SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (D)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
September 30, 1997 (July 25, 1997)
GC COMPANIES, INC.
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(Exact name of Registrant as specified in its charter)
Delaware 1-12360 04-3200876
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(State of Incorporation) (Commission File No.) (IRS Employer
Identification No.)
27 Boylston Street
Chestnut Hill, Massachusetts
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(Address of principal executive offices)
(617) 278-5600
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(Registrant's telephone number)
No Change
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(Former name or former address, if changed since last report)
ITEM 5. OTHER EVENTS.
Pursuant to a Stock Purchase Agreement, dated as
of July 25, 1997, as amended by Amendment No. 1, dated
as of September 24, 1997 (as amended, the "Agreement"),
by and among General Cinema International, Inc. (the
"Buyer"), United Artists Theatre Circuit, Inc., UA
Mexico Holdings, S.A. de C.V. ("UA Mexico"), UATC
Europe B.V. ("UATC Europe") and Fondo Optima, S.A. de
C.V. ("Fondo Optima"), the Buyer agreed, subject to the
satisfaction of certain conditions, to purchase (1)
from UA Mexico, all of the issued and outstanding
capital stock of (i) Cinemas United Artists, S.A. de
C.V., (ii) Servicios Cinematograficos Especializados,
S.A. de C.V. and (iii) Operadora de Cinemas, S.A. de
C.V., owned by UA Mexico; and (2) from UATC Europe and
Fondo Optima, all of the issued and outstanding capital
stock of Cinemas United Artists de Argentina, S.A.,
owned by UATC Europe and Fondo Optima, respectively.
Upon satisfaction of the conditions in the
Agreement, including the negotiation and documentation
of certain agreements between the Buyer and Fondo
Optima, the closing under the Agreement took place on
September 26, 1997.
On September 29, 1997, GC Companies, Inc. issued
a press release, which is attached hereto as Exhibit
99.1.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits:
10.18 Stock Purchase Agreement, dated as of July
25, 1997, by and among General Cinema
International, Inc., United Artists Theatre
Circuit, Inc., UA Mexico Holdings, S.A. de
C.V., UATC Europe B.V. and Fondo Optima,
S.A. de C.V.
10.19 Amendment No. 1, dated as of September 24,
1997, by and among General Cinema
International, Inc., United Artists Theatre
Circuit, Inc., UA Mexico Holdings, S.A. de
C.V., UATC Europe B.V. and Fondo Optima,
S.A. de C.V.
99.1 Press Release entitled "GC Companies, Inc.
Purchases Theatre Assets in Mexico and
Argentina - General Cinema Theatres Expands
into Latin America."
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned hereunto duly authorized.
Date: September 30, 1997
GC COMPANIES, INC.
(Registrant)
By: /s/ Robert A. Smith
__________________________
Name: Robert A. Smith
Title: President and Chief
Operating Officer
EXHIBIT INDEX
Exhibit
Number Description
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10.18 Stock Purchase Agreement, dated as of July
25, 1997, by and among General Cinema
International, Inc., United Artists Theatre
Circuit, Inc., UA Mexico Holdings, S.A. de
C.V., UATC Europe B.V. and Fondo Optima, S.A.
de C.V.
10.19 Amendment No. 1, dated as of September 24,
1997, by and among General Cinema
International, Inc., United Artists Theatre
Circuit, Inc., UA Mexico Holdings, S.A. de
C.V., UATC Europe B.V. and Fondo Optima, S.A.
de C.V.
99.1 Press Release entitled "GC Companies, Inc.
Purchases Theatre Assets In Mexico And
Argentina - General Cinema Theatres Expands
Into Latin America."
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of July 25,
1997, by and among General Cinema International, Inc., a
Delaware corporation (the "Buyer"), United Artists
Theatre Circuit, Inc., a Maryland corporation ("UA"), UA
Mexico Holdings, S.A. de C.V., a Mexican corporation ("UA
Mexico"), UATC Europe B.V., a Netherlands corporation
("UATC Europe"), Fondo Optima, S.A. de C.V., a Mexican
corporation ("Fondo Optima") and Transeuropa
Entertainment Group, S.A., an Argentinean corporation
("Transeuropa"). The Buyer, UA, UA Mexico, UATC Europe,
Fondo Optima and Transeuropa are sometimes collectively
referred to hereinafter as the "Parties". Capitalized
terms used herein but not defined immediately after their
use shall have the meanings given them in Article 1 of
this Agreement.
WHEREAS, each of UA Mexico and UATC Europe is a
wholly owned Subsidiary of UA;
WHEREAS, UA Mexico and Fondo Optima each own
(or, with respect to sub-paragraph (iii) below, prior to
Closing will own) 50% of (i) the issued and outstanding
capital stock (the "Cinemas Shares") of Cinemas United
Artists, S.A. de C.V., a Mexican corporation ("Cinemas"),
(ii) the issued and outstanding capital stock (the
"Servicios Shares") of Servicios Cinematograficos
Especializados, S.A. de C.V., a Mexican Corporation
("Servicios"), and (iii) the issued and outstanding
capital stock (the "Operadora Shares") of Operadora de
Cinemas, S.A. de C.V. ("Operadora"). Cinemas, Servicios
and Operadora are sometimes collectively referred to
hereinafter as the "Mexican Companies". The Cinemas
Shares, the Servicios Shares and the Operadora Shares are
sometimes collectively referred to hereinafter as the
"Mexican Shares", and UA Mexico and Fondo Optima are, in
their capacity as shareholders of Cinemas, together
hereinafter referred to as the "Cinemas Shareholders";
WHEREAS, UATC Europe, Fondo Optima and
Transeuropa own 25%, 25% and 50%, respectively, of the
all of the issued and outstanding capital stock (the
"UATC Shares") of UATC Argentina, S.A., an Argentinean
corporation ("UATC"). UATC Europe, Fondo Optima and
Transeuropa are, in their capacity as shareholders of
UATC, collectively hereinafter referred to as the "UATC
Shareholders";
WHEREAS, UATC Europe and Fondo Optima each own
50% of the issued and outstanding capital stock (the
"CUAA Shares") of Cinemas United Artists de Argentina,
S.A., an Argentinean corporation ("CUAA"). UATC Europe
and Fondo Optima are, in their capacity as shareholders
of CUAA, together hereinafter referred to as the "CUAA
Shareholders". UA Mexico, the UATC Shareholders and the
CUAA Shareholders are sometimes collectively referred to
hereinafter as the "Shareholders", and the Mexican
Shares, the UATC Shares and CUAA Shares are sometimes
collectively referred to hereinafter as the "Shares";
WHEREAS, Cinemas is the Lessee, pursuant to
certain lease agreements listed on Schedule 4.1(l) hereto
(the "Cinemas Leases");
WHEREAS, UATC is the Lessee, pursuant to
certain lease agreements listed on Schedule 4.1(l) hereto
(the "UATC Leases");
WHEREAS, CUAA is, or by Closing will be, the
Lessee, pursuant to certain lease agreements listed on
Schedule 4.1(l) hereto (the "CUAA Leases");
WHEREAS, UA Mexico desires to sell, transfer,
assign and convey to the Buyer all of the Cinemas Shares
and Servicios Shares owned by it and all of the Operadora
Shares which by Closing it will own, and the Buyer
desires to purchase such Mexican Shares in order to
acquire a total of fifty percent (50%) ownership of each
of the Mexican Companies;
WHEREAS, the UATC Shareholders desire to sell,
transfer, assign and convey to the Buyer all the UATC
Shares owned by them, and the Buyer desires to purchase
such UATC Shares in order to acquire a total of one
hundred percent (100%) ownership of UATC; and
WHEREAS, the CUAA Shareholders desire to sell,
transfer, assign and convey to the Buyer all the CUAA
Shares owned by them, and the Buyer desires to purchase
such CUAA Shares in order to acquire a total of one
hundred percent (100%) ownership of CUAA;
NOW, THEREFORE, in consideration of the mutual
agreements, covenants, representations and warranties set
forth herein, and intending to be legally bound hereby,
the parties hereto agree as follows:
ARTICLE 1
CERTAIN DEFINITIONS
1.1 Definitions. As used in this Agreement,
each of the following terms shall have the following
meaning:
"ACTION" shall have the meaning set forth in Section
4.1(k).
"AFFILIATE" of any person or entity means any other
person or entity directly or indirectly controlled by or
under common control with such person or entity. For the
purposes of this definition, "control" (including, with
correlative meaning, the terms "controlling" and
"controlled") means the possession, directly or
indirectly, of the power to direct or cause a direction
of the management and policies of such person or entity,
whether through ownership of voting securities, by
contract or otherwise. For purposes of this Agreement,
however, (i) Merrill Lynch & Co., Merrill Lynch Capital
Partners, Inc. and Stonington Partners, Inc. and their
direct and indirect subsidiaries (including through the
ownership of stock in one or more direct and/or indirect
subsidiaries) and Affiliates, other than Oscar I
Corporation, a Delaware corporation, and its direct and
indirect subsidiaries (including through the ownership of
stock in one or more other direct and/or indirect
subsidiaries), shall not be deemed to be Affiliates of
any of the Shareholders or of Oscar I Corporation or any
of its Affiliates, (ii) each of the Mexican Companies,
UATC and CUAA shall not be deemed to be an Affiliate of
any of the Shareholders or the Buyer and (iii) the
shareholders of Fondo Optima shall not be deemed to be
Affiliates of Fondo Optima.
"AGREEMENT" shall mean all or any part of this
Agreement, including all exhibits or schedules hereto.
"AGREED AMOUNT" shall have the meaning set forth in
Section 9.3.
"AUDITED BALANCE SHEETS" shall have the meaning set
forth in Section 4.1(f).
"BALANCE SHEETS" shall have the meaning set forth in
Section 4.1(f).
"BUYER" shall have the meaning set forth in the
recitals to this Agreement.
"BUYER GROUP" shall have the meaning set forth in
Section 10.3.
"CINEMAS" shall have the meaning set forth in the
recitals to this Agreement.
"CINEMAS LEASES" shall have the meaning set forth in
the recitals to this Agreement.
"CINEMAS VAT INTERCOMPANY RECEIVABLE" shall have the
meaning set forth in Section 2.3.
"CLAIM" means any claim, charge, complaint, action,
cause of action, suit, proceeding (including, without
limitation, arbitration proceedings or alternative
dispute resolution proceedings), hearing, investigation
or demand.
"CLOSING" shall have the meaning set forth in
Section 3.1.
"CLOSING DATE" shall have the meaning set forth in
Section 3.1.
"CODE" means the Internal Revenue Code of 1986, as
amended.
"COMPANIES" means each of (i) the Mexican Companies,
(ii) UATC and (iii) CUAA, provided that in the event that
any one or more of the foregoing entities are not sold to
the Buyer due to inability or failure of a condition to
such sale, and any one or more of the foregoing entities
is purchased in accordance herewith, the term "Companies"
shall mean those of the foregoing entities that are
actually purchased by the Buyer pursuant to this
Agreement.
"CONSENTS" shall have the meaning set forth in
Section 4.1(e).
"CONSTRUCTION PROGRAM VAT REFUND" shall have the
meaning set forth in Section 2.3.
"CONSUMER CLAIMS" shall have the meaning set forth
in Section 10.3.
"CUAA" shall have the meaning set forth in the
recitals to this Agreement.
"CUAA LEASES" shall have the meaning set forth in
the recitals to this Agreement.
"CUAA SHAREHOLDERS" shall have the meaning set forth
in the recitals to this Agreement.
"CUAA SHARES" shall have the meaning set forth in
the recitals to this Agreement.
"DAMAGES" shall have the meaning set forth in
Section 10.3.
"DISPUTE" shall have the meaning set forth in
Section 14.2.
"DOLLARS" AND "$" means United States Dollars.
"DUE DATE" shall have the meaning set forth in
Section 9.3.
"ENCUMBRANCE" means any encumbrance, lien, claim,
charge, mortgage, pledge, security interest, fiduciary
assignments or other legal or equitable limitations or
restrictions or rights of any third party.
"ENVIRONMENTAL LAWS" shall have the meaning set
forth in Section 4.1(m).
"ENVIRONMENTAL PERMITS" shall have the meaning set
forth in Section 4.1(m).
"FIRST YEAR" shall have the meaning set forth in
Section 10.5.
"FONDO OPTIMA" shall have the meaning set forth in
the recitals to this Agreement.
"GAAP" means generally accepted accounting
principles in the jurisdiction of incorporation of any of
the Companies applied on a consistent basis in accordance
with past practice.
"GOVERNMENTAL AUTHORITY" shall have the meaning set
forth in Section 4.1(e).
"GUARANTOR" shall, in the case of (i) the Buyer,
mean GC Companies, Inc., and (ii) Fondo Optima, mean
Bufete Industrial, S.A.
"HAZARDOUS SUBSTANCES" shall have the meaning set
forth in Section 4.1(m).
"ICC" shall have the meaning set forth in Section
14.2.
"INDEMNIFICATION CLAIM" shall have the meaning set
forth in Section 10.3.
"INDEMNIFIED PARTY" shall have the meaning set forth
in Section 10.4.
"INDEMNIFYING PARTY" shall have the meaning set
forth in Section 10.4.
"INDEMNITY PAYMENTS" shall have the meaning set
forth in Section 9.8.
"KPMG" shall have the meaning set forth in Section
2.3.
"LEASED REAL PROPERTY" shall have the meaning set
forth in Section 4.1(l).
"LEASES" shall have the meaning set forth in Section
4.1(l).
"LIENS" shall have the meaning set forth in Section
4.1(d).
"MATERIAL ADVERSE EFFECT" means, with respect to any
Person (or group taken as a whole), such event or change
or effect which is materially adverse to (i) the
consolidated financial condition, results of operations
or business, as currently conducted or in the case of
construction projects as currently conducted or
contemplated to be conducted (without giving effect to
the purchase of the Shares by the Buyer contemplated
hereby) of such Person (or, if used with respect thereto,
of such group taken as a whole), or (ii) the ability of
such Person (or group) to consummate the transactions
contemplated hereby. However, for the purposes hereof, a
"Material Adverse Effect" shall be deemed to have
occurred with respect to any of the Shareholders or any
of the Companies or for determining whether there has
been a breach of representations, warranties or covenants
by any or all of the Shareholders (wherever materiality
is an element of such determination pursuant to this
Agreement) only if such event, change or effect has a
material adverse effect upon the matters described in (i)
or (ii) above with respect to the Companies and their
respective Subsidiaries taken as a whole or such portion
of the Companies actually purchased pursuant to this
Agreement. Notwithstanding the foregoing, with respect
to any of the Cinemas Leases, the UATC Leases or the CUAA
Leases, "Material Adverse Effect" means any event, change
or effect which is materially adverse to any of such
leases individually (excluding such leases for any of the
Companies the Shares of which are not sold hereunder).
"MATERIAL CONTRACTS" shall have the meaning set
forth in Section 4.1(i).
"MEXICAN COMPANIES" shall have the meaning set forth
in the recitals to this Agreement.
"MEXICAN SHARES" shall have the meaning set forth in
the recitals to this Agreement.
"NET FIXED ASSETS" means fixed assets before
depreciation and amortization (where such fixed assets
have been fully paid for and there does not exist as of
the date of determination any payable relating thereto,
unless such payable has been fully funded with cash
contributed by the Shareholders), plus landlord advances,
but excluding, if included, the Cinemas VAT Intercompany
Receivable.
"ORDERS" shall have the meaning set forth in Section
4.1(j).
"ORDINARY COURSE OF BUSINESS" means (i) in general,
the ordinary course of business as presently conducted;
and (ii) with respect to any material construction
activities (including without limitation the construction
of theaters), construction undertaken pursuant to plans
and specifications for projects in process as of the date
hereof without variation or change order, except those
required to satisfy building codes or plan specifications
and other changes or variations which are not materially
adverse to the cost, timing of completion, or overall
quality of the completed product, of such construction
activities. Material variations or material change
orders from plans and specifications for any other
purpose, including changes, upgrades or downgrades in
finishes shall not be considered to be in the ordinary
course of business.
"OWNED REAL PROPERTY" shall have the meaning set
forth in Section 4.1(l).
"PARTIES" shall have the meaning set forth in the
recitals to the Agreement.
"PERSON" means any individual, trust, corporation,
company, partnership, limited liability company or other
business association, legal entity, court or government,
governmental agency or instrumentality.
"PLANS" means: (i) all employee benefit plans; (ii)
all other severance pay, deferred compensation, excess
benefit, pension, vacation, stock, stock option and
incentive plans, managers' insurance schemes, contracts,
schemes, programs, funds, commitments or arrangements,
statutory or otherwise, made with any group of employees;
and (iii) all other plans, contracts, schemes, programs,
funds, commitments or arrangements providing money,
services, property or other benefits, whether written or
oral, qualified or nonqualified, funded or unfunded, and
including any that have been frozen or terminated, which
pertain to any employee, former employee, director,
officer, stockholder, consultant or independent
contractor of any of the Companies or any of their
respective Subsidiaries.
"PRO RATA SHARE" shall have the meaning set forth in
Section 10.5.
"PURCHASE PRICE" shall mean the aggregate amount
being paid for the Mexican Shares, the UATC Shares, the
CUAA Shares, or for all the Shares, as the case may be.
"REAL PROPERTY" shall have the meaning set forth in
Section 4.1(l).
"RECEIVABLES" shall have the meaning set forth in
Section 2.3.
"REQUEST" shall have the meaning set forth in
Section 14.2.
"RULES" shall have the meaning set forth in Section
14.2.
"SECOND YEAR" shall have the meaning set forth in
Section 10.5.
"SETTLEMENT PAYMENT" shall have the meaning set
forth in Section 9.3.
"SHAREHOLDERS" shall have the meaning set forth in
the recitals to this Agreement.
"SHAREHOLDERS GROUP" shall have the meaning set
forth in Section 10.3.
"SUBSIDIARY" shall, in the case of (i) UA, mean each
of UA Mexico and UATC Europe; (ii) UA Mexico, mean each
of the Mexican Companies; (iii) each of UATC Europe and
Fondo Optima, mean each of UATC and CUAA; (iv)
Transeuropa, mean UATC; and (v) each of the Companies,
mean all corporations or other entities in which each of
the Companies owns a majority of the issued and
outstanding capital stock or similar interest.
"TAX" shall have the meaning set forth in Section
4.1(o).
"TAX ARBITRATOR" shall have the meaning set forth in
Section 9.3.
"TAX AUDIT" shall have the meaning set forth in
Section 9.5.
"TAX RETURNS" shall have the meaning set forth in
Section 4.1(o).
"TERRITORY" shall have the meaning set forth in
Section 6.1(c).
"TRANSFER TAXES" shall have the meaning set forth in
Section 9.4.
"TRANSEUROPA" shall have the meaning set forth in
the recitals to this Agreement.
"UA" shall have the meaning set forth in the
recitals to this Agreement.
"UA MEXICO" shall have the meaning set forth in the
recitals to this Agreement.
"UATC" shall have the meaning set forth in the
recitals to this Agreement.
"UATC EUROPE" shall have the meaning set forth in
the recitals to this Agreement.
"UATC LEASES" shall have the meaning set forth in
the recitals to this Agreement.
"UATC SHAREHOLDERS" shall have the meaning set forth
in the recitals to this Agreement.
"UATC SHARES" shall have the meaning set forth in
the recitals to this Agreement.
"UNAUDITED BALANCE SHEETS" shall have the meaning
set forth in Section 4.1(f).
ARTICLE 2
SALE AND PURCHASE
2.1 Sale and Transfer. Subject to the terms
and conditions, and on the basis of the representations,
warranties, covenants and agreements, set forth in this
Agreement:
(a) UA Mexico agrees to sell, convey,
transfer, assign and deliver to the Buyer, and the Buyer
agrees to purchase from UA Mexico for the aggregate
Purchase Price set forth in Section 2.2(a) hereof, the
number of Cinemas Shares, Servicios Shares and Operadora
Shares set out opposite UA Mexico's name in the last
column on Schedule 2.1(a) hereto;
(b) each of the UATC Shareholders agrees to
sell, convey, transfer, assign and deliver to the Buyer,
and the Buyer agrees to purchase from each of the UATC
Shareholders for the aggregate Purchase Price set forth
in Section 2.2(b) hereof, the number of UATC Shares set
out opposite such UATC Shareholder's name in the last
column on Schedule 2.1(b) hereto; and
(c) each of the CUAA Shareholders agrees to
sell, convey, transfer, assign and deliver to the Buyer,
and the Buyer agrees to purchase from each of the CUAA
Shareholders for the aggregate Purchase Price set forth
in Section 2.2(c) hereof, the number of CUAA Shares set
out opposite such CUAA Shareholder's name in the last
column on Schedule 2.1(c) hereto;
2.2 Purchase Price.
(a) The aggregate Purchase Price of the
Mexican Shares shall be $13,000,000.
(b) The aggregate Purchase Price of the UATC
Shares shall be $3,000,000, with each of the UATC
Shareholders receiving the percentage of such aggregate
Purchase Price as set forth in the third column on
Schedule 2.1(b) hereto.
(c) The aggregate Purchase Price of the CUAA
Shares shall be $22,000,000, subject to adjustment as
follows, with each of the CUAA Shareholders receiving the
percentage of such aggregate Purchase Price as set forth
in the third column on Schedule 2.1(c) hereto:
(1) if the Net Fixed Assets of CUAA as of June
30, 1997, as certified by a Big Six
accounting firm in accordance with Section
7.2, is less than $14,500,000, the
Purchase Price for the CUAA Shares shall
be decreased by the difference between
$14,500,000 and the amount of such Net
Fixed Assets, and if it is more than
$14,500,000, then the Purchase Price for
the CUAA Shares shall be increased by the
difference between $14,500,000 and the
amount of such Net Fixed Assets; and
(2) the Purchase Price for the CUAA Shares
shall be increased by the total cash
invested in Dollars by the CUAA
Shareholders to fund additional
construction costs in CUAA from July 1,
1997 to the Closing Date (other than cash
utilized to satisfy management fees or
intercompany accounts).
2.3 Receivables. (a) At the Buyer's option,
on and subject to the terms contained in this Section
2.3, all intercompany receivables of Cinemas held by UA,
its Affiliates and Fondo Optima will not be cancelled and
the Buyer agrees to purchase at Closing at face value
from each of UA and its Affiliates and Fondo Optima, and
each of UA and its Affiliates and Fondo Optima agrees to
sell, transfer, convey, and deliver, to the Buyer all
rights, title and interest to such receivables, other
than the Cinemas VAT Intercompany Receivable (the
"Receivables"). If the Buyer exercises such option, the
Purchase Price shall not be increased, but shall be
allocated among the Receivables and the Shares as
determined by the Buyer in good faith. This provision
shall be effective only if, prior to the Closing, Cinemas
shall have recapitalized the Receivables held by each of
UA, its Affiliates and Fondo Optima into two classes:
the Cinemas VAT Intercompany Receivable and the
Receivables. The "Cinemas VAT Intercompany Receivable"
shall be a receivable denominated in Mexican pesos that
shall entitle each holder to receive an amount equal to
50% of any amounts received by Cinemas as a refund of VAT
that Cinemas paid directly or indirectly to the Mexican
taxing authorities in a period prior to the Closing with
respect to certain construction activities engaged in by
Cinemas (the "Construction Program VAT Refund") any such
amounts to be payable pursuant to the terms of the
Cinemas VAT Intercompany Receivable by Cinemas promptly,
but in any event within 30 days after Cinemas receives
the Construction Program VAT Refund.
(b) The Buyer and Cinemas shall each have
received the certificate, as allowed under the laws of
Mexico, from KPMG Peat Marwick ("KPMG") certifying to the
government of Mexico that Cinemas is entitled, under the
laws of Mexico, to the Construction Program VAT Refund
and setting forth the amount thereof. In addition, UA
Mexico and Fondo Optima shall use their good faith
efforts to cause KPMG to deliver a letter before Closing
addressed to the Buyer stating that (i) KPMG has
completed the documentation and related application for
the relevant Construction Program VAT Refund, (ii) KPMG
has fully reviewed all supporting documentation for such
application and (iii) in KPMG's professional opinion
Cinemas is entitled to the Construction Program VAT
Refund and the amount thereof as set forth in the
application for VAT refund filed by Cinemas with the
government of Mexico.
(c) At the Buyer's option, on and subject
to the terms contained in this Section 2.3, all
intercompany receivables of each of UATC, CUAA, Servicios
and Operadora held by any of the Shareholders will not be
cancelled and the Buyer agrees to purchase from such
Shareholder, and such Shareholder agrees to sell,
transfer, convey, and deliver, to the Buyer all rights,
title and interest to such receivables at face value.
ARTICLE 3
THE CLOSING
3.1 Time and Place of Closing. Upon the terms
of, and subject to the satisfaction (or waiver pursuant
to Section 14.9 hereof) of the conditions contained in,
this Agreement, the closing of the transactions
contemplated by this Agreement (the "Closing") will take
place at the offices of Skadden, Arps, Slate, Meagher &
Flom LLP at 919 Third Avenue, New York, NY or at such
other place as the parties may mutually agree on August
22, 1997 (the "Closing Date").
3.2 Deliveries by UA and the Shareholders. At
the Closing, unless previously delivered:
(a) UA Mexico will deliver to the Buyer stock
certificates or other customary documentation
representing the number of Cinemas Shares, Servicios
Shares and Operadora Shares set out opposite its name in
the last column on Schedule 2.1(a) hereto accompanied by
stock powers duly endorsed in blank or in favor of the
Buyer or accompanied by duly executed instruments of
transfer or other customary documentation of transfer,
and further accompanied by a certified copy of minutes of
shareholders' meetings of each of the Mexican Companies
containing the approval of the transactions contemplated
herein and the waiver of Fondo Optima (and any other
shareholder of the Mexican Companies) to their right of
first refusal to acquire any of the Mexican Shares, as
well as certified copies of the entries in the
shareholders' registry books of the Mexican Companies
evidencing the transfer of the Mexican Shares in favor of
the Buyer, all in form and substance satisfactory to the
Buyer;
(b) each UATC Shareholder will each deliver to
the Buyer stock certificates or other customary
documentation representing the number of UATC Shares set
out opposite its name in the last column on Schedule
2.1(b) hereto accompanied by stock powers duly endorsed
in blank or in favor of the Buyer or accompanied by duly
executed instruments of transfer or other customary
documentation of transfer;
(c) each CUAA Shareholder will each deliver to
the Buyer stock certificates or other customary
documentation representing the number of CUAA Shares set
out opposite its name in the last column on Schedule
2.1(c) hereto accompanied by stock powers duly endorsed
in blank or in favor of the Buyer or accompanied by duly
executed instruments of transfer or other customary
documentation of transfer;
(d) UA and each Shareholder (or, on behalf of
UA Mexico or UATC Europe, or both, UA) shall deliver a
certificate, dated as of the Closing Date, executed by
its President or Vice President, certifying for and on
behalf of UA or such Shareholder, as the case may be, to
the best of the knowledge, information and belief of the
person signing such certificate after having made
reasonable inquiries, to the effect that (1) UA or such
Shareholder, as the case may be, has performed and
complied in all material respects with all covenants,
agreements, obligations and conditions required by this
Agreement to be so performed or complied with by it on or
prior to the Closing Date and (2) the representations and
warranties of UA or such Shareholder, as the case may be,
contained herein are true and correct when made and at
and as of the Closing Date with the same force and effect
as if made at and as of the Closing Date after giving
effect to the transactions contemplated in this
Agreement, except for such representations and warranties
which are contemplated to change by their nature or speak
as of an earlier date;
(e) Each Shareholder (or, on behalf of UA
Mexico or UATC Europe, or both, UA) shall deliver a duly
executed cross-receipt acknowledging receipt of its
Purchase Price;
(f) Each Shareholder (or, on behalf of UA
Mexico or UATC Europe, or both, UA) shall deliver copies
of such Shareholder's articles of incorporation and by-
laws, as amended, or equivalent organizational documents
and of each of such Shareholder's Subsidiaries, certified
by UA or such Shareholder, as the case may be, as being
true and complete and in full force and effect as of
Closing Date;
(g) UA and each Shareholder (or, on behalf of
UA Mexico or UATC Europe, or both, UA) shall deliver (1)
copies of the resolutions adopted by its Board of
Directors, certified by its President, Vice President,
Secretary or other appropriate officer as having been
duly and validly adopted and as being in full force and
effect, authorizing the execution and delivery by UA or
such Shareholder, as the case may be, of this Agreement,
and the performance by UA or such Shareholder, as the
case may be, of its obligations hereunder, and (2)
certified copies of the resolutions adopted by the
shareholders of each of UATC and CUAA reflecting: (i) the
acceptance of the resignations to their respective
offices as directors and syndics by the person then
holding office provided the Buyer has furnished the
necessary information (ii) the approval of the duties
performed by the aforementioned resigning directors;
(iii) the appointment of new directors and syndics to
replace the resigning directors and syndics; and (iv)
subject to obtaining any necessary landlord consents, the
change of name of UATC and CUAA to another eliminating
the reference to UATC, UA or United Artists together with
such other matters as may be necessary or appropriate to
satisfy the requirements of Section 12.4;
(h) UA and each Shareholder (or, on behalf of
UA Mexico or UATC Europe, or both, UA) shall deliver a
certificate of its President, Vice President, Secretary
or other appropriate officer certifying the names and
signatures of the officers of UA or such Shareholder, as
the case may be, authorized to sign this Agreement and
the other documents to be delivered hereunder; and
(i) UA and each Shareholder (or, on behalf of
UA Mexico or UATC Europe, or both, UA) shall deliver all
other documents, instruments and writings (1) required to
be delivered by it at or prior to the Closing Date
pursuant to this Agreement, (2) otherwise required in
connection herewith or (3) other customary closing
documents, certificates and opinions of counsel (as to,
without limitation, due organization and existence of the
Companies; title to Shares; due authorization and
execution of this Agreement by such Shareholder) which
are reasonably requested by the Buyer to be delivered to
the Buyer at the Closing in connection with the
transactions contemplated herein.
3.3 Deliveries by the Buyer. The Buyer will
deliver to each of the Shareholders:
(a) its Purchase Price by wire transfer of
immediately available funds to the respective accounts
which have been designated by each of the Shareholders
five business days prior to the Closing;
(b) cross-receipts duly executed by the Buyer
acknowledging receipt of the Shares, as well as receipt
of transfer letters in respect of the UATC Shares and the
CUAA Shares, as the case may be;
(c) a certificate dated the Closing Date
evidencing the good standing of the Buyer under the laws
of the State of Delaware;
(d) a certificate, dated as of the Closing
Date, executed by its President or Vice President,
certifying for and on behalf of the Buyer to the best of
the knowledge, information and belief of the person
signing such certificate after having made reasonable
inquiries, to the effect that (1) the Buyer has performed
and complied in all material respects with all covenants,
agreements, obligations and conditions required by this
Agreement to be so performed or complied with by it on or
prior to the Closing Date and (2) the representations and
warranties of the Buyer contained herein are true and
correct when made and at and as of the Closing Date with
the same force and effect as if made at and as of the
Closing Date after giving effect to the transactions
contemplated in this Agreement, except for such
representations and warranties which are contemplated to
change by their nature or speak as of an earlier date;
(e) copies of the resolutions adopted by the
Board of Directors of the Buyer, certified by the
Secretary of the Buyer as having been duly and validly
adopted and as being in full force and effect,
authorizing the execution and delivery by the Buyer of
this Agreement, and the performance by the Buyer of its
obligations hereunder;
(f) a certificate of the Secretary of the
Buyer certifying the names and signatures of the officers
of the Buyer authorized to sign this Agreement and the
other documents to be delivered hereunder; and
(g) all other documents, instruments and
writings (1) required to be delivered by the Buyer at or
prior to the Closing Date pursuant to this Agreement, (2)
otherwise required in connection herewith or (3) other
customary closing documents ,certificates and opinions of
counsel (as to, without limitation, good standing and due
incorporation of the Buyer and due authorization and
execution of this Agreement by the Buyer) which are
reasonably requested by the Shareholders to be delivered
to the Shareholders at the Closing in connection with the
transactions contemplated herein.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties of UA. UA
represents and warrants, for and on behalf of (i) UA
Mexico, as to UA Mexico and the Mexican Companies, and
(ii) UATC Europe, as to UATC Europe, UATC and CUAA, to
the Buyer as follows:
(a) Organization and Standing. Each of Cinemas
and Servicios is, and, at Closing, Operadora will be, a
corporation duly organized and validly existing under the
laws of Mexico, with full power and authority to own,
operate and lease its properties and to carry on its
business as now conducted, except where the failure to be
so organized and existing or to have such power and
authority would not have a Material Adverse Effect. Each
of UATC and CUAA is a corporation duly organized and
validly existing under the laws of Argentina, with full
power and authority to own, operate and lease its
properties and to carry on its business as now conducted
except where the failure to be so organized and existing
or to have such power and authority would not have a
Material Adverse Effect. Each of UA Mexico and UATC
Europe is a corporation duly organized and validly
existing under the laws of the jurisdiction of its
incorporation, with full power and authority to own,
operate and lease its properties and to carry on its
business as now conducted except where the failure to be
so organized and existing or to have such power and
authority would not have a Material Adverse Effect.
(b) Authorization; Binding Obligation. Each
of UA, UA Mexico and UATC Europe has all requisite
corporate power and authority to execute and deliver this
Agreement, to carry out its obligations hereunder and to
consummate the transactions contemplated hereby except
where the failure to have such power and authority would
not have a Material Adverse Effect. The execution and
delivery of this Agreement by each of UA, UA Mexico and
UATC Europe, the performance by each of UA, UA Mexico and
UATC Europe of its obligations hereunder and the
consummation of the transactions contemplated hereby by
each of UA, UA Mexico and UATC Europe have been duly and
validly authorized by the Board of Directors of each of
UA, UA Mexico and UATC Europe, and no other corporate
action on the part of each of UA, UA Mexico and UATC
Europe is necessary to authorize this Agreement or for
each of UA, UA Mexico and UATC Europe to carry out its
obligations hereunder or to consummate the transactions
contemplated hereby. This Agreement has been duly and
validly executed and delivered by each of UA, UA Mexico
and UATC Europe and, assuming the due authorization,
execution and delivery by all the other Parties hereto,
constitutes a legal, valid and binding obligation of each
of UA, UA Mexico and UATC Europe, enforceable against
each of UA, UA Mexico and UATC Europe in accordance with
its terms.
(c) Subsidiaries and Affiliates. Schedule
4.1(c) hereto contains a complete list of all of the
Subsidiaries and Affiliates of each of the Companies,
other than those identified in the definition of
"Subsidiary" in Section 1.1. Each of the Companies does
not have any Subsidiaries or Affiliates other than those
listed on Schedule 4.1(c) hereto other than those
identified in the definition of "Subsidiary" in Section
1.1. All of such Subsidiaries and Affiliates are
corporations duly organized and validly existing under
the laws of the jurisdiction of their incorporation, with
full power and authority to own, operate and lease their
properties and to carry on their business as now
conducted except where the failure to be so organized and
existing or to have such power and authority would not
have a Material Adverse Effect.
(d) Title to Shares; Capitalization. UA
Mexico is the record and beneficial owner of the Cinemas
Shares and the Servicios Shares and, at Closing, UA
Mexico will be the record and beneficial owner of the
Operadora Shares, set out opposite its name on Schedule
2.1(a) hereto, and UATC Europe is the record and
beneficial owner of the UATC Shares and the CUAA Shares
set out opposite its name on Schedules 2.1(b) and 2.1(c)
hereto, respectively, free and clear of all Liens (as
defined below) and, at the Closing, the Buyer will
receive good and valid title to such Shares free of any
adverse claim. Such Shares are not subject to any
restrictions on transferability other than those imposed
by the articles of association, by-laws or other
equivalent organizational documents or any joint venture
or shareholder agreements of the Companies and by the
applicable securities laws of any jurisdiction. The
share capitalization of (1) the Mexican Companies (other
than Operadora) consists solely of the Cinemas Shares and
the Servicios Shares, respectively, owned by UA Mexico
and Fondo Optima, and in the case of Operadora, will at
Closing consist solely of the Operadora Shares owned by
UA Mexico and Fondo Optima, with UA Mexico selling all of
such Mexican Shares owned by it to the Buyer; (2) UATC
consists solely of the UATC Shares owned by the UATC
Shareholders, with all of such UATC Shares being sold by
the UATC Shareholders to the Buyer; and (3) CUAA consists
solely of the CUAA Shares owned by the CUAA Shareholders,
with all of such CUAA Shares being sold by the CUAA
Shareholders to the Buyer. There are no options,
warrants, calls, commitments or rights of any character
to purchase or otherwise acquire such Shares from any of
UA Mexico or UATC Europe or under which any of UA Mexico
or UATC Europe may be obligated to sell or transfer any
of such Shares other than those imposed by the articles
of association, by-laws or other equivalent
organizational documents or any joint venture or
shareholder agreements of the Companies and by this
Agreement. There are no voting trusts, stockholder
agreements, proxies or other agreements or understandings
in effect with respect to the voting or transfer of any
of such Shares other than those imposed by the articles
of association, by-laws or other equivalent
organizational documents or any joint venture or
shareholder agreements of the Companies and by this
Agreement. For the purpose of this Agreement, "Liens"
shall mean and include all liens, mortgages, pledges,
security interests, fiduciary assignments, options,
charges or similar Encumbrances.
(e) Consents and Approvals; No Violation.
Except for the consents and approvals set forth in
Schedule 4.1(e) hereto (the "Consents"), neither the
execution and delivery of this Agreement by UA, UA Mexico
and UATC Europe nor the consummation of the transactions
contemplated hereby will (assuming that the Consents are
obtained) (1) violate or conflict with any provision of
the articles of incorporation, by-laws or other
equivalent organizational documents of any of UA, UA
Mexico, UATC Europe or the Companies, (2) violate or
conflict with any material provision of the Cinemas
Leases, the UATC Leases or the CUAA Leases, (3) require
any consent, waiver, approval, authorization or permit of
or the filing with or notification to, any court, or
governmental or regulatory authority, agency or
commission (each, a "Governmental Authority") by any of
UA, UA Mexico, UATC Europe or the Companies, (4) violate
or conflict with any law, rule, regulation, ordinance,
order, judgment, award, writ, injunction or decree of a
Governmental Authority (collectively, "Laws") applicable
to any of UA, UA Mexico, UATC Europe or the Companies or
(5) violate or conflict with, result in a breach of or
constitute (with or without due notice or lapse of time
or both) a default (or give rise to any right of
termination, cancellation or acceleration) under, require
any consent under, or result in the creation of any Lien
on any of the Mexican Shares owned by UA Mexico, or the
UATC Shares and CUAA Shares owned by UATC Europe pursuant
to any of the terms, conditions or provisions of any
note, mortgage, indenture, Lien, bond, agreement,
sublease, license, permit, franchise, contract, lease or
other instrument or obligation to which any of UA, UA
Mexico, UATC Europe or the Companies is a party or by
which it or any of its assets, properties or interests is
bound, excluding from any the foregoing clauses (1)
through (5) such failures, violations, breaches or
defaults which individually or in the aggregate, would
not have a Material Adverse Effect.
(f) Financial Statements. Attached hereto as
Schedule 4.1(f) are copies of the unaudited balance
sheets and income statements for each of Cinemas and UATC
for the periods ended December 31, 1996 and May 31, 1997,
and for CUAA for the period ended May 31, 1997.
(collectively, the "Unaudited Balance Sheets"). The
audited balance sheets, income statements and statements
of cash flow of Cinemas and UATC for the period ended
December 31, 1996 and June 30, 1997 and the audited fixed
asset accounts of CUAA for the period ended June 30, 1997
(collectively, the "Audited Balance Sheets", and,
together with the Unaudited Balance Sheets, the "Balance
Sheets") will be delivered to the Buyer after the date of
execution of this Agreement and in any case no later than
August 1, 1997 except for the Audited Balance Sheets of
Cinemas for the period ended June 30, 1997 which will be
delivered to the Buyer no later than August 8, 1997. The
Unaudited Balance Sheets of Cinemas present and the
Audited Balance Sheets of Cinemas, when delivered as
aforesaid, will present fairly the financial position, in
accordance with GAAP, of Cinemas as of the dates set
forth therein and the results of operations of Cinemas
for the period set forth therein. The Unaudited Balance
Sheets of UATC and CUAA, respectively, present and the
Audited Balance Sheets of UATC and CUAA, respectively,
when delivered as aforesaid, will present fairly the
financial position, in accordance with GAAP, of UATC and
CUAA, respectively, as of the dates set forth therein and
the results of operations of UATC and CUAA, respectively,
for the period set forth therein. UA presently has the
financial capacity and ability to fulfill its obligations
under this Agreement, including its obligations of
indemnification under Article 10 hereof.
(g) No Undisclosed Liabilities. Each of
Cinemas, UATC and CUAA and each of their respective
Subsidiaries has no liabilities (whether absolute,
accrued, fixed, contingent, matured, unmatured,
determined, determinable or otherwise) which would be
required by GAAP to be and were not disclosed or reserved
against in each of their Balance Sheets, except for (1)
liabilities set forth on Schedule 4.1(g) hereto, (2)
liabilities incurred in the Ordinary Course of Business,
(3) liabilities arising under or resulting from this
Agreement, or (4) liabilities incurred other than in the
Ordinary Course of Business which do not exceed in the
aggregate $25,000.
(h) Absence of Certain Changes. Except as
disclosed in Schedule 4.1(h) hereto, since May 31, 1997,
each of the Companies and each of their respective
Subsidiaries has conducted its business only in the
ordinary and usual course and (1) there has not occurred
any events or changes (including the incurrence of any
liabilities of any nature other than in the Ordinary
Course of Business, whether or not accrued, contingent or
otherwise) having or reasonably likely to have,
individually or in the aggregate, a Material Adverse
Effect, and (2) each of the Companies and each of their
respective Subsidiaries has not taken any action which
would have been prohibited under Section 6.1(b) hereof.
(i) Material Contracts. (1) Schedule 4.1(i)
hereto sets forth a list, as of the date hereof, of the
following contracts to which each of the Companies or any
of their respective Subsidiaries is a party:
(i) each employment, severance,
management, collective bargaining, consulting and other
agreement involving compensation for services rendered or
to be rendered, in each case involving payments in excess
of $100,000 per year;
(ii) any credit agreement, loan
agreement, indenture, note, mortgage, security agreement,
loan commitment, evidence of indebtedness, or other
contract relating to the borrowing of a material amount
of funds;
(iii) any contract regarding the
acquisition or disposition of a motion picture exhibition
theater in the last two years pursuant to which net
payments or net proceeds, as the case may be, in excess
of $500,000 were made or received, as the case may be;
(iv) the Cinemas Leases, the UATC Leases
and the CUAA Leases;
(v) any joint venture or shareholders
agreements; and
(vi) any other contract in the Ordinary
Course of Business other than film contracts which
involves the payment or receipt of an amount in excess of
$250,000 per annum or, outside of the Ordinary Course of
Business which involves the payment or receipt of an
amount in excess of $100,000 per annum.
(2) Except as set forth on Schedule
4.1(i) hereto, all of the Material Contracts (as defined
below) are valid, binding and enforceable obligations of
each of the Mexican Companies, UATC or CUAA or any of
their respective Subsidiaries, which are parties to such
Material Contracts, as the case may be, and, to the
knowledge of UA, neither the other party thereto or any
of the Companies or any of their respective Subsidiaries,
as the case may be, is in material breach of or default
under any such Material Contract, except where (i) the
failure of Material Contracts to be valid, binding and
enforceable or (ii) breaches of Material Contracts, in
each such case, would not have a Material Adverse Effect.
As used in this Agreement, the term "Material Contracts"
shall mean all of the contracts set forth on Schedule
4.1(i) hereto. True and correct copies of each of the
Material Contracts have been previously provided to the
Buyer or will be provided promptly to the Buyer after the
execution of this Agreement.
(j) Compliance with Laws. Except as set forth
on Schedule 4.1(j) hereto, none of the Companies nor any
of their respective Subsidiaries is in violation of any
provision of any (1) Law or (2) order, judgment,
injunction, award, decree, writ, ruling and similar
action of any Governmental Authority having jurisdiction
over any of them (collectively, "Orders") , except for
such violations which would not have a Material Adverse
Effect.
(k) Litigation and Arbitration. Except as set
forth on Schedule 4.1(k) hereto, as of the date hereof,
there is no claim, action, suit, arbitration, inquiry,
proceeding or investigation by or before any Governmental
Authority ("Action") pending or, to the knowledge of UA,
threatened against any of the Companies or any of their
respective Subsidiaries which (1) would have a Material
Adverse Effect or (2) challenges or seeks to prevent,
enjoin, alter or delay the transactions contemplated
hereby. Except as set forth in Schedule 4.1(k) hereto,
none of the Companies or any of their respective
Subsidiaries is subject to any Order (except any such
Orders which have general applicability to Persons which
are similarly situated) which would, if violated, have a
Material Adverse Effect.
(l) Real Estate. (1) Part I of Schedule
4.1(l) attached hereto sets forth, as of the date of this
Agreement, a complete and accurate list, in all material
respects, of (i) all of the real property owned by (A)
each of the Companies and each of their respective
Subsidiaries singly or in common with other entities or
individuals and (B) joint ventures in which each of the
Companies and each of their respective Subsidiaries is a
venture partner, singly or in common with other entities
(the "Owned Real Property"), (ii) all of the real
property that each of the Companies and each of their
respective Subsidiaries has leased or subleased from a
third party and (iii) all of the real property that each
of the Companies and each of their respective
Subsidiaries has leased or subleased to a third party
(clauses (ii) and (iii), together, the "Leased Real
Property" and, together with the Owned Real Property, the
"Real Property"). As of the date of this Agreement, each
of the Companies and each of their respective
Subsidiaries has good, valid and marketable title to its
interest in the applicable Owned Real Property or a valid
leasehold interest in the applicable Leased Real
Property, in each case, free and clear of all Liens,
Encumbrances and other matters of record, except for (A)
Liens, Encumbrances and other matters of record, if any,
listed on Part II of Schedule 4.1(l), (B) Liens,
encumbrances and other matters of record which do not,
individually or in the aggregate, have a Material Adverse
Effect on the present use or operation of the Real
Property, (C) taxes or assessments, special or otherwise,
not due and payable or being contested in good faith, (D)
easements, rights of way, restrictions, covenants of
record and claims or other similar charges, Encumbrances
and other matters of record which, if the rights granted
under such instruments were fully exercised, would not,
individually or in the aggregate, have a Material Adverse
Effect on the present use or operation of the Real
Property, (E) rights of parties in possession, as tenants
only, under leases of Real Property shown on Schedule
4.1(l) hereto or any party claiming through or under such
tenants, (F) any state of facts, rights, interests or
claims which could be ascertained by an inspection of the
Real Property, the existence of which does not have a
Material Adverse Effect on the present use or operation
of the Real Property but excluding any state of facts or
claims with respect to any noncompliance with any
environmental laws, and (G) any discrepancies, conflicts
or boundary lines, shortages in area, encroachments, or
any other facts which an accurate survey would disclose,
the existence of which does not have a Material Adverse
Effect on the present use or operation of the Real
Property.
(2) With respect to Leased Real Property
(i) which is leased or subleased by each of the Companies
and each of their respective Subsidiaries from a third
party, none of the Companies or their respective
Subsidiaries has received any written notice, in the case
of the Mexican Companies and CUAA and their respective
Subsidiaries during each of their period of ownership or
occupancy of such property, and in the case of UATC and
its Subsidiaries during the period since UATC Europe and
Fondo Optima became shareholders of UATC, of (A) any
monetary default or other material default under any
lease or sublease (which is material to their business or
operations) or (B) non-compliance with any applicable
Laws, other than any non-compliance or default the
consequences of which currently do not have a Material
Adverse Effect on the present occupancy, use and/or
operation of the Leased Real Property by the Companies
and each of their respective Subsidiaries and (ii) which
is leased or subleased by each of the Companies and each
of their respective Subsidiaries to a third party, none
of the Companies or their respective Subsidiaries (A) is
in material default under any lease or sublease (which is
material to their business or operations) which default
would give rise to a right of such third party to
terminate the applicable lease or sublease and (B) has
actual knowledge of any monetary default or other
material default by a third party under any material
lease or sublease.
(3) None of the Companies or their
respective Subsidiaries, with respect to its Real
Property, has received any written notice, in the case of
the Mexican Companies and CUAA and their respective
Subsidiaries during each of their period of ownership or
occupancy of such property, and in the case of UATC and
its Subsidiaries during the period since UATC Europe and
Fondo Optima became shareholders of UATC, from any
Governmental Authority with respect to its Real Property
of any material violation of any Laws, which violation is
not in the process of being cured or contested in good
faith.
(4) None of the Companies or their
respective Subsidiaries has received any written notice,
in the case of the Mexican Companies and CUAA and their
respective Subsidiaries during each of their period of
ownership or occupancy of such property, and in the case
of UATC and its Subsidiaries during the period since UATC
Europe and Fondo Optima became shareholders of UATC, of
any pending condemnation or eminent domain proceeding
which if successfully prosecuted would have a Material
Adverse Effect on the present use or operation of its
Real Property.
(5) The Spanish language copies of the
leases covering the Leased Real Property (the "Leases")
delivered by UA Mexico and UATC Europe to the Buyer (a
complete set of which have been delivered by such
Shareholder to the Buyer) are true and complete copies
thereof, and the same have not otherwise been amended,
modified or supplemented in any material respect;
(6) There is no material Action pending
to which any of the Companies or their respective
Subsidiaries is a party, or, to the knowledge of UA,
threatened with respect to the ownership, management or
operation of the Real Property;
(7) There are no outstanding unpaid
assessment notices directed to, or assessment proceedings
to which any of the Companies or their respective
Subsidiaries is a party, respecting municipal
improvements against the Real Property, other than such
notices or proceedings which are being contested in good
faith, and all municipal improvements for the cost of
which the Real Property can be assessed have been paid in
full so far as they relate to the interest of any of the
Companies or their respective Subsidiaries therein and
the payment of which is the obligation of any of the
Companies; and
(8) None of the Companies or their
respective Subsidiaries has received any notice from any
insurance company which has issued a policy with respect
to the Real Property claiming any material defects or
deficiencies in the Real Property or suggesting or
requesting the performance of any material repairs,
alterations or other work for the Real Property which has
not been complied with; nor has any of the Companies or
their respective Subsidiaries received any written notice
from any such insurance company stating or indicating
that the policy issued by it will not be renewed or will
be renewed at a materially higher premium than is
presently payable therefor.
(m) Environmental. (1) Except as set forth
on Schedule 4.1(m) hereto, (i) to the knowledge of UA,
each of the Companies and each of their respective
Subsidiaries is in material compliance with all
applicable Environmental Laws (as defined below)
regarding the storage, use, treatment, transportation,
manufacture, refinement, production, disposal or handling
of Hazardous Substances (as defined below); each of the
Companies and each of their respective Subsidiaries has
secured all material permits, licenses, authorizations,
registrations and approvals ("Environmental Permits")
necessary for the storage, use or handling of Hazardous
Substances and is in compliance therewith; (ii) there are
no material pending claims by any Governmental Authority
or any other Person in respect of Environmental Laws
affecting the Real Property; none of the Companies or
their respective Subsidiaries has received any written
notice of any violations of any Environmental Laws; and
none of the Companies or their respective Subsidiaries
has received any written warning notices, administrative
complaints, judicial complaints or other formal or, to
the knowledge of UA, informal notices from any Person
alleging that conditions on the Real Property are, or may
be, in violation of any Environmental Laws; and (iii) to
the actual knowledge of UA, without investigation, there
is not now, nor has there ever been, any treatment,
storage, disposal, discharge or other type of release of
Hazardous Substances on property adjacent to or near the
Real Property or to the surface or ground water flowing
to the Real Property which has resulted in the
contamination to the Real Property.
(2) For purposes of this Agreement, (i)
the term "Environmental Laws" shall mean all applicable
laws, regulations, rules, ordinances, orders, codes,
licenses, permits, decrees and judgments of or by any
Governmental Authority relating to pollution or
protection of the environment now in effect in any
applicable jurisdiction and (ii) the term "Hazardous
Substances" shall mean any chemicals, materials or
substances regulated as toxic or hazardous or as a
pollutant, contaminant or waste under any applicable
Environmental Laws.
(n) Employee Benefit Plans. (1) Schedule
4.1(n) hereto sets forth a true and complete list (or in
the case of an unwritten Plan, a description) of all the
Plans established or maintained by each of the Companies
and each of their respective Subsidiaries or covering
employees or former employees of each of the Companies
and each of their respective Subsidiaries.
(2) Each Plan listed on Schedule 4.1(n)
hereto is in material compliance with its terms and the
requirements provided by any and all applicable Laws, and
no condition exists that would be expected to affect such
material compliance. To UA's knowledge, no notice has
been issued by any Governmental Authority questioning or
challenging such compliance. There are no Claims (other
than routine, non-contested Claims for benefits) pending
or, to UA's knowledge, threatened against the Plans, or
any administrator or fiduciary thereof, which could
result in any material liability to any of the Companies
and their respective Subsidiaries, taken as a whole.
With respect to all such Plans, all required
contributions due for all periods ending before the
Closing Date have been made in full or have been accrued
on the relevant Company's most recent balance sheet.
Neither the Companies nor any of their respective
Subsidiaries maintains or contributes to, or has any
liability (fixed, contingent or otherwise) for, medical,
health or life insurance benefits for terminated or
retired employees of any of the Companies nor any of
their respective Subsidiaries after termination of their
employment, except as required by law.
(3) The execution and performance of this
Agreement will not constitute a stated triggering event
under any Plan or employment agreement that will result
in any payment (whether of severance pay or otherwise)
becoming due to any employee of any of the Companies or
any of their respective Subsidiaries.
(o) Taxes. (1) Except as disclosed on
Schedule 4.1(o) hereto:
(i) Each of the Companies and each of their
respective Subsidiaries
(A) has prepared in good faith and duly and
timely filed all material Tax Returns (as
defined below) required to be filed by it and
all such filed Tax Returns are complete and
accurate in all material respects,
(B) has paid all material Taxes (as defined
below) that are required to be paid, except
with respect to matters contested in good faith
that are set forth in Schedule 4.1(o) or with
respect to which reserves are provided on the
Balance Sheets of the appropriate Company, and
(C) has not waived any statute of limitations
with respect to Taxes or agreed to any
extension of time with respect to a Tax
assessment or deficiency;
(ii) There are not pending or, to UA's knowledge,
threatened in writing, any audits, examinations,
investigations or other proceedings in respect of
material Taxes or Tax matters of any of the
Companies or any of their respective Subsidiaries;
(iii) There are no Encumbrances for material Taxes
upon the assets or properties of any of the
Companies or any of their respective Subsidiaries,
except for statutory liens for Taxes not yet due;
and
(iv) None of the Companies or any of their
respective Subsidiaries (A) is a party to, or is
bound by, any Tax sharing agreement, Tax
indemnification agreement or similar contract or
arrangement ("Tax Agreement"), or (B) has formally
or informally assumed (or has been caused to assume)
any obligation under any Tax Agreement to which it
is not a party or with respect to which it is not
otherwise bound.
(v) Other than any Tax Returns which have not yet
been required to be filed, and those Tax Returns
referred to on Schedule 4.1(o), each of the
Companies and each of their respective Subsidiaries
has made available, or will no later than August 1,
1997 make available, to the Buyer true and correct
copies of the Tax Returns as filed for each of the
taxable years, or portions thereof, from 1992
through 1997.
(2) As used in this Agreement, (i) the
term "Tax" (including, with correlative meaning, the
terms "Taxes" and "Taxable") includes all federal, state,
local and foreign taxes, including without limitation,
income, windfall, profits, gains, franchise, gross
receipts, transfer, license, environmental, customs duty,
capital stock, severance, stamp, payroll, sales,
employment, unemployment, disability, use, property,
withholding, excise, production, value added, occupancy
and other taxes, duties or governmental assessment,
together with all interest, penalties and additions
imposed with respect to such amounts and any interest in
respect of such penalties and additions, and (ii) the
term "Tax Return" includes all returns and reports
(including elections, declarations, disclosures,
schedules, estimates and information returns) required to
be supplied to a Tax authority relating to Taxes. For
purposes of this Section 4.1(o) and Section 4.2(o),
"material" shall mean Taxes, individually or in the
aggregate, in excess of $25,000 and, when referring to
Tax Returns, any Tax Return, alone or when taken together
with any other Tax Returns, with respect to which the
failure to file would result in Taxes in excess of
$25,000.
(p) Labor Matters. To the knowledge of UA (1)
there is no unfair labor practice complaint against any
of the Companies or any of their respective Subsidiaries
pending before any agency or tribunal responsible for the
prevention of unlawful employment practices; (2) no
representation question exists respecting any employee of
any of the Companies or any of their respective
Subsidiaries; (3) no charges with respect to or relating
to any employee of any of the Companies or any of their
respective Subsidiaries are pending before any agency or
tribunal responsible for the prevention of unlawful
employment practices; and (4) except as disclosed in
Schedule 4.1(i) hereto, none of the Companies or any of
their respective Subsidiaries is subject to any
collective bargaining agreements.
(q) Construction. Schedule 4.1(q) hereto sets
forth a schedule as of the date thereof of all material
construction activity being conducted by or on behalf of
CUAA and each of its Subsidiaries. All such construction
will be funded by CUAA through Closing as required by the
relevant construction agreements on a current basis; all
such construction which has been completed has been paid
for in full to the extent required by the relevant
construction agreements; to the knowledge of UA, no
mechanics' or materialmens' liens have been filed against
CUAA on or before August 1, 1997; from August 1, 1997
until Closing, there shall have been no mechanics' or
materialmens' liens filed against CUAA; all licenses and
permits relating to all such construction required to be
obtained from Governmental Authorities have been
obtained; and the contemplated use of the project upon
completion is permitted under applicable Laws, including
the applicable zoning laws.
(r) Ownership of Personal Property. Except
for leased personal property, each of the Companies and
each of their respective Subsidiaries has or at Closing
will have good, valid and marketable title to all of its
personal property of every kind, nature and description,
wherever situated, owned or used in its business, free
and clear of all material Liens, Encumbrances and other
matters of record except for the Liens, Encumbrances and
other matters of record listed on Schedule 4.1(r) hereto
or released prior to Closing.
(s) Payments. (1) None of (i) UA Mexico in
its capacity as the shareholder of each of the Mexican
Companies, the Mexican Companies nor any of their
respective Subsidiaries or representatives, since UA
Mexico became such shareholder, (ii) UATC Europe in its
capacity as shareholder of UATC, UATC nor any of their
respective Subsidiaries or representatives, since UATC
Europe became such shareholder and (iii) UATC Europe in
its capacity as shareholder of CUAA, CUAA nor any of
their respective Subsidiaries or representatives, since
UATC Europe became such shareholder, has made, authorized
or offered any payment, or given, authorized or offered
the giving of anything of value, directly or indirectly,
to any official or employee of the local, state, federal
or other governments in Mexico or Argentina or of the
jurisdictions included in Mexico and Argentina or any
department, agency or instrumentality thereof, or to any
Person acting in an official capacity for or on behalf of
any of the foregoing, or to any political party in Mexico
or Argentina or in the jurisdictions included in Mexico
and Argentina or any official thereof, or to any Person
known to be a candidate for any office in Mexico or
Argentina or in the governments of the jurisdictions
included in Mexico and Argentina, for the purpose of
illegally influencing any act or decision in any such
person's official capacity, or illegally inducing any
such Person to use its influence with any such
governments or any department, agency or instrumentality
thereof, or influencing any official act or decision of
any such governments or any department, agency or
instrumentality thereof, with respect its business and
operations; and
(2) None of (i) UA Mexico in its capacity
as the shareholder of each of the Mexican Companies, the
Mexican Companies nor any of their respective
Subsidiaries or representatives, since UA Mexico became
such shareholder, (ii) UATC Europe in its capacity as
shareholder of UATC, UATC nor any of their respective
Subsidiaries or representatives, since UATC Europe became
such shareholder and (iii) UATC Europe in its capacity as
shareholder of CUAA, CUAA nor any of their respective
Subsidiaries or representatives, since UATC Europe became
such shareholder, taken any action that would subject
itself to any material liability or penalty under any
applicable laws, rules, regulations or decrees of any
Governmental Authority.
(t) Disclosure of All Material Facts. UA has
disclosed to the Buyer all material facts of which it has
knowledge or has reason to believe of their existence
relating to each of the Mexican Companies.
4.2 Representations and Warranties of Fondo
Optima. Fondo Optima represents and warrants to the
Buyer as follows:
(a) Organization and Standing. Each of UATC
and CUAA is a corporation duly organized and validly
existing under the laws of Argentina, with full power and
authority to own, operate and lease its properties and to
carry on its business as now conducted except where the
failure to be so organized and existing or to have such
power and authority would not have a Material Adverse
Effect. Fondo Optima is a corporation duly organized and
validly existing under the laws of the jurisdiction of
its incorporation, with full power and authority to own,
operate and lease its properties and to carry on its
business as now conducted except where the failure to be
so organized and existing or to have such power and
authority would not have a Material Adverse Effect.
(b) Authorization; Binding Obligation. Fondo
Optima has all requisite corporate power and authority to
execute and deliver this Agreement, to carry out its
obligations hereunder and to consummate the transactions
contemplated hereby except where the failure to have such
power and authority would not have a Material Adverse
Effect. The execution and delivery of this Agreement by
Fondo Optima, the performance by Fondo Optima of its
obligations hereunder and the consummation of the
transactions contemplated hereby by Fondo Optima have
been duly and validly authorized by the Board of
Directors of Fondo Optima, and no other corporate action
on the part of Fondo Optima is necessary to authorize
this Agreement or for Fondo Optima to carry out its
obligations hereunder or to consummate the transactions
contemplated hereby. This Agreement has been duly and
validly executed and delivered by Fondo Optima and,
assuming the due authorization, execution and delivery by
the other Parties hereto, constitutes a legal, valid and
binding obligation of Fondo Optima, enforceable against
Fondo Optima in accordance with its terms.
(c) Subsidiaries and Affiliates. Schedule
4.1(c) hereto contains a complete list of all of the
Subsidiaries and Affiliates of each of UATC and CUAA
other than those identified in the definition of
"Subsidiary" in Section 1.1. Each of UATC and CUAA does
not have any Subsidiaries or Affiliates other than those
listed on Schedule 4.1(c) hereto other than those
identified in the definition of "Subsidiary" in Section
1.1. All of such Subsidiaries and Affiliates are
corporations duly organized and validly existing under
the laws of the jurisdiction of their incorporation, with
full power and authority to own, operate and lease their
properties and to carry on their business as now
conducted except where the failure to be so organized and
existing or to have such power and authority would not
have a Material Adverse Effect.
(d) Title to Shares; Capitalization. Fondo
Optima is the record and beneficial owner of the UATC
Shares and the CUAA Shares set out opposite its name on
Schedules 2.1(b) and 2.1(c) hereto, respectively, free
and clear of all Liens and, at the Closing, the Buyer
will receive good and valid title to such Shares free of
any adverse claim. Such Shares are not subject to any
restrictions on transferability other than those imposed
by the articles of association, by-laws or other
equivalent organizational documents or any joint venture
or shareholder agreements of UATC and CUAA and by the
securities laws of any jurisdiction. The share
capitalization of (1) UATC consists solely of the UATC
Shares owned by the UATC Shareholders, with all of such
UATC Shares being sold by the UATC Shareholders to the
Buyer and (2) CUAA consists solely of the CUAA Shares
owned by the CUAA Shareholders, with all of such CUAA
Shares being sold by the CUAA Shareholders to the Buyer.
There are no options, warrants, calls, commitments or
rights of any character to purchase or otherwise acquire
such Shares from Fondo Optima or under which Fondo Optima
may be obligated to sell or transfer any of such Shares
other than those imposed by the articles of association,
by-laws or other equivalent organizational documents or
any joint venture or shareholder agreements of UATC and
CUAA and by this Agreement. There are no voting trusts,
stockholder agreements, proxies or other agreements or
understandings in effect with respect to the voting or
transfer of any of such Shares other than those imposed
by the articles of association, by-laws or other
equivalent organizational documents or any joint venture
or shareholder agreements of UATC and CUAA and by this
Agreement.
(e) Consents and Approvals; No Violation.
Except for the Consents, neither the execution and
delivery of this Agreement by Fondo Optima nor the
consummation of the transactions contemplated hereby will
(assuming that the Consents are obtained) (1) violate or
conflict with any provision of the articles of
incorporation, by-laws or other equivalent organizational
documents of any of Fondo Optima, UATC or CUAA, (2)
violate or conflict with any material provision of the
UATC Leases or the CUAA Leases, (3) require any consent,
waiver, approval, authorization or permit of or the
filing with or notification to, any Governmental
Authority by any of Fondo Optima, UATC or CUAA, (4)
violate or conflict with any Laws applicable to Fondo
Optima, UATC or CUAA, or (5) violate or conflict with,
result in a breach of or constitute (with or without due
notice or lapse of time or both) a default (or give rise
to any right of termination, cancellation or
acceleration) under, require any consent under, or result
in the creation of any Lien on any of the UATC Shares or
the CUAA Shares owned by Fondo Optima pursuant to any of
the terms, conditions or provisions of any note,
mortgage, indenture, Lien, bond, agreement, sublease,
license, permit, franchise, contract, lease or other
instrument or obligation to which any of Fondo Optima,
UATC or CUAA is a party or by which it or any of its
assets, properties or interests is bound, excluding from
any of the foregoing clauses (1) through (5) such
failures, violations, breaches or defaults which
individually or in the aggregate would not have a
Material Adverse Effect.
(f) Financial Statements. Attached hereto as
Schedule 4.1(f) are copies of the Unaudited Balance
Sheets of each of UATC and CUAA. The Audited Balance
Sheets of UATC and CUAA will be delivered to the Buyer
after the date of execution of this Agreement and in any
case no later than August 1, 1997. The Unaudited Balance
Sheets of UATC and CUAA, respectively, present and the
Audited Balance Sheets of UATC and CUAA, respectively,
when delivered as aforesaid, will present fairly the
financial position, in accordance with GAAP, of UATC and
CUAA, respectively, as of the dates set forth therein and
the results of operations of UATC and CUAA, respectively,
for the period set forth therein.
(g) No Undisclosed Liabilities. Each of UATC
and CUAA and each of their respective Subsidiaries has no
liabilities (whether absolute, accrued, fixed,
contingent, matured, unmatured, determined, determinable
or otherwise) which would be required by GAAP to be and
were not disclosed or reserved against in its Balance
Sheets, except for (1) liabilities set forth on Schedule
4.1(g) hereto, (2) liabilities incurred in the Ordinary
Course of Business, (3) liabilities arising under or
resulting from this Agreement, or (4) liabilities
incurred other than in the Ordinary Course of Business
which do not exceed in the aggregate $25,000.
(h) Absence of Certain Changes. Except as
disclosed in Schedule 4.1(h) hereto, since May 31, 1997,
each of UATC and CUAA and each of their respective
Subsidiaries has conducted its business only in the
ordinary and usual course and (1) there has not occurred
any events or changes (including the incurrence of any
liabilities of any nature other than in the Ordinary
Course of Business, whether or not accrued, contingent or
otherwise) having or reasonably likely to have,
individually or in the aggregate, a Material Adverse
Effect, and (2) each of UATC and CUAA and each of their
respective Subsidiaries has not taken any action which
would have been prohibited under Section 6.1(b) hereof.
(i) Material Contracts. (1) Schedule 4.1(i)
hereto sets forth a list, as of the date hereof, of the
following contracts to which each of UATC or CUAA or any
of their respective Subsidiaries is a party:
(i) each employment, severance,
management, collective bargaining, consulting and other
agreement involving compensation for services rendered or
to be rendered, in each case involving payments in excess
of $100,000 per year;
(ii) any credit agreement, loan
agreement, indenture, note, mortgage, security agreement,
loan commitment, evidence of indebtedness, or other
contract relating to the borrowing of a material amount
of funds;
(iii) any contract regarding the
acquisition or disposition of a motion picture exhibition
theater in the last two years pursuant to which net
payments or net proceeds, as the case may be, in excess
of $500,000 were made or received, as the case may be;
(iv) the UATC Leases and the CUAA Leases;
(v) any joint venture or shareholders
agreements; and
(vi) any other contract in the Ordinary
Course of Business other than film contracts which
involves the payment or receipt of an amount in excess of
$250,000 per annum or, outside of the Ordinary Course of
Business which involves the payment or receipt of an
amount in excess of $100,000 per annum.
(2) Except as set forth on Schedule
4.1(i) hereto, all of the Material Contracts (as defined
below) are valid, binding and enforceable obligations of
each of UATC or CUAA or any of their respective
Subsidiaries, which are parties to such Material
Contracts, as the case may be, and, to the knowledge of
Fondo Optima, neither the other party thereto or any of
UATC or CUAA or any of their respective Subsidiaries, as
the case may be, is in material breach of or default
under any such Material Contract, except where (i) the
failure of Material Contracts to be valid, binding and
enforceable or (ii) breaches of Material Contracts, in
each such case, would not have a Material Adverse Effect.
True and correct copies of each of the Material Contracts
have been previously provided to the Buyer or will be
provided promptly to the Buyer after the execution of
this Agreement.
(j) Compliance with Laws. Except as set forth
on Schedule 4.1(j) hereto, none of UATC or CUAA nor any
of their respective Subsidiaries is in violation of any
provision of any (1) Law or (2) Orders, except for such
violations which would not have a Material Adverse
Effect.
(k) Litigation and Arbitration. Except as set
forth on Schedule 4.1(k) hereto, as of the date hereof,
there is no Action pending or, to the knowledge of Fondo
Optima, threatened against any of UATC or CUAA or any of
their respective Subsidiaries which (1) would have a
Material Adverse Effect or (2) challenges or seeks to
prevent, enjoin, alter or delay the transactions
contemplated hereby. Except as set forth in Schedule
4.1(k) hereto, none of UATC or CUAA or any of their
Subsidiaries is subject to any Order (except any such
Orders which have general applicability to Persons which
are similarly situated) which would, if violated, have a
Material Adverse Effect.
(l) Real Estate. (1) Part I of Schedule
4.1(l) attached hereto sets forth, as of the date of this
Agreement, a complete and accurate list, in all material
respects, of (i) all of the real property owned by (A)
each of UATC and CUAA and each of their respective
Subsidiaries, singly or in common with other entities or
individuals and (B) joint ventures in which each of UATC
and CUAA and each of their respective Subsidiaries is a
venture partner, singly or in common with other entities
(the "Owned Real Property"), (ii) all of the real
property that each of UATC and CUAA and each of their
respective Subsidiaries has leased or subleased from a
third party and (iii) all of the real property that each
of UATC and CUAA and each of their respective
Subsidiaries has leased or subleased to a third party
(clauses (ii) and (iii), together, the "Leased Real
Property" and, together with the Owned Real Property, the
"Real Property"). As of the date of this Agreement, each
of UATC and CUAA and each of their respective
Subsidiaries has good, valid and marketable title to its
interest in the applicable Owned Real Property or a valid
leasehold interest in the applicable Leased Real
Property, in each case, free and clear of all Liens,
Encumbrances and other matters of record, except for (A)
Liens, Encumbrances and other matters of record, if any,
listed on Part II of Schedule 4.1(l), (B) Liens,
encumbrances and other matters of record which do not,
individually or in the aggregate, have a Material Adverse
Effect on the present use or operation of the Real
Property, (C) taxes or assessments, special or otherwise,
not due and payable or being contested in good faith, (D)
easements, rights of way, restrictions, covenants of
record and claims or other similar charges, Encumbrances
and other matters of record which, if the rights granted
under such instruments were fully exercised, would not,
individually or in the aggregate, have a Material Adverse
Effect on the present use or operation of the Real
Property, (E) rights of parties in possession, as tenants
only, under leases of Real Property shown on Schedule
4.1(l) hereto or any party claiming through or under such
tenants, (F) any state of facts, rights, interests or
claims which could be ascertained by an inspection of the
Real Property, the existence of which does not have a
Material Adverse Effect on the present use or operation
of the Real Property but excluding any state of facts or
claims with respect to any noncompliance with any
environmental laws, and (G) any discrepancies, conflicts
or boundary lines, shortages in area, encroachments, or
any other facts which an accurate survey would disclose,
the existence of which does not have a Material Adverse
Effect on the present use or operation of the Real
Property.
(2) With respect to Leased Real Property
(i) which is leased or subleased by each of UATC and CUAA
and each of their respective Subsidiaries from a third
party, none of UATC and CUAA or their respective
Subsidiaries has received any written notice, in the case
of CUAA and its respective Subsidiaries during each of
their period of ownership or occupancy of such property,
and in the case of UATC and its Subsidiaries during the
period since UATC Europe and Fondo Optima became
shareholders of UATC, of (A) any monetary default or
other material default under any lease or sublease (which
is material to their business or operations) or (B) non-
compliance with any applicable Laws, other than any non-
compliance the consequences of which currently do not
have a Material Adverse Effect on the present occupancy,
use and/or operation of the Leased Real Property by UATC
and CUAA and each of their respective Subsidiaries and
(ii) which is leased or subleased by each of UATC and
CUAA and each of their respective Subsidiaries to a third
party, none of UATC and CUAA or their respective
Subsidiaries (A) is in material default under any lease
or sublease which default would give rise to a right of
such third party to terminate the applicable lease or
sublease (which is material to their business or
operations) and (B) has actual knowledge of any monetary
default or other material default by a third party under
any material lease or sublease.
(3) None of UATC and CUAA or their
respective Subsidiaries, with respect to its Real
Property, has received any written notice, in the case of
CUAA and its respective Subsidiaries during each of their
period of ownership or occupancy of such property, and in
the case of UATC and its Subsidiaries during the period
since UATC Europe and Fondo Optima became shareholders of
UATC, from any Governmental Authority with respect to its
Real Property of any material violations of any Laws,
which violation is not in the process of being cured or
contested in good faith.
(4) None of UATC and CUAA or their
respective Subsidiaries has received any written notice,
in the case of CUAA and its respective Subsidiaries
during each of their period of ownership or occupancy of
such property, and in the case of UATC and its
Subsidiaries during the period since UATC Europe and
Fondo Optima became shareholders of UATC, of any pending
condemnation or eminent domain proceeding which if
successfully prosecuted would have a Material Adverse
Effect on the present use or operation of its Real
Property.
(5) The Leases delivered by Fondo Optima
to the Buyer (a complete set of which have been delivered
by Fondo Optima to the Buyer) are true and complete
copies thereof, and the same have not otherwise been
amended, modified or supplemented in any material
respect;
(6) There is no material Action pending
to which any of UATC and CUAA or their respective
Subsidiaries is a party, or, to the knowledge of Fondo
Optima, threatened with respect to the ownership,
management or operation of the Real Property;
(7) There are no outstanding unpaid
assessment notices directed to, or assessment proceedings
to which any of UATC, CUAA or their respective
Subsidiaries is a party, respecting municipal
improvements against the Real Property, other than such
notices or proceedings which are being contested in good
faith, and all municipal improvements for the cost of
which the Real Property can be assessed have been paid in
full so far as they relate to the interest of any of UATC
and CUAA or their respective Subsidiaries therein and the
payment of which is the obligation of UATC or CUAA; and
(8) None of UATC or CUAA or their
respective Subsidiaries has received any notice from any
insurance company which has issued a policy with respect
to the Real Property claiming any material defects or
deficiencies in the Real Property or suggesting or
requesting the performance of any material repairs,
alterations or other work for the Real Property which has
not been complied with; nor has any of UATC or CUAA or
their respective Subsidiaries, received any written
notice from any such insurance company stating or
indicating that the policy issued by it will not be
renewed or will be renewed at a materially higher premium
than is presently payable therefor.
(m) Environmental. Except as set forth
on Schedule 4.1(m) hereto, (1) to the knowledge of Fondo
Optima, each of UATC and CUAA and each of their
respective Subsidiaries is in material compliance with
all applicable Environmental Laws regarding the storage,
use, treatment, transportation, manufacture, refinement,
production, disposal or handling of Hazardous Substances;
each of UATC and CUAA and each of their respective
Subsidiaries has secured all Environmental Permits
necessary for the storage, use or handling of Hazardous
Substances and is in compliance therewith; (2) there are
no pending claims by any Governmental Authority or any
other Person in respect of Environmental Laws affecting
the Real Property; none of UATC or CUAA or their
respective Subsidiaries has received any written notice
of any violations of any Environmental Laws; and none of
UATC or CUAA or their respective Subsidiaries has
received any written warning notices, administrative
complaints, judicial complaints or other formal or, to
the knowledge of Fondo Optima, informal notices from any
Person alleging that conditions on the Real Property are,
or may be, in violation of any Environmental Laws; and
(3) to the actual knowledge of Fondo Optima, without
investigation, there is not now, nor has there ever been,
any treatment, storage, disposal, discharge or other type
of release of Hazardous Substances on property adjacent
to or near the Real Property or to the surface or ground
water flowing to the Real Property which has resulted in
the contamination to the Real Property.
(n) Employee Benefit Plans. (1) Schedule
4.1(n) hereto sets forth a true and complete list (or in
the case of an unwritten Plan, a description) of all the
Plans established or maintained by each of UATC and CUAA
and each of their respective Subsidiaries or covering
employees or former employees of each of UATC and CUAA
and each of their respective Subsidiaries.
(2) Each Plan listed on Schedule 4.1(n)
hereto is in material compliance with its terms and the
requirements provided by any and all applicable Laws, and
no condition exists that would be expected to affect such
material compliance. To Fondo Optima's knowledge, no
notice has been issued by any Governmental Authority
questioning or challenging such compliance. There are no
Claims (other than routine, non-contested Claims for
benefits) pending or, to Fondo Optima's knowledge,
threatened against the Plans, or any administrator or
fiduciary thereof, which could result in any material
liability to any of UATC or CUAA and their respective
Subsidiaries, taken as a whole. With respect to all such
Plans, all required contributions due for all periods
ending before the Closing Date have been made in full or
have been accrued on the relevant company's most recent
balance sheet. Neither UATC or CUAA nor any of their
respective Subsidiaries maintains or contributes to, or
has any liability (fixed, contingent or otherwise) for,
medical, health or life insurance benefits for terminated
or retired employees of UATC or CUAA nor any of their
respective Subsidiaries after termination of their
employment, except as required by law.
(3) The execution and performance of this
Agreement will not constitute a stated triggering event
under any Plan or employment agreement that will result
in any payment (whether of severance pay or otherwise)
becoming due to any employee of any of UATC, CUAA or any
of their respective Subsidiaries.
(o) Taxes. Except as disclosed on Schedule
4.1(o) hereto:
(i) Each of UATC and CUAA and each of their
respective Subsidiaries
(A) has prepared in good faith and duly and
timely filed all material Tax Returns (as
defined below) required to be filed by it and
all such filed Tax Returns are complete and
accurate in all material respects,
(B) has paid all material Taxes (as defined
below) that are required to be paid, except
with respect to matters contested in good faith
that are set forth in Schedule 4.1(o) or with
respect to which reserves are provided on the
Balance Sheets of the appropriate Company, and
(C) has not waived any statute of limitations
with respect to Taxes or agreed to any
extension of time with respect to a Tax
assessment or deficiency;
(ii) There are not pending or, to the knowledge of
Fondo Optima, threatened in writing, any audits,
examinations, investigations or other proceedings in
respect of material Taxes or Tax matters of any of
UATC or CUAA or any of their respective
Subsidiaries;
(iii) There are no Encumbrances for material Taxes
upon the assets or properties of any of UATC or CUAA
or any of their respective Subsidiaries, except for
statutory liens for Taxes not yet due;
(iv) None of UATC or CUAA or any of their respective
Subsidiaries (A) is a party to, or is bound by, any
Tax sharing agreement, Tax indemnification agreement
or similar contract or arrangement ("Tax
Agreement"), or (B) has formally or informally
assumed (or has been caused to assume) any
obligation under any Tax Agreement to which it is
not a party or with respect to which it is not
otherwise bound.
(v) Other than any Tax Returns which have not yet
been required to be filed, and those Tax Returns
referred to on Schedule 4.1(o), each of UATC and
CUAA and each of their respective Subsidiaries has
made available, or will no later than August 1, 1997
make available, to the Buyer true and correct copies
of the Tax Returns as filed for each of the taxable
years, or portions thereof, from 1992 through 1997.
(p) Labor Matters. To the knowledge of Fondo
Optima (1) there is no unfair labor practice complaint
against any of UATC or CUAA or any of their respective
Subsidiaries pending before any agency or tribunal
responsible for the prevention of unlawful employment
practices; (2) no representation question exists
respecting any employee of any of UATC or CUAA or any of
their respective Subsidiaries; (3) no charges with
respect to or relating to any employee of any of UATC or
CUAA or any of their respective Subsidiaries are pending
before any agency or tribunal responsible for the
prevention of unlawful employment practices; and (4)
except as disclosed in Schedule 4.1(i) hereto, none of
UATC or CUAA or any of their respective Subsidiaries is
subject to any collective bargaining agreements.
(q) Construction. Schedule 4.1(q) hereto sets
forth a schedule as of the date thereof of all material
construction activity being conducted by or on behalf of
CUAA and each of its Subsidiaries. All such construction
will be funded by CUAA through Closing as required by the
relevant construction agreements on a current basis; all
such construction which has been completed has been paid
for in full to the extent required by the relevant
construction agreements; to the knowledge of Fondo
Optima, no mechanics' or materialmens' liens have been
filed against CUAA on of before August 1, 1997; from
August 1, 1997 until Closing, there shall have been no
mechanics' or materialmens' liens filed against CUAA; all
licenses and permits relating to all such construction
required to be obtained from Governmental Authorities
have been obtained; and the contemplated use of the
project upon completion is permitted under applicable
Laws, including the applicable zoning laws.
(r) Ownership of Personal Property. Except
for leased personal property, each of UATC and CUAA and
each of their respective Subsidiaries has or at Closing
will have good, valid and marketable title to all of its
personal property of every kind, nature and description,
wherever situated, owned or used in its business, free
and clear of all material Liens, Encumbrances and other
matters of record except for the Liens, Encumbrances and
other matters of record listed on Schedule 4.1(r) hereto
or released prior to Closing.
(s) Payments. (1) None of (i) Fondo Optima in
its capacity as shareholder of UATC, UATC or any of their
respective Subsidiaries or representatives, since Fondo
Optima became such shareholder and (ii) Fondo Optima in
its capacity as shareholder of CUAA, CUAA or any of their
respective Subsidiaries or representatives, since Fondo
Optima became such shareholder, has made, authorized or
offered any payment, or given, authorized or offered the
giving of anything of value, directly or indirectly, to
any official or employee of the local, state, federal or
other governments in Mexico or Argentina or of the
jurisdictions included in Mexico and Argentina or any
department, agency or instrumentality thereof, or to any
Person acting in an official capacity for or on behalf of
any of the foregoing, or to any political party in Mexico
or Argentina or in the jurisdictions included in Mexico
and Argentina or any official thereof, or to any Person
known to be a candidate for any office in Mexico or
Argentina or in the governments of the jurisdictions
included in Mexico and Argentina, for the purpose of
illegally influencing any act or decision in any such
person's official capacity, or illegally inducing any
such Person to use its influence with any such
governments or any department, agency or instrumentality
thereof, or influencing any official act or decision of
any such governments or any department, agency or
instrumentality thereof, with respect its business and
operations; and
(2) None of (i) Fondo Optima in its
capacity as shareholder of UATC, UATC or any of their
respective Subsidiaries or representatives, since Fondo
Optima became such shareholder and (ii) Fondo Optima in
its capacity as shareholder of CUAA, CUAA or any of their
respective Subsidiaries or representatives, since Fondo
Optima became such shareholder, has taken any action that
would subject itself to liability or penalty under any
applicable laws, rules, regulations or decrees of any
Governmental Authority.
(t) Disclosure of All Material Facts. Fondo
Optima has disclosed to the Buyer all material facts of
which it has knowledge or has reason to believe of their
existence relating to each of the Mexican Companies.
4.3 Representations and Warranties of
Transeuropa. Transeuropa represents and warrants to the
Buyer as follows:
(a) Organization and Standing. Transeuropa
is a corporation duly organized and validly existing
under the laws of the jurisdiction of its incorporation,
with full power and authority to own, operate and lease
its properties and to carry on its business as now
conducted except where the failure to be so organized and
existing or to have such power and authority would not
have a Material Adverse Effect.
(b) Authorization; Binding Obligation.
Transeuropa has all requisite corporate power and
authority to execute and deliver this Agreement, to carry
out its obligations hereunder and to consummate the
transactions contemplated hereby except where the failure
to have such power and authority would not have a
Material Adverse Effect. The execution and delivery of
this Agreement by Transeuropa, the performance by
Transeuropa of its obligations hereunder and the
consummation of the transactions contemplated hereby by
Transeuropa have been duly and validly authorized by the
Board of Directors of Transeuropa, and no other corporate
action on the part of Transeuropa is necessary to
authorize this Agreement or for Transeuropa to carry out
its obligations hereunder or to consummate the
transactions contemplated hereby. This Agreement has
been duly and validly executed and delivered by
Transeuropa and, assuming the due authorization,
execution and delivery by all the other Parties hereto,
constitutes a legal, valid and binding obligation of
Transeuropa, enforceable against Transeuropa in
accordance with its terms.
(c) Title to Shares; Capitalization.
Transeuropa is the record and beneficial owner of the
UATC Shares set out opposite its name on Schedule 2.1(b)
hereto, free and clear of all Liens and at the Closing,
the Buyer will receive good and valid title to such
Shares free of any adverse claim. Such Shares are not
subject to any restrictions on transferability other than
those imposed by the articles of association, by-laws or
other equivalent organizational documents or any joint
venture or shareholder agreements of UATC and by the
securities laws of any jurisdiction. The share
capitalization of UATC consists solely of the UATC Shares
owned by the UATC Shareholders, with all of such UATC
Shares being sold by the UATC Shareholders to the Buyer.
There are no options, warrants, calls, commitments or
rights of any character to purchase or otherwise acquire
such Shares from Transeuropa or under which Transeuropa
may be obligated to sell or transfer any of such Shares
other than those imposed by the articles of association,
by-laws or other equivalent organizational documents or
any joint venture or shareholder agreements of UATC and
by this Agreement. There are no voting trusts,
stockholder agreements, proxies or other agreements or
understandings in effect with respect to the voting or
transfer of any of such Shares other than those imposed
by the articles of association, by-laws or other
equivalent organizational documents or any joint venture
or shareholder agreements of UATC and by this Agreement.
(d) Consents and Approvals; No Violation.
Except for the Consents, neither the execution and
delivery of this Agreement by Transeuropa nor the
consummation of the transactions contemplated hereby will
(assuming that the Consents are obtained) (1) violate or
conflict with any provision of the articles of
incorporation, by-laws or other equivalent organizational
documents of Transeuropa, (2) violate or conflict with
any provision of the UATC Lease, (3) require any consent,
waiver, approval, authorization or permit of or the
filing with or notification to, any Governmental
Authority by Transeuropa, (4) violate or conflict with
any Laws applicable to Transeuropa or (5) violate or
conflict with, result in a breach of or constitute (with
or without due notice or lapse of time or both) a default
(or give rise to any right of termination, cancellation
or acceleration) under, require any consent under, or
result in the creation of any Lien on any of the UATC
Shares owned by Transeuropa pursuant to any of the terms,
conditions or provisions of any note, mortgage,
indenture, Lien, bond, agreement, sublease, license,
permit, franchise, contract, lease or other instrument or
obligation to which Transeuropa is a party or by which it
or any of its assets, properties or interests is bound,
excluding from any of the foregoing clauses (1) through
(5) such failures, violations, breaches or defaults which
individually or in the aggregate would not have a
Material Adverse Effect.
(e) Payments. (1) Neither Transeuropa in its
capacity as shareholder of UATC, UATC nor any of their
respective Subsidiaries or representatives, since
Transeuropa became such shareholder, has made, authorized
or offered any payment, or given, authorized or offered
the giving of anything of value, directly or indirectly,
to any official or employee of the local, state, federal
or other governments in Argentina or of the jurisdictions
included in Argentina or any department, agency or
instrumentality thereof, or to any Person acting in an
official capacity for or on behalf of any of the
foregoing, or to any political party in Argentina or in
the jurisdictions included in Argentina or any official
thereof, or to any Person known to be a candidate for any
office in Argentina or in the governments of the
jurisdictions included in Argentina, for the purpose of
illegally influencing any act or decision in any such
person's official capacity, or illegally inducing any
such Person to use its influence with any such
governments or any department, agency or instrumentality
thereof, or influencing any official act or decision of
any such governments or any department, agency or
instrumentality thereof, with respect its business and
operations; and
(2) Neither Transeuropa in its capacity
as shareholder of UATC, UATC nor any of their respective
Subsidiaries or representatives, since Transeuropa became
such shareholder, has taken any action that would subject
itself to liability or penalty under any applicable laws,
rules, regulations or decrees of any Governmental
Authority.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to the
Shareholders as follows:
5.1 Organization and Standing. The Buyer is a
corporation duly organized and validly existing and in
good standing under the laws of the jurisdiction of its
incorporation. The Buyer has all requisite corporate
power and authority to own, lease and operate its
properties and assets and to carry on its business as now
being conducted except where the failure to be so
organized, existing and in good standing or to have such
power and authority would not have a Material Adverse
Effect.
5.2 Authorization; Binding Obligation. The
Buyer has all requisite corporate power and authority to
execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the
transactions contemplated hereby by the Buyer have been
duly and validly authorized by the Board of Directors of
the Buyer, and no other corporate action on the part of
the Buyer is necessary to authorize this Agreement or for
the Buyer to consummate the transactions contemplated
hereby. This Agreement has been duly and validly
executed and delivered by the Buyer and, assuming the due
authorization, execution and delivery by the other
Parties hereto, constitutes a legal, valid and binding
obligation of the Buyer, enforceable against the Buyer in
accordance with its terms.
5.3 Consents and Approvals; No Violation.
Neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby
will (i) violate any provision of the Certificate of
Incorporation or By-laws of the Buyer, (ii) require any
consent of or filing with or notification to any
Governmental Authority by the Buyer, except where the
failure to obtain such Consent or make such filing or
notification would not have a Material Adverse Effect on
the Buyer or its ability to consummate the transactions
contemplated by this Agreement, (iii) violate any Law of
any Governmental Authority applicable to the Buyer,
except where such violations would not have a Material
Adverse Effect on the Buyer or its ability to consummate
the transactions contemplated by this Agreement or (iv)
violate or conflict with, result in a breach of, or
constitute (with or without due notice or lapse of time
or both) a default (or give rise to any right of
termination, cancellation or acceleration) under, any of
the terms, conditions or provisions of any note,
mortgage, indenture, Lien, contract, lease or other
instrument or obligation to which the Buyer is a party or
by which it or any of its assets, properties or interests
is bound except for such violations, breaches or defaults
which would not have a Material Adverse Effect on the
Buyer or its ability to consummate the transactions
contemplated by this Agreement or those as to which
requisite waivers or consents have been obtained.
5.4 Purchase for Investment. The Buyer is
acquiring the Shares for its own account and not with a
view to or for sale in connection with any distribution
of all or any part thereof.
5.5 Litigation. Except as set forth on
Schedule 5.5 hereto, as of the date hereof, there is no
Action pending or, to the knowledge of the Buyer,
threatened against the Buyer which challenges or seeks to
prevent, enjoin, alter or delay the transactions
contemplated hereby.
ARTICLE 6
COVENANTS
6.1 Covenants of the Shareholders.
(a) Access to Information. From time to time
prior to the Closing and upon reasonable advance notice,
UA and Fondo Optima shall cause each of the Mexican
Companies and CUAA and each of their respective
Subsidiaries, and UA, Fondo Optima and Transeuropa shall
cause UATC and each of its Subsidiaries (1) to afford
(and will cause their officers, employees and
representatives to afford) the Buyer, and its counsel,
financial advisors, accountants and other representatives
with (i) access to all of their respective properties,
(ii) the opportunity to examine and to make copies of all
of their respective books and records, contracts and all
other documents, and (iii) reasonable access to their
respective key personnel and (2) to furnish or provide
access to the Buyer and their respective counsel,
financial advisors, accountants and other
representatives, all such further information concerning
itself as the Buyer shall reasonably request. All such
information and access by the Buyer and its employees and
representatives shall comply with all security procedures
and shall be conducted in a manner which does not
unreasonably interfere with the operations of any of such
companies.
(b) Conduct of Business. In the case of each
of the Mexican Companies and CUAA, UA and Fondo Optima
covenant that, and in the case of UATC, UA, Fondo Optima
and Transeuropa covenant that, from the date hereof until
the Closing Date, the Mexican Companies, UATC and CUAA
will carry on their business and operations (including
continuation of construction) in the Ordinary Course of
Business and operations in the usual, regular and
ordinary manner and, absent the prior written consent of
the Buyer, which will not be unreasonably withheld, none
of the Mexican Companies, UATC and CUAA, as the case may
be, will:
(1) except in the Ordinary Course of
Business change or alter in any material respect or enter
into any employment contracts or arrangements with any of
its management personnel;
(2) declare or pay any dividend or make
any other distribution with respect to its capital stock
except as contemplated by Section 7.13 and Section
6.1(d);
(3) split, combine, reclassify or redeem
any of its capital stock except as contemplated by
Section 7.13 and Section 6.1(d);
(4) sell or acquire any property subject
to any Encumbrance or create, or allow to be placed, any
Encumbrance upon its property, except in the Ordinary
Course of Business;
(5) make any capital investment in any
other Person or any capital expenditures, other than
purchases of equipment, supplies and materials in the
Ordinary Course of Business consistent with past practice
and except as contemplated by Section 6.1(d);
(6) compromise or settle any debt or
claim except for adjustments made with respect to
contracts for the purchase of equipment, supplies and
materials or for the sale of products or services in the
Ordinary Course of Business, which in the aggregate will
not have a Material Adverse Effect;
(7) incur any debt, other than ordinary
cash management and inter company debt incurred in the
Ordinary Course of Business, or, other than in the
Ordinary Course of Business, incur any trade payables or
other obligations or enter into any transaction to sell
any assets or make any payment in respect of any material
liabilities or obligations;
(8) except for the payment of normal
salaries, fees or commissions in the Ordinary Course of
Business, make any payment to any Shareholder or enter
into or engage in any other transaction not involving the
payment of money with any Shareholder thereof except
those terminable at Closing, except as contemplated by
this Agreement;
(9) alter or amend in any manner its
articles of association, by-laws or similar
organizational documents; and
(10) enter into any change order for
construction projects except in the Ordinary Course of
Business or enter into any construction contracts for new
projects. It is understood and agreed that,
notwithstanding anything else set forth in this Section
6.1(b), construction by CUAA of the Quilmes project, as
currently planned, may be commenced provided that the
related construction agreements shall have been provided
to the Buyer at least 7 days prior to Closing and shall
have been approved or disapproved by the Buyer within
seven days thereafter. The Buyer's approval shall not be
unreasonably withheld.
(c) Covenant Not to Compete.
(1) Each of the Shareholders and UA
agrees that, for a period of three years following the
Closing Date, it will not, directly or indirectly
(whether as a partner, joint venturer, holder of debt or
equity securities or otherwise), and that it will cause
any Person which is its Subsidiary or Affiliate not to,
own, manage, operate or control or participate in the
ownership, management, operation or control of, or become
associated in any capacity with, or have any financial
interest in or lend their name or any combination thereof
to, any enterprise, firm or corporation which is engaged
in the business of motion picture exhibition theaters in
any area which is within a radius of 15 miles of any
motion picture exhibition theater which is (i) presently
existing and owned or being constructed or (ii) proposed
to be constructed as set forth on Schedule 6.1(c) by any
of the Mexican Companies, UATC, CUAA or any of their
respective Subsidiaries as of Closing (each such
location, the "Territory").
(2) Notwithstanding the foregoing, that
in the event of any consolidation or merger of UA or any
of its Affiliates with or into another Person or in case
of any sale, transfer or lease to another Person of all
or substantially all of the property and assets of UA or
any of its Affiliates, or as a result of a purchase of
all or substantially all of the assets or securities of
another Person by UA or any of its Affiliates, the
surviving Person or UA or its Affiliates, as the case may
be, may continue to own, manage and operate any motion
picture exhibition theaters, or control or participate in
the ownership, management, operation or control of, or
become associated in any capacity with, or have any
financial interest in or lend their name or any
combination thereof to, any enterprise, firm or
corporation which, at the time any such transaction is
consummated, is engaged in the business of motion picture
exhibition theaters situated in the Territory by owning
or operating such theaters or managing or operating such
theaters pursuant to a binding contract or lease or
intends to so own, manage or operate such theaters (i)
through leases or management agreements in the process of
negotiations which result in a binding lease or
management agreement within 60 days of the consummation
of such transaction or (ii) through a proposed purchase
of property pursuant to a binding contract or through a
contract which is in the process of negotiation which
results in a binding contract within 60 days of the
consummation of such transaction. None of foregoing,
however, shall prevent (i) UA, the Shareholders or their
respective Subsidiaries and Affiliates from owning up to
two percent (2%) of the issued and outstanding stock of
any enterprise, firm or corporation which is engaged in
the business of motion picture exhibition theaters and
(ii) Fondo Optima from continuing to be a shareholder of
the Mexican Companies and (iii) the continued use by UATC
of its corporate name, "United Artists" or any derivative
thereof, in the operation of its business if the Buyer
does not purchase the UATC Shares and (iv) if the UATC
Shares are not purchased pursuant to this Agreement, UATC
Europe or Fondo Optima or any of their respective
Affiliates from continuing to own an interest and
participate in the management and operation of UATC,
provided that UATC shall be considered for the purposes
of this Section 6.1(c) as a Person all or substantially
all of the securities of which were purchased by UA and
shall be the surviving Person.
(3) The covenants and agreements
contained in this Section 6.1 (c) shall apply to those
portions of the Territory located in Mexico only if the
Buyer purchases the Mexican Shares pursuant to this
Agreement, and to those portions of the Territory located
in Argentina only if the Buyer purchases the UATC Shares
and the CUAA Shares pursuant to this Agreement.
(d) Organization and Capitalization of
Operadora. UA and Fondo Optima shall cause Operadora to
be formally organized and capitalized pursuant to a spin
off plan valid in all respects under the laws of Mexico.
(e) Termination of Certain Agreements.
Except as otherwise provided in this Agreement and other
than this Agreement, (1) upon the closing of the purchase
of the Mexican Shares, any agreement relating to the
management or operation of the Mexican Companies between
or among any of UA and its Affiliates, Fondo Optima and
the Mexican Companies shall be terminated; (2) upon the
closing of the UATC Shares, any agreement relating to the
management or operation of UATC between or among UA and
its Affiliates, Fondo Optima, Transeuropa, UATC and CUAA
shall be terminated; and (3) upon the closing of the CUAA
Shares, any agreement relating to the management or
operation of CUAA between or among UA and its Affiliates,
Fondo Optima, Transeuropa, UATC and CUAA shall be
terminated; provided, however, that if the UATC Shares
are not purchased by the Buyer pursuant to this
Agreement, no agreements to which any of Transeuropa or
UATC is a party shall be terminated.
ARTICLE 7
CONDITIONS TO THE OBLIGATIONS OF THE BUYER
The obligation of the Buyer to consummate the
transactions contemplated hereby is subject to the
satisfaction (or waiver pursuant to Section 14.9 hereof),
prior to or at the Closing, of each of the following
conditions, except that the conditions contained in
Sections 7.1 and 7.13, respectively, shall apply only to
those transactions contemplated hereby relating to the
purchase of the Mexican Shares and the UATC Shares,
respectively, by the Buyer, and further that the failure
of satisfaction of the condition contained in Section 7.1
shall not result in a Material Adverse Effect.
7.1 Shareholders Agreement. The Buyer and
Fondo Optima shall have executed and delivered a
Shareholders Agreement satisfactory to the Buyer and
Fondo Optima with respect to the Mexican Shares now or
hereafter to be owned by Fondo Optima and when delivered
hereunder such Shareholders Agreement will be a legal,
valid, binding and enforceable obligation of Fondo Optima
and the Buyer.
7.2 Net Fixed Assets Certification. The Buyer
shall have received a certificate from a "Big Six"
accounting firm retained by the Shareholders setting
forth the Net Fixed Assets as of June 30, 1997 of each of
the Companies together with their respective
Subsidiaries, as derived from the Audited Balance Sheets.
Such certification shall indicate that the Net Fixed
Assets of (1) the Mexican Companies in the aggregate is
not less than $26,900,000 as of such date (based upon the
historical exchange rate in effect on the date or dates
when UA Mexico and Fondo Optima contributed capital to
the Mexican Companies for the purpose of acquiring or
funding construction of assets); and (2) UATC is not less
than $2,500,000 as of such date (based upon the
historical exchange rate in effect the date or dates on
which the UATC Shareholders contributed capital to UATC
for the purpose of acquiring or funding construction of
assets).
7.3 Construction Status. Each Shareholder
shall have provided to the Buyer certificates from the
general contractor for the Moron project substantially in
the form of Schedule 7.3(a) hereto and, if construction
has commenced, for the Quilmes project substantially in
the form of Schedule 7.3(b) hereto.
7.4 Due Diligence. The Buyer shall have
satisfied itself as to the specific matters set forth on
Schedule 7.4 hereto by the dates set forth therein,
provided that, this condition shall not be effective as
to any of such matters if the Buyer fails to provide the
Shareholders with notice of its objection with respect to
such matters by the dates specified in Schedule 7.4,
provided that, if such objection is not addressed or
remedied to the satisfaction of the Buyer within ten
business days by the Shareholders, unless the Parties
agree otherwise, any of the Buyer or the Shareholders may
terminate this Agreement thereafter, but further
provided, however, that any of the Shareholders may
terminate this Agreement at any time after such notice of
objection is received but prior to any such objection
being addressed or remedied to the satisfaction of the
Buyer, provided that such termination by any of the
Shareholders may not occur sooner than two days after its
receipt of such notice of objection. Any such
termination shall be considered as being pursuant to
Section 13.1.
7.5 Representations and Warranties. The
representations and warranties made by the Shareholders
shall be true when made and at and as of the Closing Date
with the same force and effect as if made at and as of
the Closing Date after giving effect to the transactions
contemplated in this Agreement except as such warranties
which relate to an earlier date.
7.6 Shareholders' Covenants. Each of the
Shareholders shall have performed and complied in all
material respects with all covenants, agreements,
obligations and conditions required by this Agreement to
be so performed or complied with by each of them on or
prior to the Closing Date.
7.7 Shareholders' Certificate. Each of the
Shareholders shall have delivered to the Buyer a
certificate, dated as of the Closing Date and executed by
its President or Vice President, certifying as to the
fulfillment of the conditions specified in Sections 7.5
and 7.6 hereof.
7.8 Adverse Event. As of the Closing Date, no
event shall have occurred which has caused or is
reasonably likely to cause a Material Adverse Effect.
7.9 Approvals. All third-party and government
consents, orders and approvals, if any, required for the
consummation of the transactions contemplated by this
Agreement shall have been obtained by the Shareholders.
7.10 No Action or Order. At the Closing Date,
there shall be no pending Action or Order of any nature
that seeks to restrain or prohibit the consummation of
the transactions contemplated hereby by the Buyer or the
Shareholders.
7.11 Estoppel Certificates. On or before the
Closing Date the Shareholders shall have delivered to the
Buyer estoppel certificates from landlords substantially
in the form of Schedule 7.11 hereto.
7.12 Management Fees. Each Shareholder shall
have extinguished any and all liability on the part of
any of the Companies with respect to management fees owed
by any of the Companies to such Shareholder without cost,
including tax cost, to each of the Companies.
7.13 Shareholder Accounts. Except to the
extent otherwise elected by the Buyer pursuant to Section
2.3 hereof, the Shareholders and their Affiliates shall
have paid all amounts due to any of the Companies or any
of their respective Subsidiaries, and shall have
extinguished, without cost or liability (through equity
contributions), all amounts due by any of the Companies
or any of their respective Subsidiaries to any
Shareholder, except for amounts due in the Ordinary
Course of Business to any Affiliate.
ARTICLE 8
CONDITIONS TO THE OBLIGATIONS OF THE SHAREHOLDERS
The obligations of the Shareholders to
consummate the transactions contemplated by this
Agreement are subject to the satisfaction (or waiver
pursuant to Section 14.9 hereof), prior to or at the
Closing Date, of the following conditions except that the
condition contained in Section 8.1 shall apply only to
those transactions contemplated hereby relating to the
purchase of the Mexican Shares by the Buyer, and further
that the failure of satisfaction of the condition
contained in Section 8.1 shall not result in a Material
Adverse Effect.
8.1 Shareholders Agreement. Subject to
Section 14.1(a), the Buyer and Fondo Optima shall have
executed and delivered a Shareholders Agreement
satisfactory to the Buyer and Fondo Optima with respect
to the Mexican Shares now or hereafter to be owned by
Fondo Optima and when delivered hereunder such
Shareholders Agreement will be a legal, valid, binding
and enforceable obligation of Fondo Optima and the Buyer.
8.2 Representations and Warranties. The
representations and warranties made by the Buyer in this
Agreement shall be true in all material respects when
made and at and as of the Closing Date as though such
representations and warranties were made at and as of the
Closing Date.
8.3 Buyer's Covenants. The Buyer shall have
performed and complied in all material respects with all
agreements, obligations and conditions required by this
Agreement to be so performed or complied with by it on or
prior to the Closing Date.
8.4 Buyer's Certificate. The Buyer shall have
delivered to each of the Shareholders a certificate of
the President or Vice President of the Buyer, dated the
Closing Date, certifying as to the fulfillment of the
conditions specified in Sections 8.2 and 8.3 hereof.
8.5 No Action or Order. At the Closing Date,
there shall be no pending Action or Order that seeks to
restrain or prohibit the consummation of the transactions
contemplated hereby by the Buyer, UA and by the
Shareholders.
8.6 United Artists Rights. The Shareholders
shall have received such agreements as are reasonably
necessary to satisfy the covenants set forth in Section
12.4 hereof.
ARTICLE 9
TAX MATTERS
9.1 Sellers' Tax Indemnification of Buyer.
(a) Subject to the provisions of Section 10.1 hereof and
the limitations contained in Sections 9.1(c) and 10.5
hereof, the Shareholders, severally and not jointly,
shall be responsible for and indemnify the Buyer, from,
against and in respect of, except to the extent (1)
current liabilities in the respective Unaudited Balance
Sheets or Audited Balance Sheet of each of the Companies,
or (2) with respect to CUAA only, taken into account in
adjusting the Purchase Price under Section 2.2, any Taxes
imposed with respect to each of the Companies and their
respective Subsidiaries for the taxable periods, or
portions thereof, ended on or before the Closing
including, with respect to taxable periods beginning
before the Closing but ending thereafter, the portion of
such taxable period ending on the Closing Date.
(b) The Buyer shall promptly pay to the
Shareholders their proportionate share of any refunds
,including the VAT Refund to the extent provided in
Section 2.3, received by the Buyer or the Companies for
Taxes of the Companies with respect to any taxable period
or portion thereof with respect to which the Shareholders
are responsible for Taxes.
(c) No indemnification claim for Taxes covered
by this Article 9 may be made by the Buyer unless (1) the
aggregate amount of the sum of such Tax claims and
Indemnification Claims exceeds $200,000 and (2) such Tax
claims would be indemnifiable under this Article 9 but
for this Section 9.1(c).
9.2 Proration of Taxes. Whenever it is
necessary to determine the liability for Taxes for a
portion of a taxable year or period that begins before
and ends after the Closing Date, the determination of the
Taxes for the portion of the year or period ending at,
and the portion of the year or period beginning after,
the Closing Date shall be determined by assuming that the
taxable year or period ended at the close of business on
the Closing Date, except that exemptions, allowances or
deductions that are calculated on an annual basis shall
be prorated on the basis of the number of days in the
annual period elapsed through the Closing Date as
compared to the number of days in the annual period
elapsing after the Closing Date.
9.3 Tax Returns. With respect to each of the
Companies, the Buyer shall prepare, in a manner
consistent with past practice other than as required by
law, all Tax Returns due on or after the Closing Date,
provided that all Tax Returns for taxable periods
beginning before the Closing Date shall be prepared in a
manner consistent with past practice. With respect to
Tax Returns for taxable periods beginning before the
Closing Date that are due on or after the Closing Date,
not less than sixty (60) days prior to the date on which
such Tax Return is due to be filed (taking into account
any applicable extensions) (the "Due Date"), the Buyer
shall deliver a copy of such Tax Returns to UA for its
review. If UA objects to any items reflected on such
returns (which objection shall be made no later than 10
days before the Due Date), the parties shall attempt to
resolve the disagreement. If the parties are unable to
resolve the disagreement, the dispute shall be referred
to a "Big Six" accounting firm selected by the auditors
of the Buyer at such time and UA at such time (the "Tax
Arbitrator") whose determination shall be binding upon
the parties. The fees and expenses of the Tax Arbitrator
shall be borne equally by UA and the Buyer. If the
dispute has not been resolved or the Tax Arbitrator has
not made its determination prior to the Due Date, the Tax
Return shall be filed as originally proposed by the
Buyer, reflecting any items agreed to by UA and the Buyer
at such time and those items shall no longer be
determined by the Tax Arbitrator. The appropriate
Shareholder shall pay to the Buyer the amount requested
by the Buyer with respect to those items that the parties
have agreed to the extent that such items are covered by
the Shareholders' indemnity in Section 9.1(a) (the
"Agreed Amount"). When the Tax Arbitrator determines the
amount of Tax due in respect of such Tax Return that is
covered by the Shareholders' indemnity under Section
9.1(a) (the "Covered Amount"), a settlement payment (the
"Settlement Payment") shall be made (a) from the
appropriate Shareholder to the Buyer in an amount equal
to the excess, if any, of (1) the Covered Amount finally
determined to be due over (2) the amount previously paid
to Buyer in respect of such Taxes or (b) from the Buyer
to the appropriate Shareholder in an amount equal to the
excess, if any, of (1) the amount previously paid to the
Buyer in respect of such Taxes over (2) the Covered
Amount, in either case, with interest on such Settlement
Payment calculated from the Due Date of the Tax Return at
the long-term applicable federal rate in effect at such
time.
9.4 Transfer Taxes. All excise, sales, use,
transfer (including real property transfer or gains),
stamp, documentary, filing, recordation and other similar
taxes and fees, if any, which may be imposed or assessed
as a result of the transactions effected pursuant to this
Agreement, together with any interest, additions or
penalties with respect thereto and any interest in
respect of such additions or penalties ("Transfer
Taxes"), shall be borne equally by the Buyer, on the one
hand, and the Shareholders, on the other hand, provided,
however, that the Shareholders shall be solely
responsible for and shall indemnify the Buyer against all
Taxes imposed on the transfer of the mortgage held by
UATC Europe to CUAA securing certain lease obligations of
Cencosud S.A. to UATC Europe pursuant to the Concession
agreement identified on Schedule 4.1(l) hereto. Any Tax
Returns that must be filed in connection with Transfer
Taxes shall be prepared and filed when due by the party
primarily or customarily responsible under the applicable
local law for filing such Tax Returns, and such party
will use its reasonable efforts to provide such Tax
Returns to the other parties at least 10 days prior to
the Due Date for such Tax Returns.
9.5 Contest Provisions. With respect to each
of the Companies:
(a) The Buyer shall promptly notify the
appropriate Shareholder in writing upon receipt by the
Buyer, or the appropriate company of notice of any
pending or threatened audits, adjustments or assessments
(a "Tax Audit") which may materially affect the liability
for Taxes of such company for which such Shareholder
would be required to indemnify the Buyer pursuant to
Section 9.l(a). If the Buyer fails to give such prompt
notice to such Shareholder, it shall not be entitled to
indemnification for any Taxes arising in connection with
such Tax Audit if such failure to give notice materially
adversely affects the right of such Shareholder to
participate in the Tax Audit.
(b) If such Tax Audit involves solely Taxes
for which such Shareholder is liable (taking into
consideration any indemnification obligation pursuant to
this Agreement), such Shareholder shall at its expense
control the complete defense and settlement of the
interests of itself and each other party in such Tax
Audit provided that such Shareholder shall notify the
Buyer in writing within twenty days of receiving notice
from the Buyer under Section 9.5(a). Such Shareholder
shall keep the Buyer informed about, and shall allow the
Buyer to observe, at its sole expense, the defense of any
such Tax Audit. Such Shareholder shall not pay,
discharge, settle, compromise, litigate, or otherwise
dispose (collectively, "dispose") of any item subject to
such Tax Audit without obtaining the prior written
consent of the Buyer. If such Shareholder and the Buyer
cannot agree as to the resolution of such item, the
dispute shall be referred to the Tax Arbitrator whose
determination shall be conclusive and binding upon the
parties.
(c) If the appropriate Shareholder does not
provide the Buyer with notice as required under this
Section 9.5 and such failure to give notice materially
adversely affects the Buyer, the Buyer shall control the
defense of any Tax Audit involving solely Taxes for which
such Shareholder is liable (taking into account any
indemnification obligation imposed pursuant to this
Agreement) and shall be entitled to dispose of such item
subject to Tax Audit without the written consent of such
Shareholder.
(d) If a Tax Audit involves Taxes for which
both a Shareholder and the Buyer may be liable, such
Shareholder and the Buyer shall jointly control the
complete defense and settlement of such Tax Audit and
each shall be responsible for its own expenses. Neither
party shall be entitled to dispose of any item subject to
such Tax Audit with respect to Taxes for which such
Shareholder is liable without obtaining the prior written
consent of the other party. If there is a disagreement
regarding the resolution of any dispute between the
parties, the dispute shall be referred to the Tax
Arbitrator for resolution. The determination of the Tax
Arbitrator shall be binding upon the parties.
(e) The Buyer, in its sole discretion and at
its expense, shall control the complete defense and
settlement of the interests of itself and each other
party in any other Tax Audit.
9.6 Assistance and Cooperation. The
Shareholders and the Buyer agree that, after the Closing:
(a) each party shall assist (and cause its
affiliates to assist) the other in preparing any Tax
Returns which the other is responsible for preparing
and filing;
(b) the parties shall cooperate fully in
preparing for any audits of, or disputes with taxing
authorities regarding, any Tax Returns and payments
in respect thereof;
(c) the parties shall make available to each
other and to any Taxing authority as reasonably
requested all relevant books and records relating to
Taxes;
(d) the parties shall provide timely notice to
the other in writing of any pending or proposed
audits or assessments with respect to Taxes for
which the other may have an indemnification
obligation under this Agreement;
(e) the parties shall furnish each other with
copies of all relevant correspondence received from
any Tax authority in connection with any audit or
information request with respect to any Taxes
referred to in subsection (d) above; and
(f) except as otherwise provided herein, the
party requesting assistance or cooperation shall
bear the other's out-of-pocket expenses in complying
with such request to the extent that those expenses
are attributable to fees and other costs of
unaffiliated third-party service providers other
than attorneys' fees.
9.7 Maintenance of Books and Records. Until
the applicable statute of limitations (including periods
of waiver) has run for any Tax Returns filed or required
to be filed covering the periods up to and including the
Closing Date, each of the Companies shall retain all
books and records in existence on the Closing Date and
after the Closing Date will provide the Shareholders
access to such books and records for inspection and
copying by the Shareholders and its representatives
during normal business hours upon reasonable request and
upon reasonable notice. After the expiration of such
period, no such books and records shall be destroyed by
the Buyer without first advising the Shareholders in
writing detailing the contents of any such books and
records and giving the Shareholders at least 120 days to
obtain possession thereof.
9.8 Indemnity Payments. All Indemnity Payments
(as defined below) shall be treated as adjustments to the
Purchase Price for all Tax purposes. All amounts payable
or to be paid under this Article 9 ("Indemnity Payments")
shall be paid in immediately available funds within five
Business Days after the later of (a) receipt of a written
request from the party entitled to such Indemnity Payment
and (b) the day of payment of the amount that is the
subject of the Indemnity Payment by the party entitled to
receive the Indemnity Payment. All such Indemnity
Payments shall be made to the accounts and in the manner
specified in such written notice. All such Indemnity
Payments shall be made without giving effect to any tax
deduction or credit allowable to the party receiving the
Indemnity Payment with respect to any payments made by
the party receiving the Indemnity Payment and on account
of which the Indemnity Payment is being made.
ARTICLE 10
INDEMNIFICATION
10.1 Survival of Representations. All
representations, warranties, covenants and agreements
made by any party in this Agreement or pursuant hereto
shall survive the Closing hereunder and any investigation
made at any time by or on behalf of any Party hereto,
except that the survival of all representations and
warranties shall terminate two years after the Closing
Date; provided, however, that all such representations
contained in (a) Sections 4.1(d), 4.2(d) and 4.3(c)
(Title to Shares); (b) to the extent that their
provisions relate to title matters, Sections 4.1(l) and
4.2(l) (Real Estate) and Sections 4.1(e), 4.2(e) and
4.3(d) (Consents and Approvals); and (c) Sections 4.1(r)
and 4.2(r) (Ownership of Personal Property) survive
forever. Notwithstanding the previous sentence, the
obligation of the Parties with respect to the matters
contained in Article 9 hereof shall survive until the
expiration of the statute of limitations (including
extensions thereof) relative to the subject matter
thereof.
10.2 Statements as Representations. All
statements contained in any certificate, schedule,
document or other writing required to be delivered
pursuant hereto for Closing shall be deemed
representations and warranties for all purposes of this
Agreement.
10.3 Agreement to Indemnify. (a) Subject to
the terms and conditions of this Article 10, the
Shareholders and UA hereby agree, severally, but only to
the extent set forth below, to indemnify, defend and hold
harmless the Buyer and any Affiliate thereof or any of
its or their directors or officers (the "Buyer Group")
from and against all demands, claims, actions or causes
of action, assessments, losses, damages, liabilities,
costs and expenses, including, without limitation,
interest, penalties and reasonable attorneys' fees and
expenses (collectively, "Damages"), asserted against,
resulting to, imposed upon or incurred by the Buyer
Group, or any member thereof, directly or indirectly, by
reason of or resulting from:
(1) any inaccuracy in, or a breach of,
any representation, warranty, covenant or agreement
of the Shareholders contained in or made pursuant to
this Agreement or any facts or circumstances
constituting such a breach, excluding any inaccuracy
in, or breach with respect to, any item contained in
Section 4.1(o) and Section 4.2(o); and
(2) any and all liabilities, direct or
indirect, absolute or contingent, for personal
injury and property damage consumer claims in excess
of insurance coverage maintained by the Buyer in the
Ordinary Course of Business ("Consumer Claims")
asserted against the Buyer Group or any member
thereof with respect to the operations or properties
of any of the Companies, as the case may be, prior
to the Closing Date.
(b) Subject to the terms and conditions of
this Article 10, the Buyer hereby agrees to indemnify,
defend and hold harmless the Shareholders and any
Affiliate thereof (the "Shareholders Group") from and
against all Damages asserted against, resulting to,
imposed upon or incurred by the Shareholders Group or any
member thereof, directly or indirectly, by reason of or
resulting from:
(1) any inaccuracy in, or a breach of,
any representation, warranty, covenant or agreement
of the Buyer contained in or made pursuant to this
agreement or any facts or circumstances constituting
such a breach; or
(2) the operations of any of the
Companies at or after Closing.
(c) Each matter for which the Buyer or each of
the Shareholder has agreed to provide indemnification
pursuant to this Section 10.3 is hereinafter referred to
as a "Indemnification Claim" and collectively as
"Indemnification Claims".
10.4 Conditions of Indemnification. The
obligations and liabilities of the Shareholders and the
Buyer under Section 10.3 hereof with respect to
Indemnification Claims shall be subject to the following
terms and conditions:
(a) The Person seeking indemnification (the
"Indemnified Party") will give the Person providing
indemnification (the "Indemnifying Party") notice of any
such Indemnification Claim, which notice shall set forth
the details of the Indemnification Claim and the specific
provisions of this Agreement relating thereto, and the
Indemnifying Party will undertake the defense thereof by
representatives chosen by it.
(b) If the Indemnifying Party, within a
reasonable time after notice of any such Indemnification
Claim, fails to defend the Indemnified Party, the
Indemnified Party (upon further notice to the
Indemnifying Party) will have the right to undertake the
defense, compromise or settlement of such Indemnification
Claim on behalf of and for the account and risk of the
Indemnifying Party, subject to the right of the
Indemnifying Party to assume the defense of such
Indemnification Claim at any time prior to settlement,
compromise or final determination thereof, provided that
if the Indemnified Party is maintaining the defense of
the Indemnification Claim, the Indemnified Party shall
not enter into any compromise or settlement without the
consent of the Indemnifying Party, which consent shall
not be unreasonably withheld. It is agreed and
understood that the Indemnified Party shall in this event
be entitled to be also indemnified for all costs and
expenses, including attorneys fees, arising from its
defense of such Indemnification Claim
(c) Anything in this Section 10.4 to the
contrary notwithstanding, (1) if there is a reasonable
probability that a Indemnification Claim may materially
and adversely affect the Indemnified Party other than as
a result of money damages or other money payments, the
Indemnified Party shall have the right to defend,
compromise or settle such Indemnification Claim; provided
that no settlement which would require indemnification
shall be entered without the consent of Indemnifying
Party, which consent shall not be unreasonably withheld
or delayed and (2) the Indemnifying Party shall not,
without written consent of the Indemnified Party, settle
or compromise any Indemnification Claim or consent to the
entry of any judgment which does not include, as an
unconditional term thereof, the giving by the claimant or
the plaintiff to the Indemnified Party of a release from
all liability in respect of such Indemnification Claim.
(d) No Indemnification Claims may be made by
the Buyer Group unless (1) the aggregate amount of the
sum of the Indemnification Claims and claims for Taxes
under Article 9 exceeds $200,000 and (2) that such
Indemnification Claims would be indemnifiable under this
Section 10.4 but for this sentence.
(e) Indemnification Claims payable by Fondo
Optima, if not paid in cash, may be paid by a direct
right of set off against any dividends, distributions,
payments or amounts due from time to time to Fondo Optima
from any of the Mexican Companies.
(f) Any Indemnified Party shall have the right
to receive payment for any Indemnification Claim from any
Indemnifying Party or Indemnifying Parties, as the case
may be, only upon such Indemnification Claim becoming
legally due and payable. It is further understood and
agreed that upon receiving full payment for such
Indemnification Claim, such Indemnified Party shall have
no further recourse (ordinary or extraordinary) against
such Indemnifying Party or Indemnifying Parties, as the
case may be, for such Indemnification Claim.
10.5 Aggregate Limitation on Liability.
Notwithstanding anything in this Agreement to the
contrary, the liability of all the Indemnifying Parties
and their Affiliates as a group pursuant to this
Agreement shall be limited as follows:
(a) Except with respect to claims made
pursuant to clause (d), if notice with respect to the
claim is duly given prior to the first anniversary of the
Closing (the "First Year"), the aggregate amount payable
by all the Indemnifying Parties and their Affiliates as a
group with respect to such claim and all other claims for
which notice was duly given in the First Year shall not
exceed $5,000,000 less any amounts payable pursuant to
clause (d) hereof or otherwise payable pursuant to this
Agreement, including Article 9 hereof. The maximum
liability of UA, UATC Europe and UA Mexico and their
respective Affiliates pursuant to this Section 10.5(a)
shall be 65% of the aggregate amount payable under this
Section 10.5(a); the maximum liability of Fondo Optima
and its Affiliates pursuant to this Section 10.5(a) shall
be 31% of the aggregate amount payable under this Section
10.5(a); and the maximum liability of Transeuropa and its
Affiliates pursuant to this Section 10.5(a) shall be 4%
of the aggregate amount payable under this Section
10.5(a);
(b) Except with respect to claims made
pursuant to clause (d), if notice with respect to the
claim is duly given on or after the First Year and prior
to the second anniversary of the Closing (the "Second
Year"), the aggregate amount payable by the Indemnifying
Parties and their Affiliates as a group with respect to
such claim and all other claims for which notice was duly
given in the Second Year shall not exceed the amount, if
any, by which $2,500,000 exceeds the sum of (x) the
aggregate amount payable pursuant to this Agreement in
respect of claims made pursuant to clause (a) above, (y)
any amount payable pursuant to clause (d) hereof, and (z)
any amounts otherwise payable pursuant to this Agreement,
including Article 9 hereof. The maximum liability of UA,
UATC Europe and UA Mexico and their respective Affiliates
pursuant to this Section 10.5(b) shall be 65% of the
aggregate amount payable under this Section 10.5(b); the
maximum liability of Fondo Optima and its Affiliates
pursuant to this Section 10.5(b) shall be 31% of the
aggregate amount payable under this Section 10.5(b); and
the maximum liability of Transeuropa and its Affiliates
pursuant to this Section 10.5(b) shall be 4% of the
aggregate amount payable under this Section 10.5(b);
(c) If notice with respect to the claim is not
duly given prior to the second anniversary of the
Closing, none of the Indemnifying Parties or any of their
Affiliates shall have any liability hereunder except as
expressly set forth in clause (d) below;
(d) For claims, notice with respect to which
is: given at any time after Closing and arising from a
breach of a warranty in this Agreement pursuant to
Sections 4.1(d), 4.2(d) and 4.3(c) (but only to the
extent relating to title to Shares); given at any time
after Closing and arising from a breach of warranty in
this Agreement pursuant to Sections 4.1(l), 4.2(l),
4.1(e), 4.2(e) and 4.3(d) (but only to the extent
relating to title to assets); given prior to the second
anniversary of the Closing and arising from a breach of
warranty in this Agreement pursuant to Sections 4.1(m)
and 4.2(m) (but only to the extent relating to
environmental matters); given prior to the second
anniversary of the Closing and arising from a breach of
warranty in this Agreement pursuant to Section 10.3(iii)
(but only to the extent arising from Consumer Claims
relating to activity prior to Closing); given at any time
after Closing but before the expiration of any applicable
statute of limitations (including any extensions thereof)
and arising from fraud relating to activity prior to
Closing, the liability of an Indemnifying Party and its
Affiliates shall be limited to its Pro Rata Share (as
defined below) of the Purchase Price less the sum of (x)
the sum of any amounts payable pursuant to clauses (a) or
(b) hereof, and (y) any amounts otherwise payable
pursuant to this Agreement, including Article 9 hereof;
(e) It is understood and agreed that in no
event shall the aggregate liability of any Indemnifying
Party and its Affiliates as a group exceed its Pro Rata
Share of the Purchase Price. For purposes of this
Section 10.5, the term "Pro Rata Share" shall mean:
(1) In the case of any Indemnification Claim
against any of UA, UA Mexico or Fondo Optima or
any of their respective Affiliates for Damages
with respect to claims arising out of the
Mexican Companies or the purchase of the
Mexican Shares,
(i) 100% for UA and UA Mexico or any of their
respective Affiliates, jointly, and in the
aggregate,
and when reference is made to a Pro Rata Share
of the Purchase Price it shall be to the
aggregate Purchase Price specified in Section
2.2(a); provided, however, that the liability
of UA and UA Mexico or any of their respective
Affiliates for any such Indemnification Claim
by the Buyer Group from and against any Damages
shall, in any event, not exceed 50% of the
total amount of any such Damages except in case
of Damages relating to title to the Mexican
Shares sold by UA Mexico to the Buyer pursuant
to this Agreement.
(2) In the case of any Indemnification Claim
against any of UA and/or the UATC Shareholders
or any of their respective Affiliates for
Damages with respect to claims arising out of
UATC or the purchase of the UATC Shares,
(i) 50% for Transeuropa or its Affiliates,
provided that the Buyer may elect, at its
option, to collect such portion from Fondo
Optima or its Affiliates on the one hand and UA
and UATC Europe or their respective Affiliates
on the other hand, in which case, such portion
shall be paid to the Buyer 50% by Fondo Optima
or its Affiliates and 50% by UA or UATC Europe
or their respective Affiliates and the Buyer
shall have no obligation to pursue such portion
from, or make such claim against, Transeuropa
or its Affiliates. If the Buyer elects to
collect the Transeuropa portion from Fondo
Optima and UA, it shall be deemed that UA and
Fondo Optima have succeeded to the rights of
the Buyer to collect such portion from
Transeuropa, and the Buyer shall execute and
deliver any and all documents or instruments
necessary to accomplish such purpose, and
(ii) 25% for Fondo Optima and its Affiliates,
subject to increase pursuant to clause (i)
above, and
(iii) 25% for UA and UATC Europe and their
respective Affiliates, subject to increase
pursuant to clause (i) above, jointly, and in
the aggregate,
and when reference is made to a Pro Rata Share
of the Purchase Price, it shall be to the
aggregate Purchase Price specified in Section
2.2(b); and
(3) In the case of any Indemnification Claim
against any of UA and/or the CUAA Shareholders
or any of their respective Affiliates for
Damages with respect to claims arising out of
CUAA or the purchase of the CUAA Shares,
(i) 50% for Fondo Optima and its Affiliates,
and
(ii) 50% for UA and UATC Europe and their
respective Affiliates, jointly, and in the
aggregate,
and when reference is made to a Pro Rata Share
of the Purchase Price, it shall be to the
aggregate Purchase Price specified in Section
2.2(c).
(f) For the purposes of this Section 10.5,
"Indemnifying Parties" shall refer only to the
Shareholders, UA and their respective Affiliates;
"Indemnifying Party" shall refer to any one of them;
"Indemnification Claim" shall include any amounts
indemnified by the Shareholders, UA or their respective
Affiliates pursuant to this Agreement, including Article
9 hereof, and "Damages" shall include any amount so
indemnified.
ARTICLE 11
CONFIDENTIALITY
Whether or not the transactions contemplated
hereby are consummated, each of the Parties agrees to use
its reasonable efforts to keep confidential any and all
information and data with respect to the other Party
which it has received as a result of any investigation
made in connection with this Agreement and which is not
otherwise available to the Parties and to use such
information solely for the purpose of evaluating the
transactions contemplated hereby; provided, however, that
notwithstanding the foregoing, the Parties shall be
entitled to disclose such information and data (i) to the
extent required by law, (ii) as is necessary to obtain
any consent, approval or authorization of or make any
filing, designation, declaration or notice by reason of
the transactions hereunder, and (iii) during the course
of or in connection with any litigation or other
proceeding based upon or in connection with the subject
matter to this Agreement, including, without limitation,
the failure of the transactions contemplated hereby to be
consummated. In the event that the transactions
contemplated hereby are consummated, from and after the
Closing Date the Shareholders agree to use their
reasonable efforts to keep confidential any and all
information and data with respect to the Companies which
is not otherwise available to the public. In the event
the transactions contemplated by this Agreement are not
consummated (except in the event remedies are being
pursued) each Party will return to the other all
documents, work papers, financial statements and other
materials and information obtained from the other, or its
agents, in connections with the transactions contemplated
hereby, and all copies, digests, summaries or productions
thereof.
ARTICLE 12
UNITED ARTISTS NAME, SIGNAGE, ETC.
12.1 Name. As soon as is reasonably
practicable after the Closing, but in no event later than
October 31, 1997, the Buyer Group shall take all
corporate, legal, regulatory or other actions necessary
to cause the Companies to change its legal name so as to
no longer use the term "United Artists" or any derivative
thereof. Upon completion of such change in its name, the
Buyer Group shall cause the Companies to, and the
Companies shall, cease to use or employ in any manner,
directly or indirectly, in its corporate or trade name,
service mark or logo, and in any other printed or written
materials used by the Companies or in any other manner or
for any purpose, the words "United Artists" or any logo
or mark currently used by the Companies in connections
therewith, or any other trade name, trade mark, service
mark or logo using or including the "United Artists" name
or logo or which is deceptively similar thereto.
12.2 Signage, etc. As soon as is reasonably
practicable after the Closing, the Buyer Group shall
cause the Companies to cease to use or employ in any
manner, directly or indirectly, in any signage or other
interior or exterior design feature of the theaters and
any other premises owned or operated by the Companies any
trade name, trade mark, service mark or logo using or
including the words "United Artists" or any logo or mark
currently used by the Companies in connection therewith,
or any other trade name, trade mark, service mark or logo
using or including the "United Artists" name or logo or
which is deceptively similar thereto. The foregoing
notwithstanding, the Companies may continue to use such
trade names, trade marks, service marks and logos for
such reasonable period of time, but in no event later
than December 31, 1997, as may be reasonably practicable
to modify such signage or other interior or exterior
design feature.
12.3 General. Subject to the foregoing
subparagraphs of this Article 12, the Buyer acknowledges
that neither it nor the Companies nor any of their
respective Affiliates has or will have any right or
interest whatsoever to use or any interest in, and
neither the Buyer nor the Companies nor any of their
respective Affiliates shall use, the words "United
Artists" or any derivative thereof incorporated in their
trade names, trade marks, service marks, logos or
otherwise or any logo or symbol currently used by the
Companies in connection with the words "United Artists"
(the "United Artists Rights").
12.4 Companies to Join. Upon Closing, the
Buyer shall cause the Companies to join in and be bound
by the provisions of this Article 12.
ARTICLE 13
TERMINATION AND ABANDONMENT
13.1 Methods of Termination. The transactions
contemplated herein may be terminated and/or abandoned at
any time prior to the Closing:
(a) By mutual consent of the Buyer and the
Shareholders; or
(b) By any Shareholder (if such Shareholder is
not then in material breach of any term of this
Agreement), if any of the conditions set forth in Article
8 hereof shall have become incapable of fulfillment by
Closing, and shall not have been waived by such
Shareholder or if Closing shall not have occurred on or
before August 22, 1997; or
(c) By Buyer (if Buyer is not then in material
breach of any term of this Agreement), if any of the
conditions set forth in Article 7 hereof shall have
become incapable of fulfillment by Closing, and shall not
have been waived by the Buyer; or
(d) By any party hereto if there shall be any
final, nonappealable order, writ, injunction or decree of
any court or governmental or regulatory agency binding
any party hereto that prohibits or restrains any of the
parties hereto from consummating the transactions
contemplated hereby.
13.2 Procedure Upon Termination. In the event
of termination by the Buyer or by any one or more the
Shareholders pursuant to Section 13.1 hereof, written
notice thereof shall forthwith be given to the other
Party and the transactions contemplated by this Agreement
shall be terminated, without further action by any Party
hereto. If the transactions contemplated by this
Agreement are terminated as provided herein:
(a) Each Party will redeliver all documents,
work papers and other material of any other Party
relating to the transactions contemplated hereby, whether
so obtained before or after the execution hereof, to the
Party furnishing the same; and
(b) All confidential information received by
any Party hereto with respect to the business of any
other Party shall be treated as such.
(c) If this Agreement is terminated pursuant
to Section 13.1, after this Agreement is terminated no
party will have any further rights or obligations under
this Agreement other than the parties' respective
obligations under Section 13.2(a) and (b), Article 11 and
Section 14.11. Nothing in this Section shall, however,
relieve either party of liability for any willful or
intentional breach of any covenant contained in this
Agreement which occurs before this Agreement is
terminated.
ARTICLE 14
MISCELLANEOUS
14.1 Special Conditions. (a) In the event
that the conditions in Section 7.1 and 8.1 are not
satisfied by the Closing Date, UA at its option may elect
to close the sale of the UATC Shares and the CUAA Shares
in accordance with the terms hereof, and to extend the
Closing Date for the sale of the Mexican Shares to a date
not beyond September 30, 1997 or to terminate this
Agreement as it relates to the Mexican Shares. If the
Closing Date for the sale of Mexican Shares is extended
as aforesaid, all references in this Agreement to August
22, 1997, as it relates to the sale of the Mexican
Shares, shall be deemed to refer to the date of closing
for the sale of Mexican Shares as so extended.
(b) In the event that Transeuropa has not
executed this Agreement or if by Closing UATC Europe or
Fondo Optima, or both, have not purchased the UATC Shares
owned by Transeuropa and subjected them to this
Agreement, the Parties shall treat this Agreement as
relating to the sale of only the CUAA Shares and the
Mexican Shares and shall close such sale, subject to the
terms and conditions hereof, without regard to the
provisions hereof relating to the UATC Shares.
14.2 Dispute Resolution and Arbitration. (a)
In the event of any dispute, controversy or claim arising
out of or relating to this Agreement (including any
provision of any Schedule or Exhibit thereto) or the
breach, termination or validity thereof ("Dispute"), upon
the written request (a "Request") of any Party, the
matter shall immediately be referred to senior officers
of each Party for resolution. The senior officers shall
meet promptly and attempt in good faith to negotiate a
resolution of the Dispute. If the Parties are unable to
resolve the Dispute within 10 days after receipt of a
Request, then any Party may submit the Dispute to
arbitration as the exclusive means of resolving it in
accordance with the procedures set forth in paragraph (b)
of this Section 14.2. If the Dispute involves a matter
which is subject to indemnification under Article 10
hereof, all of the relevant Indemnifying Parties shall be
joined as parties to the Dispute.
(b) Any unresolved Dispute shall be
finally settled by arbitration in accordance with the
Arbitration Rules of the International Chamber of
Commerce (the "ICC") then in effect (the "Rules"), except
as modified herein. The arbitration shall be held in
Toronto, Canada. The arbitration proceedings shall be
conducted, and the award shall be rendered, in the
English language.
(c) There shall be three arbitrators. If
the Dispute involves two Parties, each Party shall select
one arbitrator. If the Dispute involves more than two
Parties, all claimants (or plaintiffs) shall jointly
select one arbitrator and all respondents (or defendants)
shall select one arbitrator; provided, however, that if
the Buyer (as claimant or respondent) is a party to such
arbitration, the Buyer shall be entitled to select the
arbitrator for all claimants or respondents, as the case
may be, upon consultation with any other Party named as
claimant or respondent, as the case may be. The
arbitrator for the claimant (or claimants) shall be
appointed within 20 days of the submission of the request
for arbitration and the arbitrator for the respondent (or
respondents) shall be appointed within 40 days of the
submission of the request for arbitration. The two
arbitrators so appointed shall select a third arbitrator
to serve as Chair of the tribunal, such selection to be
made within 20 days of the selection of the second
arbitrator. If for any reason any arbitrator has not
been appointed within the time limits specified herein,
such appointment shall be made by the ICC Court of
Arbitration pursuant to the Rules upon the written
request of any Party if possible within 20 days of such
request.
(d) The hearing shall be held if possible
no later than 180 days following the appointment of the
last of the three arbitrators and the award shall be
rendered if possible no later than 30 days following the
close of the hearing. Judgment upon any award may be
entered in any court having jurisdiction.
(e) The Parties hereby waive any rights
of application or appeal to any court or tribunal of
competent jurisdiction (including without limitation the
courts of the United States and of Canada) to the fullest
extent permitted by law in connection with any question
of law or fact arising in the course of the arbitration
or with respect to any award made except for actions
relating to enforcement of the arbitration agreement or
an arbitral award.
(f) The award shall be final and binding
upon the Parties, and shall be the sole and exclusive
remedy between the Parties regarding any claims, counter-
claims, issues, or accounting presented to the arbitral
tribunal. Judgment upon any award may be entered in any
court having jurisdiction.
(g) Any monetary award shall be made and
promptly payable in Dollars free of any tax, deduction or
offset, and the arbitral tribunal shall be authorized in
its discretion to grant pre-award and post-award interest
at commercial rates. Any costs, fees, or taxes incident
to enforcing the award shall, to the maximum extent
permitted by law, be charged against the party resisting
such enforcement.
(h) This Agreement and the rights and
obligations of the Parties shall remain in full force and
effect pending the award in any arbitration proceeding
hereunder.
(i) All notices by one party to the other
in connection with the arbitration shall be in accordance
with the provisions of Section 14.4 hereof.
(j) This agreement to arbitrate shall be
binding upon the Parties, their successors and the
permitted assigns in accordance with Section 14.5 hereof.
14.3 Headings. The descriptive headings of
the several Articles and Sections of this Agreement are
inserted for convenience only and are not meant in any
way to affect the meaning or interpretation of this
Agreement.
14.4 Notices. Any notices or other
communications required or permitted hereunder shall be
given in writing and may be delivered initially by
facsimile to be promptly followed by hand or air courier
or by certified or registered mail, postage prepaid,
addressed as follows:
If to the Buyer, to:
General Cinema International, Inc.
1300 Boylston Street
Chestnut Hill, MA 02167
Fax: (617) 264-8206
Attention: Philip J. Szabla, Esq.
Vice President and General
Counsel
Copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
Attention: Jeffrey W. Tindell, Esq.
or:
If to UA, UA Mexico or UATC Europe, to:
United Artists Theatre Circuit, Inc.
9110 East Nichols Avenue, Suite 200
Englewood, CO 80112
Fax: (303) 792-8800
Attention: Kurt C. Hall
Copy to:
United Artists Theatre Circuit, Inc.
9110 East Nichols Avenue, Suite 200
Englewood, CO 80112
Fax: (303) 792-8649
Attention: Gene Hardy, Esq.
or:
If to Fondo Optima, to:
Cinemas United Artists
Camino A Santa Teresa No. 1040, 8 Piso
Col. Jardines en la Montana, Delegacion
Tlalpan
14210 Mexico, D.F.
Mexico
Fax: (525) 631-3958
Attention: Ing. Carlos Walther
Copy to:
White & Case, S.C.
Torre Optima
Paseo de las Palmas 405 - 6 Piso
Col. Lomas de Chapultepec
11000 Mexico, D.F.
Mexico
Fax: (525) 540-9698
Attention: Alberto Sepulveda de la Fuente
or:
If to Transeuropa, to:
Transeuropa Entertainment Group
Ayacucho 580/86
(1026) Buenos Aires, Argentina
Fax: (541) 11-1191
Attention: Mario de Pedro, President
Oscar Rodriguez, Vice President
Copy to:
Attention: Leonardo Racauchi
Lavalle 774-516
(1047) Buenos Aires, Argentina
Fax: (541) 325-0167
or to such other address as shall be furnished in writing
by such party, and any such notice or communication shall
be effective and be deemed to have been given as of the
date delivered if by hand or air courier and five days
following the date of mailing if mailed.
14.5 Assignment. This Agreement and all of
the provisions hereof shall be binding upon and inure to
the benefit of the parties hereto and their respective
successors and permitted assigns, but neither this
Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by any of the parties hereto
without the prior written consent of the other party.
14.6 Counterparts; Effectiveness. This
Agreement may be executed in two or more counterparts all
of which shall be considered one and the same agreement
and each of which shall be deemed an original. The
failure by any Shareholder to execute and deliver this
Agreement shall not impair the validity hereof with
respect to the buyer or any other Shareholder (and their
respective Guarantors and Affiliates) which have
delivered to each other duly executed counterparts of
this Agreement.
14.7 Governing Law. This Agreement shall be
governed by (a) the laws of Mexico as it relates to the
purchase of the Mexican Shares and tax matters relating
to the Mexican Companies contained in Article 9 hereof,
(b) the law of Argentina as it relates to the purchase of
the UATC Shares and the CUAA Shares and tax matters
relating to UATC and CUAA contained in Article 9 hereof
and (c) in all other respects (including, without
limitation, the dispute resolution and arbitration
provisions contained in Section 14.2 hereof and the
indemnification provision contained in Article 10 hereof)
this Agreement shall be governed by the laws of the State
of Delaware (regardless of the principles of conflicts of
law).
14.8 Severability. In the event that any part
of this Agreement is declared by any court or other
judicial or administrative body to be null, void or
unenforceable, said provision shall survive to the extent
it is not so declared, and all of the other provisions of
this Agreement shall remain in full force and effect.
14.9 Amendments; Waivers. This Agreement may
be amended or modified, and any of the terms, covenants,
representations, warranties or conditions hereof may be
waived, only by a written instrument executed by in case
of an amendment or modification, by the party against
whom such amendment or modification is sought to be
enforced, or in the case of a waiver, by the party
waiving compliance. Any waiver by any party of any
condition, or of the breach of any provision, term,
covenant, representation or warranty contained in this
Agreement, in any one or more instances, shall not be
deemed to be nor construed as a further or continuing
waiver of any such condition, or of the breach of any
other provision, term, covenant, representation or
warranty of this Agreement.
14.10 Parties in Interest. Nothing in this
Agreement is intended to confer any rights or remedies
under or by reason of this Agreement on any Persons other
than the Parties and the Indemnified Parties and their
respective successors and permitted assigns.
14.11 Fees and Expenses. Each party hereto
shall each pay its costs and expenses which it incurs in
connection with the transactions contemplated by this
Agreement.
IN WITNESS WHEREOF, each of the parties hereto
has executed or caused its duly authorized officers to
execute this Agreement, as of the day and year first
above written.
GENERAL CINEMA UATC EUROPE B.V.
INTERNATIONAL, INC.
By: /s/ Robert A. Smith By: /s/ Kurt C. Hall
Name: Robert A. Smith Name: Kurt C. Hall
Title: President Title: Director
UNITED ARTISTS THEATRE FONDO OPTIMA, S.A. de C.V.
CIRCUIT, INC.
By: /s/ Kurt C. Hall By: /s/ Carlos Walther
Name: Kurt C. Hall Name: Carlos Walther
Title: Director Title: Director General
UA MEXICO HOLDINGS, S.A. TRANSEUROPA ENTERTAINMENT
DE C.V. GROUP, S.A.
By: /s/ Kurt C. Hall By:
Name: Kurt C. Hall Name:
Title: Director Title:
The undersigned (1) guarantees the performance
of all the obligations of General Cinema International,
Inc. under this Agreement, (2) agrees to be bound as if
it were a Party by the dispute resolution and arbitration
provisions set forth in Section 14.2 of this Agreement,
and (3) makes the same representations and warranties to
the Shareholders as to itself as are contained in
Sections 5.1, 5.2 and 5.3 of this Agreement.
GC COMPANIES, INC.
By: /s/ Robert A. Smith
Name: Robert A. Smith
Title: President & COO
The undersigned (1) guarantees the performance
of all the obligations of Fondo Optima, S.A. de C.V.
under this Agreement, (2) agrees to be bound as if it
were a Party by the dispute resolution and arbitration
provisions set forth in Section 14.2 of this Agreement,
and (3) makes the same representations and warranties to
the Buyer as to itself as are contained in Sections 4.2
(a), 4.2(b) and 4.2(c) of this Agreement.
BUFETE INDUSTRIAL, S.A.
By: /s/ Jose Mendoza Fernandez
Name: Jose Mendoza Fernandez
Title: Chief Executive Officer
STOCK PURCHASE AGREEMENT
Dated as of July 25, 1997
by and among
GC COMPANIES INTERNATIONAL INC.
UNITED ARTISTS THEATRE CIRCUIT, INC.
UA MEXICO HOLDINGS, S.A. DE C.V.
UATC EUROPE B.V.
FONDO OPTIMA, S.A. DE C.V.
and
TRANSEUROPA ENTERTAINMENT GROUP, S.A.
TABLE OF CONTENTS
Page
ARTICLE 1
CERTAIN DEFINITIONS
1.1 Definitions . . . . . . . . . . . . . . . . 3
ARTICLE 2
SALE AND PURCHASE
2.1 Sale and Transfer . . . . . . . . . . . . . 11
2.2 Purchase Price . . . . . . . . . . . . . . 11
2.3 Receivables . . . . . . . . . . . . . . . . 12
ARTICLE 3
THE CLOSING
3.1 Time and Place of Closing . . . . . . . . . 13
3.2 Deliveries by UA and the Shareholders . . . 14
3.3 Deliveries by the Buyer . . . . . . . . . . 16
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties of UA . . . 18
(a) Organization and Standing . . . . . . 18
(b) Authorization; Binding Obligation . . 18
(c) Subsidiaries and Affiliates . . . . . 19
(d) Title to Shares; Capitalization . . . 19
(e) Consents and Approvals; No Violation . 20
(f) Financial Statements . . . . . . . . . 21
(g) No Undisclosed Liabilities . . . . . . 22
(h) Absence of Certain Changes . . . . . . 22
(i) Material Contracts . . . . . . . . . . 22
(j) Compliance with Laws . . . . . . . . . 23
(k) Litigation and Arbitration . . . . . . 24
(l) Real Estate . . . . . . . . . . . . . 24
(m) Environmental . . . . . . . . . . . . 27
(n) Employee Benefit Plans . . . . . . . . 28
(o) Taxes . . . . . . . . . . . . . . . . 29
(p) Labor Matters . . . . . . . . . . . . 31
(q) Construction . . . . . . . . . . . . . 31
(r) Ownership of Personal Property . . . . 31
(s) Payments . . . . . . . . . . . . . . . 32
(t) Disclosure of All Material Facts . . . 33
4.2 Representations and Warranties of Fondo
Optima . . . . . . . . . . . . . . . . . . 33
(a) Organization and Standing . . . . . . 33
(b) Authorization; Binding Obligation . . 33
(c) Subsidiaries and Affiliates . . . . . 34
(d) Title to Shares; Capitalization . . . 34
(e) Consents and Approvals; No Violation . 35
(f) Financial Statements . . . . . . . . . 35
(g) No Undisclosed Liabilities . . . . . . 36
(h) Absence of Certain Changes . . . . . . 36
(i) Material Contracts . . . . . . . . . . 36
(j) Compliance with Laws . . . . . . . . . 37
(k) Litigation and Arbitration . . . . . . 37
(l) Real Estate . . . . . . . . . . . . . 38
(m) Environmental . . . . . . . . . . . . 41
(n) Employee Benefit Plans . . . . . . . . 41
(o) Taxes . . . . . . . . . . . . . . . . 42
(p) Labor Matters . . . . . . . . . . . . 43
(q) Construction . . . . . . . . . . . . . 44
(r) Ownership of Personal Property . . . . 44
(s) Payments . . . . . . . . . . . . . . . 44
(t) Disclosure of All Material Facts . . . 45
4.3 Representations and Warranties of
Transeuropa . . . . . . . . . . . . . . . . 45
(a) Organization and Standing . . . . . . 45
(b) Authorization; Binding Obligation . . 46
(c) Title to Shares; Capitalization . . . 46
(d) Consents and Approvals; No Violation . 47
(e) Payments . . . . . . . . . . . . . . . 47
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE BUYER
5.1 Organization and Standing . . . . . . . . . 48
5.2 Authorization; Binding Obligation . . . . . 48
5.3 Consents and Approvals; No Violation . . . 49
5.4 Purchase for Investment . . . . . . . . . . 49
5.5 Litigation . . . . . . . . . . . . . . . . 49
ARTICLE 6
COVENANTS
6.1 Covenants of the Shareholders . . . . . . . 50
(a) Access to Information . . . . . . . . 50
(b) Conduct of Business . . . . . . . . . 50
(c) Covenant Not to Compete . . . . . . . 52
(d) Organization and Capitalization of
Operadora . . . . . . . . . . . . . . 54
(e) Termination of Certain Agreements . . 54
ARTICLE 7
CONDITIONS TO THE OBLIGATIONS OF THE BUYER
7.1 Shareholders Agreement . . . . . . . . . . 54
7.2 Net Fixed Assets Certification . . . . . . 55
7.3 Construction Status . . . . . . . . . . . . 55
7.4 Due Diligence . . . . . . . . . . . . . . . 55
7.5 Representations and Warranties . . . . . . 56
7.6 Shareholders' Covenants . . . . . . . . . . 56
7.7 Shareholders' Certificate . . . . . . . . . 56
7.8 Adverse Event . . . . . . . . . . . . . . . 56
7.9 Approvals . . . . . . . . . . . . . . . . . 56
7.10 No Action or Order . . . . . . . . . . . . 56
7.11 Estoppel Certificates . . . . . . . . . . 56
7.12 Management Fees . . . . . . . . . . . . . 56
7.13 Shareholder Accounts . . . . . . . . . . . 57
ARTICLE 8
CONDITIONS TO THE OBLIGATIONS OF THE SHAREHOLDERS
8.1 Shareholders Agreement . . . . . . . . . . 57
8.2 Representations and Warranties . . . . . . 57
8.3 Buyer's Covenants . . . . . . . . . . . . . 58
8.4 Buyer's Certificate . . . . . . . . . . . . 58
8.5 No Action or Order . . . . . . . . . . . . 58
8.6 United Artists Rights . . . . . . . . . . . 58
ARTICLE 9
TAX MATTERS
9.1 Sellers' Tax Indemnification of Buyer . . . 58
9.2 Proration of Taxes . . . . . . . . . . . . 59
9.3 Tax Returns . . . . . . . . . . . . . . . . 59
9.4 Transfer Taxes . . . . . . . . . . . . . . 60
9.5 Contest Provisions . . . . . . . . . . . . 61
9.6 Assistance and Cooperation . . . . . . . . 62
9.7 Maintenance of Books and Records . . . . . 63
9.8 Indemnity Payments . . . . . . . . . . . . 63
ARTICLE 10
INDEMNIFICATION
10.1 Survival of Representations . . . . . . . 64
10.2 Statements as Representations . . . . . . 64
10.3 Agreement to Indemnify . . . . . . . . . . 64
10.4 Conditions of Indemnification . . . . . . 66
10.5 Aggregate Limitation on Liability . . . . 67
ARTICLE 11
CONFIDENTIALITY . . . . . . . 71
ARTICLE 12
UNITED ARTISTS NAME, SIGNAGE, ETC.
12.1 Name . . . . . . . . . . . . . . . . . . . 72
12.2 Signage, etc. . . . . . . . . . . . . . . 72
12.3 General . . . . . . . . . . . . . . . . . 73
12.4 Companies to Join . . . . . . . . . . . . 73
ARTICLE 13
TERMINATION AND ABANDONMENT
13.1 Methods of Termination . . . . . . . . . . 73
13.2 Procedure Upon Termination . . . . . . . . 74
ARTICLE 14
MISCELLANEOUS
14.1 Special Conditions . . . . . . . . . . . . 75
14.2 Dispute Resolution and Arbitration . . . . 75
14.3 Headings . . . . . . . . . . . . . . . . . 77
14.4 Notices . . . . . . . . . . . . . . . . . 77
14.5 Assignment . . . . . . . . . . . . . . . . 79
14.6 Counterparts; Effectiveness . . . . . . . 79
14.7 Governing Law . . . . . . . . . . . . . . 80
14.8 Severability . . . . . . . . . . . . . . . 80
14.9 Amendments; Waivers . . . . . . . . . . . 80
14.10 Parties in Interest . . . . . . . . . . . 80
14.11 Fees and Expenses . . . . . . . . . . . . 81
September 24, 1997
United Artists Theatre Circuit, Inc.
9110 East Nichols Avenue
Suite 200
Englewood, CO 80112
Attention: Kurt C. Hall
Fondo Optima, S.A. de C.V.
c/o Cinemas United Artists
Camino A. Santa Teresa No. 1040, 8 Piso
Col. Jardines en la Montana
Delegacion Tlalpan
14210 Mexico, D.F.
Attention: Ing. Carlos Walther
Amendment No. 1 to Stock Purchase Agreement
Gentlemen:
Reference is made to the Stock Purchase Agreement,
dated as of July 25, 1997, by and among General Cinema
International, Inc., United Artists Theatre Circuit,
Inc., Fondo Optima, S.A. de C.V. and others (the
"Agreement"). Capitalized terms used herein, unless
otherwise defined herein, shall have the meaning given
them in the Agreement.
By our letter dated July 25, 1997 (the "July 25
Letter"), we provided notice of objection under Section
7.4 and Schedule 7.4 of the Agreement with respect to
certain matters. We also refer to our letter dated
August 8, 1997 (the "August 8 Letter"), in which we have
raised certain concerns in connection with certain other
matters.
This confirms the Parties' agreement as follows:
1. Pursuant to Section 7.4 of the Agreement and
notwithstanding our having sent the July 25 Letter and
the August 8 Letter, the Parties ratify and confirm in
all respects the continued effectiveness of the
Agreement, as amended hereby.
2. Section 3.1 of the Agreement "Time and Place of
Closing" be amended and restated in its entirety as
follows:
"3.1 Time and Place of Closing. Upon the
terms of, and subject to the satisfaction (or waiver
pursuant to Section 14.9 hereof) of the conditions
contained in this Agreement, the closing (the "Closing")
of the transactions contemplated by this Agreement (1)
relating to the Mexican Shares will take place at the
offices of White & Case, S.C., Torre Optima, Paseo de la
Palmas 405-6 Piso, Col. Lomas de Chapultepec, 11000
Mexico, D.F.; (2) relating to the CUAA Shares will take
place at the offices of Munoz De Toro & Munoz De Toro,
Alicia Moreau De Justo, Loft 212, Puerto Madero, 1107 -
Buenos Aires, Argentina; and (3) in all other respects at
the offices of Skadden, Arps, Slate, Meagher & Flom LLP
at 919 Third Avenue, New York, NY, or at such other place
as the parties may mutually agree, simultaneously on
September 26, 1997 (the "Closing Date")."
3. The Parties hereby agree that all references in
the Agreement to August 22, 1997 or to the "Closing Date"
shall in each case be deemed to be references to
September 26, 1997.
4. Pursuant to Section 14.1(b) of the Agreement,
the Parties hereby agree and confirm that they shall
treat the Agreement as relating to the sale of the CUAA
Shares and the Mexican Shares only and to close such
sales, subject to the terms and conditions of the
Agreement as amended hereby, without regard to the
provisions of the Agreement relating to the UATC Shares.
5. References to "October 31, 1997" in Section
12.1 of the Agreement are hereby amended to "December 31,
1997."
6. Schedule 6.1(c) is hereby amended as attached.
7. Pursuant to Section 2.3 of the Agreement, the
Buyer has elected to acquire from UA Mexico the accounts
receivable owned by UA Mexico and due from Cinemas, and
in connection therewith, UA agrees that it shall cause UA
Mexico to execute and deliver any and all documents
necessary to effectuate such transfer; provided, however,
that UA Mexico shall and hereby does retain for itself an
amount of such receivable equal to fifty percent (50%) of
the Cinemas VAT Intercompany Receivable, which UA
acknowledges shall be payable only to the extent of fifty
percent (50%) of the Construction Program VAT Refund as
such amount is paid to Cinemas.
8. The Parties hereby agree that the purchase
price for the CUAA Shares shall be adjusted as provided
in Schedule 8 attached hereto.
Your agreement and acceptance of the foregoing is
signified by your signatures below. Please sign and
return to us one of the enclosed copies of this letter
(as well as the attached confirmation of guarantees,
where appropriate), which shall thereupon become a
binding Amendment No. 1 to the Agreement.
Very truly yours,
UNITED ARTISTS THEATRE GENERAL CINEMA
CIRCUIT, INC. INTERNATIONAL, INC.
By: /s/ R.E. Hardy By: /s/ G. Gail Edwards
Name: R.E. Hardy Name: G. Gail Edwards
Title: Executive Vice Title: VP and Chief
President Financial Officer
UA MEXICO HOLDINGS, S.A. UATC EUROPE B.V.
DE C.V.
By: /s/ R.E. Hardy By: /s/ R.E. Hardy
Name: R.E. Hardy Name: R.E. Hardy
Title: Title: Director
FONDO OPTIMA, S.A. de C.V.
By: /s/ Carlos Walther Esquer
Name: Carlos Walther Esquer
Title: Director
The undersigned consents to the attached Amendment
No. 1 to the Agreement (as amended) and hereby ratifies
and confirms its (1) guarantee of the performance of all
the obligations of General Cinema International, Inc.
under the Agreement (as amended), (2) agreement to be
bound as if it were a Party by the dispute resolution and
arbitration provisions set forth in Section 14.2 of the
Agreement, and (3) representations and warranties to the
Shareholders as to itself as are contained in Sections
5.1, 5.2 and 5.3 of the Agreement.
GC COMPANIES, INC.
By: /s/ G. Gail Edwards
Name: G. Gail Edwards
Title: Vice President and Chief
Financial Officer
The undersigned consents to the attached Amendment
No. 1 to the Agreement (as amended) and hereby ratifies
and confirms its (1) guarantee of the performance of all
the obligations of Fondo Optima, S.A. de C.V. under the
Agreement (as amended), (2) agreement to be bound as if
it were a Party by the dispute resolution and arbitration
provisions set forth in Section 14.2 of the Agreement,
and (3) representations and warranties to the Buyer as to
itself as are contained in Sections 4.2 (a), 4.2(b) and
4.2(c) of the Agreement.
BUFETE INDUSTRIAL S.A.
By: /s/ Jose Mendoza Fernandez
Name: Jose Mendoza Fernandez
Title: Chairman
cc: Jeffrey W. Tindell, Esq. (via facsimile)
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, NY 10022
Gene Hardy, Esq. (via facsimile)
United Artists Theatre Circuit, Inc.
9110 East Nichols Ave., Suite 200
Englewood, CO 80112
Alberto Sepulveda de la Fuente (via facsimile)
White & Case, S.C.
Torre Optima
Paseo de las Palmas 405 - 6 Piso
Col. Lomas de Chapultepec
11000 Mexico, D.F.
FOR IMMEDIATE RELEASE
Contact: G. Gail Edwards or Sharon F. Merrill
Chief Financial Officer President
GC Companies, Inc. Sharon Merrill
617/277-4320 Associates, Inc.
617/542-5300
GC COMPANIES, INC. PURCHASES THEATRE ASSETS IN MEXICO AND
ARGENTINA
GENERAL CINEMA THEATRES EXPANDS INTO LATIN AMERICA
Chestnut Hill, MA, September 29, 1997 -- GC Companies,
Inc. (NYSE: GCX), one of the nation's leading motion
picture exhibitors and a manager of a pool of the
Company's investment capital, announced today that it has
acquired certain international theatre assets of United
Artists Theatre Circuit, Inc. in Mexico and Argentina for
a total purchase price of approximately $36 million. As
a result of this agreement, GC Companies, Inc. has
acquired existing theatre units and theatres currently
under development, as well as an infrastructure to
support future growth in each of these countries.
Stated Robert A. Smith, president and chief
operating officer of GC Companies, Inc., "This
acquisition is the first step in our international growth
strategy. It provides us with the foundation for
expansion throughout Latin America, which we view as an
attractive and relatively untapped marketplace for the
exhibition industry. We are very excited about the
potential of the existing locations and the future
development possibilities in the Argentine and Mexican
markets, and additional Latin American countries."
"Our international efforts will be consistent with
our domestic growth strategy to build high-impact
profitable theatres in urban and suburban locations. We
are aggressively undertaking this initiative with the
belief that international expansion will be one of the
key drivers to the long-term growth and profitability of
GC Companies. The Company intends to commit substantial
resources to its international development as there is
significant investment potential in this area over the
next several years," concluded Smith.
As a result of this acquisition, GC Companies, Inc.
will add in total seven new locations (five currently
open and operating and two under construction) with 79
screens. The 34 screens at three locations in Buenos
Aires are owned 100 percent, while the 45 screens at four
locations in Mexico are operated by a company which is
owned jointly with a 50 percent partner, Fondo Optima
S.A. de C.V., a Mexican company.
The Company wishes to take advantage of the 'safe
harbor' provisions of the Private Securities Litigation
Reform Act of 1995 with respect to statements that may be
deemed to be forward-looking statements under the Act.
Such forward-looking statements may include, but are not
limited to, statements regarding the Company's long-term
theatre strategy. The Company cautions that numerous
factors could cause actual results to differ materially
from any forward-looking statements made by the Company.
Please refer to the section on forward-looking statements
included in the Company's 1996 annual report incorporated
by reference in the Company's Form 10-K filed January 29,
1997 with the Securities and Exchange Commission.
GC Companies, Inc. operates one of the nation's
leading motion picture exhibition circuits with 1,168
screens at 185 locations in 25 states, and manages a pool
of the Company's capital to be used for investments
purposes.
APPROVED:/s/ G. Gail Edwards
By: G. Gail Edwards
