1
Exhibit 10.26
Execution Copy
PURCHASE AGREEMENT
by and among
THE STOCKHOLDERS OF
XXXXXXXXX.XXX, INC.,
as "Sellers",
XXXXXXXXX.XXX, INC.,
as "Target",
and
EL SITIO, INC.,
as "Buyer"
Regarding purchase by Buyer of 100% of the issued and outstanding capital stock
of
XXXXXXXXX.XXX, INC.
Dated: March 10, 2000
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TABLE OF CONTENTS
ARTICLE I
DEFINITIONS.....................................................................................2
1.1 Defined Terms..........................................................................2
1.2 Other Defined Terms....................................................................9
1.3 Interpretation.........................................................................9
1.4 Currency...............................................................................9
ARTICLE II
PURCHASE AND SALE OF SHARES....................................................................10
2.1 Transfer of Purchased Capital Stock...................................................10
2.2 Consideration for Purchased Capital Stock.............................................10
2.3 Cash Purchase Price Adjustment........................................................10
2.4 Transfer Restrictions and Escrow Arrangements for Purchased Capital Stock.............11
ARTICLE III
CLOSING........................................................................................12
3.1 Closing...............................................................................12
3.2 Closing Deliveries....................................................................12
3.3 Escrow................................................................................13
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
REGARDING SELLERS AND HOLDING COMPANIES........................................................14
4.1 Capital Stock.........................................................................14
4.2 Due Organization, etc. of Holding Companies...........................................15
4.3 Authorization.........................................................................15
4.4 No Conflict or Violation..............................................................15
4.5 Foreign Corrupt Practices Act.........................................................15
4.6 Consents and Approvals; Announcements.................................................16
4.7 No Brokers............................................................................16
4.8 No Operating Assets...................................................................16
4.9 Litigation............................................................................16
4.10 Accuracy and Completeness of Information Provided.....................................16
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ARTICLE V
REPRESENTATIONS AND WARRANTIES
REGARDING TARGET AND COMPANY...................................................................17
5.1 Organization..........................................................................17
5.2 Capital Stock.........................................................................17
5.3 Authorization.........................................................................18
5.4 Absence of Certain Changes or Events..................................................18
5.5 Title to Assets, Etc..................................................................19
5.6 Material Contracts....................................................................20
5.7 No Conflict or Violation..............................................................20
5.8 Financial Statements..................................................................20
5.9 Litigation............................................................................21
5.10 Liabilities...........................................................................21
5.11 Consents and Approvals; Announcements.................................................21
5.12 Compliance with Applicable Laws; Permits..............................................22
5.13 Intellectual Property.................................................................22
5.14 Foreign Corrupt Practices Act.........................................................23
5.15 Conduct of Business...................................................................23
5.16 Labor Matters.........................................................................23
5.17 Employee Benefit Plans and Other Labor Matters........................................24
5.18 Transactions with Certain Persons.....................................................26
5.19 Taxes.................................................................................26
5.20 No Brokers............................................................................27
5.21 Products Liability; Product Recall....................................................27
5.22 Maintenance of Property; Insurance....................................................27
5.23 Environmental Matters.................................................................28
5.24 Operating Assets......................................................................29
5.25 Absence of Subsidiaries...............................................................29
5.26 Accuracy and Completeness of Information Provided.....................................29
5.27 No Other Representations or Warranties................................................29
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER........................................................29
6.1 Due Organization, etc. of Buyer.......................................................29
6.2 Buyer Shares..........................................................................29
6.3 Authorization.........................................................................30
6.4 Consents and Approvals................................................................30
6.5 No Conflict or Violation..............................................................30
6.6 No Brokers............................................................................30
6.7 Litigation............................................................................30
6.8 Financial Capability..................................................................31
6.9 SEC Reports and Financial Statements..................................................31
6.10 No Other Representations or Warranties................................................31
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ARTICLE VII
ACTIONS BY SELLERS, HOLDING COMPANIES, TARGET
AND BUYER PRIOR TO THE CLOSING.................................................................32
7.1 Management of Target and Company......................................................32
7.2 Employment Matters....................................................................32
7.3 Investigation by Buyer................................................................33
7.4 Conditions to Closing.................................................................34
7.5 Regulatory and Other Authorizations; Notices and Consents.............................34
7.6 Notification of Certain Matters.......................................................35
7.7 Other Proposals or Discussions........................................................36
7.8 Employee Matters......................................................................36
7.9 Outstanding Share Options of Company Employees........................................36
7.10 Resignations of Directors; Auditors...................................................37
7.11 Transfer Taxes........................................................................37
7.12 Liquidated Damages....................................................................37
7.13 Legend on Certificates for Buyer Shares...............................................37
7.14 Organization and Transfers of Holding Companies.......................................38
7.15 Further Action........................................................................38
7.16 Conversion of Preferred Stock.........................................................38
ARTICLE VIII
CONDITIONS TO SELLERS' AND HOLDING COMPANIES' OBLIGATIONS......................................38
8.1 Representations, Warranties and Covenants.............................................38
8.2 Consents; Illegality..................................................................39
8.3 Registration Rights Agreement.........................................................39
8.4 Share Options.........................................................................39
8.5 Employment Agreements.................................................................39
8.6 Board of Directors Approval...........................................................39
8.7 Legal Opinion.........................................................................39
ARTICLE IX
CONDITIONS TO BUYER'S OBLIGATIONS..............................................................39
9.1 Representations, Warranties and Covenants.............................................40
9.2 Consents; Illegality..................................................................40
9.3 Due Diligence Investigation...........................................................40
9.4 No Governmental or Other Legal Proceeding.............................................40
9.5 No Material Adverse Change............................................................41
9.6 Release of Encumbrances...............................................................41
9.7 Execution of Lock-up Agreements.......................................................41
9.8 Employment Agreements.................................................................41
9.9 Legal Opinions........................................................................41
9.10 Escrow Agreement......................................................................41
9.11 Buyer Board of Director Approval......................................................41
9.12 Power of Attorney.....................................................................41
9.13 New Share Options.....................................................................41
9.14 Financial Statements..................................................................42
9.15 Tax Certificate.......................................................................42
9.16 Conversion of Preferred Stock.........................................................42
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9.17 Cancellation of Lease Obligations.....................................................42
9.18 Other Closing Documents...............................................................42
ARTICLE X
ACTIONS AFTER THE CLOSING......................................................................42
10.1 Further Assurances....................................................................42
10.2 Certain Tax Matters...................................................................42
ARTICLE XI
INDEMNIFICATION................................................................................43
11.1 Survival of Representations Etc.......................................................43
11.2 Indemnification.......................................................................44
11.3 Procedure.............................................................................44
11.4 Limitations to Indemnity..............................................................46
11.5 Net Indemnifiable Losses..............................................................47
11.6 Non-Exclusive Remedy..................................................................47
ARTICLE XII
MISCELLANEOUS..................................................................................48
12.1 Termination...........................................................................48
12.2 Confidentiality.......................................................................49
12.3 Assignment............................................................................49
12.4 Notices...............................................................................49
12.5 Governing Law.........................................................................50
12.6 Dispute Resolution....................................................................50
12.7 Judgment Currency.....................................................................51
12.8 Entire Agreement; Amendments and Waivers..............................................51
12.9 Counterparts..........................................................................51
12.10 Invalidity............................................................................52
12.11 Headings..............................................................................52
12.12 Expenses..............................................................................52
12.13 Schedules and Exhibits................................................................52
12.14 Reasonable Consent Required...........................................................52
12.15 Governing Language....................................................................52
12.16 Delegation to and Reliance on Sellers' Representatives................................52
12.17 Adherence to Agreement by Holding Companies...........................................53
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EXHIBITS
A-1 Stockholders of Holding Companies
A-2 Key Employees
B Registration Rights Agreement
C Investment Direction
C-1 Form of Lock-Up Agreement (Key Employees)
C-2 Form of Lock-Up Agreement (Non-Key Employees and Holding Company B)
C-3 Form of Lock-Up Agreement (Holding Company A)
D-1 Terms and Conditions of Employment and Share Option Plan Arrangements
E Indicative Financial Statements
F Company Business Plan
G Power of Attorney
H Form of Buyer Officer's Certificate
I-1 Form of Sellers' Certificate
I-2 Form of Holding Companies' Officer's Certificate
I-3 Form of Target Officer's Certificate
J Escrow Agreement
K-1 Form of Promissory Note for First Loan
K-2 Form of Promissory Note for Second Loan
SCHEDULES
1 Permitted Investments
4.1 Capital Stock
4.7 No Operating Assets
5.2 Capital Stock
5.4 Absence of Certain Changes or Events
5.5(a) Title to Assets, Etc.
5.6 Material Contracts
5.8 Consents and Approvals--Company
5.13(a) Intellectual Property
5.13(b) Intellectual Property Infringements
5.18 Transactions with Certain Persons
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PURCHASE AGREEMENT
PURCHASE AGREEMENT, dated as of March 10, 2000, by and among, (i) EL
SITIO, INC., a British Virgin Islands company ("Buyer"), (ii) the STOCKHOLDERS
OF XXXXXXXXX.XXX, INC., as set forth on Exhibit A-1 hereto (collectively,
"Sellers"), and (iii) XXXXXXXXX.XXX, INC., a California corporation ("Target").
WHEREAS, Sellers in the aggregate own 100% of the issued and
outstanding capital stock of Target as set forth on Exhibit A-1 hereto;
WHEREAS, certain of the Sellers, as set forth on Exhibit A-2 hereto
(collectively, the "Holding Company A Sellers"), have established Coracias,
B.V., a new holding company organized as a Netherlands corporation ("Holding
Company A"), to which Holding Company A Sellers will transfer 100% of their
shares in Target in exchange for shares in Holding Company A (such transfer, the
"Holding Company A Transfer");
WHEREAS, the remaining Sellers, as set forth on Exhibit A-2 hereto
(collectively, the "Holding Company B Sellers"), have established Belagua, B.V.
a new holding company organized as a Netherlands corporation ("Holding Company
B" and, together with Holding Company A, "Holding Companies"), to which Holding
Company B Sellers will transfer 100% of their shares in Target in exchange for
shares in Holding Company B (such transfer, the "Holding Company B Transfer",
and together with the Holding Company A Transfer, the "Holding Company
Transfers");
WHEREAS, Holding Companies, upon such Holding Company Transfers, will
in the aggregate own 100% of the issued and outstanding capital stock of Target;
WHEREAS, Holding Companies shall become parties hereto prior to Closing
(as defined below);
WHEREAS, Target owns (other than a de minimis number of shares required
to satisfy a diversity of ownership requirement in Mexico) 100% of the issued
and outstanding shares of XXXXXXXXX.XXX, S.A. DE C.V., a Mexican corporation
(sociedad anonima de capital variable) ("Company"); and
WHEREAS, Buyer desires to purchase from Sellers, and Sellers desire to
sell to Buyer, 100% of the issued and outstanding capital stock of Target, upon
the terms and subject to the conditions of this Agreement (the "Capital Stock
Purchase").
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
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ARTICLE I
DEFINITIONS
Defined Terms. As used herein, the terms below shall have the following
meanings:
"Accounts Receivable" shall have the meaning set forth in Section
5.8(c).
"Affiliate" shall mean, with respect to any specified Person, any other
Person, directly or indirectly, controlling or controlled by or under direct or
indirect common control with such specified Person. For the purposes of this
definition, "control", when used with respect to any Person, means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Agreement" shall mean this Purchase Agreement, together with all
schedules and exhibits referenced herein.
"Applicable GAAP" shall mean accounting principles and practices
(including, where applicable, prescribed accounting standards) generally
accepted in the United States (in the case of Target) or Mexico (in the case of
Company) as in effect from time to time.
"Applicable Laws" shall mean all national, provincial, state or local
laws, rules or regulations of any applicable jurisdiction (including Mexico, the
United States, The Netherlands and the British Virgin Islands), the rules,
regulations and administrative guidelines and policies of any governmental or
non-governmental body or agency in any such jurisdiction and all orders,
rulings, judgments and decrees of any court or tribunal in any such
jurisdiction.
"Assets" shall have the meaning set forth in Section 5.5.
"Attributable Indebtedness" shall mean, with respect to a
Sale/Leaseback Transaction, as at the time of determination, the present value
of the total obligations of the lessee for rental payments during the remaining
term of the lease included in such Sale/Leaseback Transaction (including any
period for which such lease has been extended).
"Balance Sheet Date" shall mean December 31, 1999.
"Business Day" shall mean any day other than a Saturday or Sunday or a
day on which banking institutions are required or authorized by law to be closed
in New York City.
"Buyer Shares" shall mean Buyer's common shares comprising the Stock
Purchase Price.
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"Capital Stock" shall mean, with respect to any Person, any and all
shares, stock, interests, rights to purchase, warrants, options, participation
or other equivalents of or interests in (however designated) the equity of such
Person, including any preferred stock, but excluding any debt securities
convertible into such equity.
"Capital Stock Purchase" shall have the meaning set forth in the
recitals.
"Capitalized Lease Obligations" shall mean an obligation that is
required to be classified and accounted for as a capitalized lease for financial
reporting purposes in accordance with Applicable GAAP, and the amount of
Indebtedness represented by such obligation shall be the capitalized amount of
such obligation determined in accordance with Applicable GAAP; and the Stated
Maturity thereof shall be the date of the last payment of rent or any other
amount due under such lease.
"Cash Purchase Price" shall have the meaning set forth in Section
2.2(a).
"Closing" shall have the meaning set forth in Section 3.1.
"Closing Balance Sheet" shall have the meaning set forth in Section
2.3(b).
"Closing Date" shall mean the date on which the Closing occurs.
"Company Business Plan" shall mean Company's business plan reviewed and
agreed by Buyer, dated March 1, 2000, attached as Exhibit F.
"Company Financial Statements" shall mean the audited balance sheets of
Target and Company as of December 31, 1999 and the audited statements of
operations and changes in financial position of Target (on an unconsolidated,
stand-alone basis) and Company for the fiscal year ended on such date, in each
case prepared in accordance with Applicable GAAP, together with the notes
thereon and the related audit reports of PricewaterhouseCoopers.
"Contracts" shall mean all agreements, contracts, commitments and
undertakings to which Company is a party, an obligor or a beneficiary, including
the following:
(i) joint venture, partnership or similar agreements or contracts;
(ii) licenses, sublicenses, consent agreements, royalty agreements,
transfer agreements, research and development agreements and
all other agreements relating to Intellectual Property
("Intellectual Property Contracts");
(iii) employment agreements or agreements relating to compensation
or benefits;
(iv) any agreements, contracts, commitments or undertakings that
would be breached or are terminable or under which default
would occur or any payment or repayment would be accelerated,
as a result of any of the transactions contemplated by this
Agreement;
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(v) any agreements, contracts, commitments or undertakings entered
into involving an estimated total future payment or payments
in respect of each such agreement, contract, commitment or
undertaking in excess of U.S.$25,000;
(vi) any agreements, contracts, commitments or undertakings
evidencing indebtedness, guarantees or other obligations,
contingent or otherwise, for borrowed money in excess of
U.S.$25,000;
(vii) agreements restricting the ability of Company from competing
for or entering into a particular line of business or from
engaging in one or more lines of business in a particular
geographic area;
(viii) agreements between any director or officer of Company, on the
one hand, and Sellers or their respective Affiliates
(including Company) on the other; and
(ix) any other agreements, contracts, commitments or undertakings
as to the performance or non-performance of which is or would
be material to Company.
"Convertible Series A Preferred Stock" shall mean up to
4,080,000 shares of Target's Convertible Series A Preferred Stock, each
share of which entitles its holder to convert such share into one share
of Target's common stock.
"Escrow Agent" shall have the meaning set forth in Section
3.3.
"Escrow Agreement" shall mean an escrow agreement
substantially in the form of Exhibit J hereto.
"First Loan" shall mean the working capital loan in an
aggregate principal amount of U.S.$1.0 million made by Buyer to Company
on or about March 13, 2000, on the terms and conditions as set forth in
Exhibit K-1 attached hereto.
"Governmental Authority" shall mean any national, provincial,
state, or local governmental, regulatory body or agency, or court, in
any applicable jurisdiction (including in Mexico, the United States,
The Netherlands or the British Virgin Islands).
"Hedging Agreement" means, with respect to any Person, any
foreign exchange or interest rate protection or swap Contract or other
similar agreement as to which such Person is a party or a beneficiary.
"Income Tax" shall mean any national, provincial, state or
local income tax.
"Indebtedness" shall mean, with respect to any Person, on any
date of determination, the following (without duplication):
(i) the principal of and premium, if any, in respect of
indebtedness of such Person for borrowed money;
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(ii) the principal of and premium, if any, in respect of
obligations of such Person evidenced by bonds, debentures,
notes or other similar instruments;
(iii) all obligations of such Person in respect of letters of
credit or other similar instruments (including reimbursement
obligations with respect thereto);
(iv) all obligations of such Person to pay the deferred and
unpaid purchase price of property or services (except trade
payables), which purchase price is due more than six months
after the date of placing such property in service or taking
delivery and title thereto or the completion of such services;
(v) all Capitalized Lease Obligations and all Attributable
Indebtedness of such Person;
(vi) all Indebtedness of other Persons secured by a Lien on
any asset of such Person, whether or not such Indebtedness is
assumed by such Person; provided, however, that the amount of
such Indebtedness shall be the lesser of (A) the fair market
value of such asset at such date of determination and (B) the
amount of such Indebtedness of such other Persons;
(vii) all Indebtedness of other Persons to the extent
guaranteed directly or indirectly by such Person; and
(viii) to the extent not otherwise included in this
definition, net obligations of such Person under Hedging
Agreements (the amount of any such obligation to be equal at
any time to the termination value of such agreement or
arrangement giving rise to such obligation that would be
payable by such Person at such time).
"Indemnity Cap" shall have the meaning set forth in Section
11.4.
"Indicative Financial Statements" shall mean the unaudited
balance sheets of Target and Company as of December 31, 1999 and the
unaudited statements of operations and changes in financial position of
Target and Company for the fiscal year ended on such date, prepared in
accordance with Applicable GAAP.
"Intellectual Property" shall mean all U.S., Mexican and other
intellectual property rights and assets, including, without limitation,
the following:
(i) (a) patents, inventions, discoveries, processes,
designs, techniques, developments, technology, and related
improvements and know-how, whether or not patented or
patentable ("Patents"); (b) copyrights, mask works and works
of authorship in any media, including computer programs,
software, databases and related items and Internet site
content, whether or not registered or published
("Copyrights"); (c) trademarks, uniform resource locators
(URLs), service marks, trade names, brand names, corporate
names, fictitious business names, domain names, logos, trade
dress and all elements thereof, whether or not registered, the
goodwill of any business symbolized thereby, and all
common-law rights relating thereto ("Trademarks"); (d) trade
secrets, customer lists, plans, drawings, blueprints and all
confidential, technical or proprietary information ("Trade
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Secrets"); (e) industrial property rights and all other
authors', inventors' and intellectual property rights not set
forth above;
(ii) all registrations, applications, recordings, and
licenses or other agreements related thereto; and
(iii) all rights to obtain renewals, extensions,
continuations, continuations-in-part, reissues, divisions or
similar legal protections related thereto.
"Key Employees" shall mean, collectively, the following
employees at Company (each such employee, a "Key Employee"): Xxxx
Xxxxxx Xxxxxx S.; Xxxxx Xxxxx; Xxxxxxxx Xxxxx; Xxxxxx Xxxxxxxxx; Xxxxxx
Xxxxx de xx Xxxxx; Xxxx Xxxxxx Xxxxxxxx; Xxxxxx Xxxxxxx; and Xxxxxx
Xxxxxxxxxx.
"Legal Proceeding" shall have the meaning set forth in Section
5.9.
"Letter of Intent" shall have the meaning set forth in Section
7.3(6).
"Liabilities" shall have the meaning set forth in Section
5.10.
"Lien" shall mean any mortgage, pledge, security interest,
encumbrance, lien, charge or restriction of any kind (including any
conditional sale or other title retention agreement or lease in the
nature thereof) whether or not recorded, filed or otherwise perfected
under Applicable Laws.
"Loans" shall mean the First Loan and the Second Loan.
"Loan Conversion Agreement" shall mean the Loan Conversion
Agreement, dated March 13, 2000, between Buyer, on the one hand, and
Target and Company, on the other hand, in the form attached hereto as
Exhibit L.
"Management Committee" shall have the meaning set forth in
Section 7.1.
"Material Adverse Effect" shall mean, with respect to any
Person, an effect that is materially adverse to the business,
properties, results of operations, financial condition or prospects of
such Person, other than effects arising solely out of this Agreement or
the transactions contemplated hereby, including the announcement or
pendency thereof.
"Mexico" shall mean the United Mexican States.
"Net Working Capital" shall mean, at any date, (a) the current
assets of Company as of such date minus (b) the current liabilities of
Company as of such date, excluding current liabilities in respect of
Indebtedness and any dividends payable, all valued in accordance with
Applicable GAAP.
"New Share Options" shall have the meaning set forth in
Section 7.9.
"Outstanding Share Options" shall have the meaning set forth
in Section 7.9.
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"Permits" shall mean all licenses, permits, franchises,
orders, consents, approvals, registrations, authorizations,
qualifications and filings with and under all Applicable Laws.
"Person" shall mean an individual, a partnership, a limited
liability company, a joint venture, a corporation, a trust, an
unincorporated organization, a government or any department or agency
thereof or any other entity.
"Purchase Price" shall have the meaning set forth in Section
2.2(b).
"Purchased Capital Stock" shall mean all of the issued and
outstanding Capital Stock of Target immediately prior to Closing.
"Representative" shall mean any director, officer, employee,
attorney, agent, or other representative.
"Sale/Leaseback Transaction" shall mean an arrangement
relating to property now owned or hereafter acquired pursuant to which
Company transfers such property to a Person and Company leases it from
such Person.
"SEC" shall mean the U.S. Securities and Exchange Commission.
"Second Loan" shall mean the working capital loan in an
aggregate principal amount of U.S.$2.0 million to be made by Buyer to
Company, on the terms and conditions as set forth in Exhibit K-2.
"Sellers' Representatives" shall mean Messrs. Xxxx Xxxxxx
Xxxxxx S. and Xxxxxx Xxxxx de xx Xxxxx, acting jointly.
"Shares" shall have the meaning set forth in Section 5.2.
"Stated Maturity" shall mean, with respect to any security,
the date specified in such security as the fixed date on which the
payment of principal of such security is due and payable, including
pursuant to any mandatory redemption provision (but excluding any
provision providing for the repurchase of such security at the option
of the holder thereof upon the happening of any contingency beyond the
control of the issuer unless such contingency has occurred).
"Stock Purchase Price" shall have the meaning set forth in
Section 2.2(b).
"Taxes" shall mean all national, federal, provincial, state or
local taxes imposed by any Tax Authority in any jurisdiction (including
in Mexico, the United States, The Netherlands and the British Virgin
Islands), including income, gross receipts, consumption, windfall
profits, alternative minimum, value added, property, production, sales,
use, license, excise, franchise, employment, withholding, industry and
commerce or similar taxes, together with any interest or penalties with
respect thereto and any interest in respect of such penalties.
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"Tax Authority" shall mean any competent Governmental
Authority responsible for the determination, assessment or collection
of Taxes.
"Tax Law" shall mean any Applicable Laws relating to Taxes.
"Tax Returns" shall mean all tax returns and reports
(including any schedules, elections or other documents relating
thereto) required to be filed with any Tax Authority or required to be
prepared and retained in accordance with any applicable Tax Law
relating to Company as currently conducted.
"Transfer Taxes" shall mean all excise, ad valorem, sales,
use, transfer (including real property transfer or gains), stamp,
documentary, filing, recordation and other similar taxes together with
any interest, additions or penalties with respect thereto and any
interest in respect of such additions or penalties directly or
indirectly resulting from or arising out of the transactions
contemplated by this Agreement.
"Voting Stock" shall mean, with respect to any corporation,
all classes of Capital Stock of such corporation then outstanding and
normally entitled to vote in the election of directors.
"Walk-away Date" shall have the meaning set forth in Section
12.1(a).
1.2 Other Defined Terms. Other terms may be defined elsewhere in the
text of this Agreement and, unless otherwise indicated, shall have such meaning
throughout this Agreement.
1.3 Interpretation. As used in this Agreement, the following
conventions shall be applied in interpreting and construing the provisions of
this Agreement:
(i) the terms "includes" and "including" and similar terms
shall be deemed to be followed by the terms "without
limitation";
(ii) definitions contained in this Agreement apply to singular
as well as the plural forms of such terms and to the masculine
as well as to the feminine and neuter genders of such terms;
(iii) terms in the singular shall be held to include the
plural and vice versa, and words of one gender shall be held
to include the other gender as the context requires;
(iv) the terms "hereof", "herein," and "herewith" and terms of
similar import shall, unless otherwise stated, be construed to
refer to this Agreement as a whole and not to any particular
provision of this Agreement, and Article, Section, paragraph,
Schedule and Exhibit references are to the Articles, Sections,
paragraphs, Schedules and Exhibits to this Agreement unless
otherwise specified;
(v) the term "or" shall not be exclusive; and
(vi) provisions shall apply, when appropriate, to successive
events and transactions.
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1.4 Currency. All references to dollar amounts in this Agreement are
references to U.S. dollars unless otherwise stated.
ARTICLE II
PURCHASE AND SALE OF SHARES
2.1 Transfer of Purchased Capital Stock. Upon the terms and subject to
the conditions contained herein, (i) each Seller shall, or shall cause Holding
Companies to, sell, convey, transfer, assign and deliver to Buyer, and (ii)
Buyer shall acquire, or shall cause its designee to acquire, in each case on the
Closing Date, the Purchased Capital Stock.
2.2 Consideration for Purchased Capital Stock. Upon the terms and
subject to the conditions contained herein, as consideration for the purchase of
the Purchased Capital Stock, on the Closing Date, Buyer shall pay, or cause its
designee to pay, to Holding Companies for the benefit of Sellers, as follows:
(a) an aggregate of U.S.$7,000,000 in cash (the "Cash Purchase
Price") payable by wire transfer in immediately available funds to an account or
the accounts that Sellers' Representatives on behalf of Holding Companies and
Sellers shall designate in writing to Buyer no less than two Business Days prior
to the Closing Date; and
(b) an aggregate of 1,750,000 of Buyer's common shares (the
"Stock Purchase Price" and, together with the Cash Purchase Price, the "Purchase
Price"), which Stock Purchase Price shall be payable as follows:
(i) by issuing to Holding Companies the Buyer Shares, as
fully paid and non-assessable, free and clear of any
Encumbrances of any nature whatsoever (except for any
Encumbrances arising solely as a result of any action
taken by Holding Companies); and
(ii) by delivery of a written order to Buyer's registrar
and transfer agent (A) to register the Buyer Shares
in the shareholder register of Buyer, (B) to issue
share certificates representing the Buyer Shares in
the names of Holding Companies; and the number of
Buyer Shares issued to each Holding Company shall
correspond to the number of shares held by Holding
Company A Sellers in Holding Company A and by Holding
Company B Sellers in Holding Company B, as set forth
on Exhibit A-2;
2.3 Cash Purchase Price Adjustment. (a) In accordance with the
provisions of this Section 2.3, the Cash Purchase Price shall be subject to
decrease by an amount, if any, equal to the sum of the following (the "Cash
Purchase Price Differential"):
(i) the excess, if any, of any operating expenses,
indebtedness, dividends, or capital expenditures through the Closing
Date, above the amounts specified in the Company Business Plan and
other than in the ordinary course of business; plus,
(ii) the amount of material differences (which are adverse to
Buyer) in Target's consolidated financial condition or results of
operations as between the Indicative
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Financial Statements (which are unaudited) and Company Financial
Statements (which are audited) or from specific contingencies of
Company that are not disclosed in connection with Articles IV and V of
this Agreement and are identified during the course of Buyer's due
diligence review prior to the Closing Date (the amount of such specific
contingencies to be agreed upon by Buyer and Seller's Representatives).
(b) As soon as practicable but in any event on the earlier of
(i) three Business Days before the Closing Date and (ii) 25 days following the
date hereof, Target shall deliver to Buyer the Company Financial Statements
accompanied by an unqualified opinion of PricewaterhouseCoopers that such
balance sheet (the "Closing Balance Sheet") presents fairly in all material
respects the financial position of Company, its Indebtedness and Net Worth as of
the date hereof in conformity with Applicable GAAP applied on a consistent
basis.
(c) Promptly upon receipt by Buyer of the Company Financial
Statements, representatives of Buyer and Sellers' Representatives shall meet to
discuss and agree upon the amount of the Cash Purchase Price Differential, if
any. If Buyer and Sellers' Representatives are unable to agree upon the amount
of the Cash Purchase Price Adjustment, if any, Buyer shall preserve its rights
to assert a Claim for Damages in accordance with Article XI hereof. Upon
determination of the Cash Purchase Price Differential, if any, the Cash Purchase
Price and Purchase Price shall be reduced by such amount.
2.4 Transfer Restrictions and Escrow Arrangements for Purchased Capital
Stock. In addition to the Purchased Capital Stock, as part of the consideration
for the Purchase Price, Sellers and Holding Companies agree and acknowledge that
the Buyer Shares shall be subject to the following:
(a) lock-up agreements substantially in the forms
attached hereto as Exhibit C-1 (in the case of Sellers that
are Key Employees), Exhibit C-2 (in the case of Sellers that
are not Key Employees and in the case of Holding Company B),
and Exhibit C-3 (in the case of Holding Company A), as the
case may be (common shares of Buyer that are issued upon the
exercise of New Share Options also being subject to such
agreements);
(b) a deposit and pledge of a portion of the Buyer
Shares in accordance with the Escrow Agreement to indemnify
Buyer for up to the amount of Damages incurred by Buyer above
the De Minimis Threshold pursuant to Article XI; and
(c) in the case of the portion of the Buyer Shares to
be beneficially held by each of the Key Employees, a deposit
and pledge of such Buyer Shares in accordance with the Escrow
Agreement in connection with the employment contracts and
confidentiality and non-competition agreements to be entered
into by the Key Employees pursuant to Section 7.4, or the
termination with cause by Buyer or its Affiliate of any such
Key Employees under the terms of such Person's employment
contract. Sellers (including the Key Employees) and Holding
Companies acknowledge and agree that the restrictions upon
transfer referred to in the preceding sentence are negotiated
provisions and in exchange for good and valuable
consideration, the adequacy of which is hereby acknowledged.
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ARTICLE III
CLOSING
3.1 Closing. Subject to the conditions set forth in Articles VIII and
IX, the closing of the transactions contemplated herein (the "Closing") shall
take place within three Business Days after the date on which the conditions set
forth in Articles VIII and IX shall have been satisfied or waived or on such
other date as the parties may mutually agree. The Closing shall be held at 9:00
a.m. (New York City time) on the Closing Date at the offices of Xxxxxxx Xxxxxxx
& Xxxxxxxx, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, unless the parties hereto
otherwise agree.
3.2 Closing Deliveries. To effect the transfers referred to in Section
2.1 and the delivery of the consideration referred to in Section 2.2, on the
Closing Date, the parties hereto shall take or cause to be taken the following
actions:
(a) Closing Deliveries by Sellers and Holding Companies. Sellers
shall, or shall cause Holding Companies to, deliver to Buyer:
(i) duly executed stock transfer powers in favor of Buyer
or its nominee in respect of 100% of the Purchased
Capital Stock, together with the stock certificates
evidencing the Purchased Capital Stock duly endorsed
in accordance with the laws of the State of
California, free and clear of any Encumbrances of any
nature whatsoever (except for any Encumbrances
arising solely as a result of any action taken by
Buyer);
(ii) a written order to Company instructing Company (A) to
register the Purchased Capital Stock in the
shareholder register of Company, (B) to cancel and
make void the duly endorsed stock certificates
representing the Purchased Capital Stock and (C) to
issue new stock certificates representing the
Purchased Capital Stock in the name of Buyer;
(iii) a receipt for the Purchase Price;
(iv) executed counterparts of the Registration Rights
Agreement;
(v) executed counterparts of the Escrow Agreement
pursuant to Section 3.3;
(vi) the certificates required to be delivered by Sellers,
Holding Companies and Target pursuant to Section 9.1;
(vii) the legal opinions required to be delivered by
Sellers pursuant to Section 9.9; and
(viii) the other documents required to be delivered by
Sellers pursuant to Article IX.
(b) Closing Deliveries by Buyer. Buyer shall deliver, or shall
cause its designee to deliver, to Sellers and Holding
Companies:
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(i) the Cash Purchase Price, in immediately available
funds, to the accounts designated by Holding
Companies, for the benefit of Holding Companies and
Sellers;
(ii) for the benefit of Holding Companies and Sellers, the
Stock Purchase Price in accordance with Section
2.2(b);
(iii) a receipt for the Purchased Capital Stock;
(iv) an executed Registration Rights Agreement;
(v) executed counterparts of the Escrow Agreement
pursuant to Section 3.3;
(vi) the certificate required to be delivered on behalf of
Buyer pursuant to Section 8.1;
(vii) the legal opinion required to be delivered by Buyer
pursuant to Section 8.7; and
(viii) the other documents required to be delivered by Buyer
pursuant to Article VIII.
All instruments and documents executed and delivered to Buyer
pursuant hereto shall be in form and substance reasonably satisfactory to Buyer.
All instruments and documents executed and delivered to Sellers pursuant hereto
shall be in form and substance reasonably satisfactory to Sellers'
Representatives. All actions set forth above shall be deemed to occur
simultaneously at the Closing.
3.3 Escrow. At the Closing, (i) each of Sellers, Holding Companies,
Buyer and an internationally recognized financial institution based in New York
to be named by Buyer as escrow agent (the "Escrow Agent") shall execute and
deliver an escrow agreement substantially in the form attached as Exhibit J
hereto (the "Escrow Agreement"), and (ii) Sellers, Holding Companies shall
deposit into the escrow account identified in the Escrow Agreement (the "Escrow
Account") and pledge in favor of Buyer the Indemnity Shares (as defined in
Section 11.4) and certain additional Buyer Shares relating to the obligations of
the Key Employees in accordance with the Escrow Agreement. Such deposited shares
shall be applied in accordance with the terms and conditions set forth in the
Escrow Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
REGARDING SELLERS AND HOLDING COMPANIES
Sellers hereby represent and warrant as of the date hereof and
as of the Closing Date, and with respect to Holding Companies, as of the Closing
Date, and Holding Companies hereby represent and warrant, as of the Closing
Date, in each case jointly and severally, to Buyer, as follows:
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4.1 Capital Stock. (a) Capital Stock of Target. As of the date hereof,
Sellers, and as of the Closing Date, Holding Companies, are the record and
beneficial owners of the Purchased Capital Stock as set forth opposite their
names on Exhibit A-1 and Exhibit A-2, respectively, hereto, free and clear of
all Encumbrances, including any agreement, understanding or restriction entered
into by any of the Sellers affecting the voting rights or other incidents of
record or beneficial ownership pertaining to the Purchased Capital Stock. All of
the issued Target Shares have been, and as of the Closing Date, shall have been,
duly and validly authorized and are fully paid or properly credited as fully
paid. None of the issued shares of the Purchased Capital Stock have been and, as
of the Closing Date shall have been, issued in violation of any purchase option,
call, warrant, right of first refusal, preemptive, subscription or similar
rights under any provision of Applicable Law, the by-laws of Target, or any
contract, agreement or instrument to which Company, Target, Holding Companies,
Sellers or any other Affiliate thereof is subject or by which any of such
Persons is bound. Except for this Agreement and the Convertible Series A
Preferred Stock, there are no subscriptions, options, phantom share options,
warrants, calls, commitments, preemptive rights or other rights of any kind
outstanding for the purchase of, nor any securities convertible into or
exchangeable for, the Purchased Capital Stock, any other shares of Capital Stock
or any equity interests of Target. Except for this Agreement, there are no
restrictions upon the voting or transfer of any shares of Target pursuant to
Target's by-laws or any agreement or other instrument to which Target is a party
or by which Target is bound. Upon consummation of the Capital Stock Purchase,
Buyer shall acquire from Sellers and Holding Companies full and exclusive
ownership and dominion of the Purchased Capital Stock, free and clear of all
Encumbrances, except for any Encumbrances which may have been created by Buyer.
(b) Capital Stock of Holding Companies. As of the Closing
Date, Holding Company A Sellers and Holding Company B Sellers are the record and
beneficial owners of the issued and outstanding shares of capital stock of
Holding Companies as set forth opposite their names on Exhibit A-2 hereto, free
and clear of all Encumbrances, including any agreement, understanding or
restriction entered into by Sellers affecting the voting rights or other
incidents of record or beneficial ownership pertaining to the Purchased Capital
Stock. As of the Closing Date, all of the issued shares of Capital Stock of
Holding Companies has been duly and validly authorized and is fully paid or
properly credited as fully paid and Sellers own, in the aggregate, 100% of the
outstanding shares of capital stock of Holding Companies.
4.2 Due Organization, etc. of Holding Companies. Each of the Holding
Companies is a corporation duly organized and validly existing under the laws of
The Netherlands and has full corporate power and authority to conduct its
business and to own and lease its properties. Each of Holding Companies is duly
qualified to do business as a foreign entity and is in good standing in each
jurisdiction in which the character or location of the properties and assets
owned or operated by it or the nature of the businesses conducted by it makes
such qualification necessary.
4.3 Authorization. Each Person that is a Seller has executed this
Agreement. Each of the Sellers has all legal capacity and authority, and each of
the Holding Companies has all necessary corporate power and authority to enter
into this Agreement and consummate the transactions contemplated hereby and to
perform their obligations hereunder. This Agreement has been duly executed and
delivered by each of the Sellers and subsequently duly executed and delivered by
each of the Holding Companies and, assuming the due execution of this Agreement
by Buyer, constitutes a legal, valid and binding obligation of Sellers and
Holding Companies, enforceable against each and all of them in accordance with
its terms, subject to (i) the effect of any applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws relating to or
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affecting creditors' rights and remedies generally and (ii) the effect of
equitable principles. As of the Closing Date, with respect to the Power of
Attorney to be executed by each of the Sellers, each of the Sellers shall have
all legal capacity and authority to grant the Power of Attorney; and the Power
of Attorney shall have been duly executed and delivered by Sellers.
4.4 No Conflict or Violation. Neither the execution and delivery of
this Agreement nor the consummation of the transactions contemplated hereby will
result in (a) any violation of or a conflict with any provision of the
organizational documents of Holding Companies or, if applicable, any of the
Sellers, (b) any breach of, or a default under, any term or provision of any
Contract, Indebtedness, Encumbrance, commitment, license, franchise, Permit,
authorization or concession to which Holding Companies or any of the Sellers is
or may be a party or is subject except for any such breach or default as would
not have a Material Adverse Effect or (c) any violation by Holding Companies or
by any of the Sellers of any Applicable Laws, order, judgment, writ, injunction,
decree or award, except any such violation as would not have a Material Adverse
Effect.
4.5 Foreign Corrupt Practices Act. Neither Sellers nor Holding
Companies, nor any of their Affiliates, including Target and Company, nor any
director, officer, employee, authorized agent or other person acting on behalf
of Sellers or Holding Companies, has (i) used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful expense relating to
political activity, (ii) made any direct or indirect unlawful payment to any
foreign or domestic government official or employee from corporate funds, (iii)
violated, or, if it were applicable, would have violated or is, or, if it were
applicable, would have been in violation of any provision of the U.S. Foreign
Corrupt Practices Act of 1977, as amended, or (iv) made any bribe, rebate,
payoff, influence payment, kickback or other unlawful payment.
4.6 Consents and Approvals; Announcements. No consent, approval or
authorization of, or declaration, filing or registration with, any Governmental
Authority is required to be made or obtained by any Seller or either of Holding
Companies prior to, on or after, the Closing Date in connection with the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby, except where failure to obtain such
consent, approval or authorization or make such declaration, filing or
registration would not have a Material Adverse Effect, and would not materially
and adversely affect Target's and Company's ability to consummate the
transactions contemplated hereby.
4.7 No Brokers. None of Sellers nor Holding Companies has employed, or
is subject to the valid claim of, any broker, finder, consultant or other
intermediary in connection with the transactions contemplated by this Agreement
who will be entitled to a fee, commission, or expense reimbursement in
connection with such transactions, other than Sellers' and Holding Companies'
financial, legal and accounting advisors. Sellers and Holding Companies are
solely responsible for the fees and expenses of their advisors who have no
claim, contingent or otherwise, against Target, Company or Buyer, except as
otherwise provided by Section 12.12.
4.8 No Operating Assets. Each of the Holding Companies' only asset is
the Capital Stock of Target.
4.9 Litigation. To the knowledge of Sellers and Holding Companies,
there is no claim, action, suit, proceeding, arbitration, investigation or
inquiry (collectively, "Legal Proceedings") pending or threatened to which
Sellers, Holding Companies, Target, Company
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or any of the Key Employees are or may be a party. There is not in existence
any order, judgment, writ, injunction or decree of any Governmental Authority
enjoining the Sellers, Holding Companies, Target, Company or Key Employees from
taking any action, or requiring any of them to take action of any kind, or
otherwise prohibiting the Key Employees from engaging in or continuing any
conduct, activity or practice relating to Company's business.
4.10 Accuracy and Completeness of Information Provided. None of this
Agreement and the documents or written information delivered by Sellers, Holding
Companies, Target or Company to Buyer in connection with the transactions
contemplated by this Agreement contains any untrue statement of a material fact
or omits to state a material fact necessary in order to make the statements
contained therein not misleading.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
REGARDING TARGET AND COMPANY
Sellers hereby represent and warrant, with respect to Sellers
and Target, as of the date hereof and as of the Closing Date, and with respect
to Holding Companies, as of the Closing Date, Holding Companies hereby represent
and warrant, as of the Closing Date, and Target hereby represents and warrants
as of the date hereof and as of the Closing Date, in each case jointly and
severally, to Buyer, as follows:
5.1 Organization. Organization of Target. Target is duly organized and
validly existing and is in good standing under the laws of the State of
California. Target is duly qualified to do business as a foreign corporation and
is in good standing in each jurisdiction in which the character or location of
the properties and assets owned or operated by it or the nature of the business
conducted by it makes such qualification necessary. Target has full corporate
power and authority to own or lease its assets or properties and to carry on its
business as it is currently being conducted. Target has made available to
Company a complete and correct copy of the charter and by-laws of Target and the
corporate records and minute books of Target. The stock certificate book and
register of shareholders of Target are complete and accurate.
(b) Due Organization, etc. of Company. Company is duly
organized and validly existing under the laws of Mexico. Company is duly
qualified to do business as a foreign entity and is in good standing in each
jurisdiction in which the character or location of the properties and assets
owned or operated by it or the nature of the business conducted by it makes such
qualification necessary. Company has full corporate power and authority to own
or lease its assets or properties and to carry on its business as it is
currently being conducted. Company has made available to Buyer a complete and
correct copy of the by-laws (estatutos) of Company and the corporate records and
minute books of Company. The share certificate book and register of shareholders
of Company are complete and accurate.
5.2 Capital Stock. Capital Stock of Company. The Capital Stock of
Company consists of 60 Series A shares, without par value, and 15,300,000 Series
B shares, without par value (collectively, the "Shares"), all of which are
issued and outstanding. All of the issued Shares of Company have been duly and
validly authorized and are fully paid or properly credited as fully paid. None
of the issued Shares of Company have been issued in violation of any
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purchase option, call, warrant, right of first refusal, preemptive, subscription
or similar rights under any provision of Applicable Law, the by-laws of Company,
or any contract, agreement or instrument to which Company, Holding Companies,
Sellers or any other Affiliate thereof is subject or by which any of such
Persons is bound. Except for this Agreement and the employee share options
described in Schedule 5.17(a), there are no subscriptions, options, phantom
share options, warrants, calls, commitments, preemptive rights or other rights
of any kind outstanding for the purchase of, nor any securities convertible into
or exchangeable for, the Purchased Capital Stock, any other Shares or any equity
interests of Company. Except for this Agreement, there are no restrictions upon
the voting or transfer of any shares of Company pursuant to Company's by-laws or
any agreement or other instrument to which Company is a party or by which
Company is bound.
5.3 Authorization. Target has all necessary corporate power and
authority to enter into this Agreement and consummate the transactions
contemplated hereby and to perform its obligations hereunder. This Agreement has
been duly executed and delivered by Target and, assuming the due execution of
this Agreement by Buyer, constitutes a legal, valid and binding obligation of
Target, enforceable against it in accordance with its terms, subject to (i) the
effect of any applicable bankruptcy, insolvency, reorganization, moratorium and
similar laws relating to or affecting creditors' rights and remedies generally
and (ii) the effect of equitable principles.
5.4 Absence of Certain Changes or Events. Since the Balance Sheet Date
and prior to the date hereof, except as set forth in Schedule 5.4, there has not
been any:
(a) event, change or development, or absence thereof, which has
had or is likely to have a Material Adverse Effect on Target
or Company;
(b) sale, assignment or transfer of any assets of Target or
Company involving, in the aggregate, in excess of U.S.$5,000;
(c) establishment of or increase in any bonus, deferred
compensation, incentive compensation, share purchase, share
option (including any grant of any share options), share
appreciation, phantom share, savings, profit sharing,
severance or termination pay, health or other medial, dental,
life, disability or other insurance (whether insured or
self-insured), pension, retirement benefit, registered
retirement savings, supplementary retirement, employment,
consulting, collective bargaining, trade union,
change-in-control and any other benefit or compensation plan,
contract, program, agreement, arrangement, policy or practice,
of Target or Company;
(d) entry into any employment or severance agreement with any
Person by Target or Company, or any amendment to any such
agreement, except as to employment agreements related to new
hirings in the ordinary course of business consistent with
past practice or as the same may be required or imposed by
Applicable Laws;
(e) loans by Target or Company to employees other than for
relocation expenses and advances in the ordinary course of
business consistent with past practice;
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(f) acquisition of assets, properties, securities or business of
any other Person by Target or Company except the replenishment
of inventories and supplies, in each case in the ordinary
course of business consistent with past practice;
(g) cancellation of any Indebtedness owed to Target or Company or
waiver or compromise of any rights, in either case, whether or
not in the ordinary course of business (except with respect to
amortization of existing Indebtedness in the ordinary course);
(h) Lien or other Encumbrance of any assets of Target or Company
other than in the ordinary course of business consistent with
past practice;
(i) declaration, setting aside or payment of any dividends or
distributions (whether in cash, stock or property) in respect
of any Capital Stock of Target or Company or any redemption,
purchase or other acquisition of any Capital Stock of Target
or Company;
(j) issuance by Target or Company of, or commitment of Target or
Company to issue, any shares of Capital Stock or obligations
or securities convertible into or exchangeable for shares of
Capital Stock of Target or Company, except for the conversion
into common stock of Target of Target's outstanding
Convertible Series A Preferred Stock;
(k) entry into any Contract that is material to Target or Company,
except in the ordinary course of business consistent with past
practice and consistent with the Company Business Plan;
(l) amendment to the by-laws or other organizational documents of
Target or Company;
(m) entry into, cancellation, termination or modification of any
material Intellectual Property Contract;
(n) change of any Tax election, change of annual Tax accounting
period, change of any method of Tax accounting, filing of any
amended Tax Return, entrance into any closing agreement
relating to any Tax, settlement of any Tax claim or
assessment, surrender of any right to claim a Tax refund or
consent to any extension or waiver of the period applicable to
any Tax claim or assessment;
(o) increase in the compensation payable or to become payable to
any director, officer, employee, consultant, agent or other
representative of Target or Company, by Target or Company; or
(p) Contract by Target or Company to do any of the foregoing.
5.5 Title to Assets, Etc. Schedule 5.5(a) hereto lists all real
property owned, leased or otherwise used by Target or Company (collectively, the
"Real Property"). Either Target or Company is the legal and beneficial owner of
and has good and valid title to or valid and subsisting leasehold interests in
all such Real Property and in all personal property and other
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assets on its books and reflected on the balance sheet included in the
Indicative Financial Statements or acquired since the Balance Sheet Date (the
"Assets"). None of the Assets is subject to any Lien or other Encumbrance.
(b) Neither Target nor Company has entered into any agreement
to sell, encumber, or otherwise dispose of or impair any of its right, title and
interest in and to any Real Property or the air, density or easement rights
relating to any part of the Real Property.
(c) All Encumbrances against the Real Property have been
complied with to date.
(d) Neither Target nor Company has received any notification
of and is not aware of any outstanding deficiency notice or work order affecting
any of the buildings, improvements or other structures forming part of the Real
Property, or of any current non-compliance of such buildings, improvements or
other structures with building or zoning by-laws or other Applicable Laws.
5.6 Material Contracts. Except as set forth in Schedule 5.6 hereto, (i)
neither Target nor Company is a party to any material Contract; (ii) all of the
Contracts to which Target or Company is a party are valid and binding
obligations of Target or Company as the case may be, and neither Target, Company
nor any other Person is in material breach thereof or material default
thereunder, and there does not exist under any provision thereof or any event
that, with the giving of notice or the lapse of time or both, would constitute
such a breach or default; and (iii) no Person is renegotiating (x) any amount
paid or payable to Target or Company under any material Contract, or (y) any
other material term or provision of any material Contract.
5.7 No Conflict or Violation. Neither the execution and delivery of
this Agreement nor the consummation of the transactions contemplated hereby will
result in (a) any violation of, or conflict with, any provision of the by-laws
or other organizational documents of Target or Company, (b) any breach of, or
default under, any term or provision of any Contract, Indebtedness, Encumbrance,
commitment, license, franchise, Permit, authorization or concession to which
Target or Company is or may be a party or is subject or by which any assets of
Target or Company are bound, (c) any violation by Target or Company of any
Applicable Laws, order, judgment, writ, injunction, decree or award, (d) the
imposition of any material Encumbrance on the business of Target or Company or
on any assets of Target or Company or (e) the creation or exercisability of any
right of termination, cancellation or acceleration under any Contract to which
Company is or may be a party or by or to which it or any of their respective
assets or properties may be bound or subject.
5.8 Financial Statements.
(a) The Indicative Financial Statements and, as of the Closing
Date, Company Financial Statements are based on the books and records of each of
Target and Company and fairly present the financial condition and results of
operations of each of Target and Company, in each case as of the dates therein
or for the periods indicated.
(b) All accounts receivable of each of Target and Company that
are reflected on the Indicative Financial Statements or, upon their issuance,
Company Financial Statements or on the accounting records of each of Target and
Company as of the Closing Date (collectively, but excluding any accounts
receivable which on the Closing Date are more than forty-five (45)
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days past due, together with any interest or penalties due with respect thereto,
the "Accounts Receivable") represent or will represent valid obligations arising
from transactions actually made or services actually performed in the ordinary
course of business consistent with past practice. Unless paid prior to the
Closing Date, the Accounts Receivable are or will be as of the Closing Date
current and collectible in the ordinary course of Company's business net of the
reserves shown on the Closing Balance Sheet. Subject to such reserves, each of
the Accounts Receivable either has been or will be collected in full, without
any set-off, within ninety days after the day on which it first becomes due and
payable. There is no contest, claim, or right of set-off, other than returns in
the ordinary course of business consistent with past practice, under any
Contract with any obligor of an Accounts Receivable relating to the amount or
validity of such Accounts Receivable.
5.9 Litigation. To the knowledge of Sellers, Holding Companies and
Target, there are no Legal Proceedings pending or threatened to which Sellers,
Holding Companies, Target or Company is or may be a party. There is not in
existence any order, judgment, writ, injunction or decree of any Governmental
Authority enjoining Company, Holding Companies or Sellers from taking any action
or requiring any of them to take action of any kind.
5.10 Liabilities. As of the Balance Sheet Date, neither Target nor
Company has, directly or indirectly, any Indebtedness, liability, claim, loss,
damage, deficiency, obligation or responsibility, fixed or unfixed, xxxxxx or
inchoate, liquidated or unliquidated, secured or unsecured, accrued, absolute,
contingent or otherwise ("Liabilities"), that were required by Applicable GAAP
to be set forth on the Indicative Financial Statements but that were not fully
set forth on the Indicative Financial Statements or that, upon their issuance by
PricewaterhouseCoopers, that are required by Applicable GAAP to be set forth in
the Company Financial Statements but that are not fully set forth in the Company
Financial Statements. Each of Target's or Company's accounting records include
all Liabilities incurred by each of Target and Company as of the date hereof.
Neither Target nor Company has any Liabilities except Liabilities set forth on
the Indicative Financial Statements or, upon their issuance, Company Financial
Statements and non-material Liabilities incurred subsequent to the Balance Sheet
Date in the ordinary course of business consistent with past practice.
5.11 Consents and Approvals; Announcements. No consent, approval or
authorization of, or declaration, filing or registration with, any Governmental
Authority is required to be made or obtained by Target or Company prior to, on
or after the Closing Date in connection with the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby.
5.12 Compliance with Applicable Laws; Permits. (a) Each of Target and
Company is in compliance with all Applicable Laws. Neither Target nor Company
has received any written notice to the effect that, or otherwise been advised
that, it is not in compliance with any Applicable Laws, and there are no
presently existing circumstances that are likely to result in violations of any
Applicable Laws.
(b) Each of Target and Company holds all Permits necessary for
the ownership and conduct of the businesses of Target and Company in each of the
jurisdictions in which Target and Company conducts or operates its businesses in
the manner now conducted, and such Permits are in full force and effect. There
are no pending or, to the knowledge of Sellers, Holding Companies or Target,
threatened Legal Proceedings with respect to revocation,
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cancellation, suspension or non-renewal of any such Permit, and there has
occurred no event which (whether with notice or lapse of time or both) will
result in such a revocation, cancellation, suspension or non-renewal thereof.
5.13 Intellectual Property. (a) Schedule 5.13(a) lists, with respect to
all Intellectual Property owned, held or used by Target or Company ("Company
Intellectual Property"), (i) all applications and registrations (including
trademarks uniform resource locators, service marks, trade names, brand names
and domain names) owned by Target or Company relating thereto, by jurisdiction
in which such applications are pending and in which such registrations are
owned; and (ii) all written Intellectual Property Contracts to which Target or
Company is a party or by which Target or Company is bound, except for any
perpetual, paid-up licenses to Target or Company for commonly available software
programs with a value of less than U.S.$5,000.
(b) Except as disclosed on Schedule 5.13(b): (i) each of
Target and Company owns or has the right to use all the Intellectual Property
necessary to conduct its businesses as currently conducted and consistent with
past practice, free and clear of all Encumbrances and obligations to make
payments to any other Person and no such right to use will be lost, or rendered
liable to any right of termination or cessation by any third party, by virtue of
the acquisition by Buyer of the Purchased Capital Stock; (ii) all registered or
patented Company Intellectual Property owned by Target or Company is unexpired
and has not been abandoned; (iii) none of Company Intellectual Property
infringes or makes unauthorized use of ("Infringe") the Intellectual Property of
any other Person nor are there any circumstances (including any act or omission
to act) likely to give rise to such Infringement of the Intellectual Property of
any other Person; (iv) to the knowledge of Sellers, Holding Companies and
Target, Company Intellectual Property is not being Infringed by any other
Person; (v) no judgment, decree, injunction, rule or order has been rendered or,
to the knowledge of Sellers, Holding Companies or Target, is threatened by any
Governmental Authority that limits or challenges the ownership, use, validity or
enforceability of any Company Intellectual Property owned by Company; (vi) no
Legal Proceeding is pending, or to the knowledge of Sellers, Holding Companies
and Target, is threatened, that limits or challenges the ownership, use,
validity or enforceability of any Company Intellectual Property owned by
Company; (vii) Company takes reasonable steps to keep all trade secrets
confidential; (viii) no party to an Intellectual Property Contract is, or is
alleged to be, in breach or default thereunder, and all Intellectual Property
Contracts are valid and enforceable; (ix) with respect to Company Intellectual
Property owned by Target or Company, no registered, patented or issued
Intellectual Property are subject to any fees or taxes or actions coming due
within 90 days after the Closing Date; (x) all registered or patented Company
Intellectual Property owned by each of Target and Company is owned solely,
legally and beneficially by such entity, and, each of Target and Company has
taken all reasonable actions to evidence, protect and maintain such sole legal
and beneficial ownership and neither Target nor Company has acquiesced in the
unauthorized use by any Person of Company Intellectual Property; (xi) neither
Target nor Company has not disclosed or permitted to be disclosed to any Person
other than Buyer any Intellectual Property where such disclosure would be
materially detrimental to the interests of Company; and (xii) no publication,
use or sale has been made or permitted by any of Sellers, Holding Companies,
Target or Company that would invalidate any of the existing Intellectual
Property applications listed or referred to on Schedule 5.13(a).
5.14 Foreign Corrupt Practices Act. Neither Target nor Company, nor any
of their Affiliates, nor any director, officer, employee, authorized agent or
other person acting on behalf of Target or Company, has (i) used any corporate
funds for any unlawful contribution, gift,
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entertainment or other unlawful expense relating to political activity, (ii)
made any direct or indirect unlawful payment to any foreign or domestic
government official or employee from corporate funds, (iii) violated, or, if it
were applicable, would have violated or is, or, if it were applicable, would
have been in violation of any provision of the U.S. Foreign Corrupt Practices
Act of 1977, as amended, or (iv) made any bribe, rebate, payoff, influence
payment, kickback or other unlawful payment.
5.15 Conduct of Business. Since the Balance Sheet Date, the business of
Target and Company has been conducted solely in the ordinary course consistent
with past practice.
5.16 Labor Matters. No trade union, council of trade unions, employee
bargaining agency or affiliated bargaining agent:
(a) holds bargaining rights with respect to Target or
Company by way of certification, interim
certification, voluntary recognition, designation or
successor rights;
(b) has applied to be certified as the bargaining agent
of any employees of Target or Company; or
(c) has applied to have Sellers, Holding Companies or
Target declared a related employer or successor
employer pursuant to applicable labor legislation.
There are no actual, threatened or pending organizing activities of any
trade union, council of trade unions, employee bargaining agency or affiliated
bargaining agent or any actual, threatened or pending unfair labor practice
complaints, strikes, work stoppages, picketing, lock-outs, hand-xxxxxxxx,
boycotts, slowdowns, arbitrations, grievances or labor related proceedings
pertaining to Target or Company, nor have there been any such activities or
complaints within the last year.
5.17 Employee Benefit Plans and Other Labor Matters. (a) Schedule
5.17(a) hereto sets forth a true and complete list of all bonus, deferred
compensation, incentive compensation, share purchase, share option, share
appreciation, phantom share, savings, profit sharing, severance or termination
pay, health or other medical, dental, life, disability or other insurance
(whether insured or self-insured), pension, retirement benefit, registered
retirement savings, supplementary retirement, employment, consulting, collective
bargaining, trade union, change-in-control and any other benefit or compensation
plan, contract, program, agreement, arrangement, policy or practice, whether
formal or informal, funded or unfunded, registered or unregistered, oral or
written, maintained or contributed to, required to be contributed to or provided
by Target or Company, under which any current or former employee, or independent
contractor (or dependent of any such persons) in relation to Target or Company
has any present or future right to benefits or compensation or under which
Target or Company has any present or future liability or obligation other than
Required Benefits (as defined below). (All such plans, contracts, programs,
agreements, arrangements, policies or practices, other than those in which a
company is required by Applicable Laws to participate or which a company is
required by Applicable Laws to provide, shall be collectively referred to as the
"Company Plans").
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(b) Each of Target and Company has satisfied or fully reserved
for all of its payment or funding obligations regarding both current or former
directors, officers, employees or independent contractors (or dependents of any
such person) and former employees on a current basis for the following employee
expenses and has no pending obligations (other than contingent obligations and
current obligations in the ordinary course) and that any related assets or
reserves are correctly reflected on the accounting records of each of Target and
Company as of the Closing Date for each of the following employee benefits or
expenses that are not Company Plans (together, "Required Benefits"):
(i) severance payments;
(ii) vacation days (6 paid working days per year) and
vacation premium;
(iii) overtime payments and compensation, including
for work on Sundays and Christmas bonuses (xxxxxxxxx) and such other
bonuses as are required by Applicable Laws;
(iv) profit sharing (PTV);
(v) other benefits that may be required by Applicable
Laws, including pension payments, mandatory health plan payments and
contributions to the Social Security Mexican Institute (IMSS), the Low
Cost Housing Fund (INFONAVIT) and the retirement fund (SAR);
(vi) benefits required under collective bargaining
agreements; and
(vii) any other benefits or employee-related expenses
required by Applicable Laws or pursuant to any Company Plan or
otherwise.
(c) Each of Target and Company has paid all fringe benefits
(prestaciones sociales) that are Required Benefits at the conclusion of the
employment of each of its former directors, officers or employees, in accordance
with all Applicable Laws.
(d) Any temporary employee retained by Target or Company was
retained in compliance with all Applicable Laws, and all amounts (other than de
minimis amounts in the aggregate) owing to such temporary employees have been
duly paid in full.
(e) No event has occurred and there has been no failure to act
on the part of Company or others, that would reasonably be expected to subject
Target or Company to the imposition of any material tax, penalty or other
liability with respect to any Company Plans or Required Benefits, whether by way
of indemnity or otherwise.
(f) With respect to any Company Plan or Required Benefit, no
material Legal Proceedings are pending or threatened.
(g) The consummation of the transactions contemplated by this
Agreement shall not constitute an event under any Company Plan or Required
Benefit that shall or may result (i) in any acceleration of, vesting of, or
increase in benefits with respect to any Company
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Employee or (ii) in any acceleration of or increase in the funding requirements
of any Company Plan or Required Benefit.
(h) Except as disclosed in Schedule 5.18, no present or former
director, officer or employee (or dependent or Affiliate thereof) nor any other
Person not dealing at arm's length with any such present or former director,
officer, or employee is indebted to Company in an amount in excess of
U.S.$5,000.
(i) Company has considered on its payroll all the remunerative
and payroll-based concepts required by Applicable Laws and has made all
deductions, withholding and remitted to the Tax Authorities all employee or
payroll-related amounts required by Applicable Laws.
(j) Except as disclosed in Schedule 5.17(j), (i) all employer
and, if applicable, employee contributions accrued prior to the Closing Date
under Company Plans or Required Benefits (including all current service costs
and any special payments required to be made) required to be remitted under the
terms of Company Plans, Required Benefits or Applicable Laws have been remitted,
(ii) Company Plans and Required Benefits have been funded in accordance with
their terms and Applicable Laws and (iii) Company Plans and Required Benefits
have no past service funding liabilities and are fully funded.
5.18 Transactions with Certain Persons. Schedule 5.18 hereto identifies
all Contracts, or other arrangements, whether actual, contingent or otherwise,
in existence or in effect as of the date hereof, by and between Target or
Company, on the one hand, and any Seller, either of the Holding Companies or any
Affiliate of Holding Companies or any Seller (other than Target and Company) or
any dependent of any Seller, on the other.
5.19 Taxes.
(a) All material Tax Returns that are required to have been
filed or prepared and retained (taking into account applicable extensions) by or
on behalf of each of Target and Company have been timely filed or prepared and
retained in the manner prescribed by the appropriate Tax Law, and all Taxes
shown and due on such Tax Returns have been paid. As of the time of filing or
preparing, as applicable, such Tax Returns were true, complete and correct in
all material respects.
(b) All material Taxes owed by each of Target and Company have
been timely paid. Each of Target and Company files Tax Returns in all
jurisdictions where required to file Tax Returns.
(c) Neither Target nor Company 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. No adjustments or deficiencies of Taxes have
been proposed, asserted or assessed in writing by the relevant national,
federal, state or local Tax Authority, except for such adjustments or
deficiencies which have been fully paid or finally settled.
(d) To the best knowledge of the Company, no Tax audit or
other proceeding by any Governmental Authority has commenced, is pending or
ongoing with respect to any Taxes
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due from or with respect to Target or Company or any Tax Return filed by or with
respect to Target or Company.
(e) There are no Liens with respect to Taxes upon any of the
assets or properties of Company, other than with respect to Taxes not yet due
and payable.
(f) All material Taxes required to be withheld, collected or
deposited by or with respect to Target and Company or its employees have been
duly and timely withheld, collected or deposited, as the case may be, and, to
the extent required, have been paid to the relevant Tax Authority.
(g) Without limiting the foregoing representations and
warranties in any way, each of Target and Company has collected all sales, use
and value-added Taxes required to be collected, and have remitted, or will remit
on a timely basis where required prior to the Closing Date, such amounts to the
appropriate Tax Authorities, or have been furnished properly completed exemption
certificates.
(h) Records which are complete and accurate in all material
respects and which are necessary or appropriate for compliance with all Tax Laws
have been maintained and retained by or on behalf of each of Target and Company
for the period required by applicable Tax Laws and all other information or
evidence required or necessary to support those records, have been so maintained
and retained.
(i) No action has been taken by either of Target or Company in
default of any obligation to obtain a requisite consent from any Tax Authority,
and where such a consent has been obtained, any conditions thereto have been
complied with in all material respects. With respect to any period for which Tax
Returns have not yet been filed, or for which Taxes are not yet due or owing,
each of Target and Company has made due and sufficient accruals for such Taxes
in accordance with Applicable GAAP.
(j) Neither Target nor Company is a party to or bound by any
tax-sharing agreement, tax indemnity obligation or similar agreement or
arrangement with respect to Taxes. Neither Target nor Company is currently or
has ever been a member of an affiliated group filing a consolidated tax return,
nor has any liability for Taxes of a consolidated, combined or unitary tax
reporting group of which it was a member on or prior to the Closing Date.
Neither Target nor Company has any liability for the Taxes of any person (other
than itself) incurred by Target or Company under U.S. Treasury Regulations
Section 1.1502-6 or any other provision of Applicable Law, or as a transferee or
successor, by contract or otherwise.
(k) Target has not 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.
5.20 No Brokers. Neither Target nor Company has employed, or is subject
to any valid claim of, any broker, finder, consultant or other intermediary in
connection with the transactions contemplated by this Agreement who or which
will be entitled to a fee, commission or expense reimbursement in connection
with such transactions.
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5.21 Products Liability; Product Recall. No products sold or delivered
by Target or Company have been recalled or have resulted in Sellers, Holding
Companies, Target or any of their Affiliates, including Company, making payments
to customers in excess of, in the aggregate, U.S.$10,000 as a result of
defective products.
5.22 Maintenance of Property; Insurance. Each of Target and Company
keeps all property useful and necessary in its business in good working order
and condition. Each of Target and Company carries, or is covered by, insurance
from insurers of recognized financial responsibility in such amounts and
covering such risks as is adequate for the conduct of its business and the value
of it respective properties and as is prudent and customary for companies
engaged in similar businesses in similar industries; all policies of insurance
insuring Target, Company or their respective businesses, assets, directors,
officers and employees are in full force and effect; each of Target and Company
is in compliance with the terms of such policies and instruments in all material
respects; and there are no claims by either Target or Company under any such
policy or instrument as to which any insurance company is denying liability or
defending under a reservation of rights clause; neither Target nor Company has
been refused any insurance coverage sought or applied for; and neither Target
nor Company has any reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business at a cost that could not reasonably be expected to have a Material
Adverse Effect.
5.23 Environmental Matters.
(a) Each of Target and Company and the Real Property and other
assets used in its businesses, are in compliance with all applicable
Environmental Laws.
(b) There is no Environmental Claim that is (i) pending or, to
the knowledge of Sellers, Holding Companies or Target, threatened against Target
or Company or (ii) pending or threatened against any Person whose liability for
such Environmental Claim has been retained or assumed by or can be imputed or
attributed by law or contract to Target or Company.
(c) There are no current or former actions, activities,
circumstances, conditions, events or incidents arising out of or relating to the
ownership, operation or use of any Real Property or other assets currently or
formerly owned, operated or used by Target or Company (or any predecessor in
interest), including the emission, discharge, disposal or other release of any
Hazardous Materials into the Environment, that (i) would reasonably be expected
to result in the incurrence of costs, fees, expenses or other liability under
Environmental Laws or (ii) would reasonably be expected to form the basis of any
Environmental Claim against or with respect to Target or Company or against any
person or entity whose liability for any Environmental Claim has been retained
or assumed by or can be imputed or attributed by law or contract to Target or
Company.
(d) For purposes of this Agreement, the terms below are
defined as follows:
"Encumbrances" shall mean any Liens claim, option, easement,
right-of-way, equity, encroachment, encumbrance, right-of-first
refusal, priority or other rights or adverse claim of third parties.
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"Environment" shall mean any surface water, ground water,
drinking water supply, land surface or subsurface strata, ambient air
and including any indoor location.
"Environmental Claim" shall mean any notice or claim by any
person or entity alleging liability (including liability for
investigatory costs, cleanup costs, governmental costs, or harm,
injuries or damages to any person, property or natural resources, and
any fines or penalties) arising out of or relating to (i) the emission,
discharge, disposal, or other release in or into the Environment of any
Hazardous Materials or (ii) circumstances that would result in any
violation of any applicable Environmental Law.
"Environmental Laws" shall mean all Applicable Laws relating
to pollution, the protection of human health, the protection of the
Environment or the emission, discharge, disposal or other release or
threatened release of Hazardous Materials in or into the Environment.
"Hazardous Materials" shall mean pollutants, contaminants, or
chemicals, that are hazardous or toxic materials or wastes, including
asbestos, or asbestos-containing materials, PCBs, and petroleum, oil or
oil products, derivatives or constituents.
5.24 Operating Assets. Target's only assets are the Capital Stock of
Company and certain Company Intellectual Property set forth in Schedule 5.13(a).
Except for such Company Intellectual Property as is held by Target, all of the
assets, Real Property, contractual rights, Intellectual Property and any other
asset, right, agreement, employment relationship or equitable interest relating
to the business operations of Company is held by Company.
5.25 Absence of Subsidiaries. Company has no Subsidiaries.
5.26 Accuracy and Completeness of Information Provided. None of this
Agreement and the documents or written information delivered by Target or
Company to Buyer in connection with the transactions contemplated by this
Agreement contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained therein not
misleading.
5.27 No Other Representations or Warranties. Except for the
representations and warranties contained in this Article V, neither Sellers,
Holding Companies, Target nor any other Person has made or makes any other
express or implied representation or warranty, either oral or written, on behalf
of itself or themselves.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to each of Sellers and Holding
Companies as follows:
6.1 Due Organization, etc. of Buyer. Buyer is a company duly organized
and validly existing under the laws of the British Virgin Islands and has full
corporate power and authority to conduct its business and to own or lease its
assets and properties.
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6.2 Buyer Shares. The Buyer Shares will be validly issued, free and
clear of all Encumbrances. Subject to any limitations of or restrictions on
Sellers or any acts or omissions of Sellers, upon consummation of the Share
Purchase, Sellers shall acquire from Buyer full and exclusive ownership and
dominion of those Buyer Shares, free and clear of all Encumbrances, except for
any Encumbrances that may have been created by Sellers.
6.3 Authorization. Buyer has all necessary corporate power and
authority to enter into this Agreement and, except for the final approval of its
Board of Directors to consummate the transactions contemplated hereby and to
perform its obligations hereunder. This Agreement has been duly executed and
delivered by Buyer and, assuming the due execution of this Agreement by Sellers,
Holding Companies and Target, is a valid and binding obligation of Buyer
enforceable against it in accordance with its terms.
6.4 Consents and Approvals. No consent, approval or authorization of,
or declaration, filing or registration with, any Governmental Authority is
required to be made or obtained by Buyer on or prior to the Closing Date in
connection with the execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby, except where failure
to obtain such consent, approval or authorization or make such declaration,
filing or registration would not restrict or adversely affect Buyer's ability to
consummate the transactions contemplated hereby.
6.5 No Conflict or Violation. Neither the execution and delivery of
this Agreement nor the consummation of the transactions contemplated hereby will
result in (a) a violation of or a conflict with any provision of the memorandum
of association, articles of association or other organizational documents of
Buyer, (b) a breach of, or a default under, any term or provision of any
contract, agreement, indebtedness, lease, Encumbrance, commitment, license,
franchise, Permit, authorization or concession to which Buyer is a party or is
subject or by which any assets of Buyer are bound, except for any such breach or
default as would not have a Material Adverse Effect on Buyer, (c) a violation by
Buyer of any Applicable Laws, order, judgment, writ, injunction, decree or
award, except any such violation as would not have a Material Adverse Effect on
Buyer, or (d) the creation or exercisability of any right of termination,
cancellation or acceleration under any contract or other agreement to which
Buyer or any of its Subsidiaries is a party or by or to which they or any of
their assets or properties may be bound or subject, which would have a Material
Adverse Effect on Buyer.
6.6 No Brokers. Buyer has not employed, and is not subject to the valid
or binding claim of, any broker, finder, consultant or other intermediary in
connection with the transactions contemplated by this Agreement who will be
entitled to a fee, commission or expense reimbursement in connection with such
transactions, other than Buyer's legal and accounting advisors. Buyer is solely
responsible for the fees and expenses of its advisors none of whom have any
claim, contingent or otherwise, against Company or Holding Companies.
6.7 Litigation. There is no Legal Proceeding pending or, to the
knowledge of Buyer, threatened to which Buyer or any of its Subsidiaries is or
may be a party, except for Legal Proceedings that, if adversely determined,
would not have, individually or in the aggregate, a Material Adverse Effect on
Buyer, and would not restrict or adversely affect Buyer's ability to consummate
the transactions contemplated hereby. There is not in existence any order,
judgment, writ, injunction or decree of any court or other tribunal or any
Governmental Authority
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enjoining Buyer or its Subsidiaries from taking or requiring any of them to take
action of any kind or to which any of them is subject or by which any of them is
or may be bound.
6.8 Financial Capability. Buyer has cash or cash equivalents sufficient
to consummate the transactions contemplated hereby, including the transactions
contemplated by Article II.
6.9 SEC Reports and Financial Statements. Buyer has filed a true and
complete copy of each form, report, schedule, registration statement and other
document (together with all amendments thereof and supplements thereto) with the
SEC from and after December 9, 1999 (as such documents, including Buyer's
prospectus dated December 9, 1999 relating to its initial public offering, have
since the time of their filing been amended or supplemented, the "Buyer SEC
Reports") that Buyer and its Subsidiaries were required to file with the SEC
since such date. As of their respective dates, the Buyer SEC Reports (i)
complied as to form in all material respects with the requirements of the
Securities Act or the Exchange Act, as the case may be, and (ii) did not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The audited consolidated financial statements and unaudited interim
consolidated financial statements (including, in each case, the notes, if any,
thereto) included in the Buyer SEC Reports complied as to form in all material
respects with the published rules and regulations of the SEC as of the date
thereof with respect thereto, were prepared in accordance with generally
accepted accounting principles applied on a consistent basis during the periods
involved (except as may be indicated therein or in the notes thereto and except
with respect to unaudited statements as permitted by the SEC) and fairly present
(subject, in the case of the unaudited interim financial statements, to normal,
recurring year-end audit adjustments that are not expected to be, individually
or in the aggregate, materially adverse to Buyer and its Subsidiaries taken as a
whole) the consolidated financial position of Buyer and its consolidated
subsidiaries as at the respective dates thereof and the consolidated results of
their operations and cash flows for the respective periods then ended. Since
December 9, 1999, and except as otherwise disclosed in Buyer SEC Reports, there
has not been any event, change or development, or absence thereof, which has had
a Material Adverse Effect on Buyer.
6.10 No Other Representations or Warranties. Except for the
representations and warranties contained in this Article VI, neither Buyer nor
any other Person has made or makes any other express or implied representation
or warranty, either oral or written, on behalf of Buyer.
ARTICLE VII
ACTIONS BY SELLERS, HOLDING COMPANIES, TARGET
AND BUYER PRIOR TO THE CLOSING
Sellers, Holding Companies, Target and Buyer covenant and
agree as follows for the period from the date hereof to the Closing Date:
7.1 Management of Target and Company. (a) From the date hereof through
the earlier of (i) the Closing Date and (ii) termination of this Agreement in
accordance with Section 12.1, Target and Buyer agree to establish a management
committee (the "Management Committee") consisting of Target's Chief Executive
Officer, Xxxx Xxxxxx Xxxxxx S., and Buyer's
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Executive Vice President for Business Development and Strategic Planning, Xxxxxx
Xxxxxxxxx, which Management Committee shall have executive authority over the
management of the Target and Company and their businesses. Neither the Target
nor Company shall take any action outside of the ordinary course without the
approval of the Management Committee. In addition, any of the actions set forth
in Section 5.4 shall require the approval of the Management Committee. The
approval of the Management Committee shall require the favorable vote or consent
of the representatives of both Target and Buyer.
(b) Except as set forth in Schedule 7.1 or as otherwise
specifically required by this Agreement or with the express prior written
consent of Buyer prior to the Closing Date, from the date hereof through the
Closing Date, Sellers, Holding Companies and Target shall use their respective
best efforts to cause Target and Company and Target shall and shall cause
Company:
(i) to conduct their businesses and to engage in
transactions only in the ordinary course consistent with past
practice;
(ii) to preserve their goodwill and to protect their
business organizations;
(iii) to keep all property useful and necessary in
their businesses in good working order and condition;
(iv) to preserve their Contracts and Permits in full
force and effect in accordance with their respective terms;
and
(v) not to (A) take any action that would otherwise
cause the representations and warranties in Articles IV and V
hereunder to be incorrect in any material respect on the
Closing Date or (B) amend their organizational documents.
7.2 Employment Matters. Except with the express prior written consent
of Buyer, each of Sellers and Holding Companies shall use their respective best
efforts to cause Target and Company not to, and Target shall not:
(a) enter into, amend, modify or renew any employment,
consulting, severance or similar agreements or arrangements with any
director, officer or employee or independent contract of Target or
Company or grant any salary or wage increase or increase any employee
benefit (including incentive or bonus payments); or
(b) other than as required by this Agreement, enter into,
establish, adopt, amend or terminate (except as may be required by
Applicable Laws) any bonus, deferred compensation, incentive
compensation, share purchase, share option, share appreciation, phantom
share, savings, profit sharing, severance or termination pay, health or
other medical, dental, life, disability or other insurance (whether
insured or self-insured), pension, retirement benefit, registered
retirement savings, supplementary retirement, employment, consulting,
collective bargaining, trade union, change-in-control and any other
benefit or compensation plan, contract, program, agreement,
arrangement, policy or practice, or any trust agreement (or similar
arrangement) related thereto, in respect of any director, officer, or
employee of, or independent contractor with respect to, Company, or
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take any action to accelerate the vesting, exercisability, payment or
funding of stock options, restricted stock or other compensation or
benefits payable thereunder.
7.3 Investigation by Buyer. (a) Upon reasonable advance notice, Sellers
and Holding Companies shall use their respective best efforts to cause Target
and Company and their respective directors, officers, employees, counsel,
financial advisors and other representatives to allow Buyer's Representatives,
during regular business hours, to make such investigation of the business,
properties, books, contracts, personnel and records (including access to
suppliers, supply reports and customer online transaction reports) of Target and
Company, and to conduct such due diligence investigation of Target and Company
as Buyer deems necessary or advisable. Sellers and Holding Companies also agree
to use their respective best efforts to cause Target and Company and their
respective directors, officers, employees and representatives to, furnish
promptly to Buyer all information concerning their respective businesses,
properties, results of operations, financial condition, and prospects as Buyer
may from time to time reasonably request. Buyer covenants that such
investigation shall be conducted in such a manner as not to interfere
unreasonably with the business or operations of Target or Company.
(b) Any information provided to Buyer or its Representatives
pursuant to this Agreement shall be held by Buyer and its Representatives in
accordance with, and shall be subject to the terms of, the Letter of Intent,
dated February 22, 2000, as extended by a subsequent Letter of Intent, dated
February 29, 2000, by and between Target and Buyer (such letters, the "Letter of
Intent"), which terms are hereby incorporated in this Agreement by reference as
though fully set forth herein; provided, however, that all the references
therein to Target shall be deemed to include Sellers and Holding Companies; and
provided, further, that the terms thereof shall terminate on the Closing Date.
(c) No investigation by Buyer or its Representatives hereunder
shall affect or limit in any way the representations and warranties in Articles
IV and V or the conditions to the obligations of each of Sellers and Holding
Companies.
(d) Buyer agrees to hold all of the accounts, books and
records of Company existing and transferred to it on the Closing Date and not to
destroy or dispose of any such books or records for a period of six (6) years
from the Closing Date or such longer time as may be required by law.
7.4 Conditions to Closing. (a) Sellers and Holding Companies shall (i)
use their best efforts to satisfy the conditions to Buyer's closing obligations
set forth in Article IX (provided that best efforts shall in no event be
understood to require a party to waive a condition to closing that remains
unsatisfied), (ii) enter into the lock-up agreements substantially in the forms
attached hereto as Exhibit C-1, C-2 and C- 3, as set forth in Schedule 9.7, the
Escrow Agreement and the Power of Attorney and (iii) cause the Key Employees to
enter into Buyer's current standard employment contracts and confidentiality and
non-competition agreements on terms and conditions satisfactory to Buyer.
(b) Buyer shall (i) use its best efforts to satisfy the
conditions to Sellers' and Holding Companies' obligations set forth in Article
VIII (provided that best efforts shall in no event be understood to require a
party to waive a condition to closing that remain unsatisfied), (ii) enter into
the share option agreements under Buyer's 1999 Share Option Plan and (iii) enter
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into, with each of the Key Employees, Buyer's current standard employment
contracts and confidentiality and non-competition agreements on terms and
conditions satisfactory to Buyer.
7.5 Regulatory and Other Authorizations; Notices and Consents. (a) As
soon as practicable after execution and delivery of this Agreement and in any
event no later than three Business Days following the date hereof, Buyer and
Target shall jointly make any regulations, filings or qualifications required
under Mexican law and any other Applicable Laws. Each party hereto shall furnish
all information and documentation necessary in connection with such filings, as
follows:
(i) Sellers, Holding Companies and Target, respectively, shall
furnish Buyer with all information and documentation necessary and such
reasonable assistance as Buyer may request in connection with such filings as
such information and documentation relates to Target, Sellers and Holding
Companies, respectively;
(ii) Sellers and Holding Companies shall cause Target and its
respective directors, officers, employees and representatives to furnish Buyer
such information and documentation and such reasonable assistance as Buyer may
request relating to Target; and
(iii) Buyer shall furnish Sellers, Holding Companies and
Target, with all information and documentation necessary and such reasonable
assistance as Buyer may request in connection with such filings as such
information and documentation relates to Buyer. Sellers, Holding Companies,
Target and Buyer shall use their respective commercially reasonable best efforts
to take all other actions required to obtain as promptly as practicable after
the date hereof all necessary consents, approvals, authorizations and agreements
of, and to give all notices and make all other registrations, filings or
qualifications with, any Governmental Authorities and other Persons, necessary
to authorize, approve or permit the consummation of the transactions
contemplated hereby. Sellers, Holding Companies, Target and Buyer shall all use
their respective commercially reasonable best efforts to take such actions as
may be necessary to satisfy the conditions to the Closing as soon as practicable
after the date hereof. Sellers, Holding Companies, Target and Buyer shall not,
and shall use their respective commercially reasonable best efforts not to
permit any of their respective Affiliates to, take any action inconsistent with
the terms of this Agreement.
(b) All filing fees, if any, required in connection with the
application for or prosecution of any consent, approval, authorization,
registration, filing or submission in accordance with this Section 7.5 shall be
shared on a 50-50 basis by Sellers and Holding Companies, on the one hand, and
Buyer on the other hand. All other fees, expenses and disbursements (including
the costs of preparation of any such filings) incurred in connection with the
matters referred to in this Section 7.5 shall be borne by Buyer if incurred by
or on its behalf and by the Sellers and Holding Companies if incurred by or on
behalf of Target, Company (to the extent incurred prior to the Closing), Holding
Companies or Sellers.
(c) Until the Closing, Sellers, Holding Companies and Target,
on the one hand, and Buyer, on the other hand, shall promptly inform the other
of any material communication from any Governmental Authority regarding any of
the transactions contemplated hereby. If any such party or any Affiliate thereof
receives a request for additional information or documentary material from any
such Governmental Authority with respect to the transactions contemplated
hereby, then such party shall use all reasonable efforts to make, or cause to be
made, as soon as
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reasonably practicable and after consultation with the other parties, an
appropriate response in compliance with such request.
7.6 Notification of Certain Matters. Sellers, Holding Companies and
Target shall give prompt notice to Buyer, and Buyer shall give prompt notice to
Sellers, Holding Companies and Target, of the following:
(i) the occurrence, or failure to occur, of any event,
occurrence or non-occurrence which would be reasonably likely to cause any
representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect any time from the date hereof through the
Closing Date;
(ii) any material failure of Sellers, Holding Companies,
Target or Buyer, as the case may be, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder, and
each party shall use all reasonable efforts to remedy such failure on its part;
(iii) progress with respect to obtaining Permits and consents,
if any, that are conditions to the Closing; and
(iv) the occurrence, or failure to occur, of any event,
occurrence or non-occurrence which would be reasonably likely to cause a
condition to Closing not to be satisfied.
7.7 Other Proposals or Discussions. Prior to either (i) the Closing
Date or (ii) the termination of this Agreement pursuant to Section 12.1,
Sellers, Holding Companies, Target and each of their respective Affiliates,
including Company, shall not and shall direct their agents, representatives and
employees not to, directly or indirectly, solicit any inquiries or proposals or
enter into or continue any discussions, negotiations or agreements relating to
the direct or indirect sale, or exchange or other disposition of all or any
portion of the Purchased Capital Stock, the merger, reorganization,
consolidation or recapitalization or other similar transaction involving Target
or Company with, or the direct or indirect disposition of a significant amount
of Target or Company's assets or business to, any Person other than Buyer or its
Affiliates or provide any assistance or any information to or otherwise
cooperate with any Person in connection with any such inquiry, proposal or
transaction. In the event that Sellers, Holding Companies, Target or any of
their respective Affiliates, including Company, receives a solicited or
unsolicited inquiry, proposal or offer for such a transaction or obtains
information that such an inquiry, proposal or offer is likely to be made,
Sellers, Holding Companies and Target shall provide Buyer with notice thereof as
soon as practicable but in any event not later than 48 hours after receipt
thereof, including the identity of the prospective purchaser or soliciting
party.
7.8 Employee Matters. Sellers, Holding Companies, Target and Buyer
shall cooperate during the period prior to the Closing Date to ensure continued
employment of all officers and employees of Target and Company and to preserve
the human resources of Target and Company.
7.9 Outstanding Share Options of Company Employees. Sellers and Holding
Companies shall cause Target to cancel and extinguish, and Target shall cancel
and extinguished or cause to be cancelled and extinguished the outstanding share
options of Target or Company, (the "Outstanding Share Options") and the plan
under which such share options are issued, all of
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which are set forth in Schedule 5.17(a) hereto. In consideration for agreeing to
the cancellation and extinguishment of the Outstanding Share Options, the
holders of such options, will be granted options to acquire common shares of El
Sitio, Inc. under Buyer's 1999 Share Option Plan, subject to the terms of
Exhibit D-1 and on terms and conditions reasonably satisfactory to Buyer (the
"New Share Options"). Buyer shall have no obligation to grant and issue New
Share Options in respect of more that 100,000 common shares of Buyer, as set
forth in Exhibit D-1, and Buyer shall have no responsibility with respect to
allocation of the New Share Options. Sellers and Holding Companies shall cause
Target to notify Buyer, within ten (10) days after the date of this Agreement, a
plan for the allocation of the New Share Options. By their execution and
delivery of this Agreement, the holders of the Outstanding Share Options that
are signatories to this Agreement irrevocably consent to the cancellation and
extinguishment of such options and to the treatment of options as set forth
herein.
7.10 Resignations of Directors; Auditors. (a) Sellers and Holding
Companies shall furnish Buyer, at or prior to the Closing, with signed
resignations of the members of the board of directors of Target and Company,
effective as of the Closing Date.
(b) Concurrently with the Closing, Sellers and Holding
Companies shall cause PricewaterhouseCoopers to resign their position as
independent public accountants of Company and shall furnish Buyer, at the or
prior to Closing, with the signed letter of resignation of
PricewaterhouseCoopers, effective as of the Closing Date.
(c) Upon Buyer's written notification, Sellers and Holding
Companies shall cause Company to call a shareholders' meeting for the Closing
Date or a date within five days following the Closing Date as shall be requested
in Buyer's notification.
7.11 Transfer Taxes. Sellers and Holding Companies shall pay, or cause
to be paid, any Transfer Taxes required to be paid in connection with the sale
and delivery to Buyer of the Purchased Capital Stock.
7.12 Liquidated Damages. (a) Sellers, Holding Companies, Target and
Buyer agree that damages for certain breaches of this Agreement would be
difficult to calculate accurately and, therefore, agree that the following
liquidated damages ("Liquidated Damages") shall be payable:
(i) For breach of Section 7.7, Sellers, Holding
Companies and Target, shall, jointly and severally, pay Buyer
U.S.$35,000,000, within thirty (30) Business Days of a demand notice
presented by Buyer; and
(ii) For a failure by Buyer to pay or deliver all or
part of the Purchase Price pursuant to Section 2.2 that is not
attributable to a failure to satisfy any of the conditions set forth in
Article IX prior to the Walk-away Date, Buyer shall pay Target
U.S.$5,000,000, within thirty (30) Business Days of a demand notice
presented by Target; provided, however, that any amount payable
pursuant to this paragraph (ii) shall be reduced by the principal
amount of the Loan to the extent funded by Buyer or any Affiliate to
Target or Company.
(b) The Liquidated Damages shall be the sole and exclusive
remedy for the specified breaches or failures triggering the right to Liquidated
Damages that may be brought in contract, tort or otherwise. Sellers, Holding
Companies, Target and Buyer expressly
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acknowledge and agree that the Liquidated Damages are commercially reasonable in
view of the potential damages resulting from the breach of or failure to perform
the specified obligations.
7.13 Legend on Certificates for Buyer Shares. So long as applicable,
each certificate representing Buyer Shares shall bear the following legend:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT
BE OFFERED, SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT
IN COMPLIANCE WITH SUCH ACT. THESE SECURITIES ARE ALSO SUBJECT
TO CERTAIN TRANSFER RESTRICTIONS PURSUANT TO A PURCHASE
AGREEMENT, DATED MARCH 10, 2000 (THE "PURCHASE AGREEMENT"), BY
AND AMONG EL SITIO, INC., THE STOCKHOLDERS OF XXXXXXXXX.XXX,
INC., AND XXXXXXXXX.XXX, INC. INCLUDING CERTAIN LOCK-UP
AGREEMENTS AND ESCROW ARRANGEMENTS ENTERED INTO IN CONJUNCTION
THEREWITH."
Buyer agrees that, promptly upon the request of Sellers or
Holding Companies or any transferee, it will remove such legend from the
certificates representing Shares in the event that U.S. counsel for Sellers,
Holding Companies or such transferee determines that the transfer of such Shares
is no longer restricted by the Securities Act and, if requested by Buyer, such
U.S. counsel provides an unqualified written legal opinion to the foregoing
effect.
7.14 Organization and Transfers of Holding Companies. Sellers shall
cause (i) the organization in accordance with Netherlands laws of each of the
Holding Companies, and (ii) the consummation of each of the Holding Company
Transfers.
7.15 Further Action. Each of the parties hereto shall use its best
efforts to take, or cause to be taken, all appropriate action, do or cause to be
done all things necessary, proper or advisable under applicable law, and execute
and deliver such documents and other papers, as may be required to consummate
the transactions contemplated by this Agreement.
7.16 Conversion of Preferred Stock. All of the outstanding Convertible
Series A Preferred Stock of Target shall have been duly converted into 4,080,000
shares of common stock of Target.
ARTICLE VIII
CONDITIONS TO SELLERS' AND HOLDING COMPANIES' OBLIGATIONS
The obligations of Sellers and Holding Companies to consummate
the transactions contemplated hereby are subject to the satisfaction or waiver,
prior to or on the Closing Date, of each of the following conditions:
8.1 Representations, Warranties and Covenants. All representations and
warranties of Buyer contained in this Agreement or in any Schedule hereto shall
be true and correct, except for such failures as would not, in the aggregate,
have a Material Adverse Effect, at and as of the
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Closing Date as if such representations and warranties were made at and as of
the Closing Date, except for (i) representations and warranties that speak as of
a specific date or time other than the Closing Date (which need to only be true
and correct, except for such failures as would not, in the aggregate, have a
Material Adverse Effect, as of such date and time), (ii) representations and
warranties which are qualified by materiality or Material Adverse Effect (which
shall be true and correct in all respects) and (iii) changes therein
specifically permitted by this Agreement or resulting from any transaction
expressly consented to in writing by Sellers and Holding Companies, and Buyer
shall have performed in all material respects all agreements and covenants
required hereby to be performed by it prior to or on the Closing Date. Buyer
shall deliver to Sellers and Holding Companies a certificate of Buyer (signed by
the President and Chief Executive Officer of Buyer) to the foregoing effect in
the form attached hereto as Exhibit H.
8.2 Consents; Illegality. There shall not be in effect any statute,
rule, regulation or order of any Governmental Authority which enjoins, prohibits
or makes illegal consummation of the transactions contemplated by this
Agreement.
8.3 Registration Rights Agreement. Buyer shall have executed and
delivered to Sellers the Registration Rights Agreement, substantially in the
form annexed hereto as Exhibit B.
8.4 Share Options. Buyer shall have entered into a share option
agreement with each of the Key Employees under Buyer's 1999 Share Option Plan,
including the terms and conditions set forth in Exhibit D-1 hereto.
8.5 Employment Agreements. Buyer's Mexican subsidiary shall have
entered into Buyer's current standard employment contracts and confidentiality
and non-competition agreements with the Key Employees on terms and conditions
satisfactory to Buyer.
8.6 Board of Directors Approval. Prior to or on the date that is ten
(10) Business Days after the date hereof, Buyer shall have communicated to
Sellers' Representatives the receipt of final approval from its Board of
Directors (subject to Buyer's reasonably satisfactory completion of its due
diligence investigation) to enter into the transactions contemplated hereby and
to execute and deliver the documentation required hereby.
8.7 Legal Opinion. Buyer shall have delivered, or shall have caused to
be delivered, to Holding Companies a legal opinion dated as of the Closing Date,
in form and substance reasonably satisfactory to Holding Companies, of Xxxxxxx,
Xxxx & Xxxxxxx, British Virgin Islands counsel to Buyer, covering such matters
as reasonably requested by Holding Companies.
ARTICLE IX
CONDITIONS TO BUYER'S OBLIGATIONS
The obligations of Buyer to consummate the transactions
contemplated hereby are subject to the satisfaction or waiver, at Buyer's sole
option and entire discretion, on or prior to the Closing Date, of each of the
following conditions:
9.1 Representations, Warranties and Covenants. All representations and
warranties of Sellers and Holding Companies contained in this Agreement or in
any Schedule hereto shall be true and correct, except for such failures as would
not, in the aggregate, have a Material Adverse
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Effect, at and as of the Closing Date as if such representations and warranties
were made at and as of the Closing Date, except for (i) representations and
warranties that speak as of a specific date or time other than the Closing Date
(which need only be true and correct, except for such failures as would not, in
the aggregate, have a Material Adverse Effect, as of such date or time), (ii)
representations and warranties which are qualified by materiality or Material
Adverse Effect (which shall be true and correct in all respects) and (iii)
changes therein specifically permitted by this Agreement or resulting from any
transaction expressly consented to in writing by Buyer; and Sellers and Holding
Companies shall have performed in all material respects all agreements and
covenants required hereby to be performed by each of them prior to or at the
Closing Date. There shall be delivered to Buyer a certificate of (i) Seller's
Representatives (with respect to Sellers) in the form attached hereto as Exhibit
I-1; (ii) Holding Companies (signed by their respective Presidents) in the form
attached hereto as Exhibit I-2 and (iii) Target (signed by its Chief Executive
Officer) in the form attached hereto as Exhibit I-3, in each case to the
foregoing effect.
9.2 Consents; Illegality. (a) All consents, approvals and waivers from
Governmental Authorities and other Persons (including under all Contracts)
necessary to permit the consummation of the transactions contemplated by this
Agreement shall have been obtained, and no such consent, approval or waiver of
any Governmental Authority or other Person shall contain any term or condition
that Buyer in its reasonable discretion determine to be unduly burdensome.
(b) There shall not be in effect any statute, rule, regulation
or order of any Governmental Authority which enjoins, prohibits or makes illegal
the consummation of the transactions contemplated by this Agreement.
9.3 Due Diligence Investigation. Buyer shall have completed to its
reasonable satisfaction a due diligence investigation of the business,
properties, results of operations, financial conditions and prospects (including
all accounts, books and records, and Contracts) of Target and Company.
9.4 No Governmental or Other Legal Proceeding. There shall be no Legal
Proceeding, whether initiated or brought by any Governmental Authority or other
Person, pending or threatened which seeks to enjoin, restrain or prohibit the
consummation of the transactions contemplated by this Agreement or to impose
limitations on the ability of Buyer to exercise full rights of ownership of the
Purchased Capital Stock or the ability of Buyer to conduct the businesses
conducted by Company or to require the divestiture by Buyer of the Purchased
Capital Stock or by Company, Buyer or any of its Affiliates of any assets or
businesses, or which Buyer believes, acting reasonably, presents a material risk
that it or its Affiliates would suffer significant monetary damages (without
regard to whether such Legal Proceeding is being indemnified against under this
Agreement); provided that under no circumstances shall Company, Buyer or any of
its Affiliates be required to carry out divestitures or agree to restrict its
operations in any way.
9.5 No Material Adverse Change. From the date hereof and through the
Closing, there shall not have occurred any event, change or development
(excluding any event, change or development that relates generally to the Latin
American e-commerce industry or the Mexican economy) that has had or would
reasonably be expected to have a Material Adverse Effect on Company.
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9.6 Release of Encumbrances. Any existing Encumbrances in respect of
the Purchased Capital Stock shall have been released to the reasonable
satisfaction of Buyer.
9.7 Execution of Lock-up Agreements. Each of Sellers and Holding
Companies shall have executed and delivered to Buyer lock-up agreements
substantially in the forms attached hereto as Exhibit C-1 (in the case of
Sellers that are Key Employees), Exhibit C-2 (in the case of Sellers that are
not Key Employees and in the case of Holding Company B), and Exhibit C-3 (in the
case of Holding Company A), as set forth in Schedule 9.7.
9.8 Employment Agreements. The Key Employees shall have entered into
Buyer's current standard employment contracts and confidentiality and
non-competition agreements with Buyer's Mexican subsidiary on terms and
conditions satisfactory to Buyer.
9.9 Legal Opinions. Sellers and Holding Companies shall have delivered,
or shall have caused to be delivered, to Buyer legal opinions dated as of the
Closing Date, in form and substance reasonably satisfactory to Buyer, of (i)
Xxxxxxxxxxx y Steta, S.C., Mexican counsel to Sellers and Holding Companies,
(ii) Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, California counsel to Sellers and Target
and (iii) Ernst & Young, Dutch counsel to Sellers and Holding Companies, and
covering such matters as reasonably requested by Buyer.
9.10 Escrow Agreement. Sellers and Holding Companies shall have duly
executed and delivered the Escrow Agreement and the Escrow Agent shall have duly
executed and delivered the Escrow Agreement; such agreement shall be in full
force and effect; and each of the Sellers, Holding Companies and the Escrow
Agent shall have complied with all obligations required of it as of the Closing
Date under such agreement.
9.11 Buyer Board of Director Approval. Buyer shall have received final
approval from its Board of Directors (subject to Buyer's satisfactory completion
of its due diligence investigation) to enter into and consummate the
transactions contemplated hereby.
9.12 Power of Attorney. Each of the Sellers shall have executed a power
of attorney substantially in the form attached hereto as Exhibit G.
9.13 New Share Options. The New Share Options proposed by Target
pursuant to Section 7.9 shall be reasonably acceptable to Buyer and conform to
the terms and conditions of the employment and share option plan arrangements
set forth in Exhibit D-1.
9.14 Financial Statements. Holding Companies shall have delivered, or
shall have caused to be delivered to Buyer, Company Financial Statements, which
shall be substantially consistent with the Indicative Financial Statements.
9.15 Tax Certificate. Sellers shall have delivered to the Buyer a
certificate or certificates in form and substance satisfactory to Buyer, duly
executed and acknowledged, certifying any facts that would exempt the
transactions contemplated hereby from withholding pursuant to Section 1445 of
the U.S. Internal Revenue Code of 1986, as amended.
9.16 Conversion of Preferred Stock. All of the outstanding Series A
Convertible Preferred Stock of Target shall have been duly converted into
4,080,000 shares of common stock of Target.
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9.17 Cancellation of Lease Obligations. Company shall have delivered to
Buyer evidence of cancellation, by each of Xxxx Xxxxxx Xxxxxxxx, Xxxx Xxxxxx
Xxxxxx and Xxxxxx Xxxxxxxxx, on a personal basis, of the obligation set forth on
Schedule 5.4.
9.18 Other Closing Documents. Sellers and Holding Companies shall have
delivered to Buyer such other closing certificates and documents as reasonably
requested by Buyer, including, without limitation, a receipt for the Purchase
Price, good standing certificates and certificates of the corporate secretaries
of Holding Companies and Company annexing resolutions, incumbency, signature and
other documents establishing the due authorization and execution of this
Agreement and other agreements and documents contemplated hereby.
ARTICLE X
ACTIONS AFTER THE CLOSING
10.1 Further Assurances. On and after the Closing Date, Sellers,
Holding Companies and Buyer shall use their respective best efforts to take all
appropriate action and execute all documents, instruments or conveyances of any
kind which may be reasonably necessary or advisable to carry out any of the
provisions hereof.
10.2 Certain Tax Matters. (a) Buyer shall cause to be prepared (on a
basis consistent with prior periods except for changes required by changes in
applicable Tax Law) and filed all Tax Returns for Target and Company for all
taxable periods; provided, however, that PricewaterhouseCoopers shall prepare
the Tax Returns for year ended December 31, 1999. Sellers shall reimburse Buyer
for Taxes of the Target and Company with respect to such periods ten (10) days
prior to the date of payment by Buyer, the Target or Company of such Taxes to
the extent such Taxes are not reflected in the reserve for Tax liability (rather
than any reserve for deferred Taxes established to reflect timing differences
between book and Tax income) shown on the face of the Closing Balance Sheet (as
finally determined pursuant to Section 2.3). With respect to taxable periods
beginning before and ending after the Closing Date (a "Straddle Period"),
Sellers and Buyer shall to the extent permitted by applicable law, elect with
the relevant Tax Authority to close the taxable period of the Target and Company
on the Closing Date. Sellers shall reimburse Buyer for Taxes of the Target and
Company with respect to a Straddle Period, an amount equal to the portion of
such Taxes which relates to the portion of such taxable period ending on the
Closing Date. The portion of such Tax which relates to the portion of such
taxable period ending on the Closing Date shall (x) in the case of any Taxes
other than Taxes based upon or related to income or receipts, be deemed to be
the amount of such Tax for the entire taxable period multiplied by a fraction,
the numerator of which is the number of days in the portion of the taxable
period ending on the Closing Date and the denominator of which is the number of
days in the entire taxable period, and (y) in the case of any Tax based upon or
related to income or receipts, be deemed equal to the amount which would be
payable if the relevant taxable period ended on the Closing Date.
(b) Sellers, Holding Companies, Target and Buyer shall
cooperate fully, as and to the extent reasonably requested by the other party,
in connection with the filing of Tax Returns pursuant to this Section 10.2 and
any audit, litigation or other proceeding with respect to Taxes. Such
cooperation shall include the retention and (upon the other party's request) the
provision of records and information which are reasonably relevant to any such
audit, litigation or other
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proceeding and making employees available on a mutually convenient basis to
provide additional information and explanation of any material provided
hereunder. Buyer and Sellers agree to retain all books and records with respect
to Tax matters pertinent to the Target and Company relating to any taxable
period beginning before the Closing Date until the expiration to the statute of
limitations (and any extensions thereof) of the respective taxable periods, and
to abide by all record retention agreements entered into with any taxing
authority and all applicable tax-record keeping laws. Prior to filing (or
subsequently amending) any Tax Return for any taxable period beginning before
the Closing Date, Buyer shall allow Sellers to review each such Tax Return and,
consistent with applicable Tax law, shall make such revisions as reasonably
requested by Sellers.
ARTICLE XI
INDEMNIFICATION
11.1 Survival of Representations Etc. The representations and
warranties of Sellers, Holding Companies, Target and Buyer contained herein or
in the Schedules or Exhibits hereto or any certificate delivered pursuant hereto
shall survive the Closing until the date one year and one day following the
Closing Date or, as to the representations and warranties in Section 5.13, until
the date two years and one day following the Closing Date (the "Representation
Survival Date"). Notwithstanding the foregoing, the representations and
warranties contained in Section 5.19 shall survive the Closing until the date
three years and one day following the Closing Date (the "Tax Representation
Survival Date").
11.2 Indemnification. (a) Sellers and, upon their execution and
delivery of this Agreement, Holding Companies and, until the Closing Date,
Target, shall indemnify Buyer and its Affiliates against, and hold Buyer and its
Affiliates harmless from, without duplication, any loss, damage, claim,
liability or expense, including interest, penalties and reasonable attorney's
fees (collectively "Damages"), arising out of (i) the breach of any
representation or warranty of Sellers, Holding Companies, Target or Company so
long as Notice (as defined in Section 11.3) is delivered before the
Representation Survival Date or Tax Representation Survival Date, as applicable,
as provided in Section 11.1, (ii) the breach of any covenant or agreement of
Sellers, Holding Companies or Company contained in this Agreement or (iii) any
Taxes of the Target or Company with respect to any Tax year or portion thereof
ending on or before the Closing Date (or for any Straddle Period, to the extent
allocable to the portion of such period beginning before and ending on the
Closing Date) and any and all Taxes arising out of, resulting from or caused by
the Holding Company Transfers. The indemnification obligations of the Sellers
Holding Companies and Target hereunder shall be joint and several. It is
understood and agreed by the parties thereto that upon the occurrence of the
Closing, Target shall have no further obligations under this Section 11.2(a).
(b) Buyer shall indemnify and hold Sellers and their
Affiliates harmless from any Damages arising out of (i) the breach of any
representation or warranty of Buyer until the Representation Survival Date so
long as Notice of such breach is delivered before the applicable Representation
Survival Date or (ii) the breach of any covenant or agreement of Buyer contained
in this Agreement.
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(c) As used in this Article XI, the term "Damages" is not
limited to matters asserted by third parties against any Person entitled to be
indemnified under this Article XI, but includes Damages incurred or sustained by
Sellers, Holding Companies, Target, Company, or Buyer or their respective
Affiliates in the absence of third-party claims. The term "Damages" as used in
this Article XI shall include consequential or punitive damages. Notwithstanding
any other provision contained herein, for purposes of this Section 11.2, in
determining the amount of any Damages resulting from any such breach, such
representations and warranties shall be read without regard to any "Material
Adverse Effect" qualifications or other "materiality" qualifications contained
therein.
11.3 Procedure. (a) Except as provided in Section 11.3(c), in the event
that any Person shall incur or suffer any Damages in respect of which
indemnification may be sought hereunder, the party seeking to be indemnified
hereunder (the "Indemnitee") may assert a claim for indemnification by written
notice (the "Notice") to the party from whom indemnification is being sought
(the "Indemnitor"), stating the nature and basis of such claim and, to the
extent practicable, the amount or estimate of the Damages attributable to such
Claim. In the case of Damages arising or which may arise by reason of any
third-party claim, promptly after receipt by an Indemnitee of written notice of
the assertion or the commencement of any Legal Proceeding with respect to any
matter in respect of which indemnification may be sought by such party
hereunder, the Indemnitee shall give the Notice to the Indemnitor and shall
thereafter keep the Indemnitor reasonably informed with respect thereto;
provided that failure of the Indemnitee to give the Indemnitor prompt notice as
provided herein shall not relieve the Indemnitor's obligations hereunder, except
that if the Indemnitor is prejudiced by such failure its obligations shall be
reduced to the extent of such prejudice resulting from such failure. In case any
such Legal Proceeding is brought against any Indemnitee, the Indemnitor shall be
entitled to assume the defense thereof, by written notice of its intention to do
so to the Indemnitee within 30 days after receipt of the Notice, in which event
the Indemnitor shall assume all past and future responsibility for such Legal
Proceeding, including reimbursing the Indemnitee for all prior reasonable legal
expenses in connection therewith. If the Indemnitor shall assume the defense of
such Legal Proceeding, it shall not settle such Legal Proceeding unless such
settlement includes as an unconditional term thereof the giving by the claimant
or the plaintiff of a release of the Indemnitee from all liability with respect
to such Legal Proceeding. As long as the Indemnitor has assumed the defense of
such Legal Proceeding, and is contesting any such Legal Proceeding in good faith
and on a timely basis, the Indemnitee shall not pay or settle any claims brought
under such Legal Proceeding. Notwithstanding the assumption by the Indemnitor of
the defense of any Legal Proceeding as provided in this subsection, the
Indemnitee shall be permitted to participate in the defense of such Legal
Proceeding and to employ counsel at its own expense; provided, however, that if
the defendants in any Legal Proceeding shall include both an Indemnitor and any
Indemnitee and such Indemnitee shall have reasonably concluded that counsel
selected by Indemnitor has a conflict of interest because of the availability of
different or additional defenses to such Indemnitee which, if asserted, would be
adverse to the Indemnitor, such Indemnitee shall have the right to select
separate counsel to participate in the defense of such Legal Proceeding on its
behalf, at the expense of the Indemnitor; provided that the Indemnitor shall not
be obligated to pay the expenses of more than one separate counsel for all
Indemnitees. The Indemnitor shall not be obligated to incur total expenses and
costs in excess of the Indemnity Cap.
(b) If the Indemnitor shall fail to notify the Indemnitee of
its desire to assume the defense of any such Legal Proceeding within the
prescribed period of time, or shall notify the
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Indemnitee that it will not assume the defense of any such Legal Proceeding,
then the Indemnitee may assume the defense of any such Legal Proceeding, in
which event it may do so in such manner as it may reasonably deem appropriate,
and the Indemnitor shall be bound by any determination made in such Legal
Proceeding or any settlement thereof effected by the Indemnitee; provided, that
the Indemnitee shall provide the Indemnitor with reasonable advance notice of
any proposed settlement; provided, further, that any such determination or
settlement shall not affect the right of the Indemnitor to dispute the
Indemnitee's claim for indemnification. The failure of the Indemnitor to assume
the defense of any such Legal Proceeding shall not be deemed a concession that
it is required to indemnify the Indemnitee for the subject matter of such Legal
Proceeding. The Indemnitor shall be permitted to join in the defense of such
Legal Proceeding and to employ counsel at its own expense.
(c) Notwithstanding anything to the contrary in this
Agreement, this Section 11.3(c) shall apply to any Tax audit or administrative
or court proceeding relating to any Tax covered by this Section 11 (a "Tax
Proceeding"). With respect to periods ending prior to or on the Closing Date,
the Sellers shall have the sole right to represent the interests of Company in
any Tax Proceeding covered by Section 11.2(a) and to employ counsel of its
choice; provided, however, that if the results of such Tax Proceeding could
reasonably be expected to have a Material Adverse Effect on the business,
properties, results of operations, financial condition or prospects of Buyer,
any of Buyer's Affiliates, or Company for any taxable period including or ending
after the Closing Date, then the Sellers, Holding Companies and Buyer shall
jointly control the defense and settlement of such Tax Proceeding, and each
party shall cooperate with the other party at its own expense and there shall be
no settlement or closing or other agreement with respect thereto without the
consent of the other party, which consent will not be unreasonably withheld;
provided, however, that in the event that one of the parties (Sellers and
Holding Companies being considered a single party for these purposes) does not
consent to a settlement or compromise that the other party is willing to accept,
the liability of first party in connection with such Tax Proceeding and its
indemnity obligation hereunder shall not exceed an amount equal to its allocable
share of the proposed settlement or compromise; and provided, further, that
Seller shall have no right to represent the interests of Company with respect to
matters for which Buyer has waived any right to indemnity from Seller hereunder.
The Sellers shall promptly notify Buyer if it decides not to control the defense
or settlement of any such Tax Proceeding and Buyer thereupon shall be permitted
to defend and settle such Tax Proceeding. With respect to any taxable period of
Company beginning before and ending after the Closing Date, the Sellers, Holding
Companies and Buyer shall jointly control the defense and settlement of any such
Tax Proceeding, and each party shall cooperate with the other party at its own
expense and there shall be no settlement or closing or other agreement with
respect thereto without the consent of the other party, which consent will not
be unreasonably withheld; provided, however, that in the event that one of the
parties (Sellers and Holding Companies being considered a single party for these
purposes) does not consent to a settlement or compromise that the other party is
willing to accept, the liability of first party in connection with such Tax
Proceeding and its indemnity obligation hereunder shall not exceed an amount
equal to its allocable share of the proposed settlement or compromise.
11.4 Limitations to Indemnity. (a) Any indemnification payable pursuant
to Section 11.2(a) (i) (except as a result of a breach of representation or
warranty contained in Section 5.19) or 11.2(a)(ii) shall not exceed an amount
equal to the value of 525,000 shares of Buyer's common stock (the "Indemnity
Cap") (as such number of shares may be adjusted to account for share splits and
combinations and recapitalizations or reorganizations, the "Indemnity Shares").
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As of any date of calculation, the "value" of the Shares (or of the equivalent
stock of any successor entity) shall be calculated by reference to the average
of the high and low sales prices per share of Buyer's common shares on each of
the 20 consecutive Nasdaq National Market trading days ending on the second
trading day prior to such date of calculation; provided, that if the Shares are
no longer traded on the Nasdaq National Market, the Indemnity Cap shall be fixed
at the value of the Indemnity Shares at the time of delisting of the Indemnity
Shares from the Nasdaq National Market. No indemnification shall be payable
pursuant to Section 11.2 until the aggregate amount claimed against such
Indemnitor under this Agreement shall have exceeded U.S.$50,000 ("De Minimis
Threshold").
(b) Any indemnity payment under this Agreement shall be
treated as an adjustment to the Stock Purchase Price.
11.5 Net Indemnifiable Losses. (a) The amount of any Damages shall not
include, and shall be deemed net of, (i) amounts collected by the Indemnitee in
respect of such Damages pursuant to any applicable insurance coverage or third
party indemnification rights and (ii) any proceeds from claims, cross-claims and
counterclaims that are actually received by the Indemnitee pursuant to a final
judgment by the Indemnitee for claims or Legal Proceedings covered by such
Damages. Each Indemnitee further agrees that, in the event any Damages shall
have been previously paid by the Indemnitor and, thereafter, any insurance
proceeds or any proceeds from claims, cross-claims and counterclaims that are
actually received by the Indemnitee, then the Indemnitee shall, promptly after
receipt of such proceeds, reimburse the Indemnitor to the extent retention of
such proceeds by the Indemnitee should be duplicative in light of the prior
payment of the Damages.
(b) If the payment of the amount with respect to which any
claim is made under this Section 11 ("Indemnity Claim"), gives rise to a
currently realized Tax Benefit (as defined below) to the party making the claim,
the indemnity payment shall be reduced by the amount of the Tax Benefit
available to the party making the claim. To the extent such Indemnity Claim does
not give rise to a currently realized Tax Benefit, if the amount with respect to
which any Indemnity Claim is made gives rise to a subsequently realized Tax
Benefit to the party that made the claim, such party shall refund to the
indemnifying party the amount of such Tax Benefit when, as and if realized. For
the purposes of this Agreement, any subsequently realized Tax Benefit shall be
treated as though it were a reduction in the amount of the initial Indemnity
Claim, and the liabilities of the parties shall be redetermined as though both
occurred at or prior to the time of the indemnity payment. For purposes of this
subsection 11.5(b), a "Tax Benefit" means an amount by which the tax liability
of the party (or group of corporations including the party) is actually reduced
(by deduction, reduction of income or entitlement to refund or credit) plus any
related interest received from the relevant taxing authority. Where a party has
other losses, deductions, credits or items available to it, the Tax Benefit from
any losses, deductions, credits or items relating to the Indemnity Claim shall
be deemed to be realized last after any other losses, deductions, credits or
items are realized. For the purposes of this subsection 11.5(b), a Tax Benefit
is "currently realized" to the extent that such Tax Benefit will be actually
realized in the current taxable period or year or in any tax return with respect
thereto (including through a carryback to a prior taxable period) or in any
taxable period or year prior to the date of the Indemnity Claim. In the event
that there should be a determination disallowing the Tax Benefit, the
indemnifying party shall be liable to refund to the indemnified party the amount
of any related reduction previously allowed or payments previously made to the
indemnifying party pursuant to this subsection 11.5(b).
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11.6 Non-Exclusive Remedy. The indemnification remedies provided in
this Article XI shall not be deemed to be exclusive. Accordingly, the exercise
by any Person of any of its rights under this Article XI shall not deemed to be
an election of remedies and shall not be deemed to prejudice, or to constitute
or operate as a waiver of, any other right or remedy that such Person may
entitled to exercise (whether under this Agreement, under any other contract,
under any law or otherwise). Notwithstanding the preceding two sentences of this
Section 11.6, the Indemnity Cap (except in the case of Damages resulting from a
breach of a representation and warranty contained in Sections 5.19 or
11.2(a)(iii)) shall act as a maximum amount of all Damages, whether pursuant to
Section 11.2, under contract or otherwise.
ARTICLE XII
MISCELLANEOUS
12.1 Termination. (a) This Agreement may be terminated and the
transactions contemplated hereby abandoned solely as follows:
(i) by Sellers' Representatives if Buyer has not notified
Sellers that the condition in Section 7.4 has been satisfied on or prior to the
date that is 10 days after the date hereof; or
(ii) by Sellers' Representatives (in the case of Sellers) or
Buyer upon notice if the Closing has not occurred by the Walk-away Date; or
(iii) by the express written agreement of Sellers'
Representatives (in the case of Sellers) and Buyer; or
(iv) by Buyer in the event that any condition set forth in
Article IX shall not be satisfied and shall not be reasonably capable of being
remedied prior to or on the Walk-away Date; or
(v) by Sellers' Representatives (in the case of Sellers) in
the event that any condition set forth in Article VIII shall not be satisfied
and shall not be reasonably capable of being remedied prior to or on the
Walk-away Date.
The "Walk-away Date" shall mean the date which is 45 days following the date
hereof; provided, however, that the Walk-away Date shall be extended by a
further 45 days to the extent required in connection with any
competition-related filing with the Mexican Federal Competition Commission.
(b) In the event of termination of this Agreement by any party
or parties entitled to terminate this Agreement pursuant to Section 12.1,
written notice thereof shall forthwith be given by the terminating party to the
other parties hereto, and this Agreement shall thereupon terminate and become
void and have no effect, and the transactions contemplated hereby shall be
abandoned without further action by the parties hereto; provided, however,
that the provisions of Sections 7.3(b), 7.4(b), 12.2 and 12.12 shall
survive the termination of this Agreement; provided,
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further, that such termination shall not relieve any party hereto of any
liability for any breach of the surviving provisions of this Agreement.
12.2 Confidentiality. Except as otherwise set forth below or required
by Applicable Law, Buyer, Sellers and Holding Companies and their
representatives shall keep confidential until three years from the Closing all
aspects of the transactions contemplated hereby. Notwithstanding the foregoing,
Buyer and its Affiliates and Sellers, Holding Companies and their respective
Affiliates may disclose information concerning the transactions contemplated
hereby as necessary to satisfy any of the conditions set forth in Articles VIII
and IX. Buyer shall issue a press release and make a filing on Form 6-K with the
SEC, upon the execution of this Agreement. In addition, Buyer may file a copy of
this Agreement with the SEC and any other applicable Governmental Authority as
and if required by Applicable Laws. Before any public announcement is made with
respect to the transactions contemplated by this Agreement, to the extent
practicable, each party will first provide to the other parties the content of
all proposed disclosure, the reasons that such disclosure is required by law,
and the time and place that the disclosure will be made.
12.3 Assignment. Neither this Agreement nor any of the rights or
obligations hereunder may be assigned by any of the Sellers without the prior
written consent of Buyer, or by Buyer without the prior written consent of
Sellers' Representatives, except that Buyer may, without such consent, assign
the right to acquire the Purchased Capital Stock to any of its direct or
indirect subsidiaries; provided, that no such assignment shall relieve Buyer of
any of its obligations under this Agreement. Subject to the foregoing and except
for the promises in Article IV relating to Indemnity Parties, this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, and no other Person shall have any right,
benefit or obligation hereunder.
12.4 Notices. Unless otherwise provided herein, any notice, request,
instruction or other document to be given hereunder by any party to any other
party shall be in writing and delivered in person or by courier, telexed or by
facsimile transmission or mailed by certified or registered mail, postage
prepaid, return receipt requested (such mail notice to be effective on the date
such receipt is acknowledged), as follows:
If to Sellers or
Holding Companies: c/o Xxxxxxxxx.xxx, S.A. de C.V.
Corpus Christi, 2312
Col. Xxxxx xx Xxx Xxxxxxxxx
Xxxxxxxxx, X.X.
Xxxxxx 00000
Attention: Xxxx Xxxxxx Xxxxxx S.
Telecopier number: 000 (000) 000-0000; ext. 115
Confirmation number: 000 (000) 000-0000; ext. 117
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With copies to: Ventura Capital Privado S.A. de C.V.
Edificio Torrealta
Ave. Xxxxx 300-Desp. 1505
66265 Gesza Xxxxxx. N.L.
Attention: Xxxxxx Xxxxx de xx Xxxxx
Telecopier Number: 000 (000) 000-0000
Confirmation Number: 000 (000) 000-0000
Xxxxxxxx Chance Xxxxxx &
Xxxxx LLP 000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
X.X.X.
Attention: Xxxxxxxxx X. Xxxxxxx, Esq.
Telecopier number: (000) 000-0000
Confirmation number: (000) 000-0000
If to Buyer: El Sitio, Inc.
Xx. Xxxxxxxxx Xxxxxx 0000
X0000XXX, Xxxxxx Xxxxx
Xxxxxxxxx
Attention: Xxxxxx Xxxxxxxxx
Telecopier number: 000(00-00) 0000-0000
Confirmation number: 000 (00-00) 0000-0000
With a copy to: Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
X.X.X.
Attention: Xxxxx X. Xxxxxx, Esq. and
S. Xxxx Xxxxxx, Esq.
Telecopier number: (000) 000-0000
Confirmation number: (000) 000-0000
or to such other place and with such other copies as either party may designate
as to itself by written notice to the others.
12.5 Governing Law. This Agreement shall be governed by, and construed
(and the rights of the parties determined) in accordance with, the laws of the
State of New York.
12.6 Dispute Resolution. Any controversy or claim arising out of or
relating to this Agreement, or the breach thereof, shall be settled by
arbitration in accordance with the then existing Rules of Conciliation and
Arbitration of the International Chamber of Commerce (the "ICC"). The arbitral
tribunal shall be composed of three arbitrators. Each party shall appoint one
arbitrator. If a party fails to appoint an arbitrator within thirty (30) days
after the date the claimant's Demand for Arbitration is communicated to the
other party (the "Notification Date"), the ICC shall make such appointment. The
two arbitrators thus appointed shall attempt to agree upon the appointment of a
third arbitrator to serve as chairperson of the arbitral tribunal. If such two
arbitrators fail to agree upon the appointment of such third arbitrator within
sixty (60) days after the Notification Date, the ICC shall make such
appointment. The place of arbitration shall be New York, New York. The arbitral
proceeding shall be conducted in the English language.
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The arbitral tribunal shall apply the laws of the State of New York. To the
extent they may validly so agree, the parties hereby exclude any right of appeal
to any court of the arbitration or concerning the arbitral award. Judgment upon
the arbitral award may be entered in any court having jurisdiction thereof or
having jurisdiction over any party or any party's assets. Notwithstanding the
foregoing, any party may seek a preliminary injunction or other preliminary
judicial relief if, in its reasonable, good faith judgment, such action is
necessary to avoid irreparable damage. Despite such action, such party shall
continue to participate in good faith in the procedures specified in this
Section 12.6. All applicable statutes of limitations shall be tolled while the
procedures specified in this Section 12.6 are pending, and the parties shall
take any and all actions required to effectuate such tolling.
12.7 Judgment Currency. Each party hereto agrees that, if a judgment or
order given or made by any court for the payment of any amount due to any other
party hereunder, which amount is expressed in currency (the "judgment currency")
other than the currency (the "denomination currency") in which such amount is
payable, the party making such payment shall indemnify the receiving party
against any deficiency arising or resulting from any variation in rates of
exchange between the date as of which the amount in the denomination currency is
notionally converted into the amount in the judgment currency for the purposes
of such judgment or order and the date of actual payment thereof. This indemnity
shall constitute a separate and independent obligation from the other
obligations contained in this Agreement, shall give rise to a separate and
independent cause of action, will apply irrespective of any indulgence granted
from time to time and shall continue in full force and effect notwithstanding
any judgment or order for a liquidated sum or sums in respect of any amounts so
due in respect hereof under any such judgment or order.
12.8 Entire Agreement; Amendments and Waivers. This Agreement
constitutes the entire agreement among the parties pertaining to the subject
matter hereof and supersedes all prior agreements, understandings, negotiations
and discussions, whether oral or written, of the parties, except for the Letter
of Intent, which shall terminate on the Closing Date. No supplement,
modification or amendment of this Agreement shall be binding unless executed in
writing by all parties. Any term of provision of this Agreement may be waived,
or the time for performance of which may be extended, if evidenced in writing by
the party or parties entitled to the benefit hereof. No waiver of any of the
provisions of this Agreement shall be deemed or shall constitute a waiver of any
other provision hereof (whether or not similar), nor shall such waiver
constitute a continuing waiver unless otherwise expressly provided.
12.9 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
12.10 Invalidity. In the event that any one or more of the provisions
contained in this Agreement or in any other instrument referred to herein,
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other provision of this Agreement or any other such instrument.
12.11 Headings. The headings of the Articles and Sections herein are
inserted for convenience of reference only and are not intended to be a part of
or to affect the meaning of interpretation of this Agreement.
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12.12 Expenses. Except as provided in Article XI, Sellers, Holding
Companies, Target and Buyer shall each be liable for their own costs and
expenses incurred in connection with the negotiation, preparation, execution or
performance of this Agreement, including the fees and expenses of any financial,
accounting or legal advisors retained in connection herewith; provided, that
Sellers shall be liable for expenses incurred by or on behalf of Target or
Company prior to the Closing Date; and provided, further, that upon a failure by
Buyer to Close pursuant to Section 2.2 that is not attributable to a failure of
any of the conditions set forth in Article IX to be satisfied or waived prior to
the Walk-away Date, Buyer shall pay up to 50% of Sellers' expenses incurred in
connection with this Agreement up to U.S.$75,000.
12.13 Schedules and Exhibits. The Schedules and Exhibits referred to in
this Agreement shall be construed with and as an integral part of this Agreement
to the same extent as if the same had been set forth verbatim herein. Any matter
disclosed in any Schedule of the Sellers, Holding Companies and Target, on the
one hand, or of Buyer, on the other hand, shall be deemed to qualify each
representation and warranty of Sellers, Holding Companies, Target and Buyer, as
the case may be, notwithstanding the lack of a specific cross-reference, except
to the extent that its applicability to a particular representation, warranty,
agreement or condition is not reasonably apparent from the disclosure thereof.
12.14 Reasonable Consent Required. Where any provision of this
Agreement requires a party to obtain the consent, approval or other acquiescence
of any other Person, such consent, approval or other acquiescence shall not be
unreasonably conditioned, withheld or delayed by such other Person.
12.15 Governing Language. This Agreement and its schedules and exhibits
may be translated into Spanish. If any provision contained in the Spanish
version of this Agreement conflicts or is inconsistent with any provision of the
English version of this Agreement, then the provision contained in the English
version shall prevail.
12.16 Delegation to and Reliance on Sellers' Representatives. Sellers
and Holding Companies hereby delegate to Sellers' Representatives the authority
to provide notices and written instructions to Buyer and to act on behalf of the
Sellers and Holding Companies regarding any notices, written instructions or
actions required of Sellers or Holding Companies in connection with this
Agreement. Buyer is entitled to rely, and the Sellers and Holding Companies
acknowledge that Buyer shall rely, upon the notices, written instructions or
actions of Sellers' Representatives acting on behalf of Sellers or Holding
Companies.
12.17 Adherence to Agreement by Holding Companies. Notwithstanding any
provision of this Agreement to the contrary, Sellers, Target and Buyer hereby
agree that, upon Sellers' compliance with Section 7.14, Sellers shall cause each
of Holding Companies to execute and deliver counterparts to this Agreement, and
that upon such execution, each of Holding Companies shall be bound by and adhere
to this Agreement, with the same force and effect as if Holding Companies had
executed and delivered this Agreement on and as of the date hereof.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
BUYER:
EL SITIO, INC.
By: /s/ Xxxxxx Xxxxxxxxx
----------------------------------
Name: Xxxxxx Xxxxxxxxx
Title:
TARGET:
XXXXXXXXX.XXX, INC.
By: /s/ Xxxx Xxxxxx Xxxxxx
----------------------------------
Name: Xxxx Xxxxxx Xxxxxx
Title:
SELLERS:
XXXX XXXXXX XXXXXX XXXXXXX
By: /s/ Xxxx Xxxxxx Xxxxxx Xxxxxxx
----------------------------------
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XXXXXX DE LA XXXXX XXXXX
By: /s/ Xxxxxx de la Xxxxx Xxxxx
----------------------------------
XXXXXX XXXXXXXXX XXXXXXXX
By: /s/ Xxxxxx Xxxxxxxxx Xxxxxxxx
----------------------------------
XXXXXXXX XXXXX XXXXXX
By: /s/ Xxxxxxxx Xxxxx Xxxxxx
----------------------------------
XXXXXX XXXXX DE XX XXXXX
By: /s/ Xxxxxx Xxxxx de xx Xxxxx
----------------------------------
GRUPO CAPITAL PRIVADO S.A. DE C.V.
By: /s/ Xxxxxxx Xxxxxxxx
---------------------------------
Name:
Title:
XXXXX XXXXX SAGAON
By: /s/ Xxxxx Xxxxx Sagaon
----------------------------------
XXXXXX XXXXXXXXXX XXXXXXXXX
By: /s/ Xxxxxx Xxxxxxxxxx Xxxxxxxxx
----------------------------------
XXXXXXX XXXXX XXXXXXXX
By: /s/ Xxxxxxx Xxxxx Xxxxxxxx
----------------------------------
XXXXX XXXXX XXXXXXXX
By: /s/ Xxxxx Xxxxx Xxxxxxxx
----------------------------------
XXXXX XXXXXXX XXXXXX XXXXXXX
By: /s/ Xxxxx Xxxxxxx Xxxxxx Xxxxxxx
----------------------------------
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XXXXXX XXXXX XXXXXXXX XXXXXXX
By: /s/ Xxxxxx Xxxxx Xxxxxxxx Xxxxxxx
----------------------------------
XXXX XXXXXX
By: /s/ Xxxx Xxxxxx
----------------------------------
XXXXXXX XXXXXXX XXXXXXXX
By: /s/ Xxxxxxx Xxxxxxx Xxxxxxxx
----------------------------------
XXXXX XXXXX XXXXX
By: /s/ Xxxxx Xxxxx Xxxxx
----------------------------------
XXXX XXXX XXXXXX
By: /s/ Xxxx Xxxx Xxxxxx
----------------------------------
XXXX XXXXXX XXXXXXXX XXXX
By: /s/ Xxxx Xxxxxx Xxxxxxxx Xxxx
----------------------------------
XXXXXX XXXXXXX
By: /s/ Xxxxxx Xxxxxxx
----------------------------------
XXXXXXX XXXXX XXXXXXXX
By: /s/ Xxxxxxx Xxxxx Xxxxxxxx
----------------------------------
XXXXXX X. XXXXXX
By:
----------------------------------
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XXXXXXXXX XXXXXXX XXXXXX
By: /s/ Xxxxxxxxx Xxxxxxx Xxxxxx
---------------------------------------
XXXXXXXX XXXXX DE LA FUENTE
By: /s/ Xxxxxxxx Xxxxx de la Fuente
------------------------------------
XXXXXX X. XXXXXXXX XXXXXXXX
By: /s/ Xxxxxx X. Xxxxxxxx Xxxxxxxx
---------------------------------------
XXXXXXX XXXX XXXXXXX
By: /s/ Xxxxxxx Xxxx Xxxxxxx
---------------------------------------
XXXXX XXXXXXX XXXXXXX XX XXXXXXX
By: /s/ Xxxxx Xxxxxxx Xxxxxxx xx Xxxxxxx
---------------------------------------
XXXXXX XXXXXXX XXXXXXXXXX
By: /s/ Xxxxxx Xxxxxxx Xxxxxxxxxx
--------------------------------------
XXXXXXX XXXXXXXXX ANDREVE
By: /s/ Xxxxxxx Xxxxxxxxx Andreve
------------------------------------
DESARROLLO DINAMICO MEXICANO, S.A. DE C.V.
By: /s/ Xxxxxxx Xxxxxx
--------------------------------------
Name:
Title:
XXXXX XXXXX XXXXXXXX
By: /s/ Xxxxx Xxxxx Xxxxxxxx
---------------------------------------
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XXXXX XXXXXX XXXXXX
By: /s/ Xxxxx Xxxxxx Xxxxxx
---------------------------------------
XXXXX XXXXX
By: /s/ Xxxxx Xxxxx
---------------------------------------
XXXX XXXXX XXXXXXXX
By: /s/ Xxxx Xxxxx Xxxxxxxx
---------------------------------------
XXXXX X. XXXXXX
By: /s/ Xxxxx X. Xxxxxx
---------------------------------------
Name:
Title:
XXXXX X. XXXXXX
By: /s/ Xxxxx X. Xxxxxx
---------------------------------------
XXXX X. XXXXXXXXXX
By: /s/ Xxxx X. Xxxxxxxxxx
---------------------------------------
XXXXXX XXXXXXXXXX XXXXXXX
By: /s/ Xxxxxx Xxxxxxxxxx Xxxxxxx
---------------------------------------
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HOLDING COMPANIES:
The undersigned hereby adhere to this
Agreement as of March ___, 2000
CORACIAS, B.V.
By:
---------------------------------------
Name:
Title:
BELAGUA, B.V.
By:
---------------------------------------
Name:
Title:
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EXHIBIT B
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of
_______ __, 2000, by and among, (i) EL SITIO, INC., a British Virgin Islands
company (the "Company"), (ii) CORACIAS, B.V., a Netherlands company ("Holding
Company A"), (iii) BELAGUA, B.V., a Netherlands company ("Holding Company B"),
and (iv) the STOCKHOLDERS OF HOLDING COMPANY A and HOLDING COMPANY B as set
forth on Exhibit A hereto (collectively, the "Sellers").
WHEREAS, Sellers and Company have entered into a Purchase
Agreement dated as of March 10, 2000 (as such agreement may be amended from time
to time, the "Purchase Agreement"), pursuant to which Holding Company A and
Holding Company B shall receive an aggregate of 1,750,000 common shares (the
"Shares"), par value U.S.$0.01, of Company (the "Common Shares") and
U.S.$7,000,000 in cash in exchange for 100% of the capital stock of
XxXxxxxxx.xxx, Inc., a California corporation (the "Acquisition"); and
WHEREAS, it is a condition and inducement to Sellers'
willingness to consummate the Acquisition that Company execute and deliver this
Agreement.
NOW, THEREFORE, in consideration of the covenants and
agreements hereinafter set forth, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 Certain Defined Terms. For purposes of this Agreement:
"Commission" shall mean the U.S. Securities and Exchange Commission.
"Exchange Act" shall mean the U.S. Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated thereunder.
"Holder" shall mean any of Holding Company A, Holding Company
B or any Seller.
"Person" shall mean any individual, partnership, joint
venture, corporation, trust, unincorporated organization or government or any
department or agency thereof.
"Registrable Securities" shall mean (i) any Common Shares
(including the Shares) held by any Holder and (ii) any Common Shares or any
security convertible, exchangeable or exercisable into Common Shares that may be
issued or distributed in respect thereof by way of share dividend, division,
combination or other distribution, recapitalization or reclassification;
provided, that the only Common Shares of the Holders that shall be considered
Registrable
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Shares are the Shares received in connection with the Acquisition and any Common
Shares or other security convertible, exchangeable or exercisable into Common
Shares which may be issued or distributed in respect of the Shares in accordance
with clause (ii) above. As to any particular Registrable Securities, once
issued, such Registrable Securities shall cease to be Registrable Securities
when (a) a registration statement with respect to the sale by the Holder of such
securities shall have become effective under the Securities Act and such
securities shall have been disposed of in accordance with such registration
statement, (b) such securities shall have been distributed to the public
pursuant to Rule 144 (or any successor provision) or Regulation S under the
Securities Act, or (c) such securities shall have ceased to be outstanding.
"Securities Act" shall mean the U.S. Securities Act of 1933,
as amended, and the rules and regulations promulgated thereunder.
"Sellers' Representatives" shall mean Mr. Xxxx Xxxxxx Xxxxxx
S. and Xxxxxx Xxxxx de xx Xxxxx, acting jointly.
1.2 Other Defined Terms. (a) Other terms may be defined
elsewhere in the text of this Agreement and, unless otherwise indicated, shall
have such meaning throughout this Agreement.
1.3 Interpretation. As used in this Agreement, the following
conventions shall be applied in interpreting and construing the provisions of
this Agreement;
(i) the terms "includes" and "including" and similar terms
shall be deemed to be followed by the terms "without
limitation";
(ii) definitions contained in this Agreement apply to singular
as well as the plural forms of such terms and to the masculine
as well as to the feminine and neuter genders of such terms;
(iii) terms in the singular shall be held to include the
plural and vice versa, and words of one gender shall be held
to include the other gender as the context requires;
(iv) the terms "hereof", "herein," and "herewith" and terms of
similar import shall, unless otherwise stated, be construed to
refer to this Agreement as a whole and not to any particular
provision of this Agreement, and Article, Section, paragraph,
Schedule and Exhibit references are to the Articles, Sections,
paragraphs, Schedules and Exhibits to this Agreement unless
otherwise specified;
(v) the term "or" shall not be exclusive; and
(vi) provisions shall apply, when appropriate, to successive
events and transactions.
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1.4 Currency. All references to dollar amounts in this
Agreement are references to U.S. dollars unless otherwise stated.
ARTICLE II
PIGGYBACK REGISTRATION RIGHTS
2.1 Right to Include Registrable Securities. If Company at any
time after the first anniversary of the date hereof and prior to the second
anniversary of the date hereof proposes or is required to register Common Shares
under the Securities Act (other than (i) a registration on Form F-4, or any
successor or other forms promulgated for similar purposes and (ii) registrations
on such form or similar form(s) solely for registration of securities in
connection with an employee benefit plan or dividend reinvestment plan or a
merger, consolidation or acquisition), whether or not for sale for its own
account, in a manner that would permit registration of Registrable Securities
for sale to the public under the Securities Act, it shall, subject to the
remainder of this Section 2.1, give prompt written notice to all Holders of its
intention to do so and of such Holders' rights under this Article II. Upon the
written request of any such Holder made within 15 days after the receipt of any
such notice (which request shall specify the number of Registrable Securities
intended to be disposed of by such Holder and the intended method of
distribution thereof), Company shall, subject to the remainder of this Section
2.1, use its best efforts to effect the registration under the Securities Act of
all Registrable Securities that Company has been duly requested to register by
the Holders thereof (together with the securities that Company at the time
proposes to register for its own account) to permit the sale or other
disposition by such Holders (in accordance with the intended method of
distribution thereof) of the Registrable Securities to be so registered (such
registration, a "Piggyback Registration"); provided, that (a) if, at any time
after giving written notice of its intention to register any Common Shares and
prior to the effective date of the registration statement filed in connection
with such registration, Company shall determine for any reason not to proceed
with or to delay the proposed registration of the securities to be sold by it,
Company may, at its election, give written notice of such determination to each
Holder and, thereupon, (i) in the case of a determination not to register, shall
be relieved of its obligation to register any Registrable Securities in
connection with such abandoned registration, without prejudice, however, to the
rights of Holders under this Section 2.1, and (ii) in the case of a
determination to delay such registration of its Common Shares, shall be
permitted to delay the registration of such Registrable Securities for the same
period as the delay in registering such other Common Shares; or (b) if such
registration involves an underwritten offering, all Holders requesting to be
included in Company's registration must sell their Registrable Securities to the
underwriters selected by Company on the same terms and conditions as apply to
Company, with such differences, including any with respect to indemnification
and liability insurance, as may be customary or appropriate in combined primary
and secondary offerings.
2.2 Withdrawal by Holder. If a registration requested pursuant
to Section 2.1 involves an underwritten public offering, any Holder requesting
to be included in such registration may elect to withdraw its request for
inclusion of its Registrable Securities in such
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registration by giving written notice to Company of its request to withdraw;
provided, however, that (i) such request must be made in writing prior to the
effective date of the registration statement filed in connection with such
registration and (ii) such withdrawal shall be irrevocable and, after making
such withdrawal, a Holder shall no longer have any right to include Registrable
Securities in the registration as to which such withdrawal was made.
2.3 Obligations of the Company. Whenever required under this
Article II to effect the registration of any Registrable Securities, the Company
shall use reasonable efforts to take the following actions (and subject, in each
case, to the Company's rights set forth in the proviso of Section 2.1):
(a) Prepare and file with the SEC a registration statement
with respect to such Registrable Securities and use its reasonable efforts to
cause such registration statement to become effective, and, upon the request of
the Holders of a majority of the Registrable Securities registered thereunder,
keep such registration statement effective for a period of up to sixty days or
until the distribution contemplated in the Registration Statement has been
completed; provided, however, that (i) such 60-day period shall be extended for
a period of time equal to the period the Holder refrains from selling any
securities included in such registration at the request of an underwriter of
securities of the Company; and (ii) in the case of any registrations of
Registrable Securities on Form F-3 that are intended to be offered on a
continuous or delayed basis, such 60-day period shall be extended, if necessary,
to keep the registration statement effective until all such Registrable
Securities are sold, provided that Rule 415, or any successor rule under the
Securities Act, permits an offering on a continuous or delayed basis, and
provided further that applicable rules under the Securities Act governing the
obligation to file a post-effective amendment permit, in lieu of filing a
post-effective amendment which (A) includes any prospectus required by Section
10(a)(3) of the Securities Act or (B) reflects facts or events representing a
material or fundamental change in the information set forth in the registration
statement, the incorporation by reference of information required to be included
in (A) and (B) above to be contained in periodic reports filed pursuant to
Section 13 or 15(d) of the 1934 Act in the registration statement;
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement;
(c) Furnish to the Holders such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as they may
reasonably request in order to facilitate the disposition of Registrable
Securities owned by them;
(d) Use its reasonable efforts to register and qualify the
securities covered by such registration statement under such other securities or
Blue Sky laws of such states or other jurisdictions in the United States as
shall be reasonably requested by the Holders; provided that the Company shall
not be required in connection therewith or as a condition thereto to qualify to
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do business or to file a general consent to service of process in any such
states or other jurisdictions, unless the Company is already subject to service
in such jurisdiction and except as may be required by the Securities Act;
(e) In the event of any underwritten public offering, enter
into and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter of such offering; and each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement;
(f) Notify each Holder of Registrable Securities covered by
such registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing; and
(g) Cause all such Registrable Securities registered pursuant
hereunder to be listed on the principal securities exchange on which similar
securities issued by the Company are then listed.
2.4 Expenses. Company shall pay all fees and expenses in
connection with each registration of Registrable Securities requested pursuant
to this Article II. Such fees and expenses shall include all qualification fees,
printers and accounting fees, the legal fees of counsel for the Company and the
reasonable legal fees and disbursements of one counsel for the requesting Holder
or Holders (such legal fees and disbursements to be in an amount not to exceed
U.S.$10,000 in the aggregate), but excluding, without limitation, (a) all filing
fees with the Commission, any stock exchange or the National Association of
Securities Dealers, Inc., and any underwriters' discounts or commissions
associated with any Registrable Securities and (b) underwriting commissions or
discounts, in each case attributable to the Registrable Securities of the
Holders registered pursuant to Section 2.1.
2.5 Priority in Incidental Registrations. If a registration
pursuant to this Article II involves an underwritten offering and the managing
underwriter advises Company in writing that, in its opinion, the number of
Registrable Securities requested to be included in such registration would be
likely to have an adverse effect on the price, timing or distribution of the
securities to be offered in such offering as contemplated by Company (other than
the Registrable Securities), then Company shall include in such registration (a)
first, 100% of the securities Company proposes to sell and (b) second, to the
extent of the amount of Registrable Securities requested to be included in such
registration which, in the opinion of such managing underwriter, can be sold
without having the adverse effect referred to above, the amount of Registrable
Securities which the Holders and other Persons who have registration rights with
respect to Common Shares, have requested to be included in such registration,
such amount to be allocated pro rata among all requesting Holders and other
Persons on the basis of the relative amount of Registrable Securities then held
by each such Holder or such other Person provided, that any
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such amount thereby allocated to any such Holder that exceeds such Holder's
request shall be reallocated among the remaining requesting Holders in like
manner.
2.6 Limitations to Registration Rights. The Holders do not
have the right to demand or require that Company register Registrable Securities
of the Holders unless Company shall first propose or otherwise be required to
register its securities. Prior to exercising any Piggyback Registration, the
Holders exercising such right pursuant to Section 2.1 shall, in the aggregate,
seek the registration of Registrable Securities with a market value of no less
than U.S.$10,000,000. For purposes of this section "market value" shall be
calculated by reference to the average of the high and low sales prices per
share of the Common Shares on each of the 20 consecutive NASDAQ trading days
ending on the second trading day prior to such date of calculation. Each Holder
shall have the right to demand a Piggyback Registration only once pursuant to
this Agreement; provided, that if the proposed registration by Company shall be
canceled or postponed, such demand of registration by the Holder shall not be
counted.
ARTICLE III
OTHER AGREEMENTS
3.1 Rule 144. Company covenants that it shall file the reports
required to be filed by it under the Securities Act and the Exchange Act (or, if
Company is not required to file such reports, it shall, upon the request of any
Holder, make publicly available such information), and it will take such further
action as any Holder may reasonably request, all to the extent required from
time to time to enable such Holder to sell shares of Registrable Securities
without registration under the Securities Act within the limitation of the
exemptions provided by (a) Rule 144 under the Securities Act, as such Rule may
be amended from time to time, or (b) any similar rule or regulation hereafter
adopted by the Commission. Upon the request of any Holder, Company shall deliver
to such Holder a written statement as to whether it has complied with such
requirements. Notwithstanding anything contained in this Article III, Company
may deregister under Section 12 of the Exchange Act if it then is permitted to
do so pursuant to the Exchange Act.
3.2 Selection of Counsel. In connection with any registration
of Registrable Securities pursuant to Article II hereof, the Holders of a
majority of the Registrable Securities covered by any such registration may
select one counsel to represent all Holders of Registrable Securities covered by
such registration.
3.3 Holdback Agreement. If any registration hereunder shall be
in connection with an underwritten public offering, each Holder agrees not to
effect any public sale or distribution, including any sale pursuant to Rule 144
under the Securities Act, of any Registrable Securities, within 7 days before,
or 90 days (or such other period as the managing underwriters shall reasonably
require) after, the effective date of such registration (except as part of such
registration), and Company hereby also so agrees and agrees to cause each other
holder of any equity security of Company, or of any security convertible,
exchangeable or exercisable into any
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Registrable Securities, purchased from Company (at any time other than in a
public offering) to so agree.
ARTICLE IV
INDEMNIFICATION
4.1 Indemnification. In the event any Registrable Securities
are included in a registration statement under this Agreement:
(a) To the extent permitted by law, the Company shall
indemnify and hold harmless each Holder, any underwriter (as defined in the
Securities Act) for such Holder and each person, if any, who controls such
Holder or underwriter within the meaning of the Securities Act or the Exchange
Act, against any losses, claims, damages, or liabilities (joint or several) to
which they may become subject under the Securities Act, the Exchange Act or
other U.S. federal or state law, insofar as such losses, claims, damages, or
liabilities (or actions in respect thereof) arise out of or are based upon any
of the following statements, omissions or violations (collectively a
"Violation"): (i) any untrue statement or alleged untrue statement of a material
fact contained in such registration statement, including any preliminary
prospectus or final prospectus contained therein or any amendments or
supplements thereto, (ii) the omission or alleged omission to state therein a
material fact required to be stated therein, or necessary to make the statements
therein not misleading, or (iii) any violation or alleged violation by the
Company of the Securities Act, the Exchange Act, any state securities law or any
rule or regulation promulgated under the Securities Act, the Exchange Act or any
state securities law; and the Company will pay to each such Holder, underwriter
or controlling person, as incurred, any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability, or action; provided, however, that the indemnity
agreement contained in this Section 4.1(a) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability, or action if such
settlement is effected without the consent of the Company (which consent shall
not be unreasonably withheld), nor shall the Company be liable in any such case
for any such loss, claim, damage, liability, or action to the extent that it
arises out of or is based upon a Violation which occurs in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by any such Holder, underwriter or controlling person.
(b) To the extent permitted by law, each selling Holder shall
indemnify and hold harmless the Company, each of its directors, each of its
officers who has signed the registration statement, each person, if any, who
controls the Company within the meaning of the Securities Act, any underwriter,
any other Holder selling securities in such registration statement and any
controlling person of any such underwriter or other Holder, against any losses,
claims, damages, or liabilities (joint or several) to which any of the foregoing
persons may become subject, under the Securities Act, the Exchange Act or other
U.S. federal or state law, insofar as such losses, claims, damages, or
liabilities (or actions in respect thereto) arise out of or are based upon any
Violation, in each case to the extent ( and only to the extent) that such
Violation occurs in reliance upon and in conformity with written information
furnished by such Holder expressly
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for use in connection with such registration; and each such Holder will pay any
legal or other expenses reasonably incurred by any person intended to be
indemnified pursuant to this Section 4.1(b), in connection with investigating or
defending any such loss, claim, damage, liability, or action; provided, however,
that the indemnity agreement contained in this Section 4.1(b) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or action
if such settlement is effected without the consent of the Holder, which consent
shall not be unreasonably withheld; provided, that, in no event shall any
indemnity under this Section 4.1(b) exceed the net proceeds from the offering
received by such Holder.
4.2 Indemnification Procedures. Promptly after receipt by an
indemnified party under Section 4.1 of notice of the commencement of any action
(including any governmental action), such indemnified party shall, if a claim in
respect thereof is to be made against any indemnifying party under this Section
4.2, deliver to the indemnifying party a written notice of the commencement
thereof and the indemnifying party shall have the right to participate in, and,
to the extent the indemnifying party so desires, jointly with any other
indemnifying party similarly noticed, to assume the defense thereof with counsel
mutually satisfactory to the parties; provided, however, that an indemnified
party (together with all other indemnified parties which may be represented
without conflict by one counsel) shall have the right to retain one separate
counsel, with the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Article
IV, but the omission so to deliver written notice to the indemnifying party
shall not relieve it of any liability that it may have to any indemnified party
otherwise than under this Article IV.
4.3 Contribution. If the indemnification provided for in
Section 4.1 is held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any loss, liability, claim, damage, or expense
referred to therein, then the indemnifying party, in lieu of indemnifying such
indemnified party hereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such loss, liability, claim, damage, or
expense in such proportion as is appropriate to reflect the relative fault of
the indemnifying party on the one hand and of the indemnified party on the other
in connection with the statements or omissions that resulted in such loss,
liability, claim, damage, or expense as well as any other relevant equitable
considerations; provided, that in no event shall any contribution by a Holder
under this Section 4.3 exceed the net proceeds from the offering received by
such Holder. The relative fault of the indemnifying party and of the indemnified
party shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission to state a
material fact relates to information supplied by the indemnifying party or by
the indemnified party and the parties' relative intent, knowledge, access to
information, and opportunity to correct or prevent such statement or omission.
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4.4 Other. (a) Notwithstanding the foregoing, to the extent
that the provisions on indemnification and contribution contained in the
underwriting agreement entered into in connection with the underwritten public
offering are in conflict with the foregoing provisions, the provisions in the
underwriting agreement shall control.
(b) The obligations of the Company and Holders under this
Article IV shall survive the completion of any offering of Registrable
Securities in a registration statement under Article II, and otherwise.
ARTICLE V
MISCELLANEOUS
5.1 Assignment. Neither this Agreement nor any of the rights
or obligations hereunder may be assigned by any of the Sellers without the prior
written consent of Company, or by Company without the prior written consent of
Sellers' Representatives, except that Company may, without such consent, assign
the right to acquire the Purchased Shares to any of its direct or indirect
subsidiaries; provided, that no such assignment shall relieve Company of any of
its obligations under this Agreement. Subject to the foregoing, this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, and no other Person shall have any right,
benefit or obligation hereunder.
5.2 Notices. Unless otherwise provided herein, any notice,
request, instruction or other document to be given hereunder by any party to any
other party shall be in writing and delivered in person or by courier, telexed
or by facsimile transmission or mailed by certified or registered mail, postage
prepaid, return receipt requested (such mail notice to be effective on the date
such receipt is acknowledged), as follows:
(a) if to Sellers or Holding c/o XxXxxxxxx.xxx, S.A. de C.V.
Company: Corpus Christi, 2312
Col. Xxxxx xx Xxx Xxxxxxxxx
Xxxxxxxxx, X.X.
Xxxxxx 00000
Attention: Xxxx Xxxxxx Xxxxxx S.
Telecopier number: 000 (000) 000-0000; ext. 115
Confirmation number: 000 (000) 000-0000; ext. 117
with copies to: Ventura Capital Privado
Edificio Torrealta
Ave. Xxxxx 300-Desp. 1505
66265 Gesza Xxxxxx. N.L.
Attention: Xxxxxx Xxxxx de xx Xxxxx
Telecopier Number: 000 (000) 000-0000
Confirmation Number: 000 (000) 000-0000
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Xxxxxxxx Chance Xxxxxx & Xxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
X.X.X.
Attention: Xxxxxxxxx X. Xxxxxxx, Esq.
Telecopier number: (000) 000-0000
Confirmation number: (000) 000-0000
(b) if to Company: El Sitio, Inc.
Xx. Xxxxxxxxx Xxxxxx 0000
X0000XXX, Xxxxxx Xxxxx
Xxxxxxxxx
Attention: Xxxxxx Xxxxxxxxx
Telecopier number: 000(00-00) 0000-0000
Confirmation number: 000 (00-00) 0000-0000
with a copy to: Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
X.X.X.
Attention: Xxxxx X. Xxxxxx, Esq. and
S. Xxxx Xxxxxx, Esq.
Telecopier number: (000) 000-0000
Confirmation number: (000) 000-0000
(c) if to any other Holder, to the address of such other
Holder as shown in the stock record books of Company, or to such other address
as any of the above shall have designated in writing to all of the other above
(or to such other place and with such other copies as either party may designate
as to itself by written notice to the others).
5.3 Governing Law. This Agreement shall be governed by, and
construed (and the rights of the parties determined) in accordance with, the law
of the State of New York.
5.4 Dispute Resolution. Any controversy or claim arising out
of or relating to this Agreement, or the breach thereof, shall be settled by
arbitration in accordance with the then existing Rules of Conciliation and
Arbitration of the International Chamber of Commerce (the "ICC"). The arbitral
tribunal shall be composed of three arbitrators. Each party shall appoint one
arbitrator. If a party fails to appoint an arbitrator within thirty (30) days
after the date the claimant's Demand for Arbitration is communicated to the
other party (the "Notification Date"), the ICC shall make such appointment. The
two arbitrators thus appointed shall attempt to agree upon the appointment of a
third arbitrator to serve as chairperson of the arbitral tribunal. If such two
arbitrators fail to agree upon the appointment of such third arbitrator within
sixty (60) days after the Notification Date, the ICC shall make such
appointment. The place of arbitration shall be New York, New York. The arbitral
proceeding shall be conducted in the English language. The arbitral tribunal
shall apply the laws of the State of New York. To the extent they may
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validly so agree, the parties hereby exclude any right of appeal to any court of
the arbitration or concerning the arbitral award. Judgment upon the arbitral
award may be entered in any court having jurisdiction thereof or having
jurisdiction over any party or any party's assets. Notwithstanding the
foregoing, any party may seek a preliminary injunction or other preliminary
judicial relief if, in its reasonable, good faith judgment, such action is
necessary to avoid irreparable damage. Despite such action, such party shall
continue to participate in good faith in the procedures specified in this
Section 5.4. All applicable statutes of limitations shall be tolled while the
procedures specified in this Section 5.4 are pending, and the parties shall take
any and all actions required to effectuate such tolling.
5.5 Judgment Currency. Each party hereto agrees that, if a
judgment or order given or made by any court for the payment of any amount due
to any other party hereunder, which amount is expressed in currency (the
"judgment currency") other than the currency (the "denomination currency") in
which such amount is payable, the party making such payment shall indemnify the
receiving party against any deficiency arising or resulting from any variation
in rates of exchange between the date as of which the amount in the denomination
currency is notionally converted into the amount in the judgment currency for
the purposes of such judgment or order and the date of actual payment thereof.
This indemnity shall constitute a separate and independent obligation from the
other obligations contained in this Agreement, shall give rise to a separate and
independent cause of action, will apply irrespective of any indulgence granted
from time to time and shall continue in full force and effect notwithstanding
any judgment or order for a liquidated sum or sums in respect of any amounts so
due in respect hereof under any such judgment or order.
5.6 Entire Agreement; Amendments and Waivers. This Agreement
constitutes the entire agreement among the parties pertaining to the subject
matter hereof and supersedes all prior agreements, understandings, negotiations
and discussions, whether oral or written, of the parties. No supplement,
modification or amendment of this Agreement shall be binding unless executed in
writing by all parties. Any term of provision of this Agreement may be waived,
or the time for performance of which may be extended, if evidenced in writing by
the party or parties entitled to the benefit hereof. No waiver of any of the
provisions of this Agreement shall be deemed or shall constitute a waiver of any
other provision hereof (whether or not similar), nor shall such waiver
constitute a continuing waiver unless otherwise expressly provided. Each Holder
of any Registrable Securities at the time or thereafter outstanding shall be
bound by any amendment authorized by this Section 5.6, whether or not such
Registrable Securities shall have been marked to indicate such amendment.
5.7 Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other parties.
5.8 Invalidity. In the event that any one or more of the
provisions contained in this Agreement or in any other instrument referred to
herein, shall, for any reason, be held to be
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invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of this Agreement or any
other such instrument.
5.9 Headings. The headings of the Articles and Sections herein
are inserted for convenience of reference only and are not intended to be a part
of or to affect the meaning of interpretation of this Agreement.
5.10 Expenses. Except as provided in Section 2.3, and except
as otherwise expressly provided herein, Sellers and Company shall each be liable
for its own costs and expenses incurred in connection with the negotiation,
preparation, execution or performance of this Agreement, including the fees and
expenses of any financial, accounting or legal advisors retained in connection
herewith.
5.11 Schedules and Exhibits. The Schedules and Exhibits
referred to in this Agreement shall be construed with and as an integral part of
this Agreement to the same extent as if the same had been set forth verbatim
herein. Any matter disclosed in any Schedule of the Holding Company and Sellers,
on the one hand, or of Buyer, on the other hand, shall be deemed to qualify each
representation and warranty of the Holding Company, the Sellers and Buyer, as
the case may be, notwithstanding the lack of a specific cross-reference, except
to the extent that its applicability to a particular representation, warranty,
agreement or condition is not reasonably apparent from the disclosure thereof.
5.12 Reasonable Consent Required. Where any provision of this
Agreement requires a party to obtain the consent, approval or other acquiescence
of any other Person, such consent, approval or other acquiescence shall not be
unreasonably conditioned, withheld or delayed by such other party.
5.13 Delegation to and Reliance on Sellers' Representatives.
The Sellers hereby delegate to Sellers' Representatives the authority to provide
notices and written instructions to Company and to act on behalf of the Sellers
regarding any notices, written instructions or actions required of Sellers in
connection with this Agreement. Company is entitled to rely, and the Sellers
acknowledge that Company shall rely, upon the notices, written instructions or
actions of Sellers' Representatives acting on behalf of Sellers.
5.14 No Recourse. Notwithstanding anything that may be
expressed or implied in this Agreement, Company and each Holder covenant, agree
and acknowledge that no recourse under this Agreement or any documents or
instruments delivered in connection with this Agreement or the Acquisition shall
be had against any current or future director, officer, employee, general or
limited partner, member, Affiliate or assignee of Sellers or of any of the
foregoing, whether by the enforcement of any assessment or by any legal or
equitable proceeding, or by virtue of any statute, regulation or other
applicable law, it being expressly agreed and acknowledged that no personal
liability whatsoever shall attach to, be imposed on or otherwise be incurred by
any current or future officer, agent or employee of Sellers or any current or
future member of Seller or any current or future director, officer, employee,
partner, member, Affiliate or assignee of any of the foregoing, as such for any
obligation of Sellers under this Agreement or
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any documents or instruments delivered in connection with this Agreement or the
Acquisition for any claim based on, in respect of or by reason of such
obligations or their creation.
5.15 Further Assurances. At any time or from time to time
after the date hereof, the parties agree to cooperate with each other, and at
the request of any other party, to execute and deliver any further instruments
or documents and to take all such further action as the other party may
reasonably request in order to evidence or effectuate the consummation of the
transactions contemplated hereby and to otherwise carry out the intent of the
parties hereunder.
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IN WITNESS WHEREOF, each of the parties has caused this
Agreement to be duly executed and delivered as of the date first written above.
By: EL SITIO, INC.
------------------------------------
Name:
Title:
By: CORACIAS, B.V.
------------------------------------
Name:
Title:
By: BELAGUA, B.V.
------------------------------------
Name:
Title:
SELLERS
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EXHIBIT J
ESCROW AGREEMENT
This ESCROW AGREEMENT, dated as of _______ __, 2000 (this
"Agreement"), by and among, (i) [EL SITIO, INC., a British Virgin Islands
company] ("Buyer"), (ii) CORACIAS, B.V., a Dutch company ("Holding Company A"),
(iii) BELAGUA, B.V., a Dutch company ("Holding Company B" and together with
Holding Company A, "Holding Companies"), (iv) the KEY EMPLOYEES of
XxXxxxxxx.xxx, Inc., as set forth in Exhibit A-2 hereto in their capacity as
employees (collectively, the "Key Employees") and (vi) [Name of Escrow Agent], a
New York banking corporation (the "Escrow Agent").
W I T N E S S E T H:
WHEREAS, Buyer, XxXxxxxxx.xxx, Inc., a California corporation
("DeCompras"), the stockholders of DeCompras, as set forth on Exhibit A-1 hereto
(collectively, "Sellers") and, by subsequent adherence thereto, Holding
Companies entered into that certain Purchase Agreement dated March 10, 2000 (the
"Purchase Agreement") providing for the purchase by Buyer (or one or more of its
direct or indirect wholly owned subsidiaries) from Sellers and Holding Companies
of all of the outstanding capital stock, of DeCompras; and
WHEREAS, the transactions contemplated by the Purchase
Agreement are closing as of the date hereof; and
WHEREAS, as contemplated by Section 3.3 of the Purchase
Agreement, Holding Companies shall deposit with the Escrow Agent 525,000 shares
of Common Shares of Buyer received by Holding Companies pursuant to the Purchase
Agreement (together with the Employee Escrow Shares (as defined below), the
"Escrow Shares"), as security for the payment of amounts as to which Buyer or
its affiliates may become entitled to pursuant to the indemnification
obligations of Sellers and Holding Companies set forth in the Purchase
Agreement; and
WHEREAS, the Key Employees shall cause Holding Company A to
deposit, and Holding Company A shall deposit, with the Escrow Agent [ ]
additional shares of Common Shares representing Employee Escrow Shares required
to be deposited as security for the payment of amounts as to which Buyer or its
affiliates may become entitled pursuant to provisions of the Employment
Agreements (as defined below) and Purchase Agreement pursuant to which the Key
Employees shall transfer certain common shares of Buyer upon certain material
breaches of their obligations (such provisions, the "Escrow Transfer
Provisions"; and each such transfer, a "transfer-back" ); and
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WHEREAS, to the extent not paid to Buyer or its designee in
accordance with this Agreement, the Common Shares shall be transferred or
released as provided herein to Holding Company A and/or Holding Company B, as
applicable.
NOW, THEREFORE, in consideration of these premises, the mutual
covenants contained herein and other good and valuable consideration, Buyer,
Sellers, Holding Companies and the Escrow Agent agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. As used herein, the following terms
shall have the meanings hereinafter set forth:
"Arbitral Order" shall have the meaning set forth in Section
4.4.
"Business Day" shall mean any day on which the Escrow Agent is
open for business.
"Buyer's Account" shall mean the account of Buyer specified in
Exhibit B hereto under the caption "Buyer's Account".
"Claim" shall mean any claim for indemnification asserted by
Buyer in a Claim Notice.
"Claim Notice" shall have the meaning set forth in Section
2.4.
"Closing" shall have the meaning set forth in the Purchase
Agreement.
"Common Shares" shall mean the common shares, par value $0.01
per share, of Buyer.
"Court Order" shall mean a final unappealable order, judgment,
writ or decree of any federal or state court of competent jurisdiction.
"Damages" shall have the meaning set forth in Section 11.2 of
the Purchase Agreement.
"De Minimis Threshold" shall mean the U.S.$50,000 minimum
threshold for Damages under Article XI established by Section 11.4 of the
Purchase Agreement.
"Employee Escrow Shares" shall mean, from the date hereof
until the First Termination Date, [ ] Common Shares received by Holding Company
A in connection with the Purchase Agreement (equivalent to 50% of the Common
Shares beneficially owned by the Key Employees) and, from
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the First Termination Date until the Second Termination Date, [ ] Common Shares
(equivalent to 25% of the Common Shares beneficially owned by the Key
Employees).
"Employment Agreements" shall mean the employment contracts
and confidentiality and non-competition agreements entered into by the Key
Employees pursuant to Section __ of the Purchase Agreement.
"Escrow Account" shall have the meaning set forth in Section
2.1.
"Escrow Agent" shall mean [name of escrow agent], so long as
it is acting as the Escrow Agent hereunder, and thereafter means the then-acting
Successor Escrow Agent.
"Escrow Shares" has the meaning set forth in the recitals of
this Agreement.
"Fair Market Value" shall mean, except as set forth in the
last sentence of this paragraph, the "Fair Market Value" per Common Share on any
date shall mean the last sale price on such day (or, if no sale took place such
day, the most recent day on which a sale did take place) as quoted on the Nasdaq
Stock Market's National Market ("Nasdaq"), or, if such Common Shares are not
quoted on Nasdaq or is not otherwise reported, then the last sale price on such
day on the principal domestic stock exchange on which such stock is then listed
or admitted to trading. If such Common Shares are neither quoted on Nasdaq nor
listed or admitted to trading on any domestic stock exchange, then the Fair
Market Value per Common Share on any date means on such date the fair market
value of the entire Common Shares equity interest of Buyer taken as a whole,
divided by the number of outstanding Common Shares on a fully diluted basis,
without premiums for control or discounts for minority interests or restrictions
on transfers.
"Financial Institution" shall mean any bank, trust company,
national banking association or other savings institution, incorporated under
the laws of the United States of America or any state thereof, each of which has
a reported capital, surplus and undivided profits of at least U.S.$100,000,000.
"First Termination Date" shall mean the first anniversary from
the date hereof or if such date is not a Business Day, the next Business Day.
"Holding Companies' Account" shall mean the accounts of
Holding Companies specified in Exhibit B hereto under the captions "Holding
Company A's Account" and "Holding Company B's Account".
"Investment Direction" shall have the meaning set forth in
Section 2.1.
"Joint Order" shall mean written instructions to the Escrow
Agent signed by a qualified representative of Buyer and Holding Companies, or
their respective successors.
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"Key Employees" shall have the meaning set forth in the
preamble.
"Losses" shall have the meaning set forth in Section 3.8.
"Objection Notice" shall have the meaning set forth in Section 2.3(b).
"Pending Claim" shall have the meaning set forth in Section
2.3(e).
"Permitted Investments" shall mean any of the investments
listed in Schedule 1 hereto.
"Person" shall mean any individual, business corporation,
municipal or not-for-profit corporation, trust, general or limited partnership,
joint venture, unincorporated association, joint stock company, or other legal
entity or organization of any kind, and any government, including any agency or
political subdivision of any government.
"Proportional Basis" shall mean the proportion of the Escrow
Shares deposited by each of Holding Company A and Holding Company B as reflected
in Exhibit D, as the same may be amended from time to time in accordance with
Section 2.2(b).
"Purchase Agreement" shall have the meaning set forth in the
recitals of this Agreement.
"Resignation Date" shall have the meaning set forth in Section
3.2.
"Resignation Notice" shall have the meaning set forth in
Section 3.2.
"Resigning Escrow Agent" shall have the meaning set forth in
Section 3.2.
"Second Termination Date" shall mean the second anniversary
from the date hereof or if such date is not a Business Day, the next Business
Day.
"Successor Escrow Agent" shall have the meaning set forth in
Section 3.2.
"Termination Date" shall have the meaning set forth in Section
2.4.
"Transfer" shall be construed broadly and shall include any
transfer by way of issuance, sale, participation, pledge, gift, bequeath,
intestate transfer, distribution, liquidation, or consolidation.
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ARTICLE II
PROVISIONS RELATING TO THE ESCROW DEPOSIT
Section 2.1 Receipt and Investment of Escrow Deposit. At the
Closing, Holding Companies shall deposit the Escrow Shares with the Escrow
Agent. The deposit of the Escrow Stock shall be accompanied by stock transfer
powers duly endorsed in blank by Sellers. Upon receipt from Holding Companies of
the Escrow Shares, the Escrow Agent shall promptly 1. notify Buyer and Holding
Companies in writing of the Escrow Agent's receipt of the Escrow Shares and 2.
deposit the Escrow Shares into the escrow account established by the Escrow
Agent hereunder (the "Escrow Account"). If any moneys shall at any time or from
time to time be deposited in the Escrow Account and not otherwise subject to
immediate distribution in accordance with the terms hereof, such moneys shall be
invested by Escrow Agent in Permitted Investments as the Escrow Agent shall be
instructed by Holding Companies from time to time, in the form of Exhibit C
hereto (an "Investment Direction"), with a simultaneous copy of such instruction
sent by Holding Companies to Buyer.
Section 2.2 Distribution of Earnings, Dividends and Other
Distributions; Adjustments; Liability for Taxes. (a) All dividends or other
amounts earned or received in respect of the Escrow Shares shall be paid to
Holding Company A and/or Holding Company B on a Proportional Basis by wire
transfer to Holding Companies' Account as of the first Business Day after
collection and for so long as amounts are held in the Escrow Accounts, and shall
not constitute a part of the Escrow Accounts (provided, that whenever this
Agreement requires a payment to Seller, such payment may be made to any
affiliate of Seller pursuant to a written instruction delivered by Seller to the
Escrow Agent specifying the account to which such payment shall be made and
specifying the relevant obligation that such payment shall satisfy).
Notwithstanding the foregoing, if there shall occur any subdivision or
combination of the Common Shares or any recapitalization or reorganization of
Buyer or any reclassification or change in the Common Shares or any merger,
consolidation, sale of all or substantially all assets, exchange or other
similar transaction involving Buyer pursuant to which other securities, money or
property are distributed in respect of, or in exchange for, the Common Shares,
such securities, money or property shall be delivered to the Escrow Agent with a
written instruction signed by Buyer that such securities, money or property
shall be deposited into the Escrow Accounts and shall not be paid or distributed
to Holding Companies (except pursuant to Section 2.5).
(b) Holding Companies shall provide Escrow Agent with prompt
notification of any change in the Proportional Basis attributable to (i) the
occurrence of the First Termination Date or (ii) the transfer of any deposited
Escrow Shares pursuant to the Escrow Transfer Provisions. The Escrow Agent shall
be entitled to rely upon the accuracy of Exhibit D in any distribution of Escrow
Shares or any other securities, money or property deposited into the Escrow
Account, whether pursuant to this Section 2.2 or Section 2.5.
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(c) Buyer and Holding Companies shall treat each Escrow
Account as a grantor trust for tax purposes, of which Holding Companies are the
grantor. Holding Companies shall pay all income, withholding and any other taxes
imposed on or measured by income that are attributable to income from the Escrow
Shares for the time it is held in the Escrow Account hereunder, and shall file
all tax and information returns applicable thereto.
Section 2.3 Grant of Security Interest. Each of Holding
Companies and Key Employees hereby grant Buyer a security interest in the Escrow
Shares and other deposits into the Escrow Account (including securities, money
or property included therein pursuant to the last sentence in Section 2.2(a))
(as such Escrow Shares may be reduced from time to time), but not in any amounts
or properties earned, received, dividended or distributed in respect of such
Escrow Shares (other than the amounts described in the last sentence in Section
2.2(a)), to secure the performance of (i) each and every indemnification
obligation of Holding Companies set forth in the Purchase Agreement and (ii) of
the Escrow Transfer Provisions. Said security interest shall be deemed perfected
by the possession of each Escrow Account on behalf of Buyer by the Escrow Agent
pursuant to this Agreement and shall have priority over all other liens, claims
and interests (including, without limitation, any liens, claims and interests
permitted to be created pursuant to Section 2.6) except those of the Escrow
Agent pursuant to Section 3.8. The Escrow Agent shall have no duty to file or
record any document in connection with the grant of a security interest
hereunder.
Section 2.4 Claim Notices. (a) Buyer shall give written notice
(a "Claim Notice"), of any claim in good faith that (x) Sellers and Holding
Companies are obligated to indemnify Buyer under the Purchase Agreement or (y)
any Key Employee is obligated to transfer his, her or its Escrow Shares pursuant
to the Escrow Transfer Provisions due to termination with cause. Each Claim
Notice shall be given by Buyer to the Holding Companies' Escrow Agent and the
affected Key Employee, if any, shall be signed by an officer of Buyer, shall be
delivered by certified mail, return receipt requested, to the address for each
thereof specified in or pursuant to Section 4.7, and shall in good faith:
(i) identify the provision(s) in the Purchase Agreement with
respect to which indemnification is claimed or in the
Employment Agreements with respect to which transfer-back is
claimed;
(ii) contain a reasonably detailed statement of the grounds
upon which indemnification or transfer-back is claimed;
(iii) if an indemnity claim under the Purchase Agreement,
state the amount of Damages claimed (which may in good faith
be estimated);
(iv) if an indemnity claim under the Purchase Agreement,
confirm that the Damages set forth in the Claim are in the
amount by which the aggregate amount of such Damages exceeds
the De Minimis Threshold;
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(v) if a claim relating to the Escrow Transfer Provisions
under the Employment Agreements, the name of the Key Employee
incurring such transfer-back;
(vi) state the number of Common Shares required, if any,
pursuant to the priorities set forth in Section 2.4(e), to be
delivered to satisfy such Claim or Claims; and
(vii) if an indemnity claim under the Purchase Agreement, and
to the extent required pursuant to clause (f) below, the Fair
Market Value (as of the date of the Claim Notice) of the
Common Shares on a per share basis;
provided, that so long as Holding Companies and the applicable
Key Employees, if any, are put on notice of a Claim pursuant to any Claim
Notice, the failure of such Claim Notice to specify any of the information set
forth in (i) through (vii) above shall not relieve Holding Companies or the Key
Employees of any of their obligations under this Agreement, the Purchase
Agreement or the Employment Agreements with respect to such Claim or prevent
Buyer from exercising its rights under this Agreement, the Purchase Agreement or
the Employment Agreements.
(b) If Holding Companies or the affected Key Employee, as
applicable, fail or fails to advise the Escrow Agent (with a copy to Buyer) in a
written notice (an "Objection Notice"), delivered within 30 days after receipt
of the Claim Notice, that Holding Companies or the affected Key Employee, as
applicable, object or objects in good faith to all or any part of the Claim or
Claims set forth in such Claim Notice, the Escrow Agent shall deliver to Buyer
(or its designee) an amount equal to the amount of indemnification claimed as
set forth in such Claim Notice; provided, however, that if the amount of
indemnification claimed (or any portion thereof) is an estimate, such amount
shall be paid to Buyer on such later date when the amount of such Claim (or such
portion thereof) becomes finally determined. Each Objection Notice shall be
delivered by Sellers' Representatives, Holding Companies or the affected Key
Employees, if any, to the Escrow Agent and Buyer, shall be signed by Sellers'
Representatives or the affected Key Employee, as applicable, shall be delivered
by certified mail, return receipt requested, to the address for each thereof
specified in or pursuant to Section 4.7 and shall in good faith:
(i) identify any Claim or Claims to which an objection is
being made;
(ii) if regarding an indemnity claim under the Purchase
Agreement, state the amount of any disagreement with the
Damages claimed (including any estimate thereof) and any
application of the De Minimis Threshold set forth in the Claim
Notice;
(iii) if regarding a claim pursuant to the Escrow Transfer
Provisions under the Employment Agreement, state the nature of
the disagreement with such Claim;
(iv) state the amount of any disagreement with the amount of
indemnification claimed (including any estimate thereof);
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(v) quantify any disagreement with the determination of the
Fair Market Value; and
(vi) state any other disagreement with any matter set forth in
such Claim Notice;
provided, that so long as Buyer is put on notice of an
objection to a Claim pursuant to any Objection Notice, the failure of such
Objection Notice to specify any of the information set forth in (i) through (vi)
above shall not cause Holding Companies or Key Employees to lose any of their
rights with respect to any objection under this Agreement, the Purchase
Agreement or the Employment Agreement, as applicable.
(c) If Holding Companies or the affected Key Employee, as
applicable, advise the Escrow Agent, in an Objection Notice, delivered within 30
days after receipt of the Claim Notice, that Holding Companies or the affected
Key Employee, as applicable, object in good faith to the entire amount of each
Claim set forth in such Claim Notice, the Escrow Agent shall make no payment or
delivery to Buyer (or its designee) for any such amount, except pursuant to a
Joint Order, Court Order or an Arbitral Order that resolves such Claim.
(d) If Holding Companies or the affected Key Employee, as
applicable, advise the Escrow Agent, in an Objection Notice delivered within 30
days after receipt of the Claim Notice, that Holding Companies or the affected
Key Employee, as applicable, object to only part of the amount of a Claim or
Claims set forth in such Claim Notice, the Escrow Agent shall (i) deliver to
Buyer (or its designee) an amount from the Escrow Shares equal to the amount of
such Claim as to which Holding Companies or the affected Key Employee, as
applicable, has no objection if such amount can be ascertained from such Claim
Notice and Objection Notice and (ii) make no payment or delivery to Buyer (or
its designee) for the balance of the amount of such Claim, except pursuant to a
Joint Order or an Arbitral Order which resolves the balance of the amount of
such Claim; provided, however, that if the portion of the amount referred to in
clause (i) of this sentence cannot be ascertained from such Claim Notice and
Objection Notice, and if Buyer requests Holding Companies or the affected Key
Employee, as applicable, to sign a Joint Order specifying an amount which
represents the lowest amount for which such undisputed portion could be
reasonably valued, Holding Companies or the affected Key Employee, as
applicable, shall not unreasonably refuse to sign such Joint Order.
(e) Any payments made to Buyer from the Escrow Account
pursuant to this Agreement shall be made only from the Escrow Shares and only in
the following order: (i) first, from any cash available in the Escrow Account,
if any, until such amounts shall have been reduced to zero and (ii) second, from
the Common Shares based on their cash value (as determined pursuant to clause
(g) below) until all Escrow Shares have been cancelled as provided below;
provided, that in the case of a claim relating to the Escrow Transfer Provisions
of the Employment Agreements, any payments shall be made from the Employee
Escrow Shares.
(f) All amounts paid to Buyer from the Escrow Shares (based on
the cash value pursuant to clause (g) below) to satisfy Claims shall be
delivered to Buyer (or its designee) (along with duly executed stock powers) for
cancellation at the office of the corporate secretary of Buyer and, to
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the extent of such cash value, all of Seller's right, title and interest in and
to such Common Shares shall be deemed to have been transferred to Buyer (or its
designee) upon such delivery. Buyer shall, upon receipt of the certificates
representing the applicable Escrow Shares, void such certificates and issue new
certificates representing the number of Common Shares to be conveyed to Buyer
(or its designee) based on the cash value of the Common Shares and the amount of
indemnification to be satisfied therewith, and promptly deliver to the Escrow
Agent a certificate or certificates representing the remainder of the Escrow
Shares.
(g) If Claims are to be satisfied by the delivery of Common
Shares, each Common Share shall be deemed to have a cash value equal to the Fair
Market Value as of the earlier of (A) the date such Common Shares is delivered
and (B) the Termination Date. If the determination of the Fair Market Value is
disputed and is not resolved through negotiations, the dispute with regard to
the Fair Market Value shall be submitted to an internationally recognized
investment banking firm reasonably agreed to by Buyer and Sellers'
Representatives or the affected Key Employee, as applicable (the "Final
Arbiter"), which firm shall make a final and binding determination as to the
Fair Market Value within 45 days after its appointment. The Final Arbiter shall
send its written determination of the Fair Market Value to Buyer, Sellers,
Holding Companies and the Escrow Agent, at which point the determination of the
Final Arbiter shall be final and binding on Buyer, Sellers and Holding
Companies. The fees and expenses of the Final Arbiter shall be borne equally by
Buyer, on the one hand, and Sellers and Holding Companies or the affected Key
Employee, as applicable, on the other hand.
(h) Buyer shall telecopy copies of all Claim Notices to
Sellers' Representatives and Sellers' Representatives and their counsel shall
telecopy copies of all Objection Notices to Buyer and its counsel, on the same
day on which they are sent to the Escrow Agent.
Section 2.5 Distribution Upon Termination Dates. (a) On the
First Termination Date, Escrow Agent shall distribute to Holding Companies, on a
Proportional Basis, the amount of Common Shares, money, other securities and
property by which the balance in the Escrow Account as of the First Termination
Date exceeds the sum of (i) the Employee Escrow Shares (as such number is
adjusted on the first anniversary of the date hereof), plus (ii) the amount, if
any, by which the aggregate amount of reasonable reserves for all
indemnification claimed under Pending Claims as of the Termination Date exceeds
the amount of the De Minimis Threshold remaining unused as of the Termination
Date. It is expressly understood that any amounts set forth above that are
deducted from the amount delivered to Seller shall first be deducted from the
cash deposited in the Escrow Amount, if any, second, from the number of Common
Shares and third, from the other securities or property, if any; provided, that,
in the case of such Common Shares, if Holding Companies have not yet objected to
the determination of Fair Market Value in an Objection Notice or if Holding
Companies have so objected but such dispute has not yet been resolved pursuant
to Section 2.3(g), then until such time as a Joint Order or an Arbiter Order has
been issued pursuant to Section 2.3(g), the amount to be so withheld shall be
based upon Buyer's determination in good faith of Fair Market Value as set forth
in the applicable Claim Notice.
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(b) On the Second Termination Date, Escrow Agent shall
distribute to Holding Companies, on a Proportional Basis, the amount of Common
Shares, money, other securities and property by which the balance in the Escrow
Account as of the Second Termination Date exceeds the amount, if any, by which
the aggregate amount of reasonable reserves for all indemnification claimed
under Pending Claims as of the Termination Date exceeds the amount of the De
Minimis Threshold remaining unused as of the Termination Date. It is expressly
understood that any amounts set forth above which are deducted from the amount
delivered to Seller shall first be deducted from the cash deposited in the
Escrow Amount, if any, second, from the number of Common Shares and third, from
the other securities or property, if any; provided, that, in the case of such
Common Shares, if Holding Companies have not yet objected to the determination
of Fair Market Value in an Objection Notice or if Holding Companies have so
objected but such dispute has not yet been resolved pursuant to Section 2.3(g),
then until such time as a Joint Order or an Arbiter Order has been issued
pursuant to Section 2.3(g), the amount to be so withheld shall be based upon
Buyer's determination in good faith of Fair Market Value as set forth in the
applicable Claim Notice.
(c) An amount equal to the aggregate amount of reasonable
reserves for all indemnification claimed under all Pending Claims shall continue
to be held by the Escrow Agent as long as, and to the extent that, such Pending
Claims have not been resolved by a Joint Order or a Court Order or, if
applicable, an Arbiter Order, and all the terms and provisions of this
Agreement, including, without limitation, Seller's right of substitution under
Section 2.3(h), shall continue to apply to such amount continued to be held by
the Escrow Agent. Whenever any Pending Claim is resolved by a Joint Order, a
Court Order or an Arbiter Order, the amount of such Pending Claim shall be
disposed of in accordance with such Joint Order, Court Order or Arbiter Order.
Upon a Joint Order, a Court Order or an Arbiter Order, amounts in the applicable
Escrow Account may be distributed at any time to Buyer or Holding Companies, or
both of them, as the case may be.
Section 2.6 Transfer Restrictions. For so long as any Escrow
Shares remain in the Escrow Account, none of Sellers and Holding Companies shall
Transfer the Escrow Shares except as otherwise permitted in the lock-up
agreements entered into pursuant to Section __ of the Purchase Agreement.
Section 2.7 Voting and Other Rights. During the time that the
Escrow Shares are deposited in the Escrow Account, each of Holding Companies (or
any of their permitted transferees pursuant to Section 2.6) shall be entitled
with respect to its Escrow Shares to exercise all rights, and be entitled to all
benefits, of a stockholder of Buyer (except as such rights may be limited by
Sections 2.2 of this Agreement), including, without limitation, in the case of
the Common Shares, all rights to vote on matters submitted to the holders of the
Common Shares. The Escrow Agent shall, at the written request from time to time
of Seller, execute and deliver appropriate proxies in respect to the Securities.
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ARTICLE III(1)
PROVISIONS RELATING TO THE ESCROW AGENT
[Subject to revision upon selection
of Escrow Agent]
Section 3.1 Appointment of Escrow Agent. Buyer, Sellers,
Holding Companies and the Key Employees hereby appoint [name of Bank], and [name
of Bank] hereby accepts appointment, as the initial Escrow Agent hereunder.
Section 3.2 Resignation of Escrow Agent. Any Escrow Agent (the
"Resigning Escrow Agent") may at any time, upon not less than 30 days' prior
written notice (the "Resignation Notice") to Buyer and Holding Companies,
resign, and be discharged of all of its duties under this Agreement, such notice
to specify the date when such resignation shall occur (the "Resignation Date").
Upon receipt of the Resignation Notice, Buyer and Holding Companies shall confer
in good faith and, having due regard to the proposed successor's experience,
ability and fees, shall 3. appoint a successor to the Resigning Escrow Agent (a
"Successor Escrow Agent") to act as the Escrow Agent hereunder, which Successor
Escrow Agent shall be a Financial Institution with offices in the United States
of America, and 4. notify the Resigning Escrow Agent of such appointment;
provided, however, that if Buyer and Holding Companies shall fail to mutually so
appoint a Successor Escrow Agent, the Resigning Escrow Agent may petition a
Court to appoint a Successor Escrow Agent hereunder. Notwithstanding the
Resignation Date set forth by the Resigning Escrow Agent in its Resignation
Notice, no such resignation shall become effective until a Successor Escrow
Agent shall have delivered to each of the Resigning Escrow Agent, Buyer and
Holding Companies a copy of the instrument under which it was appointed and an
executed counterpart of an instrument accepting its appointment and assuming all
of the Resigning Escrow Agent's obligations as the Escrow Agent hereunder,
except for obligations attributable to acts or omissions of the Resigning Escrow
Agent. On the first Business Day next following the later to occur of (A) the
Resignation Date and (B) the date of delivery to the Resigning Escrow Agent,
Buyer and Holding Companies of the instruments referred to in the next preceding
sentence, the Resigning Escrow Agent shall deliver to the Successor Escrow Agent
all assets then held by the Resigning Escrow Agent in the Escrow Account, its
records of all payments theretofore made to and from the Escrow Account (or
copies of such records), copies of all Claim Notices, Objection Notices and
other written notices given or received by the Escrow Agent pursuant to this
Agreement and all transmittal letters and other documents received or held by it
under this Agreement.
Section 3.3 Duties and Rights of Escrow Agent. (a) The duties
of the Escrow Agent are only such as are herein specifically provided, being
purely ministerial in nature, and no implied
--------
(1) Note: Article III to be subject to revision upon selection of Escrow
Agent.
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covenants or obligations shall be inferred against it herein. The Escrow Agent
shall not be responsible for any recitals of fact in this Agreement or any
related agreement, including, but not limited to, the Purchase Agreement or
Employment Agreements, and shall not be subject to, nor obliged to, recognize
any other agreement between the other parties hereto even though reference
thereto may be made in this Agreement. The Escrow Agent shall incur no liability
whatever for any error in judgment or any act or omission to act except in the
case of its wilful misconduct or gross negligence.
(b)The Escrow Agent shall not be required to, and shall not,
expend or risk any of its own funds or otherwise incur any financial liability
in the performance of any of its duties hereunder.
Section 3.4 Reliance upon Counsel. If the Escrow Agent
believes it appropriate to do so, the Escrow Agent may consult with counsel
concerning any of the Escrow Agent's duties hereunder or any litigation or
problems relating to this Agreement, and the Escrow Agent shall be fully
protected in any action or omission to act taken in good faith in accordance
with such counsel's advice. The Escrow Agent may rely on its counsel as to the
"final unappealable" nature of any Court Order for purposes of this Agreement.
If any property subject hereto is at any time attached, garnished or levied
upon, under any court order, writ, judgment or decree, or in case the payment,
assignment, transfer, conveyance or delivery of any such property shall be
stayed or enjoined by any court order, writ, judgment or decree, or in case any
court order, writ, judgment or decree shall be made or entered by any court
affecting such property, or any part thereof, then, in any of such events, the
Escrow Agent is authorized, in its sole discretion, to rely upon and comply with
any such court order, writ, judgment or decree, which it is advised by legal
counsel of its own choosing is binding upon it, and if it complies with any such
court order, writ, judgment or decree, it shall not be liable to Buyer or Seller
or to any other Person by reason of such compliance even though such court
order, writ, judgment or decree may be subsequently reversed, modified,
annulled, set aside or vacated.
Section 3.5 Legal Proceedings. The Escrow Agent shall not be
required to defend any legal proceedings which may be instituted against it in
respect of this Agreement or any of the assets in the Escrow Account unless
required to do so by Buyer or Seller and indemnified to its reasonable
satisfaction by Buyer or Seller against the cost and expense thereof. The Escrow
Agent shall not be required to institute any legal proceedings of any kind, but
may, at its election, bring an interpleader action against Buyer and Seller in
any court, if the Escrow Agent deems such action necessary to resolve any
dispute as to its duties hereunder or the disposition of any of the assets in
the Escrow Account.
Section 3.6 Sufficiency of Documents. The Escrow Agent shall
have no responsibility for the form, genuineness, execution, value, validity or
sufficiency for any purpose of any securities, certificate, stock power,
telecopy, letter, instructions, notice, document or other item delivered to it
and reasonably believed by it to be genuine, and it shall be fully protected in
acting in accordance with any written instructions given to it hereunder in
accordance with the provisions hereof, or given jointly at any time by Buyer and
Sellers' Representatives and reasonably
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believed by it to have been signed by the proper party or parties. The Escrow
Agent shall not be obliged to inquire as to the form, manner of execution or
validity of any documents deposited or received by it pursuant to the provisions
of this Agreement, including, but not limited to, any instrument necessary for
the negotiation or transfer of any Permitted Investments, nor shall the Escrow
Agent be obliged to inquire as to the identity, authority or rights of the
Persons executing the same. The Escrow Agent shall not be responsible for the
acts or omissions of its nominees, correspondents, designees, subagents or
subcustodians appointed in good faith.
Section 3.7 Conflicting Demands. In case of conflicting
demands upon it or ambiguity or uncertainty, the Escrow Agent may withhold
performance of any action under this Agreement until such time as said
conflicting demands, ambiguity or uncertainty shall have been withdrawn or
resolved or the rights of the parties shall have been settled by court
adjudication or otherwise.
Section 3.8 Fees and Expenses of Escrow Agent and
Indemnification. (a) Buyer shall pay to the Escrow Agent (i) an initial fee
U.S.$1,500 on the date hereof, (ii) an annual administration fee of U.S.$5,000
on each anniversary of the date hereof so long as this Agreement has not been
terminated, (iii) a substitution fee of U.S.$250 for each substitution made by
the Escrow Agent under Section 2.3, (iv) any reasonable legal fees or expenses
incurred by the Escrow Agent in connection with the execution and performance of
its duties hereunder and (v) such other expenses (including any costs incurred
in connection with any purchase or sale of any security made by the Escrow
Agent) of the Escrow Agent which may be reasonably necessary to the performance
of its duties and obligations hereunder.
(b)Buyer and Seller, jointly and severally, shall be liable
for and shall reimburse and indemnify the Escrow Agent and hold the Escrow Agent
harmless from and against any and all claims, losses, liabilities, costs,
damages or expenses (including reasonable attorneys' fees and expenses)
(collectively, "Losses") arising out of or in connection with or related to this
Agreement or being Escrow Agent hereunder (including but not limited to Losses
incurred by the Escrow Agent in connection with its successful defense, in whole
or in part, of any claim of gross negligence or wilful misconduct on its part),
provided, however, that nothing contained herein shall require the Escrow Agent
to be indemnified for Losses caused by its gross negligence or wilful
misconduct. The provisions of this Section 3.8(b) shall survive termination of
this Agreement and the resignation or removal of the Escrow Agent.
ARTICLE IV
MISCELLANEOUS PROVISIONS
Section 4.1 Assignment. Neither this Agreement nor any of the
rights or obligations hereunder may be assigned by any of the Sellers without
the prior written consent of Buyer, or by Buyer without the prior written
consent of Sellers' Representatives, except that Buyer may, without
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such consent, assign the right to Escrow Shares or other proceeds paid pursuant
hereto to any of its direct or indirect subsidiaries. Subject to the foregoing,
this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns, and no other Person shall
have any right, benefit or obligation hereunder.
4.2 Notices. Unless otherwise provided herein, any notice,
request, instruction or other document to be given hereunder by any party to any
other party shall be in writing and delivered in person or by courier, telexed
or by facsimile transmission or mailed by certified or registered mail, postage
prepaid, return receipt requested (such mail notice to be effective on the date
such receipt is acknowledged), as follows:
(a) if to Sellers or Holding c/o XxXxxxxxx.xxx, S.A. de C.V.
Companies: Corpus Christi, 2312
Col. Xxxxx xx Xxx Xxxxxxxxx
Xxxxxxxxx, X.X.
Xxxxxx 00000
Attention: Xxxx Xxxxxx Xxxxxx S.
Telecopier number: (000) 000-0000 (x115)
Confirmation number: (000) 000-0000 (x 117)
with copies to: Ventura Capital Privado
Edificio Torrealta
Ave. Xxxxx 300-Desp. 1505
66265 Gesza Xxxxxx, X.X.
Attention: Xxxxxx Xxxxx de xx Xxxxx
Telecopier Number: 000 (000) 000-0000
Confirmation Number: 000 (000) 000-0000
Xxxxxxxx Chance Xxxxxx & Xxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
X.X.X.
Attention: Xxxxxxxxx X. Xxxxxxx
Telecopier number: (000) 000-0000
Confirmation number: (000) 000-0000
(b) if to Buyer: El Sitio, Inc.
Xx. Xxxxxxxxx Xxxxxx 0000
X0000XXX, Xxxxxx Xxxxx
Xxxxxxxxx
Attention: Xxxxxx Xxxxxxxxx
Telecopier number: 000(00-00) 0000-0000
Confirmation number: 000 (00-00) 0000-0000
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with a copy to: Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
X.X.X.
Attention: Xxxxx X. Xxxxxx, Esq. and
S. Xxxx Xxxxxx, Esq.
Telecopier number: (000) 000-0000
Confirmation number: (000) 000-0000
4.3 Governing Law. This Agreement shall be governed by, and
construed (and the rights of the parties determined) in accordance with, the law
of the State of New York.
4.4 Dispute Resolution. Any controversy or claim arising out
of or relating to this Agreement, or the breach thereof, shall be settled by
arbitration in accordance with the then existing Rules of Conciliation and
Arbitration of the International Chamber of Commerce (the "ICC"). The arbitral
tribunal shall be composed of three arbitrators. Each party shall appoint one
arbitrator. If a party fails to appoint an arbitrator within thirty (30) days
after the date the claimant's Demand for Arbitration is communicated to the
other party (the "Notification Date"), the ICC shall make such appointment. The
two arbitrators thus appointed shall attempt to agree upon the appointment of a
third arbitrator to serve as chairperson of the arbitral tribunal. If such two
arbitrators fail to agree upon the appointment of such third arbitrator within
sixty (60) days after the Notification Date, the ICC shall make such
appointment. The place of arbitration shall be New York, New York. The arbitral
proceeding shall be conducted in the English language. The arbitral tribunal
shall apply the laws of the State of New York. To the extent they may validly so
agree, the parties hereby exclude any right of appeal to any court of the
arbitration or concerning the arbitral award. Upon reaching a decision, the
arbitral tribunal shall send written notification (the "Arbitral Order") to the
parties hereto, including the Escrow Agent. Judgment upon the arbitral award may
be entered in any court having jurisdiction thereof or having jurisdiction over
any party or any party's assets. Notwithstanding the foregoing, any party may
seek a preliminary injunction or other preliminary judicial relief if, in its
reasonable, good faith judgment, such action is necessary to avoid irreparable
damage. Despite such action, such party shall continue to participate in good
faith in the procedures specified in this Section 4.4. All applicable statutes
of limitations shall be tolled while the procedures specified in this Section
4.4 are pending, and the parties shall take any and all actions required to
effectuate such tolling.
4.5 Entire Agreement; Amendments and Waivers. This Agreement
constitutes the entire agreement among the parties pertaining to the subject
matter hereof and supersedes all prior agreements, understandings, negotiations
and discussions, whether oral or written, of the parties. No supplement,
modification or amendment of this Agreement shall be binding unless executed in
writing by all parties. Any term of provision of this Agreement may be waived,
or the time for performance of which may be extended, if evidenced in writing by
the party or parties entitled to the benefit hereof. No waiver of any of the
provisions of this Agreement shall be deemed or
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shall constitute a waiver of any other provision hereof (whether or not
similar), nor shall such waiver constitute a continuing waiver unless otherwise
expressly provided.
4.6 Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other parties.
4.7 Invalidity. In the event that any one or more of the
provisions contained in this Agreement or in any other instrument referred to
herein, shall, for any reason, be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not affect
any other provision of this Agreement or any other such instrument.
4.8 Headings. The headings of the Articles and Sections herein
are inserted for convenience of reference only and are not intended to be a part
of or to affect the meaning of interpretation of this Agreement.
4.9 Schedules and Exhibits. The Schedules and Exhibits
referred to in this Agreement shall be construed with and as an integral part of
this Agreement to the same extent as if the same had been set forth verbatim
herein.
4.10 Reasonable Consent Required. Where any provision of this
Agreement requires a party to obtain the consent, approval or other acquiescence
of any other Person, such consent, approval or other acquiescence shall not be
unreasonably conditioned, withheld or delayed by such other party.
4.11 Further Assurances. At any time or from time to time
after the date hereof, the parties agree to cooperate with each other, and at
the request of any other party, to execute and deliver any further instruments
or documents and to take all such further action as the other party may
reasonably request in order to evidence or effectuate the consummation of the
transactions contemplated hereby and to otherwise carry out the intent of the
parties hereunder.
4.12 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 ANY
DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION.
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IN WITNESS WHEREOF, each of the parties has caused this
Agreement to be duly executed and delivered as of the date first written above.
EL SITIO, INC.
By: _______________________________
Name:
Title:
CORACIAS, B.V.
By: _______________________________
Name:
Title:
BELAGUA, B.V.
By: ______________________________
Name:
Title:
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EXHIBIT K-1
X X X X X X PROMISSORY NOTE
----------- ---------------
E.U.A. $1'000,000.00 Dolares U.S.A. $1,000,000.00 Dollars
DE XXXXXXX.XXX, S.A. DE C.V. (la "SUSCRIPTORA") DE XXXXXXX.XXX, S.A. DE C.V. (the "MAKER")
representada por el Sr. Xxxxxx de la Xxxxx Xxxxx, represented by Mr. Adrian de la Xxxxx Xxxxx,
por este XXXXXX incondicionalmente promete pagar hereby unconditionally promises to pay to the
a la orden de EL SITIO, INC. ("EL SITIO"), la order of EL SITIO, INC. ("EL SITIO"), the
suma principal de EUA$1'000,000.00 Dolares (Un principal sum of US$1,000,000 Dollars (One
Millon de Dolares 00/100 moneda de curso legal de Million Dollars 00/100 lawful currency of the
los Estados Unidos de America), de conformidad United States of America), in accordance with the
con los terminos que se establecen a terms hereinafter set forth.
continuacion.
La suma principal de este XXXXXX sera pagadera el The principal amount of this PROMISSORY NOTE
dia 00 xx xxxxx xx 0000 (xx "Fecha de shall be payable on March 13, 2001 (the "Maturity
Vencimiento"). Date").
La SUSCRIPTORA promete pagar intereses ordinarios The MAKER promises to pay ordinary interest on
sobre el saldo principal de este XXXXXX a partir the unpaid principal balance hereof as from the
de la fecha de suscripcion de este XXXXXX hasta e date of execution of this PROMISSORY NOTE until
incluyendo la fecha de pago total de la suma and including the date full payment of the
principal del mismo a satisfaccion plena de EL principal amount thereof is made at EL SITIO's
SITIO, a una tasa de interes anual fija de 8% complete satisfaction, at a fixed rate of 8%
(ocho por ciento). (eight percent) per annum.
Dichos intereses sobre el saldo insoluto del All such interest on the outstanding amount of
principal seran pagaderos en forma mensual, the principal amount shall be payable on a
dentro de xxx xxxxx (5) xxxx naturales de cada monthly basis, in arrears, within the first five
mes, mientras cualquier cantidad de principal sea (5) calendar days of each month so long as any
debida a favor de EL SITIO. El primer pago de amount of principal hereunder is outstanding in
intereses ordinarios se efectuara dentro de los favor of EL SITIO. The first payment of ordinary
primeros cinco (5) xxxx naturales del mes de interest shall be made within the first five (5)
abril de 2000, y xxxxxx incluir intereses calendar days of the month of April 2000, and
ordinarios desde la fecha de suscripcion de este shall include ordinary interest from the date
xxxxxx y hasta el ultimo dia del mes en que se hereof and until the last day of the month in
suscribe este xxxxxx. Conjuntamente con el pago which this PROMISSORY NOTE is executed. Together
del principal, se xxxxxx pagar cualquier interes with payment of the principal amount hereunder,
ordinario que se deba hasta esa fecha. any ordinary interest owed until such date shall
be paid.
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En el caso de que la SUSCRIPTORA no pagase In the event the MAKER shall fail to pay any
cualesquiera pagos periodicos o la suma principal installment or the principal amount due
sobre este XXXXXX a su vencimiento, y no obstante hereunder, and without prejudice to all rights
los derechos y recursos que tenga la SUSCRIPTORA and remedies of the MAKER hereunder, the MAKER
de acuerdo al presente, la SUSCRIPTORA pagara a shall pay in to EL SITIO, in lieu of the ordinary
EL SITIO, en lugar de la tasa de interes interest rate, penalty interest on any
ordinaria, intereses moratorios sobre la cantidad outstanding amount, at a per annum rate equal to
adeudada, a una tasa de interes anual igual al the result of multiplying the ordinary interest
resultado de multiplicar la tasa de interes rate times one point five (1.5) (" Default
ordinaria por uno punto cinco (1.5) ("Tasa Rate"). Interest at the Default Rate shall
Moratoria"). El interes a la Tasa Moratoria se accrue on a daily basis until full payment of the
devengara diariamente, hasta que el pago debido amount due is made to EL SITIO's satisfaction;
sea pagado en su totalidad, a satisfaccion de EL provided however, that the Default Rate shall
SITIO, en el entendido, sin embargo, que la Tasa not exceed the maximum allowed by applicable law.
Moratoria no xxxxxx exceder el xxxxx xxxxxx
permitido por la legislacion aplicable.
No obstante lo anterior o cualquier otra Notwithstanding the foregoing or any other
disposicion contenida en el presente Xxxxxx, xxxx provision contained in this Promissory Note,
de lo contenido en este titulo autorizara o nothing herein contained shall authorize or
permitira la exigibilidad o el pago de intereses permit exaction or payment of interest by the
por parte de la SUSCRIPTORA cuando los mismos MAKER where the same would be unlawful or
serian ilegales o prohibidos por xx xxx o prohibited by any applicable law or would violate
violarian las disposiciones sobre usura the applicable usury law of any competent
aplicables de cualquier jurisdiccion competente jurisdiction hereof. In any such event, this
bajo el presente. En cualquiera de dichos casos, Promissory Note shall automatically be deemed
este Xxxxxx xx considerara automaticamente amended to permit interest charged at an amount
modificado a fin de permitir cargos por intereses equal to, but not greater than, the maximum
en una cantidad igual a, pero no mayor a, la permitted by law.
maxima permitida por xx xxx.
Adicionalmente, el incumplimiento en efectuar el In addition, the failure to make a punctual
pago puntual y en su totalidad cuando sea debido, payment in its totality when due of interest
de cualquier suma de intereses conforme a este under this PROMISSORY NOTE, shall be sufficient
XXXXXX, sera causa suficiente para acelerar la cause for accelerating the stated maturity of
fecha de vencimiento del mismo, y el pago total this PROMISSORY NOTE, and the full payment
de este XXXXXX sera entonces debido y pagadero de thereof shall become due and payable immediately.
inmediato.
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Los intereses a que se refiere este XXXXXX xx Interest hereunder shall be computed on the basis
computaran sobre la base de un ano de trescientos of a year of three hundred and sixty (360) days
sesenta (360) xxxx por el numero xx xxxx for the number of calendar days elapsed.
calendario transcurridos.
La suma principal de este XXXXXX y los intereses The principal amount hereof and interest thereon
correspondientes al mismo xx xxxxxxx a EL SITIO shall be payable to EL SITIO at: Xxxxxxxx XX, 000
en Citibank NA, 000 Xxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx Street, 21st Floor, New York, NY, United
York, NY, United States of America, ABA: States of America, ABA: 000000000, account
000000000, account number 3618-3355, Estados number 3618-3355, for deposit on the account
Unidos de America, para deposito en la cuenta indicated by EL SITIO or at such other place or
indicada por EL SITIO, o en otro lugar o cuenta bank account outside of the territory of the
bancaria fuera del territorio de los Estados United Mexican States that EL SITIO or the holder
Unidos Mexicanos que EL SITIO o el legitimo hereof may notify in writing to the MAKER with
tenedor del presente XXXXXX notifiquen por fifteen (15) calendar days in advance, in
escrito a la SUSCRIPTORA con quince (15) xxxx Dollars, lawful currency of the United States of
naturales de anticipacion, en Dolares, moneda de America ("DOLLARS"), in immediately available
curso legal de los Estados Unidos de America funds.
("DOLARES"), en fondos inmediatamente
disponibles.
Si, cualquier pago conforme al presente es hecho If, any payment due hereunder is made to EL SITIO
a EL SITIO en una moneda (la "OTRA MONEDA") in a currency (the "OTHER CURRENCY") other than
distinta a dolares, moneda de los Estados Unidos dollars, currency of the United States of America
de America ("DOLARES EUA"), por cualquier razon ("U.S. DOLLARS"), for any reason whatsoever
(incluyendo, sin limitacion, como resultado de (including, without limitation, as a result of a
una sentencia en contra de la SUSCRIPTORA o la judgment against the MAKER or the liquidation of
liquidacion de los activos de la SUSCRIPTORA), the MAKER's assets), then, to the extent that
entonces, en la medida en que dicho pago (o, en such payment (or, in the case of a liquidation,
caso de una liquidacion, el valor a la ultima the value as of the latest date for the
fecha para la determinacion de pasivos permitida determination of liabilities permitted by
por xx xxx aplicable) sea inferior a la cantidad applicable law) falls short of the applicable
aplicable que sea requerida a ser pagada conforme amount which is required to be paid under this
a este XXXXXX basado en el tipo de cambio para la PROMISSORY NOTE based upon the rate of exchange
Otra Moneda, la SUSCRIPTORA, como una obligacion for the Other Currency, the MAKER shall, as a
separada e independiente, indemnizara en su separate and independent obligation, fully
totalidad a EL SITIO por la cantidad deficiente. indemnify EL SITIO against the amount of the
Para los efectos de este parrafo, el termino shortfall. For the purposes of this paragraph,
"tipo de cambio" significa el tipo de cambio al the term "rate of exchange" means the rate at
cual which EL SITIO is able at 11:00 a.m. (New York
City time)
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EL SITIO puede a las 11:00 a.m. (hora de la on the relevant date to purchase U.S. Dollars
ciudad de Nueva York) en la fecha correspondiente in New York City with the Other Currency.
comprar Dolares EUA en la ciudad de Nueva York
con la Otra Moneda.
El importe principal de este XXXXXX y los The principal amount of this PROMISSORY NOTE and
intereses sobre el mismo seran pagados por la the interest thereon shall be paid by the MAKER
SUSCRIPTORA libres y sin deduccion alguna por free and clear and without deduction of any and
concepto de cualesquiera impuestos, tributos, all present or future taxes, levies, imposts,
contribuciones, deducciones, cargos, retenciones, deductions, charges, withholdings, any interest,
cualesquiera intereses, recargos, multas, surcharges, fines, penalties, or other fiscal
sanciones y otros gravamenes fiscales presentes o assessments of any kind whatsoever with respect
futuros de cualquier clase respecto de los thereto.
mismos.
Si en cualquier tiempo, cualquier pago recibido o If, at any time, any payment received or
que EL SITIO vaya a recibir (incluyendo, sin receivable by EL SITIO (including, without
limitar, cualquier cantidad que deba ser retenida limitation, any amount required to be held by the
por la SUSCRIPTORA), esta sujeta a cualquier MAKER), is subject to any deduction or
deduccion o retencion en los Estados Unidos withholding in the United Mexican States, then
Mexicanos, entonces la cantidad de dicho pago the amount of such payment shall be increased to
xxxxxx incrementarse a un monto (el "PAGO an amount (the "GROSSED-UP PAYMENT") which (upon
INCREMENTADO") el cual (una vez que se le subtraction of the amount of any and all taxes or
descuenten cualquier y todos los impuestos other charges required to be paid by, or withheld
aplicables o cualquier otro cargo requerido, o from payment to EL SITIO with respect to the
retenido del pago a EL SITIO con respecto al Pago Grossed-up Payment) shall be equal to the amount
Incrementado) xxxxxx ser equivalente a la that would have been obtained by EL SITIO if the
cantidad que debio xxxxx sido recibida por EL payment had not been taxable to EL SITIO. The
SITIO si el pago no hubiera sido sujeto a MAKER shall forward to EL SITIO within thirty
impuestos a cargo de EL SITIO. La SUSCRIPTORA (30) days after such deduction or withholding is
xxxxxx entregar a EL SITIO dentro de los treinta made, official receipts or other official
(30) xxxx siguientes en que se efectue dicha documentation acceptable to EL SITIO evidencing
deduccion o retencion, los recibos oficiales u payment of such deduction or withholding to the
otra documentacion oficial aceptable a EL SITIO, competent Mexican authorities.
que compruebe el pago de dicha deduccion o
retencion a las autoridades mexicanas
competentes.
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95
En cualquier caso en que un abono de intereses o Whenever any installment of interest or principal
de principal conforme al presente sea debido en hereunder is due on a day other than a Business
un dia distinto a un Dia Habil, dicho abono sera Day, such installment shall become due and
exigible y pagadero en el Dia Habil siguiente, y payable on the following Business Day, and such
dicha extension de tiempo sera incluida en el extension of time shall be included in the
calculo de pago de intereses. computation of payment of interest.
Segun se utiliza en este XXXXXX, el termino "Dia As used in this PROMISSORY NOTE, the term
Habil" significa el dia del ano en que los bancos "Business Day" means a day of the year on which
en el Estado de New York, Estados Unidos de the banks in the State of New York, United States
America, no xxxx requeridos o estan autorizados of America are not required or authorized to
a cerrar. close.
El presente XXXXXX xx considerara suscrito This PROMISSORY NOTE shall be deemed to be made
conforme a las leyes del Estado de Nueva York, under the laws of the State of New York, United
Estados Unidos de America, y para todos los States of America, and for all purposes shall
efectos se interpretara de conformidad con las be construed in accordance with the laws of such
leyes de dicho Estado; en el entendido, sin State; provided, however, that for any legal
embargo, que para cualquier accion o action or proceeding brought with respect to this
procedimiento legal instituido en relacion con PROMISSORY NOTE in the courts of the United
este XXXXXX en los tribunales de los Estados Mexican States, or any political subdivision
Unidos Mexicanos, o cualquier subdivision thereof, this PROMISSORY NOTE shall be deemed to
politica del mismo, este XXXXXX xx considerara be made under the laws of the United Mexican
suscrito conforme a las leyes de los Estados States and for such purposes shall be construed
Unidos Mexicanos y para dichos efectos sera in accordance with the laws of the United Mexican
interpretado de conformidad con las leyes de los States.
Estados Unidos Mexicanos.
Para cualquier accion o procedimiento derivado de In any action or proceeding arising out of or
o relativo al presente XXXXXX, la SUSCRIPTORA y relating to this PROMISSORY NOTE, the MAKER and
cualquier otro firmante del mismo, se someten any signatories thereof, hereby explicitly submit
expresamente a la jurisdiccion de los tribunales themselves to the jurisdiction of the competent
competentes xxx Xxxxxxxx Xxxxxxx, Xxxxxx, o los courts of the Federal District, Mexico, or the
tribunales federales o locales del Estado de competent federal or local courts of the State of
Nueva York, Estados Unidos de America, a la New York, United States of America, at the
eleccion del tenedor del presente, y renuncian election of the holder hereof, wherefore they
expresamente por lo tanto, a cualquier otra waive expressly any other jurisdiction to which
jurisdiccion a la que pudieren tener derecho, they might have a right, including but not
incluyendo pero no limitado a, jurisdiccion limited to, jurisdiction by reason of their
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por razon de sus domicilios presentes o futuros o por present or future domiciles or by reason of the
razon xx xxxxx de pago de este XXXXXX o por place of payment of this PROMISSORY NOTE or by
cualquier otra razon. any other reason.
La SUSCRIPTORA en este acto incondicionalmente The MAKER hereby unconditionally waives to any
renuncia a cualquier derecho a un juicio por right to a jury trial of any claim or right of
xxxxxx de cualquier reclamacion o derecho de action based upon or arising out, directly or
accion basado en o derivado de, directa o indirectly, this PROMISSORY NOTE, any dealings
indirectamente, este XXXXXX, cualesquiera between the MAKER and EL SITIO relating to the
negociaciones entre la SUSCRIPTORA y EL SITIO subject matter of this transaction or any related
relacionadas con el objeto materia de esta transactions, and/or the relationship that is
transaccion o cualquiera transacciones being established between the MAKER and EL SITIO.
relacionadas, y/o la relacion que se establece The scope of this waiver is intended to be all
entre la SUSCRIPTORA y EL SITIO. La amplitud de encompassing of any and all disputes that may be
esta renuncia tiene la intencion de abarcar filed in any court (including without limitation,
cualesquiera y todas las disputas que puedan ser contract claims, tort claims, breach of duty
presentadas en cualquier tribunal (incluyendo sin claims, and all other common law and statutory
limitacion, reclamaciones contractuales, claims). This waiver is irrevocable meaning that
reclama-ciones extracontractuales, reclamaciones it may not be modified either orally or in
por incumplimiento de un deber, y todas las xxxxx writing, and the waiver shall apply to any
reclamaciones de derecho comun y reclamaciones subsequent amendments, renewals, supplements or
legales). Esta renuncia es irrevocable modifications to this PROMISSORY NOTE, and
entendiendose que no puede ser modificada ya sea related documents, or to any other documents or
verbalmente o por escrito, y la renuncia sera agreements relating to this transaction or any
aplicable a modificaciones, renovaciones o related transaction.
suplementos subsecuentes de este XXXXXX, y
documentos relacionados, o a cualesquiera otros
documentos o acuerdos relacionados con esta
transaccion o cualquier transaccion relacionada.
El presente XXXXXX xx suscribe en ingles y en This PROMISSORY NOTE is executed in an English
espanol, siendo ambas versiones obligatorias para and a Spanish version, both of which shall bind
la SUSCRIPTORA y para cualquier otro firmante del the MAKER and any other signatories thereof, and
mismo, y constituyen uno y el mismo XXXXXX; en constitute one and the same PROMISSORY NOTE;
el entendido, sin embargo, que en caso xx xxxx provided, however, that in case of doubt as to
respecto de la correcta interpretacion de este the proper interpretation and construction of
XXXXXX, el texto en ingles prevalecera en todos this PROMISSORY NOTE, the English text shall be
los casos, excepto que el texto en espanol controlling in all cases, except that the Spanish
prevalecera en cualquier accion o text shall be controlling in any legal
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procedimiento legal instituido en relacion action or proceeding brought with respect to
con este XXXXXX en los tribunales de los this PROMISSORY NOTE in the courts of the
Estados Unidos Mexicanos o cualquier United Mexican States or any political
subdivision politica de dicho pais. subdivision thereof.
En caso de incumplimiento en el pago Upon default in the prompt and full payment
oportuno y puntual de cualquier abono de of any installment of principal and/or of
principal x/x xx xxxxxxxxx xxxx xxxx XXXXXX, interest on this PROMISSORY NOTE, the entire
la suma principal total insoluta del mismo e unpaid principal hereof and interest
intereses sobre la misma, incluyendo thereon, including penalty interest, to the
intereses moratorios, seran inmediatamente date of payment shall immediately become due
exigibles y pagaderos a la opcion y a and payable at the option and upon the
requerimiento del tenedor de este XXXXXX. demand of the holder hereof.
La SUSCRIPTORA en este acto renuncia a The MAKER hereby waives any requirement of
cualquier requerimiento para cualquier any diligence, presentment, demand, protest
diligencia, presentacion, demanda, protesto or notice of nonpayment or dishonor with
o aviso de falta de pago o deshonra de este respect to this PROMISSORY NOTE.
XXXXXX.
La omision en el ejercicio por el tenedor The failure of the holder hereof to exercise
del presente de cualquiera de sus derechos any of its rights hereunder in any instance
conforme al mismo en cualquier instancia, no shall not constitute a waiver thereof in
constituira una renuncia a tales derechos en that or any other instance.
dicha o en cualquier otra instancia.
El presente XXXXXX podra ser transmitido o This PROMISSORY NOTE may be transferred or
negociado mediante endoso sin limitacion negotiated by means of an endorsement,
alguna. without limitation whatsoever.
Este XXXXXX xx suscribe en la Ciudad de This PROMISSORY NOTE is executed in Buenos
Buenos Aires, Xxxxxxxxx, xx 00 xx xxxxx xxx Xxxxx, Xxxxxxxxx, on March 13, 2000.
2000.
DE XXXXXXX.XXX, S.A. DE C.V.
Por/By: Mr._____________________________
Puesto/Title:Attorney-in-fact/ Apoderado
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EXHIBIT K-2
X X X X X X PROMISSORY NOTE
----------- ---------------
E.U.A. $2'000,000.00 Dolares U.S.A. $2,000,000.00 Dollars
DE XXXXXXX.XXX, S.A. DE C.V. (la "SUSCRIPTORA") DE XXXXXXX.XXX, S.A. DE C.V. (the "MAKER")
representada por el Sr. represented by Mr. ____________________, hereby
__________________________, por este XXXXXX unconditionally promises to pay to the order of
incondicionalmente promete pagar a la orden de EL EL SITIO, INC. ("EL SITIO"), the principal sum of
SITIO, INC. ("EL SITIO"), la suma principal de US$2,000,000 Dollars (Two Million Dollars 00/100
EUA$2'000,000.00 Dolares (Dos Millones de Dolares lawful currency of the United States of America),
00/000 xxxxxx xx xxxxx xxxxx xx xxx Xxxxxxx in accordance with the terms hereinafter set
Unidos de America), de conformidad con los forth.
terminos que se establecen a continuacion.
La suma principal de este XXXXXX sera pagadera el The principal amount of this PROMISSORY NOTE
dia ___ xx xxxxx xx 0000 (xx "Fecha de shall be payable on March __, 2001 (the "Maturity
Vencimiento"). Date").
La SUSCRIPTORA promete pagar intereses ordinarios The MAKER promises to pay ordinary interest on
sobre el saldo principal de este XXXXXX a partir the unpaid principal balance hereof as from the
de la fecha de suscripcion de este XXXXXX hasta e date of execution of this PROMISSORY NOTE until
incluyendo la fecha de pago total de la suma and including the date full payment of the
principal del mismo a satisfaccion plena de EL principal amount thereof is made at EL SITIO's
SITIO, a una tasa de interes anual fija de 8% complete satisfaction, at a fixed rate of 8%
(ocho por ciento). (eight percent) per annum.
Dichos intereses sobre el saldo insoluto del All such interest on the outstanding amount of
principal seran pagaderos en forma mensual, the principal amount shall be payable on a
dentro de xxx xxxxx (5) xxxx naturales de cada monthly basis, in arrears, within the first five
mes, mientras cualquier cantidad de principal sea (5) calendar days of each month so long as any
debida a favor de EL SITIO. El primer pago de amount of principal hereunder is outstanding in
intereses ordinarios se efectuara dentro de los favor of EL SITIO. The first payment of ordinary
primeros cinco (5) xxxx naturales del mes de interest shall be made within the first five (5)
abril de 2000, y xxxxxx incluir intereses calendar days of the month of April 2000, and
ordinarios desde la fecha de suscripcion de este shall include ordinary interest from the date
xxxxxx y hasta el ultimo dia del mes en que se hereof and until the last day of the month in
suscribe este xxxxxx. Conjuntamente con el pago which this PROMISSORY NOTE is executed. Together
del principal, se xxxxxx pagar cualquier interes with payment of the principal amount hereunder,
ordinario que se deba hasta esa fecha. any ordinary interest owed until such date shall
be paid.
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En el caso de que la SUSCRIPTORA no pagase In the event the MAKER shall fail to pay any
cualesquiera pagos periodicos o la suma principal installment or the principal amount due
sobre este XXXXXX a su vencimiento, y no obstante hereunder, and without prejudice to all rights
los derechos y recursos que tenga la SUSCRIPTORA and remedies of the MAKER hereunder, the MAKER
de acuerdo al presente, la SUSCRIPTORA pagara a shall pay in to EL SITIO, in lieu of the ordinary
EL SITIO, en lugar de la tasa de interes interest rate, penalty interest on any
ordinaria, intereses moratorios sobre la cantidad outstanding amount, at a per annum rate equal to
adeudada, a una tasa de interes anual igual al the result of multiplying the ordinary interest
resultado de multiplicar la tasa de interes rate times one point five (1.5) (" Default
ordinaria por uno punto cinco (1.5) ("Tasa Rate"). Interest at the Default Rate shall
Moratoria"). El interes a la Tasa Moratoria se accrue on a daily basis until full payment of the
devengara diariamente, hasta que el pago debido amount due is made to EL SITIO's satisfaction;
sea pagado en su totalidad, a satisfaccion de EL provided however, that the Default Rate shall
SITIO, en el entendido, sin embargo, que la Tasa not exceed the maximum allowed by applicable law.
Moratoria no xxxxxx exceder el xxxxx xxxxxx
permitido por la legislacion aplicable.
No obstante lo anterior o cualquier otra Notwithstanding the foregoing or any other
disposicion contenida en el presente Xxxxxx, xxxx provision contained in this Promissory Note,
de lo contenido en este titulo autorizara o nothing herein contained shall authorize or
permitira la exigibilidad o el pago de intereses permit exaction or payment of interest by the
por parte de la SUSCRIPTORA cuando los mismos MAKER where the same would be unlawful or
serian ilegales o prohibidos por xx xxx o prohibited by any applicable law or would violate
violarian las disposiciones sobre usura the applicable usury law of any competent
aplicables de cualquier jurisdiccion competente jurisdiction hereof. In any such event, this
bajo el presente. En cualquiera de dichos casos, Promissory Note shall automatically be deemed
este Xxxxxx xx considerara automaticamente amended to permit interest charged at an amount
modificado a fin de permitir cargos por intereses equal to, but not greater than, the maximum
en una cantidad igual a, pero no mayor a, la permitted by law.
maxima permitida por xx xxx.
Adicionalmente, el incumplimiento en efectuar el In addition, the failure to make a punctual
pago puntual y en su totalidad cuando sea debido, payment in its totality when due of interest
de cualquier suma de intereses conforme a este under this PROMISSORY NOTE, shall be sufficient
XXXXXX, sera causa suficiente para acelerar la cause for accelerating the stated maturity of
fecha de vencimiento del mismo, y el pago total this PROMISSORY NOTE, and the full payment
de este XXXXXX sera entonces debido y pagadero de thereof shall become due and payable immediately.
inmediato.
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100
Los intereses a que se refiere este XXXXXX xx Interest hereunder shall be computed on the basis
computaran sobre la base de un ano de trescientos of a year of three hundred and sixty (360) days
sesenta (360) xxxx por el numero xx xxxx for the number of calendar days elapsed.
calendario transcurridos.
La suma principal de este XXXXXX y los intereses The principal amount hereof and interest thereon
correspondientes al mismo xx xxxxxxx a EL SITIO shall be payable to EL SITIO at: Xxxxxxxx XX, 000
en Citibank NA, 000 Xxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx Street, 21st Floor, New York, NY, United
York, NY, United States of America, ABA: States of America, ABA: 000000000, account
000000000, account number 3618-3355, Estados number 3618-3355, for deposit on the account
Unidos de America, para deposito en la cuenta indicated by EL SITIO or at such other place or
indicada por EL SITIO, o en otro lugar o cuenta bank account outside of the territory of the
bancaria fuera del territorio de los Estados United Mexican States that EL SITIO or the holder
Unidos Mexicanos que EL SITIO o el legitimo hereof may notify in writing to the MAKER with
tenedor del presente XXXXXX notifiquen por fifteen (15) calendar days in advance, in
escrito a la SUSCRIPTORA con quince (15) xxxx Dollars, lawful currency of the United States of
naturales de anticipacion, en Dolares, moneda de America ("DOLLARS"), in immediately available
curso legal de los Estados Unidos de America funds.
("DOLARES"), en fondos inmediatamente
disponibles.
Si, cualquier pago conforme al presente es hecho If, any payment due hereunder is made to EL SITIO
a EL SITIO en una moneda (la "OTRA MONEDA") in a currency (the "OTHER CURRENCY") other than
distinta a dolares, moneda de los Estados Unidos dollars, currency of the United States of America
de America ("DOLARES EUA"), por cualquier razon ("U.S. DOLLARS"), for any reason whatsoever
(incluyendo, sin limitacion, como resultado de (including, without limitation, as a result of a
una sentencia en contra de la SUSCRIPTORA o la judgment against the MAKER or the liquidation of
liquidacion de los activos de la SUSCRIPTORA), the MAKER's assets), then, to the extent that
entonces, en la medida en que dicho pago (o, en such payment (or, in the case of a liquidation,
caso de una liquidacion, el valor a la ultima the value as of the latest date for the
fecha para la determinacion de pasivos permitida determination of liabilities permitted by
por xx xxx aplicable) sea inferior a la cantidad applicable law) falls short of the applicable
aplicable que sea requerida a ser pagada conforme amount which is required to be paid under this
a este XXXXXX basado en el tipo de cambio para la PROMISSORY NOTE based upon the rate of exchange
Otra Moneda, la SUSCRIPTORA, como una obligacion for the Other Currency, the MAKER shall, as a
separada e independiente, indemnizara en su separate and independent obligation, fully
totalidad a EL SITIO por la cantidad deficiente. indemnify EL SITIO against the amount of the
Para los efectos de este parrafo, el termino shortfall. For the purposes of this paragraph,
"tipo de the term "rate of exchange" means the rate at
which EL SITIO
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cambio" significa el tipo de cambio al
cual EL SITIO puede a las 11:00 a.m. (hora de la is able at 11:00 a.m. (New York
ciudad de Nueva York) en la fecha correspondiente City time) on the relevant date to purchase U.S.
comprar Dolares EUA en la ciudad de Nueva York Dollars in New York City with the Other Currency.
con la Otra Moneda.
El importe principal de este XXXXXX y los The principal amount of this PROMISSORY NOTE and
intereses sobre el mismo seran pagados por la the interest thereon shall be paid by the MAKER
SUSCRIPTORA libres y sin deduccion alguna por free and clear and without deduction of any and
concepto de cualesquiera impuestos, tributos, all present or future taxes, levies, imposts,
contribuciones, deducciones, cargos, retenciones, deductions, charges, withholdings, any interest,
cualesquiera intereses, recargos, multas, surcharges, fines, penalties, or other fiscal
sanciones y otros gravamenes fiscales presentes o assessments of any kind whatsoever with respect
futuros de cualquier clase respecto de los thereto.
mismos.
Si en cualquier tiempo, cualquier pago recibido o If, at any time, any payment received or
que EL SITIO vaya a recibir (incluyendo, sin receivable by EL SITIO (including, without
limitar, cualquier cantidad que deba ser retenida limitation, any amount required to be held by the
por la SUSCRIPTORA), esta sujeta a cualquier MAKER), is subject to any deduction or
deduccion o retencion en los Estados Unidos withholding in the United Mexican States, then
Mexicanos, entonces la cantidad de dicho pago the amount of such payment shall be increased to
xxxxxx incrementarse a un monto (el "PAGO an amount (the "GROSSED-UP PAYMENT") which (upon
INCREMENTADO") el cual (una vez que se le subtraction of the amount of any and all taxes or
descuenten cualquier y todos los impuestos other charges required to be paid by, or withheld
aplicables o cualquier otro cargo requerido, o from payment to EL SITIO with respect to the
retenido del pago a EL SITIO con respecto al Pago Grossed-up Payment) shall be equal to the amount
Incrementado) xxxxxx ser equivalente a la that would have been obtained by EL SITIO if the
cantidad que debio xxxxx sido recibida por EL payment had not been taxable to EL SITIO. The
SITIO si el pago no hubiera sido sujeto a MAKER shall forward to EL SITIO within thirty
impuestos a cargo de EL SITIO. La SUSCRIPTORA (30) days after such deduction or withholding is
xxxxxx entregar a EL SITIO dentro de los treinta made, official receipts or other official
(30) xxxx siguientes en que se efectue dicha documentation acceptable to EL SITIO evidencing
deduccion o retencion, los recibos oficiales u payment of such deduction or withholding to the
otra documentacion oficial aceptable a EL SITIO, competent Mexican authorities.
que compruebe el pago de dicha deduccion o
retencion a las autoridades mexicanas
competentes.
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En cualquier caso en que un abono de intereses o Whenever any installment of interest or principal
de principal conforme al presente sea debido en hereunder is due on a day other than a Business
un dia distinto a un Dia Habil, dicho abono sera Day, such installment shall become due and
exigible y pagadero en el Dia Habil siguiente, y payable on the following Business Day, and such
dicha extension de tiempo sera incluida en el extension of time shall be included in the
calculo de pago de intereses. computation of payment of interest.
Segun se utiliza en este XXXXXX, el termino "Dia As used in this PROMISSORY NOTE, the term
Habil" significa el dia del ano en que los bancos "Business Day" means a day of the year on which
en el Estado de New York, Estados Unidos de the banks in the State of New York, United States
America, no xxxx requeridos o estan autorizados a of America are not required or authorized to
cerrar. close.
El presente XXXXXX xx considerara suscrito This PROMISSORY NOTE shall be deemed to be made
conforme a las leyes del Estado de Nueva York, under the laws of the State of New York, United
Estados Unidos de America, y para todos los States of America, and for all purposes shall
efectos se interpretara de conformidad con las be construed in accordance with the laws of such
leyes de dicho Estado; en el entendido, sin State; provided, however, that for any legal
embargo, que para cualquier accion o action or proceeding brought with respect to this
procedimiento legal instituido en relacion con PROMISSORY NOTE in the courts of the United
este XXXXXX en los tribunales de los Estados Mexican States, or any political subdivision
Unidos Mexicanos, o cualquier subdivision thereof, this PROMISSORY NOTE shall be deemed to
politica del mismo, este XXXXXX xx considerara be made under the laws of the United Mexican
suscrito conforme a las leyes de los Estados States and for such purposes shall be construed
Unidos Mexicanos y para dichos efectos sera in accordance with the laws of the United Mexican
interpretado de conformidad con las leyes de los States.
Estados Unidos Mexicanos.
Para cualquier accion o procedimiento derivado de In any action or proceeding arising out of or
o relativo al presente XXXXXX, la SUSCRIPTORA y relating to this PROMISSORY NOTE, the MAKER and
cualquier otro firmante del mismo, se someten any signatories thereof, hereby explicitly submit
expresamente a la jurisdiccion de los tribunales themselves to the jurisdiction of the competent
competentes xxx Xxxxxxxx Xxxxxxx, Xxxxxx, o los courts of the Federal District, Mexico, or the
tribunales federales o locales del Estado de competent federal or local courts of the State of
Nueva York, Estados Unidos de America, a la New York, United States of America, at the
eleccion del tenedor del presente, y renuncian election of the holder hereof, wherefore they
expresamente por lo tanto, a cualquier otra waive expressly any other jurisdiction to which
jurisdiccion they might have a right, including but
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a la que pudieren tener derecho, not limited to, jurisdiction by reason of their
incluyendo pero no limitado a, jurisdiccion por present or future domiciles or by reason of the
razon de sus domicilios presentes o futuros o por place of payment of this PROMISSORY NOTE or by
razon xx xxxxx de pago de este XXXXXX o por any other reason.
cualquier otra razon.
La SUSCRIPTORA en este acto incondicionalmente The MAKER hereby unconditionally waives to any
renuncia a cualquier derecho a un juicio por right to a jury trial of any claim or right of
xxxxxx de cualquier reclamacion o derecho de action based upon or arising out, directly or
accion basado en o derivado de, directa o indirectly, this PROMISSORY NOTE, any dealings
indirectamente, este XXXXXX, cualesquiera between the MAKER and EL SITIO relating to the
negociaciones entre la SUSCRIPTORA y EL SITIO subject matter of this transaction or any related
relacionadas con el objeto materia de esta transactions, and/or the relationship that is
transaccion o cualquiera transacciones being established between the MAKER and EL SITIO.
relacionadas, y/o la relacion que se establece The scope of this waiver is intended to be all
entre la SUSCRIPTORA y EL SITIO. La amplitud de encompassing of any and all disputes that may be
esta renuncia tiene la intencion de abarcar filed in any court (including without limitation,
cualesquiera y todas las disputas que puedan ser contract claims, tort claims, breach of duty
presentadas en cualquier tribunal (incluyendo sin claims, and all other common law and statutory
limitacion, reclamaciones contractuales, claims). This waiver is irrevocable meaning that
reclama-ciones extracontractuales, reclamaciones it may not be modified either orally or in
por incumplimiento de un deber, y todas las xxxxx writing, and the waiver shall apply to any
reclamaciones de derecho comun y reclamaciones subsequent amendments, renewals, supplements or
legales). Esta renuncia es irrevocable modifications to this PROMISSORY NOTE, and
entendiendose que no puede ser modificada ya sea related documents, or to any other documents or
verbalmente o por escrito, y la renuncia sera agreements relating to this transaction or any
aplicable a modificaciones, renovaciones o related transaction.
suplementos subsecuentes de este XXXXXX, y
documentos relacionados, o a cualesquiera otros
documentos o acuerdos relacionados con esta
transaccion o cualquier transaccion relacionada.
El presente XXXXXX xx suscribe en ingles y en This PROMISSORY NOTE is executed in an English
espanol, siendo ambas versiones obligatorias para and a Spanish version, both of which shall bind
la SUSCRIPTORA y para cualquier otro firmante del the MAKER and any other signatories thereof, and
mismo, y constituyen uno y el mismo XXXXXX; en constitute one and the same PROMISSORY NOTE;
el entendido, sin embargo, que en caso xx xxxx provided, however, that in case of doubt as to
respecto de la correcta interpretacion de este the proper interpretation and construction of
XXXXXX, el texto en ingles prevalecera en this PROMISSORY NOTE, the English text shall
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104
todos los casos, excepto que el texto en espanol be controlling in all cases, except that the Spanish
prevalecera en cualquier accion o procedimiento text shall be controlling in any legal action or
legal instituido en relacion con este XXXXXX en proceeding brought with respect to this
los tribunales de los Estados Unidos Mexicanos o PROMISSORY NOTE in the courts of the United
cualquier subdivision politica de dicho pais. Mexican States or any political subdivision
thereof.
Upon default in the prompt and full payment of
En caso de incumplimiento en el pago oportuno y any installment of principal and/or of interest
puntual de cualquier abono de principal y/o de on this PROMISSORY NOTE, the entire unpaid
intereses bajo este XXXXXX, la suma principal principal hereof and interest thereon, including total
insoluta del mismo e intereses sobre la penalty interest, to the date of payment shall
misma, incluyendo intereses moratorios, seran immediately become due and payable at the option
inmediatamente exigibles y pagaderos a la opcion and upon the demand of the holder hereof.
y a requerimiento del tenedor de este XXXXXX.
La SUSCRIPTORA en este acto renuncia a cualquier The MAKER hereby waives any requirement of any
requerimiento para cualquier diligencia, diligence, presentment, demand, protest or notice
presentacion, demanda, protesto o aviso de falta of nonpayment or dishonor with respect to this
de pago o deshonra de este XXXXXX. PROMISSORY NOTE.
La omision en el ejercicio por el tenedor del The failure of the holder hereof to exercise any
presente de cualquiera de sus derechos conforme of its rights hereunder in any instance shall not
al mismo en cualquier instancia, no constituira constitute a waiver thereof in that or any other
una renuncia a tales derechos en dicha o en instance.
cualquier otra instancia.
El presente XXXXXX podra ser transmitido o This PROMISSORY NOTE may be transferred or
negociado mediante endoso sin limitacion alguna. negotiated by means of an endorsement, without
limitation whatsoever.
Este XXXXXX xx suscribe en la Ciudad de Buenos This PROMISSORY NOTE is executed in Aires, Argentina,
el __ xx xxxxx xxx 0000. Xxxxxx Xxxxx, Xxxxxxxxx, on March __, 2000.
DE XXXXXXX.XXX, S.A. DE C.V.
Por/By: Mr.________________________
Puesto/Title:Attorney-in-fact/
Apoderado
14
