Exhibit 10.1


 


 




 





PURCHASE AGREEMENT


 


regarding the shares
of


 


Suez-Lyonnaise
Télécom SA


 


and certain
Intercompany Loans


 


dated as of


 


15 March 2004




 





 

















 


TABLE OF CONTENTS


 


	
  ARTICLE I DEFINITIONS

  	
   

  
	
  ARTICLE II SALE OF SHARES AND INTERCOMPANY LOAN; CLOSING

  	
   

  
	
  2.1

  	
  Purchase and Sale of Shares and
  Intercompany Loan.

  	
   

  
	
  2.2

  	
  Closing Consideration.

  	
   

  
	
  2.3

  	
  Closing Documents.

  	
   

  
	
  2.4

  	
  Time and Place of Closing.

  	
   

  
	
  2.5

  	
  Reference Date and Closing Date.

  	
   

  
	
  2.6

  	
  Provisional Purchase Price and Provisional
  Consideration Amount.

  	
   

  
	
  2.7

  	
  Final Determination of the Purchase Price.

  	
   

  
	
  ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER

  	
   

  
	
  ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE UPC SHAREHOLDER

  	
   

  
	
  ARTICLE V COVENANTS OF SELLER AND BUYER

  	
   

  
	
  5.1

  	
  Investigation of Business; Access to
  Properties and Records, Etc.

  	
   

  
	
  5.2

  	
  Efforts; Obtaining Consents.

  	
   

  
	
  5.3

  	
  Competition Authority Clearance.

  	
   

  
	
  5.4

  	
  Further Assurances.

  	
   

  
	
  5.5

  	
  Conduct of the Business and the UPC French
  Cable Business.

  	
   

  
	
  5.6

  	
  Public Announcements.

  	
   

  
	
  5.7

  	
  Confidentiality.

  	
   

  
	
  5.8

  	
  Provision of Financial Statements, Reports
  and Certain Other Information.

  	
   

  
	
  5.9

  	
  Conversion of Portions of Intercompany
  Loan, Buyer Intercompany Loans and UPC France Intercompany Loan.

  	
   

  
	
  5.10

  	
  Release of Encumbrances.

  	
   

  
	
  5.11

  	
  Affiliate Commercial Contracts.

  	
   

  
	
  5.12

  	
  Tax matters.

  	
   

  
	
  5.13

  	
  Restrictive Covenants.

  	
   

  
	
  5.14

  	
  Insurance.

  	
   

  
	
  5.15

  	
  Sipperec Memorandum of Agreement.

  	
   

  
	
  5.16

  	
  Sarbanes Oxley.

  	
   

  
	
  ARTICLE VI WORKS COUNCILS

  	
   

  
	
  ARTICLE VII CONDITIONS TO BUYER’S OBLIGATION TO CLOSE

  	
   

  
	
  7.1

  	
  Representations, Warranties and Covenants
  of Seller.

  	
   

  
	
  7.2

  	
  Competition Filing.

  	
   

  
	
  7.3

  	
  Notification to the CSA.

  	
   

  
	
  7.4

  	
  Cannes and Epinal Networks.

  	
   

  
	
  7.5

  	
  No Injunction.

  	
   

  
	
  7.6

  	
  2003 Year End RGUs.

  	
   

  
	
  7.7

  	
  2004 RGUs and Revenues.

  	
   

  
	
  7.8

  	
  2003 EBITDA and Revenues.

  	
   

  



 


i

















 


	
  7.9

  	
  Noos Run-Rate EBITDA.

  	
   

  
	
  7.10

  	
  Rights of Way Renewal.

  	
   

  
	
  7.11

  	
  No Material Adverse Change.

  	
   

  
	
  ARTICLE VIII CONDITIONS TO SELLER’S
  OBLIGATION TO CLOSE

  	
   

  
	
  8.1

  	
  UPC Warranties and Buyer Covenants.

  	
   

  
	
  8.2

  	
  No Injunction.

  	
   

  
	
  ARTICLE IX SURVIVAL; INDEMNIFICATION

  	
   

  
	
  9.1

  	
  Indemnification by Seller.

  	
   

  
	
  9.2

  	
  Indemnification for Seller Loss.

  	
   

  
	
  9.3

  	
  Disclosures.

  	
   

  
	
  9.4

  	
  Update of Disclosures.

  	
   

  
	
  9.5

  	
  Procedure for update of Disclosure
  Documents.

  	
   

  
	
  9.6

  	
  Survival.

  	
   

  
	
  9.7

  	
  Limitations to the Indemnity Obligations of
  Seller.

  	
   

  
	
  9.8

  	
  Limitations to the Indemnity Obligations of
  the UPC Shareholder.

  	
   

  
	
  9.9

  	
  Loss.

  	
   

  
	
  9.10

  	
  Payment of Claims.

  	
   

  
	
  9.11

  	
  Procedures for Third-Party Claims.

  	
   

  
	
  9.12

  	
  Procedures for Non-Third Party Claims.

  	
   

  
	
  ARTICLE X TERMINATION

  	
   

  
	
  10.1

  	
  Termination.

  	
   

  
	
  10.2

  	
  Procedure and Effect of Termination.

  	
   

  
	
  ARTICLE XI MISCELLANEOUS

  	
   

  
	
  11.1

  	
  Counterparts.

  	
   

  
	
  11.2

  	
  Governing Law; Jurisdiction and Forum.

  	
   

  
	
  11.3

  	
  Entire Agreement; Third-Party Beneficiary.

  	
   

  
	
  11.4

  	
  Expenses.

  	
   

  
	
  11.5

  	
  Notices.

  	
   

  
	
  11.6

  	
  Successors and Assigns.

  	
   

  
	
  11.7

  	
  Headings; Definitions.

  	
   

  
	
  11.8

  	
  Amendments and Waivers.

  	
   

  
	
  11.9

  	
  Interpretation; Absence of Presumption.

  	
   

  
	
  11.10

  	
  Severability.

  	
   

  
	
  ARTICLE XII GUARANTEE

  	
   

  



 


ii

















 


	
  SCHEDULES

  	
   

  
	
   

  	
   

  
	
  1

  	
  Definitions

  	
   

  
	
  2.2.4

  	
  Escrow Agreement

  	
   

  
	
  2.3.3

  	
  Transfer of Loan Agreement (acte de cession de créance)

  	
   

  
	
  2.6

  	
  Determination of the Cash Consideration, Consideration Shares Amount
  and the Purchase Price

  	
   

  
	
  2.6,3.4.2(a)

  	
  Disputed payables

  	
   

  
	
  2.6,3.4.2(b)

  	
  WL Escrow Agreement

  	
   

  
	
  3.

  	
  Seller Representations and Warranties

  	
   

  
	
  3A.

  	
  Seller Specific Warranties

  	
   

  
	
  4.

  	
  UPC Representations and Warranties

  	
   

  
	
  4A.

  	
  UPC Specific Warranties

  	
   

  
	
  5.11

  	
  Buyer Affiliate contracts

  	
   

  
	
  5.13

  	
  Seller existing shareholdings

  	
   

  
	
  7.4 (b)

  	
  C&E Escrow Agreement

  	
   

  
	
  7.6

  	
  RGUs calculation method

  	
   

  
	
  7.7

  	
  2004 RGUs and Revenues

  	
   

  
	
  A

  	
  Shareholders Agreement

  	
   

  
	
  B

  	
  Sipperec Memorandum of Agreement

  	
   

  
	
  C

  	
  The Budget

  	
   

  
	
   

  	
   

  	
   

  
	
  APPENDICES

  	
   

  
	
   

  	
   

  
	
  3.2.3

  	
  2004 Monthly EBITDA

  	
   

  
	
  3.5

  	
  2004 Monthly Capex

  	
   

  
	
  4.2.3

  	
  2004 Monthly UPC France EBITDA and Capex

  	
   

  



 


iii

















 


This STOCK
AND LOAN PURCHASE AGREEMENT (together with the Schedules and
Appendices hereto, this “Agreement”),
dated as of 15 March 2004 (the “Signing
Date”), is by and between Suez SA, a société anonyme organized under
the laws of France (“Seller”),
MédiaRéseaux SA, a société anonyme organized under the laws of France (“Buyer”), UPC France Holding BV (the “UPC Shareholder”) and UnitedGlobalCom, Inc.
(“UGC”).


 


UGC is party to this Agreement solely for the
purpose of Section 5.16 and Article XII.


 


WHEREAS as at the date of this Agreement,
Seller owns 50.1% of the share capital and voting rights in Suez-Lyonnaise
Télécom SA (the “Company”) which
owns and operates, through its Subsidiaries, a cable business and provides
related services in France.


 


WHEREAS Seller is willing to dispose of its
interests in the Company.


 


WHEREAS Buyer has expressed an interest in
acquiring 100% of the share capital and voting rights in the Company and has
been invited to perform due diligence on the Companies.


 


WHEREAS on Closing, Seller will own all of
the outstanding shares of the Company (the “Shares”).


 


WHEREAS Buyer owns all of the UPC French
Cable Business.


 


WHEREAS Seller wishes to sell to Buyer, and
Buyer wishes to purchase from Seller all of the Shares upon the terms and
subject to the conditions set forth herein.


 


WHEREAS Seller wishes, after capitalizing a
portion of the Intercompany Loan, to sell the remaining Intercompany Loan to
Buyer upon the terms and subject to the conditions set forth herein.


 


WHEREAS contemporaneously with the signing of
this Agreement, the Parties will sign the Sipperec Memorandum of Agreement.


 


NOW THEREFORE, in consideration of the
premises and the representations, warranties, covenants and agreements
contained herein, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, and intending to be legally
bound hereby, the Parties hereby agree as follows:


 


ARTICLE
I


DEFINITIONS


 


Capitalized terms used in this Agreement have
the respective meanings indicated in Schedule 1.


 


ARTICLE
II


SALE
OF SHARES AND INTERCOMPANY LOAN; CLOSING


 


2.1 Purchase and Sale of Shares and
Intercompany Loan.  At the
Closing and subject to the terms and conditions set forth herein, in
consideration for the Purchase Price, Seller shall sell to Buyer, and Buyer
shall purchase from Seller, all of Seller’s right, title and interest in and


 


1

















 


to the Shares and the Intercompany Loan, it
being understood that for the purpose of this Agreement, the Shares and the
Intercompany Loan may only be sold and purchased together.  The Purchase Price calculated in accordance
with Schedule 2.6 will be allocated as follows:


 


(a) to the Shares existing as at the Signing
Date (the “Existing Shares”), an
amount equal to EUR one (1), given that the cap on the Base Consideration under
Schedule 2.6 is significantly lower than the anticipated level of Noos
Financial Debt and Intercompany Loan expected at Closing; and


 


(b) to the Intercompany Loan, an amount equal
to the balance of the Purchase Price, save that with respect to the portion of
the Intercompany Loan required to be capitalized pursuant to Section 5.9.1
an amount equal to the Purchase Price less EUR one (1) less the face value of
the post-capitalization Intercompany Loan shall be allocated to the shares
issued pursuant to Section 5.9.1 (the “Capitalization
Shares”).


 


The amount of the Purchase Price allocated to
the purchase of the Intercompany Loan under (b) above will be first allocated
to the amount (not to exceed EUR85 million) that will be used for the issuance
by Buyer of the Consideration Shares (the “Provisional
Consideration Shares Amount”). 
The balance of the Purchase Price shall be allocated to the amount that
will be paid by Buyer as the Cash Consideration calculated pursuant to
Schedule 2.6.


 


2.2 Closing
Consideration.


 


2.2.1 At the Closing and subject to the terms
and conditions set forth herein, Buyer shall pay to Seller the Provisional
Purchase Price by:


 


(a) the issue to Seller, credited as fully
paid, of a number of shares (calculated in accordance with Section 2.2.2
and Schedule 2.6) in Buyer representing a maximum of 19.9% of Buyer’s
issued share capital (the “Consideration
Shares”) by way of set-off against Buyer’s debt to Seller for the
Provisional Consideration Shares Amount; and


 


(b) the wire transfer of immediately
available funds equivalent to the Provisional Purchase Price less (i) the
Provisional Consideration Shares Amount (the “Closing
Cash Payment” including, for the avoidance of doubt the Escrow
Amount) and (ii) the Escrow Amount, to the account specified to Buyer by Seller
by written notice delivered to Buyer at least three Business Days prior to the
Closing Date.


 


2.2.2 The number of Consideration Shares
shall be equal to a number of new shares in Buyer such that the percentage
represented by the Consideration Shares compared to the aggregate number of
shares in Buyer (including the Consideration Shares) is equal to the percentage
represented by the Provisional Consideration Shares Amount compared to the
Closing Date Buyer Equity Value.  If the
Provisional Consideration Shares Amount exceeds EUR 85 million, the number of
Consideration Shares and accordingly the percentage of the issued share capital
of Buyer represented by the Provisional Consideration Shares


 


2

















 


Amount shall be reduced until the Provisional
Consideration Shares Amount is EUR 85 million.


 


2.2.3 If the Provisional Consideration Shares
Amount is equal to or less than EUR 85 million, the Closing Cash Payment shall
be the Provisional Purchase Price less the Provisional Consideration Shares
Amount.


 


2.2.4 At the Closing, Buyer will place into
an interest-bearing account (the “Escrow
Account”) with Crédit Lyonnais acting as escrow agent (the “Escrow Agent”) an amount equal to the
higher of (a) 10% of the Closing Cash Payment and (b) the net amount of the
Provisional Purchase Price and/or Provisional UPC France Equity Value in
dispute, provided that such amount in the Escrow Account will in no event
exceed 20% of the Closing Cash Payment (the “Escrow
Amount”) pending the determination of the Purchase Price in
accordance with Section 2.7 as a reserve against any difference between
the Provisional Purchase Price and the Purchase Price.  The release of amounts held in the Escrow
Account will be made in accordance with the terms of the Escrow Agreement.


 


2.3 Closing
Documents.


 


2.3.1 Seller Deliveries.  In addition to the other things required to
be done hereunder, at the Closing, Seller shall deliver or cause to be
delivered to Buyer the following: (a) an executed counterpart of the
Shareholders Agreement dated as of the Closing Date; (b) a certificate, dated
the Closing Date and validly executed on behalf of Seller, to the effect that
the condition set forth in Section 7.1 shall have been satisfied; (c)  an executed share transfer order
transferring the Existing Shares, dated as of the Closing Date; (d) the share
register of the Company in which the transfer of Existing Shares has been
registered; (e) minutes of the extraordinary general meeting of the Company and
copy of the Company’s share register, evidencing issuance of the Capitalization
Shares; (f) an executed share transfer order transferring the Capitalization
Shares dated as of the Closing Date; (g) the share register of the Company in
which the transfer of the Capitalization Shares has been registered; (h) an
executed counterpart of the Transfer of Loan Agreement (“acte de cession de créance”) dated as of
the Closing Date; (i) an executed counterpart of the Escrow Agreement, the
C&E Escrow Agreement, any escrow agreements required to be provided under
Schedule 2.6 and the WL Letter of Credit, all dated as of the Closing
Date; and (j) such other instruments of sale, conveyance, assignment, transfer
and delivery reasonably requested by Buyer as may be necessary or appropriate
to confirm or carry out the provisions of this Agreement.


 


2.3.2 Buyer Deliveries.  In addition to the payment under
Section 2.2.1(b), the payment into the Escrow Account under
Section 2.2.4 and the issue of the Consideration Shares under
Section 2.2.1(a) and the other things required to be done hereunder, at
the Closing, Buyer shall deliver or cause to be delivered to Seller the
following: (a) an executed counterpart of the Shareholders Agreement dated as
of the Closing Date; (b) minutes of the extraordinary general meeting of Buyer,
and copy of Buyer’s share register, evidencing issuance of the Consideration
Shares; (c) a copy of the decision by the Competition Authority clearing the
transactions contemplated by this Agreement pursuant to Section 7.2; (d)
an executed counterpart of the Transfer of Loan Agreement (“acte de cession de


 


3

















 


créance”) dated as of the Closing Date, (e) a certificate, dated the
Closing Date and validly executed on behalf of Buyer, to the effect that the
condition set forth in Section 8.1 shall have been satisfied; (f) an
executed counterpart of the Escrow Agreement, the C&E Escrow Agreement, any
escrow agreements required to be provided under Schedule 2.6 and any
letter of credit required to be provided by the UPC Shareholder under
Section 4.3 of Schedule 2.6, all dated as of the Closing Date, and
(g) such other instruments as may be reasonably requested by Seller as may be
necessary or appropriate to confirm or carry out the provisions of this
Agreement.


 


2.3.3 Transfers of Shares and Intercompany
Loan.  The transfer of the Shares
shall be effected by means of share transfer orders (“ordre de mouvement”).  The transfer of the Intercompany Loan shall
be effected by means of the Transfer of Loan Agreement (“acte de cession de créance”) and Buyer
will procure that the transfer is notified to the Company by a bailiff (“huissier de justice”) in application of
Article 1690 of the French Civil Code.


 


2.3.4 Increase in Capital of Buyer.  At Closing, an extraordinary general meeting
of shareholders of Buyer will be held for the purpose of issuing the
Consideration Shares to Seller by way of set-off against Buyer’s debt to Seller
for the Provisional Consideration Shares Amount.


 


2.3.5 Increase in Capital of the Company.  Prior to Closing, Seller shall cause the
Company to hold one or more extraordinary general meetings of shareholders for
the purpose of issuing the Capitalization Shares.


 


2.4 Time and Place of Closing.  The Closing shall take place on the Closing
Date at 11:00 a.m., Paris time, at the Paris offices of Willkie Farr &
Gallagher unless otherwise agreed by the Parties.


 


2.5 Reference Date and Closing Date.  The “Reference
Date” shall be the last day of the month in which the Parties agree,
having cooperated and consulted in good faith to reach such agreement, the
conditions set out in Articles VII and VIII are expected to be satisfied or
waived, unless the Parties reach such agreement less than 15 days before the
end of the month in question, in which case the Reference Date shall be the
last day of the next month unless the Parties otherwise agree.  The Closing Date will fall on the Business
Day immediately following the Reference Date. 
Should the Closing not occur on the scheduled Closing Date agreed
between the Parties pursuant to this Section 2.5 and this Agreement has
not been terminated as a result, the Reference Date and the Closing Date shall
be moved, respectively, so as to occur on the last day of the month in which
the Closing Date was scheduled to occur and the Business Day immediately
following and the Parties shall prepare a replacement Provisional Purchase
Price Report and Provisional UPC France Equity Value Report using the process
in Section 2.6 accordingly.


 


2.6 Provisional Purchase Price and
Provisional Consideration Amount.  Not later than 15 days prior to the scheduled Closing:


 


(a) Seller will deliver to Buyer a
preliminary report (the “Provisional Purchase
Price Report”), prepared in good faith and certified as to
completeness by Seller and accompanied by a comfort letter as to its preparation
from Seller’s auditors,


 


4

















 


showing in reasonable detail Seller’s
preliminary best estimate of the Purchase Price (the “Provisional Purchase Price”), the Base
Consideration, the Noos Financial Debt, the Noos Working Capital Adjustment and
the Noos Capital Expenditure Shortfall Adjustment as at the Reference Date and
based on management accounts to the month preceding that containing the
Reference Date and budget for the month containing the Reference Date; and


 


(b) Buyer will deliver to Seller a
preliminary report (the “Provisional UPC
France Equity Value Report”), prepared in good faith and certified
as to completeness by Buyer and accompanied by a comfort letter as to its
preparation from Buyer’s auditors, showing in reasonable detail Buyer’s
preliminary best estimate of the UPC France Equity Value (the “Provisional UPC France Equity Value”), the
Base UPC France Enterprise Value, the UPC France Financial Debt, the UPC France
Working Capital Adjustment and the UPC France Capital Expenditure Shortfall
Adjustment as at the Reference Date and based on management accounts to the
month preceding that containing the Reference Date and budget for the month
containing the Reference Date, together with the expected Closing Date Buyer
Net Debt.


 


Following receipt of the Provisional Purchase
Price Report or the Provisional UPC France Equity Value Report, the recipient
Party shall have five (5) Business Days to review such report and supporting
information and to notify any disagreements with the estimates contained
therein.  If, within such five (5)
Business Day period, a notice of disagreement with the estimates set forth in
either report is delivered, Buyer and Seller shall negotiate in good faith to
resolve any such dispute and to reach an agreement on such estimates two (2)
Business Days prior to the Reference Date. 
The estimates so agreed upon by Buyer and Seller, or, if the Parties do
not reach such an agreement or a notice of disagreement with the estimates is
not provided within the time provided, then the estimates set forth in the
Provisional Purchase Price Report and the Provisional UPC France Equity Value
Report shall be the basis of a combined statement prepared by Buyer two (2)
Business Days prior to the Reference Date which shall be used to determine the
Provisional Purchase Price and the Provisional Consideration Shares Amount,
without prejudice to the Parties’ objection and audit rights which follow in
Section 2.7.


 


2.7 Final Determination of the Purchase
Price.


 


2.7.1 The Final Report.


 


(a) Within 90 days following the Closing Date
Seller will deliver to Buyer audited consolidated accounts (including a
consolidated profit and loss account and balance sheet) for the period
commencing on January 1, 2004 and ending at the Reference Date for the
Companies, prepared by the Company’s management in accordance with French GAAP,
consistently applied with past principles and practices and duly certified by
Ernst & Young acting in their capacity as statutory auditors of the Company
(the “Noos Reference Date Accounts”);


 


5

















 


(b) Within 90 days following the Closing Date
Buyer will deliver to Seller audited consolidated accounts (including a
consolidated profit and loss account and balance sheet) for the period
commencing on January 1, 2004 and ending at the Reference Date for the UPC
French Cable Business, prepared by Buyer in accordance with French GAAP,
consistently applied with past principles and practices and duly certified by
KPMG acting in their capacity as statutory auditors of the UPC French Cable
Business (the “UPC French Cable Business
Reference Date Accounts”);


 


(c) During the 90-day period referred to
above, Ernst & Young and KPMG, in their respective capacities as statutory
auditors of the Company and the UPC French Cable Business will work together on
an open book basis and will share with one another their work papers, subject
to exchange of customary non-reliance letters;


 


(d) Within 30 days following the receipt of
the deliveries provided in paragraphs (a) and (b), each Party will specify in
writing any objection with respect to the Noos Reference Date Accounts or the
UPC French Cable Business Reference Date Accounts, as applicable. The Parties
will consult with one another and their respective auditors to attempt to
resolve all questions and points of dispute during such 30-day period;


 


(e) Within 10 days following the end of the
30-day period referred to in paragraph (d) above, Buyer will deliver to Seller a
Final Report consisting of :


 


(i) a final determination calculated in
accordance with Schedule 2.6, based on the Noos Reference Date Accounts,
showing in reasonable detail all amounts necessary to calculate the Purchase
Price, the Base Consideration, the Noos Financial Debt, the Noos Working
Capital Adjustment and the Noos Capital Expenditure Shortfall Adjustment
together with any documents substantiating the adjustments and calculations;


 


(ii) a final determination calculated in
accordance with Schedule 2.6, based on the UPC French Cable Business
Reference Date Accounts, showing in reasonable detail all amounts necessary to
calculate the UPC France Equity Value, the Base UPC France Enterprise Value,
the UPC France Financial Debt, the UPC France Working Capital Adjustment and
the UPC France Capital Expenditure Shortfall Adjustment together with any
documents substantiating the adjustments and calculations and the Closing Date
Buyer Net Debt; and


 


(iii) based on the determinations in (i) and
(ii), the Purchase Price, Consideration Shares Amount and corresponding Cash
Consideration.


 


The Final Report will be prepared as at 23:59
hours on the Reference Date, except with respect to the Closing Date Buyer Net
Debt, which will be calculated immediately following the Closing and shall
include in reasonable detail any unresolved objection of Buyer on the Noos
Reference Date Accounts.


 


6

















 


2.7.2 Dispute resolution.  If any disputes are not resolved at the time
the Final Report is delivered as due, then the Parties will have a further 10
days from delivery of the Final Report to specify in writing any objections
with respect to the calculation of the Purchase Price and Consideration Shares
Amount as set forth in the Final Report. 
Subject to the signing of a customary non-reliance letter, each Party
will cause its auditors to make available to the other Party’s auditors their
working papers for the Final Report and its review.  The Parties will continue to attempt to resolve any dispute, in
conjunction with their respective auditors, for an additional 15 days (i.e. a
total of 25 days following delivery of the Final Report).


 


2.7.3 Resolution by Independent
Accountant.  If any objections under
Section 2.7.2 are not resolved within the 15-day period specified in the
last sentence of Section 2.7.2, then Seller and Buyer shall jointly
appoint PricewaterhouseCoopers to act as an independent accountant or, if
PricewaterhouseCoopers refuses to act or is conflicted from acting, the most
diligent party shall be entitled to request the president of the Commercial
Court of Paris by way of summary proceedings (“référé”)
(the other party being offered the opportunity to be heard at such proceedings)
to appoint a firm of accountants of good international reputation (but
excluding any firm already acting as auditors to either of the Parties) who
shall be an expert in French GAAP and act as an expert (the “Independent Accountant”).  The Parties shall instruct the Independent
Accountant to address and determine the calculation of the Purchase Price
and/or the Consideration Shares Amount, as the case may be, and the
corresponding Cash Consideration by way of a binding opinion and to conclude
its investigation within 60 days of its receipt of instruction.


 


2.7.4 Opinion of the Independent
Accountant.  For the purpose of
assessing the Purchase Price and/or the Consideration Shares Amount and
corresponding Cash Consideration, the Independent Accountant shall apply the
principles set out in Schedule 2.6. Once the Independent Accountant has
accepted its assignment and acknowledged the rules applicable thereto, and
except to the extent that Seller and Buyer agree otherwise, the Independent
Accountant shall, prior to rendering its binding opinion, give each of Seller
on the one hand and Buyer on the other hand, 10 days to comment on its draft
written binding opinion.  Buyer and
Seller shall co-operate with the Independent Accountant and comply with its
reasonable requests made in connection with the carrying out of its duties
under this Agreement.  In particular,
without limitation, Buyer shall procure that the Companies and UPC French Cable
Business shall keep up to date and make available to the Independent Accountant
their respective books and records during the period from the appointment of
the Independent Accountant to the delivery of the Independent Opinion. Subject
to the signing by the Independent Accountant of customary non-reliance letters,
the Parties will cause their auditors to make available to the Independent
Accountant their working papers for the Final Report and its review.  Upon reaching its binding opinion, the
Independent Accountant shall cause to be prepared and delivered to each of
Buyer and Seller a binding opinion (the “Independent
Opinion”) showing the Independent Accountant’s calculation of the
Purchase Price and/or Consideration Shares Amount and corresponding Cash
Consideration.  The determination of the
final Purchase Price and/or Consideration Shares Amount and corresponding Cash
Consideration resulting from the Independent Accountant shall be final and
binding on the Parties save in the event of


 


7

















 


manifest error (“erreur grossière”). 
The Independent Accountant shall act in accordance with the provisions
of Article 1592 of the French Civil Code.


 


2.7.5 Cash Adjustment.  (x) The Cash Consideration as determined
under this Section 2.7 less (y) the sum of the Closing Cash Payment less
the Escrow Amount, together with interest thereon from the Closing Date to the
date of payment at the 30-day EURIBOR Rate is referred to herein as the “Cash Adjustment”.  If the Cash Adjustment is positive, then payment of the Cash
Adjustment will be made by Buyer to Seller within five (5) Business Days from
final determination of the Purchase Price in accordance with this
Section 2.7 by:


 


(a) the release to Seller from the Escrow
Account of an amount up to the Cash Adjustment (including accrued interest),
with any surplus left in the Escrow Account being released to Buyer; and


 


(b) to the extent the Cash Adjustment
(including accrued interest) exceeds the amount held in the Escrow Account, by
payment of that excess by Buyer.


 


If the Cash Adjustment is zero or negative,
then within five (5) Business Days from final determination of the Purchase
Price in accordance with this Section 2.7:


 


(c) the Escrow Amount will be released to
Buyer from the Escrow Account; and


 


(d) the Seller will pay to the Buyer an
amount equal to the absolute value of the Cash Adjustment (plus accrued
interest thereon).


 


2.7.6 Repayment of UPC Group loans.  Seller acknowledges that, notwithstanding
the provisions of the Shareholders Agreement, any Cash Adjustment or release
from the Escrow Account paid to Buyer pursuant to Section 2.7.5 shall be
applied by Buyer in repayment of an equivalent amount of intercompany loans
from the UPC Group to Buyer.


 


2.7.7 Fees of Independent Accountant.  All fees and expenses of the auditors
engaged by Buyer and Seller and the Independent Accountant shall be borne
equally by Seller on the one hand and Buyer on the other hand.


 


ARTICLE
III


REPRESENTATIONS
AND WARRANTIES OF SELLER


 


Seller hereby represents and warrants to, and
agrees with, Buyer that on and as of each of the Signing Date and the Closing Date,
subject to the provisions of Sections 9.3 to 9.5 of this Agreement, each and
every statement set out in Schedules 3 and 3A (the “Seller Warranties”) is true and correct in all respects.


 


ARTICLE
IV


REPRESENTATIONS
AND WARRANTIES OF THE UPC SHAREHOLDER


 


The UPC Shareholder represents and warrants
to, and agrees with, Seller that on and as of each of the Signing Date and the
Closing Date, subject to the provisions of Sections 9.3 to 9.5 of this


 


8

















 


Agreement, each and every statement set out
in Schedules 4 and 4A (the “UPC Warranties”)
is true and correct in all respects.


 


ARTICLE
V


COVENANTS
OF SELLER AND BUYER


 


5.1 Investigation of Business; Access to
Properties and Records, Etc.


 


5.1.1 Continuing Right of Access.  From the Signing Date to the Closing Date,
but subject to any applicable legal or regulatory restriction respecting
competition matters, Seller shall cause to be afforded to Buyer and its
representatives reasonable access to the Company’s offices, books and records
and Buyer shall cause to be afforded to Seller and its representatives
reasonable access to the UPC French Cable Business’ offices, books and records,
both during normal business hours, in order that Buyer and Seller, as the case
may be, may have opportunity to make such investigations as it may reasonably
require of the affairs of the Company and the UPC French Cable Business, as the
case may be, provided that such investigation shall only be upon reasonable
notice and shall not unreasonably disrupt personnel and operations and shall be
at the investigating Party’s sole risk and expense.  All requests for access to the offices, books and records of the
Company and the UPC French Cable Business, as the case may be, shall be made to
such representatives of Seller or Buyer, as the case may be, as Seller or
Buyer, as the case may be, shall designate, who shall be solely responsible for
coordinating all such requests and all access permitted hereunder.  It is further agreed that prior to Closing
neither Buyer nor its representatives nor Seller nor its representatives, as
the case may be, shall contact any of the employees, customers, suppliers,
joint venture partners or other associates or Affiliates of (i) Seller or the
Company or Buyer or (ii) the UPC French Cable Business, as the case may be, in
connection with the transactions contemplated hereby, whether in person or by
telephone, mail or other means of communication, without the specific prior
written authorization of such representatives of Seller or Buyer, as the case
may be.


 


5.1.2 Company Records.  Seller will ensure that all books and
records of the Companies, whether in paper or electronic form, are in the
possession of the Companies at Closing.


 


5.1.3 Retention of Records.  Buyer agrees that for so long as Buyer owns
the Shares (a) to cause the Companies to maintain the books and records of the
Companies existing on the Closing Date that are in the possession of the
Companies and not to destroy or dispose of any thereof for a period of 5 years
from the Closing Date or such longer time as either may be required by law or,
in the case of all records, schedules and work papers relating to any Tax
returns or audits, until the expiration of all applicable statutes of
limitations and (b) at any time and from time to time following the Closing
Date to direct the Companies to afford Seller, its Affiliates, representatives,
accountants and counsel and other advisors, during normal business hours, upon
reasonable request, full access to such books, records and other data
(including the right to photocopy the same) and to appropriate employees to the
extent that such access may be requested for any legitimate purpose, subject to
appropriate limitations of non-disclosure and use as Buyer may request at the
time of proposed disclosure, at no cost to Seller (other than for reasonable
out-of-pocket expenses).  In addition,
with respect to paragraph (xvi) of Schedule 3A, Buyer shall


 


9

















 


provide Seller with the Tax returns for the
Companies for any Tax period following between January 1, 2004 and
December 31, 2013, within 15 days following filing thereof with the
relevant Tax authorities.


 


5.2 Efforts;
Obtaining Consents.


 


5.2.1 Obligations to Seek Consents.  Subject to the terms and conditions herein
provided, each Party shall use its commercially reasonable efforts to take or
cause to be taken all actions and to do or cause to be done all things
necessary, proper or advisable to consummate and make effective as promptly as
practicable the transactions contemplated hereby, and to cooperate with the
other in connection with the foregoing, including using all commercially
reasonable efforts (a) to satisfy any applicable conditions and to obtain all
necessary waivers, consents and approvals from other parties to material loan
agreements, leases and other contracts with third parties, (b) to obtain all
consents, approvals and authorizations that are required to be obtained under
any national, state, local or foreign law or regulation, (c) to lift or rescind
any injunction or restraining order or other order adversely affecting the
ability of the Parties to consummate the transactions contemplated hereby, (d)
to effect all necessary governmental registrations and filings and submissions
of information requested by any Government Authority and to fulfil all
conditions set forth in Articles VII and VIII of this Agreement. All notices
and applications to, filings with, and other contacts with any Government
Authority (other than the Competition Authority) relating to the transactions
contemplated hereby shall be made by any Party only after prior consultation
with and approval by the other Party, which approval shall not be unreasonably
withheld or delayed. Each Party further shall, with respect to any threatened
or pending preliminary or permanent injunction or other order, decree or ruling
or statute, rule, regulation or executive order that would adversely affect the
ability of the Parties to consummate the transactions contemplated hereby, use
all reasonable efforts to prevent the entry, enactment or promulgation thereof,
as the case may be.  Notwithstanding the
foregoing, (y) the provisions of Section 7.2 shall apply to the imposition
of conditions to obtaining Competition Authority clearance of the transactions
contemplated by this Agreement and (z) subject to Section 7.2, Buyer will
not be required to take any action which would result in a materially
prejudicial effect on the business of Buyer or any of its Affiliates.


 


5.2.2 Material Communications.  Each Party shall promptly inform the other
Party of any material communication from any Government Authority regarding any
of the transactions contemplated hereby. 
If either Party or any Affiliate thereof receives a request for
additional information or documentary material from any such Government
Authority with respect to the transactions contemplated hereby, then such Party
will endeavor in good faith to make or cause to be made, as soon as reasonably
practicable and after consultation with the other Party, an appropriate
response in compliance with such request. 
The provisions of Sections 5.3 and 7.2 rather than this
Section 5.2.2 shall apply in respect of the Competition Authority.


 


10

















 


5.3 Competition
Authority Clearance. 


 


5.3.1 Cooperation with Competition
Authority.  The Parties shall use
their commercially reasonable efforts to co-operate with the relevant
Competition Authority in order to enable it to complete its required analysis.


 


5.3.2 Notification; Procedure with
Competition Authority.


 


(a) Buyer shall file with the Competition
Authority a notification of the transactions contemplated by this
Agreement.  Seller will provide to
Buyer, on a timely basis, all information required in connection with such
filing.  To facilitate this process,
Seller will provide to Buyer a senior point of contact within Seller’s
organization that has knowledge of and access to all economic data regarding
Seller and the Business, and who will be available to work in cooperation with
Buyer during the time necessary to complete the initial notification form for
the Competition Authority.


 


(b) Each Party will reasonably comply with
all information requests of the Competition Authority.  Any information requests in this respect
between the Parties will be done in writing.


 


(c) To the extent practical, each Party will
inform the other in advance of all communications with representatives of the
Competition Authority in respect of the transactions contemplated by this
Agreement and will provide all information necessary as to the status of the
procedure with the Competition Authority. 
Buyer will co-operate and consult with Seller in connection with (x) all
key communications with the Competition Authority and (y) key strategic
decisions regarding seeking Competition Authority approval of the transactions
contemplated by this Agreement, but Buyer will have final decision making
authority as to all such matters following such consultation.  Buyer shall select any economists and other
experts in connection with the Competition Authority procedure.


 


5.3.3 Failure to Obtain Clearance.  If the Competition Authority does not clear
the proposed acquisition without condition (excepting only those, if any,
agreed to in writing by Buyer pursuant to Section 7.2), or if the
Competition Authority clears the proposed acquisition but the Closing is
enjoined prior to Closing, then the Parties shall meet and decide whether or
not Buyer should appeal such decision or injunction.  Seller will fully co-operate with Buyer in any such appeal.


 


5.3.4 Costs.  Buyer will pay the filing fees and costs associated with the
Competition Authority filing (other than fees and costs of Seller’s advisors
and counsel) and all fees and expenses of economists and other experts engaged
by Buyer.  Seller will pay all
reasonable filing fees and costs associated with respect to other Permits and
any required consents and all fees and costs of its advisors and counsel with
respect to the Competition Authority filing.


 


5.4 Further Assurances.  Each Party shall, and shall cause its
Affiliates to, from time to time, whether before, at or after the Closing Date,
execute, acknowledge and deliver such reasonable further instruments of
conveyance and transfer, notices, assumptions, releases


 


11

















 


and acquittances and take such other
reasonable actions as may be reasonably necessary or appropriate to carry out
the purposes and intents hereof.


 


5.5 Conduct of the Business and the UPC
French Cable Business.


 


5.5.1 Steering Committee.  As from the Signing Date, the Parties shall
set up a steering committee consisting of 4 members, 2 representing Buyer and 2
representing Seller (the “Steering Committee”).


 


5.5.2 Conduct of the Business.  From the Signing Date to the Closing, Seller
shall procure that each of the Companies operates its business in the ordinary
course of its business consistently with past practice so as to preserve the
value and goodwill of its business. 
None of the decisions listed below shall be taken by the Companies,
without the agreement of the Steering Committee:


 


(a) change their accounting methods or
practices (as such accounting methods or practices are described in the
appendix to the audited annual accounts of that company) unless provided for by
law;


 


(b) incur any obligation or liability
material to the operation of the Business, (whether absolute, accrued,
contingent or otherwise) except in the ordinary course of business consistent
with past practice or in connection with Seller’s refinancing by way of
intercompany loan prior to the Reference Date of (i) the third party banking
debts of the Companies in a maximum amount of EUR 250 million and (ii) the
deferred purchase price payable to NTL Inc.;


 


(c) mortgage, pledge or subject to any
Encumbrances any of their assets, properties or rights, except Encumbrances for
Taxes not yet due and payable and purchase money or other minor Encumbrances
arising in the ordinary course of business;


 


(d) enter into any arrangement, commitment or
agreement creating any Encumbrance relating to its shares or limiting or
restricting in any manner the transferability of its shares, or providing for
the voting of its shares, options, warrants, or other rights to purchase any of
such securities from any third party;


 


(e) sell or transfer any of their assets
material to the operation of the Business or cancel any debts or claims or
waive any rights, except in the ordinary course of business consistent with
past practice;


 


(f) declare, set aside, make or pay any
dividend or other distribution in respect of, or redeem any of, their share
capital (in cash or otherwise);


 


(g) enter into any joint venture or similar
arrangement;


 


(h) acquire, by merger, consolidation,
purchase of stock or assets or otherwise, any corporation, partnership,
association or other business organization;


 


12

















 


(i) reorganize, dissolve or enter into any
plan of liquidation or dissolution or similar proceeding;


 


(j) cancel, terminate or fail to maintain any
insurance policy comparable in amount and scope to current coverage, except if
replaced by a new insurance policy providing for at least the same coverage at
premiums not materially higher than the insurance policy being replaced;


 


(k) acquire or agree to acquire any assets or
make any investment (or any commitment relating to any such investment) for an
amount greater than EUR 2,000,000, or commit to make any capital expenditure in
excess of EUR 2,000,000, or additions to property, plant and equipment used in
its operations other than ordinary repairs and maintenance but, in each case,
excluding any investment set forth in the Budget;


 


(l) enter into any new material contract, or
agree to any amendment thereto, or any master agreement (“contrat cadre”), general or specific
conditions for the purchase and/or sale of services, products or equipment
likely to require future cash outlays in excess of EUR 2,000,000 or new
commitments to disburse cash in excess of EUR 2,000,000 in one or a series of
payments for the same underlying transaction;


 


(m) change its digital or analogue television
lineup or subscription packages in any material respect except for the change
in the digital offering from star system to a tiered system or discontinue the
provision of any of its material products or services or change or fail to
apply consistently its disconnect policies;


 


(n) enter into any, or amend, its agreement
with TPS or Canal+ or enter into any new, or amend any existing other,
agreement with any content provider that either (a) has a term of more than two
years or (b) pays the programmer on other than a per actual subscriber basis;


 


(o) amend or voluntarily terminate or fail to
perform any Material Contract;


 


(p) commence, compromise or discontinue any
legal or arbitration proceedings (other than routine debt collection) the
amount of which is in excess of EUR 1,000,000; or


 


(q) lay-off more than 15 of its employees;


 


(r) make any amendments to the Organizational
Documents of any of the Companies except as required pursuant to
Section 5.9.1;


 


(s) enter into any extraordinary
transactions, including acquisitions, mergers (“fusion”), spin-offs or split-offs (“scissions ou apports partiels d’actifs”),
on-going business sales (“cession de fonds
de commerce”) or business rental agreements (“location gérance”);


 


13

















 


(t) dispose of any patents, trademarks or
copyrights or any patent, trademark or copyright applications;


 


(u) fail to discharge or satisfy any
Encumbrance or pay or satisfy any obligation or liability (whether absolute,
accrued, contingent or otherwise), other than Liabilities being contested in
good faith and for which adequate reserves have been provided and Encumbrances
arising in the ordinary course of business;


 


(v) issue any securities of any nature
whatsoever or enter into any agreement to issue any securities except as
provided for in Section 5.9.1;


 


(w) enter into any new (or amend any existing)
employee benefit plan, grant any general increase in the compensation
(including bonus consistent with past practice granted in the ordinary course
of business and profit sharing plan) of, or increase the duration of any
employment contracts with the management or employees of the Companies, except
as required by law;


 


(x) incur any obligation or liability for the
payment of severance benefits;


 


(y) terminate the employment or office of any
of its officers or Key Employees or appoint any new officer or Key Employee or
materially alter the employment or engagement of any officer or Key Employee;


 


(z) enter into any new, or materially amend
any existing, union agreement or work council agreement or pension fund or
private benefits arrangements unless provided for by law;


 


(aa) grant any third party access or use
rights over any portion of the Cable Networks;


 


(bb) restrict the ability of the Companies to
compete or enter in any market or offer any product or service;


 


(cc) borrow money under mezzanine or high
yield types of financing from any party (including Affiliates); or


 


(dd) adopt a new Budget for 2004.


 


5.5.3 Conduct of the UPC French Cable
Business.  From the Signing Date
until the Closing, Buyer shall procure that (i) the UPC French Cable Business shall
be carried out in the ordinary course of business generally consistent with
past practice and so as to preserve the value and goodwill of the business and
(ii) the Steering Committee is kept informed of any and all material
developments in relation to such business. 
Additionally, Buyer shall procure that no UPC France Company does any of
the following between the Signing Date and Closing without the consent of the
Steering Committee:


 


(a) carry out any Major Business Combination
(as defined in the Shareholders Agreement);


 


14

















 


(b) make a fundamental change in the business
strategy of the UPC France Companies such that the UPC France Companies’
businesses are not wholly in telecommunications, data distribution and/or
content, with related goods and services;


 


(c) enter into any new material intragroup
arrangements that would require the unanimous affirmative vote of the
Director(s) nominated by Seller under the Shareholders Agreement, except as
provided for in Section 5.9.2;


 


(d) otherwise do any transactions, or series
of transactions, the result of which would fundamentally change the nature or
value of the UPC French Cable Business.


 


5.5.4 The Parties agree that the rights under
this Section 5.5 will be exercised in compliance with relevant competition
laws.


 


5.5.5 No approval by the Steering Committee
or by any Party as to any action between the Signing Date and Closing shall
affect the determination of the Purchase Price and Consideration Shares Amount,
including with respect to:


 


(a) the calculation of the Noos Actual
Adjusted EBITDA or Actual Adjusted UPC France EBITDA;


 


(b) the Noos Working Capital Adjustment or
the UPC France Working Capital Adjustment (both as defined in
Schedule 2.6); or


 


(c) the Noos Capital Expenditure Shortfall
Adjustment or the UPC France Capital Expenditure Shortfall Adjustment (both as
defined in Schedule 2.6).


 


5.6 Public Announcements.  Subject to applicable laws and stock
exchange requirements, from the Signing Date until the Closing Date, each Party
shall consult with the other before issuing, or permitting any agent or
Affiliate to issue, any press releases or otherwise making or permitting any
agent or Affiliate to make, any public statements with respect to this Agreement
and the transactions contemplated hereby.


 


5.7 Confidentiality.  Each Party agrees as a separate and independent agreement that
(save as may be required by law or regulation or for the purpose of obtaining
in connection with the transactions contemplated in this Agreement any
Governmental Authorization or third party consents under any applicable
agreement relating to the Companies or the UPC France Companies, as applicable,
their respective share capital, assets or business, and then only to the extent
so required) it will not at any time hereafter divulge (other than in
accordance with Section 5.6) any information in relation to the affairs or
businesses of the Companies, the UPC France Companies or the subject matter of
this Agreement from the Signing Date until Closing or termination of this
Agreement, whichever is the earlier.


 


5.8 Provision
of Financial Statements, Reports and Certain Other Information.


 


(a) Each Party shall deliver or cause the
Companies or the UPC France Companies, as applicable, to deliver to the other
Party within 20 days following the close of each


 


15

















 


month the Management Financial Report for
such prior month as well as other material reports that are prepared in the
ordinary course of the business by or for the Companies or the UPC France
Companies, as applicable, with respect to the operations of their business
between the Signing Date and the Reference Date.


 


(b) Each Party shall deliver to the other
Party the 2003 Financial Statements or the UPC 2003 Financial Statements, as
applicable, within 3 days following the delivery by the statutory auditors of
their report on such financial statements.


 


(c) Subject to any applicable legal or
regulatory restriction regarding competition matters, Seller shall deliver or
cause the Companies to deliver material agreements and documents that are
concluded after the Signing Date and relate to (i) any changes or proposed
future changes in rates charged to subscribers or other customers of any of the
Companies, including any legal proceeding initiated in respect of same, (ii)
any of the Exploitation Agreements and (iii) TPS, Canal+, and other material
Programming Contracts, or (iv) any Government Authority.


 


5.9 Conversion of Portions of Intercompany
Loan, Buyer Intercompany Loans and UPC France Intercompany Loan.


 


5.9.1 Prior to the Closing Date, Seller shall
capitalize such amount of the Intercompany Loan as exceeds the lower of (a) the
Provisional Purchase Price less EUR 100 million, and (b) six times the 2003
EBITDA (as calculated in Section 7.8). 
Such capitalization of the Intercompany Loan shall be done so as not to
create income to the Companies.


 


5.9.2 Prior to the Closing Date, Buyer shall
procure that Buyer Intercompany Loans are paid off or capitalized so that the
debt at Buyer at Closing does not exceed EUR 60 million and Buyer shall pay off
or capitalize the UPC France Intercompany Loans to the UPC France
Companies.  Any such capitalization of
Buyer Intercompany Loans and UPC France Intercompany Loans shall be done so as
not to create income to the UPC France Companies.


 


5.10 Release of Encumbrances.  Prior to the Closing, Seller will cause all
Encumbrances (if any) with respect to the assets of the Companies to be
released so that at the Closing, no Encumbrances shall exist with respect to
the assets of the Companies.


 


5.11 Affiliate Commercial Contracts.  The Parties will use best efforts to agree
the material terms of the contracts with respect to the services listed in
Schedule 5.11 prior to Closing, recognizing the key principles of (i)
permitting Buyer and its Affiliates to realize synergies within the UPC Group
and (ii) that the contracts must be in the corporate interest of Buyer, taking
into account, in particular, the preservation of the interests of both
shareholders in Buyer, but agreement on the material terms of such contracts
will not be a condition to Closing.  To
the extent agreement with respect to the material terms of contracts for the
services listed in Schedule 5.11 is reached prior to Closing, Exhibit
2.2(c)(2) to the Shareholders Agreement will contain at Closing a summary of
such services and the corresponding material terms.  As to any services for which agreement on material terms is not
reached before Closing, Buyer may nevertheless proceed after


 


16

















 


Closing with the implementation of such
service arrangements, subject to and in accordance with the procedures of
Section 2.2(c)(2) of the Shareholders Agreement.


 


5.12 Tax matters.


 


(a) Seller shall prepare and file, or cause
to be prepared and filed, all Tax returns with respect to the Companies (i) for
any Tax period that ends prior to Closing and (ii) that require to be filed
before Closing. Seller will prepare all such returns in accordance with past
practices of the Companies.


 


(b) Buyer shall prepare and file, or cause to
be prepared and filed, all Tax returns with respect to the Companies (i) for
entire Tax periods that end prior to Closing and (ii) that are required to be
filed after Closing.  Unless otherwise
required by applicable law, Buyer shall prepare such returns in accordance with
the practices of the UPC France Companies, giving due regard to the prior Tax
positions of the Companies and that such returns could increase the pre-Closing
liability to Tax of the Companies.


 


(c) Buyer shall prepare and file, or cause to
be prepared and filed, all Tax returns with respect to the Companies for
straddle periods (any Tax period beginning prior to the Closing and ending
after the Closing) and shall provide Seller with a statement setting forth the
allocation of liability for Taxes shown on such returns between the portion of
the straddle period ending on Closing and the portion of the straddle period
beginning after Closing.  Unless
otherwise required by applicable law, Buyer shall prepare such Tax returns in
accordance with the past practices of the Companies. Seller shall have the
right to review and approve such Tax returns and such allocation statement and
to consent to the filing of any such returns, which approval and consent shall
not be unreasonably withheld.


 


(d) Seller shall pay, or cause to be paid,
all Taxes shown on the Tax returns required to be filed by Seller pursuant to
Section 5.12(a) above on or prior to the due date for payment thereof.


 


(e) Buyer shall pay, or cause to be paid, all
Taxes shown as due on each Tax return required to be filed by Buyer pursuant to
Section 5.12(b) above on or prior to the due date for payment
thereof.  Except to the extent taken
into account in the Noos Reference Date Accounts, Seller shall pay, no later
than three days prior to the due date for payment thereof, to or at the
direction of Buyer, an amount equal to all such Taxes shown as due on such
return (it being understood that Seller shall not be required to pay Buyer or
the relevant Company for any Taxes previously paid by Seller or the relevant
Company prior to Closing (including, for example, by way of payment of
estimated Taxes in the Noos Reference Date Accounts)).


 


(f) Buyer shall pay, or cause to be paid, all
Taxes shown as due on each Tax return required to be filed by Buyer pursuant to
Section 5.12(c) above on or prior to the due date for payment
thereof.  Except to the extent taken
into account in the Noos Reference Date Accounts, Seller shall pay, no later
than three days prior to the 


 


17

















 


due date for payment thereof, to or at the
direction of Buyer, an amount equal to all such Taxes that relate to the
portion of the straddle period ending on Closing (it being understood that
Seller shall not be required to pay Buyer or the relevant Company for any Taxes
previously paid by Seller or the relevant Company prior to Closing (including,
for example, by way of payment of estimated Taxes in the Noos Reference Date
Accounts)).  The portion of such Taxes
required to be reimbursed by Seller pursuant to this paragraph shall be
determined in the manner set forth in Section 5.12(h).


 


(g) For purposes of this Section 5.12,
the Parties agree to allocate Tax items between pre-Closing Tax periods and
post-Closing Tax periods that end and begin, respectively, on Closing on the
basis of a “closing of the books” on Closing.


 


(h) For purposes of this Article, in the case
of any Taxes that are imposed with respect to a straddle period on a periodic
basis, the portion of such Tax related to the portion of such Tax period ending
on and including the Closing Date shall:


 


(i) in the case of any Taxes other than
corporate income tax (including additional surtaxes), employee profit sharing,
VAT, registration duties, payroll taxes, withholding taxes, be deemed to be the
amount of such Tax for the entire Tax period multiplied by a fraction the
numerator of which is the number of days in the Tax period ending on and
including Closing and the denominator of which is the number of days in the
entire Tax period, and


 


(ii) in the case of corporate income tax
(including additional surtaxes), employee profit sharing, VAT, registration
duties, payroll taxes, withholding taxes, be deemed equal to the amount which
would be payable if the relevant Tax period ended on and included Closing.  All determinations necessary to give effect
to the allocation set forth in this clause (ii) shall be made in a manner consistent
with prior practice of the Companies.


 


(i) Buyer covenants that from Closing, except
as otherwise expressly provided in this Agreement or required by applicable
law, it will not cause or permit any Company (i) to take any action from
Closing other than in the ordinary course of business (“acte anormal de gestion”), (ii) to make or
change any Tax election, amend any Tax return or take any Tax position on any
Tax return in each case with respect to a Tax period prior to Closing or (iii)
to take any action, or enter into any transaction, merger or restructuring with
respect to a Tax period after Closing (or portion of a straddle period after
Closing), that would result in any increased Tax liability or reduction of any
Tax Asset of Seller.  A reduction in a
Tax Asset shall be deemed to occur only as and when Seller would otherwise have
realized an actual reduction in cash Taxes to be paid but for the reduction of
such Tax Asset.


 


(j) Buyer shall promptly pay or cause to be
paid to Seller all refunds of Taxes and interest thereon received by Buyer or
any Company attributable to Taxes paid by Seller or 


 


18

















 


any Company with respect to any Tax period
prior to Closing or the portion of any straddle period ending on Closing.


 


(k) Seller covenants that from the date
hereof until Closing, except as otherwise expressly provided in this Agreement
or required by applicable law, it will not cause or permit any Company to take
any action, or enter into any transaction, merger or restructuring that would
result in any increased Tax liability or reduction of any Tax Asset of any
Company in respect of any Tax period after Closing (or portion of any straddle
period beginning after Closing).  A
reduction in any Tax Asset shall be deemed to occur only as and when Buyer
would otherwise have realized an actual reduction in cash Taxes to be paid but
for the reduction of such Tax Assets.


 


(l) Buyer and Seller agree to furnish or
cause to be furnished to each other, upon reasonable request, as promptly as
practicable, such information (including access to books, accounts, personnel,
correspondence and documentation of the Companies) and assistance relating to
the Companies as is reasonably necessary for the filing of any return, for the
preparation for any audit, for the prosecution or defense of any claim, suit or
proceeding relating to any proposed adjustment.


 


(m) Buyer shall devote, or cause to be
devoted by the Companies, reasonable resources to dealing with all pre-Closing
tax affairs and shall use reasonable endeavors to ensure that they are
finalized as soon as reasonably practicable.


 


(n) Buyer and Seller shall cooperate with
each other in the conduct of any audit or other proceedings involving the
Companies for any Tax purposes and each shall execute and deliver such powers
of attorney and other documents as are necessary to carry out the intent of
this subsection.


 


5.13 Restrictive
Covenants.


 


(a) From Closing, Seller hereby undertakes to
Buyer for the benefit of Buyer, its legal successors in interests and for each
of its subsidiaries as may exist from time to time, that neither Seller, nor
any of its Affiliates, will either alone or jointly with others, whether as
principal, agent, manager, shareholder or in any other capacity, directly or
indirectly through any other Person, for its own benefit or that of others, at
any time during the period that is the shorter of (i) three years following the
Closing Date or (ii) the date that is one year following the date that Seller or
any its Affiliates ceases to remain a shareholder in Buyer (the “Restricted Period”): engage in, carry on or
invest in the business of owning or operating cable, satellite, wireless, or
video DSL networks (the “Restricted Business”)
within France (other than the existing shareholdings listed in
Schedule 5.13 or as a passive holder for investment only of no more than
5% of any class of shares or other securities in any entity that is so
engaging, carrying on or investing in a Restricted Business).  The foregoing covenant is agreed to be fair
and reasonable to protect the value of the interests being acquired by Buyer
and extension of the covenant for the one year period following the date that
Seller or any of its


 


19

















 


Affiliates ceases to remain a shareholder in
Buyer is agreed to be fair and reasonable to protect confidential information
of Buyer to which Seller will have access as a shareholder in Buyer.  If for any reason this restriction is found
to be void or ineffective but would be valid and effective if the duration or
area of application were reduced or if any other adjustment were to be made
such restriction shall apply with such modification as may be necessary to make
it valid and effective.


 


(b) For a period beginning on the date hereof
and continuing for a period ending one year following the Closing Date, neither
Seller nor any of its Affiliates will solicit or actively seek to hire (other
than pursuant to general employment solicitations such as job advertisements)
any Key Employee who during such period is employed in the Business, whether or
not such person would commit any breach of his contract of service in leaving
such employment.  Seller will not be in
breach of this paragraph if it or its Affiliate employs any such person after
such person has responded to a general advertisement.


 


5.14 Insurance. 
Seller will procure that the Companies do not terminate any of their
insurance coverage prior to Closing. 
For policies of the Companies that are scheduled to expire within 90
days following Closing, Seller will consult with Buyer as to whether to extend
such policies or instead obtain coverage under UPC group policies. If Buyer so
requests Seller in writing at least 30 days prior to the Closing Date, Seller
will continue to provide to the Companies civil liability insurance coverage in
an amount of EUR 50 million under its umbrella insurance policy for a period of
no longer than three months after Closing at a cost no higher than the cost
charged to the Companies for such coverage during the three month period prior
to Closing.


 


5.15 Sipperec Memorandum of Agreement.  Prior to the Closing Date, Seller shall
comply, and cause the Companies to comply, with their obligations under the
Sipperec Memorandum of Agreement.


 


5.16 Sarbanes Oxley.  From the Signing Date, Seller will cause its chief compliance
officer to work with UGC or its designee to accelerate the Companies’ Sarbanes
Oxley compliance program to help UGC to be Sarbanes Oxley compliant with regard
to the Companies’ business on a timely basis.


 


ARTICLE
VI


WORKS
COUNCILS


 


Each of the Parties represents and warrants
that, prior to the Signing Date, it has complied with its obligations to
conduct consultations with its works council as required by French law.


 


ARTICLE
VII


CONDITIONS
TO BUYER’S OBLIGATION TO CLOSE


 


Buyer’s obligation to consummate the
transactions contemplated by this Agreement shall be subject to the
satisfaction or waiver in writing by Buyer, on or prior to the Closing Date, of
all of the following conditions:


 


20

















 


7.1 Representations, Warranties and Covenants of
Seller.  Subject to the provisions
of Section 9.4, the Seller Warranties in paragraphs 1, 2, 4, 5, 6, 7, 9,
10(e), 10(f) and 10(g), 10(h), 11(a), 11(b), 11(c), 12(a), 13(d), 14(a) and
14(c), 15(c), 16(f), 18 and 19 of Schedule 3 and the Seller Specific
Warranties in Schedule 3A shall be true and correct in all material
respects on and as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of such date.  The covenants and agreements of Seller to be
performed on or before the Closing Date in accordance with this Agreement shall
have been duly performed in all material respects on and as of the Closing
Date.


 


7.2 Competition
Filing.


 


(a) The transactions contemplated by this
Agreement shall have been cleared by the Competition Authority at the end of
the Phase 1 investigation period without the withholding by the Competition
Authority of its approval to provisions or portions of this Agreement and
without the imposition of any condition by the Competition Authority, or a
requirement that Buyer propose any undertaking to the Competition Authority as
a concession to obtain clearance, that in Buyer’s judgment acting in good
faith, will or could have a materially prejudicial effect on the Business, its
business or the business of any Liberty Affiliate; or


 


(b) if the transactions contemplated by this
Agreement shall not have been so cleared by the Competition Authority at the
end of the Phase 1 investigation period but Buyer has waived part (a) of this
condition, the transactions contemplated by this Agreement shall have been
cleared by the Competition Authority at the end of the Phase 2 investigation
period without the withholding by the Competition Authority of its approval to
provisions or portions of this Agreement and without the imposition of any
condition by the Competition Authority, or a requirement that Buyer propose any
undertaking to the Competition Authority as a concession to obtain clearance,
that in Buyer’s judgment acting in good faith, will or could have a materially
prejudicial effect on the Business, its business or the business of any of its
Affiliates or that of any Liberty Affiliate.


 


If Buyer decides that any condition imposed
or undertaking required by the Competition Authority will or could have a
material adverse effect of the type referred to in this Section 7.2, Buyer
will provide a reasoned, confidential explanation of its decision to Seller or
its counsel.


 


7.3 Notification to the CSA.  Notification by Seller of the transactions
contemplated by this Agreement and the proposed change in the ownership of the
Company having been made to the French broadcasting authority (CSA).


 


7.4 Cannes
and Epinal Networks.  Either:


 


(a) the irrevocable transfer of ownership of
the Cannes and Epinal Networks together with all assets used in the provision
of services within these areas to Rapp 16 SA which transfer terms include only
those representations and warranties acceptable


 


21

















 


to Buyer, acting reasonably, the
consideration for such purchase to be financed by Seller before the Reference
Date by way of increase in the Intercompany Loan; or


 


(b) the payment by the Company (financed by
an increase in the Intercompany Loan) into the C&E Escrow Account before
the Reference Date of an amount equal to the agreed purchase price of EUR
12,710,772 plus any accrued interest, VAT and real estate transfer tax due on
the transfer of the Cannes and Epinal Networks and assets by France Telecom
(but so that any such payment and any corresponding liability will not be taken
into account in calculating the Noos Working Capital Adjustment).  Such amount to be released up to the amount
of the purchase price due on the transfer of the Cannes and Epinal Networks on
the completion of such transfer in accordance with the C&E Escrow
Agreement.  If the purchase price due on
the transfer of the Cannes and Epinal Networks is higher than such amount,
Seller will pay such necessary additional amount into the C&E Escrow
Account within ten (10) Business Days of becoming aware of the need for such
increased purchase price.  If there is a
surplus in the C&E Escrow Account after payment of the purchase price due
on the transfer of the Cannes and Epinal Networks, such surplus shall be
released to the Company.


 


7.5 No Injunction. 
At the Closing Date, there shall be no injunction, restraining order or
decree of any nature of any court or Government Authority of competent
jurisdiction that is in effect that restrains or prohibits the transactions
contemplated by this Agreement.


 


7.6 2003 Year End RGUs.  The number of RGUs as at December 31,
2003, as calculated in accordance with the principles and methods set forth in
Schedule 7.6, is no more than 3.75% below any of the figures set out
below:


 


	
  CATV
  analog RGUs:

  	
   

  	
  189,553

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Digital
  TV RGUs:

  	
   

  	
  429,923

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Data RGUs:

  	
   

  	
  191,300

  	
   

  



 


7.7 2004 RGUs and Revenues.  Figures for
any of (a) digital video RGUs, (b) aggregate digital and analog video RGUs, (c)
data RGUs and (d) cumulative revenues, as at the end of the last month before
the Closing Date for which figures are available being no more than 10% below
the figures shown as at the end of such month in the Budget as set forth in
Schedule 7.7.


 


7.8 2003 EBITDA and Revenues.  Delivery by
Seller of the 2003 Financial Statements prepared in accordance with French GAAP
(a) prepared with a clean audit opinion; and (b) showing no adverse deviation
of more than 3.75% from the EBITDA and revenue figures set out below :


 


EBITDA:                            EUR 61 million (calculated, for this purpose, in accordance with
Section 3.2.2 of Schedule 2.6 but excluding adjustment under Sections
3.2.2 (c) (f) (g) and (h) of Schedule 2.6)


 


22

















 


Revenues:                     EUR 296 million


 


7.9 Noos Run-Rate EBITDA.  That the Noos Run-Rate EBITDA of the
Business as at Closing as demonstrated by the Management Financial Reports is
no less than EUR 70 million.


 


7.10 Rights of Way Renewal.  Seller and/or the Company has commenced
negotiation for the renewal of the rights of way agreements for Paris (expiring
on November 17, 2004), Neuilly sur seine (expiring on September 4,
2004) and Boulogne Billancourt (expiring on December 22, 2004) in
accordance with the terms of those agreements.


 


7.11 No Material Adverse Change.  At any time after the Signing Date there
shall not have occurred a Material Adverse Change.


 


ARTICLE
VIII


CONDITIONS
TO SELLER’S OBLIGATION TO CLOSE


 


The obligation of Seller to consummate the
transactions contemplated by this Agreement shall be subject to the
satisfaction or waiver by Seller, on or prior to the Closing Date, of all of
the following conditions:


 


8.1 UPC Warranties and Buyer Covenants.  Subject to the provisions of
Section 9.4, the UPC Warranties in paragraphs 1, 2, 4, 5, 6, 7, 10(f) and
10(g), 10(h), 11(a), 11(b), 11(c), 13(d), 14(a) and 14(c), 15(c), 16(f), 18 and
19 of Schedule 4 and the UPC Specific Warranties in Schedule 4A shall
be true and correct in all material respects on and as of the Closing Date with
the same effect as though such representations and warranties had been made on
and as of such date.  The covenants and
agreements of Buyer to be performed on or before the Closing Date in accordance
with this Agreement shall have been duly performed in all material respects on
and as of the Closing Date.


 


8.2 No Injunction.  At the Closing Date, there shall be no injunction, restraining
order or decree of any nature of any court or Government Authority of competent
jurisdiction that is in effect that restrains or prohibits the transactions
contemplated by this Agreement.


 


ARTICLE
IX


SURVIVAL;
INDEMNIFICATION


 


9.1 Indemnification by Seller.  Subject to the terms and conditions provided
in this Article IX, Seller shall indemnify Buyer for the amount of any
damage (“préjudice”), loss, debt,
penalty or payment (including reasonable attorney’s fees, court costs and
out-of-pocket expenses) provided that such damage (“préjudice”), loss, debt or penalty results or has resulted
in an immediate or deferred payment or transfer in cash or in kind (a “Buyer Loss”), borne or made by Buyer as a
consequence of:


 


(a) any Seller Warranty or any warranty under
the Sipperec Memorandum of Agreement being untrue, inaccurate or incomplete; or


 


(b) the breach of any covenant made by Seller
under this Agreement or under the Sipperec Memorandum of Agreement.


 


23

















 


Where Buyer is the beneficiary of an
indemnity payment under this Section 9.1, Buyer may direct Seller to make
such payment to one or more of the Companies, thereby creating a debt
obligation from such company to Buyer. 
If Seller pays any sum under this Section 9.1, the amount of the
Purchase Price shall be deemed to be reduced by the amount of any such payment.


 


9.2 Indemnification for Seller Loss.  Subject to the terms and conditions provided
in this Article IX, the UPC Shareholder shall indemnify, at the UPC
Shareholder’s option, either Seller or Buyer or the relevant UPC France
Companies (save that Seller shall be the “Indemnified
Party” under this Section 9.2 for the purposes of
Section 9.6.4) for the amount of any damage (“préjudice”), loss, debt, penalty or payment (including
reasonable attorney’s fees, court costs and out-of-pocket expenses) provided
that such damage (“préjudice”),
loss, debt or penalty results or has resulted in an immediate or deferred
payment or transfer in cash or in kind (a “Seller
Loss”), borne or made by Seller or Buyer or the Companies as a
consequence of:


 


(a) any UPC Warranty being untrue, inaccurate
or incomplete; or


 


(b) the breach of any covenant made by Buyer
under this Agreement.


 


Payment of Seller Loss under this
Section 9.2 will be made in a way that is (i) non-dilutive to the
interests of Seller in Buyer and (ii) tax-effective for Seller, Buyer, the
Companies and the UPC Shareholder. 
Should the UPC Shareholder choose to pay Seller Loss under this
Section 9.2 to Buyer or the Companies, the Parties will use their
reasonable endeavors to seek to agree the manner of such payment within 30 days
of the final determination of the Seller Loss. 
In the absence of agreement, the UPC Shareholder shall make such payment
using one of the two following options:


 


OPTION 1:


 


(i)                                     The UPC Shareholder will procure that Buyer issues a number of
shares in Buyer to each of the UPC Shareholder and Seller in proportion to
their existing holdings in Buyer.


 


(ii)                                  The shares issued to the UPC Shareholder shall be Class A Common
Stock and shall be issued at an aggregate premium equal to the Seller Loss less
the aggregate nominal value of all the issued shares in Buyer (including the
shares referred to in paragraphs (ii) and (iii).


 


(iii)                               The shares issued to Seller shall be Class B Common Stock and shall
be issued at par.


 


OPTION 2:


 


(i)                                     The UPC Shareholder will procure that Buyer issues a number of
shares to the UPC Shareholder which shares’ nominal value would be equal to
Seller Loss.  Seller agrees to waive its
pre-emption rights in relation to the issue of such shares.


 


24

















 


(ii)                                  The shares issued to the UPC Shareholder shall be Class A Common
Stock.


 


(iii)                               The UPC Shareholder will grant Seller a call option exercisable at
an aggregate exercise price of EUR 1 over a proportion of such shares equal to
the proportion of the issued capital of Buyer (excluding the shares issued
pursuant to paragraph (ii)) represented by Seller’s shares in Buyer.  Such shares transferred to Seller pursuant
to the call option shall become Class B Common Stock.


 


9.3 Disclosures. 
Seller and the UPC Shareholder shall not be liable for any claim
pursuant to this Article IX relating to any matter specifically disclosed
in the Exhibits to the Seller Warranties (with respect to a Buyer Loss) or in
the Exhibits to the UPC Warranties (with respect to a Seller Loss) provided, in
each case, that such disclosures and information (the “Disclosure Documents”) were sufficiently
clear and specific to enable Seller or Buyer, as the case may be, to assess the
related risks. For the avoidance of doubt, it is hereby specified that the
Seller Specific Warranties and the UPC Specific Warranties shall not be
affected, in any manner whatsoever, by the content of the Disclosure Documents.


 


9.4 Update of Disclosures.  For the purposes of Sections 7.1 and 8.1 of
this Agreement, Seller and the UPC Shareholder may, prior to Closing, update
any information set forth in their respective Disclosure Documents to reflect
any fact, matter or circumstance occurred following the Signing Date, to the
extent that such fact, matter or circumstance:


 


(a) occurred in the ordinary course of the
business; and


 


(b) arose other than as a result of a breach
of the obligations of Seller under Article V of this Agreement (with
respect to any update of the Exhibits to Seller Warranties), or a breach of the
obligations of Buyer under Article V (with respect to any update of the
Exhibits to the UPC Warranties).


 


9.5 Procedure for update of Disclosure
Documents.  In the event that
Seller or the UPC Shareholder wishes to update any Exhibits to the Seller
Warranties or to the UPC Warranties, as applicable, in accordance with
Section 9.4 it shall submit the corresponding change to the other Party in
writing no later than eight (8) days prior to Closing and the Parties shall
discuss in good faith when agreeing upon any such change.  Should the Parties fail to agree upon such
change, the Seller Warranties and the UPC Warranties will remain applicable without
giving effect to the updated Exhibits not agreed upon.


 


9.6 Survival.


 


9.6.1 Survival of Representations and
Warranties and Covenants.  Subject
to the limitations in this Section 9.6, all of the representations and
warranties, covenants and agreements of the Parties contained in this Agreement
and in any Schedule to this Agreement and in any certificate or agreement
to be delivered at the Closing shall survive the Closing.


 


9.6.2 Survival Period.  Except as provided in Sections 9.6.2(a) to
(i) inclusive, all representations and warranties and all covenants and
agreements of the Parties shall survive for a period of two years following the
Closing.


 


25

















 


(a) All representations, warranties and
covenants concerning Taxes, social security contributions or customs shall
survive for a period ending on the later of (a) the expiration date of the
statute of limitations applicable to such claims and (b) 90 days after the
final administrative or judicial determination of any such Tax, social security
contributions or customs liability save that the warranties in paragraph (xvi)
of Schedule 3A shall survive for a period ending 90 days after the final
administrative or judicial determination of any Tax relating to the fiscal year
ending 2013.


 


(b) The Seller Warranties in paragraphs (ix)
and (x) of Schedule 3A shall survive for a period of six months following
(i) final binding judgment without the possibility of appeal or
(ii) a final settlement, of each relevant litigation claim.


 


(c) The following Seller Warranties shall
survive for a period of five years following Closing:


 


(i) paragraphs 10 (a) (b) (c) (d) (h) and
paragraph 11 (d) (e) (f) of Schedule 3; and


 


(ii) paragraphs (i) (ii) (iii) (iv) (v) (vi)
(vii) (viii) of Schedule 3A.


 


(d) The Seller Warranties in paragraph 6 of
Schedule 3 and Seller Warranties in paragraph (xiii) of Schedule 3A
and the representations and covenants in the Sipperec Memorandum of Agreement
as regards Sipperec 3 shall survive indefinitely.


 


(e) The Seller Warranties in paragraph (xi)
of Schedule 3A and the representations and pre-Closing covenants in the
Sipperec Memorandum of Agreement as regards Sipperec 1 and 2 shall survive for
a period of the longer of (x) two years after Closing and (y) the earlier of
(aa) three (3) months after the signature of a binding settlement agreement
with Sipperec regarding all outstanding issues between the Companies and
Sipperec, and (bb) December 31, 2006.


 


(f) The UPC Warranties in paragraph (iii) of
Schedule 4A shall survive for a period of six months following (i) final
binding judgment without the possibility of appeal or (ii) final settlement, of
each relevant litigation claim.


 


(g) The following UPC Warranties shall
survive for a period of five years following Closing:


 


(i) paragraphs 10(a) (b) (c) (d) (h) and
11(d) (e) (f) of Schedule 4; and


 


(ii) paragraphs (i) (ii) (iv) and (v) of
Schedule 4A.


 


(h) The UPC Warranties in paragraph 6 of
Schedule 4 shall survive indefinitely.


 


(i) The representations and warranties and
all covenants and agreements of Buyer and the UPC Shareholder shall terminate
upon Seller ceasing to be a shareholder in Buyer.


 


26

















 


9.6.3 The restrictions on either Parties’
rights under this Section 9.6 and Section 9.7 are without prejudice
to the rights of the parties to the Sipperec Memorandum of Agreement to require
performance, seek redress or enforce remedies under that agreement.


 


9.6.4 For the avoidance of doubt, no claim
may be made after the dates specified in Section 9.6.2 but the ability to
continue the pursuit of any claim and the right of indemnification of Buyer or
Seller, as the case may be (each, the “Indemnified
Party”) shall be maintained after the dates specified in Section 9.6.2
for any claim which may have been notified by the Indemnified Party to the UPC
Shareholder, Buyer or Seller, as the case may be, prior to those specified
dates.


 


9.7 Limitations
to the Indemnity Obligations of Seller.  


 


9.7.1 De Minimis.  Except for Buyer Loss related to the Seller
Warranties in paragraphs 6 and 16(c)(v) of Schedule 3 and paragraph (xiii)
of Schedule 3A and the representations and covenants in the Sipperec
Memorandum of Agreement pertaining to Sipperec 3, Seller shall not be liable
for any Buyer Loss unless the amount of the liability in connection with such
individual Buyer Loss pursuant to this Article IX exceeds EUR 50,000, in
which case Buyer shall be entitled to claim the whole amount of such Claim and
not merely the excess.


 


9.7.2 Threshold and Deductible.  Except for Buyer Loss related to the Seller
Warranties in paragraph 6 of Schedule 3 and Seller Specific Warranties in
Schedule 3A and the representations and covenants in the Sipperec
Memorandum of Agreement pertaining to Sipperec 3, Seller shall not be liable
for any Buyer Loss unless the aggregate amount of the liability of Seller
pursuant to this Article IX exceeds EUR 8,000,000, in which event Seller
shall be liable only for the amount in excess of EUR 2,500,000.


 


9.7.3 Liability Ceilings.  The maximum aggregate liability for Buyer
Losses which are payable by Seller to Buyer shall not exceed 25% of the
Purchase Price, except that the following specific ceilings shall apply to any
claim for any breach by Seller of the following Seller Warranties:


 


(a) the Purchase Price, with respect to the
Seller Warranties in paragraph 6 of Schedule 3 and paragraphs (xiv) (xv)
and (xvi) of Schedule 3A;


 


(b) EUR 125,000,000, in aggregate, with
respect to claims under paragraphs (i) to (x) of Schedule 3A; and


 


(c) Seller’s liability for Buyer Loss under
the Seller Warranty in paragraph (xiii) of Schedule 3A and the
representations and covenants in the Sipperec Memorandum of Agreement (in so
far as they relate to Sipperec 3) shall be without limit.


 


It is agreed that the aggregate maximum
amount of liability for Buyer Losses (other than Buyer Losses referred to under
(c) above) shall be equal to the Purchase Price.


 


27

















 


9.8 Limitations to the Indemnity
Obligations of the UPC Shareholder.


 


9.8.1 De Minimis.  Except for Seller Loss related to the UPC
Warranties in paragraph 6 of Schedule 4, the UPC Shareholder shall not be
liable for any Seller Loss unless the amount of the liability in connection with
such individual Seller Loss pursuant to this Article IX exceeds EUR
50,000, in which case Seller shall be entitled to claim the whole amount of
such Claim and not merely the excess.


 


9.8.2 Threshold and Deductible.  Except for Seller Loss related to the UPC
Warranties in paragraphs 6 of Schedule 4 and paragraphs (i) (iii) (iv) (v)
of Schedule 4A, the UPC Shareholder shall not be liable for any Seller
Loss unless the aggregate amount of the liability of the UPC Shareholder
pursuant to this Article IX exceeds EUR 5,000,000, in which event the UPC
Shareholder shall be liable only for the amount in excess of EUR 2,500,000.


 


9.8.3 Liability Ceilings.  The maximum aggregate liability for Seller
Losses shall not exceed 25% of the UPC France Equity Value, except that the
liability ceiling with respect to any claim under paragraph 6 of
Schedule 4 and paragraphs (i) (iii) (iv) (v) of Schedule 4A shall be
the UPC France Equity Value. It is agreed that the maximum aggregate amount of
liability for Seller Losses shall not exceed the UPC France Equity Value.


 


9.9 Loss.


 


9.9.1 Calculation of the Loss.  In calculating Buyer Loss or Seller Loss, as
the case may be, the following shall apply:


 


(a) The amount of any Loss shall be reduced
by the amount of any Provision or Overprovision, where, for the purpose of this
paragraph (a):


 


(i) “Provision”
shall mean a provision which (aa) was included in the accounts of the company
in which the Loss was incurred, suffered or sustained and (bb) it has been
established, as at the date of the Claim, that it relates directly to the same
nature of risk and the same specific account in the line item in such accounts
as the matter giving rise to the Loss, and


 


(ii) “Overprovision”
shall mean the amount of any Provision which has been established to have not
been used at the date of the determination of the amount of any indemnification
due by the Indemnifying Party, provided that the subject matter of such
Provision has been definitively extinguished at such date.


 


(b) The amount of any Loss shall be reduced
by the amount of any indemnification actually paid to the Indemnified Party (or
to the relevant Company) by any third party with respect to such Loss
(including any insurance proceeds, save that Loss shall include any increase in
premium as a result of such insurance claim) and, as the case may be, any
amount taken into consideration for the purpose of determining the Purchase
Price or the Consideration Shares Amount specifically on account of the matter
giving rise to the Loss;


 


(c) The indemnity shall be computed taking
into account any Tax saving which the Indemnified Party or the relevant Company
benefits from as a result of the Loss;


 


28

















 


(d) If a claim is made in connection with a
Tax reassessment which results in a timing difference (e.g. a deferral of an
expense or of an income from one fiscal year to another or a deferral of a VAT
deduction), the Loss indemnifiable thereunder will be limited to penalties and
interest for late payment incurred by the Companies as a consequence of the
said reassessment; and


 


(e) Where the Seller Loss relates to a Loss
at Buyer or any of the Companies, and the UPC Shareholder decides to indemnify
Seller in accordance with Section 9.2, Seller shall only be entitled to a
payment in respect of Seller Loss from the UPC Shareholder equal to a
percentage of the Loss at Buyer or any of the Companies equivalent to its
percentage shareholding in Buyer.


 


9.9.2 No Double Recovery.  The Indemnified Party shall not be entitled
to be indemnified under this Agreement more than once in respect of the same
Loss.


 


9.10 Payment of Claims.  Buyer Losses and Seller Losses (collectively, “Losses”) shall be paid by Seller or the UPC
Shareholder, respectively, as the case may be (each, an “Indemnifying Party”):


 


(a) promptly upon the expiration of the
45-day time period provided for in Section 9.11, in the absence of an
objection by the Indemnifying Party of a direct claim; or


 


(b) promptly upon the date of an enforceable
final award or court decision (with the exception of a provisional order), in
the event of a legal challenge by the Indemnifying Party of a direct claim or
in the event of a third party claim; or


 


(c) on the date on which the Parties conclude
a settlement agreement.


 


9.11 Procedures for Third-Party Claims.  Promptly after the receipt by any
Indemnified Party of a notice of any claim, action, suit or proceeding by any
third party that may be subject to indemnification hereunder, such Indemnified
Party shall give prompt written notice of such claim to the Indemnifying Party,
stating the nature and basis of the claim and the amount thereof, to the extent
known, along with copies of the relevant documents evidencing the claim and the
basis for indemnification sought.  Failure
of the Indemnified Party to give prompt written notice in accordance with the
foregoing requirements shall not relieve the Indemnifying Party from liability
on account of this indemnification, except (a) if and to the extent that the
Indemnifying Party is actually prejudiced thereby or (b) a claims notice is not
given within the survival period for the applicable representation, warranty,
covenant or agreement under Section 9.6, in which case any claim for
indemnification shall expire and terminate. 
The Indemnifying Party shall have 45 days from receipt of any such
notice of claim (x) to give written notice to assume the defense thereof and
thereby admit to its liability for indemnification hereunder (except that where
a notified claim relates to a Seller Specific Warranty or a UPC Specific
Warranty the Indemnifying Party’s right to assume the defense thereof shall be
automatic unless the Indemnifying Party does not respond following such 45 day
period to a second notice of claim by the Indemnified Party within five
Business Days in which event the Indemnified Party shall be entitled to assume
the defense thereof) or to otherwise admit


 


29

















 


to its liability for indemnification
hereunder or (y) to dispute the claim of indemnification of the Indemnified
Party, in which case the Indemnified Party may defend the claim and any dispute
between the Parties will be resolved pursuant to Section 11.2.  If written notice to the effect set forth in
clause (x) of the immediately preceding sentence is given by the Indemnifying
Party, then the Indemnifying Party shall have the right to assume the defense
of the Indemnified Party against the third party claim with counsel of its
choice reasonably satisfactory to the Indemnified Party.  So long as the Indemnifying Party has
assumed the defense of the third party claim in accordance herewith, (a) the
Indemnified Party may retain separate co-counsel at its sole cost and expense
and participate in the defense of the third party claim, (b) the Indemnified
Party will not file any papers or consent to the entry of any judgment or enter
into any settlement with respect to the third party claim without the prior
written consent of the Indemnifying Party (not to be withheld or delayed
unreasonably), and (c) the Indemnifying Party will not consent to the entry of
any judgment or enter into any settlement with respect to the third party claim
without the prior written consent of the Indemnified Party (not to be withheld
or delayed unreasonably).  The Parties
agree that the consent of the Indemnified Party under (c) above will not be
required if money damages only are to be paid by the Indemnifying Party under
any such judgment or settlement of a third party claim and there is no future
impact as a result on the Indemnified Party’s business.  The Indemnified Party shall use commercially
reasonable efforts to minimize Losses from claims by third parties and the
Parties shall act in good faith in responding to, defending against, settling
or otherwise dealing with such claims. 
The Parties shall also reasonably cooperate in any such defense and give
each other reasonable access to all information relevant thereto.  Whether or not the Indemnifying Party shall
have assumed the defense, the Indemnifying Party shall not be obligated to
indemnify the Indemnified Party hereunder for any settlement entered into
without the Indemnifying Party’s prior written consent, which consent shall not
be unreasonably withheld or delayed.


 


9.12 Procedures for Non-Third Party
Claims.  The Indemnified Party
shall notify the Indemnifying Party promptly of its discovery of any matter
giving rise to the claim of indemnity pursuant hereto, stating the nature and
basis of the claim and the amount thereof, to the extent known, along with
copies of the relevant documents evidencing the claim and the basis for
indemnification sought.  Failure of the
Indemnified Party to give prompt written notice in accordance with the
foregoing requirements shall not relieve the Indemnifying Party from liability
on account of this indemnification, except (a) if and to the extent that the
Indemnifying Party is actually prejudiced thereby or (b) a claims notice is not
given within the survival period for the applicable representation, warranty,
covenant or agreement under Section 9.6, in which case any claim for
indemnification shall expire and terminate. 
The Indemnifying Party shall have 45 days from receipt of any such
notice to (x) take steps to remedy the default or breach that is the subject of
the claims notice or (y) give written notice of dispute of the claim to the
Indemnified Party in which case the dispute between the Parties will be
resolved pursuant to Section 11.2. 
The Indemnified Party shall use commercially reasonable efforts to
minimize Losses.  The Indemnified Party
shall cooperate and assist the Indemnifying Party in determining the validity
of any claim for indemnity by the Indemnified Party and in otherwise resolving
such matters.  Such assistance and
cooperation will include providing reasonable access to and copies of
information, records and documents relating to such matters, furnishing


 


30

















 


employees to assist in the investigation,
defense and resolution of such matters and providing legal and business
assistance with respect to such matters, provided that such access shall not
unreasonably disrupt personnel or operations.


 


ARTICLE
X


TERMINATION


 


10.1 Termination.  This Agreement may be terminated at any time
prior to the Closing:


 


10.1.1 Mutual Consent.  By mutual consent of the Parties.


 


10.1.2 If Closing Does Not Occur.  By Seller or Buyer, on or after
December 31, 2004 if the Closing shall not have occurred by such date,
provided that the Party seeking to terminate this Agreement under this
Section 10.1.2 is not then in material breach of this Agreement and
provided further that the right to terminate this Agreement under this
Section 10.1.2 shall not be available to any Party whose failure to fulfil
any obligation under this Agreement has been the cause of, or resulted in, the
failure of the Closing to occur on or before such date.


 


10.1.3 If Closing is Enjoined.  By Buyer or Seller, if any court of
competent jurisdiction or other Government Authority shall have issued an
order, decree or ruling enjoining or otherwise prohibiting the transactions
contemplated by this Agreement (unless such order, decree or ruling has been
withdrawn, reversed or otherwise made inapplicable), provided that the Party
seeking to terminate this Agreement under this Section 10.1.3 is not then
in material breach of this Agreement and provided further that the right to
terminate this Agreement under this Section 10.1.3 shall not be available
to any Party who shall not have used commercially reasonable efforts to avoid
the issuance of such order, decree or ruling. 
Notwithstanding anything herein to the contrary, save for
Section 7.2, the failure of any adversely affected Party to accept any
withholding by the Competition Authority of its approval to provisions or
portions of this Agreement or the imposition of any condition by the
Competition Authority shall not preclude it from exercising its termination
rights under this Section 10.1.3 and no Party shall be required to accept
any condition if Closing is enjoined on competition grounds by the Competition
Authority or by a court following consent by the Competition Authority.


 


10.1.4 Breach by Seller.  By Buyer if Seller has breached any of its
covenants in this Agreement in any material respect and after notice of such
breach has not cured such breach by Seller within thirty (30) days following
written notice.


 


10.1.5 Breach by Buyer.  By Seller if Buyer has breached any of its
covenants in this Agreement in any material respect and after notice of such
breach has not cured such breach by Buyer within thirty (30) days following
written notice.


 


10.2 Procedure and Effect of Termination.  In the event of termination of this
Agreement pursuant to Section 10.1, written notice thereof shall forthwith
be given by the terminating Party to the other Party, and this Agreement shall
thereupon terminate and become void and have no effect, and the transactions
contemplated hereby shall be abandoned without further action by the Parties,
except that the provisions of Sections 5.1.3 and 10.2 and Article XI 


 


31

















 


shall survive the termination of this
Agreement, provided that such termination shall not relieve either Party of any
liability for any material breach of any covenant or agreement contained in
this Agreement.  If this Agreement shall
be terminated, all filings, applications and other submissions made in
accordance with this Agreement shall, to the extent practicable, be withdrawn
from the Persons to whom they were made.


 


ARTICLE
XI


MISCELLANEOUS


 


11.1 Counterparts. 
This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original but all of which shall be considered one and
the same agreement, and shall become effective when one or more counterparts
have been signed by each of the Parties and delivered to the other
Parties.  Copies of executed
counterparts transmitted by telecopy, telefax or other electronic transmission
service shall be considered original executed counterparts for purposes of this
Section, provided that actual receipt of original executed counterparts is
confirmed.


 


11.2 Governing Law; Jurisdiction and
Forum.


 


11.2.1 Any controversy or claim arising out
of or relating to this Agreement which cannot be settled amicably shall be
submitted to the exclusive jurisdiction of the courts in Paris, France.


 


11.2.2 The validity, construction,
performance and enforceability of this Agreement shall be governed by the laws
of France, without application of its conflict of laws principles.


 


11.3 Entire Agreement; Third-Party
Beneficiary.  This Agreement
(including agreements incorporated herein) contain the entire agreement between
the Parties with respect to the subject matter hereof and there are no
agreements, understandings, representations or warranties between the Parties
other than those set forth or referred to herein.  Except for those provisions hereof respecting the Indemnified
Parties, which are intended to benefit and to be enforceable (subject to the
terms and conditions herein provided) by such Indemnified Parties, this
Agreement is not intended to confer upon any Person not a Party hereto (or its
successors and assigns permitted hereby) any rights or remedies hereunder.


 


11.4 Expenses. 
Except as set forth in this Agreement, whether or not the transactions
contemplated by this Agreement are consummated, all advisory, legal and other
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby (“Transaction
Costs”) shall be paid by the Party incurring such costs and
expenses.  None of Seller’s Transaction
Costs shall be borne by the Companies and none of UPC Group’s Transaction Costs
shall be borne by Buyer.


 


11.5 Notices.  All
notices and other communications hereunder shall be sufficiently given for all
purposes hereunder if in writing and delivered personally, sent by documented
overnight delivery service or, to the extent receipt is confirmed, telecopy,
telefax or other electronic transmission service to the appropriate address or
number as set forth below.  Notices
shall be effective only upon actual receipt. 
Notices to Buyer shall be addressed to:


 


Anton Tuijten


 


32

















 


Boeing Avenue 53


1119 PE Schiphol-Rijk


Postbus 74763


1070 BT Amsterdam


The Netherlands


Fax : +31 20 779 9871


 


with a copy to:


 


Jim Ryan (Fax: +31 20 778 9453) at the same
address


 


and


 


Pierre Roy-Contancin


UPC France


10, rue Albert Einstein


77437 Marne-la-Vallée cedex 02


France


Fax : +33 1 64 61 42 32


 


or at such other address and to the attention
of such other Person as Buyer may designate by written notice to Seller.  Notices to Seller shall be addressed to:


 


Patrick Buffet


16, rue de la Ville l’Evêque


75008 Paris


France


Fax : +33 1 40 06 64 15


 


with a copy to:


 


Michel Sirat (Fax: +33 1 40 06 6682) and
Patrice Herbet (Fax: +33 1 40 06 6622) at the same address


 


or at such other address and to the attention
of such other Person as Seller may designate by written notice to Buyer.


 


11.6 Successors and Assigns.  This Agreement shall be binding upon and
inure to the benefit of the Parties and their respective successors and
assigns, provided that no Party may assign its rights or delegate its
obligations under this Agreement without the express prior written consent of
the other Party.


 


11.7 Headings; Definitions.  The Section, Article and other headings
contained in this Agreement are inserted for convenience of reference only and
shall not affect the meaning or interpretation of this Agreement.  All references to Sections or Articles
contained herein mean Sections or Articles of this Agreement unless otherwise
stated.  All capitalized terms defined
herein are equally applicable to both the singular and plural forms of such terms.


 


33

















 


11.8 Amendments and Waivers.  This Agreement may not be modified or
amended except by an instrument or instruments in writing signed by the Party
against whom enforcement of any such modification or amendment is sought.  Any Party may, only by an instrument in
writing, waive compliance by any other Party with any term or provision hereof
on the part of such other Party to be performed or complied with.  The waiver by any Party of a breach of any
term or provision hereof shall not be construed as a waiver of any subsequent
breach.


 


11.9 Interpretation; Absence of
Presumption.


 


11.9.1 For purposes of this Agreement, (a)
words in the singular shall be held to include the plural and vice versa and
words of one gender shall be held to include the other genders as the context
requires, (b) the terms “hereof,” “herein” and “herewith” and words of similar
import shall, unless otherwise stated, be construed to refer to this Agreement
as a whole (including all of the Schedules hereto) and not to any particular
provision of this Agreement, and Article, Section, paragraph and
Schedule references are to the Articles, Sections, paragraphs and
Schedules to this Agreement unless otherwise specified, the word “including”
and words of similar import when used in this Agreement shall mean “including,
without limitation,” unless the context otherwise requires or unless otherwise
specified, the word “or” shall not be exclusive and   provisions shall apply, when appropriate, to successive events
and transactions.


 


11.9.2 This Agreement shall be construed
without regard to any presumption or rule requiring construction or
interpretation against the Party drafting or causing any instrument to be
drafted.


 


11.9.3 It is understood and agreed that
neither the specification of any Euro amount in the representations and
warranties contained in this Agreement nor the inclusion of any specific item
in the Schedules to this Agreement is intended to imply that such amounts or
higher or lower amounts, or the items so included or other items, are or are
not material, and no Party shall use the fact of the setting of such amounts or
the fact of the inclusion of any such item in the Schedules to this Agreement
in any dispute or controversy between the Parties as to whether any obligation,
item or matter is or is not material for purposes hereof.


 


11.10 Severability. 
Any provision hereof which is invalid or unenforceable in any
jurisdiction shall be ineffective to the extent of such invalidity or
unenforceability, without affecting in any way the remaining provisions hereof
or the validity or enforceability of such provision in any other
jurisdiction.  The Parties shall
negotiate in good faith to replace any provision so held to be invalid or unenforceable
so as to implement most effectively the transactions contemplated by such
provision in accordance with the Parties’ original intent.


 


ARTICLE
XII


GUARANTEE


 


12.1 UGC hereby guaranties to Seller the
full, prompt and complete performance by:


 


34

















 


(a) Buyer of its payment obligations under
Sections 2.2.1 and 2.7.5; and


 


(b) The UPC Shareholder of its payment
obligations under Section 9.2.


 


12.2 The guarantees in this Article XII
shall continue in force until all the obligations of Buyer and the UPC
Shareholder, as the case may be, under those Sections have been fully
performed.


 


IN WITNESS WHEREOF, THIS AGREEMENT HAS BEEN
SIGNED BY OR ON BEHALF OF EACH OF THE PARTIES AS OF THE DAY FIRST ABOVE
WRITTEN.


 


35

















 


	
   

  	
  SUEZ SA

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Patrick
  Buffet

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name: Patrick Buffet

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MÉDIARÉSEAUX SA

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Anton M. Tuijten

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name: Anton M. Tuijten

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  UPC FRANCE HOLDING BV

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Anton M. Tuijten / /s/ Gene Musselman

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name: Anton M. Tuijten/Gene Musselman

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  UNITEDGLOBALCOM, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Anton M. Tuijten / /s/ Shane O’Neill

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name: Anton M. Tuijten/Shane O’Neill

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  



 


36



















SCHEDULE 1


 


DEFINITIONS


 


“0G Cable Networks” shall mean the Cable
Networks that were included in the so-called “Olivia” transaction entered into
between France Telecom and Seller in May 2001, including Cable Networks located
in the following municipalities:  Paris,
Boulogne, Neuilly, Levallois, Vincennes, Saint Mandé, Saint Germain, Cannes,
Dijon and Epinal.


 


“1G Cable Networks” shall mean the Cable
Networks located in the 1G Municipalities.


 


“1G Municipalities” shall mean Mantes,
Massy, Evry, Sèvres/St. Cloud/Suresnes (the so-called “3S”), and Toulon.


 


“2003 Financial Statements” shall mean the
consolidated balance sheet for the Companies as of December 31, 2003 and
income statement and statement of cash flows for the Companies for the 12
calendar month period ending on December 31, 2003, together with the
explanatory notes thereto, which are audited by Ernst & Young.


 


“30-Day EURIBOR Rate” shall mean as at any
date, the rate per annum at which Euro deposits were offered for one month
shown on the Reuters Screen as at 11.00 a.m. (Brussels time) on that date.  For this purpose, “Reuters Screen” means the
display designated as the EURIBOR= page on the Reuters system or such other
page on that system as may replace the EURIBOR= page on the Reuters system for
the purpose of displaying interbank offered rates for Euro deposits within
member states of the European Union which are participants in European monetary
union.


 


“Accounting Principles” shall mean with
respect to the Companies French GAAP applied on a consistent basis by the
Companies as detailed in the Appendix to the 2003 Financial Statements and US
GAAP applied on a consistent basis with respect to the UPC France Companies.


 


“Affiliate” shall mean, with respect to any
Person, any other Person that directly, or through one or more intermediaries,
controls or is controlled by or is under common control with such Person, and,
if such a Person is an individual, any member of the immediate family
(including parents, spouse and children) of such individual and any trust whose
principal beneficiary is such individual or one or more members of such
immediate family and any Person who is controlled by any such member or
trust.  As used in this definition,
“control” (including, with correlative meanings, “controlled” and “under common
control with”) shall have the meaning given to it in Article L233-3 of the
French Commercial Code.


 


“Agreement” shall have the meaning set forth
in the Preamble.


 


“Base Consideration” shall have the meaning
set forth in Schedule 2.6.


 


“Base UPC France Enterprise Value” shall
have the meaning set forth in Schedule 2.6.


 


“Budget” shall mean with respect to the
Companies the budget attached as Schedule C.


 


“Business” shall mean the business of the
Companies as at the Signing Date, as the same may change between the Signing
Date and the Closing Date in accordance with the terms of this Agreement, which
consists of providing internet services and analogue cable television and


 


1

















 


radio signals to residential and business customers,
digital television services and telephony services to residential customers and
video and data communications services and facilities to business customers.


 


“Business Day” shall mean any day other than
Saturday, Sunday or a day on which banks are required or permitted to close in
Paris and Amsterdam.


 


“Buyer” shall have the meaning set forth in
the Preamble.


 


“Buyer Intercompany Loans” means all loans
from the UPC Group to Buyer.


 


“Buyer Loss” shall have the meaning set
forth in Section 9.1.


 


“C&E Escrow Account” means the escrow
account referred to in Section 7.4(b).


 


“C&E Escrow Agreement” means the escrow
agreement that may be entered into between Seller, Buyer and the Escrow Agent
at the Closing to be agreed between Signing and Closing in order for the option
in Section 7.4(b) to be available.


 


“Cable Networks” shall mean any electronic
communications network controlled or operated by any of the Companies.


 


“Cable Networks Agreements” shall mean any
agreement entered into between any of the Companies and the Municipalities for
the deployment and/or the operation of Cable Networks.


 


“Cannes and Epinal Networks” means the 0G
Networks located in Cannes and Epinal.


 


“Capitalization Shares” shall have the
meaning set forth in Section 2.1(b).


 


“Cash Adjustment” shall have the meaning set
forth in Section 2.7.5.


 


“Cash Consideration” shall have the meaning
set forth in Schedule 2.6.


 


“Change of Control” shall mean any transfer
of control over the business of the Companies or the UPC France Companies, as
the case may be, to a third party, whether as a result of a transfer or other
transmission of shares or voting rights or the subscription of shares or
otherwise.


 


“Closing” (and, with a correlative meaning,
“Close”) shall mean the consummation of the purchase of the Shares and
Intercompany Loan by Buyer from Seller.


 


“Closing Cash Payment” shall have the
meaning set forth in Section 2.2.1(b).


 


“Closing Date” shall mean the Business Day
immediately following the Reference Date.


 


“Closing Date Buyer Equity Value” shall have
the meaning set forth in Schedule 2.6.


 


“Closing Date Buyer Net Debt” shall have the
meaning set forth in Schedule 2.6.


 


“Companies” shall mean the Company and all
of its Subsidiaries.


 


“Company” shall have the meaning set forth
in the Recitals.


 


2

















 


“Competition Authority” shall mean the
European Commission, the French Ministry of Economy and Finance, and/or the
French Competition Council, as the case may be.


 


“Consideration Shares” shall have the
meaning set forth in Section 2.2.1(a).


 


“Consideration Shares Amount” shall have the
meaning set forth in Schedule 2.6.


 


“Disclosure Documents” shall have the
meaning set forth in Section 9.3.


 


“EBITDA” shall have the meaning set forth in
Schedule 2.6.


 


“Encumbrances” shall mean any rights of
pledge, mortgage or usufruct, charges, liens, or attachments or obligation or
commitment to grant any rights of pledge, mortgage or usufruct, charges, liens,
or attachments at a future date.


 


“Environmental, Health and Safety Law” shall
mean any applicable law or regulation regarding (i) emissions, discharges or
wastes in the environment (including without limitation ambient air, surface
water, ground water or land) or otherwise regulating the manufacturing,
processing, distribution, use, treatments, storage, disposal, transport or
handling of pollutants, contaminants, asbestos, chemicals or toxic or hazardous
substances or wastes or environmental protection and (ii) health and safety of
persons or property, including the protection of the health and safety of
employees.


 


“Escrow Account” shall have the meaning set
forth in Section 2.2.4.


 


“Escrow Agent” shall have the meaning set
forth in Section 2.2.4.


 


“Escrow Agreement” means the escrow
agreement to be entered into between Seller, Buyer and the Escrow Agent at the
Closing in the form attached in Schedule 2.2.4.


 


“Escrow Amount” shall have the meaning set
forth in Section 2.2.4.


 


“Existing Shares” shall have the meaning set
forth in Section 2.1.(a).


 


“Exploitation Agreements” shall mean
agreements between municipalities and the Companies or the UPC France Companies
pursuant to which the Companies or the UPC France Companies, as the case may
be, exploit and maintain networks in such municipalities, including side
letters related to such agreements.


 


“Final Report” shall have the meaning set
forth in Section 2.7.1.


 


“France Telecom 0G Network Infrastructure Agreements”
shall mean (i) the agreement dated May 18, 2001 between France Telecom and Rapp
16 SA relating to the use of France Telecom infrastructure for the 0G Networks,
and (ii) the cahier des charges dated May 18, 2001.


 


“France Telecom 1G Network Infrastructure Agreements”
shall mean the agreement dated May 6, 1999 between France Telecom and NTL Inc.,
as amended by the letter agreement dated November 22, 2001.


 


“French GAAP” shall mean the accounting
principles generally accepted in France.


 


3

















 


“Government Authority” shall mean any government
or state (or any subdivision thereof), whether domestic, foreign or
multinational (including European Community), or any agency, authority, bureau,
commission, department or similar body or instrumentality thereof, or any
governmental court or tribunal.


 


“Governmental Authorizations” shall mean any
license, exemption, consent or other authorization or clearance, howsoever
named from a Government Authority.


 


“Indebtedness” shall mean indebtedness or
other liabilities or obligations of the Companies (other than the Intercompany
Debt), in each case in respect of borrowed money, including obligations
evidenced by mortgages, notes, bonds, debentures or similar instruments, and
obligations under capital leases and obligations with respect to letters of credit
or swaps, any unpaid interest owing on any such obligations, and any
guarantees, assumptions or similar obligations with respect to any of the
foregoing, but shall exclude all Taxes and obligations and liabilities in
respect of Taxes.


 


“Indemnified Party” shall have the meaning
set forth in Section 9.6.4.


 


“Indemnifying Party” shall have the meaning
set forth in Section 9.10.


 


“Independent Accountant” shall have the
meaning set forth in Section 2.7.3.


 


“Independent Opinion” shall have the meaning
set forth in Section 2.7.4.


 


“Intercompany Loan” shall mean the
intercompany loan under the agreement dated 14 May, 2002, in the original
principal amount of EUR 700 million by Seller as lender to the Company as
borrower, together with all accrued interest thereon.


 


“Key Employees” shall mean:


 


• Chairman, Patrick Leleu


• COO, Mathias Hautefort


• Controller, Steve Lawson


• Regional
Director, Philippe Carillon


• Sale &
Marketing, Jacques Guerreau


• IT Director, Claude Glacet


• CFO, Frederic Rombaut


• HR Director, Herve Hannebicque


• Customer Care Director, Franck Guenot


• Network
Director, Jean-Paul Tissandier


• PR, Flavie Bitan


• Technology, Jean Villard (independent
contractor)


 


“Liabilities” means as reflected in
accordance with French GAAP on the audited consolidated balance sheet for the
Company as of the applicable date, the sum, without duplication of amounts, of
all amounts and provisions that are included and classified as current or
long-term liabilities (including deferred income).


 


“Liberty” shall mean Liberty, a Delaware
Corporation.


 


“Liberty Affiliate” means any of:


 


4

















 


(a)                                  Liberty;


 


(b)                                 any entity that acquires all or substantially all of the assets of
Liberty or any successor to Liberty, or any New Liberty International Co, by
operation or law (including in connection with a merger, consolidation or other
business combination) or otherwise (a “Liberty Successor Entity”);


 


(c)                                  any entity in which immediately following its formation, the
executive officers and directors of Liberty or any Liberty Successor Entity,
together with its common shareholders, directly or indirectly hold in the
aggregate a majority of the voting securities in such entity and which
immediately following its formation, holds, directly or indirectly, a majority
of shares in UGC or any successor thereto in regard to all or substantially all
of UGC’s European broadband distribution assets (“New Liberty International
Co”); and


 


(d)                                 any entity that is directly or indirectly controlled by Liberty, a
Liberty Successor Entity or a New Liberty International Co.


 


For purposes of this Agreement, John Malone will not
be considered a Liberty Affiliate.


 


“Losses” shall have the meaning set forth in
Section 9.10.


 


“Management Financial Reports” shall mean
the unaudited management balance sheet income statement and statements of cash
flows of the Companies, or the UPC France Companies, as the case may be, for
each succeeding month period beginning with 1st March 2004 and ending on
the last full month prior to the Closing Date which will be established in the
same format and include as to the Companies only the same level of detail as
the monthly management reports of the Companies for the two (2) months prior to
the Signing Date, which have been provided to Buyer.  With respect to the UPC France Companies, the Management
Financial Reports shall be prepared in accordance with prior practice.


 


“Material Adverse Change” and “Material
Adverse Effect” shall mean any change, effect or development that
either individually or in combination with other changes, effects or
developments are materially adverse to the assets, business, financial
condition, results of operation, expected operations or operational condition
of the Companies or the UPC France Companies, as the case may be, taken as a
whole.  Changes, effects or developments
that have only a short-term or transitory impact on the Companies or the UPC
France Companies, as the case may be, will not be sufficient in and of
themselves to constitute a Material Adverse Change or Material Adverse
Effect.  For the sake of clarity, it is
acknowledged and agreed that the implementation of the EU directive Paquet
telecom shall not constitute a Material Adverse Change or a Material Adverse
Effect under this Agreement.


 


“Material Contract” shall mean all
agreements to which any of the Companies is a party or is bound (a) which
purport to limit in any material respect, after the Closing, the manner in
which, or the localities in which, all or any material portion of the current
Business of the Companies is conducted, (b) which involve or are expected by
the management of the Company to involve aggregate payments by a party thereto
of EUR 2,500,000 or more per annum, which are to be performed in whole or in
part after the Closing Date, (c) which would prohibit or materially delay the
transactions contemplated by this Agreement, (d) imposing or creating an
Encumbrance with respect to the Shares or any part of the assets of the
Companies, (e) that is an Exploitation Agreement, (f) which primarily relate to
the


 


5

















 


distribution of television programs or channels or to
pay-per-view/near-video-on-demand licenses or to the supply of backbone or
network access capacity or interconnection rights, and involve aggregate
payments by a party thereto of EUR 2,500,000 or more per annum or (g) between
any of the Companies and Seller or any Affiliated company (other than the
Companies) of Seller.


 


“Minority Interest Company” shall mean
Mantes TV Câble SAELM and Vidéocable 91 SLEC.


 


“Municipalities” shall mean any municipality
or group of municipalities having entered into an Exploitation Agreement with
the Companies or the UPC France Companies.


 


“Noos Capital Expenditure Shortfall Adjustment”
shall have the meaning set forth in Schedule 2.6.


 


“Noos Financial Debt” shall have the meaning
set forth in Schedule 2.6.


 


“Noos Reference Date Accounts” and “Reference
Date Accounts” shall have the meaning set forth in
Section 2.7.1(a).


 


“Noos Working Capital Adjustment” shall have
the meaning set forth in Schedule 2.6.


 


“Organizational Documents” shall mean the
articles of incorporation (“statuts”) or equivalent organizational
document or charter of any Person.


 


“Parties” shall mean the parties to this Agreement.  For the sake of clarity, UGC is party to
this Agreement solely for the purpose of Section 5.16 and
Article XII.


 


“Permit” shall mean any license, exemption,
consent or other authorization or clearance, howsoever named from a Government
Authority.


 


“Person” shall mean any individual,
corporation, partnership, joint venture, trust, unincorporated organization,
other form of business or legal entity or Government Authority.


 


“Programming Contracts” shall mean any
agreements entered into between a Company and a supplier of programming
services providing for the supply of content to be distributed on a Cable
Network.


 


“Provisional Consideration Shares Amount”
shall have the meaning set forth in Section 2.1.


 


“Provisional Purchase Price” shall have the
meaning set forth in Section 2.6(a).


 


“Provisional Purchase Price Report” shall
have the meaning set forth in Section 2.6(a).


 


“Provisional UPC France Equity Value” shall
have the meaning set forth in Section 2.6(b).


 


“Provisional UPC France Equity Value Report”
shall have the meaning set forth in Section 2.6(b).


 


“Purchase Price” shall have the meaning set
forth in Schedule 2.6.


 


6

















 


“RGU” means an economic accounting unit
corresponding to the provision of a sole CATV or Internet access service to a
given subscriber (excluding, for the avoidance of doubt, “lifeline” (“Service
Antenne”) and subscribers who are not billed) and accounted for on a
consistent basis with the 2004 business plan previously furnished to Buyer and
the Company’s billing system.


 


“Reference Date” shall have the meaning set
forth in Section 2.5.


 


“Restricted Business” shall have the meaning
set forth in Section 5.13(a).


 


“Restricted Period” shall have the meaning
set forth in Section 5.13(a).


 


“Seller” shall have the meaning set forth in
the Preamble.


 


“Seller Loss” shall have the meaning set
forth in Section 9.2.


 


“Seller’s Knowledge” means the actual
current knowledge of Patrick Buffet and Patrick Lefort after a customary review
of their files.


 


“Seller Specific Warranties” means Seller
Warranties in Schedule 3A.


 


“Seller Warranties” shall have the meaning
set forth in Article III.


 


“Shareholders Agreement” means the agreement
between UPC France Holding BV and Seller, as shareholders in Buyer, and UGC in
the form attached as Schedule A.


 


“Shares” shall have the meaning set forth in
the Recitals.


 


“Signing Date” shall have the meaning set
forth in the Preamble.


 


“Sipperec” shall mean the Syndicat
Intercommunal de la Périphérie de Paris pour l’Electricité et les Réseaux de
Communication, an entity representing a group of French
municipalities, having its principal address at 193-197 rue de Bercy, Paris
75012 France.


 


“Sipperec 3 Agreement” shall mean the
Concession Agreement dated November 17, 2000 entered into between
Lyonnaise Communications SA and Sipperec.


 


“Sipperec Memorandum of Agreement” means the
agreement between Buyer, Seller and UPC France Holding BV in the form attached
as Schedule B.


 


“Sipperec Settlement Agreements” shall mean
the following agreements between Sipperec and Lyonnaise Communications SA:  (i) Procès Verbal de Conciliation-Plaque Nord,
dated September 4, 2003; (ii) Procès Verbal de Conciliation – Plaque Sud,
dated September 4, 2003; and (iii) Procès Verbal de Conciliation – Sipperec 3,
dated September 22, 2003.


 


“Steering Committee” shall have the meaning
set forth in Section 5.5.


 


“Subsidiary” of any Person shall mean any
corporation, partnership, limited liability company or other business entity of
which at least a majority of the outstanding capital stock (or similar
interests) having voting power under ordinary circumstances to elect directors
(or similar governing body members) shall at the time be held, directly or
indirectly, by such Person or by such Person and one or more Subsidiaries of
such Person.


 


7

















 


“Tax Asset” means any net operating loss,
net capital loss or other credit that could be carried forward or back to
reduce Taxes.


 


“Taxes” means any form of taxation, duties,
imposts and levies, whether in France or elsewhere, including (accrued and
non-accrued) income tax, corporation tax, advance corporation tax, precompte,
capital tax, real estate tax, capital gains tax, inheritance tax, value added
tax, customs and other import or export duties, excise duties, stamp duties,
social security or other similar contributions, and any interest, penalty,
surcharge or fine relating to these Taxes.


 


“Transaction Costs” shall have the meaning
set forth in Section 11.4.


 


“Transaction Documents” shall mean this
Agreement, the Shareholders Agreement, the Sipperec Memorandum of Agreement and
the other closing agreements and documents between the Parties referred to in
this Agreement.


 


“Transfer of Loan Agreement” shall mean the
agreement in the form attached in Schedule 2.3.3.


 


“UGC” shall have the meaning set forth in
the Preamble.


 


“UPC 2003 Financial Statements” shall mean
the consolidated balance sheet for the UPC France Companies as of
December 31, 2003 and income statement and statement of cash flows for the
UPC France Companies for the twelve (12) calendar month period ending on
December 31, 2003, together with the explanatory notes thereto, which are
audited by KPMG.


 


“UPC Cable Networks” shall mean any
electronic communications network controlled or operated by any of the UPC
France Companies.


 


“UPC Cable Networks Agreements” shall mean
any agreement entered into between any of the UPC France Companies and the
Municipalities for the deployment and/or the operation of UPC Cable Networks.


 


“UPC France Capital Expenditure Shortfall Adjustment”
shall have the meaning set forth in Schedule 2.6.


 


“UPC France Companies” shall mean Buyer and
all of its Subsidiaries (other than the Companies).


 


“UPC France Equity Value” shall have the
meaning set forth in Schedule 2.6.


 


“UPC France Financial Debt” shall have the
meaning set forth in Schedule 2.6.


 


“UPC France Intercompany Loan” shall mean
all loans from the UPC Group to a UPC France Company other than Buyer.


 


“UPC France Working Capital Adjustment”
shall have the meaning set forth in Schedule 2.6.


 


8

















 


“UPC French Cable Business” shall mean
ownership and operation by UPC France SA and InterComm France Holding SA and
their Subsidiaries of cable TV, cable Internet and telephony services in
France.


 


“UPC French Cable Business Reference Date Accounts”
shall have the meaning set forth in Section 2.7.1(b).


 


“UPC Group” shall mean UGC and its
Affiliates excluding the UPC France Companies and after Closing, excluding the
Companies.


 


“UPC Material Contract” shall mean all
agreements to which any of the UPC France Companies is a party or is bound (a)
which purport to limit in any material respect, after the Closing, the manner
in which, or the localities in which, all or any material portion of the
current business of the UPC France Companies is conducted, (b) which involve or
are expected by the management of Buyer to involve aggregate payments by a
party thereto of EUR 2,500,000 or more per annum, which are to be performed in
whole or in part after the Closing Date, (c) which would prohibit or materially
delay the transactions contemplated by this Agreement, (d) imposing or creating
an Encumbrance with respect to the Consideration Shares or any part of the
assets of the UPC France Companies, (e) that is an Exploitation Agreement, (f)
which primarily relate to the distribution of television programs or channels
or to pay-per-view/near-video-on-demand licenses or to the supply of backbone
or network access capacity or interconnection rights, and involve aggregate
payments by a party thereto of EUR 2,500,000 or more per annum or (g) between
any of the UPC France Companies and Buyer or any Affiliated company (other than
the UPC France Companies) of Buyer.


 


“UPC Programming Contracts” shall mean any
agreements entered into between a UPC France Company and a supplier of
programming services providing for the supply of content to be distributed on a
UPC Cable Network.


 


“UPC Shareholder” shall have the meaning set
forth in the Preamble.


 


“UPC Shareholder’s Knowledge” means the
actual current knowledge of Pierre Roy-Contancin, François Marie and Jack
Mikallof, after a customary review of their files.


 


“UPC Specific Warranties” means the UPC
Warranties in Schedule 4A.


 


“UPC Warranties” shall have the meaning set
forth in Article IV.


 


“US GAAP” shall mean the accounting
principles generally accepted in the United States of America.


 


“WL Escrow Account” shall have the meaning
set forth in Schedule 2.6.


 


“WL Escrow Agreement” means the escrow
agreement to be entered into between Seller, Buyer and the Escrow Agent at the
Closing in the form attached in Schedule 2.6, 3.4.2(b).


 


“WL Letter of Credit” shall have the meaning
set forth in Schedule 2.6.


 


9

















 


SCHEDULE 2.6


 


DETERMINATION OF THE CASH
CONSIDERATION, CONSIDERATION

SHARES AMOUNT AND THE PURCHASE PRICE


 


1.                                      CASH CONSIDERATION


 


The Cash
Consideration = Purchase Price minus Consideration Shares Amount


 


2.                                      CONSIDERATION SHARES AMOUNT


 


1                                          The Consideration Shares Amount = the lesser of (A) .199 times
Closing Date Buyer Equity Value or (B) EUR85 million (the “Consideration Shares Amount Cap”).


 


2                                          The Closing Date Buyer Equity Value =


 


2.1                                 the Purchase Price; plus


 


2.2                                 the UPC France Equity Value; minus


 


2.3                                 Closing Date Buyer Net Debt.


 


2.4                                 As provided in Section 2.2.2 of this Agreement, if the
Consideration Shares Amount would exceed the Consideration Shares Amount Cap,
then the number of shares in Buyer and corresponding percentage interest in
Buyer of Seller will be reduced so that Seller’s shareholding = number of
shares of Buyer times EUR 85 million divided by the Closing Date Buyer Equity
Value.


 


3.                                      CALCULATION OF THE PURCHASE PRICE


 


3.1                                 Purchase
Price


 


The Purchase
Price will be calculated as follows:


 


(a)                                  Base Consideration (as set out in Section 3.2 below);


 


(b)                                 Less
the Noos Financial Debt (as set out in
Section 3.3 below);


 


(c)                                  Plus
or Less the Noos Working Capital Adjustment,
depending on whether the adjustment is positive or negative (as set out in
Section 3.4 below);


 


(d)                                 Less
the Noos Capital Expenditure Shortfall Adjustment
(as set out in Section 3.5 below).


 


3.2                                 Base
Consideration


 


3.2.1                        The Base Consideration will be calculated in accordance with the
following formula (subject to a limitation on the maximum amount of EUR
660,000,000):


 


10

















 


7.25 x Noos
Run-Rate EBITDA


 


Where the “Noos
Run-Rate EBITDA” is equal to (i) the Noos Actual Adjusted EBITDA (as
defined in Section 3.2.2 below) for the period commencing on 1st
January 2004 and ending on the Reference Date (ii) divided by the Noos
Budgeted Adjusted EBITDA (as defined in Section 3.2.3 below) for the
period commencing on 1st January 2004 and ending on the Reference Date and
(iii) multiplied by EUR 86 million.


 


3.2.2                        The Noos Actual Adjusted EBITDA will be calculated on the basis of
the Reference Date Accounts, in accordance with French GAAP applied in a
consistent manner.


 


The Noos
Actual Adjusted EBITDA will be equal to the algebraic sum of the following
items:


 


(A)                             the amount of the operating income (“Résultat d’exploitation”) as
shown in the Reference Date Accounts;


 


(B)                               Plus the net amount of the depreciation and amortization expense of
tangible and intangible assets (“Dotations amortissements et provisions”)
as shown in the Reference Date Accounts;


 


(C)                               Plus the net amount of the depreciation expense of current assets (
“Dotations
provisions sur actif circulant” ) as shown in the Reference Date
Accounts;


 


(D)                               Plus the net amount of the depreciation expense of changes in
provisions for contingencies and losses (“Dotations provisions pour risques et charges”)
as shown in the Reference Date Accounts;


 


(E)                                 Minus the net amount of the depreciation and amortization income (“Reprises
amortissements et provisions”) as shown in the Reference Date
Accounts;


 


such amount
(the “Noos
Actual EBITDA”) being adjusted, as the case may be, for the
following items to the extent they have been included in the Noos Actual
EBITDA:


 


(a)                                  Plus the amount of all fees, success fees and expenses relating to non
recurring activities recorded in the Reference Date Accounts;


 


(b)                                 Plus the amount of any restructuring costs relating to the “2003
Voluntary Departure Plan and Restructuring Action Plan” and other business
optimization expenses related to the “2003 Voluntary Departure Plan and Restructuring Action
Plan” recorded as shown in the Reference Date Accounts;


 


(c)                                  Plus the amount of Seller’s domiciliation fees (“frais de domiciliation”)
defined on a consistent basis with the 2003 Financial Statements, recorded in
the Reference Date Accounts;


 


(d)                                 Plus the amount of financial and bank related charges, such as fees
related to any Seller guarantee or letter of comfort or fees related to bank
debt (but any


 


11

















 


banking cost for running direct debit for
client accounts will not be added back), as recorded in the Reference Date
Accounts;


 


(e)                                  Plus the amount of any bad debt losses (“pertes sur créances irrécouvrables”)
recorded in the Reference Date Accounts;


 


(f)                                    Less the amount of the Bad Debts (defined and calculated as per
Section 3.2.4 below);


 


(g)                                 Less the amount of any one-time credit resulting from non-recurring and
non-standard reversal of accruals where either no corresponding or similar
charge is accounted for in connection therewith or a corresponding charge is
accounted for, in which case the amount of the one-time credit shall be taken
into account only for the portion of the reversal exceeding such charge in the
relevant period;


 


(h)                                 Plus the amount of any one-time debit resulting from non-recurring and
non-standard expenses, where either no corresponding or similar income is
accounted for in connection therewith or a corresponding income is accounted
for, in which case the amount of the one-time debit shall be taken into account
only for the portion of the debit exceeding the corresponding income in the
relevant period.


 


The Noos
Actual EBITDA, if and when adjusted in accordance with this Section 3.2.2,
being referred to hereinafter as the “Noos Actual Adjusted EBITDA”.


 


3.2.3                        The “Noos Budgeted Adjusted EBITDA” will be calculated as follows:


 


(a)                                  Cumulative amount of the monthly budgeted EBITDA appearing in the
schedule attached in Appendix 3.2.3 to this Schedule 2.6 with respect
to any month elapsed between 1st January 2004 and the Reference Date;


 


(b)                                 Less the amount of the Bad Debts (as defined in Section 3.2.4
below).


 


3.2.4                        For the purposes of calculating Noos Actual Adjusted EBITDA and Noos
Budgeted Adjusted EBITDA, “Bad Debts” means the amount calculated as
follows:


 


EUR 5million x
(number of months elapsed between 1st January 2004 and the Reference Date
/ 12).


 


3.2.5                        When calculating the Noos Actual Adjusted EBITDA and the Noos
Budgeted Adjusted EBITDA, the following further principles shall be applied:


 


(a)                                  EBITDA will exclude all one-time restructuring costs;


 


(b)                                subscriber acquisition costs (direct and indirect marketing costs,
reconnection costs) shall not be capitalized, except for physical first
connection costs (drop lines);


 


(c)                                  capitalization of labor cost will be on a basis consistent with
prior practice;


 


12

















 


(d)                                 Accruals will be prepared at Closing on a basis consistent with the
principles used during prior periods and more generally, all items recorded in
the loss and income statement included in the Reference Date Accounts will be
prepared on a basis consistent with the principles used during prior periods;


 


(e)                                  All judgmental areas including, without limitation, bad debt
provision (recorded as “provision pour créances douteuses”),
holiday accruals (“provision pour conges payés”), programming
accruals (recorded as “provisions pour charges de programme”)
will be made on a basis consistent with the principles used during prior
periods;


 


(f)                                    If there are one-off discretionary items or discretionary marketing
costs (by way of examples, newspaper, television, radio and other media
advertising and direct marketing campaigns) in the Budget for the period
commencing on 1st January 2004 and ending on the Reference Date which are
not spent in the relevant period, their amount will be neutralized as follows:
in the formula set forth in Section 3.2.1 for the calculation of the Noos
Run-Rate EBITDA, the amount of any such one-off discretionary item or
discretionary marketing costs will be added to the numerator with no adjustment
of the denominator (so that both Noos Actual Adjusted EBITDA and Noos Budgeted
Adjusted EBITDA are calculated with the same level of those discretionary items
and discretionary marketing costs).


 


3.3                                 Noos
Financial Debt


 


The “Noos
Financial Debt” shall be calculated based on the Reference Date
Accounts as follows:


 


(a)                                  all outstanding financial debt (including short and long-term debt
of a financial nature) for borrowed money from third parties, excluding the
Intercompany Loan, as recorded in the Reference Date Accounts;


 


(b)                                 all financial obligations evidenced by a note, bond, debenture or
similar instrument or guaranty recorded in the Reference Date Accounts and
including the deferred purchase price payment to NTL, Inc. if outstanding on
the Reference Date;


 


(c)                                  all obligations related to capital leases recorded for in the
Reference Date Accounts;


 


(d)                                 any financing of accounts receivable or inventory (e.g.:
securitization, discounted notes) including those without recourse, recorded in
the Reference Date Accounts;


 


(e)                                  any accrued interest, penalties, premium and any fees or expenses
relating to the foregoing, recorded in the Reference Date Accounts;


 


Minus


 


(f)                                    cash and short term securities recorded as “Valeurs Financières”,
“Disponibilités”, “Valeurs Mobilières de Placement”, as shown in the Reference
Date Accounts;


 


13

















 


(g)                                 Less any cash deposit in the C&E Escrow Account, if Seller has
elected to cause the Company to effect such cash deposit in accordance with
Section 7.4 (b) of this Agreement.


 


3.4                                 Noos
Working Capital Adjustment


 


3.4.1                        Actual
Reference Date Noos Working Capital and Normalized Noos Working Capital


 


For the
purpose of calculating the Noos Working Capital Adjustment, the Actual
Reference Date Noos Working Capital and the Normalized Noos Working Capital (as
defined below respectively) shall be calculated on the basis of the Reference
Date Accounts.


 


When
calculating each of the Actual Reference Date Noos Working Capital and the
Normalized Noos Working Capital (i) French GAAP shall be applied on a
consistent basis with the preparation of the 2003 Financial Statements,
(ii)  to the extent they are consistent
with French GAAP, the accounting methods, practices and procedures used by the
Company for the preparation of the 2003 Financial Statements shall be applied
(together with any classification, judgment and estimation methodology applied
on a consistent basis) and (iii) the items listed in Section 3.4.2(a),
together with the WL Escrow Amount and WL Letter of Credit, shall be excluded.


 


(a)                                  If the Actual Reference Date Noos Working Capital minus the
Normalized Noos Working Capital divided by the Normalized Noos Working Capital
(the “Adjustment
Percentage”) is less negative than minus five percent (-5%) (eg -3%)
and it is less positive than plus five percent (+5%) (eg +3%), then the Noos
Working Capital Adjustment shall be deemed to equal zero and there shall be no
corresponding adjustment to the Purchase Price.


 


(b)                                 If the Adjustment Percentage is more negative than minus five
percent (-5%) (eg -7%) or more positive than plus five percent (+5%) (eg +7%),
then the Noos Working Capital Adjustment shall be the total amount equal to the
Actual Reference Date Noos Working Capital minus the Normalized Noos Working
Capital and:


 


(i)                                     if such difference is negative, then the Purchase Price shall be
reduced by such difference and


 


(ii)                                  if such difference is positive, then the Purchase Price shall be
increased by such difference.


 


“Actual
Reference Date Noos Working Capital” means:


 


(a)                                  the sum of the following items:


 


(i)                                     the amount for which the receivable trade accounts, including
unbilled revenues consistent with prior practice, with VAT, net of allowance
for doubtful accounts and excluding inter-company balances (“Clients et
comptes rattachés, net”), are accounted for in the Reference Date
Accounts;


 


14

















 


(ii)                                  the amount for which inventories net of reserves (“Stocks et
en-cours, net”) are accounted for in the Reference Date Accounts;


 


(iii)                               the amount for which other current receivables net of reserves (“Créances
diverses”), including taxes receivables and VAT receivables, are
accounted for in the Reference Date Accounts;


 


(iv)                              the amount for which prepaid expenses (“Charges constatées d’avance”)
are is accounted for in the Reference Date Accounts, to the extent the Companies
remain entitled to receive after Closing the benefits of the services or items
in respect of which such prepayment was made;


 


(v)                                 the amount for which expenses to amortize (“Charges à repartir”) are
accounted for in the Reference Date Accounts,


 


Minus


 


(b)                                 the sum of the following items


 


(i)                                     the amount for which payable trade accounts and unrecorded invoices
plus VAT (“Fournisseurs
et comptes rattachés” and “Dettes sur immobilisations”) net of
supplier advances and deposits made to suppliers (“Avances et acomptes versés”),
excluding inter-company balances are accounted for in the Reference Date
Accounts and excluding the Warranted Liability Items, as defined in
Section 3.4.2(a);


 


(ii)                                  the amount for which customer advances and prepayments (“Avances et
acomptes reçus”) are accounted for in the Reference Date Accounts;


 


(iii)                               the amount for which current Taxes payable (“Dettes fiscales”) are
accounted for in the Reference Date Accounts;


 


(iv)                              the amount for which current accrued compensation (“Dettes
sociales”) are accounted for in the Reference Date Accounts;


 


(v)                                 the amount for which deferred revenues (“Produits constatés d’avance”)
are accounted for in the Reference Date Accounts.


 


“Normalized
Noos Working Capital” means:


 


(a)                                  the sum of the following items:


 


(i)                                   the amount for which the receivable trade accounts net of allowance
for doubtful accounts and excluding inter-company balances (“Clients et
comptes rattachés, net”) are accounted for in the Reference Date
Accounts and which are stipulated to be equal to 20 Days Amount (as defined
below) of sales (“chiffre d’affaires”) plus the VAT that would be included in
such stipulated receivables;


 


(ii)                                  the amount for which inventories net of reserves (“Stocks et
en-cours, net”) are accounted for in the Reference Date Accounts;


 


15

















 


(iii)                               the amount for which other current receivables net of reserves (“Créances
diverses”) including Taxes receivables and VAT receivables are
accounted for in the Reference Date Accounts;


 


(iv)                              the amount for which prepaid expenses (“Charges constatées d’avance”)
are is accounted for in the Reference Date Accounts, to the extent the
Companies remain entitled to receive after Closing the benefits of the services
or items in respect of which such prepayment was made;


 


(v)                                 the amount for which expenses to amortize (“Charges à repartir”) are
accounted for in the Reference Date Accounts,


 


Minus


 


(b)                                 the sum of the following items


 


(i)                                   the amount for which payable trade accounts and unrecorded invoices
plus VAT (“Fournisseurs
et comptes rattachés” and “Dettes sur immobilisations”) net of
supplier advances and deposits made to suppliers (“Avances et acomptes versés”),
excluding inter-company balances are accounted for in the Reference Date Accounts
and which are stipulated to be equal to 100 Days Amount (as defined below) of
Expenses, plus the VAT that would be included in such Expenses;


 


(ii)                                  the amount for which customer advances and prepayments (“Avances et
acomptes reçus”) are accounted for in the Reference Date Accounts;


 


(iii)                               the amount for which current Taxes payable (“Dettes fiscales”) are
accounted for in the Reference Date Accounts;


 


(iv)                              the amount for which current accrued compensation (“Dettes
sociales”) are accounted for in the Reference Date Accounts;


 


(v)                                 the amount for which deferred revenues (“Produits constatés d’avance”)
are accounted for in the Reference Date Accounts.


 


For the sake
of clarity, it is understood that the Actual Reference Date Noos Working
Capital and the Normalized Noos Working Capital shall not include any of the
following items:


 


(i)                                     deferred tax assets and liabilities (“impôts différés actifs et impôts
différés passifs”) as shown in the Reference Date Accounts; or


 


(ii)                                  customer deposits (“Dépôts de garantie”) as shown in the
Reference Date Accounts.


 


For the
purpose of this Schedule 2.6, “Day Amount” shall mean, with respect to any
item, the amount for which such item is accounted for in the Reference Date
Accounts (i) divided by the number of months elapsed between 1st
January 2004 and the Reference Date multiplied by 12 and (ii) divided by
365.


 


16

















 


For the
purpose of calculating Normalized Noos Working Capital, “Expenses” shall mean the sum
of the following items (as shown in the Reference Date Accounts):


 


•                                          “Achats de marchandises”


•                                          “Variation de stocks de marchandises”


•                                          “Autres achats et charges externes”


•                                          “Autres charges d’exploitation”


•                                          “Acquisitions d’immobilisations incorporelles”


•                                          “Acquisitions d’immobilisations corporelles”


 


3.4.2                        Warranted Liability Items


 


(a)                                  The Parties have agreed that Seller will be permitted to exclude
from payables for purposes of the calculation of the Actual Reference Date Noos
Working Capital, the following types of items, provided that Seller funds at
Closing the WL Escrow Amount and provides at Closing the WL Letter of
Credit.  The foregoing items are called
herein the “Warranted Liability Items”. 
The Warranted Liability Items will be reviewed as part of the
finalization of the Noos Reference Date Accounts.  Seller shall compensate Buyer for all Warranted Liability Items,
net of the amount of the corresponding assets, booked in the Reference Date
Accounts as and when paid by the Companies after Closing.


 


(i)                                     SACEM and ANGOA payables (net of the amount of the corresponding
assets), only for the portion of the net amount thereof exceeding an amount
equal to 90 Days Amount (as defined in Section 3.4.1) of operating
expenses relating to SACEM and ANGOA plus VAT on these operating expenses and
accrued Sipperec penalties; and


 


(ii)                                  The disputed payables listed in Schedule 2.6, 3.4.2(a) which
will not exceed EUR 6,033,346.


 


(b)                                Prior to Closing, Seller and Buyer shall conclude with Crédit
Lyonnaise (the “WL Escrow Agent”) an escrow agreement in the form attached as
Schedule 2.6, 3.4.2(b) (the “WL Escrow Agreement”) and Seller, at
Closing, shall place in an interest-bearing account (the “WL Escrow Account”) with the
WL Escrow Agent an amount equal to 10% of the aggregate liability of the
Warranted Liability Items (funds deposited from time to time in such account
are called herein the “WL Escrow Amount”).  Interest earned on funds in the WL Escrow
Account shall be for the account of Seller to the extent remaining in the
account when it is dissolved. 
Additionally, at Closing, Seller shall deliver an unconditional standby
letter of credit from a creditworthy bank acceptable to Buyer in an amount
equal to 40% of the Warranted Liability Items for a term of not less than two
years (the “WL Letter of Credit”). 
If the WL Letter of Credit is not renewed at least 30 days prior to
expiry, Buyer may draw the full amount of the WL Letter of Credit and place the
proceeds thereof in the WL Escrow Account.


 


(c)                                  If and when any of the Companies pays any of the Warranted Liability
Items, Seller shall have an absolute obligation upon written notice from Buyer
to immediately pay or repay that amount, regardless of its size, to Buyer or,


 


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where the amount is paid from the WL Escrow
Amount, replenish the WL Escrow Amount and/or if the WL Letter of Credit is
drawn to pay the same, to replenish the WL Letter of Credit such that the WL
Escrow Amount is equal to 10% of the remaining Warranted Liability Items and
the WL Letter of Credit is equal to 40% of the remaining Warranted Liability
Items.


 


(d)                                 Buyer or any of the Companies shall be able to draw funds from the
WL Escrow Account and to draw on the WL Letter of Credit by providing a
certificate that the amount is required to be paid.  A copy of such certificate and the corresponding invoice shall be
provided to Seller.  Following payment,
Buyer shall provide appropriate evidence that payment of such invoice has been
effected to Seller.


 


(e)                                  At the fifth anniversary of Closing, the WL Escrow Agreement shall
terminate and any amounts placed with the WL Escrow Agent (plus interest
thereon) shall be released in favor of Seller, and the WL Letter of Credit
released, except in both cases for any demands for payment of Warranted
Liability Items then outstanding.


 


3.5                                 Noos
Capital Expenditure Shortfall Adjustment


 


The “Noos Capital
Expenditure Shortfall Adjustment” will be calculated as follows:


 


Total budgeted
Capital Expenditures for the Companies, excluding budgeted Capital Expenditures
related to customer acquisitions, for the period from January 1, 2004
through the Reference Date, appearing in the schedule attached in Appendix
3.5 to this Schedule 2.6;


 


Less Actual
Capital Expenditures for the Companies, excluding actual Capital Expenditures
related to customer acquisitions, for the period from January 1, 2004
through the Reference Date, as shown in the Reference Date Accounts;


 


provided such
difference is greater than zero.


 


4.                                      UPC FRANCE EQUITY VALUE


 


4.1                                 UPC France
Equity Value


 


The UPC France
Equity Value will be calculated as follows:


 


(a)                                  Base UPC France Enterprise Value (as set out in Section 4.2
below).


 


(b)                                 Less the UPC France Financial Debt (see Section 4.3 below).


 


(c)                                  Plus or Less the UPC France Working Capital Adjustment, depending on
whether the adjustment is positive or negative (as set out in Section 4.4
below).


 


(d)                                 Less the UPC France Capital Expenditure Shortfall Adjustment (as set out
in Section 4.5 below).


 


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4.2                                 Base
UPC France Enterprise Value


 


4.2.1                        The “Base UPC France Enterprise Value” will be calculated as
follows (subject to a limitation on the maximum amount of the Base UPC
Enterprise Value of EUR 103 million):


 


7.25 x UPC
France Run-Rate EBITDA


 


Where:


 


“UPC France
Run-Rate EBITDA” means:


 


	
  Actual Adjusted UPC France EBITDA for the period

  from January 1, 2004 through the Reference Date

  	
  x EUR13.4
  million

  
	
  Budgeted Adjusted UPC France EBITDA for the period

  from January 1, 2004 through the Reference Date

  



 


4.2.2                        Actual Adjusted UPC France EBITDA will be prepared in accordance
with French GAAP consistently applied. 
When calculating the Actual Adjusted UPC France EBITDA, the principles
set forth in Section 3.2.2 shall apply mutatis mutandis.


 


4.2.3                        The Budgeted Adjusted UPC France EBITDA will be calculated as
follows:


 


(a)                                  Cumulative amount of the monthly Budgeted UPC France EBITDA
appearing in the schedule attached in Appendix 4.2.3 to this
Schedule 2.6 with respect to any month elapsed between 1st
January 2004 and the Reference Date;


 


(b)                                 Less the amount of the Bad Debts (as defined in Section 4.2.4
below).


 


4.2.4                        For the purposes of calculating Actual Adjusted UPC France EBITDA
and Budgeted Adjusted UPC France EBITDA, “Bad Debts” means an amount equal to 2% of
revenue for the period from January 1, 2004 through the Reference Date.


 


4.2.5                        When calculating the Actual Adjusted UPC France EBITDA and the
Budgeted Adjusted UPC France EBITDA, the principles set forth in
Section 3.2.5 shall apply mutatis mutandis.


 


4.3                                 UPC
France Financial Debt


 


The UPC France
Financial Debt shall be calculated for the UPC France Companies, excluding
Buyer, based on the UPC French Cable Business Reference Date Accounts as
follows:


 


(a)                                  all outstanding financial debt (including short and long-term debt
of a financial nature) for borrowed money from third parties including
vis-à-vis any UPC Affiliate that is not a UPC France Company (but excluding
intercompany trading balances with Chello) in the ordinary course of business,
recorded in the UPC French Cable Business Reference Date Accounts;


 


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(b)                                all financial obligations evidenced by a note, bond, debenture,
guaranty or similar instrument recorded in the UPC French Cable Business
Reference Date Accounts that are not payable to a UPC France Company;


 


(c)                                  all obligations related to capital leases recorded for in the UPC
French Cable Business Reference Date Accounts;


 


(d)                                any financing of accounts receivable or inventory (e.g.:
securitization, discounted notes) including those without recourse, recorded in
the UPC French Cable Business Reference Date Accounts;


 


(e)                                  any accrued interests, penalties, premium and any fees or expenses
relating to the foregoing, recorded in the UPC French Cable Business Reference
Date Accounts;


 


Minus


 


(f)                                    cash and short term securities recorded as “Valeurs Financières”,
“Disponibilités”, “Valeurs Mobilières de Placement”, as shown in the UPC French
Cable Business Reference Date Accounts.


 


UPC France
Financial Debt shall exclude all loans and other obligations between UPC France
Companies and all intra-group loans that are capitalized or otherwise paid off
before Closing.  Buyer intends to
restructure the capital leases pertaining to the Cité Cable group, which the
UPC France Companies treat as debt (the “Capital Leases”).  Buyer is seeking to obtain a reduction of EUR 7 million.  Buyer may exclude up to EUR 7 million of the
Capital Leases from the calculation of UPC France Financial Debt (the “Excluded
Capital Lease Amount”), provided Buyer establishes an
interest-bearing cash escrow with Crédit Lyonnaise or another bank acceptable
to Seller and/or a standby letter of credit from Crédit Lyonnaise or another
creditworthy bank acceptable to Seller in a total amount equal to 50% of the
Excluded Capital Lease Amount.  The
escrow and/or letter of credit will remain outstanding until a restructuring of
the Capital Leases is achieved.  If
Buyer has not obtained a restructuring so as to obtain a reduction in the
Capital Leases outstanding equal to the Excluded Capital Lease Amount by the
date (the “CL Settlement Date”) that is 24 months following the Closing
Date (any portion of the Excluded Capital Lease Amount that has not been
successfully reduced being referred to as the “Remaining CL Amount”), then
the UPC Shareholder will then make a cash settlement to Seller in the amount
equal to 19.9% of the Remaining CL Amount. 
For avoidance of doubt, the charges under the Capital Leases will not be
included in the calculation of UPC France Run-Rate EBITDA.  The UPC Shareholder will pay, and indemnify
Buyer and the UPC France Companies from, the lease payments attributable to the
Excluded Capital Lease Amount between Closing and the CL Settlement Date.


 


4.4                                 UPC
France Working Capital Adjustment


 


The UPC France
Working Capital Adjustment Amount will be calculated mutatis mutandis as per
Section 3.4.1 without any reference to Sipperec which is non-applicable
and the amount in (b)(i) of the definition of Normalized Noos Working Capital
shall be stipulated to be 130 Days Amount of Expenses, rather than 100 Days
Amount.


 


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4.5                                 UPC
France Capital Expenditure Shortfall Adjustment


 


The UPC France
Capital Expenditure Shortfall Adjustment will be calculated as follows:


 


Total budgeted
Capital Expenditures for the UPC France Companies (appearing in the
schedule attached in Appendix 4.5 to this Schedule 2.6), excluding
budgeted Capital Expenditures related to customer acquisitions, for the period
from January 1, 2004 through the Reference Date;


 


Less Actual Capital
Expenditures for the UPC France Companies, excluding actual Capital
Expenditures related to customer acquisitions, for the period from
January 1, 2004 through the Reference Date;


 


provided such
difference is greater than zero.


 


5.                                      CLOSING DATE BUYER NET DEBT


 


1.                                       “Closing Date Buyer Net Debt” means Closing Date Buyer Gross
Debt less Buyer Cash.


 


2.                                       “Closing Date Buyer Gross Debt” means the following as at
Closing and without duplication, and excluding Noos Financial Debt and UPC
France Financial Debt (which are separately adjusted for as provided above):


 


2.1                                 All outstanding loans and open accounts and bank account overdrafts
of Buyer, whether a current liability or a long-term liability.


 


2.2                                 All obligations of Buyer evidenced by a note, bond, debenture,
guaranty or similar instrument.


 


3.                                       “Buyer Cash” means cash and cash equivalents on hand within
Buyer and its subsidiaries at Closing, but only if and to the extent that such
cash is not taken into account in calculating the Noos Working Capital
Adjustment Amount or the UPC France Working Capital Adjustment Amount.


 


4.                                       The new intergroup financing that is contemplated to be made by the
UPC Group to Buyer at Closing shall bear interest at EURIBOR plus 5.5% per
annum.


 


6.                                      BUDGETS


 


The respective
detailed 2004 budgets for the Companies and the UPC France Companies are
attached at Schedule C and to this Schedule 2.6 respectively.


 


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