement and therefore will be bound by its terms as well as to the terms of
the American depositary receipt, or ADR, that represents your ADSs. The deposit
agreement and this American depositary receipt specify UPC's rights and
obligations as well as your rights and obligations as owner of UPC ADSs and
those of the depositary bank. Please read the section captioned "Description of
American Depositary Shares."
Your rights as a holder of UPC ADSs would differ in certain material
respects from your rights as a shareholder of SBS, which are governed by SBS's
articles of incorporation and by Luxembourg law. You will find more information
about the rights generally of holders of UPC ordinary shares A in the sections
captioned "Description of UPC's Share Capital" and "Summary of Additional
Material Provisions of the Articles of Association and Other Matters."
The following is a comparison of:
- your current rights as a holder of SBS shares under Luxembourg law and
SBS's articles of incorporation and
- the rights you would have as a holder of UPC ordinary shares A
(represented by UPC ADSs) under Netherlands law, the UPC articles of
association and the UPC deposit agreement if you tender your SBS shares
in the exchange offer and receive UPC ADSs.
This comparison summarizes the material differences but is not intended to
list all differences. It is qualified by reference to the corporate law of
Luxembourg and the Netherlands, and you may wish to review both the SBS articles
of incorporation and the UPC articles of association, which are available in the
respective filings of UPC and SBS. Please read the section captioned "Where You
Can Find More Information," above.
CAPITAL STOCK
UPC
The total number of authorized shares of UPC capital stock is 1,650,000,000
shares consisting of:
- 600,000,000 ordinary shares A, nominal value Euro 1.00
- 300,000,000 ordinary shares B, nominal value Euro 0.01
- 300 priority shares, nominal value Euro 1.00
- 149,999,700 class A preference shares, nominal value Euro 1.00
- 600,000,000 class B preference shares, nominal value Euro 1.00.
All unissued shares of the authorized capital may be issued by the UPC
management board upon approval of both the supervisory board and
UnitedGlobalCom, the holder of all outstanding priority shares. The authority of
the management board to issue ordinary shares will end on July 26, 2004, unless
extended under the articles of association or by resolution of the general
meeting of shareholders for a period not exceeding five years in each instance.
If an extension is not given, issues of ordinary shares will require a
resolution of the general meeting of shareholders in addition to approval of the
supervisory board and UnitedGlobalCom, as holder of all outstanding priority
shares. A resolution of the general meeting of shareholders to extend the
authority of the
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management board to issue shares requires the approval of both the supervisory
board and UnitedGlobalCom, as holder of all outstanding priority shares.
SBS
According to SBS's most recent Annual Report on Form 20-F for the fiscal
year ended December 31, 1999, the authorized capital of SBS consists of
75,000,000 SBS shares, of which 25,725,590 SBS shares (excluding 18,362 shares
held by SBS) were issued and outstanding as of March 10, 2000.
The SBS board of directors is authorized, without further shareholder
action, to issue additional SBS shares from time to time up to the number of
authorized SBS shares.
VOTING RIGHTS
UPC
All classes of UPC capital stock vote together on all matters presented at
a general meeting of shareholders. Each ordinary share A represents the right to
cast 100 votes at a general meeting of shareholders. Each ordinary share B
represents the right to cast one vote, and each share of all other classes of
capital stock represents the right to cast 100 votes, at a general meeting of
shareholders.
Generally, decisions of the general meeting of shareholders may be adopted
by a majority of the votes cast. UnitedGlobalCom, as the holder of the priority
shares, has certain specific rights and powers over UPC including:
- the right to approve the issuance by us of our shares;
- the right to approve the exclusion or restriction of the preemptive
rights of existing shareholders;
- the right to nominate members for appointment to the management and
supervisory boards, which nominations may only be set aside by a
resolution of the general meeting of shareholders adopted by two-thirds
of the votes cast representing more than one-half of the issued nominal
capital;
- the right to approve certain decisions of our management board; and
- the exclusive right to propose amendments to our articles of association
and to propose our merger, split up or dissolution.
As a holder of UPC ADSs, you generally have the right under the deposit
agreement to instruct the depositary bank to exercise the voting rights for the
UPC ordinary shares A represented by your UPC ADSs. At our request, the
depositary bank will mail to you any notice of shareholders' meeting received
from us together with information explaining how to instruct the depositary bank
to exercise the voting rights of the securities represented by your UPC ADSs. If
the depositary bank timely receives voting instructions from a holder of UPC
ADSs, it will endeavor to vote the securities represented by the holder's UPC
ADSs in accordance with such voting instructions. Please note that the ability
of the depositary bank to carry out voting instructions may be limited by
practical and legal limitations and the terms of the securities on deposit. We
cannot assure you that you will receive voting materials in time to enable you
to return voting instructions to the depositary bank in a timely manner.
Securities for which no voting instructions have been received will not be
voted.
SBS
Holders of SBS shares vote on all matters submitted to a vote of the
shareholders, with each SBS share entitled to one vote. Under Luxembourg law,
shareholder action can generally be taken by a simple majority of the SBS shares
present or represented at a duly convened meeting. An
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amendment to the articles of incorporation requires a quorum, by presence or
proxy, of 50% of the issued SBS shares and a two-thirds vote of those shares
present or represented at a duly convened meeting. If a quorum is not achieved
at a first meeting, a second meeting may be convened, which may proceed whether
a quorum is achieved or not.
PREEMPTIVE RIGHTS
UPC
Except for issuances of UPC ordinary shares in return for non-cash
consideration and shares issued to UPC employees or employees of any of UPC's
group companies (groepsmaatschappijen), as defined under Netherlands law holders
of UPC ordinary shares will have preemptive rights to subscribe for their pro
rata portion of all new ordinary share issuances by UPC. These rights may be
restricted or excluded, however, by a resolution of the management board if
approved by both the supervisory board and UnitedGlobalCom, as holder of all
outstanding priority shares. The management board's power to restrict or to
exclude preemptive rights will terminate on July 26, 2004, unless extended by a
resolution of the shareholders at a general meeting.
A resolution of the general meeting of shareholders to restrict or to
exclude preemptive rights, or to delegate the authority to restrict or to
exclude preemptive rights to the management board, must be approved by a simple
majority, unless less than one-half of the issued share capital is represented
at the meeting, in which case two-thirds of the votes will be required to
approve the resolution.
SBS
The holders of SBS shares have waived their preemptive rights as to the SBS
shares that may be issued by the board of directors until the fifth anniversary
of the later of (1) the publication of the most recent amendment to the SBS
articles of association and (2) approval by the SBS shareholders of an extension
of this five year period. This waiver is binding upon all current and future
shareholders. Upon the expiration of the five year term, all SBS shareholders
would be entitled to preemptive rights unless the board of directors recommends,
and the SBS shareholders approve, the suppression of these rights.
DIRECTORS
UPC
The general affairs and business of UPC are supervised by a supervisory
board appointed at the general meeting of shareholders from a list proposed by
UnitedGlobalCom, as the holder of all of UPC's outstanding priority shares, or
through direct appointment by Philips Electronics N.V. Under UPC's articles of
association, Philips currently has the right to appoint and remove one of UPC's
supervisory directors. Philips' representative on the supervisory board must
approve (1) the disposition of assets aggregating more than 30% of the
consolidated assets or generating more than 30% of the consolidated revenues of
the Telekabel Group, or (2) UPC's merger or consolidation into any other entity
that is not wholly-owned by UnitedGlobalCom. The Discount Group, UPC's partner
in its Israeli system, has a contractual right to nominate one director and
UnitedGlobalCom has agreed to vote in favor of the Discount Group's nominee
subject to certain conditions. The Discount Group has not to date exercised its
contractual right to nominate a supervisory director. The Discount Group's
nomination may be set aside by two-thirds of the votes cast at the general
meeting of shareholders representing more than one-half of the issued nominal
capital.
The management and policy making of UPC and its subsidiaries is entrusted
to the management board under the supervision of the supervisory board. The
general authority to represent UPC is vested in the management board, and two
management board members acting jointly are authorized to represent UPC. Under
the articles of association, the management board consists of one or more
members. If the management board has two or more members, the supervisory board
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may designate one member president and one member chief executive officer,
although one member may have both designations. Management board members are
appointed by the general meeting of shareholders upon the proposal by
UnitedGlobalCom, as holder of all outstanding priority shares. UnitedGlobalCom's
proposal generally is binding upon the shareholders (that is, a UPC shareholder
must choose one of the priority shareholder's nominees) if UnitedGlobalCom
nominates at least two persons for each vacancy. However, the proposal can be
set aside by two-thirds of the votes cast at the meeting if the two-thirds
majority represents more than one-half of the issued capital. Certain decisions
of the management board specified in the articles of association require the
approval of the supervisory board. UnitedGlobalCom, as holder of all outstanding
priority shares, may, after consultation with the supervisory board, resolve
that certain managerial decisions require the approval of UnitedGlobalCom, as
holder of all outstanding priority shares.
UPC management board members can be suspended or removed by the general
meeting of shareholders at any time. A resolution to suspend or remove other
than at the proposal of UnitedGlobalCom, as holder of all outstanding priority
shares, may only be passed by the general meeting of shareholders with a
majority of at least two-thirds of the votes cast representing more than half of
the issued capital. Members of the management board may also be suspended at any
time by the vote of a majority of at least two-thirds of the supervisory board
at a meeting at which at least half of the supervisory directors are present or
represented. Such a suspension may be discontinued by the general meeting of
shareholders at any time. Any suspension may be extended one or more times, but
may not last longer than three months in the aggregate.
SBS
SBS has a board of directors composed of at least five persons elected by a
simple majority vote of the outstanding SBS shares for a term not exceeding six
years, until their successors are elected. A director may be removed with or
without cause by a majority vote of the SBS shares present or represented at a
general meeting of shareholders. Under the private placement agreement, UPC has
the right to nominate one director to the SBS board.
CONTROLLING SHAREHOLDER
UnitedGlobalCom owns about 53% of the outstanding UPC ordinary shares A and
all of UPC's priority shares. If the exchange offer is completed, assuming all
of the SBS shares are tendered, UnitedGlobalCom will own about [ %] of the
outstanding UPC ordinary shares A. UnitedGlobalCom will therefore continue to
control substantially all of UPC's business affairs and policies. The priority
shares give UnitedGlobalCom additional approval rights over certain of UPC's
actions. Please read "Risk Factors -- We will continue to be controlled by
UnitedGlobalCom, whose interests may be different from those of other
shareholders."
INDEMNIFICATION
UPC
Under UPC's articles of association, UPC must indemnify any person who is
or has been a member of UPC's supervisory board or management board and who,
either because he or she has served as a member of the supervisory board or
management board or as an officer, employee or agent of UPC, becomes a party to
any legal proceeding, whether civil, criminal, administrative or investigative
(other than a legal proceeding in or by or on behalf of UPC). UPC must indemnify
each of these persons against all expenses (including legal fees), judgments and
other amounts reasonably incurred in connection with the legal proceeding,
provided that he or she acted in good faith in carrying out his or her duties
and in a manner that he or she reasonably believed to be in, or not opposed to,
the best interest of UPC. In a criminal proceeding, an indemnified person must
have had no reasonable cause to believe that his or her conduct was unlawful or
outside his or her mandate.
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UPC's articles of association also require UPC to indemnify persons
entitled to indemnification (as described in the previous paragraph) in legal
proceedings in or by or on behalf of UPC against all expenses (including legal
fees), judgments and other amounts reasonably incurred in connection with the
legal action if he or she acted in good faith in carrying out his or her duties
and in a manner that he or she reasonably believed to be in, or not opposed to,
the best interest of UPC. This indemnification will generally not apply if the
person seeking indemnification is found to have acted with gross negligence or
with intentional failure (opzettelijk tekortschieten) in the performance of his
or her duty to UPC, unless the court in which the action is brought determines
that indemnification is otherwise fair and reasonable.
Under UPC's articles of association, UPC can only indemnify a person upon a
determination that indemnification is proper under the circumstances. This
determination is made by a decision of the supervisory board adopted by a
majority of the votes cast by members of the supervisory board who are not
parties to the legal action, unless the entire supervisory board is named in the
legal action or if the supervisory board directs, in which case the
determination is made by independent legal counsel in a written opinion.
Alternatively, this determination can be made by the general meeting of
shareholders.
UPC may, if authorized by the supervisory board, purchase insurance on
behalf of any member of the supervisory board or management board or any
officer, employee or agent of UPC to cover any liability incurred by a person in
connection with his or her service to UPC.
SBS
Under UPC's articles of association, a majority of the members of the
supervisory board (not being parties to the action) must approve any
indemnification, unless the entire supervisory board is named in the lawsuit, in
which case the indemnification may be approved by independent legal counsel in a
written opinion or by the general meeting of shareholders. The supervisory board
may extend the indemnification provisions of UPC's articles of association to
any of its officers, employees or agents.
SBS's articles of incorporation provide that subject to certain exceptions
every person who is, or has been, a director of officer of SBS will be
indemnified by SBS to the fullest extent permitted by law against liability and
against all expenses reasonably incurred or paid by him or her in connection
with any claim, action, suit or proceeding in which he or she becomes involved,
as a party or other wise, by virtue of his or her service as a director or
officer of SBS.
SBS will not indemnify any director or officer:
- against any liability to SBS or its shareholders incurred by reason of
willful malfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of his or her office; or
- with respect to any matter as to which he or she has been found by a
court of law to have acted in bad faith and not in the interest of SBS;
or
- in the event of a settlement, unless the settlement has been approved by
a court of competent jurisdiction of by SBS's board of directors.
SHAREHOLDER MEETINGS
UPC
UPC is required to hold a general shareholders' meeting annually, and a
general shareholders' meeting can be convened by the supervisory board, the
management board or UnitedGlobalCom, as holder of all outstanding priority
shares.
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SBS
SBS is required to hold a general meeting of shareholders each year in
Luxembourg, and the board of directors may call any number of extraordinary
general meetings. In addition, the board of directors is obligated to call a
general meeting of shareholders within one month after receipt of a written
demand by shareholders representing one-fifth of the outstanding SBS shares
entitled to vote at a shareholder meeting.
SBS shareholders may be represented by written proxy so long as the written
proxy is deposited with SBS at its registered offices in Luxembourg, or with any
member of the board of directors, five days before the meeting.
DIVIDENDS
UPC
Each UPC ordinary share A and ordinary share B is entitled to the same
amount of dividend if one is declared. UPC may not pay a dividend to holders of
UPC ordinary shares A without paying a dividend to holders of ordinary shares B.
Subject to certain exceptions, UPC may only pay dividends on profits as
shown in UPC's annual financial statements. UPC may not pay dividends if the
payment would reduce shareholders' equity below the sum of the paid-up capital
and any reserves required by Netherlands law. Under UPC's articles of
association, the priority shares and preference shares have preferential
dividend rights. Thereafter, the management board, upon approval of the
supervisory board, determines how much of the remaining profit will be allocated
to UPC's reserves before dividends are paid on the ordinary shares. The
management board, with the approval of the supervisory board, may propose to the
shareholders at the general meeting that some or all of the dividends on the
ordinary shares will be paid in UPC shares rather than in cash. The management
board, with the approval of the supervisory board and subject to certain
statutory provisions, may distribute one or more interim dividends. Any
dividends paid but not claimed by the recipient within five years revert to UPC.
As a holder of UPC ADSs, you would generally have the right to receive the
distributions UPC makes on the UPC ordinary shares A deposited with the
custodian. Your receipt of these distributions may be limited, however, by
practical considerations and legal limitations. Holders will receive these
distributions under the terms of the deposit agreement in proportion to the
number of UPC ADSs held as of a specified record date.
SBS
Holders of SBS shares participate pro rata in dividends, if any are
declared.
Interim dividends can be declared by SBS up to two times in any fiscal year
(in the third and fourth quarter) by the board of directors. Interim dividends
cannot be paid within six months of the closing of the preceding year and can
only be paid after the prior year's financial statements have been approved, and
SBS's independent auditor must report that SBS has adequate funds to pay the
dividends at the time of the declaration. Final dividends may be declared by the
board of directors once a year and must be approved at the annual general
meeting of shareholders. Both interim and final dividends can be paid out of any
earnings, retained and current, as well as paid-in surplus. Luxembourg law
authorizes the payment of stock dividends if sufficient surplus exists to
provide for the related increase in capital.
Luxembourg law requires that each year 5% of SBS's net profits be allocated
to a legal reserve until such reserve equals 10% of the issued and outstanding
capital of SBS. Dividends cannot be called until such reserve is satisfied. This
legal reserve is not available for dividends. If there are no net profits, the
legal reserve may also be satisfied by a transfer from capital surplus. The
legal
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reserve requirement for SBS has been satisfied by this kind of transfer.
However, as SBS has not had any net profits, Luxembourg law prevents SBS from
declaring or paying any dividends.
LIMITATIONS ON SHARE OWNERSHIP
UPC
UPC's articles of association do not place limitations on ownership of UPC
ordinary shares A.
Under the Dutch Act on Disclosure of Holdings in Listed Companies, any
person who acquires or disposes of an interest in the capital stock and/or the
voting rights of UPC (whether in the form of UPC ADSs or UPC ordinary shares A),
must give written notice to UPC and to the Securities Board of The Netherlands
of that acquisition or disposal if, as a result of that acquisition or disposal,
that shareholder's total capital interest or voting rights in UPC rises or falls
to a different percentage "bandwidth." The percentage bandwidths in the Dutch
law are 0% to 5%, 5% to 10%, 10% to 25%, 25% to 50%, 50% to 66 2/3%, and over
66 2/3%.
Under the Dutch Securities Market Supervision Act, any shareholder with a
capital interest of more than 25% in any company that has listed securities on
the Amsterdam Stock Exchange must also notify the Securities Board of the
Netherlands of any and all transaction involving those securities and certain
derivative securities. This requirement also applies to, among others, the
directors of a company that is a 25% shareholder of a listed company.
SBS
A person who owns more than 20% of the SBS shares or voting power of SBS at
any time who has not obtained approval from the board of directors cannot be
registered, or otherwise accepted, as a shareholder, and such a person will have
no voting rights, rights to dividends or distributions, or any other rights as a
shareholder for that portion of that person's shareholding that exceeds 20%.
The SBS board of directors may approve the ownership by a person of more
than 20% of the SBS shares or voting power
- if that person has, prior to purchasing more than 20% of the SBS shares
or votes, requested the approval of the board of directors to own more
than the 20% share ownership limit;
- if that person has made a legally binding and irrevocable bona fide offer
to all shareholders of SBS to purchase all SBS shares and votes in the
company at a price deemed favorable by the board of directors, at its
discretion; or
- in other circumstances determined by the board of directors
On December 10, 1999, SBS's board authorized UPC to exceed the 20% share
ownership limit to hold up to approximately 23.4% of the issued and outstanding
SBS shares. SBS's board has also authorized UPC to exceed the 20% share
ownership limit to complete the exchange offer.
ACQUISITION OR REDEMPTION OF SHARES
UPC
UPC may acquire its own UPC ordinary shares A and other shares subject to
certain provisions of Netherlands law. UPC may only acquire its own fully-paid
shares for consideration if
- the shareholders' equity less the payment required to make the
acquisition does not fall below the sum of the paid-up and called portion
of the share capital and any statutory reserves, and
- UPC and its subsidiaries would thereafter not hold or hold in pledge
shares with an aggregate nominal value exceeding one-tenth of UPC's
issued share capital.
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Shares held by UPC in its own capital or by its subsidiaries may not be
voted or counted for quorum purposes at shareholders' meetings.
Acquisitions by UPC of its own shares may be effected by UPC's management
board, subject to the approval of the supervisory board and UnitedGlobalCom, as
holder of all outstanding priority shares, only if the general meeting of
shareholders has authorized the management board to effect these acquisitions.
The general meeting adopted a resolution of this type on July 23, 1999. Such
resolutions expire within 18 months. Acquisitions by UPC of its own shares that
are listed on a stock exchange do not require an authorization of the general
meeting if made for the purpose of transferring shares to UPC's employees or
employees of a company in the UPC group.
Upon the proposal of our management board and after approval of our
supervisory board, the general meeting of shareholders may resolve to reduce the
issued share capital by cancellation of shares or by reducing the nominal value
of our shares, subject to certain statutory provisions and the provisions of our
articles of association.
SBS
SBS's articles of incorporation permit SBS to redeem its own shares,
subject to applicable law.
FORM OF SHARES
UPC
UPC ordinary shares A may, at the option of the shareholder, be registered
shares or bearer shares. Subject to certain conditions, shareholder may convert
ordinary shares in bearer form into registered ordinary shares of the same class
at any time, and vice versa.
UPC ADSs are only in registered form.
SBS
SBS shares are only in registered form.
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MATERIAL TAX CONSEQUENCES UNDER NETHERLANDS LAW
In general, for Dutch tax purposes, holders of UPC ADSs will be treated as
owners of the UPC ordinary shares A represented by UPC ADSs.
DUTCH TAXES
The statements below represent a broad analysis of Clifford Chance Limited
Liability Partnership of the present Netherlands tax laws with respect to
material Dutch tax implications of investing in the UPC ordinary shares A and
UPC ADSs. They do not address special rules that may apply to special classes of
holders of ordinary shares and are not to be read as extending by implication to
matters not specifically referred to in this prospectus. As to individual tax
consequences, each investor in UPC ordinary shares A or UPC ADSs should consult
his or her tax counsel.
SUBSTANTIAL INTEREST
A shareholder that owns, either via shares or options, directly or
indirectly, five percent or more of any class of shares, or five percent or more
of the total issued share capital of a company resident in The Netherlands (a
substantial interest) is subject to special rules. Profit participation rights
which give the holder rights to five percent or more of the annual profit or
five percent or more of the liquidation proceeds of a company resident in The
Netherlands will also qualify as a substantial interest. A shareholder is deemed
to own a substantial interest if part of a substantial interest has been
disposed of on a non-recognition basis. With respect to individuals, certain
attribution rules exist in determining the presence of a substantial interest.
Under the income tax treaty in effect between the United States and the
Netherlands, a person who is a resident of the United States and who has a
substantial or deemed substantial interest in our share capital will be exempt
from income tax imposed by The Netherlands, unless that person is an individual
who, at any time during the five-year period preceding the sale or disposition
of UPC ordinary shares A or UPC ADSs, has been a resident of The Netherlands,
and at the time of the sale or disposition owns, either alone or together with
certain related individuals, at least 25% of any class of our shares.
Unless indicated otherwise, the term "shareholder," as used below, includes
an individual and entities as defined under Dutch tax law holding UPC ordinary
shares A or UPC ADSs, but does not include any person owning a substantial
interest in UPC.
DUTCH TAX CONSEQUENCES FOR RESIDENTS OR DEEMED RESIDENTS OF THE NETHERLANDS
DUTCH DIVIDEND WITHHOLDING TAX
In general, a dividend distributed by UPC will be subject to a withholding
tax imposed by The Netherlands at a statutory rate of 25%. Dividends include
dividends in cash or in kind, deemed and constructive dividends, repayment of
paid-in capital not recognized as capital for Netherlands dividend withholding
tax purposes and liquidation proceeds in excess of the average paid-in capital
recognized as capital for Netherlands dividend withholding tax purposes.
Generally a resident shareholder will be allowed a credit against Dutch income
tax or corporation tax for the tax withheld on dividends paid on UPC ordinary
shares A or ADSs. A corporate resident shareholder that is not subject to Dutch
corporate income tax may, under certain conditions, be entitled to a refund of
the tax withheld. Ordinary share dividends paid out of our paid-in-share
premium, recognized as capital for Netherlands dividend withholding tax
purposes, will not be subject to this withholding tax.
Dividends we pay to a corporate resident shareholder that qualifies for the
"participation exemption," as defined in Article 13 of The Netherlands
Corporation Tax Act 1969 (the "Corporation Tax Act"), will not be subject to the
dividend withholding tax if the UPC ordinary shares A or UPC ADSs are
attributable to the shareholder's business carried out in The Netherlands. A
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corporate resident shareholder will qualify for the participation exemption if,
among other things, the corporate resident shareholder owns at least five
percent of our nominal paid-up capital.
DUTCH INDIVIDUAL INCOME TAX AND CORPORATION INCOME TAX
If the UPC ordinary shares A or UPC ADSs are held by an individual resident
shareholder, income derived from the UPC ordinary shares A or UPC ADSs is
subject to Dutch income tax on a net income basis at progressive rates. An
individual generally is entitled to a dividend exemption of NLG1,000 a year
(NLG2,000 a year for married couples). UPC ordinary shares A or UPC ADSs
distributed to individual resident shareholders from our share premium account
(as recognized for Dutch tax purposes) are also exempt from Dutch income tax.
The dividend exemption is not available to an individual resident shareholder if
the UPC ordinary shares A or UPC ADSs are:
- attributable to a trade or business carried on by the shareholder; or
- form part of a substantial interest.
Dividends accruing to individual shareholders that hold a substantial
interest are subject to income tax at a rate of 25% on a net basis.
Dividends received from UPC ordinary shares A or UPC ADSs by corporate
resident shareholders will be subject to Dutch corporation tax on a net basis
unless the company's shareholding qualifies for the participation exemption.
Dividends received from UPC ordinary shares A or UPC ADSs by a pension fund as
defined in the Corporation Tax Act are not subject to Dutch corporation tax.
CAPITAL GAINS REALIZED FROM THE SALE OR EXCHANGE OF UPC ORDINARY SHARES A OR UPC
ADSS
Capital gains derived from the sale, conversion or disposition of UPC
ordinary shares A or UPC ADSs by an individual resident shareholder are not
subject to Dutch income tax provided:
- the UPC ordinary shares A or UPC ADSs were not acquired directly or
indirectly by us or our subsidiaries;
- the shareholder did not have a substantial interest in our share capital
at the time of the sale or exchange; and
- the UPC ordinary shares A or UPC ADSs were not assets of a business.
Capital gains realized by an individual resident shareholder on the
disposal of UPC ordinary shares A or UPC ADSs forming part of a substantial
interest are subject to tax at a rate of 25%. Capital gains realized by an
individual resident shareholder from the sale or exchange of ordinary shares A
or UPC ADSs forming part of the assets of a shareholder's business are subject
to tax on a net income basis at the progressive income tax rates.
If the UPC ordinary shares A or UPC ADSs are held by a corporate resident
shareholder, capital gains realized from the sale or exchange of UPC ordinary
shares A or UPC ADSs are subject to Dutch corporation tax unless the
shareholding qualifies for the participation exemption. If the UPC ordinary
shares A or UPC ADSs are held by a qualifying pension fund, gains realized from
the sale or exchange of UPC ordinary shares A or UPC ADSs are exempt from Dutch
corporation tax.
DUTCH NET WEALTH TAX
An individual who resides, or is deemed to reside, in The Netherlands
generally will be subject to a net wealth tax at a rate of 0.7% on the fair
market value of the UPC ordinary shares A or UPC ADSs, with certain exceptions.
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DUTCH GIFT TAX AND INHERITANCE TAX
Dutch gift tax or inheritance tax will be due with respect to a gift or
inheritance of UPC ordinary shares A or ADSs from a person who resided, or was
deemed to have resided, in The Netherlands at the time of the gift or his or her
death. A Dutch national is deemed to have been a resident of The Netherlands if
he or she was a resident in The Netherlands at any time during the 10 years
preceding the date of the gift or the date of his or her death. For gift tax
purposes, each person, regardless of nationality, is deemed to be a Dutch
resident if he or she was a resident in The Netherlands at any time during the
12 months preceding the date of the gift. The 10-year and 12-month residency
rules may be modified by treaty.
However, in case of a gift by an individual who at the time of the gift was
neither a resident nor deemed to be a resident in The Netherlands and such
individual dies within 180 days after the date of the gift, while being a
resident or deemed to be a resident in The Netherlands, such tax will be due.
Liability for payment of the gift tax or inheritance tax rests with the
donee or heir, respectively. The rate at which these taxes are levied is
primarily dependent on the fair market value of the gift or inheritance and the
relationship between the donor and donee or the deceased and heir(s). Exemptions
may apply under specific circumstances.
VALUE ADDED TAX
No Netherlands value added tax is imposed on dividends under the UPC
ordinary shares A or UPC ADSs or on the transfer of the UPC ordinary shares A or
UPC ADSs.
RESIDENCE
A non-resident shareholder will not become resident, or deemed to be
resident, in The Netherlands solely as a result of holding an UPC ordinary share
A or UPC ADSs or of the execution, performance, delivery and/or enforcement of
rights in respect of the UPC ordinary shares A or UPC ADSs.
DUTCH TAX CONSEQUENCES FOR NON-RESIDENTS OF THE NETHERLANDS
DUTCH DIVIDEND WITHHOLDING TAX
In general, a dividend distributed by UPC will be subject to a withholding
tax imposed by The Netherlands at a statutory rate of 25%. Dividends include
dividends in cash or in kind, deemed and constructive dividends, repayment of
paid-in capital not recognized as capital for Netherlands dividend withholding
tax purposes and liquidation proceeds in excess of the average paid-in capital
recognized as capital for Netherlands dividend withholding tax purposes.
Ordinary share dividends paid out of our paid-in-share premium, recognized as
capital for Netherlands dividend withholding tax purposes, will not be subject
to this withholding tax.
A non-resident holder of UPC ordinary shares A or UPC ADSs can be eligible
for a partial or complete exemption or refund of all or a portion of the above
withholding tax under a tax convention that is in effect between The Netherlands
and the non-resident shareholder's country of residence. The Netherlands has
concluded such conventions with the United States, all European Union member
states except Portugal, and a large number of other countries.
A non-resident shareholder may benefit from a reduced dividend withholding
tax rate pursuant to an income tax treaty in effect between the shareholder's
country of residence and The Netherlands. Under most Dutch income tax treaties,
the withholding tax rate is reduced to 15% or less provided that:
- the recipient shareholder does not have a permanent establishment in The
Netherlands to which the UPC ordinary shares A and UPC ADSs are
attributable; and
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- the recipient shareholder is the beneficial owner of the dividends.
A non-resident shareholder who receives dividends distributed by UPC on
ordinary shares or who realizes a gain from the sale or disposition of ordinary
shares, will not be subject to Netherlands taxation on the income or gain
unless:
- the income, dividend or capital gain is attributable to an enterprise or
part thereof that is carried on through a permanent establishment or
permanent representative in The Netherlands; or
- the non-resident shareholder holds, directly or indirectly, a substantial
interest or a deemed substantial interest in UPC that does not form part
of the assets of an enterprise.
The withholding of tax on UPC ordinary shares A or UPC ADS dividend
distributions to a non-resident corporate shareholder carrying on a business
through a Dutch permanent establishment is not required as long as:
- the Dutch participation exemption applies; and
- the UPC ordinary shares A or UPC ADSs form a part of the permanent
establishment's business assets.
To qualify for the participation exemption, this entity should hold at
least five percent of our nominal paid-up capital and the UPC ordinary shares A
or UPC ADSs must form a part of the permanent establishment's business assets.
DUTCH INDIVIDUAL INCOME TAX AND CORPORATION INCOME TAX ON INCOME AND CAPITAL
GAINS
A non-resident shareholder who receives dividends distributed by UPC on
ordinary shares or who realizes a gain from the sale or disposition of ordinary
shares, will not be subject to Netherlands taxation on the income or gain
unless:
- the income, dividend or capital gain is attributable to an enterprise or
part thereof that is carried on through a permanent establishment or
permanent representative in The Netherlands; or
- the non-resident shareholder holds, directly or indirectly, a substantial
interest or a deemed substantial interest in UPC that does not form part
of the assets of an enterprise.
Capital gains derived from the sale, conversion or disposition of UPC
ordinary shares A or UPC ADSs by a non-resident corporate shareholder carrying
on a business through a permanent establishment in The Netherlands are not
subject to Dutch corporation tax provided:
- the Dutch participation exemption would apply; and
- the UPC ordinary shares A or UPC ADSs are attributable to the business
carried out in The Netherlands.
To qualify for the participation exemption, the shareholder must hold at
least five percent of the UPC nominal paid-up capital and meet certain other
requirements.
Under most Dutch tax treaties, the right to tax capital gains realized by a
non-resident shareholder from the sale or exchange of UPC ordinary shares A or
UPC ADSs is allocated to the shareholder's country of residence.
DUTCH NET WEALTH TAX
A non-resident corporate shareholder is not subject to Netherlands net
wealth tax. Netherlands net wealth tax will not be levied on an individual
non-resident shareholder unless the UPC ordinary shares A or UPC ADSs are
attributable to an enterprise or part thereof that is carried on through a
permanent establishment or a permanent representative in The Netherlands.
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DUTCH GIFT TAX AND INHERITANCE TAX
A gift or inheritance of UPC ordinary shares A or UPC ADSs from a
non-resident shareholder will not be subject to Dutch gift tax or inheritance
tax in the hands of the donee or heir provided the nonresident shareholder was
not:
- a Dutch national who has been a resident in The Netherlands at any time
during the 10 years preceding the date of gift or the date of death or,
in the event he or she was a resident in The Netherlands during such
period, the non-resident shareholder was not a Dutch national at the time
of gift or death;
- solely for the purpose of the gift tax, a resident of The Netherlands at
any time during the 12 months preceding the time of the gift;
- engaged in a business in The Netherlands through a permanent
establishment or a permanent representative which included in its assets
the UPC ordinary shares A or UPC ADSs; and
- entitled to share directly (not through the beneficial ownership of UPC
ordinary shares A or UPC ADSs or similar securities) in the profits of an
enterprise managed and controlled in The Netherlands which owned or is
deemed to have owned UPC ordinary shares A or ADSs.
A Dutch national is deemed to have been a resident of The Netherlands if he
or she was a resident in The Netherlands at any time during the 10 years
preceding the date of the gift or the date of his or her death. For gift tax
purposes, each person (regardless of nationality) is deemed to be a Dutch
resident if he or she was a resident in The Netherlands at any time during the
12 months preceding the date of the gift. The 10-year and 12-month residency
rules may be overruled by treaty.
However, in case of a gift by an individual who at the time of the gift was
neither a resident nor deemed to be a resident in The Netherlands and such
individual dies within 180 days after the date of the gift, while being a
resident or deemed to be a resident in The Netherlands, such tax will be due.
VALUE ADDED TAX
No Netherlands value added tax is imposed on dividends under the UPC
ordinary shares A or UPC ADSs or on the transfer of the UPC ordinary shares A or
UPC ADSs.
RESIDENCE
A non-resident shareholder will not become resident, or deemed to be
resident, in The Netherlands solely as a result of holding an UPC ordinary share
A or UPC ADSs or of the execution, performance, delivery and/or enforcement of
rights in respect of the UPC ordinary shares A or UPC ADSs.
PENDING TAX REFORM
In The Netherlands, a major tax reform is pending which is expected to
become effective as of January 1, 2001. It will, in particular, change the
taxation in relation to shares held by individual shareholders resident or
deemed resident of The Netherlands. According to the proposed legislation, Dutch
individual resident shareholders will be taxed annually at a rate of 30% on a
deemed income of 4% of the average annual value of the shares, regardless of
whether any dividends are received or capital gains are realized, or capital
losses are suffered.
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FORWARD-LOOKING STATEMENTS
We caution you that, in addition to the historical financial information
included herein, this prospectus includes certain "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995 (the
"Litigation Reform Act") that are based on management's beliefs, as well as on
assumptions made by and information currently available to management. All
statements other than statements of historical fact included in this prospectus,
including statements concerning the business, anticipated events or trends,
future financial position and economic prospects, results of operations,
business strategy and anticipated benefits of our proposed business combination
and plans, expectations, beliefs and objectives of management for future
operations of UPC and SBS, may constitute forward-looking statements.
In addition, forward-looking statements generally can be identified by the
use of forward-looking terminology such as "may," "will," "expect," "intend,"
"estimate," "anticipate," "believe," "plan," "seek," or "continue" or the
negative thereof or variations thereon or similar terminology. Such
forward-looking statements involve known and unknown risks, including, but not
limited to, national and international economic and market conditions,
competitive activities or other business conditions, and customer reception of
our existing and future services. Although we believe that our expectations with
respect to the forward-looking statements are based upon reasonable assumptions
within the bounds of our knowledge of our business and operations as of the date
hereof, there can be no assurance that our actual results, performance or
achievements will not differ materially from any future results, performance or
achievements expressed or implied from such forward-looking statements.
You should be aware that the multi-channel television, telephone and
Internet/data service industries are changing rapidly, and, therefore, the
forward-looking statements and statements of expectations, plans and intent in
this prospectus are subject to a greater degree of risk than similar statements
regarding certain other industries. Important factors that could cause actual
results to differ materially from our expectations ("cautionary statements") are
disclosed in this prospectus, including without limitation in conjunction with
the forward-looking statements included in this prospectus and under "Risk
Factors." All subsequent written and oral forward-looking statements
attributable to us or persons acting on our behalf are expressly qualified in
their entirety by these cautionary statements.
These and other risk factors are discussed in more detail in this
prospectus. Many such factors are beyond our ability to control or predict.
Readers are cautioned not to rely on forward-looking statements. We disclaim any
intent or obligation to update these forward-looking statements, whether as a
result of new information, future events or otherwise.
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LEGAL MATTERS
Clifford Chance Limited Liability Partnership, Netherlands counsel for UPC,
has rendered an opinion with respect to the validity of the UPC ordinary shares
A to be issued in connection with the exchange offer and also has rendered an
opinion with respect to certain Netherlands tax matters. Clifford Chance Rogers
& Wells LLP, U.S. counsel for UPC, is advising UPC as to U.S. legal matters in
connection with the exchange offer. Sullivan & Cromwell, U.S. counsel for SBS,
is advising SBS as to certain U.S. legal matters in connection with the exchange
offer. Stibbe Simont Monahan Dubot, Netherlands counsel to SBS, is advising SBS
as to certain Netherlands legal matters in connection with the exchange offer.
Arendt & Meternach, Luxembourg counsel for SBS, is advising SBS as to certain
Luxembourg legal matters in connection with the exchange offer.
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EXPERTS
The consolidated financial statements of United Pan-Europe Communications
N.V. incorporated by reference in the registration statement of which this
prospectus is a part for the year ended December 31, 1999 have been audited by
Arthur Andersen, independent accountants, as indicated in their report with
respect to it, and are incorporated by reference herein upon the authority of
that firm as experts in giving that report.
The consolidated financial statements of United TeleKabel Holding N.V.
incorporated by reference in the registration statement of which this prospectus
is a part for the period from commencement of operations (August 6, 1998) until
December 31, 1998, have been audited by Arthur Andersen, independent
accountants, as indicated in their report with respect to it, and are
incorporated by reference herein upon the authority of said firm as experts in
giving that report.
The consolidated financial statements of @Entertainment, Inc. incorporated
by reference in the registration statement of which this prospectus is a part
have been audited by KPMG Polska Sp.z o.o, independent auditors, as indicated in
their report with respect thereto, and are incorporated by reference herein upon
the authority of that firm as experts in giving that report.
The consolidated financial statements of NBS Nordic Broadband Services AB
incorporated by reference in the registration statement of which this prospectus
is a part have been audited by Ernst & Young AB, independent auditors, as
indicated in their report with respect thereto, and are incorporated by
reference herein upon the authority of that firm as experts in giving that
report.
The consolidated financial statements of Singapore Telecom International
Svenska AB, as of and for the year ended March 31, 1998, and the Reconciliation
of Significant Differences between U.S. and Swedish Generally Accepted
Accounting Principles incorporated by reference in the registration statement of
which this prospectus is a part from the United Pan-Europe Communications N.V.
Form 8-K/A dated September 17, 1999 on pages F-70 through F-91 of that Form
8-K/A have been so incorporated in reliance on the reports of
PricewaterhouseCoopers, independent accountants, given on the authority of that
firm as experts in auditing and accounting.
The combined financial statements of the ENECO KabelTV and Telecom Group as
of December 31, 1999 and for the year then ended incorporated by reference in
the registration statement of which this prospectus is a part have been audited
by Arthur Andersen, independent accountants, as indicated in their report with
respect to it, and are incorporated by reference herein upon the authority of
that firm as experts in giving that report.
The financial statements of TV3 Ltd., Schlieren for the period from July 8,
1998 to December 31, 1999 incorporated by reference in the registration
statement of which this prospectus is a part have been audited by ATAG Ernst &
Young Ltd., independent auditors, as indicated in their report with respect
thereto, and are incorporated by reference herein upon the authority of that
firm as experts in giving that report.
The consolidated financial statements of SBS appearing in its Annual Report
on Form 20-F for the year ended December 31, 1999, have been audited by Ernst &
Young, Statsautoriseret Revisionsaktieselskab, independent auditors, as
described in their report included in that Annual Report and incorporated by
reference in the registration statement of which this prospectus is a part.
These consolidated financial statements are incorporated by reference in the
registration statement of which this prospectus is a part in reliance upon the
report given on the authority of this firm as experts in accounting and
auditing.
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SCHEDULE I
INFORMATION CONCERNING THE DIRECTORS AND EXECUTIVE
OFFICERS OF UNITED PAN-EUROPE COMMUNICATIONS N.V.
AND UNITEDGLOBALCOM, INC.
UPC DIRECTORS AND EXECUTIVE OFFICERS
Set forth below is the name and the present principal occupation or
employment and material occupations, positions, offices or employment for the
past five years of the directors and executive officers of United Pan-Europe
Communications N.V. ("UPC"). The principal business address of UPC and, unless
otherwise indicated below, the current business address or a business address to
which communications can be sent, for each individual listed below is Fred.
Roeskestraat 123, 1076 EE Amsterdam, The Netherlands. Unless otherwise
indicated, each such person is a citizen of the United States.
During the past five years, UPC has not, and to the knowledge of UPC, none
of the directors and executive officers of UPC described below has (1) been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors) or (2) been a party to any judicial or administrative proceeding
(except for matters that were dismissed without sanction or settlement) that
resulted in a judgment, decree or final order enjoining the person from future
violations of, or prohibiting activities subject to, federal or state securities
laws, or a finding of any violation of federal or state securities laws.
Supervisory Board
The general affairs and business of UPC are supervised by a supervisory
board appointed by the general meeting of shareholders upon proposal of
UnitedGlobalCom, Inc. ("UnitedGlobalCom") as the holder of our outstanding
priority shares. Mr. Gene Schneider, UnitedGlobalCom's Chairman and Chief
Executive Officer and the former Chairman of the Supervisory Board, resigned
from the Supervisory Board in February 1999. Pursuant to the rules and
procedures of the Supervisory Board, he became a non-voting adviser to the
Supervisory Board and has the right to attend and participate in the meetings of
the Supervisory Board.
UPC's supervisory directors are appointed at the general meeting of
shareholders from a list proposed by UnitedGlobalCom, as the holder of all of
UPC's outstanding priority shares or through direct appointment by Philips
Electronics N.V. Philips currently has the right to appoint and remove one of
UPC's supervisory directors, so long as Philips has any liability in respect of
certain agreements relating to the Telekabel Wien system, which is expected to
terminate by 2006. UPC has agreed to indemnify Philips against such liability.
UPC and UnitedGlobalCom have agreed to use their reasonable best efforts to
obtain the release by the City of Vienna of Philips from such liability.
Philips' representative on the supervisory board must approve (1) the
disposition of assets aggregating more than 30% of the consolidated assets or
generating more than 30% of the consolidated revenues of the Telekabel Group, or
(2) UPC's merger or consolidation into any other entity that is not wholly-owned
by UnitedGlobalCom. The Discount Group, UPC's partner in its Israeli system, has
a contractual right to nominate one director and UnitedGlobalCom has agreed to
vote in favor of the Discount Group's nominee subject to certain conditions. The
Discount Group has not to date exercised its contractual right to nominate a
supervisory director. The Discount Group's nomination may be set aside by
two-thirds of the votes cast at the general meeting of shareholders representing
more than one-half of the issued nominal capital.
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<PAGE> 145
The Supervisory Directors and Adviser are:
<TABLE>
<CAPTION>
Principal Occupation or Employment During Past Five Years,
Name Positions with UPC and Certain Directorships
- ---- ----------------------------------------------------------
<S> <C>
</TABLE>
Michael T. Fries.......
Mr. Fries has been a member of the Supervisory Board since
September 1998 and the Chairman since February 1999. Mr.
Fries became a director of UnitedGlobalCom in November
1999 and is President of UnitedGlobalCom and President of
United Latin America, Inc., a wholly-owned subsidiary of
UnitedGlobalCom, positions he has held since September
1998. He is also the Executive Chairman of Austar United
Communications Limited ("Austar United"),
UnitedGlobalCom's majority-owned subsidiary, a position he
has held since June 1999. Mr. Fries also serves as
President and Chief Executive Officer of United
Asia/Pacific Communications, Inc., a wholly-owned
subsidiary of UnitedGlobalCom, positions he has held since
June 1995 and December 1996, respectively. In January
2000, Mr. Fries also became a member of the Supervisory
Board of chello broadband N.V., our Internet portal and
ISP. From March 1990 to June 1995, Mr. Fries served as
UnitedGlobalCom's Senior Vice President, Development, in
which capacity he was responsible for managing
UnitedGlobalCom's acquisitions and new business
development activities, including UnitedGlobalCom's
expansion into the Asia/Pacific, Latin American and
European markets.
John P. Cole, Jr.......
Mr. Cole became a member of the Supervisory Board in
February 1999 and has been a director of UnitedGlobalCom
since March 1998. In January 2000, he also became a member
of chello broadband's Supervisory Board. Mr. Cole has
practiced law in Washington, D.C. since 1956 and has been
counsel over the years in many landmark proceedings before
the U.S. Federal Communications Commission, reflecting the
development of the cable television industry. In 1966, he
founded the law firm of Cole, Raywid & Braverman, a firm
specializing in all aspects of telecommunications and
media law.
Richard De Lange.......
Mr. De Lange has been a member of the Supervisory Board
since April 1996. Since October 1998, Mr. De Lange has
been Chairman of the Philips organization in The
Netherlands (Philips Nederland B.V. and Nederlandse
Philips Bedrijven B.V.). He also serves as President and
Chief Executive Officer of Philips Media B.V., which
position he assumed in February 1996. From April 1995
until October 1998, Mr. De Lange was Chairman and Managing
Director of Philips Electronics UK Ltd. Previously, Mr. De
Lange served since 1970 in various capacities with
subsidiaries of Philips, including as President of Philips
Lighting Europe from December 1990 until April 1995.
Ellen P. Spangler......
Ms. Spangler became a member of the Supervisory Board in
February 1999. Ms. Spangler is the Senior Vice President
of Business and Legal Affairs and Secretary of
UnitedGlobalCom, positions she has held since December
1996. Ms. Spangler is responsible for the legal operations
of UnitedGlobalCom. Prior to assuming her current
positions, since February 1991, she served as a Vice
President of UnitedGlobalCom, where her responsibilities
included business and legal affairs, programming and
assisting on development projects.
Tina Wildes............
Ms. Wildes became a member of the Supervisory Board in
February 1999. Ms. Wildes has been a director of
UnitedGlobalCom since November 1999
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and the Senior Vice President of Development Oversight and
Administration of UnitedGlobalCom since May 1998. In
January 2000, she also became a member of the Supervisory
Board of chello broadband. From October 1997 until May
1998, Ms. Wildes served as Senior Vice President of
Programming for UnitedGlobalCom. From December 1993 to
October 1997, she served as Regional Vice President of
UnitedGlobalCom's Latin America region. Prior to that
time, from 1988 to 1994, Ms. Wildes served as either a
director or Vice President for development, programming
and operations for several of UnitedGlobalCom's European
operating companies.
Gene W. Schneider......
Mr. Schneider served as a member of the Supervisory Board
from July 1995 until February 1999, when he became an
adviser to the Supervisory Board. Mr. Schneider is also
the Chairman of the Board of Directors of UnitedGlobalCom,
a position he has held since its inception in May 1989 and
was a director of United International Holdings, a
Colorado general partnership, since September 1989 until
its dissolution in December 1993. In addition to serving
as UnitedGlobalCom's Chairman, Mr. Schneider has served as
UnitedGlobalCom's Chief Executive Officer since October
1995, and served as UnitedGlobalCom's President from
October 1997 until he relinquished the title in September
1998. Mr. Schneider has served as a director of Austar
United since June 1999. Mr. Schneider served as Chairman
of United Artists Entertainment Company, then the third
largest multiple system cable operator in the United
States, from May 1989 until its merger with
Tele-Communications, Inc. in November 1991. He was a
founder of United Cable Television Corporation in the
early 1950s and, as its Chairman and Chief Executive
Officer, helped build United Cable into the eighth-largest
multiple system operator in the United States prior to its
merger with United Artists in 1989. Mr. Schneider has been
active in cable television affairs and has served on the
board of the National Cable Television Association (the
"NCTA") and on numerous committees and special projects
thereof since NCTA's inception in the early 1950s. Mr.
Schneider is one of the original inductees into NCTA's
Cable Television Pioneers. Mr. Schneider is the Chairman
of the Board of Advance Display Technologies, Inc. and an
adviser to the Supervisory Board of chello broadband.
The Supervisory Board has an Audit Committee and a Compensation Committee.
The Audit Committee is comprised of Mr. Fries, Mr. Cole and Mr. De Lange. The
Compensation Committee is comprised of Mr. Fries, Ms. Spangler and Ms. Wildes.
Family Relationships
Tina Wildes, a member of the supervisory board, and Mark L. Schneider, the
Chairman of the management board and chief executive officer, are sister and
brother. Gene W. Schneider is their father. No other family relationships exist
between any other members of the supervisory board or management board.
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<PAGE> 147
Management Board and Other Key Employees
The members of the management board and other key employees are:
Mark L. Schneider......
Mr. Schneider has been Chief Executive Officer and
Chairman of our management board since April 1997. Mr.
Schneider has been a member of the board of directors of
UnitedGlobalCom since April 1993 and served as its
Executive Vice President from December 1996 to December
1999. In addition, Mr. Schneider has been chairman of the
Supervisory Board of chello broadband since March 1998.
From April 1997 to September 1998, he served as our
President and from May 1996 to December 1996, he served as
Chief of Strategic Planning and Operational Oversight of
UnitedGlobalCom. He served as President of UnitedGlobalCom
from July 1992 until June 1995 and as Senior Vice
President of UnitedGlobalCom from May 1989 until July
1992. Mr. Schneider also worked as a consultant for
UnitedGlobalCom from June 1995 to May 1996. Mr. Schneider
is a director of Advance Display Technologies, Inc.
John F. Riordan........
Mr. Riordan was appointed President in June 1999, and has
been a member of the management board since September
1998. Also in September 1998, Mr. Riordan was appointed
Vice Chairman of the Supervisory Board of chello
broadband, where he oversaw the implementation of UPC's
Internet/data services and digital distribution platform
and in June 1999, Mr. Riordan became a director of Austar
United. Mr. Riordan has also served as a director of
UnitedGlobalCom since March 1998. From March 1998 to June
1999, he served as Executive Vice President and from
September 1998 to June 1999, he served as President of
Advance Communications for UPC, where he oversaw the
implementation of UPC's Internet/data services and digital
distribution platform. From 1992 until November 1998, Mr.
Riordan served as Chief Executive Officer of Princes
Holdings Limited, the Irish multi-channel television
operating company of which UPC owned 20% until its sale in
November 1998.
Nimrod J. Kovacs.......
Mr. Kovacs was appointed Executive Chairman, Central
Europe in August 1999. He was appointed managing director
of Eastern Europe in March 1998 and a member of the
management board in September 1998. He has served in
various positions with UnitedGlobalCom, including
president of United Programming, Inc., from December 1996
until August 1999, President, Eastern Europe Electronic
Distribution & Global Programming Group from January to
December 1996 and Senior Vice President, Central/Eastern
Europe from March 1991 until December 1995.
Scott Bachman..........
Mr. Bachman has served as Managing Director of Technology
and Purchasing since February 1998. From March 1996 until
February 1998, Mr. Bachman was Vice President of
Engineering and the Chief Technology Officer. From April
1991 to March 1996, Mr. Bachman was Vice President of
Operations & Technology Projects for Cable Television
Laboratories, Inc.
Charles
H. R. Bracken..........
Mr. Bracken has been Chief Financial Officer since
November 1999. Prior to November 1999, Mr. Bracken served
as Managing Director of Strategy, Acquisitions and
Corporate Development from March 1999. Mr. Bracken became
a member of the management board in July 1999 and a member
of the Supervisory Board of chello broadband in March
1999. From 1994,
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<PAGE> 148
he held a number of positions at Goldman Sachs
International in London, most recently as Executive
Director, Communications, Media and Technology. While at
Goldman Sachs, he was responsible for providing merger and
corporate finance advice to a number of communications
companies, including UPC.
Steven D. Butler.......
Mr. Butler became managing director of UPC Capital and
treasurer in February 1998. Mr. Butler is responsible for
all corporate and project debt/equity financing
activities, as well as banking and investor relations.
From July 1995 until February 1998, Mr. Butler served as
Vice President and Treasurer. Prior to that, Mr. Butler
served as Director of Finance at UnitedGlobalCom since May
1991.
Simon Oakes............
Mr. Oakes has served as managing director of programming
since March 1998 at UPC, where he is responsible for
programming operations and development activities. From
1994 until joining UPC, Mr. Oakes independently developed
and produced feature films including Single Girls' Diary
(Granada Films), The Main of Buttermere (Tribeca and
United Artists) and Cave (Working Title and Polygram).
From 1989 until 1994, Mr. Oakes served as Co-chairman of
Crossbow Films, a film production company.
Ray D. Samuelson.......
Mr. Samuelson was appointed managing director of finance
and accounting in February 1998, responsible for all
accounting, reporting, budgeting, management information
systems and administrative activities. From UPC's
formation in July 1995 until February 1998, Mr. Samuelson
served as Vice President of Finance & Accounting. From
1992 to 1995, he was Vice President of Finance and
Administration of the Cable Operations Division at
UnitedGlobalCom. Prior to Mr. Samuelson's appointment with
UnitedGlobalCom, he was employed by US WEST. While with US
WEST, from 1990 to 1992, Mr. Samuelson was seconded to
UnitedGlobalCom's and US WEST's Norwegian, Swedish and
Hungarian cable television partnership, where he served as
the Chief Financial Officer.
Anton M. Tuijten.......
Mr. Tuijten joined UPC in September 1998 as Vice President
of legal services and was appointed General Counsel in May
1999. Mr. Tuijten has been a member of the management
board since March 2000. Mr. Tuijten has also served as
General Counsel for and a member of the management board
of chello broadband since December 1998. From 1992 until
joining UPC, Mr. Tuijten was General Counsel and Company
Secretary of Unisource, an international
telecommunications company. Prior to that he worked as a
Senior Corporate Lawyer at KPN, the Dutch telecom
operator.
Andrew Barron..........
Mr. Barron became Managing Director of Media in November
1999, a new position created to oversee the development of
UPC's digital media strategy. Prior to joining UPC, Mr.
Barron served as Executive Vice President of New Media &
Business Development at Walt Disney International Europe,
with responsibility for overseeing Walt Disney's Internet
businesses in Europe. Mr. Barron joined Walt Disney in
1995. Prior to joining Walt Disney, Mr. Barron worked for
McKinsey & Co. as a management consultant specializing in
international telecoms strategy and mergers and
acquisitions activity. Mr. Barron has also been a member
of the Supervisory Board of chello broadband since January
2000.
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<PAGE> 149
Jereon Bergman.........
Mr. Bergman became Managing Director of Video and
Marketing in July 1999. Prior to his appointment, Mr.
Bergman served as the Commercial Director at Casema, a
subsidiary of France Telecom, and the second largest cable
television operator in The Netherlands after us, a
position he had held since 1996. From 1993 to 1996, Mr.
Bergman worked for Optus Vision, and its shareholder Optus
Communications, a long distance and mobile communications
operator in Australia, primarily owned by Cable & Wireless
Optus Limited.
Sudhir Ispahani........
Mr. Ispahani has served as Chief Technology Officer and
Managing Director of Operations and Technology for chello
broadband since March 1999. His primary responsibility is
developing and implementing chello's technology
architecture. Mr. Ispahani joined chello broadband as
Corporate Technology Officer in July 1998 and has been a
member of chello broadband's Management Board since
November 1998. Prior to joining chello broadband in July
1998, Mr. Ispahani spent the nine preceding years with MCI
Telecommunications. While at MCI, Mr. Ispahani's
responsibilities included overseeing the design,
engineering and support of MCI's data and voice networks
in the U.S.
Roger Lynch............
Mr. Lynch has been the President and Chief Executive
Officer and Chairman of the management board of chello
broadband since November 1999. Prior to November 1999, Mr.
Lynch served as President and Chief Financial Officer of
chello broadband from July 1999. Prior to joining UPC, Mr.
Lynch spent five years at Morgan Stanley Dean Witter where
he was responsible for the bank's Internet corporate
finance activity in Europe. In addition, Mr. Lynch was
Morgan Stanley Dean Witter's Internet sector specialist
and had advised UPC and chello broadband during the year
preceding his appointment with UPC.
Shane O'Neill..........
Mr. O'Neill joined UPC as Managing Director, Strategy,
Acquisitions and Corporate Development in November 1999.
Prior to joining UPC, Mr. O'Neill spent seven years at
Goldman Sachs in the New York, Sydney and London offices.
Most recently, Mr. O'Neill was an Executive Director in
the Advisory Group for Goldman Sachs in London where he
worked on a number of mergers and acquisitions and
corporate finance transactions for companies in the
communications industry, including UPC. Prior to joining
Goldman Sachs, Mr. O'Neill spent four years at Macquarie
Bank in Sydney as well as three years at KPMG in Dublin
where he qualified as a chartered accountant.
Iain Osborne...........
Mr. Osborne has been Managing Director of Marketing
Communications for chello broadband since March 1999 and
has been a member of the management board of chello
broadband since January 1999. Mr. Osborne's primary
responsibility is to build the chello brand. Mr. Osborne
joined UPC in July 1998 from Yahoo! Inc. where he served
as Marketing and Communications Director, Europe.
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<PAGE> 150
UNITEDGLOBALCOM, INC. DIRECTORS AND EXECUTIVE OFFICERS
Set forth below is the name and the present principal occupation or
employment and material occupations, positions, offices or employments for the
past five years of the directors and executive officers of UnitedGlobalCom. The
principal business address of UnitedGlobalCom and, unless otherwise indicated
below, the current business address or a business address to which
communications can be sent, for each individual listed below is 4643 South
Ulster Street, Suite 1300, Denver, Colorado USA 80237. Unless otherwise
indicated, each such person is a citizen of the United States.
During the past five years, UnitedGlobalCom has not, and to the knowledge
of UPC, none of the directors and executive officers of UnitedGlobalCom
described below has (1) been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors) or (2) been a party to any judicial
or administrative proceeding (except for matters that were dismissed without
sanction or settlement) that resulted in a judgment, decree or final order
enjoining the person from future violations of, or prohibiting activities
subject to, federal or state securities laws, or a finding of any violation of
federal or state securities laws.
The directors and executive officers of UnitedGlobalCom and their ages,
along with their respective position with UnitedGlobalCom as of March 31, 2000
are set forth below. All officers are appointed for an indefinite term serving
at the pleasure of the Board.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Gene W. Schneider.................... 73 Chairman of the Board and Chief Executive Officer
Michael T. Fries..................... 37 Director and President
Mark L. Schneider.................... 44 Director; Chief Executive Officer of UPC and Chairman
of UPC's Board of Management
John F. Riordan...................... 57 Director; President of UPC and Vice Chairman of UPC's
Board of Management
Albert M. Carollo.................... 86 Director
John P. Cole, Jr..................... 70 Director
Lawrence J. DeGeorge................. 83 Director
Curtis W. Rochelle................... 84 Director
John C. Malone....................... 59 Director
Henry P. Vigil....................... 42 Director
Tina M. Wildes....................... 39 Director and Senior Vice President
</TABLE>
The number of members of UnitedGlobalCom's Board is currently fixed at 11.
UnitedGlobalCom's Second Restated Certificate of Incorporation provides for a
classified Board of Directors, which may have the effect of deterring hostile
takeovers or delaying changes in control or management of UnitedGlobalCom. For
purposes of determining their terms, directors are divided into three classes.
The Class I directors, whose terms expire at the 2000 annual stockholders'
meeting, include Messrs. Carollo, DeGeorge, and Mark L. Schneider. The Class II
directors, whose terms expire at the 2001 annual stockholders' meeting, include
Mr. Cole. The Class III directors, whose terms expire at the 2002 annual
stockholders' meeting, include Messrs. Riordan, Rochelle and Gene W. Schneider.
In October 1999, Messrs. Lawrence F. DeGeorge, Antony Ressler and Bruce Spector
resigned from the Board. The Board appointed Messrs. Michael T. Fries and John
C. Malone and Ms. Tina M. Wildes to the Board effective November 15, 1999, and
Mr. Hank Vigil to the Board effective March 8, 2000, each to serve until the
Meeting. On November 15, 1999, the Board also appointed Gregory P. Maffei as a
director. Mr. Maffei resigned in March 2000.
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<PAGE> 151
<TABLE>
<CAPTION>
Principal Occupation or Employment During Past Five Years,
Name Positions with UnitedGlobalCom and Certain Directorships
- ---- ----------------------------------------------------------
<S> <C>
</TABLE>
Gene W. Schneider......
Mr. Schneider has served as Chairman of the Board of
Directors of UnitedGlobalCom since its inception in May
1989 and was a director of United International Holdings,
a Colorado general partnership (the "Partnership"), from
September 1989 until its dissolution in December 1993. Mr.
Schneider has also served as UnitedGlobalCom's Chief
Executive Officer since October 1995, and served as
President from October 1997 until he relinquished the
title in September 1998. Since June 1999, Mr. Schneider
has also served as a director of Austar United
Communications Limited, a majority-owned subsidiary of
UnitedGlobalCom ("Austar United"). Mr. Schneider served as
a member of the Supervisory Board of UPC from July 1995
until February 1999, when he became an adviser to the
Board. From May 1989 until its merger with TCI in November
1991, Mr. Schneider served as Chairman of United Artists
Entertainment Company ("United Artists"), then the third
largest cable television company and the largest theater
owner in the world. He was a founder of United Cable
Television Corporation ("United Cable") in the early 1950s
and, as its Chairman and Chief Executive Officer, helped
build United Cable into the eighth-largest multiple system
operator in the United States prior to its merger with
United Artists in 1989. He has been active in cable
television affairs and has served on the Board of the
National Cable Television Association ("NCTA"), and on
numerous committees and special projects thereof, since
the NCTA's inception in the early 1950s. Mr. Schneider is
one of the original inductees into the NCTA's Cable
Television Pioneers. Mr. Schneider is an adviser to the
Supervisory Boards of UPC and chello broadband and the
Chairman of the Board of Advance Display Technologies,
Inc.
Michael T. Fries.......
Mr. Fries became a director of UnitedGlobalCom in November
1999 and has served as its President and as a member of
the UPC Supervisory Board since September 1998 and as
Chairman of the UPC Supervisory Board since February 1999.
He has also served as President and Chief Executive
Officer of United Asia/Pacific Communications, Inc., a
wholly-owned subsidiary of UnitedGlobalCom ("UAP"), since
June 1995 and December 1995, respectively, and Executive
Chairman of Austar United, since June 1999. In addition,
since September 1998, Mr. Fries has served as the
President of United Latin America, Inc., a wholly-owned
subsidiary of UnitedGlobalCom ("ULA"). In January 2000, he
became a member of the chello broadband Supervisory Board.
From March 1990 to June 1995, Mr. Fries served as Senior
Vice President, Development, in which capacity he was
responsible for managing UnitedGlobalCom's acquisitions
and new business development activities, including its
expansion into the Asia/Pacific, Latin America and
European markets.
Mark L. Schneider......
Mr. Schneider has been a director of UnitedGlobalCom since
April 1993. From December 1996 until December 1999, he
also served as Executive Vice President of
UnitedGlobalCom. In April 1997, Mr. Schneider also became
Chief Executive Officer of UPC and Chairman of its Board
of Management, and in March 1998 he also became Chairman
of the Supervisory Board of chello broadband. From April
1997 to September 1998, he served as President of UPC, and
from May 1996 to December 1996, he served as the Chief of
Strategic Planning and Operations
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<PAGE> 152
Oversight for UnitedGlobalCom. Mr. Schneider served as
President of UnitedGlobalCom from July 1992 to June 1995,
and as Senior Vice President of UnitedGlobalCom from May
1989 to July 1992. He also worked as a consultant for
UnitedGlobalCom from June 1995 to May 1996. Mr. Schneider
is also a director of Advance Display Technologies, Inc.
John F. Riordan........
Mr. Riordan has been a director of UnitedGlobalCom since
March 1998. Mr. Riordan became Vice Chairman of UPC's
Board of Management in September 1998 and President of UPC
in June 1999. Mr. Riordan has also served on the
Supervisory Board of chello broadband since September 1998
and as a director of Austar United since June 1999. From
March 1998 to June 1999, he served as Executive Vice
President of UPC, and from September 1998 to June 1999, he
served as President of Advanced Communications for UPC,
where he oversaw the implementation of UPC's Internet/data
services and digital distribution network. From 1992 to
November 1998, Mr. Riordan served as Chief Executive
Officer of Princes Holdings Limited, a multi-channel
television operating company in Ireland in which
UnitedGlobalCom held a 20% interest until its sale in
November 1998.
Albert M. Carollo......
Mr. Carollo has been a director of UnitedGlobalCom since
April 1993 and was a director of the Partnership from
December 1990 until its dissolution in December 1993. Mr.
Carollo is the Chairman of Sweetwater Television Company,
a cable television company, and served as its President
from 1955 until 1997. Mr. Carollo served as a director of
United Artists from December 1988 until its merger with
TCI in November 1991 and as a director of United Cable
from 1974 until its merger with United Artists in 1989.
John P. Cole, Jr.......
Mr. Cole has been a director of UnitedGlobalCom since
March 1998, and became a member of the Supervisory Board
of UPC in February 1999. Also, in January 2000, he became
a member of the Supervisory Board of chello broadband. Mr.
Cole has practiced law in Washington, D.C. since 1956 and
has been counsel over the years in many landmark
proceedings before the Federal Communications Commission,
reflecting the development of the cable industry. In 1966,
he founded the law firm of Cole, Raywid & Braverman, a
firm specializing in all aspects of telecommunications and
media law.
Lawrence J. DeGeorge...
Mr. DeGeorge has been a director of UnitedGlobalCom since
April 1993 and was a director of the Partnership from
September 1989 until its dissolution in December 1993. Mr.
DeGeorge served as Chairman of the Board and Chief
Executive Officer of Amphenol Corporation, a major
international manufacturer of electrical, electronic and
fiber-optic connectors, cable and cable assemblies, from
May 1987 until its sale in May 1997. Mr. DeGeorge also
served as the Chief Executive Officer of Amphenol
Corporation's subsidiary, Times Fiber Television
Communications, Inc., a major U.S. manufacturer of coaxial
cable for the cable television industry, from 1985 until
the sale of Amphenol Corporation.
Curtis W. Rochelle.....
Mr. Rochelle has been a director of UnitedGlobalCom since
April 1993 and was a director of the Partnership, from
September 1989 until its dissolution in December 1993. He
is a rancher in Rawlins, Wyoming, and the
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<PAGE> 153
owner of Rochelle Livestock. Mr. Rochelle served as a
director of United Artists from December 1988 until its
merger with Telecommunications, Inc. ("TCI") in November
1991 and as a director of United Cable from 1974 until its
merger with United Artists in 1989.
John C. Malone.........
Mr. Malone has been a director of UnitedGlobalCom since
November 1999. He is the Chairman of Liberty Media
Corporation ("Liberty"), a producer and distributor of
entertainment, sports, informational programming and
electronic retailing services. From 1996 to 1999 he served
as Chairman of TCI and from 1994 to 1999 as Chief
Executive Officer of TCI. Mr. Malone served as Chief
Executive Officer from 1992 to 1994 and as President from
1993 to 1994 of TCI Communications, Inc. He is also a
director of AT&T Corporation, The Bank of New York, @ Home
Corporation, TCI Satellite Entertainment, Inc., USANi LLC,
Black Entertainment Television Holdings II, and Cendant
Corporation.
Henry P. Vigil.........
Mr. Vigil became a director of UnitedGlobalCom in March
2000. He is the Vice President, Consumer Strategy and
Partnerships, of Microsoft Corporation ("Microsoft"), a
computer software company, a position he has held since
January 1999. At Microsoft he is responsible for
developing consumer strategies, managing strategic
engagements with consumer electronics companies and
developing consumer platforms and consumer services. From
January 1997 to January 1999, Mr. Vigil served as the
Senior Director of Strategy Planning and Business
Development for the Digital Television Group at Microsoft
where he was responsible for the development of
Microsoft's digital TV strategy. From September 1995 to
January 1997, he served as the General Manager of
Microsoft's Internet Commerce Business and Interactive
Television Units.
Tina M. Wildes.........
Ms. Wildes has been a director of UnitedGlobalCom since
November 1999 and the Senior Vice President of Development
Oversight and Administration of UnitedGlobalCom since May
1998. She has also served as a member of the Supervisory
Board of UPC since February 1999. In January 2000, she
also became a member of the Supervisory Board of chello
broadband. From October 1997 until May 1998, Ms. Wildes
served as Senior Vice President of Programming for
UnitedGlobalCom. From December 1993 until October 1997,
Ms. Wildes served as a Regional Vice President of
UnitedGlobalCom's Latin American region. Prior to that
time, from 1988, Ms. Wildes served as either a director or
vice president of development, programming and operations,
for several of UnitedGlobalCom's European operating
entities.
Gene W. Schneider is the father of Mark L. Schneider and Tina Wildes who
are brother and sister. No other family relationships exist between any other
named executive officer or director of UnitedGlobalCom.
Other Key Employees
The following lists other officers who are not executive officers of
UnitedGlobalCom but who make significant contributions to UnitedGlobalCom and
its subsidiaries:
<TABLE>
<CAPTION>
Principal Occupation or Employment During Past Five Years,
Name Positions with UnitedGlobalCom and Certain Directorships
- ---- ----------------------------------------------------------
<S> <C>
</TABLE>
James Clark............
Mr. Clark, 45, became Vice President, Regional Operations,
of UnitedGlobalCom May 1, 1999, where he oversees all
operations in Asia/Pacific
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<PAGE> 154
and Latin America. Mr. Clark has also served as a Vice
President of UAP since August 1999 and of ULA since June
1999. Prior to his current positions he served as the
Regional Manager for Austar Entertainment Pty Limited,
which is a wholly-owned subsidiary of the Company, from
1997 to May 1999. From January 1996 to 1997, Mr. Clark
served as Satellite Operations Manager at Austar
Entertainment Pty Limited where he was responsible for
launching direct broadcast satellite service in rural
Australia. Prior to joining Austar Entertainment Pty
Limited, from 1990 to 1995, Mr. Clark served as Regional
Vice President for The Disney Channel where he managed
sales and marketing in eight mid-west states serving over
1,000,000 subscribers.
Valerie L. Cover.......
Ms. Cover, 43, has served as the Controller for
UnitedGlobalCom since October 1990 and as a Vice President
of UnitedGlobalCom since December 1996. Ms. Cover is
responsible for the accounting, financial reporting and
information technology functions of UnitedGlobalCom. Prior
to joining UnitedGlobalCom, she was the Director of
Corporate Accounting at United Artists from May 1989 until
October 1990 and Manager of Financial Reporting at United
Cable from June 1986 until May 1989.
John C. Porter.........
Mr. Porter, 42, has served as the Chief Executive Officer
and a director of Austar United since June 1999 and as the
Managing Director of Austar Entertainment Pty Limited, a
wholly-owned subsidiary of UnitedGlobalCom, from July 1997
to December 1999. In these positions, Mr. Porter is senior
operating liaison for telecommunications projects in the
Asia/Pacific region. From January 1997 to August 1999, he
also served as the Chief Operating Officer of UAP. From
1995 until January 1997, Mr. Porter served as the Chief
Operating Officer for Austar Entertainment Pty Limited,
where he was responsible for the design and deployment of
such company's multi-channel multi-point distribution
system/satellite/ cable television network. Prior to
joining Austar Entertainment Pty Limited, Mr. Porter
served as the President of the Ohio Division of Time
Warner, Inc., which had over 250,000 cable customers.
Ellen P. Spangler......
Ms. Spangler, 51, has served as Senior Vice President of
Business and Legal Affairs and Secretary of
UnitedGlobalCom since December 1996. She also became a
member of the Supervisory Board of UPC in February 1999.
Ms. Spangler is responsible for the legal operations of
UnitedGlobalCom. Prior to assuming her current positions,
since February 1991, she served as a Vice President of
UnitedGlobalCom and her responsibilities included business
and legal affairs, programming and assisting on
development projects.
Blas Tomic.............
Mr. Tomic, 50, became the President of VTR GlobalCom S.A.
(f/k/a VTR Hipercable S.A.), a wholly-owned subsidiary of
UnitedGlobalCom ("VTR"), in April 1999. From 1994 to l999,
Mr. Tomic served as Executive Member of the board of VTR,
Cia. Nacional de Telfonos and Cia. Telfonos de Coyhaique
S.A. During 1996 and 1997, Mr. Tomic served as Executive
Member of the board of CTC-VTR Comunicaciones Moviles S.A.
Mr. Tomic has also represented the Government of Chile,
Ministry of Finance, in the United States and served as
executive director of, and Chilean representative at, the
Inter-American Development Bank.
A-11
<PAGE> 155
Frederick G.
Westerman............
Mr. Westerman, 34, became Chief Financial Officer of
UnitedGlobalCom in June 1999. His responsibilities include
oversight and planning of UnitedGlobalCom's financial and
treasury operations. He also serves as Vice President of
UAP and of ULA. From December 1997 to June 1999, Mr.
Westerman served as Treasurer for EchoStar Communications
Corporation where he was responsible for strategic
planning, financial analysis, treasury operations, risk
management, corporate budgeting and institutional investor
relations. From June 1993 to September 1997, Mr. Westerman
served as Vice President of Equity Research for UBS
Securities LLC (a subsidiary of Union Bank of Switzerland)
where he was responsible for primary research coverage of
cable television and satellite communications and
secondary coverage of media and entertainment.
Committees and Meetings
UnitedGlobalCom has an Audit Committee and a Compensation Committee. There
is no standing nomination committee of the Board.
Audit Committee. The members of the Audit Committee are Messrs. Carollo,
Cole and DeGeorge. The Audit Committee is charged with reviewing and monitoring
UnitedGlobalCom's financial reports and accounting practices to ascertain that
they are within acceptable limits of sound practice, to receive and review audit
reports submitted by UnitedGlobalCom's independent auditors and to make such
recommendations to the Board as may seem appropriate to the Audit Committee to
assure that the interests of UnitedGlobalCom are adequately protected and to
review all related party transactions and potential conflict-of-interest
situations. The Audit Committee of UnitedGlobalCom held one meeting during the
year ended December 31, 1999.
Compensation Committee. The members of the Compensation Committee (the
"Committee") during the year ended December 31, 1999, were Messrs. Carollo,
Cole, DeGeorge, Malone (since his appointment in November 1999) and Rochelle.
Mr. Vigil became a member of the Committee in March 2000. Also, former directors
Lawrence F. DeGeorge, Antony Ressler and Bruce Spector were members of the
Committee until their resignations in October 1999. The Committee held four
meetings during 1999. The Committee administers UnitedGlobalCom's employee stock
option plans, and in this capacity approves all option grants to UnitedGlobalCom
executive officers and management under the Employee Plan. It also makes
recommendations to the Board of Directors with respect to the compensation of
the Chairman of the Board and Chief Executive Officer and approves the
compensation paid to other senior executives.
A-12
<PAGE> 156
SCHEDULE II
OPINION OF DONALDSON, LUFKIN & JENRETTE INTERNATIONAL
DONALDSON, LUFKIN & JENRETTE
DONALDSON, LUFKIN & JENRETTE INTERNATIONAL
99 BISHOPSGATE, LONDON EC2M 3YF
TELEPHONE: 0207 655 7000
March 9, 2000
Board of Directors
SBS Broadcasting S.A.
8-10 Rue Mathias Hardt
L-1717 Luxembourg
Dear Sirs:
You have requested our opinion as to the fairness from a financial point of
view to the shareholders of SBS Broadcasting S.A. (the "Company") (other than to
shareholders who are affiliates of the Company, including the Parent (as defined
below)) of the consideration to be received by such shareholders pursuant to the
terms of the Exchange Offer Agreement to be dated as of March 9, 2000 (the
"Agreement") between United Pan-Europe Communications N.V. ("Parent") and the
Company.
Pursuant to the Agreement, Parent will commence an exchange offer for any
and all outstanding common shares of the Company (other than common shares owned
by Parent) for $40 per share in cash and 0.19408 ordinary shares A of Parent
subject to a collar as described in the Agreement (the "Parent Shares") for each
common share of the Company (the "Consideration") pursuant to an exchange offer
(the "Offer").
In arriving at our opinion, we have reviewed the draft dated March 8, 2000
of the Agreement. We also have reviewed financial and other information that was
publicly available or furnished to us by the Company and Parent including
information provided during discussions with their respective managements.
Included in the information provided during discussions with the respective
managements were certain financial projections of the Company prepared by the
management of the Company and certain financial projections of Parent prepared
by certain industry research analysts, which we discussed with the management of
Parent. In addition, we have compared certain financial and securities data of
the Company and Parent with various other companies whose securities are traded
in public markets, reviewed the historical stock prices and trading volumes of
the shares of the Company and Parent, reviewed prices and premiums paid in
certain other business combinations and conducted such other financial studies,
analyses and investigations as we deemed appropriate for purposes of this
opinion. We were not requested to, nor did we, solicit the interest of any other
party in acquiring the Company or any of its assets.
In rendering our opinion, we have relied upon and assumed the accuracy and
completeness of all of the financial and other information that was available to
us from public sources, that was provided to us by the Company and Parent or
their respective representatives, or that was otherwise reviewed by us. With
respect to the financial projections of the Company reviewed by us, we have
relied on representations that they have been reasonably prepared on the basis
reflecting the best currently available estimates and judgments of the
management of the Company as to the future operating and financial performance
of the Company. With respect to the financial projections of Parent referred to
above, we have relied on representations that they are not materially different
from the best currently available estimates and judgments of the management of
Parent as to the
REGISTERED BY THE SECURITIES AND FUTURES AUTHORITY LIMITED
REGISTERED IN ENGLAND AND WALES: 2475089
B-1
<PAGE> 157
future operating performance of Parent. We have not assumed any responsibility
for making an independent evaluation of any assets or liabilities or for making
any independent verification of any of the information reviewed by us. We have
relied as to certain legal matters on advice of counsel to the Company.
Our opinion is necessarily based on economic, market, financial and other
conditions as they exist, and on the information made available to us as of, the
date of this letter. It should be understood that, although subsequent
developments may affect this opinion, we do not have any obligation to update,
revise or reaffirm this opinion. We are expressing no opinion herein as to the
prices at which Parent Shares will actually trade at any time. Our opinion does
not address the relative merits of the proposed transaction and other business
strategies being considered by the Company's Board of Directors, nor does it
address the Board's decision to proceed with the proposed transaction. Our
opinion does not constitute a recommendation to any shareholder as to whether or
not such shareholder should tender its shares in the Offer.
Donaldson, Lufkin & Jenrette International ("DLJI"), as part of its
investment banking services, is regularly engaged in the valuation of businesses
and securities in connection with mergers, acquisitions, underwritings, sales
and distributions of listed and unlisted securities, private placements and
valuations for corporate and other purposes. DLJI and its affiliates have
performed investment banking and other services for the Company and Parent in
the past and has been compensated for such services. For example, DLJI has acted
or is acting as lead or co-managing underwriter for Parent, the Company and
their respective affiliates on numerous recent offerings of notes and equity
securities. Certain affiliates of DLJI in the aggregate own less than two
percent of SBS Broadcasting S.A. and less than one percent of United Pan-Europe
Communications N.V.
Based upon the foregoing and such other factors as we deem relevant, we are
of the opinion that the consideration to be received by the shareholders of the
Company pursuant to the Offer is fair to such shareholders (other than to
shareholders who are affiliates of the Company, including Parent) from a
financial point of view.
Very truly yours
DONALDSON LUFKIN & JENRETTE
INTERNATIONAL
By: /s/ LEE A. LE BRUN
------------------------------------
Lee A. Le Brun
Senior Vice President
B-2
<PAGE> 158
Photocopies of the Letter of Transmittal, properly completed and duly
executed, will be accepted. The Letter of Transmittal, Certificates for SBS
shares and any other required documents should be sent or delivered by each
shareholder of SBS or such shareholder's broker, dealer, commercial bank, trust
company or other nominee to the exchange agent at one of its addresses set forth
below:
The Exchange Agent for the Exchange Offer is:
CITIBANK, N.A.
<TABLE>
<S> <C> <C>
By Hand: By Mail: By Overnight Courier:
CITIBANK, N.A. CITIBANK, N.A. CITIBANK, N.A.
C/O SECURITIES TRANSFER AND CORPORATE ACTIONS CORPORATE ACTIONS
REPORTING SERVICES INC. P.O. BOX 2544 SUITE 4660 -- 525 WASHINGTON BLVD.
ATTN: CORPORATE ACTIONS JERSEY CITY, N.J. 07303-2544 JERSEY CITY, N.J. 07303
100 WILLIAM STREET -- GALLERIA
NEW YORK, N.Y. 10038
For Information:
In the United States:
(877) 248-4237
In Europe:
+44-20-7986-2138
</TABLE>
Questions and requests for assistance may be directed to the information
agent or the Dealer Manager at their respective addresses and telephone numbers
listed below. Additional copies of this prospectus, the Letter of Transmittal
and other tender offer materials may be obtained from the information agent as
set forth below, and will be furnished promptly at UPC's expense. You may also
contact your broker, dealer, commercial bank, trust company or other nominee for
assistance concerning the exchange offer.
The Information Agent for the Exchange Offer is:
D.F. KING
<TABLE>
<S> <C>
UNITED STATES EUROPE
D.F. KING & CO., INC. D.F. KING (EUROPE) LIMITED
77 WATER STREET 2ND FLOOR, 2 LONDON WALL BUILDINGS
NEW YORK, NEW YORK 10005 LONDON WALL, LONDON EC2M 5PP
CALL TOLL FREE: (800) 769-4414 CALL COLLECT: +44 207 920 9700
CALL COLLECT: (212) 269-5550
</TABLE>
Banks and Brokerage Firms
Call Collect: (212) 269-5550
The Dealer Manager for the Exchange Offer is:
GOLDMAN, SACHS & CO.
85 BROAD ST.
NEW YORK, NEW YORK 10004
(212) 902-1000
<PAGE> 159
PART II.
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Pursuant to Netherlands law, each member of UPC's Supervisory Board and
Board of Management is responsible to UPC for the proper performance of his or
her assigned duties. UPC's articles of association provide that the adoption by
the general meeting of shareholders of the annual accounts shall discharge the
Supervisory Board and Board of Management from liability in respect of the
exercise of their duties during the financial year concerned unless an explicit
reservation is made by the general meeting of shareholders. This discharge of
liability may also be limited by mandatory provisions of Netherlands law, such
as in the case of bankruptcy, and furthermore extends only to actions or
omissions not disclosed in or apparent from the adopted annual accounts. In the
event of such actions or omissions, the members of the Supervisory Board or
Board of Management will be jointly and severally liable to third parties for
any loss sustained by such third parties as a result of such actions or
omissions, unless the Supervisory Board or Board of Management member proves
that he or she is not responsible for the actions or omissions. Generally, under
Netherlands law, directors will not be held personally liable for decisions
based on reasonable business judgment.
Under UPC's articles of association, UPC must indemnify any person who is
or has been a member of UPC's supervisory board or management board and who,
either because he or she has served as a member of the supervisory board or
management board or as an officer, employee or agent of UPC, becomes a party to
any legal proceeding, whether civil, criminal, administrative or investigative
(other than a legal proceeding in or by or on behalf of UPC). UPC must indemnify
each of these persons against all expenses (including legal fees), judgments and
other amounts reasonably incurred in connection with the legal proceeding,
provided that he or she acted in good faith in carrying out his or her duties
and in a manner that he or she reasonably believed to be in, or not opposed to,
the best interest of UPC. In a criminal proceeding, an indemnified person must
have had no reasonable cause to believe that his or her conduct was unlawful or
outside his or her mandate.
UPC's articles of association also require UPC to indemnify persons
entitled to indemnification (as described in the previous paragraph) in legal
proceedings in or by or on behalf of UPC against all expenses (including legal
fees), judgments and other amounts reasonably incurred in connection with the
legal action if he or she acted in good faith in carrying out his or her duties
and in a manner that he or she reasonably believed to be in, or not opposed to,
the best interest of UPC. This indemnification will generally not apply if the
person seeking indemnification is found to have acted with gross negligence or
with intentional failure (opzettelijk tekortschieten) in the performance of his
or her duty to UPC, unless the court in which the action is brought determines
that indemnification is otherwise fair and reasonable.
Under UPC's articles of association, UPC can only indemnify a person upon a
determination that indemnification is proper under the circumstances. This
determination is made by a decision of the supervisory board adopted by a
majority of the votes cast by members of the supervisory board who are not
parties to the legal action, unless the entire supervisory board is named in the
legal action or if the supervisory board directs, in which case the
determination is made by independent legal counsel in a written opinion.
Alternatively, this determination can be made by the general meeting of
shareholders.
UPC may, if authorized by the supervisory board, purchase insurance on
behalf of any member of the supervisory board or management board or any
officer, employee or agent of UPC to cover any liability incurred by a person in
connection with his or her service to UPC.
II-1
<PAGE> 160
ITEM 21. EXHIBITS AND FINANCIAL DATA SCHEDULES.
(a) The following is a complete list of Exhibits filed as part of this
Registration Statement, which are incorporated herein:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
2.1 Exchange Offer Agreement, dated as of March 9, 2000, between
UPC and SBS Broadcasting S.A.
2.2 Letter Agreement, dated as of April 11, 2000, by and between
UPC and SBS amending the Exchange Offer Agreement.
2.3 Share Exchange Agreement, dated as of March 9, 2000, between
UPC and each of the several shareholders listed on the
signature page thereof.
3.1 Amended and Restated Articles of Association of UPC
(incorporated herein by reference to Exhibit 3.1 from UPC's
Amendment No. 1 to Registration Statement on Form S-1 filed
September 23, 1999 (File No. 333-84427)).
3.2 Amendment to the Articles of Association of UPC dated March
17, 2000 (incorporated herein by reference to Exhibit 3.1
from UPC's Form 8-K filed March 17, 2000 (File No.
000-25365)).
4.1 Amended and Restated Deposit Agreement, dated as of October
25, 1999, by and among UPC, Citibank N.A., as Depositary,
and the Holders and Beneficial Owners of ADSs evidenced by
the ADRs issued thereunder (incorporated herein by reference
to Exhibit (a) from UPC's Post-Effective Amendment No. 1 to
Form F-6 filed October 14, 1999 (File No. 333-9850)).
5.1 Opinion of Clifford Chance Limited Liability Partnership,
Netherlands counsel to UPC, regarding the validity of the
UPC ordinary shares A.
8.1 Opinion of Clifford Chance Limited Liability Partnership,
Netherlands counsel to UPC, regarding certain Netherlands
tax matters.
10.1 Letter Agreement, dated as of March 9, 2000, by and between
Harry Evans Sloan and UPC.
10.2 Letter Agreement, dated as of March 9, 2000, by and between
Howard A. Knight and UPC.
10.3 Letter Agreement, dated as of March 9, 2000, by and between
Michael Finkelstein and UPC.
10.4 Letter Agreement, dated as of March 9, 2000, by and between
Martin Lindskog and UPC.
23.1 Consent of Arthur Andersen (UPC).
23.2 Consent of Arthur Andersen (United TeleKabel Holding N.V.).
23.3 Consent of Arthur Andersen (ENECO KabelTV and Telecom
Group).
23.4 Consent of Ernst & Young, Statsautoriseret
Revisionsaktieselskab (SBS).
23.5 Consent of KPMGPolska Sp.z o.o (@Entertainment, Inc.).
23.6 Consent of Ernst & Young AB (NBS Nordic Broadband Services
AB).
23.7 Consent of PricewaterhouseCoopers (Singapore Telecom
International Svenska AB)
23.8 PricewaterhouseCoopers Auditing Standards Letter.
23.9 Consent of ATAG Ernst & Young Ltd. (TV3 Ltd., Schlieren).
23.10 Consent of Clifford Chance Limited Liability Partnership,
Netherlands counsel to UPC (contained in Exhibit 5.1).
</TABLE>
II-2
<PAGE> 161
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
23.11 Consent of Clifford Chance Limited Liability Partnership,
Netherlands counsel to UPC (contained in Exhibit 8.1).
23.12 Consent of Donaldson, Lufkin & Jenrette International, SBS's
Financial Adviser.
24.1 Power of Attorney.
99.1 Form of Letter of Transmittal.*
99.2 Form of Notice of Guaranteed Delivery.*
99.3 Form of Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and other Nominees.*
99.4 Form of Letter to Clients for use by Brokers, Dealers,
Commercial Banks, Trust Companies and other Nominees.*
99.5 Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.*
99.6 Opinion of Donaldson, Lufkin & Jenrette International, SBS's
Financial Adviser (included as Schedule II to the
Prospectus).
99.7 Press Release issued by UPC on March 9, 2000 (incorporated
herein by reference to Exhibit 99.1 from UPC's Form 8-K
filed March 13, 2000 (File No. 000-25365)).
99.8 Press Release issued by UPC on April 11, 2000 (incorporated
herein by reference to Exhibit 99.1 from UPC's Form 8-K
filed April 18, 2000 (File No. 000-25365)).
</TABLE>
- ---------------
* To be filed by amendment.
(b) Financial Statement Schedules.
None.
ITEM 22. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended (the "Securities Act");
(ii) To reflect in the prospectus any facts or event arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in
the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the
II-3
<PAGE> 162
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act that is incorporated by reference in the registration statement
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person against the Registrant in connection
with the securities being registered, the Registrant will, unless, in the
opinion of its counsel, the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
(d) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference in the prospectus pursuant to
Items 4, 10(b), 11, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to this request.
(e) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-4
<PAGE> 163
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in London, England, on this 12th day of May, 2000.
UNITED PAN-EUROPE COMMUNICATIONS N.V.,
a Netherlands public limited liability
company
By: /s/ CHARLES H.R. BRACKEN
------------------------------------
Name: Charles H.R. Bracken
Title: Board of Management Member
and Chief Financial Officer
<PAGE> 164
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has caused this Registration Statement to be signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
* Chairman of Board of Management May , 2000
- --------------------------------------------------- and Chief Executive Officer
Mark L. Schneider
* Board of Management Member and May , 2000
- --------------------------------------------------- President
John F. Riordan
/s/ CHARLES H.R. BRACKEN Board of Management Member and May , 2000
- --------------------------------------------------- Chief Financial Officer
Charles H. R. Bracken
* Board of Management Member, May , 2000
- --------------------------------------------------- Managing Director, Eastern
Nimrod J. Kovacs Europe and Executive Chairman,
UPC Central Europe
* Board of Management Member and May , 2000
- --------------------------------------------------- General Counsel
Anton M. Tuijten
* Managing Director, Finance and May , 2000
- --------------------------------------------------- Accounting (Chief Accounting
Ray D. Samuelson Officer)
* Chairman of Supervisory Board May , 2000
- --------------------------------------------------- and Authorized U.S.
Michael T. Fries Representative
* Supervisory Director May , 2000
- ---------------------------------------------------
John P. Cole
Supervisory Director May , 2000
- ---------------------------------------------------
Richard De Lange
* Supervisory Director May , 2000
- ---------------------------------------------------
Ellen P. Spangler
* Supervisory Director May , 2000
- ---------------------------------------------------
Tina M. Wildes
*By /s/ CHARLES H.R. BRACKEN
---------------------------------------------
Charles H.R. Bracken,
Attorney-in-fact
</TABLE>
<PAGE> 1
EXHIBIT 2.1
EXCHANGE OFFER AGREEMENT
BETWEEN
UNITED PAN-EUROPE COMMUNICATIONS N.V.
AND
SBS BROADCASTING S.A.
Dated as of March 9, 2000
<PAGE> 2
EXCHANGE OFFER AGREEMENT
EXCHANGE OFFER AGREEMENT (this "AGREEMENT"), dated as of March
9, 2000, by and between United Pan-Europe Communications N.V., a public limited
liability company (naamloze vennootschap) organized and existing under the laws
of The Netherlands ("PURCHASER") and SBS Broadcasting S.A., a public limited
liability corporation (societe anonyme) organized and existing under the laws of
Luxembourg (the "COMPANY"). Capitalized terms have the meanings ascribed to them
throughout this Agreement or in Section 9.11 of this Agreement.
W I T N E S S E T H :
WHEREAS, each of the Board of Supervisory Directors and the
Board of Managing Directors of Purchaser and the Board of Directors of the
Company have determined that this Agreement and the transactions contemplated
hereby are advisable and fair to, and in the best interests of, each corporation
and its respective shareholders in order to promote the long term strategic
interest of each of them;
WHEREAS, the Board of Directors of the Company has adopted
resolutions approving this Agreement and the transactions contemplated hereby,
including the Offer (as defined herein), and has agreed to recommend that the
Company's shareholders accept the Offer and tender their Shares (as defined in
the "Definitions" section) in the Offer;
WHEREAS, the shares of common stock of the Company are listed
on the AEX-Stock Exchange and on NASDAQ, and the Ordinary Shares A of Purchaser
are listed on the Amsterdam Stock Exchange and American Depositary Shares
representing Ordinary Shares A of Purchaser are listed for quotation on the
NASDAQ National Market;
WHEREAS, the Company is a "foreign private issuer" as such
term is defined in Rule 3b-4(c) under the Exchange Act;
WHEREAS, Purchaser holds as of the date of this Agreement
6,000,000 Shares representing approximately 18% of the Shares on a fully-diluted
basis;
WHEREAS, Purchaser intends to commence an offer for all of the
Shares, including an offer in the United States for Shares held by U.S. holders;
WHEREAS, as a condition and inducement to Purchaser's
willingness to enter into this Agreement, Purchaser and certain holders of
Shares are simultaneously entering into Share Exchange Agreements pursuant to
which such holders have agreed to tender their Shares in the Offer, subject to
the terms and conditions contained therein;
WHEREAS, Purchaser and the Company desire to make certain
representations, warranties, covenants and agreements in connection with this
Agreement.
NOW THEREFORE, in consideration of the mutual covenants and
agreements set forth herein, the parties hereto agree as follows:
<PAGE> 3
ARTICLE I THE OFFER 2
Section 1.01. The Exchange Offer 2
Section 1.02. Company Actions 7
Section 1.03. Shareholder Lists 8
Section 1.04. Directors 8
Section 1.05. Standstill Agreement 9
Section 1.06. Minority Buy-Out 9
ARTICLE II TREATMENT OF OPTIONS 9
Section 2.01. Treatment of Options 9
ARTICLE III PAYMENT FOR SHARES TENDERED 11
Section 3.01. Prompt Payment 11
Section 3.02. Transfer Taxes 11
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY 11
Section 4.01. Organization and Qualification 11
Section 4.02. Capitalization 12
Section 4.03. Authority for this Agreement 13
Section 4.04. Consents and Approvals; No Violation 13
Section 4.05. Reports; Financial Statements 14
Section 4.06. Absence of Certain Changes 15
Section 4.07. Schedule 14D-9 and Offer Documents 15
Section 4.08. Brokers 15
Section 4.09. Employee Benefit Matters 15
Section 4.10. Litigation, etc. 17
Section 4.11. Tax Matters 17
Section 4.12. Compliance with Law; No Default 18
Section 4.13. Intellectual Property 18
<PAGE> 4
Section 4.14. Title to Properties. Entire Business 18
Section 4.15. Convertible Notes and Warrant 18
Section 4.16 Foreign Private Issuer 19
Section 4.17. Material Contracts 19
Section 4.18. Related Party Transactions 19
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PURCHASER 19
Section 5.01. Organization and Qualification 19
Section 5.02. Authority for this Agreement 19
Section 5.03. Capitalization 20
Section 5.04. Reports; Financial Statements 20
Section 5.05. Absence of Certain Changes 21
Section 5.06. Litigation, etc 21
Section 5.07. Compliance with Law; No Default 21
Section 5.08. Offer Documents 22
Section 5.09. Consents and Approvals; No Violation 22
Section 5.10. Brokers 23
Section 5.11 Available Funds 23
ARTICLE VI COVENANTS 23
Section 6.01. Conduct of Business of the Company 23
Section 6.02. No Solicitation 26
Section 6.03. Access to Information 27
Section 6.04. Reasonable Best Efforts 28
Section 6.05. Legal Challenges 28
Section 6.06. Notification of Certain Matters 28
Section 6.07. Press Releases 29
<PAGE> 5
Section 6.08. Cross-Media Ownership 29
Section 6.09. Accountants' Comfort Letters 29
Section 6.10. Indemnification; Directors' and Officers' Insurance 29
ARTICLE VII INTENTIONALLY LEFT BLANK 30
ARTICLE VIII TERMINATION; AMENDMENT; WAIVER 30
Section 8.01. Termination 30
Section 8.02. Effect of Termination 31
Section 8.03. Fees and Expenses 31
Section 8.04. Amendment 32
Section 8.05. Extension; Waiver; Remedies 33
ARTICLE IX MISCELLANEOUS 33
Section 9.01. Survival of Representations and Warranties 33
Section 9.02. Entire Agreement; Assignment 33
Section 9.03. Enforcement of the Agreement; Jurisdiction 33
Section 9.04. Validity 34
Section 9.05. Notices 34
Section 9.06. Governing Law 36
Section 9.07. Descriptive Headings 36
Section 9.08. Parties in Interest 36
Section 9.09. Counterparts 36
Section 9.10 Adjustment to Purchaser Shares 36
Section 9.11. Certain Definitions 37
EXHIBIT A CONDITIONS TO THE OFFER 42
<PAGE> 6
ARTICLE I
THE OFFER
SECTION 1.01. THE EXCHANGE OFFER.
(a) (i) Provided that this Agreement shall not have been
terminated in accordance with Section 8.01 and that none of the events
set forth in EXHIBIT A hereto shall have occurred or be existing,
Purchaser shall as promptly as practicable after the declaration by the
U.S. Securities and Exchange Commission (the "SEC") that the
Registration Statement to be filed by Purchaser on Form S-4 relating to
Ordinary Shares A (including American Depositary Shares representing
such Ordinary Shares A) to be issued by Purchaser (the "PURCHASER
SHARES") in the Offer (the "FORM S-4"), has become effective, commence
(within the meaning of Rule 14d-2 under the Exchange Act) an exchange
offer (the "OFFER") for all the Shares at a per-share consideration
consisting of US$40 of cash and the Number of Purchaser Shares (as
defined below) and Additional Cash (as defined below) ("OFFER PRICE").
No holder of Shares shall be entitled to receive fractional Purchaser
Shares, and if any such holder would otherwise be so entitled, then
such holder will receive cash without interest in lieu of such
fractional share, determined by multiplying the fractional interest in
Purchaser Shares to which such holder would otherwise be entitled
(after taking into account all Shares of the Company then held of
record by such holder) by the closing sale price of a Purchaser Share
as reported on NASDAQ on the Closing Date.
(ii) The "NUMBER OF PURCHASER SHARES" will be determined
as follows:-
(A) If the average closing sale price of Purchaser Shares on
NASDAQ for the 10 trading days prior to the Consideration Calculation
Date (as defined below) (the "AVERAGE PRICE") is equal to or greater
than US$210 but less than US$241.50 then there will be no Additional
Cash (as defined below) and the Number of Purchaser Shares per Share
will equal 0.1904762 per Share (the "INITIAL EXCHANGE RATIO")
(B) If the Average Price is equal to or greater than
US$241.50 then there will be no Additional Cash and the Number of
Purchaser Shares per Share will equal the result of US$46 divided by
the Average Price.
(C) If the Average Price is less than US$210 but more than
US$168 then there will be no Additional Cash and the Number of
Purchaser Shares per Share will equal the result of US$40 divided by
the Average Price.
(D) If the Average Price is equal to or less than US$168 but
greater than US$147 then there will be no Additional Cash and the
Number of Purchaser Shares per Share will be equal to an amount
calculated as follows: ($40 - ($168 - Average Price) x 0.119047619)
divided by the Average Price.
(E) If the Average Price is equal to or less than US$147 then
the Number of Purchaser Shares per Share will be 0.255102 (the "SECOND
EXCHANGE RATIO") plus a mixture of additional Purchaser Shares and
additional cash ("ADDITIONAL CASH")
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<PAGE> 7
determined by the Purchaser which mixture has, together with the
0.255102 Purchaser Shares, an aggregate value (calculating the part (if
any) comprised of Purchaser Shares at the Average Price) equal to
US$37.50.
If the Purchaser has a choice pursuant to Section
1.01(a)(i)(E)) to issue Purchaser Shares or pay Additional Cash it will
give notice to the Company of its choice.
The term "CONSIDERATION CALCULATION DATE" means the
third US Business Day prior to the commencement date of the Offer.
The term "EXCHANGE RATIO" means the number of Purchaser
Shares issued in respect of each Share expressed as a decimal after
taking account of all the adjustments required pursuant to Section
1.01(a)(i) and 1.01(a)(ii).
Notwithstanding the foregoing, if the average closing
sale price for Purchaser Shares on NASDAQ for any consecutive period of
ten trading days after the date hereof and prior to the Consideration
Calculation Date is equal to or less than US$147 (a "TRIGGER EVENT")
then the Purchaser may within two US Business Days following the end of
that period of the first occasion on which that event occurs elect by
giving notice to the Company to treat this Agreement as terminated and
if the Purchaser does not do so within such period it will not
thereafter be entitled to do so on any subsequent Trigger Event.
(iii) A three-for-one share split (the "SHARE SPLIT") of
Purchaser Shares is proposed to take effect following an affirmative
vote of the shareholders of Purchaser at an extraordinary general
meeting scheduled for March 13, 2000. Should the Share Split be
effected, then following the Share Split, the Initial Exchange Ratio,
the Second Exchange Ratio and the number 0.119047619 in Section
1.01(ii)(D) will be adjusted by multiplying them by three and the
various prices for Purchaser Shares of US$210, US$241.50, US$168, and
US$147 set out in Section 1.01(a)(ii) will be divided by three, and any
other terms of this Agreement, including the formula set forth in
Section 1.01(a)(ii)(D), will be adjusted appropriately to give effect
to the Share Split.
(iv) Company shareholders validly accepting the Offer may
elect to receive more cash than they would otherwise be entitled
pursuant to the terms set out in Section 1.01(a)(i) and 1.01(a)(ii)
above (the "BASIC TERMS"). Such elections shall be satisfied in full if
sufficient cash is available as a result of other Company shareholders
accepting the Offer electing to receive additional Purchaser Shares and
thereby releasing cash to which they would otherwise be entitled under
the Basic Terms. If the amount of cash so made available is
insufficient to satisfy in full all elections for additional cash then
such elections shall be scaled down pro rata as nearly as practicable
and the balance of consideration shall be satisfied under the Basic
Terms. Company shareholders validly accepting the Offer may elect to
receive more Purchaser Shares than they would otherwise be entitled
pursuant to the Basic Terms. Such elections shall be satisfied in full
if sufficient Purchaser Shares are available as a result of other
accepting Company Shareholders electing to receive additional cash and
thereby releasing Purchaser Shares to which they would otherwise be
entitled under the Basic Terms. If the amount of Purchaser Shares so
made available is insufficient to satisfy in full all elections for
additional Purchaser Shares then such elections shall be scaled down
pro rata as nearly as
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<PAGE> 8
practicable and the balance of consideration shall be satisfied under
the Basic Terms (the elections in this paragraph are referred to as the
"MIX AND MATCH ELECTION"). The basis on which cash will be forgone for
Purchaser Shares pursuant to the Mix and Match Election and vice versa
will be determined by valuing Purchaser Shares at the Average Price.
Shareholders will forego cash for Purchaser Shares of equal value on
that basis and vice versa. In no event shall any Company shareholder be
entitled to receive as a result of the Mix and Match Election an
aggregate amount of cash and Purchaser Shares that exceeds in value at
the Average Price the Basic Terms. The Purchaser shall deposit the
amount of cash and Purchaser Shares payable pursuant to the Basic Terms
with an exchange agent or agents selected by Purchaser, with the
Company's prior approval, which shall not be unreasonably withheld (the
"EXCHANGE AGENT"), prior to or on the Closing Date. The Exchange Agent,
after consultation with Purchaser and the Company, shall make all
computations to give effect to this Section and will pay or distribute
to holders of record of Shares who have validly accepted the Offer
first the cash due to them and then on the same day the Purchaser
Shares promptly after the Closing Date.
(v) The obligation of Purchaser to consummate the Offer and
to accept for payment and to pay for any Shares tendered pursuant
thereto shall be subject to those conditions set forth in EXHIBIT A
hereto (the "OFFER CONDITIONS"), any of which may be waived by
Purchaser in its sole discretion. The initial expiration date of the
Offer shall be the twentieth (20th) U.S. Business Day following the
commencement of the Offer (determined in accordance with Rule
14d-1(g)(3) under the Exchange Act). Purchaser expressly reserves the
right to modify the terms of the Offer, except that, without the prior
written consent of the Company, Purchaser shall not (A) decrease the
Offer Price or change the form of the consideration payable in the
Offer, (B) decrease the number of Shares sought pursuant to the Offer,
(C) impose additional conditions to the Offer, (D) change the
conditions to the Offer (any of which may be waived by Purchaser in its
sole discretion) or (E) make any other change in the terms of the Offer
which is adverse to the holders of Shares.
(vi) Subject to the terms and conditions of this Agreement and
to the satisfaction or waiver of the Offer Conditions as of any
scheduled expiration of the initial offering period of the Offer,
Purchaser shall accept for payment and pay for Shares validly tendered
and not withdrawn pursuant to the Offer as soon as practicable after
such scheduled expiration, which, in the case of payment for Shares
listed on the AEX-Stock Exchange, shall occur three Amsterdam Exchange
Days after the expiration of the Offer. The date on which such
acceptance and payment shall first occur is referred to herein as the
"CLOSING DATE." Notwithstanding the foregoing, Purchaser may, without
the consent of the Company, (A) extend the initial offering period of
the Offer if at any scheduled expiration of the initial offering
period, any of the Offer Conditions has not been satisfied or waived,
(B) extend the Offer for any period required by any regulation of the
SEC or any foreign governmental regulatory authority applicable to the
Offer or (C) extend the Offer on one or more occasions (but not beyond
September 30, 2000) if on any expiration date permitted hereunder there
shall not have been validly tendered and not properly withdrawn prior
to such expiration that number of Shares which, together with any
Shares beneficially owned by Purchaser or any of its affiliates,
represents at least 90% of the total outstanding Shares on a
fully-diluted basis. Notwithstanding the foregoing, if requested by the
Company, Purchaser shall extend the initial offering period (i) for an
aggregate period of not more than 10 U.S. Business Days if at any
scheduled expiration
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<PAGE> 9
of the initial offering period any of the Offer Conditions have not
been satisfied or waived and all such conditions are reasonably capable
of being satisfied and (ii) for an aggregate period of not more than 15
U.S. Business Days if the Offer period has not been previously extended
and at the expiration of the initial Offer period, there shall not have
been validly tendered and not properly withdrawn prior to such
expiration that number of Shares which, together with any Shares
beneficially owned by Purchaser or any of its affiliates, represents at
least 90% of the total outstanding Shares on a fully-diluted basis. In
addition, the Offer Price may be increased and the Offer may be
extended to the extent required by any Applicable Law or Rule in
connection with such increase, in each case, without the consent of the
Company.
(b) If the Purchaser desires to make any pre-commencement
communication as contemplated under Rule 14d-2(b) under the Exchange
Act and in compliance with Rule 135 on Rule 165 under the Securities
Act, on the date of the pre-commencement communication, Purchaser shall
file or cause to be filed with the SEC such communication relating to
the Offer pursuant to Rule 425 under the Securities Act, and deliver to
the Company a copy of such communication. If the Company desires to
make any pre-commencement communication as contemplated under Rule
14d-9(a) under the Exchange Act and in compliance with Rule 135 or Rule
165 under the Securities Act, the Company shall file or cause to be
filed with the SEC such communication relating to the Offer pursuant to
Rule 425 under the Securities Act, and deliver to the Purchaser a copy
of such communication.
(c) On the date of commencement of the Offer in the United
States, Purchaser shall file or cause to be filed with the SEC a Tender
Offer Statement and Rule 13e-3 Transaction Statement on Schedule TO,
including all exhibits thereto (together with all amendments and
supplements thereto, a "SCHEDULE TO") with respect to the Offer which
will comply in all material respects with the provisions of, and
satisfy in all material respects the requirements of, such Schedule TO
and all applicable U.S. federal securities laws, and will contain
(including as an exhibit) or incorporate by reference the Offer to
Exchange and forms of the related letter of transmittal and summary
advertisement and any other documents pursuant to which the Offer will
be made in the United States (collectively with any supplements or
amendments thereto, and including the final prospectus contained in the
effective Registration Agreement (as defined below) and any amendments
and supplements to such prospectus, the "U.S. OFFER DOCUMENTS").
(d) The Company and its counsel shall be given a reasonable
opportunity to review and comment on the initial U.S. Offer Documents
prior to their filing with the SEC. Purchaser agrees to provide the
Company with, and to consult with the Company regarding, any comments
that may be received from the SEC or its staff with respect to the U.S.
Offer Documents promptly after receipt thereof. Purchaser and the
Company each agree promptly to correct any information provided by it
for use in any U.S. Offer Document if and to the extent that it shall
have become false or misleading in any material respect and Purchaser
further agrees to take all steps necessary to cause the U.S. Offer
Documents as so corrected to be filed with the SEC and be disseminated
to holders of Shares, in each case, as and to the extent required by
applicable law.
(e) On the date of commencement of the Offer in The
Netherlands (which shall be the same date as the date of the
commencement of the Offer in the United
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<PAGE> 10
States,) offer documents relating to the Offer prepared in accordance
with any Applicable Law or Rule of The Netherlands (the "NETHERLANDS
OFFER DOCUMENTS") shall be made generally available to the public in
The Netherlands. The commencement of the Offer and the availability of
the Netherlands Offer Documents shall be announced in AEX's Official
Price List (Officiele Prijscourant) and in at least one newspaper with
a nationwide circulation in The Netherlands one day prior to such
commencement.
(f) Prior to commencement of the Offer in the United States
and The Netherlands, Purchaser shall prepare and file with the SEC as
soon as reasonably practicable after the date hereof a Registration
Statement on Form S-4 relating to the Purchaser Shares to be issued in
connection with the Offer (the "REGISTRATION STATEMENT"). Purchaser and
the Company shall use all reasonable best efforts to have the
Registration Statement declared effective by the SEC as promptly as
practicable after such filing. The Purchaser and the Company shall
cooperate with each other in the preparation of the Registration
Statement or any amendment or supplement thereto and each shall notify
the other of the receipt of any comments of the SEC with respect to the
Registration Statement and of any requests by the SEC for any amendment
or supplement thereto, and shall provide to the other as promptly as
practicable copies of all correspondence with respect to the
Registration Statement. Purchaser shall give the Company and its
counsel the opportunity to review the Registration Statement and all
responses to requests for additional information by and reply to
comments of the SEC before their being filed with, or sent to, the SEC.
Each of Purchaser and the Company agrees to use its reasonable best
efforts, after consultation with the other party hereto, to respond as
promptly as practicable to all such comments of and requests by the SEC
and to cause the Registration Statement to be declared effective by the
SEC, and the prospectus contained thereto to be mailed at the earliest
practicable time to the holders of Shares.
(g) Purchaser shall not later than at the time of their
publication submit copies of all public announcements and filings
(including announcements and filings made outside The Netherlands) in
connection with the Offer to the Committee for Merger Affairs of the
Social Economic Council (Commissie voor Fusieaangelegenheden van de
Sociaal-Economisch Raad; the "COMMITTEE") and the AEX-Stock Exchange.
To the extent compliance with Chapter 1 of the Netherlands Merger Code
(as defined herein) does not appear from the documents submitted to the
Committee in accordance with the preceding sentence, the Purchaser
shall inform the Committee thereof. Pursuant to section 3, paragraph 3
of the Netherlands Merger Code, at all times subsequent to the public
announcement that a firm intention to commence the Offer exists (as
referred to in Section 6.07 hereof) is made, the Board of Managing
Directors of Purchaser shall inform the Committee of any transactions
in Shares or agreements in respect of a transaction in Shares effected
or entered into by Purchaser after that moment. The Board of Managing
Directors of Purchaser shall also inform the Committee of the
conditions applicable to such transactions or agreements and the
percentage stake held by the Purchaser in the Company as a consequence
thereof. Furthermore, the Board of Managing Directors of Purchaser
shall inform the Committee of any transactions in Shares or any
agreements in respect of a transaction in Shares not effected or
entered into by Purchaser but which are known to the Board of Managing
Directors of Purchaser. The disclosure to the Committee referred to in
this paragraph (g) shall be made promptly after a relevant transaction
or agreement has been effected or has been entered into or has become
known to the Board of Managing Directors of Purchaser. The duty to
inform the Committee in
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<PAGE> 11
accordance with this paragraph (g) shall remain in force until the
moment it is publicly announced that the Offer has expired, is
withdrawn or shall not be commenced.
(h) The parties intend that the Offer shall be extended to
all holders of Shares, including holders of Shares outside the United
States and The Netherlands. If the law of a country or territory (other
than the United States of America or any part thereof, The Netherlands
or Luxembourg) precludes the making of the Offer in that country or
territory or to persons in that country or territory or so precludes
the making of the Offer except after compliance by the Purchaser with
conditions which the Purchaser regards as onerous (together,
"ILLEGALITY") then the Purchaser may vary the Offer made with regard to
holders of Shares to whom the Illegality is applicable, provided that
the variation is such that such holders of Shares are able to receive
consideration of a substantially equivalent value to that which they
would have received, but for the variation.
(i) In order to achieve maximum participation in the Offer,
Purchaser agrees to retain the services of a shareholder communications
agent to facilitate distribution of information relating to the Offer
and to solicit tenders and assist holders to tender their Shares in
connection with the Offer.
SECTION 1.02. COMPANY ACTIONS.
(a) The Company represents and warrants that (i) (with the
exception of the current board member nominated by Purchaser), its
Board of Directors (at a meeting or meetings duly called and held prior
to the date hereof) has duly and unanimously (A) approved entry into
this Agreement and the transactions contemplated hereby, (B) determined
that the terms of the Offer are fair to and in the best interests of
the Company and its shareholders, (C) resolved to recommend acceptance
of the Offer and the tender of Shares by the shareholders of the
Company, and (D) resolved to (1) consent to the acquisition of Shares
contemplated by this Agreement and to the voting of Shares so acquired,
as contemplated by the Company's Articles of Incorporation (statuts
coordonnes) and (2) elect, to the extent permitted by any Applicable
Law or Rule, not to be subject to any other form of anti-takeover laws
and regulations (collectively, "TAKEOVER LAWS") of any jurisdiction
that may purport to be applicable to this Agreement; (ii) the Company
has complied, in all material respects and to the extent applicable,
with Rule 4320(e)(21)(G) of the NASDAQ Stock Market; and (iii) the
Board of Directors of the Company has received the opinion of
Donaldson, Lufkin & Jenrette International, the Company's independent
financial advisor, ("COMPANY ADVISER") to the effect that, in its
opinion, as of the date of this Agreement, the consideration to be
received in the Offer by the holders of Shares is fair, from a
financial point of view, to such holders (other than the Purchaser and
its affiliates), a true and complete copy of which will be delivered to
the Purchaser as soon as practicable following the execution and
delivery of this Agreement. It is understood and agreed that such
opinion is for the benefit of the Company's Board of Directors and may
not be relied upon by Purchaser or any of its affiliates. The Company
has been advised by each of its directors and executive officers listed
in SECTION 1.02 OF THE DISCLOSURE LETTER that each such person
currently intends to tender all Shares beneficially owned by such
person pursuant to the Offer.
(b) Upon commencement of the Offer in the United States, the
Company shall file with the SEC a Solicitation/Recommendation Statement
on Schedule 14D-9
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<PAGE> 12
including all exhibits thereto (together with all amendments and
supplements thereto, a "SCHEDULE 14D-9") which shall comply in all
material respects with the provisions of, and satisfy in all material
respects the requirements of, such Schedule 14D-9 and all other
applicable U.S. federal securities laws, and will contain the
recommendations of its Board of Directors described in Section 1.02(a)
and hereby consents to the inclusion of such recommendations in the
Offer Documents and to the inclusion of a copy of the Schedule 14D-9
with the Offer Documents mailed or furnished to the Company's
shareholders, provided, however, that the Company's Board of Directors
may thereafter withdraw or amend such recommendations in accordance
with Section 6.02 hereunder. The Purchaser and its counsel shall be
given a reasonable opportunity to review and comment on any Schedule
14D-9 prior to its filing with the SEC. The Company agrees to provide
the Purchaser with, and to consult with Purchaser regarding, any
comments that may be received from the SEC or its staff with respect to
any Schedule 14D-9 promptly upon receipt thereof. The Company and
Purchaser each agrees promptly to correct any information provided by
it for use in the Schedule 14D-9 if and to the extent that it shall
have become false or misleading in any material respect and the Company
further agrees to take all steps necessary to cause the Schedule 14D-9
as so corrected or amended to be filed with the SEC and to be
disseminated to holders of Shares, in each case, as and to the extent
required by any Applicable Law or Rule.
SECTION 1.03. SHAREHOLDER LISTS. In connection with the Offer, the
Company shall promptly furnish or cause to be furnished to Purchaser
(or a suitable designated agent) mailing labels, security position
listings, and any available listing or computer file containing the
names and addresses of the record holders of the Shares as of the
latest practicable date and shall furnish Purchaser (or suitable
designated agent) with such information and assistance (including
periodic updates of such information) as Purchaser (or suitable
designated agent) or its agents may reasonably request in communicating
the Offer to the record and beneficial holders of the Shares. Subject
to the requirements of any Applicable Law or Rule, and except for such
steps as are necessary to disseminate the U.S. Offer Documents and any
other documents necessary to consummate the Offer, Purchaser shall (i)
hold in confidence the information contained in any such labels,
listings and files, (ii) use such information only in connection with
the Offer and, (iii) if this Agreement shall be terminated, shall, upon
request, deliver to the Company all copies of such information then in
its possession; provided, however, that the provisions of this sentence
shall no longer be of any force or effect upon the purchase of the
Shares tendered pursuant to the Offer.
SECTION 1.04. DIRECTORS. Promptly upon the purchase of Shares by
Purchaser pursuant to the Offer, provided that the Minimum Tender
Condition is satisfied, Purchaser shall be entitled to designate such
number of directors on the Board of Directors of the Company as will
give Purchaser representation on the Board of Directors of the Company
constituting a majority of the number of directors on the Board of
Directors of the Company, and the Company shall take all actions
required to be taken by the Company in order to provide Purchaser with
such level of representation and to cause Purchaser's designees to be
so elected. In order to enable such action to be taken immediately by
the Board of the Company appointing new directors in replacement for
them, each of Michael Finkelstein, Anthony Ghee, Martin Lindskog, James
McNamara, Jorgen Nilsson and Jesper Smith will agree (no later than
promptly after the signing of this Agreement) to resign as directors of
the Company at such time. The Company shall also take all actions
required to be taken by the Company in order to cause persons
designated by Purchaser to
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constitute a majority of Directors of the Company on (i) each committee
of the Board of Directors of the Company and (ii) each Board of
Directors and each committee thereof of each Subsidiary of the Company.
SECTION 1.05. STANDSTILL AGREEMENT. The Company, the Purchaser and
United Global Com, Inc. have executed and delivered an agreement
amending the standstill provisions set forth in that certain Private
Placement Agreement, dated as of January 27, 2000, by and between the
Company, Purchaser and UnitedGlobalCom, Inc., including Section 2.2
thereof, to permit the execution and delivery of this Agreement, the
Offer and the transactions contemplated hereby and thereby, and to
permit purchases of Shares by Purchaser or any of its affiliates after
consummation of the Offer.
SECTION 1.06. MINORITY BUY-OUT. For a period of six months after the
Closing Date, Purchaser agrees to use its reasonable best efforts
(subject to restrictions imposed by Applicable Law or Rules) to cause
any minority shareholders in the Company remaining after the Closing
Date to receive promptly consideration for their Shares that is equal
to the Offer Price, or if such consideration is not permitted by
Applicable Law, consideration that is substantially equivalent to the
Offer Price (the "MINORITY BUY-OUT"). The Company agrees to cooperate
with Purchaser and use its reasonable best efforts (subject to
restrictions imposed by Applicable Law or Rules) to facilitate the
Minority Buy-Out. The means by which the Purchaser conducts the
Minority Buy-Out shall be at its reasonable discretion and may include
redemption, merger or other corporate actions. Purchaser agrees to
retain the services of a shareholder communications agent to facilitate
distribution of information relating to any Minority Buyout and to
facilitate participation in any Minority Buy-Out.
ARTICLE II
TREATMENT OF OPTIONS
SECTION 2.01. TREATMENT OF OPTIONS.
(a) Purchaser and Company agree that they shall each take all
actions necessary such that at the Closing Date each outstanding option
or right to acquire Shares ("COMPANY OPTION") granted under any stock
option or similar plan of the Company or under any agreement to which
the Company or a Subsidiary is a party shall become vested and
exercisable and each holder of Company Options shall be entitled at the
Closing Date to elect by notice to the Purchaser either option (i) or
(ii) below in respect of that holder's Company Options:
(i) The Purchaser shall pay against cancellation of
the applicable Company Option to such holder within
72 hours of the Closing Date with respect to each of
such holder's Company Options an amount equal to the
product of (A) the excess of the Offer Price over the
exercise price for that Company Option (the "OPTION
SPREAD") multiplied by (B) the number of Shares
subject to that Company Option, which amount shall be
paid at such holder's option in cash or Purchaser
Shares (with the value of Purchaser Shares for
purposes of paying the Option Spread
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<PAGE> 14
being equal to the Average Price), provided that
holders of Company Options electing this option (i)
shall be subject to proration such that such holders
shall not receive in the aggregate greater than 60
percent. of their consideration in cash.
(ii) At the Closing Date, each of such holder's
Company Options shall be deemed to constitute options
to acquire, on the same terms and conditions as were
applicable under such Company Options, the number of
Purchaser Shares equal to the result (rounded down to
the nearest whole share) of multiplying the number of
Shares subject to the Company Option immediately
prior to the Closing Date by the Conversion Ratio (as
defined below), at an exercise price per share equal
to the result (rounded down to the nearest whole
share) of dividing (A) the per share exercise price
of such Company Option immediately prior to the
Closing Date by (B) the Conversion Ratio; provided,
however, that in the case of any Company Option to
which Section 422 of the Code applies, the
adjustments provided for in this Section shall be
effected in a manner consistent with the requirements
of Section 42(a) of the Code, and provided, further,
that each holder of a Company Option electing this
option shall be entitled by notice to require the
Purchaser to purchase for cash up to 50 percent of
each of that holder's Company Options at a price
equal to the product of the applicable Option Spread
multiplied by the number of Shares subject to such
Company Options, with the balance of such Company
Options being converted in accordance with this
paragraph. At or prior to the Closing Date, the
Company and the Purchaser shall make all necessary
arrangements with respect to their stock option plans
to permit the assumption of the unexercised Company
Options by Purchaser pursuant to this Section. For
purposes of this Section, the term "Conversion Ratio"
means a fraction, the numerator of which is the
average of the high and low sales price of one Share
on NASDAQ and on the three trading days immediately
preceding the Closing Date and the denominator of
which is the average of the high and low sales price
of one Purchaser Share on NASDAQ on the trading day
immediately preceding the Closing Date. If a holder
fails to make a timely election for option (i) or
(ii) pursuant to this paragraph (a), such holder
shall be deemed to have elected option (i) and to
receive equal parts cash and Purchaser Shares under
option (i).
(b) Effective at the Closing Date, Purchaser shall assume
each Company Option in accordance with the terms of the stock option
agreement by which it is evidenced. At or prior to the Closing Date,
Purchaser shall take all corporate action necessary to reserve for
issuance a sufficient number of Purchaser Shares for delivery upon
exercise of Company Options assumed by it in accordance with this
Section. As soon as practicable after the Closing Date, if any Company
Options are converted pursuant to paragraph (a)(ii) of this Section
2.01 Purchaser shall file a registration statement on Form S-8 (or any
successor or other appropriate form) or, to the extent required,
another appropriate form with respect to the Purchaser Shares subject
to such Company Options, and shall use its reasonable best efforts to
maintain the effectiveness of such registration statement (and maintain
the current status of the prospectus or prospectuses contained therein)
for so long as such Company Options remain outstanding.
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(c) The Purchaser and the Company shall cooperate and take
such reasonable actions as may be available pursuant to exemptions
available under Rule 16b-3 of the Exchange Act or such other guidance
as may be promulgated by the SEC so that the acquisition of Purchaser
Shares or options to acquire Purchaser Shares pursuant to this
Agreement and the transactions contemplated in this Section 2.01 shall
be exempt transactions for purposes of Section 16 of the Exchange Act
by any officer or director of the Company who may become a covered
person of Purchaser for purposes of Section 16 ("SECTION 16").
ARTICLE III
PAYMENT FOR SHARES TENDERED
SECTION 3.01. PROMPT PAYMENT. Promptly after the Closing Date,
Purchaser shall cause payment to be made for all Shares properly
tendered and not withdrawn in accordance with Rule 14e-1(c) under the
Exchange Act and all requirements of applicable Luxembourg law and no
later than the third Amsterdam Exchange Day after such acceptance in
accordance with the rules and regulations of the AEX-Stock Exchange.
SECTION 3.02. TRANSFER TAXES. Any stamp or transfer taxes payable in
connection with purchases of Shares by Purchaser in the Offer and any
capital duty payable in The Netherlands in connection with the issuance
of Purchaser Shares pursuant to the Offer shall be paid by Purchaser.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in (i) the Company SEC Reports (as defined herein) filed and
available prior to the date of this Agreement or (ii) with respect to any
Section of this Article IV, as set forth in the disclosure letter previously
delivered by the Company to Purchaser with respect to this Agreement (the
"DISCLOSURE LETTER"), the Company represents and warrants to Purchaser as
follows:
SECTION 4.01. ORGANIZATION AND QUALIFICATION. The Company and each of
its Subsidiaries is a duly organized and validly existing corporation
under the laws of its jurisdiction of incorporation, with all corporate
power and authority to own its properties and conduct its business as
currently conducted and is duly qualified as a foreign corporation
authorized to do business in each of the jurisdictions in which the
character of the properties owned or held under lease or license by it
or the nature of the business transacted by it makes such qualification
necessary, except where the failure to be so qualified, individually or
in the aggregate, would not have a Material Adverse Effect. The Company
has provided Purchaser with accurate and complete copies of the
Company's Articles of Incorporation (statuts coordonnes) as currently
in effect and a structure chart reflecting all of the Company's
Subsidiaries. Neither the Company nor any of its Subsidiaries, directly
or indirectly, owns any interest or investment (whether equity or debt)
in any corporation, partnership joint venture, limited liability
company, trust or other entity, other than in the Company's
Subsidiaries and other than as reflected on the structure chart
described above.
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<PAGE> 16
SECTION 4.02. CAPITALIZATION.
(a) The authorized capital stock of the Company consists of
75,000,000 Shares. As of the date hereof, 25,725,590 Shares were issued
and outstanding (including all restricted Shares granted to employees,
officers, directors, or other service providers under any plan,
program, arrangement or agreement, whether or not vested), no shares of
Preferred Stock were issued and outstanding and 18,362 Shares were held
(beneficial or otherwise) by the Company as treasury shares or
otherwise. As of the date hereof, (i) there were options outstanding
pursuant to the Company's share incentive plans or otherwise to
purchase an aggregate of 4,900,463 Shares, as set forth in SECTION 4.02
OF THE DISCLOSURE LETTER, (ii) Paramount Television Group holds a
warrant to purchase up to 1,000,000 Shares and (iii) the Company has
outstanding US $75,000,000 in aggregate principal amount of its 7%
Convertible Subordinated Notes due 2004, which may be converted into an
aggregate of up to 2,574,665 Shares. No class of the Company's capital
stock is entitled to preemptive rights, and the Company has not
authorized or taken any action to split, combine or reclassify any
shares of its capital stock. All of the outstanding Shares have been
duly authorized and validly issued and are fully-paid and nonassessable
and are free of preemptive rights. SECTION 4.02(a) OF THE DISCLOSURE
LETTER contains a true, accurate and complete list, as of the date
hereof, of the name of each holder of employee stock options,
directors' stock options and any other options of the Company, the
number of outstanding options held by such holder, the grant date of
each such option, the number of Shares subject to such option, and the
corresponding exercise price. Except as set forth above and in SECTION
4.02(a) OF THE DISCLOSURE LETTER, there are no authorized, issued or
outstanding (i) securities of the Company convertible into or
exchangeable for shares of capital stock or voting securities or
ownership interests in the Company, (ii) options, warrants, rights or
other agreements or commitments to acquire from the Company, or
obligations of the Company to issue, any capital stock, voting
securities or other ownership interests in (or securities convertible
into or exchangeable for capital stock or voting securities or other
ownership interests in) the Company, (iii) obligations of the Company
to grant, extend or enter into any subscription, warrant, right,
convertible or exchangeable security or other similar agreement or
commitment relating to any capital stock, voting securities or other
ownership interests in the Company (the items in clauses (i), (ii) and
(iii), together with the capital stock of the Company, being referred
to collectively as "COMPANY SECURITIES") or (iv) obligations by the
Company or any of its Subsidiaries to make any payments based on the
price or value of the Shares. Except as set forth above, there are no
outstanding obligations of the Company or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any Company Securities. There
are no voting trusts or other agreements or understandings to which the
Company or any of its Subsidiaries is a party with respect to the
voting of capital stock of the Company or any of its Subsidiaries.
(b) Except as disclosed in SECTION 4.02(b) OF THE DISCLOSURE
LETTER, the Company or another Subsidiary is the record and beneficial
owner of all the outstanding shares of capital stock of each Company
Subsidiary, free and clear of any lien, mortgage, pledge, charge,
security interest or encumbrance of any kind, and there are no
irrevocable proxies with respect to any such shares. Except as
disclosed in SECTION 4.02(b) OF THE DISCLOSURE LETTER, there are no
outstanding (i) securities of the Company or any of its Subsidiaries
convertible into or exchangeable for shares of capital stock or other
voting securities or ownership interests in any Subsidiary of the
Company, (ii) options, warrants, rights or other agreements or
commitments to acquire from the Company or any of its
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<PAGE> 17
Subsidiaries (or obligations of the Company or any of its Subsidiaries
to issue) any capital stock, voting securities or other ownership
interests in, or any securities convertible into or exchangeable for
any capital stock, voting securities or ownership interests in, any of
its Subsidiaries, (iii) obligations of the Company or any of its
Subsidiaries to grant, extend or enter into any subscription, warrant,
right, convertible or exchangeable security or other similar agreement
or commitment relating to any capital stock, voting securities or other
ownership interests in any of the Company's Subsidiaries (the items in
clauses (i), (ii) and (iii), together with the capital stock of such
Subsidiaries, being referred to collectively as "SUBSIDIARY
SECURITIES") or (iv) obligations of the Company or any of its
Subsidiaries to make any payment based on the value of any shares of
any Subsidiary. There are no outstanding obligations of the Company or
any of its Subsidiaries to repurchase, redeem or otherwise acquire any
outstanding Subsidiary Securities.
SECTION 4.03. AUTHORITY FOR THIS AGREEMENT. The Company has all
necessary corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement by the Company and the
consummation by the Company of the transactions contemplated hereby
have been duly and validly authorized by the Board of Directors of the
Company and no other corporate proceedings (including for the avoidance
of doubt, the advice, consent or consultation of any works council,
labor unions or similar employee representative) on the part of the
Company are necessary to authorize this Agreement or to consummate the
transactions so contemplated. This Agreement has been duly and validly
executed and delivered by the Company and, assuming the due
authorization, execution and delivery of this Agreement by Purchaser,
constitutes a legal, valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms, except to
the extent that its enforceability may be limited by bankruptcy,
insolvency, reorganization, fraudulent conveyance, fraudulent transfer,
moratorium or other laws relating to or affecting creditors' rights
generally and by general principles of equity.
SECTION 4.04. CONSENTS AND APPROVALS; NO VIOLATION. Neither the
execution and delivery of this Agreement by the Company nor the
consummation of the transactions contemplated hereby will (a) violate
or constitute a breach of any provision of the respective governing
documents of the Company or any of its Subsidiaries, (b) require any
consent, approval, authorization or permit of, or filing with or
notification to, any governmental, judicial, legislative, executive,
administrative or regulatory authority, agency, commission, tribunal or
body having valid jurisdiction (which shall include the Committee and
the AEX Listing and Issuing Rules) (a "GOVERNMENTAL ENTITY"), except as
may be required by or under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR ACT"), the Securities
Act, the Exchange Act, NASDAQ, the AEX - Stock Exchange, the European
Union Merger Task Force, any relevant competition, anti-trust, media or
broadcast laws and regulations in any Member State of the European
Union, any competition, anti-trust, media or broadcast laws and
regulations in any other applicable jurisdiction, (c) other than with
respect to media or broadcast licenses and permits, require any
consent, waiver or approval or result in a default (or give rise to any
right of termination, cancellation, modification or acceleration or
right to require the transfer of any license or material asset) under
any of the terms, conditions or provisions of any note, permit,
license, agreement, contract, indenture or other instrument or
obligation to which the Company or any of its Subsidiaries is a party
or by which the Company or any of its Subsidiaries or any of their
respective assets may be bound, (d) result in the creation or
imposition of any mortgage, lien, pledge, charge, security interest
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<PAGE> 18
or encumbrance of any kind on any asset of the Company or any of its
Subsidiaries or (e) violate any order, writ, injunction, decree,
statute, rule or regulation including the Netherlands Merger Code
applicable to the Company or any of its Subsidiaries or by which any of
their respective assets are bound, except, in the case of clauses (b),
(c), (d) and (e), for cross-media ownership restrictions in Hungary or
for any of the foregoing that would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect or
a material adverse effect on the ability of the parties to consummate
the transactions contemplated hereby.
SECTION 4.05 REPORTS; FINANCIAL STATEMENTS.
(a) Since January 1, 1999, the Company has timely filed (or
furnished, in the case of Form 6-K's) all forms, reports and documents
required to be filed (or documents furnished, in the case of Form
6-K's) by it with the SEC, all of which have complied as of their
respective filing dates in all material respects with all applicable
requirements of the Exchange Act and the Securities Act. True and
correct copies of all filings (or "documents" or "reports" furnished,
in the case of Form 6-K's) , including exhibits, made by the Company
with the SEC since such date and prior to the date hereof (the "COMPANY
SEC REPORTS"), whether or not required under applicable laws, rules and
regulations and including any registration statement filed by the
Company under the Securities Act, have been furnished or made available
to Purchaser. None of the Company SEC Reports, including any financial
statements or schedules included or incorporated by reference therein,
at the time filed, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. All of the
Company's SEC Reports, as of the respective dates (and as of the date
of any amendment thereto), complied as to form in all material respects
with the applicable requirements of the Securities Act and the Exchange
Act.
(b) Except as disclosed therein, the audited and unaudited
consolidated financial statements of the Company included (or
incorporated by reference) in the Company SEC Reports were prepared in
accordance with United States generally accepted accounting principles
applied on a consistent basis throughout the periods involved (except
as may be indicated in the notes thereto) and fairly presented, in all
material respects, the consolidated financial position of the Company
and its Subsidiaries as of their respective dates, and the consolidated
results of operations and its cash flows for the periods presented
therein, except that the unaudited interim financial statements were or
are subject to normal and recurring year-end adjustments which have not
had a Material Adverse Effect.
(c) Neither the Company nor any of its Subsidiaries has any
material liabilities of any nature, whether accrued, absolute, fixed,
contingent or otherwise, whether due or to become due and required to
be recorded or reflected on a consolidated balance sheet of the Company
under United States generally accepted accounting principles, except
(i) as reflected or reserved against or disclosed in the financial
statements of the Company included in the Company SEC Reports, and (ii)
liabilities incurred since December 31, 1999 that (x) have been
incurred in the ordinary course of business consistent with past
practice and (y) have not had and are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect.
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SECTION 4.06. ABSENCE OF CERTAIN CHANGES. Since December 31, 1998, (a)
the Company and its Subsidiaries have not suffered any change,
condition, event or development that has had or that would reasonably
be expected to have a Material Adverse Effect, and (b) the Company and
its Subsidiaries have conducted their respective businesses only in the
ordinary course consistent with past practice, except for the
negotiation and execution and delivery of this Agreement.
SECTION 4.07. SCHEDULE 14D-9 AND OFFER DOCUMENTS.
(a) None of the information supplied or to be supplied by or
on behalf of the Company or any affiliate of the Company (other than
Purchaser or any of its affiliates) for inclusion in any Offer Document
will, at the times such documents are published, filed with the SEC and
any other relevant Governmental Entity in the Netherlands or Luxembourg
or submitted to and are mailed to shareholders of the Company, contain
any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they are made, not
misleading, or to correct any statement made in any communication with
respect to the Offer previously filed with the SEC or any other
Governmental Entity in The Netherlands or Luxembourg or disseminated to
the shareholders of the Company.
(b) Each Schedule 14D-9 filed in the United States and each
of The Netherlands Offer Documents published in The Netherlands will
not, at the time such documents are filed or made public and at all
times prior to the purchase of Shares by Purchaser pursuant to the
Offer, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they
are made, not misleading, except that no representation or warranty is
made by the Company with respect to information supplied in writing by
Purchaser or an affiliate of Purchaser expressly for inclusion therein.
All Schedules 14D-9 will comply as to form in all material respects
with the provisions of the Exchange Act and the AEX Listing and Issuing
Rules.
SECTION 4.08. BROKERS. No Person or entity (other than the Company
Adviser, the arrangements with which have been completely and
accurately disclosed to the Purchaser) is entitled to receive any
brokerage, finder's or other fee or commission in connection with this
Agreement or the transactions contemplated hereby based upon agreements
made by or on behalf of the Company, any of its Subsidiaries or any of
their respective officers, directors or employees.
SECTION 4.09. EMPLOYEE BENEFIT MATTERS.
(a) A true and complete copy of each executive compensation,
incentive bonus or other bonus, employee pension, profit-sharing,
savings, retirement, stock option, stock purchase, severance pay, or
change in control plan, program, arrangement, agreement or commitment
in effect that covers current and future employees, directors or
consultants of the Company or any of its Subsidiaries (each, a "PLAN")
has been made available to the Purchaser or publicly filed prior to the
date thereof. SECTION 4.09(a) OF THE DISCLOSURE LETTER sets forth a
true and complete list of all Plans, and specifically
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<PAGE> 20
identifies any "change of control" or similar provisions and the
aggregate change in control payments due thereunder.
(b) Neither the Company nor any of its Subsidiaries, directly
or indirectly, is subject to any liability in respect of any Plan,
which would reasonably be expected to have a Material Adverse Effect.
There are no actions, suits or claims pending (other than routine
claims for benefits) or, to the knowledge of the Company, threatened
with respect to such Plan or against the assets of such Plan (except
for the benefits payable or contributions due under the terms of such
Plans) which would reasonably be expected to have a Material Adverse
Effect. To the best knowledge of the Company, no Plan is under audit or
is the subject of an investigation by any Governmental Entity, except
routine audits conducted in the ordinary course which would not
reasonably be expected to have a Material Adverse Effect.
(c) The Company has complied, or will comply, with any
applicable works council or labor union advice, information, and/or
consultation procedures required by the laws of Luxembourg or The
Netherlands Merger Code and The Netherlands Works Council Act in
connection with the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby, except for any
non-compliance that would not have a Material Adverse Effect on the
Company or a material adverse effect on the ability of the parties to
consummate the transactions contemplated hereby.
(d) Neither the Company nor any of its Subsidiaries is in
violation of any provision of applicable law or any governmental rule
or regulation, or any order, ruling, decree, judgment or arbitration
award of any court, arbitrator or any Governmental Entity regarding the
terms and conditions of employment of employees, former employees or
prospective employees or other labor related matters, including laws,
rules, regulations, orders, rulings, decrees, judgments and awards
relating to wages, hours, civil rights, discrimination, fair labor
standards and occupational health and safety, wrongful discharge or
violation of the personal rights of employees, former employees or
prospective employees which, taken alone or together with any other
such violation or violations, would reasonably be expected to have a
Material Adverse Effect.
(e) (i) The Aggregate Payments (as defined below) do not
exceed US$2,500,000. Except for the Aggregate Payments, neither the
Company nor any of its Subsidiaries has any liability to any current or
former employee of the Company or its Subsidiaries, or any other person
by virtue of their rendering or having rendered personal services to
the Company or its Subsidiaries, the amount of which, the timing of the
payment of which or the other terms or conditions of which are affected
by the consummation of the transactions contemplated herein or the
value of equity securities of the Company or equity securities of or
interests in any of its Subsidiaries. For purposes of this subsection,
the term "AGGREGATE PAYMENTS" means the sum of (i) the aggregate amount
of payments (including, without limitation, the value of benefits) in
the nature of severance pay for which the Company and its Subsidiaries
are liable in connection with any change in control of the Company or
any of its Subsidiaries, and (ii) the aggregate liability of the
Company under any bonus or employee-retention plan, except for any
Company Options.
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SECTION 4.10. LITIGATION, ETC. There is no claim, action, suit,
proceeding or governmental investigation pending or, to the knowledge
of the Company, threatened against or relating to the Company or any of
its Subsidiaries that, individually or in the aggregate, would
reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect or, as of the date hereof, that in any material
manner challenges or seeks to prevent, enjoin, alter or materially
delay the Offer or prevent the Company from consummating any of the
other transactions contemplated hereby. Neither the Company nor any
Subsidiary of the Company is subject to any outstanding order, writ,
injunction or decree in any jurisdiction that, individually or in the
aggregate, has had or would reasonably be expected to have a Material
Adverse Effect.
SECTION 4.11. TAX MATTERS.
(a) The Company and its Subsidiaries have timely filed
(taking into account any permitted extensions of time in which to file)
all returns and reports relating to Taxes (including income taxes,
withholding taxes and estimated taxes) required to be filed by
Applicable Law or Rule with respect to each of the Company and its
Subsidiaries or any of their income, properties or operations as of the
date hereof, except for such failure to file as would not reasonably be
expected to have a Material Adverse Effect. All such returns are true,
accurate and complete in all material respects. The Company and its
Subsidiaries have timely paid or will timely pay all Taxes attributable
to each of the Company and its Subsidiaries that were due and payable
without regard to whether such Taxes have been assessed other than
Taxes which (i) are being contested in good faith (ii) for which an
adequate reserve has been provided in accordance with United States
generally accepted accounting principles or (iii) if not paid, the
failure of which payment would not have a Material Adverse Effect.
(b) The Company and its Subsidiaries have made adequate
provisions in accordance with the relevant jurisdictional generally
accepted accounting principles appropriately and consistently applied
to each of the Company and its Subsidiaries in the consolidated
financial statements included in the SEC Reports for the payment of all
material Taxes for which each of the Company and its Subsidiaries may
be liable for the periods covered thereby that were not yet due and
payable as of the dates thereof, regardless of whether the liability
for such Taxes is disputed.
(c) There is no claim or assessment pending or, to the best
of the Company's knowledge, threatened against the Company or any of
its Subsidiaries relating to the Company's or its Subsidiaries'
liability for Taxes that would reasonably be expected to have a
Material Adverse Effect. There are no agreements in effect to extend
the period of limitations for the assessment or collection of any Tax
for which the Company or any of its Subsidiaries may be liable that
would have a Material Adverse Effect.
(d) There is no contract, agreement or intercompany account
system in existence under which the Company or any of its Subsidiaries
has, or may at any time in the future have, an obligation to contribute
to the payment of a Tax of any group of corporations of which the
Company or any of its Subsidiaries is or was a part, the failure to pay
which would have a Material Adverse Effect.
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SECTION 4.12. COMPLIANCE WITH LAW; NO DEFAULT.
(a) The Company and its Subsidiaries are not in violation of,
and are not conducting their respective businesses in violation of, any
Applicable Law or Rule or in each case, except for such violations that
have not had and are not reasonably expected to have a Material Adverse
Effect or a material adverse effect on the ability of the parties to
consummate the transactions contemplated hereby.
(b) The Company and its Subsidiaries have all permits,
licenses, authorizations, consents, approvals and franchises from
Governmental Entities required to conduct their businesses as currently
conducted (the "COMPANY PERMITS"), except for such permits, licenses,
authorizations, consents, approvals and franchises the absence of
which, individually or in the aggregate, have not had and are not
reasonably expected to have a Material Adverse Effect or a material
adverse effect on the ability of the parties to consummate the
transactions contemplated hereby. The Company and its Subsidiaries are
in compliance with the terms of the Company Permits, except where the
failure so to comply in the aggregate has not had and is not reasonably
expected to have a Material Adverse Effect or a material adverse effect
on the ability of the parties to consummate the transactions
contemplated hereby.
SECTION 4.13. INTELLECTUAL PROPERTY. The Company and its Subsidiaries
have all right, title and interest in, or a valid and binding license
to use, and have taken reasonable and appropriate steps to protect all
Intellectual Property (as defined below), except for such defects that
individually or in the aggregate would not have a Material Adverse
Effect. Neither the Company nor any Subsidiary of the Company is in
default (or with the giving of notice or lapse of time or both, would
be in default) in any material respect under any right or license to
use such Intellectual Property, such Intellectual Property to the
knowledge of the Company is not being infringed by any third party, and
neither the Company nor any Subsidiary of the Company is infringing any
Intellectual Property of any third party, except for such defaults and
infringements which, individually or in the aggregate, are not having
and would not be reasonably expected to have a Material Adverse Effect.
For purposes of this Agreement, "INTELLECTUAL PROPERTY" trademarks,
trade names, service marks, service names, domain names, copyrights,
patents, database rights, compatible software and rights in
personalities and other proprietary intellectual property rights and
all pending applications for the registrations of any of the foregoing.
SECTION 4.14. TITLE TO PROPERTIES. ENTIRE BUSINESS. The Company and its
Subsidiaries have good title or a valid and subsisting leasehold
interest in and to or a valid and enforceable license to use all
material assets, properties and rights owned, used or held for use by
them in the conduct of their respective businesses, in each case, free
and clear of any leases, claims, mortgages, pledges and security
interests ("LIENS") except for Liens (i) arising in the ordinary course
of business, (ii) that do not materially impair the continued use of
such properties, or (iii) that are not reasonably expected to have a
Material Adverse Effect or a material adverse effect on the ability of
the parties to consummate the transactions contemplated hereby.
SECTION 4.15. CONVERTIBLE NOTES AND WARRANT. As the date hereof there
is US$75 million aggregate principal amount outstanding under the
Company's 7% Convertible Subordinated Notes due 2004. The current
Conversion Price (as defined in
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such Notes) of those Notes is US$29.13 having the result that if all
such Notes were converted they would convert into 2,574,655 Shares, and
there is no circumstance in existence which would give rise to
adjustments of the Conversion Price. As of the date hereof, the number
of Shares issuable to Paramount Communications B.V. under the warrant
("WARRANT") granted to it by the Company pursuant to their Warrant
Agreement originally dated 15 March 1995 is 1,000,000 Shares. The
Exercise Price (as defined in such Warrant Agreement) with respect to
each Share is US$25.00, and there is no circumstance in existence which
would give rise to adjustments of the Exercise Price or the number of
Shares purchasable under the Warrant.
SECTION 4.16. FOREIGN PRIVATE ISSUER. The Company is a "foreign private
issuer" as such term is defined in Rule 3b-4(c) under the Exchange Act
and does not qualify for the "Tier I" or "Tier II" exemptions under
Rule 14d-1 under the Exchange Act.
SECTION 4.17. MATERIAL CONTRACTS. Neither the Company nor any of its
Subsidiaries is, or has any knowledge that any other party is, in
default in any respect under any of the contracts, agreements, bonds,
mortgages, indentures, commitments, arrangements, leases (including
with respect to personal property) and other instruments to which the
Company or any of its Subsidiaries is a party or by which the Company,
any of its Subsidiaries or any of their respective assets is bound,
except for such defaults as have not had and are not reasonably likely
to have a Material Adverse Effect (each, a "MATERIAL CONTRACT"), and
there has not occurred any event that with the lapse of time or the
giving of notice or both would constitute such a default.
SECTION 4.18. RELATED PARTY TRANSACTIONS. No director or officer of the
Company or any of its Subsidiaries, nor any affiliate of such director
or officer (a) has borrowed any monies from or has outstanding any
indebtedness or other similar obligations to the Company or any of its
Subsidiaries that is required to be reported under applicable law or in
the SEC Reports provided to the Purchaser or (b) is otherwise a party
to any contract, arrangement or understanding with the Company or any
of its Subsidiaries that is required to be reported under applicable
law or in the SEC Reports provided to the Purchaser.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Except as set forth in the Purchaser SEC Reports (as defined herein) filed and
available prior to the date of this Agreement, Purchaser represents and warrants
to the Company as follows:
SECTION 5.01. ORGANIZATION AND QUALIFICATION. Purchaser is a duly
organized and validly existing public limited liability company
incorporated under the laws of The Netherlands.
SECTION 5.02. AUTHORITY FOR THIS AGREEMENT. Purchaser has all requisite
corporate power and authority to execute and deliver this Agreement and
to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement by Purchaser and the consummation of the
transactions contemplated hereby have been duly and validly authorized
by all necessary corporate proceedings on the part of Purchaser. This
Agreement has been duly and validly executed and delivered by Purchaser
and,
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assuming the due authorization, execution and delivery of this
Agreement by the Company, constitutes a legal, valid and binding
agreement of each of Purchaser, enforceable against Purchaser in
accordance with its terms, except to the extent that its enforceability
may be limited by bankruptcy, insolvency, reorganization, fraudulent
conveyance, fraudulent transfer, moratorium or other laws relating to
or affecting creditors' rights generally and by general principles of
equity.
SECTION 5.03. CAPITALIZATION. As of the date of this Agreement, the
issued and outstanding capital stock of the Purchaser consists of the
Purchaser Shares as disclosed in the Purchaser SEC Reports (as defined
herein). Purchaser shall have sufficient authorized Shares to complete
the Offer on the terms and conditions set forth in this Agreement.
Except except as set forth in the Purchaser SEC Reports, there are no
outstanding obligations of the Purchaser or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any Purchaser Shares. There are
no voting trusts or other agreements or understandings to which the
Purchaser is a party with respect to the voting of capital stock of the
Purchaser.
SECTION 5.04. REPORTS; FINANCIAL STATEMENTS.
(a) Since January 1, 1999, the Purchaser has timely filed all
forms, reports and documents required to be filed by it with the SEC,
all of which have complied as of their respective filing dates in all
material respects with all applicable requirements of the Exchange Act
and the Securities Act. True and correct copies of all filings,
including exhibits, made by the Purchaser with the SEC since such date
and prior to the date hereof (the "PURCHASER SEC REPORTS"), whether or
not required under applicable laws, rules and regulations and including
any registration statement filed by the Purchaser under the Securities
Act and any disclosure made to the AEX-Stock Exchange pursuant to the
AEX Listing and Listing Rules, as amended, have been or, within a
reasonable time will be, furnished or made available to the Purchaser.
None of the Purchaser SEC Reports, including any financial statements
or schedules included or incorporated by reference therein, at the time
filed, contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances
under which they were made, not misleading. All of the Purchaser's SEC
Reports, as of the respective dates (and as of the date of any
amendment thereto), complied as to form in all material respects with
the applicable requirements of the Securities Act and the Exchange Act.
(b) Except as disclosed therein, the audited and unaudited
consolidated financial statements of the Purchaser included (or
incorporated by reference) in the Purchaser SEC Reports were prepared
in accordance with United States generally accepted accounting
principles applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes thereto) and fairly
presented, in all material respects, the consolidated financial
position of the Purchaser and its Subsidiaries as of their respective
dates, and the consolidated results of operations and cash flows for
the periods presented therein, except that the unaudited interim
financial statements were or are subject to normal and recurring
year-end adjustments which have not had a Purchaser Material Adverse
Effect.
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(c) Neither the Purchaser nor any of its Subsidiaries has any
material liabilities of any nature, whether accrued, absolute, fixed,
contingent or otherwise, whether due or to become due and required to
be recorded or reflected on a consolidated balance sheet of the
Purchaser under United States generally accepted accounting principles,
except (i) as reflected or reserved against or disclosed in the
financial statements of the Purchaser included in the Purchaser SEC
Reports, and (ii) liabilities incurred since December 31, 1999 that (x)
have been incurred in the ordinary course of business consistent with
past practice and (y) have not had and are not reasonably likely to
have, individually or in the aggregate, a Purchaser Material Adverse
Effect.
SECTION 5.05. ABSENCE OF CERTAIN CHANGES.
Since January 1, 1999, (a) the Purchaser and its Subsidiaries
have not suffered any Purchaser Material Adverse Effect or any change,
condition, event or development that has had a Purchaser Material
Adverse Effect, and (b) the Purchaser and its Subsidiaries have
conducted their respective businesses only in the ordinary course
consistent with past practice, except for the negotiation and execution
and delivery of this Agreement and various other acquisitions which it
is pursuing and which it will disclose to the Company in accordance
with Applicable Law or Rules.
SECTION 5.06. LITIGATION, ETC.
There is no claim, action, suit, proceeding or governmental
investigation pending or, to the knowledge of the Purchaser, threatened
against or relating to the Purchaser or any of its Subsidiaries that,
individually or in the aggregate, would reasonably be expected,
individually or in the aggregate, to have a Purchaser Material Adverse
Effect or, as of the date hereof, that in any material manner
challenges or seeks to prevent, enjoin, alter or materially delay the
Offer or prevent Purchaser from consummating any of the other
transactions contemplated hereby. Neither the Purchaser nor any
Subsidiary of the Purchaser is subject to any outstanding order, writ,
injunction or decree in any jurisdiction that, individually or in the
aggregate, has had or would reasonably be expected to have a Purchaser
Material Adverse Effect.
SECTION 5.07. COMPLIANCE WITH LAW; NO DEFAULT.
(a) The Purchaser and its Subsidiaries are not in violation
of, and are not conducting their respective businesses in violation of,
any Applicable Law or Rule except for such violations that have not had
and are not reasonably expected to have a Purchaser Material Adverse
Effect or a material adverse effect on the ability of the parties to
consummate the transactions contemplated hereby.
(b) The Purchaser and its Subsidiaries have all permits,
licenses, authorizations, consents, approvals and franchises from any
Governmental Entity which is required to conduct their businesses as
currently conducted (the "PURCHASER PERMITS"), except for such permits,
licences, authorizations, consents, approvals and franchises the
absence of which, individually or in the aggregate, have not had and
are not reasonably expected to have a Purchaser Material Adverse Effect
or a material adverse effect on the ability of the parties to
consummate the transactions contemplated hereby. The Purchaser
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and its Subsidiaries are in compliance with the terms of the Purchaser
Permits, except where the failure so to comply in the aggregate has not
had and is not reasonably expected to have a Purchaser Material Adverse
Effect or a material adverse effect on the ability of the parties to
consummate the transactions contemplated hereby.
SECTION 5.08. OFFER DOCUMENTS.
(a) None of the Offer Documents prepared by the Purchaser
will, at the times such documents are published, filed with the SEC or
submitted to any other relevant Governmental Entity in Luxembourg or
The Netherlands and are mailed to the shareholders of the Company,
contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to
make the statements made therein, in light of the circumstances under
which they are made, not misleading, except that no representation is
made by Purchaser with respect to information supplied in writing by
the Company or an affiliate of the Company expressly for inclusion
therein. The Offer Documents will comply as to form in all material
respects with the provisions of the Exchange Act and the AEX Listing
and Issuing Rules.
(b) None of the information supplied by Purchaser or any
affiliate of Purchaser specifically for inclusion in any Schedule 14D-9
filed in the United States and each of the Netherlands Offer Documents
will, at the date of filing with the SEC, contain any untrue statement
of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.
SECTION 5.09. CONSENTS AND APPROVALS; NO VIOLATION. Neither the
execution and delivery of this Agreement by Purchaser nor the
consummation of the transactions contemplated hereby will (a) conflict
with or result in any breach of any provision of the governing
documents of Purchaser, (b) require any consent, approval,
authorization or permit of, or filing with or notification to, any
Governmental Entity, except (i) with respect to broadcast licenses and
permits and (ii) as may be required by or under the HSR Act, the
Securities Act, the Exchange Act, NASDAQ, the AEX-Stock Exchange, the
European Union Merger Task Force, any relevant competition or
anti-trust laws and regulations in any Member State of the European
Union, any competition or anti-trust laws and regulations in any other
applicable jurisdiction or (iii) where the failure to obtain such
consent, approval, authorization or permit, or to make such filing or
notification, would not, individually or in the aggregate, have a
material adverse effect on the ability of Purchaser to consummate the
transactions contemplated hereby, (c) require any consent, waiver or
approval or result in a default (or give rise to any right of
termination, cancellation, modification or acceleration) under any of
the terms, conditions or provisions of any note, license, agreement,
contract, indenture or other instrument or obligation to which
Purchaser or any of its Subsidiaries is a party or by which Purchaser
or any of its Subsidiaries or any of its respective assets may be
bound, except with respect to broadcast licenses and permits and except
for cross-media ownership restrictions in Hungary or defaults (or
rights of termination, cancellation, modification or acceleration) as
to which requisite waivers or consents have been obtained or which
would not in the aggregate have a material adverse effect on the
ability of Purchaser to consummate the transactions contemplated hereby
or (d) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to Purchaser or any of its Subsidiaries or by
which any of their
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respective assets are bound, except for violations which would not,
individually or in the aggregate, have a material adverse effect on the
condition (financial or otherwise), business, properties, assets,
liabilities or result of operations of Purchaser and its Subsidiaries
taken as a whole, or a material adverse affect on the ability of
Purchaser to consummate the transactions contemplated hereby.
SECTION 5.10. BROKERS. No broker, finder or investment banker (other
than Goldman Sachs International Ltd) is entitled to any brokerage,
finder's or other fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by and on
behalf of the Purchaser that is or will be payable by the Company or
any of its Subsidiaries.
SECTION 5.11. AVAILABLE FUNDS. The Purchaser has or will have available
to it sufficient funds to satisfy all of its obligations hereunder and
in connection with the transactions contemplated by this Agreement.
ARTICLE VI
COVENANTS
SECTION 6.01. CONDUCT OF BUSINESS OF THE COMPANY. Except as expressly
contemplated by this Agreement or described in the Disclosure Letter,
during the period from the date of this Agreement to the Closing Date
or until the earlier termination of this Agreement, the Company shall
conduct and shall cause each of its Subsidiaries to conduct its
operations according to its ordinary and usual course of business and
consistent with past practice, and, to the extent consistent therewith,
the Company shall use and shall cause each of its Subsidiaries to use
its reasonable efforts to preserve substantially intact its business
organization, to keep available the services of its current officers
and employees and to preserve the present relationships with those
Persons and entities having significant business relationships with the
Company and its Subsidiaries, except such as would not have a Material
Adverse Effect, and the Company shall promptly advise the Purchaser of
any change in the Company's or any of its Subsidiaries' condition
(financial or otherwise), properties, assets, liabilities or results of
operations that would be material to the Company and its Subsidiaries
taken as a whole. Without limiting the generality of the foregoing and
except as otherwise expressly provided in or contemplated by this
Agreement or as disclosed in the Disclosure Letter, and except for that
certain transaction referred to as "Project Pluto" (the terms of which
have previously been disclosed to the Purchaser), during the period
specified in the preceding sentence, without the prior written consent
the Purchaser, the Company shall not and shall not permit any of its
Subsidiaries to:
(a) issue, sell, grant options or rights to purchase or
receive, pledge, or authorize or propose the issuance, sale, grant of
options or rights to purchase or receive or pledge of (i) any Company
Securities or Subsidiary Securities, or grant or accelerate any right
to convert or exchange any Company Securities or Subsidiary Securities,
other than Shares issuable upon exercise of the options described in
Section 4.02 or (ii) any other securities in respect of, in lieu of or
in substitution for Shares outstanding on the date hereof;
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(b) acquire or redeem, directly or indirectly, or amend any
Company Securities or Subsidiary Securities;
(c) split, combine or reclassify its capital stock or
declare, set aside, make or pay any dividend or distribution (whether
in cash, stock or property) on any shares of its capital stock (other
than cash dividends paid to the Company by its wholly-owned
Subsidiaries with regard to their capital stock);
(d) (i) make or offer to make any acquisition, by means of a
merger or otherwise, of assets or securities, or any sale, lease,
encumbrance or other disposition of assets or securities, in each case
involving an amount in excess of US$1,000,000 (one million), except for
purchases of inventory made in the ordinary course of business and
consistent with past practice or (ii) enter into a Material Contract or
amend any Material Contract or grant any release or relinquishment of
any rights under any Material Contract;
(e) incur or assume any long-term debt or short-term debt
except in ordinary course of business consistent with past practice or
to fund payments contemplated under this Agreement;
(f) other than in the ordinary course of business and
consistent with past practice, assume, guarantee, endorse or otherwise
become liable or responsible (whether directly, contingently or
otherwise) for the material obligations of any other Person except
wholly-owned Subsidiaries of the Company;
(g) other than in the ordinary course of business and
consistent with past practice, make any loans, advances or capital
contributions to, or investments in, any other Person (other than
wholly-owned Subsidiaries of the Company);
(h) change any of the material accounting principles or
practices used by it unless required by United States generally
accepted accounting principles;
(i) make any material Tax election or settle or compromise
any material federal, state or local income Tax liability;
(j) except as may be required to effect the Minority Buy-Out,
propose or adopt any amendments to its governing documents;
(k) grant any stock-related, performance or similar awards or
bonuses;
(l) forgive any loans to employees, officers or directors or
any of their respective affiliates or associates;
(m) except as contemplated by this Agreement, enter into any
new, or amend any existing, employment, severance, consulting or salary
continuation agreements with or for the benefit of any officers,
directors or employees, or grant any increases in the compensation or
benefits to officers, directors and employees (other than normal
increases
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to persons who are not officers or directors in the ordinary course of
business consistent with past practices and that, in the aggregate, do
not result in a material increase in benefits or compensation expense
of the Company); provided, however, that nothing contained in this
Section 6.01 shall in any manner preclude the Company from extending
the current term of any employment, severance, change in control or
similar agreement, arrangement or program which is effect on the date
hereof;
(n) except in the ordinary course of business, agree to the
amendment, revocation or termination of any material broadcasting
license of the Company and its Subsidiaries or joint ventures;
(o) make any deposits or contributions of cash or other
property to or take any other action to fund or in any other way secure
the payment of compensation or benefits under the Plans or agreements
subject to the Plans or any other plan, agreement, contract or
arrangement of the Company;
(p) enter into, amend, or extend any material collective
bargaining or other labor agreement;
(q) adopt, amend or terminate any Plan or any other bonus,
severance, insurance pension or other employee benefit plan or
arrangement ; provided, however, that nothing contained in this Section
6.01 shall in any manner preclude the Company from extending the
current term of any Plan which is effect on the date hereof;
(r) other than in the ordinary course of business, settle or
agree to settle any suit, action, claim, proceeding or investigation
(including any suit, action, claim, proceeding or investigation
relating to this Agreement or the transactions contemplated hereby) or,
except in the ordinary course of business, pay, discharge or satisfy or
agree to pay, discharge or satisfy any claim, liability or obligation
(absolute or accrued, asserted or unasserted, contingent or otherwise)
other than the payment, discharge or satisfaction of liabilities
reflected or reserved against in full in the financial statements as at
December 31, 1998 or incurred in the ordinary course of business
subsequent to December 31, 1998;
(s) except as specifically permitted by Section 6.02,
knowingly take, or agree to commit to take, or fail to take any action
that would result or is reasonably likely to result in any of the Offer
Conditions not being satisfied, or would make any representation or
warranty of the Company contained herein inaccurate in any material
respect at, or as of any time prior to, the Closing Date, or that would
impair the ability to consummate the Offer in accordance with the terms
hereof or materially delay such consummation; or
(t) agree in writing or otherwise to take any of the
foregoing actions.
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SECTION 6.02. NO SOLICITATION.
(a) The Company agrees that neither it nor any of its
Subsidiaries shall, and that it shall direct and use its reasonable
best efforts to cause its and its Subsidiaries' respective officers,
directors, employees, representatives (including investment bankers,
attorneys and accountants), agents or affiliates (other than Purchaser
or any of its affiliates) not to, directly or indirectly, encourage,
solicit, initiate or participate in any way in any discussions or
negotiations with, or provide any information to, or afford any access
to the properties, books or records of the Company or any of its
Subsidiaries to, or otherwise take any other action to assist or
facilitate, any Person or group (other than Purchaser or any affiliate
or associate of Purchaser) concerning any Acquisition Proposal (as
defined below) or the possible making of any Acquisition Proposal.
Notwithstanding the foregoing and subject to compliance with Section
6.02(c), the Company may only to the extent required by Luxembourg law
furnish information to or enter into discussions or negotiations with
any Person or entity that has made an unsolicited bona fide Acquisition
Proposal that the Board of Directors of the Company determines
constitutes or could constitute a Superior Proposal if, and only to the
extent that, the Board of Directors of the Company, after consultation
with outside legal counsel to the Company, determines in good faith
that failure to do so would be inconsistent with the fiduciary duty
imposed by Luxembourg law on the Board of Directors of the Company to
the shareholders of the Company under Applicable Law or Rule.
(b) The Company shall promptly (and in any event within one
business day) notify Purchaser, orally and in writing, if any such
information is requested or any such negotiations or discussions are
sought to be initiated and will promptly communicate to Purchaser the
identity of the Person or group making such request or inquiry (the
"POTENTIAL ACQUIROR") and any other material terms of such request,
inquiry or Acquisition Proposal. If the Company (or any of its
Subsidiaries or its or their respective officers, directors, employees,
representatives, agents or affiliates) participates in discussions or
negotiation with, or provides information to, a Potential Acquiror, the
Company shall keep Purchaser advised on a current basis of any
developments with respect thereto.
(c) The Company shall, and shall cause its Subsidiaries and
its and their respective officers, directors, employees,
representatives, agents and affiliates to, immediately cease and cause
to be terminated any existing activities, discussions, or negotiations
with any Persons other than Purchaser or any of its respective
affiliates or associates conducted prior to the date hereof with
respect to any Acquisition Proposal.
(d) Unless and until this Agreement has been terminated in
accordance with Section 8.01, the Company shall not (i) approve or
recommend, or propose publicly to approve or recommend, any Acquisition
Proposal, (ii) release any third party from any confidentiality or
standstill agreement to which the Company is a party or fail to enforce
to the fullest extent permitted by law any such agreement in order to
facilitate any Acquisition Proposal, (iii) waive a suspension of voting
rights for the acquisition of more than 20% of the voting stock of the
Company to facilitate any Acquisition Proposal (other than by
Purchaser) or (iv) enter into any letter of intent, agreement in
principle, acquisition agreement or other agreement to effect any
Acquisition Proposal.
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(e) Nothing contained in this Section 6.02 shall prohibit the
Company or its Board of Directors from taking and disclosing to the
Company's shareholders a position with respect to an Acquisition
Proposal by a third party pursuant to Rules 14d-9 and 14e-2(a)
promulgated under the Exchange Act.
(f) For purposes of this Agreement, (i) "ACQUISITION
PROPOSAL" means any offer or proposal, or any bona fide indication of
interest in making an offer or proposal, made by a Person or group at
any time which is structured to permit such Person or group to acquire
beneficial ownership of 20% of the consolidated assets of, or at least
20% of the equity interest in the Company pursuant to a merger,
consolidation or other business combination, sale of shares of capital
stock, sale of assets, tender offer or exchange offer or similar
transaction, including any single or multi-step transaction or series
of related transactions, in each case other than the transactions
contemplated by this Agreement and (ii) "SUPERIOR PROPOSAL" means any
unsolicited, bona fide Acquisition Proposal made in writing in respect
of which the Board of Directors of the Company has reasonably
determined in good faith after receiving the advice of its outside
counsel and independent financial advisors that (A) the Potential
Acquiror has the financial wherewithal to consummate such Acquisition
Proposal, (B) such Acquisition Proposal would, if consummated, result
in a transaction that is more favorable to the Company and its
shareholders (other than Purchaser and its Affiliates) from a financial
point of view than the transactions contemplated by this Agreement and
(C) such Acquisition Proposal is reasonably likely to be consummated.
SECTION 6.03. ACCESS TO INFORMATION. From and after the date of this
Agreement, the Company shall (i) give Purchaser and its authorized
accountants, investment bankers, counsel and other representatives
reasonable access (during regular business hours upon reasonable notice
and after consultation) to its officers, key employees, offices and
other facilities, and to all books, contracts, commitments and records
(including Tax returns) of the Company and its Subsidiaries and cause
the Company's and its Subsidiaries' independent public accountants to
provide access to their work papers and such other information as
Purchaser may reasonably request, (ii) permit Purchaser to make such
inspections as they may reasonably require, (iii) cause its executive
officers and those of its Subsidiaries to furnish Purchaser with such
financial and operating data and other information with respect to the
business, properties and personnel of the Company and its Subsidiaries
as Purchaser may from time to time reasonably request and (iv) furnish
promptly to Purchaser a copy of each report, schedule and other
document filed or received by the Company during such period pursuant
to the requirements of the U.S. federal or state securities laws,
provided, that the foregoing shall not require the Company to permit
any inspection, or to disclose any information, which in the reasonable
judgment of the Company would result in the disclosure of any trade
secrets of third parties or violate any obligation of the Company with
respect to confidentiality if the Company shall have used reasonable
efforts to obtain the consent of such third party to such inspection or
disclosure. All requests for information made pursuant to this Section
shall be directed to an executive officer of the Company or such person
as may be designated by any such officer. If the transactions
contemplated by this Agreement are not consummated, then upon
termination of this Agreement, Purchaser shall as promptly as
practicable collect and deliver to the Company all documents obtained
by it or any of its representatives then in their possession and any
copies thereof.
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SECTION 6.04. REASONABLE BEST EFFORTS. Subject to the terms and
conditions of this Agreement, each of the parties hereto agrees to use
its reasonable best efforts to take, or cause to be taken, all
appropriate action, and to do, or cause to be done, all things
necessary, proper or advisable under any Applicable Law or Rule to
consummate and make effective, in the most expeditious manner
practicable, the transactions contemplated by this Agreement; provided,
however, that nothing in this Agreement (other than as expressly
provided for in Section 1.01) shall obligate Purchaser to keep the
Offer open beyond the expiration date set forth in the Offer (as it may
be extended from time to time). Without limiting the foregoing, (i)
each of the Company and Purchaser shall use its reasonable best efforts
to make promptly any required submissions under the HSR Act or any
competition filings required under Applicable Law or Rule which the
Company or Purchaser determines should be made, in each case, with
respect to the Offer and the transactions contemplated hereby and (ii)
Purchaser and the Company shall cooperate with one another (A) in
promptly determining whether any filings are required to be or should
be made or consents, approvals, permits or authorizations are required
to be or should be obtained under any other U.S. federal, state or
foreign law or regulation or whether any consents, approvals or waivers
are required to be or should be obtained from other parties to
indentures, loan agreements or other contracts (including joint venture
agreements) or instruments material to the Company's business in
connection with the consummation of the transactions contemplated by
this Agreement and (B) in promptly making any such filings, furnishing
information required in connection therewith and seeking to obtain
timely any such consents, permits, authorizations, approvals or
waivers. In case at any time after the Closing Date any further action
is necessary or desirable to carry out the purposes of this Agreement,
the proper officers and directors of each party to this Agreement shall
take all such necessary action.
SECTION 6.05. LEGAL CHALLENGES. The Company shall, upon the request of
Purchaser, take all reasonable steps to exclude the applicability of,
or to assist in any challenge by Purchaser to the validity, or
applicability to the Offer or any other transaction contemplated by
this Agreement. In the event that any action, suit, proceeding or
investigation relating hereto or to the transactions contemplated
hereby is commenced, whether before or after the Closing Date, the
parties hereto agree to cooperate and use their reasonable best efforts
to defend vigorously against it and respond thereto.
SECTION 6.06. NOTIFICATION OF CERTAIN MATTERS. The Company shall give
prompt notice to Purchaser, and Purchaser, as the case may be, shall
give prompt notice to the Company, of the occurrence, or
non-occurrence, of any event the occurrence, or non-occurrence, of
which is likely (a) to cause any representation or warranty of such
party contained in this Agreement to be untrue or inaccurate in any
material respect if made as of any time at or prior to the Closing
Date, and (b) to result in any material failure of such party to comply
with or satisfy any covenant, condition or agreement to be complied
with or satisfied hereunder (including the conditions set forth in
Exhibit A); provided, however, that the delivery of any notice pursuant
to this Section 6.06 shall not limit or otherwise affect the remedies
available hereunder to any of the parties receiving such notice.
SECTION 6.07. PRESS RELEASES. Purchaser and the Company shall consult
with each other before issuing any press release or otherwise making
any public statements with respect to the Offer or this Agreement and
shall not issue any such press release or make any such public
statement prior to such consultation (and affording the other party or
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parties an opportunity to comment thereon), except as they may
determine in their sole discretion may be required by Applicable Law or
stock exchange rules. As soon as practicable after signing of this
Agreement, the firm intention to commence an Offer shall be publicly
announced by both the Purchaser and the Company; provided, however,
that such announcement shall comply with Rule 14d-2(b) under the
Exchange Act and Rule 135 or Rule 165 under the Securities Act. The
contents of the announcement shall be in compliance with Section 3 of
the Netherlands Merger Code. In accordance with Section 17 of the
Netherlands Merger Code, the parties agree, to make prior to its
publication, a copy of the public announcement available to relevant
labor unions, if any, and to the Committee pursuant to Section 21 of
the Netherlands Merger Code.
SECTION 6.08. CROSS-MEDIA OWNERSHIP. The Company will use reasonable
best efforts to assist Purchaser to ensure that prior to the time
Purchaser consummates the Offer and accepts for payment and pays for
any Shares tendered pursuant thereto, the media cross ownership
restrictions in Hungary relating in particular but without limitation
to cross ownership of cable assets and broadcasting assets are not
violated as a result of Purchaser controlling the Company. In no event
shall any representation or warranty, covenant or condition of the
Company under this Agreement be violated or otherwise breached or
triggered by a violation of such media cross ownership restrictions in
Hungary.
SECTION 6.09. ACCOUNTANTS' COMFORT LETTERS. Each of the Purchaser and
the Company shall use its reasonable efforts to cause to be delivered
to the other two letters from their respective independent accountants,
one dated a date within two business days before the date on which the
Form S-4 Registration Statement shall have become effective and one
dated a date within two U.S. Business Days before the Closing Date, in
form and substance reasonably satisfactory to the recipient and
customary in scope and substance for comfort letters delivered by
independent accountants in connection with registration statements
similar to the Form S-4 Registration Statement.
SECTION 6.10. INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE.
(a) If the Offer is consummated, for a period of the earlier
of two years following the Closing Date or expiration of the limitation
period in which any action could be brought, Purchaser shall indemnify
and hold harmless, to the full extent permitted by the General
Corporation law of the State of Delaware ("DGCL") as if the DGCL were
to apply to the Company and Purchaser if they were corporations subject
to the DGCL, each present and former director or officer of the Company
and its Subsidiaries (collectively, the "INDEMNIFIED PARTIES") against
any costs or expenses (including reasonable attorneys' fees),
judgments, fines, losses, claims, damages or liabilities (collectively,
"COSTS"), such right of indemnification to include the right to
advancement of expenses incurred in the defense of any action or suit
promptly after statements therefor are received to the fullest extent
permitted by the DGCL; provided that the Indemnified Party to whom
expenses are advanced provides an undertaking to repay such advance if
it is ultimately determined that such party is not entitled to
indemnification. Notwithstanding the foregoing, Purchaser shall not be
liable for any settlement of any claim effected without Purchaser's
consent, which consent shall not be unreasonably withheld.
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<PAGE> 34
(b) If the Offer is consummated, for a period of the earlier
of two years following the Closing Date or expiration of the limitation
period in which any action could be brought, Purchaser shall maintain
officers' and directors' liability insurance ("D&O INSURANCE") for, or
cause Purchaser's existing D&O insurance to cover, those persons who
are serving as officers or directors of the Company on the date hereof.
(c) If the Purchaser or any of its successors or assigns (i)
shall consolidate with or merge into any other corporation or entity
and shall not be the continuing or surviving corporation or entity of
such consolidation or merger or (ii) shall transfer all or
substantially all of its properties and assets to any individual,
corporation or other entity, then, and in each such case, proper
provisions shall be made so that the successors and assigns of the
Purchaser shall assume all of the obligations set forth in this
Section.
(d) The provisions of this Section are intended to be for the
benefit of, and shall be enforceable by, each of the Indemnified
Parties.
ARTICLE VII
[INTENTIONALLY LEFT BLANK]
ARTICLE VIII
TERMINATION; AMENDMENT; WAIVER
SECTION 8.01. TERMINATION. This Agreement may be terminated at any time
prior to the Closing Date by action taken or authorized by the Board of
Directors of the terminating party or parties:
(a) by mutual written consent of Purchaser and the Company,
by action of their Supervisory Board and Managing Board, and Board of
Directors, respectively;
(b) by Purchaser or the Company, if any court of competent
jurisdiction or other Governmental Entity shall have issued an order,
decree or ruling (which order, decree or ruling the parties hereto
shall use reasonable efforts to lift), or taken any other action
restraining, enjoining or otherwise prohibiting any of the transactions
contemplated by this Agreement and which can reasonably be expected to
result in any of the consequences referred to in clauses (1)-(6) of
paragraph (iv)(a) of Exhibit A and such order, decree, ruling or other
action shall have become final and non-appealable;
(c) by the Company, if (i) Purchaser fails to commence the
Offer in violation of Section 1.01 hereof, (ii) Purchaser shall not
have accepted, or by law is not permitted to accept, for payment and
paid for Shares pursuant to the Offer in accordance with the terms
thereof on or before September 30, 2000, or (iii) Purchaser fails to
purchase validly tendered Shares in violation of the terms of this
Agreement;
(d) by Purchaser, if (A) due to an occurrence or circumstance
which would result in a failure to satisfy any of the Offer Conditions
contained in clause (iv) to
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<PAGE> 35
Exhibit A, Purchaser shall have not commenced the Offer within the time
provided for in Section 1.01 hereof, or (B) due to an occurrence or
circumstance which would result in a failure to satisfy any of the
Offer Conditions, Purchaser shall have either (1) terminated the Offer
without purchasing any Shares pursuant to the Offer or (2) not accepted
for payment Shares pursuant to the Offer prior to September 30, 2000;
(e) by the Company, prior to the purchase of Shares pursuant
to the Offer, if (i) the Company has given Purchaser at least two U.S.
Business Days advance notice of its intention to accept or recommend a
Superior Proposal and of all of the material terms and conditions of
such Superior Proposal in accordance with Section 6.02 and (ii) in
response to an unsolicited Acquisition Proposal, the Board of Directors
determines, after consultation with and the receipt of the advice of
its financial advisor and outside counsel, that such Acquisition
Proposal is a Superior Proposal and that failure to terminate this
Agreement would be inconsistent with the fiduciary duties of the Board
of Directors under Luxembourg Law; provided that the termination
described in this Section 8.01(e) shall not be effective unless and
until the Company shall have paid to Purchaser all of the Termination
Fee (as defined in Section 8.03 below);
(f) by Purchaser, prior to the purchase of Shares pursuant to
the Offer, if the Company shall have taken or the Board of Directors of
the Company shall have resolved to take, any of the actions referred to
in Section 6.02(d), or if the Company shall have withdrawn or modified,
or proposed publicly to withdraw or modify, in a manner adverse to
Purchaser, the approval or recommendation of the Offer as set forth in
Section 1.02(a); or
(g) by Purchaser, in accordance with the last paragraph of
Section 1.01(a)(ii).
SECTION 8.02. EFFECT OF TERMINATION. If this Agreement is terminated
pursuant to Section 8.01 hereof, this Agreement, except for the
provisions of Sections 8.02, 8.03 and Article IX hereof, shall
forthwith become void and have no effect, without any liability on the
part of any party or its directors, officers or shareholders. Nothing
in this Section 8.02 shall relieve any party to this Agreement of
liability for any breach of this Agreement.
SECTION 8.03. FEES AND EXPENSES.
(a) Whether or not the Offer is consummated, except as
otherwise specifically provided herein, all costs and expenses incurred
in connection with the Offer, this Agreement and the transactions
contemplated by this Agreement shall be paid by the party incurring
such expenses. Purchaser acknowledges and agrees that the Company shall
be entitled to pay or cause to be paid, at or prior to the Closing, all
fees, costs and expenses incurred by the Company in connection with the
Offer, this Agreement and the transactions contemplated by this
Agreement.
(b) In the event that this Agreement is terminated (1)
pursuant to Section 8.01(e) or 8.01(f) or (2) pursuant to Section
8.01(c)(ii) or 8.01(d) and (in the case of this clause (2) only) either
(A) prior to such termination an Acquisition Proposal (other than any
Acquisition Proposal made by or on behalf of, or encouraged, solicited
or initiated in any respect by, the Purchaser or any of its affiliates
or any of such persons' associates) shall have been made or publicly
announced and (B) within nine months thereafter any
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<PAGE> 36
Acquisition Proposal that is financially superior to the Offer shall
have been consummated (whether or not with a different third party),
then the Company shall pay the Purchaser a termination fee of US$90
million (which shall be deemed to include reimbursement for all fees
and expenses of the Purchaser related to the Offer, this Agreement, the
transactions contemplated hereby and any related financing) (the
"TERMINATION FEE") in immediately available funds by wire transfer to
an account designated by Purchaser. For the purposes of clause (2) of
this Section 8.03(b) only, "Acquisition Proposal" shall have the same
meaning ascribed to it in Section 6.02(f), except that references
therein to "20%" shall be read to substitute "25%" therefore. If such
amounts become payable pursuant to clause (1) of this Section 8.03(b),
they shall be payable simultaneously with such termination (in the case
of a termination by the Company) or within two business days thereafter
(in the case of a termination by Purchaser). If such amounts become
payable pursuant to clause (2) of this Section 8.03(b), they shall be
payable simultaneously with completion of such Acquisition Proposal. No
Termination Fee shall be payable pursuant to this Section 8.03 if
Purchaser shall be in material breach of its obligations under this
Agreement.
(c) In the event of the payment of a Termination Fee by the
Company pursuant to this Section 8.03, such Termination Fee shall be
the sole and exclusive remedy of Purchaser against the Company and any
of its Subsidiaries and their respective officers, directors,
employees, agents, advisors and other representatives with respect to
the breach of this Agreement.
(d) For purposes of this Section 8.03, this Agreement shall
be deemed terminated by Purchaser pursuant to a provision giving rise
to the obligation to pay the Termination Fee if at the time of any
termination hereunder Purchaser was so entitled to terminate this
Agreement pursuant to such provision.
(e) The prevailing party in any legal action undertaken to
enforce this Agreement or any provision hereof shall be entitled to
recover from the other party the reasonable costs and expenses
(including attorneys' and expert witness fees) incurred in connection
with such action.
SECTION 8.04. AMENDMENT. This Agreement may not be amended, changed,
supplemented or otherwise modified except by an instrument in writing
signed on behalf of all of the parties. The parties acknowledge that,
pursuant to Section 18 of the Netherlands Merger Code and the
procedures specified in Section 25 of the Netherlands Works Council
Act, this Agreement, and the documents in connection with the
transactions contemplated by this Agreement, may be subject to
amendment (with the consent of the Company and Purchaser) pursuant to
the results of any consultation with any labor unions or advice
provided by works councils, to the extent required.
SECTION 8.05. EXTENSION; WAIVER; REMEDIES.
(a) At any time prior to the Closing Date, the parties
hereto, by action taken by or on behalf of the respective boards of the
Company and Purchaser, may (i) extend the time for the performance of
any of the obligations or other acts of the other parties hereto, (ii)
waive any inaccuracies in the representations and warranties contained
herein by any other applicable party or in any document, certificate or
writing delivered pursuant hereto by any other applicable party or
(iii) waive compliance with any of the agreements or conditions
contained herein. Any agreement on the part of any party to any
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<PAGE> 37
such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party.
(b) All rights, powers and remedies provided under this
Agreement or otherwise available in respect hereof at law or in equity
shall be cumulative and not alternative, and the exercise of any
thereof by any party shall not preclude the simultaneous or later
exercise of any other such right, power or remedy by such party. The
failure of any party hereto to exercise any rights, power or remedy
provided under this Agreement or otherwise available in respect hereof
at law or in equity, or to insist upon compliance by any other party
hereto with its obligations hereunder, and any custom or practice of
the parties at variance with the terms hereof, shall not constitute a
waiver by such party of its right to exercise any such or other right,
power or remedy or to demand such compliance.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties made in Articles IV and V shall not
survive beyond the Closing Date. This Section 9.01 shall not limit any
covenant or agreement of the parties hereto which by its terms
contemplates performance after the Closing Date.
SECTION 9.02. ENTIRE AGREEMENT; ASSIGNMENT. This Agreement, together
with the Disclosure Letter delivered in connection herewith,
constitutes the entire agreement between the parties with respect to
subject matter hereof and supersedes all other prior agreements and
understandings, both written and oral, between the parties with respect
to subject matter hereof. The Agreement shall not be assigned by any
party by operation of law or otherwise without the prior written
consent of the other parties, provided, however, that Purchaser may
assign any of its respective rights and obligations to any direct or
indirect Subsidiary of Purchaser but no such assignment shall relieve
Purchaser of its obligations hereunder.
SECTION 9.03. ENFORCEMENT OF THE AGREEMENT; JURISDICTION. The parties
agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with
their specific terms or were otherwise breached. It is accordingly
agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement in the United
States District Court for the Southern District of New York ("SDNY")
located in the Borough of Manhattan, City of New York, this being in
addition to any other remedy to which they are entitled at law or in
equity. In addition, each of the parties hereto (a) consents to submit
itself to the non-exclusive personal jurisdiction of the SDNY in the
event any dispute arises out of this Agreement or any transaction
contemplated by this Agreement, (b) agrees that it will not attempt to
deny or defeat such personal jurisdiction by motion or other request
for leave from any such court and (c) waives any right to trial by jury
with respect to any action related to or arising out of this Agreement
or any transaction contemplated by this Agreement. The parties
irrevocably and unconditionally waive any objection to the laying of
venue of any action, suit or proceeding arising out of this Agreement
or the transactions contemplated hereby in the SDNY, and hereby further
irrevocably and unconditionally waive and agree not to plead
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<PAGE> 38
or claim in any such court that any such action, suit or proceeding
brought in any such court has been brought in an inconvenient forum.
SECTION 9.04. VALIDITY. Whenever possible, each provision or portion of
any provision of this Agreement will be interpreted in such manner as
to be effective and valid under applicable law but if any provision or
portion of any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or
rule in any jurisdiction such invalidity, illegality or
unenforceability will not affect any other provision or portion of any
provision in such jurisdiction, and this Agreement will be reformed,
construed and enforced in such jurisdiction as if such invalid, illegal
or unenforceable provision or portion of any provision had never been
contained herein.
SECTION 9.05. NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be given (and shall be deemed to have
been duly received if given) by hand delivery in writing or by
facsimile transmission with confirmation of receipt, as follows:
if to Purchaser:
United Pan-Europe Communications N.V.
Fred. Roeskestraat 123
PO Box 74763
1070 BT Amsterdam, The Netherlands
Attention: General Counsel
Facsimile: +31 20 778 9871
Telephone: +31 20 778 9872
with copies to:
Clifford Chance Rogers & Wells LLP
200 Park Avenue
New York, New York 10166
Attention: Bonnie A. Barsamian, Esq.
Facsimile: +1-212-878-8375
Telephone: +1-212-878-8000
and to:
Clifford Chance Limited Liability Partnership
200 Aldersgate Street
London EC1A 4JJ, England
Attention: Daniel Kossoff, Esq.
Facsimile: +44-207-600-5555
Telephone: +44-207-600-1000
if to the Company:
SBS Broadcasting S.A.
8-10 rue Mathias Hardt
L-1717 Luxembourg
Luxembourg
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<PAGE> 39
Attention: Corporate Secretary
Facsimile: +352-40-78-04
Telephone: +352-40-78-78
with copies to:
Sullivan & Cromwell
St. Olave's House
9a Ironmonger Lane
London EC2V 8EY
Attention: William A. Plapinger, Esq
Facsimile: +44-20-7710-6565
Telephone: +44-20-7710-6500
and to:
Arendt & Medernach
8-10 rue Mathias Handt
P.O. Box 39
L-2010 Luxembourg
Luxembourg
Attention: Guy Harles, Esq.
Facsimile: +352-40-78-04
Telephone: +352-40-78-78
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth
above.
SECTION 9.06. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
SECTION 9.07. DESCRIPTIVE HEADINGS. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be
part of or to affect the meaning or interpretation of this Agreement.
SECTION 9.08. PARTIES IN INTEREST. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in
this Agreement, express or implied, is intended to confer upon any
other Person any rights or remedies of any nature whatsoever under or
by reason of this Agreement.
SECTION 9.09. COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but all
of which, taken together, shall constitute one and the same agreement.
SECTION 9.10. ADJUSTMENTS TO PURCHASER SHARES. Except as otherwise
provided in Section 1.01(a)(iii), in the event that Purchaser carries
out a reclassification, stock split (including a reverse split), stock
dividend or stock distribution, recapitalization, subdivision or other
similar transaction with respect to Purchaser Shares prior to the
Closing Date, then the Offer Price, Exchange Ratio and other terms of
this Agreement relating to Purchaser Shares will be equitably adjusted.
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<PAGE> 40
SECTION 9.11 CERTAIN DEFINITIONS.
(a) "AEX-STOCK EXCHANGE" as referred to herein shall mean the
stock exchange held by Amsterdam Exchanges N.V.
(b) "ACQUISITION PROPOSAL" shall have the meaning assigned to
it in Section 6.02(f) of this Agreement.
(c) "AMSTERDAM EXCHANGE DAY" shall mean a day on which the
AEX-Stock Exchange is open for trading.
(d) The term "APPLICABLE LAW OR RULE" shall mean, as the
context may require, any statute, law, ordinance, rule, regulation,
order, judgment or decree in any jurisdictions applicable to the
relevant party or any of its Subsidiaries or by which any property or
asset of the relevant party or any of its Subsidiaries is bound or
affected (which shall include The Netherlands Merger Code), or any rule
or regulation of any stock exchange on which the shares or any other
securities of the relevant party are listed.
(e) The terms "AFFILIATE" and "ASSOCIATE" shall have the
meanings given to such terms in Rule 12b-2 under the Exchange Act.
(f) "AGGREGATE PAYMENTS" shall have the meaning assigned to
it in Section 4.09(e) of this Agreement.
(g) the "AVERAGE PRICE" shall have the meaning assigned to it
in Section 1.01(a) of this Agreement.
(h) "BASIC TERMS" shall have the meaning assigned to it in
Section 1.01(a) of this Agreement.
(i) The term "BENEFICIAL OWNERSHIP" shall have the meaning
given to such term in Rule 13d-3 under the Exchange Act.
(j) "BUSINESS DAY" shall mean any day of the week where the
commercial banks in The City of New York, The Netherlands and
Luxembourg are generally open for business.
(k) "CLOSING DATE" shall have the meaning assigned to it in
Section 1.01(a) of this Agreement.
(l) "COMMITTEE" shall have the meaning assigned to it in
Section 1.01(g) of this Agreement.
(m) "COMPANY ADVISER" shall have the meaning assigned to it
in Section 1.02(a) of this Agreement.
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(n) "COMPANY PERMITS" shall have the meaning assigned to it
in Section 4.12(b) of this Agreement.
(o) "COMPANY SEC REPORTS" shall have the meaning assigned to
it in Section 4.05(a) of this Agreement.
(p) "COMPANY SECURITIES" shall have the meaning assigned to
it in Section 3.02(b) of this Agreement.
(q) "CONFIDENTIALITY AGREEMENT" shall have the meaning
assigned to it in Section 6.02(a) of this Agreement.
(r) "CONSIDERATION CALCULATION DATE" shall have the meaning
assigned to it in Section 1.01(a) of this Agreement.
(s) "COSTS" shall have the meaning assigned to it in Section
6.10(a) of this Agreement.
(t) "DGCL" shall have the meaning assigned to it in Section
6.10(a) of this Agreement.
(u) "D&O INSURANCE" shall have the meaning assigned to it in
Section 6.10(b) of this Agreement.
(v) "EXCHANGE ACT" means the United States Securities
Exchange Act of 1934, as amended, and the rules and regulations
thereunder.
(w) "EXCHANGE AGENT" shall have the meaning assigned to it in
Section 3.02(b).
(x) "EXCHANGE RATIO" shall have the meaning assigned to it in
Section 1.01(a) of this Agreement.
(y) "FORM OF ELECTION" shall have the meaning assigned to it
in Section 3.02(b) of this Agreement.
(z) "FORMS S-4" shall have the meaning assigned to it in
Section 1.01(a).
(aa) "GOVERNMENTAL ENTITY" shall have the meaning assigned to
it in Section 4.04 of this Agreement.
(bb) "HSR ACT" shall have the meaning assigned to it in
Section 4.04 of this Agreement.
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(cc) "ILLEGALITY" shall have the meaning assigned to it in
Section 1.01(h) of this Agreement.
(dd) The term "INCLUDING" shall be deemed to be followed by
the phrase "without limitation."
(ee) "INDEMNIFIED PARTIES" shall have the meaning assigned to
it in Section 6.10(a) of this Agreement.
(ff) "INITIAL EXCHANGE RATIO" shall have the meaning assigned
to it in Section 1.01(a) of this Agreement.
(gg) The term "HEREBY" shall be deemed to refer to this
Agreement in its entirety, rather than to any Article, Section, or
other portion of this Agreement.
(hh) "MATERIAL ADVERSE EFFECT" shall mean (i) any change in or
effect on the business of the Company that is or would be reasonably
expected to be materially adverse to any of the condition (financial or
otherwise), business, properties, assets, liabilities or results of
operations of the Company and its Subsidiaries taken as a whole;
provided, however, that any such effect resulting from any adverse
change (i) in Applicable Law relating to the broadcasting or television
industries or in generally accepted accounting principles or
interpretations thereof or (ii) economic or business conditions in the
broadcasting or television industries shall not be considered when
determining whether a Material Adverse Effect has occurred.
(ii) "MATERIAL CONTRACT" shall have the meaning assigned to it
in Section 4.12(b) of this Agreement.
(jj) "MINORITY BUY-OUT" shall have the meaning assigned to it
in Section 1.06 of this Agreement.
(kk) "MIX AND MATCH ELECTION" shall have the meaning assigned
to it in Section 1.01(a) of this Agreement.
(ll) "NETHERLANDS MERGER CODE" shall mean the rules of conduct
which have to be taken into account in connection with the preparation
and making of a public offer for Shares and accomplishing mergers of
business, as formulated by the Committee and in effect from time to
time (SER-besluit Fusiegedragsregels 1975).
(mm) "OFFER" shall have the meaning assigned to it in
Section 1.01(a) of this Agreement.
(nn) "OFFER CONDITIONS" shall have the meaning assigned to it
in Section 1.01(a) of this Agreement.
(oo) "OFFER DOCUMENTS" means, collectively, the U.S. Offer
Documents and The Netherlands Offer Documents.
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<PAGE> 43
(pp) "PERSON" shall mean any individual, corporation, limited
liability company, partnership, association, trust, estate or other
entity or organization.
(qq) "PLAN" shall have the meaning assigned to it in
Section 4.09(a) of this Agreement.
(rr) "POTENTIAL ACQUIROR" shall have the meaning assigned to
it in Section 6.02(b) of this Agreement.
(ss) "PURCHASER DISCLOSURE LETTER" shall have the meaning
assigned to it in Article V of this Agreement.
(tt) "PURCHASER MATERIAL ADVERSE EFFECT" shall have the same
meaning as "Material Adverse Effect" as defined above, except that
references therein to the "COMPANY" shall be read to substitute
"PURCHASER" therefor.
(uu) "PURCHASER PERMITS" shall have the meaning assigned to
it in Section 5.07(b) of this Agreement.
(vv) "PURCHASER SHARES" shall have the meaning assigned to it
in Section 1.01(a) of this Agreement.
(ww) "REGISTRATION STATEMENT" shall have the meaning assigned
to in Section 1.01(f) of this Agreement.
(xx) "SCHEDULE 14D-9" shall have the meaning assigned to it
in Section 1.02(b) of this Agreement.
(yy) "SDNY" shall have the meaning assigned to it in Section
9.03 of this Agreement.
(zz) "SEC" shall have the meaning assigned to it in Section
1.01(a) of this Agreement.
(aaa) "SECURITIES ACT" means the United States Securities Act
of 1933, as amended, and the rules and regulations thereunder.
(bbb) "SHARES" means the outstanding shares of the common
stock of the Company, par value USD 1.50 per share, and any rights of
issued and outstanding shares of the common stock of the Company that
are held in the name of nominee Amsterdam Stock Exchange NV (ASAS).
(ccc) "SHARE SPLIT" shall have the meaning assigned to it in
Section 1.01(a) of this Agreement.
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<PAGE> 44
(ddd) "SCHEDULE TO" shall have the meaning assigned to it in
Section 1.01(b) of this Agreement.
(eee) The term "SUBSIDIARY" shall mean, when used with
reference to an entity, any other entity of which securities or other
ownership interests having ordinary voting power to elect a majority of
the board of directors or other persons performing similar functions,
or a majority of the outstanding voting securities of which, are owned
directly or indirectly by such entity.
(fff) "SUBSIDIARY SECURITIES" shall have the meaning assigned
to it in Section 3.02(b) of this Agreement.
(ggg) "SUPERIOR PROPOSAL" shall have the meaning assigned to
it in Section 6.02(f) of this Agreement.
(hhh) "TAKEOVER LAWS" shall have the meaning assigned to it in
Section 1.02(a) of this Agreement.
(iii) "TAX" shall mean all taxes, charges, fees, levies,
imposts, duties, and other assessments, including any income,
alternative minimum or add-on tax, estimated, gross income, gross
receipts, sales, use, transfer, transactions, intangibles, ad valorem,
value-added, franchise, registration, title, license, capital, paid-up
capital, profits, withholding, employee withholding, payroll, worker's
compensation, unemployment insurance, social security, employment,
excise (including the federal communications excise tax under Section
4251 of the Code), severance, stamp, transfer occupation, premium,
recording, real property, personal property, federal highway use,
commercial rent, environmental (including taxes under Section 59A of
the Code) or windfall profit tax, custom, duty or other tax, fee or
other like assessment or charge of any kind whatsoever, together with
any interest, penalties, related liabilities, fines or additions to tax
that may become payable in respect thereof imposed by any country, any
state, county, provincial or local government or subdivision or agency
thereof.
(jjj) "TERMINATION FEE" shall have the meaning assigned to it
in Section 8.03(b) of this Agreement.
(kkk) "TRIGGER EVENT" shall have the meaning assigned to it in
Section 1.01(a) of this Agreement.
(mmm) "US$" means United States Dollars.
(nnn) "U.S. BUSINESS DAY" shall mean any day on which the SEC
is open for business.
(ooo) "U.S. OFFER DOCUMENTS" shall have the meaning assigned
to it in Section 1.01(e) of this Agreement.
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<PAGE> 45
IN WITNESS WHEREOF, each of the parties has caused this Agreement
to be executed on its behalf by its officers thereunto duly authorized,
all at or on the day and year first above written.
<TABLE>
<CAPTION>
UNITED PAN-EUROPE COMMUNICATIONS N.V.
<S> <C>
By: /s/ Charles Bracken By: /s/ Anton Tuijten
-------------------- ---------------------
Name: Charles Bracken Name: Anton Tuijten
Title: Managing Director /Chief Title: General Counsel / POA
Financial Officer
SBS BROADCASTING S.A.
By: /s/ Harry Evans Sloan By: /s/ Howard A. Knight
---------------------- -----------------------
Name: Harry Evans Sloan Name: Howard A. Knight
Title: Chairman and Chief Executive Title: Vice Chairman and Chief Operating
Officer Officer
</TABLE>
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<PAGE> 46
EXHIBIT A
CONDITIONS TO THE OFFER
Capitalized terms used in this Exhibit A and not otherwise
defined herein shall have the meanings assigned to them in the
Agreement to which it is attached (the "EXCHANGE OFFER AGREEMENT").
Notwithstanding any other provision of the Offer, Purchaser
shall not be required to accept for payment, purchase or pay for any
Shares tendered in connection with the Offer and may terminate or,
subject to the terms of the Exchange Offer Agreement, amend the Offer
as to Shares not then paid for, if (i) there shall not be validly
tendered and not properly withdrawn prior to the expiration of the
initial offering period for the Offer (the "EXPIRATION DATE") that
number of Shares which, together with any Shares beneficially owned by
Purchaser or any of its affiliates, represents at least two-thirds of
the total number of outstanding Shares on a fully-diluted basis on the
date of purchase (the "MINIMUM TENDER CONDITION"), (ii) the
Registration Statement on Form S-4 shall not have been declared
effective by the SEC, (iii) (A) any applicable waiting period under the
HSR Act or approval required by the European Union Merger Task Force
shall not have expired, been terminated, or received, as applicable,
prior to the Expiration Date, or (B) any applicable waiting period or
approval required or which is appropriate under any relevant
competition or anti-trust laws and regulations in any Member State of
the European Union or any other relevant country (including
Switzerland, but excluding any cross-media ownership restrictions in
Hungary) shall not have expired, been terminated, or received, as
applicable, prior to the Expiration Date, the consequence of which in
the case of either (A) or (B) would reasonably be likely to have any of
the effects set forth in (a)(5) below, or (iv) at any time on or after
the date of the Exchange Offer Agreement and prior to the time of
payment for any Shares, any of the following conditions shall exist and
be continuing:
(a) there shall have been any statute, rule, regulation,
legislation, interpretation, judgment, order or injunction,
promulgated, enacted, entered, enforced, issued or amended, in each
case by a Governmental Entity applicable to the Purchaser, the Company,
or any of their respective affiliates that would reasonably be expected
to:
(1) make the acceptance for payment of, or payment
for or purchase of all or a substantial number of the Shares
pursuant to the Offer illegal, or otherwise prohibit the
consummation of the Offer;
(2) result in a material delay in or restrict (other
than in an immaterial way) the ability of Purchaser to accept
for payment, pay for or purchase pursuant to the Offer at
least such number of the Shares necessary to satisfy the
Minimum Tender Condition;
(3) render Purchaser unable to accept for payment or
pay for or purchase pursuant to the Offer at least such number
of Shares necessary to satisfy the Minimum Tender Condition;
42
<PAGE> 47
(4) impose material limitations (which shall not be
deemed to include any required compliance with the U.S.
federal securities laws) on the ability of Purchaser, its
Subsidiaries or affiliates to acquire or hold, transfer or
dispose of, or effectively to exercise all rights of ownership
of, all or a substantial number of the Shares, including the
right to vote the Shares purchased by it pursuant to the Offer
on an equal basis with all other Shares on all matters
properly presented to the shareholders of the Company;
(5) require the divestiture by Purchaser of a
material portion of any Shares (provided, however, that any
divestiture causing Purchaser to own less than the number of
Shares necessary to satisfy the Minimum Tender Condition shall
be deemed to be material), or require Purchaser or the Company
or any of their respective Subsidiaries or affiliates to
dispose of or hold separate all or any material portion of the
business, assets or properties of the Company and its
Subsidiaries taken as a whole (excluding Hungary by reason of
cross-media ownership restrictions), or impose any material
limitations on the ability of any of such entities to conduct
their businesses or own assets or properties material to the
Company and its Subsidiaries taken as a whole (excluding
Hungary by reason of cross-media ownership restrictions) or on
the ability of Purchaser to own a material portion of Shares
(provided, however, that any divestiture causing Purchaser to
own less than the number of Shares necessary to satisfy the
Minimum Tender Condition shall be deemed to be material), or
on the ability of Purchaser to conduct the business of the
Company and its Subsidiaries and own the assets and properties
of the Company and its Subsidiaries; or
(6) impose any material limitations on the ability of
Purchaser or any of its Subsidiaries or affiliates effectively
to control the business or operations of the Company and its
Subsidiaries;
(b) there shall have been instituted or be pending any action
or proceeding by any Governmental Entity challenging the making of the
Offer or the acquisition by Purchaser of the Shares pursuant to the
Offer which can reasonably be expected to result, directly or
indirectly, in any of the consequences referred to in clauses (1)
through (6) of paragraph (a) above;
(c) there shall have occurred and be continuing (1) any
general suspension of, or limitation on trading in securities on The
New York Stock Exchange or NASDAQ (other than any suspension or
limitation on trading in any particular security as a result of a
computerized trading limit or any intraday suspension due to "circuit
breakers"), (2) the declaration of any banking moratorium or any
suspension of payments in respect of banks or any limitation (whether
or not mandatory) on the extension of credit by lending institutions in
the United States, the United Kingdom or Germany, or (3) a decline at
any time for any three trading days in any consecutive five trading day
period of both (A) 30% or more in the Eurotop 300 index, as measured
against the closing value on the trading day immediately preceding the
date of this Agreement and (B) 20% or more in the closing sales price
per Purchaser Share as reported by NASDAQ, as measured against US$210;
43
<PAGE> 48
(d) any Person or "group" (as such term is used in Section
13(d)(3) of the Exchange Act) other than Purchaser or any of its
affiliates shall have become the beneficial owner (as that term is used
in Rule 13d-3 under the Exchange Act) of more than 25% of the
outstanding Shares;
(e) all consents, approvals, licenses, authorisations,
registrations, notices or other filings (including, without limitation,
broadcast licenses) (other than under any cross-media ownership
restrictions in Hungary) required to be obtained or made by the Company
or the Purchaser with or from any Governmental Entity or third party
(other than the Purchaser or any of its affiliates) in connection with
the execution, delivery and performance of the Exchange Offer
Agreement, the Offer and the transactions contemplated by the Exchange
Offer Agreement shall not have been obtained or made and such failure
would reasonably be expected to have a Material Adverse Effect on the
Company or the Purchaser or a material adverse effect on the ability of
the parties to consummate the transactions contemplated hereby;
(f) there shall have occurred any change, condition, event or
development that, individually or in the aggregate, has had or is
reasonably likely to have, a Material Adverse Effect with respect to
the Company;
(g) the Company shall have breached or failed to comply in
any material respect with any of its material obligations, covenants,
or agreements under the Exchange Offer Agreement, or any representation
or warranty of the Company contained in the Exchange Offer Agreement
that is qualified by reference to a Material Adverse Effect thereof
shall not be true and correct because there has been a Material Adverse
Effect, or any other representation or warranty shall not be true and
correct in any respect that (when taken together with all such other
representations and warranties not true and correct) has had or would
reasonably be likely to have a Material Adverse Effect, in each case as
of when made or at and as of any time thereafter, and which is
continuing;
(h) the Exchange Offer Agreement shall have been terminated
pursuant to its terms or shall have been amended pursuant to its terms
to terminate the Offer; or
(i) the Committee shall have issued in connection with the
Offer, a public admonition as a consequence of infringement by the
Company or any of its Subsidiaries of any of the stipulations of
Chapters I, II or III of the Netherlands Merger Code prior to the date
on which the Offer expires;
which, in the good faith judgment of Purchaser, in any case, giving rise to any
such condition, makes it inadvisable to proceed with the Offer or with
acceptance for payment or payment for Shares.
The foregoing conditions are for the sole benefit of Purchaser and may be
asserted or waived by Purchaser in whole or in part at any time or from time to
time in its discretion subject to the terms and conditions of the Exchange Offer
Agreement. The failure of Purchaser at any time to exercise any of the foregoing
rights shall not be deemed a waiver of any such right and each such right shall
be deemed an ongoing right which may be asserted at any time and from time to
time.
44
<PAGE> 1
EXHIBIT 2.2
To: SBS Broadcasting S.A.
8-10 rue Mathias Hardt
L-1717 Luxembourg
Luxembourg
From: United Pan-Europe Communications N.V.
Fred. Roeskestraat 123
P.O. Box 74763
1070 BT Amsterdam
The Netherlands
11 April 2000
Dear Sirs:
EXCHANGE OFFER AGREEMENT DATED AS OF MARCH 9, 2000 BETWEEN UNITED PAN-EUROPE
COMMUNICATIONS N.V. AND SBS BROADCASTING S.A. ("THE AGREEMENT")
This letter records our agreement that, notwithstanding the occurrence of a
Trigger Event giving rise to a right for Purchaser to terminate the Agreement,
Purchaser has elected not to terminate the Agreement, and instead Purchaser and
the Company have agreed to amend the Agreement pursuant to section 8.04 thereof
so that the last paragraph of section 1.01(a)(ii) of the Agreement is deleted in
its entirety and replaced by the following paragraph:
"Notwithstanding the foregoing, if the average closing sale price of
Purchaser Shares on NASDAQ for ten trading days selected at random (the
"Random Trading Days") on the Consideration Calculation Date from the
20 trading days prior to the Consideration Calculation Date is equal to
or less than US$147 (which number will be adjusted in accordance with
Section 1.01(a)(iii)) then the Purchaser may within one US Business Day
following the Consideration Calculation Date elect by giving notice to
the Company to terminate this Agreement, provided that if the Purchaser
does not so notify the Company within such one US Business Day period,
Purchaser shall not be entitled to terminate this Agreement pursuant to
this paragraph. The Random Trading Days shall be selected by the
Purchaser drawing random lots on the Consideration Calculation Date at
the London offices of the Purchaser at which a representative of the
Company shall be in attendance. For the purpose of this paragraph the
Consideration Calculation Date will be determined by the Purchaser as
being the third US Business Day prior to the date that would in the
Purchaser's reasonable opinion have been the commencement date of the
Offer based on the terms of this Agreement were it not for the
operation of this paragraph."
Purchaser hereby acknowledges its obligations, as provided in and subject to the
terms and conditions of the Agreement (and in particular sections 1.01(f) and
6.04 thereof), to (i) commence the Offer as promptly as practicable after the
SEC has declared that its Registration Statement on Form S-4 relating to the
Offer has become effective, and (ii) to use its reasonable best efforts to take,
or cause to be taken, all appropriate action, and to do, or cause to be done,
all things necessary, proper or advisable under any Applicable Law or Rule to
consummate and make effective, in the most expeditious manner practicable, the
transactions contemplated by the Agreement.
Capitalised terms used but not defined in this letter have the meanings assigned
to them in the Agreement. Please confirm your agreement to the above by
countersigning this letter and returning it to us in accordance with Section
9.05 of the Agreement.
<PAGE> 2
Yours faithfully,
United Pan-Europe Communications NV
/s/ John Riordan /s/ Mark Schneider
- -------------------------------------- -----------------------------------
By: John Riordan By: Mark Schneider
Title: Managing Director Title: Managing Director
We confirm our agreement to the above:
SBS Broadcasting SA
/s/ Harry Evans Sloan /s/ Howard A. Knight
- ----------------------------------- ------------------------------------
By: Harry Evans Sloan By: Howard A. Knight
Title: Chairman, Chief Executive Title: Vice Chairman, Chief
Officer Operating Officer
<PAGE> 1
EXHIBIT 2.3
SHARE EXCHANGE AGREEMENT
SHARE EXCHANGE AGREEMENT (this "Agreement"), dated 9 March, 2000, by and among
UNITED PAN-EUROPE COMMUNICATIONS N.V., a public limited liability company
(naamloze vennootschap) incorporated under the laws of The Netherlands
("Purchaser"), and each of the parties listed on the signature pages hereto
(each a "Shareholder", and collectively, the "Shareholders"). This Agreement
shall be deemed to be separate and several Agreements between Purchaser and each
Shareholder.
WHEREAS, each of the Shareholders is, as of the date hereof, the record and
beneficial owner of the shares of common stock, par value $1.50 per share (the
"Common Shares"), of SBS BROADCASTING S.A., a corporation organized under the
laws of Luxembourg (the "Company"), set forth opposite its name on Annex I
hereto;
WHEREAS, Purchaser and the Company concurrently herewith are entering into an
Exchange Offer Agreement, dated as of the date hereof (the "Exchange Offer
Agreement"), which provides, among other things, for the acquisition of Common
Shares by Purchaser by means of an exchange offer (the "Offer") by Purchaser for
all of the outstanding Common Shares, and upon the terms and subject to the
conditions set forth in the Exchange Offer Agreement; and
WHEREAS, as a condition to the willingness of Purchaser to enter into the
Exchange Offer, and in order to induce Purchaser to enter into the Exchange
Offer each of the Shareholders has severally agreed to enter into this
Agreement.
NOW, THEREFORE, in consideration of the execution and delivery by Purchaser of
the Exchange Offer Agreement and the mutual representations, warranties,
covenants and agreements set forth herein and therein, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
SECTION 1. Representations and Warranties of the Shareholder. Each of the
Shareholders hereby represents and warrants to Purchaser, severally and not
jointly, as follows:
(a) Such Shareholder is the beneficial owner of the Common Shares (as may
be adjusted from time to time pursuant to Section 6 hereof, the
"Shares") set forth opposite its name on Annex I to this Agreement.
Such Shares are held of record, in each case, by such Shareholder or by
a nominee or custodian of such Shareholder. On the date hereof, the
Shares opposite such Shareholder's name constitute all of the Shares
owned by such Shareholder. Such Shareholder has the exclusive right to
vote or dispose of (or exercise the voting or disposition of) such
Shares.
(b) If such Shareholder is a corporation, general partnership, limited
partnership, limited liability company, collective investment trust or
separate account, as the case may be, such Shareholder is duly
organized, validly existing and in good standing under the laws of its
respective jurisdiction of organization. Such Shareholder has all
requisite power and authority to enter into this
1
<PAGE> 2
Agreement and to consummate the transactions contemplated hereby and
has taken all corporate, partnership or other action necessary to
authorize the execution, delivery and performance of this Agreement.
This Agreement has been validly executed and delivered by such
Shareholder and (assuming due authorization, execution and delivery by
Purchaser) constitutes the legal, valid and binding obligation of such
Shareholder, enforceable against such Shareholder in accordance with
its terms, except as may be limited by bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium or other laws affecting
enforcement of creditors' rights generally and by general equitable
principles (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
(c) The execution and delivery of this Agreement by such Shareholder do
not, and the performance by such Shareholder of its obligations
hereunder will not, (i) conflict with, result in a violation or breach
of, constitute (with or without notice or lapse of time or both) a
default under, result in or give to any person any right of
termination, cancellation, modification or acceleration of, or result
in the creation or imposition of any Lien upon any of the assets or
properties of such Shareholder under, any of the terms, conditions or
provisions of (A), if such Shareholder is a corporation, partnership,
limited liability company, bank or other entity, the certificate or
articles of incorporation or bylaws, partnership agreement, limited
liability company agreement, trust agreement or other comparable
organisational governing documents of such Shareholder or (B) (x) any
Law or Order of any Governmental or Regulatory Authority applicable to
such Shareholder or any of its respective assets or properties, or (y)
any Contract to which such Shareholder is a party or by which such
Shareholder or any of its respective assets or properties is bound,
excluding from the foregoing clauses (x) and (y) conflicts, violations,
breaches, defaults, terminations, modifications, accelerations and
creations and impositions of Liens which, individually or in the
aggregate, would not be reasonably expected to have a material adverse
effect on the ability of such Shareholder to consummate the transaction
contemplated by this Agreement, or (ii) require any filing by such
Shareholder with, or any permit, authorization, consent or approval of,
any Governmental or Regulatory Authority or any third party other than
Schedule 13D or Schedule 13G and Form 4 and/or Form 5, or amendments
thereto, with the United States Securities and Exchange Commission, or
a notification to the Securities Board of The Netherlands (Stichting
Toezicht Effectenverkeer) pursuant to section 46b of the Netherlands
Securities Market Supervision Act 1995 (Wet toezicht effecten verkeer
1995) or pursuant to the Luxembourg Act on Disclosure of Significant
Shareholdings in Listed Companies (Loi du 4 decembre 1992 sur les
informations publies lors de l'acquisition et de la cession d'une
participation importante dans une societe cotee en bourse). There is no
beneficiary or holder of a voting trust certificate or other interest
of any trust of which such Shareholder is a trustee whose consent is
required for the execution and delivery of this Agreement or the
consummation by such Shareholder of the transaction contemplated
hereby.
2
<PAGE> 3
(d) The Shares and the certificates representing the Shares owned by such
Shareholder are now and at all times during the term hereof will be
held by such Shareholder, or by a nominee or custodian for the benefit
of such Shareholder, free and clear of all Liens, proxies, voting
trusts or agreements or understandings or arrangements whatsoever,
except for any such Liens or proxies arising hereunder, and not subject
to any preemptive rights.
SECTION 2. Representations and Warranties of Purchaser. Purchaser hereby
represents and warrants to each of the Shareholders as follows:
(a) Purchaser is a public limited liability company (naamloze vennootschap)
duly incorporated and validly existing under the laws of The
Netherlands and Purchaser has full corporate power and authority to
enter into this Agreement and to consummate the transactions
contemplated hereby and has taken all necessary corporate action to
authorize the execution, delivery and performance of this Agreement.
(b) This Agreement has been duly authorized, executed and delivered by
Purchaser and (assuming due execution and delivery by the Shareholders)
constitutes the legal, valid and binding obligation of Purchaser,
enforceable against Purchaser in accordance with its terms, except as
may be limited by bankruptcy, insolvency reorganization, moratorium or
other similar laws affecting enforcement of creditors' rights generally
(including the doctrine of voidable preference within the meaning of
section 3:45 of the Netherlands Civil Code and section 42 et seq. of
the Netherlands Bankruptcy Code) and by general equitable principles
(regardless of whether such enforceability is considered in a
proceeding in equity or at law).
(c) The execution and delivery of this Agreement by Purchaser do not, and
the performance by Purchaser of its obligations hereunder and the
consummation of the transactions contemplated hereby will not, conflict
with, result in a violation or breach of, constitute (with or without
notice or lapse of time or both) a default under, result in or give to
any person any right of termination, cancellation, modification or
acceleration of, or result in the creation or imposition of any Lien
upon any of the assets or properties of Purchaser under, any of the
terms, conditions or provisions of (A) the articles of association
(statuten) of Purchaser or (B) (x) any Law or Order of any Governmental
or Regulatory Authority applicable to Purchaser or any of its assets or
properties, or (y) any Contract to which Purchaser is a party or by
which Purchaser or any of its assets or properties is bound, excluding
from the foregoing clauses (x) and (y) conflicts, violations, breaches,
defaults, terminations, modifications, accelerations and creations and
impositions of Liens which, individually or in the aggregate, would not
be reasonably expected to have a material adverse effect on the ability
of Purchaser to consummate the transactions contemplated by this
Agreement.
SECTION 3. Purchase and Sale of the Shares. Each of the Shareholders hereby
severally (and not jointly) agrees to exchange the Shares set forth opposite its
name on Annex I to this Agreement into the Offer promptly, and in any event no
later than the fifth business day following the commencement of the Offer
pursuant to Section 1.01 of the Exchange Offer Agreement and not to withdraw any
Shares so exchanged unless the Offer is terminated or has expired; provided that
if such Shareholder shall thereafter
3
<PAGE> 4
acquire further Common Shares, then any such Shares shall be exchanged no later
than the second business day after such acquisition. Purchaser hereby agrees to
purchase all the Shares so exchanged at a price per Share equal to the Offer
Price (as such term is defined in the Exchange Offer Agreement) or any higher
price that may be paid in the Offer; provided, however, that Purchaser's
obligation to accept for payment and pay for the Shares in the Offer is subject
to all the terms and conditions of the Offer including those set forth in the
Exchange Offer Agreement and Exhibit A thereto.
SECTION 4. Transfer of the Shares; Proxies and Non-Interference. Prior to the
termination of this Agreement, except as otherwise provided herein, each of the
Shareholders severally agrees that it shall not, directly or indirectly, (i)
offer for sale, sell, transfer, tender, pledge, encumber, assign, or otherwise
dispose of, any or all of its Shares; (ii) enter into any Contract, option or
understanding with respect to any transfer of any or all of its Shares or any
interest therein; (iii) except as provided herein, grant any proxy,
power-of-attorney or other authorization or consent in or with respect to its
Shares; (iv) deposit its Shares into a voting trust or enter into a voting
agreement or arrangement with respect to its Shares; or (v) take any other
action that would in any way restrict, limit or interfere with the performance
of such Shareholder's obligations hereunder or the transactions contemplated
hereby. Notwithstanding the foregoing, each Shareholder may transfer its Shares
(i) as a bona fide gift or gifts, provided that the donee or donees thereof
agree to be bound by the terms and provisions set forth herein and executes and
delivers to Purchaser a copy of this Agreement, (ii) to any trust for the direct
or indirect benefit of the undersigned or the immediate family of the
undersigned, provided that the trustee of the trust agrees to be bound by the
terms and provisions set forth herein and executes and delivers to Purchaser a
copy of this Agreement or (iii) with the prior written consent of Purchaser. For
purposes of this Agreement, "immediate family" shall mean any relationship by
blood, marriage or adoption, not more remote than first cousin. In addition,
notwithstanding the foregoing, if the undersigned is a corporation, the
corporation may transfer the capital stock of the Company to any wholly-owned
subsidiary of such corporation; provided, however, that in any such case, it
shall be a condition to the transfer that the transferee execute an agreement
stating that the transferee is receiving and holding such capital stock subject
to the terms and provisions of this Agreement and there shall be no further
transfer of such capital stock except in accordance with this Agreement, and
provided further that any such transfer shall not involve a disposition for
value. Notwithstanding the foregoing, no transfer permitted hereunder shall
release the transferring Shareholder from its obligations under this Agreement
(including, without limitation, pursuant to Section 7 hereunder).
SECTION 5. Shareholder Capacity. No person executing this Agreement who is or
becomes during the term hereof a director of the Company makes any agreement or
understanding herein in his or her capacity as such director. Each Shareholder
signs solely in his or her capacity as the owner of, or the trustee of a trust
whose beneficiaries are the owners of, on a several (and not joint) basis, such
Shareholder's Shares. Each Shareholder is executing this Agreement severally
(and not jointly) in his individual capacity and not collectively and is not
forming a partnership group or other arrangement hereby.
SECTION 6. Certain Events. In the event of any share split, share dividend,
merger, reorganization, recapitalization or other similar change in the capital
structure of the Company affecting the Common
4
<PAGE> 5
Shares or the acquisition of additional shares of Common Shares or other
securities or rights of the Company by any Shareholder, the number of Shares
shall be adjusted appropriately, and this Agreement and the rights and
obligations hereunder shall attach to any additional shares of Common Shares or
other securities or rights of the Company issued to or acquired by any such
Shareholder.
SECTION 7. Certain Other Agreements. From the date of this Agreement until the
earlier of the termination of this Agreement or the Effective Time (as such term
is defined in the Exchange Offer Agreement), and shall not permit or authorize
any advisor or representative retained by or acting for or on behalf of any such
Shareholder to, directly or indirectly, (i) take any action to initiate,
solicit, continue, encourage or facilitate (including by way of furnishing or
disclosing non-public information) any inquiries or the making of any offer or
proposal with respect to a merger, reorganization, share exchange,
consolidation, business combination, recapitalization, liquidation, dissolution
or similar transaction involving the Company or any of its subsidiaries other
than in connection with Project Pluto or any proposal or offer to acquire in any
manner, directly or indirectly, 20% or more of the shares of any class of voting
securities of the Company or any of its subsidiaries or a substantial portion of
the assets of the Company or any of its subsidiaries, other than the
transactions contemplated by or as provided in the Exchange Offer Agreement or
by this Agreement (any of the foregoing being referred to as an "Acquisition
Proposal"), or (ii) except in his capacity as a director pursuant to the
Exchange Offer Agreement, engage in negotiations, discussions or communications
regarding or disclose any information relating to the Company or any of its
subsidiaries or afford access to the properties, books or records of the Company
or any of its subsidiaries to any person, corporation, partnership or other
entity or group (a "Potential Acquiror") that may be considering making, or has
made, an Acquisition Proposal or knowingly facilitate any effort or attempt to
make or implement an Acquisition Proposal or accept an Acquisition Proposal.
Each of the Shareholders shall (i) notify Purchaser promptly (and in any event
within one business day) after receipt by it of any Acquisition Proposal (or any
indication that any person is considering making an Acquisition Proposal) or any
request for non-public information relating to the Company or any of its
subsidiaries or for access to the properties, books or records of the Company or
any of its subsidiaries by any person that may be considering making, or has
made, an Acquisition Proposal, (ii) notify Purchaser promptly of any material
change to any such Acquisition Proposal received by it, indication or request
and (iii) upon reasonable request by Purchaser, provide Purchaser with all
material information about any such Acquisition Proposal, indication or request
received by it.
SECTION 8. Further Assurances. Each of the Shareholders shall, upon request of
Purchaser, take such further actions as may reasonably be necessary or desirable
to carry out the provisions hereof, provided that the Shareholders shall not be
required to incur any additional costs or expenses or receive less than the
agreed price as provided in Section 3 without their prior written consent.
SECTION 9. Termination. Except as otherwise provided in this Agreement, this
Agreement, and all rights and obligations of the parties hereunder, shall
terminate immediately upon the earlier of (i) the acquisition by Purchaser of
all of the Shares, (ii) the termination of the Exchange Offer Agreement in
accordance with its terms or provided, however, that Section 10 shall survive
any termination of this Agreement.
5
<PAGE> 6
SECTION 10. Expenses. All fees and expenses incurred by any party hereto shall
be borne by the party incurring such fees and expenses.
SECTION 11. Public Announcements. Each of the Shareholders and Purchaser agree
that they will not issue any press release or otherwise make any public
statement with respect to this Agreement or the transactions contemplated hereby
without the prior consent of the other party, which consent shall not be
unreasonably withheld or delayed; provided, however, that such disclosure can be
made without obtaining such prior consent if (i) the disclosure is required by
Law, and (ii) the party making such disclosure has first used its best efforts
to consult with the other party about the form and substance of such disclosure.
SECTION 12. Definitions. As used in this Agreement, the following terms shall
have the meanings indicated below:
"Contract" means any agreement, lease, evidence of indebtedness, mortgage,
indenture, security agreement or other contract (whether written or oral).
"Law" means any law, statute, rule, regulation, ordinance and other
pronouncement having the effect of law of the United States, any foreign country
or any domestic or foreign state, county, city or other political subdivision or
of any Governmental or Regulatory Authority.
"Liens" means any mortgage, pledge, assessment, security interest, lease, lien,
adverse claim, levy, charge or other encumbrance of any kind, or any conditional
sale Contract, title retention Contract or other Contract to give any of the
foregoing.
"Governmental or Regulatory Authority" means any court, tribunal, arbitrator,
authority, agency, commission, official or other instrumentality of the United
States, any foreign country or any domestic or foreign state, county, city or
other political subdivision.
"Order" means any writ, judgment, decree, injunction or similar order of any
Governmental or Regulatory Authority.
SECTION 13. Miscellaneous.
(d) All notices, requests and other communications hereunder must be in
writing and will be deemed to have been duly given only if delivered
personally or by facsimile transmission or mailed (first class postage
prepaid) to the parties at the following addresses or facsimile
numbers:
(A) if to any Shareholder, to such Shareholder at the
address set forth on the signature page hereto:
with copies to:
Sullivan & Cromwell
St. Olave's House
9a Ironmonger Lane
London EC2V 8EY
Attn: William A. Plapinger
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<PAGE> 7
Fax: +44 207 710 6565
Tel: +44 207 710 6800
and
(B) if to Purchaser, to:
United Pan-Europe Communications N.V.
Fred. Roeskestraat 123, P.O. Box 74763
1070 BT Amsterdam
The Netherlands 1070 BT
Telephone: +31 20 778 9872
Facsimile: +31 20 778 9871
Attention: General Counsel
with a copy to:
Clifford Chance Rogers & Wells LLP
200 Park Avenue
New York, New York 10166
Telephone: +1 212 878-8000
Facsimile: +1 212 878-8375
Attention: Bonnie A. Barsamian
and to:
Clifford Chance Limited Liability Partnership
200 Aldersgate Street
London EC1A 4JJ
Telephone: + 44 207 600 1000
Facsimile: + 44 207 600 5555
Attention: Daniel Kossoff
All such notices, requests and other communications will (i) if delivered
personally to the address as provided in this Section, be deemed given upon
delivery, (ii) if delivered by facsimile transmission to the facsimile number as
provided in this Section, be deemed given upon receipt, and (iii) if delivered
by mail in the manner described above to the address as provided in this
Section, be deemed given upon receipt (in each case regardless of whether such
notice, request or other communication is received by any other person to whom a
copy of such notice is to be delivered pursuant to this Section). Any party from
time to time may change its address, facsimile number or other information for
the purpose of notices to that party by giving notice specifying such change to
the other parties hereto.
(e) The headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of
this Agreement.
(f) This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but all of which shall be considered
one and the same agreement.
7
<PAGE> 8
(g) This Agreement constitutes the entire agreement, and supersedes all
prior agreements and understandings, whether written and oral, among
the parties hereto with respect to the subject matter hereof.
(h) This Agreement shall be governed by, and construed in accordance with,
the laws of the State of New York.
(i) Each party hereby irrevocably submits to the non-exclusive jurisdiction
of the United States District Court for the Southern District of New
York located in the Borough of Manhattan, City of New York in any
action, suit or proceeding arising in connection with this Agreement,
and agrees that any such action, suit or proceeding shall be brought in
such court (and waives any objection based on forum non conveniens or
any other objection to venue therein); provided, however, that such
consent to jurisdiction is solely for the purpose referred to in this
paragraph (f) and shall not be deemed to be a general submission to the
jurisdiction of said Courts or in the State of New York other than for
such purposes. Each party hereto hereby waives any right to a trial by
jury in connection with any such action, suit or proceeding.
(j) Neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by any of the parties hereto (whether by
operation of law or otherwise) without the prior written consent of the
other parties, and any such purported assignment shall be null and
void; provided, however, Purchaser may, without the prior written
consent of any Shareholder assign its rights and obligations to any of
its direct or indirect wholly owned subsidiaries in connection with, or
for the purpose of, effecting the transactions contemplated by the
Exchange Offer Agreement. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of and be
enforceable by, the parties and their respective successors and
assigns, and the provisions of this Agreement are not intended to
confer upon any person other than the parties hereto any rights or
remedies hereunder.
(k) If any term, provision, covenant or restriction herein is held by a
court of competent jurisdiction or other authority to be invalid, void
or unenforceable or against its regulatory policy, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall
remain in full force and effect and shall in no way be affected,
impaired or invalidated.
(l) Each of the parties hereto acknowledge and agrees that in the event of
any breach of this Agreement, each non-breaching party would be
irreparably and immediately harmed and could not be made whole by
monetary damages. It is accordingly agreed that the parties hereto (i)
will waive, in any action for specific performance, the defence of
adequacy of a remedy at law and (ii) shall be entitled, in addition to
any other remedy to which they may be entitled at law or in equity, to
compel specific performance of this Agreement.
(m) No amendment, modification or waiver in respect to this Agreement shall
be effective unless it shall be in writing and signed by each party
hereto.
8
<PAGE> 9
IN WITNESS WHEREOF, Purchaser and the Shareholders have caused this Agreement to
be duly executed and delivered as of the date first written above.
PURCHASER
By: /s/ Anton Tuijten
--------------------------------
Name: Anton Tuijten
Title: General Counsel/ POA
INDIVIDUAL SHAREHOLDERS:
By: /s/ Harry Evans Sloan
--------------------------------
Name: Harry Evans Sloan
Address: SBS Broadcasting S.A.
8-10 rue Mathias Hardt
L-1717 Luxembourg
By: /s/ Michael Finkelstein
--------------------------------
Name: Michael Finkelstein
Address: SBS Broadcasting S.A.
8-10 rue Mathias Hardt
L-1717 Luxembourg
By: /s/ Howard A. Knight
--------------------------------
Name: Howard A. Knight
Address: SBS Broadcasting S.A.
8-10 rue Mathias Hardt
L-1717 Luxembourg
By: /s/ Martin Lindskog
--------------------------------
Name: Martin Lindskog
Address: SBS Broadcasting S.A.
8-10 rue Mathias Hardt
L-1717 Luxembourg
9
<PAGE> 10
ANNEX I
Beneficial Ownership of Company Common Shares
Number of Shares
Harry Evans Sloan 819,366
Michael Finkelstein 125,000
Howard A. Knight 141,105
Martin Lindskog 6,723
10
<PAGE> 1
EXHIBIT 5.1
May 12, 2000
United Pan-Europe Communications N.V.
Fred. Roeskestraat 123
1070 BT Amsterdam
The Netherlands
Dear Sirs,
REGISTRATION STATEMENT ON FORM S-4
- ----------------------------------------------------------------------------
We render this opinion to be filed as an exhibit to the Registration Statement
on Form S-4 filed with the Securities and Exchange Commission (the "Registration
Statement") on 9 May 2000 by you, United Pan-Europe Communications N.V., a
public company with limited liability (naamloze vennootschap) incorporated under
the laws of the Netherlands (the "Company").
The Registration Statement relates to the proposed offer to exchange (the
"Exchange Offer") all outstanding shares of common stock of SBS Broadcasting
S.A. ("SBS") for ordinary shares A of the Company, nominal value Euro 1.00 per
share (the "Shares"), including American depositary shares representing ordinary
shares A of the Company, plus US$40.00 in cash (subject to adjustment as set
forth in the Registration Statement) and upon the terms and subject to the
conditions set forth in the Registration Statement.
We are members of the Amsterdam Bar and we express no opinion as to the laws of
any jurisdiction other than the laws of The Netherlands as it stands and has
been interpreted in published case law of the courts of The Netherlands as the
date hereof. We express no opinion on tax law.
In arriving at the opinions expressed below, we have examined and relied upon
only the following documents:
(a) a faxed copy of the Registration Statement dated 12 May 2000;
<PAGE> 2
(b) a faxed copy of a resolution taken by the Company's Board of Managing
Directors dated 12 May 2000, signed by all members of the Board of
Managing Directors;
(c) a faxed copy of a resolution taken by the Company's Board of
Supervisory Directors dated 8 March 2000, signed by all members of the
Board of Supervisory Directors;
(d) a faxed copy of a resolution taken by Company's General Meeting of
Priority Shareholders dated 8 March 2000;
(the resolutions referred to under (b) to (d) above collectively to be
referred to as the "Resolutions")
and such other documents as we have deemed necessary in connection with this
opinion. In examining and in describing the documents listed above and in giving
this opinion we have, with your permission, assumed:
(i) that the Registration Statement becomes and will remain effective;
(ii) the due compliance with all matters (including without limitation the
obtaining of the necessary consents, licences, approvals and
authorisations, the making of the necessary filings, lodgments,
registrations and notifications and the payment of stamp duties and
other taxes) under any law other than that of The Netherlands as may
relate to or be required in respect of (a) the Registration Statement
and (b) the Exchange Offer (including without limitation with regard to
the exchange and payment for SBS shares);
(iii) that insofar as any obligation in connection with the Registration
Statement fails to be performed in any jurisdiction outside The
Netherlands, such performance will not be illegal or contrary to the
public policy under the laws of that jurisdiction;
(iv) the genuineness of all signatures on all documents or on the originals
thereof, the authenticity and completeness of all documents submitted
as originals and the conformity of conformed, (photo)copy, faxed or
specimen documents to the originals thereof;
(v) that the Resolutions remain in full force and effect and unaltered; and
(vi) that the Shares will be paid for and delivered in accordance with the
Registration Statement and that as a matter of Luxembourg law the
Company will acquire valid title to the SBS shares tendered and not
withdrawn in the Exchange Offer.
We have not been concerned with investigating or verifying the accuracy of any
facts, certifications, representations or warranties stated or set out in the
Registration Statement or in the other documents listed above (with the
exception of those matters on which we specifically and expressly opine herein).
To the extent that the accuracy of such facts, certifications,
-2-
<PAGE> 3
representations and warranties not so investigated or verified and, we have
assumed, with your permission, that such facts, certifications, representations
and warranties (with the exception of those matters on which we specifically and
expressly opine herein) were true and accurate when made and remain true and
accurate.
Based upon and subject to the foregoing and to the further qualifications set
out below and subject to any factual matters, documents or events not disclosed
to us by the parties concerned, having regard to such legal considerations as we
deem relevant, we are of the following opinion:
Upon the completion of the Exchange Offer and the issue and exchange of the
Shares in the manner contemplated in the Registration Statement, the Shares will
be legally issued, fully paid up and non-assessable.
The opinion expressed above is subject to the following qualifications:
(A) the term "legal" as used above, means that any obligations assumed are
of a type which Netherlands law generally recognises; they do not mean
that these obligations will necessarily be enforced in all
circumstances in accordance with their terms;
(B) our opinion is subject to and limited by the provisions of any
applicable bankruptcy, insolvency, moratorium and other laws of general
application relating to or affecting generally the enforcement of
creditors' rights and remedies from time to time in effect.
This opinion is strictly limited to the matters stated herein and may not be
read as extending by implication to any matters not specifically referred to.
Nothing in this opinion should be taken as expressing an opinion in respect of
any information contained in the Registration Statement examined in connection
with this opinion, except as expressly confirmed herein.
This opinion:
(a) expresses and describes Netherlands legal concepts in English and not
in their original Dutch terms; these concepts may not be identical to
the concepts described by the English translations; consequently, this
opinion is issued and may only be relied upon on the express condition
that it shall be governed by and that all words and expressions used
herein shall be construed and interpreted in accordance with the laws
of The Netherlands;
(b) speaks as of the date stated above;
(c) is addressed to you and is solely for your benefit;
(d) is strictly limited to the matters set forth herein and no opinion may
be inferred or implied beyond that expressly stated herein;
-3-
<PAGE> 4
(e) may not be relied upon by or disclosed to any other person, company,
enterprise or institution, except for disclosure to your legal advisers
and any successors and assigns; and
(f) may not be used for any other purpose other than in connection with the
Registration Statement. We consent to the filing of this opinion as an
exhibit to the Registration Statement and further consent to the
references to our firm in the Registration Statement under the captions
"Legal Matters" in the prospectus which is a part of the Registration
Statement.
Yours faithfully,
/s/ JOACHIM FLEURY
JOACHIM FLEURY
-4-
<PAGE> 1
EXHIBIT 8.1
OPINION OF CLIFFORD CHANCE LIMITED LIABILITY PARTNERSHIP
United Pan-Europe Communications N.V.
Fred. Roeskestraat 123
1070 BT AMSTERDAM
The Netherlands
Amsterdam, May 12, 2000
United Pan-Europe Communications N.V. Offering of Ordinary Shares
and American Depositary Shares
Dear Ladies and Gentlemen,
We render this opinion to be filed as an exhibit to the Registration
Statement on Form S-4 filed with the Securities and Exchange Commission (the
"Registration Statement") by you, United Pan-Europe Communications N.V., a
public company with limited liability (naamloze vennootschap) incorporated under
the laws of the Netherlands ("UPC") and relating to the proposed offer to
exchange each outstanding share of common stock of SBS Broadcasting S.A. for
American Depositary Shares and Ordinary Shares of UPC.
GENERAL REMARKS
This opinion addresses only the statements in the Registration Statement
under the caption "Material Tax Consequences under Netherlands Law." We express
no opinion as to any law other than the tax laws of The Netherlands in force at
the date hereof as applied and interpreted according to present case law of the
Netherlands courts, administrative rulings and authoritative tax law scholars.
We also express no opinion on the tax laws of The Netherlands concerning (i) any
transaction, agreement or understanding between UPC and any person or entity
that is, or is deemed to be, affiliated to UPC and (ii) any matter other than
explicitly stated in this opinion.
We have assumed that all parties entered into the documents to which they
are expressed to be a party on arm's length terms.
We have no obligations to update this opinion.
OPINION
Introduction
Headings in this opinion are for ease of reference only and shall not
affect the information hereof. In connection with this opinion, we have examined
and rely upon the Registration Statement issued by UPC in connection with the
offering.
Opinion
In our opinion, the statements in the Registration Statement under the
caption "Material Tax Consequences under Netherlands Law" regarding any matter
of Dutch tax law referenced therein are correct in all material aspects.
<PAGE> 2
FINAL REMARKS
We consent to the filing of this opinion as an exhibit to the Registration
Statement and further consent to the references to our firm in the Registration
Statement under the captions "Legal Matters" in the prospectus which is a part
of the Registration Statement.
Very truly yours,
/s/ W.H.A. SPECKEN
--------------------------------------
W.H.A. Specken
<PAGE> 1
EXHIBIT 10.1
To: United Pan-Europe Communications N.V.
Fred. Roeskestraat 123
P.O. Box 74763
1070 BT Amsterdam
The Netherlands
9 March 2000
RE: EXCHANGE OFFER FOR COMMON STOCK OF SBS BROADCASTING S.A.
Ladies and Gentlemen:
The undersigned understands that United Pan-Europe Communications N.V. ("UPC")
has entered into that certain Exchange Offer Agreement dated as of March 9, 2000
(the "EXCHANGE AGREEMENT") by and between UPC and SBS Broadcasting S.A. ("SBS")
will (under the terms and conditions of the Exchange Offer Agreement) commence
an exchange offer (the "OFFER") for all of the outstanding shares of common
stock, par value $1.50, of SBS (the "SBS SHARES").
In order to induce UPC to enter into the Exchange Agreement, and for other good
and valuable consideration, the undersigned hereby irrevocably agrees that,
without the prior written consent of UPC, the undersigned will not and will use
its reasonable best efforts to ensure that his immediate family, trusts
benefiting him or his immediate family and persons controlled by any of them
separately or together, will not, nor will they solicit an offer, offer, sell,
offer to contract to sell, pledge, hypothecate, grant any option for the sale
of, or otherwise transfer or dispose of, directly or indirectly, any shares of,
or interest in, any Ordinary Shares A (including American Depository Shares
representing such Ordinary Shares A) of UPC (the "UPC SHARES") (or securities
convertible into or exercisable for UPC Shares) beneficially owned, or owned as
of record by any of them as of the date hereof or acquired by any of them
hereafter, for a period of 6 months from the completion date of the Offer.
Notwithstanding the foregoing, the undersigned may transfer the UPC Shares (i)
as a bona fide gift or gifts, provided that the donee or donees thereof agree to
be bound in writing by the restrictions set forth herein, or (ii) to any trust
for the direct or indirect benefit of the undersigned or the immediate family of
the undersigned, provided that the trustee of the trust agrees to be bound in
writing by the restrictions set forth herein, and provided further that any such
transfer shall not involve a disposition for value. For purposes of this
Agreement, "immediate family" shall mean any relationship by blood, marriage or
adoption, not more remote than first cousin, provided however, that in any such
case, it shall be a condition to the transfer that the transferee execute an
agreement stating that the transferee is receiving and holding such UPC Shares
subject to the provisions of this Agreement and there shall be no further
<PAGE> 2
transfer of such UPC Shares except in accordance with this Agreement, and
provided further that any such transfer shall not involve a disposition for
value.
The undersigned will execute any additional document reasonably necessary in
connection with the enforcement hereof. Any obligations of the undersigned shall
be binding on the undersigned's heirs, legal representatives, successors and
assigns.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK.
Very truly yours,
By: /s/ Harry Evans Sloan
---------------------------------
Name: Harry Evans Sloan
Title:
2
<PAGE> 1
EXHIBIT 10.2
To: United Pan-Europe Communications N.V.
Fred. Roeskestraat 123
P.O. Box 74763
1070 BT Amsterdam
The Netherlands
9 March 2000
RE: EXCHANGE OFFER FOR COMMON STOCK OF SBS BROADCASTING S.A.
Ladies and Gentlemen:
The undersigned understands that United Pan-Europe Communications N.V. ("UPC")
has entered into that certain Exchange Offer Agreement dated as of March 9, 2000
(the "EXCHANGE AGREEMENT") by and between UPC and SBS Broadcasting S.A. ("SBS")
will (under the terms and conditions of the Exchange Offer Agreement) commence
an exchange offer (the "OFFER") for all of the outstanding shares of common
stock, par value $1.50, of SBS (the "SBS SHARES").
In order to induce UPC to enter into the Exchange Agreement, and for other good
and valuable consideration, the undersigned hereby irrevocably agrees that,
without the prior written consent of UPC, the undersigned will not and will use
its reasonable best efforts to ensure that his immediate family, trusts
benefiting him or his immediate family and persons controlled by any of them
separately or together, will not, nor will they solicit an offer, offer, sell,
offer to contract to sell, pledge, hypothecate, grant any option for the sale
of, or otherwise transfer or dispose of, directly or indirectly, any shares of,
or interest in, any Ordinary Shares A (including American Depository Shares
representing such Ordinary Shares A) of UPC (the "UPC SHARES") (or securities
convertible into or exercisable for UPC Shares) beneficially owned, or owned as
of record by any of them as of the date hereof or acquired by any of them
hereafter, for a period of 6 months from the completion date of the Offer.
Notwithstanding the foregoing, the undersigned may transfer the UPC Shares (i)
as a bona fide gift or gifts, provided that the donee or donees thereof agree to
be bound in writing by the restrictions set forth herein, or (ii) to any trust
for the direct or indirect benefit of the undersigned or the immediate family of
the undersigned, provided that the trustee of the trust agrees to be bound in
writing by the restrictions set forth herein, and provided further that any such
transfer shall not involve a disposition for value. For purposes of this
Agreement, "immediate family" shall mean any relationship by blood, marriage or
adoption, not more remote than first cousin, provided however, that in any such
case, it shall be a condition to the transfer that the transferee execute an
agreement stating that the transferee is receiving and holding such UPC Shares
subject to the provisions of this Agreement and there shall be no further
<PAGE> 2
transfer of such UPC Shares except in accordance with this Agreement, and
provided further that any such transfer shall not involve a disposition for
value.
The undersigned will execute any additional document reasonably necessary in
connection with the enforcement hereof. Any obligations of the undersigned shall
be binding on the undersigned's heirs, legal representatives, successors and
assigns.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK.
Very truly yours,
By: /s/ Howard A. Knight
------------------------
Name: Howard A. Knight
Title:
2
<PAGE> 1
EXHIBIT 10.3
To: United Pan-Europe Communications N.V.
Fred. Roeskestraat 123
P.O. Box 74763
1070 BT Amsterdam
The Netherlands
9 March 2000
RE: EXCHANGE OFFER FOR COMMON STOCK OF SBS BROADCASTING S.A.
Ladies and Gentlemen:
The undersigned understands that United Pan-Europe Communications N.V. ("UPC")
has entered into that certain Exchange Offer Agreement dated as of March 9, 2000
(the "EXCHANGE AGREEMENT") by and between UPC and SBS Broadcasting S.A. ("SBS")
will (under the terms and conditions of the Exchange Offer Agreement) commence
an exchange offer (the "OFFER") for all of the outstanding shares of common
stock, par value $1.50, of SBS (the "SBS SHARES").
In order to induce UPC to enter into the Exchange Agreement, and for other good
and valuable consideration, the undersigned hereby irrevocably agrees that,
without the prior written consent of UPC, the undersigned will not and will use
its reasonable best efforts to ensure that his immediate family, trusts
benefiting him or his immediate family and persons controlled by any of them
separately or together, will not, nor will they solicit an offer, offer, sell,
offer to contract to sell, pledge, hypothecate, grant any option for the sale
of, or otherwise transfer or dispose of, directly or indirectly, any shares of,
or interest in, any Ordinary Shares A (including American Depository Shares
representing such Ordinary Shares A) of UPC (the "UPC SHARES") (or securities
convertible into or exercisable for UPC Shares) beneficially owned, or owned as
of record by any of them as of the date hereof or acquired by any of them
hereafter, for a period of 6 months from the completion date of the Offer.
Notwithstanding the foregoing, the undersigned may transfer the UPC Shares (i)
as a bona fide gift or gifts, provided that the donee or donees thereof agree to
be bound in writing by the restrictions set forth herein, or (ii) to any trust
for the direct or indirect benefit of the undersigned or the immediate family of
the undersigned, provided that the trustee of the trust agrees to be bound in
writing by the restrictions set forth herein, and provided further that any such
transfer shall not involve a disposition for value. For purposes of this
Agreement, "immediate family" shall mean any relationship by blood, marriage or
adoption, not more remote than first cousin, provided however, that in any such
case, it shall be a condition to the transfer that the transferee execute an
agreement stating that the transferee is receiving and holding such UPC Shares
subject to the provisions of this Agreement and there shall be no further
<PAGE> 2
transfer of such UPC Shares except in accordance with this Agreement, and
provided further that any such transfer shall not involve a disposition for
value.
The undersigned will execute any additional document reasonably necessary in
connection with the enforcement hereof. Any obligations of the undersigned shall
be binding on the undersigned's heirs, legal representatives, successors and
assigns.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK.
Very truly yours,
By: /s/ Michael Finkelstein
-----------------------------
Name: Michael Finkelstein
Title:
2
<PAGE> 1
EXHIBIT 10.4
To: United Pan-Europe Communications N.V.
Fred. Roeskestraat 123
P.O. Box 74763
1070 BT Amsterdam
The Netherlands
9 March 2000
RE: EXCHANGE OFFER FOR COMMON STOCK OF SBS BROADCASTING S.A.
Ladies and Gentlemen:
The undersigned understands that United Pan-Europe Communications N.V. ("UPC")
has entered into that certain Exchange Offer Agreement dated as of March 9, 2000
(the "EXCHANGE AGREEMENT") by and between UPC and SBS Broadcasting S.A. ("SBS")
will (under the terms and conditions of the Exchange Offer Agreement) commence
an exchange offer (the "OFFER") for all of the outstanding shares of common
stock, par value $1.50, of SBS (the "SBS SHARES").
In order to induce UPC to enter into the Exchange Agreement, and for other good
and valuable consideration, the undersigned hereby irrevocably agrees that,
without the prior written consent of UPC, the undersigned will not and will use
its reasonable best efforts to ensure that his immediate family, trusts
benefiting him or his immediate family and persons controlled by any of them
separately or together, will not, nor will they solicit an offer, offer, sell,
offer to contract to sell, pledge, hypothecate, grant any option for the sale
of, or otherwise transfer or dispose of, directly or indirectly, any shares of,
or interest in, any Ordinary Shares A (including American Depository Shares
representing such Ordinary Shares A) of UPC (the "UPC SHARES") (or securities
convertible into or exercisable for UPC Shares) beneficially owned, or owned as
of record by any of them as of the date hereof or acquired by any of them
hereafter, for a period of 6 months from the completion date of the Offer.
Notwithstanding the foregoing, the undersigned may transfer the UPC Shares (i)
as a bona fide gift or gifts, provided that the donee or donees thereof agree to
be bound in writing by the restrictions set forth herein, or (ii) to any trust
for the direct or indirect benefit of the undersigned or the immediate family of
the undersigned, provided that the trustee of the trust agrees to be bound in
writing by the restrictions set forth herein, and provided further that any such
transfer shall not involve a disposition for value. For purposes of this
Agreement, "immediate family" shall mean any relationship by blood, marriage or
adoption, not more remote than first cousin, provided however, that in any such
case, it shall be a condition to the transfer that the transferee execute an
agreement stating that the transferee is receiving and holding such UPC Shares
subject to the provisions of this Agreement and there shall be no further
<PAGE> 2
transfer of such UPC Shares except in accordance with this Agreement, and
provided further that any such transfer shall not involve a disposition for
value.
The undersigned will execute any additional document reasonably necessary in
connection with the enforcement hereof. Any obligations of the undersigned shall
be binding on the undersigned's heirs, legal representatives, successors and
assigns.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK.
Very truly yours,
By: /s/ Martin Lindskog
-------------------------------
Name: Martin Lindskog
Title:
2
<PAGE> 1
EXHIBIT 23.1
CONSENT OF ARTHUR ANDERSEN (UPC)
As independent accountants, we hereby consent to the incorporation by reference
in this Registration Statement of our report dated March 28, 2000 on the
consolidated financial statements of United Pan-Europe Communications N.V.
("UPC") included in UPC's Form 10-K for the year ended December 31, 1999, and to
all references to our Firm included in this Registration Statement.
/s/ Arthur Andersen
Amstelveen, The Netherlands
May 12, 2000
<PAGE> 1
EXHIBIT 23.2
CONSENT OF ARTHUR ANDERSEN (UTH)
As independent accountants, we hereby consent to the incorporation by reference
in this Registration Statement of our report dated March 19, 1999 on the
consolidated financial statements of United Telekabel Holding N.V. included in
United Pan-Europe Communications N.V.'s Form 10-K for the year ended December
31, 1999, and to all references to our Firm included in this Registration
Statement.
/s/ Arthur Andersen
Amstelveen, The Netherlands
May 12, 2000
<PAGE> 1
EXHIBIT 23.3
CONSENT OF ARTHUR ANDERSEN (ENECO)
As independent accountants, we hereby consent to the incorporation by reference
in this Registration Statement of our report dated April 14, 2000 on the
combined financial statements of ENECO KabelTV and Telecom Group included in
United Pan-Europe Communications N.V.'s 8-K filed April 19, 2000 and to all
references to our Firm included in this Registration Statement.
/s/ Arthur Andersen
Rotterdam, The Netherlands
May 12, 2000
<PAGE> 1
EXHIBIT 23.4
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated March 1, 2000, with respect to the consolidated
financial statements of SBS Broadcasting S.A., for the year ended December 31,
1999 which report appears in the annual report on Form 20-F, incorporated by
reference in the Form S-4 of United Pan-Europe Communications N.V. dated May 12,
2000.
/s/ Ernst & Young
Statsautoriseret Revisionsaktieselskab
Copenhagen, Denmark
May 12, 2000
<PAGE> 1
EXHIBIT 23.5
CONSENT OF KPMG POLSKA Sp.Z 0.0 (@Entertainment, Inc.)
The Board of Directors
@Entertainment, Inc.:
We hereby consent to the use of our report, dated March 29, 1999, on
@Entertainment, Inc.'s consolidated financial statements as of December 31, 1998
and 1997 and for the years ended December 31, 1998, 1997 and 1996, incorporated
by reference in this Registration Statement, and to the reference to our Firm
under the heading "Experts" in the Registration Statement.
/s/ KPMG
Warsaw, Poland
May 12, 2000
<PAGE> 1
EXHIBIT 23.6
Consent of Ernst & Young AB
As independent public auditors, we hereby consent to the incorporation by
reference in this Registration Statement of United Pan-Europe Communications
N.V. on Form S-4 of the English translation of our report dated May 4, 1999,
relating to the financial statements as of December 31, 1998 of NBS Nordic
Broadband Services AB (publ) Org No. 556536-1598, which report appears in
United Pan-Europe Communications N.V.'s Form 8-K/A dated September 17, 1999.
The original copy of this report is in the Swedish language. We also consent to
the reference to us under the heading "Experts" in such Registration Statement.
/s/ Ernst & Young AB
Stockholm, Sweden
May 12, 2000
<PAGE> 1
EXHIBIT 23.7
CONSENT OF PRICEWATERHOUSECOOPERS (SINGAPORE)
The Board of Directors
StjarnTVnatet AB
We hereby consent to the incorporation by reference in this Registration
Statement of United Pan-Europe Communications N.V. on Form S-4 of the English
translation of our report dated May 29, 1998, relating to the financial
statements and the financial statement schedule of Singapore Telecom
International Svenska AB (now StjarnTVnatet AB) org no 556497-8210, which appear
in the United Pan-Europe Communications N.V. Form 8-K/A dated September 17,
1999 on pages F-70 through F-88. The original signed copy of this report is in
the Swedish language. We also consent to the incorporation by reference of our
report dated September 17, 1999, relating to the Reconciliation of Significant
Differences between US and Swedish Generally Accepted Accounting Principles of
Singapore Telecom International Svenska AB which appear in the United Pan-Europe
Communications N.V. Form 8-K/A dated September 17, 1999 on pages F-89 through
F-91. We also consent to the references to us under the heading "Experts" in
such Registration Statement.
/s/ PricewaterhouseCoopers
Stockholm, Sweden
May 12, 2000
<PAGE> 1
EXHIBIT 23.8
PRICEWATERHOUSECOOPERS AUDITING STANDARDS LETTER
To the Board of Directors of Stjarn AB
(formerly Singapore Telecom International Svenska AB)
We conducted our audit of the financial statements of the Singapore Telecom
International Svenska as for the year ended March 31, 1998 in accordance with
auditing standards generally accepted in Sweden, which are substantially the
same as those generally accepted in the United States.
/s/ PricewaterhouseCoopers
Stockholm, Sweden
September 17, 1999
<PAGE> 1
EXHIBIT 23.9
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated March 28, 2000 with respect to the financial
statements of TV3 Ltd., Schlieran for the period July 9, 1999 to December 31,
1999 which report appears in the annual report on Form 20-F of SBS Broadcasting
S.A. for the year ended December 31, 1999, and in the Form 8-K of United
Pan-Europe Communications N.V. dated April 19, 2000, which is incorporated by
reference in the Form S-4 of United Pan-Europe Communications N.V. dated May 12,
2000.
/s/ ATAG Ernst & Young Ltd.
May 12, 2000
Zurich, Switzerland
<PAGE> 1
EXHIBIT 23.12
CONSENT OF DONALDSON, LUFKIN & JENRETTE INTERNATIONAL
We hereby consent to (i) the inclusion of our opinion letter, dated
March 9, 2000, to the Board of Directors of SBS Broadcasting S.A. (the
"Company") as Schedule II to the Prospectus of United Pan-Europe Communications
N.V. ("UPC") relating to the offer by UPC to exchange shares of Company Common
Stock for cash and American Depositary Shares representing UPC ordinary shares
A, and (ii) all references to us in the sections captioned "Questions and
Answers About the Proposed Acquisition," "Special Factors - Opinion of
Donaldson, Lufkin & Jenrette International, SBS's Financial Adviser" and
"Special Factors -- Position of UPC Regarding Fairness of the Exchange Offer"
of the Prospectus of UPC which forms a part of this Registration Statement on
Form S-4. In giving such consent, we do not admit that we come within the
category of persons whose consent is required under, and we do not admit that
we are "experts" for purposes of, the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.
DONALDSON, LUFKIN & JENRETTE
INTERNATIONAL
By: /s/ Lee A. LeBrun
------------------
Lee A. LeBrun
London, England
May 12, 2000
<PAGE> 1
EXHIBIT 24.1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Mark L. Schneider, Charles H.R. Bracken, Anton M.
Tuijten and Ray D. Samuelson, and each of them, his or her attorneys-in-fact,
with full power of substitution, for him or her in any and all capacities, to
sign a registration statement to be filed with the Securities and Exchange
Commission (the "Commission") on Form S-4 in connection with the registration by
United Pan-Europe Communications N.V., a Dutch Public limited liability company
(the "Company"), of ordinary shares A to be offered in exchange for shares of
common stock and/or other securities of SBS Broadcasting S.A., and all
amendments (including post-effective amendments) thereto, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Commission; and to sign all documents in connection with the qualification and
issuance of such notes with Blue Sky authorities; granting unto said
attorneys-in-fact full power and authority to perform any other act on behalf of
the undersigned required to be done in the premises, hereby ratifying and
confirming all that said attorneys-in-fact may lawfully do or cause to be done
by virtue hereof.
<TABLE>
<S> <C>
Date: April 13, 2000 /s/ CHARLES H.R. BRACKEN
---------------------------------------------
Charles H.R. Bracken, Board of Management
Member and Chief Financial Officer
Date: March 24, 2000 /s/ JOHN P. COLE, JR.
---------------------------------------------
John P. Cole, Jr., Supervisory Board Member
Date: March , 2000
---------------------------------------------
Richard De Lange, Supervisory Board Member
Date: March 24, 2000 /s/ MICHAEL T. FRIES
---------------------------------------------
Michael T. Fries, Chairman of the Supervisory
Board
Date: April 13, 2000 /s/ NIMROD J. KOVACS
---------------------------------------------
Nimrod J. Kovacs, Board of Management Member,
Managing Director, Eastern Europe and
Executive Chairman, UPC Central Europe
Date: March 24, 2000 /s/ JOHN F. RIORDAN
---------------------------------------------
John F. Riordan, President and Vice Chairman
Date: April 13, 2000 /s/ RAY D. SAMUELSON
---------------------------------------------
Ray D. Samuelson, Chief Accounting Officer
Date: March 24, 2000 /s/ MARK L. SCHNEIDER
---------------------------------------------
Mark L. Schneider, Chairman of the Board of
Management and Chief Executive Officer
Date: March 24, 2000 /s/ ELLEN P. SPANGLER
---------------------------------------------
Ellen P. Spangler, Supervisory Board Member
Date: April 13, 2000 /s/ ANTON M. TUIJTEN
---------------------------------------------
Anton M. Tuijten, Board of Management Member
and General Counsel
Date: March 24, 2000 /s/ TINA M. WILDES
---------------------------------------------
Tina M. Wildes, Supervisory Board Member
</TABLE>
