Exhibit 2.1
-----------------------------
FRAMEWORK AGREEMENT
between
IMPSAT CORPORATION
and
EL SITIO INTERNATIONAL CORP
August 4, 1999
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FRAMEWORK AGREEMENT
THIS FRAMEWORK AGREEMENT (the "Agreement") is made as of this ___
day of August, 1999, by and between IMPSAT Corporation, a Delaware corporation
("IMPSAT"), and El Sitio International Corp., a British Virgin islands
corporation ("El Sitio").
RECITALS
WHEREAS, IMPSAT and its subsidiaries provide telecommunications services
to business customers, carriers, Internet service providers ("ISPs") and other
telecommunications providers in the Americas and are developing a terrestrial
broadband fiber optic network connecting the major cities of Latin America and
building local distribution networks in the major cities of Latin America.
WHEREAS, El Sitio and its subsidiaries are developing an internet access
and content business in Argentina, Brazil, Colombia and other countries.
WHEREAS, IMPSAT has decided to divest its retail Internet access business
in Argentina, Brazil and Colombia in order to further develop its
telecommunications businesses, including Internet backbone and wholesale
Internet access services to ISPs, and El Sitio desires to acquire IMPSAT's
retail Internet access business and enter into a telecommunications services
agreement with IMPSAT and/or subsidiaries for Internet backbone and wholesale
Internet access services.
WHEREAS, El Sitio and IMPSAT desire to enter into a series of related
agreements as set for in Article 2 of this Agreement (such agreements, the
"Transaction Agreements") in connection with the sale of IMPSAT's retail
Internet access business to El Sitio, the provision by IMPSAT to El Sitio of
telecommunications network services and access for El Sitio's ISP business in
specified countries in South America, and the issuance and sale by El Sitio to
IMPSAT of preferred stock of El Sitio.
WHEREAS, El Sitio and IMPSAT desire to set forth an interim framework for
the negotiation the Transaction Agreements, including the material terms and
conditions of the Transaction Agreement.
AGREEMENT
NOW THEREFORE, in consideration of the foregoing premises and the mutual
covenants and agreements hereinafter set forth, which the parties agree is good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE 1.
THE TRANSACTION
1.1. Purpose. The purpose of this Agreement is to set forth the terms and
conditions upon which El Sitio and IMPSAT will negotiate and enter into the
Transaction Agreements.
1.2. Term. This Agreement is an interim non-binding agreement between El
Sitio and IMPSAT and shall be superseded at each Closing (as defined below) by
thc applicable Transaction Agreements set forth in Article 2. All terms and
conditions of this Agreement with respect to a particular Closing shall expire
and terminate at such Closing. This Agreement shall expire and terminate in
accordance with the provisions of Section 6.1 hereof. Promptly after the date
hereof, El Sitio and IMPSAT shall use all reasonable best endeavors to negotiate
Transaction Agreements with terms and conditions consistent with the terms
hereof and mutually acceptable to each party hereto. As soon as practicable
after the satisfaction of the conditions set forth in Article 3 applicable to
IMPSAT S.A. (Argentina) ("IMPSAT Argentina"), IMPSAT S.A. (Colombia) ("IMPSAT
Colombia") or IMPSAT
Comunicacoes Ltda. ("IMPSAT Brazil"), as the case may be, the parties, and/or
their respective subsidiaries, shall consummate the Transaction Agreements
applicable to IMPSAT Argentina, IMPSAT Colombia or IMPSAT Brazil (each such date
being a "Closing Date"). The parties shall use their reasonable best efforts to
finalize and enter into each of the Transaction Agreements not later than
September 30, 1999.
ARTICLE 2.
TRANSACTION AGREEMENTS
El Sitio, IMPSAT and/or their respective subsidiaries, as applicable, will
enter into the Transaction Agreements set forth below. The Transaction
Agreements shall also contain such usual, customary or appropriate terms and
conditions as the parties may agree.
2.1. Purchase and Sale Agreements.
(a) As soon as practicable after the date hereof, each of IMPSAT
Argentina, IMPSAT Colombia and IMPSAT Brazil (collectively, the "Sellers"), will
enter into a Purchase and Sale Agreement with El Sitio, or any subsidiary of El
Sitio designated by El Sitio (collectively, the "Buyers"), pursuant to which
each applicable Seller will transfer, sell and assign to each applicable Buyer
the retail Internet access customer contracts (the "Subscribers") and assets of
each applicable Seller, directly and exclusively related to IMPSAT's retail
internet access business in Argentina, Brazil or Colombia, as the case may be.
The specific related assets to be sold shall be agreed among the parties in the
applicable Purchase and Sale Agreements.
(b) The Purchase Price for respective assets shall be as follows:
Seller Purchase Price (U.S. dollars)
IMPSAT Argentina $6.2 million
IMPSAT Brazil $12.3 million
IMPSAT Colombia $3.0 million
in the event that the number of Subscribers of IMPSAT Argentina, IMPSAT Brazil
or IMPSAT Colombia at July 31, 1999 shall be greater or less by five percent
(5%) or more than the number of Subscribers set forth in the following table,
then the parties shall adjust the applicable Purchase Price on a per Subscriber
basis by the amounts set forth in the following table, and such amounts shall be
added or subtracted from the applicable Purchase Price. For the purposes of
adjustment in the amounts paid, IMPSAT and El Sitio shall undertake reasonable
efforts to determine jointly the actual number of Subscribers at July 31, 1999
within thirty (30) days following the date hereof and shall make any appropriate
additions or subtractions to the applicable Purchase Price in U.S. dollars.
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Country Subscribers as of May 31, 1999 Value per Subscriber
------- ------------------------------ --------------------
Argentina 12,639 $489.77
Brazil 48,548 $253.36
Colombia 7,046 $425.77
(c) The Purchase and Sale Agreements shall contain terms and provisions
customary and applicable for such transactions and shall otherwise be mutually
agreeable to El Sitio and IMPSAT.
2.2. Telecommunications Services Agreements.
(a) On or prior to each Closing Date, the applicable Seller and/or one
of its Affiliates and the applicable Buyer and/or one of its Affiliates shall
enter into one or more Telecommunications Services Agreements whereby such
Seller or Affiliate shall provide, and such Buyer or Affiliate shall
purchase, telecommunications services related to El Sitio's Internet access
requirements with respect to the Subscribers transferred to such Buyer on an
exclusive basis for a one-year term commencing on such Closing Date. The
Telecommunications Services Agreements shall also provide that IMPSAT or one
of its Affiliates shall have a right of first refusal to provide such
telecommunications services with respect to other telecommunications
requirements of El Sitio and its Affiliates, including with respect to the
Subscribers transferred to the applicable Buyer, following the one-year
exclusivity period. The terms and conditions of the Telecommunications
Services Agreements shall be mutually agreeable to El Sitio and IMPSAT.
(b) On each Closing Date, El Sitio and each of IMPSAT Argentina, IMPSAT
Brazil and IMPSAT Colombia, as applicable, shall enter into transition services
agreements pursuant to which IMPSAT Argentina, IMPSAT Brazil and IMPSAT Colombia
shall operate El Sitio's business activities in Argentina, Brazil and Colombia,
respectively, for a period of no more than two months after such Closing Date
subject to terms and conditions, including the terms of the compensation to be
paid to each Seller for the provision of such services, mutually agreeable to El
Sitio and each of IMPSAT Argentina, IMPSAT Brazil and IMPSAT Colombia.
(c) IMPSAT and El Sitio also agree that they shall use their respective
best efforts to enter into Telecommunications Service Agreements in other
countries where IMPSAT has or may in the future have an operating presence in
connection with the future expansion of El Sitio's business into such countries.
2.3. Stock Purchase Agreement. As soon as practicable after the date
hereof, IMPSAT and El Sitio shall enter into a stock purchase agreement (the
"Stock Purchase Agreement") providing for the issuance by El Sitio to IMPSAT, or
a designated subsidiary, for the purchase price of $21.5 million of 3,070,615
shares of Class A Convertible Preferred Stock of El Sitio having a liquidation
value of $21.5 million. The Class A Convertible Preferred Stock of El Sitio to
be subscribed by IMPSAT shall have anti-dilution and related rights and
protections applicable to such class of El Sitio's capital stock on a
retroactive basis to June 21, 1999. The Stock Purchase Agreement shall contain
terms and conditions customary and applicable for such transactions, including,
without limitation, representations and warranties, conditions precedent,
covenants, anti-dilution provisions and indemnities, shall be substantially
similar to the Stock Purchase Agreement dated June 21, 1999 entered into by El
Sitio in connection with the prior issuance of 4,727,319 shares of its Class A
Convertible Preferred Stock to
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Ibero-American Media Partners II Ltd. and certain other parties (collectively,
the "Private Placement Investors") and shall otherwise be satisfactory to
IMPSAT. The Stock Purchase Agreement shall provide that on the respective
Closing Dates for IMPSAT Argentina, IMPSAT Brazil and IMPSAT Colombia, IMPSAT
shall purchase, and El Sitio shall issue and sell, 885,480, 1,756,677 and
428,458 shares of Class A Convertible Preferred Stock.
2.4. Shareholders Agreement. On the date of the first Closing under the
Stock Purchase Agreement, IMPSAT, El Sitio and the existing shareholders of El
Sitio who are parties to the Stockholders Agreement and Registration Rights
Agreement each dated June 21, 1999 entered into connection with the issuance of
El Sitio's Class A Convertible Preferred Stock to the Private Placement
Investors (the "Shareholders Agreement" and the "Registration Rights Agreement,"
respectively) shall enter into a new or amended Shareholders Agreement (the
"Shareholders Agreement") and registration rights agreement relating to the
management of El Sitio and the transfer and ownership of the shares of El Sitio.
The Shareholders Agreement and the registration rights agreement shall each be
substantially similar to the Stockholders Agreement and Registration Rights
Agreement. The Shareholders Agreement shall provide (A) that the number of
directors to be designated by the holders of the Class A Convertible Preferred
Stock shall be increased to five, one of whom shall be designated by IMPSAT and
another of whom shall be (i) independent to any other holder of common of Class
A Convertible Preferred Stock and (ii) designated by the unanimous vote of all
of the other directors of El Sitio and (B) that the actions specified in Section
2.3 of the Stockholders Agreement shall require the affirmative vote of at least
three of the five directors allocated to or designated by the holders of the
Class A Convertible Preferred Stock. The new or amended registration rights
agreement shall provide IMPSAT with certain registration rights and tag-along
rights with respect to transfers of capital stock by the shareholders of El
Sitio. In the event that all of the Closings for the IMPSAT Argentina, IMPSAT
Brazil or IMPSAT Colombia Transaction Agreements shall not have occurred as of a
date to be set forth in the Stock Purchase Agreement, the Shareholders Agreement
will provide for an appropriate adjustment, if any, to IMPSAT's right to
designate a member of thc Board of Directors and to vote in favor of the
independent member of the Board of Directors in a manner, and at a shareholding
level, substantially identical to Section 2.2(a) of the Stockholders Agreement
with respect to the Private Placement Investors. The Shareholders Agreement and
Registration Rights Agreement shall each contain terms and conditions customary
and applicable for such agreements and shall be otherwise satisfactory to
IMPSAT.
ARTICLE 3.
CONDITIONS TO CLOSING
3.1. Conditions to Obligations of El Sitio to Close. The obligations of
El Sitio under Article 2 of this Agreement are subject to the fulfillment and
satisfaction, on or prior to each Closing Date, of each of the following
conditions:
(a) Approvals. The Board of Directors and shareholders of El Sitio shall
have approved the execution and delivery by El Sitio and its Affiliates of the
applicable Transaction Agreements and the performance by El Sitio and its
Affiliates of their obligations thereunder, and El Sitio, the applicable Buyer
and any Affiliate entering into any applicable Transaction Agreement as of such
date shall have obtained or filed all approvals, authorizations, consents,
licenses, permits and other notices with all governmental authorities and third
parties required to be obtained or filed by such Persons in connection with the
transactions contemplated by the applicable Closing.
(b) Representations, Warranties, Etc. (i) All representations and
warranties of IMPSAT, the applicable Seller and their respective Affiliates
contained in this Agreement and the Transaction
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Agreements to be consummated on such Closing Date shall be true and correct
in all material respects and as of such Closing Date, as applicable; and
(ii) IMPSAT, the applicable Seller and their respective Affiliates shall have
performed and complied with, in all material respects, their respective
obligations under this Agreement and the applicable Transaction Agreements
that are to be performed or complied with by them prior to or on such Closing
Date.
(c) Transaction Agreements. Each of IMPSAT, the applicable Seller and
their respective Affiliates shall have executed and delivered all of the
applicable Transaction Agreements to which it is to be a party.
(d) No Changes. There shall have been no adverse change between the date
hereof and such Closing Date in the assets intended to be purchased by El Sitio
or the applicable Buyer or in the business or financial condition of IMPSAT, in
each case that shall be reasonably unacceptable to El Sitio.
3.2. Conditions to Obligations of IMPSAT to Close. The obligations of
IMPSAT under Article 2 of this Agreement are subject to the fulfillment and
satisfaction, on or prior to each Closing Date, of each of the following
conditions:
(a) Approvals. The Board of Directors and shareholders of IMPSAT shall
have approved the execution and delivery by IMPSAT and its Affiliates of the
applicable Transaction Agreements and the performance by IMPSAT and its
Affiliates of their obligations thereunder, and IMPSAT, the applicable Seller
and any Affiliate entering into any applicable Transaction Agreement as of such
date shall have obtained or filed all approvals, authorizations, consents,
licenses, permits and other notices with all governmental authorities and third
parties required to be obtained or filed by such Persons in connection with the
transactions contemplated by the applicable Closing.
(b) Representations, Warranties and Covenants True at each Closing Date.
(i) All representations and warranties of El Sitio, the applicable Buyer and
their respective Affiliates contained in this Agreement and the applicable
Transaction Agreements shall be true and correct in all material respects at and
as of such Closing Date, as applicable; and (ii) El Sitio, the applicable Buyer
and their respective Affiliates shall have performed and complied with, in all
material respects, their respective obligations under this Agreement and the
applicable Transaction Agreements that are to be performed or complied with by
them prior to or on such Closing Date.
(c) Transaction Agreements. Each of El Sitio, the applicable Buyer and
their respective Affiliates shall have executed and delivered all of the
applicable Agreements to which it is to be a party.
(d) No Changes. There shall have been no significant change between the
date hereof and such Closing Date in the business, financial condition, assets,
indebtedness or shareholders of El Sitio that shall be reasonably unacceptable
to IMPSAT.
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ARTICLE 4.
COVENANTS
4.1. Actions Prior to the Closings. Upon the terms and subject to the
conditions of this Agreement and the other agreements, documents and instruments
pursuant to which the transactions contemplated hereby are to be consummated, El
Sitio and IMPSAT will use their reasonable best efforts to take all other
actions, and to do, or cause to be done, all other things necessary, proper or
advisable to carry out its obligations under this Agreement and to consummate
and make effective the transactions contemplated hereby and by the Transaction
Agreements, including, without limitation, the following:
(a) as soon as practicable following the execution of this Agreement, to
make all applications and filings and to use its best efforts to obtain all
other authorizations and consents required to be obtained by such party or its
Subsidiaries in connection with the consummation of the transactions
contemplated by this Agreement and by the Transaction Agreements;
(b) in the event any claim, action, suit, investigation or other
proceeding by any governmental authority or other Person is commenced which
questions the validity or legality of any of the transactions contemplated
hereby or by any of the Transaction Agreements or any injunction or other order
is issued in any such proceeding, to cooperate with the other party hereto
regarding the defense of such proceedings and the removal of any such impediment
to the consummation of such transactions and to use its reasonable best efforts
to have such injunction or other order dissolved.
4.2. Information. Each of the parties hereto agrees to keep the other
informed as to all material developments and communications relating to the
transactions contemplated by this Agreement.
4.3. Public Announcements. Either party may publicly announce that it has
entered into this Agreement, provided that the other party is given a reasonable
opportunity to review the form and content of the proposed announcement.
4.4. Confidentiality. El Sitio and IMPSAT agree that any written
information with respect to this Agreement or the Transaction Agreements
delivered to it by the other party that is confidential and proprietary and is
marked "confidential and proprietary" ("Confidential Information") will be kept
confidential by El Sitio and IMPSAT and shall not be disclosed, in whole or in
part to any person other than Affiliates, officers, directors, employees, agents
consultants or representatives of El Sitio and IMPSAT (collectively
"Representatives") who need to know such Confidential Information. Each of the
parties agrees to inform each of its Representatives of the non-public nature of
the Confidential Information and to direct such persons to treat such
Confidential Information in accordance with the terms of this Section 4.4.
Nothing herein shall prevent either party from disclosing Confidential
Information (a) upon the order of any court or administrative agency, (b) upon
the request or demand of, or pursuant to any rule or regulation of any
regulatory agency or authority, and (c) to its legal counsel or independent
auditors.
ARTICLE 5.
TERMINATION AND EXPENSES
5.1. Termination. Notwithstanding anything herein, this Agreement may be
terminated at any time prior to any Closing Date:
(a) by mutual consent of El Sitio and IMPSAT;
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(b) by either El Sitio or IMPSAT, if either El Sitio or IMPSAT receives a
final non-appealable order from any regulatory authority denying an
authorization necessary in order for any party to execute and deliver any of the
Transaction Agreements;
(c) by either El Sitio or IMPSAT, if all the Closings shall not have
occurred on or before December 31, 1999, unless such failure so to consummate
shall be due to the failure of the party seeking to terminate this Agreement
to perform in all material respects each of its obligations under this
Agreement required to be performed by it on or prior to each Closing Date
pursuant to the terms hereof (unless such failure to consummate is due to the
failure to obtain required authorizations in which case such date shall be
extended for an additional three months);
(d) by El Sitio, if there has been a material breach of a representation
or warranty in this Agreement by IMPSAT, and IMPSAT fails to cure such breach
within 60 days after notice thereof from El Sitio, or a material breach by
IMPSAT of any covenant set forth in this Agreement or a failure of any condition
to which the obligations of El Sitio are subject, and such breach or failure has
not been waived expressly in writing;
(e) by IMPSAT, if there has been a material breach of a representation or
warranty in this Agreement by El Sitio and El Sitio fails to cure such breach
within 60 days after notice thereof from IMPSAT or a material breach by El Sitio
of any covenant set forth in this Agreement or a failure of an condition to
which the obligations of IMPSAT are subject, and such breach or failure has not
been waived expressly in writing.
5.2. Liabilities in Event of Termination. In the event of the termination
and abandonment of this Agreement and the transactions contemplated hereby, this
Agreement shall become void and have no effect, and El Sitio, IMPSAT and their
respective directors, officers, employees and shareholders shall have no
obligation or liability to each other hereunder, except (a) for those
obligations set forth in Section 4.4 or (b) for any obligations of El Sitio and
IMPSAT arising prior to such termination.
ARTICLE 6.
MISCELLANEOUS
6.1. Survival. The representations and warranties and covenants of each of
the parties contained in this Agreement shall survive until each Closing, as
applicable.
6.2. Defined Terms. As used herein, the following terms have the following
meanings:
"Affiliate" means as to any Person, any other Person controlled by,
controlling or under common control with such Person. For purposes of
this definition, "control" of a Person means the power, directly or indirectly,
either to (a) vote 50% or more of the securities having ordinary voting power
for the election of directors of such Person, or (b) direct or cause the
direction of the management and policies of such Person whether by contract or
otherwise
"Person" means any natural person or corporation, limited liability
company, general partnership, limited partnership, venture, trust, business
trust, estate or other entity.
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6.3. Successors and Permitted Assigns; Assignment.
(a) Subject to Section 6.3(b), the provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns, and to the extent applicable heirs, executors,
administrators and legal representatives.
(b) Neither party may assign, delegate or otherwise transfer any of its
rights or obligations under this Agreement without the prior written consent of
each of the parties hereto. Notwithstanding the foregoing, a party may assign
its rights and obligations under this Agreement to an Affiliate provided that
the assigning party will continue to be responsible for its liabilities and
obligations hereunder.
6.4. Notices. All notices, requests and other communications hereunder
shall be deemed to have been duly delivered, given or made to or upon any party
hereto if in writing and delivered by hand against receipt, or by certified or
registered mail, postage prepaid, return receipt requested, or to a courier who
guarantees next business day delivery or sent by telecopy (with confirmation),
to such-party at its address set forth below or to such other address as such
party may at any tune, or from time to time, direct by notice given in
accordance with this Section 6.4.
if to El Sitio:
El Sitio International Corp.
Xxxxxxx Xxxxxxxx 000, 0xx Xxxxx
0000 Xxxxxx Xxxxx, Xxxxxxxxx
Fax: 00000 000-0000
Attention: Xxxxxxx Xxxxxxx-Xxxxxx
if to IMPSAT:
IMPSAT Corporation
Xxxxxxx Xxxxxx 000
0000 Xxxxxx Xxxxx, Xxxxxxxxx
Fax: 00000-000-0000
Attention: Xxxxxx Xxxxxx
The date of delivery of any such notice, request or other communication shall be
the earlier of (i) the date of actual receipt or (ii) three business days after
such notice, request or other communication is sent if sent by certified or
registered mail, (iii) if sent by courier who guarantees next business day
delivery the business day next following the day such notice, request or other
communication is actually delivered to the courier or (iv) the day actually
telecopied.
6.5. Amendments and Waivers. (a) Any provision of this Agreement may be
amended or waived if, but only if, such amendment or waiver is in writing and is
signed, in the case of an amendment, by each party to this Agreement, or in the
case of a waiver, by the party against whom the waiver is to be effective.
(b) No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
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6.6. Governing Law; Severability. THIS AGREEMENT IS GOVERNED BY AND SHALL
BE CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK, EXCLUDING ANY
CONFLICT-OF-LAWS RULE OR PRINCIPLE THAT MIGHT REFER THE GOVERNANCE OR THE
CONSTRUCTION OF THIS AGREEMENT TO THE LAW OF ANOTHER JURISDICTION. If any
provision of this Agreement or its application to any Person or circumstance is
held invalid or unenforceabie to any extent, the remainder of this Agreement and
the application of such provision to other Persons or circumstances is not
affected and such provision shall be enforced to the greatest extent permitted
by law.
6.7. Expenses. All expenses incurred by any party hereto in connection
with the negotiation preparation and consummation of this Agreement and the
transactions contemplated hereby shall be borne by such party except as
otherwise expressly provided in any provision of this Agreement.
6.8. Counterparts; Effectiveness. This Agreement may be signed in any
number of counterparts, each of which shall be an original, with the same effect
as if the signature thereto and hereto were upon the same instrument. This
Agreement shall become effective when each party hereto shall have received
counterparts hereof signed by all of the other parties hereto.
6.9. Headings. The headings contained in this Agreement are for reference
purposes only and shall not in any way affect the meaning or interpretation of
this Agreement.
6.10. Entire Agreement. This Agreement, the Exhibits attached (or to be
attached) hereto and the agreements, documents and instruments contemplated
hereby, constitute the entire agreement between the parties with respect to the
subject matter hereof, and supersede all prior agreements and understandings,
whether oral or written, between or among any of the parties hereto with respect
to the subject matter hereof.
6.11. Interpretation. In any dispute concerning the construction or
interpretation of any provision of this Agreement or any ambiguity thereof,
there shall be no presumption that the Agreement or any provision hereof be
construed against the party who drafted this Agreement.
6.12. Further Assurances. In connection with this Agreement and the
transactions contemplated hereby, each party shall execute and deliver any
additional documents and instruments and perform any additional acts that may be
necessary or appropriate to effectuate and perform the provision of this
Agreement and such transactions.
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IN WITNESS WHEREOF, each of the undersigned has executed this
Agreement as of the date first set forth above.
EL SITIO INTERNATIONAL CORP.
By /s/ Xxxxxxx Xxxxxxx-Xxxxxx
--------------------------------------
Name: XXXXXXX XXXXXXX XXXXXX
Title: CHIEF EXECUTIVE OFFICER
EL SITIO INTERNATIONAL CORP
IMPSAT CORPORATION
By /s/ Xxxxxx Xxxxx Aranha
--------------------------------------
Name:
Title:
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