Exhibit D
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COMBINATION AGREEMENT
among
NEW SITE INC.,
NEWHAVEN OVERSEAS CORP.,
HICKS, MUSE, ▇▇▇▇ & ▇▇▇▇▇ LATIN AMERICA FUND, ▇.▇.
▇▇▇▇▇, MUSE, ▇▇▇▇ & ▇▇▇▇▇ LATIN AMERICA PRIVATE FUND, L.P.
HMLA 1-SBS COINVESTORS, L.P.
IBERO-AMERICAN MEDIA PARTNERS II LTD.
and
EL SITIO, INC.
Dated as of October 30, 2000
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Table of Contents
Page
1. Organizational Documents of Holdco and Formation of El Sitio Merger
Subsidiary............................................................2
1.1. Organizational Documents of Holdco.........................2
1.2. Directors and Officers of Holdco...........................2
1.3. Organization of El Sitio Merger Subsidiary.................2
1.4. Directors and Officers of El Sitio Merger
Subsidiary.................................................2
1.5. Actions of IAMP............................................3
2. The El Sitio Merger and Related Matters.................................3
2.1. The Contributions and the El Sitio Merger..................3
2.2. Closing....................................................4
2.3. Effective Time.............................................4
2.4. Effects of the El Sitio Merger.............................5
2.5. Memorandum and Articles of Association.....................5
2.6. Directors and Officers.....................................5
2.7. Effect on El Sitio Share Capital...........................5
2.8. Treatment of Options; Common Share Plans...................5
2.9. Certain Adjustments........................................6
3. Exchange of Certificates................................................6
3.1. Exchange Fund...............................................6
3.2. Exchange Procedures.........................................7
3.3. Distributions with Respect to Unexchanged Shares............7
3.4. No Further Ownership Rights in El Sitio Common
Shares......................................................7
3.5. No Fractional Holdco Common Shares..........................7
3.6. Termination of Exchange Fund................................9
3.7. No Liability................................................8
3.8. Investment of the Exchange Fund.............................8
3.9. Lost Certificates...........................................8
3.10. Withholding Rights..........................................9
3.11. Further Assurances..........................................9
3.12. Share Transfer Books........................................9
3.13. IAMP Matters................................................9
3.14. Lock-Up Agreements..........................................9
4. Representations and Warranties.........................................10
4.1. Representations and Warranties of Newhaven, ▇▇▇▇▇
and IAMP...................................................10
4.2. Representations and Warranties of Newhaven.................24
4.3. Representations and Warranties of El Sitio.................37
4.4. Expiration of Representations and Warranties...............49
ii
5. Transactions Prior to Closing..........................................49
5.1. Access to Information Concerning Properties and
Records; Confidentiality...................................49
5.2. Conduct of the Business of Media Companies
Pending the Closing Date...................................50
5.3. Conduct of Business of El Sitio Pending the
Closing Date...............................................53
5.4. Intercompany Transactions..................................56
5.5. Further Actions............................................56
5.6. Notification...............................................57
5.7. Assignment of Rights to Newhaven...........................57
5.8. Transition Period..........................................58
5.9. No Inconsistent Action.....................................58
5.10. Convertible Preferred Shares; Debt Financing...............58
5.11. Redemption or Retirement of Holdco Common Shares
Received by Subsidiaries of Holdco.........................59
5.12. IAMP Employee Share and Equity Rights......................59
5.13. Agreement with Cablevision.................................59
6. Additional Agreements..................................................59
6.1. Preparation of Proxy Statement; Shareholders
Meeting....................................................59
6.2. Acquisition Proposals......................................61
6.3. Holdco Board of Directors; PTVI Board of Directors.........61
6.4. Fees and Expenses..........................................64
6.5. Directors' and Officers' Indemnification and
Insurance..................................................65
6.6. Public Announcements.......................................66
6.7. Listing of Holdco Common Shares............................66
6.8. Employee Benefits..........................................66
6.9. Iberoamerican Media Holdings Chile S.A. Options............66
7. Conditions Precedent...................................................66
7.1. Conditions Precedent to Obligations of El Sitio,
each Media Company, Newhaven and ▇▇▇▇▇.....................66
7.2. Conditions Precedent to Obligations of El Sitio............67
7.3. Conditions Precedent to the Obligations of
Newhaven, ▇▇▇▇▇ and the Media Companies....................68
8. Termination............................................................69
8.1. General....................................................69
8.2. Effect of Termination......................................69
iii
9. Indemnification........................................................69
9.1. Survival of Representations and Warranties.................69
10. Miscellaneous..........................................................75
10.1. Notices....................................................75
10.2. Entire Agreement...........................................76
10.3. Binding Effect; No Third-Party Beneficiaries...............76
10.4. Assignability..............................................76
10.5. Amendment; Waiver..........................................76
10.6. Schedules and Exhibits.....................................77
10.7. Section Headings; Table of Contents........................77
10.8. Severability...............................................77
10.9. Counterparts...............................................77
10.10. WAIVER OF JURY TRIAL.......................................77
10.11. Applicable Law.............................................77
10.12. Submission to Jurisdiction.................................77
10.13. Certain Definitions...............................................78
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Exhibits
Exhibit A - Holdco Agreement
Exhibit B - Term Sheet for Registration Rights Agreement
Exhibit C - Voting Agreement
Exhibit D - Term Sheet for Employment Agreement of ▇▇▇▇▇▇▇ Vivo-
Chaneton
Exhibit E-1 - Holdco Memorandum of Association
Exhibit E-2 - Holdco Articles of Association
Exhibit F - Holdco Letter Agreement for Chilean Employees
COMBINATION AGREEMENT
COMBINATION AGREEMENT, dated as of October 30, 2000 (this "Agreement"),
among New Site Inc., a British Virgin Islands international business company
("Holdco"), Newhaven Overseas Corp., a British Virgin Islands international
business company ("Newhaven"), Hicks, Muse, ▇▇▇▇ & ▇▇▇▇▇ Latin America Fund,
L.P., a Delaware limited partnership ("HMTF I"), Hicks, Muse, ▇▇▇▇ & ▇▇▇▇▇ Latin
America Private Fund, L.P., a Delaware limited partnership ("HMTF II"), HMLA
1-SBS Coinvestors, L.P., a Delaware limited partnership ("HMTF III" and,
together with HMTF I and HMTF II, "▇▇▇▇▇"), Ibero-American Media Partners II
Ltd., a Cayman Islands company ("IAMP", and, together with Newhaven, the "Media
Companies") and El Sitio, Inc., a British Virgin Islands international business
company ("El Sitio").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, Newhaven and ▇▇▇▇▇ together own 100% of the issued and outstanding
share capital of IAMP;
WHEREAS, Newhaven and ▇▇▇▇▇, through the Media Companies, as well as
through their respective subsidiaries, are engaged in the business of
developing, producing, marketing and distributing television, radio and other
media programming and own television and radio networks and certain
pay-television channels in Latin America and Europe with certain additional
operations in the United States and other parts of the world (the "Media
Business");
WHEREAS, IAMP owns the percentage of the share capital of each IAMP
Subsidiary as set forth in Section 4.1(a)(iv) of the IAMP Disclosure Schedule,
and Newhaven owns (directly or indirectly) the percentage of the share capital
of each Newhaven Subsidiary as set forth on Section 4.2(a)(iv) of the Newhaven
Disclosure Schedule;
WHEREAS, El Sitio is an Internet media company that provides
country-specific and global interactive content, connectivity and e-commerce for
Spanish and Portuguese-speaking audiences in Latin America and the United
States;
WHEREAS, the respective Boards of Directors of Newhaven, ▇▇▇▇▇, IAMP,
Holdco and El Sitio have approved and deemed it advisable and in the best
interests of their respective shareholders to consummate the Transactions
pursuant to the terms and subject to the conditions set forth herein;
WHEREAS, Newhaven, ▇▇▇▇▇, IAMP, Holdco and El Sitio intend, by approving
resolutions authorizing this Agreement, to adopt this Agreement as a plan of
reorganization within the meaning of Sections 354, 361 and 368(a) of the U.S.
Internal Revenue Code of 1986, as amended, and the rules and regulations
promulgated thereunder (the "Code") and that the transactions contemplated by
this Agreement be undertaken pursuant to such plans and that such transactions
be treated as a tax-free exchange pursuant to Section 368 and/or Section 351 of
the Code;
WHEREAS, concurrently with the execution and delivery of this Agreement and
as a condition and inducement to each party's willingness to enter into this
Agreement, Newhaven and ▇▇▇▇▇ and certain shareholders of El Sitio have entered
into a voting agreement (the "Voting Agreement") dated as of the date hereof;
2
WHEREAS, as a condition to the closing of the Transactions, Hampstead
Management Company Ltd., ▇▇▇▇▇, certain shareholders of El Sitio and Holdco will
enter into an agreement (the "Holdco Agreement"), attached as Exhibit A hereto,
and Newhaven, ▇▇▇▇▇ and Holdco will enter into a registration rights agreement
(the "Registration Rights Agreement") providing for, among other things, the
registration of Holdco Common Shares to be held, as the case may be, by Newhaven
and ▇▇▇▇▇ or their affiliates under the Securities Act including the terms set
forth in Exhibit B hereto; and
WHEREAS, the parties hereto desire to make certain representations,
warranties and agreements in connection with the Transactions, and also to
prescribe various conditions to the Transactions.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants of the parties hereto, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, it is hereby
agreed as follows:
1. Organizational Documents of Holdco and
Formation of El Sitio Merger Subsidiary
---------------------------------------
1.1. Organizational Documents of Holdco. El Sitio, ▇▇▇▇▇ and Newhaven shall
take, and shall cause Holdco to take, all requisite action to cause the
memorandum of association of Holdco to be in the form set forth as Exhibit E-1
and the articles of association of Holdco to be in the form set forth as Exhibit
E-2 (collectively, the "Holdco Memorandum and Articles of Association") at the
Effective Time.
1.2. Directors and Officers of Holdco. Prior to the Effective Time, the
directors and officers of Holdco shall consist of individuals designated by
Newhaven. El Sitio, ▇▇▇▇▇, and Newhaven shall take all requisite action to cause
the directors and officers of Holdco as of the Effective Time to be as provided
in Section 6.3. Each such director and officer shall remain in office until his
or her successors are elected in accordance with the Holdco Memorandum and
Articles of Association.
1.3. Organization of El Sitio Merger Subsidiary. As promptly as practicable
following the execution of this Agreement, Holdco shall cause to be formed as an
international business company under the laws of the British Virgin Islands ("El
Sitio Merger Subsidiary") for the sole purpose of effectuating the El Sitio
Merger contemplated herein; the memorandum of association and articles of
association of El Sitio Merger Subsidiary shall be in such forms as shall be
determined by Holdco as soon as practicable following the execution of this
Agreement; and the authorized share capital of El Sitio Merger Subsidiary shall
initially consist of 100 common shares, par value U.S.$0.01 per share, all of
which shares shall be issued to Holdco at a price of U.S.$1.00 per share.
1.4. Directors and Officers of El Sitio Merger Subsidiary. As promptly as
practicable following the execution of this Agreement, El Sitio, Newhaven, ▇▇▇▇▇
and IAMP shall take all requisite action to designate the directors and officers
of El Sitio Merger Subsidiary and to take such steps as may be necessary or
appropriate to complete the organization of El Sitio Merger Subsidiary.
3
1.5. Actions of IAMP. As promptly as practicable following the execution of
this Agreement, IAMP, as the holder of all the outstanding Class A common shares
of Holdco, par value U.S.$0.01 per share ("Holdco Common Shares"), shall adopt
this Agreement, and shall cause Holdco, as the sole shareholder of El Sitio
Merger Subsidiary, to adopt this Agreement. Prior to the Effective Time, IAMP
shall cause Holdco, and Holdco shall cause El Sitio Merger Subsidiary, to
perform its obligations under this Agreement. As promptly as practicable after
the date hereof, the parties hereto shall cause this Agreement to be amended to
add El Sitio Merger Subsidiary as a party hereto and El Sitio Merger Subsidiary
shall become a constituent corporation in the El Sitio Merger.
Prior to the Imagen Contribution, IAMP shall contribute all of the stock it
owns of Iberoamerican Media Holdings, Chile, S.A. and Red de Television
Chilevision S.A. (the "Chile Businesses") to a newly formed wholly owned
subsidiary of IAMP ("Chile Sub"), which shall be a British Virgin Islands
international business company and a disregarded entity for U.S. tax purposes,
in exchange for stock of Chile Sub.
2. The El Sitio Merger and Related Matters
---------------------------------------
2.1. The Contributions and the El Sitio Merger. Upon the terms and subject
to the conditions set forth in this Agreement, and in accordance with the
provisions of Part VII of the International Business Companies Ordinance, 1984
of the British Virgin Islands (the "BVI Companies Ordinance"):
(a) First, as promptly as practical following the date hereof, IAMP
shall cause CTG Inversora, S.A. to be dissolved under the laws of
Argentina.
(b) Second, IAMP shall contribute all of the common stock of Imagen
Satelital S.A. to Holdco in exchange for 23,768,410 Holdco Common Shares
(the "Imagen Contribution").
(c) Third, IAMP shall contribute all of the common stock owned by IAMP
of each of Chile Sub, Canal Joven S.A., Morehaven Investments, Inc., IAMP
(El Sitio) Investments Ltd. and Kedar Enterprises Ltd. (with their
respective subsidiaries and Imagen Satelital, S.A., the "IAMP
Subsidiaries") to Holdco in exchange for 39,760,058 Holdco Common Shares
(together the "IAMP Contribution"). Immediately following the Effective
Time, Holdco shall issue to IAMP two Class C Common Shares of Holdco, par
value U.S.$1.00 per share (the "C Shares"), and one Class H Common Share of
Holdco, par value U.S.$1.00 per share (the "H Share"), as additional
consideration for the IAMP Contribution.
(d) Fourth, Newhaven shall cause Hampstead Management Company Ltd. to
contribute all of the capital stock of Meadowlane Enterprises, Ltd.,
Rainbow Heights International Ltd. ("Rainbow"), Collingham Holdings Co.
Ltd. and Iberoamerican Media Management, Inc. (together with their
respective subsidiaries, the "Hampstead Subsidiaries") to Holdco (the
"Hampstead Contribution") and Newhaven shall contribute 100% of the capital
stock of its wholly-owned subsidiary Victoria Springs Investments Ltd.
("Victoria Springs" and together with its subsidiary and the Hampstead
Subsidiaries, the "Newhaven Subsidiaries") in exchange for 8,762,547 Holdco
Common Shares (the "Newhaven Contribution" and, together with the Imagen
Contribution, the IAMP Contribution and the Hampstead Contribution, the
"Contributions").
4
(e) Fifth, El Sitio Merger Subsidiary shall be merged with and into El
Sitio (the "El Sitio Merger"). El Sitio shall be the surviving corporation
in the El Sitio Merger and shall continue its corporate existence under the
laws of the British Virgin Islands. As a result of the El Sitio Merger, El
Sitio shall become a wholly owned subsidiary of Holdco. The Contributions
and the El Sitio Merger together are referred to herein as the
"Transactions".
(f) Sixth, immediately following the Effective Time, each of the
Founders (as defined in the Holdco Agreement) shall contribute U.S.$0.01 to
Holdco in exchange for 1 share of Class F Common Shares of Holdco, par
value U.S.$0.01 per share.
2.2. Closing. Upon the terms and subject to the conditions set forth in
Article 7 and the termination rights set forth in Article 8, the closing of the
Transactions (the "Closing") will take place on the first Business Day after the
satisfaction or waiver (subject to applicable law) of the conditions (excluding
conditions that, by their nature, cannot be satisfied until the Closing Date)
set forth in Article 7, unless this Agreement has been terminated pursuant to
its terms or unless another time or date is agreed to in writing by the parties
hereto (the actual time and date of the Closing referred to herein as the
"Closing Date"). The Closing shall be held at the offices of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇, unless another place
is agreed to in writing by the parties hereto.
2.3. Effective Time. As soon as practicable following the satisfaction or
waiver (subject to applicable law) of the conditions set forth in Article 7 and
subject to the ordering of the transactions set forth in this Section 2.3, at
the Closing the parties shall file the Certificate of Merger relating to the El
Sitio Merger (the "El Sitio Certificate of Merger") with the Registrar of
Companies of the British Virgin Islands in such form as is required by and
executed and acknowledged in accordance with the relevant provisions of the BVI
Companies Ordinance, and shall make all other filings or recordings required
under the BVI Companies Ordinance. The Imagen Contribution shall become
effective immediately prior to the effective time of the IAMP Contribution. The
IAMP Contribution shall become effective immediately prior to the effective time
of the Hampstead Contribution. The Hampstead Contribution shall become effective
immediately prior to the effective time of the Newhaven Contribution. The
Newhaven Contribution shall become effective immediately prior to the effective
time of the El Sitio Merger. The El Sitio Merger shall become effective at (a)
the date and time the El Sitio Certificate of Merger is duly filed with the
Registrar of Companies of the British Virgin Islands or (b) such subsequent time
as El Sitio, IAMP, Newhaven and ▇▇▇▇▇ shall agree and as shall be specified in
the El Sitio Certificate of Merger (such effective date and time for the El
Sitio Merger being the "Effective Time").
5
2.4. Effects of the El Sitio Merger. At and after the Effective Time, the
El Sitio Merger will have the effects set forth in the BVI Companies Ordinance.
2.5. Memorandum and Articles of Association. The memorandum of association
and the articles of association of El Sitio, as in effect immediately prior to
the Effective Time, shall be the memorandum of association and articles of
association of the surviving corporation in the El Sitio Merger.
2.6. Directors and Officers. The directors and officers of El Sitio Merger
Subsidiary immediately prior to the Effective Time shall be the directors and
officers of the surviving corporation in the El Sitio Merger.
2.7. Effect on El Sitio Share Capital. As of the Effective Time, by virtue
of the El Sitio Merger and without any action on the part of the holder of any
common shares of El Sitio, par value U.S.$0.01 per share, (the "El Sitio Common
Shares"), or any Holdco Common Shares:
(a) Shares of El Sitio Merger Subsidiary. Each issued and outstanding
common share of El Sitio Merger Subsidiary, par value U.S.$0.01 per share,
shall be converted into the right to receive one fully paid and
non-assessable common share of the surviving corporation in the El Sitio
Merger, par value U.S.$0.01 per share.
(b) Conversion of El Sitio Common Shares. Subject to Section 3.5, each
issued and outstanding El Sitio Common Share shall be converted into the
right to receive one fully paid and non-assessable Holdco Common Share (the
"El Sitio Exchange Ratio"). The Holdco Common Shares into which the El
Sitio Common Shares are converted pursuant to the foregoing are
collectively referred to herein as the "El Sitio Merger Consideration".
As a result of the El Sitio Merger and without any action on the part of
the holders thereof, at the Effective Time, all El Sitio Common Shares shall
cease to be outstanding and shall be canceled and retired and shall cease to
exist, and each holder of a certificate that immediately prior to the Effective
Time represented any such El Sitio Common Shares (a "El Sitio Certificate")
shall thereafter cease to have any rights with respect to such El Sitio Common
Shares, except the right (subject to Section 3.5) to receive the El Sitio Merger
Consideration to be issued in consideration therefor.
2.8. Treatment of Options; Common Share Plans. As soon as reasonably
practicable following the date of this Agreement, the board of directors of each
of Holdco and El Sitio (or, if appropriate, any committee administering the El
Sitio Common Share Plans) shall adopt such resolutions or take such other
actions as may be required to effect the following:
(a) adjust the terms of all outstanding employee share options to
purchase El Sitio Common Shares ("El Sitio Common Share Options") granted
under any plan, program or arrangement of El Sitio and the El Sitio
Subsidiaries and affiliates that provides for share options or share
purchase, including without limitation, the 1999 Share Option Plan
(collectively, the "El Sitio Common Share Plans"), to provide that, at the
Effective Time, each El Sitio Common Share Option outstanding immediately
prior to the Effective Time (except to the extent that El Sitio and the
holder of a El Sitio Common Share Option otherwise agree prior to the
Effective Time) shall be converted into an option to acquire, on the same
terms and conditions as were applicable under such El Sitio Common Share
Option, that number of Holdco Common Shares equal to the product of (x) the
number of El Sitio Common Shares issuable upon exercise of such El Sitio
Common Share Option and (y) the El Sitio Exchange Ratio (such product
rounded up to the nearest whole share), at a price per share equal to the
quotient of (i) the per share exercise price for the El Sitio Common Shares
otherwise purchasable pursuant to such El Sitio Common Share Option divided
by (ii) the El Sitio Exchange Ratio (such quotient rounded down to the
nearest whole cent); provided, however, that, in the case of any option
that is a qualified stock option, the parties shall use reasonable efforts
to cause the option price, the number of shares purchasable pursuant to
such option and the terms and conditions of exercise of such option to be
determined in order to comply with Section 424(a) of the Code; and
6
(b) Holdco shall, as of the Effective Time, reserve for issuance a
number of Holdco Common Shares equal to the number of shares that may
become issuable pursuant to the options referenced in subsection (a) above.
Upon the Effective Time or as soon as practicable thereafter, Holdco shall
file with the U.S. Securities and Exchange Commission ("SEC") a
registration statement on Form S-8 covering all shares of Holdco Common
Shares to be so issued and shall cause such registration statement to
remain effective so long as Holdco has a registration statement on Form S-8
outstanding for other Holdco share options.
2.9. Certain Adjustments. If, between the date of this Agreement and the
Effective Time, the share capital of Holdco or El Sitio shall have been
increased, decreased, changed into or exchanged for a different number of shares
or different class, in each case, by reason of any reclassification,
recapitalization, share split, split-up, combination or exchange of shares or a
share dividend or dividend payable in any other securities shall be declared
with a record date within such period, or any similar event shall have occurred,
the applicable Transaction consideration pursuant to Section 2.1 shall be
appropriately adjusted to provide to the holders of El Sitio Common Shares, IAMP
and Newhaven the same economic effect as contemplated by this Agreement prior to
such event.
3. Exchange of Certificates
------------------------
3.1. Exchange Fund. Prior to the Effective Time, Holdco shall appoint a
commercial bank or trust company reasonably acceptable to El Sitio to act as
exchange agent hereunder for the purpose of exchanging Certificates for the El
Sitio Merger Consideration (the "Exchange Agent"). At or prior to the Effective
Time, Holdco shall deposit with the Exchange Agent, in trust for the benefit of
holders of shares of El Sitio Common Shares, certificates representing the
Holdco Common Shares issuable pursuant to Sections 2.7, 2.8 and 2.9 in exchange
for outstanding El Sitio Common Shares. Holdco agrees to make available to the
Exchange Agent, from time to time as needed, cash sufficient to pay cash in lieu
of fractional shares pursuant to Section 3.5. Any cash and certificates
representing Holdco Common Shares deposited with the Exchange Agent shall
hereinafter be referred to as the "Exchange Fund".
7
3.2. Exchange Procedures. Promptly after the Effective Time, Holdco shall
cause the Exchange Agent to mail to each holder of a Certificate (a) a letter of
transmittal that shall be in customary form and have such other provisions as
Holdco may reasonably specify and that shall specify that delivery shall be
effected, and risk of loss and title to such El Sitio Certificates shall pass,
only upon proper delivery of such El Sitio Certificates to the Exchange Agent
and (b) instructions for effecting the surrender of such El Sitio Certificates
in exchange for the El Sitio Merger Consideration, together with any dividends
and other distributions with respect thereto and any cash in lieu of fractional
shares. Upon surrender of a El Sitio Certificate to the Exchange Agent together
with such letter of transmittal, duly executed and completed in accordance with
the instructions thereto and such other documents as may reasonably be required
by the Exchange Agent, the holder of such Certificate shall be entitled to
receive in exchange therefor (a) one or more Holdco Common Shares (which shall
be in uncertificated book-entry form unless a physical certificate is requested
or is otherwise required by applicable law or regulation) representing, in the
aggregate, the whole number of shares that such holder has the right to receive
pursuant to Sections 2.7, 2.8 and 2.9 (after taking into account all Holdco
Common Shares then held by such holder) and (b) a check in the amount equal to
the cash that such holder has the right to receive pursuant to the provisions of
this Article 3, including cash in lieu of any fractional Holdco Common Shares
pursuant to Section 3.5. No interest will be paid or will accrue on any cash
payable pursuant to Section 3.3 or 3.5. In the event of a transfer of ownership
that is not registered in the transfer records of El Sitio, one or more Holdco
Common Shares evidencing, in the aggregate, the proper number of Holdco Common
Shares, and a check in the proper amount of cash in lieu of any fractional
Holdco Common Shares pursuant to Section 3.5, may be issued with respect to such
El Sitio Common Shares to such a transferee if the El Sitio Certificate
representing such El Sitio Common Shares is presented to the Exchange Agent,
accompanied by all documents required to evidence and effect such transfer and
evidence that any applicable share transfer taxes have been paid.
3.3. Distributions with Respect to Unexchanged Shares. No dividends or
other distributions with a record date after the Effective Time shall be paid to
the holder of any unsurrendered El Sitio Certificate with respect to the Holdco
Common Shares that such holder would be entitled to receive upon surrender of
such El Sitio Certificate and no cash payment in lieu of fractional Holdco
Common Shares shall be paid to any such holder pursuant to Section 3.5 until
such holder shall surrender such El Sitio Certificate in accordance with Section
3.2. Subject to the effect of applicable laws, following surrender of any such
El Sitio Certificate, there shall be paid to the record holder thereof without
interest, (a) promptly after the time of such surrender, the amount of any cash
payable in lieu of fractional Holdco Common Shares to which such holder is
entitled pursuant to Section 3.5 and the amount of dividends or other
distributions with a record date after the Effective Time theretofore paid with
respect to such whole Holdco Common Shares, and (b) at the appropriate payment
date, the amount of dividends or other distributions with a record date after
the Effective Time and a payment date subsequent to such surrender payable with
respect to such whole Holdco Common Shares.
3.4. No Further Ownership Rights in El Sitio Common Shares. All Holdco
Common Shares issued and cash paid upon conversion of El Sitio Common Shares in
accordance with the terms of Article 2 and this Article 3 (including any cash
paid pursuant to Section 3.3 or 3.5) shall be deemed to have been issued or paid
in full satisfaction of all rights pertaining to the El Sitio Common Shares.
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3.5. No Fractional Holdco Common Shares (a) No certificates or scrip or
Holdco Common Shares representing fractional Holdco Common Shares or book-entry
credit of the same shall be issued upon the surrender for exchange of El Sitio
Certificates, and such fractional share interests will not entitle the owner
thereof to vote or to have any rights of a shareholder of Holdco or a holder of
Holdco Common Shares.
(b) Notwithstanding any other provision of this Agreement, each holder
of El Sitio Common Shares exchanged pursuant to the El Sitio Merger who
would otherwise have been entitled to receive a fraction of a Holdco Common
Share (determined after taking into account all El Sitio Certificates
delivered by such holder) shall receive, in lieu thereof, cash (without
interest) in an amount equal to the product of (i) such fractional part of
a Holdco Common Share multiplied by (ii) the average of closing bid and ask
price during regular trading hours for a Holdco Common Share as reported on
The Nasdaq Stock Market ("Nasdaq") on the first trading day following the
date on which the Effective Time occurs. As promptly as practicable after
the determination of the amount of cash, if any, to be paid to holders of
fractional interests, the Exchange Agent shall so notify Holdco, and Holdco
shall deposit such amount with the Exchange Agent and shall cause the
Exchange Agent to forward payments to such holders of fractional interests
subject to and in accordance with the terms hereof.
3.6. Termination of Exchange Fund. Any portion of the Exchange Fund that
remains undistributed to the holders of El Sitio Certificates six months after
the Effective Time shall, at Holdco's request, be delivered to Holdco or
otherwise on the instruction of Holdco, and any holders of such El Sitio
Certificates that have not complied with this Article 3 shall, after such
delivery, look only to Holdco for the El Sitio Merger Consideration and any cash
in lieu of fractional Holdco Common Shares with respect to the El Sitio Common
Shares formerly represented thereby to which such holders are entitled pursuant
to Sections 2.7, 2.8, 2.9 and 3.5.
3.7. No Liability. None of the parties hereto or the Exchange Agent shall
be liable to any Person in respect of any El Sitio Merger Consideration from the
Exchange Fund delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
3.8. Investment of the Exchange Fund. The Exchange Agent shall invest any
cash included in the Exchange Fund as directed by Holdco on a daily basis;
provided, however, that no such investment or loss thereon shall affect the
amounts payable to shareholders of El Sitio pursuant to Article 2 and the other
provisions of this Article 3. Any interest and other income resulting from such
investments shall promptly be paid to Holdco.
3.9. Lost Certificates. If any El Sitio Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit to such effect by the
Person claiming such El Sitio Certificate to be lost, stolen or destroyed and,
if required by Holdco, the posting by such Person of a bond in such reasonable
amount as Holdco may direct as indemnity against any claim that may be made
against it with respect to such El Sitio Certificate, the Exchange Agent will
deliver in exchange for such lost, stolen or destroyed El Sitio Certificate the
El Sitio Merger Consideration with respect to the El Sitio Common Shares
formerly represented thereby, any cash in lieu of fractional Holdco Common
Shares, and unpaid dividends and distributions on Holdco Common Shares
deliverable in respect thereof, pursuant to this Agreement.
9
3.10. Withholding Rights. Holdco shall be entitled to deduct and withhold
from the consideration otherwise payable pursuant to this Agreement such amounts
as it is required to deduct and withhold with respect to the making of such
payment under the Code or any provision of U.S. federal or state or non-U.S. Tax
law. To the extent that amounts are so withheld by Holdco, such withheld amounts
shall be treated for all purposes of this Agreement as having been paid to the
party in respect of which such deduction and withholding was made by Holdco.
3.11. Further Assurances. At and after the Effective Time, the directors
and officers of Holdco will be authorized to execute and deliver, in the name
and on behalf of any of the IAMP Subsidiaries, any of the Newhaven Subsidiaries,
El Sitio or El Sitio Merger Subsidiary, any deeds, bills of sale, assignments or
assurances and to take and do, in the name and on behalf of any of the IAMP
Subsidiaries, any of the Newhaven Subsidiaries, El Sitio or El Sitio Merger
Subsidiary, any other actions and things to vest, perfect or confirm of record
or otherwise in Holdco any and all right, title and interest in, to and under
any of the rights, properties or assets acquired or to be acquired by Holdco as
a result of, or in connection with, the Transactions.
3.12. Share Transfer Books. The share transfer books of El Sitio shall be
closed immediately upon the Effective Time and there shall be no further
registration of transfers of El Sitio Common Shares that were outstanding
immediately prior to the El Sitio Merger thereafter on the records of El Sitio.
On or after the Effective Time, any El Sitio Certificates presented to the
Exchange Agent or Holdco for any reason shall be converted into the right to
receive the El Sitio Merger Consideration (including any cash in lieu of
fractional Holdco Common Shares to which the holders thereof are entitled
pursuant to Section 3.5 and any dividends or other distributions to which the
holders thereof are entitled pursuant to Section 3.3).
3.13. IAMP Matters. Effective upon the Effective Time, except with respect
to the agreements entered into in connection with the consummation of the
Transactions and referred to herein (including, without limitation, the
Indemnification and Contribution Agreement of even date herewith), all prior
agreements, arrangements, understandings, undertakings and indemnities by,
between or among any of Newhaven and its affiliates, on the one hand, and ▇▇▇▇▇
and its affiliates, on the other hand, or pursuant to which any such Persons
have any liabilities or obligations with respect to the formation or
contribution of any assets to or governance of IAMP shall terminate with no
further obligations or liabilities between or of any of the parties thereto or
otherwise of or in respect of any third-party beneficiaries or other Persons,
all of which obligations and liabilities shall be fully and forever released and
terminated (including, without limitation, that neither Holdco nor any of its
affiliates shall have any rights to enforce or collect any such liabilities or
obligations as successor or otherwise). Effective immediately following the
Effective Time, Newhaven and ▇▇▇▇▇ shall dissolve IAMP and distribute its assets
pursuant to the terms of such agreements and pursuant to the plan of
reorganization, provided that (i) all such distributions shall be divided
equally between Newhaven and ▇▇▇▇▇, and (ii) IAMP shall distribute the C Shares
to Newhaven or a wholly-owned subsidiary of Newhaven and shall distribute the H
Share to ▇▇▇▇▇ or a wholly-owned subsidiary of ▇▇▇▇▇.
3.14. Lock-Up Agreements. Holdco shall enter into individual lock-up
agreements with each of Newhaven, ▇▇▇▇▇ and each of the Founders, each agreement
to be in customary form, to be effective upon the Effective Time and to restrict
the applicable shareholder from transferring its Holdco Common Shares for six
months following the Effective Time. Notwithstanding the foregoing, the entrance
into such agreements shall not be a condition to the obligations of any party
hereto under Article 7.
10
4. Representations and Warranties
-----------------------------
4.1. Representations and Warranties of Newhaven, ▇▇▇▇▇ and IAMP. Except as
set forth in the disclosure schedule delivered by IAMP to El Sitio prior to the
date of this Agreement (the "IAMP Disclosure Schedule"), Newhaven, with respect
to itself, ▇▇▇▇▇, with respect to HMTF I, HMTF II and HMTF III, and IAMP, with
respect to itself, severally but not jointly, represent and warrant to El Sitio
as follows; provided that no representation or warranty is made with respect to
Holdco other than pursuant to Section 4.1(w) below:
(a) Due Organization; Good Standing and Power; Subsidiaries. (i) Each
of ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇, ▇▇▇▇ ▇▇, ▇▇▇▇ III, IAMP and their respective
subsidiaries is a corporation or other Person duly organized, validly
existing and, in the case of each U.S. corporation or other Person, is in
good standing under the laws of the jurisdiction of its incorporation or
organization, has the requisite power and authority to conduct its business
as now conducted by it, except where the failure to be so organized,
existing and in good standing or have such power and authority,
individually or in the aggregate, would not have a Material Adverse Effect
on IAMP and the IAMP Subsidiaries taken as a whole.
(ii) Each of IAMP and the IAMP Subsidiaries is duly
qualified and in good standing to do business in each other
jurisdiction in which the nature of its business or the ownership
or leasing of its properties makes such qualification necessary
other than in such jurisdictions where the failure so to qualify
or to be in good standing, individually or in the aggregate,
would not have a Material Adverse Effect on IAMP and the IAMP
Subsidiaries taken as a whole.
(iii) The copies of the certificate of incorporation and
by-laws or other constitutive documents of IAMP and each IAMP
Subsidiary, which were previously furnished or made available to
El Sitio, are true, complete and correct copies in all material
respects of such documents as in effect on the date of this
Agreement.
(iv) Section 4.1(a)(iv) of the IAMP Disclosure Schedule sets
forth all of the IAMP Subsidiaries and for each IAMP Subsidiary,
its name, jurisdiction of incorporation or organization and the
record ownership as of the date of this Agreement of all the
share capital of such subsidiary that is issued and outstanding.
All the outstanding share capital of each IAMP Subsidiary has
been validly issued and is fully paid and non-assessable, and,
except as set forth in Section 4.1(a)(iv) of the IAMP Disclosure
Schedule, is owned, directly or indirectly by IAMP, free and
clear of all material pledges, claims, liens, charges,
encumbrances and security interests of any kind or nature
whatsoever (collectively, "Liens"), and free of any other
material restriction (including any restriction on the right to
vote, sell or otherwise dispose of such share capital or other
ownership interests), except for restrictions on transfer imposed
by applicable securities laws and under the Holdco Agreement.
Except as disclosed in Section 4.1(a)(iv) of the IAMP Disclosure
Schedule, neither IAMP nor any of the IAMP Subsidiaries owns,
directly or indirectly, any equity interest in, or any interest
convertible into or exchangeable or exercisable for any equity
interest in, any corporation or other Person that is material to
IAMP and the IAMP Subsidiaries taken as a whole.
11
(v) Other than the IAMP Subsidiaries or as set forth in
Section 4.1(a)(v) of the IAMP Disclosure Schedule, neither IAMP
nor the IAMP Subsidiaries (A) has any direct or indirect
subsidiaries that engage, directly or indirectly, in the Media
Business, or (B) owns in excess of 5% of the outstanding share
capital of any Person that engages, directly or indirectly, in
the Media Business.
(vi) Except as disclosed in Section 4.1(a)(vi) of the IAMP
Disclosure Schedule, none of IAMP or any of the IAMP Subsidiaries
is a party to any joint venture or partnership agreement relating
to the Media Business, and neither IAMP nor any of the IAMP
Subsidiaries is a party to any other joint venture or partnership
agreement.
(b) Capitalization. (i) All of the issued and outstanding share
capital of IAMP has been duly authorized and validly issued and is
fully paid and non-assessable, and, except as set forth on Section
4.1(b)(i) of the IAMP Disclosure Schedule and except for directors'
qualifying shares and other nominal share interests issued to third
parties to comply with requirements of law, are owned by Newhaven or
▇▇▇▇▇ (or their respective subsidiaries), free and clear of all Liens
and free of any other material restriction on the right to vote, sell
or otherwise dispose of such share capital.
(ii) No bonds, debentures, notes or other Indebtedness
having the right to vote on any matters on which shareholders may
vote ("Voting Debt") of IAMP or any of the IAMP Subsidiaries are
issued or outstanding.
(iii) Except as set forth in Section 4.1(b)(iii) of the IAMP
Disclosure Schedule, there are no options, warrants, calls,
rights, commitments or agreements of any character to which IAMP
or any of the IAMP Subsidiaries is a party or by which IAMP or
any of the IAMP Subsidiaries is bound obligating IAMP or any of
the IAMP Subsidiaries to issue, deliver or sell, or cause to be
issued, delivered or sold, additional capital shares or any
Voting Debt of IAMP or of any of the IAMP Subsidiaries or
obligating IAMP or any of the IAMP Subsidiaries to grant, extend
or enter into any such option, warrant, call, right, commitment
or agreement. Except as set forth in Section 4.1(b)(iii) of the
IAMP Disclosure Schedule, there are no outstanding contractual
obligations of IAMP or any of the IAMP Subsidiaries (A) to
repurchase, redeem or otherwise acquire any shares of IAMP or any
of the IAMP Subsidiaries or (B) to register any capital stock of
IAMP under the U.S. Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder (the "Securities
Act").
12
(iv) Since June 30, 2000, except as set forth in Section
4.1(b)(iv) of the IAMP Disclosure Schedule, IAMP has not (A)
issued or permitted to be issued any shares, or securities
exercisable or exchangeable for or convertible into shares, of
any of the IAMP Subsidiaries, other than any such shares issued
after the date hereof in the ordinary course of business
consistent with past practice, (B) repurchased, redeemed or
otherwise acquired, directly or indirectly through one or more of
its subsidiaries, any shares of IAMP or any of the IAMP
Subsidiaries or (C) declared, set aside, made or paid dividends
or other distributions on the outstanding shares of any of the
IAMP Subsidiaries.
(v) Newhaven and ▇▇▇▇▇ have made all capital contributions
due and payable to IAMP and the IAMP Subsidiaries through
September 30, 2000.
(c) Indebtedness. As of the date hereof, the only outstanding
Indebtedness of IAMP and the IAMP Subsidiaries is the Indebtedness set
forth in Section 4.1(c) of the IAMP Disclosure Schedule or as set forth in
the IAMP Financial Information or the IAMP Interim Financial Information.
Section 4.1(c) of the IAMP Disclosure Schedule specifically identifies each
Indebtedness of IAMP or the IAMP Subsidiaries that is in a principal amount
of at least U.S.$5 million. There exists (i) no default or event of default
(with or without notice or lapse of time or both) by IAMP or any of the
IAMP Subsidiaries under the provisions of the agreements identified in
Section 4.1(c) of the IAMP Disclosure Schedule and (ii) no default or event
of default (with or without notice or lapse of time or both) by IAMP or any
of the IAMP Subsidiaries under the provisions of any other instrument
evidencing such other Indebtedness or of any agreement relating thereto,
that, in either case, permits acceleration of all or any part of such
Indebtedness, except, in the case of clause (i) or (ii), where such
acceleration would not result in a default under the agreements identified
on Section 4.1(c) of the IAMP Disclosure Schedule and would not otherwise,
individually or in the aggregate, have a Material Adverse Effect on IAMP
and the IAMP Subsidiaries taken as a whole.
(d) Authorization and Validity of Agreements. Each of Newhaven, HMTF
I, HMTF II, HMTF III and IAMP has all necessary corporate or other power
and authority to enter into this Agreement, the Holdco Agreement, the
Registration Rights Agreement and the Voting Agreement, to enter into the
other agreements contemplated hereby and to consummate the transactions and
perform its obligations contemplated hereby and thereby. The execution,
delivery and performance by ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇, ▇▇▇▇ ▇▇, ▇▇▇▇ III, and IAMP
of this Agreement, the Voting Agreement, the Holdco Agreement and the
Registration Rights Agreement and the other agreements contemplated hereby
and thereby and the consummation by ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇, ▇▇▇▇ ▇▇, ▇▇▇▇ III and
IAMP of the transactions contemplated hereby and thereby have been duly
authorized by the board of directors of each of ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇, ▇▇▇▇ ▇▇,
▇▇▇▇ III and IAMP. No other corporate or shareholder action is necessary
for the authorization, execution, delivery and performance by ▇▇▇▇▇▇▇▇,
▇▇▇▇ ▇, ▇▇▇▇ ▇▇, ▇▇▇▇ III and IAMP of this Agreement, the Holdco Agreement,
the Registration Rights Agreement and the Voting Agreement and the other
agreements contemplated hereby and the consummation by ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇,
▇▇▇▇ ▇▇, ▇▇▇▇ III and IAMP of the transactions contemplated hereby or
thereby, other than the corporate approvals set forth in Section 4.1(d) of
the IAMP Disclosure Schedule, which corporate approvals shall have been
obtained by, and be in full force and effect on, the Closing Date. This
Agreement has been duly executed and delivered by each of ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇,
▇▇▇▇ ▇▇, ▇▇▇▇ III and IAMP and constitutes a valid and legally binding
obligation of each of ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇, ▇▇▇▇ ▇▇, ▇▇▇▇ III and IAMP
enforceable against each of them in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws relating to or affecting the enforcement
of creditors' rights generally, by general equitable principles (regardless
of whether such enforceability is considered in a proceeding in equity or
at law) or by an implied covenant of good faith and fair dealing.
13
(e) No Conflicts. Except (i) as, individually or in the aggregate,
would not have a Material Adverse Effect on IAMP and the IAMP Subsidiaries
taken as a whole, subject to obtaining or making the consents, approvals,
orders, authorizations, registrations, declarations and filings referred to
in Section 4.1(f) and (ii) as set forth in Section 4.1(e) of the IAMP
Disclosure Schedule, the execution and delivery of this Agreement by
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇, ▇▇▇▇ ▇▇, ▇▇▇▇ III, and IAMP does not, and the
consummation by IAMP of the IAMP Contribution and the other transactions
contemplated hereby and the performance by ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇, ▇▇▇▇ ▇▇, ▇▇▇▇
III, and IAMP of their respective obligations hereunder will not, conflict
with, or result in any violation of, or constitute a default (with or
without notice or lapse of time, or both) under, or give rise to a right
of, or result by its terms in the termination, amendment, cancellation or
acceleration of any obligation of IAMP or the IAMP Subsidiaries or the loss
of a material benefit to which IAMP or the IAMP Subsidiaries are entitled
under, or the creation of a Lien on, or the loss of, any assets, including
Intellectual Property of IAMP or the IAMP Subsidiaries (any such conflict,
violation, default, right of termination, amendment, cancellation or
acceleration, loss or creation, a "Violation") pursuant to: (A) any
provision of the memorandum of association and articles of
association, certificate of incorporation or bylaws or similar constitutive
document of any such Person or any IAMP Subsidiary, or (B) any loan or
credit agreement, note, mortgage, bond, indenture, lease, Benefit Plan or
other agreement, obligation, instrument, permit, Concession, franchise,
license, judgment, order, decree, statute, law, ordinance, rule or
regulation binding upon Newhaven, ▇▇▇▇▇, IAMP or any IAMP Subsidiary or
their respective properties or assets.
(f) No Governmental Approvals or Notices Required; No Conflict with
Instruments to which IAMP or the IAMP Subsidiaries are a Party. Except for
Government Consents under applicable antitrust laws and filings
contemplated by Article 1 and Section 2.1 hereof, no Government Consent or
notice to, or declaration, filing or registration with any Government
Entity, or consent, approval or waiver of any other Person (a
"Non-Governmental Approval"), is required to be made or obtained by
Newhaven, ▇▇▇▇▇, IAMP or any IAMP Subsidiary in connection with the
execution, delivery and performance of this Agreement and the other
agreements contemplated hereby by Newhaven, ▇▇▇▇▇ and IAMP and the
consummation by each of them of the transactions contemplated hereby and
thereby, other than such violations the occurrence of which, and such
consents, approvals, filings or notices the failure of which to obtain or
make, would not, individually or in the aggregate, have a Material Adverse
Effect on IAMP and the IAMP Subsidiaries taken as a whole.
14
(g) Title to Properties. Newhaven, ▇▇▇▇▇, IAMP or one or more of the
IAMP Subsidiaries have or has (i) good title to the IAMP Common Shares and
(ii) good and marketable title to all material real property owned, and a
valid leasehold interest in all material property leased by such Person in
the case of each of clauses (i) and (ii), free and clear of all Liens,
except (A) as set forth on Section 4.1(g) of the IAMP Disclosure Schedule;
(B) as set forth in the IAMP Financial Information or IAMP Interim
Financial Information; (C) Liens for taxes, assessments and other
governmental charges not yet due and payable or, if due, being contested in
good faith by appropriate proceedings during which collection or
enforcement against the property is stayed; (D) mechanics', workmen's,
repairmen's, warehousemen's, carriers' or other like liens arising or
incurred in the ordinary course of business if the underlying obligations
are not past due, original purchase price conditional sales contracts and
equipment leases with third parties entered into in the ordinary course of
business; (E) with respect to real property, (1) easements, licenses,
covenants, rights-of-way and other similar restrictions, including, without
limitation, any other agreements, conditions or restrictions which would be
shown by a current title report or other similar report or listing, (2) any
conditions that may be shown by a current survey, title report or physical
inspection and (3) zoning, building and other similar restrictions, so long
as none of (1), (2) or (3) render the title of such real property
unmarketable or prevent the use of such real property substantially as
currently used; and (F) Liens that, individually or in the aggregate, would
not have a Material Adverse Effect on IAMP and the IAMP Subsidiaries taken
as a whole (such Liens described in clauses (A) through (F) above being
referred to herein as "Permitted Liens"). The real property of IAMP and
each IAMP Subsidiary is adequate for the conduct of the business of IAMP
and each IAMP Subsidiary as currently conducted, except for such inadequacy
that, individually or in the aggregate, would not have a Material Adverse
Effect on IAMP and the IAMP Subsidiaries taken as a whole.
(h) Conduct of Business. Except as disclosed in Section 4.1(h) of the
IAMP Disclosure Schedule or otherwise disclosed in this Agreement, or as
set forth in the IAMP Financial Information or the IAMP Interim Financial
Information, since December 31, 1999, IAMP and the IAMP Subsidiaries have
conducted their business in the ordinary course consistent with past
practice, and, other than in the ordinary course, there has not occurred or
arisen, with respect to its business: (i) a Material Adverse Effect on IAMP
and the IAMP Subsidiaries taken as a whole; (ii) any notice of non-renewal,
cancellation or termination from any existing customers with respect to any
IAMP Material Contract, which would have a Material Adverse Effect on IAMP
and the IAMP Subsidiaries taken as a whole; (iii) any sale, assignment,
pledge, hypothecation or other transfer of any assets, businesses or
operations, other than such sales, assignments, pledges, hypothecations or
other transfers which would not, individually or in the aggregate have a
Material Adverse Effect on IAMP and the IAMP Subsidiaries taken as a whole;
(iv) any termination or material amendment of, or any notice of termination
of, any IAMP Material Contract, which amendment or termination would have a
Material Adverse Effect on IAMP and the IAMP Subsidiaries taken as a whole;
(v) any damage, destruction or other casualty loss (not covered by
insurance) which would have a Material Adverse Effect on IAMP and the IAMP
Subsidiaries taken as a whole; (vi) except in each case for immaterial
amounts, any (A) increase in the fringe benefits or compensation of any
present or former director, officer or employee of IAMP or the IAMP
Subsidiaries, (B) grant of any severance or termination pay to any present
or former director, officer or employee of IAMP or the IAMP Subsidiaries,
(C) loan or advance of money or other property by IAMP or the IAMP
Subsidiaries to any of their present or former directors, officers or
employees, or (D) establishment, adoption, entrance into, modification,
amendment or termination of any IAMP Benefit Plan; (vii) the cancellation
of any debts to or waiver of any claims or rights of material value to IAMP
(viii) capital expenditures or additions to property, plant or equipment or
the acquisition of any other property or assets (other than raw materials,
supplies and inventory) by IAMP, other than immaterial amounts; (ix) any
lease by IAMP of any of its properties or assets, other than immaterial
amounts; (x) the entering into of any IAMP Material Contract not listed on
the IAMP Disclosure Schedule or (xi) the entering into of an agreement to
do any of the foregoing.
15
(i) Financial Information; Absence of Certain Changes. (i)
IAMP has delivered to El Sitio the audited consolidated balance
sheets of IAMP and the IAMP Subsidiaries at December 31, 1998 and
1999 (in the case of the balance sheet at December 31, 1999, the
"IAMP 1999 Balance Sheet"), and the related audited statements of
operations and comprehensive income, stockholders' equity and
cash flows for the fiscal year ended December 31, 1999, including
notes thereto, and the report thereon of independent certified
public accountants, which are set forth in Section 4.1(i) of the
IAMP Disclosure Schedule (the "IAMP Financial Information"). The
IAMP Financial Information fairly presents in all material
respects the financial position and results of operations of IAMP
and the IAMP Subsidiaries as at the respective dates thereof and
for the periods then ended, all in accordance with generally
accepted accounting principles in the United States ("U.S. GAAP")
consistently applied by IAMP at the dates and during the period
involved. Except (A) as and to the extent set forth on the IAMP
1999 Balance Sheet, including the notes thereto, or in the IAMP
Interim Financial Information or (B) as disclosed in Section
4.1(i) of the IAMP Disclosure Schedule, neither IAMP nor any of
the IAMP Subsidiaries has any liabilities or obligations of any
nature (whether accrued, absolute, contingent or otherwise) that
would be required to be reflected on a balance sheet or in the
notes thereto prepared in accordance with U.S. GAAP other than
liabilities or obligations incurred since December 31, 1999 that
would not, individually or in the aggregate, have a Material
Adverse Effect on IAMP and the IAMP Subsidiaries taken as a
whole.
(ii) IAMP has delivered to El Sitio the unaudited
consolidated balance sheet of IAMP and the IAMP Subsidiaries as
at June 30, 2000, and the related unaudited statements of
operations for the period then ended, set forth in Section
4.1(i)(ii) of the IAMP Disclosure Schedule (the "IAMP Interim
Financial Information"). The IAMP Interim Financial Information
was prepared in accordance with U.S. GAAP on a basis consistent
with prior practice for the preparation of interim financial
statements for IAMP and the IAMP Subsidiaries, and fairly
presents in all material respects the financial position and
results of operations of IAMP and the IAMP Subsidiaries at June
30, 2000 and for the period then ended, subject to customary
year-end adjustments.
16
(j) Legal Proceedings. Except as described in Section 4.1(j) of
the IAMP Disclosure Schedule, there is no suit, action, legal
proceeding or governmental investigation or inquiry ("Legal
Proceedings") relating to IAMP or the IAMP Subsidiaries to which IAMP
or any of the IAMP Subsidiaries is a party, or to which any of their
assets is subject, pending, or, to the knowledge of Newhaven, ▇▇▇▇▇ or
IAMP, threatened against IAMP or any of the IAMP Subsidiaries or
relating to the transactions contemplated by this Agreement that,
individually or in the aggregate, would reasonably be expected to
result in a Material Adverse Effect on IAMP and the IAMP Subsidiaries
taken as a whole.
(k) Labor Matters. Except as described in Section 4.1(k) of the
IAMP Disclosure Schedule, since December 31, 1999, (i) IAMP and the
IAMP Subsidiaries are, to the knowledge of Newhaven, ▇▇▇▇▇ and IAMP,
in compliance in all material respects with all applicable laws
respecting employment and employment practices, terms and conditions
of employment and wages and hours, and neither IAMP nor any of the
IAMP Subsidiaries has been engaged in any unfair labor practice, (ii)
there is no unfair labor practice complaint against IAMP or the IAMP
Subsidiaries pending before any labor relations board or other
Governmental Entity having oversight authority with respect to labor
relations, (iii) there is no labor strike, dispute, slowdown or
stoppage actually pending or, to the knowledge of Newhaven, ▇▇▇▇▇ and
IAMP, threatened against or affecting IAMP or the IAMP Subsidiaries,
(iv) neither IAMP nor any of the IAMP Subsidiaries has experienced any
strike, work stoppage or other labor difficulty, and (v) neither IAMP
nor any of the IAMP Subsidiaries is a party to, or subject to, a
collective bargaining agreement, and no collective bargaining
agreement relating to IAMP Employees is currently being negotiated,
which, in the case of any of the foregoing, would, individually or in
the aggregate, have a Material Adverse Effect on IAMP and the IAMP
Subsidiaries taken as a whole.
(l) Contracts. (i) Section 4.1(l)(i) of the IAMP Disclosure
Schedule lists all contracts, agreements or commitments of IAMP and
the IAMP Subsidiaries that are material to IAMP and the IAMP
Subsidiaries taken as a whole ("IAMP Material Contracts"). Except as
specified in Section 4.1(l)(i) of the IAMP Disclosure Schedule, all
IAMP Material Contracts are in full force and effect and are valid and
enforceable in accordance with their respective terms, except where
the failure to be in full force and effect and valid and enforceable
would not, individually or in the aggregate, have a Material Adverse
Effect on IAMP and the IAMP Subsidiaries taken as a whole. Except as
specified in Section 4.1(l)(i) of the IAMP Disclosure Schedule, IAMP
and the IAMP Subsidiaries are not in breach or default in the
performance of, and to IAMP's knowledge, no other Person is in breach
or default of, any obligation thereunder and no event has occurred or
has failed to occur whereby any of the other parties thereto have been
or will be released therefrom or will be entitled to refuse to perform
thereunder, except for such breaches, defaults and events that,
individually or in the aggregate, would not have a Material Adverse
Effect on IAMP and the IAMP Subsidiaries taken as a whole.
(ii) Except as set forth in Section 4.1(l)(ii) of the IAMP
Disclosure Schedule, there is no IAMP Material Contract between
IAMP and the IAMP Subsidiaries, on the one hand, and any
affiliate of Newhaven, ▇▇▇▇▇ or IAMP (in each case excluding IAMP
and the IAMP Subsidiaries), on the other hand, and no affiliate
of Newhaven, ▇▇▇▇▇ or IAMP (in each case excluding IAMP and the
IAMP Subsidiaries) has any material interest in any material
property, real or personal, tangible or intangible, including,
without limitation, any Intellectual Property, used in the
business of IAMP and the IAMP Subsidiaries.
(m) Intellectual Property. (i) Section 4.1(m)(i) of the IAMP
Disclosure Schedule sets forth, with respect to material Intellectual
Property owned, held or used by IAMP and/or the IAMP subsidiaries ("IAMP
Intellectual Property"), all patents, registrations and applications
relating thereto, all material unregistered Intellectual Property, and all
material licenses, consents, royalty and other agreements concerning IAMP
Intellectual Property to which IAMP and/or any of the IAMP Subsidiaries is
a party ("IAMP Intellectual Property Licenses").
(ii) Except as disclosed in Section 4.1(m)(ii) of the IAMP
Disclosure or would not have a Material Adverse Effect, (A) IAMP
and/or the IAMP Subsidiaries own or have the right to use all the
IAMP Intellectual Property necessary to conduct the respective
businesses of IAMP and the IAMP Subsidiaries as currently are
conducted, free of all Liens; (B) all of the IAMP Intellectual
Property is valid, enforceable, not abandoned and unexpired; (C)
to the knowledge of IAMP and the IAMP Subsidiaries, the IAMP
Intellectual Property does not infringe or otherwise impair the
Intellectual Property of any other Person and is not being
infringed or impaired by any other Person, nor has IAMP or the
IAMP Subsidiaries received any written notice of the same; (D)
IAMP and/or the IAMP Subsidiaries take all reasonable steps to
protect and maintain the IAMP Intellectual Property, including
executing all appropriate confidentiality agreements, filing all
appropriate patents and registrations, and filings any other
documents necessary under the laws of any relevant jurisdictions
to preserve their rights in such IAMP Intellectual Property; (E)
no party to a IAMP Intellectual Property License is, or is
alleged to be, in breach or default thereunder; (F) the
transactions contemplated by this Agreement shall not impair the
rights of IAMP or the IAMP Subsidiaries under any IAMP
Intellectual Property License, or cause any payments to be due
thereunder; and (G) without limiting the generality of the
foregoing, IAMP and/or the IAMP Subsidiaries owns and possesses
all right, title and interest in and to all IAMP Intellectual
Property created or developed by, or under the direction or
supervision of, its employees.
(iii) "Intellectual Property" shall mean all intellectual
property, including without limitation all (A) (1) patents,
inventions, discoveries, processes, designs, techniques,
developments, technology, and related improvements and know-how;
(2) copyrights and works of authorship in any media, including
films, websites, website content, computer programs, hardware,
software, applications, files, databases, documentation and
related items; (3) trademarks, service marks, trade names, brand
names, corporate names, domain names, logos, trade dress, and all
common-law rights relating thereto; and (4) trade secrets and
other confidential or proprietary documents, files, analyses,
lists, ways of doing business and/or information; and (B)
registrations, applications and recordings related thereto.
18
(n) Governmental Consents. Section 4.1(n) of the IAMP Disclosure
Schedule sets forth a true and complete list of each radio and television
concession and license owned or leased and operated by IAMP or the IAMP
Subsidiaries (the "Concessions") and the dates of expiration of each
Concession. Except as described in Section 4.1(n) of the IAMP Disclosure
Schedule, IAMP and the IAMP Subsidiaries have all Governmental Consents
required for the conduct of their respective businesses as presently
conducted, and such Governmental Consents are in full force and effect, and
Newhaven, ▇▇▇▇▇, IAMP and the IAMP Subsidiaries have not received any
notice of any violation thereof or claim thereunder, nor does any of
Newhaven, ▇▇▇▇▇, IAMP or any IAMP Subsidiary have knowledge of any
threatened suspension or cancellation of any such Governmental Consent,
except where the failure to have, or to keep in full force and effect such
Governmental Consents would not, individually or in the aggregate, have a
Material Adverse Effect on IAMP and the IAMP Subsidiaries taken as a whole.
(o) Conduct of Business in Compliance with Regulatory and Contractual
Requirements. Except as described in Section 4.1(o) of the IAMP Disclosure
Schedule or as set forth in the IAMP Interim Financial Information, since
December 31, 1999, IAMP and the IAMP Subsidiaries have conducted their
respective businesses so as to comply in all material respects with all
applicable U.S. and non-U.S. laws, ordinances, regulations or orders or
other requirements of any Governmental Entity, and have received no written
notice of any failure to comply with such laws, ordinances, regulations,
orders, rights or requirements, except where the failure to comply with
such laws, ordinances, regulations, orders, rights or requirements would
not, individually or in the aggregate, have a Material Adverse Effect on
IAMP and the IAMP Subsidiaries taken as a whole.
(p) Employee Benefit Plans. (i) "Benefit Plans" means all "employee
benefit plans" (within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), including,
without limitation, "multiemployer plans" (within the meaning of Sections
3(37) and 4001(a)(3) of ERISA)), and all material pension, retirement,
savings, share purchase, share option, severance, employment,
change-in-control, fringe benefit, collective bargaining, bonus, incentive,
deferred compensation, vacation, insurance (including self-insurance),
health or medical, disability, worker's compensation, supplemental
unemployment, retiree welfare, and all other employee benefit plans,
agreements, programs, policies or other arrangements, whether or not
subject to ERISA (including any funding mechanism), whether formal or
informal, oral or written. "IAMP Benefits Plans" means all Benefit Plans
that (A) are entered into, sponsored or maintained by IAMP or any of the
IAMP Subsidiaries, and (B) under which any present or former director,
officer or employee of IAMP or any of the IAMP Subsidiaries (collectively,
the "IAMP Employees") has any present or future right to benefits. "IAMP
U.S. Benefit Plans" means all IAMP Benefit Plans under which any IAMP
Employee who is or was primarily employed in the United States
(collectively, the "IAMP U.S. Employees") has any present or future right
to benefits. "IAMP International Benefit Plans" means all IAMP Benefit
Plans other than the IAMP U.S. Benefit Plans.
19
(ii) Section 4.1(p)(ii) of the IAMP Disclosure Schedule sets
forth a list of each IAMP Benefit Plan.
(iii) With respect to each IAMP Benefit Plan, IAMP has
provided or made available to El Sitio a current, accurate and
complete copy thereof, including any amendments thereto, and, to
the extent applicable: (A) any related trust agreement or other
funding instrument, (B) the most recent determination letter, if
applicable, (C) any summary description and other material
written communications to IAMP Employees concerning benefits
provided thereunder, (D) for the one most recent year, if
applicable, the Form 5500 and attached schedules, audited
financial statements and actuarial reports.
(iv) Except as described on Section 4.1(p)(iv) of the IAMP
Disclosure Schedule:
(A) each IAMP Benefit Plan has been established and
administered in accordance with its terms, in
compliance with the applicable provisions of ERISA, the
Code and other applicable laws, rules, statutes, orders
and regulations, and has been maintained in good
standing with applicable regulatory authorities;
(B) each IAMP U.S. Benefit Plan that is intended to be
qualified (within the meaning of Section 401(a) of the
Code) is so qualified and has received a favorable
determination letter as to its qualification, and
nothing has occurred, whether by action or failure to
act, that could reasonably be expected to cause the
loss of such qualification;
(C) no event has occurred and no condition exists that
would subject IAMP or any of the IAMP Subsidiaries,
either directly or by reason of their affiliation with
any member of their "Controlled Group" (defined as any
organization that is a member of an controlled group of
organizations (within the meaning of Section 414(b),
(c), (m) or (o) of the Code)), to any tax, fine, lien,
penalty or other liability imposed by ERISA, the Code
or any other applicable laws, rules, statutes, orders
and regulations;
(D) no "prohibited transaction" (as defined in Section 406
of ERISA and Section 4975 of the Code) has occurred
with respect to any IAMP U.S. Benefit Plan;
20
(E) no IAMP Benefit Plan provides retiree welfare benefits,
and neither IAMP nor any of the IAMP Subsidiaries have
any obligation to provide retiree welfare benefits
other than coverage mandated under applicable law or
regulation for which neither IAMP nor any of the IAMP
Subsidiaries is required to book an accrual on its
financial statements;
(F) no IAMP U.S. Benefit Plan is subject to Title IV of
ERISA or Section 412 of the Code, or is a
"multiemployer plan" (within the meaning of Section
4001(a)(3) of ERISA);
(G) no actions, suits, claims, administrative
investigations, audits or other administrative
proceedings (other than routine claims for benefits in
the ordinary course) are pending or threatened with
respect to any IAMP Benefit Plan, and no facts or
circumstances exist that could give rise to any such
actions, suits, claims, investigations, audits or
proceedings;
(H) no IAMP Benefit Plans exist that, individually or
collectively, could be reasonably expected to give rise
to the payment of any amount that would not be
deductible pursuant to the terms of Section 280G of the
Code, and no IAMP Benefit Plan exists that, as a result
of the transaction contemplated by this Agreement,
could result in the payment to any IAMP Employee of any
money or other property or could result in the
acceleration or provision of any other rights or
benefits to any IAMP Employee; and
(I) with respect to any IAMP International Benefit Plan,
according to the actuarial assumptions and valuations
most recently used for the purpose of funding each IAMP
International Benefit Plan (which actuarial assumptions
and valuations were provided in accordance with the
actuarial and accounting principles, bases, policies,
methods and practices in the relevant jurisdiction for
such plan), as of June 30, 2000, the total amount or
value of the funds available under such IAMP
International Benefit Plan to pay benefits accrued
thereunder or segregated in respect of such accrued
benefits, together with any reserve or accrual with
respect thereto, exceeded the present value of all
benefits (actual or contingent) accrued as of such date
of all participants and past participants therein in
respect of which IAMP or any of the IAMP Subsidiaries
has or would have after the Closing Date any
obligation.
21
(v) There are no Benefit Plans that are entered into,
sponsored or maintained by Newhaven or ▇▇▇▇▇ under which any
present or former IAMP Employee has any present or future
right to benefits.
(q) Tax Matters. Except as disclosed in Section 4.1(q) of
the IAMP Disclosure Schedule and except as would not result in a
Material Adverse Effect on IAMP and the IAMP Subsidiaries taken
as a whole:
(i) IAMP and the IAMP Subsidiaries have filed all Tax
Returns that they were required to file. All such filed Tax
Returns were correct and complete in all material respects.
All Taxes required to have been paid by IAMP and the IAMP
Subsidiaries (whether or not shown on any Tax Return) have
been paid or adequately reserved against in accordance with
U.S. GAAP. None of IAMP or the IAMP Subsidiaries currently
is the beneficiary of any extension of time within which to
file any Tax Return. No written claim has ever been made
(and, to the knowledge of IAMP or the IAMP Subsidiaries, no
claim has been threatened in writing) by any authority in a
jurisdiction where IAMP and any of the IAMP Subsidiaries
does not file Tax Returns that it is or may be subject to
taxation by that jurisdiction. There are no Liens on any of
the assets of any of IAMP and the IAMP Subsidiaries that
arose in connection with any failure (or alleged failure) to
pay any Tax other than Liens for (A) current Taxes not yet
due or (B) Taxes that are being disputed in good faith by
appropriate proceedings and for which adequate reserves have
been provided.
(ii) IAMP and the IAMP Subsidiaries have withheld and
paid all Taxes required to have been withheld and paid in
connection with amounts paid or owing to any IAMP Employee,
independent contractor, creditor, shareholder or other third
party.
(iii) No audit or other proceeding by any Governmental
Entity is pending or, to the knowledge of IAMP, threatened
in writing with respect to any Taxes due from or with
respect to IAMP or any of the IAMP Subsidiaries. There is no
dispute or claim concerning any Tax liability of IAMP or the
IAMP Subsidiaries claimed or raised by any taxing authority
(and, to the knowledge of IAMP or the IAMP Subsidiaries, no
such dispute or claim has been threatened in writing). IAMP
has made available to El Sitio correct and complete copies
of all income Tax Returns and examination reports with
respect to, and statements of deficiencies assessed against
or agreed to by, IAMP and the IAMP Subsidiaries since
December 31, 1999.
(iv) None of IAMP or the IAMP Subsidiaries has waived
any statute of limitations in respect of Taxes or agreed to
any extension of time with respect to a Tax assessment or
deficiency.
(v) None of IAMP or the IAMP Subsidiaries has filed a
consent under Section 341(f) of the Code concerning
collapsible corporations. None of IAMP or the IAMP
Subsidiaries has made any payments, is obligated to make any
payments, or is a party to any agreement that under certain
circumstances could obligate it to make any payments that
will not be deductible under Section 280G of the Code. None
of IAMP or the IAMP Subsidiaries has been a United States
real property holding corporation (within the meaning of
Section 897(c)(2) of the Code) during the applicable period
specified in Section 897(c)(1)(A)(ii) of the Code. IAMP and
the IAMP Subsidiaries have disclosed on their U.S. income
Tax Returns all positions taken therein that could
reasonably be expected to give rise to a substantial
understatement of U.S. federal income Tax (within the
meaning of Section 6662 of the Code). None IAMP or the IAMP
Subsidiaries is a party to any Tax allocation or sharing
agreement, other than such an agreement exclusively between
or among IAMP and the IAMP Subsidiaries. None of IAMP or the
IAMP Subsidiaries (A) has been a member of an affiliated
group filing a consolidated income Tax Return or (B) have
any liability for the Taxes of any Person (other than IAMP
and the IAMP Subsidiaries) under U.S. Treasury Regulations
Section 1.1502-6 (or any similar provision of U.S. or
non-U.S. federal, state or local law), as a transferee or
successor, by contract, or otherwise.
22
(vi) "Tax" means any domestic or foreign federal, national,
state, provincial, local, territorial, foreign or other
jurisdictional income, gross receipts, property, sales, use,
withholding, license, excise, franchise, employment, payroll,
alternative or add-on minimum, ad valorem, transfer or excise
tax, or any other tax, custom, duty, governmental fee or other
like assessment or charge imposed by any Governmental Authority,
together with any interest or penalty imposed thereon. The term
"Tax Return" means a report, return or other information
(including any attached schedules or any amendments to such
report, return or other information) required to be supplied to
or filed with a taxing authority with respect to any Tax,
including any information return, claim for refund, amended
return or declaration of estimated Tax.
(r) Insurance. Except as would not have a Material Adverse Effect on
IAMP and the IAMP Subsidiaries taken as a whole, all insurance policies
covering IAMP and the IAMP Subsidiaries and their respective material
assets are in full force and effect, all premiums with respect thereto (or
with respect to new insurance policies that, in the ordinary course of
business, have replaced such insurance policies), covering all periods up
to and including the Closing Date, have been paid, to the extent due, prior
to the Closing Date, or accrued on IAMP's financial statements and books
and records and no notice of cancellation or termination has been received
with respect to any such insurance policy (other than any insurance policy
that expires, is cancelled or is terminated in accordance with its terms
and has been continued, extended or reinstated on substantially similar
terms or is replaced with another insurance policy with substantially
similar terms). Except as would not have a Material Adverse Effect on IAMP
and the IAMP Subsidiaries taken as a whole, such policies are sufficient
for compliance with all requirements of law, and are, to the knowledge of
IAMP and the IAMP Subsidiaries, valid, outstanding and enforceable. Except
as would not have a Material Adverse Effect on IAMP and the IAMP
Subsidiaries taken as a whole, neither IAMP nor any IAMP Subsidiary has
received notice that the coverage of any insurance has been limited by any
insurance carrier, which insurance carrier has carried any such insurance
during the last three years.
23
(s) Certain Fees. Except for fees and expenses payable to ▇▇▇▇▇ ▇▇▇▇▇▇
& Partners and to Bear, ▇▇▇▇▇▇▇ & Co. Inc., neither Newhaven, ▇▇▇▇▇, IAMP
nor any of the IAMP Subsidiaries nor any IAMP Employee, on behalf of IAMP,
Newhaven, ▇▇▇▇▇ or the IAMP Subsidiaries, has employed any broker or finder
or incurred any other liability for any brokerage fees, commissions or
finders' fees in connection with the transactions contemplated hereby for
which Holdco would be liable.
(t) Holdco Common Shares Held for Investment. Newhaven and ▇▇▇▇▇ are
aware that the Holdco Common Shares to be received by Newhaven and ▇▇▇▇▇ as
consideration in the Contributions have not been registered under the
Securities Act or under any state securities laws in the United States or
under the laws of any other jurisdiction. Newhaven and ▇▇▇▇▇ are acquiring
such Holdco Common Shares solely for investment, with no present intention
to distribute any such shares to any Person.
(u) Information Supplied. (i) None of the information supplied or to
be supplied by IAMP, Newhaven or ▇▇▇▇▇ for inclusion or incorporation by
reference in (A) the Form F-4 at the time it is filed with the SEC, at any
time it is amended or supplemented or at the time it becomes effective
under the Securities Act or (B) the Proxy Statement/Prospectus, on the date
it is first mailed to El Sitio shareholders or at the time of the El Sitio
Shareholders Meeting, will contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading.
(ii) Notwithstanding the foregoing provisions of this Section
4.1(u), no representation or warranty is made by Newhaven, ▇▇▇▇▇ or
IAMP with respect to statements made or incorporated by reference in
the Form F-4 or the Proxy Statement/Prospectus based on information
supplied by El Sitio for inclusion or incorporation by reference
therein, and no representation or warranty is made by ▇▇▇▇▇ or IAMP
with respect to statements made or incorporated by reference in the
Form F-4 or the Proxy Statement/Prospectus based on information
supplied by Newhaven with respect to the Newhaven Subsidiaries, for
inclusion or incorporation by reference therein.
(v) Board Approvals.
(i) Newhaven Board Approval. The board of directors of Newhaven,
by resolutions duly adopted by unanimous vote of those voting at a
meeting duly called and held and not subsequently rescinded or
modified in any way has duly approved this Agreement, the Voting
Agreement, the Holdco Agreement, the Registration Rights Agreement and
the Transactions (the "Newhaven Board Approval").
24
(ii) ▇▇▇▇▇ Board Approval. The general partners of each of HMTF
I, HMTF II and HMTF III, by resolutions duly adopted by unanimous vote
of those voting at a meeting duly called and held and not subsequently
rescinded or modified in any way, has duly approved this Agreement,
the Voting Agreement, the Holdco Agreement, the Registration Rights
Agreement and the Transactions (the "▇▇▇▇▇ Board Approval").
(iii) IAMP Board Approval. The board of directors of IAMP, by
resolutions duly adopted by unanimous vote of those voting at a
meeting duly called and held and not subsequently rescinded or
modified in any way, has duly approved this Agreement, and the
Transactions. IAMP has received all necessary corporate approvals of
this Agreement, the Voting Agreement, the Holdco Agreement, the
Registration Rights Agreement and the Transactions under the laws of
the Cayman Islands (the "IAMP Board Approval").
(w) Holdco. Holdco has been formed for the purpose of consummating the
transactions contemplated hereby and has not engaged in any other business
except that prior to the Closing, Holdco shall have entered into the letter
agreements described in Section 6.9 hereof. All of the outstanding capital
stock of Holdco, consisting of 1 Holdco Common Share, is owned beneficially
and of record by IAMP, and any other issuances of Holdco Common Shares
prior to the Effective Time shall be solely as contemplated by this
Agreement and the transactions contemplated hereby.
(x) No Other Representations or Warranties. Except for the
representations and warranties contained in this Section 4.1, none of
Newhaven, ▇▇▇▇▇ or IAMP nor any other Person has made or makes any other
express or implied representation or warranty on behalf of Newhaven, ▇▇▇▇▇,
IAMP or the IAMP Subsidiaries.
4.2. Representations and Warranties of Newhaven. Except as set forth
in the disclosure schedule delivered by Newhaven to ▇▇▇▇▇ and El Sitio
prior to the date of execution of this Agreement (the "Newhaven Disclosure
Schedule"), Newhaven represents and warrants to El Sitio and ▇▇▇▇▇ as
follows:
(a) Due Organization; Good Standing and Power. (i) Each of Newhaven
and each of the Newhaven Subsidiaries is a corporation or other Person duly
organized, validly existing and, in the case of each U.S. corporation or
other Person, is in good standing under the laws of the jurisdiction of its
incorporation or organization, has the requisite power and authority to
conduct its business as now conducted by it, except where the failure to be
so organized, existing and in good standing or have such power and
authority, individually or in the aggregate, would not have a Material
Adverse Effect on Newhaven and the Newhaven Subsidiaries taken as a whole.
(ii) Each of Newhaven and the Newhaven Subsidiaries is duly
qualified and in good standing to do business in each other
jurisdiction in which the nature of its business or the ownership or
leasing of its properties makes such qualification necessary other
than in such jurisdictions where the failure so to qualify or to be in
good standing, individually or in the aggregate, would not have a
Material Adverse Effect on Newhaven and the Newhaven Subsidiaries
taken as a whole.
25
(iii) The copies of the certificate of incorporation and bylaws
or other constitutive documents of Newhaven and each Newhaven
Subsidiary, which were previously furnished or made available to El
Sitio, are true, complete and correct copies in all material respects
of such documents as in effect on the date of this Agreement.
(iv) Section 4.2(a)(iv) of the Newhaven Disclosure Schedule sets
forth all Newhaven Subsidiaries, and for each such Newhaven
Subsidiary, its name, jurisdiction of incorporation or organization
and the record ownership as of the date of this Agreement of all the
share capital of such Newhaven Subsidiary that is issued and
outstanding. All the outstanding share capital of each such Newhaven
Subsidiary has been validly issued and is fully paid and
non-assessable, and, except as set forth in Section 4.2(a)(iv) of the
Newhaven Disclosure Schedule, is owned, directly or indirectly, by
Newhaven, free and clear of all Liens and free of any other material
restriction (including any restriction on the right to vote, sell or
otherwise dispose of such share capital or other ownership interests),
except for restrictions on transfer imposed by applicable securities
laws and under the Holdco Agreement. Except as disclosed in Section
4.2(a)(iv) of the Newhaven Disclosure Schedule, neither Newhaven nor
any of the Newhaven Subsidiaries owns, directly or indirectly, any
equity interest in, or any interest convertible into or exchangeable
or exercisable for any equity interest in, any corporation or other
Person that is material to Newhaven and the Newhaven Subsidiaries
taken as a whole.
(v) Other than the Newhaven Subsidiaries or as set forth in
Section 4.2(a)(v) of the Newhaven Disclosure Schedule, neither
Newhaven nor any of the Newhaven Subsidiaries (A) has any direct or
indirect subsidiaries that engages, directly or indirectly, in the
Media Business, or (B) owns in excess of 5% of the outstanding share
capital of any Person that engages, directly or indirectly, in the
Media Business.
(vi) Except as disclosed in Section 4.2(a)(vi) of the Newhaven
Disclosure Schedule, neither of Newhaven nor any of the Newhaven
Subsidiaries is a party to any joint venture or partnership agreement
relating to the Media Business, and neither Newhaven nor any of the
Newhaven Subsidiaries is a party to any other joint venture or
partnership agreement.
(b) Capitalization. (i) All of the issued and outstanding share
capital of Newhaven has been duly authorized and validly issued and is
fully paid and non-assessable.
(ii) No Voting Debt of Newhaven or any of the Newhaven
Subsidiaries is issued or outstanding.
26
(iii) Except as set forth in Section 4.2(b)(iii) of the Newhaven
Disclosure Schedule, there are no options, warrants, calls, rights,
commitments or agreements of any character to which Newhaven or any
Newhaven Subsidiary is a party or by which Newhaven or any Newhaven
Subsidiary is bound obligating Newhaven or any Newhaven Subsidiary to
issue, deliver or sell, or cause to be issued, delivered or sold,
additional capital shares or any Voting Debt of Newhaven or of any
Subsidiary or obligating Newhaven or any Newhaven Subsidiary to grant,
extend or enter into any such option, warrant, call, right, commitment
or agreement. Except as set forth in Section 4.2(b)(iii) of the
Newhaven Disclosure Schedule, there are no outstanding contractual
obligations of Newhaven or any Newhaven Subsidiary (A) to repurchase,
redeem or otherwise acquire any shares of Newhaven or any Newhaven
Subsidiary or (B) to register Newhaven Common Shares or other
securities under the Securities Act.
(iv) Since June 30, 2000, except as set forth in Section
4.2(b)(iv) of the Newhaven Disclosure Schedule, Newhaven has not (A)
issued or permitted to be issued any shares, or securities exercisable
or exchangeable for or convertible into shares, of any Newhaven
Subsidiary, other than any such shares issued after the date hereof in
the ordinary course of business consistent with past practice, (B)
repurchased, redeemed or otherwise acquired, directly or indirectly
through one or more Newhaven Subsidiaries, any shares of Newhaven or
any Newhaven Subsidiary, or (C) declared, set aside, made or paid
dividends or other distributions on the outstanding shares of any
Newhaven Subsidiary.
(v) Newhaven has made all capital contributions due and payable
to the Newhaven Subsidiaries through September 30, 2000.
(c) Indebtedness. As of the date hereof, the only outstanding
Indebtedness of Newhaven and the Newhaven Subsidiaries is the Indebtedness
set forth in Section 4.2(c) of the Newhaven Disclosure Schedule or as set
forth in the Newhaven Financial Information or the Newhaven Interim
Financial Information. Section 4.2(c) of the Newhaven Disclosure Schedule
specifically identifies each Indebtedness of Newhaven or the Newhaven
Subsidiaries that is in a principal amount of at least U.S.$5 million.
There exists (i) no default or event of default (with or without notice or
lapse of time or both) by Newhaven or any of the Newhaven Subsidiaries
under the provisions of the agreements identified in Section 4.2(c) of the
Newhaven Disclosure Schedule, and (ii) no default or event of default (with
or without notice or lapse of time or both) by Newhaven or any of the
Newhaven Subsidiaries under the provisions of any other instrument
evidencing such other Indebtedness or of any agreement relating thereto,
that, in either case, permits acceleration of all or any part of such
Indebtedness, except, in the case of clause (i) or (ii) above, where such
acceleration would not result in a default under the agreements identified
on Section 4.2(c) of the Newhaven Disclosure Schedule and would not
otherwise, individually or in the aggregate, have a Material Adverse Effect
on Newhaven and the Newhaven Subsidiaries taken as a whole.
27
(d) Authorization and Validity of Agreements. Newhaven has all
necessary corporate or other power and authority to enter into this
Agreement, the Holdco Agreement, the Registration Rights Agreement and the
Voting Agreement, to enter into the other agreements contemplated hereby,
and to consummate the transactions and perform its obligations contemplated
hereby and thereby. The execution, delivery and performance by Newhaven of
this Agreement, the Voting Agreement, the Holdco Agreement and the
Registration Rights Agreement and the other agreements contemplated hereby
and thereby and the consummation by it of the transactions contemplated
hereby and thereby have been duly authorized by the board of directors of
Newhaven. No other corporate or shareholder action is necessary for the
authorization, execution, delivery and performance by Newhaven of this
Agreement, the Holdco Agreement, the Registration Rights Agreement and the
Voting Agreement and the other agreements contemplated hereby and the
consummation by Newhaven of the transactions contemplated hereby or
thereby, other than the corporate approvals set forth in Section 4.2(d) of
the Newhaven Disclosure Schedule, which corporate approvals shall have been
obtained by, and be in full force and effect on, the Closing Date. This
Agreement has been duly executed and delivered by Newhaven, and constitutes
a valid and legally binding obligation of Newhaven enforceable against
Newhaven in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium and other
similar laws relating to or affecting the enforcement of creditors' rights
generally, by general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law) or by an
implied covenant of good faith and fair dealing.
(e) No Conflicts. Except (i) as, individually or in the aggregate,
would not have a Material Adverse Effect on Newhaven and the Newhaven
Subsidiaries taken as a whole, subject to obtaining or making the consents,
approvals, orders, authorizations, registrations, declarations and filings
referred to in Section 4.2(f) and (ii) as set forth in Section 4.2(e) of
the Newhaven Disclosure Schedule, and except with respect to employee share
options, the execution and delivery of this Agreement by Newhaven does not,
and the consummation by Newhaven of the Transactions and the performance by
Newhaven of its respective obligations hereunder will not, conflict with,
or result in any Violation of, or constitute a default (with or without
notice or lapse of time, or both) under, or give rise to a right of, or
result by its terms in a Violation pursuant to: (A) any provision of the
memorandum of association and articles of association, certificate of
incorporation or bylaws or similar constitutive document of Newhaven or any
Newhaven Subsidiary, or (B) any loan or credit agreement, note, mortgage,
bond, indenture, lease, Newhaven Benefit Plan or other agreement,
obligation, instrument, permit, Concession, franchise, license, judgment,
order, decree, statute, law, ordinance, rule or regulation binding upon
Newhaven, or any Newhaven Subsidiary or their respective properties or
assets.
(f) No Governmental Approvals or Notices Required; No Conflict with
Instruments to which Newhaven or any of the Newhaven Subsidiaries are a
Party. Except for Governmental Consents under applicable antitrust laws and
filings contemplated by Article 1 and Section 2.1 hereof, no Governmental
Consent or notice to, or declaration, filing or registration with any
Governmental Entity, or consent, approval or waiver of a Non-Governmental
Approval, is required to be made or obtained by Newhaven or any Newhaven
Subsidiary in connection with the execution, delivery and performance of
this Agreement and the other agreements contemplated hereby by Newhaven and
the consummation of the transactions contemplated hereby and thereby, other
than such violations the occurrence of which, and such consents, approvals,
filings or notices the failure of which to obtain or make, would not,
individually or in the aggregate, have a Material Adverse Effect on
Newhaven and the Newhaven Subsidiaries taken as a whole.
28
(g) Title to Properties. Newhaven or one or more of the Newhaven
Subsidiaries has good and marketable title to all material real property
owned, and a valid leasehold interest in all material property leased by
such Person in the case of each of clauses (x) and (y), free and clear of
all Liens, except (i) as set forth on Section 4.2(g) of the Newhaven
Disclosure Schedule; (ii) as set forth in the notes to the Newhaven
Financial Information; and (iii) Permitted Liens. The real property of
Newhaven and each Newhaven Subsidiary is adequate for the conduct of the
business of such Persons as currently conducted, except for such inadequacy
that, individually or in the aggregate, would not have a Material Adverse
Effect on Newhaven and the Newhaven Subsidiaries taken as a whole.
(h) Conduct of Business. Except as disclosed in Section 4.2(h) of the
Newhaven Disclosure Schedule or otherwise disclosed in this Agreement, or
the Newhaven's Disclosure Schedule or as set forth in the Newhaven
Financial Information or the Newhaven Interim Financial Information since
December 31, 1999, Newhaven has conducted its business in the ordinary
course consistent with past practice, and other than in the ordinary
course, there has not occurred or arisen, with respect to its business: (i)
a Material Adverse Effect on Newhaven and the Newhaven Subsidiaries taken
as a whole; (ii) any notice of non-renewal, cancellation or termination
from any existing customers with respect to any Newhaven Material
Contracts, that would have a Material Adverse Effect on Newhaven and the
Newhaven Subsidiaries taken as a whole; (iii) any sale, assignment, pledge,
hypothecation or other transfer of any assets, businesses or operations,
other than such sales, assignments, pledges, hypothecations or other
transfers which would not, individually or in the aggregate have a Material
Adverse Effect on Newhaven and the Newhaven Subsidiaries taken as a whole;
(iv) any termination or material amendment of, or any notice of termination
of, any Newhaven Material Contract, which amendment or termination would
have a Material Adverse Effect on Newhaven and the Newhaven Subsidiaries
taken as a whole; (v) any damage, destruction or other casualty loss (not
covered by insurance) that would have a Material Adverse Effect on Newhaven
and the Newhaven Subsidiaries taken as a whole; (vi) except in each case
for immaterial amounts, any (A) increase in the fringe benefits or
compensation of any present or former Newhaven Employee, (B) grant of any
severance or termination pay to any present or former Newhaven Employee (C)
loan or advance of money or other property by Newhaven or the Newhaven
Subsidiaries to any present or former Newhaven Employee, or (D)
establishment, adoption, entrance into, modification, amendment or
termination of any Newhaven Benefit Plan; (vii) any incurrence or
assumption of any indebtedness for borrowed money or the guaranty by
Newhaven of another person; (viii) the cancellation of any debts to or
waiver of any claims or rights of material value to Newhaven; (ix) capital
expenditures or additions to property, plant or equipment or the
acquisition of any other property or assets (other than raw materials,
supplies and inventory) by Newhaven, other than immaterial amounts; (x) any
lease by Newhaven of any of its properties or assets, other than immaterial
amounts; (xi) the entering into of any Newhaven Material Contract not
listed on the Newhaven Disclosure Schedule; or (xii) the entering into of
an agreement to do any of the foregoing.
29
(i) Financial Information; Absence of Certain Changes. (i) Newhaven
has delivered to El Sitio the audited balance sheet of Playboy TV
International LLC ("PTVI") at December 31, 1999 (the "PTVI 1999 Balance
Sheet"), and the related consolidated audited statements of operations and
comprehensive loss, of owner's equity and of cash flows for the period from
August 31, 1999 (date of commencement) through December 31, 1999, including
notes thereto, and the report thereon of independent certified public
accountants, which are set forth in Section 4.2(i) of the Newhaven
Disclosure Schedule (the "PTVI Financial Information"). The PTVI Financial
Information fairly presents in all material respects the financial position
and results of operations of PTVI as at the respective dates thereof and
for the periods then ended, all in accordance with U.S. GAAP consistently
applied by PTVI at the dates and during the periods involved. Except (A) as
and to the extent set forth on the PTVI 1999 Balance Sheet, including the
notes thereto, the PTVI Interim Financial Information, the Rainbow
Financial Information or the AEI Financial Information or (B) as disclosed
in Section 4.2(i) of the Newhaven Disclosure Schedule, neither Newhaven nor
any of the Newhaven Subsidiaries has any liabilities or obligations of any
nature (whether accrued, absolute, contingent or otherwise) that would be
required to be reflected on a balance sheet or in the notes thereto
prepared in accordance with U.S. GAAP other than liabilities or obligations
incurred since December 31, 1999 that would not, individually or in the
aggregate, have a Material Adverse Effect on Newhaven and the Newhaven
Subsidiaries taken as a whole.
(ii) Newhaven has delivered to El Sitio the unaudited balance
sheet of PTVI as at June 30, 2000, and the related unaudited
statements of operations and comprehensive loss for the period then
ended, attached as Section 4.2(i)(ii) of the Newhaven Disclosure
Schedule (the "PTVI Interim Financial Information"). The PTVI Interim
Financial Information was prepared in accordance with U.S. GAAP on a
basis consistent with prior practice for the preparation of interim
financial statements for PTVI, and fairly presents in all material
respects the financial position and results of operations of PTVI at
as of and for the period then ended subject to customary year-end
adjustments.
(iii) Newhaven has delivered to El Sitio the unaudited balance
sheet of Rainbow at June 30, 2000, and the related unaudited statement
of operations for the period then ended, attached as Section
4.2(i)(iii) of the Newhaven Disclosure Schedule (the "Rainbow
Financial Information"). The Rainbow Financial Information was
prepared in accordance with U.S. GAAP on a basis consistent with prior
practice for the preparation of interim financial statements for
Rainbow and fairly presents in all material respects the financial
position and results of operations of Rainbow as of and for the period
then ended subject to customary year-end adjustments.
30
(iv) Newhaven has delivered to El Sitio (A) the unaudited balance
sheet of AEI Collingham Holdings Co, Ltd. ("AEI") at December 31,
1999, and the related unaudited statement of operations for the fiscal
year then ended, and (B) the unaudited balance sheet of AEI at June
30, 2000, and the related unaudited statement of operations for the
period then ended attached as Section 4.1(i)(iv) of the Newhaven
Disclosure Schedule (collectively, the "AEI Financial Information,"
and together with the PTVI Financial Information, the PTVI Interim
Financial Information and the Rainbow Financial Information, the
"Newhaven Financial Information"). The AEI Financial Information was
prepared in accordance with U.S. GAAP on a basis consistent with prior
practice for the preparation of annual or interim financial
statements, as applicable, for AEI and fairly presents in all material
respects the financial position and results of operations of AEI as of
and for the periods then ended subject to customary year-end
adjustments.
(j) Legal Proceedings. Except as described in Section 4.2(j) of the
Newhaven Disclosure Schedule, there is no Legal Proceeding relating to
Newhaven or the Newhaven Subsidiaries to which Newhaven or any of the
Newhaven Subsidiaries is a party, or to which any of their assets is
subject, pending or, to the knowledge of Newhaven, ▇▇▇▇▇ or Newhaven,
threatened against Newhaven or any of the Newhaven Subsidiaries or relating
to the Transactions that, individually or in the aggregate, would
reasonably be expected to result in a Material Adverse Effect on Newhaven
and the Newhaven Subsidiaries taken as a whole.
(k) Labor Matters. Except as described in Section 4.2(k) of the
Newhaven Disclosure Schedule, since December 31, 1999, (i) Newhaven and the
Newhaven Subsidiaries are, to the knowledge of Newhaven, in compliance in
all material respects with all applicable laws respecting employment and
employment practices, terms and conditions of employment and wages and
hours, and neither Newhaven nor any of the Newhaven Subsidiaries has been
engaged in any unfair labor practice, (ii) there is no unfair labor
practice complaint against Newhaven or the Newhaven Subsidiaries pending
before any labor relations board or other Governmental Entity having
oversight authority with respect to labor relations, (iii) there is no
labor strike, dispute, slowdown or stoppage actually pending or, to the
knowledge of Newhaven, threatened against or affecting Newhaven or the
Newhaven Subsidiaries, (iv) neither Newhaven nor any of the Newhaven
Subsidiaries has experienced any strike, work stoppage or other labor
difficulty, and (v) neither Newhaven nor any of the Newhaven Subsidiaries
is a party to, or subject to, a collective bargaining agreement, and no
collective bargaining agreement relating to any Newhaven Employees
currently is being negotiated, which, in the case of any of the foregoing
would, individually or in the aggregate, have a Material Adverse Effect on
Newhaven and the Newhaven Subsidiaries taken as a whole.
(l) Contracts. (i) Section 4.2(l)(i) of the Newhaven Disclosure
Schedule lists all contracts, agreements or commitments of Newhaven and the
Newhaven Subsidiaries that are material to Newhaven and the Newhaven
subsidiaries taken as a whole ("Newhaven Material Contracts"). Except as
specified in Section 4.2(l)(i) of the Newhaven Disclosure Schedule, all
Newhaven Material Contracts are in full force and effect and are, to the
knowledge of Newhaven, valid and enforceable in accordance with their
respective terms, except where the failure to be in full force and effect
and valid and enforceable would not, individually or in the aggregate, have
a Material Adverse Effect on Newhaven and the Newhaven Subsidiaries taken
as a whole. Except as specified in Section 4.2(l)(i) of the Newhaven
Disclosure Schedule, Newhaven and the Newhaven Subsidiaries are not in
breach or default in the performance of, and to Newhaven's knowledge, no
other Person is in breach or default of, any obligation thereunder and no
event has occurred or has failed to occur whereby any of the other parties
thereto have been or will be released therefrom or will be entitled to
refuse to perform thereunder, except for such breaches, defaults and events
that, individually or in the aggregate, would not have a Material Adverse
Effect on Newhaven and the Newhaven Subsidiaries taken as a whole.
31
(ii) Except as set forth in Section 4.2(l)(ii) of the Newhaven
Disclosure Schedule, there is no Newhaven Material Contract between
Newhaven and the Newhaven Subsidiaries, on the one hand, and any affiliate
of Newhaven, on the other hand, (except, in each case, IAMP and the IAMP
Subsidiaries) and no affiliate of Newhaven has any material interest in any
material property, real or personal, tangible or intangible, including,
without limitation, any Intellectual Property, used in the business of
Newhaven and the Newhaven Subsidiaries.
(m) Intellectual Property. (i) Section 4.2(m)(i) of the Newhaven
Disclosure Schedule sets forth, with respect to material Intellectual
Property owned, held or used by Newhaven and/or the Newhaven Subsidiaries
("Newhaven Intellectual Property"), all patents, registrations and
applications relating thereto, all material unregistered Intellectual
Property, and all material licenses, consents, royalty and other agreements
concerning Newhaven Intellectual Property to which Newhaven and/or the
Newhaven Subsidiaries is a party ("Newhaven Intellectual Property
Licenses").
(ii) Except as disclosed in Section 4.2(m)(ii) of the Newhaven
Disclosure or would not have a Material Adverse Effect, (A) Newhaven and/or
the Newhaven Subsidiaries own or have the right to use all the Newhaven
Intellectual Property necessary to conduct the respective businesses of
Newhaven and the Newhaven Subsidiaries as currently are conducted, free of
all Liens; (B) all of the Newhaven Intellectual Property is valid,
enforceable, not abandoned and unexpired; (C) to the knowledge of Newhaven
and the Newhaven Subsidiaries, the Newhaven Intellectual Property does not
infringe or otherwise impair the Intellectual Property of any other Person
and is not being infringed or impaired by any other Person, nor has
Newhaven or the Newhaven Subsidiaries received any written notice of the
same; (D) Newhaven and/or the Newhaven Subsidiaries take all reasonable
steps to protect and maintain the Newhaven Intellectual Property, including
executing all appropriate confidentiality agreements, filing all
appropriate patents and registrations, and filings any other documents
necessary under the laws of any relevant jurisdictions to preserve their
rights in such Newhaven Intellectual Property; (E) no party to a Newhaven
Intellectual Property License is, or is alleged to be, in breach or default
thereunder; (F) the transactions contemplated by this Agreement shall not
impair the rights of Newhaven or the Newhaven Subsidiaries under any
Newhaven Intellectual Property License, or cause any payments to be due
thereunder; and (G) without limiting the generality of the foregoing,
Newhaven and/or the Newhaven Subsidiaries owns and possesses all right,
title and interest in and to all Newhaven Intellectual Property created or
developed by, or under the direction or supervision of, its employees.
32
(n) Government Consents. Except as described in Section 4.2(n) of the
Newhaven Disclosure Schedule, Newhaven or the Newhaven Subsidiaries have
all Governmental Consents required for the conduct of their respective
businesses as presently conducted, and such Governmental Consents are in
full force and effect, and Newhaven and the Newhaven Subsidiaries have not
received any notice of any violation thereof nor does any of Newhaven or
any of the Newhaven Subsidiaries have knowledge of any threatened
suspension or cancellation of any such Governmental Consent, except where
the failure to have, or to keep in full force and effect such Governmental
Consents would not, individually or in the aggregate, have a Material
Adverse Effect on Newhaven and the Newhaven Subsidiaries taken as a whole.
(o) Conduct of Business in Compliance with Regulatory and Contractual
Requirements. Except as described in Section 4.2(o) of the Newhaven
Disclosure Schedule or as reflected in the Newhaven Financial Information,
since December 31, 1999, Newhaven and the Newhaven Subsidiaries have
conducted their respective businesses so as to comply in all material
respects with all applicable U.S. and non-U.S. laws, ordinances,
regulations or orders or other requirements of any Governmental Entity and
have received no written notice of any failure to comply with such laws,
ordinances, regulations, orders, rights or requirements, except where the
failure to comply with such laws, ordinances, regulations, orders, rights
or requirements would not, individually or in the aggregate, have a
Material Adverse Effect on Newhaven and the Newhaven Subsidiaries taken as
a whole.
(p) Employee Benefit Plans. (i) "Newhaven Benefit Plans" means all
Benefit Plans that (A) are entered into, sponsored or maintained by any of
the Newhaven Subsidiaries, and (B) under which any present or former
director, officer or employee of any of the Newhaven Subsidiaries
(collectively, the "Newhaven Employees") has any present or future right to
benefits. "Newhaven U.S. Benefit Plans" means all Newhaven Benefit Plans
under which any Newhaven Employee who is or was primarily employed in the
United States (collectively, the "Newhaven U.S. Employees") has any present
or future right to benefits. "Newhaven International Benefit Plans" shall
mean all Newhaven Benefit Plans other than the Newhaven U.S. Benefit Plans.
(ii) Section 4.2(p)(ii) of the Newhaven Disclosure Schedule sets
forth a list of each Newhaven Benefit Plan.
(iii) With respect to each Newhaven Benefit Plan, Newhaven has
provided or made available to El Sitio a current, accurate and
complete copy thereof, including any amendments thereto, and, to the
extent applicable: (A) any related trust agreement or other funding
instrument, (B) the most recent determination letter, if applicable,
(B) any summary description and other written communications to
Newhaven Employees concerning benefits provided thereunder, (C) for
the one most recent year, if applicable, the Form 5500 and attached
schedules, audited financial statements and actuarial reports.
33
(iv) Except as described on Section 4.2(p)(iv) of the Newhaven
Disclosure Schedule:
(A) each Newhaven Benefit Plan has been established and
administered in accordance with its terms, in
compliance with the applicable provisions of ERISA, the
Code and other applicable laws, rules, statutes, orders
and regulations, and has been maintained in good
standing with applicable regulatory authorities;
(B) each Newhaven U.S. Benefit Plan that is intended to be
qualified (within the meaning of Section 401(a) of the
Code) is so qualified and has received a favorable
determination letter as to its qualification, and
nothing has occurred, whether by action or failure to
act, that could reasonably be expected to cause the
loss of such qualification;
(C) no event has occurred and no condition exists that
would subject Newhaven or any of the Newhaven
Subsidiaries, either directly or by reason of their
affiliation with any member of their "Controlled Group"
(defined as any organization that is a member of an
controlled group of organizations (within the meaning
of Section 414(b), (c), (m) or (o) of the Code), to any
Tax, fine, Lien, penalty or other liability imposed by
ERISA, the Code or any other applicable laws, rules,
statutes, orders and regulations;
(D) no "prohibited transaction" (as defined in Section 406
of ERISA and Section 4975 of the Code) has occurred
with respect to any Newhaven U.S. Benefit Plan;
(E) no Newhaven Benefit Plan provides retiree welfare
benefits and neither Newhaven nor any of the Newhaven
Subsidiaries have any obligation to provide retiree
welfare benefits other than coverage mandated under
applicable law or regulation for which neither Newhaven
nor any Newhaven Subsidiary is required to book an
accrual on its financial statements;
(F) no Newhaven U.S. Benefit Plan is subject to Title IV of
ERISA or Section 412 of the Code, or is a multiemployer
plan within the meaning of Section 4001(a)(3) of ERISA;
34
(G) no actions, suits, claims, administrative
investigations, audits or other administrative
proceedings (other than routine claims for benefits in
the ordinary course) are pending or threatened with
respect to any Newhaven Benefit Plan, and no facts or
circumstances exist that could give rise to any such
actions, suits, claims, investigations, audits or
proceedings;
(H) no Newhaven Benefit Plans exist that, individually or
collectively, could be reasonably expected to give rise
to the payment of any amount that would not be
deductible pursuant to the terms of Section 280G of the
Code, and no Newhaven Benefit Plan exists that, as a
result of the transaction contemplated by this
Agreement, could result in the payment to any Newhaven
Employee of any money or other property or could result
in the acceleration or provision of any other rights or
benefits to any Newhaven Employee; and
(I) with respect to any Newhaven International Benefit
Plan, according to the actuarial assumptions and
valuations most recently used for the purpose of
funding each Newhaven International Benefit Plan (which
actuarial assumptions and valuations were provided in
accordance with the actuarial and accounting
principles, bases, policies, methods and practices in
the relevant jurisdiction for such plan), as of June
30, 2000, the total amount or value of the funds
available under such Newhaven International Benefit
Plan to pay benefits accrued thereunder or segregated
in respect of such accrued benefits, together with any
reserve or accrual with respect thereto, exceeded the
present value of all benefits (actual or contingent)
accrued as of such date of all participants and past
participants therein in respect of which Newhaven or
any of the Newhaven Subsidiaries has or would have
after the Closing Date any obligation.
(v) There are no Benefit Plans that are entered into,
sponsored or maintained by Newhaven under which any present or
former Newhaven Employee has any present or future right to
benefits.
(q) Tax Matters. Except as disclosed on Section 4.2(q) of the Newhaven
Disclosure Schedule and except as would not result in a Material Adverse
Effect on Newhaven and the Newhaven Subsidiaries taken as a whole:
(i) Newhaven and the Newhaven Subsidiaries have filed all Tax
Returns that they were required to file. All such filed Tax Returns
were correct and complete in all material respects. All Taxes required
to have been paid by Newhaven and the Newhaven Subsidiaries (whether
or not shown on any Tax Return) have been paid or adequately reserved
against in accordance with U.S. GAAP. None of Newhaven or the Newhaven
Subsidiaries currently is the beneficiary of any extension of time
within which to file any Tax Return. No written claim has ever been
made (and, to the knowledge of Newhaven or the Newhaven Subsidiaries,
no claim has been threatened in writing) by any authority in a
jurisdiction where Newhaven and any of the Newhaven Subsidiaries does
not file Tax Returns that it is or may be subject to taxation by that
jurisdiction. There are no Liens on any of the assets of any of
Newhaven and the Newhaven Subsidiaries that arose in connection with
any failure (or alleged failure) to pay any Tax other than Liens for
(i) current Taxes not yet due or (ii) Taxes that are being disputed in
good faith by appropriate proceedings and for which adequate reserves
have been provided.
35
(ii) Newhaven and the Newhaven Subsidiaries have withheld and
paid all Taxes required to have been withheld and paid in connection
with amounts paid or owing to any Newhaven Employee, independent
contractor, creditor, shareholder or other third party.
(iii) No audit or other proceeding by any Governmental Entity is
pending or, to the knowledge of Newhaven, threatened in writing with
respect to any Taxes due from or with respect to Newhaven or any of
the Newhaven Subsidiaries. There is no dispute or claim concerning any
Tax liability of Newhaven or the Newhaven Subsidiaries claimed or
raised by any taxing authority (and, to the knowledge of Newhaven or
the Newhaven Subsidiaries no such dispute or claim has been threatened
in writing). Newhaven, has made available to El Sitio correct and
complete copies of all income Tax Returns and examination reports with
respect to, and statements of deficiencies assessed against or agreed
to by, Newhaven and the Newhaven Subsidiaries since December 31, 1999.
(iv) None of Newhaven or the Newhaven Subsidiaries has waived any
statute of limitations in respect of Taxes or agreed to any extension
of time with respect to a Tax assessment or deficiency.
(v) None of Newhaven or the Newhaven Subsidiaries has filed a
consent under Section 341(f) of the Code concerning collapsible
corporations. None of Newhaven or the Newhaven Subsidiaries has made
any payments, is obligated to make any payments, or is a party to any
agreement that under certain circumstances could obligate it to make
any payments that will not be deductible under Section 280G of the
Code. None of Newhaven or the Newhaven Subsidiaries has been a United
States real property holding corporation (within the meaning of
Section 897(c)(2) of the Code) during the applicable period specified
in Section 897(c)(1)(A)(ii) of the Code. Newhaven and the Newhaven
Subsidiaries have disclosed on their U.S. income Tax Returns all
positions taken therein that could reasonably be expected to give rise
to a substantial understatement of U.S. federal income Tax (within the
meaning of Section 6662 of the Code). None of Newhaven or the Newhaven
Subsidiaries is a party to any Tax allocation or sharing agreement,
other than such Tax allocation or sharing agreement exclusively
between or among Newhaven and the Newhaven Subsidiaries. None of
Newhaven or the Newhaven Subsidiaries (A) has been a member of an
affiliated group filing a consolidated income Tax Return or (B) has
any liability for the Taxes of any person (other than Newhaven and the
Newhaven Subsidiaries) under U.S. Treasury Regulations Section
1.1502-6 (or any similar provision of U.S. or non-U.S. federal, state
or local law), as a transferee or successor, by contract, or
otherwise.
36
(r) Insurance. Except as would not have a Material Adverse Effect
on Newhaven and the Newhaven Subsidiaries taken as a whole, all
insurance policies covering Newhaven and the Newhaven Subsidiaries and
their respective material assets are in full force and effect, all
premiums with respect thereto (or with respect to new policies that,
in the ordinary course of business, have replaced such policies)
covering all periods up to and including the Closing Date have been
paid, to the extent due, prior to the Closing Date, or accrued on
Newhaven's financial statements and books and records and no notice of
cancellation or termination has been received with respect to any such
policy (other than any policy that expires, is cancelled or is
terminated in accordance with its terms and has been continued,
extended or reinstated on substantially similar terms or is replaced
with another policy with substantially similar terms). Except as would
not have a Material Adverse Effect on Newhaven and the Newhaven
Subsidiaries taken as a whole, such policies are sufficient for
compliance with all requirements of law and are, to the knowledge of
Newhaven and the Newhaven Subsidiaries, valid, outstanding and
enforceable. Except as would not have a Material Adverse Effect on
Newhaven and the Newhaven Subsidiaries taken as a whole, neither
Newhaven nor any Newhaven Subsidiary has received notice that the
coverage of any insurance has been limited by any insurance carrier,
which insurance carrier has carried any such insurance during the last
three years.
(s) Certain Fees. Neither Newhaven, nor any of the Newhaven
Subsidiaries nor any Newhaven Employee, on behalf of Newhaven or the
Newhaven Subsidiaries, has employed any broker or finder or incurred
any other liability for any brokerage fees, commissions or finders'
fees in connection with the Transactions for which Newhaven or Holdco
would be liable.
(t) Holdco Common Shares Held for Investment. Newhaven is aware
that the Holdco Common Shares to be received by Newhaven in the
Contributions will not have been registered under the Securities Act
or under any state securities laws in the United States or under the
laws of any other jurisdiction. Newhaven is acquiring such Holdco
Common Shares solely for investment, with no present intention to
distribute any such shares to any Person.
(u) Information Supplied. (i) None of the information supplied or
to be supplied by Newhaven for inclusion or incorporation by reference
in (A) the Form F-4 at the time it is filed with the SEC, at any time
it is amended or supplemented or at the time it becomes effective
under the Securities Act, or (B) the Proxy Statement/Prospectus, on
the date it is first mailed to El Sitio shareholders or at the time of
the El Sitio Shareholders Meeting, will contain any untrue statement
of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading.
37
(ii) Notwithstanding the foregoing provisions of this
Section 4.2(u), no representation or warranty is made by Newhaven
with respect to statements made or incorporated by reference in
the Form F-4 or the Proxy Statement/Prospectus based on
information supplied by El Sitio or ▇▇▇▇▇ for inclusion or
incorporation by reference therein.
(v) No Other Representations or Warranties. Except for the
representations and warranties contained in this Section 4.2, neither
Newhaven nor any other Person has made or makes any other express or
implied representation or warranty with respect to Newhaven or the
Newhaven Subsidiaries.
4.3. Representations and Warranties of El Sitio. Except (i) as set
forth in the disclosure schedule delivered by El Sitio to IAMP, ▇▇▇▇▇ and
Newhaven prior to the date of execution of this Agreement (the "El Sitio
Disclosure Schedule" and, together with the IAMP Disclosure Schedule and
the Newhaven Disclosure Schedule, the "Disclosure Schedules") or (ii) as
set forth in the El Sitio SEC Reports that have been filed prior to the
date hereof, El Sitio represents and warrants to each of IAMP, ▇▇▇▇▇ and
Newhaven as follows:
(a) Due Organization; Good Standing and Power; Subsidiaries. (i)
Each of El Sitio and the El Sitio Subsidiaries (as defined below) is a
corporation or other Person duly organized, validly existing and, in
the case of each U.S. corporation or other Person, is in good standing
under the laws of the jurisdiction of its incorporation or
organization, has the requisite power and authority to conduct its
business as now conducted by it, except where the failure to be so
organized, existing and in good standing or have such power and
authority, individually or in the aggregate, would not have a Material
Adverse Effect on El Sitio and the El Sitio Subsidiaries taken as a
whole.
(ii) Each of El Sitio and the El Sitio Subsidiaries is duly
qualified and in good standing to do business in each other
jurisdiction in which the nature of its business or the ownership
or leasing of its properties makes such qualification necessary
other than in such jurisdictions where the failure so to qualify
or to be in good standing, individually or in the aggregate,
would not have a Material Adverse Effect on El Sitio and the El
Sitio Subsidiaries taken as a whole.
(iii) The copies of the memorandum of association and
articles of association or other constitutive documents of El
Sitio and each of the El Sitio Subsidiaries which were previously
furnished or made available to IAMP and Newhaven, are true,
complete and correct copies in all material respects of such
documents as in effect on the date of this Agreement.
38
(iv) Section 4.3(a)(iv) of the El Sitio Disclosure Schedule
sets forth all the subsidiaries of El Sitio (the "El Sitio
Subsidiaries"), and, for each El Sitio Subsidiary, its name,
jurisdiction of incorporation or organization and the record
ownership as of the date of this Agreement of all the share
capital of such subsidiary that is issued and outstanding. All
the outstanding share capital of each such subsidiary has been
validly issued and is fully paid and non-assessable, and, except
as set forth in Section 4.3(a)(iv) of the El Sitio Disclosure
Schedule, is owned, directly or indirectly by El Sitio, free and
clear of all Liens, and free of any other material restriction
(including any restriction on the right to vote, sell or
otherwise dispose of such share capital or other ownership
interests), except for restrictions on transfer imposed by
applicable securities laws and under the Holdco Agreement. Except
as disclosed in Section 4.3(a)(iv) of the El Sitio Disclosure
Schedule, neither El Sitio nor any of the El Sitio Subsidiaries
owns, directly or indirectly, any equity interest in, or any
interest convertible into or exchangeable or exercisable for any
equity interest in, any corporation or other Person that is
material to El Sitio and the El Sitio Subsidiaries taken as a
whole.
(v) Except as disclosed in the El Sitio Disclosure Schedule,
neither El Sitio nor any of the El Sitio Subsidiaries is a party
to any joint venture or partnership agreement.
(b) Capitalization. (i) All of the issued and outstanding share
capital of El Sitio has been duly authorized and validly issued and is
fully paid and non-assessable, except as set forth in Section
4.3(b)(i) of the El Sitio Disclosure Schedule.
(ii) No Voting Debt of El Sitio or any of the El Sitio
Subsidiaries issued or outstanding.
(iii) Except as set forth in Section 4.3(b)(iii) of the El
Sitio Disclosure Schedule, there are no options, warrants, calls,
rights, commitments or agreements of any character to which El
Sitio or any El Sitio Subsidiary is a party or by which El Sitio
or any El Sitio Subsidiary is bound obligating El Sitio or any El
Sitio Subsidiary to issue, deliver or sell, or cause to be
issued, delivered or sold, additional capital shares or any
Voting Debt of El Sitio or of any El Sitio Subsidiary or
obligating El Sitio or any El Sitio Subsidiary to grant, extend
or enter into any such option, warrant, call, right, commitment
or agreement. Except as set forth in Section 4.3(b)(iii) of the
El Sitio Disclosure Schedule, there are no outstanding
contractual obligations of El Sitio or any El Sitio Subsidiary
(A) to repurchase, redeem or otherwise acquire any shares of El
Sitio or any El Sitio Subsidiary or (B) to register El Sitio
Common Shares or other securities under the Securities Act.
(iv) Since June 30, 2000, except as set forth in Section
4.3(b)(iv) of the El Sitio Disclosure Schedule, El Sitio has not
(A) issued or permitted to be issued any shares, or securities
exercisable or exchangeable for or convertible into shares, of
any El Sitio subsidiary, other than any such shares issued after
the date hereof in the ordinary course of business consistent
with past practice, (B) repurchased, redeemed or otherwise
acquired, directly or indirectly through one or more El Sitio
subsidiaries, any shares of El Sitio or any El Sitio Subsidiary
or (C) declared, set aside, made or paid dividends or other
distributions on the outstanding shares of any El Sitio
Subsidiary.
39
(c) Indebtedness. As of the date hereof, the only outstanding
Indebtedness of El Sitio and the El Sitio Subsidiaries is the Indebtedness
set forth in Section 4.3(c) of the El Sitio Disclosure Schedule or as set
forth in the El Sitio Financial Information or the El Sitio Interim
Financial Information. Section 4.3(c) of the El Sitio Disclosure Schedule
specifically identifies each Indebtedness of El Sitio or the El Sitio
Subsidiaries that is in a principal amount of at least U.S.$5 million.
There exists (i) no default or event of default (with or without notice or
lapse of time or both) by El Sitio or any of the El Sitio Subsidiaries
under the provisions of the agreements identified in Section 4.3(c) of the
El Sitio Disclosure Schedule and (ii) no default or event of default (with
or without notice or lapse of time or both) by El Sitio or any of El Sitio
Subsidiaries under the provisions of any other instrument evidencing such
other Indebtedness or of any agreement relating thereto, that, in either
case, permits acceleration all or any part of such Indebtedness, except, in
the case of clause (i) or (ii), where such acceleration would not result in
a default under the agreements identified on Section 4.3(c) of the El Sitio
Disclosure Schedule and would not otherwise, individually or in the
aggregate, have a Material Adverse Effect on El Sitio and El Sitio
Subsidiaries taken as a whole.
(d) Authorization and Validity of Agreement. El Sitio has all
necessary corporate power and authority to execute and deliver this
Agreement, the Holdco Agreement and the Voting Agreement, to perform its
obligations hereunder and thereunder, and to consummate the transactions
contemplated hereby and thereby. The execution, delivery and performance by
El Sitio of this Agreement, the Holdco Agreement and the Voting Agreement
and the other agreements contemplated hereby and the consummation by El
Sitio of the transactions contemplated hereby and thereby have been duly
and validly authorized by all necessary corporate action. No other
corporate or shareholder action is necessary for the authorization,
execution, delivery and performance by El Sitio of this Agreement, the
Holdco Agreement and the Voting Agreement and the other agreements
contemplated hereby and the consummation by El Sitio of the transactions
contemplated hereby or thereby other than the approvals set forth in
Section 4.3(d) of the El Sitio Disclosure Schedule, which corporate
approvals shall have been obtained by, and be in full force and effect on,
the Closing Date. This Agreement has been duly executed and delivered by El
Sitio, and constitutes a valid and legally binding obligation of El Sitio
enforceable against El Sitio in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws relating to or affecting creditors'
rights generally, by general equitable principles (regardless of whether
such enforceability is considered in a proceeding in equity or at law) or
by an implied covenant of good faith and fair dealing.
(e) No Conflicts. Except (i) as, individually or in the aggregate,
would not have a Material Adverse Effect on El Sitio and El Sitio
Subsidiaries taken as a whole, subject to obtaining or making the consents,
approvals, orders, authorizations, registrations, declarations and filings
referred to in Section 4.3(f) and (ii) as set forth in Section 4.3(e) of
the El Sitio Disclosure Schedule, and except with respect to employee share
options, the execution and delivery of this Agreement by El Sitio does not,
and the consummation by El Sitio of the Transactions and the performance by
El Sitio of its obligations hereunder will not, conflict with, or result in
any violation of, or constitute a default (with or without notice or lapse
of time, or both) under, or give rise to a right of, or result by its terms
in the termination, amendment, cancellation or acceleration of any
obligation of El Sitio or El Sitio Subsidiaries or a violation pursuant to:
(A) any provision of the memorandum and articles of association,
certificate of incorporation or bylaws or similar constitutive document of
any such Person or any El Sitio Subsidiary, or (B) any loan or credit
agreement, note, mortgage, bond, indenture, lease, Benefit Plan or other
agreement, obligation, instrument, permit, concession, franchise, license,
judgment, order, decree, statute, law, ordinance, rule or regulation
binding upon El Sitio or any El Sitio Subsidiary or their respective
properties or assets.
40
(f) No Governmental Approvals or Notices Required; No Conflict with
Instruments to which El Sitio is Party. Except for Governmental Consents
under applicable antitrust laws and filings contemplated by Article 1 and
Section 2.1 hereof, no Governmental Consent or notice to, or declaration,
filing or registration with any Governmental Entity, or consent, approval
or waiver of any Non-Governmental Approval, is required to be made or
obtained by El Sitio or any El Sitio Subsidiary in connection with the
execution, delivery and performance of this Agreement and the other
agreements contemplated hereby by El Sitio and the consummation by it of
the transactions contemplated hereby and thereby, except for (x) the
applicable requirements of the Exchange Act, and the rules and regulations
promulgated thereunder and (y) such violations the occurrence of which, and
such consents, approvals, filings or notices the failure of which to obtain
or make, would not, individually or in the aggregate, have or reasonably be
expected to have a Material Adverse Effect on El Sitio and the El Sitio
Subsidiaries taken as a whole.
(g) Title to Properties. El Sitio or one of the El Sitio Subsidiaries
has good and marketable title to all material real property owned, and a
valid leasehold interest in all material property leased by such Person,
free and clear of all Liens, except (i) as set forth in Section 4.3(g) of
the El Sitio Disclosure Schedule; (ii) as set forth in the El Sitio
Financial Information or El Sitio Interim Financial Information; and (iii)
Permitted Liens. The real property of El Sitio and each El Sitio Subsidiary
is adequate for the conduct of the business of such Persons as currently
conducted, except for such inadequacy that, individually or in the
aggregate, would not have a Material Adverse Effect on El Sitio and the El
Sitio Subsidiaries taken as a whole.
(h) Conduct of Business. Except as disclosed in Section 4.3(h) of the
El Sitio Disclosure Schedule or otherwise disclosed in this Agreement or as
set forth in the El Sitio Financial Information or the El Sitio Interim
Financial Information, since December 31, 1999, El Sitio has conducted its
business in the ordinary course consistent with past practice, and, other
than in the ordinary course, there has not occurred or arisen, with respect
to its business: (i) a Material Adverse Effect on El Sitio and the El Sitio
Subsidiaries taken as a whole; (ii) any notice of non-renewal, cancellation
or termination from any existing customers with respect to any El Sitio
Material Contract, which would have a Material Adverse Effect on El Sitio
and the El Sitio Subsidiaries taken as a whole; (iii) any sale, assignment,
pledge, hypothecation or other transfer of any assets, businesses or
operations, other than such sales, assignments, pledges, hypothecations or
other transfers which would not, individually or in the aggregate have a
Material Adverse Effect on El Sitio and the El Sitio Subsidiaries taken as
a whole; (iv) any termination or material amendment of, or any notice of
termination of, any El Sitio Material Contract, which amendment or
termination would have a Material Adverse Effect on El Sitio and the El
Sitio Subsidiaries taken as a whole; (v) any damage, destruction or other
casualty loss (not covered by insurance) which would have a Material
Adverse Effect on El Sitio and the El Sitio Subsidiaries taken as a whole;
(vi) except in each case for immaterial amounts, any (A) increase in the
fringe benefits or compensation of any present or former El Sitio Employee,
(B) grant of any severance or termination pay to any present or former El
Sitio Employee, (C) loan or advance of money or other property by El Sitio
or the El Sitio Subsidiaries to any of their present or former directors,
officers or employees, or (D) establishment, adoption, entrance into,
modification, amendment or termination of any El Sitio Benefit Plan; (vii)
any incurrence or assumption of any indebtedness for borrowed money or the
guaranty by El Sitio of another person; (viii) the cancellation of any
debts to or waiver of any claims or rights of material value to El Sitio;
(ix) capital expenditures or additions to property, plant or equipment or
the acquisition of any other property or assets (other than raw materials,
supplies and inventory) by El Sitio, other than immaterial amounts; (x) any
lease by El Sitio of any of its properties or assets other than immaterial
amounts; (xi) the entering into of any El Sitio Material Contract not
listed on the El Sitio Disclosure Schedule or (xii) the entering into of an
agreement to do any of the foregoing.
41
(i) Financial Information. (i) El Sitio has made available to
IAMP, ▇▇▇▇▇ and Newhaven the audited consolidated balance sheets of El
Sitio and the El Sitio Subsidiaries at December 31, 1998 and 1999 (in
the case of the balance sheet at December 31, 1999, the "El Sitio 1999
Balance Sheet"), and the related audited statements of income and
retained earnings and cash flows for each of the fiscal years then
ended, including note thereto, and the report thereon of independent
certified public accountants, which are set forth in Section 4.3(i)(i)
of the El Sitio Disclosure Schedule (the "El -- Sitio Financial
Information"). The El Sitio Financial information fairly presents in
all material respects the financial position and results of operations
of El Sitio and the El Sitio Subsidiaries as at the respective dates
thereof and for the periods then ended, all in accordance with U.S.
GAAP consistently applied by El Sitio at the dates and during the
periods involved. Except (A) as and to the extent set forth on the El
Sitio 1999 Balance Sheet, including the notes thereto, or as
specifically identified in the notes to the El Sitio Interim Financial
Information or (B) as disclosed in Section 4.3(i)(i) of the El Sitio
Disclosure Schedule, neither El Sitio nor any of the El Sitio
Subsidiaries has any liabilities or obligations of any nature (whether
accrued, absolute, contingent or otherwise) that would be required to
be reflected on a balance sheet or in the notes thereto prepared in
accordance with U.S. GAAP other than liabilities or obligations
incurred since December 31, 1999 that would not, individually or in
the aggregate, have a Material Adverse Effect on El Sitio and the El
Sitio Subsidiaries taken as a whole.
(ii) El Sitio has made available to IAMP, ▇▇▇▇▇ and Newhaven
the unaudited consolidated balance sheet of El Sitio and the El
Sitio Subsidiaries as at June 30, 2000, and the related unaudited
statements of income and retained earnings and cash flows for the
period then ended and the corresponding period of 1999, including
notes thereto, set forth Section 4.3(i)(ii) of the El Sitio
Disclosure Schedule (the "El Sitio Interim Financial
Information"). The El Sitio Interim Financial Information was
prepared in accordance with U.S. GAAP on a basis consistent with
prior practice for the preparation of interim financial
statements for El Sitio and the El Sitio Subsidiaries, and fairly
presents in all material respects the financial position and
results of operations of El Sitio and the El Sitio Subsidiaries
at June 30, 2000 and for the period then ended subject to
customary year-end adjustments.
42
(j) Legal Proceedings. Except as described in Section 4.3(j) of
the El Sitio Disclosure Schedule, there is no Legal Proceeding
relating to El Sitio or the El Sitio Subsidiaries to which El Sitio or
any of the El Sitio Subsidiaries is a party, or to which any of their
assets is subject, pending or, to the knowledge of El Sitio,
threatened against El Sitio or any of the El Sitio Subsidiaries or
relating to the Transactions that, individually or in the aggregate,
would reasonably be expected to result in a Material Adverse Effect on
El Sitio and the El Sitio Subsidiaries taken as a whole.
(k) Labor Matters. Except as described in Section 4.3(k) of the
El Sitio Disclosure Schedule, since December 31, 1999, (i) El Sitio
and the El Sitio Subsidiaries are, to the knowledge of El Sitio, in
compliance in all material respects with all applicable laws
respecting employment and employment practices, terms and conditions
of employment and wages and hours, and neither El Sitio nor any of the
El Sitio Subsidiaries has been engaged in any unfair labor practice,
(ii) there is no unfair labor practice complaint against El Sitio
pending before any labor relations board or any other Governmental
Entity having oversight authority with respect to labor relations,
(iii) there is no labor strike, dispute, slowdown or stoppage actually
pending or, to the knowledge of El Sitio, threatened against or
affecting El Sitio or the El Sitio subsidiaries, (iv) neither El Sitio
nor any of the El Sitio Subsidiaries has experienced any strike, work
stoppage or other labor difficulty and (v) neither El Sitio nor any of
the El Sitio Subsidiaries is a party to, or subject to, a collective
bargaining agreement, and no collective bargaining agreement relating
to El Sitio Employees is currently being negotiated, which in the case
of any of the foregoing would, individually or in the aggregate, have
or reasonably be expected to have a Material Adverse Effect on El
Sitio and the El Sitio Subsidiaries taken as a whole.
(l) Contracts. (i) Section 4.3(l)(i) of the El Sitio Disclosure
Schedule lists all contracts, agreements or commitments of El Sitio
and the El Sitio Subsidiaries that are material to El Sitio and the El
Sitio Subsidiaries taken as a whole ("El Sitio Material Contracts").
Except as specified in Section 4.3(l)(i) of the El Sitio Disclosure
Schedule, all El Sitio Material Contracts are in full force and effect
and are, to the knowledge of El Sitio, valid and enforceable in
accordance with their respective terms, except where the failure to be
in full force and effect and valid and enforceable would not,
individually or in the aggregate, have a Material Adverse Effect on El
Sitio and the El Sitio Subsidiaries taken as a whole. Except as
specified in Section 4.3(l)(i) of the El Sitio Disclosure Schedule, El
Sitio and the El Sitio Subsidiaries are not in breach or default in
the performance of, and to El Sitio's knowledge, no other Person is in
breach or default of, any obligation thereunder and no event has
occurred or has failed to occur whereby any of the other parties
thereto have been or will be released therefrom or will be entitled to
refuse to perform thereunder, except for such breaches, defaults and
events that, individually or in the aggregate, would not have a
Material Adverse Effect on El Sitio and the El Sitio Subsidiaries
taken as a whole.
43
(ii) Except as set forth in Section 4.3(l)(ii) of the El
Sitio Disclosure Schedule, there is no Material Contract between
El Sitio and the El Sitio Subsidiaries, on the one hand, and any
affiliate of El Sitio on the other hand and no affiliate of El
Sitio has any material interest in any material property, real or
personal, tangible or intangible, including, without limitation,
any Intellectual Property, used in the business of El Sitio and
the El Sitio Subsidiaries.
(m) Intellectual Property. (i) Section 4.3(m)(i) of the El Sitio
Disclosure Schedule sets forth, with respect to material Intellectual
Property owned, held or used by El Sitio and/or the El Sitio
Subsidiaries ("El Sitio Intellectual Property"), all patents,
registrations and applications relating thereto, all material
unregistered Intellectual Property, and all material licenses,
consents, royalty and other agreements concerning El Sitio
Intellectual Property to which El Sitio and/or the El Sitio
Subsidiaries is a party ("El Sitio Intellectual Property Licenses").
(ii) Except as disclosed in Section 4.3(m)(ii) of the El
Sitio Disclosure, (A) El Sitio and/or the El Sitio Subsidiaries
own or have the right to use all the El Sitio Intellectual
Property necessary or desirable to conduct the respective
businesses of El Sitio and the El Sitio Subsidiaries as currently
are conducted, free of all Liens; (B) all of the El Sitio
Intellectual Property is valid, enforceable, not abandoned and
unexpired; (C) to the knowledge of El Sitio and the El Sitio
Subsidiaries, the El Sitio Intellectual Property does not
infringe or otherwise impair the Intellectual Property of any
other Person and is not being infringed or impaired by any other
Person, nor has El Sitio or the El Sitio Subsidiaries received
any written notice of the same; (D) El Sitio and/or the El Sitio
Subsidiaries take all reasonable steps to protect and maintain
the El Sitio Intellectual Property, including executing all
appropriate confidentiality agreements, filing all appropriate
patents and registrations, and filing any other documents
necessary under the laws of any relevant jurisdictions to
preserve their rights in such El Sitio Intellectual Property; (E)
no party to a El Sitio Intellectual Property License is, or is
alleged to be, in breach or default thereunder; (F) the
Transactions shall not impair the rights of El Sitio or the El
Sitio Subsidiaries under any El Sitio Intellectual Property
License, or cause any payments to be due thereunder; and (G)
without limiting the generality of the foregoing, El Sitio and/or
the El Sitio Subsidiaries owns and possesses all right, title and
interest in and to all El Sitio Intellectual Property created or
developed by, or under the direction or supervision of, its
employees.
(n) Governmental Consents. Except as described in Section 4.3(n)
of the El Sitio Disclosure Schedule, El Sitio or the El Sitio
Subsidiaries have all Governmental Consents required for the conduct
of their respective businesses as presently conducted, and such
Governmental Consents are in full force and effect, and neither El
Sitio nor any of the El Sitio Subsidiaries has received notice of any
violation thereof nor does El Sitio nor any of the El Sitio
Subsidiaries have knowledge of any threatened suspension or
cancellation of any such Governmental Consent, except where the
failure to have, or to keep in full force and effect such Governmental
Consents would not, individually or in the aggregate, have a Material
Adverse Effect on El Sitio and the El Sitio Subsidiaries taken as a
whole.
44
(o) Conduct of Business in Compliance with Regulatory and
Contractual and Contractual Requirements. Except as described in
Section 4.3(o) of the El Sitio Disclosure Schedule or as set forth in
the El Sitio Interim Financial Information, since December 31, 1999,
El Sitio and the El Sitio Subsidiaries have conducted their respective
businesses so as to comply in all material respects with all
applicable U.S. and non-U.S. laws, ordinances, regulations or orders
or other requirements of any Governmental Entity, rights of
concession, licenses, know-how or other proprietary rights of others,
and have received no written notice of any failure to comply with such
laws, ordinances, regulations, orders, rights or requirements, except
where the failure to comply with such laws, ordinances, regulations,
orders, rights or requirements would not, individually or in the
aggregate, have a Material Adverse Effect on El Sitio and the El Sitio
Subsidiaries taken as a whole.
(p) Employee Benefit Plans. (i) "El Sitio Benefit Plans" means
all Benefit Plans that (A) are entered into, sponsored or maintained
by El Sitio or any of the El Sitio Subsidiaries, and (B) under which
any present or former director, officer or employee of El Sitio or any
of the El Sitio Subsidiaries (collectively, the "El Sitio Employees")
has any present or future right to benefits. "El Sitio U.S. Benefit
Plans" means all El Sitio Benefit Plans under which any El Sitio
Employee who is or was primarily employed in the United States
(collectively, the "El Sitio U.S. Employees") has any present or
future right to benefits. "El Sitio International Benefit Plans" means
all El Sitio Benefit Plans other than the El Sitio U.S. Benefit Plans.
(ii) Section 4.3(p)(ii) of the El Sitio Disclosure Schedule
sets forth a list of each El Sitio Benefit Plan.
(iii) With respect to each El Sitio Benefit Plan, El Sitio
has provided or made available to IAMP and Newhaven a current,
accurate and complete copy thereof, including any amendments
thereto, and, to the extent applicable: (A) any related trust
agreement or other funding instrument, (B) the most recent
determination letter, if applicable, (C) any summary description
and other material written communications to El Sitio Employees
concerning benefits provided thereunder, (D) for the one most
recent year, if applicable, the Form 5500 and attached schedules,
audited financial statements and actuarial reports.
(iv) Except as described on Section 4.3(p)(iv) of the El
Sitio Disclosure Schedule:
(A) each El Sitio Benefit Plan has been established and
administered in accordance with its terms, in
compliance with the applicable provisions of ERISA, the
Code and other applicable laws, rules, statutes, orders
and regulations, and has been maintained in good
standing with applicable regulatory authorities;
45
(B) each El Sitio U.S. Benefit Plan that is intended to be
qualified (within the meaning of Section 401(a) of the
Code) is so qualified and has received a favorable
determination letter as to its qualification, and
nothing has occurred, whether by action or failure to
act, that could reasonably be expected to cause the
loss of such qualification;
(C) no event has occurred and no condition exists that
would subject El Sitio or any of the El Sitio
Subsidiaries, either directly or by reason of their
affiliation with any member of their "Controlled Group"
(defined as any organization that is a member of an
controlled group of organizations (within the meaning
of Section 414(b), (c), (m) or (o) of the Code), to any
Tax, Fine, Lien, penalty or other liability imposed by
ERISA, the Code or any other applicable laws, rules,
statutes, orders and regulations;
(D) no "prohibited transaction" (as defined in Section 406
of ERISA and Section 4975 of the Code) has occurred
with respect to any El Sitio U.S. Benefit Plan;
(E) no El Sitio Benefit Plan provides retiree welfare
benefits and neither El Sitio nor any of the El Sitio
Subsidiaries have any obligation to provide retiree
welfare benefits other than coverage mandated under
applicable law or regulation for which neither El Sitio
nor any of the El Sitio Subsidiaries is required to
book an accrual on its financial statements;
(F) no El Sitio U.S. Benefit Plan is subject to Title IV of
ERISA or Section 412 of the Code, or is a multiemployer
plan (within the meaning of Section 4001(a)(3) of
ERISA);
(G) no actions, suits, claims, administrative
investigations, audits or other administrative
proceedings (other than routine claims for benefits in
the ordinary course) are pending or threatened with
respect to any El Sitio Benefit Plan, and no facts or
circumstances exist that could give rise to any such
actions, suits, claims, investigations, audits or
proceedings;
46
(H) no El Sitio Benefit Plans exist that, individually or
collectively, could be reasonably expected to give rise
to the payment of any amount that would not be
deductible pursuant to the terms of Section 280G of the
Code, and no El Sitio Benefit Plan exists that, as a
result of the transaction contemplated by this
Agreement, could result in the payment to any El Sitio
Employee of any money or other property or could result
in the acceleration or provision of any other rights or
benefits to any El Sitio Employee; and
(I) with respect to any El Sitio International Benefit
Plan, according to the actuarial assumptions and
valuations most recently used for the purpose of
funding each El Sitio International Benefit Plan (which
actuarial assumptions and valuations were provided in
accordance with the actuarial and accounting
principles, bases, policies, methods and practices in
the relevant jurisdiction for such plan), as of June
30, 2000, the total amount or value of the funds
available under such El Sitio International Benefit
Plan to pay benefits accrued thereunder or segregated
in respect of such accrued benefits, together with any
reserve or accrual with respect thereto, exceeded the
present value of all benefits (actual or contingent)
accrued as of such date of all participants and past
participants therein in respect of which El Sitio or
any of the El Sitio Subsidiaries has or would have
after the Closing Date any obligation.
(q) Tax Matters. Except as disclosed in Section 4.3(q) of the El
Sitio Disclosure Schedule and except as would not result in a Material
Adverse Effect on El Sitio and the El Sitio Subsidiaries taken as a
whole:
(i) El Sitio and the El Sitio Subsidiaries have filed all
Tax Returns that they were required to file. All such filed Tax
Returns were correct and complete in all material respects. All
Taxes required to have been paid by El Sitio and the El Sitio
Subsidiaries (whether or not shown on any Tax Return) have been
paid or adequately reserved against in accordance with U.S. GAAP.
None of El Sitio or the El Sitio subsidiaries currently is the
beneficiary of any extension of time within which to file any Tax
Return. No written claim has ever been made (and, to the
knowledge of El Sitio or the El Sitio Subsidiaries, no claim has
been threatened in writing) by any authority in a jurisdiction
where El Sitio and any of the El Sitio Subsidiaries does not file
Tax Returns that it is or may be subject to taxation by that
jurisdiction. There are no Liens on any of the assets of any of
El Sitio and the El Sitio Subsidiaries that arose in connection
with any failure (or alleged failure) to pay any Tax other than
Liens for (i) current Taxes not yet due or (ii) Taxes that are
being disputed in good faith by appropriate proceedings and for
which adequate reserves have been provided.
47
(ii) El Sitio and the El Sitio Subsidiaries have withheld
and paid all Taxes required to have been withheld and paid in
connection with amounts paid or owing to any El Sitio Employee,
independent contractor, creditor, shareholder or other third
party.
(iii) No audit or other proceeding by any Governmental
Entity is pending or, to the knowledge of El Sitio, threatened in
writing with respect to any Taxes due from or with respect to El
Sitio or any of the El Sitio Subsidiaries. There is no dispute or
claim concerning any Tax liability of El Sitio or the El Sitio
Subsidiaries claimed or raised by any taxing authority (and, to
the knowledge of El Sitio or the El Sitio Subsidiaries, no such
dispute or claim has been threatened in writing). El Sitio has
made available to El Sitio, ▇▇▇▇▇ and Newhaven correct and
complete copies of all income Tax Returns and examination reports
with respect to, and statements of deficiencies assessed against
or agreed to by, El Sitio and the El Sitio Subsidiaries since
December 31, 1999.
(iv) None of El Sitio or the El Sitio Subsidiaries has
waived any statute of limitations in respect of Taxes or agreed
to any extension of time with respect to a Tax assessment or
deficiency.
(v) None of El Sitio or the El Sitio Subsidiaries has filed
a consent under Section 341(f) of the Code concerning collapsible
corporations. None of El Sitio or the El Sitio Subsidiaries has
made any payments, is obligated to make any payments, or is a
party to any agreement that under certain circumstances could
obligate it to make any payments that will not be deductible
under Section 280G of the Code. None of El Sitio or the El Sitio
Subsidiaries has been a United States real property holding
corporation (within the meaning of Section 897(c)(2) of the Code)
during the applicable period specified in Section
897(c)(1)(A)(ii) of the Code. El Sitio and the El Sitio
Subsidiaries have disclosed on their U.S. income Tax Returns all
positions taken therein that could reasonably be expected to give
rise to a substantial understatement of U.S. federal income Tax
(within the meaning of Section 6662 of the Code). None of El
Sitio or the El Sitio Subsidiaries is a party to any Tax
allocation or sharing agreement, other than such Tax allocation
or sharing agreement exclusively between or among El Sitio and
the El Sitio Subsidiaries. None of El Sitio or the El Sitio
Subsidiaries (A) has been a member of an affiliated group filing
a consolidated income Tax Return or (B) has any liability for the
Taxes of any Person (other than El Sitio and the Subsidiaries)
under U.S. Treasury Regulations Section 1.1502-6 (or any similar
provision of U.S. or non-U.S. federal, state or local law), as a
transferee or successor, by contract, or otherwise.
(r) Insurance. Except as would not have a Material Adverse Effect on
El Sitio and the El Sitio Subsidiaries taken as a whole, all insurance
policies covering El Sitio and the El Sitio Subsidiaries and their
respective material assets are in full force and effect, all premiums with
respect thereto (or with respect to new policies that, in the ordinary
course of business, have replaced such policies) covering all periods up to
and including the Closing Date have been paid, to the extent due, prior to
the Closing Date, or accrued on El Sitio's financial statements and books
and records and no notice of cancellation or termination has been received
with respect to any such policy (other than any policy that expires, is
cancelled or is terminated in accordance with its terms and has been
continued, extended or reinstated on substantially similar terms or is
replaced with another policy with substantially similar terms). Except as
would not have a Material Adverse Effect on El Sitio and the El Sitio
Subsidiaries taken as a whole, such policies are sufficient for compliance
with all requirements of law and are, to the knowledge of El Sitio and the
El Sitio Subsidiaries, valid, outstanding and enforceable. Except as would
not have a Material Adverse Effect on El Sitio and the El Sitio
Subsidiaries taken as a whole, neither El Sitio nor any El Sitio Subsidiary
has received notice that the coverage of any insurance has been limited by
any insurance carrier, which insurance carrier has carried any such
insurance during the last three years.
48
(s) Certain Fees. Except for fees and expenses payable to Credit
Suisse First Boston Corporation, which shall be paid by El Sitio, neither
El Sitio nor any El Sitio Employee, on behalf of El Sitio, has employed any
broker or finder or incurred any other liability for any brokerage fees,
commissions or finders' fees in connection with the Transactions for which
IAMP, Newhaven or Holdco would be liable.
(t) Information Supplied.
(i) None of the information supplied or to be supplied by El
Sitio for inclusion or incorporation by reference in (A) the Form F-4,
at the time it is filed with the SEC, at any time it is amended or
supplemented or at the time it becomes effective under the Securities
Act, or (B) the Proxy Statement/Prospectus, on the date it is first
mailed to El Sitio shareholders or at the time of the El Sitio
Shareholders meeting, will contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the
circumstances under which they were made.
(ii) Notwithstanding the foregoing provisions of this Section
4.3, no representation or warranty is made by El Sitio with respect to
statements made or incorporated by reference in the Form F-4 or the
Proxy Statement/Prospectus based on information supplied by Newhaven,
▇▇▇▇▇ or IAMP for inclusion or incorporation by reference therein.
(u) El Sitio Board Approval. The Board of Directors of El Sitio, by
resolutions duly adopted by unanimous vote of those voting at a meeting
duly called and held and not subsequently rescinded or modified in any way
(the "El Sitio Board Approval"), has duly (A) determined that this
Agreement and the Transactions are fair to and in the best interests of El
Sitio and its shareholders and declared the Transactions to be advisable,
(B) approved this Agreement, the Voting Agreement and the Transactions, and
(C) recommended that the shareholders of El Sitio approve the issuance of
El Sitio Common Shares pursuant to this Agreement and directed that such
matter be submitted for consideration by El Sitio's shareholders at a
special shareholders' meeting. El Sitio Board Approval constitutes approval
of this Agreement and the Transactions for purposes of Part VII of the BVI
Companies Ordinance. To the knowledge of El Sitio, no foreign or U.S.
takeover statute is applicable to this Agreement or the Transactions.
49
(v) Shareholder Vote Required. The affirmative vote of the holders of
a majority of the El Sitio Common Shares present in person or represented
by proxy at El Sitio's special shareholders' meeting (provided that the
shares so present or represented constitute a majority of the outstanding
El Sitio Common Shares), is the only vote of the holders of any class or
series of El Sitio's share capital necessary to approve this Agreement, the
Transactions and the transactions contemplated thereby.
(w) No Other Representations or Warranties. Except for the
representations and warranties contained in this Section 4.3, neither El
Sitio nor any other Person has made or makes any other express or implied
representation or warranty on behalf of El Sitio.
4.4. Expiration of Representations and Warranties. The respective
representations and warranties of El Sitio, Newhaven, ▇▇▇▇▇ and IAMP contained
herein or in any certificate or other document delivered prior to or on the
Closing Date shall expire and be terminated and extinguished on the day that is
12 months following the Closing Date (except with respect to the representations
made in Sections 4.1(q), 4.2(q), and 4.3(q), which representations shall expire
and be terminated and extinguished on the day that is 24 months following the
Closing Date, subject to Section 9.1(a)(iv)); and thereafter El Sitio, Newhaven,
▇▇▇▇▇ and IAMP shall have no liability whatsoever with respect to any such
representation or warranty. None of the controlling persons, shareholders,
members, legal representatives, officers, directors or affiliates of either El
Sitio, Newhaven, ▇▇▇▇▇ or IAMP nor any controlling person, legal representative,
heir, successor or assign of any such officer, director or affiliate shall have
any liability for any breach of any representation, warranty, covenant or
agreement of any of El Sitio, Newhaven, ▇▇▇▇▇ or IAMP under this Agreement.
5. Transactions Prior to Closing
-----------------------------
5.1. Access to Information Concerning Properties and Records;
Confidentiality. (a) Newhaven, ▇▇▇▇▇ and IAMP agree that, during the period
commencing on the date hereof and ending on the Closing Date, unless otherwise
prohibited by law, (i) they will give or cause to be given to El Sitio and its
counsel, financial advisors, auditors and other authorized representatives
(collectively, the "Representatives") such access, during normal business hours
and upon reasonable advance notice, to the properties, books and records of
IAMP, the IAMP Subsidiaries and the Newhaven Subsidiaries, as El Sitio may from
time to time reasonably request, and (ii) they will furnish or cause to be
furnished to El Sitio such financial and operating data and other information
with respect to the business, operations and properties of such entities, as El
Sitio may from time to time reasonably request. El Sitio and its Representatives
shall be entitled, in consultation with IAMP or Newhaven, to such access to the
representatives, officers and employees of IAMP, the IAMP Subsidiaries, and the
Newhaven Subsidiaries to the extent they are involved in the business of the
Media Companies and the Subsidiaries as El Sitio may reasonably request. Such
access and request shall not materially disrupt the business of such entities.
50
(a) El Sitio agrees that, during the period commencing on the date
hereof and ending on the Closing Date, (i) it will give or cause to be
given to each of IAMP and Newhaven and their respective Representatives
such access, during normal business hours and upon reasonable advance
notice, to the properties, books and records of El Sitio, as IAMP or
Newhaven may from time to time reasonably request and (ii) it will furnish
or cause to be furnished to IAMP or Newhaven such financial and operating
data and other information with respect to El Sitio, as such Person may
from time to time reasonably request. Each of IAMP and Newhaven and each of
their Representatives shall be entitled, in consultation with El Sitio, to
such access to the representatives, officers and employees of El Sitio as
IAMP or Newhaven may reasonably request. Such access and request shall not
materially disrupt the business of El Sitio.
(b) Except as required by law, each party hereto will hold, and will
cause its respective directors, officers, partners, employees, accountants,
counsel, financial advisors and other representatives and affiliates to
hold in confidence, any nonpublic information obtained from any other party
hereto in confidence to the extent required by, and in accordance with, the
provisions of the letter dated August 31, 2000, among El Sitio, Newhaven
and ▇▇▇▇▇ (the "Confidentiality Agreement"), as if Newhaven and ▇▇▇▇▇ were
also parties.
5.2. Conduct of the Business of Media Companies Pending the Closing Date.
Each of Newhaven, ▇▇▇▇▇ and IAMP agrees that, except as permitted or required by
this Agreement, as required by contractual obligations in the agreements listed
in Sections 4.1(l) of the IAMP Disclosure Schedule and Section 4.2(l) of the
Newhaven Disclosure Schedule, as disclosed on Section 5.2 of each party's
Disclosure Schedule, or as otherwise consented to or approved in writing by El
Sitio (such consent not to be unreasonably withheld or delayed), during the
period commencing on the date hereof and ending at the Closing Date:
(a) Subject to Section 5.9, IAMP and Newhaven will, and will cause the
IAMP Subsidiaries and Newhaven Subsidiaries, respectively, to, operate
their respective businesses only in the usual, regular and ordinary manner,
on a basis consistent with past practice (other than transactions not in
the ordinary course with a value not in excess of U.S.$2.5 million
individually and U.S.$10 million in the aggregate), including, without
limitation, the making of necessary capital expenditures; provided, that
each of IAMP and Newhaven and its respective Subsidiaries may
refrain from making any expenditures planned by each of IAMP and Newhaven
with respect to management information systems or, with respect to any
other planned or necessary capital expenditures, to the extent agreed upon
by El Sitio;
(b) None of IAMP, Newhaven or any of the IAMP Subsidiaries or the
Newhaven Subsidiaries will materially amend its memorandum and articles of
association, certificate of incorporation or bylaws or other constitutive
documents, and none of IAMP, Newhaven or any of the IAMP Subsidiaries or
the Newhaven Subsidiaries shall commence a voluntary case or other
proceeding seeking liquidation, reorganization or other relief with respect
to itself or its debts under any bankruptcy, insolvency or other similar
law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property;
51
(c) None of IAMP, Newhaven or any of the IAMP Subsidiaries or the
Newhaven Subsidiaries will issue or agree to issue any additional shares of
share capital of any class or series, or any securities convertible into or
exchangeable for shares of share capital or issue any options, warrants or
other rights to acquire any shares of share capital, other than issuances
pursuant to outstanding agreements as of the date hereof or as in effect as
of the date hereof, in each case as set forth on Section 5.2(c) of the IAMP
Disclosure Schedule and on Section 5.2(c) of the Newhaven Disclosure
Schedule, or issuances with a value not in excess of U.S.$2.5 million
individually and U.S.$10 million in the aggregate;
(d) None of IAMP, Newhaven or any Subsidiary will (i) split, combine
or reclassify any shares of its outstanding share capital, (ii) declare,
set aside or pay any dividend or other distribution payable in cash, share
or property other than as required by the governing documents of such
Person or to another wholly-owned subsidiary of IAMP or Newhaven, (iii)
directly or indirectly redeem or otherwise acquire any shares of its share
capital or shares of the share capital of any of its subsidiaries, (iv)
except with respect to transactions with a value of less than U.S.$2.5
million individually and U.S.$10 million in the aggregate, merge or
consolidate with another entity, (v) except with respect to transactions
with a value of less than U.S.$2.5 million individually and U.S.$10 million
in the aggregate, acquire or purchase an equity interest in or a
substantial portion of the assets of another corporation, partnership or
other business organization or otherwise acquire any assets outside the
ordinary and usual course of business and consistent with past practice or
otherwise enter into any material contract, commitment or transaction
outside the ordinary and usual course of business consistent with past
practice, or (vi) except with respect to transactions with a value of less
than U.S.$2.5 million individually and U.S.$10 million in the aggregate,
make any loans, advances or capital contributions to, or investments in,
any other person, other than to its subsidiaries and except as required by
the governing documents of IAMP, Newhaven or any of their respective
subsidiaries;
(e) Each of IAMP and Newhaven will use, and will cause the IAMP
Subsidiaries and the Newhaven Subsidiaries, respectively, to use, its
reasonable best efforts to preserve intact the business organization of
each such subsidiary, to keep available the services of their present
officers and key employees and others having business relations with each
of them or such respective subsidiaries, and to preserve the goodwill of
those having business relationships with such subsidiaries;
(f) Each of IAMP and Newhaven will not, and will cause the IAMP
Subsidiaries and the Newhaven Subsidiaries, respectively, not to:
(i) except with respect to transactions with a value of less than
U.S.$2.5 million individually and U.S.$10 million in the aggregate,
dispose of or encumber any of their properties or assets other than
(A) in the ordinary course of business, (B) any property or asset
which has been determined by either IAMP or Newhaven, as the case may
be, to be obsolete, worn out or no longer useful in the operation of
their respective businesses and (C) transfers by either IAMP or
Newhaven, as the case may be, to any of the IAMP Subsidiaries or
Newhaven Subsidiaries, as the case may be;
52
(ii) cancel any material debts or waive any material claims other
than in the ordinary course of business;
(iii) except as (A) required by applicable law, (B) pursuant to
previously existing contractual commitments or (C) in the ordinary
course of business consistent with past practice (1) increase the
compensation or fringe benefits of any present or former director,
officer or employee, (2) grant any severance or termination pay to any
present or former director, officer or employee, (3) loan or advance
any money or other property to any of their present or former
directors, officers or employees, (4) establish, adopt, enter into,
modify or amend in any material respect or terminate any IAMP Benefit
Plan or Newhaven Benefit Plan, as applicable, or any employee benefit
plan, policy or arrangement that would have been a IAMP Benefit Plan
or a Newhaven Benefit Plan, as applicable, had it been in effect as of
the date hereof or (5) accelerate the vesting or payment of any
compensation or benefits;
(iv) make any capital expenditure or commitment other than (A) in
the ordinary course of business, (B) pursuant to existing commitments,
(C) maintenance capital expenditures or capital expenditures
reasonably required to ▇▇▇▇▇ conditions endangering individuals or
property or (D) pursuant to budgets previously disclosed to El Sitio;
(v) except with respect to endorsement of negotiable instruments
in the ordinary course, incur, assume or guarantee any Indebtedness
other than (A) Indebtedness incurred in the ordinary course of
business, (B) refundings of existing Indebtedness, (C) Indebtedness of
a IAMP Subsidiary to IAMP or a Newhaven Subsidiary to Newhaven, as the
case may be, (D) other Indebtedness that is not material to the
business, properties, results of operations, financial condition or
prospects of either IAMP or Newhaven, as the case may be, and the IAMP
Subsidiaries and Newhaven Subsidiaries, respectively, or (E) as
required by the governing documents of IAMP or Newhaven or any of the
IAMP Subsidiaries or Newhaven Subsidiaries, as the case maybe;
(vi) enter into or modify, or engage in any negotiations with
respect to, any collective bargaining or union agreement or
commitment, except as required by applicable law;
(vii) enter into or modify any agreement or commitment or engage
in any activity or transaction other than agreements, commitments and
transactions in the ordinary course of business and consistent with
past practice; or
(viii) (A) make any material Tax election or settle or compromise
any material Tax liability or (B) enter into any Tax sharing or Tax
allocation agreements.
53
(g) Each of IAMP and Newhaven will, and will cause the IAMP
Subsidiaries and Newhaven Subsidiaries, respectively, to, use reasonable
best efforts to maintain in full force and effect all licenses, subsidies
or Tax holidays from Governmental Entities applicable to either IAMP or
Newhaven, as the case may be, and the IAMP Subsidiaries and Newhaven
Subsidiaries, respectively, and comply, in all material respects, with all
laws, statutes, ordinances, rules, regulations, orders, writs, injunctions,
decrees, awards or other requirements of any court or other Governmental
Entities applicable to them or the conduct of their businesses;
(h) each of IAMP and Newhaven will, and will cause the IAMP
Subsidiaries and Newhaven Subsidiaries, respectively, to, perform all of
their respective material obligations under all IAMP Material Contracts and
Newhaven Material Contracts; and
(i) neither of IAMP nor Newhaven nor any of the IAMP Subsidiaries and
Newhaven Subsidiaries, respectively, will agree, whether in writing or
otherwise, to do any of the foregoing actions described in paragraphs (b),
(c), (d) or (f) of this Section 5.2.
5.3. Conduct of Business of El Sitio Pending the Closing Date. El Sitio
agrees that, except as permitted or, required by this Agreement, as required by
contractual obligations contained in the agreements listed in Section 4.3(l) of
the El Sitio Disclosure Schedule, as disclosed on Section 5.2 of the El Sitio
Disclosure Schedule or as otherwise consented to or approved in writing by ▇▇▇▇▇
and Newhaven (such consent not to be unreasonably withheld or delayed), during
the period commencing on the date hereof and ending at the Closing Date:
(a) El Sitio will, and will cause the El Sitio Subsidiaries to,
operate their respective businesses only in the usual, regular and ordinary
manner, on a basis consistent with past practice (other than transactions
not in the ordinary course with a value not in excess of U.S.$2.5 million
individually and U.S.$10 million in the aggregate), including, without
limitation, the making of necessary capital expenditures; provided that El
Sitio may refrain from making expenditures planned by El Sitio with respect
to management information systems or any other planned or necessary capital
expenditures to the extent agreed upon by Newhaven and ▇▇▇▇▇;
(b) None of El Sitio or any of the El Sitio Subsidiaries will
materially amend its memorandum and articles of association, certificate of
incorporation or bylaws or other constitutive documents, and neither El
Sitio nor any material subsidiary shall commence a voluntary case or other
proceeding seeking liquidation, reorganization or other relief with respect
to itself or its debts under any bankruptcy, insolvency or other similar
law now or hereafter in effect seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property;
(c) None of El Sitio or any of the El Sitio Subsidiaries will issue or
agree to issue any additional shares of share capital of any class or
series, or any securities convertible into or exchangeable for shares of
share capital or issue any options, warrants or other rights to acquire any
shares of share capital, other than issuances pursuant to outstanding
agreements as of the date hereof or as in effect as of the date hereof, in
each case, as set forth on Section 5.3(c) of the El Sitio Disclosure
Schedule;
54
(d) None of El Sitio or any of the El Sitio Subsidiaries will (i)
split, combine or reclassify any shares of its outstanding share capital,
(ii) declare, set aside or pay any dividend or other distribution payable
in cash, share or property other than as required by the governing
documents of El Sitio or to a wholly-owned subsidiary of El Sitio, (iii)
directly or indirectly redeem or otherwise acquire any shares of its share
capital, (iv) except with respect to transactions with a value of less than
U.S.$2.5 million individually and U.S.$10 million in the aggregate, merge
or consolidate with another entity; (v) except with respect to transactions
with a value of less than U.S.$2.5 million individually and U.S.$10 million
in the aggregate, acquire or purchase an equity interest in or a
substantial portion of the assets of another corporation, partnership or
other business organization or otherwise acquire any assets outside the
ordinary and usual course of business and consistent with past practice, or
otherwise enter into any material contract, commitment or transaction
outside the ordinary and usual course of business consistent with past
practice, or (vi) except with respect to transactions with a value of less
than U.S.$2.5 million individually and U.S.$10 million in the aggregate,
make any loans, advances or capital contributions to, or investments in,
any other Person, other than to the El Sitio Subsidiaries and except as
required by the governing documents of El Sitio or the El Sitio
Subsidiaries;
(e) El Sitio will use, and will cause the El Sitio Subsidiaries to
use, its reasonable efforts to preserve intact the present business
organization, including the business organization of each subsidiary, to
keep available the services of their present officers and key employees and
others having business relations with El Sitio and the El Sitio
Subsidiaries, and to preserve the goodwill of those having business
relationships with El Sitio and with the El Sitio Subsidiaries;
(f) El Sitio will not, and will cause the El Sitio Subsidiaries not
to:
(i) except with respect to transactions with a value of less than
U.S.$2.5 million individually and U.S.$10 million in the aggregate,
dispose of or encumber any of its properties or assets, other than (A)
in the ordinary course of business or (B) any property or asset that
has been determined by El Sitio to be obsolete, worn out or no longer
useful in the operation of their respective businesses, (C) transfers
by El Sitio to any of the El Sitio Subsidiaries;
(ii) cancel any material debts or waive any material claims or
rights pertaining to or affecting its business, except in the ordinary
course of business;
(iii) except as (A) is required by applicable law, (B) pursuant
to previously existing contractual commitments or (C) in the ordinary
course of business consistent with past practice (1) increase the
compensation of any present or former director, officer or employee,
(2) grant any severance or termination pay to any present or former
director, officer or employee, (3) loan or advance any money or other
property to any of its present or former directors, officers or
employees, (4) establish, adopt, enter into, modify or amend in any
material respect or terminate any El Sitio Benefit Plan, or any
employee benefit plan, policy or arrangement that would have been a El
Sitio Benefit Plan had it been in effect as of the date hereof or (5)
accelerate the vesting period or payment of any compensation or
benefits;
55
(iv) make any capital expenditure or commitment, other than (A)
in the ordinary course of business, (B) pursuant to existing
commitments, (C) maintenance capital expenditures or capital
expenditures reasonably required to ▇▇▇▇▇ conditions endangering
individuals or property or (D) pursuant to budgets previously
disclosed to IAMP and Newhaven; or
(v) except with respect to endorsement of negotiable instruments
in the ordinary course of its business, incur, assume or guarantee any
Indebtedness other than (A) Indebtedness incurred in the ordinary
course of business, (B) refundings of existing Indebtedness, (C)
Indebtedness of a subsidiary, (D) other Indebtedness that is not
material to the business, properties, results of operations, financial
condition or prospects of El Sitio and the El Sitio Subsidiaries, or
(E) as required by the governing documents of El Sitio or any of the
El Sitio Subsidiaries;
(vi) enter into or modify, or engage in any negotiations with
respect to, any collective bargaining or union agreement or
commitment, except as required by applicable law;
(vii) enter into or modify any agreement or commitment or engage
in any activity or transaction other than agreements, commitments and
transactions in the ordinary course of business and consistent with
past practice; or
(viii) (A) make any material Tax election or settle or compromise
any material Tax liability or (B) enter into any Tax sharing or Tax
allocation agreements.
(g) El Sitio will, and will cause the El Sitio Subsidiaries to, use
reasonable best efforts to maintain in full force and effect all licenses,
subsidies or Tax holidays from Governmental Entities applicable to El Sitio
and the El Sitio Subsidiaries and comply, in all material respects, with
all laws, statutes, ordinances, rules, regulations, orders, writs,
injunctions, decrees, awards or other requirements of any court or other
Governmental Entities applicable to it or the conduct of its business;
(h) El Sitio will, and will cause the El Sitio Subsidiaries to,
perform all of its obligations under all El Sitio Material Contracts;
(i) Prior to the Effective Time, El Sitio will release and deliver all
the El Sitio Common Shares that El Sitio has previously agreed to release
and deliver to ▇▇▇▇▇▇▇▇ Enterprises Ltd., IAMP (El Sitio) Investments Inc.,
Red de Television Chilevision, S.A. and Iberoamerican Radio Holdings Chile,
S.A., without any restrictions thereon; and
(j) Neither El Sitio nor any of the El Sitio Subsidiaries will agree,
whether in writing or otherwise, to do any of the foregoing actions
described in paragraphs (b), (c), (d) or (f) of this Section 5.3.
56
5.4. Intercompany Transactions. Prior to or on the Closing, all
intercompany receivables or payables and loans then existing between any of IAMP
or Newhaven, any IAMP Subsidiary or Newhaven Subsidiary or any other subsidiary
or affiliate of any of IAMP or Newhaven that is not an IAMP Subsidiary or a
Newhaven Subsidiary (the "Non-Media Affiliates") on the one hand, and the IAMP
Subsidiaries or the Newhaven Subsidiaries, on the other hand, shall be settled
by way of capital contribution (with respect to intercompany payables or loans
due to any of IAMP or Newhaven, any IAMP Subsidiary or Newhaven Subsidiary or
any Non-Media Affiliate), except for services rendered and goods provided on an
arm's-length basis consistent with past practices, which amounts shall be
settled in the ordinary course. Such settlement shall be accomplished without
any violation of any law or regulation or any incurrence of any material Tax,
penalties, interest or other charges.
5.5. Further Actions. (a) Subject to the terms and conditions hereof,
Newhaven, ▇▇▇▇▇, IAMP and El Sitio agree to use their reasonable best efforts to
take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable to consummate and make effective the
Transactions, including using all reasonable best efforts: (i) to obtain prior
to the Closing Date all Governmental Consents and Non-Governmental Consents as
are necessary for the consummation of the Transactions, including, without
limitation, such consents and approvals as may be required under any antitrust
laws of any applicable jurisdiction as set forth below; and (ii) to furnish to
each other such information and assistance as reasonably may be requested in
connection with the foregoing. Newhaven, ▇▇▇▇▇, IAMP and El Sitio shall
cooperate fully with each other to the extent reasonably required to obtain such
consents. Notwithstanding the foregoing, no party shall agree, without the prior
consent of the other parties and shall not be obligated to agree, to any action,
including agreeing to divestitures, standstill arrangements, hold separate
agreements or other limitations on business activities, that would (A) have a
Material Adverse Effect on IAMP and the IAMP Subsidiaries taken as a whole,
Newhaven and the Newhaven Subsidiaries taken as a whole, El Sitio and the El
Sitio Subsidiaries taken as a whole or Holdco and its subsidiaries taken as a
whole or (B) be materially adverse to Newhaven, ▇▇▇▇▇ or El Sitio.
(b) Newhaven, ▇▇▇▇▇, IAMP and El Sitio shall timely and promptly make all
filings which may be required by each of them in connection with the
consummation of the Transactions under any antitrust laws of any applicable
jurisdiction. Each party shall furnish to each other such necessary information
and assistance as such party may reasonably request in connection with the
preparation of any necessary filings or submissions by it to any U.S. or
non-U.S. Governmental Entity, including, without limitation, any filings
necessary under the provisions of the Securities Act and the Exchange Act. Each
party hereto shall provide the other party the opportunity to make copies of all
correspondence, filings or communications (or memoranda setting forth the
substance thereof) between such party or its representatives, on the one hand,
and Governmental Entity (including antitrust regulatory authorities) or any
similar foreign Governmental Entity or members of their respective staffs, on
the other hand, with respect to this Agreement or the Transactions. Each party
hereto shall promptly inform the other parties hereto of any communication
received from a Governmental Entity, give an opportunity to the other parties to
participate in any conversation or meeting with any Governmental Entity and
grant the other parties hereto an opportunity to review in advance any filing or
communication made with a Governmental Entity relating to this Agreement or the
Transactions.
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(c) Each of Newhaven, ▇▇▇▇▇ and IAMP shall use its reasonable best
efforts to cause the Transactions to qualify, and will not (both before and
after the Effective Time) take any actions, which would reasonably be
expected to prevent the Transactions from qualifying as a reorganization
under the provisions of Sections 367 and 368(a) of the Code and/or as a tax
free exchange under the provisions of Section 351 of the Code. Each of El
Sitio, IAMP and Newhaven shall make, and shall cause their affiliates to
make, such representations, warranties and covenants as shall be requested
reasonably in the circumstances by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, U.S. counsel
to El Sitio, and by Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇, U.S. counsel to
Newhaven, and by ▇▇▇▇▇▇▇▇ Chance, ▇▇▇▇▇▇ & ▇▇▇▇▇ LLP, U.S. counsel to
▇▇▇▇▇, in order for such firms to render their opinions referred to in
Sections 7.2 (e) and 7.3(f), respectively. Holdco and its subsidiaries
(including CTG Inversora, S.A., the IAMP Subsidiaries, the Newhaven
Subsidiaries and El Sitio) will take no action which will cause the Imagen
Contribution, the IAMP Contribution and subsequent IAMP liquidation
(together the "IAMP Reorganization") to be considered an indirect stock
transfer under Treas. Regs. Section 1.367(a)-3(d). In particular Holdco and
its subsidiaries will not contribute or otherwise transfer any of the IAMP
Subsidiaries or any other assets acquired from IAMP to an entity controlled
by Holdco or its subsidiaries that is treated as a corporation for U.S.
federal income tax purposes within two years of the Closing or otherwise in
connection with the Transactions. In the event that Holdco and/or its
subsidiaries contributes or otherwise transfers any of the IAMP
Subsidiaries, or any other assets acquired from IAMP to an entity
controlled by Holdco or its subsidiaries that is treated as a corporation
for U.S. federal income tax purposes and thereby causes the IAMP
Reorganization to be considered an indirect stock transfer under Treas.
Regs. Section 1.367(a)-3(d), Holdco shall indemnify and hold harmless the
shareholders of IAMP for the U.S. federal, state and local taxes (and
interest and penalties related thereto) incurred by the IAMP shareholders
in connection with the IAMP Reorganization being so treated. The
obligations and covenant included in this Section 5.5 shall survive the
Closing Date until the expiration of the statute of limitations with
respect to the applicable taxes.
5.6. Notification. Each party hereto shall notify each other party and keep
it advised as to (i) any litigation or administrative proceeding pending and
known to any such party or, to its knowledge, threatened against it, or any
subsidiary that challenges the Transactions and (ii) any notice or other
communication from any person or entity alleging that the consent of such person
or entity is or may be required in connection with the Transactions.
5.7. Assignment of Rights to Newhaven. Notwithstanding anything in this
Agreement to the contrary, the parties agree that following the Effective Time,
all trademarks, copyrights, domain names, trade names, brand names, corporate
names, and logos containing the word "▇▇▇▇▇▇▇▇", the phrase "▇▇▇▇▇▇▇▇ Television
Group" or any derivative or abbreviation thereof, and all legal rights relating
thereto (the "▇▇▇▇▇▇▇▇ Intellectual Property"), shall be the exclusive property
of Newhaven. Following the Effective Time, neither Holdco nor any of its
subsidiaries shall use any ▇▇▇▇▇▇▇▇ Intellectual Property without the express
written consent of Newhaven. The parties shall take all actions necessary to
assign any such rights to Newhaven.
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5.8. Transition Period. Prior to the Effective Time, each of the parties
hereto will cooperate, to the fullest extent permitted by law, to plan for the
integration of the Media Companies and El Sitio as part of Holdco. Such
cooperation shall include, to the fullest extent permitted by law, coordinating
operational matters, developing uniform personnel and benefits policies,
identifying and planning for future growth opportunities, management
integration, and similar matters. Such integration efforts will be coordinated
among senior executives of IAMP, Newhaven and El Sitio.
5.9. No Inconsistent Action. None of the parties hereto shall take any
action inconsistent with their obligations under this Agreement that would
reasonably be expected to materially hinder or delay the consummation of the
Transactions.
5.10. Convertible Preferred Shares; Debt Financing.
(a) Prior to or on the Closing Date and pursuant to the plan of
reorganization contemplated by this Agreement, Newhaven and ▇▇▇▇▇ will
purchase from Holdco at least U.S.$15,000,000 stated amount of preferred
shares, which will have the following terms and conditions:
(i) The preferred shares will not have dividend rights;
(ii) The preferred shares will have voting rights equivalent to
those of the Holdco Common Shares based on conversion at the El Sitio
Common Shares price per share at the close of regular day time trading
on the day prior to the Effective Time;
(iii) Convertible on a mandatory basis on the earlier to occur
of: (A) an underwritten public offering by Holdco of Holdco Common
Shares, in which case, the preferred shares held by Newhaven and ▇▇▇▇▇
will be converted at the per share offering price of such number of
Holdco Common Shares upon completion of such offering and (B) 24
months from Closing, in which case such preferred shares will be
converted into such number of Holdco Common Shares (rounded to the
nearest whole share) at a price per share equal to the value of such
preferred shares divided by the "fair market value" of each Holdco
Common Share;
(iv) Beginning 12 months from the Closing and ending 24 months
from the Closing Date, Newhaven and ▇▇▇▇▇ will have the right to
convert the preferred shares held by them into such number of Holdco
Common Shares as is equal to the aggregate stated amount of the
preferred shares held by each of them divided by the "fair market
value" per Holdco Common Share on the date of such conversion; and
(v) If a "change in control" (as defined in Section 9.1(d))
occurs with respect to Holdco prior to the date 24 months from the
Closing, Newhaven and ▇▇▇▇▇ will have the option to exchange the
preferred shares held by each of them for either (A) the consideration
received in the transaction that resulted in such change of control,
as if the preferred shares had been converted into Holdco Common
Shares as of such date or (B) an amount of cash equal to the stated
amount of the preferred shares.
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For purposes of this Section 5.10, "fair market value", means, with
respect to each Holdco Common Share, the average of the daily high and low
bid and ask prices per Holdco Common Share on the Nasdaq for the 10 trading
days immediately preceding the applicable conversion date for the preferred
shares.
(b) Following the date hereof and prior to the Effective Time,
Newhaven and ▇▇▇▇▇ shall, in addition to the capital contributions referred
to in Section 5.10(a) use reasonable best efforts to procure from third
parties no less than U.S.$10,000,000 in debt financing for IAMP, and/or the
IAMP Subsidiaries (it being understood that such efforts will include
offers of credit support until the Effective Time to any such third-party
debt provider by Newhaven and ▇▇▇▇▇).
5.11. Redemption or Retirement of Holdco Common Shares Received by
Subsidiaries of Holdco. In connection with the transactions contemplated by
Article 2, any Holdco Common Shares held by any subsidiary of Holdco as of
the Effective Time will, immediately following the Effective Time, be
redeemed or acquired by Holdco, pursuant to the Holdco Memorandum and
Articles of Association for a nominal amount.
5.12. IAMP Employee Share and Equity Rights. Prior to the Effective
Time, IAMP or an affiliate thereof will cause to be satisfied in full any
share option, share grant or other equity rights granted to or held by
employees of IAMP, the IAMP Subsidiaries or the Newhaven Subsidiaries,
which satisfaction of any such share options, share grants or other equity
rights will result in a reduction (on a net treasury basis in the case of
options) in the number of Holdco Common Shares otherwise issuable to such
entities pursuant to Article 2.
5.13. Agreement with Cablevision. Newhaven and ▇▇▇▇▇ will use their
reasonable best efforts to cause Imagen to execute a definitive agreement
with Cablevision, S.A. ("Cablevision") prior to the Closing for the
carriage and transmission by Cablevision to its subscribers of programming
produced and/or distributed by Imagen, which agreement will be on terms and
conditions reasonably acceptable to the parties hereto.
6. Additional Agreements
------------------------
6.1. Preparation of Proxy Statement; Shareholders Meeting.
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(a) As promptly as reasonably practicable following the date
hereof, the parties hereto shall cooperate in preparing and shall
cause to be filed with the SEC a mutually acceptable proxy
statement/prospectus relating to the matters to be submitted to the El
Sitio shareholders at the El Sitio Shareholders Meeting (such proxy
statement/prospectus, and any amendments or supplements thereto, the
"Proxy Statement/Prospectus"), and Holdco shall prepare and file with
the SEC a registration statement on Form F-4 (or another appropriate
Form if Form F-4 is not available) with respect to the issuance of
Holdco Common Shares in connection with the Transactions (such Form
F-4, and any amendments or supplements thereto, the "Form F-4"). The
Proxy Statement/Prospectus will be included as a prospectus
in and will constitute a part of the Form F-4 as Holdco's prospectus.
Each of the parties hereto shall use its reasonable best efforts to
have the Proxy Statement/Prospectus cleared by the SEC and the Form
F-4 declared effective by the SEC, and to keep the Form F-4 effective
as long as is necessary to consummate the Transactions. Each of the
parties hereto shall, as promptly as practicable after receipt
thereof, provide the other parties hereto copies of any written
comments and advise the other parties hereto of any oral comments,
with respect to the Proxy Statement/Prospectus or Form F-4 received
from the SEC. The parties hereto shall cooperate and provide the
others with a reasonable opportunity to review and comment on any
amendment or supplement to the Proxy Statement/Prospectus and the Form
F-4 prior to filing such with the SEC, and will provide each other
with a copy of all such filings made with the SEC. Notwithstanding any
other provision in this Agreement to the contrary, no amendment or
supplement (including by incorporation by reference) to the Proxy
Statement/Prospectus or the Form F-4 shall be made without the
approval of each party hereto, which approval shall not be
unreasonably withheld or delayed; provided, however, that,
with respect to documents filed by a party hereto that are
incorporated by reference in the Proxy Statement/Prospectus of Form
F-4, this right of approval by a party hereto shall apply only with
respect to information relating to the Transactions hereby, such party
hereto or its subsidiaries or their business, financial condition,
results of operations or prospects. Holdco shall also take any action
(other than as would have a Material Adverse Effect on Holdco)
required to be taken under any applicable state securities laws in
connection with the Transactions and each party hereto shall furnish
all information concerning it and the holders of its share capital as
may be reasonably requested in connection with any such action. Each
party hereto will advise the other parties hereto, promptly after it
receives notice thereof, of the time when the Form F-4 has become
effective, the issuance of any stop or similar order, the suspension
of the qualification of the Holdco Common Shares issuable in
connection with the Transactions for offering or sale in any
jurisdiction, or any request by the SEC for amendment of the Proxy
Statement/Prospectus or the Form F-4. If at any time prior to the
Effective Time any information should be discovered by any party
hereto or any event shall occur or any condition shall exist that
should be set forth in an amendment or supplement to any of the Proxy
Statement/Prospectus or Form F-4 so that any of such documents would
not include any misstatement of a material fact or omit to state any
material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, the
party that discovers such information shall promptly notify the other
parties hereto and, to the extent required by law, rules or
regulations, an appropriate amendment or supplement describing such
information shall be promptly filed by El Sitio or Holdco, as
appropriate, with the SEC and disseminated to the shareholders of El
Sitio.
(b) El Sitio shall duly take all lawful action to call, give
notice of, convene and hold a special shareholders meeting as promptly
as practicable following the date upon which the Form F-4 becomes
effective (the "El Sitio Shareholders Meeting") for the
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purpose of obtaining shareholder approval with respect to the
Transactions (the "El Sitio Shareholder Approval") and shall take
all lawful action to solicit the adoption of this Agreement by the El
Sitio Shareholders; and the Board of Directors of El Sitio shall
recommend adoption of this Agreement by the shareholders of El Sitio
to the effect as set forth in Section 4.3(u) (the "El Sitio
Recommendation"), and shall not (i) withdraw, modify or qualify (or
propose to withdraw, modify or qualify) in any manner adverse to IAMP
or Newhaven such recommendation or (ii) take any action or make any
statement in connection with the El Sitio Shareholders Meeting
inconsistent with such recommendation (collectively, a "Change in the
El Sitio Recommendation"); provided, however, any statement under
clause (ii) will not be deemed a Change in the El Sitio Recommendation
provided (A) such statement is taken or made after consultation with
U.S., British Virgin Islands and, if advisable, other counsel of El
Sitio, to the effect that such statement is required for the El Sitio
directors to comply with their fiduciary duties under applicable law,
(B) if a publicly disclosed Acquisition Proposal has been made and not
rescinded, such statement shall not relate to such public proposal
other than any factual statement required by any regulatory authority
(including the SEC) and shall in any event include a rejection of such
public proposal and (C) such statement also includes a reaffirmation
of the El Sitio Board Approval of the El Sitio Merger and the other
Transactions and recommendation to the El Sitio shareholders to adopt
this Agreement; provided, further, that the board of directors of El
Sitio may make a Change in the El Sitio Recommendation pursuant to
Section 6.2 hereof. Notwithstanding any Change in the El Sitio
Recommendation, this Agreement shall be submitted to the shareholders
of El Sitio at the El Sitio Shareholders Meeting for the purpose of
adopting this Agreement and receiving any required El Sitio
Shareholder Approval for the Transactions and nothing contained herein
shall be deemed to relieve El Sitio of such obligation.
6.2. Acquisition Proposals. (a) Each Media Company and each of ▇▇▇▇▇,
Newhaven and El Sitio agrees that neither it nor any of the El Sitio
Subsidiaries or affiliates nor any of the directors and officers of it or
the El Sitio Subsidiaries or affiliates shall, and that it shall use its
reasonable best efforts to cause the El Sitio Subsidiaries and its
affiliates, employees, agents and representatives (including any investment
banker, attorney or accountant retained by it or any of the El Sitio
Subsidiaries) not to, directly or indirectly, (i) initiate, solicit,
encourage or knowingly facilitate any inquiries or the making of any
proposal or offer with respect to, or a transaction to effect, a merger,
reorganization, share exchange, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction involving
it, El Sitio or any of the El Sitio Subsidiaries, IAMP or any of the IAMP
Subsidiaries or Newhaven or any of the Newhaven Subsidiaries (or a material
portion of the stock or assets thereof), (other than any such transaction
permitted by Section 5.2 in the case of a Media Company or its
subsidiaries, and Section 5.3 in the case of El Sitio) or any purchase or
sale of the consolidated assets (including, without limitation, shares of
its subsidiaries) of it and its subsidiaries, taken as a whole, or any
purchase or sale of, or tender or exchange offer for, its voting securities
that, if consummated, would result in any person (or the shareholders of
such Person) beneficially owning all or substantially all of its securities
(or of the surviving parent entity in such transaction) or any of its
subsidiaries (any such proposal, offer or transaction (other than a
proposal or offer made by the other party to this Agreement or an affiliate
thereof) being hereinafter referred to as an "Acquisition Proposal"), (ii)
have any discussions with or provide any confidential information or data
to any Person relating to an Acquisition Proposal, or engage in any
negotiations concerning an Acquisition Proposal, or knowingly facilitate
any effort or attempt to make or implement an Acquisition Proposal, (iii)
approve or recommend, or propose publicly to approve or recommend, any
Acquisition Proposal or (iv) approve or recommend, or propose to approve or
recommend, or execute or enter into, any letter of intent, agreement in
principle, merger agreement, asset purchase or share exchange agreement,
option agreement or other similar agreement related to any Acquisition
Proposal or propose or agree to do any of the foregoing.
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(b) Notwithstanding anything in this Agreement to the contrary,
El Sitio and its board of directors shall be permitted to (A) effect a
Change in the El Sitio Recommendation or (B) engage in any discussions
or negotiations with, or provide any confidential information or data
to, any person in response to an unsolicited bona fide written
Acquisition Proposal by any such person first made after the date of
this Agreement, if and only to the extent that, in any such case
referred to in clause (A) or (B) above:
(i) the party making the Acquisition Proposal is an entity
with which El Sitio has not engaged, directly or indirectly, in
substantial discussions with respect to an Acquisition Proposal
at any time during the six months immediately prior to the date
hereof;
(ii) the El Sitio Shareholders Meeting shall not have
occurred;
(iii) El Sitio has complied in all respects with this
Section 6.2;
(iv) El Sitio's board of directors, on the advice of outside
counsel, determines in good faith that failure to take such
action would result in a breach of its fiduciary duties under
applicable law;
(v) in the case only of clause (A) above, (I) El Sitio has
received an unsolicited bona fide written Acquisition Proposal
from a third party and El Sitio's board of directors concludes in
good faith that such Acquisition Proposal constitutes a Superior
Proposal (after giving effect to all of the concessions that may
be offered by the other party hereto pursuant to clause (III)
below), (II) it has notified the other parties hereto, at least
five business days in advance, of its intention to effect a
Change in the El Sitio Recommendation, specifying the material
terms and conditions of such Superior Proposal and furnishing to
the other party to this Agreement a copy of any relevant proposed
transaction agreements with the party making such Superior
Proposal and any other material documents received by it or its
Representatives, and (III) prior to effecting such a Change in
the El Sitio Recommendation, it has, and has caused its financial
and legal advisors to, negotiate with the other parties hereto in
good faith to make such adjustments in the terms and conditions
of this Agreement such that such Acquisition Proposal would no
longer constitute a Superior Proposal;
(vi) in the case only of clause (B) above, the board of
directors of El Sitio concludes in good faith that there is a
reasonable likelihood that such Acquisition Proposal constitutes
or is reasonably likely to result in a Superior Proposal (taking
into account the terms of the Acquisition Proposal, the identity
of the Person making such Acquisition Proposal, the ability of
such Person to effect a Superior Proposal, and all other relevant
factors), and prior to providing any information or data to any
person in connection with an Acquisition Proposal by any such
person, the board of directors of El Sitio receives from such
Person an executed confidentiality agreement having provisions
that are no more favorable to such Person than those contained in
the Confidentiality Agreement for Newhaven, ▇▇▇▇▇ and IAMP; and
63
(vii) El Sitio notifies the other parties hereto, as
promptly as practicable (and in any event with 24 hours of
providing any confidential information or data to any Person or
entering into discussions or negotiations with any Person), of
such inquiries, proposals or offers received by, any such
information requested from, or any such discussions or
negotiations sought to be initiated or continued with, it or any
of its representatives indicating, in connection with such
notice, the identity of such Person and the material terms and
conditions of any inquiries, proposals or offers (including a
copy thereof if in writing and any related available
documentation or correspondence and copies of any written or
electronic materials provided to such Person). El Sitio agrees
that it will promptly keep the other parties hereto informed of
the status and terms of any such proposals or offers and the
status and terms of any such discussions or negotiations.
(c) Each of Newhaven and ▇▇▇▇▇, each Media Company and El Sitio
agrees that (i) it will, and will cause its directors, officers and
representatives to, immediately cease and cause to be terminated any
activities, discussions or negotiations existing as of the date of
this Agreement with any Persons conducted heretofore with respect to
any Acquisition Proposal, (ii) it will immediately cease and cause its
subsidiaries, its affiliates, and its and their officers, directors,
agents, representatives and advisors, to cease any and all existing
activities, discussions or negotiations with any third parties
conducted heretofore with respect to any Acquisition Proposal, and
(iii) it will not release any third party from, or waive any
provisions of, any confidentiality or standstill agreement to which it
or any of its subsidiaries is a party with respect to any Acquisition
Proposal. Each of El Sitio, the Media Companies, Newhaven and ▇▇▇▇▇
agrees that it will use reasonable best efforts to promptly inform its
respective directors, officers, key employees, agents and
representatives of the obligations undertaken in this Section 6.2.
(d) Nothing in this Section 6.2 shall (i) permit any party to
terminate this Agreement or (ii) affect any other obligation of the
parties hereto under this Agreement. El Sitio shall not submit to the
vote of its shareholders any Acquisition Proposal other than the El
Sitio Merger.
(e) "Superior Proposal" means a bona fide written Acquisition
Proposal involving the acquisition of all or substantially all the El
Sitio Common Shares that the board of directors of El Sitio concludes
in good faith, after consultation with its financial and legal
advisors, taking into account all legal, financial, regulatory and
other terms of the proposal and the identity of the Person making the
proposal (including any break-up fees, expense reimbursement
provisions and conditions to consummation), (i) is more favorable to
the shareholders of El Sitio, from a financial point of view, than the
Transactions, (ii) is fully financed or reasonably capable of being
fully financed and otherwise reasonably capable of being completed on
the terms proposed; and (iii) is reasonably likely to be consummated
in accordance with its terms.
64
(f) Any disclosure made pursuant to clause (A) of Section 6.2(b)
shall be deemed to be a Change in the El Sitio Recommendation unless
the board of directors of El Sitio expressly reaffirms the El Sitio
Recommendation.
6.3. Holdco Board of Directors; PTVI Board of Directors. (a) At or
prior to the Effective Time, Newhaven, ▇▇▇▇▇ and El Sitio will take all
action necessary to cause the board of directors of Holdco immediately
following the Effective Time to include three independent directors
designated by mutual agreement of Newhaven, ▇▇▇▇▇ and the Founders, three
designees of Newhaven, two designees of ▇▇▇▇▇, and one designee of the
Founders (in each case, until the earlier of their resignation or removal
or until their respective successors are duly elected and qualified, as the
case may be) and be otherwise constituted as provided in the Holdco
Memorandum and Articles of Association. It is intended that ▇▇▇▇▇▇▇
Vivo-Chaneton will be the initial chairman and chief executive officer of
Holdco, until the earlier of his resignation or removal or until his
successor is duly elected and qualified, as the case may be.
(b) From and after the Effective Time, Holdco shall consult in
good faith with Newhaven in connection with the selection of designees
to serve on the PTVI board of directors. For one year following the
Effective Time, Holdco shall cause the current designees of Victoria
Springs serving on the board of directors of PTVI to continue to serve
in such capacity or nominate such other designees as may be acceptable
to Playboy Entertainment Group, Inc.
6.4. Fees and Expenses. (a) If the Transactions are consummated,
Holdco shall bear and pay the Expenses (including reimbursing any amounts
previously paid) incurred by or on behalf of Newhaven and ▇▇▇▇▇ in
connection with this Agreement and the Transactions as well as any and all
real property transfer, sales, use, transfer, value added, share transfer
and stamp Taxes, any transfer, recording, registration and other fees, and
any similar Taxes ("Transfer Taxes") imposed on the Media Companies,
Newhaven or ▇▇▇▇▇ and any Transfer Taxes imposed on the IAMP Subsidiaries
or the Newhaven Subsidiaries resulting from the Transactions.
El Sitio shall bear and pay the Expenses (including amounts
previously paid) incurred by or on behalf of it as well as any
and all Transfer Taxes incurred by it or its subsidiaries in
connection with the Transactions. In no event shall Holdco or any
affiliate thereof reimburse El Sitio for the payment of such Expenses
or Transfer Taxes.
"Expenses" means all out-of-pocket expenses (including, without
limitation, all fees and expenses of counsel, accountants, investment
bankers, experts and consultants to a party hereto and its affiliates)
incurred by a party hereto or on its behalf in connection with or
related to the authorization, preparation, negotiation, execution and
performance of this Agreement and the Transactions, including the
preparation, printing, filing and mailing of the Proxy Statement and
Prospectus and the solicitation of shareholder approvals and all other
matters related to the Transactions.
(b) If the Transactions are not consummated, each of Newhaven,
▇▇▇▇▇ and El Sitio will bear and pay for its own Expenses incurred in
connection with the Transactions; provided, however, that all expenses
relating to the preparation, printing, filing and mailing of the Proxy
Statement/Prospectus and solicitation of shareholder approval shall be
shared pro rata by Newhaven, ▇▇▇▇▇ and El Sitio, based on the number
of Holdco shares each of them (or their respective shareholders) would
have received in connection with consummation of the Transactions.
65
6.5. Directors' and Officers' Indemnification and Insurance. Holdco
shall, and in the case of the El Sitio Merger, Holdco shall cause the
surviving corporation of the El Sitio Merger to, (i) indemnify and hold
harmless, and provide advancement of expenses to, all past and present
directors, officers and employees of each party to the Transactions and
their respective subsidiaries (in all of their capacities) (a) to the same
extent such persons are indemnified or have the right to advancement of
expenses as of the date of this Agreement by such party pursuant to such
party's certificate of incorporation, bylaws (or equivalent constitutive
documents) and indemnification agreements, if any, in existence on the date
hereof with any directors, officers and employees of such party and its
subsidiaries and (b) without limitation to clause (a), to the fullest
extent permitted by law, in each case for acts or omissions occurring at or
prior to the Effective Time (including for acts or omissions occurring in
connection with the approval of this Agreement and the consummation of the
Transactions), (ii) include and cause to be maintained in effect in the
surviving corporation's (or any successor's) memorandum and articles of
association, certificate of incorporation and bylaws or equivalent
constitutive documents after the Effective Time, provisions regarding
elimination of liability of directors, indemnification of officers,
directors and employees and advancement of expenses which are, in the
aggregate, no less advantageous to the intended beneficiaries than the
corresponding provisions contained in the current certificate of
incorporation and bylaws of such party and (iii) cause to be maintained for
a period of six years after the Effective Time the current policies of
directors' and officers' liability insurance and fiduciary liability
insurance maintained by such party (provided, that the surviving
corporation (or any successor) may substitute therefor one or more policies
of at least the same coverage and amounts containing terms and conditions
which are, in the aggregate, no less advantageous to the insured) with
respect to claims arising from facts or events that occurred on or before
the Effective Time; provided, however, that in no event shall the surviving
corporation be required to expend in any one year an amount in excess of
150% of the annual premiums currently paid by such party for such
insurance; and, provided, further, that if the annual premiums of such
insurance coverage exceed such amount, the surviving corporation shall be
obligated to obtain a policy with the greatest coverage available for a
cost not exceeding such amount. The provisions of clause (iii) of the
immediately preceding sentence shall be deemed to have been satisfied if
prepaid policies have been obtained prior to the Closing for purposes of
this Section 6.5, which policies provide such directors and officers with
coverage for an aggregate period of six years with respect to claims
arising from facts or events that occurred on or before the Effective Time,
including, without limitation, in respect of the Transactions and for a
premium not in excess of the aggregate of the premiums set forth in the
preceding sentence. If such prepaid policies have been obtained prior to
the Closing, Holdco shall and shall cause the applicable surviving
corporation to maintain such policies in full force and effect, and
continue to honor the obligations thereunder. The obligations under this
Section 6.5 shall not be terminated or modified in such a manner as to
adversely affect any Person to whom this Section 6.5 applies without the
consent of such affected Person (it being expressly agreed that the Persons
to whom this Section 6.5 applies shall be third-party beneficiaries of this
Section 6.5).
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6.6. Public Announcements. The parties hereto shall use their
reasonable best efforts to (a) promptly following the date hereof, develop
a joint communications plan; (b) to ensure that all press releases and
other public statements with respect to the Transactions shall be
consistent with such joint communications plan; and (c) unless otherwise
required by applicable law or by obligations pursuant to any listing
agreement with or rules of any securities exchange, to consult with each
other before issuing any press release or, to the extent practical,
otherwise making any public statement with respect to this Agreement or the
Transactions. In addition to the foregoing, except to the extent disclosed
in or consistent with the Proxy Statement/Prospectus in accordance with the
provisions of Section 6.1, no party hereto shall issue any press release or
otherwise make any public statement or disclosure concerning any other
party hereto or any other party's business, financial condition or results
of operations without the consent of such other party hereto, which consent
shall not be unreasonably withheld or delayed.
6.7. Listing of Holdco Common Shares. Holdco shall use its reasonable
best efforts to cause the Holdco Common Shares to be issued in connection
with the Transactions and the Holdco Common Shares to be reserved for
issuance upon exercise of the Holdco Options (issued under the 2000 Holdco
Option Plan) and El Sitio Common Share Options, to be approved for listing
on Nasdaq, subject to official notice of issuance, prior to the Closing
Date.
6.8. Employee Benefits. From and after the Effective Time, Holdco will
honor, or will cause its subsidiaries to honor, all obligations under the
IAMP Benefit Plans, the Newhaven Benefit Plans and the El Sitio Benefit
Plans (collectively, the "Plans"). From and after the Effective Time,
Holdco shall have the right to amend, modify, alter or terminate any such
Plan to the extent the terms of such Plan permit such action and shall have
no obligation to extend or continue any such Plan which by its terms
expires or terminates.
6.9. Iberoamerican Media Holdings Chile S.A. Options. As soon as
practicable after the date hereof, Holdco shall offer to enter into a
letter agreement in the form attached hereto as Exhibit F with each of the
Persons listed in Exhibit F providing for payment of an aggregate amount to
all such Persons up to U.S.$3,245,000 in payments to such Persons by Holdco
in connection with options or other equity rights previously granted by
Iberoamerican Media Holdings Chile S.A.
7. Conditions Precedent
-------------------------
7.1. Conditions Precedent to Obligations of El Sitio, each Media
Company, Newhaven and ▇▇▇▇▇. The respective obligations of El Sitio, each
Media Company, Newhaven, and ▇▇▇▇▇ to consummate the Transactions shall be
subject to the satisfaction at or prior to the Closing Date of the
following conditions:
(a) No Injunction, Etc. At the Closing Date, there shall be no
injunction, restraining order or decree of any nature of any
Governmental Entity of competent jurisdiction that is in effect that
restrains or prohibits the consummation of the Transactions.
(b) Governmental Authorizations. All consents, approvals,
authorizations and orders of U.S. and foreign Governmental Entities
(including courts) as are necessary in connection with the
Transactions, or that, if not obtained, would be reasonably likely to
subject El Sitio, each Media Company, Newhaven, ▇▇▇▇▇ or any of their
respective subsidiaries, or any director, officer or agent of any such
Person to criminal or material civil liability or could render such
transfer void or voidable (the "Required Consents") shall have been
obtained or any applicable waiting period shall have expired or been
terminated, except for Required Consents the failure to obtain which,
individually or in the aggregate, would not have a Material Adverse
Effect on Holdco and are not otherwise likely to subject any such
director, officer, employee or agent to criminal or material civil
liability.
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(c) El Sitio Shareholder Approval. The El Sitio Shareholder
Approval shall have been obtained.
(d) Holdco Memorandum and Articles. The Holdco Memorandum and
Articles shall have been duly adopted and shall be in effect.
(e) Consents. All third-party consents with respect to the
Transactions shall have been obtained, except those consents the
failure of which to obtain that, individually or in the aggregate,
would not have a Material Adverse Effect on Holdco and its
subsidiaries taken as whole (after giving effect to the Transactions).
(f) Employment Agreements. Holdco shall have offered to enter
into an employment agreement with ▇▇▇▇▇▇▇ Vivo-Chaneton in accordance
with the terms set forth on Exhibit D hereto.
7.2. Conditions Precedent to Obligations of El Sitio. The obligations
of El Sitio under this Agreement are subject to the satisfaction (or waiver
by El Sitio), at or prior to the Closing Date, of each of the following
conditions:
(a) Accuracy of Representations and Warranties. (i) All
representations and warranties of Newhaven, ▇▇▇▇▇ and each Media
Company contained herein or in any certificate delivered to El Sitio
pursuant hereto, shall be true and correct in all respects on and as
of the Closing Date, with the same force and effect as though such
representations and warranties had been made on and as of the Closing
Date, except (A) to the extent that any such representation or
warranty is made as of a specified date, in which case such
representation or warranty shall have been true and correct in all
respects as of such date, and (B) after giving effect to clause (A),
for all such inaccuracies or misstatements that, individually or in
the aggregate, would not have a Material Adverse Effect on IAMP and
the IAMP Subsidiaries taken as a whole or Newhaven and the Newhaven
Subsidiaries taken as a whole.
(ii) No Material Adverse Change. Except as contemplated by
or set forth in this Agreement or in the Exhibits or the
Disclosure Schedule of any Media Company subsequent to the date
of this Agreement, there has not occurred or arisen, any Material
Adverse Effect on IAMP and the IAMP Subsidiaries taken as a whole
or Newhaven and the Newhaven subsidiaries taken as a whole.
(b) Performance of Agreements. Newhaven, ▇▇▇▇▇ and each Media
Company shall, in all material respects, have performed all
obligations and agreements, and complied in all material respects with
all material covenants and conditions, contained in this Agreement to
be performed or complied with by it prior to or at the Closing Date.
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(c) Officer's Certificate. El Sitio shall have received a
certificate, dated the Closing Date, of the president or other senior
executive officer of each of Newhaven, ▇▇▇▇▇, IAMP to the effect that,
to the knowledge of such officer after due inquiry, the applicable
conditions specified in Sections 7.2(a) and (b) have been fulfilled.
(d) Holdco Agreement. The Holdco Agreement shall have been
executed by each party thereto.
(e) Tax Opinion. El Sitio shall have received a written opinion
of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, U.S. counsel to El Sitio, in form and
substance reasonably satisfactory to it, on the basis of customary
representations, warranties, covenants and assumptions set forth in
such opinions, and delivered as of the date of the Effective Time, to
the effect that the El Sitio Merger will constitute a reorganization
within the meaning of Section 368(a) of the Code and/or that the
Transactions, taken together, will constitute an exchange under
Section 351 of the Code.
7.3. Conditions Precedent to the Obligations of Newhaven, ▇▇▇▇▇ and
the Media Companies. The obligations of Newhaven, ▇▇▇▇▇ and the Media
Companies under this Agreement are subject to the satisfaction (or waiver
by Newhaven, ▇▇▇▇▇ or the Media Companies, as the case may be), at or prior
to the Closing Date, of each of the following conditions:
(a) Accuracy of Representations and Warranties. (i) All
representations and warranties of El Sitio contained herein or in any
certificate or document delivered to Newhaven, ▇▇▇▇▇ or the Media
Companies pursuant to this Agreement shall be true and correct in all
respects on and as of the Closing Date, with the same force and effect
as though such representations and warranties had been made on and as
of the Closing Date, except (A) to the extent that any such
representation or warranty is made as of a specified date, in which
case such representation or warranty shall have been true and correct
in all respects as of such date and (B) after giving effect to clause
(A) for all such inaccuracies or misstatements that, individually or
in the aggregate, would not have a Material Adverse Effect on El Sitio
and the El Sitio Subsidiaries taken an a whole.
(ii) No Material Adverse Change. Except as otherwise
contemplated by or disclosed in this Agreement or the Exhibits
hereto or the El Sitio Disclosure Schedule, subsequent to the
date of this Agreement, there has not occurred any Material
Adverse Effect on El Sitio and the El Sitio Subsidiaries taken as
a whole.
(b) Performance of Agreements. El Sitio shall in all material
respects have performed all obligations and agreements, and complied
in all material respects with all covenants and conditions, contained
in this Agreement to be performed or complied with by it prior to or
at the Closing Date.
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(c) Officer's Certificate. Newhaven, ▇▇▇▇▇ and the Media
Companies shall have received a certificate, dated the Closing Date,
of the president or a vice president of El Sitio to the effect that,
to the knowledge of such officer after due inquiry, the conditions
specified in Sections 7.3(a) and (b) have been fulfilled.
(d) Holdco Agreement. The Holdco Agreement shall have been
executed by each party thereto.
(e) Registration Rights Agreement. The Registration Rights
Agreement in a form in accordance with the terms set forth as Exhibit
B hereto shall have been executed by Holdco.
(f) Tax Opinion. Newhaven shall have received a written opinion
of Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇, U.S. counsel to Newhaven and ▇▇▇▇▇
shall have received a written opinion of ▇▇▇▇▇▇▇▇ Chance ▇▇▇▇▇▇ &
▇▇▇▇▇ LLP, U.S. counsel to ▇▇▇▇▇, in each case, in form and substance
reasonably satisfactory to the recipients, on the basis of customary
representations, warranties, covenants and assumptions set forth in
such opinions, and delivered as of the date of the Effective Time, to
the effect that the IAMP Reorganization will constitute a
reorganization within the meaning of Section 368(a) of the Code and,
in the case of the opinion of Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇, to the
further effect that the Transactions, taken together, will constitute
an exchange under Section 351 of the Code.
8. Termination
--------------
8.1. General. This Agreement may be terminated and the Transactions
may be abandoned: (a) by mutual consent of El Sitio, IAMP, Newhaven and
▇▇▇▇▇; or (b) by El Sitio, IAMP, Newhaven or ▇▇▇▇▇ by notice to the other
parties hereto in the event that the Closing Date shall not have occurred
on or before July 30, 2001; provided, however, that, if the Closing Date
shall not have occurred on or before such date due to the act or omission
of El Sitio, IAMP, Newhaven or ▇▇▇▇▇ in breach of this Agreement, then that
party may not terminate the Agreement.
8.2. Effect of Termination. In the event of any termination of the
Agreement as provided in Section 8.1 above, this Agreement shall forthwith
become wholly void and of no further force and effect and there shall be no
liability on the part of El Sitio, IAMP, Newhaven or ▇▇▇▇▇, except that (i)
the obligations of El Sitio, IAMP, Newhaven and ▇▇▇▇▇ under Sections
5.1(b), 6.4 and 6.6 of this Agreement shall remain in full force and effect
and (ii) termination shall not preclude any party from suing another party
for breach of this Agreement.
9. Indemnification.
-------------------
9.1. Survival of Representations and Warranties.
(a) Each of the representations and warranties set forth in
Section 4.4 and in any certificate delivered pursuant to Sections
7.2(c) or 7.3(c) shall survive for the time period set forth in
Section 4.4, after which time they will have no further force or
effect. The agreements set forth in this Agreement shall terminate at
the Effective Time, except that the agreements set forth in Article 1,
Section 5.1(c), Section 5.5, Section 6.5, this Article 9, and Article
10 shall survive the Effective Time and the Closing.
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(i) Newhaven and ▇▇▇▇▇, jointly and severally, with respect
to matters relating to IAMP, and Newhaven, with respect to
matters relating to Newhaven, shall indemnify and hold Holdco
harmless against and in respect of (i) any actual loss,
liability, damage, cost, expense or amount paid in settlement
(including reasonable attorneys' fees and other reasonable costs
of defense) (collectively, "Damages") incurred or sustained by
Holdco as a result of any breach by Newhaven, ▇▇▇▇▇ or IAMP of
their respective covenants contained herein that survive the
Closing; and (ii) any actual Damages incurred or sustained by
Holdco as a result of any breach by Newhaven, ▇▇▇▇▇ or IAMP of
their respective representations and warranties contained in
Section 4.1 or 4.2 hereof that survive pursuant to Section 4.4
and made on the date hereof; provided that Newhaven and ▇▇▇▇▇
shall be required to indemnify Holdco pursuant to this clause
(ii) for such breaches only to the extent that the aggregate
actual Damages resulting from such breaches to Holdco exceeds
U.S.$5,000,000 (the "Threshold"); and provided, further, that
Newhaven and ▇▇▇▇▇' aggregate liability pursuant to this Section
9.1(a) will not exceed U.S.$50,000,000, (the "Cap") and any claim
for indemnification under this clause (ii) must be made in
writing with specificity to Newhaven and ▇▇▇▇▇ by Holdco within
12 months of the Closing Date (except in the case of breach of a
representation in Sections 4.1(q) and 4.2(q), which claim may be
made within 24 months of the Closing Date.
(ii) With respect to the agreements set forth on Section
9.1(a)(ii) of the IAMP Disclosure Schedule or Section 9.1(a)(ii)
of the Newhaven Disclosure Schedule, each IAMP Subsidiary or each
Newhaven Subsidiary, as the case may be, identified in such
Section will agree to: (A) if permitted pursuant to applicable
law and the terms of the applicable agreement, assign to Holdco
any and all rights to indemnification granted to such Subsidiary
by any third party transferor or seller (other than Newhaven,
▇▇▇▇▇ or any affiliate of either of such parties), as the case
may be, with respect to the assets or other property conveyed to
such Subsidiary, and (B) if assignment is not permitted by the
terms of the applicable agreement, agree to pursue any claim for
indemnification granted under such agreement and assign, convey
or otherwise transfer to Holdco any and all cash proceeds,
property or other valuable consideration received from any such
third party indemnitor. Notwithstanding the foregoing, subject to
paragraph (iii) below, in no event shall any assignment pursuant
to this paragraph limit any right of Newhaven, ▇▇▇▇▇ or the IAMP
Subsidiaries to pursue a claim for indemnification against such
third-party indemnitor in the event that Holdco makes a claim for
indemnification against Newhaven, ▇▇▇▇▇ or IAMP related to the
assets or other property conveyed by such third party, in which
event Holdco shall immediately assign the right to seek
indemnification against the third-party indemnitor back to the
Indemnifying Party against which Holdco has made a claim for
indemnification. In the event Holdco recovers any cash proceeds,
property or other valuable consideration from a third-party
indemnitor pursuant to a claim for indemnification, such amount
shall be deducted from the Damages Holdco may be entitled to
recover from an Indemnifying Party.
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(iii) In the event that Holdco may have the benefit of a
claim under paragraph (ii) above, as well as a claim under
paragraph (i) above, Holdco shall first use its reasonable best
efforts to pursue such claim under paragraph (ii) and only
thereafter seek indemnification pursuant to paragraph (i).
(iv) Newhaven shall, from and after the Effective Time until
January 1, 2005 (or, if earlier, the applicable statute of
limitations), indemnify and hold harmless Holdco, on the same
terms and conditions as otherwise set forth in this Section 9
(including with respect to the Threshold and the cap, which shall
apply in the aggregate as to indemnification pursuant to this
paragraph (iv) and otherwise under this Agreement, as well as the
manner of making and handling claims) with respect to the
tax-free status of the tax-free reorganization under Argentine
law involving Imagen and the subsequent combination of Imagen and
Imasac S.A. into a common business enterprise in June 1997.
Notwithstanding any other provision in this Agreement, in the
event that Holdco or another Indemnified Party receives notice of
any claim or dispute with respect to any matter related to the
indemnity set forth in this paragraph (iv) or which would give
rise to any claim for indemnification pursuant hereto, it shall
promptly provide such notice to Newhaven, and Newhaven shall have
sole authority to manage such claim or dispute and to settle or
otherwise resolve it, including through litigation. Holdco shall
provide Newhaven such powers of attorney and other documents as
Newhaven may reasonably request in connection with such claim. As
a condition to its right set forth in this paragraph (iv), Holdco
shall not take, and shall cause its directors, officers, agents
and subsidiaries not to take, any action which could reasonably
be expected to result in, or increase the amount of, any claim or
dispute under this paragraph (iv), including in positions or
statements in any future tax returns, tax audit inquiries and
other administrative or judicial tax proceedings or financial
statements and related notes thereto, except as required by law.
The provisions of this paragraph (iv) shall not affect the
release of Holdco Common Shares in the IAMP Escrow Account, which
shall be released at such time as otherwise provided herein,
except that, if a claim is made with respect to this paragraph
(iv) by Holdco or another Indemnified Party hereunder prior to
the time such shares would otherwise be released, such shares may
be retained by the Escrow Agent, to the extent applicable, with
respect to any pending claim under this paragraph (iv). Following
release of the IAMP Escrow Account, Holdco may seek
indemnification under this paragraph (iv) by claim against
Newhaven (subject to the same limitations as set forth herein).
For the avoidance of doubt, to the extent Holdco Common Shares
held in the IAMP Escrow Account have been used to satisfy
obligations of Newhaven, ▇▇▇▇▇ or any of their affiliates
hereunder, or cash amounts have been paid in lieu of the release
of such shares in respect of indemnification obligations (and
such shares have, accordingly, been released to Newhaven or
▇▇▇▇▇) the amount of available indemnification hereunder shall be
correspondingly reduced by the value of such shares, based on the
transaction value set forth below, represented by such cash
amount.
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(b) Holdco shall indemnify and hold IAMP, ▇▇▇▇▇ and Newhaven harmless
against and in respect of any actual Damages incurred or sustained by
▇▇▇▇▇, IAMP or Newhaven as a result of any breach by El Sitio of its
representations and warranties contained in Section 4.3 that survive
pursuant to Section 4.4 and made on the date hereof; provided that Holdco
shall be required to indemnify IAMP, ▇▇▇▇▇ and Newhaven pursuant to this
Section 9.1(b) for such breaches only to the extent that the aggregate
actual Damages resulting from such breaches to IAMP, ▇▇▇▇▇ or Newhaven
exceed the Threshold; provided, however, that Holdco's aggregate liability
pursuant to this Section 9.1(b) will not exceed the Cap and any claim for
indemnification under this Section 9.1(b) must be made in writing with
specificity to Holdco by IAMP, ▇▇▇▇▇ or Newhaven, as applicable, within 12
months of the Closing Date (except in the case of breach of a
representation in Section 4.3(q), which claim may be made within 24 months
of the Closing Date).
(c) Any claim for Damages pursuant to this Section 9.1 for which a
notice of a breach has been given during the time such representation,
warranty or agreement survives shall survive the time it would otherwise
terminate pursuant to this Section 9.1.
(d) With respect to third-party claims, all claims for indemnification
by Holdco, Newhaven, ▇▇▇▇▇ or IAMP (the "Indemnified Party") hereunder
shall be asserted and resolved as set forth in this Section 9.1(d). In the
event that any written claim or demand for which Newhaven, ▇▇▇▇▇ or Holdco
(an "Indemnifying Party"), would be liable to the Indemnified Party
hereunder is asserted against or sought to be collected from the
Indemnified Party by a third party, the Indemnified Party shall promptly
notify the Indemnifying Party of such claim or demand and the amount or the
estimated amount thereof to the extent then feasible (which estimate shall
not be conclusive of the final amount of such claim or demand) (the "Claim
Notice"). Failure to give prompt notice shall not affect the
indemnification obligations hereunder in the absence of actual prejudice.
The Indemnifying Party shall have 20 days from the personal delivery or
mailing of the Claim Notice (the "Notice Period") to notify the Indemnified
Party (i) whether or not the Indemnifying Party disputes the liability of
the Indemnifying Party to the Indemnified Party hereunder with respect to
such claim or demand and (ii) whether or not it desires to defend the
Indemnified Party against such claim or demand. All costs and expenses
incurred by the Indemnifying Party in defending such claim or demand shall
be a liability of, and shall be paid by, the Indemnifying Party; provided,
however, that the amount of such costs and expenses that shall be a
liability of the Indemnifying Party hereunder shall be subject to the
limitations set forth in Section 9.1(a) and (b) hereof. Except as
hereinafter provided, in the event that the Indemnifying Party notifies the
Indemnified Party within the Notice Period that it desires to defend the
Indemnified Party against such claim or demand, the Indemnifying Party
shall have the right to defend the Indemnified Party with counsel
reasonably satisfactory to the Indemnified Party by appropriate proceedings
and shall have the sole power to direct and control such defense and the
Indemnifying Party shall not be liable to such Indemnified Party under this
Section 9.1 for any fees of other counsel or any other expenses, in each
case subsequently incurred by such Indemnified Party in connection with the
defense thereof, other than reasonable costs of investigation and costs and
expenses of legal counsel, if the Indemnified Party and the Indemnifying
Party are both parties to the action and the indemnified party has been
advised by counsel that there may be one or more defenses available to it
and not available to the Indemnifying Party. If any Indemnified Party
73
desires to participate in any such defense, other than with respect to
defenses described in the last clause of the preceding sentence, it may do
so at its sole cost and expense. The Indemnified Party shall not settle a
claim or demand without the consent of the Indemnifying Party unless prior
thereto or in connection therewith the Indemnified Party unconditionally
releases the Indemnifying Party for any liability arising out of such claim
or demand. The Indemnifying Party shall not, without the prior written
consent of the Indemnified Party, settle, compromise or offer to settle or
compromise any such claim or demand on a basis which would result in the
imposition of a consent order, injunction or decree which would restrict
the future activity or conduct of the Indemnified Party or any subsidiary
or affiliate thereof or if such settlement or compromise does not include
an unconditional release of the Indemnified Party for any liability arising
out of such claim or demand. If the Indemnifying Party elects not to defend
the Indemnified Party against such claim or demand, whether by not giving
the Indemnified Party timely notice as provided above or otherwise, then
the amount of any such claim or demand or, if the same be contested by the
Indemnified Party, that portion thereof as to which such defense is
unsuccessful (and the reasonable costs and expenses pertaining to such
defense), shall be the liability of the Indemnifying Party hereunder,
subject to the limitations set forth in Section 9.1(a) and (b). Holdco,
Newhaven and ▇▇▇▇▇ shall each render to each other such assistance as may
reasonably be requested in order to insure the proper and adequate defense
of any such claim or proceeding.
Notwithstanding any other provision in this Agreement, the obligations
of, Holdco, Newhaven and ▇▇▇▇▇ under this Section 9 shall terminate with
respect to a party that otherwise is entitled to indemnity hereunder
immediately upon consummation of a "change in control" with respect to such
party, Holdco or, in the case of an indemnity for the benefit of Holdco,
with respect to an asset or business as to which indemnification is sought
hereunder. A "change in control" with respect to a party or any of Holdco's
businesses shall be deemed to occur upon the occurrence of any of the
following: (i) a person or group (other than Holdco and its wholly owned
subsidiaries with respect to Holdco) obtains control, whether through
ownership, contract or otherwise, of at least 50.01% of the voting power or
equity interest of such party or such business, or (ii) a person or group
(other than Holdco and its wholly owned subsidiaries or an affiliate of the
indemnified party) obtains the ability to elect a majority of the board of
directors or other managing body of such party or such business whether
through contract, share ownership, proxy, voting agreement or otherwise;
provided, in the event that ▇▇▇▇▇ or Newhaven or one of their affiliates
effects any such transaction with respect to Holdco, the Holdco Board shall
have approved or consented to such transaction.
(e) (i) At Closing, Newhaven and ▇▇▇▇▇ shall place 3,525,824 and
2,763,484 Holdco Common Shares, respectively, in an escrow account (the
"IAMP Escrow Account") with an escrow agent (the "Escrow Agent") mutually
74
agreeable to Newhaven, ▇▇▇▇▇, El Sitio and Holdco. Any indemnification
payments that may be made from Newhaven or ▇▇▇▇▇ to Holdco hereunder may be
paid, at Newhaven's or ▇▇▇▇▇' option, in U.S. dollars in the amount of the
Damages or in Holdco Common Shares out of the IAMP Escrow Account with a
value equal to the Damages (with each Holdco Common Share being deemed,
solely for purposes of this Section 9.1(e), to have a value of U.S.$7.95).
In the event that Newhaven or ▇▇▇▇▇ makes an indemnification payment to
Holdco in cash, a number of Holdco Common Shares shall immediately be
released to the Indemnifying Party from the IAMP Escrow Account equal in
value to the amount of such cash indemnification payment (such Holdco
Common Shares being deemed to have a value, solely for purposes of this
Section 9.1(e), of U.S.$7.95 per share). The IAMP Escrow Account shall be
terminated on the date two years after Closing and all Holdco Common Shares
remaining therein on such date shall be returned to Newhaven or ▇▇▇▇▇;
provided that in the event there is a pending claim for indemnification
against Newhaven or ▇▇▇▇▇ at such date, then Holdco Common Shares shall
remain in the IAMP Escrow Account pending the final resolution of such
claim.
(ii) Holdco shall place 6,289,308 shares of Holdco Common
Shares in an escrow account (the "Holdco Escrow Account") with
the Escrow Agent against which all claims for indemnification
against Holdco may be met. Any indemnification payments that may
be made from Holdco to Newhaven or ▇▇▇▇▇ hereunder may be paid,
at Holdco's option, in U.S. dollars in the amount of the Damages
or in Holdco Common Shares out of the Holdco Escrow Account with
a value equal to the Damages (with each Holdco Common Share being
deemed, solely for purposes of this Section 9.1(e), to have a
value of U.S.$7.95; provided, however, that Holdco shall not be
entitled to make such payment in U.S. dollars to the extent that
doing so would cause the IAMP Reorganization to fail to
constitute a reorganization within the meaning of Section 368(a)
of the Code). The Holdco Escrow Account shall be terminated on
the date two years after Closing and all Holdco Common Shares
remaining therein on such date shall be returned to Holdco;
provided that in the event there is a pending claim for
indemnification against Holdco at such date, then Holdco Common
Shares shall remain in the Holdco Escrow Account pending the
final resolution of such claim.
(iii) The sole recourse of any party hereto in the event of
any claim pursuant to this Section 9 shall be to the applicable
Escrow Account, regardless of the value of any Holdco Common
Shares then held in such Escrow Account, or the size or basis of
the claim made by any indemnified party. The parties acknowledge
that, as a consequence of this provision, in the event that a
party's Escrow Account is exhausted, an indemnified party shall
have no remedy against such other party with respect to any such
claim, notwithstanding an indemnification obligation set forth in
Section 9(a) or 9(b) hereof.
(iv) The IAMP Escrow Account and the Holdco Escrow Account
shall substantially satisfy the provisions of IRS Revenue
Procedure 84-42.
75
(f) The parties agree that any indemnification payments made
pursuant to this Agreement shall be treated for tax purposes as an
adjustment to the Merger Consideration, unless otherwise required by
applicable law.
10. Miscellaneous
-------------
10.1. Notices. Any and all notices to any party to this Agreement will
be delivered to the following addresses:
(a) If to Newhaven, IAMP or Holdco:
Newhaven Overseas Corp.
c/o Finser Corporation
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (solely for information purposes) to:
Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
(c) If to HMTF I, HMTF II, HMTF III, IAMP or Holdco:
c/o Hicks, Muse, ▇▇▇▇ & ▇▇▇▇▇, Incorporated
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (solely for information purposes) to:
▇▇▇▇▇▇▇▇ Chance ▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: L. ▇▇▇▇▇ ▇'▇▇▇▇, ▇▇., Esq.
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
and
76
(d) If to El Sitio:
El Sitio, Inc.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Fax No.: (5411) 4339-3876
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Fax No: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as the parties hereto shall have specified by notice in
writing to the other parties hereto. All such notices, requests, demands and
communications shall be deemed to have been received on the date of personal
delivery or telecopy or on the third Business Day after the mailing thereof.
10.2. Entire Agreement. This Agreement (including the Exhibits hereto and
the Disclosure Schedules), together with the Confidentiality Agreement, the
Registration Rights Agreement, the Holdco Agreement and the Voting Agreement,
constitutes the entire agreement between the parties hereto, and supersedes all
prior agreements and understandings, oral and written, between the parties
hereto with respect to the subject matter hereof.
10.3. Binding Effect; No Third-Party Beneficiaries. This Agreement shall
inure to the benefit of and be binding upon the parties hereto and their
respective successors and assigns. Nothing in this Agreement, expressed or
implied, is intended to confer on any Person other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
10.4. Assignability. This Agreement shall not be assignable by Newhaven,
▇▇▇▇▇ or IAMP without the prior written consent of El Sitio or by El Sitio
without the prior written consent of each of Newhaven, ▇▇▇▇▇ and IAMP, provided,
however, that each of Newhaven, ▇▇▇▇▇ and IAMP shall be permitted to assign its
rights hereunder to any one or more Person or Persons to which all or
substantially all of its respective businesses are assigned or otherwise
transferred, so long as such Person assumes the obligations of such party
hereunder and such assignment does not deprive any other party hereunder of the
benefits of this Agreement.
10.5. Amendment; Waiver. This Agreement may be amended, supplemented or
otherwise modified only by a written instrument executed by the parties hereto.
No waiver by any of the parties hereto of any of the provisions hereof shall be
effective unless explicitly set forth in writing and executed by the party
hereto so waiving. Except as provided in the preceding sentence, no action taken
pursuant to this Agreement, including, without limitation, any investigation by
or on behalf of any party hereto, shall be deemed to constitute a waiver by the
party hereto taking such action of compliance with the representations,
warranties, covenants, or agreements contained herein, and in any documents
delivered or to be delivered pursuant to this Agreement and in connection with
the Closing hereunder. The waiver by any party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
subsequent breach.
77
10.6. Schedules and Exhibits. Any fact or item that is clearly disclosed on
any Exhibit to this Agreement or in any Disclosure Schedule or in the Financial
Information or Interim Financial Information of any party hereto in such a way
as to make its relevance to a representation or representations made elsewhere
in this Agreement or to the information called for by an Exhibit or Exhibits to
this Agreement or any Disclosure Schedule readily apparent shall be deemed to be
an exception to such representation or representations or to be disclosed on
such Exhibit or Exhibits on any Disclosure Schedule, as the case may be,
notwithstanding the omission of a reference or cross-reference thereto. Any fact
or item disclosed on any Exhibit or any Disclosure Schedule shall not by reason
only of such inclusion be deemed to be material and shall not be employed as a
point of reference in determining any standard of materiality under this
Agreement.
10.7. Section Headings; Table of Contents. The Section headings contained
in this Agreement and the Table of Contents to this Agreement are for reference
purposes only, and shall not affect the meaning or interpretation of this
Agreement.
10.8. Severability. If any provision of this Agreement shall be declared by
any court of competent jurisdiction to be illegal, void or unenforceable, all
other provisions of this Agreement shall not be affected and shall remain in
full force and effect.
10.9. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.
10.10. WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY LAW, THE
PARTIES HERETO HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM
OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR RELATING TO
THE SUBJECT MATTER OF THIS TRANSACTION.
10.11. Applicable Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of New York.
10.12. Submission to Jurisdiction. Each of Newhaven, ▇▇▇▇▇, each Media
Company and El Sitio irrevocably agrees that any Legal Proceeding with respect
to this Agreement or for recognition and enforcement of any judgment in respect
hereof brought by another party hereto or its successors or assigns may be
brought and determined in the U.S. federal district court for the Southern
District of New York, and each of Newhaven, ▇▇▇▇▇, the Media Companies and El
Sitio hereby irrevocably submits with regard to any such Legal Proceeding for
itself and in respect to its property, generally and unconditionally, to the
exclusive jurisdiction of the aforesaid courts. Each of Newhaven, ▇▇▇▇▇, each
Media Company and El Sitio hereby irrevocably waives, and agrees not to assert,
by way of motion, as a defense, counterclaim or otherwise, in any Legal
Proceeding with respect to this Agreement, (a) any claim that it is not
personally subject to the jurisdiction of the above-named courts for any reason
other than the failure to lawfully serve process, (b) that it or its property is
exempt or immune from jurisdiction of any such court or from any legal process
commenced in such courts (whether through service of notice, attachment prior to
judgment, attachment in aid of execution of judgment, execution of judgment or
otherwise), (c) to the fullest extent permitted by applicable law, that (i) the
suit, action or proceeding in any such court is brought in an inconvenient
forum, (ii) the venue of such suit, action or proceeding is improper and (iii)
this Agreement, or the subject matter hereof, may not be enforced in or by such
courts and (d) any right to a trial by jury.
78
10.13. Certain Definitions
(a) Defined Terms. For purposes of this Agreement, the following terms
shall have the specified meanings:
(i) "affiliate" of a Person means a Person that, directly or
indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, the first
mentioned person;
(ii) "Business Day" means any day other than a Saturday,
Sunday, or other day on which banks located in New York City, the
British Virgin Islands or Buenos Aires, Argentina are authorized
or obligated to close;
(iii) "Government Consent" means any license, certificate,
permit, consent, approval, authorization, qualification or order
issued by, or entered by or with any Governmental Entity;
(iv) "Governmental Entity" means any U.S. or non-U.S.
national, state, municipal or local government, any regulatory
agency, body or court, or any quasi-governmental or private body
exercising any regulatory, taxing, importing or
quasi-governmental entity or any supranational government or
regulatory agency, body or court;
(v) "Indebtedness" means, with respect to any Person, (a)
all indebtedness or such Person, whether or not contingent, for
borrowed money (including reimbursement obligations in respect of
letters of credit, guarantees or similar instruments), (b) all
obligations of such Person for the deferred subscription price of
property or services, (c) all other indebtedness of such Person
evidenced by notes, bonds, debentures, letters of credit or other
similar instruments, (d) all obligations under leases required to
be classified and accounted for as capital leases in accordance
with generally accepted accounting principles and (e) all
indebtedness of other persons referred to in clauses (a) through
(d) above guaranteed directly or indirectly in any manner by such
person, except, in the case of clauses (a) through (e),
indebtedness of either Media Company or any of the Subsidiaries
to such Media Company or any of its wholly-owned subsidiaries;
79
(vi) "material" has the meaning assigned to such term under
the Securities Act and the Exchange Act (including, without
limitation, under SEC Staff Accounting Bulletin No. 99);
(vii) "Material Adverse Effect" means (A) a material adverse
effect upon the business, operations, properties, assets,
liabilities, financial condition or results of operations of the
applicable Person(s), (B) the prevention of or material delay in
the ability of the parties hereto to perform their respective
obligations under this Agreement and to consummate the
Transactions or (C) any material adverse change in the near-term
or long-term projected business, assets, liabilities, financial
condition or results of operations (taking into account, among
other factors, EBITDA and free cash flow, as such terms are
customarily used) of the applications Person(s), except, in the
case of clauses (A), (B) or (C), any such effect resulting from
or arising in connection with: (1) changes in general economic or
business conditions or in financial markets in the countries in
which the parties do business, (2) changes in circumstances or
conditions affecting companies in the media or entertainment
industry generally, (3) this Agreement, the Transactions or the
announcement hereof or (4) the failure of a party to give consent
to an action requested pursuant to an applicable Section of
Article 5. for purposes of clause (C) of this definition, the
term "material adverse change" shall take into account, among
other factors, the intended capital structure of Holdco giving
effect to the Transactions;;
(viii) "Permits" means all licenses, permits, order,
consents, approvals, registrations, authorizations,
qualifications and fillings with and under all U.S. federal,
state or local or other non-U.S. laws and Governmental Entities
and the National Association of Securities Dealers, Inc.;
(ix) "Person" means an individual, corporation, partnership,
association, trust, incorporated organization, other entity or
group (as defined in Section 13(d)(3) of the Exchange Act); and
(x) "subsidiary" of El Sitio, Newhaven, ▇▇▇▇▇, any Media
Company or any other Person means any corporation, partnership,
joint venture or other legal entity of which El Sitio, Newhaven,
▇▇▇▇▇, any Media Company or such other Person, as the case may be
(either alone or through or together with any other subsidiary),
owns, directly or indirectly, more than 50% of the share capital
or other equity interests the holder of which generally is
entitled to vote for the election of the board of directors or
other governing body of such corporation or other legal entity.
(b) Other Terms. For purposes if this Agreement, references to
"share capital", "capital stock", "share" and similar expressions
shall, in the case of any Person that is not a corporation, mean the
corresponding equity or ownership interests in such Person.
80
(c) Glossary of Terms. Capitalized terms used herein are defined
in the following Sections of this Agreement:
Defined Term Section
------------ --------
Acquisition Proposal.......................... 6.2(a)
AEI.............................................. 4.2(i)(iv)
AEI Financial Information........................ 4.2(i)(iv)
Affiliate........................................ 10.13(a)(i)
Affiliate Agreement.............................. 6.8
Agreement........................................ Preamble
Articles of Association.......................... 1.2
Benefit Plans.................................... 4.1 (p) (i)
Business Day.................................... 10.13(a)(ii)
BVI Companies Ordinance.......................... 2.1
C Share.......................................... 2.1(b)
Cap.............................................. 9.1
capital stock.................................... 10.13(b)
Certificate of Merger............................ 2.3
Change in the El Sitio Recommendation............ 6.1(b)
Claim Notice..................................... 9(a)
Closing.......................................... 2.2
Closing Date..................................... 2.2
Code............................................. Preamble
Concessions...................................... 4.1(n)
Confidentiality Agreement........................ 5.1(c)
Contributions.................................... 2.1(d)
Damages......................................... 9(b)(i)
Disclosure Schedules............................. 4.3
Effective Time................................... 2.3
El Sitio........................................ Preamble
El Sitio 1999 Balance Sheet...................... 4.3(i)(i)
El Sitio Benefit Plans........................... 4.3(p)(i)
El Sitio Board Approval.......................... 4.3(u)
El Sitio Certificate............................. 2.7
El Sitio Certificate of Merger................... 2.3
El Sitio Common Share Options.................... 2.8(a)
El Sitio Common Share Plans...................... 2.8(a)
El Sitio Common Shares........................... 2.7
El Sitio Disclosure Schedule..................... 4.3
El Sitio Employees............................... 4.3(p)(i)
El Sitio Exchange Ratio.......................... 2.7(b)
El Sitio Financial Information................... 4.3(i)(i)
El Sitio Interim Financial Information........... 4.3(i)(ii)
El Sitio Intellectual Property................... 4.3(m)
El Sitio International Benefit Plans............. 4.3(p)(i)
El Sitio Material Contracts...................... 4.3(l)
El Sitio Merger.................................. 2.1(f)
El Sitio Merger Consideration.................... 2.7(b)
El Sitio Merger Subsidiary....................... 1.3
El Sitio Recommendation.......................... 6.1(b)
81
El Sitio Shareholders Meeting.................... 6.1(b)
El Sitio Subsidiaries............................ 4.3(a)(iv)
El Sitio U.S. Benefit Plans...................... 4.3(p)(i)
El Sitio U.S. Employees.......................... 4.3(p)(i)
ERISA............................................ 4.1(p)(i)
Escrow Agent..................................... 9(4)(i)
Exchange Act..................................... 4.3(f)(I)
Exchange Agent................................... 3.1
Exchange Fund.................................... 3.1
Expenses......................................... 6.4(a)
Form F-4......................................... 6.1(a)
Government Consent............................... 10.13(a)(iii)
Government Entity................................ 10.13(a)(iv)
H Share.......................................... 2.1(b)
Hampstead Contribution........................... 2.1(c)
Hampstead Subsidiaries........................... 2.1(c)
▇▇▇▇▇............................................ Preamble
▇▇▇▇▇ Board Approval............................. 4.1(v)(ii)
HMTF I........................................... Preamble
HMTF II.......................................... Preamble
HMTF III......................................... Preamble
Holdco........................................... Preamble
Holdco Agreement................................. Preamble
Holdco Common Shares............................. 1.5
Holdco Escrow Account............................ 9(4)(ii)
Holdco Memorandum and
Articles of Association....... .................. 1.1
IAMP............. ............................... Preamble
IAMP Benefit Plans............................... 4.1(p)(i)
IAMP Board Approval.............................. 4.1(v)(iii)
IAMP Contribution................................ 2.1(b)
IAMP Disclosure Schedule......................... 4.1
IAMP Employees................................... 4.1(p)(i)
IAMP Escrow Account.............................. 9(4)(i)
IAMP Financial Information....................... 4.1(i)(i)
IAMP Intellectual Property Licenses.............. 4.1(m)
IAMP Interim Financial Information............... 4.1(i)(ii)
IAMP International Benefit Plans................. 4.1(p)(i)
IAMP Material Contracts.......................... 4.1(l)
IAMP 1999 Balance Sheet.......................... 4.1(i)(i)
IAMP Subsidiaries................................ 2.1(b)
IAMP U.S. Benefit Plans.......................... 4.1(p)(i)
82
IAMP U.S. Employees.............................. 4.1(p)(i)
Indebtedness..................................... 10.13(a)(v)
Indemnified Party................................ 9(e)
Indemnifying Party.............................. 9(e)
Intellectual Property............................ 4.1(m)(ii)
Imagen Contribution.............................. 2.1(a)
Legal Proceedings................................ 4.1(j)
Liens............................................ 4.1(a)(iv)
Material......................................... 10.13(a)(v)
Material Adverse Effect.......................... 10.13(a)(vi)
Media Business................................... Preamble
Media Companies.................................. Preamble
Nasdaq........................................... 3.5(b)
Newhaven......................................... Preamble
Newhaven 1999 Balance Sheet...................... 4.2(i)(i)
Newhaven Benefit Plans........................... 4.2(p)(i)
Newhaven Board Approval.......................... 4.1(v)(i)
Newhaven Contribution............................ 2.1(e)
Newhaven Disclosure Schedule..................... 4.2
Newhaven Employees............................... 4.2(p)(i)
Newhaven Financial Information................... 4.2(i)(iv)
Newhaven Intellectual Property................... 4.2(n)
Newhaven Intellectual Property Licenses.......... 4.2(n)
Newhaven Interim Financial Information........... 4.2(i)(ii)
Newhaven International Benefit Plans............. 4.2(p)(i)
Newhaven Material Contracts...................... 4.2(l)(i)
Newhaven Subsidiaries............................ 2.1(e)
Newhaven U.S. Benefit Plans...................... 4.2(p)(i)
Newhaven U.S. Employees.......................... 4.2(p)(i)
Non-Governmental Approval........................ 4.1(f)
Non-Media Affiliates............................. 5.4
Notice Period.................................... 9(e)
Permits.......................................... 10.13(a)(vii)
Permitted Liens.................................. 4.1(g)
Person........................................... 10.13(a)(viii)
Proxy Statement/Prospectus....................... 6.1(a)
PTVI............................................ 4.2(h)(i)
Rainbow.......................................... 2.1(d)
Rainbow Financial Information.................... 4.2(i)(iii)
Registration Rights Agreement.................... Preamble
Required Consents................................ 7.1(b)
Representatives.................................. 5.1(a)
Securities Act................................... 4.1(b)(iii)
SEC.............................................. 2.8(b)
Securities Act................................... 4.1(b)
Share............................................ 10.13(b)
83
share capital.................................... 10.13(b)
Subsidiaries..................................... Preamble
Subsidiary....................................... 10.13(a)(ix)
Superior Proposal................................ 6.2(e)
Tax.............................................. 4.1(g)(vi)
Tax Return....................................... 4.1(g)(vi)
Threshold........................................ 9(b)(i)
Transactions..................................... 2.1(f)
Transfer Taxes................................... 6.4(a)
U.S. GAAP........................................ 4.1(i)(i)
Violation........................................ 4.1(e)
Victoria Springs................................. 2.1(e)
Voting Agreement................................. Preamble
Voting Debt...................................... 4.1(b)(ii)
84
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement as of the date first above written.
NEW SITE INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Director
NEWHAVEN OVERSEAS CORP.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Attorney In Fact
HICKS, MUSE, ▇▇▇▇ & ▇▇▇▇▇ LATIN AMERICA
FUND, L.P.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Principal
HICKS, MUSE, ▇▇▇▇ & ▇▇▇▇▇ LATIN AMERICA PRIVATE
FUND, L.P.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Principal
HMLA 1-SBS COINVESTORS, L.P.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Principal
IBERO-AMERICAN MEDIA PARTNERS II LTD.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Attorney In Fact
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Attorney In Fact
EL SITIO, INC.
By: /s/ ▇▇▇▇▇▇▇ Vivo
------------------------
Name: ▇▇▇▇▇▇▇ Vivo
Title: Chairman of the Board
