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Exhibit 2.7
Final Version
AGREEMENT FOR THE PURCHASE/SALE OF CORPORATE STOCK
In accordance with the following recitals, definitions, and clauses, this
Agreement for the Purchase/Sale of Corporate Stock has been entered into this
5th day of October, 1999, between the following parties: Bidasoa, B.V., a Dutch
corporation, represented by ATC Management B.V., a Dutch corporation,
represented by Xxxxx Xxxxxxxxxxxxx and Xxxx Xxxxx (hereinafter referred to as
the "Seller") and Telefonica Servicios y Contenidos por la Red, S.A., a Spanish
corporation, represented by Xxxx Xxxxx Xxxxx de Buruaga and Xxxx Xxxxxxx Xxxxxxx
(Sole Administrator and CEO) (hereinafter referred to as "Teleline" or the
"Purchaser"). Also appearing here is Terra Networks, S.A., formerly named
Telefonica Interactiva, S.A. (hereinafter referred to as "Terra Networks" or
"TN"), a Spanish corporation, represented by Xxxx Xxxxx Xxxxx de Buruaga.
RECITALS
I. Through their representatives, Teleline, the Seller, and TN hereby declare
that:
A. On September 10, 1999, the Seller and TN, the holding company of the
Purchaser, joined together as founding stockholders to form a
Mexican business corporation called Terra Network, S.A. de C.V.
(hereinafter referred to as "Terra"), for the purpose of
participating jointly in Internet business activities as an
"Internet Service Provider" ("ISP" or Internet access provider) and
as a "Portal" (Internet site with integrated content, communication,
community, and electronic commerce services, including both
"Business-to-Consumer" and "Consumer-to-Consumer" services),
Financial Information Services via Electronic Media (which shall be
defined below) and "Business-to-Business" electronic commerce
services, all of which services focus on residential, "Small Office,
Home Office" ("SOHO"), financial, and corporate markets, through
Informacion Selectiva, S.A. de C.V. (hereinafter referred to as the
"Subsidiary"), a corporation whose shares, except for one, are owned
by Terra Network, S.A. de C.V.
B. On the same date, TN and the Seller held an extraordinary and
ordinary shareholders' meeting for the shareholders of Terra, in
which the shareholders resolved, among other things, to change the
name of the corporation to Terra Networks Mexico, S.A. de C.V. A
capital increase was ordered in the amount of 564,378,000.00 pesos
(five hundred and sixty-four million, three hundred and
seventy-eight thousand pesos), an amount equivalent to
US$60,000,000.00 (sixty million dollars) at the exchange rate of
9.4063 pesos per US$1.00, as published in the Official Gazette of
Mexico,
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and paid the 25% (twenty-five percent) of said increase that was
represented by all of the Series A shares, which had full voting
rights and were issued for the purpose of said increase, and (ii) by
TN, which subscribed and paid the 75% (seventy-five percent) of said
increase that was represented by all of the Series B shares, which
had restricted voting rights and were issued for the purpose of the
increase.
II. Through its legal representatives, the Purchaser hereby declares that:
A. Teleline is a Spanish corporation whose line of business includes
but is not limited to providing Internet access services, Portal
services, Financial Information Services via Electronic Media (which
shall be defined below) and "Business-to-Business" electronic
commerce services, all of which services focus on residential,
"Small Office, Home Office" ("SOHO"), financial, and corporate
markets. Teleline wishes to increase its share in said market within
Mexico for the purpose of combining the aforementioned businesses
with similar ones worldwide in the near future.
B. Teleline is a 100% subsidiary corporation of TN and TN is in the
process of effectuating an initial public offering and sale of its
shares (IPO) and the subsequent listing of said shares on the
Spanish stock exchanges, NASDAQ, and the stock exchanges of other
countries.
C. The Purchaser wishes to complete the legal formalities of this
Agreement for the Purchase/Sale of Corporate Shares (hereinafter
referred to as the "Agreement") in order to acquire all of the
Series A shares of common stock of Terra in accordance with the
terms and conditions specified herein.
III. Through its legal representative, TN hereby declares that:
A. TN is a Spanish corporation whose line of business includes but is
not limited to providing Internet access services, Portal services,
Financial Information Services via Electronic Media (which shall be
defined below) and "Business-to-Business" electronic commerce
services, all of which services focus on residential, "Small Office,
Home Office" ("SOHO"), financial, and corporate markets. Teleline
wishes to increase its share in said market within Mexico for the
purpose of combining the aforementioned businesses with similar ones
worldwide in the near future and effectuating an initial public
offering and sale of its shares (IPO), as well as the subsequent
listing of said shares on the Spanish stock exchanges, NASDAQ, and
the stock exchanges of other countries.
B. TN is the registered owner and holder of all of the Series B
registered preferred shares having limited voting rights and
representing 75% of the capital stock of Terra.
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C. TN wishes to enter into this Agreement in order to join with
Teleline in warranting each and every obligation that Teleline shall
assume under the terms and conditions hereof.
D. TN's representative has sufficient legal powers to bind TN to the
terms and conditions hereof.
IV. Through its legal representative, the Seller hereby declares that:
A. The Seller is a Dutch corporation duly formed in accordance with the
laws of the Netherlands.
B. The Seller is the registered owner and bearer of all of the Series A
registered shares of common stock having full voting rights and
representing 25% of the capital stock of Terra (hereinafter referred
to as the "Shares").
C. As owner of 100% of Terra's Shares having full voting rights, the
Seller has confirmed that (i) on this date, Terra is the owner of
all but one of the shares representing the capital stock of the
Subsidiary; and (ii) on this date, the Subsidiary has all of the
qualities that are necessary in order to efficiently and effectively
carry out the business forming the Corporate Purpose of Terra and
the Subsidiary, which shall be defined below.
D. The Seller wishes to enter into this Agreement with the Purchaser in
order to transfer all of the Shares to the Purchaser once the
conditions specified herein have been met.
V. Through their legal representatives, the parties hereby declare that this
Agreement contains the terms and conditions under which the Seller shall
sell, and the Purchaser shall acquire from the Seller on the Closing Date (as
defined below), 100% (one hundred percent) of the Series A registered shares
of common stock having full voting rights, which as a whole represent 25% of
the capital stock of Terra.
DEFINITIONS
For the purposes of this Agreement, unless otherwise expressly provided herein,
the terms, phrases, and words listed below shall have the meaning indicated:
"Shares" refers to all of the registered shares of Series "A" common stock
issued by Terra, having a par value of 10.00 pesos each (ten pesos) and full
voting rights, represented by Stock Certificates numbers 1-A, 2-A, and 3-A,
issued by Terra. Said shares have been fully subscribed and paid up by the
Seller and represent 25% of the capital stock of Terra.
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"Necessary Assets" shall have the meaning specified in Clause 3.4 of this
Agreement.
"Advance Payment" refers to the amount of US$15,000,000.00 (fifteen million
dollars) in cash that the Purchaser pays to the Seller on the terms and
conditions of Clause 1.2 hereof.
"Spanish Stock Exchanges" refers to the financial markets on which listed
securities are purchased and sold in Spain and are controlled by the Spanish
Securities and Exchange Commission.
"Business-to-business" refers to electronic business transactions that are
carried out between companies over the Internet.
"Business-to-consumer" refers to electronic business transactions that are
carried out between companies and consumers over the Internet.
"Closing" refers to the transaction through which the Seller transfers full
ownership of the Shares, free and clear of any and all liens and encumbrances on
ownership, to the Purchaser, and the transaction through which the Purchaser
pays the Remaining Price (which shall be defined below).
"Purchaser" shall have the meaning indicated in the introductory paragraph
hereof.
"Agreement" shall have the meaning indicated in the introductory paragraph
hereof.
"Necessary Agreements" shall have the meaning specified in Clause 3.5 hereof.
"Consumer-to-consumer" refers to electronic business transactions that are
carried out between consumers over the Internet.
"Share Management Deposit Agreement" refers to the Share Management Deposit
Agreement which, on the terms and conditions of the document marked Exhibit A,
is attached hereto as provided in Clause 2.4.5 hereof.
"Share Escrow Agreement" refers to the Share Escrow Agreement executed by the
Parties on the date of the signing hereof and in accordance with the terms and
conditions of Clause 2.6.
"Holding Company" shall refer to any corporation owning at least ninety-nine
percent (99%) of the shares of another corporation than the one to which this
term refers.
"Income Tax Returns" refers to all statements, reports, calculations,
informational statements, and statements of any nature which the Subsidiary must
submit
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to any governmental agency or office with respect to the revenues, properties,
or operations of the Subsidiary.
"Depository" refers to Banco Argentaria, a Spanish financial institution.
"Business Day" or "Business Days" refers to any day other than Saturday, Sunday,
or a day on which the banks are permitted to close in any of the following
cities: Madrid, Spain; Monterrey, Nuevo Xxxx, Mexico; or Amsterdam, Netherlands.
"Dollar" or "dollars" shall refer to the legal tender of the United States of
America.
"Euro" or "Euros" refers to the legal tender of Spain and the European Economic
Community.
"Financial Statements" shall refer to the financial statements of Terra and the
Subsidiary as referred to in Clause 3.14.1 and the following provisions hereof.
"Closing Date" refers to the date on which the Closing is completed in
accordance with the provisions of Clause Five hereof.
"Subsidiary Corporation" shall refer to any corporation whose shares are owned
in at least ninety-nine percent (99%) of another corporation, which in turn owns
at least ninety-nine percent (99%) of the shares of the corporation to which
this term refers.
"Internet" refers to the network formed by millions of computers or servers that
are interconnected worldwide by means of telephone cables or by other means and
that share compatible digital communication protocols and constitute a
bi-directional and interactive mode of electronic exchange and distribution of
digital materials, such as text and hypertext, sound, video, animation, and
software, as well as electronic mail services, access to information databases,
electronic commerce, consulting services, and communication services in general,
among other applications.
"IPO" or "Initial Public Offering" refers to the initial public offering and
sale, whether primary or secondary, of TN's shares, and their subsequent listing
on any of the securities markets or exchanges of Spain, the United States of
America, or any other country, as well as on NASDAQ.
"Mexico" refers to the United States of Mexico.
"NASDAQ" refers to the National Association of Securities Dealers Automated
Quotations, an information system operated by the National Association of
Securities Dealers of the United States of America, which provides listings of
the prices of securities that are traded outside of established securities
exchanges (over-the-counter) by securities dealers.
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"Corporate purpose of Terra and the Subsidiary" refers to Internet services for
the residential and "Small Office, Home Office" ("SOHO") segments, known as
"ISP's" (Internet service providers), and a "Portal" (Internet site with
integrated content, communication, community, and electronic commerce services,
including both "business-to-consumer" and "consumer-to-consumer" services),
Financial Information Services via Electronic Media (which shall be defined
below) and "business-to-business" electronic commerce services, all of which
services focus on residential, SOHO, financial, and corporate markets in Mexico.
"Parties" refers to the Seller and the Purchaser.
"Peso" or "pesos" refers to the legal tender of Mexico.
"Business Plan" refers to any plan or plans that have been or will be agreed to
by Terra and TN concerning investments and the implementation of the Corporate
Purpose of Terra and the Subsidiary. Said plan or plans shall include but shall
not be limited to (i) the operating aspects of the business, (ii) publicity
campaigns, (iii) the acquisition of the accounts of customers and other
companies, and (iv) the financial requirements of the foregoing.
"Portal" refers to an integral Internet site that functions to provide Internet
users with integrated content, communication, community, and electronic commerce
services in the form of business-to-consumer or consumer-to-consumer services.
"Remaining Price" refers to the amount of US$220,000,000.00 (two hundred and
twenty million dollars).
"Judicial Proceedings" shall have the meaning specified in Clause 3.10 hereof.
"Financial Information Services via Electronic Media" refers to information
services (especially but not limited to news, prices and quotes, analyses and
commentaries, tools, and databases) pertaining to the financial markets in which
such information is gathered directly from the sources that generate them (stock
exchanges, financial intermediaries, news agencies, etc.), which are processed
and distributed via telecommunication networks and computer equipment.
"SOHO" or "Small Office, Home Office" refers to the segment of Internet users
consisting of small offices or offices located in private homes.
"Subsidiary" shall have the meaning indicated in Statement I.A hereof.
"Direct Subsidiary" shall refer to any corporation whose shares are owned in at
least ninety-nine percent (99%) by another corporation than the one to which
this term refers.
"LIBOR Rate" refers to a simple annual interest rate equivalent to (i) the
annual rate appearing on page 3750 of Telerate's screen (or on any page
substituted therefor), as the compound rate offered for inter-bank deposits in
London for the period of
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time closest to the period for which the rate is to be applied as shown below
the heading "USD" at 11:00 AM (London time), two (2) Business Days before the
date on which the New Remaining Price is to be paid; or (ii) if the rate
specified in section (i) cannot be determined, then the annual rate equivalent
to the arithmetic mean of the rates shown on the page called the "LIBO" page on
the Reuters Money Rates Services Monitor (or any page substituted therefor) at
approximately 11:00 AM (London time) two (2) Business Days before the date on
which the New Remaining Price is to be paid.
"Telefonica, S.A." refers to Telefonica, S.A., a Spanish corporation, any
subsidiary corporation or other subsidiary thereof, or any corporation held by
Telefonica, S.A., the holder of shares representing the capital stock of TN.
"Terra" refers to Terra Networks Mexico, S.A. de C.V., a Mexican corporation
formed in accordance with Notarial Document No. 6,232, which was executed before
Xxxxxxx Xxxxxxxx Xxxxx, Notary Public No. 123 for the City of Monterrey, Nuevo
Xxxx, on September 10, 1999. The first certified copy of that notarial document
was duly recorded in the Public Registry of Real Estate and Commerce of the City
of Monterrey, Nuevo Xxxx, under No. 2468, Page (no number), Vol. 431, Book No.
3, Second Ledger, Documents of Commercial Associations, Commercial Section.
"TN" and "Terra Networks" refers to Terra Networks S.A., a Spanish corporation
whose line of business includes but is not limited to providing Internet access
services (ISP), Portal services, Financial Information Services via Electronic
Media (which shall be defined below) and "Business-to-Business" electronic
commerce services, all of which focus on the residential, SOHO, financial, and
corporate markets. This corporation seeks to effectuate an initial public
offering and sale of its shares (IPO) and the subsequent listing of said shares
on the Spanish Stock Exchanges, NASDAQ, or the stock exchanges of other
countries.
"Dollar/Euro Exchange Rate" refers to the rate of exchange between the Dollar
and the Euro, as published by the Banco de Espana [Bank of Spain] for any
particular Business Day.
"Seller" shall have the meaning specified in the introductory paragraph hereof.
CLAUSES
By virtue of the agreements and covenants set forth herein, the parties have
agreed to the following terms and conditions:
FIRST CLAUSE: Purchase/Sale of Shares
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1.1 Sale of the Shares. Subject to the conditions precedent provided for in
Clauses Seven and Eight hereof and the condition that the IPO occur
during 1999, the Seller agrees to sell and the Purchaser agrees to buy
100% (one hundred percent) of the Shares, free and clear of any and all
liens, encumbrances, or other burdens, along with each and every
corporate and financial right inherent in said Shares.
1.2 Purchase Price of the Shares. The Purchaser agrees to pay the amount of
US$235,000,000.00 (two hundred and thirty-five million dollars) in
consideration of the Shares to be transferred to the Purchaser on the
terms and conditions stated in the foregoing paragraph. The Purchaser
agrees to pay said consideration by means of (i) delivery of the Advance
Payment by the Purchaser, or for the Purchaser's account, to the Seller,
at the same time as the signing of this Agreement, and by signing this
Agreement, the Seller declares to have received to the Seller's complete
satisfaction; and (ii) the delivery of the Remaining Price to the Seller
on the terms and conditions hereof and at the same time as the transfer
of the ownership of the Shares to the Purchaser, said Shares being free
and clear of any and all liens, encumbrances, or other restriction on
ownership, and once the conditions precedent to which the purchase/sale
of the Shares are subject have been met.
SECOND CLAUSE: Form of Payment of the Purchase Price and Seller's Obligations
In consideration of the transfer of the ownership of the Shares on the terms and
conditions hereof, besides having made the Advance Payment to the Seller's
complete satisfaction, the Purchaser hereby agrees to pay the Seller the
Remaining Price in the following manner:
2.1 Term for Effectuating the Payment. The Purchaser agrees to pay the
Remaining Price, on the terms and conditions hereof, on the Closing Date
and at the same time that the ownership of the Shares is transferred to
the Purchaser as provided for in Clause Five hereof.
2.2 Remaining Price to be Paid. The Purchaser agrees to pay the Remaining
Price on the Closing Date by transferring to the Seller immediately
available funds in Dollars. Said payment shall be made to the account
designated by the Seller in writing for this purpose.
2.3 Shares in Escrow as Warranty of Performance. In order to warrant the
Seller's performance of (i) the Seller's obligation to transfer
ownership of the Shares to the Purchaser upon the Closing in accordance
with the terms and conditions hereof, and (ii) the Seller's obligation
to reimburse the Advance Payment to the Purchaser in the event provided
for in the last paragraph of Clause Seven hereof, the Parties are
executing the Share Escrow Agreement at the same time that they execute
this Agreement. By means of the Share Escrow Agreement, stock
certificate
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no. 2-A is being delivered to the Purchaser in escrow. Said stock
certificate represents fifty percent (50%) of the Series A shares issued
by Terra for the purpose of the capital increase described in Recital I
B hereof and was duly endorsed as a warranty to the Purchaser or TN.
Thus, said shares are in escrow for the purpose of warranting the
obligations specified herein until the Closing Date, on which the
ownership of said shares shall be delivered to the Purchaser. The escrow
arrangement agreed to herein shall in no way limit any other right of
the Purchaser to demand the Seller's performance of Seller's obligations
in accordance herewith and subject to the applicable laws.
2.4 Delay in Closing. If the Closing is not effectuated during the period
specified in Clause 5.1 hereof for any reason attributable to the
Purchaser, then the Purchaser shall pay the Seller default interest
calculated on the basis of the Remaining Price and determined by
applying the LIBOR Rate plus six (6) points during the default period.
If the Closing is not effectuated during the period specified in Clause
5.1 for any reason attributable to the Seller, then the Seller shall
reimburse the Purchaser for any and all damages the Purchaser incurs as
a result of said default.
THIRD CLAUSE: Sellers' Representations and Warranties
On this date, the Seller hereby represents and warrants the following:
3.1 Ownership of the Shares. The Seller is and until the Closing Date shall
be the sole lawful owner of the Shares, which the Seller has subscribed
and fully paid up and are free of any and all liens, encumbrances, or
restrictions, except the restrictions imposed on the terms and
conditions hereof. Furthermore, at the moment in which the Shares are
delivered in the manner provided for herein, the Purchaser shall acquire
the full and irrevocable ownership of said Shares, free and clear of any
and all liens, encumbrances, or restrictions.
3.2 Formation. Terra and the Subsidiary are duly formed corporations
existing validly and in compliance with the laws of the Republic of
Mexico and the state and county in which they are domiciled.
3.3 Powers, Authorizations, and Licenses. The Subsidiary has all of the
powers, authorizations, and licenses that are necessary in order to
carry out the business forming the Corporate Purpose of Terra and the
Subsidiary.
3.4 Necessary Assets to Carry out the Business Forming the Corporate Purpose
of Terra and the Subsidiary. The Subsidiary has full ownership; free and
clear of any liens, of all of the tangible and intangible assets
specified in List 3.4, which is attached hereto, as well as all other
tangible and intangible assets that are necessary in order to carry out
the business forming the Corporate Purpose of Terra and the Subsidiary
(hereinafter referred to as the "Necessary Assets"). The Subsidiary has
said ownership as of the date hereof.
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3.5 Necessary Agreements to Carry out the Corporate Purpose of Terra and the
Subsidiary. The Subsidiary has duly completed the legal formalities
pertaining to the execution of all of the agreements, contracts, and
other proceedings described in List 3.5, which is attached hereto, as
well as all other agreements, contracts, and other proceedings that are
necessary for the purpose of carrying out the Corporate Purpose of Terra
and the Subsidiary (hereinafter referred to as the "Necessary
Agreements"). All such agreements are in full force and effect as of the
date of the signing hereof, and the Subsidiary has not breached or
defaulted on any of them.
3.6 Corporate Power. The Subsidiary has the powers and authorities that are
necessary in order to execute and perform each and every one of the
Necessary Agreements, as well as to carry out the transactions provided
for thereby. The Subsidiary's execution, completion of the legal
formalities, and performance of each and every one of the Necessary
Agreements have been duly authorized by all of the corporate resolutions
that may be required.
3.7 Capital Stock. The shares of Terra and the Subsidiary that have been
issued and are outstanding are solely those specified in List 3.7
hereof. Moreover, said shares have been issued effectively, are fully
subscribed and paid up, and are free of any and all liens. Except for
the rights created in accordance herewith, there are no pending options,
warranties, other rights (including rights of conversion or first
refusal), or any agreements for the purchase or acquisition of the
Shares.
3.8 Registered Holders of the Shares. As evidenced in the Shareholders'
Register of Terra on the date hereof and on the Closing Date, all of
Terra's shares are the property of and are registered in the name of the
Purchaser and The Seller in the amounts indicated beside the name of
each of these parties in List 3.8 hereof.
3.9 Subsidiaries. Terra is the owner of all but one of the shares
representing the capital stock of the Subsidiary. Said shares are fully
subscribed and paid up and are free and clear of any and all liens and
encumbrances. Except for the corporations identified in List 3.9 hereof,
the Subsidiary has no other subsidiaries, does not own shares in any
other corporation, and is not a partner or associate of any professional
partnership, charitable or non-profit organization, or joint venture
entity.
3.10 Ongoing Litigation. With the exception of those cases indicated in List
3.10, no actions, lawsuits, or governmental, judicial,
employment-related, tax, administrative, or arbitration proceedings
("Judicial Proceedings") are in progress or have been threatened against
or regarding Terra or the Subsidiary.
3.11 Lists Concerning the Business Forming the Corporate Purpose of Terra and
the Subsidiary. On the date hereof, the Seller has delivered or made
available to the Purchaser (a) complete, correct, and detailed
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lists in a manner and format that the Purchaser finds reasonably
acceptable, describing--with respect to the Business Forming the
Corporate Purpose of Terra and the Subsidiary--the property, assets, and
liabilities of Terra and the Subsidiary, as well as each and every one
of the items in the categories mentioned below, and (b) true and
complete copies of the documents and other materials referred to in said
lists:
3.11.1 List 3.11.1 Agreements, contracts, commitments, and offers pending as of
this date (other than those specified in List 3.11.4), including but not
limited to standing purchase orders with suppliers, as well as pending
purchase orders; leases (other than those specified in List 3.11.8),
sureties for leases; licenses, franchises, distribution contracts,
commercial agency contracts, service contracts, agency contracts, or any
other contract; and furthermore including, with respect to each and
every one of the items contained in each category mentioned above, a
specification as to whether the consent of any third party is required
in order to carry out the transactions envisioned hereby;
3.11.2 List 3.11.2 List of the tangible assets that are the property of Terra
and the Subsidiary (other than those specified in List 3.11.8),
including equipment, tools, furnishings and fittings, furniture,
improvements, vehicles, as well as buildings and accessories, with a
description of the location of said assets;
3.11.3 List 3.11.3 A summary of (a) any and all insurance policies in force
(other than those to be specified in List 3.11.4) and without limiting
the scope thereof, any and all insurance policies that cover the civil
liability of the Subsidiary, its personnel, properties, buildings,
machinery, furniture, accessories, and operations, indicating for each
policy the name of the insurer, type of coverage, term of the policy,
liability limits, and annual premium, and (b) any and all claims pending
for Terra and the Subsidiary concerning any damages or losses with
respect to goods or revenues of which notice has been given to the
insurers.
3.11.4 List 3.11.4 Regarding the Subsidiary's employees:
A. The name, current annual compensation (including bonuses and
commissions), position, current base-salary wage scale, bonuses
received, separation payments received, and leave pay for each and
every one of the Subsidiary's current employees; organizational
charts pertaining to the Subsidiary; collective bargaining
agreements, or contracts involving any other employment
relationship, whether oral or written; service contracts, management
contracts, consulting contracts, as well as confidentiality
agreements or other agreements that protect the Subsidiary's
systems, procedures, or data, whether oral or
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written; any and all employee manuals; and any and all reports
and/or plans that have been developed or adopted in accordance with
the applicable labor laws.
B. Any employee benefit plan, profit-sharing plan, stock acquisition
plan, stock option plan, benefit plan, bonus plan, retirement plan,
and any other agreement, plan, or arrangement for deferred
compensation, whether sponsored or maintained by the Subsidiary or
to which the Subsidiary makes contributions;
C. The value of the Subsidiary's retirement liabilities that are not
covered, including health protection, and that are derived from any
plan, fund, or arrangement pertaining to those indicated in
subsections (A), (B), or (C) of this Clause; and
D. Copies of all collective bargaining agreements to which the
Subsidiary is a party.
3.11.5 List 3.11.5 Reimbursable deposits, prepaid expenses, and deferred
charges pertaining to the Subsidiary.
3.11.6 List 3.11.6 Any and all loans or advance payments granted by the
Subsidiary to any person;
3.11.7 List 3.11.7 Liens, encumbrances, restrictions, claims, and warranties
regarding the business, assets, and property of the Subsidiary.
3.11.8 List 3.11.8 Each and every piece of real estate leased by the
Subsidiary.
3.11.9 List 3.11.9 Trademark registrations, applications, and notices of
violations thereof, service xxxx registrations (the list shall include
but shall not be limited to an indication of the period of use of each
trademark and service xxxx, identification of the product or products on
which each of the trademarks and service marks are used, as well as the
registration numbers, recording and renewal dates, and dates of
declaration of use), patents and patent applications, copyrights and
copyright applications (including information on the expiration dates of
all of the above, if applicable), currently constituting the property,
in whole or in part, of the Subsidiary; as well as all trademark
licenses, service xxxx licenses, copyright licenses, royalty agreements,
patent licenses, assignments, conferrals, and agreements with employees
or third parties related in whole or in part to the disclosure,
assignment, registration, or granting of trademarks, service marks,
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copyrights, inventions, discoveries, improvements, processes, formulas,
trade secrets, or other information pertaining to the Subsidiary.
3.11.10 List 3.11.10 Any and all ongoing lawsuits, governmental or regulatory
proceedings, or labor disputes involve or might involve the Subsidiary's
board members or officers.
3.11.11 List 3.11.11 All federal, state, and local licenses and permits, as well
as those from foreign governments, that are necessary in order to carry
out the business forming the Subsidiary's Corporate Purpose or for the
purposes of using and occupying the real estate owned by the Subsidiary
or the properties leased thereby ("Permits"); all authorizations,
orders, federal, state, and local, foreign, and court decrees that
relate to the Subsidiary, pursuant to which the Subsidiary operates or
is bound; all inspection reports concerning the Subsidiary and its
properties as of this date, in accordance with all applicable laws and
regulations, whether federal, state, or local, regarding health and
safety; as well as copies of everything mentioned above and the
corresponding applications;
3.11.12 List 3.11.12 Any and all loans or credits extended to the Subsidiary by
any national or foreign lending institution or any other third party,
along with a specification as to whether the consent of any third party
is required in order to carry out the transactions envisioned hereby;
3.12 There are no liens. Except as indicated in List 3.12, the Subsidiary is
the lawful owner of all of its properties (other than Real Estate),
assets, and other entitlements that do not constitute real estate, free
and clear of any liens and encumbrances.
3.13 Real Estate. Except as indicated in List 3.13, all buildings,
constructions, improvements, and accessories that are used in order to
carry out the business forming the Subsidiary's Corporate Purpose and
are owned or leased by the Subsidiary are in sufficiently good order and
repair to allow the business forming said Corporate Purpose to continue
to be carried out in a manner consistent with past practices. Moreover,
normal wear and tear excepted, there are no defects in said buildings,
constructions, improvements, and accessories that would hinder their
daily use by the Purchaser or subject the Purchaser to any liability
under the applicable laws.
3.14 Financial Statements.
3.14.1 The Seller has provided the Purchaser with a copy of the most recent
audited balance sheets, income statements, shareholders' equity
statements and cash flow statements of the Subsidiary (collectively
referred to as the "Financial Statements"), on a consolidated basis with
respect to each of said Financial Statements. Unless otherwise indicated
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therein, said financial statements were complete and correct, were
developed in accordance with the generally accepted accounting
principles in Mexico, were used consistently during the periods
indicated, and fairly reflect the financial situation of the Subsidiary
on said dates;
3.14.2 There are no liabilities, debts, obligations, or claims of any kind
against the Subsidiary, whether absolute or contingent, with the
exception of (i) to the extent indicated or for which there is a reserve
in the Subsidiary's balance sheet on June 30, 1999; (ii) any
liabilities, debts, obligations, or claims specifically described and
identified as an exception to this section in any of the Lists delivered
to the Purchaser in accordance herewith; (iii) any liabilities, debts,
obligations, or claims that have been incurred as of June 30, 1999 in
the Subsidiary 's normal course of business and that are consistent with
past practices; or (iv) pending purchase or sale orders or contracts for
the delivery of services in the normal course of business, provided that
Terra or Subsidiary is not in breach of any of them.
3.14.3 The Seller has provided the Purchaser with a copy of Terra's balance
sheet as of the date of the execution hereof. Said balance sheet was
duly certified by the Subsidiary's Manager of Finance and accurately
reflects Terra's financial status immediately prior to the execution
hereof.
3.15 Tax Issues. For purposes of this Agreement, "Tax or Taxes" shall refer
to any income, gross revenue, profit, franchise, license, transfer,
sales, use, ad valorem, customs, payroll, withholding, employment,
occupation, property (real estate or chattels), use or value-added tax,
as well as other taxes, rights, fees, contributions, or withholdings,
including but not limited to Social Security taxes, Retirement Savings
System, and Infonavit [National Institute for Workers' Housing]
(including interest, penalties, and additions to such items).
3.16 Except as indicated in List 3.16:
3.16.1 All Income Tax Returns have been submitted timely;
3.16.2 All Taxes indicated on the Income Tax Returns have been paid
timely;
3.16.3 The Income Tax Returns accurately and completely reflect the facts
regarding the revenues, properties, operations, and status of any
entity that must appear thereon;
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3.16.4 The charges, accumulations, and reserves for Taxes owed or accrued
but not yet payable with respect to the Subsidiary's revenues,
properties, or operations as indicated in the Subsidiary's records
are sufficient to cover said Taxes;
3.16.5 Concerning Taxes on the Subsidiary 's revenues, properties, or
operations, there are no actions, lawsuits, proceedings, audits, or
claims in progress; nor are there, to the best of the Seller's
knowledge and belief, any investigations in progress concerning
such Taxes.
3.16.6 There are no agreements to extend the period for imposing the Taxes
affecting the Subsidiary's revenues, properties, or operations.
3.16.7 All Income Tax Returns corresponding to the fiscal years ending on
or before December 31, 1998 have been audited for tax purposes or
are Statements with respect to which the statute of limitations has
expired once the applicable extensions and waivers have been
rendered effective;
3.16.8 All Taxes pertaining to the Subsidiary have been covered or paid,
and no situation has arisen as a result of the audits for which the
application of similar principles would lead one to consider the
possibility of any tax claim for any year that has not been
audited.
3.17 Employment-related Matters. Each of the following facts is true for each
of the plans, funds, or arrangements that are indicated or are to be
indicated in List 3.11.4:
3.17.1 The Financial Statements reflect all employment-related liabilities
derived from each of said plans, funds, or schemes in accordance
with the applicable laws and regulations;
3.17.2 All plans and schemes have been accorded a favorable resolution
under the applicable laws;
3.17.3 No actions, lawsuits, or claims against the Subsidiary (other than
normal benefit-related claims that arise in the normal course of
business) are ongoing, nor, to the best of the Seller's knowledge
and belief, have any been threatened. Moreover, the Seller has no
knowledge of any facts that might give rise to such actions,
lawsuits, or claims (other than normal benefit-related claims that
arise in the normal course of business).
3.17.4 The execution and performance of this Agreement by the Seller, and
the completion of the transactions provided for hereunder, shall
not give rise to any obligations or liabilities (concerning
benefits
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received or otherwise) under such plans, funds, or schemes,
vis-a-vis the employees or former employees of the Subsidiary;
3.17.5 The Subsidiary has complied with all applicable laws and collective
bargaining agreements concerning employment-related matters and
practices, terms and conditions of employment, salaries, hours of
work, as well as workplace safety and health. The Subsidiary does
not engage in any improper employment practices within the meaning
of the Federal Labor Act in its amended form. Moreover, there are
no actions, lawsuits, or legal, administrative, arbitration, or
other proceedings in progress; nor, to the best of the Seller's
knowledge and belief, have any been threatened. To the best of the
Seller's knowledge and belief, no investigations are ongoing or
have been threatened against the Subsidiary concerning the
foregoing, nor, to the best of the Seller's knowledge and belief,
do any grounds exist for any action, lawsuit, or legal,
administrative, arbitration, or other proceeding or governmental
investigation;
3.17.6 Currently, there are no workers' strikes, labor disputes, go-slows,
or work stoppages, nor, to the best of the Sellers' knowledge and
belief, have any been threatened against the Subsidiary;
3.17.7 Currently, no grievance or arbitration proceedings derived from or
in accordance with any collective bargaining agreements exist
against the Subsidiary, nor are there any grounds for any such
claims;
3.17.8 The Subsidiary has not experienced any organized work stoppages in
the past three years.
3.18 Intellectual Property. Except as indicated in List 3.18:
3.18.1 The patents, trademarks, service marks, copyrights, licenses,
business names, assignments, conferrals, agreements, and contracts
indicated in List 3.11.9 are valid;
3.18.2 Said trademark registrations, service xxxx registrations, copyright
registrations, and patents have been duly issued and have not been
canceled, abandoned, or terminated in any other manner;
3.18.3 Said trademark applications, service xxxx applications, copyrights,
and patent applications have been duly submitted. The Subsidiary is
not in breach of any licenses or agreements; and
3.18.4 Said licenses and agreements are binding subject to the terms
thereof. Except as indicated in List 3.11.9, none of the processes
that are currently used by the Subsidiary, nor any of the
properties, or products
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contracted for or sold by the Subsidiary, nor any of the
trademarks, business slogans, labels, or other designations or
copyrights used by the Subsidiary violate the rights of any other
person or entity. Moreover, the Subsidiary has not received notice
to the contrary.
3.19 Accounts Receivable. The accounts receivable that appear on the
Subsidiary's consolidated balance sheet on June 30, 1999, as well as all
accounts receivable created as of said date, represent and shall continue
to represent valid liabilities in favor of the Subsidiary, to the extent
established in List 3.19 hereof.
3.20 Inventory. Except as indicated in List 3.20, the Subsidiary's inventories
of work materials or otherwise are in good condition and conform to the
applicable specifications and warranties in every way.
3.21 Equipment. The Subsidiary's equipment and other tangible physical assets
are in good functioning order. Normal wear and tear excepted, they are in
use and are useful to the Subsidiary's business at its current activity
level. Moreover, they are in sufficiently good functioning condition to
carry out the business forming the Subsidiary's Corporate Purpose as the
Subsidiary is carrying it out currently.
3.22 No Significant Changes. Except as indicated in List 3.22, between June 30,
1999 and the execution date hereof, there has not been any significant
adverse change in the Subsidiary's financial situation, assets,
liabilities (fixed, contingent, or otherwise), operating results,
business, or business prospects that would cause the Subsidiary to assume
different liabilities or liabilities other than those the Subsidiary has
vis-a-vis the Purchaser or Telefonica, S.A.
3.23 Absence of Changes or Events. Except as indicated in List 3.23, between
June 30, 1999 and the execution date hereof, the Subsidiary has complied
with its corporate purpose exclusively in the normal course of business.
Furthermore, the Subsidiary has not:
3.23.1 Incurred any absolute, accrued, contingent, or other obligations
or liabilities, whether owing now or in the future, for a total
amount exceeding US$1,000,000.00 (one million dollars), except for
liabilities or obligations that have been incurred in the normal
course of business and are consistent with the Subsidiary's usual
practices, unless otherwise agreed upon by the Parties in a faxed
message confirmed in writing.
3.23.2 Mortgaged or pledged the Subsidiary's property, businesses, or
assets, whether tangible or intangible, or subjected them to any
liens, charges, guarantees, or other encumbrances or restrictions;
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3.23.3 Sold, transferred, or leased its assets to any third parties or
otherwise alienated any of the Subsidiary's Necessary Assets;
3.23.4 Suffered any damages, destruction, or losses (whether covered by
insurance or not) that have adversely affected the Subsidiary's
business or prospects;
3.23.5 Effected any capital expenditures or capital additions or
improvements, or committed to effecting any of the foregoing, in
an amount exceeding US $1,000,000.00 (one million dollars), unless
otherwise agreed upon by the Parties in a faxed message confirmed
in writing.
3.23.6 Suffered or been threatened with the possibility of being
adversely affected by any strikes, work stoppages, go-slows, or
lockouts;
3.23.7 Initiated any lawsuits, actions, or proceedings before any courts
or governmental offices with respect to its property, nor has the
Subsidiary waived or given up any rights that are valuable to the
Subsidiary, with the exception of the lawsuits initiated and the
waivers and commitments granted in the normal course of business
and in a manner consistent with its usual practices;
3.23.8 Declared or paid any dividends or made any capital or capital
surplus payments, nor has the Subsidiary redeemed, purchased, or
acquired any shares of its own capital stock, either directly or
indirectly;
3.23.9 Increased the compensation of the Subsidiary's officers,
employees, or agents, either directly or indirectly, through
bonuses, pension plans, distributions of dividends, deferred
compensation, savings, insurance, retirement, or any other
employee compensation plan, aside from reasonable amounts in the
normal course of business.
3.23.10 Hired any employee, officer, agent, or clerk from Terra.
3.24 No Breach. Except as indicated in List 3.24, all of the Necessary
Agreements were duly executed in the normal course of business. None of
the following exist under any contract:
3.24.1 Material breach by the Subsidiary, or, to the best of the Seller's
knowledge and belief, by any other party thereto; or
3.24.2 Any event which, after notice thereof has been provided or the
time has lapsed or both, would constitute a breach by the
Subsidiary, or, to the best of the Seller's knowledge and belief,
by any other party, which
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would result in a right of acceleration or would result in the
loss of the rights against the Subsidiary;
3.25 Suspension of Business. The Subsidiary has not been subjected to any
suspension of business or work.
3.26 Consent. Except as indicated in Clause 5.6 and List 3.26, no consent,
approval, or authorization from any governmental or regulatory agency, nor
any statement, registration, or record with any such agency is required
for purposes of executing , delivering, and performing this Agreement or
carrying out the transactions provided for herein. Except as indicated in
List 3.26, no consent is required from any person in order to carry out
the transactions provided for herein, including but not limited to consent
from any parties involved in loans, contracts, leases, or any other
agreements.
3.27 Specific Interests. Except as indicated in List 3.27, neither the members
of the Board nor the officers or managers of the Subsidiary have any
rights to the Subsidiary's chattel or real estate or other tangible or
intangible property, including but not limited to the Subsidiary's
inventions, patents, trademarks, or business slogans.
3.28 Compliance with Laws. Except as indicated in List 3.28, the Subsidiary has
all of the Permits that are necessary in order to carry out its business
as it carries out said business currently or in the manner planned for the
future. All of said Permits are in full force and are producing effects.
The Subsidiary is in compliance with the respective terms and conditions
of such Permits. The Subsidiary has complied with all applicable laws,
statutes, rules, regulations, judgments, orders, bills, exemptions, and
decrees, whether state or local, from the governmental, judicial, or
administrative authorities having jurisdiction over the Subsidiary, its
property, assets or business (referred to collectively as "Legal
Requirements"). The transactions provided for herein shall not infringe on
the Legal Requirements or require the consent, approval, authorization
order of the states or the governmental or public authorities, except for
any notice, consent, or approval that has already been obtained or shall
be obtained before the Closing Date and is indicated in List 3.28.
3.29 Payment of Dividends. From June 30, 1999 until the date hereof, there has
not been nor shall there be any announcement or payment of dividends or
distribution of any kind to the Subsidiary's shareholders.
3.30 Articles of Incorporation, Bylaws, Books, and Registers of the Subsidiary
and Terra. The Purchaser has been provided with true and complete copies
of the Articles of Incorporation, along with proof of the necessary
registrations, and the Bylaws of the Subsidiary and Terra. The
Subsidiary's books and registers have been kept in accordance with the
applicable laws.
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3.31 Declarations and Warranties. The declarations and warranties made by the
Seller in this Agreement, including the attached Lists and the declarations made
in the documents (including but not limited to financial statements,
certifications, or other writings that the Seller or Terra has delivered or will
deliver to the Purchaser or any of its representatives in accordance with the
provisions hereof or in connection with the transactions provided for hereby) do
not and shall not include any false declarations, nor do they or shall they omit
any important and necessary facts in light of the circumstances under which they
were accomplished, so that the declarations contained herein or in said
documents are not deceptive, and they shall continue to be true until the date
hereof.
FOURTH CLAUSE: Declarations and Warranties of the Purchaser and TN
The Purchaser and TN hereby declare and warrant that on the date hereof and on
the Closing Date:
4.1 Formation. The Purchaser is a duly formed corporation existing validly and
in compliance with the laws of Spain.
4.2 Corporate Power. The Purchaser has the corporate powers and authorities
that are necessary in order to execute and perform each and every one of
the agreements to which the Purchaser is a party, as well as to carry out
the transactions provided for by this Agreement and those mentioned above
in this paragraph. The Purchaser's signing, delivery, and performance of
each and every one of the agreements have been duly authorized by all of
the corporate resolutions that were required on the part of the Purchaser.
Each and every one of the agreements has been duly signed and delivered by
the Purchaser and constitutes a valid and legally binding obligation on
the Purchaser that is enforceable in accordance with its terms, unless
said enforceability were to be limited by bankruptcy, insolvency,
restructuring, or similar rights that would generally affect the rights of
creditors, or by principles of equity in general.
4.3 No Restrictions. The Purchaser is not a party to any significant agreement
or any judgment, award, order, xxxx, exemption, or decree, nor is the
Purchaser subject to or bound by any of the foregoing, from any court or
governmental or arbitration body, which might come into conflict with or
be violated by the Purchaser's signing, delivery, or performance of the
agreements, or which might hinder the fulfillment thereof. If applicable,
any consent required from any third party shall be obtained before the
Closing Date.
4.4 Best Efforts for IPO. TN has made its best efforts to carry out the IPO.
FIFTH CLAUSE: Closing Date
For purposes of this Agreement, the Closing Date shall be understood to be the
Business Day on which the Closing is carried out as set forth below:
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5.1 Closing Date. If the Purchaser is of the opinion that TN shall reasonably
carry out the IPO before December 31, 1999, and provided that the other
conditions precedent to which the obligations of the Purchaser and the
Seller are subject in accordance with Clauses Seven and Eight hereof,
respectively, have also been met before December 31, 1999, then the
Purchaser shall notify the Seller of the tentative date on which the IPO
is to be carried out so that the Closing is carried out at the same time
as the IPO, provided that the IPO is effectively carried out before
December 31, 1999.
5.2 Termination of the Agreement and the Purchase/Sale. If the IPO is canceled
for any reason and the Closing is not carried out on the terms and
conditions hereof, then regardless of whether the Purchaser receives
notice, the Agreement and the purchase/sale shall be terminated
automatically. Said termination shall not result in any liability for the
parties.
If the Closing fails to occur as provided for in the prior paragraph, then the
parties shall be relieved of their obligations and shall return any and all
benefits that they have received from one another in connection with the
execution hereof, except for the Advance Payment, which the Seller shall keep.
5.3 Place of Closing. The Closing shall take place at the Purchaser's offices
in Madrid, Spain, or at any other location agreed upon by the Purchaser
and the Seller in writing.
5.4 Documents to be Delivered by the Seller. On the Closing Date, the Seller
shall deliver to the Purchaser:
5.4.1 The certificates representing the Shares, which shall be duly
endorsed to the Purchaser's name, provided that the Purchaser pays
any Remaining Price at the same time;
5.4.2 A certified copy of the corresponding entry in the Shareholders'
Register of Terra, which shall reflect the ownership and
registration of the Shares in the Purchaser's name;
5.4.3 Any and all other documents that must be delivered to the Purchaser
in accordance with the terms and conditions hereof; and
5.4.4 The advisory opinion of the Seller's legal consultants on the terms
of Exhibit B, which, having been signed by the parties, is now
attached hereto.
5.5 Documents to be Delivered by the Purchaser. On the Closing Date, the
Purchaser shall deliver to the Seller or shall see to it that the Seller
receives:
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5.5.1 Proof of payment of any part of the Remaining Price, which, if
applicable, shall be paid in cash on the terms and conditions
specified in Clause Two hereof.
5.5.2 Any and all other documents that must be delivered by the Purchaser
on or before the Closing Date in accordance with the terms and
conditions hereof; and
5.5.3 The advisory opinion of the Purchaser's legal consultants on the
terms of Exhibit C, which, having been signed by the parties, is now
attached hereto.
5.6 Mexican Federal Antitrust Commission. On the Closing Date, the application
addressed to the Mexican Federal Antitrust Commission shall be submitted
to that Commission. Said application shall request that the Commission not
object to the purchase/sale of the shares forming the subject of this
Agreement. The Seller and the Purchaser shall cooperate in making said
application and dealing with the formalities thereof. Both parties hereby
agree to make their best efforts for this purpose.
SIXTH CLAUSE - Conducting Business before the Closing Date
The Seller, TN, and the Buyer agree that, between the date of this document and
the Closing Date, they will make their best efforts and fully cooperate to
jointly ensure that the Business which is the [corporate] Purpose of Terra and
the Subsidiary continues in operation, thrives, and is carried out in the best
possible manner. The Buyer agrees to ensure that TN complies with the above
obligation as if it were an obligation of TN itself, and to ensure that TN
and/or Telefonica, X.X. xxxxx the loans required by Terra and the Subsidiary to
fund the Business Plan agreed to by TN and Terra; the Buyer declares that TN is
aware of and has internally approved the actions and loans in question.
SEVENTH CLAUSE. - Conditions that Suspend the Buyer's Obligations
The Buyer shall not be required to carry out the transactions provided for by
this Contract if the following conditions are not satisfied:
7.1 All steps taken in connection with the transactions provided for
herein, and all instruments and documents required in connection
with or incidental to them, are executed, in manner and substance,
[in a way that is] satisfactory to the Buyer.
7.2 Except for the changes that are provided for or permitted in some
other way by this Contract, it will have been determined on the
Closing date that the Seller's declarations and guarantees contained
in this Contract or in any certification or document provided to the
Buyer pursuant to it, were essentially true on the date this
Contract was signed, and the Seller and an authorized official of
Terra and of the Subsidiary have signed and provided certifications
to that effect.
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7.3 The Seller has executed and complied with all the agreements and
conditions that this contract requires were executed or complied
with by it [sic] not later than the Closing date, and an authorized
official of the Seller has signed and turned over a certification to
that effect.
7.4 The Buyer has been provided an opinion, dated on the date this
document is signed, by the Seller's legal advisors, substantially in
the format attached to this Contract as Exhibit B.
7.5 There is no judicial action, lawsuit, or proceeding pending before
any court or governmental or regulatory authority; no governmental
or regulatory authority has initiated any investigation, nor has
there been a threat of any judicial action, lawsuit, or proceeding
by any governmental or regulatory authority against the Buyer, TN,
Terra, the Subsidiary, or any of the managers, officials, or
advisors of any of them, seeking to restrict, prevent, or change the
transactions covered under this document or to question the legality
or validity of any of such transactions or attempt to petition for
damages in connection with any of said transactions.
7.6 Except the routine notifications and registrations that must be made
after the Closing Date, all the third party consents, including, but
not limited to, [those of] governmental authorities, and all the
registrations and notifications of governmental authorities,
regulatory agencies, or other entities that govern the businesses of
the Buyer, TN, Terra, and the Subsidiary that are necessary on the
part of the Buyer, TN, Terra, and the Subsidiary for the signing and
performance of this Contract and to carry out the transactions
provided for by it and so that, after the date this document is
signed, operation of the businesses of Terra and the Subsidiary
would continue substantially the same as before, have been obtained
or executed.
7.7 On or before the Closing Date, it will be verified that between June
30, 1999, and the date this document is signed:
7.7.1 There have been no significant adverse changes in the
financial status of the Subsidiary, assets, liabilities other
than those held with the Buyer or the affiliate or subsidiary
the Buyer designates (contingent or other), results of
operations, transactions, or prospects for the Subsidiary's
transactions.
7.7.2 There have been no significant adverse changes in relations
between the Subsidiary and that of its clients in general for
reasons imputable to the Seller.
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7.8 On the Closing Date, it shall be verified that on the date of this
document:
7.8.1 The Subsidiary has the rights to a minimum of between 35,000
and 45,000 subscriber accounts, with the understanding that
between 20,000 and 25,000 will be its own and between 15,000
and 20,000 will be subscribers of franchise holders.
7.8.2 The Subsidiary has a monthly volume of between 25,000,000 and
30,000,000 page views through its portal known as
"xxx.xxxxxxx.xxx."
If, for reasons imputable to the Seller, any of the suspensive conditions
referred to in this Clause are not fulfilled, and as a result, Closing or the
forced closing provided for in Clause 5.7 [sic] of this Contract cannot be
accomplished, the Seller shall be required to refund the Advance to the Buyer
within five (5) Business Days of the date on which Terra repays or reimburses
the Seller for the Shares in an amount equivalent to the amount of the Advance.
EIGHTH CLAUSE - Conditions that Suspend the Seller's Obligations
The Seller shall not be obligated to carry out the transactions provided for by
this document if the following conditions are not satisfied:
8.1 Steps. All steps taken in connection with the transactions provided
for herein, and all the instruments and documents required in
connection with or incidental to them, are executed, in form and
substance, [in a way that is] satisfactory to the Seller.
8.2 Truth of Declarations and Guarantees. Except for the changes that
are provided for or permitted in some other way by this Contract,
the declarations and guarantees of the Buyer and TN contained in
this Contract or in any other certification or document provided to
the Seller in accordance with it, shall be, essentially, equally
valid and applicable on the Closing Date, inclusive [sic], and
shall, at that time, be essentially true; the Buyer shall have
executed and complied with all agreements and conditions this
Contract requires were executed or complied with by it [sic] on or
before the Closing Date; and an authorized official of the Buyer has
signed and turned over a certification to that effect.
8.3 Consents. All third party consents, including but not limited to
[those of] governmental authorities, plus all the registrations with
and notifications of governmental authorities, regulatory agencies,
or other entities that govern the businesses of the Buyer and TN,
necessary on the part of the Buyer and TN for the signing and
performance of this Contract and to carry out the transactions
provided for by it, have been obtained or executed.
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8.4 On the Closing Date, TN's capital stock and issue premium are in the
range of $400,000,000 to $450,000,000, as certified in writing by an
authorized TM official.
8.5 The Seller has been provided an opinion dated on the date this
document is signed, by the Buyer's legal advisors, substantially in
the format attached to this Contract as Exhibit C.
NINTH CLAUSE - Indemnification by the Seller.
The Seller, by means of this document, agrees to defend, indemnify, and hold the
Buyer and its successors and assignees harmless with respect to:
9.1 Each and every one of the losses, costs, liabilities, damages, or
deficiencies resulting from any:
9.1.1. False declaration or violation of guarantees, agreements, or
commitments under this document by the Seller;
9.1.2. Non-compliance by the Seller or the Subsidiary with any
commitment or other agreement or obligation under this
Contract;
9.2 Each and every one of the obligations, petitions, decisions,
damages, legal actions, causes of action, injuries, liabilities, or
losses, penalties, costs and expenses, regardless of their nature,
losses of life, injuries to persons and property or damages to
natural resources caused by the Seller's acts or omissions.
9.3 Claims for services rendered before the date of this document, to
the extent that the amounts exceed the reserves reflected in the
Subsidiary's books up until that time;
9.4 Inability to cover the accounts receivable to the extent established
in List 3.19 of this Contract within 120 days of the signing date.
9.5 All obligations of the Subsidiary that are not set forth in the
Subsidiary's books, whether known on this date or not; with the
understanding, however, that if any claim, liability, petition,
establishment of damages, legal action, lawsuit, or proceeding is
enforced against the Buyer or any of its successors or assignees
with respect to which the Buyer or any of its successors or
assignees intends to seek indemnification ("Indemnified Claims"),
the Buyer shall notify the Seller thereof. As soon as it receives
such notice, the Seller shall have the right to assume control of
the challenge, settlement, or resolution of
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any of such Indemnified Claims, including costs and expenses, hiring
legal advisors that are reasonably satisfactory to the Buyer, with
the understanding, however, that if the Seller has exercised its
right to assume such control, the Buyer may, at its sole discretion,
hire legal advisors to represent it (in addition to the legal
advisors hired by the Seller and, in this case, at its sole expense)
in any of said cases, and in that case, the legal advisors
designated by the Seller shall be obligated to cooperate with the
Buyer's legal advisors in such challenge, settlement, or resolution;
and with the further understanding that the Seller's obligation to
indemnify pursuant to Clause 10 of this Contract shall only be
effective if all those losses, damages, deficiencies, debts,
liabilities, costs, and expenses which arise under this Contract
with respect to the items stipulated in the Ninth Clause exceed
US$ 75,000.00 (seventy-five thousand dollars), and then the Buyer
would have the right to recover the entire amount of the damages
suffered by the Buyer exceeding that amount ("Indemnified Damages").
9.6 Indemnifications of the Seller, as stipulated in this Clause, shall
not be affected in any way by any reference made in this Contract to
the declarations and guarantees made "to the Seller's knowledge and
belief" or "to the best of the Seller's knowledge and belief."
TENTH CLAUSE - Indemnification by the Buyer.
The Buyer, by means of this document, agrees to defend, indemnify, and hold the
Seller and its [successors] and assignees harmless with respect to and against
any costs, liabilities, and damages resulting from:
10.1 Each and every one of the losses, costs, liabilities, damages, or
deficiencies resulting from any:
10.1.1 False declaration or violation of guarantees, agreements, or
commitments under this Contract, by the Buyer or TN; and
10.1.2 Non-compliance by the Buyer with any commitment or other
agreement or obligation under this Contract;
10.2 Each and every one of the legal actions, lawsuits, proceedings,
claims, liabilities, petitions, establishment of damages, decisions,
costs and expenses, including reasonable attorneys fees, incidental
to any of the above or such indemnification; with the understanding,
however, that if any claim, liability, petition, establishment of
damages, judicial action, lawsuit, or proceeding is enforced against
the Seller or any of
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its assignees with respect to which the Seller or any of its
assignees intends to seek indemnification ("Indemnified Claims"),
the Seller shall notify the Buyer thereof. As soon as it receives
such notice, the Buyer shall have the right to assume control of the
challenge, settlement, or resolution of any of such Indemnified
Claims including, at its own expense, hiring legal advisors that are
reasonably satisfactory to the Sellers, with the understanding,
however, that if the Buyer has exercised its right to assume such
control, the Seller may, at its sole discretion, hire legal advisors
to represent them (in addition to the legal advisors hired by the
Buyer and, in this case, at their sole expense) in any of said
areas, and, in that case, the legal advisors designated by the Buyer
shall be obligated to cooperate with the Seller's legal advisors in
such challenge, settlement, or resolution.
ELEVENTH CLAUSE - Expenses
The Buyer and the Seller shall each defray their own expenses in relation to the
negotiation, drawing up, signing, delivery of, and compliance with this Contract
and the contracts provided for by this document. The Seller and the Buyer each
declare and guarantee to the other party that the negotiations related to this
Contract and the transactions provided for by it have been carried out in such a
way as to not give rise to any valid claim against the other Party, Terra, or
the Subsidiary because of brokerage commissions, dealers' commissions, or other
similar payments.
TWELFTH CLAUSE - Declarations. Unconditional Guarantees and Warrantees.
12.1 The guarantees set forth in this Contract shall extend beyond the Closing
Date. It shall be deemed that the declarations and unconditional
guarantees are made on the date of this document and any claim or action
based on a violation of any declaration or unconditional guarantee or
warranty shall extend beyond the Closing Date for a period of three (3)
years or until the statute of limitations expires, whichever is longer.
12.2 TN guarantees to the Seller, solidarily with the Buyer, payment of the
balance of the price and compliance with each and every one of the
obligations which are the Buyer's responsibility under this Contract.
Therefore, the Seller, at its option, may require payment of the balance
of the price and/or the other obligations, from either or both of the
Buyer and TN.
THIRTEENTH CLAUSE . - Confidentiality.
No press release shall be issued, nor shall the terms of this Contract be
disclosed to third parties, without the authorization of the Seller and the
Buyer. The Buyer and the Seller shall reach agreement with respect to the time
and nature of the announcement of the transaction to the Subsidiary's employees.
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FOURTEENTH CLAUSE - General Provisions.
14.1 Cooperation. Each of the Parties to this document shall make its
best effort to perform or ensure performance, and to cooperate with
the other Party to this document, as necessary, with respect to all
actions, and to perform or ensure the performance, in accordance
with the applicable laws, of whatever is necessary, appropriate, or
advisable in order to execute and ensure the execution of the
transactions provided for by this Contract.
14.2 Waivers. Failure of the Seller to comply with any of its obligations
or [any of the] agreements set forth herein may be waived only by
the Buyer in writing. Failure of the Buyer to comply with its
obligations or [the] agreements set forth herein may be waived only
by the Seller in writing.
14.3 Notifications. All notifications and other communications that are
required or permitted in accordance with this Contract shall be made
in writing and sent to the addressee by telefax, which shall be
confirmed by means of the original document signed by an authorized
representative of the Party making the notification or
communication. These shall be sent by DHL, Federal Express, or
another worldwide express messenger service that offers delivery
times equal to or better than those of the aforementioned companies,
with the understanding that the communication or notification shall
become effective on the date the telefax is sent, but only if the
original signed notification or communication is delivered to the
addressee within two (2) Business Days of the date it is telefaxed.
If the original notification or communication is not received within
said time period, it shall become effective on the Business Day on
which such original notification or communication is delivered. Such
notifications or communications shall in all cases be sent to the
following domiciles:
(i) If addressed to the Seller:
Olympic Xxxxx
Xxxx Xxxxxxxxxxx 000
Xxxxxxxxx 0000XX
Atencion: Xxxxx Xxxxxxxxxxxxx
Fax #: (00) 00-000-0000
With a copy for:
Xxxxxxxx Xxxxxxxx X.
Xxxxx 000
Xxxxxxx Xxxxx xxx Xxxxxxxx
00000 San Xxxxx Xxxxx Xxxxxx, X.X.
Mexico
Fax#: (00-0) 000-0000
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and a copy for:
Xxxxxxxxx Xxxxxxxxx
Xxxxxxx 00, Xxxx 0
Xxxxxxx Xxxxxxxxxxx,
00000 Xxxxxx D.F.
(ii) If addressed to the Buyer or TN:
Telefonica Servicios y Contenidos por la Red, S.A.
Edificio Atica
Xxx xx xxx Xxx Xxxxxxx Xx. 00
00000 Madrid, Espana
Atencion: Xxxxxxxx Lomana
Fax # (00) 00-000-0000
Terra Networks, S.A.
Edificio Atica
Xxx xx xxx Xxx Xxxxxxx Xx. 00
00000 Madrid, Espana
Atencion: Xxxxxxxx Lomana
Fax # (00) 00-000-0000
Telefonica, S.A.
Xxxx Xxx, 00
00000 Xxxxxx, Xxxxxx
Atencion: Secretario General
with copies to:
Xxxxx & XxXxxxxx Abogados, S.C.
Oficinas en el Parque - piso 10
Blvd. Xxxxxxx X. Xxxxxxxxx 1884 Pte.
64650 Monterrey, Nuevo Xxxx
Atencion: Lic. Xxxxxx Xxxxx Bunsow
Fax # (0) 000-0000
Said names and addresses may be changed by written notification to each of the
above individuals.
The above notwithstanding, the Parties may choose to make any notification or
communication by personal delivery of the respective document to the appropriate
domicile, in which case such communication or notification shall become
effective on the date of its delivery.
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A signature acknowledging receipt shall be obtained from the addressee's
employee or representative who performs said function.
14.4 Applicable Laws and Conflict Resolution. This Contract shall be governed
[by] and interpreted under the laws of Mexico.
14.4.1 Any dispute, claim, or controversy arising as a result of this
Contract or related thereto, or regarding the interpretation or
violation thereof, shall be submitted to arbitration pursuant to
the regulations of the International Chamber of Commerce of Paris,
to the extent that said regulations are not incompatible with this
paragraph. The decision on the arbitrators' award may be finalized
before any competent court, or it may be requested that said court
finalize the award so that it may be implemented, as appropriate.
The request for arbitration shall be made within a reasonable
period counted from the time the claim, dispute, or any other
question arises, and in no case shall it be made after the date on
which the institution of the legal or equity proceedings based on
such claim, dispute, or any other question, has been barred under
the applicable statute of limitations.
14.4.1 The panel shall be comprised of three arbitrators. Each of the
Parties to this Contract shall name one of said arbitrators, and
the two arbitrators so named shall designate a third: with the
understanding, however, that if the two arbitrators fail to reach
agreement regarding the naming of the third arbitrator, either of
the arbitrators may request that the International Chamber of
Commerce of Paris make the designation;
14.4.1 The arbitration shall be conducted in Dallas, Texas, in Spanish
and/or English.
14.4.1 For the present, each Party waives the requirement for
hand-delivered notification of arbitration, and agrees that
notification may be made in writing, by registered mail, with
acknowledgement of receipt, to the address provided in this
Contract, and any request made in this manner shall be considered
effected on the tenth Business Day after such request has been
mailed.
14.4.1 Any judicial proceeding brought as support for the arbitration with
respect to this Contract, including precautionary measures, shall
be submitted to the competent judicial authority. Each Party to
this document (a) accepts, generally and unconditionally, the
exclusive competence of said court and any related appeals court,
and irrevocably waives any objection it may have, now or in the
future, with respect to the forum of any lawsuit, legal action, or
proceeding
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brought in said courts, or [objection with respect to] said courts
being an inappropriate forum.
14.4.1 Copies. This Contract may be signed simultaneously in one or more
copies, each of which shall be considered an original, but all
together they shall constitute a single, unique instrument.
14.4.1 Headings. The headings of this Contract's different clauses are for
reference purposes only, and shall not affect the meaning or
interpretation of this Contract in any way.
14.4.1 Indivisible Contract. This Contract, including its appendices and
the documents mentioned herein, constitute the entire Contract and
the agreements of the parties thereto with respect to its purpose.
There are no restrictions, promises, declarations, absolute
warranties, guarantees, or commitments other than those expressly
stipulated or mentioned herein. This Contract replaces all previous
contracts and agreements between the Parties with respect to said
purpose.
14.4.1 Amendments and Modifications. This Contract may only be amended or
modified by written agreement of the Parties.
14.4.1 Mandatory nature: Benefits. This Contract shall be to the benefit
of the Parties thereto and their respective successors and
assignees, and shall be mandatory for them; nothing expressly or
implicitly included in this Contract is intended to confer on any
person other than the Parties thereto or their respective
successors and assignees, any right, option, obligation, or
responsibility under or resulting from this Contract.
14.4.1 Transfer. This Contract may not be transferred by any of the
Parties thereto, except with the prior written agreement of the
other Parties thereto.
14.4.1 Transfer Taxes. The Income Tax with respect to this transaction or
the sale, transfer, or delivery of the Shares shall be payable by
the Seller.
14.5 Best of Knowledge and Belief. For purposes of this Contract, the phrase,
"to the best of the Seller's knowledge and belief," in reference to a
declaration or guarantee made by the Seller, shall be considered to mean
"to the best of the Seller's knowledge and belief" after due inquiry; and
"knowledge and belief," as used in said phrase, shall be considered to
include all the matters which the Seller or any official of the Subsidiary
in fact knows or should have known after due inquiry.
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14.6 Language. The Parties agree that this Contract may also be signed in
English, with the understanding that, in case of any difference of opinion
of any of the parties about the content of either version, this Spanish
version shall prevail in all cases.
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IN WITNESS WHEREOF, the Parties have signed this Contract on the date shown at
the beginning thereof.
Buyer:
TELEFONICA SERVICIOS Y CONTENIDOS
POR LA RED, S.A.
[illegible signature]
Mr. Xxxx Xxxxx Xxxxx de Buruaga and
Xx. Xxxx Xxxxxxx Xxxxxxx (Sole Administrator)
Seller:
BIDASOA, B.V.
[illegible signature] [illegible signature]
Xx. Xxxxx Xxxxxxxxxxxxx Xx. Xxxx Xxxxx
Representative Representative
As Guarantor:
TERRA NETWORKS, S.A.
[illegible signature]
Xxxx Xxxxx Xxxxx de Buruaga
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The following annexes to this agreement have not been included:
- Annex B - Opinion of seller's legal counsel
- Annex C - Opinion of buyer's legal counsel
- List 3.4 - List of Necessary Assets for the development of the
business of Terra and its subsidiaries
- List 3.5 - List of Necessary Agreements
- List 3.7 - Outstanding capital stock
- List 3.8 - Registered shareholders
- List 3.9 - Subsidiaries
- List 3.10 - Pending litigation
- List 3.11.1 - Agreements, contracts, commitments and offers
- List 3.11.2 - Tangible assets
- List 3.11.3 - Insurance policies in force
- List 3.11.4 - List of employees
- List 3.11.5 - Reimbursable deposits, prepaid expenses and
deferred charges
- List 3.11.6 - Loans to third parties
- List 3.11.7 - Liens, encumbrances, restrictions, claims and
warranties
- List 3.11.8 - Leased real estate
- List 3.11.9 - Trademark registrations, applications and
notices of violations thereof
- List 3.11.10 - Pending litigation
- List 3.11.11 - Permits required to carry out business
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- List 3.11.12 - Outstanding loans
- List 3.11.13 - Condition of real estate
- List 3.16 - Taxes filed and paid
- List 3.18 - Abandoned trademarks
- List 3.19 - Accounts receivable
- List 3.22 - Significant changes
- List 3.23 - Absence of changes or events
- List 3.24 - Breach of contract
- List 3.26 - Consent of regulatory and governmental authorities
- List 3.27 - Certain interests
- List 3.28 - Compliance with laws
Copies of the annexes not included herein will be provided upon request.
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