EXHIBIT 10.39
PURCHASE AGREEMENT
This Purchase Agreement is made on 22nd of September 1999 ("this Agreement")
between the following parties:
103 ESTUDIO, S.A., a Spanish company (hereinafter "103 ESTUDIO, S.A." or "the
Company"), with a registered office in Barcelona, C/Marques de Sentmenat, num.
59, represented by Xxx. Xxxxxx Xxxxxx, with National Identity card no. in her
capacity as Manager, and
XXXX-XX ESPANA, a subsidiary company of THE XXXX-XX CORPORATION, registered in
the State of California in the United States, with an office in Los Angeles,
California, represented by Xx. Xxxxx X. Xxxxxxxxx, with passport no.000000000 in
his capacity as President and CEO.
For the purposes of this Agreement reference to XXXX-XX ESPANA includes THE
XXXX-XX CORPORATION and all those affiliates of which THE XXXX-XX CORPORATION
holds at least 50% of the voting rights.
RECITALS
WHEREAS, THE XXXX-XX CORPORATION and 103 ESTUDIO, S.A. have agreed to develop,
operate and exploit together a dubbing studio on the terms and conditions set
out herein; and
WHEREAS, THE XXXX-XX CORPORATION, through XXXX-XX ESPANA, is willing to acquire
a 50% interest in 103 ESTUDIO, S.A. in order to carry out THE PROJECT; and
WHEREAS, as a consequence of the above, 103 ESTUDIO S.A. and THE XXXX-XX
CORPORATION signed a Letter of Intent dated March 26, 1999, stating their
intention to complete the acquisition by THE XXXX-XX CORPORATION, or by a
subsidiary thereof, of 50% of the capital of 103 ESTUDIO, S.A., on the terms and
conditions established in this Agreement and in that Letter of Intent.
WHEREAS, according to the mentioned Letter of Intent, the formalization of the
transaction would be subject to the completion of this Agreement, revised
Articles of Association and a Stockholders' Agreement; and
WHEREAS, according to section (b) of the Letter of Intent, 103 ESTUDIO, S.A. has
decided not to form an unincorporated joint venture.
WHEREAS, consequently, and in accordance with section (c) of the Letter of
Intent, 103 ESTUDIO, S.A. agrees to convert its present S.A. to an S.L.
corporation; and
WHEREAS, by virtue of the agreements established in the Letter of Intent, the
mutual promises contained in this formal contract and otherwise, THE PARTIES
AGREE AS FOLLOWS:
CLAUSES
PURPOSE OF THE AGREEMENT
103 ESTUDIO, S.A. and XXXX-XX ESPANA (referred to as the Parties in this
Agreement) hereby declare and acknowledge that they have entered this Agreement
for the purpose of developing and managing a dubbing studio that will provide
recording, editing and. mixing stages and related facilities in support of film
and video products, contemplating as well, as the relationship progresses, to
develop a business plan to offer additional related services, such as video
transfer, etc., on the terms and conditions contained in this Agreement.
All characteristics and specifications of THE PROJECT, including its location,
premises and financing are reflected in the document attached as Appendix I.
Any modification to THE PROJECT after the signature of this Agreement shall be
approved in accordance with the terms of the Stockholders' Agreement dated the
date hereof by and among all the shareholders of 103 ESTUDIO, S.L, including
XXXX-XX ESPANA ("the Stockholders' Agreement"), attached hereto as Appendix II.
1.- CONVERSION OF 103 ESTUDIO, S. A. INTO AN S. L.
1.1. - Both parties, ratify in its totality the content of the Letter of Intent
which will be carried out according to the terms and conditions established in
this Agreement.
1.2. - 103 ESTUDIO, S.A. will convert itself from a S.A. to a S.L. according to
the minutes of an Extraordinary Universal General Meeting of 103 Estudio, S.A.
and Articles of Association attached as Appendix III, which both parties
acknowledge and accept. The attached Appendix III includes the change in share
capital as contemplated by this Agreement and the Stockholders' Agreement.
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2. - INCREASE OF CAPITAL OF 103 ESTUDIO, S.A.
2.1. - Simultaneously with the conversion set forth above, 103 ESTUDlO, S.L.
will amend its Articles of Association to increase the share capital in
accordance with paragraph 1.2 above.
2.2.- XXXX-XX ESPANA shall own 50% of the total capital of 103 ESTUDIO, S.L. in
accordance with the Letter of Intent and shall purchase such percentage on the
terms and conditions set forth in this Agreement.
2.3.- 103 ESTUDIO, S.L. shall issue new ordinary participations to its present
shareholders in exchange for the shares of 103 ESTUDIO, S.A. owned by such
shareholders. 103 ESTUDIO, S.L. shall issue an equal number of new ordinary
participations to XXXX-XX ESPANA for a purchase price of Pts. 300.000.000, of
which Pts. 70.800.000 shall represent the par value, according to the Balance
Sheet of 103 ESTUDIO, S.A. on the day before the formalization (closing) date in
the Notary's office, and the balance of which shall be considered surplus. After
issuing all such new participations, the present shareholders of 103 ESTUDIO,
S.A. will own 50% of the ordinary participations of 103 ESTUDIO, S.L. and
XXXX-XX ESPANA shall own 50% of the ordinary participations of 103 ESTUDIO, S.L.
and no other participations of capital of 103 ESTUDIO, S.L. shall be issued and
outstanding.
2.4. - For the purposes of the aforesaid increase of capital, each of the
current shareholders of 103 ESTUDIO, S.A. will renounce their preferential right
of subscription of the shares to be purchased by XXXX-XX ESPANA, which may
relate to them legally or through the Articles of Association, pursuant to the
waiver included as part of the Minutes of the General Meeting in Appendix III.
2.5. - For its part, XXXX-XX ESPANA at its discretion, will subscribe to
purchase the participations resulting from the increase of capital referred to
above. The price for which this participation will be acquired will be Pts.
300.000.000, with Pts. 70,800,000 as the nominal value of the shares and Pts.
229.200.000 as paid-in surplus.
2.6. - A duly empowered person will appear to represent XXXX-XX ESPANA mentioned
in section 2.5, at the Notary's office appointed by 103 ESTUDIO, S.A., on the
formalization (closing) date to purchase the participations described in section
2.5, which must be fully paid up, for the amount of Pts. 300.000.000,
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3.- NAME, REGISTERED OFFICE AND DURATION
3.1. - The name of 103 ESTUDIO, S.L. shall be changed as soon as possible after
the closing date to 103 XXXX-XX ESTUDIO. The Individual Stockholders (as defined
in the Stockholders' Agreement) shall vote their participations in favor of such
change in name of the corporation.
4.- DECLARATIONS
103 ESTUDIO, S.A., Xxxxxx Xxxxxx and Xxxxxx Xxxxxx each, individually and
jointly, affirms and guarantees to THE XXXX-XX CORPORATION the following
(which shall be true and correct after the conversion of 103 ESTUDIO, S.A. to
an S.L. corporation):
4.1. - That the Company is a Sociedad Anonima (limited company), duly
constituted in accordance with Spanish law and entered in the Barcelona
Companies Register, in which have also been registered, furthermore, all the
resolutions which, according to the law, it is obligatory to register, and
that at this moment there does not exist any resolution of the administration
body of the Company or the General Meeting of shareholders awaiting entry,
all the legally required steps having been complied with. That the Company
has such administrative and other authorizations and licenses as are
necessary to carry on the activities of the Company business and corporate
objectives, and such authorizations as are necessary for the operation and
development of its business.
4.2. - The Articles of Association attached as Appendix III will be the true
and correct Articles of Association of the Company as an S.L. corporation on
the date of the acquisition of the participations by XXXX-XX ESPANA. All of
the participations of 103 ESTUDIO, S.L. to be issued in exchange for shares
of 103 ESTUDIO, S.A pursuant to section 1 above, and all of the
participations to be issued to XXXX-XX ESPANA pursuant to section 2 above,
have been duly authorized and will be duly and validly issued and outstanding
(upon payment therefor), are without liability for the obligations of the
Company and are not subject to preferential or preemptive rights of any kind.
The participations to be acquired by XXXX-XX ESPANA will be issued by the
Company free and clear of any and all liens and encumbrances of any kind.
4.3. - That after the date of this Agreement, the Company will operate its
business in accordance with the clauses of the Stockholder's Agreement.
4.4. - That the Company is the legal and only owner of all the fixed assets,
buildings, machinery, installations and furniture which are included in the
assets of the Balance Sheet attached as part of Appendix III to this Agreement,
and that over these currently there are no mortgages, charges,
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distraints, or other encumbrances other than those mortgages included in such
Balance Sheet; and that no mortgage action or action of any other nature has
been brought against the Company which could affect the ownership or
possession of these assets.
4.5. - That the Company has no holding or ownership interest, of record or
beneficially, in any other company, partnership, person, group or other entity.
All of the material contracts and documents of the Company are in full force and
effect and no default exists under any such contract or document, and the
Company has not done any act or thing that would cause a default under any such
contract or document. There are no disputes with any party under any such
contract or document.
4.6. - That the Company has no other employees than those listed in Appendix IV,
which sets out the categories, professional qualifications, conditions of
employment, salaries and bonuses; there being listed all the workers and
employees, with respect to contracts, who are under General Regulations; and
that the Company has not agreed to any new contracts (other than those disclosed
to XXXX-XX ESPANA) or bargaining agreements of any nature which oblige it to
grant terms of employment, salary payments or pecuniary benefits higher than
those which are of legal obligation or which the Company has previously agreed
to pay for persons in the same position.
4.7. - That the Company's responsibilities with regard to employment, in matters
of pensions, payments and compensations to employees, are those which appear and
are appropriately entered in its books of accounts, and that at this time it
does not owe any sum to Social Security nor to employees, as legally required.
Attached at Appendix V is a certificate from the Social Security Treasury, dated
November 18, 1998, certifying that the Company was up to date with its payments.
Also attached as Appendix VI are copies of payments made to the Social Security
subsequent to 31st August, 1999.
4.8. - That all the accounts receivable which the Company has against third
parties are fully collectible; that the financial statements of the Company
presented to XXXX-XX ESPANA, attached as Appendix VII, have been audited by
Xxxxxx Xxxxxxxx, are true and correct in all respects and accurately reflect the
financial condition of the Company as of their date, and no event has occurred
which would cause the Company to believe that such financial statements are not
true and correct as of their date.
4.9.- That the Company has no outstanding or threatened litigation nor do any
facts exist which could give rise to possible litigation in the future.
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4.10 - Subject to paragraph 2.4, the share capital of the Company is
currently distributed among the members in the percentage set out as part of
the Minutes of the General Meeting attached as Appendix III to this
Agreement, and will not be changed after the date of this Agreement until the
increase in capital contemplated by section 2 takes place.
4.11.- That the Company has complied, is in compliance and will comply with all
its taxation obligations, being current with the payment of all taxes and
obligations. Attached as Appendix VIII is a certificate from the Taxation Agency
dated November 24, 1998 applicable to the Company certifying the presentation of
the relevant taxation returns and the payment of all taxes due at that date.
Also attached as Appendix IX are copies of receipts of payments of Corporation
Tax, V.A.T. and employee withholding taxes due since that date.
4.12.- That the Company has not given guarantees or undertakings in favor of
third parties, nor do agreements exist which could cause the Company to become a
debtor, either directly or on a contingent basis, and that the Company will not
make any commitment of this nature after the date of this Agreement.
4.13.- That after the date of the financial statements attached as Appendix III
no dividends or other distributions or payments have been, and after the date of
this Agreement, no dividends or other distributions will be, authorized,
distributed or paid to the shareholders of the Company, whether or not related
to the share capital or reserves of the Company, with the exception of those
distributions related to the business of the Company for the year 1998, up to a
maximum of Pts. 19.000.000,
4.14.- That the Company has disclosed to XXXX-XX ESPANA all information relating
to the Company and its business, prospects, financial condition, liabilities
(both direct and contingent), assets and other matters that may be material or
important to XXXX-XX ESPANA in making its decision to enter into this Agreement
and acquire the share capital of 103 ESTUDIO, S.L. as set forth in paragraph 2.3
above. Any and all such information disclosed to XXXX-XX ESPANA, whether in
writing or orally, is, on the date of this Agreement, and on the closing date
will be, true and correct in all material respects and does not omit any facts
or other information that would make the information disclosed misleading.
4.15.- That no previous filing, registration or approval of any Spanish
governmental authority is necessary in connection with the signature of this
Agreement. This Agreement, the Stockholders' Agreement and the Articles of
Association of 103 ESTUDIO, S.L., are, or will be as of the closing date, duly
executed and delivered by the Company and such agreements and the
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transactions contemplated thereby are enforceable against the Company in
accordance with their respective terms.
4.16.- Attached as part of Appendix III is a list of all of the shareholders
of the Company and the amount of the participation of each shareholder, after
giving effect to the exchange of shares by the existing shareholders of 103
ESTUDIO, S.A. pursuant to paragraph 1 above and the acquisition of
participation by XXXX-XX ESPANA, pursuant to paragraph 2 above. The Company
does not have any obligation to issue any additional participations to any
other person and has not reached any agreement relating to allowing any
participation by any other person.
5.- GUARANTEES; INDEMNIFICATION
5.1. - In consideration of the fact that XXXX-XX ESPANA has not previously been
among the shareholders of 103 ESTUDIO, S.A. and, therefore, is not subject to
the contingencies of any type which could arise to the latter through acts
previous to the entry of XXXX-XX ESPANA as a participant, Xxxxxx Xxxxxx and
Xxxxxx Xxxxxx, as directors of 103 ESTUDIO, S.A., state that all the facts and
declarations set out in Section 4 of this Agreement and the appendices are
accurate and true and that, therefore, XXXX-XX ESPANA must be indemnified for
any claims, debts, damages and prejudices which could be produced, known or
unknown, as a consequence of the incorrectness or inaccuracy or such facts and
declarations, especially with reference to, but not limited to, taxation, labour
and Social Security obligations which could arise as a consequence of
inspections in 103 ESTUDIO, S.A. on the part of the competent authorities.
5.2 - To the extent set forth in the Indemnification Agreement attached as
Appendix X, Xxxxxx Xxxxxx and Xxxxxx Xxxxxx hereby agree to indemnify and hold
harmless XXXX-XX ESPANA for any and all damages, liabilities and expenses that
may be incurred by XXXX-XX ESPANA.
6. - COSTS, TAXES AND COMMISSIONS
6.1. - All the costs and taxes arising from the transactions to which this
Agreement refers will be assumed in equal parts by the parties signing, except
for those incurred under section 4, which will be assumed by Xxxxxx Xxxxxx and
Xxxxxx Xxxxxx in accordance with Appendix X.
6.2.- Considering the leading position of THE XXXX-XX CORPORATION with regard to
the activities to be developed in relation to THE PROJECT, and its capacity to
provide new customers, 103 ESTUDIO, S.L. will pay to THE XXXX-XX CORPORATION a
yearly commission of $75,000 (Seventy-five thousand US dollars), whether or not
THE XXXX-XX CORPORATION obtains new customers for the Company.
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6.3.-. Commission shall first be paid on the first anniversary of this Agreement
and on each anniversary thereafter. Such commission shall be paid until the
accumulated dividends distributed to the shareholders equal $2,000,000 (Two
million U.S. dollars) or until such time as XXXX-XX ESPANA is no longer a
participant in the Company. XXXX-XX ESPANA shall not be required to return any
portion of such commission in the event of any sale or transfer of its shares of
the Company.
7. - CONDITIONS PRECEDENT TO CLOSING
XXXX-XX ESPANA'S obligation to acquire their participation pursuant to section 2
above, is subject in all respects to the satisfaction or waiver of the following
conditions:
7.1.- This Agreement and the transactions contemplated hereby have been
approved by the shareholders of 103 ESTUDIO, S.A. in accordance with applicable
law.
7.2.- Subject to the consents and approvals required under Section 7.6 below
all consents and approvals of third parties and governmental authorities, if
any, have been obtained to the extent required under relevant contracts and
law in Spain. No governmental authority or court shall have issued any
injunction or order or enacted any rule or law which would make the
transactions contemplated by this Agreement illegal or invalid.
7.3.- The Company has completed simultaneously the share exchange and
conversion to an S.L. corporation as contemplated by section 1 above in
accordance with applicable law.
7.4.- All of the declarations by the Company in section 4 above are true and
correct on the closing date as evidenced by Appendix X signed by Xxxxxx
Xxxxxx and Xxxxxx Xxxxxx, as officers and directors of the Company.
7.5.- The Stockholders' Agreement is being fully executed and delivered by
the all of the shareholders of the Company and all changes in the management
structure of the Company contemplated thereby are completed simultaneously
with the closing of the agreement.
7.6- The Minutes and all necessary documents have been executed
simultaneously and will be filed as required by the Public Notary and
presented by the Company to the Companies Register.
7.7.- The Indemnification Agreement by Xxxxxx Xxxxxx and Xxxxxx Xxxxxx set
forth in Appendix X has been simultaneously executed and delivered to XXXX-XX
ESPANA.
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7.8.- No material change other than those approved by XXXX-XX ESPANA has
occurred in the business or condition of the Company since the date of the
financial statements attached hereto as Appendix VII.
7.9. - The participation to be acquired by XXXX-XX ESPANA is duly issued by
the Company, free and clear of any and all liens, preferential and preemptive
rights, and free of the obligations of the Company.
7.10.- All of the undertakings and agreements of the Company set forth in this
Agreement and the stockholders' Agreement have been and/or are simultaneously
performed by the Company prior to or on the closing date.
8. - ASSIGNMENT
8.1. - All rights and obligations, including the guarantees attached as Appendix
X acquired by XXXX-XX ESPANA according to this Agreement may be assigned in
favor of any subsidiary of THE XXXX-XX CORPORATION. Notwithstanding such
assignment, THE XXXX-XX CORPORATION will be considered, jointly and severally,
responsible for the financial fulfillment of the investment in the shares of the
Company in accordance with this Agreement.
8.2.- This Agreement is not assignable by 103 ESTUDIO, S.A. except to 103
ESTUDIO, S.L.
9. - MISCELLANEOUS
9.1. - WAIVER. No waiver of any breach of this Agreement or any of the terms of
this Agreement shall be effective unless the waiver is in writing and signed by
the party against whom the waiver is claimed. No waiver of any breach shall
operate as a waiver of any other breach or subsequent breach,
9.2. - ENTIRE UNDERSTANDING. This Agreement sets forth the entire agreement and
understanding between the parties as to the subject matter of this Agreement and
merges all prior discussions between them and none of the parties shall be bound
by any conditions, definitions, warranties or representations with respect to
the subject matter of this Agreement other than expressly provided in this
Agreement as duly set forth and each of the parties acknowledges to the other
party and to each of them that except as set forth in this Agreement it has not
relied on any representation made by or on behalf of any other party.
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9.3.- NON-DISCLOSURE. The parties hereto have executed that certain
Non-Disclosure Agreement. The parties hereto agree that the terms and
provisions of the Non-Disclosure Agreement shall be deemed to apply to the
provisions this Agreement.
9.4. - No press release of any kind regarding THE PROJECT is permitted without
the express prior written permission from both parties, with the exception of
all those activities necessary for the development of the PROJECT and as may be
required by law (whether Spanish or US).
10.- NOTICES
10.1.- In addition to any method prescribed by the laws of Spain from time to
time, notice may be given by one party to another party or parties at the
address of the relevant party set out m this Agreement, or such other address as
is notified by the relevant party to the other parties from time to time, by way
of the following methods:
a. - Delivering a copy of such notice to the party personally or if that party
is a corporation, leaving a copy thereof at its address appearing herein with a
duly authorized representative thereof, or
b. - Forwarding a copy of such notice to the party by registered post or telex
or telegram or facsimile transmission (with confirmation of transmission), and
such notice shall not be deemed to have been delivered until it has been
received by the party to whom it is addressed, provided however, that:
i). - notice sent by telex shall be deemed to be duly served in accordance with
this clause when the sender receives the answerback code of the recipient
acknowledging receipt thereof, and
ii). - a facsimile shall be deemed to be duly delivered in accordance with this
clause when a confirmation is received by the sender stating the date, time of
facsimile transmission and the number of pages in such transmission.
All notices shall be addressed as shown below:
If to the Company:
000 Xxxx-XX Estudio S.L.
X/ Xxxxxxx xx Xxxxxxxxx 00
Xxxxxxxxx 00000
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If to XXXX-XX ESPANA:
Xxxx-XX Espana
000 X. Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxxx
Fax No. 000-000-0000
With a copy to:
The Xxxx-XX Corporation
000 Xxx xx xx Xxxxx, Xxxxx 000X
Xxxxxx Xxxxx, XX 00000
Attention: Xxxx Xxxxx, General Counsel
Facsimile: 000-000-0000
11.- APPLICABLE LAW AND SOLUTION OF CONTROVERSIES
This Agreement and the transactions contemplated by it will be governed by
Spanish law. All disputes arising in connection with this Agreement shall be
finally settled under the Rules of Conciliation and Arbitration of the
International Chamber of Commerce, by one or more arbitrators appointed in
accordance with the mentioned rules. The arbitration will take place at the
city of Geneva, Switzerland.
IN WITNESS WHEREOF, duly authorized persons of the parties hereto have signed
this Agreement, together with its appendices, in duplicate, as of the date first
above given.
103 ESTUDIO, X.X. XXXX-AO ESPANA
By /s/ XXXXXX XXXXXX By /s/ XXXXX X. XXXXXXXXX
--------------------------------- ----------------------------------
Name: Xxxxxx Xxxxxx Name: Xxxxx X. Xxxxxxxxx
Title: Managing Director Title: President and CEO
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