Exhibit 10.17
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EL SITIO, INC.
SHARE PURCHASE AGREEMENT
October 6, 1999
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SHARE PURCHASE AGREEMENT, dated as of this 6th day of October, 1999
(this "Agreement"), between EL SITIO, INC., an international business company
organized and existing under the laws of the British Virgin Islands (the
"Company"), and IMPSAT Corporation, a Delaware corporation (the "Purchaser").
W I T N E S S E T H:
WHEREAS, the Company desires to issue to the Purchaser, and the
Purchaser desires to purchase from the Company, the Preferred Shares (as such
term is defined below) as set forth below; and
WHEREAS, certain terms used in this Agreement are defined in Section
9.1 hereof;
NOW, THEREFORE, in consideration of the promises and mutual
covenants and agreements hereinafter contained, the receipt and sufficiency of
which is hereby mutually acknowledged, the parties hereto hereby agree as
follows:
1. Sale and Purchase of Securities.
1.1 Sale and Purchase of Preferred Shares. Subject to the terms and
conditions of this Agreement, the Company shall issue, sell and deliver to the
Purchaser, and the Purchaser shall purchase from the Company, an aggregate of
3,070,615 shares of Class A Preferred Stock of the Company (the "Preferred
Shares").
1.2 Timing of Preferred Shares Issuance. On the respective Closing
Dates (as defined in Section 3.1 herein) for the Internet Agreements (as defined
herein), for IMPSAT S.A. (Argentina) ("IMPSAT Argentina"), IMPSAT Comunicacoes
Ltda. ("IMPSAT Brazil") and IMPSAT S.A. (Colombia) ("IMPSAT Colombia," and
collectively with IMPSAT Argentina and IMPSAT Brazil, the "Sellers"), the
Company shall issue 885,480, 1,756,677 and 428,458 shares of Preferred Shares,
respectively.
2. Purchase Price.
2.1 Amount of Purchase Price. The aggregate purchase price of the
Preferred Shares to be purchased is US$21,500,000 (the "Purchase Price"). On the
respective Closing Dates for IMPSAT Argentina, IMPSAT Brazil and IMPSAT
Colombia, the Purchaser shall pay to the Company the amount of US$6,200,000,
US$12,300,000 and US$3,000,000, respectively.
3. Closing.
3.1 Closing Date. Each of the closings of the sale and purchase of
the Preferred Shares (the "Closings") shall take place at such time, dates or
places as the parties shall mutually agree; provided that all conditions to the
Closing set forth in this Agreement have been satisfied or waived by such date.
The date on which any of the Closings is held is referred to in this Agreement
as the "Closing Date" with respect to each of the Closings. At the First Closing
(as
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defined herein), the parties shall execute and deliver the documents
referred to in Section 8 hereof.
3.2 Closing of the Internet Agreements. In conjunction with the
execution and delivery of this Agreement, the Company or any Subsidiary (as
defined herein) of the Company designated by the Company (collectively with the
Company, the "Buyer") shall enter into (i) a purchase agreement with IMPSAT
Brazil or its affiliate pursuant to which IMPSAT Brazil or its affiliate shall
transfer, sell and assign all of its ownership rights in all of the outstanding
quotas of Mandic Internet Ltda. and (ii) a telecommunications service agreement
pursuant to which IMPSAT Brazil or its affiliate shall provide to the Buyer
telecommunications services related to the Buyer's Internet access requirements.
The Company shall also enter into purchase agreements and telecommunications
services agreements with IMPSAT Argentina and IMPSAT Colombia or their
affiliates, pursuant to which IMPSAT Argentina and IMPSAT Colombia or their
affiliates shall transfer, sell and assign to the Buyer the retail internet
access customer contracts and its assets directly and exclusively related to
IMPSAT's retail internet access business and provide telecommunication services
in Argentina or Colombia, as the case may be. The purchase agreements and
telecommunications services agreements for IMPSAT Argentina, IMPSAT Brazil and
IMPSAT Colombia are herein collectively referred to as the "Internet
Agreements". Each of the Closings with respect to IMPSAT Argentina, IMPSAT
Brazil and IMPSAT Columbia shall occur simultaneously with the signing of the
Internet Agreements for each of those countries.
4. Representations and Warranties of the Company.
The Company hereby represents and warrants to the Purchaser that:
4.1 Organization and Good Standing; Capitalization.
(a) The Company is duly organized and validly existing under the
laws of the British Virgin Islands and has the corporate power and authority to
own, lease and operate its properties and assets and to carry on its business as
now conducted and as it is proposed to be conducted, except where the lack
thereof would not have a Material Adverse Effect (as defined in Section 9). The
Company is duly qualified or authorized to do business as a foreign corporation
under the laws of each jurisdiction in which the conduct of its business or the
ownership of its properties or assets requires such qualification or
authorization except where the lack thereof would not have a Material Adverse
Effect.
(b) The authorized and issued capital of the Company immediately
prior to and immediately after the Closing and the legal and beneficial
ownership thereof is as set forth on Schedule 4.1(b). All the outstanding shares
of capital stock of the Company have been duly authorized, and are validly
issued, fully paid and non-assessable. Except as disclosed on Schedule 4.1(b),
(i) there is no option, warrant, call, right, commitment or other agreement of
any character to which the Company is a party, (ii) there are no securities of
the Company outstanding which upon conversion or exchange would require, and
(iii) there are no stock appreciation rights, or other similar rights based on
securities of the Company which, in the case of clause (i), (ii) or (iii), would
require the issuance, sale or transfer of any additional shares of capital stock
or other equity securities of the Company or other securities convertible into,
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exchangeable for or evidencing the right to subscribe for or purchase shares of
capital stock or other equity securities of the Company. Except as disclosed on
Schedule 4.1(b) and other than this Agreement, the Company is not a party to,
nor is it aware of, any voting trust or other voting agreement with respect to
any of the securities of the Company or to any agreement relating to the
issuance, sale, redemption, transfer or other disposition of the capital stock
of the Company.
4.2 Authorization of Agreement; Enforceability. The Company has all
requisite corporate power and authority to execute and deliver this Agreement
and each other agreement, document, instrument and certificate to be executed by
the Company in connection with the consummation of the transactions contemplated
by this Agreement (the "Transaction Documents"), and to perform fully its
obligations hereunder and thereunder. The execution, delivery and performance by
the Company of this Agreement and the Transaction Documents have been duly
authorized by all necessary corporate action on the part of the Company and its
members. This Agreement and each of the Transaction Documents have been duly and
validly executed and delivered by the Company and, assuming the due
authorization, execution and delivery thereof by the Purchaser, this Agreement
and each of the Transaction Documents constitute the legal, valid and binding
obligations of the Company, enforceable against the Company in accordance with
their respective terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally and subject, as to enforceability, to general principles of
equity (regardless of whether enforcement is sought in a proceeding at law or in
equity).
4.3 Subsidiaries, Joint Ventures, Partnerships, Etc.
(a) Schedule 4.3(a) hereof sets forth a true, complete and correct
list of each company or other entity in which the Company holds an interest of
greater than fifty percent (50%) (each such corporation or other entity is
referred to herein as a "Subsidiary" and, collectively, the "Subsidiaries") as
well as each entity in which the Company holds a minority interest. Each
Subsidiary is duly organized and validly existing in good standing (if
applicable) under the laws of the jurisdiction of its incorporation with
corporate power and corporate authority under such laws to own, lease and
operate its properties and conduct its business except, in each case, where the
lack thereof would not have a Material Adverse Effect; and each Subsidiary is
duly qualified to transact business as a foreign corporation and is in good
standing (if applicable) in each other jurisdiction in which it owns or leases
property of a nature, or transacts business of a type, that would make such
qualification necessary, except to the extent that the failure to so qualify or
be in good standing would not result in a Material Adverse Change. All of the
issued and outstanding shares of capital stock of each Subsidiary which are
owned by the Company have been duly authorized and validly issued, and are fully
paid and non-assessable. The Company, directly or indirectly, owns the
percentage of capital indicated in Schedule 4.3(a) next to each such Subsidiary,
free and clear of any Liens, except as set forth in Schedule 4.3(a).
(b) The Company is not a party to any joint venture, partnership or
similar arrangement in which the Company or any of its Subsidiaries
participates.
4.4 Consents of Third Parties. None of the execution and delivery by
the Company of this Agreement and the Transaction Documents, the consummation of
the
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transactions contemplated hereby or thereby, or compliance by the Company
with any of the provisions hereof or thereof will (a) conflict with, or result
in the breach of, any provision of the Memorandum of Association or Articles of
Association or by-laws of the Company, (b) conflict with, violate, result in the
breach or termination of, or constitute a default or give rise to any right of
termination or acceleration or right to increase the obligations or otherwise
modify the terms thereof under any Permit or Order to which the Company is a
party or any Contract to which the Company or any of its Subsidiaries is bound
or by which the Company or any of its properties or assets is bound, (c)
constitute a violation of any Law applicable to the Company or (d) result in the
creation of any Lien upon the properties or assets of the Company. Except as set
forth on Schedule 4.4 and other than those which have been obtained or made, no
consent, waiver, approval, Order, Permit or authorization of, or declaration or
filing with, or notification to, any Person or Governmental Body is required on
the part of the Company in connection with the execution and delivery of this
Agreement or the Transaction Documents, or the compliance by the Company with
any of the provisions hereof or thereof.
4.5 Authorization of Preferred Shares.
(a) On the Closing Date, the issuance, sale, and delivery of the
Preferred Shares to be purchased pursuant to Section 1.1 will have been duly
authorized by all requisite action of the Company, and, when issued, sold, and
delivered in accordance with this Agreement, the Preferred Shares will be
validly issued and outstanding, fully paid and non-assessable, with no personal
liability attaching to the ownership thereof, and not subject to preemptive or
any other similar rights of the members of the Company or others.
(b) On the Closing Date, the issuance and delivery of the Common
Stock to be delivered upon conversion of the Preferred Shares in accordance with
the terms of the Preferred Shares will have been duly authorized by all
requisite action of the Company and, when issued and delivered in accordance
with the terms of the Preferred Shares, the Common Stock will be validly issued
and outstanding, fully paid and non-assessable, with no personal liability
attaching to the ownership thereof, and not subject to preemptive or any other
similar rights of the members of the Company or others.
4.6 Financial Statements. Attached hereto as Schedule 4.6 are (a)
copies of the audited balance sheet of the Company and its Subsidiaries, on a
consolidated basis as of December 31, 1998, the income statement of the Company
and its Subsidiaries, on a consolidated basis for the fiscal year ended December
31, 1998, and the cash flow statement of the Company and its Subsidiaries, on a
consolidated basis for the fiscal year ended December 31, 1998 (the "Audited
Financial Statements") and (b) copies of the unaudited balance sheet of the
Company and its Subsidiaries, on a consolidated basis as of June 30, 1999, the
statement of income and retained earnings of the Company and its Subsidiaries,
on a consolidated basis for the six-month period ended June 30, 1999, and the
cash flow statement of the Company and its Subsidiaries, on a consolidated basis
for the six-month period ended June 30, 1999 (the "Unaudited Financial
Statements", and together with the Audited Financial Statements, the "Financial
Statements"). Each of the Financial Statements was prepared in good faith, is
complete and correct in all material respects, has been prepared in accordance
with GAAP and in conformity with the practices consistently applied by the
Company and its Subsidiaries and
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presents fairly the financial position, results of operations and cash flows of
the Company and its Subsidiaries as of the dates and for the periods indicated.
4.7 No Undisclosed Liabilities. Except as set forth on Schedule 4.7,
neither the Company nor any of its Subsidiaries has any liabilities (whether
accrued, absolute, contingent or otherwise, and whether due or to become due or
asserted or unasserted), except (a) obligations under Contracts described in
Schedule 4.15 or under Contracts that are not required to be disclosed thereon
as a result of dollar thresholds therein, (b) liabilities provided for in the
Financial Statements (other than liabilities which, in accordance with GAAP,
need not be disclosed), (c) liabilities (other than accounts payable) incurred
since the Audited Financial Statements, in the ordinary course of business
consistent with past practice, the sum of which is, in the aggregate, no greater
than $50,000, and (d) accounts payable in excess of those shown on the Financial
Statements, incurred in the ordinary course of business consistent with past
practice, the sum of which is, in the aggregate, not greater than $50,000.
4.8 Absence of Certain Developments. Except as set forth on Schedule
4.8 and since the date of the Audited Financial Statements:
(a) there has not been any Material Adverse Change nor has any event
occurred which could result in any Material Adverse Change;
(b) there has not been any declaration, setting a record date,
setting aside or authorizing the payment of, any dividend or other distribution
in respect of any shares of capital stock of the Company or any of its
Subsidiaries or any repurchase, redemption or other acquisition by the Company
or any of its Subsidiaries, of any of the outstanding shares of capital stock or
other securities of, or other ownership interest in, the Company or any of its
Subsidiaries;
(c) there has not been any transfer, issue, sale or other
disposition by the Company of any shares of capital stock or other securities of
the Company or any of its Subsidiaries or any grant of options, warrants, calls
or other rights to purchase or otherwise acquire shares of such capital stock or
such other securities;
(d) neither the Company nor any of its Subsidiaries has (i) awarded
or paid any bonuses to Employees or Representatives of the Company, (ii) entered
into any employment, deferred compensation, severance or similar agreements (nor
amended any such agreement), (iii) agreed to increase the compensation payable
or to become payable by the Company or any of its Subsidiaries to any of the
Company's Employees or Representatives, or (iv) agreed to increase the coverage
or benefits available under any severance pay, deferred compensation, bonus or
other incentive compensation, pension or other employee benefit plan, payment or
arrangement made to, for or with such Employees or Representatives, other than
in the ordinary course of business consistent with past practice which increases
in the aggregate do not exceed $50,000 in annual cost to the Company or any of
its Subsidiaries and consistent with the operating expense budget of the Company
or any of its Subsidiaries, and other than as may have been required by law or
insurers;
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(e) neither the Company nor any of its Subsidiaries has made any
loans, advances (other than advances to officers and employees of the Company or
its Subsidiaries which advances are made in the ordinary course of business and
do not exceed per individual the reasonable anticipated expenses for legitimate
business purposes), or capital contributions to, or investments in, any Person
or paid any fees or expenses to any Affiliate of the Company other than a
Subsidiary;
(f) neither the Company nor any of its Subsidiaries has transferred
or granted any rights under any Contracts, leases, licenses, agreements or
intangible property (as set forth in Section 4.12 hereof) used by the Company in
its business which could result in a Material Adverse Change;
(g) there has not been any damage, destruction or loss, whether or
not covered by insurance, with respect to the property or assets of the Company
or any of its Subsidiaries having a replacement cost of more than $10,000 for
any single loss or $50,000 for all such losses;
(h) neither the Company nor any of its Subsidiaries has mortgaged,
pledged or subjected to any Lien any of its assets, or acquired any assets for a
purchase price in excess of $50,000 in the aggregate or sold, assigned,
transferred, conveyed, leased or otherwise disposed of any assets of the Company
or any of its Subsidiaries for a sale price in excess of $50,000 in the
aggregate except for assets acquired or sold, assigned, transferred, conveyed,
leased or otherwise disposed of in the ordinary course of business;
(i) neither the Company nor any of its Subsidiaries has canceled or
compromised any debt or claim or amended, canceled, terminated, relinquished,
waived or released any Contract or right except in the ordinary course of
business consistent with past practice and which, individually or in the
aggregate, would not be material to the Company or any of its Subsidiaries;
(j) neither the Company nor any of its Subsidiaries has made any
binding commitment to make any capital expenditures or capital additions or
betterments in excess of $25,000 individually or $75,000 in the aggregate;
(k) neither the Company nor any of its Subsidiaries has incurred any
debts, obligations or liabilities, whether due or to become due, except current
liabilities incurred in the ordinary course of business, none of which current
liabilities (individually or in the aggregate) could result in a Material
Adverse Change;
(l) neither the Company nor any of its Subsidiaries has entered into
any transaction other than in the ordinary course of business except for (in the
case of the Company) this Agreement;
(m) neither the Company nor any of its Subsidiaries has encountered
any labor difficulties or labor union organizing activities;
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(n) neither the Company nor any of its Subsidiaries has made any
change in the accounting principles, methods or practices followed by it or
depreciation or amortization policies or rates theretofore adopted;
(o) neither the Company nor any of its Subsidiaries has disclosed to
any Person any material trade secrets except for disclosures made to Persons
subject to valid and enforceable confidentiality agreements;
(p) except in the ordinary course of business, neither the Company
nor any of its Subsidiaries has suffered or experienced any change in the
relationship or course of dealings between the Company and/or any of its
Subsidiaries and any of their suppliers or customers which supply goods or
services to the Company or any of its Subsidiaries or purchase goods or services
from the Company and or any of its Subsidiaries, which has had or is likely to
have a Material Adverse Effect; and
(q) neither the Company nor any of its Subsidiaries has made any
payment to, or received any payment from, or made or received any investment in,
or entered into any transaction or series of related transactions (including
without limitation, the purchase, sale, exchange or lease of assets, property or
services, or the making of a loan or guarantee) with any Affiliate in each case,
in excess of $50,000 or its equivalent (other than any transactions between or
among the Company and any of its Subsidiaries) (each, an "Affiliate
Transaction").
4.9 Taxes. The Company and each of its Subsidiaries has filed all
Tax returns (including statements of estimated Taxes owed) and reports required
to be filed within the applicable periods (subject to extensions) for such
filings and has paid all Taxes required to be paid, and has established adequate
reserves (net of estimated Tax payments already made) for the payment of all
Taxes payable in respect of the period subsequent to the last periods covered by
such returns. Such Tax returns and reports are true and correct in all material
respects. No deficiencies for any Tax are currently assessed against the Company
or any Subsidiary, and, no Tax returns of the Company or any Subsidiary have
ever been audited, and, to the knowledge of the Company, there is no such audit
pending or contemplated. Neither the Company nor any of its Subsidiaries has
received any notice of any audit of any of the Tax returns by any British Virgin
Islands or foreign taxing authority (including, without limitation, the
Argentine Direccion General Impositiva ("DGI") and Direccion General xx Xxxxxx).
There is no Tax lien, whether imposed by any federal, state or local taxing
authority, outstanding against the assets, properties or business of the Company
or any of its Subsidiaries other than Liens for Taxes which are not yet due.
Neither the Company nor any of its Subsidiaries has executed any waiver of the
statute of limitations on the assessment or collection of any Tax or
governmental charge. The Company and its Subsidiaries have properly charged,
collected and paid all applicable stamp, sales, use and other similar Taxes on
or before the Closing Date.
4.10 Real Property.
(a) Neither the Company nor any of its Subsidiaries owns any real
property.
(b) Schedule 4.10(b) sets forth a complete list of all real property
and interests in real property leased by the Company or any of its Subsidiaries
(each, a "Real Property Lease",
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and collectively, the "Real Property Leases") as lessee or lessor. The Company
or the applicable Subsidiary has good, legal and marketable title to the
leasehold estates in all Real Property Leases in each case free and clear of all
Liens. Neither the Company nor any Subsidiary has any reason to believe that
such title would not be insurable subject to customary exceptions.
(c) Each of the Real Property Leases is valid and enforceable in
accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally and subject, as to enforceability, to general principles of
equity (regardless of whether enforcement is sought in a proceeding at law or in
equity), and there is no default under any Real Property Lease by the Company or
the applicable Subsidiary or, to the knowledge of the Company, by any other
party thereto, and no event has occurred that with the lapse of time or the
giving of notice or both would constitute a default thereunder. The Company has
delivered or otherwise made available to the Purchaser true, correct and
complete copies of the Real Property Leases, together with all amendments,
modifications, supplements or side letters affecting the obligations of any
party thereunder.
(d) No previous or current party to any Real Property Lease has
given notice of or made a claim with respect to any breach or default
thereunder. With respect to those Real Property Leases that were assigned or
subleased to the Company or a Subsidiary by a third party, all necessary
consents to such assignments or subleases have been obtained.
4.11 Tangible Personal Property; Assets. Each of the Company and its
Subsidiaries has good, legal and marketable title to or valid leasehold
interests in, all of its personal property and assets. The personal property
owned by the Company or its Subsidiaries are held in each case free and clear of
all Liens, other than Permitted Liens. With respect to the personal property and
assets that the Company or any Subsidiary leases, the lessee thereunder is in
compliance with such leases except for such noncompliance as would not have a
Material Adverse Effect and the lessee holds a valid leasehold interest free and
clear of any Liens, other than Permitted Liens. All material items of personal
property and assets owned or leased by the Company and its Subsidiaries are in
good operating condition, normal wear and tear excepted.
4.12 Intangible Property. Each of the Company and its Subsidiaries
owns or possesses adequate licenses or other rights to use all patents, patent
applications, trademarks, trademark applications, service marks, service xxxx
applications, trade names, copyrights, manufacturing processes, software,
formulae, trade secrets and know how (collectively, "Intellectual Property")
necessary to the conduct of its business as conducted; if any such Intellectual
Property necessary to the conduct of the business as proposed to be conducted is
not owned or licensed to the Company or to any of its Subsidiaries, such
Intellectual Property is readily available to the Company on commercially
reasonable terms, and no claim is pending or, to the knowledge of the Company,
threatened to the effect that the operations of the Company or any Subsidiary
infringe upon or conflict with the asserted rights of any other Person under any
Intellectual Property, and the Company does not know of any basis for any such
claim (whether or not pending or threatened). No claim is pending or, to the
knowledge of the Company, threatened to the effect that any such Intellectual
Property owned or licensed by the Company or any Subsidiary, or which the
Company or a Subsidiary otherwise has the right to use, is invalid or
unenforceable by the Company or the applicable Subsidiary, and the Company does
not know of any basis for any such claim (whether or not pending or threatened).
Neither the Company
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nor any Subsidiary has granted or assigned to any other Person any right to
provide the services or proposed services of the Company and its Subsidiaries.
4.13 Technology. Except as set forth in Schedule 4.13, the products,
processes, proprietary technology and other proprietary know-how owned or used
by the Company and its Subsidiaries were completely developed by the Company's
full-time employees only; the concepts, inventions and original works of
authorship owned or used by the Company or its Subsidiaries were developed or
conceived by employees within the scope of their employment by the Company (or
the applicable Subsidiary) and are connected with the Company's and its
Subsidiaries' underlying products, processes and proprietary technology. Except
as set forth in Schedule 4.13, no independent contractors or consultants were
used or employed by the Company or a Subsidiary in the development of the
products, processes, proprietary technology and other proprietary know-how owned
or used by the Company and its Subsidiaries.
4.14 Real Property Holding Corporation. The Company is not a "United
States real property holding corporation" within the meaning of Section
847(c)(2) of the Code.
4.15 Material Contracts.
(a) Except as set forth on Schedule 4.15, neither the Company, any
Subsidiary nor any of their respective properties or assets is a party to or
bound by any (i) Contract not made in the ordinary course of business, or
involving a commitment or payment by the Company or any Subsidiary in excess of
$50,000 or, in the Company's belief, otherwise material to the business of the
Company or any Subsidiary, (ii) Contract among members or granting a right of
first refusal or for a partnership or a joint venture or for the acquisition,
sale or lease of any assets or capital stock of the Company or any other Person
or involving a sharing of profits, (iii) mortgage, pledge, conditional sales
contract, security agreement, factoring agreement or other similar Contract with
respect to any real or tangible personal property of the Company or any
Subsidiary, (iv) loan agreement, credit agreement, promissory note, guarantee,
subordination agreement, letter of credit or any other similar type of Contract,
(v) Contract with any Governmental Body outside the ordinary course of business,
(vi) Contract with respect to the discharge, storage or removal of hazardous
materials or (vii) binding commitment or agreement to enter into any of the
foregoing. The Company has delivered or otherwise made available to the
Purchaser true, correct and complete copies of the Contracts listed on Schedule
4.15, together with all amendments, modifications, supplements or side letters
affecting the obligations of any party thereunder.
(b) (i) Each of the Contracts listed on Schedule 4.15 is valid and
enforceable against the Company or its Subsidiaries in accordance with its
terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium
and similar laws affecting creditors' rights and remedies generally and subject,
as to enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity), and there is no
default under any Contract listed on Schedule 4.15 by the Company or any of its
Subsidiaries which is likely to have a Material Adverse Effect or, to the
knowledge of the Company, by any other party thereto, and no event has occurred
that with the lapse of time or the giving of notice or both would constitute a
default by the Company thereunder which is likely to have a Material Adverse
Effect.
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(ii) No previous or current party to any Contract has given
written notice to the Company or any Subsidiary of or made a claim with respect
to any breach or default thereunder and the Company has no knowledge of any
notice of or claim with respect to any such breach or default.
(c) With respect to the Contracts listed on Schedule 4.15 that were
assigned to the Company or any Subsidiary by a third party, all necessary
consents to such assignment have been obtained.
4.16 Employee Benefits. Except as set forth on Schedule 4.16,
neither the Company nor any Subsidiary has in effect any employment agreements,
consulting agreements, deferred compensation, pension or retirement agreements
or arrangements, bonus, incentive or profit-sharing plans or arrangements, or
labor or collective bargaining agreements, written or oral. The Company and its
Subsidiaries are in compliance in all material respects with all applicable Laws
relating to labor, employment, fair employment practices, terms and conditions
of employment, and wages and hours.
4.17 Employees.
(a) To the knowledge of the Company, no key executive Employee and
no group of Employees or independent contractors of the Company or any
Subsidiary has any plans to terminate his, her or its employment or relationship
as an Employee or independent contractor with the Company or such Subsidiary.
(b) Schedule 4.17 sets forth a true and complete list of the name
and amount of annual compensation of (i) each Employee of the Company or any
Subsidiary whose current annual compensation is $50,000 or more, together with
such person's job title and amounts and forms of compensation and fringe and
severance benefits and (ii) each consultant, contractor or subcontractor
equivalent of the Company and its Subsidiaries whose annual compensation by the
Company or its Subsidiary is $50,000 or more.
(c) To the best of the Company's knowledge after reasonable inquiry,
no key executive Employee or any other Employee of the Company or any Subsidiary
is a party to or is otherwise bound by any agreement or arrangement (including,
without limitation, confidentiality agreements, non-competition agreements,
licenses, covenants, or commitments of any nature), or subject to any judgment,
decree, or Order of any court or Governmental Body, (i) that would conflict with
such Employee's obligation diligently to promote and further the interest of the
Company or such Subsidiary or (ii) that would conflict in any material respect
with the Company's (or the applicable Subsidiary's) business as now conducted or
as proposed to be conducted.
4.18 Litigation. There are no Legal Proceedings pending or, to the
knowledge of the Company, threatened that question the validity of this
Agreement or any of the Transaction Documents or any action taken or to be taken
by the Company in connection with the consummation of the transactions
contemplated hereby or thereby. Except as set forth on Schedule 4.18, there are
no Legal Proceedings pending or, to the knowledge of the Company, threatened
against or affecting the Company, any of its Subsidiaries or any of their
respective
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properties or assets, and there is no reasonable basis for any such
Legal Proceeding. There is no outstanding or, to the knowledge of the Company,
threatened Order of any Governmental Body against, in respect of or naming the
Company or any of its Subsidiaries or in respect of any of their respective
properties or assets or against the Company or its Subsidiaries.
4.19 Compliance with Laws; Permits.
(a) The Company and each Subsidiary is and at all times has been in
compliance in all material respects with all material Laws and material Orders
promulgated by any Governmental Body applicable to the Company or such
Subsidiary, or to the conduct of the business or operations of the Company or
such Subsidiary, or the use of any of their respective properties (including any
leased properties) and assets. Neither the Company nor any Subsidiary has
received any notices of violation or alleged violation of any such Law or Order
by any Governmental Body.
(b) The Company and each Subsidiary has all Permits necessary for
the conduct of its business where the failure to have such Permits could have a
Material Adverse Effect. The Company and each Subsidiary has complied in all
material respects with all conditions of such Permits applicable to it; no
default or violation, or event that with the lapse of time or giving of notice
or both would become a default or violation which could have a Material Adverse
Effect, has occurred in the due observance of any such Permit; all such Permits
are in full force and effect without further consent or approval of any Person;
and neither the Company nor any Subsidiary has received any notice from any
source to the effect that there is lacking any such material Permit required in
connection with the current operations of the Company or such Subsidiary.
4.20 Environmental and Safety Laws. Neither the Company nor any
Subsidiary is in violation of any applicable Laws relating to the environment or
occupational health where the failure to so comply could have a Material Adverse
Effect and safety and no material expenditures are or will be required in order
to comply with any such existing Laws.
4.21 Investment Company Act. The Company is not, nor is it directly
or indirectly controlled by or acting on behalf of any Person that is, an
investment company within the meaning of the Investment Company Act of 1940, as
amended.
4.22 Affiliate Transactions. Schedule 4.22 sets forth each Affiliate
Transaction of the Company and its Subsidiaries, including the parties, material
terms (including amounts due from the Company (or a Subsidiary) or owed to the
Company (or a Subsidiary)), restrictions and obligations of the Company and its
Subsidiaries in connection with each such Affiliate Transaction. Each such
Affiliate Transaction is on an arm's-length basis and on terms no less favorable
to the Company or a Subsidiary than could be obtained from non-related parties.
The Company has delivered or otherwise made available to the Purchaser true,
correct and complete copies of all written Contracts relating to such Affiliate
Transactions, together with all amendments, modifications, supplements or side
letters affecting the obligations of any party thereunder.
11
4.23 Disclosure; Survival. There is no fact which has not been
disclosed to the Purchaser of which the Company has knowledge and which has had
or could reasonably be anticipated to result in a Material Adverse Change. All
representations and warranties set forth in this Agreement or in any writing or
certificate delivered in connection with this Agreement shall survive the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby for a period of sixty (60) days after delivery
of audited financial statements for 1999 (the "Survival Period") and shall not
be affected by any examination made for or on behalf of the Purchaser, the
knowledge of the Purchaser, or the acceptance by the Purchaser of any
certificate or opinion.
4.24 Insurance. There is in full force and effect one or more
policies of insurance issued by insurers of recognized responsibility, insuring
the Company, its Subsidiaries and their respective properties, business and
projects against such losses and risks, and in such amounts, as are customary in
the case of corporations of established reputation engaged in the same or
similar business and similarly situated. Neither the Company nor any Subsidiary
has been refused any insurance coverage sought or applied for, and the Company
has no reason to believe that the Company and its Subsidiaries will be unable to
renew its existing insurance coverage as and when the same shall expire upon
terms at least as favorable as those presently in effect, other than possible
increases in premiums that do not result from any act or omission of the Company
or the applicable Subsidiary. Schedule 4.24 sets forth a list of each insurance
policy (specifying the insurer, the amount of coverage, the type of insurance,
the policy number, the expiration date, the annual premium (current and for each
of the last three (3) years) and any pending claims thereunder) maintained by
the Company and its Subsidiaries relating to its properties, assets, business or
personnel, and each inspection report or recommendation, if any, during the last
three (3) years as to the conditions of the properties and assets owned, leased,
occupied or operated by it or the conduct of its business. Except as disclosed
on Schedule 4.24, neither the Company nor any Subsidiary is in default in any
material respect with respect to any provision contained in any insurance policy
maintained by the Company or any of its Subsidiaries, and neither the Company
nor any Subsidiary has failed to give any notice or present any presently
existing claims under any insurance policy in due and timely fashion.
4.25 Customers and Suppliers. Schedule 4.25 sets forth a list of the
ten (10) largest customers and the ten (10) largest suppliers of the Company and
its Subsidiaries and the dollar amount of purchases or sales which each such
customer or supplier represents. There exists no actual or, to the knowledge of
the Company, threatened termination or cancellation of the business conducted by
the Company or any Subsidiary with any customer, supplier or group of customers
or group of suppliers set forth on Schedule 4.25.
4.26 Year 2000. Each item of hardware, software, information
technology, embedded, or processor based system and/or any combination thereof,
used, developed, manufactured, distributed, licensed, transferred or delivered,
by the Company or any of its Subsidiaries (collectively, the "System"), shall be
able to correctly function, operate, process data or perform date related
calculations, including, but not limited to, calculating, comparing and
sequencing, from, into and between the years 1999 and 2000, accurately process,
provide and/or receive date data, including leap year calculations, into and
between the years 1999, 2000 and beyond, shall otherwise function as per the
specifications thereof before, during and following January 1, 2000. Neither
performance nor functionality of the System shall be
12
affected by dates prior to, during and after January 1, 2000. A System
containing or calling on a calendar function including, without limitation, any
function indexed to the CPU clock, and any function providing specific dates or
days, or calculating spans of dates or days shall record, store, process,
provide and, where appropriate, insert, true and accurate dates and calculations
for dates and spans, before, during and following January 1, 2000. The System
shall have no lesser functionality or operability with respect to records
containing dates, before, during or after January 1, 2000 than heretofore with
respect to dates prior to January 1, 2000. The System shall be fully
interoperable and interface with any and all other systems, software and/or
hardware used by the Company, its Subsidiaries and their respective customers
before, during or after January 1, 2000, and/or otherwise exchange data,
including date related data therewith.
4.27 Financial Advisors. No agent, broker, investment banker,
finder, financial advisor or other Person is or will be entitled to any broker's
or finder's fee or any other commission or similar fee from the Company,
directly or indirectly, in connection with the transactions contemplated by this
Agreement or any Transaction Document and no Person is entitled to any fee or
commission or like payment from the Company in respect thereof based in any way
on agreements, arrangements or understandings made by or on behalf of the
Company.
4.28 Condition of Properties. All facilities, machinery, equipment,
fixtures, vehicles and other properties owned, leased or used by the Company and
its Subsidiaries are in good operating condition and repair, are reasonably fit
and usable for the purposes for which they are being used, are adequate and
sufficient for the Company and its Subsidiaries' respective businesses and
conform in all material respects with all applicable Laws.
4.29 Illegal or Unauthorized Payments; Political Contributions. The
operations and practices of the Company and its Subsidiaries have been conducted
at all times during the past five (5) years in compliance with the provisions of
the United States Foreign Corrupt Practices Act of 1977, as amended.
4.30 Pending Changes. To the actual knowledge of the Company, there
is no pending or threatened change in any Law which materially affects or could
materially affect the Company or the business, assets, liabilities, prospects,
properties, results of operations or condition (financial or otherwise) of the
Company or its Subsidiaries.
4.31 Securities Laws. The Company has complied with all applicable
U.S. federal and state securities laws in connection with the offer, issuance
and sale of the Preferred Shares. Prior to the Closing, neither the Company nor
anyone acting on its behalf has sold, offered to sell or solicited offers to buy
the Preferred Shares or similar securities to, or solicit offers with respect
thereto from, or entered into any preliminary conversations or negotiations
relating thereto with, any Person, so as to bring the issuance and sale of the
Preferred Shares under the registration provisions of the Securities Act, and
applicable state securities laws. Neither the Company nor any Person acting on
its behalf has offered the Preferred Shares to any Person by means of general or
public solicitation or general or public advertising, such as by newspaper or
magazine advertisements, by broadcast media, or at any seminar or meeting whose
attendees were solicited by such means.
13
4.32 Backlog. Schedule 4.32 sets forth a list of Revenue and
Customer "Backlog" by customer as of July 31, 1999. Such list has been
accurately compiled, is true, correct and complete insofar as it purports to
reflect revenues actually generated, and represents the best good faith forecast
of the Company insofar as it purports to forecast revenues for periods after the
date hereof.
4.33 Accounts Receivable. The accounts receivable of the Company and
its Subsidiaries were created in the ordinary course of business and, to the
Company's knowledge, are fully collectible, without offset or other deduction,
subject to appropriate reserves in accordance with GAAP applied on a consistent
basis. Schedule 4.33 sets forth a good faith estimate of the accounts receivable
of the Company and its Subsidiaries as of July 31, 1999.
4.34 Registration Rights. Except for the rights granted under the
Transaction Documents, no Person has demand or other rights to cause the Company
to file any registration statement under the Securities Act relating to any
securities of the Company or any right to participate in any such registration
statement.
4.35 Books and Records. The books of account, ledgers, order books,
records and documents of the Company and its Subsidiaries accurately and
completely reflect all material information relating to the business of the
Company or the applicable Subsidiary, the location and collection of its assets,
and the nature of all transactions giving rise to the obligations or accounts
receivable of the Company or the applicable Subsidiary.
4.36 PFIC. The Company is not a "passive foreign investment company"
within the meaning of Section 1297 of the Code.
5. Representations and Warranties of the Purchaser.
The Purchaser hereby represents and warrants to the Company that:
5.1 Capacity; Authorization. The Purchaser has all legal capacity to
enter into this Agreement and to carry out its obligations hereunder. Assuming
due execution and delivery by the Company of this Agreement, this Agreement will
constitute a legal, valid and binding obligation of the Purchaser, enforceable
against the Purchaser in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally and subject, as to enforceability, to
general principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity).
5.2 Investment Purposes. (a) The Purchaser is acquiring the
Preferred Shares it has agreed to purchase for investment purposes only, for its
own account, and not as nominee or agent for any other Person, and not with a
view to, or for resale in connection with, any distribution thereof within the
meaning of the Securities Act, (b) it has such knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risks of its investment, (c) the Company has made available to it the
opportunity to ask questions and to receive answers, and to obtain information
necessary to evaluate the merits and risks of this investment, (d) the Purchaser
understands, acknowledges and agrees that the Preferred Shares have not been
registered under (and that the Company has no present intention to register the
14
Preferred Shares under) the U.S. Securities Act or applicable state securities
laws, and may not be sold or otherwise transferred by the Purchaser to a United
States person unless the Preferred Shares have been registered under the U.S.
Securities Act and applicable U.S. state securities laws or are sold or
transferred in a transaction exempt therefrom, and (e) no broker has acted on
behalf of the Purchaser in connection with this Agreement, and there are no
brokerage commissions, finders' fees or similar fees or commissions payable in
connection therewith based on any agreement, arrangement or understanding with
the Purchaser or any action taken by the Purchaser.
5.3 Payment of Purchase Price. The Purchaser has available resources
in order to pay to the Company the purchase price for the Preferred Shares in
accordance with the terms and conditions of this Agreement.
6. Further Agreements of the Parties.
6.1 Reserved Shares. For so long as the Preferred Shares are
convertible, the Company shall reserve that number of shares of Common Stock
issuable upon conversion of the Preferred Shares, which shares shall not be
subject to any preemptive or other similar rights.
6.2 Use of Proceeds. The Company shall use the proceeds from the
sale of the Preferred Shares under this Agreement for the following purposes:
advertising, brand positioning and development, production of proprietary and
third party content, product and technology development, expansion of local
sales operations, general corporate purposes and such other purposes as are
discussed in the Private Placement Memorandum.
6.3 Access to Information. The Purchaser and its Representatives
shall be entitled, upon reasonable notice, and at their own expense, to make
such investigation of the properties, business and operations of the Company and
such examination of the books, records and financial condition of the Company as
they reasonably request and to make extracts and copies of such books and
records. Any such investigation and examination shall be conducted during
regular business hours and under reasonable circumstances without material
interference with the Company's normal business operations, and the Company and
its Representatives shall cooperate fully therein. No investigation by the
Purchaser or its Representatives prior to or after the date of this Agreement
shall diminish or obviate any of the representations, warranties, covenants or
agreements of the Company contained in this Agreement or the Transaction
Documents. In order that the Purchaser may have full opportunity to make such
physical, business, accounting and legal review, examination of the affairs of
the Company and investigation as may be reasonably requested, the Company shall
cause its Representatives to cooperate fully with the Representatives of the
Purchaser in connection with such review and examination.
6.4 Confidentiality. Except as may be required by applicable law or
as otherwise agreed among the parties hereto, neither the Company, the Purchaser
nor any of their respective Affiliates shall at any time divulge, disclose,
disseminate, announce or release any information to any Person concerning this
Agreement, the Transaction Documents, the transactions contemplated hereby or
thereby, any trade secrets or other confidential information
15
of the Company or the Purchaser, without first obtaining the prior written
consent of the other party hereto; provided, however, that the parties shall be
entitled to disclose information with respect to the Purchaser's investment in
the Company on any reports the Purchaser files with the U.S. Securities and
Exchange Commission or otherwise furnishes to its security holders or as
otherwise required by Law.
6.5 Other Actions. The Company and the Purchaser agree to execute
and deliver such other documents and take such other actions as the other
parties may reasonably request for the purpose of carrying out the intent of
this Agreement and the Transaction Documents.
6.6 Year 2000 Covenant. The Company undertakes to promptly inform
the Purchaser of any material deficiency or expected cost in complying with the
"Year 2000" problem.
6.7. Indemnity.
(a) The Company agrees to indemnify, defend and hold harmless the
Purchaser (and its partners (and each officer and director thereof), directors,
officers, members, Employees, Affiliates, agents and permitted assigns) from and
against any and all losses, claims, liabilities, damages, deficiencies, costs or
expenses (including interest, penalties, and reasonable attorneys' fees,
disbursements and related charges) (collectively, "Losses") based upon, arising
out of or otherwise in respect of any inaccuracy in or breach of any
representations, warranties, covenants or agreements of the Company contained in
this Agreement or the Transaction Documents; provided, however, that the
Purchaser shall have no right to indemnification hereunder unless and until its
Losses, when aggregated with any and all other Losses which the Purchaser may
have against the Company, exceed $250,000. The provisions of this Section 6.7(a)
shall survive the termination of this Agreement for a period equal to the
Survival Period.
(b) The Purchaser agrees, severally and not jointly, to indemnify,
defend and hold harmless the Company (and its directors, officers, members,
Employees, Affiliates, agents and permitted assigns) from and against any and
all Losses based upon, arising out of or otherwise in respect of any inaccuracy
in or breach by it of any representations, warranties, covenants or agreements
of the Purchaser (and no other) contained in this Agreement.
6.8 Other Affirmative Covenants of the Company. Without limiting any
other covenants and provisions hereof, the Company covenants and agrees that
until the consummation of a Qualifying IPO, it will perform and observe the
following covenants and provisions, and will cause each Subsidiary, if and when
such Subsidiary exists, to perform and observe such of the following covenants
and provisions as are applicable to such Subsidiary:
(a) The Company shall pay and discharge, and cause each Subsidiary
to pay and discharge, all Taxes, assessments and governmental charges or levies
imposed upon it or upon its income, profits or business, or upon any properties
belonging to it, prior to the date on which penalties attach thereto, and all
lawful claims which, if unpaid, might become a Lien or charge upon any
properties of the Company or any Subsidiary, provided that neither the Company
nor any Subsidiary shall be required to pay any such Tax, assessment, charge,
levy or
16
claim which is being contested in good faith and by appropriate proceedings if
the Company or any Subsidiary shall have set aside on its books sufficient
reserves, if any, with respect thereto. The Company shall pay and cause each
Subsidiary to pay, when due, or in conformity with customary trade terms, all
lease obligations, all trade debt, and all other indebtedness incident to the
operations of the Company or its Subsidiaries, except such as are being
contested in good faith and by proper proceedings if the Company or Subsidiary
concerned shall have set aside on its books sufficient reserves, if any, with
respect thereto.
(b) The Company shall maintain insurance with a reputable insurance
company or association in such amount and covering such risks as is customary
coverage covering its properties and businesses customarily carried by companies
engaged in similar businesses and owning similar properties in the same general
areas in which the Company or any Subsidiary operates for the type and scope of
its properties and businesses and the Company shall maintain, and cause each
Subsidiary to maintain, such insurance. The Company will not cause or permit any
assignment of the proceeds of the life insurance policies specified in the first
sentence of this paragraph and will not borrow against such policies. The
Company will add the Purchaser as a notice party to such policies and will
request that the issuer(s) of such policies provide such designee with at least
ten (10) days' notice before either such policy is terminated (for failure to
pay premiums or otherwise) or assigned, or before any change is made in the
designation of a beneficiary thereof.
(c) The Company shall preserve and maintain (except where
noncompliance will not result in a Material Adverse Effect) and, unless the
Company deems it not to be in its best interests, cause each Subsidiary to
preserve and maintain, its corporate existence, rights, franchises and
privileges in the jurisdiction of its incorporation, and qualify and remain
qualified, and cause each Subsidiary to qualify and remain qualified, as a
foreign corporation in each jurisdiction in which such qualification is
necessary or desirable in view of its business and operations or the ownership
or lease of its properties. The Company shall use commercially reasonable best
efforts to secure, preserve and maintain (except where noncompliance will not
result in a Material Adverse Effect) and cause each Subsidiary to use
commercially reasonable best efforts to secure, preserve and maintain (except
where noncompliance will not result in a Material Adverse Effect), all licenses
and other rights to use patents, processes, licenses, Permits, trademarks, trade
names, inventions, intellectual property rights or copyrights owned or possessed
by it and deemed by the Company to be material to the conduct of its business or
the business of any Subsidiary.
(d) The Company shall comply (except where noncompliance will not
result in a Material Adverse Effect), and cause each Subsidiary to comply, with
the requirements of all applicable Laws and Orders of any Governmental Body,
where noncompliance would have a Material Adverse Effect.
(e) The Company shall keep, and cause each Subsidiary to keep,
adequate records and books of account in which complete entries will be made in
accordance with GAAP consistently applied, reflecting all financial transactions
of the Company and any Subsidiary, and in which, for each fiscal year, all
proper reserves for depreciation, depletion, returns of merchandise,
obsolescence, amortization, Taxes, bad debts and other purposes in connection
with its business shall be made.
17
(f) The Company shall use commercially reasonable best efforts to
maintain and preserve, and cause each Subsidiary to use commercially reasonable
best efforts to maintain and preserve, all of its properties and assets,
necessary for the proper conduct of its business, in good repair, working order
and condition, ordinary wear and tear excepted, including, without limitation,
the maintenance and preservation of any material patents, licenses, Permits or
agreements being used by the Company in its business as now operated and as now
proposed to be operated.
(g) The Company shall promptly, fully and in detail, inform the
Board of Directors of any substantive discussions, offers or contracts relating
to possible financings of any nature for the Company, whether initiated by the
Company or any other Person, except for (i) arrangements with trade creditors,
and (ii) utilization by the Company or any Subsidiary of commercial lending
arrangements with financial institutions.
(h) The Company shall at all times maintain provisions in its
Memorandum of Association and Articles of Association indemnifying all directors
against liability to the maximum extent permitted under the laws of the British
Virgin Islands.
(i) On or before December 31 in each calendar year (beginning
December 1, 1999), the Company shall pay to the Purchaser a monitoring fee equal
to $100,000 per annum in arrears (pro rated for any partial year). The board of
directors of the Company shall have the right to review the compensation paid
hereunder beginning at any time after December 31, 2001, and may (in its sole
discretion) reduce, eliminate, maintain or increase all such fees.
7. Other Obligations of the Parties.
7.1 Certain Notifications. At all times prior to the Closing, each
party hereto shall as promptly as reasonably practicable notify the other party
in writing of the occurrence of any event of which it obtains knowledge which
will result, or in the opinion of such party has a reasonable prospect of
resulting, in the failure to satisfy the conditions specified in Section 8
hereof.
7.2 Public Announcements. The parties hereto agree to consult
promptly with each other prior to issuing any press releases or otherwise making
public statements with respect to the transactions contemplated hereby, and
shall not issue any such press release or make any such public statement prior
to such consultation, except as may be required by law.
7.3 Furnishing Information. Each of the parties hereto will, as soon
as practicable after reasonable request therefor, furnish all the information
concerning it required for inclusion in any statement or application made by any
of them to any governmental or regulatory body in connection with the
transactions contemplated by this Agreement.
18
8. Conditions to Closing.
8.1 Conditions of Obligations of the Purchaser. The obligation of
the Purchaser to purchase and pay for the Preferred Shares which it has agreed
to purchase on the Closing Date is subject to the fulfillment in all material
respects prior to or on the date of the first Closing contemplated by this
Agreement (the "First Closing") of the following conditions, any of which may be
waived in whole or in part by the Purchaser:
(a) Representations and Warranties. The representations and
warranties of the Company under this Agreement shall be deemed to have been made
again on the date of the First Closing (other than those representations and
warranties made expressly as of a date prior to the First Closing) and shall
then be true and correct.
(b) Compliance with Agreement. The Company shall have performed and
complied with all agreements and conditions required by this Agreement to be
performed or complied with by the Company on or before the First Closing.
(c) Approvals. The Company shall have obtained any and all consents,
waivers, approvals or authorizations, with or by any Governmental Body or any
other Person required for the valid execution of this Agreement and the
transactions contemplated hereby.
(d) No Injunction. No Governmental Body or any other Person shall
have issued an Order which shall then be in effect restraining or prohibiting
the completion of the transactions contemplated hereby, nor shall any such Order
be threatened or pending.
(e) No Material Adverse Change. Since December 31, 1998, there shall
not have been a Material Adverse Change.
(f) Certificate of Officer. At any Closing hereunder subsequent to
the First Closing, the Company will deliver a certificate dated as of such
subsequent Closing Date, executed by its Chief Executive Officer, certifying the
satisfaction of the conditions specified in paragraphs (a), (b), (c), (d), (e)
and (h) of this Section 8.1 as of such subsequent Closing Date.
(g) Opinions of the Company's Counsel. The Purchaser shall have
received from Paul, Hastings, Xxxxxxxx & Xxxxxx, LLP, U.S. counsel for the
Company, and from Xxxxxxx Xxxx & Xxxxxxx, British Virgin Islands counsel for the
Company, favorable opinions dated the date of the First Closing, in form and
substance satisfactory to the Purchaser and their counsel.
(h) Memorandum. The Memorandum of Association and Articles of
Association shall be in full force and effect as of the date of the First
Closing under the laws of the British Virgin Islands and shall not have been
amended or modified, and a certified copy of the Memorandum of Association and
Articles of Association shall have been delivered to counsel for the Purchaser.
(i) Registration Rights Agreement and Stockholders Agreement. The
Purchaser shall have received from each of the parties thereto executed versions
of the amendment to the Stockholders Agreement and the amendment to the
Registration Rights Agreement on the date of the First Closing, in the form
attached hereto as Exhibits A and B.
19
(j) Supporting Documents. The Purchaser shall have received the
following:
(i) Copies of resolutions of the Board of the Company,
certified by the Secretary of the Company, authorizing and approving the
execution, delivery and performance of this Agreement and the Transaction
Documents and the issuance of the Preferred Shares, the forms of stock
certificates, and all other documents and instruments to be delivered pursuant
hereto and thereto;
(ii) A copy of the consent executed by holders of a majority
of the shares of Preferred Shares issued and outstanding as of the date hereof
consenting to the issuance of preferred shares pursuant to this Agreement; and
(iii) A certificate of incumbency executed by the Secretary of
the Company certifying the names, titles and signatures of the officers
authorized to execute the documents referred to in subparagraph (i) above and
further certifying that the Memorandum of Association and Articles of
Association of the Company delivered to the Purchaser at the time of the
execution of this Agreement have been validly adopted and have not been amended
or modified.
(k) Updating of Information. The Company shall have promptly
delivered to the Purchaser any information concerning events subsequent to the
date of this Agreement which is necessary to supplement the information
contained in or made a part of the representations and warranties contained
herein, including the schedules provided in connection with this Agreement, or
delivered by the Company pursuant to any of the covenants contained herein, in
order that the information contained herein or so delivered be complete and
accurate in all material respects as of the date of the First Closing.
Notwithstanding the preceding sentence, for purposes of determining the parties'
rights and obligations under this Agreement, the schedules delivered by the
Company shall be deemed to include only that information contained therein on
the date of this Agreement.
8.2 Conditions of Company's Obligations. The Company's obligation to
issue and sell the Preferred Shares to the Purchaser on each of the Closing
Dates is subject to the fulfillment prior to or on each Closing Date of the
following conditions, any of which may be waived in whole or in part by the
Company, provided that at any Closing hereunder subsequent to the First Closing,
the Purchaser will deliver a certificate dated as of such subsequent Closing
Date, executed by its Chief Executive Officer, certifying the satisfaction of
the conditions specified in paragraphs (a), (b), (c), (d) and (e) of this
Section 8.2 as of such subsequent Closing Date:
(a) Representations and Warranties. The representations and
warranties of the Purchaser under this Agreement shall be deemed to have been
made again on each Closing Date and shall then be true and correct in all
material respects.
(b) Compliance with Agreement. The Purchaser shall have performed
and complied with all agreements and conditions required by this Agreement to be
performed or complied with by the Purchaser on or before the First Closing.
20
(c) Approvals. The Purchaser shall have obtained any and all
consents, waivers, approvals or authorizations, with or by any Governmental Body
or any other Person required for the valid execution of this Agreement and the
transactions contemplated hereby.
(d) Payment of Purchase Price. The Purchaser shall have delivered
its Purchase Price specified in Section 2.1 hereof.
(e) No Injunction. No Governmental Body or any other Person shall
have issued an Order which shall then be in effect restraining or prohibiting
the completion of the transactions contemplated hereby, nor shall any such Order
be threatened or pending.
8.3 Closing of the Internet Agreements. With respect to each
Closing, the parties or their respective affiliates shall have executed the
Internet Agreement for such Closing.
9. Miscellaneous.
9.1 Certain Definitions.
"Affiliate" of any Person means any Person that directly or
indirectly controls, or is under common control with, or is controlled by, such
Person. As used in this definition, "control" (including with its correlative
meanings, "controlled by" and "under common control with") shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person (whether through ownership
of securities or partnership or other ownership interests, by contract or
otherwise). For the purposes of Section 8.2(d), the Purchaser shall not be
deemed to be an Affiliate of the Company.
"Code" means the Internal Revenue Code of 1986, as amended, and the
rules and regulations promulgated thereunder.
"Common Stock" means the ordinary shares, par value $1.00 per share,
of the Company.
"Contract" means any contract, agreement, indenture, note, bond,
loan, instrument, lease, conditional sales contract, mortgage, license,
franchise, insurance policy, commitment or other arrangement or agreement,
whether written or oral.
"Dollars" or "$" means the currency of the United States or its
foreign currency equivalent at the time the determination is made.
"Employee" means any current employee, office consultant,
independent contractor, agent, officer or director of the Company.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any similar federal statute, and the rules and regulations of the
Securities and Exchange Commission thereunder, all as the same shall be in
effect at the time.
"GAAP" means generally accepted accounting principles, as in effect
in the United States.
21
"Governmental Body" means any government or governmental or
regulatory body thereof, or political subdivision thereof, whether federal,
state, local or foreign, or any agency, instrumentality or authority thereof, or
any court or arbitrator (public or private).
"Law" means any federal, state, local or foreign law (including
common law), statute, code, ordinance, rule, regulation or other requirement or
guideline.
"Legal Proceeding" means any judicial, administrative or arbitral
actions, suits, proceedings (public or private), claims or governmental
proceedings.
"Lien" means any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind, including, without limitation, any conditional sale
or other title retention agreement, any lease in the nature thereof and the
filing of or agreement to give any financing statement under the Uniform
Commercial Code (or similar laws) of any jurisdiction and including any lien or
charge arising by statute or other law.
"Material Adverse Change" means any material adverse change in the
business, assets, liabilities, prospects, properties, results of operations or
condition (financial or otherwise) of the Company and its Subsidiaries, taken as
a whole.
"Material Adverse Effect" means any event, circumstance, condition,
fact, effect, or other matter which has had or could reasonably be expected to
have a material adverse effect (i) on the business, assets, liabilities,
prospects, properties, results of operations or condition (financial or
otherwise) of the Company and its Subsidiaries taken as a whole or (ii) on the
ability of the Company and such subsidiaries to perform on a timely basis any
material obligation under this Agreement or to consummate the transactions
contemplated hereby.
"Order" means any order, injunction, judgment, decree, ruling, writ,
assessment or arbitration award.
"Permits" means any approvals, authorizations, consents, licenses,
permits or certificates by or of any Governmental Body.
"Permitted Liens" shall mean (a) Liens for ad valorem real or
personal property taxes or assessments not at the time due and (b) Liens in
respect of pledges or deposits under workers' compensation laws or similar
legislation, carriers', warehousemen's, mechanics', laborers', and materialmen's
and similar liens, if the obligations secured by such Liens are not then
delinquent.
"Person" means any individual, corporation, partnership, firm, joint
venture, association, joint-stock company, trust, unincorporated organization,
Governmental Body or other entity.
"Qualifying IPO" means an underwritten initial public offering of
shares of common stock of the Company pursuant to an effective registration
statement under the Securities Act of 1933, as then in effect (or any comparable
statement under any similar federal statute then in force or effect) in which
the cumulative gross proceeds to the Company are equal to or greater than $35.0
million and the price per share paid in the public offering is greater than
22
3.0 times the then applicable Conversion Price (as defined in the Memorandum of
Association and Articles of Association of the Company).
"Register" means to register under the Securities Act and applicable
state securities laws for the purpose of effecting a public sale of securities.
"Representatives" of a Person means its officers, Employees, agents,
legal advisors and accountants.
"Securities Act" means the Securities Act of 1933, as amended, or
any similar federal statute, and the rules and regulations of the Securities and
Exchange Commission thereunder, all as the same shall be in effect at the time.
"Taxes" means any federal, state, local or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Section 59A of
the Code), customs duties, capital stock, franchise, profits, withholding,
social security (or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value-added, alternative or add-on
minimum, estimated, or other tax of any kind whatsoever, including any interest,
penalty, or addition thereto, whether disputed or not.
9.2 Expenses.
(a) At the Closing, the Company shall reimburse the Purchaser for
the reasonable out-of-pocket fees and expenses incurred by the Purchaser in
connection with the transactions contemplated hereby. The Company agrees that
such fees and expenses incurred through the Closing Date may be deducted by the
Purchaser from the Purchase Price payable at the Closing.
(b) The Company shall pay its own other out-of-pocket expenses and
all stamp and other Taxes which may be payable in respect of the execution and
delivery of this Agreement, the Transaction Documents, or the issuance, delivery
or acquisition of the Preferred Shares.
(c) The Company further agrees to reimburse the Purchaser on demand
for the Purchaser's reasonable out-of-pocket fees and expenses incurred in
connection with any amendment to or waiver or enforcement of this Agreement.
9.3 Specific Performance. Each of the parties hereto acknowledges
and agrees that the breach of this Agreement would cause irreparable damage to
the other parties hereto and that the other parties hereto will not have an
adequate remedy at law. Therefore, the obligations of each of the parties hereto
under this Agreement shall be enforceable by a decree of specific performance
issued by any court of competent jurisdiction, and appropriate injunctive relief
may be applied for and granted in connection therewith. Such remedies shall,
however, be cumulative and not exclusive and shall be in addition to any other
remedies which any party may have under this Agreement or otherwise.
23
9.4 Further Assurances. The Company and the Purchaser agree to
execute and deliver such other documents or agreements as may be necessary or
desirable for the implementation of this Agreement and the consummation of the
transactions contemplated hereby.
9.5 Submission to Jurisdiction; Consent to Service of Process.
(a) The parties hereto hereby irrevocably submit to the
non-exclusive jurisdiction of any federal or state court located within the
Borough of Manhattan, State of New York over any dispute arising out of or
relating to this Agreement or any of the transactions contemplated hereby and
each party hereby irrevocably agrees that all claims in respect of such dispute
or any suit, action or proceeding related thereto may be heard and determined in
such courts. The parties hereby irrevocably waive, to the fullest extent
permitted by applicable law, any objection which they may now or hereafter have
to the laying of venue of any such dispute brought in such court or any defense
of inconvenient forum for the maintenance of such dispute. Each of the parties
hereto agrees that a judgment in any such dispute may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
(b) Each of the parties hereto hereby consents to process being
served by any party to this Agreement in any suit, action or proceeding by the
mailing of a copy thereof in accordance with the provisions of Section 9.10
hereof.
9.6 Entire Agreement; Amendments and Waivers. This Agreement
(including the schedules and exhibits hereto) represents the entire
understanding and agreement among the parties hereto with respect to the subject
matter hereof and can be amended, supplemented or changed, and any provision
hereof can be waived, only by written instrument making specific reference to
this Agreement signed by the parties hereto. No action taken pursuant to this
Agreement, including without limitation, any investigation by or on behalf of
any party, shall be deemed to constitute a waiver by the party taking such
action of compliance with any representation, warranty, covenant or agreement
contained herein. The waiver by any party hereto of a breach of any provision of
this Agreement shall not operate or be construed as a further or continuing
waiver of such breach or as a waiver of any other or subsequent breach. No
failure on the part of any party to exercise, and no delay in exercising, any
right, power or remedy hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise of such right, power or remedy by such party
preclude any other or further exercise thereof or the exercise of any other
right, power or remedy. All remedies hereunder are cumulative and are not
exclusive of any other remedies provided by law.
9.7 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York without giving effect to
the principles of conflict of laws thereunder which would specify the
application of the law of another jurisdiction.
9.8 Headings; Interpretive Matters. The section headings of this
Agreement are for reference purposes only and are to be given no effect in the
construction or interpretation of this Agreement. No provision of this Agreement
will be interpreted in favor of, or against, any of the parties hereto by reason
of the extent to which any such party or its counsel
24
participated in the drafting thereof or by reason of the extent to which any
such provision is inconsistent with any prior draft hereof or thereof.
9.9 Confidentiality. Each party hereto covenants and agrees to treat
any non-public information provided to it by the Company concerning the business
and finances of the Company ("Corporate Information") as confidential and agrees
further that it will not use, exploit, reproduce, disclose or provide Corporate
Information to any third party (other than any agents of the parties who are
bound by substantially similar obligations of confidentiality) on its own behalf
or otherwise, except with the consent of the Company or as required by law,
legal process or any federal or state regulatory body having jurisdiction over
such party. The provisions of this Section 9.9 shall not apply to any
information which:
(a) was within the public domain prior to the time of disclosure of
Corporate Information to the receiving party or which comes into the public
domain other than as a result of a breach by the party of this Section 9.9;
(b) was in the possession of the receiving party or any of its
officers, directors, employees, agents, principals, or Affiliates) before the
receiving party received the Corporate Information;
(c) was rightfully acquired by the receiving party from a third
party without, to the knowledge of the receiving party, any restriction or any
obligation of confidentiality; or
(d) was independently developed by the receiving party without any
use or reference to the Corporate Information.
The provisions of this Section 9.9 shall survive the termination of
this Agreement, either in whole or as to any party, for a period of two (2)
years.
9.10 Notices. All notices and other communications under this
Agreement shall be in writing and shall be deemed given when delivered
personally, telecopied or mailed by certified mail, return receipt requested, to
the parties at the address or telecopier number indicated in the signature pages
hereof.
All notices are effective upon receipt or upon refusal if properly
delivered.
9.11 Severability. If any provision of this Agreement is invalid or
unenforceable, the balance of this Agreement shall remain in effect.
9.12 Binding Effect; Assignment. This Agreement shall be binding
upon and inure to the benefit of the parties and their respective successors and
permitted assigns. Nothing in this Agreement shall create or be deemed to create
any third-party beneficiary rights in any Person not a party to this Agreement
except as provided below. No assignment of this Agreement or of any rights or
obligations hereunder may be made by the Company or the Purchaser (by operation
of law or otherwise) without the prior written consent of the other parties
hereto and any attempted assignment without the required consents shall be void;
provided, however, that the Purchaser may assign this Agreement and any or all
rights and obligations hereunder, in whole or in part, to any Affiliate of the
Purchaser, but any such
25
assignment shall not relieve the Purchaser of its obligations hereunder. In
addition, and whether or not any express assignment has been made, the
provisions of this Agreement which are for the benefit of the Purchaser as a
purchaser or holder of Preferred Shares (or any securities pursuant to which
such Preferred Shares may be converted or exercised into) are also for the
benefit of and enforceable by, any subsequent holder of such Preferred Shares
who acquires the lesser of (i) $5,000,000 in original purchase price value of
the Preferred Shares other than pursuant to open-market purchases or (ii) fifty
percent (50%) of the number of Preferred Shares purchased by the Purchaser
pursuant hereto. Upon any permitted assignment, the references in this Agreement
to the Purchaser shall also apply to any such assignee unless the context
otherwise requires.
9.13 Counterparts. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original but all of
which together shall constitute one and the same instrument.
[The rest of this page has been intentionally left blank]
26
IN WITNESS WHEREOF, the parties hereto have executed or have caused this
Agreement to be executed by their respective officers thereunto duly authorized,
as of the date first written above.
EL SITIO, INC.
By: /s/ Xxxxxx Xxxxx Aranha
---------------------------------------
Title:
Notice address: Xxx Xxxxxxx 0000
0xx Xxxxx
Xxxxxxxx, Xxx Xxxxx
Xxxxxx 04565-001
Xxxxxxx Xxxxxxxx 000, 0xx Xxxxx
0000 Xxxxxx Xxxxx, Xxxxxxxxx
Attention: Xxxxxxx Xxxxxxx-Xxxxxx
Telephone: (00 00) 0000-0000
Telecopier: (00 00) 0000-0000, ext. 104
with a copy to:
Paul, Hastings, Xxxxxxxx & Xxxxxx LLP
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
27
IMPSAT CORPORATION
By: /s/ Xxxxxx Xxxxx Aranha
---------------------------------------
Title:
Notice address: Xxx Xxxxxxx 0000
0xx Xxxxx
Xxxxxxxx, Xxx Xxxxx
Xxxxxx 04565-001
ImpSat Corporation
Xxxxxxx Xxxxxx 000
0000 Xxxxxx Xxxxx, Xxxxxxxxx
Attention: Xxxxxx Xxxxxx
Telephone:
Telecopier: 000 00-000-0000
with a copy to:
Xxxxxx & Xxxxxx
000 00xx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000-0000
Attn: Xxxx X. Xxxxxxx
Telephone: 000-000-0000
Telecopier: 000-000-0000
28
