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Exhibit 2.14
STOCK PURCHASE AGREEMENT
This agreement is executed on September 9, 1999 (together with the Appendices
attached hereto hereinafter referred to as the "Agreement") between Xxxxxxx
Xxxxxxx Xxxxxxx, Federal Identification No. 21.697.798, born on February 2,
1971, unmarried, domiciled at Junin 658 Xxxxx X, 00xx Xxxxx, Xxxxxxxxx "X",
Xxxxxx Xxxxx, Xxxxxxxxx (hereinafter "Xxxxxxx Xxxxxxx"), and Xxxxxxxx Xxxxxx
Xxxxxxx, Federal Identification No. 20.668.976, born on February 18, 1969,
unmarried, domiciled at Junin 658 Xxxxx X, 00xx Xxxxx, Xxxxxxxxx "X", Xxxxxx
Xxxxx, Xxxxxxxxx (hereinafter jointly referred to as the "Sellers"), and
Telefonica Interactiva Argentina S.A., a company organized and existing under
the laws of the Republic of Argentina, domiciled at Xxxxxxx 0, 00xx Xxxxx,
Xxxxxx Xxxxx, Xxxxxxxxx (hereinafter the "Buyer") (hereinafter jointly referred
to as the "Parties").
WHEREAS
The Sellers are the legal owners and beneficiaries and have perfect title to
100% of the shares issued, subscribed, paid in and in circulation of the capital
stock and rights thereto (hereinafter referred to as the "Shares") of Netgocios
S.A., a company duly organized and existing under the laws of the Republic of
Argentina, registered on December 3, 1998 under No. 14.571, in Book 3,
Corporations Volume, entry No. 422, of the Corporate Records Office of the
Public Trade Register, legally operating under the laws of the Republic of
Argentina (hereinafter referred to as the "Company").
The Company owns the trademarks GauchoNet, which includes a distinctive,
identifying logo, and Netgocios; and the NIC-Argentina registered domain name
xxx.xxxxxxxxx.xxx.xx and the INTERNIC registered domain name xxx.xxxxxxxxx.xxx;
The Sellers wish to sell, and the Buyer wishes to buy, the Shares issued by the
company, subject to the terms and conditions of this Agreement;
THEREFORE, based upon the representations and warranties herein and as agreed
herein, the Parties covenant as follows:
ARTICLE 1
DEFINITIONS
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1.1. Certain Definitions. In addition to the terms defined in other parts of
this Agreement, the terms indicated below, written with the first letter
capitalized, as used in this Agreement shall be defined as follows:
"Accord": With respect to any Person, any agreement, contract, negotiable
instrument, legally binding and enforceable commitment, arrangement or
understanding, to which said Person is a party or by which it is bound, either
written or oral, including each and all of the amendments thereto.
"Deletion of a Person": The action of eliminating the information on a Person
from the records maintained by NIC-Argentina.
"Banner": A unit of measurement of advertising space on the Internet.
"Change a Person": Replacement by transferring one registered Person to another
registered Person.
"Number of Banners Displayed per Page in a Domain": The number of Banners on a
page in the Domain.
"Number of Pages Displayed Per Day by a Domain": The number of pages displayed
by a domain in one day, resulting from the number of pages viewed according to
the log-file analysis.
"Number of Pages Viewed Per User": The number of pages that are consulted on the
average by the Users when they successfully access the Domain in question.
"Number of Hits per Day": The number of times per day a given Domain is
successfully accessed.
"Total Number of Banners Displayed Per Day by a Domain": The number of banners
displayed per day by a Domain, derived by multiplying the Number of Pages
Displayed Per Day by a Domain by the Number of Banners Displayed Per Page in a
Domain.
"Content": Certain content transmitted by the Internet, including but not
limited to movies, music, games, on-line books, information, etc. Content
Providers may be, among others, motion picture studios, editors, periodical
publishers (such as La Nacion, Clarin, etc.) and music composers.
"Content Contracts": All contracts executed by a Domain owner with Content
Providers in order to obtain a profit (either by performing an exchange that is
profitable or by any other method) by incorporating in the domain the Content
that may be of interest to the Users.
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"Cost per Thousand": The manner of charging advertisers instituted globally on
the Internet. A price is determined for every thousand hits and then is
multiplied by the number of hits received by the corresponding Banner. Banners
located on the first page, home pages or preferred locations have a higher Cost
per Thousand than the others.
"Domain Name": The complete identifier of a Domain. It consists of the
concatenation of the name and the Subdomain, separated by a dot.
"E-mail address": The only means by which Applicants may submit Requests for
Domain Names.
"Dollars" or "US$": The legal tender of the United States of America.
"Domain": The Internet address expressed in a simple manner for the ease of the
User. The primary function of the Domain is to facilitate Net surfing for Users.
"Internet": A/The network of networks. It is an autopoietic phenomenon. It
consists of services that, supported by networks, links and/or
telecommunications systems, offer facilities that differentiate them from the
basic service, applying processes that make information available, act on it and
even allow the User to interact with the system.
"Log-file": The file that records all server activity, including but not limited
to pages viewed, hits, file transfers, source of hits or server errors.
"LSC": The Law on Commercial Companies No. 19550 and amendments thereto.
"NIC-Argentina": The abbreviation that identifies the Ministry of Foreign
Relations, International Trade and Culture of the Republic of Argentina in its
capacity as administrator of the Argentine Internet Domain.
"Registered Domain Name": The name that appears in the lists of Domains
maintained by NIC-Argentina.
"Person": Any individual or legal entity, including but not limited to any
company, association, joint venture, trust, de facto corporation, or any other
entity or organization, including government or departmental organizations or
agencies of any government.
"Registrant": The person benefiting from registration of a name.
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"Responsible Person": The contact person designated by the Registrant who will
responds to all issues regarding the Domain Name. This person must have a valid
and reachable E-mail Address.
"Pesos" or "$": The legal tender of the Republic of Argentina.
"Percentage of Inventory Sold by a Site": The percentage of banners displayed by
a Domain that generate a cash flow. It is common in any communications media to
exchange advertising space, for which no money is exchanged but rather another
service is provided.
"Internet Portal": A means of communications. An Internet Portal offers an
Internet that is much better organized and much easier to search. Each Internet
Portal provides more functionality to the network and more productive usage. An
Internet Portal offers, in addition to a search engine, among others, services
such as e-mail, chat, news, shopping, personal pages, communities and games.
"Horizontal Portal": A Portal that does not have a specific subject, but instead
is general. A Horizontal Portal is aimed at a general community and not
necessarily a community interested in searching for a specific subject.
"Registration Procedure": The registration procedure used by NIC-Argentina,
consisting of the possibility of Persons filing an Application or Change of
Registration, for which interactive forms are available for the different
Applications. Communications regarding the receipt and results of each
Registration Procedure are sent to the E-mail Address of the contacts of each
Domain.
"Readership": The number of Users that use the same Internet account. This
occurs in cases, especially in companies rather than in homes, in which a single
Internet account is used by various Users.
"Application": The application submitted on a NIC-Argentina form in order to
initiate a Registration Procedure. The purpose of the application may be to
register a Domain or Change the Registrant or Person Responsible.
"Applicant": The Person submitting an application to NIC-Argentina.
"Subdomain": A subdivision of the domain AR (Argentina), under which
NIC-Argentina registers the names.
"User": Those who access the Internet from residential or business, private or
public, computer equipment.
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1.2. Other terms. Other terms may be defined in another provision in the text of
this Agreement and, unless otherwise indicated, shall be defined as in the
definition, for any application under this Agreement.
1.3. Other definitions: The words "herein," "contained herein," and "established
below" are words that are similar in meaning, when used in this Agreement, and
refer to this Agreement in its entirety. The terms defined in the singular shall
have a comparable meaning when used in the plural and vice-versa, according to
the context.
ARTICLE 2
PURCHASE OF SHARES
2.1. Purchase of Shares: (i) The Sellers hereby sell and transfer to the Buyer,
and the Buyer purchases from the Sellers, subject to the terms and conditions of
this Agreement, all of the Shares for the purchase price established in Article
3 herein.
(ii) For purposes of this Agreement, the term "Shares" means all of the shares
of the Company issued and in circulation, which currently amount to 12,000
(twelve thousand) common registered shares with a par value of $ 1 (one peso),
each share entitling the owner to 1 (one) vote, with all political, economic and
other rights corresponding thereto, including but not limited to: (i) all rights
to uncapitalized capital contributions made, and the stock premiums paid, in
effect as of the date of this Agreement; (ii) all rights to dividends payable in
cash, shares or otherwise declared by the Company up to the date of this
Agreement which are unpaid to date; (iii) all rights to subscribe shares of
stock of the Company corresponding to subscriptions offered by the Company up to
the date of this Agreement; (iv) all rights to receive shares of the Company
subscribed prior to the date of this Agreement; (v) all other distributions
declared by the Company, whether capital reductions, distributions of stock
premiums or other concepts.
2.2. Transfer of Shares and delivery of documentation: The Sellers hereby
transfer the Shares to the Buyer, free of all encumbrances, and the Parties
deliver all of the documentation and execute all of the acts necessary to
perfect the transfer of the Shares, and the Buyers assume the unrestricted
administration and disposition of the Company, including but not limited to the
documents and acts listed below:
(i) The Sellers deliver to the Buyer the stock certificates representing the
Shares, in a suitable manner for the transfer, together with the corresponding
transfer notices addressed to the Company, signed by the Sellers, in compliance
with all requirements of the LSC;
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(ii) The Sellers deliver to the Buyer all of the books, documentation and
accounting and corporate background of the Company, as well as all of the deeds
and other property records of the Company;
(iii) The Permanent and Alternate Directors of the Company submit and deliver
their unconditional resignations and waiver of fees and compensation for any
other reason that may be applicable, indicating that they have nothing to claim
from the Company for any reason whatsoever;
(iv) The Chairman of the Company, who resigns as provided in Article 2.2 (iii),
signs all of the necessary documents prior to resigning, in accordance with
applicable legislation, in order to perfect the transfer of the Shares and the
unrestricted administration of the Company by the Buyer;
(v) After duly registering the transfer of Shares, the Buyer convenes a General
Shareholders Meeting of the Company to, among others, accept the resignation of
the departing Directors and their waiver of any fees that may apply, and to
appoint new members of the Board of Directors of the Company;
(vi) The Buyer delivers the following checks to the Sellers: (i) Check No.
01009834 drawn on Citibank, dated September 9, 1999, for US$ 3,000 (three
thousand Dollars), to the order of Xxxxxxxx Xxxxxx Xxxxxxx, and (ii) Check No.
01009837 drawn on Citibank, dated September 9, 1999, for US$ 57,000 (three
thousand Dollars), to the order of Xxxxxxx Xxxxxxx Xxxxxxx, in payment of a
portion of the price of the Shares to begin performance of this Agreement,
pursuant to the provisions of Article 3 herein, the Agreement being sufficient
receipt for such payment.
ARTICLE 3
PRICE AND FORM OF PAYMENT
3.1. The total purchase price of the Shares is US$ 4,586,000 (four million five
hundred eighty-six thousand Dollars). This amount is subject to all downward
adjustments and/or deductions that may apply pursuant to Article 6 herein.
The Sellers hold the Buyer harmless from all liability that may result or arise
out of any dispute between the Sellers with regard to distribution of the Price,
adjustments and/or deductions thereto, or indemnifications that they may be
required to sustain as a result of this Agreement.
3.2. The Price shall be paid as follows:
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(i) US$ 60,000 (sixty thousand Dollars), as established in Article 2.2 (vi)
herein, to begin performance of this Agreement, paid herewith;
(ii) Furthermore, the Buyer hereby credits the Sellers in the amount of US$
200,000 (two hundred thousand Dollars), of which US$ 80,000 (eighty thousand
Dollars) shall be used for payment as indicated in Article 3.1 herein, and US$
120,000 (one hundred twenty thousand Dollars) shall be used for the Security
Deposit as provided in Articles 6 and 7 herein. The Sellers hereby deliver to
the Buyer the above-mentioned amounts so that the Buyer, in the name of the
Company, may pay back wages and severance pay to the employees of the Company
pursuant to Article 4.13 herein, and so the Buyer may take the necessary
measures for the Security Deposit.
(iii) The balance of the Price (hereinafter the "Balance of the Price"), i.e.,
US$ 4,326,000 (four million three hundred twenty-six thousand Dollars), shall be
paid by the Buyer to the Sellers as follows:
(iii.1.) US$ 1,500,000 (one million five hundred thousand Dollars) shall be paid
by the Buyer to the Sellers within five (5) calendar days from the date of
definitive legal registration, in due form, of the domains xxx.xxxxxxxxx.xxx.xx
and xxx.xxxxxxxxx.xxx in the name of the Company, and registration with
NIC-Argentina and INTERNIC, respectively. Payment shall be made as follows: US$
1,425,000 (one million four hundred twenty-five thousand Dollars) to Xxxxxxx
Xxxxxxx Xxxxxxx, and US$ 75,000 (seventy-five thousand Dollars) in favor of
Xxxxxxxx Xxxxxx Xxxxxxx. Payment shall be made at the place and time that the
Buyer reliably advises the Sellers, or at the place and time agreed by the
Parties. Furthermore, the Parties may agree that payment be deposited in a bank
account, in which case the Sellers shall advise the Buyer of the account number,
the name of the Bank and other necessary information.
(iii.2) US$ 2,826,000 (two million eight hundred twenty-six thousand Dollars)
shall be paid by the Buyer to the Sellers within five (5) calendar days from the
date on which the Company executes and signs the Content Contracts with the
parties indicated in Appendix 3.2 (ii.2) herein. Payment shall be made as
follows: US$ 2,684,700 (two million six hundred eighty-four thousand seven
hundred Dollars) to Xxxxxxx Xxxxxxx Xxxxxxx, and US$ 141,300 (one hundred
forty-one thousand three hundred Dollars) in favor of Xxxxxxxx Xxxxxx Xxxxxxx.
Payment shall be made at the place and time that the Buyer reliably advises the
Sellers, or at the place and time agreed by the Parties. Furthermore, the
Parties may agree that payment be deposited in a bank account, in which case the
Sellers shall advise the Buyer of the account number, the name of the Bank and
other necessary information.
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The Balance of the Price shall not accrue interest of any type whatsoever in
favor of the Sellers.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
The Sellers represent and warrant to the Buyer that as of the date of this
Agreement:
4.1. Legal Standing of the Sellers. The Sellers have the right and full legal
standing to enter into this Agreement and execute the transactions provided
herein, and are not subject to any legal, judicial or contractual restriction
with respect to the disposal of their assets in general or the Shares in
particular. This Agreement was duly executed and granted by the Sellers and
constitutes a valid and binding obligation for the Sellers, enforceable
according to the terms and conditions hereof.
4.2. Non-violation. Execution of the operations provided herein and performance
by the Sellers of this Agreement according to the terms and conditions hereof
(i) shall not require the approval, consent or adoption of any measure by any
other person, nor any submission or representation to or sending any
notification to any person, and (ii) shall not be in conflict with, nor imply
nonperformance or violation of, any of the terms and conditions, nor constitute
a fact that may end or accelerate the terms, or impose any pledge or encumbrance
on the assets of the Company, of any of the following instruments:
(a) The bylaws of the Company;
(b) Any other agreement, instrument or contract (hereinafter "Contract") to
which the Company or the Sellers are a party or by which they are otherwise
bound or subject;
(c) Any ruling, decision, order, mandate, measure to not change or resolution
(hereinafter "Order") of any court, government or administrative agency or
arbitrator applicable to the Company, Sellers, any of the Shares in the
possession of the Sellers or any of the assets of the Company that may impede
the transaction instrumented by this Agreement; or
(d) Any law, legal provision, standard or regulation (hereinafter "Law")
applicable to Company, Sellers, any of the Shares in the possession of the
Sellers or any of the assets of the Company that may impede or have a
significant adverse effect on the transaction instrumented by this Agreement.
4.3. Corporate Structure and Standing. The Company is a duly organized
corporation that operates validly and is in existence under the laws of the
Republic of Argentina. The Company
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has all power necessary to conduct the business in which it is engaged and to
own, rent, lease and operate the assets it owns, leases or operates. The Sellers
have delivered to the Buyer a complete and correct copy of the bylaws
(hereinafter "Bylaws") of the Company, with amendments and according to the
current text, which is included in Appendix 4.3 herein.
4.4. Ownership of Shares. The Sellers are the sole and unlimited owners and sole
beneficiaries of the Shares. The Sellers have a valid, perfect title to the
Shares, free and clear of all types of pledges, restrictions, encumbrances,
mortgages, legal or administrative attachments, liens, easements, defects,
collateral property rights, claims, usufructs, third party contractual rights,
options and restrictions of any type, including any limitation or restriction to
ownership, transfer and availability of the Shares and/or assets, accordingly
(hereinafter "Encumbrances"). Against delivery of the Shares as provided in
Article 2.2, the Sellers shall transfer to the Buyer the valid, negotiable and
absolute title to the Shares, free and clear of any type of Encumbrance.
4.5. Internet Domain and Trademark. Notwithstanding the representations and
warranties in Article 4.7 herein, Xxxxxxx Xxxxxxx represents and warrants that
he sold to the company, with clean title and in compliance with all legal
provisions:
(i) The domain xxx.xxxxxxxxx.xxx.xx, registered with NIC-Argentina.
Xxxxxxx Xxxxxxx represents that he is currently taking the necessary measures to
register the Domain in the name of the Company. Furthermore, Xxxxxxx Xxxxxxx
ensures the legitimacy and satisfactory results of the procedure and further
ensures that the Company will owe nothing for this procedure nor will lose any
rights as a result thereof.
The contract to transfer the Domain xxx.xxxxxxxxx.xxx.xx and the registration
procedure that was initiated are attached hereto in Appendix 4.5 (i).
(ii) The Domain xxx.xxxxxxxxx.xxx, a registered domain name with INTERNIC,
United States of America.
Xxxxxxx Xxxxxxx represents that he is currently taking the necessary measures to
register the Domain in the name of the Company. Furthermore, Xxxxxxx Xxxxxxx
ensures the legitimacy and satisfactory results of the procedure and further
ensures that the Company will owe nothing for this procedure nor will lose any
rights as a result thereof.
The contract to transfer the Domain xxx.xxxxxxxxx.xxx and the registration
procedure that was initiated are attached hereto in Appendix 4.5 (ii).
(iii) The trademarks GauchoNet and the distinctive, identifying logo, and
Netgocios, the transfer forms, duly and legally signed, are attached Appendix
4.5 (iii).
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Xxxxxxx Xxxxxxx represents that there have been no objections filed against the
transferred trademarks in the Trademark Register to date.
4.6. Capitalization. The capital stock of the Company is $12,000 (twelve
thousand Pesos), represented by common registered shares with a par value of $1
(one Peso) (hereinafter the "Capital Stock") There is no other type or class of
capital stock of the company or other ownership of its capital stock. All of the
shares of Capital Stock issued and in circulation have been validly issued and
are fully paid in, and not subject to additional contributions. There are no
options, subscription rights or other rights of any type to acquire additional
shares of Capital Stock of the Company or other ownership of its capital, nor
securities which are convertible to or exchangeable for, or otherwise grant the
holder any right to acquire, any of such additional shares or ownership of
capital stock, and the Company is not bound to issue any options, subscription
rights, rights or certificates. There are no agreements with regard to voting,
redemption, purchase or sale of the Capital Stock. The Company has no pending
(i) capital increases or decreases, (ii) subscriptions, issuances or redemptions
of shares, (iii) amendments to the Bylaws of the Company, (iv) mergers,
spin-offs or transfers of businesses, or (v) other corporate acts of similar
magnitude, with the exception of the sale of Shares in favor of the Buyer
pursuant to this Agreement.
4.7. Assets of the Company. The Company has perfect title to all of the tangible
or intangible property listed in the Financial Statements, including such assets
that were acquired subsequent to the last balance sheet corresponding to the
normal course of business. None of the assets of the Company are subject to
encumbrances, pledges or claims of any type whatsoever. The assets currently
used by the Company in its operations are in good condition and have been
maintained and cared for according to their intended use. Appendix 4.7 herein
lists the assets owned by the Company.
4.8. Legal Proceedings. There are no: (i) outstanding rulings issued by any
court, government, regulatory agency or arbitral tribunal against or involving
the Company or any of its assets; (ii) actions, lawsuits, disputes or
proceedings of any type whatsoever underway or imminent at any time since
November 27, 1998 against or involving the Company or any of its assets, and
(iii) investigation underway or imminent at any time since November 27, 1998
against or involving the Company or any of its assets (jointly referred to as
"Proceedings"). There are no facts, events or circumstances that may be
reasonably assumed to entail Proceedings against or involving the Company or any
of its assets.
4.9. Lease. Appendix 4.9 herein contains a copy of the only lease executed by
the Company. The lease is valid, binding, and was granted regularly and
legitimately and is in full force, and the Company is current in all rent
payments and any other amounts payable. The Company has
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complied with all of the terms and conditions of the lease, and there is no
assumption of termination or default. The Company has quiet enjoyment of the
property covered by such lease.
4.10. Financial Statements. (i) the Financial Statements for the fiscal year
ending on December 31, 1998, together with the notes to said financial
statements (hereinafter jointly referred to as "Financial Statements") were
prepared in accordance with generally accepted accounting procedures in
Argentina, and are complete, correct and properly reflect the financial
situation and operating earnings of the Company.
(ii) There are no liabilities, debts, obligations or claims of any type
whatsoever against the Company, whether absolute or contingent, with the
exception of those reflected or provided in the Financial Statements, as
explained therein.
4.11. Books and Records. The books of the Company have been maintained in a
legal, all-inclusive, adequate and accurate manner, and contain accurate,
complete and exact details of all of the issues that must be recorded in such
books, according to applicable regulations.
4.12. Tax Issues: Other Payments or Declarations to Government Agencies. For
purposes of this Agreement, the term Taxes shall include any type of tax, levy,
contribution, tariff, duty, determination, withholding, assessment or government
charge of any type, including but not limited to any and all taxes or levies of
this type that must be collected and paid to any government agency on behalf of
third parties (including but not limited to obligations derived from acting as
withholding agent, assessment agent, substitute, agent or intermediary, etc.),
including, with regard to each item, all interest, adjustments, punitive charges
or additional amounts, etc., fines and other penalties.
(i) All Sworn Tax Declarations of the Company have been submitted in a timely
manner when due, according to applicable Law, and all significant aspects of
such Sworn Tax Declarations are true, complete and accurate;
(ii) All of the Taxes reflected in such Tax Declarations and all other Taxes
relating to the Company (including all Tax shortages or determinations) have
been paid in a timely manner;
(iii) The charges, amounts due and reserved for Taxes relating to the Company
reflected in the books of the Company (including but not limited to the
Financial Statements) are sufficient to cover all Taxes payable, or which may
become payable, for periods prior to the date of
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execution of this Agreement;
(iv) There are no agreements or covenants currently in effect or any pending
requests with regard to the extension or waiver of terms for (a) submitting any
Sworn Tax Declaration for the Company, or (b) the determination or collection of
any type of Tax relating to the Company;
(v) Except as listed in Appendix 4.12 (v) herein, all Taxes that the Company is
bound by any Law to withhold or collect have been duly withheld or collected,
and have been paid in a timely manner to the pertinent government authorities as
they became due and payable;
(vi) There are no actions, lawsuits, proceedings, investigations, examinations,
inspections, claims or deficiencies currently pending or imminent in relation to
Taxes applicable to the Company;
(vii) There are no Tax liens against any assets of the Company;
(viii) The Company is not and has never been party to any agreements or
covenants for sharing Taxes, and
(ix) Since its inception, the Company has never been subject to audits by the
Tax Authorities that would entail additional Tax payments by the Company.
4.13. Labor Issues. (i) According to preliminary estimates, the Company is
currently confronting a contingency for personnel and insurance accounts
payable. Appendix 4.13 (i) herein contains the name, hire date, job and gross
monthly salary of all employees of the Company.
(ii) The Sellers assume and agree to confront all consequences derived form this
contingency (hereinafter the "Contingency"), thus releasing and holding the
Buyer harmless from any claim and payment that the Company must confront in the
future, for any reason arising out of this Contingency.
(iii) The Parties agree that in order to facilitate payment of the Contingency,
they shall establish a security deposit, pursuant to Article 7 herein, for a
total of US$ 120,000 (one hundred twenty thousand Dollars). If the definitive
amount that must be paid exceeds the amount of the Security Deposit, the Sellers
shall pay the balance within five (5) business days from notification by the
Buyer. The Security Deposit provided in Articles 6 and 7 herein is not limited
only to the Contingency.
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(iv) The Sellers shall also cover the costs derived from severing the employment
relationship and adjusting the compensation situation for the employees listed
in Appendix 4.13 (i), authorizing the Buyer to process the severance of Xxxxxx
Xxxxx, Mariana Xxxxxx, Xxxxxxx Caderossa, Xxxxxxx Xxxxx and Xxxxx Xxxxxxx, and
to adjust the compensation situation of Diego Benchuya, Xxxxxxx Fornaso and
Xxxxxx Xxxxxx with the Ministry of Labor, and to credit them in an amount not
exceeding US$ 80,000 (eight thousand Dollars), as detailed in Appendix 4.13
(iv).
(v) The reintegration of any of these people in the Company, regardless of the
legal form adopted, does not release the Sellers from their obligation for
indemnity for prior employment.
4.14. Compliance with Laws: Permits and Authorization. (i) The Company has
conducted all of its business in accordance with all applicable federal,
provincial or municipal regulations and with all orders issued by any federal,
provincial or local government, or government, regulatory or administrative
agency, ministry, organization or commission (hereinafter "Government
Regulations") applicable to the Company or any of its assets or activities.
(ii) The Company has full written authorization, in accordance with applicable
Law, to operate and continue to engage in its activities, in the manner and at
the place(s) where it currently does so. The Company has not received any
notification and there is no reasonable basis to assume that other permits,
authorizations and/or licenses will be required. The Company is not under
investigation, the subject of a report or imminent legal or administrative
action or proceeding in relation to the violation of any standard, regulation or
ruling that may entail a request or order for temporary or definitive closure.
4.15. Nonexistence of Contingent or Hidden Liabilities. The Company does not
have any liabilities or obligations of any type (absolute, due, registered,
hidden, simulated, contingent or others) including but not limited to loans, tax
liability, labor and benefit liabilities, which are not fully and duly recorded
in the Financial Statements or for which a reserve or provision is not
established therein. such provisions, records or reserves are adequate,
appropriate, sufficient and reasonable.
4.16. Agreements and Commitments. (i) Appendix 4.16 herein lists all of the
agreements and commitments signed by the Company which are in effect and being
performed as of the date of this Agreement to which the Company is a party.
(ii) The Company has regularly complied with all standards, contracts or
agreements, in accordance with applicable legal provisions in each case, and has
not performed any action or failed to take any measure that may result in the
possibility of a lawsuit or liability or which may have a significant adverse
effect on its business, property, assets or financial condition.
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4.17. Accuracy of Information. No representation or warranty of the Sellers in
this Agreement, including the Appendices hereto, or any representation contained
in any document (including but not limited to the Financial Statements,
certificates or other writings submitted or to be submitted by the Sellers to
the Buyer or any of its representatives pursuant to the provisions of this
Agreement or in relation to the operations provided herein) contains or shall
contain any misrepresentation of a key event nor shall fail to state any fact as
necessary, in view of the circumstances, to ensure that the representations
contained herein or in such other documents are not misleading. There is no fact
known by the Sellers or which may be determined by reasonable investigation that
there was or may be a significant adverse change for the Company that has not
been indicated in this Agreement. "Significant Adverse Change" is understood to
be any fact, circumstance or event which significantly affects or may affect the
situation (financial or otherwise), activity, assets, liabilities (contingent or
otherwise), cash flow, operating earnings, capital stock, economic, commercial,
legal and/or financial situation or projections of the Company.
4.18. Insurance Policies. There is no insurance of any type whatsoever carried
by the Company.
4.19. Powers of Attorney. There are currently no powers of attorney granted by
the Company.
4.20. Bank accounts. All bank accounts of the Company are listed in Appendix
4.20, which also lists the balances and names of all persons authorized to sign
for an draw on such accounts. It is understood that the authorizations granted
to such persons shall be revoked at the time of signature of this Agreement.
4.21. Accounts Receivable and Payable. Appendix 4.21 herein contains current
details of the accounts payable (including the amount, account, due date and
supporting documentation) and accounts receivable (including the amount,
account, due date and supporting documentation).
4.22. Backups of Documentation and Programs. The Sellers represent and warrant
to the Buyer that each and all of the programs and information necessary for
normal development of the activities of the Company and all documentation,
whether in hard copy or on magnetic media, necessary to access the history
records and/or to maintain the activities of the Company at the same level are
backed upon on magnetic media. No damage and/or unforeseen circumstances and/or
force majeure will prevent the Sellers from delivering to the Buyer a backup
copy on magnetic media of all of the updated data and information of the
Company.
4.23. Inventory. The Company has no inventory.
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4.24. The Sellers represent that the commercial activity of the Company has
resulted in the following averages in August 1999:
(i) Number of unique hits per day: 12,000
(ii) Number of pages viewed by Users: 4
(iii) Number of pages displayed per day in a Domain: 48,000
[sic] (v) Number of registered users: 30,000
(vi) Number of pages viewed in the month: 1,440,000
(vii) Average sales income from March through August: US$ 17,000
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to the Sellers that as of the date of this
Agreement:
5.1. Organization. The Buyer is a company organized under the laws of the
Republic of Argentina on July 28, 1999, and was duly registered with the
Corporate Records Office under No. 11778, Book VI - Corporations Volume, on
August 17, 1999, and is validly existing and operating under the laws of
Argentina.
5.2. Corporate Authority. The Buyer has full corporate power and authority to
enter into this Agreement and perform the transactions contemplated herein. The
execution, granting and performance of this Agreement by the Buyer have been
duly authorized by all required corporate means. This Agreement was duly
executed and granted by the Sellers and constitutes a valid and binding
obligation for the Sellers, enforceable according to the terms and conditions
hereof
ARTICLE 6
INDEMNIFICATION
6.1. Indemnification for the Buyer. The Sellers jointly and severally agree to
indemnify, protect and hold the Buyer and/or the Company harmless, at the
discretion of the Buyer, for all
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losses, liability, claims, damages, obligations, costs and charges (including
but not limited to reasonable attorney fees) that may be directly or indirectly
caused by or arising out of:
(i) Any inaccuracy, misrepresentation or nonperformance of any of the
representations, warranties or clauses agreed by the Sellers in this Agreement
or in any document or information delivered by the Sellers pursuant to this
Agreement;
(ii) Any nonperformance by the Sellers in implementing or complying with any or
all of this Agreement;
(iii) Each and all of the past, present or future tax liabilities derived from
any violation of laws, regulations or decrees or which result from rulings or
judgments that may affect or be imposed against the Company, its employees or
any of its assets, arising out of measures prior to the date of this Agreement
(hereinafter "Tax Losses");
(iv) Any nonperformance by the Sellers and the Company in payment of labor,
benefit and social security obligations (including but not limited to payment of
the Contingency as defined in Article 4.13 herein) in relation to the employees
of the Company.
(v) Any Contingent Liabilities. For purposes of this Agreement, "Contingent
Liabilities" are defined as any liability or obligation assumed by or imposed
upon the Company, or obligations of the Company that have not been duly reported
in the records or Financial Statements of the Company prior to the date of this
Agreement, or which have been reported but the information does not sufficiently
represent or cover the amount corresponding to the obligation or liability; and
(vi) Any Hidden Liabilities. For purposes of this Agreement, "Hidden
Liabilities" are defined as: (i) any unreported liability or obligation assumed
negligently or fraudulently; or (ii) any unreported liability or obligation of
which the Sellers or the management, executives, employees or representatives of
the Company were aware or should have been aware, in order to take customary
care during the normal course of business; or (iii) any liability or obligation
determined or imposed by any authority, including judges, that was not reported
in the Financial Statements; or (iv) any failure to indicate in the Financial
Statements any liabilities that should have been indicated in accordance with
current legal provisions.
The Sellers shall not be released from their liability if the Buyer could have
known of the existence of the contingency, loss, expense or cost by means of
authenticated documents submitted by the Sellers or the results of the Audit;
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The facts included in this Article 6.1 for which the Sellers agree to indemnify
the Buyer shall be called "Indemnifiable Facts".
6.2. Terms. The indemnifications established in this Agreement shall remain in
effect for a term of 5 (five) years from the date of this Agreement, except in
the following cases: (i) taxes (except social security), in which case the term
of indemnification shall be 7 (seven) years from the date of this Agreement,
(ii) social security, for 10 (ten) years from the date of this Agreement, and
(iii) Contingent or Hidden Liabilities, until the corresponding statutes of
limitations have elapsed.
6.3. Defense. The Sellers may be entitled to defense against a claim filed
against the Company, together with the actions of the Buyer and/or the Company,
at the discretion of the Buyer. In order to enforce the right to defense, the
Sellers must be notified by the Buyer of any claim sufficiently in advance, in
the event that there is a legal term in which to respond to the claim. This
obligation shall only remain in effect if the Buyer is duly notified of an
actual claim that is indemnifiable. The Sellers do not need to be advised of
notifications of warnings or threats.
6.4. Actions for Damages. If the Sellers must pay an amount pursuant to Article
6.1 herein, the payment shall be made by the Sellers to the Buyer or to the
Company, at the discretion of the Buyer. Once the payment is made, it shall
automatically be deducted from the Security Deposit pursuant to the provisions
of Article 7 herein.
ARTICLE 7
INDEMNIFICATION PROCEDURE - SECURITY DEPOSIT
7.1. The Buyer is expressly and irrevocably authorized by the Sellers to deduct
and/or compensate from the amount of US$ 120,000 (one hundred twenty thousand
Dollars) indicated in Article 3.2 herein, any amount corresponding to an
Indemnifiable Fact. For this purpose, the amount of US$ 120,000 (one hundred
twenty thousand Dollars) is deposited as a security deposit with a bank in
Argentina at the selection of the Buyer, under terms and conditions
substantially similar to those in the Deposit Agreement attached hereto as
Appendix 7.1 (the "Security Deposit"). The Security Deposit shall have the terms
and conditions and term as provided in the Deposit Agreement attached hereto as
Appendix 7.1.
7.2. The Buyer shall deduct from the Security Deposit the amounts derived from
Indemnifiable Facts in the following cases:
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(i) in the event of an administrative resolution or firm ruling on a claim
relating to an Indemnifiable Fact, and/or;
(ii) in the event that the Sellers have signed an agreement regarding the
determination and amount of an Indemnifiable Fact, or if there is an arbitration
award regarding this issue, as provided by Article 9.12 herein, and/or;
(iii) in the event that the Buyer is authorized to compensate according to legal
provisions, and/or;
(iv) in the event of any default on labor obligations by the Sellers and/or the
Company (including but not limited to the payment of wages, insurance and social
security), in which case the amounts necessary to cover the costs of severing
the employment relationship and adjusting the compensation situation of
employees of the Company following a ruling, resolution or arbitration award.
The Parties clarify that, if the Sellers assume the obligation of covering the
payment of severing the employment relationship and adjusting the compensation
situation of certain employees as established in Article 4.13 herein, this does
not release them from any default on labor obligations by the Company.
In these cases, the Buyer shall deduct the amounts necessary to cover the
Indemnifiable Fact from the Security Deposit, and shall notify the Sellers of
the amount deducted.
ARTICLE 8
OBLIGATIONS
8.1. Xxxxxxx Xxxxxxx agrees to continue to perform the activities of consultant
as requested by the Buyer for the Company for a term of six (6) calendar months
from the date of execution of this Agreement. Xxxxxxx Xxxxxxx shall earn the
total and definitive amount of US$ 18,000 (eighteen thousand Dollars) for these
services, subject to any taxes that are applicable. The Buyer shall pay this
amount to Xxxxxxx Xxxxxxx in six (6) equal consecutive monthly installments of
US$ 3,000 (three thousand Dollars) + value added tax.
After the six (6) months have elapsed, Xxxxxxx Xxxxxxx shall not disparage the
operating capacity of the Company to the Buyer.
8.2. Non-Competition. The Sellers agree that for a term of 24 (twenty-four)
months from the date of execution of this Agreement:
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(i) they shall not initiate, for their own account or for the account of others,
either directly or indirectly, or through family members, nor shall participate
in any activity directly or indirectly involving the operation of a Horizontal
Portal either in Spanish or in Portuguese, or any other activity that may
compete with the activity developed at the time of signing this Agreement by the
Company, with respect to Horizontal Portals.
(ii) they shall not develop or participate, as principal, agent, partner,
co-participant, lender, guarantor, owner, operator, manager, executive,
director, shareholder, consultant, contractor, employee, sponsor or in any other
capacity, in any location in Argentina or abroad, in any of the businesses or
activities developed at the time of execution of this Agreement by the Company,
as described in Article 8.2. (i).
(iii) they shall not compete through shareholding, positions on Boards of
Directors, employment contracts or any other type of contractual or commercial
relationship, in any type of legal entity that is controlled by, parent of,
related to, affiliated with, either directly or indirectly, through one or more
companies and other legal entities, other companies that provide and/or engage
in the activities developed by the Company at the time of execution of this
Agreement, as described in Article 8.2. (i).
(iv) they shall not have any relationship whatsoever, pursuant to the terms
indicated in the previous paragraphs, with Persons who develop, have agreements
with other Persons, are associated with, operate and or provide the services
indicated in Article 8.2. (i).
As total and definitive payment in full for non-competition as established in
Article 8.2 herein, the Sellers shall receive, together with the Buyer, a
monthly payment of US$ 4,000, subject to payment of taxes that may be
applicable. Taking into account that non-competition was agreed for a term of 24
(twenty-four) months, the Sellers shall collect the total amount of US$ 96,000
(ninety-six thousand Dollars). The payments shall be made throughout the term of
non-competition, and the Sellers shall issue the corresponding receipt as they
receive payments. Xxxxxxx Xxxxxxx shall issue a receipt for US$ 3,800 (three
thousand eight hundred Dollars(), and Xxxxxxxx Xxxxxxx shall issue a receipt for
US$ 200 (two hundred Dollars). In the hypothetical situation that either or both
of the Sellers fail(s) to perform the obligation of non-competition, they shall
pay the Buyer a penalty of US$ 200,000 (two hundred thousand Dollars), not
subject to the collection of any deduction whatsoever, plus damages.
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8.3. No Third Party Offerings. The Sellers assume the obligation for a term of
two (2) calendar years from the date of execution of this Agreement, to not
directly or indirectly offer and/or induce and/or tempt and/or propose and/or
promote a job and/or abandon a position and/or any other type of commercial
and/or professional activity for any Person affiliated with the Company by
contract or employment relationship, or who has been affiliated with the Company
by contract or employment relationship for any reason whatsoever, without
reliable written authorization from the Buyer.
The Sellers shall only be authorized to hire those persons listed in Appendix
8.3. hereto.
8.4. Condition of equipment, Domains and other assets. The Sellers assume the
obligation to deliver the Domains in operating conditions. They further assume
the obligation of delivering the hardware, software and database components in
operating condition, as well as any other system necessary for developing the
activity of the Company.
8.5. Pre-emptive right in favor of the Buyer. If the Sellers should decide to
seek partners and/or investors for any type of business that they may initiate
related to the operation of Internet activities and/or any other type of
activities within the telecommunications sector in the broadest sense, they
shall give the Buyer pre-emptive rights to join them and become a partner and/or
investor in such businesses, provided that the Buyer has matched or bettered the
offers that the Sellers may have received from third parties.
In order to allow the Buyer to better the third party offer, the Sellers shall
notify the Buyer of the offer received so that within a term of twenty (20)
calendar days from reliable receipt of the notice, the Buyer may match or better
the third party offer. For this purpose, the Sellers shall send the notice
together with a copy of the offer received.
The right provided in favor of the Buyer in this Article shall be valid for a
term of twenty-four months from the date of execution of this Agreement.
ARTICLE 9
MISCELLANEOUS PROVISIONS
9.1. Waiver. The Buyer may only waive nonperformance by the Sellers of any of
their obligations or agreements arising out of this Agreement if in writing. The
Sellers may only waive nonperformance by the Buyer of any of its obligations or
agreements arising out of this Agreement if in writing.
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9.2. Nonperformance by the Buyer. The Sellers may exercise all rights granted by
law to the fullest extent in the event of nonperformance by the Buyer of any of
its obligations arising out of this Agreement, with the exception of terminating
this Agreement.
9.3. Confidentiality. The Parties may not divulge under any circumstances either
this transaction nor the financial terms of this transaction, nor may publish
anything regarding this transaction, except for those notices which are
necessary for the commercial operation of the Parties, and in cases in which
legal provisions so require (including but not limited to the obligation to file
information for a public offering).
If the Parties mutually agree to make public announcements, they shall do so by
means of a previously agreed upon joint notification.
The Sellers shall not under any circumstances reveal and/or advise and/or
disclose to third parties any strategic plan to which they may have had access
as shareholders and/or directors of the Company or which they may have
developed.
9.4. Notifications. All notifications and other communications that must be made
as a result of this Agreement shall be made in writing, and shall be considered
to be duly made upon receipt of a hand delivered copy with an acknowledgement of
receipt, or any other type of reliable notice, as follows:
(i) Communications addressed to the Sellers, at:
Junin 658 Xxxxx X, 00xx Xxxxx, Xxxxxxxxx "X", Xxxxxx Xxxxx, Xxxxxxxxx
Att: Xxxxxxx Xxxxxxx/Xxxxxxxx Xxxxxxx
(ii) Communications addressed to the Buyer, at:
Xxxxxxx 0, 00xx Xxxxx, Xxxxxx Xxxxx, Xxxxxxxxx
Att: Xxxxx Xxxx/Xxxx Xxxxxxxx
The names and addresses indicated above may be changed by reliable written
notification to each of the persons listed above.
9.5. Agents and fees. The Parties guarantee that in this transaction there are
no agents or intermediaries of any type whatsoever, so that there is no amount
due to any Person for execution of this Agreement. Any claims by professionals
involved shall be satisfied be the Party that appointed them.
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9.6. Joint and Several Liability. Both of the Sellers are jointly and severally
liable and as such are bound with regard to the other Party by the obligations
arising out of this Agreement.
9.7. Other Warranties. Beginning at the time of execution of this Agreement, the
Sellers shall periodically sign and grant documents that the Buyer may
reasonably request, or arrange to have such documents signed and granted, in
order to more effectively perform the transactions contemplated in this
Agreement, and beginning at the time of execution of this Agreement, the Buyer
shall periodically sign and grant documents that the Sellers may reasonably
request, or arrange to have such documents signed and granted, in order to more
effectively perform the transactions contemplated in this Agreement.
9.8. Entire Agreement. This Agreement, including the Appendices hereto and
documents referred to herein, constitute the entire agreement and understanding
of the parties with regard to the issue included herein. This Agreement
supersedes all other prior agreements and understandings between the Parties
with regard to this matter.
9.9. Assignment. Due to its nature, this Agreement cannot be assigned or
transferred in whole or in part by the Sellers. The Buyer is authorized to
assign or transfer this Agreement in whole or in part.
9.10. Severability. If a competent court should determine that any provisions of
this Agreement or the application of such provisions to any Person or under any
circumstances is invalid, such nullity, illegitimacy or unenforceability shall
in no way affect the remaining provisions of this Agreement (or the remainder
hereof) nor the application of such provision to any other person or
circumstance.
9.11. Applicable Law. This Agreement shall be governed and interpreted according
to the laws of the Republic of Argentina.
9.12. Arbitration. All issues that may arise between the parties regarding this
Agreement, its validity, interpretation, scope, execution, performance, or
termination shall be settled through mediation first and, if an agreement cannot
be reached, the dispute shall be definitively settled through arbitration (de
jure) within the framework of the Arbitral Tribunal of the Buenos Aires Stock
Exchange, according to the regulations and procedures approved for this purpose,
of which the parties state that they are aware, and which they accept as forming
an integral part of this Agreement. The parties expressly waive any other venue
or jurisdiction which may apply. The decision of the Arbitral Tribunal of the
Buenos Aires Stock Exchange shall be definitive and binding for the Parties. The
Parties hereby waive, in the broadest sense permitted by law, the right to
appeal. Any payment provided by the Arbitral Tribunal of the Buenos Aires Stock
Exchange shall be paid in Dollars.
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The Parties indicate their approval by signing this Agreement in two (2) exact
copies for a single purpose, at the place and on the date indicated at the
beginning.
The Sellers
[signed]
Xxxxxxx Xxxxxxx Xxxxxxx
Federal Identification No. 21.697.798
[signed]
Xxxxxxxx Xxxxxx Xxxxxxx
Federal Identification No. 20.668.976
The Buyer
[signed]
for: Telefonica Interactiva Argentina S.A.
Name: Xxxxx Xxxx
Title: Chairman
Signature(s) authenticated per
Notarization No. 0003922303
9/9/1999
[signed and sealed]
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[seal of the Board of Notaries]
APPENDIX C 003922303
Buenos Aires, September 9, 1999. In my capacity as Notary No. 132 of Buenos
Aires, I CERTIFY: ONE: That the signatures appearing in the document attached
hereto were affixed in my presence by the persons whose names and identification
numbers appear below, and who are personally known by me. In witness whereof.
Xxxxx Xxxxxxx Xxxx Xxxxxx Xxxxxxx: Federal Identification No. 93.762.488 -
Xxxxxxx Xxxxxxx Xxxxxxx, Federal Identification No. 21.697.798, Xxxxxxxx Xxxxxx
Xxxxxxx, Federal Identification No. 20.668.976.
TWO: That said persons state that their capacity is as follows: Xxx. Xxxx Xxxxxx
Xxxxxxx, Chairman of TELEFONICA INTERACTIVA ARGENTINA S.A., which I certify that
she evidenced by documentation presented to me for purposes of this
notarization, and the others are acting on their own behalf.
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[seal of the Board of Notaries]
C 003922303
THREE: That the respective request(s) were recorded simultaneously in Minutes
No. 110 of the Book of Requests No. 2. I certify that the Special Notarization
Seal No. C006418460 was affixed to this Appendix, as it refers to a single
matter. IN WITNESS WHEREOF.
[signed and sealed]
