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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(d)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
------------------------
TESCORP, INC.
(Name of subject company)
TESCORP ACQUISITION CORPORATION
SUPERCANAL HOLDING S.A.
(Bidder)
------------------------------
COMMON STOCK, PAR VALUE $.02 PER SHARE
(Title of class of securities)
881584106--COMMON STOCK
(CUSIP number of class of securities)
DANIEL EDUARDO VILA
SUPERCANAL HOLDING S.A.
GODOY CRUZ 316
MENDOZA, PROVINCE OF MENDOZA
ARGENTINA 5500
54-61-295125
(Name, address and telephone number of person authorized to receive notices and
communications on behalf of bidder)
------------------------------
WITH A COPY TO:
DAVID W. BERNSTEIN, ESQ.
ROGERS & WELLS
200 PARK AVENUE
NEW YORK, NEW YORK 10166-0153
TELEPHONE: (212) 878-8342
CALCULATION OF FILING FEE
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TRANSACTION VALUATION* AMOUNT OF FILING FEE
<S> <C>
$59,478,525 $11,896
</TABLE>
* Based in accordance with Rule 0-11(d) on the aggregate of the cash offered for
the Common Stock.
/ / Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the form
or schedule and the date of its filing.
Amount Previously Paid: ________________________________________________________
Form or Registration No.: ______________________________________________________
Filing Party: __________________________________________________________________
Date Filed: ____________________________________________________________________
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CUSIP No. 88154106 SCHEDULE 14D-1 Page 2 of 8 Pages
</TABLE>
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1. NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NO. OF EACH ABOVE PERSON
Tescorp Acquisition Corporation
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [X]
(b) [ ]
3. SEC USE ONLY
4. SOURCE OF FUNDS
AF
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(e) or 2(f)
[ ]
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
6,006,006 shares of Common Stock are owned by Tescorp Acquisition Corporation.
8. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES
CERTAIN SHARES
[ ]
9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
31%
10. TYPE OF REPORTING PERSON
CO
</TABLE>
2
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<TABLE>
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CUSIP No. 88154106 SCHEDULE 14D-1 Page 3 of 8 Pages
</TABLE>
<TABLE>
<C> <S>
1. NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NO. OF EACH ABOVE PERSON
Supercanal Holding S.A.
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [X]
(b) [ ]
3. SEC USE ONLY
4. SOURCE OF FUNDS
BK
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(e) or 2(f)
[ ]
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Argentina
7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
6,006,006 shares of Common Stock are owned by Supercanal Holding S.A.
8. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES
CERTAIN SHARES
[ ]
9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
31%
10. REPORTING PERSON
HC
</TABLE>
3
<PAGE>
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Tescorp, Inc., a Texas corporation
(the "Company"). The address of the Company's principal executive offices is 327
Congress Avenue, Suite 200, Austin, Texas 78701.
(b) This Statement on Schedule 14D-1 relates to the offer by Tescorp
Acquisition Corporation (the "Purchaser"), a Delaware corporation and a wholly
owned subsidiary of Supercanal Holding S.A., (the "Parent"), an Argentine
corporation, to purchase all of the outstanding shares of common stock, par
value $.02 per share, of the Company (the "Common Shares"), and all of the
outstanding shares of Series 1995 8% Convertible Preferred Stock of the Company
(the "8% Preferred Shares") upon the terms and subject to the conditions set
forth in the Offer to Purchase (the "Offer to Purchase"), dated December 8,
1997, and in the related Letters of Transmittal (which, together with any
amendments or supplements thereto, constitute the "Offer"), at a purchase price
of $4.50 per Common Share net to the tendering stockholder in cash, without
interest thereon and $144 per 8% Preferred Share plus accrued dividends from the
last date on which dividends were paid prior to the expiration of the Offer. The
Company has informed the Purchaser that as of December 5, 1997, there were
19,223,456 outstanding Common Shares and 139,250 outstanding 8% Preferred
Shares. The information set forth in the "Introduction" of the Offer to Purchase
annexed hereto as Exhibit (a)(1) is incorporated herein by reference.
(c) The information set forth in Section 7 ("Price Range of Shares") of the
Offer to Purchase is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d); (g) This Statement is being filed jointly by the Purchaser and
Parent. The information set forth in Section 9 ("Certain Information Concerning
the Purchaser and Parent") of the Offer to Purchase and Schedule I thereto is
incorporated herein by reference.
(e) and (f) During the last five years, neither the Purchaser nor Parent,
nor, to the best knowledge of the Purchaser and Parent, any persons controlling
the Purchaser or Parent, or any of the persons listed on Schedule I to the Offer
to Purchase, (i) has been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors) or (ii) was a party to a civil proceeding of
a judicial or administrative body of competent jurisdiction as a result of which
any such person was or is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting activities subject to, federal or state
securities laws or finding any violation of such laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a)-(b) The information set forth in Section 11 ("Background of the Offer;
Contacts with the Company"), Section 12 ("Purpose of the Offer and the Proposed
Merger; Plans for the Company") and Section 13 ("The Merger") of the Offer to
Purchase is incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)-(b) The information set forth in Section 10 ("Source and Amount of
Funds") of the Offer to Purchase is incorporated herein by reference.
(c) Not applicable.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a)-(e) The information set forth in the Introduction, Section 11
("Background of the Offer; Contacts with the Company"), Section 12 ("Purpose of
the Offer and the Proposed Merger; Plans for the Company") and Section 13 ("The
Merger") of the Offer to Purchase is incorporated herein by reference.
4
<PAGE>
(f)-(g) The information set forth in Section 14 ("Certain Effects of the
Transaction") of the Offer to Purchase is incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a) The information set forth in the Introduction and Section 9 ("Certain
Information Concerning the Purchaser and Parent") of the Offer to Purchase is
incorporated herein by reference.
(b) The information set forth in Section 9 ("Certain Information Concerning
the Purchaser and Parent") of the Offer to Purchase is incorporated herein by
reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE SUBJECT COMPANY'S SECURITIES.
The information set forth in the Introduction and Section 9 ("Certain
Information Concerning the Purchaser and Parent"), Section 11 ("Background of
the Offer; Contacts with the Company") and Section 12 ("Purpose of the Offer and
the Proposed Merger; Plans for the Company") and Section 13 ("The Merger") of
the Offer to Purchase is incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in the Introduction and Section 17 ("Fees and
Expenses") of the Offer to Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The information set forth in Section 9 ("Certain Information Concerning the
Purchaser and Parent") of the Offer to Purchase is incorporated herein by
reference.
ITEM 10. ADDITIONAL INFORMATION.
(a) Not applicable.
(b)-(c) The information set forth in and Section 16 ("Certain Legal Matters;
Regulatory Approvals") of the Offer to Purchase is incorporated herein by
reference.
(d) The shares of the Company are not margin stock.
(e) There are no pending legal proceedings relating to the Offer.
(f) The information set forth in the Offer to Purchase, the Letters of
Transmittal, the Summary Advertisement and the Amended Stock Purchase and Merger
Agreement copies of which are attached hereto as Exhibits (a)(1), (a)(2), (a)(7)
and (c) respectively, is incorporated herein by reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
(a) (1) Offer to Purchase, dated December 8, 1997.
(2) Letters of Transmittal.
(3) Notice of Guaranteed Delivery.
(4) Letter from the Dealer Managers to Brokers, Dealers, Commercial
Banks, Trust Companies and other Nominees.
5
<PAGE>
(5) Letter to clients for use by Brokers, Dealers, Commercial Banks,
Trust Companies and other Nominees.
(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(7) Summary Advertisement as published on December 8, 1997.
(8) Text of Press Release, dated December 5, 1997, issued by Parent.
(b) (1) Note Purchase Agreement among Parent, and the other issues named or
referred to therein, as issuers, the financial institutions party thereto, as
purchasers, ING Baring (U.S.) Securities, Inc. as Arranger, ING Baring (U.S.)
Capital Corporation, as Administrative Agent and Collateral Agent and the Bank
of New York, as Registrar.
(2) Supplement to Note Purchase Agreement dated November 26, 1997.
(c) Amended Stock Purchase and Merger Agreement dated as of November 26,
1997.
(d) Not applicable.
(e) Not applicable.
(f) None.
6
<PAGE>
SIGNATURE. After due inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: December 8, 1997
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TESCORP ACQUISITION CORPORATION
By: /s/ Alfredo L. Vila
------------------------------
Name: Alfredo L. Vila
Title: President
SUPERCANAL HOLDING S.A.
By: /s/ Daniel E. Vila
------------------------------
Name: Daniel E. Vila
Title: Chief Executive
Officer
</TABLE>
7
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------------------------------------------------------------------------------------------------
<C> <S>
(a)(1) Offer to Purchase, dated December 8, 1997.
(2) Letters of Transmittal.
(3) Notice of Guaranteed Delivery.
(4) Letter from the Dealer Managers to Brokers, Dealers, Commercial Banks, Trust Companies and other
Nominees.
(5) Letter to clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and other Nominees.
(6) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9.
(7) Summary Advertisement as published on December 8, 1997.
(8) Text of Press Release, dated December 5, 1997, issued by Parent.
(b)(1) Note Purchase Agreement among Parent, and the other issues named or referred to therein, as issuers,
the financial institutions party thereto, as purchasers, ING Baring (U.S.) Securities, Inc. as
Arranger, ING Baring (U.S.) Capital Corporation, as Administrative Agent and Collateral Agent and the
Bank of New York, as Registrar.
(2) Supplement to Note Purchase Agreement dated November 26, 1997.
(c) Amended Stock Purchase and Merger Agreement dated as of November 26, 1997.
(d) Not applicable.
(e) Not applicable.
(f) None.
</TABLE>
8
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
AND SERIES 1995 8% CONVERTIBLE PREFERRED STOCK
of
TESCORP, INC.
by
TESCORP ACQUISITION CORPORATION
A WHOLLY OWNED SUBSIDIARY
of
SUPERCANAL HOLDING S.A.
for
$4.50 PER SHARE OF COMMON STOCK
and
$144 PLUS ACCRUED DIVIDENDS FOR EACH SHARE
OF SERIES 1995 8% CONVERTIBLE PREFERRED STOCK
NET IN CASH
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON FRIDAY, JANUARY 9, 1998, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS CONDITIONED UPON (1) THERE BEING VALIDLY TENDERED AND NOT
WITHDRAWN PRIOR TO THE EXPIRATION TIME A NUMBER OF SHARES OF COMMON STOCK
("COMMON SHARES") OF TESCORP, INC. (THE "COMPANY"), WHICH, WHEN ADDED TO THE
COMMON SHARES ALREADY OWNED BY TESCORP ACQUISITION CORPORATION (THE
"PURCHASER"), CONSTITUTES MORE THAN TWO-THIRDS OF THE TOTAL NUMBER OF
OUTSTANDING COMMON SHARES, (2) THERE BEING VALIDLY TENDERED AND NOT WITHDRAWN
PRIOR TO THE EXPIRATION TIME A NUMBER OF SHARES OF SERIES 1995 8% CONVERTIBLE
PREFERRED STOCK ("8% PREFERRED SHARES") WHICH, WHEN ADDED TO THE 8% PREFERRED
SHARES ALREADY OWNED BY THE PURCHASER, CONSTITUTES MORE THAN TWO-THIRDS OF THE
TOTAL NUMBER OF OUTSTANDING 8% PREFERRED SHARES ON A FULLY DILUTED BASIS, AND
(3) SATISFACTION OF CERTAIN OTHER CONDITIONS. SEE SECTION 15.
THIS OFFER IS BEING MADE IN ACCORDANCE WITH AN AMENDED STOCK PURCHASE AND
MERGER AGREEMENT (THE "MERGER AGREEMENT"), DATED AS OF NOVEMBER 26, 1997,
BETWEEN THE COMPANY AND THE PURCHASER. THE BOARD OF DIRECTORS OF THE COMPANY (1)
HAS APPROVED THE MERGER AGREEMENT, THE OFFER AND A MERGER OF THE COMPANY AND THE
PURCHASER (THE "MERGER"), IN WHICH SUPERCANAL HOLDING S.A., THE PARENT OF THE
PURCHASER, WILL BECOME THE SOLE STOCKHOLDER OF THE MERGED COMPANY AND THE
STOCKHOLDERS OF THE COMPANY WILL RECEIVE THE SAME AMOUNT OF CASH PER COMMON
SHARE AND PER 8% PREFERRED SHARE AS IS PAID FOR SHARES PURCHASED THROUGH THE
OFFER, (2) HAS DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER ARE FAIR TO
AND IN THE BEST INTERESTS OF THE COMPANY'S STOCKHOLDERS AND (3) RECOMMENDS THAT
HOLDERS OF THE COMMON SHARES AND 8% PREFERRED SHARES (COLLECTIVELY, "SHARES")
TENDER THEIR SHARES IN RESPONSE TO THE OFFER.
------------------------
IMPORTANT
Any stockholder who wishes to tender Shares should complete and sign a
Letter of Transmittal (or a facsimile of one) in accordance with the
instructions set forth in the Letter of Transmittal and (A) mail or deliver it,
together with the certificate(s) representing the tendered Shares (the "Share
Certificates") and any other required documents, to the Depositary named on the
back cover of this Offer to Purchase or (B) tender the Shares using the
procedures for book-entry transfer described in Section 3. A stockholder whose
Shares are registered in the name of a broker, dealer, commercial bank, trust
company or other nominee must contact the broker, dealer, commercial bank, trust
company or other nominee if the stockholder wishes to tender Shares.
A stockholder who wishes to tender Shares but whose certificates are not
immediately available, or who cannot comply with the procedures for book-entry
transfer described in this Offer to Purchase on a timely basis, may tender the
Shares by following the procedures for guaranteed delivery described in Section
3.
Questions and requests for assistance, or for additional copies of this
Offer to Purchase, the Letter of Transmittal or other tender offer materials,
may be directed to the Information Agent or the Dealer Managers (named on the
back cover of this Offer to Purchase) at their respective addresses and
telephone numbers set forth on the back cover. Holders of Shares may also
contact brokers, dealers or banks for additional copies of this Offer to
Purchase, the Letter of Transmittal or other tender offer materials.
--------------------------
THE DEALER MANAGERS FOR THE OFFER ARE:
ING BARINGS FURMAN SELZ
December 8, 1997
<PAGE>
TABLE OF CONTENTS
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PAGE
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INTRODUCTION............................................................................................... 1
THE TENDER OFFER........................................................................................... 3
1. Terms of the Offer............................................................................ 3
2. Acceptance for Payment and Payment for Shares................................................. 4
3. Procedures for Tendering Shares............................................................... 5
4. Withdrawal Rights............................................................................. 8
5. Conditions of the Offer....................................................................... 8
6. Certain Federal Income Tax Consequences....................................................... 10
7. Price Range of Shares......................................................................... 11
8. Certain Information Concerning the Company.................................................... 11
9. Certain Information Concerning The Purchaser and Parent....................................... 13
10. Source and Amount of Funds.................................................................... 14
11. Background of the Offer; Contacts with the Company............................................ 14
12. Purpose of the Offer and the Proposed Merger; Plans for the Company........................... 16
13. The Merger.................................................................................... 18
14. Certain Effects of the Transaction............................................................ 21
15. Dividends and Distributions................................................................... 21
16. Certain Legal Matters; Regulatory Approvals................................................... 22
17. Fees and Expenses............................................................................. 23
18. Miscellaneous................................................................................. 23
SCHEDULE I................................................................................................. I-1
</TABLE>
i
<PAGE>
TO THE HOLDERS OF SHARES OF COMMON STOCK, PAR VALUE $.02 PER SHARE, AND THE
HOLDERS OF SERIES 1995 8% CONVERTIBLE PREFERRED STOCK, OF TESCORP, INC.:
INTRODUCTION
Tescorp Acquisition Corporation (the "Purchaser"), a Delaware corporation
and a wholly owned subsidiary of Supercanal Holding S.A. ("Parent"), an
Argentine corporation, hereby offers to purchase (i) all the outstanding shares
of common stock, par value $0.02 per share ("Common Shares"), of Tescorp, Inc.
(the "Company"), a Texas corporation, for $4.50 per Common Share, net to the
seller in cash, and (ii) all the outstanding shares of Series 1995 8%
Convertible Preferred Stock ("8% Preferred Shares") of the Company for $144 per
share plus accrued dividends from the last date on which dividends were paid to
the Expiration Time (as defined below) (collectively the Common Shares and the
8% Preferred Shares are referred to as the "Shares" and the $4.50 per share
price and the $144 per share price plus accrued dividends which the Purchaser is
offering to pay are referred to as the "purchase prices"), upon the terms and
subject to the conditions set forth in this Offer to Purchase and in the related
Letters of Transmittal (which together, as amended from time to time, constitute
the "Offer").
The Offer is being made in accordance with an Amended Stock Purchase and
Merger Agreement (the "Merger Agreement") dated as of November 26, 1997 between
the Purchaser and the Company. The Merger Agreement contemplates that (i) the
Purchaser would purchase from the Company 6,006,006 Common Shares for $3.33 per
share (the "Stock Purchase"), (ii) not later than December 5, 1997, the Company
would announce the Offer and (iii) if the Purchaser purchases at least a number
of Common Shares and 8% Preferred Shares which, together with the shares already
owned by the Purchaser (which will include the 6,006,006 Common Shares purchased
by the Purchaser in the Stock Purchase), constitutes at least two thirds of the
outstanding Common Shares and two-thirds of the outstanding 8% Preferred Shares,
and the other conditions set forth in the Merger Agreement are satisfied or
waived, the Purchaser will take all steps in its power to cause the Purchaser to
be merged into the Company in a transaction in which Supercanal Holding S.A.,
the sole stockholder of the Purchaser, will become the sole stockholder of the
corporation which survives the Merger and all the stockholders of the Company
other than the Purchaser will receive cash in the same amount per Common Share
and per 8% Preferred Share as is paid for Shares purchased through the Offer.
Under the Merger Agreement, if a tender offer is commenced by someone other than
the Purchaser for all the outstanding Common Shares and 8% Preferred Shares
which the Company's Board of Directors determines to be superior to the Offer
and which the Board of Directors resolves to accept or to recommend to the
Company's stockholders, the Company may terminate the Merger Agreement by paying
the Purchaser $5 million.
Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes as a result of the sale of shares to the
Purchaser in response to the Offer.
Any tendering stockholder who fails to complete and sign the Substitute Form
W-9 included in the Letter of Transmittal may be subject to a required backup
Federal income tax withholding of 31% of the gross proceeds payable to the
stockholder or other payee pursuant to the Offer. See Section 3. The Purchaser
will pay all charges and expenses of Furman Selz LLC and ING Baring (U.S.)
Securities, Inc. as Dealer Managers (the "Dealer Managers"), The Bank of New
York, as Depositary (the "Depositary"), and Morrow & Co., Inc., as Information
Agent (the "Information Agent"), incurred in connection with the Offer. See
Section 17.
THE BOARD OF DIRECTORS OF THE COMPANY (1) HAS APPROVED THE OFFER AND THE
MERGER WHICH WILL FOLLOW THE OFFER IF THE OFFER IS SUCCESSFULLY COMPLETED AND
THE SHAREHOLDERS OF THE COMPANY APPROVE THE MERGER, (2) HAS DETERMINED THAT THE
TERMS OF THE OFFER AND THE MERGER EACH IS FAIR TO AND IN THE BEST INTERESTS OF
THE COMPANY'S STOCKHOLDERS, AND (3) RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS
ACCEPT THE OFFER AND TENDER THEIR SHARES IN RESPONSE TO THE OFFER.
<PAGE>
THE MINIMUM CONDITION. The Offer is subject to a number of conditions,
including the Minimum Condition. See Section 15. The Minimum Condition requires
that (i) the number of Common Shares tendered and not withdrawn before the
Expiration Time, when added to the number of Common Shares already owned by the
Purchaser, constitute more than two-thirds of the total number of outstanding
Common Shares and (ii) the number of 8% Preferred Shares validly tendered and
not withdrawn before the Expiration Time, when added to the number of 8%
Preferred Shares already owned by the Purchaser, constitute more than two-thirds
of the total number of outstanding 8% Preferred Shares. The Company has informed
the Purchaser that as of December 5, 1997, there were 19,223,456 outstanding
Common Shares and 139,250 outstanding 8% Preferred Shares. The Purchaser owned
6,006,006 (approximately 31%) of those Common Shares. On that date, there also
were 3,060,470 Common Shares reserved for issuance on exercise of outstanding
options and warrants. The Shares owned by the Purchaser were acquired from the
Company in the Stock Purchase, which took place under the Merger Agreement on
December 5, 1997.
Assuming no additional Shares are issued before the Expiration Time, the
Minimum Condition will be satisfied if at least 6,809,632 Common Shares and
92,834 8% Preferred Shares are properly tendered and not withdrawn before the
Expiration Time.
Other conditions to consummation of the Offer are described in Section 5.
The Purchaser expressly reserves the right, in its sole discretion, to waive any
of the conditions to the Offer. See Section 5.
THIS OFFER TO PURCHASE AND THE LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
2
<PAGE>
THE TENDER OFFER
1. TERMS OF THE OFFER. On the terms and subject to the conditions of the
Offer (including, if the Offer is extended or amended, the terms and conditions
of the extension or amendment), the Purchaser will accept for payment and pay
for all Shares validly tendered prior to the Expiration Time and not withdrawn
in accordance with Section 4. The term "Expiration Time" means 12:00 midnight,
New York City time, on Friday, January 9, 1998, unless the Purchaser extends the
period during which the Offer is open, in which event the term "Expiration Time"
will mean the time and date at which the Offer, as extended, will expire.
In the Merger Agreement, the Purchaser has agreed that it will not extend
the Offer to a date which is more than 60 days after the Offer is commenced,
except that (a) if the Offer is modified during the period it is open to
increase the price per share payable in the Offer or in any other manner
permitted by the Merger Agreement, the Offer many be extended until not more
than 10 business days after the day on which the modification is communicated to
the Company's stockholders, (b) if anyone makes a tender offer for either the
Common Shares or the 8% Preferred Shares before the Offer expires, the Offer may
be extended until not more than 10 business days after the other tender offer
expires, (c) if the Purchaser is prevented by an order of a court or other
governmental agency from accepting Shares which are tendered, the Offer may be
extended until 10 business days after the Purchaser is able to accept Shares
without violating any order of any court or other governmental agency and (d) if
the Minimum Condition is not satisfied by the scheduled Expiration Time, the
Offer may be extended for up to an additional 60 days to enable the Minimum
Condition to be satisfied (and if, although the Minimum Condition is not
satisfied, at least 2,500,000 Common Shares and at least 35,000 8% Preferred
Shares are properly tendered and not withdrawn, the Purchaser will extend the
Offer for at least an additional 30 days to enable the Minimum Condition to be
satisfied).
The Purchaser also has agreed in the Merger Agreement that it will not (a)
decrease the number of Shares being tendered for in the Offer, (b) reduce the
Purchase Price either for the Common Shares or for the 8% Preferred Shares, (c)
modify or add to the conditions described in Section 5, (d) change the form of
consideration payable in the Offer, or (e) extend the Offer, except as required
or permitted by the Merger Agreement (which is described above).
The Purchaser reserves the right, at any time and from time to time, to
extend the period during which the Offer is open, by giving oral or written
notice of the extension to the Depositary and by making a public announcement of
it as described below. During any extension, all Shares previously tendered and
not withdrawn will remain tendered in response to the Offer, subject to the
rights of a tendering stockholder to withdraw tendered Shares. See Section 4.
Subject to the Merger Agreement and the applicable regulations of the
Securities and Exchange Commission (the "Commission"), the Purchaser reserves
the right, at any time and from time to time, to (i) delay acceptance for
payment of, or, regardless of whether Shares were already accepted for payment,
payment for, Shares pending receipt of any regulatory or third-party approval
described in Section 16 or in order to comply in whole or in part with any other
applicable law, (ii) terminate the Offer and not accept for payment any Shares
if any of the conditions described in Section 5 have not been satisfied or upon
the occurrence of any of the events described in Section 5 or (iii) waive any
condition or otherwise amend the Offer in any respect, in each case, by giving
oral or written notice of the delay, termination, waiver or amendment to the
Depositary and by making a public announcement of it, as described below.
The Purchaser acknowledges that (i) Rule 14e-1(c) under the Securities
Exchange Act of 1934, as amended (the "Exchange Act") requires the Purchaser to
pay the consideration offered or return the tendered Shares promptly after the
termination or withdrawal of the Offer and (ii) the Purchaser may not delay
acceptance for payment of, or payment for (except as provided in clause (i) of
the first sentence of the preceding paragraph), any Shares upon the occurrence
of any of the events described in Section 5 without extending the period of time
during which the Offer is open.
3
<PAGE>
The Purchaser will make a public announcement of any extension, delay,
termination, waiver or amendment as promptly as practicable after it takes
place. In the case of an extension, a public announcement will be made no later
than 9:00 a.m., New York City time, on the business day after the day of the
previously scheduled Expiration Time. Subject to applicable law (including Rules
14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act, which require that material
changes be promptly disseminated to stockholders in a manner reasonably designed
to inform them of the changes), the Purchaser will have no obligation to
publish, advertise or otherwise communicate any public announcement other than
by issuing a press release.
If the Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or if it waives a material condition to the
Offer, the Purchaser will extend the Offer to the extent required by Rules
14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act. Consummation of the Offer
is conditioned upon satisfaction of the Minimum Condition, and the other
conditions set forth in Section 5. The Purchaser reserves the right (but will
not be obligated) to waive any or all of those conditions.
If, prior to the Expiration Time, the Purchaser should decide to increase
the consideration being offered in the Offer, that increase will be applicable
to all stockholders whose Shares are accepted for payment, including
stockholders who tender their shares before the Purchaser increases the
consideration. If, at the time notice of an increase in the consideration being
offered is first published or otherwise given to holders of Shares, the Offer is
scheduled to expire earlier than the tenth business day after (but including)
the day the notice is first published or otherwise given, the Offer will be
extended at least until the expiration of that ten-business-day period. The
Purchaser does not expect to increase the consideration being offered.
The Company has given the Purchaser a stockholder list and security position
listings for the purpose of enabling the Purchaser to disseminate the Offer to
holders of Shares. This Offer to Purchase and the related Letter of Transmittal
and other relevant materials will be mailed to record holders of Shares and to
brokers, dealers, commercial banks, trust companies and similar persons whose
names, or the names of whose nominees, appear on the Company's stockholder list,
or who are listed as participants in a clearing agency's security position
listing for subsequent transmittal to beneficial owners of Shares.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES. On the terms and subject
to the conditions of the Offer (including, if the Offer is extended or amended,
the terms and conditions of the extension or amendment), the Purchaser will
purchase, by accepting for payment, and will pay for, all Shares which are
validly tendered (and not properly withdrawn in accordance with Section 4) prior
to the Expiration Time. Shares will be accepted as soon as practicable after the
later to occur of (i) the Expiration Time and (ii) the satisfaction or waiver of
the conditions set forth in Section 5. Any determination concerning the
satisfaction of the terms and conditions of the Offer will be in the sole
discretion of the Purchaser. See Section 5. The Purchaser expressly reserves the
right, in its sole discretion, to delay acceptance for payment of, or, subject
to the applicable rules of the Commission, payment for, Shares in order to
comply in whole or in part with any applicable law. See Section 16.
In all cases, payment for Shares which are tendered in response to the Offer
and accepted for payment will be made only after timely receipt by the
Depositary of (a) the certificate(s) representing the tendered Shares (the
"Share Certificates"), or timely confirmation of a book-entry transfer (a
"Book-Entry Confirmation") of the Shares (if that procedure is available) into
the Depositary's account at The Depository Trust Company (the "Book-Entry
Transfer Facility"), as described in Section 3, (b) a properly completed and
duly executed Letter of Transmittal (or facsimile of one), or an Agent's Message
in connection with a book-entry transfer, and (c) any other documents required
by the Letter of Transmittal.
An "Agent's Message" is a message, transmitted by the Book-Entry Transfer
Facility to, and received by, the Depositary and forming a part of the
Book-Entry Confirmation, which states that the Book-Entry Transfer Facility has
received an express acknowledgment from a participant in the Book-Entry Transfer
4
<PAGE>
Facility which tenders Shares that the participant has received, and agrees to
be bound by the terms of, the Letter of Transmittal and that the Purchaser may
enforce that agreement against the participant.
For purposes of the Offer, the Purchaser will be deemed to have accepted for
payment, and thereby purchased, tendered Shares when the Purchaser gives oral or
written notice to the Depositary of the Purchaser's acceptance of the Shares for
payment. Payment for Shares which are accepted will be made by deposit of the
aggregate purchase price for all the Shares which are accepted for payment with
the Depositary, which will act as agent for tendering stockholders for the
purpose of receiving payment from the Purchaser and transmitting payment to the
tendering stockholders. UNDER NO CIRCUMSTANCES WILL INTEREST ON THE OFFER PRICE
BE PAID BY THE PURCHASER BY REASON OF ANY DELAY IN PAYING FOR SHARES. Upon the
deposit of funds with the Depositary for the purpose of making payments to
tendering stockholders, the Purchaser's obligation to pay for Shares will be
satisfied and tendering stockholders must look solely to the Depositary for
payment of amounts owed to them by reason of the acceptance of their Shares
pursuant to the Offer. If, for any reason, acceptance for payment of or payment
for any Shares tendered in response to the Offer is delayed, or the Purchaser is
prevented from accepting for payment or paying for Shares which are tendered in
response to the Offer, the Depositary may, nevertheless, retain tendered Shares
on behalf of the Purchaser and those Shares may not be withdrawn, except to the
extent the tendering stockholder exercises withdrawal rights as described in
Section 4. The Purchaser will pay any stock transfer taxes incident to the
transfer to it of validly tendered Shares, except as otherwise provided in
Instruction 6 of the Letter of Transmittal, as well as any charges and expenses
of the Depositary and the Information Agent.
If any tendered Shares are not accepted for payment for any reason, or if
certificates which are submitted evidence more Shares than are tendered,
certificates representing unpurchased or untendered Shares will be returned or
sent, without expense to the tendering stockholder (or, in the case of Shares
tendered by book-entry transfer into the Depositary's account at the Book-Entry
Transfer Facility, Shares which are not purchased will be credited to an account
at that Book-Entry Transfer Facility), as promptly as practicable following the
expiration or termination of the Offer.
IF, PRIOR TO THE EXPIRATION TIME, THE PURCHASER INCREASES THE CONSIDERATION
OFFERED TO HOLDERS OF SHARES TENDERED IN RESPONSE TO THE OFFER, THE INCREASED
CONSIDERATION WILL BE PAID TO ALL HOLDERS WHOSE SHARES ARE PURCHASED THROUGH THE
OFFER, INCLUDING HOLDERS WHOSE SHARES ARE TENDERED BEFORE THE CONSIDERATION IS
INCREASED.
The Purchaser reserves the right to transfer or assign, in whole, or in part
from time to time, to one or more of its affiliates the right to purchase all or
any portion of the Shares which are tendered in response to the Offer, but such
a transfer or assignment will not relieve the Purchaser of its obligations under
the Offer and will in no way prejudice the rights of tendering stockholders to
receive payment for Shares which are validly tendered in response to the Offer
and accepted for payment.
3. PROCEDURES FOR TENDERING SHARES.
VALID TENDER OF SHARES. Except as set forth below, in order for Shares to be
validly tendered in response to the Offer, (a) a Letter of Transmittal or a
facsimile of one, properly completed and duly executed, with any required
signature guarantees, or an Agent's Message in connection with a book-entry
delivery of Shares, and any other required documents, must be received by the
Depositary at one of its addresses set forth on the back cover of this Offer to
Purchase prior to the Expiration Time and (b) either (i) the certificates
representing the tendered Shares must be received by the Depositary along with
the Letter of Transmittal, (ii) the Shares must be tendered using the procedure
for book-entry transfer described below, and the Book-Entry Confirmation must be
received by the Depositary prior to the Expiration Time, or (iii) the tendering
stockholder must comply with the guaranteed delivery procedures described below.
5
<PAGE>
THE METHOD OF DELIVERY OF SHARE CERTIFICATES, THE LETTER OF TRANSMITTAL AND
OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER
FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER. ITEMS WILL BE
DEEMED DELIVERED ONLY WHEN THEY ARE ACTUALLY RECEIVED BY THE DEPOSITARY. IF
DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ENSURE TIMELY DELIVERY.
BOOK-ENTRY TRANSFER. The Depositary will establish an account with respect
to the Shares at The Depository Trust Company (the "Book-Entry Transfer
Facility") for purposes of the Offer within two business days after the date of
this Offer to Purchase, and any financial institution that is a participant in
the Book-Entry Transfer Facility's system may make book-entry delivery of Shares
by causing the Book-Entry Transfer Facility to transfer the Shares into the
Depositary's account at the Book-Entry Transfer Facility. Although delivery of
Shares may be effected through book-entry transfer at the Book-Entry Transfer
Facility, a Letter of Transmittal or a facsimile of one, with any required
signature guarantees, or an Agent's Message in connection with a book-entry
delivery of Shares, and any other required documents, as well as the Book Entry
Confirmation relating to the Shares, must be transmitted to and received by the
Depositary at one of its addresses set forth on the back cover of this Offer to
Purchase prior to the Expiration Time or the guaranteed delivery procedures
described below must be followed.
REQUIRED DOCUMENTS MUST BE TRANSMITTED TO AND RECEIVED BY THE DEPOSITARY AT
ONE OF ITS ADDRESSES SET FORTH ON THE BACK COVER PAGE OF THIS OFFER TO PURCHASE.
DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE
DELIVERY TO THE DEPOSITARY.
SIGNATURE GUARANTEES. Signatures on Letters of Transmittal need not be
guaranteed, unless the Shares to which they relate are being tendered by a
registered holder of Shares who has completed either the box entitled "Special
Delivery Instructions" or the box entitled "Special Payment Instructions" on the
Letter of Transmittal. Signatures on Letters of Transmittal on which either of
those boxes has been completed must be guaranteed by a firm which is a bank,
broker, dealer, credit union, savings association or other entity that is a
member in good standing of the Securities Transfer Agents Medallion Program
(each an "Eligible Institution"). See Instruction 1 of the Letter of
Transmittal.
If a Share Certificate is registered in the name of a person other than the
signer of the Letter of Transmittal, or if payment is to be made, or
certificates representing shares which are not tendered or are not accepted for
payment are to be returned, to a person other than the registered holder(s),
then the Share Certificate must be endorsed or accompanied by appropriate stock
powers, in either case, signed exactly as the name(s) of the registered
holder(s) appear on the Share Certificate, with the signature(s) on the Share
Certificate or stock powers guaranteed. See Instructions 1 and 5 of the Letter
of Transmittal.
If Share certificates are delivered to the Depositary at different times, a
properly completed and duly executed Letter of Transmittal (or facsimile of one)
must accompany each delivery.
GUARANTEED DELIVERY. If a stockholder wishes to tender Shares in response
to the Offer but the Share Certificates are not immediately available or time
will not permit all required documents to reach the Depositary prior to the
Expiration Time, or the procedure for book-entry transfer cannot be completed on
a timely basis, the Shares may nevertheless be tendered as follows:
(i) the tender must be made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided with this Offer to Purchase,
must be received by the Depositary before the Expiration Time; and
6
<PAGE>
(iii) the Share Certificates representing all tendered Shares, in proper
form for transfer, or the Book-Entry Confirmation, together with a properly
completed and duly executed Letter of Transmittal (or facsimile of one),
with any required signature guarantees (or, in the case of a book-entry
transfer, an Agent's Message) and any other documents required by the Letter
of Transmittal are received by the Depositary within three (3) New York
Stock Exchange trading days after the date of execution of the Notice of
Guaranteed Delivery.
A Notice of Guaranteed Delivery may be delivered by hand or transmitted by
telegram, facsimile transmission or mail to the Depositary, but must include a
guarantee by an Eligible Institution in the form set forth in the Notice of
Guaranteed Delivery distributed with this Offer to Purchase.
Payment for Shares which are accepted for payment will be made only after
timely (i) receipt by the Depositary of Share Certificates for, or of Book-Entry
Confirmation with respect to, the Shares, (ii) a properly completed and duly
executed Letter of Transmittal (or facsimile of one), together with any required
signature guarantees (or, in the case of a book-entry transfer, an Agent's
Message) and (iii) any other documents required by the Letter of Transmittal.
Accordingly, it is possible that payment will not be made to all tendering
stockholders at the same time.
BACKUP UNITED STATES FEDERAL WITHHOLDING TAX. Under the United States
Federal income tax laws, the Depositary may be required to withhold 31% of the
amount of any payments made to certain stockholders. To prevent backup Federal
income tax withholding, each tendering stockholder must provide the Depositary
with the stockholder's correct taxpayer identification number, or certify that
the stockholder is exempt from backup Federal income tax withholding, by
completing the Substitute Form W-9 included in the Letter of Transmittal. See
Instruction 10 of the Letter of Transmittal.
APPOINTMENT AS PROXY. By executing a Letter of Transmittal, a tendering
stockholder irrevocably appoints designees of the Purchaser as the tendering
stockholder's attorneys-in-fact and proxies, in the manner set forth in the
Letter of Transmittal, each with full power of substitution, to the full extent
of the stockholder's rights with respect to the Shares tendered by the
stockholder and accepted for payment by the Purchaser (and with respect to any
other securities issued in respect of those Shares on or after the date of this
Offer to Purchase). That proxy is considered coupled with an interest in the
tendered Shares. This appointment will be effective if, when and to the extent
that the Purchaser accepts the tendered Shares for payment pursuant to the
Offer. When tendered Shares are accepted for payment, all prior proxies given by
the stockholder with respect to the tendered Shares and any other securities
issued in respect of them will, without further action, be revoked, and no
subsequent proxies may be given. The designees of the Purchaser will, with
respect to the tendered Shares and any other securities for which the
appointment is effective, be empowered to exercise all voting and other rights
of the tendering stockholder as they, in their sole discretion, deem proper at
any annual, special, adjourned or postponed meeting of the Company's
stockholders, and the Purchaser reserves the right to require that in order for
Shares or other securities to be deemed validly tendered, immediately upon the
Purchaser's acceptance for payment of the Shares, the Purchaser will be able to
exercise full voting rights with respect to the Shares.
Proxies are effective only as to Shares accepted for payment pursuant to the
Offer. The Offer does not constitute a solicitation of proxies, absent a
purchase of Shares, for any meeting of the Company's stockholders. Any
solicitation of proxies will be made only pursuant to separate proxy
solicitation materials complying with the Exchange Act.
DETERMINATIONS REGARDING TENDERS. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any Shares
using any of the procedures described above will be determined by the Purchaser,
in its sole discretion, and the Purchaser's determination will be final and
binding on all parties. The Purchaser reserves the absolute right to reject any
or all tenders of Shares determined by it not to be in proper form or if the
acceptance for payment of, or payment for, the Shares may, in the opinion of the
Purchaser's counsel, be unlawful. The Purchaser also reserves the absolute
right,
7
<PAGE>
in its sole discretion, to waive any of the conditions of the Offer or any
defect or irregularity in any tender with respect to Shares of any particular
stockholder, whether or not similar defects or irregularities are waived in the
case of other stockholders. No tender of Shares will be deemed to have been
validly made until all defects and irregularities have been cured or waived.
The Purchaser's interpretation of the terms and conditions of the Offer
(including the Letter of Transmittal and the instructions to it) will be final
and binding. None of Parent, the Purchaser, either Dealer Manager, the
Depositary, the Information Agent or any other person will be under any duty to
give notification of any defects or irregularities in tenders or will incur any
liability for failure to give any such notification.
BINDING AGREEMENT. The Purchaser's acceptance for payment of Shares
tendered in response to the Offer will constitute a binding agreement by the
tendering stockholder to sell, and by the Purchaser to purchase, the tendered
Shares on the terms and subject to the conditions of the Offer.
4. WITHDRAWAL RIGHTS. Except as otherwise provided in this Section 4,
tenders of Shares made in response to the Offer are irrevocable. Shares tendered
in response to the Offer may be withdrawn at any time prior to the Expiration
Time and, unless they have been accepted for payment by the Purchaser, may also
be withdrawn at any time after February 9, 1998.
If the Purchaser extends the Offer, is delayed in its acceptance of Shares
for payment or is unable to accept Shares for payment for any reason, then,
without prejudice to the Purchaser's rights under the Offer, the Depositary may,
nevertheless, retain tendered Shares on behalf of the Purchaser, and those
Shares may not be withdrawn except to the extent that tendering stockholders are
entitled to withdraw them as described in this Section 4. Any such delay will be
accompanied by an extension of the Offer to the extent required by law.
For a withdrawal to be effective, a written or facsimile transmission of a
notice of withdrawal must be timely received by the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase. A notice of
withdrawal must specify the name of the person who tendered the Shares to be
withdrawn, the number of Shares to be withdrawn and (if Share Certificates have
been tendered) the name of the registered holder, if different from that of the
person who tendered the Shares. If Share Certificates evidencing Shares to be
withdrawn have been delivered or otherwise identified to the Depositary, then
prior to the release of those Share Certificates, the serial numbers shown on
the particular Share Certificates to be withdrawn must be submitted to the
Depositary, and the signature(s) on the notice of withdrawal must be guaranteed
by an Eligible Institution, unless the Shares have been tendered for the account
of an Eligible Institution. If Shares have been tendered pursuant to the
procedure for book-entry transfer, any notice of withdrawal must also specify
the name and number of the account at the Book-Entry Transfer Facility to be
credited with the withdrawn Shares. Withdrawals of Shares may not be rescinded.
After Shares are properly withdrawn, they will be deemed not to have been
validly tendered for purposes of the Offer. However, withdrawn Shares may be
retendered at any time prior to the Expiration Time using one of the procedures
described in Section 3.
All questions as to the form and validity (including, without limitation,
time of receipt) of notices of withdrawal will be determined by the Purchaser,
in its sole discretion, and its determination will be final and binding. None of
Parent, the Purchaser, either Dealer Manager, the Depositary, the Information
Agent or any other person will be under any duty to give notification of any
defects or irregularities in any notice of withdrawal or will incur any
liability for failure to give any such notification.
5. CONDITIONS OF THE OFFER. The Purchaser will not be required to accept
for payment or, subject to any applicable rules and regulations of the
Commission, including Rule 14e-1(c) under the Exchange Act (relating to the
Purchaser's obligation to pay for or return tendered Shares promptly after
termination or withdrawal of the Offer), pay for, the Shares which are tendered
in response to the Offer if:
8
<PAGE>
(a) The number of Shares properly tendered in response to the Offer and
not withdrawn, together with the Common Shares and any 8% Preferred Shares
already owned by the Purchaser does not total more than two-thirds of the
outstanding Common Shares and two-thirds of the outstanding 8% Preferred
Shares;
(b) There are any 10% Preferred Shares outstanding after the day which
is 65 days after the Stock Purchase (if that day is before the Expiration
Date);
(c) Any statute, rule, regulation, order or injunction has been enacted,
promulgated, entered or enforced by any national or state government or
governmental authority or by any United States or Argentine court of
competent jurisdiction, that would make the acquisition of the Shares by the
Purchaser illegal or otherwise prohibit consummation of the Offer or the
Merger; or
(d) There has been (i) a general suspension of trading in, or limitation
on prices for, securities on the New York Stock Exchange which continued for
at least three business days, (ii) the declaration of a banking moratorium
or any suspension of payments in respect of banks in the United States or
Argentina (whether or not mandatory) which continued for at least three
business days, (iii) the commencement of a war or armed hostilities or any
other international or national calamity directly or indirectly involving
the United States or Argentina, which has a significant adverse effect on
the functioning of financial markets in the United States or Argentina, (iv)
any limitation (whether or not mandatory) by any United States or Argentine
governmental authority or agency on the extension of credit by banks or
other financial institutions which would have a material adverse effect on
Parent's or the Purchaser's ability to borrow sufficient funds under its
bank facilities to purchase and pay for all the Shares which are tendered in
response to the Offer and to carry out the Merger on the terms contemplated
by the Merger Agreement or (v) there is a material acceleration or worsening
of any of the conditions described in clauses (i) through (iv) which exists
at the date of the commencement of the Offer.
(e) Any of the representations and warranties of the Company set forth
in the Merger Agreement is not true and correct as of the date of the Merger
Agreement except failures to be true and correct which would not, in the
aggregate, have a material adverse effect upon the Company;
(f) Since the date of the Merger Agreement, there has been an occurrence
or group of occurrences (whether or not related) which have had a material
adverse effect upon the Company (other than (i) occurrences which affected
generally the cable television industry worldwide or in Argentina, including
actual or proposed changes in laws or regulations, or (ii) the transactions
contemplated by the Merger Agreement, including the change in control
contemplated by it);
(g) the Company has not performed all the obligations it is required to
have performed under the Merger Agreement, except failures which (i) would,
in the aggregate, not materially impair or delay the ability of the
Purchaser to consummate the purchase of the Shares which are tendered in
response to the Offer or the ability of the Purchaser and the Company to
effect the Merger, (ii) have been caused by or result from a breach of the
Merger Agreement by the Purchaser; or (iii) do not, and are not reasonably
expected to, have a material adverse effect on the Company;
(h) The Merger Agreement has been terminated in accordance with its
terms; or
(i) The Board of Directors of the Company withdraws or modifies in a
manner adverse to the Purchaser the Board's approval or recommendation of
the Offer or the Merger.
The conditions set forth above are for the sole benefit of the Purchaser,
and may be waived by the Purchaser, in whole or in part. Any delay by the
Purchaser in exercising the right to terminate the Offer because any of the
conditions are not fulfilled will not be deemed a waiver of its right to do so.
9
<PAGE>
6. CERTAIN FEDERAL INCOME TAX CONSEQUENCES.
The following summary is a general discussion of certain of the expected
Federal income tax consequences of the Offer. The summary is based on the
Internal Revenue Code of 1986, as amended (the "Code"), and published
regulations, rulings and judicial decisions in effect at the date of this Offer
to Purchase, all of which are subject to change. The summary does not discuss
all aspects of Federal income taxation that may be relevant to a particular
holder in light of his or her personal circumstances or to certain types of
holders subject to special treatment under the Federal income tax laws, such as
life insurance companies, financial institutions, tax-exempt organizations and
non-U.S. persons. The following summary may not be applicable with respect to
Shares acquired through exercise of employee stock options or otherwise as
compensation. It also does not discuss any aspects of state or local tax laws or
of tax laws of jurisdictions outside the United States of America.
THE DESCRIPTION OF FEDERAL INCOME TAX CONSEQUENCES SET FORTH BELOW IS FOR
GENERAL INFORMATION ONLY. HOLDERS ARE URGED TO CONSULT THEIR TAX ADVISORS AS TO
THE PARTICULAR TAX CONSEQUENCES TO THEM OF THE SALE OF THEIR SHARES, INCLUDING
THE APPLICATION OF FEDERAL, STATE, LOCAL AND FOREIGN TAX LAWS AND POSSIBLE
CHANGES IN TAX LAWS.
Sales of Shares in response to the Offer will be taxable transactions for
Federal income tax purposes, and may also be taxable transactions under
applicable state, local, foreign and other tax laws. For Federal income tax
purposes, a tendering stockholder will generally recognize gain or loss equal to
the difference between the amount of cash received by the stockholder upon sale
of the Shares and the aggregate tax basis in the Shares which are sold. Under
present law, gain or loss will be calculated separately for each block of Shares
tendered and purchased pursuant to the Offer.
If tendered Shares are held by a tendering stockholder as capital assets,
gain or loss recognized by the tendering stockholder will be capital gain or
loss, which will be long-term capital gain or loss if the tendering
stockholder's holding period for the Shares exceeds one year. Long-term capital
gains recognized by a tendering individual stockholder will generally be taxed
at a maximum Federal marginal tax rate of 28% as to Shares held between 12 and
18 months and 20% as to shares held more than 18 months. Long-term capital gains
recognized by a tendering corporate stockholder will be taxed at a maximum
Federal marginal tax rate of 35%.
A stockholder (other than certain exempt stockholders, including all
corporations and certain foreign individuals) who tenders Shares may be subject
to 31% backup withholding unless the stockholder provides its taxpayer
identification number ("TIN") and certifies that the TIN is correct or properly
certifies that it is awaiting a TIN. This should be done by completing and
signing the substitute Form W-9 included as part of the Letter of Transmittal. A
stockholder that does not furnish its TIN also may be subject to a penalty
imposed by the IRS.
If backup withholding applies to a stockholder, the Depositary is required
to withhold 31% from each payment to that stockholder. Backup withholding is not
an additional tax. Rather, the amount of the backup withholding can be credited
against the Federal income tax liability of the person subject to the backup
withholding, provided that the required information is given to the IRS. If
backup withholding results in an overpayment of tax, a refund can be obtained by
the stockholder upon filing an income tax return.
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<PAGE>
7. PRICE RANGE OF SHARES. The Common Shares trade on the NASDAQ Small-Cap
Market under the symbol "TESC." The following table sets forth, for the periods
indicated, the high and low sales prices per Common Share on the NASDAQ
Small-Cap Market.
COMMON SHARES
<TABLE>
<CAPTION>
HIGH LOW
------- -------
<S> <C> <C>
Year Ended December 31,
1995:
First Quarter.......... $ 2.88 $ 1.88
Second Quarter......... 4.000 1.875
Third Quarter.......... 3.563 2.750
Fourth Quarter......... 3.875 2.750
Year Ended December 31,
1996
First Quarter.......... 4.375 2.500
Second Quarter......... 4.500 3.2500
Third Quarter.......... 4.1250 2.8750
Fourth Quarter......... 4.6250 2.8750
Year Ended December 31,
1997
First Quarter.......... 4.3125 3.2500
Second Quarter......... 4.000 3.0625
Third Quarter.......... 4.1875 3.0625
Fourth Quarter (through
December 4, 1997).... 4.1250 3.5000
</TABLE>
Insofar as the Purchaser is aware, there is no trading market for the 8%
Preferred Shares.
On September 15, 1997, the last full day of trading prior to the public
announcement of the execution of the Merger Agreement, the last sales price of
the Common Shares reported on NASDAQ was $3.375. On December 5, 1997, the last
full day of trading prior to the commencement of the Offer, the last sales price
reported on NASDAQ was $4 per Common Share. STOCKHOLDERS ARE URGED TO OBTAIN
CURRENT MARKET QUOTATIONS FOR THE SHARES.
8. CERTAIN INFORMATION CONCERNING THE COMPANY. The information concerning
the Company contained in this Offer to Purchase, including financial
information, has been taken from or is based upon publicly available documents
and records on file with the Commission and other public sources. None of
Parent, the Purchaser or either Dealer Manager assumes any responsibility for
the accuracy or completeness of the information concerning the Company contained
in those documents and records or for any failure by the Company to disclose
events which may have occurred or may affect the significance or accuracy of any
such information but which are not known to Parent, the Purchaser or either
Dealer Manager.
The Company is a Texas corporation and its principal executive offices are
located at 327 Congress Avenue, Suite 200, Austin, Texas 78701. The following
description of the Company's business has been taken from the Company's 1997
Form 10-KSB/A:
The Company acquires, develops and operates cable television and
communications systems in the Republic of Argentina, with concentrations in the
Patagonia and Tierra del Fuego regions. At March 31, 1997, the Company provided
cable television service to approximately 69,000 subscribers. In addition, the
Company holds a license to provide data services to its customers under the name
"Patagonia On-Line (TM)."
Set forth below is certain consolidated financial information with respect
to the Company, excerpted or derived from the summary financial information of
the Company contained in the Company's 1997 10-KSB/A and the Company's Form 10-Q
for the period ended September 30, 1997. More comprehensive
11
<PAGE>
financial information is included in those reports and other documents filed
with the Commission, and the following summary is qualified in its entirety by
reference to those reports and other documents, including the financial
information and related notes contained in them. The reports and other documents
may be inspected and copies of them may be obtained in the manner set forth
below.
TESCORP, INC. AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL INFORMATION
<TABLE>
<CAPTION>
QUARTERS ENDED
SEPTEMBER 30, YEARS ENDED MARCH 31,
---------------------- ------------------------------------
1997 1996 1997 1996 1995
---------- ---------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA
Revenues.................... $7,208,487 $5,527,433 $22,580,466 $16,009,116 $ *
Operating income (loss)..... (1,142,651) (676,419) (2,391,448) (1,470,291) (1,480,039)
Net income (loss)........... (1,754,501) (779,974) (3,382,059) (1,495,297) 229,046
Net Earnings (loss) per
share applicable to Common
Shares.................... (0.16) (0.9) (0.38) (0.19) (0.2)
</TABLE>
- ------------------------
* The Company had disposed of its oil and gas field service company operating
units in fiscal 1994, and accordingly, for the fiscal years ended March 31,
1995, the Company recorded no net sales. The Company began consolidating the
earnings from its Latin America operations beginning with the first quarter
of fiscal 1996.
<TABLE>
<CAPTION>
AS OF SEPTEMBER 30
----------------------
1997 1996
---------- ----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
BALANCE SHEET DATA:
Total assets..................................................... $50,831,707 $43,058,722
Debt............................................................. 7,193,613 1,059,287
Total liabilities................................................ 19,916,392 6,245,423
Total Stockholders' equity....................................... 30,102,837 35,818,068
</TABLE>
The Company is subject to the informational and reporting requirements of
the Exchange Act and is required to file reports and other information with the
Commission relating to its business, financial condition and other matters.
Information, as of particular dates, concerning the Company's directors and
officers, their remuneration, stock options granted to them, the principal
holders of the Company's securities, any material interests of those persons in
transactions with the Company and other matters is required to be disclosed in
proxy statements distributed to the Company's stockholders and filed with the
Commission. These reports, proxy statements and other information can be
inspected and copied at the public reference facilities of the Commission
located at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549, and at the following regional offices of the Commission: Seven World
Trade Center, New York, New York 10048; and Citicorp Center, 500 West Madison
Street, Chicago, Illinois 60661. Copies of this material may be obtained by
mail, upon payment of the Commission's customary fees, from the Commission's
principal office at 450 Fifth Street, N.W., Washington, D.C. 20549. The
Commission also maintains an Internet site on the world wide web at
http://www.sec.gov that contains reports, proxy statements and other
information. Reports, proxy statements and other information concerning the
Company should also be available for inspection at the offices of NASDAQ, 1735 K
Street, N.W., Washington, D.C. 20006. All of the information with respect to the
Company and its affiliates set forth in this Offer to Purchase has been derived
from publicly available information.
12
<PAGE>
9. CERTAIN INFORMATION CONCERNING THE PURCHASER AND PARENT.
THE PURCHASER. The Purchaser is a Delaware corporation organized in order
to enter into the transactions which are the subject of the Merger Agreement
(including the Offer). The principal executive offices of the Purchaser are
located at Godoy Cruz 316, Mendoza, Province of Mendoza, Argentina 5500. The
Purchaser is a wholly owned subsidiary of Parent. Until immediately prior to the
Stock Purchase, the Purchaser did not have any significant assets or liabilities
and had not engaged in activities other than those incidental to its formation
and capitalization and preparation for the Stock Purchase, the Offer and the
Merger. Due to the fact that the Purchaser is newly formed and, until the Stock
Purchase, had minimal assets and capitalization, no meaningful financial
information regarding the Purchaser is available.
In the Stock Purchase, the Purchaser purchased 6,006,006 Common Shares
Preferred Shares for $3.33 per Common Share (a total of $20,000,000). That price
is lower than the price to be paid in the Offer and the Merger. However, the
terms of the Stock Purchase were agreed upon (a) to provide funds to the Company
at prices Parent and the Purchaser were willing to pay even if they did not
acquire the remaining shares of the Company, and (b) with knowledge that if the
Offer and the Merger were completed, Parent would own all the stock of the
Company, and therefore Parent would, in effect, become the owner of the proceeds
of the Stock Purchase (or of the benefits of application of those proceeds). The
Agreement provides that unless the Purchaser purchases all the Shares tendered
in response to the Offer (even if the Minimum Condition or other conditions are
not fulfilled), the Company will have an option, which will expire one year
after the date of the Stock Purchase, to repurchase the shares it sold in the
Stock Purchase for the price the Purchaser paid for those shares. See
"Description of the Agreement."
PARENT. Parent, a corporation organized under the laws of Argentina, is the
third largest multi-channel television system operator in Argentina, providing
multi-channel television services via cable and wireless technology. The
principal executive offices of Parent are located at Godoy Cruz 316, Mendoza,
Province of Mendoza, Argentina 5500.
During the last 5 years none of Parent's or Purchaser's officers or
directors was (1) convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors) or (2) party to a civil proceeding of a
judicial or administrative body of competent jurisdiction and as a result of the
proceeding was or is subject to a judgment, decree or final order enjoining
future violations of or prohibiting activities subject to, Federal or state
securities laws or finding any violation of such laws.
Parent is not subject to the informational and reporting requirements of the
Exchange Act and Parent is not required to file reports and other information
with the Commission relating to its businesses, financial condition or other
matters.
The name, citizenship, business address, principal occupation or employment
and five-year employment history for each of the directors and executive
officers of the Purchaser and Parent are set forth in Schedule I.
Except for the 6,006,006 Common Shares acquired by the Purchaser on December
5, 1997 through the Stock Purchase described in this Offer to Purchase, none of
Parent, the Purchaser or, to the best knowledge of Parent or the Purchaser, any
of the persons listed on Schedule I or any associate or majority owned
subsidiary of any of those persons beneficially owns any equity security of the
Company, and none of Parent or the Purchaser or, to the best knowledge of Parent
or the Purchaser, any of the other persons referred to above, or any of their
respective directors, executive officers or subsidiaries, has effected any
transaction in any equity security of the Company during the past 60 days.
Except as described in this Offer to Purchase, none of Parent or the
Purchaser or, to the best knowledge of Parent or the Purchaser, any of the
persons listed on Schedule I has any contract, arrangement, understanding or
relationship with any other person with respect to any securities of the
13
<PAGE>
Company, including, without limitation, any contract, arrangement, understanding
or relationship concerning the transfer or the voting of any securities of the
Company, joint ventures, loan or option arrangements, puts or calls, guarantees
of loans, guarantees against loss or the giving or withholding of proxies.
Except as set forth in this Offer to Purchase, none of Parent or the Purchaser
or, to the best knowledge of Parent or the Purchaser, any of the persons listed
on Schedule I has had any transactions with the Company or any of its executive
officers, directors or affiliates that would require reporting under the rules
of the Commission.
Except as described in this Offer to Purchase, since January 1, 1994, there
have been no contacts, negotiations or transactions between Parent or the
Purchaser, or their respective subsidiaries, or, to the best knowledge of Parent
or the Purchaser, any of the persons listed in Schedule I, on the one hand, and
the Company or its executive officers, directors or affiliates, on the other
hand, concerning a merger, consolidation or acquisition, tender offer or other
acquisition of securities, election of directors or a sale or other transfer of
a material amount of assets.
10. SOURCE AND AMOUNT OF FUNDS. If all the outstanding Shares not owned by
the Purchaser were tendered in response to the Offer, the Purchaser would be
required to pay a total of approximately $86 million to purchase the tendered
Shares and pay the fees and other expenses related to the Offer. See Section 17.
The Purchaser expects to obtain the funds required to consummate the Offer
through capital contributions or advances made by Parent. Parent has guaranteed
the Purchaser's obligations under the Merger Agreement, including obligations
with respect to the Offer.
On November 12, 1997, Parent entered into a $300,000,000 Note Purchase
Agreement (the "Loan Agreement") among Parent, and the other issuers named or
referred to therein, as issuers, the financial institutions party thereto, as
purchasers, ING Baring (U.S.) Securities, Inc. as Arranger, ING Baring (U.S.)
Capital Corporation, (the "Bank"), as Administrative Agent and Collateral Agent,
and The Bank of New York, as Registrar. One of the reasons Parent entered into
the Loan Agreement was to obtain the funds it would require for the transactions
which are the subject of the Merger Agreement. Parent expects to obtain
substantially all the funds which will be used to pay for tendered Shares and to
pay the fees and expenses related to the Offer through borrowings under the Loan
Agreement. It is permitted to use up to $135 million of borrowings (including
the $20 million paid in the Stock Purchase) for the transactions under the
Merger Agreement and to pay costs of those transactions. ING Baring (U.S.)
Securities, Inc., an affiliate of the Bank, acted as a financial advisor to
Parent in connection with the transactions which are the subject of the Merger
Agreement and is one of the Deal Managers with regard to the Offer.
Borrowings under the Loan Agreement bear interest at LIBOR plus 4.5% per
annum and must be repaid by November 12, 2002. Parent anticipates that the
indebtedness under the Loan Agreement, including indebtedness incurred by Parent
in connection with the Stock Purchase, the Offer and the Merger, will be repaid
from funds generated internally by Parent and its subsidiaries (including, after
the Merger, if consummated, dividends paid by the surviving corporation and its
subsidiaries), through additional borrowings, through application of proceeds of
dispositions of assets or through a combination of two or more of those sources.
No final decisions have been made, however, concerning the method Parent will
employ to repay that indebtedness. Those decisions, when made, will be based on
Parent's review from time to time of the advisability of particular actions, as
well as on prevailing interest rates and financial and other economic
conditions.
11. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY.
The initial discussions of a possible transaction between Parent and the
Company took place at a meeting in October 1996 between senior officers of the
Company and representatives of Integra Financial Services L.L.C ("Integra"), an
advisor to Parent. These initial discussions, and additional discussions through
March 1997, focused on the high degree of consolidation in the Argentine CATV
industry which
14
<PAGE>
was taking place, and the advisability of combining the operations of Parent and
the Company in view of that consolidation.
In April 1997, there were discussions about a merger of the Company and
Parent, in which shareholders of the Company would receive shares of Parent.
Extensive discussions were held, and draft agreements were prepared. However,
the merger would have required approval of the shareholders of both companies. A
shareholder of Parent, which had the ability to preclude Parent from carrying
out the merger, stated it would not approve a merger. Because of that,
discussions of a merger were dropped.
Early in August 1997, discussions of a transaction between Parent and the
Company were revived. Parent was represented in these discussions by Integra,
ING Baring (U.S.) Securities, Inc. ("ING Baring Securities") and Smith Barney &
Co., Inc. ("Smith Barney"). The Company was represented in these discussions by
its senior officers and by Arnhold and S. Bleicholder & Co. ("Bleicholder"). By
mid-August, Parent and the Company each brought attorneys into the discussions,
and agreements began to be drafted.
From mid-August to mid-September, there were nearly daily discussions of a
transaction between Parent and the Company. Initially, the discussions related
to a purchase by Parent from the Company of what would have been approximately
45% of the outstanding Common Shares and 30% of the outstanding 8% Preferred
Shares for approximately $39 million, followed by a merger of the Company into a
subsidiary of Parent in which the stockholders of the Company would have
received $4.53 per Common Share and $144.96 per 8% Preferred Share. However, at
Parent's suggestion, it was decided that the transaction would take place in
three steps, with a tender offer for the Common Shares and 8% Preferred Shares
between the initial stock purchase and the merger.
A principal issue during the discussions was a desire of the Company to be
sure Parent would not become unable to complete a transaction either (i) because
it did not have adequate funds or (ii) because its shareholders would not permit
the transaction to proceed. With regard to the first concern, ING Baring (US)
Capital Corporation ("ING Baring Capital") delivered a letter to the Company
stating that ING Baring Capital had obtained internal credit approval for a
senior secured credit facility in an aggregate principal amount sufficient to
conclude the transactions being discussed, but the disbursement of that facility
was subject to the negotiation, execution and delivery of definitive
documentation satisfactory to ING Baring Capital and its counsel, which would
contain, among other things, customary covenants, conditions precedent and
security arrangements (including financial covenants on a pro forma basis
concerning the combined operations of Parent and the Company). With regard to
the second concern, the stockholders of Parent all stated they approved of the
transaction.
On September 16, 1997, the Purchaser (a wholly-owned subsidiary of Parent)
and the Company signed a Stock Purchase and Merger Agreement (the "Original
Merger Agreement") in which they agreed that (i) the Purchaser would purchase
10,790,000 Common Shares (which would be approximately 45% of the outstanding
Common Shares) for $35,930,700 ($3.33 per share) and would purchase 60,750 8%
Preferred Shares (which would be 30% of the outstanding 8% Preferred Shares) for
$6,075,000 ($100 per share), (ii) shortly after completion of that stock
purchase, the Purchaser would make a tender offer for all the outstanding Common
Shares and 8% Preferred Shares for $4.50 per Common Share and $144 per 8%
Preferred Share (plus an amount equal to accrued dividends on the 8% Preferred
Shares), and (iii) if the tender offer resulted in the Purchaser's owning at
least two-thirds of the outstanding Common Shares and two-thirds of the
outstanding 8% Preferred Shares (which would enable the Purchaser to approve a
merger between the Company and itself even if no other Tescorp shareholders
voted in favor of the merger), the Company and the Purchaser would be merged in
a transaction in which Parent would become the sole shareholder of the merged
company and the former Tescorp shareholders who had not tendered their shares
would receive $4.50 per Common Share and $144 per 8% Preferred Share plus
accrued dividends, unless they sought to obtain appraisal of their shares in
accordance with Articles 5.11 through 5.13 of the Texas Business Corporation
Act. The Original Merger Agreement required that before the Purchaser purchased
the 10,790,000 Common Shares and the 60,750 8% Preferred Shares, three designees
of the
15
<PAGE>
Purchaser would be elected to the Company's Board of Directors. When the
Original Merger Agreement was signed, the Purchaser gave the Company a
$5,000,000 deposit, to be applied against the purchase price of the 10,790,000
Common Shares and the 60,750 8% Preferred Shares.
After the Original Merger Agreement was signed, required filings were made
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and
the waiting periods required by that Act were terminated. Also, agreements
between Parent and various financial institutions, including ING Bank N.V.,
which included the financing required for the transaction contemplated by the
Original Merger Agreement were drafted. However, before those financing
agreements were signed, it was realized that the purchase by the Purchaser of
45% of the Common Shares and 30% of the 8% Preferred Shares would not result in
the Company's financial statements being included in Parent's consolidated
financial statements, and therefore, that step of the transaction would cause
Parent to be in violation of financial ratio covenants which would be in the
financing agreements.
On November 5, 1997, representatives of Parent informed the principal
executive officers of the Company that, because of requirements of Parent's
expected lending agreements, Parent and the Purchaser would not be able to carry
out the transaction as contemplated by the Original Merger Agreement.
Discussions ensued, and on December 5, 1997 the Purchaser and the Company
entered into an Amended Stock Purchase and Merger Agreement (the "Merger
Agreement"). The principal difference between the Merger Agreement and the
Original Merger Agreement is that under the Merger Agreement, the initial step
was the purchase by the Purchaser of 6,006,006 Common Shares for $20,000,000
(including $5,000,000 paid through application of the deposit given when the
Original Merger Agreement was signed), rather than the purchase of 10,790,000
Common Shares and 60,750 8% Preferred Shares for $42,005,700 which had been
contemplated by the Original Merger Agreement. Because this initial transaction
would be smaller than had been contemplated in the Original Merger Agreement,
provisions were added to the Merger Agreement which were intended to insure that
the proceeds of the initial transaction would give the Company the cash it
needed for specified transactions (including a debt repayment due in February
1998) and the number of directors of the Company the Purchaser could designate
was reduced from three to one.
In accordance with the Merger Agreement, on December 5, 1997, (i) the
Purchaser purchased a total of 6,006,006 Common Shares for $20,000,000 ($3.33
per share), of which $15 million was paid in cash and the balance was paid by
permitting the Company to keep the $5 million deposit which the Purchaser had
given to the Company when the Original Merger Agreement was signed, and (ii) the
Offer was announced. The Merger Agreement required that materials relating to
the Offer be sent to the Company's stockholders, and requires that if the
Purchaser increases its ownership to at least two-thirds of the outstanding
Common Shares and obtains at least two-thirds of the outstanding 8% Preferred
Shares through the Offer (i.e., the Minimum Condition is satisfied), the merger
contemplated by the Merger Agreement will take place. The Merger Agreement is
described under the caption "The Merger Agreement."
12. PURPOSE OF THE OFFER AND THE PROPOSED MERGER; PLANS FOR THE COMPANY.
PURPOSE. The purpose of the Stock Purchase, the Offer and the Merger is to
enable Parent to acquire all the outstanding stock of the Company. The Offer is
the second step in this effort. In the Stock Purchase, Parent, through the
Purchaser, acquired approximately 31% of the outstanding Common Shares. If the
Purchaser accepts Shares tendered in response to the Offer, the Purchaser's (and
indirectly Parent's) ownership of Common Shares and 8% Preferred Shares will
increase by the number of Shares purchased through the Offer. The purpose of the
Merger will be to enable Parent to become the owner of all the outstanding stock
of the Company.
If the Purchaser purchases through the offer at least the minimum number of
Common Shares and 8% Preferred Shares required to satisfy the Minimum Condition,
Parent will be required by the Merger Agreement to carry out the Merger. If
Purchaser purchases the shares which are properly tendered in response to the
Offer, but those shares do not increase the Purchaser's holdings sufficiently to
satisfy the
16
<PAGE>
Minimum Condition, neither Parent nor the Company will be contractually
obligated to carry out the Merger. However, unless the Loan Agreement is
modified, the Purchaser will not be permitted to waive the Minimum Condition (or
any other condition to its obligation to accept and pay for the Shares which are
tendered in response to the Offer).
If, because one or more of the conditions to the Purchaser's obligation to
accept Shares which are tendered in response to the Offer is not fulfilled, the
Purchaser does not purchase the Shares which are tendered in response to the
Offer, the Company will have the option, which it may exercise at any time on or
before December 5, 1998 (the first anniversary of the date on which the Stock
Purchase was completed), to repurchase all the stock the Purchaser acquired
through the Stock Purchase for the price the Purchaser paid for it. If, however,
the Purchaser purchases all the Shares which are tendered in response to the
Tender Offer, even though it is not required to do so, the Company will not have
the option to repurchase the stock the Purchaser acquired through the Stock
Purchase.
The Purchaser is also required to purchase, at or before the Effective Time
of the Merger, the minority interests in some cable television systems of which
the Company is the majority owner, except to the extent the current owners of
the minority interests will not sell them for prices specified in the Merger
Agreement. The Purchaser also is required to purchase two local cable systems
which were the subject of options held by the Company, if the owners of these
systems will sell them on the terms provided in the options. There is no
provision of the Merger Agreement giving the Company the right, or the
obligation, to purchase the minority interests or the two cable systems from the
Purchaser if the Purchaser purchases them but the Merger does not take place.
If Parent acquires all the stock of the Company, Parent will include the
Company's cable systems in Parent's network of Argentine cable systems. If that
occurs, Parent may make changes in the way those cable systems are operated, in
the corporate structure of those cable systems or in their personnel. Parent
also may liquidate the Company so Parent or another subsidiary of Parent will be
the sole owner of the Argentine cable systems currently owned or operated by the
Company. Except as described, neither the Purchaser nor Parent has any current
plans or proposals that would relate to, or result in, any extraordinary
corporate transaction involving the Company, such as a merger, reorganization or
liquidation involving the Company or any of its subsidiaries, a sale or transfer
of a material amount of assets of the Company or any of its subsidiaries, any
changes in the Company's capitalization or dividend policy or any other material
change in the Company's business, corporate structure or personnel.
In accordance with the Merger Agreement, effective December 5, 1997, Daniel
Vila, was elected to the Company's Board of Directors. The Company is required
to use its best efforts to cause Daniel Vila, or if he becomes unable to serve,
another designee of the Purchaser reasonably acceptable to the Company, to be
elected at all subsequent meetings of the Company's stockholders at which
directors are elected. If (i) at any time the Purchaser and its affiliates
(including Parent) cease to own at least 15% of the outstanding Common Shares,
or (ii) the Purchaser breaches or fails to fulfill in a material respect any of
its obligations under the Merger Agreement within 10 days after written notice
of the failure from the Company, the Purchaser must cause Daniel Vila or whoever
else may be its designee to resign.
ACQUISITION PROPOSALS. The Company may not, and may not authorize its
officers, directors, employees or agents to, enter into any discussions or take
any other steps, a likely result of which might be to cause someone other than
the Purchaser or Parent to (i) solicit tenders of stock of the Company or
otherwise seek to acquire 5% or more of either the Common Shares or the 8%
Preferred Shares, other than with a view to tendering those Shares in response
to the Offer, (ii) acquire all or a substantial portion of the assets of the
Company and its subsidiaries (whether through acquisitions of assets,
acquisitions of stock of subsidiaries or both), or (iii) otherwise acquire the
Company or a substantial portion of its assets if the Minimum Condition is not
met or if the Company's stockholders do not approve the Merger. The Company is
required to notify the Purchaser if the Company learns that anyone is
contemplating soliciting tenders of its stock, acquiring 5% or more of its
outstanding stock, acquiring all or a substantial portion of
17
<PAGE>
its assets and those of its subsidiaries or otherwise offering to acquire the
Company or its assets if the Minimum Condition is not met or if its stockholders
do not approve the Merger, and to provide the Purchaser with any additional
information it obtains regarding the contemplated solicitation of tenders,
acquisition of stock or assets or other acquisition offer.
If there is an unsolicited tender offer from someone other than the
Purchaser which the Company's Board of Directors determines, in good faith and
after consultation with the Company's independent financial advisor, (i) would
result in the holders of the Common Shares receiving consideration with a fair
value of more than $5.00 per share and the holders of the 8% Preferred shares
receiving consideration with a fair value of more than $160 per share, and (ii)
is more favorable both to the holders of the Common Shares than the transactions
under the Merger Agreement and to the holders of the 8% Preferred Shares the
Company may terminate the Merger Agreement by paying the Purchaser $5 million.
See Section 13.
13. THE MERGER.
THE MERGER AGREEMENT. The Merger Agreement provides that if the Purchaser
acquires enough Shares through the Offer to satisfy the Minimum Condition,
following the satisfaction or waiver of the conditions described below under
"Conditions to the Merger", the Purchaser will be merged with and into the
Company, which will be the surviving corporation of the Merger (the "Surviving
Corporation"). When the Merger becomes effective, the separate existence of the
Purchaser will terminate, the Purchaser's real and personal property, other
assets, rights, privileges, immunities, powers, purposes and franchises will be
merged into the Surviving Corporation, and the Merger will have the other
effects specified in Section 259 of the Delaware General Corporate Law and
Article 5.06 of the Texas Business Corporation Act (the "TBCA").
STOCK OF THE COMPANY.
(a) At the Effective Time of the Merger, each Common Share which is
outstanding immediately before the Effective Time, other than shares owned by
the Purchaser, will be converted into and become the right to receive $4.50 in
cash, or any higher price per share paid with regard to Common Shares tendered
in response to the Offer (the "Common Shares Merger Price").
(b) At the Effective Time each 8% Preferred Share which is outstanding
immediately before the Effective Time will be converted into and become the
right to receive in cash $144 per share plus accrued dividends to the Expiration
Date of the Offer (except that if a dividend is paid with regard to the 8%
Preferred Shares between the Expiration Time and the Effective Time, each 8%
Preferred Share will be converted into and become the right to receive $144.00
in cash without regard to any accrued but unpaid dividends).
(c) At the Effective Time, each Common Share or 8% Preferred Share held by
the Purchaser or by any direct or indirect subsidiary of the Company immediately
before the Effective Time will be cancelled and no payment will be made with
respect to those shares.
STOCK OF THE PURCHASER. At the Effective Time, each share of stock of the
Purchaser which is outstanding immediately before the Effective Time will be
converted into and become one share of common stock of the Surviving Corporation
("Surviving Corporation Common Stock").
STOCKHOLDER VOTE REQUIRED TO APPROVE MERGER. Under the TBCA, the
affirmative vote of holders of two-thirds of the outstanding Shares (including
any Shares owned by the Purchaser) is required to approve the Merger. If the
Minimum Condition is satisfied and the Purchaser purchases the Shares tendered
in response to the Offer, the Purchaser will it have sufficient voting power to
approve the Merger without the vote of any other stockholder of the Company. If
the Purchaser acquires more than 90% of the outstanding shares, stockholder
approval will not be required under TBCA Article 5.16.
18
<PAGE>
STOCKHOLDERS MEETING. If the Minimum Condition is satisfied and the
Purchaser purchases the Shares tendered in response to the Offer, and if
approval by the Company's stockholders is required in order to consummate the
Merger, the Company will hold a special meeting of its stockholders as soon as
practicable after the Expiration Time for the purpose of adopting the Merger
Agreement and approving the Merger.
CONDITIONS TO THE MERGER. Neither the Company nor the Purchaser is
contractually obligated to complete the Merger unless the Purchaser acquires the
Shares tendered in response to the Offer and the Minimum Condition is satisfied.
If that occurs (i) the Purchaser will own sufficient shares to be able to
approve the Merger even if no other stockholders of the Company vote in favor of
it and (ii) the Purchaser will be contractually obligated to vote in favor of
the Merger. The obligations of the Company to carry out the Merger will be
conditioned on the Merger's being approved by the holders of two-thirds of the
outstanding Common Shares and two-thirds of the outstanding 8% Preferred Shares
(which will occur if the Minimum Condition is satisfied and the Purchaser votes
in favor of the Merger). In addition, the obligations of the Company and of the
Purchaser complete the Merger are subject to the following conditions: (a) no
order will have been entered by any court or governmental authority and be in
force which invalidates the Merger Agreement or restrains the Company from
completing the transactions contemplated by the Merger Agreement; (b) the
Effective Time will occur on or before April 30, 1998; (c) the number of shares
held by shareholders of the Company who have filed written objections to
approval of the Merger sufficient to preserve their rights to demand the fair
value of the shares pursuant to Articles 5.11 through 5.13 of the TBCA will not
exceed 5% of the total number of outstanding Common Shares and 8% Preferred
Shares combined (treating each 8% Preferred Share as being equal to 32 Common
Shares).
TERMINATION OF THE MERGER AGREEMENT. The Merger Agreement may be terminated
at any time prior to the Effective Time of the Merger (as defined below),
whether before or after approval of the terms of the Merger Agreement by the
stockholders of the Company:
(1) by mutual consent of the Company and the Purchaser;
(2) by the Company, if without fault of the Company, the Expiration Time
of the Offer is not on or before January 31, 1998;
(3) by the Company or the Purchaser if, without fault of the Purchaser,
the Effective Time of the Merger is not on or before April 30, 1998;
(4) by the Company if (i) if any of the representations and warranties
of the Purchaser contained in the Merger Agreement was not complete and
accurate in all material respects on the date of the Merger Agreement or
(ii) any of the conditions to the Company's obligations to complete the
Merger are not satisfied or waived by the Company prior to or on the date of
the Merger;
(5) by the Purchaser if (i) any of the representations or warranties of
the Company contained in the Merger Agreement was not complete and accurate
in all material respects on the date of the Merger Agreement, or (ii) any of
the conditions to the Purchaser's obligations to complete the Merger are not
satisfied or waived by the Purchaser prior to or on the date of the Merger;
or
(6) by the Company if (A) a tender or exchange offer is commenced by a
potential acquiror for all the outstanding Common Shares and 8% Preferred
Shares for a consideration having a value of at least $5 per Common Share
and $160 per 8% Preferred Share, (B) the Company's Board of Directors
determines in good faith and after consultation with an independent
financial advisor that the offer constitutes a Superior Proposal (as defined
below) and resolves to accept the Superior Proposal or to recommend to the
Company's stockholders that they tender their shares in response to the
tender or exchange offer (C) the Company has given the Purchaser at least 10
business days' prior notice of its intention to terminate pursuant to this
provision and (D) the Company has paid the Purchaser $5 million. A "Superior
Proposal" is an unsolicited proposal to the Company which (x) would result
in the Company's stockholders receiving consideration with a fair value
determined in good faith by the
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<PAGE>
Company's Board of Directors and after consultation with the Company's
independent financial advisor to be more than $5 per share of Common Stock
and more than $160 per share of 8% Preferred Stock and (y) is determined in
good faith by the Company's Board of Directors to be more favorable both to
the holders of Common Shares and to the holders of the 8% Preferred Shares
than the Offer and the Merger.
EFFECT OF TERMINATION OF THE MERGER AGREEMENT. If the Merger Agreement is
terminated, neither the Company nor the Purchaser will be required to complete
the Merger. If the Merger Agreement is terminated after the Purchaser has
accepted Shares tendered in response to the Offer, the termination will not
affect the Purchaser's purchase of the Shares it has accepted or its obligation
to pay for those shares. If the Purchaser waives the Minimum Condition and votes
in favor of the Merger, but the Merger is not approved by the Company's
stockholders, the Company will have to pay the Purchaser $5 million.
ACQUISITION PROPOSALS. The Merger Agreement contains prohibitions against
the Company's soliciting, or authorizing its officers, directors, employees or
agents to solicit acquisition proposals, and regarding what the Company may do,
if it receives unsolicited acquisition proposals.
OTHER PROVISIONS. The Merger Agreement also contains provisions (i)
requiring the Company to operate its business in the ordinary course, including
maintaining the goodwill of its business and maintaining its assets in good
condition, limiting the Company's borrowings and commitments for capital
expenditures, and precluding the Company from paying dividends (other than
required dividends with regard to its preferred stock) or taking other steps
regarding its stock, until the Effective Time, (ii) requiring the Purchaser (and
the corporation which survives the Merger) to indemnify directors, officers,
employees, fiduciaries and agents of the Company and its subsidiaries against
liability rising out of their service as directors, officers, employees or
agents of the Company or its subsidiaries, or of companies with regard to which
they served as directors, officers, employees or agents at the request of the
Company or its subsidiaries.
BOARD OF DIRECTORS. The Merger Agreement provides that if the Merger is
consummated, Daniel E. Vila, Alfredo L. Vila and Jose Maria Saenz Valiente will
be the directors of the Surviving Corporation.
REPRESENTATIONS AND WARRANTIES. The Merger Agreement contains various
customary representations and warranties.
APPRAISAL RIGHTS. If the Merger is consummated, holders of Shares at the
Effective Time of the Merger will have rights pursuant to the provisions of
Article 5.12 of the TBCA ("Article 5.12") to dissent and demand appraisal of
their Shares. Under Article 5.12, dissenting stockholders who comply with the
applicable statutory procedures will be entitled to receive a judicial
determination of the fair value of their Shares (exclusive of any element of
value arising from the accomplishment or exception of the Merger) and to receive
payment of that fair value in cash, together with a fair rate of interest, if
any. The statutory procedures include notifying the Company prior to the meeting
at which the Company's stockholders vote on the Merger that the particular
stockholder intends to exercise, dissenter's rights and giving that
stockholder's address. Any judicial determination of the fair value of Shares
could be more or less than the price per Share to be paid in the Merger.
The foregoing summary of Article 5.12 does not purport to be complete and is
qualified in its entirety by reference to Article 5.12. FAILURE TO FOLLOW THE
STEPS REQUIRED BY ARTICLE 5.12 FOR PERFECTING APPRAISAL RIGHTS MAY RESULT IN THE
LOSS OF THOSE RIGHTS.
The Purchaser will not be required to complete the Merger if holders of more
than 5% of the outstanding Common Shares and 8% Preferred Shares combined
(treating each 8% Preferred Share as equal to 32 Common Shares) file objections
sufficient to preserve their right to demand appraisal of their Shares.
20
<PAGE>
14. CERTAIN EFFECTS OF THE TRANSACTION.
NASDAQ. The purchase of the Shares tendered in response to the Offer will
reduce the number of Common Shares that might otherwise trade publicly and could
reduce the number of holders of Common Shares, which could adversely affect the
liquidity and market value of the remaining Common Shares held by the public.
Depending upon the number of Common Shares purchased pursuant to the Offer, the
Common Shares may no longer meet the standards for continued inclusion in the
NASDAQ Small-Cap Market, which require that an issuer have at least 200,000
publicly held shares with a market value of at least $1,000,000, held by at
least 400 shareholders or 300 shareholders of round lots. If these standards are
not met, the Common Shares might nevertheless continue to be quoted in the
over-the-counter "additional list" or in one of the "local lists," but if the
number of holders of the Common Shares falls below 300, or if the number of
publicly held Common Shares falls below 100,000 or there are not at least two
registered and active market makers for the Common Shares, the Common Shares
would no longer be "qualified" for NASDAQ reporting and NASDAQ would cease to
provide any quotations. Shares held directly or indirectly by directors,
officers or beneficial owners of more than 10% of the Common Shares (which would
include the Purchaser) are not considered as being publicly held for this
purpose. If the Common Shares are no longer eligible for NASDAQ quotation,
quotations might still be available from other sources. The extent of the public
market for the Shares and the availability of quotations would, however, depend
on the remaining number of holders of Common Shares, the interest of securities
firms in maintaining a market in the Common Shares, the possible termination of
registration under the Exchange Act, as described below, and other factors.
According to the Company, as of November 14, 1997, there were approximately 336
holders of record of Common Shares and approximately 1,460 beneficial owners of
Common Shares and as of December 5, 1997, there were 19,223,456 Common Shares
outstanding, of which 6,006,006 were owned by the Purchaser.
EXCHANGE ACT REGISTRATION. The Common Shares are currently registered under
the Exchange Act. That registration may be terminated upon application of the
Company to the Securities and Exchange Commission if the Common Shares are not
listed on a national securities exchange or quoted on NASDAQ and there are fewer
than 300 record holders of the Common Shares. The termination of registration of
the Common Shares under the Exchange Act would substantially reduce the
information required to be furnished by the Company to holders of Common Shares
and to the Commission and would make certain provisions of the Exchange Act,
such as the short-swing profit recovery provisions of Section 16(b) of the
Exchange Act, the requirement of furnishing a proxy statement in connection with
stockholders' meetings pursuant to Section 14(a) of the Exchange Act, and the
requirements of Rule 13e-3 under the Exchange Act with respect to
"going-private" transactions, no longer applicable to the Company. See Section
16. In addition, "affiliates" of the Company and persons holding "restricted
securities" of the Company may be deprived of the ability to dispose of those
securities pursuant to Rule 144 under the Securities Act. If registration of the
Common Shares under the Exchange Act were terminated, the Common Shares would no
longer be eligible for quotation on NASDAQ. The Purchaser intends to seek to
cause the Company to make an application for termination of registration of the
Common Shares under the Exchange Act as soon after consummation of the Offer as
the requirements for termination of the registration of the Common Shares are
met. As a result, the Purchaser may be able to give the required stockholder
approval of the Merger (if stockholder approval is required) without the
Company's sending a proxy statement or an information statement to its
stockholders.
15. DIVIDENDS AND DISTRIBUTIONS. The Merger Agreement prohibits the Company
from paying any dividends or making other distributions with regard to its
Common Shares or its 8% Preferred Shares (other than regularly scheduled
dividends with regard to the 8% Preferred Shares), or from issuing any shares,
until the Effective Time of the Merger.
21
<PAGE>
16. CERTAIN LEGAL MATTERS; REGULATORY APPROVALS.
GENERAL. Except as otherwise disclosed in this Offer to Purchase, based on
the Company's representations and warranties in the Merger Agreement and a
review of publicly available filings by the Company with the Commission, the
Purchaser is not aware of (i) any license or regulatory permit that appears to
be material to the business of the Company and its subsidiaries, taken as a
whole, that might be adversely affected by the acquisition of Shares by the
Purchaser pursuant to the Offer or the Merger or (ii) any approval or other
action by any governmental, administrative or regulatory agency or authority,
domestic or foreign, that would be required for the acquisition or ownership of
Shares by the Purchaser, other than approvals by an Argentine governmental
authority which, although required as a pre-requisite to changes of control of
Argentine cable system operators, customarily are not given until after the
changes of control have taken place (and are not a condition to the Offer or the
Merger). Should any such approval or other action be required, the Purchaser
currently contemplates that the approval or action would be sought. It is
possible that any such approval or action, if needed, would not be obtained.
GOING PRIVATE TRANSACTIONS. The Commission has adopted Rule 13e-3 under the
Exchange Act, which is applicable to certain "going private" transactions. The
Offeror does not believe that Rule 13e-3 will be applicable to the Merger unless
the Merger is consummated more than one year after the termination of the Offer.
If applicable, Rule 13e-3 requires, among other things, that certain financial
information concerning the fairness of the Merger and the consideration offered
to minority stockholders in the Merger be filed with the Commission and
disclosed to stockholders prior to the consummation of the Merger.
ANTITRUST COMPLIANCE. Prior to the Stock Purchase, the Company and Parent
made a filing with the United States Federal Trade Commission (the "FTC") under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act"). The
HSR Act requires that, before an acquisition involving companies which exceed
specified sizes can take place, information must be provided to the FTC and to
the Antitrust Division of the United States Department of Justice, and specified
waiting periods must expire or be terminated by the FTC or the Antitrust
Division.
The required notification under the HSR Act was filed, and the waiting
period was terminated, before the Stock Purchase. That filing contemplated a
possible acquisition by Parent of all the stock of the Company. Therefore, no
further filing or waiting period will be required with regard to the Offer or
the Merger.
STATE TAKEOVER STATUTES. The Company is incorporated under the laws of
Texas. Effective September 1, 1997, a new Part Thirteen of the Texas Business
Corporation Act (the "Texas Business Combination Law") prohibits a public
corporation organized under Texas law, or its majority owned subsidiaries, from
engaging in a transaction with a person who acquires 20% or more of the
corporation's outstanding voting stock or its affiliates, for three years after
the person acquires that 20% or greater interest, share exchange, sale of
significant assets, issuance of shares, liquidation of the Corporation pursuant
to an agreement with the 20% or greater shareholder, reclassification of the
securities of the Corporation which increases the portion of the stock of any
class or series owned by the 20% or greater stockholder or the receipt by the
20% or greater stockholder of loans or similar financial assistance. The three
year ban does not apply, however, if the proposed transaction with the 20% or
greater stockholder, or the transaction by which the person became a 20% or
greater stockholder, is approved by the board of directors of the corporation
before the person becomes a 20% or greater stockholder. Because the Board of the
Company approved the Stock Purchase (the transaction by which the Purchaser, and
indirectly Parent, became a 20% or greater stockholder of the Company) before it
took place, the Texas Business Combination Law will not apply to the Purchaser
or Parent.
A number of other states have adopted laws and regulations applicable to
attempts to acquire securities of corporations which are incorporated, or have
substantial assets, stockholders, principal
22
<PAGE>
executive offices or principal places of business, or whose business operations
otherwise have substantial economic effects, in such states. In 1982, in EDGAR
V. MITE CORP., the Supreme Court of the United States invalidated on
constitutional grounds the Illinois Business Takeover Statute, which, as a
matter of state securities law, made takeovers of corporations meeting certain
requirements more difficult. However, in 1987, in CTS CORP. V. DYNAMICS CORP. OF
AMERICA, the Supreme Court held that the State of Indiana may, as a matter of
corporate law, and, in particular, with respect to those aspects of corporate
law concerning corporate governance, constitutionally disqualify a potential
acquiror from voting on the affairs of a target corporation without the prior
approval of the remaining stockholders. The state law before the Supreme Court
was by its terms applicable only to corporations that had a substantial number
of stockholders in the state and were incorporated there.
17. FEES AND EXPENSES. Except as set forth below, neither Parent nor the
Purchaser will pay any fees or commissions to any broker, dealer or other person
for soliciting tenders of Shares pursuant to the Offer.
The Purchaser has retained Furman Selz LLC and ING Baring (U.S.) Securities,
Inc. to act as Dealer Managers in connection with the Offer. Furman Selz LLC and
ING Baring (U.S.) Securities, Inc. each will receive a fee of $125,000 for their
services as Dealer Managers in connection with the Offer. The Purchaser has also
agreed to reimburse Furman Selz LLC and ING Baring (U.S.) Securities, Inc. for
certain out-of pocket expenses incurred in connection with the Offer (excluding
certain fees and disbursements of their legal counsel) and to indemnify Furman
Selz LLC and ING Baring (U.S.) Securities, Inc. against certain liabilities in
connection with the Offer, including liabilities under the federal securities
laws.
The Purchaser has retained Morrow & Co., Inc. to act as the Information
Agent in connection with the Offer. The Information Agent may contact holders of
Shares by mail, telephone, facsimile, telegraph and personal interviews and may
request brokers, dealers and other nominee stockholders to forward materials
relating to the Offer to beneficial owners of Shares. The Information Agent will
receive reasonable and customary compensation together with reimbursement for
its reasonable out-of-pocket expenses and will be indemnified against certain
liabilities and expenses, including certain liabilities under the federal
securities laws.
In addition, The Bank of New York has been retained as the Depositary. The
Depositary has not been retained to make solicitations or recommendations in its
role as Depositary. The Depositary will receive reasonable and customary
compensation for its services, will be reimbursed for certain reasonable out-of-
pocket expenses and will be indemnified against certain liabilities and
expenses. Brokers, dealers, commercial banks and trust companies will be
reimbursed by the Purchaser for customary mailing and handling expenses incurred
by them in forwarding offering material to their customers.
18. MISCELLANEOUS. The Purchaser is not aware of any jurisdiction where the
making of the Offer is prohibited by any administrative or judicial action or
pursuant to any state statute. If the Purchaser becomes aware of any state
statute prohibiting the making of the Offer or the acceptance of the Shares
which are tendered in response to the Offer, the Purchaser will make a good
faith effort to comply with that state statute. If, after a good faith effort
the Purchaser cannot comply with any such state statute, the Offer will not be
made to (nor will tenders be accepted from or on behalf of) the holders of
Shares in such state. In any jurisdiction where the securities, Blue Sky or
other laws require the Offer to be made by a licensed broker or dealer, the
Offer will be deemed to be made on behalf of the Purchaser by the Dealer
Managers or one or more registered brokers or dealers which are licensed under
the laws of that jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF THE PURCHASER NOT CONTAINED IN THIS OFFER TO
PURCHASE OR IN THE LETTER OF TRANSMITTAL, AND IF GIVEN OR MADE, THAT INFORMATION
OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
23
<PAGE>
Parent and the Purchaser have filed with the Commission a Tender Offer
Statement on Schedule 14D-1 (the "Schedule 14D-1"), together with exhibits,
pursuant to Rule 14d-3 of the General Rules and Regulations under the Exchange
Act, containing additional information with respect to the Offer, and Parent or
the Purchaser may file amendments to the Schedule 14D-1. The Schedule 14D-1 and
any amendments to it, including exhibits, may be inspected at, and copies may be
obtained from, the places described in Section 8 (except that they will not be
available at the regional offices of the Commission).
TESCORP ACQUISITION CORPORATION
December 8, 1997
24
<PAGE>
SCHEDULE I
CERTAIN INFORMATION CONCERNING THE DIRECTORS AND EXECUTIVE
OFFICERS OF PARENT AND THE PURCHASER
1. DIRECTORS AND EXECUTIVE OFFICERS OF PARENT. Set forth below is the name,
current business address, citizenship and the present principal occupation or
employment and material occupations, positions, offices or employments for the
past five years of each director and executive officer of Parent. The principal
address of Parent and, unless otherwise indicated below, the current business
address for each individual listed below is Godoy Cruz 316, Mendoza, Province of
Mendoza Argentina 5500. Unless otherwise indicated, each such person is a
citizen of the Republic of Argentina.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION OR EMPLOYMENT DURING PAST
NAME FIVE YEARS, POSITIONS WITH PARENT AND CERTAIN DIRECTORSHIPS
- --------------------------------------------- -------------------------------------------------------------------
<S> <C>
Daniel Eduardo Vila.......................... Chairman of the Board of Directors of Parent since 1996; Chief
Executive Officer of Parent since March 1997; Vice Chairman of the
Board of Directors of Supercanal S.A. since 1984; Chairman of the
Board of Mendoza 21 S.A.; Director of Purchaser since September,
1997; publisher of DIARIO UNO, a daily newspaper in Mendoza; Radio
Nihuil S.A. a radio broadcaster, operating in the Province of
Mendoza and surrounding areas; publisher of PRIMERA FILA, a monthly
magazine; Vice Chairman of Radio Red Celeste y Blanca S.A., the
operator of an AM radio station in Buenos Aires; Director of
Dalvian S.A., a real estate development company; alternate director
of Banco de Mendoza S.A. and Banco Prevision Social S.A.;
Alfredo Luis Vila Santander.................. Vice Chairman of the Board of Directors of Parent since 1996;
Chairman and Chief Executive Officer of Supercanal S.A. from 1993
to 1996; Director and President of Purchaser since September, 1997;
Director of Radio Nihuil S.A., Mendoza 21 S.A. and of Dalvian S.A.;
Chairman and Chief Executive Officer of Supercanal Internacional
S.A.
Jorge Mas.................................... Director of Parent since July 1997; Alternate Director of Parent
from June 1996 through April 1997; Alternate Director of Supercanal
S.A. since 1996; President, Chief Executive Officer and Director of
MasTec, Inc., a U.S. publicly-held company, since March 1994;
during the past five years, President and Chief Executive Officer
of Church & Tower, Inc., a principal operating subsidiary of
MasTec, Inc.; Chairman of the Board of Directors of Neff
Corporation, a company which sells and leases construction and
industrial equipment, Atlantic Real Estate Holding Corp., a real
estate holding company, U.S. Development Corp. a real estate
company, and Santos Capital, Inc., a merchant banking firm, all
companies controlled by Mr. Mas.; during all or a portion of the
past five years, President and Chief Executive Officer of these
corporations.
Jose Maria Saenz Valiente, Jr................ Director of Parent since July 1996; Chairman of the Board of
Multicanal from 1993 until 1994; Director, Secretary and President
of Purchaser since September, 1997; since 1996
</TABLE>
I-1
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION OR EMPLOYMENT DURING PAST
NAME FIVE YEARS, POSITIONS WITH PARENT AND CERTAIN DIRECTORSHIPS
- --------------------------------------------- -------------------------------------------------------------------
Director of various companies in the multi-channel television
industry that were acquired by Multicanal; partner of the Saenz
Valiente & Padilla law firm.
<S> <C>
Alberto Luis Vila............................ Director of Parent since 1996; Director of Supercanal S.A. since
1993; Director of Primera Fila A.A.; legal counsel to various
multinational corporations in Mendoza; partner of the Vila law
firm.
Sergio Ceroi................................. Alternate Director of Parent since July, 1996; Chief Financial
Officer of Mendoza 21 S.A. since February 1996; prior to that,
Chief Financial Officer of Radio Nihuil S.A.; from January 1985 to
December 1987, Chief Auditor for Profim Cia Financiera S.A., a
money manager in the Province of Mendoza.
Juan Maria de la Vega........................ Alternate Director of Parent since July, 1996; Member of the Saenz
Valiente & Padilla law firm; and serving on the Board of Directors
of various companies in the multi-channel television industry
acquired by Multicanal since 1993; alternate Director of
Multicanal.
Kevin P. Fitzgerald.......................... Alternate Director of Parent since July 1997; prior to that,
Director of Supercanal Holding from 1996 until April 1997; Director
of Supercanal S.A. since April 1996; since July 1995, President and
Co-Chairman of Santos Capital, Inc., and President and Chief
Executive Officer of Neff Corporation and its subsidiaries, Neff
Rental, Inc. and Neff Machinery, Inc.; From 1991 to 1995, Senior
Vice President in the investment banking department of Houlihan
Lokey Howard & Zukin, a private investment bank; prior to that, in
the corporate finance department of Deloitte, Haskins & Sells, a
public accounting firm; Director of Primera Fila S.A., Neff Corp.
and Santos Capital, Inc.
Guillermo Vila............................... Alternate Director of Parent since July 1996; Director of
Supercanal S.A.; a partner of the Vila law firm.
Omar R. Alvarez.............................. Alternate Director of Parent since July, 1997; holds (i) 35% of the
capital stock and is President of San Rafael/Pehuenche, a
multi-channel television system controlled by the Company, (ii) 70%
of the capital stock and is President of Inversora C.T.C.S.R.L., an
investment company which holds interests in banks, medical
providers and real estate, (iii) 80% of the capital stock and is a
director of L.V. 23 Radio Rio Atuel S.R.L., an AM and FM radio
station, (iv) 33% of the CUOTAS and is partner of Lomas del Nihuil
S.R.L., a tourist resort in Nihuil, (v) 100% of the capital stock
of El Faro S.R.L., a tourist resort in Nihuil, (vi) 100% of the
capital stock of and a director of Cementerio Parque S.A. which
holds property for cemetery parks, and (vii) 100% of the CUOTAS and
President of
</TABLE>
I-2
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION OR EMPLOYMENT DURING PAST
NAME FIVE YEARS, POSITIONS WITH PARENT AND CERTAIN DIRECTORSHIPS
- --------------------------------------------- -------------------------------------------------------------------
Parque Turistico Sierra Pintada S.R.L., a 14,000 hectare reserve
and tourist park in the province of Mendoza.
<S> <C>
Fernando Julio Barbeira...................... Chief Financial Officer of Parent since August, 1996; from 1993 to
August 1996, held various general management positions in
subsidiaries of Multicanal, including Red Argentina S.A. ("Red
Argentina"), Multicanal's MSO management company, Intercable S.A.
and Lanus Video Cable S.A., operating subsidiaries of Multicanal,
companies controlled by Multicanal, and Aconcagua (Multicanal's
subsidiary in Mendoza); was responsible for the accounting and
financial statements of the Aerolineas Argentinas privatization at
Henry Martin y Asociados, a public accounting firm from 1991 to
1993; served in several positions at Neumaticos Goodyear S.A. from
1970 to 1990.
Omar Jorge Saez.............................. Chief Operating Officer of Parent since December 1996; from 1993 to
1996, served as General Manager of several different companies
acquired by Multicanal; from 1989 to 1993, was General Manager of
Cormasa S.A., a metal mechanic company.
Guillermo Horacio Panelli.................... Chief Administrative Officer of Parent since November 1996; from
November 1993 until September 1996, was Administrative and
Financial Manager of Concecuyo S.A., a licensee of YPF S.A.
operating service stations in the provinces of Mendoza, San Luis,
San Juan, La Rioja and Catamarca; From 1987 to 1993, was
Administrative and Financial Manager of Bodega Quiros S.A., a
beverages and winery concern.
Eduardo Elbio Carbini........................ Marketing Manager of Parent since January 1997; was Marketing
Manager of Supercanal S.A. between 1987 and 1996; served as
Marketing Manager of PRIMERA FILA from 1990 to 1996; from 1995 to
1996, was Director of Radio F.M. Brava S.A., the operator of a
local radio station, and Marketing Manager at DIARIO UNO.
</TABLE>
2. DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER. Set forth below is the
name, current business address, citizenship and the present principal occupation
or employment and material occupations, positions, offices or employments for
the past five years of each director and executive officer of Purchaser. The
principal address of Purchaser and, unless otherwise indicated below, the
current business address for each individual listed below is Godoy Cruz 316,
Mendoza, Province of Mendoza Argentina 5500. Unless otherwise indicated, each
such person is a citizen of the Republic of Argentina.
<TABLE>
<S> <C>
Daniel Eduardo Vila................. Director of Purchaser since September, 1997; Chairman
of the Board of Directors of Parent since 1996; Chief
Executive Officer of Parent since March 1997; Vice
Chairman of the Board of Directors of Supercanal S.A.
since 1984; Chairman of the Board of Mendoza 21 S.A.;
publisher of DIARIO UNO, a daily newspaper in Mendoza;
Radio Nihuil S.A. a radio
</TABLE>
I-3
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION OR EMPLOYMENT DURING PAST
FIVE YEARS, POSITIONS WITH PARENT AND CERTAIN
NAME DIRECTORSHIPS
- ------------------------------------ ------------------------------------------------------
broadcaster, operating in the Province of Mendoza and surrounding
areas; publisher of PRIMERA FILA, a monthly magazine; Vice Chairman
of Radio Red Celeste y Blanca S.A., the operator of an AM radio
station in Buenos Aires; Director of Dalvian S.A., a real estate
development company; alternate director of Banco de Mendoza S.A.
and Banco Prevision Social S.A.;
<S> <C> <C>
Alfredo Luis Vila Santander.................. Director and President of Purchaser since September, 1997; Vice
Chairman of the Board of Directors of Parent since 1996; Chairman
and Chief Executive Officer of Supercanal S.A. from 1993 to 1996;
Director of Radio Nihuil S.A., Mendoza 21 S.A. and of Dalvian S.A.;
Chairman and Chief Executive Officer of Supercanal Internacional
S.A.
Jose Maria Saenz Valiente, Jr................ Director, Secretary and Treasurer of Purchaser since September,
1997; Director of Parent since July 1996; Chairman of the Board of
Multicanal from 1993 until 1994; since 1996 Director of various
companies in the multi-channel television industry that were
acquired by Multicanal; partner of the Saenz Valiente & Padilla law
firm.
</TABLE>
I-4
<PAGE>
Facsimile copies of the Letter of Transmittal, properly completed and duly
signed, will be accepted. The Letter of Transmittal, certificates for Shares and
any other required documents should be sent by each stockholder of the Company
or the stockholder's broker, dealer, commercial bank, trust company or other
nominee to the Depositary as follows:
<TABLE>
<S> <C> <C>
THE DEPOSITARY FOR THE OFFER IS:
THE BANK OF NEW YORK
BY MAIL: FACSIMILE TRANSMISSION: BY HAND OR OVERNIGHT COURIER:
Tender & Exchange Department (for Eligible Institutions Tender & Exchange Department
P.O. Box 11248 Only) 101 Barclay Street
Church Street Station (212) 815-6213 Receive and Deliver Window
New York, New York 10286-1248 New York, New York 10286
FOR CONFIRMATION TELEPHONE:
(800) 507-9357
</TABLE>
Any questions or requests for assistance or additional copies of the Offer
to Purchase, the Letter of Transmittal or the Notice of Guaranteed Delivery may
be directed to the Information Agent or the Dealer Managers at their respective
telephone numbers and locations listed below. You may also contact your broker,
dealer, commercial bank or trust company or other nominee for assistance
concerning the Offer.
THE INFORMATION AGENT FOR THE OFFER IS:
[LOGO]
909 Third Avenue
20th Floor
New York, New York 10022
(212) 754-8000
Toll Free: (800) 566-9061
Banks and Brokerage Firms please call:
(800) 662-5200
THE DEALER MANAGERS FOR THE OFFER ARE:
<TABLE>
<S> <C>
ING BARINGS FURMAN SELZ
667 Madison Avenue 230 Park Avenue
New York, New York 10021 New York, New York 10169
1-888-584-4166 (Toll Free) 1-888-584-4166 (Toll Free)
</TABLE>
<PAGE>
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
of
TESCORP, INC.
at
$4.50 NET PER SHARE
IN RESPONSE TO THE OFFER TO PURCHASE DATED DECEMBER 8, 1997
of
TESCORP ACQUISITION CORPORATION
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FRIDAY, JANUARY 9, 1998 UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
THE DEPOSITARY:
THE BANK OF NEW YORK
<TABLE>
<CAPTION>
BY MAIL: BY FACSIMILE TRANSACTION: BY HAND OR OVERNIGHT COURIER:
<S> <C> <C>
Tender & Exchange Department (For Eligible Institutions Only) Tender & Exchange Department,
P.O. Box 11248 (212) 815-6213 101 Barclay Street
Church Street Station Receive and Deliver Window
New York, New York 10286-1248 FOR CONFIRMATION TELEPHONE New York, New York 10286
(800) 507-9357
</TABLE>
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS VIA A TELEX OR FACSIMILE NUMBER OTHER THAN THE ONES
LISTED ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
This Letter of Transmittal is to be used to tender shares of common stock
("Shares"), par value $0.02 per share, of Tescorp, Inc. (the "Company") in
response to a solicitation of tenders by Tescorp Acquisition Corporation (the
"Purchaser"). It must be used whether certificates evidencing Shares are to be
forwarded with this Letter of Transmittal or whether delivery of Shares is to be
made by book-entry transfer to the account maintained by the Depositary at The
Depository Trust Company (the "Book-Entry Facility") as described in Section 3
of the Offer to Purchase. Stockholders whose certificates are not immediately
available or who cannot deliver their confirmation of the book-entry transfer of
their Shares into the Depositary's account at the Book-Entry Facility
("Book-Entry Confirmation") on or before the Expiration Date may use the
guaranteed delivery procedure described in Section 3 of the Offer to Purchase to
tender their Shares. See Instruction 2. DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY
FACILITY DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
/ / CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO
THE ACCOUNT MAINTAINED BY THE DEPOSITARY AT THE BOOK-ENTRY FACILITY AND
COMPLETE THE FOLLOWING:
Name of Tendering Institution:______________________________________________
Account Number______________________________________________________________
Transaction Code Number_____________________________________________________
/ / CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
Name(s) of Registered Owner(s):_____________________________________________
Date of Execution of Notice of Guaranteed Delivery:_________________________
Name of Institution which Guaranteed Delivery:______________________________
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
--------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) CERTIFICATE(S) TENDERED
(PLEASE FILL IN, IF BLANK) (ATTACH ADDITIONAL LIST IF NECESSARY)
- -------------------------------------------------------------------------------------------------------
TOTAL NUMBER
OF SHARES
REPRESENTED NUMBER OF
CERTIFICATE BY SHARES
NUMBER(S)* CERTIFICATE(S)* TENDERED**
<S> <C> <C> <C>
-------------------------------------------
-------------------------------------------
-------------------------------------------
-------------------------------------------
-------------------------------------------
TOTAL SHARES..............
- -------------------------------------------------------------------------------------------------------
* Need not be completed by stockholders tendering by book-entry transfer.
** Unless otherwise indicated it will be assumed that all Shares described above are being tendered.
See Instruction 4.
- -------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: SIGNATURE MUST BE PROVIDED BELOW.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
<PAGE>
Gentlemen:
The undersigned hereby tenders to Tescorp Acquisition Corporation (the
"Purchaser"), a Delaware corporation, the shares of Common Stock, par value
$0.02 per share ("Shares"), of Tescorp, Inc. (the "Company"), a Texas
corporation, listed above, in response to the Purchaser's offer to purchase all
outstanding Shares at a price of $4.50 per Share, net to the sellers in cash,
upon the terms and subject to the conditions set forth in the Offer to Purchase
dated December 8, 1997 (the "Offer to Purchase"), receipt of which is hereby
acknowledged, and in this Letter of Transmittal (which, together with the Offer
to Purchase, constitutes the "Offer").
Subject to, and effective upon, acceptance of the Shares tendered with this
Letter of Transmittal for payment in accordance with the Offer, the undersigned
hereby sells, assigns, and transfers to, or upon the order of, the Purchaser all
right, title and interest in and to all the Shares that are being tendered with
this Letter of Transmittal (and any other Shares or other securities issued or
issuable in respect of those Shares after December 8, 1997) and irrevocably
constitutes and appoints the Depositary the true and lawful agent and
attorney-in-fact of the undersigned with respect to those Shares (and any such
other Shares or securities), with full power of substitution, (that power of
attorney being an irrevocable power coupled with an interest) to (a) deliver
certificates for the Shares (and any such other Shares or securities), or
transfer ownership of the Shares (and any such other Shares or securities) on
the account books maintained by the Book-Entry Facility, together in either case
with all accompanying evidences of transfer and authenticity, to or upon the
order of the Purchaser upon receipt by the Depositary, as the undersigned's
agent, of the purchase price (adjusted, if appropriate, as provided in the Offer
to Purchase), (b) present those Shares (and any such other Shares or securities)
for transfer on the books of the Company and (c) otherwise exercise all rights
of beneficial ownership of the Shares (and any such other Shares or securities),
all in accordance with the terms of the Offer.
The undersigned irrevocably appoints the Purchaser, its officers and its
designees, and each of them, the attorneys-in-fact and proxies of the
undersigned, each with full power of substitution, to vote in such manner as
each such attorney-in-fact and proxy or his or its substitute, in his or its
sole discretion, deems proper, and otherwise act (including acting by written
consent without a meeting) with respect to, all the Shares tendered by this
Letter of Transmittal which have been accepted for payment by the Purchaser
prior to the time of the vote or action (and any other Shares or securities
issued in respect of those Shares after December 8, 1997). This proxy is
irrevocable and is granted in consideration of, and is effective upon, the
deposit by the Purchaser with the Depositary of the purchase price for the
Shares to which it relates, and acceptance of those Shares for payment, in
accordance with the Offer. That acceptance for payment will revoke all prior
proxies granted by the undersigned with regard to those Shares (and any such
other Shares or other securities) and the undersigned will not give any
subsequent proxies with respect to those Shares.
The undersigned represents and warrants that the undersigned has full power
and authority to tender, sell, assign and transfer the Shares tendered by this
Letter of Transmittal (and any other Shares or other securities issued in
respect of those Shares after December 8, 1997) and that, when those Shares are
accepted for payment by the Purchaser, the Purchaser will acquire good and
unencumbered titled to the Shares (and any such other Shares or securities),
free and clear of all liens, restrictions, charges, encumbrances or adverse
claims. The undersigned, upon request, will execute and deliver any additional
documents deemed by the Depositary or the Purchaser to be necessary or desirable
to complete the sale, assignment and transfer of the Shares tendered by this
Letter of Transmittal (and any such other Shares or other securities) to the
Purchaser.
The authority conferred in this Letter of Transmittal will not be affected
by, and will survive, the death or incapacity of the undersigned, and any
obligation of the undersigned under this Letter of Transmittal or otherwise
resulting from the tender of the Shares to which this Letter of Transmittal
relates will be binding upon the successors, assigns, heirs, executors,
administrators and legal representatives of the undersigned. Except as stated in
the Offer to Purchase, the tender made by this Letter of Transmittal is
irrevocable.
The undersigned understands that tenders of Shares pursuant to any one of
the procedures described in Section 3 of the Offer to Purchase and in the
instructions to this Letter of Transmittal will constitute a binding agreement
between the undersigned and the Purchaser upon the terms and subject to the
conditions of the Offer.
<PAGE>
Unless otherwise indicated in the box below captioned "Special Payment
Instructions," please issue the check for the purchase price of the Shares
tendered by this Letter of Transmittal, and cause any Shares represented by
certificates accompanying this Letter of Transmittal which are not being
tendered, or are not accepted for payment, in the name(s) of the undersigned.
Similarly, unless otherwise indicated in the box below captioned "Special
Delivery Instructions," please mail the check for the purchase price and deliver
certificates representing any Shares which are not being tendered or are not
accepted for payment (and accompanying documents, as appropriate) to the
undersigned at the address shown below the undersigned's signature. If both the
Special Delivery Instructions and the Special Payment Instructions are
completed, please issue the check for the purchase price and certificates for
any Shares which are not being tendered, or are not accepted for payment, in the
name of, and deliver the check and certificates, or confirmation of transfer of
the Shares at the Book-Entry Facility, to the person or persons indicated.
Stockholders delivering Shares by book-entry transfer may request that any
Shares not accepted for payment be returned by crediting an account at the
Book-Entry Facility, by making an appropriate entry under "Special Payment
Instructions." The undersigned recognizes that the Purchaser has no obligation
pursuant to the Special Payment Instructions or otherwise to transfer any
tendered Shares which are not accepted for payment from the name of the
registered holder of the Shares to the name of another person.
<PAGE>
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 5, 6 AND 7)
To be completed ONLY if certificates for Shares which are not tendered or are
not purchased and the check for the purchase price of Shares which are purchased
are to be issued in the name of someone other than the undersigned, or if Shares
delivered by book-entry which are not purchased are to be returned by credit to
an account maintained at the Book-Entry Facility other than that designated
above.
Issue / / Check / / Certificates to:
Name ___________________________________________________________________________
(Please Print)
Address ________________________________________________________________________
_______________________________________________________________________________
(Include Zip Code)
_______________________________________________________________________________
(Tax Identification or Social Security Number)
/ / Credit unpurchased Shares delivered by book-entry transfer to the Book-Entry
Facility account set forth below:
_______________________________________________________________________________
(Account Number)
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 5, 6 AND 7)
To be completed ONLY if certificates for Shares which are not tendered or are
not purchased and the check for the purchase price of Shares which are purchased
are to be sent to someone other than the undersigned, or to the undersigned at
an address other than that shown after the undersigned's signature below.
Mail / / Check / / Certificates to:
Name ___________________________________________________________________________
(Please Print)
Address ________________________________________________________________________
_______________________________________________________________________________
(Include Zip Code)
<PAGE>
SIGN HERE
(COMPLETE SUBSTITUTE FORM W-9 ON REVERSE)
______________________________________________________________________________
______________________________________________________________________________
SIGNATURE(S) OF OWNER(S)
Dated: ________________________________________________________________, 199__
(Must be signed by registered holder(s) exactly as name(s) appear(s) on
stock certificate(s) or on a security position listing or by person(s)
authorized to become registered holder(s) by certificates and documents
transmitted with this Letter of Transmittal. If signature is by trustees,
executors, administrators, guardians, attorneys-at-fact, agents, officers of
corporations or others acting in a fiduciary or representative capacity,
please provide the information described in Instruction 5.)
Name(s) ______________________________________________________________________
_____________________________________________________________________________
(PLEASE PRINT)
Capacity (full title) ________________________________________________________
Address ______________________________________________________________________
______________________________________________________________________________
(INCLUDE ZIP CODE)
Area Code and Telephone Number _______________________________________________
Tax Identification or Social Security No. ____________________________________
(Complete Substitute Form W-9 on reverse)
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5)
Authorized Signature _________________________________________________________
Name _________________________________________________________________________
Title ________________________________________________________________________
Name of Firm _________________________________________________________________
Address ______________________________________________________________________
Area Code and Telephone Number _______________________________________________
Dated: ________________________________________________________________, 199__
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. No signature guarantee is required on this
Letter of Transmittal (i) if this Letter of Transmittal is signed by the
registered holder of the Shares tendered by it (which, for purposes of this
document, includes any participant in the Book-Entry Facility whose name appears
on a security position listing as the owner of Shares) unless the holder has
completed either the box entitled "Special Delivery Instructions" or the box
entitled "Special Payment Instructions" on the reverse of this Letter of
Transmittal or (ii) if those Shares are tendered for the account of a member
firm of a registered national securities exchange or a member of the National
Association of Securities Dealers, Inc. or by a commercial bank or trust company
which has an office or correspondent in the United States (collectively,
"Eligible Institutions"). In all other cases, all signatures on this Letter of
Transmittal must be guaranteed by an Eligible Institution. See Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES. This Letter of
Transmittal is to be completed by stockholders either if certificates are being
forwarded with it or if tenders of Shares are to be made in accordance with the
procedures for delivery by book-entry transfer set forth in Section 3 of the
Offer to Purchase. Certificates for all physically tendered Shares, or a
Book-Entry Confirmation confirming book-entry transfer of Shares to an account
of the Depositary, as the case may be, together with a properly completed and
duly executed Letter of Transmittal (or facsimile of one) and any other
documents required by this Letter of Transmittal, must be received by the
Depositary at one of its addresses set forth above on or prior to the Expiration
Date (as defined in Section 1 of the Offer to Purchase). Stockholders whose
certificates for Shares are not immediately available, or who cannot deliver
Book-Entry Confirmation of book entry transfer of the Shares to the Depositary
on or prior to the Expiration Date may tender their Shares by properly
completing and executing a Notice of Guaranteed Delivery in accordance with the
guaranteed delivery procedure described in Section 3 of the Offer to Purchase.
Pursuant to that procedure, (i) the tender must be made by or through an
Eligible Institution, (ii) a properly completed and duly executed Notice of
Guaranteed Delivery, substantially in the form provided by the Purchaser, must
be received by the Depositary prior to the Expiration Date and (iii) the
certificates for all physically tendered Shares, or Book-Entry Confirmation of
Shares tendered by book-entry transfer, as the case may be, together with a
properly completed and duly executed Letter of Transmittal (or facsimile of one)
and any other documents required by this Letter of Transmittal, must be received
by the Depositary within three New York Stock Exchange trading days after the
date of execution of the Notice of Guaranteed Delivery, all as provided in
Section 3 of the Offer to Purchase.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, THE CERTIFICATES FOR
SHARES AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE
BOOK-ENTRY FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER AND,
EXCEPT AS OTHERWISE PROVIDED IN THIS INSTRUCTION 2, THE DELIVERY WILL BE DEEMED
MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY IS BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. All tendering stockholders, by execution of
this Letter of Transmittal (or a facsimile of it), waive any right to receive
any notice of the acceptance of their Shares for payment.
3. INADEQUATE SPACE. If the space provided in this Letter of Transmittal is
inadequate, the certificate numbers and numbers of Shares being tendered should
be listed on a separate signed schedule, which should be attached to this Letter
of Transmittal.
4. PARTIAL TENDERS. (Not applicable to stockholders who tender by book-entry
transfer). If fewer than all the Shares evidenced by a certificate are to be
tendered, fill in the number of Shares which are to be tendered in the box
entitled "Number of Shares Tendered." In such case, new certificate(s) for the
remainder of the Shares that were evidenced by your old certificate(s) will be
sent to you, unless otherwise provided in the appropriate box on this Letter of
Transmittal, as soon as practicable after the Expiration Date. All Shares
represented by certificates delivered to the Depositary will be deemed to have
been tendered unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL, STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
being tendered, the signature(s) must correspond exactly with the name(s) as
written on the face of the certificate(s), without any alteration, enlargement
or change whatsoever.
If any of the tendered Shares are owned of record by two or more joint
owners, all the owners must sign this Letter of Transmittal.
IF TENDERED SHARES ARE REGISTERED IN DIFFERENT NAMES ON DIFFERENT
CERTIFICATES, IT WILL BE NECESSARY TO COMPLETE, SIGN AND SUBMIT AS MANY SEPARATE
LETTERS OF TRANSMITTAL AS THERE ARE DIFFERENT REGISTRATIONS ON CERTIFICATES.
<PAGE>
If this Letter of Transmittal or any certificates or stock powers are signed
by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
that person should so indicate when signing, and submit evidence satisfactory to
the Purchaser of the person's authority so to act.
When this Letter of Transmittal is signed by the registered owner(s) of the
Shares being tendered, no endorsements of certificates or separate stock powers
are required, unless payment or certificates for Shares which are not tendered
or purchased are to be issued to a person other than the registered owner(s), in
which case, endorsements of certificates or separate stock powers are required
and signatures on those certificates or stock powers must be guaranteed by an
Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered owner(s) of the Shares being tendered, the certificates must be
endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name(s) of the registered owner(s) appear on the certificates.
Signatures on the certificates or stock powers must be guaranteed by an Eligible
Institution.
6. STOCK TRANSFER TAXES. Except as set forth in this Instruction 6, the
Purchaser will pay or cause to be paid any stock transfer taxes with respect to
the transfer and sale to it of Shares it purchases pursuant to the Offer. If
payment of the purchase price is to be made to, or if certificates for Shares
which are not tendered or are not purchased are to be registered in the name of,
any person other than the registered holder, or if tendered certificates are
registered in the name of anyone other than the person(s) signing this Letter of
Transmittal, the amount of any stock transfer taxes payable on account of the
transfer to another person (whether imposed on the registered holder or on the
other person) will be deducted from the purchase price unless satisfactory
evidence of the payment of, or an exemption from the need to pay, stock transfer
taxes is submitted.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE CERTIFICATES SUBMITTED WITH THIS LETTER
OF TRANSMITTAL.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check or certificates for
unpurchased Shares are to be issued in the name of a person other than the
signer of this Letter of Transmittal, or if a check is to be sent or
certificates are to be returned to someone other than the signer of this Letter
of Transmittal or to an address other than the signer's address shown above, the
appropriate boxes on this Letter of Transmittal must be completed. Stockholders
tendering Shares by book-entry transfer may request that any Shares which are
not purchased be credited to an account maintained at the Book-Entry Facility
which the stockholder designates. If no instructions are given, Shares tendered
by book-entry transfer which are not purchased will be returned by crediting the
account at the Book-Entry Facility designated above.
8. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Requests for assistance may
be directed to, or additional copies of the Offer to Purchase and this Letter of
Transmittal may be obtained from, the Information Agent or the Dealer Managers
at their respective addresses set forth below or from your broker, dealer,
commercial bank or trust company.
9. WAIVER OF CONDITIONS. The conditions to the Offer may be waived by the
Purchaser, in whole or in part, at any time and from time to time in the
Purchaser's sole discretion, as to any Shares which are tendered.
10. SUBSTITUTE FORM W-9. The tendering stockholder is required to provide
the Depositary with a correct Taxpayer Identification Number ("TIN") on the
Substitute Form W-9 which is provided under "Important Tax Information" below,
and to indicate that the stockholder is not subject to backup withholding by
checking the box in Part 2 of the Substitute Form W-9. Failure to provide the
information on the Substitute Form W-9 may subject the tendering stockholder to
31% Federal income tax withholding from the payment of the purchase price. The
box in Part 3 of the Substitute Form W-9 may be checked if the tendering
stockholder has not been issued a TIN and has applied for a number or intends to
apply for a number in the near future. If the box in Part 3 is checked and the
Depositary is not provided with a TIN within 60 days, the Depositary will
withhold 31% from all payments of the purchase price to be made after expiration
of that 60 day period until a TIN is provided to the Depositary.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE OF IT), TOGETHER WITH
CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL OTHER REQUIRED
DOCUMENTS, OR A NOTICE OF GUARANTEED DELIVERY, MUST BE RECEIVED BY THE
DEPOSITARY ON OR PRIOR TO THE EXPIRATION DATE.
<PAGE>
(DO NOT WRITE IN THE SPACES BELOW)
Date Received ________ Accepted by ________ Checked by ________
<TABLE>
<CAPTION>
CERTIFICATES SHARES SHARES CHECK AMOUNT SHARES CERTIFICATE BLOCK
SURRENDERED TENDERED ACCEPTED NO. OF CHECK RETURNED NO. NO.
<S> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
Delivery Prepared by ________ Checked by ________ Date ________
IMPORTANT TAX INFORMATION
Under Federal income tax law, a stockholder whose tendered Shares are
accepted for payment is required to provide the Depositary with the
stockholder's correct TIN on Substitute Form W-9 below. If the stockholder is an
individual, the TIN is his or her social security number. If the Depositary is
not provided with the correct TIN, the stockholder may be subject, among other
things, to penalties imposed by the Internal Revenue Service. In addition,
payments that are made to the stockholder with respect to Shares purchased
pursuant to the Offer may be subject to backup withholding.
Certain stockholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, that individual must submit a statement, signed under penalties of
perjury, attesting to the individual's exempt status. A form of statement may be
obtained from the Depositary. See the enclosed Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9 for additional
instructions.
If backup withholding applies, the Depositary is required to withhold 31% of
any payments made to the stockholder. Backup withholding is not an additional
tax. Rather, the tax liability of persons subject to backup withholding will be
reduced by the amount of tax withheld. If withholding results in an overpayment
of taxes, a refund may be obtained.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to a stockholder
with respect to Shares purchased pursuant to the Offer, the stockholder is
required to notify the Depositary of the stockholder's correct TIN by completing
the form below certifying that the TIN provided on the Substitute Form W-9 is
correct (or that the stockholder is awaiting a TIN).
WHAT NUMBER TO GIVE THE DEPOSITARY
The stockholder is required to give the Depositary the social security
number or employer identification number of the record owner of the Shares. If
the Shares being tendered are in more than one name or are not in the name of
the actual owner, consult the enclosed Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 for additional guidelines on which
number to report.
<PAGE>
<TABLE>
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------
PAYER'S NAME: THE BANK OF NEW YORK
SUBSTITUTE PART 1-- PLEASE PROVIDE YOUR TIN IN THE BOX Social Security Number
FORM W-9 AT RIGHT AND CERTIFY BY SIGNING AND DATING OR
BELOW -------------------------
Employer Identification
Number
-------------------------------------------------------------------------
PART 2 -- Check the box if you are NOT subject to backup withholding
DEPARTMENT OF THE under the provisions of Section 3406(a)(1)(C) of the Internal Revenue
TREASURY, Code because (1) you are exempt from backup withholding, or (2) you have
INTERNAL REVENUE SERVICE not been notified that you are subject to backup withholding as a result
of failure to report all interest or dividends or (3) the Internal
Revenue Service has notified you that you are no longer subject to backup
withholding. / /
-------------------------------------------------------------------------
PAYER'S REQUEST FOR CERTIFICATION -- UNDER THE PENALTIES OF PART 3-- Awaiting TIN / /
TAXPAYER PERJURY, I CERTIFY THAT THE INFORMATION
IDENTIFICATION NUMBER PROVIDED ON THIS FORM IS TRUE, CORRECT AND
(TIN) COMPLETE.
SIGNATURE DATE
- ------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
THE INFORMATION AGENT FOR THE OFFER IS:
[LOGO]
909 Third Avenue
20th Floor
New York, New York 10022
(212) 754-8000
Toll Free: (800) 566-9061
Banks and Brokerage Firms please call:
(800) 662-5200
THE DEALER MANAGERS FOR THE OFFER ARE:
<TABLE>
<S> <C>
ING BARINGS FURMAN SELZ
667 Madison Avenue 230 Park Avenue
New York, New York 10021 New York, New York 10169
1-888-584-4166 (Toll Free) 1-888-584-4166 (Toll Free)
</TABLE>
<PAGE>
LETTER OF TRANSMITTAL
TO TENDER SHARES OF SERIES 1995 8% CONVERTIBLE PREFERRED STOCK
of
TESCORP, INC.
at
$144 PLUS ACCRUED DIVIDENDS PER SHARE
IN RESPONSE TO THE OFFER TO PURCHASE DATED DECEMBER 8, 1997
of
TESCORP ACQUISITION CORPORATION
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FRIDAY, JANUARY 9, 1998 UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
THE DEPOSITARY:
THE BANK OF NEW YORK
<TABLE>
<CAPTION>
BY MAIL: BY FACSIMILE TRANSACTION: BY HAND OR OVERNIGHT COURIER:
<S> <C> <C>
Tender & Exchange Department (For Eligible Institutions Only) Tender & Exchange Department
P.O. Box 11248 (212) 815-6213 101 Barclay Street
Church Street Station Receive and Deliver Window
New York, New York 10286-1248 FOR CONFIRMATION TELEPHONE New York, New York 10286
(800) 507-9357
</TABLE>
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS VIA A TELEX OR FACSIMILE NUMBER OTHER THAN THE ONES
LISTED ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
This Letter of Transmittal is to be used to tender shares of Series 1995 8%
Convertible Preferred Stock ("Shares") of Tescorp Inc. (the "Company") in
response to a solicitation of tenders by Tescorp Acquisition Corporation (the
"Purchaser"). It must be used whether certificates evidencing Shares are to be
forwarded with this Letter of Transmittal or whether delivery of Shares is to be
made by book-entry transfer to the account maintained by the Depositary at The
Depository Trust Company (the "Book-Entry Facility") as described in Section 3
of the Offer to Purchase. Stockholders whose certificates are not immediately
available or who cannot deliver their confirmation of the book-entry transfer of
their Shares into the Depositary's account at the Book-Entry Facility
("Book-Entry Confirmation") on or before the Expiration Date may use the
guaranteed delivery procedure described in Section 3 of the Offer to Purchase to
tender their shares. See Instruction 2. DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY
FACILITY DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
/ / CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO
THE ACCOUNT MAINTAINED BY THE DEPOSITARY AT THE BOOK-ENTRY FACILITY AND
COMPLETE THE FOLLOWING:
Name of Tendering Institution:______________________________________________
Account Number:_____________________________________________________________
Transaction Code Number_____________________________________________________
/ / CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
Name(s) of Registered Owner(s):_____________________________________________
Date of Execution of Notice of Guaranteed Delivery:_________________________
Name of Institution which Guaranteed Delivery:______________________________
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
--------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) CERTIFICATE(S) TENDERED
(PLEASE FILL IN, IF BLANK) (ATTACH ADDITIONAL LIST IF NECESSARY)
- -------------------------------------------------------------------------------------------------------
TOTAL NUMBER
OF SHARES
REPRESENTED NUMBER OF
CERTIFICATE BY* SHARES
NUMBER(S)* CERTIFICATE(S)* TENDERED*
<S> <C> <C> <C>
-------------------------------------------
-------------------------------------------
-------------------------------------------
-------------------------------------------
-------------------------------------------
TOTAL SHARES..............
- -------------------------------------------------------------------------------------------------------
* Need not be completed by stockholders tendering by book-entry transfer.
** Unless otherwise indicated it will be assumed that all Shares described above are being tendered.
See Instruction 4.
- -------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: SIGNATURE MUST BE PROVIDED BELOW.
(PLEASE) READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
<PAGE>
Gentlemen:
The undersigned hereby tenders to Tescorp Acquisition Corporation (the
"Purchaser"), a Delaware corporation, the shares of Series 1995 8% Convertible
Preferred Stock (the "Shares"), of Tescorp, Inc. (the "Company"), a Texas
corporation, listed above, in response to the Purchaser's offer to purchase all
outstanding Shares at a price of $144 plus accrued dividends from the last date
on which dividends were paid prior to the expiration of this Offer (defined
below) per Share, net to the sellers in cash, upon the terms and subject to the
conditions set forth in the Offer to Purchase dated December 8, 1997 (the "Offer
to Purchase"), receipt of which is hereby acknowledged, and in this Letter of
Transmittal (which, together with the Offer to Purchase, constitutes the
"Offer").
Subject to, and effective upon, acceptance of the Shares tendered with this
Letter of Transmittal for payment in accordance with the Offer, the undersigned
hereby sells, assigns, and transfers to, or upon the order of, the Purchaser all
right, title and interest in and to all the Shares that are being tendered with
this Letter of Transmittal (and any other Shares or other securities issued or
issuable in respect of those Shares after December 8, 1997) and irrevocably
constitutes and appoints the Depositary the true and lawful agent and
attorney-in-fact of the undersigned with respect to those Shares (and any such
other Shares or securities) with full power of substitution, (that power of
attorney being an irrevocable power coupled with an interest) to (a) deliver
certificates for the Shares (and any such other Shares or securities) or
transfer ownership of the Shares (and any such other Shares or securities) on
the account books maintained by the Book-Entry Facility, together in either case
with all accompanying evidences of transfer and authenticity, to or upon the
order of the Purchaser upon receipt by the Depositary, as the undersigned's
agent, of the purchase price (adjusted, if appropriate, as provided in the Offer
to Purchase), (b) present those Shares (and any such other Shares or securities)
for transfer on the books of the Company and (c) otherwise exercise all rights
of beneficial ownership of the Shares (and any such other Shares or securities),
all in accordance with the terms of the Offer.
The undersigned irrevocably appoints the Purchaser, its officers and its
designees, and each of them, the attorneys-in-fact and proxies of the
undersigned, each with full power of substitution, to vote in such manner as
each such attorney-in-fact and proxy or his or its substitute, in his or its
sole discretion deems proper, and otherwise act (including acting by written
consent without a meeting) with respect to, all the Shares tendered by this
Letter of Transmittal which have been accepted for payment by the Purchaser
prior to the time of the vote or action (and any other Shares or securities
issued in respect of those Shares after December 8, 1997). This proxy is
irrevocable and is granted in consideration of, and is effective upon, the
deposit by the Purchaser with the Depositary of the purchase price for the
Shares to which it relates, and acceptance of those Shares for payment, in
accordance with the Offer. That acceptance for payment will revoke all prior
proxies granted by the undersigned with regard to those Shares (and any such
other Shares or other securities) and the undersigned will not give any
subsequent proxies with respect to those Shares.
The undersigned represents and warrants that the undersigned has full power
and authority to tender, sell, assign and transfer the Shares tendered by this
Letter of Transmittal (and any other Shares or other securities issued in
respect of those Shares after December 8, 1997) and that, when those Shares are
accepted for payment by the Purchaser, the Purchaser will acquire good and
unencumbered titled to the Shares (and any such other Shares or securities),
free and clear of all liens, restrictions, charges, encumbrances or adverse
claims. The undersigned, upon request, will execute and deliver any additional
documents deemed by the Depositary or the Purchaser to be necessary or desirable
to complete the sale, assignment and transfer of the Shares tendered by this
Letter of Transmittal (and any such other Shares or other securities) to the
Purchaser.
The authority conferred in this Letter of Transmittal will not be affected
by, and will survive, the death or incapacity of the undersigned, and any
obligation of the undersigned under this Letter of Transmittal or otherwise
resulting from the tender of the Shares to which this Letter of Transmittal
relates will be binding upon the successors, assigns, heirs, executors,
administrators and legal representatives of the undersigned. Except as stated in
the Offer to Purchase, the tender made by this Letter of Transmittal is
irrevocable.
The undersigned understands that tenders of Shares pursuant to any one of
the procedures described in Section 3 of the Offer to Purchase and in the
instructions to this Letter of Transmittal will constitute a binding agreement
between the undersigned and the Purchaser upon the terms and subject to the
conditions of the Offer.
<PAGE>
Unless otherwise indicated in the box below captioned "Special Payment
Instructions," please issue the check for the purchase price of the Shares
tendered by this Letter of Transmittal, and cause any Shares represented by
certificates accompanying this Letter of Transmittal which are not being
tendered, or are not accepted for payment, in the name(s) of the undersigned.
Similarly, unless otherwise indicated in the box below captioned "Special
Delivery Instructions," please mail the check for the purchase price and deliver
certificates representing any Shares which are not being tendered or are not
accepted for payment (and accompanying documents, as appropriate) to the
undersigned at the address shown below the undersigned's signature. If both the
Special Delivery Instructions and the Special Payment Instructions are
completed, please issue the check for the purchase price and certificates for
any Shares which are not being tendered, or are not accepted for payment, in the
name of, and deliver the check and certificates, or confirmation of transfer of
the Shares at the Book-Entry Facility, to the person or persons indicated.
Stockholders delivering Shares by book-entry transfer may request that any
Shares not accepted for payment be returned by crediting an account at the
Book-Entry Facility, by making an appropriate entry under "Special Payment
Instructions." The undersigned recognizes that the Purchaser has no obligation
pursuant to the Special Payment Instructions or otherwise to transfer any
tendered Shares which are not accepted for payment from the name of the
registered holder of the Shares to the name of another person.
<PAGE>
- ------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 5, 6 AND 7)
To be completed ONLY if certificates for Shares which are not tendered or
are not purchased and the check for the purchase price of Shares which are
purchased are to be issued in the name of someone other than the
undersigned, or if Shares delivered by book-entry which are not purchased
are to be returned by credit to an account maintained at the Book-Entry
Facility other than that designated above.
Issue / / Check / / Certificates to:
Name _______________________________________________________________________
(PLEASE PRINT)
Address ____________________________________________________________________
____________________________________________________________________________
(INCLUDE ZIP CODE)
__________________________________________________________________________
(TAX IDENTIFICATION OR SOCIAL SECURITY NO.)
/ / Credit unpurchased Shares delivered by book-entry transfer to the
Book-Entry Facility account set forth below:
____________________________________________________________________________
(ACCOUNT NUMBER)
- ------------------------------------------------------------
- ------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 5, 6 AND 7)
To be completed ONLY if certificates for Shares which are not tendered or
are not purchased and the check for the purchase price of Shares which are
purchased are to be sent to someone other than the undersigned, or to the
undersigned at an address other than that shown after the undersigned's
signature below.
Mail / / Check / / Certificates to:
Name _______________________________________________________________________
(PLEASE PRINT)
Address ____________________________________________________________________
____________________________________________________________________________
(INCLUDE ZIP CODE)
- -----------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
SIGN HERE
(COMPLETE SUBSTITUTE FORM W-9 ON REVERSE)
____________________________________________________________________________
____________________________________________________________________________
SIGNATURE(S) OF OWNER(S)
Dated: _______________________________________________________________, 199_
(Must be signed by registered holder(s) exactly as name(s) appear(s) on
stock certificate(s) or on a security position listing or by person(s)
authorized to become registered holder(s) by certificates and documents
transmitted with this Letter of Transmittal. If signature is by trustees,
executors, administrators, guardians, attorneys-at-fact, agents, officers of
corporations or others acting in a fiduciary or representative capacity,
please provide the information described in Instruction 5.)
Name(s) ____________________________________________________________________
____________________________________________________________________________
(PLEASE PRINT)
Capacity (full title) ______________________________________________________
Address ____________________________________________________________________
____________________________________________________________________________
(INCLUDE ZIP CODE)
Area Code and Telephone Number _____________________________________________
Tax Identification or Social Security No. __________________________________
(COMPLETE SUBSTITUTE FORM W-9 ON REVERSE)
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5)
Authorized Signature _______________________________________________________
Name _______________________________________________________________________
Title ______________________________________________________________________
Name of Firm _______________________________________________________________
Address ____________________________________________________________________
Area Code and Telephone Number _____________________________________________
Dated: _______________________________________________________________, 199_
- --------------------------------------------------------------------------------
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. No signature guarantee is required on this
Letter of Transmittal (i) if this Letter of Transmittal is signed by the
registered holder of the Shares tendered by it (which, for purposes of this
document, includes any participant in the Book-Entry Facility whose name appears
on a security position listing as the owner of Shares) unless the holder has
completed either the box entitled "Special Delivery Instructions" or the box
entitled "Special Payment Instructions" on the reverse of this Letter of
Transmittal or (ii) if those Shares are tendered for the account of a member
firm of a registered national securities exchange or a member of the National
Association of Securities Dealers, Inc. or by a commercial bank or trust company
which has an office or correspondent in the United States (collectively,
"Eligible Institutions"). In all other cases, all signatures on this Letter of
Transmittal must be guaranteed by an Eligible Institution. See Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES. This Letter of
Transmittal is to be completed by stockholders either if certificates are being
forwarded with it or if tenders of Shares are to be made in accordance with the
procedures for delivery by book-entry transfer set forth in Section 3 of the
Offer to Purchase. Certificates for all physically tendered Shares, or a
Book-Entry Confirmation confirming book-entry transfer of Shares to an account
of the Depositary, as the case may be, together with a properly completed and
duly executed Letter of Transmittal (or facsimile of one) and any other
documents required by this Letter of Transmittal, must be received by the
Depositary at one of its addresses set forth above on or prior to the Expiration
Date (as defined in Section 1 of the Offer to Purchase). Stockholders whose
certificates for Shares are not immediately available, or who cannot deliver
Book-Entry Confirmation of book entry transfer of the Shares to the Depositary
on or prior to the Expiration Date may tender their Shares by properly
completing and executing a Notice of Guaranteed Delivery in accordance with the
guaranteed delivery procedure described in Section 3 of the Offer to Purchase.
Pursuant to that procedure, (i) the tender must be made by or through an
Eligible Institution, (ii) a properly completed and duly executed Notice of
Guaranteed Delivery, substantially in the form provided by the Purchaser, must
be received by the Depositary prior to the Expiration Date and (iii) the
certificates for all physically tendered Shares, or Book-Entry Confirmation of
Shares tendered by book-entry transfer, as the case may be, together with a
properly completed and duly executed Letter of Transmittal (or facsimile of one)
and any other documents required by this Letter of Transmittal, must be received
by the Depositary within three New York Stock Exchange trading days after the
date of execution of the Notice of Guaranteed Delivery, all as provided in
Section 3 of the Offer to Purchase.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, THE CERTIFICATES FOR
SHARES AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE
BOOK-ENTRY FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER AND,
EXCEPT AS OTHERWISE PROVIDED IN THIS INSTRUCTION 2, THE DELIVERY WILL BE DEEMED
MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY IS BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. All tendering stockholders, by execution of
this Letter of Transmittal (or a facsimile of it), waive any right to receive
any notice of the acceptance of their Shares for payment.
3. INADEQUATE SPACE. If the space provided in this Letter of Transmittal is
inadequate, the certificate numbers and numbers of Shares being tendered should
be listed on a separate signed schedule which should be attached to this Letter
of Transmittal.
4. PARTIAL TENDERS. (Not applicable to stockholders who tender by book-entry
transfer). If fewer than all the Shares evidenced by a certificate are to be
tendered, fill in the number of Shares which are to be tendered in the box
entitled "Number of Shares Tendered." In such case, new certificate(s) for the
remainder of the Shares that were evidenced by your old certificate(s) will be
sent to you, unless otherwise provided in the appropriate box on this Letter of
Transmittal, as soon as practicable after the Expiration Date. All Shares
represented by certificates delivered to the Depositary will be deemed to have
been tendered unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL, STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
being tendered, the signature(s) must correspond exactly with the name(s) as
written on the face of the certificate(s), without any alteration, enlargement
or change whatsoever.
If any of the tendered Shares are owned of record by two or more joint
owners, all the owners must sign this Letter of Transmittal.
IF TENDERED SHARES ARE REGISTERED IN DIFFERENT NAMES ON DIFFERENT
CERTIFICATES, IT WILL BE NECESSARY TO COMPLETE, SIGN AND SUBMIT AS MANY SEPARATE
LETTERS OF TRANSMITTAL AS THERE ARE DIFFERENT REGISTRATIONS ON CERTIFICATES.
<PAGE>
If this Letter of Transmittal or any certificates or stock powers are signed
by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
that person should so indicate when signing, and submit evidence satisfactory to
the Purchaser of the person's authority so to act.
When this Letter of Transmittal is signed by the registered owner(s) of the
Shares being tendered, no endorsements of certificates or separate stock powers
are required, unless payment or certificates for Shares which are not tendered
or purchased are to be issued to a person other than the registered owner(s), in
which case, endorsements of certificates or separate stock powers are required
and signatures on those certificates or stock powers must be guaranteed by an
Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered owner(s) of the Shares being tendered, the certificates must be
endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name(s) of the registered owner(s) appear on the certificates.
Signatures on the certificates or stock powers must be guaranteed by an Eligible
Institution.
6. STOCK TRANSFER TAXES. Except as set forth in this Instruction 6, the
Purchaser will pay or cause to be paid any stock transfer taxes with respect to
the transfer and sale to it of Shares it purchases pursuant to the Offer. If
payment of the purchase price is to be made to, or if certificates for Shares
which are not tendered or are not purchased are to be registered in the name of,
any person other than the registered holder, or if tendered certificates are
registered in the name of anyone other than the person(s) signing this Letter of
Transmittal, the amount of any stock transfer taxes payable on account of the
transfer to another person (whether imposed on the registered holder or on the
other person) will be deducted from the purchase price unless satisfactory
evidence of the payment of, or an exemption from the need to pay, stock transfer
taxes is submitted.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE CERTIFICATES SUBMITTED WITH THIS LETTER
OF TRANSMITTAL.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check or certificates for
unpurchased Shares are to be issued in the name of a person other than the
signer of this Letter of Transmittal, or if a check is to be sent or
certificates are to be returned to someone other than the signer of this Letter
of Transmittal or to an address other than the signer's address shown above, the
appropriate boxes on this Letter of Transmittal must be completed. Stockholders
tendering Shares by book-entry transfer may request that any Shares which are
not purchased be credited to an account maintained at the Book-Entry Facility
which the stockholder designates. If no instructions are given, Shares tendered
by book-entry transfer which are not purchased will be returned by crediting the
account at the Book-Entry Facility designated above.
8. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Requests for assistance may
be directed to, or additional copies of the Offer to Purchase and this Letter of
Transmittal may be obtained from the Information Agent or the Dealer Managers at
their respective addresses set forth below or from your broker, dealer,
commercial bank or trust company.
9. WAIVER OF CONDITIONS. The conditions to the Offer may be waived by the
Purchaser, in whole or in part, at any time and from time to time in the
Purchaser's sole discretion, as to any Shares which are tendered.
10. SUBSTITUTE FORM W-9. The tendering stockholder is required to provide
the Depositary with a correct Taxpayer Identification Number ("TIN") on the
Substitute Form W-9 which is provided under "Important Tax Information" below,
and to indicate that the stockholder is not subject to backup withholding by
checking the box in Part 2 of the Substitute Form W-9. Failure to provide the
information on the Substitute Form W-9 may subject the tendering stockholder to
31% Federal income tax withholding from the payment of the purchase price. The
box in Part 3 of the Substitute Form W-9 may be checked if the tendering
stockholder has not been issued a TIN and has applied for a number or intends to
apply for a number in the near future. If the box in Part 3 is checked and the
Depositary is not provided with a TIN within 60 days, the Depositary will
withhold 31% from all payments of the purchase price to be made after expiration
of that 60 day period until a TIN is provided to the Depositary.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE OF IT), TOGETHER WITH
CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL OTHER REQUIRED
DOCUMENTS, OR A NOTICE OF GUARANTEED DELIVERY, MUST BE RECEIVED BY THE
DEPOSITARY ON OR PRIOR TO THE EXPIRATION DATE.
<PAGE>
(DO NOT WRITE IN THE SPACES BELOW)
Date Received ________ Accepted by ________ Checked by ________
<TABLE>
<CAPTION>
CERTIFICATES SHARES SHARES CHECK AMOUNT SHARES CERTIFICATE BLOCK
SURRENDERED TENDERED ACCEPTED NO. OF CHECK RETURNED NO. NO.
<S> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
Delivery Prepared by ________ Checked by ________ Date ________
IMPORTANT TAX INFORMATION
Under Federal income tax law, a stockholder whose tendered Shares are
accepted for payment is required to provide the Depositary with the
stockholder's correct TIN on Substitute Form W-9 below. If the stockholder is an
individual, the TIN is his or her social security number. If the Depositary is
not provided with the correct TIN, the stockholder may be subject, among other
things, to penalties imposed by the Internal Revenue Service. In addition,
payments that are made to the stockholder with respect to Shares purchased
pursuant to the Offer may be subject to backup withholding.
Certain stockholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, that individual must submit a statement, signed under penalties of
perjury, attesting to the individual's exempt status. A form of statement may be
obtained from the Depositary. See the enclosed Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9 for additional
instructions.
If backup withholding applies, the Depositary is required to withhold 31% of
any payments made to the stockholder. Backup withholding is not an additional
tax. Rather, the tax liability of persons subject to backup withholding will be
reduced by the amount of tax withheld. If withholding results in an overpayment
of taxes, a refund may be obtained.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to a stockholder
with respect to Shares purchased pursuant to the Offer, the stockholder is
required to notify the Depositary of the stockholder's correct TIN by completing
the form below certifying that the TIN provided on the Substitute Form W-9 is
correct (or that the stockholder is awaiting a TIN).
WHAT NUMBER TO GIVE THE DEPOSITARY
The stockholder is required to give the Depositary the social security
number or employer identification number of the record owner of the Shares. If
the Shares being tendered are in more than one name or are not in the name of
the actual owner, consult the enclosed Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 for additional guidelines on which
number to report.
<PAGE>
<TABLE>
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------
PAYER'S NAME: THE BANK OF NEW YORK
SUBSTITUTE PART 1 -- PLEASE PROVIDE YOUR TIN IN THE BOX Social Security Number
FORM W-9 AT RIGHT AND CERTIFY BY SIGNING AND DATING OR
BELOW -------------------------
Employer Identification
Number
-------------------------------------------------------------------------
PART 2 -- Check the box if you are NOT subject to backup withholding
DEPARTMENT OF THE under the provisions of Section 3406(a)(1)(C) of the Internal Revenue
TREASURY, Code because (1) you are exempt from backup withholding, or (2) you have
INTERNAL REVENUE SERVICE not been notified that you are subject to backup withholding as a result
of failure to report all interest or dividends or (3) the Internal
Revenue Service has notified you that you are no longer subject to backup
withholding. / /
-------------------------------------------------------------------------
PAYER'S REQUEST FOR CERTIFICATION -- UNDER THE PENALTIES OF PART 3 -- Awaiting TIN / /
TAXPAYER PERJURY, I CERTIFY THAT THE INFORMATION
IDENTIFICATION NUMBER PROVIDED ON THIS FORM IS TRUE, CORRECT AND
(TIN) COMPLETE.
SIGNATURE DATE
- ------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
THE INFORMATION AGENT FOR THE OFFER IS:
[LOGO]
909 Third Avenue
20th Floor
New York, New York 10022
(212) 754-8000
Toll Free: (800) 566-9061
Banks and Brokerage Firms please call:
(800) 662-5200
THE DEALER MANAGERS FOR THE OFFER ARE:
<TABLE>
<CAPTION>
ING BARINGS FURMAN SELZ
<S> <C>
667 Madison Avenue 230 Park Avenue
New York, New York 10021 New York, New York 10169
1-888-584-4166 (Toll Free) 1-888-584-4166 (Toll Free)
</TABLE>
<PAGE>
NOTICE OF GUARANTEED DELIVERY
for
TENDER OF SHARES OF COMMON STOCK AND
SERIES 1995 8% CONVERTIBLE PREFERRED STOCK
of
TESCORP, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE
AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, JANUARY 9, 1998,
UNLESS THE OFFER IS EXTENDED.
This form, or one substantially equivalent to it, must be used to accept the
Offer (as defined below) if certificates for (i) shares of common stock, $.02
par value per share (the "Common Shares") or (ii) shares of Series 1995 8%
Convertible Preferred Stock (the "Preferred Shares") of Tescorp, Inc., a Texas
corporation (the "Company"), are not immediately available or if the procedure
for book-entry transfer cannot be completed on a timely basis or time will not
permit all required documents to reach the Depositary on or prior to the
Expiration Date (described in the Offer to Purchase dated December 8, 1997 the
"Offer to Purchase"). This form may be delivered by hand, facsimile
transmission, or mail to the Depositary.
THE DEPOSITARY FOR THE OFFER IS:
THE BANK OF NEW YORK
<TABLE>
<CAPTION>
BY MAIL: FACSIMILE TRANSMISSION: BY HAND OR OVERNIGHT COURIER:
<S> <C> <C>
Tender & Exchange Department (For Eligible Institutions Tender & Exchange Department
P.O. Box 11248 Only) 101 Barclay Street
Church Street Station (212) 815-6213 Receive and Deliver Window
New York, New York 10286-1248 New York, New York 10286
FOR CONFIRMATION TELEPHONE:
(800) 507-9357
</TABLE>
DELIVERY OF THIS REVISED NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS, OR
TRANSMISSION OF INSTRUMENTS VIA A FACSIMILE, OTHER THAN AS SET FORTH ABOVE, DOES
NOT CONSTITUTE A VALID DELIVERY TO THE DEPOSITARY.
This Notice of Guaranteed Delivery is not to be used to guarantee
signatures. If the Instructions to the Letter of Transmittal require that a
signature on a Letter of Transmittal be guaranteed by an "Eligible Institution"
the signature guarantee must appear in the applicable space in the signature box
on the Letter of Transmittal.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal or an
Agent's Message and certificates for Shares to the Depositary within the time
period described under "Guarantee" on the reverse side. Failure to do so could
result in a financial loss to the Eligible Institution.
THE GUARANTEE ON THE REVERSE SIDE MUST BE COMPLETED.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to Tescorp Acquisition Corporation, a
Delaware corporation, upon the terms and subject to the conditions set forth in
the Offer to Purchase, and the related Letters of Transmittal, receipt of which
are hereby acknowledged, Common Shares or Preferred Shares of the Company,
pursuant to the guaranteed delivery procedure set forth in Section 3 of the
Offer to Purchase.
<TABLE>
<S> <C>
Class of Shares: SIGN HERE
Name(s) of Record Holder(s):
Number of Shares: (Please Print)
Certificate No(s) (if available): Address(es):
(Zip Code)
If Securities will be tendered by Area Code and Telephone No(s):
book-entry transfer:
Name of Tendering Institution: Signature(s):
Account No.:at
The Depository Trust Company
Dated:
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a bank, broker, dealer, credit union, savings association or other
entity which is a member in good standing of the Securities Transfer Agents Medallion
Program, the New York Stock Exchange Medallion Signature Guarantee Program or the
Stock Exchange Medallion Program, or a bank, broker, dealer, credit union, savings
association or other entity which is an "eligible guarantor institution," as that term
is defined in Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended,
guarantees the delivery to the Depositary of the Shares tendered hereby, together with
a properly completed and duly executed Letter of Transmittal (or manually signed
facsimile(s) of one) and any other required documents, or an Agent's Message (as
defined in the Offer to Purchase) in the case of a book-entry delivery of Shares, all
within three (3) trading days after the date of this Guarantee. A "trading day" is a
day on which the New York Stock Exchange is open for trading.
Name of Firm: Title:
Name:
(Authorized Signature) (Please Print or Type)
Address: Area Code and Telephone No.:
Dated:
(Zip Code)
</TABLE>
DO NOT SEND CERTIFICATES FOR SHARES WITH THIS FORM--CERTIFICATES SHOULD BE SENT
WITH LETTER OF TRANSMITTAL.
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
AND SERIES 1995 8% CONVERTIBLE PREFERRED STOCK
of
TESCORP, INC.
by
TESCORP ACQUISITION CORPORATION
A WHOLLY OWNED SUBSIDIARY
of
SUPERCANAL HOLDING S.A.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON FRIDAY, JANUARY 9, 1998, UNLESS THE OFFER IS EXTENDED.
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been appointed by Tescorp Acquisition Corporation (the "Purchaser"), a
Delaware corporation and a wholly owned subsidiary of Supercanal Holding S.A.
("Parent"), an Argentine corporation, to act as Dealer Managers in connection
with the Purchaser's offer to purchase (i) all the outstanding shares of common
stock, par value $0.02 per share ("Common Shares"), of Tescorp, Inc. (the
"Company"), a Texas corporation, for $4.50 per Common Share, net to the seller
in cash, and (ii) all the outstanding shares of Series 1995 8% Convertible
Preferred Stock ("8% Preferred Shares") of the Company for $144 per share plus
accrued dividends from the last date on which dividends were paid to the
expiration of the Offer (defined below) (collectively the Common Shares and the
8% Preferred Shares are referred to as the "Shares" and the $4.50 per share
price and the $144 per share price plus accrued dividends which the Purchaser is
offering to pay are referred to as the "purchase prices"), upon the terms and
subject to the conditions set forth in the Offer to Purchase, dated December 8,
1997 (the "Offer to Purchase"), and the related Letters of Transmittal (which,
together with any supplements or amendments thereto, collectively constitute the
"Offer") enclosed herewith.
Please furnish copies of the enclosed materials to those of your clients for
whom you hold Shares registered in your name or in the name of your nominee.
The Offer is conditioned upon, (i) there being validly tendered and not
withdrawn prior to the expiration of the Offer a number of Common Shares of the
Company which, when added to the Common Shares already owned by the Purchaser,
constitutes more than two-thirds of the total number of outstanding Common
Shares, (ii) there being validly tendered and not withdrawn prior to the
expiration of the Offer a number of 8% Preferred Shares which, when added to any
8% Preferred Shares already owned by the Purchaser, constitutes more than
two-thirds of the total number of outstanding 8% Preferred Shares and (iii)
satisfaction of certain other conditions.
Enclosed herewith for your information and forwarding to your clients are copies
of the following documents:
1. The Offer to Purchase, dated December 8, 1997;
2. The Letters of Transmittal to be sent by stockholders of the Company
accepting the Offer and tendering Shares;
3. The Notice of Guaranteed Delivery to be used to accept the Offer if
certificates for Shares are not immediately available, or if such
certificates and all other required documents cannot be
<PAGE>
delivered to The Bank of New York (the "Depositary") by the expiration of
the Offer, or if the procedure for book-entry transfer cannot be
completed by the expiration of the Offer;
4. A printed form of letter which may be sent to your clients for whose
accounts you hold Shares registered in your name or in the name of your
nominee, with space provided for obtaining such clients' instructions
with regard to the Offer;
5. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9; and
6. A return envelope addressed to the Depositary.
7. A letter to the shareholders of the Company from Jack R. Crosby,
Chairman of the Board and Chief Executive Officer of the Company together
with a Solicitation/Recommendation Statement on Schedule 14D-9 filed with
the Securities and Exchange Commission by the Company.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS WILL
EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, JANUARY 9, 1997, UNLESS
THE OFFER IS EXTENDED.
The Board of Directors of the Company (a) has approved the Offer and the
Merger (as defined in the Offer to Purchase) which will follow the Offer if the
Offer is successfully completed and the shareholders of the Company approve the
Merger, (2) has determined that the terms of the Offer and the Merger are fair
to and in the best interests of the Company's stockholders, and (3) recommends
that the holders of the Common Shares and 8% Preferred Shares tender their
Shares in response to the Offer.
The Offer is being made pursuant to an Amended Stock Purchase and Merger
Agreement dated as of November 26, 1997 (the "Merger Agreement"), between the
Purchaser and the Company. The Merger Agreement provides that, among other
things, as soon as practicable after the purchase of shares pursuant to the
Offer and the satisfaction or waiver of the other conditions set forth in the
Merger Agreement the Purchaser will be merged with and into the Company (the
"Merger"). At the effective time of the Merger (the "Effective Time"), each
Common Share which is outstanding immediately before the Effective Time, other
than shares owned by the Purchaser, will be converted into and become the right
to receive $4.50 in cash, or any higher price per share paid with regard to
Common Shares tendered in response to the Offer. At the Effective Time, each 8%
Preferred Share which is outstanding immediately before the Effective Time will
be converted into and become the right to receive in cash $144 per share plus
dividends accrued up to the Expiration Date of the Offer (except that if a
dividend is paid with regard to the 8% Preferred Shares between the Expiration
Time and the Effective Time, each 8% Preferred Share will be converted into and
become the right to receive $144 in cash without regard to any accrued but
unpaid dividends). At the Effective Time, each Common Share or 8% Preferred
Share held by the Purchaser or by any direct or indirect subsidiary of the
Company immediately before the Effective Time will be cancelled and no payment
will be made with respect to those Shares.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of certificates
evidencing such Shares or a confirmation of a book-entry transfer of such Shares
into the Depositary's account at the Book-Entry Transfer Facility (as defined in
the Offer to Purchase), a Letter of Transmittal (or facsimile thereof) properly
completed and duly executed, or an Agent's Message (as defined in the Offer to
Purchase), and any other required documents in accordance with the instructions
contained in the Letter of Transmittal.
If a holder of Shares wishes to tender Shares, but cannot deliver such
holder's certificates or other required documents, or cannot comply with the
procedure for book-entry transfer, prior to the expiration of the Offer, a
tender of Shares may be effected by following the guaranteed delivery procedure
described in Section 3 of the Offer to Purchase.
The Purchaser will not pay any commissions or fees to any broker, dealer or
other person (other than the Dealer Managers and the Information Agent, as
described in the Offer) in connection with the
2
<PAGE>
solicitation of tenders of Shares pursuant to the Offer. However, the Purchaser
will reimburse you for customary mailing and handling expenses incurred by you
in forwarding any of the enclosed materials to your clients. The Purchaser will
pay or cause to be paid any stock transfer taxes payable with respect to the
transfer of Shares to it, except as otherwise provided in Instruction 6 of the
Letter of Transmittal.
Any inquiries you may have with respect to the Offer and requests for
additional copies of the enclosed materials should be addressed to the Dealer
Managers or the Information Agent at their respective addresses and telephone
numbers set forth on the back cover of the Offer to Purchase.
Very truly yours,
ING BARINGS FURMAN SELZ
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL RENDER YOU OR
ANY OTHER PERSON THE AGENT OF THE PARENT, THE PURCHASER, THE DEALER MANAGERS,
THE COMPANY, THE DEPOSITARY OR THE INFORMATION AGENT, OR ANY AFFILIATE OF ANY OF
THEM, OR AUTHORIZE YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENT OR USE ANY
DOCUMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE
ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN.
3
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
AND SERIES 1995 8% CONVERTIBLE PREFERRED STOCK
of
TESCORP, INC.
by
TESCORP ACQUISITION CORPORATION
A WHOLLY OWNED SUBSIDIARY
of
SUPERCANAL HOLDING S.A.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON FRIDAY, JANUARY 9, 1998, UNLESS THE OFFER IS EXTENDED.
To Our Clients:
Enclosed for your consideration are the Offer to Purchase, dated December 8,
1997 (the "Offer to Purchase"), and the related Letters of Transmittal (which,
together with any supplements or amendments thereto, collectively constitute the
"Offer") relating to the offer by Tescorp Acquisition Corporation (the
"Purchaser"), a Delaware corporation and a wholly owned subsidiary of Supercanal
Holding S.A. ("Parent"), an Argentine corporation, to purchase (i) all the
outstanding shares of common stock, par value $0.02 per share ("Common Shares"),
of Tescorp, Inc. (the "Company"), a Texas corporation, for $4.50 per Common
Share, net to the seller in cash, and (ii) all the outstanding shares of Series
1995 8% Convertible Preferred Stock ("8% Preferred Shares") of the Company for
$144 per share plus accrued dividends from the last date on which dividends were
paid to the Expiration Time (as defined below) (collectively the Common Shares
and the 8% Preferred Shares are referred to as the "Shares" and the $4.50 per
share price and the $144 per share price plus accrued dividends which the
Purchaser is offering to pay are referred to as the "purchase prices"), upon the
terms and subject to the conditions set forth in the Offer. Also enclosed is the
Letter to the Stockholders of the Company from the Chairman and Chief Executive
Officer of the Company, accompanied by the Company's Solicitation/Recommendation
Statement on Schedule 14D-9.
WE ARE THE HOLDER OF RECORD OF SHARES HELD BY US FOR YOUR ACCOUNT. A TENDER
OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF RECORD AND PURSUANT TO
YOUR INSTRUCTIONS. THE LETTERS OF TRANSMITTAL ARE FURNISHED TO YOU FOR YOUR
INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER SHARES HELD BY US FOR YOUR
ACCOUNT.
Accordingly, we request instructions as to whether you wish to have us
tender on your behalf any or all Shares held by us for your account pursuant to
the terms and conditions set forth in the Offer.
<PAGE>
Please note the following:
1. The tender price is $4.50 per Common Share, net to you in cash, and $144
per share plus accrued dividends from the last date on which dividends
were paid to the Expiration Time upon the terms and subject to the
conditions set forth in the Offer.
2. The Offer is being made for all outstanding Common Shares and all
outstanding 8% Preferred Shares.
3. The Offer is conditioned upon (i) there being validly tendered and not
withdrawn prior to the expiration of the Offer a number of Common Shares
of the Company which, when added to the Common Shares already owned by
the Purchaser, constitutes more than two-thirds of the total number of
outstanding Common Shares, (ii) there being validly tendered and not
withdrawn prior to the expiration of the Offer a number of 8% Preferred
Shares which, when added to any 8% Preferred Shares already owned by the
Purchaser, constitutes more than two-thirds of the total number of
outstanding 8% Preferred Shares and (iii) satisfaction of certain other
conditions.
4. Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as otherwise provided in Instruction 6 of the
Letter of Transmittal, stock transfer taxes on the purchase of Shares by
the Purchaser in response to the Offer.
5. The Offer and withdrawal rights will expire at 12:00 midnight, New York
City time, on Friday, January 9, 1998 ("Expiration Time") unless the
Purchaser extends the period during which the offer is open, in which
event the term "Expiration Time" will mean the time and date at which the
offer, as extended, will expire.
6. The Board of Directors of the Company (a) has approved the Offer and the
Merger (as defined in the Offer to Purchase) which will follow the Offer
if the Offer is successfully completed and the shareholders of the
Company approve the Merger, (2) has determined that the terms of the
Offer and the Merger are fair to and in the best interests of the
Company's stockholders, and (3) recommends that the holders of the Common
Shares and 8% Preferred Shares tender their Shares in response to the
Offer.
If you wish to have us tender any or all of the Shares held by us for
your account, please so instruct us by completing, executing and returning
to us the instruction form contained in this letter. If you authorize the
tender of your Shares, all such Shares will be tendered unless otherwise
specified in your instructions. An envelope in which to return your
instructions to us is enclosed. YOUR INSTRUCTIONS SHOULD BE FORWARDED TO US
IN AMPLE TIME TO PERMIT US TO SUBMIT A TENDER ON YOUR BEHALF PRIOR TO THE
EXPIRATION OF THE OFFER.
The Offer is made solely by the Offer to Purchase and the related Letter
of Transmittal and is being made to all holders of Shares. The Offer is not
being made to (nor will tenders be accepted from or on behalf of) the
holders of Shares in any jurisdiction in which the making of the Offer or
the acceptance thereof would not be in compliance with the laws of such
jurisdiction. In those jurisdictions where the securities laws require the
Offer to be made by a licensed broker or dealer, the Offer will be deemed to
be made on behalf of the Purchaser by Furman Selz LLC, ING Baring (U.S.)
Securities Inc. or one or more registered brokers or dealers licensed under
the laws of particular jurisdictions.
2
<PAGE>
INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE
FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK
AND SERIES 1995 8% CONVERTIBLE PREFERRED STOCK
OF TESCORP INC. BY TESCORP ACQUISITION CORPORATION
The undersigned acknowledge(s) receipt of your letter and the enclosed Offer
to Purchase, dated December 5, 1997, and the related Letters of Transmittal
(which, as amended or supplemented from time to time, together constitute the
"Offer"), in connection with the offer by Tescorp Acquisition Corporation (the
"Purchaser"), a Delaware corporation and a wholly owned subsidiary of Supercanal
Holding S.A. ("Parent"), an Argentine corporation, to purchase (i) all the
outstanding shares of common stock, par value $0.02 per share ("Common Shares"),
of Tescorp, Inc. (the "Company"), a Texas corporation and (ii) all the
outstanding shares of Series 1995 8% Convertible Preferred Stock ("8% Preferred
Shares" and together with the Common Shares ("Shares")) of the Company.
This will instruct you to tender to the Purchaser the number of Shares
indicated below (or if no number is indicated below, all Shares) which are held
by you for the account of the undersigned, upon the terms and subject to the
conditions set forth in the Offer.
SIGN HERE
Number of Shares
----------------------------------------
to Be Tendered:
____________Shares*
----------------------------------------
Signature(s)
----------------------------------------
Dated: , 199
----------------------------------------
Please type or print name(s)
----------------------------------------
----------------------------------------
Please type or print address
----------------------------------------
Area Code and Telephone Numbers
----------------------------------------
Taxpayer Identification
or Social Security Number(s)
- ------------------------
* Unless other indicated, it will be assumed that all shares held by us for
your account are to be tendered.
3
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYOR.--Social Security numbers have nine digits separated by two hyphens: i.e.
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e. 00-0000000. The table below will help determine the number to
give the payor.
<TABLE>
<CAPTION>
- -----------------------------------------------------
GIVE THE TAXPAYER
IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
- -----------------------------------------------------
<S> <C> <C>
1. An individual's The individual
account
2. Two or more The actual owner of
individuals (joint the account or, if
account) combined funds, the
first individual on
the account(1)
3. Custodian account of The minor(2)
a minor (Uniform
Gift to Minors Act)
4. a. The usual The
revocable savings grantor-trustee(1)
trust (grantor is
also trustee)
b. So-called trust
account that is The actual owner(1)
not a legal or
valid trust under
state law.
5. Sole proprietorship The owner(3)
6. A valid trust, The legal entity (Do
estate, or pension not furnish the
trust identifying number
of the personal
representative or
trustee unless the
legal entity itself
is not designated in
the account
title.)(4)
- -----------------------------------------------------
<CAPTION>
GIVE THE TAXPAYER
IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
<S> <C> <C>
- -----------------------------------------------------
7. Corporate account The corporation
8. Religious, The organization
charitable, or
educational
organization account
9. Partnership account The partnership
10. Association, club, The organization
or other tax-exempt
organization
11. A broker or The broker or
registered nominee nominee
12. Account with the The public entity
Department of
Agriculture in the
name of a public
entity (such as a
state or local
government, school
district, or prison)
that receives
agricultural program
payments
</TABLE>
- ---------------------------------------------
- ---------------------------------------------
(1) List first and circle the name of the person whose number you furnish. If
only one person on a joint account has an SSN, that person's number must be
furnished.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Show your individual name. You may also enter your business or "doing
business as" name. You may use either your social security number or your
employer identification number.
(4) List first and circle the name of the legal trust, estate, or pension trust.
NOTE: If no name is circled when there is more than one name listed, the number
will be considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
Note: Section references are to the Internal Revenue Code unless otherwise
noted.
OBTAINING A NUMBER
If you do not have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card (for
individuals), or Form SS-4, Application for Employer Identification Number (for
businesses and all other entities), at the local office of the Social Security
Administration or the Internal Revenue Service (the "IRS") and apply for a
number.
PAYEES AND PAYMENTS EXEMPT FROM BACKUP WITHHOLDING
The following is a list of payees exempt from backup withholding and for which
no information reporting is required. For interest and dividends, all listed
payees are exempt except item (9). For broker transactions, payees listed in
items (1) through (13) and a person registered under the Investment Advisors Act
of 1940 who regularly acts as a broker are exempt. Payments subject to reporting
under sections 6041 and 6041A are generally exempt from backup withholding only
if made to payees described in items (1) through (7), except a corporation
(other than certain hospitals described in Regulations section 1.6041-3(c)) that
provides medical and health care services or bills and collects payments for
such services is not exempt from backup withholding or information reporting.
Only payees described in items (1) through (5) are exempt from backup
withholding for barter exchange transactions and patronage dividends.
(1) An organization exempt from tax under section 501(a), or an IRA, or a
custodial account under section 403(b)(7), if the account satisfies the
requirements of section 401(f)(2).
(2) The United States or any of its agencies or instrumentalities.
(3) A state, the District of Columbia, a possession of the United States, or any
of their political subdivisions or instrumentalities.
(4) A foreign government or any of its political subdivisions, agencies or
instrumentalities.
(5) An international organization or any of its agencies or instrumentalities.
(6) A corporation.
(7) A foreign central bank of issue.
(8) A dealer in securities or commodities required to register in the United
States, the District of Columbia or a possession of the United States.
(9) A futures commission merchant registered with the Commodity Futures Trading
Commission.
(10) A real estate investment trust.
(11) An entity registered at all times during the tax year under the Investment
Company Act of 1940
(12) A common trust fund operated by a bank under section 584(a).
(13) A financial institution.
(14) A middleman known in the investment community as a nominee or listed in the
most recent publication of the American Society of Corporate Secretaries, Inc.,
Nominee List.
(15) A trust exempt from tax under section 664 or described in section 4947.
Payments of dividends and patronage dividends that generally are exempt from
backup withholding include the following:
- - Payments to nonresident aliens subject to withholding under section 1441.
- - Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident alien partner.
- - Payments of patronage dividends not paid in money.
- - Payments made by certain foreign organizations.
- - Section 404(k) payments made by an ESOP.
Payments of interest that generally are exempt from backup withholding include
the following:
- - Payments of interest on obligations issued by individuals. Note: You may be
subject to backup withholding if this interest is $600 or more and is paid in
the course of the payer's trade or business and you have not provided your
correct taxpayer identification number to the payor.
- - Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
- - Payments described in section 6049(b)(5) to non-resident aliens.
- - Payments on tax-free covenant bonds under section 1451.
- - Payments made by certain foreign organizations.
- - Payments of mortgage interest to you.
Exempt payees described above should file substitute Form W-9 to avoid possible
erroneous backup withholding. FILE THIS FORM WITH THE PAYOR, FURNISH YOUR
TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, SIGN AND
DATE THE FORM AND RETURN IT TO THE PAYOR. IF YOU ARE A NON-RESIDENT ALIEN OR A
FOREIGN ENTITY NOT SUBJECT TO BACKUP WITHHOLDING, FILE WITH PAYOR A COMPLETED
INTERNAL REVENUE FORM W-8 (CERTIFICATE OF FOREIGN STATUS).
Payments that are not subject to information reporting are also not subject
to backup withholding. For details, see sections 6041, 6041A, 6042, 6044, 6045,
6049, 6050A and 6050N and the regulations promulgated thereunder.
PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payors
who must report the payments to the IRS. The IRS uses the numbers for
identification purposes. Payors must generally withhold 31% of taxable interest,
dividend, and certain other payments to a payee who does not furnish a taxpayer
identification number to a payor. Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail
to furnish your correct taxpayer identification number to a requester, you are
subject to a penalty of $50 for each such failure unless your failure is due to
reasonable cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
<PAGE>
Exhibt 99(a)(7)
Page 1
This announcement is neither an offer to purchase nor a solicitation of
an offer to sell Shares. The Offer is made only by the Offer to Purchase
dated December 8, 1997, and the related Letters of Transmittal. The Offer is
being made to all holders of Shares, except that it is not being made to (nor
will tenders be accepted from) holders of Shares in any jurisdiction in
which the Offer or acceptance of the Offer would violate applicable
securities laws. Neither the Purchaser nor Parent is aware of any
jurisdiction in which the making or acceptance of the Offer would violate
applicable securities laws. To the extent the Offeror or Parent becomes aware
of any state law that would limit the class of persons to whom the Offer can
be made, the Purchaser will amend the Offer and, depending on the timing of
the amendment, "will extend the Offer to provide adequate dissemination of
information about the amendment before the Offer expires. In those
jurisdictions where the securities laws require the Offer to be made by a
licensed broker or dealer, the Offer will be deemed to be made on behalf of
the Purchaser by Furman Selz, LLC, ING Baring (U.S.) Securities, Inc. or one
or more registered brokers or dealers licensed under the laws of particular
jurisdictions.
Tescorp Acquisition Corporation
a wholly owned subsidiary of
SUPERCANAL HOLDING S.A.
is offering to purchase
All Outstanding Shares of Common Stock
and Series 1995 8% Convertible Preferred Stock
of
Tescorp, Inc.
at $4.50 per Share of Common Stock
and $144 Plus Accrued Dividends for
Each Share of Series 1995 8% Convertible Preferred Stock
Tescorp Acquisition Corporation (the "Purchaser"), a Delaware corporation
and a wholly owned subsidiary of Supercanal Holding S.A. ("Parent"), an
Argentine corporation, hereby offers to purchase (i) all the outstanding shares
of common stock, par value $0.02 per share ("Common Shares"), of Tescorp, Inc.
(the "Company"), a Texas corporation, for $4.50 per Common Share, net to the
seller in cash, and (ii) all the outstanding shares of Series 1995 8%
Convertible Preferred Stock ("8% Preferred Shares") of the Company for $144 per
share plus accrued dividends from the last date on which dividends were paid to
the Expiration Time (as defined below) (collectively the Common Shares and the
8% Preferred Shares are referred to as the "Shares" and the $4.50 per share
price and the $144 per share price plus accrued dividends which the Purchaser is
offering to pay are referred to as the "purchase prices"), upon the terms and
subject to the conditions set forth in the Offer to Purchase dated December 8,
1997 (the "Offer to Purchase") and in the related Letter of Transmittal (which
together, as amended from time to time, constitute the "Offer").
<PAGE>
Page 2
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON FRIDAY, JANUARY 9, 1998,
UNLESS THE OFFER IS EXTENDED.
<PAGE>
Page 3
The Offer is conditioned upon (1) there being validly tendered and not
withdrawn prior to the expiration of the Offer a number of Common Shares of the
Company, which, when added to the Common Shares already owned by the Purchaser,
constitutes more than two-thirds of the total number of outstanding Common
Shares, (2) there being validly tendered and not withdrawn prior to the
expiration of the Offer a number of 8% Preferred Shares which, when added to any
8% Preferred Shares already owned by the Purchaser, constitutes more than
two-thirds of the total number of outstanding 8% Preferred Shares and (3)
satisfaction of certain other conditions.
The Offer is being made in accordance with an Amended Stock Purchase and
Merger Agreement (the "Merger Agreement"), dated November 26, 1997, between the
Company and the Purchaser which amends and restates a Stock Purchase and Merger
Agreement dated September 16, 1997 between the Company and the Purchaser. The
Merger Agreement provides that, among other things, as soon as practicable after
the purchase of shares pursuant to the Offer and the satisfaction or waiver of
the other conditions set forth in the Merger Agreement the Purchaser will be
merged with and into the Company (the "Merger"). At the effective time of the
Merger (the "Effective Time"), each Common Share which is outstanding
immediately before the Effective Time, other than shares owned by the Purchaser,
will be converted into and become the right to receive $4.50 in cash, or any
higher price per share paid with regard to Common Shares tendered in response to
the Offer. At the Effective Time, each 8% Preferred Share which is outstanding
immediately before the Effective Time will be converted into and become the
right to receive in cash $144 per share plus dividends accrued up to the
Expiration Date of the Offer (except that if a dividend is paid with regard to
the 8% Preferred Shares between the Expiration Time and the Effective Time, each
8% Preferred Share will be converted into and become the right to receive
$144.00 in cash without regard to any accrued but unpaid dividends). At the
Effective Time, each Common Share or 8% Preferred Share held by the Purchaser or
by any direct or indirect subsidiary of the Company immediately before the
Effective Time will be cancelled and no payment will be made with respect to
those Shares.
For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment, and thereby purchased, the Shares which are validly tendered and
not withdrawn, when the Purchaser gives oral or written notice to The Bank of
New York (the "Depositary") of the Purchaser's acceptance of those Shares for
payment. Payment for Shares purchased pursuant to the Offer will be made by
deposit of the purchase price with the Depositary, which will act as agent for
tendering stockholders for the purpose of receiving payment from the Purchaser
and transmitting payment to the tendering stockholders. Payment for Shares
accepted for payment pursuant to the Offer will be made only after timely
receipt by the Depositary of (i) certificates for the Shares or timely
confirmation of a book-entry transfer of the Shares into the Depositary's
account at the Book-Entry Transfer Facility (as defined in the Offer to
Purchase) in accordance with the procedures described in the Offer to Purchase,
(ii) a properly completed and duly executed Letter of Transmittal (or facsimile
of one), with any required signature guarantees, or, in the case of a book-entry
transfer, an Agent's Message (as defined in the Offer to Purchase) and (iii) any
other documents required by the Letter of Transmittal.
If any of the conditions set forth in the Offer to Purchase that relate to
the Purchaser's obligations to purchase the Shares are not satisfied by 12:00
Midnight, New York City Time, on January 9, 1998 (or any other time set as the
Expiration Date), the Purchaser may, subject to the terms of the Merger
Agreement, (i) extend the Offer and, subject to applicable withdrawal rights,
retain all tendered Shares until the expiration of the Offer as so extended,
(ii) subject to complying with applicable rules and regulations of the
Securities and Exchange Commission, accept for payment all Shares which are
tendered and not extend the Offer, or (iii) terminate the Offer and not accept
for payment any Shares and return all tendered Shares to the tendering
stockholders. The term "Expiration Date" means 12:00 Midnight, New York City
Time, on January 9, 1998, unless the Purchaser extends the time during which the
Offer is open, in which event the term "Expiration Date" will mean the latest
time and date at which the Offer, as so extended, will expire.
Subject to the limitations set forth in the Offer and the Merger Agreement,
the Purchaser reserves the right (but will not be obligated), at any time or
from time to time in its sole discretion, to extend the period during which the
Offer is open by giving oral or written notice of the extension to the
Depositary and by making a public announcement of the extension. The Purchaser
will make a public announcement of any extension of the period during which the
Offer is open not later than 9:00 a.m., New York City Time, on the business day
after the previously scheduled Expiration Date. During any extension, all
Shares previously tendered and not withdrawn will remain tendered in response to
the Offer, subject to the rights of a tendering stockholder to withdraw tendered
Shares.
Except as otherwise provided in Section 4 of the Offer to Purchase, tenders
of Shares made in response to the Offer are
<PAGE>
Page 4
irrevocable, except that Shares tendered in response to the Offer may be
withdrawn at any time prior to the Expiration Date, and, unless they have been
accepted for payment, may also be withdrawn at any time after February 9, 1998.
For a withdrawal to be effective, a written or facsimile transmission of a
notice of withdrawal must be timely received by the Depositary at one of its
addresses set forth on the back cover of the Offer to Purchase. A notice of
withdrawal must specify the name of the person who tendered the Shares to be
withdrawn, the number of Shares to be withdrawn and (if share certificates have
been tendered) the name of the registered holder if different from the name of
the person who tendered the Shares. If certificates for Shares to be withdrawn
have been delivered or otherwise identified to the Depositary, then prior to the
release of those certificates, the serial numbers shown on the particular
certificates to be withdrawn must be submitted to the Depositary and, unless the
Shares have been tendered for the account of an Eligible Institution (as defined
in the Offer to Purchase), the signatures on the notice of withdrawal must be
guaranteed by an Eligible Institution. If Shares have been delivered pursuant
to the procedure for book-entry transfer described in Section 3 of the Offer to
Purchase, any notice of withdrawal must also specify the name and number of the
account at the Book-Entry Transfer Facility to be credited with the withdrawn
Shares and otherwise comply with the Book-Entry Transfer Facility's procedures.
All questions as to the form and validity (including time of receipt) of a
notice of withdrawal will be determined by the Purchaser, in its sole
discretion, and its determination will be final and binding.
The information required to be disclosed by Paragraph (e)(l)(vii) of Rule
14d-6 of the General Rules and Regulations under the Securities Exchange Act of
1934, as amended, is contained in the Offer to Purchase and is incorporated
herein by reference.
The Company has provided to the Purchaser lists of stockholders and
security position listings for the purpose of disseminating the Offer to holders
of Shares. The Offer to Purchase, the related Letter of Transmittal and other
materials are being mailed to record holders of Shares and will be mailed to
brokers, dealers, commercial banks, trust companies and similar persons in whose
names Shares are registered, for subsequent transmittal to beneficial owners of
Shares.
The Offer to Purchase and the related Letter of Transmittal contain
important information that should be read before any decision is made with
respect to the Offer.
Any questions or requests for assistance or for copies of the Offer to
Purchase, the related Letter of Transmittal and other tender offer materials may
be directed to the Information Agent or the Dealer Manager as set forth below,
and copies will be furnished promptly at the Purchaser's expense. No fees or
commissions will be paid to brokers, dealers, or other persons, other than the
Information Agent, the Dealer Manager and the Depositary, for soliciting tenders
of Shares pursuant to the Offer.
The Board of Directors of the Company (1) has approved the Merger
Agreement, the Offer and the Merger in which the Parent will become the sole
stockholder of the merged company and the stockholders of the Company will
receive the same amount of cash per Common Share and per 8% Preferred Share as
is paid for shares purchased through the Offer, (2) has determined that the
terms of the Offer and the Merger are fair to and in the best interests of the
Company's stockholders and (3) recommends that holders of the Common Shares and
8% Preferred Shares tender their Shares in response to the Offer.
The Information Agent for the Offer is:
MORROW & CO., INC.
909 Third Avenue
20th Floor
New York, NY 10022
(212) 754-8000
Toll Free (800) 566-9061
Banks and Brokerage Firms please call:
(800) 622-5200
The Dealer Managers for the Offer are:
<PAGE>
Page 5
ING BARINGS FURMAN SELZ
667 Madison Avenue 230 Park Avenue
New York, New York 10021 New York, New York 10169
1-888-584-4166 (Toll Free) 1-888-584-4166 (Toll Free)
December 8, 1997
<PAGE>
Exhibit 99(a)(8)
Page 1
NEWS RELEASE
FOR IMMEDIATE RELEASE
Supercanal, Tescorp Reach Amended
Merger Agreement,
Supercanal Announces Tender Offer
Mendoza, Argentina (December 5, 1997) -- Supercanal Holding S.A. announced
today that it has purchased approximately 31% of the outstanding common stock of
Tescorp, Inc. (NASDAQ:TESC) and will be making a tender offer for the remaining
Tescorp Common Stock as well as for Tescorp's Series 1995 8% Preferred Stock.
In today's transaction, a Supercanal subsidiary purchased 6,006,006 newly
issued shares of Tescorp common stock for a total of $20 million. A $5 million
deposit made by Supercanal in connection with the execution of an agreement in
September was credited against the purchase price.
Supercanal, through its subsidiary, will be soliciting tenders of the
remainder of Tescorp's outstanding common stock for $4.50 per share and will be
soliciting tenders of Tescorp's outstanding Series 1995 8% Preferred Stock for
$144 per share plus an amount equal to accrued dividend. The obligation to
accept shares which are tendered in response to that solicitation will be
subject to a number of conditions, including the condition that the tendered
shares, together with shares already owned by Supercanal, total at least two
thirds of the outstanding Tescorp common stock and two thirds of the outstanding
Tescorp 8% Preferred Stock.
If the tender offer is completed, the Supercanal subsidiary will be merged
with Tescorp in a transaction in which Supercanal will become the sole
stockholder of the surviving corporation and the pre-merger Tescorp stockholders
(other than Supercanal and its subsidiary) will receive cash of $4.50 per share
of common stock and $144 per share of 8% Preferred Stock, plus any unpaid
dividends.
Tescorp will be sending holders of its Series 1990 10% Preferred Stock
notice of redemption of that stock for $5 per share plus accrued and unpaid
dividends. However, until the end of the 60 day period, holders will have the
right to convert each share of 10% Preferred Stock into 1.2531 shares of Tescorp
common stock. Until the Supercanal tender offer expires, common stock obtained
by converting 10% Preferred Stock can be tendered for the equivalent of $5.639
per share of 10% Preferred Stock,
<PAGE>
Page 2
subject to the conditions of the tender offer being met. Holders of 10%
Preferred Stock who convert it after the tender offer expires will receive
the same $5.639 per share of 10% Preferred Stock in the merger of the
Supercanal subsidiary with Tescorp. Holders who do not convert 10% Preferred
Stock during the 60 day period will receive only $5 per share of 10%
Preferred Stock.
Documents relating to the tender offer will be sent to Tescorp stockholders
shortly.
Daniel E. Vila, chairman and CEO of Supercanal Holding, said, "Jack Crosby,
chairman and CEO of Tescorp, and his management team have done an outstanding
job of building their company. We are delighted with this opportunity to work
together with them on this merger. It is part of our ongoing commitment to
build a major cable and telecommunications company that will play an important
role in the growth and development of Argentina."
Tescorp, Inc. acquires and develops cable systems and communications
properties in Latin America concentrating on Argentina. For the fiscal year
ended March 1997, Tescorp revenue increased 41% to $22.6 million. The Tescorp
transaction will provide Supercanal with roughly 130,000 new subscribers
including 70,000 existing subscribers primarily in the Patagonia and Tierra del
Fuego regions and an additional 60,000 subscribers through existing purchase
options and systems available for acquisition. Tescorp also holds a license to
provide data services to its customers.
Supercanal Holding S.A. provides multi-channel television services via
cable, wireless and DBS technology in Argentina. The company is the largest
multiple system operator (MSO) in Argentina operating exclusively outside the
Province of Buenos Aires.
Argentina has Latin America's highest cable penetration rate. The
country's 1996 per capita gross domestic product was the highest in the region.
For further information, contact Mario Repetto at (305) 371-9144 or Frank
N. Hawkins, Jr./Julie Marshall at Hawk Associates, Inc. at (305) 852-2383.
<PAGE>
Exhibit 99.(b)(i)
U.S.$300,000,000 SENIOR FLOATING RATE NOTES DUE 2002
NOTE PURCHASE AGREEMENT
among
SUPERCANAL HOLDING S.A.,
and
VARIOUS SUBSIDIARIES THAT ARE
OR MAY BECOME PARTY HERETO,
as Issuers,
and
VARIOUS FINANCIAL INSTITUTIONS,
as Purchasers,
ING BARING (U.S.) SECURITIES, INC.,
as Arranger,
ING BARING (U.S.) CAPITAL CORPORATION,
as Administrative and Collateral Agent,
and
THE BANK OF NEW YORK,
as Registrar
__________________________________
Dated as of November 12, 1997
__________________________________
<PAGE>
TABLE OF CONTENTS
Page
----
Section 1. Definitions and Principles of Construction . . . . . . . . . 1
1.1 Defined Terms . . . . . . . . . . . . . . . . . . . . . 1
1.2 Principles of Construction. . . . . . . . . . . . . . . 18
Section 2. Sale and Purchase of Notes.. . . . . . . . . . . . . . . . . 19
2.1 Authorization; Form of Notes; Evidence of Obligations . 19
2.2 Commitment; Notice of Funding
2.3 Closings. . . . . . . . . . . . . . . . . . . . . . . . 20
2.4 Amount of Each Funding. . . . . . . . . . . . . . . . . 22
2.5 Interest. . . . . . . . . . . . . . . . . . . . . . . . 23
2.6 Increased Costs, Illegality, etc. . . . . . . . . . . . 24
2.7 Compensation. . . . . . . . . . . . . . . . . . . . . . 25
Section 3. Commitment Fee; Additional Fees; Reduction of Total
Commitment . . . . . . . . . . . . . . . . . . . . . . . . 26
3.1 Commitment Fee. . . . . . . . . . . . . . . . . . . . . 26
3.2 Additional Fees . . . . . . . . . . . . . . . . . . . . 26
3.3 Reduction of Total Commitment . . . . . . . . . . . . . 26
3.4 Voluntary Termination of Unutilized Total Commitment. . 26
Section 4. Prepayments; Scheduled Repayments; Payments. . . . . . . . . 27
4.1 Voluntary Prepayments . . . . . . . . . . . . . . . . . 27
4.2 Scheduled Repayments. . . . . . . . . . . . . . . . . . 27
4.3 Mandatory Prepayments . . . . . . . . . . . . . . . . . 28
4.4 Method and Place of Payment . . . . . . . . . . . . . . 29
4.5 Net Payments. . . . . . . . . . . . . . . . . . . . . . 29
Section 5. Conditions Precedent . . . . . . . . . . . . . . . . . . . . 30
5.1 Conditions Precedent to the Initial Funding . . . . . . 30
5.2 Conditions Precedent to Subsequent Fundings . . . . . . 35
5.3 Conditions Precedent Relating to Acquisitions . . . . . 36
5.4 Satisfaction of Conditions; Representation. . . . . . . 40
Section 6. Representations, Warranties and Agreements . . . . . . . . . 40
6.1 Legal Status. . . . . . . . . . . . . . . . . . . . . . 40
6.2 Power and Authority . . . . . . . . . . . . . . . . . . 41
6.3 No Immunity . . . . . . . . . . . . . . . . . . . . . . 41
6.4 No Violation. . . . . . . . . . . . . . . . . . . . . . 41
6.5 Governmental Approvals. . . . . . . . . . . . . . . . . 41
(i)
<PAGE>
6.6 Litigation. . . . . . . . . . . . . . . . . . . . . . . 42
6.7 Financial Statements; Projections; No Material Adverse
Change. . . . . . . . . . . . . . . . . . . . . . . . 42
6.8 Existing Indebtedness . . . . . . . . . . . . . . . . . 43
6.9 Use of Proceeds . . . . . . . . . . . . . . . . . . . . 43
6.10 Properties. . . . . . . . . . . . . . . . . . . . . . . 43
6.11 License . . . . . . . . . . . . . . . . . . . . . . . . 44
6.12 Patents, Licenses, Franchises and Formulas. . . . . . . 44
6.13 True and Complete Disclosure. . . . . . . . . . . . . . 44
6.14 Tax Returns and Payments. . . . . . . . . . . . . . . . 44
6.15 Employee Benefit Plans. . . . . . . . . . . . . . . . . 44
6.16 Capitalization. . . . . . . . . . . . . . . . . . . . . 45
6.17 Subsidiaries and Acquisition Subsidiaries . . . . . . . 45
6.18 Compliance with Statutes, etc.. . . . . . . . . . . . . 46
6.19 Labor Relations . . . . . . . . . . . . . . . . . . . . 46
6.20 Pledge Agreements . . . . . . . . . . . . . . . . . . . 46
6.21 Guaranty Trust Agreements . . . . . . . . . . . . . . . 47
6.22 Establishment of Liens. . . . . . . . . . . . . . . . . 47
6.23 Availability and Transfer of Foreign Currency . . . . . 47
6.24 Fees and Enforcement. . . . . . . . . . . . . . . . . . 47
6.25 Withholding and Value-Added Taxes . . . . . . . . . . . 48
6.26 The Acquisitions. . . . . . . . . . . . . . . . . . . . 48
6.27 Investment Company Act. . . . . . . . . . . . . . . . . 49
6.28 Public Utility Holding Company Act. . . . . . . . . . . 49
6.29 Securities Laws Representations . . . . . . . . . . . . 49
Section 7. Affirmative Covenants. . . . . . . . . . . . . . . . . . . . 49
7.1 Information Covenants . . . . . . . . . . . . . . . . . 49
7.2 Books, Records and Inspections; Accounting Matters;
Provision of Certain Financial Statements . . . . . . 52
7.3 Compliance with Statutes, etc.. . . . . . . . . . . . . 52
7.4 Performance of Obligations. . . . . . . . . . . . . . . 52
7.5 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . 52
7.6 Corporate Franchises. . . . . . . . . . . . . . . . . . 52
7.7 Compliance with License . . . . . . . . . . . . . . . . 53
7.8 Further Assurances. . . . . . . . . . . . . . . . . . . 53
7.9 Maintenance of Property; Insurance. . . . . . . . . . . 54
7.10 Fiscal Years. . . . . . . . . . . . . . . . . . . . . . 54
7.11 COMFER Approvals. . . . . . . . . . . . . . . . . . . . 54
7.12 Notices under Guaranty Trust Agreements . . . . . . . . 55
7.13 Additional Pledge Agreements. . . . . . . . . . . . . . 55
7.14 Pledge of Stock of Offeror. . . . . . . . . . . . . . . 55
7.15 Amendments to Bylaws. . . . . . . . . . . . . . . . . . 56
7.16 Registration of Ownership . . . . . . . . . . . . . . . 56
7.17 Transfer of Domicile of Limited Liability Companies . . 57
(ii)
<PAGE>
7.18 Registration of SRL Pledge Agreements . . . . . . . . . 57
7.19 Transfer and Acquisition of Limited Liability
Companies . . . . . . . . . . . . . . . . . . . . . . 57
7.20 Interest Rate Protection. . . . . . . . . . . . . . . . 58
7.21 Payment Instructions. . . . . . . . . . . . . . . . . . 58
7.22 Financial Statements. . . . . . . . . . . . . . . . . . 58
7.23 Clearance Through DTC . . . . . . . . . . . . . . . . . 58
7.24 Interest Reserve Account. . . . . . . . . . . . . . . . 59
Section 8. Negative Covenants . . . . . . . . . . . . . . . . . . . . . 59
8.1 Liens . . . . . . . . . . . . . . . . . . . . . . . . . 59
8.2 Dividends . . . . . . . . . . . . . . . . . . . . . . . 60
8.3 Indebtedness. . . . . . . . . . . . . . . . . . . . . . 61
8.4 Capital Expenditures. . . . . . . . . . . . . . . . . . 62
8.5 Advances, Investments and Loans . . . . . . . . . . . . 63
8.6 Consolidations, Mergers, Sales of Assets. . . . . . . . 64
8.7 Indebtedness-Subscriber Ratio . . . . . . . . . . . . . 65
8.8 Senior Indebtedness-Subscriber Ratio. . . . . . . . . . 65
8.9 Indebtedness-Annualized EBITDA Ratio. . . . . . . . . . 66
8.10 Senior Indebtedness-Annualized EBITDA Ratio . . . . . . 66
8.11 Fixed Charge Coverage Ratio . . . . . . . . . . . . . . 66
8.12 Interest Coverage Ratio . . . . . . . . . . . . . . . . 67
8.13 Pro Forma Debt Service Coverage Ratio . . . . . . . . . 67
8.14 Issuance of Stock . . . . . . . . . . . . . . . . . . . 67
8.15 Limitations on Voluntary Payments and Bonuses and
Modifications of Indebtedness; Modifications and
Certain Agreements; etc.. . . . . . . . . . . . . . . 67
8.16 No Other Business . . . . . . . . . . . . . . . . . . . 68
8.17 Transactions with Affiliates. . . . . . . . . . . . . . 68
8.18 Limitation on Restrictions on Subsidiary Dividends
and Other Distributions . . . . . . . . . . . . . . . 68
Section 9. Events of Default. . . . . . . . . . . . . . . . . . . . . . 69
9.1 Payments. . . . . . . . . . . . . . . . . . . . . . . . 69
9.2 Representations, etc. . . . . . . . . . . . . . . . . . 69
9.3 Covenants . . . . . . . . . . . . . . . . . . . . . . . 69
9.4 Default Under Other Agreements. . . . . . . . . . . . . 69
9.5 Bankruptcy, etc.. . . . . . . . . . . . . . . . . . . . 69
9.6 Security Documents. . . . . . . . . . . . . . . . . . . 70
9.7 Judgments . . . . . . . . . . . . . . . . . . . . . . . 70
9.8 Cancellation of Payment Obligation. . . . . . . . . . . 70
9.9 Abandonment of Business . . . . . . . . . . . . . . . . 70
9.10 Governmental Action . . . . . . . . . . . . . . . . . . 70
9.11 Licenses. . . . . . . . . . . . . . . . . . . . . . . . 71
9.12 COMFER Approvals. . . . . . . . . . . . . . . . . . . . 71
9.13 Adverse Change. . . . . . . . . . . . . . . . . . . . . 71
(iii)
<PAGE>
9.14 Change in Control . . . . . . . . . . . . . . . . . . . 71
Section 10. The Administrative Agent and the Collateral Agent. . . . . . 72
10.1 Appointment of the Administrative Agent . . . . . . . . 72
10.2 Appointment of the Collateral Agent . . . . . . . . . . 73
10.3 Administration of the Collateral. . . . . . . . . . . . 73
10.4 Application of Proceeds . . . . . . . . . . . . . . . . 73
10.5 Nature of Duties. . . . . . . . . . . . . . . . . . . . 74
10.6 No Reliance on the Administrative Agent and the
Collateral Agent. . . . . . . . . . . . . . . . . . . 74
10.7 Request For Instructions By, and Direction of, the
Administrative Agent and the Collateral Agent . . . . 75
10.8 Reliance by the Administrative Agent and the
Collateral Agent. . . . . . . . . . . . . . . . . . . 75
10.9 Indemnification . . . . . . . . . . . . . . . . . . . . 75
10.10 Capacity as Purchasers. . . . . . . . . . . . . . . . . 76
10.11 Holders . . . . . . . . . . . . . . . . . . . . . . . . 76
10.12 Assignment; Resignation . . . . . . . . . . . . . . . . 76
Section 11. Restructuring of the Issuers . . . . . . . . . . . . . . . . 77
11.1 Restructuring Transactions. . . . . . . . . . . . . . . 77
11.2 Conditions. . . . . . . . . . . . . . . . . . . . . . . 77
11.3 Certain Modifications to Purchase Documents . . . . . . 78
11.4 Further Assurances. . . . . . . . . . . . . . . . . . . 79
Section 12. Certain Acquisitions and Related Matters . . . . . . . . . . 79
12.1 International Acquisitions. . . . . . . . . . . . . . . 79
12.2 The TDH Acquisition . . . . . . . . . . . . . . . . . . 82
Section 13. Representations and Agreements of the Purchasers . . . . . . 82
13.1 Securities Act. . . . . . . . . . . . . . . . . . . . . 83
13.2 Commitment to Accept Negotiable Obligations . . . . . . 83
Section 14. Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . 84
14.1 Payment of Expenses, etc. . . . . . . . . . . . . . . . 84
14.2 Right of Setoff . . . . . . . . . . . . . . . . . . . . 85
14.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . 85
14.4 Benefit of Agreement. . . . . . . . . . . . . . . . . . 86
14.5 Registration of Notes; Transfer and Exchange;
Transfer Restrictions . . . . . . . . . . . . . . . . 86
14.6 Joinder . . . . . . . . . . . . . . . . . . . . . . . . 92
14.7 Payments Pro Rata . . . . . . . . . . . . . . . . . . . 92
14.8 Calculations; Exclusion of Certain Persons;
Computations. . . . . . . . . . . . . . . . . . . . . 92
14.9 Governing Law; Submission to Jurisdiction; Venue. . . . 93
14.10 Obligation to Make Payments in Dollars. . . . . . . . . 94
14.11 Counterparts. . . . . . . . . . . . . . . . . . . . . . 95
(iv)
<PAGE>
14.12 Effectiveness . . . . . . . . . . . . . . . . . . . . . 95
14.13 Headings Descriptive. . . . . . . . . . . . . . . . . . 95
14.14 Amendment or Waiver . . . . . . . . . . . . . . . . . . 95
14.15 Obligations Joint and Several . . . . . . . . . . . . . 95
14.16 Authorization . . . . . . . . . . . . . . . . . . . . . 95
14.17 Survival. . . . . . . . . . . . . . . . . . . . . . . . 95
14.18 Domicile of Advances. . . . . . . . . . . . . . . . . . 95
14.19 Confidentiality . . . . . . . . . . . . . . . . . . . . 96
14.20 Base Rate Advances During Interim Period. . . . . . . . 96
14.21 Waiver of Security, Performance Bond, etc . . . . . . . 96
14.22 Interest Reserve Account Payments, Security
Interest, etc . . . . . . . . . . . . . . . . . . . . 97
14.23 WAIVER OF JURY TRIAL. . . . . . . . . . . . . . . . . . 98
Exhibit A Note
Exhibit B Notice of Funding
Exhibit C Officer's Certificate
Exhibit D-1 Rogers & Wells Opinion
Exhibit D-2 Marval O'Farrell Opinion
Exhibit D-3 Estudio Vila Opinion
Exhibit E-1 SA Pledge Agreement
Exhibit E-2 SRL Pledge Agreement
Exhibit F Guaranty Trust Agreement
Exhibit G Joinder
Exhibit H Compliance Certificate
Exhibit I Financial Statements Certificate
Exhibit J Accredited Investor's Letter
Schedule I Schedule of Commitments
Schedule II Funding Offices
Schedule III COMFER Exceptions
Schedule IV Litigation
Schedule V Existing Indebtedness
Schedule VI Supercanal Holding Shareholders/Options, etc.
Schedule VII Subsidiaries
Schedule VIII Liens
Schedule IX Permitted Stock Issuances
(v)
<PAGE>
NOTE PURCHASE AGREEMENT, dated as of November 12, 1997, among
SUPERCANAL HOLDING S.A. ("Supercanal Holding") and SUPERCANAL S.A.
("Supercanal"), each a corporation (sociedad anonima) organized and existing
under the laws of the Republic of Argentina, MIRROR HOLDING S.R.L., a limited
liability company (sociedad de responsabilidad limitada) organized and existing
under the laws of the Republic of Argentina ("SRL Holding"), each of the other
Persons which have executed this Agreement below as an Issuer and each other
Person which hereafter becomes party hereto as an Issuer in accordance with the
provisions hereof (Supercanal Holding, Supercanal, SRL Holding and each other
Person identified above, each an "Issuer" and collectively, the "Issuers"), and
the financial institutions listed in Schedule I hereto (each, a "Purchaser" and
collectively, the "Purchasers"), ING BARING (U.S.) SECURITIES, INC., as arranger
(the "Arranger"), ING BARING (U.S.) CAPITAL CORPORATION, as administrative agent
(in such capacity, the "Administrative Agent"), and collateral agent (in such
capacity, the "Collateral Agent"), and THE BANK OF NEW YORK, as registrar (in
such capacity, the "Registrar").
W I T N E S S E T H:
WHEREAS, the Issuers have duly authorized and have determined to
create and issue, from time to time, up to U.S.$300,000,000 aggregate principal
amount of their Senior Floating Rate Notes due 2002, upon the terms and
conditions herein set forth;
WHEREAS, the Purchasers desire to purchase the Notes from time to time
upon the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the premises and mutual agreements
hereinafter contained, the parties hereto hereby agree as follows:
Section 1. Definitions and Principles of Construction.
1.1 Defined Terms. As used in this Agreement, the following terms
shall have the following meanings (such meanings to be equally applicable to
both the singular and plural forms of the terms defined, except as otherwise
provided):
"Acquired Issuer" shall mean the Issuers the Stock of which was
acquired by Supercanal Holding, SRL Holding or the Purchasing Agents with
proceeds of loans under the Syndicated Facilities.
"Acquisition" shall mean the acquisition by an Issuer of the Stock or
assets of any Acquisition Subsidiary for a purchase price not greater than the
Acquisition Price.
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"Acquisition Documents" shall mean, as to any Approved Acquisition,
the purchase agreement in respect thereof and all other documents and
instruments relating to or effecting such Approved Acquisition (other than the
Purchase Documents).
"Acquisition Price" shall mean the purchase price as shall have been
disclosed to and approved by the Required Purchasers in connection with any
Approved Acquisition.
"Acquisition Subsidiary" shall mean any Person approved by the
Required Purchasers.
"Administrative Agent" shall have the meaning provided in the first
paragraph of this Agreement.
"Advance" shall have the meaning provided in Section 2.2(b).
"Affiliate" shall mean, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under direct or indirect
common control with, such Person; provided, however, that for purposes of
Section 8.17, an Affiliate of the Issuers shall include any Person that directly
or indirectly owns more than 5% of any Issuer and any officer or director of any
Issuer or any such Person (and the spouse, parent, brother, sister or children
of any such officer, director or other Person). A Person shall be deemed to
control another Person if such Person possesses, directly or indirectly, the
power to direct or cause the direction of the management and policies of such
other Person, whether through the ownership of voting Stock, by contract or
otherwise.
"Agreement" shall mean this Note Purchase Agreement, as modified,
supplemented or amended from time to time.
"Annualized Consolidated EBITDA" shall mean:
(a) as at the end of any calendar quarter ended on or prior to
March 31, 1998, the Consolidated EBITDA of Supercanal Holding for the calendar
quarter then ended, multiplied by four; and
(b) as at the end of any calendar quarter ended on or after June 30,
1998, the Consolidated EBITDA of Supercanal Holding for the period of two
consecutive calendar quarters then ended, multiplied by two.
"Applicable Acquisition" shall mean the Acquisition of any Applicable
Acquisition Subsidiary in any Approved Acquisition.
"Applicable Acquisition Documents" shall mean, as to any Applicable
Acquisition, the Acquisition Documents relating thereto.
"Applicable Acquisition Subsidiary" shall mean, as to any Funding
Date, any Acquisition Subsidiary which was acquired by an Issuer in any Approved
Acquisition, and for
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which all or part of the Acquisition Price and/or Permitted Transaction Expenses
in connection therewith will be paid with proceeds of an Advance on such Funding
Date.
"Applicable Indebtedness Amount" shall mean U.S.$510,000,000.
"Applicable Margin" shall mean 4.50%; provided, however, that from and
after the date on which the Issuers shall have satisfied in full all principal,
interest and other amounts due under the Bridge Purchase Documents, the
Applicable Margin shall be increased or decreased as of the first day of each
Interest Period to the percentage set forth below corresponding to the
Indebtedness-Annualized EBITDA Ratio in effect as of such date:
Indebtedness-Annualized EBITDA
Ratio Percentage
----- ----------
GREATER THAN OR EQUAL TO 7.0 4.50%
GREATER THAN OR EQUAL TO 6.0 but LESS THAN 7.0 4.00%
GREATER THAN OR EQUAL TO 5.5 but LESS THAN 6.0 3.50%
GREATER THAN OR EQUAL TO 5.0 but LESS THAN 5.5 3.00%
GREATER THAN OR EQUAL TO 4.5 but LESS THAN 5.0 2.50%
GREATER THAN OR EQUAL TO 4.0 but LESS THAN 4.5 2.00%
GREATER THAN OR EQUAL TO 3.5 but LESS THAN 4.0 1.75%
LESS THAN 3.5 1.50%
The calculation of the Indebtedness-Annualized EBITDA Ratio in effect on the
first day of each Interest Period shall be based upon the financial statements
provided to the Administrative Agent pursuant to Section 7.1(i) and the related
certificate required pursuant to Section 7.1(v). If the Issuers have not
submitted to the Administrative Agent such financial statements and certificate
as and when required pursuant to Section 7.1, the Applicable Margin shall be the
highest percentage indicated until the Interest Determination Date next
succeeding the delivery of financial statements and certificates by the Issuers
to the Administrative Agent as required under Section 7.1. If the interest
borne by any Advances is determined by reference to the Base Rate pursuant to
Section 2.6(a), the term Applicable Margin shall mean with respect to such
Advances during such Interest Period the Applicable Margin as calculated above,
less 1.00%.
"Approved Acquisition" shall mean, as of any Funding Date, an
Acquisition for which all or part of the Acquisition Price and/or Permitted
Transaction Expenses in connection therewith will be paid with proceeds of an
Advance made on such Funding Date and in connection
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with which the conditions to such Funding specified in Section 5.3 were
satisfied on or prior to such Funding Date.
"Argentina" shall mean the Republic of Argentina.
"Argentine GAAP" shall mean generally accepted accounting principles
in Argentina, consistently applied during a relevant period.
"Assignment and Acceptance" shall mean (i) as to any transfer of a
Note at any time on or prior to the earlier to occur of (x) the Availability
Expiry Date, and (y) the date on which the Total Commitment is funded hereunder,
an assignment and acceptance substantially in the form of Annex A to the Notes,
and (ii) as to any transfer of a Note thereafter, an assignment and acceptance
substantially in the form of Annex B to the Notes.
"Availability Expiry Date" shall mean the date 120 days after
Effective Date; provided, however, that solely for purposes of (i) 7.23, (ii)
any Advances requested under Section 12.1(b), and (iii) 14.5(d), the
Availability Expiry Date shall mean the date 180 days after the Effective Date.
"Bankruptcy Code" shall have the meaning provided in Section 9.5.
"Base Rate" shall mean, for any day, a rate per annum equal to the
higher of (i) the Prime Rate for such day, and (ii) the sum of 1% plus the
Federal Funds Rate for such day.
"Bridge Acquisitions" shall mean all "Acquisitions" as defined under
the Bridge Note Purchase Agreement.
"Bridge Advances" shall mean all "Advances" as defined under the
Bridge Note Purchase Agreement.
"Bridge Collateral Agent" shall mean the Collateral Agent under, and
as defined in, the Bridge Note Purchase Agreement.
"Bridge Guaranty Trust Agreements" shall mean the Guaranty Trust
Agreements executed and delivered pursuant to, and as defined in, the Bridge
Note Purchase Agreement.
"Bridge Note Purchase Agreement" shall mean that certain Bridge Note
Purchase Agreement, dated as of the date hereof, between the Issuers, various
financial institutions, ING Baring (U.S.) Securities, Inc., as arranger, ING
Baring (U.S.) Capital Corporation, as administrative agent and collateral agent,
and The Bank of New York, as registrar.
"Bridge Notes" shall mean the "Notes" as defined under the Bridge Note
Purchase Agreement.
"Bridge Obligations" shall mean the "Obligations" as defined under the
Bridge Note Purchase Agreement. For purposes hereof, the Bridge Obligations
shall be deemed to be "outstanding" at all times prior to the Availability
Expiry Date (as defined in the Bridge Note
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Purchase Agreement) and for so long as any Bridge Advances or other Bridge
Obligations remain unpaid.
"Bridge Purchase Documents" shall mean the "Purchase Documents" as
defined in the Bridge Note Purchase Agreement.
"Bridge Purchasers" shall mean the Purchasers under, and as defined
in, the Bridge Note Purchase Agreement.
"Bridge SA Pledge Agreements" shall mean the SA Pledge Agreements
executed and delivered pursuant to, and as defined in, the Bridge Note Purchase
Agreement.
"Bridge SRL Pledge Agreements" shall mean the SRL Pledge Agreements
executed and delivered pursuant to, and as defined in, the Bridge Note Purchase
Agreement.
"Broadcasting Law" shall mean Argentine Law No. 22,285, passed on
September 15, 1980, as amended.
"Business Day" shall mean (i) for all purposes other than as covered
by clause (ii) below, any day except Saturday, Sunday and any day which shall be
in New York, Curacao or Buenos Aires a legal holiday or a day on which banking
institutions are authorized or required by law or other government action to
close, and (ii) with respect to all notices and determinations in connection
with, and payments of principal and interest on, Advances, any day which is a
Business Day described in clause (i) above and which is also a day for trading
by and between banks in the London interbank Eurodollar market.
"Capital Expenditures" shall have the meaning provided in Section 8.4.
"Cash Equivalents" shall mean, as to any Person, (i)
dollar-denominated securities issued or directly and fully guaranteed or insured
by (x) the United States or any Governmental Authority thereof (provided that
the full faith and credit of the United States is pledged in support thereof)
having maturities of not more than six months from the date of acquisition, or
(y) Argentina or any Governmental Authority thereof (provided that the full
faith and credit of Argentina is pledged in support thereof) having maturities
of not more than 30 days from the date of acquisition, (ii) Dollar-denominated
time deposits or certificates of deposit of any commercial bank, or principal
banking subsidiary of a bank holding company, in any such case incorporated in
the United States of recognized standing and having a long-term unsecured debt
rating of at least "A" or the equivalent thereof from Standard & Poor's Ratings
Group, a division of The McGraw Hill Companies, or "A2" or the equivalent
thereof from Moody's Investors Service, Inc., (iii) Dollar-denominated
repurchase obligations with a term of not more than seven days for underlying
securities of the types described in clause (i) above entered into with any bank
meeting the qualifications specified in clause (ii) above, (iv) commercial paper
issued by any Person incorporated in (x) the United States rated at least A-1 or
the equivalent thereof by Standard & Poor's Ratings Group, a division of The
McGraw Hill Companies, or at least P-1 or the equivalent thereof by Moody's
Investor Service, Inc. or (y) Argentina rated for external indebtedness at least
investment grade by Duff & Phelps, and in each case of clause (x) and (y),
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maturing not more than six months after the date of acquisition by the Issuer,
and (v) investments in money market funds substantially all of whose assets are
comprised of securities of the types described in clauses (i) through (iv)
above.
"Collateral" shall mean and include all of the collateral pledged or
assigned in guaranty trust under the Security Documents.
"Collateral Agent" shall have the meaning provided in the first
paragraph of this Agreement.
"COMFER" shall mean the Comite Federal de Radiofusion, the Argentine
Governmental Authority responsible for administering the Broadcasting Law.
"COMFER Approval" shall mean the approval of COMFER to the transfer
and acquisition of Stock or assets of a Person which holds a License.
"Commitment" shall mean for each Purchaser, the amount set forth
opposite such Purchaser's name in Schedule I directly below the column entitled
"Commitment", as the same may be reduced pursuant to Section 3.3 and 9, and as
the same may be adjusted pursuant to Section 14.5 and/or any Assignment and
Acceptance executed and delivered pursuant to the provisions thereof.
"Commitment Fee" shall have the meaning provided in Section 3.1.
"Consolidated EBIT" shall mean, as to any Person and for any period,
the consolidated net income of such Person and its Subsidiaries for such period,
before interest expense and provision for income taxes and without giving effect
to any extraordinary gains and gains from sales of assets (other than sales of
inventory in the ordinary course of business).
"Consolidated EBITDA" shall mean, as to any Person and for any period,
the Consolidated EBIT of such Person and its Subsidiaries for such period,
adjusted by (i) adding thereto (x) the amount of all amortization and
depreciation that were deducted in arriving at such Consolidated EBIT for such
period, (y) all non-recurring financing costs and expenses incurred by any of
the Issuers, including in connection with the Purchase Documents, the Proposed
IPO or the Proposed High Yield Debt Offering, and (z) all non-recurring costs
and expenses incurred by any of the Issuers in connection with any severance or
employment termination expenses arising in connection with any reorganization of
an Issuer immediately following the acquisition thereof, and (ii) subtracting
therefrom the amount of all non-cash gains that were added in arriving at such
Consolidated EBIT for such period, and (iii) making a pro forma adjustment
approved by the Administrative Agent for any Acquisition effected during such
period, including any identified cost savings which would have been achieved by
such Acquisition Subsidiary during such period if it had been an Affiliate of
Supercanal Holding at the beginning of such period.
"Consolidated Fixed Charges" shall mean, as to any Person and for any
period, the sum of (i) the total consolidated Interest Expense of such Person
and its Subsidiaries for such period (calculated without regard to any
limitations on the payment thereof), (ii) imputed
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consolidated interest expense on capitalized lease obligations of such Person
and its Subsidiaries for such period, (iii) the scheduled principal amount of
all amortization payments on all Indebtedness of such Person and its
Subsidiaries for such period (as determined on the first day of the respective
period), (iv) the total amount of all income taxes of such Person and its
Subsidiaries for such period, on a consolidated basis, and (v) the total amount
of Capital Expenditures of such Person and its Subsidiaries for such period, on
a consolidated basis (other than Capital Expenditures financed with proceeds of
Indebtedness).
"Contingent Obligation" shall mean, as to any Person, any obligation
of such Person guaranteeing any Indebtedness, leases, dividends or other
obligations ("primary obligations") of any other Person (the "primary obligor")
in any manner, whether directly or indirectly, including, without limitation,
any obligation of such Person, whether or not contingent, (i) to purchase any
such primary obligation or any property constituting direct or indirect security
therefor, (ii) to advance or supply funds (x) for the purchase or payment of any
such primary obligation or (y) to maintain working capital or equity capital of
the primary obligor or otherwise to maintain the net worth or solvency of the
primary obligor, (iii) to purchase property, securities or services primarily
for the purpose of assuring the holder of any such primary obligation of the
ability of the primary obligor to make payment of such primary obligation or
(iv) otherwise to assure or hold harmless the holder of such primary obligation
against loss in respect thereof; provided, however, that the term Contingent
Obligation shall not include endorsements of instruments for deposit or
collection in the ordinary course of business. The amount of any Contingent
Obligation shall be deemed to be an amount equal to the stated or determinable
amount of the primary obligation in respect of which such Contingent Obligation
is made (subject to any limitation therein) or, if not stated or determinable,
the maximum reasonably anticipated liability in respect thereof (assuming such
Person is required to perform thereunder) as determined by such Person in good
faith.
"Credit Parties" shall mean each of the Issuers and any Subsidiaries
of any of the foregoing.
"Default" shall mean any event, act or condition which, with notice or
lapse of time, or both, would constitute an Event of Default.
"Dollar Denominated Securities" shall mean dollar denominated Bonos
Externos of Argentina or any other public or private equity or debt securities
actively traded on any national securities exchange in the United States or the
National Market System of the National Association of Securities Dealers
Automated Quotation System.
"Dollars" and the sign "$" shall each mean freely transferable lawful
money of the United States.
"Effective Date" shall have the meaning provided in Section 14.12.
"Event of Default" shall have the meaning provided in Section 9.
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"Excess Cash Flow" shall mean, for any period, an amount equal to the
difference, if such difference is positive, between (i) the Consolidated EBITDA
of Supercanal Holding for such period, and (ii) the sum of (w) the aggregate
amount of payments of principal and interest by Supercanal Holding and/or its
Subsidiaries during such period in respect of any of their respective
Indebtedness, (x) the aggregate amount of all Capital Expenditures made by
Supercanal Holding and its Subsidiaries during such period (other than Capital
Expenditures financed with the proceeds of Indebtedness), (y) the aggregate
amount of all income taxes paid or required to be paid in respect of such period
by Supercanal Holding and its Subsidiaries in cash, and (z) the net change in
the working capital of Supercanal Holding and its Subsidiaries during such
period.
"Excluded Subsidiary" shall have the meaning provided in Section
14.8(b).
"Federal Funds Rate" shall mean, for any day, the rate per annum
(rounded upward, if necessary, to the nearest 1/100th of 1%) equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published for such day (or if such day is not a Business Day, for the
immediately preceding Business Day) by the Federal Reserve Bank of New York, or,
if such rate is not published for any day which is a Business Day, the average
rate quoted to Morgan Guaranty Trust Company of New York on such day on such
transactions as determined by the Administrative Agent.
"Fees" shall mean all amounts payable pursuant to or referred to in
Section 3.
"Final Maturity Date" shall mean the date five years after the
Effective Date.
"Fixed Charge Coverage Ratio" shall mean, as to any Person and for any
period, the ratio of (i) the Consolidated EBITDA of such Person for such period
(calculated without making the pro forma adjustment specified in clause (iii) of
the definition of Consolidated EBITDA), to (ii) the Consolidated Fixed Charges
of such Person for such period.
"Funding" shall mean a funding of Advances to the Issuers on a Funding
Date.
"Funding Date" shall mean the date occurring on or after the Effective
Date on which a Funding hereunder occurs.
"Funding Office" shall mean, with respect to each Purchaser, the
office of such Purchaser specified as its "Funding Office" opposite its name on
Schedule II or such other office, Subsidiary or Affiliate of such Purchaser as
such Purchaser may from time to time specify as such to the Issuer and the
Administrative Agent.
"Governmental Approval" shall mean any authorization, approval,
consent, license, concession, ruling, permit, tariff, rate, certification,
order, validation, exemption, waiver, variance, or registration, filing or
recording with, any Governmental Authority.
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"Governmental Authority" shall mean any ministry, administrative
department, agency, commission, bureau, board, regulatory authority, registry,
instrumentality, corporation or other governmental body, entity, judicial or
administrative body or court (including, without limitation, banking and taxing
authorities), of, or owned or controlled by, as the case may be, Argentina, the
United States or any other jurisdiction or any political subdivision of any of
the foregoing.
"Guaranty Trust Agreement" shall have the meaning provided in Section
5.1(g).
"Guaranty Trustee" shall mean Red Rose Investment N.V., or any
successor entity designated by the Administrative Agent and approved by the
Issuers, such approval not to be unreasonably withheld, conditioned or delayed.
"Indebtedness" shall mean, as to any Person, without duplication,
(i) all indebtedness (including principal, interest, fees and charges) of such
Person (x) evidenced by any notes, bonds, debentures or similar instruments made
or issued by such Person, (y) for borrowed money or (z) for the deferred
purchase price of property or services (other than current trade accounts
payable incurred in the ordinary course of business), (ii) the face amount of
all letters of credit issued for the account of such Person, (iii) all
liabilities secured by any Lien on any property owned by such Person, whether or
not such liabilities have been assumed by such Person, (iv) the aggregate amount
required to be capitalized in accordance with Argentine GAAP under leases under
which such Person is the lessee and (v) all Contingent Obligations of such
Person.
"Indebtedness-Annualized EBITDA Ratio" shall mean, as at the end of
any calendar quarter, the ratio of (i) the total consolidated Indebtedness of
Supercanal Holding and its Subsidiaries as at the end of such quarter (less the
aggregate amount of (x) any cash or Cash Equivalents of Supercanal Holding
and/or its Subsidiaries as at the end of such quarter in excess of U.S.$500,000,
and (y) any cash or Cash Equivalents held for the benefit of Supercanal Holding
and/or its Subsidiaries as at the end of such quarter (other than amounts held
in the Interest Reserve Account) and pledged to the Collateral Agent for the
benefit of the Purchasers pursuant to documentation satisfactory in all respects
to the Collateral Agent) to (ii) the Annualized Consolidated EBITDA of
Supercanal Holding for such calendar quarter.
"Indebtedness-Subscriber Ratio" shall mean, as to any Person and for
any period, the ratio of (i) the total consolidated Indebtedness of such Person
and its Subsidiaries as at the end of such period (less the aggregate amount of
(x) any cash or Cash Equivalents of such Person and/or its Subsidiaries as at
the end of such period in excess of U.S.$500,000, and (y) any cash or Cash
Equivalents held for the benefit of such Person and/or its Subsidiaries as at
the end of such period (other than amounts held in the Interest Reserve Account)
and pledged to the Collateral Agent for the benefit of the Purchasers pursuant
to documentation satisfactory in all respects to the Collateral Agent) to (ii)
the total number of Net Subscribers of such Person and its Subsidiaries as at
the end of such period.
"ING London" shall have the meaning provided in Section 2.2(e).
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"Initial Funding Date" shall mean the first Funding Date hereunder on
which the Purchasers shall have made Advances.
"Interest Coverage Ratio" shall mean, as to any Person and for any
period, the ratio of (i) Consolidated EBITDA of such Person (calculated without
making the pro forma adjustment specified in clause (iii) of the definition of
Consolidated EBITDA) to (ii) the Interest Expense of such Person.
"Interest Determination Date" shall mean, with respect to any Advance,
the second Business Day prior to the commencement of any Interest Period
relating to such Advance.
"Interest Expense" shall mean, as to any Person and for any period,
the total interest expense of such Person and its Subsidiaries with respect to
all outstanding Indebtedness of such Person and its Subsidiaries (less interest
income from cash or Cash Equivalents of such Person and its Subsidiaries during
such period).
"Interest Period" shall mean (i) as to any Funding occurring prior to
December 8, 1997, an initial period commencing on the date of such Funding and
ending on December 8, 1997, (ii) as to any Funding occurring on or after
December 9, 1997 and before March 8, 1998, an initial period commencing on the
date of such Funding and ending on March 8, 1998, (iii) as to any Funding
occurring on or after March 9, 1998 and before June 8, 1998, an initial period
commencing on the date of such Funding and ending on June 8, 1998, and (iv) as
to each Funding, each subsequent period commencing on the last day of the next
preceding Interest Period and ending three months thereafter; provided that,
each of the foregoing provisions relating to Interest Periods is subject to the
following:
(x) if any Interest Period would otherwise end on a day that is not a
Business Day, such Interest Period shall be extended to the next succeeding
Business Day unless the result of such extension would be to carry such Interest
Period into another calendar month in which event such Interest Period shall end
on the immediately preceding Business Day;
(y) any Interest Period that would otherwise extend beyond the Final
Maturity Date shall end on the Final Maturity Date; and
(z) any Interest Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding day
in the calendar month at the end of such Interest Period) shall end on the last
Business Day of a calendar month.
"Interest Reserve Account" shall have the meaning provided in
Section 7.24.
"International Acquisition" shall have the meaning provided in
Section 12.1.
"International Acquisition Subsidiary" shall mean (i) any Person the
Stock of which was acquired by one or more Issuers or a Purchasing Agent in an
International
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Acquisition, (ii) any Person organized outside of Argentina which acquired the
assets of any other Person in any International Acquisition, and (iii)
Supercanal Bolivia.
"Issuer" and "Issuers" shall have the meaning provided in the first
paragraph of this Agreement. The term Issuer shall include any Acquisition
Subsidiary acquired in an Approved Acquisition from and after the time of the
execution and delivery of the applicable Joinder Agreement and any other Person
which becomes party hereto pursuant to any agreement or other instrument
executed and delivered for such purpose.
"Joinder Agreements" shall have the meaning provided in Section
5.3(d).
"Latlink" shall mean Latlink Argentina, Inc., a corporation organized
and existing under the laws of Delaware.
"Law" shall mean any constitution, treaty or convention, statute,
law, code, act, ordinance, decree, order, injunction, rule, regulation or
resolution. For purposes of Sections 2.6 and 4.5, the term Law shall also
include any guideline, interpretation, direction, policy, restriction or
request (whether or not in any such case having the force of law), or
judicial, administrative or arbitral decision.
"LIBOR" shall mean, with respect to each Interest Period for the
Advances, (i) the rate which appears on the Telerate Page 3750 (rounded
upward to the next whole multiple of 1/16th of 1%) for deposits in Dollars
comparable to the outstanding principal amount of the Advances with
maturities comparable to such Interest Period (provided that, if such
Telerate Page is not available or if no such rate is quoted for the relevant
Interest Period, then LIBOR shall mean the average of the rates which appear
on the Reuters Screen LIBO Page; and, if such LIBO Page is not available or
if no such rate is quoted for the relevant Interest Period, then LIBOR shall
mean the average of the offered quotation to two or more reference banks
selected by the Administrative Agent for Dollar deposits of amounts
comparable to the outstanding principal amount of the Advance for which an
interest rate is then being determined with maturities comparable to the
Interest Period to be applicable to such Advance (in each such case rounded
upward to the next whole multiple of 1/16th of 1%)), determined as of
10:00 A.M. (New York time) on the date which is two Business Days prior to the
commencement of such Interest Period, divided by (ii) a percentage equal to
100% minus the then stated maximum rate of all reserve requirements, if any
(including, without limitation, any marginal, emergency, supplemental,
special or other reserves) applicable on the date two Business Days prior to
the commencement of such Interest Period to any member bank of the Federal
Reserve System in respect of Eurocurrency liabilities as defined in
Regulation D of the Board of Governors of the Federal Reserve System as from
time to time in effect and any successor to all or a portion thereof
establishing reserve requirements.
"License" shall mean a cable television broadcasting license issued by
COMFER pursuant to the Broadcasting Law.
"Lien" shall mean any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), preference,
priority or other security
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agreement of any kind or nature whatsoever (including, without limitation, any
conditional sale or other title retention agreement, any financing or similar
statement or notice filed under any recording or notice statute, and any lease
having substantially the same effect as any of the foregoing).
"Margin Stock" shall have the meaning provided in Regulation U of the
Board of Governors of the Federal Reserve System.
"Material Adverse Effect" shall mean, with respect to any Person, (a)
any material adverse effect on the condition (financial or otherwise), business,
operations, assets, revenues, properties or prospects of such Person and, unless
the context indicates otherwise, such Person's Subsidiaries, taken as a whole,
and/or (b) any material adverse effect on the ability of such Person to perform
any of its obligations under any Purchase Document to which it is a party.
"Multicanal" shall mean Multicanal S.A., a corporation (sociedad
anonima) organized and existing under the laws of Argentina.
"Net Proceeds" shall mean (i) the gross cash proceeds received by any
of the Issuers, the Purchasing Agents or the Offeror in connection with any of
the transactions referred to, as the case may be, in Sections 4.3(a), (b) or
(c), less (ii)(v) all related underwriting, broker, dealer, sales or placement
agent fees and commissions, and all out-of-pocket expenses paid by the Issuers
in connection therewith, including, without limitation, fees and expenses with
respect to legal, accounting, investment banking, brokerage, financial advisory
and other professional services and printing, telecommunications and duplicating
expenses, (w) all amounts required to be paid to ING Bank N.V., Argentina
Branch, pursuant to that certain letter agreement dated July 28, 1997, between
ING (U.S.) Capital Corporation, ING Bank N.V., Argentina Branch, and the Issuers
under the Syndicated Facilities (provided, that amounts payable pursuant to such
letter agreement shall only be deducted if the provisions thereof require
payment in connection with the transaction for which Net Proceeds are being
determined), (x) all taxes, assessments, registration or filing fees or similar
charges payable by the Issuers as a consequence of any such transaction, (y) the
amount of such gross cash proceeds required to be used to pay interest or other
amounts on any Indebtedness to the Purchasers which is required to be repaid,
and (z) the amount of such proceeds, if any, required to be used to make any
mandatory prepayments pursuant to Section 4.3(a) of the Bridge Note Purchase
Agreement plus interest and other amounts, if any.
"Net Subscribers" shall mean, with respect to any Issuer, the product
of (x) the number of Subscribers of such Issuer on the date of determination,
and (y) the direct or indirect percentage ownership of Supercanal Holding, SRL
Holding or their respective Purchasing Agents of the outstanding Stock of such
Issuer, on a fully diluted basis.
"Noon Buying Rate" shall mean the noon buying rate in New York City
for cable transfers in foreign currencies as certified for customs purposes by
the Federal Reserve Bank of New York.
"Note" shall have the meaning provided in Section 2.1.
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"Notice of Funding" shall have the meaning provided in Section
2.2(b).
"Notice Office" shall mean the office of the Administrative Agent
located at 135 East 57th Street, New York, New York 10022, or such other
office as the Administrative Agent may hereafter designate in writing as such
to the other parties hereto.
"Obligations" shall mean all present and future obligations,
liabilities and other amounts owing to the Administrative Agent, the
Collateral Agent or any Purchaser pursuant to the terms of this Agreement or
any other Purchase Document. For purposes of Section 4.3, the term
"Obligations" shall include only Obligations then due and payable.
"Offeror" shall mean Supercanal Holding or any other holding company
organized in connection with any public or private offering in the
international and/or Argentine capital markets, of capital stock or debt
securities of Supercanal Holding or any of the other Issuers (or any direct
or indirect holding company of Supercanal Holding or any of the Issuers) or
the Offeror, including, without limitation, as contemplated in Section 11.1
or in that certain mandate letter dated January 23, 1997, between the
Arranger and Supercanal Holding.
"Payment Office" shall mean the office of the Administrative Agent
located at 135 East 57th Street, New York, New York 10022, or such other
office as the Administrative Agent may hereafter designate in writing as such
to the other parties hereto.
"Permitted Funding Amount" shall have the meaning provided in
Section 2.4.
"Permitted Liens" shall have the meaning provided in Section 8.1.
"Permitted Transaction Expenses" shall mean any transaction fees and
expenses in connection with the transactions contemplated hereby or any
Approved Acquisition, to the extent disclosed to and approved by the
Administrative Agent.
"Person" shall mean any individual, partnership, limited
partnership, joint venture, firm, corporation, association, trust or other
enterprise or any government or political subdivision or any agency,
department or instrumentality thereof.
"Peso" shall mean the lawful currency of Argentina.
"Prime Rate" shall mean the rate of interest publicly announced by
ING (U.S.) Capital Corporation in New York City from time to time as its
Prime Rate.
"Pro Forma Debt Service Coverage Ratio" shall mean, as at the last
day of any calendar quarter, the ratio of the Annualized Consolidated EBITDA
of Supercanal Holding as at such day to the Pro Forma Debt Service of
Supercanal Holding as at such day.
"Pro Forma Debt Service" shall mean, on any date of determination,
the sum of (i) all required scheduled principal payments on the consolidated
Indebtedness of Supercanal Holding and its Subsidiaries for the 12-month
period following the date of determination, and (ii)
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the total projected consolidated Interest Expense of Supercanal Holding and
its Subsidiaries for the 12-month period following the date of determination;
provided, that for the 12-month period in which the final Repayment Date
occurs, Pro Forma Debt Service shall not include the principal amount of the
final Scheduled Repayment.
"Process Agent" shall mean National Registered Agents, Inc.,
presently located at 440 Ninth Avenue, New York, New York 10001.
"Proposed High Yield Debt Offering" shall mean the proposed high
yield bond issue by Supercanal Holding in the international capital markets
upon the terms and conditions set forth in that certain commitment letter
dated September 10, 1997, between ING Baring (U.S.) Securities, Inc. and
Supercanal Holding.
"Proposed IPO" shall mean the proposed initial public offering by
Supercanal Holding in the international capital markets of Stock of one or
more of the Issuers, which will result in Net Proceeds to the Issuers of not
less than U.S.$100,000,000, and for which the Arranger will be Global
Coordinator, as contemplated in that certain mandate letter dated January 23,
1997, between the Arranger and Supercanal Holding.
"Purchase Documents" shall mean and include (i) this Agreement, (ii)
the Notes, (iii) the Security Documents, (iv) the Joinder Agreements, (v) the
Transferor Powers of Attorney, and (vi) all other documents and instruments
executed and delivered in connection with any of the foregoing.
"Purchaser" shall have the meaning provided in the first paragraph
of this Agreement, subject to Section 14.5 hereof.
"Purchase Money Financing" shall mean any purchase money
Indebtedness incurred by any of the Issuers or the Purchasing Agents from the
sellers or any other third party in connection with the acquisition of the
Stock or assets of any Issuer.
"Purchasing Agent" shall mean any or all of Daniel Eduardo Vila,
Alfredo Luis Vila Santander, Alberto Vila and any other Person which was
appointed by any Issuer to acquire and/or hold and own for and on behalf of
an Issuer the Stock of any Person.
"QIB" shall have the meaning provided in Section 13.1(b).
"Receivables" shall mean all of the right, title and interest of an
Issuer in and to all amounts, or portions thereof, owed or to be owed by any
subscriber of cable television services to such Issuer for cable television
services provided by the Issuer pursuant to a License.
"Registrar" shall mean The Bank of New York.
"Registrar Office" shall mean the office of the Registrar located at
101 Barclay Street, Floor 12E, New York, New York 10286, or such other office
as the Registrar may thereafter designate in writing as such to the other
parties hereto.
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"Repayment Date" shall have the meaning provided in Section 4.2(a).
"Required Purchasers" shall mean the Purchasers holding more than
50% of the then aggregate unpaid principal amount of the Advances or, if no
such principal amount is then outstanding, Purchasers holding more than 50%
of the Total Commitment; provided, however, that in connection with any
matter relating to the approval of any Acquisition or any matter directly
related thereto for which the Acquisition Price is greater than
U.S.$25,000,000 (or the equivalent), the term Required Purchasers shall mean
the Purchasers holding more than 66 2/3 % of the then aggregate unpaid
principal amount of the Advances or, if no such principal amount is then
outstanding, the Purchasers holding more than 66 2/3 % of the Total
Commitment; provided further, that in connection with any matter relating to
the approval of an Acquisition or any matter in connection therewith for
which (i) the Acquisition Price is equal to or less than U.S.$10,000,000 (or
the equivalent), and (ii) the Acquisition Price, when added to the
Acquisition Price for all other Acquisitions and the Acquisition Price (as
defined under the Bridge Note Purchase Agreement) for all the Bridge
Acquisitions (other than, in each such case, International Acquisitions)
theretofore effected after the Effective Date which have been approved by the
Administrative Agent is less than U.S.$25,000,000 (or the equivalent), the
term Required Purchasers shall mean the Administrative Agent.
"Resale Restriction Termination Date" shall have the meaning
provided in Section 13.1(b).
"Restructuring Transaction" shall have the meaning provided in
Section 11.1.
"SA Pledge Agreements" shall have the meaning provided in Section
5.1(f)(i).
"Scheduled Repayment" shall have the meaning provided in Section
4.2(a).
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Security Documents" shall mean and include (i) the SA Pledge
Agreements, (ii) the SRL Pledge Agreements, (iii) the Guaranty Trust
Agreements, (iv) the Bridge SA Pledge Agreements, (v) the Bridge SRL Pledge
Agreements, (vi) and the Bridge Guaranty Trust Agreements, and (iv) all other
agreements and/or instruments executed and delivered to secure the Notes.
"Senior Indebtedness-Annualized EBITDA Ratio" shall mean, as at the
end of any calendar quarter, the ratio of (i) the total consolidated
Indebtedness of Supercanal Holding and its Subsidiaries under this Agreement
and the other Purchase Documents as at the end of such quarter (less the
aggregate amount of (x) any cash or Cash Equivalents of Supercanal Holding
and/or its Subsidiaries as at the end of such quarter in excess of
U.S.$500,000, and (y) any cash or Cash Equivalents held for the benefit of
Supercanal Holding and/or its Subsidiaries as at the end of such quarter
(other than amounts held in the Interest Reserve Account) and pledged to the
Collateral Agent for the benefit of the Purchasers pursuant to documentation
satisfactory in all respects to the Collateral Agent) to (ii) the Annualized
Consolidated EBITDA of Supercanal Holding for such calendar quarter.
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"Senior Indebtedness-Subscriber Ratio" shall mean, as to any Person
and for any period, the ratio of (i) the total consolidated Indebtedness of
such Person and its Subsidiaries under this Agreement and the other Purchase
Documents as at the end of such period (less the aggregate amount of (x) any
cash or Cash Equivalents of such Person and/or its Subsidiaries as at the end
of such period in excess of U.S.$500,000, and (y) any cash or Cash
Equivalents held for the benefit of such Person and/or its Subsidiaries as at
the end of such period (other than amounts held in the Interest Reserve
Account) and pledged to the Collateral Agent for the benefit of the
Purchasers pursuant to documentation satisfactory in all respects to the
Collateral Agent) to (ii) the total number of Net Subscribers of such Person
and its Subsidiaries as at the end of such period.
"Shareholders' Agreement" shall mean the Acuerdo de Accionistas
dated July 25, 1996, between Multicanal, Latlink and the Vilas, as amended,
modified or supplemented through the Effective Date.
"SRL Issuers" shall mean the Issuers (other than SRL Holding)
organized as limited liability companies (sociedades de responsabilidad
limitada).
"SRL Holding" shall have the meaning provided in the first paragraph
of this Agreement.
"SRL Pledge Agreements" shall have the meaning provided in Section
5.1(f)(ii).
"Stock" shall mean any and all shares, interests, participations or
other equivalents, including, without limitation, cuotas (however designated,
whether voting or non-voting, ordinary or preferential) in equity of any
Person, whether now outstanding or issued after the date hereof.
"Subscriber" shall mean a Person which has entered into an agreement
with (i) an Issuer for the provision by the Issuer or any of its Subsidiaries
to such Person of multi-channel television service in the area covered by a
License, or (ii) any Subsidiary of an Issuer for the provision by such
Subsidiary or any of its Subsidiaries to such Person of multi-channel
television service in the area covered by a License; provided that in each of
the cases referred to in clauses (i) and (ii) above, (x) such Person has paid
at least one monthly service charge for such service, (y) no amount owed by
such Person to the Issuer or Subsidiary is more than 90 days past due, and
(z) the agreement between the Issuer and such Person or any such other
Subsidiary has not been terminated and is in full force and effect.
"Subsidiary" shall mean, as to any Person, (i) any corporation more
than 50% of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such
corporation (irrespective of whether or not at the time stock of any class or
classes of such corporation shall have or might have voting power by reason
of the happening of any contingency) is at the time owned by such Person
and/or one or more Subsidiaries of such Person and/or a Purchasing Agent of
such Person, (ii) any partnership, association, joint venture or other entity
in which such Person and/or one or more Subsidiaries of such Person has more
than a 50% equity interest at the time, (iii) in the case of Supercanal
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Holding, (x) all of the Issuers (including all Acquisition Subsidiaries), and
(y) SRL Holding and any corporation or limited liability company more than
50% of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such
corporation (irrespective of whether or not at the time stock of any class or
classes of such corporation shall have or might have voting power by reason
of the happening of any contingency) is at the time owned by SRL Holding
and/or one or more Subsidiaries of SRL Holding and/or a Purchasing Agent of
SRL Holding. For the avoidance of doubt, SRL Holding is defined as a
Subsidiary of Supercanal Holding under this Agreement and the other Purchase
Documents for convenience of reference and the operation of the provisions
hereof and thereof. The use of such definition shall not mean, and shall not
be construed to mean, that Supercanal Holding owns any Stock of SRL Holding
or any other limited liability company (sociedad de responsabilidad limitada).
"Subsidiary Indebtedness" shall mean any Indebtedness of any of the
Issuers (other than Supercanal and Supercanal Holding) for borrowed money
(other than Indebtedness under the Syndicated Facilities) incurred prior to
the Effective Date.
"Supercanal" shall have the meaning provided in the first paragraph
of this Agreement.
"Supercanal Bolivia" shall have the meaning provided in Section
7.13(b).
"Supercanal Holding" shall have the meaning provided in the first
paragraph of this Agreement.
"Syndicated Facilities" shall mean (i) that certain U.S.$90,000,000
acquisition and working capital facility provided pursuant to that certain
Amended and Restated Credit Agreement dated as of August 9, 1996 (as amended,
modified or supplemented from time to time), between and among Supercanal
Holding, Supercanal and certain of their Subsidiaries, as borrowers, various
financial institutions party thereto, as lenders, ING Baring (U.S.)
Securities, Inc., as arranger, and ING (U.S.) Capital Corporation, as
administrative and collateral agent, and (ii) that certain U.S.$113,000,000
acquisition facility provided pursuant to that certain Credit Agreement dated
as of April 16, 1997 (as amended, modified or supplemented from time to
time), between and among Supercanal Holding, Supercanal and certain of their
Subsidiaries, as borrowers, various financial institutions party thereto, as
lenders, ING Baring (U.S.) Securities, Inc., as arranger, and ING (U.S.)
Capital Corporation, as administrative and collateral agent.
"Taxes" shall have the meaning provided in Section 4.5.
"Tescorp Acquisition" shall mean the acquisition by Tescorp Delaware
of all of the outstanding Stock of Tescorp Texas pursuant to the Tescorp
Purchase Agreement.
"Tescorp Carryover Reduction Amount" shall have the meaning provided
in Section 3.3(a).
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"Tescorp Delaware" shall mean Tescorp Acquisition Corporation, a
Delaware corporation and a wholly-owned subsidiary of Supercanal Holding.
"Tescorp Purchase Agreement" shall mean that certain Stock Purchase
and Merger Agreement dated September 16, 1997, between Tescorp Acquisition
Corporation and Tescorp, Inc., as amended from time to time.
"Tescorp Texas" shall mean Tescorp, Inc., a Texas corporation.
"TDH" shall mean Television Directa al Hogar S.A., an Argentina
corporation.
"TIC" shall have the meaning provided in Section 5.1(f)(iii).
"Total Assets" shall mean, as to any Person, all of the assets of
such Person and its Subsidiaries.
"Total Commitment" shall mean, at any time, the sum of the
Commitments of each of the Purchasers.
"Transferor Power of Attorney" shall have the meaning provided in
Section 5.3(j).
"United States" and "U.S." shall each mean the United States of
America.
"Unutilized Commitment" shall mean, at any time, the positive
difference of (i) the Total Commitment, less (ii) the aggregate principal
amount of all Advances made prior to such time.
"Unutilized Total Commitment" shall mean the sum of the Unutilized
Commitments of each of the Purchasers.
"U.S. GAAP" shall mean generally accepted accounting principles in
the United States, consistently applied during a relevant period.
"Vilas" shall mean Daniel Eduardo Vila and Alfredo Luis Vila
Santander.
"Warrant" shall have the meaning provided in the Bridge Note
Purchase Agreement.
"Warrant Agreement" shall have the meaning provided in the Bridge
Note Purchase Agreement.
1.2 Principles of Construction.
(a) All references to sections, schedules and exhibits are to
sections, schedules and exhibits in or to this Agreement unless otherwise
specified. The words "hereof," "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole
and not to any particular provision of this Agreement.
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(b) All accounting terms not specifically defined herein shall be
construed in accordance with Argentine GAAP in conformity with those used in
the preparation of the financial statements described in Section 6.7.
(c) A statement made herein to the knowledge of the Issuers means
that such statement is made to the knowledge or belief of the executive
officers and directors of Supercanal Holding and Supercanal, after due and
diligent inquiry as to the matter that is the subject of such statement.
(d) Notwithstanding anything contained herein to the contrary, the
parties agree that all of the representations, covenants and defaults
contained herein which cannot be made or performed solely because of Laws
applicable to Supercanal Bolivia or other relevant circumstances relating to
the organization of, and conduct of business by, Supercanal Bolivia outside
of Argentina, shall be deemed to be modified in the manner and to the extent
necessary to take into account and be consistent with such Laws and
circumstances; provided, that nothing shall be deemed to modify the
provisions of Section 8.5 hereof.
Section 2. Sale and Purchase of Notes.
2.1 Authorization; Form of Notes; Evidence of Obligations. (a)
The Issuers have duly authorized the issue and sale of their Senior Floating
Rate Promissory Notes in the aggregate principal amount of U.S.$300,000,000,
to mature on the Final Maturity Date, and to bear interest on the outstanding
principal thereof as provided herein.
(b) The Senior Floating Rate Notes shall be in registered form only
and substantially in the form of Exhibit A hereto (such notes, including any
note delivered following transfer or exchange or pursuant to any other
provision of this Agreement, hereinafter individually a "Note" and,
collectively, the "Notes").
2.2 Commitment; Notice of Funding.
(a) The Issuers hereby agree to issue and sell to each Purchaser,
and each Purchaser severally agrees, subject to and upon the terms and
conditions set forth herein, to purchase from the Issuers, during the period
commencing on the Initial Funding Date and ending on the Availability Expiry
Date, Notes in an aggregate principal amount not to exceed the Commitment of
such Purchaser.
(b) The funding by each Purchaser of its Commitment shall be made
in installments (each, an "Advance" and collectively, the "Advances") in such
principal amounts and at such times as the Issuers may designate in a written
notice with respect thereto delivered to the Administrative Agent at its
Notice Office at least three Business Days' prior to the issue and sale
thereof, provided that such notice shall be deemed to have been given on a
certain day only if given before 12:00 noon (New York time) on such day.
Each such notice (each a "Notice of Funding") shall be irrevocable and shall
be given by the Issuers in the form of Exhibit B, appropriately completed to
specify (i) the aggregate principal amount of the Advances to be made
pursuant to such Funding, (ii) the date of such Funding (which shall be a
Business Day),
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(iii) whether the proceeds of the Advances will be used to repay the
Syndicated Facilities, Purchase Money Financing or Subsidiary Indebtedness,
to make Capital Expenditures, for working capital purposes, or to pay or
reimburse Permitted Transaction Expenses or the Acquisition Price of an
Approved Transaction, and (iv) the following additional information:
(i) if proceeds of the Advances will be used to make or reimburse
Capital Expenditures, a description in reasonable detail of
the nature and amount of each such Capital Expenditure;
(ii) if proceeds of the Advance are to be applied for working
capital, a description in reasonable detail of: (x) the
purposes for which the proceeds will be used, (y) the amounts
to be expended for each such purpose, and (z) if proceeds will
be used to acquire any assets, a description of each asset to
be acquired;
(iii) if proceeds of the Advances will be used to pay or reimburse
Permitted Transaction Expenses, a description in reasonable
detail of: (x) the amount of each such Permitted Transaction
Expense, (y) the purpose for which each such Permitted
Transaction Expense will be or was incurred, and (z) the party
to whom such Permitted Transaction Expense will be or was
paid; and
(iv) if proceeds of the Advances will be used to pay or reimburse
the Acquisition Price in an Approved Acquisition, (x) the
amount of such Acquisition Price, and (y) the party to whom
such Permitted Transaction Expense will be or was paid.
Each Notice of Funding will be accompanied by agreements, invoices or other
supporting documentation reflecting or evidencing the amounts which will be
paid or reimbursed with proceeds of the Advances.
(c) The Advances will be made by the Purchasers only on the terms
and conditions specified hereunder, and once repaid, in full or in part,
shall not be remade by the Purchasers in full or in part.
(d) The Administrative Agent shall promptly (but in no event later
than two Business Days prior to the applicable Funding Date) give each
Purchaser notice of such proposed Funding, of such Purchaser's proportionate
share thereof and of the other matters required by the immediately preceding
sentence to be specified in the Notice of Funding.
(e) Notwithstanding anything contained herein to the contrary, if
any Purchaser shall fail to purchase Notes and make available its pro rata
portion of the aggregate amount of the Advances as required pursuant to
Section 2.3(d), ING Bank N.V., London Branch ("ING London"), shall make an
Advance, in addition to any other Advances required to be made by ING London
hereunder, in an amount equal to the unfunded amount. In such event, (i) the
Issuers shall execute and deliver to ING London, and the Registrar shall
register in the name of
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ING London, an additional Note with respect to such Advance of the unfunded
amount, and (ii) the Administrative Agent shall inform the Registrar of the
failure of such Purchaser to purchase Notes and make available its pro rata
portion of the Advances.
2.3 Closings.
(a) The closing of the initial purchase and sale of the Notes shall
be held at 12:00 Noon (New York time) on the Initial Funding Date, at the
offices of White & Case, 1155 Avenue of the Americas, New York, New York, or
at such other time and location as the parties may agree. Delivery of the
Notes to the Purchasers hereunder shall be made on the Initial Funding Date
against payment by the Purchasers as provided herein. On each Funding Date
subsequent to the Initial Funding Date, each Purchaser shall, subject to the
terms and conditions set forth herein, make the Advance required to be made
by such Purchaser on such date as provided herein.
(b) The Notes to be delivered to each Purchaser on the Initial
Funding Date shall be appropriately completed to (i) be dated the Initial
Funding Date, (ii) be in a stated principal amount equal to the Commitment of
such Purchaser, (iii) mature on the Final Maturity Date, (iv) bear interest
as provided in Section 2.5, and (v) be entitled to the benefits of this
Agreement and the other Purchase Documents. The Notes will be registered in
the name of the Purchaser thereof (or its nominee's name).
(c) At the time of each Funding and at the time of the making of
any payment of principal, interest or other amounts in respect of the Notes
or this Agreement, each Purchaser will note in its internal records the
amount of the indebtedness of the Issuers to such Purchaser as a result
thereof. Such internal records shall constitute prima facie evidence of the
existence and amounts of the Advances and other Obligations therein noted;
provided, however, that the failure of any Purchaser to make such notations,
or any error therein, shall not in any manner affect the obligations of the
Issuers to repay or pay the Advances made by such Purchaser hereunder and
under the Notes in accordance with the terms of this Agreement and the Notes.
(d) Subject to the terms and conditions hereof, no later than 12:00
Noon (New York time) on each Funding Date, each Purchaser will make available
its pro rata portion of the aggregate amount of the Advances to be made on
such date, in Dollars and in immediately available funds at the Payment
Office of the Administrative Agent, and the Administrative Agent will
transfer the aggregate of the amounts so made available by the Purchasers,
net of fees and costs payable to the Purchasers, to or to the order of the
relevant Issuer or Issuers pursuant to wire instructions provided to the
Administrative Agent not later than three Business Days prior to the Funding
Date.
(e) Unless the Administrative Agent shall have been notified by any
Purchaser prior to the date of a Funding that such Purchaser does not intend
to make available to the Administrative Agent such Purchaser's portion of the
Advances to be made on such date, the Administrative Agent may assume that
such Purchaser has made or will make such amount available to the
Administrative Agent on such date and the Administrative Agent may (but shall
have no obligation to), in reliance upon such assumption, make available to
the relevant Issuer or
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Issuers a corresponding amount. If such corresponding amount is not in fact
made available to the Administrative Agent by such Purchaser, the
Administrative Agent shall be entitled to recover such corresponding amount
from such Purchaser on demand. If such Purchaser does not pay such
corresponding amount forthwith upon the Administrative Agent's demand
therefor, the Administrative Agent shall promptly notify the relevant Issuer
or Issuers and the relevant Issuer or Issuers shall immediately pay such
corresponding amount to the Administrative Agent. The Administrative Agent
shall also be entitled to recover on demand from such Purchaser or the
Issuers, as the case may be, interest on such corresponding amount in respect
of each day from the date such corresponding amount was made available by the
Administrative Agent to the relevant Issuer or Issuers until the date such
corresponding amount is recovered by the Administrative Agent, at a rate per
annum equal to (i) if such amount is recovered from such Purchaser, the cost
to the Administrative Agent of acquiring overnight federal funds at the then
applicable rate, and (ii) if such amount is recovered from the Issuers, the
then applicable rate of interest as provided herein. Nothing in this Section
2.3 shall be deemed to relieve any Purchaser from its obligation to fund its
Commitment hereunder or to prejudice any rights which the relevant Issuer or
Issuers may have against any Purchaser as a result of any failure by such
Purchaser to make an Advance hereunder.
2.4 Amount of Each Funding. (a) The aggregate principal amount of
Advances made on any Funding Date shall be not less than U.S.$5,000,000, and,
subject to Section 2.4(b) below, shall not be more than the Permitted Funding
Amount. For purposes hereof, the term "Permitted Funding Amount" shall mean:
(i) in respect of Advances the proceeds of which will be
applied to repay the Syndicated Facilities, U.S.$203,000,000;
(ii) in respect of Advances the proceeds of which will be
applied to repay Purchase Money Financing, U.S.$39,021,546;
(iii) in respect of Advances the proceeds of which will be
applied to repay Subsidiary Indebtedness, U.S.$2,292,390;
(iv) in respect of Advances the proceeds of which will be
applied to make permitted Capital Expenditures, the difference between
(x) U.S.$15,000,000, and (y) the aggregate amount of all prior Advances
the proceeds of which were applied to make permitted Capital Expenditures;
(v) in respect of Advances the proceeds of which will be
applied for working capital purposes, the difference between (x)
U.S.$15,000,000, and (y) the aggregate amount of all prior Advances the
proceeds of which were applied for working capital purposes;
(vi) in respect of Advances the proceeds of which will be
applied to (x) pay Permitted Transaction Expenses, the amount of such
Permitted Transaction Expenses to the extent then due and payable, or (y)
reimburse the Issuers for any portion of any Permitted Transaction
Expenses previously paid by the Issuers, the amount of such
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Permitted Transaction Expenses to the extent such amounts were paid with
funds of the Issuers other than the proceeds of Advances or advances
under the Bridge Note Purchase Agreement and were not theretofore
reimbursed; provided, however, that the aggregate amount of all Advances
the proceeds of which are to be applied to pay or reimburse the
Acquisition Price and Permitted Transaction Expenses in connection with
any Approved Acquisition of Stock of a Person organized or doing business
outside of Argentina or of assets located outside of Argentina (other
than the Tescorp Acquisition) shall not exceed U.S.$10,000,000 (or the
equivalent);
(vii) in respect of Advances the proceeds of which will be
applied to (x) pay the Acquisition Price for any Approved Acquisition,
the amount of the unpaid amounts in respect thereof, to the extent then
due and payable, or (y) reimburse the Issuers for any portion of the
Acquisition Price for any Approved Acquisition previously paid by the
Issuers, the amount of the Acquisition Price so paid to the extent such
amounts were paid with funds of the Issuers other than the proceeds of
Advances or advances under the Bridge Note Purchase Agreement and were
not theretofore reimbursed; provided, however, that the aggregate amount
of all Advances the proceeds of which are to be applied to pay or
reimburse the Acquisition Price and Permitted Transaction Expenses in
connection with any Approved Acquisition of Stock of a Person organized
or doing business outside of Argentina or of assets located outside of
Argentina (other than the Tescorp Acquisition) shall not exceed
U.S.$10,000,000 (or the equivalent).
(b) Notwithstanding anything contained herein to the contrary, the
aggregate principal amount of the Advances and the Bridge Advances for each
of the items specified in Section 2.4(a)(i) through (vii) above shall not
exceed the corresponding amounts specified above.
(c) Subject to Section 2.2(e), all Advances shall be made by the
Purchasers pro rata on the basis of their Commitments. It is understood that
no Purchaser shall be responsible for any default by any other Purchaser of
its obligation to make an Advance except to the extent set forth in Section
2.2(e), and that each Purchaser shall be obligated to make the Advances
provided to be made by it thereunder regardless of the failure of any other
Purchaser to make its Advance hereunder.
2.5 Interest. (a) The Issuers agree to pay interest in respect of
the unpaid principal amount of each Advance from the date the amount of such
Advance is made available to the Issuers as provided herein until the
maturity thereof (whether by acceleration or otherwise) at a rate per annum
which shall, during each Interest Period applicable thereto, be equal to the
sum of the Applicable Margin plus LIBOR for such Interest Period.
(b) During any period in which an Event of Default has occurred and
is continuing (whether or not the Advances are accelerated), as the result of a
default by the Issuers in the payment when due of any amount required to be paid
hereunder, the outstanding principal amount of each Advance and, to the extent
permitted by law, overdue interest in respect of the outstanding principal
amount of each Advance and any other overdue amount payable by the
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Issuers hereunder or under any other Purchase Document shall bear interest at a
rate per annum equal to the product of (i) LIBOR in effect from time to time
plus the Applicable Margin, and (ii) 1.5, in each such case with such interest
to be payable on demand. During any period in which an Event of Default has
occurred and is continuing (but the Advances have not been accelerated), as the
result of a default by the Issuers in the due performance or observance of any
term, covenant or agreement contained in Section 8, the outstanding principal
amount of each Advance and, to the extent permitted by law, overdue interest in
respect of the outstanding principal amount of each Advance and any other
overdue amount payable by the Issuers hereunder or under any other Purchase
Document shall bear interest at a rate per annum equal to the sum of (i) LIBOR
in effect from time to time, plus (ii) the Applicable Margin, plus (ii) 2%, in
each such case with such interest to be payable on demand.
(c) Accrued (and theretofore unpaid) interest shall be payable in
respect of the outstanding principal amount of each Advance on the last day of
each Interest Period applicable thereto, on any repayment or prepayment (on the
amount repaid or prepaid), at maturity (whether by acceleration or otherwise)
and, after such maturity, on demand.
(d) On each Interest Determination Date, the Administrative Agent
shall determine LIBOR for the Interest Period applicable to the Advances and
shall promptly notify the Issuers and the Purchasers thereof. Each such
determination shall, absent manifest error, be final and conclusive and binding
on all parties hereto.
2.6 Increased Costs, Illegality, etc.
(a) In the event that any Purchaser shall have determined (which
determination shall, absent manifest error, be final and conclusive and binding
upon all parties hereto but, with respect to clause (i) below, may be made only
by the Administrative Agent):
(i) on any Interest Determination Date that, by reason of any
changes arising after the Effective Date affecting the London interbank
Eurodollar market, adequate and fair means do not exist for ascertaining
the applicable interest rate on the basis provided for in the definition of
LIBOR; or
(ii) at any time, that such Purchaser shall incur increased costs
or reductions in the amounts received or receivable hereunder with respect
to any Advance because of (x) any change since the Effective Date in any
applicable Law or in the interpretation or administration thereof and
including the introduction of any new Law, such as, for example, but not
limited to: (A) a change in the basis of taxation of payments to any
Purchaser of the principal of or interest on the Notes or any other amounts
payable hereunder (except for changes in the rate of tax on, or determined
by reference to, the net income or profits of such Purchaser pursuant to
the laws of the jurisdiction in which it is organized or in which its
principal office or applicable Funding Office is located or any subdivision
thereof or therein) or (B) a change in official reserve requirements and/or
(y) other circumstances since the Effective Date affecting such Purchaser
or the London interbank Eurodollar market or the position of such Purchaser
in such market; or
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(iii) at any time, that the making or continuance of any
Advance has been made (x) unlawful by any law or governmental rule,
regulation or order, (y) impossible by compliance by any Purchaser in good
faith with any governmental request (whether or not having force of law) or
(z) impracticable as a result of a contingency occurring after the
Effective Date which materially and adversely affects the London interbank
Eurodollar market;
then, and in any such event, such Purchaser (or the Administrative Agent, in the
case of clause (i) above) shall promptly give telephonic notice (confirmed in
writing) to the Issuers and, except in the case of clause (i) above, to the
Administrative Agent of such determination (which notice the Administrative
Agent shall promptly transmit to each of the other Purchasers). Thereafter
(x) in the case of clause (i) above, the interest rate during the applicable
Interest Period shall be the Base Rate in effect on the applicable Interest
Determination Date plus the Applicable Margin, (y) in the case of clause (ii)
above, the Issuers shall pay to such Purchaser, upon written demand therefor,
such additional amounts (in the form of an increased rate of, or a different
method of calculating, interest or otherwise as such Purchaser in its sole
discretion shall determine) as shall be required to compensate such Purchaser
for such increased costs or reductions in amounts received or receivable
hereunder (a written notice as to the additional amounts owed to such Purchaser,
showing the basis for the calculation thereof, submitted to the Issuers by such
Purchaser shall, absent manifest error, be final and conclusive and binding on
all the parties hereto) and (z) in the case of clause (iii) above, the Issuers
shall take one of the actions specified in Section 2.6(b) as promptly as
possible and, in any event, within the time period required by law.
(b) At any time that any Advance is affected by the circumstances
described in Section 2.6(a) (iii), the Issuers shall either (x) if the affected
Advance is then being made initially, cancel the respective Advance (subject,
however, to Section 2.7), or (y) if the affected Advance is then outstanding,
upon at least five Business Days' written notice to the Administrative Agent,
repay the Advance of the affected Purchaser, provided that, if more than one
Purchaser is affected at any time, then all affected Purchasers must be treated
the same pursuant to this Section 2.6(b).
(c) If any Purchaser determines at any time that the introduction or
implementation of, or any change in, any applicable Law after the Effective
Date, concerning capital adequacy, or any change in interpretation or
administration thereof after the Effective Date by any Governmental Authority,
will have the effect of increasing the amount of capital required or expected to
be maintained by such Purchaser based on the existence of such Purchaser's
Commitment hereunder or its obligations hereunder, then the Issuers shall pay to
such Purchaser, within 15 Business Days of its written demand therefor, such
additional amounts as shall be required to compensate such Purchaser for the
increased cost to such Purchaser as a result of such increase of capital. In
determining such additional amounts, each Purchaser will act reasonably and in
good faith and will use averaging and attribution methods which are reasonable,
provided that such Purchaser's determination of compensation owing under this
Section 2.6 shall, absent manifest error, be final and conclusive and binding on
all the parties hereto. Each Purchaser, upon determining that any additional
amounts will be payable pursuant
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to this Section 2.6, will give prompt written notice thereof to the Issuers,
which notice shall show the basis for calculation of such additional amounts,
and the failure to give any such notice shall not release the Issuers'
obligations to pay additional amounts pursuant to this Section 2.6.
(d) At any time that any Advance is affected by the circumstances
described in Sections 2.6(a)(ii) or 2.6(c), the Issuers shall have the right
(subject, however, to Section 2.7), upon at least five Business Days' written
notice to the Administrative Agent, to prepay the Advance of the affected
Purchaser, provided that, if more than one Purchaser is affected at any time,
then all affected Purchasers must be treated the same pursuant to this Section
2.6(d).
2.7 Compensation. The Issuers shall compensate each Purchaser, upon
its written request (which request shall set forth the basis for requesting such
compensation and shall, absent manifest error, be final and conclusive and
binding on all the parties hereto), for all reasonable losses, expenses and
liabilities (including, without limitation, any loss, expense or liability
incurred by reason of the liquidation or reemployment of deposits or other funds
required by such Purchaser to fund its Advances) which such Purchaser may
sustain: (i) if for any reason (other than a default by such Purchaser or the
Administrative Agent) any Funding of Advances does not occur on the date
specified therefor in a Notice of Funding (whether or not withdrawn by the
Issuer); (ii) if any repayment (including any prepayment made pursuant to
Section 4) of its Advances occurs on a date which is not the last day of an
Interest Period with respect thereto, or (iii) as a consequence of (x) any other
default by the Issuers to repay the Advances when required by the terms of this
Agreement or the Notes or (y) any actions taken pursuant to Sections 2.6(b) or
(d).
Section 3. Commitment Fee; Additional Fees; Reduction of Total
Commitment.
3.1 Commitment Fee. The Issuers agree to pay to the Administrative
Agent for distribution to the Purchasers a commitment commission (the
"Commitment Fee") for the period from the Effective Date until the earlier of
(i) the date that the Purchasers shall have made Advances in an aggregate
principal amount equal to the Total Commitment, or (ii) the Availability Expiry
Date (or, in either such case, such earlier date as the Total Commitment shall
have been terminated), computed at a rate equal to 1% per annum on the daily
average Unutilized Commitment. The Commitment Fee shall be due and payable in
arrears on (x) the last Business Day of each calendar quarter, beginning on
December 31, 1997, and (y) upon the earlier of (A) the Availability Expiry Date,
and (B) such earlier date as the Total Commitment shall be terminated.
3.2 Additional Fees. The Issuers agree to pay to the Administrative
Agent, for its own account the fees that have been agreed to in that certain
letter dated the date hereof between Supercanal Holding and the Administrative
Agent.
3.3 Reduction of Total Commitment.
(a) If Tescorp Delaware shall not have consummated the acquisition of
the Purchased Common Stock pursuant to, and as defined in, the Tescorp Purchase
Agreement on or
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before December 31, 1997, the Total Commitment shall be reduced by an amount,
if any, equal to the Tescorp Carryover Reduction Amount. For purposes
hereof, the "Tescorp Carryover Reduction Amount" shall mean the difference,
if any, between (i) U.S.$100,000,000, and (ii) the amount of the commitment
reduction effected pursuant to Section 3.3(a) of the Bridge Note Purchase
Agreement, to the extent such reduction reduces the Unutilized Total
Commitment (as defined in the Bridge Note Purchase Agreement).
(b) Each increase or reduction of the Total Commitment pursuant to
this Section 3.3 shall apply proportionately to the Commitment of each
Purchaser.
3.4 Voluntary Termination of Unutilized Total Commitment. Upon at
least five Business Days' prior notice to the Administrative Agent at its Notice
Office (which notice the Administrative Agent will promptly transmit to each of
the Purchasers), the Issuers shall have the right, without premium or penalty,
to terminate the Unutilized Total Commitment in whole or in part, in integral
multiples of U.S.$5,000,000, provided that any such termination shall apply
proportionately to reduce the Commitment of each Purchaser.
Section 4. Prepayments; Scheduled Repayments; Payments.
4.1 Voluntary Prepayments. The Issuers shall have the right to
prepay the Advances, without premium or penalty, in whole or in part at any time
and from time to time after the Initial Funding Date on the following terms and
conditions: (i) the Issuers shall give the Administrative Agent at the Notice
Office at least five Business Days' prior written notice of its intent to prepay
the Notes and the amount of such prepayment (which notice the Administrative
Agent will promptly transmit to each of the Purchasers); (ii) each prepayment in
respect of any Advances shall be in an aggregate principal amount of at least
U.S.$5,000,000; (iii) prepayments of an Advance may only be made pursuant to
this Section 4.1 on the last day of an Interest Period applicable thereto,
unless the Issuers pay all amounts owing under Section 2.7 as a result of
repaying such Advance on a day other than the last day of the Interest Period
applicable thereto; (iv) each prepayment in respect of any Advances shall be
applied pro rata among such Advances in the inverse order of maturity; and (v)
the Issuers shall have provided reasonable assurances to the Administrative
Agent that the prepayment does not violate any applicable Laws of Argentina.
4.2 Scheduled Repayments. (a) On the dates set forth below, the
Issuers shall repay the principal amount of the Advances, to the extent then
outstanding, as is set forth opposite such date (each such repayment, a
"Scheduled Repayment" and each such date, a "Repayment Date"), as follows:
Repayment Date Amount
----------------- -----------------
January 31, 2000 U.S.$ 15,000,000
April 30, 2000 U.S.$ 15,000,000
July 31, 2000 U.S.$ 15,000,000
October 31, 2000 U.S.$ 15,000,000
January 31, 2001 U.S.$ 15,000,000
April 30, 2001 U.S.$ 15,000,000
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July 31, 2001 U.S.$ 15,000,000
October 31, 2002 U.S.$ 15,000,000
January 31, 2002 U.S.$ 15,000,000
April 30, 2002 U.S.$ 15,000,000
July 31, 2002 U.S.$ 15,000,000
Final Maturity Date U.S.$135,000,000
(b) If the Total Commitment is reduced pursuant to Section 3.3, or if
less than all of the Advances are funded, the Scheduled Repayments set forth
above shall be reduced by the amount of such reduction or amount not borrowed
pro rata based upon the then remaining Scheduled Repayments after giving effect
to prior reductions thereto.
4.3 Mandatory Prepayments.
(a) In addition to any other mandatory prepayments pursuant to this
Section 4.3, if at any time after the Initial Funding Date any of the Issuers,
any Purchasing Agents or the Offeror receives or is entitled to receive any Net
Proceeds from any public or private sale by any such Person of debt or equity
securities (other than in connection with the Proposed IPO) of any Issuer or the
Offeror, including, without limitation, in connection with the Proposed High
Yield Debt Offering, then the Issuers shall promptly make, or cause to be made,
a mandatory prepayment of the Advances and the other Obligations in an amount
equal to the lower of (i) 100% of such Net Proceeds, and (ii) the outstanding
amount of the Advances and other Obligations; provided, however, that the
Issuers shall not be required to make any such prepayment in connection with any
sale of Stock of any Issuer which results in Net Proceeds to the Issuers of less
than U.S.$100,000 (or the equivalent thereof) in the aggregate.
(b) In addition to any other mandatory prepayments pursuant to this
Section 4.3, if at any time after the Initial Funding Date any of the Issuers,
any Purchasing Agents or the Offeror receives or is entitled to receive any Net
Proceeds from the Proposed IPO, then the Issuers shall promptly make, or cause
to be made, a mandatory prepayment of the Advances and the other Obligations in
an amount equal to the lower of (i) the amount of the Net Proceeds, (ii) the sum
of (x) U.S.$100,000,000, and (y) 50% of the difference between the amount of the
Net Proceeds and U.S.$100,000,000, and (iii) the outstanding amount of the
Advances and other Obligations.
(c) In addition to any other mandatory prepayments pursuant to this
Section 4.3, if at any time after the Initial Funding Date any of the Issuers
receives or is entitled to receive any Net Proceeds in excess of U.S.$1,000,000
(or the equivalent thereof) from the sale of any assets in any single or related
series of transactions other than in the ordinary course of business (including
any sale of Stock of any Issuer or any other Person), then the Issuers shall
promptly make a mandatory prepayment of the Advances and the other Obligations
in an amount equal to the lower of (i) 100% of such Net Proceeds (and not merely
the excess), and (ii) the outstanding amount of the Advances and other
Obligations; provided, however, that if any such sale is made by a Subsidiary of
Supercanal Holding other than a wholly-owned Subsidiary, the mandatory
prepayment shall be in an amount equal to the Net Proceeds of such sale
multiplied
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by the percentage ownership interest (direct or indirect) of Supercanal
Holding in such Subsidiary.
(d) In addition to any other mandatory prepayments pursuant to this
Section 4.3, on April 30, 1999 and on April 30 of each year thereafter, the
Issuers shall make a mandatory prepayment of the Advances and the other
Obligations in an amount equal to the lower of (i) 100% of the Excess Cash Flow
for the immediately preceding calendar year, and (ii) the outstanding amount of
the Advances and other Obligations; provided, however, that if all principal,
interest and all other amounts due under the Bridge Note Purchase Agreement
shall have been fully paid on or before the first anniversary of the Effective
Date, the obligation of the Issuers to make a mandatory prepayment under this
Section 4.3(d) shall commence on April 30, 2000 and continue on each April 30
thereafter and the amount of any such mandatory prepayment shall be reduced to
an amount equal to the lower of (x) 50% of the Excess Cash Flow for the
immediately preceding calendar year, and (y) the outstanding amount of the
Advances and other Obligations.
(e) Each prepayment pursuant to this Section 4.3 shall be applied pro
rata among the Advances to the repayment of the principal thereof in the inverse
order of maturity.
4.4 Method and Place of Payment.
(a) Except as otherwise specifically provided herein, all payments
under this Agreement or any Note shall be made to the Administrative Agent for
the account of the Purchaser or Purchasers entitled thereto not later than 12:00
Noon (New York time) on the date when due and shall be made in Dollars in
immediately available funds at the Payment Office; provided, however, that if
the Issuers are not able to so tender Dollars as a result of the adoption of a
Law, the taking of action by a Governmental Authority or the occurrence of any
other circumstance which in any such case prohibits or prevents the payment of
Dollars, the Issuers shall, during the continuance of such prohibition or
restriction, make payments hereunder and under the Notes by delivering to the
Administrative Agent, for the benefit of the Purchasers, at its own expense, an
amount of Dollar Denominated Securities which, when sold by the Administrative
Agent in the markets in which such securities are customarily traded, will
result in net proceeds to the Administrative Agent sufficient to satisfy in full
the payments due hereunder and under the Notes in respect of the Obligations.
The Administrative Agent shall sell any such Dollar Denominated Securities
promptly, but in no event later than 30 days after delivery thereof, unless the
Issuers shall otherwise so direct in writing. Any such delivery of Dollar
Denominated Securities shall only be deemed to constitute payment of the
applicable Obligation upon receipt by the Administrative Agent of the full
amount of Dollars due in respect thereof.
(b) Whenever any payment to be made hereunder or under any Note shall
be stated to be due on a day which is not a Business Day, the due date thereof
shall be extended to the next succeeding Business Day and, with respect to
payments of principal, interest shall be payable at the applicable rate during
such extension.
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(c) Any payment of principal or interest hereunder or under any Note
in respect of any Advance shall be made by the Issuer which received the
proceeds of such Advance. Contemporaneously with any such payment, the Issuers
shall provide the Administrative Agent with evidence satisfactory to the
Administrative Agent of compliance with this Section 4.4(c).
4.5 Net Payments. All payments made by the Issuers hereunder or
under any Note will be made without setoff, counterclaim or other defense. All
such payments will be made free and clear of, and without deduction or
withholding for, any present or future taxes, value-added taxes, levies,
imposts, duties, fees, assessments or other charges of whatever nature now or
hereafter imposed by any jurisdiction or by any political subdivision or taxing
authority thereof or therein (but excluding, except as provided below, any tax
imposed on or measured by the net income of a Purchaser pursuant to the laws of
the jurisdiction (or any political subdivision or taxing authority thereof or
therein) in which the principal office or Funding Office of such Purchaser is
located and any jurisdiction which would have legal power to tax the net income
of a Purchaser if such Purchaser had not made any Advance to the Issuers) and
all interest, penalties or similar liabilities with respect thereto
(collectively, "Taxes"). The Issuers shall also reimburse each Purchaser, upon
the written request of such Purchaser, for all other taxes imposed on or
measured by the net income of such Purchaser pursuant to the laws of the
jurisdiction (or any political subdivision or taxing authority thereof or
therein) in which the principal office or Funding Office of such Purchaser is
located as such Purchaser shall determine are payable by such Purchaser in
respect of amounts paid to or on behalf of such Purchaser pursuant to the
preceding sentence. If any Taxes are so levied or imposed, the Issuers agree to
pay the full amount of such Taxes and such additional amounts as may be
necessary so that every payment of all amounts due hereunder or under any Note,
after withholding or deduction for or on account of any Taxes, will not be less
than the amount provided for herein or in such Note. The Issuers will furnish
to the Administrative Agent within 45 days after the date the payment of any
Taxes is due pursuant to applicable Law certified copies of tax receipts
evidencing such payment by the Issuers (provided, that if any such receipts
cannot be obtained within 45 days, the Issuers will furnish such receipts as
soon as reasonably practicable). Argentine value-added tax or any tax imposed
in replacement thereof will be invoiced directly to the Issuers by each
Purchaser which is an Argentine financial institution or whose Funding Office is
located in Argentina, and the Issuer will pay such tax directly to such
Purchaser upon receipt of any such invoice. The Issuers will indemnify and hold
harmless each Purchaser, and reimburse such Purchaser upon its written request,
for the amount of any Taxes or other taxes described above which are levied or
imposed on and paid by such Purchaser.
Section 5. Conditions Precedent.
5.1 Conditions Precedent to the Initial Funding. The obligation of
each Purchaser to make the Advances on the Initial Funding Date is subject, at
the time of such Funding, to the satisfaction or waiver of the following
conditions:
(a) Execution of Agreement; Notes. The Effective Date shall have
occurred and there shall have been delivered to the Administrative Agent for the
account of each
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Purchaser the appropriate Notes executed by the Issuers in the amount, with
the maturity and as otherwise provided herein.
(b) No Default; Representations and Warranties. At the time of the
Funding (and after giving effect thereto) (i) there shall exist no Default or
Event of Default and (ii) all representations and warranties contained herein
and in the other Purchase Documents shall be true and correct in all material
respects with the same effect as though such representations and warranties had
been made on and as of the date of the Funding.
(c) Notice of Funding; Amount of Funding. The Administrative Agent
shall have received a Notice of Funding with respect to the Advances to be made
on such date meeting the requirements of Section 2.2(b). Each Advance requested
in such Notice of Funding shall not exceed the Permitted Funding Amount with
respect to such Advance, and the sum of (i) aggregate amount of the Advances
requested in such Notice of Funding, and (ii) the aggregate amount of all
Advances outstanding under the Notes, shall not exceed the product of (x) 5.25,
and (y) the Annualized Consolidated EBITDA of Supercanal Holding as at the end
of the calendar quarter then nearest ended. For purposes hereof, the Annualized
Consolidated EBITDA of Supercanal shall be determined by reference to the
financial statements delivered to the Administrative Agent pursuant to Section
7.1(i) hereof (or, if no such financial statements have been delivered pursuant
to such Section, by reference to the financial statements delivered pursuant to
the credit documents for the Syndicated Facilities or such other financial
statements as shall be acceptable to the Administrative Agent).
(d) Officer's Certificates; Proceedings.
(i) The Administrative Agent shall have received a certificate
from (A) Supercanal Bolivia, (B) Sucanal S.R.L., and (C) each of the
Issuers which has adopted any amendments to its estatutos sociales or other
organization documents since the date it became a Subsidiary of Supercanal
Holding (other than amendments adopted pursuant to the credit documents for
the Syndicated Facilities), dated the Initial Funding Date, signed by the
President or any Vice President of such Issuers, substantially in the form
of Exhibit C hereto, with appropriate insertions, together with copies of
the estatutos sociales, as amended, and resolutions referred to in such
certificate.
(ii) All corporate and legal proceedings and all Purchase
Documents shall be satisfactory in form and substance to the Administrative
Agent and the Administrative Agent shall have received all information and
copies of all documents and papers, including records of corporate
proceedings and Governmental Approvals, if any, which the Administrative
Agent may reasonably have requested in connection therewith, such documents
and papers where appropriate to be certified by proper corporate or
Governmental Authorities.
(iii) The Administrative Agent shall have received from
Supercanal Holding a copy of the Shareholders' Agreement, together with all
amendments thereto through and including the Initial Funding Date,
certified as true and correct by the President of Supercanal Holding.
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(e) Opinions of Counsel. The Administrative Agent shall have
received opinions addressed to the Administrative Agent, the Collateral Agent
and each of the Purchasers, dated the Initial Funding Date, and in form and
substance satisfactory to the Administrative Agent, from (i) Rogers & Wells,
special U.S. counsel to the Issuers, substantially in the form of Exhibit D-1
hereto and as to such other matters as the Administrative Agent shall reasonably
request, (ii) Marval, O'Farrell & Mairal, special Argentine counsel to the
Issuers, substantially in the form of Exhibit D-2 hereto and as to such other
matters as the Administrative Agent shall reasonably request, (iii) Estudio
Vila, Argentine counsel to the Issuers, substantially in the form of Exhibit D-3
and as to such other matters as the Administrative Agent shall reasonably
request, (iv) Dr. Comesana, special counsel to the Issuers (or other similarly
qualified expert reasonably satisfactory to the Administrative Agent), as to
such matters as the Administrative Agent shall reasonably request, and (v) such
other counsel as the Administrative Agent shall reasonably require, as to such
matters as the Administrative Agent shall reasonably require.
(f) Pledge Agreements.
(i) Each Issuer which holds Stock of another Issuer (other than
Supercanal Bolivia), if such other Issuer is a corporation (sociedad
anonima), shall have duly authorized, executed and delivered a pledge
agreement substantially in the form of Exhibit E-1 (as amended, modified or
supplemented from time to time, an "SA Pledge Agreement" and together with
all other SA Pledge Agreements executed and delivered pursuant hereto, the
"SA Pledge Agreements"), pursuant to which such Issuer shall have granted
to (A) the Collateral Agent, for the benefit of the Purchasers, a first
priority Lien on all of the Stock of each such other Issuer owned by such
Issuer, and (B) the Bridge Collateral Agent for the benefit of the Bridge
Purchasers, a second priority Lien on all of such Stock of each such other
Issuer, free and clear of all Liens (and shall have (i) delivered to the
Collateral Agent all such Stock with the relevant annotation of the
existence and perfection of the Liens created by such SA Pledge Agreement,
(ii) given notice to the Issuer which issued such Stock of the grant of
such Liens as required by Argentine Law, and (iii) caused the Issuer which
issued such Stock to have duly registered such Liens in the names of the
Collateral Agent and the Bridge Collateral Agent in such Issuer's share
registry).
(ii) SRL Holding and each Issuer and Purchasing Agent which
acquired Stock of another Issuer, if such other Issuer is a limited
liability company (sociedad de responsabilidad limitada), shall have duly
authorized, executed and delivered a pledge agreement substantially in the
form of Exhibit E-2 (as amended, modified or supplemented from time to
time, an "SRL Pledge Agreement" and together with all other SRL Pledge
Agreements executed and delivered pursuant hereto, the "SRL Pledge
Agreements"), pursuant to which SRL Holding, and each such Issuer or
Purchasing Agent shall have granted to (A) the Collateral Agent, for the
benefit of the Purchasers, a first priority Lien on all of the Stock of
such other Issuer owned or acquired by SRL Holding, such Issuer or
Purchasing Agent, and (B) the Bridge Collateral Agent, for the benefit of
the Bridge Purchasers, a second priority Lien on all of such Stock, free
and clear of all Liens.
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(iii) Supercanal Holding shall have duly authorized, executed
and delivered an SA Pledge Agreement pursuant to which it shall have
granted to (A) the Collateral Agent, for the benefit of the Purchasers, a
first priority Lien on 49% of the Stock of Tele Imagen Codificada S.A.
("TIC"), and (B) the Bridge Collateral Agent for the benefit of the Bridge
Purchasers, a second priority Lien on all of such Stock, free and clear of
all Liens (and shall have (i) delivered to the Collateral Agent all such
Stock with the relevant annotation of the existence and perfection of the
Liens created by such SA Pledge Agreement, (ii) given notice to TIC of the
grant of such Liens as required by Argentine Law, and (iii) caused TIC to
have duly registered such Liens in the names of the Collateral Agent and
the Bridge Collateral Agent in TIC's share registry).
(iv) The Administrative Agent shall have received evidence of the
completion of all recordings and filings of, or with respect to, the SA
Pledge Agreements, and the SRL Pledge Agreements as may be necessary or,
in the opinion of the Administrative Agent, desirable to perfect the
security and other interests intended to be created by each such agreement,
except for the filing of the SRL Pledge Agreements with the applicable
registro publico which is required in order to perfect the security
interest granted thereby.
(g) Guaranty Trust Agreements. Each Issuer (other than Supercanal
Holding, SRL Holding, Inversora Atelco Comodoro S.A. and Inversora Antena
Comunitaria Trelew S.A.) and TIC shall have duly authorized, executed and
delivered a guaranty trust agreement (cesion fiduciaria) substantially in the
form of Exhibit F (as amended, modified or supplemented from time to time, a
"Guaranty Trust Agreement" and together with all other Guaranty Trust Agreements
executed and delivered pursuant hereto, the "Guaranty Trust Agreements"),
pursuant to which such Issuer shall have assigned to the Guaranty Trustee in
guaranty trust for the benefit of the Purchasers and the Bridge Purchasers all
of its present and future Receivables, free and clear of all Liens, other than
Liens created pursuant to the Purchase Documents and the Bridge Purchase
Documents; provided, that (i) the Guaranty Trust Agreements executed and
delivered by Cable Televisora Color Pehuenche S.R.L. and Cable Televisora Color
S.R.L. shall only provide for the assignment in guaranty trust of 65% of the
Receivables of each such company, and (ii) the Guaranty Trust Agreement executed
and delivered by TIC shall only provide for the assignment in guaranty trust of
13% of the Receivables of such company.
(h) Due Diligence. The Administrative Agent and the Required
Purchasers shall have (i) completed a due diligence investigation of the Issuers
and such other matters related to or in connection with the transactions
contemplated hereby, in scope, and with results, satisfactory to the
Administrative Agent and the Required Purchasers in all respects, (ii) been
given such access to the management, records, books of account, contracts,
concessions, management agreements with respect to the business, regulatory
framework and environment and property of the Issuers, and (iii) received such
financial, business and other information regarding the Issuers and such other
matters related to or in connection with the transactions contemplated hereby as
the Administrative Agent and/or the Required Purchasers shall have requested.
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(i) Projections. On or prior to the Initial Funding Date, the
Administrative Agent shall have received true and correct copies of the
projections referred to in Section 6.7, which projections shall be in form
and substance satisfactory to the Administrative Agent and the Required
Purchasers.
(j) Transferor's COMFER Approval; Power of Attorney. The
Administrative Agent shall have received assurances satisfactory to it that,
except as set forth on Schedule III, the transferors from which the Issuers
or the Purchasing Agents acquired the Stock of the Acquired Issuers either
(i) had all COMFER Approvals required in connection with the acquisition and
ownership of such Stock by such transferors, or (ii) had received, prior to
the transfer of such Stock to the Issuers or the Purchasing Agents, an
irrevocable power of attorney pursuant to which the predecessor in interest
of the transferors had granted to such transferors the right to direct or
cause the direction of the management and policies of the Acquired Issuers
and to transfer or otherwise pledge the Stock of the Acquired Issuers.
(k) Consent Letter. The Administrative Agent shall have received a
letter from the Process Agent, in form and substance satisfactory to the
Administrative Agent in all respects, indicating its consent to its
appointment by each Issuer as its agent to receive service of process in
connection with the transactions contemplated by the Purchase Documents.
(l) Governmental Approvals. The Administrative Agent shall have
received assurances satisfactory to it that all Governmental Approvals
(except for the filing of the SRL Pledge Agreements with the applicable
registro publico which is required in order to perfect the security interest
granted thereby) required (i) in connection with the execution, delivery and
performance of the Purchase Documents, and (ii) to ensure the legality,
validity, binding effect and enforceability of any and all such Purchase
Documents, have been received by the Issuers.
(m) Compliance. The Administrative Agent shall have received
assurances satisfactory to it that the transactions contemplated in the
Purchase Documents are in compliance in all respects with all applicable Laws.
(n) Litigation. Other than as set forth on Schedule IV hereto, no
litigation, action, suit, investigation, claim or proceeding shall be pending
or, to the knowledge of the Issuers, threatened with respect to this
Agreement or any other Purchase Document, the transactions contemplated
hereby or which could reasonably be expected to have a Material Adverse
Effect on any of the Issuers.
(o) Payments. All Fees and other amounts required to be paid or
deposited on or prior to the Initial Funding Date under this Agreement and
the other Purchase Documents shall have been paid or deposited.
(p) Market Conditions, etc. There shall not exist or be
anticipated to occur any disruption or other circumstances in United States,
Argentine or international capital markets or other financial, political or
economic conditions, or currency exchange rates or exchange controls
applicable to the Dollar or the Peso as would, in the sole judgment of the
Administrative Agent, make it impracticable for any Purchaser to successfully
sell its Notes.
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(q) COMFER Applications. The Administrative Agent shall have
received assurances satisfactory to it that the predecessors in interest of
each Acquired Issuer and each direct and indirect predecessor in interest of
such predecessors shall have prepared, executed and filed all required
documents and instruments necessary to obtain the COMFER Approval required in
connection with the acquisition and ownership by any such transferor of its
interest in the Acquired Issuer.
(r) No Material Adverse Change. The Issuers shall have delivered
to the Administrative Agent a certificate signed by the President of
Supercanal Holding to the effect that since June 30, 1997, there has been no
material adverse change in the business, operations, property, assets,
liabilities, condition (financial or otherwise) or prospects of Supercanal
Holding or any of its Subsidiaries.
(s) Power of Attorney for Review of COMFER Records. Each of the
Issuers shall have executed and delivered to the Administrative Agent an
irrevocable power of attorney, in form and substance satisfactory to the
Administrative Agent, pursuant to which each such Person shall have granted
to the Administrative Agent and its Affiliates and authorized representatives
the authority to review the records of COMFER relating to it.
(t) Funding of Bridge Advances; Refinancing of Certain
Indebtedness. The Issuers shall have requested, and the Bridge Purchasers
shall have funded, Bridge Advances in an aggregate principal amount not less
than the Total Commitment (as defined under the Bridge Note Purchase
Agreement) and all such Bridge Advances shall have been applied to the
payment of the Syndicated Facilities and/or the Subsidiary Indebtedness. To
the extent such Bridge Advances are not sufficient to repay in full such
Indebtedness, the Issuers shall have requested Advances on the Initial
Funding Date in an aggregate principal amount equal to the unpaid amount of
such Indebtedness.
(u) Additional Conditions Relating to Acquisitions. If the
Advances to be made on the Initial Funding Date relate to the payment or
reimbursement of the Acquisition Price of any Acquisition Subsidiary or the
payment or reimbursement of any Permitted Transaction Expenses arising in
connection with any Acquisition, the Issuers shall have satisfied the
additional conditions precedent set forth in Section 5.3.
5.2 Conditions Precedent to Subsequent Fundings. The obligation of
each Purchaser to make Advances on each Funding Date after the Initial
Funding Date is subject, at the time of such Funding, to the satisfaction or
waiver of the following conditions:
(a) No Default; Representations and Warranties. At the time of the
Funding (and after giving effect thereto) (i) there shall exist no Default or
Event of Default and (ii) all representations and warranties contained herein
and in the other Purchase Documents shall be true and correct in all material
respects with the same effect as though such representations and warranties
had been made on and as of the date of the Funding.
(b) Notice of Funding; Amount of Funding. The Administrative Agent
shall have received a Notice of Funding with respect to the Advances to be
made on such date meeting
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the requirements of Section 2.2(b). Each Advance requested in such Notice of
Funding shall not exceed the Permitted Funding Amount with respect to such
Advance, and the sum of (i) the aggregate amount of the Advances requested in
such Notice of Funding, and (ii) the aggregate amount of all Advances
outstanding hereunder, shall not exceed the product of (x) 5.25, and (y) the
Annualized Consolidated EBITDA of Supercanal Holding as at the end of the
calendar quarter then nearest ended. For purposes hereof, the Annualized
Consolidated EBITDA of Supercanal shall be determined by reference to the
financial statements delivered to the Administrative Agent pursuant to
Section 7.1(i) hereof (or, if no such financial statements have been
delivered pursuant to such Section, by reference to the financial statements
delivered pursuant to the credit documents for the Syndicated Facilities or
such other financial statements as shall be acceptable to the Administrative
Agent).
(c) Litigation. Other than as set forth on Schedule IV hereto, no
litigation, action, suit, investigation, claim or proceeding shall be pending
or, to the knowledge of the Issuers, threatened with respect to this
Agreement or any other Purchase Document, the transactions contemplated
hereby or which could reasonably be expected to have a Material Adverse
Effect on any Issuer.
(d) Payments. All Fees and other amounts required to be paid or
deposited on or prior to the Funding Date under this Agreement and the other
Purchase Documents shall have been paid or deposited.
(e) Market Conditions, etc. There shall not exist or be
anticipated to occur any disruption or other circumstances in the United
States, Argentine or international capital markets or other financial,
political or economic conditions, or currency exchange rates or exchange
controls applicable to the Dollar or the Peso as would, in the sole judgment
of the Administrative Agent, make it impracticable for any Purchaser to
successfully sell its Notes.
(f) Additional Conditions Relating to Acquisitions. If the
Advances to be made on the Funding Date relate to the payment or
reimbursement of the Acquisition Price of any Acquisition Subsidiary or the
payment or reimbursement of any Permitted Transaction Expenses arising in
connection with any Acquisition, the Issuers shall have satisfied the
additional conditions precedent set forth in Section 5.3.
5.3 Conditions Precedent Relating to Acquisitions. The obligation
of each Purchaser to make Advances on each Funding Date, to the extent that
the proceeds of Advances to be made on such date will be applied to the
payment or reimbursement of the Acquisition Price of any Acquisition
Subsidiary or the payment or reimbursement of any Permitted Transaction
Expenses arising in connection with any Acquisition (other than the Tescorp
Acquisition, except to the extent provided in Section 12.1(b)), is subject,
at the time of such Funding, to the satisfaction or waiver of the following
additional conditions:
(a) Officer's Certificates; Proceedings. The Administrative Agent
shall have received a certificate from each Applicable Acquisition
Subsidiary, dated the Funding Date, signed by the President or any Vice
President of each Applicable Acquisition Subsidiary,
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substantially in the form of Exhibit C hereto with appropriate insertions,
together with copies of the estatutos sociales and the resolutions referred
to in such certificate.
(b) Pledge Agreements.
(i) If any Applicable Acquisition Subsidiary is a corporation
(sociedad anonima), the acquiring Issuer shall have duly authorized,
executed and delivered an SA Pledge Agreement, pursuant to which such
Issuer shall have granted (A) to the Collateral Agent, for the benefit of
the Purchasers, a first priority Lien on all of the Stock of such
Applicable Acquisition Subsidiary acquired by the Acquiring Issuer, and
(B) if any Bridge Obligations are outstanding, to the Bridge Collateral
Agent, for the benefit of the Bridge Purchasers, a second priority Lien
on all of such Stock of such Applicable Acquisition Subsidiary, free and
clear of all Liens (and shall have (i) delivered to the Collateral Agent
all such Stock with the relevant annotation of the existence and
perfection of the Liens created by such SA Pledge Agreement, (ii) given
notice to the Applicable Acquisition Subsidiary of the grant of such
Liens as required by Argentine Law, and (iii) caused the Applicable
Acquisition Subsidiary to have duly registered such Liens in the names of
the Collateral Agent and the Bridge Collateral Agent in the Applicable
Acquisition Subsidiary's share registry).
(ii) If any Applicable Acquisition Subsidiary is a limited
liability company (sociedad de responsabilidad limitada), the acquiring
Issuer shall have duly authorized, executed and delivered an SRL Pledge
Agreement, pursuant to which the Issuer shall have granted to (A) the
Collateral Agent, for the benefit of the Purchasers, a first priority
Lien on all of the Stock of such Applicable Acquisition Subsidiary
acquired by the acquiring Issuer, and (B) if any Bridge Obligations are
outstanding, the Bridge Collateral Agent, for the benefit of the Bridge
Purchasers, a second priority Lien on all of the Stock of each such
Applicable Acquisition Subsidiary, free and clear of all Liens.
(iii) The Administrative Agent shall have received evidence
of the completion of all recordings and filings of, or with respect to,
the SA Pledge Agreements and the SRL Pledge Agreements as may be
necessary or, in the opinion of the Administrative Agent, desirable to
perfect the security and other interest intended to be created by each
such agreement, except for the filing of the SRL Pledge Agreements with
the applicable registro publico which is required in order to perfect the
security interest granted thereby.
(c) Guaranty Trust Agreement. Each Applicable Acquisition
Subsidiary shall have duly authorized, executed and delivered a Guaranty
Trust Agreement, pursuant to which such Applicable Acquisition Subsidiary
shall have assigned to the Guaranty Trustee in guaranty trust for the benefit
of the Purchasers and, to the extent any Bridge Obligations are outstanding,
the Bridge Purchasers all of such Applicable Acquisition Subsidiary's present
and future Receivables, free and clear of all Liens.
(d) Joinder Agreement. Each Applicable Acquisition Subsidiary
shall have duly authorized, executed and delivered a Joinder Agreement
substantially in the form of Exhibit
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G hereto (as amended, modified or supplemented from time to time, a "Joinder
Agreement") pursuant to which such Applicable Acquisition Subsidiary shall
have joined in this Agreement and the Notes and, to the extent any Bridge
Obligations are outstanding, in the Bridge Note Purchase Agreement and the
Bridge Notes as a party hereto and thereto and become an Issuer hereunder and
under the Notes and under the Bridge Note Purchase Agreement and the Bridge
Notes.
(e) Opinions of Counsel. The Administrative Agent shall have
received from counsel to the Issuers (who shall be reasonably satisfactory to
the Administrative Agent) an opinion or opinions addressed to the
Administrative Agent, the Collateral Agent and each of the Purchasers and
dated the date of the Funding as to such matters as the Administrative Agent
may reasonably request.
(f) Due Diligence. The Administrative Agent and the Required
Purchasers shall have (i) completed a due diligence investigation of the
Applicable Acquisition Subsidiary and such other matters related to or in
connection with the Acquisition thereof, in scope, and with results,
satisfactory to the Administrative Agent and the Required Purchasers in all
respects, (ii) been given such access to the management, records, books of
account, contracts, concessions, management agreements with respect to the
business, regulatory framework and environment and property of the Issuers,
and (iii) received such other financial, business and other information
regarding the Applicable Acquisition Subsidiary and the Acquisition thereof
as the Administrative Agent and/or the Required Purchasers shall have
requested.
(g) Acquisition Audit Report; Projections; Compliance Certificate.
The Administrative Agent shall have received the following documents not
later than the date three Business Days prior to the applicable Funding Date:
(x) the special audit report of Coopers & Lybrand (or other auditors of
international standing acceptable to the Administrative Agent), prepared in
accordance with agreed upon procedures and dated not earlier than the date 10
days prior to the date of the Funding, of the Subscribers, Indebtedness and
contingent liabilities of each Applicable Acquisition Subsidiary, and the
results of such audit shall be to the satisfaction of the Administrative
Agent and the Required Purchasers, (y) as to each Applicable Acquisition
Subsidiary for which the Acquisition Price or exchange value exceeds
U.S.$5,000,000, consolidated financial projections for Supercanal Holding and
its Subsidiaries for the five-year period after the Funding Date, prepared by
Supercanal Holding on a pro forma basis to reflect the Consolidated EBITDA
and Indebtedness of each Applicable Acquisition Subsidiary during such
period, and (z) a certificate from Supercanal Holding substantially in the
form of Exhibit H hereto, dated the date three Business Days prior to the
Funding Date, signed by the President or any Vice President of Supercanal
Holding, setting forth the calculations required to establish pro forma
compliance by Supercanal Holding with the provisions of Sections 8.7 through
8.13 hereof, after giving effect to the Acquisition of each Applicable
Acquisition Subsidiary. The conditions set forth in clauses (y) and (z)
shall not be applicable in connection with the Acquisition of Telecable S.A.
(h) Transferor's COMFER Approval; Power of Attorney. The
Administrative Agent shall have received assurances satisfactory to it in all
respects that, the transferors from
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which the Issuers will acquire the Stock of each Applicable Acquisition
Subsidiary, either (i) has all COMFER Approvals required in connection with
the acquisition and ownership of such Stock by such transferors, or (ii) have
been granted an irrevocable power of attorney, in form and substance
satisfactory to the Administrative Agent, pursuant to which the predecessor
in interest of the transferors shall have granted to such transferors the
right to direct or cause the direction of the management and policies of the
Applicable Acquisition Subsidiary and to transfer or otherwise pledge the
Stock of such Acquisition Subsidiary. This condition shall not be applicable
in connection with the Acquisition of Telecable S.A.
(i) The Acquisition. On or prior to the date three Business Days
prior to the Funding Date there shall have been delivered to the
Administrative Agent and the Required Purchasers a true and correct copy of
all of the Applicable Acquisition Documents, certified as true and correct by
the President or any Vice President of Supercanal Holding, and all such
Applicable Acquisition Documents shall be in full force and effect and in
form and substance satisfactory to the Administrative Agent and the Required
Purchasers, including with respect to the establishment by the Issuers of
procedures and reserves for the Indebtedness and contingent liabilities of
each Applicable Acquisition Subsidiary. On or prior to the Funding Date (i)
each of the conditions precedent as set forth in the Applicable Acquisition
Documents shall have been satisfied and not waived (or with respect to any
non-material conditions, waived by the applicable party); (ii) the
Administrative Agent shall have received assurances satisfactory to it in all
respects that (x) each Applicable Acquisition shall have been consummated in
compliance with the Applicable Acquisition Documents and all applicable Laws
and (y) all necessary Governmental Approvals and third-party approvals in
connection with each Applicable Acquisition other than the COMFER Approval
shall have been obtained and remain in effect, and (iii) all applicable
waiting periods shall have expired without any action being taken by any
Governmental Authority which restrains, prevents or imposes, in the judgment
of the Administrative Agent, materially adverse conditions upon the
consummation of each Applicable Acquisition.
(j) Transferor Power of Attorney. The transferors of the Stock of
each Applicable Acquisition Subsidiary shall have granted to the Issuers an
irrevocable power of attorney, in form and substance satisfactory to the
Administrative Agent (a "Transferor Power of Attorney" and together with all
other Transferor Powers of Attorney executed and delivered in connection with
any Applicable Acquisition, the "Transferor Powers of Attorney"), pursuant to
which the Issuers shall have the exclusive right and power to direct or cause
the direction of the management and policies of such Applicable Acquisition
Subsidiary, including without limitation, the right and power to vote the
Stock of such Applicable Acquisition Subsidiary, to request the applicable
COMFER Approval, to execute and deliver the SA Pledge Agreement and the SRL
Pledge Agreement, as the case may be, and to take such other actions
regarding the business or assets of such Applicable Acquisition Subsidiary as
the Issuers shall deem necessary or desirable. This condition shall not be
applicable in connection with the Acquisition of Telecable S.A.
(k) Consent Letter. The Administrative Agent shall have received a
letter from the Process Agent, in form and substance satisfactory to the
Administrative Agent in all
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respects, indicating its consent to its appointment by each Applicable
Acquisition Subsidiary as its agent to receive service of process in
connection with the transactions contemplated by the Purchase Documents and
the Bridge Purchase Documents. This condition shall not be applicable to the
Funding on the Initial Funding Date in connection with the Acquisition of
Telecable S.A.
(l) Governmental Approvals. The Administrative Agent shall have
received assurances satisfactory to it that all Governmental Approvals
(except for the filing of the SRL Pledge Agreements with the applicable
registro publico which is required in order to perfect the security interest
granted thereby) required (i) in connection with the execution, delivery and
performance of the Purchase Documents and (ii) to ensure the legality,
validity, binding effect and enforceability of any and all such Purchase
Documents, have been received by the Issuers.
(m) COMFER Applications. The Administrative Agent shall have
received assurances satisfactory to it that the transferors in each
Applicable Acquisition and each direct and indirect predecessor in interest
of such transferors shall have prepared, executed and filed all required
documents and instruments necessary to obtain the COMFER Approval required in
connection with the acquisition and ownership by any such transferor or
predecessor of its interest in the Applicable Acquisition Subsidiary.
(n) Power of Attorney for Review of COMFER Records. Each
Acquisition Subsidiary shall have executed and delivered to the
Administrative Agent an irrevocable power of attorney, in form and substance
satisfactory to the Administrative Agent, pursuant to which each such
Acquisition Subsidiary shall have granted to the Administrative Agent and its
Affiliates and authorized representatives the authority to review the records
of COMFER relating to it.
5.4 Satisfaction of Conditions; Representation.
(a) The obligations of each Purchaser to make Advances on each
Funding Date are subject to the satisfaction of the foregoing conditions
applicable to such Funding to the satisfaction of the Administrative Agent;
provided, however, that the conditions specified in Sections 5.1(h), 5.1(i),
5.3(f), 5.3(g) and the first sentence of 5.3(i) shall be to the satisfaction
of the Required Purchasers.
(b) The acceptance of the proceeds of each Advance shall constitute
a representation and warranty by each of the Issuers to the Administrative
Agent and each of the Purchasers that all the conditions specified in this
Section 5 were satisfied as of the Funding Date for such Advance (unless
otherwise waived by the Administrative Agent or the Purchasers, as the case
may be). All of the Notes, certificates, legal opinions and other documents
and papers referred to in Section 5, unless otherwise specified, shall be
delivered to the Administrative Agent for the account of each of the
Purchasers and, except for the Notes, in sufficient counterparts for each of
the Purchasers.
Section 6. Representations, Warranties and Agreements. In order
to induce the Purchasers to enter into this Agreement and to purchase the
Notes and make the Advances, each of the Issuers makes the following
representations, warranties and agreements, all of which
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shall survive the execution and delivery of this Agreement and the Notes and
the making of the Advances, with the occurrence of each Funding being deemed
to constitute a representation and warranty that the matters specified in
this Section 6 are true and correct on and as of the date of the Funding (it
being understood and agreed that any representation or warranty which by its
terms is made as of a specified date shall be required to be true and correct
in all material respects only as of such specified date):
6.1 Legal Status.
(a) Each of the Credit Parties organized and existing under the
Laws of Argentina is either a duly incorporated and validly existing
corporation (sociedad anonima) or limited liability company (sociedad de
responsabilidad limitada) under the laws of Argentina. Each of the Credit
Parties organized and existing under the Laws of a jurisdiction outside of
Argentina is a duly organized and validly existing corporation (and, if
applicable, in good standing) under the laws of such jurisdiction.
(b) Each of the Credit Parties (i) has the power and authority to
own its property and assets and to transact the business in which it is
engaged and to do all things necessary or appropriate in respect of its
business and (ii) is duly qualified and is authorized to do business and is
in good standing in each jurisdiction where the ownership, leasing or
operation of its property or the conduct of its business requires such
qualification, except for (x) failures to be so qualified which, in the
aggregate, could not reasonably be expected to have a Material Adverse Effect
on it or any of its Subsidiaries, (y) COMFER Approvals which are required to
be obtained by the Credit Parties or the Purchasing Agents in connection with
the acquisition by such Persons of the Stock of the Acquired Issuers and the
Acquisition Subsidiaries, and (z) registration with the applicable
Governmental Authorities, including, without limitation, the applicable
registros publicos, of the ownership by the Issuers or their Purchasing
Agents of Stock of any Acquired Issuers or Acquisition Subsidiaries.
6.2 Power and Authority. Each of the Credit Parties and the
Purchasing Agents has the power and authority to execute, deliver and perform
the terms and provisions of each of the Purchase Documents to which it or he
is party and has taken all corporate or other action necessary to authorize
the execution, delivery and performance by it of each such Purchase Documents
as have been executed and delivered as of each date this representation and
warranty is made. Each of the Credit Parties and the Purchasing Agents has
duly executed and delivered each of the Purchase Documents to which it is
party, and each such Purchase Document constitutes its legal, valid and
binding obligation enforceable against it in accordance with its terms,
except as such enforcement may be limited by applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization or other similar laws
relating to or affecting creditors' rights generally or by general equity
principles. Except as reflected in the certificates delivered by the Issuers
pursuant to Section 5.1(d), none of the bylaws or other organization
documents of any of the Acquired Issuers has been amended, except to the
extent such amendments were adopted pursuant to the credit documents for the
Syndicated Facilities.
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6.3 No Immunity. None of the Credit Parties or the Purchasing
Agents nor any of its or his property has any immunity from the jurisdiction
of any court or from setoff or any legal process (whether through service or
notice, attachment prior to judgment, attachment in aid of execution,
execution or otherwise) under the laws of any jurisdiction, including the
laws of Argentina, except to the extent provided in Section 63 of the
Broadcasting Law.
6.4 No Violation. Neither the execution, delivery or performance
by any Credit Party or Purchasing Agent of the Purchase Documents to which it
or he is a party, nor compliance by it or him with the terms and provisions
thereof, nor the use of the proceeds of the Advances as contemplated herein
(i) will contravene any provision of any law, statute, rule or regulation or
any order, writ, injunction or decree of any court or governmental
instrumentality binding on any such Credit Party or Purchasing Agent, (ii)
will conflict or be inconsistent with or result in any breach of any of the
terms, covenants, conditions or provisions of, or constitute a default in
respect of, or result in the creation or imposition of (or the obligation to
create or impose) any Lien (other than Liens created pursuant to the Security
Documents) upon, any of the property or assets of any Credit Party or
Purchasing Agent or pursuant to the terms of any indenture, mortgage, deed of
trust, credit agreement, loan agreement or any other material agreement,
contract or instrument to which any Credit Party or Purchasing Agent is a
party or by which any such Credit Party's or Purchasing Agent's properties or
assets is bound or to which any such Credit Party may be subject or (iii)
will violate any provision of the estatutos sociales, articles of
incorporation, bylaws or other organizational documents of any Credit Party.
6.5 Governmental Approvals.
(a) No Governmental Approval (except (x) as has been obtained or
made and is in full force and effect, and (y) the filing of any SRL Pledge
Agreement with the applicable Governmental Authority, including, without
limitation, the applicable registro publico (which is necessary in order to
perfect the security interest granted thereby)), is required to authorize, or
is required in connection with, (i) the execution, delivery and performance
by any Issuer or Purchasing Agent of any Purchase Document or (ii) the
legality, validity, binding effect or enforceability against any Issuer or
Purchasing Agent of any such Purchase Document.
(b) Except as set forth on Schedule III hereto, the transferors
from which the Issuers or Purchasing Agents acquired the Stock of the
Acquired Issuers either (i) had all COMFER Approvals required in connection
with the acquisition and ownership of such Stock by such transferors, or (ii)
had been granted, prior to the transfer of such Stock to the Issuers or the
Purchasing Agents, an irrevocable power of attorney pursuant to which the
predecessor in interest of the transferors had granted to such transferors
the right to direct or cause the direction of the management and policies of
the Acquired Issuers and to transfer or otherwise pledge the Stock of the
Acquired Issuers.
(c) To the best knowledge of the Issuers, there is no reason to
believe that each COMFER Approval required but not yet received in connection
with the acquisition by the Issuers or Purchasing Agents of the Stock of any
Acquired Issuer or any Acquisition Subsidiary would not be granted by COMFER
in the ordinary course.
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6.6 Litigation. There is no litigation, action, suit,
investigation, claim or proceeding pending or, to the knowledge of the
Issuers, threatened with respect to this Agreement or any other Purchase
Document or the transactions contemplated hereby. Other than as set forth on
Schedule IV hereto, there is no litigation, action, suit, investigation,
claim or proceeding pending or threatened which could reasonably be expected
to have a Material Adverse Effect on any Credit Party.
6.7 Financial Statements; Projections; No Material Adverse Change.
(a) The consolidated balance sheet of Supercanal Holding and its
Subsidiaries as at June 30, 1997, and the related statement of income and
retained earnings and changes in financial position of Supercanal Holding and
its Subsidiaries for the six-month period then ended heretofore furnished to
the Administrative Agent were prepared in accordance with Argentine GAAP and
fairly present the financial condition and results of operations of
Supercanal Holding and its Subsidiaries as at and for the period covered
thereby.
(b) The financial projections for the Issuers prepared by
Supercanal Holding for the five-year period after the Initial Funding Date
heretofore furnished to the Administrative Agent were prepared on the basis
described therein, and are based on good faith estimates and assumptions
believed by management of Supercanal Holding to be reasonable and attainable
as of the date thereof, and there are no statements or conclusions in any of
the projections which are based upon or include information known to
Supercanal Holding to be misleading or which fail to take into account
material information regarding the matters reported therein.
(c) The consolidated financial projections for Supercanal Holding
and its Subsidiaries furnished to the Administrative Agent in connection with
any Funding pursuant to Section 5.3(g) were prepared on the basis described
therein, and are based on good faith estimates and assumptions believed by
management of Supercanal Holding to be reasonable and attainable as of the
date thereof, and there are no statements or conclusions in any of the
projections which are based upon or include information known to Supercanal
Holding to be misleading or which fail to take into account material
information regarding the matters reported therein.
(d) Since the date of the latest audited financial statements of
the Issuers provided to the Administrative Agent pursuant to the credit
documents for the Syndicated Facilities or pursuant to Section 7.1 hereof,
there has been no material adverse change in the business, operations,
property, assets, liabilities, condition (financial or otherwise) or
prospects of Supercanal Holding or any of its Subsidiaries.
6.8 Existing Indebtedness.
(a) Schedule V sets forth a true and complete list of all
Indebtedness of each of the Credit Parties as of the Effective Date other
than Contingent Obligations, in each case indicating the aggregate principal
amount thereof, accrued interest in respect thereof and the obligee of such
Indebtedness.
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(b) As of the Effective Date, the aggregate amount of all Purchase
Money Financing is U.S.$39,021,546, and the aggregate amount of all Subsidiary
Indebtedness is U.S.$2,292,390.
(c) Tescorp Delaware does not have any Indebtedness other than
Indebtedness arising under the Tescorp Purchase Agreement. Neither Inversora
Atelco Comodoro S.A. nor Inversora Antena Comunitaria Trelew S.A. has any
Indebtedness.
6.9 Use of Proceeds. All proceeds of the Advances shall be used by
the Issuers to (i) repay the Syndicated Facilities, the Purchase Money
Indebtedness and the Subsidiary Indebtedness, (ii) to make permitted Capital
Expenditures, (iii) for working capital purposes, (iv) to pay or reimburse the
Issuers for Permitted Transaction Expenses, (v) to pay or reimburse the Issuers
for the Acquisition Price in connection with Approved Acquisitions, and (vi) to
pay or reimburse amounts contemplated in Section 12 hereof. Advances made on
the Initial Funding Date shall be used to repay the Syndicated Facilities, the
Purchase Money Indebtedness and the Subsidiary Indebtedness. No part of the
proceeds of any Advance will be used by the Issuers to purchase or carry any
Margin Stock or to extend credit to others for the purpose of purchasing or
carrying any Margin Stock. Neither the making of the Advances nor the use of
the proceeds thereof will violate or be inconsistent with the provisions of
Regulations G, T, U, or X of the Board of Governors of the Federal Reserve
System.
6.10 Properties. Each of the Credit Parties has good and marketable
title to all properties owned by it, free and clear of all Liens other than
Liens permitted under Section 8.1, except as such title may be affected by the
failure of the Issuers to have obtained COMFER Approvals in connection with the
acquisition by Supercanal Holding of the Stock of its Subsidiaries. With
respect to any lease or rental agreement for any premises to which any Credit
Party is a party, (i) such lease or rental agreement is in full force and
effect, (ii) such Credit Party has complied in all material respects with all of
the terms of such lease or rental agreement, (iii) there exists no event of
default or an event, act or condition (other than defaults or conditions which
are not reasonably likely to have a Material Adverse Effect on the Credit Party)
which with notice or lapse of time, or both, would constitute an event of
default thereunder by the Credit Party or, to the knowledge of the Issuers, the
lessor thereunder, and (iv) the Credit Party is in possession of the premises
demised under all such leases and rental agreements and is conducting business
on such premises.
6.11 License. The License held by each of the Credit Parties is in
full force and effect and each of the Credit Parties is in compliance with the
terms and conditions thereof. A true and correct copy of each such License has
been provided to the Administrative Agent.
6.12 Patents, Licenses, Franchises and Formulas. Each of the Credit
Parties owns all the patents, trademarks, permits, service marks, trade names,
copyrights, licenses, franchises and formulas, or rights with respect to the
foregoing, and has obtained assignments of all leases and other rights of
whatever nature, necessary for the present conduct of its business, without any
known conflict with the rights of others which, or the failure to obtain which,
as the case may be, could result in a Material Adverse Effect on such Credit
Party.
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6.13 True and Complete Disclosure. All factual information (taken as
a whole) heretofore or contemporaneously furnished by or on behalf of any of the
Credit Parties or the Purchasing Agents (including, without limitation, such
factual information as contained in the Purchase Documents and the Acquisition
Documents), for purposes of or in connection with this Agreement or any
transaction contemplated herein or in any Purchase Document is, and all other
such factual information (taken as a whole) hereafter furnished by or on behalf
of any of the Credit Parties or the Purchasing Agents to the Administrative
Agent, the Collateral Agent or any Purchaser will be, true and accurate in all
material respects on the date as of which such information is dated or certified
and does not omit any fact necessary to make such information (taken as a whole)
not misleading at such time in light of the circumstances under which such
information was provided. There is no material fact or circumstance which could
have a Material Adverse Effect on any of the Credit Parties, any Purchasing
Agent or any Acquisition Subsidiary which has not been disclosed herein or in
such other documents, certificates and statements furnished to the Purchasers
for use in connection with the transactions contemplated hereby and there are in
existence no documents or agreements which have not been disclosed to the
Purchasers which are material in the context of the Purchase Documents or the
Acquisitions or which have the effect of varying any of the Purchase Documents
or the Acquisition Documents.
6.14 Tax Returns and Payments. Each of the Credit Parties has filed
all tax returns required to be filed by it and has paid all taxes payable by it
which have become due pursuant to such tax returns and all other taxes and
assessments payable by it which have become due, other than those not yet
delinquent and except for those contested in good faith and for which adequate
reserves have been established.
6.15 Employee Benefit Plans. Each of the Credit Parties is in
compliance in all material respects with its respective obligations relating to
all employee benefit plans established, maintained or contributed to by it, and
none of the Credit Parties has outstanding any liabilities with respect to any
such employee benefit plans.
6.16 Capitalization.
(a) As of the Effective Date, the authorized capital stock of
Supercanal Holding consists of 106,385,110 common book-entry shares each with a
nominal value of ten cents (0.10 Pesos) per share, of which 106,385,110 shares
are issued, outstanding, and fully paid and are owned and registered in the name
of the shareholders listed on Schedule VI, and 69,538,657 preferred book entry
shares, of which 4,075,154 shares are issued and paid as to 25% and represented
by provisional certificates (certificados provisorios) held by the shareholders
listed on Schedule VI and the balance of which may be offered to the public in
the Proposed IPO. Other than the Warrant Agreement and the Warrants and as
otherwise set forth on Schedule VI, Supercanal Holding does not have outstanding
(i) any securities convertible into or exchangeable for its capital stock or
(ii) any rights to subscribe for or to purchase, or any options for the purchase
of, or any agreements, arrangements or understandings providing for the issuance
(contingent or otherwise) of, or any calls, puts, commitments or claims of any
character relating to, its capital stock.
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(b) As of the Effective Date, the authorized capital stock of
Supercanal consists of 10,000 shares of common stock, 10 Pesos nominal value per
share, of which 10,000 shares are issued, outstanding, 9,999 of which are fully
paid and are owned and registered in the name of Supercanal Holding and one of
which is fully paid and is owned and registered in the name of S.H.O. S.A.
Supercanal does not have outstanding (i) any securities convertible into or
exchangeable for its capital stock or (ii) any rights to subscribe for or to
purchase, or any options for the purchase of, or any agreements, arrangements or
understandings providing for the issuance (contingent or otherwise) of, or any
calls, puts, commitments or claims of any character relating to, its capital
stock.
(c) As of the Effective Date, the authorized capital stock (capital
social) of SRL Holding consists of 12,000 shares (cuotas), nominal value one
Peso per share, all of which are issued and outstanding and 25% of which are
fully paid. 5,400 shares are owned and registered in the name of Daniel Eduardo
Vila Santander, 5,400 shares are owned and registered in the name of Alfredo
Luis Vila and 1,200 shares are owned and registered in the name of Alberto Luis
Vila. The foregoing persons have entered into agreements to transfer the Stock
of SRL Holding owned by them to Supercanal Holding or Supercanal upon the
conversion of SRL Holding into a corporation (sociedad anonima). SRL Holding
does not have outstanding (i) any securities convertible into or exchangeable
for its capital stock or (ii) any rights to subscribe for or to purchase, or any
options for the purchase of, or any agreements, arrangements or understandings
providing for the issuance (contingent or otherwise) of, or any calls, puts,
commitments or claims of any character relating to, its Stock.
6.17 Subsidiaries and Acquisition Subsidiaries. Schedule VII
correctly sets forth, as of the Effective Date, the percentage ownership (direct
and indirect) of Supercanal Holding and/or any Purchasing Agent acting for or on
behalf of Supercanal Holding or any of the Credit Parties in each class of Stock
in each of its Subsidiaries and also identifies the direct owner thereof. Other
than as set forth on Schedule VII, none of Supercanal Holding or any of the
Credit Parties or any Purchasing Agent acting for or on behalf of any of the
foregoing owns any proprietary interest in any other Person as of the Effective
Date. The Stock of each Subsidiary described on Schedule VII which was acquired
prior to the Effective Date by any Person other than Supercanal Holding,
Supercanal or SRL Holding was acquired for or on behalf of Supercanal Holding by
a Purchasing Agent with proceeds of loans made under the Syndicated Facilities.
6.18 Compliance with Statutes, etc. Each of the Credit Parties is in
compliance in all material respects with all applicable Laws imposed by all
Governmental Authorities, domestic or foreign, in respect of the conduct of its
business and the ownership of its property (including applicable statutes,
regulations, orders and restrictions relating to environmental standards and
controls), except (x) such noncompliance as could not have a Material Adverse
Effect on such Credit Party, and (y) the legal requirement that the Credit
Parties and the Purchasing Agents obtain COMFER Approvals in connection with the
acquisition of the Stock of the Acquired Issuers and the Acquisition
Subsidiaries.
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6.19 Labor Relations. None of the Credit Parties has engaged in any
unfair labor practice that could reasonably be expected to have a Material
Adverse Effect on it. There is (i) no unfair labor practice complaint pending
against any Credit Party or, to the knowledge of the Issuers, threatened against
any Credit Party, before any governmental body or any political subdivision
thereof with responsibility, authority or jurisdiction for such matters, and no
significant grievance or significant arbitration proceeding arising out of or
under any collective bargaining agreement is so pending against any Credit Party
or, to the knowledge of the Issuers, threatened against any Credit Party, (ii)
no strike, labor dispute, slowdown or stoppage pending against any Credit
Parties or, to the knowledge of the Issuers, threatened against any Credit
Party, (iii) to the knowledge of the Issuers, no union representation question
existing with respect to the employees of any Credit Party and, to the knowledge
of the Issuers, no union organizing activities with respect to any Credit Party
are taking place, in any such case that could have a Material Adverse Effect on
it, except as set forth on Schedule IV hereto.
6.20 Pledge Agreements.
(a) The provisions of each SA Pledge Agreement are, or upon execution
and delivery will be, effective to (i) create in favor of the Collateral Agent
for the benefit of the Purchasers, a legal, valid and enforceable fully
perfected first priority Lien on and security interest in the Stock referred to
therein, and (ii) to the extent that any Bridge Obligations are outstanding,
create in favor of the Bridge Collateral Agent for the benefit of the Bridge
Purchasers, a legal, valid and enforceable fully perfected second priority Lien
on and security interest in the Stock referred to therein, subject in each such
case to no other Liens. The provisions of each Bridge SA Pledge Agreement are,
or upon execution and delivery will be, effective to (i) create in favor of the
Collateral Agent for the benefit of the Purchasers, a legal, valid and
enforceable fully perfected first priority Lien on and security interest in the
Stock referred to therein, and (ii) to the extent that any Bridge Obligations
are outstanding, create in favor of the Bridge Collateral Agent for the benefit
of the Bridge Purchasers, a legal, valid and enforceable fully perfected second
priority Lien on and security interest in the Stock referred to therein, subject
in each such case to no other Liens.
(b) The provisions of each SRL Pledge Agreement are, or upon
execution and delivery and registration with the applicable Governmental
Authority, including, without limitation the applicable registro publico, will
be, effective to (i) create in favor of the Collateral Agent for the benefit of
the Purchasers, a legal, valid and enforceable fully perfected first priority
Lien on and security interest in the Stock referred to therein, and (ii) to the
extent that any Bridge Obligations are outstanding, create in favor of the
Bridge Collateral Agent for the benefit of the Bridge Purchasers a legal, valid
and enforceable fully perfected second priority Lien on and security interest in
the Stock referred to therein, subject in each such case to no other Liens. The
provisions of each Bridge SRL Pledge Agreement are, or upon execution and
delivery and registration with the applicable Governmental Authority, including,
without limitation the applicable registro publico, will be, effective to (i)
create in favor of the Collateral Agent for the benefit of the Purchasers, a
legal, valid and enforceable fully perfected first priority Lien on and security
interest in the Stock referred to therein, and (ii) to the extent that any
Bridge Obligations are outstanding, create in favor of the Bridge Collateral
Agent for the benefit of the Bridge
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Purchasers a legal, valid and enforceable fully perfected second priority
Lien on and security interest in the Stock referred to therein, subject in
each such case to no other Liens.
6.21 Guaranty Trust Agreements. The provisions of each Guaranty Trust
Agreement and Bridge Guaranty Trust Agreement are, or upon execution and
delivery and compliance with the notification requirements set forth therein,
will be, effective to (i) constitute the Collateral assigned in guaranty trust
an estate separate from that of the Guaranty Trustee and each of the Issuers,
and (ii) create in favor of the Guaranty Trustee, for the benefit of the
Purchasers and, to the extent that any Bridge Obligations are outstanding, the
Bridge Purchasers, a legal, valid and enforceable right as between the parties
to receive distributions of the Collateral described therein as provided
therein.
6.22 Establishment of Liens. Neither the establishment of the Liens
created by the Security Documents (including, without limitation, the pledge and
deposit of the Stock with the Collateral Agent or its designee and the pledge of
the Receivables to the Guaranty Trustee) nor the exercise of the rights and
remedies contemplated by the Security Documents at any time after the Initial
Funding Date (i) contravenes any provision of existing Argentine Law, or
Governmental Approval or any order, writ, injunction or decree of any Argentine
court or Governmental Authority, or (ii) would result in the termination of any
of the Licenses.
6.23 Availability and Transfer of Foreign Currency. No foreign
exchange control approvals or other authorizations by the Argentine government
or any Governmental Authority thereof are required to assure the availability of
Dollars to enable the Issuers to perform all of their obligations under each
Purchase Document to which they are a party in accordance with the terms
thereof. There are no restrictions or requirements which limit the availability
or transfer of foreign exchange for the purpose of the performance by the
Issuers of their respective obligations under this Agreement or any other
Purchase Document to which they are a party.
6.24 Fees and Enforcement. No fees or taxes, including, without
limitation, stamp, transaction, registration or similar taxes, are required to
be paid for the legality, validity, or enforceability of this Agreement or any
of the other Purchase Documents. This Agreement and each other Purchase
Document is in proper legal form under the laws of Argentina, and under the
respective governing laws selected in such Purchase Documents, for the
enforcement thereof in such jurisdiction without any further action by any
Issuer, the Administrative Agent, the Collateral Agent or the Purchasers;
provided, that if legal proceedings in respect of the Purchase Documents are
brought before Argentine courts, a court fee of three percent of the amount
claimed will be imposed on the claimant.
6.25 Withholding and Value-Added Taxes.
(a) As of the Effective Date, all payments of interest by the Issuers
to Purchasers who make and maintain their Advances from outside of Argentina of
interest under this Agreement, the Notes and the other Purchase Documents in
respect of the Obligations are subject to withholding of Argentine income tax at
an effective rate of 13.2%. The Issuers are not prohibited or restricted by
applicable Law from paying the additional amounts required to be
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paid pursuant to Section 4.5 as will result in receipt by the Purchasers of
such amounts as would have been received by them had no such withholding been
required.
(b) As of the Effective Date, all payments of interest by the Issuers
to Purchasers domiciled in Argentina of interest under this Agreement, the Notes
and the other Purchase Documents in respect of the Obligations are subject to
Argentine value-added tax at an effective rate of 21%. The Issuers will pay to
the Purchasers all value-added taxes due in respect of interest payments under
the Notes.
(c) Other than as set forth in this Section 6.25, no withholding or
other taxes are required to be paid in respect of, or deducted from, any payment
required to be made by the Issuers under this Agreement, the Notes or any other
Purchase Document.
6.26 The Acquisitions. Each Applicable Acquisition has been
consummated in accordance with the terms and conditions of the Applicable
Acquisition Documents and all applicable Laws. All conditions precedent set
forth in the Applicable Acquisition Documents have been or will have been
satisfied and not waived (or with respect to any non-material conditions, waived
by the applicable party) on or prior to consummation of the Applicable
Acquisition, and all necessary Governmental Approvals and third-party approvals
in connection with each Applicable Acquisition other than the COMFER Approvals
and the registration with the applicable Governmental Authorities, including,
without limitation, the applicable registros publicos, in connection with the
transfer of the Stock in the Acquisitions have been or will have been obtained
and are or will be in full force and effect, and all applicable waiting periods
have or will have expired at the time of the consummation of such Applicable
Acquisitions. All representations and warranties of the Issuers contained in
the Applicable Acquisition Documents are true and correct as of the time as of
which such representations and warranties were made, except for such
misrepresentations or breaches of warranties which could not have a Material
Adverse Effect on the Issuers or the Applicable Acquisition Subsidiary. The
copies of the Applicable Acquisition Documents delivered or to be delivered to
the Administrative Agent in satisfaction of the conditions set forth in Section
5 hereof are or will be true and correct copies of the Applicable Acquisition
Documents as in effect at the time of each Funding relating to the payment of
any portion of the Acquisition Price in connection therewith.
6.27 Investment Company Act. None of the Credit Parties is an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
6.28 Public Utility Holding Company Act. None of the Credit Parties
is a "holding company," or a "subsidiary company" of a "holding company," or an
"Affiliate" of a "holding company" or of a "subsidiary company" of a "holding
company" within the meaning of the Public Utility Holding Company Act of 1935,
as amended.
6.29 Securities Laws Representations.
(a) None of the Issuers nor anyone acting on behalf of any of the
Issuers has offered the Notes or any similar securities for sale to, or
solicited any offer to buy any of the same from, or otherwise approached or
negotiated in respect thereof with, any Person other than
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the Purchasers and the Bridge Purchasers. None of the Issuers nor anyone
acting on behalf of any of the Issuers has taken, or will take, any action
which would require the issuance and sale of the Notes to be registered
pursuant to Section 5 of the Securities Act, or would limit the availability
to the Purchasers of the resale exemptions provided in Rule 144A and
Regulation S under the Securities Act.
(b) Neither the Issuers, nor any of their affiliates (as defined in
Rule 144 under the Securities Act), nor any person acting on behalf of any of
the foregoing persons has engaged or will engage in any "directed selling
efforts" (as defined in Regulation S under the Securities Act) with respect to
the Notes.
(c) Neither the Issuers, nor any of their affiliates (as defined in
Rule 144 under the Securities Act), nor any person acting on behalf of any of
the foregoing persons has engaged or will engage in any form of "general
solicitation" or "general advertising" (within the meaning of Rule 502(c) under
the Securities Act) in connection with the sale of the Notes in the United
States.
(d) The Notes meet the eligibility requirements of Rule 144A(d)(3)
under the Securities Act.
(e) There is no "substantial U.S. market interest" (as defined in
Rule 902(n) under the Securities Act) in any of the debt securities of the
Issuers.
Section 7. Affirmative Covenants. The Issuers covenant and agree
that on and after the Effective Date and until the Notes, together with all
accrued interest, Fees and all other Obligations incurred hereunder and
thereunder, are paid in full:
7.1 Information Covenants. Supercanal Holding will furnish or cause
to be furnished to each Purchaser:
(i) Quarterly Financial Statements. As soon as available, but,
in any event, within 45 days (or 120 days in the case of the fourth fiscal
quarter of 1998 or any subsequent calendar year) after the close of each
quarterly accounting period in each fiscal year of Supercanal Holding, a
copy of the complete unaudited and consolidated balance sheet of Supercanal
Holding and its Subsidiaries for such period, together with the related
statements of income and retained earnings and statements of changes in
financial position for such quarterly period, certified by the chief
executive officer of Supercanal Holding, subject to normal recurring
year-end adjustments. The quarterly financial statements for the fourth
quarter of 1997 shall be delivered within 45 days after the close of such
quarter.
(ii) Annual Financial Statements. As soon as available, but, in
any event, within 120 days after the close of each fiscal year of
Supercanal Holding, the consolidated and consolidating balance sheet of
Supercanal Holding and its Subsidiaries for such fiscal year, together with
the related consolidated and consolidating statements of income and
retained earnings and statements of changes in financial position for such
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fiscal year, certified by independent public accountants of recognized
international standing selected by Supercanal Holding, and in each case
pursuant to an unqualified opinion of such independent public accountants,
subject only to Defaults or Events of Default specified therein.
(iii) Management Letters. Promptly after Supercanal
Holding's receipt thereof, a copy of any "management letter" or other
similar communication received by Supercanal Holding from its auditors in
relation to its financial, accounting and other systems, management and
accounts.
(iv) Budgets. Promptly after preparation, copies of any
consolidated or unconsolidated annual budgets of Supercanal Holding and/or
its Subsidiaries (and any modifications thereof or supplements thereto),
including budgeted statements of income and sources and uses of cash and
balance sheets.
(v) Officer's Certificates. At the time of the delivery of the
financial statements provided for in Section 7.1(i) and (ii), a certificate
signed by the chief executive officer of Supercanal Holding substantially
in the form of Exhibit I hereto, to the effect that, to the best of his
knowledge, no Default or Event of Default has occurred and is continuing,
and setting forth (x) the calculations required to establish compliance by
Supercanal Holding with the provisions of Sections 8.7 through 8.13 at the
end of such fiscal quarter or year, as the case may be, and (y) in the case
of the certificate delivered at the time of the delivery of the financial
statements provided for in Section 7.1(ii), the calculations required to
establish compliance by the Issuers with the provisions of Section 8.4,
and, from and after January 1, 1999 or January 1, 2000, as the case may be,
the calculation of Excess Cash Flow for the calendar year then ended.
(vi) Auditor's Certificates. (1) At the time of the delivery of
the financial statements for the fiscal quarter ended each June 30, a
limited review report prepared in accordance with Argentine GAAP by the
independent public accountants of Supercanal Holding of recognized
international standing selected by Supercanal Holding, which report shall
set forth the calculations required to establish compliance by Supercanal
Holding with the provisions of Sections 8.7 through 8.13 at the end of such
period.
(2) At the time of the delivery of the financial statements
provided for in Section 7.1(ii), a certificate signed by independent public
accountants of Supercanal Holding of recognized international standing
selected by Supercanal Holding setting forth (A) the number of Subscribers
and Net Subscribers of Supercanal Holding and its Subsidiaries at the end
of the period covered thereby, and (B) the Consolidated EBITDA of
Supercanal Holding and its Subsidiaries during the period covered thereby.
(vii) Notice of Default or Litigation, etc. Promptly, but in
no event later than three days after an officer of Supercanal Holding or
any other Issuer obtains actual knowledge thereof, written notice of (i)
the occurrence of any event which constitutes a Default or Event of
Default, (ii) any litigation or governmental proceeding pending or
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threatened (x) against Supercanal Holding, (y) against any Credit Party or
Purchasing Agent which, if determined adversely, could have a Material
Adverse Effect on such Credit Party or Purchasing Agent or (z) with respect
to any Purchase Document, (iii) any other event which could have a Material
Adverse Effect on any Credit Party or Purchasing Agent, and (iv) any claim
by COMFER that any License held by any Credit Party is not valid or that
any breach or default has occurred thereunder or under relevant Law or any
notice or inquiry of COMFER as to any breach or potential breach of any
such License.
(viii) Monthly Reports. (A) Within 15 days after the
beginning of each month, a report prepared by Supercanal Holding setting
forth the number of Subscribers and Net Subscribers of Supercanal Holding
and its Subsidiaries as at the end of the previous month.
(B) Within 30 days after the beginning of each month, a report
prepared by Supercanal Holding setting forth (1) the Consolidated EBITDA of
each of Supercanal Holding and each of its Subsidiaries for the previous
month, and (2) the Consolidated EBITDA of Supercanal Holding and its
Subsidiaries for the previous month.
(ix) Status Reports. From time to time, within five Business
Days after request therefor from the Administrative Agent, such reports,
prepared in reasonable detail and in form and substance satisfactory to the
Administrative Agent, regarding (A) the status of the registration of the
amendments to the estatutos sociales of each of the Issuers required
hereby, and (B) the status of all registrations, filings and other actions
required to be taken pursuant to Section 7 hereof, including, without
limitation, the matters contemplated in Sections 7.15 through 7.19 hereof.
(x) COMFER Correspondence. Promptly upon dispatch or receipt,
copies of all correspondence with COMFER.
(xi) Rule 144A(d)(4) Reports. To permit compliance with Rule
144A under the Securities Act in connection with transfers of the Notes
that are "restricted securities," Supercanal Holding will furnish, upon the
request of any holder of a Note or any prospective purchaser designated by
such holder, the information required to be delivered pursuant to Rule
144A(d)(4) under the Securities Act, if at the time of such request
Supercanal Holding is neither a reporting company under Section 13 or 15(d)
of the Securities Exchange Act of 1934, as amended, nor exempt from
reporting pursuant to Rule 12g3-2(b) thereunder.
(xii) Other Information. From time to time, such other
information or documents (financial or otherwise) as any Purchaser and/or
the Administrative Agent may reasonably request.
7.2 Books, Records and Inspections; Accounting Matters; Provision of
Certain Financial Statements. Supercanal Holding shall, and shall cause each of
its Subsidiaries to, keep
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proper books of record and account adequate to reflect truly and fairly the
financial condition and results of operations of Supercanal Holding and its
Subsidiaries and in which full, true and correct entries in conformity with
applicable generally accepted accounting principles consistently applied and
all requirements of Law shall be made of all dealings and transactions in
relation to its business and activities. Supercanal Holding will, and will
cause each of its Subsidiaries to, permit officers and designated
representatives of the Administrative Agent, the Collateral Agent or any
Purchaser to visit and inspect, under guidance of officers of, as the case
may be, Supercanal Holding or its respective Subsidiaries, any of the
properties of Supercanal Holding or any such Subsidiary, and to examine and
make copies of the books of record and account of Supercanal Holding or any
such Subsidiary and discuss the affairs, finances and accounts of Supercanal
Holding or any such Subsidiary with, and be advised as to the same by, its
and their officers, all at such reasonable times and intervals and to such
reasonable extent as such Person may request. The requirements of this
Section 7.2 are subject to restrictions of applicable Laws, including,
without limitation, applicable securities laws.
7.3 Compliance with Statutes, etc. Each of the Issuers will, and
will cause each other Credit Party to, comply with all applicable Laws imposed
by all governmental bodies, domestic or foreign, in respect of the conduct of
its business and the ownership of its property, except where the failure to so
comply could not have a Material Adverse Effect on it.
7.4 Performance of Obligations. Each of the Issuers will, and will
cause each other Credit Party and Purchasing Agent to, perform all of its or his
obligations under (a) each Purchase Document and Bridge Purchase Document to
which it is a party, (b) the terms of each other agreement, mortgage, indenture,
security agreement, and other debt instrument by which it is bound, except, in
the case of this clause (b), when the failure to so perform could not have a
Material Adverse Effect on it.
7.5 Taxes. Each of the Issuers will, and will cause each other
Credit Party to, pay and discharge or cause to be paid and discharged all
applicable taxes (including stamp taxes), assessments and governmental charges
or levies imposed upon it or upon its income or profits or upon any of its
property, real, personal or mixed or upon any part thereof, when due (other than
taxes contested in good faith and for which adequate reserves have been
established), as well as all lawful claims for labor, materials and supplies
which, if unpaid might by law become a Lien upon such property (except to the
extent permitted by Section 8.1).
7.6 Corporate Franchises. Each of the Issuers will, and will cause
each other Credit Party to, do or cause to be done all things necessary to
preserve and keep in full force and effect its existence and its material
rights, franchises, licenses and patents; provided, however, that nothing in
this Section 7.6 shall prevent any other transaction specifically permitted by
this Agreement or the withdrawal by any Credit Party of its qualification as a
foreign corporation in any jurisdiction where such withdrawal could not have a
Material Adverse Effect on such Credit Party.
7.7 Compliance with License. Each of the Issuers will, and will
cause each other Credit Party to, perform all of its obligations under its
respective License and take all such
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further actions as shall be required in order to ensure that its License shall
remain in full force and effect.
7.8 Further Assurances.
(a) Each of the Issuers will, at its own expense, (i) make,
execute, endorse, acknowledge, file and/or deliver to the Administrative
Agent and/or the Collateral Agent from time to time such vouchers, invoices,
schedules, confirmatory assignments, conveyances, financing statements,
transfer endorsements, powers of attorney, certificates, reports and other
assurances or instruments and (ii) take or cause to be taken such further
actions and steps relating to (x) the Collateral, (y) the filing and
prosecution of applications with Governmental Authorities for registration or
recording (including, if necessary or requested, the modification, refiling
and prosecution of such applications) and (z) the other agreements, covenants
and transactions provided for or contemplated herein, in any such case as the
Administrative Agent and/or the Collateral Agent may reasonably require.
(b) Each of the Issuers will (i) make, execute, endorse,
acknowledge, file with and/or deliver, or cause to be made, executed,
endorsed, acknowledged, filed and/or delivered, to the Administrative Agent
and the Purchasers from time to time such documents, instruments and
opinions, and (ii) take such further steps, relating to the sale or other
disposition by any Purchaser of all or any portion of the Notes as
contemplated in Section 14.5, in each such case as the Administrative Agent
or any Purchaser may reasonably require. Without limiting the generality of
the foregoing, the Issuers will promptly execute and deliver such additional
Notes as the Administrative Agent or any Purchaser may reasonably require.
(c) The Issuers agree to cooperate with the other parties hereto,
and to execute and deliver such documents and instruments as the
Administrative Agent shall reasonably require in order to effect such
modifications and amendments to the Purchase Documents and the Bridge
Purchase Documents as the Registrar and the Purchasers and the Bridge
Purchasers in the initial placement of the Notes and the Bridge Notes may
reasonably request.
(d) Promptly, but in no event later than the date 30 days after the
Initial Funding Date, (i) the Issuers will cause the Process Agent to deliver
to the Administrative Agent a letter, in form and substance satisfactory to
the Administrative Agent, indicating its consent to its appointment by
Telecable S.A. as its agent to receive service of process in connection with
the transactions contemplated by the Purchase Documents and the Bridge
Purchase Documents, and (ii) the Issuers will prepare and deliver to the
Administrative Agent a certificate from Supercanal Holding substantially in
the form of Exhibit J hereto, dated as of the Initial Funding Date, signed by
the President of Supercanal Holding, setting forth the calculations required
to establish pro forma compliance by Supercanal Holding with the provisions
of Sections 8.7 through 8.13 hereof, after giving effect to the Acquisition
of Telecable S.A.
7.9 Maintenance of Property; Insurance. Each of the Issuers will,
and will cause each other Credit Party to, (i) keep all property useful and
necessary in its business in good working order and condition (except to the
extent failure to do so would have no Material Adverse Effect on it) and (ii)
keep its present and future properties and business insured with
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financially sound and reputable insurers satisfactory to the Purchasers
against loss or damage in such manner and to the same extent as companies in
the Issuers' line of business customarily maintain in Argentina (or, in the
case of any Credit Party organized or located in any other jurisdiction, such
other jurisdiction), subject to customary deductibles, and each of the
Issuers will, and will cause each other Credit Party to, maintain with
financially sound and reputable insurance companies satisfactory to the
Purchasers, insurance against other hazards and risks and liability to
Persons and property sufficient to protect the Credit Parties and the
respective financial condition of each of them against the risks involved in
the business conducted by them. Notwithstanding anything contained in this
Section 7.9 to the contrary, the Credit Parties may, in lieu of or
supplemental to the insurance described above, adopt such other plan or
method of protection, whether by the establishment of any insurance fund or
reserve to be held and applied to make good losses from casualties, or
otherwise, and conforming to the practices of similar corporations
maintaining systems of self-insurance, as may be determined by the Board of
Directors. If any Credit Party adopts any such other plan or method of
protection, whether by the establishment of an insurance fund or reserve, or
otherwise, such Credit Party shall, at the time of the establishment thereof,
furnish to the Administrative Agent a certificate of an actuary or other
qualified person that such plan or method of protection is adequate.
7.10 Fiscal Years. Each of the Issuers will, and will cause each
other Credit Party to, cause its fiscal year and the fiscal year of each of
its Subsidiaries to end on December 31.
7.11 COMFER Approvals. (a) Promptly, but in no event later than 30
days after the Effective Date, the Issuers will prepare, execute and file, or
cause to be prepared, executed and filed, all required documents and
instruments and take such other action as is necessary to obtain the required
COMFER Approval in connection with the acquisition by the Issuers or their
Purchasing Agents of the Stock of each of the Acquired Issuers. Following
such filings, the Issuers will take, or cause to be taken, all such
additional actions and do such other things as are necessary to obtain such
approval as soon after the Effective Date as is practicable.
(b) Promptly, but in no event later than 30 days after the
consummation of any Acquisition, the Issuers will prepare, execute and file,
or cause to be prepared, executed and filed, all required documents and
instruments and take such other action as is necessary to obtain the required
COMFER Approval for such Acquisition. Following such filing, the Issuers
will take all such additional actions and do such other things as are
necessary to obtain such approval as soon after the Effective Date as is
practicable.
(c) The Issuers will provide the Administrative Agent with copies
of all documents and instruments referred to in this Section 7.11
contemporaneously with the preparation and filing thereof, and will
thereafter promptly provide the Administrative Agent with copies of all
correspondence with COMFER or any other Governmental Authority relating
thereto and will promptly notify the Administrative Agent of all other
communications in connection therewith.
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7.12 Notices under Guaranty Trust Agreements. Prior to the
incurrence of any Indebtedness for borrowed money (other than the Advances),
the Issuers will (i) provide a notification which constitutes an acto publico
for purposes of Argentine Law to the Person from whom such Indebtedness is
to be incurred of the assignment of the Receivables in guaranty trust
pursuant to the Guaranty Trust Agreements, and (ii) provide a copy of such
notification to the Administrative Agent.
7.13 Additional Pledge Agreements. (a) Promptly, but in no event
later than 30 days after the acquisition by any Issuer or its Purchasing
Agents or any other Person acting by or on behalf of any Issuer of Stock of
any Person other than an Acquisition Subsidiary, the Issuers will cause the
acquiring Issuer, Purchasing Agent or other Person, as the case may be, to
(i) execute and deliver a pledge agreement, in form and substance
satisfactory to the Administrative Agent, pursuant to which such Issuer,
Purchasing Agent or other Person shall have granted to the Collateral Agent,
for the benefit of the Purchasers, a perfected Lien of first priority in all
of such Stock, free and clear of all Liens other than Liens created by the
Bridge Purchase Documents, and (ii) (x) deliver to the Collateral Agent all
such Stock with the relevant annotation of the existence and perfection of
the Liens created by such pledge agreement, (y) give notice to the Person
which issued such Stock of the grant of such Liens, if required by applicable
Law, and (z) cause such Person to duly register such Liens in the names of
the Collateral Agent and the Bridge Collateral Agent in such Person's share
registry.
(b) Within 30 days after the Effective Date, the Issuers will cause
the shareholders of Supercanal Bolivia S.A., a corporation (sociedad anonima)
organized and existing under the laws of Bolivia ("Supercanal Bolivia") to
(i) execute and deliver a pledge agreement, in form and substance
satisfactory to the Administrative Agent, pursuant to which such shareholders
shall have granted to the Collateral Agent, for the benefit of the
Purchasers, a perfected Lien of first priority in all of the Stock of
Supercanal Bolivia, free and clear of all other Liens other than Liens
created by the Bridge Purchase Documents, and (ii) (x) deliver to the
Collateral Agent all such Stock with the relevant annotation of the existence
and perfection of the Liens created by such SA Pledge Agreement, (y) give
notice to Supercanal Bolivia of the grant of such Liens, if required by
applicable Law, and (z) cause Supercanal Bolivia to duly register such Liens
in the names of the Collateral Agent and the Bridge Collateral Agent in
Supercanal Bolivia's share registry.
7.14 Pledge of Stock of Offeror. If the Offeror is organized as the
holding company of Supercanal Holding, contemporaneously with the
organization of the Offeror and the transfer to the Offeror of the Stock of
Supercanal Holding, the Issuers will cause the Offeror to (i) execute and
deliver an SA Pledge Agreement pursuant to which the Offeror shall grant to
the Collateral Agent for the benefit of the Purchasers a fully perfected Lien
of first priority on all Stock of Supercanal Holding, free and clear of all
Liens other than the Liens created by the Bridge Purchase Documents, and (ii)
(x) deliver to the Collateral Agent all such Stock with the relevant
annotation of the existence and perfection of the Liens created by such SA
Pledge Agreement, (y) give notice to Supercanal Holding of the grant of such
Liens, if required by applicable Law, and (z) cause Supercanal Holding to
duly register such Liens in the names of the Collateral Agent and the Bridge
Collateral Agent in Supercanal Holding's share registry.
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7.15 Amendments to Bylaws. (a) On or before June 30, 1998,
Supercanal Holding will cause the bylaws (estatutos sociales) or other
organizational documents of each of the Issuers (including all Acquisition
Subsidiaries) to be amended, pursuant to an amendment in form and substance
satisfactory to the Administrative Agent, to prohibit the transfer of the
License of each such Issuer prior to December 31, 2007.
(b) On or before June 30, 1998, Supercanal Holding will cause the
bylaws (estatutos sociales) or other organizational documents of SRL Holding
to be amended, pursuant to an amendment in form and substance satisfactory to
the Administrative Agent, to prohibit or restrict, during any period in which
any of the Advances is outstanding, (x) the transfer of any of its assets or
properties, and (y) the incurrence of any Indebtedness in excess of
U.S.$100,000.
(c) Promptly, but in no event later than 30 days after the adoption
of any amendments of the bylaws of any Issuer as contemplated in this Section
7.15, the Issuers will prepare, execute and file, or cause to be prepared,
executed and filed, all required documents and instruments and take such
other action as is necessary to obtain the required COMFER approval for such
amendment. Following such filing, the Issuers will take all such additional
actions and do such other things as are necessary to obtain such approval as
soon as is practicable.
(d) Promptly, but in no event later than 30 days after the adoption
of any amendments to the bylaws of any Issuer, the Issuers will prepare,
execute and file, or cause to be prepared, executed and filed, all required
documents and instruments and take such other action as is necessary to cause
all such amendments to be effective. Following such filings, the Issuers
will take all such additional actions and do such other things as are
necessary to cause such amendments to be effective as soon as is practicable.
7.16 Registration of Ownership. (a) Promptly, but in no event
later than 30 days after the Effective Date, the Issuers will cause the
ownership of the Stock of each Acquired Issuer which is organized as a
limited liability company to be properly registered with all appropriate
Governmental Authorities, including, without limitation, the applicable
registros publicos; provided, however, that the 30-day period described above
shall be extended with respect to any Issuer for one or more additional
15-day periods if (i) no Issuer shall have received notice, or the
Administrative Agent shall not have any reason to believe, that such
registration with respect to such Issuer will not be granted in the ordinary
course, and (ii) the Administrative Agent shall not have determined that the
Issuers are not diligently prosecuting the application for such registration.
(b) Promptly, but in no event later than 30 days after the
consummation of any Acquisition of an Acquisition Subsidiary organized as a
limited liability company, the Issuers will prepare, execute and file all
documents and instruments necessary to cause the ownership of the Stock of
such Acquisition Subsidiary to be properly registered with all appropriate
Governmental Authorities, including, without limitation, the applicable
registros publicos. Following such filing, the Issuers will take all such
additional actions and do such other things as are necessary to cause such
registrations to be made as soon after the Effective Date as is practicable.
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7.17 Transfer of Domicile of Limited Liability Companies. (a)
Within 30 days after the registration of ownership of any Issuer organized as
a limited liability company pursuant to Section 7.16(a) above (or, if such
ownership is registered as of the Effective Date, within 30 days after the
Effective Date), the Issuers will prepare, execute and file all documents and
instruments necessary to cause the registered domicile of each such Issuer
organized as a limited liability company to be transferred to and registered
in the City of Buenos Aires. Following such filing, the Issuers will take
all such additional actions and do such other things as are necessary to
cause such registration to be made as soon after the Effective Date as is
practicable.
(b) Promptly, but in no event later than 30 days after the
consummation of any Acquisition of any Acquisition Subsidiary organized as a
limited liability company, the Issuers will prepare, execute and file all
documents and instruments necessary to cause the registered domicile of such
Acquisition Subsidiary to be transferred to and registered in the City of
Buenos Aires; provided, that if the selling shareholders in any such
acquisition shall not have previously adopted appropriate resolutions
authorizing such change in registered domicile, the Issuers shall prepare,
execute and file all such documents and instruments no later than 30 days
after the registration of the ownership of the Stock of such Acquisition
Subsidiary, as contemplated in Section 7.16(b). Following such filings, the
Issuers will take all such additional actions and do such other things as are
necessary to cause such registration to be made as soon after the Effective
Date as is practicable.
7.18 Registration of SRL Pledge Agreements. Promptly, but in no
event later than the earlier to occur of (i) 30 days after the registration
of the change in registered domicile of any Issuer or any Acquisition
Subsidiary pursuant to Section 7.17 above (or, if such domicile is registered
in the City of Buenos Aires as of the Effective Date, within 30 days after
the Effective Date), or (ii) if possible, contemporaneously with the filing
with the registro publico in the City of Buenos Aires of the application for
such change in registered domicile of any such Person, the Issuers will file
each SRL Pledge Agreement with respect to such Issuer or Acquisition
Subsidiary for registration with all appropriate Governmental Authorities,
including, without limitation, the applicable registros publicos. Following
such filing, the Issuers will take all additional actions and do such other
things and execute and deliver such other documents and instruments relating
thereto as shall be necessary or as the Collateral Agent shall reasonably
request in order to cause such registration to be made and to cause the
security interests granted pursuant to each such SRL Pledge Agreement to
constitute fully perfected Liens of first and second priority, as the case
may be, subject to no other Liens other than Liens created by the Bridge
Purchase Documents, in each such case as soon after the Effective Date as is
practicable.
7.19 Transfer and Acquisition of Limited Liability Companies. (a)
Promptly, but in no event later than the earlier to occur of (i) 15 days
after the registration of any pledge agreement as contemplated in Section
7.18 with respect to any Issuer or Acquisition Subsidiary, or (ii) if
possible, contemporaneously with the filing with the registro publico in the
City of Buenos Aires of the application for the registration of any such
pledge agreement (provided, no delay in the registration of such pledge
agreement will result from such filing), the Issuers will, and will cause all
Purchasing Agents to, (i) transfer to SRL Holding all of the Stock owned by
any of them in such Issuer or Acquisition Subsidiary, and (ii) prepare,
execute and file all
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documents and instruments necessary to cause the ownership of such Stock to
be properly registered with all appropriate Governmental Authorities,
including, without limitation, the applicable registros publicos. Following
such filings, the Issuers will take all such additional actions and do such
other things as are necessary to cause such registrations to be made as soon
after the Effective Date as is practicable.
(b) From and after the Effective Date, the Issuers will cause SRL
Holding to directly acquire the Stock of any Acquisition Subsidiary or other
Person organized as a limited liability company, without the use of
Purchasing Agents.
7.20 Interest Rate Protection. No later than the date 60 days after
the Effective Date, the Issuers will enter into, and for a minimum of two
years thereafter maintain, interest rate cap agreements in form and substance
reasonably satisfactory to the Administrative Agent with international
financial institutions or other counterparties reasonably acceptable to the
Administrative Agent, which establish a fixed or maximum interest rate
acceptable to the Administrative Agent in respect of at least 50% of the
aggregate principal amount of the Notes and the Bridge Notes which may be
issued hereunder and under the Bridge Purchase Documents.
7.21 Payment Instructions. Prior to the consummation of the
Proposed IPO or the Proposed High Yield Debt Offering or any other public or
private sale by any Issuer or Offeror of any Stock or debt securities which
will require the Issuers to make a prepayment of the Advances pursuant to
Section 4.3(a), the Issuers will cause the Issuers, Purchasing Agents or
Offeror entitled to receive the Net Proceeds to provide the global
coordinators or lead underwriters with irrevocable payment instructions to
pay to the Administrative Agent an amount of the Net Proceeds of such sale
sufficient to make the required prepayment.
7.22 Financial Statements. On or before December 15, 1997, the
Issuers will deliver to the Administrative Agent (i) the consolidated balance
sheet of Supercanal Holding and its Subsidiaries as at September 30, 1997,
together with the related statement of income and retained earnings and
changes in financial position of Supercanal Holding and its Subsidiaries for
the nine-month period then ended, prepared in accordance with Argentine GAAP
and accompanied by a reconciliation to U.S. GAAP and an unqualified opinion
of Coopers & Lybrand based on a limited review, and (ii) a copy of a
"management letter" from the auditors of Supercanal Holding, dated the date
of the opinion provided by such auditors in connection with the financial
statements described in clause (i) above, to the effect that the financial
systems and controls utilized by Supercanal Holding are, in the opinion of
such auditors, adequate.
7.23 Clearance Through DTC. The Issuers will cooperate with the
Purchasers and take all actions necessary to (i) cause the Notes to be
designated as eligible for trading on the PORTAL System of the National
Association of Securities Dealers Inc. and maintain such designation, (ii)
make all necessary arrangements for the clearance of the Notes for book entry
settlement by The Depository Trust Company, including all arrangements
regarding the assignment by Standard & Poor's CUSIP Service Bureau of a CUSIP
Number to the Notes, (iii) make such modifications to this Agreement and the
other Purchase Documents as any Purchaser shall reasonably request in order
to effect the foregoing (it being understood and agreed that any such
modifications shall be binding on all parties hereto; provided, that such
modifications shall
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(x) not adversely affect any right or remedy of any party hereto, and (y)
shall be in form and substance satisfactory to the Administrative Agent),
(iv) cause to be provided to the Administrative Agent and the Purchasers such
opinion or opinions of counsel reasonably acceptable to the Administrative
Agent as the Administrative Agent shall require, and (v) pay all costs,
expenses and fees incident to each of the foregoing. The Issuers agree to
take the actions set forth in the immediately preceding sentence as soon
after the Effective Date as is practicable, but in any event within the time
required in order for all necessary arrangements for the clearance of the
Notes through The Depository Trust Company to be accomplished on the
Availability Expiry Date. For purposes hereof, the fact that Purchasers who
are accredited investors may not hold Notes through such book-entry system
shall not constitute an adverse effect on any right or remedy of such
Purchaser; provided, that each such Purchaser can continue to transfer its
Notes as provided herein.
7.24 Interest Reserve Account. On or before November 28, 1997, the
Issuers will establish an interest reserve account (the "Interest Reserve
Account") with the Collateral Agent pursuant to standard documentation and
policies of the Collateral Agent with respect to such accounts, for deposits
of amounts as contemplated in Section 14.22 and all other revenues, receipts,
moneys, proceeds and other sums derived in any manner from such amounts.
Section 8. Negative Covenants.
Each of the Issuers covenants and agrees that on and after the
Effective Date and until the Notes, together with all accrued interest, Fees
and all other Obligations incurred hereunder and thereunder, are paid in full:
8.1 Liens. None of the Issuers will, or will permit any other
Credit Party to, create, agree to create, incur, assume or suffer to exist
any Lien upon or with respect to any of its property or assets (real,
personal or mixed, tangible or intangible), whether now owned or hereafter
acquired, provided that the provisions of this Section 8.1 shall not prevent
the creation, incurrence, assumption or existence of (all Liens described
below are hereinafter referred to as "Permitted Liens"):
(i) Liens for taxes, assessments or governmental charges or
levies not yet due, or Liens for taxes, assessments or governmental charges
or levies being contested in good faith and by appropriate proceedings for
which adequate reserves have been established in accordance with generally
accepted accounting principles;
(ii) Liens created pursuant to the Security Documents and the
Bridge Purchase Documents;
(iii) Liens in respect of property or assets of the any of
the Issuers imposed by Law, which were incurred in the ordinary course of
business and do not secure Indebtedness for borrowed money, such as
carriers', warehousemen's, materialmen's and mechanics' liens and other
similar Liens arising in the ordinary course of business, and which do not
in the aggregate materially detract from the value of the
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Issuers' respective property or assets or materially impair the use
thereof in the operation of the business of the Issuers;
(iv) Liens in existence on the Effective Date which are listed,
and the property subject thereto described, in Schedule VIII hereto and any
other Liens in existence at the time of the consummation of the acquisition
of the Stock or assets of any Person, to the extent such acquisition is
permitted hereby or by the Bridge Purchase Documents;
(v) Liens placed upon equipment or machinery used in the
ordinary course of business of any of the Issuers at the time of
acquisition thereof to secure Indebtedness incurred to pay all or a portion
of the purchase price thereof, provided that (x) the aggregate principal
amount of all Indebtedness of the Issuers secured by Liens permitted by
this clause (v) does not exceed U.S.$10,000,000 in the aggregate, and (y)
in all events, the Lien encumbering the equipment or machinery so acquired
does not encumber any other asset of the Issuers;
(vi) pledges or deposits for the purpose of securing a stay or
discharge in the course of any legal proceedings, provided that the
aggregate amount of such pledges or deposits does not exceed U.S.$2,000,000
in the aggregate; and
(vii) other Liens which, in the aggregate, do not encumber
more than the lesser of (x) two percent of the combined Total Assets of the
Issuers, and (y) U.S.$8,000,000.
Notwithstanding anything contained in this Agreement to the
contrary, none of the Issuers will create, incur, assume or suffer to exist
any Lien (other than pursuant to the Security Documents and the Bridge
Purchase Documents) upon any of the Stock of the Issuers (other than
Supercanal Holding) (including any Stock of any Issuer owned by a Purchasing
Agent), to the extent such Stock constitutes Collateral, or any other
Collateral.
8.2 Dividends.
(a) Supercanal Holding will not declare or pay any dividends, or
return any capital, to its stockholders or authorize or make any other
distribution, payment or delivery of property or cash to its stockholders as
such, or redeem, retire, purchase or otherwise acquire, directly or
indirectly, for any consideration, any shares of any class of its capital
stock now or hereafter outstanding (or any options or warrants issued by
Supercanal Holding with respect to its capital stock) or set aside any funds
for any of the foregoing purposes, or permit any of its respective
Subsidiaries to purchase or otherwise acquire for a consideration any shares
of any class of the capital stock of Supercanal Holding now or hereafter
outstanding (or any options or warrants issued by Supercanal Holding with
respect to its capital stock), except as permitted or required by the
Purchase Documents.
(b) Supercanal Holding will not permit any of its respective
Subsidiaries to declare or pay any dividends, or return any capital, to its
stockholders or authorize or make any
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other distribution, payment or delivery of property or cash to its
stockholders as such, or redeem, retire, purchase or otherwise acquire,
directly or indirectly, for a consideration, any shares of any class of its
capital stock now or hereafter outstanding (or any options or warrants issued
by such Subsidiary with respect to its capital stock), or set aside any funds
for any of the foregoing purposes, or permit any of its respective
Subsidiaries to purchase or otherwise acquire for a consideration any shares
of any class of the capital stock of any other Subsidiary of Supercanal
Holding now or hereafter outstanding (or any options or warrants issued by
such Subsidiary with respect to its capital stock), except that any such
Subsidiary may pay dividends to Supercanal Holding or any Subsidiary of
Supercanal Holding for distribution to Supercanal Holding. Nothing contained
in this Section 8.2(b) shall be deemed to prohibit the acquisition of Stock
of any Issuer in an Approved Acquisition.
8.3 Indebtedness. None of the Issuers will, or will permit any
other Credit Party to, contract, create, incur, assume or suffer to exist any
Indebtedness (including the Indebtedness to be incurred under this
Agreement), such that the aggregate amount of the Indebtedness of the Credit
Parties outstanding at any time (less the aggregate amount of (x) any cash or
Cash Equivalents of Supercanal Holding and/or its Subsidiaries as at such
time in excess of U.S.$500,000, and (y) any cash or Cash Equivalents held for
the benefit of Supercanal Holding and/or its Subsidiaries as at such time
(other than amounts held in the Interest Reserve Account) and pledged to the
Collateral Agent for the benefit of the Purchasers pursuant to documentation
satisfactory in all respects to the Collateral Agent) exceeds the lesser of:
(i) the Applicable Indebtedness Amount, or
(ii) the difference between:
(x) the sum of: (1) the outstanding principal amount of the
Advances and the principal amount of Indebtedness outstanding
under the Bridge Purchase Documents (which Indebtedness may be
refinanced with the Indebtedness of the Proposed High Yield Debt
Offering), (2) U.S.$10,000,000 (or its equivalent), and (3) until
the Initial Funding Date (at which time the Indebtedness
described in this subclause (3) shall be repaid in full), the
aggregate amount of the Purchase Money Financing and the
Subsidiary Indebtedness; and
(y) an amount equal to the amount of any mandatory prepayment
pursuant to Sections 4.3(a) through (d) hereof;
provided, however, that no Issuer shall guaranty or otherwise become liable
for any Indebtedness of TDH or any International Acquisition Subsidiary
(other than any Person acquired in the Tescorp Acquisition); provided,
further that none of Tescorp Delaware, Inversora Atelco Comodoro S.A. or
Inversora Antena Comunitaria Trelew S.A. shall incur any Indebtedness, other
than in each such case Indebtedness under this Agreement and the Notes and
the Bridge Note Purchase Agreement and the Bridge Notes.
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8.4 Capital Expenditures.
(a) None of the Issuers will, or will permit any other Credit Party
to, make any expenditure for fixed or capital assets (including, without
limitation, expenditures for maintenance and repairs which should be
capitalized in accordance with applicable generally acceptable accounting
principles and including capitalized lease obligations) (each a "Capital
Expenditure"), except that the Credit Parties may make Capital Expenditures
so long as the aggregate amount of such Capital Expenditures made by all such
Credit Parties does not exceed in any calendar year the amount set forth
opposite such calendar year below:
Year Amount
1997 U.S.$8,000,000
1998 1998 CapEx Amount
1999 1999 CapEx Amount
2000 U.S.$25,000,000
2001 U.S.$15,000,000
2002 U.S.$15,000,000
(b) For purposes hereof, (i) the term "1998 CapEx Amount" shall
mean the sum of (x) U.S.$27,000,000, and (y) the lesser of (A)
U.S.$26,000,000, (B) product of (1) U.S.$175, multiplied by (2) an amount
equal to the net increase in the number of Subscribers which buy or lease
addressable converter boxes from the Issuers during 1998, and (C) the amount
of Capital Expenditures made by the Issuers for addressable converter boxes
during 1998, and (ii) the term "1999 CapEx Amount" shall mean the sum of (x)
U.S.$25,000,000, and (y) the lesser of (A) U.S.$13,000,000, (B) the product
of (1) U.S.$175, multiplied by (2) an amount equal to the net increase in the
number of Subscribers which buy or lease addressable converter boxes from the
Issuers during 1999, and (C) the amount of Capital Expenditures made by the
Issuers for addressable converter boxes during 1999.
(c) Notwithstanding anything contained to the contrary in Section
8.4(a) or (b) above, to the extent that the aggregate amount of Capital
Expenditures made the Issuers in any calendar year above is less than the
amount set forth opposite such year, 50% of the amount of such difference may
be carried forward and used to make Capital Expenditures in the immediately
succeeding calendar year (after the full amount of Capital Expenditures
otherwise permitted to be made in such year, with regard to the provision of
this Section 8.4(c) have been made); provided, that amounts once carried
forward to such succeeding calendar year shall lapse and terminate at the end
of such calendar year.
(d) Nothing contained in this Section 8.4 shall prohibit or
restrict Capital Expenditures made by TDH or, if acquired by the Issuers,
Procono S.A.
8.5 Advances, Investments and Loans. None of the Issuers will, or
will permit any other Credit Party to, directly or indirectly, lend money or
credit or make advances to any Person, or purchase or acquire any stock,
obligations or securities of, or any other interest in, or make any capital
contribution to, any other Person, or purchase or own a futures contract or
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otherwise become liable for the purchase or sale of currency or other
commodities at a future date in the nature of a futures contract, except that
the following shall be permitted:
(i) the Issuers may acquire the Acquisition Subsidiaries in
the Acquisitions, and the Credit Parties may acquire capital stock or
other proprietary interests in, or assets of, entities directly and
primarily engaged in the multi-channel television business in Argentina
or the telecommunications business in Argentina or other businesses
directly related to the telecommunications business in Argentina;
provided, however, that (x) prior to making any investment permitted by
this clause (i) in excess of U.S.$1,000,000, the Issuers shall notify the
Administrative Agent of such investment and provide the Administrative
Agent with such information relating thereto as it may reasonably
request, and (y) prior to making any investment permitted by this clause
(i) in excess of U.S.$5,000,000 in any single or related series of
transactions (other than in any Approved Acquisition), the Issuers shall
obtain the consent of the Administrative Agent, which consent shall not
be unreasonably withheld, conditioned or delayed;
(ii) the Issuers may consummate the Approved Acquisitions
and any Bridge Acquisitions permitted under the Bridge Purchase Documents;
(iii) the Issuers may consummate the Tescorp Acquisition,
subject to the requirements of Section 12.1 hereof;
(iv) the Issuers may purchase capital stock or other
proprietary interests in, or assets of, entities which are organized or
doing business outside of Argentina and which are directly and primarily
engaged in the multi-channel television business or the telecommunications
business or other businesses directly related to the telecommunications
business; provided, however, that (x) prior to making any investment in any
entity organized or doing business outside of Argentina, the Issuers shall
obtain the prior written consent of the Administrative Agent and the
Required Purchasers (it being understood that the Administrative Agent will
promptly request such consent of the Required Purchasers if requested to do
so by the Issuers), (y) the aggregate of all such investments hereafter made
by any Issuer or any Purchasing Agent shall not exceed (A) at all times
prior to the consummation of the Proposed IPO, U.S.$20,000,000 (or the
equivalent thereof), and (B) at all times from and after the consummation of
the Proposed IPO, U.S.$35,000,000 (or the equivalent thereof), and (z) any
such investment, to the extent permitted, shall be subject to the provisions
of Section 12 hereof;
(v) the Credit Parties may acquire and hold accounts
receivables owing to it, if created or acquired in the ordinary course of
business and payable or dischargeable in accordance with customary terms;
(vi) the Credit Parties may acquire and hold cash and Cash
Equivalents;
(vii) the Issuers may make intercompany loans, advances and
capital contributions to other Issuers in the ordinary course of
business; provided, however, that
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none of the Issuers will, or will permit any other Credit Party to, make
any loans, advances or capital contributions to (x) any Excluded
Subsidiary (except that such investments shall be permitted to be made to
TDH in an aggregate amount not to exceed U.S.$2,500,000, to be used by
TDH to make Capital Expenditures), or (y) any International Acquisition
Subsidiary (other than any Person acquired in the Tescorp Acquisition).
Notwithstanding anything contained in this Agreement to the contrary, the
Issuers shall not make any of the investments otherwise permitted by this
Section 8.5 in excess of the Permitted Investment Amount (as defined below) in
any entity primarily engaged in any business other than the multi-channel
television business without the prior written consent of the Required
Purchasers. For purposes hereof, the term "Permitted Investment Amount" shall
mean (i) at all times prior to the consummation of the Proposed IPO,
U.S.$5,000,000, and (ii) from and after the consummation of the Proposed IPO,
the sum of (x) U.S.$5,000,000, and (y) the net proceeds to the Issuers from the
Proposed IPO in excess of all mandatory prepayments required to be made as a
result of the Proposed IPO pursuant to Section 4.3 of this Agreement and 4.3 of
the Bridge Note Purchase Agreement.
8.6 Consolidations, Mergers, Sales of Assets. None of the Issuers
will, or will permit any other Credit Party to, wind up, liquidate or dissolve
its affairs or enter into any transaction of consolidation or merger with or
into any other Person; sell, lease, assign, transfer or otherwise dispose of,
directly or indirectly (or agree to do any of the foregoing at any future time),
all or any part of its property or assets or any of the Collateral; or enter
into any partnership, joint venture or sale-leaseback transaction, or purchase
or otherwise acquire (in one or a series of related transactions) any part of
the property or assets (other than purchases or other acquisitions of inventory,
materials and equipment in the ordinary course of business) of any Person,
except that, subject to Section 4.3 hereof:
(i) The Credit Parties shall be entitled to sell, transfer,
lease or otherwise dispose of not more than 5% of the combined Total
Assets of the Credit Parties in any 12-month period; provided, however,
that if the proceeds of any such sale, transfer, lease or disposal are
retained by the Credit Parties in investments approved by the
Administrative Agent (such approval not to be unreasonably withheld,
conditioned or delayed), the Credit Parties shall be entitled to sell,
transfer, lease or otherwise dispose of not more than 15% of the combined
Total Assets of the Credit Parties in any 12-month period;
(ii) Capital Expenditures by each of the Credit Parties
shall be permitted to the extent not in violation of Section 8.4;
(iii) Each of the Credit Parties may, in the ordinary course
of business, sell, lease or otherwise dispose of any assets which, in its
reasonable judgment, are no longer useful in the conduct of its business,
provided that the aggregate sale proceeds of all assets subject to such
sales or other dispositions shall not exceed the equivalent of
U.S.$250,000 in any fiscal year;
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(iv) Investments may be made to the extent permitted by
Section 8.5;
(v) Each of the Credit Parties may lease (as lessee) real
or personal property; and
(vi) Each of the Credit Parties may make sales of inventory
in the ordinary course of business;
(vii) The Credit Parties may enter into the transactions
contemplated by Section 7.19; and
(viii) The Credit Parties may enter into Restructuring
Transactions, to the extent permitted pursuant to Section 11 hereof.
Notwithstanding anything contained in this Agreement to the contrary, (i) none
of the Credit Parties will transfer, convey, assign, lien or otherwise encumber
any of its right, title or interest in or to any License held by it, and
(ii) SRL Holding will not transfer, convey, assign, lien or otherwise encumber
any of its right, title or interest in or to any of its properties or assets
(except pursuant to the Security Documents and the Bridge Purchase Documents).
8.7 Indebtedness-Subscriber Ratio. Supercanal Holding will not
permit its Indebtedness-Subscriber Ratio as at the end of any calendar quarter
ended on the dates set forth below to exceed the ratio set forth opposite such
date:
Calendar Quarter Ended Ratio
---------------------- -----
December 31, 1997 975
March 31, 1998 975
June 30, 1998 750
September 30, 1998 750
December 31, 1998 700
March 31, 1999 650
June 30, 1999 650
September 30, 1999 650
Thereafter 600
8.8 Senior Indebtedness-Subscriber Ratio. Supercanal Holding will not
permit its Senior Indebtedness-Subscriber Ratio as at the end of any calendar
quarter ended on the dates set forth below to exceed the ratio set forth
opposite such date:
Calendar Quarter Ended Ratio
---------------------- -----
December 31, 1997 525
March 31, 1998 525
June 30, 1998 350
September 30, 1998 350
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December 31, 1998 350
March 31, 1999 350
June 30, 1999 350
September 30, 1999 350
Thereafter 300
8.9 Indebtedness-Annualized EBITDA Ratio. Supercanal Holding will not
permit its Indebtedness-Annualized EBITDA Ratio as at the end of any calendar
quarter ended on the dates set forth below to exceed the ratio set forth
opposite such date:
Calendar Quarter Ended Ratio
---------------------- -----
December 31, 1997 7.50
March 31, 1998 7.50
June 30, 1998 5.50
September 30, 1998 5.50
December 31, 1998 5.00
March 31, 1999 5.00
June 30, 1999 5.00
September 30, 1999 4.75
December 31, 1999 4.50
March 31, 2000 4.25
June 30, 2000 4.00
September 30, 2000 3.75
Thereafter 3.50
8.10 Senior Indebtedness-Annualized EBITDA Ratio. Supercanal Holding
will not permit its Senior Indebtedness-Annualized EBITDA Ratio as at the end of
any calendar quarter ended on the dates set forth below to exceed the ratio set
forth opposite such date:
Calendar Quarter Ended Ratio
---------------------- -----
December 31, 1997 5.25
March 31, 1998 5.25
June 30, 1998 3.25
September 30, 1998 3.25
December 31, 1998 3.25
March 31, 1999 3.00
June 30, 1999 2.75
September 30, 1999 2.50
December 31, 1999 2.50
Thereafter 2.00
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8.11 Fixed Charge Coverage Ratio. Supercanal Holding will not permit
its Fixed Charge Coverage Ratio as at the end of any calendar quarter ended on
and after December 31, 1999 to be less than 1.25
8.12 Interest Coverage Ratio. Supercanal Holding will not permit its
Interest Coverage Ratio as at the end of any calendar quarter ended on the dates
set forth below to be less than the ratio set forth opposite such date:
Calendar Quarter Ended Ratio
---------------------- -----
December 31, 1997 1.00
March 31, 1998 1.25
June 30, 1998 1.50
September 30, 1998 2.00
December 31, 1998 2.00
March 31, 1999 2.25
June 30, 1999 2.25
September 30, 1999 2.50
December 31, 1999 2.50
March 31, 2000 2.75
June 30, 2000 2.75
September 30, 2000 3.00
December 31, 2000 3.00
March 31, 2001 3.25
June 30, 2001 3.25
Thereafter 3.50
8.13 Pro Forma Debt Service Coverage Ratio. Supercanal Holding will
not permit its Pro Forma Debt Service Coverage Ratio as at the end of any
calendar quarter ended on or after June 30, 1998 to be less than 1.50.
8.14 Issuance of Stock. None of the Issuers will, or will permit any
other Credit Party to, issue any Stock or any options or warrants to purchase,
or securities convertible into, Stock except as contemplated herein and/or in
the Bridge Purchase Documents; provided, however, that (i) Supercanal Holding
shall be permitted to issue Stock to Multicanal pursuant to the Shareholders'
Agreement as in effect on the date of the execution and delivery thereof, and
(ii) Supercanal Holding shall be permitted to issue Stock as described on
Schedule IX hereto.
8.15 Limitations on Voluntary Payments and Bonuses and Modifications
of Indebtedness; Modifications and Certain Agreements; etc. None of the Issuers
will, or will permit any other Credit Party to, (i) make (or give any notice in
respect of) any voluntary or optional payment or prepayment on or redemption or
acquisition for value of (including, without limitation, by way of depositing
with the trustee with respect thereto money or securities before due for the
purpose of paying when due) any unsecured Indebtedness which is subordinated in
right of payment to the Notes and/or the other Obligations, (ii) pay any bonuses
or other amounts
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to any management level personnel for the purpose of covering their personal
tax liability or interest expense, (iii) amend or modify, or permit the
amendment or modification of, (v) any provision of any Indebtedness, (w) the
agreements referred to in Section 6.16(c), (x) any agreement (including,
without limitation, any purchase agreement, indenture, loan agreement or
security agreement) relating to any of the foregoing if, in the case of the
preceding clauses (v), (w) or (x), such amendment or modification could
reasonably result in a Material Adverse Effect on any of the Credit Parties,
or (y) the Shareholders' Agreement if such amendment or modification could
reasonably result in a Material Adverse Effect on any of the Credit Parties
(it being understood that the substitution of Multicanal with any strategic
investor of comparable reputation and ability in the cable television
business, as reasonably determined by the Required Purchasers, will not
constitute a Material Adverse Effect), or (iv) amend, modify or change its
estatutos sociales or other organizational documents, except as contemplated
in Section 7.15 hereof or as contemplated under the Bridge Purchase Documents.
8.16 No Other Business. None of the Issuers will, or will permit any
other Credit Party to, carry on any business other than the business conducted
by it as of the Effective Date, or with respect to any Acquisition Subsidiary or
any other Person acquired after the date hereof, as of the date of the
consummation of the relevant Acquisition or other acquisition, and will not take
any action whether by acquisition or otherwise which would constitute or result
in any material alteration to the nature of that business; provided, however,
that (i) TDH will be permitted to engage in the business conducted by it as of
the Effective Date, and (ii) the Credit Parties will be permitted to engage in
the telecommunications business and other businesses directly related to the
telecommunications business to the extent already conducted by such Credit
Parties as of the Effective Date and to the extent the Credit Parities conduct
such business as a result of any permitted investments in such businesses
pursuant to Section 8.5.
8.17 Transactions with Affiliates. None of the Issuers will, or will
permit any other Credit Party to, enter into any transaction or series of
related transactions with any of its shareholders or Affiliates other than in
the ordinary course of business and on terms and conditions substantially as
favorable to the Credit Party as would reasonably be obtained by the Credit
Party at that time in a comparable arm's-length transaction with a Person other
than a shareholder or Affiliate.
8.18 Limitation on Restrictions on Subsidiary Dividends and Other
Distributions. Supercanal Holding will not, directly or indirectly, create or
otherwise cause or suffer to exist or become effective any encumbrance or
restriction on the ability of any of its Subsidiaries to (i) pay dividends or
make any other distributions on its capital stock or any other interest or
participation in its profits owned by Supercanal Holding or any of its
Subsidiaries, or pay any Indebtedness owed to Supercanal Holding or any of its
Subsidiaries, (ii) make loans or advances to Supercanal Holding or
(iii) transfer any of its properties or assets to Supercanal Holding, except
for such encumbrances or restrictions existing under or by reasons of
(x) applicable Law, (y) this Agreement and (z) customary provisions
restricting subletting or assignment of any lease governing a leasehold
interest of Supercanal Holding or any of its Subsidiaries.
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Notwithstanding anything contained in this Agreement or the other
Purchase Documents to the contrary, if at any time after the Initial Funding
Date any of the Issuers, any Purchasing Agents or the Offeror receives or is
entitled to receive any Net Proceeds from the Proposed IPO, and the Issuers have
made the mandatory prepayment required to made pursuant to Section 4.3(b), the
Issuers shall be entitled to use the Net Proceeds remaining after such payment
without regard to any limitation or restriction contained in this Section 8.
Section 9. Events of Default.
Upon the occurrence of any of the following specified events (each an
"Event of Default"):
9.1 Payments. Any Issuer shall (i) default in the payment when due
of any principal of any Note or any Advance thereunder or (ii) default, and such
default shall continue unremedied for five or more Business Days, in the payment
when due of any interest on any Note or any Advance thereunder or any Fees or
any other amounts owing hereunder or under any other Purchase Document; or
9.2 Representations, etc. Any representation, warranty or statement
made by or on behalf of any Issuer herein or in any other Purchase Document or
in any certificate delivered pursuant hereto or thereto shall prove to be untrue
in any material respect on the date as of which made or deemed made; or
9.3 Covenants. Any of the Issuers shall (i) default in the due
performance or observance by it of any term, covenant or agreement contained in
Sections 7.1(vii), 7.11 or 8 or (ii) default in the due performance or
observance by it of any term, covenant or agreement (other than those referred
to in Sections 9.1 and 9.2 and clause (i) of this Section 9.3) contained in this
Agreement or any other Purchase Document and any such default shall have
continued unremedied for a period of 30 days; or
9.4 Default Under Other Agreements. Any of the Credit Parties shall
(i) default in any payment of any Indebtedness other than the Obligations
(including, without limitation Indebtedness under the Bridge Purchase Documents)
in a principal amount in excess of U.S.$2,000,000 (or its equivalent in any
other currency), either individually or in the aggregate, when as the same shall
become due and payable beyond the period of grace, if any, provided in the
instrument or agreement under which such Indebtedness was created, or
(ii) default in the observance or performance of any agreement, covenant or
condition relating to any Indebtedness other than the Obligations (including,
without limitation Indebtedness under the Bridge Purchase Documents) in a
principal amount in excess of U.S.$2,000,000 (or its equivalent in any other
currency), either individually or in the aggregate, or contained in any
instrument or agreement evidencing, securing or relating thereto, or any
other event shall occur or condition exist, the effect of which default or
other event or condition, in each case, is to cause, or to permit the holder
or holders of such Indebtedness (or a trustee or agent on behalf of such
holder or holders) to cause (determined without regard to whether any notice
is required), any such Indebtedness to become due prior to its stated
maturity; or any such Indebtedness of any of the
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Credit Parties shall be declared to be due and payable, or required to be
prepaid other than by a regularly scheduled required prepayment, prior to the
stated maturity thereof; or
9.5 Bankruptcy, etc. Any of the Credit Parties shall commence a
voluntary case concerning itself under Title 11 of the United States Code, as
now or hereafter in effect, or any successor thereto (the "Bankruptcy Code") or
under any bankruptcy law of Argentina or any other jurisdiction; or an
involuntary case under any such statute is commenced against any of the Credit
Parties, and the petition is not controverted within 10 days, or is not
dismissed within 30 days, after commencement of the case; or a custodian or
trustee is appointed for, or takes charge of, any Collateral or all or
substantially all of the other property or assets of any of the Credit Parties
and such custodian or trustee is not discharged or removed within 30 days, or
any of the Credit Parties commences any other proceeding under any
reorganization, arrangement, adjustment of debt, relief of debtors, dissolution,
insolvency or liquidation or similar law of any jurisdiction whether now or
hereafter in effect relating to any of the Credit Parties, or there is commenced
against any of the Credit Parties any such proceeding which remains undismissed
for a period of 30 days, or any of the Credit Parties is adjudicated insolvent
or bankrupt; or any order of relief or other order approving any such case or
proceeding is entered; or any of the Credit Parties suffers any appointment of
any custodian or the like for it or any substantial part of its property to
continue undischarged or unstayed for a period of 30 days; or any of the Credit
Parties makes a general assignment for the benefit of creditors; or any trust or
corporate action is taken by any of the Credit Parties for the purpose of
effecting any of the foregoing; or
9.6 Security Documents. At any time after the execution and delivery
thereof, any of the Security Documents shall cease to be in full force and
effect, or, except as otherwise permitted hereby, shall cease to give the
Collateral Agent or the Guaranty Trustee for the benefit of the Purchasers the
Liens, rights, powers and privileges purported to be created thereby (including,
from and after the perfection thereof, a perfected Lien of first priority on all
of the Collateral in favor of the Collateral Agent or the Guaranty Trustee for
the benefit of the Purchasers), subject to no other Liens (except as permitted
by Section 8.1 or as provided in the Bridge Purchase Documents), or any of the
Issuers or the Purchasing Agents shall default in the due performance or
observance of any term, covenant or agreement on its part to be performed or
observed pursuant to any of the Security Documents and any such default results
in, or could, in the reasonable judgment of the Administrative Agent, be
expected to result in, a Material Adverse Effect on any Credit Party; or
9.7 Judgments. One or more judgments or decrees shall be entered
against any of the Issuers involving, in the aggregate, a liability (not paid or
fully covered by insurance) of the equivalent of U.S.$2,000,000 or more, and all
such judgments or decrees shall not have been vacated, discharged or stayed or
bonded pending appeal within 30 days after the entry thereof; or
9.8 Cancellation of Payment Obligation. Any Governmental Authority
or any other dominant authority asserting or exercising de jure or de facto
governmental or police powers in Argentina shall, by moratorium laws or
otherwise, cancel, suspend or defer the obligation of the Issuers to pay any
amount required to be paid hereunder or under the Notes, or
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the obligations of any of the Issuers or the Purchasing Agents under any
other Purchase Document; or
9.9 Abandonment of Business. Any of the Issuers shall abandon the
business in which it is engaged; or
9.10 Governmental Action. Any Governmental Authority or any other
dominant authority asserting or exercising de jure or de facto governmental or
police powers in any jurisdiction shall have condemned, nationalized, seized, or
otherwise expropriated all or any substantial part of the property or other
assets of any of the Issuers or the Stock of any of the Issuers; or shall have
assumed custody or control of such property or other assets of the business or
operations of any of the Issuers; or shall have taken any action for the
dissolution or disestablishment of any of the Issuers or any action that would
prevent any of the Issuers from carrying on its business or a substantial part
thereof; or
9.11 Licenses. COMFER or any other Governmental Authority in
Argentina shall assert that any License held by any of the Issuers will be
terminated and such assertion has been consented to or is not being contested in
good faith on grounds that the Administrative Agent reasonably believes has a
probability of success; or COMFER or any other Governmental Authority in
Argentina shall assert that any such License is terminated and such assertion
has been consented to or is not being contested in good faith on grounds that
the Administrative Agent reasonably believes has a probability of success; or
any such License shall terminate for any reason whatsoever; or any of the
Issuers shall cease to have the right to possess and use its respective License;
or COMFER or any other Governmental Authority in Argentina or any of the Issuers
shall assert that the exercise of any remedies under the Security Documents
would constitute a violation of any License or applicable Law and such assertion
has been consented to or is not being contested in good faith on grounds that
the Administrative Agent reasonably believes has a probability of success; and
any of the foregoing results in or could, in the reasonable judgment of the
Administrative Agent, be expected to result in a Material Adverse Effect on any
Credit Party; or
9.12 COMFER Approvals. All COMFER Approvals required by applicable
Law in connection with (i) the acquisition by any Issuer or any Purchasing Agent
of any other Issuer, or (ii) any Acquisition or Restructuring Transaction shall
not have been received within 120 days after the consummation of such
acquisition or Restructuring Transaction, as the case may be; provided, however,
that such 120-day period shall be extended for additional 90-day periods if
(x) no Issuer or Purchasing Agent, as the case may be, shall have received
notice, or the Administrative Agent shall not have any reason to believe,
that the applicable COMFER Approval will not be granted in the ordinary
course, and (y) the Administrative Agent shall not have determined that the
Issuers or the Purchasing Agents, as the case may be, are not diligently
prosecuting the application for such COMFER Approval; provided further, that
if such COMFER Approval is denied, no Event of Default shall occur if within
10 days after the date of such denial the Issuers prepay the Advances in an
amount equal to the sum of the Acquisition Price and related Permitted
Transaction Expenses in connection with the Acquisition of the Acquisition
Subsidiary for which the COMFER Approval was denied; or
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9.13 Adverse Change. Any event or condition shall occur which gives
reasonable grounds to conclude, in the judgment of the Required Purchasers, that
any of the Issuers will not, or will be unable to, perform or observe in the
normal course of business its obligations under the Purchase Documents; or
9.14 Change in Control. The Vilas (directly or indirectly through
Grupo Uno S.A. or otherwise) shall cease to own (unless otherwise consented
to by the Required Purchasers), in the aggregate, at least 51% of the voting
Stock of Supercanal Holding or, if the Offeror has been organized and all of
the Stock of Supercanal Holding transferred to the Offeror pursuant to
Section 11 hereof or otherwise, the Offeror;
then, and in any such event, and at any time thereafter, if any Event of
Default shall then be continuing, then the Administrative Agent may (with the
approval of the Required Purchasers) and, upon the written request of the
Required Purchasers, shall by written notice to the Issuers, take any and all
of the following actions, without prejudice to the rights of the
Administrative Agent, any Purchaser or the holder of any Note to enforce its
claims against any of the Issuers (provided, that, if an Event of Default
specified in Section 9.5 shall occur with respect to any of the Issuers the
result which would occur upon the giving of written notice by the
Administrative Agent as specified in clause (i) and (ii) below shall occur
automatically without the giving of any such notice): (i) to declare the
Total Commitment terminated whereupon the Commitment of each Purchaser shall
forthwith terminate immediately; (ii) to declare the principal of and any
accrued interest in respect of all the Notes and the Advances and all
obligations owing hereunder and thereunder to be, whereupon the same shall
become, forthwith due and payable without presentment, demand, protest or
other notice of any kind, all of which are hereby waived by the Issuers;
(iii) to instruct the Collateral Agent and the Guaranty Trustee to vote the
Stock of the Issuers or take any other action pursuant to any Security
Documents; and (iv) to exercise any other rights available under the Purchase
Documents or any other document or instrument entered into in connection
therewith.
Section 10. The Administrative Agent and the Collateral Agent.
10.1 Appointment of the Administrative Agent. (a) The Purchasers
hereby appoint and designate ING Baring (U.S.) Capital Corporation as
Administrative Agent to act as specified herein and in the other Purchase
Documents. Each Purchaser hereby irrevocably authorizes, and each holder of any
Note by the acceptance of such Note shall be deemed irrevocably to authorize,
the Administrative Agent to take such action on its behalf under the provisions
of this Agreement, the other Purchase Documents and any other instruments and
agreements referred to herein or therein and to exercise such powers and to
perform such duties hereunder and thereunder as are specifically delegated to or
required of the Administrative Agent by the terms hereof and thereof and such
other powers as are reasonably incidental hereto and thereto.
(b) The Administrative Agent may perform any of its duties
hereunder and under the other Purchase Documents by or through officers,
directors, employees, agents and attorneys in fact. The Administrative Agent
hereby appoints ING Bank N.V., Argentina Branch,
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as its agent in Argentina, for the benefit of the Purchasers, to take such
actions and do such things, on behalf of the Administrative Agent, as shall be
convenient or desirable to assist the Administrative Agent in the performance of
its duties hereunder in Argentina and in connection with the review and approval
of the Acquisitions and other matters in connection therewith and otherwise as
requested by the Administrative Agent from time to time, and by the taking of
such actions and the doing of such things, ING Bank N.V., Argentina Branch,
shall be deemed to accept such appointment. All references in the Purchase
Documents to the Administrative Agent shall be deemed to be references to the
Administrative Agent and/or ING Bank N.V., Argentina Branch, as agent for the
Administrative Agent, to the extent of the performance by ING Bank N.V.,
Argentina Branch, of duties of the Administrative Agent.
10.2 Appointment of the Collateral Agent. (a) The Purchasers hereby
appoint and designate ING Baring (U.S.) Capital Corporation as Collateral Agent
to act as specified herein and in the other Purchase Documents. Each Purchaser
hereby irrevocably authorizes, and each holder of any Note by the acceptance of
such Note shall be deemed irrevocably to authorize, the Collateral Agent to take
such action on its behalf under the provisions of this Agreement and the other
Purchase Documents and any other instruments and agreements referred to herein
or therein and to exercise such powers and to perform such duties hereunder and
thereunder as are specifically delegated to or required of the Collateral Agent
by the terms hereof and thereof and such other powers as are reasonably
incidental hereto and thereto.
(b) The Collateral Agent may perform any of its duties hereunder or
under any other Purchase Document by or through officers, directors, employees,
agents or attorneys in fact. The Collateral Agent hereby appoints ING Bank
N.V., Argentina Branch, as its agent in Argentina, for the benefit of the
Purchasers, to take such actions as shall be specified in the Security
Documents, and by its execution and delivery of each such Security Document, ING
Bank N.V., Argentina Branch, shall be deemed to accept such appointment. All
references in the Purchase Documents to the Collateral Agent shall be deemed to
be references to the Collateral Agent and/or ING Bank N.V., Argentina Branch, as
agent for the Collateral Agent, to the extent of the performance by ING Bank
N.V., Argentina Branch, of duties of the Administrative Agent.
10.3 Administration of the Collateral. The Collateral Agent shall
administer the Collateral and any Lien thereon for the benefit of the Purchasers
in the manner provided herein and in the other Purchase Documents. The
Collateral Agent shall exercise such rights and remedies with respect to the
Collateral as are granted to it hereunder and under the other Purchase Documents
and applicable Law and as shall be directed by the Required Purchasers.
10.4 Application of Proceeds. Except as otherwise specifically
provided in any Security Document, the proceeds of any collection, sale,
disposition or other realization of all or any part of the Collateral shall be
applied by the Collateral Agent as follows:
(a) to the payment of any and all expenses and fees (including
reasonable attorneys' fees) incurred by the Collateral Agent in obtaining,
taking possession of, removing, insuring, repairing, storing and disposing of
the Collateral and any and all amounts incurred by the Collateral Agent in
connection therewith;
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(b) next, any surplus then remaining to the payment of the
Obligations in the following order of priority:
(i) accrued and unpaid interest;
(ii) outstanding principal due under the Advances;
(iii) unpaid Fees, if any; and
(iv) all other unpaid Obligations, if any;
(c) any surplus remaining after payment of the foregoing amounts
shall be paid to the Issuers, subject, however, to the rights of the holder of
any then existing Lien of which the Collateral Agent has actual notice (without
investigation), including without limitation, the Bridge Collateral Agent;
it being understood that the Issuers shall remain liable to the extent of any
deficiency between the amount of the proceeds of the Collateral and the
aggregate amount of the sums referred to in clauses (a) and (b) of this Section
10.4.
10.5 Nature of Duties. Neither the Administrative Agent nor the
Collateral Agent shall have any duties or responsibilities except those
expressly set forth in this Agreement and in the other Purchase Documents.
Neither the Administrative Agent nor the Collateral Agent nor any of their
respective officers, directors, agents or employees shall be liable for any
action taken or omitted by it or them hereunder or under any other Purchase
Document or in connection herewith or therewith, unless caused by its or their
gross negligence or willful misconduct. Neither the Administrative Agent nor
the Collateral Agent shall have by reason of this Agreement or any other
Purchase Document a fiduciary relationship in respect of any Purchaser or the
holder of any Note; and nothing in this Agreement or any other Purchase
Document, expressed or implied, is intended to or shall be so construed as to
impose upon the Administrative Agent or the Collateral Agent any obligations in
respect of this Agreement or any other Purchase Document except as expressly set
forth herein.
10.6 No Reliance on the Administrative Agent and the Collateral Agent.
Independently and without reliance upon the Administrative Agent or the
Collateral Agent, each Purchaser and the holder of each Note, to the extent it
deems appropriate, has made and shall continue to make (i) its own independent
investigation of the financial condition and affairs of the Issuers in
connection with the purchase of the Notes and the making of the Advances
thereunder and the taking or not taking of any action in connection herewith and
(ii) its own appraisal of the creditworthiness of the Issuers and, except as
expressly provided in this Agreement, neither the Administrative Agent nor the
Collateral Agent shall have any duty or responsibility, either initially or on a
continuing basis, to provide any Purchaser or the holder of any Note with any
credit or other information with respect thereto, whether coming into its
possession before the issue and sale of the Note or at any time or times
thereafter. Neither the Administrative Agent nor the Collateral Agent shall be
responsible to any Purchaser or the holder of any Note for any recitals,
statements, information, representations or warranties herein or in
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any document, certificate or other writing delivered in connection herewith or
for the execution, effectiveness, genuineness, validity, enforceability,
perfection, collectibility, priority or sufficiency of this Agreement or any
other Document or the financial condition of the Issuers or be required to make
any inquiry concerning either the performance or observance of any of the terms,
provisions or conditions of this Agreement or any other Purchase Document, or
the financial condition of the Issuers or the existence or possible existence of
any Default or Event of Default.
10.7 Request For Instructions By, and Direction of, the Administrative
Agent and the Collateral Agent.
(a) If either the Administrative Agent or the Collateral Agent shall
request instructions from the Required Purchasers with respect to any act or
action (including failure to act) in connection with this Agreement or any other
Purchase Document, then the Administrative Agent or Collateral Agent requesting
such instructions shall be entitled to refrain from such act or taking such
action unless and until it shall have received instructions from the Required
Purchasers. Notwithstanding anything contained in this Agreement or the other
Purchase Documents to the contrary, no Person, including, without limitation,
any Purchaser or the holder of any Note shall have any right of action
whatsoever against the Administrative Agent or the Collateral Agent (and neither
the Administrative Agent or the Collateral Agent shall incur any liability
whatsoever) as a result of refraining from any act or taking any action as
contemplated in this Section 10.7(a).
(b) The Required Purchasers shall have the right to instruct the
Administrative Agent and the Collateral Agent to exercise their respective
rights and remedies granted or provided to them hereunder and under the other
Purchase Documents; provided, however that in no case shall the Administrative
Agent or the Collateral Agent be required to take any actions hereunder or under
any other Purchase Document (i) which are contrary to this Agreement, the other
Purchase Documents or applicable Law or (ii) which may, in the opinion of the
Administrative Agent or the Collateral Agent, as the case may be, result in any
liability to the Administrative Agent or the Collateral Agent, unless in the
case of this clause (ii), the Required Purchasers requesting any such action
agree to indemnify the Administrative Agent or the Collateral Agent, as the case
may be, pursuant to an instrument reasonably satisfactory to it, or post a bond
reasonably satisfactory to it. Notwithstanding anything contained in this
Agreement or the other Purchase Documents to the contrary, no Purchaser or the
holder of any Note shall have any right of action whatsoever against the
Administrative Agent or the Collateral Agent as a result of (and neither the
Administrative Agent or the Collateral Agent shall incur any liability
whatsoever as a result of) acting or refraining from acting hereunder or under
any other Purchase Document in accordance with the instructions of the Required
Purchasers.
10.8 Reliance by the Administrative Agent and the Collateral Agent.
Each of the Administrative Agent and the Collateral Agent shall be entitled to
rely, and shall be fully protected in relying, upon any note, writing,
resolution, notice, statement, certificate, telex, teletype or telecopier
message, cablegram, radiogram, order or other document or telephone message
signed, sent or made by any Person that the Administrative Agent or Collateral
Agent,
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as the case may be, believed to be the proper Person, and, with respect to all
legal matters pertaining to this Agreement and any other Purchase Document and
its duties hereunder and thereunder, upon advice of counsel selected by it.
10.9 Indemnification. To the extent the Administrative Agent or the
Collateral Agent is not reimbursed and indemnified by the Issuers, the
Purchasers will reimburse and indemnify the Administrative Agent or the
Collateral Agent, as the case may be, in proportion to their outstanding Notes,
for and against any and all liabilities, obligations, losses, damages,
penalties, claims, actions, judgments, suits, costs, expenses or disbursements
of whatsoever kind or nature which may be imposed on, asserted against or
incurred by the Administrative Agent or the Collateral Agent, as the case may
be, in performing its duties hereunder or under any other Purchase Document, or
in any way relating to or arising out of this Agreement or any other Purchase
Document, provided that no Purchaser shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from the gross negligence or willful
misconduct of the Administrative Agent or the Collateral Agent.
10.10 Capacity as Purchasers. With respect to its obligation to
make Advances under this Agreement, each of the Administrative Agent and the
Collateral Agent shall have the rights and powers specified herein for a
"Purchaser" and may exercise the same rights and powers as though it were not
performing the duties specified herein; and the term "Purchasers," "Required
Purchasers," "holders of Notes" or any similar terms shall, unless the context
clearly otherwise indicates, include each of the Administrative Agent and the
Collateral Agent in its individual capacity. Each of the Administrative Agent
and the Collateral Agent may accept deposits from, lend money to, and generally
engage in any kind of banking, trust or other business with the Issuer or any
Affiliate of the Issuer as if it were not performing the duties specified
herein, and may accept fees and other consideration from the Issuers for
services in connection with this Agreement and otherwise without having to
account for the same to the Purchasers.
10.11 Holders. Each of the Administrative Agent and the
Collateral Agent may deem and treat the payee of any Note as the owner thereof
for all purposes hereof unless and until a written notice of the assignment,
transfer or endorsement thereof, as the case may be, shall have been filed with
the Administrative Agent. Any request, authority or consent of any Person who,
at the time of making such request or giving such authority or consent, is the
holder of any Note shall be conclusive and binding on any subsequent holder,
transferee, assignee or indorsee, as the case may be, of such Note or of any
Note or Notes issued in exchange therefor.
10.12 Assignment; Resignation.
(a) The Administrative Agent and the Collateral Agent shall be
entitled to assign its obligations and duties hereunder and/or under the other
Purchase Documents to any of its Affiliates. From and after any such assignment,
the terms Administrative Agent and Collateral Agent as used herein and in all
other Purchase Documents shall be deemed to refer to such
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Affiliate for all purposes. The Administrative Agent and the Collateral Agent
will promptly provide the Issuers notice of any such assignment.
(b) The Administrative Agent and the Collateral Agent may resign from
the performance of its duties as Administrative Agent or Collateral Agent
hereunder and/or under the other Purchase Documents at any time by giving 15
Business Days' prior written notice to the Issuers and the Purchasers. Such
resignation shall take effect upon the appointment of a successor Administrative
Agent or Collateral Agent, as the case may be, pursuant to clauses (c) and (d)
below or as otherwise provided below.
(c) Upon any such notice of resignation, the Purchasers shall appoint
a successor Administrative Agent or Collateral Agent hereunder or thereunder who
shall be an internationally-recognized commercial bank or trust company
reasonably acceptable to the Issuers.
(d) If a successor Administrative Agent or Collateral Agent shall not
have been so appointed within such 15 Business Day period, the Administrative
Agent or Collateral Agent, with the consent of the Issuers, may then appoint a
successor Administrative Agent or Collateral Agent who shall serve as such
hereunder or thereunder until such time, if any, as the Purchasers appoint a
successor as provided above.
(e) If no successor has been appointed pursuant to clause (b) or (c)
above by the 20th Business Day after the date such notice of resignation was
given by the Administrative Agent or the Collateral Agent the resignation shall
become effective and the Purchasers shall thereafter perform all the duties of
the Administrative Agent and the Collateral Agent hereunder and/or under any
other Purchase Document until such time, if any, as the Purchasers appoint a
successor as provided above.
Section 11. Restructuring of the Issuers.
11.1 Restructuring Transactions. The Issuers have informed the
Purchasers that they may enter into the following transactions (each, a
"Restructuring Transaction", and collectively, the "Restructuring
Transactions"): (i) Supercanal Holding will lend funds to SRL Holding for SRL
Holding to acquire Stock of the SRL Issuers, (ii) SRL Holding will exercise
options to acquire Stock of the SRL Issuers previously obtained by certain
Purchasing Agents on behalf of SRL Holding with respect to such SRL Issuers,
(iii) such Purchasing Agents will cause the SRL Issuers to change their domicile
to the City of Buenos Aires, (iv) SRL Holding shall thereafter be registered in
the share register of the SRL Issuers as the registered owner of the Stock of
the SRL Issuers following which, (v) the Subsidiaries of SRL Holding will be
merged into SRL Holding; and SRL Holding and/or all or some of the other Issuers
will be merged into either Supercanal Holding or Supercanal in a tax-free
reorganization and (vi) the Issuers will cause Supercanal Holding to conduct a
public or private offering in the international and/or Argentine capital markets
and offer to sell a portion of Supercanal Holding's newly issued preferred stock
or its debt securities. Nothing contained in this Section 11.1 shall be
construed to require the Issuers to undertake any of the Restructuring
Transactions.
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11.2 Conditions. The Purchasers acknowledge and agree that,
notwithstanding anything contained in this Agreement or in any other Purchase
Document to the contrary, the Issuers shall be permitted to enter into the
Restructuring Transactions; provided that prior to entering into any such
Restructuring Transaction, the following conditions shall have been satisfied,
in each case in a manner, and to the extent requested by, the Administrative
Agent in its reasonable discretion:
(a) No Default or Event of Default. Immediately prior to (and after
giving effect to) any Restructuring Transaction, no Default or Event of Default
shall have occurred and be continuing.
(b) Documentation and Information. The Issuers shall have (i)
provided to the Administrative Agent promptly upon request therefor (x) true and
correct copies of all agreements, documents, instruments, books and records
relating to or in connection with the Restructuring Transaction as the
Administrative Agent shall have requested, and (y) such financial and operating
data and such other information with respect to the Issuers as the
Administrative Agent shall have deemed relevant in connection with the
evaluation of the Restructuring Transaction, and (ii) granted the Administrative
Agent and its representatives access to, and provided an opportunity to ask
questions of, and receive answers from, such directors, officers, employees, and
professional advisors of the Issuers as the Administrative Agent shall have
deemed relevant in connection with the evaluation of the Restructuring
Transaction.
(c) Execution of Documentation; Opinions. The Issuers shall have (i)
made, executed, endorsed, acknowledged, filed with and/or delivered to the
Administrative Agent such agreements, documents, instruments and certificates,
and shall have taken such other action as the Administrative Agent shall have
deemed reasonably necessary or desirable in order to (x) preserve and maintain
in full force and effect the legality and validity of the each of the Purchase
Documents and the enforceability against the Issuers of each such Purchase
Document to which it is a party, (y) create in favor of the Collateral Agent for
the benefit of Purchasers, such Liens on such additional collateral as the
Administrative Agent shall require, and (z) modify the Purchase Documents to
change or supplement the existing covenants and include such additional
financial and other covenants as the Administrative Agent shall reasonably
require, and (ii) caused to be delivered to the Administrative Agent such
opinions of legal counsel reasonably acceptable to the Administrative Agent and
in form and substance satisfactory to the Administrative Agent as it shall have
requested in connection with any of the foregoing. The Purchasers will request
only such additional Liens, collateral and covenants pursuant to clauses (x) and
(y) above to the extent necessary or desirable, in the reasonable opinion of the
Required Purchasers, to provide at least the same degree of protection and
security to the Purchasers as provided by the provisions of this Agreement and
the other Purchase Documents prior to any such Restructuring Transaction.
(d) Governmental Approvals. The Issuers shall have delivered
evidence satisfactory to the Administrative Agent in all respects that all
Governmental Approvals required
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in connection with the Restructuring Transaction other than the applicable
COMFER Approval (subject, however, to Section 9.12) have been received by the
Issuers.
(e) Adverse Change. There shall not have occurred or exist any event
or condition (including, without limitation, any material adverse change in the
economic or financial condition or prospects of any of the Issuers) which gives
reasonable grounds to conclude, in the judgment of the Administrative Agent and
the Required Purchasers, that as a result of the consummation of the
Restructuring Transaction any of the Issuers will not, or will be unable to,
perform or observe in the normal course of business its respective obligations
under the Purchase Documents;
11.3 Certain Modifications to Purchase Documents. The Purchasers and
the Issuers acknowledge and agree that in connection with each Restructuring
Transaction, it will be necessary to amend, modify or supplement this Agreement
and/or one or more of the Purchase Documents, to conform the representations and
covenants contained herein and therein to the requirements of the Restructuring
Transactions in a manner not detrimental to the Purchasers, as determined by the
Administrative Agent and the Required Purchasers. The Purchasers and the
Issuers agree to cooperate in making any such amendments, modifications and
supplements, including, if necessary, the release of Collateral; provided that
the Purchasers shall simultaneously therewith receive substitute collateral
acceptable to the Administrative Agent and the Required Purchasers, free and
clear of all Liens. All agreements, documents or instruments relating to any
such amendments, modifications or supplements shall be in form and substance
satisfactory to the Administrative Agent and the Required Purchasers in all
respects.
11.4 Further Assurances. Each of the Issuers will, at its own
expense, make, execute, endorse, acknowledge, file and/or deliver to the
Administrative Agent and/or the Collateral Agent from time to time such
agreements, documents, instruments, and certificates, vouchers, invoices,
schedules, confirmatory assignments, conveyances, financing statements, transfer
endorsements, powers of attorney, certificates, reports and other assurances or
instruments and take such further action as the Administrative Agent shall have
reasonably deemed necessary or desirable in connection with the Restructuring
Transactions in order to preserve and maintain in full force and effect the
legality and validity of the each of the Purchase Documents and the
enforceability against each of the Issuers of each such Purchase Document to
which it is a party.
Section 12. Certain Acquisitions and Related Matters.
12.1 International Acquisitions. The Issuers have informed the
Purchasers that they intend to acquire the Stock of certain entities or the
assets of certain entities organized outside of Argentina or principally engaged
in the multi-channel television business in one or more countries outside of
Argentina, and that they would like to use proceeds of one or more Advances to
finance such acquisitions (each an "International Acquisition"). The Purchasers
acknowledge and agree that, notwithstanding anything contained in this Agreement
or in any other Purchase Document to the contrary, the Issuers shall be
permitted to request Advances hereunder at any time prior to the Availability
Expiry Date to (i) pay the unpaid amount of the
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Acquisition Price or Permitted Transaction Expenses directly related to any such
International Acquisition, to the extent due and payable, or (ii) to reimburse
the Issuers for any portion of such Acquisition Price or Permitted Transaction
Expenses to the extent such amounts were paid with funds of the Issuers other
than proceeds of Advances and were not theretofore reimbursed as follows:
(a) General. As to any International Acquisition other than the
Tescorp Acquisition, the Issuers shall be permitted to request Advances in
respect thereof to the extent that (i) such acquisition is permitted under
Section 8.5, and (ii) the aggregate amount of Advances so made shall not exceed
U.S.$10,000,000, and provided, further that the Issuers shall have satisfied
such conditions to such Funding and to such International Acquisition as the
Administrative Agent shall specify, including, without limitation, the
conditions specified in Section 5 hereof, as applicable, and such additional
conditions precedent as the Administrative Agent shall deem necessary or
desirable at such time. Without limiting the generality of the foregoing, the
Issuers shall have (i) provided to the Administrative Agent true and correct
copies of all agreements, documents, instruments, books and records relating to
or in connection with any International Acquisition as the Administrative Agent
shall have requested, and such financial and operating data and such other
information in connection with the evaluation of the International Acquisition
as the Administrative Agent shall have requested, (ii) made, executed, endorsed,
acknowledged, filed with and/or delivered to the Administrative Agent such
agreements, documents, instruments and certificates, and shall have taken such
other action as the Administrative Agent shall have reasonably deemed necessary
or desirable in order to (x) grant to the Purchasers a security interest in the
Stock or other assets of the entity acquired in such International Acquisition,
and (y) amend, modify or supplement this Agreement and/or one or more of the
Purchase Documents, to conform the representations and covenants contained
herein and therein to the International Acquisition and the circumstances
related thereto, and (iii) caused to be delivered to the Administrative Agent
such opinions of legal counsel acceptable to the Administrative Agent and in
form and substance satisfactory to the Administrative Agent as it shall have
reasonably requested. All agreements, documents or instruments relating to any
such amendments, modifications or supplements shall be in form and substance
reasonably satisfactory to the Administrative Agent and the Required Purchasers
in all respects.
(b) The Tescorp Acquisition. As to the Tescorp Acquisition, Tescorp
Delaware shall be permitted to request Advances hereunder at any time prior to
the Availability Expiry Date to (i)(x) pay the unpaid amount of the acquisition
price for Purchased Common Stock (as defined in the Tescorp Purchase Agreement),
to the extent due and payable at the time of the Purchase Closing (as defined in
the Tescorp Purchase Agreement), (y) pay all amounts required to be paid by
Tescorp Delaware upon the completion of the Tender Offers (as defined in the
Tescorp Purchase Agreement), to the extent then due and payable, and (z) pay the
transaction expenses directly related to the Tescorp Acquisition; provided,
however, that the aggregate principal amount of Advances and Bridge Advances for
the Tescorp Acquisition shall not exceed U.S.$135,000,000; and provided, further
that the Issuers shall have satisfied such conditions to such Fundings as the
Required Purchasers shall specify on or before the later to occur of (1)
December 5, 1997, and (2) the commencement of the Tender Offers (as defined in
the Tescorp Purchaser Agreement), including, the conditions specified in Section
5 hereof, as applicable, and
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such additional conditions precedent as the Required Purchasers shall deem
necessary or desirable, including, without limitation, the following:
(i) the Tescorp Acquisition Agreement and all documents and
instruments required to be executed and delivered in connection therewith shall
be in form and substance satisfactory to the Required Purchasers;
(ii) Tescorp Delaware shall have executed and delivered a joinder
agreement substantially in the form of the Joinder Agreement with such
modifications thereto as the Administrative Agent shall require, pursuant to
which Tescorp Delaware shall have become a party hereto and to the other
Purchase Documents;
(iii) there shall have been delivered to the Administrative Agent
the special audit report of Coopers & Lybrand (or other auditors of
international standing acceptable to the Administrative Agent), prepared in
accordance with agreed upon procedures and dated not earlier than the date ten
days prior to the date of the Funding, of the Subscribers, Indebtedness and
contingent liabilities of Tescorp Texas and its subsidiaries, and the results of
such audit shall be to the satisfaction of the Required Purchasers;
(iv) the shareholders of Tescorp Delaware shall have executed and
delivered a pledge agreement, in form and substance satisfactory to the
Administrative Agent, pursuant to which such shareholders shall have granted to
(A) the Collateral Agent, for the benefit of the Purchasers, a perfected Lien of
first priority in all of the Stock of Tescorp Delaware, and (B) the Bridge
Collateral Agent, for the benefit of the Bridge Purchasers, a perfected Lien of
second priority in all such Stock, in each such case free and clear of all
Liens;
(v) Tescorp Delaware shall have executed and delivered a pledge
agreement, in form and substance satisfactory to the Administrative Agent,
pursuant to which Tescorp Delaware shall have granted to (A) the Collateral
Agent, for the benefit of the Purchasers, a perfected Lien of first priority in
all of the Stock of Tescorp Texas theretofore and thereafter acquired by Tescorp
Delaware, and (B) the Bridge Collateral Agent, for the benefit of the Bridge
Purchasers, a perfected Lien of second priority in all such Stock, in each such
case free and clear of all Liens;
(vi) the Issuers, immediately following the consummation of the merger
between Tescorp Delaware and Tescorp Texas, shall have caused Tescorp Texas to
have executed and delivered pledge agreements, in form and substance
satisfactory to the Administrative Agent, pursuant to which Tescorp Texas shall
have granted to (A) the Collateral Agent, for the benefit of the Purchasers, a
perfected Lien of first priority in all of the Stock of the Argentine operating
companies owned by Tescorp Texas, and (B) the Bridge Collateral Agent, for the
benefit of the Bridge Purchasers, a perfected Lien of second priority in all
such Stock, in each such case free and clear of all Liens; and
(vii) the Issuers, immediately following the consummation of the
merger between Tescorp Delaware and Tescorp Texas, shall have caused Tescorp
Texas to execute and deliver an instrument pursuant to which Tescorp Texas
acknowledges its obligations hereunder.
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Without limiting the generality of the foregoing, the Issuers shall have (i)
provided to the Administrative Agent true and correct copies of all
agreements, documents, instruments, books and records relating to or in
connection with the Tescorp Acquisition as the Required Purchasers shall have
requested, and such financial and operating data and such other information
in connection with the evaluation of the Tescorp Acquisition as the Required
Purchasers shall have requested, (ii) made, executed, endorsed, acknowledged,
filed with and/or delivered to the Administrative Agent such agreements,
documents, instruments and certificates, and shall have taken such other
action as the Required Purchasers shall have reasonably deemed necessary or
desirable in order to amend, modify or supplement this Agreement and/or one
or more of the Purchase Documents, to conform the representations and
covenants contained herein and therein to the Tescorp Acquisition and the
circumstances related thereto, and (iii) caused to be delivered to the
Administrative Agent such opinions of legal counsel acceptable to the
Administrative Agent and in form and substance satisfactory to the Required
Purchasers as they shall have reasonably requested. All agreements, documents
or instruments relating to any such amendments, modifications or supplements
shall be in form and substance reasonably satisfactory to the Administrative
Agent and the Required Purchasers in all respects.
Notwithstanding anything contained in this Agreement to the
contrary, the obligations of Tescorp Delaware to repay any Advances or other
amounts hereunder or under the other Purchase Documents shall be limited to
the amount of Advances made to Tescorp Delaware hereunder and all accrued
interest thereon.
12.2 The TDH Acquisition. (a) Permitted Advances. Notwithstanding
anything contained in this Agreement or in any other Purchase Document to the
contrary, the Issuers shall be permitted to request Advances hereunder at any
time prior to the Availability Expiry Date to (i)(x) pay the unpaid amount of
the acquisition price or transaction expenses directly related to the
acquisition by the Issuers of TDH, to the extent due and payable, or (y) to
reimburse the Issuers for any portion of such acquisition price or transaction
expenses directly related the acquisition by the Issuers of TDH, to the extent
such amounts were paid with funds of the Issuers other than proceeds of Advances
and were not theretofore reimbursed, and (ii) to make Capital Expenditures in
respect of TDH; provided, that the aggregate amount of all such Advances to be
applied as contemplated in clause (i) above shall not exceed U.S.$6,000,000, and
(ii) the aggregate amount of all such Advances to be applied as contemplated in
clause (ii) above shall not exceed U.S.$2,500,000.
(b) Conditions. The obligation of the Purchasers to make Advances
pursuant to Section 12.2(a) above, shall be subject to the satisfaction of the
Administrative Agent of the following conditions:
(i) the satisfaction of the conditions set forth in Section 5.2
hereof;
(ii) the Issuer which is the shareholder of TDH shall have duly
authorized, executed and delivered an SA Pledge Agreement, pursuant to
which such Issuer shall have granted to (A) the Collateral Agent, for
the benefit of the Purchasers, a fully perfected first priority Lien
in all of the Stock of TDH, and (B)
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if any Bridge Obligations are outstanding, to the Bridge Collateral
Agent, for the benefit of the Bridge Purchasers, a fully perfected
second priority Lien in all of the Stock of TDH, free and clear of all
Liens (and shall have (i) delivered to the Collateral Agent all such
Stock with the relevant annotation of the existence and perfection of
the Liens created by such SA Pledge Agreement, (ii) given notice to
TDH of the grant of such Liens as required by Argentine Law, and (iii)
caused TDH to have duly registered such Liens in the names of the
Collateral Agent and the Bridge Collateral Agent in TDH's share
registry); and
(iii) The Administrative Agent shall have received from
counsel to the Issuers (who shall be reasonably satisfactory to the
Administrative Agent) an opinion or opinions addressed to the
Administrative Agent, the Collateral Agent and each of the Purchasers
and dated the date of the Funding covering such matters incident to
the transactions contemplated hereby as the Administrative Agent may
reasonably request.
Section 13. Representations and Agreements of the Purchasers.
13.1 Securities Act. Each Purchaser listed on Schedule I hereto as of
the Initial Funding Date hereby represents and warrants to, and agrees with, the
Issuers, as of the Initial Funding Date, as follows:
(a) Each Purchaser is an institutional "accredited investor" (as
defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities
Act) purchasing for its own account or for the account of such an institutional
"accredited investor", each Purchaser is not acquiring the Notes with a view to,
or for offer or sale in connection with, any distribution in violation of the
Securities Act, each Purchaser has such knowledge and experience in financial
and business matters as to be capable of evaluating the merits and risks of an
investment in the Notes, and each Purchaser and any accounts for which such
Purchaser is acting are each able to bear the economic risk of its investment.
(b) Each Purchaser understands that the Notes have not been
registered under the Securities Act and further agrees on its own behalf and on
behalf of any investor account for which it is purchasing the Notes to offer,
sell or otherwise transfer such Notes prior to the date which is two years after
the later of the date of original issue thereof and the last date on which any
Issuer or any affiliate of any Issuer was the owner of such Notes (the "Resale
Restriction Termination Date") only (i) pursuant to a registration statement
which has been declared effective under the Securities Act, (ii) for so long as
the Notes are eligible for resale pursuant to Rule 144A under the Securities
Act, to a person the Purchaser reasonably believes is a qualified institutional
buyer under Rule 144A (a "QIB") that purchases for its own account or for the
account of a QIB to whom notice is given that the transfer is being made in
reliance on Rule 144A, (iii) pursuant to offers and sales to non-U.S. Persons
that occur outside the United States within the meaning of Regulation S under
the Securities Act, (iv) to an institutional "accredited investor" within the
meaning of subparagraph (a)(1), (2), (3) or (7) of Rule 501 under the Securities
Act that is acquiring the Notes for its own account or for the account of such
an
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institutional "accredited investor" and not with a view to, or for offer or sale
in connection with, any distribution thereof in violation of the Securities Act
or (v) pursuant to any other available exemption from the registration
requirements of the Securities Act, subject in each of the foregoing cases to
any requirement of law that the disposition of its property and the property of
such investor account or accounts be at all times within its or their control
and to compliance with any applicable state securities laws. The foregoing
restrictions on resale will not apply subsequent to the Resale Restriction
Termination Date. If any resale or other transfer of the Notes is proposed to
be made pursuant to clause (iv) above prior to the Resale Restriction
Termination Date, the transferor shall deliver a letter from the transferee
substantially in the form of Exhibit J, which shall provide, among other things,
that the transferee is an institutional "accredited investor" within the meaning
of subparagraph (a)(1), (2), (3) or (7) of Rule 501 under the Securities Act and
that it is acquiring such Notes not for distribution in violation of the
Securities Act. The Purchasers acknowledge that the Issuers reserve the right
prior to any offer, sale or other transfer prior to the Resale Restriction
Termination Date of the Notes pursuant to clause (v) above to require the
delivery of an opinion of counsel satisfactory to the Issuers.
13.2 Commitment to Accept Negotiable Obligations.
(a) Each Purchaser agrees that if Supercanal Holding issues
Negotiable Obligations (as defined below) at any time after the date hereof, and
the Issuers request the Purchasers to accept such Negotiable Obligations as
payment for the Notes and the Advances, they will accept, as payment in full of
the Obligations, Negotiable Obligations with an aggregate principal amount not
less than the sum of outstanding principal amount of the Notes, all accrued and
unpaid interest thereon and all other amounts payable hereunder by the Issuers
hereunder and under the other Purchase Documents; provided, that (i) no Default
or Event of Default has occurred and is continuing, (ii) at the time of payment,
the issuer of the Negotiable Obligations shall not be, and shall not at any time
have been, in default under the terms and conditions of any such Negotiable
Obligations, and (iii) the Administrative Agent shall have received such legal
opinions of counsel satisfactory to the Administrative Agent and the Purchasers
covering such matters relating to the issuance, validity, enforceability of the
Negotiable Obligations, and the security therefor and such other matters as the
Administrative Agent and the Purchasers shall require.
(b) The term "Negotiable Obligations" shall mean bonds constituting
obligaciones negociables under Argentine Law issued by Supercanal Holding after
the date hereof in the international and Argentine capital markets, which are
(i) issued in compliance with Articles 36 and 36 bis of Argentine Law 23,576, as
amended, (ii) issued upon the same economic terms and conditions as the Notes,
and such other terms and conditions customarily included in similar
transactions, (iii) are (as to the Negotiable Obligations to be transferred to
the Purchasers) secured to the same extent as, the Notes and the other
Obligations hereunder, (iv) afford the Purchasers the same rights and remedies
provided by the Purchase Documents, and (v) otherwise in form and substance
satisfactory to the Administrative Agent and the Required Purchasers, all as
determined in the discretion of the Administrative Agent and the Required
Purchasers.
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Section 14. Miscellaneous.
14.1 Payment of Expenses, etc. The Issuers shall: (i) whether or not
the transactions herein contemplated are consummated, pay, from time to time
upon request, all reasonable out-of-pocket costs and expenses of (w) the
Administrative Agent and the Collateral Agent (including, without limitation,
the reasonable costs and expenses of the arrangement of the issue and sale of
the Notes, the reasonable fees and disbursements of White & Case (as special
U.S. counsel to the Administrative Agent) and Bruchou, Fernandez Madero &
Lombardi (as Argentine counsel to the Administrative Agent) and reasonable
printing, document production and delivery, communication, travel and due
diligence costs) and the Registrar incurred in connection with the preparation,
review, negotiation, translation, execution and delivery of this Agreement and
the other Purchase Documents and the documents and instruments prepared in
connection herewith or in anticipation hereof and any amendment, waiver or
consent relating hereto or thereto, (x) the Administrative Agent, the Collateral
Agent, the Registrar and each of the Purchasers in connection with the
enforcement of the Notes, this Agreement and the other Purchase Documents and
the documents and instruments referred to herein and therein (including, without
limitation, the reasonable fees and disbursements of counsel for the
Administrative Agent, the Collateral Agent, the Registrar and each of the
Purchasers), (y) the Administrative Agent in connection with the sale by it of
any Dollar Denominated Securities as contemplated in Section 4.4(a), and (z)
each of the Purchasers in connection with any due diligence conducted by any of
them in connection with the transactions contemplated hereby; (ii) pay and hold
the Registrar and each of the Purchasers harmless from and against any and all
present and future stamp and other similar taxes with respect to the foregoing
matters and save and hold the Registrar and each of the Purchasers harmless from
and against any and all liabilities with respect to or resulting from any delay
or omission (other than to the extent attributable to the Registrar or such
Purchaser) to pay such taxes; and (iii) indemnify the Administrative Agent, the
Collateral Agent, the Registrar and each Purchaser, and their respective
officers, directors, employees, representatives and agents (each an "indemnified
person") from and hold each of them harmless against any and all liabilities,
obligations, losses, damages, penalties, claims, actions, judgments, suits,
costs, expenses and disbursements incurred by any of them as a result of, or
arising out of, or in any way related to, or by reason of, any investigation,
litigation or other proceeding (whether or not the indemnified person is a party
thereto) related to the entering into and/or performance of the Notes, this
Agreement or any other Purchase Document or the use of the proceeds of any
Advances hereunder or the consummation of any transactions contemplated herein
or in any other Purchase Document, including, without limitation, the reasonable
fees and disbursements of counsel incurred in connection with any such
investigation, litigation or other proceeding (but excluding any such
liabilities, obligations, losses, etc., to the extent incurred by reason of the
gross negligence or willful misconduct of the Person to be indemnified).
14.2 Right of Setoff. In addition to any rights now or hereafter
granted under applicable law or otherwise, and not by way of limitation of any
such rights, upon the occurrence of an Event of Default, the Administrative
Agent and the Collateral Agent and each Purchaser is hereby authorized, to the
extent permitted by Law, at any time or from time to time, without presentment,
demand, protest or other notice of any kind to the Issuer or to any other
Person, any
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such notice being hereby expressly waived, to set off and to appropriate and
apply any and all deposits (general or special) and any other Indebtedness at
any time held or owing by such Purchaser (including without limitation by
branches and agencies of such Purchaser wherever located) to or for the credit
or the account of the Issuer against and on account of the Obligations and
liabilities of the Issuer to such Purchaser or the Administrative Agent or the
Collateral Agent under this Agreement or under any of the other Purchase
Documents, including, without limitation, all interests in Obligations purchased
by such Purchaser pursuant to Section 14.7(b), and all other claims of any
nature or description arising out of or connected with this Agreement or any
other Purchase Document, irrespective of whether or not such Purchaser or the
Administrative Agent or the Collateral Agent shall have made any demand
hereunder and although said Obligations, liabilities or claims, or any of them,
shall be contingent or unmatured.
14.3 Notices. Except as otherwise expressly provided herein, all
notices and other communications provided for hereunder shall be in writing
(including telegraphic, telex, facsimile or cable communication) and mailed,
telegraphed, telexed, sent by facsimile, cabled or delivered: if to any or all
of the Issuers, to Supercanal Holding at its address specified opposite its
signature below; if to any Purchaser, to its Funding Office specified opposite
its name on Schedule II; if to the Administrative Agent, to it at its Notice
Office; if to the Collateral Agent or to the Arranger, to it at 135 East 57th
Street, New York, New York 10022; if to the Registrar, at the Registrar's
Office; or, as to any such party, to such other address as shall be designated
by such party in a written notice to the other parties hereto. All such notices
and communications shall be effective (i) three days after deposit in the mails,
when mailed, (ii) when delivered to any nationally-recognized telegraph company,
cable company or overnight courier, when sent by telegraph, cable or overnight
courier, and (iii) when sent, when sent by telex or facsimile, except that
notices and communications to the Administrative Agent and the Collateral Agent
shall not be effective until actually received by the Administrative Agent or
the Collateral Agent, as the case may be.
14.4 Benefit of Agreement. This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the respective successors and
assigns of the parties hereto, provided that none of the Issuers may assign or
transfer any of its rights or obligations hereunder without the prior written
consent of the Purchasers.
14.5 Registration of Notes; Transfer and Exchange; Transfer
Restrictions.
(a) The Notes shall be issued in registered non-endorseable form
only. Supercanal Holding shall cause to be kept at the Registrar Office and at
its offices in Argentina a register in which, subject to such reasonable
regulations as it may prescribe, Supercanal Holding shall provide for the
registration of the Notes and transfers or exchanges of the Notes as herein
provided and for the recording of the Advances and Commitments of each
Purchaser, as the same may be adjusted pursuant to an Assignment and Acceptance.
The name and address of each holder of one or more Notes, each transfer thereof
and of the Advances and Commitments in respect thereof, and the name and address
of each transferee of one or more Notes and of the Advances and Commitments in
respect thereof shall be registered in such register. All Notes issued upon any
registration of transfer or exchange of Notes shall be the valid obligations of
the
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Company, evidencing the same obligations, and entitled to the same benefit under
this Agreement, as the Notes surrendered for such registration of transfer or
exchange.
(b) On or prior to the earlier to occur of (i) the Availability
Expiry Date, and (ii) the date on which the Total Commitment is funded
hereunder, any transfer of a Note shall represent a transfer of a uniform, and
not varying, percentage of the transferor's Advances made under such Note and of
such transferor's Commitment hereunder. After the earlier to occur of (i) the
Availability Expiry Date, and (ii) the date on which the Total Commitment is
funded hereunder, any transfer of a Note shall represent a transfer of the
aggregate principal amount of the Advances thereunder.
(c) A Purchaser may transfer its Note and its rights and obligations
thereunder only by complying with the terms of this Agreement. No such transfer
shall be effected until, and such transferee shall succeed to the rights of a
holder only upon, final acceptance and registration of the transfer by the
Registrar in the register. Prior to the registration of any transfer of Notes
by a holder as provided herein, the Issuers, the Registrar and the
Administrative Agent may treat the Person in whose name the Notes are registered
as the owner thereof for all purposes and as the Person entitled to exercise the
rights represented thereby, any notice to the contrary notwithstanding. When
Notes are presented to the Registrar with a request to register the transfer or
to exchange them, the Registrar shall register the transfer or make the exchange
in accordance with the provisions hereof. No Purchaser shall grant a
participation under which the participant shall have rights to approve any
amendment to or waiver of any provision of this Agreement, any Note or any other
Purchase Documents except to the extent such amendment or waiver would (i)
extend the final scheduled maturity of any Advance or Note in which such
participant is participating, or reduce the rate or extend the time of payment
of interest or Fees thereon, or (ii) release all or substantially all of the
Collateral under all of the Security Documents (except as expressly provided in
such Security Documents) supporting the Advances and Notes in which such
participant is participating.
(d) When Notes are presented to the Registrar with a request from the
holder of such Notes to register the transfer or to exchange them, the Registrar
shall register the transfer or make the exchange as requested and provide the
transferor and the transferee with a written confirmation thereof within three
Business Days of such transfer or exchange; provided that (i) every Note
presented and surrendered for registration of transfer or exchange shall be
accompanied by an Assignment and Acceptance duly executed by the holder thereof
or the holder's attorneys duly authorized in writing pursuant to which the
holder shall have assigned a uniform, and not varying, percentage of its rights
and obligations under such Note and hereunder, (ii) the transferor and
transferee of such Notes shall have complied with their respective obligations
under Sections 14.5(g), (h), (i) and (j), and (iii) if such transfer or exchange
is made prior to the Availability Expiry Date, the Administrative Agent shall
have provided its consent.
(e) Upon presentment of any Note for transfer in accordance with the
provisions of Section 14.5(d) above, the Issuers shall execute and deliver, at
the Issuers' expense, one or more new Notes (as requested by the holder thereof)
in exchange therefor, in an aggregate principal amount equal to the principal
amount of the surrendered Note. Each such new Note shall be in such principal
amount and be payable to such Person as such holder may request and shall be
substantially in the form of Exhibit A. Each such new Note
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shall be dated and bear interest from the date to which interest shall have been
paid on the surrendered Note or dated the date of the surrendered Note if no
interest shall have been paid thereon. Notes shall not be issued or transferred
in denominations of less than U.S.$1,000,000; provided, that if necessary to
enable the registration of transfer by a holder of its entire holding of Notes,
one Note may be issued in a denomination of less than U.S.$1,000,000.
(f) If any Purchaser transfers all or a part of its Notes and its
rights and obligations hereunder to any other Person pursuant to the provisions
hereof, the transferor Purchaser shall be relieved of its obligations hereunder
with respect to the transferred Notes, Advances or Commitment, as the case may
be, and the transferee shall be a party hereto and, to the extent that Notes,
Advances and Commitments and such other rights and obligations hereunder have
been transferred, shall acquire such Notes, Advances, Commitments and other
rights and obligations of a Purchaser hereunder and under the other Purchase
Documents, and this Agreement shall be deemed to be amended to the extent
necessary to reflect the transfer and assignment of such rights and obligations
and the addition of such transferee, and any reference to the transferring
Purchaser in this Agreement, the other Purchase Documents or the Note of such
Purchaser shall thereafter refer to such Purchaser and to such transferee to the
extent of their respective interests.
(g) The following provisions shall apply with respect to the
registration of any proposed transfer of Notes to any institutional "accredited
investor" which is not a QIB (excluding non-U.S. Persons, as such term is
defined in Regulation S under the Securities Act): the Registrar shall register
the transfer of any Note if (i) the proposed transferee has delivered to the
Registrar and the Administrative Agent a certificate to the effect that at least
two years have elapsed since the later of (x) the original issue date of such
Notes, and (y) the last date on which any Issuer or any affiliate of any Issuer
was the owner of such Notes, or (ii) the proposed transferee has delivered to
the Registrar and the Administrative Agent a certificate substantially in the
form of Exhibit J hereto.
(h) The following provisions shall apply with respect to the
registration of any proposed transfer of Notes to a QIB (excluding non-U.S.
Persons, as such term is defined in Regulation S under the Securities Act): the
Registrar shall register the transfer if such transfer is being made by a
proposed transferor who has checked the box provided for on the applicable
Assignment and Acceptance stating, or has otherwise advised the Issuers, the
Registrar and the Administrative Agent in writing that the sale has been made in
compliance with the provisions of Rule 144A to a transferee who has signed a
certification stating, or has otherwise represented to the Issuers, the
Registrar and the Administrative Agent in writing, that it is purchasing the
Notes for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a QIB within the
meaning of Rule 144A, and is aware that the sale to it is being made in reliance
on Rule 144A and acknowledges that it has received such information regarding
the Issuers as it has requested pursuant to Rule 144A or has determined not to
request such information and that it is aware that the transferor is relying
upon its
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foregoing representations in order to claim the exemption from registration
provided by Rule 144A.
(i) The following provisions shall apply to the registration of any
proposed transfer of Notes to a Non-U.S. Person outside the United States (in
each case within the meaning of Regulation S under the Securities Act): the
Registrar shall register the transfer if such transfer is being made by a
proposed transferor who has checked the box provided for on the applicable
Assignment and Acceptance stating, or has otherwise advised the Issuers, the
Registrar and the Administrative Agent in writing, that the sale has been made
in compliance with Regulation S to a transferee who has signed the certification
provided for on the applicable Assignment and Acceptance, or has otherwise
advised the Issuers, the Registrar and the Administrative Agent in writing that
it is a non-U.S. Person (within the meaning of Regulation S under the Securities
Act) and that the sale has been made in compliance with the provisions of
Regulation S.
(j) By its acceptance of any Notes, each holder of such Notes
acknowledges the restrictions on transfer of such Notes set forth therein and in
this Agreement and agrees that it will transfer such Notes only as provided in
this Agreement. The Registrar shall not register a transfer of any Notes unless
such transfer complies with the restrictions on transfer of such Notes set forth
in this Agreement.
(k) Upon receipt by the Registrar and Supercanal Holding of evidence
reasonably satisfactory to each of them of the ownership of and the loss, theft,
destruction or mutilation of any Note, and
(x) in the case of loss, theft or destruction, of indemnity
reasonably satisfactory to each of them; or
(y) in the case of mutilation, upon surrender and cancellation
thereof;
the Issuers, at their expense, shall execute and deliver, in lieu thereof, a new
Note, dated and bearing interest from the date to which interest shall have been
paid on such lost, stolen, destroyed or mutilated Notes or dated the date of
such lost, stolen, destroyed or mutilated Notes if no interest shall have been
paid thereon.
(l) The Registrar and the Administrative Agent shall retain copies of
all letters, notices and other written communications received pursuant to this
Section 14.5. The Issuers shall have the right to inspect and make copies of
all such letters, notices or other written communications at any reasonable time
upon the giving of reasonable written notice to the Registrar and the
Administrative Agent.
(m) The Registrar agrees to notify Supercanal Holding from time to
time upon the registration of the transfer of any Note, Advance or Commitment
pursuant to such procedures as the Registrar and Supercanal Holding shall agree.
In the event of any conflict between any transfers or other particulars noted in
the register maintained by the Registrar and the register
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maintained by Supercanal Holding, the transfers and particulars noted in the
register maintained by the Registrar shall prevail.
(n) The Registrar will promptly notify the Administrative Agent upon
the registration of any transfer or exchange of Notes or any Commitments and
Advances in respect thereof.
(o) To permit registrations of transfers and exchanges, the Company
shall make available to the Registrar a sufficient number of duly executed Notes
to effect such registrations of transfers and exchanges. Such Notes shall be
prepared with the date, the payee and the principal amount in blank. The
Registrar is authorized and directed to prepare the appropriate Notes to be
delivered upon any registration of transfer or exchange and, in connection
therewith, to fill in the appropriate date, payee and principal amount, all as
contemplated hereunder and in the applicable Assignment and Acceptance.
(p) The Issuers hereby appoint the Registrar to act as agent of the
Issuers as set forth in this Agreement. The Registrar hereby accepts the agency
established by this Agreement and agrees to perform the same upon the terms and
conditions herein set forth, by all of which the Issuers and the Purchasers
shall be bound. The Registrar shall not have any obligation towards or
relationship of agency or trust for the Purchasers, except as provided in this
Section 14.5. The Registrar shall not by any act hereunder be deemed to make
any representations as to the validity or authorization of the Notes. The
Registrar shall not be accountable for the use or application by the Issuers of
the proceeds from the issuance of any Note. The Registrar shall not (i) be
liable for any recital or statement of fact contained herein or for any action
taken, suffered or omitted by it in good faith in the belief that any Notes or
any other documents or any signatures are genuine or properly authorized, (ii)
be responsible for any failure on the part of the Issuers to comply with any of
their covenants and obligations contained in this Agreement or (iii) be liable
for any act or omission in connection with this Agreement except for its own
gross negligence or willful misconduct. The Registrar is hereby authorized to
accept instructions with respect to the performance of its duties hereunder from
the President, any Vice President or the Secretary or Treasurer of Supercanal
Holding and to apply to any such officer for instructions (which instructions
will be promptly given in writing when requested) and the Registrar shall not be
liable for any action taken or suffered to be taken by it in good faith in
accordance with the instructions of any such officer; however, in its
discretion, the Registrar may in lieu thereof accept other evidence of such or
may require such further or additional evidence as it may deem reasonable. The
Registrar shall not be liable for any action taken with respect to any matter in
the event it requests instructions from Supercanal Holding as to that matter and
does not receive such instructions within a reasonable period of time after the
request therefor.
(q) The Registrar may execute and exercise any of the rights and
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys, agents or employees, and the Registrar shall not be
answerable or accountable for any act, default, neglect or misconduct of any
such attorneys, agents or employees, provided reasonable care has been exercised
in the selection and in the continued employment of any such attorney, agent or
employee. The Registrar shall not be under any obligation or duty to institute,
appear in
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or defend any action, suit or legal proceeding in respect hereof, unless first
indemnified to its satisfaction, but this provision shall not affect the power
of the Registrar to take such action as the Registrar may consider proper,
whether with or without such indemnity. The Registrar shall promptly notify
Supercanal Holding in writing of any claim made or action, suit or proceeding
instituted against it arising out of or in connection with this Agreement.
(r) The Registrar may rely and shall be fully protected in acting or
refraining from acting upon any certificate, notice, instruction, Note, document
or other writing believed by it to be genuine and to have been signed or
presented by the proper Person. The Registrar need not investigate any fact or
matter stated in any such certificate, notice, instruction, Note, document or
other writing. The Registrar shall not be liable for any action that it takes
or omits to take in good faith which it believes to be authorized or within its
rights or powers.
(s) The Issuers will perform, execute, acknowledge and deliver or
cause to be performed, executed, acknowledged and delivered all such further
acts, instruments and assurances as are consistent with this Agreement and as
may reasonably be required by the Registrar in order to enable it to carry out
or perform its duties under this Agreement.
(t) The Registrar shall act solely as agent of the Issuers hereunder.
The Registrar shall not be liable except for the failure to perform such duties
as are specifically set forth herein, and no implied covenants or obligations
shall be read into this Agreement against the Registrar, whose duties and
obligations shall be determined solely by the express provisions hereof.
(u) The Registrar may at any time consult with legal counsel
acceptable to it (who may be legal counsel for the Issuers), and the opinion or
advice of such counsel shall be full and complete authorization and protection
to the Registrar and the Registrar shall incur no liability or responsibility to
the Issuers or to any holder for any action taken, suffered or omitted by it in
good faith in accordance with the opinion or advice of such counsel.
(v) The Registrar and any stockholder, director, officer or employee
of the Registrar may buy, sell or deal in any of the Notes or other securities
of the Issuers or become pecuniarily interested in transactions in which the
Issuers may be interested, or contract with or lend money to any of the Issuers
or otherwise act as fully and freely as though it were not the Registrar under
this Agreement. Nothing herein shall preclude the Registrar from acting in any
other capacity for the Issuers or for any other legal entity.
(w) Except as otherwise provided in this Section 14.5, no resignation
or removal of the Registrar and no appointment of a successor registrar shall
become effective until the acceptance of appointment by the successor registrar
provided herein. The Registrar may resign from its position as such and be
discharged from all further duties and liabilities hereunder (except liabilities
arising as a result of the Registrar's own gross negligence or willful
misconduct), after giving one month's prior written notice to the Issuers. The
Issuers may remove the Registrar upon one month's prior written notice
specifying the date when such discharge shall take effect, and the Registrar
shall thereupon in like manner be discharged from all further duties and
liabilities hereunder, except as aforesaid. The Registrar or the Issuers shall
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cause to be mailed (by first-class mail, postage prepaid) to each holder of a
Note a copy of said notice of resignation or notice of removal, as the case
may be. Upon such resignation or removal the Issuers shall appoint in
writing a new registrar. If the Issuers shall fail to make such appointment
within a period of 30 calendar days after it has been notified in writing of
such resignation by the resigning Registrar or after such removal, then the
resigning Registrar or the holder of any Note, at the Issuers' expense, may
apply to any court of competent jurisdiction for the appointment of a new
registrar. Any new registrar, whether appointed by the Issuers or by such a
court, shall be a bank or trust company doing business under the laws of the
United States or any state thereof, in good standing and having a combined
capital and surplus of not less than US$50,000,000. The combined capital and
surplus of any such new registrar shall be deemed to be the combined capital
and surplus as set forth in the most recent annual report of its condition
published by such registrar prior to its appointment, provided that such
reports are published at least annually pursuant to law or to the
requirements of a federal or state supervising or examining authority. After
acceptance in writing of such appointment by the new registrar, it shall be
vested with the same powers, rights, duties and responsibilities as if it had
been originally named herein as the Registrar, without any further assurance,
conveyance, act or deed; however, the original Registrar, upon payment of its
fees and expenses, shall in all events deliver and transfer to the successor
Registrar all property, if any, at the time held hereunder by the original
Registrar and if for any reason it shall be necessary or expedient to execute
and deliver any further assurance, conveyance, act or deed, the same shall be
done at the expense of the Issuers and shall be legally and validly executed
and delivered by the resigning or removed Registrar. Not later than the
effective date of any such appointment, the Issuers shall file a notice
thereof with the resigning or removed Registrar and shall forthwith cause a
copy of such notice to be mailed to each holder of a Note. Failure to give
any notice provided for in this Section 14.5, however, or any defect therein,
shall not affect the legality or validity of the resignation of the Registrar
or the appointment of a new registrar, as the case may be.
(x) Any corporation into which the Registrar or any successor
registrar may be merged or converted, or any corporation resulting from any
consolidation to which the Registrar or any successor Registrar shall be a
party, and any corporation which acquires substantially all of the corporate
trust business of the Registrar, shall be a successor Registrar under this
Agreement without any further act, provided that such corporation would be
eligible for appointment as successor to the Registrar under this Section
14.5. Any such successor Registrar shall promptly cause notice of its
succession as Registrar to be mailed (by first-class mail, postage prepaid)
to each holder of a Note.
14.6 Joinder. Upon the execution and delivery of a Joinder
Agreement pursuant to the provisions hereof, the Person executing and
delivering such Joinder Agreement shall be an Issuer hereunder and under the
other Purchase Documents as provided therein.
14.7 Payments Pro Rata.
(a) The Administrative Agent agrees that promptly after its receipt
of each payment from or on behalf of the Issuers in respect of any
Obligations of the Issuers hereunder, it
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shall distribute such payment to the Purchasers pro rata based upon their
respective shares, if any, of the Obligations with respect to which such
payment was received.
(b) Each of the Purchasers agrees that, if it should receive any
amount hereunder (whether by voluntary payment, by realization upon security,
by the exercise of the right of setoff or banker's lien, by counterclaim or
cross action, by the enforcement of any right under the Purchase Documents,
or otherwise), which is applicable to the payment of the principal of, or
interest on, the Notes or any Advances thereunder or any Fee, of a sum which
with respect to the related sum or sums received by other Purchasers is in a
greater proportion than the total amount of such Obligation then owed and due
to such Purchaser bears to the total amount of such Obligation then owed and
due to all the Purchasers immediately prior to such receipt, then such
Purchaser receiving such excess payment shall purchase for cash without
recourse or warranty from the other Purchasers an interest in the Obligations
of the Issuers to such Purchasers in such amount as shall result in a
proportional participation by all the Purchasers in such amount; provided,
however, that if all or any portion of such excess amount is thereafter
recovered from such Purchaser, such purchase shall be rescinded and the
purchase price restored to the extent of such recovery, but without interest.
14.8 Calculations; Exclusion of Certain Persons; Computations.
(a) The financial statements to be furnished to the Purchasers
pursuant hereto shall be made and prepared in accordance with U.S. or
Argentine GAAP, as applicable (except as set forth in the notes thereto or as
otherwise disclosed in writing by the Issuers to the Purchasers); provided
that such financial statements shall also be accompanied by convenience
translations pursuant to which all Peso amounts will be converted into
Dollars both (i) using the Noon Buying Rate as in effect on the last day of
the respective fiscal quarter or year of the Borrower, as the case may be,
and (ii) on the basis provided in Section 14.8(b)(i). All financial
statements and other reports and certificates delivered pursuant to this
Agreement shall be in English.
(b) Notwithstanding anything to the contrary contained in clause
(a) of this Section 14.8, (i) all calculations used in determining Excess
Cash Flow and compliance with Sections 8.7 through 8.13, inclusive, shall
convert all Peso amounts into Dollars using the average rate of exchange
during the relevant fiscal period based on the rates in effect in Argentina
on each Business Day during such fiscal period, provided that in determining
the Indebtedness-Annualized EBITDA Ratio and the Senior
Indebtedness-Annualized EBITDA Ratio for such fiscal period the numerator
thereof shall be calculated by converting all Peso amounts into Dollars using
the Noon Buying Rate as in effect on the last day of the relevant fiscal
period, (ii) for purposes of determining compliance with any incurrence tests
set forth in Sections 8.1 through 8.6 and 8.17, any amounts so incurred or
expended (to the extent incurred or expended in a currency other than
Dollars) shall be converted into Dollars on the basis of the Noon Buying Rate
as in effect on the date of such incurrence or expenditure under any
provision of any such Section that has an aggregate Dollar limitation
provided for therein for any fiscal period, and (iii) except as otherwise
specifically provided herein, all computations determining compliance with
Sections 8.7 through 8.13, inclusive, shall utilize accounting principles and
policies in conformity with those used to prepare the historical financial
statements heretofore delivered to the Purchasers.
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(c) Notwithstanding anything contained in this Agreement or in any
other Purchase Document to the contrary, no Excluded Subsidiary shall be
subject to, or be limited or restricted by, or shall be considered a
Subsidiary of any Issuer for the purposes of, or be included in any
calculations of the ratios in, the determination of Excess Cash Flow or the
covenants contained in Sections 8.7 through 8.13, including for purposes of
calculating the assets, liabilities or Subscribers of any Issuer. For
purposes hereof, the term "Excluded Subsidiary" shall mean (i) TDH, (ii)
Procono S.A., and (iii) Supercanal Bolivia and Integra Cable S.A.; provided,
if the assets, liabilities and results of operations of Supercanal Bolivia or
Integra Cable S.A. are included in the consolidated financial statements of
Supercanal Holding provided to the Administrative Agent pursuant to Section
7.1, such company shall not be an Excluded Subsidiary during the period
covered by such financial statements.
(d) All computations of interest and Fees hereunder shall be made
on the basis of a year of 360 days for the actual number of days (including
the first day but excluding the last day) occurring in the period for which
such interest or Fees are payable.
14.9 Governing Law; Submission to Jurisdiction; Venue.
(a) This Agreement and the other Purchase Documents and the rights
and obligations of the parties hereunder and thereunder shall be construed in
accordance with and be governed by the law of the State of New York, except
as is otherwise specifically provided in such Purchase Document. Any legal
action or proceeding with respect to this Agreement or any other Purchase
Document may be brought in the courts of the State of New York sitting in the
City and the County of New York or of the United States for the Southern
District of New York, and, by execution and delivery of this Agreement, each
of the Issuers hereby irrevocably accepts for itself and in respect of its
property, generally and unconditionally, the non-exclusive jurisdiction of
the aforesaid courts. Each of the Issuers hereby irrevocably designates,
appoints and empowers the Process Agent, as its designee, appointee and agent
to receive, accept and acknowledge for and on its behalf, and in respect of
its property, service of any and all legal process, summons, notices and
documents which may be served in any action or proceeding. If for any reason
such designee, appointee and agent shall cease to be available to act as
such, each of the Issuers agrees to designate a new designee, appointee and
agent in New York City on the terms and for the purposes of this provision
satisfactory to the Administrative Agent. Each of the Issuers further
irrevocably consents to the service of process out of any of the
aforementioned courts in any such action or proceeding by the mailing of
copies thereof by registered or certified mail, postage prepaid, to the
Issuers at the address set forth opposite its signature below, such service
to become effective 30 days after such mailing. Nothing herein shall affect
the right of the Administrative Agent, the Collateral Agent, any Purchaser or
the holder of any Note to serve process in any other manner permitted by law
or to commence legal proceedings or otherwise proceed against the Issuers in
any other jurisdiction.
(b) To the extent permitted by Law, each of the Issuers hereby
irrevocably waives any objection which it may now or hereafter have to the
laying of venue of any of the aforesaid actions or proceedings arising out of or
in connection with this Agreement or any other Purchase Document brought in the
courts referred to in clause (a) above and hereby further
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irrevocably waives and agrees not to plead or claim in any such court that
any such action or proceeding brought in any such court has been brought in
an inconvenient forum.
(c) Each of the Issuers agrees, to the extent permitted by
applicable law, that in any legal action or proceeding arising out of or in
connection with this Agreement or any other Purchase Document (the
"Proceedings") anywhere (whether for an injunction, specific performance,
damages or otherwise), no immunity (to the extent that it may at any time
exist) from those Proceedings, from attachment (whether in aid of execution,
before judgment or otherwise), or from judgment shall be claimed by it or on
its behalf or with respect to its assets. Each of the Issuers agrees, to the
extent permitted by applicable law, that it is and its assets are, and shall
be, subject to such Proceedings, attachment or execution in respect of its
obligations under this Agreement and each other Purchase Document to which it
is party.
14.10 Obligation to Make Payments in Dollars. The obligation of
the Issuers to make payment in Dollars of the principal of and interest on
the Notes and any other amounts due hereunder or under any other Purchase
Document to the Payment Office of the Administrative Agent as provided in
Section 4.4 shall not be discharged or satisfied by any tender, or any
recovery pursuant to any judgment, which is expressed in or converted into
any currency other than Dollars, except to the extent such tender or recovery
shall result in the actual receipt by the Administrative Agent at its Payment
Office on behalf of the Purchasers or holders of the Notes of the full amount
of Dollars expressed to be payable in respect of the principal of and
interest on the Notes and all other amounts due hereunder or under any other
Purchase Document. The obligation of the Issuers to make payments in Dollars
as aforesaid shall be enforceable as an alternative or additional cause of
action for the purpose of recovery in Dollars of the amount, if any, by which
such actual receipt shall fall short of the full amount of Dollars expressed
to be payable in respect of the principal of and interest on the Notes and
any other amounts due under any other Purchase Document, and shall not be
affected by judgment being obtained for any other sums due under this
Agreement or under any other Purchase Document. The Issuers assume and will
be liable in respect of any future circumstance (including acts of God or
force majeure) which may affect the exchange market or mechanism available
for the purchase of Dollars in such a way as to hinder or make more onerous
obtaining the Dollars owed hereunder and under the Notes and agree to provide
the Administrative Agent with Dollar Denominated Securities as contemplated
herein or take any other similar or other actions permitted by applicable law
to enable the Issuers to make full payment, in Dollars, of the Obligations in
accordance with the provisions of this Agreement and the Notes. The Issuers
waive the right to invoke any defense of payment impossibility (including any
defense under Section 1198 of the Argentine Civil Code).
14.11 Counterparts. This Agreement may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an
original, but all of which shall together constitute one and the same
instrument.
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14.12 Effectiveness. This Agreement shall become effective on
the date (the "Effective Date") on which the parties hereto shall have duly
executed and delivered a copy hereof (whether the same or different copies).
14.13 Headings Descriptive. The headings of the several
sections and subsections of this Agreement are inserted for convenience only
and shall not in any way affect the meaning or construction of any provision
of this Agreement.
14.14 Amendment or Waiver. Neither this Agreement nor any other
Purchase Document nor any terms hereof or thereof may be changed, waived,
discharged or terminated unless such change, waiver, discharge or termination
is in writing signed by the Required Purchasers and the Administrative Agent;
provided, however, that no such change, waiver, discharge or termination
shall, without the consent of each Purchaser, (i) extend the final maturity
of any Advance or Note, or reduce the rate or extend the time of payment of
interest or Fees thereon, or reduce the principal amount thereof, or increase
the Commitment of any Purchaser over the amount thereof then in effect (it
being understood that a waiver of any Default or Event of Default or of a
mandatory reduction in the Total Commitment shall not constitute a change in
the terms of any Commitment of any Purchaser), (ii) release substantially all
of the Collateral except as shall be otherwise provided in any Purchase
Document, (iii) amend, modify or waive any provision of this Section 14.14
or Sections 2.1, 2.2, 2.3, 10.9, 13, 14.1, 14.2, 14.4, 14.5, 14.7, 14.8(b),
(iv) reduce the percentage specified in the definition of Required Purchasers
or (v) consent to the assignment or transfer by any of the Issuers of any of
its rights and obligations under this Agreement.
14.15 Obligations Joint and Several. The obligations of the
Issuers hereunder and under the Notes are joint and several.
14.16 Authorization. Each Issuer hereby authorizes, and grants
a power of attorney to, each other Issuer to execute and deliver for and on
its behalf Notices of Funding, Notes and any other Purchase Documents which
purport to be executed and delivered for and on behalf of such Issuer.
14.17 Survival. All indemnities set forth herein, including,
without limitation, in Sections 2.6, 2.7, 4.5, 10.9 and 14.1, shall survive
the execution and delivery of this Agreement and the Notes and the making and
repayment of the Advances.
14.18 Domicile of Advances. Each Purchaser may transfer and
thereafter carry its Advances at, to or for the account of any office,
Subsidiary or Affiliate of such Purchaser; provided, however, that to the
extent a transfer of Advances pursuant to this Section 14.18 would, at the
time of such transfer, result in increased costs or taxes under Section 2.6
or 4.5 hereof from those being charged by the respective Purchaser prior to
such transfer, then the Issuers shall not be obligated to pay such increased
costs or taxes (although the Issuers shall be obligated to pay any other
increased costs or taxes of the type described above resulting from changes
after the date of the respective transfer).
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14.19 Confidentiality. Each of the Administrative Agent, the
Collateral Agent, the Arranger and each Purchaser agrees to take normal and
reasonable precautions and exercise due care to maintain the confidentiality
of all non-public information provided to it by the Issuers pursuant to this
Agreement or the other Purchase Documents, and no such party shall use any
such information for any purpose or in any manner other than in connection
with the transactions contemplated in this Agreement; except to the extent
such information was or becomes available on a non-confidential basis from a
source other than the Issuers; provided further, however, that any Purchaser
may disclose such information (A) at the request or pursuant to any
requirement of any Governmental Authority to which the Purchaser is subject
or in connection with an examination of such Purchaser by any such authority;
(B) pursuant to subpoena or other judicial or administrative process; (C)
when required to do so in accordance with the provisions of any applicable
Law; (D) to the extent reasonably required in connection with any litigation
or proceeding to which the Purchaser or its Affiliates may be party, (E) to
the extent reasonably required in connection with the exercise of any remedy
hereunder or under any other Purchase Document, (F) to such Purchaser's
independent auditors and other professional advisors, and (G) with the
permission of Supercanal Holding. Notwithstanding the foregoing, and without
limiting the generality of the foregoing, the Issuers authorize each
Purchaser to disclose to any transferee (each, a "Transferee") and to any
prospective Transferee, such financial and other information in such
Purchaser's possession concerning the Issuers which has been delivered to the
Administrative Agent, or the Collateral Agent or the Purchasers pursuant to
this Agreement or in connection with the transactions contemplated hereby;
provided that any such Transferee shall agree to be bound to keep such
information confidential to the same extent required of the Purchasers
hereunder.
14.20 Base Rate Advances During Interim Period. Notwithstanding
anything contained in this Agreement to the contrary, the parties agree that
during the Interim Period (as defined below) the Advances made on the Initial
Funding Date shall bear interest at a rate per annum equal to the Base Rate
in effect from time to time, plus 3.00%. For purposes hereof, the term
"Interim Period" shall mean the period commencing on the Initial Funding Date
and ending on the earlier to occur of (i) November 30, 1997, and (ii) the
date (the "LIBOR Commencement Date") specified in a written notice from the
Administrative Agent to the Issuers and the Purchasers, which notice shall
(a) be given not less than two Business Days prior to the LIBOR Commencement
Date, (b) specify that Advances made on the Initial Funding Date shall bear
interest from and after the LIBOR Commencement Date on the basis of LIBOR as
provided in Section 2.5 hereof, and (c) specify LIBOR for the ensuing
Interest Period, which Interest Period shall commence on the LIBOR
Commencement Date and end on January 7, 1998. All accrued interest in
respect of the Interim Period shall be payable on the last Business Day of
the Interim Period.
14.21 Waiver of Security, Performance Bond, etc. To the extent
that any of the Issuers may be entitled to the benefit of any provision of
Law requiring the Administrative Agent, the Collateral Agent or any Purchaser
in any suit, action or proceeding brought in a court of Argentina or other
jurisdiction arising out of or in connection with this Agreement, the Notes,
any of the other Purchase Documents or any of the transactions contemplated
hereby or thereby, to post security for litigation costs or otherwise post a
performance bond or guaranty (cautio
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judicatum solvi or excepcion de arraigo), or to take any similar action, each
of the Issuers hereby irrevocably waives such benefit, in each case to the
fullest extent now or hereafter permitted under the Laws of Argentina or any
such other jurisdiction.
14.22 Interest Reserve Account Payments, Security Interest, etc.
(a) On the last Business Day of each calendar month, the Issuers
shall pay to the Collateral Agent for deposit in the Interest Reserve Account
an amount equal to the amount of interest that will have accrued during such
calendar month in respect of the Advances, as set forth in a written notice
from the Collateral Agent to Supercanal Holding dated not later than the date
five Business Days prior to the last Business Day of such calendar month.
(b) On or before 12:00 noon (New York time) on each Interest
Payment Date, the Collateral Agent shall transfer monies from the Interest
Reserve Account to the Administrative Agent (or as the Administrative Agent
shall designate), for the account of the Purchasers entitled thereto, to be
applied to the payment of accrued interest. All amounts from time to time on
deposit in the Interest Reserve Account shall constitute collateral for the
payment of the Advances and shall not constitute any payment of any
Obligation until applied as provided above. To the extent that any amounts
so transferred from the Interest Reserve Account to the Administrative Agent
on any Interest Payment Date are not sufficient to pay all accrued interest
due on such date, the Issuers shall pay to the Administrative Agent on such
date an amount equal to all remaining accrued interest due on such date.
(c) As security for the prompt and complete payment and performance
when due of all of the Obligations, each of the Issuers does hereby grant,
bargain, assign, transfer, sell, deliver and convey unto the Collateral
Agent, its successors and assigns, and does hereby grant to the Collateral
Agent for the benefit of the Purchasers, a continuing security interest in,
and first Lien on, all of the Issuers' respective right, title and interest
in, to and under the Interest Reserve Account (including any and all
investment accounts established by the Collateral Agent to hold investments
of funds deposited in the Interest Reserve Account), and all monies,
securities, revenues, receipts, proceeds and other sums from time to time
deposited or required to be deposited in the Interest Reserve Account (or any
such investment accounts). The security interest of the Collateral Agent
under this Agreement extends to all interest, monies, securities and
instruments deposited or required to be deposited in the Interest Reserve
Account (or any such investment accounts) at any time during the continuation
of this Agreement.
(d) All funds held by the Collateral Agent in the Interest Reserve
Account shall be invested and reinvested in cash and Cash Equivalents. All
revenues, receipts, monies, proceeds and other sums derived in any manner
from any amounts held in the Interest Reserve Account shall be held and
applied in accordance with this Section 14.19.
(e) Upon the occurrence and during the continuance of an Event of
Default, the Collateral Agent shall hold and apply the amounts held in the
Interest Reserve Account, in accordance with Section 10.4 of the Credit
Agreement.
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14.23 WAIVER OF JURY TRIAL. EACH OF THE PURCHASERS, THE
ADMINISTRATIVE AGENT, THE COLLATERAL AGENT AND THE ISSUERS HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES THE RIGHT ANY OF THEM MAY HAVE TO A
TRIAL BY JURY OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT, THE NOTES OR
ANY OTHER PURCHASE DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY RELATING
HERETO OR THERETO. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE
PURCHASERS, THE ADMINISTRATIVE AGENT AND THE COLLATERAL AGENT TO ENTER INTO
THIS AGREEMENT.
[SIGNATURES ON NEXT PAGE]
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IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute and deliver this Agreement as of the date first
above written.
ISSUERS:
c/o Estudio Vila SUPERCANAL HOLDING S.A.
Espejo 333-Dpts. 5/6
5500, Mendoza, Argentina
Attn: Dr. Alberto Luis Vila By:______________________________
Telephone/Facsimile: (54-61) 25- Daniel Eduardo Vila
3229/4202/4879/3859 President
SUPERCANAL S.A.
By:______________________________
Daniel Eduardo Vila
President
MIRROR HOLDING S.R.L.
By:______________________________
Daniel Eduardo Vila
Manager
T.V. CABLE LA RIOJA S.A.
By:______________________________
Daniel Eduardo Vila
President
CABLE TELEVISORA COLOR
MERCEDES S.R.L.
By:______________________________
Daniel Eduardo Vila
Manager
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INTEGRA CABLE S.A. f/k/a Integra
Cable S.R.L.
By:______________________________
Daniel Eduardo Vila
President
HORIZONTE S.R.L.
By:______________________________
Daniel Eduardo Vila
Manager
T.V. CABLE CATAMARCA S.A.
By:______________________________
Daniel Eduardo Vila
President
ACV CABLE VISION S.R.L.
By:______________________________
Daniel Eduardo Vila
Manager
NUEVA VISION SATELITAL S.R.L.
By:______________________________
Daniel Eduardo Vila
Manager
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MONTEROS TELEVISORA COLOR S.R.L.
By:______________________________
Daniel Eduardo Vila
Manager
A-T SAT S.R.L.
By:______________________________
Daniel Eduardo Vila
Manager
TRINIDAD TELEVISION S.A.
By:______________________________
Daniel Eduardo Vila
President
RAWSON CABLE S.A.
By:______________________________
Daniel Eduardo Vila
President
TELEVISORA DEL OESTE S.A.
By:______________________________
Daniel Eduardo Vila
President
CABLE TELEVISORA COLOR S.R.L.
By:______________________________
Daniel Eduardo Vila
Manager
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PEHUENCHE CABLE TELEVISORA
COLOR S.R.L.
By:______________________________
Daniel Eduardo Vila
Manager
FACUNDO S.A.
By:______________________________
Daniel Eduardo Vila
President
ATELCO S.A.
By:______________________________
Daniel Eduardo Vila
President
INVERSORA ATELCO COMODORO S.A.
By:______________________________
Daniel Eduardo Vila
President
ANTENA TELEVISION COMUNITARIA S.A.
By:______________________________
Daniel Eduardo Vila
President
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INVERSORA ANTENA COMUNITARIA TRELEW S.A.
By:______________________________
Daniel Eduardo Vila
President
SUCANAL S.R.L.
By:______________________________
Daniel Eduardo Vila
Manager
ACONQUIJA TELEVISORA SATELITAL S.R.L.
By:______________________________
Alfredo Luis Vila
Manager
SUPERCANAL BOLIVIA S.A.
By:______________________________
Alfredo Luis Vila
President
ARRANGER
ING BARING (U.S.) SECURITIES, INC.
By:______________________________
Name:_________________________
Title:________________________
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ADMINISTRATIVE AGENT AND
COLLATERAL AGENT
135 East 57th Street ING BARING (U.S.) CAPITAL CORPORATION
New York, New York 10022
Attn: Patricia Lorenzana
Telephone: (212) 446-1500
Facsimile: (212) 593-0566 By:______________________________
Name:_________________________
Title:________________________
AGENT OF COLLATERAL AGENT
ING BANK N.V., ARGENTINA BRANCH
By:______________________________
Name:_________________________
Title:________________________
REGISTRAR
THE BANK OF NEW YORK
By:______________________________
Name:_________________________
Title:________________________
PURCHASERS
BZW SECURITIES LIMITED
By:_______________________________
Name:_________________________
Title:________________________
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ING BANK N.V., LONDON BRANCH
By:_______________________________
Name:_________________________
Title:________________________
By:______________________________
Name:_________________________
Title:________________________
LEHMAN COMMERCIAL PAPER INC.
By:_______________________________
Name:_________________________
Title:________________________
CREDIT LYONNAIS SECURITIES (USA) INC.
By:______________________________
Name:_________________________
Title:________________________
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November 26, 1997
Supercanal Holding S.A. and each of
the other Issuers under the Note
Purchase Agreement described below
Re: U.S.$300 Million Note Purchase Agreement/Conditions to Tescorp Acquisition
Ladies & Gentlemen:
Reference is hereby made to the Note Purchase Agreement, dated as of
November 12, 1997 (as modified, amended or supplemented from time to time,
the "Note Purchase Agreement"), among Supercanal Holding S.A. and various
other subsidiaries thereof that are or may become party thereto, various
financial institutions, ING Baring (U.S.) Securities, Inc., as Arranger, ING
Baring (U.S.) Capital Corporation, as Administrative Agent and as Collateral
Agent, and The Bank of New York, as Registrar. Capitalized terms used herein
shall, unless the context otherwise requires, have the meanings provided in
the Note Purchase Agreement.
The Issuers have informed the Purchasers that they desire to request
Advances in order to finance the Tescorp Acquisition. Pursuant to Section
12.1(b) of the Note Purchase Agreement, the Required Purchasers may specify
the terms and conditions upon which Advances will be made by the Purchasers
to finance the Tescorp Acquisition, including the execution and delivery of
certain documents and instruments and the provision of certain legal
opinions. This letter constitutes an agreement of the Purchasers regarding
the terms and conditions upon which such Advances will be made.
For valuable consideration given and received, the parties hereto
hereby agree as follows:
1. Conditions Precedent to the Funding Relating to the Stock
Purchase. The obligation of each Purchaser to make Advances to (i) pay the
unpaid amount of the acquisition price for the Purchased Common Stock (as
defined in the Amended Stock Purchase and Merger Agreement dated as of
November 26, 1997, between Tescorp Delaware and Tescorp Texas (the "Tescorp
Purchase Agreement")), or (ii) to pay or reimburse any transaction expenses
directly related to the Tescorp Acquisition, is subject, at the time of such
Funding, to the satisfaction or waiver of the following conditions:
(a) the Issuers shall have satisfied each of the conditions set
forth in Sections 5.2(a) through (d) and Section 5.3(e) of the Note
Purchase Agreement;
(b) at the time of the Funding (A) the Issuers shall have
complied with all of their obligations hereunder, and (B) all
representations and warranties contained
<PAGE>
herein shall be true and correct in all material respects with the same
effect as though such representations and warranties had been made as of
such time;
(c) the Administrative Agent shall have received a certificate
from Tescorp Delaware, dated such Funding Date, signed by the President or
any Vice President of Tescorp Delaware, substantially in the form of
Exhibit A hereto;
(d) Supercanal Holding shall have executed and delivered a
pledge agreement substantially in the form of Exhibit B hereto, pursuant to
which Supercanal Holding shall have granted to (A) the Collateral Agent,
for the benefit of the Purchasers, a Lien of first priority in all of the
Stock of Tescorp Delaware, and (B) the Bridge Collateral Agent, for the
benefit of the Bridge Purchasers, a Lien of second priority in all such
Stock, in each such case free and clear of all Liens;
(e) Tescorp Delaware shall have executed and delivered:
(1) a joinder agreement substantially in the form of
Exhibit G to the Note Purchase Agreement, pursuant to which Tescorp
Delaware shall have become a party to the Note Purchase Agreement and
the other Purchase Documents and the Bridge Note Purchase Agreement
and the other Bridge Purchase Agreements;
(2) a pledge agreement substantially in the form of Exhibit
C hereto, pursuant to which Tescorp Delaware shall have (A) granted to
(i) the Collateral Agent, for the benefit of the Purchasers, a
perfected Lien of first priority in all of the Stock of Tescorp Texas
theretofore and thereafter acquired by Tescorp Delaware, and (ii) the
Bridge Collateral Agent, for the benefit of the Bridge Purchasers, a
perfected Lien of second priority in all such Stock, in each such case
free and clear of all Liens (and shall have delivered to the
Collateral Agent all Stock of Tescorp Texas owned by Tescorp Delaware
as of such date (which shall constitute not less than 20% of the
issued and outstanding common Stock of Tescorp Texas), together with
stock powers executed in blank), and (B) assigned to the Collateral
Agent for the benefit of the Purchasers the right to receive any
payment to Tescorp Delaware pursuant to Paragraph 11.2 of the Tescorp
Purchase Agreement;
(f) the Administrative Agent shall have received a letter from
the Process Agent, in form and substance satisfactory to the Administrative
Agent in all respects, indicating its consent to its appointment by Tescorp
Delaware as its agent to receive service of process in connection with the
transactions contemplated by the Note Purchase Agreement;
(g) on or prior to the Funding Date, (i) each of the conditions
precedent set forth in the Tescorp Purchase Agreement to the Stock Purchase
(as defined in the Tescorp Purchase Agreement) shall have been satisfied
(as reasonably determined by the Required Purchasers) and not waived (or
with respect to any non-material conditions, waived by the applicable
party), (ii) the Stock Purchase (as defined in the Tescorp Purchase
Agreement) shall have been consummated, and (iii) the President or any Vice
President of Tescorp Delaware shall have provided a certificate to the
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<PAGE>
Administrative Agent certifying as to the matters set forth in clauses (i)
and (ii) above; and
(h) if proceeds of the Advances will be used to pay or reimburse
transaction fees and expenses in connection with the Tescorp Acquisition,
the Administrative Agent shall have approved the amounts of such fees and
expenses.
The parties agree and acknowledge that the pledge agreement executed and
delivered pursuant to paragraph 1(e) above shall provide that the Stock pledged
pursuant thereto shall be released upon (i) the repurchase of the Purchased
Common Stock (as defined in the Tescorp Purchase Agreement), and (ii) the
payment to the Collateral Agent of any amounts payable to Tescorp Delaware
pursuant to Paragraph 11.2 of the Tescorp Purchase Agreement.
2. Conditions Precedent to the Funding Relating to the Tender
Offers. The obligation of each Purchaser to make Advances to (i) pay the
amounts required to be paid under the Tescorp Purchase Agreement for the shares
of Stock tendered in response to the Tender Offers (as defined in the Tescorp
Purchase Agreement), or (ii) to pay or reimburse any transaction expenses
directly related to the Tescorp Acquisition, is subject, at the time of such
Funding, to the satisfaction or waiver of the following conditions:
(a) the Issuers shall have satisfied each of the conditions set
forth in Sections 5.2(a) through (d) and Sections 5.3(e) of the Note
Purchase Agreement;
(b) at the time of the Funding (A) the Issuers shall have
complied with all of their obligations hereunder, and (B) all
representations and warranties contained herein shall be true and correct
in all material respects with the same effect as though such
representations and warranties had been made as of such time;
(c) on or prior to the Funding Date, (i) each of the conditions
precedent as set forth in the Tescorp Purchase Agreement to the payment of
amounts required to be paid under the Tescorp Purchase Agreement for the
shares of Stock tendered in response to the Tender Offers shall have been
satisfied (as reasonably determined by the Required Purchasers) and not
waived (or with respect to any non-material conditions, waived by the
applicable party), (ii) Tescorp Delaware shall have consummated the
acquisition of not less than 66 2/3% of the issued and outstanding common
Stock of Tescorp Texas, and (iii) the President or any Vice President of
Tescorp Delaware shall have provided a certificate to the Administrative
Agent certifying as to the matters set forth in clauses (i) and (ii) above;
and
(d) if proceeds of the Advances will be used to pay or reimburse
transaction fees and expenses in connection with the Tescorp Acquisition,
the Administrative Agent shall have approved the amounts of such fees and
expenses.
3. Amount of Fundings for the Tescorp Acquisition. Notwithstanding
anything contained in the Note Purchase Agreement to the contrary, the
aggregate amount of Advances under the Note Purchase Agreement to finance the
Tescorp Acquisition shall not exceed U.S.$107,000,000.
3
<PAGE>
4. Representations and Warranties of the Issuers. In order to
induce the Purchasers to enter into this letter agreement and make the
Advances requested in connection with the Tescorp Acquisition, each of the
Issuers makes the following representations and warranties, all of which
shall survive the execution and delivery of this letter agreement and the
making of the Advances, with the occurrence of each Funding in connection
with the Tescorp Acquisition being deemed to constitute a representation and
warranty that the representations and warranties made pursuant to this
paragraph 4 are true and correct on the date of Funding (it being understood
and agreed that any representation and warranty which by its terms is made as
of a specified date shall be required to be true and correct in all material
respects only as of such specified date):
(a) Each of the representations and warranties of the Issuers
contained in Section 6 of the Note Purchase Agreement and each of the
representations and warranties of Tescorp Delaware in Article VI of the
Tescorp Purchase Agreement are true and correct. To the knowledge of the
Issuers, each of the representations and warranties made by Tescorp Texas in
Article V of the Tescorp Purchase Agreement are true and correct.
(b) In connection with the transactions contemplated by the Tescorp
Acquisition Agreement, Tescorp Delaware and, to the knowledge of the Issuers,
Tescorp Texas have complied and will comply, in all material respects, with
all requirements of the Securities Act of 1933, as amended, and all rules and
regulations promulgated thereunder, and the Securities Exchange Act of 1934,
as amended, and all rules and regulations promulgated thereunder.
(c) Each of the Issuers (including, Tescorp Delaware) has the power
and authority to execute, deliver and perform the terms and provisions of
this letter agreement and the pledge agreements and other documents and
instruments required to be executed and delivered pursuant hereto to which it
is party (collectively, the "Documents") and has taken all corporate or other
action necessary to authorize the execution, delivery and performance by it
of each such Document as has been executed and delivered as of each date this
representation and warranty is made. Each of the Issuers (including Tescorp
Delaware) has duly executed and delivered each of the Documents to which it
is party, and each such Document constitutes its legal, valid and binding
obligation enforceable against it in accordance with its terms, except as
such enforcement may be limited by applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization or other similar laws relating to or
affecting creditors' rights generally or by general equity principles.
(d) Neither the execution, delivery or performance by any Issuer
(including, Tescorp Delaware) of the Documents to which it is a party, nor
compliance by it with the terms and provisions thereof, nor the use of the
proceeds of the Advances as contemplated herein and in the Note Purchase
Agreement (i) will contravene any provision of any law, statute, rule or
regulation or any order, writ, injunction or decree of any court or
governmental instrumentality binding on any such Issuer, (ii) will conflict
or be inconsistent with or result in any breach of any of the terms,
covenants, conditions or provisions of, or constitute a default in respect
of, or result in the creation or imposition of (or the obligation to create
or impose) any Lien (other than Liens created pursuant to the Security
Documents) upon, any of the property or assets of any Issuer or pursuant to
the terms of any indenture, mortgage, deed of trust, credit agreement, loan
agreement or any other material agreement, contract or instrument to which
any Issuer is a party or by
4
<PAGE>
which any such Issuer or its properties or assets is bound or to which any
such Issuer may be subject or (iii) will violate any provision of the
estatutos sociales, articles of incorporation, bylaws or other organizational
documents of any Issuer.
(e) Upon execution and delivery, the provisions of each of the
pledge agreements required to be executed and delivered pursuant to paragraph
5.c hereof will be effective to (i) create in favor of the Collateral Agent
for the benefit of the Purchasers, a legal, valid and enforceable fully
perfected first priority Lien on and security interest in the Stock referred
to therein, and (ii) create in favor of the Bridge Collateral Agent for the
benefit of the Bridge Purchasers, a legal, valid and enforceable fully
perfected second priority Lien on and security interest in such Stock,
subject to no other Liens.
5. Covenants.
a. Contemporaneously with the acquisition of any Stock of Tescorp
Texas by Tescorp Delaware, the Issuers will cause Tescorp Delaware to deliver
such Stock to the Collateral Agent to be held by the Collateral Agent
pursuant to, and subject to the Liens created by, the pledge agreement
executed and delivered by Tescorp Delaware pursuant to paragraph 1(e) above.
b. The Issuers will take all steps necessary to effect the Merger
(as defined in the Tescorp Purchase Agreement), and will effect the Merger,
as soon as is practicable, but in no event later than March 31, 1998;
provided, however, that the Administrative Agent may provide one or more
extensions of the time (not to exceed 60 days in each instance) by which the
Merger shall be completed if the Administrative Agent shall have determined
that the Issuers are diligently taking all reasonable action in order to
effect the Merger as soon as is practicable. The Issuers will provide to the
Administrative Agent from time to time such information as it shall
reasonably request in connection with the status of the Merger;
c. Contemporaneously with the consummation of the Merger (as
defined in the Tescorp Purchase Agreement), the Issuers will cause each of
the following to occur:
(i) The Issuers will cause Tescorp Texas and each of its
Subsidiaries listed on Schedule 1 hereto (the "Tescorp Subsidiaries") to
execute and deliver a joinder agreement substantially in the form of
Exhibit G to the Note Purchase Agreement, pursuant to which Tescorp Texas
and each Tescorp Subsidiary shall become party to the Note Purchase
Agreement and the other Purchase Documents and the Bridge Note Purchase
Agreement and the other Bridge Purchase Documents;
(ii) The Issuers will cause the President of any Vice President
of each of Tescorp Texas and each of the Tescorp Subsidiaries to execute
and deliver to the Administrative Agent a certificate, substantially in the
form of Exhibit A hereto, dated the date of the execution and delivery
thereof;
(iii) The Issuers will cause Tescorp Texas to execute and
deliver pledge agreements substantially in the form of Exhibit B hereto,
pursuant to which Tescorp Texas grants to (A) the Collateral Agent, for the
benefit of the Purchasers, a perfected Lien of first priority in all of the
Stock of Metserco Holdings, Inc. ("Metserco"), Austral Communications Corp.
and Austral Communications Management Services, Inc., and (B)
5
<PAGE>
the Bridge Collateral Agent, for the benefit of the Bridge Purchasers, a
perfected Lien of second priority in all such Stock, in each such case free
and clear of all Liens (and shall have delivered to the Collateral Agent
all such Stock, together with stock powers executed in blank);
(iv) The Issuers will cause Metserco to execute and deliver a
pledge agreement substantially in the form of Exhibit B hereto, pursuant to
which Metserco grants to (A) the Collateral Agent, for the benefit of the
Purchasers, a perfected Lien of first priority in all of the Stock of
Metserco Corporation, and (B) the Bridge Collateral Agent, for the benefit
of the Bridge Purchasers, a perfected Lien of second priority in all such
Stock, in each such case free and clear of all Liens (and shall have
delivered to the Collateral Agent all such Stock, together with stock
powers executed in blank);
(v) The Issuers will cause each Tescorp Subsidiary and each
other Person which owns Stock of any Tescorp Subsidiary which is identified
as a Tescorp Argentine Subsidiary on Schedule 1 hereto (the "Tescorp
Argentine Subsidiaries") to execute and deliver pledge agreements
substantially in the form of the SA Pledge Agreements and SRL Pledge
Agreements, as applicable, pursuant to which each such Tescorp Argentine
Subsidiary and such other Person grants to (A) the Collateral Agent, for
the benefit of the Purchasers, a perfected Lien of first priority in all of
the Stock of the Tescorp Argentine Subsidiaries owned by such Tescorp
Subsidiary or other Person, and (B) the Bridge Collateral Agent, for the
benefit of the Bridge Purchasers, a perfected Lien of second priority in
all such Stock, in each such case free and clear of all Liens (and, if
applicable, (i) deliver to the Collateral Agent all such Stock with the
relevant annotation of the existence and perfection of the Liens created by
such pledge agreement, (ii) give notice to the applicable Tescorp
Subsidiaries of the grant of such Liens as required by applicable Law, and
(iii) cause the applicable Tescorp Subsidiaries to duly register such Liens
in the names of the Collateral Agent and the Bridge Collateral Agent in
such Subsidiaries' share registries);
(vi) The Issuers will cause each of the Tescorp Subsidiaries
which is identified as an Argentine Operating Subsidiary on Schedule 1
hereto (the "Argentine Operating Subsidiaries") to execute and deliver a
guaranty trust agreement substantially in the form of the Guaranty Trust
Agreements, pursuant to which each such Argentine Operating Subsidiary
assigns to the Guaranty Trustee in guaranty trust for the benefit of the
Purchasers and, to the extent any Bridge Obligations are outstanding, the
Bridge Purchasers, all of such Argentine Operating Subsidiary's present and
future Receivables, free and clear of all Liens; and
(vii) The Issuers shall cause the Process Agent to provide to
the Administrative Agent a letter, in form and substance satisfactory to
the Administrative Agent in all respects, indicating the Process Agent's
consent to its appointment by Tescorp Texas and each of the Tescorp
Subsidiaries as their agent to receive service of process in connection
with the transactions contemplated by the Note Purchase Agreement.
d. On or before the date 15 days after the date (the "Control Date")
on which Tescorp Delaware acquires a majority of the Stock of Tescorp Texas, the
Issuers will cause all of
6
<PAGE>
the Indebtedness of the Tescorp Subsidiaries existing as of the Control Date
to be fully paid. From and after the date 15 days after the Control Date,
(i) the Issuers will not permit any of the Tescorp Subsidiaries to incur any
Indebtedness for borrowed money, without the prior written consent of the
Administrative Agent, and (ii) the Issuers will, within 60 days after request
by the Administrative Agent, cause the Tescorp Argentine Subsidiaries to
adopt, and file all appropriate applications for the registration of,
amendments to their respective estatutos sociales, in form and substance
satisfactory to the Administrative Agent, reflecting the restriction set
forth in clause (i) above.
e. The Issuers will not permit the amendment, modification or
supplementation of the Tescorp Purchase Agreement, without the prior consent
of the Administrative Agent.
f. Each of the Issuers will, at its own expense, (i) make,
execute, endorse, acknowledge, file and/or deliver to the Administrative
Agent and/or the Collateral Agent from time to time such vouchers, invoices,
schedules, confirmatory assignments, conveyances, financing statements,
transfer endorsements, powers of attorney, certificates, reports and other
assurances or instruments and (ii) take or cause to be taken such further
actions and steps relating to (x) the Collateral, (y) the filing and
prosecution of applications with Governmental Authorities for registration or
recording (including, if necessary or requested, the modification, refiling
and prosecution of such applications) and (z) the other agreements, covenants
and transactions provided for or contemplated herein, in any such case as the
Administrative Agent and/or the Collateral Agent may reasonably require.
Without limiting the generality of the foregoing, the Issuers will cooperate
with the Administrative Agent and the Required Purchasers and take such
actions and execute and deliver such agreements and instruments as the
Administrative Agent and the Required Purchasers shall reasonably request (a)
in connection with the restructuring of the ownership of the Stock of the
Tescorp Subsidiaries in order to ensure the validity and enforceability of
the Liens created pursuant to the pledge agreements executed and delivered
pursuant hereto, and/or (b) in order to change the domicile of any Tescorp
Subsidiaries organized as limited liability companies (sociedades de
responsabilidad limitada)(the "Tescorp SRL Subsidiaries") to the City of
Buenos Aires, and/or (c) in order to provide for the transfer of the
ownership of the Stock of the Tescorp SRL Subsidiaries to an existing or
newly created entity or entities reasonably satisfactory to the
Administrative Agent, and the registration of such transfer with all
applicable Governmental Authorities. The Issuers shall comply with their
obligations under this paragraph 5.f within such time periods as the
Administrative Agent shall reasonably request.
g. The Issuers will cause all of the Stock pledged pursuant to the
pledge agreement executed and delivered pursuant to paragraph 1(d) hereof,
together with stock powers with respect thereto duly executed in blank, to be
delivered to the Collateral Agent not later than 10 days after the Funding
contemplated in paragraph 1 hereof.
6. Miscellaneous.
a. The parties acknowledge and agree that (i) all of the pledge
agreements and guaranty trust agreements executed and delivered pursuant to
the provisions hereof constitute "Security Documents" as such term is defined
and used in the Note Purchase Agreement, (ii) this letter agreement and all
documents and instruments executed and delivered pursuant to the
7
<PAGE>
provisions hereof constitute "Purchase Documents" as such term is defined and
used in the Note Purchase Agreement, (iii) all Stock and other collateral
encumbered by (or purported to be encumbered by) the pledge agreements
executed and delivered pursuant hereto constitute "Collateral" as such term
is defined and used in the Note Purchase Agreement, (iv) all pledge
agreements granting a Lien on the Stock of any Tescorp Argentine Subsidiary
executed and delivered pursuant hereto constitute SA Pledge Agreements and
SRL Pledge Agreements, as the case may be, for purposes of the Note Purchase
Agreement, (v) all guaranty trust agreements executed and delivered pursuant
to the provisions hereof constitute Guaranty Trust Agreements for purposes of
the Note Purchase Agreement, (vi) for purposes of the covenants contained in
the Note Purchase Agreement (other than 7.17, 7.18 and 7.19) from and after
the Control Date, each of the Tescorp Subsidiaries shall be deemed to be
"Acquisition Subsidiaries" acquired in an "Acquisition" consummated on the
Control Date.
b. Notwithstanding anything contained in the Note Purchase
Agreement to the contrary, the Issuers shall be permitted to (i) convert the
Tescorp SRL Subsidiaries into corporations (sociedades anonimas) organized
under Argentine law, (ii) merge the Tescorp SRL Subsidiaries into any other
Tescorp Subsidiary, and/or (iii) modify the estatutos of any Tescorp
Argentine Subsidiary or any other Issuer in connection with any of the
transactions or other matters contemplated hereby or by the Note Purchase
Agreement or the other Purchase Documents; provided, that in any such case
the Administrative Agent shall have consented to such action, which consent
shall not be unreasonably withheld, conditioned or delayed.
c. This letter agreements sets forth all of the conditions to the
Fundings to finance the Tescorp Acquisition. Accordingly, to the extent that
any of the conditions to Fundings for the Tescorp Acquisition outlined in
Section 12.1(b) of the Note Purchase Agreement are inconsistent with the
provisions hereof, such conditions are superseded hereby.
d. This letter agreement may be changed, waived, discharged or
terminated only by any instrument in writing signed by the party against
which enforcement of such change, waiver, discharge or termination is sought.
e. The benefits of this letter agreement shall inure to the
parties and their respective successors and assigns of the parties hereto,
and the obligations and liabilities of the parties hereto shall be binding
upon them and their respective successors and assigns. The Issuers may not
transfer or assign their obligations under this letter agreement without the
prior written consent of the Administrative Agent.
f. This letter agreement shall be governed by and construed in
accordance with the Laws of the State of New York.
g. This letter agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of
which together shall be deemed to be the same agreement.
8
<PAGE>
If the foregoing is in accordance with your understanding of our
agreement, please sign below where indicated and return a copy of this letter
to the Administrative Agent.
Sincerely,
ADMINISTRATIVE AGENT AND COLLATERAL AGENT
ING BARING (U.S.) CAPITAL CORPORATION
By:
-----------------------------------------------
Name:
---------------------------------------------
Title:
--------------------------------------------
PURCHASERS
ING BANK N.V., LONDON BRANCH
By:
-----------------------------------------------
Name:
---------------------------------------------
Title:
--------------------------------------------
CREDIT LYONNAIS PANAMA BRANCH
By:
-----------------------------------------------
Name:
---------------------------------------------
Title:
--------------------------------------------
9
<PAGE>
BZW SECURITIES LIMITED
By:
-----------------------------------------------
Name:
---------------------------------------------
Title:
--------------------------------------------
LEHMAN COMMERCIAL PAPER INC.
By:
-----------------------------------------------
Name:
---------------------------------------------
Title:
--------------------------------------------
AGREED AND ACCEPTED AS OF
THE DATE WRITTEN ABOVE:
SUPERCANAL HOLDING S.A.
SUPERCANAL S.A.
T.V. CABLE LA RIOJA S.A.
INTEGRA CABLE S.A. f/k/a Integra Cable S.R.L.
T.V. CABLE CATAMARCA S.A.
TRINIDAD TELEVISION S.A.
RAWSON CABLE S.A.
TELEVISORA DEL OESTE S.A.
FACUNDO S.A.
ATELCO S.A.
INVERSORA ATELCO COMODORO S.A.
ANTENA TELEVISION COMUNITARIA S.A.
INVERSORA ANTENA COMUNITARIA
TRELEW S.A.
TELECABLE S.A.
By:
-------------------------------------
Daniel E. Vila, President
Daniel E. Vila is executing and delivering
this letter agreement, as President, for and
on behalf of each of the Issuers listed above.
10
<PAGE>
MIRROR HOLDING S.R.L.
CABLE TELEVISORA COLOR MERCEDES S.R.L.
HORIZONTE S.R.L.
ACV CABLE VISION S.R.L.
NUEVA VISION SATELITAL S.R.L.
MONTEROS TELEVISORA COLOR S.R.L.
A-T SAT S.R.L.
CABLE TELEVISORA COLOR S.R.L.
PEHUENCHE CABLE TELEVISORA COLOR S.R.L.
SUCANAL S.R.L.
By:
-----------------------------------
Daniel E. Vila, Manager
Daniel E. Vila is executing and delivering
this letter agreement, as Manager, for and
on behalf of each of the Issuers listed above.
SUPERCANAL BOLIVIA S.A.
By:
-------------------------------------
Alfredo Luis Vila
President
ACONQUIJA TELEVISORA SATELITAL
S.R.L.
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
11
<PAGE>
SCHEDULE 1
Tescorp U.S. Subsidiaries
-------------------------
Metserco Holdings, Inc.
Austral Communications Corp.
Austral Communications Management Services, Inc.
Metserco Corporation
Tescorp Argentine Subsidiaries
-------------------------------
1. Argentine Holding and Management Subsidiaries
Comunicaciones Austral S.A.
SMR S.A.
Cabledifusion S.A.
2. Argentine Operating Subsidiaries
Transcable S.A.
Televisora Austral S.A.
Cablemax S.A.
ARTV S.A.
BTC S.A.
SIR TV S.R.L.
Cable Viedma S.R.L.
Televiedma S.R.L.
Vision Codificada S.A.
<PAGE>
Exhibit C
AMENDED STOCK PURCHASE AND MERGER AGREEMENT
DATED AS OF
NOVEMBER 26, 1997
BETWEEN
TESCORP ACQUISITION CORPORATION,
A WHOLLY OWNED SUBSIDIARY OF
SUPERCANAL HOLDING S.A.,
AND
TESCORP, INC.
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
STOCK PURCHASE
1.1 Purchase of Stock. . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Deposit. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Stock Purchase Closing . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II
THE TENDER OFFERS
2.1 The Offers . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2 Company Action . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE III
THE MERGER
3.1 Agreement to Effect Merger . . . . . . . . . . . . . . . . . . 8
3.2 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.3 Certificate of Incorporation . . . . . . . . . . . . . . . . . 8
3.4 By-Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.5 Directors. . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.6 Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.7 Stock of the Company . . . . . . . . . . . . . . . . . . . . . 9
3.8 Stock of Acquisition . . . . . . . . . . . . . . . . . . . . . 10
3.9 Stockholders Meeting . . . . . . . . . . . . . . . . . . . . . 10
3.10 Voting by Acquisition. . . . . . . . . . . . . . . . . . . . . 11
3.11 Dissenting Shares. . . . . . . . . . . . . . . . . . . . . . . 11
3.12 Payment for Shares . . . . . . . . . . . . . . . . . . . . . . 12
3.13 Options and Warrants . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE IV
EFFECTIVE TIME OF MERGER
4.1 Date of the Merger . . . . . . . . . . . . . . . . . . . . . . 14
4.2 Execution of Certificates of Merger. . . . . . . . . . . . . . 14
4.3 Effective Time of the Merger . . . . . . . . . . . . . . . . . 15
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
5.1 Organization and Qualification; Subsidiaries . . . . . . . . . 15
5.2 Certificate of Incorporation and By-Laws . . . . . . . . . . . 16
5.3 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . 16
5.4 Authority Relative to this Agreement . . . . . . . . . . . . . 18
5.5 No Conflict; Required Filings and Consents . . . . . . . . . . 19
5.6 Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . 20
i
<PAGE>
5.7 SEC Reports; Financial Statements. . . . . . . . . . . . . . . 20
5.8 Absence of Certain Changes . . . . . . . . . . . . . . . . . . 21
5.9 No Undisclosed Liabilities . . . . . . . . . . . . . . . . . . 22
5.10 Absence of Litigation. . . . . . . . . . . . . . . . . . . . . 22
5.11 Benefit Plans. . . . . . . . . . . . . . . . . . . . . . . . . 23
5.12 Transactions with Certain Persons. . . . . . . . . . . . . . . 24
5.13 Labor Matters. . . . . . . . . . . . . . . . . . . . . . . . . 25
5.14 Proxy Statement/Prospectus . . . . . . . . . . . . . . . . . . 25
5.15 Restrictions on Business Activities. . . . . . . . . . . . . . 26
5.16 Title to Property. . . . . . . . . . . . . . . . . . . . . . . 26
5.17 CATV Systems, Subscribers. . . . . . . . . . . . . . . . . . . 26
5.18 Franchises, Licenses, Permits, etc.. . . . . . . . . . . . . . 27
5.19 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.20 Environmental Matters. . . . . . . . . . . . . . . . . . . . . 32
5.21 Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . 34
5.22 Intellectual Property. . . . . . . . . . . . . . . . . . . . . 34
5.23 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . 36
5.24 Accounts Receivable. . . . . . . . . . . . . . . . . . . . . . 36
5.25 Full Disclosure. . . . . . . . . . . . . . . . . . . . . . . . 36
5.26 Fairness Opinion . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF ACQUISITION
6.1 Organization and Qualification; Subsidiaries . . . . . . . . . 37
6.2 Constituent Documents. . . . . . . . . . . . . . . . . . . . . 37
6.3 Authority Relative to this Agreement and the Guarantee . . . . 37
6.4 No Conflict. . . . . . . . . . . . . . . . . . . . . . . . . . 38
6.5 Ownership of Acquisition; No Prior Activities. . . . . . . . . 39
6.6 Accuracy of Materials. . . . . . . . . . . . . . . . . . . . . 40
6.7 Availability of Funds. . . . . . . . . . . . . . . . . . . . . 41
6.8 No Supercanal Shareholder Suits. . . . . . . . . . . . . . . . 41
ARTICLE VII
ACTIONS PRIOR TO THE MERGER
7.1 Activities Until Effective Time. . . . . . . . . . . . . . . . 42
7.2 Redemption of 10% Preferred Stock. . . . . . . . . . . . . . . 44
7.3 No Solicitation of Offers; Notice of Indications of Interest . 44
7.4 Efforts to Fulfill Conditions. . . . . . . . . . . . . . . . . 46
7.5 Indemnification and Insurance. . . . . . . . . . . . . . . . . 46
7.6 Board Representation . . . . . . . . . . . . . . . . . . . . . 48
7.7 Options and Warrants . . . . . . . . . . . . . . . . . . . . . 49
7.8 Use of Proceeds of Sale of Purchased Common Stock. . . . . . . 50
7.9 Purchase of KTV. . . . . . . . . . . . . . . . . . . . . . . . 50
7.10 Satisfaction of Subsidiary Debt. . . . . . . . . . . . . . . . 50
7.11 Ownership of Subsidiaries. . . . . . . . . . . . . . . . . . . 51
8.1 Conditions to the Company's Obligations. . . . . . . . . . . . 51
8.2 Conditions to Acquisition's Obligations. . . . . . . . . . . . 52
ARTICLE IX
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TERMINATION
9.1 Right to Terminate . . . . . . . . . . . . . . . . . . . . . . 54
9.2 Manner of Terminating Agreement. . . . . . . . . . . . . . . . 54
9.3 Termination due to Superior Proposal.. . . . . . . . . . . . . 54
9.4 Effect of Termination. . . . . . . . . . . . . . . . . . . . . 56
ARTICLE X
ABSENCE OF BROKERS
10.1 Representations and Warranties Regarding Brokers and Others. . 57
ARTICLE XI
GENERAL
11.1 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
11.2 Company Option to Repurchase Stock . . . . . . . . . . . . . . 58
11.3 Purchase of Minority Interests . . . . . . . . . . . . . . . . 59
11.4 Payment to Company . . . . . . . . . . . . . . . . . . . . . . 59
11.5 Retention Payments . . . . . . . . . . . . . . . . . . . . . . 59
11.6 Access to Properties, Books and Records. . . . . . . . . . . . 60
11.7 Press Releases . . . . . . . . . . . . . . . . . . . . . . . . 60
11.8 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . 61
11.9 Effect of Disclosures. . . . . . . . . . . . . . . . . . . . . 62
11.10 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
11.11 Prohibition Against Assignment . . . . . . . . . . . . . . . . 62
11.12 Third Party Beneficiaries. . . . . . . . . . . . . . . . . . . 62
11.13 Notices and Other Communications . . . . . . . . . . . . . . . 62
11.14 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . 64
11.15 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . 64
11.16 Consent to Jurisdiction and Service of Process . . . . . . . . 64
11.17 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . 64
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AMENDED STOCK PURCHASE AND MERGER AGREEMENT
This is an Agreement dated as of November 26, 1997 between TESCORP
ACQUISITION CORPORATION ("Acquisition"), a Delaware corporation and a wholly
owned subsidiary of Supercanal Holding, S.A., ("Supercanal"), an Argentine
corporation, and TESCORP, INC. (the "Company"), a Texas corporation, which,
subject to the provisions of Paragraph 11.8(b), amends and restates a Stock
Purchase and Merger Agreement (the "Original Agreement') dated as of September
16, 1997, between Acquisition and the Company.
ARTICLE I
STOCK PURCHASE
1.1 Purchase of Stock. At the Initial Purchase Closing described
in Paragraph 1.3, Acquisition will purchase from the Company, and the Company
will sell to Acquisition, 6,006,006 shares (the "Purchased Common Stock") of
common stock, par value $.02 per share, of the Company ("Common Stock") for a
total of $20,000,000 (the "Common Stock Purchase Price").
1.2 Deposit. (a) Simultaneously with the execution of the Original
Agreement, Acquisition delivered $5 million (the "Deposit") to the Company. If
the Purchase Closing takes place, the Company will retain the Deposit as part of
the payment of the Common Stock Purchase Price. If the Purchase Closing does
not take place, other than because one or more of the conditions specified in
Paragraph 8.2 is not fulfilled (other than because the condition in Paragraph
8.2(d) is not fulfilled due to an order entered by a court in a suit or
proceeding instituted by a shareholder of Supercanal or an affiliate of a
shareholder of Supercanal (a "Supercanal Shareholder Suit"), or because this
Agreement is terminated under Paragraph 9.1 or 9.2 (other than Paragraph 9.1(d),
and other than clause (ii) of Paragraph 9.1(e) due to an order entered by a
court in a Supercanal Shareholder Suit), on the Stock Purchase Closing Date
described in Paragraph 1.3, the Company will return the Deposit to Acquisition.
If the Purchase Closing does not take place (i) because of a default by
Acquisition, (ii) because a condition specified in Paragraph 8.1 is not
fulfilled (unless that condition is also a condition specified in Paragraph 8.2
and is not due to an order of a court entered in a Supercanal Shareholder Suit)
or (iii) because this Agreement is terminated under Paragraph 9.1(d) or under
clause (ii) of Paragraph 9.1(e) due to an order entered by a court in a
Supercanal Shareholder Suit, the Deposit will be retained by the Company.
1.3 Stock Purchase Closing. (a) The closing of the Purchase of
the Purchased Stock, (the "Purchase Closing") will take place at the offices of
Rogers & Wells, 200 Park Avenue, New York, New York, at 10:00 a.m. New York City
time on December 5, 1997 (the "Stock Purchase Closing Date").
(b) At the Purchase Closing, Acquisition will deliver to the
Company the following:
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(i) Evidence of a wire transfer to an account specified by
the Company at least 24 hours before the Purchase Closing of $15,000,000.
(ii) A letter in which Acquisition acknowledges that it will
be acquiring the Purchased Common Stock for investment, and not with a view to
its resale or distribution.
(iii) A copy, executed by Supercanal, of a Programming Purchase
Agreement (the "Programming Agreement") substantially in the form of Exhibit
1.3-B(4).
(c) At the Purchase Closing, the Company will deliver to
Acquisition the following:
(i) Certificates, registered in the name of Acquisition (or,
at Acquisition's election, registered in the name of Supercanal or another
wholly owned subsidiary of Supercanal which agrees to be bound by Paragraphs 3.1
and 3.10) representing all the Purchased Common Stock.
(ii) Evidence that the actions described in Paragraph 7.6 have
been taken and that the persons designated by Acquisition have been elected to
serve as directors of Acquisition from and after the Purchase Closing.
(iii) A copy, executed by the Company, of the Programming
Agreement.
(iv) A document, executed by the Company, stating that the
Deposit has been applied to pay a portion of the purchase price for the
Purchased Common Stock, and that the purchase price of the Purchased Common
Stock has been paid in full.
(v) A copy, executed by the Company, of a Registration
Agreement (the "Registration Agreement") substantially in the form of Exhibit
1.3-C(5).
(d) The certificates representing the Purchased Common Stock may
bear legends to the effect that the shares represented by those certificates
have not been registered under the Securities Act of 1933, as amended, and may
not be sold or transferred other than in transactions registered under that Act
or which are exempt from the registration requirements of that Act.
ARTICLE II
THE TENDER OFFERS
2.1 The Offers. (a) Not later than December 5, 1997, Acquisition
will make a public announcement of (i) an offer (the
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"Common Stock Tender Offer") to purchase all the outstanding Common Stock for
$4.50 per share in cash and (ii) an offer (the "Preferred Stock Tender Offer"
and, together with the Common Stock Tender Offer, the "Tender Offers") to
purchase all the outstanding Series 1995 8% Preferred Stock of Tescorp ("8%
Preferred Stock") for a per share amount in cash equal to (x) $144, plus (y) an
amount equal to accrued dividends on a share of 8% Preferred Stock from the last
date on which dividends were paid to the Expiration Date (defined below).
(b) The Tender Offers will not expire until at least 20 business
days, and (except as provided in subparagraph (c)) the Tender Offers will expire
not more than 60 days, after the day on which a Schedule 14D-1 relating to the
Tender Offers (the "Schedule 14D-1") is filed with the Securities and Exchange
Commission ("SEC").
(c) Subject to the conditions to the Tender Offers set forth on
Exhibit 2.1-C, and the other conditions set forth in this Agreement,
Acquisition will, not later than five days after the date on which the Tender
Offers expire (the "Expiration Date") accept for payment and pay for all the
shares of Common Stock and 8% Preferred Stock which are properly tendered in
response to the Tender Officers and not withdrawn. The obligation of
Acquisition to accept for payment and pay for shares which are properly tendered
and not withdrawn prior to the Expiration Date will not be subject to any
conditions other than those set forth on Exhibit 2.1-C. Acquisition will not
(i) decrease the price per share of Common Stock or per share of 8% Preferred
Stock offered in the Tender Offers below that described in subparagraph (a),
(ii) decrease the number of shares being tendered for in the Tender Offers,
(iii) change the form of consideration payable in the Tender Offers, (iv) modify
or add to the conditions set forth on Exhibit 2.1-C or (v) extend the Tender
Offers to a date which is more than 60 days after the Tender Offers are
commenced, except that (w) if the Tender Offers are modified during the 60 day
period to increase the price per share payable in the Tender Offers or in any
other manner permitted by this Agreement, the Tender Offers may be extended
until 10 business days after the day on which the modification is communicated
to the Company's stockholders, (x) if anyone makes a tender offer for either the
Common Stock or the 8% Preferred Stock before the Tender Offers expire, the
Tender Offers may be extended until not more than 10 business days after the
other tender offer expires, (y) if Acquisition is prevented by an order of a
court or other governmental agency from accepting shares which are tendered, the
Tender Offers may be extended until 10 business days after Acquisition is able
to accept shares without violating any order of any court or other governmental
agency and (z) if the Minimum Condition described on Exhibit 2.1-C is not
satisfied during the 60 day period, the Tender Offers may be extended for up to
an additional 60 days to enable the Minimum Condition to be satisfied (and if,
although the Minimum Condition is not satisfied, at least 2,500,000 shares of
Common Stock and at least 35,000 shares of 8% Preferred Stock are properly
tendered and not withdrawn, Acquisition will extend the Tender Offers for at
least an additional 30 days to enable the Minimum Condition to be satisfied).
Acquisition reserves the right to increase the price per share of Common Stock
or per share of 8% Preferred Stock offered in the Tender Offers. If, when the
Tender Offers are scheduled to expire, the Minimum Condition has been satisfied
(assuming no subsequent withdrawals of shares
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which have been tendered), but the condition in paragraph (c) of Exhibit 2.1-C
has not been satisfied because of a non-final injunction, Acquisition will
extend the Tender Offers at least until the earliest of (A) the time all the
conditions on Exhibit 2.1-C are satisfied, (B) the time the injunction becomes
final and not appealable or (C) 90 days after the Schedule 14D-1 is filed with
the SEC. Subject to the terms and conditions of the Tender Offers, Acquisition
will accept all shares which are validly tendered in response to the Tender
Offers and not withdrawn and will pay for those shares as soon as practicable
after the Expiration Date.
(d) Within five business days after the public announcement of the
Tender Offers, Acquisition will file with the SEC a Tender Offer Statement on
Schedule 14D-1 with respect to the Tender Offers (together with any amendments
or supplements, the "Schedule 14D-1") including forms of an offer to purchase, a
letter of transmittal and a summary advertisement (the Schedule 14D-1 and the
documents included in it by which the Tender Offers will be made, as they may be
supplemented or amended, being the "Offer Documents"). Each of Acquisition and
the Company agrees promptly to correct any information provided by it for use in
the Offer Documents if and to the extent that information becomes incomplete or
inaccurate in any material respect, and Acquisition will supplement or amend the
Offer Documents to the extent required by applicable securities laws, file the
amended or supplemented Offer Documents with the SEC and, if required,
disseminate the amended Offer Documents to the Company's stockholders. The
Company and its counsel will be given a reasonable opportunity to review the
Offer Documents and all amendments and supplements to them before they are filed
with the SEC or disseminated to the Company's stockholders.
2.2 Company Action. (a) The Company hereby approves of and
consents to the Tender Offers and represents and warrants that its Board of
Directors (the "Board") has (i) determined that this Agreement and the
transactions contemplated by it are fair to and in the best interests of the
Company and its stockholders, (ii) approved this Agreement and the transactions
contemplated by it, including the sales of the Purchased Common Stock, the
Tender Offers and the Merger (described in Paragraph 3.1), and (iii) resolved to
recommend that the Company's stockholders accept the Tender Offers, tender their
shares in response to the Tender Offers, and approve and adopt this Agreement
and the Merger. Simultaneously with the execution of the Original Agreement,
each of the directors and executive officers of the Company agreed to tender his
or her shares of Common Stock and 8% Preferred Stock in response to the Tender
Offers or (in the case of directors and executive officers who might as a result
of their tenders incur liability under Section 16(b) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act") and who do not tender their shares)
to vote their shares in favor of the Merger. Those agreements remain in effect
notwithstanding the changes to the Original Agreement reflected in this
Agreement. Notwithstanding anything contained in this subparagraph (a) or
elsewhere in this Agreement, if the Board, after receiving advice from its
counsel, determines, in good faith, to withdraw, modify or amend the
recommendation, because the failure to do so could reasonably be expected to be
a breach of the directors' fiduciary duties under applicable law, that
withdrawal, modification or amendment will not constitute a breach of this
Agreement.
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(b) The Company will file with the SEC, promptly after Acquisition
files the Schedule 14D-1, a Solicitation/Recommendation Statement on Schedule
14D-9 (together with any amendments or supplements, the "Schedule 14D-9")
containing the recommendations described in subparagraph (a) and will
disseminate the Schedule 14D-9 as required by Rule 14d-9 under the Exchange Act
promptly after the commencement of the Tender Offers and the filing by
Acquisition of the Schedule 14D-1. The Company and Acquisition each agrees to
correct promptly any information provided by it for use in the Schedule 14D-9 if
and to the extent that information becomes incomplete or inaccurate in any
material respect and the Company will file any corrected Schedule 14D-9 with the
SEC and disseminate the corrected Schedule 14D-1 to the Company's stockholders
to the extent required by applicable federal securities laws.
(c) In connection with the Tender Offers, the Company will
promptly furnish Acquisition with mailing labels, security position listings and
any other available listing or computer files containing the names and addresses
of the record holders or beneficial owners of shares of Common Stock or 8%
Preferred Stock (together, "Shares") as of a recent date and the Company will
furnish Acquisition with such additional information and assistance (including,
without limitation, updated lists of stockholders, mailing labels and lists of
securities positions) as Acquisition or its agents may reasonably request in
order to communicate the Tender Offers to the record holders and beneficial
owners of the Common Stock and the 8% Preferred Stock. Subject to the
requirements of applicable law, Acquisition will hold in confidence the
information contained in any such labels, listings or files, and will use that
information only in connection with the Tender Offers and the Merger. If this
Agreement is terminated, Acquisition will return to the Company the originals
and all copies of that information in Acquisition's possession.
ARTICLE III
THE MERGER
3.1 Agreement to Effect Merger. If (a) Acquisition purchases
pursuant to the Tender Offers at least the minimum number of shares of Common
Stock and 8% Preferred Stock (the "Minimum Shares") required to satisfy the
Minimum Condition described on Exhibit 2.1-C (the "Minimum Condition") and (b)
the conditions to the Merger set forth in paragraphs 8.1 and 8.2 are satisfied
or waived, Acquisition will take all steps in its power, including voting all
Shares beneficially owned by it at a meeting of the Company's stockholders in
favor of approval of this Agreement, to cause Acquisition to be merged into the
Company (the "Merger") on the terms and with the effects set forth in Paragraphs
3.2 through 3.8.
3.2 The Merger. If Acquisition purchases at least the Minimum
Shares pursuant to the Tender Offers and the conditions of the Merger set forth
in paragraphs 8.1 and 8.2 are satisfied or waived, at the Effective Time
described in Article IV, Acquisition will be merged into the Company, which will
be the surviving corporation of the Merger (the "Surviving Corporation").
Except as specifically provided in this Agreement, the real and personal
property, other assets, rights, privileges, immunities, powers, purposes and
franchises of the Company will continue unaffected and
5
<PAGE>
unimpaired by the Merger. When the Merger becomes effective, the separate
existence of Acquisition will terminate, Acquisition's real and personal
property, other assets, rights, privileges, immunities, powers, purposes and
franchises will be merged into the Surviving Corporation, and the Merger will
have the other effects specified in Section 259 of the Delaware General
Corporation Law (the "DGCL") and Article 5.06 of the Texas Business Corporation
Act (the "TBCA").
3.3 Certificate of Incorporation. From the Effective Time until
subsequently amended, the Articles of Incorporation of the Surviving Corporation
will be in the form of Exhibit 3.3, and those Articles of Incorporation,
separate and apart from this Agreement, may be certified as the Articles of
Incorporation of the Surviving Corporation.
3.4 By-Laws. At the Effective Time, the By-Laws of the Surviving
Corporation will be in the form of Exhibit 3.4, until they are altered, amended
or repealed.
3.5 Directors. The persons listed on Exhibit 3.5 will be the
directors of the Surviving Corporation after the Effective Time and will hold
office in accordance with the By-Laws of the Surviving Corporation for the
respective terms shown on Exhibit 3.5.
3.6 Officers. The persons listed on Exhibit 3.6 will be the
officers of the Surviving Corporation after the Effective Time and will hold
office at the pleasure of the Board of Directors of the Surviving Corporation.
3.7 Stock of the Company. (a) Except as provided in subparagraph
(c), at the Effective Time each share of Common Stock which is outstanding
immediately before the Effective Time will be converted into and become the
right to receive $4.50 in cash, or any higher price per share paid with regard
to shares of Common Stock tendered in response to the Common Stock Tender Offer
(the "Common Stock Merger Price").
(b) Except as provided in subparagraph (c), at the Effective Time
each share of 8% Preferred Stock which is outstanding immediately before the
Effective Time will be converted into and become the right to receive in cash
the per share amount paid with regard to shares of 8% Preferred Stock tendered
in response to the Preferred Stock Tender Offer (except that if a dividend is
paid with regard to the 8% Preferred Stock between the Expiration Date and the
Effective Time, each share of Preferred Stock will be converted into and become
the right to receive $144 in cash without regard to any accrued but unpaid
dividends).
(c) Each share of Common Stock or 8% Preferred Stock held in the
treasury of the Company, and each share of Common Stock or 8% Preferred Stock
held by Acquisition or by any direct or indirect subsidiary of the Company,
immediately before the Effective Time will, at the Effective Time, be cancelled
and cease to exist and no payment will be made with respect to any such shares.
3.8 Stock of Acquisition. At the Effective Time, each share of
common stock, par value $.01 per share, of Acquisition ("Acquisition common
stock") which is outstanding immediately before the Effective Time will be
converted into and become one share of common stock
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of the Surviving Corporation ("Surviving Corporation Common Stock"). At the
Effective Time, a certificate which represented Acquisition common stock will
automatically become and be a certificate representing the number of shares of
Surviving Corporation Common Stock into which the Acquisition common stock
represented by the certificate was converted.
3.9 Stockholders Meeting. If Acquisition purchases the Minimum
Shares pursuant to the Tender Offers and if approval by the Company's
stockholders is required by applicable law in order to consummate the Merger,
the Company will:
(a) hold a special meeting of its stockholders as soon as
practicable following the Expiration Date for the purpose of adopting this
Agreement and approving the Merger (the "Stockholders Meeting");
(b) as promptly as practicable after the Expiration Date, (i) file
with the SEC a proxy statement (the "Proxy Statement") and other proxy
soliciting materials relating to the Stockholders Meeting, (ii) respond promptly
to any comments made by the SEC with respect to the Proxy Statement or other
proxy soliciting materials, (iii) cause the Proxy Statement to be mailed to its
stockholders at the earliest practicable time following the Expiration Date, and
(iv) in all other respects, use its best efforts to cause its stockholders to
adopt this Agreement and approve the Merger;
(c) include in the Proxy Statement relating to the Stockholders
Meeting the recommendation of the Board that the stockholders of the Company
vote in favor of the adoption of this Agreement, unless the Board, after
receiving advice from its counsel, determines in good faith, that the failure to
amend or withdraw such recommendation could reasonably be expected to be a
breach of the directors' fiduciary duties under applicable law.
3.10 Voting by Acquisition. If Acquisition Purchases at least the
Minimum Shares pursuant to the Tender Offers, or waives the Minimum Condition
and purchases the shares which are properly tendered in response to the Tender
Offers and not withdrawn, (a) Acquisition will not dispose of any of stock of
the Company until the earlier of the Effective Time or such time as this
Agreement is terminated (except to Supercanal or a subsidiary of Supercanal
which agrees to be bound by Paragraph 3.1 and this Paragraph) and (b)
Acquisition will vote all shares of Common Stock and 8% Preferred Stock which
Acquisition owns or otherwise has the power to vote in favor of the adoption of
this Agreement and approval of the Merger.
3.11 Dissenting Shares.(a) Notwithstanding any provision of this
Agreement to the contrary, Shares that are outstanding immediately prior to the
Effective Time which are held by stockholders who have complied with Article
5.12 of the TBCA (including filing a written objection to approval of the
Merger, not having voted in favor of the Merger or consented to it in writing
and having properly demanded payment of the fair value of those shares) will not
be converted into the right to receive the consideration described in Paragraph
3.2. Instead, if the Merger takes place,
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the Surviving Corporation will pay the holders of those shares the fair value of
the shares determined as provided in Article 5.12 of the TBCA. Shares held by
stockholders who fail to perfect, or who otherwise withdraw or lose their rights
to receive the fair value of their shares determined under Article 5.12 of the
TBCA will, at the later of the Effective Time or the time they fail to perfect,
withdraw or lose, their rights to receive the fair value of their shares, be
deemed to have been converted into the right to receive the per share sum
described in Paragraph 3.7 (the "Merger Price") without any interest.
(b) The Company will promptly give Acquisition (i) notice of any
demands for appraisal received by the Company, any withdrawals of any such
demands, and any other instruments served pursuant to Article 5.12 of the TBCA
which are received by the Company and (ii) the opportunity to direct all
negotiations and proceedings with respect to demands for appraisal under the
TBCA. The Company will not, except with the prior written consent of
Acquisition, make any payment with respect to any demands for payment of the
fair value of shares or offer to settle or settle any such demand.
3.12 Payment for Shares. (a) Prior to the Effective Time,
Acquisition will designate a bank or trust company to act as Paying Agent in
connection with the Merger (the "Paying Agent"). At, or immediately prior to,
the Effective Time, Acquisition will provide the Paying Agent with the funds
necessary to make the payments contemplated by Paragraph 3.7. Until used for
that purpose, the funds will be invested by the Paying Agent, as directed by
Acquisition, in obligations of or guaranteed by the United States of America or
of any agency thereof and backed by the full faith and credit of the United
States of America, in commercial paper obligations rated A-1 or P-1 or better by
Moody's Investors Services Inc. or Standard & Poors' Corporation, respectively,
or in deposit accounts, certificates of deposit or banker's acceptances of,
repurchase or reverse repurchase agreements with, or Eurodollar time deposits
purchased from, commercial banks with capital, surplus and undivided profits
aggregating in excess of $200 million (based on the most recent financial
statements of such bank which are then publicly available at the SEC or
otherwise).
(b) Promptly after the Effective Time, the Surviving Corporation
will cause the Paying Agent to mail to each person who was a record holder of
Common Stock or 8% Preferred Stock at the Effective Time, a form of letter of
transmittal for use in effecting the surrender of stock certificates
representing Common Stock or 8% Preferred Stock ("Certificates") in order to
receive payment of the Merger Price. Upon surrender to the Paying Agent of a
Certificate, together with a properly completed and executed letter of
transmittal and any other required documents, the Paying Agent will pay to the
holder of the Certificate the Merger Price with regard to the shares represented
by the Certificate, and the Certificate will be cancelled. No interest will be
paid or accrued on the cash payable upon the surrender of Certificates. If
payment is to be made to a person other than the person in whose name a
surrendered Certificate is registered, the surrendered Certificate must be
properly endorsed or otherwise be in proper form for transfer, and the person
who surrenders the Certificate must provide funds for payment of any transfer or
other taxes required by reason of the
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payment to a person other than the registered holder of the surrendered
Certificate or establish to the satisfaction of the Surviving Corporation that
the tax has been paid. After the Effective Time, a Certificate which has not
been surrendered will represent only the right to receive the Merger Price,
without any interest.
(c) At any time which is more than six months after the Effective
Time, the Surviving Corporation may require the Paying Agent to deliver to it
any funds which had been made available to the Paying Agent and have not been
disbursed to holders of Shares (including, without limitation, interest and
other income received by the Paying Agent in respect of the funds made available
to it), and after the funds have been delivered to the Surviving Corporation,
former stockholders of the Company must look to the Surviving Corporation for
the consideration to which they are entitled under Paragraph 3.7 upon surrender
of the Certificates held by them. Neither the Surviving Corporation nor the
Paying Agent will be liable to any former stockholder of the Company for any
Merger consideration which is delivered to a public official pursuant to any
abandoned property, escheat or similar law.
(d) After the Effective Time, no transfers of shares of Common
Stock or 8% Preferred Stock will be recorded on the stock transfer books of the
Company or the Surviving Corporation, and the stock ledger of the Company will
be closed. If, after the Effective Time, Certificates are presented for
transfer, they will be cancelled and treated as having been surrendered for the
Merger consideration.
3.13 Options and Warrants. To the extent that the Company has not
fulfilled prior to the Effective Time all the Company's obligations under all
options and warrants which are outstanding at the date of this Agreement, taking
account of changes in the options and warrants described in Paragraph 7.7(a),
the Surviving Corporation will fulfill those obligations. To the extent the
Surviving Corporation is required to pay cash due to exercise of an option or
warrant after the Effective Time, instead of requiring the exercising holder to
pay the exercise price, upon receiving a notice of exercise, the Surviving
Corporation will pay the holder the amount due on exercise minus the exercise
price.
ARTICLE IV
EFFECTIVE TIME OF MERGER
4.1 Date of the Merger. The day on which the Merger is to take
place (the "Merger Date") will be the third business day after the first day on
which all the conditions in Paragraphs 8.1(d) and (e) and 8.2(d) have been
satisfied or waived. The Merger Date may be changed with the consent of the
Company and Acquisition. For the purposes of this Paragraph, a "business day"
is a day on which certificates of merger may be filed with the Secretaries of
State of both Texas and Delaware.
4.2 Execution of Certificates of Merger. Not later than 3:00 P.M.
on the day before the Merger Date, (a) Acquisition
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and the Company will each execute certificates of merger (the "Certificates of
Merger") substantially in the form of Exhibits 4.2(1) and 4.2(2) and deliver
them to Rogers & Wells for filing with the Secretaries of State of Texas and
Delaware. Rogers & Wells will be instructed that, if it is notified on the
Merger Date that all the conditions in Article VIII have been fulfilled or
waived, it is to cause the applicable Certificate of Merger to be filed with the
Secretary of State of Texas and to cause the applicable Certificate of Merger to
be filed with the Secretary of State of Delaware on the Merger Date or as soon
after that date as is practicable.
4.3 Effective Time of the Merger. The Merger will become
effective at 11:59 P.M. on the day when a Certificate of Merger has been filed
with the Secretary of State of Texas and a Certificate of Merger has been filed
with the Secretary of State of Delaware (that being the "Effective Time").
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Acquisition and to Supercanal
(to induce Supercanal to execute the Guaranty attached to this Agreement) that,
except as set forth in the written disclosure schedule delivered by the Company
to Acquisition (the "Company Disclosure Schedule"):
5.1 Organization and Qualification; Subsidiaries. Each of the
Company and each of its subsidiaries is a corporation, partnership, sociedad
anonima, limited liability company or sociedad de responsabilidad limitada duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has the requisite power and authority and
is in possession of, and in compliance with, all franchises, grants,
authorizations, licenses, permits, easements, variances, consents, certificates,
approvals, exemptions and orders ("Approvals") necessary to enable it to own,
lease and operate the properties it purports to own, lease or operate and to
carry on its business as it is now being conducted and as proposed to be
conducted, except where the failure to have such Approvals could not reasonably
be expected to have a Material Adverse Effect on the Company. Each of the
Company and each of its subsidiaries is duly qualified or licensed as a foreign
corporation to do business, and is in good standing, in each jurisdiction where
the character of the properties owned, leased or operated by it or the nature of
its activities makes such qualification or licensing necessary, except for such
failures to be so duly qualified or licensed and in good standing that could not
reasonably be expected to have a Material Adverse Effect on the Company. A true
and complete list of all of the Company's subsidiaries, together with the
jurisdiction of incorporation of each subsidiary and the percentage of each
subsidiary's outstanding capital stock owned by the Company or another
subsidiary is set forth in the Company Disclosure Schedule. Except as set forth
in the Company Disclosure Schedule and except for interests in subsidiaries of
the Company, neither the Company nor any of its subsidiaries owns, directly or
indirectly, any interest or investment (whether equity or debt) in any
corporation, partnership,
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limited liability company, joint venture, business, trust or entity. For the
purposes of this Agreement, a "Material Adverse Effect" upon a company is a
material adverse change in the financial condition, operating results, business
or prospects of that company and its subsidiaries taken together.
5.2 Certificate of Incorporation and By-Laws. The Company has
heretofore furnished to Acquisition or Supercanal a complete and correct copy of
its Articles of Incorporation and By-Laws, and has furnished or made available
to Acquisition or Supercanal the Articles of Incorporation and By-Laws (or
equivalent organizational documents) of each of its subsidiaries (the
"Subsidiary Documents"). Those Articles of Incorporation, By-Laws and
Subsidiary Documents are listed on the Company Disclosure Schedule, are in full
force and effect and have not been amended. Except as disclosed in the Company
Disclosure Schedule, neither the Company nor any of its subsidiaries is in
violation of any of the provisions of its Articles of Incorporation or By-Laws
or Subsidiary Documents.
5.3 Capitalization. The authorized capital stock of the Company
consists of 50,000,000 shares of Common Stock and 5,000,000 shares of Preferred
stock, of which 704,684 shares have been designated 1990 10% Preferred Stock
("10% Preferred Stock") and 200,000 shares have been designated 8% Preferred
Stock. As of August 15, 1997, 13,189,785 shares of Company Common Stock,
693,864 shares of 10% Preferred Stock, and 139,250 shares of 8% Preferred Stock
were issued and outstanding, all of which were duly authorized, validly issued,
fully paid and non-assessable, and no shares of capital stock were held in
treasury or held by subsidiaries of the Company. The Company Disclosure
Schedule sets forth each beneficial owner (as that term is defined for purposes
of the Exchange Act) of 5% or more of any class of capital stock of the Company
known to the Company and Section 5.3 of the Company Disclosure Schedule contains
a true and complete list of all affiliates of the Company (as defined in Rule
405 under the Securities Act). Except as set forth in the Company Disclosure
Schedule, there are no options, warrants or other rights, agreements,
arrangements or commitments of any character relating to the issued or unissued
capital stock of the Company or any of its subsidiaries or obligating the
Company or any of its subsidiaries to issue, sell or transfer (currently or upon
the passage of time, the payment of money or the occurrence of any other event)
any shares of capital stock of, or other equity interests in, the Company or any
of its subsidiaries. All shares of Common Stock which the Company is or may
become obligated to issue (including, but not limited to, the Purchased Common
Stock will be, when they are issued, duly authorized, validly issued, fully paid
and nonassessable. The Company Disclosure Schedule sets forth an accurate and
complete list of (a) each optionee under the Employee Options and the number of
shares of Common Stock issuable upon exercise of those Employee Options and (b)
each holder of record of warrants to purchase stock of the Company ("Company
Warrants"), and the number of shares of Common Stock issuable upon exercise of
the Company Warrants held by each holder. Other than the Employee Options and
Company Warrants there are no obligations contingent or otherwise, of the
Company or any of its subsidiaries to repurchase, redeem or otherwise acquire
any shares of capital stock of the Company or any of its subsidiaries or to
provide funds to or make any investment (in the form of a loan, capital
contribution or otherwise) in any subsidiary or any other entity. Except as set
forth in the
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Company Disclosure Schedule, all of the outstanding shares of capital stock of
each of the Company's subsidiaries are duly authorized, validly issued, fully
paid and nonassessable, and all those shares are owned by the Company or another
subsidiary free and clear of all security interests, liens, claims, pledges,
agreements, limitations on the Company's voting rights, charges or other
encumbrances of any nature whatsoever. There are no preemptive rights with
respect to any capital stock of the Company or any capital stock of any of its
subsidiaries or any agreements, arrangements or understandings to grant
preemptive rights with respect thereto. When issued and sold as provided in
this Agreement, the Purchased Common Stock will be duly authorized, validly
issued, fully paid and nonassessable and free from any claims (including claims
to preemptive rights) of any persons.
5.4 Authority Relative to this Agreement. The Company has all
necessary corporate power and authority to execute and deliver this Agreement
and to perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by the
Company and the consummation by the Company of the transactions contemplated
hereby have been duly and validly authorized by all necessary corporate action
(including approval by the Company's Board of Directors which satisfies the
requirement of Article 13.03(1) of the TBCA), and no other corporate proceedings
on the part of the Company are necessary to authorize this Agreement or to
consummate the transactions so contemplated (other than approval of the Merger
Agreement by the Company's stockholders). This Agreement has been duly and
validly executed and delivered by the Company and, assuming the due
authorization, execution and delivery of this Agreement by Acquisition and due
authorization, execution and delivery of the Guaranty by Supercanal, constitutes
a legal, valid and binding obligation of the Company enforceable against the
Company in accordance with its terms, except as the enforceability thereof may
be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or other laws relating to the enforcement of creditors' rights
generally and by general principles of equity.
5.5 No Conflict; Required Filings and Consents. (a) Except as set
forth in the Company Disclosure Schedule, the execution and delivery of this
Agreement by the Company does not, and the performance of this Agreement by the
Company will not, (i) conflict with or violate the Certificate of Incorporation
or By-Laws of the Company or any of the Subsidiary Documents, (ii) conflict with
or violate any law, rule, regulation, order, judgment or decree applicable to
the Company or any of its subsidiaries or by which its or any of their
respective properties is bound or affected, or (iii) result in any breach of or
constitute a default (or an event that with notice or lapse of time or both
would become a default) under, or impair the Company's or any of its
subsidiaries' rights or alter the rights or obligations of any third party
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or encumbrance on any of
the properties or assets of the Company or any of its subsidiaries pursuant to,
any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which the Company or any
of its subsidiaries is a party or by which the Company or any of its
subsidiaries or its or any of their respective properties is bound or affected.
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(b) Except as disclosed in the Company Disclosure Schedule, the
execution and delivery of this Agreement by the Company does not, and the
performance of this Agreement by the Company will not, require any consent,
approval, authorization or permit of, or filing with or notification to, any
governmental or regulatory authority in the United States, the Republic of
Argentina ("Argentina") or elsewhere (a "Governmental Entity"), except for (i)
applicable requirements with respect to the Proxy Statement under the Exchange
Act, and the rules and regulations thereunder, (ii) the filing and recordation
of appropriate merger or other documents, including, without limitation, the
filing of a final franchise tax return with the Texas State Comptroller's
Office, as required by the DGCL and the TBCA, (iii) applicable filing and
waiting period requirements under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended (the "HSR Act"), and (iv) such filings, authorizations,
orders and approvals (the "Comfer Approvals") as may be required under Argentine
Law No. 22,285 passed on September 15, 1980, as amended by Decree 286, passed on
February 18, 1991 (the "Broadcasting Law") from the Comite Federal de
Radiodifusion ("Comfer"), the Argentine Governmental Entity responsible for
administering the Broadcasting Law, and with and of provincial and local
governmental authorities, including provincial and local Governmental Entities
granting franchises to operate cable systems (the "Local Approvals"). The
filing required to have been made by the Company under the HSR Act has been made
and the waiting periods under the HSR Act have been terminated.
5.6 Compliance. Except as disclosed in the Company Disclosure
Schedule, neither the Company nor any of its subsidiaries is in conflict with,
or in default or violation of, (i) any law, rule, regulation, order, judgment or
decree applicable to the Company or any of its subsidiaries or by which its or
any of their respective properties is bound or affected, or (ii) any agreement
or other obligation to which the Company or any of its subsidiaries is a party
or by which the Company or any of its subsidiaries or its or any of their
respective properties is bound or affected, except in the case of both clauses
(i) and (ii) for any conflicts, defaults or violations which could not
reasonably be expected to have individually or in the aggregate a Material
Adverse Effect on the Company.
5.7 SEC Reports; Financial Statements. (a) The Company has filed
all reports and documents required to be filed with the SEC and has heretofore
delivered to Acquisition or Supercanal, in the form filed with the SEC, (i) its
Annual Report on Form 10-KSB for the fiscal year ended March 31, 1997, (ii) its
Quarterly Reports on Form 10-Q for the period ended September 30, 1997, (iii)
all other reports or registration statements filed by the Company with the SEC
since March 31, 1997, and (iv) all amendments and supplements to all such
reports and registration statements filed by the Company with the SEC (the
documents described in clauses (i)-(iv) being collectively, the "SEC Reports").
Each of the SEC Reports (i) was prepared in accordance with the requirements of
the Exchange Act, and (ii) did not at the time it was filed (or if it was
amended or superseded by a subsequent filing, then on the date of such
subsequent filing) contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.
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(b) Each of the financial statements (including, in each case, any
related notes thereto) contained in the SEC Reports has been prepared in
accordance with generally accepted accounting principles in the United States
("US GAAP") applied on a consistent basis throughout the periods involved
(except as may be indicated in the notes to the financial statements) and each
of them fairly presents in all material respects the consolidated financial
position of the Company and its subsidiaries as at the respective dates of the
financial statements and the consolidated results of its operations and cash
flows for the periods indicated, except that the unaudited interim financial
statements were or are subject to normal, recurring year-end adjustments.
5.8 Absence of Certain Changes or Events. Except as set forth in
the Company Disclosure Schedule or as expressly contemplated by this Agreement,
since June 30, 1997 each of the Company and its subsidiaries has conducted its
business in the ordinary course and there has not occurred: (a) any events or
occurrences which, individually or in the aggregate, have had a Material Adverse
Effect on the Company; (b) any material damage to, destruction or loss of any
material asset of the Company or any of its subsidiaries (whether or not covered
by insurance); (c) any change by the Company or any of its subsidiaries in its
accounting policies, practices or methods; (d) any material revaluation by the
Company or any of its subsidiaries of any of its assets, including without
limitation, writing down the value of inventory or writing off notes or accounts
receivable other than in the ordinary course of business in amounts consistent
with prior periods; (e) any sale of a material amount of property or assets; (f)
any declaration, setting aside or, except as required by the terms of the 8%
Preferred Stock or the 10% Preferred Stock as in effect on the date hereof,
payment of any dividend or distribution in respect of any stock of the Company
or any redemption, purchase or other acquisition of its securities by the
Company or an of its Subsidiaries; or (g) any entering into, establishment or
amendment of, any Plan (as hereinafter defined), any granting of stock options,
stock appreciation rights, performance awards or restricted awards, or any other
increase (other than ordinary course increases) in compensation payable or to
become payable to any officers or key employees of the Company or any of its
subsidiaries.
5.9 No Undisclosed Liabilities. Except as set forth in the
Company Disclosure Schedule, neither the Company nor any of its subsidiaries has
any material liabilities (absolute, accrued, contingent or otherwise) except
liabilities (a) in the aggregate adequately provided for in the Company's
audited balance sheet (including any related notes thereto) as of March 31, 1997
(the "1997 Balance Sheet") or the Company's unaudited interim balance sheet
(including any related notes thereto) as of September 30, 1997 (the "Interim
Balance Sheet"), included in the SEC Reports, (b) incurred in the ordinary
course of business and not required under US GAAP to be reflected on the 1997
Balance Sheet, (c) incurred since September 30, 1997 in the ordinary course of
business and not in violation of any provision of this Agreement, or (d)
incurred in connection with this Agreement.
5.10 Absence of Litigation. Except as set forth in the Company
Disclosure Schedule, there are no claims, actions, suits, proceedings or
investigations pending or, to the knowledge of the Company, threatened against
the Company or any of its subsidiaries, or any properties
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or rights of the Company or any of its subsidiaries, before any court,
arbitrator or administrative, governmental or regulatory authority or body,
domestic or foreign, that could reasonably be expected to have a Material
Adverse Effect on the Company.
5.11 Benefit Plans. All Company Benefit Plans are listed in the
Company Disclosure Schedule, and copies of all documentation relating to such
Company Benefit Plans have been delivered or made available to Parent. Except
as disclosed in the Company Disclosure Schedule: (a) each Company Benefit Plan
and the administration thereof complies, and has at all times complied in all
material respects with the requirements of all applicable law, including ERISA
and the Code; (b) no Company Benefit Plan is intended to qualify under Section
401(a) of the Code; (c) neither the Company nor any of its subsidiaries is now,
nor at any time has been, a member of a controlled group, as defined in Section
412(n)(6)(B) of the Code, with any other enterprise; (d) neither the Company nor
any of its subsidiaries presently maintains or contributes to, nor at any time
has maintained or contributed to, any single-employer plan (within the meaning
of Section 3(41) of ERISA) or any multi-employer plan (within the meaning of
Section 3(37) of ERISA) subject to Title IV of ERISA, and there are no
circumstances pursuant to which the Company or any of its subsidiaries could
have liability to any party under Title IV of ERISA; (e) neither the Company nor
any of its subsidiaries has incurred any liability for any tax imposed under
Sections 4971 through 4980B of the Code or civil liability under Section 502(i)
or (1) of ERISA; (f) no Company Benefit Plan provides health or death benefit
coverage beyond the termination of an employee's employment, except as required
by Part 6-of Subtitle B of Title I of ERISA or Section 4980B of the Code; (g) no
suits, actions or other litigation (excluding claims for benefits incurred in
the ordinary course of plan activities) have been brought against or with
respect to any Company Benefit Plan; and (h) all contributions to Company
Benefit Plans required to be made under such Company Benefit Plans have been
made, and all benefits accrued under any unfunded Company Benefit Plan have been
paid, accrued or otherwise adequately reserved in accordance with US GAAP as of
such date and the Company and each of its subsidiaries has performed all
material obligations required to be performed by it under all Company Benefit
Plans.
As used in this Agreement:
"Code" means the Internal Revenue Code of 1986, as amended, and the
regulations promulgated thereunder.
"Company Benefit Plan" means any Plan established by the Company, any
subsidiary of the Company or any predecessor or affiliate of the Company or of
any subsidiary of the Company, existing on the date hereof or prior thereto, to
which the Company or any subsidiary of the Company contributes or has
contributed, or under which any employee, former employee or director of the
Company or any subsidiary of the Company or any beneficiary thereof is covered,
is eligible for coverage or has benefit rights.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder.
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"Plan" means any bonus, incentive compensation, deferred compensation,
pension, profit sharing, retirement, stock purchase, stock option, stock
ownership, stock appreciation rights, phantom stock, leave of absence, layoff,
vacation, day or dependent care, legal services, cafeteria, life, health,
accident, disability, workmen's compensation or other insurance, severance,
separation or other employee benefit plan, practice, policy or arrangement of
any kind, whether written or oral, whether for the benefit of a single
individual or more than one individual, including, but not limited to, any
"employee benefit plan" within the meaning of Section 3(3) of ERISA.
5.12 Transactions with Certain Persons. Except as set forth in the
Company Disclosure Schedule or disclosed in a SEC Report, no officer, director
or employee of the Company or any of its subsidiaries nor any member of any such
person's immediate family is presently, or within the past two years has been, a
party to any transaction with the Company or any of its subsidiaries where the
fair market value of the amount involved in such transaction exceeded US$60,000,
including without limitation, any contract, agreement, loan or other arrangement
(a) providing for the furnishing of services by, (b) providing for the rental of
real or personal property from, or (c) otherwise requiring payments to (other
than for services as officers, directors or employees of the Company or any of
its subsidiaries) any such person or corporation, partnership, trust or other
entity in which any such person has a material interest as a stockholder, or as
an officer, director, trustee or partner.
5.13 Labor Matters. Except as set forth in the Company Disclosure
Schedule, (a) there are no controversies pending or, to the knowledge of the
Company or any of its subsidiaries, threatened, between the Company or any of
its subsidiaries and any of their respective employees, which controversies have
or could reasonably be expected to have a Material Adverse Effect on the
Company; (b) neither the Company nor any of its subsidiaries is a party to any
collective bargaining agreement or other labor union contract applicable to
persons employed by the Company or its subsidiaries, nor does the Company or any
of its subsidiaries know of any activities or proceedings of any labor union to
organize any such employees; and (c) neither the Company nor any of its
subsidiaries has during the past five years been subject to any strikes,
slowdowns, work stoppages, lockouts, or threats thereof, by or with respect to
any employees of the Company or any of its subsidiaries, and to the knowledge of
the Company none are threatened; which strikes, slowdowns, work stoppages or
lockouts have had or could reasonably be expected to have a Material Adverse
Effect on the Company.
5.14 Proxy Statement/Prospectus. If prior to the Effective Time,
the Company supplies any information for inclusion in a Registration Statement
of Supercanal on Form F-1 (a "Registration Statement"), that information will
not at the time the Registration Statement (including amendments thereof or
supplements thereto) is declared effective by the SEC contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
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5.15 Restrictions on Business Activities. Except for this
Agreement or as set forth in the Company Disclosure Schedule, there is no
agreement, judgment, injunction, order or decree binding upon the Company or any
of its subsidiaries which has or could reasonably be expected to have the effect
of prohibiting or impairing any business practice of the Company or any of its
subsidiaries, any material acquisition of property by the Company or any of its
subsidiaries or the conduct of business by the Company or any of its
subsidiaries as currently conducted or as proposed to be conducted by the
Company.
5.16 Title to Property. Except as set forth in the Company
Disclosure Schedule, the Company and each of its subsidiaries have good and
marketable title to all of their material properties and assets, free and clear
of all liens, charges and encumbrances, except liens for taxes not yet due and
payable and such liens or other imperfections of title, if any, as do not
materially detract from the value of or materially interfere with the present or
currently contemplated use of the property affected thereby; and all leases
pursuant to which the Company or any of its subsidiaries lease from others
material real or personal property are valid and enforceable in accordance with
their respective terms, and there is no material default or event of default by
the Company or a subsidiary of the Company, nor to the knowledge of the Company,
by any other party thereto, under any of such leases, (or event which with
notice or lapse of time, or both, would constitute a default).
5.17 CATV Systems, Subscribers. Set forth in the Company
Disclosure Schedule, is a complete list of the cable television ("CATV") systems
owned and/or operated by the Company or any subsidiary thereof ("Company CATV
Systems") as of the date hereof and the number of equity subscribers and total
subscribers in each of such Company CATV Systems as of June 30, 1997, as well as
the following information for each Company CATV System as of June 30, 1997, (i)
the approximate number of route kilometers of cable plant which are fully
completed and operational; (ii) the estimated number of households passed; (iii)
the capacity of cable plant; (iv) a description of all services provided; and
(v) the rates charged for such services.
5.18 Franchises, Licenses, Permits, etc.. Set forth in the Company
Disclosure Schedule, is a complete list and brief description of all
authorizations, approvals, certifications, licenses and permits issued by Comfer
(the "Company Comfer Authorizations") to the Company or any subsidiary thereof
as of the date hereof and all applications by the Company or any subsidiary
thereof for any Company Comfer Authorizations which are pending on the date
hereof. The Company and its subsidiaries (A) have all Company Comfer
Authorizations and other authorizations, approvals, franchises, licenses and
permits of Argentine provincial Governmental Entities (the "Company Other
Authorizations") required for the operation of the Company CATV Systems being
operated on the date hereof, (B) have duly and currently filed all reports and
other information required by Comfer or any other Governmental Entity to be
filed in connection with such Company Comfer Authorizations and Company Other
Authorizations and (C) are not in violation of any Company Comfer Authorization
or Company Other Authorization, other than the lack of Company Comfer
Authorizations or Company
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Other Authorizations, delays in filing reports or violations which, insofar as
can reasonably be foreseen, would not have a material adverse effect on the CATV
business conducted by the Company and its subsidiaries taken as a whole.
5.19 Taxes. (a) For purposes of this Agreement, "Tax" or "Taxes"
shall mean taxes, fees, levies, duties, tariffs, imposts and governmental
impositions or charges of any kind in the nature of (or similar to) taxes,
payable to any federal, state, local or foreign taxing authority, including
(without limitation) income, franchise, profits, gross receipts, ad valorem, net
worth, value added, sales, use, service, real or personal property, special
assessments, capital stock, license, payroll, withholding social security,
workers' compensation, unemployment compensation, utility, severance,
production, excise, stamp, occupation, premiums, windfall profits, transfer and
gains taxes, and other taxes, duties or assessments of any nature whatsoever,
and interest, penalties, additional taxes and additions to tax imposed with
respect thereto; and "Tax Returns" shall mean returns, reports and information
statements with respect to Taxes required to be filed with the Internal Revenue
Service (the "IRS") or any other Taxing Authority, domestic or foreign,
including, without limitation, consolidated, combined and unitary tax returns;
and "Taxing Authority" means any governmental agency, board, bureau, body,
department or authority of any United States federal, state or local
jurisdiction or any foreign jurisdiction, having or purporting to exercise
jurisdiction with respect to any Tax.
(b) Except as set forth in the Company Disclosure Schedule:
(i) All Tax Returns required to have been filed by or with
respect to the Company or any of its subsidiaries or any affiliated, combined,
consolidated, unitary or similar group of which the Company or any subsidiary is
or was a member (a "Relevant Group") with any Taxing Authority have been duly
filed, and each such Tax Return filed by the Company correctly and completely
reflects the income, franchise or other Tax liability and all other information
required to be reported thereon. All Taxes owed by the Company or any of its
subsidiaries or any member of a Relevant Group (whether or not shown on any Tax
Return) have been paid or, in the case of Taxes attributable to the Company and
its subsidiaries, are duly provided for in the financial statements included in
the SEC Reports.
(ii) The provisions for Taxes due by the Company and its
subsidiaries (as opposed to any reserve for deferred Taxes established to
reflect timing differences between book and Tax income) in the financial
statements included in the SEC Reports, are sufficient for all unpaid Taxes,
whether or not disputed, of the Company and its subsidiaries. As of the
Effective Time, such provisions as adjusted for the passage of time through the
Effective Time, will be sufficient for the then-unpaid Taxes of the Company and
its subsidiaries.
(iii) Neither the Company nor any of its subsidiaries is a
party to any current agreement extending the time within which to file any Tax
Return. No claim has ever been made by any taxing authority in a jurisdiction
in which the Company or its subsidiaries does not file Tax Returns that it is or
may be subject to taxation by that jurisdiction.
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(iv) The Company and each of its subsidiaries has withheld and
paid all Taxes required to have been withheld and paid in connection with
amounts paid or owing to any employee, creditor, independent contractor or other
third party.
(v) The Company does not expect any Taxing Authority to
assess any additional Taxes against or in respect of it or any of its
subsidiaries for any past period. There is no dispute or claim concerning any
Tax liability of the Company or any of its subsidiaries either (i) claimed or
raised by any Taxing Authority or (ii) otherwise known to the Company or any of
its subsidiaries. No issues have been raised in any examination by any Taxing
Authority with respect to the Company or any of its subsidiaries which, by
application of similar principles, reasonably could be expected to result in a
proposed deficiency for any other period not so examined. The Company
Disclosure Schedule lists all federal, state, local and foreign income Tax
Returns filed by or with respect to the Company or any of its subsidiaries for
all taxable periods ended on or after March 31, 1992, indicates those Tax
Returns, if any, that have been audited, and indicates those Tax Returns that
currently are the subject of audit. The Company has delivered to Parent
complete and correct copies of all federal, state, local and foreign income Tax
Returns filed by, and all Tax examination reports and statements of deficiencies
assessed against or agreed to by, the Company or any of its subsidiaries since
1992.
(vi) Neither the Company nor any of its subsidiaries has
waived any statute of limitations in respect of Taxes or agreed to any extension
of time with respect to any Tax assessment or deficiency.
(vii) Neither the Company nor any of its subsidiaries has made
any payments, is obligated to make any payments, or is a party to any agreement
that under certain circumstances could require it to make any payments, that are
not deductible under Section 28OG of the Code.
(viii) Neither the Company nor any of its subsidiaries is a
party to any Tax allocation or sharing agreement.
(ix) Neither the Company nor any of its subsidiaries is, or at
any time has been, a "United States real property holding corporation" within
the meaning of Section 897(c)(2) of the Code.
(x) None of the assets of the Company or any of its
subsidiaries constitutes tax-exempt bond financed property or tax-exempt use
property, within the meaning of Section 168 of the Code. Neither the Company
nor any of its subsidiaries is a party to any "safe harbor lease" that is
subject to the provisions of Section 168(f)(8) of the Internal Revenue Code as
in effect prior to the Tax Reform Act of 1986, or to any "long-term contract"
within the meaning of Section 460 of the Code.
(xi) Neither the Company nor any of its subsidiaries is a
"consenting corporation" within the meaning of Section 341(f)(1) of the Code, or
comparable provisions of any state statutes, and none of the assets of the
Company or any of its subsidiaries is subject to an election under Section 341
(f) of the Code or comparable provisions of any state statutes.
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(xii) Neither the Company nor any of its subsidiaries is a
party to any joint venture, partnership or other arrangement that is treated as
a partnership for federal income Tax purposes.
(xiii) There are no accounting method changes, or proposed or
threatened accounting method changes, of the Company or any of its subsidiaries
that could give rise to an adjustment under Section 481 of the Code for periods
after the Closing Date.
(xiv) Neither the Company nor any of its subsidiaries has
received any written ruling of a Taxing Authority related to Taxes or entered
into any written and legally binding agreement with a Taxing Authority relating
to Taxes.
(xv) Each of the Company and its subsidiaries has disclosed
(in accordance with Section 6662(d)(2)(B)(ii) of the Code) on its federal income
Tax Returns all positions taken on those Tax Returns for which there was no
substantial authority within the meaning of Section 6662(d)(2)(B)(i) of the Code
and that could give rise to a substantial understatement of federal income tax
within the meaning of Section 6662(d) of the Code.
(xvi) Neither the Company nor any of its subsidiaries has any
liability for Taxes of any Person other than the Company or its subsidiaries (w)
under Section 1.1502-6 of the Treasury regulations (or any similar provision of
state, local or foreign law), (x) as a transferee or successor, (y) by contract
or (z) otherwise.
(xvii) Neither the Company nor any of its subsidiaries has
participated in or cooperated with an international boycott within the meaning
of Section 999 of the Code.
(xviii) No foreign subsidiary of the Company has, or at any time
has had, an investment in "United States property" within the meaning of Section
956(b) of the Code.
(xix) No foreign subsidiary of the Company has, or at any time
has had, a material amount that is includible in the income of a United States
person under Section 951 of the Code.
(xx) No foreign subsidiary of the Company is, or at any time
has been, a passive foreign investment company within the meaning of Section
1296 of the Code, and neither the company nor any of its subsidiaries is a
shareholder, directly or indirectly, in a passive foreign investment company.
(xxi) No foreign subsidiary of the Company is, or at any time
has been, engaged in the conduct of a trade or business within the United States
within the meaning of Section 864(b) and Section 882(a) of the Code, or treated
as or considered to be so engaged under Section 882(d) or Section 897 of the
Code or otherwise.
(xxii) No foreign subsidiary of the Company holds, or at any
time has held, a United States real property interest
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within the meaning of Section 897(c)(1) of the Code.
(xxiii) Neither the Company nor any of its subsidiaries is, or at
any time has been, subject to (x) the dual consolidated loss provisions of
Section 1503(d) of the Code, (y) the overall foreign loss provisions of Section
904(f) of the Code or (z) the recharacterization provisions of Section 952(c)(2)
of the Code.
(xxiv) There currently are no limitations on the utilization of
the net operating losses, built-in losses, capital losses, tax credits or other
similar items of the Company or any subsidiary of the Company (collectively, the
"Losses") under (t) Section 382 of the Code, (u) Section 383 of the Code, (v)
Section 384 of the Code, (w) Section 269 of the Code, (x) Section 1.1502-21T and
Section 1.1502-15A of the Treasury regulations, (y) Section 1.1502-21T and
Section 1.1 502-21A of the Treasury regulations or (z) Section 1.1502-91T
through 1.1502-99T of the Treasury regulations.
(xxv) At March 31, 1997, the Company and its subsidiaries had
the aggregate Tax Losses for federal income Tax purposes as set forth in Section
5.19(b)(xxv) of the Company Disclosure Statement.
5.20 Environmental Matters. Except as set forth in the Company
Disclosure Schedule, the Company and each of its subsidiaries (a) have obtained
all applicable permits, licenses and other authorizations which are required to
be obtained under all applicable laws or any regulation, code, plan, order,
decree, judgment, notice or determination letter issued, entered, promulgated or
approved thereunder relating to pollution or protection of the environment,
including laws relating to emissions, discharges, releases or threatened
releases of pollutants, contaminants, or hazardous or toxic wastes into ambient
air, surface water, ground water, or land or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling of pollutants, contaminants or hazardous or toxic
materials or wastes ("Environmental Laws") by the Company or its subsidiaries
(or their respective agents); (b) are in compliance with all terms and
conditions of such required permits, licenses and authorizations, and also are
in compliance with all other limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and timetables contained in
applicable Environmental Laws; (c) are not aware of and have not received notice
of any past or present violations of Environmental Laws or any event, condition,
circumstance, activity, practice, incident, action or plan which is reasonably
likely to interfere with or prevent continued compliance with or which could
give rise to any common law or statutory liability, or otherwise form the basis
of any claim, action, suit or proceeding, against the Company or any of its
subsidiaries based on or resulting from the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling, or the
emission, discharge or release into the environment, of any pollutant,
contaminant or hazardous or toxic material or waste; and (d) have taken all
actions necessary under applicable Environmental Laws to register any products
or materials required to be registered by the Company or its subsidiaries (or
any of their respective agents) thereunder; except where the failure to obtain
such permit, license or other authorization, or any such
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non-compliance, or violations, liabilities, claim, action, suit, proceeding, or
failure to register any such product or material, individually or in the
aggregate, does not have and could not reasonably be expected to have a Material
Adverse Effect on the Company.
5.21 Contracts. The Company Disclosure Schedule contains an
accurate and complete listing of all contracts, leases, agreements or
understandings, whether written or oral, material to the business, properties,
operations or financial condition of the Company and its subsidiaries, taken as
a whole, including, without limitation, all contracts, agreements or
understandings with providers of programming (true and complete copies or, if
none, reasonably complete and accurate written descriptions of which, together
with all amendments and supplements thereto and all waivers of any material
terms thereof, have been delivered or made available to Acquisition or
Supercanal prior to the execution of this Agreement). Each of such contracts,
leases, agreements and understandings is in full force and effect and (a) none
of the Company or any of its subsidiaries or, to the knowledge of the Company,
any other party thereto, has breached or is in default thereunder, (b) no event
has occurred which, with the passage of time or the giving of notice would
constitute such a breach or default, (c) no claim of default thereunder has been
asserted or, to the knowledge of the Company, threatened and (d) none of the
Company or its subsidiaries or, to the knowledge of the Company, any other party
thereto is seeking a renegotiation thereof or substitute performance thereunder,
except where such breach or default, or attempted renegotiation or substitute
performance, individually or in the aggregate, does not have and could not
reasonably be expected to have a Material Adverse Effect on the Company.
5.22 Intellectual Property. (a) The Company and/or each of its
subsidiaries owns, or is licensed or otherwise possesses legally enforceable
rights to use, all patents, trademarks, trade names, service marks, copyrights,
and any applications therefor, technology, know-how, computer software programs
or applications, and tangible or intangible proprietary information or material
that are used in the business of the Company and its subsidiaries as currently
conducted and as proposed to be conducted.
(b) Except as disclosed in the Company Disclosure Schedule, or as
could not reasonably be expected to have a Material Adverse Effect on the
Company: (i) the Company is not, nor will it be as a result of the execution and
delivery of this Agreement or the performance of its obligations hereunder, in
violation of any licenses, sublicenses and other agreements as to which the
Company is a party and pursuant to which the Company is authorized to use any
third-party patents, trademarks, service marks and copyrights ("Third Party
Intellectual Property Rights"); (ii) no claims with respect to the patents,
registered and material unregistered trademarks and service marks, registered
copyrights, trade names and any applications therefor owned by the Company or
any of its subsidiaries (the "Company Intellectual Property Rights") are
currently pending or, to the knowledge of the Company, are overtly threatened by
any person; (iii) the Company does not know of any valid grounds for any bona
fide claims (a) to the effect that the sale, licensing or use of any product as
now used, sold or licensed or proposed for use, sale or license by the any or
any of its subsidiaries, infringes on any copyright, patent, trademark, service
mark or trade secret, (b) against the use by the Company or any of its
subsidiaries of any trademarks, trade
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names, trade secrets, copyrights, patents, technology, know-how or computer
software programs and applications used in the business of the Company or any of
its subsidiaries as currently conducted or as proposed to be conducted, (c)
challenging the ownership, validity or effectiveness of any of the Company
Intellectual Property Rights or other trade secret material to the Company, or
(d) challenging the license or legally enforceable right to use of the Third
Party Intellectual Rights by the Company or any of its subsidiaries.
(c) All material patents, registered trademarks, service marks and
copyrights held by the Company are valid and subsisting. Except as set forth in
the Company Disclosure Schedule, to the Company's knowledge, there is no
material unauthorized use, infringement or misappropriation of any of the
Company Intellectual Property Rights by any third party, including any employee
or former employee of the Company or any of its subsidiaries.
5.23 Insurance. All casualty, general liability, business
interruption, and other insurance policies maintained by the Company or any of
its subsidiaries are in character and amount substantially equivalent to that
carried by persons engaged in similar businesses and subject to the same or
similar perils or hazards, except as could not reasonably be expected to have a
Material Adverse Effect on the Company.
5.24 Accounts Receivable. The accounts receivable of the Company
and its subsidiaries as reflected on the Interim Balance Sheet, to the extent
uncollected on the date hereof, and the accounts receivable reflected on the
books of its subsidiaries are valid and existing and represent monies due, and
the Company has made reserves reasonably considered adequate for receivables not
collectible in the ordinary course of business, and (subject to the aforesaid
reserves) are subject to no refunds or other adjustments and to no defenses,
rights of setoff, assignments, restrictions, encumbrances or conditions
enforceable by third parties on or affecting any thereof.
5.25 Full Disclosure. No statement contained in any certificate or
schedule furnished or to be furnished by the Company or its subsidiaries to
Acquisition in, or pursuant to the provisions of, this Agreement contains or
will contain any untrue statement of a material fact or omits or will omit to
state any material fact necessary, in the light of the circumstances under which
it was made, in order to make statements herein or therein not misleading. The
Company has provided, or made available, to Acquisition or Supercanal complete
and correct copies of all agreements and other documents (including amendments,
supplements or modifications thereto) referred to on the Company Disclosure
Schedule.
5.26 Fairness Opinion. The Company has received the fairness
opinion of Arnhold and S. Bleichroeder, Inc. relating to the transactions which
are the subject of this Agreement (which fairness opinion supplements the
fairness opinion of Arnhold and S. Bleichroeder relating to the transactions
which were the subject of the Original Agreement) and a copy thereof will be
delivered to Acquisition.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF ACQUISITION
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Acquisition hereby represents and warrants to the Company that, except
as set forth in the written disclosure schedule delivered by Acquisition to the
Company (the "Acquisition Disclosure Schedule"):
6.1 Organization and Qualification; Subsidiaries. Acquisition is
a corporation duly organized, validly existing and in good standing under the
laws of the state of Delaware, and Supercanal is a corporation (sociedad
anonima) duly organized, validly existing and in good standing under the laws of
Argentina.
6.2 Constituent Documents. Acquisition has heretofore furnished
to the Company complete and correct copies of its certificate of incorporation
and by-laws and Supercanal has heretofore furnished to the Company a complete
and correct copy of its estatutos sociales and has furnished or made available
to the Company the estatutos sociales or other organizational documents of each
of its subsidiaries (the "Constituent Documents"). Such Constituent Documents
are in full force and effect.
6.3 Authority Relative to this Agreement and the Guarantee.
Acquisition has all necessary corporate power and authority to execute and
deliver this Agreement and to perform its obligations hereunder and to
consummate the transactions contemplated hereby. Supercanal has all necessary
corporate power and authority to execute and deliver the guaranty attached to
this Agreement (the "Guaranty") and the Programming Agreement and to perform its
obligations thereunder. The execution and delivery of this Agreement by
Acquisition and the consummation by Acquisition of the transactions contemplated
hereby have been duly and validly authorized by all necessary corporate action
on the part of Acquisition, and no other corporate proceedings on the part of
Acquisition are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby. The execution and delivery of the Guaranty
and the Programming Agreement by Supercanal and fulfillment by Supercanal of its
obligations under the Guaranty and the Programming Agreement have been duly and
validly authorized by all necessary corporate action on the part of Supercanal,
and no other proceedings on the part of Supercanal are necessary to authorize
the Guaranty and the Programming Agreement or for Supercanal to fulfill any
obligations under the Guaranty and the Programming Agreement which it may be
required to fulfill. This Agreement has been duly and validly executed and
delivered by Acquisition and the Guaranty has been duly and validly executed by
Supercanal. Assuming the due authorization, execution and delivery of this
Agreement by the Company, this Agreement constitutes a legal, valid and binding
obligation of Acquisition, and the Guaranty constitutes, and when executed the
Programming Agreement will constitute, a valid and binding obligation of
Supercanal, enforceable against Acquisition (as to this Agreement) or Supercanal
(as to the Guaranty and the Programming Agreement) in accordance with its terms,
except as the enforceability thereof may be limited by bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium or other such laws relating to
the enforcement of creditors' rights generally and by general principles of
equity.
6.4 No Conflict. (a) Required Filings and Consents. Except as
set forth in the Acquisition Disclosure Schedule, the
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execution and delivery of this Agreement by Acquisition, and the execution and
delivery of the Guaranty by Supercanal, do not, and the performance of this
Agreement by Acquisition or of the Guarantee by Supercanal will not, (i)
conflict with or violate the Constituent Documents of Acquisition or Supercanal,
(ii) conflict with or violate any law, rule, regulation, order, judgment or
decree applicable to Acquisition or Supercanal or any of their subsidiaries or
by which its or their respective properties are bound or affected, or (iii)
result in any breach of or constitute a default (or an event which with notice
or lapse of time or both would become a default) under, or impair Acquisition's,
Supercanal's or any of their subsidiaries' rights or alter the rights or
obligations of any third party under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or encumbrance on any of the properties or assets of
Acquisition or Supercanal or any of their subsidiaries pursuant to, any note,
bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which Acquisition or Supercanal
or any of their subsidiaries is a party or by which Acquisition or Supercanal or
any of their subsidiaries or its or any of their respective properties are bound
or affected.
(b) Except as disclosed in the Acquisition Disclosure Schedule,
the execution and delivery of this Agreement by Acquisition and of the Guaranty
by Supercanal does not, and the performance of this Agreement by Acquisition and
of the Guaranty by Supercanal will not, require any consent, approval,
authorization or permit of, or filing with or notification to, any governmental
or regulatory authority, domestic or foreign, except for (i) the filing and
recordation of appropriate merger or other documents as required by the DGCL and
the TBCA (ii) applicable filing and waiting period requirements under the HSR
Act and (iii) applicable requirements, if any, under Argentine Law No. 22,285 or
other required filings with, or approvals by Comfer. The filing required to
have been made by Acquisition under the HSR Act has been made and the waiting
periods under the HSR Act have been terminated.
(c) The execution and delivery of this Agreement by Acquisition
and of the Guaranty by Supercanal does not require the consent of any person,
including any shareholder of Acquisition or Supercanal, other than approval of
the Board of Directors of Acquisition and of the Directorio (i.e., Board of
Directors) of Supercanal, each of which has been obtained.
6.5 Ownership of Acquisition; No Prior Activities. (a)
Acquisition was formed solely for the purpose of engaging in the transaction
contemplated by this Agreement.
(b) As of the date hereof and the Effective Time, except for
obligations or liabilities incurred in connection with the transactions
contemplated by this Agreement and except for this Agreement and any other
agreement or arrangements contemplated by this Agreement, Acquisition has not
and will not have incurred, directly or indirectly, through any subsidiary or
affiliate, any obligations or liabilities or engaged in any business activities
of any type or kind whatsoever or entered into any agreements or arrangements
with any persons.
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6.6 Accuracy of Materials. Neither the Offer Documents nor any
information supplied by Acquisition in writing for inclusion in the Schedule
14D-9 will, at the respective times the Schedule 14D-9 and the Offer Documents
are filed with the SEC and first published, sent or given to the Company's
stockholders, contain a false or misleading statement with respect to any
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. On the date the Proxy
Statement is mailed to the Company's stockholders and on the date of the
Stockholders Meeting, none of the information supplied in writing by Acquisition
for inclusion in the Proxy Statement will be false or misleading with respect to
any material fact or will omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading or necessary to correct
any statement in any earlier communication with respect to the Stockholders
Meeting or the solicitation of proxies therefor which has become false or
misleading. The Offer Documents will comply as to form in all material respects
with the Exchange Act and the rules and regulations under it. Notwithstanding
the foregoing, Acquisition does not make any representation or warranty with
respect to information supplied by the Company or any of its affiliates or
representatives in writing for inclusion in the Offer Documents, the Schedule
14D-9 or the Proxy Statement.
6.7 Availability of Funds. Supercanal (i) has arranged loan
facilities which, either alone or with cash presently on hand, will provide
sufficient funds to enable Acquisition to purchase and pay for the Purchased
Common Stock (and the Option Preferred Stock, of Acquisition exercises the
Preferred Stock Purchase Option), the Shares which are tendered in response to
the Tender Offers and the Merger as contemplated by this Agreement and to
consummate the other transactions contemplated by this Agreement and (ii) will
have on the Stock Purchase Closing Date, the Expiration Date and the Effective
Date sufficient funds to enable Acquisition to fulfill the respective
obligations under this Agreement which it will be required to fulfill on each of
those dates, including but not limited to its obligations to purchase and pay
for the Purchased Common Stock, the Shares which are tendered in response to the
Tender Offers and the Merger, respectively, as contemplated by this Agreement.
Supercanal's loan facilities permit money borrowed under the facilities to be
used to purchase and pay for Common Stock and 8% Preferred Stock purchased at
the Initial Purchase Closing, under Paragraph 1.4 or through the Tender Offers
and to carry out the Merger. The Note Purchase Agreement dated as of November
12, 1997 among Supercanal Holding S.A. and various subsidiaries, various
financial institutions, as Purchasers, ING Baring (U.S.) Securities, Inc., as
Arranger, ING Baring (U.S.) Capital Corporation, as Administrative and
Collateral Agent, and The Bank of New York, as Registrar, as modified by a
letter agreement dated as of November 26, 1997, (the "Note Purchase Agreement"),
a copy of which was given to the Company, has not been terminated or further
modified.
6.8 No Supercanal Shareholder Suits. At the date of this
Agreement, no shareholder of Supercanal or affiliate of a
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shareholder of Supercanal has filed or threatened to file a suit seeking to
enjoin Supercanal or Acquisition from completing the transactions which are the
subject of this Agreement.
6.9 Not Affiliated Shareholders. None of Acquisition, Supercanal
or any "affiliates" or "associates" of Acquisition or Supercanal are "affiliated
shareholders" of the Company, as those terms are defined in Articles 13.01 -
13.08 of the TBCA.
ARTICLE VII
ACTIONS PRIOR TO THE MERGER
7.1 Activities Until Effective Time. From the date of this
Agreement to the Effective Time, the Company will, and will cause each of its
subsidiaries to, except with the written consent of Acquisition:
(a) Operate its business in the ordinary course and in a manner
consistent with the manner in which it is being operated at the date of this
Agreement.
(b) Take all reasonable steps available to it to maintain the
goodwill of the Company's business and the continued employment of the
executives and other employees engaged in that business.
(c) At its expense, maintain all its assets in good repair and
condition, except to the extent of reasonable wear and use and damage by fire or
other unavoidable casualty.
(d) Not make any borrowings other than (i) borrowings in the
ordinary course of business under working capital lines which are disclosed in
the notes to the consolidated balance sheet at March 31, 1997 or September 30,
1997 included in the Company SEC Reports, and (ii) up to a total of $1,000,000
under revolving credits from Jack R. Crosby Inter Vivos Trust and Sharpe
Irrevocable Inter Vivos Trust.
(e) Except as permitted in Paragraph 7.1(f) not enter into any
contractual commitments involving capital expenditures, loans or advances, and
not voluntarily incur any contingent liabilities, except in each case in the
ordinary course of business.
(f) Not make any expenditure which reduces its net working capital
(i.e., current assets minus current liabilities) by more than $2.5 million, and
not make capital expenditures whether or not in the ordinary course of business
(excluding capitalized costs of new subscriber connections and costs of
acquiring new television systems, other than KTV) totalling more than $2.5
million, if Acquisition's designee on the Company's Board of Directors objects
in writing to the expenditures within three business days in Argentina after the
Acquisition designee is notified in writing that the Company wants to make the
expenditure or expenditures and is given written materials describing in
reasonable detail the reasons the Company
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wants to make the expenditure or expenditures and, if applicable, the return the
Company expects to realize from the expenditure or expenditures, provided that
Acquisition's designee will not be permitted to object to a reduction of net
working capital which is necessary to enable the Company to pay its outstanding
obligations as they become due and payable in the ordinary course of business or
to make expenditures or payments specifically permitted in subparagraph (d) or
(g).
(g) Not declare or pay any dividends, or make any other
distributions or repayments of debt to its stockholders, other than (i) required
payments of dividends, if any, with regard to the 10% Preferred Stock and the 8%
Preferred Stock, (ii) payments by subsidiaries of the Company to the Company or
other wholly owned subsidiaries of the Company, (iii) repayments of borrowings
under a $500,000 revolving credit from each of Jack R. Crosby Inter Vivos Trust
and the Sharpe Irrevocable Inter Vivos Trust and (iv) repayment of 1998 Notes.
(h) Not make any loans or advances (other than advances for travel
and other normal business expenses) to stockholders, directors, officers or
employees.
(i) Maintain its books of account and records in the usual manner,
in accordance with US GAAP applied on a consistent basis, subject to normal
year-end adjustments and accruals.
(j) Comply in all material respects with all applicable laws and
regulations of governmental agencies.
(k) Not sell, dispose of or encumber any property or assets, or
engage in any activities or transactions, except in each case in the ordinary
course of business.
(l) Not increase the salaries of any officers or directors.
(m) Not adopt, or become an employer with regard to, any employee
compensation, employee benefit or post-employment benefit plan, except bonuses
totalling not more than $300,000 to Jack Gray and Jack Crosby.
(n) Not issue any stock of any class, other than (i) the issuance
of Common Stock upon exercise of options or warrants which are outstanding on
the date of this Agreement and are disclosed on the Company Disclosure Schedule,
(ii) the issuance of Common Stock on conversion of 8% Preferred Stock or 10%
Preferred Stock, (iii) the issuance of 8% Preferred Stock as dividends to the
extent required by the 8% Preferred Stock and the 10% Preferred Stock, (iv) the
issuance of 8% Preferred Stock as dividends to the extent required by
outstanding shares of 8% Preferred Stock and (v) the issuance of shares upon
conversion of subsidiaries from sociedad de responsabilidad limitada (SRL) form
to sociedad anonima (SA) form, or issue any options, warrants or rights, or
enter into any other agreements, by reason of which the Company may become
obligated to issue any stock of any class.
7.2 Redemption of 10% Preferred Stock. Not later than three
Austin, Texas business days after the Initial Stock
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Purchase Closing Date the Company will give notice of redemption of all the
outstanding shares of 10% Preferred Stock for the redemption price of $5.00 per
share plus dividends specified in the Statement of Resolution Establishing and
Designating the Series 1990 10% Convertible Preferred Stock, which was filed on
July 11, 1990.
7.3 No Solicitation of Offers; Notice of Indications of Interest.
(a) Except as provided in subparagraph (b), the Company will not, and will not
authorize any of its officers, directors, employees or agents to, enter into any
discussions or take any other steps, a likely result of which might be to cause
someone other than Acquisition or Supercanal to (i) solicit tenders of stock of
the Company or otherwise seek to acquire 5% or more of either the Common Stock
or the 8% Preferred Stock of the Company, other than with a view to tendering
that stock in response to the Tender Offers, (ii) acquire all or a substantial
portion of the assets of the Company and its subsidiaries (whether through
acquisitions of assets, acquisitions of stock of subsidiaries or both), or (iii)
otherwise to acquire the Company or a substantial portion of its assets if the
Minimum Shares are not validly tendered in response to the Tender Offers and not
withdrawn or if the Company's stockholders do not approve the Merger. If the
Company learns that anyone is contemplating soliciting tenders of its stock,
acquiring 5% or more of its outstanding stock, acquiring all or a substantial
portion of its assets and those of its subsidiaries or otherwise offering to
acquire the Company or its assets if the Minimum Shares are not validly tendered
in response to the Tender Offers and not withdrawn or if its stockholders do not
approve the Merger, the Company will promptly notify Acquisition of that fact
and provide Acquisition with all information in the Company's possession
regarding the contemplated solicitation of tenders, acquisition of stock or
assets or other acquisition offer, and the Company will promptly, from time to
time, provide Acquisition with any additional information it obtains regarding
the contemplated solicitation of tenders, acquisition of stock or assets or
other acquisition offer.
(b) Notwithstanding subparagraph (a), the Company may,
without breaching this Agreement, in response to an unsolicited proposal to the
Company (an "Acquisition Proposal") which the Company's Board of Directors
determines, in good faith and after consultation with the Company's independent
financial advisor, would result (if consummated pursuant to its terms) in a
transaction (an "Acquisition Transaction") which is more favorable both to the
holders of the Common Stock and to the holders of the 8% Preferred Stock than
the Tender Offers and the Merger, furnish confidential or non-public information
to the person, entity or group (a "Potential Acquiror") making that Acquisition
Proposal and enter into discussions and negotiations with that Potential
Acquiror.
7.4 Efforts to Fulfill Conditions. The Company will use its
best efforts to cause all the conditions set forth in Paragraph 8.1 to be
fulfilled prior to or on the Initial Stock Purchase Closing Date and Acquisition
will use its best efforts to cause all the conditions set forth in Paragraph 8.2
to be fulfilled prior to or on the Initial Stock Purchase Closing Date.
7.5 Indemnification and Insurance. (a) In the event of any
threatened or actual claim, action, suit, proceeding or
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investigation, whether civil, criminal or administrative, (each an "Action")
including, without limitation, any Action in which any person who is now, or has
been at any time prior to the date of this Agreement, or who becomes prior to
the Effective Time, a director, officer, employee, fiduciary or agent of the
Company or any of its subsidiaries (the "Indemnified Parties") is, or is
threatened to be, made a party based in whole or in part on, or arising in whole
or in part out of, or pertaining to (i) the fact that he is or was a director,
officer, employee or agent of the Company or any of its subsidiaries, or is or
was serving at the request of the Company or any of its subsidiaries as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, or (ii) this Agreement or any of the
transactions contemplated by it, whether asserted or arising before or after the
Effective Time, the Company and Acquisition (prior to the Merger) and the
Surviving Corporation (after the Merger) will cooperate and use its reasonable
best efforts to defend against the Action. The Company will indemnify and hold
harmless, and after the Effective Time the Surviving Corporation will indemnify
and hold harmless, to the fullest extent permitted by applicable law, each
Indemnified Party against any losses, claims, damages, liabilities, costs,
expenses (including attorneys' fees and expenses), judgments, fines and amounts
paid in settlement in connection with any such threatened or actual claim,
action, suit, proceeding or investigation, and in the event of any such
threatened or actual Action. Without limiting what is said in the preceding
sentence, (i) the Company, and the Surviving Corporation after the Effective
Time, will promptly pay expenses incurred by an Indemnified Party in advance of
the final disposition of any Action to the fullest extent permitted by law, (ii)
the Indemnified Parties may retain counsel satisfactory to them, and the
Company, and the Surviving Corporation after the Effective Time, will pay all
fees and expenses of one counsel for the Indemnified Parties promptly after
statements are received. However, neither the Company nor the Surviving
Corporation will be liable for any settlement effected without its prior written
consent (which consent will not be unreasonably withheld), and the Surviving
Corporation will have no obligation to any Indemnified Party when and if a court
of competent jurisdiction determines, in a determination which becomes final and
non-appealable, that indemnification of such Indemnified Party in the manner
contemplated by this Paragraph is prohibited by applicable law. Any Indemnified
Party wishing to claim indemnification with regard to an actual or threatened
Action under this Paragraph 7.6, upon learning of the Action or the threat of
the Action, must notify the Company and, after the Effective Time, the Surviving
Corporation, of the Action; provided that the failure to give notice will not
effect the obligations of the Company or the Surviving Corporation except to the
extent the failure to give notice materially prejudices such party.
(b) Acquisition agrees that all rights to indemnification existing
in favor, and all limitations on the personal liability, of the Indemnified
Parties in the Company's Certificate of Incorporation or by-laws or the charter
or by-laws or similar organizational documents of any of its subsidiaries as in
effect as of the date Agreement with respect to matters occurring prior to the
Effective Time will survive the Merger and will continue in full force and
effect for a period of not less than six after years the Effective Time;
provided, however, that all rights to indemnification in respect of any claim
asserted or made within such period shall continue until the disposition of such
claim. The Surviving Corporation will cause the current policies
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of the directors' and officers' liability insurance to remain in effect for at
least three years after the Effective Time or will substitute policies of at
least the same coverage with terms and conditions which are not less
advantageous to the insureds than those presently maintained by the Company,
with respect to matters occurring prior to the Effective Time; provided that in
no event will the Surviving Corporation be required to expend in any one year an
amount in excess of 150% of the annual premiums currently paid by the Company
for that insurance. If the annual premiums exceed that amount, the Surviving
Corporation will only be obligated to obtain a policy with the greatest dollar
amount of coverage available for a cost not exceeding that amount.
(c) This Paragraph 7.5 is intended for the benefit of the
Indemnified Parties and will be binding on all successors and assigns of
Acquisition, the Company and the Surviving Corporation. Each of the Indemnified
Parties will be entitled to enforce this in Paragraph 7.5.
(d) If the Surviving Corporation or any of its successors or
assigns (i) consolidates with or merges into any other person or entity and is
not the entity which continues or survives after the consolidation or merger or
(ii) transfers all or substantially all of its properties and assets to any
person or entity, then, and in each such case, provision will be made so the
successors of the Surviving Corporation assume the obligations set forth in this
Paragraph 7.5.
7.6 Board Representation. Not later than the Stock Purchase
Closing Date, Daniel Vila, will be elected by the Board, effective upon
completion of Acquisition's purchase of the Purchased Common Stock, to one of
the positions (of which there will not be more than seven) on the Company's
Board of Directors and the Company will use its best efforts to cause Daniel
Vila, or if he becomes unable to serve, another designee of Acquisition
reasonably acceptable to the Company, to be elected at all subsequent meetings
of the Company's stockholders at which directors are elected (except that, (i)
at any time when Acquisition and its affiliates (including Supercanal) cease to
own at least 15% of the outstanding shares of Common Stock, or (ii) if
Acquisition breaches or fails to fulfill in a material respect any of its
obligations under this Agreement within 10 days after written notice of the
failure from the Company (which states that it is a notice being given for the
purposes of this Paragraph 7.6), Acquisition will cause Daniel Vila or whoever
else may be its designee to resign.
7.7 Options and Warrants. (a) The Company will use its best
efforts (including, without limitation, by amending the provisions of the
Company's Employee Stock Option Plan and its Non-Employee Director Stock Option
Plan and the option agreements which have been issued under those Plans) to
provide that, (i) immediately prior to the acceptance of Shares in response to
the Tender Offers, each holder of an outstanding option granted under either
Plan (an "Option") will become fully vested and (ii) if all the conditions on
Exhibit 2.1-C are fulfilled, (x) each Option will be cancelled and (y) the
holder of each Option will receive, not later than 10 days after the Tender
Offers expire, a cash payment from the Company equal to (I) the excess of the
Merger Price for the Common Stock over the per share exercise price of the
Option times (II) the number of shares subject to the Option when it is
cancelled. Any such cash payments will be treated as compensation and will be
net of any applicable federal or state
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withholding tax.
(b) If (i) all the conditions on Exhibit 2.1-C are fulfilled, or
(ii) even though those conditions are not fulfilled, Acquisition purchases all
the Common Stock and 8% Preferred Stock which is properly tendered in response
to the Tender Offers and not withdrawn and (iii) at least 5 days after all the
10% Preferred Stock has either been converted into Common Stock or redeemed, any
holder of warrants listed in Section 5.3 of the Company Disclosure Schedule
tenders the warrants to the Company to be cancelled in exchange for payment of
(A) the excess of $4.50 per share of Common Stock over the per share exercise
price of the warrants times (B) the number of shares of Common Stock subject to
the warrants when they are cancelled, within five business days after the
warrants are tendered for cancellation, the Company will cancel the warrants and
pay the holder cash in the amount described in clauses (A) and (B).
7.8 Use of Proceeds of Sale of Purchased Common Stock. The
Company will use the proceeds of the sale of the Purchased Common Stock solely
(a) to pay the redemption price of the 10% Preferred Stock, (b) to repay up to
$6,780,000 of the Company's 13% Notes due February 1998, (c) to make payments to
holders of Options or warrants as contemplated by Paragraph 7.7 and (d) to make
other payments which are listed on Exhibit 7.8. Until it uses proceeds of the
sale of the Purchased Common Stock for one or more of those purposes, the
Company will invest them in (i) securities issued by the United States Treasury
which mature not later than March 31, 1998, (ii) certificates of deposit issued
by ING Bank N.V. or an affiliate which mature no later than March 31, 1998, or
(iii) other short term debt securities to which Acquisition consents in writing
in advance.
7.9 Purchase of KTV. Not later than 10 days after the Stock
Purchase is competed, the Company will assign to Acquisition all the rights, if
any, the Company may have under the option to purchase the entities which
operate cable systems and in Monte Caseras and Federacion (together, the "KTV
Entities") which is described in Items 8(a) and (b) of Section 5.20 of the
Company Disclosure Schedule (the "KTV Option"). If the KTV Option has not
expired, Acquisition will exercise the KTV Option before its expiration date and
will purchase, or cause a designee to purchase, the KTV Entities on the terms
provided in the KTV Option. If the KTV Option has expired but the owners of the
KTV Entities are willing to sell the KTV Entities to Acquisition for the
purchase price, and on the other terms, provided in the KTV Option, as promptly
as practicable after the Stock Purchase is completed, Acquisition or a designee
will purchase the KTV Entities for that purchase price and on those other terms.
7.10 Satisfaction of Subsidiary Debt. Not later than 15 days after
(i) the day on which Acquisition accepts the shares which are properly tendered
in response to the Tender Offers and not withdrawn, or (ii) such earlier time as
Acquisition acquires a majority of the outstanding Common Stock, the Company
will cause each of its subsidiaries listed on Exhibit 7.10 to repay in full all
its indebtedness for borrowed money and all its indebtedness incurred in
connection with acquisitions of businesses or other assets (other than trade
accounts payable incurred in the
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ordinary course of business).
7.11 Ownership of Subsidiaries. Not later than 20 days after the
date of this Agreement, the Company will enter into binding written agreements
with the registered owners of shares or other interests in SIR TV S.R.L., Cable
Viedma S.R.L. and Televiedma S.R.L., (together the "Tescorp S.R.L.'s") in form
reasonably satisfactory to Acquisition, in which those registered owners agree
that at any time the Company asks them to do so, they will (a) execute any
documents the Company requests that they execute in order to ensure that at the
Effective Time, the lenders under the Note Purchase Agreement will have valid
and enforceable liens on all the shares or other ownership interests in the
Tescorp S.R.L.'s, and (b) providing for the transfer of ownership of the Tescorp
S.R.L.'s to such entity or entities as Supercanal may designate.
ARTICLE VIII
CONDITIONS PRECEDENT TO TRANSACTIONS
8.1 Conditions to the Company's Obligations. The obligations of
the Company to sell the Purchased Common Stock (the "Stock Purchase") and to
complete the Merger are subject to satisfaction of the following conditions (any
or all of which may be waived by the Company with regard to either the Stock
Purchases or the Merger):
(a) The representations and warranties of Acquisition contained in
this Agreement and the representations and warranties of Supercanal contained in
the Guaranty will, except as contemplated by this Agreement, be true and correct
in all material respects on the date of the Stock Purchase Closing (as to the
Stock Purchase) and on the Merger Date (as to the Merger) with the same effect
as though made on that date, and Acquisition will have delivered to the Company
on the date of the Stock Purchase Closing (as to the Stock Purchase) and on the
Merger Date (as to the Merger) a certificate dated that date and signed by the
President of Acquisition to that effect.
(b) Acquisition will have fulfilled in all material respects all
its obligations under this Agreement required to have been fulfilled prior to or
on the applicable one of the Stock Purchase Closing Date or the Merger Date.
(c) No order will have been entered by any court or governmental
authority and be in force which invalidates this Agreement or restrains the
Company from completing any of the transactions which are the subject of this
Agreement.
(d) As to the Merger (but not as to the Stock Purchase), unless
the Merger can be consummated under both the TBCA and the DGCL without a vote of
the Company's stockholders, the Merger will have been approved by the holders of
two-thirds of the outstanding shares of Common Stock and two-thirds of the
outstanding shares of 8% Preferred Stock.
(e) As to the Merger, the Effective Time will occur on or before
April 30, 1998.
8.2 Conditions to Acquisition's Obligations. The obligations of
Acquisition to complete the Stock Purchase and to
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complete the Merger are subject to the following conditions (any or all of which
may be waived by Acquisition with regard to the Stock Purchase or the Merger):
(a) As to the Stock Purchase, the representations and warranties
of the Company contained in this Agreement will, except as contemplated by this
Agreement, be true and correct in all material respects on the Stock Purchase
Closing Date with the same effect as though made on that date, and the Company
will have delivered to Acquisition on the Stock Purchase Closing Date a
certificate dated that date and signed by the President or a Vice President of
the Company to that effect.
(b) As to the Merger, the representations and warranties of the
Company in Paragraph 5.8 will, except as contemplated by this Agreement, be true
and correct in all material respects on the Merger Date with the same effect as
though made on that date, and the Company will have delivered to Acquisition on
the Merger Date a certificate dated that date and signed by the President or a
Vice President of the Company to that effect.
(c) The Company will have fulfilled in all material respects all
of its obligations under this Agreement required to have been fulfilled prior to
or on the applicable one of the Stock Purchase Closing Date or, the Merger Date.
(d) No order will have been entered by any court or governmental
authority and be in force which invalidates this Agreement or restrains
Acquisition from completing any of the transactions which are the subject of
this Agreement.
(e) On or before the Stock Purchase Closing Date, Daniel Vila will
have been elected to the Company's Board of Directors,effective upon completion
of Acquisition's purchase of the Purchased Common Stock, as contemplated by
Paragraph 7.6, and, except under circumstances described in Paragraph 7.6 in
which Acquisition no longer is entitled to designate a member of that Board of
Directors, that election will not have been rescinded.
(f) As to the Merger, the number of shares held by shareholders of
the Company who have filed written objections to approval of the Merger
sufficient to preserve their rights to demand the fair value of the shares
pursuant to Articles 5.11 through 5.13 of the TBCA will not exceed 5% of the
total number of outstanding shares of Common Stock and 8% Preferred Stock
combined (treating each share of 8% Preferred Stock as being equal to 32 shares
of Common Stock).
(g) As to the Merger, the Effective Time will occur on or before
April 30, 1998.
ARTICLE IX
TERMINATION
9.1 Right to Terminate. This Agreement may be terminated at any
time prior to the Effective Time (whether or not
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the stockholders of the Company have approved the Merger):
(a) By mutual consent of the Company and Acquisition.
(b) By the Company if, without fault of the Company, the
Expiration Date is not on or before January 31, 1998.
(c) By the Company or Acquisition if, without fault of
Acquisition, the Effective Time is not on or before April 30, 1998.
(d) By the Company if (i) any of the representations or warranties
of Acquisition contained in this Agreement was not complete and accurate in all
material respects on the date of this Agreement, or (ii) any of the conditions
in Paragraph 8.1 is not satisfied or waived by the Company prior to or on the
Merger Date.
(e) By Acquisition if (i) any of the representations or warranties
of the Company contained in this Agreement was not complete and accurate in all
material respects on the date of this Agreement or (ii) any of the conditions in
Paragraph 8.2 is not satisfied or waived by Acquisition prior to or on the
Merger Date.
9.2 Manner of Terminating Agreement. If at any time Acquisition
or the Company has the right under Paragraph 9.1 to terminate this Agreement, it
can terminate this Agreement by a notice to the other of them that it is
terminating this Agreement.
9.3 Termination due to Superior Proposal.
(a) This Agreement may be terminated by the Company at any time
prior to the Stock Purchase Closing Date, if (i) it receives a Superior
Proposal, (ii) its Board of Directors resolves to accept the Superior Proposal,
(iii) the Company has given Acquisition at least ten business days' prior notice
of its intention to terminate this Agreement pursuant to this provision and (iv)
the Company has paid Acquisition $5 million (it being understood that only one
such payment will be required even if the Company is entitled to terminate this
Agreement both under this subparagraph (a) and under subparagraph (b)). A
"Superior Proposal" is an Acquisition Proposal which would result in the
Company's stockholders receiving consideration with a fair value determined in
good faith by the Company's Board of Directors and after consultation with the
Company's independent financial advisor to be more favorable both to the holders
of the Common Stock and to the holders of the 8% Preferred Stock than the Tender
Offers and the Merger. A notice of intention to terminate given pursuant to
this subparagraph will be irrevocable (unless Acquisition consents in writing to
its being withdrawn by the Company) and will result in this Agreement's being
terminated on the date specified in the notice of intention, which will be not
earlier than the day after the expiration of the ten business day period. When
the Company delivers a notice of intention to terminate pursuant to this
Paragraph, Acquisition's obligations under Articles I, II, III and IV and
Paragraphs 7.2 and 7.5 will terminate.
(b) This Agreement may be terminated by the Company, if (A) a
tender or exchange offer is commenced by a Potential Acquiror for all the
outstanding shares of Common Stock and 8% Preferred Stock, (B) the Company's
Board of Directors determines in good faith and
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after consultation with an independent financial advisor, that the offer
constitutes a Superior Proposal and resolves to accept the Superior Proposal or
recommend to the Company's stockholders that they tender their shares in
response to the tender or exchange offer, (C) the Company has given Acquisition
at least ten business days' prior notice of its intention to terminate pursuant
to this provision, and (D) the Company has paid Acquisition $5 million (it being
understood that only one such payment will be required even if the Company is
entitled to terminate this Agreement both under this subparagraph (b) and under
subparagraph (a)). A notice of intention to terminate given pursuant to this
subparagraph will be irrevocable (unless Acquisition consents in writing to its
being withdrawn by the Company) and will result in this Agreement's being
terminated on the date specified in the notice of intention, which will be not
earlier than day after the expiration of the ten business day period. When the
Company delivers a notice of intention to terminate pursuant to this Paragraph,
Acquisition's obligations under Articles I, II, III and IV and Paragraphs 7.2
and 7.5 will terminate.
9.4 Effect of Termination. (a) If this Agreement is terminated
pursuant to Paragraph 9.1 or 9.3, after this Agreement is terminated, neither
party will have any further rights or obligations under this Agreement, other
than the parties' respective rights and obligations under Paragraphs 7.6, 11.1,
11.2, 11.3, and 11.7. Nothing in this Paragraph will, however, (i) affect the
rights of the Company and Acquisition with respect to the Deposit as set forth
in Paragraph 1.2 or (ii) relieve either party of liability for any breach of
this Agreement which occurs before this Agreement is terminated.
(b) If this Agreement is terminated after the Stock Purchase
Closing Date, the termination will not affect the validity of the Stock
Purchase. If this Agreement is terminated after Acquisition has accepted Shares
which are tendered in response to the Tender Offers, the termination will not
affect Acquisition's purchase of the Shares it has accepted or its obligation to
pay for those shares. Either Acquisition or the Company will, however, be
entitled to seek recourse for any damages it suffers as a result of, or
otherwise in connection with, the Stock Purchases or the purchase by Acquisition
of Shares which are tendered in response to the Tender Offers because
representations and warranties in this Agreement are not accurate or because of
breaches of this Agreement which occur after those events have taken place.
ARTICLE X
ABSENCE OF BROKERS
10.1 Representations and Warranties Regarding Brokers and Others.
The Company and Acquisition each represents and warrants to the other of them
that nobody acted as a broker, a finder or in any similar capacity in connection
with the transactions which are the subject of this Agreement, except that
Arnhold and S. Bleichroeder, Inc. and Prudential Securities, Inc. acted as
financial advisors to the Company and ING Baring (U.S.) Securities, Inc., Smith
Barney Inc. and Integra Financial Services LLC acted as financial advisors to
Acquisition and Supercanal. The fees of Arnhold and S. Bleichroeder, Inc. and
Prudential Securities, Inc., which together will total the lesser of (i) 2% of
the total amount paid by Acquisition for
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shares it acquires through the Stock Purchase and the Tender Offers plus the
total Merger consideration, or (ii) $2 million will be paid by the Company,
except that if (i) the Tender Offers are commenced and all the conditions on
Exhibit 2.1-C are fulfilled or waived, or (ii) the Tender Offers are not
commenced because Acquisition breaches its obligations under this Agreement,
Acquisition will pay those fees promptly after request by the Company. The fees
of ING Baring (U.S. Securities, Inc.), Smith Barney, Inc. and Integra Financial
Services LLC, which together will total the lesser of (x) 2% of the total amount
paid by Acquisition for the shares it acquires through the Stock Purchase and
the Tender Offers plus the Merger Consideration or (y) $2 million, will be paid
by Acquisition. The Company and Acquisition each indemnifies the other of them
against, and agrees to hold the other of them harmless from, all losses,
liabilities and expenses (including, but not limited to, reasonable fees and
expenses of counsel and costs of investigation) incurred because of any claim by
anyone other than the five firms named in the first sentence of this Paragraph
for compensation as a broker, a finder or in any similar capacity by reason of
services allegedly rendered to the indemnifying party in connection with the
transactions which are the subject of this Agreement.
ARTICLE XI
GENERAL
11.1 Expenses. If (i) the Tender Offers are commenced and all the
conditions on Exhibit 2.1-C are fulfilled or waived or (ii) the Tender Offers
are not commenced because Acquisition breaches its obligations under this
Agreement, Acquisition will pay (i) its own expenses and (ii) promptly after
demand by the Company, all the expenses of the Company in connection with this
Agreement and the transactions which are the subject of this Agreement,
including the fees of the firms described in Paragraph 10.1 and including legal
and accounting fees and expenses. Otherwise, the Company and Acquisition
(together with Supercanal) each will pay its own expenses, including fees of
financial advisors and legal and accounting fees and expenses, in connection
with this Agreement and the transactions which are the subject of this
Agreement.
11.2 Company Option to Repurchase Stock. If the Stock Purchase
Closing takes place but Acquisition fails (i) to make the Tender Offers or (ii)
whether or not it is required to do so, to accept and pay for the Shares which
are properly tendered in response to the Tender Offers and not withdrawn, or if
this Agreement is terminated because of failure of the condition in Paragraph
8.2(d) due to a Supercanal Shareholder Suit, the Company will have the option,
exercisable by a notice to Acquisition given not later than 5:00 P.M. New York
City time on the first anniversary of the Initial Stock Purchase Closing Date,
to repurchase all (but not less than all) the Initial Purchased Common Stock, if
any, Acquisition has purchased for the price Acquisition paid for it (including
the amount of the Deposit which was applied in payment of a portion of the
purchase price of the Purchased Common Stock), payable on a date specified by
the Company in the notice of exercise of the option which is not more than 20
days after the day on which the notice of exercise is given, by a wire transfer
to an account in New York City specified by Acquisition in funds which are
immediately available
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in New York City. Upon confirmation that the funds were received, Acquisition
will surrender to the Company the certificates representing the Purchased Common
Stock.
11.3 Purchase of Minority Interests. At or before the Effective
Time, Acquisition will purchase (or will cause an affiliate to purchase) the
minority interests in cable television interests listed on Exhibit 11.3 for a
total of $2,745,330, except to the extent Acquisition (or an affiliate) does not
purchase specific minority interests because the current owners of those
minority interests would not sell them for the prices shown on Exhibit 11.3.
11.4 Payment to Company. If after the Stock Purchase Closing Date
but before the Effective Time, this Agreement is terminated (i) by the Company
because Acquisition fails to fulfill its obligations under Article II or Article
III, or (ii) by Acquisition because the condition in Paragraph 8.2(d) is not
fulfilled due to a Supercanal Shareholder Suit, within 5 days after the day on
which this Agreement is terminated, Acquisition will pay the Company, by wire
transfer to the account specified in accordance with Paragraph 1.4(b)(i), the
sum of $5 million.
11.5 Retention Payments. The Surviving Corporation will pay each
employee of the Company listed on Exhibit 11.5 who either (i) continues to be
employed by the Surviving Corporation or a subsidiary for at least three months
after the Expiration Date, or (ii) is terminated as an employee of the Company
and its subsidiaries between the Expiration Date and the day which is three
months after the Expiration Date other than for Cause, an amount equal to the
employee's annual salary, but in no event will the Surviving Corporation be
obligated to pay those employees a total of more than $350,000 (and the amounts
payable to various employees will be reduced pro rata to the extent, if any,
necessary to reduce the total payments to $350,000). As used in this Agreement
the term "Cause" means gross negligence, fraud, wilful misconduct or the failure
to perform material duties after notice of such failure has been given to the
applicable employee.
11.6 Access to Properties, Books and Records. (a) From the date of
this Agreement until the Merger Date or such earlier date as this Agreement is
terminated, the Company will, and will cause each of its subsidiaries to, give
representatives of Acquisition full access during normal business hours to all
of their respective properties, books and records. Until the Effective Time or,
if the Merger does not take place, until the second anniversary of the date of
this Agreement, Acquisition will, and will cause its representatives to, hold
all information its representatives receive as a result of their access to the
properties, books and records of the Company or its subsidiaries in confidence,
and not use any of that information for any purpose except in connection with
the transactions which are the subject of this Agreement (including confirming
the accuracy of representations and warranties of the Company and other
information about the Company contained in this Agreement), except to the extent
that information (i) is or becomes available to the public (other than through a
breach of this Agreement), (ii) becomes available to Acquisition from a third
party which, insofar as Acquisition is aware, is not under an obligation to the
Company, or to a subsidiary of the Company, to keep the information
confidential, (iii) was known
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to Acquisition before it was made available to Acquisition or its representative
by the Company or a subsidiary, or (iv) otherwise is independently developed by
Acquisition or an affiliate of, or advisor to, Acquisition. If this Agreement
is terminated prior to the Effective Time, Acquisition will, at the request of
the Company, deliver to the Company all documents and other material obtained by
Acquisition from the Company or a subsidiary in connection with the transactions
which are the subject of this Agreement or evidence that material has been
destroyed by Acquisition.
11.7 Press Releases. The Company and Acquisition will consult with
each other before issuing any press releases or otherwise making any public
statements with respect to this Agreement or the transactions contemplated by
it, except that nothing in this Paragraph will prevent either party from making
any statement when and as required by law or by the rules of any securities
exchange or securities quotation or trading system on which securities of that
party or an affiliate are listed, quoted or traded.
11.8 Entire Agreement. (a) This Agreement and the documents to be
delivered in accordance with this Agreement contain the entire agreement between
the Company and Acquisition relating to the transactions which are the subject
of this Agreement and those other documents, and, except as provided in
subparagraph (b), all prior negotiations, understandings and agreements between
the Company and Acquisition or Supercanal, or any affiliate or representative of
either of them, including, but not limited to, the Original Merger Agreement,
are superseded by this Agreement and those other documents, and there are no
representations, warranties, understandings or agreements concerning the
transactions which are the subject of this Agreement or those other documents
other than those expressly set forth in this Agreement or those other documents.
(b) If Acquisition is obligated under this Agreement to
complete, but fails to complete, any of the Stock Purchase, the Tender Offers or
the Merger, the Company, at its option, may (i) sue for damages or seek other
recourse for breach of this Agreement, or (ii) sue for damages or seek other
recourse for breach of the Original Agreement as though this Agreement had never
been entered into, provided that in computing damages under the Original
Agreement all transactions completed under this Agreement will be taken into
account. Under either option, the Company may seek declaratory, injunctive or
other non-monetary relief in connection with any breach of this Agreement.
(c) Acquisition acknowledges that neither it nor Supercanal,
nor any of their officers, directors or agents, has any claim against the
Company or any of its officers, directors or employees, based upon a failure of
the Company to fulfill any of its obligations, or otherwise arising, under or
relating to the Original Agreement, and Acquisition waives any such claims for
itself and for Supercanal to the extent Acquisition or Supercanal may have any
such claims.
11.9 Effect of Disclosures. Any information disclosed by a party
in connection with any representation or warranty contained in this Agreement
(including Disclosure Statements and including exhibits to this Agreement) will
be treated as having been disclosed in connection with each representation and
warranty made by that party in this Agreement.
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11.10 Captions. The captions of the articles and paragraphs of this
Agreement are for reference only, and do not affect the meaning or
interpretation of this Agreement.
11.11 Prohibition Against Assignment. Neither this Agreement nor
any right of any party under it may be assigned, except that Acquisition may
assign its rights under this agreement to Supercanal or any majority owned
subsidiary of Supercanal.
11.12 Third Party Beneficiaries. Agreement will be solely for the
benefit of the Company and Acquisition, except that (a) Paragraphs 3.13 and 7.7
are for the benefit of, and may be enforced by, each person who is a holder of
an Option or of a warrant listed in Section 5.3 of the Company Disclosure
Schedule, (b)Paragraph 7.1(m) is for the benefit of and may be enforced by, Jack
Gray and Jack Crosby,(c) Paragraph 7.6 is for the benefit of, and may be
enforced by, each person who is entitled to indemnification under that
Paragraph,(d) Paragraphs 10.1 and 11.1 are for the benefit of, and may be
enforced by, the persons entitled to have their fees and expenses paid as
described in those Paragraphs,(e) Paragraph 11.3 is for the benefit of, and may
be enforced by, the owners of the minority interests listed on Exhibit 11.3,(f)
Paragraph 11.5 is for the benefit of, and may be enforced by, the respective
persons listed on Exhibit 11.5, and (g) this Agreement is for the benefit of,
and may be enforced by, Supercanal to the same extent it is for the benefit of,
and may be enforced by, Acquisition.
11.13 Notices and Other Communications. Any notice or other
communication under this Agreement (including, but not limited to, a notice
under Paragraph 7.1(f)) must be in writing and will be deemed given when
delivered in person or sent by facsimile (with proof of receipt at the number to
which it is required to be sent), or on the tenth business day after the day on
which mailed by first class mail from within the United States of America or
Argentina, to the following addresses (or such other address as may be specified
after the date of this Agreement by the party to which the notice or
communication is sent):
If to Acquisition:
Tescorp Acquisition Corporation
c/o Supercanal Holding S.A.
[at the address and facsimile number for
Supercanal Holding S.A.]
with copies to:
Supercanal Holding S.A.
Godoy Cruz 316
Mendoza, Province of Mendoza
Argentina 5500
Attention: Daniel Eduardo Vila, Chairman
Facsimile No.: 546-129-8855
and
Rogers & Wells
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200 Park Avenue
New York, New York 10166
Attention: David W. Bernstein
Facsimile No.: 1-212-878-8375
If to the Company:
Tescorp, Inc.
327 Congress Avenue, Suite 200
Austin, Texas 78701
Attention: Jack S. Gray, Jr.
Facsimile No.: 1-512-474-1610
with a copy to:
Klehr, Harrison, Harvey, Branzburg & Ellers
1401 Walnut Street
Philadelphia, Pennsylvania 19102
Attention: Barry Siegel
Facsimile: 1-215-568-6603
11.14 Governing Law. This Agreement will be governed by, and
construed under, the laws of the State of New York relating to contracts made
and to be performed in that state.
11.15 Amendments. This Agreement may be amended only by a document
in writing signed by both the Company and Acquisition.
11.16 Consent to Jurisdiction and Service of Process. Each of the
parties to this Agreement (a) consents to the jurisdiction of any Federal or
state court sitting in the Borough of Manhattan, State of New York, in the
United States of America with regard to any action or proceeding under or
relating to this Agreement or any of the transactions contemplated by this
Agreement, (b) agrees not to attempt to move any such action or proceeding from
any such court to any other court, whether on the ground of inconvenience of the
forum or otherwise (but nothing will prevent a party from removing an action or
proceeding from a state court sitting in the Borough of Manhattan to a Federal
court sitting in that Borough), and (c) consents that process in any such action
or proceeding may be served by registered mail or in any other manner permitted
by the rules of the court in which the action or proceeding is brought.
11.17 Counterparts. This Agreement may be executed in two or more
counterparts, some of which may contain the signatures of some, but not all, the
parties. Each of those counterparts will be deemed an original, but all of them
together will constitute one and the same agreement.
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IN WITNESS WHEREOF, the Company and Acquisition have executed this
Agreement, intending to be legally bound by it, on the day shown on the first
page of this Agreement.
TESCORP ACQUISITION CORPORATION
By:
--------------------
Title:
TESCORP, INC.
By:
--------------------
Title:
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Exhibit 2.1-C
Conditions to Tender Offers
The capitalized terms used in this Annex A have the meanings set forth in
the attached Agreement, except that the term "Agreement" refers to the attached
Agreement together with this Annex A.
Acquisition will not be required to accept for payment or pay for any
Shares tendered in response to the Tender Offers if:
(i) The number of shares properly tendered in response to the
Tender Offers and not withdrawn, together with the shares of Common Stock
and any shares of 8% Preferred Stock already owned by Acquisition, does not
total more than two-thirds of the outstanding shares of Common Stock and
two-thirds of the outstanding shares of 8% Preferred Stock (this condition
being referred to as the "Minimum Condition");
(ii) There is any 10% Preferred Stock outstanding after the day
which is 65 days after the Initial Stock Purchase Closing Date (if that day
is before the Expiration Date);
(iii) Any statute, rule, regulation, order or injunction has been
enacted, promulgated, entered or enforced by any national or state
government or governmental authority or by any United States or Argentine
court of competent jurisdiction, that would make the acquisition of the
Shares by Acquisition illegal or otherwise prohibit consummation of the
Tender Offers or the Merger; or
(iv) There has been (i) a general suspension of trading in, or
limitation on prices for, securities on the New York Stock Exchange which
continued for at least three business days, (ii) the declaration of a
banking moratorium or any suspension of payments in respect of banks in the
United States or Argentina (whether or not mandatory) which continued for
at least three business days, (iii) the commencement of a war or armed
hostilities or any other international or national calamity directly or
indirectly involving the United States or Argentina, which has a
significant adverse effect on the functioning of financial markets in the
United States or Argentina, (iv) any limitation (whether or not mandatory)
by any United States or Argentine governmental authority or agency on the
extension of credit by banks or other financial institutions which would
have a material adverse effect on Supercanal's or Acquisition's ability to
borrow sufficient funds under its bank facilities to purchase and pay for
all the Shares which are tendered in response to the Tender Offers and to
carry out the Merger on the terms contemplated by the Agreement or (v)
there is a material acceleration or worsening of any of the conditions
described in clauses (i) through (iv) which exists at the date of the
commencement of the Tender Offers.
(v) Any of the representations and warranties of the Company set
forth in the Agreement is not true and correct as of the date of the
Agreement, except failures to be true and correct which would not, in the
aggregate, have a Material Adverse Effect upon the Company;
(vi) Since the date of the Agreement, there has been an occurrence
or group of occurrences (whether or not related) which have had a Material
Adverse Effect upon the Company (other than (i) occurrences which affected
generally the cable television industry worldwide or in Argentina,
including actual or proposed changes in laws or regulations, or (ii) the
transactions contemplated by the Agreement, including the change in control
contemplated by it); or
(vii) the Company has not performed all the obligations it is
required to have performed under the Agreement, except failures which (i)
would, in the aggregate, not materially impair or delay the ability of
Acquisition to consummate the purchase of the Shares which are tendered in
response to the Tender Offers or the ability of Acquisition and the Company
to effect the Merger, (ii) have been caused by or result from a breach of
the Agreement by Acquisition; or (iii) do not, and are not reasonably
expected to, have a Material Adverse Effect on the Company.
(viii) The Agreement has been terminated in accordance with its
terms; or
(ix) The Board withdraws or modifies in a manner adverse to
Acquisition the Board's approval or recommendation of the Tender Offers or
the Merger.
The conditions set forth above are for the sole benefit of Acquisition, and
may be waived by Acquisition, in whole or in part. Any delay by
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Acquisition in exercising the right to terminate the Tender Offers because any
of the conditions are not fulfilled will not be deemed a waiver of its right to
do so.
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