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EXHIBIT 2.2
MERGER AGREEMENT
executed between
ADVERTISING ANTWERPEN B.V.
CANTABRO CATALANA DE INVERSIONES, S.A.
COMPANIA DE CARTERA E INVERSIONES, S.A.
DEYA, S.A.
HAVAS ADVERTISING S.A.
INVERMARO, S.A.
INVERSIONES Y SERVICIOS PUBLICITARIOS, S.A.
CALLE ARCOS, S.L.
29 November 1998
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MERGER AGREEMENT
BETWEEN:
On one hand,
DEYA, S.A., a Luxembourguese company, duly incorporated and existing under the
laws of Luxembourg, ("Deya"), represented in this act by Mr. Fernando Rodes
Vila.
ADVERTISING ANTWERPEN B.V., a Dutch company, duly incorporated and existing
under the laws of The Netherlands, ("Advertising Antwerpen"), represented in
this act by Mr. Fernando Rodes Vila.
COMPANIA DE CARTERA E INVERSIONES, S.A., a Spanish company, duly incorporated
and existing under the laws of Spain ("Compania de Cartera e Inversiones"),
represented in this act by Mr. Fernando Rodes Vila.
CANTABRO CATALANA DE INVERSIONES, S.A., a Spanish company, duly incorporated and
existing under the laws of Spain, ("Cantabro Catalana") represented in this act
by Mr. Fernando Rodes Vila.
INVERMARO, S.A., a Spanish company, duly incorporated and existing under the
laws of Spain ("Invermaro"), represented in this act by Mr. Fernando Rodes Vila.
INVERSIONES Y SERVICIOS PUBLICITARIOS, S.A., a Spanish company, duly
incorporated and existing under the laws of Spain ("ISP"), represented in this
act by Mr. Fernando Rodes Vila.
(the "MP Shareholders").
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AND
On the other hand,
HAVAS ADVERTISING SA, a societe anonyme duly incorporated and existing under the
laws of France whose registered office is at 84, rue de Villiers, 92683
Levallois-Perret, represented in this act by Mr. Alain de Pouzilhac, as chairman
of the Board of Directors ("HA").
(Jointly, MP Shareholders and HA, referred as the "Parties").
WHEREAS
Media Planning, S.A. ("MP") and its directly or indirectly controlled entities
(together the "MP Group") is principally engaged in the business of media
planning and buying, including the activities of research, strategy definition,
tactical planning, negotiation and buying (the "Media Business").
HA and its directly or indirectly controlled entities (together the "HA Group")
is also engaged in the Media Business, both through specialized entities and
through advertising agencies of the HA Group.
Reference to "MP Media Business" or "HA Media Business" will be understood to
include all the Media Business of the respective group of companies. Reference
to any transfer of Media Business shall be understood to include all necessary
assets and related liabilities unless otherwise clearly indicated in the text.
The MP Shareholders and HA wish to combine their Media Business into one entity
which would either directly or through subsidiaries undertake in the long term
all the Media Business activities of HA Group and MP Group, and jointly develop
the combined entity.
NOW THEREFORE THE PARTIES HAVE HEREBY AGREED AS FOLLOWS
Definitions:
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Terms are defined in the text of the contract where most appropriate. For ease
of reference, all terms are indexed in Annex A.
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1. The Transaction
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1.1. General Framework
1.1.1. Venture vehicle and participation
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The Parties or HA, as may be agreed by the Parties prior to the execution of the
Implementation Agreements, will transfer, subject to the terms herein, all their
Media Business to ISP or MP ("New MP"), a Spanish limited liability company
(hereinafter the "Merger"). Method of transfer of the Media Business will be
effected on a case by case basis as described below in clause 1.2. and 1.3.
Assets and activities transferred to New MP will be valued as agreed in clause
1.4, though the Parties agree that the final share participation in New MP, if
the contribution is made to ISP, will be:
HA. 45,000%
Deya 22,000%
Advertising Antwerpen 16,775%
Compania de Cartera e Inversiones 11,000%
Cantabro Catalana de Inversiones 2,750%
Invermaro 2,475%
If Media Planning, S.A. becomes New MP, the resulting participation will be:
HA. 45,000%
Deya 22,000%
Compania de Cartera e Inversiones 11,000%
Cantabro Catalana de Inversiones 2,750%
ISP 15,950%
Calle Arcos 1,650%
Invermaro 1,650%
Any differences arising as a result of the valuation from the percentages agreed
above (the "Agreed Percentages") will be settled on the Merger Date among the
Parties as established in clause 1.6.
1.1.2. Timetable
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The Merger will be effected on the basis of the following timetable:
1. Execution of this Agreement ("Starting Date").
2. Before January 15th, 1999, a legal, tax (limited to a review of the auditors
papers and conclusions, unless such review rises doubts about the tax
treatment of a material issue)
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3. and information technology due diligence of the contributed assets will be
effected pursuant to clause 1.2.1.
4. Exchange of 1998 Proforma Accounts on or before January 15th, 1999.
5. Approvals as established in clause 12.
6. January 24th, 1999 : execution of the Implementation Agreements (the
"Implementation Date").
7. Public announcements as provided in clause 7.1.2 (January 25th, 1999).
8. During the first quarter of 1999, the Independent Auditor will review the
1998 Proforma Accounts presented by the Parties, presenting its report
on/or prior to March 31st, 1999, from which review adjustments to the
initial valuation may result.
9. As soon as all prior reorganization activities and the audit by the
Independent Auditor referred above are effected, the Parties will agree on
a date in which to effect the contributions to New MP (the "Merger Date").
The Merger Date shall be no later than June 30th, 1999. Effect of the
Merger as between the Parties is agreed to be from January 1st, 1999.
10. The contribution of the U.S. and Mexico HA Business Media, will be effected
during 1999 as established in clause 1.3.
1.1.3. 1998 Proforma accounts - Initial valuation
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The Parties shall prepare and deliver on or prior to January 15th,
1999, proforma estimated accounts for 1998 ("1998 Proforma Accounts")
of HA Media Business and MP Media Business.
1.2. The Merger
1.2.1. Due Diligence
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Prior to January 15th, 1999, the Parties will perform a reciprocal due diligence
on the MP Group and HA Group Media Business to be transferred by the other
Parties. Execution of the Implementation Agreements is subject to a
satisfactory conclusion and result of the due diligence for all Parties.
Exclusively for reference purpose, the Parties attach to this Agreement
projected estimates for 1998 HA Media Business and MP Media Business, as Annex C
and Annex D respectively.
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1.2.2. Prior reorganization
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As preliminary acts and conditions, the Parties shall cause the following acts
to occur prior to the dates established below:
a) By HA:
Prior to Implementation Date:
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(i) New England Co. will have developed analytical accounting for 1998 in order
to obtain a proforma profit and loss account and the year average net cash
position.
(ii) the following separation acts with Young and Rubicam, Inc. will have been
effected:
a) HA will have executed a separation agreement terminating its
present joint venture with Young & Rubicam;
b) HA will buy from Young & Rubicam all the shares of the French
company Mediapolis Worldwide;
c) HA will sell to Young & Rubicam all Media Business
activities/shares in Hungary and the Czech Republic;
d) in the UK, HA and Young & Rubicam will sign a client relationship
contract under the present conditions;
e) in Portugal, HA will buy all the shares of Mediapolis Portugal
from Young & Rubicam;
f) in Italy, HA and Young & Rubicam will execute a service contract,
whereby Young & Rubicam will provide to HA all necessary services
including software databases, offices, back office support, etc.;
g) in Holland, HA and Young & Rubicam will execute a service
contract, whereby Young & Rubicam will provide to HA all necessary
services including software databases, offices, back office support,
etc.;
(iii) HA shall provide together with the 1998 Proforma Accounts, all
information regarding the following pharmaceutical and financial services
companies which are not to be contributed : Euro RSCG Omnium & Associes,
Euro RSCG Health Care (France), Euro RSCG Health Care (UK), Robert A.
Becker, Lally McFarland & Pantello (USA), Lally McFarland & Pantello
(Canada), Connect World, Lolita, necessary to ensure that their
activities do not materially affect
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New MP's activity. Such confirmation shall be provided by MP Shareholders
at the Implementation Date at the latest.
Prior to the Merger Date:
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(iv) transfer of all the shares of the French companies to be contributed,
and listed below in 1.2.3(ii), to a single holding company (which could
be one of them).
(v) segregation of the Media Business developed by the HA Group in England
(including, without limitation, Euro RSCG Wnek Gosper, and WCRS) to a
new company ("New England Co.").
(vi) All the Media Business in Italy resulting from the termination agreement
of the joint venture with Young & Rubicam plus the Media Business
services provided by HA Group in Italy shall be transferred to Media
Pressing Srl.
(vii) (prior to Implementation Date) Contracts concerning service
relationships existing between HA Group companies existing prior to the
Merger Date and necessary between HA Group and New MP after the Merger
Date (legal, accountancy, computers, leases, etc.) will have been
executed, ensuring the continuance of the services at the existing rates
and standards provided they conform with market rates and standards.
(viii) HA shall make its best efforts in order to negotiate and execute
agreements with SFM top management providing for termination of the
current earn out arrangements and for reasonable incentives (to be borne
by New MP) in line with normal market practices in the sector. Any
payment to be made to terminate the present earn out arrangements shall
be borne by HA. If no agreement is reached by the Merger Date at the
latest, HA shall continue to bear the costs of any earn out payable to
the relevant HA Media Business management.
HA will provide to the MP shareholders appropriate justification that all the
steps described above have been taken and provide reasonable information thereon
at the MP shareholders request. Additionally, all acts reflected in paragraphs
(ii) (d), (e) (f) and (g) regarding the separation agreement with Young &
Rubicam, and those to be executed concerning Italy, UK and Holland, and those in
paragraphs (v), (vii) and (viii) and the separation agreement in (a) if it
affects the Media Business of Italy, UK, Holland and Portugal, will require
review and approval by MP shareholders prior to their execution.
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b) By MP Shareholders:
(i) MP shall transfer out from MP Group the following:
- Rablin, S.A.
- Acciones Especiales, S.A.
- Eventos Deportivos, S.L.
- Interactive Network, S.L.
- Banner activity in Media Contacts, S.A. (Spanish Net)
(ii) MP shall transfer to a subsidiary of Banco Bilbao Vizcaya, S.A. (BBV) and
to a subsidiary of Banco Santander, S.A. (BS), 10% each of all the shares
owned by MP in a holding company to be incorporated to hold all present
and future Latin American MP companies. This transfer may be effected by
allowing direct share subscription or sale of existing shares in each
company or in a holding company to be created. BBV and BS will be able to
acquire up to 10% each of any MP subsidiary in Latin America that may be
contributed in the future, subject to agreement with New MP.
(iii) Dissolution of Calle Arcos, S.A. and transfer of its present MP
shareholding to ISP, if ISP becomes New MP.
c) Nature of these conditions precedent:
The successful conclusion of all the above acts prior the Merger Date is
essential. However, if the execution of any of them for causes not attributable
to the corresponding party is to be unavoidably delayed past the Merger Date,
the Parties shall review prior to the Merger Date, the situation in good faith
to determine whether a rescheduling of the act may be acceptable, provided that
if required by any party or parties, the other Parties or Party, the Party (or
Parties) obliged to effect the act provides adequate guarantees that the act
will be finalized within the new period of time agreed. Any Party will have the
right to determine as its discretion whether a rescheduling of the act is to be
acceptable or whether termination of this Agreement pursuant to clause 6.3
should occur. For the purposes of this paragraph "Party" shall be understood to
mean HA and MP Shareholders.
1.2.3. Media Business to be transferred on the Merger Date
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(i) MP shareholders: all MP shareholders undertake to transfer by contribution
in kind to New MP (if New MP is not MP) all their shares in MP, as a result
of which New MP will have 100% of MP.
(ii) HA: undertakes to transfer to New MP:
France
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. a holding company that owns directly or indirectly all the shares of:
- AFFI Conseil.
- Concerto Media.
- HCA SNC.
- Mediapolis Worldwide.
- MCBB.
- Mediapolis.
- Societe d'Expertise Media SNC (SEM).
- the division identified as CCA.
. All Media Business activity currently performed in HA Group agencies
(migration).
England
. All the shares of New England Co.
United States
. All the shares of SFM Media Corporation, such shares may remain under the
control of the French holding company, if advisable from the tax point of
view.
Argentina
. All direct Media Business clients of Iconos Communicaciones shall be
transferred to Media Planning Argentina (migration).
Netherlands
. All the shares of Mediamaatwerk.
Italy
. All the shares of Media Pressing Srl.
Portugal
All the Media Business resulting from the termination agreement of the
joint venture with Young & Rubicam plus the Media Business services
provided by HA Group shall be sold to Media Planning Publicidade or any
other Media Planning Portuguese subsidiary. The Media Business
transferred will include
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personnel, clients' contracts (subject to clause 1.3.4 second (S) ), and
other assets and legal relationships directly linked to the Media
Business transferred. New MP Shareholders shall purchase directly or
indirectly the Media Business by way of share purchase of Mediapolis
Portugal subject to satisfactory review of Mediapolis Portugal by the MP
Shareholders.
Spain
All the shares of Mediapolis Espana S.A. shall be sold for 1 peseta to
New MP. Mediapolis Espana, S.A. shall be closed down as soon as
possible. Any cost or expenses above 150,000,000 ptas. incurred as a
consequence of the liquidation of Mediapolis Espana, S.A. will be paid,
net of corporate taxes, by HA to New MP.
1.2.4. Dividend policy
The MP Shareholders and HA shall ensure that any dividend distributed by
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any of the companies involved in the Merger in respect of the profits
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related to the fiscal year ending on December 31st, 1998 shall be
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calculated in compliance with principles applied for 1997.
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1.3. Post Merger Date agreements
1.3.1. US and Mexico contributions
-----------------------------------
Additionally, HA will transfer to New MP the following Media Business:
United States
Prior to December 31st, 1999, all the Media Business of HA Group in the US
(without limitation, Euro RSCG and all the other creative agencies and all
the business subcontracted with other Media Business companies in the US),
unless specifically requested otherwise by the relevant clients shall be
transferred to one or more new US companies ("New US Cos."). All direct
costs and expenses shall be attributable to the corresponding New Co.
(using analytical accounting).
If specifically requested otherwise by the clients as provided above, HA
Group's agencies shall execute a contract with the relevant US New Co.
subcontracting any Media Business services that the client may require and
that will be subsequently invoiced by the agency to the HA Group agencies's
client. The contract will provide for payment to the relevant US New Co.
of commissions to be charged, as reflected in the table (which shall be
annexed to the relevant Implementation Agreement) based on a percentage of
total billing to the agency.
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This obligation will remain until the earlier of (i) a contract for all
Media Business services is executed between the corresponding client and
the relevant New Co or (ii) the relevant client ceases to require Media
Business services from the HA Group.
Additionally, HA Group agencies will execute a similar contract with SFM
with regard to shared SFM/agency clients. Prior to or on December 31st,
1999, HA will cause the sale of all shares of all New US Co. to New MP.
Valuation: Valuation of the Media Business to be transferred shall be made
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following the Adjusted Standard Criteria, where
Income: income due under the contracts with the agencies.
Direct costs: costs as transferred to the New US Cos (which shall
necessarily include all costs necessary for the business).
Indirect costs: taking as bench mark the standard of SFM. Said indirect
costs will include all the then existing indirect costs in the New US Cos.
Contracts concerning service relationships between HA Group companies in
the US existing prior to the transfer of the New US Cos. and necessary
after such date (legal, accountancy, computers, leases, etc.) will have
been executed, ensuring the continuance of the services at the existing
rates and standards which must conform with market rates and standards.
Transitory period: Until each New US Co. has been effectively transferred
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to New MP, HA will:
(i) implement analytical accounting of each non-transferred Media
Business operations from 1.1.99.
(ii) provide New MP with every two months written reports on the progress
of the transfer and projected significant events in the transfer
procedure.
(iii) review and agree with New MP specific transfers to New US Cos.,
analysing the transfer procedure, its elements and circumstances and
the services contracts mentioned above.
Transfer of New US Cos.: two months prior to the intended sale or transfer
------------------------
of New US Cos. to New MP, New MP shall effect a due diligence in similar
terms and conditions as those provided in clause 1.2.1.
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On the date set for transfer, HA shall sell or cause to be sold all New US
Cos. to New MP or any of its subsidiaries.
b) Mexico
On or prior to June 30th, 1999, all the Media Business of HA Group in
Mexico shall be transferred to Media Planning, S.A. de CV, and subject to
any conflict of interest such transfer could create between Telmex and
Avantel (MCI), which the Parties will attempt to resolve by negotiation.
HA Group agencies shall execute a contract with Media Planning, S.A. de CV
subcontracting any services that a specific client may require, who will
then be invoiced from the agency.
Valuation: Valuation of the Media Business to be transferred shall be
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effected on an Adjusted Standard Criteria where:
Income: income due under the contracts with the agency.
Direct costs: costs as transferred to the Media Planning, S.A. de CV
(which shall necessarily include all costs necessary for the business).
Indirect costs: taking as bench mark the standard of Media Planning, S.A.
de CV. Said indirect costs will include all the then existing indirect
costs in the New US Cos.
Contracts concerning service relationships between HA Group companies in
Mexico existing prior to the transfer of the Media Business in Mexico and
necessary after such date (legal, accountancy, computers, leases, etc.)
will have been executed, ensuring the continuance of the services at the
existing rates and standards which must conform with market rates and
standards.
Transitory period: Until all the Media Business have been effectively
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transferred to Media Planning, S.A. de CV, HA will:
(i) implement analytical accounting of each non-transferred Media
Business operations from 1.1.99.
(ii) provide New MP with every two months written reports on the progress
of the transfer and projected significant events in the transfer
procedure.
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(iii) review and agree with New MP specific transfer to Media Planning,
S.A. de CV, analysing the transfer procedure, its elements and
circumstances and the services contracts mentioned above.
HA and New MP agree to provide their best efforts to achieve a satisfactory
arrangement for New MP concerning the Telmex/Avantel (MCI) potential
conflict.
1.3.2. Expansion of new markets
--------------------------------
Whenever HA should wish to start or develop a Media Business in any country
where New MP is not established HA will notify NMP accordingly with a one month
prior notice the starting or the developing such Media Business.
In the event that New MP's board of directors decides to enter into a Media
Business in any country, New MP will have the right to acquire HA's Media
Business in such country if any should exist. New MP will have to announce the
opening at least three months in advance of the intended date. During this
period, both Parties will negotiate in good faith the best valuation of HA Media
Business in the relevant country; if no agreement is reached, the value shall be
established by an Independent Expert as provided in clause 7.3. HA undertakes
to sell (or to cause any of its subsidiaries to sell), at New MP's decision,
such Media Business to New MP. Any arrangement necessary or convenient to
finance an acquisition under this clause 1.3.2 may be adopted by New MP's board
of Directors by simple majority, notwithstanding the limitations established in
Annex F.
1.3.3. HA new media businesses
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Should HA acquire through purchase, contribution, merger or otherwise a company
or a group of companies having a Media Business as an ancillary activity (i.e.
an activity which generates a Media Business gross income not higher than 25% of
the total gross income of the company or group of companies) (the "New Media
Business") (if the New Media Business is not an "ancillary activity" (as defined
above), the transaction will require the unanimous consent of the remaining New
MP shareholders), the remaining shareholders of New MP will have the right to
decide by simple majority, excluding HA votes, at any time within the 24 months
following the purchase, contribution, merger or acquisition to either:
(i) acquire by purchase or merge the Media Business (terms and
conditions of the implementation of the chosen alternative shall be
discussed among the relevant parties at the time of implementation);
or
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(ii) leave the new Media Business as an independent unit.
Both Parties will negotiate in good faith the best valuation of the New Media
Business; if no agreement is reached, the value shall be established by an
Independent Expert. The Parties shall discuss implementation of any actions at
that time. Any arrangement necessary or convenient to finance an acquisition
under this clause 1.3.3 may be adopted by New MP's board of Directors by simple
majority, notwithstanding the limitations established in Annex F.
In the event that New MP does not choose to integrate the New Media Business (as
provided in paragraph (i)), HA may, within thirty days as of New MP's written
decision, (or failing any decision, at the end of this 24 months period), notify
the MP shareholders that it wishes to call a Demerger (as defined in Annex F).
If HA should not exercise this right, New MP and the New Media Business shall
compete independently. HA will ensure that all the then HA Group companies
(excluding the company acquired, merged or otherwise), including any successors
or assignees of said companies as long as they belong to the HA Group, fully
support in every way and channel all client activity to New MP. HA will ensure
that the New Media Business does not compete with New MP for HA Group clients.
In addition:
- in the case provided above (HA acquiring through purchase, contribution,
merger or otherwise a company or a group of companies having a Media Business as
an ancillary activity) and if HA merges Campus with all or part of the non Media
Business of the newly acquired company or companies, or
- should HA acquire through Campus by purchase, contribution, merger or
otherwise a company or a group of companies having a Media Business as an
ancillary activity, and the non-HA shareholders of New MP decide to leave that
New Media Business as an independent unit (paragraph (ii)), then the following
provisions shall apply: HA shall have the right to purchase all or part of the
Media Business initially contributed by Campus at the Merger Date, at a price
equal to 100% of the initial valuation of the Campus Media Business at the time
of the Merger, provided however the Campus Media Business does not generate at
the time of the purchase of the New Media Business a gross income greater than
10% of the then New MP gross income.
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1.3.4. HA Group Clients (except for the USA and Mexico specifically provided in
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clause 1.3.1)
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An "HA Group Client" is a Media Business client of any company belonging to the
HA Group with whom New MP does not have a separate media contract for all media
services rendered by HA Group. New MP and the relevant company of HA Group will
subscribe a contract providing for the payment to New MP a percentage of the HA
Group client's total billing determined in accordance with market standards.
This obligation will remain until the earlier of (i) a contract for all Media
Business services is executed between the corresponding client and New MP or
(ii) the relevant client ceases to require Media Business services from the HA
Group.
Should any HA Group Client request to continue receiving media services from any
HA Group company after the Merger Date (or in the case of U.S., Mexico and any
new country in which New MP will start operations, after the date in which the
Media Business is transferred to New MP) the HA Group company will remain
providing upfront services to the client, subcontracting all the aforementioned
media services with New MP.
For the purpose of determining which sub-contracting arrangements should be put
in place, a list of all such country clients will be attached to the
Implementation Agreements or delivered prior to the sale or transfer of the
Media Business at the appropriate dates in respect to the U.S., Mexico and any
new country operations.
New MP will render media services to HA Group Clients and hire the personnel
currently rendering such services in so far as said personnel's labour
agreements follow market standards and their cost is included in the valuation.
A list of such personnel shall be provided prior to Implementation Date.
1.4. Valuation Criteria
1.4.1. General
---------------
The Media Business transferred will be valued following one of three criteria:
(i) "Standard Criteria": As an ongoing business where the transfer
includes a clients' list with a business structure to develop the
activity. In this case, the valuation formula will be:
Value = E x M (plus or minus) C
where
E = Group share of (EBITDA plus Cash Discounts for 1998).
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M = valuation multiple of [*].
C = Average Net Cash position for 1998.
(ii) "Adjusted Standard Criteria": Where transfer includes a client list
with an incomplete business structure. In this case, the valuation
formula will be:
Value = Gi x Ec x M (plus or minus) C
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Gc
where
Gi = Gross margin contributed by the incomplete business in 1998.
Gc = Gross margin of a complete on-going business in the same
country for 1998.
Ec = the E of a complete on-going business in the same country for
1998.
C will be calculated as follows:
- if possible, the accounting for 1998 will be redone using
analytic accounting principles, in which case C will be
determined using the same formula as in paragraph (i) above;
- if analytic accounting is not possible, then:
C = Bi x Cc
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Bc
where
Bi = billings contributed by the incomplete business in 1998.
Cc = C of a complete on-going business in the same country for 1998.
Bc = billings of a complete on-going business in the same country
for 1998.
(iii) "Project Cost Criteria": Using an investment criteria which will be
calculated on the basis of "Project Cost", being defined as the
Group share of all disbursements made up to the Merger Date for the
start-up and development of the investment.
* Confidential treatment has been requested for certain portions of this
document pursuant to an application for confidential treatment sent to the
Securities and Exchange Commission. Such portions are omitted from this filing
and filed separately with the Securities and Exchange Commission.
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The valuation of the different Media Business to be transferred (including
exceptions to the criteria) applicable are established in Annex G.
1.4.2. Young & Rubicam Clients Migration
-----------------------------------------
Valuation of Young & Rubicam clients' Media Business transferred shall be
adjusted by the amounts resulting from applying the following formula:
Y&R % x Vc x R
Where:
R =
a) For UK clients: R = 0, 75
b) For France clients: R = 0, 50
Y&R % = the percentage of total country value represented by Y&R clients will be
agreed by the Parties prior to the Implementation Date and failing agreement, by
an independent expert jointly appointed before the Implementation Date.
Vc = value of the country Media Business calculated by the criteria used
pursuant to Annex G.
If Young & Rubicam clients communicate at any time in writing to New MP or to
HA that they will stop being a Media Business client before December 31st,
1999, HA shall compensate New MP the value of said clients. Said
compensations will be made in the way described in clause 1.5.2.5.
1.5. Adjustments
1.5.1. Adjustment on the basis of Audited 1998 accounts
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1.5.1.1. Calculation of theoretical adjustment ("ThA")
Before Implementation Date the parties shall quantify the respective value of
the Media Business to be contributed by the MP Shareholders and by HA on the
basis of the 1998 Proforma Accounts and the methods provided in clause 1.4 (the
"Proforma Values").
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On the basis of the Proforma Values, the parties shall calculate before the
Implementation Date the amount of the theoretical adjustment ("ThA") necessary
to maintain their respective Agreed Percentage to be calculated on the basis of
the following formula:
VA = Proforma Value of HA contributions
VB = Proforma Value of MP Shareholders contribution
If (VA/(VA+VB)) (less than) 45%, then ThA = (VB/0,55)-VA-VB
If (VA/(VA+VB)) (greater than) 45%, then ThA = (VA/0,45)-VA-VB
If (VA/(VA+VB)) = 45%, no adjustment
1.5.1.2. Calculation of actual Adjustment ("AcA")
The actual 1998 accounts of HA Media Business and MP Media Business (to be
delivered by the parties as soon as practicable after January 15th, 1999, will
be reviewed by Arthur Andersen (or failing agreement on Arthur Andersen, the
Parties will appoint by common agreement, another auditor, if no agreement is
reached, Arthur Andersen will designate the Independent Auditor - the
"Independent Auditor"-) at the latest by March 31st, 1999, pursuant to
accounting methods and principles and audit procedures agreed by the Parties
prior to the execution of the Implementation Agreement (the resulting review :
the "1998 Audited Accounts"). The Independent Auditor shall quantify the
respective actual value of the Media Business contributed by the MP Shareholders
and by HA on the basis of the 1998 Audited Accounts (the "Actual Values"),
limiting the maximum increase from the Proforma Value to the Actual Value to US
$ 20 million for HA and to US $ 24 million for MP Shareholders collectively.
On the basis of the Actual Values, the Independent Auditor shall calculate at
the latest by March 31st, 1999, the amount of the actual adjustment ("AcA")
necessary to maintain the respective Agreed Percentages to be calculated on the
basis of the following formula:
VA' = Actual Value of HA contributions
VB' = Actual Value of MP Shareholders contribution
If (VA'/(VA'+VB')) (less than) 45%, then AcA = (VB'/0,55)-VA'-VB'
If (VA'/(VA'+VB')) (greater than) 45%, then AcA = (VA'/0, 45)-VA'-VB'
If (VA'/(VA'+VB')) = 45%, AcA = 0
17
<PAGE>
1.5.1.3. Way out
In the event that, for any party, the Actual Value is lower than the Proforma
Value in an amount higher than US $40 million, then the other party (either MP
Shareholders collectively or HA) may terminate this agreement and request the
first party to pay an amount of 5 million US dollars (to be allocated among the
MP Shareholders in accordance with their respective shareholding in New MP if
due to the MP Shareholders) and this Agreement shall be considered terminated to
all intents and purposes, with no further obligations or liabilities remaining
between the Parties as a consequence of this Agreement or its termination.
In the event that the difference between AcA and ThA is greater than 20 million
US $, the party (either MP Shareholders collectively or HA) which has to pay the
amount of the settlement (S) may terminate this agreement and shall pay to the
other party an amount of 5 million US dollars (to be allocated among the MP
Shareholders in accordance with their respective shareholding in New MP if due
to the MP Shareholders) and this Agreement shall be considered terminated to all
intents and purposes, with no further obligations or liabilities remaining
between the Parties as a consequence of this Agreement or its termination.
This penalty will not accrue if the negative adjustment as a result of the 1998
Audited Accounts is due to subsequent events that, at the time of the 1998
Proforma Accounts were not known by the Parties.
For the purpose of this clause "party" means either HA or the MP Shareholders.
Examples of calculations are attached for reference only as Annex J.
1.5.2. Adjustment on Migration List Clients
--------------------------------------------
1.5.2.1. General procedure
Attached as Annex H is the "Proforma Migration List" which shall contain, in a
per country basis, the following data referred to 1998:
(i) The list of HA Media Business clients, whose transfer to New MP
shall be particularly monitored (the "Migration List Clients");
(ii) the Client fee figure contributed by each Migration List Client
(the "Client Fee"); and
18
<PAGE>
(iii) the value contributed by each Migration List Client (the
"Migration List Client Value")
The Migration List Client Value will be calculated according the following
formula:
Migration List Client Value = Client Fee x Country Value
-------------
Country Fees
where
Country Value = total Value attributed to the country Media Business, determined
according to Clause 1.4.
Country Fees = total Client Fees received in one country.
Not later than March 31st, 1999 the Independent Auditor will review the Proforma
Migration List to determine the actual fees and values contributed by the
Migration List Clients during 1998 (the "Audited Migration List 98"), and not
later than March 31st, 2000 the Independent Auditor will determine, on a per
country basis, the actual fees and values contributed by each Migration List
Client during 1999 (the "Audited Migration List 99").
1.5.2.2. Adjustment on Lost Clients
Subject to Clause 1.5.2.4, HA shall compensate to New MP an amount equal to 50%
the Migration List Client Value allocated in the Audited Migration List 98, to
any Migration List Client which has communicated at any time in writing to New
MP or to HA that it will stop being a Media Business client before December
31st, 1999 (the "Lost Client").
1.5.2.3. Country Adjustments
Not later than March 31st, 2000 the Independent Auditor will determine:
(i) The "Country Migration List Value 98": The country aggregate of all its
Migration List Client Values minus the compensation calculated in
accordance to Clause 1.5.2.2, as per the Audited Migration List 98; and
(ii) The "Country Migration List Value 99": The total Migration List Client
Values, as per the Audited Migration List 99, but excluding the full 99
value, if any, of the Lost Clients, if any.
19
<PAGE>
If any Country Migration List Value 99 is equal to or greater than the
corresponding Country Migration List Value 98, these shall be no additional
adjustment with respect to such specific country.
Subject to Clause 1.5.2.4, if any Country Migration List Value 99 is lower than
the corresponding Country Migration List Value 98, HA shall compensate to New MP
an amount equal to said difference.
1.5.2.4. Threshold
No compensation will have to be paid if the aggregate of the adjustments
described in Clauses 1.5.2.2 and 1.5.2.3 for all countries is lower than 5% of
the aggregate of the Country Migration List Value 98 for all countries.
However, if any Country Migration List Value 99 is lower than 50% of the
corresponding Country Migration List Value 98, the compensation will be paid
with respect to such Country and the global 5% threshold provided above shall
continue to apply to the other countries.
1.5.2.5. Compensations
Compensations under clause 1.5.2. will be paid within 15 days from the date in
which the Independent Auditor determines the Audited Migration List 99 and will
be instrumented as supplementary contributions in cash to New MP to compensate
New MP for the lower value of the contributed assets, therefore, no additional
shares will be issued.
1.5.2.6. Mexico Adjustments
The same adjustments will be made, following the same procedures, with respect
to the Migration List Clients of Mexico, but the Proforma Migration List and the
Audited Migration List 98 shall be referred to the period starting one year
prior to the date at which the HA Group's Media Business is contributed to New
MP and ending at said date, and the Audited Migration List 99 shall be referred
to the year immediately after said contribution date. The remaining definitions
will be accordingly adjusted to such periods.
1.6. Settlement of adjustments
HA or the MP Shareholders, as the case may be, will settle the AcA, as
calculated pursuant to clause 1.5.1 by, at the relevant Party's choice:
(i) Pay to New MP (or any relevant subsidiary if applicable) in cash the
amount required to maintain such percentage; or
20
<PAGE>
(ii) accept a decrease of the percentage of its shareholding in New MP;
or
(iii) settle the difference by any other means the Parties may jointly
agree, taking into account, without limitation, any tax or financial
concerns.
HA or the MP Shareholders, as the case may be, will determine no later than
April 16th, 1999 their decision as to how to proceed with their compensation.
In any event, the compensation will be made on the Merger Date.
1.7. Acts on Merger Date
1.7.1. Contribution of assets
------ ----------------------
On the Merger Date the Parties will sell or contribute to New MP or to a
relevant subsidiary of New MP, by contribution in kind, the assets identified in
1.2.3 in exchange for shares.
1.7.2. Corporate resolutions
------ ---------------------
The Parties shall approve by shareholders resolution:
(i) the appointment of the 21 directors to the board.
(ii) the by-laws of New MP as agreed in the Shareholders Agreement.
The board of directors shall simultaneously approve a board resolution
appointing the president of the board, the chief executive officer and the
secretary of the board.
2. Implementation Agreements
-- -------------------------
The Parties undertake to provide their best efforts to negotiate on or prior to
January 24th, 1999, the following agreements:
2.1. Contribution Agreement
The Contribution Agreement shall describe in detail the Media Business to be
contributed and will include mutually standard representations, warranties and
indemnities regarding the Media Business transferred. The Parties will jointly
determine in this agreement the assets and liabilities to be transferred.
[Except for Spain], as a general guideline, the Parties agree that no Media
Business with a negative net worth will be transferred.
21
<PAGE>
The Contribution Agreement will incorporate all annexes and documents to be
provided or agreed in connection with this Agreement as herein established,
including acknowledgement by all Parties of the execution of all conditions
precedent established in clause 1.2.2.
The 1998 Audited Accounts for each HA Media Business and MP Media Business shall
be used as the basis for the representations and warranties to be made in the
Contribution Agreement.
2.2. Shareholders Agreement
A shareholders agreement implementing the specific points which are already
agreed and included in Annex F among all shareholders of New MP.
2.3. Put and Call and Contribution Agreement
A Put and call and Contribution Agreement executed between HA, the MP
Shareholders and Havas S.A. on the basis of the points established in Annex I.
All three agreements referred as the "Implementation Agreements".
3. Regulatory issues
-- -----------------
3.1. Approval of the European Commission
This Agreement and the Implementation Agreements are subject to the European
Commission not opposing the Merger. The Parties agree to notify the proposed
Merger to the European Commission under Rule 1310/97 on European concentrations
as soon as possible after execution of the Implementation Agreements, in
compliance with applicable regulations.
3.2. Regulatory and Labour Law Issues
The Parties agree to comply and cause the relevant entities of their respective
groups to comply with all legal and regulatory requirements arising from or in
connection with the Merger, including, in particular, all requirements under all
applicable labor laws (such as information and/or consultation of workers'
committees).
3.3. No Other Authorization or Consents
Each of the MP Shareholders and HA confirms that no authorization or consent
from any government regulatory or administration authority is required under the
laws of France or Spain (as applicable) in order to effect the Merger with the
exception of foreign investment regulations
22
<PAGE>
in Spain, which require prior verification by the authorities.
4. Non-competition Undertaking
-- ---------------------------
Without prejudice to clause 1.3.2 and 1.3.3, from the Merger Date and as long as
it shall remain a direct or indirect shareholder in New MP, HA, Advertising
Antwerpen, Invermaro, ISP, and Calle Arcos, neither directly nor indirectly
(including through any company controlled as defined in article 42 of the
Spanish Code of Commerce) undertake not to conduct or purchase any Media
Business, directly or indirectly, in Spain, Portugal, France, Italy, the
Netherlands, U.K., Argentina and Colombia. The same rule will apply with
respect to Mexico from June 30, 1999 and to the U.S. from December 31, 1999.
The same non competition obligations will apply to any other country where New
MP should establish itself after the Merger Date.
The restriction to the acquisition of participations in companies conducting
Media Business shall not apply to portfolio investment held by either Group
which, in the aggregate is not greater than 5% of the relevant company's share
capital.
As an exception the companies mentioned in clause 1.2.2 a) iii) above will not
be considered for these purposes as competing in Media Business, provided they
remain exclusively dedicated to the pharmaceutical and financial services as
provided today. New MP and MP Shareholders shall be authorized to engage in
these activities freely.
The parties agree that the undertakings in this clause 4 are essential to the
Merger. In consequence parties agree that failure to perform any non-
competition obligation should be considered in view of the world wide
cooperation that this agreement intends to create.
5. Synergy Committee
-- -----------------
Synergy Committee: the parties shall establish a "Synergy Committee" formed by
-----------------
eight members, of which half of them will be appointed by HA. The Synergy
Committee will meet at least every 3 months , and at the request of any member.
Its main functions will be:
- review the existing and potential synergies deriving from the Merger;
- review further synergies between New MP and HA Group;
- review the new pitches and activities;
23
<PAGE>
- analyze and resolve any discrepancies or controversies arising from
activities concerning new pitches.
6. Indemnities
-- -----------
The parties acknowledge that they are entering into a complex transaction that
will require time and restructuring acts that will affect the organization of
both HA Group and MP Group, prior to actual effectiveness of the Merger.
Equally, the Parties have undertaken obligations that are critical to the
transaction and that must be completed after the Merger. In order to promote
accurate fulfillment of all obligations undertaken by the Parties, the following
indemnities are hereby agreed:
6.1. Unilateral termination
In the event that either MP Shareholders or HA terminate this Agreement after
Implementation Date and before Merger Date for any reason, the terminating party
shall pay the other Party an amount of seven million US dollars and this
Agreement shall be considered terminated to all intents and purposes, with no
further obligations or liabilities remaining between the Parties as a
consequence of this Agreement or its termination.
6.2. Failure to Merge
In the event that either MP Shareholders or HA (other than for causes not
attributable to the defaulting party (e.g.: EU Commission clearance) provided
such party has acted with the utmost diligence and provides, if possible,
adequate guarantee that the act will be completed as soon as possible) should
have failed to comply with its obligations under clause 1.2.2, or should not
otherwise have complied with any obligations herein necessary to effect the
Merger, the other Party may at its discretion terminate this Agreement by
written notice to the defaulting party and the defaulting party shall pay an
amount of seven million US dollars in which case this Agreement shall be
considered terminated to all intents and purposes, with no further obligations
or liabilities remaining between the Parties as a consequence of this Agreement
or its termination.
7. Miscellaneous
-- -------------
7.1. Confidentiality and Announcements
24
<PAGE>
7.1.1. Prior to Implementation Agreements
------ -----------------------------------
The Parties undertake to maintain the contents and existence of this Agreement
in the utmost confidentiality and shall take all reasonable steps to ensure that
this covenant is complied with.
7.1.2. After Implementation Agreements
------ -------------------------------
On 25 January 1999 (immediately upon execution of the Implementation Agreements)
the Parties shall disclose the existence of this Agreement, upon execution of
the Implementation Agreements through joint press releases to be agreed by the
Parties.
The Parties agree that no further public release or announcement concerning the
transactions contemplated hereby shall be issued by any party without the prior
written consent of the other party (which consent shall not be unreasonably
withheld), except as such release or announcement may be required by an
applicable law, rule or regulation, in which case the party required to make the
release or announcement shall, where applicable, allow the other party
reasonable time to comment on such release or announcement in advance of such
issuance, provided, however, that the Parties may make internal announcements to
their respective employees, subject to prior consultation regarding the content
of such announcement with the other party.
7.2. Notices
Any notice, request, demand or other communication given with reference to this
Agreement shall be delivered by hand or by telefax, (provided that confirmation
of receipt is made by the recipient).
If to or by the MP Shareholders:
All notifications shall necessarily be made to or by Mr. Fernando Rodes (at the
address or fax n provided herein) or any person appointed by MP Shareholders and
such notifications shall bind all MP Shareholders.
With a copy to:
Cuatrecasas
Attn.: Antonio Sanchez Pedreno
Velazquez 63, 28001
Madrid
Telecopy: 34 91 524 71 64
25
<PAGE>
If to HA:
to the attention of the
Mr. Alain de Pouzilhac and
Mr. Jacques Herail
at the address or fax n provided herein
With a copy to:
Breden, Prat & Associes
130, rue du Faubourg Saint-Honore
75008 Paris, France
Attn.: Dominique Bompoint and Jean Reynaud
Telecopy: 33.1.45.63.14.07
Any Party hereto may from time to time by notice in writing served as set forth
above designate a different address or a different or additional person to whom
such notices, communications or payments are hereafter to be sent.
7.3. Independent Expert appointment
Whenever the Parties should require an independent expert valuation for the
purposes of this agreement, the Parties will attempt to appoint one expert. If
an agreement is not reached, New MP shall request the President or senior
executive of Arthur Andersen UK to appoint one expert who shall be independent
from the parties and shall not be part of the Arthur Andersen Group (the
"Independent Expert"). The Independent Expert will undertake to provide the
valuation as soon possible and in any event no longer than 60 days from the date
of acceptance by the expert. The cost of the Independent Expert shall be paid
by New MP.
8. Governing Law
-- -------------
This Agreement shall be governed by and construed in accordance with the laws of
Spain.
9. Assignability
-- -------------
Except as provided expressly herein or in any of the Implementation Agreements
as they may be finally agreed by the Parties, this Agreement will bind any
successors of the Parties, but no rights or obligations may be assigned to any
third Party.
26
<PAGE>
10. Jurisdiction
--- ------------
Except as otherwise expressly stated herein any controversy or claim arising out
of or relating to this Agreement (including without limitation a breach hereof
or the rights or liabilities of the Parties hereunder as well as all matter
related to the signature, interpretation, validity and termination of this
Agreement) shall be exclusively referred to and finally settled by arbitration
under the Rules of the London Court of International Arbitration (the "Court").
The arbitral tribunal shall be composed of three members.
The Parties to any controversy or claim will jointly appoint three arbitrators
and, if within 30 days from the request of one party (whether as plaintiff or
defendant), the Parties fail to do so, then the Court will appoint such three
arbitrators, one of whom shall be neither a Spanish nor a French national or
resident.
The arbitration shall be held in London. The written submissions and the
proceedings shall be made or conducted in the English language.
The arbitration award shall be based on law and not on equity (equidad "amiable
composition") not be subject to appeal.
Judgment upon the award rendered may be entered in any court having jurisdiction
or application may be made to such court for judicial acceptance of the award
and an order of enforcement, as the case may be.
10. Term of this Agreement
--- ----------------------
This Agreement has a duration of ten years as of the Implementation Date.
Breach by any Party of any Implementation Agreement will be considered a breach
of this Agreement to all effects. Termination of any of the Implementation
Agreements will be cause of termination of this Agreement.
12. Approvals
--- ---------
The terms and conditions of this Agreement, with the exception of clause 1.1.3
and 7.1 are not binding on the Parties until approved by the Board of directors
of HA and by the Board of directors (or person with sufficient legal power in
the opinion of legal councel of HA) of each of the MP Shareholders.
27
<PAGE>
If all approvals in this clause are not obtained on or prior to January 24th,
1999, this Agreement shall be considered revoked without having any validity or
effect, with the exception of clause 7.1 and 1.1.3 which will remain fully
binding.
Executed in Paris, on November, 29th 1998
/s/ Fernando Rodes Vila /s/ Alain de Pouzilhac
----------------------- ----------------------
Fernando Rodes Vila Alain de Pouzilhac
28
<PAGE>
ANNEX A
DEFINITIONS
To be attached
29
<PAGE>
ANNEX C
PROJECTED ESTIMATES FOR 1998 HA BUSINESS.
30
<PAGE>
<TABLE>
<CAPTION>
P & L KFRF
----- ----
------------------------------- ------- --------- ---------- ------- ---------- ------ ------ ------
FR- FR-
1998 FR-AFFI CONCERTA- FR - HAC + MEDIAPOLIS TOTAL
CONSEIL MEDIA WORLDWIDE FR-MCBB FRANCE FR-SEM FR-CCA FRANCE
------------------------------- ------- --------- ---------- ------- ---------- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BILLINGS [*] [*] [*] [*] [*] [*] [*] [*]
CLIENT FEES [*] [*] [*] [*] [*] [*] [*] [*]
MEDIA INCOME [*] [*] [*] [*] [*] [*] [*] [*]
OTHER INCOME [*] [*] [*] [*] [*] [*] [*] [*]
------------------
TOTAL GROSS INCOME [*] [*] [*] [*] [*] [*] [*] [*]
------------------ [*] [*] [*] [*] [*] [*] [*] [*]
COMPENSATION [*] [*] [*] [*] [*] [*] [*] [*]
[*] [*] [*] [*] [*] [*] [*] [*]
Rent & occupancy [*] [*] [*] [*] [*] [*] [*] [*]
Fees and subscriptions [*] [*] [*] [*] [*] [*] [*] [*]
Leasings [*] [*] [*] [*] [*] [*] [*] [*]
Depreciation [*] [*] [*] [*] [*] [*] [*] [*]
Management fees [*] [*] [*] [*] [*] [*] [*] [*]
Travel - entertainment [*] [*] [*] [*] [*] [*] [*] [*]
Public relations [*] [*] [*] [*] [*] [*] [*] [*]
New Business expenses [*] [*] [*] [*] [*] [*] [*] [*]
Telephone, mail [*] [*] [*] [*] [*] [*] [*] [*]
Tax (other than income tax) [*] [*] [*] [*] [*] [*] [*] [*]
Computers [*] [*] [*] [*] [*] [*] [*] [*]
Insurance [*] [*] [*] [*] [*] [*] [*] [*]
Stationery and supply [*] [*] [*] [*] [*] [*] [*] [*]
Research [*] [*] [*] [*] [*] [*] [*] [*]
Miscellaneous [*] [*] [*] [*] [*] [*] [*] [*]
TOTAL OTHER EXPENSES [*] [*] [*] [*] [*] [*] [*] [*]
OPERATING EXPENSES RECHARGED [*] [*] [*] [*] [*] [*] [*] [*]
TO SUBSIDIARIES
-------------------------
TOTAL OPERATING EXPENSES [*] [*] [*] [*] [*] [*] [*] [*]
------------------------- [*] [*] [*] [*] [*] [*] [*] [*]
EBIT [*] [*] [*] [*] [*] [*] [*] [*]
[*] [*] [*] [*] [*] [*] [*] [*]
NON OPERATING (exp) [*] [*] [*] [*] [*] [*] [*] [*]
FINANCIAL Income (exp) [*] [*] [*] [*] [*] [*] [*] [*]
PBT [*] [*] [*] [*] [*] [*] [*] [*]
[*] [*] [*] [*] [*] [*] [*] [*]
TAX [*] [*] [*] [*] [*] [*] [*] [*]
NET PROFIT [*] [*] [*] [*] [*] [*] [*] [*]
MINORITY INTERESTS [*] [*] [*] [*] [*] [*] [*] [*]
PAT GROUP SHARE [*] [*] [*] [*] [*] [*] [*] [*]
EBIT [*] [*] [*] [*] [*] [*] [*] [*]
DEPRECIATION [*] [*] [*] [*] [*] [*] [*] [*]
CASH DISCOUNTS [*]
NEW EBIT DA [*] [*] [*] [*] [*] [*] [*] [*]
CASH [*]
</TABLE>
<TABLE>
<CAPTION>
P & L KFRF
----- ----
---------------------------- ------------- ------------- ---------- ---------- ---------- -------- -----
ITL - POR - SP - UK -
1998 MEDIAPOLIS NLG - MEDIAPOLIS MEDIAPOLIS MEDIAPOLIS
MEDIAPRESSING MEDIAMAATWERK PORTUGAL SPAIN UK US - SFM TOTAL
---------------------------- ------------- ------------- ---------- ---------- ---------- -------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
BILLINGS [*] [*] [*] [*] [*] [*] [*]
CLIENT FEES [*] [*] [*] [*] [*] [*] [*]
MEDIA INCOME [*] [*] [*] [*] [*] [*] [*]
OTHER INCOME [*] [*] [*] [*] [*] [*] [*]
------------------
TOTAL GROSS INCOME [*] [*] [*] [*] [*] [*] [*]
------------------ [*] [*] [*] [*] [*] [*] [*]
COMPENSATION [*] [*] [*] [*] [*] [*] [*]
[*] [*] [*] [*] [*] [*] [*]
Rent & occupancy [*] [*] [*] [*] [*] [*] [*]
Fees and subscriptions [*] [*] [*] [*] [*] [*] [*]
Leasings [*] [*] [*] [*] [*] [*] [*]
Depreciation [*] [*] [*] [*] [*] [*] [*]
Management fees [*] [*] [*] [*] [*] [*] [*]
Travel - entertainment [*] [*] [*] [*] [*] [*] [*]
Public relations [*] [*] [*] [*] [*] [*] [*]
New Business expenses [*] [*] [*] [*] [*] [*] [*]
Telephone, mail [*] [*] [*] [*] [*] [*] [*]
Tax (other than income tax) [*] [*] [*] [*] [*] [*] [*]
Computers [*] [*] [*] [*] [*] [*] [*]
Insurance [*] [*] [*] [*] [*] [*] [*]
Stationery and supply [*] [*] [*] [*] [*] [*] [*]
Research [*] [*] [*] [*] [*] [*] [*]
Miscellaneous [*] [*] [*] [*] [*] [*] [*]
TOTAL OTHER EXPENSES [*] [*] [*] [*] [*] [*] [*]
OPERATING EXPENSES RECHARGED [*] [*] [*] [*] [*] [*] [*]
TO SUBSIDIARIES
------------------------
TOTAL OPERATING EXPENSES [*] [*] [*] [*] [*] [*] [*]
------------------------ [*] [*] [*] [*] [*] [*] [*]
------------------------
EBIT [*] [*] [*] [*] [*] [*] [*]
------------------------ [*] [*] [*] [*] [*] [*] [*]
NON OPERATING (exp) [*] [*] [*] [*] [*] [*] [*]
FINANCIAL Income (exp) [*] [*] [*] [*] [*] [*] [*]
PBT [*] [*] [*] [*] [*] [*] [*]
[*] [*] [*] [*] [*] [*] [*]
TAX [*] [*] [*] [*] [*] [*] [*]
NET PROFIT [*] [*] [*] [*] [*] [*] [*]
MINORITY INTERESTS [*] [*] [*] [*] [*] [*] [*]
PAT GROUP SHARE [*] [*] [*] [*] [*] [*] [*]
EBIT [*] [*] [*] [*] [*] [*] [*]
DEPRECIATION [*] [*] [*] [*] [*] [*] [*]
CASH DISCOUNTS [*] [*] [*]
NEW EBIT DA [*] [*] [*] [*] [*] [*] [*]
CASH [*] [*] [*] [*] [*] [*]
</TABLE>
<TABLE>
<CAPTION>
P & L KFRF
----- ----
---------------------------- --------- ------ -----
1998 ARGENTINA FRANCE TOTAL
---------------------------- --------- ------ -----
<S> <C> <C> <C>
BILLINGS [*] [*] 14,200,679.0
CLIENT FEES [*] [*] [*]
MEDIA INCOME [*] [*] [*]
OTHER INCOME [*] [*] [*]
------------------
TOTAL GROSS INCOME [*] [*] 405,520.9
------------------ [*] [*] 100%
COMPENSATION [*] [*] 223,813.4
[*] [*] 55%
Rent & occupancy [*] [*] 22,504.0
Fees and subscriptions [*] [*] 27,234.6
Leasings [*] [*] 2,171.9
Depreciation [*] [*] 7,162.4
Management fees [*] [*] 10,149.4
Travel - entertainment [*] [*] 8,070.5
Public relations [*] [*] 3,588.9
New Business expenses [*] [*] 2,188.6
Telephone, mail [*] [*] 5,594.4
Tax (other than income tax) [*] [*] 3,244.5
Computers [*] [*] 7,902.6
Insurance [*] [*] 1,677.8
Stationery and supply [*] [*] 4,892.2
Research [*] [*] 28,953.3
Miscellaneous [*] [*] 12,274.1
TOTAL OTHER EXPENSES [*] [*] 147,609.2
OPERATING EXPENSES RECHARGED [*] [*]
TO SUBSIDIARIES 33,738.0
------------------------
TOTAL OPERATING EXPENSES [*] [*] 337,684.6
------------------------ [*] [*] 83%
----
EBIT [*] [*] 67,836.3
---- [*] [*] 17%
NON OPERATING (exp) [*] [*] -4,565.6
FINANCIAL Income (exp) [*] [*] 21,113.5
PBT [*] [*] 84,384.2
[*] [*] 21%
TAX [*] [*] 34,922.4
NET PROFIT [*] [*] 49,461.8
MINORITY INTERESTS [*] [*] 1,013.7
PAT GROUP SHARE [*] [*] 48,448.1
EBIT [*] [*] 67,836.3
DEPRECIATION [*] [*] 7,162.4
CASH DISCOUNTS 4,312.0
NEW EBIT DA [*] [*] 77,583.2
CASH [*] [*] 349,813.0
</TABLE>
* Confidential treatment has been requested for certain portions of this
document pursuant to an application for confidential treatment sent to the
Securities and Exchange Commission. Such portions are omitted from this filing
and filed separately with the Securities and Exchange Commission.
31
<PAGE>
ANNEX D
PROJECTED ESTIMATES OR 1998 MP BUSINESS
32
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
P & L
(000 000)ESP
--------------------------------- ------- ------- ------- -----------
1998 MPESP MPPOR MPMEX MPCONSOL
--------------------------------- ------- ------- ------- -----------
BILLINGS [*] [*] [*] 128.133,0
CLIENT FEES [*] [*] [*] [*] [*] [*] [*] [*]
MEDIA INCOME [*] [*] [*] [*] [*] [*] [*] [*]
OTHER INCOME [*] [*] [*] [*] [*] [*] [*] [*]
------------------
TOTAL GROSS INCOME [*] [*] [*] [*] [*] [*] 7.850,0 6,13%
------------------
[*] [*] [*] 100%
COMPENSATION [*] [*] [*] [*] [*] [*] 3.341,0 2,61%
[*] [*] [*] 43%
Rent & occupancy [*] [*] [*] [*] [*] [*] 291,0 0,23%
Fees and subscriptions [*] [*] [*] [*] [*] [*] 56,0 0,04%
Leasings [*] [*] [*] [*] [*] [*] 0,0 0,00%
Depreciation [*] [*] [*] [*] [*] [*] 368,0 0,29%
Management fees [*] [*] [*] [*] [*] [*] 0,0 0,00%
Travel - entertainment [*] [*] [*] [*] [*] [*] 172,0 0,13%
Public relations [*] [*] [*] [*] [*] [*] 16,0 0,01%
New Business expenses [*] [*] [*] [*] [*] [*] 0,0 0,00%
Telephone, mail [*] [*] [*] [*] [*] [*] 99,0 0,08%
Tax (other than income tax) [*] [*] [*] [*] [*] [*] 47,0 0,04%
Computers [*] [*] [*] [*] [*] [*] 56,0 0,04%
Insurance [*] [*] [*] [*] [*] [*] 15,0 0,01%
Stationery and supply [*] [*] [*] [*] [*] [*] 81,0 0,06%
Research [*] [*] [*] [*] [*] [*] 367,0 0,29%
Miscellaneous [*] [*] [*] [*] [*] [*] 316,0 0,25%
TOTAL OTHER EXPENSES [*] [*] [*] [*] [*] [*] 1.884,0 1,47%
OPERATING EXPENSES RECHARGED TO
SUBSIDIARIES [*] [*] [*] [*] [*] [*] 0,0 0,00%
------------------------
TOTAL OPERATING EXPENSES [*] [*] [*] [*] [*] [*] 5.225,0 4,08%
------------------------
[*] [*] [*] 67%
----
EBIT [*] [*] [*] [*] [*] [*] 2,625,0 2,05%
----
[*] [*] [*] 33%
NON OPERATING (Profit) [*] [*] [*] [*] [*] [*] 0,0 0,00%
FINANCIAL Income (exp) [*] [*] [*] [*] [*] [*] 373,0 0,29%
PBT [*] [*] [*] [*] [*] [*] 2.998,0 2,34%
[*] [*] [*] 38%
TAX [*] [*] [*] [*] [*] [*] 981,5 0,77%
NET PROFIT [*] [*] [*] [*] [*] [*] 2.016,5 1,57%
MINORITY INTERESTS [*] [*] [*] [*] [*] [*] 139,9 0,11%
PAT GROUP SHARE [*] [*] [*] [*] [*] [*] 1876,6 1,46%
EBIT [*] [*] [*] 2.625
DEPRECIATION [*] [*] [*] 368
CASH DISCOUNTS [*] [*] [*] 498
NEW EBITDA [*] [*] [*] 3.491
MINORITY INTEREST [*] [*] [*] 217
NEW EBITDA GROUP SHARE [*] [*] [*] 3.274
AVERAGE CASH POSITION [*] [*] [*] (5.565)
MINORITY INTEREST [*] [*] [*] 22
AVERAGE CASH POSITION GROUP SHARE [*] [*] [*] (5.587)
</TABLE>
* Confidential treatment has been requested for certain portions of this
document pursuant to an application for confidential treatment sent to the
Securities and Exchange Commission. Such portions are omitted from this filing
and filed separately with the Securities and Exchange Commission.
33
<PAGE>
ANNEX F
TERM SHEET
SHAREHOLDERS AGREEMENT
(reference to clauses are reference to the main body of this Merger Agreement)
Parties: Initial shareholders; new shareholders will become parties
to the agreement as well as any successors of the
shareholders.
New MP: New MP shall be Inversiones y Servicios Publicitarios, S.A.
or Media Planning S.A.; its name will be Media Planning
International or any other chosen by majority vote by New MP
general shareholders meeting. Its purpose shall be limited
to carrying out media activities and holding participations
in companies having the same activity;
Board of Directors: 21 members; each Director shall have a deputy Director; the
Parties undertake to vote in favor of the appointment of the
Deputy in the event the Director resigns or is no longer
able to hold its position on the Board; upon appointment of
a Deputy as Director, such appointed Director shall
designate a Deputy to be appointed in the same way should
the circumstances described above in respect of a Director
occur; the agreement shall contain appropriate provisions so
that the initially appointed Directors are appointed for a 5
year term and are reelected for at least two more;
The Shareholders Agreement will include as an Annex the list
of 21 board members, and their substitutes, which shall be
chosen by the first appointees. If prior to the Merger Date
any listed member should not be willing or be enable to be
appointed director, he/she shall appoint its substitute; if
any vacancies cannot be filled in this manner, the general
shareholders meeting shall appoint any vacancies;
If any single shareholder holds more than 50% of the
sharecapital of the company, such shareholder shall have the
right through the
34
<PAGE>
shareholder meeting to dismiss the existing board and
reappoint a new board.
Powers of the CEO: the CEO will have all powers to manager New MP and represent
and bind New MP vis-a-vis third parties except for those
matters (listed below) which will require a super majority;
Decisions of the
Board: Decisions of the Board (including appointment of the CEO and
its remuneration, and the approval of the annual budgets for
operations and investments) shall be made by simple majority
except for those listed below;
Super majority: The following actions may not be taken without the prior
approval of the Board by a 2/3 majority of those members
present or represented:
- acquisitions of shares in an amount greater than US$
1.000.000 per transaction;
- direct or indirect sale of business generating a gross
income greater than US$ 1.000.000;
- incorporation or liquidation of company and entering into
joint venture or partnership agreements;
- entering into bank loans and debt restructuring
agreements in an amount greater than double the net worth
of the relevant company with the exception of any
financing arrangement or loans necessary to implement the
purchase of the US and Mexico contribution under clause
1.3.1 and any that might arise in the future pursuant to
clause 1.3.2 and 1.3.3;
- granting pledges, guaranties or similar undertakings to
third parties;
- any investment not provided for in the annual budgets for
operations and investments for amounts greater than US$
1.000.000;
- any transaction with the shareholders, managers or
related parties except in the ordinary course of
business;
35
<PAGE>
- any proposal to the shareholders to amend the by-laws of
New MP;
Appropriate provisions shall be discussed in order to
implement these restrictions not only at New MP level but
also at the level of the New MP subsidiaries;
Appropriate provisions shall also be discussed in order to
allow an emergency procedure for approval of matters falling
into one of the above categories if the circumstances so
require (consultation of a limited number of specifically
selected members of the Board);
Modifications of the by-laws by the shareholders meeting
shall be made at a 2/3 majority vote while the
Implementation Agreements are in force.
Deadlock: 1. Deadlock Triggering Events
------------------------------
New MP will be considered to have arrived to a deadlock in
any of the following cases (the "Deadlock Triggering
Events"):
a) a material disagreement appears between the Parties
regarding any issue concerning the conduct of affairs or
strategy of New MP which could reasonably result in
substantial damage to the interests of any Party. A
material disagreement may be called by any shareholder
or shareholders representing more than 25% of the share
capital. If the majority of the other shareholders do
not acknowledge the material disagreement, the matter
shall be negotiated in good faith between the Parties
and if necessary subject to an alternative dispute
resolution procedure. This procedure shall be non-
binding though the mediator(s) shall issue an opinion as
to whether the event is material or not. The mediation
procedure and notification of any material disagreement
shall be agreed and included in the Shareholders
Agreement.
36
<PAGE>
b) if for any reason not attributable to HA, HA could not
any longer consolidate with New MP after the Merge Date.
c) As provided in 1.3.3 of the Merger Agreement.
2. Demerger
------------
Subject to point 3 below, the occurrence of a Deadlock
Triggering Event will allow any New MP's shareholder or
group of shareholders representing at least 25% of New MP's
share capital to cause, by written notice served to all the
remaining New MP's Shareholders (the "Deadlock Notice") the
"Demerger" of New MP. Such Demerger will be implemented in
accordance with the following guidelines.
- New MP businesses will be divided into two different
legal structures following a geographical criteria.
- MP Shareholders will obtain the ownership of the
structure owning the operations in Southern Europe
(Spain, Italy and Portugal) and in Latin America and
retain the ownership and exclusive use of all commercial
names, trademarks and other intellectual property rights
held by Media Planning prior to the Merger.
- HA will be the owner of the structure owning the
operations in France, U.K., U.S.A., and the Netherlands
and retain the ownership and exclusive use of all
commercial names, trademarks and other intellectual
property rights held by HA prior to the Merger.
- If the Media Business of a country(ies) not included in
the previous guidelines cannot be distributed between the
Parties by common agreement, an independent investment
banker will be appointed to group all non-allocated
operations in two packages of equivalent market value,
taking into account the relationship between said
country(ies) and the geographical areas allocated to each
37
<PAGE>
group. The party not triggering the Demerger shall
choose first.
- The two independent business units will be valued by the
independent investment banker and if necessary, cash
adjustments will be made.
- The parties requiring the Demerger will bear the
investment banker expenses.
3. Exercise of Put and Contribution Agreement
----------------------------------------------
If the Put and Contribution Agreement is exercised by MP
Shareholders the Demerger will not be implemented.
Preemption Rights: Transfer of New MP shares or shares of any company having
directly or indirectly as its essential asset shares of New
MP to non-shareholders shall be subject to preemption rights
by the other shareholders at the price offered by the third
party.
HA has the right to prevent the sale of the control of NMP
to a competitor of HA ; therefore the Shareholders agreement
shall contain provisions to the following effect:
If the non-HA shareholders receive from a third party a bona
fide offer ("Offer"), the Non-HA shareholders shall notify
HA accordingly (with price and identity of the third party
offeror). HA shall then notify the non-HA shareholders that
the third party offeror is a competitor of HA (to be more
specifically defined in the shareholders agreement); in such
case HA will have the right (in addition, as the case may be
to a standard preemption right at the price offered by the
third party) to purchase 6% of the shares of NMP at the
price offered by the third party 1/ and the non-HA
-
shareholders will have the right to either at their option
(i) sell the remaining shares they own in NMP to the third
party offeror or (ii) either sell these shares to HA or
contribute them to HA (subject to shareholders approval)
(and being remunerated in HA shares) in
-----------------------
1/ Subject to giving such third party a preemption right up to 6% in the event
-
HA intended to sell 6% or more of the shares of NMP to a third party.
38
<PAGE>
both cases in accordance with the valuations principles
defined in Annex I.
Sales among shareholders are free of restrictions. If as a
result of an intended purchase any non-HA shareholder would
exceed 44.9% of New MP share capital, said shareholder must
assign the right to purchase free of any limitation to a
third party non-shareholder provided said shareholder is not
a competitor of HA and becomes subrogated in all the
contractual rights and obligations of the seller with the
Parties in relation to the joint venture agreement.
Term: The Shareholders Agreement shall have a duration of ten
years as of the Implementation Date.
Termination of the
Shareholders
Agreement: Termination causes (to be discussed as the case may be);
Termination if either the MP Shareholders' globally or HA's
shareholding in New MP falls below 33%.
Cross default clause with Merger Agreement and other
Implementation Agreements to be discussed.
****
39
<PAGE>
ANNEX G
VALUATION CRITERIA
<TABLE>
<CAPTION>
COUNTRY CONTRIBUTION VALUATION METHOD SPECIFIC CRITERIA
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MP
--------------------------------------------------------------------------------------------------------------------
SPAIN 100% shares Standard
--------------------------------------------------------------------------------------------------------------------
MEXICO 56% shares Standard 20% issued to BBV/BS
--------------------------------------------------------------------------------------------------------------------
PORTUGAL 80% shares Standard
--------------------------------------------------------------------------------------------------------------------
COLOMBIA 80% shares Project Cost 20% issued to BBV/BS
--------------------------------------------------------------------------------------------------------------------
ARGENTINA 80% shares Project Cost 20% issued to BBV/BS
--------------------------------------------------------------------------------------------------------------------
HA
--------------------------------------------------------------------------------------------------------------------
FRANCE 100% shares Holding Co. Standard Y&R Adjustment
--------------------------------------------------------------------------------------------------------------------
Migration list Adjusted Standard On-going business bench mark:
HA Holding Co.
--------------------------------------------------------------------------------------------------------------------
UK 100% New UK Co. Standard Y&R Adjustment
--------------------------------------------------------------------------------------------------------------------
US 100% Shares SFM Standard
--------------------------------------------------------------------------------------------------------------------
Migration list Adjusted Standard On-going business bench mark:
Panel of US Media Business
(clause 1.3.1)
--------------------------------------------------------------------------------------------------------------------
ARGENTINA Client list Adjusted standard According to agreed formula
--------------------------------------------------------------------------------------------------------------------
HOLLAND 100% Shares Mediamaatwerk Standard Subject to Y&R guaranteed
contract
--------------------------------------------------------------------------------------------------------------------
ITALY Shares Project Cost
--------------------------------------------------------------------------------------------------------------------
ITALY Migration List To be discussed
--------------------------------------------------------------------------------------------------------------------
PORTUGAL Clients or shares On-going business bench mark:
MP Portugal
--------------------------------------------------------------------------------------------------------------------
MEXICO Migration Adjusted Standard On-going business bench mark:
MP Mexico (clause 1.3.1)
--------------------------------------------------------------------------------------------------------------------
SPAIN 100% shares Mediapolis 0 value
Spain
--------------------------------------------------------------------------------------------------------------------
</TABLE>
"Avoir fiscal" (or tax cost for MP shareholders): A valuation compensation to
be discussed will be granted according to where New MP is incorporated (France
or Spain).
40
<PAGE>
ANNEX H
PROFORMA MIGRATION LIST
41
<PAGE>
Watchlist France - 1998
IN 000's FF
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------
Client Fees % EBITDA
--------------------- ------------------------ -------------------------
<S> <C> <C> <C>
Migration EURO BETC [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
Migration Euro GBHR [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
-------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Confidential treatment has been requested for certain portions of this
document pursuant to an application for confidential treatment sent to the
Securities and Exchange Commission. Such portions are omitted from this filing
and filed separately with the Securities and Exchange Commission.
42
<PAGE>
Watchlist France - 1998
IN 000's FF
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------
Clients Clients Fees % EBITDA
--------------------- ------------------------ -------------------------
<S> <C> <C> <C>
Total France [*] [*] [*]
Total Watchlist [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
-------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Confidential treatment has been requested for certain portions of this
document pursuant to an application for confidential treatment sent to the
Securities and Exchange Commission. Such portions are omitted from this filing
and filed separately with the Securities and Exchange Commission.
43
<PAGE>
Watchlist France - 1998
IN 000's GBP
<TABLE>
<CAPTION>
Client Fees % EBITDA
--------------------- ------------------------ -------------------------
<S> <C> <C> <C>
Total UK [*] [*] [*]
Total Watchlist [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
-------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Confidential treatment has been requested for certain portions of this
document pursuant to an application for confidential treatment sent to the
Securities and Exchange Commission. Such portions are omitted from this filing
and filed separately with the Securities and Exchange Commission.
44
<PAGE>
Watchlist Portugal - 1998
IN 000's PTE
<TABLE>
<CAPTION>
Client Fees % EBITDA
--------------------- ------------------------ -------------------------
<S> <C> <C> <C>
Total Portugal [*] [*] [*]
Total Watchlist [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
-------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Confidential treatment has been requested for certain portions of this
document pursuant to an application for confidential treatment sent to the
Securities and Exchange Commission. Such portions are omitted from this filing
and filed separately with the Securities and Exchange Commission.
45
<PAGE>
Watchlist Mediamaatwerk - 1998
IN 000's NLG
<TABLE>
<CAPTION>
Current Fees % EBITDA
--------------------- ------------------------ -------------------------
<S> <C> <C> <C>
Total Mediamaatwerk [*] [*] [*]
Total Watchlist [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
-------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Confidential treatment has been requested for certain portions of this
document pursuant to an application for confidential treatment sent to the
Securities and Exchange Commission. Such portions are omitted from this filing
and filed separately with the Securities and Exchange Commission.
46
<PAGE>
Watchlist US-SFM - 1998
IN 000's US$
<TABLE>
<CAPTION>
Client Fees % EBITDA
--------------------- ------------------------ -------------------------
<S> <C> <C> <C>
Total SFM [*] [*] [*]
Total Watchlist [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
-------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Confidential treatment has been requested for certain portions of this
document pursuant to an application for confidential treatment sent to the
Securities and Exchange Commission. Such portions are omitted from this filing
and filed separately with the Securities and Exchange Commission.
47
<PAGE>
ANNEX I
PUT / CALL AND CONTRIBUTION AGREEMENT: BASIC ISSUES
A. Parties : Havas, S.A., Havas Advertising, S.A., MP Shareholders.
The rights of the MP Shareholders under the put, call and contribution
agreements can only be exercised jointly and simultaneously by the MP
Shareholders for all the New MP shares they hold at the time of exercise of such
option.
B. Put Option :
(i) MP Shareholders may sell to Havas Advertising, S.A., who will be
obliged to buy, all their shares in New MP (the "Put Option").
(ii) This right may be exercised by MP Shareholders (i) during April to
June 30th of the years 2000, 2001, 2002, 2003, 2004, 2005, 2006, 2007,
2008 and 2009; (ii) within fifteen days of any notice of Demerger
pursuant to the terms of the Merger Agreement and Implementation
Agreements; and (iii) within six months from a Change in Control as
defined in Section D, hereinafter, or sale of EURO RSCG [or other HA
agencies excluding Campus as provided in clause 1.3.4].
(iii) Valuation:
. New MP shares will be valued at market price plus an additional twenty per
cent (20%) of said value. The market value will be determined as follows:
If New MP is quoted: New MP shares will be valued at the average quoted price
-------------------
in the thirty days prior to the date of notification of the exercise of the
option.
If New MP is not quoted: New MP shares shall be valued according to market
-----------------------
criteria by one independent expert. If agreement is not reached on the
appointee, the expert shall be appointed by [to be agreed]. The cost of the
expert shall be borne by New MP. The Put and Contribution Agreement shall
contain the following clause regarding the principles to be applied by the
independent expert : "The expert shall make the valuation taking into account
comparable multiples of publicly traded companies."
HA shares will be valued at the average quoted price in the thirty days prior
to the date of notification of the exericse of the option.
C. HA contribution undertaking.
(i) The MP Shareholders shall notify Havas S.A. of their intent to
exercise the Put Option with at least three days prior notice to the
intended date of notification.
(ii) Havas, S.A. shall have the right (only in the case the put is
exercised pursuant to B(ii)(i) above) to request, prior to the
intended date of notification of the Put
48
<PAGE>
Option, the MP Shareholders to contribute the New MP shares to Havas
Advertising, S.A. by way of contribution in kind to an increase in
Havas Advertising, S.A. share capital.
(iii) The value of New MP shares shall be the same as calculated pursuant to
point B above.
(iv) If for whatever reason, the increase in share capital or the
contribution as herein agreed and valued is not effected, within three
months as of the exercise of the option, MP Shareholders shall have
the right to exercise the Put Option in the terms granted in point B
above to Havas, S.A. or Havas Advertising, S.A. for the value agreed.
D. Change in control
A Change in Control will be deemed to occur when a competitor (term to be
defined by the Implementation Agreements) of HA or New MP becomes the largest
shareholder of HA (or of Havas in the case HA becomes the essential asset of
Havas);
A deemed change in control allows MP Shareholders to trigger the Put Option, the
Call Option provided in section E or a Demerger, at their joint option (six
months to exercise).
However, this presumption can be overruled (therefore, the MP Shareholders will
have no right to exercise the Put Option, the Call Option or the Demerger) if HA
can prove that the competitor-shareholder does not exercise solely or jointly
with other HA or Havas shareholders a material influence ("influencia notable,"
"influence determiante") on the management of HA.
If in the future the competitor starts to exercise a material influence on the
management of HA, the MP Shareholders may trigger the Put Option, the Call
Option or the Demerger (6 months from the date at which MP Shareholders become
aware of said influence, except, in all cases, if HA proves that the competitor-
shareholder does not exercise solely or jointly with other HA or Havas
shareholders a material influence on the management of HA.
E. Call Option
MP Shareholders may buy from Havas Advertising, S.A., which will be obliged to
sell, all HA shares held by HA in New MP at the time of exercise of the option.
This right may be exercised by MP Shareholders within 6 months from (i) a Change
in Control, or (ii) a sale by HA of EURO RSCG, or other HA agencies with the
exception of small agencies the sale of which is convenient for the purpose of
the conduct of the business taken as a whole.
New MP shares will be valued as in the Put Option.
F. Indemnities
Standard representation, warranties and indemnities as to the shares covered by
the call and put options.
F. Term
June 30th, 2009.
49
<PAGE>
ANNEX J
EXAMPLE 1
(Figures in million US $)
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
HA MP Shareholders Adjustments
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Proforma Values 232.0 303.6 ThA = 16.4; to be paid
theoretically by HA
--------------------------------------------------------------------------------------------------------------
Audit Adjustments (53.6) 35.7
--------------------------------------------------------------------------------------------------------------
Adjustment retained (53.6) 24.0
--------------------------------------------------------------------------------------------------------------
Actual Values 178.4 (VA) 327.6 (VB) AcA = 89.64
--------------------------------------------------------------------------------------------------------------
</TABLE>
If VA/(VA + VB) is less than 45%, then AcA = (VB/0.55) - VA - VB
If VA/(VA + VB) is greater than 45%, then AcA = (VA/0.45) - VA - VB
. Because the negative adjustment resulting from the audit, minus US $ 53.6
million, is larger than US $ 40 million, then MP has the right to pull out
and ask for the US $ 5 million penalty from HA.
. Because AcA - ThA is greather than 20 million US $ (US $ 73.24), then HA is
entitled to pull out provided it pays US $ 5 million to MP.
EXAMPLE 2
(Figures in million US $)
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
HA MP Shareholders Adjustments
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Proforma Values 250.0 294.6 ThA = 10.95; to be paid
theoretically by MP
--------------------------------------------------------------------------------------------------------------
Audit Adjustments 26.8 8.9
--------------------------------------------------------------------------------------------------------------
Adjustment retained 20 8.9
--------------------------------------------------------------------------------------------------------------
Actual Values 270.0 (VA) 303.5 (VB) AcA = 26.5
--------------------------------------------------------------------------------------------------------------
</TABLE>
If VA/(VA + VB) is less than 45%, then AcA = (VB/0.55) - VA - VB
If VA/(VA + VB) is greather than 45%, then AcA = (VA/0.45) - VA - VB
Because AcA - ThA = 26.5 - 10.95 = 15.55 is less than 20 million US $, then MP
is not entitled to pull out.
50
