<PAGE> 1
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: May 4, 1995
Date of Earliest Event Reported: April 25, 1995
TELE-COMMUNICATIONS, INC.
----------------------------------------------------------
(Exact name of Registrants as specified in their charters)
State of Delaware
----------------------------------------------
(State or other jurisdiction of incorporation)
0-20421 84-1260157
- ----------------------------------- -------------------------------------
(Commission File Numbers) (I.R.S. Employer Identification Nos.)
5619 DTC Parkway
Englewood, Colorado 80111
- ---------------------------------------- ----------------
(Address of principal executive offices) (Zip Code)
Registrants' telephone number, including area code: (303) 267-5500
<PAGE> 2
Item 2. Acquisition or Disposition of Assets
On April 25, 1995, the Company consummated the acquisition of the
controlling interests in Cablevision S.A., Televisora Belgrano S.A., Construred
S.A. and Univent's S.A., four affiliated companies owned by a shareholder group
headed by Eduardo Eurnekian (the "Shareholders") and engaged in the cable
television business in the Greater Buenos Aires area (collectively
"Cablevision") pursuant to a stock purchase agreement with the Shareholders.
The acquisition of a 51% ownership interest in Cablevision was
consummated for a purchase price of approximately $286 million prior to the
assumption of liabilities. The purchase price was paid with cash consideration
of approximately $199 million (including a previously paid deposit of $20
million) and the Company's issuance of approximately $87 million in secured,
negotiable promissory notes payable (the "Notes") to the Shareholders. The
Notes are secured by the Company's pledge of the stock representing its 51%
interest in Cablevision. The Notes bear interest at variable rates and are
scheduled to be repaid in 20 monthly installments beginning on August 31, 1995.
The purchase price is subject to adjustment upon the final determination of the
actual number of Cablevision equivalent basic subscribers and Cablevision
liabilities as of March 31, 1995.
In addition, the Company has an option during the two-year period
ended April 25, 1997 to increase its ownership interest to 80% at a cost per
subscriber similar to the initial purchase price adjusted for certain
fluctuations in applicable foreign currency exchange rates.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements
None.
(b) Pro Forma Financial Information
Tele-Communications, Inc. and Subsidiaries:
Condensed Pro Forma Combined Balance Sheet,
December 31, 1994 (unaudited)
Condensed Pro Forma Combined Statement of Operation,
Year ended December 31, 1994 (unaudited)
Notes to Condensed Pro Forma Combined Financial Statements,
December 31, 1994 (unaudited)
(c) Exhibits
(2) Amended and Restated Stock Purchase Agreement, dated as of
April 25, 1995, by and among Eduardo Eurnekian, stockholders
of shares of the Common Stock of Cablevision S.A.,
Televisora Belgrano S.A., Construred S.A., Univent's S.A.,
and TCI International Holdings, Inc.
(10) Amended and Restated Stockholders Agreement, dated April 25,
1995, between Eduardo Eurnekian and TCI International
Holdings, Inc.
__________________
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrants have duly caused this report to be signed on their behalf by the
undersigned hereunto duly authorized.
Date: May 4, 1995
TELE-COMMUNICATIONS, INC.
(Registrant)
By:/s/ Stephen M. Brett
Stephen M. Brett
Executive Vice President and
Secretary
<PAGE> 4
TELE-COMMUNICATIONS, INC. AND SUBSIDIARIES
Condensed Pro Forma Combined Financial Statements
December 31, 1994
(unaudited)
The following unaudited condensed pro forma combined balance sheet of TCI,
dated as of December 31, 1994, assumes that (i) the merger with TeleCable
Corporation ("TeleCable") (the "TeleCable Merger"), (ii) the acquisition of
controlling interests in Cablevision S.A., Televisora Belgrano S.A., Construred
S.A. and Univent's S.A. (collectively "Cablevision") (the "Cablevision
Acquisition") and (iii) the transactions whereby QVC, Inc. ("QVC") became 43%
owned by the Company and 57% owned by Comcast Corporation ("Comcast") (the "QVC
Transactions") had occurred as of such date. See notes (2), (3) and (4).
The following unaudited condensed pro forma combined statement of
operations of TCI for the year ended December 31, 1994 assumes that the
TeleCable Merger, the Cablevision Acquisition, the combination of TCI
Communications, Inc. ("TCIC") and Liberty Media Corporation ("Liberty"),
whereby TCIC and Liberty each became a wholly-owned subsidiary of TCI (the
"TCI/Liberty Combination") (see note 1) and the QVC Transactions had occurred
as of January 1, 1994.
The unaudited pro forma results do not purport to be indicative of the
results of operations that would have been obtained if the TeleCable Merger,
the Cablevision acquisition, the TCI/Liberty Combination and the QVC
Transactions had occurred as of January 1, 1994. These condensed pro forma
combined financial statements of TCI should be read in conjunction with the
historical financial statements and the related notes thereto of TCI.
1
<PAGE> 5
TELE-COMMUNICATIONS, INC. AND SUBSIDIARIES
Condensed Pro Forma Combined Balance Sheet
(unaudited)
<TABLE>
<CAPTION>
December 31, 1994
------------------------------------------------------------------
TCI TeleCable Cablevision Pro forma
Historical Historical (2) Historical (3) adjustments(2)(3)
---------- -------------- -------------- -----------------
amounts in millions
<S> <C> <C> <C> <C>
Assets
------
Cash, receivables and other
current assets $ 496 19 10 --
Investment in affiliates and Turner
Broadcasting System, Inc., and
related receivables 2,156 18 -- --
Property and equipment, net of
accumulated depreciation 5,876 258 30 334 (5)
Franchise costs, intangibles and
other assets, net of amortization 11,000 21 -- 1,319 (5)
--------- ------ ---------- --------
956 (6)
$ 19,528 316 40 2,609
========= ====== ========== ========
Liabilities and Stockholders' Equity
------------------------------------
Payables and accruals $ 1,193 31 32 --
Debt 11,162 274 46 87 (7)
179 (8)
Deferred income taxes 3,613 46 6 956 (6)
Other liabilities 160 5 -- --
--------- ------ ---------- --------
Total liabilities 16,128 356 84 1,222
--------- ------ ---------- --------
Minority interests 429 3 -- --
Series D Preferred Stock -- -- -- 300 (10)
Stockholders' equity:
Preferred Stock -- -- -- --
Combined deficit -- -- (44) 44 (11)
Class A common stock 577 -- -- 42 (10)
Class B common stock 89 7 -- (7) (9)
Additional paid-in capital 2,959 (262) -- 958 (10)
262 (9)
Cumulative foreign currency
translation adjustment (4) -- -- --
Unrealized holding gains for
available-for sale securities 253 3 -- (3) (9)
Retained earnings (deficit) (293) 209 -- (209) (9)
Treasury stock (610) -- -- --
--------- ------ ---------- --------
2,971 (43) (44) 1,087
--------- ------ ---------- --------
$ 19,528 316 40 2,609
========= ====== ========== ========
<CAPTION>
QVC
Transactions TCI
Pro forma(4) Proforma
------------ --------
amounts in millions
<S> <C> <C>
Assets
------
Cash, receivables and other
current assets -- 525
Investment in affiliates and Turner
Broadcasting System, Inc., and
related receivables 7 (12) 1,965
(216)(13)
Property and equipment, net of
accumulated depreciation -- 6,498
Franchise costs, intangibles and
other assets, net of amortization -- 13,296
--------- ----------
(209) 22,284
========= ==========
Liabilities and Stockholders' Equity
------------------------------------
Payables and accruals -- 1,256
Debt 7 (12) 11,666
(89) (13)
Deferred income taxes -- 4,621
Other liabilities -- 165
--------- ----------
Total liabilities (82) 17,708
--------- ----------
Minority interests -- 432
Series D Preferred Stock -- 300
Stockholders' equity:
Preferred Stock -- --
Combined deficit -- --
Class A common stock -- 619
Class B common stock -- 89
Additional paid-in capital -- 3,917
Cumulative foreign currency
translation adjustment -- (4)
Unrealized holding gains for
available-for sale securities (127) (13) 126
Retained earnings (deficit) -- (293)
Treasury stock -- (610)
--------- ----------
(127) 3,844
--------- ----------
(209) 22,284
========= ==========
</TABLE>
See accompanying notes to unaudited condensed pro forma combined
financial statements.
2
<PAGE> 6
TELE-COMMUNICATIONS, INC. AND SUBSIDIARIES
Condensed Pro Forma Combined Statement of Operations
(unaudited)
<TABLE>
<CAPTION>
Year ended December 31, 1994
----------------------------
TCI Liberty TeleCable Cablevision Pro forma
Historical Historical (1) Historical (2) Historical (3) adjustments(1)(2)(3)
---------- -------------- -------------- -------------- --------------------
<S> <C> <C> <C> <C> <C>
Revenue $ 4,936 790 302 139 (36) (14)
Operating, cost of sales, selling,
general and administrative expenses
and compensation relating to stock
appreciation rights (3,130) (726) (171) (90) 36 (14)
Depreciation and amortization (1,018) (32) (46) (6) (71) (15)
--------- ---------- --------- --------- -------
Operating income (loss) 788 32 85 43 (71)
Interest expense (785) (22) (23) -- 12 (16)
(6) (17)
(15) (18)
(6) (19)
Interest and dividend income 36 15 1 -- (12) (16)
Share of earnings of Liberty 125 -- -- -- (125) (20)
Share of earnings (losses) of
affiliates, net (120) 23 -- -- --
Gain on dispositions 151 183 -- -- --
Loss on early extinguishment of
debt (9) -- -- -- --
Other expense, net (15) (11) (4) (1) --
--------- ---------- --------- --------- -------
Earnings (loss) before income
taxes 171 220 59 42 (223)
Income tax expense (116) (95) (23) (15) 86 (21)
--------- ---------- --------- --------- -------
Net earnings (loss) 55 125 36 27 (137)
Dividend requirement on redeemable
preferred stocks (8) (14) -- -- (17) (22)
8 (23)
--------- ---------- --------- --------- -------
Net loss attributable to
common shareholders $ 47 111 36 27 (146)
========= ========== ========= ========= =======
Primary earnings per common and
common equivalent share $ .09
=========
<CAPTION>
Year ended December 31, 1994
----------------------------
QVC
Transactions TCI
Pro forma (4) Pro forma
------------- ---------
<S> <C> <C>
Revenue -- 6,131
Operating, cost of sales, selling,
general and administrative expenses and
compensation relating to stock
appreciation rights -- (4,081)
Depreciation and amortization -- (1,173)
--------- ------------
Operating income (loss) -- 877
Interest expense -- (845)
Interest and dividend income -- 40
Share of earnings of Liberty -- --
Share of earnings (losses) of
affiliates, net 26 (24) (98)
(27) (25)
Gain on dispositions -- 334
Loss on early extinguishment of
debt -- (9)
Other expense, net -- (31)
--------- ------------
Earnings (loss) before income
taxes (1) 268
Income tax expense -- (163)
--------- ------------
Net earnings (loss) (1) 105
Dividend requirement on redeemable
preferred stocks -- (31)
--------- ------------
Net loss attributable to
common shareholders (1) 74
========= ============
Primary earnings per common and
common equivalent share $ .11 (26)
</TABLE>
See accompanying notes to unaudited condensed pro forma combined financial
statements.
3
<PAGE> 7
TELE-COMMUNICATIONS, INC. AND SUBSIDIARIES
Notes to Condensed Pro Forma Combined Financial Statements
December 31, 1994
(unaudited)
(1) The TCI/Liberty Combination, which were consummated on August 4, 1994,
were structured as a tax free exchange whereby the common stock of
TCIC and Liberty and the preferred stock of Liberty were exchanged for
like shares of TCI. The merger agreement provided that each share of
TCIC's and Liberty's common stock (including shares held by TCIC's or
Liberty's subsidiaries) would be converted into one share and 0.975 of
a share, respectively, of the corresponding class of TCI's common
stock. Shares of Liberty Class E Preferred Stock were converted into
shares of a preferred stock of TCI having designations, preferences,
rights and qualifications, limitations and restrictions substantially
identical to the shares of preferred stock being converted. Shares of
the remaining Liberty preferred stock held by subsidiaries of TCIC
were converted into shares of a class of TCI preferred stock having an
equivalent fair value to that which was given up. All preferred stock
of TCI held by TCIC or its subsidiaries has been eliminated in
consolidation. The TCI/Liberty Combination has been accounted for as
a purchase of Liberty by TCI utilizing Liberty's historical
predecessor cost.
(2) As of August 8, 1994, TCI, TCIC and TeleCable entered into a
definitive merger agreement (the "TeleCable Merger Agreement") whereby
TeleCable was merged into TCIC on January 26, 1995. The aggregate
$1.6 billion purchase price was satisfied by TCIC's assumption of
approximately $300 million of TeleCable's net liabilities and the
issuance to TeleCable's shareholders of shares of TCI Class A common
stock (approximately 42 million shares) and 1 million shares of a new
series of preferred stock designated Convertible Preferred Stock,
Series D (the "Series D Preferred Stock") with an aggregate initial
liquidation value of $300 million. The Series D Preferred Stock,
which accrues dividends at a rate of 5.5% per annum, are convertible
into 10 million shares of TCI Class A common stock. The Series D
Preferred Stock is redeemable at the option of TCI after five years
and at the option of either TCI or the holder after ten years. The
amount of net liabilities assumed by TCIC and the number of shares of
TCI Class A common stock issued to TeleCable's shareholders are
subject to closing adjustments.
(3) On April 25, 1995, the Company consummated the acquisition of
controlling interests in Cablevision for an aggregate purchase price
of $286 million, including a previously paid deposit of $20 million.
The purchase price was paid with cash consideration of approximately
$199 million (including the initial $20 million) and the Company's
issuance of approximately $87 million in secured negotiable promissory
notes payable.
(continued)
4
<PAGE> 8
TELE-COMMUNICATIONS, INC. AND SUBSIDIARIES
Notes to Condensed Pro Forma Combined Financial Statements
(4) Pursuant to an Agreement and Plan of Merger dated as of August 4,
1994, as amended (the "QVC Merger Agreement"), QVC Programming
Holdings, Inc. (the "Purchaser"), a corporation which is jointly owned
by Comcast and Liberty, commenced an offer (the "QVC Tender Offer") to
purchase all outstanding shares of common stock and preferred stock of
QVC, Inc. ("QVC"). The QVC Tender Offer expired at midnight, New York
City time, on February 9, 1995, at which time the Purchaser accepted
for payment all shares of QVC which had been tendered in the QVC
Tender Offer. Following consummation of the QVC Tender Offer, the
Purchaser was merged with and into QVC with QVC continuing as the
surviving corporation. The Company owns an approximate 43% interest
of the post-merger QVC. Upon consummation of the aforementioned QVC
transactions, the Company is deemed to exercise significant influence
over QVC and, as such, will account for its investment in QVC under
the equity method.
(5) Represents an allocation of the purchase prices of TeleCable and
Cablevision to their tangible and intangible assets. The cost
allocations were estimated using information available at the date of
preparation of these condensed pro forma combined financial statements
and will be adjusted upon final appraisal of the assets acquired.
Therefore, the actual allocations may differ from those allocations
reflected herein.
(6) Represents the estimated incremental deferred income tax liability
associated with the TeleCable and Cablevision purchase price
allocations, as described in note (5) above. The adjustment assumes a
combined federal and state income tax rate of 41%.
(7) Represents the issuance of the Notes in the acquisition of Cablevision
(see note 3).
(8) Represents borrowings by the Company to pay the remaining cash
consideration in the Cablevision acquisition.
(9) Represents the elimination of TeleCable's historical stockholders'
deficit.
(10) Represents the issuance by TCI to TeleCable shareholders of shares of
TCI Class A common stock (approximately 42 million shares) and 1
million shares of Series D Preferred Stock with an aggregate
liquidation value of $300 million. See note (2) above.
(11) Represents the elimination of Cablevision's historical stockholders'
deficit.
(12) Represents the Company's cash contribution in the QVC Transactions.
(13) Represents the elimination of the unrealized gain attributable to QVC.
(14) Represents the elimination of intercompany revenue and operating
expenses between TCIC and Liberty arising from the sale of certain
cable television programming to their respective cable television
subscribers. See note (1) above.
(15) Represents depreciation and amortization of TeleCable's and
Cablevision's allocated excess purchase prices based upon weighted
average lives of 12-1/2 years for property and equipment and 40 years
for franchise costs for TeleCable and 20 years for franchise costs for
Cablevision.
(continued)
5
<PAGE> 9
TELE-COMMUNICATIONS, INC. AND SUBSIDIARIES
Notes to Condensed Pro Forma Combined Financial Statements
(16) Represents the elimination of interest on intercompany indebtedness
between TCIC and Liberty. See note (1) above.
(17) Represents assumed interest expense incurred by the Company on the
Notes, calculated at an assumed rate of 7% per annum.
(18) Represents assumed interest expense incurred by the Company on the
borrowings of $179 million to pay the remaining cash portion of the
Cablevision purchase price and the interest expense that would have
been incurred had the initial $20 million payment toward the
Cablevision purchase price been paid on January 1, 1994. Such
interest expense was calculated at the Company's weighted average
interest rate of 7.5% for the year ended December 31, 1994.
(19) Represents additional interest expense on assumed indebtedness of
Cablevision. Interest expense was not reflected in the historical
financial statements as such borrowings were not utilized to support
the assets to be acquired by the Company. Such interest was
calculated at the interest rate in effect at December 31, 1994 for
such indebtedness (14.4% per annum).
(20) Represents the elimination of TCIC's share of Liberty's historical
earnings.
(21) Reflects the estimated income tax effect of the pro forma adjustments.
(22) Represents the dividend requirements on TCI's Series D Preferred Stock
(issued in connection with the TeleCable Merger - see note 2).
(23) Represents the elimination of the preferred stock dividend
requirements on Liberty preferred stock held by TCIC converted into
preferred stock of TCI.
(24) Reflects the incremental increase in TCI's share of QVC's historical
earnings resulting from the consummation of the QVC Transactions.
(25) Represents the adjustment to TCI's share of the pro forma loss of the
Purchaser after giving effect to the consummation of the QVC
Transactions. Such adjustment reflects the estimated incremental
interest, depreciation and amortization expense, net of income taxes,
incurred by the Purchaser following the consummation of the QVC
Transactions.
(26) Reflects primary and fully diluted earnings per common and common
equivalent share based upon 651,475,966 weighted average shares. Such
amount is calculated utilizing 540,837,355 weighted average shares of
TCI at December 31, 1994 (such amount representing TCI's weighted
average shares, as disclosed in its historical financial statements),
adjusted for the effect of shares issued in the TCI/Liberty
Combination as if such transaction had occurred on January 1 and
adjusted for the issuance of 42 million shares of TCI Class A common
stock issued in connection with the TeleCable Merger. Shares issuable
upon conversion of the Series D Preferred Stock (see note 2) have not
been included in the computation of weighted average shares
outstanding for the year ended December 31, 1994 because their
inclusion would be anti-dilutive.
6
<PAGE> 10
EXHIBIT INDEX
The following exhibits are filed herewith or are incorporated by reference
herein (according to the number assigned to them in Item 601 of Regulation S-K)
as noted:
(2) Amended and Restated Stock Purchase Agreement, dated as of April 25,
1995, by and among Eduardo Eurnekian, stockholders of shares of the
Common Stock of Cablevision S.A., Televisora Belgrano S.A.,
Construred S.A., Univent's S.A., and TCI International Holdings, Inc.
(10) Amended and Restated Stockholders Agreement, dated April 25, 1995,
between Eduardo Eurnekian and TCI International Holdings, Inc.
<PAGE> 1
EXHIBIT 2
AMENDED AND RESTATED
STOCK PURCHASE AGREEMENT
THIS AMENDED AND RESTATED STOCK PURCHASE AGREEMENT ( the "Agreement"
as herein defined), is entered into as of this 25th day of April, 1995 by and
among Eduardo Eurnekian, the undersigned owners (collectively, Eduardo
Eurnekian and the undersigned owners defined as the "Stockholders", and
individually, a "Stockholder" as herein defined) of shares of the Common Stock
(the "Common Stock"), of Cablevision S.A. (face value $ 1 per share),
Construred S.A. (face value $ 1 per share), Univent's S.A. (face value $ 1 per
share) and Televisora Belgrano S.A. (face value $1 per share), all Argentine
Corporations (Sociedades Anonimas) (all referred to hereinafter as the
"Company" as herein defined), and TCI International Holdings, Inc., a Delaware
(U.S.A.) corporation ("Buyer"). This Agreement amends and restates that
certain Stock Purchase Agreement dated 6 December, 1994 as amended by that
certain Amendment to Stock Purchase Agreement dated March 28, 1995.
RECITALS
A. The Stockholders own all of the outstanding Shares which represent
one hundred per cent (100%) of the Common Stock and votes of the Company and
twenty percent (20%) of the outstanding Common Stock and votes of Televisora
Belgrano S.A. The remaining 80% of Televisora Belgrano is owned by Cablevision
S.A.
B. The Stockholders desire to sell to Buyer, and Buyer desires to
purchase from the Stockholders, the Shares which represent fifty-one per cent
(51%) of the Common Stock of the Company and ten and two-tenths percent (10.2%)
of the Common Stock of Televisora Belgrano S.A. (the "TB Shares") all of which
shall be referred to as the "Shares"), in accordance with the terms of this
Agreement.
C. Stockholders further desire to grant Buyer an option to purchase up
to an additional twenty-nine percent (29%) of the Common Stock of the Company.
D. The Stockholders and the Buyer also desire to enter into the
Stockholders Agreement attached hereto as Exhibit 1 of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties herein contained, the parties hereto agree as
follows:
<PAGE> 2
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DEFINITIONS
For purposes of this Agreement, the following terms shall have the following
meanings:
"Agreement": this Amended and Restated Stock Purchase Agreement and its
exhibits and schedules.
"Assets": All properties, privileges, rights, interests and claims, real and
personal, tangible and intangible, of every type and description that are
owned, leased, held, used or useful in the Company Business in which
Stockholders or Company have any right, title or interest or in which
Stockholders or Company have acquired any right, title or interest on or before
the Closing Date, including Governmental Permits, Company Contracts, Equipment
and Real Property.
"Balance Sheet Date": shall mean the date of March 31st, 1995 or one month
prior to the Closing Date if this were not April 25, 1995.
"Base Purchase Price": shall be that defined in Section 1.2.
"Basic Services": the transmission of cable television programming sold to
Company subscribers as a package, and its wholly or partially owned cable
subsidiaries such as Televisora Belgrano S.A. as part of the Company Business,
for which a subscribers pay a fixed monthly fee to Company, including the
satellite transmission related to Televisora Belgrano S.A., in the city of
Chascomus, Province of Buenos Aires.
"Closing": means the consummation of the transactions contemplated by this
Agreement, the date of which is referred to as the Closing Date.
"Closing Date": meaning the 25th day of April, 1995, provided that the
Conditions Precedent referred to in Articles IV and V are met or waived, or
such other date as the parties mutually agree.
"COMFER": meaning the Comite Federal de Radiodifusion of Argentina.
"COMFER Approval": shall mean all necessary authorizations, or consents from
COMFER required to consummate the transactions contemplated by this Agreement
and/or the obligations assumed and/or provisions contained herein.
"Company": meaning Cablevision S.A., Construred S.A. Univent's S.A., Televisora
Belgrano S.A. and all cable subsidiaries of the Company whether wholly or
partially owned.
<PAGE> 3
-3-
"Company Contracts": All contracts and agreements, other than Governmental
Permits, pertaining to ownership, operation and maintenance of the Assets or
the Company Business.
"Company Business": meaning the operation of a complete cable television
reception and distribution System located in the city of Buenos Aires, Greater
Buenos Aires, and in the city of Chascomus, Province of Buenos Aires.
"EBS": For the purposes of determining the Basic Purchase Price and the
adjustments to the same, the Stockholders and the Buyer define EBS's as the
number derived by dividing (a) the total income in pesos received by the
Company for Basic Services and additional outlet charges during the full
calendar month immediately prior to that of the Closing Date including all
payments for more than one period for such charges if paid in such month, by
(b) U$S 29.75. Notice is made that there is no V.A.T. applicable in relation to
the income in pesos and that the same will not be considered in relation to the
definition established herein and will therefore not be included in the
calculation of "total income in pesos". Within 90 days as from Closing Date the
amount of EBS will be adjusted as of the Balance Sheet Date for the sole
purpose of including in the calculation of the Base Purchase Price only those
subscribers whose Basic Services were installed before Closing and who have
paid their first regularly scheduled billing for Basic Services after the
Closing, and excluding from the said calculation only all those subscribers who
as of the Closing Date had paid their first Basic Service billing and who had
not paid their second Basic Service billing after the Closing Date.
"Encumbrances": any mortgage, lien, security interest, security agreement,
conditional sale or other title retention agreement, limitation, pledge,
option, charge, assessment, restrictive agreement, restriction, encumbrance,
adverse interest, restriction on transfer or any exception to or defect in
title or other ownership interest (including reservations, rights of way,
possibilities of reverter, encroachments, easements, rights of entry,
restrictive covenants, leases and licenses).
"Equipment": all electronic devices, trunk and distribution coaxial and optical
fiber cable, amplifiers, power supplies, conduit, vaults and pedestals,
grounding and pole hardware, subscriber's devices (including converters,
encoders, decoders, transformers behind television sets and fittings), headend
hardware (including origination, earth stations, transmission and
distribution system), test equipment, vehicles and other tangible personal
property owned, leased, used or held for use in the Company Business.
<PAGE> 4
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"Environmental Laws": any Legal Requirement relating to pollution or protection
of public health, safety or welfare or the environment, including those
relating to emissions, discharges, releases or threatened releases of Hazardous
Substances into environment (including ambient air, surface water, ground water
or land), or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport, or handling or Hazardous
Substances.
"Exercise Date": each date on which Buyer provides Stockholders with notice of
its intent to exercise all or any part(s) of the Option. Such notice(s) will be
interpreted in accordance with Section 8.8 of this Agreement.
"Exercise Price": (a) the price which Buyer must pay to acquire the Option
Shares which are the subject of the relevant option exercise notice. The Gross
Exercise Price will be calculated by multiplying U$S 1,500 times the number of
EBS's on the Exercise Date and thereafter multiplying that number by the Option
Amount. Thereafter, the Company's Liabilities on March 31, 1995 will be
multiplied by the Option Amount and such number will be subtracted from the
Gross Exercise Price to arrive at the Exercise Price. The Exercise Price will
be paid sixty percent (60%) in cash and forty percent (40%) in the form of two
year promissory notes as described in Section 1.2. deducting from the latter
the relevant percentage of Company's Liabilities. For purposes of determining
the Exercise Price, EBS will be calculated as follows:
R x C
-----
U$S 29.75
Where:
R: Total income to the Company in Argentine pesos (Argentine currency) from
cable television operations for the calendar month immediately prior to the
relevant Exercise Date. As used herein, "total income in Argentine pesos from
cable television operations" shall be calculated as provided in the definition
of "EBS" contained in this Agreement.
C: That number necessary to convert Argentine pesos into U.S. Dollars at the
average of the free market exchange rate six months before and six months after
the relevant Exercise Date.
(b) If, on the relevant Exercise Date, the Company is engaged in any line of
business other than those in which it is currently engaged the Exercise Price
for all such additional lines of business will be calculated by multiplying the
Option Amount by the Company's capital expenditures plus the Shareholders'
unexpended capital contributions attributable solely to such other lines of
<PAGE> 5
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business from the Closing Date through the Exercise Date. The amount resulting
from this procedure will be added to that foreseen in (a) above.
(c) Upon Exercise of the Option, any dividends for that calendar year on the
Option Amount of the Option Shares will be pro-rated from the Exercise Date.
The payment date of dividends (if any) will be when payment is approved by the
General Meeting of Shareholders.
"GAAP": generally accepted accounting principals in force in the Argentine
Republic as from time to time.
"Governmental Authorities": (i) The Republic of Argentina, (ii) any state,
territory or possession of the Republic of Argentina and any political
subdivision thereof (including counties, municipalities and the like), (iii)
any foreign (as to the Republic of Argentina) sovereign entity and any
political subdivision thereof or (iv) any agency, authority or instrumentality
of any of the foregoing, including any court, tribunal, department, bureau,
commission or board, including, but not limited to, the COMFER.
"Governmental Permits": all franchises, approvals, authorizations, permits,
licenses, easements, registrations, qualifications, leases, variances and
similar rights obtained from any Governmental Authority.
"Hazardous Substances": any pollutant, contaminant, chemical, industrial,
toxic, hazardous or noxious substance or waste which is regulated by law
24.051 or any other Argentine legal body (Regulation) or any Governmental
Authority, including (a) any petroleum or petroleum compounds (refined or
crude), flammable substances, explosives, radioactive materials or any other
materials or pollutants which pose a hazard or potential hazard to the Real
Property or to Persons in or about the Real Property or cause the Real Property
to be in violation of any laws, regulations or ordinances of federal, state or
applicable local governments, (b) asbestos or any asbestos-containing material
of any kind or character, (c) polychlorinated biphenyls, (d) any materials or
substances designated as "hazardous substances" pursuant to Governmental
Authorities regulation (e) "chemical substance", "new chemical substance" or
"hazardous chemical substance or mixture" pursuant to Governmental Authorities
regulation, (f) "hazardous substances" pursuant to Governmental Authorities
regulation, and (g) "hazardous waste" pursuant to Governmental Authorities
regulation.
"Legal Requirements": any statute, ordinance, code, law, rule, regulation,
order or other requirement, standard or procedure enacted, adopted or applied
by any Governmental Authority, including judicial decisions applying common or
civil law or interpreting any other Legal Requirement.
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"Liabilities": those items classified as liabilities on the Company's balance
sheet or in the Financial Statements prepared in accordance with GAAP on the
Closing Date or Balance Sheet Date, as the context requires.
"Option": Buyer's right (but not obligation) to purchase up to an additional
twenty-nine percent (29%) of the Company's Common Stock and votes. The Option
may be exercised in whole or part from time to time during its entire term. The
term of the Option will commence on the Closing Date and terminate
automatically two (2) years thereafter.
"Option Amount": that portion of the entire Option then being exercised,
expressed as a percentage up to twenty-nine percent (29%).
"Option Shares": those shares of the Company's Common Stock underlying the
Option and constituting at least twenty-nine percent (29%) of the issued and
outstanding Common Stock and votes of the Company from time to time.
"Persons": any natural person, corporation, partnership, trust, unincorporated
organization, association, limited liability company, Governmental Authority or
other entity.
"Programming Assets": those signals and/or television programmes currently
produced by the Company and listed on Exhibit 2 or other which may be added to
or replace the latter in the future.
"Real Property": all Assets consisting of realty, including appurtenances,
improvements and fixtures located on such realty, and any other interests in
real property, including fee interests (if any) in Company's offices and
headend sites and leasehold interests and easements.
"Required Consents": all franchises, licenses, approvals and consents required
under Governmental Permits, Company Contracts or otherwise for (a) Stockholders
to transfer the Shares and control of the Company Business to Buyer, (b) Buyer
to conduct the Company Business and to own, lease, use and operate the Shares,
the Company Business and Assets at the places and in the manner in which the
Company Business is conducted as of the date of this Agreement and on the
Closing Date, and (c) the Company to assume and perform the Governmental
Permits and the Company Contracts after the Closing Date.
"Shares": meaning fifty-one percent (51%) of the Common Stock and voting rights
of the Company and the TB Shares.
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"Stockholders": means Mr. Eduardo Eurnekian and the record and beneficial
owners of the Shares.
"Stockholders Agreement": meaning the document which shall govern the
relationship of the Company's stockholders after the Closing and the management
of the Company, all as set forth in Exhibit 1 of the Agreement.
"Subscriber": any Person who receives the Company's Basic Services.
"System": a complete cable television reception and distribution system
operated in the conduct of the Company Business, consisting of one or more
headends, subscriber drops and associated electronic and other equipment, and
which is, or is capable of being without modification, operated as an
independent system without interconnections to other systems. Any systems which
are interconnected or which are served in total or in part by a common headend
will be considered a single System.
ARTICLE I
PURCHASE AND SALE OF THE SHARES
SECTION 1.1. Purchase and Sale of the Shares. Upon the terms and
subject to the conditions set forth in this Agreement, at the Closing (as
defined herein and in Section 1.7 hereof), the Stockholders shall sell the
Shares to Buyer and Buyer shall purchase the Shares from the Stockholders. At
the Closing, provided that the Conditions Precedent indicated in Articles IV
and V have been met: a) the Stockholders shall deliver to Buyer such documents
representing the Shares, with duly executed stock powers attached, as may be
appropriate, in proper form for transfer, with appropriate transfer stamps, if
any, affixed and any other document or instrument which may be necessary in
order to vest Buyer with good and exclusive title to the Shares, and (b) Buyer
shall deliver cash denominated in US Dollars (or Argentine pesos if the parties
so agree) and negotiable and endorsable promissory notes, in payment of the
Base Purchase Price (as hereinafter defined) pursuant to Sections 1.2, 1.3 and
1.4.
SECTION 1.2 Base Purchase Price. In consideration of (i) the covenants,
representations and warranties made by Stockholders in this Agreement, and
(ii) the EBS's (as defined herein) which the Stockholders represent that the
Company had on March 31, 1995 (432,859), Buyer will pay to Stockholders an
amount equal to U$S 1,500 times fifty-one percent (51%) of the number of
EBS's at Closing, minus fifty-one percent (51%) of all Liabilities to be
deducted as provided in Section 1.4.1 (the "Base Purchase Price"),
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subject to adjustment as provided in Sections 1.3, and 1.4. as follows,
provided that Stockholders comply with the duties assumed under this Agreement.
The parties agree that, as of March 31, 1995, the EBS number was 432,859 and
Liabilities were Eighty Nine million Six Hundred Seven Thousand Five Hundred
Seventy Two million U.S. dollars (U$S 89,607,572). Therefore, the Base Purchase
Price will be Three Hundred Thirty One Million One Hundred Thirty Seven
Thousand One Hundred Thirty Five Dollars (U$S 331,137,135).
a) Twenty million U.S. dollars (US$ 20,000,000) was paid on December
6, 1994 by wire transfer of readily available funds to the account which the
Stockholders indicated. The Stockholders simultaneously delivered to Buyer a
letter from the notary Mr. Juan Bautista Cubas in the form attached hereto as
Exhibit 3. The Shares mentioned therein will be referred to hereinafter as the
Deposited Stock.
b) With a Base Purchase Price of U$S 331,137,135 at the Closing (as
defined herein) and provided that the Conditions Precedent indicated in
Articles IV and V have been met, Buyer shall deliver to Stockholders at Closing
(i) US$ 178,682,281 (after subtracting the US$ 20 million referred to in 1.2
(a) above) by wire transfer of readily available funds to the account which
Stockholders shall indicate, and (ii) the balance of US$ 86,754,992 (after
subtracting 51% of the assumed Liabilities of US$ 89,607,572, i.e. US$
45,699,862) will be paid in 20 consecutive monthly installments maturing on the
last day of each month, or the following working day if the last day were not a
working day, commencing on August 31, 1995. The first installment will provide
for payment of US$ 4,337,750 and all interest accrued through August 31, 1995.
The following nineteen (19) installments will provide for a payment of US$
4,337,750 (the "Promissory Notes"). Installments representing this debt will be
documented through four negotiable and endorsable Promissory Notes issued by
Buyer. Each of the four Promissory Notes shall have an original principal
amount of US$ 21,688,748. Amounts due under the said Promissory Notes will
accrue interest at the Bank of New York Prime Rate at Closing, plus an extra
one percent (1%) as from their date of issuance per annum. Said rate will be
adjusted on each yearly anniversary of the Closing Date to Bank of New York
Prime Rate which prevails on that date, plus one percent (1%) per annum. For
these purposes, the prime rate for the first year will be the Bank of New York
prime rate on Closing Date. Stockholders acknowledge that the Promissory Notes
may not be sold in a "public offering". These Promissory Notes will be
construed and interpreted under the laws of the state of New York, United
States of America. Stockholders undertake the duty of negotiating said
Promissory Notes only with a limited number of top ranked international banking
institutions located outside the United States of America. At Closing,
Stockholders will designate two bank
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accounts (one of which must be in the United States of America) to which Buyer
may remit payments under the Promissory Notes. Buyer may remit scheduled
payments to either account as it so chooses, subject to further instructions
from Stockholders as long as one of the accounts is in the United States of
America. The Promissory Notes will be issued in accordance with the terms of
this Section as pertinent. Stockholders will provide Buyer with written
instructions, before Closing, in relation to the Stockholders-beneficiaries in
whose favor the Promissory Notes must be issued, and the names of the Persons
or banking institutions authorized to receive payments. Buyer has the
unrestricted rights to pre pay the Promissory Notes without penalty, together
with accrued interest through the dates of pre-payments, anticipated payment to
which the Stockholders irrevocably agree.
Payment of these Promissory Notes are not subject to any condition and
any Liabilities of the Stockholders which may represent the obligation of
paying amounts of money to Buyer, will not authorize Buyer to carry out any act
tending to non-payment, or to restrict, delay, reduce or limit amounts which
are payable under the Promissory Notes. In case there were amounts due by the
Stockholders, and subject to the limitations foreseen in Section 8.4, the Buyer
may enforce the pledge provided for in Section 2.12.
(c) Option Grant. Upon the terms and subject to the conditions set
forth in this Agreement, at the Closing (as defined herein and in Section 1.7
hereof), the Stockholders shall grant the Buyer the Option.
1.2.2 If COMFER Approval has not been obtained by the Closing Date, or
if the conditions in Article V have not been satisfied, the Buyer may -at its
exclusive choice-either (a) terminate the Agreement, leaving in favor of
Stockholders the monies indicated in 1.2 (a) above in full and final
compensation, and the notary indicated in Exhibit 3 will proceed with the
immediate returning of the Deposited Stock to Stockholders; or (b) extend for
up to an additional 180 days the term to obtain COMFER Approval and comply with
all conditions in Article V in which case if COMFER Approval is not obtained
and all conditions are not complied with by the end of the extended period,
Stockholders will immediately return monies received pursuant to 1.2 (a) above,
except if COMFER Approval is not obtained by reasons directly attributable to
Buyer in which case the notary will return the Deposited Stock to the
Stockholders. Upon Buyer's receipt of the US$ 20 million, as in the case
foreseen in the last part of Section 1.2.2 (b), the Deposited Stock will be
immediately released to Stockholders. If COMFER approval is obtained and all
conditions in Article V are complied
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with prior to the end of such 180 day extension, parties will proceed with this
Agreement and payments pursuant to Section 1.2 (b) will be made.
1.2.3 The above notwithstanding, if final COMFER approval has not been
obtained (as provided in Section 5.11 of this Agreement and in substantially
the form agreed by Stockholders and Buyer) within one hundred eighty (180) days
of Buyer's providing Stockholders with all COMFER application information for
which Buyer is responsible, this Agreement may be terminated by the Buyer and
Stockholders will immediately refund the Base Purchase Price to Buyer plus
interest and the Shares will be returned to Stockholders.
SECTION 1.3. Adjustments to Base Purchase Price. The Base Purchase
Price will be adjusted as follows:
1.3.1 Stockholders represent that on the Closing Date, the Company
shall have 432,859 EBS's. Should there be materially fewer EBS's on the Closing
Date, Buyer, in its sole discretion may elect to (i) consummate the Closing, in
which case the cash portion of the Base Purchase Price will be reduced by an
amount equal to US$ 1,500 multiplied by fifty-one percent (51%) of the positive
difference between (a) 432,859 and (b) the number of EBS's as of the Closing
Date and must be made in conformity with the method demonstrated herein or (ii)
terminate this Agreement if there are less than 350,000 EBS in which case the
Stockholders will immediately return to Buyer all monies received under Section
1.2 a) and against said payment the Deposited Stock will be released. If on
the Closing Date, there are greater than 432,859 EBS's, the Base Purchase Price
will be increased in the same manner.
1.3.2 Stockholders represent that all Liabilities have been adequately
reported and accounted for and that there are no Liabilities, disclosed or
undisclosed, for which due provision have not been accounted if necessary.
SECTION 1.4 Determination of Adjustments. Preliminary and final
adjustments to the Base Purchase Price will be determined as follows:
1.4.1. Before Closing, Stockholders will deliver to Buyer a report
(the "Preliminary Adjustments Report"), certified as to completeness and
accuracy by Stockholders, showing in detail any, adjustments which are
calculated as of the Closing Date (or as of
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any other date agreed by the parties) and any documents substantiating the
adjustments proposed in the Preliminary Adjustments Report. The Preliminary
Adjustments Report will include a complete
(NOTE: The remainder of this page has been intentionally left blank)
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list of Subscribers, a detailed calculation of EBS and an unaudited balance
sheet as of the Balance Sheet Date certified by the Company prepared in
accordance with GAAP indicating, inter alia, all Liabilities as of the Balance
Sheet Date. Stockholders also will furnish to Buyer a bring down letter stating
that the Company has not incurred any additional liabilities or modified in any
material respect the Balance Sheet as of the Balance Sheet Date, other than in
the ordinary course of Business. The net adjustment shown in the Preliminary
Adjustments Report will be reflected as an adjustment to the Base Purchase
Price payable at Closing. Those Liabilities which arise from the Preliminary
Adjustments Report will be deducted equally (pro-rata) from the original
principal amount of Notes # 1 to # 4 during the twenty (20) installments
provided for in 1.2 (b).
1.4.2. Within 90 days after the Closing, Shareholders will deliver to
Buyer (i) a balance sheet as of the Closing Date audited by a firm reasonably
acceptable to Buyer prepared in accordance with GAAP indicating, inter alia,
all Liabilities as of Closing, and (ii) a report (the "Final Adjustments
Report"), similarly certified by Stockholders, showing in detail the final
determination of all adjustments which were not calculated as of the Closing
Date and containing any corrections to the Preliminary Adjustments Report,
together with any documents substantiating the adjustments proposed in the
Final Adjustments Report. Buyer will provide Stockholders with reasonable
access to all records which Buyer has in its possession and which are necessary
for preparing the Final Adjustments Report.
1.4.3. Within 30 days after receipt of the Final Adjustments Report
and of the balance sheet referred to in 1.4.2, Buyer will give Stockholders
written notice of Buyer's objections, if any, to the Final Adjustments Report
and with respect to Liabilities indicated in said balance sheet. If Buyer makes
any such objection, the parties will agree on the amount, if any, which is not
in dispute within 30 days after Stockholders' receipt of Buyer's notice of
objections to the Final Adjustments Report and with respect to Liabilities
indicated in said balance sheet. Fifty-one percent (51%) of any such undisputed
amount will be paid by the Stockholders within ninety (90) days after the Final
Adjustments Report. Should the Final Adjustments Report show undisputed amount
in favor of the Stockholders, Buyer shall pay said amount within ninety (90)
days after the Final Adjustments Report. Any disputed amounts will be
determined within 210 days after the Closing Date by a mutually agreed
accounting firm whose determination will be conclusive. Fifty one percent (51%)
of any Liability will be paid by the Stockholders to third parties upon
receiving a judicial claim in this sense. Stockholders and Buyer will bear
equally the
<PAGE> 13
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fees and expenses payable to such firm in connection with such determination
unless the determination of such firm results in a net decrease in the Base
Purchase Price of more than 10% thereof, in which case the fees and expenses
payable to such firm will be paid by Stockholders.
SECTION 1.5 Additional Agreements. On or before the Closing Date,
Stockholders and/or Company will, and shall perform acts in order that
licensees and/or owners not related to Stockholders or the Company, enter into
the following agreements with Buyer and/or Company, as the Buyer may determine
in relation to the parties to the agreement:
(i) A mutually acceptable Irrevocable Right of First Refusal ("Right
of First Refusal") granting Buyer or its designees a Right of First Refusal to
purchase all or part of the Programming Assets.
(ii) Programming supply agreements for the Programming Assets as
provided herein will be executed for a 2 year period wih right of first
negotiation in favor of Buyer. Said agreements will grant Buyer
clause-by-clause "most favored nations" rights including lowest market prices,
except in those cases where programming is provided for free.
(iii) A license agreement for the name "Cablevision" and trademarks,
service, marks, tradenames, dressings in every shape size and colors related to
the Company Business which are currently used in the Company Business
including, but not limited to, Cablevision, CV and CVN; and subject to the
programming supply agreement to be agreed upon above.
(iv) Agreement to supply to Company all those programs currently
provided to Company by third parties in the terms of a final agreement to be
executed.
(v) An agreement on the Assets which will be taken out of the Company
comprehensive of all ownership interests on Real Property, the shares of
Radiodifusora El Carmen S.A. (Canal 2), the assets related to the Programming
Assets and the production, transmittal and commercialization, including without
limitation, the assets and Persons related to the satellite commercialization
of the Programming Assets, and all those credits caused before Closing. Those
which should have been excluded under this Section, but which were not excluded
in due course, will be handed over to the Stockholders insofar they have been
credited within five (5) years following the Closing Date. Buyer also
acknowledges in favor of Stockholders the eventual claims against COMFER. Those
credits related to Subscribers' obligations will not be excluded. The
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excluded receivables may be compensated under Section 1.4.3.. The exclusion of
receivables under this agreement will not affect the normal development of the
Company Business.
(vi) The Stockholders Agreement according to the wording contained in
Exhibit 1.
(vii) The form of the Promissory Notes and of the pledge agreements
foreseen under this Agreement.
1.5.1 Authority to Act and Further Indemnity. Each party agrees that
neither it nor any of its directors, in their capacity as directors of the
Company will act beyond the scope of their authority. Specifically, none of
such directors may in any way commit the Company in excess of U$S 100,000
without: (a) the express prior approval of the Company's Board of Directors or
and/or General Shareholders Meeting in accordance with the Company's Board
and/or (b) General Shareholders Meeting-approved budget for the relevant year.
If any such director acts outside the scope of his authority, he will
immediately be removed from all his positions with the Company, and the party
with whom he is affiliated will indemnify and hold harmless the Company for the
consequences of his actions. Such obligation to indemnify and hold harmless
will not be subject to any limitation imposed on either party by this
Agreement, including those imposed by Section 8.4..
SECTION 1.6 Late Payment, Default. The delay in the payment of the
balance due pursuant to Section 1.2 b) will occur automatically, with the
expiration of the agreed dates, without need of any judicial or out-of-court
requirement, giving way to punitive and compensatory interests at a daily rate
equivalent to a rate of 15% per annum, during which payment is due and until
the date of payment. Default in paying two consecutive installments, or six
late payments, whether consecutive or not, will entitle the Stockholders to:
(i) demand fulfillment of the agreement in which case all granted financing
will be considered due and the Stockholders may enforce the total pending
balance considering it as due, together with the corresponding compensatory and
punitive interests. In order to enforce the rights provided for above, the
Stockholders must have previously demanded that Buyer fully satisfy his
uncomplied obligation, including payment of capital and Buyer must not have
satisfied his uncomplied obligation. The parties agree that this benefit
granted to Buyer prior demand for compliance- will be one and only during the
whole lifetime of the Agreement. The Buyer can not assign any rights as long as
it is in default of payment.
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SECTION 1.6.1 Guarantees. As guarantee of payment of balances due,
Buyer will execute a pledge agreement in favor of the Stockholders, affecting
all the Shares, and any Shares which may replace them, along the following
guidelines (i) the pledge will be registered at the Inspeccion General de
Personas Juridicas and other pertinent registers, together with the
registration of the transfer of the Shares in favor of the Buyer; (ii) the
guarantee will survive until the total cancellation of the balance due,
interests and/or eventual punitive interests if applicable, (iii) all the
provisions of the pledge agreement will be according to the requirements
established in the Argentine Broadcasting Law and/or to those which the COMFER
may suggest; (iv) the Company will duly acknowledge and register the pledge in
the pertinent corporate books; (v) every capital increase decided by the
Company will imply the obligation of the Buyer or assignees to pledge in favor
of the Stockholders 51% of the shares subscribed for by Buyer or assignees as a
result of the corresponding capital increase; (vi) the parties agree that the
procedure foreseen in article 3223 of the Argentine Civil Code and/or in the
Commercial Code of the Argentine Republic can be indistinctly used at the
option of the Stockholders; (vii) in case of judicial enforcement, the
Stockholders will appoint all the appraisers and auctioneers which may be
necessary, except in case they take the option of the auctioning procedure
under article 585 of the Commercial Code in which case the parties will agree
beforehand to the appointment of a mutually agreeable appraiser among Price
Waterhouse, Arthur Anderson, Deloitte Haskins & Sells and Citibank (Buenos
Aires branch) and, should an agreement not be possible in this regard, the
option among these firms/institutions will be made by the Stockholders; (viii)
use of other standard clauses which arise from the form of the Registro
Nacional de Creditos Prendarios (Act Nr 12.962); (ix) all registration,
deregistration and cancellation costs will be faced by Buyer, same as all
enforcement costs (unless otherwise determined by a court resolution); and (x)
the pledge will continue in force until full cancellation of the balance due.
The parties will appoint the administrator of the pledge ("the Agent")
in the same way as provided in the preceding paragraph, to whom the following
irrevocable powers of attorney will be granted at the Closing: (i) by the
Buyer: a) so that the Agent may proceed with handing over of the Shares,
issuing receipts for monies received and, payment of the same in case the
Stockholders elect the procedure foreseen in article 3223 of the Argentine
Civil Code (in which case the Notes foreseen in Section 1.2 b) can be used for
payment) and, b) in case the Agreement is rescinded: in order that the Agent
transfer the Shares to the Stockholders in accordance with legal provisions
in force in Argentina; (ii) the Stockholders: in order that the Agent proceeds
with the same empowerment for the
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case of enforcement of the pledge provided for herein and in Section 2.12.
At Closing the Stockholders will execute a pledge agreement in favor
of the Buyer, affecting the Stockholders 49% of its interest in the Company
along the guidelines established in 1.6.1., in order secure all Liabilities,
disclosed or undisclosed, caused before Closing, and subject to the limitation
provided in Section 8.4., enforceable to the extent of the amounts paid by the
Company.
1.6.2 Mutual Pledge. Each party agrees to pledge all its shares of the
Company's Common Stock to secure its obligations under Section 1.5.1 of this
Agreement. The pledge with respect to such obligation will expire automatically
two (2) years after the Closing Date or -with respect to the Buyer only- when
Buyer has paid in full the Promissory Notes.
SECTION 1.7 Closing. Unless this Agreement shall have been terminated
pursuant to Section 7.1 hereof, the closing of the purchase and sale of the
Shares (the "Closing") shall take place at the offices of Baker & Botts, 885
Third Avenue Suite 1900, New York, New York at 10 a.m. local time on the
Closing Date or will be conducted by mail, or at any other place, time or date
as the Buyer and the Stockholders may mutually establish (such time and date
being referred to herein as the "Closing Date").
SECTION 1.8 Deliveries by Stockholders. Stockholders covenant and
agree to deliver items and documents to Buyer as follows:
1.8.1 Stockholders have previously furnished to Buyer or at least
three (3) days prior to Closing Date, or such earlier dated as provided herein,
will furnish, without further demand, accurate and complete copies of all
documents herein after specified:
(a) a certified copy of the Articles of Incorporation of the Company,
as amended, and of the Company's By-laws.
(b) minutes and written actions containing an accurate record of
proceedings of and actions by the shareholders, directors, and committes of
directors of the Company from its inception.
(c) copies of the shareholders book of the Company which accurately
reflect all issuances, reissuances, cancellations and transfers of Company
stock which adequately reflect all ownership, cancellations, capital increase
and transfers of Company interest.
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(d) copies of all Governmental Permits for the on going Company
Business.
(e) copies of Company Contracts and Title Documents.
(f) copies of any title documents or Company Contracts representing
intangible property.
(g) copies of the insurance policies presently in force.
(h) copies of any employee incentive, bonus or benefit plans or
agreements.
(i) the Financial Statements and the Balance Sheet described in
Sections 1.4.1 and 2.10 of the Agreement.
(j) copies of all tax returns described in Section 2.14 of the
Agreement that have been filed with any Governmental Authority within the seven
(7) years preceding the date hereof and any additional tax returns for tax
years that have not been agreed as final by the applicable Governmental
Authority. Copies of all tax returns and related documents filed in connection
with the tax amnesty regulated through the Executive's Decrees 314/95 and
316/95. Copies of any tax returns proposed to be filed by or on behalf of the
Company, with any Governmental Authority prior to the Closing shall be
delivered to Buyer at least 3 days before the filing thereof for Buyer's
review.
(k) copies of such other documents and items as Buyer may reasonably
request.
1.8.2 AT LEAST THREE (3) DAYS PRIOR TO CLOSING, Stockholders shall
cause the Company to furnish to Buyer documents which accurately show the
boundaries of all Real Property as owned or leased by the Company together with
any and all improvements, rights of way, easements, roads and such other
features as Buyer shall reasonably specify.
1.8.3 AT LEAST THREE (3) DAYS PRIOR TO CLOSING, Stockholders shall
deliver to Buyer the Financial Statements.
1.8.4 AT CLOSING, Stockholders shall also cause the Company to procure
and provide to Buyer a report dated within ten (10) days prior to the Closing
Date, issued by Real Estate Registry or by a notary or an officer of the
Company satisfactory to Buyer, to the effect that (i) none of the Assets is
subject to any recorded lien, including any lien for federal, state or local
taxes or
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assessments, and (ii) no suits or judgments have been filed against the Company
except for those indicated in the Balance Sheet as of the Closing Date or in
Exhibit 5 as may correspond.
1.8.5 AT THE CLOSING, provided that the Conditions Precedent indicated
in Articles IV and V have been met, Stockholders will, with duly and fully
executed instruments, certificates, documents and opinions, deliver to Buyer,
or cause Company to deliver to Buyer:
(a) The documents evidencing the Shares, duly endorsed, in blank if
appropriate, and/or all necessary documentary or transfer tax stamps affixed
thereto together with such other documents or instruments as Buyer may request,
in order that Buyer be vested with good and exclusive title to the Shares.
(b) To the extent not previously delivered, the minute books,
shareholders books of the Company -if applicable- and such other papers,
evidence of title or interest, books, records, files, correspondence,
memoranda and other documents of the Company, all as Buyer may request prior to
the Closing.
(c) A bring down letter from the Stockholders indicating that all
representations and warranties made under this Agreement are true and valid as
of the Closing Date.
(d) The written resignations, dated the Closing Date, of all of the
directors or managers of the Company (except those managers which the parties
have agreed will remain employees of the Company), and election of new Board of
up to six (6) members.
(e) Employment Agreements, dated the Closing Date, executed by the
Company and mutually agreed key employees.
(f) Duly certified copies of resolutions of the Board of Directors or
similar governing body of, and, if required by applicable law, the Stockholders
or other holders of ownership interest in each Stockholder that is not a
natural person, authorizing the execution, delivery and performance of this
Agreement by such Stockholder which resolutions shall be in full force an
effect at and as of the Closing.
(g) Documentary proof and counsel opinion reasonably acceptable to
Buyer that: (i) The Company has timely obtained or has filed complete and
timely applications for all authorizations needed to carry all signals being
carried and all authorizations needed to utilize the frequencies on which these
signals are carried; (ii) Except with respect to general rulemakings and
similar matters relating generally to the Company activity, there
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is no legal action or governmental proceeding pending or, to such counsel's
best knowledge after due inquiry, any investigation pending or proceeding
threatened (nor any basis therefor) for the purpose of modifying, revoking,
terminating, suspending, canceling or reforming any of the Company's
certificates of compliance or licenses or which might have any other adverse
effect upon, or cause disruption to, the Company Business; (iii) that the
Company is in good standing with and has appropriate authority from the COMFER
in order to carry on the Company Business as conducted as of the date of this
Agreement and the Closing; (iv) that Stockholders have the power and capacity
to sell the Shares so as to vest good and marketable title to the same, (v)
COMFER Approval has been obtained in relation to the acquisition of Televisora
Belgrano S.A. by Cablevision S.A., (vi) presentations have been made in timely
fashion and form regarding the tax amnesty governed by Decrees number 314/95
and 316/95, (vii) that under their understanding COMFER will not pose
objections to the pledge provided for in Section 1.6.1 above, and (viii) such
other matters as Buyer may reasonably request.
(h) All blueprints, schematics, drawings, diagrams, maps, system
design bill of material, engineering and technical data, used by the Company in
connection with the Assets and the Company Business, unless Buyer shall direct
in writing that the same or part thereof be delivered to Buyer elsewhere.
(i) A certificate signed by the Secretary (or other person having and
exercising equivalent authority) of each Stockholder that is not a natural
person, certifying to Buyer the incumbency of such Stockholder officers (or
persons having and exercising equivalent authority) from the date hereof to the
Closing Date, and bearing the authentic signatures of all such officers (or
other persons) who shall have executed this Agreement, or any of the other
documents required or contemplated by this Agreement, prior to or at the
Closing.
(j) A long-form certificate of good standing for the Company dated not
more than five (5) days prior to the Closing Date, a certificate of tax good
standing for the Company dated not more than five (5) days prior to the Closing
Date and a "bring-down" tax good standing telegram for the Company dated the
Closing Date, in each case from the Company syndic or the Chairman of the board
of directors.
(k) And a bring down letter dated the Closing Date stating that
between the Balance Sheet Date and the Date of Closing, there have not been
modifications to the Financial Statements other than those attributable to the
evolution of the ordinary Company Business nor have there been distribution or
payings of Company dividends other than those paid in kind or cash as provided
in Sec-
<PAGE> 20
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tion 2.11 herein.
(1) Such documents and instruments as may be necessary or as Buyer may
request in order to change the authorized signatures for all bank accounts, and
the persons authorized to have access of the Company or otherwise in order to
vest in Buyer exclusive control over and possession of such accounts and safety
deposit boxes and the funds and other property deposited therein.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF THE STOCKHOLDERS
Stockholders and Company (where noted) represent and warrant to Buyer,
as of December 6, 1994 and as of the Closing, as follows:
SECTION 2.1. Organization and Qualification. Company is a corporation
duly organized, validly existing and in good standing under the laws of
Argentina and has all requisite corporate power and authority to own, lease and
use its Assets as they are currently owned, leased and used and to conduct the
Company Business as it is currently conducted. The Company is duly qualified or
licensed to do business and is in good standing under the laws of each
jurisdiction in which the character of the Company Business makes such
qualification necessary, except any such jurisdiction where the failure to be
so qualified or licensed and in good standing would not have a material adverse
effect on Company or on the validity, binding effect or enforceability of this
Agreement.
SECTION 2.2. Good title. Stockholders have good, valid, marketable and
exclusive title to the Shares free and clear of any liens, encumbrances, rights
of first refusal (except as agreed herein), pledges or claims, with full right
and lawful authority to transfer to Buyer the Shares. There are no outstanding
options, warrants or any other preemptive rights or commitments of any kind for
third parties to acquire or become beneficiary of the Shares or the Common
Stock in any way. All of the Shares have been duly authorized and validly
issued and have been fully paid for and there are no pending increases of
capital nor convertible securities. Should full payment of any Shares or the
Common Stock be pending, the same must be canceled (either through the
canceling of that portion of the capital increase not paid in, or through
payment of the capital increase before Closing). Spousal consent provided for
in article 1277 of the Argentine Civil Code has been granted by the spouse of
each Stockholder when necessary.
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SECTION 2.3. Authority and Validity. Company and Stockholders have
authority to execute and deliver, to perform its obligations under, and to
consummate the transactions contemplated by this Agreement. The execution and
delivery by Stockholders and Company and the performance by Stockholders and
Company of their obligation hereunder, and the consummation by Stockholders and
Company of the transactions contemplated by this Agreement have been duly
authorized by all requisite corporate and other appropriate action of
Stockholders and Company. This Agreement has been duly executed and delivered
by Stockholders and Company and is the valid and binding obligation of
Stockholders and Company, enforceable against Stockholders and Company in
accordance with its terms, except insofar as enforceability may be affected by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
now or hereafter in effect affecting creditor's rights generally or by
principles governing the availability of equitable remedies.
SECTION 2.4. No Breach or Violation. Subject to obtaining the COMFER
Approval and other Required Consents, the execution, delivery and performance
of this Agreement by Stockholders and Company will not: (a) violate any
provision of the charter or bylaws of the Company; (b) constitute a material
violation of any Legal Requirement; (c) require any consent, approval or
authorization of, or any filing with or notice to, any Person; or (d) (i)
violate, conflict with or constitute a breach of or default under, (ii) permit
or result in the termination, suspension or modification of, (iii) result in
the acceleration of (or give any Person the right to accelerate) the
performance of the Company under, or (iv) result in the creation or imposition
of any Encumbrance under, any Company Contract or any other instrument
evidencing any of the Assets or any instrument or other agreement to which
Company is a party or by which Company, Company Business or any of its Assets
is bound or affected, except for purposes of this clause (d) such violations,
conflicts, breaches, defaults, terminations, suspensions, modifications, and
accelerations as would not, individually or in the aggregate, have a material
adverse effect on any System, the Company Business or the Company.
SECTION 2.5. Assets. Company has exclusive, good and marketable title
to (or, in the case of Assets that are leased, valid leasehold interests in)
the Assets (other than Real Property, as to which the representations and
warranties in Section 2.6 apply). The Assets are free and clear of all
Encumbrances of any kind or nature, except (a) restrictions stated in the
Governmental Permits and (b) Encumbrances disclosed in this Agreement. Except
as set forth on Exhibit 6, none of the Equipment is leased by Company from any
other Person. The Assets will remain in the Company and are all the assets
necessary to permit Buyer to conduct
<PAGE> 22
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the Company Business substantially as it is being conducted on the date of this
Agreement in compliance with all Legal Requirements. The cash remaining in the
Company on the Closing Date must be sufficient to pay the Company's cash
obligations through at least May 15, 1995. Such obligations will be paid in the
same manner as they were paid prior to the Closing Date. If, after the Closing
Date and prior to May 15, 1995, the Company has not generated sufficient
revenues to pay such obligations, the Stockholders will pay them. All the
Equipment is in good operating condition and repair, ordinary wear and tear
excepted and is suitable and adequate for continued use in the manner in which
it is presently used. No Stockholder or any affiliate of Stockholder has been
granted or has applied for a cable television franchise in any area currently
served by the Company Business, except for Saprotel S.R.L. corporation, which
in the course of this year has not increased its number of subscribers, and
will not in the future.
SECTION 2.6. Real Property.
2.6.1. All the Assets consisting of Real Property interests are
described on Exhibit 4. Company has valid leasehold interests in Real Property
leased by Company and, with respect to other Real Property not owned or leased
by Company, Company has the valid and enforceable right to use all other Real
Property pursuant to easements, licenses, rights-of-way or other rights.
2.6.2. The documents delivered by Company or Stockholders to Buyer as
evidence of each lease of Real Property constitute the entire agreement with
the landlord in question, except for the agreements indicated under Exhibit 4
as subject to renegotiation which will be renegotiated in order to have them
meet current practice and market prices for which purposes the parties may
request the appraisal of three respectable local real estate brokers. There are
no leases or other agreements, oral or written, granting to any Person other
than Company the right to occupy or use any Real Property. All easements,
rights-of-way and other rights appurtenant to, or which are necessary for the
Company's current use of, any Real Property are valid and in full force and
effect, and the Company has not received any notice with respect to the
termination or breach of any of those rights. Each parcel of Real Property, any
improvements constructed thereon and their current use conform to (a) all
applicable Legal Requirements, including zoning requirements, and (b) all
restrictive covenants, if any, or other Encumbrances affecting all or part of
such parcel.
SECTION 2.7. Environmental Matters.
<PAGE> 23
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2.7.1. The Real Property currently complies with and, to Stockholders'
best knowledge, has previously been operated in compliance with, all
Environmental Laws. Company has not generated, released, stored, used, treated,
handled, discharged or disposed of any Hazardous Substances at, on, under, in
or about, or in any other manner affecting any Real Property, transported any
Hazardous Substances to or from any Real Property or discharged any Hazardous
Substances from any Real Property into any body of water, directly or
indirectly, and Stockholders have no notice that any other present or previous
owner, tenant, occupant or user of any Real Property or any other Person has
committed or suffered any of the foregoing. To Stockholders's best knowledge,
no release of Hazardous Substances outside the Real Property has entered or
threatens to enter any Real Property, nor is there any pending or threatened
claim based on Environmental Laws which arises from any condition of the land
surrounding any Real Property. No claim or investigation based on Environmental
Laws which relates to any Real Property or any operations on it (a) has been
asserted or conducted in the past or is currently pending against or with
respect to Company or, to the Stockholders' best knowledge, any other Person, or
(b) to the Stockholders' best knowledge, is threatened or contemplated.
2.7.2. To Stockholders's best knowledge, (a) no underground storage
tanks are currently or have been located on any Real Property, (b) no Real
Property has been used at any time as a gasoline service station or any other
facility for storing, pumping, dispensing or producing gasoline or any other
petroleum products or wastes and (c) no building or other structure on any Real
Property contains asbestos. There are no incinerators, septic tanks or
cesspools on the Real Property and all waste is discharged into a public
sanitary sewer system.
2.7.3. Stockholders have caused the Company to provide Buyer with
complete and correct copies of (a) all studies, reports, surveys or other
materials in the Company's possession or to which the Company has access
relating to the presence or alleged presence of Hazardous Substances at, on or
affecting the Real Property, (b) all notices or other materials in the
Company's possession or to which the Company has access that were received from
any Governmental Authority having the power to administer or enforce any
Environmental Laws relating to current or past ownership, use or operation of
the Real Property or activities at the Real Property and (c) all materials in
the Company's possession or to which the company has access relating to any
claim, allegation or action by any private third party under and Environmental
Law.
<PAGE> 24
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SECTION 2.8. Compliance with Law: Governmental Permits.
2.8.1. The ownership, leasing and use of the Assets as they are
currently owned, leased and used, and the conduct of the Company Business as it
is currently conducted do not violate any Legal Requirement, which violation,
individually or in the aggregate, would have a material adverse effect on the
System, the Company Business or the Company. The Company has received no notice
claiming a violation by Company or the Company Business of any Legal
Requirement applicable to Company or the Company Business as it is currently
conducted and to Stockholder's and Company's best knowledge, there is no basis
for any claim that such a violation exists. Shareholders and Company have
complied fully with the laws of the Argentine Republic and United States of
America Foreign Corrupt Practices Act.
2.8.2. Complete and correct copies of the Governmental Permits have
been delivered by Company to Buyer. The Governmental Permits are currently in
full force and effect, are not in default, and are valid under all applicable
Legal Requirements according to their terms. There is no legal action,
governmental proceeding or investigation, pending or threatened, to terminate,
suspend or modify any Governmental Permit and Company is in compliance with the
terms and conditions of all Governmental Permits and with other applicable
requirements of all Governmental Authorities relating to the Governmental
Permits, including all requirements for notification, filing, reporting,
posting and maintenance of logs and records.
2.8.3. Without limiting the generality of the foregoing: (a) the
operation of Company Business and each System has been, and is, in compliance
with the rules and regulations of the Argentine Republic, (b) Company has made
all filings required to be made with the Governmental Authorities; (c) Company
has provided all notices to subscribers and maintained all public files
required under Argentine Law; (d) each System is in compliance with all must
carry requirements and has received all necessary retransmission consents; (e)
each System is in compliance with all signal leakage criteria prescribed by the
Argentine regulations; and (f) the Company has complete authorizations to carry
all signals it carries and all authorizations needed to utilize the frequency
on which these signals are carried.
SECTION 2.9. Patents, Trademarks and Copyrights. Company has timely
and accurately made all requisite filings and payments with the Register of
Copyrights and is otherwise in compliance with
<PAGE> 25
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all applicable rules and regulations of the Copyright Office. Company has
delivered to Buyer complete and correct copies of all current reports and
filings, and all reports and filings for the past five years, made or filed
pursuant to copyright rules and regulations with respect to the Company
Business. Company has collected and paid to the appropriate Governmental
Authority all withholding taxes payable on fees and/or royalties paid to
nonresident suppliers and licensors. Company does not possess any patent,
patent right, trademark or copyright except for licenses respecting program
material and obligations applicable to cable television systems generally. The
operation of the Company Business as currently conducted does not violate or
infringe upon the rights of any Person in any copyright, trademark, service
mark, patent, license, trade secret or the like.
SECTION 2.10. Financial Statements. Stockholders will and shall cause
the Company to cooperate fully with Buyer in the production of financial
statements, and with the production of all financial statements and related
information required in connection with Buyer's reporting obligations to the
SEC.
SECTION 2.11 Since the date of the most recent balance sheet included
in the financial statements (i) the Company Business has been operated only in
the ordinary course, (ii) Company has not sold or disposed of any Assets other
than in the ordinary course of business, except for payment of dividends
necessary to transfer the Programming Assets, Real Property, assets affected to
the programming and the shares of Radiodifusora El Carmen S.A. (Canal 2) and
the credits excluded under Section 1.5 (v), out of the Company, (iii) there has
been no material adverse change in, and no event has occurred which is likely,
individually or in the aggregate, to result in any material adverse change in,
the business, operations, Assets, prospects or condition (financial or
otherwise) of the Company Business, other than changes affecting the cable
television industry generally.
SECTION 2.12 Stockholders represent that all Liabilities have been
adequately reported and accounted for and that there are no Liabilities,
disclosed or undisclosed, for which due provision have not been accounted, if
pertinent. Should there be materially greater Liabilities upon the Company on
the Closing Date, Buyer in its sole discretion may elect to terminate this
Agreement or to consummate the Closing. If Buyer elects to consummate the
Closing, the cash portion of the Base Purchase Price will be reduced in an
amount equal to 51% of said Liability with the agreement of the Stockholders,
or the Stockholders will otherwise guarantee said liability with
a pledge over 49% of the shares of the Stockholders
<PAGE> 26
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in the same manner as that provided for in Section 1.6.1 as applicable.
SECTION 2.13. Legal Proceedings. Except as set forth on Exhibit 5
there is no judgment or order outstanding, or any action, suit, complaint,
proceeding or investigation by or before any Governmental Authority or any
arbitration pending, or to Stockholders' best knowledge, threatened, involving
or affecting all or any part of the Company Business or Company.
SECTION 2.14. Tax Returns: Other Reports. Company has duly and timely
filed in proper form all income, franchise, sales, use, property, excise,
payroll and other tax returns and all other reports (whether or not relating to
taxes) required to be filed with the appropriate Governmental Authority. All
taxes, fees and assessments of whatever nature due and payable by Company have
been paid, except such amounts as are being contested diligently and in good
faith and are not in the aggregate material. Company has filed all tax returns
and other documents necessary and is eligible to receive the tax treatment it
has requested for the tax amnesty governed through Executive Decrees Nr 314/95
and 316/95. There are no outstanding agreements or waivers extending the
statutory period of limitations applicable to any federal, state, local or
foreign income tax return for any period.
SECTION 2.15. Employment Matters.
2.15.1. On or before 15 December 1994 Stockholders will cause Company
to deliver to Buyer a complete and correct list of names and positions of all
employees of Company engaged in the Company Business and their current hourly
wages or monthly salaries and other compensation. Company has complied in all
respects with all Legal Requirements relating to the employment of labor,
continuation coverage requirements with respect to group health plans, and
those relating to wages, hours, collective bargaining, unemployment
compensation, worker's compensation, equal employment opportunity and benefit
plans, age and disability discrimination, immigration control and the payment
and withholding of taxes.
2.15.2. Except as provided in Exhibit 8 Company is not bound by any
contract with any labor organization, and Company has not recognized or agreed
to recognize and is not required to recognize any union or other collective
bargaining unit. No union or other collective bargaining unit been certified as
representing any of its employees, nor has Company received any requests from
any party
<PAGE> 27
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for recognition as a representative of employees for collective bargaining
purposes. To Company's best knowledge, its employees are not engaged in
organizing activity with respect to any labor organization. Company has no
employment agreement of any kind, oral or written, express or implied, that
would require Buyer to employ any Person after the Closing Date.
SECTION 2.16. EBS Numbers. As of the Closing Date, the Company
Business will have no fewer than 350,000 EBS's.
SECTION 2.17. Finders and Brokers. Stockholders have not employed any
financial advisor, broker or finder or incurred any liability for any financial
advisory, brokerage, finder's or similar fee or commission in connection with
the transactions contemplated by this Agreement for which Buyer could be
liable.
SECTION 2.18. Disclosure. No representation or warranty by
Stockholders in this Agreement or in any schedule or Exhibit to this Agreement,
or any statement, list or certificate furnished or to be furnished by
Stockholders or Company pursuant to this Agreement, contains or will contain
any untrue statement or material fact, or omits or will omit to state a
material fact required to be stated therein or necessary to make the statements
contained therein not misleading in light of the circumstances in which made.
Without limiting the generality of the foregoing, the information set forth
herein concerning the Company Business is accurate and complete in all material
respects.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to the Stockholders that:
SECTION 3.1 Organization, Power and Authority.
Buyer is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware, United States of America, and has the
sufficient legal power and authority to own or lease and to operate its
properties and to carry on its business as now being conducted.
SECTION 3.2 Authorization. Buyer has the corporate power and
<PAGE> 28
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authority to execute and deliver this Agreement, to consummate the transactions
contemplated hereby and to perform its obligations under this Agreement, at its
sole discretion. This Agreement, upon its execution and delivery by Buyer
(assuming the due authorization, execution and delivery hereof by the
Stockholders), will constitute the legal, valid and binding obligation of
Buyer, enforceable against Buyer in accordance with its terms, and the rules of
law of the country and/or State to which this Agreement is submitted as per
Section 8.14 hereunder.
SECTION 3.3 No Conflict or Violation. Neither the execution and
delivery of this Agreement by Buyer, nor the consummation of the transactions
contemplated hereby, will (a) violate any provision of the Articles of
Incorporation of Buyer, (b) violate, conflict with or result in the breach or
termination of, or otherwise give any other contracting party the right to
terminate, or constitute a default under the terms of, any mortgage, bond,
indenture or material agreement to which Buyer is a party or by which Buyer or
any of its property or assets may be bound or materially affected, or (c)
violate any judgment, order, injunction, decree or award of any court,
administrative agency or governmental body against, or binding upon, Buyer or
upon the property or business of Buyer.
SECTION 3.4 Brokers' Fees. No broker, finder or similar agent has been
employed by or on behalf of Buyer in connection with this Agreement or the
transactions contemplated hereby, and no person or entity with which Buyer has
had any dealings or communications of any kind is entitled to any brokerage
commission, finder's fee or any similar compensation in connection with this
Agreement or the transactions contemplated hereby.
ARTICLE IV
CONDITIONS TO THE OBLIGATIONS
OF THE STOCKHOLDERS
The obligations of each of the Stockholders to consummate the
transactions contemplated by this Agreement are subject to the fulfillment, on
or before the Closing Date, of the following conditions, subject to the right
of the Majority Stockholders (as defined in Section 7.1 hereof) to waive any
such condition.
SECTION 4.1 Representations and Warranties True. All of the
Representations and Warranties of Buyer contained in this Agreement shall be
true and correct in all material respects on and as of the
<PAGE> 29
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Closing Date as if made on and as of the Closing Date.
SECTION 4.2 Agreements Performed. Buyer shall have performed, in all
material respects, all agreements required by this Agreement to be performed by
Buyer prior to or on the Closing Date.
SECTION 4.3 No Actions, Suits or Proceedings. No preliminary or
permanent injunction or other order issued by any federal or state court of
competent jurisdiction preventing consummation of the sale of any or all of the
Shares to Buyer shall be in effect.
ARTICLE V
CONDITIONS TO THE OBLIGATIONS OF BUYER
The obligations of Buyer to consummate the transactions contemplated
by this Agreement, are subject to the fulfillment, on or before the Closing
Date, of the following conditions (subject to the right of Buyer to waive any
and/or all such condition in full, or partially).
SECTION 5.1 Representations and Warranties True. All of the
representations and warranties of the Company and each Stockholder contained in
this Agreement shall be true and correct in all material respects on and as of
the Closing Date as if made on and as of the Closing Date.
SECTION 5.2 Agreement Performed. Each Stockholder and the Company
shall have performed, in all material respects, all agreements and covenants
required by this Agreement to be performed by such Stockholder and the Company
prior to or on the Closing Date.
SECTION 5.3 No Actions. Suits or Proceedings. No preliminary or
permanent injunction or other order issued by any Governmental Authority or any
federal or state court of competent jurisdiction preventing consummation of the
sale of any or all of the Shares to Buyer shall be in effect.
SECTION 5.4 Stockholders' and Officer's Certificates. (a) Buyer shall
have been furnished with certificates executed by each of the Stockholders,
dated the Closing Date, representing and
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certifying (i) with respect to such Stockholder that the conditions set forth
in this Article V have been fulfilled at or prior to the Closing Date, and (ii)
that such Stockholder is not in material default under any provision of this
Agreement.
(b) Buyer shall have been furnished with a certificate signed by an
appropriate officer of the Company, but without any personal liability to such
officer, regarding the Company's Business and financial condition.
SECTION 5.5 Required Consents. All Required Consents (including but
not limited to consents to change of control of the Company), have been
obtained on or before the Closing.
SECTION 5.6 Contracts. All Company Contracts are in full force and
effect and the Company has not incurred in any default under the same.
SECTION 5.7 [Reserved]
SECTION 5.8 Assets and Employees. The parties will have agreed which
assets and which employees, managers and executives will remain in the Company
after Closing.
SECTION 5.9 Agreement Not To Hire. Each of the Stockholders will have
entered into mutually acceptable agreements not to hire employees of the
Company after Closing (as provided herein).
SECTION 5.10 "Cablevision" License and Programming Assets. Mutually
acceptable agreements will have been reached with respect to: (i) Company's
continued use of the name "Cablevision", "CV", "CVN" and all associated names
and trade and service marks and (ii) the obligation of the Company to execute
agreements regarding the Programming Assets at cost or at the lowest existing
price for third parties with inclusion of "most favored nation" provision,
except when programming is provided free of charge.
SECTION 5.11 (a) COMFER: All necessary COMFER Approvals required in
connection with this Agreement (including COMFER's
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approval of Buyers and the Company's acquisition of Televisora Belgrano), to
the conditions precedent provided for in this Article and to any other duty or
obligation provided for herein have been obtained. Such approvals will not
impose any material change to the Company's license nor will they impose
conditions that do not permit the Company to operate substantially as it did
prior to Closing. Any COMFER Approval in favor of Buyer prior to Closing Date
will not grant any right nor may any right be invoked on the basis of said
approval, until the Buyer has complied with all its obligations at Closing. In
case COMFER Approval has been obtained prior to Closing and this Agreement has
been terminated, Buyer will carry out all acts, and sign all documents, which
may be necessary to cancel the COMFER Approval.
(b) The COMFER will have issued a letter addressed to Buyer indicating
that, as of the Closing Date, the Company is current in all its obligation to
the COMFER (financial and otherwise), including all fees and penalties, or
Stockholders will provide Buyer with a letter by Eduardo Eurnekian indicating
that he will unconditionally undertake payment of such obligations when and if
due after any fiscal resolution of the issue.
SECTION 5.12 Additional Agreements. Stockholders must have caused
Company and/or third parties to enter into the additional Agreements
established in Section 1.5, which include, but is not limited to, the Right of
First Refusal.
SECTION 5.13 Due diligence. All aspects related with a broad due
diligence of the Company must have been satisfactorily completed by the Buyer
or its representatives.
SECTION 5.14 Reports for SEC. Financial Statements be prepared by
Buyer, at its cost, in order that Buyer and its Affiliates may file the same to
satisfy (i) its undertaking under Section 512(a) of Regulation S-K to keep the
prospectuses contained in certain presently effective registration statements
current, (ii) the requirements of any forms for the registration of securities
under the Securities Act which Buyer may hereafter use to register any of its
securities, and (iii) its obligation to file periodic and current reports under
the Exchange Act, (iv) the requirements of any proxy statement under the
Securities Act, and (v) such other rules of the Securities and Exchange
Commission of the United States of America which Buyer may deem applicable.
Stockholders shall fully cooperate with the preparation of these reports which
shall be made under generally accepted accounting principals of the United
States of America.
<PAGE> 32
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SECTION 5.15 Tax Amnesty. Company shall have made all filings and is
eligible to receive the tax treatment it has requested in the tax amnesty
governed through Executive Decrees 314/95 and 316/95 and will provide proof of
such filings and eligibility satisfactory to Buyer.
ARTICLE VI
COVENANTS
Buyer and the Stockholders hereby covenant and agree as of 6 December
1994 and the Closing Date as follows:
SECTION 6.1 Access to PremiSes and Records. Between December 6, 1994 and
the Closing Date, Stockholders will give Buyer and its representatives full
access at reasonable times to all the premises and books and records of the
Company Business and will furnish to Buyer and its representatives all
information regarding the Company Business as Buyer may from time to time
reasonably request. Buyer may immediately send its agents and other personnel
to the Company's offices to work closely on a day - to - day basis with all top
level and other staff of the Company, including Stockholders. Stockholders
will and will cause the Company's staff to work with and cooperate with Buyer'
s assigned personnel. Notwithstanding any investigation that Buyer may conduct
of the Company Business, Buyer may fully rely on Stockholders representations,
warranties, covenants and indemnities, which will not be waived or affected by
or as a result of such investigation.
SECTION 6.2 Continuity and Maintenance of Operations. Financial
Statements. Except as Buyer may otherwise agree in writing, until the Closing:
6.2.1 Stockholders will continue to operate the Company Business in
the ordinary course consistent with past practices (including completing line
extensions, placing conduit or cable in new developments and fulfilling
installation requests) and will use its best efforts to keep available the
services of its employees employed in connection with the Systems and to
preserve any beneficial business relationships with customers, suppliers and
others having business dealings relating to the Company Business. Without
limiting the generality of the foregoing, Company will maintain the Assets in
good conditions and repair, will maintain adequate inventories of spare
Equipment consistent with past practice, will maintain insurance as in effect
on the date of this
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Agreement and will keep all of its business books, records and files in the
ordinary course of business in accordance with past practices. Company will not
itself, and will not permit any of its officers, directors, shareholders,
agents or employees to, pay any of Company's subscriber accounts receivable
(other than for their own residences) prior to the Closing Date nor will they
hire any of the current employees officers or directors of the Company except
for those agreed herein. Company will continue to implement its procedures for
disconnection and/or discontinuance of service to subscribers whose accounts
are delinquent in accordance with those in effect on September 30, 1994.
6.2.2 Stockholders will cause the Company not to, without the prior
written consent of Buyer: (a) materially change the rate charged for Basic
Services and will not add or delete any program services; (b) engage in any new
promotions modifying the Basic Service charge or method of payments, or any
promotions which differ materially from usual prior practice, (c) sell,
transfer or assign any of the material Assets or permit the creation of any
Encumbrance on any material Asset or a material Encumbrance on the Assets as a
whole; (d) permit the amendment or cancellation of any of the Governmental
Permits, Company Contracts or any other contract or agreement which affects or
is applicable to the System or the Company Business which adversely affects the
Company or the Company Business; (e) enter into any contract or commitment or
incur indebtedness or other liability or obligation of any kind relating to any
System or the Company Business involving an expenditure in excess of Company's
past ordinary business practice; (f) take or omit to take any action that would
cause Company to be in breach of any of its representations or warranties in
this Agreement, or (g) pay any dividends except as provided in Section 2.11.
6.2.3 Stockholders will timely cause Company to deliver to Buyer
correct and complete copies of monthly, quarterly and annual financial
statements and operating reports for the Company Business and any reports with
respect to the operations of the System prepared by or for Company at any time
between the date of this Agreement and the Closing. All financial statements
so delivered will be prepared in accordance with GAAP on a basis consistent
with the Financial Statements referred to in Section 2.10.
SECTION 6.3 Employee Matters.
6.3.1 Stockholders will cause Company to pay to employees
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employed in the Company Business all compensation, including salaries,
commissions, bonuses, deferred compensation, severance, insurance, pensions,
profit sharing, vacation, sick pay and other compensation or benefits to which
they are entitled for periods prior to the Closing. Stockholders will cause
Company not without the prior written consent of Buyer, change the compensation
or benefits of any employees of the Company Business, except for normal prior
practice in the labor relationship.
6.3.2 Stockholders will have paid or properly accrued for
maintenance and distribution of benefits accrued under any employee benefit
plan maintained by Company pursuant to the provisions of such plans. Buyer will
assume neither any liability for any such accrued benefits nor any fiduciary or
administrative responsibility to account for or dispose of any such accrued
benefits under any employee benefit plans maintained by Company.
6.3.3 All claims and obligations under, pursuant to or in connection
with any welfare, medical, insurance, disability or other employee benefit
plans of Company or arising under any Legal Requirement affecting employees of
Company incurred on or before the Closing Date or resulting or arising from
events or occurrences occurring or commencing on or prior to the Closing Date
will have been paid or properly accrued for, whether or not such employees are
hired after the Closing.
SECTION 6.4 Required Consents, Estoppel Certificate and Franchise Renewals.
Stockholders, Company and Buyer will obtain, as soon as possible, all
the Required Consents and COMFER Approvals, in form and substance satisfactory
to the parties. Buyer, Company and Stockholders will cooperate in obtaining all
Required Consents and COMFER Approvals, but will not be required to agree to
any changes in, or the imposition of any condition to the transfer to Buyer
which may imply a material modification to the Company Business and/or to the
conditions or Sections of this Agreement. Such failure to agree will not
constitute a reason attributable to the same. Should there be changes in,
impositions or conditions which are acceptable to the Buyer but not to the
Stockholders, the latter - in case Closing is no executed - will immediately
return the US$ 20 million received under Section 1.2.a) and the Deposited
Stock will immediately released. Stockholders will cause the Company to
require, at its expense, such estoppel certificates or similar documents from
lessors and other Persons who are parties to Company Contracts as Buyer may
request.
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Stockholders will use their best efforts to obtain, and will cooperate
with Company to obtain, renewals or extensions of any COMFER and Governmental
Authority licenses and franchises which expire prior to January 1, 2000
("Extended Franchises"), for applicable legal terms.
SECTION 6.5 No Shopping. None of Stockholder, Company or any
agent or representative of any of them will, during the period commencing on
the date of this Agreement and ending with the earlier to occur of the Closing
or the termination of this Agreement, directly or indirectly (a) solicit or
initiate the submission of proposals or offers from any Person for, (b)
participate in any discussions pertaining to or (c) furnish any information to
any Person other than Buyer relating to, any direct or indirect acquisition or
purchase of all or any portion of the Company Stock.
SECTION 6.6 Notification of Certain Matters. Stockholders will
promptly notify. Buyer of any fact, event, circumstance or action (a) which, if
known on December 6, 1994 or on the date of this Agreement, would have been
required to be disclosed to Buyer pursuant to this Agreement and (b) the
existence or occurrence of which would cause any Stockholders' representations
or warranties under this Agreement not to be correct and complete.
SECTION 6.7 Risk of Loss. Condemnation.
Stockholders will bear the risk of any loss or damage to the Company
resulting from fire, theft or other casualty (except reasonable wear and tear)
at all times prior to the Closing. If any such loss or damage is so substantial
as to prevent normal operation of any material portion of a System or the
replacement or restoration of the lost or damaged property within 20 days after
the occurrence of the event resulting in such loss or damage, Stockholders will
immediately notify Buyer of that fact and Buyer, at any time within 10 days
after receipt of such notice, may elect by written notice to Stockholders
either (i) to waive such defect and proceed toward consummation of this
Agreement or (ii) terminate this Agreement, losing monies paid to Stockholders.
If Buyer elects so to terminate this Agreement, Buyer and Stockholders will be
discharged of any and all obligations hereunder, and the Deposited Shares will
be released. If Buyer elects to consummate the transactions contemplated by
this Agreement notwithstanding such loss or damage and does so, 51% of all
insurance proceeds payable as a result of the occurrence of the event resulting
in such loss or damage will be delivered by Stockholders or Company to
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Buyer, or 51% of the rights to such proceeds will be assigned by Stockholders
to Buyer if not yet paid over to Stockholders, and Stockholders will pay to
Buyer (or Buyer may withhold from the Base Purchase Price) an amount equal to
the difference between the amount of such insurance proceeds and 51% of the
full replacement cost of the damaged or lost Assets. If loss or damage were not
covered by an insurance policy, and should Buyer wish to consummate the
transactions contemplated in this Agreement, the Base Purchase Price payable to
Stockholders will be reduced as per market value of 51% of the said loss or
damage.
SECTION 6.8 If, prior to the Closing, any part of or interest in
the Company is taken or condemned as a result of the exercise of the power of
eminent domain, or if a Governmental Authority having such power informs
Stockholders or Buyer that it intends to condemn all or any part of the
Company Business or Assets (such event being called, in either case, a
"Taking"), then Buyer may terminate this Agreement, and Buyer will order the
Deposited Shares to be released. If Buyer does not elect to terminate this
Agreement, then (a) Buyer will have the sole right, in the name of Stockholders
and the Company, if Buyer so elects, to negotiate for, claim, contest and
receive 51% of all damages with respect to the Taking, (b) Stockholders will be
relieved of its obligation to convey to Buyer the Assets or interests that are
the subject of the Taking, (c) at the Closing Stockholders will assign to Buyer
51% of all of Stockholders' rights to all damages payable with respect to such
Taking and will pay to Buyer 51% of all damages previously paid to Stockholders
or Company with respect to the Taking and (d) following the Closing,
Stockholders will give Buyer such further assurances of such rights and
assignments with respect to the taking as Buyer may from time to time
reasonably request.
SECTION 6.9 Lien and Judgment Searches. Buyer may produce, at its
cost in the shortest possible time (a) results of a lien search conducted by a
professional search company of records in the office of the secretaries of
state in each state and county clerks in each county where there exist tangible
Assets, and in the state and county where Company's principal offices are
located, including copies of all financing statements or similar notices or
filings (and any continuation statements) discovered by such search company and
(b) the results of a search of the dockets of the clerk of each federal and
state court sitting in the city, county or other applicable political
subdivision where the principal office or any material assets of Company may be
located, with respect to judgments, orders, writs or decrees against or
affecting Stockholders, or any of the Assets. For these purposes Stockholders
will give full collaboration to the representatives of Buyer.
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SECTION 6.10 Transfer Taxes. Stockholders and Buyer will be
responsible to the extent determined by law for the payment of any state or
local sales, use, transfer, excise, documentary or license taxes or fees or any
other charge (including filing fees) imposed by any Governmental Authority with
respect to the transfer pursuant to this Agreement, according to the rules
provided by the pertinent legislation. Shareholders will pay cost related to
removal from the Company of the assets to be excluded (Section 1.5 v). The
removal will not affect the Company Business.
SECTION 6.11 Use of Company Trade-name. For a period of two (2)
years after the Closing Date, and as long as the Programming Supply Agreement
is in force Buyer may continue to operate the Systems using the
trademark/tradename "Cablevision" and all derivations and abbreviations of such
name and related marks. Prior to Closing, Buyer and the owner of such rights
will enter into an agreement with respect to such rights, in accordance with
Section 5.10.
SECTION 6.12 Satisfaction of Conditions. Each party will use its
best efforts to satisfy, or to cause to be satisfied, the conditions to the
obligations of the other party to consummate the transactions contemplated by
this Agreement, provided that Buyer will not be required to agree to any
increase in the amount payable, or the method of payment.
SECTION 6.13 Confidentiality. Neither party will issue any press
release or make any other public announcement regarding this Agreement or the
transactions contemplated hereby without the consent of the other party. Each
party will hold, and will cause its employees, consultants, advisors and agents
to hold, in confidence, the terms of this Agreement and any non-public
information concerning the other party obtained pursuant to this Agreement.
Notwithstanding the preceding, a party may disclose such information to the
extent required by any Legal Requirement (including disclosure requirements
under Argentine and United States of America federal and state securities
laws), but the party proposing to disclose such information will first notify
and consult with the other party concerning the proposed disclosure, to the
extent reasonably feasible. Each party also may disclose such information to
employees, consultants, advisors, agents and actual or potential lenders whose
knowledge is necessary to facilitate the consummation of the transactions
contemplated by this Agreement. Each party's obligation to hold information in
confidence will be satisfied if it exercises the same care with respect to such
information as it would exercise to preserve the confidentiality of its own
similar information. Stockholders authorize Buyer to use
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all the information which may be necessary for presentations and filings before
the Securities and Exchange Commission, or applicable state securities
commissions.
SECTION 6.14 Notary fees. Buyer and Stockholders will pay equally
all fees and expenses of Mr. Juan Bautista Cubas, such fees and expenses not to
exceed US$ 20,000. In any event, Buyer's obligations in such matter will not
exceed US$ 10,000.
ARTICLE VII
TERMINATION
SECTION 7.1 Termination. Anything herein to the contrary
notwithstanding, this Agreement may be terminated and the transactions
contemplated hereby abandoned at any time prior to the Closing Date (a) by
mutual written consent of Buyer and the Majority Stockholders (as hereinafter
defined), (b) by Buyer if any of the conditions precedent to Closing set forth
in Article V of this Agreement have not been met on the Closing Date and Buyer
is not in default of its obligations hereunder, or (c) by the Majority
Stockholders if any of the conditions precedent to Closing set forth in Article
IV of this Agreement have not been met on the Closing Date and the Stockholders
are not in default of their obligations hereunder. Termination under clauses
(b) and (c) of the immediately preceding sentence shall be effective when a
notice of termination is deemed to have been given pursuant to Section 8.8
hereof by the party or parties giving such notice to the other party or parties
to whom such notice is directed. For the purposes of this Agreement, "Majority
Stockholders" means Eduardo Eurnekian while living or, if deceased, the
Stockholders beneficially owning at least 51% of the Shares being sold pursuant
to this Agreement.
SECTION 7.2 Effects of Termination. If this Agreement is
terminated and the transactions contemplated hereby are not consummated as
provided in Section 1, this Agreement shall have no further force and effect.
In case this Agreement is terminated on the grounds of breach of the statements
made under Exhibit 7 the US$ 20,000,000 will be returned to the Buyer by the
Stockholders, in which case the Deposited Stock will be released. This general
provisions does not apply with regard to the provisions of Section 6.13 hereof
relating to the confidentiality obligations of the parties, Section 6.13
hereof relating to publicity, and Sections 2.17 and 3.4 hereof relating to
expenses; and provided that nothing in this Article VII shall relieve any party
failure to consummate the transactions contemplated hereby is due to an
intentional action or inaction by such party which such party
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knew or reasonably should have known would cause the Closing hereunder not to
occur on the Closing Date.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 Survival of Representations, Warranties and
Agreements. The representations and warranties of Stockholders in this
Agreement and in the documents and instruments to be delivered by Stockholder
pursuant to this Agreement will survive until the sixth anniversary of the
Closing Date, except that (a) all such representations and warranties with
respect to any federal, state or local taxes, environmental matters, labor,
social contributions, governmental authorizations, employee benefits and tort
and contract claims will survive until 180 days after the expiration of the
applicable statute of limitations (including any extensions). The
representations and warranties of Buyer in this Agreement and in the documents
and instruments to be delivered by Buyer pursuant to this Agreement will
survive until the sixth anniversary of the Closing Date. The periods of
survival of the representations and warranties prescribed by this Section are
referred to as the "Survival Period". The liabilities of the parties under
their respective representations and warranties will expire as of the
expiration of the applicable Survival Period; provided, however, that such
expiration will not include, extend or apply to any representation or warranty,
the breach of which has been asserted by Buyer in a written notice to
Stockholders before such expiration or about which Stockholders have given
Buyer written notice before such expiration indicating that facts or conditions
which exist or that, with the passage of time or otherwise, can reasonably be
expected to result in a breach.
SECTION 8.2 Indemnification by Stockholders. Stockholders jointly
and severally, agree to (and prior to the Closing and following any rescission
of the transactions consummated at the Closing, shall cause the Company to)
indemnify and/or defend and/or hold harmless Buyer from and against:
(a) all losses, damages, liabilities, deficiencies or obligations
of or to the Company, Buyer or any such other indemnified person resulting from
or arising out of (i) any misrepresentation or breach of warranty or any
nonperformance or breach of any covenant or agreement of Stockholders contained
in this Agreement or any additional agreements; (ii) the ownership of the
Shares, the ownership or operation of the Company Assets, or the control,
management or operations of the Company Business, prior to the Closing, whether
known or unknown, asserted or
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unasserted, now existing or arising at any time prior to, at or after the
Closing, including, without limitation, fines or forfeitures imposed or
threatened to be imposed by any authority for any operation of the Company
Business at or prior to the Closing which was not in full compliance with
applicable rules, or for any operation at or prior to the Closing of any
facility used in conjunction with the operation of the Company Business which
was not in full compliance with said rules and any future, additional
assessment imposed on Buyer or Company after the Closing by the Copyright
Tribunal, the liability for which occurred prior to the Closing, but excluding
any of such liabilities that are reflected on the Balance Sheet to the extent
reflected thereon; and
(b) all claims, actions, suits, proceedings, demands, judgments,
assessments, fines, interest, penalties, costs and expenses (including, agreed
to settlement costs and reasonable legal, accounting, experts' and other fees,
costs and expenses) incident or relating to or resulting from any of the
foregoing.
SECTION 8.3 Stockholders further indemnification. Each of the
Stockholders jointly and severally agrees to indemnify and hold harmless Buyer,
and its assigns from and against any and all claims, losses, damages and
expenses (including, without limitation, settlement costs and reasonable legal
or other expenses) incurred by the Company, Buyer or assignee resulting from or
arising out of any misrepresentation or breach of any warranty relating to such
Stockholder or the Shares sold by such Stockholder or the nonperformance or
breach of any covenant, agreement or obligation of such Stockholder.
SECTION 8.4 Limitation to Indemnification. The only limitation on
Stockholders' indemnity obligation in favor of Buyer, Company or assignees will
be in reference to liabilities for tax, environmental, labour, employee
benefits, social contributions, contract claims, tort claims and Governmental
Permits issues (except for COMFER licenses of the Company for which this
limitation will not apply). Stockholders total obligation to indemnify Company,
Buyer or assignees with respect to all such claims will be limited in the
aggregate to US$ 50 million. The lawsuit currently captioned "Gomez, Jose
Alberto y otros c/ Cablevision S.A." being heard by the Civil Court of Buenos
Aires No. 54, Civil Action Nr 40.680/91 is not and will not be subject to
this limitation, nor will any fees or penalties payable to the COMFER arising
before Closing.
SECTION 8.5 Indemnification by Buyer. Buyer agrees to indemnify,
defend and hold harmless each Stockholder, its
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successors and assigns, from and against all losses, damages and expenses
(including, agreed to, settlement costs and reasonable legal or other expenses)
incurred by such Stockholder or any other indemnified person in connection with
any misrepresentation or breach of any warranty made by Buyer in this Agreement
or the nonperformance or breach of any covenant, agreement or obligation of
Buyer contained in this Agreement.
SECTION 8.6 Third Party Claims. Promptly after the receipt by any
party hereto of notice of any claim, action, suit or proceeding by any person
who is not a party to this Agreement (collectively, an "Action") which is
subject to indemnification hereunder, such party (the "Indemnified Party" )
shall give reasonable written notice to the party from whom indemnification is
claimed (the "Indemnifying Party"). At the sole expense and liability of the
Indemnifying Party and within a reasonable time after the giving of such notice
by the Indemnified Party, the Indemnifying Party shall: (i) admit or decline in
writing to the Indemnified Party, the Indemnifying Party's liability to the
Indemnified Party for such Action, (ii) notify the Indemnified Party in
writing of the Indemnifying Party's intention to assume the defense thereof,
(iii) post an indemnity or similar bond (in form and substance satisfactory to
the Indemnified Party), in both cases for the full amount (including interest
and penalties) for which the Indemnified Party may be liable as a result of
such Action or provide other evidence satisfactory to the Indemnified Party of
the Indemnifying Party's ability to pay such amount in full, and (iv) retain
legal counsel reasonably satisfactory to the Indemnified Party to conduct the
defense of such Action. The Indemnified Party and the Indemnifying Party shall
cooperate with the party assuming the defense, in defending, compromising or
settling any such Action in any manner that such party reasonably may request.
If the Indemnifying Party so assumes the defense of any such Action, the
Indemnified Party shall have the right to employ separate counsel and to
participate in (but not control) the defense, compromise or settlement thereof,
but the fees and expenses of such counsel shall be to the expense of the
Indemnified Party unless (i) the Indemnifying Party has agreed to pay such fees
and expenses, (ii) any relief other than the payment of money damages is sought
against the Indemnified Party or (iii) the Indemnified Party shall have been
advised by its counsel that there may be one or more legal defenses available
to it which are different from or additional to those available to the
Indemnifying Party, and in any such case the fees and expenses of such separate
counsel shall be borne by the Indemnified Party. No Indemnified Party shall
settle or compromise any such Action for which it is entitled to
indemnification hereunder without the prior written consent of the Indemnifying
Party, unless the Indemnifying Party shall have failed, after reasonable notice
thereof, to undertake control of
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such Action in the manner provided above in this Section. No Indemnifying Party
shall settle or compromise any such Action in which any relief other than the
payment of money damages is sought against any Indemnified Party unless the
Indemnified Party consents in writing to such compromise or settlement.
SECTION 8.7 Assignment: Successors and Assigns; Third Parties. No
party to this Agreement shall convey, assign or otherwise transfer any of its
rights or obligations under this Agreement without the express written consent
of Buyer or the Majority Stockholder, as the case may be, except for Buyer's
authorized assignment of its rights and obligations hereunder in favor of
subsidiaries of Buyer or Carlos Avila or an entity affiliated with him (in
which case Buyer will assume joint several liability). Assignment can also be
made in favor of Time Warner and/or US WEST and/or Bell Canada and/or any of
the Bell Regional Operating Companies (RBOC's) provided that these assignees
may comply with the legal requirements of COMFER. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns. Subject to the immediately
preceding sentence, this Agreement is not intended to benefit, and shall not
run to the benefit of or be enforceable by, any other person or entity other
than the parties hereto and their permitted successors and assigns. Assignments
of rights must be notified to the other party.
SECTION 8.8 Notices. All notices or other communications required
or permitted to be given hereunder shall be in writing and shall be delivered
by hand (acknowledgement of receipt requested) or through a notary public, or
sent by facsimile, telegram or registered mail (carta documento) and shall be
deemed given when so delivered by hand or through a notary, or if faxed,
telegraphed or mailed when so delivered. Said notices and communications must
be addressed as follows:
If to the Stockholders, addressed to:
Mr. Eduardo Eurnekian
Honduras 5663
1414 - Buenos Aires
Argentina
Telephone: (54 1) 777-1111 or (54 1) 777-1234
Fax: 777-1111
with a copy to:
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Mr. Mariano Ibanez
Bonpland 1745
1414 - Capital Federal
Telephone: 777-1234
Telecopier: 777-1234 (extension 765)
If to Buyer, addressed to:
TCI International Holdings, Inc.
5619 DTC Parkway
Englewood, Colorado 80111, U.S.A.
Attention: President
Telephone: (1 303) 267 5740
Telecopier: (1 303)488 3242
with a copy to:
TCI International Holdings, Inc.
5619 DTC Parkway
Englewood, Colorado 80111, U.S.A.
Attention: General Counsel
Telephone: (1 303) 267 4800
Telecopier: (1 303) 488 3245
and to:
M & M BOMCHIL - Abogados
Suipacha 268, 12th floor
1355 - Buenos Aires, Argentina
Attention: Mr. Marcelo E. Bombau
Telephone: 328 8400
Fax: 326 7217
or in any case to such other address or addresses as hereafter shall be
furnished as provided in this Section 8.8 by any of the parties hereto to
each of the other parties hereto.
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SECTION 8.9 Waiver: Remedies. No delay on the part of Buyer, on
the one hand, or the Stockholders, on the other, in exercising any right, power
or privilege hereunder shall operate as a waiver thereof, nor shall any waiver
on the part of Buyer or the Stockholders of any right, power or privilege
hereunder operate as a waiver of any other right, power or privilege hereunder,
nor shall any single or partial exercise of any right, power or privilege
hereunder preclude any other or further exercise thereof or the exercise of any
other right, power or privilege hereunder. Upon any default by the Buyer, on
the one hand, or any of the Stockholders, on the other hand, the Buyer or any
such Stockholder, as the case may be, may proceed to protect his or its rights
by suit in equity, action at law or other appropriate proceedings, whether for
the specific performance of any covenant or agreement contained in this
Agreement or to enforce any and all other legal or equitable rights.
SECTION 8.10 Entire Agreement. This Agreement, including the
schedules and Exhibits attached hereto, constitute the entire agreement among
the parties hereto with respect to the subject matter hereof and supersede all
other prior agreements or understandings of the parties relating thereto. There
are no representations, warranties, agreements or undertakings of any party
hereto with respect to the transactions contemplated by this Agreement other
than those set forth in this Agreement or in the documents delivered at the
Closing. All Exhibits annexed hereto, and all schedules referred to herein, are
hereby incorporated in and made a part of this Agreement as if set forth in
full herein.
SECTION 8.11 Amendments; Waivers; Control By Majority. This
Agreement may be modified or amended only by a written agreement signed by
Buyer and the Majority Stockholders. Provisions hereof may be waived, and other
actions permitted hereunder or contemplated hereby may be taken, in the case of
Buyer, by an instrument signed by Buyer, and in the case of the Stockholders,
by an instrument signed by the Majority Stockholder.
SECTION 8.12 Further Assurances. Each Stockholder shall, at the
request of Buyer, at any time and from time to time following the Closing
hereunder, execute and deliver to Buyer all such further instruments and take
all such further action as may be reasonably necessary or appropriate in order
more effectively to sell, assign, transfer and convey to Buyer, or to perfect
or record Buyer's title to or interest in, the Shares sold by such Stockholder
hereunder. Buyer shall at any time and from time to time following the Closing
hereunder execute and deliver to the Stockholders, or any of them, all such
further instruments and take
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all such further action as may reasonably be necessary or appropriate in order
more effectively to confirm or carry out the provisions of this Agreement. The
parties hereto shall use their best efforts to consummate the transactions
contemplated by this Agreement.
SECTION 8.13 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original but all of which
together shall constitute a single instrument.
SECTION 8.14 Governing Law: Choice of Forum. This Agreement shall
be governed by and construed in accordance with the laws of the Republic of
Argentina, except for the Promissory Notes # 1 to 4 which will be exclusively
governed in accordance with the laws of the State of New York, United States of
America.
SECTION 8.15 Submission to Arbitration. The parties will use their
best efforts to resolve amicably any disputes arising under this Agreement, or
those contained in its Exhibits or schedules. Except as otherwise expressly
provided herein, and except for those cases related to default in payment of
moneys due and the enforcement of pledge agreement indicated in Section 1.6.1.
and Section 2.12, all disputes arising between the parties under this Agreement
which cannot be resolved amicably shall be resolved by submission to
arbitration pursuant to the Rules of the Inter-American Commission on
International Commercial Arbitration then in force. The arbitration shall be
held in Geneva, Switzerland. There shall be three arbitrators, one selected by
the Stockholders, one selected by the Buyer and the third selected by mutual
agreement of the parties, and failing their agreement, pursuant to the Rules of
the Commission. None of the arbitrators shall be citizens of the U.S.A. or the
Republic of Argentina. The arbitration shall be conducted in the English and
Spanish languages. Except as provided in Section 8.14, the arbitrators shall
decide the case on the basis of Argentine law, and shall give written reasons
for their award. The party in whose favor an award is issued shall be entitled
to recover its costs or the arbitration, and any costs incurred in the
enforcement of the award, including reasonable attorney's fees. The award of
the arbitrators may be enforced in any jurisdiction where a party has assets or
may be found, and the parties hereby irrevocably waive, to the fullest extent
permitted by law, any defenses to recognition and enforcement of the award on
the grounds of the invalidity of the submission to arbitration, and improper
constitution of the arbitral panel (if constituted pursuant to this Section).
Should an issue related to default in payment of moneys due or enforcement of
the pledge agreement foreseen in Sections 1.6.1. arise, parties agree to submit
to the jurisdiction of the courts of the city of Buenos Aires, or the city of
New York as the
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Stockholders may decide, except for the case of enforcement of the pledge
provided for under Section 2.12 in which case the option will be in favour of
the Buyer.
SECTION 8.16 Noncompetition. Each Stockholder covenants and agrees
that, during the period in which he is a director or Stockholder of the
Company, and for five years thereafter neither he, nor it, nor any of its
officers, directors or affiliates, directly or indirectly, shall manage,
operate, join, control, participate, or become interested in, or be connected
with (as an employee, consultant, partner, officer, director, stockholder or
investor, other than through ownership of up to a 5% equity interest in a
publicly-trade entity) any cable television company or System nor in any Direct
Broadcast Satellite or Direct to Home System which has Subscribers located
within 40 (forty) kilometers miles from the periphery of any portion of the
Company Business. This non-competition clause will terminate five (5) years as
from the date the Stockholders ceases in his capacity as Stockholder or
director of the Company.
SECTION 8.17 Disclosure. This Agreement does not contain any
untrue statement nor omit to state a material fact necessary to make the
statements contained herein not misleading. There is no fact known to
Stockholders which materially and adversely affects, or which in the future may
so affect, the Common Stock or the Shares, which has not been set forth in this
Agreement.
SECTION 8.18 Captions. All section titles or captions contained in
this Agreement, in any Exhibits annexed hereto or in any Schedule referred to
herein, and the table of contents to this Agreement are for convenience only,
and shall not be deemed a part of this Agreement and shall not affect the
meaning or interpretation of this Agreement. All references herein to numbered
sections, except otherwise indicated, are to sections of this Agreement.
SECTION 8.19. This Agreement is executed in English and Spanish
versions, and in case of differences among them, the Spanish version shall
prevail.
SECTION 8.20. The Stockholders and Buyer will execute those
documents which may be necessary for the best implementation of the agreements
contained herein.
<PAGE> 47
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SECTION 8.21. All the provisions, rights and obligations undertaken
by the Buyer and Stockholders are subject to the suspensive condition of the
corresponding COMFER Approval.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the day and year first above written.
/s/ FRED A. VIERRA
1) TCI International Holdings, Inc.
By: Mr. Fred A. Vierra
Chief Executive Officer
/s/ EDUARDO EURNEKIAN
2) THE STOCKHOLDERS
/s/ EDUARDO EURNEKIAN
3) COMPANY
Cablevision S.A.
By:
/s/ EDUARDO EURNEKIAN
Construred S.A.
By:
/s/ EDUARDO EURNEKIAN
Univent's S.A.
By:
/s/ EDUARDO EURNEKIAN
4) Spouses of Stockholders.
<PAGE> 48
EXHIBIT 1
AMENDED AND RESTATED
STOCKHOLDERS AGREEMENT
THIS AMENDED AND RESTATED STOCKHOLDERS AGREEMENT (the "Agreement") is made on
April 25, 1995. It amends and restates a Stockholders Agreement dated December
6, 1994 and an amendment to such agreement dated March 28, 1995.
BETWEEN:
(1) EDUARDO EURNEKIAN, I.C. Nbr. 4.086.268, in his individual capacity and
on behalf of BASILIA JALIQUIAS, I.C. Nbr. 3.304.838; NATALIO WENDE, I.C. Nbr.
4.203.286; ALBERTO ANTRANIK EURNEKIAN, I.C. Nbr. 2.073.441; ENRIQUE
KEVORKYAN, I.C. Nbr. 16.821.610; SEBASTIAN ARIAS DUVAL, I.C. Nbr. 20.987.869;
LORENZO LUIS MARCHESE, I.C. Nbr. 7.640.022 and TOMAS DANIEL KOLAKOVIC, I.C.
Nbr. 7.861.707, ("the Sellers");
(2) TCI INTERNATIONAL HOLDINGS, INC. ("TCI") a corporation organized
under the laws of the State of Delaware, USA, with its main offices at 5619
DTC Parkway Englewood, Colorado, 80111, U.S.A.
WHEREAS:
(A) Cablevision S.A., Construred S.A. Univent's S.A. and Televisora
Belgrano S.A. ("the Companies") are corporations organized under the laws of
the Republic of Argentina with their main offices within the City of Buenos
Aires, Argentina.
(B) Sellers hold shares which represent 100% of the capital stock and
votes of Cablevision S.A., Construred S.A. and Univent's and 20% of the capital
stock and votes of Televisora Belgrano S.A.
(C) Cablevision S.A. holds shares which represent 80% of the capital stock
and votes of Televisora Belgrano S.A.
(D) The Sellers, Cablevision S.A. and TCI executed as of the date hereof
an Amended and Restated Stock Purchase Agreement by which TCI agreed to acquire
from the Sellers the shares representing 51% of the capital stock and votes of
Cablevision S.A., Construred S.A. and Univent's S.A. and 10,2% of the capital
stock and votes of Televisora Belgrano S.A. with an option to purchase an
additional 29% of the Companies ("the Purchase Agreement").
(E) The Sellers and TCI agree that the future relationship between them as
co-owners of the Companies as "sociedades anonimas" as foreseen in the Purchase
Agreement, shall be governed by the terms set out in this Agreement.
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NOW IT IS HEREBY AGREED as follows:
1. DEFINITIONS
In this Agreement, unless the context otherwise requires, the following
expressions have the following meanings:
All capitalized terms not defined herein will have the meaning given them in
the Purchase Agreement.
"Affiliate" one company or individual shall be deemed to be an affiliate of
another if one is Controlled by, under common Control with, or Controlling the
other;
"the Auditors" the firm of accountants referred to in Clause 4 or the firm of
accountants subsequently appointed pursuant to Clause 4;
"TCI's Directors" or "Class A Directors" the directors of the Companies
nominated from time to time by TCI in accordance with Clause 2.1.1 hereof;
"Sellers' Director" or "Class B Directors" the directors of the Companies
nominated from time to time by the Sellers in accordance with Clause 2.1.1.
hereof;
"the Board" the board of directors of the Companies;
"Control" a company or a person shall be deemed to have control over another
company if it (directly or indirectly) owns, or has the right to exercise more
than half the voting rights in such other company or otherwise exercises
(whether directly or indirectly) a legal right of decision making in such
company's affairs;
"Net Worth" share capital plus reserves and retained earnings of each of the
Companies;
"the Shares" ordinary nominative and non-endorsable shares issued in the
Companies at a par value of 1 peso each;
"the Territory" the Republic of Argentina;
"the Partners" the stockholders of the Companies after the Closing.
1.2 Except where inconsistent with anything contained herein:
1.2.1 Words in this Agreement denoting the masculine gender shall include
the feminine gender and the singular number shall include the plural and
viceversa;
<PAGE> 50
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1.2.2 The titles and headings herein are used for convenience of reference
only and shall not be deemed part of this Agreement for the purpose of its
interpretation;
1.2.3 All schedules to this Agreement form an integral part hereof.
2. SHAREHOLDERS OR PARTNERS UNDERTAKINGS
2.1 Notwithstanding anything contained in the by-laws of the Companies,
the Partners respectively undertake that they shall at all times take all steps
necessary to ensure that the following provisions shall apply to each other and
to the Companies.
2.1.1 Unless otherwise agreed in writing between the Partners, the number of
directors of each of the Companies shall be a maximum of eight (8), of which
five (5) shall be TCI' Directors and three (3) shall be Sellers' Directors; TCI
and the Sellers may appoint the alternate Directors in the same proportion as
they may appoint Directors. Subject to any necessary approval being obtained
from the "Comite Federal de Radiodifusion" (COMFER) the Partners shall each be
entitled at any time to remove or substitute any of their respective nominated
directors or alternate directors. There shall be five (5) TCI Directors and
three (3) Sellers Directors and TCI shall have the casting vote referred to in
Section 2.1.4. herein only for so long as Luis B. Nofal ("Nofal") serves as a
director of the Companies. Unless otherwise agreed, if Nofal ceases to be a
director of the Companies, there shall be four (4) TCI Directors and three (3)
Sellers Directors and TCI shall no longer have a casting vote.
2.1.2 To be quorate a meeting of the Board shall require the presence of a
majority of Directors then in office present in person or by their alternates
of whom one (1) at least shall be a TCI' Director and one (1) at least shall be
a Sellers' Director. However, if at any meeting of the Board duly convened in
accordance with the by-laws of the Companies and this Agreement a quorum is not
present that meeting may be adjourned to a date not earlier than ten (10) days
thereafter. Such adjourned meeting shall be quorate if a majority of the
Directors then in office are present in person or by their alternates and all
business properly transacted at that adjourned meeting shall be valid.
2.1.3 Meetings of the Board shall be held from time to time as the Partners
may agree but in any event at intervals of not more than three (3) months
unless otherwise agreed by the Partners or required by law.
2.1.4 Only a TCI Director (who must also be an officer of TCI) shall have a
casting vote in the event of a deadlock.
<PAGE> 51
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2.1.5 Unless otherwise agreed by all of the Directors, notice of every
meeting or adjourned meeting of the Board shall be given to each Director at
the address (in the Territory or elsewhere) notified to the Companies by such
Director from time to time for this purpose at least ten (10) business days (or
in the case of an adjourned meeting at least five (5) days in advance thereof).
2.1.6 Every notice convening a meeting of the Board shall set out the agenda
of the business to be transacted thereat in full and sufficient detail. No item
of business not included in the agenda may be discussed and voted upon or
transacted at the meeting unless all of the Directors the corresponding Company
are present and unanimously consent.
2.1.7. Directors appointed by each partner must comply with any requirement
under Argentine law, and must be persons of good reputation and "buenos hombres
de negocios" (good businessmen) as said expression is understood in Argentina.
2.1.8. The sindico shall be appointed by TCI from among the accounting firms
indicated under Schedule B as long as Mr. Eduardo Eurnekian is on the board of
the Companies. However, if Eduardo Eurnekian ceases to serve as a director, and
for so long as he owns at least twenty one percent (21%) of the Company's
Common Stock, he may appoint the sindico who must be from one of the accounting
firms indicated under Schedule B. At the time the Sellers' equity drops below
twenty one percent (21%) of the Company's Common Stock, then the sindico will
be freely appointed by TCI.
2.1.9. After the Closing Date (as defined in the Purchase Agreement), all
matters shall be decided by a vote of a simple majority (i.e. more than 50%) of
the Shares. However, until the Stockholders have received in cash seventy five
percent (75%) of the Base Purchase Price, through the payment of the Base
Purchase Price foreseen in Section 1.2 a) of the Purchase Agreement and the
necessary payments to said effect under the Promissory Notes referred to in
Section 1.2.b) of the Purchase Agreement, the following matters must be
approved by the positive vote of not less than ninety percent (90%) of the
Shares:
a) each year's annual operating budget;
b) each year's annual capital budget;
c) any variance from the operating or capital budgets of ten percent
(10%) or more;
d) a sale of the Company Business;
e) any fundamental change in the Company Business; or
f) capital increases.
If the Partners are unable to agree on the budgets referred to in items a) and
b) above, they will apply the budgets of the previous
<PAGE> 52
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year automatically adjusted in accordance with the Argentine Consumer Price
Index for the previous year plus ten per cent.
2.1.10. Each Partner shall indemnify and keep harmless the other Partner for
any damage caused to it by any Director acting (in a wilful or grossly
negligent manner) in such capacity appointed by TCI or the Sellers, as the case
may be.
2.1.11. Capital Increase: The Sellers and TCI have reached the Base Purchase
Price under the Purchase Agreement on the basis of the number of EBS at
Closing. Accordingly, the Partners determine that, for purposes of calculating
any dilution as a result of capital increases, each Partner's percentage
ownership of the Company's Shares -- notwithstanding anything to the contrary
stemming from the corporate by-laws or books -- shall be determined by
multiplying the number of EBS at Closing times US$ 1,500.
Such amount is currently believed to be approximately US$ 600 million.
Accordingly, the Partners agree that, only for the purposes of calculating any
dilution caused to any Partner as a result of its failure to participate or to
participate fully in capital increases, each Partner's percentage ownership of
the Company's Share (notwithstanding anything to the contrary in the corporate
by-laws or books) will be deemed to be derived from the Base Purchase Price
paid to the Stockholders on the Closing Date.
As an example, the parties illustrate on a U$S 120.000.000 capital increased
upon a capital of US$ 600.000.000, with corporate capital book value at US$
10.000.000, which is not subscribed by the Sellers.
1) Situation before the capital increase.
TCI 5,100,000 = 51%
Sellers 4,900,000 = 49%
2) Situation after the capital increase, including an increase in the book
value of the capital stock to $12,000,000.
TCI 7,100,000 = 59.17%
Sellers 4,900,000 = 40,83%
Premium 118,000,000 99.99%
2.1.12. No distribution of dividends may be made to any Partners until TCI has
paid enough of the principal amount of the Promissory Notes referred to in
Section 1.2 b) of the Purchase Agreement in order that 75% of the Base Purchase
Price has been paid in cash by TCI to the Stockholders.
<PAGE> 53
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2.1.13 The parties consent to the amendment of the By-Laws of Cablevision
S.A. to create two classes of common stock, par value 1 peso (Class A and Class
B), with one (1) vote per share of each class. The following shares of each
class will be issued to the Partners: 7,350,000 shares of Class B Common stock
(par value, 1 peso) with one vote per share to Sellers and 7,650,000 shares of
Class A common stock (par value 1 peso) with one vote per share to TCI. The
shares to be issued will be subject to the pledges provided for in the Purchase
Agreement.
3. GENERAL MEETINGS OR PARTNERS MEETINGS
3.1 No General Meeting or Partners Meeting of the Companies shall be
quorate unless representatives of the Partners representing more than 50% of
the voting shares of each of the Companies are present.
3.2 Written notice of a General Meeting of the Companies (or of an
adjourned General Meeting of the Companies) shall if not waived,
notwithstanding any provisions of applicable law which may provide for a
shorter period, be given to each Partner at least ten (10) business days in
advance thereof.
3.3 Every notice convening a General Meeting or Partners Meeting of the
Companies shall set out the agenda of the business to be transacted thereat in
full and sufficient detail. No item of business not included in the agenda may
be discussed and voted upon or transacted at the meeting unless all of the
Partners of the Companies are represented at the meeting and unanimously
consent.
4. AUDITORS
The accounts and records of the Companies shall be audited by KPMG Finsterbusch
Pickenhhayn Sibille or such other firm of independent accountants of
international repute as maybe approved by the Board from time to time.
5. FINANCIAL AND GENERAL REPORTING
The Partners shall procure that:
5.1 the accounts of the Companies shall be made up to 31st December or
such other date as may be agreed in each year;
5.2 the Companies shall report to the parties in Argentine and US GAAP and
in accordance with the requirements and systems of TCI at monthly, quarterly
and yearly intervals. Such reports shall deal with at least the following:
5.2.1 financial, commercial and operating matters;
<PAGE> 54
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5.2.2 sales and financial forecasts;
5.2.3 proposed financial, marketing, procurement, capital expenditure,
services, personnel and remuneration policies;
5.2.4 insurance arrangements;
5.2.5 pension schemes and the funding thereof; and
5.2.6 such other matters as may be reasonably requested by any of the
Partners.
5.3 All quarterly and annual financial statements will comply fully with
the requirements of the United States of America's Securities and Exchange
Commission. Quarterly financial statements will be delivered to the Partners no
later than thirty (30) days after each quarter's end. Annual financial
statements will be delivered no later than forty five (45) days after each
year's end. The Partners will cooperate fully in the timely preparation of all
reports required hereunder.
5.4 The Companies shall prepare, in a manner and form to be specified by
the Partners, monthly management accounts and shall provide the Partners with
such monthly management accounting information in a form and at times
reasonably required by the Partners for their own management accounting
purposes and shall further provide the Partners with such other accounting
information as each may reasonably require for the purposes of the preparation
of their own statutory accounts.
6. SUBSCRIPTION FOR AND TRANSFER AND ASSIGNMENT OF SHARES
6.1 If at any time any of the Partners to this Agreement wishes to sell or
otherwise transfer or assign any of the Shares held by it, it shall do so in
accordance with the provisions contained in this Agreement, including Schedule
A.
6.2 Except as otherwise provided herein, all Partners agree not to
transfer, sell or in any way assign their respective participation in the
Companies for a term of two (2) years as from the Closing Date as defined in
the Purchase Agreement. At the end of said term, the Partners may sell,
transfer or assign their respective participations in the Companies, subject to
this Agreement, including Schedule A. The Partners agree that Cablevision S.A.
cannot sell assign or transfer under any title the shares of Televisora Belgrano
S.A. until the Base Purchase Price foreseen in the Amended and Restated Stock
Purchase Agreement dated April 25, 1995 is paid.
6.3 The Partners of the Companies shall have pre-emptive rights to acquire
any additional Shares which the Companies may issue, such
<PAGE> 55
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Shares to be offered to the Partners in proportion to their shareholdings in
the Companies at the time of the said issue.
6.4 Upon receiving the prior consent of a majority of the shares, any
Partner may transfer any or all of its Shares to an Affiliate, provided that,
in all cases, the Affiliate agrees to join in this Agreement and shall be bound
by the terms of this Agreement as though it were an original party hereto. Such
consent shall not be unreasonably withheld.
6.5 The Partners acknowledge and agree that TCI may after the date hereof
and in accordance with Section 8.7 of the Purchase Agreement assign a portion
of its interest in the Companies or in this Agreement to U.S. West,
Time-Warner, and/or Bell Canada and/or any of the Bell Regional Operating
Companies (RBOC's), Torneos y Competencias S.A., Avila Cab or Carlos Avila y
Cia. S.R.L. or their Affiliates or all or a portion of its interest to an
entity jointly Controlled by or by any combination of TCI, US West and Time-
Warner; and that the Sellers may assign their interest in the Companies or this
Agreement to an S.A. controlled by the Sellers in accordance with Section 8.7
of the Purchase Agreement, provided that the assignees, in all cases, agree to
join in this Agreement and shall be bound by the terms of this Agreement as
though it were an original party hereto.
6.6 In the event that any of the Partners sells, transfers or assigns all
or a portion of its Shares in the Companies in violation of this Agreement,
including Schedule A:
6.6.1 the Partners will be able to exclude the proposed purchaser of such
Shares pursuant to the law of Argentine commercial companies Nbr. 19.550,
Section 152.
6.7 All Partners agree that the procedure foreseen in Clause 6.6 shall
also be applicable in case of sales, assignments or transfers resulting from
the bankruptcy of any of Partner.
6.8 Save as provided in this Agreement neither this Agreement nor any
right under this Agreement shall be assignable or transferable by any Partner
hereto without the prior written consent of the others.
6 9 The sale of Shares by any of the Sellers to Eduardo Eurnekian only
will not be subject to Section 6 or Schedule A of this Agreement.
<PAGE> 56
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7. CONFIDENTIALITY
7.1 Neither party will issue any press release or make any other public
announcement regarding this Agreement or the transactions contemplated hereby
without the consent of the other party. Each party will hold, and will cause
its employees, consultants, advisors and agents to hold, in confidence, the
terms of this Agreement and any non-public information concerning the Companies
or the other party obtained pursuant to or as a result of this Agreement.
Notwithstanding the preceding, a party may disclose such information to the
extent required by any Legal Requirement (including disclosure requirements
under Argentine and United States of America ("USA") federal and state
securities laws), but the party proposing to disclose such information will
first notify and consult with the other party concerning the proposed
disclosure, to the extent reasonably feasible. Each party also may disclose
such information to employees, consultants, advisors, agents and actual or
potential lenders whose knowledge is necessary to facilitate the consummation
of the transactions contemplated by this Agreement. Each party's obligation to
hold information in confidence will be satisfied if it exercises the same care
with respect to such information as it would exercise to preserve the
confidentiality of its own similar information. The Sellers authorize TCI
and/or its transferees to use all information which may, in such persons'
estimation, be necessary for their and their Affiliates' presentations and
filings with the USA's Securities and Exchange Commission and the appropriate
state securities agencies. The obligations set forth in this Clause shall
survive termination of this Agreement.
7.2 The foregoing obligations shall not apply to any information which:
7.2.1 the recipient party can prove by documentary evidence to have been in
its possession or the possession of any of its Affiliates prior to receipt of
this information except such information as has been exchanged in confidence
between the parties prior to the entering into of this Agreement; or
7.2.2 the recipient party can prove by documentary evidence to have been
independently created by it or one of its Affiliates prior to or subsequent to
the receipt of the information; or
7.2.3 has entered the public domain otherwise than as the result of a breach
of this Clause 7 by the recipient party or by a third party to whom the
recipient party has disclosed the information; or
<PAGE> 57
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7.2.4 has been or is disclosed to the recipient party by a third party
otherwise than in breach of an obligation of confidentiality to the disclosing
party; or
7.2.5 is disclosed under compulsion of law or the regulations of any
relevant stock exchange.
8. UNDERTAKING
The parties agree to amend the by-laws of the Companies in order to reflect as
much as possible the agreements contained herein.
9. LANGUAGE OF CONTRACT
This Agreement shall be prepared in the English and the Spanish languages, and
shall be executed in two (2) copies one of each of which will be retained by
each party hereto. In case of differences between both versions, the Spanish
version will prevail.
10. WAIVER
No forbearance, indulgence or relaxation or inaction by any party at any time
to require performance of any provision of this Agreement shall in any way
affect, diminish or prejudice the right of such party to require performance of
that provision, and any waiver or acquiescence by any party of any breach of
any provision of this Agreement shall not be construed as a waiver or
acquiescence of any continuing or succeeding breach of such provision, a waiver
or an amendment of the provision itself, or a waiver of any right under or
arising out of this Agreement or acquiescence to or recognition of rights
and/or position other than that expressly stipulated in this Agreement.
11. REMEDIES CUMULATIVE
All remedies of the parties under this Agreement whether provided herein or
conferred by law, custom or trade usages, are cumulative and not alternative
and may be enforced successively or concurrently.
12. INVALIDITY
12.1 If any provision of this Agreement is invalid under any applicable law
this Agreement shall be considered divisible as to such provision and such
provision shall be inoperative and shall not be part of the consideration
moving from any party hereto the other parties and the remainder of this
Agreement shall be valid and binding and of like effect as though such
provision was not included herein.
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12.2 Notwithstanding the provisions of Clause 12.1 hereof the parties shall
use their best endeavors to establish a practical and commercial solution to
problems arising out of such invalidity or enforceability and to agree and
embody in a supplementary agreement a substitute provision which as closely as
possible resembles the inoperative provision but which is itself not invalid or
unenforceable or prohibited by any applicable law.
13. NOTICES
13.1 Any notice or communication required or authorized to be given by this
Agreement shall be given in writing and may be served by delivery to the served
party's main office address as given in this Agreement by pre-paid registered
recorded delivery letter, cable, telex or facsimile addressed to such office or
address and any notice or communication so given by airmail shall be deemed to
have been served fourteen (14) days after the same shall have been airmailed
and any notice or communication so given by cable, telex or facsimile shall be
deemed to have been served forty eight (48) hours after it shall have been
despatched. In addition each party may serve such notice by hand and such
notice shall be deemed to have been properly served if it is delivered by hand
to and receipted by the representative in the Territory of the served party at
the address specified in Clause 13.2 receipt of such notice alone to be
sufficient for the purposes herein.
13.2 The addresses of the representatives referred to in Clause 13.1 are as
follows:
To the Sellers
Mr. Eduardo Eurnekian
Honduras 5663
(1414) Buenos Aires
Argentina
Telephone: (54 1) 777 1111
Fax: (54 1) 777 1111
With a copy to:
Mr. Mariano Ibanez
Honduras 5663
(1414) Buenos Aires
Argentina
Telephone: (54 1) 777 1234 x 765
Fax: (54 1) 777 1234 x 765
<PAGE> 59
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To TCI
TCI International Holdings, Inc.
5619 DTC Parkway
Englewood, Colorado 80111, U.S.A.
Attention: President
Telephone: (1 303) 267 5740
Telecopier: (1 303) 488 3242
With a copy to:
TCI International Holdings, Inc.
5619 DTC Parkway
Englewood, Colorado 80111, U.S.A.
Attention: General Counsel
Telephone: (1 303) 267 4800
Telecopier: (1 303) 488 3207
M. & M. Bomchil
Suipacha 268, 12o Floor
Buenos Aires - 1355 - Argentina
Attention: Mr. Marcelo E. Bombau
Telephone: (54 1) 328 8400
Telecopier: (54 1) 326 7217
14. ENTIRE AGREEMENT
This Agreement together with the Purchase Agreement of even date, and their
exhibits and schedules and those agreements to be executed pursuant to this
Agreement and the Purchase Agreement are the entire agreement between the
parties as to the subject matter hereof and no amendments hereto shall be
effective unless in writing and signed by or on behalf of each of the parties.
Sellers agree that all prior or contemporaneous stockholders agreements to
which the Sellers are parties with respect to the Companies are hereby
terminated and of no further force and effect.
15. AUTHORIZATION
Each party confirms to the others that the execution, delivery and performance
of this Agreement and the transactions contemplated hereby have been duly
authorized and that each is within the powers granted to it by law or its
Memorandum and Articles of Association, Statutes and By-Laws or equivalent
documents.
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16. DURATION
16.1. This Agreement shall be in effect as from Closing and shall remain in
effect as long as TCI and the Sellers or their permitted assignees hold Shares.
17. LAW - ARBITRATION
This Agreement shall be construed and shall take effect in accordance with the
laws of the Territory and any proceedings relating to any matters arising out
of the interpretation of this Agreement or to purported breaches of this
Agreement, irrespective of where the breach occurs, or to any matter arising
out of or incidental to the rights and liabilities of the parties hereto shall
be resolved by arbitration as provided in the Purchase Agreement.
18. INCONSISTENT PROVISIONS
In the event that any provision of this Agreement is inconsistent with the
provisions of any agreement ancillary hereto including the provisions of the
Companies' by-Laws the parties agree that the provisions of this Agreement
shall prevail to the extent of any such inconsistency, except in the case of
the Purchase Agreement.
AS WITNESS the parties have executed this Agreement the date first above
written, at New York, U.S.A.
/s/ EDUARDO EURNEKIAN
EDUARDO EURNEKIAN TCI INTERNATIONAL
/SELLERS HOLDINGS, INC.
<PAGE> 61
SCHEDULE/ANEXO B
Buenos Aires offices or representatives of:
1) Price Waterhouse
2) Coopers & Lybrand
3) Arthur Anderson
4) Deloitte Haskins and Sells
5) Ernst & Young
<PAGE> 1
EXHIBIT 10
AMENDED AND RESTATED
STOCKHOLDERS AGREEMENT
THIS AMENDED AND RESTATED STOCKHOLDERS AGREEMENT (the "Agreement") is made on
April 25, 1995. It amends and restates a Stockholders Agreement dated December
6, 1994 and an amendment to such agreement dated March 28, 1995.
BETWEEN:
(1) EDUARDO EURNEKIAN, I.C. Nbr. 4.086.268, in his individual capacity and
on behalf of BASILIA JALIQUIAS, I.C. Nbr. 3.304.838; NATALIO WENDE, I.C. Nbr.
4.203.286; ALBERTO ANTRANIK EURNEKIAN, I.C. Nbr. 2.073.441; ENRIQUE KEVORKYAN,
I.C. Nbr. 16.821.610; SEBASTIAN ARIAS DUVAL, I .C. Nbr. 20.987.869; LORENZO
LUIS MARCHESE, I.C. Nbr. 7.640.022 and TOMAS DANIEL KOLAKOVIC, I.C. Nbr.
7.861.707, ("the Sellers");
(2) TCI INTERNATIONAL HOLDINGS, INC. ( "TCI" ) a corporation organized
under the laws of the State of Delaware, USA, with its main offices at 5619 DTC
Parkway Englewood, Colorado, 80111, U.S.A.
WHEREAS:
(A) Cablevision S.A., Construred S.A. Univent's S.A. and Televisora
Belgrano S.A. ("the Companies") are corporations organized under the laws of
the Republic of Argentina with their main offices within the City of Buenos
Aires, Argentina.
(B) Sellers hold shares which represent 100% of the capital stock and
votes of Cablevision S.A., Construred S.A. and Univent's and 20% of the
capital stock and votes of Televisora Belgrano S.A.
(C) Cablevision S.A. holds shares which represent 80% of the capital stock
and votes of Televisora Belgrano S.A.
(D) The Sellers, Cablevision S.A. and TCI executed as of the date hereof
an Amended and Restated Stock Purchase Agreement by which TCI agreed to acquire
from the Sellers the shares representing 51% of the capital stock and votes of
Cablevision S.A., Construred S.A. and Univent's S.A. and 10,2% of the capital
stock and votes of Televisora Belgrano S.A. with an option to purchase an
additional 29% of the Companies ("the Purchase Agreement").
(E) The Sellers and TCI agree that the future relationship between them as
co-owners of the Companies as "sociedades anonimas" as foreseen in the Purchase
Agreement, shall be governed by the terms set out in this Agreement.
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NOW IT IS HEREBY AGREED AS FOLLOWS:
1. DEFINITIONS
In this Agreement, unless the context otherwise requires, the following
expressions have the following meanings:
All capitalized terms not defined herein will have the meaning given them in
the Purchase Agreement.
"Affiliate" one company or individual shall be deemed to be an affiliate of
another if one is Controlled by, under common Control with, or Controlling the
other;
"the Auditors" the firm of accountants referred to in Clause 4 or the firm of
accountants subsequently appointed pursuant to Clause 4;
"TCI's Directors" or "Class A Directors" the directors of the Companies
nominated from time to time by TCI in accordance with Clause 2.1.1 hereof;
"Sellers' Director" or "Class B Directors" the directors of the Companies
nominated from time to time by the Sellers in accordance with Clause 2.1.1.
hereof;
"the Board" the board of directors of the Companies;
"Control" a company or a person shall be deemed to have control over another
company if it (directly or indirectly) owns, or has the right to exercise more
than half the voting rights in such other company or otherwise exercises
(whether directly or indirectly) a legal right of decision making in such
company's affairs;
"Net Worth" share capital plus reserves and retained earnings of each of the
Companies;
"the Shares" ordinary nominative and non-endorsable shares issued in the
Companies at a par value of 1 peso each;
"the Territory" the Republic of Argentina;
"the Partners" the stockholders of the Companies after the Closing.
1.2 Except where inconsistent with anything contained herein:
1.2.1 Words in this Agreement denoting the masculine gender shall include
the feminine gender and the singular number shall include the plural and vice
versa;
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1.2.2 The titles and headings herein are used for convenience of reference
only and shall not be deemed part of this Agreement for the purpose of its
interpretation;
1.2.3 All schedules to this Agreement form an integral part hereof.
2. SHAREHOLDERS OR PARTNERS UNDERTAKINGS
2.1 Notwithstanding anything contained in the by-laws of the Companies,
the Partners respectively undertake that they shall at all times take all steps
necessary to ensure that the following provisions shall apply to each other and
to the Companies.
2.1.1 Unless otherwise agreed in writing between the Partners, the number of
directors of each of the Companies shall be a maximum of eight (8), of which
five (5) shall be TCI' Directors and three (3) shall be Sellers' Directors; TCI
and the Sellers may appoint the alternate Directors in the same proportion as
they may appoint Directors. Subject to any necessary approval being obtained
from the "Comite Federal de Radiodifusion" (COMFER) the Partners shall each be
entitled at any time to remove or substitute any of their respective nominated
directors alternate directors. There shall be five (5) TCI Directors and
three (3) Sellers Directors and TCI shall have the casting vote referred to in
Section 2.1.4. herein only for so long as Luis B. Nofal ("Nofal") serves as a
director of the Companies. Unless otherwise agreed, if Nofal ceases to be a
director of the Companies, there shall be four (4) TCI Directors and three (3)
Sellers Directors and TCI shall no longer have a casting vote.
2.1.2 To be quorate a meeting of the Board shall require the presence of a
majority of Directors then in office present in person or by their alternates
of whom one (1) at least shall be a TCI' Director and one (1) at least shall be
a Sellers' Director. However, if at any meeting of the Board duly convened in
accordance with the by-laws of the Companies and this Agreement a quorum is not
present that meeting may be adjourned to a date not earlier than ten (10) days
thereafter. Such adjourned meeting shall be quorate if a majority of the
Directors then in office are present in person or by their alternates and all
business properly transacted at that adjourned meeting shall be valid.
2.1.3 Meetings of the Board shall be held from time to time as the Partners
may agree but in any event at intervals of not more than three (3) months
unless otherwise agreed by the Partners or required by law.
2.1.4 Only a TCI Director (who must also be an officer of TCI) shall have a
casting vote in the event of a deadlock.
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2.1.5 Unless otherwise agreed by all of the Directors, notice of every
meeting or adjourned meeting of the Board shall be given to each Director at
the address (in the Territory or elsewhere) notified to the Companies by such
Director from time to time for this purpose at least ten (10) business days (or
in the case of an adjourned meeting at least five (5) days in advance thereof).
2.1.6 Every notice convening a meeting of the Board shall set out the agenda
of the business to be transacted thereat in full and sufficient detail. No item
of business not included in the agenda maybe discussed and voted upon or
transacted at the meeting unless all of the Directors the corresponding Company
are present and unanimously consent.
2.1.7. Directors appointed by each partner must comply with any requirement
under Argentine law, and must be persons of good reputation and "buenos hombres
de negocios" (good businessmen) as said expression is understood in Argentina.
2.1.8. The sindico shall be appointed by TCI from among the accounting firms
indicated under Schedule B as long as Mr. Eduardo Eurnekian is on the board of
the Companies. However, if Eduardo Eurnekian ceases to serve as a director, and
for so long as he owns at least twenty-one percent (21%) of the Company's
Common Stock, he may appoint the sindico who must be from one of the accounting
firms indicated under Schedule B. At the time the Sellers' equity drops below
twenty-one percent (21%) of the Company's Common Stock, then the sindico will
be freely appointed by TCI.
2.1.9. After the Closing Date (as defined in the Purchase Agreement), all
matters shall be decided by a vote of a simple majority (i.e. more than 50%) of
the Shares. However, until the Stockholders have received in cash seventy five
percent (75%) of the Base Purchase Price, through the payment of the Base
Purchase Price foreseen in Section 1.2 a) of the Purchase Agreement and the
necessary payments to said effect under the Promissory Notes referred to in
Section 1.2.b) of the Purchase Agreement, the following matters must be
approved by the positive vote of not less than ninety percent (90%) of the
Shares:
a) each year's annual operating budget;
b) each year's annual capital budget;
c) any variance from the operating or capital budgets of ten percent
(10%) or more;
d) a sale of the Company Business;
e) any fundamental change in the Company Business; or
f) capital increases.
If the Partners are unable to agree on the budgets referred to in items a) and
b) above, they will apply the budgets of the previous
<PAGE> 5
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year automatically adjusted in accordance with the Argentine Consumer Price
Index for the previous year plus ten per cent.
2.1.10. Each Partner shall indemnify and keep harmless the other Partner for
any damage caused to it by any Director acting (in a wilful or grossly
negligent manner) in such capacity appointed by TCI or the Sellers, as the case
may be.
2.1.11. Capital Increase: The Sellers and TCI have reached the Base Purchase
Price under the Purchase Agreement on the basis of the number of EBS at
Closing. Accordingly, the Partners determine that, for purposes of calculating
any dilution as a result of capital increases, each Partner's percentage
ownership of the Company's Shares -notwithstanding anything to the contrary
stemming from the corporate by-laws or books- shall be determined by multiplying
the number of EBS at Closing times U$S 1,500.
Such amount is currently believed to be approximately U$S 600 million.
Accordingly, the Partners agree that, only for the purposes of calculating any
dilution caused to any Partner as a result of its failure to participate or to
participate fully in capital increases, each Partner's percentage ownership of
the Company's Share (notwithstanding anything to the contrary in the corporate
by-laws or books) will be deemed to be derived from the Base Purchase Price
paid to the Stockholders on the Closing Date.
As an example, the parties illustrate on a U$S 120.000.000 capital increased
upon a capital of U$S 600.000.000, with corporate capital book value at U$S
10.000.000, which is not subscribed by the Sellers.
1) Situation before the capital increase.
TCI 5,100,000 = 51%
Sellers 4,900,000 = 49%
2) Situation after the capital increase, including an increase in the book
value of the capital stock to $12,000,000.
TCI 7,100,000 = 59.17%
Sellers 4,900,000 = 40,83%
Premium 118,000,000 99.99%
2.1.12. No distribution of dividends may be made to any Partners until TCI has
paid enough of the principal amount of the Promissory Notes referred to in
Section 1.2 b) of the Purchase Agreement in order that 75% of the Base Purchase
Price has been paid in cash by TCI to the Stockholders.
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2.1.13 The parties consent to the amendment of the By-Laws of Cablevision
S.A. to create two classes of common stock, par value 1 peso (Class A and Class
B), with one (1) vote por share of each class. The following shares of each
class will be issued to the Partners: 7,350,000 shares of Class B Common stock
(par value, 1 peso) with one vote per share to Sellers and 7,650,000 shares of
Class A common stock (par value 1 peso) with one vote per share to TCI. The
shares to be issued will be subject to the pledges provided for in the Purchase
Agreement.
3. GENERAL MEETINGS OR PARTNERS MEETINGS
3.1 No General Meeting or Partners Meeting of the Companies shall be
quorate unless representatives of the Partners representing more than 50% of
the voting shares of each of the Companies are present.
3.2 Written notice of a General Meeting of the Companies (or of an
adjourned General Meeting of the Companies) shall if not waived,
notwithstanding any provisions of applicable law which may provide for a
shorter period, be given to each Partner at least ten (10) business days in
advance thereof.
3.3 Every notice convening a General Meeting or Partners Meeting of the
Companies shall set out the agenda of the business to be transacted thereat in
full and sufficient detail. No item of business not included in the agenda may
be discussed and voted upon or transacted at the meeting unless all of the
Partners of the Companies are represented at the meeting and unanimously
consent.
4. AUDITORS
The accounts and records of the Companies shall be audited by KPMG Finsterbusch
Pickenhayn Sibille or such other firm of independent accountants of
international repute as may be approved by the Board from time to time.
5. FINANCIAL AND GENERAL REPORTING
The Partners shall procure that:
5.1 the accounts of the Companies shall be made up to 31st December or
such other date as may be agreed in each year;
5.2 the Companies shall report to the parties in Argentine and US GAAP and
in accordance with the requirements and systems of TCI at monthly, quarterly
and yearly intervals. Such reports shall deal with at least the following:
5.2.1 financial, commercial and operating matters;
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5.2.2 sales and financial forecasts;
5.2.3 proposed financial, marketing, procurement, capital expenditure,
services, personnel and remuneration policies;
5.2.4 insurance arrangements;
5.2.5 pension schemes and the funding thereof; and
5.2.6 such other matters as may be reasonably requested by any of the
Partners.
5.3 All quarterly and annual financial statements will comply fully with
the requirements of the United States of America's Securities and Exchange
Commission. Quarterly financial statements will be delivered to the Partners no
later than thirty (30) days after each quarter's end. Annual financial
statements will be delivered no later than forty five (45) days after each
year's end. The Partners will cooperate fully in the timely preparation of all
reports required hereunder.
5.4 The Companies shall prepare, in a manner and form to be specified by
the Partners, monthly management accounts and shall provide the Partners with
such monthly management accounting information in a form and at times
reasonably required by the Partners for their own management accounting
purposes and shall further provide the Partners with such other accounting
information as each may reasonably require for the purposes of the preparation
of their own statutory accounts.
6. SUBSCRIPTION FOR AND TRANSFER AND ASSIGNMENT OF SHARES
6.1 If at any time any of the Partners to this Agreement wishes to sell or
otherwise transfer or assign any of the Shares held by it, it shall do so in
accordance with the provisions contained in this Agreement, including Schedule
A.
6.2 Except as otherwise provided herein, all Partners agree not to
transfer, sell or in any way assign their respective participation in the
Companies for a term of two (2) years as from the Closing Date as defined in
the Purchase Agreement. At the end of said term, the Partners may sell,
transfer or assign their respective participations in the Companies, subject to
this Agreement, including Schedule A. The Partners agree that Cablevision S.A.
cannot sell assign or transfer under any title the shares of Televisora
Belgrano S.A. until the Base Purchase Price foreseen in the Amended and
Restated Stock Purchase Agreement dated April 25, 1995 is paid.
6.3 The Partners of the Companies shall have pre-emptive rights to acquire
any additional Shares which the Companies may issue, such
<PAGE> 8
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Shares to be offered to the Partners in proportion to their shareholdings in
the Companies at the time of the said issue.
6.4 Upon receiving the prior consent of a majority of the shares, any
Partner may transfer any or all of its Shares to an Affiliate, provided that,
in all cases, the Affiliate agrees to join in this Agreement and shall be bound
by the terms of this Agreement as though it were an original party hereto. Such
consent shall not be unreasonably withheld.
6.5 The Partners acknowledge and agree that TCI may after the date hereof
and in accordance with Section 8.7 of the Purchase Agreement assign a portion
of its interest in the Companies or in this Agreement to U.S. West,
Time-Warner, and/or Bell Canada and/or any of the Bell Regional Operating
Companies (RBOC's), Torneos y Competencias S.A., Avila Cab or Carlos Avila y
Cia. S.R.L. or their Affiliates or all or a portion of its interest to an
entity jointly Controlled by or by any combination of TCI, US West and Time
Warner; and that the Sellers my assign their interest in the Companies or this
Agreement to an S.A. controlled by the Sellers in accordance with Section 8.7
of the Purchase Agreement, provided that the assignees, in all cases, agree to
join in this Agreement and shall be bound by the terms of this Agreement as
though it were an original party hereto.
6.6 In the event that any of the Partners sells, transfers or assigns all
or a portion of its Shares in the Companies in violation of this Agreement,
including Schedule A:
6.6.1 the Partners will be able to exclude the proposed purchaser of such
Shares pursuant to the law of Argentine commercial companies Nbr. 19.550,
Section 152.
6.7 All Partners agree that the procedure foreseen in Clause 6.6 shall
also be applicable in case of sales, assignments or transfers resulting from
the bankruptcy of any of Partner.
6.8 Save as provided in this Agreement neither this Agreement nor any
right under this Agreement shall be assignable or transferable by any Partner
hereto without the prior written consent of the others.
6.9 The sale of Shares by any of the Sellers to Eduardo Eurnekian only
will not be subject to Section 6 or Schedule A of this Agreement.
<PAGE> 9
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7. CONFIDENTIALITY
7.1 Neither party will issue any press release or make any other public
announcement regarding this Agreement or the transactions contemplated hereby
without the consent of the other party. Each party will hold, and will cause
its employees, consultants, advisors and agents to hold, in confidence, the
terms of this Agreement and any non-public information concerning the Companies
or the other party obtained pursuant to or as a result of this Agreement.
Notwithstanding the preceding, a party may disclose such information to the
extent required by any Legal Requirement (including disclosure requirements
under Argentine and United States of America ("USA") federal and state
securities laws), but the party proposing to disclose such information will
first notify and consult with the other party concerning the proposed
disclosure, to the extent reasonably feasible. Each party also may disclose
such information to employees, consultants, advisors, agents and actual or
potential lenders whose knowledge is necessary to facilitate the consummation
of the transactions contemplated by this Agreement. Each party's obligation to
hold information in confidence will be satisfied if it exercises the same care
with respect to such information as it would exercise to preserve the
confidentiality of its own similar information. The Sellers authorize TCI
and/or its transferees to use all information which may, in such persons'
estimation, be necessary for their and their Affiliates' presentations and
filings with the USA's Securities and Exchange Commission and the appropriate
state securities agencies. The obligations set forth in this Clause shall
survive termination of this Agreement.
7.2 The foregoing obligations shall not apply to any information which:
7.2.1 the recipient party can prove by documentary evidence to have been in
its possession or the possession of any of its Affiliates prior to receipt of
this information except such information as has been exchanged in confidence
between the parties prior to the entering into of this Agreement; or
7.2.2 the recipient party can prove by documentary evidence to have been
independently created by it or one of its Affiliates prior to or subsequent to
the receipt of the information; or
7.2.3 has entered the public domain otherwise than as the result of a breach
of this Clause 7 by the recipient party or by a third party to whom the
recipient party has disclosed the information; or
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7.2.4 has been or is disclosed to the recipient party by a third party
otherwise than in breach of an obligation of confidentiality to the disclosing
party; or
7.2.5 is disclosed under compulsion of law or the regulations of any
relevant stock exchange.
8. UNDERTAKING
The parties agree to amend the by-laws of the Companies in order to reflect as
much as possible the agreements contained herein.
9. LANGUAGE OF CONTRACT
This Agreement shall be prepared in the English and the Spanish languages, and
shall be executed in two (2) copies one of each of which will be retained by
each party hereto. In case of differences between both versions, the Spanish
version will prevail.
10. WAIVER
No forbearance, indulgence or relaxation or inaction by any party at any time
to require performance of any provision of this Agreement shall in any way
affect, diminish or prejudice the right of such party to require performance of
that provision, and any waiver or acquiescence by any party of any breach of
any provision of this Agreement shall not be construed as a waiver or
acquiescence of any Continuing or succeeding breach of such provision, a waiver
or an amendment of the provision itself, or a waiver of any right under or
arising out of this Agreement or acquiescence to or recognition of rights
and/or position other than that expressly stipulated in this Agreement.
11. REMEDIES CUMULATIVE
All remedies of the parties under this Agreement whether provided herein or
conferred by law, custom or trade usages, are cumulative and not alternative
and may be enforced successively or concurrently.
12. INVADLIDITY
12.1 If any provision of this Agreement is invalid under any applicable law
this Agreement shall be considered divisible as to such provision and such
provision shall be inoperative and shall not be part of the consideration
moving from any party hereto to the other parties and the remainder of this
Agreement shall be valid and binding and of like effect as though such
provision was not included herein.
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12.2 Notwithstanding the provisions of Clause 12.1 hereof the parties shall
use their best endeavors to establish a practical and commercial solution to
problems arising out of such invalidity or enforceability and to agree and
embody in a supplementary agreement a substitute provision which as closely as
possible resembles the inoperative provision but which is itself not invalid or
unenforceable or prohibited by any applicable law.
13. NOTICES
13.1 Any notice or communication required or authorized to be given by this
Agreement shall be given in writing and may be served by delivery to the served
party's main office address as given in this Agreement by pre-paid registered
recorded delivery letter, cable, telex or facsimile addressed to such office or
address and any notice or communication so given by airmail shall be deemed to
have been served fourteen (14) days after the same shall have been airmailed
and any notice or communication so given by cable, telex or facsimile shall be
deemed to have been served forty eight (48) hours after it shall have been
despatched. In addition each party may serve such notice by hand and such
notice shall be deemed to have been properly served if it is delivered by hand
to and receipted by the representative in the Territory of the served party at
the address specified in Clause 13.2 receipt of such notice alone to be
sufficient for the purposes herein.
13.2 The addresses of the representatives referred to in Clause 13.1 are as
follows:
To the Sellers
Mr. Eduardo Eurnekian
Honduras 5663
(1414) Buenos Aires Argentina
Telephone: (54 1) 777 1111
Fax: (54 1) 777 1111
With a copy to:
Mr. Mariano Ibanez
Honduras 5663
(1414) Buenos Aires
Argentina
Telephone: (54 1) 777 1234 x 765
Fax: (54 1) 777 1234 x 765
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TO TCI
TCI International Holdings, Inc.
5619 DTC Parkway
Englewood, Colorado 80111, U.S.A.
Attention: President
Telephone:(1 303) 267 5740
Telecopier: (1 303) 488 3242
With a copy to:
TCI International Holdings, Inc.
5619 DTC Parkway
Englewood, Colorado 80111, U.S.A.
Attention: General Counsel
Telephone: (1 303) 267 4800
Telecopier: (1 303) 488 3207
M. & M. Bomchil
Suipacha 268, 12o Floor
Buenos Aires - 1355 - Argentina
Attention: Mr. Marcelo E. Bombau
Telephone: (54 1) 328 8400
Telecopier: (54 1) 326 7217
14. ENTIRE AGREEMENT
This Agreement together with the Purchase Agreement of even date, and their
exhibits and schedules and those agreements to be executed pursuant to this
Agreement and the Purchase Agreement are the entire agreement between the
parties as to the subject matter hereof and no amendments hereto shall be
effective unless in writing and signed by or on behalf of each of the parties.
Sellers agree that all prior or contemporaneous stockholders agreements to
which the Sellers are parties with respect to the Companies are hereby
terminated and of no further force and effect.
15. AUTHORIZATION
Each party confirms to the others that the execution, delivery and performance
of this Agreement and the transactions contemplated hereby have been duly
authorized and that each is within the powers granted to it by law or its
Memorandum and Articles of Association, Statutes and By-Laws or equivalent
documents.
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16. DURATION
16.1. This Agreement shall be in effect as from Closing and shall remain in
effect as long as TCI and the Sellers or their permitted assignees hold Shares.
17. LAW - ARBITRATION
This Agreement shall be construed and shall take effect in accordance with the
laws of the Territory and any proceedings relating to any matters arising out
of the interpretation of this Agreement or to purported breaches of this
Agreement, irrespective of where the breach occurs, or to any matter arising
out of or incidental to the rights and liabilities of the parties hereto shall
be resolved by arbitration as provided in the Purchase Agreement.
18. INCONSISTENT PROVISIONS
In the event that any provision of this Agreement is inconsistent with the
provisions of any agreement ancillary hereto including the provisions of the
Companies' by-Laws the parties agree that the provisions of this Agreement
shall prevail to the extent of any such inconsistency, except in the case of
the Purchase Agreement.
AS WITNESS the parties have executed this Agreement the date first above
written, at New York, U.S.A.
/s/ EDUARDO EURNEKIAN /s/ FRED A. VIERRA
EDUARDO EURNEKIAN TCI INTERNATIONAL
/SELLERS HOLDINGS, INC.
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SCHEDULE/ANEXO B
Buenos Aires offices or representatives of:
1) Price Waterhouse
2) Coopers & Lybrand
3) Arthur Anderson
4) Deloitte Haskins and Sells
5) Ernst & Young
