EX-10 9 exh10_7.txt EXH. 10.7 EXHIBIT 10.7 ------------ May 16, 2001 United International Properties, Inc. 4643 South Ulster Street; Suite 1300 Denver, Colorado 80237 Austar United Communications Limited N.V. Level 29 AAP Centre 259 George Street Sydney, New South Wales Australia, 2000 Re: Exercise and sale of options to pay promissory notes (non-purpose credit) Ladies and Gentlemen: The undersigned, John F. Riordan ("Borrower"), has executed and delivered the following promissory notes (the "Notes") to United International Properties, Inc. ("Lender"): (a) that Promissory Note (Non-Purpose Credit), dated November 22, 2000, in the principal amount of US$1,800,000; and (b) that Promissory Note (Non-Purpose Credit), dated January 29, 2001, in the principal amount of US$1,200,000; and (c) that Promissory Note (Non-Purpose Credit), dated April 4, 2001, in the principal amount of US$3,500,000, which Notes are secured by, among other things, vested stock options and phantom stock options (the "Options") granted to Borrower by Austar United Communications Limited N.V. (the "Company"). In addition, the Notes provide for the termination of the Options (as defined below) at the Lender's option upon the occurrence of certain defaults under the Notes. Borrower has delivered to the Lender an undated option exercise notice executed in blank by Borrower (the "Exercise Letter"), pursuant to which the Lender may cause Borrower to exercise some or all of the Options and direct the Company to sell such Options and apply the proceeds: (a) first to the payment of the option exercise price; (b) next to pay any required withholding of income, employment and other taxes with respect to the exercise of such Options; and (c) next to the payment of the Notes. 1. AUTHORIZATION AND INSTRUCTION OF BORROWER. (a) Borrower hereby authorizes the Lender to complete and date the Exercise Letter and submit the Exercise Letter to the Company at any time for purposes of causing Borrower to exercise some or all of the Options. (b) Borrower hereby authorizes and instructs the Company: (i) to accept the Exercise Letter when submitted by the Lender to the Company; (ii) to sell the shares of stock covered by the Options exercised pursuant to the Exercise Letter and apply the proceeds of such sale as described in the Exercise Letter, including, without limitation, to remit the proceeds of the sale to Lender as described in Section 3 of the Exercise Letter; and (iii) to cancel those Options granted to Borrower that are specified by the Lender in the Default Notice (as defined below). 2. AGREEMENT OF THE COMPANY. The Company hereby agrees: (i) to accept the Exercise Letter when submitted by the Lender; (ii) to sell the shares covered by the Options described in the Exercise Letter when submitted by the Lender and apply the proceeds of such a sale as described in the Exercise Letter; and (iii) upon receipt by the Company of a written notice (a "Default Notice") from the Lender which states that Borrower is in default under one or more of the Notes, to cancel those Options granted to Borrower that are specified by the Lender in the Default Notice as authorized in Section 1(b) above. Upon receipt by the Company of any request from Borrower regarding an exercise of Options, the Company further agrees to sell the shares covered by such Options and apply the proceeds of such a sale as set forth in this letter agreement as if the Lender had delivered an Exercise Notice to the Company. 3. AGREEMENT OF LENDER. Lender agrees: (a) to accept the proceeds of the sale remitted by the Company to Lender pursuant to Section 2 above; (b) to apply such proceeds towards payment of outstanding amounts owing under the Notes; and (c) to remit to Borrower any remaining proceeds after application to payment in full of all outstanding amounts owing under the Notes. 4. MISCELLANEOUS. This letter agreement constitutes the entire understanding between the parties with respect to the subject matter contained herein and supersedes all prior discussions or prior agreements and understandings relating to such subject matter. This letter agreement can not be altered or amended, nor any rights hereunder be waived, except by an instrument in writing and executed by the party or parties to be charged with such amendment or waiver. This letter agreement shall be binding upon the parties hereto and, except as otherwise prohibited, their respective successors and assigns. This letter agreement may be delivered by facsimile or similar transmission and shall be valid as an effective and binding agreement. This letter agreement shall be governed by and construed in accordance with the laws of the State of Colorado, without giving effect to any conflict of laws provisions thereof. This letter agreement may be executed in counterparts and shall become operative when each party has executed and delivered at least one counterpart. [REMAINING PORTION OF PAGE INTENTIONALLY LEFT BLANK] 2 Very truly yours, JOHN F. RIORDAN By: /s/ John F. Riordan --------------------------------------- Date: 5-16-01 ------------------------------------- AGREED TO AND ACCEPTED this 16 day of May, 2001 UNITED INTERNATIONAL PROPERTIES, INC. By: /s/ Ellen P. Spangler ------------------------------------------------- Name: Ellen P. Spangler ----------------------------------------------- Title: Vice President ---------------------------------------------- AGREED TO AND ACCEPTED this 16 day of May, 2001 AUSTAR UNITED COMMUNICATIONS LIMITED N.V. By: /s/ John C. Porter ------------------------------------------------- Name: John C. Porter ----------------------------------------------- Title: Director/CEO ---------------------------------------------- 3