Exhibit 10.2
INTERNET CONTENT AND SERVICES FRAMEWORK AGREEMENT
THIS INTERNET CONTENT AND SERVICES FRAMEWORK AGREEMENT (the "AGREEMENT")
is entered into as of this 30th day of May 2001 (the "EFFECTIVE DATE") by and
between BellSouth Enterprises, Inc., a corporation organized and existing under
the laws of the State of Georgia, with its principal place of business at 0000
Xxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxx 00000 (the "COMPANY"), and StarMedia Network,
Inc., a corporation organized and existing under the laws of the State of
Delaware, with its principal place of business at 00 Xxxxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000 ("STARMEDIA"). StarMedia and the Company are occasionally
collectively referred to in this Agreement as the "PARTIES" or individually as a
"PARTY".
RECITALS
WHEREAS, simultaneously herewith, the Company and StarMedia are entering
into a Securities Purchase Agreement (as defined below), whereby the Company is
acquiring certain equity interests and options with respect to StarMedia;
WHEREAS, StarMedia owns and operates the StarMedia Websites (as defined
below);
WHEREAS, the Company's Affiliates provide Wireless Access Services in the
Territory (as such terms are defined below);
WHEREAS, the Securities Purchase Agreement contemplates that the Company
and StarMedia will enter into an agreement pursuant to which StarMedia shall
become the exclusive provider of integrated global customized series of
co-branded portals available in a multi-access environment ("MAP") for the
Subscribers (as such terms are defined below) to the Participating Affiliates'
Wireless Access Services; and
WHEREAS, certain obligations of Company hereunder may be performed by
BellSouth International, Inc., a wholly owned subsidiary of Company, or its
successor ("BSI");
NOW, THEREFORE, in consideration of the respective representations and
warranties hereinafter set forth and of the mutual covenants and agreements
contained herein, the Parties, intending to be legally bound, hereby agree as
follows:
ARTICLE I
DEFINITIONS
The capitalized terms which appear in the recitals and the body of this
Agreement shall have the following meanings, unless such term is defined
elsewhere in this Agreement, including its recitals (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
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"ACCESS SERVICES" shall mean the Wireless Access Services and/or any
other form of telecommunications access services.
"ACTIVE TERRITORY" shall refer to that portion of the Territory in
which Participating Affiliates are licensed to conduct operations.
"AFFILIATE" of the Company shall mean another Person that, directly
or indirectly, controls, is controlled by or is under common control with,
Company (other than independent contractors and leased employees) where
the Company shall be deemed to have control over any other Person if: (a)
the Company directly or indirectly or acting through one or more other
Persons owns, controls or has power to vote fifty-one percent (51%) or
more of the equity interests of the other Person; (b) the Company
controls, in any manner, the election of a majority of the directors,
managers or trustees (or persons exercising similar responsibilities) of
the other Person; or (c) the Company directly or indirectly controls,
either individually or jointly with a third party, the management or
policies of the other Person. Affiliate of StarMedia means another Person
that, directly or indirectly, controls, is controlled by or is under
common control with, StarMedia (other than independent contractors and
leased employees) where StarMedia shall be deemed to have control over any
other Person if: (a) StarMedia directly or indirectly or acting through
one or more other Persons owns, controls or has power to vote ten percent
(10%) or more of the equity interests of the other Person; (b) such Person
controls, in any manner, the election of a majority of the directors,
managers or trustees (or persons exercising similar responsibilities) of
the other Person; or (c) such Person directly or indirectly controls the
management or policies of the other Person. For the avoidance of doubt,
the entities listed on Exhibit A are "Affiliates" of the Company.
Notwithstanding the foregoing, neither StarMedia nor any of its Affiliates
shall be considered the Company's Affiliate and neither the Company nor
any of its Affiliates shall be considered StarMedia's Affiliate.
"CHANGE IN CONTROL" of a Person shall mean (i) the consummation of
any merger, consolidation or reorganization (or series of such related
transactions) involving such Person and any Person other than the other
Party to this Agreement and its Affiliates unless both (x) the
shareholders of such Person immediately prior to such consummation, shall
have beneficial ownership of more than 50% of the voting stock of such
Person (or if such Person shall not be the surviving company in such
merger, consolidation or reorganization, such surviving company)
immediately after such consummation, and (y) such Person is not subject to
an agreement that contemplates that individuals who are directors of such
Person immediately prior to such consummation (or other persons designated
by such Person at or before such consummation) shall constitute less than
a majority of the directors of such Person or such surviving company, as
the case may be, (ii) a change or changes in the membership of the board
of directors of such Person which represent a change of a majority or more
of such membership during any 12 month period (unless such change or
changes in membership are caused by the actions of the then existing board
of directors of such Person and do not occur within 12 months of the
commencement, threat or proposal of an election contest (as defined in
Rule 14a-11 of
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Regulation 14A under the Securities Exchange Act of 1934), tender offer or
other transaction which would constitute a change of control under clause
(i) above, in each case, by any Person other than the other Party to this
Agreement and its Affiliates), (iii) a sale to any Person other than the
other Party to this Agreement and its Affiliates of all or substantially
all of the assets of such Person and its Subsidiaries, taken as a whole,
(iv) the sale to any Person other than the other Party to this Agreement
and its Affiliates of all or substantially all of either (a) the Person's
content aggregation and distribution business or (b) the Person's wireless
portal business, or (v) any Person other than the other Party to this
Agreement and its Affiliates obtaining the right to vote or direct the
voting, directly or indirectly, of securities having more than 50% of the
ordinary voting power for the election of directors of such Person.
"CLAIMS" shall have the meaning specified in Section 14.1 of this
Agreement.
"COMPANY COMPETITORS" shall mean such Persons as may be engaged,
directly or indirectly, in the provision or sale of wireless
telecommunications services, including without limitation, wireless
carriers.
"COMMON STOCK" shall mean common stock, par value $0.001 per share,
of StarMedia.
"COMPANY SERVICES" shall mean the services offered by the Company or
the applicable Participating Affiliate via the Access Services.
"CONFIDENTIAL INFORMATION" of a Party shall mean all information of
a technological or business-sensitive nature, including without limitation
product or service designs, plans and specifications, business plans,
financial data, operating data, lists of customers or suppliers, furnished
by such Party to the other Party and if disclosed in writing, is marked
confidential, or if disclosed orally or visually, is designated as
confidential at the time of disclosure and confirmed in writing within
thirty (30) days of disclosure. Notwithstanding the above, Confidential
Information shall not include information that the receiving Party can
demonstrate (A) is in the public domain and is available at the time of
disclosure or which thereafter enters the public domain and is available
through no improper action or inaction by the receiving Party or any
Affiliate, agent or employee of the receiving Party, or (B) was in its
possession or known by the receiving Party, without restriction, prior to
receipt from the disclosing Party, as demonstrated by files or records in
existence at the time of disclosure, or (C) was disclosed to others by the
disclosing Party without restriction on further disclosure, or (D) was
rightfully disclosed to the receiving Party by a third party without
restriction, or (E) is independently developed by the receiving Party
without reference to such Confidential Information of the disclosing
Party, as demonstrated by files or records created at the time of such
independent development. Information shall not be deemed known to such
Party or publicly known for purposes of the above exceptions (x) merely
because it is embraced by more general information in the prior possession
of such Party
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or others, or (y) merely because it is expressed in public material in
general terms not specifically the same as the Confidential Information.
"CURRENT CRITICAL TECHNOLOGY" shall mean those applications included
in Third Party Technology which are essential to the continued operation
of the MAP Service, including as of the Effective Date, Voice Portal,
email, ad serving, PIM and calendar. The foregoing list of applications
may be updated on a quarterly basis by the Product Path Planning Team as
it determines is reasonably necessary.
"DEFAULT" shall have the meaning specified in Section 12.2 of this
Agreement.
"DEPOSIT MATERIALS" means the Source Code for the StarMedia
Technology, including without limitation the Gen3 Technology, the WIS
Technology, and the User Registration Database (together with the related
data dictionary), together with the Source Code for the Third Party
Technology and all modifications to such Third Party Technology, if and to
the extent that StarMedia has the right to deposit the Source Code for
such Third Party Technology into escrow for the benefit of the Company,
and diagrams and explanations reflecting the architecture and components
of the MAP Service.
"DIAL-UP PORTAL" shall mean a portal scripted so that it is
accessible on the Internet by end-users using a wired connection at the
users location.
"DOMAIN NAMES" shall mean the individual domain names (URL) of the
MAP Service, exclusive of any redirects owned by StarMedia which are
transparent to the end-user.
"ENCODED" is a term that shall be used generically to describe any
content that has been prepared in accordance with an authoring language or
markup (such as HTML, SGML, XML, WAP, etc. and successor protocols) used
to create documents for viewing and/or data exchange on the World Wide Web
or any other network portals, situses and facilities.
"FIRST PARTY" means, with respect to any payment made under this
Agreement, the Party to whom such payment is made.
"FULL OWNERSHIP RIGHTS" shall mean, with respect to specified
Intellectual Property Rights in specified subject matter, ownership of
those rights, exclusive of any underlying rights of either Party or a
third party with respect to pre-existing matter incorporated therein
(which underlying rights shall in no event be affected by this Agreement
except as expressly specified elsewhere herein), including the full right
(to the extent such rights exist therein) to make, have made, use, sell,
transfer or license anywhere in the world.
"GEN3 TECHNOLOGY" shall have the meaning associated with its
description in Exhibit D, including enhancements thereof which have been
used in the MAP Service.
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"XXX XXX" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended.
"INTELLECTUAL PROPERTY RIGHTS" shall mean any and all now known or
hereafter existing rights associated with works of authorship or
inventions throughout the world, including without limitation, copyrights,
patents, trademarks, service marks, trade secrets, know-how, "look and
feel" and all other intellectual and industrial property and proprietary
rights relating to intangible property of every kind and nature throughout
the world and however designated, and all applications for, and rights and
priority to apply for, such rights.
"INTERNET USE DATA" shall mean all Subscriber Data that is not
Personal Subscriber Data and from which any Personal Subscriber Data has
been irreversibly deleted, or generalized so as not to be specific to the
Subscriber.
"LAUNCH" shall mean the initial commercial availability on a
non-beta, non-test or non-preview basis of the MAP Service of the
Participating Affiliate in the Active Territory with capacity to service
the volume of end-users reasonably anticipated upon the commercial
start-up of such Participating Affiliate's MAP Service.
"LICENSED TECHNOLOGY" means the StarMedia Technology, excluding the
WIS Technology, which is separately licensed under the WIS Software
License Agreement.
"LINK" shall mean a pointer to an Internet address, page or other
service, which can be activated through a user interface to transfer the
user to such address, page or other service.
"LOCAL CURRENCY" shall mean the generally accepted currency of the
applicable Active Territory.
"LOCAL LANGUAGE" shall mean the generally accepted written and
spoken language of the applicable Active Territory.
"MAINTENANCE AND SUPPORT AGREEMENT" shall mean the agreement
attached to the Operating Agreements as Exhibit E, as amended,
supplemented or otherwise modified from time to time.
"MAP SERVICE" shall mean the integrated, global, customized,
co-branded portal services available in a multi-access environment
provided by StarMedia allowing access to the portals hosted for each
Participating Affiliate by StarMedia pursuant to applicable Operating
Agreements via Wireless Devices with browsers, via Wireless Devices with
SMS, via the dial-in number designated by the Participating Affiliate for
Voice Portal usage and via personal computers (e.g., personal computers
with dial-up access and/or dedicated access to the Internet) as described
further in Exhibit B.
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"MARKS" shall mean all trademarks, service marks and corporate and
brand identification and indicia, including without limitation, word
marks, logos and other picture marks, phrases, jingles, composite marks,
corporate, commercial and institutional images, product designations and
identifications, whether registered or not.
"MFN PRICES" for services shall mean prices that are no higher than
the lowest price that the provider of such services and/or any of its
Affiliates charges for the same services provided by it or such Affiliate
in the same country or region to comparable third party customers for
comparable usage involving comparable or lesser volumes under similar or
less favorable terms and conditions to said service provider or Affiliate.
"NET ADVERTISING REVENUE" shall mean all cash receipts of revenue
paid by advertisers to StarMedia or its Affiliates (determined in
accordance with U.S. generally accepted accounting principles) generated
by the sale of advertising on the MAP Services ("GROSS ADVERTISING
REVENUE"), less (i) applicable Value Added Tax and (ii) twenty percent
(20%) of Gross Advertising Revenue.
"NEW TECHNOLOGY" shall mean Technology for providing new or enhanced
functionality for a MAP Service.
"OPERATING AGREEMENTS" shall mean the Internet Content and Services
Agreements in the form of Exhibit E entered into between the Participating
Affiliates and StarMedia or its Affiliates pursuant to Section 16.18
hereof.
"PAGE" shall mean with respect to any web site, any text, graphic,
multimedia or other document or application containing content (whether
in-line, Linked or framed, and whether or not Encoded) which can be
accessed so as to be viewed, listened to, stored, reproduced or made use
of by a user with the aid of a suitable device and software.
"PARTICIPATING AFFILIATE" shall mean any Affiliate of the Company in
the Territory which enters into an Operating Agreement, for the duration
of such Operating Agreement.
"PERMITTED TRANSFEREE" shall mean (i) any Affiliate of the Company,
(ii) any successor to the Company, or any Affiliate of the Company, by
operation of law and (iii) up to ten (10) other Persons that the Company
may elect, provided that each such Person is an "Accredited Investor" as
such term is defined in Rule 501(a) of Regulation D promulgated under the
Securities Act.
"PERSON" shall mean a natural person, a corporation, a partnership
(general or limited), a joint venture, an association, a trust or any
other organization or entity, including without limitation, a government
or political subdivision or an agency or instrumentality thereof.
"PERSONAL SUBSCRIBER DATA" shall mean any Subscriber Data that could
be used by itself or in connection with other data to identify, locate or
contact a Subscriber.
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"PRODUCT PATH PLANNING TEAM" shall have the meaning set forth in
Section 6.1 of this Agreement.
"RESTRICTED SERVICES" shall mean the provision of a MAP or the same
or similar services.
"SECOND PARTY" means, with respect to any payment made under this
Agreement, the Party making such payment.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"SECURITIES PURCHASE AGREEMENT" shall mean the Securities Purchase
Agreement by and between the parties hereto dated as of May 30, 2001, as
amended, supplemented or otherwise modified from time to time.
"SOURCE CODE" for a program or system means a copy of the source
code corresponding thereto, including all updates to the source code
delivered to the escrow agent from time to time pursuant to Section 4.6 of
this Agreement, plus any pertinent available commentary or explanation
that may be necessary to render the source code understandable and usable
by highly-trained computer programmers. The Source Code shall be provided
with all internal comments intact as actually used by StarMedia in
development. Insofar as the "development environment" employed by
StarMedia for the development, maintenance, and implementation of the
Source Code includes any device, programming, or documentation not
commercially available to Company on reasonable terms through readily
known sources other than StarMedia, the Source Code shall include all such
devices, programming, or documentation. The foregoing reference to such
"development environment" is intended to apply to any proprietary
programs, including compilers, "workbenches," tools, and higher-level
languages, used by StarMedia for the development, maintenance, and
implementation of the Source Code.
"SMS" shall mean the wireless service known as Short Message Service
that enables the transmission of alphanumeric messages between mobile
subscribers and external systems such as electronic mail, paging, and
voice-mail systems.
"SPECIFICATIONS" shall mean the applicable technical, operating and
functional descriptions which are attached hereto as Exhibits B - D,
and/or the applicable functions, interfaces, capabilities, characteristics
and/or limitations of any such Participating Affiliate's MAP Service
defined by a Participating Affiliate in its Operating Agreement in
accordance with the terms and conditions of this Agreement.
"STARMEDIA COMPETITORS" are the eleven Persons identified by
StarMedia on Exhibit F. StarMedia may update the identification of the
StarMedia competitors on Exhibit F no more than once per calendar quarter,
upon at least thirty (30) days prior written notice to the Company, but in
no event shall the number of such StarMedia Competitors listed in Exhibit
F at any time exceed eleven.
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"STARMEDIA TECHNOLOGY" means Technology that is owned and controlled
and licensable on a stand-alone basis by StarMedia that is used by
StarMedia to provide MAP Services to the Participating Affiliates under
the Operating Agreements, including without limitation, the Gen3
Technology, the WIS Technology, and the User Registration Database.
"STARMEDIA WEBSITES" shall mean the collection of Encoded documents
and related servers, equipment, software and facilities that are owned,
managed, administered or hosted by StarMedia and accessible by the public
via the Internet at the URL xxxx://xxx.xxxxxxxxx.xxx and any successor
sites, or at such other URL(s) as determined by StarMedia in its sole
discretion.
"SUBSCRIBER" shall mean any user of Access Services of Company
Affiliates located in the Territory.
"SUBSCRIBER DATA" shall mean all data and information relating to
Company's and its Affiliates' Subscribers, including without limitation
user profiles, demographic information, transactional and navigational
information regarding the Subscriber.
"TECHNOLOGY" shall mean all software, methods of operation, hardware
designs, interfaces, specifications and documentation in respect of the
foregoing and all Intellectual Property Rights contained therein.
"TERM" shall have the meaning specified in Section 12.1 of this
Agreement.
"TERRITORY" shall mean Mexico, Central America and South America.
"THIRD PARTY TECHNOLOGY" means Technology, other than StarMedia
Technology or New Technology developed by either Party or the Product Path
Planning Team that is (i) owned by third parties, and (ii) used by
StarMedia to provide the MAP Service to Company and its Participating
Affiliates hereunder.
"URL" is an abbreviation of Uniform Resource Locator, the global
address of documents and other resources on the World Wide Web.
"USER REGISTRATION DATABASE" shall mean the database of
identification of all Subscribers.
"VALUE ADDED TAX" shall mean value added or similar tax and any
sales tax charged to and collected from customers or advertisers, as the
case may be, as required by local law.
"VOICE PORTAL" shall mean a voice-activated user interface that
allows end-users to access information via back-end applications otherwise
available via Wireless Portals or Dial-Up Portals.
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"VOLUME DISCOUNT AMOUNT" of a Participating Affiliate shall mean,
with respect to any applicable month, (i) with respect to the Net
Advertising Revenues (as defined in the applicable Operating Agreement)
that are taken into account in accordance with U.S. generally accepted
accounting principles during such month and until such time as the Volume
Discount Threshold has been met, zero and (ii) with respect to the Net
Advertising Revenues (as defined in the applicable Operating Agreement)
that are taken into account in accordance with U.S. generally accepted
accounting principles during such month and after such time as the Volume
Discount Threshold has been met, 20% of such Net Advertising Revenues (as
defined in the applicable Operating Agreement) for such Participating
Affiliate.
"VOLUME DISCOUNT THRESHOLD" shall mean the aggregate amount of Net
Advertising Revenue received by StarMedia and its Affiliates pursuant to
the Operating Agreements equal to U.S.$25,000,000. Exclusively for the
purposes of calculating the foregoing, any Net Advertising Revenue
collected in any currency other than U.S. dollars shall be computed in
U.S. dollars using the currency conversion mechanism set forth in Section
10.1(c) of the Operating Agreements.
"WAP" shall mean the markup protocol known as Wireless Application
Protocol that allows users to access information via handheld wireless
devices such as mobile phones, pagers, two-way radios, smartphones and
communicators, and any successor or other similar protocols as may be
developed from time to time.
"WIRELESS ACCESS SERVICES" means any and all services based on
providing communications connections for Wireless Devices.
"WIRELESS DEVICE" shall mean an SMS- or WAP-enabled cellular device,
or any other similar or successor technology that enables end-users to
transmit data through the air.
"WIRELESS PORTAL" shall mean a portal scripted and configured so
that it is accessible on the Internet and/or proprietary networks by
end-users using a Wireless Device.
"WIS SOFTWARE LICENSE AGREEMENT" shall mean the agreement attached
hereto as Exhibit G, as amended, supplemented or otherwise modified from
time to time.
"WIS TECHNOLOGY" shall mean StarMedia's proprietary wireless
Internet server Technology, more specifically described in Exhibit C, and
all successor or similar Technologies as may be developed by StarMedia or
its licensors from time to time.
"WITHHOLDING TAXES" means foreign, federal, and state and local
taxes, fees, or charges of the First Party which are imposed on or by
reference to gross or net income or gross or net receipts and are required
under applicable law to be withheld by the Second Party from payments made
to the First Party under this Agreement.
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ARTICLE II
EXCLUSIVITY
2.1 STARMEDIA EXCLUSIVITY AND PREFERRED RELATIONSHIP. (a) During the
Term and except as specifically provided for in this Section 2.1, StarMedia and
its Affiliates, directly or indirectly, will not provide, any Restricted
Services to any third party in the Territory on an exclusive basis. StarMedia
further agrees that it will not provide (i) during the first six (6) months of
the Term of this Agreement, any Restricted Services to any Company Competitor
anywhere in the Territory, and (ii) with respect to each Affiliate of the
Company which becomes a Participating Affiliate within the six (6) month period
following the Effective Date, during the period beginning on the date six (6)
months after the Effective Date and ending twelve (12) months after the Launch
of the MAP Service in such Participating Affiliate's Active Territory,
Restricted Services to any Company Competitor anywhere in the Active Territory
of such Participating Affiliate.
The foregoing restrictions shall not apply to any services provided by
StarMedia or its Affiliates under agreements entered into with Company
Competitors prior to the Effective Date of this Agreement, during the term of
such agreements and any renewals thereof expressly provided for in such
agreements, as long as such renewals do not provide for the provision of
Restricted Services.
(b) During the Term the Company will use commercially reasonable
efforts to promote the MAP Service to the Company Affiliates in the Territory.
If eight Company Affiliates in the Territory (at least two of which must be from
Argentina, Brazil or Venezuela) have not executed Operating Agreements within
six months after the Effective Date, StarMedia shall have the right to provide
any services to any third party in any country in the Territory in which an
Affiliate operates, if such Affiliate has not signed an Operating Agreement
within such six month period. StarMedia may provide services to any third party
where permitted pursuant to the foregoing on an exclusive basis for up to twelve
months (excluding Brazil).
(c) Notwithstanding anything to the contrary in this Section 2.1, in
those countries within the Territory where Company does not have an Affiliate
which actively conducts a wireless telecommunications business as of the
Effective Date, StarMedia or its Affiliates may for six (6) months after the
Effective Date enter into an agreement with any party to offer the Restricted
Services on an exclusive basis for no more than twelve (12) months and/or on a
non-exclusive basis for any time period, provided that in Mexico, StarMedia or
its Affiliate shall have the right to enter into any such agreements at any
time.
(d) Notwithstanding anything to the contrary contained herein, in
the event that the Participating Affiliates have failed to increase the user
base for the MAP Services such that the Participating Affiliates, in the
aggregate, meet at least 60% of the user base level projections provided by the
Company as set forth in Exhibit H, User Base Level Projections, hereto (such
projections to be measured first on a twelve-month basis for the period ending
on December 31, 2002, and thereafter such projections to be measured on a
semi-annual basis), StarMedia may provide Restricted Services to any third party
on a non-exclusive basis in those
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Active Territories where the Participating Affiliate has failed to achieve 60%
of User Base Level Projections as set forth in the executed Operating Agreement
with the Participating Affiliate. Additionally, in such event, StarMedia shall
be entitled to terminate services pursuant to any applicable Operating Agreement
on six (6) months' written notice with respect to any Participating Affiliate
that has failed to achieve at least 40% of its respective user base level
projections provided by the Company as set forth in Exhibit H hereto, as amended
from time to time so as not to reduce the combined projections, after which
termination StarMedia shall offer to provide the MAP Service to such Affiliate
at MFN Prices.
(e) During the Term, the Company or its Affiliates shall provide to
StarMedia and its Affiliates, and StarMedia and its Affiliates shall purchase
exclusively from the Company or its Affiliates, or from any Person that directly
or indirectly controls, is controlled by or is under common control with,
Company or any such Affiliate, as technically and reasonably feasible for
StarMedia and its Affiliates (except for a back-up bandwidth provider, which
will be purchased through the Company or its Affiliates if the necessary
bandwidth is available) and at MFN Prices, its internet access services, hosting
services, wireless services, yellow page and telephone directory services,
domestic and international long distance telephone services in the United States
and in markets where there is a Participating Affiliate and where the Company or
its Affiliates (or any such affiliated companies) provide such services;
provided that, as applicable, StarMedia will not need to make a material change
to its network configuration to make any such purchase, that the quality of such
services is comparable or better than the services currently provided to
StarMedia and that at a minimum, six (6) of the Company's Affiliates
haveexecuted an Operating Agreement, and that the Company's prices for such
services (i) in comparison to agreements between StarMedia and third parties
dated on or before the Effective Date, are no higher than prices for comparable
services in those agreements for the term of such third party agreements, and
(ii) thereafter, no higher than those otherwise available from time to time in
the market for comparable services. StarMedia agrees to employ commercially
reasonable efforts to terminate existing agreements with third-party vendors of
the foregoing services in order to complete such transfer within six (6) months
after the signing of the sixth Operating Agreement, it being understood that
StarMedia shall not have to breach an agreement with a pre-existing third party
vendor of the foregoing services in order to comply with this subsection 2.1(e).
(f) As set forth in Section 2.3 of the Operating Agreement, a
Participating Affiliate shall have the right to terminate its Operating
Agreement in the event of a merger with or acquisition by or of another company
that provides wireless telecommunications services. In such an event, the
Company shall use its highest commercially reasonable efforts to promote the
continued use of the MAP Services by the entity resulting from such merger or
acquisition, and provided further that the Company shall use commercially
reasonable efforts to cause such Affiliates or successor entity, as applicable,
to pay StarMedia the fee set forth in Section 2.3 of the Operating Agreements.
(g) StarMedia shall provide all MAP Services to the Company at MFN
Prices.
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(h) For the purposes of this Section 2.1, exclusivity obligations
with respect to this Section 2.1 shall apply to joint ventures of the Parties
and their respective Affiliates in the Territory.
(i) Notwithstanding Section 2.1(e), StarMedia shall transfer all or
a substantial portion of its web hosting requirements to an Affiliate of the
Company doing business in Miami, Florida (such Affiliate's operation shall
hereinafter be referred to as the "E-CENTER") within six (6) months of the
Effective Date; provided that StarMedia will not need to make a material change
to its network configuration to make any such transfer, that the quality of the
services to be provided by the e-Center is comparable or better than the
services currently provided to StarMedia at the time of such transfer, and that
the prices for such e-Center services (i) in comparison to agreements between
StarMedia and third parties dated on or before the Effective Date, are no higher
than prices for comparable services in those agreements for the term of such
third party agreements, and (ii) thereafter, no higher than those generally
available from time to time in the market for comparable services; provided
however that the e-Center shall neither be obligated nor entitled to alter its
prices more than twice during any twelve (12) month period, and the e-Center
shall not be obligated to match promotional discounts or incentives offered by
other providers. StarMedia's sole remedies for disputes concerning pricing will
be to terminate its obligation to purchase those services for which the e-Center
did not meet its pricing obligations. StarMedia may terminate services provided
by the e-Center upon the expiration or termination of this Agreement or in the
event that six (6) of the Company's Affiliates have not signed Operating
Agreements with StarMedia within one year of the Effective Date. StarMedia
represents that it does not believe that transferring all or a substantial
portion of its web hosting requirements to the e-Center will result in a
material change to its network configuration. The Parties shall each designate
two representatives within three business days after the Effective Date hereof
to form a transfer team (the "TRANSFER TEAM") to design a comprehensive plan,
including a milestone schedule for implementation of such plan, to transfer all
or a substantial portion of StarMedia's web hosting requirements to such
e-Center (the "PLAN"). The Transfer Team shall use its best efforts to agree
upon a finalized Plan on or before the first month after the Effective Date
hereof.2.2 COMPANY EXCLUSIVITY AND PREFERRED RELATIONSHIP. During the Term,
StarMedia shall have the right to procure new wireless Internet applications
that have been developed by the Company and/or BSI for StarMedia's use in its
other properties outside of the Active Territory, provided the Company or BSI
decides to commercialize such wireless Internet applications and further
provided that in no event will any Company Competitors be permitted to derive
any benefit from access to such applications, directly or indirectly, from or
through StarMedia.
2.3 RESALE SERVICES. StarMedia shall have a right of first
negotiation to become the provider of any MAP Services that the Company or its
Affiliates distributes for resale in the Territory in connection with the sale
of wholesale airtime to a reseller operating under the reseller's own brand.
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ARTICLE III
MAP SERVICE DESIGN AND FUNCTIONALITY
3.1 MAP SERVICE DEVELOPMENT AND INTEGRATION. StarMedia shall design,
create, serve, host and maintain the MAP service for each Participating
Affiliate to use in accordance with the Specifications and with the terms and
conditions of this Agreement.
3.2 PRODUCTION WORK. StarMedia will design a unique, integrated,
global, customized, co-branded MAP Service "look and feel," site scheme and
navigation for portal services available in a multi-access environment in
consultation with the Company for use by all Participating Affiliates launching
a MAP Service with StarMedia, which will support the Specifications (the
"PRODUCTION WORK"). Such Production Work will include branding space for Company
and/or its Participating Affiliate, space for Participating Affiliate services,
Participating Affiliate colors and two additional local StarMedia content
channels which the Participating Affiliate may choose for inclusion in its MAP
Service (as such term is defined in the Operating Agreement), and will
incorporate StarMedia's expertise in site navigation. Such Production Work will
be delivered to Company within two (2) weeks after the Effective Date. Provided
that the Company has paid the Production Work Fee set forth in Section 11.1(b)
hereof, StarMedia hereby assigns all right, title and interest in the Production
Work to the Company.
3.3 ACCEPTANCE TESTING. (a) The Production Work shall be deemed
accepted upon the earlier of (i) notification from the Company of acceptance or
(ii) two (2) weeks from StarMedia's delivery of such Production Work, unless the
Company notifies StarMedia of its reasonable rejection of such Production Work
within such time period together with a detailed explanation of how such
Production Work needs to be corrected to warrant acceptance from the Company (in
which case StarMedia shall have one (1) week to correct any non-conformity as
described in such rejection notification).
(b) The MAP Service shall be located at such Domain Name(s) as
determined by the Company and the applicable Participating Affiliate. The Domain
Name(s) shall be the sole and exclusive property of the Company or the
particular Participating Affiliate.
3.4 BRANDING AND PLACEMENT. (a) The MAP Service shall be primarily
branded with one or more of the Marks designated by the Company and shall
include one Xxxx designated by StarMedia. The placement and size of the
StarMedia Xxxx shall be subject to the Company's approval, but in each case it
shall appear either (but not both) (i) above the fold and no smaller than
one-fourth the size of the Company or Participating Affiliate's Xxxx, or (ii)
below the fold and no smaller than half the size of the Company or Participating
Affiliate's Xxxx. Each Participating Affiliate may, at its option, include its
own branding in the MAP Service provided in such Participating Affiliate's
Active Territory.
(b) INTENTIONALLY OMITTED.
(c) The Voice Portal shall not include audible StarMedia branding
unless agreed upon by both Parties.
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ARTICLE IV
TECHNOLOGY
4.1 LICENSED TECHNOLOGY. (a) StarMedia shall enter into the WIS
Software License Agreement attached hereto as Exhibit G with the Company on or
before the Effective Date hereof.
(b) StarMedia shall enter into a WIS Technology Maintenance
Agreement attached hereto with the Company to provide maintenance and support to
the WIS Technology licensed under the WIS Software License Agreement.
(c) StarMedia hereby grants to the Company a nonexclusive,
nontransferable, perpetual (subject to the limitation set forth below) license
under StarMedia's Intellectual Property Rights to access, use, provide services
with, reproduce, maintain, upgrade and install the Licensed Technology within
the Territory. Company hereby grants to StarMedia, under and to the full extent
of the foregoing license, an exclusive sublicense of said Intellectual Property
Rights for the purpose of enabling StarMedia and its Affiliates to provide to
the Company and the Participating Affiliates the services contemplated by this
Agreement and each Operating Agreement as then being provided from time to time
hereunder and thereunder, said exclusive sublicense to remain in effect until
the occurrence of a Release Event requiring the release of the Deposit Materials
to the Company as described in Section 4.6 hereof, for the purpose of enabling
the Company or a contractor on behalf of the Company to provide on the Company's
behalf for the Company and/or its Participating Affiliates those services under
this Agreement and each Operating Agreement that StarMedia and its Affiliates
would have provided hereunder and thereunder but for such Release Event. It is
understood and agreed that the license granted to the Company in the first
sentence of this Section 4.1 (c) is no broader than that necessary to support
the rendition of the then-current services that StarMedia is obligated to
provide pursuant to this Agreement and the Operating Agreements, provided, that
it is further understood and agreed that after the occurrence of a Release
Event, the Company or any contractor on behalf of the Company, to the extent
consistent with the next sentence, may begin providing services with the use of
the Licensed Technology to Affiliates operating in the Territory that are not
Participating Affiliates hereunder. For the avoidance of doubt, it is understood
that the Source Code must be protected by the Company and treated as
"Confidential Information" of StarMedia and that the foregoing shall in no event
be construed so as to authorize the use of StarMedia Technology or access
thereto directly or indirectly by or for the benefit of any StarMedia
Competitors, unless the only available Persons for the performance of applicable
services are StarMedia Competitors. The Company's license granted in the first
sentence of this Section 4.1 (c) and its rights to use the Deposit Materials
shall terminate in the event that this Agreement is terminated by reason of
material breach by the Company based on a violation of StarMedia's Intellectual
Property Rights.
4.2 NON-STAND-ALONE TECHNOLOGY. Upon a Release Event, at the
Company's and/or a Participating Affiliate's request, StarMedia shall use
commercially reasonable efforts to provide the Company or Participating
Affiliate, as applicable, with all
15
Technology that is used in the MAP Service that is owned and controlled by
StarMedia but not licensable on a stand-alone basis (the "NON-STAND-ALONE
TECHNOLOGY") and shall further grant to the Company and/or Participating
Affiliate all licenses to such Non-Stand-Alone Technology necessary to ensure
continuity of the MAP Service to Subscribers as otherwise provided herein and in
the Operating Agreements.
4.3 PRODUCT PATH PLANNING TEAM TECHNOLOGY. (a) In the event either
Party develops New Technology or independently acquires any rights with respect
to New Technology, it may submit such New Technology to the attention of the
Product Path Planning Team, which shall consider it for integration into the MAP
Service. If the Product Path Planning Team makes a favorable determination as to
such integration, the Parties shall agree on funding of related development
costs, revenue sharing and any outstanding questions of ownership, and abide by
such agreement. If the Product Path Planning Team makes an unfavorable
determination, or fails to make a favorable determination thereon within a
reasonable time after such submission, then the Company may:
(1) at its sole expense, retain StarMedia on a cost plus 10%
profit basis to perform such integration work, in which case
StarMedia shall have no right to share the particular revenues
associated with the New Technology; or
(2) deploy such New Technology outside the Map Service and outside
of any restrictions or revenue sharing provisions of this
Agreement.
In either event (Subsection 4.3(a)(1) or (2) above), the Company
shall have Full Ownership Rights with respect to the New Technology.
(b) In the event New Technology has been developed jointly by the
Product Path Planning Team, and the Product Path Planning Team has made a
determination to integrate such New Technology with the MAP Service, the Parties
shall agree on funding of related development costs, revenue sharing and any
outstanding questions of ownership, and abide by such agreement.
(c) If New Technology has been jointly acquired from a third party
pursuant to a determination of the Product Path Planning Team, and the Product
Path Planning Team has made a determination to integrate such New Technology
with the MAP Service, the parties shall agree on funding of related development
costs, revenue sharing and any outstanding questions of ownership, and abide by
such agreement.
4.4 THIRD PARTY TECHNOLOGY. (a) During the Term, StarMedia shall
provide information and cooperation to the Company for the purpose of
identifying any Current Critical Technology, provided that such information
shall be protected by the Company and treated as "Confidential Information" of
StarMedia and used only for the benefit of the Company and Participating
Affiliates. Further, StarMedia agrees to use commercially reasonable efforts in
conjunction with the Company to secure appropriate licenses for the Company to
use the Current Critical Technology in the event of the occurrence of a Release
Event, which obligation shall be
16
an ongoing obligation for the duration of the Term as the list of Current
Critical Technology may be updated from time to time. In the event that
StarMedia and the Company cannot secure the foregoing licenses to any item of
Current Critical Technology or a reasonable back-up substitute therefor within
three (3) months after the Effective Date, the Company shall have the right to
terminate this Agreement pursuant to Section 12.2 hereof.
(b) Upon the occurrence of any Release Event, StarMedia shall employ
its commercially reasonable efforts to assist the Company to procure from the
vendors therefor a license allowing the Company to use such vendors' Third-Party
Technology in connection with the exercise of its rights pursuant to Section
4.4(a) hereof.
4.5 CONTINUATION OF RIGHTS PURSUANT TO UNITED STATES BANKRUPTCY
CODE. All rights and licenses granted under or pursuant to this Agreement by
StarMedia to Company shall be deemed, for purposes of Article 365(n) of the
United States Bankruptcy Code (the "CODE"), to be licenses to rights to
"intellectual property" as defined under Article 101(35A) of the Code. StarMedia
agrees that Company, as licensee of such rights under this Agreement, shall
retain and may fully exercise all of its rights and elections under the Code.
StarMedia further agrees that in the event of commencement of bankruptcy
proceedings by or against StarMedia, Company shall be entitled to retain all of
its rights under this license.
4.6 DEPOSIT MATERIALS. (a) Within thirty (30) days following the
Effective Date, StarMedia shall deposit in escrow with Fort Xxxx Escrow
Services, Inc. (or other mutually acceptable escrow agent) pursuant to the
Escrow Agreement attached hereto as Exhibit J, a copy of the Deposit Materials.
Provided that the Company has paid all applicable maintenance fees due to
StarMedia hereunder, if StarMedia corrects any defects in, or provides any
revision to, the Deposit Materials, StarMedia shall furnish the escrow agent
with a corrected or revised copy of the Deposit Materials within five (5) days.
In the event the Deposit Materials are released to the Company, they shall be
treated as the confidential information of StarMedia in accordance with the
provisions of Section 10 of this Agreement. The Escrow Agreement shall provide
that the Deposit Materials are subject to release to the Company if, and only
if: (i) StarMedia liquidates, dissolves, or shall be adjudicated insolvent, or
files or has filed against it a petition in bankruptcy or for reorganization
which is not discharged within 60 days after the filing thereof, or takes
advantage of any insolvency act or proceeding, including an assignment for the
benefit of creditors, or commits any other act of bankruptcy, (ii) StarMedia
ceases to commercially provide an integrated multi-access portal service
offering or a content aggregation service offering in the ordinary course
without a successor reasonably acceptable to the Company, completely
discontinues the MAP Service, or the MAP Service experiences more than two (2)
Critical Failures (as such term is defined in the Maintenance and Support
Agreements) during each of the Initial Term or Renewal Terms (e.g., one Critical
Failure in the Initial Term and one Critical Failure in the next Renewal Term
shall not count as two Critical Failures for the purposes of triggering this
provision) under any Operating Agreement during the term of such Operating
Agreement (it being understood and agreed by the Parties hereto that a Critical
Failure that affects more than one Participating Affiliate shall only count as
one Critical Failure hereunder), or (iii) StarMedia is acquired by, merges with,
or sells all or substantially all of its assets related to its performance under
this Agreement to a Company Competitor (each, a "Release Event").
17
All costs of establishing and maintaining the escrow account(s) described herein
shall be borne by the Company. The parties acknowledge and agree that the Escrow
Agreement pursuant to which the Deposit Materials are deposited with the escrow
agent referred to above is an agreement supplementary to the licenses granted in
this Agreement and in connection herewith for purposes of Section 365(n) of the
United States Bankruptcy Code.
(b) Company may periodically, but not more frequently than once per
year, trigger fresh escrow deposits. Company shall reimburse StarMedia and the
escrow agent under the Escrow Agreement for the reasonable expenses incurred in
the preparation of such fresh escrow deposits. In addition to triggering fresh
deposits, Company shall have the right through a reputable third party
designated by Company that is not a competitor of StarMedia, to validate the
materials on deposit upon thirty (30) calendar days prior written notice to and
in the presence of StarMedia, but no more frequently than two (2) times per
year. Any third party designated by Company to validate the materials on deposit
shall be required to execute a nondisclosure agreement with StarMedia, in a form
reasonably satisfactory to StarMedia, which nondisclosure agreement shall
require that such third party's report to Company contain only a
non-confidential description of results of such validation. Verification shall
take place at StarMedia's convenience during normal business hours on mutually
designated hardware. Such verification shall be at Company's expense unless the
materials on deposit are not current, in which event StarMedia shall bear all
costs associated therewith.
(c) SUFFICIENCY OF DEPOSIT MATERIALS WARRANTY. StarMedia represents
and warrants to the Company that it has used and will use all commercially
reasonable efforts to ensure that at all times during the term of this
Agreement, included within the Deposit Materials shall be everything necessary
(other than commercially or freely available software tools and libraries) to
recreate the executable code for the then current versions of the WIS Technology
and Gen3 Technology and to identify the Subscribers.
4.7 INFRINGEMENT INDEMNITY. (a) StarMedia agrees, at its own
expense, to defend or at its option to settle any claim or action brought by any
third party against the Company or any of its Affiliates on the issue of
infringement of any Intellectual Property Right by Company's or any such
Affiliate's use of any Technology provided by StarMedia (to the extent that
Company or such Affiliate has been granted the right to use such Technology
hereunder or under the WIS Software License Agreement and Participating
Affiliate WIS Software Sublicense Agreement (as defined in the Operating
Agreement)) or display of any content furnished by StarMedia (and not provided
by the Company or any Participating Affiliates) (including, without limitation,
the Production Work), or by StarMedia's use of any such Technology or provision
of such content to provide the MAP Service, and to indemnify the Company and its
Affiliates against any and all damages and costs, including legal fees, that a
court awards against the Company and each such Affiliate, or that are paid in
settlement in accordance with this Section 4.7, and any Termination Loss
incurred in the event of the applicability of Section 4.7 (b)(2) below (as such
term is defined therein), PROVIDED, THAT the Company provides StarMedia with
prompt notice of the assertion of any such claim and the opportunity to control
the defense and/or settlement thereof, and PROVIDED FURTHER THAT,
notwithstanding anything to the contrary set forth in this Agreement, in no
event shall the total
18
aggregate liability of StarMedia and its Affiliates to provide indemnification
to the Company and its Affiliates pursuant to this Section 4.7 and Section 4.2
of each Operating Agreement, or otherwise, for infringement of third-party
intellectual property rights, exceed the amount of fifty million dollars
(U.S.$50,000,000) (the "CAP"), except that (A) the amount of any payments made
by StarMedia pursuant to Section 4.7 (b)(1) below or withheld from StarMedia
pursuant to Section 4.7 (b)(2) below shall not be counted in accounting for the
Cap, and (B) the Cap shall not apply with respect to any claim for infringement
of third-party Intellectual Property Rights of which StarMedia had knowledge as
of the Effective Date but failed to disclose to the Company at or prior to the
Effective Date. StarMedia shall not enter into any settlement, admit any
liability on behalf of the Company or any Affiliate, or consent to any adverse
judgment that would adversely affect the rights, interest or business of the
Company or any Affiliate without the prior written consent of the Company and/or
the applicable Affiliate(s).
(b) If the Technology or content used or displayed as contemplated
hereunder, or any part thereof, becomes, or in StarMedia's reasonable opinion is
likely to become, unavailable for use in accordance with this Agreement or any
Operating Agreement, then StarMedia shall at its sole expense either: (i)
procure the right to continue using same as contemplated hereunder; (ii) modify
same to render same non-infringing (provided such modification does not
materially adversely affect such item); or (iii) replace same with a
substantially equally suitable, functionally equivalent, compatible,
non-infringing element. Provided, however, if none of the foregoing options are
reasonably available and practicable:
(1) And the Technology at issue is a single stand alone item
of Non-Critical Technology (hereinafter defined), StarMedia shall
have the right to immediately discontinue any such potentially
infringing use of such item of Non-Critical Technology in connection
with the MAP Service and, upon StarMedia's request, Company shall
immediately discontinue any such potentially infringing use of such
item of Non-Critical Technology in connection with the MAP Service,
and StarMedia shall refund Company and its Applicable Affiliates in
an amount equal to the lesser of (x) two hundred thousand dollars
($200,000) or (y) all fees previously paid to StarMedia for such
infringing Non-Critical Technology, and (as stated in Section 4.7
(a) above) such amount shall not be included in any calculation of
the Cap. "NON-CRITICAL TECHNOLOGY", as used herein, shall mean
Technology other than (i) Current Critical Technology; (ii) WIS
Technology; (iii) Gen3 Technology; or (iv) Technology, which alone
or in combination with other Technology, is essential to the
continued operation of the MAP Service. For the avoidance of doubt,
StarMedia may terminate only one item of Non-Critical Technology as
set forth in this Section 4.7(b)(1).
(2) And the Technology at issue is any Current Critical
Technology, WIS Technology or Gen3 Technology, or Current Critical
Technology, WIS Technology or Gen3 Technology combined with any
other Technology, then StarMedia may thereafter terminate this
Agreement upon six (6) months notice to Company and, in such event,
from and after the date such notice is received: (i) all obligations
of Company and its Affiliates to pay StarMedia and its Affiliates
hereunder and under the Operating Agreements shall terminate; and
(ii) Company and its Affiliates shall be entitled to
19
receive the indemnification provided under subsection 4.7(a) hereof,
including in such event any and all loss, damages, cost or expense,
within the Cap, incurred by the Company or its Affiliates as a
proximate result of such termination ("TERMINATION LOSS").
(c) The Company acknowledges and agrees that the remedies provided
pursuant to this Section 4.7 shall constitute its exclusive remedy pursuant to
this Agreement or otherwise in connection with infringement for violation of
third party Intellectual Property Rights.
4.8 COMPANY CONTACT PERSONNEL. Company shall have the right to
designate two (2) Company employees or representatives as qualified to contact
StarMedia for technical support regarding problems of which Company becomes
aware relating to any MAP Service provided by StarMedia to a Participating
Affiliate.
ARTICLE V
MAP SERVICE DELIVERY AND LAUNCH
StarMedia shall make MAP Services available for Launch as specified
in the applicable Operating Agreement, which MAP Service shall be available for
Launch no later than ninety (90) days after the Effective Date of each such
Operating Agreement.
ARTICLE VI
PRODUCT PATH PLANNING TEAM
6.1 PURPOSE. The Parties shall jointly form and maintain an ongoing
management team (the "PRODUCT PATH PLANNING TEAM") which shall be responsible
for creating the product path and quarterly launch plans and shall work to
secure third party applications and to integrate applications provided to the
MAP Service by the Company.
6.2 TEAM MEMBERS. Each Party shall designate two individuals who may
be appointed from time to time by each Party to participate as members of the
Product Path Planning Team and to cooperate on all matters arising pursuant to
this Agreement, including without limitation, design, promotions, content
priorities and project execution. The Product Path Planning Team will meet on a
quarterly basis and shall finalize product path plans, including the
determination of Launch dates which shall be deemed part of the Milestone
Schedule once finalized, in accordance with the terms and conditions of this
Agreement. The Product Path Planning Team shall determine the economic
feasibility of integrating new applications for the MAP Service on a case by
case basis from time to time under standard business case analysis.
20
6.3 RESOURCES. The Parties shall commit such resources into the
development process via the Product Path Planning Team as agreed upon by the
parties during the planning phase of any new Product Path Planning Team
undertaking.
ARTICLE VII
SUBSCRIBER DATA
All Subscriber Data is, or will be, and shall remain, the sole and
exclusive property of the Participating Affiliate and its third party licensors,
shall be deemed Confidential Information of the Participating Affiliate and
shall not be used by StarMedia except as otherwise provided in the Operating
Agreements.
ARTICLE VIII
INTELLECTUAL PROPERTY RIGHTS
8.1 CONTENT AND PRODUCTION WORK OWNERSHIP. All content, including
without limitation, any photos, text, illustrations, graphical elements and
animation, appearing on the MAP Service or on the StarMedia Websites, except as
expressly provided herein, is and shall remain the sole and exclusive property
of the Party (and its third party licensors) that provides such content, and
except as otherwise provided hereunder, the other Party shall acquire no right,
title or interest therein or thereto. Notwithstanding the foregoing, Company
shall own all right, title, and interest in and to the Production Work and to
any content created by StarMedia at the request of Company under this Agreement
at the Company's cost and expense ("DEVELOPED CONTENT"), including all
Intellectual Property Rights therein. StarMedia expressly acknowledges that the
Parties have agreed that all aspects of the Production Work and Developed
Content and all work in process in connection therewith are to be considered
"works made for hire" within the meaning of the Copyright Act of 1976, as
amended (the "Act"), and that Company is to be the "author" within the meaning
of such Act. In the event (and to the extent) that the Production Work or the
Developed Content created by StarMedia hereunder or any part or element thereof
is found as a matter of law not to be a "work made for hire" within the meaning
of the Act, StarMedia hereby conveys and assigns to Company the sole and
exclusive right, title, and interest in the ownership to the Production Work and
all such Developed Content, and all copies of any of them, without further
consideration.
8.2 TECHNOLOGY OWNERSHIP. (a) All Technology provided by either
Party hereto shall remain the sole and exclusive property of its respective
owner, and except as otherwise expressly agreed, neither Party hereto acquires
any right, title or interest in the Technology provided by the other Party.
(b) All New Technology shall be owned as provided in Section 4.3
hereof.
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8.3 MARKS OWNERSHIP AND LICENSE. All Marks provided by either Party
or its Affiliates shall remain the sole and exclusive property of its respective
owner, and neither Party nor its Affiliates acquire any right, title or interest
in the Marks provided by the other Party. Without limiting the foregoing:
(a) StarMedia and its Affiliates hereby grant to Company and its
Affiliates, during the Term of this Agreement and subject to its conditions, a
non-exclusive, non-transferable, non-sublicensable, royalty-free, worldwide
license to use, display, perform, reproduce and distribute StarMedia's Marks
solely as set forth in this Agreement.
(b) Company's affiliate, BellSouth Corporation, has agreed to grant
to StarMedia a non-exclusive, non-transferable, non-sublicensable, royalty-free
license to use, display, perform, reproduce and distribute certain of Company's
Marks, solely as set forth in this Agreement and pursuant to the Trademark
License Agreement attached hereto as Exhibit J and incorporated herein by
reference. Certain Participating Affiliate Marks may be owned by the respective
Participating Affiliate and will require a separate trademark license agreement
between StarMedia and the Participating Affiliate. BellSouth Corporation is the
owner of Company's Marks in the Territory.
ARTICLE IX
MARKETING AND MEDIA
RIGHT OF FIRST NEGOTIATION. The Company shall have the right of
first negotiation on a pan-regional basis for the purchase of sponsorship and
provision of Wireless Access Services on the StarMedia Websites in the Active
Territories, such right to be in effect for five (5) business days after written
notification by StarMedia, provided that, if after presenting such opportunity
to the Company, StarMedia shall offer such opportunity to a third party on terms
and conditions more favorable than those offered to the Company, then the
Company shall further have a right of first refusal with respect to the terms
offered to such third party, which right of first refusal shall be in effect for
two (2) business days after written notification by StarMedia.
ARTICLE X
CONFIDENTIALITY
10.1 CONFIDENTIAL INFORMATION. The Company and StarMedia shall, and
shall cause their Affiliates to, (i) hold all Confidential Information in
confidence and take all reasonable precautions to protect such Confidential
Information (including, without limitation, all precautions such Person employs
with respect to its own confidential materials of a similar nature), (ii) not
divulge any such Confidential Information of such other Person or any
information derived therefrom to any third person except to its employees,
independent contractors or Affiliates that have a need to know such information
to further the permitted use thereof pursuant to this Agreement, that are bound
by appropriate confidentiality obligations and
22
that are informed of such non-disclosure obligations, which measures, however,
shall not operate to relieve the applicable Party to this Agreement from
liability for such employees', independent contractors' and/or Affiliates'
actions in breach of this Section, (iii) not make any use whatsoever, at any
time, of any Confidential Information of such other Person except to the extent
necessary to exercise any right or license granted, or perform any obligations,
under this Agreement, and (iv) not copy (except as reasonably necessary to
exercise the rights or obligations under this Agreement) or reverse engineer or
reverse compile any Confidential Information of such other Person which is
computer code. For purpose of this Article X, Confidential Information of
Affiliates of each Party shall be treated as Confidential Information of such
Person. The foregoing obligations shall survive (i) as to Confidential
Information that constitutes a trade secret for so long as such information
remains a trade secret under applicable law and (ii) for all other Confidential
Information, for a period of five (5) years from the date of termination or
expiration of this Agreement.
10.2 LIMITATION OF CONFIDENTIALITY. Without granting any right or
license, the foregoing obligations shall not apply to the extent that the
receiving Person can demonstrate that such Confidential Information of the other
Person (A) is required to be disclosed pursuant to any statutory or regulatory
authority, provided the disclosing Person is given prompt notice of such
requirement and the scope of such disclosure is limited to the maximum extent
consistent with compliance with such authority, or (B) is required to be
disclosed by a court order, provided the disclosing Person is given prompt
notice of such order and given the opportunity to contest it and the scope of
the disclosure is limited to the maximum extent consistent with compliance with
such order. The terms of confidentiality under this Agreement shall not be
construed to limit any bound Person's right to independently develop or acquire
products without use of the disclosing Person's Confidential Information. Upon
termination or expiration of this Agreement for any reason, each bound Person
shall return to the disclosing Person (or certify the destruction of) all
tangible manifestations (including computer records) of the disclosing Person's
Confidential Information and certify the deletion or destruction of any other
manifestations of same, in any medium, except that the Company shall not be
obligated to return any Confidential Information of StarMedia that may be
necessary for the Company to exercise any of its ongoing rights granted under
this Agreement or under the WIS Software License Agreement, for so long as and
to the extent necessary.
10.3 CONFIDENTIALITY OF AGREEMENT. Except (i) to the extent required
by applicable law or regulation, subject to compliance with the requirements of
the first sentence of Section 10.2 above in each instance, (ii) to assert its
rights hereunder, (iii) in connection with financing where the prospective
provider of financing agrees to be bound by the confidentiality provisions of
this Agreement, or (iv) for disclosures to its own employees and independent
contractors on a "need to know" basis, the Company, StarMedia and their
respective Affiliates shall not disclose the terms of this Agreement or the
subject matter hereof without the prior written consent of the other Party,
which consent shall not be unreasonably withheld or delayed. For disclosures
pursuant to applicable law or regulation, the Parties will cooperate in seeking
and jointly produce an acceptable redacted version of this Agreement (including
the Exhibits hereto) and the Parties will use good faith reasonable efforts to
obtain acceptable confidential treatment from any government agency or self
regulatory authority and/or acceptable confidentiality
23
agreements from any applicable non-governmental parties, in each case
sufficiently protective of the Confidential Information.
10.4 INJUNCTIVE RELIEF. The Company and StarMedia expressly agree
that monetary damages would be inadequate to compensate the other for any breach
of this Article X, that any such breach or threatened breach of this Article X
shall cause irreparable injury to either the Company or StarMedia (as the case
may be) and that, in addition to any other remedies that may be available, at
law or in equity, the Company and StarMedia shall be entitled to seek injunctive
relief against the threatened breach of any provision of this Article X or the
continuation of any such breach without the necessity of proving actual damages
or posting a bond.
ARTICLE XI
PAYMENTS
11.1 STARMEDIA FEES.
(a) In consideration for the right to use the WIS Technology
granted herein, the Company shall pay U.S. [information has been omitted and
filed separately with the Securities and Exchange Commission in connection
with a request for confidential treatment] to StarMedia upon the execution
hereof.
(b) In consideration of StarMedia's creation of the Production Work,
the Company shall pay U.S. [information has been omitted and filed separately
with the Securities and Exchange Commission in connection with a request for
confidential treatment] to StarMedia upon the execution hereof.
(c) In consideration of StarMedia's services in maintaining the
Licensed Technology, the Company shall pay U.S. [information has been omitted
and filed separately with the Securities and Exchange Commission in
connection with a request for confidential treatment] per year of the Term,
the first installment thereof to be paid upon execution hereof and each
successive installment to be paid on each anniversary of this Agreement
during the Term. Provided, however, if Company terminates this Agreement
pursuant to Section 12.2, 12.3 or 12.4, Company shall be entitled to a
pro-rata refund of any such pre-paid maintenance fees.
(d) In consideration for the right to use the Licensed Technology
granted herein, the Company shall pay U.S. [information has been omitted and
filed separately with the Securities and Exchange Commission in connection
with a request for confidential treatment] to StarMedia upon the execution
hereof
(e) Solely for the purpose of determining whether the Volume
Discount Threshold has been met, the value of barter goods and services actually
received from third party advertisers by StarMedia or its Affiliates in exchange
for advertising on the MAP Services shall be considered as "cash receipts"
credited at 25% of then prevailing rate card prices in calculating Net
Advertising Revenues for such purpose. For the avoidance of doubt, the value of
barter goods and services shall not count towards the Volume Discount Amount.
11.2 PAYMENT. All payments made by the Company shall be in U.S.
Dollars. All payments made by a Participating Affiliate pursuant to an
applicable Operating Agreement may be made in the Local Currency in the
Participating Affiliate's discretion. The Company will use reasonable efforts to
cause its Participating Affiliates choosing to make payments in Local
24
Currency of amounts denominated in U.S. dollars to determine the amount of Local
Currency due in accordance with Section 10.1(c) of the Operating Agreement. The
First Party shall be responsible for all Withholding Takes with respect to
payments made to it by the Second Party. If the second Party (i) receives notice
or other instructions from a taxing authority that such Party is required to
withhold Withholding Taxes or (ii) otherwise reasonably believes that it is
required under applicable law to withhold Withholding Taxes from payments to the
First Party or any Affiliate of the First Party, the Second Party may withhold
such Withholding Taxes from such payments. In that event, the Second Party will
timely (x) remit such Withholding Taxes to the appropriate taxing authority, and
(y) provide to the First Party copies of official tax receipts or other evidence
sufficient to establish that any such Withholding Taxes have been remitted to
the appropriate taxing authorities. All payments will be made net of Withholding
Taxes, and the Second Party will not be required to "gross up" such payments to
account for any amounts withheld. If applicable under local law, the First Party
may provide to the Second Party an exemption certificate acceptable to the
Second Party and the relevant taxing authority, in which case the Second Party
will not withhold the Withholding Taxes covered by such certificate.
11.3 VOLUME DISCOUNT. Beginning with the first calendar month in the
month with respect to which the Volume Discount Threshold has been reached, each
Operating Agreement shall provide that the Usage Commissions (as defined in the
Operating Agreements) payable by the Participating Affiliate to StarMedia or its
Affiliates shall be reduced by the Volume Discount Amount. StarMedia shall
provide prompt written notice to the Company after the Volume Discount Threshold
has been reached.
11.4 OPTIONS. (a) Subject to the terms and conditions hereinafter
set forth and effective as of the Effective Date and in consideration for
entering into this Agreement, StarMedia hereby grants Company options (the
"OPTIONS") to purchase from StarMedia up to 4,500,000 shares of Common Stock
(the "OPTION SHARES") exercisable on or after the first anniversary date of the
Effective Date (the "COMMENCEMENT DATE") until the applicable expiration dates
set forth in the table below for each tranche (the "EXPIRATION DATE"), at a
corresponding exercise price per Option Share (the "EXERCISE PRICE") as set
forth below:
-------------------------------------------------------------------------------------------
NUMBER OF OPTION SHARES EXPIRATION DATE EXERCISE PRICE (PER SHARE)
-------------------------------------------------------------------------------------------
1,500,000 48 months after Effective Date U.S.$4.55
-------------------------------------------------------------------------------------------
1,500,000 60 months after Effective Date U.S.$6.55
-------------------------------------------------------------------------------------------
1,500,000 72 months after Effective Date U.S.$8.55
-------------------------------------------------------------------------------------------
The Options may be exercised anytime from the Commencement Date until the
applicable Expiration Date (the "EXERCISE PERIOD"), subject to extension as
provided in the last sentence of Section 11.4(b). Company may not assign or
transfer any Option to any Person other than a Permitted Transferee; provided,
however, that (i) any such assignment or transfer to a Permitted Transferee
shall be in compliance with applicable law (including, without limitation, the
Securities Act of 1933, as amended) and the terms and conditions of this
Agreement, and (ii)
25
prior to any such assignment or transfer, the Company shall deliver to StarMedia
(x) a written notice setting forth the name of such Permitted Transferee and the
number of Option Shares subject to the Option proposed to be assigned or
transferred and (y) an express written assumption by such Permitted Transferee
of the terms and conditions of the Options proposed to be assigned or
transferred. No Permitted Transferee may transfer any Option, except to any
successor to such Permitted Transferee by operation of law.
(b) In order to exercise any Option at any time during the
applicable Exercise Period, Company or the Permitted Transferee, as the case may
be, shall give written notice to StarMedia of its election to exercise such
Option in whole or in part from time to time (the "CALL NOTICE") which notice
shall state the number of Option Shares as to which the Option is being
exercised and the method of payment of the Exercise Price, as described below.
The closing of the purchase and sale of the applicable Option Shares (an "Option
Closing") shall take place at the offices of StarMedia within ten (10) business
days following StarMedia's receipt of the Call Notice, subject to extension as
provided in the last sentence of this Section 11.4(b). At the applicable Option
Closing, StarMedia shall deliver the applicable Option Shares in the form of a
certificate issued in the name of the Company or the name of any Permitted
Transferee who received the applicable Option in accordance with the last
sentence of Section 11.4 (a), as the case may be, (bearing the legend required
by Section 11.4(f) of this Agreement), upon receipt by StarMedia of (i) payment
of the applicable Exercise Price for each Option Share and (ii) written
confirmation by the Company or such Permitted Transferee, as the case may be,
that the representations and warranties contained in Section 13.3 are true and
correct with respect to such Person as if made on the date of such Option
Closing. The applicable Exercise Price shall be paid (i) by wire transfer of
immediately available funds to a bank account designated by StarMedia at least
three (3) business days prior to the date of such payment, (ii) to the extent
permitted by (a) applicable law (including federal and state securities laws),
(b) StarMedia's certificate of incorporation and by-laws, (c) the terms of any
agreement or instrument to which StarMedia is a party and (d) the terms of any
security issued by StarMedia, by delivery to StarMedia of certificates
representing shares of Common Stock (each such share to be valued at an amount
equal to the average closing sale price of the Common Stock on Nasdaq over the
thirty trading days immediately preceding the applicable Option Closing) with an
aggregate value equal to the applicable Exercise Price, or (iii) by any
combination thereof. Notwithstanding the foregoing, if so specified in the
applicable Call Notice and to the extent permitted by (a) applicable law
(including federal and state securities laws), (b) StarMedia's certificate of
incorporation and by-laws, (c) the terms of any agreement or instrument to which
StarMedia is a party and (d) the terms of any security issued by StarMedia, the
Company or any Permitted Transferee, as the case may be, may consummate the
purchase and sale of the applicable Option Shares by irrevocably authorizing a
broker acceptable to StarMedia to sell the applicable Option Shares and remit to
StarMedia a sufficient portion of the proceeds of such sale to pay the
applicable Exercise Price in full.
On or before any Option Closing, all required filings (if necessary)
under the HSR Act shall have been made by the parties required to do so, and any
waiting period (and any extension thereof) under the HSR Act, applicable to the
transactions contemplated in connection with such Option Closing shall have
expired or shall have terminated and neither StarMedia nor
26
the Company or any Permitted Transferee, as the case may be, shall be subject to
any injunction or temporary restraining order against consummation of the
transactions contemplated hereby.
The obligation of the Company or any Permitted Transferee, as the
case may be, and StarMedia to proceed with the Option Closing shall be
conditioned upon, and the date scheduled for the Option Closing and, if
necessary, the applicable Expiration Date shall be extended to a date up to ten
(10) business days following the last to occur of the receipt of all material
governmental and regulatory consents, approvals or waivers that are required in
connection with the purchase and sale of the applicable Option Shares.
(c) ADJUSTMENT FOR REORGANIZATION, CONSOLIDATION, MERGER, ETC. In
case at any time or from time to time, StarMedia shall (x) effect a
reorganization, (y) consolidate with or merge into any other Person, or (z)
transfer all or substantially all of its properties or assets to any other
Person under any plan or arrangement contemplating the dissolution of StarMedia,
then, in each such case, the Option shall continue to be in full force and
effect and Company or any Permitted Transferee, as the case may be, on the
exercise of the Option as provided in Section 11.4(b) at any time after the
consummation of such reorganization, consolidation or merger or the effective
date of such dissolution, as the case may be, shall receive, if after such
reorganization, consolidation or merger or the effective date of such
dissolution, as the case may be, no shares of Common Stock shall be outstanding
that are identical to the shares of Common Stock outstanding immediately prior
to such reorganization, consolidation or merger or the effective date of such
dissolution, as the case may be, in lieu of the Common Stock issuable on such
exercise prior to such consummation or such effective date, the stock and other
securities and property (including cash) to which Company or any Permitted
Transferee, as the case may be, would have been entitled upon such consummation
or in connection with such dissolution, as the case may be, if Company or any
Permitted Transferee, as the case may be, had so exercised its Option
immediately prior thereto, all subject to further adjustment thereafter as
provided in Section 11.4(d). StarMedia shall cause the issuer of any such stock
or other securities, or, in the case of any such transfer, the Person acquiring
all or substantially all of the properties or assets of StarMedia, to agree to
be bound by the terms and conditions of the Options, whether or not such Person
shall have expressly assumed the terms of the Options.
(d) In the event that StarMedia shall (i) issue additional shares of
Common Stock as a dividend or other distribution on outstanding Common Stock,
(ii) subdivide its outstanding shares of Common Stock, or (iii) combine
outstanding shares of Common Stock into a smaller number of shares of Common
Stock, then, in each such event, the applicable Exercise Price shall,
simultaneously with the happening of such event, be adjusted by multiplying the
then applicable Exercise Price by a fraction, the numerator of which shall be
the number of shares of Common Stock outstanding immediately prior to such event
and the denominator of which shall be the number of shares of Common Stock
outstanding immediately after such event, and the product so obtained shall
thereafter be the Exercise Price then in effect. The Exercise Price, as so
adjusted, shall be readjusted in the same manner upon the happening of any
successive event or events described herein in this Section 11.4(d). Company or
any Permitted Transferee, as the case may be, shall thereafter, on the exercise
hereof as provided in Section 11.4(b), be entitled to receive that number of
shares of Common Stock determined by multiplying the number of shares
27
of Common Stock which would otherwise (but for the provisions of this Section
11.4(d)) be issuable on such exercise by a fraction of which (i) the numerator
is the Exercise Price which would otherwise (but for the provisions of this
Section 11.4(d)) be in effect and (ii) the denominator is the Exercise Price in
effect on the date of such exercise after the application of this Section 15(d).
(e) CERTIFICATE AS TO ADJUSTMENTS. In each case of any adjustment or
readjustment in the shares of Common Stock issuable on the exercise of the
Options, StarMedia at its expense will, within fifteen (15) days following the
adjustment or readjustment event, cause its Chief Financial Officer to compute
such adjustment or readjustment in accordance with the terms of the Options and
prepare a certificate setting forth such adjustment or readjustment and showing
in detail the facts upon which such adjustment or readjustment is based,
including a statement of the applicable Exercise Price and the maximum number of
shares of Common Stock to be received upon exercise of the Options, in effect
immediately prior to such adjustment or readjustment and as adjusted and
readjusted as provided herein. StarMedia will forthwith mail a copy of such
certificate to Company, and will, on the written request at any time of Company,
furnish Company a like certificate setting forth the Exercise Price in effect at
such time and showing how it was calculated.
(f) LEGEND. The certificates representing the Option Shares shall
bear the following legend:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, THE SECURITIES LAWS OF ANY STATE OR OTHER
JURISDICTION WITHIN THE UNITED STATES AND ITS TERRITORIES, POSSESSIONS OR
THE SECURITIES LAWS OF ANY FOREIGN JURISDICTION. NEITHER THESE SECURITIES
NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED, OR OTHERWISE DISPOSED OF IN THE ABSENCE
OF SUCH REGISTRATION OR UNLESS AN OPINION OF COUNSEL SATISFACTORY TO
STARMEDIA NETWORK, INC. IS RECEIVED STATING THAT SUCH TRANSACTION IS NOT
SUBJECT TO THE REGISTRATION AND/OR PROSPECTUS DELIVERY REQUIREMENTS OF ANY
SUCH JURISDICTION. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS
HEREBY NOTIFIED THAT STARMEDIA NETWORK, INC. MAY BE RELYING ON THE
EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED
BY SECTION 4(2) THEREUNDER AND/OR THE PROVISIONS OF REGULATION S UNDER THE
UNITED STATES SECURITIES ACT OF 1933.
(g) DESIGNATION. StarMedia hereby specifically designates the Option
Shares as "Other Shares" under the Securities Purchase Agreement.]
ARTICLE XII
28
TERM AND TERMINATION
12.1 TERM. The term of this Agreement will commence on the Effective
Date and, unless earlier terminated pursuant to the provisions of this Article
XII, shall continue on for five (5) years (the "INITIAL TERM"). The term of this
Agreement shall automatically renew upon the expiration of the Initial Term for
successive one (1) year periods (each a "RENEWAL TERM"), unless either Party
notifies the other Party to the contrary at least ninety (90) days prior to the
expiration of the Initial Term or then-current Renewal Term, as applicable,
provided that the first such Renewal Term may be elected unilaterally by the
Company by written notice on or before the beginning of such ninety (90) day
period. For the purposes hereof, the Initial Term together with all Renewal
Terms shall constitute the "TERM."
12.2 BREACH. The Company may terminate this Agreement without
prejudice to any other rights it may have hereunder or at law upon thirty (30)
days prior written notice, in the event of a material breach of this Agreement
(a "DEFAULT") by StarMedia which has not been cured during the 30-day period
immediately following such notice of termination. It is understood and agreed by
the Parties hereto that more than two (2) Critical Failures (as such term is
defined in the Maintenance and Support Agreements) during each of the Initial
Term or Renewal Terms (e.g., one Critical Failure in the Initial Term and one
Critical Failure in the next Renewal Term shall not count as two Critical
Failures for the purposes of triggering this provision) under any Operating
Agreement during the term of such Operating Agreement (it being understood and
agreed by the Parties hereto that a Critical Failure that affects more than one
Participating Affiliate shall only count as one Critical Failure hereunder)
shall constitute a material breach of this Agreement.
StarMedia may terminate this Agreement without prejudice to any
other rights it may have hereunder or at law upon thirty (30) days prior written
notice, in the event of a Default arising by reason of violation of StarMedia's
Intellectual Property Rights by the Company which has not been cured during the
30-day period immediately following such notice of termination. Notwithstanding
Section 16.17, in the event that the Company terminates this Agreement pursuant
to this Section 12.2, StarMedia shall provide the Company with a list of key
employees and the Company shall be entitled to solicit any StarMedia employees
or individual consultants for employment or other contractual engagement.
Moreover, in the event that this Agreement is terminated for any reason,
StarMedia may terminate the Operating Agreements except where and to the extent
that the Active Territory is any portion of Brazil and in the event of such
termination shall provide a six (6) month wind-down of the MAP Service as
provided in Section 12.5 hereof.
12.3 BANKRUPTCY. Either Party may terminate this Agreement without
prejudice to any other rights it may have hereunder or at law immediately upon
written notice, in the event the other Party liquidates, dissolves, or shall be
adjudicated insolvent, or files or has filed against it a petition in bankruptcy
or for reorganization which is not discharged within 60 days after the filing
thereof, or takes advantage of any insolvency act or proceeding, including an
assignment for the benefit of creditors, or commits any other act of bankruptcy.
Notwithstanding Section 16.17, in the event that the Company terminates this
Agreement pursuant to this Section 12.3,
29
StarMedia shall provide the Company with a list of key employees and the Company
shall be entitled to solicit any StarMedia employees or individual consultants
for employment or other contractual engagement.
12.4 CHANGE IN CONTROL. The Company shall be entitled to terminate
this Agreement if there is a Change in Control of StarMedia to a Company
Competitor on thirty (30) days' written notice to StarMedia delivered within
ninety (90) days of the Company's first receiving written notice from StarMedia
of such Change in Control.
12.5 PROVISION OF ASSISTANCE. In the event that this Agreement
expires or the Company terminates this Agreement pursuant to Sections 12.2,
12.3, or 12.4 at the election of the Company, either (i) StarMedia shall assign
up to six (6) StarMedia employees in the following functional capacities:
software architecture, database architecture, server cluster architecture,
content management, wireless and WIS interface management and operations
management, with access to the services and tools reasonably necessary to
consult for the Company for up to six months, at reasonable time and materials
rates with regard to the use of any software licensed hereunder or under any
Operating Agreement or any Deposit Materials, or (ii) StarMedia will provide the
MAP Services to those Participating Affiliates as of the date of termination or
expiration as provided for under the terms and conditions of this Agreement and
each Operating Agreement on a month to month basis for up to six (6) months as
determined by each such Participating Affiliate (the "TRANSITION PERIOD").
StarMedia shall have no obligation to further develop the MAP Service during the
Transition Period. Notwithstanding anything contained herein to the contrary, in
the event that the Company terminates this Agreement pursuant to Section 12.2,
the Company cannot concurrently exercise its rights under this Section 12.5 and
Section 16.17 hereof.
ARTICLE XIII
REPRESENTATIONS AND WARRANTIES
13.1 STARMEDIA'S REPRESENTATIONS AND WARRANTIES. StarMedia
represents and warrants to the Company that (i) it has full power and authority,
and has taken all action necessary, to execute and deliver this Agreement and to
fulfill its obligations hereunder, (ii) the making and performance by it of this
Agreement does not and will not violate any law or regulation applicable to it,
its certificate of incorporation, by-laws or other organizational documents or
any other agreement to which it is a party or by which it is bound, (iii) this
Agreement has been duly executed and delivered by it and constitutes its legal,
valid and binding obligations, enforceable against it in accordance with the
respective terms hereof (except to the extent that the enforceability thereof
may be limited by bankruptcy, insolvency or other similar laws of general
applicability affecting enforcement of creditors' rights generally, or by a
court's discretion in relation to equitable remedies), (iv) all approvals,
authorizations or other actions by, or filings with, any governmental authority
or other person or entity necessary for the validity or enforceability of its
obligations under this Agreement have been obtained, (v) the MAP Service, the
Production Work and all underlying Technology provided by StarMedia shall
function and perform in accordance with the Specifications and any product
manual documentation provided
30
by StarMedia to the Company, (vi) it has all necessary rights, licenses and
approvals required to provide the MAP Service and all other products and
services provided hereunder to the Company and its Participating Affiliates, and
to their respective Subscribers, in accordance with this Agreement, (vii)
neither the MAP Service nor any Technology nor other service provided by
StarMedia to the Company and its Participating Affiliates, and to their
respective Subscribers, nor any portion or use thereof in accordance with this
Agreement, will infringe upon or violate any patent, copyright, trade secret or
other proprietary or personal right of any third party, (viii) all obligations
owed to third parties with respect to the activities contemplated to be
undertaken by StarMedia pursuant to this Agreement are or will be fully
satisfied by StarMedia so that neither the Company nor any of its Participating
Affiliates will have any obligations (other than obligations set forth in this
Agreement and/or in the applicable Operating Agreement) with respect thereto,
(ix) StarMedia will comply with the reasonable privacy policies of the Company
and each Participating Affiliate (with respect to the applicable Active
Territory), as the same are posted from time to time on the Company website or
the applicable Participating Affiliate's website, as applicable, in the
provision of the MAP Service and in the performance of its other obligations
hereunder, (x) the content appearing on the MAP Service and on the StarMedia
Websites generated by StarMedia, its Affiliates and its contracted third-party
content providers shall not contain libelous, defamatory, obscene, pornographic
or profane material or any instructions that may cause harm to any individuals;
and (xi) such content may be reproduced, used, converted into digital or other
electronic media, displayed, and distributed as contemplated by this Agreement
without violating or infringing the rights of any other Person, including
infringing any copyright, trademark or right of privacy, or any other
intellectual or industrial property right, title or interest of any Person, and
without obligating the Company or any of its Participating Affiliates to pay any
royalties, fees or other compensation to third parties.
13.2 COMPANY'S REPRESENTATIONS AND WARRANTIES. The Company
represents and warrants to StarMedia that (i) it has full power and authority,
and has taken all action necessary, to execute and deliver this Agreement and to
fulfill its obligations hereunder, (ii) the making and performance by it of this
Agreement does not and will not violate any law or regulation applicable to it,
its certificate of incorporation, by-laws or other organizational documents or
any other agreement to which it is a party or by which it is bound, (iii) this
Agreement has been duly executed and delivered by it and constitutes its legal,
valid and binding obligations, enforceable against it in accordance with the
respective terms hereof (except to the extent that the enforceability thereof
may be limited by bankruptcy, insolvency or other similar laws of general
applicability affecting enforcement of creditors' rights generally, or by a
court's discretion in relation to equitable remedies), (iv) the Company is in
compliance with all applicable governmental laws and regulations and (v) all
approvals, authorizations or other actions by, or filings with, any governmental
authority or other person or entity necessary for the validity or enforceability
of its obligations under this Agreement have been obtained.
13.3 COMPANY'S INVESTMENT REPRESENTATIONS AND WARRANTIES. The
Company hereby represents and warrants to StarMedia, understanding and agreeing
that StarMedia is entering into this Agreement in part in reliance on such
representations and warranties, as follows:
31
(a) The Company is an "Accredited Investor" as that term is
defined in Rule 501(a) of Regulation D promulgated under the Securities Act;
(b) The Company has been advised by StarMedia that the Options
and the Option Shares have not been registered under the Securities Act, that
the Options and the Option Shares will be issued on the basis of the statutory
exemption provided by Section 4(2) of the Securities Act or Regulation D
promulgated thereunder, or both, relating to transactions by an issuer not
involving any public offering and under similar exemptions under certain state
securities laws, that this transaction has not been reviewed by, passed on or
submitted to any federal or state agency or self-regulatory organization where
an exemption is being relied upon, and that the StarMedia's reliance thereon is
based in part upon the representations made by the Company in this Agreement.
The Company acknowledges that it has been informed by StarMedia of, or is
otherwise familiar with, the nature of the limitations imposed by the Securities
Act and the rules and regulations thereunder on the transfer of securities;
(c) The Company is purchasing the Options and, if applicable,
the Option Shares for investment purposes, for its own account and not with a
view to, or for sale in connection with, any distribution thereof in violation
of federal or state securities laws;
(d) The Company has substantial experience in evaluating and
investing in private placement transactions of securities in companies similar
to StarMedia so that it is capable of evaluating the merits and risks of its
investment in StarMedia and has the capacity to protect its own interests. The
Company must bear the economic risk of this investment indefinitely unless the
Options (or the Option Shares) are registered pursuant to the Securities Act, or
an exemption from registration is available. The Company understands that
StarMedia has no present intention of registering the Options or the Option
Shares unless and to the extent it is required to do so pursuant to Article VIII
of the Securities Purchase Agreement. The Company also understands that there is
no assurance that any exemption from registration under the Securities Act will
be available and that, even if available, such exemption may not allow the
Company to transfer all or any portion of the Options or the Option Shares under
the circumstances, in the amounts or at the times the Company might propose. The
Company represents that by reason of its, or of its management's, business or
financial experience, the Company has the capacity to protect its own interests
in connection with the transactions contemplated in this Agreement. Further, the
Company is aware of no publication of any advertisement in connection with the
transactions contemplated in the Agreement;
(e) The Company has had an opportunity to discuss StarMedia's
business, management and financial affairs with directors, officers and
management of StarMedia and has had the opportunity to review StarMedia's
operations and facilities. The Company acknowledges that it is relying entirely
on its own due diligence investigation of StarMedia. The Company has also had
the opportunity to ask questions of, and receive answers to the Company's
satisfaction from, StarMedia and its management regarding the terms and
conditions of this investment;
32
(f) The Company acknowledges and agrees that the Options and,
if issued, the Option Shares must be held indefinitely unless they are
subsequently registered under the Securities Act or an exemption from such
registration is available. The Company has been advised or is aware of the
provisions of Rule 144 promulgated under the Securities Act as in effect from
time to time, which permits limited resale of shares purchased in a private
placement subject to the satisfaction of certain conditions, including, among
other things: the availability of certain current public information about
StarMedia, the resale occurring following the required holding period under Rule
144 and the number of shares being sold during any three-month period not
exceeding specified limitations;
(g) The Company acknowledges and agrees that the Option Shares
and, if issued, the Option Shares are subject to restrictions on transfer as set
forth in this Agreement].
13.4 NO OTHER REPRESENTATIONS AND WARRANTIES. EXCEPT AS SPECIFICALLY
PROVIDED HEREIN OR IN THE EXHIBITS HERETO, NEITHER PARTY HERETO MAKES ANY
REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, AS TO THE TRANSACTIONS
CONTEMPLATED HEREBY AND SERVICES PROVIDED HEREUNDER, INCLUDING WITHOUT
LIMITATION, ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE.
ARTICLE XIV
INDEMNIFICATION
14.1 STARMEDIA'S INDEMNIFICATION OBLIGATIONS. Subject to Section
14.3, StarMedia shall indemnify, hold harmless and defend the Company from and
against any and all claims, liabilities, losses, damages, expenses and costs
(including without limitation, legal fees and costs) (collectively, "CLAIMS")
arising out of or relating to (i) StarMedia's breach of any of its
representations and warranties set forth herein, (ii) the StarMedia Websites,
(iii) the efforts of any taxing authority to collect Withholding Taxes from the
Company with respect to payments made to StarMedia or its Affiliates, (iv) any
gross negligence or willful misconduct by StarMedia or any of its Affiliates, or
any of their respective employees or agents or (v) libel or slander by the
content of the MAP Service provided by StarMedia and its licensors. For the
avoidance of doubt, nothing in this Section 14.1 shall be construed to provide
indemnification for any matter which is covered by Section 4.7 hereof.
14.2 COMPANY'S INDEMNIFICATION OBLIGATIONS. Subject to Section 14.3,
the Company shall indemnify, hold harmless and defend StarMedia from and against
any and all Claims arising out of or relating to (i) the Company's breach of any
of its representations and warranties set forth herein, (ii) the Access
Services, or (iii) any gross negligence or willful misconduct by the Company,
any of its Affiliates, or any of their respective employees or agents.
14.3 INDEMNIFICATION PROCEDURE. The indemnified Party shall give
prompt notice to the indemnifying Party of the occurrence of any Claims as to
which indemnification
33
may be claimed hereunder. The indemnified Party shall have the right to
participate in the defense of any third-party Claim. The indemnifying Party's
indemnification obligation hereunder shall also cover the fees and expenses of
separate counsel of the indemnified Party's choice in connection with such
third-party Claim. The indemnifying Party shall not settle any third-party Claim
without the prior written consent of the indemnified Party. In addition, if any
third-party Claim is asserted, which impairs the indemnified Party's interests
under this Agreement, the indemnified Party shall have the right to terminate
this Agreement on written notice as provided herein in the case of Default,
without, however, waiving any right to full indemnification hereunder.
ARTICLE XV
LIMITATION OF LIABILITY
EXCEPT WITH RESPECT TO LIABILITY ARISING OUT OF THE OBLIGATIONS CONTAINED
IN SECTION 4.7 OR IN ARTICLE X OR XIV HEREOF, IN NO EVENT SHALL EITHER PARTY BE
LIABLE TO THE OTHER FOR ANY FORM OF INDIRECT, SPECIAL, INCIDENTAL OR
CONSEQUENTIAL DAMAGES OF ANY CHARACTER (INCLUDING WITHOUT LIMITATION, LOSS OF
PROFITS) ARISING FROM ANY CAUSES OF ACTION OF ANY KIND WITH RESPECT TO THIS
AGREEMENT, WHETHER BASED ON BREACH OF CONTRACT, TORT (INCLUDING WITHOUT
LIMITATION, NEGLIGENCE) OR OTHERWISE, AND WHETHER OR NOT THE OTHER PARTY HAD
BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGE.
ARTICLE XVI
GENERAL
16.1 NOTICES. All notices and other communications between the
Parties required or permitted hereunder shall be in writing and shall be deemed
to have been duly given upon receipt by (i) hand delivery, (ii) certified or
registered mail, return receipt requested, (iii) delivery by reputable overnight
delivery service, or (iv) fax transmission, to be supplemented by delivery
pursuant to one of the methods set forth in (i) through (iii) herein within two
(2) days of such fax transmission, addressed as follows, or to such other
address as may be hereafter notified by the Parties:
StarMedia: StarMedia Network, Inc.
00 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Macedonia, General Counsel
Fax: (000) 000-0000
Company: BellSouth Enterprises, Inc.
c/o BellSouth International, Inc.
0000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
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Xxxxxxx, Xxxxxxx 00000
Attention: General Counsel
Fax:
With a copy to: BellSouth Corporation
0000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attention: General Counsel
Fax: (000) 000-0000
16.2 NO WAIVER; CUMULATIVE REMEDIES. No failure or delay in the
exercise, by either Party, of any right, remedy, power or privilege hereunder
shall operate as a waiver thereof; and no single or partial exercise of any
right, remedy, power or privilege hereunder shall preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges herein provided are cumulative and
not exclusive of any rights, remedies, powers and privileges provided by law or
in equity.
16.3 COUNTERPARTS. This Agreement may be executed simultaneously in
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument. Transmission by fax of an
executed counterpart of this Agreement shall be deemed to constitute due and
sufficient delivery of such counterpart.
16.4 SEVERABILITY. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. In the event that,
notwithstanding the foregoing, a tribunal of competent jurisdiction shall refuse
to enforce any of the provisions contained in this Agreement, the remaining
provisions hereof shall not in any way be impaired or affected thereby, unless
the absence of the affected provision materially adversely impairs the
substantive rights of the Parties; PROVIDED, HOWEVER, that, in the latter event,
the Parties shall use their best efforts to replace the invalidated provision by
a valid, legal and enforceable provision, which, insofar as practical,
implements the purposes hereof. To the extent that it may effectively do so
under applicable law, the Parties hereby waive any provision of law which
renders any provision of this Agreement invalid, illegal or unenforceable in any
respect.
16.5 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of
New York without reference
to the conflict of law principles thereof.
16.6 JURISDICTION. Any judicial proceeding brought with respect to
this Agreement must be brought in a court of competent jurisdiction of the State
of
New York located in
New York County or in the United States District Court in
and for the Southern District of
New York. By execution and delivery of this
Agreement, each Party (i) accepts, generally and unconditionally, the exclusive
jurisdiction of such courts and any related appellate court, and
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irrevocably agrees to be bound by any judgment rendered thereby in connection
with this Agreement, (ii) irrevocably waives any objection it may now or
hereafter have as to the venue of any such suit, action or proceeding brought in
such a court or that such court is an inconvenient forum and (iii) agrees that
service of process in any such action or proceeding may be effected (A) by
mailing a copy thereof by registered or certified mail (or any substantially
similar form of mail), postage prepaid, to its address set forth in Section 16.1
or (B) in any other manner permitted by law. StarMedia, if it prevails on any
claim based on the failure of the Company or any Participating Affiliate to make
any payment required hereunder or under the Operating Agreement, shall in any
case be entitled to recover in connection with such award its reasonable
attorneys' fees and costs incurred in connection therewith.
16.7 HEADINGS; REFERENCES. The article, section and exhibit headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. All references
herein to "Articles," "Sections" or "Exhibits" shall be deemed to be references
to Articles, Sections or Exhibits hereof unless otherwise indicated.
16.8 ENTIRE AGREEMENT. This Agreement embodies the entire agreement
and understanding of the Parties hereto with respect to the subject matter
contained herein and supersedes all prior agreements and understandings between
the Parties with respect to such subject matter.
16.9 AMENDMENTS; WAIVERS; BINDING EFFECT. Any amendments to, or
waivers of, this Agreement or any provision hereof shall be in writing and
signed by both Parties or, in the case of a waiver, by the Party waiving
compliance. This Agreement shall be binding upon and inure to the benefit of the
Parties hereto and their respective successors and permitted assigns.
16.10 ASSIGNMENT. Neither Party may assign this Agreement in part or
in whole without the prior written consent of the other Party, and any attempt
by a Party to assign this Agreement without such consent shall be null and void;
PROVIDED, HOWEVER, that (i) Company shall be entitled to assign this Agreement
without StarMedia's prior written consent as a result of substantially all
Company's direct or indirect interests in the Participating Affiliates being
spun-off to form a new entity; provided that in the event such assignment is to
a StarMedia Competitor, StarMedia may terminate this Agreement and shall provide
the Company such transition assistance as provided in Section 12.6, and (ii)
either Party shall be entitled to assign this Agreement without the other
Party's prior written consent in connection with a merger of such Party with or
into, or sale of all or substantially all of the assets of such Party to, an
entity that is not a direct competitor of the other Party.
16.11 NO AGENCY. No agency, partnership, joint venture or employment
relationship shall be created or inferred by the existence or performance of
this Agreement, and neither Party shall have any authority to bind the other in
any respect whatsoever.
16.12 SURVIVAL. In addition to those provisions herein which
expressly survive the termination of this Agreement, (i) Sections 4.1(c)
(pursuant to its terms), 4.5, 4.6 (pursuant to
36
its terms), 4.7, 11.2, 11.3 and 11.4 and (ii) Articles I, VII, VIII, X, XI, XII,
XIII, XIV, XV and XVI.
16.13 FORCE MAJEURE. Either Party hereto shall be excused from any
delay or failure in performance hereunder, except the payment of monies due and
payable hereunder, caused by reason of any occurrence or contingency beyond its
reasonable control, including without limitation, acts of God, fires, floods,
wars, civil disturbances, power outages, sabotage, accidents or disputes with
organized labor, provided that such delay or failure in performance cannot
reasonably be circumvented through the prompt implementation of reasonable
disaster recovery or contingency procedures, provided that this is not meant to
provide a defense by reason of nonperformance of an Affiliate, subsidiary or
independent contractor of such Party. The time for performance (together with
the other Party's time of performance of related obligations, including without
limitation, related payment obligations) shall be extended for a period equal to
the period during which the event of force majeure prevented performance as
aforesaid, but in no event for more than sixty (60) days. If any delay or
failure in performance on the part of StarMedia continues for more than (a) five
(5) consecutive days, or (b) a total of ten (10) days within any thirty (30) day
period, then Company, at its option, may terminate this Agreement, in whole or
in part, without liability to StarMedia, as of a date specified in a written
notice delivered to StarMedia by Company. Each Party shall take all reasonable
measures to minimize the delaying effects of any force majeure (including,
without limitation, by obtaining substitute services from alternate sources
and/or implementing work around plans) and shall notify the other Party in
writing (which notice shall include the affected Party's plans and efforts to
implement a work-around solution) within ten (10) days of its first becoming
aware of any event of force majeure causing a delay or failure of such Party's
performance hereunder.
16.14 PUBLICITY. Each Party agrees to make available for all public
relations events relating to this Agreement a senior executive of such Party.
Neither of the Parties shall issue any press releases regarding the other Party,
this Agreement or the relationship of the Parties without the prior written
consent of the other in each instance, except to the extent required by law,
regulation or stock exchange rule. In any event, the Parties shall mutually
agree to both the content and the media of distribution of any press release
approved pursuant to the previous sentence.
16.15 INTERPRETATION. All terms set forth in this Agreement and not
otherwise defined herein shall be construed to have meanings consistent with the
Internet, World Wide Web and telecommunications industries.
16.16 CONFORMANCE WITH LAWS. Notwithstanding anything to the
contrary contained herein, neither Party shall have any obligation hereunder to
take any actions which will violate any laws, statutes or regulations of the
United States or any other jurisdiction in which such actions are to be taken.
16.17 NON-SOLICITATION. Except as otherwise provided herein, during
the Term and for one year after the Term neither Party nor any Person that
controls or is controlled by a Party shall directly or indirectly solicit the
other Party's employees or individual consultants for
37
employment or other contractual engagement without the prior consent of the
other Party. The foregoing shall not, however, prohibit one Party or such other
Persons from innocently soliciting employment of or contractual relationship
with the other Party's employees or contractors in a way where such
solicitations were made generically to the world and not directly or indirectly
targeted or brought to such individuals attention in a way that could be
reasonably interpreted to be an attempt to purposefully solicit the other's
employees or contractors working on or related to the provision of the MAP
Service hereunder. This provision shall not apply to employees or contractors of
a Party whose engagement with the other Party bears no relationship whatsoever
to this Agreement, the StarMedia Websites, the Company's Access Services, or the
MAP Service. Notwithstanding the foregoing, (i) in the event that the Company
terminates this Agreement pursuant to Section 12.2 or 12.3 hereof, StarMedia
shall provide the Company with a list of key employees and the Company shall be
entitled to solicit any StarMedia employees or individual consultants for
employment or other contractual engagement and (ii) in the event that the
Company terminates this Agreement pursuant to Section 12.2, 12.3, or 12.4
hereof, StarMedia shall assign up to six (6) StarMedia employees (provided that
StarMedia shall not be obligated to assign any employee to the Company which
would cause StarMedia to provide in excess of eighteen (18) employees in the
aggregate to the Company and the Participating Affiliates) in the following
functional capacities software architecture, database architecture, server
cluster architecture, content management, wireless and WIS interface management
and operations management, to consult for the Company for up to six months, at
reasonable time and materials rates with regard to the use of any software
licensed by StarMedia hereunder or pursuant to any Operating Agreement or any
Deposit Materials.
16.18 PARTICIPATING AFFILIATE AGREEMENTS. (a) The Company shall
cause each Company Affiliate conducting an active telecommunications business
within the Territory which elects to offer the MAP Service to execute an
Operating Agreement with StarMedia or its Affiliate substantially in the form
attached hereto as Exhibit E, and StarMedia shall, or shall cause its Affiliate
to, execute such Operating Agreement.
(b) The form of Operating Agreement shall not be subject to
renegotiation by StarMedia, the Company or their respective Affiliates, but may
be customized for each Participating Affiliate to provide for custom content
selection and to conform to applicable local governmental regulations or as
otherwise contemplated herein or in the form of Operating Agreement or as agreed
by the parties. If a Participating Affiliate determines that an allocation of
the amounts payable under the Operating Agreements among the items of
consideration provided by StarMedia or its Affiliate is necessary for such
Participating Affiliate to properly determine its obligation to withhold
Withholding Taxes, the Company and StarMedia shall cause their respective
Affiliates to negotiate in good faith to determine the proper allocation based
upon the fair market value of such items of consideration; provided, that if the
parties cannot agree as to the proper allocation, the Operating Agreement shall
be entered without an allocation and the Participating Affiliate shall take such
actions as it reasonably believes necessary to meet its obligation to withhold
Withholding Taxes.
(c) StarMedia and its Affiliates may enforce each Operating
Agreement only against the associated Participating Affiliate. Breach or default
by a Participating Affiliate shall
38
not affect the rights or obligations of the Company hereunder or any other
Participating Affiliate under its Operating Agreement, or the obligations of
StarMedia to the Company and any non-breaching Participating Affiliate.
(d) If a StarMedia Affiliate is designated to enter into an
Operating Agreement with a Participating Affiliate, StarMedia shall enter into
such arrangements with such StarMedia Affiliate as are necessary to assure
performance of all of StarMedia's obligations under the Operating Agreement and
this Agreement, and StarMedia shall guarantee performance of such obligations.
StarMedia shall provide Company with a written description of all such
arrangements and copies of all agreements between StarMedia and its Affiliates
relating to performance under the Operating Agreements.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
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IN WITNESS WHEREOF, each of the Parties hereto has caused this
Agreement to be executed and delivered by its duly authorized officer or
representative as of the date first set forth above.
BELLSOUTH ENTERPRISES, INC. STARMEDIA NETWORK, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxx By: /s/ Xxxxxxxx X. Espuelas
-------------------------------- -------------------------------------
Name: Xxxxxxx X. Xxxxxxxxx Name: Xxxxxxxx X. Espuelas
------------------------------ -----------------------------------
Title: V. P. Corporate and Business Title: Chief Executive Officer
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Development
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