Exhibit C
AMENDED STOCK PURCHASE AND MERGER AGREEMENT
DATED AS OF
NOVEMBER 26, 1997
BETWEEN
TESCORP ACQUISITION CORPORATION,
A WHOLLY OWNED SUBSIDIARY OF
SUPERCANAL HOLDING S.A.,
AND
TESCORP, INC.
TABLE OF CONTENTS
Page
ARTICLE I
STOCK PURCHASE
1.1 Purchase of Stock. . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Deposit. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Stock Purchase Closing . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II
THE TENDER OFFERS
2.1 The Offers . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2 Company Action . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE III
THE MERGER
3.1 Agreement to Effect Merger . . . . . . . . . . . . . . . . . . 8
3.2 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.3 Certificate of Incorporation . . . . . . . . . . . . . . . . . 8
3.4 By-Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.5 Directors. . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.6 Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.7 Stock of the Company . . . . . . . . . . . . . . . . . . . . . 9
3.8 Stock of Acquisition . . . . . . . . . . . . . . . . . . . . . 10
3.9 Stockholders Meeting . . . . . . . . . . . . . . . . . . . . . 10
3.10 Voting by Acquisition. . . . . . . . . . . . . . . . . . . . . 11
3.11 Dissenting Shares. . . . . . . . . . . . . . . . . . . . . . . 11
3.12 Payment for Shares . . . . . . . . . . . . . . . . . . . . . . 12
3.13 Options and Warrants . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE IV
EFFECTIVE TIME OF MERGER
4.1 Date of the Merger . . . . . . . . . . . . . . . . . . . . . . 14
4.2 Execution of Certificates of Merger. . . . . . . . . . . . . . 14
4.3 Effective Time of the Merger . . . . . . . . . . . . . . . . . 15
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
5.1 Organization and Qualification; Subsidiaries . . . . . . . . . 15
5.2 Certificate of Incorporation and By-Laws . . . . . . . . . . . 16
5.3 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . 16
5.4 Authority Relative to this Agreement . . . . . . . . . . . . . 18
5.5 No Conflict; Required Filings and Consents . . . . . . . . . . 19
5.6 Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . 20
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5.7 SEC Reports; Financial Statements. . . . . . . . . . . . . . . 20
5.8 Absence of Certain Changes . . . . . . . . . . . . . . . . . . 21
5.9 No Undisclosed Liabilities . . . . . . . . . . . . . . . . . . 22
5.10 Absence of Litigation. . . . . . . . . . . . . . . . . . . . . 22
5.11 Benefit Plans. . . . . . . . . . . . . . . . . . . . . . . . . 23
5.12 Transactions with Certain Persons. . . . . . . . . . . . . . . 24
5.13 Labor Matters. . . . . . . . . . . . . . . . . . . . . . . . . 25
5.14 Proxy Statement/Prospectus . . . . . . . . . . . . . . . . . . 25
5.15 Restrictions on Business Activities. . . . . . . . . . . . . . 26
5.16 Title to Property. . . . . . . . . . . . . . . . . . . . . . . 26
5.17 CATV Systems, Subscribers. . . . . . . . . . . . . . . . . . . 26
5.18 Franchises, Licenses, Permits, etc.. . . . . . . . . . . . . . 27
5.19 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.20 Environmental Matters. . . . . . . . . . . . . . . . . . . . . 32
5.21 Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . 34
5.22 Intellectual Property. . . . . . . . . . . . . . . . . . . . . 34
5.23 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . 36
5.24 Accounts Receivable. . . . . . . . . . . . . . . . . . . . . . 36
5.25 Full Disclosure. . . . . . . . . . . . . . . . . . . . . . . . 36
5.26 Fairness Opinion . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF ACQUISITION
6.1 Organization and Qualification; Subsidiaries . . . . . . . . . 37
6.2 Constituent Documents. . . . . . . . . . . . . . . . . . . . . 37
6.3 Authority Relative to this Agreement and the Guarantee . . . . 37
6.4 No Conflict. . . . . . . . . . . . . . . . . . . . . . . . . . 38
6.5 Ownership of Acquisition; No Prior Activities. . . . . . . . . 39
6.6 Accuracy of Materials. . . . . . . . . . . . . . . . . . . . . 40
6.7 Availability of Funds. . . . . . . . . . . . . . . . . . . . . 41
6.8 No Supercanal Shareholder Suits. . . . . . . . . . . . . . . . 41
ARTICLE VII
ACTIONS PRIOR TO THE MERGER
7.1 Activities Until Effective Time. . . . . . . . . . . . . . . . 42
7.2 Redemption of 10% Preferred Stock. . . . . . . . . . . . . . . 44
7.3 No Solicitation of Offers; Notice of Indications of Interest . 44
7.4 Efforts to Fulfill Conditions. . . . . . . . . . . . . . . . . 46
7.5 Indemnification and Insurance. . . . . . . . . . . . . . . . . 46
7.6 Board Representation . . . . . . . . . . . . . . . . . . . . . 48
7.7 Options and Warrants . . . . . . . . . . . . . . . . . . . . . 49
7.8 Use of Proceeds of Sale of Purchased Common Stock. . . . . . . 50
7.9 Purchase of KTV. . . . . . . . . . . . . . . . . . . . . . . . 50
7.10 Satisfaction of Subsidiary Debt. . . . . . . . . . . . . . . . 50
7.11 Ownership of Subsidiaries. . . . . . . . . . . . . . . . . . . 51
8.1 Conditions to the Company's Obligations. . . . . . . . . . . . 51
8.2 Conditions to Acquisition's Obligations. . . . . . . . . . . . 52
ARTICLE IX
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TERMINATION
9.1 Right to Terminate . . . . . . . . . . . . . . . . . . . . . . 54
9.2 Manner of Terminating Agreement. . . . . . . . . . . . . . . . 54
9.3 Termination due to Superior Proposal.. . . . . . . . . . . . . 54
9.4 Effect of Termination. . . . . . . . . . . . . . . . . . . . . 56
ARTICLE X
ABSENCE OF BROKERS
10.1 Representations and Warranties Regarding Brokers and Others. . 57
ARTICLE XI
GENERAL
11.1 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
11.2 Company Option to Repurchase Stock . . . . . . . . . . . . . . 58
11.3 Purchase of Minority Interests . . . . . . . . . . . . . . . . 59
11.4 Payment to Company . . . . . . . . . . . . . . . . . . . . . . 59
11.5 Retention Payments . . . . . . . . . . . . . . . . . . . . . . 59
11.6 Access to Properties, Books and Records. . . . . . . . . . . . 60
11.7 Press Releases . . . . . . . . . . . . . . . . . . . . . . . . 60
11.8 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . 61
11.9 Effect of Disclosures. . . . . . . . . . . . . . . . . . . . . 62
11.10 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
11.11 Prohibition Against Assignment . . . . . . . . . . . . . . . . 62
11.12 Third Party Beneficiaries. . . . . . . . . . . . . . . . . . . 62
11.13 Notices and Other Communications . . . . . . . . . . . . . . . 62
11.14 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . 64
11.15 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . 64
11.16 Consent to Jurisdiction and Service of Process . . . . . . . . 64
11.17 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . 64
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AMENDED STOCK PURCHASE AND MERGER AGREEMENT
This is an Agreement dated as of November 26, 1997 between TESCORP
ACQUISITION CORPORATION ("Acquisition"), a Delaware corporation and a wholly
owned subsidiary of Supercanal Holding, S.A., ("Supercanal"), an Argentine
corporation, and TESCORP, INC. (the "Company"), a Texas corporation, which,
subject to the provisions of Paragraph 11.8(b), amends and restates a Stock
Purchase and Merger Agreement (the "Original Agreement') dated as of September
16, 1997, between Acquisition and the Company.
ARTICLE I
STOCK PURCHASE
1.1 Purchase of Stock. At the Initial Purchase Closing described
in Paragraph 1.3, Acquisition will purchase from the Company, and the Company
will sell to Acquisition, 6,006,006 shares (the "Purchased Common Stock") of
common stock, par value $.02 per share, of the Company ("Common Stock") for a
total of $20,000,000 (the "Common Stock Purchase Price").
1.2 Deposit. (a) Simultaneously with the execution of the Original
Agreement, Acquisition delivered $5 million (the "Deposit") to the Company. If
the Purchase Closing takes place, the Company will retain the Deposit as part of
the payment of the Common Stock Purchase Price. If the Purchase Closing does
not take place, other than because one or more of the conditions specified in
Paragraph 8.2 is not fulfilled (other than because the condition in Paragraph
8.2(d) is not fulfilled due to an order entered by a court in a suit or
proceeding instituted by a shareholder of Supercanal or an affiliate of a
shareholder of Supercanal (a "Supercanal Shareholder Suit"), or because this
Agreement is terminated under Paragraph 9.1 or 9.2 (other than Paragraph 9.1(d),
and other than clause (ii) of Paragraph 9.1(e) due to an order entered by a
court in a Supercanal Shareholder Suit), on the Stock Purchase Closing Date
described in Paragraph 1.3, the Company will return the Deposit to Acquisition.
If the Purchase Closing does not take place (i) because of a default by
Acquisition, (ii) because a condition specified in Paragraph 8.1 is not
fulfilled (unless that condition is also a condition specified in Paragraph 8.2
and is not due to an order of a court entered in a Supercanal Shareholder Suit)
or (iii) because this Agreement is terminated under Paragraph 9.1(d) or under
clause (ii) of Paragraph 9.1(e) due to an order entered by a court in a
Supercanal Shareholder Suit, the Deposit will be retained by the Company.
1.3 Stock Purchase Closing. (a) The closing of the Purchase of
the Purchased Stock, (the "Purchase Closing") will take place at the offices of
Xxxxxx & Xxxxx, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, at 10:00 a.m. New York City
time on December 5, 1997 (the "Stock Purchase Closing Date").
(b) At the Purchase Closing, Acquisition will deliver to the
Company the following:
(i) Evidence of a wire transfer to an account specified by
the Company at least 24 hours before the Purchase Closing of $15,000,000.
(ii) A letter in which Acquisition acknowledges that it will
be acquiring the Purchased Common Stock for investment, and not with a view to
its resale or distribution.
(iii) A copy, executed by Supercanal, of a Programming Purchase
Agreement (the "Programming Agreement") substantially in the form of Exhibit
1.3-B(4).
(c) At the Purchase Closing, the Company will deliver to
Acquisition the following:
(i) Certificates, registered in the name of Acquisition (or,
at Acquisition's election, registered in the name of Supercanal or another
wholly owned subsidiary of Supercanal which agrees to be bound by Paragraphs 3.1
and 3.10) representing all the Purchased Common Stock.
(ii) Evidence that the actions described in Paragraph 7.6 have
been taken and that the persons designated by Acquisition have been elected to
serve as directors of Acquisition from and after the Purchase Closing.
(iii) A copy, executed by the Company, of the Programming
Agreement.
(iv) A document, executed by the Company, stating that the
Deposit has been applied to pay a portion of the purchase price for the
Purchased Common Stock, and that the purchase price of the Purchased Common
Stock has been paid in full.
(v) A copy, executed by the Company, of a Registration
Agreement (the "Registration Agreement") substantially in the form of Exhibit
1.3-C(5).
(d) The certificates representing the Purchased Common Stock may
bear legends to the effect that the shares represented by those certificates
have not been registered under the Securities Act of 1933, as amended, and may
not be sold or transferred other than in transactions registered under that Act
or which are exempt from the registration requirements of that Act.
ARTICLE II
THE TENDER OFFERS
2.1 The Offers. (a) Not later than December 5, 1997, Acquisition
will make a public announcement of (i) an offer (the
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"Common Stock Tender Offer") to purchase all the outstanding Common Stock for
$4.50 per share in cash and (ii) an offer (the "Preferred Stock Tender Offer"
and, together with the Common Stock Tender Offer, the "Tender Offers") to
purchase all the outstanding Series 1995 8% Preferred Stock of Tescorp ("8%
Preferred Stock") for a per share amount in cash equal to (x) $144, plus (y) an
amount equal to accrued dividends on a share of 8% Preferred Stock from the last
date on which dividends were paid to the Expiration Date (defined below).
(b) The Tender Offers will not expire until at least 20 business
days, and (except as provided in subparagraph (c)) the Tender Offers will expire
not more than 60 days, after the day on which a Schedule 14D-1 relating to the
Tender Offers (the "Schedule 14D-1") is filed with the Securities and Exchange
Commission ("SEC").
(c) Subject to the conditions to the Tender Offers set forth on
Exhibit 2.1-C, and the other conditions set forth in this Agreement,
Acquisition will, not later than five days after the date on which the Tender
Offers expire (the "Expiration Date") accept for payment and pay for all the
shares of Common Stock and 8% Preferred Stock which are properly tendered in
response to the Tender Officers and not withdrawn. The obligation of
Acquisition to accept for payment and pay for shares which are properly tendered
and not withdrawn prior to the Expiration Date will not be subject to any
conditions other than those set forth on Exhibit 2.1-C. Acquisition will not
(i) decrease the price per share of Common Stock or per share of 8% Preferred
Stock offered in the Tender Offers below that described in subparagraph (a),
(ii) decrease the number of shares being tendered for in the Tender Offers,
(iii) change the form of consideration payable in the Tender Offers, (iv) modify
or add to the conditions set forth on Exhibit 2.1-C or (v) extend the Tender
Offers to a date which is more than 60 days after the Tender Offers are
commenced, except that (w) if the Tender Offers are modified during the 60 day
period to increase the price per share payable in the Tender Offers or in any
other manner permitted by this Agreement, the Tender Offers may be extended
until 10 business days after the day on which the modification is communicated
to the Company's stockholders, (x) if anyone makes a tender offer for either the
Common Stock or the 8% Preferred Stock before the Tender Offers expire, the
Tender Offers may be extended until not more than 10 business days after the
other tender offer expires, (y) if Acquisition is prevented by an order of a
court or other governmental agency from accepting shares which are tendered, the
Tender Offers may be extended until 10 business days after Acquisition is able
to accept shares without violating any order of any court or other governmental
agency and (z) if the Minimum Condition described on Exhibit 2.1-C is not
satisfied during the 60 day period, the Tender Offers may be extended for up to
an additional 60 days to enable the Minimum Condition to be satisfied (and if,
although the Minimum Condition is not satisfied, at least 2,500,000 shares of
Common Stock and at least 35,000 shares of 8% Preferred Stock are properly
tendered and not withdrawn, Acquisition will extend the Tender Offers for at
least an additional 30 days to enable the Minimum Condition to be satisfied).
Acquisition reserves the right to increase the price per share of Common Stock
or per share of 8% Preferred Stock offered in the Tender Offers. If, when the
Tender Offers are scheduled to expire, the Minimum Condition has been satisfied
(assuming no subsequent withdrawals of shares
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which have been tendered), but the condition in paragraph (c) of Exhibit 2.1-C
has not been satisfied because of a non-final injunction, Acquisition will
extend the Tender Offers at least until the earliest of (A) the time all the
conditions on Exhibit 2.1-C are satisfied, (B) the time the injunction becomes
final and not appealable or (C) 90 days after the Schedule 14D-1 is filed with
the SEC. Subject to the terms and conditions of the Tender Offers, Acquisition
will accept all shares which are validly tendered in response to the Tender
Offers and not withdrawn and will pay for those shares as soon as practicable
after the Expiration Date.
(d) Within five business days after the public announcement of the
Tender Offers, Acquisition will file with the SEC a Tender Offer Statement on
Schedule 14D-1 with respect to the Tender Offers (together with any amendments
or supplements, the "Schedule 14D-1") including forms of an offer to purchase, a
letter of transmittal and a summary advertisement (the Schedule 14D-1 and the
documents included in it by which the Tender Offers will be made, as they may be
supplemented or amended, being the "Offer Documents"). Each of Acquisition and
the Company agrees promptly to correct any information provided by it for use in
the Offer Documents if and to the extent that information becomes incomplete or
inaccurate in any material respect, and Acquisition will supplement or amend the
Offer Documents to the extent required by applicable securities laws, file the
amended or supplemented Offer Documents with the SEC and, if required,
disseminate the amended Offer Documents to the Company's stockholders. The
Company and its counsel will be given a reasonable opportunity to review the
Offer Documents and all amendments and supplements to them before they are filed
with the SEC or disseminated to the Company's stockholders.
2.2 Company Action. (a) The Company hereby approves of and
consents to the Tender Offers and represents and warrants that its Board of
Directors (the "Board") has (i) determined that this Agreement and the
transactions contemplated by it are fair to and in the best interests of the
Company and its stockholders, (ii) approved this Agreement and the transactions
contemplated by it, including the sales of the Purchased Common Stock, the
Tender Offers and the Merger (described in Paragraph 3.1), and (iii) resolved to
recommend that the Company's stockholders accept the Tender Offers, tender their
shares in response to the Tender Offers, and approve and adopt this Agreement
and the Merger. Simultaneously with the execution of the Original Agreement,
each of the directors and executive officers of the Company agreed to tender his
or her shares of Common Stock and 8% Preferred Stock in response to the Tender
Offers or (in the case of directors and executive officers who might as a result
of their tenders incur liability under Section 16(b) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act") and who do not tender their shares)
to vote their shares in favor of the Merger. Those agreements remain in effect
notwithstanding the changes to the Original Agreement reflected in this
Agreement. Notwithstanding anything contained in this subparagraph (a) or
elsewhere in this Agreement, if the Board, after receiving advice from its
counsel, determines, in good faith, to withdraw, modify or amend the
recommendation, because the failure to do so could reasonably be expected to be
a breach of the directors' fiduciary duties under applicable law, that
withdrawal, modification or amendment will not constitute a breach of this
Agreement.
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(b) The Company will file with the SEC, promptly after Acquisition
files the Schedule 14D-1, a Solicitation/Recommendation Statement on Schedule
14D-9 (together with any amendments or supplements, the "Schedule 14D-9")
containing the recommendations described in subparagraph (a) and will
disseminate the Schedule 14D-9 as required by Rule 14d-9 under the Exchange Act
promptly after the commencement of the Tender Offers and the filing by
Acquisition of the Schedule 14D-1. The Company and Acquisition each agrees to
correct promptly any information provided by it for use in the Schedule 14D-9 if
and to the extent that information becomes incomplete or inaccurate in any
material respect and the Company will file any corrected Schedule 14D-9 with the
SEC and disseminate the corrected Schedule 14D-1 to the Company's stockholders
to the extent required by applicable federal securities laws.
(c) In connection with the Tender Offers, the Company will
promptly furnish Acquisition with mailing labels, security position listings and
any other available listing or computer files containing the names and addresses
of the record holders or beneficial owners of shares of Common Stock or 8%
Preferred Stock (together, "Shares") as of a recent date and the Company will
furnish Acquisition with such additional information and assistance (including,
without limitation, updated lists of stockholders, mailing labels and lists of
securities positions) as Acquisition or its agents may reasonably request in
order to communicate the Tender Offers to the record holders and beneficial
owners of the Common Stock and the 8% Preferred Stock. Subject to the
requirements of applicable law, Acquisition will hold in confidence the
information contained in any such labels, listings or files, and will use that
information only in connection with the Tender Offers and the Merger. If this
Agreement is terminated, Acquisition will return to the Company the originals
and all copies of that information in Acquisition's possession.
ARTICLE III
THE MERGER
3.1 Agreement to Effect Merger. If (a) Acquisition purchases
pursuant to the Tender Offers at least the minimum number of shares of Common
Stock and 8% Preferred Stock (the "Minimum Shares") required to satisfy the
Minimum Condition described on Exhibit 2.1-C (the "Minimum Condition") and (b)
the conditions to the Merger set forth in paragraphs 8.1 and 8.2 are satisfied
or waived, Acquisition will take all steps in its power, including voting all
Shares beneficially owned by it at a meeting of the Company's stockholders in
favor of approval of this Agreement, to cause Acquisition to be merged into the
Company (the "Merger") on the terms and with the effects set forth in Paragraphs
3.2 through 3.8.
3.2 The Merger. If Acquisition purchases at least the Minimum
Shares pursuant to the Tender Offers and the conditions of the Merger set forth
in paragraphs 8.1 and 8.2 are satisfied or waived, at the Effective Time
described in Article IV, Acquisition will be merged into the Company, which will
be the surviving corporation of the Merger (the "Surviving Corporation").
Except as specifically provided in this Agreement, the real and personal
property, other assets, rights, privileges, immunities, powers, purposes and
franchises of the Company will continue unaffected and
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unimpaired by the Merger. When the Merger becomes effective, the separate
existence of Acquisition will terminate, Acquisition's real and personal
property, other assets, rights, privileges, immunities, powers, purposes and
franchises will be merged into the Surviving Corporation, and the Merger will
have the other effects specified in Section 259 of the Delaware General
Corporation Law (the "DGCL") and Article 5.06 of the Texas Business Corporation
Act (the "TBCA").
3.3 Certificate of Incorporation. From the Effective Time until
subsequently amended, the Articles of Incorporation of the Surviving Corporation
will be in the form of Exhibit 3.3, and those Articles of Incorporation,
separate and apart from this Agreement, may be certified as the Articles of
Incorporation of the Surviving Corporation.
3.4 By-Laws. At the Effective Time, the By-Laws of the Surviving
Corporation will be in the form of Exhibit 3.4, until they are altered, amended
or repealed.
3.5 Directors. The persons listed on Exhibit 3.5 will be the
directors of the Surviving Corporation after the Effective Time and will hold
office in accordance with the By-Laws of the Surviving Corporation for the
respective terms shown on Exhibit 3.5.
3.6 Officers. The persons listed on Exhibit 3.6 will be the
officers of the Surviving Corporation after the Effective Time and will hold
office at the pleasure of the Board of Directors of the Surviving Corporation.
3.7 Stock of the Company. (a) Except as provided in subparagraph
(c), at the Effective Time each share of Common Stock which is outstanding
immediately before the Effective Time will be converted into and become the
right to receive $4.50 in cash, or any higher price per share paid with regard
to shares of Common Stock tendered in response to the Common Stock Tender Offer
(the "Common Stock Merger Price").
(b) Except as provided in subparagraph (c), at the Effective Time
each share of 8% Preferred Stock which is outstanding immediately before the
Effective Time will be converted into and become the right to receive in cash
the per share amount paid with regard to shares of 8% Preferred Stock tendered
in response to the Preferred Stock Tender Offer (except that if a dividend is
paid with regard to the 8% Preferred Stock between the Expiration Date and the
Effective Time, each share of Preferred Stock will be converted into and become
the right to receive $144 in cash without regard to any accrued but unpaid
dividends).
(c) Each share of Common Stock or 8% Preferred Stock held in the
treasury of the Company, and each share of Common Stock or 8% Preferred Stock
held by Acquisition or by any direct or indirect subsidiary of the Company,
immediately before the Effective Time will, at the Effective Time, be cancelled
and cease to exist and no payment will be made with respect to any such shares.
3.8 Stock of Acquisition. At the Effective Time, each share of
common stock, par value $.01 per share, of Acquisition ("Acquisition common
stock") which is outstanding immediately before the Effective Time will be
converted into and become one share of common stock
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of the Surviving Corporation ("Surviving Corporation Common Stock"). At the
Effective Time, a certificate which represented Acquisition common stock will
automatically become and be a certificate representing the number of shares of
Surviving Corporation Common Stock into which the Acquisition common stock
represented by the certificate was converted.
3.9 Stockholders Meeting. If Acquisition purchases the Minimum
Shares pursuant to the Tender Offers and if approval by the Company's
stockholders is required by applicable law in order to consummate the Merger,
the Company will:
(a) hold a special meeting of its stockholders as soon as
practicable following the Expiration Date for the purpose of adopting this
Agreement and approving the Merger (the "Stockholders Meeting");
(b) as promptly as practicable after the Expiration Date, (i) file
with the SEC a proxy statement (the "Proxy Statement") and other proxy
soliciting materials relating to the Stockholders Meeting, (ii) respond promptly
to any comments made by the SEC with respect to the Proxy Statement or other
proxy soliciting materials, (iii) cause the Proxy Statement to be mailed to its
stockholders at the earliest practicable time following the Expiration Date, and
(iv) in all other respects, use its best efforts to cause its stockholders to
adopt this Agreement and approve the Merger;
(c) include in the Proxy Statement relating to the Stockholders
Meeting the recommendation of the Board that the stockholders of the Company
vote in favor of the adoption of this Agreement, unless the Board, after
receiving advice from its counsel, determines in good faith, that the failure to
amend or withdraw such recommendation could reasonably be expected to be a
breach of the directors' fiduciary duties under applicable law.
3.10 Voting by Acquisition. If Acquisition Purchases at least the
Minimum Shares pursuant to the Tender Offers, or waives the Minimum Condition
and purchases the shares which are properly tendered in response to the Tender
Offers and not withdrawn, (a) Acquisition will not dispose of any of stock of
the Company until the earlier of the Effective Time or such time as this
Agreement is terminated (except to Supercanal or a subsidiary of Supercanal
which agrees to be bound by Paragraph 3.1 and this Paragraph) and (b)
Acquisition will vote all shares of Common Stock and 8% Preferred Stock which
Acquisition owns or otherwise has the power to vote in favor of the adoption of
this Agreement and approval of the Merger.
3.11 Dissenting Shares.(a) Notwithstanding any provision of this
Agreement to the contrary, Shares that are outstanding immediately prior to the
Effective Time which are held by stockholders who have complied with Article
5.12 of the TBCA (including filing a written objection to approval of the
Merger, not having voted in favor of the Merger or consented to it in writing
and having properly demanded payment of the fair value of those shares) will not
be converted into the right to receive the consideration described in Paragraph
3.2. Instead, if the Merger takes place,
7
the Surviving Corporation will pay the holders of those shares the fair value of
the shares determined as provided in Article 5.12 of the TBCA. Shares held by
stockholders who fail to perfect, or who otherwise withdraw or lose their rights
to receive the fair value of their shares determined under Article 5.12 of the
TBCA will, at the later of the Effective Time or the time they fail to perfect,
withdraw or lose, their rights to receive the fair value of their shares, be
deemed to have been converted into the right to receive the per share sum
described in Paragraph 3.7 (the "Merger Price") without any interest.
(b) The Company will promptly give Acquisition (i) notice of any
demands for appraisal received by the Company, any withdrawals of any such
demands, and any other instruments served pursuant to Article 5.12 of the TBCA
which are received by the Company and (ii) the opportunity to direct all
negotiations and proceedings with respect to demands for appraisal under the
TBCA. The Company will not, except with the prior written consent of
Acquisition, make any payment with respect to any demands for payment of the
fair value of shares or offer to settle or settle any such demand.
3.12 Payment for Shares. (a) Prior to the Effective Time,
Acquisition will designate a bank or trust company to act as Paying Agent in
connection with the Merger (the "Paying Agent"). At, or immediately prior to,
the Effective Time, Acquisition will provide the Paying Agent with the funds
necessary to make the payments contemplated by Paragraph 3.7. Until used for
that purpose, the funds will be invested by the Paying Agent, as directed by
Acquisition, in obligations of or guaranteed by the United States of America or
of any agency thereof and backed by the full faith and credit of the United
States of America, in commercial paper obligations rated A-1 or P-1 or better by
Xxxxx'x Investors Services Inc. or Standard & Poors' Corporation, respectively,
or in deposit accounts, certificates of deposit or banker's acceptances of,
repurchase or reverse repurchase agreements with, or Eurodollar time deposits
purchased from, commercial banks with capital, surplus and undivided profits
aggregating in excess of $200 million (based on the most recent financial
statements of such bank which are then publicly available at the SEC or
otherwise).
(b) Promptly after the Effective Time, the Surviving Corporation
will cause the Paying Agent to mail to each person who was a record holder of
Common Stock or 8% Preferred Stock at the Effective Time, a form of letter of
transmittal for use in effecting the surrender of stock certificates
representing Common Stock or 8% Preferred Stock ("Certificates") in order to
receive payment of the Merger Price. Upon surrender to the Paying Agent of a
Certificate, together with a properly completed and executed letter of
transmittal and any other required documents, the Paying Agent will pay to the
holder of the Certificate the Merger Price with regard to the shares represented
by the Certificate, and the Certificate will be cancelled. No interest will be
paid or accrued on the cash payable upon the surrender of Certificates. If
payment is to be made to a person other than the person in whose name a
surrendered Certificate is registered, the surrendered Certificate must be
properly endorsed or otherwise be in proper form for transfer, and the person
who surrenders the Certificate must provide funds for payment of any transfer or
other taxes required by reason of the
8
payment to a person other than the registered holder of the surrendered
Certificate or establish to the satisfaction of the Surviving Corporation that
the tax has been paid. After the Effective Time, a Certificate which has not
been surrendered will represent only the right to receive the Merger Price,
without any interest.
(c) At any time which is more than six months after the Effective
Time, the Surviving Corporation may require the Paying Agent to deliver to it
any funds which had been made available to the Paying Agent and have not been
disbursed to holders of Shares (including, without limitation, interest and
other income received by the Paying Agent in respect of the funds made available
to it), and after the funds have been delivered to the Surviving Corporation,
former stockholders of the Company must look to the Surviving Corporation for
the consideration to which they are entitled under Paragraph 3.7 upon surrender
of the Certificates held by them. Neither the Surviving Corporation nor the
Paying Agent will be liable to any former stockholder of the Company for any
Merger consideration which is delivered to a public official pursuant to any
abandoned property, escheat or similar law.
(d) After the Effective Time, no transfers of shares of Common
Stock or 8% Preferred Stock will be recorded on the stock transfer books of the
Company or the Surviving Corporation, and the stock ledger of the Company will
be closed. If, after the Effective Time, Certificates are presented for
transfer, they will be cancelled and treated as having been surrendered for the
Merger consideration.
3.13 Options and Warrants. To the extent that the Company has not
fulfilled prior to the Effective Time all the Company's obligations under all
options and warrants which are outstanding at the date of this Agreement, taking
account of changes in the options and warrants described in Paragraph 7.7(a),
the Surviving Corporation will fulfill those obligations. To the extent the
Surviving Corporation is required to pay cash due to exercise of an option or
warrant after the Effective Time, instead of requiring the exercising holder to
pay the exercise price, upon receiving a notice of exercise, the Surviving
Corporation will pay the holder the amount due on exercise minus the exercise
price.
ARTICLE IV
EFFECTIVE TIME OF MERGER
4.1 Date of the Merger. The day on which the Merger is to take
place (the "Merger Date") will be the third business day after the first day on
which all the conditions in Paragraphs 8.1(d) and (e) and 8.2(d) have been
satisfied or waived. The Merger Date may be changed with the consent of the
Company and Acquisition. For the purposes of this Paragraph, a "business day"
is a day on which certificates of merger may be filed with the Secretaries of
State of both Texas and Delaware.
4.2 Execution of Certificates of Merger. Not later than 3:00 P.M.
on the day before the Merger Date, (a) Acquisition
9
and the Company will each execute certificates of merger (the "Certificates of
Merger") substantially in the form of Exhibits 4.2(1) and 4.2(2) and deliver
them to Xxxxxx & Xxxxx for filing with the Secretaries of State of Texas and
Delaware. Xxxxxx & Xxxxx will be instructed that, if it is notified on the
Merger Date that all the conditions in Article VIII have been fulfilled or
waived, it is to cause the applicable Certificate of Merger to be filed with the
Secretary of State of Texas and to cause the applicable Certificate of Merger to
be filed with the Secretary of State of Delaware on the Merger Date or as soon
after that date as is practicable.
4.3 Effective Time of the Merger. The Merger will become
effective at 11:59 P.M. on the day when a Certificate of Merger has been filed
with the Secretary of State of Texas and a Certificate of Merger has been filed
with the Secretary of State of Delaware (that being the "Effective Time").
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Acquisition and to Supercanal
(to induce Supercanal to execute the Guaranty attached to this Agreement) that,
except as set forth in the written disclosure schedule delivered by the Company
to Acquisition (the "Company Disclosure Schedule"):
5.1 Organization and Qualification; Subsidiaries. Each of the
Company and each of its subsidiaries is a corporation, partnership, sociedad
anonima, limited liability company or sociedad de responsabilidad limitada duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has the requisite power and authority and
is in possession of, and in compliance with, all franchises, grants,
authorizations, licenses, permits, easements, variances, consents, certificates,
approvals, exemptions and orders ("Approvals") necessary to enable it to own,
lease and operate the properties it purports to own, lease or operate and to
carry on its business as it is now being conducted and as proposed to be
conducted, except where the failure to have such Approvals could not reasonably
be expected to have a Material Adverse Effect on the Company. Each of the
Company and each of its subsidiaries is duly qualified or licensed as a foreign
corporation to do business, and is in good standing, in each jurisdiction where
the character of the properties owned, leased or operated by it or the nature of
its activities makes such qualification or licensing necessary, except for such
failures to be so duly qualified or licensed and in good standing that could not
reasonably be expected to have a Material Adverse Effect on the Company. A true
and complete list of all of the Company's subsidiaries, together with the
jurisdiction of incorporation of each subsidiary and the percentage of each
subsidiary's outstanding capital stock owned by the Company or another
subsidiary is set forth in the Company Disclosure Schedule. Except as set forth
in the Company Disclosure Schedule and except for interests in subsidiaries of
the Company, neither the Company nor any of its subsidiaries owns, directly or
indirectly, any interest or investment (whether equity or debt) in any
corporation, partnership,
10
limited liability company, joint venture, business, trust or entity. For the
purposes of this Agreement, a "Material Adverse Effect" upon a company is a
material adverse change in the financial condition, operating results, business
or prospects of that company and its subsidiaries taken together.
5.2 Certificate of Incorporation and By-Laws. The Company has
heretofore furnished to Acquisition or Supercanal a complete and correct copy of
its Articles of Incorporation and By-Laws, and has furnished or made available
to Acquisition or Supercanal the Articles of Incorporation and By-Laws (or
equivalent organizational documents) of each of its subsidiaries (the
"Subsidiary Documents"). Those Articles of Incorporation, By-Laws and
Subsidiary Documents are listed on the Company Disclosure Schedule, are in full
force and effect and have not been amended. Except as disclosed in the Company
Disclosure Schedule, neither the Company nor any of its subsidiaries is in
violation of any of the provisions of its Articles of Incorporation or By-Laws
or Subsidiary Documents.
5.3 Capitalization. The authorized capital stock of the Company
consists of 50,000,000 shares of Common Stock and 5,000,000 shares of Preferred
stock, of which 704,684 shares have been designated 1990 10% Preferred Stock
("10% Preferred Stock") and 200,000 shares have been designated 8% Preferred
Stock. As of August 15, 1997, 13,189,785 shares of Company Common Stock,
693,864 shares of 10% Preferred Stock, and 139,250 shares of 8% Preferred Stock
were issued and outstanding, all of which were duly authorized, validly issued,
fully paid and non-assessable, and no shares of capital stock were held in
treasury or held by subsidiaries of the Company. The Company Disclosure
Schedule sets forth each beneficial owner (as that term is defined for purposes
of the Exchange Act) of 5% or more of any class of capital stock of the Company
known to the Company and Section 5.3 of the Company Disclosure Schedule contains
a true and complete list of all affiliates of the Company (as defined in Rule
405 under the Securities Act). Except as set forth in the Company Disclosure
Schedule, there are no options, warrants or other rights, agreements,
arrangements or commitments of any character relating to the issued or unissued
capital stock of the Company or any of its subsidiaries or obligating the
Company or any of its subsidiaries to issue, sell or transfer (currently or upon
the passage of time, the payment of money or the occurrence of any other event)
any shares of capital stock of, or other equity interests in, the Company or any
of its subsidiaries. All shares of Common Stock which the Company is or may
become obligated to issue (including, but not limited to, the Purchased Common
Stock will be, when they are issued, duly authorized, validly issued, fully paid
and nonassessable. The Company Disclosure Schedule sets forth an accurate and
complete list of (a) each optionee under the Employee Options and the number of
shares of Common Stock issuable upon exercise of those Employee Options and (b)
each holder of record of warrants to purchase stock of the Company ("Company
Warrants"), and the number of shares of Common Stock issuable upon exercise of
the Company Warrants held by each holder. Other than the Employee Options and
Company Warrants there are no obligations contingent or otherwise, of the
Company or any of its subsidiaries to repurchase, redeem or otherwise acquire
any shares of capital stock of the Company or any of its subsidiaries or to
provide funds to or make any investment (in the form of a loan, capital
contribution or otherwise) in any subsidiary or any other entity. Except as set
forth in the
11
Company Disclosure Schedule, all of the outstanding shares of capital stock of
each of the Company's subsidiaries are duly authorized, validly issued, fully
paid and nonassessable, and all those shares are owned by the Company or another
subsidiary free and clear of all security interests, liens, claims, pledges,
agreements, limitations on the Company's voting rights, charges or other
encumbrances of any nature whatsoever. There are no preemptive rights with
respect to any capital stock of the Company or any capital stock of any of its
subsidiaries or any agreements, arrangements or understandings to grant
preemptive rights with respect thereto. When issued and sold as provided in
this Agreement, the Purchased Common Stock will be duly authorized, validly
issued, fully paid and nonassessable and free from any claims (including claims
to preemptive rights) of any persons.
5.4 Authority Relative to this Agreement. The Company has all
necessary corporate power and authority to execute and deliver this Agreement
and to perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by the
Company and the consummation by the Company of the transactions contemplated
hereby have been duly and validly authorized by all necessary corporate action
(including approval by the Company's Board of Directors which satisfies the
requirement of Article 13.03(1) of the TBCA), and no other corporate proceedings
on the part of the Company are necessary to authorize this Agreement or to
consummate the transactions so contemplated (other than approval of the Merger
Agreement by the Company's stockholders). This Agreement has been duly and
validly executed and delivered by the Company and, assuming the due
authorization, execution and delivery of this Agreement by Acquisition and due
authorization, execution and delivery of the Guaranty by Supercanal, constitutes
a legal, valid and binding obligation of the Company enforceable against the
Company in accordance with its terms, except as the enforceability thereof may
be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or other laws relating to the enforcement of creditors' rights
generally and by general principles of equity.
5.5 No Conflict; Required Filings and Consents. (a) Except as set
forth in the Company Disclosure Schedule, the execution and delivery of this
Agreement by the Company does not, and the performance of this Agreement by the
Company will not, (i) conflict with or violate the Certificate of Incorporation
or By-Laws of the Company or any of the Subsidiary Documents, (ii) conflict with
or violate any law, rule, regulation, order, judgment or decree applicable to
the Company or any of its subsidiaries or by which its or any of their
respective properties is bound or affected, or (iii) result in any breach of or
constitute a default (or an event that with notice or lapse of time or both
would become a default) under, or impair the Company's or any of its
subsidiaries' rights or alter the rights or obligations of any third party
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or encumbrance on any of
the properties or assets of the Company or any of its subsidiaries pursuant to,
any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which the Company or any
of its subsidiaries is a party or by which the Company or any of its
subsidiaries or its or any of their respective properties is bound or affected.
12
(b) Except as disclosed in the Company Disclosure Schedule, the
execution and delivery of this Agreement by the Company does not, and the
performance of this Agreement by the Company will not, require any consent,
approval, authorization or permit of, or filing with or notification to, any
governmental or regulatory authority in the United States, the Republic of
Argentina ("Argentina") or elsewhere (a "Governmental Entity"), except for (i)
applicable requirements with respect to the Proxy Statement under the Exchange
Act, and the rules and regulations thereunder, (ii) the filing and recordation
of appropriate merger or other documents, including, without limitation, the
filing of a final franchise tax return with the Texas State Comptroller's
Office, as required by the DGCL and the TBCA, (iii) applicable filing and
waiting period requirements under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended (the "HSR Act"), and (iv) such filings, authorizations,
orders and approvals (the "Comfer Approvals") as may be required under Argentine
Law No. 22,285 passed on September 15, 1980, as amended by Decree 286, passed on
February 18, 1991 (the "Broadcasting Law") from the Comite Federal de
Radiodifusion ("Comfer"), the Argentine Governmental Entity responsible for
administering the Broadcasting Law, and with and of provincial and local
governmental authorities, including provincial and local Governmental Entities
granting franchises to operate cable systems (the "Local Approvals"). The
filing required to have been made by the Company under the HSR Act has been made
and the waiting periods under the HSR Act have been terminated.
5.6 Compliance. Except as disclosed in the Company Disclosure
Schedule, neither the Company nor any of its subsidiaries is in conflict with,
or in default or violation of, (i) any law, rule, regulation, order, judgment or
decree applicable to the Company or any of its subsidiaries or by which its or
any of their respective properties is bound or affected, or (ii) any agreement
or other obligation to which the Company or any of its subsidiaries is a party
or by which the Company or any of its subsidiaries or its or any of their
respective properties is bound or affected, except in the case of both clauses
(i) and (ii) for any conflicts, defaults or violations which could not
reasonably be expected to have individually or in the aggregate a Material
Adverse Effect on the Company.
5.7 SEC Reports; Financial Statements. (a) The Company has filed
all reports and documents required to be filed with the SEC and has heretofore
delivered to Acquisition or Supercanal, in the form filed with the SEC, (i) its
Annual Report on Form 10-KSB for the fiscal year ended Xxxxx 00, 0000, (xx) its
Quarterly Reports on Form 10-Q for the period ended September 30, 1997, (iii)
all other reports or registration statements filed by the Company with the SEC
since March 31, 1997, and (iv) all amendments and supplements to all such
reports and registration statements filed by the Company with the SEC (the
documents described in clauses (i)-(iv) being collectively, the "SEC Reports").
Each of the SEC Reports (i) was prepared in accordance with the requirements of
the Exchange Act, and (ii) did not at the time it was filed (or if it was
amended or superseded by a subsequent filing, then on the date of such
subsequent filing) contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.
13
(b) Each of the financial statements (including, in each case, any
related notes thereto) contained in the SEC Reports has been prepared in
accordance with generally accepted accounting principles in the United States
("US GAAP") applied on a consistent basis throughout the periods involved
(except as may be indicated in the notes to the financial statements) and each
of them fairly presents in all material respects the consolidated financial
position of the Company and its subsidiaries as at the respective dates of the
financial statements and the consolidated results of its operations and cash
flows for the periods indicated, except that the unaudited interim financial
statements were or are subject to normal, recurring year-end adjustments.
5.8 Absence of Certain Changes or Events. Except as set forth in
the Company Disclosure Schedule or as expressly contemplated by this Agreement,
since June 30, 1997 each of the Company and its subsidiaries has conducted its
business in the ordinary course and there has not occurred: (a) any events or
occurrences which, individually or in the aggregate, have had a Material Adverse
Effect on the Company; (b) any material damage to, destruction or loss of any
material asset of the Company or any of its subsidiaries (whether or not covered
by insurance); (c) any change by the Company or any of its subsidiaries in its
accounting policies, practices or methods; (d) any material revaluation by the
Company or any of its subsidiaries of any of its assets, including without
limitation, writing down the value of inventory or writing off notes or accounts
receivable other than in the ordinary course of business in amounts consistent
with prior periods; (e) any sale of a material amount of property or assets; (f)
any declaration, setting aside or, except as required by the terms of the 8%
Preferred Stock or the 10% Preferred Stock as in effect on the date hereof,
payment of any dividend or distribution in respect of any stock of the Company
or any redemption, purchase or other acquisition of its securities by the
Company or an of its Subsidiaries; or (g) any entering into, establishment or
amendment of, any Plan (as hereinafter defined), any granting of stock options,
stock appreciation rights, performance awards or restricted awards, or any other
increase (other than ordinary course increases) in compensation payable or to
become payable to any officers or key employees of the Company or any of its
subsidiaries.
5.9 No Undisclosed Liabilities. Except as set forth in the
Company Disclosure Schedule, neither the Company nor any of its subsidiaries has
any material liabilities (absolute, accrued, contingent or otherwise) except
liabilities (a) in the aggregate adequately provided for in the Company's
audited balance sheet (including any related notes thereto) as of March 31, 1997
(the "1997 Balance Sheet") or the Company's unaudited interim balance sheet
(including any related notes thereto) as of September 30, 1997 (the "Interim
Balance Sheet"), included in the SEC Reports, (b) incurred in the ordinary
course of business and not required under US GAAP to be reflected on the 1997
Balance Sheet, (c) incurred since September 30, 1997 in the ordinary course of
business and not in violation of any provision of this Agreement, or (d)
incurred in connection with this Agreement.
5.10 Absence of Litigation. Except as set forth in the Company
Disclosure Schedule, there are no claims, actions, suits, proceedings or
investigations pending or, to the knowledge of the Company, threatened against
the Company or any of its subsidiaries, or any properties
14
or rights of the Company or any of its subsidiaries, before any court,
arbitrator or administrative, governmental or regulatory authority or body,
domestic or foreign, that could reasonably be expected to have a Material
Adverse Effect on the Company.
5.11 Benefit Plans. All Company Benefit Plans are listed in the
Company Disclosure Schedule, and copies of all documentation relating to such
Company Benefit Plans have been delivered or made available to Parent. Except
as disclosed in the Company Disclosure Schedule: (a) each Company Benefit Plan
and the administration thereof complies, and has at all times complied in all
material respects with the requirements of all applicable law, including ERISA
and the Code; (b) no Company Benefit Plan is intended to qualify under Section
401(a) of the Code; (c) neither the Company nor any of its subsidiaries is now,
nor at any time has been, a member of a controlled group, as defined in Section
412(n)(6)(B) of the Code, with any other enterprise; (d) neither the Company nor
any of its subsidiaries presently maintains or contributes to, nor at any time
has maintained or contributed to, any single-employer plan (within the meaning
of Section 3(41) of ERISA) or any multi-employer plan (within the meaning of
Section 3(37) of ERISA) subject to Title IV of ERISA, and there are no
circumstances pursuant to which the Company or any of its subsidiaries could
have liability to any party under Title IV of ERISA; (e) neither the Company nor
any of its subsidiaries has incurred any liability for any tax imposed under
Sections 4971 through 4980B of the Code or civil liability under Section 502(i)
or (1) of ERISA; (f) no Company Benefit Plan provides health or death benefit
coverage beyond the termination of an employee's employment, except as required
by Part 6-of Subtitle B of Title I of ERISA or Section 4980B of the Code; (g) no
suits, actions or other litigation (excluding claims for benefits incurred in
the ordinary course of plan activities) have been brought against or with
respect to any Company Benefit Plan; and (h) all contributions to Company
Benefit Plans required to be made under such Company Benefit Plans have been
made, and all benefits accrued under any unfunded Company Benefit Plan have been
paid, accrued or otherwise adequately reserved in accordance with US GAAP as of
such date and the Company and each of its subsidiaries has performed all
material obligations required to be performed by it under all Company Benefit
Plans.
As used in this Agreement:
"Code" means the Internal Revenue Code of 1986, as amended, and the
regulations promulgated thereunder.
"Company Benefit Plan" means any Plan established by the Company, any
subsidiary of the Company or any predecessor or affiliate of the Company or of
any subsidiary of the Company, existing on the date hereof or prior thereto, to
which the Company or any subsidiary of the Company contributes or has
contributed, or under which any employee, former employee or director of the
Company or any subsidiary of the Company or any beneficiary thereof is covered,
is eligible for coverage or has benefit rights.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder.
15
"Plan" means any bonus, incentive compensation, deferred compensation,
pension, profit sharing, retirement, stock purchase, stock option, stock
ownership, stock appreciation rights, phantom stock, leave of absence, layoff,
vacation, day or dependent care, legal services, cafeteria, life, health,
accident, disability, workmen's compensation or other insurance, severance,
separation or other employee benefit plan, practice, policy or arrangement of
any kind, whether written or oral, whether for the benefit of a single
individual or more than one individual, including, but not limited to, any
"employee benefit plan" within the meaning of Section 3(3) of ERISA.
5.12 Transactions with Certain Persons. Except as set forth in the
Company Disclosure Schedule or disclosed in a SEC Report, no officer, director
or employee of the Company or any of its subsidiaries nor any member of any such
person's immediate family is presently, or within the past two years has been, a
party to any transaction with the Company or any of its subsidiaries where the
fair market value of the amount involved in such transaction exceeded US$60,000,
including without limitation, any contract, agreement, loan or other arrangement
(a) providing for the furnishing of services by, (b) providing for the rental of
real or personal property from, or (c) otherwise requiring payments to (other
than for services as officers, directors or employees of the Company or any of
its subsidiaries) any such person or corporation, partnership, trust or other
entity in which any such person has a material interest as a stockholder, or as
an officer, director, trustee or partner.
5.13 Labor Matters. Except as set forth in the Company Disclosure
Schedule, (a) there are no controversies pending or, to the knowledge of the
Company or any of its subsidiaries, threatened, between the Company or any of
its subsidiaries and any of their respective employees, which controversies have
or could reasonably be expected to have a Material Adverse Effect on the
Company; (b) neither the Company nor any of its subsidiaries is a party to any
collective bargaining agreement or other labor union contract applicable to
persons employed by the Company or its subsidiaries, nor does the Company or any
of its subsidiaries know of any activities or proceedings of any labor union to
organize any such employees; and (c) neither the Company nor any of its
subsidiaries has during the past five years been subject to any strikes,
slowdowns, work stoppages, lockouts, or threats thereof, by or with respect to
any employees of the Company or any of its subsidiaries, and to the knowledge of
the Company none are threatened; which strikes, slowdowns, work stoppages or
lockouts have had or could reasonably be expected to have a Material Adverse
Effect on the Company.
5.14 Proxy Statement/Prospectus. If prior to the Effective Time,
the Company supplies any information for inclusion in a Registration Statement
of Supercanal on Form F-1 (a "Registration Statement"), that information will
not at the time the Registration Statement (including amendments thereof or
supplements thereto) is declared effective by the SEC contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
16
5.15 Restrictions on Business Activities. Except for this
Agreement or as set forth in the Company Disclosure Schedule, there is no
agreement, judgment, injunction, order or decree binding upon the Company or any
of its subsidiaries which has or could reasonably be expected to have the effect
of prohibiting or impairing any business practice of the Company or any of its
subsidiaries, any material acquisition of property by the Company or any of its
subsidiaries or the conduct of business by the Company or any of its
subsidiaries as currently conducted or as proposed to be conducted by the
Company.
5.16 Title to Property. Except as set forth in the Company
Disclosure Schedule, the Company and each of its subsidiaries have good and
marketable title to all of their material properties and assets, free and clear
of all liens, charges and encumbrances, except liens for taxes not yet due and
payable and such liens or other imperfections of title, if any, as do not
materially detract from the value of or materially interfere with the present or
currently contemplated use of the property affected thereby; and all leases
pursuant to which the Company or any of its subsidiaries lease from others
material real or personal property are valid and enforceable in accordance with
their respective terms, and there is no material default or event of default by
the Company or a subsidiary of the Company, nor to the knowledge of the Company,
by any other party thereto, under any of such leases, (or event which with
notice or lapse of time, or both, would constitute a default).
5.17 CATV Systems, Subscribers. Set forth in the Company
Disclosure Schedule, is a complete list of the cable television ("CATV") systems
owned and/or operated by the Company or any subsidiary thereof ("Company CATV
Systems") as of the date hereof and the number of equity subscribers and total
subscribers in each of such Company CATV Systems as of June 30, 1997, as well as
the following information for each Company CATV System as of June 30, 1997, (i)
the approximate number of route kilometers of cable plant which are fully
completed and operational; (ii) the estimated number of households passed; (iii)
the capacity of cable plant; (iv) a description of all services provided; and
(v) the rates charged for such services.
5.18 Franchises, Licenses, Permits, etc.. Set forth in the Company
Disclosure Schedule, is a complete list and brief description of all
authorizations, approvals, certifications, licenses and permits issued by Comfer
(the "Company Comfer Authorizations") to the Company or any subsidiary thereof
as of the date hereof and all applications by the Company or any subsidiary
thereof for any Company Comfer Authorizations which are pending on the date
hereof. The Company and its subsidiaries (A) have all Company Comfer
Authorizations and other authorizations, approvals, franchises, licenses and
permits of Argentine provincial Governmental Entities (the "Company Other
Authorizations") required for the operation of the Company CATV Systems being
operated on the date hereof, (B) have duly and currently filed all reports and
other information required by Comfer or any other Governmental Entity to be
filed in connection with such Company Comfer Authorizations and Company Other
Authorizations and (C) are not in violation of any Company Comfer Authorization
or Company Other Authorization, other than the lack of Company Comfer
Authorizations or Company
17
Other Authorizations, delays in filing reports or violations which, insofar as
can reasonably be foreseen, would not have a material adverse effect on the CATV
business conducted by the Company and its subsidiaries taken as a whole.
5.19 Taxes. (a) For purposes of this Agreement, "Tax" or "Taxes"
shall mean taxes, fees, levies, duties, tariffs, imposts and governmental
impositions or charges of any kind in the nature of (or similar to) taxes,
payable to any federal, state, local or foreign taxing authority, including
(without limitation) income, franchise, profits, gross receipts, ad valorem, net
worth, value added, sales, use, service, real or personal property, special
assessments, capital stock, license, payroll, withholding social security,
workers' compensation, unemployment compensation, utility, severance,
production, excise, stamp, occupation, premiums, windfall profits, transfer and
gains taxes, and other taxes, duties or assessments of any nature whatsoever,
and interest, penalties, additional taxes and additions to tax imposed with
respect thereto; and "Tax Returns" shall mean returns, reports and information
statements with respect to Taxes required to be filed with the Internal Revenue
Service (the "IRS") or any other Taxing Authority, domestic or foreign,
including, without limitation, consolidated, combined and unitary tax returns;
and "Taxing Authority" means any governmental agency, board, bureau, body,
department or authority of any United States federal, state or local
jurisdiction or any foreign jurisdiction, having or purporting to exercise
jurisdiction with respect to any Tax.
(b) Except as set forth in the Company Disclosure Schedule:
(i) All Tax Returns required to have been filed by or with
respect to the Company or any of its subsidiaries or any affiliated, combined,
consolidated, unitary or similar group of which the Company or any subsidiary is
or was a member (a "Relevant Group") with any Taxing Authority have been duly
filed, and each such Tax Return filed by the Company correctly and completely
reflects the income, franchise or other Tax liability and all other information
required to be reported thereon. All Taxes owed by the Company or any of its
subsidiaries or any member of a Relevant Group (whether or not shown on any Tax
Return) have been paid or, in the case of Taxes attributable to the Company and
its subsidiaries, are duly provided for in the financial statements included in
the SEC Reports.
(ii) The provisions for Taxes due by the Company and its
subsidiaries (as opposed to any reserve for deferred Taxes established to
reflect timing differences between book and Tax income) in the financial
statements included in the SEC Reports, are sufficient for all unpaid Taxes,
whether or not disputed, of the Company and its subsidiaries. As of the
Effective Time, such provisions as adjusted for the passage of time through the
Effective Time, will be sufficient for the then-unpaid Taxes of the Company and
its subsidiaries.
(iii) Neither the Company nor any of its subsidiaries is a
party to any current agreement extending the time within which to file any Tax
Return. No claim has ever been made by any taxing authority in a jurisdiction
in which the Company or its subsidiaries does not file Tax Returns that it is or
may be subject to taxation by that jurisdiction.
18
(iv) The Company and each of its subsidiaries has withheld and
paid all Taxes required to have been withheld and paid in connection with
amounts paid or owing to any employee, creditor, independent contractor or other
third party.
(v) The Company does not expect any Taxing Authority to
assess any additional Taxes against or in respect of it or any of its
subsidiaries for any past period. There is no dispute or claim concerning any
Tax liability of the Company or any of its subsidiaries either (i) claimed or
raised by any Taxing Authority or (ii) otherwise known to the Company or any of
its subsidiaries. No issues have been raised in any examination by any Taxing
Authority with respect to the Company or any of its subsidiaries which, by
application of similar principles, reasonably could be expected to result in a
proposed deficiency for any other period not so examined. The Company
Disclosure Schedule lists all federal, state, local and foreign income Tax
Returns filed by or with respect to the Company or any of its subsidiaries for
all taxable periods ended on or after March 31, 1992, indicates those Tax
Returns, if any, that have been audited, and indicates those Tax Returns that
currently are the subject of audit. The Company has delivered to Parent
complete and correct copies of all federal, state, local and foreign income Tax
Returns filed by, and all Tax examination reports and statements of deficiencies
assessed against or agreed to by, the Company or any of its subsidiaries since
1992.
(vi) Neither the Company nor any of its subsidiaries has
waived any statute of limitations in respect of Taxes or agreed to any extension
of time with respect to any Tax assessment or deficiency.
(vii) Neither the Company nor any of its subsidiaries has made
any payments, is obligated to make any payments, or is a party to any agreement
that under certain circumstances could require it to make any payments, that are
not deductible under Section 28OG of the Code.
(viii) Neither the Company nor any of its subsidiaries is a
party to any Tax allocation or sharing agreement.
(ix) Neither the Company nor any of its subsidiaries is, or at
any time has been, a "United States real property holding corporation" within
the meaning of Section 897(c)(2) of the Code.
(x) None of the assets of the Company or any of its
subsidiaries constitutes tax-exempt bond financed property or tax-exempt use
property, within the meaning of Section 168 of the Code. Neither the Company
nor any of its subsidiaries is a party to any "safe harbor lease" that is
subject to the provisions of Section 168(f)(8) of the Internal Revenue Code as
in effect prior to the Tax Reform Act of 1986, or to any "long-term contract"
within the meaning of Section 460 of the Code.
(xi) Neither the Company nor any of its subsidiaries is a
"consenting corporation" within the meaning of Section 341(f)(1) of the Code, or
comparable provisions of any state statutes, and none of the assets of the
Company or any of its subsidiaries is subject to an election under Section 341
(f) of the Code or comparable provisions of any state statutes.
19
(xii) Neither the Company nor any of its subsidiaries is a
party to any joint venture, partnership or other arrangement that is treated as
a partnership for federal income Tax purposes.
(xiii) There are no accounting method changes, or proposed or
threatened accounting method changes, of the Company or any of its subsidiaries
that could give rise to an adjustment under Section 481 of the Code for periods
after the Closing Date.
(xiv) Neither the Company nor any of its subsidiaries has
received any written ruling of a Taxing Authority related to Taxes or entered
into any written and legally binding agreement with a Taxing Authority relating
to Taxes.
(xv) Each of the Company and its subsidiaries has disclosed
(in accordance with Section 6662(d)(2)(B)(ii) of the Code) on its federal income
Tax Returns all positions taken on those Tax Returns for which there was no
substantial authority within the meaning of Section 6662(d)(2)(B)(i) of the Code
and that could give rise to a substantial understatement of federal income tax
within the meaning of Section 6662(d) of the Code.
(xvi) Neither the Company nor any of its subsidiaries has any
liability for Taxes of any Person other than the Company or its subsidiaries (w)
under Section 1.1502-6 of the Treasury regulations (or any similar provision of
state, local or foreign law), (x) as a transferee or successor, (y) by contract
or (z) otherwise.
(xvii) Neither the Company nor any of its subsidiaries has
participated in or cooperated with an international boycott within the meaning
of Section 999 of the Code.
(xviii) No foreign subsidiary of the Company has, or at any time
has had, an investment in "United States property" within the meaning of Section
956(b) of the Code.
(xix) No foreign subsidiary of the Company has, or at any time
has had, a material amount that is includible in the income of a United States
person under Section 951 of the Code.
(xx) No foreign subsidiary of the Company is, or at any time
has been, a passive foreign investment company within the meaning of Section
1296 of the Code, and neither the company nor any of its subsidiaries is a
shareholder, directly or indirectly, in a passive foreign investment company.
(xxi) No foreign subsidiary of the Company is, or at any time
has been, engaged in the conduct of a trade or business within the United States
within the meaning of Section 864(b) and Section 882(a) of the Code, or treated
as or considered to be so engaged under Section 882(d) or Section 897 of the
Code or otherwise.
(xxii) No foreign subsidiary of the Company holds, or at any
time has held, a United States real property interest
20
within the meaning of Section 897(c)(1) of the Code.
(xxiii) Neither the Company nor any of its subsidiaries is, or at
any time has been, subject to (x) the dual consolidated loss provisions of
Section 1503(d) of the Code, (y) the overall foreign loss provisions of Section
904(f) of the Code or (z) the recharacterization provisions of Section 952(c)(2)
of the Code.
(xxiv) There currently are no limitations on the utilization of
the net operating losses, built-in losses, capital losses, tax credits or other
similar items of the Company or any subsidiary of the Company (collectively, the
"Losses") under (t) Section 382 of the Code, (u) Section 383 of the Code, (v)
Section 384 of the Code, (w) Section 269 of the Code, (x) Section 1.1502-21T and
Section 1.1502-15A of the Treasury regulations, (y) Section 1.1502-21T and
Section 1.1 502-21A of the Treasury regulations or (z) Section 1.1502-91T
through 1.1502-99T of the Treasury regulations.
(xxv) At March 31, 1997, the Company and its subsidiaries had
the aggregate Tax Losses for federal income Tax purposes as set forth in Section
5.19(b)(xxv) of the Company Disclosure Statement.
5.20 Environmental Matters. Except as set forth in the Company
Disclosure Schedule, the Company and each of its subsidiaries (a) have obtained
all applicable permits, licenses and other authorizations which are required to
be obtained under all applicable laws or any regulation, code, plan, order,
decree, judgment, notice or determination letter issued, entered, promulgated or
approved thereunder relating to pollution or protection of the environment,
including laws relating to emissions, discharges, releases or threatened
releases of pollutants, contaminants, or hazardous or toxic wastes into ambient
air, surface water, ground water, or land or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling of pollutants, contaminants or hazardous or toxic
materials or wastes ("Environmental Laws") by the Company or its subsidiaries
(or their respective agents); (b) are in compliance with all terms and
conditions of such required permits, licenses and authorizations, and also are
in compliance with all other limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and timetables contained in
applicable Environmental Laws; (c) are not aware of and have not received notice
of any past or present violations of Environmental Laws or any event, condition,
circumstance, activity, practice, incident, action or plan which is reasonably
likely to interfere with or prevent continued compliance with or which could
give rise to any common law or statutory liability, or otherwise form the basis
of any claim, action, suit or proceeding, against the Company or any of its
subsidiaries based on or resulting from the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling, or the
emission, discharge or release into the environment, of any pollutant,
contaminant or hazardous or toxic material or waste; and (d) have taken all
actions necessary under applicable Environmental Laws to register any products
or materials required to be registered by the Company or its subsidiaries (or
any of their respective agents) thereunder; except where the failure to obtain
such permit, license or other authorization, or any such
21
non-compliance, or violations, liabilities, claim, action, suit, proceeding, or
failure to register any such product or material, individually or in the
aggregate, does not have and could not reasonably be expected to have a Material
Adverse Effect on the Company.
5.21 Contracts. The Company Disclosure Schedule contains an
accurate and complete listing of all contracts, leases, agreements or
understandings, whether written or oral, material to the business, properties,
operations or financial condition of the Company and its subsidiaries, taken as
a whole, including, without limitation, all contracts, agreements or
understandings with providers of programming (true and complete copies or, if
none, reasonably complete and accurate written descriptions of which, together
with all amendments and supplements thereto and all waivers of any material
terms thereof, have been delivered or made available to Acquisition or
Supercanal prior to the execution of this Agreement). Each of such contracts,
leases, agreements and understandings is in full force and effect and (a) none
of the Company or any of its subsidiaries or, to the knowledge of the Company,
any other party thereto, has breached or is in default thereunder, (b) no event
has occurred which, with the passage of time or the giving of notice would
constitute such a breach or default, (c) no claim of default thereunder has been
asserted or, to the knowledge of the Company, threatened and (d) none of the
Company or its subsidiaries or, to the knowledge of the Company, any other party
thereto is seeking a renegotiation thereof or substitute performance thereunder,
except where such breach or default, or attempted renegotiation or substitute
performance, individually or in the aggregate, does not have and could not
reasonably be expected to have a Material Adverse Effect on the Company.
5.22 Intellectual Property. (a) The Company and/or each of its
subsidiaries owns, or is licensed or otherwise possesses legally enforceable
rights to use, all patents, trademarks, trade names, service marks, copyrights,
and any applications therefor, technology, know-how, computer software programs
or applications, and tangible or intangible proprietary information or material
that are used in the business of the Company and its subsidiaries as currently
conducted and as proposed to be conducted.
(b) Except as disclosed in the Company Disclosure Schedule, or as
could not reasonably be expected to have a Material Adverse Effect on the
Company: (i) the Company is not, nor will it be as a result of the execution and
delivery of this Agreement or the performance of its obligations hereunder, in
violation of any licenses, sublicenses and other agreements as to which the
Company is a party and pursuant to which the Company is authorized to use any
third-party patents, trademarks, service marks and copyrights ("Third Party
Intellectual Property Rights"); (ii) no claims with respect to the patents,
registered and material unregistered trademarks and service marks, registered
copyrights, trade names and any applications therefor owned by the Company or
any of its subsidiaries (the "Company Intellectual Property Rights") are
currently pending or, to the knowledge of the Company, are overtly threatened by
any person; (iii) the Company does not know of any valid grounds for any bona
fide claims (a) to the effect that the sale, licensing or use of any product as
now used, sold or licensed or proposed for use, sale or license by the any or
any of its subsidiaries, infringes on any copyright, patent, trademark, service
xxxx or trade secret, (b) against the use by the Company or any of its
subsidiaries of any trademarks, trade
22
names, trade secrets, copyrights, patents, technology, know-how or computer
software programs and applications used in the business of the Company or any of
its subsidiaries as currently conducted or as proposed to be conducted, (c)
challenging the ownership, validity or effectiveness of any of the Company
Intellectual Property Rights or other trade secret material to the Company, or
(d) challenging the license or legally enforceable right to use of the Third
Party Intellectual Rights by the Company or any of its subsidiaries.
(c) All material patents, registered trademarks, service marks and
copyrights held by the Company are valid and subsisting. Except as set forth in
the Company Disclosure Schedule, to the Company's knowledge, there is no
material unauthorized use, infringement or misappropriation of any of the
Company Intellectual Property Rights by any third party, including any employee
or former employee of the Company or any of its subsidiaries.
5.23 Insurance. All casualty, general liability, business
interruption, and other insurance policies maintained by the Company or any of
its subsidiaries are in character and amount substantially equivalent to that
carried by persons engaged in similar businesses and subject to the same or
similar perils or hazards, except as could not reasonably be expected to have a
Material Adverse Effect on the Company.
5.24 Accounts Receivable. The accounts receivable of the Company
and its subsidiaries as reflected on the Interim Balance Sheet, to the extent
uncollected on the date hereof, and the accounts receivable reflected on the
books of its subsidiaries are valid and existing and represent monies due, and
the Company has made reserves reasonably considered adequate for receivables not
collectible in the ordinary course of business, and (subject to the aforesaid
reserves) are subject to no refunds or other adjustments and to no defenses,
rights of setoff, assignments, restrictions, encumbrances or conditions
enforceable by third parties on or affecting any thereof.
5.25 Full Disclosure. No statement contained in any certificate or
schedule furnished or to be furnished by the Company or its subsidiaries to
Acquisition in, or pursuant to the provisions of, this Agreement contains or
will contain any untrue statement of a material fact or omits or will omit to
state any material fact necessary, in the light of the circumstances under which
it was made, in order to make statements herein or therein not misleading. The
Company has provided, or made available, to Acquisition or Supercanal complete
and correct copies of all agreements and other documents (including amendments,
supplements or modifications thereto) referred to on the Company Disclosure
Schedule.
5.26 Fairness Opinion. The Company has received the fairness
opinion of Xxxxxxx and S. Bleichroeder, Inc. relating to the transactions which
are the subject of this Agreement (which fairness opinion supplements the
fairness opinion of Xxxxxxx and X. Xxxxxxxxxxxx relating to the transactions
which were the subject of the Original Agreement) and a copy thereof will be
delivered to Acquisition.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF ACQUISITION
23
Acquisition hereby represents and warrants to the Company that, except
as set forth in the written disclosure schedule delivered by Acquisition to the
Company (the "Acquisition Disclosure Schedule"):
6.1 Organization and Qualification; Subsidiaries. Acquisition is
a corporation duly organized, validly existing and in good standing under the
laws of the state of Delaware, and Supercanal is a corporation (sociedad
anonima) duly organized, validly existing and in good standing under the laws of
Argentina.
6.2 Constituent Documents. Acquisition has heretofore furnished
to the Company complete and correct copies of its certificate of incorporation
and by-laws and Supercanal has heretofore furnished to the Company a complete
and correct copy of its estatutos sociales and has furnished or made available
to the Company the estatutos sociales or other organizational documents of each
of its subsidiaries (the "Constituent Documents"). Such Constituent Documents
are in full force and effect.
6.3 Authority Relative to this Agreement and the Guarantee.
Acquisition has all necessary corporate power and authority to execute and
deliver this Agreement and to perform its obligations hereunder and to
consummate the transactions contemplated hereby. Supercanal has all necessary
corporate power and authority to execute and deliver the guaranty attached to
this Agreement (the "Guaranty") and the Programming Agreement and to perform its
obligations thereunder. The execution and delivery of this Agreement by
Acquisition and the consummation by Acquisition of the transactions contemplated
hereby have been duly and validly authorized by all necessary corporate action
on the part of Acquisition, and no other corporate proceedings on the part of
Acquisition are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby. The execution and delivery of the Guaranty
and the Programming Agreement by Supercanal and fulfillment by Supercanal of its
obligations under the Guaranty and the Programming Agreement have been duly and
validly authorized by all necessary corporate action on the part of Supercanal,
and no other proceedings on the part of Supercanal are necessary to authorize
the Guaranty and the Programming Agreement or for Supercanal to fulfill any
obligations under the Guaranty and the Programming Agreement which it may be
required to fulfill. This Agreement has been duly and validly executed and
delivered by Acquisition and the Guaranty has been duly and validly executed by
Supercanal. Assuming the due authorization, execution and delivery of this
Agreement by the Company, this Agreement constitutes a legal, valid and binding
obligation of Acquisition, and the Guaranty constitutes, and when executed the
Programming Agreement will constitute, a valid and binding obligation of
Supercanal, enforceable against Acquisition (as to this Agreement) or Supercanal
(as to the Guaranty and the Programming Agreement) in accordance with its terms,
except as the enforceability thereof may be limited by bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium or other such laws relating to
the enforcement of creditors' rights generally and by general principles of
equity.
6.4 No Conflict. (a) Required Filings and Consents. Except as
set forth in the Acquisition Disclosure Schedule, the
24
execution and delivery of this Agreement by Acquisition, and the execution and
delivery of the Guaranty by Supercanal, do not, and the performance of this
Agreement by Acquisition or of the Guarantee by Supercanal will not, (i)
conflict with or violate the Constituent Documents of Acquisition or Supercanal,
(ii) conflict with or violate any law, rule, regulation, order, judgment or
decree applicable to Acquisition or Supercanal or any of their subsidiaries or
by which its or their respective properties are bound or affected, or (iii)
result in any breach of or constitute a default (or an event which with notice
or lapse of time or both would become a default) under, or impair Acquisition's,
Supercanal's or any of their subsidiaries' rights or alter the rights or
obligations of any third party under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or encumbrance on any of the properties or assets of
Acquisition or Supercanal or any of their subsidiaries pursuant to, any note,
bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which Acquisition or Supercanal
or any of their subsidiaries is a party or by which Acquisition or Supercanal or
any of their subsidiaries or its or any of their respective properties are bound
or affected.
(b) Except as disclosed in the Acquisition Disclosure Schedule,
the execution and delivery of this Agreement by Acquisition and of the Guaranty
by Supercanal does not, and the performance of this Agreement by Acquisition and
of the Guaranty by Supercanal will not, require any consent, approval,
authorization or permit of, or filing with or notification to, any governmental
or regulatory authority, domestic or foreign, except for (i) the filing and
recordation of appropriate merger or other documents as required by the DGCL and
the TBCA (ii) applicable filing and waiting period requirements under the HSR
Act and (iii) applicable requirements, if any, under Argentine Law No. 22,285 or
other required filings with, or approvals by Comfer. The filing required to
have been made by Acquisition under the HSR Act has been made and the waiting
periods under the HSR Act have been terminated.
(c) The execution and delivery of this Agreement by Acquisition
and of the Guaranty by Supercanal does not require the consent of any person,
including any shareholder of Acquisition or Supercanal, other than approval of
the Board of Directors of Acquisition and of the Directorio (i.e., Board of
Directors) of Supercanal, each of which has been obtained.
6.5 Ownership of Acquisition; No Prior Activities. (a)
Acquisition was formed solely for the purpose of engaging in the transaction
contemplated by this Agreement.
(b) As of the date hereof and the Effective Time, except for
obligations or liabilities incurred in connection with the transactions
contemplated by this Agreement and except for this Agreement and any other
agreement or arrangements contemplated by this Agreement, Acquisition has not
and will not have incurred, directly or indirectly, through any subsidiary or
affiliate, any obligations or liabilities or engaged in any business activities
of any type or kind whatsoever or entered into any agreements or arrangements
with any persons.
25
6.6 Accuracy of Materials. Neither the Offer Documents nor any
information supplied by Acquisition in writing for inclusion in the Schedule
14D-9 will, at the respective times the Schedule 14D-9 and the Offer Documents
are filed with the SEC and first published, sent or given to the Company's
stockholders, contain a false or misleading statement with respect to any
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. On the date the Proxy
Statement is mailed to the Company's stockholders and on the date of the
Stockholders Meeting, none of the information supplied in writing by Acquisition
for inclusion in the Proxy Statement will be false or misleading with respect to
any material fact or will omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading or necessary to correct
any statement in any earlier communication with respect to the Stockholders
Meeting or the solicitation of proxies therefor which has become false or
misleading. The Offer Documents will comply as to form in all material respects
with the Exchange Act and the rules and regulations under it. Notwithstanding
the foregoing, Acquisition does not make any representation or warranty with
respect to information supplied by the Company or any of its affiliates or
representatives in writing for inclusion in the Offer Documents, the Schedule
14D-9 or the Proxy Statement.
6.7 Availability of Funds. Supercanal (i) has arranged loan
facilities which, either alone or with cash presently on hand, will provide
sufficient funds to enable Acquisition to purchase and pay for the Purchased
Common Stock (and the Option Preferred Stock, of Acquisition exercises the
Preferred Stock Purchase Option), the Shares which are tendered in response to
the Tender Offers and the Merger as contemplated by this Agreement and to
consummate the other transactions contemplated by this Agreement and (ii) will
have on the Stock Purchase Closing Date, the Expiration Date and the Effective
Date sufficient funds to enable Acquisition to fulfill the respective
obligations under this Agreement which it will be required to fulfill on each of
those dates, including but not limited to its obligations to purchase and pay
for the Purchased Common Stock, the Shares which are tendered in response to the
Tender Offers and the Merger, respectively, as contemplated by this Agreement.
Supercanal's loan facilities permit money borrowed under the facilities to be
used to purchase and pay for Common Stock and 8% Preferred Stock purchased at
the Initial Purchase Closing, under Paragraph 1.4 or through the Tender Offers
and to carry out the Merger. The Note Purchase Agreement dated as of November
12, 1997 among Supercanal Holding S.A. and various subsidiaries, various
financial institutions, as Purchasers, ING Baring (U.S.) Securities, Inc., as
Arranger, ING Baring (U.S.) Capital Corporation, as Administrative and
Collateral Agent, and The Bank of New York, as Registrar, as modified by a
letter agreement dated as of November 26, 1997, (the "Note Purchase Agreement"),
a copy of which was given to the Company, has not been terminated or further
modified.
6.8 No Supercanal Shareholder Suits. At the date of this
Agreement, no shareholder of Supercanal or affiliate of a
26
shareholder of Supercanal has filed or threatened to file a suit seeking to
enjoin Supercanal or Acquisition from completing the transactions which are the
subject of this Agreement.
6.9 Not Affiliated Shareholders. None of Acquisition, Supercanal
or any "affiliates" or "associates" of Acquisition or Supercanal are "affiliated
shareholders" of the Company, as those terms are defined in Articles 13.01 -
13.08 of the TBCA.
ARTICLE VII
ACTIONS PRIOR TO THE MERGER
7.1 Activities Until Effective Time. From the date of this
Agreement to the Effective Time, the Company will, and will cause each of its
subsidiaries to, except with the written consent of Acquisition:
(a) Operate its business in the ordinary course and in a manner
consistent with the manner in which it is being operated at the date of this
Agreement.
(b) Take all reasonable steps available to it to maintain the
goodwill of the Company's business and the continued employment of the
executives and other employees engaged in that business.
(c) At its expense, maintain all its assets in good repair and
condition, except to the extent of reasonable wear and use and damage by fire or
other unavoidable casualty.
(d) Not make any borrowings other than (i) borrowings in the
ordinary course of business under working capital lines which are disclosed in
the notes to the consolidated balance sheet at March 31, 1997 or September 30,
1997 included in the Company SEC Reports, and (ii) up to a total of $1,000,000
under revolving credits from Xxxx X. Xxxxxx Inter Vivos Trust and Xxxxxx
Irrevocable Inter Vivos Trust.
(e) Except as permitted in Paragraph 7.1(f) not enter into any
contractual commitments involving capital expenditures, loans or advances, and
not voluntarily incur any contingent liabilities, except in each case in the
ordinary course of business.
(f) Not make any expenditure which reduces its net working capital
(i.e., current assets minus current liabilities) by more than $2.5 million, and
not make capital expenditures whether or not in the ordinary course of business
(excluding capitalized costs of new subscriber connections and costs of
acquiring new television systems, other than KTV) totalling more than $2.5
million, if Acquisition's designee on the Company's Board of Directors objects
in writing to the expenditures within three business days in Argentina after the
Acquisition designee is notified in writing that the Company wants to make the
expenditure or expenditures and is given written materials describing in
reasonable detail the reasons the Company
27
wants to make the expenditure or expenditures and, if applicable, the return the
Company expects to realize from the expenditure or expenditures, provided that
Acquisition's designee will not be permitted to object to a reduction of net
working capital which is necessary to enable the Company to pay its outstanding
obligations as they become due and payable in the ordinary course of business or
to make expenditures or payments specifically permitted in subparagraph (d) or
(g).
(g) Not declare or pay any dividends, or make any other
distributions or repayments of debt to its stockholders, other than (i) required
payments of dividends, if any, with regard to the 10% Preferred Stock and the 8%
Preferred Stock, (ii) payments by subsidiaries of the Company to the Company or
other wholly owned subsidiaries of the Company, (iii) repayments of borrowings
under a $500,000 revolving credit from each of Xxxx X. Xxxxxx Inter Vivos Trust
and the Xxxxxx Irrevocable Inter Vivos Trust and (iv) repayment of 1998 Notes.
(h) Not make any loans or advances (other than advances for travel
and other normal business expenses) to stockholders, directors, officers or
employees.
(i) Maintain its books of account and records in the usual manner,
in accordance with US GAAP applied on a consistent basis, subject to normal
year-end adjustments and accruals.
(j) Comply in all material respects with all applicable laws and
regulations of governmental agencies.
(k) Not sell, dispose of or encumber any property or assets, or
engage in any activities or transactions, except in each case in the ordinary
course of business.
(l) Not increase the salaries of any officers or directors.
(m) Not adopt, or become an employer with regard to, any employee
compensation, employee benefit or post-employment benefit plan, except bonuses
totalling not more than $300,000 to Xxxx Xxxx and Xxxx Xxxxxx.
(n) Not issue any stock of any class, other than (i) the issuance
of Common Stock upon exercise of options or warrants which are outstanding on
the date of this Agreement and are disclosed on the Company Disclosure Schedule,
(ii) the issuance of Common Stock on conversion of 8% Preferred Stock or 10%
Preferred Stock, (iii) the issuance of 8% Preferred Stock as dividends to the
extent required by the 8% Preferred Stock and the 10% Preferred Stock, (iv) the
issuance of 8% Preferred Stock as dividends to the extent required by
outstanding shares of 8% Preferred Stock and (v) the issuance of shares upon
conversion of subsidiaries from sociedad de responsabilidad limitada (SRL) form
to sociedad anonima (SA) form, or issue any options, warrants or rights, or
enter into any other agreements, by reason of which the Company may become
obligated to issue any stock of any class.
7.2 Redemption of 10% Preferred Stock. Not later than three
Austin, Texas business days after the Initial Stock
28
Purchase Closing Date the Company will give notice of redemption of all the
outstanding shares of 10% Preferred Stock for the redemption price of $5.00 per
share plus dividends specified in the Statement of Resolution Establishing and
Designating the Series 1990 10% Convertible Preferred Stock, which was filed on
July 11, 1990.
7.3 No Solicitation of Offers; Notice of Indications of Interest.
(a) Except as provided in subparagraph (b), the Company will not, and will not
authorize any of its officers, directors, employees or agents to, enter into any
discussions or take any other steps, a likely result of which might be to cause
someone other than Acquisition or Supercanal to (i) solicit tenders of stock of
the Company or otherwise seek to acquire 5% or more of either the Common Stock
or the 8% Preferred Stock of the Company, other than with a view to tendering
that stock in response to the Tender Offers, (ii) acquire all or a substantial
portion of the assets of the Company and its subsidiaries (whether through
acquisitions of assets, acquisitions of stock of subsidiaries or both), or (iii)
otherwise to acquire the Company or a substantial portion of its assets if the
Minimum Shares are not validly tendered in response to the Tender Offers and not
withdrawn or if the Company's stockholders do not approve the Merger. If the
Company learns that anyone is contemplating soliciting tenders of its stock,
acquiring 5% or more of its outstanding stock, acquiring all or a substantial
portion of its assets and those of its subsidiaries or otherwise offering to
acquire the Company or its assets if the Minimum Shares are not validly tendered
in response to the Tender Offers and not withdrawn or if its stockholders do not
approve the Merger, the Company will promptly notify Acquisition of that fact
and provide Acquisition with all information in the Company's possession
regarding the contemplated solicitation of tenders, acquisition of stock or
assets or other acquisition offer, and the Company will promptly, from time to
time, provide Acquisition with any additional information it obtains regarding
the contemplated solicitation of tenders, acquisition of stock or assets or
other acquisition offer.
(b) Notwithstanding subparagraph (a), the Company may,
without breaching this Agreement, in response to an unsolicited proposal to the
Company (an "Acquisition Proposal") which the Company's Board of Directors
determines, in good faith and after consultation with the Company's independent
financial advisor, would result (if consummated pursuant to its terms) in a
transaction (an "Acquisition Transaction") which is more favorable both to the
holders of the Common Stock and to the holders of the 8% Preferred Stock than
the Tender Offers and the Merger, furnish confidential or non-public information
to the person, entity or group (a "Potential Acquiror") making that Acquisition
Proposal and enter into discussions and negotiations with that Potential
Acquiror.
7.4 Efforts to Fulfill Conditions. The Company will use its
best efforts to cause all the conditions set forth in Paragraph 8.1 to be
fulfilled prior to or on the Initial Stock Purchase Closing Date and Acquisition
will use its best efforts to cause all the conditions set forth in Paragraph 8.2
to be fulfilled prior to or on the Initial Stock Purchase Closing Date.
7.5 Indemnification and Insurance. (a) In the event of any
threatened or actual claim, action, suit, proceeding or
29
investigation, whether civil, criminal or administrative, (each an "Action")
including, without limitation, any Action in which any person who is now, or has
been at any time prior to the date of this Agreement, or who becomes prior to
the Effective Time, a director, officer, employee, fiduciary or agent of the
Company or any of its subsidiaries (the "Indemnified Parties") is, or is
threatened to be, made a party based in whole or in part on, or arising in whole
or in part out of, or pertaining to (i) the fact that he is or was a director,
officer, employee or agent of the Company or any of its subsidiaries, or is or
was serving at the request of the Company or any of its subsidiaries as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, or (ii) this Agreement or any of the
transactions contemplated by it, whether asserted or arising before or after the
Effective Time, the Company and Acquisition (prior to the Merger) and the
Surviving Corporation (after the Merger) will cooperate and use its reasonable
best efforts to defend against the Action. The Company will indemnify and hold
harmless, and after the Effective Time the Surviving Corporation will indemnify
and hold harmless, to the fullest extent permitted by applicable law, each
Indemnified Party against any losses, claims, damages, liabilities, costs,
expenses (including attorneys' fees and expenses), judgments, fines and amounts
paid in settlement in connection with any such threatened or actual claim,
action, suit, proceeding or investigation, and in the event of any such
threatened or actual Action. Without limiting what is said in the preceding
sentence, (i) the Company, and the Surviving Corporation after the Effective
Time, will promptly pay expenses incurred by an Indemnified Party in advance of
the final disposition of any Action to the fullest extent permitted by law, (ii)
the Indemnified Parties may retain counsel satisfactory to them, and the
Company, and the Surviving Corporation after the Effective Time, will pay all
fees and expenses of one counsel for the Indemnified Parties promptly after
statements are received. However, neither the Company nor the Surviving
Corporation will be liable for any settlement effected without its prior written
consent (which consent will not be unreasonably withheld), and the Surviving
Corporation will have no obligation to any Indemnified Party when and if a court
of competent jurisdiction determines, in a determination which becomes final and
non-appealable, that indemnification of such Indemnified Party in the manner
contemplated by this Paragraph is prohibited by applicable law. Any Indemnified
Party wishing to claim indemnification with regard to an actual or threatened
Action under this Paragraph 7.6, upon learning of the Action or the threat of
the Action, must notify the Company and, after the Effective Time, the Surviving
Corporation, of the Action; provided that the failure to give notice will not
effect the obligations of the Company or the Surviving Corporation except to the
extent the failure to give notice materially prejudices such party.
(b) Acquisition agrees that all rights to indemnification existing
in favor, and all limitations on the personal liability, of the Indemnified
Parties in the Company's Certificate of Incorporation or by-laws or the charter
or by-laws or similar organizational documents of any of its subsidiaries as in
effect as of the date Agreement with respect to matters occurring prior to the
Effective Time will survive the Merger and will continue in full force and
effect for a period of not less than six after years the Effective Time;
provided, however, that all rights to indemnification in respect of any claim
asserted or made within such period shall continue until the disposition of such
claim. The Surviving Corporation will cause the current policies
30
of the directors' and officers' liability insurance to remain in effect for at
least three years after the Effective Time or will substitute policies of at
least the same coverage with terms and conditions which are not less
advantageous to the insureds than those presently maintained by the Company,
with respect to matters occurring prior to the Effective Time; provided that in
no event will the Surviving Corporation be required to expend in any one year an
amount in excess of 150% of the annual premiums currently paid by the Company
for that insurance. If the annual premiums exceed that amount, the Surviving
Corporation will only be obligated to obtain a policy with the greatest dollar
amount of coverage available for a cost not exceeding that amount.
(c) This Paragraph 7.5 is intended for the benefit of the
Indemnified Parties and will be binding on all successors and assigns of
Acquisition, the Company and the Surviving Corporation. Each of the Indemnified
Parties will be entitled to enforce this in Paragraph 7.5.
(d) If the Surviving Corporation or any of its successors or
assigns (i) consolidates with or merges into any other person or entity and is
not the entity which continues or survives after the consolidation or merger or
(ii) transfers all or substantially all of its properties and assets to any
person or entity, then, and in each such case, provision will be made so the
successors of the Surviving Corporation assume the obligations set forth in this
Paragraph 7.5.
7.6 Board Representation. Not later than the Stock Purchase
Closing Date, Xxxxxx Xxxx, will be elected by the Board, effective upon
completion of Acquisition's purchase of the Purchased Common Stock, to one of
the positions (of which there will not be more than seven) on the Company's
Board of Directors and the Company will use its best efforts to cause Xxxxxx
Xxxx, or if he becomes unable to serve, another designee of Acquisition
reasonably acceptable to the Company, to be elected at all subsequent meetings
of the Company's stockholders at which directors are elected (except that, (i)
at any time when Acquisition and its affiliates (including Supercanal) cease to
own at least 15% of the outstanding shares of Common Stock, or (ii) if
Acquisition breaches or fails to fulfill in a material respect any of its
obligations under this Agreement within 10 days after written notice of the
failure from the Company (which states that it is a notice being given for the
purposes of this Paragraph 7.6), Acquisition will cause Xxxxxx Xxxx or whoever
else may be its designee to resign.
7.7 Options and Warrants. (a) The Company will use its best
efforts (including, without limitation, by amending the provisions of the
Company's Employee Stock Option Plan and its Non-Employee Director Stock Option
Plan and the option agreements which have been issued under those Plans) to
provide that, (i) immediately prior to the acceptance of Shares in response to
the Tender Offers, each holder of an outstanding option granted under either
Plan (an "Option") will become fully vested and (ii) if all the conditions on
Exhibit 2.1-C are fulfilled, (x) each Option will be cancelled and (y) the
holder of each Option will receive, not later than 10 days after the Tender
Offers expire, a cash payment from the Company equal to (I) the excess of the
Merger Price for the Common Stock over the per share exercise price of the
Option times (II) the number of shares subject to the Option when it is
cancelled. Any such cash payments will be treated as compensation and will be
net of any applicable federal or state
31
withholding tax.
(b) If (i) all the conditions on Exhibit 2.1-C are fulfilled, or
(ii) even though those conditions are not fulfilled, Acquisition purchases all
the Common Stock and 8% Preferred Stock which is properly tendered in response
to the Tender Offers and not withdrawn and (iii) at least 5 days after all the
10% Preferred Stock has either been converted into Common Stock or redeemed, any
holder of warrants listed in Section 5.3 of the Company Disclosure Schedule
tenders the warrants to the Company to be cancelled in exchange for payment of
(A) the excess of $4.50 per share of Common Stock over the per share exercise
price of the warrants times (B) the number of shares of Common Stock subject to
the warrants when they are cancelled, within five business days after the
warrants are tendered for cancellation, the Company will cancel the warrants and
pay the holder cash in the amount described in clauses (A) and (B).
7.8 Use of Proceeds of Sale of Purchased Common Stock. The
Company will use the proceeds of the sale of the Purchased Common Stock solely
(a) to pay the redemption price of the 10% Preferred Stock, (b) to repay up to
$6,780,000 of the Company's 13% Notes due February 1998, (c) to make payments to
holders of Options or warrants as contemplated by Paragraph 7.7 and (d) to make
other payments which are listed on Exhibit 7.8. Until it uses proceeds of the
sale of the Purchased Common Stock for one or more of those purposes, the
Company will invest them in (i) securities issued by the United States Treasury
which mature not later than Xxxxx 00, 0000, (xx) certificates of deposit issued
by ING Bank N.V. or an affiliate which mature no later than March 31, 1998, or
(iii) other short term debt securities to which Acquisition consents in writing
in advance.
7.9 Purchase of KTV. Not later than 10 days after the Stock
Purchase is competed, the Company will assign to Acquisition all the rights, if
any, the Company may have under the option to purchase the entities which
operate cable systems and in Monte Caseras and Federacion (together, the "KTV
Entities") which is described in Items 8(a) and (b) of Section 5.20 of the
Company Disclosure Schedule (the "KTV Option"). If the KTV Option has not
expired, Acquisition will exercise the KTV Option before its expiration date and
will purchase, or cause a designee to purchase, the KTV Entities on the terms
provided in the KTV Option. If the KTV Option has expired but the owners of the
KTV Entities are willing to sell the KTV Entities to Acquisition for the
purchase price, and on the other terms, provided in the KTV Option, as promptly
as practicable after the Stock Purchase is completed, Acquisition or a designee
will purchase the KTV Entities for that purchase price and on those other terms.
7.10 Satisfaction of Subsidiary Debt. Not later than 15 days after
(i) the day on which Acquisition accepts the shares which are properly tendered
in response to the Tender Offers and not withdrawn, or (ii) such earlier time as
Acquisition acquires a majority of the outstanding Common Stock, the Company
will cause each of its subsidiaries listed on Exhibit 7.10 to repay in full all
its indebtedness for borrowed money and all its indebtedness incurred in
connection with acquisitions of businesses or other assets (other than trade
accounts payable incurred in the
32
ordinary course of business).
7.11 Ownership of Subsidiaries. Not later than 20 days after the
date of this Agreement, the Company will enter into binding written agreements
with the registered owners of shares or other interests in SIR TV S.R.L., Cable
Viedma S.R.L. and Televiedma S.R.L., (together the "Tescorp S.R.L.'s") in form
reasonably satisfactory to Acquisition, in which those registered owners agree
that at any time the Company asks them to do so, they will (a) execute any
documents the Company requests that they execute in order to ensure that at the
Effective Time, the lenders under the Note Purchase Agreement will have valid
and enforceable liens on all the shares or other ownership interests in the
Tescorp S.R.L.'s, and (b) providing for the transfer of ownership of the Tescorp
S.R.L.'s to such entity or entities as Supercanal may designate.
ARTICLE VIII
CONDITIONS PRECEDENT TO TRANSACTIONS
8.1 Conditions to the Company's Obligations. The obligations of
the Company to sell the Purchased Common Stock (the "Stock Purchase") and to
complete the Merger are subject to satisfaction of the following conditions (any
or all of which may be waived by the Company with regard to either the Stock
Purchases or the Merger):
(a) The representations and warranties of Acquisition contained in
this Agreement and the representations and warranties of Supercanal contained in
the Guaranty will, except as contemplated by this Agreement, be true and correct
in all material respects on the date of the Stock Purchase Closing (as to the
Stock Purchase) and on the Merger Date (as to the Merger) with the same effect
as though made on that date, and Acquisition will have delivered to the Company
on the date of the Stock Purchase Closing (as to the Stock Purchase) and on the
Merger Date (as to the Merger) a certificate dated that date and signed by the
President of Acquisition to that effect.
(b) Acquisition will have fulfilled in all material respects all
its obligations under this Agreement required to have been fulfilled prior to or
on the applicable one of the Stock Purchase Closing Date or the Merger Date.
(c) No order will have been entered by any court or governmental
authority and be in force which invalidates this Agreement or restrains the
Company from completing any of the transactions which are the subject of this
Agreement.
(d) As to the Merger (but not as to the Stock Purchase), unless
the Merger can be consummated under both the TBCA and the DGCL without a vote of
the Company's stockholders, the Merger will have been approved by the holders of
two-thirds of the outstanding shares of Common Stock and two-thirds of the
outstanding shares of 8% Preferred Stock.
(e) As to the Merger, the Effective Time will occur on or before
April 30, 1998.
8.2 Conditions to Acquisition's Obligations. The obligations of
Acquisition to complete the Stock Purchase and to
33
complete the Merger are subject to the following conditions (any or all of which
may be waived by Acquisition with regard to the Stock Purchase or the Merger):
(a) As to the Stock Purchase, the representations and warranties
of the Company contained in this Agreement will, except as contemplated by this
Agreement, be true and correct in all material respects on the Stock Purchase
Closing Date with the same effect as though made on that date, and the Company
will have delivered to Acquisition on the Stock Purchase Closing Date a
certificate dated that date and signed by the President or a Vice President of
the Company to that effect.
(b) As to the Merger, the representations and warranties of the
Company in Paragraph 5.8 will, except as contemplated by this Agreement, be true
and correct in all material respects on the Merger Date with the same effect as
though made on that date, and the Company will have delivered to Acquisition on
the Merger Date a certificate dated that date and signed by the President or a
Vice President of the Company to that effect.
(c) The Company will have fulfilled in all material respects all
of its obligations under this Agreement required to have been fulfilled prior to
or on the applicable one of the Stock Purchase Closing Date or, the Merger Date.
(d) No order will have been entered by any court or governmental
authority and be in force which invalidates this Agreement or restrains
Acquisition from completing any of the transactions which are the subject of
this Agreement.
(e) On or before the Stock Purchase Closing Date, Xxxxxx Xxxx will
have been elected to the Company's Board of Directors,effective upon completion
of Acquisition's purchase of the Purchased Common Stock, as contemplated by
Paragraph 7.6, and, except under circumstances described in Paragraph 7.6 in
which Acquisition no longer is entitled to designate a member of that Board of
Directors, that election will not have been rescinded.
(f) As to the Merger, the number of shares held by shareholders of
the Company who have filed written objections to approval of the Merger
sufficient to preserve their rights to demand the fair value of the shares
pursuant to Articles 5.11 through 5.13 of the TBCA will not exceed 5% of the
total number of outstanding shares of Common Stock and 8% Preferred Stock
combined (treating each share of 8% Preferred Stock as being equal to 32 shares
of Common Stock).
(g) As to the Merger, the Effective Time will occur on or before
April 30, 1998.
ARTICLE IX
TERMINATION
9.1 Right to Terminate. This Agreement may be terminated at any
time prior to the Effective Time (whether or not
34
the stockholders of the Company have approved the Merger):
(a) By mutual consent of the Company and Acquisition.
(b) By the Company if, without fault of the Company, the
Expiration Date is not on or before January 31, 1998.
(c) By the Company or Acquisition if, without fault of
Acquisition, the Effective Time is not on or before April 30, 1998.
(d) By the Company if (i) any of the representations or warranties
of Acquisition contained in this Agreement was not complete and accurate in all
material respects on the date of this Agreement, or (ii) any of the conditions
in Paragraph 8.1 is not satisfied or waived by the Company prior to or on the
Merger Date.
(e) By Acquisition if (i) any of the representations or warranties
of the Company contained in this Agreement was not complete and accurate in all
material respects on the date of this Agreement or (ii) any of the conditions in
Paragraph 8.2 is not satisfied or waived by Acquisition prior to or on the
Merger Date.
9.2 Manner of Terminating Agreement. If at any time Acquisition
or the Company has the right under Paragraph 9.1 to terminate this Agreement, it
can terminate this Agreement by a notice to the other of them that it is
terminating this Agreement.
9.3 Termination due to Superior Proposal.
(a) This Agreement may be terminated by the Company at any time
prior to the Stock Purchase Closing Date, if (i) it receives a Superior
Proposal, (ii) its Board of Directors resolves to accept the Superior Proposal,
(iii) the Company has given Acquisition at least ten business days' prior notice
of its intention to terminate this Agreement pursuant to this provision and (iv)
the Company has paid Acquisition $5 million (it being understood that only one
such payment will be required even if the Company is entitled to terminate this
Agreement both under this subparagraph (a) and under subparagraph (b)). A
"Superior Proposal" is an Acquisition Proposal which would result in the
Company's stockholders receiving consideration with a fair value determined in
good faith by the Company's Board of Directors and after consultation with the
Company's independent financial advisor to be more favorable both to the holders
of the Common Stock and to the holders of the 8% Preferred Stock than the Tender
Offers and the Merger. A notice of intention to terminate given pursuant to
this subparagraph will be irrevocable (unless Acquisition consents in writing to
its being withdrawn by the Company) and will result in this Agreement's being
terminated on the date specified in the notice of intention, which will be not
earlier than the day after the expiration of the ten business day period. When
the Company delivers a notice of intention to terminate pursuant to this
Paragraph, Acquisition's obligations under Articles I, II, III and IV and
Paragraphs 7.2 and 7.5 will terminate.
(b) This Agreement may be terminated by the Company, if (A) a
tender or exchange offer is commenced by a Potential Acquiror for all the
outstanding shares of Common Stock and 8% Preferred Stock, (B) the Company's
Board of Directors determines in good faith and
35
after consultation with an independent financial advisor, that the offer
constitutes a Superior Proposal and resolves to accept the Superior Proposal or
recommend to the Company's stockholders that they tender their shares in
response to the tender or exchange offer, (C) the Company has given Acquisition
at least ten business days' prior notice of its intention to terminate pursuant
to this provision, and (D) the Company has paid Acquisition $5 million (it being
understood that only one such payment will be required even if the Company is
entitled to terminate this Agreement both under this subparagraph (b) and under
subparagraph (a)). A notice of intention to terminate given pursuant to this
subparagraph will be irrevocable (unless Acquisition consents in writing to its
being withdrawn by the Company) and will result in this Agreement's being
terminated on the date specified in the notice of intention, which will be not
earlier than day after the expiration of the ten business day period. When the
Company delivers a notice of intention to terminate pursuant to this Paragraph,
Acquisition's obligations under Articles I, II, III and IV and Paragraphs 7.2
and 7.5 will terminate.
9.4 Effect of Termination. (a) If this Agreement is terminated
pursuant to Paragraph 9.1 or 9.3, after this Agreement is terminated, neither
party will have any further rights or obligations under this Agreement, other
than the parties' respective rights and obligations under Paragraphs 7.6, 11.1,
11.2, 11.3, and 11.7. Nothing in this Paragraph will, however, (i) affect the
rights of the Company and Acquisition with respect to the Deposit as set forth
in Paragraph 1.2 or (ii) relieve either party of liability for any breach of
this Agreement which occurs before this Agreement is terminated.
(b) If this Agreement is terminated after the Stock Purchase
Closing Date, the termination will not affect the validity of the Stock
Purchase. If this Agreement is terminated after Acquisition has accepted Shares
which are tendered in response to the Tender Offers, the termination will not
affect Acquisition's purchase of the Shares it has accepted or its obligation to
pay for those shares. Either Acquisition or the Company will, however, be
entitled to seek recourse for any damages it suffers as a result of, or
otherwise in connection with, the Stock Purchases or the purchase by Acquisition
of Shares which are tendered in response to the Tender Offers because
representations and warranties in this Agreement are not accurate or because of
breaches of this Agreement which occur after those events have taken place.
ARTICLE X
ABSENCE OF BROKERS
10.1 Representations and Warranties Regarding Brokers and Others.
The Company and Acquisition each represents and warrants to the other of them
that nobody acted as a broker, a finder or in any similar capacity in connection
with the transactions which are the subject of this Agreement, except that
Xxxxxxx and X. Xxxxxxxxxxxx, Inc. and Prudential Securities, Inc. acted as
financial advisors to the Company and ING Baring (U.S.) Securities, Inc., Xxxxx
Xxxxxx Inc. and Integra Financial Services LLC acted as financial advisors to
Acquisition and Supercanal. The fees of Xxxxxxx and X. Xxxxxxxxxxxx, Inc. and
Prudential Securities, Inc., which together will total the lesser of (i) 2% of
the total amount paid by Acquisition for
36
shares it acquires through the Stock Purchase and the Tender Offers plus the
total Merger consideration, or (ii) $2 million will be paid by the Company,
except that if (i) the Tender Offers are commenced and all the conditions on
Exhibit 2.1-C are fulfilled or waived, or (ii) the Tender Offers are not
commenced because Acquisition breaches its obligations under this Agreement,
Acquisition will pay those fees promptly after request by the Company. The fees
of ING Baring (U.S. Securities, Inc.), Xxxxx Xxxxxx, Inc. and Integra Financial
Services LLC, which together will total the lesser of (x) 2% of the total amount
paid by Acquisition for the shares it acquires through the Stock Purchase and
the Tender Offers plus the Merger Consideration or (y) $2 million, will be paid
by Acquisition. The Company and Acquisition each indemnifies the other of them
against, and agrees to hold the other of them harmless from, all losses,
liabilities and expenses (including, but not limited to, reasonable fees and
expenses of counsel and costs of investigation) incurred because of any claim by
anyone other than the five firms named in the first sentence of this Paragraph
for compensation as a broker, a finder or in any similar capacity by reason of
services allegedly rendered to the indemnifying party in connection with the
transactions which are the subject of this Agreement.
ARTICLE XI
GENERAL
11.1 Expenses. If (i) the Tender Offers are commenced and all the
conditions on Exhibit 2.1-C are fulfilled or waived or (ii) the Tender Offers
are not commenced because Acquisition breaches its obligations under this
Agreement, Acquisition will pay (i) its own expenses and (ii) promptly after
demand by the Company, all the expenses of the Company in connection with this
Agreement and the transactions which are the subject of this Agreement,
including the fees of the firms described in Paragraph 10.1 and including legal
and accounting fees and expenses. Otherwise, the Company and Acquisition
(together with Supercanal) each will pay its own expenses, including fees of
financial advisors and legal and accounting fees and expenses, in connection
with this Agreement and the transactions which are the subject of this
Agreement.
11.2 Company Option to Repurchase Stock. If the Stock Purchase
Closing takes place but Acquisition fails (i) to make the Tender Offers or (ii)
whether or not it is required to do so, to accept and pay for the Shares which
are properly tendered in response to the Tender Offers and not withdrawn, or if
this Agreement is terminated because of failure of the condition in Paragraph
8.2(d) due to a Supercanal Shareholder Suit, the Company will have the option,
exercisable by a notice to Acquisition given not later than 5:00 P.M. New York
City time on the first anniversary of the Initial Stock Purchase Closing Date,
to repurchase all (but not less than all) the Initial Purchased Common Stock, if
any, Acquisition has purchased for the price Acquisition paid for it (including
the amount of the Deposit which was applied in payment of a portion of the
purchase price of the Purchased Common Stock), payable on a date specified by
the Company in the notice of exercise of the option which is not more than 20
days after the day on which the notice of exercise is given, by a wire transfer
to an account in New York City specified by Acquisition in funds which are
immediately available
37
in New York City. Upon confirmation that the funds were received, Acquisition
will surrender to the Company the certificates representing the Purchased Common
Stock.
11.3 Purchase of Minority Interests. At or before the Effective
Time, Acquisition will purchase (or will cause an affiliate to purchase) the
minority interests in cable television interests listed on Exhibit 11.3 for a
total of $2,745,330, except to the extent Acquisition (or an affiliate) does not
purchase specific minority interests because the current owners of those
minority interests would not sell them for the prices shown on Exhibit 11.3.
11.4 Payment to Company. If after the Stock Purchase Closing Date
but before the Effective Time, this Agreement is terminated (i) by the Company
because Acquisition fails to fulfill its obligations under Article II or Article
III, or (ii) by Acquisition because the condition in Paragraph 8.2(d) is not
fulfilled due to a Supercanal Shareholder Suit, within 5 days after the day on
which this Agreement is terminated, Acquisition will pay the Company, by wire
transfer to the account specified in accordance with Paragraph 1.4(b)(i), the
sum of $5 million.
11.5 Retention Payments. The Surviving Corporation will pay each
employee of the Company listed on Exhibit 11.5 who either (i) continues to be
employed by the Surviving Corporation or a subsidiary for at least three months
after the Expiration Date, or (ii) is terminated as an employee of the Company
and its subsidiaries between the Expiration Date and the day which is three
months after the Expiration Date other than for Cause, an amount equal to the
employee's annual salary, but in no event will the Surviving Corporation be
obligated to pay those employees a total of more than $350,000 (and the amounts
payable to various employees will be reduced pro rata to the extent, if any,
necessary to reduce the total payments to $350,000). As used in this Agreement
the term "Cause" means gross negligence, fraud, wilful misconduct or the failure
to perform material duties after notice of such failure has been given to the
applicable employee.
11.6 Access to Properties, Books and Records. (a) From the date of
this Agreement until the Merger Date or such earlier date as this Agreement is
terminated, the Company will, and will cause each of its subsidiaries to, give
representatives of Acquisition full access during normal business hours to all
of their respective properties, books and records. Until the Effective Time or,
if the Merger does not take place, until the second anniversary of the date of
this Agreement, Acquisition will, and will cause its representatives to, hold
all information its representatives receive as a result of their access to the
properties, books and records of the Company or its subsidiaries in confidence,
and not use any of that information for any purpose except in connection with
the transactions which are the subject of this Agreement (including confirming
the accuracy of representations and warranties of the Company and other
information about the Company contained in this Agreement), except to the extent
that information (i) is or becomes available to the public (other than through a
breach of this Agreement), (ii) becomes available to Acquisition from a third
party which, insofar as Acquisition is aware, is not under an obligation to the
Company, or to a subsidiary of the Company, to keep the information
confidential, (iii) was known
38
to Acquisition before it was made available to Acquisition or its representative
by the Company or a subsidiary, or (iv) otherwise is independently developed by
Acquisition or an affiliate of, or advisor to, Acquisition. If this Agreement
is terminated prior to the Effective Time, Acquisition will, at the request of
the Company, deliver to the Company all documents and other material obtained by
Acquisition from the Company or a subsidiary in connection with the transactions
which are the subject of this Agreement or evidence that material has been
destroyed by Acquisition.
11.7 Press Releases. The Company and Acquisition will consult with
each other before issuing any press releases or otherwise making any public
statements with respect to this Agreement or the transactions contemplated by
it, except that nothing in this Paragraph will prevent either party from making
any statement when and as required by law or by the rules of any securities
exchange or securities quotation or trading system on which securities of that
party or an affiliate are listed, quoted or traded.
11.8 Entire Agreement. (a) This Agreement and the documents to be
delivered in accordance with this Agreement contain the entire agreement between
the Company and Acquisition relating to the transactions which are the subject
of this Agreement and those other documents, and, except as provided in
subparagraph (b), all prior negotiations, understandings and agreements between
the Company and Acquisition or Supercanal, or any affiliate or representative of
either of them, including, but not limited to, the Original Merger Agreement,
are superseded by this Agreement and those other documents, and there are no
representations, warranties, understandings or agreements concerning the
transactions which are the subject of this Agreement or those other documents
other than those expressly set forth in this Agreement or those other documents.
(b) If Acquisition is obligated under this Agreement to
complete, but fails to complete, any of the Stock Purchase, the Tender Offers or
the Merger, the Company, at its option, may (i) xxx for damages or seek other
recourse for breach of this Agreement, or (ii) xxx for damages or seek other
recourse for breach of the Original Agreement as though this Agreement had never
been entered into, provided that in computing damages under the Original
Agreement all transactions completed under this Agreement will be taken into
account. Under either option, the Company may seek declaratory, injunctive or
other non-monetary relief in connection with any breach of this Agreement.
(c) Acquisition acknowledges that neither it nor Supercanal,
nor any of their officers, directors or agents, has any claim against the
Company or any of its officers, directors or employees, based upon a failure of
the Company to fulfill any of its obligations, or otherwise arising, under or
relating to the Original Agreement, and Acquisition waives any such claims for
itself and for Supercanal to the extent Acquisition or Supercanal may have any
such claims.
11.9 Effect of Disclosures. Any information disclosed by a party
in connection with any representation or warranty contained in this Agreement
(including Disclosure Statements and including exhibits to this Agreement) will
be treated as having been disclosed in connection with each representation and
warranty made by that party in this Agreement.
39
11.10 Captions. The captions of the articles and paragraphs of this
Agreement are for reference only, and do not affect the meaning or
interpretation of this Agreement.
11.11 Prohibition Against Assignment. Neither this Agreement nor
any right of any party under it may be assigned, except that Acquisition may
assign its rights under this agreement to Supercanal or any majority owned
subsidiary of Supercanal.
11.12 Third Party Beneficiaries. Agreement will be solely for the
benefit of the Company and Acquisition, except that (a) Paragraphs 3.13 and 7.7
are for the benefit of, and may be enforced by, each person who is a holder of
an Option or of a warrant listed in Section 5.3 of the Company Disclosure
Schedule, (b)Paragraph 7.1(m) is for the benefit of and may be enforced by, Xxxx
Xxxx and Xxxx Xxxxxx,(c) Paragraph 7.6 is for the benefit of, and may be
enforced by, each person who is entitled to indemnification under that
Paragraph,(d) Paragraphs 10.1 and 11.1 are for the benefit of, and may be
enforced by, the persons entitled to have their fees and expenses paid as
described in those Paragraphs,(e) Paragraph 11.3 is for the benefit of, and may
be enforced by, the owners of the minority interests listed on Exhibit 11.3,(f)
Paragraph 11.5 is for the benefit of, and may be enforced by, the respective
persons listed on Exhibit 11.5, and (g) this Agreement is for the benefit of,
and may be enforced by, Supercanal to the same extent it is for the benefit of,
and may be enforced by, Acquisition.
11.13 Notices and Other Communications. Any notice or other
communication under this Agreement (including, but not limited to, a notice
under Paragraph 7.1(f)) must be in writing and will be deemed given when
delivered in person or sent by facsimile (with proof of receipt at the number to
which it is required to be sent), or on the tenth business day after the day on
which mailed by first class mail from within the United States of America or
Argentina, to the following addresses (or such other address as may be specified
after the date of this Agreement by the party to which the notice or
communication is sent):
If to Acquisition:
Tescorp Acquisition Corporation
c/o Supercanal Holding S.A.
[at the address and facsimile number for
Supercanal Holding S.A.]
with copies to:
Supercanal Holding X.X.
Xxxxx Xxxx 316
Mendoza, Province of Xxxxxxx
Argentina 5500
Attention: Xxxxxx Xxxxxxx Xxxx, Chairman
Facsimile No.: 546-129-8855
and
Xxxxxx & Xxxxx
40
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxxxx
Facsimile No.: 0-000-000-0000
If to the Company:
Tescorp, Inc.
000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Xxxx X. Xxxx, Xx.
Facsimile No.: 0-000-000-0000
with a copy to:
Klehr, Harrison, Xxxxxx, Branzburg & Xxxxxx
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxx Xxxxxx
Facsimile: 0-000-000-0000
11.14 Governing Law. This Agreement will be governed by, and
construed under, the laws of the State of New York relating to contracts made
and to be performed in that state.
11.15 Amendments. This Agreement may be amended only by a document
in writing signed by both the Company and Acquisition.
11.16 Consent to Jurisdiction and Service of Process. Each of the
parties to this Agreement (a) consents to the jurisdiction of any Federal or
state court sitting in the Borough of Manhattan, State of New York, in the
United States of America with regard to any action or proceeding under or
relating to this Agreement or any of the transactions contemplated by this
Agreement, (b) agrees not to attempt to move any such action or proceeding from
any such court to any other court, whether on the ground of inconvenience of the
forum or otherwise (but nothing will prevent a party from removing an action or
proceeding from a state court sitting in the Borough of Manhattan to a Federal
court sitting in that Borough), and (c) consents that process in any such action
or proceeding may be served by registered mail or in any other manner permitted
by the rules of the court in which the action or proceeding is brought.
11.17 Counterparts. This Agreement may be executed in two or more
counterparts, some of which may contain the signatures of some, but not all, the
parties. Each of those counterparts will be deemed an original, but all of them
together will constitute one and the same agreement.
41
IN WITNESS WHEREOF, the Company and Acquisition have executed this
Agreement, intending to be legally bound by it, on the day shown on the first
page of this Agreement.
TESCORP ACQUISITION CORPORATION
By:
--------------------
Title:
TESCORP, INC.
By:
--------------------
Title:
42
Exhibit 2.1-C
Conditions to Tender Offers
The capitalized terms used in this Annex A have the meanings set forth in
the attached Agreement, except that the term "Agreement" refers to the attached
Agreement together with this Annex A.
Acquisition will not be required to accept for payment or pay for any
Shares tendered in response to the Tender Offers if:
(i) The number of shares properly tendered in response to the
Tender Offers and not withdrawn, together with the shares of Common Stock
and any shares of 8% Preferred Stock already owned by Acquisition, does not
total more than two-thirds of the outstanding shares of Common Stock and
two-thirds of the outstanding shares of 8% Preferred Stock (this condition
being referred to as the "Minimum Condition");
(ii) There is any 10% Preferred Stock outstanding after the day
which is 65 days after the Initial Stock Purchase Closing Date (if that day
is before the Expiration Date);
(iii) Any statute, rule, regulation, order or injunction has been
enacted, promulgated, entered or enforced by any national or state
government or governmental authority or by any United States or Argentine
court of competent jurisdiction, that would make the acquisition of the
Shares by Acquisition illegal or otherwise prohibit consummation of the
Tender Offers or the Merger; or
(iv) There has been (i) a general suspension of trading in, or
limitation on prices for, securities on the New York Stock Exchange which
continued for at least three business days, (ii) the declaration of a
banking moratorium or any suspension of payments in respect of banks in the
United States or Argentina (whether or not mandatory) which continued for
at least three business days, (iii) the commencement of a war or armed
hostilities or any other international or national calamity directly or
indirectly involving the United States or Argentina, which has a
significant adverse effect on the functioning of financial markets in the
United States or Argentina, (iv) any limitation (whether or not mandatory)
by any United States or Argentine governmental authority or agency on the
extension of credit by banks or other financial institutions which would
have a material adverse effect on Supercanal's or Acquisition's ability to
borrow sufficient funds under its bank facilities to purchase and pay for
all the Shares which are tendered in response to the Tender Offers and to
carry out the Merger on the terms contemplated by the Agreement or (v)
there is a material acceleration or worsening of any of the conditions
described in clauses (i) through (iv) which exists at the date of the
commencement of the Tender Offers.
(v) Any of the representations and warranties of the Company set
forth in the Agreement is not true and correct as of the date of the
Agreement, except failures to be true and correct which would not, in the
aggregate, have a Material Adverse Effect upon the Company;
(vi) Since the date of the Agreement, there has been an occurrence
or group of occurrences (whether or not related) which have had a Material
Adverse Effect upon the Company (other than (i) occurrences which affected
generally the cable television industry worldwide or in Argentina,
including actual or proposed changes in laws or regulations, or (ii) the
transactions contemplated by the Agreement, including the change in control
contemplated by it); or
(vii) the Company has not performed all the obligations it is
required to have performed under the Agreement, except failures which (i)
would, in the aggregate, not materially impair or delay the ability of
Acquisition to consummate the purchase of the Shares which are tendered in
response to the Tender Offers or the ability of Acquisition and the Company
to effect the Merger, (ii) have been caused by or result from a breach of
the Agreement by Acquisition; or (iii) do not, and are not reasonably
expected to, have a Material Adverse Effect on the Company.
(viii) The Agreement has been terminated in accordance with its
terms; or
(ix) The Board withdraws or modifies in a manner adverse to
Acquisition the Board's approval or recommendation of the Tender Offers or
the Merger.
The conditions set forth above are for the sole benefit of Acquisition, and
may be waived by Acquisition, in whole or in part. Any delay by
43
Acquisition in exercising the right to terminate the Tender Offers because any
of the conditions are not fulfilled will not be deemed a waiver of its right to
do so.
44
