STOCK PURCHASE AGREEMENT
DATED OCTOBER 20, 1997
BETWEEN
Supercanal Holding S.A., an Argentine corporation, hereinafter referred to as
the "Buyer", and United International Holdings Argentina, S.A., an Argentine
corporation ("UIH"), and UIH Argentina, Inc., a Colorado corporation ("UIHA").
UIH and UIHA are collectively referred to in this Agreement as the "Sellers."
The Sellers and the Buyer are jointly referred to as the "Parties."
RECITALS
The Sellers are the owners of the shares of stock of the Argentine companies set
forth on Schedule I, in proportion and quantities that are detailed on Schedule
I and the Buyer is interested in acquiring such shares pursuant to the terms and
conditions of this Agreement.
In consideration of the terms and covenants contained herein, the Parties agree
as follows:
ARTICLE 1
DEFINITIONS
As used herein, the following terms have the following meanings (terms defined
in singular to have the same meanings when used in plural and vice versa):
ADDITIONAL AGREEMENTS: Any agreement, instrument, certificate or other document
executed or delivered pursuant to this Agreement including, without limitation,
any Contract and any other documents (except opinions) delivered to the Buyer
pursuant to Article 6.
AFFILIATE: Affiliate of a Person will mean, unless otherwise specified, any
entity that directly or indirectly, through one or more intermediaries,
controls, is controlled by or is under common control with the Person. For
purposes of this definition the term "control" means effective management
control of the Person including, without limitation, control through the power
to elect a sufficient number of directors or to appoint a sufficient number of
senior managers to obtain control or similar powers. A Person will be rebuttably
presumed to control another Person or entity if it owns 50% or more of the
equity or the voting power of the applicable entity.
AGREEMENT: This Stock Purchase Agreement (including the Exhibits and Schedules
attached hereto).
APPLICABLE PURCHASE AGREEMENTS: The purchase agreements under which the Sellers
acquired their ownership interests in the Operating Companies.
ASSETS: For any Person, all of the properties, Equipment, Systems, Licenses,
marks, commercial names, intellectual property rights, and other assets,
privileges, rights, interest, claims and goodwill of such Person, real and
personal, tangible and intangible, owned, leased or otherwise used by such
Person.
BAHIA XXXXXX AGREEMENT: That certain Stock Purchase Agreement, dated as of
October 17, 1997, by and among the Sellers and Multicanal S.A., an Argentine
corporation, with respect to the sale of the shares of stock of certain
Argentine corporations operating in Bahia Xxxxxx.
BUSINESS DAY: Any day on which banks in the State of New York, U.S.A., and in
the city of Buenos Aires, Argentina, are not required or authorized to be closed
by law.
CLOSING: As defined in Section 2.2 of this Agreement.
CLOSING DATE: The date on which the Closing occurs.
CLOSING LIABILITIES: All obligations, net of any amounts in escrow accounts to
provide for any such obligations, of each of the Companies at the Closing Date
that are or should be included as liabilities on the consolidated balance sheet
of the Companies as of said date in accordance with generally accepted
accounting principles in Argentina.
CLOSING CURRENT ASSETS: All assets of each of the Companies at the Closing Date
(net of any amounts in escrow accounts referred to in the definition of Closing
Liabilities) that are or should be included as current assets on the
consolidated balance sheet of the Companies as of said date in accordance with
generally accepted accounting principles in Argentina.
COMFER: The Argentine Comite Federal de Radiodifusion.
COMPANIES: The Holding Companies and the Operating Companies.
CONTRACTS/COMMITMENTS: 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 and/or beneficiary and/or
obligee and/or subscriber and/or by which such Person and/or any Assets or
securities of such Person are or may be bound, including, without limitation,
any License.
EQUIPMENT: Equipment includes, but is not limited to, electronic devices, trunk
and distribution cables; amplifiers; power supplies; conduit; cables and
pedestals; grounding and pole hardware, installed subscriber devices (including,
without limitation, drop lines, converters, encoders, transformers behind
television sets and fittings); "headend" (origination, transmission and
distribution system); hardware; tools; inventory; spare parts; maps and
engineering data; vehicles; microwave equipment; studios and other broadcast
facilities and other equipment for local programming; and all other tangible
property and facilities owned, used or held for use by the Operating Companies
in the Systems of the Companies.
GOVERNING DOCUMENTS: The bylaws (estatutos), articles or certificate of
incorporation or association, or other governing documents which may be
mandatory in any entity.
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GOVERNMENTAL AUTHORITY: Any court, administrative agency or commission, or any
other governmental organization, or any other governmental or quasi-governmental
agency, instrumentality or official, domestic or foreign.
HOLDING COMPANIES: Inversora Atelco Comodoro, S.A., and Inversora Antena
Comunitaria Trelew S.A.
JUDGMENT: Any judgment, writ, order, decree or ruling of or by any court, judge
or magistrate, including any bankruptcy court or judge.
LAW: The civil and commercial law and any statute, ordinance, code or other law,
rule, regulation, order, technical or other standard, requirement or procedure
adopted and in effect in the Argentine Republic or its political subdivisions.
LICENSES: All concessions, licenses, permits, operating authorizations and other
agreements and approvals from Governmental Authorities, providers of programming
or other entities and all material rights-of-way, 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 filed or not),
conditional sale or other title retention agreement, any lease, consignment or
bailment given for security purposes, any lien, charge, limitation, restrictive
agreement, mortgage, pledge, option, encumbrance, adverse interest, constructive
trust or other trust, claim, legal custody, 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: Material Adverse Effect means any event, change,
occurrence or condition, singly or together with any other event, change,
occurrence or condition that would have a material adverse effect on the
condition, financial or otherwise, of a Person.
OPERATING COMPANIES: Atelco, S.A., and Antena Television Comunitaria, S.A.
PERSON: Any natural person, sociedad anonima, sociedad de responsabilidad
limitada, corporation, general or limited partnership, joint venture, trust,
association, entities of any kind (with or without legal existence) or
Governmental Authority or other persons.
PURCHASE PRICE: The Purchase Price will equal the following:
(a) The aggregate amount for all of the Companies (calculated without
duplication) of the following amount for each Company:
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(i)(A) the total number of Subscribers of such Company at the Closing
Date multiplied by US$1,500, (B) less the Closing Liabilities of such
Company, (c) plus the Closing Current Assets of such Company;
(ii) multiplied by the total percentage ownership of such Company
being transferred pursuant to this Agreement.
For example, suppose Company A is a seller and owns 80% of the shares of Company
B and Company B owns 90% of Company C. Company B has no Subscribers, US$25 of
Closing Liabilities and US$5 of Closing Current Assets. Company C has 10
Subscribers, US$100 of Closing Liabilities and US$20 of Closing Current Assets.
In this case, clause (a) of the definition of Purchase Price would be applied as
follows:
-- The amount for Company C would be (10 x US$1,500) minus US$100 plus
US$20, all multiplied by 72%, for a total of US$10,742.40.
-- The amount for Company B would be ($20) multiplied by 80% or ($16).
-- The total amount for these two companies under clause (a) would be
US$10,726.40.
REAL PROPERTY: For any Person, all realty, towers, fixtures and other interests
in real property, buildings, improvements and construction-in-progress owned,
leased, occupied, used or held for use by such Person.
REQUIRED CONSENTS: As defined in Section 3.2.2 hereof.
RESTRICTION: With respect to any stock, any voting or other trust or agreement,
option, warrant, escrow, proxy, buy-sell or other share transfer agreement,
power of attorney or other Contract, arrangement or understanding, 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 (with or without the passage of time, the payment of money or the
occurrence of any other event) in any Person acquiring any such stock, any
interest in or proceeds or distributions of any such stock, (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, or (iii) creates or may create a lien or a
purported lien affecting such stock, proceeds or distributions.
RIGHTS: Collectively, (A) the right to any dividend of any of the Companies, in
cash or in kind, declared but not distributed as of the Closing Date, (B) all
the rights arising from revocable or irrevocable capital contributions made by
Sellers to the Companies prior to the Closing Date that have not been
capitalized (or the capitalization of which has not yet been effected), (C) all
credits that the Sellers may have against the capital of the Companies as of the
Closing Date, (D) all rights to subscribe to the Companies' capital increases as
of the Closing Date, and (E) any other rights to be paid in as of the Closing
Date.
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SANTA FE AGREEMENT: That certain Amended and Restated Stock Purchase Agreement,
dated as of October 20, 1997, by and among the Buyer, UIHA, and CV American
Holdings L.L.C., a Delaware limited liability company, with respect to the sale
of the shares of stock of certain Argentine corporations operating in Santa Fe
and Entre Xxxx.
SELLERS' REPRESENTATIVE: UIH Latin America, Inc., a Colorado corporation, or
such other Person as the Sellers may designate in writing in the future. The
Sellers grant the Sellers' Representative sufficient power to interpret and/or
modify this Agreement and to sign any agreement related to the same.
SHARES: The shares of the Holding Companies' capital stock, and the shares of
any Operating Company's capital stock held directly by any Seller, set forth on
Schedule I to be purchased by the Buyer from the Sellers pursuant to this
Agreement, which will constitute all of the outstanding capital stock and voting
power of each such Holding Company or Operating Company, as applicable, owned by
the Sellers. The transfer of the Shares implies the transfer of all of the
Rights.
SUBSCRIBER: Any person that, at the relevant date for the calculation of the
number of Subscribers, is connected to the services furnished by the Company,
and with respect to whom condition (i) below and one of conditions (ii) and
(iii) below is met.
(i) the services furnished by the Company to that person have been
invoiced on a monthly basis at a time consistent with the system's past
practices;
(ii) if services had been furnished for a period for which more than
two invoices have been issued, no debt in respect of a monthly invoice,
other than the three monthly invoices due prior to such date is outstanding
(including debt outstanding under a refinancing plan) or have been released
or otherwise discharged without payment since August 1, 1997, PROVIDED,
HOWEVER, that a person owing any such invoice under a refinancing plan of
which at least THREE installments have been paid at that date and who is
not in arrears with respect to any installment thereof will be considered a
Subscriber; and
(iii) if services had been furnished for a period shorter than the
period contemplated in (ii) above, that person has paid either (a) a
connection charge not lower than 50% of the system's regular monthly charge
or (b) a monthly invoice in advance.
If a person has been connected to the services under a temporary sale
promotion, that person shall be counted as a fraction of subscriber in the same
proportion as the monthly charge paid by that person bears to the then regular
monthly charge. For the purposes hereof "temporary sale promotion" shall mean,
with respect to any system, any temporary discount, rebate or other reduction in
the system's monthly charge for the purpose of gaining new subscribers for the
system, and "regular monthly charge" shall mean, with respect to any system, the
monthly charge invoiced to the persons connected to that system under no such
promotion or other preference, as shown in the relevant management reports. For
systems that normally offer a discount for invoices paid within a specified
time, the discounted amount shall be deemed to be the regular monthly charge.
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If a person connected to the services enjoys a preference charge, that
person shall be counted as a fraction of subscriber in the same proportion as
the monthly charge paid by that person bears to the then regular monthly charge.
For the purposes hereof "preference charge" shall mean, with respect to any
system owned by the Company, any charge lower than the regular monthly charge
(as defined above) provided for by the Company under any program other than a
temporary sale promotion.
If a person connected to the services pays more than the regular monthly
service charge, then that person shall be counted as more than one subscriber in
a manner comparable to that used above for persons who pay less than the regular
monthly charge.
SYSTEM: A complete multi-channel subscription television reception and
distribution system consisting of one or more head-ends, trunk cable, subscriber
drops and associated electronic equipment that is or is capable of being
operated as an independent system without interconnections to other systems.
TAX: Any tax or payment of any kind required pursuant to any Law, to be paid to
any Governmental Authority.
TITLE DOCUMENTS: Any deed, grant of easement, certificate of title or other
document which confirms or vests title or ownership of any property or any
interest in Assets in any Person.
US$: United States Dollars.
ARTICLE 2
PURCHASE OF STOCK
2.1 PURPOSE OF AGREEMENT.
(a) The Sellers agree to sell, assign and transfer to Buyer and Buyer
agrees to purchase, pursuant to the terms and conditions of this Agreement, the
Shares.
(b) This Agreement includes the transfer to Buyer of all of the Rights
on the Closing Date. Sellers also agree to transfer directly (or through
transfer of a parent company) all rights to receive funds from or enforce the
provisions of any escrow existing pursuant to any of the Applicable Purchase
Agreements or related documents.
(c) This Agreement includes the assignment by Sellers to Buyer of all
of Sellers' rights and obligations under the Applicable Purchase Agreements, to
the extent such rights and obligations are assignable under the respective terms
of such Applicable Purchase Agreements.
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2.2 CLOSING.
(a) The Closing of the purchase and sale of the Shares (the "Closing")
will occur on October 20, 1997 at 10:00 a.m. Buenos Aires time. The Closing
shall take place at the offices of Xxxxxxx Xxxxxx Xxxxxx, Xxxxxx Xxxxx,
Xxxxxxxxx, or any other place as agreed in writing by Buyer and Sellers'
Representative.
(b) At the Closing the Sellers will deliver to the Buyer any and all
certificates representing the Shares and will take all necessary acts to perfect
the transfer of the Shares and note in the name of the Buyer and/or the company
that the Buyer will designate the transfer in the Companies' Stock Registry
Books, free of Liens and Restrictions, with the exception of the authorization
provided for in Article 46 clause (f) of the Broadcasting Law, if applicable.
2.3 PAYMENT OF PURCHASE PRICE.
2.3.1 INITIAL PAYMENT: The Buyer has paid to the Sellers the sum of
US$5,000,000.00 as partial payment of the Purchase Price. Such amount will be
forfeited by Buyer if the Closing does not occur on October 20, 1997 for any
reason other than a breach by Seller of a material obligation hereunder or a
failure by Seller to satisfy the conditions precedent set forth in Section 6.1.
2.3.2 ESCROW DEPOSIT: US$2,429,203.00 of the Purchase Price (the
"Escrow Deposit") will be paid at the Closing by way of a deposit on behalf of
the Buyer in an escrow account (the "Escrow Account") with Colorado National
Bank N.A. or such other escrow agent as the Parties shall agree, with which an
agreement will be signed substantially in the form attached hereto as Exhibit A
(the "Escrow Agreement"). The Escrow Account will be governed by the terms and
conditions of the Escrow Agreement.
2.3.3 CLOSING PAYMENTS: The remainder of the Purchase Price, determined
pursuant to Section 2.4(a) (the "Closing Payment"), will be paid to the Sellers
at the Closing.
2.4 DETERMINATION OF PURCHASE PRICE. For purposes of the Closing Payment to
be made pursuant to Section 2.3.3, the Purchase Price will be determined as
follows:
(a) Attached hereto as Exhibit B is a certificate setting forth a good
faith estimate, based on August 31, 1997 numbers, of (A) the total number of
Subscribers to the Companies' Systems as of the Closing Date, (B) the Closing
Liabilities, (C) the Closing Current Assets, and (D) the Purchase Price. The
Closing Payment will be (i) the Purchase Price shown on that certificate (the
"Estimated Purchase Price") plus interest thereon from October 17, 1997 until
the Closing at the rate of 15% per annum, payable weekly until the Closing
occurs, minus (ii) subject to Section 2.3.1, the partial payment described in
Section 2.3.1 and minus (iii) the Escrow Deposit.
(b) Within thirty days after the Closing Date, the Buyer will deliver
to the Sellers' Representative a statement (the "Purchase Price Statement")
showing (i) the number of Subscribers at the Closing Date, (ii) the Closing
Liabilities, (iii) the Closing Current Assets and (iv) the resulting Purchase
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Price, and specifying in reasonable detail how each of those items was
calculated. In order to expedite calculation of the Purchase Price, the Seller
will cooperate with the Buyer prior to the Closing in the Buyer's efforts to
prepare to audit the number of Subscribers at the Closing Date and to determine
the Closing Liabilities and Closing Current Assets. The Buyer will permit the
Sellers' Representative or its designee to participate in the Buyer's audit of
the number of Subscribers at the Closing Date. Schedule 2.4(b) details certain
valuation criteria to be used for auditing or arbitration purposes. If Buyer
does not deliver the Purchase Price Statement within this 30-day period, it will
have no right to assert that the Purchase Price is lower than the Estimated
Purchase Price.
(c) The Purchase Price shown on the Purchase Price Statement will be
deemed to be the final Purchase Price unless, within ten days after it receives
the Purchase Price Statement, the Sellers' Representative delivers to the Buyer
a notice (a "Dispute Notice") stating that the calculation of the Purchase Price
was not correct and specifying in reasonable detail each item on the Purchase
Price Statement that the Sellers' Representative disputes, and the amount in
dispute with regard to each of those items.
(d) If a Dispute Notice is delivered to the Buyer within the ten day
period described in subparagraph (c), the Buyer and the Sellers' Representative
will attempt to reach an agreement within five days after the Dispute Notice is
delivered with regard to each item specified in the Dispute Notice. If the Buyer
and the Sellers' Representative fail to agree within that five day period as to
any items, KPMG Peat Marwick or another firm of accountants agreed upon by the
Buyer and the Sellers' Representative (the "Accountants") will be retained to
resolve the dispute as to those items (with the Buyer and the Sellers each
paying half the cost of the Accountants). The determination of the Accountants
as to each item will be final and binding on the Parties. The final Purchase
Price will reflect all adjustments to the Purchase Price shown on the Purchase
Price Statement that are agreed upon by the Buyer and the Sellers'
Representative or are determined by the Accountants.
(e) Within three days after the Purchase Price Statement is delivered
to the Sellers' Representative, the Buyer will pay the Sellers the amount, if
any, by which the Purchase Price shown on the Purchase Price Statement exceeds
the Estimated Purchase Price.
(f) Within three days after the Dispute Notice is delivered to the
Buyer (or the time to deliver a Dispute Notice expires without a Dispute Notice
being delivered), the Buyer and the Sellers' Representative will instruct the
Escrow Agent (i) to pay the Buyer the amount, if any, by which, if all the
Disputed Items were resolved in favor of Sellers, the Purchase Price would be
less than the Estimated Purchase Price, or (ii) to pay the Sellers the amount,
if any, by which if all the Disputed Items were resolved in favor of the Buyer,
the Purchase Price would be more than the Estimated Purchase Price minus the
amount of the Escrow Deposit. If, even if all the Disputed items were resolved
in favor of the Sellers, the Purchase Price would be less than the Estimated
Purchase Price minus the amount of the Escrow Deposit, at the same time the
instruction is delivered to the Escrow Agent, the Sellers will pay the Buyer the
amount by which the Purchase Price shown on the Purchase Price Statement plus
the total of all the Disputed Items is less than the Estimated Purchase Price
minus the amount of the Escrow Deposit. If, even if all the Disputed Items were
resolved in favor of the Buyer, the Purchase Price would be more than the
Estimated Purchase Price, at the same ime the instruction is delivered to the
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Escrow Agent, the Buyer will pay the Sellers the amount by which the Purchase
Price shown on the Purchase Price Statement is more than the Estimated Purchase
Price.
(g) If a Dispute Notice is delivered to the Buyer, within three days
after any disputed item is resolved by agreement of the Buyer and the Sellers'
Representative in a manner that increases the Purchase Price, the Buyer and the
Sellers will instruct the Escrow Agent to pay the Sellers (or, after the entire
Escrow Deposit has been paid to the Sellers, the Buyer will pay the Sellers) the
amount by which the Purchase Price is increased.
(h) Within three days after the final Purchase Price is determined
(whether because the Sellers' Representative did not deliver a Dispute Notice,
because of agreement between the Buyer and the Sellers or because of a
determination of the Accountants), the Buyer and the Sellers' Representative
will instruct the Escrow Agent to pay to the Sellers any amount by which the
final Purchase Price exceeds the payments previously made with regard to the
Purchase Price (including any payment being made under subparagraph (e), (f) or
(g)), and to pay the balance of the Escrow Deposit to the Buyer. If the amount
by which the final Purchase Price is greater than the payments previously made
with regard to the Purchase Price exceeds the balance of the Escrow Deposit
being held by the Escrow Agent, within three days after the final Purchase
Deposit is determined, the Buyer will pay the Sellers an amount equal to the
excess.
(i) When the Purchase Price is finally determined, the income earned on
the Escrow Deposit will be paid to the Sellers and the Buyer in proportion to
the portions of the Escrow Deposit paid to each of them.
(j) If the amount of the Escrow Deposit being held by the Escrow Agent
on December 1, 1997 exceeds US$971,681, on December 1, 1997, the Escrow Agent
will pay the excess above US$971,681 to the Sellers. If, when the final Purchase
Price is determined, the amount the Sellers have received with regard to the
Purchase Price, including the sum distributed under this subparagraph on
December 1, 1997, exceeds the final Purchase Price, within three days after the
final Purchase Price is determined, the Sellers will pay the Buyer an amount
equal to the excess.
2.5 EFFECTIVENESS OF PAYMENT. Each Seller acknowledges that payment in
accordance with Section 2.6 will constitute payment to such Seller.
2.6 FORM OF PAYMENT. All payments to be made pursuant to this Agreement
shall be made to the Sellers' Representative by wire transfer of immediately
available funds to in accordance with the wire transfer instructions attached
hereto as Schedule 2.6.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
Each Seller represents and warrants, except as disclosed on the annexes and
schedules of the Applicable Purchase Agreements, to Buyer the following. With
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respect to each Operating Company, the representations and warranties made by
Sellers in or pursuant to this Agreement apply only to events that occurred
after the Sellers acquired at least majority ownership of such Operating Company
("Majority Ownership Date"). Accordingly, no such representation and/or warranty
will be deemed to have been untrue or inaccurate when made with respect to any
Operating Company unless (and then only to the extent that) an event that
occurred after the Majority Ownership Date caused such representation and
warranty to be untrue or inaccurate when made.
3.1(a) THE SELLERS.
3.1(a)(1). Each of the Sellers is a corporation, sociedad anonima or
limited liability company duly organized and validly existing under the Laws of
the jurisdiction of its incorporation or organization.
3.1(a)(2). This Agreement is a valid obligation, binding on each of the
Sellers, and is enforceable against each of them pursuant to the terms and
conditions hereof. Each Additional Agreement to which any Seller is a party
will, at the Closing, have been duly signed and executed by each of the Sellers
and will be a valid obligation, binding on and enforceable against each of them
pursuant to the terms thereof.
3.1(b) THE COMPANIES.
3.1(b)(1). Each of the Holding Companies and Operating Companies is a
corporation ("sociedad anonima") duly incorporated and validly existing and in
good standing under the Laws of the Republic of Argentina.
3.1(b)(2). Except as set forth on Schedule 3.8.3, each of the Holding
Companies and, to the Sellers' knowledge, Operating Companies has all requisite
corporate powers (and, to the Sellers' knowledge, each of the Operating
Companies holds a license) to operate the Systems, as well as to carry out its
activities as it has done until now and to be the owner of and/or to lease
and/or to use and/or to manage its property in the way it uses and manages same
at present and according to the annexes and schedules of the Applicable Purchase
Agreements. Each of the Holding Companies and, to the Sellers' knowledge,
Operating Companies is duly qualified to engage in and transact business and is
in good standing in each jurisdiction in which the character of the properties
owned, leased, used or managed by it or the nature of the business conducted by
it require it to be so qualified. The representations in this Section 3.1(b)(2)
do not include approval by COMFER of the Sellers' indirect acquisition of shares
of the Operating Companies, which approval has not yet been obtained.
3.1(b)(3). The Sellers have previously delivered or made available in
Argentina to Buyer complete and accurate copies of each of the Companies' (a)
Corporate Bylaws as amended from time to time, (b) all the minutes of its board
meetings or shareholders' meetings furnished to the Sellers in conjunction with
the Applicable Purchase Agreements and since the ownership of the Shares by the
Sellers, and (c) its stock registers, validly reflecting any and all issuances,
reissuances, cancellations and transfers of each of the Companies' capital
stock.
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3.1(b)(4). None of the Companies owns any equity interest or any other
obligation or equity security of any other Person.
3.2 NO VIOLATION; CONSENTS:
3.2.1 The execution and delivery of this Agreement by each of the
Sellers and of any Additional Agreement to be executed and delivered by any of
them, as well as the performance of their respective obligations hereunder and
thereunder and the consummation of the transactions contemplated herein and
therein will not violate any provision of Law and, with or without the giving of
notice or the passage of time, will not conflict with or result in any breach of
any of the terms and conditions of, nor will constitute a default pursuant to,
the Companies' Governing Documents or of any Contract of any of the Holding
Companies or, to the Sellers' knowledge, any of the Operating Companies.
3.2.2 Schedule 3.2 lists all Persons (including, without limitation,
Governmental Authorities, shareholders and creditors, parties to any necessary
License and parties to any other Contract) whose approval or consent, or with
whom the filing of any certificate, notice, application, report or other
document is legally or contractually required or necessary in connection with
the execution, delivery or performance of this Agreement or any of the
Additional Agreements, by Sellers (the "Required Consents").
3.3 CAPITAL STOCK.
3.3.1 The authorized capital stock and the capital stock that is issued
and outstanding of each of the Companies is set forth on Schedule 3.3.1. Except
as set forth on Schedule 3.3.1, all of such outstanding shares are duly
authorized, validly issued, fully paid-in and are subject to no Lien. With
respect to such shares, there are no obligations to make further contributions.
Each Company's outstanding capital stock is owned as indicated in Schedule I,
which sets forth the name of each beneficial owner of such stock and the number
of shares owned by each of them. Except as set forth on Schedule 3.3.1, none of
the Sellers has created or is contractually bound to create any Lien or
Restriction on the capital stock or any other securities of the Companies. One
share of stock of each of the Holding Companies is held by an Affiliate of the
Sellers. It is the intention of the Sellers to (a) before the Closing, cause
such Affiliates to transfer such shares to one or more of the Sellers and (b)
transfer such shares to the Buyer together with the remainder of the Shares.
3.3.2 There are no outstanding options, warrants, calls or other
securities or rights of any kind to acquire, currently or upon the passage of
time or the payment of money or the occurrence of any other event, stock or
other securities of any of the Holding Companies and, to the Sellers' knowledge,
the Operating Companies, nor any contingent or other kind of commitment to issue
any of the foregoing.
3.4 BROKERS, AGENTS, FINDERS, ETC. Except as set forth on Schedule 3.4,
neither the Sellers nor their respective agents have retained or hired any
broker, agent or finder, nor have they agreed to pay any fee, commission or
similar payment to any person under this Agreement or under any Additional
Agreement or in respect of the transactions contemplated herein or therein.
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3.5 FINANCIAL STATEMENTS.
3.5.1 The Sellers have delivered to the Buyer the following financial
statements (the "Financial Statements"):
(i) The financial statements delivered to the Sellers in
conjunction with their acquisition of the Operating Companies;
(ii) monthly operating results for April and May, 1997, for each
of the Operating Companies, setting forth month-end subscribers and
revenue, expense and EBITDA for such Companies for such months; and
(iii) closing certificates furnished to Sellers setting forth
certain estimated information regarding numbers of subscribers,
liabilities and working capital of each of the Companies received by
the Sellers in connection with Sellers' acquisitions of the Companies
pursuant to the Applicable Purchase Agreements.
3.5.2 The financial statements referred to in Clauses (ii) and (iii) of
Section 3.5.1 are accurate in all material respects, subject to normal year-end
adjustments and subject also to debt of such Companies to the Persons who sold
such Companies to the Sellers incurred under the Applicable Purchase Agreements.
The documents referred to in Clauses (i) and (iv) of Section 3.5.1 are complete
and accurate copies of the documents furnished to Sellers. Since May 31, 1997
there has been no material adverse change in the financial condition or results
of operations of the Operating Companies taken as a whole. Since September 9,
1997 (i) the Companies have conducted their respective businesses diligently, in
good faith and in the ordinary course, consistent with past practices and in
compliance with all applicable Laws, and have not engaged in any transaction,
including, without limitation, entering into or amending any Contract, incurring
any liability or obligation (absolute or contingent), or making any advance or
expenditure, other than in the ordinary course of business, nor have they
changed their business policies or practices in any material respect. The
Companies have not acquired any customers of a System by promotional incentives
or discounts exceeding those customarily given in the cable industry in
Argentina; and (ii) the Companies have not paid any dividends, nor retired any
amounts on account of future dividends, redeemd or repurchased any shares of
their stock, or reduced their capital, except as permitted under Section 5.7 of
the Existing Stock Purchase Agreement.
3.5.3 The books and records of each of the Holding Companies and, to
the Sellers' knowledge, Operating Companies are reasonably complete and reflect
the transactions and dispositions of the Assets of each of them adequately.
3.6 TAXES. Each of the Holding Companies has duly and timely filed in
proper, legal and accurate form, all reports and tax returns and has paid all
taxes in accordance with applicable Law. Each Operating Company, since its
Majority Ownership Date, has duly and timely filed in proper, legal and accurate
form all reports and tax returns and has paid all taxes in accordance with
applicable Law that first became due during such period.
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3.7 LAWSUITS. Except as set forth in the annexes and schedules to the
Applicable Purchase Agreements, there are no actions, proceedings, claims or
investigations pending or threatened by or before any Governmental Authority to
which a Holding Company or, to the Sellers' knowledge, an Operating Company is a
party in which an adverse determination could reasonably be expected to have a
Material Adverse Effect on the Companies taken as a whole or the material
Licenses, Contracts, Assets or rights of the Companies taken as a whole, or
which might question the validity of this Agreement or of any other Additional
Agreement, or which seeks to restrain or enjoin the consummation of transactions
contemplated herein or therein.
3.8 LICENSES.
3.8.1 To the Sellers' knowledge, each of the Operating Companies has
all material Licenses necessary to construct, own and operate commercially the
Systems of the Companies in the geographical areas in which it currently
conducts business, in each case in full compliance with all applicable Laws
except where such noncompliance would not have a Material Adverse Effect on such
Operating Company. To the Sellers' knowledge, each of the Operating Companies'
Licenses is a valid and subsisting instrument under applicable Laws and is in
full force and effect. To the Sellers' knowledge, each License used, held for
use in or necessary for the operation of the Systems of the Operating Companies
is held by and in the name of each such company. To the Sellers' knowledge,
there is no pending application before any Governmental Authority which involves
an Operating Company License. To the Sellers' knowledge, none of the Operating
Companies' Licenses may be revoked during the period of issue unless the
applicable Operating Company breaches the terms or conditions of such license.
3.8.2 To the Sellers' knowledge (i) no Operating Company has materially
breached or is in default under any of the Operating Companies' Licenses except
where such breach or default would not have a Material Adverse Effect on such
company, (ii) the Systems of the Companies, to the extent that same are
constructed, have been constructed in compliance with all applicable Licenses
and Laws and (iii) no Operating Company has received any notice of breach or
default under any of its Licenses from any Governmental Authority.
3.8.3 To the Sellers' knowledge, Schedule 3.8.3 sets forth a list of
all pending COMFER authorizations and claims.
3.9 ASSETS.
3.9.1 TITLE; LIENS. To the Sellers' knowledge, each of the Operating
Companies has good and marketable title or valid rights to all of its Assets,
free and clear of any Lien, except (i) Liens for property taxes not delinquent,
(ii) Liens that do not materially detract from the value of the Assets or
materially interfere with the present use of the Assets, (iii) the Liens listed
in the schedules and annexes to the Applicable Purchase Agreements and (iv)
Liens referred to in Section 6.1(h).
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3.9.2 REAL PROPERTY. Other than as reflected in the annexes and
schedules to the Applicable Purchase Agreements, neither the Holding Companies
nor, to the Sellers' knowledge, the Operating Companies own any Real Property.
3.9.3 INTELLECTUAL PROPERTY, COPYRIGHTS, PATENTS AND TRADEMARKS.
Neither the Holding Companies nor, to the Sellers' knowledge, the Operating
Companies are in violation of any intellectual property right, copyright, patent
or trademark of any Person.
3.10 THE SYSTEMS.
3.10.1 To the Sellers' knowledge, all of the Equipment is in good
working order and repair, complies in all material respects with all applicable
Licenses and Laws and with all rules, regulations and standards of all
Governmental Authorities regarding its intended use. None of the Holding
Companies directly owns any material cable television Equipment.
3.10.2 To the Sellers' knowledge, each of the Operating Companies is
duly authorized under applicable Laws to distribute to Subscribers all the
signals carried or proposed to be carried and has all Licenses required to
operate all earth stations and microwave and other transmission facilities used
or proposed to be used in the Systems of the Companies in compliance with
applicable Laws.
3.11 EMPLOYMENT MATTERS. Each of the Holding Companies and, to the Seller's
knowledge, the Operating Companies (except as covered by Section 9.2(a)(iii))
has fully complied with all applicable labor and social security Laws.
3.12 INSURANCE. To the Sellers' knowledge, all of the insurance policies of
the Operating Companies are outstanding, valid and enforceable in accordance
with their respective terms, having been hired with financially sound and
reputable insurance companies.
3.13 CONTRACTS AND COMMITMENTS.
3.13.1 All of the Contracts/Commitments of the Holding Companies and,
to the Sellers' knowledge, the Operating Companies (collectively the "Company
Contracts") are in good standing, valid and effective, with no material breach,
violation, default, notice or claim of breach by any party thereto except where
such breach, violation or default would not have a Material Adverse Effect.
3.13.2 Sellers have made available to Buyer in Argentina complete and
accurate copies of all of the Company Contracts, and any and all amendments or
modifications thereto.
3.14 COMPLIANCE. Each of the Holding Companies and, to the Sellers'
knowledge, the Operating Companies has complied in all material respects with
all Licenses, Contracts, and Laws applicable to the conduct of its business and
ownership, possession, maintenance and operation of its properties and Assets
except where such noncompliance would not cause a Material Adverse Effect on the
Companies taken as a whole.
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3.15 NO MISSTATEMENTS OR OMISSIONS. No representation or warranty in this
Article Three contains any untrue statement of a material fact or omits to state
a material fact necessary to make the statements contained therein not
misleading.
3.16 ENVIRONMENTAL MATTERS. To the Sellers' knowledge, none of the
Operating Companies has received a notice from any Governmental Authority that
it, or any property it owns or uses, is in violation of any Law or regulation
relating to protecting the environment.
3.17 LABOR MATTERS. Except as set forth on Schedule 3.17, no employee of
any of the Companies is represented by any labor union, and no union is
attempting to organize or otherwise become the bargaining representative for any
employees of any of the Companies.
3.18 VENDOR DEBT. Schedule 3.18 shows (a) the amounts as of the date hereof
of all outstanding debt incurred as deferred payment of the purchase price paid
by Sellers for the Companies and (b) the amount as of the date hereof of all
funds held in escrow pursuant to the Applicable Purchase Agreements.
3.19 ASSETS AND CONTROLLED AFFILIATES IN THE UNITED STATES. None of the
Companies is incorporated in the United States, or organized under the laws of
the United States, or has its principal offices within the United States. None
of the Companies, nor any entity that they control, nor all such controlled
entities in the aggregate, hold assets located in the United States having an
aggregate book value of US$15,000,000 or more, and none of the Companies
directly or indirectly controls any corporation that is incorporated in the
United States, is organized under the laws of he United States, or has its
principal offices within the United States. As used in this Section 3.19, the
term "control" means (a) holding 50% or more of the outstanding voting
securities of an issuer; (b) in the case of an entity that has no outstanding
voting securities, having the right to 50% or more of the entity's profits, or
having the right in the event of dissolution to 50% or more of the entity's
assets; or (c) having the contractual power presently to designate 50% or more
of the directors of a corporation, or in the case of unincorporated entities, of
individuals exercising similar functions.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER
4.1 BUYER. Buyer is a corporation duly organized, validly existing and in
good standing under the Laws of the Republic of Argentina, with all requisite
corporate power and authority to conduct its business and operations as
presently conducted and to execute, deliver and perform this Agreement and the
other instruments and documents required hereby to be executed and delivered by
Buyer, and has, or as of the Closing Date will have, taken all action required
to duly authorize such execution, delivery and performance. This Agreement is,
and the other instruments and documents to be executed and delivered by Buyer
hereunder or prior to the Closing will be, legal, valid and binding obligations
of Buyer, enforceable in accordance with their respective terms. Buyer
represents that it is familiar with any and all applicable broadcasting Laws, in
particular with the provisions of Law 22,285, as amended, and with any and all
obligations to be undertaken by it under same, and especially that this
15
Agreement must be submitted to the approval specified in Article 46 clause (f)
of the Broadcasting Law.
4.2 NO VIOLATION; BUYER'S CONSENTS.
4.2.1 The execution and delivery of this Agreement by Buyer and of any
Additional Agreement to be executed and delivered by it, as well as the
performance of its obligations hereunder and thereunder and the consummation of
the transactions contemplated herein and therein will not violate any provision
of Law and, with or without the giving of notice or the passage of time, will
not conflict with or result in any breach of any of the terms and conditions of,
nor will constitute default pursuant to, Buyer's Governing Documents or of any
Contract of Buyer.
4.2.2 Except for COMFER if applicable, there are no Persons (including,
without limitation, Governmental Authorities, shareholders and creditors,
parties to any necessary License and parties to any other Contract) whose
approval or consent, or with whom the filing of any certificate, notice,
application, report or other document is legally or contractually required or
necessary in connection with the execution, delivery or performance of this
Agreement or any of the Additional Agreements by Buyer.
4.3 BROKERS, AGENTS, FINDERS, ETC. Neither the Buyer nor its agents have
retained or hired any broker, agent or finder, nor have they agreed to pay any
fee, commission or similar payment to any person under this Agreement or under
any Additional Agreement or in respect of the transactions contemplated herein
or therein, except for Integra Financial Services LLC, Xxxxx Xxxxxx, and ING
Bank ("ING"). Any obligations arising under any of the arrangements described in
the preceding sentence will be the sole obligation of Buyer, and no Seller will
have any liability therefor.
ARTICLE 5
POST-CLOSING COVENANTS
Except as otherwise approved by the other Party in writing, the Parties
agree as follows:
5.1 UFC AFFILIATION AGREEMENT. Buyer shall use its best efforts to enter
into, within six months after the date hereof, an affiliation agreement with
respect to the carriage of Casa Club and The Family Channel through the
Companies' Systems, on terms and conditions substantially as set forth on the
term sheet attached hereto as Exhibit C, along with such other terms and
conditions as are customary for agreements with respect to such matters.
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ARTICLE 6
CONDITIONS OF BUYER'S OBLIGATIONS
6.1 CLOSING. Buyer's obligation to pay the Purchase Price is subject to the
satisfaction or written waiver of the following conditions:
(a) STOCK TRANSFER. That the Sellers deliver to Buyer all of the
certificates representing the Shares and do all acts necessary to perfect the
transfer of the Shares in the name of Buyer and/or any company that Buyer
indicates in the Stock Registry book of the Companies, free of Liens or
undisclosed Restrictions, subject to the approval of the authorization provided
for in Art. 46(f) of the Broadcasting Law, if applicable.
(b) RECEIPT OF CONSENTS. All of the Required Consents will have been
obtained or given, with the exception of such Consent required under art. 46,
part (f) of Law 22.285, if applicable, and except where the failure to obtain
(or, in the case of filings, make) such Required Consents would not have a
Material Adverse Effect on the Companies taken as a whole.
(c) CORPORATE ACTIONS. All corporate or other actions necessary for (i)
the execution, delivery and performance of this Agreement and of the Additional
Agreements by the Sellers, (ii) the completion of the transactions contemplated
herein and therein, and (iii) implementing the annotations that are required in
the corporate record books in order to effectuate the transfer of the Shares,
free of all Liens and undisclosed Restrictions, will have been duly and validly
taken and will be in full force and effect.
(d) PERFORMANCE. The Sellers will have performed in all material
respects all obligations under this Agreement and the Additional Agreements to
be performed by them at or prior to the Closing.
(e) TRUE AND COMPLETE REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties made to Buyer in or pursuant to this Agreement or
any Additional Agreement will be true and complete in all material respects,
both when made and as of Closing, with the same effect as if made at and as of
the time of Closing.
(f) NO GOVERNMENTAL PROCEEDINGS. No provision of any applicable Laws
will apply, with the exception of those stemming from the Law 22,285 on
Broadcasting, and no Judgment will exist so as to prevent completion of the
transactions contemplated in this Agreement or in any Additional Agreement,
questioning the legality or validity of such transactions or otherwise alleging
damage as the result of such transactions, or where damages resulting from such
transactions might be claimed, nor any pending or threatened proceeding in which
any Person seeks or may take any such action. None of the Parties to this
Agreement will have been notified of the present intention of any Government
Authority or of the legal representative thereof to bring an action or
proceeding challenging or enjoining completion of any other transactions
contemplated herein or in any Additional Agreement.
(g) DOCUMENTS. The Sellers will have signed and delivered, or caused to
be delivered, the certificate contemplated by Section 2.4(a).
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(h) RELEASE OF LIENS. Buyer shall have received written notification
from Toronto Dominion (Texas), Inc., in form and substance reasonably
satisfactory to Buyer, that upon receipt of such amount as is specified in such
notification, Toronto Dominion (Texas), Inc. will promptly release all Liens it
holds on any of the shares or Assets of any of the Companies.
(i) TRANSFER OF SINGLE SHARES. The single shares described in the final
two sentences of Section 3.3.1 shall have been transferred to the Sellers, to be
transferred to Buyer together with the remaining Shares.
ARTICLE 7
CONDITIONS OF SELLERS' OBLIGATIONS
The obligation of the Sellers to complete Closing is subject to the
satisfaction or written waiver by the Sellers' Representative of each of the
following conditions:
7.1 PERFORMANCE BY BUYER. Buyer will have performed in all material
respects all of its obligations hereunder and under each of the Additional
Agreements.
7.2 TRUTH OF REPRESENTATIONS AND WARRANTIES. Each of Buyer's
representations and warranties made pursuant to this Agreement or to any
Additional Agreement will be true and complete in all material respects and will
have the same effects whether made at or prior to the date of transfer of the
Shares.
7.3 NO GOVERNMENTAL PROCEEDINGS. As regards Buyer, there will not exist any
provision of applicable Laws nor any Judgment preventing completion of the
transactions contemplated herein or in any Additional Agreement, questioning the
legality or validity of such transactions or claiming damages resulting from
such transactions, nor any pending or threatened proceeding in which any Person
seeks or may take any such action. None of the Parties to this Agreement will
have been notified of the firm and nonappealable intention of the applicable
authority by which the consummation of this Agreement is prohibited.
7.4 BAHIA XXXXXX CLOSING. The closing of the transactions contemplated
under the Bahia Xxxxxx Agreement shall have occurred and Sellers shall have
received payment in full of the purchase price thereunder.
7.5 ING COMFORT LETTER. Sellers shall have received a comfort letter from
ING, in form and substance acceptable to Sellers, stating that ING will use its
best efforts to be ready to loan to Buyer on the Closing Date the entire
purchase price under the Santa Fe Agreement by Buyer.
7.6 SANTA FE AGREEMENT. The Santa Fe Agreement shall have been executed and
shall be in full force and effect, and the initial payment of US$2,176,405.00
under the Santa Fe Agreement shall have been paid in full by wire transfer as
provided in Schedule 2.6.
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ARTICLE 8
CONFIDENTIALITY
8.1 GENERAL. Any information or document that any Party hereto provides to
the other Party or that a Party develops in the course of completing the
transactions contemplated herein, with the exception of information or documents
that are publicly available other than through a breach by the disclosing Party
of any agreement with the Seller or Buyer, will be treated as confidential and
proprietary and will not be disclosed to any third party, with the exception of
investment banks and other consultants who agree in writing to comply with this
Section 8.1 or as otherwise consented to in writing by the Seller or Buyer, as
applicable. The Parties will attempt to identify any and all confidential
information specifically as such. The Party infringing confidentiality as agreed
herein will indemnify the other Party to the extent of the damages which were
caused.
8.2 PUBLIC ANNOUNCEMENTS. Neither Seller nor Buyer will issue any press
release or make any other public disclosure relating to the transactions
contemplated herein without the prior written consent in each instance of the
other. Section 8.1 and this Section 8.2, however, will not apply to or limit any
Party's ability to make such public announcements or disclosures as it may
consider necessary or appropriate pursuant to the reporting requirements under
U.S.A. securities Laws or other applicable Law. Also excepted from Section 8.1
and this Section 8.2 are the annual and other periodic reports and financial
statements legally prepared and released in the ordinary course of business by
the Parties hereto.
ARTICLE 9
SURVIVAL; INDEMNIFICATION
9.1 SURVIVAL. Sections 2.1, 2.2, 2.3, 2.4, 2.5, 2.6, and Articles 8, 9, and
11 hereof will survive Closing and will not cease except when expressly provided
therein. The provisions of this Agreement, including all representations and
warranties of the Parties hereto and any certificate delivered pursuant to this
Agreement, will survive Closing and will terminate on the earlier of 30 days
after completion of the audit of Buyer's financial statements for the year ended
December 31, 1998 or June 30, 1999. The obligation to indemnify will apply to
any of the foregoing matters for any claim made prior to the expiration of the
limitation period that was not resolved within said period of time.
Notwithstanding the foregoing, the provisions under Section 9.3 shall survive
the Closing and will remain in full force and effect for a period of five years
thereafter.
9.2 INDEMNIFICATION.
(a) Each of the Sellers agrees to indemnify Buyer with respect to any
loss, claim, damage, liability (or actions or procedures in relation to these)
and expenses that Buyer, the entities controlling, controlled by or under common
control with it, officers, employees, shareholders and advisors (henceforward
the "Indemnified Persons") may have suffered in relation to or arising out of:
(i) the inaccuracy when made of any representation and warranty
made by Sellers in or pursuant to this Agreement, but only to the
extent that the event or circumstance that caused such representation
19
and warranty to be inaccurate first occurred or existed after Seller's
acquisition of the Company with respect to which such representation
and warranty was inaccurate;
(ii) non-performance on the part of any of the Sellers of any
obligation made in this Agreement or the Additional Agreements; or
(iii) any failure by an Operating Company to comply with labor
and social security Laws after the Majority Ownership Date of such
Operating Company and before the Closing.
(b) Immediately after receipt by an Indemnified Person of notice of any
action, proceeding, claim, or potential claim (an "Asserted Claim") that could
give rise to a right to indemnification under this Agreement, the Buyer will
give the Sellers' Representative written notice of the Asserted Claim. Delay in
giving this notice will not affect the Indemnified Party's right to
indemnification to the extent it is demonstrated that the interests of the
Sellers have not been prejudiced due to such delay.
(c) The Sellers' Representative may assume and control the defense of
such Asserted Claim (with counsel reasonably acceptable to the Indemnified
Person) if it affirms the obligation of the Sellers to indemnify the Indemnified
Person with respect to such Asserted Claim. Notwithstanding the foregoing, the
Indemnified Person will have the right to hire its own counsel and to control
the defense or settlement in any such action, at the expense of the Sellers if
(i) the action involves a conflict of interest between the Indemnified Person
and the Sellers, (ii) the Sellers' Representative has not assumed such defense
to the reasonable satisfaction of Buyer within a reasonable time after receiving
notice of the Asserted Claim from Buyer or (iii) the Asserted Claim could have a
Material Adverse Effect on the business of Buyer. The Sellers' Representative
agrees to cooperate with the Indemnified Persons in order to enable their
counsel to participate in the defense and to deliver to the Indemnified Persons
copies of all pleadings and other information within the Sellers'
Representative's knowledge or possession reasonably requested by the Indemnified
Persons that is relevant to the defense of any such claim or demand. The
Sellers' Representative will maintain confidentiality with respect to all such
information consistent with the conduct of a defense hereunder.
(d) Neither the Indemnified Person nor the Sellers' Representative may
consent to the rendering of a judgment with respect to the Asserted Claim or
enter into a settlement with respect to the Asserted Claim if such judgment or
settlement does not unconditionally release the Sellers or the Indemnified
Person, as the case may be, from all liability with respect thereto without the
consent of such Party. Such consent cannot be unreasonably withheld.
(e) Notwithstanding any other provision of this Agreement, (i) Sellers'
indemnification obligations will not apply until the cumulative amount of
Buyer's indemnifiable claims exceed US$100,000, (ii) in no event will Sellers'
indemnification obligation under this Agreement exceed US$4,858,405, except for
a breach arising from Sellers' inability to transfer the Shares, and (iii)
Buyer's sole remedy for any breach of this Agreement or inaccuracy of any
20
representation or warranty made in or pursuant to this Agreement shall be
indemnification pursuant to this Article Nine.
(f) The provisions of paragraphs (a) through (e) of this Section 9.2
also shall apply to the Buyer as an indemnifying party and the Sellers, their
Affiliates, and their respective officers, employees, shareholders and advisers
as Indemnified Persons, with references therein to Buyer being read as
references to the Sellers and all references to the Sellers or the Sellers'
Representative being read as references to the Buyer. Such indemnification
obligations of the Buyer also shall apply to any loss, claim, damage, liability
and expenses suffered by any of the Sellers with respect to Sellers' guarantees
of indebtedness incurred in connection with the Sellers' acquisition of the
Companies, and the limitation on damages set forth in clause (ii) of Section 9.2
(e) shall not apply to such indemnification obligation or to any failure by
Buyer to pay the Purchase Price on the date hereof as required hereunder.
9.3 INDEMNIFICATION AGAINST CLOSING DATE LIABILITIES.
(a) The Sellers jointly and severally agree to indemnify the Buyer
against, and reimburse the Buyer for, any amount by which the total payments by
the Companies after the Closing Date of obligations which existed at the Closing
Date or relate to periods prior to the Closing Date (net of any amounts
collected out of escrow accounts referred to in the definition of Closing
Liabilities), whether or not the payments are of liabilities known to the
Sellers or the Companies on the Closing Date, exceed the Closing Liabilities
included in the calculation of the Purchase Price made as provided in Section
2.4. The amount of indemnification will be adjusted to reflect the extent to
which the Buyer acquires less than 100% of the shares of an entity that makes
payments for which the Buyer is entitled to indemnification or reimbursement
under this Section 9.3(a). Any payments to the Buyer under this Section will (i)
be made promptly after demand by the Buyer accompanied by documentation of the
amounts paid by the Companies which shows the payment to be due and (ii) be
treated as adjustments of the Purchase Price.
(b) If any of the Companies receives a claim with regard to a
liability, or claimed liability, which existed at the Closing Date or relates to
a period prior to the Closing Date and was not included (or exceeds the amount
which was included) in the Closing Liabilities included in the calculation of
the Purchase Price, the Buyer will promptly notify the Sellers' Representative
of the claim and the fact that the Buyer intends to treat any amount paid with
regard to the claim as a payment to which Section 9.3(a) applies. If the
Sellers' Representative informs the Buyer that the Sellers acknowledge that any
payment with regard to the claim will be a payment to which Section 9.3(a)
applies and that the Sellers either (i) wish to contest the claim, (ii) want to
seek reimbursement out of an escrow account referred to in the definition of
Closing Liabilities with regard to any amount due as a result of the claim or
(iii) want to seek indemnification or other recovery related to such claim under
an Applicable Purchase Agreement or related agreement, the Sellers may, at their
expense, contest the claim or seek reimbursement out of the escrow account or
other recovery. The Buyer will cooperate, and will cause the Companies to
cooperate, in all reasonable respects in the Sellers' efforts to do that, and
the Sellers will reimburse the Buyer for all out-of-pocket costs it or any of
the Companies incurs in doing so. To the extent the Sellers recover
reimbursement out of an escrow account for a sum due as a result of a claim, the
21
Sellers will pay the amount of the reimbursement to the Buyer or the applicable
Company, and the amount paid to the Buyer or a Company will be included in the
calculation of any amount due under Section 9.3(a). Sellers will be subrogated
to all rights of any Company to the extent that Sellers pay any amount under
this Section 9.3.
ARTICLE 10
[INTENTIONALLY OMITTED]
ARTICLE 11
GENERAL PROVISIONS
11.1 NOTICES. All notices hereunder shall be made (i) by delivery of same
in person to the intended addressee, (ii) by sending such notice by Federal
Express or another reputable private international courier service (a "Qualified
Courier") for overnight (or its nearest equivalent) delivery to the intended
addressee or (iii) by facsimile transmission to such Party at the facsimile
number set forth for such Party below provided that a copy of same is deposited
with a Qualified Courier for overnight delivery to the intended addressee, in
each case for delivery to the address of the intended addressee as set forth
below (or as such other address or fax number as may be designated by such Party
as herein provided) to the officers mentioned hereinafter:
If to Sellers to Sellers' Representative: If to the Buyer:
UIH Latin America, Inc. Supercanal S.A.
0000 Xxxxx Xxxxxx, Xxxxx 0000 Xxxxx Xxxx 316
Xxxxxx, Xxxxxxxx 00000 Mendoza
Attn.: President Argentina
Tel: (000) 000-0000
Fax: (000) 000-0000
Copies to: Copies to:
UIH Argentina, Inc. Estudio Xxxx
Xxxxxxx 000, xxxx 00 Xxxxxx 000, X.X. of. 4 a 6
1309 Buenos Aires Mendoza
Attn.: Xxxxxxx Xxxxxxx and/or Attn: Xxxxxxx Xxxx
Xxxxxxx X. Xxxxxxx Tel: 000-00-00-000000
Tel: (000) 000-0000 Fax: 000-00-00-000000
Fax: (000) 000-0000
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United International Holdings, Inc. Marval, X'Xxxxxxx & Mairal
0000 Xxxxx Xxxxxx, Xxxxx 0000 L.N. Alem 928
Xxxxxx, Xxxxxxxx 00000 (1001) Buenos Aires
Attn.: General Counsel Argentina
Tel: (000) 000-0000 Tel: (00-0) 000-0000
Fax: (000) 000-0000 Fax: (00-0) 000-0000
W. Xxxx Xxxxxx, Esq.
Holme Xxxxxxx & Xxxx LLP
0000 Xxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
All notices, summons and requests will be effective upon such personal
delivery or upon confirmation of delivery by facsimile transmission provided
that delivery to the Qualified Courier is effected within three business days
thereafter. In all other cases, notices, summons and requests will be effective
three business days after having been deposited with Qualified Courier for
overnight (or its nearest equivalent) delivery. Rejection or other refusal to
receive, or the inability to deliver, because of changed address of which no
notice was given as herein required will be deemed to be receipt of the notice,
summons or request sent.
11.2 FURTHER ASSURANCES. The Parties will make, execute and deliver such
other instruments of transfer as may be necessary or proper to transfer to Buyer
all right, title and interest in the Shares, free of any Restriction or Lien.
11.3 HEADINGS. The Article and Section headings in this Agreement are for
convenience only and will not be used for interpretation hereof nor considered
part of this Agreement.
11.4 COUNTERPARTS. This Agreement may be executed in any number of
counterparts or counterpart signature pages, each of which will be deemed an
original but all of which, together, will constitute one and only instrument.
11.5 AMENDMENTS. No provision of this Agreement will be altered, amended,
revoked or waived except by an instrument in writing designated as an amendment,
revocation or waiver and signed by the person against whom it is sought to be
enforced.
11.6 ASSIGNMENT. This Agreement and all Additional Agreements will be
binding upon and inure to the benefit of the Parties. Except for assignments to
Affiliates, neither Party will assign any of its rights under this Agreement nor
delegate its duties hereunder unless it obtains prior written consent of the
other Party. For any assignment under the preceding sentence, the assignee, as a
condition to the effectiveness of such assignment, must assume all obligations
hereunder, with respect to the Company assigned, as co-obligor with Buyer.
11.7 ENTIRE AGREEMENT; THIRD PARTY BENEFICIARIES. This Agreement and the
Additional Agreements embody the entire agreement between the Parties concerning
the subject matter hereof and thereof. Such Agreements replace and take the
place of any other prior or contemporaneous negotiations, agreements and
23
understandings. The Indemnified Persons are third-party beneficiaries of Article
9.2 hereof. Otherwise, there are no third party beneficiaries.
11.8 NO WAIVER. Failure or delay of any Party at any time or from time to
time to exercise any right under or enforce any provision of this Agreement will
not be construed as implying a waiver of such provision or of that Party's right
to exercise or enforce it subsequently. No single or partial exercise of any
right hereunder by any Party will preclude the further or full exercise of the
right by such Party. No waiver of any default on any one occasion by a Party
will constitute a waiver of any subsequent or other default by such Party.
11.9 SEVERABILITY. If any provision of this Agreement or the applications
thereof to any Person or circumstance were invalid or unenforceable to any
extent, the remainder of this Agreement, and the application of such provision
to other Persons or circumstances, will not be affected thereby and will be
enforced to the greatest extent permitted by applicable Law. In such case, the
Parties will amend this Agreement to effect, to the fullest extent possible
under applicable Laws, the original intent of the Parties with respect to such
invalid or unenforceable provision.
11.10 GOVERNING LAW. This Agreement, the rights and obligations of the
Parties hereto, and any claims or disputes relating thereto will be governed by
and construed in accordance with the Laws of Colorado.
11.11 DISPUTE RESOLUTION. Any dispute, controversy or claim arising out of
or relating to this Agreement or any Additional Agreement will be resolved by
the state courts of COLORADO or the federal courts located within the STATE OF
COLORADO. The Parties consent to personal jurisdiction of such courts in any
such disputes. Buyer consents to service of process through notice given under
Section 11.1 of this Agreement in connection with any such dispute and waives
any other requirements for service of process.
11.12 EXPENSES. Each Party will pay its own expenses incurred in connection
with the preparation, negotiation and execution of this Agreement and any
Additional Agreements.
11.13 SELLERS. Each of the Sellers hereby appoints the Sellers'
Representative as his or her agent to make decisions and take any action on
behalf of such Seller in connection with this Agreement.
11.14 NONCOMPETITION.
(a) During the period commencing at the Closing and ending on the date
which is 10 (ten) years after the Closing Date, none of the Sellers, nor any
Affiliate thereof will, directly or indirectly, own, manage, operate, control or
engage or participate in the ownership, management, operation or control of, or
be connected as a stockholder, director, officer, agent, partner, consultant,
joint venturer or otherwise with, any business or organization which engages in
the business of owning, providing, distributing or operating in the Republic of
Argentina (i) any cable television system or service, satellite master antennae
or MMDS or UHF system or service, any direct broadcast satellite system or
service or any telephone internet access, data service, or (ii) without the
prior written consent of Buyer, any service or product related to cable
24
television (other than provision of programming), telephony or any other
communication business. Sellers and their Affiliates shall not be deemed in
violation of this paragraph (a) if through ownership of up to 5% of the stock of
a publicly-traded company that engages in the activities described above.
(b) Each of the Sellers shall keep confidential all
proprietary information which they have obtained or receive in the future with
respect to the Companies and their Affiliates and the cable television systems
and other business owned and operated by them, except to the extent required by
applicable Law or during the course of or in connection with any litigation,
arbitration or other proceeding based upon or in connection with the subject
matter of this Agreement and except as Sellers may consider appropriate pursuant
to disclosure obligations under U.S. securities Laws. In the event that any of
the Sellers is requested pursuant to or required by applicable Law, regulation
or legal process to disclose any of the foregoing confidential proprietary
information, he or she will notify Buyer promptly so that Buyer may seek a
protective order or other appropriate remedy or, in such Person's sole
discretion, waive compliance with the terms of this Section, the relevant Seller
will furnish only that portion of the foregoing confidential proprietary
information which he or she is advised in writing by his or her counsel is
legally required and will exercise all commercially reasonable efforts to obtain
reliable assurance that confidential treatment will be accorded to such
confidential proprietary information. For purposes of this Section 11.14(b),
proprietary information does not include information that became generally
available to any Seller on a non-confidential basis from a source other than
Buyer, provided that such source is not bound by a confidentially agreement
with, or other contractual, legal or fiduciary obligation of confidentiality to
Buyer.
* * * * *
25
IN WITNESS HEREOF, two copies of the same effect are executed on the date
set forth on page 1.
SELLERS
UIH ARGENTINA, INC.
/S/ XXXXX XXXXXXX
-----------------------------------
By: XXXXX XXXXXXX
Its: President
UNITED INTERNATIONAL HOLDINGS
ARGENTINA, S.A.
/S/ XXXXXXX XXXXXXX
-----------------------------------
By: XXXXXXX XXXXXXX
Its: President
SUPERCANAL HOLDING S.A.
/S/ XXXXXX XXXX
-----------------------------------
By: XXXXXX XXXX
Its: President
