Filed On 11/14/96 · SEC File 0-26264 · Accession Number 927356-96-1101
This Filing was Corrected by the SEC on 12/2/96.
As Of Filer Filing On/For/As Docs:Pgs Issuer Agent
11/14/96 Tele Communications Int'l Inc 10-Q® 9/30/96 4:110 927356
Quarterly Report · Form 10-Q
Filing Table of Contents
Document/Exhibit Description Pages Size
1: 10-Q Quarterly Report 53 239K
2: EX-10.1 Stock Purchase Agreement 37 137K
3: EX-10.2 Deed of Guarantee & Indemnity & Subordination 18 60K
4: EX-27 Financial Data Schedule 2 9K
EX-10.1 · Stock Purchase Agreement
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STOCK PURCHASE AGREEMENT
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THIS STOCK PURCHASE AGREEMENT (the "Agreement" as herein defined), is
entered into as of this 1st day of October, 1996 by and among Eduardo Eurnekian
and Natalio Wende (collectively, the "Stockholders", and individually, a
"Stockholder" as herein defined) owners of all the shares and votes of the
Common Stock (the "Common Stock") of Oeste Cable Color S.A. (face value $ 100
per share) an Argentine Corporation (Sociedad Anonima) (the "Company" as defined
hereinafter), and Cablevision S.A. an Argentine corporation ("Buyer").
RECITALS
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A. The Stockholders and certain additional stockholders (Stockholders and
additional stockholders, "the Sellers") executed on April 25th, 1995 with TCI
International Holdings, Inc. (now Tele-Communications International, Inc.)
("TINTA") an amended and restated stock purchase agreement (the "Amended and
Restated Stock Purchase Agreement") for the acquisition of 51% of the capital
stock of Buyer, Construred S.A. and Univent's S.A. and the 10,20% of Televisora
Belgrano S.A., with an option for the acquisition of an additional 29% (the
"Option").
B. Pursuant to the Amended and Restated Stock Purchase Agreement TINTA was
granted the right to acquire 51% of the Company and an option to acquire an
additional 29% in the Company.
C. On May 23, 1996 TINTA notified Sellers of its exercise of its right to
acquire 51% of the Company.
D. Buyer and Sellers have agreed that the exercise of TINTA's right will be
accomplished by Buyer's purchasing 100% of the issued and outstanding capital
stock of OCC (except 1 share) and that said additional share be owned jointly by
TINTA and Eduardo Eurnekian by holding 51% and 49% of said share, respectively.
Such 51% interest in such one additional share will be transferred to
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TINTA at no additional cost and pursuant to this Agreement. For the sole purpose
its ownership of such one share, TINTA will also execute this Agreement.
E. The Stockholders own all the issued and outstanding shares of the
Company which represent one hundred per cent (100%) of the Common Stock and
votes (the "Shares").
F. Buyers desire to purchase the Shares from the Stockholders and
Stockholders desire to transfer the shares to Buyers, in accordance with the
terms of this Agreement. The transfer of the additional share referred to in
Recital D. above is also included in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties contained herein the parties hereto agree as
follows:
DEFINITIONS
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For purposes of this Agreement, the following terms shall have the following
meanings:
"Agreement": this Stock Purchase Agreement and its exhibits and schedules.
"Assets": All properties, privileges, rights, interests and claims, real and
personal, tangible and intangible, of every type and description that are owned,
leased, held, used or useful in the Company Business in which Stockholders or
Company have any right, title or interest or in which Stockholders or Company
have acquired any right, title or interest on or before the Closing Date,
including Governmental Permits, Company Contracts, Equipment and Real Property
except as provided in Exhibit 1.
"Balance Sheet Date": shall mean the date of August 31, 1996.
"Base Purchase Price": shall be that defined in Section 1.2.
"Basic Services": the transmission of cable television programming sold to
Company subscribers as a package, for which subscribers pay a fixed monthly fee
to Company. Basic Services does not include pay per view such as "Clasico del
Domingo" or the like.
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"Closing": means the consummation of the transactions contemplated by this
Agreement, the date of which is referred to as the Closing Date.
"Closing Date": meaning the day hereof, provided that the Conditions Precedent
referred to in Articles IV and V are met or waived, or such other date as the
parties mutually agree.
"COMFER": meaning the Comite Federal de Radiodifusion of Argentina.
"COMFER Approval": shall mean all necessary authorizations, or consents from
COMFER required to consummate the transactions contemplated by this Agreement
and/or the obligations assumed and/or provisions contained herein.
"Company": meaning Oeste Cable Color S.A..
"Company Contracts": All contracts and agreements, other than Governmental
Permits, pertaining to ownership, operation and maintenance of the Assets or the
Company Business.
"Company Business": meaning the operation of a complete cable television
reception and distribution System located in the cities of Ramos Mejia,
Ciudadela, Villa Luzuriaga, Haedo, Moron, Castelar, Ituzaingo, Villa Tesei,
Hurlingham, Ciudad Jardin, Caseros, Villa Bosch, Martin Coronado, Merlo, San
Antonio de Padua, San Andres, San Martin and Palomar, all in the Province of
Buenos Aires.
"EBS": For the purposes of determining the Base Purchase Price and the
adjustments to the same, the Stockholders and the Buyer define EBS's as the
number derived by dividing (a) the total income in pesos received by the
Company for Basic Services and recurring monthly charges for additional outlets
during August, 1996, including all payments for more than one period for such
charges if paid in such month, by (b) U.S.$ 29,75. Notice is made that there is
no V.A.T. applicable in relation to the income in pesos and that the same will
not be considered in relation to the definition established herein and will
therefore not be included in the calculation of "total income in pesos". Within
90 days as from Closing Date the amount of EBS will be adjusted as of the
Closing Date for the sole purpose of including in the calculation of the Base
Purchase Price only those subscribers whose Basic Services were installed before
Closing and who have paid their first regularly scheduled billing for Basic
Services after the Closing, and excluding from the said calculation only all
those subscribers who as of the Closing Date had paid their first Basic Service
billing and who had not paid their second Basic Service billing after the
Closing Date.
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"Encumbrances": any mortgage, lien, security interest, security agreement,
conditional sale or other title retention agreement, limitation, pledge, option,
charge, assessment, restrictive agreement, restriction, encumbrance, adverse
interest, restriction on transfer or any exception to or defect in title or
other ownership interest (including reservations, rights of way, possibilities
of reverter, encroachments, easements, rights of entry, restrictive covenants,
leases and licenses).
"Equipment": all electronic devices, trunk and distribution coaxial and optical
fiber cable, amplifiers, power supplies, conduit, vaults and pedestals,
grounding and pole hardware, subscriber's devices (including converters,
encoders, decoders, transformers behind television sets and fittings), headend
hardware (including origination, earth stations, transmission and distribution
system), test equipment, vehicles and other tangible personal property owned,
leased, used or held for use in the Company Business, except as provided in
Exhibit 1.
"Environmental Laws": any Legal Requirement relating to pollution or protection
of public health, safety or welfare or the environment, including those relating
to emissions, discharges, releases or threatened releases of Hazardous
Substances into environment (including ambient air, surface water, ground water
or land), or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport, or handling or Hazardous
Substances.
"GAAP": generally accepted accounting principles in force in the Argentine
Republic as from time to time.
"Governmental Authorities": (i) The Republic of Argentina, (ii) any state,
territory or possession of the Republic of Argentina and any political
subdivision thereof (including counties, municipalities and the like), (iii)
any foreign (as to the Republic of Argentina) sovereign entity and any political
subdivision thereof or (iv) any agency, authority or instrumentality of any of
the foregoing, including any court, tribunal, department, bureau, commission or
board, including, but not limited to, the COMFER.
"Governmental Permits": all franchises, approvals, authorizations, permits,
licenses, easements, registrations, qualifications, leases, variances and
similar rights obtained from any Governmental Authority.
"Hazardous Substances": any pollutant, contaminant, chemical, industrial, toxic,
hazardous or noxious substance or waste which is regulated by law 24.051 or any
other Argentine Regulation or by any Governmental Authority, including (a) any
petroleum or petroleum compounds (refined or crude), flammable substances,
explosives, radioactive materials or any other materials or pollutants which
pose a
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hazard or potential hazard to the Real Property or to Persons in or about the
Real Property or cause the Real Property to be in violation of any laws,
regulations or ordinances of federal, state or applicable local governments, (b)
asbestos or any asbestos-containing material of any kind or character, (c)
polychlorinated biphenyls, (d) any materials or substances designated as
"hazardous substances" pursuant to Governmental Authorities regulation, (e)
"chemical substance", "new chemical substance" or "hazardous chemical substance
or mixture" pursuant to Governmental Authorities regulation, (f) "hazardous
substances" pursuant to Governmental Authorities regulation, and (g) "hazardous
waste" pursuant to Governmental Authorities regulation.
"Legal Requirements": any statute, ordinance, code, law, rule, regulation, order
or other requirement, standard or procedure enacted, adopted or applied by any
Governmental Authority, including judicial decisions applying common or civil
law or interpreting any other Legal Requirement.
"Liabilities": those items classified as liabilities on the Company's balance
sheet or in the Financial Statements prepared in accordance with GAAP on the
Closing Date or Balance Sheet Date, as the context requires.
"Persons": any natural person, corporation, partnership, trust, unincorporated
organization, association, limited liability company, Governmental Authority or
other entity.
"Real Property": all Assets consisting of realty, including appurtenances,
improvements and fixtures located on such realty, and any other interests in
real property, including fee interests (if any) in Company's offices and headend
sites and leasehold interests and easements, except as provided in Exhibit 1.
"Required Consents": all franchises, licenses, approvals and consents required
under Governmental Permits, Company Contracts or otherwise for (a) Stockholders
to transfer the Shares and control of the Company Business to Buyer, (b) Buyer
to con duct the Company Business and to own the Shares and to own, lease, use
and operate the Company Business and Assets at the places and in the manner in
which the Company Business is conducted as of the Closing Date, and (c) the
Company to assume and perform the Governmental Permits and the Company Contracts
after the Closing Date.
"Shares": meaning one hundred percent (100%) of the issued and outstanding
Common Stock and voting rights of the Company.
"Stockholders": means Mr. Eduardo Eurnekian and Mr. Natalio Wende as record and
beneficial owners of the Shares.
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"Subscriber": any Person who receives the Company's Basic Services.
"System": a complete cable television reception and distribution system operated
in the conduct of the Company Business, consisting of subscriber drops and
associated electronic and other equipment, and which is, or is capable of being
without modification, operated as an independent system without interconnections
to other systems. The Company's System is a single system which is
interconnected and served jointly by its own headend and Buyer's headend.
ARTICLE I
PURCHASE AND SALE OF THE SHARES
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SECTION 1.1. Purchase and Sale of the Shares. Upon the terms and subject to
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the conditions set forth in this Agreement, the Stockholders sell the Shares to
Buyers and Buyers purchase the Shares from the Stockholders. At the Closing,
provided that the Conditions Precedent indicated in Articles IV and V have been
met: a) the Stock holders deliver to Buyers such documents representing the
Shares, with duly executed stock powers attached, as may be appropriate, in
proper form for transfer, with appropriate transfer stamps, if any, affixed and
any other document or instrument which may be necessary in order to vest Buyers
with good and exclusive title to the Shares (except with respect to the jointly
owned Share referred to in Recital D above), and (b) Buyer delivers cash
denominated in US Dollars and negotiable and endorsable promissory notes, in
payment of the Base Purchase Price (as hereinafter defined) pursuant to
Sections 1.2, 1.3 and 1.4.
SECTION 1.2 Base Purchase Price. In consideration of (i) the covenants,
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representations and warranties made by Stockholders in this Agreement, and (ii)
the EBS's (as defined herein) which the Stockholders represent that the Company
had on August 31, 1996, Buyer will pay to Stockholders an amount equal to U$S
1500 times the number of EBS's at Closing, minus all Liabilities to be deducted
as provided in Section 1.4.1. (the "Base Purchase Price"), subject to adjustment
as provided in Sections 1.3, and 1.4. as follows, provided that Stockholders
comply with the duties assumed under this Agreement. The parties agree that, as
of August 31, 1996, the EBS number was 76,994 and Liabilities were seven million
three hundred seventy thousand four hundred fifty three U.S. dollars (U$S
7,370,453). Therefore, the Base Purchase Price will be one hundred nine million
forty six thousand eight hundred ninety-two U.S. dollars (U$S 109,046,892).
a) With a Base Purchase Price of U$S 109,046,892 at the Closing (as defined
herein) and provided that the Conditions Precedent indicated in Articles IV
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and V have been met, Buyer shall deliver to Stockholders: (i) at Closing US$
43,734,090 and on December 1, 1996 US$ 22,064,326 by wire transfer of readily
available funds to the account which Stockholders shall indicate, and (ii) the
balance of US$ 43,248,476 will be paid in 21 consecutive monthly installments
maturing on the tenth day of each month, or the following working day if the
tenth day were not a working day, commencing on January 10, 1997. The first
installment will provide for payment of US$ 2,059,451.23 and all interest
accrued from December 1, 1996 through January 10, 1997, and minus all applicable
withholding for taxes. The following twenty (20) installments will provide for a
payment of U$S 2,059,451.23 (the "Promissory Notes"). Installments representing
this debt will be documented through twenty one (21) negotiable and endorsable
Promissory Notes issued by Buyer. Each of the Promissory Notes shall have an
original principal amount of US$ 2,059,451.23. Amounts due under the said
Promissory Notes will accrue interest at the Bank of New York Prime Rate at
Closing, plus an extra one percent (1%) as from their date of issuance per
annum. All payments will be made net of applicable withholding for taxes. Said
rate will be adjusted on October 10, 1997, to the Bank of New York Prime Rate
which prevails on that date, plus one percent (1%) per annum. For these
purposes, the prime rate for the first year will be the Bank of New York prime
rate on Closing Date. Stockholders acknowledge that the Promissory Notes may not
be sold in a "public offering". These Promissory Notes will be construed and
interpreted under the laws of the state of New York, United States of America.
Stockholders undertake the duty of negotiating said Promissory Notes only with
banking institutions or "accredited investors" as defined in Regulation D under
the United States Securities Act of 1933, as amended. At Closing, Stockholders
will designate two bank accounts (one of which must be in the United States of
America) to which Buyer may remit payments under the Promissory Notes. Buyer may
remit scheduled payments to either account as it so choses, subject to further
instructions from Stockholders as long as one of the accounts is in the United
States of America. The Promissory Notes will be issued in accordance with the
terms of this Section as pertinent. Stockholders will provide Buyer with written
instructions in relation to the Stockholders-beneficiaries in whose favor the
Promissory Notes must be issued, and the names of the Persons or banking
institutions authorized to receive payments. Buyer has the unrestricted rights
to prepay the Promissory Notes without penalty, together with accrued interest
through the dates of pre-payments, anticipated payment to which the Stockholders
irrevocably agree.
Payment of these Promissory Notes are not subject to any condition and any
Liabilities of the Stockholders which may represent the obligation of paying
amounts of money to Buyer, will not authorize Buyer to carry out any act tending
to non-payment, or to restrict, delay, reduce or limit amounts which are payable
under the Promissory Notes.
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1.2.2 If COMFER Approval has not been obtained within 90 days as of the
Closing Date the Buyer may -at its exclusive choice- either (a) terminate the
Agreement, leaving in favor of Stockholders the monies indicated in 1.2 (a) (i)
above in full and final compensation; or (b) extend for up to an additional 180
days the term to obtain COMFER Approval and comply with all conditions in
Article V in which case if COMFER Approval is not obtained and all conditions
are not complied with by the end of the extended period, Stockholders will
refund to Buyer immediately all the Base Purchase Price in whatever form paid,
including all cash paid at Closing, any amounts paid under the Promissory Notes,
except if COMFER Approval is not obtained by reasons directly attributable to
Buyer. Upon termination of this Agreement pursuant to this Section, (i) Buyer
will immediately return the Shares to Stockholders. If COMFER Approval is
obtained and all conditions in Article V are complied with prior to the end of
such 180 day extension, parties will proceed with this Agreement and payments
pursuant to Section 1.2 will be made.
SECTION 1.3 Adjustments to Base Purchase Price. The Base Purchase Price
----------------------------------
will be adjusted as follows:
1.3.1 Stockholders represent that on August 31, 1996, the Company had at
least 76,994 EBS's. Should there be fewer EBS's on September 30, 1996, the Base
Purchase Price will be reduced by an amount equal to U.S.$ 1,500 multiplied by
one hundred percent (100%) of the positive difference between (a) 76,994 and (b)
the number of EBS's as of September 30, 1996. If on September 30, 1996, there
are greater than 76,994 EBS's, the Base Purchase Price will be increased in the
same man ner.
SECTION 1.4 Determination of Adjustments. Preliminary and final adjustments
----------------------------
to the Base Purchase Price will be determined as follows:
1.4.1. Before Closing, Stockholders will deliver to Buyer a report (the
"Preliminary Adjustments Report"), certified as to completeness and accuracy by
Stockholders, showing in detail any adjustments which are calculated as of the
Balance Sheet Date (or as of any other date agreed by the parties) and any
documents substantiating the adjustments proposed in the Preliminary Adjustments
Report. The Preliminary Adjustments Report will include a complete list of
Subscribers, a detailed calculation of EBS and an unaudited balance sheet as of
the Balance Sheet Date certified by the Company prepared in accordance with GAAP
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indicating, inter alia, all Liabilities as of the Balance Sheet Date.
Stockholders also will furnish Buyer a bring down letter stating that the
Company has not incurred any additional liabilities or modified in any material
respect the Balance Sheet as of the Balance Sheet Date, other than in the
ordinary course of Business. The net adjustment shown in the Preliminary
Adjustments Report will be reflected as an adjustment to the Base Purchase Price
payable at Closing.
1.4.2. Within 90 days after the Closing, Stockholders will deliver to Buyer
(i) a balance sheet as of September 30, 1996 audited by KPMG or any other
internationally well known auditors firm prepared in accordance with GAAP
indicating, inter alia, all Liabilities as of September 30, 1996, and (ii) a
report (the "Final Adjustments Report"), similarly certified by Stockholders,
showing in detail the final determination of all adjustments which were not
calculated as of September 30, 1996 and containing any corrections to the
Preliminary Adjustments Report, together with any documents substantiating the
adjustments proposed in the Final Adjustments Report. Buyer will provide
Stockholders with reasonable access to all records which Buyer has in its
possession and which are necessary for preparing the Final Adjustments Report.
1.4.3. Within 30 days after receipt of the Final Adjustments Report and of
the balance sheet referred to in 1.4.2, Buyer will give Stockholders written
notice of Buyer's objections, if any, to the Final Adjustments Report and with
respect to Liabilities indicated in said balance sheet. If Buyer makes any such
objection, the par ties will agree on the amount, if any, which is not in
dispute within 30 days after Stockholders' receipt of Buyer's notice of
objections to the Final Adjustments Report and with respect to Liabilities
indicated in said balance sheet. The undisputed amount will be paid by the
Stockholders within ninety (90) days after the Final Adjustments Report. Should
the Final Adjustments Report show undisputed amount in favor of the
Stockholders, Buyer shall pay said amount within ninety (90) days after the
Final Adjustments Report. Any disputed amounts will be determined within 210
days after the Closing Date by a mutually agreed accounting firm whose
determination will be conclusive. All Liabilities will be paid by the
Stockholders to third parties upon receiving a judicial claim in this sense.
Stockholders and Buyer will bear equally the fees and expenses payable to such
firm in connection with such determination unless the determination of such firm
results in a net decrease in the Base Purchase Price of more than 10% thereof,
in which case the fees and expenses payable to such firm will be paid by
Stockholders.
SECTION 1.5 [RESERVED]
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SECTION 1.6 Late Payment. Default. The delay in the payment of the balance
---------------------
due pursuant to Section 1.2 will occur automatically, with the expiration of the
agreed dates, without need of any judicial or out-of-court requirement, giving
way to punitive and compensatory interests at a daily rate equivalent to a rate
of 15% per annum, during which payment is due and until the date of payment.
Default in paying two consecutive installments, or six late payments, whether
consecutive or not, will entitle the Stockholders to demand fulfillment of the
agreement in which case all granted financing will be considered due and the
Stockholders may enforce the total pending balance considering it as due,
together with the corresponding compensatory and punitive interests. In order to
enforce the rights provided for above, the Stockholders must have previously
demanded that Buyer fully satisfy his uncomplied obligation, including payment
of capital and compensatory and punitive interests, within fifteen (15) days and
Buyer must not have satisfied his uncomplied obligation. The parties agree that
this benefit granted to Buyer prior demand for compliance- will be one and only
during the whole lifetime of the Agreement. The Buyer can not assign any rights
as long as it is in default of payment.
SECTION 1.6.1 Guarantees. As guarantee of payment of balances due, Buyer
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will execute a pledge agreement in favor of the Stockholders, affecting 51% of
the Shares, and any Shares which may replace them, along the following
guidelines (i) the pledge will be registered at the Inspeccion General de
Personas Juridicas and other pertinent registers, together with the registration
of the transfer of such Shares in favor of the Buyer; (ii) the guarantee will
survive until the total cancellation of the balance due, interests and/or
eventual punitive interests if applicable, (iii) all the provisions of the
pledge agreement will be according to the requirements established in the
Argentine Broadcasting Law and/or to those which the COMFER may suggest; (iv)
the Company will duly acknowledge and register the pledge in the pertinent
corporate books; (v) every capital increase decided by the Company will imply
the obligation of the Buyer or assignees to pledge in favor of the Stockholders
51% of the shares subscribed for by Buyer or assignees as a result of the
corresponding capital increase; (vi) the parties agree that the procedure
foreseen in article 3223 of the Argentine Civil Code and/or in the Commercial
Code of the Argentine Republic can be indistinctly used at the option of the
Stockholders; (vii) in case of judicial enforcement, the Stock holders will
appoint all the appraisers and auctioneers which may be necessary, except in
case they take the option of the auctioning procedure under article 585 of the
Commercial Code in which case the parties will agree beforehand to the
appointment of a mutually agreeable appraiser among Price Waterhouse, Arthur
Anderson, Deloitte Haskins & Sells and Citibank (Buenos Aires branch) and,
should an agreement not be possible in this regard, the option among these
firms/institutions will be made by the Stock-
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holders; (viii) use of other standard clauses which arise from the form of the
Registro Nacional de Creditos Prendarios (Act Nr 12.962); (ix) all registration,
dere gistration and cancellation costs will be faced by Buyer, same as all
enforcement costs (unless otherwise determined by a court resolution); and (x)
the pledge will continue in force until full cancellation of the balance due.
The parties will appoint the administrator of the pledge ("the Agent") in
the same way as provided in the preceding paragraph, to whom the following
irrevocable powers of attorney will be granted at the Closing: (i) by the Buyer:
so that the Agent may proceed with handing over of the Shares, issuing receipts
for monies received and, payment of the same in case the Stockholders elect the
procedure foreseen in article 3223 of the Argentine Civil Code (in which case
the Notes foreseen in Section 1.2 can be used for payment); (ii) the
Stockholders: in order that the Agent proceeds with the same empowerment for the
case of enforcement of the pledge.
At Closing the Stockholders will issue a promissory note in favour of Buyer
in the amount of U$S 5,000,000, in order to secure all Liabilities and amounts
reserved pursuant to Article VI, disclosed or undisclosed, caused before
Closing, enforceable to the extent of the amounts paid by the Company, in
accordance with this Agreement.
SECTION 1.7 [RESERVED]
SECTION 1.8 Deliveries by Stockholders. Stockholders covenant and agree
--------------------------
to deliver items and documents to Buyer as follows:
1.8.1 Stockholders have previously furnished to Buyer prior to Closing Date
accurate and complete copies of all documents hereinafter specified:
(a) a certified copy of the Articles of Incorporation of the Company, as
amen ded, and of the Company's By-laws.
(b) minutes and written actions containing an accurate record of
proceedings of and actions by the shareholders, directors, and committees of
directors of the Company from its inception.
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(c) copies of the shareholders' book of the Company which accurately
reflect all issuances, reissuances, cancellations and transfers of Company stock
which adequately reflect all ownership, cancellations, capital increase and
transfers of Company interest.
(d) copies of all Governmental Permits for the ongoing Company Business.
(e) copies of Company Contracts and title documents.
(f) copies of any title documents or Company Contracts representing
intangible property.
(g) copies of the insurance policies currently in force.
(h) copies of any employee incentive, bonus or benefit plans or agreements.
(i) the Financial Statements and the Balance Sheet described in Sections
1.4.1 and 2.10 of the Agreement.
(j) copies of all tax returns described in Section 2.14 of the Agreement
that have been filed with any Governmental Authority within the seven (7) years
preceding the date hereof and any additional tax returns for tax years that have
not been agreed as final by the applicable Governmental Authority. Copies of
any tax returns proposed to be filed by or on behalf of the Company, with any
Governmental Authority prior to the Closing shall be delivered to Buyer at least
3 days before the filing thereof for Buyer's review.
(k) copies of such other documents and items as Buyer may reasonably
request.
1.8.2 AT LEAST THREE (3) DAYS PRIOR TO CLOSING, Stockholders shall have
caused the Company to furnish to Buyer documents which accurately show the
boundaries of all Real Property as owned or leased by the Company together with
any and all improvements, rights of way, easements, roads and such other
features as Buyer shall reasonably specify.
1.8.3 AT LEAST THREE (3) DAYS PRIOR TO CLOSING, Stockholders shall have
delivered to Buyer the Financial Statements.
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1.8.4 AT CLOSING, Stockholders shall also cause the Company to procure and
provide to Buyer a report dated within ten (10) days prior to the Closing Date,
issued by Real Estate Registry or by a notary or an officer of the Company
satisfactory to Buyer, to the effect that (i) none of the Assets is subject to
any recorded lien, including any lien for federal, state or local taxes or
assessments, and (ii) no suits or judgments have been filed against the Company
except for those indicated in the Balance Sheet as of the Closing Date or in
Exhibit 5 as may correspond.
1.8.5 AT CLOSING, provided that the Conditions Precedent indicated in
Articles IV and V have been met, Stockholders will, with duly and fully executed
instruments, certificates, documents and opinions, deliver to Buyer, or cause
Company to deliver to Buyer:
(a) The documents evidencing the Shares, duly endorsed, in blank if
appropriate, and/or all necessary documentary or transfer tax stamps affixed
thereto together with such other documents or instruments as Buyer may request,
in order that Buyer be vested with good and exclusive title to the Shares.
(b) To the extent not previously delivered, the minute books, shareholders
books of the Company -if applicable- and such other papers, evidence of title or
interest, books, records, files, correspondence, memoranda and other documents
of the Company, all as Buyer may request prior to the Closing.
(c) The written resignations, dated the Closing Date, of all of the
directors or managers of the Company (except those managers which the parties
have agreed will remain employees of the Company), and election of new Board of
up to five (5) members.
(d) Duly certified copies of resolutions of the Board of Directors or
similar governing body of, and, if required by applicable law, the Stockholders
or other holders of ownership interest in each Stockholder that is not a natural
person, authorizing the execution, delivery and performance of this Agreement by
such Stock holder which resolutions shall be in full force an effect at and as
of the Closing.
(e) Documentary proof and counsel opinion reasonably acceptable to Buyer
that: (i) The Company has timely obtained or has filed complete and timely
applications for all authorizations needed to carry all signals being carried
and all authorizations needed to utilize the frequencies on which these signals
are carried; (ii) Except with respect to general rulemakings and similar matters
relating
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generally to the Company activity, there is no legal action or governmental
proceeding pending or, to such counsel's best knowledge after due inquiry, any
investigation pending or proceeding threatened (nor any basis therefor) for the
purpose of modifying, revoking, terminating, suspending, canceling or reforming
any of the Company's certificates of compliance or licenses or which might have
any other adverse effect upon, or cause disruption to, the Company Business;
(iii) that the Company is in good standing with and has appropriate authority
from the COMFER in order to carry on the Company Business as conducted as of the
date of this Agreement and the Closing; (iv) that Stockholders have the power
and capacity to sell the Shares so as to vest good and marketable title to the
same, and (v) such other matters as Buyer may reasonably re quest].
(g) All blueprints, schematics, drawings, diagrams, maps, system design
bill of material, engineering and technical data, used by the Company in
connection with the Assets and the Company Business, unless Buyer shall direct
in writing that the same or part thereof be delivered to Buyer elsewhere.
(h) A long-form certificate of good standing for the Company dated not more
than five (5) days prior to the Closing Date, a certificate of tax good standing
for the Company dated not more than five (5) days prior to the Closing Date and
a "bring-down" tax good standing telegram for the Company dated the Closing
Date, in each case from the Company syndic or the Chairman of the board of
directors.
(i) A bring down letter dated the Closing Date stating that between the
Balance Sheet Date and the Date of Closing, there have not been modifications to
the Financial Statements other than those attributable to the evolution of the
ordinary Company Business, nor have there been distribution or payings of
Company dividends.
(j) Such documents and instruments as may be necessary or as Buyer may
request in order to change the authorized signatures for all bank accounts, and
the persons authorized to have access of the Company or otherwise in order to
vest in Buyer exclusive control over and possession of such accounts and safety
deposit boxes and the funds and other property deposited therein.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
------------------------------
OF THE STOCKHOLDERS
-------------------
-15-
Stockholders and Company (where noted) represent and warrant to Buyer, as
of the Closing, as follows:
SECTION 2.1. Organization and Qualification. Company is a corporation duly
------------------------------
organized, validly existing and in good standing under the laws of Argentina and
has all requisite corporate power and authority to own, lease and use its Assets
as they are currently owned, leased and used and to conduct the Company Business
as it is currently conducted. The Company is duly qualified or licensed to do
business and is in good standing under the laws of each jurisdiction in which
the character of the Company Business makes such qualification necessary, except
any such jurisdiction where the failure to be so qualified or licensed and in
good standing would not have a material adverse effect on Company or on the
validity, binding effect or enforceability of this Agreement.
SECTION 2.2. Good Title. Stockholders have good, valid, marketable and
----------
exclusive title to the Shares free and clear of any liens, encumbrances, rights
of first refusal, pledges or claims, with full right and lawful authority to
transfer to Buyer the Shares. There are no outstanding options, warrants or any
other preemptive rights or commitments of any kind for third parties to acquire
or become beneficiary of the Shares in any way. All the Shares have been duly
authorized and validly issued and have been fully paid for and there are no
pending increases of capital nor convertible securities. Spousal consent
provided for in article 1277 of the Argentine Civil Code has been granted by the
spouse of the Stockholders when necessary.
SECTION 2.3. Authority and Validity. Company and Stockholders have
----------------------
authority to execute and deliver, to perform their obligations under, and to
consummate the transactions contemplated by this Agreement. The execution and
delivery by Stockholders and Company and the performance by Stockholders and
Company of their obligations hereunder, and the consummation by Stockholders and
Company of the transactions contemplated by this Agreement have been duly
authorized by all requisite corporate and other appropriate action of
Stockholders and Company. This Agreement has been duly executed and delivered
by Stockholders and Company and is the valid and binding obligation of
Stockholders and Company, enforceable against Stockholders and Company in
accordance with its terms, except insofar as enforceability may be affected by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
now or hereafter in effect affecting creditor's rights generally or by
principles governing the availability of equitable remedies.
-16-
SECTION 2.4. No Breach or Violation. Subject to obtaining the COMFER
----------------------
Approval and other Required Consents, the execution, delivery and performance of
this Agreement by Stockholders and Company will not: (a) violate any provision
of the charter or bylaws of the Company; (b) constitute a material violation of
any Legal Requirement; (c) require any consent, approval or authorization of,
or any filing with or notice to, any Person; or (d) (i) violate, conflict with
or constitute a breach of or default under, (ii) permit or result in the
termination, suspension or modification of, (iii) result in the acceleration of
(or give any Person the right to accelerate) the performance of the Company
under, or (iv) result in the creation or imposition of any Encumbrance under,
any Company Contract or any other instrument evidencing any of the Assets or any
instrument or other agreement to which Company is a party or by which Company,
Company Business or any of its Assets is bound or affected, except for purposes
of this clause (d) such violations, conflicts, breaches, defaults, terminations,
suspensions, modifications, and accelerations as would not, individually or in
the aggregate, have a material adverse effect on any System, the Company
Business or the Company.
SECTION 2.5. Assets. Company has exclusive, good and marketable title to
------
(or, in the case of Assets that are leased, valid leasehold interests in) the
Assets (other than Real Property, as to which the representations and warranties
in Section 2.6 apply). The Assets are free and clear of all Encumbrances of any
kind or nature, except (a) restrictions stated in the Governmental Permits and
(b) Encumbrances disclosed in this Agreement. Except as set forth on Exhibit 3,
none of the Equipment is leased by Company from any other Person. The Assets
will remain in the Company and are all the assets necessary to permit Buyer to
conduct the Company Business substantially as it is being conducted on the date
of this Agreement in compliance with all Legal Requirements. The cash remaining
in the Company on the Closing Date must be sufficient to pay the Company's cash
obligations through at least one month after Closing Date. Such obligations will
be paid in the same manner as they were paid prior to the Closing Date. If,
after the Closing Date and prior to one month thereafter, the Company has not
generated sufficient revenues to pay such obligations, the Stockholders will pay
them. All the Equipment is in good operating condition and repair, ordinary
wear and tear excepted and is suitable and adequate for continued use in the
manner in which it is currently used. Neither Company nor Stockholder nor any
affiliate of Stockholder has been granted or has applied for a cable television
franchise in any area currently served by the Company Business or by the Buyer,
except for the participation in RCC, Teleunica and MCM System.
SECTION 2.6. Real Property.
-------------
-17-
2.6.1. All the Assets consisting of Real Property interests are described
on Exhibit 2. Company has valid leasehold interests in Real Property leased by
Company and, with respect to other Real Property not owned or leased by Company,
Company has the valid and enforceable right to use all other Real Property
pursuant to easements, licenses, rights-of-way or other rights.
2.6.2. The documents delivered by Company or Stockholders to Buyer as
evidence of each lease of Real Property constitute the entire agreement with the
landlord in question, except for the agreements indicated under Exhibit 2 as
subject to renegotiation which will be renegotiated in order to have them meet
current practice and market prices for which purposes the parties may request
the appraisal of three respectable local real estate brokers. There are no
leases or other agreements, oral or written, granting to any Person other than
Company the right to occupy or use any Real Property. All easements, rights-of-
way and other rights appurtenant to, or which are necessary for the Company's
current use of, any Real Property are valid and in full force and effect, and
the Company has not received any notice with respect to the termination or
breach of any of those rights. Each parcel of Real Property, any improvements
constructed thereon and their current use conform to (a) all applicable Legal
Requirements, including zoning requirements, and (b) all restrictive covenants,
if any, or other Encumbrances affecting all or part of such parcel.
2.6.3. With respect to the building at Rivadavia 14874/76, Stockholders
represent and warrant that such building will have been transferred out of the
Company prior to the Closing Date. Moreover, Stockholders agree to indemnify
and hold harmless Company with respect to any liabilities, including taxes,
arising from such transfer of ownership.
SECTION 2.7. Environmental Matters.
---------------------
2.7.1. The Real Property currently complies with and, to Stockholders' best
knowledge, has previously been operated in compliance with, all Environmental
Laws. Company has not generated, released, stored, used, treated, handled,
discharged or disposed of any Hazardous Substances at, on, under, in or about,
or in any other manner affecting any Real Property, transported any Hazardous
Substances to or from any Real Property or discharged any Hazardous Substances
from any Real Property into any body of water, directly or indirectly, and
Stockholders have no notice that any other present or previous owner, tenant,
-18-
occupant or user of any Real Property or any other Person has committed or
suffered any of the foregoing. To Stockholders's best knowledge, no release of
Hazardous Substances outside the Real Property has entered or threatens to enter
any Real Property, nor is there any pending or threatened claim based on
Environmental Laws which arises from any condition of the land surrounding any
Real Property. No claim or investigation based on Environmental Laws which
relates to any Real Property or any operations on it (a) has been asserted or
conducted in the past or is currently pending against or with respect to Company
or, to the Stockholders' best knowledge, any other Person, or (b) to the
Stockholders' best knowledge, is threatened or contemplated.
2.7.2. To Stockholders's best knowledge, (a) no underground storage tanks
are currently or have been located on any Real Property, (b) no Real Property
has been used at any time as a gasoline service station or any other facility
for storing, pumping, dispensing or producing gasoline or any other petroleum
products or wastes and (c) no building or other structure on any Real Property
contains asbestos. There are no incinerators, septic tanks or cesspools on the
Real Property and all waste is discharged into a public sanitary sewer system.
2.7.3. Stockholders have caused the Company to provide Buyer with complete
and correct copies of (a) all studies, reports, surveys or other materials in
the Company's possession or to which the Company has access relating to the
presence or alleged presence of Hazardous Substances at, on or affecting the
Real Property, (b) all notices or other materials in the Company's possession or
to which the Company has access that were received from any Governmental
Authority having the power to administer or enforce any Environmental Laws
relating to current or past ownership, use or operation of the Real Property or
activities at the Real Property and (c) all materials in the Company's
possession or to which the Company has access relating to any claim, allegation
or action by any private third party under an Environmental Law.
SECTION 2.8. Compliance with Law: Governmental Permits.
-----------------------------------------
2.8.1. The ownership, leasing and use of the Assets as they are currently
owned, leased and used, and the conduct of the Company Business as it is
currently conducted do not violate any Legal Requirement, which violation,
individually or in the aggregate, would have a material adverse effect on the
System, the Company Business or the Company. The Company has received no notice
claiming a violation by Company or the Company Business of any Legal Requirement
-19-
applicable to Company or the Company Business as it is currently conducted and
to Stockholder's and Company's best knowledge, there is no basis for any claim
that such a violation exists. Stockholders and Company have complied fully with
the laws of the Argentine Republic and United States of America Foreign Corrupt
Practices Act.
2.8.2. Complete and correct copies of the Governmental Permits have been
delivered by Company to Buyer. The Governmental Permits are currently in full
force and effect, are not in default, and are valid under all applicable Legal
Requirements according to their terms. There is no legal action, governmental
proceeding or investigation, pending or threatened, to terminate, suspend or
modify any Governmental Permit and Company is in compliance with the terms and
conditions of all Governmental Permits and with other applicable requirements of
all Governmental Authorities relating to the Governmental Permits, including all
requirements for notification, filing, reporting, posting and maintenance of
logs and records.
2.8.3. Without limiting the generality of the foregoing: (a) the operation
of Company Business and the System has been, and is, in compliance with the
rules and regulations of the Argentine Republic, (b) Company has made all
filings required to be made with the Governmental Authorities; (c) Company has
provided all notices to subscribers and maintained all public files required
under Argentine Law; (d) each System is in compliance with all must carry
requirements and has received all necessary retransmission consents; (e) each
System is in compliance with all signal leakage criteria prescribed by the
Argentine regulations; and (f) the Company has complete authorizations to carry
all signals it carries and all authorizations needed to utilize the frequency on
which these signals are carried.
SECTION 2.9. Patents. Trademarks and Copyrights. Company has timely and
-----------------------------------
accurately made all requisite filings and payments with the Register of
Copyrights and is otherwise in compliance with all applicable rules and
regulations of the Copyright Office. The operation of the Company Business as
currently conducted does not violate or infringe upon the rights of any Person
in any copyright, trademark, service mark, patent, license, trade secret or the
like.
SECTION 2.10. Financial Statements. Stockholders have delivered to Buyer
--------------------
correct and complete copies of the Company's (a) audited balance sheets and
related statements of income, stockholders' equity and cash flows for and as of
the year(s) ended December 31st, 1995 and December 31, 1994 and (b) the
unaudited balance
-20-
sheet as of August 31st, 1996, and the related unaudited statement of income for
the eight (8) month period then ended (collectively, the "Financial
Statements"). The Financial Statements were prepared in accordance with GAAP
applied on a consistent basis throughout the periods covered thereby and fairly
present the Company's financial position, results of operations and changes in
financial position as of the dates and for the periods indicated, subject in the
case of the unaudited Financial Statements only to normal year-end adjustments
(none of which will be material in amount) and the omission of footnotes. Except
as disclosed by, or reserved against in, its most recent balance sheet included
in the Financial Statements, Company did not have as of the date of such balance
sheet any liability or obligation, whether accrued, absolute, fixed or
contingent (including liabilities for taxes or unusual forward or longterm
commitments), which was or would be material to the business, results of
operations or financial condition of Company's, nor to Company's best knowledge
does any aspect of the Business form a basis for any claim by a third party
which, if asserted, could result in a liability not disclosed by or reserved
against in such balance sheet.
SECTION 2.11 Except as provided herein, since the date of the most recent
balance sheet included in the Financial Statements (i) the Company Business has
been operated only in the ordinary course, (ii) Company has not sold or disposed
of any Assets other than in the ordinary course of business, (iii) there has
been no material adverse change in, and no event has occurred which is likely,
individually or in the aggregate, to result in any material adverse change in,
the business, operations, Assets, prospects or condition (financial or
otherwise) of the Company Business, other than changes affecting the cable
television industry generally.
SECTION 2.12 Liabilities. Stockholders represent that all Liabilities have
------------
been adequately reported and accounted for and that there are no Liabilities,
disclosed or undisclosed, for which due provision has not been made in the
Financial Statements. Should there be greater Liabilities upon the Company on
the Closing Date, the Base Purchase Price will be reduced in an additional
amount equal to all such greater Liabilities, pursuant to the procedure foreseen
in Section 1.4.
SECTION 2.13. Legal Proceedings. Except as set forth on Exhibit 5 there is
-----------------
no judgment or order outstanding, or any action, suit, complaint, proceeding or
investigation by or before any Governmental Authority or any arbitration
pending, or to Stockholders' best knowledge, threatened, involving or affecting
all or any part of the Company Business or the Company.
-21-
SECTION 2.14. Tax Returns: Other Reports. Company has duly and timely filed
--------------------------
in proper form all income, franchise, sales, use, property, excise, payroll and
other tax returns and all other reports (whether or not relating to taxes)
required to be filed with the appropriate Governmental Authority. All taxes,
fees and assessments of whatever nature due and payable by Company have been
paid, except such amounts as are being contested diligently and in good faith
and are not in the aggregate material all of which are listed in Exhibit 6.
There are no outstanding agreements or waivers extending the statutory period of
limitations applicable to any federal, state, local or foreign income tax return
for any period.
SECTION 2.15. Employment Matters.
------------------
2.15.1. Before Closing Stockholders will cause Company to deliver to Buyer
a complete and correct list of names and positions of all employees of Company
engaged in the Company Business and their current hourly wages or monthly
salaries and other compensation. Company has complied in all respects with all
Legal Requirements relating to the employment of labor, continuation coverage
requirements with respect to group health plans, and those relating to wages,
hours, collective bargaining, unemployment compensation, worker's compensation,
equal employment opportunity and benefit plans, age and disability
discrimination, immigration control and the payment and withholding of taxes.
2.15.2. Except as provided in Exhibit 7 Company is not bound by any
contract with any labor organization, and Company has not recognized or agreed
to recognize and is not required to recognize any union or other collective
bargaining unit. No union or other collective bargaining unit been certified as
representing any of its employees, nor has Company received any requests from
any party for recognition as a representative of employees for collective
bargaining purposes. To Company's best knowledge, its employees are not engaged
in organizing activity with respect to any labor organization. Company has no
employment agreement of any kind, oral or written, express or implied, that
would require Buyer to employ any Person after the Closing Date.
2.15.3 Company has paid to employees employed in the Company Business all
compensation, including salaries, commissions, bonuses, deferred compensation,
severance, insurance, pensions, profit sharing, vacation, sick pay and other
compensation or benefits to which they are entitled for periods prior to the
Closing.
-22-
2.15.4 Stockholders will have paid or properly accrued for maintenance and
distribution of benefits accrued under any employee benefit plan maintained by
Company pursuant to the provisions of such plans. Buyer will assume neither any
liability for any such accrued benefits nor any fiduciary or administrative
responsibility to account for or dispose of any such accrued benefits under any
employee benefit plans maintained by Company.
2.15.5 All claims and obligations under, pursuant to or in connection with
any welfare, medical, insurance, disability or other employee benefit plans of
Company or arising under any Legal Requirement affecting employees of Company
incurred on or before the Closing Date or resulting or arising from events or
occurrences occurring or commencing on or prior to the Closing Date will have
been paid or properly accrued for, whether or not such employees are hired after
the Closing.
SECTION 2.16. EBS Numbers. As of the Closing Date, the Company Business
-----------
will have no fewer than 65,000 EBS's.
SECTION 2.17. Finders and Brokers. Stockholders have not employed any
-------------------
financial advisor, broker or finder or incurred any liability for any financial
advisory, brokerage, finder's or similar fee or commission in connection with
the transactions contemplated by this Agreement for which Buyer could be liable.
SECTION 2.18. Disclosure. No representation or warranty by Stockholders in
----------
this Agreement or in any Schedule or Exhibit to this Agreement, or any
statement, list or certificate furnished or to be furnished by Stockholders or
Company pursuant to this Agreement, contains any untrue statement or material
fact, or omits to state a material fact required to be stated therein or
necessary to make the statements contained therein not misleading in light of
the circumstances in which were made. Without limiting the generality of the
foregoing, the information set forth herein concerning the Company Business is
accurate and complete in all material respects.
SECTION 2.19 Continuity and Maintenance of Operations. Financial
---------------------------------------------------
Statements. Prior to Closing the Company Business has been operated in the
----------
ordinary course consistent with past practices (including completing line
extensions, placing conduit or cable in new developments and fulfilling
installation requests)
-23-
and Company and Stockholders have used their best efforts to keep available the
services of Company's employees employed in connection with the System and to
preserve any beneficial business relationships with customers, suppliers and
others having business dealings relating to the Company Business. Without
limiting the generality of the foregoing, Company has maintained the Assets in
good conditions and repair, has maintained adequate inventories of spare
Equipment consistent with past practice, has maintained insurance and has kept
all of its business books, records and files in the ordinary course of business
in accordance with past practices. Company has not itself, and has not permited
any of its officers, directors, shareholders, agents or employees to, pay any of
Company's subscriber accounts receivable (other than for their own residences)
prior to the Closing Date nor will they hire any of the current employees
officers or directors of the Company except for those agreed herein. Company has
continued to implement its procedures for disconnection and/or discontinuance of
service to subscribers whose accounts are delinquent in accordance with those
in effect on July 31st, 1996.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
Buyer represents and warrants to the Stockholders that:
SECTION 3.1 Organization, Power and Authority. Buyer is a corporation duly
---------------------------------
organized, validly existing and in good standing under the laws of Argentina,
and has the sufficient legal power and authority to own or lease and to operate
its properties and to carry on its business as now being conducted.
SECTION 3.2 Authorization. Buyer has the corporate power and authority to
-------------
execute and deliver this Agreement, to consummate the transactions contemplated
hereby and to perform its obligations under this Agreement, at its sole
discretion. This Agreement, upon its execution and delivery by Buyer (assuming
the due authorization, execution and delivery hereof by the Stockholders), will
constitute the legal, valid and binding obligation of Buyer, enforceable against
Buyer in accordance with its terms, and the rules of law of the country and/or
State to which this Agreement is submitted as per Section 8.14 hereunder.
SECTION 3.3 No Conflict or Violation. Neither the execution and delivery
------------------------
of this Agreement by Buyer, nor the consummation of the transactions
contemplated hereby, will (a) violate any provision of the Articles of
Incorporation
-24-
of Buyer, (b) violate, conflict with or result in the breach or termination of,
or otherwise give any other contracting party the right to terminate, or
constitute a default under the terms of, any mortgage, bond, indenture or
material agreement to which Buyer is a party or by which Buyer or any of its
property or assets may be bound or materially affected, or (c) violate any
judgment, order, injunction, decree or award of any court, administrative agency
or governmental body against, or binding upon, Buyer or upon the property or
business of Buyer.
SECTION 3.4 Brokers' Fees. No broker, finder or similar agent has been
-------------
employed by or on behalf of Buyer in connection with this Agreement or the
transac transaction contemplated hereby, and no person or entity with which
Buyer has had any dealings or communications of any kind is entitled to any
brokerage commission, finder's fee or any similar compensation in connection
with this Agreement or the transactions contemplated hereby.
ARTICLE IV
CONDITIONS TO THE OBLIGATIONS
-----------------------------
OF THE STOCKHOLDERS
-------------------
The obligations of each of the Stockholders to consummate the transactions
contemplated by this Agreement are subject to the fulfillment, on or before the
Closing Date, of the following conditions, subject to the right of the
Stockholders to waive any such condition.
SECTION 4.1 Representations and Warranties True. All of the
-----------------------------------
Representations and Warranties of Buyer contained in this Agreement shall be
true and correct in all material respects on and as of the Closing Date as if
made on and as of the Closing Date.
SECTION 4.2 Agreements Performed. Buyer shall have performed, in all
--------------------
material respects, all agreements required by this Agreement to be performed by
Buyer prior to or on the Closing Date.
SECTION 4.3 No Actions, Suits or Proceedings. No preliminary or permanent
--------------------------------
injunction or other order issued by any federal or state court of competent
jurisdiction preventing consummation of the sale of any or all of the Shares to
Buyer shall be in effect.
-25-
ARTICLE V
CONDITIONS TO THE OBLIGATIONS OF BUYER
--------------------------------------
The obligations of Buyer to consummate the transactions contemplated by
this Agreement, are subject to the fulfillment, on or before the Closing Date,
of the following conditions (subject to the right of Buyer to waive any and/or
all such condition in full, or partially).
SECTION 5.1 Representations and Warranties True. All of the
-----------------------------------
representations and warranties of the Company and each Stockholder contained in
this Agreement shall be true and correct in all material respects on and as of
the Closing Date.
SECTION 5.2 Agreement Performed. Each Stockholder and the Company shall
-------------------
have performed, in all material respects, all agreements and covenants required
by this Agreement to be performed by such Stockholder and the Company prior to
or on the Closing Date.
SECTION 5.3 No Actions, Suits or Proceedings. No preliminary or permanent
--------------------------------
injunction or other order issued by any Governmental Authority or any federal or
state court of competent jurisdiction preventing consummation of the sale of any
or all of the Shares to Buyer shall be in effect.
SECTION 5.4 Stockholders' and Officer's Certificates. (a) Buyer shall
----------------------------------------
have been furnished with certificates executed by each of the Stockholders,
dated the Closing Date, representing and certifying (i) with respect to such
Stockholder that the conditions set forth in this Article V have been fulfilled
at or prior to the Closing Date, and (ii) that such Stockholder is not in
material default under any provision of this Agreement.
(b) Buyer shall have been furnished with a certificate signed by an
appropriate officer of the Company, but without any personal liability to such
officer, regarding the Company's Business and financial condition.
-26-
SECTION 5.5 Required Consents. All Required Consents (including but not
-----------------
limited to consents to change of control of the Company), will have been
obtained on or before the Closing.
SECTION 5.6 Contracts. All Company Contracts are in full force and effect
---------
and the Company has not incurred in any default under the same.
SECTION 5.7 Assets and Employees. The parties will have agreed which
--------------------
assets and which employees, managers and executives will remain in the Company
after Closing.
SECTION 5.8 Non-Competition and Agreement Not To Hire. Each of the
-----------------------------------------
Stockholders will have entered into mutually acceptable agreements not to
compete with the Company (as provided herein) except for RCC, Teleunica and MCM
System, and not to hire employees of the Company after Closing (as provided
herein).
SECTION 5.9 [RESERVED]
SECTION 5.10 COMFER: The COMFER will have issued a letter addressed to
------
Buyer indicating that, as of the Closing Date, the Company is current in all its
obligation to the COMFER (financial and otherwise), including all fees and
penalties, or Stockholders will provide Buyer with a letter by Eduardo Eurnekian
indicating that he will unconditionally undertake payment of such obligations
when and if due after any fiscal resolution of the issue.
SECTION 5.11 [RESERVED]
SECTION 5.12 Due diligence. All aspects related with a broad due diligence
-------------
of the Company must have been satisfactorily completed by the Buyer or its rep
resentatives.
SECTION 5.13 Reports for SEC. Financial Statements will have been prepared
---------------
by Buyer, at its cost, in order that TINTA, its stockholders and affiliates
-27-
may file the same to satisfy (i) their undertakings under Section 512(a) of
Regulation S-K to keep the prospectuses contained in certain presently effective
registration statements current, (ii) the requirements of any forms for the
registration of securities under the U.S. Securities Act of 1933, as amended
(the "Securities Act") which TINTA, its stockholders and affiliates may
hereafter use to register any of its securities, and (iii) its obligation to
file periodic and current reports under the U.S. Securities Exchange Act of
1934, as amended, (iv) the requirements of any proxy statement under the
Securities Act, and (v) such other rules of the Securities and Exchange
Commission of the United States of America which TINTA, its stockholders and
affiliates may deem applicable. Stockholders shall fully cooperate with the
preparation of these reports which shall be made under generally accepted
accounting principles of the United States of America.
ARTICLE VI
COVENANTS
---------
Buyer and the Stockholders hereby covenant and agree as follows:
SECTION 6.1 Required Consents, Estoppel Certificates and Franchise
------------------------------------------------------
Renewals.
--------
Stockholders, Company and Buyer will obtain, as soon as possible, all the
Required Consents and COMFER Approvals, in form and substance satisfactory to
the parties. Buyer, Company and Stockholders will cooperate in obtaining all
Required Consents and COMFER Approvals, but will not be required to agree to
any changes in, or the imposition of any condition to the transfer to Buyer
which may imply a material modification to the Company Business and/or to the
conditions or Sections of this Agreement. Such failure to agree will not
constitute a reason attributable to the same. Should there be changes in,
impositions or conditions which are acceptable to the Buyer but not to the
Stockholders, the latter - in case Closing is not executed - will immediately
return the entire Base Purchase Price to the Buyer and the Shares will be
immediately returned to Stockholders. Stockholders will cause the Company to
require, at its expense, such estoppel certificates or similar documents from
lessors and other Persons who are parties to Company Contracts as Buyer may
request.
Stockholders will use their best efforts to obtain, and will cooperate with
Company to obtain, renewals or extensions of any COMFER and Governmental
-28-
Authority licenses and franchises which expire prior to April, 2000 ("Extended
Franchises"), for applicable legal terms.
SECTION 6.2 Lien and Judgment Searches. Buyer may produce, at its cost in
--------------------------
the shortest possible time (a) results of a lien search conducted by a
professional search company of records in the office of the secretaries of state
in each state and county clerks in each county where there exist tangible
Assets, and in the state and county where Company's principal offices are
located, including copies of all financing statements or similar notices or
filings (and any continuation statements) discovered by such search company and
(b) the results of a search of the dockets of the clerk of each federal and
state court sitting in the city, county or other applicable political
subdivision where the principal office or any material assets of Company may be
loca ted, with respect to judgments, orders, writs or decrees against or
affecting Stockholders or any of the Assets. For these purposes Stockholders
will give full collaboration to the representatives of Buyer.
SECTION 6.3 Transfer Taxes. Stockholders and Buyer will be responsible to
--------------
the extent determined by law for the payment of any state or local sales, use,
transfer, excise, documentary or license taxes or fees or any other charge
(including filing fees) imposed by any Governmental Authority with respect to
the transfer pursuant to this Agreement, according to the rules provided by the
pertinent legislation. Shareholders will pay cost related to removal from the
Company of the assets to be excluded. The removal will not affect the Company
Business.
SECTION 6.4 Satisfaction of Conditions. Each party will use its best
--------------------------
efforts to satisfy, or to cause to be satisfied, the conditions to the
obligations of the other party to consummate the transactions contemplated by
this Agreement, provided that Buyer will not be required to agree to any
increase in the amount payable, or the method of payment.
SECTION 6.5 Confidentiality. Neither party will issue any press release or
---------------
make any other public announcement regarding this Agreement or the transactions
contemplated hereby without the consent of the other party. Each party will
hold, and will cause its employees, consultants, advisors and agents to hold, in
confidence, the terms of this Agreement and any non-public information
concerning the other party obtained pursuant to this Agreement. Notwithstanding
the preceding, a party may dis close such information to the extent required by
any Legal Requirement (including dis closure requirements under Argentine and
United States of America federal and state securities laws), but the party
proposing to disclose
-29-
such information will first notify and consult with the other party concerning
the proposed disclosure, to the extent reasonably feasible. Each party also may
disclose such information to employees, consultants, advisors, agents and actual
or potential lenders whose knowledge is necessary to facilitate the consummation
of the transactions contemplated by this Agreement. Each party's obligation to
hold information in confidence will be satisfied if it exercises the same care
with respect to such information as it would exercise to preserve the
confidentiality of its own similar information. Stockholders authorize Buyer to
use all the information which may be necessary for presentations and filings
before the Securities and Exchange Commission, or applicable state securities
commissions.
SECTION 6.6. Contingencies. Attached hereto as Exhibit 4 is a list of
-------------
estimated contingent liabilities. Stockholders agree that such amounts are
estimates only and that, if and when they become payable, Stockholders will pay
all amounts due thereunder whether greater or less than the amounts listed in
Exhibit 4.
ARTICLE VII
TERMINATION
-----------
SECTION 7 Effects of Termination. If this Agreement is terminated and the
----------------------
transactions contemplated hereby are not consummated as provided in Sections
1.2.2. and 1.2.3., this Agreement shall have no further force and effect. This
general provision does not apply with regard to the provisions of Section 6.5
hereof relating to the confidentiality obligations of the parties and to
publicity, and Sections 2.17 and 3.4 hereof relating to expenses.
ARTICLE VIII
MISCELLANEOUS
-------------
SECTION 8.1 Survival of Representations, Warranties and Agreements. The
------------------------------------------------------
representations and warranties of Stockholders in this Agreement and in the
documents and instruments to be delivered by Stockholders pursuant to this
Agreement will survive until 180 days after the expiration of the applicable
statute of limitations (in including any extensions). The representations and
warranties of Buyer in this Agreement and in the documents and instruments to be
delivered by Buyer pursuant to this Agreement will survive until the sixth
anniversary of the Closing Date. The periods of survival of the representations
and warranties prescribed by this Section are referred to as the "Survival
Period". The liabilities
-30-
of the parties under their respective representations and warranties will expire
as of the expiration of the applicable Survival Period; provided, however, that
such expiration will not include, extend or apply to any representation or
warranty, the breach of which has been asserted by Buyer in a written notice to
Stockholders before such expiration or about which Stockholders have given Buyer
written notice before such expiration indicating that facts or conditions which
exist or that, with the passage of time or otherwise, can reasonably be expected
to result in a breach.
SECTION 8.2 Indemnification by Stockholders. Stockholders (on behalf of
-------------------------------
themselves and the Company) jointly and severally, agree to indemnify and/or
defend and/or hold harmless Buyer from and against:
(a) all losses, damages, liabilities, deficiencies or obligations of or to
the Company, Buyer or any such other indemnified person resulting from or
arising out of (i) any misrepresentation or breach of warranty or any
nonperformance or breach of any covenant or agreement of Stockholders and/or
Company contained in this Agreement or any additional agreements; (ii) the
ownership of the Shares, the owner ship or operation of the Company Assets, or
the control, management or operations of the Company Business, prior to the
Closing, whether known or unknown, asserted or unasserted, now existing or
arising at any time prior to, at or after the Closing, including, without
limitation, fines or forfeitures imposed or threatened to be imposed by any
authority for any operation of the Company Business at or prior to the Closing
which was not in full compliance with applicable rules, or for any operation at
or prior to the Closing of any facility used in conjunction with the operation
of the Company Business which was not in full compliance with said rules and any
future, additional assessment imposed on Buyer or Company after the Closing by
the Copyright Tribunal, the liability for which occurred prior to the Closing,
but excluding any of such liabilities that are reflected on the Balance Sheet to
the extent reflected thereon; and
(b) all claims, actions, suits, proceedings, demands, judgments,
assessments, fines, interest, penalties, costs and expenses (including, agreed
to settlement costs and reasonable legal, accounting, experts' and other fees,
costs and expenses) incident or relating to or resulting from any of the
foregoing.
SECTION 8.3 Stockholders further indemnification. Each of the Stockholders
------------------------------------
jointly and severally agrees to indemnify and hold harmless Buyer and its
assigns from and against any and all claims, losses, damages and expenses
(including, without limitation, settlement costs and reasonable legal or other
expenses) incurred by the Company, Buyer or assignee resulting from or arising
out of any misrepresentation or breach of any warranty relating to such
Stockholder or
-31-
the Shares sold by such Stock holder or the nonperformance or breach of any
covenant, agreement or obligation of such Stockholder.
SECTION 8.4 Indemnification by Buyer. Buyer agrees to indemnify, defend
------------------------
and hold harmless each Stockholder, its successors and assigns, from and against
all losses, damages and expenses (including, agreed to, settlement costs and
reasonable legal or other expenses) incurred by such Stockholder or any other
indemnified person in connection with any misrepresentation or breach of any
warranty made by Buyer in this Agreement or the nonperformance or breach of any
covenant, agreement or obligation of Buyer contained in this Agreement.
SECTION 8.5 Third Party Claims. Promptly after the receipt by any party
------------------
hereto of notice of any claim, action, suit or proceeding by any person who is
not a party to this Agreement (collectively, an "Action") which is subject to
indemnification hereunder, such party (the "Indemnified Party") shall give
reasonable written notice to the party from whom indemnification is claimed (the
"Indemnifying Party"). At the sole expense and liability of the Indemnifying
Party and within a reasonable time after the giving of such notice by the
Indemnified Party, the Indemnifying Party shall: (i) admit or decline in writing
to the Indemnified Party, the Indemnifying Party's liability to the Indemnified
Party for such Action, (ii) notify the Indemnified Party in writing of the
Indemnifying Party's intention to assume the defense thereof, (iii) post an
indemnity or similar bond (in form and substance satisfactory to the Indemnified
Party), in both cases for the full amount (including interest and penalties) for
which the Indemnified Party may be liable as a result of such Action or provide
other evidence satisfactory to the Indemnified Party of the Indemnifying Party's
ability to pay such amount in full, and (iv) retain legal counsel reasonably
satisfactory to the Indemnified Party to conduct the defense of such Action. The
Indemnified Party and the Indemnifying Party shall cooperate with the party
assuming the defense, in defending, compromising or settling any such Action in
any manner that such party reasonably may request. No Indemnified Party shall
settle or compromise any such Action for which it is entitled to
indemnification hereunder without the prior written consent of the Indemnifying
Party, unless the Indemnifying Party shall have failed, after reasonable notice
thereof, to undertake control of such Action in the manner provided above in
this Section. No Indemnifying Party shall settle or compromise any such Action
in which any relief other than the payment of money damages is sought against
any Indemnified Party unless the Indemnified Party consents in writing to such
com promise or settlement.
-32-
SECTION 8.6 Assignment: Successors and Assigns; Third Parties. Except as
-------------------------------------------------
provided herein, Stockholders may not convey, assign or otherwise transfer any
of their rights or obligations under this Agreement without the express written
consent of Buyer or the Stockholders as the case may be. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns. This Agreement is not intended to
benefit, and shall not run to the benefit of or be enforceable by, any other
person or entity other than the parties hereto and their permitted successors
and assigns.
SECTION 8.7 Notices. All notices or other communications required or
-------
permitted to be given hereunder shall be in writing and shall be delivered by
hand (acknowledgement of receipt requested) or through a notary public, or sent
by facsimile, telegram or registered mail (carta documento) and shall be deemed
given when so delivered by hand or through a notary, or if faxed, telegraphed or
mailed when so delivered. Said notices and communications must be addressed as
follows:
If to the Stockholders, addressed to:
Mr. Eduardo Eurnekian
Honduras 5663
1414 - Buenos Aires
Argentina
Telephone: (54 1) 778-6585
Fax: 778-6764
with a copy to:
Dr. Mariano Ibanez
Honduras 5663
1414 - Capital Federal
Telephone: 778-6585
Fax: 778-6765
If to Buyer, addressed to:
Cablevision S.A.
Bonpland 1773
-33-
1414 - Capital Federal
Attention: General Manager
Telephone: 778-6683
Fax: 778-6689
with copies to:
Tele-Communications International, Inc.
5619 DTC Parkway
Englewood, Colorado 80111, U.S.A.
Attention: Chief Executive Office
Telephone: (1 303) 267 5216
Telecopier: (1 303) 488 3200
Tele-Communications International, Inc.
5619 DTC Parkway
Englewood, Colorado 80111, U.S.A.
Attention: General Counsel
Telephone: (1 303) 267 4827
Telecopier: (1 303) 488 3207
M. & M. BOMCHIL - Abogados
Suipacha 268, 12th floor
1355 - Buenos Aires, Argentina
Attention: Dr. Marcelo E. Bombau
Telephone: 328 8400
Telecopier: 326 7217
Mr. Eduardo Eurnekian
Honduras 5663
1414 - Buenos Aires
Argentina
Telephone: (54 1) 778-6769
Fax: 778-6764
Dr. Mariano Ibanez
-34-
Honduras 5663
1414 - Capital Federal
Telephone: 778-6585
Fax: 778-6765
or in any case to such other address or addresses as hereafter shall be
furnished as provided in this Section 8.7 by any of the parties hereto to each
of the other parties hereto.
SECTION 8.8 Waiver: Remedies. No delay on the part of Buyer, on the one
----------------
hand, or the Stockholders, on the other, in exercising any right, power or
privilege hereunder shall operate as a waiver thereof, nor shall any waiver on
the part of Buyer or the Stockholders of any right, power or privilege hereunder
operate as a waiver of any other right, power or privilege hereunder, nor shall
any single or partial exercise of any right, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege hereunder. Upon any default by the Buyer, on the one
hand, or any of the Stockholders, on the other hand, the Buyer or any such
Stockholder, as the case may be, may proceed to protect his or its rights by
suit in equity, action at law or other appropriate proceedings, whether for the
specific performance of any covenant or agreement contained in this Agreement or
to enforce any and all other legal or equitable rights.
SECTION 8.9 Entire Agreement. This Agreement, including the schedules and
----------------
Exhibits attached hereto, constitute the entire agreement among the parties
hereto with respect to the subject matter hereof and supersede all prior
agreements or understandings of the parties relating thereto. There are no
representations, warranties, agreements or undertakings of any party hereto with
respect to the transactions contemplated by this Agreement other than those set
forth in this Agreement or in the documents delivered at the Closing. All
Exhibits annexed hereto, and all schedules referred to herein, are hereby
incorporated in and made a part of this Agreement as if set forth in full
herein.
SECTION 8.10 Amendments; Waivers. This Agreement may be modified or
-------------------
amended only by a written agreement signed by Buyer and Stockholders.
Provisions hereof may be waived, and other actions permitted hereunder or
contemplated hereby may be taken, in the case of Buyer, by an instrument signed
by Buyer, and in the case of the Stockholders, by an instrument signed by
Stockholders.
-35-
SECTION 8.11 Further Assurances. Each Stockholder shall, at the request
------------------
of Buyer, at any time and from time to time following the Closing hereunder,
execute and deliver to Buyer all such further instruments and take all such
further action as may be reasonably necessary or appropriate in order more
effectively to confirm or carry out the provisions of this Agreement and to
sell, assign, transfer and convey to Buyer, or to perfect or record Buyer's
title to or interest in, the Shares sold by such Stockholder hereunder. Buyer
shall at any time and from time to time following the Closing hereunder execute
and deliver to the Stockholders, or any of them, all such further instruments
and take all such further action as may reasonably be necessary or appropriate
in order more effectively to confirm or carry out the provisions of this
Agreement. The parties hereto shall use their best efforts to consummate the
transactions contemplated by this Agreement.
SECTION 8.12 Counterparts. This Agreement may be executed in counterparts,
------------
each of which shall be deemed an original but all of which together shall
constitute a single instrument.
SECTION 8.13 Governing Law: Choice of Forum. Except with respect to the
------------------------------
Promissory Notes, this Agreement shall be governed by and construed in
accordance with the laws of the Republic of Argentina.
SECTION 8.14 Submission to Arbitration. The parties will use their best
-------------------------
efforts to resolve amicably any disputes arising under this Agreement, or those
con tained in its Exhibits or schedules. Except as otherwise expressly provided
herein, and except for those cases related to default in payment of moneys due
and the en forcement of the pledge agreement indicated in Section 1.6.1., all
disputes arising between the parties under this Agreement which cannot be
resolved amicably shall be resolved by submission to arbitration pursuant to the
Rules of the Inter-American Commission on International Commercial Arbitration
then in force. The arbitration shall be held in Geneva, Switzerland. There
shall be three arbitrators, one selected by the Stockholders, one selected by
the Buyer and the third selected by mutual agreement of the parties, and failing
their agreement, pursuant to the Rules of the Commission. None of the
arbitrators shall be citizens of the U.S.A. or the Republic of Argentina. The
arbitration shall be conducted in the English and Spanish languages. Except as
provided below, the arbitrators shall decide the case on the basis of Argentine
law, and shall give written reasons for their award. The party in whose favour
an award is issued shall be entitled to recover its costs on the arbitration,
and any costs incurred in the enforcement of the award, including rea
-36-
sonable attorney's fees. The award of the arbitrators may be enforced in any
jurisdiction where a party has assets or may be found, and the parties hereby
irrevocably waive, to the fullest extent permitted by law, any defenses to
recognition and enforcement of the award on the grounds of the invalidity of the
submission to arbitration, and improper constitution of the arbitral panel (if
constituted pursuant to this Section). Should an issue related to default in
payment of moneys due or enforcement of the pledge agreement foreseen in
Sections 1.6.1. arise, parties agree to submit to the jurisdiction of the courts
of the city of Buenos Aires, or the city of New York as the Stockholders may
decide, except as provided in the Promissory Notes.
SECTION 8.15 Noncompetition. Each Stockholder covenants and agrees that,
--------------
during the period in which he is a director or Stockholder of the Company or of
Buyer, and for five years thereafter neither he nor any of Company's officers,
directors or affiliates, directly or indirectly, shall manage, operate, join,
control, participate, or become interested in, or be connected with (as an
employee, consultant, partner, officer, director, stockholder or investor,
other than through ownership of up to a 5% equity interest in a publicly-traded
entity) any cable television company (except Cablevision S.A., Televisora
Belgrano S.A., MCM System, RCC and Teleunica) or System nor in any Direct
Broadcast Satellite or Direct to Home System which has Subscribers located
within 40 (forty) kilometers miles from the periphery of any por tion of Buyer's
or the Company's Business. This non-competition clause will terminate five (5)
years as from the date the Stockholders cease in their capacities as
Stockholders or directors of the Company and of Buyer.
SECTION 8.16 Disclosure. This Agreement does not contain any untrue
----------
statement nor omit to state a material fact necessary to make the statements
contained herein not misleading. There is no fact known to Stockholders which
materially and adversely affects, or which in the future may so affect, the
Shares, which has not been set forth in this Agreement.
SECTION 8.17 Captions. All section titles or captions contained in this
--------
Agreement, in any Exhibits annexed hereto or in any Schedule referred to herein,
and the table of contents to this Agreement are for convenience only, and shall
not be deemed a part of this Agreement and shall not affect the meaning or
interpretation of this Agreement. All references herein to numbered sections,
except otherwise indicated, are to sections of this Agreement.
-37-
SECTION 8.18. This Agreement is executed in English and Spanish versions,
and in case of differences among them, the Spanish version shall prevail.
SECTION 8.19. The Stockholders and Buyer will execute those documents which
may be necessary for the best implementation of the agreements contained herein.
SECTION 8.20. All the provisions, rights and obligations undertaken by the
Buyer and Stockholders are subject to the suspensive condition of the
corresponding COMFER Approval.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the day and year first above written.
EDUARDO
________________
EURNEKIAN CABLEVISION S.A.
________________________________
NATALIO WENDE By: William L. Wedum
Marcelo E. Bombau
OESTE CABLE COLOR S.A. TELE-COMMUNICATIONS
INTERNATIONAL, INC.
______________________________________________________
By: Eduardo Eurnekian By: William L. Wedum
As: President
Dates Referenced Herein and Documents Incorporated By Reference
| Referenced-On Page |
|---|
| This 10-Q Filing | | Date | | First | | Last | | | Other Filings |
|---|
| |  |
| | 12/31/94 | | 19 |
| | 5/23/96 | | 1 |
| | 8/31/96 | | 2 | | 8 |
| For The Period Ended | | 9/30/96 | | 8 | | 9 |
| Filed On / Filed As Of | | 11/14/96 |
| | 12/1/96 | | 7 |
| Corrected On | | 12/2/96 |
| | 1/10/97 | | 7 |
| | 10/10/97 | | 7 |
| |
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