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TRANSACTION AGREEMENT
dated as of 12 December 1999
among
Cablecom Holding AG, a company incorporated under the laws of Switzerland with
place of incorporation in Frauenfeld and business offices at Zollstrasse 42,
CH-8005 Zurich, Switzerland
(the Seller)
and
NTL Incorporated, 110 East 58th Street, New York NY 10022, USA
(the Buyer)
and
Siemens Schweiz AG, Freilagerstrasse 40, P.O. Box, CH-8047 Zurich, Switzerland
Veba Telecom GmbH, Benniagsenplatz 1, D-40474 Dusseldorf, Germany
Swisscom AG, Alte Tiefenaustrasse 6, Worblaufen, CH-3050 Bern, Switzerland
(each, a Controlling Shareholder,
and collectively, the Controlling Shareholders)
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TABLE OF CONTENTS
<TABLE>
<S> <C>
1. DEFINITIONS AND INTERPRETATION....................................... 7
2. SALE AND PURCHASE.................................................... 8
2.1. Object of Sale................................................. 8
2.2. Purchase Price................................................. 9
2.2.1. General.................................................. 9
2.2.2. Payment.................................................. 9
2.2.3. Determination of Net Purchase Price...................... 10
2.2.4. Interest on Net Purchase Price........................... 11
2.2.5. Adjustment of Net Purchase Price for Net Assets.......... 11
2.2.6. Adjustment of Net Purchase Price for Less of Subscribers. 13
2.2.7. Intercompany Net Debt.................................... 14
3. CLOSING.............................................................. 14
3.1. Date and Place................................................. 14
3.2. Conditions Precedent to Closing................................ 15
3.2.1. Conditions to Obligations of Each Party.................. 15
3.2.2. Conditions to Obligations of Buyer....................... 16
3.2.3. Conditions to Obligations of Seller...................... 16
3.2.4. Termination.............................................. 17
3.3. Closing Actions................................................ 17
3.3.1. Actions by Seller........................................ 17
3.3.2. Actions by Buyer......................................... 18
4. ACTIONS PRIOR TO CLOSING............................................. 19
4.1. General........................................................ 19
4.2. Filings and Submissions........................................ 19
4.3. Termination and Transfer of Agreements......................... 20
4.4. Related Cablecom Assets and Related Cablecom Contracts......... 22
4.5. Transitional Arrangements...................................... 22
4.6. Lex Koller..................................................... 22
4.7. Dividends of the Cablecom Companies; Escrow Agreement.......... 23
4.8. Additional Provisions for Swiss Online Shares.................. 25
4.8.1. Closing of Transaction Agreement......................... 25
4.8.2. Call Option and Put Option after Closing................. 26
4.8.3. Delayed Closing.......................................... 27
4.8.4. Actions if Seller does not deliver SOL Shares............ 27
4.8.5. Notice to Swiss Online Shareholders...................... 28
5. REPRESENTATIONS AND WARRANTIES....................................... 28
5.1 Representations and Warranties of Seller........................ 28
</TABLE>
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<TABLE>
<S> <C>
5.1.1. Cablecom Holding AG...................................... 29
5.1.2. The Cablecom Companies................................... 29
5.1.3. Related Cablecom Assets; Related Cablecom Liabilities.... 34
5.2. Representations and Warranties of the Controlling Shareholders. 35
5.2.1. Corporate Existence and Authority........................ 35
5.2.2. Ownership of Shares in Cablecom Holding AG............... 36
5.2.3. Representations as to the Cablecom Companies............. 36
5.3. Representations and Warranties of the Buyer.................... 36
6. REMEDIES FOR BREACH OF REPRESENTATIONS AND WARRANTIES................ 38
6.1. Term of Representations and Warranties......................... 38
6.2. Remedies of Buyer.............................................. 38
6.2.1. Remedies................................................. 38
6.2.2. Notice of Breach and Opportunity to Defend............... 39
6.2.3. Exclusion of Liability................................... 40
6.2.4. Limitations on Liability................................. 42
6.2.5. Several Liability of Controlling Shareholders............ 43
6.2.6. Rights of Recourse against Directors, Officers
and Employees............................................ 43
6.3. Remedies of Seller............................................. 44
6.4. Remedies Exclusive............................................. 44
6.5. No Limitation.................................................. 44
7. CONDUCT OF BUSINESS BETWEEN SIGNING AND CLOSING...................... 44
7.1. General........................................................ 44
7.2. Consultation with Buyer........................................ 45
7.3. Restricted Actions............................................. 45
7.4. Covenants of Controlling Shareholders.......................... 48
7.5. Press Releases and Other Public Announcements.................. 48
8. CONDUCT OF BUSINESS AFTER CLOSING.................................... 49
8.1. Restrictions on Resale......................................... 49
8.2. Use of Cablecom Name and Trademark............................. 50
8.3. Liquidation of Seller.......................................... 50
8.4. Restrictive Covenant........................................... 50
8.5. Swisscom Arrangements.......................................... 51
9. TAXES, COSTS AND EXPENSES............................................ 51
9.1. Taxes.......................................................... 51
9.2. Costs and Expenses............................................. 52
10. GENERAL PROVISIONS.................................................. 52
10.1. Effect on Third Parties....................................... 52
10.2. Notices....................................................... 53
</TABLE>
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<TABLE>
<S> <C>
10.3. Entire Agreement.............................................. 54
10.4. Amendments and Waivers........................................ 54
10.5. Severability; Good Faith...................................... 55
10.6. Confidentiality............................................... 55
10.7. Entry into Effect............................................. 56
10.8. Commitment Letter............................................. 56
11. GOVERNING LAW AND JURISDICTION...................................... 57
11.1. Governing Law................................................. 57
11.2. Jurisdiction.................................................. 57
</TABLE>
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ANNEXES & EXHIBITS
Annexes
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Number Name
--------------------------------------------------------------------------------
A Definitions
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Exhibits
--------------------------------------------------------------------------------
Number Name
--------------------------------------------------------------------------------
1 List of Cablecom Companies
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2 List of Related Cablecom Assets and Related Cablecom Liabilities
--------------------------------------------------------------------------------
3 Commitment Letter of Buyer
--------------------------------------------------------------------------------
4 Schedule of Indebtedness of the Cablecom Companies
--------------------------------------------------------------------------------
5 Preliminary Combined Financial Statements
--------------------------------------------------------------------------------
6 Guarantees and Financial Support Arrangements
--------------------------------------------------------------------------------
7 Data Room Index
--------------------------------------------------------------------------------
8 Disclosure Letter
--------------------------------------------------------------------------------
9 Consolidated Financial Statements of the Cablecom Group as of
31 December 1998
--------------------------------------------------------------------------------
10 Consolidated Interim Financial Statements of the Cablecom Group
as of 30 September 1999
--------------------------------------------------------------------------------
11 Number of Subscribers to Cablecom
--------------------------------------------------------------------------------
12 Real Estate owned or leased by the Cablecom Subsidiaries
--------------------------------------------------------------------------------
13 Dividend Payments
--------------------------------------------------------------------------------
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THIS TRANSACTION AGREEMENT (Agreement) is made as of 12 December 1999 among
Cablecom Holding AG, a company incorporated under the laws of Switzerland
(Seller), and NTL Incorporated, a company Incorporated under the laws of
Delaware, USA (Buyer), and Siemens Schweiz AG, a company incorporated under the
laws of Switzerland, Veba Telecom GmbH, a company Incorporated under the laws of
Germany, and Swisscom AG, a company incorporated under the laws of Switzerland
(each, a Controlling Shareholder, and collectively, the Controlling
Shareholders).
WHEREAS -:
A. Seller is a corporation incorporated under the laws of Switzerland with
statutory domicile in Frauenfeld TG. The share capital of Seller is CHF
100,000,000, divided into 100,000 registered shares with a par value of
CHF 1,000 each. The shares of Seller are held as follows:
<TABLE>
<CAPTION>
Number of Percentage of
Shareholder Shares held Shares held
<S> <C> <C>
Siemens Schweiz AG 32,000 32%
Veba Telecom GmbH 32,000 32%
Swisscom AG 32,000 32%
Cablecom Holding AG 4,000 4%
</TABLE>
B. Seller is the direct or indirect owner of the shares in the companies
listed in Exhibit 1 (collectively, the Cablecom Companies). The share
capital and number of shares of each such company are further set out in
Exhibit 1. Seller Is further the owner of the assets, and debtor of the
liabilities, listed in Exhibit 2.
C. The Cablecom Companies are active as providers of cable television and
radio services, internet services, consumer electronics, engineering and
owners of a fixed-line network In Switzerland.
D. The Controlling Shareholders have decided to procure the sale of all
business activities directly or indirectly controlled by Cablecom Holding
AG to a third party buyer. The Controlling Shareholders have determined to
do this by means of (A) a sale of (i) all shares held by Seller in the
Cablecom Subsidiaries, and (ii) all Related Cablecom Assets and Related
Cablecom Contracts, and (B) a transfer of all Related Cablecom
Liabilities.
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E. Buyer wishes to buy all shares in the Cablecom Companies and all Related
Cablecom Assets and the benefit (subject to the burden) of all Related
Cablecom Contracts, and has agreed to assume all Related Cablecom
Liabilities, pursuant to and subject to the terms and conditions set forth
in this Agreement. Buyer has, in this connection, delivered to Seller a
commitment letter in the form set out in Exhibit 3 hereto confirming that
Buyer is, and will be as of the Closing Date, in a position to finance its
commitments under this Agreement.
F. Buyer has the right to consummate the transactions contemplated under this
Agreement directly or through an Affiliate of Buyer, it being understood
that Buyer shall remain jointly and severally liable with any such
Affiliate for all obligations under this Agreement as further set out in
Section 10.1.
NOW, THEREFORE, the parties hereto agree as follows:
1. DEFINITIONS AND INTERPRETATION
Terms used in this Agreement in capitalized form shall have the meanings
ascribed to them in Annex A.
Unless the context requires otherwise:
(i) references in this Agreement to any gender shall include other genders;
(ii) references to a person shall include a reference to a natural person,
incorporated entity, unincorporated business association, partnership or
trust;
(iii) references to any statute or statutory provision shall include any
instrument, order, regulation or direction made or issued under such
statute or statutory provision, as amended from time to time up to the
Effective Date;
(iv) references to any Swiss legal term for actions, remedies, or any legal
concept or thing shall, in respect of any non-Swiss jurisdiction, be
deemed to include what most nearly approximates to the Swiss legal term in
such jurisdiction;
(v) references to times or dates shall be understood as referring to the time
or date prevailing in Switzerland.
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2. SALE AND PURCHASE
2.1. Object of Sale
Subject to the terms and conditions set forth in this Agreement, Seller hereby
undertakes to sell (or to procure the sale) and to transfer, assign and deliver
(or to procure the same) to Buyer, and Buyer hereby undertakes to buy (or to
procure the purchase) from Seller at the Closing Date the legal and beneficial
ownership free from all liens, charges and other third-party rights, other than
as described herein:
(a) the Sale Shares (subject to Section 4.8);
(b) the Related Cablecom Assets;
(c) the benefit (subject to the burden) of the Related Cablecom Contracts.
Buyer further undertakes to assume (or procure the assumption of) all the
Related Cablecom Liabilities (including, for the avoidance of doubt, the
employment agreements referred to in Exhibit 2). The Sale Shares, the Related
Cablecom Assets, the Related Cablecom Contracts and the Related Cablecom
Liabilities, which shall be transferred to Buyer pursuant to this Agreement,
shall collectively be referred to as the Cablecom Business.
The transactions contemplated by this Agreement may be consummated by an
Affiliate of Buyer in accordance with this Agreement, it being understood that
(i) Buyer shall retain Control over such Affiliate, and (ii) Buyer shall remain
jointly and severally liable for all obligations of such Affiliate.
The transactions contemplated hereunder shall become effective as of 1 January
2000, 00:01 a.m. (the Effective Date). The sale and purchase of the Sale Shares
and the Related Cablecom Assets and Related Cablecom Contracts shall include any
rights and privileges thereon (including profits accrued from the Effective Date
to the Closing Date), and the assumption of the Related Cablecom Liabilities
shall include all interest accrued and outstanding on such liabilities from the
Effective Date to the Closing Date.
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Buyer shall not be obliged to complete the purchase of the Cablecom Business
unless the sale of all of the Cablecom Business is completed substantially
simultaneously, subject, however, to the provisions of Section 4.4, 4.5, 4.6 and
4.8.
2.2. Purchase Price
2.2.1. General
The total purchase price (the Purchase Price) payable by Buyer to Seller in
connection with the transfer of Cablecom Business amounts to CHF 5,800,000,000
(five billion eight-hundred million Swiss Francs), plus interest and subject to
adjustment pursuant to this Section 2.2. The above is subject to the provisions
of Section 4.8.
2.2.2. Payment
Subject to the provisions of Section 4.8, the Purchase Price shall be payable as
follows:
(a) on the Closing Date, Buyer shall assume or cause the assumption or permit
the continuing effect of all Third Party Financial Debt outstanding as of
the Closing Date, including accrued and unpaid interest, and procure that
Seller and the Controlling Shareholders are released from any and all
obligations with respect to such Third Party Financial Debt. For the
purposes of the foregoing, Seller shall provide to Buyer, no later than
five business days prior to the Closing Date, complete and accurate
details of the Third Party Financial Debt. It is understood and agreed
that any redemption penalties or costs of early repayment in relation to
the assumption of Third Party Financial Debt shall be for the account of
Seller;
(b) on the Closing Date, Buyer shall procure that all Parent Intercompany
Debt, including accrued and unpaid interest, outstanding as of the Closing
Date is repaid, including the assumption of any guarantees or any other
financial support arrangements (particulars of which are set out in
Exhibit 6) of Seller or the Controlling Shareholders;
(c) on the Closing Date, Buyer shall pay to Seller (aa) the Net Purchase Price
calculated in accordance with Section 2.2.3., together with interest
calculated in accordance with Section 2.2.4 and subject to adjustment
pursuant to Sections 2.2.5 and 2.2.6, and (bb) the Cash payment referred
to in Section 2.2.3(e) together with interest calculated thereon in
accordance with Section 2.2.4.
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2.2.3. Determination of Net Purchase Price
Subject to the provisions of Section 4.8, the Net Purchase Price is CHF
5,353,391,000 (five billion three hundred and fifty-three million three hundred
ninety-one thousand Swiss Francs) and has been calculated as follows: attached
hereto as Exhibit 5 are the preliminary combined financial statements of the
Cablecom Business as of 31 December 1999 (the Preliminary Combined Financial
Statements), which has served as a basis for the calculation of the Net Purchase
Price as follows:
(a) With respect to the Cash, the Third Party Financial Debt and the
Intercompany Net Debt of the Cablecom Business as of 31 December 1999, as
determined in the Preliminary Combined Financial Statements:
(i) the Third Party Financial Debt projected to be outstanding as of 31
December 1999 has been deducted from the Purchase Price;
(ii) the Intercompany Net Debt, including accrued and unpaid interest,
projected to be outstanding as of 31 December 1999 has been deducted
from (or, as the case may be, added to) the Purchase Price;
(iii) the Cash projected to be outstanding as of 31 December 1999 has been
added to the Purchase Price.
(b) The balance of the calculation pursuant to Section 2.2.3(a) shall be the
Net Purchase Price, payable on the Closing Date with interest accrued
thereon (as calculated in accordance with Section 2.2.4.).
(c) It is understood, for the sake of clarity, that the Net Purchase Price
will not change until the Closing Date (even though the Third Party
Financial Debt, the Parent Intercompany Debt and the Cash may vary by
interest or otherwise between 31 December 1999 and the Closing Date),
provided, however, that the Net Purchase Price may be adjusted pursuant to
Section 2.2.5. and 2.2.6.
(d) Seller shall make available to Buyer and its advisors the books, records,
documents and work papers (including work papers of auditors) underlying
the preparation and review of the Preliminary Combined Financial
Statements and the Final Combined Financial Statements. Seller shall
further procure that Buyer is given reasonable access to the members of
management and auditors of the Cablecom Group involved in the preparation
of the financial statements for the purposes of reviewing the same.
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(e) It is understood and agreed that any cash received by the Cablecom
Companies prior to the Effective Date in respect of accounts receivable
for cable television subscriptions for the business year 2000 shall be for
the benefit of Seller, and that any cash received by the Cablecom
Companies on or after the Effective Date in respect of accounts receivable
in respect of cable television subscription for the business year 2000
shall be for the benefit of Buyer.
(f) It is further understood and agreed that any special bonuses payable to
the management of the Cablecom Group in connection with the transactions
contemplated by this Agreement will be paid by Seller and not by any
Cablecom Company, and will therefore not lead to any further reduction or
adjustment of the Net Purchase Price.
2.2.4. Interest on Net Purchase Price
Subject to Section 4.8, the Net Purchase Price shall bear interest from 1 April
2000 through to the Closing Date at a rate determined two business days prior to
1 April 2000 of 9-month EURIBOR plus 300 basis points, unless Closing has not
occurred or been substantially delayed due to (i) a material breach by Seller or
any of the Controlling Shareholders of its or their obligations under Section 4,
or (ii) a judgment, injunction or order having been issued against any of the
parties hereto due to the fault of Seller or any of the Controlling
Shareholders.
2.2.5. Adjustment of Net Purchase Price for Net Assets
Promptly following 31 December 1999, but in no event later than 90 days
thereafter, Seller shall submit to Buyer the audited combined financial
statements of the Cablecom Business as of 31 December 1999 (the Final Combined
Financial Statements), it being understood that Seller shall notify Buyer no
less than 10 business days before delivery of the Final Combined Financial
Statements and the Final Net Assets calculation that such documents will be
delivered. The Final Combined Financial Statements shall be prepared in
accordance with the consistently applied Accounting Principles and shall be
accompanied by a draft audit opinion addressed to Seller in respect of such
financial statements.
The Net Purchase Price will be subject to adjustment as follows:
(a) Seller will, in the course of preparing the Final Combined Financial
Statements, calculate the Final Net Assets as of 31 December 1999,
projected to be at CHF 1,122,282,000 (one billion one hundred twenty-two
million two hundred eighty-
<PAGE> 12
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two thousand Swiss francs). If the Final Net Assets as of 31 December 1999
(with accrued profits, but before accrual or payment of dividends for the
financial year 1999) are more than CHF 20,000,000 (twenty million Swiss
Francs) below this figure, i.e., lower than CHF 1,102,282,000 (one billion
one hundred and two million two hundred eighty-two thousand Swiss francs),
Seller will compensate Buyer for the shortfall below CHF 1,102,282,000 on
a Franc-by-Franc basis, the Net Purchase Price being reduced accordingly.
(b) In the event Buyer disputes the correctness of the Final Net Assets
calculation, Buyer shall notify Seller of its objections within 10
business days after receipt of the Final Net Assets calculation and shall
set forth, in writing and reasonable detail, the reasons for its
objection. If Buyer fails to deliver such notice of objection within such
time, Buyer shall be deemed to have accepted the Final Net Assets
calculation. Seller and Buyer shall endeavor in good faith to resolve any
disputed matters within 20 days after Seller's receipt of Buyer's notice
of objection. If they are unable to do so, Seller and Buyer shall jointly
appoint a major international firm of independent chartered accountants
(the Appraiser) to resolve the matters in dispute. If the parties fail or
refuse to appoint the Appraiser, each party may call upon the then
President of the Zurich Chamber of Commerce to appoint the Appraiser. The
Appraiser shall be independent of the parties and shall not have been
involved in any of the transactions contemplated under this Agreement. The
Appraiser shall resolve the matters in dispute within 20 days of its
appointment. Such determination shall be final and binding on the parties
for whatsoever purpose under this Agreement and may not be challenged
pursuant to Section 11.2 except in case of fraud, gross negligence or
manifest error of the Appraiser. The costs of the Appraiser shall be borne
by the parties pursuant to Section 9.2.
(c) A dispute on the calculation of the Final Net Assets shall not prevent the
Closing from taking place. In case of such a dispute the adjustment of the
Net Purchase Price shall take place after the Closing as soon as the
Appraiser has rendered its opinion. Pending resolution of such dispute,
the Buyer shall be entitled at Closing to retain the amount of the alleged
reduction from the Net Purchase Price. Upon final determination or
agreement of the dispute,
(i) to the extent the dispute is determined or agreed in favor of
Seller, Buyer shall forthwith pay to Seller the retained amount with
interest at the rate stated in Section 2.2.4. calculated from 1
April 2000 to the payment date; or
(ii) to the extent the dispute is determined or agreed in favor of Buyer,
Buyer shall be entitled to retain the amount of the retention as
represents the required reduction of the Net Purchase Price, and
shall pay the balance, if any, to Seller. If there is any shortfall
between the amount retained and the
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required reduction, the Seller shall pay the shortfall to Buyer,
including interest at the rate stated in Section 2.2.4, calculated
from 1 April 2000 to the payment date.
(d) If any event has occurred that leads to an adjustment on the Final Net
Assets (the Adjustment Event), and once the Final Net Assets have been
agreed between the parties or determined by the Appraiser, any claim for
misrepresentation or breach of warranty pursuant to Section 5 with respect
to the factual basis and the matters underlying such Adjustment Event
shall be deemed to be settled, and any further claims arising therefrom
shall be excluded.
2.2.6. Adjustment of Net Purchase Price for Loss of Subscribers
If, as a result of a judgment, injunction or order being issued by any competent
governmental, regulatory, administrative or judicial authority, Buyer is
prevented at Closing from acquiring or assuming control of 3% or more of
Cablecom's cable television subscribers (calculated under the "Equity
Subscribers" method as set forth in Exhibit 11), the Net Purchase Price shall be
adjusted in accordance with the following principles:
(a) upon Closing, Seller and Buyer shall jointly in good faith determine the
number of cable television subscribers of the Cablecom Group as to which
Buyer is prevented from acquiring or assuming control as of Closing (the
Relevant Subscribers), compared to the relevant number as of 30 September
1999 and not including any permitted purchases of networks after such
date.
(b) If the number of Relevant Subscribers is less than 3% of Cablecom's cable
television subscribers, Buyer shall have no right to make a price
adjustment. If the number of Relevant Subscribers is at or above 3% of
Cablecom's cable television subscriber, Buyer shall be entitled to hold
back an amount of the Net Purchase Price corresponding to the full number
of Relevant Subscribers multiplied by CHF 3,750 (three thousand seven
hundred fifty Swiss francs) (such amount, the Hold Back).
(c) Seller and the Controlling Shareholders shall have the right, at any time
after the Closing Date, but in no event later than 30 June 2001, to make
Buyer whole by:
(i) setting aside the effects of any Judgment, injunction or order
issued by any competent governmental, regulatory, administrative or
judicial authority that prevents Buyer from acquiring or assuming
control of all or part of the Relevant Subscribers; and
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(ii) doing all acts and things necessary to enable Buyer (or an Affiliate
of Buyer as directed by Buyer) to acquire and assume control of such
number of Relevant Subscribers to which the judgment, injunction or
order has related, including without limitation the transfer of
shares and assets relating to such Relevant Subscribers.
If Seller can make Buyer whole on all or part of the Relevant Subscribers
on or by 30 June 2001, Buyer (or an Affiliate of Buyer as directed by
Buyer) shall pay to Seller, upon the date of transfer of control of such
Relevant Subscribers to Buyer, an amount corresponding to the number of
Relevant subscribers multiplied by CHF 3,750 (three thousand seven hundred
fifty Swiss Francs), without any interest due thereon.
2.2.7. Intercompany Net Debt
Payment of the Parent Intercompany Debt to Seller or the respective Controlling
Shareholder, and payment of the Subsidiary Intercompany Debt to the relevant
Cablecom Company which is a creditor of such debt shall constitute a good and
valid discharge of the respective debtors in respect of such debt. The parties
may agree that all payments in respect of Parent Intercompany Debt and
Subsidiary Intercompany Debt be made by and to Buyer or Seller, respectively.
3. CLOSING
3.1. Date and Place
Closing shall take place within 10 business days after all conditions precedent
set forth in Section 3.2 have been satisfied or waived by the party whose
performance is subject to such condition, or on another date as the parties
hereto may agree, but in no event later than 31 October 2000 (the Long Stop
Date) or on such later date as the parties hereto may agree.
Closing shall take place at the offices of Homburger Rechtsanwalte,
Weinbergstrasse 56/58, CH-8035 Zurich, Switzerland or at such other location as
the parties hereto may agree.
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3.2. Conditions Precedent to Closing
3.2.1. Conditions to Obligations of Each Party
The respective obligations of the parties hereto to effect the transactions
contemplated under this Agreement shall be subject to the satisfaction or waiver
by all parties hereto, on or by the Long Stop Date, of the following conditions:
(a) the transactions contemplated by this Agreement shall have been approved
by the following governmental or regulatory authorities at or by the
Closing Date: (i) the Federal Office for Communication (Bundesamt fur
Kommunikation) including the approval of change of control of all
retransmission and telecommunications licenses necessary to operate the
business of the Cablecom Group as the same is presently being conducted,
(ii) the competent Austrian authorities with respect of the transfer of
the interest of the Seller in Cablecom Kabelkommunikation GmbH;
(b) all waiting periods arising under the Merger Control Laws shall have duly
lapsed or been terminated without there being imposed on any of the
parties any material condition, requirement or commitment;
(c) no judgment, injunction or order shall have been issued by any competent
governmental, regulatory, administrative or judicial authority which:
(i) would prohibit the consummation of the transactions contemplated
under this Agreement, or
(ii) would impose any substantial limitation on the ability of Buyer to
acquire or hold or control any of the shares of the Cablecom
Companies, which limitation, in the aggregate, would (aa) affect 20%
or more of the total cable television subscribers of the Cablecom
Group (calculated under the "Equity Subscribers" method as set forth
in Exhibit 11), or (bb) prevent the acquisition or control by Buyer
of a substantial part of the backbone of the Cablecom Group, or (cc)
prevent the acquisition or control by Buyer of Swiss Online
(subject, however, to Section 4.8).
(d) If the transactions contemplated under this Agreement or any matters
arising from them constitutes a "concentration with a Community dimension"
as defined in the European Merger Control Regulation (EMCR):
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(i) the EU Commission shall have declared, in terms reasonably
satisfactory to Seller and Buyer, that all such concentrations are
compatible with the common market pursuant to Articles 6(1)(b) or
8(2) EMCR; or
(ii) the applicable waiting periods laid down in Articles 10(1) or 10(3)
EMCR shall have duly lapsed or been terminated without there being
imposed on any of the parties any material conditions, commitment or
requirement; or
(iii) if a request under Art. 9(2) EMCR is made by one or more member
states of the European Economic Area, either (aa) the European
Commission shall have indicated, in terms reasonably satisfactory to
Seller and Buyer, that it does not intend to refer the transaction
or any matters arising from it to a competent authority of such
state in accordance with Art. 9 EMCR; or (bb) if a referral is made
to a competent authority in any member state, such competent
authority shall have adopted a decision or provided such other
indication of its position as is reasonably satisfactory to Seller
and Buyer.
(iv) if a member state of the European Union takes any action to protect
its legitimate interests under Art. 21(3) EMCR in relation to the
transactions contemplated by this Agreement or any matters arising
from them, Seller and Buyer shall be reasonably satisfied that such
action does not materially affect the nature of the transactions
contemplated under this Agreement or any matters arising from them.
3.2.2. Conditions to Obligations of Buyer
The obligation of Buyer to consummate the transactions contemplated by this
Agreement is subject to the satisfaction or subject to the waiver by Buyer, on
or by the Closing Date, of the condition that Seller and each Controlling
Shareholder shall have performed in all material respects all agreements,
obligations and undertakings that are to be performed on or by the Closing Date.
3.2.3. Conditions to Obligations of Seller
The obligation of Seller to consummate the transactions contemplated by this
Agreement is subject to the satisfaction or subject to the waiver by Seller, on
or by the Closing Date, of the condition that Buyer shall have performed in all
material respects all agreements, obligations and undertakings that are to be
performed on or by the Closing Date.
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Notwithstanding the foregoing, it is understood and agreed that failure by
Seller to deliver the SOL Shares on Closing as envisaged in Section 4.8 shall
not impede Closing from taking place. If Seller fails to deliver the SOL Shares
on Closing, Section 4.8 shall apply.
3.2.4. Termination
The obligations of each party to consummate the transactions contemplated by
this Agreement shall automatically terminate, without any notice or other action
being required, if Closing shall not have occurred on or by the Long Stop Date.
If this Agreement is terminated, all provisions of this Agreement shall cease to
be effective except for Section 2.2.2(a) (relating to the down payment), Section
7.3 (Press Releases and Other Public Announcements), Section 9.2 (Costs and
Expenses), Section 10 (General Provisions) and Section 11 (Governing Law and
Jurisdiction), provided, however, that if termination shall result from the
breach by any party of its obligations under this Agreement, such party shall be
fully liable for any and all damages incurred or suffered by the other party or
parties as a result of such breach.
3.3. Closing Actions
3.3.1. Actions by Seller
Subject to the provisions of Section 4.8, at the Closing, Seller shall deliver
to Buyer the following documents:
(a) certificates representing all of the Sale Shares, endorsed in blank where
necessary (or, to the extent such shares are not certificated, valid
assignments in writing relating to such shares), free and clear of any
lien or other third party rights (subject to Section 4.8);
(b) an original of the shareholders' resolution of Seller authorizing the
transactions contemplated by this Agreement;
(c) an original of a resolution of the board of directors of each Cablecom
Subsidiary the Shares of which are transferred to Buyer stating that (i)
buyer has been approved is a shareholder of the respective Cablecom
Subsidiary, and (ii) Buyer is registered as a shareholder with voting
rights of the respective Cablecom Subsidiary;
<PAGE> 18
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(d) all documents and instruments (including title deed and ancillary
documents) necessary to procure the valid transfer to Buyer of (i) free
end unencumbered title to the Related Cablecom Assets, and (ii) the
benefit (subject to the burden) of the Related Cablecom Contracts;
(e) all documents and instruments necessary to procure the valid assumption by
Buyer of the Related Cablecom Liabilities;
(f) a notarized copy of the deed of transfer relating to the interest of
Seller in Cablecom Kabelkommunikations GmbH;
(g) a certified copy of any power of attorney under which any of the transfers
or other documents referred to in this Section 3.3.1 is executed,
including evidence reasonably satisfactory to Buyer of the authority of
any person signing on behalf of a party;
(h) a letter of resignation from the auditors of each Cablecom Subsidiary,
including confirmation that such auditors have no claims or loss of
office, unpaid fees or expenses or otherwise in respect of any business
years up to 31 December 1999 (it being understood that such auditors shall
remain in office for the financial year 1999);
(i) confirmation in a form reasonably satisfactory to Buyer that all
Subsidiary Intercompany Debt has been repaid, including any accrued and
outstanding interest thereon;
(j) documents evidencing the transfer of agreements set out in Sections 4.3
and 4.4, as well as transitional arrangements concluded under Section 4.5,
as reasonably agreed among Buyer and Seller.
3.3.2. Actions by Buyer
Subject to the provisions of Section 4.8, at the Closing, Buyer shall:
(a) pay the Net Purchase Price (together with interest calculated in
accordance with Section 2.2.4), and subject to adjustment, if applicable,
pursuant to Section 2.2.5 and 2.2.6, by wire transfer to an account
designated by Seller;
(b) pay the cash received by the Cablecom Companies pursuant to Section
2.2.3(e) together with interest calculated thereon in accordance with
Section 2.2.4 by wire transfer to an account designated by Seller;
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(c) procure the repayment of the Parent Intercompany Debt in accordance with
Section 2.2.2;
(d) procure the assumption (or continuing effect) or repayment of the Third
Party Financial Debt in accordance with Section 2.2.2, and procure that
Seller and the Controlling Shareholders are released from any and all
obligations with respect to such Third Party Financial Debt.
4. ACTIONS PRIOR TO CLOSING
4.1. General
Unless specifically otherwise provided herein, the parties undertake to use
their commercially reasonable best efforts to procure:
(a) that the conditions precedent set forth in Section 3.2 shall be satisfied
by Closing;
(b) that all their Affiliates will do all acts and things as are reasonably
necessary (and within their power) to implement the transactions
Contemplated by this Agreement.
The parties shall fully cooperate and promptly inform each other of any relevant
actions taken prior to Closing.
4.2. Filings and Submissions
Promptly after the date of this Agreement, Buyer shall make (if permitted under
applicable law) or prepare all necessary filings with and submissions to
governmental, regulatory or administrative agencies or any other third parties
that are required for the consummation of the transactions contemplated by this
Agreement. Seller and the Controlling Shareholders shall use their commercially
reasonable best efforts to assist Buyer in making or preparing such filings and
submissions. Such filings shall include, without limitation:
(a) all filings and submissions required under the relevant Merger Control
Laws;
(b) all filings and submissions required to be made with the Swiss regulatory
authorities to procure for the valid transfer to or assumption by Buyer of
retrans-
<PAGE> 20
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mission licenses and telecommunications licenses under the Swiss Radio and
Television Act;
(c) all filings and submissions required to be made with the Austrian
regulatory authorities to procure for the valid transfer to or assumption
by Buyer of all licenses and permits under applicable law necessary to for
Buyer to continue to conduct the business of the Cablecom Group in Austria
as the same Is presently being conducted;
(d) all filings and submissions with third parties to material agreements
where the approval of such third parties is necessary to continue such
material agreements (to the extent Buyer is aware of its obligation to
make such filings and submissions);
(e) all filings and submissions required for the transfer of the Related
Cablecom Assets and the Related Cablecom Contracts (to the extent Buyer is
aware of its obligation to make such filings and submissions).
No party shall make any filings or submissions to any authorities or third
parties without the prior consent of the other party or parties (such consent
not to be unreasonably withheld or delayed).
4.3. Termination and Transfer of Agreements
As to the following Contracts, the relevant party shall arrange, on or prior to
the Closing, for:
(a) redemption of any loan agreements relating to the Parent Intercompany Debt
and the Subsidiary Intercompany Debt as set forth in Exhibit 4 and/or as
outstanding as of the Closing Date, it being understood that Seller shall
provide to Buyer complete and accurate details of the same no later than
five business days prior to the Closing Date;
(b) termination of any commitments, guarantees or similar third party
undertakings made or given by Cablecom Holding AG or any Controlling
Shareholder in favor of any of the Cablecom Companies, whereby Seller
shall provide to Buyer complete and accurate details of the same no later
than five business days prior to the Closing Date (it being understood
that (i) any costs and expenses arising from the Effective Date until the
Closing Date in relation to such undertakings shall be borne by the
relevant Cablecom Company, but that (ii) any costs in relation to the
early termination of such commitments, guarantees or undertakings
<PAGE> 21
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shall be for the account of Seller or the respective Controlling
Shareholder, as the case may be);
(c) termination, in accordance with their terms, of all mandate agreements and
similar appointments of directors or officers of any of the Cablecom
Companies to the extent Buyer so requests;
(d) transfer of all employment agreements of employees of Cablecom Holding AG,
it being understood that to the fullest extent possible, employment
agreements shall be transferred by operation of law in connection with a
transfer of business (Betriebsubergang) as set forth in Article 333 of the
Swiss Federal Code of Obligations (CO). All consultation and notification
periods required under applicable law for the transfer of such agreements
shall have been observed or expired in accordance with applicable law;
(e) transfer of all pension fund arrangements with respect to the employees
referred to in the preceding Section 4.3(d);
(f) transfer of all agreements relating to intellectual property owned or used
by the Cablecom Group, including those listed in Exhibit 2, to which
Seller has title, license or similar rights;
(g) termination of any insurance arrangements and agreements entered into or
made by Cablecom Holding AG on behalf of any of the Cablecom Companies, it
being understood that:
(i) Buyer shall contract, or cause the Cablecom Companies to contract,
adequate insurance as from the Closing Date, whereby such insurance
shall either (aa) cover the entire business of the Cablecom Group to
be transferred under this Agreement as from the Closing Date on a
"claims made" basis; or (bb) cover the entire business of the
Cablecom Group as from the Closing Date on an "occurrence basis",in
which case such insurance coverage shall be supplemented by an
appropriate tail insurance for any claims made by or against any
company of the Cablecom Group after the Closing Date with respect to
matters having occurred prior to the Closing Date; and
(ii) Seller shall take all steps as may be reasonably necessary to ensure
that, following Closing, the Cablecom Business shall continue to
benefit from any of the insurance arrangements in respect of the
Cablecom Business effective prior to the Closing Date.
<PAGE> 22
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4.4. Related Cablecom Assets and Related Cablecom Contracts
Seller shall use its commercially reasonable best efforts to procure that any
consent or agreement of any third party required for the transfer of any related
Cablecom Asset or Related Cablecom Contract is obtained at or by the Closing
Date. If such consent or agreement has not been obtained, then the sale and
purchase of that Related Cablecom Asset or Related Cablecom Contract shall be
postponed until such consent or agreement shall have been obtained, and in the
meantime, the provisions of Section 4.5 shall apply in relation thereto.
4.5. Transitional Arrangements
To the extent any of the agreements or commitments set out in Section 4.3 and
4.4 cannot be terminated or transferred to or assumed by Buyer or the Cablecom
Subsidiaries on the Closing Date, the parties shall enter into such appropriate
transitional arrangements as the Buyer may reasonably request allowing Buyer or
the respective Cablecom Subsidiary to assume the economic burden and benefit of
such agreements or commitments, to the fullest extent possible, on the Closing
Date. For the sake of clarity, it is understood that the receipt of such consent
shall not constitute a condition to Closing or otherwise be an obstacle for the
Closing. In particular, it shall not entitle Buyer to any set-off, counterclaim
or right of retention.
4.6. Lex Koller
(a) Promptly after the date of this Agreement, Buyer shall evaluate the
implications under the Federal Act on the Acquisition of Real Estate by
Non-resident Persons (Lex Koller) as applicable to the consummation of the
transactions contemplated by this Agreement. Seller and the Controlling
Shareholders shall use their commercially reasonable best efforts to make
available to Buyer promptly upon Buyer's request all information necessary
or expedient in connection with such evaluation.
(b) Should Buyer in its reasonable judgement come to the conclusion that the
transfer of ownership in respect of some or all of the Sale Shares
requires the approval of the relevant governmental authorities, or should
not occur without having obtained a decree by the competent governmental
authority as to the non-applicability of Lex Koller, then the parties
shall proceed to a partial closing
<PAGE> 23
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in respect of all Sale Shares where no such approval or decree is required
or held to be required.
(c) As to the Sale Shares subject to a Lex Koller approval or decree, the
following shall apply:
(i) Buyer shall apply for such approval or decree of non-applicability
of Lex Koller with the competent governmental authority, and proceed
to subsequent partial closing(s) in respect of the remaining Sale
Shares as and when the appropriate approval or decree has been
obtained.
(ii) Should Buyer request that Seller purchases or procures the sale to a
third party of certain real estate because no approval or no decree
of non-applicability of Lex Koller has been obtained, Seller shall
purchase or procure the sale to a third party of the residential
real estate or land reserves at issue from the Cablecom Subsidiary
that owns such residential real estate or land reserves. Such real
estate shall be purchased at market values as finally determined by
a real estate appraiser jointly mandated by Buyer and Seller.
(iii) As soon as the purchase of the relevant residential real estate or
land reserves at issue by Seller has been completed, the parties
shall immediately proceed to closing in relation to the affected
remaining Sale Shares.
(iv) Payment for the real estate purchased pursuant to subparagraph (ii)
above shall be made by Seller to Buyer upon the transfer of the real
estate at issue, and shall be made including interest from 1 April
2000 to the date of such relevant transfer at the rate set forth in
Section 2.2.4. It is understood and agreed that notwithstanding the
provisions of this Section 4.6, Buyer shall pay to Seller the
adjusted Net Purchase Price on Closing without being entitled to
hold back any amount in respect of such real estate.
4.7. Dividends of the Cablecom Companies; Escrow Agreement
(a) Dividends shall be paid out by the Cablecom Companies to their
shareholders in the ordinary course of business, it being understood that
the total amount of dividends payable for the business year 1999 will not
exceed CHF 54,680,000 (fifty-four million six hundred eighty thousand
Swiss Francs). It is understood and agreed that:
(i) subject to Section 4.7.(a)(iv), dividends for the business year 1999
shall be for the account of Seller, but shall be paid by the
relevant Cablecom Company into a joint account (the Joint Account)
to be established by Buyer
<PAGE> 24
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and Seller. It is understood and agreed that, subject to Section
4.7.(a)(iv) all dividends paid by the Cablecom Companies to the
relevant shareholder shall be for the account of Seller, whether
paid before or after Closing. If any dividends are paid out after
Closing, Buyer shall procure that the corresponding payments are
made or transferred into the Joint Account;
(ii) if Seller delivers the SOL Shares to Buyer on the Closing Date, the
proceeds of the Joint Account (including interest but after
deduction of costs) shall be released to Seller (or, as the case may
be, the several Controlling Shareholders) upon Closing;
(iii) if Seller does not deliver the SOL Shares to Buyer on the Closing
Date, but delivers the notice referred to in Section 4.8.2(a) to
Buyer on or prior to 28 February 2001, the proceeds of the Joint
Account (including interest but after deduction of costs) shall be
released to Seller (or, as the case may be, the several Controlling
Shareholders) no later than five business days after such notice has
been posted by Seller to Buyer;
(iv) if Seller does not deliver the SOL Shares to Buyer on the Closing
Date, and does not deliver the notice referred to in Section
4.8.2(a) to Buyer on or prior to 28 February 2001, the proceeds of
the Joint Account (including interest but after deduction of costs)
shall be released to Buyer,
(b) Promptly after execution of this Agreement, the parties to this Agreement,
UBS AG, Buyer and Seller shall enter into an escrow agreement (the Escrow
Agreement), the contents of which shall be reasonably satisfactory to
Buyer, Seller and the Controlling Shareholders, in accordance with the
following general principles:
(i) the dividends paid out by the Cablecom Companies for the business
year 1999 and received by Seller or Buyer, as the case may be, shall
as and when paid be deposited in the Joint Account and shall be
invested In CHF-denominated short-term deposits or money market
securities of prime issuers, to be determined by UBS AG in its
reasonable judgement (it being understood that Buyer and Seller
shall have neither the right nor the obligation to direct UBS AG to
make any specific investments);
(ii) the parties shall undertake jointly to direct the signatories of the
Joint Account to pay out the amounts deposited in the Joint Account
in accordance with the terms of this Agreement.
(iii) the signatories of the Joint Account shall be obligated to release
the amounts deposited (including interest but after deduction of
costs) in the Joint Account only (i) upon joint instructions of
Buyer, Seller and the Con-
<PAGE> 25
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trolling Shareholders; or (ii) failing such instructions, upon an
enforceable order of a competent Swiss court of law.
4.8. Additional Provisions for Swiss Online Shares
4.8.1. Closing of Transaction Agreement
Notwithstanding anything to the contrary in this Agreement, the parties hereto
agree that if and when all conditions to Closing are fulfilled or waived, but
Seller is unable to deliver to Buyer legal and beneficial title and ownership to
11,000 registered shares of CHF 500 (five hundred Swiss Francs) par value each
directly or indirectly held by Seller in Swiss Online AG (the SOL Shares), free
and unencumbered and not subject to any third party rights, the following shall
apply:
(a) the parties shall otherwise proceed to Closing as set out in Section 3.3;
(b) at such Closing, Seller shall perform all Closing actions to be performed
by Seller as set out in Section 3.3, provided, however, that Seller shall
deliver to Buyer all of the Sale Shares but for the shares in Swiss Online
AG to be delivered by Seller to Buyer, and failure to deliver such shares
shall not be treated as a breach of contract and shall only and
exclusively be remedied as set out in this Section 4.8;
(c) at such Closing, Buyer shall perform all Closing actions to be performed
by Buyer as set out in Section 3.3, provided, however, that
(i) the Purchase Price shall be reduced by CHF 600,000,000 (six hundred
million Swiss Francs);
(ii) the Net Purchase Price to be paid by Buyer on Closing, shall be
reduced by CHF 587,080,000 (five hundred eighty-seven million and
eighty-thousand Swiss Francs), being CHF 600,000,000 minus CHF
12,920,000 (twelve million nine hundred twenty thousand Swiss
Francs) on account of Third Party Financial Debt owed by, Parent
Intercompany Debt owed by, Subsidiary Intercompany Debt owed to and
Cash held by, Swiss Online;
(iii) If such Closing occurs after 1 April 2000, then the Net Purchase
Price shall bear interest at the rate stated in Section 2.2.4,
provided, however, that no interest shall be due if the delay in
Closing is attributable to the fault of Seller as set out in Section
2.2.4 (other than Seller's failure to deliver the SOL Shares).
<PAGE> 26
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(c) Seller shall use its commercially reasonable best efforts following
Closing to be able to deliver to Buyer legal and beneficial title and
ownership to the SOL Shares, free and unencumbered and not subject to any
third party rights whatsoever.
(d) If, for whatever reason, the SOL Shares are not delivered to Buyer at the
Closing Date, the parties shall enter into a management agreement
affording Buyer full and complete management control as from the Closing
Date, and the economic burden and benefit of all the business of Swiss
Online as from the Effective Date;
(e) the parties may agree on the transfer of additional shares in Swiss Online
acquired or held by Seller on the Closing Date at prices to be separately
agreed.
4.8.2. Call Option and Put Option after Closing
If, after Closing but prior to 28 February 2001, Seller is able to deliver to
Buyer legal and beneficial title and ownership to the SOL Shares, free and
unencumbered and not subject to any third party rights, the following shall
apply:
(a) Seller shall notify Buyer of its ability to deliver to Buyer legal and
beneficial title and ownership to the SOL Shares, free and unencumbered
and not subject to any third party rights whatsoever, as and when it is
able to do so;
(b) as from the date of delivery of the notice referred to in Section
4.8.2(a), Seller shall have a put option (the Put Option) against Buyer
under which Seller may sell to Buyer, and Buyer shall be obligated to buy
from Seller, the SOL Shares at a price of CHF 587,080,000 (five hundred
eighty-seven million and eighty-thousand Swiss Francs). The Put Option
shall be exercisable until 28 February 2001;
(c) as from the date of receipt of the notice referred to in Section 4.8.2(a).
Buyer shall have a call option (the Call Option) against Seller under
which Buyer may buy from Seller, and Seller shall be obligated to sell to
Seller, the SOL Shares at a price of CHF 587,080,000 (five hundred
eighty-seven million and eighty-thousand Swiss Francs). The Call Option
shall be exercisable until 28 February 2001.
Both the Put Option and the Call Option may be exercised by written notice
delivered to the addresses set forth in Section 10.2.
<PAGE> 27
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It is understood and agreed that the adjustment of the Purchase Price of CHF
600,000,000 (six hundred million Swiss Francs) is firm and shall not be subject
to any subsequent upward or downward adjustment for any reason.
4.8.3. Delayed Closing
If Buyer exercises the Call Option, or if Seller exercises the Put Option, on or
by 28 February 2001, the parties shall proceed to a Closing of the transfer of
the SOL Shares (the Delayed Closing), such date to be proposed by the party
exercising the Call Option or the Put Option, as the case may be, no less than
five but no more than ten business days after the date of the notice being
posted by Seller to Buyer.
At the Delayed Closing:
(a) Seller shall deliver to Buyer legal and beneficial title and ownership to
the SOL Shares, free and unencumbered and not subject to any third party
rights whatsoever;
(b) Buyer shall
(i) pay to Seller CHF 587,080,000 (five hundred eighty-seven million and
eighty-thousand Swiss Francs) by wire transfer to an account
designated by Seller. It is understood and agreed that such amount
shall not bear any interest from the Closing Date to the date of the
Delayed Closing;
(ii) assume or cause the assumption of any and all Third Party Financial
Debt owed by Swiss Online and Parent Intercompany Debt owed by Swiss
Online and Subsidiary Intercompany Debt owed by Swiss Online
outstanding as of such Delayed Closing (including for the avoidance
of doubt any variations in such Third Party Financial Debt or Parent
Intercompany Debt or Subsidiary Intercompany Debt from the Effective
Date through to the date of the Delayed Closing).
(c) the parties may agree on the transfer of additional shares in Swiss Online
acquired or held by Seller on the Closing Date at prices to be separately
agreed.
4.8.4. Actions if Seller does not deliver SOL Shares
If the Delayed Closing shall not have occurred on or by 28 February 2001
(subject to reasonable extension until 15 March 2001 if Seller delivers the
notice referred to in Section 4.8.3(a) on or by 28 February 2001, or such
additional extension as the par-
<PAGE> 28
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ties may reasonably agree), then the proceeds (including interest but after
deduction of costs) of the Joint Account referred to in Section 4.7(a) shall be
delivered to Buyer, and the parties shall have no further respective rights or
obligations under this Agreement with respect to any shares held by Seller in
Swiss Online AG.
4.8.5. Notice to Swiss Online Shareholders
Seller hereby undertakes to deliver to the remaining shareholders of Swiss
Online AG a notice informing the same of their pre-emptive right under the
shareholders' agreement relating to such company no later 14 January 2000, such
notice to be in form and substance agreed between Buyer and Seller and to
contain the following:
(a) the purchase price of CHF 600,000,000 (six hundred million Swiss Francs)
for the SOL Shares;
(b) Buyer's willingness to enter into the Shareholders' agreement under the
assumption of all rights and duties of Seller thereunder.
5. REPRESENTATIONS AND WARRANTIES
5.1. Representations and Warranties of Seller
Seller hereby represents and warrants to Buyer the following matters, except as
set forth in (i) the information memorandum dated 16 September 1999 (the
Information Memorandum) delivered to buyer, (ii) the documentation disclosed to
Buyer in connection with due diligence, as set out in the Data Room Index and
all supplements thereto attached hereto as Exhibit 7, and (iii) the matters
disclosed in the letter delivered to Buyer concurrently with this Agreement and
attached hereto as Exhibit 8 (the Disclosure Letter), including any written
documents annexed to the Disclosure Letter (all documents referred to in (i) to
(iii) collectively, the Disclosed Documents). The Disclosed Documents shall
operate as a limitation to Buyer's Remedies as set out in Section 6.2.3. No
representations are made or warranties given other than those made or given in
this Section.
The representations and warranties set forth below shall be considered given by
the Seller on the date of this Agreement and as of the Effective Date. Save as
provided in Section 2.2.5(d), the representations and warranties given by Seller
under this Section 5 shall continue in full force and effect notwithstanding
Closing.
<PAGE> 29
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Where any statement in the following representations and warranties is qualified
by the expression "to the best of the knowledge", "to the best of the
information", "so far as the Seller is aware" or any similar expression, Seller
shall be deemed to have knowledge of (a) anything of which any of the eight
members of top-level management of the Seller (Messrs. Dietiker, Eberie,
Simmonds, Gerber, Poretti, Cardineaux, Quinter, Blunier) has knowledge, (b)
anything of which any of the eight members of top-level management of the Seller
ought reasonably to have knowledge given their particular position and
responsibilities.
Seller undertakes to Buyer to disclose to Buyer in writing, immediately upon
Seller becoming aware of the same, full details of any fact, matter, event or
circumstance which constitutes a breach of any of the representations and
warranties given by Seller, or is reasonably likely to constitute such a breach
when deemed given by the Seller as of the Effective Date.
5.1.1. Cablecom Holding AG
(a) Seller is a corporation (Aktiengesellschaft) duly organized and validly
existing under the laws of Switzerland and has the full corporate power,
authority and any necessary governmental approvals to own or use its
assets and properties and to conduct its business as the same is presently
being conducted.
(b) There exist no limitations under law, the articles of incorporation of
Seller, or any contracts by which Seller is bound that would prevent
Seller from entering into or performing its obligations under this
Agreement.
(c) No authorizations, permits or consents are required from any governmental
or administrative authority, or any third party (including the Controlling
Shareholders) for the consummation of the transactions contemplated by
this Agreement other than as set out herein.
(d) The information contained in the Exhibits is true and correct In all
material respects.
5.1.2. The Cablecom Companies
(a) Each of the Cablecom Companies is duly organized and validly existing
under the laws of its place of incorporation and has the full corporate
power and authority to own or use its assets and properties and to conduct
its business as the same is presently being conducted. The capital
structure and shares of each Cablecom Company are set forth in Exhibit 1.
<PAGE> 30
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(b) The shares in each Cablecom Company are legally and beneficially owned,
except as otherwise indicated in Exhibit 1, in their entirety, free and
clear of any liens, pledges or other third party rights (except as to the
pre-emption right of the city of Neuchatel on the shares of Video 2000 SA
and as to directors' qualifying shares), by Seller, are fully paid and
non-assessable. There exists no authorization, obligation or arrangement
(present or future, absolute, contingent or otherwise) of any Cablecom
Subsidiary to issue or sell shares to any person except as indicated in
Exhibit 1. No further capital, shares, or other equity instruments in any
Cablecom Subsidiary have been or will be issued on or before the Closing
Date except as indicated in Exhibit 1.
(c) Upon delivery to Buyer at the Closing of the documents listed in Section
3.3.1, Buyer will receive good and valid title to the Sale Shares, free
and clear of any liens, pledges or other third party rights.
(d) Attached hereto as Exhibit 9 are the consolidated financial statements
(consisting of the consolidated balance sheet, the consolidated income
statement, consolidated cash flow statement and notes to the consolidated
financial statements) of the Cablecom Group for the business year ended 31
December 1998, accompanied by the audit report by the Group auditors of
Cablecom Group. All of these financial statements (i) are correct and
complete in all material respects, and (ii) have been prepared in
accordance with the Accounting Principles.
Attached hereto as Exhibit 10 are the Consolidated Balanced Sheet and the
Consolidated Income Statement for the nine months ended 30 September 1999,
accompanied by the review report of the group auditors of the Cablecom
Group. These interim financial statements have been prepared by management
of Seller on the basis of true and accurate entries in the books and
records of the Cablecom Group and pursuant to consistently applied
Accounting Principles to the extent relevant to interim financial
statements.
(e) Seller and each of the Cablecom Subsidiaries and each of its and their
respective directors and officers has complied with and presently is in
compliance with all the laws, regulations, reporting and licensing
requirements and orders applicable to it or its employees in all
jurisdictions in which the Cablecom Group owns or operates business
premises, and to the best knowledge of Seller no competent governmental or
administrative authority has claimed in writing that Seller or any of the
Cablecom Subsidiaries has violated any such laws, regulations, reporting
and licensing requirements.
(f) Seller and the Cablecom Companies have all licenses, consents, approvals,
permissions, permits, rights of way and governmental authorizations which
are necessary to conduct their business as the same is presently being
conducted.
<PAGE> 31
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In particular, and without limitation to the foregoing, (i) each Cablecom
Company has the necessary retransmission licenses in full force and effect
(subject, however, to renewal of such licenses pursuant to Section 4.2),
(ii) each Cablecom Subsidiary has all necessary permits and approvals to
be granted by cantonal or municipal authorities in connection with rights
of way for the laying, maintenance, use and renewal of cable television
lines. All such licenses, consents, approvals, permissions, permits,
rights of way and authorities are valid and subsisting, and so far as
Seller is aware, there are no facts or circumstances likely to be raised
to any of them being suspended, canceled or revoked or not renewed
pursuant to Section 4.2.
(g) As of 30 September 1999, the Cablecom Group had the cable television
subscriber numbers indicated in Exhibit 11. Seller has no reason to
believe that the number of such subscribers on 31 December 1999 would be
substantially below that set forth in Exhibit 11.
(h) There are no actions, suits or proceedings pending against any of Seller
or the Cablecom Subsidiaries before any court or administrative board,
agency or commission which involve a claim by a governmental or regulatory
authority, or by a third party, as against any of Seller or the Cablecom
Subsidiaries of an amount exceeding CHF 3,000,000 (three million Swiss
Francs). Seller is not aware of any actions, suits or proceedings in
accordance with the preceding sentence which have been threatened in
writing to be filed or instituted against any of Seller or the Cablecom
Subsidiaries. Neither Seller or any of the Cablecom Subsidiaries nor any
of its or their respective directors or officers are being prosecuted for
any criminal offense relating to the Cablecom Business, nor are any such
prosecutions pending or threatened.
(i) All tax returns required to be filed prior to 31 December 1999 by or with
respect to Seller and the Cablecom Subsidiaries for all taxable periods
ending on or prior to 31 December 1999 have been or will be timely filed.
All such tax returns (i) have been or will be prepared in the manner
required by applicable law, (ii) are or will be true, correct and complete
in all material respects, and (iii) accurately reflect or will accurately
reflect the liability for taxes of Seller and each such Cablecom
Subsidiary. All taxes shown to be due on such tax returns on or prior to
31 December 1999, or which have been or will be assessed by the competent
tax authorities with respect to such tax returns, have been (or, as far as
the 1999 financial statements are concerned, will be) timely paid or fully
reserved against. Seller hereby assumes the responsibility for settlement
of tax liabilities in respect of all insufficient provisions in the
financial statements for the payment of taxes, levies or related
liabilities with respect to all periods ending on or before 31 December
1999 (including, for the avoidance of doubt, any restructurings completed
by 31 December 1999), whether such taxes, levies or related liabilities
become due before or after Closing. Seller is not aware of any Cablecom
Subsidiary having distributed any constructive dividend to the Seller or
any affili-
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ate of Seller Which could lead to the imposition on such Cablecom Subsidiary of
any withholding taxes on dividends or constructive dividends.
(j) All social security, pension fund or similar payments due by Seller and
any Cablecom Subsidiaries in favor of their employees under any benefit
plans (collectively, the Benefit Plans) have been fully paid or
provisioned in the relevant financial statements. All contributions
required to be made under the terms of any such Benefit Plans have been
timely made or have been reflected in the relevant financial statements.
On the basis of and compared to the funding requirements set forth in
Swiss law (and, in the case of Cablecom Kabelkommunikations GmbH, Austrian
law), none of the Benefit Plans has any accumulated funding deficiency.
(k) The Information relating to the employment of the top 20 members of
management of the Cablecom Group as set out in the Disclosure Letter is
correct. True and complete copies of the standard terms and conditions
applicable to employees of the Cablecom Group, handbooks or work rules or
procedures, as well as all collective bargaining and similar agreements
will be made available to Buyer on the Effective Date. Other than as
disclosed in the Disclosed Documents, there are no arrangements, whether
contractual or otherwise, entitling any of the employees of the Cablecom
Group to any payment or other benefits arising from the transactions
contemplated hereby.
(l) The Cablecom Subsidiaries have good and valid title to the real estate
listed in Exhibit 12, or have valid lease agreements relating to the
properties reflected therein.
(m) Seller and all Cablecom Subsidiaries are in compliance with all material
contracts to which they are a party or by which their assets or properties
are bound, and Seller is nor aware of any material contracts subject to a
"change of control" covenant other than as disclosed in Exhibit 8.
(n) Each of Seller and the Cablecom Subsidiaries (i) has substantially
complied with all environmental, health and safety laws applicable to such
company, and no material action, suit or proceeding by any third party or
any governmental or administrative authority is pending or, to the best of
Seller's knowledge, has been threatened against any such company alleging
any failure to comply with any environmental, health or safety laws in
effect as of the date of this Agreement, and (ii) has obtained and been in
substantial compliance with all of the terms and conditions of all
permits, licenses and authorizations required under any environmental,
health and safety laws.
(o) The books and records maintained by Seller and each Cablecom Subsidiary
have been maintained in accordance with sound business practice and the
ap-
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plicable legal, regulatory and accounting requirementS, and reflect only
valid transactions.
(p) There is no investment banker, broker, director, employee, finder or other
intermediary that has been retained by or is authorized to act on behalf
of Seller or any of the Controlling Shareholders who might be entitled to
any fee or commission from any of the Cablecom Subsidiaries upon
consummation of the transactions contemplated under this Agreement except
as disclosed in Exhibit 8.
(q) Since 30 September 1999, there has not been:
(i) any matter, fact or circumstance which has had a Material Adverse
Effect on the Cablecom Business taken as a whole;
(ii) any declaration of dividends or dividend payment, or any
distribution of capital or income by any Cablecom Company to its
shareholder(s) or any of the Controlling Shareholders;
(iii) any increase in tie compensation payable by any Cablecom Subsidiary
to any of its directors, officers or employees other than (aa) in
accordance with agreements, collective bargaining arrangements or
practice existing prior to 31 December 1998, or (bb) as particularly
disclosed in the Disclosure Letter;
(iv) any payment made, or assets transferred, by a Cablecom Subsidiary to
the Seller or any Controlling Shareholder outside of the ordinary
course of business (unless contemplated by this Agreement).
(r) As of the date of this Agreement, Seller is not aware of any fact, matter,
event or circumstance which will or is reasonably likely to result in any
judgment, injunction or order to be issued by any competent governmental,
regulatory, administrative or judicial authority which would impose a
limitation (whether or not substantial as defined in Section 3.2.1(c)) on
the ability of Buyer to acquire or assume control over all or part of the
cable television subscriber base of Cablecom.
(s) None of the Cablecom Subsidiaries is a party to, or has the benefit of and
is subject to any obligations under, any agreement or arrangement which
cannot readily be fulfilled or performed by Seller or the relevant
Cablecom Subsidiary in accordance with its terms without undue or unusual
expenditure or effort.
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(t) No Cablecom Subsidiary has stopped paying its debts as and when they fall
due, nor is it insolvent or unable to pay its debts. No step has been
taken with a view to the dissolution or winding up of any of the Cablecom
Subsidiaries.
(u) Buyer has been given access to the documents evidencing the year 2000
compliance program (the Y2K Documents) carried out by the Cablecom Group.
Seller and the Cablecom Subsidiaries have carried out in all material
respects the actions Identified in the Y2K Documents and have taken the
necessary actions to resolve any issues identified by such documents.
(v) No Cablecom Subsidiary is infringing the rights of third parties with
respect to the use of, or by others with respect to, any intellectual
property.
(w) The Related Cablecom Assets together with the Related Cablecom Contracts
and the assets held by the Cablecom Companies will, immediately following
Closing, include all sights, properties, assets, facilities and services
necessary and sufficient for the carrying on of the Cablecom Business as
the same is presently being conducted, free from all material encumbrances
(except for mortgages and other security interests incurred for
liabilities owing by the Cablecom Companies, or Related Cablecom
Liabilities). "Sufficient" for these purposes shall include both the
quantity and state and condition of assets.
(x) The turnover generated by the Cablecom Business in the member states of
the European Union is below the thresholds relevant under the EMCR.
5.1.3. Related Cablecom Assets; Related Cablecom Liabilities
(a) As of the date of this Agreement. Seller is the direct or indirect owner
of the Related Cablecom Assets free and clear of any liens, pledges or
other third party rights (except as to third party rights incurred in the
ordinary and usual course of business).
(b) Upon Closing of the transactions contemplated by this Agreement, Buyer
will acquire title to the Related Cablecom Assets, free and clear of any
liens, pledges or other third party rights (except as set out in
subsection (a) above) and will receive the benefit (subject to the burden)
of the Related Cablecom Contracts.
(c) Exhibit 2 contains a complete list of the Related Cablecom Liabilities
outstanding as of the date of this Agreement. There will be no changes
other than in accordance with normal business practice as to the Related
Cablecom liabilities between the date of this Agreement and 31 December
1999 which would have a Material Adverse Effect on the Cablecom Business
taken as a whole, other than (i) replacement or roll-over of any of
existing Related Cablecom Liabilities by
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new liabilities in substantially equivalent amount and on substantially
equivalent terms; (ii) short-term credit drawdowns of up to CHF 20,000,000
(twenty million Swiss francs) to be incurred shortly before 31 December
1999, and (iii) accruals of interest on the Related Cablecom Liabilities.
5.2. Representations and Warranties of the Controlling Shareholders
The several Controlling Shareholders represent and warrant to the Buyer as
follows, except as set forth in the Disclosed Documents, which shall operate as
a limitation to Buyers' remedies under Section 6.2.
The representations and warranties set forth below shall be considered given by
as of the date of this Agreement and as of the Effective Date. The
representations and warranties given under this Section 5 shall continue in full
force and effect notwithstanding Closing.
Where any statement in the following representations and warranties is qualified
by the expression "to the best of the knowledge", "to the best of the
information", "so far as the Controlling Shareholders are aware" or any similar
expression, the respective Controlling Shareholder shall be deemed to have
knowledge of anything of which any member of top-level management of such
Controlling Shareholder has knowledge.
Each several Controlling Shareholder undertakes to Buyer to disclose to Buyer in
writing, immediately upon such Controlling Shareholder becoming aware of the
same. full details of any fact, matter, event or circumstance which constitutes
a breach of any of the representations and warranties given, or is reasonably
likely to constitute such a breach when deemed given as of the Effective Date.
5.2.1. Corporate Existence and Authority
(a) Each of the Controlling Shareholders is a legal entity duly organized and
validly existing under the laws of its jurisdiction of incorporation.
(b) There exist no limitations under the law, the articles of incorporation or
other constituting documents of such Controlling Shareholder, or any
material contracts by which such Controlling Shareholder is bound, that
would prevent such Controlling Shareholder from entering into or
performing its obligations under this Agreement.
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(c) No authorizations, permits or consents are required from any governmental
or administrative authority, or any third party (including any necessary
shareholder approvals for such Controlling Shareholder) for the
consummation of the transactions contemplated by this Agreement, unless
set out herein.
5.2.2. Ownership of Shares in Cablecom Holding AG
All of the issued and outstanding shares in Cablecom Holding AG are legally and
beneficially owned in their entirety, free and clear of any liens, pledges or
other third party rights (except as to directors' qualifying shares and treasury
shares) by each Controlling Shareholder, as indicated in Section A of the
Preamble to this Agreement. All such shares are fully paid-in and
non-assessable. There exists no authorization, obligation or arrangement
(present or future, absolute, contingent or otherwise) of Cablecom Holding AG to
issue or sell shares to any person. No further capital, shares or other equity
instruments have been or will be issued by Cablecom Holding AG at any time
between the date of this Agreement and the Closing Date, except as expressly
agreed with Buyer.
5.2.3. Representations as to the Cablecom Companies
Each Controlling Shareholder, acting in a several capacity, warrants that to the
best of its knowledge and without having made any special inquiry, all
representations and warranties made by Seller in Section 5.1 are correct.
Each Controlling Shareholder, acting in a several capacity, further warrants as
of the date of this Agreement that it is not aware of any fact, matter, event or
circumstance which will or is reasonably likely to result in any judgment,
injunction or order to be issued by any competent governmental, regulatory,
administrative or judicial authority which would impose a limitation (whether or
not substantial as defined in Section 3.2.1(c)) on the ability of Buyer to
acquire or assume control over all or part of the cable television subscriber
base of Cablecom.
5.3. Representations and Warranties of Buyer
Buyer represents and warrants as follows.
(a) Buyer is a corporation duly organized and validly existing under the laws
of Delaware, USA and has the full corporate power, authority and necessary
gov-
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ernmental approvals to own or use its assets and properties and to conduct
its business as the same is presently being conducted.
(b) There exist no limitations under the law, the articles of incorporation of
Buyer, or any Contracts by which Buyer is bound that would prevent Buyer
from entering into or performing its obligations under this Agreement.
(c) No authorizations, permits or consents are required from any governmental
or administrative authority, or any third party (including any
shareholders of Buyer) for the consummation of the transactions
contemplated by this Agreement other than as set out herein.
(d) There are no actions, suits or proceedings pending against Buyer or any of
Buyer's Affiliates before any court or administrative board, agency or
commission which involve a claim by a governmental or regulatory
authority, or by a third party, which would operate to hinder or
substantially impair the consummation of the transactions contemplated by
this Agreement. Buyer is not aware of any actions, suits or proceedings in
accordance with the preceding sentence which have been threatened in
writing to be filed or instituted against Buyer or any of Buyer's
Affiliates.
(e) Buyer has procured that it will, and will on the Closing Date have, the
necessary funds at its disposal to finance the transactions contemplated
by this Agreement.
(f) Buyer is aware that none of the Sale Shares have been registered under the
U.S. Securities Act of 1933 or any other applicable state securities laws.
Buyer is acquiring the Shares for its own account, for investment purposes
only and not with a view to the distribution thereof in violation of the
securities laws of the United States or any state thereof.
(g) Buyer is aware that Swisscom has terminated certain leased line agreements
(particulars of which have been disclosed to Buyer) with certain Cablecom
Companies. Buyer hereby undertakes to accept such terminations as valid
and further undertakes to ensure that any Cablecom company which was party
to such terminated agreement will accept such termination as valid and
binding, subject, however, to the provisions of Section 8.5.
(h) Buyer has not promised to pay or cause to be paid to or for the benefit of
any director, officer, employee or agent of Seller or the Cablecom
Companies any incentive, bonus, or similar payment due upon consummation
or in view of the transactions contemplated under this Agreement.
<PAGE> 38
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6. REMEDIES FOR BREACH OF REPRESENTATIONS AND WARRANTIES
6.1. Term of Representations and Warranties
Save as provided in Section 2.2.5(d), the representations and warranties set
forth in Section 5 shall survive until the later of (i) twelve months after the
Closing Date, or (ii) 30 June 2001, provided, however, that the term for the
representations and warranties set forth in Sections 5.1.2(i) (Taxes) and
5.1.2(j) (Social Security) shall extend until 60 days after the expiry of the
statute of limitations relevant to the matters referred to in such
representations and warranties.
It is understood and agreed that any notice of claims for misrepresentation or
breach of warranty shall be served to the breaching party on or by the dates set
forth in the preceding paragraph, in which case the resolution of such claims
may also be effected after such dates.
6.2. Remedies of Buyer
6.2.1. Remedies
(a) If any of the representations and warranties in Section 5.1 shall not be
true and correct, resulting in any liability, loss of earnings, damage,
cost or expenses or any deficiency of assets of the Cablecom Business or
the Buyer as a result of a misrepresentation or breach of warranty, Seller
shall at its own cost remedy the breach within thirty (30) days or such
reasonable period not exceeding sixty (60) days after receipt of the
written request from Buyer. If Seller does not or is unable to remedy the
breach within such period of time, Seller will pay to the relevant
Cablecom Company or at its option to Buyer, as the case may be, damages on
a Franc by Franc basis.
If any other breach of this Agreement has occurred, resulting in any
liability, loss of earnings, damage, cost or expenses or any deficiency of
assets of the Cablecom Business or the Buyer as a result thereof, Seller
shall at its own cost remedy the breach within such period of time as may
appear reasonable to cure any such breach after receipt of the written
request from Buyer.
<PAGE> 39
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Subject as set out in the following paragraph, Seller shall not be liable
to compensate Buyer and/or the Cablecom Companies for any damages
exceeding the total amount of liability as set out in Section 6.2.4, or
any indirect and/or consequential damages, or any goodwill. Payment shall
be made together with interest at the rate of 5% p.a. from the Effective
Date through the date of payment.
(b) Notwithstanding the provisions of the preceding paragraph, if the
representation and warranty contained in Section 5.1.2(g) should be
untrue, Seller shall compensate Buyer in accordance with the following
principles:
(i) If the number of cable television subscribers of Cablecom on 31
December 1999 (calculated under the Equity Subscribers" method as
set forth in Exhibit 11) is less than 3% below the total number of
Cablecom's cable television subscribers, Buyer shall have no remedy
for such loss of subscribers.
(ii) If the number of relevant subscribers on 31 December 1999 is 3% or
more below Cablecom's cable television subscriber base set forth in
Exhibit 11, Seller shall compensate Buyer for the shortfall in
excess of 3%. The compensation due by Seller to Buyer shall be the
number of cable television subscribers in excess of 3% below the
relevant number set forth in Exhibit 11, multiplied by CHF 3,750
(three thousand seven hundred fifty Swiss Francs) per subscriber.
6.2.2. Notice of Breach and Opportunity to Defend
Within 60 days after Buyer having obtained knowledge of a misrepresentation or
breach of warranty, or receipt by Buyer of notice of any claim made or
threatened to be made by any third party which Buyer believes is reasonably
likely to give rise to a claim for misrepresentation or breach of warranty,
Buyer shall deliver to Seller and each of the Controlling Shareholders a notice
in writing describing the facts or the claim in reasonable detail to the extent
then known. Failure to give notice within 60 days shall not affect Buyer's
remedies hereunder, except to the extent such failure to notify shall have
caused an irreparable prejudice to Seller or any of the Controlling
Shareholders. It is understood and agreed that any notice delivered in
accordance with this Section 6.2.2 must be served before expiry of the term set
out in Section 6.1.
In case of any claim brought by a third party against Buyer or any Cablecom
Company, which has been notified by Buyer in accordance with the above
provisions, Seller and the Controlling Shareholders shall use their commercially
reasonable best efforts in assisting Buyer or the relevant Cablecom Company in
the defense of such
<PAGE> 40
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claim. Buyer shall not settle any such claims, or (to the extent possible) cause
any Cablecom Company to settle such claims, without the prior written consent of
Seller and each of the Controlling Shareholders which consent shall not be
unreasonably withheld. If the aggregate level of claims made by Buyer has
exceeded or is reasonably likely to exceed CHF 50,000,000 (fifty million Swiss
Francs), and if there are no other limitations in this Agreement which would
prevent Buyer from making a claim against Seller or the Controlling Shareholders
in relation to the matter and subject to the Buyer being indemnified to its
reasonable satisfaction, and if Seller or any of the Controlling Shareholders
(acting severally for this purpose) acknowledges its liability in writing, it
shall have the right to compromise or defend, at its own expense and by its own
counsel (who shall be reasonable satisfactory to Buyer) any such matter,
provided however, that such compromise or settlement shall not have any
materially prejudicial on the business of the Cablecom Business. If Seller or
any of the Controlling Shareholders (acting severally for this purpose) is
willing to compromise or defend any asserted liability, it shall promptly notify
Buyer of its intention to do so, and Buyer shall cooperate with, and provide at
its own cost appropriate documentation (subject to any statutory privilege or
statutory or contractual duties of confidentiality) and support as reasonably
requested by Seller or the respective Controlling Shareholder and its counsel in
connection with, the compromise or defense of any such asserted liability. Buyer
shall have the right to participate, at its own expense, in the defense of any
such asserted liability.
Buyer may direct Seller or the respective Controlling Shareholder to agree to
compromise any asserted liability against Buyer or any Cablecom Company at any
time, provided that (i) Buyer at the same time waives its rights to take
recourse as against Seller and all Controlling Shareholders under Section
6.2.3., or (ii) failing such waiver, Buyer acknowledges that any such compromise
will be without prejudice to any of Sellers or the Controlling Shareholders'
rights to take action or defend themselves in a recourse action.
6.2.3. Exclusion of Liability
Buyer acknowledges that, other than as provided in this Agreement, neither
Seller nor any of the several Controlling Shareholders nor any of its or their
Affiliates nor any person acting on its or their behalf has made or makes any
representation or warranty, express or implied. pertaining to the subject matter
of this Agreement. In particular, and without limitation to the foregoing, Buyer
acknowledges that neither Seller nor any of the several Controlling Shareholders
nor any of its or their Affiliate are making any
<PAGE> 41
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representations or warranties as to budgets, business plans or other projections
of a financial, technical or business nature relating to the Cablecom Business,
or with respect to any other development of the Cablecom Business (including for
the avoidance of doubt Swiss Online) after the Effective Date.
Buyer further acknowledges that the Disclosed Documents shall operate as a
limitation of Sellers representations and warranties and Buyer's rights under
this Section 6.2 to the extent the corresponding Disclosed Documents fairly
disclose the factual basis for any limitation of claims for misrepresentation or
breach of warranty.
If facts and circumstances which would give rise to a claim against Seller
result in any financial benefits and financial advantages of the Cablecom
Companies and/or Buyer, then damages will be reduced by the amount equal to any
such benefits and advantages and the amount which can be claimed as damages for
a misrepresentation or breach of warranty or otherwise shall be reduced
correspondingly. In addition, Seller and the several Controlling Shareholders
shall not be liable in respect of a claim of Buyer for misrepresentation or
breach of warranty:
(a) if and to the extent that any specific provision, reserve or expense was
reflected in the financial statements set forth in Exhibits 9 and 10, or
in the Final Combined Financial Statements:
(b) if and to the extent that for such misrepresentation or breach a purchase
price adjustment according to Section 2.2.5 or 2.2.6 was made;
(c) for any and all costs, damages and expenses which have been recovered from
a third party (including without limitation an insurance company), after
deduction of all direct costs and expenses incurred in making such
recovery (including reasonable attorney's fees);
(d) if and to the extent, as a result of a claim for misrepresentation or
breach of warranty, any tax payable by any Cablecom Company is actually
reduced;
(e) if and to the extent any damage or loss has been caused by any voluntary
act or omission of Buyer, before or after the Closing Date (whereby, for
the avoidance of doubt, any act or omission in order to comply with
applicable law under an enforceable court order shall not be deemed to be
voluntary), or by the fact that Buyer shall have failed to take or cause
the Cablecom Companies to take all reasonable steps to mitigate the damage
caused by a misrepresentation or breach of warranty.
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6.2.4. Limitations on Liability
(a) Subject to Section 6.2.4(b) below, Seller's and the several Controlling
Shareholders' liability under this Agreement shall apply only with respect
to the following misrepresentations or breaches of warranty:
(i) misrepresentations or breaches of warranty the impact of which on
the profits and/or the balance sheet of the respective Cablecom
Company exceed CHF 3,000,000 (three million Swiss Francs), it being
understood that any breaches below such threshold (Insignificant
Breaches) shall be completely disregarded;
(ii) only if and to the extent Buyer's claims (other than Insignificant
Breaches, which shall be completely disregarded) in the aggregate
exceed CHF 50,000,000 (fifty million Swiss Francs; the Deductible),
in which event Seller and the several Controlling Shareholders shall
be liable (subject to the other limitations contained in this
Section 6) merely for the amount of the excess over the Deductible;
provided, however, that the above limitation shall not apply to claims
based on fraud or willful misrepresentation. All calculations of the
impact of a misrepresentation or breach of warranty on the profits or on
the balance sheet of the respective Cablecom Company shall take Into
account (aa) the time value of money and (bb) any tax benefits, insurance
coverage, and other amounts recovered from third parties associated to a
loss or charge incurred in connection with a misrepresentation or breach
of warranty.
Subject to Section 6.2.4(b) below, Seller's and the several Controlling
Shareholders' total liability for misrepresentations or breaches of
warranty under this Agreement shall not exceed the amount of CHF
300,000,000 (three hundred million Swiss Francs), after deduction of the
Deductible as set forth above, provided, however that claims based on
fraud or willful misrepresentation shall not be subject to such
limitation.
(b) Notwithstanding Section 62.4(a), any breaches by Seller or the several
Controlling Shareholders of (i) the representations contained in Section
5.1.2(r) and 5.2.3, second paragraph. and (ii) any contractual obligations
under this Agreement other than the representations and warranties set
forth in Section 5, shall be subject to an overall limitation of CHF
500,000,000 (five hundred million Swiss Francs), such limitation
understood to include, and not to be in addition to, any amount paid for
misrepresentations and breaches of warranty. Any claims
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made under this Section 6.2.4(b) shall be subject to the limitation for
Insignificant Breaches, but shall not be subject to the Deductible.
(c) Notwithstanding Section 6.2.4(a) and (b), if Seller fails to deliver to
Buyer upon closing title to the Sales Shares, the Related Cablecom Assets,
the benefit (subject to the burden) of the Related Cablecom Contracts or
title to the underlying network assets of the Cablecom business (other
than in circumstances set forth in Section 2.2.6 and 4.6, and subject to
the renegotiation of rights of way as set forth in the Disclosed
Documents), the liability of Seller and the several Controlling
Shareholders shall be up to the amount of the Purchase Price (if the Third
Party Financial Debt and the Parent Intercompany Debt has been redeemed
and fully discharged, so that no liability corresponding to such debt
exists any more as to the Cablecom Business), or the Net Purchase Price
(if and to the extent such Third Party Financial Debt or Intercompany Debt
is still outstanding). Any claims made under this Section 6.2.4(c) shall
not be subject to the limitation for Insignificant Breaches, and shall not
be subject to the Deductible.
(d) It is understood and agreed by the parties that the remedies of Buyer
under this Section 6.2 (including without limitation the thresholds set
forth in lit.s (a) to (c) above) shall not apply to a failure of Seller to
deliver the SOL Shares (as further set out in Section 4.8.1), and that
such failure by Seller to deliver to Buyer to SOL Shares (if any) shall be
remedied only as set out in Section 4.8.
6.2.5. Several Liability of Controlling Shareholders
Any liability of the Controlling Shareholders under this Agreement is several,
if all Controlling Shareholders are held liable for a misrepresentation, breach
of warranty or breach of another contractual undertaking pursuant to this
Agreement, each Controlling Shareholder shall be responsible for not more than
one third of the total liability in each case and in the aggregate, subject
always to the limitations set forth in Section 6.2.4.
6.2.6. Rights of Recourse against Directors, Officers and Employees
Seller and the Controlling Shareholders hereby undertake not to make any
recourse claim against any of the Cablecom Subsidiaries or any of their
respective directors Or officers or employees If Seller or a Controlling
Shareholder is being sued for misrepresentation or breach of warranty or breach
of another contractual undertaking pursuant to this Agreement, provided,
however, that this covenant shall not apply if such Cable-
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com Subsidiary, or the relevant director or officer or employee, has acted by
intent or gross negligence or reckless disregard of duties.
6.3. Remedies of Seller
The provisions of Sections 6.2.1, 6.2.2 and 6.2.4 shall apply by analogy to
Buyer, and the remedies set forth in such Sections shall be available to Seller
and the Controlling Shareholders, if Buyer is liable of any misrepresentation or
breach of warranty.
6.4. Remedies Exclusive
The representations and warranties contained in this Agreement and the remedies
for other breaches in this Section 6 shall be in lieu of, and not in addition
to, the remedies provided for in the law. All other remedies shall not apply and
are expressly waived, in particular, and without limitation to the foregoing,
the parties hereto explicitly waive (i) the duty of the Buyer immediately to
inspect and notify under Art. 201 CO, and (ii) the right of contract rescission
under Art. 24 CO and Art. 205 CO.
6.5. No Limitation
The limitations of liability in this Section 8 shall not apply in the case of
fraud or willful misrepresentation or willful breach of warranty.
7. CONDUCT OF BUSINESS BETWEEN SIGNING AND CLOSING
7.1. General
Subject as provided below, it is understood and agreed that Seller, under
direction of the Controlling Shareholders, shall continue to operate the
Cablecom Business as a going concern, in the ordinary and usual course of
business and consistent with prior practice and substantially in compliance with
the investment policies of the budget for the business year 2000 at all times
from the date of this Agreement through the Closing Date.
It is understood and agreed that Buyer's rights under this Section 7 (including
without limitation Section 7.2) shall also extend to the shares of Swiss Online
AG held by Seller.
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7.2. Consultation with Buyer
From the date of this Agreement until the Closing Date, Seller and the
Controlling Shareholders shall regularly consult with Buyer or its
representatives on the conduct of business of each of the Cablecom Subsidiaries.
Subject to any constraints under applicable law, Seller and the Controlling
Shareholders shall further procure:
(a) that Buyer is permitted to nominate a representative (the Representative)
to attend the meetings of the board of directors of Seller and the
meetings of the executive group management of the Cablecom Group as a
guest; and
(b) that the Representative will, upon request, be given reasonable and direct
access to all documents, papers, plants, premises, management and auditors
of Seller and the Cablecom Subsidiaries substantially in the same manner
as such access is granted to ordinary members of the board of directors of
Seller and the executive group management of the Cablecom Group;
(c) that Buyer, following consultation with Seller, may appoint finance,
marketing or technical experts as visitors of the Cablecom Group, and that
such experts are given reasonable access to the premises and management
and documents relating to the Cablecom Group;
(d) that Buyer's legal and financial advisers and auditors are given
reasonable direct access to the management, legal and financial advisers
and auditors of the Cablecom Group to the extent this is necessary or
expedient for Buyer or its advisors to conduct the actions contemplated
under Section 4.
7.3. Restricted Actions
Seller shall not, and shall procure that none of its Affiliates shall cause
without prior consent of Buyer (or, if applicable Merger Control Laws do not so
permit, prior consultation of Buyer), any of the Cablecom Companies to do any of
the following, from the date of this Agreement through to the Closing Date:
(a) do anything that would materially interfere with the consummation of the
transactions contemplated by this Agreement taken as a whole;
(b) execute any contracts or enter into any negotiations with any third party
that would materially inhibit or impair the consummation of the
transactions contemplated by this Agreement taken as a whole;
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(c) do anything which would have a Material Adverse Effect on the value of the
Cablecom Business taken as a whole, unless specifically provided in this
Agreement;
(d) make any change in the terms of employment of any director, officer or
employee of any of the Cablecom Business other than (i) in accordance with
existing agreements, collective bargaining arrangements or normal prior
practice or (ii) as disclosed in the Disclosed Documents;
(e) issue or create any obligation to issue any shares or equity-linked
securities;
(f) buy or commit to buy any assets (i) outside the ordinary course of
business or (ii) at terms other than at arm's length, or (iii) other than
in accordance with the budgeted capital expenditures of the Cablecom
Group: (iv) for a consideration in excess of CHF 10,000,000 (ten million
Swiss Francs); notwithstanding the foregoing, it is understood and agreed
that Seller may continue to complete its network through acquisition of
local cable television networks the net purchase price of which shall not
exceed CHF 20,000,000 (twenty million Swiss Francs);
(g) sell, encumber or transfer any assets outside of the ordinary and normal
course of business except as contemplated in this Agreement;
(h) alter or amend in any manner the articles of incorporation or
organizational regulations of any of the Cablecom Subsidiaries;
(i) pay or pre-pay invoices other than consistent with prior business
practice;
(j) transfer any shares in any of the Cablecom Companies to a third party
outside of the Cablecom Group;
(k) increase or reduce or otherwise change the share capital or capital
structure, or grant any option or conversion rights on the equity of any
of the Cablecom Subsidiaries;
(l) form, enter into, vary, terminate or withdraw from any partnership,
consortium, joint venture or other incorporated association;
(m) enter into, or increase or extend any liability under, any guarantee or
indemnity other than in the ordinary and normal course of business;
(n) make, increase or extend any loan or advance or grant any credit to any
person outside of the Cablecom Group other than in the ordinary and normal
course of business;
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(o) grant, create or allow to be created any charge, security, mortgage, lien
or encumbrance over any of its assets in a value exceeding CHF 5,000,000
(five million Swiss Francs), other than charges arising by operation of
law in the ordinary and normal course of business;
(p) borrow any money or incur any indebtedness or other liability other than
trade credit or borrowings in the ordinary and normal course of business;
(q) incorporate or liquidate any subsidiary undertaking or effect any
reorganization with respect to such subsidiary (other than the ongoing
reorganization of the Swiss-German companies of the Cablecom Group);
(r) initiate, discontinue or settle any litigation or arbitration proceedings
where the amount claimed together with any costs incurred or likely to be
incurred exceeds CHF 3,000,000 (three million Swiss Francs), not including
value added taxes;
(s) grant or enter into any license, agreement or arrangement concerning any
part of its name or trade names or any other part of the intellectual
property of the Cablecom Business other than in the ordinary and normal
course of business;
(t) amend or vary the rates of interest applicable to the Parent Intercompany
Debt or the Subsidiary Intercompany Debt other than pursuant to
pre-existing contractual arrangements;
(u) enter into, vary, supplement, amend or terminate any agreement or
arrangement with the Seller or any of the Controlling Shareholders or
their respective Affiliates, other than in the ordinary and normal course
of business;
(v) make any payment or transfer any assets to Seller or any of the
Controlling Shareholders on their respective Affiliates other than (i)
payments in the ordinary and normal course of business Or (ii) payment of
dividends as set out in Exhibit 13. It is understood and agreed, however,
that Seller shall remain entitled to all dividends of the Cablecom
Companies for the financial year 1999;
(w) amend, vary or supplement any of the regulatory licenses of the Cablecom
Subsidiaries other than as contemplated in this Agreement;
(x) do, allow or procure any act or omission before the Effective Date which
is likely to constitute a misrepresentation or breach of warranty upon
their being deemed to be given as at the Effective Date;
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(y) enter into any interconnection or open network access agreement with any
Controlling Shareholder or any third party prior to the Closing Date
(other than in accordance with pre-existing arrangements);
(z) agree to do any of the things referred to above.
Seller hereby undertakes fully and promptly to inform Buyer whenever it
contemplates to do, or cause to be done, or propose to be done, a transaction
that is or may be effected by the restrictions set forth in this subsection.
7.4. Covenants of Controlling Shareholders
Each of the Controlling Shareholders hereby undertakes to procure that Seller
shall comply with the provisions of Section 7.1. In addition, and without
limitation to the foregoing, each of the Controlling Shareholders undertakes:
(a) not to do anything that would materially interfere with the consummation
of the transactions contemplated by this Agreement taken as a whole;
(b) not to execute any contracts or enter into any negotiations with any third
party that would materially inhibit or impair the consummation of the
transactions contemplated by this Agreement taken as whole;
(c) not to increase the overall amount of Intercompany Net Debt as against
such Controlling Shareholder between 31 December 1999 and the Closing
Date;
(d) not to do any other thing which would have a Material Adverse Effect on
the value of the Cablecom Business taken as a whole, unless specifically
provided in this Agreement;
(e) to procure that neither the Seller nor the Cablecom Subsidiaries shall do,
allow or procure any act or omission before the Effective Date which is
likely to constitute a misrepresentation or breach of warranty upon their
being deemed to be given by the Controlling Shareholders under Section 5.
7.5. Press Releases and Other Public Announcements
Following execution of this Agreement, all public announcements or press
releases issued in connection with the transactions contemplated by this
Agreement shall only be published after Buyer, Seller and the Controlling
Shareholders shall have consulted
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and agreed on the contents of such public announcements or press releases.
Nothing in this Agreement shall restrict or prohibit:
(a) any announcement or disclosure required by statutory law or by any
competent judicial or regulatory authority or by any competent securities
exchange (in which case the parties shall co-operate in good faith in
order to agree the content of any such announcement prior to it being
made);
(b) the Buyer or any of the Cablecom Subsidiaries from informing customers or
Suppliers of the acquisition of the Cablecom Group by Buyer after Closing
(it being understood that any references to Seller or the Controlling
Shareholders shall only be made after prior consultation with Seller and
the respective Controlling Shareholder);
(c) any affiliate of Buyer from making any disclosure to any of its directors,
officers, employees, agents or advisers who are required to receive such
information to carry out their duties (conditional upon any such person
agreeing to keep such information confidential for so long as the
disclosing party is obligated to do so in accordance with this clause or
applicable law).
8. CONDUCT OF BUSINESS AFTER CLOSING
8.1. Restrictions on Resale
Buyer undertakes not to sell, transfer or otherwise dispose of the Cablecom
Business for a period of 24 months after the Closing Date. In particular, and
without limitation to the foregoing, Buyer shall not during such period sell,
solicit or procure the sale, transfer, or otherwise dispose of, or create a lien
or pledge or mortgage on, or allow a sub-participation to granted with respect
to, (i) all or part of the shares in the acquisition vehicle for the Cablecom
Business, or (ii) all or part of the shares or assets comprising the Cablecom
Business (including without limitation the shares or assets in all Cablecom
Companies), except as set out in the following paragraph.
Notwithstanding the foregoing, Buyer shall not be restricted from:
(a) selling, transferring or restructuring any parts of the Cablecom Business
as a part of an intra-group restructuring or reorganization;
(b) pledging, mortgaging or otherwise charging all or part of such shares or
assets after Closing by way of security for borrowings incurred by Buyer
or its Affiliates;
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(c) selling or transferring to third parties minor parts of the Cablecom cable
television business, it being understood that "minor parts" shall be
deemed to apply only to parts of the business which comprise less than 3%
of Cablecom's overall cable television subscriber base as of 30 September
1999 (calculated under the "Equity Subscribers" method as set forth in
Exhibit 11);
(d) selling or transferring the Rediffusion business division;
(e) effecting an initial public offering on a recognized securities exchange.
8.2. Use of Cablecom Name and Trademark
Seller and the Controlling Shareholders undertake to discontinue the use of the
name and trademark "Cablecom" on the Closing Date. In particular, and without
limitation to the foregoing, Seller shall change its corporate name so as not to
include any reference to "Cablecom" or any similar sounding name no later than
the Closing Date.
8.3. Liquidation of Seller
It is understood and agreed by the parties that the Controlling Shareholders
reserve the right to liquidate Seller following consummation of the transactions
contemplated by this Agreement. In the event of any such actual or de facto
liquidation, all rights and obligations of Seller under the Transaction
Agreement shall be assumed by the several Controlling Shareholders, and each
Controlling Shareholder shall therefore be liable for its several and
proportionate share of the obligations and liabilities of Seller (including
without limitation obligations and liabilities of Seller under Sections 5 and 6)
to Buyer.
The Controlling Shareholders shall be entitled to raise any claims and to
exercise any rights and remedies which otherwise would have been available to
Seller would it not have been liquidated.
8.4. Restrictive Covenant
Seller and the Controlling Shareholders each undertake to Buyer, and Buyer
undertakes to Seller and each of the Controlling Shareholders, that they will
not, at any time until 12 months after the Closing Date, solicit or entice away,
or endeavor to solicit or entice away, from any of the opposing parties any
person who was at the Effective Date or the Closing Date an employee of any Such
opposing party (whether or not
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such person would commit a breach of its employment contract by leaving
service), provided, however, that this undertaking shall not apply:
(a) to generic, unspecific advertisements for the procurement of employees
made in newspapers, magazines or otherwise in the ordinary course of
business;
(b) to any employee employed by any of the parties in a non-managerial or
non-senior technical or engineering role.
8.5. Swisscom Arrangements
Swisscom and Buyer reached an agreement in principle according to which Buyer
shall procure that the Cablecom Companies enter into new contracts within a
reasonable period of time which shall replace the existing contracts, for the
use of leased lines owned by Swisscom for an overall price of CHF 15,000,000
(fifteen million Swiss Francs) p.a. for current, unrestricted monodirectional
use, plus a 15% mark-up for bidirectionality. Swisscom will, within reasonable
time, upgrade those monodirectional leased lines covered by the existing
contracts with the Cablecom Companies to bidirectional use to the extent
requested by the Buyer. The relevant contracts will be amended accordingly.
Should any entity of the Cablecom Group terminate an agreement under which an
upgrade has been made for bi-directional use before the term of such agreement,
then such entity of the Cablecom Group shall pay to Swisscom the penalty agreed
in such agreement to cover the investment costs. Any agreements and undertakings
implementing the above shall be considered as a separate and independent matter,
shall not impede the Closing from taking place, and shall not enable any party
to take any remedies under this Agreement.
9. TAXES, COSTS AND EXPENSES
9.1. Taxes
Seller shall bear or cause to be borne, and shall indemnify Buyer if Buyer is
required to pay all Taxes to be paid or withheld by Seller in connection with
the transactions contemplated under this Agreement, including the Swiss
securities transfer tax (Umsatzabgabe) payable in connection with the
transactions contemplated under this Agreement.
<PAGE> 52
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Buyer shall bear or cause to be borne, and shall indemnify Seller or any
Controlling Shareholder required to pay any and all taxes attributable to Buyer
as a result of the consummation of the transactions contemplated by this
Agreement and value added taxes, if any, levied on the transactions contemplated
under this Agreement.
All amounts referred to in this Agreement do not include any value added tax,
which shall be added if necessary.
9.2. Costs and Expenses
Each party shall bear its own costs and expenses (including advisory fees)
incurred in the negotiation, preparation and completion of this agreement.
Seller and the Controlling Shareholders confirm that none of such costs and
expenses have been or will be prior to closing borne by any of the Cablecom
Subsidiaries. Notwithstanding the foregoing:
(a) any costs of the Appraiser appointed by the Parties pursuant to Section
2.2 shall be borne by Buyer and Seller in equal proportions;
(b) If a party has caused this Agreement not to be consummated by a fraudulent
or grossly negligent act or behavior, it shall reimburse the other party
or parties for all costs and expenses incurred by such party or parties in
view of this Agreement, including without limitation fees of legal and
financial advisors, reasonable out-of-pocket expenses, and any other
direct damages (at the exclusion of consequential damages) suffered as a
result of a failure to close this Agreement.
10. GENERAL PROVISIONS
10.1. Effect on Third Parties
No person other than the parties hereto shall have any rights or benefits under
this Agreement, and nothing in this Agreement is intended to confer on any
person other than the parties hereto any rights, benefits or remedies. No party
to this Agreement shall assign any of the rights or obligations under this
Agreement to any third party without the prior written consent of Seller and the
Controlling Shareholders (if the assignment is proposed to be undertaken by
Buyer) or Buyer (if the assignment is proposed to be undertaken by Seller or any
of the Controlling Shareholders), provided, however, that in case of liquidation
of Seller, Seller shall have the right to assign claims to the Controlling
Shareholders.
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Notwithstanding the foregoing, Buyer shall have the right
(a) to consummate the transactions contemplated under this Agreement through
an Affiliate of Buyer, it being understood that Buyer shall remain jointly
and severally liable with such Affiliate for the obligations assumed by
such Affiliate under this Agreement including without limitation the
obligation to repay part of the Hold-Back as set forth in Section 2.2.6;
(b) to assign after Closing any or all of the Buyer's rights or obligations
under this Agreement or any or all of its interest in the Cablecom
Companies to an Affiliate of Buyer, it being understood that Buyer shall
remain jointly and severally liable with such Affiliate for the
obligations assumed by any such Affiliate;
(c) to assign any or all of the Buyer's rights or obligations under this
agreement to any person by way of security for borrowings incurred by
Buyer or its Affiliates.
10.2. Notices
All notices or other communications to be given under or in connection with this
Agreement shall be made in writing and shall be delivered by hand, by registered
mail (return receipt requested) or by telefax to the following addresses:
If to Buyer:
Address for service Prager Dreifuss attn. Gaudenz Domenig
Muhlebechstrasse 6
8008 Zurich, Switzerland
Fax No. ++411-254 5599
with a copy to NTL Incorporated attn. John Gregg and
110 East 59th Street, 26th Fl., Richard Lubach
New York NY 10022, USA
Fax No. ++1-212 906 8497
with a copy to NTL Incorporated attn. Aizad Hussain and
90 Long Acre Jeff Wyman
London WC2E 9RA, England
Fax No: ++44-207 909 2012
with a copy to Travers Smith Braithwaite attn. Mark Soundy
10 Snow Hill
London EC1A 2AL, England
Fax No: ++44-207 238 3728
if to Seller:
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Cablecom Holding AG attn. Chief Executive
Zollstrasse 42 Officer
CH-8005 Zurich, Switzerland
Fax-No. ++411-277 9292
with a copy to Homburger Rechtsanwalte attn. Peter Kurer and
Weinbergstrasse 56158 Danel Daeniker
8035 Zurich, Switzerland
Fax No. ++411-265 3511
if to the Controlling Shareholders:
Siemens Schweiz AG attn. Chairman of the
Freilagerstrasse 40. P.O. Box Board of Directors
CH-8047 Zurich, Switzerland
Fax-Nr. ++411-495 6108.
Veba Telecom GmbH attn. Chief Legal
Bennigsenplatz 1 Counsel
D-40474 Dusseldorf, Germany
Fax-Nr. ++49-211 457 9446
Swisscom AG attn. Chief Financial
Alte Tiefenaustrasse 6 Officer
CH-3050 Berne
Fax-Nr. ++4131-342 5580
with a copy to Homburger Rechtsanwalte attn. Peter Kurer and
Weinbergstrasse 56/58 Daniel Daeniker
8035 Zurich, Switzerland
Fax No. ++411 -265 3511.
10.3. Entire Agreement
This Agreement, including the Annexes and Exhibits and any other documents
referred to herein, constitutes the entire Agreement and understanding among the
parties with respect to the subject matter hereof, and shall supersede all prior
oral and written agreements Or understandings of the parties relating hereto.
This Agreement, including the Annexes and Exhibits and any other documents
referred to herein, shall be binding on all successors and assignees of the
parties hereto. All references to this Agreement shall be deemed to include the
Annexes and Exhibits hereto.
10.4. Amendments and Waivers
This Agreement may only be modified or amended by a document signed by all
parties. Any provision contained in this Agreement may only be waived by a
document signed by the party waiving such provision.
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10.5. Severability; Good Faith
Should any part or provision of this Agreement be held to be invalid or
unenforceable by any competent court, governmental or administrative authority
having jurisdiction, the other provisions of this Agreement shall nonetheless
remain valid. In this case, the parties shall endeavor to negotiate a substitute
provision that best reflects the economic intentions of the parties without
being unenforceable, and shall execute all agreements and documents required in
this connection.
The parties have been informed that the transfer of the interest of Seller in
Cablecom Kabelkommunikation GmbH is subject to the form requirement of
notarization by a public deed. The parties agree that the sale and transfer of
the Cablecom Business taken as a whole would be effected even if the sale and
transfer of Sellers interest in Cablecom Kabelkommunikation, GmbH were not to
take place, and also agree that this Agreement is valid and binding on the
parties in the form as executed by the parties. The parties further agree to
execute or have executed a notarized public deed for the sale and transfer of
the interest of Seller in Cablecom Kabelkommunikation GmbH in the form required
under applicable law, and in form and substance reasonably satisfactory to Buyer
and Seller, no later than 17 December 1999.
If a party to this Agreement (the Failing Party) should fail to take any action
to be taken or to deliver any document to be delivered as of a specified date,
the other party shall not resort to any contractual remedies under this
Agreement if such failure is promptly and fully cured in good faith by the
Failing Party.
10.8. Confidentiality
The parties undertake to keep all information obtained in the course of the due
diligence and in any negotiations and discussions prior to or after Closing in
strict confidence, and further undertake not to disclose any such information to
third parties, and all parties to this Agreement shall in all respects keep
confidential and not at any time disclose to anyone or use for their own or any
other person's benefit or to the detriment of the other party or parties any
confidential information, in each case unless:
(a) a party is required to do so by a competent court or administrative
authority under compulsory law;
(b) a party is required to do so under applicable stock exchange regulations;
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(c) such information is already in the public domain by reason other than a
breach of this confidentiality undertaking.
It is understood and agreed that the above confidentiality undertaking shall not
restrict Buyer from using information obtained on the Cablecom Business in the
course of operating the Cablecom Business following the Closing Date.
This confidentiality undertaking shall remain in force until 31 December 2004.
10.7. Entry into Effect
This Agreement shall enter into effect as of the date first written hereinabove,
subject to completion of the following conditions:
(a) Buyer shall have delivered to Seller and the Controlling Shareholders a
commitment letter and a "highly confident" letter relating to the
financing of the Purchase Price set out in Section 2.2.1;
(b) the board of directors of Buyer shall have approved the transactions
contemplated by this Agreement.
10.8. Commitment Letter
At any time after signing of this Agreement and prior to noon (Swiss time) on 14
December 1999, the Buyer shall be entitled to deliver to the Controlling
Shareholders written evidence reasonably satisfactory to Warburg Dillon Read
(acting for this purpose on behalf of the Controlling Shareholders) from one or
more major international financial institutions to the effect that they are
committed to arranging the funding for the equity element of the financing to
enable Buyer to pay the Purchase Price (the Commitment Letter). Such delivery
shall be effected by hand delivery or telefax to Homburger Rechtsanwalte, Zurich
(telefax no. 0041-1-265 3511, attn. Daniel Daeniker) and to Warburg Dillon Read,
Zurich (telefax no. 0041-1-239 9331, attn. Carsten ten Brink).
If the Commitment Letter is reasonably satisfactory to Warburg Dillon Read,
Seller will, forthwith upon demand, pay to Buyer an amount equal to 75% of the
total commitment fees (to the extent such fees cover the equity element of the
Purchase Price in the amount of CHF 2,100,000,000 (two billion one hundred
million Swiss Francs))
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payable by Buyer in relation to the Commitment Letter upon evidence from Buyer
that such commitment fees have been invoiced to and paid by Buyer.
11. GOVERNING LAW AND JURISDICTION
11.1. Governing Law
This Agreement shall be governed by and construed in accordance with the laws of
Switzerland, to the exclusion of the provisions on the conflict of laws.
11.2. Jurisdiction
All disputes arising out of or in connection with this Agreement or the
transaction contemplated hereby shall be submitted to the exclusive jurisdiction
of the Commercial Court of the Canton of Zurich (Handelsgericht des Kantons
Zurich) with reserves of appeals to the Swiss Federal Supreme Court
(Schweizerisches Bundesgericht). Each party to this Agreement waives, to the
fullest extent it may effectively do so, any objection which it may now or
hereafter have to the laying of venue of any such proceeding, and submits to the
jurisdiction of such court in any suit, action or proceeding. For the purposes
of this Section 11.2. Buyer appoints Prager Dreifuss, attorneys-at-law,
Muhlebachstrasse 6, 8008 Zurich, attn: Gaudenz Domenig as its agent for service
of process.
SO AGREED on 12 December 1999 in Zurich
Cablecom Holding AG
/s/ Manifred Nagel /s/ Ueli Dietiker
------------------ -----------------------
By: Manifred Nagel Ueli Dietiker
Title: Chairman of Chief Executive Officer
the Board
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NTL Incorporated
/s/ John Gregg
------------------------------
By: John Gregg
Title: Chief Financial Officer
Siemens Schweiz AG
/s/ Manifred Nagel /s/ Peter Gruschow
------------------ ------------------
By: Manifred Nagel Peter Gruschow
Title: Chairman Managing Director
of the Board
Veba Telecom GmbH
/s/ Karsten Keller
-----------------------
By: Karsten Keller
Title: Attorney-in-fact
Swisscom AG
/s/ David Schnell /s/ Thomas Bischof
----------------- -----------------------
By: David Schnell Thomas Bischof
Title: Chief Financial General Counsel Finance
Officer
<PAGE> 59
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ANNEX A
DEFINITIONS
As used in this Agreement in capitalized form, the following terms shall have
the following meaning:
A.1 Accounting Principles shall mean the accounting principles consistently
previously applied by the Cablecom Group in accordance with Swiss Law and
the Swiss Accounting and Reporting Recommendations (Fachempfehlungen fur
Rechnungslegung, FER).
A.2 Affiliate. A person or Business Association shall be an affiliate of a
second person or Business Association if it exercises Control over such
person or Business Association, or is under Control by it, or is under
common Control by the same person or Business Association.
A.3 Agreement shall mean this Agreement including all of its Exhibits and
Annexes.
A.4 Appraiser shall have the meaning set forth in Section 2.2.
A.5 Business Association shall mean a general or limited partnership, a
corporation, a business trust, a limited liability company, a trust, an
unincorporated organization doing business, a government or any department
or agency thereof, a joint venture or any other entity doing business.
A.6 Cablecom Business shall mean the Sale Shares, the Related Cablecom Assets,
the Related Cablecom Contracts and the Related Cablecom Liabilities
(including without limitation Swiss Online) to be transferred by Seller
under this Agreement.
A.7 Cablecom Companies shall mean all of the Business Associations listed in
Exhibit 1.
A.8 Cablecom Group shall mean Seller and the Cablecom Subsidiaries taken as a
whole.
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A.9 Cablecom Subsidiaries shall mean those Cablecom Companies which are under
the direct or indirect Control of Seller.
A.10 Call Option has the meaning set forth in Section 4.8.
A.11 Cash shall mean, with respect to the Cablecom Business, cash, cash
equivalents (including cheques at hand, funds transferred but not
credited, and interest accrued thereon), marketable securities (including
interest earned but not paid), determined in accordance with the
Accounting Principles.
A.12 CHF shall mean Swiss Francs, being the lawful currency of Switzerland.
A.13 Closing shall mean the consummation of the transactions described in
Section 3.3.
A.14 Closing Date shall mean the date of Closing as set out in Section 3.1.
A.15 CO shall mean the Swiss Federal Code of Obligations (Obilgationenrecht) of
1911, as amended.
A.16 Contracts shall mean the Related Cablecom Contracts and all written
agreements and undertakings to which any of the Cablecom Companies is a
party or a beneficiary, or by which any of the Related Cablecom Assets or
liabilities are bound or beneficiaries.
A.17 Control shall be deemed to exist if a person or Business Association
(either alone of with its Affiliates) owns more than half of the voting
rights and equity capital of a Business Association, or is otherwise able
to exert a controlling influence over another person or Business
Association.
A.18 Controlling Shareholder shall mean any of Siemens Schweiz AG, Swisscom AG
or Veba Telecom GmbH.
A.19 Deductible shall have the meaning set forth in Section 6.2.3.
A.20 Delayed Closing shall have the meaning set forth in Section 4.8.
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A.21 Disclosed Documents shall have the meaning set forth in Section 5.1.
A.22 Disclosure Letter shall have the meaning set forth in Section 5.1.
A.23 Effective Date shall mean 1 January 2000, 00.01 am.
A.24 Escrow Agreement shall have the meaning set forth in Section 4.7.
A.25 Financial Debt shall mean, with respect to the Cablecom Business, Third
Party Financial Debt plus Parent Intercompany Debt minus Subsidiary
Intercompany Debt determined in accordance with the Accounting Principles.
A.26 Final Combined Financial Statements shall mean the combined balance sheet
and the profit and loss statement of the Cablecom Business as of 31
December 1999, to be prepared by the parties in accordance with the
Accounting Principles pursuant to Section 2.2.
A.27 Final Net Assets shall mean the Net Assets as of 31 December 1999.
A.28 Hold-Back shall have the meaning set out in Section 2.2.6.
A.29 Intercompany Net Debt shall mean the Parent Intercompany Debt minus the
Subsidiary Intercompany Debt.
A.30 Information Memorandum shall have the meaning set forth in Section 5.1.
A.31 Insignificant Breaches shall have the meaning set forth in Section 6.2.
A.32 Joint Account shall have the meaning set forth in Section 4.7.
A.33 Material Adverse Effect shall mean a material and lasting adverse effect
on the business operations or financial situation of the Cablecom
Business.
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A.34 Merger Control Laws shall mean the following laws applicable on Buyer or
Seller relating to the consummation of the transactions set out in this
Agreement (i) the Swiss Federal Act of 6 October 1995 on Cartels and other
Restraints on Competition, (ii) the European Union Merger Control
Regulation dated 21 December 1989 (Regulation 4064/89/EEC), as amended
(EMCR), (iii) the Austrian merger control statutes as amended with effect
as of 1 January 2000.
A.35 Net Assets shell mean, with respect to the Cablecom Business, total assets
minus total liabilities minus minority interests, determined in accordance
with the Accounting Principles.
A.36 Net Debt shall mean, with respect to the Cablecom Business, Financial Debt
minus Cash.
A.37 Net Purchase Price shall have the meaning set forth in Section 2.2.3.
A.38 Parent Intercompany Debt shall mean all interest bearing financial debt
(not including financial leases and deferred charges) owed by the Cablecom
Companies to Seller or any of the Controlling Shareholders or any of their
respective Affiliates, determined in accordance with the Accounting
Principles.
A.39 Preliminary Combined Financial Statements shall mean the projected
combined balance sheet and the profit and loss statement of the Cablecom
Companies as at 31 December 1999 attached hereto as Exhibit 5.
A.40 Price Adjustment shall have the meaning set forth in Section 2.2.
A.41 Purchase Price shall have the meaning set forth in Section 2.2.
A.42 Put Option has the meaning set forth in Section 4.8
A.43 Related Cablecom Assets shall mean the assets listed in Exhibit 2, which
shall be transferred pursuant to this Agreement as of Closing.
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A.44 Related Cablecom Contracts shall mean all written agreements and
undertakings to which the seller is a party or a beneficiary and which
relate to the Cablecom Business.
A.45 Related Cablecom Liabilities shall mean the liabilities listed in Exhibit
2, which shall be assumed pursuant to this Agreement as of Closing.
A.46 Relevant Subscribers shall have the meaning set forth in Section 2.2.6.
A.47 Representative shall have the meaning set form in Section 7.4.
A.48 Sale Shares shall mean the shares sold under this Agreement as set out in
Exhibit 1, which are held directly by Seller. Notwithstanding the
foregoing, with respect to Swiss Online the term "Sale Shares "shall mean
11,000 registered shares of Swiss Online AG.
A.49 Schedule of Indebtedness shall mean the Schedule in Exhibit 3 which sets
forth all Third Party Financial Debt and all Intercompany Debt of the
Cablecom Business.
A.50 Shares shall mean all of the shares of the Cablecom Companies listed in
Exhibit 1 which include Sale Shares and shares held by Seller through its
Affiliates.
A.51 SOL Shares shall have the meaning set out in Section 4.8.
A.52 Subsidiary Intercompany Debt shall mean all interest bearing financial
debt (not including financial leases and deferred charges) owed by Seller
or any of the Controlling Shareholders or any of their respective
Affiliates to any of the Cablecom Companies, determined in accordance with
the Accounting Principles.
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A.53 Taxes shall mean all tax liabilities, including income taxes (personal or
corporate), capital taxes, stamp duties (both on the issuance and on the
transfer or securities), withholding taxes, value added taxes and all
other taxes, duties, levies or imposts payable to any competent taxing
authority in any jurisdiction, as well as any interest, penalties, costs
and expenses reasonably related thereto.
A.54 Third Party Financial Debt shall mean all interest bearing financial debt
(not including financial leases and deferred charges) owed by any of the
Cablecom Companies to any third party other than Intercompany Net Debt,
determined in accordance with the Accounting Principles.
A.55 Y2K Documents shall have the meaning set forth in Section 5.1.2.
