EXECUTION VERSION
PROMISE AGREEMENT
Entered Into as of October 15, 1998
among
UIH LATIN AMERICA, INC.,
VTR S.A.
and
COMPANIA NACIONAL DE TELEFONOS, TELEFONICA DEL SUR S.A.
TABLE OF CONTENTS
PAGE
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ONE: DEFINITIONS........................................................1
TWO: CURRENT SHARE/EQUITY INTEREST OF PARTIES...........................9
THREE: PROMISED AGREEMENTS.............................................10
FOUR: CLOSING; TERMINATION.............................................10
FIVE: REPRESENTATIONS AND WARRANTIES OF VTR............................15
SIX: REPRESENTATIONS AND WARRANTIES OF UIH.............................17
SEVEN: CONDITIONS TO CLOSING...........................................18
EIGHT: CONDUCT PENDING THE CLOSING.....................................20
NINE: AGREEMENTS REGARDING CERTAIN OTHER MATTERS.......................23
TEN: POST CLOSING ADJUSTMENT...........................................25
ELEVEN: RIGHT OF FIRST REFUSAL.........................................26
TWELVE: SURVIVAL.......................................................29
THIRTEEN: INDEMNIFICATION..............................................29
FOURTEEN: ARBITRATION..................................................32
FIFTEEN: APPLICABLE LAW; JURISDICTION..................................34
SIXTEEN: ENTIRE AGREEMENT; OTHER AGREEMENTS............................34
SEVENTEEN: NOTICES.....................................................34
EIGHTEEN: CONFIDENTIALITY; PRESS RELEASES..............................37
NINETEEN: EXPENSES.....................................................38
TWENTY: SEVERABILITY...................................................38
TWENTY ONE: COUNTERPARTS...............................................38
TWENTY TWO: NON-ASSIGNMENT.............................................38
TWENTY THREE: SECTION HEADINGS.........................................39
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EXHIBITS:
A - Form of Amendment to Shareholders Agreement
B - Form of Amendment to Xxxxxx Shareholders Agreement
C - Form of Indemnification Agreements
D - Form of License Agreement
E - Form of Public Deeds for Hipercable
F - Form of Public Deed for Xxxxxx
G - LD Purchase Agreement
ANNEXES:
A - Form of Opinion of General Counsel of VTR
B - Form of Opinion of General Counsel of CNT
C - Form of Opinion of Outside Counsel to VTR and CNT
D - Form of Opinion of United States Counsel to UIH
E - Form of Opinion of Chilean Counsel to UIH
SCHEDULES:
Schedule 1.1 - Key Employees
Schedule 5(b) - Seller Required Consents or Filings
Schedule 5(g)(i) and (ii) - Employee Lists
Schedule 6(b) - UIH Required Consents or Filing
Schedule 9(b) - June 30 Hipercable Financial Statements
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PROMISE AGREEMENT
This Promise Agreement was entered into as of the 15th day of October,
1998, by UIH LATIN AMERICA, INC., a corporation duly incorporated and validly
existing under the laws of the State of Colorado, United States of America, duly
represented by Xxxx Xxxxxxxxx Xxxxxx Xxxxxxxxx, representation which will be
herein accredited (together "UIH"), both with domicile in 0000 Xxxxx Xxxxxx Xx.,
Xxxxx 0000, Xxxxxx, XX 00000, U.S.A., VTR S.A., a stock company incorporated and
validly existing under the laws of the Republic of Chile, duly represented by
Xxxx Xxxxx Errazuriz, representation which will be herein accredited (together
"VTR"), both with domicile in Xx. Xxxxxx Xxxxx 0000 - Xxxx 0, Xxxxxxxx, Xxxxx,
and COMPANIA NACIONAL DE TELEFONOS, TELEFONICA DEL SUR S.A., a stock company
incorporated and validly existing under the laws of the Republic of Chile, duly
represented by Xxxx Xxxxx Errazuriz, representation which will be herein
accredited (together "CNT"), both with domicile in Xx. Xxxxxx Xxxxx 0000 - Xxxx
0, Xxxxxxxx, Xxxxx.
The Parties agree as follows:
ONE: DEFINITIONS
As used herein, unless the context requires otherwise, the following
terms when capitalized have the following meanings (terms defined in the
singular to have the same meanings when used in the plural and VICE VERSA):
ACQUISITION FINANCING: The actual advance of funds at the Closing for
the acquisition of the Seller Shares and the Xxxxxx Shares by one or more
lenders or equity participants or both, on terms and in amounts that are
satisfactory to UIH in its sole discretion.
ADDITIONAL AMOUNT: An amount equal to simple interest at the rate of 12
percent per annum on the Purchase Price accrued from the Initial Termination
Date until the Closing Date.
ADJUSTMENT NOTICE: As defined in Article 10.
AFFILIATE: Affiliate means, with respect to any Person, any Person
directly or indirectly controlling, controlled by, or under common control with,
such other Person at the time at which the determination of affiliation is being
made. The term "control" (including, with correlative meanings, the terms
"controlled by" and "under common control with"), as applied to any Person,
means the possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities or similar ownership interests.
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AGREEMENT: This Promise Agreement (including the Exhibits and Schedules
attached hereto).
AMENDMENT TO SHAREHOLDERS AGREEMENT: The Amendment to Shareholders
Agreement executed by each of VTR, CNT and UIH Chile, Inc. on the date hereof,
in the form attached hereto as Exhibit A.
AMENDMENT TO XXXXXX SHAREHOLDERS AGREEMENT: The Amendment to Xxxxxx
Shareholders Agreement executed by each of VTR and UIH Chile, Inc. on the date
hereof, in the form attached hereto as Exhibit B.
ANNUAL BUDGET: As defined in the Shareholders Agreement.
ARBITRATION COURT: As defined in Article 14.
ASSETS: For any Person, all of the properties, Equipment, Systems,
Licenses and other assets, privileges, rights, interests, claims and goodwill of
such Person, real and personal, tangible and intangible, of every type and
description, whether owned or leased or otherwise possessed, used, held for use
or usable in a business and whether or not reflected on the balance sheet or
other accounts of such Person.
BONA FIDE OFFER: As defined in Section 11(a).
BUSINESS DAY: Any day other than a Saturday, Sunday or other day on
which banks in the State of New York, U.S.A., or Santiago, Chile are authorized
or obligated by law or executive order to close.
CIAC: As defined in Article 14.
CLOSING: As defined in Section 4(a)
CLOSING DATE: As defined in Section 4(a).
CNT: As defined in the recitals.
CNT SHARES: As defined in Section 11(a).
COMPANIES: Hipercable and each of the Subsidiaries.
COMPANY BUSINESSES: As defined in the Shareholders Agreement.
CONSIDERATION: As defined in Section 4(b)(i).
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CONTRACT: For any Person, any contract, mortgage, deed of trust, bond,
lease, License, note, franchise, certificate, option, warrant, right, or such
other instrument, document or written agreement, and any oral obligation, right
or agreement to which such Person is a party, nominee, signatory, or of which
such Person is a beneficiary, or by which such Person or any Assets or
securities of such Person are bound, including, without limitation, any License.
CONTROVERSY: As defined in Article 14.
CTC: Compania de Telecomunicaciones de Chile, S.A., a Chilean stock
company, together with its Affiliates, successors, and any assignees of CTC's
rights under the Pledge.
CTC MOBILE PURCHASE AGREEMENT: The Stock Purchase Agreement dated June
14, 1996 between VTR and CTC.
DOLLARS OR US$: Dollars, the lawful currency of the United States of
America.
DUE DILIGENCE MAE DETERMINATION: As defined in Section 9(b).
DUE DILIGENCE REVIEW: As defined in Section 9(b).
EQUIPMENT: Any and all equipment, materials or other Property related
to the production, transmission, retransmission or reception of voice, video or
data signals (electronic or optical, digital or analog) included in the Assets
of Hipercable or any of the Subsidiaries, including, without limitation,
electronic devices, trunk and distribution cables; amplifiers; power supplies;
conduit; cables and pedestals; grounding and pole hardware, fiber optic cables,
installed subscriber devices, network interface units (including, without
limitation, customer interface units, drop lines, converters, encoders,
transformers behind television sets and fittings); "headend" (origination,
transmission and distribution system, equipment including, without limitation,
switching, repeating and regenerating equipment); hardware; tools; inventory;
spare parts; maps and engineering data; vehicles; microwave equipment; studios
and other broadcast facilities and other equipment for origination of local
programming; and all other tangible property and facilities owned, used or held
by Hipercable or any Subsidiary for use in the Systems.
EXCHANGE RATE: For any date, the exchange rate between Dollars and
Chilean Pesos referred to in Number Six of Chapter I of Title I of the
"Compendium of Foreign Exchange Regulations" published by the Central Bank of
Chile in the Diario Oficial de Chile on such date (known as the dolar observado)
or, if such rate is not in effect, the official rate designated by the Central
Bank of Chile for the purpose of replacing such rate.
EXTENSION NOTICE: As defined in Section 4(a).
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FINAL MAE DETERMINATION: As defined in Section 9(b).
FINANCING PARTIES: As defined in Section 8(d).
GAAP: Generally accepted accounting principles as used in the United
States of America as in effect on the date hereof.
GOVERNING DOCUMENTS: The estatutos, articles or certificate of
incorporation or association, bylaws or other governing documents of any entity.
GOVERNMENTAL AUTHORITY: Any court, administrative agency or commission
or other governmental or quasi-governmental agency, instrumentality or official,
domestic or foreign.
HIPERCABLE: VTR Hipercable S.A., a Chilean stock company.
HIPERCABLE FINANCIAL STATEMENTS: As defined in Section 5(f).
INDEMNIFICATION AGREEMENTS: The Indemnification Agreements, to be
executed by each of Quinenco and SBCI at the Closing, in the forms attached
hereto as Exhibit C.
INDEMNIFIED PERSONS: As defined in Section 13(a).
INDEMNIFYING PARTY: As defined in Section 13(a).
ING CREDIT FACILITY: Credit Agreement, entered into by and between
Hipercable and ING Baring (U.S.) Capital Corporation as Administrative Agent;
and ING Baring (U.S.) Capital Corporation and the Toronto Dominion Bank as
Co-Arrangers, among others, and Security Documents thereto as defined therein;
Master Subordination Agreement, entered into by and between VTR S.A., UIH Chile,
Inc., as the Subordinated Creditors, Hipercable and ING Baring (U.S.) Capital
Corporation as Administrative Agent; and Support Agreement, entered into by and
between Hipercable, VTR S.A., UIH Chile, Inc. and ING Baring (U.S.) Capital
Corporation as Administrative Agent; all of the above dated as of August 26,
1997.
INITIAL TERMINATION DATE: The date that is a number of days after the
date hereof equal to (i) 150 PLUS (ii) the number of days after November 30,
1998, if any, that the Hipercable Financial Statements are delivered to UIH
pursuant to Section 5(f).
JUDGMENT: Any judgment, writ, order, decree or ruling of or by any
court, judge, justice or magistrate, including any bankruptcy court or judge,
and any order of or by any Governmental Authority.
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KEY EMPLOYEES: Those employees listed on Schedule 1.1 hereof.
LAW: The civil law, the common law, and any statute, ordinance, code or
other law, rule, regulation, order, technical or other standard, requirement or
procedure enacted, adopted, promulgated, applied or followed in any country or
its political subdivisions or by any Governmental Authority or court of any
country or its political subdivisions.
LD PURCHASE AGREEMENT: The Promise Agreement and the "Acuerdo de Uso de
Marca Comercial", both executed by and between VTR and CTC on December 18, 1997,
attached hereto as Exhibit G.
LICENSE AGREEMENT: The License Agreement to be executed by Hipercable
and VTR at the Closing, in the form attached hereto as Exhibit D, granting
Hipercable the exclusive right, pursuant to a 99-year license, to use the "VTR"
name in the multi-channel television, local telephony and internet businesses in
Chile, and in all other telecommunications businesses in Chile subject only to
the following limitations: (i) if CTC completes the acquisition of VTR Larga
Distancia in accordance with the LD Purchase Agreement or other arrangement, CTC
and/or any of its subsidiaries devoted to the long distance telephony business
shall have the right to use the trademark "VTR Larga Distancia" in the long
distance telephony and data transmission (excluding internet services)
businesses in Chile for a period of two years from the consummation of such
transaction; or (ii) if CTC does not complete the acquisition of VTR Larga
Distancia in accordance with the LD Purchase Agreement, VTR shall have the right
to use, and to license to third parties, but not to CTC or any of its
Affiliates, the name VTR in the long distance telephony and data transmission
and internet businesses in Chile, but shall not have the right to use the name
"VTR" in conjunction with the names "Internet" or "Web."
LICENSES: All franchises, concessions, licenses, permits, operating
authorizations and other agreements and approvals issued by or pending with
Governmental Authorities, utilities, providers of programming or other entities
and all material rightsofway, satellite, microwave or other transmission
agreements, pole or underground construction or usage agreements and all other
agreements necessary to construct, own and operate a System in a specified
geographical area in compliance with applicable Laws.
LIEN: Any security agreement, financing statement (whether or not
filed), conditional sale or other title retention agreement; any lease,
consignment or bailment given for security purposes; any lien, charge,
restrictive agreement, mortgage, pledge, option, encumbrance, adverse interest,
constructive trust or other trust, claim, attachment, exception to or defect in
title or other ownership interest (including, without limitation, reservations,
rights of entry, possibilities of reverter, encroachments, easements, rights of
way, restrictive covenants, leases and Licenses) of any kind.
MATERIAL ADVERSE EFFECT: As defined in Section 9(b).
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XXXXXX: Xxxxxx X.X., a Chilean stock company.
XXXXXX SHAREHOLDERS AGREEMENT: The Xxxxxx Shareholders Agreement dated
as of July 11, 1997 by and among VTR S.A. and UIH Chile, Inc.
NOTICE OF ARBITRATION: As defined in Article 14.
OFFER: As defined in Section 11(a).
OFFERED SHARES: As defined in Section 11(a).
ORIGINAL PROMISE AGREEMENT: Promise Agreement dated June 27, 1996,
between United International Properties, Inc., and VTR, as amended.
PARTIES: Generic definition for Sellers and UIH, collectively, or for
VTR and UIH collectively in connection with the Xxxxxx Shares.
PARTY: Generic definition for Sellers on the one hand, and UIH on the
other hand or for VTR on the one hand, and UIH on the other hand in connection
with the Xxxxxx Shares.
PERSON: Any natural person, sociedad anonima, sociedad de
responsabilidad limitada, corporation, general or limited partnership, limited
liability company, joint venture, trust, association, unincorporated entity of
any kind or Governmental Authority.
PLEDGE: The Pledge of the CNT Shares pursuant to the Pledge Agreement.
PLEDGE AGREEMENT: The Pledge Agreement dated June 16, 1998, pursuant to
which shares of common stock of CNT are pledged by VTR to CTC to secure
repayment of VTR's obligations under the CTC Mobile Purchase Agreement.
PROMISED AGREEMENTS: As defined in Article 3.
PROMISSORY NOTE: The Public Deed dated June 27, 1997 evidencing
indebtedness of UIH to VTR in the original principal amount of US$ 7,770,251.
PROPOSED TRANSFEREE: As defined in Section 11(a).
PUBLIC DEEDS: The Public Deeds effecting the transfer of the Seller
Shares and the Xxxxxx Shares to the UIH Parties, in the form set forth as
Exhibits E and F, respectively.
PURCHASE PRICE: The purchase price shall be an amount in Dollars equal
to (i) the sum of (a) US$ 236,500,000, plus (b) any capital contributions made
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to the Companies and/or Xxxxxx by the Sellers (converted from Chilean Pesos to
Dollars at the Exchange Rate in effect on the date of such contribution) from
the date hereof until the Closing, LESS (ii) a number equal to 60% of the
difference between (x) Third Party Debt at Closing and (y) US$ 122,300,000;
provided, however that if Third Party Debt at Closing is less than US$
122,300,000, there will be no adjustment under this Clause (ii).
PURCHASER DESIGNEE: Any Person (i) a majority of the voting interests
of which is owned directly or indirectly by UIH, (ii) the minority ownership of
which is disclosed to Sellers, and (iii) that would not, as a result of such
Person's participation in the purchase of some or all of the Seller Shares
and/or the Xxxxxx Shares pursuant to this Agreement, cause the Closing to be
unreasonably delayed as a result of regulatory or other approval requirements
that would not be applicable if UIH were the sole purchaser of the Seller Shares
and/or the Xxxxxx Shares.
QUALIFIED COURIER: As defined in Article 17.
QUINENCO: Quinenco S.A., a Chilean stock company.
REAL PROPERTY: For any Person, all realty, towers, fixtures,
rightsofway, leasehold and other interests in real property, buildings,
improvements and constructionin-progress owned, leased, occupied, used or held
for use by such Person.
RELATED PARTY AGREEMENTS: The Technical Assistance Agreement and all
other Contracts (other than the License Agreement) between any of the Companies
or Xxxxxx, on the one hand, and any Seller or any Affiliate of any Seller on the
other hand.
REQUIRED CONSENTS: The UIH Required Consents and the Seller Required
Consents.
RESTRICTION: With respect to any stock, any voting or other trust or
agreement, option, warrant, escrow, proxy, buysell or other share transfer
agreement, power of attorney or other Contract, arrangement or understanding or
any Judgment or Law that (i) grants to any Person the right to purchase or
otherwise acquire, or obligates any Person to sell or otherwise dispose of, or
otherwise results or may result in any Person's acquiring, any of such stock,
any of the proceeds of, or any distributions paid or payable with respect to,
any of such stock, or any interest in such stock, proceeds or distributions,
(ii) restricts or may restrict the transfer of, or the exercise of any voting
rights or the enjoyment of any other benefits arising by reason of ownership of,
any such stock, proceeds or distributions (other than restrictions on future
transfers that may be imposed under anti-monopoly Laws) or (iii) creates or may
create a Lien or purported Lien affecting such stock, proceeds or distributions,
in each case (i) through (iii) other than as a result of taxes owed by the
Companies and/or Xxxxxx or applicable exchange controls.
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SBCI: SBC International, Inc., a Delaware corporation.
SELLER REQUIRED CONSENTS: As defined in Section 5(b).
SELLER SHARES: As defined in Article 2.
SELLERS: VTR and CNT, collectively.
SETTLEMENT DEED: As defined in Section 4(b)(iv)(A).
SHAREHOLDERS AGREEMENT: The Shareholders Agreement dated as of
September 6, 1996, among VTR, UIH Chile, Inc. (as successor to UIH) and CNT.
SUBSIDIARIES: VTR CABLE EXPRESS S.A.; CABLEVISION S.A.; RED DE
TELEVISION Y SERVICIO POR CABLE S.A.; VTR CABLE EXPRESS (CHILE) S.A.; VTR GALAXY
CHILE S.A.; VTR TELEFONICA S.A., VTR NET S.A.
SYSTEM: A complete cable television system, multi-point microwave
distribution service ("MMDS") or system for two-way data transfer or any other
pc-based application, direct broadcast satellite reception and distribution
system or system for local loop telephony consisting of appropriate equipment,
which is, or is capable of being, operated as an independent system without
interconnections (except in the case of local loop telephony and internet) to
other systems.
TECHNICAL ASSISTANCE AGREEMENT: The Management Agreement between VTR
Inversiones S.A., VTR Celular S.A., Telecable Sur S.A. (predecessor to VTR Cable
Express) and SBC International, Inc. dated February 6, 1995, as amended.
TERMINATION DATE: As defined in Section 4(d).
TAX: Any tax or payment of any kind required pursuant to any Law, to be
paid to any Governmental Authority.
THIRD PARTY DEBT: Any indebtedness of the Companies, on a consolidated
basis, and any indebtedness of Xxxxxx, whether or not contingent, in respect of
borrowed money or evidenced by bonds, notes, debentures or similar instruments
or letters of credit (or reimbursement agreements in respect thereof), or
representing capital lease obligations or the deferred and unpaid balance of the
purchase price of any property, except any such balance that constitutes an
accrued expense, accrued interest or trade payable incurred in the ordinary
course of business, if and to the extent any of the foregoing indebtedness
(other than letters of credit) would appear as a liability upon a balance sheet
of the Companies or Xxxxxx prepared in accordance with GAAP, as well as all
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indebtedness of others secured by a Lien on any Asset of any of the Companies or
Xxxxxx (whether or not such indebtedness is assumed by any of the Companies or
Xxxxxx) and, to the extent not otherwise included, the Guarantee by any of the
Companies or Xxxxxx of any indebtedness of any other Person (whether or not such
Guarantee would be required under GAAP to be reflected on a balance sheet).
TRANSFER: As defined in Section 11(a).
UF: A Chilean peso denominated monetary index which value is determined
monthly by the Central Bank of the Republic of Chile for each day of the
immediately succeeding month in accordance with Chapter 11.B.3. of the
Compendium of Financial Regulations of the Central Bank of the Republic of
Chile, according to the variation in the Indice de Precios al Consumidor during
the immediately preceding month, as determined by the National Institute of
Statistics of the Republic of Chile, and published in the Official Gazette under
the name of "Unidad de Fomento."
UIH: As defined in the recitals.
UIH PARTIES: As defined in Section 3(b)(iii).
UIH REQUIRED CONSENTS: As defined in Section 6(b).
VALUATION: The Valuation, as defined in the Original Promise Agreement.
VTR: As defined in the recitals.
VTR CONTROL GROUP: Xx. Xxxxxxxxx Xxxxxx Abaroa, his family and their
descendants, and any Person or Persons controlled by any or all of them.
TWO: CURRENT SHARE/EQUITY INTEREST OF PARTIES
UIH owns 477,208 shares of Hipercable through UIH Chile, Inc., which
constitute approximately 34% of Hipercable's outstanding equity.
The Sellers own 926,345 shares of capital stock of Hipercable (the
"Seller Shares"), which constitute approximately 66% of Hipercable's outstanding
equity, of which 821,345 are owned by VTR and 105,000 are owned by CNT.
UIH owns 17,745 shares of Xxxxxx through UIH Chile, Inc., which
constitutes 50% of Xxxxxx'x outstanding equity.
VTR owns 17,745 shares of Xxxxxx (the "Xxxxxx Shares"), which
constitutes 50% of Xxxxxx'x outstanding equity.
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Except as set forth in this Article Two, there are no outstanding or
authorized shares or other equity interests of Hipercable or Xxxxxx or, except
as provided in this Agreement, the Shareholders Agreement or the Xxxxxx
Shareholders Agreement, any rights to acquire any of the foregoing.
THREE: PROMISED AGREEMENTS
(a) Through this Agreement, the Parties agree to perform all actions
and execute the agreements set forth below (the "Promised Agreements").
(b) PROMISED AGREEMENTS. The Promised Agreements are as follows:
(i) AMENDMENT TO SHAREHOLDERS AGREEMENTS. UIH and the Sellers
agree to execute and deliver the Amendment to Shareholders Agreement and the
Amendment to Xxxxxx Shareholders Agreement on the date hereof.
(ii) VALUATION: UIH and the Sellers agree to terminate the
Valuation immediately subject to the provisions of Article 4.
(iii) PURCHASE OF SELLER SHARES. Subject to the terms and
conditions of this Agreement, UIH or one or more Purchaser Designees (together
with UIH, the "UIH Parties") will, at the Closing, purchase from the Sellers all
of the Seller Shares and from VTR all of the Xxxxxx Shares for the total
consideration provided in Section 4(b)(i), and each Party will complete the
other transactions required of such Party at the Closing.
(iv) REPAYMENT OF PROMISSORY NOTE. Subject to the terms and
conditions of this Agreement, UIH will, at the Closing, repay to VTR all sums
owing under the Promissory Note, including any accrued but unpaid interest
thereon through the Closing Date.
FOUR: CLOSING; TERMINATION
(a) CLOSING; CLOSING DATE. The closing of the purchase and sale of the
Seller Shares and the Xxxxxx Shares (the "Closing") shall occur on the date (the
"Closing Date") that is five Business Days following the satisfaction or waiver
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of all conditions to the Closing (other than those that by their terms are to be
satisfied at the Closing, but subject to the satisfaction or waiver at or prior
to the Closing of all such conditions). The Parties agree this Agreement may be
terminated pursuant to Section 4(c)(ii) if the Closing has not occurred on or
before (i) the Initial Termination Date, or (ii) 30 days after the Initial
Termination Date if UIH has provided prior written notice to the Sellers (an
"Extension Notice") of its election, in the event that UIH has not obtained, but
reasonably expects to obtain, the Acquisition Financing, to extend the Initial
Termination Date up to an additional 30 days, such election to be at UIH's
option. If UIH delivers an Extension Notice in accordance with this Section
4(a), the Purchase Price shall be increased by the Additional Amount. In the
event that any such extension is due to a material breach by either of the
Sellers of its obligations hereunder, no Additional Amount shall be payable with
respect to such extension period.
(b) CLOSING TRANSACTIONS. At the Closing, the following shall occur:
(i) PAYMENT OF PURCHASE PRICE. The total consideration to be
paid to the Sellers for the purchase by the UIH Parties of the Seller Shares and
to VTR for the Xxxxxx Shares (the "Consideration") shall be an amount equal to
the sum of (i) the Purchase Price PLUS (ii) the Additional Amount, if
applicable. As required by the Foreign Investment Regulations of Chile (DL 600),
the Consideration shall be paid in its Chilean currency equivalent calculated at
the rate of exchange actually obtained by the UIH Parties upon the exchange of
the Dollar amount of the Consideration against Chilean currency at a commercial
bank in Chile on the Closing Date. For this purpose, the commercial bank in
Chile shall be designated by the Sellers by means of a written notice to the UIH
Parties as soon as practicable prior to the Closing Date. Failing such
designation, or if the designated bank fails to complete the exchange
transaction, the UIH Parties shall be entitled to effect the exchange of the
Dollar amount of the Consideration into Chilean currency on the Closing Date at
any of the three largest commercial banks in Chile. US $1,500,000 of the
Purchase Price shall be allocated to the purchase of the Xxxxxx Shares and US
$100,000 of the Purchase Price shall be allocated to payment in full of the
royalty under the License Agreement.
(ii) REPAYMENT OF PROMISSORY NOTE. UIH shall repay the
Promissory Note, according to its terms (including any interest accrued but
unpaid thereon through the Closing Date) by wire transfer of immediately
available funds to an account designated by VTR. VTR shall send written notice
to UIH designating such account not later than three Business Days prior to the
Closing Date.
(iii) UIH DOCUMENTS. UIH shall sign and deliver, or cause to
be delivered to Sellers, at the Closing, the following duly and fully executed
instruments, certificates, opinions and other documents:
(A) duly certified copies of resolutions of the Board
of Directors and, if required, the shareholders of each of the UIH
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Parties authorizing the execution, delivery and performance of this
Agreement and the Promised Agreements to which it is a party, which
resolutions shall be in full force and effect;
(B) a certificate signed by the President or a Vice
President of UIH certifying that (i) each of the conditions set forth
in Subsection (a)(ii) of Article Seven is then satisfied, and (ii) each
UIH Party has performed in all material respects all obligations to be
performed by it under this Agreement at or before the Closing; and
(C) opinions of counsel to UIH dated the Closing Date
in the forms attached as Annex D and E;
(iv) SELLER DOCUMENTS. Sellers shall sign and deliver, or
cause to be delivered, at the Closing, the following duly and fully executed
instruments, certificates, opinions and other documents:
(A) a duly executed settlement deed certifying that
the Promissory Note has been repaid in its entirety and no additional
amounts are due thereunder (the "Settlement Deed");
(B) duly certified copies of resolutions of the Board
of Directors and, if required, the shareholders of each of the Sellers
authorizing the execution, delivery and performance of this Agreement
and the Promised Agreements to which it is a party, which resolutions
shall be in full force and effect;
(C) a certificate signed by the President or a Vice
President of each Seller certifying that (i) each of the conditions
set forth in Subsection (b)(ii) of Article Seven is then satisfied, and
(ii) such Seller has performed in all material respects all obliga-
tions to be performed by it under this Agreement at or before the
Closing;
(D) opinions of counsel to VTR and CNT dated the
Closing Date, addressed to UIH in the forms attached as Annexes A,
B and C;
(E) the Indemnification Agreements, duly executed by
each of SBCI and Quinenco;
(F) the Public Deeds, duly executed by the Sellers;
(G) the License Agreement, duly executed by VTR and
Hipercable;
(H) the stock transfer ledger of Hipercable, each of
the Subsidiaries and Xxxxxx, all minutes of meetings of each of the
board of directors and the shareholders of Hipercable, each of the
Subsidiaries and Xxxxxx, and all other books and records of Hipercable,
each of the Subsidiaries and Xxxxxx;
12
(I) the certificates representing the Seller Shares
and the Xxxxxx Shares in form reasonably acceptable to UIH;
(J) all documents and instruments required to
terminate the Technical Assistance Agreement, with respect to
Hipercable, the Subsidiaries and Xxxxxx, and each other Related Party
Agreement, if any, the terms of which are less favorable to any of the
Companies or Xxxxxx, as applicable, than would have been available in
an arms' length transaction on the date such contract was entered into,
in each case without any further obligation of any of the Companies or
Xxxxxx except for any obligations owed with respect to any period prior
to the Closing; and
(K) such other documents and instruments as UIH may
reasonably request.
(c) EVENTS OF TERMINATION. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time prior to the
Closing:
(i) by mutual consent of the Parties;
(ii) by either Party, if the Closing shall not have
occurred on or prior to the Initial Termination Date
or, if UIH has delivered an Extension Notice pursuant
to Section 4(a), the date that is 30 days after the
Initial Termination Date, unless the failure to
effect the Closing by such time is due to the
material breach of any representation, warranty, or
covenant of such Party;
(iii) by either Party, if there shall be any law or
regulation of any competent authority that makes
consummation of the transactions contemplated by this
Agreement illegal or otherwise prohibited, or if any
judgment, injunction, order or decree of any
competent authority prohibiting such transaction is
entered and such judgment, injunction, order or
decree shall have become final and nonappealable;
(iv) by either Party if there is a material breach by the
other Party of any representation, warranty or
covenant; PROVIDED, that any such breach is not cured
(or cannot reasonably be expected to be cured) within
30 days following receipt by the breaching Party of
notice of such breach;
(v) by UIH upon sending written notice to Sellers of a
Final MAE Determination pursuant to Section 9(b).
13
(d) EFFECT OF TERMINATION. In the event that this Agreement shall be
terminated pursuant to Section 4(c), or as required by applicable laws, subject
to this Section 4(d), all further obligations of the Parties under this
Agreement shall terminate on the date of such termination (the "Termination
Date") without further liability or obligation of either Party to the other
hereunder; PROVIDED, HOWEVER, that no Party shall be released from liability
hereunder if this Agreement is terminated and the transactions abandoned by
reason of (i) willful failure of such Party to have performed its obligations
hereunder or (ii) any knowing misrepresentation made by such Party of any matter
set forth herein, such liability not to exceed, in the aggregate for the UIH
Parties, on the one hand, and the Sellers, on the other hand, US$ 50,000,000.
Section 3(b)(i), 3(b)(ii), 4(d), 4(e), 4(f), and Articles 14 and 15, Section
16(a), Article 17 and Articles 19 through 23 (but only such Sections and
Articles) shall survive termination and shall remain in full force and effect.
Termination under this Section 4(d) shall not affect or limit any rights or
remedies of any of the parties to the Shareholders Agreement, the Xxxxxx
Shareholders Agreement or the Original Promise Agreement under such agreements
with respect to any breach thereof.
(e) VALUATION UPON TERMINATION. In the event that this Agreement shall
be terminated pursuant to Section 4(c), or as required by applicable laws, each
of the Parties shall take such actions, and shall cause Hipercable to take such
actions, as are necessary to cause an Adjustment (as defined in the Original
Promise Agreement) to the UIH Equity Value (as defined in the Original Promise
Agreement) in accordance with clause (b) and the last paragraph of Article 11 of
the Original Promise Agreement, or at the election of VTR, by transferring
shares of Hipercable from VTR to the UIH Parties at a price of one Peso per
share if such transfer would not be in any way disadvantageous to UIH, in both
cases such that, following such Adjustment, the UIH Equity Value will be (i) 40%
if CNT has not executed the CNT Non-Compete Agreement, or (ii) 38% if CNT has
executed the CNT Non-Compete Agreement. The Parties shall cause the Adjustment
required under this Section 4(e) to be effected on or before the date that is 15
Business Days after the Termination Date. For purposes hereof, the term "CNT
Non-Compete Agreement" shall mean an Agreement in form and substance acceptable
to UIH and CNT pursuant to which CNT agrees to be bound by non-compete
provisions identical to the non-compete provisions contained in Section 5.1 of
the Shareholders Agreement as in effect on the day preceding the date hereof.
(f) PROMISSORY NOTE. In the event that this Agreement shall be
terminated pursuant to Section 4(c), or as required by applicable laws, UIH
shall have the option of (i) paying to VTR all amounts due and owing under the
Promissory Note, or (ii) having its ownership interest in Hipercable diluted in
accordance with the terms of the Promissory Note; PROVIDED, HOWEVER, that such
dilution shall occur only after giving effect to the Adjustment required under
Section 4(e). UIH shall give written notice to Sellers of its election hereunder
not less than 10 Business Days after any such termination. If UIH elects to
repay the Promissory Note under clause (i) of this Section 4(f), such payment
shall be made on or before the date that is 15 Business Days after the
14
Termination Date by wire transfer of immediately available funds, in Dollars, to
an account designated by VTR not later than 12 Business Days after the
Termination Date. If UIH elects not to repay the Promissory Note but to be
diluted in accordance with the terms of the Promissory Note, such dilution shall
occur concurrently with, but after giving effect to, the Adjustment provided for
in Section 4(e) (i.e., after the UIH Equity Value has been adjusted to 40% or
38%, as applicable). Upon such payment or dilution, VTR shall duly execute and
deliver to UIH the Settlement Deed.
FIVE: REPRESENTATIONS AND WARRANTIES OF VTR
Each Seller severally as to such Seller, and not jointly, hereby
represents and warrants in favor of and covenants with UIH as set forth below:
(a) ORGANIZATION, CORPORATE POWER AND AUTHORIZATION. Such Seller is a
stock company duly organized and validly existing under the laws of Chile. Such
Seller has full corporate power and authority to enter into this Agreement and
the Promised Agreements and to perform its obligations and to consummate the
transactions contemplated by this Agreement and the Promised Agreements. The
execution, delivery and performance of this Agreement and the Promised
Agreements and the consummation of the transactions contemplated by this
Agreement and the Promised Agreements have been duly and validly authorized by
all necessary corporate actions on the part of such Seller. This Agreement is a
valid and binding obligation of such Seller and is enforceable against it in
accordance with its terms. When executed and delivered, each of the Promised
Agreements to which such Seller is a party will be a valid and binding
obligation of such Seller, enforceable against such Seller in accordance with
its terms. Each such Seller has previously delivered or made available to UIH
complete and accurate copies of all of its Governing Documents, as amended,
modified or restated to date and currently in effect.
(b) NO VIOLATION; CONSENTS. The execution and delivery of this
Agreement by such Seller, and the performance of its obligations hereunder and
the consummation of the transactions contemplated hereby will not violate any
provision of the Governing Documents of such Seller or, assuming compliance with
the matters set forth on Schedule 5(b), any Law applicable to such Seller.
SCHEDULE 5(B) of this Agreement lists all Persons whose approval or consent, or
with whom the filing of any certificate, notice, application, report or other
document, is legally or contractually required, or is otherwise necessary, in
connection with the execution, delivery or performance of this Agreement and the
Promised Agreements by such Seller (any such approval, consent or filing
required to be obtained prior to the consummation of the transactions
contemplated hereunder, the "Seller Required Consents").
15
(c) SELLER SHARES. The Seller Shares and the Xxxxxx Shares to be
delivered to the UIH Parties at the Closing by such Seller pursuant to this
Agreement will, at the Closing, be duly authorized, validly issued and fully
paid, and will be free and clear of any Lien or Restriction except for any Lien
or Restriction created by any of the UIH Parties effective as of the Closing.
(d) NO PROCEEDINGS. Except as set forth in letter (e) of Schedule 5(b),
as of the date hereof, there are no actions, proceedings, claims or
investigations pending or to the knowledge of senior management of such Seller
threatened by or before any Governmental Authority to which such Seller is or
would be a party and which questions or would question the validity of this
Agreement or the Promised Agreements or seeks or would seek to restrain or
enjoin the consummation of the transactions contemplated by this Agreement or
the Promised Agreements.
(e) BROKERS, AGENTS, FINDERS, ETC. None of such Seller, nor any of its
Affiliates has employed or retained any broker, agent or finder, or agreed to
pay any finder's fee, commission or similar payment to any Person, on account of
this Agreement or the Promised Agreements or the transactions contemplated
hereby or thereby with respect to which UIH, Hipercable or Xxxxxx or any
Affiliate of UIH, Hipercable or Xxxxxx would be liable.
(f) FINANCIAL STATEMENTS. Sellers will deliver or cause to be delivered
to UIH on or before November 30, 1998, or as soon thereafter as is commercially
practicable, the audited consolidated balance sheet as of September 30, 1998,
and related consolidated statements of operations, stockholders equity and
changes in financial position (i) Hipercable and the Subsidiaries and (ii) of
Xxxxxx, in each case for the nine months then ended (the "Hipercable Financial
Statements"). The Hipercable Financial Statements will present fairly in all
material respects the consolidated financial position and the results of
operations of (i) Hipercable and the Subsidiaries and (ii) Xxxxxx, in each case
as of the dates and for the periods indicated, and will have been prepared in
accordance with GAAP. The Sellers shall bear the incremental costs incurred by
Hipercable and its Subsidiaries as a result of the audit undertaken to prepare
the Hipercable Financial Statements in addition to the year-end audit, it being
agreed that such incremental costs are UF 1,500 (one thousand five hundred).
(g) EMPLOYMENT MATTERS.
(i) Attached hereto as SCHEDULE 5(G)(I) is a list of all senior
managers of Hipercable as of the date hereof setting forth each such employee's
salary, position and number of years of employment with Hipercable. In addition,
Sellers have made available to UIH all employment agreements between such
employees and Hipercable. The Parties acknowledge that for purposes of this
Section 5(g)(i), senior managers of Hipercable are all employees of Hipercable,
any of the Subsidiaries or Xxxxxx who have direct reporting responsibilities to
Xxxx Xxxxxx Arriagada or Xxxxx Xxxxxxxxxxx Xxxxxxx. Except as set forth in
Schedule 5(g)(i), as of the date hereof no employee is a party to any material
16
employment or consulting agreement or similar agreement with Hipercable, any
Subsidiary or Xxxxxx. Schedule 5(g)(i) is complete and accurate in all material
respects as of the date hereof.
(ii) On or before the date that is thirty days after the date
hereof, such Seller will use its best efforts to cause Hipercable and Xxxxxx, as
applicable, to deliver to UIH, to be attached hereto as SCHEDULE 5(G)(II), a
list of employees of Hipercable, each of the Subsidiaries and Xxxxxx as of
August 31, 1998, such list to identify each employee's position, salary, number
of years of employment with Hipercable and the subject Subsidiary or Xxxxxx, as
applicable. Upon delivery, such list will be complete and accurate in all
material respects.
(iii) The Parties acknowledge that certain employees of VTR
have provided services on behalf of Hipercable and the Subsidiaries but are not
employees of Hipercable any of the Subsidiaries or Xxxxxx and such Persons will
not be deemed senior managers of Hipercable, Xxxxxx or any Subsidiary.
(h) SHAREHOLDERS AGREEMENT. As of the date hereof, the senior
management of such Seller has no actual knowledge of any breach of the
Shareholders Agreement or the Xxxxxx Shareholders Agreement by any of the UIH
Parties.
SIX: REPRESENTATIONS AND WARRANTIES OF UIH
Each of the UIH Parties jointly and severally represents and warrants
in favor of, and covenants with VTR and CNT as follows:
(a) ORGANIZATION, CORPORATE POWER AND AUTHORIZATION. Each UIH Party is
a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation. Each UIH Party has full corporate
power and authority to enter into this Agreement and the Promised Agreements to
which it is a party and to perform its obligations and to consummate the
transactions contemplated by this Agreement and the Promised Agreements to which
it is a party. The execution, delivery and performance by such UIH Party of this
Agreement and the Promised Agreements to which it is a party and the
consummation of the transactions contemplated by this Agreement and the Promised
Agreements to which it is a party have been duly and validly authorized by all
necessary corporate actions on the part of such UIH Party. This Agreement is a
valid and binding obligation of each UIH Party and is enforceable against each
UIH Party in accordance with its terms. When executed and delivered, each of the
Promised Agreements to which such UIH Party is a party will be valid and binding
obligations of such UIH Party, enforceable against it in accordance with its
terms.
17
(b) NO VIOLATION; CONSENTS. The execution and delivery of this
Agreement by each UIH Party, and the performance of its obligations hereunder
and the consummation of the transactions contemplated hereby will not violate
any provision of the Governing Documents of such UIH Party or, assuming
compliance with the matters set forth on Schedule 6(b), any Law applicable to
such UIH Party. SCHEDULE 6(B) of this Agreement lists all Persons whose approval
or consent, or with whom the filing of any certificate, notice, application,
report or other document, is legally or contractually required, or is otherwise
necessary, in connection with the execution, delivery or performance of this
Agreement and the Promised Agreements by each UIH Party (any such approval,
consent or filing required to be obtained prior to the consummation of the
transactions contemplated hereunder, the "UIH Required Consents").
(c) BROKERS, AGENTS, FINDERS, ETC. Neither any UIH Party nor any of its
Affiliates (other than Hipercable, the Subsidiaries and Xxxxxx, as to which each
UIH Party makes no representation) has employed or retained any broker, agent or
finder, or agreed to pay any finder's fee, commission or similar payment to any
Person, on account of this Agreement or the Promised Agreements or the
transactions contemplated hereby or thereby with respect to which the Sellers or
any Affiliate of the Sellers would be liable.
(d) NO PROCEEDINGS. Except as set forth in letter (f) of Schedule 6(b),
as of the date hereof, there are no actions, proceedings, claims or
investigations pending or to the knowledge of such UIH Party's senior management
threatened by or before any Governmental Authority to which such UIH Party is or
would be a party and which questions or would question the validity of this
Agreement or the Promised Agreements or seeks or would seek to restrain or
enjoin the consummation of the transactions contemplated by this Agreement or
the Promised Agreements.
(e) SHAREHOLDERS AGREEMENT. As of the date hereof, the senior
management of each UIH Party has no actual knowledge of any breach of the
Shareholders Agreement or the Xxxxxx Shareholders Agreement by any of the
Sellers.
SEVEN: CONDITIONS TO CLOSING
(a) CONDITIONS TO THE OBLIGATIONS OF THE SELLERS TO CLOSE.
The obligation of the Sellers to effect the Closing is subject to the
satisfaction (or waiver by the Sellers) prior to the Closing of the following
conditions:
(i) RECEIPT OF CONSENTS. All of the Required Consents shall
have been obtained or, in the case of filings, timely made, and shall be in full
force and effect.
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(ii) REPRESENTATIONS AND WARRANTIES TRUE AND COMPLETE. Each of
the representations and warranties made by UIH in Article Six and in the
Promised Agreements shall be true and complete in all material respects when
made and as of the Closing, with the same effect as if made at and as of the
time of Closing (except to the extent a representation or warranty is limited by
its terms to a specific date).
(iii) NO GOVERNMENTAL PROCEEDINGS. There shall not exist any
provision of applicable Law, or any Judgment, preventing consummation of the
transactions contemplated by this Agreement or the Promised Agreements,
questioning the legality or validity of such transactions or otherwise alleging
damage as the result of such transactions. None of the Parties to this Agreement
shall have been notified of a present intention by any Governmental Authority,
or the legal representative thereof, to commence an action or proceeding to
challenge or enjoin consummation of any of the transactions contemplated by this
Agreement or the Promised Agreements.
(iv) DUE DILIGENCE. UIH shall not have provided written notice
to Sellers of a Final MAE Determination.
(v) COMPLIANCE WITH COVENANTS. Each of the UIH Parties shall
have complied in all material respects with its covenants under this Agreement.
(b) CONDITIONS TO THE OBLIGATION OF UIH TO CLOSE. The obligation of the
UIH Parties to effect the Closing is subject to the satisfaction (or waiver by
the UIH Parties) prior to the Closing, of the following conditions:
(i) RECEIPT OF CONSENTS. All of the Required Consents shall
have been obtained or, in the case of filings, timely made, and shall be in full
force and effect.
(ii) REPRESENTATIONS AND WARRANTIES TRUE AND COMPLETE. Each of
the representations and warranties made by Sellers in Article Five or in the
Promised Agreements shall be true and complete in all material respects when
made and as of the Closing, with the same effect as if made at and as of the
time of Closing.
(iii) NO GOVERNMENTAL PROCEEDINGS. There shall not exist any
provision of applicable Law, or any Judgment, preventing consummation of the
transactions contemplated by this Agreement or the Promised Agreements,
questioning the legality or validity of such transactions or otherwise alleging
damage as the result of such transactions. None of the Parties to this Agreement
shall have been notified of a present intention by any Governmental Authority,
or the legal representative thereof, to commence an action or proceeding to
challenge or enjoin consummation of any of the transactions contemplated by this
Agreement or the Promised Agreements.
19
(iv) FINANCING. UIH shall have received the Acquisition
Financing.
(v) NO MATERIAL ADVERSE EFFECT. There shall not have occurred
any events or circumstances that, individually or in the aggregate, would
reasonably be expected to have a material adverse effect on the financial
condition, business, prospects or Assets of Hipercable, the Subsidiaries and
Xxxxxx taken as a whole.
(vi) DUE DILIGENCE. UIH shall not have provided written notice
to Sellers of a Final MAE Determination.
(vii) COMPLIANCE WITH COVENANTS. The Sellers shall have
complied in all material respects with the Sellers' covenants under this
Agreement.
(viii) RELATED PARTY AGREEMENTS. Sellers shall have
terminated, or caused to be terminated, the Technical Assistance Agreement with
respect to Hipercable, Xxxxxx and the Subsidiaries, and each other Related Party
Agreement, if any, the terms of which are less favorable to Hipercable, any
Subsidiary or Xxxxxx, as applicable, than would have been available in an arms'
length transaction on the date such contract was entered into, in each case
without further obligation thereunder on the part of any of the Companies or
Xxxxxx except with respect to any obligations with respect to any period prior
to the Closing.
(ix) EMPLOYMENT MATTERS. Sellers shall have complied with the
covenants set forth under Section 9(c).
EIGHT: CONDUCT PENDING THE CLOSING
Pending the Closing, and except as otherwise approved by the Parties in
writing, the Parties agree as set forth below.
(a) BUSINESS IN ORDINARY COURSE. The Sellers shall cause the Companies
and Xxxxxx (i) to conduct their business in the ordinary course and in
compliance with all duly approved budgets and the Shareholders Agreement and the
Xxxxxx Shareholders Agreement, as applicable, and (ii) not to make any material
management change or corporate reorganization without UIH's prior written
consent.
(b) REPRESENTATION AND WARRANTIES. The Sellers, on the one hand, and
the UIH Parties, on the other hand, will not take any action or omit to take any
action that would reasonably be expected to result in any of the representations
and warranties made in Articles Five or Six, respectively, being untrue or
incomplete in any material respect.
20
(c) LITIGATION DURING INTERIM PERIOD. Each Party will advise the other
Party promptly of the assertion, commencement or threat of any claim,
litigation, proceeding or investigation of which the senior management of such
Party has knowledge where any material restraining order, injunction,
preliminary injunction, monetary damages or any other Judgment is or may be
sought to which any of the Companies or Xxxxxx is a party or, to the knowledge
of the senior management of such Party, has been threatened to be made a party.
(d) FULL ACCESS. From the date hereof until the earlier of the Closing
or the termination of this Agreement, Sellers shall cause Hipercable, the
Subsidiaries and Xxxxxx to afford to UIH as part of the Due Diligence Review
under Section 9(b), and each Person conducting a bona fide investigation of the
Companies and Xxxxxx in connection with the Acquisition Financing (collectively,
the "Financing Parties"), and their respective bankers, attorneys, accountants
and other authorized representatives, full access to the offices, properties,
personnel, books and records of Hipercable, the Subsidiaries and Xxxxxx, during
normal business hours and upon reasonable notice, in order that UIH and the
Financing Parties may have full opportunity to make such reasonable
investigations as they shall desire to make of the affairs of the Companies and
Xxxxxx. Such access shall be subject to reasonable procedures agreed to by
Hipercable and UIH to ensure minimum disruption of the ongoing business
operations of Hipercable; provided however, that such procedures shall not in
any way prohibit, materially impair or unreasonably delay access by UIH or the
Financing Parties to personnel, properties or books and records. The Parties
agree to coordinate all requests for information through one or more executive
officers of Hipercable designated by Sellers and reasonably acceptable to UIH;
provided, however, that such coordination shall not in any way prohibit,
materially impair or unreasonably delay access by UIH or the Financing Parties
to personnel, properties or books and records. UIH and each other Person
participating in such investigation shall first execute a non-disclosure
agreement with respect to the receipt of confidential information related to any
of the Companies or Xxxxxx, in such form as is customary for similar
investigations (provided that with respect to UIH, such non-disclosure agreement
shall only apply to confidential information regarding the Sellers or their
respective shareholders). Sellers will cause the officers, employees and agents
of the Companies and Xxxxxx, and will use reasonable efforts to cause the
attorneys and accountants of the Companies and Xxxxxx, to cooperate fully with
UIH and the Financing Parties.
(e) ASSISTANCE IN OBTAINING REQUIRED APPROVALS. Each of the Parties
shall take, and shall use all reasonable efforts to cause the Companies to take
all reasonable legal and regulatory steps to obtain the Required Consents prior
to the Closing, including, without limitation, any applicable consents of the
Anti-Monopoly Commission and the Foreign Investment Commission, and will keep
each other fully informed of their progress in such regard. Each Party will
cooperate with the other Party and will use all reasonable efforts to obtain, as
promptly as practicable, all of the Required Consents and to maintain each such
Required Consent in full force and effect through the Closing Date. Each of the
21
Parties shall use all reasonable efforts to cause the parties to the ING Credit
Facility to agree upon all Required Consents and/or amendments thereto, pursuant
to this Agreement and the Promised Agreements.
(f) PROHIBITION ON DIVIDEND PAYMENTS AND ISSUANCE OR REPURCHASE OF
SHARES; REPAYMENT OF THIRD PARTY DEBT. Sellers shall cause each of the Companies
and Xxxxxx not to pay any dividends, redeem or repurchase any shares of its
capital stock, issue any equity or debt securities or any rights with respect
thereto or reduce its capital except, as permitted under the Shareholders
Agreement or the Xxxxxx Shareholders Agreement, as applicable. No Third Party
Debt may be repaid (other than interest and principal paid as it becomes due and
owing under the existing terms of such Third Party Debt).
(g) DELIVER FINANCIAL STATEMENTS. The Sellers will cause Hipercable and
Xxxxxx to provide to UIH all financial statements and records, including balance
sheets, statements of operations, changes in shareholders' equity and statements
of change in the financial position of the Companies and Xxxxxx in accordance
with past practice prior to the Closing, but in any event no less frequently
than monthly. It is expressly understood that, except for the representations
and warranties set forth in Article 5, the Sellers make no representation or
warranty with respect to the accuracy or completeness of the information set
forth in such materials.
(h) KEEPING THE PARTIES INFORMED. Each Party will promptly inform the
other Party in writing of the occurrence of any event that would reasonably be
expected to cause any material breach of the representations or warranties made
by such Party in this Agreement. Each Party will also keep the other Party
informed regarding the status of any Required Consents and filings and any other
matters relating to this Agreement or the transactions contemplated by this
Agreement.
(i) SHAREHOLDERS AGREEMENTS. Each of the Parties will comply with their
respective obligations under the Shareholders Agreement and under the Xxxxxx
Shareholders Agreement.
(j) ACQUISITION FINANCING: UIH will use reasonable efforts to obtain
the Acquisition Financing as promptly as commercially practicable and prior to
the Initial Termination Date.
(k) LICENSE AGREEMENT. On the Closing Date, VTR will execute and
deliver the License Agreement and will have full legal and corporate authority
to perform each of its obligations thereunder. Each of the representations and
warranties of VTR set forth in the License Agreement will be true and accurate
at and as of the Closing Date. The Parties will cause each of Hipercable, the
Subsidiaries and Xxxxxx not to transfer or encumber any ownership or other
interest to trademarks and tradenames currently owned or utilized by Hipercable,
any of the Subsidiaries or Xxxxxx after the date hereof, it being understood
22
that such trademarks and/or tradenames are currently pledged or in the process
of being pledged pursuant to the ING Credit Facility to secure outstanding
indebtedness of such parties.
(l) PURCHASER DESIGNEES. Promptly after making a final determination
regarding which, if any, Affiliates of UIH will be Purchaser Designees, UIH
shall provide written notice thereof to Sellers.
NINE: AGREEMENTS REGARDING CERTAIN OTHER MATTERS
(a) FUNDING OF THE COMPANIES PENDING THE CLOSING. From the date hereof
through the earlier of (i) the Closing, or (ii) termination of this Agreement,
interim funding of Hipercable, the Subsidiaries and Xxxxxx shall be in
accordance with any duly approved budgets, the Shareholders Agreement and the
Xxxxxx Shareholders Agreement, as applicable. During such period, VTR, CNT and
UIH each agrees to contribute cash funds to Hipercable in accordance with the
Annual Budget, the Shareholders Agreement and not to elect to have its ownership
interest in Hipercable diluted in lieu of making such cash contributions.
(b) DUE DILIGENCE REVIEW. From the date hereof through the Closing
Date, UIH shall be entitled to conduct a comprehensive review ("Due Diligence
Review") of the Companies and Xxxxxx, in accordance with Section 8(d),
including, without limitation, all aspects of the ownership, operations,
management, Assets, Contracts, rights, liabilities, finances of the Companies
and Xxxxxx and all other matters that UIH believes in good faith to be relevant
to an assessment of the value of the Companies and Xxxxxx. If on or prior to the
Closing, UIH reasonably determines that (a) the unaudited consolidated financial
statements of Hipercable and the Subsidiaries as of and for the period ended
June 30, 1998 (attached hereto as Schedule 9(b)) were not fairly presented in
all material respects in accordance with Chilean generally accepted accounting
principles or (b) Hipercable, the Subsidiaries and Xxxxxx do not own or have in
full force and effect all authorizations, permits, Assets, Contracts, or
Licenses necessary to carry on the business of Hipercable, any of the
Subsidiaries or Xxxxxx as presently conducted or as contemplated by the Business
Plan (subject to contingencies in the Business Plan), or Hipercable, any of the
Subsidiaries or Xxxxxx is in breach or noncompliance of any such authorizations,
permits, Contracts, Licenses or applicable Laws or any litigation or
governmental proceeding exists or is pending or threatened with respect to which
Hipercable, any of the Subsidiaries or Xxxxxx is a party, in each case (a) or
(b) which has had or would reasonably be expected to have, individually or in
the aggregate, a material adverse effect on the financial condition, business,
prospects or assets of Hipercable, the Subsidiaries and Xxxxxx taken as a whole
(a "Material Adverse Effect"), UIH will promptly notify the Sellers of such
determination (a "Due Diligence MAE Determination"). If Hipercable and Xxxxxx
have not within a reasonable period of time after receipt of the Due Diligence
MAE Determination taken action to remedy any matters described in the Due
Diligence MAE Determination so that such matters do not have or would not
23
reasonably be expected to have a Material Adverse Effect, UIH may at any time
thereafter but prior to the Closing Date provide written notice to Sellers (a
"Final MAE Determination") that a condition to Closing has not been satisfied
and the Parties shall have no obligation to Close.
(c) NO SOLICITATION OF HIPERCABLE EMPLOYEES.
(i) Each of the Sellers agrees that neither it nor any of its
Affiliates will employ, contract with (as a consultant, advisor or otherwise) or
solicit the employment or services of any of Hipercable's senior management
personnel for a period of one year beginning on the date hereof (the "Transition
Period"); provided, however, that this Section 9(c) will not prohibit any Seller
from making a solicitation to the general public through an advertisement in a
newspaper or another publication (print or electronic) or otherwise as long as
no member of Hipercable's senior management is employed by, or provides services
to, any Seller or their respective Affiliates during the Transition Period. For
purposes of this clause (c)(i), "Hipercable's senior management" refers to the
senior managers of Hipercable as defined in Section 5(g)(i), together with their
respective successors.
(ii) From and after the date hereof, Sellers shall use
reasonable efforts (which shall not require any payments by Sellers to the Key
Employees) to cause the Key Employees, as soon as practicable after the date
hereof but in no event later than the date that is 60 days after the date
hereof, to enter into employment agreements with Hipercable. The Key Employees
that voluntarily decide to execute employment agreements with Hipercable, shall
be hired by Hipercable on terms and conditions no less favorable than those set
forth in their current employment agreements, in which case Hipercable will
assume the obligations regarding the years of employment of the Key Employees
under their current employment agreements.
(iii) In the event any of the Key Employees does not enter
into employment agreements with Hipercable, after the expiration of the 60 day
period mentioned in Section 9(c)(ii) and for the remainder of the Transition
Period, the Sellers must reassign such Key Employees, to the extent permitted by
the relevant employment agreements or upon agreement with such employees, to a
position that is not directly competitive with the business of the Companies or
Xxxxxx. In the event that the abovementioned amendment of the employment
agreements or reassignation does not take place, the Sellers must terminate
their employment bond with such employees and shall not reemploy the Key
Employees for the remainder of the Transition Period. In addition, each Seller
shall ensure that such Key Employees do not, during the Transition Period,
advise, consult with or assist either Seller, or any Affiliate of either Seller,
in any manner with respect to any business that is directly competitive with the
business of the Companies or Xxxxxx.
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(iv) As soon as practicable, and in any event not later than
60 days after the date hereof, Sellers and UIH shall take such actions as are
necessary, and as provided for in the Shareholders Agreement, to appoint a new
General Manager of Hipercable.
TEN: POST CLOSING ADJUSTMENT
Not less than three Business Days prior to the Closing Date, Sellers
shall provide written certification to UIH of Third Party Debt as of the Closing
(calculated at the Exchange Rate in effect on the date that is four Business
Days prior to the Closing), providing a reasonably detailed description of each
material component of such Third Party Debt. Not less than 30 days following the
Closing, nor more than 90 days following the Closing, UIH shall notify the
Sellers of its determination of the amount of Third Party Debt at Closing
("Adjustment Notice") providing a reasonably detailed calculation of such Third
Party Debt and whether any adjustment to the Purchase Price is required as a
result of the amount of such Third Party Debt. Promptly following the receipt of
the Adjustment Notice, the Sellers shall verify such calculation of Third Party
Debt and UIH shall provide complete access to the records of the Companies to
the Sellers and their accountants for the purpose of such verification, using
procedures similar to those set forth in Section 8(d) with respect to the Due
Diligence Review. Not later than 30 days after receipt of the Adjustment Notice
the Sellers shall notify UIH in writing (the "Response Notice") as to whether
they agree with the calculation in the Adjustment Notice. If Sellers fail to
provide such Response Notice within 30 days of receipt of the Adjustment Notice,
the calculation of Third Party Debt set forth in the Adjustment Notice shall be
final and binding on both Parties. If Sellers agree with the calculation in the
Adjustment Notice, or if Sellers fail to deliver a Response Notice within 30
days after receipt of the Adjustment Notice, the Sellers or the UIH Parties, as
the case may be, shall promptly make any payments required as a result of the
amount of the Third Party Debt at Closing. If the Sellers disagree, they shall
include in the Response Notice a reasonably detailed calculation of the amount
of Third Party Debt that they assert existed at Closing. The Parties shall
promptly attempt to reconcile their respective determinations as to the amount
of Third Party Debt as of Closing. If the Parties are unable to agree upon the
amount of Third Party Debt within 20 days after receipt of the Response Notice,
either Party may refer the matter to KPMG Peat Marwick, LLP or another
independent certified public accountant acceptable to the Parties, who shall
promptly determine the amount of Third Party Debt at the Closing, and whose
decision shall be final and binding upon both Parties. Any adjustment to the
Purchase Price shall be paid within 10 days following the date that the
accountants communicate the amount of Third Party Debt at the Closing to the
Parties. The Parties acknowledge that payments required under this Article Ten
are not subject to any limitation set forth in Article 13.
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ELEVEN: RIGHT OF FIRST REFUSAL
(a) RIGHT OF FIRST REFUSAL. If, at any time on or before the date that
is three years from the date hereof, VTR desires to sell, assign, or otherwise
transfer (each, a "Transfer"), directly or indirectly, any or all of its shares
of capital stock of CNT or any rights in connection therewith ("CNT Shares")
pursuant to a bona fide offer (the "Bona Fide Offer") from any Person other than
UIH, VTR or any of their respective Affiliates (the "Proposed Transferee"), it
shall first submit a written offer (the "Offer") to Transfer such CNT Shares
(the "Offered Shares") to the UIH Parties on the same terms and conditions as
set forth in the Bona Fide Offer. The Offer shall set forth all material terms
included in the Bona Fide Offer. The Offer shall provide that the UIH Parties
shall be afforded the same rights to conduct a due diligence investigation as
the Proposed Transferee, which investigation will begin as soon as possible
after delivery of the Offer. The Offer shall not include any terms not included
in the Bona Fide Offer. The Offer shall further state that the UIH Parties may
acquire, in accordance with the provisions of this Agreement, all (but not fewer
than all) of the Offered Shares on the terms and other conditions set forth
therein. If any portion of the consideration offered in the Bona Fide Offer is
not in cash, the value of such consideration shall be deemed for all purposes
under this Agreement to be the value determined in accordance with an appraisal
conducted by an independent appraiser agreed upon by UIH and VTR. No Transfer to
an Affiliate of VTR (an "Affiliate Transferee") shall be permitted hereunder
unless (i) such Affiliate Transferee shall first agree in writing to be bound by
the terms of this Article 11, and (ii) Sellers guarantee to UIH performance of,
and remain fully liable for any breach by, such Affiliate Transferee of its
obligations as set forth in this Article 11. For purposes hereof, any event or
circumstance that results in a change of control of VTR or an Affiliate
Transferee shall be deemed a Transfer of CNT Shares subject to this Article 11.
A change of control shall have occurred with respect to VTR or an Affiliate
Transferee if at any time VTR or such Affiliate Transferee ceases to be
controlled, directly or indirectly, by one or more members of the VTR Control
Group.
(b) CONFIRMATION OF BONA FIDE OFFER. UIH shall be permitted to review
the terms of the Bona Fide Offer to confirm that it is bona fide and subject
only to conditions that would reasonably be expected to be satisfied, by review
of the documents involved in such Bona Fide Offer including any financing
required thereunder. If review of such documents and of such financing by UIH
would violate a confidentiality obligation of VTR to the Proposed Transferee, or
of the Proposed Transferee to any third party, UIH shall designate a recognized
investment banker, law firm or both (the "UIH Advisors"), each reasonably
satisfactory to VTR, who shall at UIH's expense confirm (i) that the offer
contains and accurately reflects all material terms and conditions set forth in
the Bona Fide Offer (including all written documents between VTR and the
Proposed Transferee related to the Bona Fide Offer) and that such terms and
conditions are no more favorable to the Proposed Transferee than the terms and
conditions set forth in the Offer, (ii) that there are no terms or conditions
included in the Offer that are not included in the Bona Fide Offer, and (iii)
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that financing has been obtained, subject to no condition which, in the
reasonable judgment such UIH Advisors, is likely to be unsatisfied, or based on
the evidence provided, such UIH Advisors expect that financing for the Transfer
to the Proposed Transferee will be obtained. The determination of the UIH
Advisors shall not affect the right of VTR to sell the Offered Shares to the
Proposed Transferee in accordance with the terms of this Article 11 if no UIH
Party elects to purchase the Offered Shares within the 60-day period set forth
in Section 11(c) by delivering notice of such election in accordance with
Section 11(c); provided, however, that in the event that prior to the end of
such 60-day period, UIH delivers written notice to VTR that any material term
applicable to the sale to the Proposed Transferee has not been included in the
Offer or has not been accurately reflected in such Offer, VTR shall revise the
Offer and UIH Party shall be provided a reasonable time to respond to such
revised Offer. As soon as practicable after receipt of notice by UIH that it has
designated the UIH Advisors under this Section 11(b), VTR shall deliver to each
such designee copies of the Bona Fide Offer and all written materials related to
the Bona Fide Offer, subject to the UIH Advisors executing standard and
customary confidentiality agreements, which agreements shall be delivered to
such UIH Advisors by VTR within three Business Days after receipt of notice from
UIH of their designation. The Parties shall use all commercially reasonable
efforts to cause such confidentiality agreements to be executed as soon as
possible after delivery of the Offer Notice. In the event that such agreements
are not executed within five days after UIH notifies VTR of the identity of the
UIH Advisors, unless such failure to execute the agreements is caused by the
unreasonable failure to execute such agreements by the UIH Advisors, the 60-day
period within which the UIH Parties must deliver a Purchase Notice shall be
extended for a number of days equal to the total number of days required to
obtain the execution of the confidentiality agreements by all parties thereto.
(c) ELECTION TO PURCHASE; CLOSING. If one or more of the UIH Parties
elects to purchase the Offered Shares in accordance with the terms of the Offer,
the subject UIH Parties shall communicate in writing such election to purchase
(a "Purchase Notice") to VTR within 60 days of the date the Offer was made. VTR
agrees that any Purchase Notice delivered by any UIH Party will provide that the
Offered Shares must be delivered to such UIH Party free and clear of any Liens
or Restrictions including, without limitation, the Pledge but excluding Liens or
Restrictions created by any of the UIH Parties effective as of the Closing, and
that such condition shall be deemed to be in accordance with the terms of the
Offer, even if a similar qualification is not included in the Bona Fide Offer.
Such election shall be irrevocable, valid, legally binding and enforceable
against the UIH Parties (to the same extent as the Bona Fide Offer would, upon
acceptance thereof by Sellers, be irrevocable, valid, legally binding and
enforceable against the Proposed Transferee) subject to the obtaining of
required regulatory approvals and the expiration of any waiting periods mandated
by applicable Law, and the Parties agree to cooperate in making any filings and
obtaining any such approvals to allow the UIH Parties to exercise their rights
hereunder. The Transfer of the Offered Shares to the subject UIH Parties
pursuant to this Section 11(c) shall be made at 11:00 A.M. Chile time at the
principal offices of UIH in Xxxxxxxx on the later of (i) the date that is 120
27
days following the date the subject UIH Parties deliver the Purchase Notice to
VTR (or if not a Business Day, then on the next succeeding Business Day) and
(ii) the date that is five Business Days after all regulatory approvals for such
transaction have been obtained and any applicable waiting period has expired.
Such Transfer shall be effected by VTR's delivery to the subject UIH Parties of
a certificate or certificates evidencing the Offered Shares to be purchased
together with an executed contract for Transfer containing the representations,
warranties, covenants and all other terms included in the Offer, and the
delivery by such UIH Parties to VTR of the purchase price therefor in cash, by
wire transfer of immediately available funds to an account designated by VTR,
which account shall be designated at least three Business Days prior to such
closing date.
(d) SALE UPON ELECTION NOT TO PURCHASE. In case none of the UIH Parties
elects to accept the Offer, or if such 60-day period of acceptance lapses
without any of the UIH Parties electing to purchase the Offered Shares in
accordance with Section 11(c), all (but not fewer than all) of the Offered
Shares may be transferred by VTR to the Proposed Transferee at any time prior to
the later of (i) the date 180 days after the date the Offer was rejected in
writing or is deemed to have been rejected by not having been accepted within
the 60-day period specified in Section 11(c), or (ii) the date five Business
Days after all regulatory approvals for such transaction have been obtained and
any applicable waiting period has expired with the limitation that the same
number of shares as offered to the UIH Parties shall be Transferred to the
Proposed Transferee (x) at the same or higher aggregate price or price per
Offered Share as set forth in the Offer, (y) subject to all of the terms and
conditions set forth in the Offer, and (z) subject to no material terms more
favorable to the Proposed Transferee than those set forth in the Offer. If the
Proposed Transferee does not carry out its purchase within the 180-day period
referred to above, or else withdraws its offer or introduces any changes thereto
that would be inconsistent with the limitation set forth in the immediately
preceding sentence, the Offered Shares may not be sold, assigned or otherwise
transferred unless previously offered to the UIH Parties pursuant to this
Article 11. Any Offered Shares that go unsold within such period shall continue
subject to the requirements of this Article 11.
(e) NO PLEDGE OF SHARES. For a period of three years beginning on the
date hereof, VTR shall not pledge or encumber, or permit to exist any Lien or
Restriction (other than the Pledge or the Pledge Agreement) on or with respect
to, any CNT Shares owned by VTR. During such three-year period, VTR shall not
amend or modify the Pledge or consent to any such amendment or modification
(except for any amendment or modification releasing CNT Shares which serve as
Security under the Pledge), without the prior written consent of UIH, which
consent shall not be unreasonably withheld or delayed.
(f) DEFAULT UNDER PLEDGE. If at any time during the three-year period
beginning on the date hereof, senior management of VTR becomes aware that there
has occurred or is reasonably likely to occur any event or circumstance (each a
"Default") that permits or would permit CTC to exercise any right under the
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Pledge Agreement (an "Execution Right") to execute against any CNT Shares
pledged as collateral thereunder (whether or not CTC's ability to exercise such
right is subject to any notice requirement, cure period, compliance with
foreclosure or similar procedures under applicable Law, or any similar
requirement), VTR shall as soon as feasible provide written notice to UIH of the
Default and of the terms and requirements applicable to the exercise by CTC of
the Execution Right. At such time VTR shall, to the maximum extent permitted by
applicable Law, take one or more of the following remedial actions: (i) repay
the Pledge Agreement in full and release the Pledge, (ii) cause the CNT Shares
to be released from the Pledge by substituting other collateral therefor, (iii)
cure the Default, or (iv) provide UIH with the option of purchasing all of the
CNT Shares owned by VTR (including the CNT Shares subject to the Pledge) to UIH
for a purchase price equal to (A) the total number of CNT Shares to be
purchased, multiplied by (B) the CNT Share Price; provided that in connection
with such purchase UIH shall repay the entire outstanding balance on the Loan,
such repayment amount to be deducted from the CNT Purchase Price and the Pledge
shall be released in its entirety prior to or simultaneously with such
repayment. For purposes hereof, the term "CNT Share Price" shall mean the
average closing price for CNT Shares for the thirty-day period ending on the
date immediately preceding the date of the closing on the purchase of the CNT
Shares as reported by the Bolsa de Comercio xx Xxxxxxxx.
TWELVE: SURVIVAL
Any breach of a representation, warranty, covenant or agreement
involving actual fraud will survive the Closing for the maximum period provided
for under Chilean law. The representations and warranties contained in Section
5(f) shall survive the Closing and will terminate on the date that is one year
after the date of delivery of the Hipercable Financial Statements to UIH
pursuant to Section 5(f). All other representations, warranties and covenants of
the Parties in this Agreement will survive the Closing for three years after the
date hereof. A claim under this Agreement will be timely and may be pursued so
long as the claim is asserted through written notice to the other Party given
during the period pursuant to which such representation, warranty or covenant
survives.
THIRTEEN: INDEMNIFICATION
(a) GENERAL. The UIH Parties jointly and severally, and the Sellers,
severally and not jointly (the "Indemnifying Party") agree to indemnify and hold
harmless the other Party, any entity controlling, controlled by or under common
control with such Party, and all directors, officers, stockholders, employees
and agents of any of the foregoing (the "Indemnified Persons") from and against
all losses, claims, demands, damages, Judgments, costs, liabilities (or actions
29
or proceedings in respect thereof) and expenses (including, without limitation,
reasonable attorneys' fees and expenses incurred in investigating, preparing,
defending against or prosecuting any litigation or claim indemnified against
under this Agreement) (collectively "Losses") of any kind paid, incurred or
suffered as a result of, relating to or arising out of (i) the inaccuracy when
made or deemed made of any representation or warranty made by the Indemnifying
Party in or pursuant to this Agreement, and (ii) the failure by the Indemnifying
Party to comply with any of its obligations under this Agreement.
(b) NOTICE; DEFENSE OF THIRD PARTY CLAIMS. Any Person that wishes to
assert the right to be indemnified under this Article 13 with respect to any
claim or demand or action by a third party against such Indemnified Person (a
"Third Party Claim") in respect of which a claim may be made against an
Indemnifying Party shall notify the Indemnifying Party as soon as practicable of
any such claim or demand or the commencement of such action (in any event such
Person shall use its best efforts to provide such notice within 10 days), but
the failure so to notify the Indemnifying Party will not relieve the
Indemnifying Party from any liability that it may have to any Indemnified Person
unless, and only to the extent that, such failure results in prejudice to the
Indemnifying Party in the conduct of the defense of such claim. If any such
action is brought against any Indemnified Person and it notifies the
Indemnifying Party of the commencement thereof, the Indemnifying Party will be
entitled to participate in and, to the extent that it elects by delivering
written notice to the Indemnified Person within 15 days after receiving notice
from the Indemnified Person of the assertion of such claim, to assume the
defense of the action, with counsel reasonably satisfactory to the Indemnified
Person, and after such notice from the Indemnifying Party to the Indemnified
Person, the Indemnifying Party will not be liable to the Indemnified Person for
any legal or other expenses except as provided below. The Indemnified Person
shall not settle, compromise or discharge any claim or demand for which it is
indemnified hereunder or admit to any liability with respect to such claim or
demand without the prior written consent of the Indemnifying Party.
Notwithstanding the foregoing, the Indemnified Person will have the right to
employ its own counsel and to participate in the defense or settlement in any
such action, but the fees, expenses and other charges of such counsel will be at
the expense of such Indemnified Person unless (i) otherwise agreed in writing by
the Indemnifying Parties, or (ii) a material conflict or potential material
conflict exists (based on written advice of counsel to the Indemnified Person)
between the Indemnified Person and the Indemnifying Party in the defense of such
action, or (iii) the Indemnifying Party has not in fact employed counsel to
assume the defense of such action within a reasonable time after receiving
notice of the commencement of the action. In each of the cases specified in
clauses (i) through (iii) of the preceding sentence, the reasonable fees,
disbursements and other charges of counsel will be at the expense of the
Indemnifying Party, but the Indemnifying Party shall not be obligated to pay the
fees, disbursements or other charges of more than one counsel for all
Indemnified Persons in respect of any action or series of related actions. All
such fees, disbursements and other charges will be reimbursed by the
Indemnifying Party promptly as they are incurred. An Indemnifying Party shall
not, without the prior written consent of each person entitled to
30
indemnification hereunder, effect any settlement of any pending or threatened
action in respect of which such person is or could have been a party and
indemnification could have been sought hereunder from such Indemnifying Party,
unless the settlement includes an unconditional release of such person from all
liability in respect of claims that are the subject matter of such action.
Nothing in this Section 13(b) shall apply to or otherwise affect the right of
Indemnified Persons to be indemnified hereunder for Losses incurred by such
Indemnified Persons which do not result from Third Party Claims, provided notice
of such claims is given in accordance with Article 12.
(c) LIMITATION ON SELLERS' LIABILITY.
(i) Subject to Section 13(e), VTR shall be liable to the
Indemnified Persons for any Losses only to the extent such Losses exceed an
aggregate amount equal to $5,000,000 or the foreign currency equivalent thereof
measured at the Exchange Rate as of the date of such Loss (the "DEDUCTIBLE
AMOUNT") and then only for Losses in excess of the Deductible Amount up to an
aggregate maximum amount equal to 89.3% of the Purchase Price (the "VTR MAXIMUM
AMOUNT") or the foreign currency equivalent thereof measured at the Exchange
Rate as of the date of payment.
(ii) Subject to Section 13(e), CNT shall be liable to the
Indemnified Persons for any Losses only to the extent such Losses exceed an
aggregate amount equal to the Deductible Amount and then only for Losses in
excess of the Deductible Amount up to an aggregate maximum amount equal to 10.7%
of the Purchase Price (the "CNT MAXIMUM AMOUNT") or the foreign currency
equivalent thereof measured at the Exchange Rate as of the date of payment.
(d) LIMITATION ON UIH PARTIES' LIABILITY. Subject to Section 13(e), the
UIH Parties shall be liable to the Indemnified Persons only for Losses up to an
aggregate maximum amount equal to 40% multiplied by (Purchase Price divided by
0.6) (the "UIH MAXIMUM AMOUNT"), or the foreign currency equivalent thereof
measured at the Exchange Rate as of the date of payment, with respect to which
amount the UIH Parties shall be jointly and severally liable.
(e) NO LIMITATION ON INDEMNIFICATION FOR BREACH OF COVENANTS REGARDING
COMPLIANCE WITH SHAREHOLDERS AGREEMENTS. Notwithstanding any other provision of
this Agreement, (i) the Sellers shall be obligated to indemnify each Indemnified
Person hereunder for the full amount of all Losses suffered by such Indemnified
Person resulting from, relating to or arising out of any breach by the Sellers
of Section 8(i) of this Agreement without regard to whether such Losses exceed
the Deductible Amount, the VTR Maximum Amount or the CNT Maximum Amount, it
being agreed by the Parties that such Losses will not to be subject to the
provisions of Section 13(c) hereof; and (ii) the UIH Parties shall be obligated
to indemnify each Indemnified Person hereunder for the full amount of all Losses
31
suffered by such Indemnified Person resulting from, relating to or arising out
of any breach by the UIH Parties of Section 8(i) of this Agreement, it being
agreed by the Parties that such Losses will not be subject to the provisions of
Section 13 (d) hereof. For purposes of this Section 13(e), "Losses" shall not
include the discounted buy-out remedy set forth in Section 4.4 of the
Shareholders Agreement and the Xxxxxx Shareholders Agreement.
(f) SELLERS' INDEMNIFICATION FOR CERTAIN REPRESENTATIONS AND
WARRANTIES. Notwithstanding anything to the contrary contained herein, only 60%
of Losses related to the Companies, and 50% of Losses related to Xxxxxx,
resulting from any breach or inaccuracy of the representations and warranties
set forth in Section 5(f) or Section 5(g)(i) or (ii) shall be deemed Losses
hereunder. Nothing in this Section 13(f) shall limit or affect the rights and
remedies available to the parties to the Shareholders Agreement and the parties
to the Xxxxxx Shareholders Agreement with respect to any breach of either or
both such agreements which breach occurred prior to the date hereof.
(g) SPECIFIC PERFORMANCE. The Parties acknowledge that, in addition to
any other remedy available to the Parties hereunder, the Arbitration Court shall
be authorized, at the request of the non-defaulting Party, to require specific
performance of a Party's obligations hereunder (including, without limitation,
the obligations of Sellers under Section 9(c) and of VTR under Article 11) in
the event of any material breach hereof by such Party.
(h) INDEMNIFICATION AS SOLE REMEDY. Subject to Sections 13(f) and
Section 13(g), and except with respect to claims of actual fraud, the indemnity
provided herein as it relates to this Agreement and the transactions
contemplated by this Agreement shall be the sole and exclusive remedy of the
Seller Indemnified Persons with respect to any and all claims for Losses
sustained, incurred or suffered as a result of any breach of this Agreement and
the transactions contemplated hereby, including, without limitation, any such
claims arising under or based upon any Laws, and the Parties on behalf of the
Indemnified Persons waive any right to pursue any other remedies to the fullest
extent permitted under applicable Laws with respect to such claims for Losses.
FOURTEEN: ARBITRATION
Any difference, controversy, conflict, issue or difficulty arising
between the Parties in respect of the validity, nullity, termination,
construction, scope, applicability or breach of this Agreement or otherwise for
whatever reason directly or indirectly in connection herewith and in respect of
any other matter which the Parties may enter into as a result of the matters
agreed and regulated under this Agreement (the "Controversy"), shall first be
the object of bona fide direct negotiations between the Parties. If the Parties
fail to reach an understanding in this regard within 30 days following the date
one or both of the Parties has initiated negotiations to resolve the
Controversy, then either Party shall have the right to initiate arbitral
proceedings by giving written notice to the other Party (the "Notice of
Arbitration").
The Controversy shall be exclusively settled by a Chilean Arbitral
Tribunal or Tribunal Arbitrador, which shall act as Arbitrator or Arbitro
Arbitrador and shall be composed of three arbitrators (the "Arbitration Court").
The Arbitration Court may act as often as necessary upon request by either or
both Parties, and its awards shall be unappealable. The Parties hereby expressly
waive any remedies which they could have asserted during or after the
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arbitration with the exception of requests for clarification or interpretation
and the remedy of complaint recurso xx xxxxx.
The three arbitrators shall be appointed as set forth in this Article
Fourteen. Within 15 days after receipt of the Notice of Arbitration, the
claimant shall select one arbitrator and the respondent shall select one
arbitrator. Within ten days of their selection, the two arbitrators shall select
the third arbitrator, who will be the arbitrator presiding over the arbitration
court. If the claimant or the respondent fail to appoint an arbitrator as
required hereunder, or if the two arbitrators so selected are unable to agree on
the appointment of the third arbitrator within twenty days after the Notice of
Arbitration, then such arbitrator(s) shall be selected by the Santiago Section
of the Inter-American Commercial Arbitration Commission (the "IACAC") pursuant
to the rules of procedure of the IACAC, except that the arbitrator(s) shall be
appointed within 35 days after the date of the Notice of Arbitration. The
arbitrator(s) so selected by the IACAC shall be fluent in Spanish and English
and shall have had considerable experience in arbitrating international
commercial disputes.
The Arbitration Court shall always be authorized to establish the
procedural rules for the arbitral proceedings, even upon the Parties'
disagreement in that respect. In reaching a determination, the Arbitration Court
shall consider common legal principles under Chilean law generally applicable to
the Controversy, provided, however, that to the extent those principles are
inconsistent with the intent of the Parties under this Agreement or the Promised
Agreements, the provisions of this Agreement and the Promised Agreements shall
prevail.
The place of arbitration shall be Santiago, Chile and the Spanish
language shall be used throughout the arbitral proceedings (although the
arbitrators may communicate with and take testimony from the Parties in English
to the extent they deem it helpful). Unless the Parties otherwise agree in
writing, the final arbitral award shall be rendered within 120 days of the
Notice of Arbitration. The arbitral award shall be in U.S. Dollars and shall
include interest from the date of the action giving rise to such award. The
arbitral award shall be final and binding upon the Parties, and judgment may be
entered thereon upon the application of any Party in any court of competent
jurisdiction. Each Party shall bear the costs of preparing and presenting its
case with respect to any arbitral proceeding. Other costs of arbitration
(including the fees and expenses of the arbitrators) will be borne as provided
in the arbitral award.
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FIFTEEN: APPLICABLE LAW; JURISDICTION
This Agreement shall be governed in accordance with the laws of the
Republic of Chile. For all legal intents and purposes derived here from, the
Parties establish their legal address in the City and District of Santiago, and
subject themselves to the jurisdiction of its Courts of Justice, without
prejudice to Article Fourteen.
SIXTEEN: ENTIRE AGREEMENT; OTHER AGREEMENTS
(a) ENTIRE AGREEMENT. This Agreement, the Promised Agreements and the
other agreements to be delivered at the Closing constitute the entire agreement
between the Parties with respect to the subject matter hereof and thereof and,
except as provided in Section 16(b), supersede all other previous agreements,
understandings and negotiations between the Parties, both written and oral, in
respect to the subject matter hereof and thereof. The Parties have neither made
nor relied upon any representation, statement, inducement, promise, covenant,
condition or guarantee not stipulated expressly herein.
(b) OTHER AGREEMENTS. The Parties shall cause the Original Promise
Agreement, the Shareholders Agreement and the Xxxxxx Shareholders Agreement to
be terminated upon the Closing. Upon such termination and notwithstanding any
provisions that would survive pursuant to Section 8.2 of the Shareholders
Agreement and the Xxxxxx Shareholders Agreement (i) the sole remedies for any
breach of either or both such Shareholder Agreements that occurred on or after
the date hereof shall be as set forth in Section 13(e), and (ii) the sole
remedies for any breach of either or both such Shareholder Agreements that
occurred prior to the date hereof shall be the remedies set forth in the
Shareholders Agreement or the Xxxxxx Shareholders Agreement, as applicable,
which remedies shall survive the termination of such agreements in accordance
with the terms thereof; provided, however, that upon the Closing, the discounted
buy-out remedy set forth in Section 4.4 of each of the Shareholders Agreement
and the Xxxxxx Shareholders Agreement shall terminate and shall no longer be
available to any party to such agreements with respect to any such breach.
SEVENTEEN: NOTICES
All notices, requests or other communications to the Parties shall be served in
writing and sent to the address or telecopier number stated by said Party herein
below, whether in person, or by Federal Express or another reputable
international courier (a "Qualified Courier") for next Business Day delivery (or
its nearest equivalent) or telecopy transmission followed by courier, or else to
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any other address or telecopier number that said Party may specify hereinafter
by means of a notice sent to each other Party as provided in this Article.
If to the Sellers:
VTR S.A.
Avenida Xxxxxx Xxxxx N(degree) 2711, piso 6
Las Xxxxxx, Xxxxxxxx
Attn: Sr. Xxxxx Xxxxxxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Compania Nacional de Telefonos, Telefonica del Sur S.A.
Avenida Xxxxxx Xxxxx N(degree) 2711, piso 6
Las Xxxxxx, Xxxxxxxx
Attn: Sr. Xxxx Xxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with copies to:
Quinenco S.A.
Agustinas 972, oficina 701
Xxxxxxxx Centro, Santiago
Attn: Xxxxxxxxx Xxxxxx C.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
SBC International, Inc.
000 X. Xxxxxxx, Xxxx 00-X-00
Xxx Xxxxxxx, XX 00000
Attn: President
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
35
SBC Communications Inc.
000 X. Xxxxxxx, Xxxx 0000
Xxx Xxxxxxx, XX 00000
Attn: General Attorney and Assistant General Counsel
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Xxxxxxxx & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx Xxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
If to UIH:
UIH Latin America, Inc.
0000 Xxxxx Xxxxxx Xx., Xxxxx 0000
Xxxxxx, XX 00000 X.X.X.
Attn: President
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with copies to:
United International Holdings, Inc.
0000 Xxxxx Xxxxxx Xx., Xxxxx 0000
Xxxxxx, XX 00000 U.S.A.
Attn: General Counsel
Telephone: (000) 000-0000
Telecopy: (000) 000-0000; and
Holme Xxxxxxx & Xxxx LLP
0000 Xxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, XX 00000 X.X.X.
Attn: W. Xxxx Xxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Any notice or other communication sent in accordance with this Article
Seventeen shall be deemed given (a) if sent by Qualified Courier, three Business
Days after being delivered to the Qualified Courier, (b) if sent by telecopy,
when the sending machine receives electronic confirmation of receipt from the
receiving machine, or (c) otherwise, when personally delivered to such address
(or when delivery at such address is refused).
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EIGHTEEN: CONFIDENTIALITY; PRESS RELEASES
(a) CONFIDENTIAL INFORMATION.
(i) All confidential information with respect to the business,
operations or prospects of any of the Companies or Xxxxxx (whether written or
oral) is hereinafter referred to as "Confidential Information". The term
Confidential Information will not, however, include information which (A) is or
becomes publicly available other than as a result of a disclosure by any of the
Sellers or any of their respective directors, officers, employees, Affiliates,
representatives (including, without limitation, financial advisors, attorneys
and accountants) or agents (collectively, the "Seller Representatives"), or (B)
is or becomes available to Sellers from a source (other than from the Companies
or Xxxxxx, or their respective directors, officers, employees, Affiliates,
representatives (including, without limitation, financial advisors, attorneys
and accountants) or agents (the "Company Representatives") which, to the best of
Sellers' knowledge after due inquiry, is not prohibited from disclosing such
information to Seller by a legal, contractual or fiduciary obligation to the
Company.
(ii) Each of the Sellers hereby agrees that it and each of the
Seller Representatives (A) will keep the Confidential Information confidential
and will not (except as required by applicable law, regulation or legal process,
and only after compliance with clause (iii) below), without UIH's prior written
consent, disclose any Confidential Information in any manner whatsoever, and (B)
will not use any Confidential Information for any commercial purpose (other than
as necessary or appropriate in furtherance of the Company Businesses prior to
the Closing).
(iii) If Seller or any of the Seller Representatives are
requested pursuant to, or required by, applicable law, regulation or legal
process to disclose any of the Confidential Information, Sellers will, if
permitted by applicable Law, exercise all reasonable efforts to notify UIH
promptly so that UIH or the Companies may seek a protective order or other
appropriate remedy or, in UIH's sole discretion, waive compliance with the terms
of this Section 18(a). In the event that no such protective order or other
remedy is obtained, or that UIH waives compliance with the terms of this
Agreement, the Sellers or the Sellers Representatives, as applicable, will
furnish only that portion of the Confidential Information which, upon advice of
counsel, is legally required and will exercise all reasonable efforts to obtain
reliable assurance that confidential treatment will be accorded the Confidential
Information.
(b) PRESS RELEASES. The initial press release by the Parties with
respect to this Agreement shall be a joint press release and thereafter the
Parties shall inform each other in advance of the making of any press release or
other public statements with respect to the transactions contemplated hereby and
of any filings with any Governmental Authority or with any securities exchange
with respect hereto.
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NINETEEN: EXPENSES
Each of the Parties shall pay its own expenses in connection with the
preparation and negotiation of this Agreement.
TWENTY: SEVERABILITY
In the event that any provision of this Agreement, or the application
thereof, becomes or is declared by a court of competent jurisdiction to be
illegal, void or unenforceable, the remainder of this Agreement will continue in
full force and effect and the application of such provision to other persons or
circumstances will be interpreted so as reasonably to effect the intent of the
parties hereto. The parties hereto further agree to replace such void or
unenforceable provision of this Agreement with a valid and enforceable provision
that will achieve, to the extent possible, the economic, business and other
purposes of such void or unenforceable provision.
TWENTY ONE: COUNTERPARTS
This Agreement may be executed in one or more counterparts, all of
which shall be considered one and the same agreement and shall become effective
when one or more counterparts have been signed by each of the Parties hereto and
delivered to the other Parties hereto, it being understood that all Parties
hereto need not sign the same counterpart.
TWENTY TWO: NON-ASSIGNMENT
Neither this Agreement nor any rights or obligations hereunder may be
assigned by any Party without the prior consent of the other Party, provided,
however, that UIH may assign its rights, but not its obligations, hereunder to
any Purchaser Designee without the consent of any other Party.
38
TWENTY THREE: SECTION HEADINGS
The paragraph and section headings of this Agreement are for
convenience only and shall not affect the construction or interpretation of this
Agreement.
39
EXECUTED as of the date set forth on page 1.
VTR S.A.
By: /S/ Xxxx Xxxxx
---------------------------------------
Its: Director
---------------------------------------
COMPANIA NACIONAL DE
TELEFONOS, TELEFONICA DEL
SUR, S.A.
By: /S/ Xxxx Xxxxx
---------------------------------------
Its: Director
---------------------------------------
UIH LATIN AMERICA, INC.
By: /S/ Xxxx Xxxxxxxxx Xxxxxx Xxxxxxxxx
---------------------------------------
Its: Agent
---------------------------------------
40
