EX-4.8
4
ex4-8.htm
SUBSCRIPTION AGREEMENT
Exhibit
4.8
EXECUTION
COPY
SUBSCRIPTION
AGREEMENT
dated
as of
May
5, 2006
among
ABRIL
S.A.
and
MIH
(UBC) HOLDINGS BV
XXXXXXX
XXXXXX
and
XXXXXXXXX
X. XXXXXX
EXECUTION
COPY
SUBSCRIPTION
AGREEMENT
SUBSCRIPTION
AGREEMENT
(this
“Agreement”)
dated
May 5, 2006, among Abril
S.A.,
a
company (sociedade
por ações)
organized under the laws of the Federative Republic of Brazil, with head offices
in the City of São Paulo, State of São Paulo, at Xx. xxx Xxxxxx Xxxxxx, 0000,
00xx
xxxxx,
Xxxxxx A, enrolled with the Legal Entities Taxpayers’ Registry (CNPJ/MF) under
No. 03.788.716/0001-93, herein represented in accordance with its corporate
documents (the “Company”),
and
MIH
(UBC) Holdings BV,
a
company organized under the laws of the Netherlands, with head offices at 13-15
Jupiterstraat, HC 2132 Hoofddorp, the Netherlands, herein represented in
accordance with its corporate documents (“MIH”),
Xx.
Xxxxxxx Xxxxxx,
Brazilian citizen, married, publisher, bearer of the Identity Card RG No.
1.666.785, enrolled with the Individual Taxpayers’ Registry (CPF/MF) under No.
000.000.000-00, resident and domiciled in the City of São Paulo, State of São
Paulo, with offices at Xx. xxx Xxxxxx Xxxxxx, 0000, 24th
floor,
and Xx.
Xxxxxxxxx Xxxxxxxxx Xxxxxx,
Brazilian citizen, married, bachelor in social communication, bearer of the
Identity Card RG No. 6.167.806-5, enrolled with the Individual Taxpayers’
Registry (CPF/MF) under No. 000.000.000-00, resident and domiciled in the City
of São Paulo, State of São Paulo, with offices at Xx. xxx Xxxxxx Xxxxxx, 0000,
24th
floor.
W
I T N E
S S E T H :
WHEREAS,
the Control Group is the legal holder and registered owner of 9,576,531 shares
of common stock and 9,576,530 shares of preferred stock of the Company,
representing 86.2% and 86.2% of the total issued and outstanding shares of
common stock and preferred stock, respectively;
WHEREAS,
MIH desires to acquire an equity stake of 30% of the Company’s total capital
stock, through a combination of subscription of newly issued shares of common
stock and shares of preferred stock and the purchase of shares of common stock
and shares of preferred stock from the Control Group and Capital International
(as defined below), as a result of which MIH will hold 30% and 30% of the total
issued and outstanding shares of common stock and preferred stock,
respectively;
WHEREAS,
on the date hereof, MIH, the Control Group and the Company are entering into
a
stock purchase agreement for the purchase and sale of 1,316,246 shares of
preferred stock of the Company, held by the Control Group, representing 11.8%
of
the total issued and outstanding shares of preferred stock;
WHEREAS,
on the date hereof, MIH and Capital International are entering into a stock
purchase agreement for the purchase and sale of 1,533,134 shares of common
stock
and 1,533,133 shares of preferred stock of the Company, held by Capital
International, representing 13.8% and 13.8% of the total issued and outstanding
shares of common stock and preferred stock, respectively; and
WHEREAS,
MIH hereby agrees to subscribe for 2,289,041 shares of common stock and 972,795
shares of preferred stock of the Company, for the aggregate subscription price
set forth below and upon other terms and conditions set forth
herein;
NOW,
THEREFORE, in consideration of the foregoing and the mutual covenants and
agreements set forth herein, the parties hereto agree as follows:
ARTICLE
1
DEFINITIONS
SECTION
1.01.
Definitions.
(a) The following terms, as used herein, have the following
meanings:
“Affiliate”
means,
with respect to any Person, any other Person directly or indirectly Controlling,
Controlled by, or under common Control with such Person;
“Agreement”
means
this
Subscription Agreement and the Disclosure Schedule and exhibits attached
hereto;
“Brazilian
Corporation Law”
means
Law No. 6,404/76 as amended;
“Brazilian
GAAP”
means
generally accepted accounting principles in Brazil;
“Business
Day”
means
any day other than a Saturday, Sunday, or other day on which commercial banks
in
the City of São Paulo, State of São Paulo are authorized or required by law to
close;
“Capital
International”
means
Brazil April LLC and Brazil May LLC;
“CI
Acquisition Shares”
means
1,533,134 shares of common stock and 1,533,133 shares of preferred stock of
the
Company, representing, 13.8% and 13.8% of the total issued and outstanding
shares of common stock and preferred stock, respectively, owned by Capital
International;
“CIESP”
means
Centro das Indústrias do Estado de São Paulo –
CIESP;
2
“CI
Stock Purchase Agreement”
means
the stock purchase agreement, dated the date hereof, between MIH and Capital
International, for the purchase, by MIH, of the CI Acquisition
Shares;
“CG
Acquisition Shares”
means
1,316,246 shares of preferred stock of the Company, representing 11.8% of the
total issued and outstanding shares of common stock and preferred stock,
respectively, owned by the Control Group;
“CG
Stock Purchase Agreement”
means
the stock purchase agreement, dated the date hereof, between MIH, the Control
Group and the Company, for the purchase, by MIH, of the CG Acquisition
Shares;
“Claim”
has
the
meaning set forth in Section 9.04 of this Agreement;
“Closing”
has
the
meaning set forth in Section 8.01 of this Agreement;
“Closing Date”
has
the
meaning set forth in Section 8.01 of this Agreement;
“Company”
means
Abril S.A.;
“Competitor”
means
when used in connection with the question whether MIH is Controlled by a
Competitor means (i) any Person that, directly or indirectly, is engaged in
the
Business in Brazil, and, as recorded in its financial statements for the
preceding Fiscal Year, either had (a) consolidated revenues of at least 20%
(twenty percent) of the consolidated revenues of the Group Companies, for the
same period, or (b) revenues in any of the Business segments of such Person
of
at least 20% (twenty percent) of the revenues of the corresponding Business
segment of the Group Companies for the same period (a “Competing
Business”),
(ii)
any Person who owns more than 10% (ten percent) of the total issued and
outstanding voting stock of a Competing Business, (iii) any Person who owns
more
than 20% (twenty percent) of the total issued and outstanding capital stock
and
have governance rights (such as, without limitation, board seats, veto or
approval rights, right to appoint management) of a Competing Business.
Competitor, when used in connection with any investment, shall mean any Person
the main business activity of which directly and substantially competes with
the
activities conducted by a Group Company at the moment of such
investment.
“Confidential Information”
has
the
meaning set forth in Section 6.03 of this Agreement;
“Control”
(including the terms “Controls”,
“Controlled
by”
and
“under
common Control with”)
means,
with respect to any Person or group of Persons (the “Controlling
Person(s)”),
(i) the
holding of shares representing more than 50% (fifty percent) of all the voting
shares of another Person or (ii) the ability to appoint the majority of the
members of the board of directors or other governing body of such other
Person;
3
“Control
Group”
means
the Parent Company and the Individual Shareholders;
“Disclosure
Schedule”
means
the Disclosure Schedule attached hereto, dated as of the date of this Agreement,
delivered by the Company to MIH in connection with this Agreement;
“Environmental Laws”
means,
as in effect on the date hereof, all laws, rules, regulations, judgments,
injunctions, orders or decrees relating to pollution or protection of the
environment, including, without limitation, laws relating to the release or
threatened release of Hazardous Substances into the indoor or outdoor
environment (including, without limitation, ambient air, surface water,
groundwater, land, surface and sub-surface strata) or otherwise relating to
the
manufacture, processing, distribution, use, treatment, storage, release,
transport or handling of Hazardous Substances;
“Environmental Permits”
has
the
meaning set forth in Section 3.17 of this Agreement;
“Financial Statements”
has
the
meaning set forth in Section 3.07 of this Agreement;
“Governmental
Authority”
means
any government, governmental entity, regulatory authority, department,
commission, board, agency or instrumentality, any recognized stock exchange
and
any court, arbitrator, tribunal, whether foreign or domestic with jurisdiction
over the Parties;
“Group
Companies”
means
the Company and its Subsidiaries and “Group
Company”
means
any of them;
“Hazardous
Substances”
means
petroleum and petroleum products, by-products or breakdown products, radioactive
materials, asbestos-containing materials, and any other chemicals, materials
or
substances regulated as toxic or hazardous or as pollutant, contaminant or
waste
under any applicable Environmental Laws;
“Indemnified Parties”
has
the
meaning set forth in Section 9.01 of this Agreement;
“Indemnifying
Shareholders”
means
Xx. Xxxxxxx Xxxxxx and Xx. Xxxxxxxxx Xxxxxxxxx Xxxxxx;
4
“Individual
Shareholders”
means
Xx. Xxxxxxx Xxxxxx, Xx. Xxxxxxxxx Xxxxxxxx Xxxxxx, Xx. Xxxxxx Xxxxxx and Xxx.
Xxxxxxx Xxxxxxxx Xxxxxx;
“Insurance Policies”
has
the
meaning set forth in Section 3.18 of this Agreement;
“Intellectual
Property Rights”
means
(i) trademarks, service marks, trade names, corporate names, logos, designs,
slogans and general intangibles of like nature, together with all goodwill
associated with the foregoing (including any registration and applications
therefore); (ii) inventions, whether or not patentable, (iii) copyrights
(whether or not registered) and registrations and applications for registration
thereof, including all derivative works, moral rights, renewals, extensions,
reversions or restorations associated with such copyrights, regardless of the
medium of fixation or means of expression; (iv) URLs and internet domain names;
(v) computer software, databases, technology, trade secrets and other
confidential information (including pricing and cost information, business
and
marketing plans and customer and supplier lists), know-how (including
manufacturing and production processes and techniques and research and
development information), proprietary process, formulae, algorithms, models,
user interfaces, customer lists, inventions, source codes, object codes,
methodologies and all related confidential information;
“Knowledge
of the Company”
means
the actual knowledge, after due inquiry, of the Company’s chief executive
officer, chief financial officer or chief legal officer and, with respect to
the
following business units, the head of the respective unit: publishing business,
electronic distribution business and educational business;
“Lien”
means
any mortgage, lien, pledge, charge, security interest, encumbrance, title
defect, objections, rights of first refusal, options or other restriction of
any
kind, or any other right in favour of or claims by, any third party of
whatsoever nature;
“Litigation”
has
the
meaning set forth in Section 3.12 of this Agreement;
“Losses”
has
the
meaning set forth in Section 9.01 of this Agreement;
“Material Agreement”
has
the
meaning set forth in Section 3.10(b) of this Agreement;
“MIH”
means
MIH (UBC) Holdings BV;
“Parent
Company”
means
Ativic S.A.;
“Parties”
means
the Company, MIH, the Parent Company and the Individual Shareholders; and
“Party”
means
any of them;
5
“Permits”
has
the
meaning set forth in Section 3.13 of this Agreement;
“Person”
means
an individual, corporation, partnership, limited liability company, association,
trust or other entity or organization, including a government or political
subdivision or an agency or instrumentality thereof;
“Reais”
or
“R$”
means
Brazilian Reais;
“Registration
Rights Agreement”
means
the Registration Rights Agreement, entered into on the date hereof, between
the
Company, MIH (UBC) Holdings BV, MIH Brazil Participações Ltda. and the Control
Group;
“Related Party”
means
the Parent Company, an Individual Shareholder, a spouse, parent, grandparent,
descendant or sibling of an Individual Shareholder, any Person owning 20%
(twenty percent) or more of the issued and outstanding capital stock of the
Parent Company, MIH, an Affiliate of any of the foregoing, and any Person in
which any of the foregoing owns, directly or indirectly, individually or
together with any other of the foregoing, 20% (twenty percent) or more of the
capital stock or other economic interests. “Related Party” shall not include (i)
Xx. Xxxxxxx Xxxxxx or his spouse or descendents. The parties agree that Abril
Radiodifusão S.A., Editora Xxxxx X.X. and Fundação Xxxxxx Xxxxxx shall each be
deemed to be a Related Party for purposes of this Agreement;
“Shareholders’
Agreement”
means
the Shareholders’ Agreement of the Company, entered on the date hereof, between
the Company, MIH and the Control Group;
“Subscription
Common Shares”
has
the
meaning set forth in Section 2.01 of this Agreement;
“Subscription
Preferred Shares”
has
the
meaning set forth in Section 2.01 of this Agreement;
“Subscription
Price”
has
the
meaning set forth in Section 2.02 of this Agreement;
“Subscription
Shares”
means
the Subscription Common Shares and the Subscription Preferred
Shares;
“Subsidiaries”
means
any Person of which securities or other ownership interests are directly or
indirectly owned by the Company;
“Taxes”
means
all taxes, charges, fees, levies or other assessments imposed by any taxing
authority, including, without limitation, income, gross receipts, sales, use,
goods and services, capital transfer, bulk transfer, franchise, profits,
license, withholding, payroll, employment, employer health, social
contributions, social security, excise, estimated, severance, stamp, occupation,
property, or other taxes, customs duties, fees, assessments or charges of any
kind whatsoever, together with any interest and any penalties, additions to
tax
or additional amounts, including any amounts payable as a result of the
application of monetary correction or any other similar factor imposed by any
taxing authority;
6
“Tax Returns”
means
any report, return, document, declaration, schedule, or any other information
or
filing required to be supplied, including by electronic means or otherwise,
to
any Governmental Authority or jurisdiction with respect to Taxes including,
without limitation, any amendments thereto; and
“Transaction Documents”
means
this Agreement, the CI Stock Purchase Agreement, the CG Stock Purchase
Agreement, the Shareholders’ Agreement and the Registration Rights
Agreement.
ARTICLE
2
SUBSCRIPTION
SECTION
2.01.
Subscription.
Upon
the terms and subject to the conditions of this Agreement, and upon the basis
of
the representations and warranties contained herein, the Company agrees to
issue
and MIH agrees to subscribe, on the date hereof, for 2,289,041 shares of common
stock (the “Subscription
Common Shares”)
and
972,795 shares of preferred stock (the “Subscription
Preferred Shares”)
of the
Company, for the Subscription Price set forth in Section 2.02
below.
SECTION
2.02.
Subscription
Price.
(a) As
consideration for the Subscription Shares, MIH agrees to pay to the Company
the
total subscription price of R$326,931,189.00 (the “Subscription
Price”),
corresponding, on the date hereof, to R$100.23 per Subscription Common Share
and
R$100.23 per Subscription Preferred Share, being R$20,092,909.76 allocated
to
the Company’s capital stock and R$306,838,279.24 allocated to capital stock
reserve (reserva
de capital).
(b)
The
Parties hereby agree that the proceeds of the Subscription Price allocated
to
capital stock reserve (reserva
de capital)
shall
not be applied to dividend distribution unless mutually agreed by the Parties.
SECTION
2.03.
Subscription
Shares.
The
Subscription Common Shares shall be shares of common stock of the Company,
with
full voting rights and will rank pari
passu
with the
remainder of the Company’s common stock in all respects. The Subscription
Preferred Shares shall be shares of preferred stock of the Company, without
voting rights and will rank pari
passu
with the
remainder of the Company’s preferred stock in all respects.
7
SECTION
2.04.
Waiver
of Preemptive Rights.
The
Control Group expressly waives any preemptive right it may have in relation
to
the issuance and subscription of the Subscription Shares.
SECTION
2.05.
Payment.
The
Subscription Price shall be paid by MIH to the Company, by international wire
transfer, in immediately available funds, to the bank account in Brazil
indicated in Schedule 2.05 hereto attached.
ARTICLE
3
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
The
Company represents and warrants to MIH that each of the following
representations and warranties is, as of the date hereof, true and correct
and
in full force and effect, subject to the qualifications and exceptions contained
in the Disclosure Schedule. In this regard, any fact, act, item, contract,
agreement, document or information listed, described, contained or disclosed
in
any Section of the Disclosure Schedule shall be deemed (a) listed, described,
contained and disclosed in all other Sections of the Disclosure Schedule, even
though not expressly set forth in such other Section, and (b) to qualify and
except such other representation and warranties contained in this Article 3,
whether or not a specific reference to the Disclosure Schedule is made in such
other representation or warranty.
SECTION
3.01.
Existence
and Power.
Each
Group Company is duly organized, validly existing and in good standing under
the
laws of the Federative Republic of Brazil and has all corporate powers,
governmental licenses, authorizations, permits, consents and approvals required
to own its respective properties and to carry on its business as presently
conducted. Section 3.01 of the Disclosure Schedule contains a copy of the
amended and restated bylaws of the Company, as currently in effect.
SECTION
3.02.
Authorization,
Binding Effect.
The
Company has been duly authorized by all necessary corporate action to execute,
deliver, perform and consummate the transactions contemplated in this Agreement.
This Agreement constitutes a valid and binding agreement upon the Company and
is
enforceable against it in accordance with its terms.
SECTION
3.03.
Governmental
Authorization.
The
execution, delivery and performance by the Company of this Agreement and the
consummation of the transactions contemplated hereby require no action,
approval, consent or declaration by or in respect of, notice or filing with,
any
Governmental Authority, agency or official other than the filing with
Conselho
Administrativo de Defesa Econômica – XXXX
and the
notice to the Agência
Nacional de Telecomunicações – ANATEL.
8
SECTION
3.04.
Noncontravention.
Except
as otherwise set forth in Section 3.04 of the Disclosure Schedule, the
execution, delivery and performance by the Company of this Agreement and the
consummation of the transactions contemplated hereby do not (i) violate the
organizational documents or bylaws of any Group Company, (ii) assuming the
filing required by the antitrust and telecommunications authorities is properly
made, violate any material applicable law, rule, regulation, judgment,
injunction, order or decree, (iii) except as set forth in Section 3.03 above,
require any consent or other action by any Person, constitute a default, or
give
rise to any right of termination, cancellation, vesting or acceleration of
any
right or obligation of any Group Company, or to a loss of any benefit to which
a
Group Company is entitled under any provision of any agreement or other
instrument binding upon a Group Company, or (iv) except for any Lien created
by
the Transaction Documents, result in the creation or imposition of any Lien
on
any asset of any Group Company.
SECTION
3.05.
Capitalization.
(a) The
capital stock of the Company, totally subscribed and paid in, is of
R$136,871,060.48, comprised of 11,109,665 (eleven million, one hundred and
nine
thousand and six hundred and sixty five) shares of common stock and 11,109,663
(eleven million, one hundred and nine thousand and six hundred and sixty three)
shares of preferred stock. There are no (i) other outstanding shares (voting
or
not), other securities (voting or not) issued by the Company or other ownership
interests of the Company, (ii) securities issued by the Company convertible
into
or exchangeable for shares of capital stock, voting securities or other
ownership interests of the Company or (iii) options, warrants or other rights
to
acquire from the Company, or other obligation of the Company to issue any shares
of capital stock, voting securities or securities convertible into or
exchangeable for shares of capital stock, voting securities or other ownership
interests of the Company. There are no outstanding obligations of the Company
to
repurchase, redeem or otherwise acquire any shares of its capital stock. The
Subscription Shares, when issued and paid for as provided in this Agreement,
will be duly authorized and validly issued, fully paid, non-assessable and
free
from any Liens.
(b)
Section 3.05(b) of the Disclosure Schedule contains a table indicating the
current ownership structure of the Company.
SECTION
3.06.
Subsidiaries.
Section
3.06 of the Disclosure Schedule lists the name and jurisdiction of organization
of each Group Company, the equity stake owned, directly or indirectly, by the
Company and the equity stake owned by any Group Company or its partners in
each
of the Group Companies. Except as otherwise set forth in Section 3.06 of the
Disclosure Schedule, there are no options or other rights to acquire from any
of
the Group Companies, or other obligation of any Group Company to issue, any
shares of capital stock, voting securities or securities convertible into or
exchangeable for shares of capital stock, voting securities or other ownership
interests of any Group Company. Except as otherwise set forth in Section 3.06
of
the Disclosure Schedule, the Company does not own any securities or other
ownership interest in any Person, or any other investment in any Person (except
for passive investments made in the ordinary course of treasury transactions),
whether by means of a share purchase, capital contribution or otherwise,
directly or indirectly, other than the Subsidiaries.
9
SECTION
3.07. Financial
Statements.
Section
3.07 of the Disclosure Schedule contains a copy of the audited consolidated
financial statements of the Company for the fiscal year ended on December 31,
2005 (the “Financial
Statements”),
which
have been prepared in accordance with the Brazilian GAAP and consistent with
the
Company’s past practices and fairly present, in all material aspects, the
financial condition, assets and liabilities and profit or loss of the Company
as
of such date and for the period covered thereby.
SECTION
3.08.
Properties.
(a)
Except as otherwise set forth in Section 3.08 of the Disclosure Schedule, the
Group Companies have good and marketable, indefeasible, legitimate title, free
and clear of any Liens, or, in the case of leased property and assets, have
valid leasehold interests in, all property and assets (whether real, personal,
tangible or intangible) of the Group Companies of which the book value or annual
rental, respectively, exceeds R$1,000,000.00 (one million Reais) and of all
assets of the Company and its Subsidiaries of which the acquisition cost exceeds
R$1,000,000.00 (one million Reais) and all such properties and assets are in
the
possession or under control of the Group Companies.
(b)
The
properties and assets owned, leased or subleased or licensed by the Group
Companies, or which they otherwise have the right to use, constitute all of
the
properties and assets used or held for use in connection with the businesses
of
the Group Companies and are adequate to conduct such businesses as currently
conducted. All of the Group Companies’ properties and assets are in good working
condition and repair, except for ordinary wear and tear.
SECTION
3.09.
Absence
of Certain Changes.
(a) As
from December 31, 2005, the Group Companies have conducted their business in
the
ordinary and usual course. In addition, since December 31, 2005 up to March
31,
2006, except as otherwise set forth in Section 3.09 of the Disclosure Schedule,
there has been:
(i)
no
physical damage, destruction, loss or abandonment of any material asset or
property of any Group Company;
(ii)
no
acquisition, sale, assignment, transfer, lease, sublease, license or other
disposal of any material asset or property of any Group Company;
10
(iii)
no
material change in the management practices of any Group Company, or in the
employment practices of any Group Company (including compensation, fringe
benefits or any plan or other employee benefit);
(iv)
no
material change in the accounting policies and practices of the Group
Companies;
(v)
no
creation of any Liens on all or any portion of any material asset or property
of
any Group Company;
(vi)
except as otherwise set forth in Section 3.10(a) of the Disclosure Schedule,
no
material amendment, modification, alteration, failure to renew or termination
of
any Material Agreements;
(vii)
no
waiver of any material rights of any Group Company, nor any cancellation of
any
material claims, debts or accounts receivable owing to any Group Company, other
than in the ordinary course of business;
(viii)
no
redemption of capital stock or declaration or payment of any dividends, interest
on equity (juros
sobre capital próprio)
or
distributions (whether in cash, securities or other property) to the current
holders of capital stock of any Group Company and no other forms of transfer
of
funds from any Group Company to its shareholders;
(ix)
no
issuance of shares of capital stock, notes, bonds or other securities,
convertible or not into shares of capital stock, or any option, warrant or
other
right to acquire the same, or any other interest in any Group
Company;
(x)
no
advance or capital contribution to or investment by any Group
Company;
(xi)
no
entering into any joint venture or similar arrangement by any Group
Company;
(xii)
no
entering into any form of financial agreement by any Group Company in an amount
higher than R$1,000,000.00 (one million Reais);
(xiii)
no
revaluation of any tangible or intangible assets of any Group
Company;
(xiv)
no
litigation, which has had or could have a material adverse effect on the Group
Companies or their financial condition;
(xv)
no
material damage to any of the Group Companies’ assets or properties, or any
other act or fact that could have a negative financial impact to any of the
Group Companies’ business activities, exceeding, in the aggregate,
US$15,000,000.00 (fifteen million United States Dollars);
11
(xvi)
no
material adverse change in the Group Companies’ financial condition, business,
operations or prospects;
(xvii)
no
failure by any Group Company to pay its creditors in the ordinary course of
business or to repay any loan capital in whole or in part as and when it fell
due; and
(xviii)
no commitment by any Group Company to do any of the foregoing.
(b)
From
March 31, 2006 to the date hereof, to the Knowledge of the Company, there has
been no material adverse change in the Group Companies’ financial condition,
business, operations or prospects.
SECTION
3.10.
Contracts.
(a)
True and correct copies of all Material Agreements have been made available
to
MIH. All of the Material Agreements are valid, binding and in full force and
effect and are enforceable against the applicable Group Company. Except as
otherwise set forth in Section 3.10 of the Disclosure Schedule, with respect
to
each Material Agreement, no Group Company nor any other party thereto is in
default and there is no event, occurrence, condition or act (including the
Closing of the transaction contemplated herein) which, with the giving of notice
or the lapse of time or both, would become a default by any of the Group
Companies in any respect in the performance, observance or fulfillment of any
of
its obligations or covenants contained in any such Material Agreement and none
of the parties to any such Material Agreement has indicated, in writing, any
intention to terminate, rescind, avoid or repudiate such Material Agreement
prior to the expiration of its term. Section 3.10(a) of the Disclosure Schedule
contains a list of all Material Agreements.
(b)
For
the purposes of this Agreement, Material Agreement means any written contract,
agreement, document, instrument, rental, lease, obligation, loan agreement,
indenture, letter of credit, reimbursement agreement, mortgage, security
agreement, franchise, guaranty, purchase order, bond, commitment and
arrangement, in each case as amended, supplemented or otherwise modified, which
a Group Company is a party to or bound by (i) which are a joint venture,
shareholders’ or partnership arrangement or agreement or similar agreement or
any agreement which purports to regulate, control or otherwise affect the voting
or disposition of the shares of any Group Company, and (ii) pursuant to which
claims or liabilities of R$1,000,000.00 (one million Reais)
or more
arise, per year, provided, however, that the international licensing agreements
relating to the publication by a Group Company in Brazil of foreign publications
and magazines and the Group Companies’ publications and magazines published
outside of Brazil and all TV content agreements shall be considered Material
Agreements irrespective of the amount involved.
12
(c)
Section 3.10(c) of the Disclosure Schedule contains a list of all Related Party
transactions that are currently in force. Except as disclosed in Section 3.10(c)
of the Disclosure Letter, no Related Party is indebted to any Group Company
for
an amount equal to or greater than R$500,000.00 (five hundred thousand
Reais),
or is
a customer of any Group Company for an amount equal to or greater than
R$500,000.00 (five hundred thousand Reais),
in the
aggregate over any twelve-month period. No Group Company is indebted to any
Related Party for an amount equal to or greater than R$500,000.00 (five hundred
thousand Reais).
SECTION
3.11.
Guaranties.
No
Group Company has secured any third parties’ obligations.
SECTION
3.12. Litigation.
(a)
Except as set forth in Section 3.12 of the Disclosure Schedule, no Group Company
is engaged in, has pending or has been notified that it is the subject of any
claim, action, suit, proceeding, complaint, investigation, inquiry, litigation,
arbitration (collectively, “Litigation”)
whether as plaintiff, defendant or otherwise (i) of civil nature over
R$500,000.00 (five hundred thousand Reais),
(ii)
relating to Taxes over R$1,000,000.00 (one million Reais),
(iii)
of a labour nature over R$300,000.00 (three hundred thousand Reais),
(iv)
of a social security nature over R$1,000,000.00 (one million Reais),
and
(v) of any other nature over R$1,000,000.00 (one million Reais).
Except
as disclosed in Section 3.12 of the Disclosure Schedule, no Group Company is
subject to any judgment, injunction, order, decree or arbitration award
involving an amount higher than R$1,000,000.00 (one million Reais).
(b)
There
is no outstanding or pending or threatened Litigation against any Group Company
or any of its respective material assets and properties before any court or
arbitrator or any Governmental Authority that seeks to prevent the Company
from
entering into or implementing the transactions contemplated in this
Agreement.
SECTION
3.13.
Licenses
and Permits.
Except
as set forth on Section 3.13 of the Disclosure Schedule, (i) each material
license, franchise, permit, certificate, approval or other similar authorization
issued by a Governmental Authority affecting, or relating in any way to, the
business of the Group Companies (collectively, the “Permits”)
is
valid and in full force and effect, (ii) to the Knowledge of the Company, no
Group Company is in material default under, and no condition exists that with
notice or lapse of time or both would constitute a material default under,
any
Permit and (iii) none of the Permits will be terminated or impaired or become
terminable, in whole or in part, as a result of the transactions contemplated
hereby. No Group Company is in violation of any applicable law or regulation
which may have a material adverse effect on the ability of any Group Company
to
conduct its business as currently conducted.
13
SECTION
3.14. Intellectual
Property Rights.
The
Group owns or has licensed to it all material intellectual property rights
used
by and/or necessary for the Group Companies to conduct their businesses as
currently conducted (the “Intellectual
Property Rights”).
The
Company has adopted internal policies to prevent the misuse or unauthorized
use
of any Intellectual Property Right and the Group Companies respect all of such
Intellectual Property Rights, except as otherwise would not have a material
adverse effect to the applicable Group Company. To the Knowledge of the Company,
there is no claim, action, suit, investigation or proceeding pending against
the
use by any Group Company of any Intellectual Property Right and no Group Company
is in breach of any agreement or license for Intellectual Property Rights,
unless otherwise indicated in Section 3.12(a) of the Disclosure
Schedule.
SECTION
3.15.
Taxes.
(a)
Except as set forth in Sections 3.12(a) and 3.15(a) of the Disclosure Schedule,
or as would not otherwise have a material adverse effect on the Group Companies:
(i) each Group Company has filed in a timely manner (or there has been filed
on
its behalf) with the appropriate Governmental Authorities all Tax Returns
required to be filed by it and all such Tax Returns are true, complete and
correct as filed; (ii) all Taxes required to be paid by each Group Company
(including Taxes required to be deducted or withheld and paid over to a taxing
authority) have been timely paid in full or are reflected as a Tax reserve
on
the Financial Statements or are being contested by the applicable Group Company;
(iii) no administrative or court proceedings have formally been commenced or
are
presently pending with regard to any Taxes or any Tax Return of the Group
Companies; (iv) there are no Liens for Taxes upon the assets of any Group
Company; (v) no Group Company is a party to, is bound by, or has any obligation
under any agreement or arrangement providing for the allocation, sharing or
indemnification of Taxes or is otherwise obligated to indemnify any party for
any Taxes; and (vi) no Group Company has requested an extension of time within
which to file any Tax Return in respect of any taxable year, which Tax Return
has not since been filed.
(b)
The
Company has established provisions, to the extent required by Brazilian GAAP,
for all Taxes due with respect to the period until the date of the Financial
Statements.
SECTION
3.16. Employee
Matters.
(a)
There is no material liability of any kind with respect to amounts withheld
or
deducted amounts from employees' earnings, for the period ending on or the
date
hereof. The Group Companies are in compliance with all Brazilian federal, state,
municipal and other material labour laws and regulations, except as otherwise
would not have a material adverse effect on the Group Companies.
14
(b)
There
is no (and there has not been during the last five years) labour strike, slow
down or stoppage against or affecting any Group Company.
(c)
The
Company has established provisions, to the extent required by Brazilian GAAP,
for all labour obligations, dues and liabilities with respect to the period
until the date of the Financial Statements.
SECTION
3.17.
Environmental
and Health and Safety Matters.
To the
Knowledge of the Company, each Group Company has been in compliance, in all
material respects, with all applicable Environmental Laws. The Group Companies
have applied for and received all permits required under Environmental Laws
for
their respective assets and business (“Environmental
Permits”),
except as would not otherwise have a material adverse effect on the Group
Companies. There are no pending claims in writing by any Governmental Authority
or any other person in respect of Environmental Laws affecting the Group
Companies or their businesses. The Company has not received any written notice
of any violations of any Environmental Laws or any written warning notices,
administrative complaints, judicial complaints or other formal notices from
any
person alleging that conditions of the business are in violation of any
Environmental Laws. To the Knowledge of the Company, there is currently no
treatment, storage, disposal, discharge or other type of release of Hazardous
Substances on property owned or leased by the Group Companies which has resulted
in contamination of such real properties.
SECTION
3.18. Insurance.
The
Group Companies keep their material properties and assets insured based on
management policies and in a manner consistent with their past practices,
against such risks as are in accordance with good commercial practices. Section
3.18 of the Disclosure Schedule contains a list of the insurance policies or
programs relating to the operations, properties and assets of the Group
Companies in effect as of the date hereof with coverage exceeding R$1.000.000,00
(one million Reais) (“Insurance
Policies”).
All
of such Insurance Policies (i) are in full force and effect; and (ii) secure
coverage in amounts and against all risks that are customary for the operation
of the businesses of the Companies Group. All of such Insurance Policies will
not terminate or lapse by reason of any of the transactions contemplated hereby.
No Group Company is in default in any material respect with respect to its
obligations under any of such Insurance Policies.
SECTION
3.19.
Brokers
and Finders.
The
Company has engaged XX Xxxxxx as its financial adviser in connection with the
transaction contemplated in this Agreement. The Company shall bear 50% (fifty
percent) of the expenses, including any commission or fee, to be paid to such
financial adviser in connection with this Agreement.
SECTION
3.20.
Capital
International Transaction Documents.
Immediately prior to the Closing of the transaction contemplated in this
Agreement, each and every contract, agreement, document, instrument, obligation,
reimbursement agreement, security agreement, pledge agreement, guaranty,
commitment and arrangement, in each case as amended, supplemented or otherwise
modified, entered into, on one hand, by a Group Company and/or any member of
the
Control Group, and on the other hand, Capital International, any fund managed
by
or on behalf of Capital International, Capital International Inc. or any
Subsidiaries thereof have been terminated and have no further force and effect,
and any and all parties thereto have been expressly released from any and all
obligations or liabilities that may have arisen in the past, or that could
arise
in the future, therefrom.
15
SECTION
3.21. No
Other Representations and Warranties.
Except
for the representations and warranties contained in this Article 3, the Company
does not make any representation or warranty, express or implied, to MIH, as
to
any matter.
ARTICLE
4
REPRESENTATIONS
AND WARRANTIES OF THE INDEMNIFYING SHAREHOLDERS
SECTION
4.01. Best
Knowledge of the Indemnifying Shareholders. Each
of
the Indemnifying Shareholders, joint and severally, represents and warrants
to
MIH that, to the best of their knowledge, after due inquiry, neither of them
is
aware of any fact, information, act, omission, event or circumstance which
would
make any of the representations and warranties contained in Article 3 untrue
or
incorrect.
ARTICLE
5
REPRESENTATIONS
AND WARRANTIES OF MIH
MIH
represents and warrants to the Company that each of the following
representations and warranties is, as of the date hereof, true and correct
and
in full force and effect.
SECTION
5.01.
Existence.
MIH is
duly organized, validly existing and in good standing under the laws of the
Netherlands, and has all corporate powers, governmental licenses,
authorizations, permits, consents and approvals required to own its properties
and to carry on its business as presently conducted.
SECTION
5.02.
Authorization,
Binding Effect.
MIH has
been duly authorized by all necessary corporate action to execute, deliver,
perform and consummate the transactions contemplated in this Agreement. This
Agreement constitutes a valid and binding agreement upon MIH and is enforceable
against MIH in accordance with its terms.
16
SECTION
5.03.
Governmental
Authorization.
The
execution, delivery and performance by MIH of this Agreement and the
consummation of the transactions contemplated hereby require no action,
approval, consent or declaration by or in respect of, notice or filing with,
any
Governmental Authority, agency or official other than the filing with Conselho
Administrativo de Defesa Econômica - XXXX, the notice to the Agência Nacional de
Telecomunicações - ANATEL and the approval of the investment by the South
African Reserve Bank.
SECTION
5.04.
Noncontravention.
The
execution, delivery and performance by MIH of this Agreement and the
consummation of the transactions contemplated hereby do not and will not (i)
violate the organizational documents or bylaws of MIH or its Controlling
shareholder, (ii) assuming any filing required by the antitrust, the
telecommunications and the South African Reserve Bank authorities properly
made,
violate any applicable material law, rule, regulation, judgment, injunction,
order or decree, (iii) except as set forth in Section 5.03 above, require any
consent or other action by any Person, constitute a default, or give rise to
any
right of termination, cancellation, vesting or acceleration of any right or
obligation of any of MIH or (iv) violate any contract, agreement or obligation
entered into by MIH on or prior to the date hereof.
SECTION
5.05.
Litigation.
There
is no outstanding, pending or threatened Litigation against MIH or any of its
assets and properties before any court or arbitrator or any Governmental
Authority that seeks to prevent MIH from entering into or implementing the
transactions contemplated in this Agreement.
SECTION
5.06. Ownership
of Interests in Third Parties.
MIH is
not directly or indirectly Controlled by any (i) Competitor, (ii) state-owned
or
state-controlled enterprise, any nation or government (in the federal, state
or
local levels, or any other political subdivision thereof), or (iii) individual
or entity, authority or body exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to any of such
government, or nation, including any governmental authority, agency, department,
board, commission, company, corporation, trust or similar structure or entity
that is Controlled by any of the foregoing. MIH does not own any shares of
capital stock, voting securities or securities convertible into or exchangeable
for shares of capital stock, voting securities or other ownership interests
in
any Competitor.
SECTION
5.07. Due
Diligence.
In
entering into this Agreement and the other Transaction Documents, MIH
acknowledges that (a) it has conducted an independent due diligence
investigation, review and analysis of the business, assets, liabilities, results
of operations, financial condition and prospects of the Company and its
Subsidiaries, and (b) except for the specific representations and warranties
contained herein, MIH has relied solely upon the aforementioned investigation,
review and analysis and not on any factual representations and warranties of
the
Company (and of its respective representatives and advisors).
17
SECTION
5.08. Financial
Capacity. MIH
has
the financial capacity whether through its own resources or through credit
facilities from reputable financial institutions to fulfill all of its
obligations under this Agreement.
SECTION
5.09. Ability
to Evaluate the Risk.
MIH has
knowledge and experience in financial and business matters such that it was
capable of evaluating the risks of the investment in the Subscription
Shares.
SECTION
5.10.
Brokers
and Finders.
MIH has
engaged Citigroup as its financial adviser in connection with the transaction
contemplated in this Agreement. MIH shall bear all the expenses, including
any
commission or fee, to be paid to such financial adviser in connection with
this
Agreement.
ARTICLE
6
COVENANTS
OF ALL PARTIES
SECTION
6.01.
XXXX
Submission.
(a) MIH
agrees to make appropriate filings pursuant to applicable antitrust laws to
obtain XXXX’x approval of the transactions contemplated by this Agreement and
the other Transaction Documents within 15 (fifteen) Business Days following
the
execution of this Agreement. MIH and the Company agree to respond as promptly
as
practicable to any inquiries received from the notified authorities and agree
to
supply promptly any additional information and documentary material that may
be
requested by such notified authorities.
(b)
The
Company shall cooperate in obtaining any information required for the XXXX
filing and to supply any information requested by any of the antitrust
authorities. MIH will bear the costs in connection with the XXXX
filing.
SECTION
6.02.
Other
Filings.
The
Parties agree to cooperate with one another in any other filing, notice or
communication to any other Governmental Authority, including furnishing
information required in connection therewith and seeking timely to make any
such
filing, notice or communication.
SECTION
6.03. Confidentiality.
(a) The
Parties ratify the terms and conditions of the Confidentiality Agreement, dated
February 7, 2006, and agree to comply with the obligations provided therein.
In
addition to the foregoing, from and after the date hereof, the Parties agree
jointly and severally to hold, and to cause their Affiliates and respective
officers, directors, employees, accountants, counsel, consultants, advisors
and
agents to hold, in confidence, all confidential documents and information
concerning the Company, the Business and/or the Parties, including without
limitation, certain non-public information about the proposed or potential
business strategy, operations, financial matters and other matters relating
to
the Company (the “Confidential
Information”),
except to the extent that such information can be shown to have been (i) in
the
public domain through no fault of any of the Parties or (ii) later lawfully
acquired by any of the Parties from other sources without any breach of any
law,
regulation, order or confidentiality obligation. Confidential Information may
only be disclosed in the event that any of the Parties is compelled to disclose
such Confidential Information by law, rule, regulation, order or decree enacted
by a Governmental Authority to which such Party is subject or as a result of
judicial or administrative process in connection with any action, suit,
proceeding or investigation. In any event Confidential Information is disclosed,
the disclosing Party shall take all such steps as may be reasonable in the
circumstances to agree the contents of such disclosure with the other Party
before making such disclosure.
18
(b)
From
and after the date hereof, the Parties agree to hold, and to cause their
Affiliates and respective officers, directors, employees, accountants, counsel,
consultants, advisors and agents to hold, in confidence, any and all information
regarding the terms and conditions of this Agreement. The terms and conditions
of this Agreement may only be disclosed in the event that any of the Parties
is
compelled to disclose such information by law, rule, regulation, order or decree
enacted by a Governmental Authority to which the Party is subject or as a result
of judicial or administrative process in connection with any action, suit,
proceeding or investigation. In any event the terms and conditions of this
Agreement are disclosed, the Party concerned shall take all such steps as may
be
reasonable in the circumstances to agree the contents of such disclosure with
the other Party before making such disclosure.
SECTION
6.04.
Public
Announcements.
The
Parties agree to consult with each other before issuing any press release or
making any public statement with respect to this Agreement or the transactions
contemplated hereby and, except for any press releases and public statements
the
making of which may be required by applicable law or any listing requirement
of
any national securities exchange, will not issue any such press release or
make
any such public statement prior to such consultation.
SECTION
6.05.
Insurance
Coverage.
The
Company has agreed that it will, within 30 days after the Closing Date, initiate
a review of the insurance policies and programs relating to the operations,
properties and assets of the Group Companies currently in effect and, if deemed
necessary, procure that the Group Companies increase their insurances so as
to
ensure that all material assets of the Group Companies of an insurable nature
are insured in such amounts and against such risks as are in accordance with
good and prudent commercial practice.
19
ARTICLE
7
CONDITIONS
TO CLOSING
SECTION
7.01.
Conditions
to Obligations of the Parties. The
obligation of each Party to carry out its respective actions at Closing is
subject to the fulfillment of the following conditions:
(i)
Closing of the Purchase of the CI Acquisition Shares. The Parties to the CI
Stock Purchase Agreement shall have executed the CI Stock Purchase Agreement
and
shall be in a position to close the purchase of the CI Acquisition Shares
simultaneously with the transaction contemplated in this Agreement.
(ii)
Closing of the Purchase of the CG Acquisition Shares. The Parties to the CG
Stock Purchase Agreement shall have executed the CG Stock Purchase Agreement
and
shall be in a position to close the purchase of the CG Acquisition Shares
simultaneously with the transaction contemplated in this Agreement.
SECTION
7.02.
Simultaneous
transaction at Closing.
All of
the transactions to occur at the Closing shall be deemed to occur
simultaneously. The Parties shall have no obligation to consummate any of the
transactions referred to in Section 7.02 and 7.03 unless all shall have been
consummated.
ARTICLE
8
CLOSING
SECTION
8.01. Closing.
The
subscription of the Subscription Shares and payment of the Subscription Price
shall take place at the head-offices of the Company, at Xx. xxx Xxxxxx Xxxxxx,
0000, 25th
floor,
in the City of São Paulo, State of São Paulo (“Closing”),
on
the date hereof (the “Closing
Date”).
For
all purposes all of the transactions contemplated by this Article 8 shall be
deemed to have occurred simultaneously.
SECTION
8.02. Actions
by the Company and the Control Group at Closing.
On the
Closing Date, the Company and the Control Group, as the case may be, shall
take
the following actions:
(i)
Execute and deliver this Agreement;
(ii)
Attend the General Shareholders’ Meeting of the Company for the issuance and
subscription of the Subscription Shares, election of MIH designated members
to
the Board of Directors of the Company and other related
resolutions;
(iii)
Issue and register the Subscription Shares in the Company’s Share Registry
Book;
20
(iv)
Execute and deliver the CG Stock Purchase Agreement;
(v)
Execute and deliver the Registration Rights Agreement;
(vi)
Execute and deliver the Shareholders Agreement; and
(vii)
Deliver to MIH an opinion of counsel to the Control Group and the Company
confirming the enforceability and validity of the Transaction
Documents.
SECTION
8.03. Actions
by MIH at Closing.
On the
Closing Date, MIH shall take the following actions:
(i)
Execute and deliver this Agreement;
(ii)
Attend the General Shareholders’ Meeting of the Company for the issuance and
subscription of the Subscription Shares, election of MIH designated members
to
the Board of Directors of the Company and other related
resolutions;
(iii)
Execute and deliver the Boletim
de Subscrição
for the
subscription of the Subscription Shares;
(iv)
Pay
the Subscription Price;
(v)
Execute and deliver the CG Stock Purchase Agreement;
(vi)
Execute and deliver the Registration Rights Agreement; and
(vii)
Execute and deliver the Shareholders Agreement.
ARTICLE
9
INDEMNIFICATION
SECTION
9.01. Indemnification.
Subject
to Sections 9.02 and 9.03 below, the Company hereby agrees to indemnify and
hold
MIH and its shareholders, officers, directors and employees (the “Indemnified
Parties”),
harmless from any and all liability, loss, damage, claims, awards, judgments,
costs and expenses (including reasonable fees and expenses of attorneys)
(“Losses”)
actually and effectively incurred or suffered by any of the Indemnified Parties,
that is exclusively and directly related or connected to or results from (i)
any
breach of any representations and warranties contained in Articles 3 and 4
hereof; and/or (ii) any breach by the Control Group and/or the Company of any
covenant or agreement contained in this Agreement. The Company shall not be
liable to any Indemnified Party for any Losses arising from a breach of any
of
the representations and warranties contained in Articles 3 and 4 above to the
extent that the act or fact (including the amount of the potential Loss) that
gave rise to such Loss was disclosed in any Section of the Disclosure Schedule
attached hereto as an exception to any of the representations and warranties
(it
being agreed and understood that the disclosure of any act or fact as an
exception to one of the representations and warranties shall be extended to
and
considered an exception of all of the other representations and warranties
regardless of any repetition of additional disclosure thereof). The disclosures
contained in any Section of the Disclosure Schedule, as well as any
qualifications, limitations or exceptions contained in the representations
and
warranties hereunder shall not be disregarded for any purpose or effect and
shall not entail, in any way, an obligation to indemnify on the part of the
Company pursuant to this Agreement.
21
SECTION
9.02. Survival
of Indemnification Obligations.
The
right to claim for any indemnification due under this Agreement shall remain
in
full force and effect for the following terms:
(i)
with
respect to any and all Losses resulting from Tax related liabilities, for a
maximum period of 5 (five) years as of the date hereof, provided that such
Tax
related Loss results from acts or omissions, facts, events or circumstances
of
which the taxable event or origin occurred up to and including the date
hereof;
(ii)
with
respect to any and all Losses resulting from labour related liabilities, for
a
maximum period of 2 (two) years as of the date hereof, provided that such labour
related Loss results from acts or omissions, facts, events or circumstances
occurred up to and including the date hereof; and
(iii)
with respect to any and all Losses resulting from civil, commercial or
liabilities of any other nature, for a maximum period of 3 (three) years as
of
the date hereof, provided that such other Loss results from acts or omissions,
facts, events or circumstances occurred up to and including the date
hereof.
(b)
For
the avoidance of doubt, the indemnification obligation set forth in this Article
9 shall encompass all Losses that are the subject matter of claims filed within
the time limits established in Section 9.02(a) above, notwithstanding the fact
that the obligation to make payments or disbursements only becomes enforceable
after such dates.
SECTION
9.03. Limits
on Indemnification.
(a) The
indemnification provided in this Section 9 shall be the sole and exclusive
remedy of any Indemnified Party (and any of their Affiliates) against the
Company with respect to any breach of any representation and warranty contained
in Articles 3 and 4 above, or covenant of the Company or the Control Group
in
this Agreement, and the issuance and subscription of the Subscription Shares
contemplated hereby, except in respect of any available injunctive or other
similar non-monetary relief or remedies.
22
(b)
The
Company’s total indemnification liability to the Indemnified Parties with
respect to all Losses indemnifiable under this Agreement shall be limited to
the
maximum amount of US$155,000,000.00 (one hundred and fifty million United States
Dollars), already including the effects of the Adjustment to Reflect MIH’s
Ownership and the Gross-up. The Company’s obligation to indemnify the
Indemnified Parties shall be triggered only if and when the amount of the
Losses, including the Adjustment to Reflect MIH’s Ownership and the Gross-up,
exceeds US$5,700,000.00 (five million and seven hundred thousand United States
dollars); provided, however, that if the aggregate amount of the Losses exceeds
such figure, the Company shall only be liable to the amounts that exceed that
figure. No Loss shall count towards the above threshold if the amount of the
Loss does not exceed US$75,000.00 (seventy-five thousand United States dollars),
already including the effects of the Adjustment to Reflect MIH’s Ownership, save
that claims relating to a series of connected matters shall be aggregated for
this purpose. Any indemnity payment due hereunder which shall be made by the
Company to the Indemnified Party shall be calculated in accordance with the
following formula:
Where:
I:
is the
indemnification amount to be paid to the Indemnifiable Party
hereunder;
L:
is the
total amount of a Loss incurred; and
PEI:
is
the total percentage of the equity interests of the Company held by MIH on
the
day of payment by the Company.
In
addition, “Adjustment
to Reflect MIH’s Ownership”
means
L*PEI and “Gross-up”
means
1-PEI.
(c)
The
amount of any indemnification due hereunder shall be reduced by (i) the amount
of any insurance or other proceeds with respect thereto that are paid to the
Company (or to any Subsidiary thereof) with respect to the applicable Loss,
(ii)
any indemnity, contribution or other similar payment actually made to the
Company (or to any Subsidiary thereof) by any third party with respect to the
applicable Loss.
SECTION
9.04.
Payment
of Losses.
(a) The
Company shall, immediately after having knowledge of any act or fact that could
give rise to an indemnification under this Article 9, send a written notice
to
MIH to that effect. MIH shall then have 30 days to respond to such notice
stating whether it wishes to institute an indemnification claim and, if so,
shall include reasonable details of the nature and basis for such
indemnification claim and the total amount thereof. Upon receipt of such
response notice, the Company shall have 10 Business Days to either pay or
contest the payment of the indemnification claimed. If (A) the Company contests
the payment of the indemnification claimed, or (B) the claim relates to any
legal action or administrative proceeding involving any of the Group Companies,
the Company shall only be required to pay any such indemnification within 10
Business Days counted as of the date on which a final and non-appealable
decision or arbitral award is rendered with respect thereto. All payments to
the
Indemnified Party shall be in immediately available funds and free and clear
of
PIS and/or COFINS, if applicable, and any indemnification payment relating
to a
non-deductible expense of the Indemnified Party (including direct tax and social
contribution) must be grossed up to cover any and all taxes payable by the
Indemnified Party on account of such payment.
23
(b)
Failure by the Company to deliver such notice in terms of Section 9.04(a) above
to MIH shall suspend the running of the survival period set forth in Section
9.02 above until the date on which the Company notifies MIH with respect to
any
act or fact that could give rise to an indemnification and will have to further
indemnify MIH for any additional Losses that such a delay may have caused.
Failure by MIH to deliver such response notice within the 30-day period will
be
considered as a waiver of its right to indemnification with respect to the
specific claim.
SECTION
9.05.
MIH
Indemnification.
MIH and
its shareholders shall defend, indemnify and hold the Company and its
shareholders, officers, directors and employees harmless from and against and
in
respect of any and all Losses incurred or suffered by any of the foregoing
in
connection with, relating to or as a result of (i) any breach of any
representations and warranties given by MIH in Article 5 hereof; and/or (ii)
any
breach by MIH of any covenant or agreement contained in this Agreement. The
procedures set forth in Section 9.04 shall apply equally to any indemnification
obligation of MIH, mutatis
mutandis,
interchanging “Company” for “MIH” where such terms appear in Section
9.04.
SECTION
9.06.
Indemnification
by the Indemnifying Shareholders.
The
Indemnifying Shareholders shall, jointly and severally, indemnify and hold
the
applicable Indemnified Party, harmless from any and all Losses actually and
effectively incurred or suffered by any of the Indemnified Parties, that are
exclusively and directly related or connected to or result from any breach
of
any representations and warranties contained in Articles 3 and 4 hereof,
provided, however, that the Indemnifying Shareholders’ obligation to indemnify
shall only be triggered to the extent that the Company failed to timely pay
an
indemnification that is due by it under this Article 9. The Indemnifying
Shareholders shall not be liable to any Indemnified Party for any Losses arising
from a breach of any of the representations and warranties contained in Articles
3 and 4 above to the extent that the act or fact (including the amount of the
potential Loss) that gave rise to such Loss was disclosed in any Section of
the
Disclosure Schedule attached hereto as an exception to any of the
representations and warranties (it being agreed and understood that the
disclosure of any act of fact as an exception to one of the representations
and
warranties shall be extended to and considered an exception of all of the other
representations and warranties regardless of any repetition of additional
disclosure thereof). The disclosures contained in any Section of the Disclosure
Schedule as well as any qualifications, limitations or exceptions contained
in
the representations and warranties hereunder shall not be disregarded for any
purpose or effect and shall not entail, in any way, an obligation to indemnify
on the part of the Indemnifying Shareholders pursuant to this
Agreement.
24
SECTION
9.07.
Procedure
for Indemnification by the Indemnifying Shareholders.
Notwithstanding anything to the contrary herein contained, the indemnification
obligation of the Indemnifying Shareholders shall only be triggered if the
Company failed to timely pay any indemnity due hereunder. Subject to the
provisions of Sections 9.03, 9.04 and 9.06 above and of Section 9.08 below,
the
Indemnifying Shareholders shall indemnify the Indemnifiable Party within 15
Business Days as of the date on which the Indemnifying Shareholders receive
written notice from such Indemnified Party requesting such indemnification
and
confirming that the Company failed to timely make the payment of an
indemnification that was due by it in accordance with the terms of this
Agreement. The right
to
claim for any indemnification against the Indemnifying Shareholders under the
terms of this Agreement shall remain in full force and effect for the terms
set
forth in Section 9.02 above.
SECTION
9.08.
Limit
on Indemnification by the Indemnifying Shareholders.
Notwithstanding anything to the contrary herein contained, the total
indemnification liability of the Indemnifying Shareholders to the Indemnified
Parties with respect thereto shall be limited to the maximum amount of ten
million United States Dollars (US$10,000,000.00). Such an amount will reflect
the Adjustment to Reflect MIH’s Ownership on the date of payment by the
Indemnifying Shareholders but will not reflect the Gross-up (both as defined
in
Section 9.03 above) not be subject to any gross-up provisions contained
hereinabove and will only reflect the percentage of Equity Interests of the
Company held by MIH on the day of payment by the Indemnifying Shareholders.
MIH
further agrees that the Indemnified Parties (or any of their Affiliates) shall
not have recourse with respect to any indemnification set forth hereunder
against the other members of the Control Group. The indemnification provided
in
this Section 9 shall be the sole and exclusive remedy of any Indemnified Party
(and any of their Affiliates) against the Indemnifying Shareholders with respect
to any breach of any representation and warranty contained in Articles 3 and
4
above in this Agreement.
25
ARTICLE
10
TERMINATION
SECTION
10.01.
Right
to Terminate.
This
Agreement may not be terminated except by the mutual written consent of the
Parties.
SECTION
10.02.
Remedies.
After
the Closing has taken place, the indemnification rights provided for in Article
9 of this Agreement shall be the sole and ultimate remedy available to the
Parties with respect to any breach of the representations and warranties of
the
Parties in this Agreement, and/or any breach of any covenant or other term
in
this Agreement.
ARTICLE
11
DISPUTE
RESOLUTION
SECTION
11.01.
Arbitration.
(a) Any
dispute arising between the Parties in connection with this Agreement, its
interpretation, validity, performance, enforceability, breach or termination,
shall be settled in an amicable way by the Parties by direct negotiations held
in good faith for a term not exceeding 30 (thirty)-calendar days.
(b)
If,
upon expiration of the 30-days period, the Parties have not reached an amicable
settlement, the dispute must be submitted to the decision of an arbitration
panel and shall be finally settled under the rules of the Chamber of Mediation
and Arbitration of São Paulo - Centro das Indústrias do Estado de São Paulo -
CIESP (“CIESP”).
(c)
The
arbitrators shall be in the number of 3 (three). MIH shall appoint 1 (one)
arbitrator and the Company shall appoint 1 (one) arbitrator. The Parties
designated arbitrators shall appoint the third arbitrator, who will be the
chairman of the arbitration panel.
(d)
The
arbitration shall be conducted in accordance with the CIESP rules.
(e)
The
arbitration shall take place in the city of São Paulo and shall be conducted in
the English language.
(f)
To
the fullest extent permitted by law, the Parties waive their right to file
any
remedies against (including, but not limited to) the arbitration award and
any
defenses against its enforcement. The arbitration award shall be final and
binding for the Parties. Specifically for purposes of any injunction procedure,
whether of preventive, provisional or permanent nature, or even for purposes
of
the enforcement of the arbitration award, the Parties hereby elect the
jurisdiction of the Central Courts of the City of São Paulo, State of São Paulo,
with the exclusion of any other jurisdictions, no matter how privileged they
may
be.
26
ARTICLE
12
MISCELLANEOUS
SECTION
12.01.
Binding
Effect.
This
Agreement will be binding and inure to the benefit of the Parties, their
respective legal successors and permitted assignees.
SECTION
12.02.
Assignability.
The
rights and obligations set forth in this Agreement must not be assigned, except
with the written consent of the other Parties. Upon completion of the actions
required to be taken at Closing, MIH shall be entitled to contribute the
Subscription Shares in a capital increase of a wholly-owned Brazilian
subsidiary.
SECTION
12.03.
Severability.
In case
any term or provision set forth in this Agreement is considered invalid, illegal
or not applicable, due to any legal provision or final court decision, all
the
other conditions and provisions hereto will remain in full force and effect.
In
case any term or provision is considered invalid, illegal or inapplicable,
the
Parties will negotiate, in good faith, the amendment of this Agreement, so
as to
effect the original intent of the Parties hereto as closely as
possible.
SECTION
12.04.
Waiver;
Amendment.
(a) No
failure or delay in exercising any right, power or privilege hereunder will
be
considered as a waiver thereof, nor will any single or partial exercise thereof
prevent the future exercise thereof or the exercise of any other right, power
or
privilege
(b)
Any
provision of this Agreement may only be amended or waived if through written
form and signed by all the Parties hereto.
SECTION
12.05.
Notices.
All
notices and communications required or allowed pursuant to this Agreement,
will
be made in written form, in English, and will be sent by registered mail, by
fax
(receipt confirmed) or e-mail (receipt confirmed), to the following
addresses:
If
to
MIH:
MIH
(UBC)
Holdings BV
13-15
HC
Xxxxxxxxxxxxx
0000
Xxxxxxxxx
Xxx
Xxxxxxxxxxx
Fax
No.:
x00 00 0000-000
Attn.:
Messrs. Xxxx Xxxxxx / Xxxxx Xxxxxxx
e-mail:
xxxxxxx@xxxxxxx.xxx
/
xxxxxxxx@xxx.xxx
27
with
copy
to:
Xxxxxx
Filho, Xxxxx Filho, Marrey Jr. e Xxxxxxx Advogados
Al.
Xxxxxxx Xxxxxxx xx Xxxx, 000
Xxx
Xxxxx
- XX - Xxxxxx
Fax:
(00
00) 0000-0000
Attn.:
Xxxxxx Xxxxxxxxxxx
e-mail:
xxxxxx@xxxxxxxxxxx.xxx.xx
if
to the
Company:
Abril
S.A.
Xx.
xxx
Xxxxxx Xxxxxx, 0000, 00 xxxxx
Xxx
Xxxxx
- XX - Xxxxxx
Fax
No.:
(x00 00) 0000-0000
Attn.:
Xx. Xxxxxxx Xxxxxxxxxx Tibyriçá - General Counsel
e-mail:
xxxxxxxxx@xxxxx.xxx.xx
with
copy
to:
Machado,
Meyer, Sendacz e Opice - Advogados
Xxx
xx
Xxxxxxxxxx, 000, 0xx xxxxx
Xxx
Xxxxx
- XX - Xxxxxx
Fax:
(x00
00) 0000-0000
At.:
Xx.
Xxxx Xxxxxxx Xxxxx
e-mail:
xxx@xxxx.xxx.xx
The
Parties are entitled to amend, by means of written communication, pursuant
to
this section 12.05, the addresses above.
SECTION
12.06.
Expenses.
All
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby will be paid by the Party incurring such cost
or expense.
SECTION
12.07.
Headings.
The
headings of the sections of this Agreement are included for convenience purposes
and will not in any way affect the meaning or the interpretation of this
Agreement.
SECTION
12.08.
Conversion
Rate.
Except
for the Subscription Price, all amounts in this Agreement expressed in United
States dollars shall be converted into Reais,
and
vice-versa,
by the
average of the purchase and sale rates for United States dollars published
by
the Central Bank of Brazil on the Business Day prior to the date on which any
payment is due or conversion is to be made in accordance with the terms of
this
Agreement through the SISBACEN data system under rate PTAX 800, option 5 – L –
Taxas
para Contabilidade.
28
SECTION
12.09.
Counterparts;
Third Party Beneficiaries.
This
Agreement may be signed in any number of counterparts, each of which will be
an
original, with the same effect as if the signatures thereto and hereto were
upon
the same instrument. This Agreement will become effective when each Party hereto
will have received a counterpart hereof signed by the other Party hereto. No
provision of this Agreement is intended to confer upon any Person other than
the
Parties hereto any rights or remedies hereunder.
SECTION
12.10.
Entire
Agreement.
This
Agreement (including the Disclosure Schedule and Exhibits hereto) constitute
the
entire agreement between the Parties with respect to the subject matter of
this
Agreement and supersede all prior agreements, understandings and offers, both
oral and written, between the Parties with respect to the subject matter of
this
Agreement.
SECTION
12.11.
Applicable
Law.
This
Agreement is governed and interpreted in accordance with the laws of the
Federative Republic of Brazil.
SECTION
12.12.
Initials. The Parties hereby appoint the nominees below to initial the
Disclosure Schedule on their behalf:
(i)
On
behalf of the Company, Xx. Xxxxxxx Xxxxxx and Xx. Xxxxxxxxx Xxxxxxxxx Xxxxxx:
(a) Xxxxx Xxxxxxxx Xxxxx and/or (b) Xxxxx Xxxxxxxx xx Xxxxxx.
(ii)
On
behalf of MIH: (a) Xxxxxxx Xxxxxxx Góes Xxxxxxxx and/or Xxxx Xxxxxxxxx Xxxxxxx
Xxxxxxxx.
IN
WITNESS WHEREOF, the Parties hereto have caused this Agreement to be duly
executed in 2 copies of equal content, by their respective authorized officers,
as of the day and year first above written, in the presence of the two witnesses
named below.
|
| |
|
| ABRIL
X.X. | | XXXXX
S.A. |
|
/s/
Xxxxxxx Xxxxxx
| |
/s/
Xxxxxxxxx Xxxxxx
|
| XXXXXXX
XXXXXX | | XXXXXXXXX
XXXXXX |
29
|
Signature
page of the Subscription Agreement, dated May 5, 2006, among Abril
S.A.,
MIH (UBC) Holdings BV, Xxxxxxx Xxxxxx and Xxxxxxxxx Xxxxxxxxx
Xxxxxx
|
| | |
|
| |
| MIH
(UBC) HOLDINGS BV | |
|
WITNESSES:
| | |
|
1)
________________________
Name:
ID:
| |
2)
________________________
Name:
ID:
|
30
