Exhibit 4.15
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STOCK PURCHASE AGREEMENT
BETWEEN
TERRA NETWORKS, S.A.
and
XXXX COMMUNICATIONS, CORP.
DATED AS OF JULY 30, 2004
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Table of Contents
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ARTICLE I DEFINITIONS...............................................1
Section 1.1 Definition of Certain Terms.........................1
Section 1.2 Construction........................................8
ARTICLE II SALE AND PURCHASE OF SHARES...............................9
Section 2.1 Place and Date......................................9
Section 2.2 Purchase............................................9
Section 2.3 Post-Closing Adjustment of Purchase Price..........10
Section 2.4 Exclusion of Certain Assets........................11
Section 2.5 Transition Services Agreement......................11
Section 2.6 Work for Hire Agreement............................11
Section 2.7 Service Agreement..................................12
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER.................12
Section 3.1 Seller's Status and Authorization..................12
Section 3.2 Company's Status and Authorization.................12
Section 3.3 Capital Stock of the Company.......................13
Section 3.4 Subsidiaries; Investments..........................13
Section 3.5 No Conflicts, etc..................................14
Section 3.6 Financial Statements...............................14
Section 3.7 Absence of Undisclosed Liabilities;
Sufficiency of Assets..............................15
Section 3.8 Accounts Receivable................................15
Section 3.9 Bank Accounts......................................15
Section 3.10 Taxes..............................................15
Section 3.11 Absence of Changes.................................16
Section 3.12 Litigation.........................................18
Section 3.13 Compliance with Laws; Governmental Approvals
and Consents.......................................19
Section 3.14 Title..............................................19
Section 3.15 Leases.............................................19
Section 3.16 Contracts..........................................19
Section 3.17 Intellectual Property..............................20
Section 3.18 Privacy Matters....................................21
Section 3.19 Insurance..........................................21
Section 3.20 Environmental Matters..............................21
Section 3.21 Employees, Labor Matters, etc......................22
Section 3.22 Employee Benefit Plans and Related Matters.........22
Section 3.23 Dealings with Affiliates...........................23
Section 3.24 Brokerage..........................................23
Section 3.25 Lycos Asia.........................................23
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER..................24
Section 4.1 Corporate Status...................................24
Section 4.2 Authorization, etc.................................24
Table of Contents
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Section 4.3 No Conflicts, etc..................................24
Section 4.4 Litigation.........................................24
Section 4.5 Ability to Perform Obligations.....................25
Section 4.6 Independent Investigation..........................25
Section 4.7 Financing..........................................25
Section 4.8 Securities Matters.................................25
ARTICLE V COVENANTS................................................25
Section 5.1 Covenants of Seller................................25
Section 5.2 Covenants of Buyer.................................28
Section 5.3 HSR Act Filing.....................................30
Section 5.4 Books and Records..................................30
Section 5.5 Employee and Employee Benefit Matters..............30
Section 5.6 Tax Matters........................................32
Section 5.7 Intercompany Arrangements..........................33
Section 5.8 Directors' and Officers' Insurance.................34
ARTICLE VI CONDITIONS PRECEDENT.....................................34
Section 6.1 Conditions to Obligations of Each Party............34
Section 6.2 Conditions to Obligations of Buyer.................34
Section 6.3 Conditions to Obligations of Seller................35
ARTICLE VII TERMINATION..............................................36
Section 7.1 Termination........................................36
Section 7.2 Effect of Termination..............................36
Section 7.3 Dispute Resolution.................................36
ARTICLE VIII INDEMNIFICATION..........................................37
Section 8.1 Survival of Obligations............................37
Section 8.2 Seller's Obligation to Indemnify...................37
Section 8.3 Buyer's Obligation to Indemnify....................38
Section 8.4 Limitations on Indemnification.....................38
Section 8.5 Procedures Relating to Indemnification.............39
Section 8.6 Losses relating to the CMU License and
Retained Assets....................................40
Section 8.7 Exclusive Remedy...................................41
ARTICLE IX MISCELLANEOUS............................................41
Section 9.1 Summaries, Memoranda not Representations or
Warranties.........................................41
Section 9.2 Expenses...........................................41
Section 9.3 Severability.......................................41
Section 9.4 Notices............................................41
Section 9.5 Attorneys' Fees....................................42
Section 9.6 Headings...........................................42
Section 9.7 Entire Agreement...................................42
Table of Contents
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Section 9.8 Counterparts.......................................43
Section 9.9 Drafting History...................................43
Section 9.10 Governing Law, etc.................................43
Section 9.11 Service of Process.................................43
Section 9.12 Binding Effect.....................................44
Section 9.13 Assignment.........................................44
Section 9.14 No Third Party Beneficiaries.......................44
Section 9.15 Amendment; Waivers, etc............................44
Section 9.16 Transfer, Sales, Documentary, Stamp and Other
Similar Taxes......................................44
Section 9.17 Failure to Close...................................44
Section 9.18 No Solicitation....................................45
SCHEDULES
Schedule 1.1(a) Company Intellectual Property
Schedule 1.1(b) Short Term Investments
Schedule 2.2(b) Certificate on Working Capital, Debt and Accrued Tax
Liabilities
Schedule 2.2(b)(i) Certificate on Restricted Cash
Schedule 2.4 Exclusion of Certain Assets
Schedule 3.2(b) Company's Status and Authorization
Schedule 3.4 Company Subsidiaries and Investments
Schedule 3.5 No Conflicts, Etc.
Schedule 3.6(a) Financial Statements
Schedule 3.6(b) Pro Forma Statements
Schedule 3.8 Accounts Receivable
Schedule 3.9 Bank Accounts
Schedule 3.10 Tax Returns
Schedule 3.11 Absence of Changes
Schedule 3.12 Litigation
Schedule 3.13(b) Compliance with Laws; Governmental Approval and Consents
Schedule 3.14 Permitted Liens
Schedule 3.15 Leases
Schedule 3.16 Contracts
Schedule 3.17 Intellectual Property
Schedule 3.18 Privacy Matters
Schedule 3.19 Insurance
Schedule 3.21 Employees, Labor Matters, etc.
Schedule 3.22 Employee Benefit Plans and Related Matters
Schedule 3.23 Dealing with Affiliates
Schedule 3.25 Lycos Asia
Schedule 5.1(b) Conduct of Business
Schedule 5.5(b) Employee and Employee Benefit Matters
Schedule 5.7 Intercompany Arrangements
Schedule 6.1(b) Conditions to Obligations of Each Party; All Requisite
Governmental Approvals
Schedule 6.2(e) Conditions to Obligations of Buyer; Good Standings
Schedule 8.6 Losses relating to the CMU License and Retained Assets
EXHIBITS
Transition Services Agreement Exhibit A
Work for Hire Agreement Exhibit B
Lycos Service Agreement Exhibit C
Software License Agreement Exhibit D
STOCK PURCHASE AGREEMENT dated as of July 30, 2004 between Terra Networks,
S.A., a corporation organized and existing under the laws of Spain ("Seller"),
and Xxxx Communications, Corp., a corporation organized and existing under the
laws of Korea ("Buyer"). The Seller and Buyer are referred to collectively as
the "Parties" and sometimes individually referred to as a "Party".
R E C I T A L S :
A. WHEREAS, Seller owns all the issued and outstanding shares of common
stock, $0.01 par value per share (the "Shares"), of Lycos, Inc., a company
incorporated in the Commonwealth of Virginia (the "Company").
B. WHEREAS, the Company develops and maintains an Internet portal and is in
the business of providing products and services over the Internet to consumers
and businesses.
C. WHEREAS, Buyer wishes to purchase all of the Purchased Shares (as
defined herein) from Seller and Seller wishes to sell all of the Purchased
Shares to Buyer.
D. WHEREAS, as an integral part of the sale of Purchased Shares pursuant to
this Agreement, which shall be binding on both Parties, on or immediately prior
to the Closing Date, but in any event prior to the Closing, the Company shall
transfer to Seller all of the Retained Assets (as defined herein).
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties made herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Parties agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definition of Certain Terms. The terms defined in this Section
1.1, whenever used in this Agreement, shall have the respective meanings
indicated below for all purposes of this Agreement.
"Accrued Tax Liabilities": means, collectively, accrued tax liability line
items as of the Closing Date, including but not limited to the following line
items as of the Closing Date, all as determined in accordance with GAAP,
consistent with the past practice of the Company: (a) "Accrued Sales & Use Tax",
(b) "Accrued Tax Fees", (c) "Accrued Property Tax", (d) "Accrued Business Tax",
(e) "Accrued MA Use Tax", (f) "Accrued CA Use Tax", (g) "Accrued FL Use Tax",
(h) "Accrued Foreign Tax", (i) "Accrued ER Option Taxes", and (j) "Accrued State
Intangibles Tax".
"Acquiring Corporation": has the meaning set forth in Section 5.2(e).
"Affiliate": of a specified Person means a Person that, directly or
indirectly through one or more intermediaries, controls, is controlled by, or is
under common control with, such
specified Person or a member of such specified Person's immediate family.
"Control" (including the terms "controlled by" and "under common control with")
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management policies of a Person, whether through the
ownership of voting securities, by contract or credit arrangement, as trustee or
executor, or otherwise. For purposes of this Agreement all references to
Affiliates of Seller shall exclude the Company, the Company Subsidiaries and
their respective directors and officers.
"Agreement": means this Stock Purchase Agreement (including the Exhibits
and the Schedules), as the same from time to time may be amended or supplemented
as provided herein.
"Applicable Law": means any and all applicable provisions of all (i)
constitutions, treaties, statutes, laws (including the common law), rules,
regulations, ordinances, codes or orders of any Governmental Authority, (ii)
Governmental Approvals, and (iii) orders, decisions, injunctions, judgments,
awards and decrees of or agreements with any Governmental Authority.
"Arbitrator": has the meaning set forth in Section 2.3(b).
"Buyer": has the meaning set forth in the first paragraph of this
Agreement.
"Buyer Indemnified Persons": has the meaning set forth in Section 8.2.
"Capitalized Lease Obligations": means all capitalized lease obligations of
the Company and the Company Subsidiaries set forth on the Interim Financial
Statements which are outstanding as of the Closing Date, determined in
accordance with GAAP consistent with past practice of the Company.
"Cash": means cash, including Restricted Cash.
"Claim": has the meaning set forth in Section 3.12(a).
"Closing": has the meaning set forth in Section 2.1.
"Closing Balance Sheet": has the meaning set forth in Section 2.3(a).
"Closing Date": has the meaning set forth in Section 2.1.
"CMU License": has the meaning set forth in Section 8.6.
"Code": means the Internal Revenue Code of 1986, as amended.
"Company": has the meaning set forth in Recital A at the head of this
Agreement.
"Company Business": means the business of the Company and its Subsidiaries
as currently conducted, other than that of the Retained Assets.
"Company Intellectual Property": means Intellectual Property held for use
or used in the Company Business as currently conducted and that certain
Intellectual Property in development within the Company or at its direction as
set forth on Schedule 1.1(a).
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"Company Owned IP": means Intellectual Property owned by the Company.
"Company Subsidiaries": means the Subsidiaries of the Company other than
the Retained Assets.
"Confidentiality Agreement": means that certain Letter Agreement, dated
April 2, 2004, executed by Buyer.
"Consent": means any consent, approval, authorization, stipulation, waiver,
permit, grant, franchise, concession, agreement, license, exemption or order of,
registration, certificate, declaration or filing with, or report or notice to,
any Person, including any Governmental Authority.
"Contracts": has the meaning set forth in Section 3.16(a).
"Current Accounts Payable": means all accounts payable of the Company and
the Company Subsidiaries as of the Closing Date, determined in accordance with
GAAP consistent with the past practice of the Company, for which the Company or
a Company Subsidiary received an invoice for services rendered and which have
not been paid prior to the Closing Date, other than any such payables to Seller
or its Affiliates which are not set forth on Schedule 5.7.
"Current Accounts Receivable" means all accounts receivable of the Company
and the Company Subsidiaries as of the Closing Date, determined in accordance
with GAAP, consistent with the past practice of the Company, less (i) accounts
receivable from Overture or any of its Affiliates, and (ii) allowance for
doubtful accounts determined in accordance with GAAP and the Company's past
practice.
"Current Assets" means (a) Current Accounts Receivable, and (b) items set
forth under the line item "Prepaid and Other Current Assets".
"Current Liabilities" means (a) Current Accounts Payable, (b) items set
forth under line item "Accrued Expenses" other than accruals for (i) the
Overture Litigation, and (ii) Accrued Tax Liabilities, and (c) items set forth
under the line item "Deferred Revenue".
"Debt": means, as to any Person, any and all obligations for payment of
principal, interest, penalties and collection costs thereof, with respect to
money borrowed, incurred or assumed, and other similar obligations in the nature
of a borrowing by which such Person will be obligated to pay; for the avoidance
of doubt Capitalized Lease Obligations shall not be included in the definition
of Debt.
"Determination": has the meaning set forth in Section 2.3(b).
"Disputed Matter": has the meaning set forth in Section 2.3(b).
"Dollars" or "$": means lawful money of the United States of America.
"Employee Benefit Plans": has the meaning set forth in Section 3.22(a).
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"Environmental Laws": shall mean any Applicable Law relating to: (a)
releases or threatened releases of Hazardous Substances; (b) the manufacture,
handling, transport, use, treatment, storage or disposal of Hazardous Substances
or materials containing Hazardous Substances; (c) the current use, occupancy or
operation of the facilities and business of the Company; or (d) otherwise
relating to pollution, protection or preservation of human health or the
environment.
"ERISA": means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate": shall mean any trade or business, whether or not
incorporated, that together with the Company or any Subsidiary or any
predecessor thereof would be deemed a "single employer" within the meaning of
Section 4001(b) of ERISA.
"Financial Statements": has the meaning set forth in Section 3.6.
"GAAP": means United States generally accepted accounting principles as in
effect from time to time.
"Governmental Approval": means any Consent of, with or to any Governmental
Authority.
"Governmental Authority": means any nation or government, any state or
other political subdivision thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government (including any government authority, agency, department, board,
commission or instrumentality of the United States, any State of the United
States or any political subdivision thereof), or any court, tribunal or
arbitrator(s) of competent jurisdiction, or any self-regulatory organization.
"Hazardous Substance": means (i) any substance that requires investigation,
removal or remediation under any Environmental Law, or is defined, listed or
identified as a "hazardous waste" or "hazardous substance" thereunder; (ii) any
substance that is toxic, explosive, corrosive, flammable, infectious,
radioactive, carcinogenic, mutagenic, or otherwise hazardous and is regulated by
any Governmental Authority or Environmental Law; or (iii) chemicals, pollutants,
contaminants, wastes, toxic substances, petroleum and petroleum products,
asbestos and asbestos-containing materials, polychlorinated biphenyls, lead and
lead-based paints and materials, and radon.
"HSR Act": means Section 7A of the Xxxxxxx Act (Title II of the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended) and the rules
and regulations promulgated thereunder.
"Indemnified Party": has the meaning set forth in Section 8.5(a).
"Indemnifying Party": has the meaning set forth in Section 8.5(a).
"Intellectual Property": means trademarks, service marks, trade names,
Internet domain names, key words and other electronic commerce identifiers,
designs, insignia, logos, slogans, other similar descriptions of source or
origin and general intangibles of like nature, together with
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all goodwill symbolized by any of the foregoing and registrations and
applications relating to the foregoing (collectively, "Trademarks"); patents,
including any continuations, divisionals, continuations-in-part, renewals,
reissues, re-examinations and applications for any of the foregoing, as well as
invention disclosures (collectively "Patents"); copyrights (including
registrations, applications and renewals for any of the foregoing, and common
law copyrights) (collectively, "Copyrights"); computer programs (whether in
source code or object code form), including any and all software implementations
of algorithms, models and methodologies, databases and compilations, including
any and all collections of data, all documentation, including user manuals and
training materials, related to any of the foregoing and the text and graphics
contained on any Web site (collectively, "Software"); and trade secrets and
other proprietary information, including technology, know-how, inventions
(patentable or not) methods, processes, formulae, algorithms, models and
methodologies (collectively, "Proprietary Information").
"Interim Financial Statements": has the meaning set forth in Section 3.6.
"IRS": means the Internal Revenue Service.
"Lease": has the meaning set forth in Section 3.15.
"Lien": means any mortgage, pledge, hypothecation, right of others, claim,
security interest, encumbrance, lease, sublease, license, occupancy agreement,
adverse claim or interest, easement, covenant, encroachment, burden, title
defect, title retention agreement, voting trust agreement, interest, equity,
option, lien, right of first refusal, charge or other restriction or limitation.
"Losses": has the meaning set forth in Section 8.2.
"Lycos Europe Agreements": means, collectively, the Inter-company Sales
Commission Agreement, effective as of March 15, 2002, between Lycos Europe GmbH
and Lycos, Inc; Sections 8 and 9 of the Shareholders Agreement by and among
Lycos, Inc., Bertelsmann Internet Holding GmbH, Xxxxxxxxx Xxxx Internet Holding
GmbH, Fireball Internet GmbH, dated as of February 18, 2000, as amended; the
License Agreement (Lycos Search Service), dated as of February 16, 2000 and
amended November 26, 2001 between Lycos, Inc. and Lycos Europe, N.V.; the
European License Agreement (Tripod), dated as of February 29, 2000 between
Tripod, Inc. and Lycos Europe, N.V.; the European License Agreement (Angelfire),
dated as of February 29, 2000 between WhoWhere, Inc. and Lycos Europe, N.V.; the
European License Agreement (Hotbot), dated as of February 29, 2000 and amended
November 26, 2001 between Lycos, Inc. and Lycos Europe, N.V.; the License
Agreement (Sonique), dated as of February 29, 2000 between Internet Music
Distribution, Inc. and Lycos Europe, N.V.; the European License Agreement
(MyLycos), dated as of February 18, 2000 between Lycos, Inc. and Lycos Europe,
N.V.; the Preferred Promotion and Linking Agreement (Lycos Gamesville), dated as
of February 18, 2000 between Lycos, Inc. and Lycos Europe, N.V.; and the Waiver
and Agreement (Lycos Search and Logo), dated as of June 4, 2003 between Lycos,
Inc. and Lycos Europe, N.V.
"Lycos Service Agreement": has the meaning set forth in Section 2.7.
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"Material Adverse Effect": means any event, circumstance, occurrence, fact,
condition, change or effect that is materially adverse to the business, results
of operations or financial condition of the Company and the Company
Subsidiaries, taken as a whole; provided that any such events, circumstances,
occurrences, developments, facts, conditions, changes or effects resulting from
or attributable to any of the following will be disregarded for this purpose:
(a) the announcement of (i) this Agreement and (ii) the transactions and matters
contemplated hereby, (b) any officers or employees of the Company who resign
from their respective positions on or prior to the Closing, (c) any event, act
or occurrence that disrupts the U.S. or global securities, capital and financial
markets, including any suspension of trading or banking moratorium, (d) general
economic or business conditions involving the United States, and (e) changes
affecting the industries in which the Company and the Company Subsidiaries
operate.
"Notice": has the meaning set forth in Section 9.4.
"Overture Litigation" means Lycos, Inc. v. Overture Services, Inc. v.
XxxxXxxx.xxx, Inc.
"Parties" or "Party": has the meaning set forth in the first paragraph of
this Agreement.
"Pension Plan": has the meaning set forth in Section 3.22(d).
"Permitted Investments" means:
(i) direct obligations of the United States of America, or of any agency
thereof, or obligations guaranteed as to principal and interest by the United
States or any agency thereof, in either case having a final maturity of 30 days
or less;
(ii) certificates of deposit, bankers' acceptances, time deposits or demand
deposits issued or held by any domestic or foreign commercial bank having
outstanding unsecured indebtedness that is rated A-1 or better by Standard &
Poors and P-1 or better by Moody's and having a final maturity of 30 days or
less;
(iii) commercial paper rated A-1 or better by Standard & Poors and P-1 or
better by Moody's, or rated A-1 or P-1 or better by one of such credit rating
agencies if only one of such credit rating agencies has rated such commercial
paper (or an equivalent rating by another nationally recognized credit rating
agency of similar standing if neither of such corporations is then in the
business of rating commercial paper), with a final maturity of 30 days or less;
and
(iv) any other type of investment in which the Restricted Cash is held by
the Company or its Subsidiaries as of the Closing Date or approved in writing by
the Seller from time to time.
"Person": means any natural person, firm, partnership, association,
corporation, company, limited liability company, joint venture, trust, business
trust, Governmental Authority or other entity.
"Pro Forma Adjustments": has the meaning set forth in Section 3.6(b).
"Pro Forma Statements": has the meaning set forth in Section 3.6(b).
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"Purchase Price": has the meaning set forth in Section 2.2.
"Purchased Shares": means all the issued and outstanding shares of common
stock, par value $0.01 per share, of the Company after giving effect to the
redemption of the Redeemed Shares pursuant to Section 2.4.
"Redeemed Shares": has the meaning set forth in Section 2.4.
"Restricted Cash": means cash set forth on the line item "Restricted Cash"
as of the Closing Date in a manner consistent with the Interim Financials and
consistent with past practice.
"Retained Assets": has the meaning set forth in Section 2.4.
"Securities Act": means the United States Securities Act of 1933, as
amended, or any successor law thereto.
"Seller": has the meaning set forth in the first paragraph of this
Agreement.
"Seller Indemnified Persons": has the meaning set forth in Section 8.3.
"Seller's Dispute Report": has the meaning set forth in Section 2.3(b).
"Shares": has the meaning set forth in Recital A at the head of this
Agreement.
"Short Term Investments": means the investments set forth on Schedule
1.1(b).
"Stock Plans": means, collectively, the Terra Networks, S.A., U.S. Program
under Phase II of the Terra Networks, S.A. Stock Option Plan; the Lycos, Inc.
2000 Stock Option Plan; the Lycos, Inc. 1996 Stock Option Plan; the
Xxxxxxxxxx.xxx, Inc. 1999 Stock Option and Incentive Plan; the Xxxxxxxxxx.xxx,
Inc. 1999 Incentive Stock Plan; the Quotecom, Incorporated 1996 Stock Option
Plan; the Valent Software Corporation 1998 Stock Option/Stock Issuance Plan; the
Whowhere? Inc. 1995 Stock Plan; the Tripod, Inc. 1995 Stock Option Plan; the
Wisewire Corporation 1995 Amended and Restated Stock Option Plan; Wisewire
Corporation 1996 Amended and Restated Non-Employee Stock Option Plan; and any
other equity compensation or incentive program of Seller and its Affiliates
under which the Company, Seller or any of its Affiliates has granted (or
assumed) awards to any employee or former employee of the Company or any of the
Company Subsidiaries that are based on, convertible into, exchangeable for or
relating to shares of Seller's capital stock.
"Straddle Period": means any Taxable period or year beginning before and
ending after the Closing Date.
"Subsidiary": means each corporation or other Person in which a Person owns
or controls, directly or indirectly, capital stock or other equity interests
representing at least 50% of the outstanding voting stock or other equity
interests.
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"Tax": means any federal, state, local or foreign net income, capital
gains, gross income, gross receipts, sales, use, transfer, ad valorem,
franchise, profits, license, capital, withholding, payroll, employment, social
security, excise, goods and services, severance, stamp, occupation, premium,
property, windfall profits, transfer, value added, alternative minimum,
estimated or other tax, fee, charge or customs duties, or any interest, any
penalties, additions to tax or additional amounts incurred or accrued under
applicable tax law or assessed or charged by any Governmental Authority
(domestic or foreign).
"Tax Return": means any return, report, information return or other
document (including schedules or any related or supporting information) filed or
required to be filed with any Governmental Authority in connection with the
determination, assessment or collection of any Tax or the administration of any
laws, regulations or administrative requirements relating to any Tax.
"Third Party Claim": has the meaning set forth in Section 8.5(b).
"Transition Services Agreement": has the meaning set forth in Section 2.5.
"Transferred Employee": has the meaning set forth in Section 5.5(a).
"Work for Hire Agreement": has the meaning set forth in Section 2.6.
"Working Capital" means (i) Current Assets less (ii) Current Liabilities.
Working Capital shall not include any intercompany accounts between the Company
and the Company Subsidiaries, on the one hand, and Seller and its Affiliates, on
the other hand, other than those relating to Lycos Europe, N.V., Telefonica Data
USA, Inc. and XxxXxxxxx.xxx, Inc.
"Year 2003 Financial Statements": has the meaning set forth in Section 3.6.
Section 1.2 Construction. Words such as "herein," "hereinafter," "hereto,"
"hereby," "hereof" and "hereunder," when used with reference to this Agreement,
refer to this Agreement as a whole, unless the context otherwise requires. The
words "include," "includes," "included" and "including" shall be construed as if
followed by the phrase "without being limited to." Reference to "business days"
means days other than a Saturday or Sunday on which banking institutions in each
of New York, New York, Boston, Massachusetts, Seoul, Korea and Madrid, Spain are
open for business. Unless otherwise stated or the context requires otherwise:
(a) all pronouns and any variations thereof shall be deemed to refer to
masculine, feminine or neuter, singular or plural, as the identity of the Person
or Persons may require; (b) references to a Schedule or an Exhibit are to a
Schedule or an Exhibit attached to this Agreement, each of which is made a part
of this Agreement for all purposes; (c) references to a law are to such law as
it may be amended from time to time, and references to particular provisions of
a law include all corresponding provisions of any succeeding law; and (d)
references to agreements and contracts include any amendments, restatements and
supplements executed from time to time.
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ARTICLE II
SALE AND PURCHASE OF SHARES
Section 2.1 Place and Date. Upon the terms and subject to the conditions
set forth in this Agreement, on the Closing Date, Seller will sell the Purchased
Shares to Buyer, and Buyer will purchase the Purchased Shares from Seller. The
closing of the sale and purchase of the Purchased Shares (the "Closing") shall
take place at 10:00 a.m. Eastern Daylight Saving Time at the offices of Winston
& Xxxxxx LLP, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, as soon as practicable (but
not more than three business days) after satisfaction or waiver of the last to
be fulfilled of the conditions set forth in Article VI (other than those
conditions which can only be satisfied at the Closing), or such other time and
place upon which the Parties may agree. The day on which the Closing actually
occurs is herein sometimes referred to as the "Closing Date". At the Closing,
against payment in full (subject to Section 2.3) of the Purchase Price, Seller
shall deliver to Buyer all certificates for the Purchased Shares, accompanied by
duly executed stock powers and any other instruments required to effect the
transfer of the Purchased Shares to Buyer, registered in the name of Buyer, free
and clear of all Liens.
Section 2.2 Purchase.
(a) Upon the terms and subject to the conditions set forth in this
Agreement, Buyer agrees to pay to Seller an aggregate of Ninety-Five Million
Dollars ($95,000,000), subject to adjustment at the Closing as provided for
below in paragraph (b) and after the Closing as provided for below in Section
2.3 (the "Purchase Price"). The Purchase Price shall be paid by Buyer at the
Closing by wire transfer of immediately available funds to a bank account
designated in writing by Seller to Buyer at least three (3) days prior to the
Closing; provided that, with respect to the amount of the Purchase Price that is
equal to the amount of the Restricted Cash, in lieu of funds wired at Closing,
Buyer shall pay such amount of the Purchase Price to Seller by wire transfer of
immediately available funds, to a bank account designated in writing by Seller
to Buyer, in the following amounts and on the following dates:
Date Amount
---- ------
October 1, 2004 $4,061,257
December 1, 2004 $2,715,743
June 30, 2005 $1,017,521
December 31, 2005 $1,052,825
June 30, 2006 $1,088,748
In the event that a portion of the Restricted Cash becomes unrestricted, the
amounts listed above will be adjusted on the Closing Date to reflect the amounts
set forth on Schedule 2.2(b)(i). In addition, on each of the dates described in
the proviso to the second preceding sentence, Buyer shall also to pay to Seller,
in cash, by wire transfer as described above, all interest and
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investment amounts earned on the Restricted Cash for the period from the Closing
Date through the applicable date.
(b) Not later than three (3) days prior to the Closing Date, Seller shall
deliver to Buyer a certificate in the form attached hereto as Schedule 2.2(b)
setting forth an estimate as of the Closing Date of Working Capital, Debt, and
Restricted Cash of the Company after giving effect to the transfer of the
Retained Assets in accordance with Section 2.4, which certificate shall be
certified as of the Closing Date by the Chief Financial Officer or, if not
available, an authorized representative of the Company. Seller shall also
deliver to Buyer a certificate in the form attached as Schedule 2.2(b)(i)
setting forth the dates when Restricted Cash becomes unrestricted. At the
Closing, the amount of the Purchase Price shall be (i) increased by the
Restricted Cash, (ii) decreased by the amount of Debt, and (iii) increased or
decreased, as the case may be, by the amount Working Capital is greater or less
than, as the case may be, $-6,593,613.
Section 2.3 Post-Closing Adjustment of Purchase Price.
(a) Within 60 days after the Closing Date, Buyer shall prepare and deliver
to Seller a consolidated balance sheet of the Company and the Company
Subsidiaries as of the Closing Date (the "Closing Balance Sheet"). The Closing
Balance Sheet shall be prepared by Buyer in good faith and in accordance with
GAAP and shall include the amount of Working Capital, Debt and Restricted Cash
as of the Closing Date. Seller shall cooperate with Buyer in the preparation of
the Closing Balance Sheet.
(b) Buyer shall cooperate with Seller and shall allow Seller and its agents
and representatives such access as Seller may reasonably request to the books,
records, accounts and information of the Company to allow Seller to examine the
accuracy of the Closing Balance Sheet. Within 30 days after the date that the
Closing Balance Sheet is delivered by Buyer to Seller, Seller may deliver to
Buyer a written report setting forth any proposed adjustments to the Working
Capital, Debt or Restricted Cash set forth on the Closing Balance Sheet (the
"Seller's Dispute Report").
(i) If Seller notifies Buyer of its acceptance of the amount of the
Working Capital, Debt and Restricted Cash as of the Closing shown on the
Closing Balance Sheet, or if Seller fails to deliver a report of proposed
adjustments to the Working Capital, Debt or Restricted Cash set forth on
the Closing Balance Sheet within the 30-day period specified in the
preceding sentence, the amount of the Working Capital, Debt and Restricted
Cash as of the Closing shown on the Closing Balance Sheet shall be
conclusive and binding on the parties as of the last day of such 30-day
period.
(ii) Buyer and Seller shall use good faith efforts to resolve any
dispute involving the amount of the Working Capital, Debt and Restricted
Cash as of the Closing (each a "Disputed Matter"), and any resolution
between them as to a Disputed Matter shall be final, binding and conclusive
on the parties hereto.
(iii) If, after 30 days following the receipt by Buyer of Seller's
Dispute Report, Buyer and Seller are unable to resolve any Disputed Matter,
such Disputed Matter shall
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be referred to an internationally recognized independent accounting firm
reasonably acceptable to both Buyer and Seller (the "Arbitrator") for
resolution. The Arbitrator shall be instructed to use every reasonable
effort to make its determination with respect to such Disputed Matter (the
"Determination") within 45 days of the submission to the Arbitrator of such
Disputed Matter. Buyer shall give the Arbitrator access at all reasonable
times to the books, records, accounts and facilities of the Company used to
prepare the Closing Balance Sheet or as otherwise reasonably requested by
the Arbitrator for the purpose of making a Determination. After completing
the Determination, the Arbitrator shall deliver notice of the Determination
to Buyer and Seller and upon receipt thereof, the Determination shall be
final, binding and conclusive on the parties hereto with respect to such
Disputed Matter. The costs, fees and expenses of the Arbitrator shall be
shared equally by Buyer and Seller.
(c) If the total amount of the Working Capital less the Debt plus the
Restricted Cash as of the Closing Date as finally determined in accordance with
this Section 2.3 is less than the total amount of the Working Capital less the
Debt plus the Restricted Cash set forth on the certificate delivered pursuant to
Section 2.2(b), then Seller shall pay to Buyer the amount of such difference. If
the total amount of the Working Capital less the Debt plus the Restricted Cash
as of the Closing Date as finally determined in accordance with this Section 2.3
is greater than the total amount of the Working Capital less the Debt plus the
Restricted Cash set forth on the certificate delivered pursuant to Section
2.2(b), then Buyer shall pay to Seller the amount of such difference. All
amounts due under this Section 2.3(c) shall be paid by Buyer or Seller, as the
case may be, by wire transfer of immediately available funds, within two (2)
business days after the date on which the Working Capital, Debt and Restricted
Cash as of the Closing Date are finally determined in accordance with this
Section 2.3.
Section 2.4 Exclusion of Certain Assets. The Parties acknowledge and agree
that the Company's interests in the assets listed on Schedule 2.4 are intended
to and shall be retained by Seller and not acquired by Buyer as a result of the
purchase and sale of the Purchased Shares pursuant to this Agreement.
Accordingly, as an integral part of the sale of Purchased Shares pursuant to
this Agreement, on or immediately prior to the Closing Date, but in any event
prior to the Closing, the Company shall transfer to Seller, and Seller will
assume, all of the Company's assets, properties and rights, subject to the
liabilities and obligations related thereto, set forth on Schedule 2.4, subject
to any changes thereto arising in the ordinary course of business between the
date hereof and the Closing Date (the "Retained Assets"). In consideration for
the transfer to Seller of the Retained Assets, the Company will redeem that
number of shares (the "Redeemed Shares") of the Company which bears the same
ratio to the total number of Shares as the value of the Retained Assets bears to
the total value of the Company immediately prior to such redemption; the Parties
shall reasonably cooperate to determine such relative values.
Section 2.5 Transition Services Agreement. At Closing, Seller or its
designee and the Company shall enter into a Transition Services Agreement (the
"Transition Services Agreement"), substantially in the form of Exhibit A
attached hereto.
Section 2.6 Work for Hire Agreement. Prior to Closing, Seller and the
Company shall enter into a Work for Hire Agreement (the "Work for Hire
Agreement") substantially in the form of Exhibit B attached hereto.
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Section 2.7 Service Agreement. At Closing, the Company and Seller will
enter into a Service Agreement whereby the Company will provide Seller with
back-end assistance with respect to Seller's search service for a period of six
months following the Closing (the "Lycos Service Agreement") substantially in
the form of Exhibit C attached hereto.
Section 2.8 Software License Agreement. Prior to Closing, the Company and
Seller will enter into a Software License Agreement substantially in the form of
Exhibit D attached hereto.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer that, as of the date of this
Agreement and as of the Closing Date, as though made on the Closing Date (or, if
made as of a specified date, as of such date):
Section 3.1 Seller's Status and Authorization.
(a) Seller is a corporation duly organized, validly existing and in good
standing under the laws of the Kingdom of Spain.
(b) Seller has all requisite power and authority (corporate or otherwise)
to execute and deliver this Agreement, to perform fully its respective
obligations hereunder and to consummate the transactions contemplated hereby.
The execution, delivery and performance by Seller of this Agreement and the
consummation of the transaction contemplated hereby have been duly authorized by
the board of directors of Seller and no other corporate action on the part of
Seller is necessary to authorize the execution and delivery by Seller of this
Agreement or the consummation of the transaction contemplated hereby.
(c) This Agreement has been duly and validly executed and delivered by
Seller and constitutes a legal, valid and binding agreement of Seller,
enforceable against it in accordance with its terms, except that such
enforcement may be subject to bankruptcy, insolvency, reorganization, moratorium
or other similar laws relating to creditors' rights generally or to general
principles of equity (regardless of whether enforcement is sought in a
proceeding at equity or at law).
Section 3.2 Company's Status and Authorization.
(a) The Company is a corporation duly organized, validly existing and in
good standing under the laws of the Commonwealth of Virginia with full corporate
power and authority to carry on its business and to own or lease and to operate
its properties as and in the places where its business is conducted.
(b) The Company is duly qualified or licensed to do business and is in good
standing in each jurisdiction where the character of its properties owned or
held under lease or the nature of its activities requires such qualification,
except (i) as of the date hereof as set forth on Schedule 3.2(b); and (ii) where
the failure to be so qualified, licensed or in good standing does not, and could
not reasonably be expected to, have a Material Adverse Effect. Set forth on
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Schedule 3.2(b) is a list of all states and foreign jurisdictions in which the
Company is qualified to conduct business.
(c) Complete and correct copies of the respective articles of
incorporation, as amended, and bylaws as in effect on the date hereof of the
Company and the Company Subsidiaries have been previously delivered to Buyer.
The stock books of the Company, which have been made available to Buyer for its
inspection, are true and complete. The minute books of the Company, as
previously made available to Buyer, contain accurate records of all meetings of
and resolutions of, or written consents by, the stockholders or Board of
Directors of the Company since the date of the Company's organization.
Section 3.3 Capital Stock of the Company.
(a) The Company's authorized capital stock consists of 10,000 shares of
common stock, $0.01 par value, of which 1,107 shares are issued and outstanding.
The Shares are duly authorized, validly issued, fully paid and non-assessable.
There are no options, warrants, calls, convertible or exchangeable notes,
agreements, commitments, evidence of indebtedness, assets, or other rights
presently outstanding that would obligate the Company to issue, deliver, convey,
transfer or sell shares of its capital stock, or to grant, extend or enter into
any such option, warrant, call, convertible or exchangeable note, agreement,
commitment, evidence of indebtedness, asset or other right. Other than this
Agreement, the Shares are not subject to any voting commitment or understanding
restricting or otherwise relating to voting, dividend rights or the disposition
of the Shares or otherwise.
(b) Seller is the sole record and beneficial owner of the Shares, and has
good and valid title to the Shares, free and clear of all Liens. The stock
certificates, stock powers, endorsements, assignments and other instruments to
be executed and delivered by Seller to Buyer at the Closing will effectively
vest in Buyer good, valid and marketable title to all of the Purchased Shares
free and clear of all Liens, except restrictions on transfer imposed by the
Securities Act and state securities laws.
Section 3.4 Subsidiaries; Investments.
(a) Schedule 3.4(a) sets forth the name, jurisdiction of incorporation and
authorized capital of each Company Subsidiary and percentage ownership of the
Company Subsidiaries and the jurisdiction in which each Company Subsidiary is
qualified to do business. All the outstanding capital stock of each Company
Subsidiary that is owned directly or indirectly by the Company, is owned free
and clear of all Liens, and is validly issued, fully paid and nonassessable.
Each Company Subsidiary (a) is a corporation duly organized, validly existing
and in good standing under the laws of its state of incorporation; (b) has full
corporate power and authority to carry on its business and to own its respective
properties and assets; and (c) is duly qualified or licensed to do business and
is in good standing in every jurisdiction where the character of its properties
owned or held under lease or the nature of its activities requires such
qualification, except where the failure to be so qualified, licensed or in good
standing would not have a Material Adverse Effect.
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(b) Except as set forth on Schedule 3.4(b), neither the Company nor any
Company Subsidiary owns or controls, directly or indirectly, any equity
interest, or any security convertible into an equity interest, in any Person.
Schedule 3.4(b) sets forth a true and complete list of each such interest,
including the name, percentage interest, cost of the investment and all
agreements governing the rights and obligations relating to such investment.
Section 3.5 No Conflicts, etc. Except as set forth on Schedule 3.5, the
execution, delivery and performance of this Agreement, and the consummation of
the transactions contemplated hereby, do not and will not conflict with or
result in a violation of or a default under or require any consent, approval or
notice under (with or without the giving of notice or the lapse of time or
both), or result in the acceleration of or give rise to any party the right to
terminate, modify or cancel under, or result in the loss of any rights,
privileges, options or alternatives under, or result in the creation of any Lien
on any of the properties or assets of the Company or the Company Subsidiaries
under (i) the articles of incorporation or bylaws of Seller, Company or any
Company Subsidiary, (ii) any Applicable Law applicable to the Company, the
Company Subsidiaries or any of their respective properties or assets, or (iii)
any Contract or Lease to which any of Seller, the Company or Company
Subsidiaries is a party or by which any of them or any of their respective
properties are bound, which, in the case of subclauses (ii) and (iii), would
have a Material Adverse Effect. Except as required under the HSR Act and except
as set forth on Schedule 3.5, Seller, the Company and the Company Subsidiaries,
as the case may be, have obtained any and all Governmental Approvals and
Consents required to be obtained by Seller, the Company or the Company
Subsidiaries in connection with the execution and delivery of this Agreement or
the consummation of the transactions contemplated hereby.
Section 3.6 Financial Statements.
(a) Seller has delivered to Buyer a true and complete copy of (i) the
audited consolidated balance sheet of the Company at December 31, 2003 and
related audited consolidated statements of income and statements of cash flow
for the fiscal year ended December 31, 2003, certified without qualification by
Deloitte & Touche, its independent accounting firm (the "Year 2003 Financial
Statements") and (ii) the unaudited consolidated balance sheet of the Company at
June 30, 2004, and the related unaudited consolidated statements of income and
statements of cash flow of the Company for the six-month period ended June 30,
2004 attached hereto as Schedule 3.6(a) (the "Interim Financial Statements")
(all of the foregoing being collectively herein referred to as the "Financial
Statements"). The Financial Statements have been prepared from, are in
accordance with and separately reflect, the books and records of the Company,
have been prepared in accordance with GAAP (except for the absence of footnotes
and normal year end adjustments in the case of the Interim Financial Statements)
on a consistent basis throughout the period indicated, present fairly, in all
material respects, the financial position and operating results of the Company
at the dates, and for the periods, indicated therein.
(b) Seller has delivered to Buyer a copy of the unaudited pro forma
consolidated balance sheets of the Company at December 31, 2003 and June 30,
2004, and the related unaudited pro forma consolidated statements of income and
statements of cash flow of the Company for the period then ended, after taking
into account the transfer of the Retained Assets provided for in Section 2.4 as
if such transfer had occurred as of January 1, 2003 or January 1,
- 14 -
2004, respectively attached hereto as Schedule 3.6(b) (collectively, the "Pro
Forma Statements"). The Pro Forma Statements indicate each pro forma adjustment
made from the respective Financial Statements (the "Pro Forma Adjustments") and
such Pro Forma Adjustments are reasonable (taking into account the Retained
Assets), have been prepared from and are in accordance with the books and
records of the Company.
Section 3.7 Absence of Undisclosed Liabilities; Sufficiency of Assets. To
the knowledge of Seller and the Company, the Company and the Company
Subsidiaries have no debts, claims, liabilities or obligations of any nature,
whether known or unknown, absolute, accrued, contingent or otherwise and whether
due or to become due, asserted or unasserted, that would be required to be
disclosed in financial statements prepared in accordance with GAAP and the
subject of a non-qualified audit opinion, except (a) to the extent disclosed or
reserved against in the Financial Statements, and (b) non-material liabilities
and obligations that were incurred after March 31, 2004 in the ordinary course
of business. After giving effect to the transfer of the Retained Assets provided
for in Section 2.4, the assets of the Company and the Company Subsidiaries
include all of the assets that are sufficient to conduct the Company Business,
except for any assets the absence of which would not have a Material Adverse
Effect.
Section 3.8 Accounts Receivable. Except as set forth on Schedule 3.8, all
accounts receivable of the Company or any Company Subsidiaries, whether
reflected in the Financial Statements or otherwise, represent sales actually
made in the ordinary course of business.
Section 3.9 Bank Accounts. Schedule 3.9 sets forth the names and locations
of all banks, trust companies, savings and loan associations and other financial
institutions at which the Company maintains safe deposit boxes, checking
accounts or other accounts of any nature the available balance of which
customarily exceeds $5,000 and the names of all Persons authorized to draw
thereon, make withdrawals therefrom or have access thereto.
Section 3.10 Taxes.
(a) Except as set forth on Schedule 3.10(a):
(i) the Company and its Subsidiaries have timely filed all Tax Returns
for all years and periods (and portions thereof) and for all jurisdictions
(whether federal, state, local or foreign) in which any such returns,
reports or estimates were due, and such Tax Returns are true, correct and
complete in all material respects. All material Taxes, whether or not shown
as due and payable in respect of such Tax Returns, have been paid, and the
Company and its Subsidiaries have withheld and paid over to the appropriate
Governmental Authority all Taxes which they are required to withhold from
amounts paid or owing to any employee, creditor or other third party;
(ii) the Company has not executed or filed with any taxing authority
(whether federal, state, local or foreign) any agreement or other document
extending or having the effect of extending the period for assessment,
reassessment or collection of any Taxes, and no power of attorney granted
by the Company with respect to any Taxes is currently in force;
- 15 -
(iii) no federal, state, local or foreign Tax audits or other
administrative proceedings, discussions or court proceedings are presently
pending or threatened in writing with regard to any Taxes or Tax Returns of
the Company or any of its Subsidiaries, and no additional issues,
deficiencies or claims for additional Taxes are being asserted against the
Company or any of its Subsidiaries in connection with any existing audits
of the Company or any of its Subsidiaries;
(iv) the assessment of any additional Taxes for periods ending on or
prior to the date of the Interim Financial Statements shall not materially
exceed the recorded liability therefor on the Interim Financial Statements
(excluding any amount recorded which is attributable solely to timing
differences between book and Tax income). Since the date of the Interim
Financial Statements, neither the Company nor any of its Subsidiaries has
incurred any material liability for Taxes other than in the ordinary course
of business;
(v) no material claim has been made in writing to the Company or any
Subsidiary of the Company by a Tax authority in a jurisdiction where the
Company or any Subsidiary of the Company does not file Tax Returns that the
Company or the Subsidiary, as applicable, is or may be subject to taxation
by that jurisdiction;
(vi) neither the Company nor any of its Subsidiaries is liable for the
Taxes of another Person (i) under Section 1.1502-6 of the Treasury
Regulations (or comparable provisions of state, local or foreign law), (ii)
as a transferee or successor, or (iii) by contract or indemnity;
(vii) neither the Company nor any Subsidiary is a party to any Tax
sharing agreement; and
(viii) the Company will not be required to pay or withhold any Taxes
as a result of the transfer of Retained Assets described in Section 2.4.
(b) Schedule 3.10(b) sets forth, for the preceding Taxable year and on an
estimated basis for the current Taxable year (taking into account the
distribution of the Retained Assets described in Section 2.4), the amount of
federal and applicable state net operating losses of the Company and its
Subsidiaries, and the extent to which the use of such Tax attributes are
disallowed, limited or reduced by Applicable Law (including by reason of Section
382 of the Code or the separate return limitation year provisions of Section
1.1502-15, -21(c) and -22(c) of the Treasury Regulations or any applicable
predecessor provision of such Treasury Regulation) since the October 27, 2000
acquisition of the Company by Seller.
Section 3.11 Absence of Changes. Except as set forth on Schedule 3.11,
since December 31, 2003, the Company Business has been conducted only in the
ordinary course and neither the Company nor any Company Subsidiary has:
(a) suffered any Material Adverse Effect;
(b) incurred, assumed, guaranteed or discharged any claim, debt, obligation
or liability, absolute, accrued, contingent or otherwise, whether due or to
become due, or any
- 16 -
indebtedness (including any indebtedness for borrowed funds), except as
contemplated by this Agreement or current liabilities for trade or business
obligations incurred in connection with the purchase of goods or services in the
ordinary course of business;
(c) mortgaged, pledged or subjected to any other Lien, any property,
business or assets, tangible or intangible other than standard or customary
Liens arising in the ordinary course of business that are not, individually or
in the aggregate, material to the Company or the Company Subsidiaries;
(d) sold, transferred, leased to others or otherwise disposed of any assets
other than pursuant to this Agreement, except for such licenses and leases
granted in the ordinary course of business, or canceled or compromised any debt
or claim, or waived or released any right of substantial value;
(e) received any notice of termination of any Contract, the termination of
which would have a Material Adverse Effect;
(f) suffered any significant adverse change in the relationship with its
material customers, suppliers and business partners;
(g) except with respect to non-material Company Intellectual Property, (i)
disposed of or permitted to lapse any material rights of the Company or the
Company Subsidiaries to the use of any Company Intellectual Property in material
markets (North America, Europe and East Asia), or (ii) to the knowledge of
Seller disposed of or disclosed to any Person any trade secret formula, process,
know-how or other Company Intellectual Property not theretofore a matter of
public knowledge, other than to representatives of Buyer or any other Person in
connection with the current sale of the Company or in the ordinary course of
business pursuant to a confidentiality agreement substantially in the form
attached hereto as Schedule 3.11(g);
(h) suffered any material damage, destruction or loss (whether or not
covered by insurance) or waived any right of substantial value;
(i) made any change in the rate of compensation, commission, bonus or other
direct or indirect remuneration payable, or paid or agreed or orally promised to
pay, conditionally or otherwise, any bonus, incentive, retention or other
compensation, retirement, welfare, fringe or severance benefit or vacation pay,
to or in respect of any employee, distributor or agent of the Company except in
the ordinary course of business;
(j) made any single capital expenditure or commitment in excess of $500,000
for additions to property, plant, equipment or intangible capital assets or made
aggregate capital expenditures and commitments in excess of $2,000,000 for
additions to property, plant, equipment or intangible capital assets;
(k) except as specifically provided for in this Agreement, declared, paid
or set aside for payment any dividend or other distribution in respect of its
capital stock or redeemed, purchased or otherwise acquired, directly or
indirectly, any shares of capital stock or other securities of the Company;
- 17 -
(l) except as set forth on Schedule 3.11(l), made or rescinded any Tax
election other than in the ordinary course of business or made any change in the
accounting or auditing methods, practices or principles of the Company other
than as required by accounting rules and regulations;
(m) encountered any labor union organizing activity, had any actual or
threatened employee strikes, work stoppages, slowdowns or lockouts, or had any
material change in its relations with its employees, distributors, agents,
customers or suppliers;
(n) amended its articles of incorporation or bylaws or merged with or into
or consolidated with any other Person, subdivided, combined or in any way
reclassified any shares of its capital stock or changed or agreed to change in
any manner the rights of its outstanding capital stock or the character of its
business;
(o) except as provided for in this Agreement, paid, loaned or advanced any
amount to, or sold, transferred or leased any properties or assets (real,
personal or mixed, tangible or intangible) to, or entered into any agreement or
arrangement with, any of its officers or directors or any Affiliate of any of
its officers or directors except for directors' fees and compensation to
officers in the ordinary course of business; or
(p) agreed or consented, whether in writing or otherwise, to take any
action described in this Section 3.11.
Section 3.12 Litigation. Except as set forth on Schedule 3.12:
(a) (i) there is no action, claim, demand, suit, proceeding, arbitration,
grievance, citation, summons, subpoena, inquiry or investigation, civil,
criminal, regulatory or otherwise, in law or in equity (each, a "Claim"),
pending against or relating to the Company or the Company Subsidiaries seeking
damages in excess of $300,000 or any injunctive or other equitable relief
sought;
(ii) to the knowledge of Seller, there is no Claim threatened against or
relating to the Company or the Company Subsidiaries seeking damages in excess of
$300,000 or any injunctive or other equitable relief sought;
(b) there are no judgments unsatisfied against the Company or the Company
Subsidiaries or consent decrees or injunctions to which any of them is subject
that is likely to have a Material Adverse Effect;
(c) there is no Claim pending, or to the knowledge of Seller, threatened,
by or against or affecting Seller, the Company or the Company Subsidiaries in
connection with or relating to the validity of this Agreement or the
transactions contemplated by this Agreement;
(d) with respect to each Claim included on Schedule 3.12, except as
otherwise noted, the Company has filed a notice with its insurance provider and,
to Seller's knowledge, the Company has not received written notification from
any insurance company denying coverage of any material Claim asserted by the
Company in connection with any of the policies maintained by the Company.
- 18 -
Section 3.13 Compliance with Laws; Governmental Approvals and Consents.
(a) Each of the Company and the Company Subsidiaries has complied in a
timely manner and in all respects with all Applicable Laws and the Company is
not in violation of any Applicable Law except for violations the existence of
which would not have a Material Adverse Effect.
(b) Except as set forth on Schedule 3.13(b), the Company has all
Governmental Approvals and Consents necessary for the conduct of the business of
the Company and the Company Subsidiaries as it is currently conducted, except
for such Governmental Approvals and Consents the absence of which would not have
a Material Adverse Effect.
Section 3.14 Title. The Company and the Company Subsidiaries have good and
marketable title (fee or leasehold) to all of their respective properties and
assets that they purport to own or use; and none of such properties or assets is
subject to any mortgage, pledge, Lien, restriction, encumbrance or security
interest, except (i) minor imperfections of title, none of which materially
detracts from the value of or impairs the use of the affected properties or
impairs any operations of the Company or the Company Subsidiaries (b) Liens for
current taxes not yet due and payable, (c) indicate mechanic's and materialmen's
Liens for construction in progress and workmen's, repairmen's, warehousemen's
and carrier's Liens arising in the ordinary course of business or (d) as
disclosed on Schedule 3.14 (collectively, "Permitted Liens").
Section 3.15 Leases. Schedule 3.15 contains each lease pursuant to which
the Company or any Company Subsidiary leases any real or personal property
(excluding leases relating solely to personal property calling for rental or
similar periodic payments not exceeding $200,000 per annum) (each, a "Lease"). A
true and complete copy of each Lease has heretofore been made available to
Buyer. To the knowledge of Seller, the leasehold estate created by each Lease is
free and clear of all Liens that would inhibit the ability of the lessee thereof
to use the property in any material respect. To the knowledge of Seller and the
Company, there are no existing payment defaults or material defaults by the
Company or the Company Subsidiaries under any of the Leases.
Section 3.16 Contracts.
(a) Schedule 3.16(a) lists all written and binding oral agreements,
contracts, commitments, indentures, orders, licenses, leases or other
instruments or arrangements (collectively, "Contracts") to which the Company or
a Company Subsidiary is a party:
(i) which involve payments to or from the Company in excess of
$300,000 per annum;
(ii) which contain restrictions with respect to payment of dividends
or any other distribution in respect of its capital stock;
(iii) relating to capital expenditures in excess of $300,000;
(iv) which is a management or consulting contract, the total contract
value of which exceeds $300,000;
- 19 -
(v) which is a guarantee or other contingent liability in respect of
any indebtedness or obligation of any other Person or entity;
(vi) limiting the Company or any of the Company Subsidiaries from
engaging in any line of business or competing with any other Person or
entity or pursuant to which the Company has granted another Person an
exclusive right to use or perform a service;
(vii) granting or receiving material rights to material Company
Intellectual Property in a material market (North America, Europe or East
Asia); or
(viii) providing for the Company or a Company Subsidiary to grant a
most favored nation or similar pricing.
(b) Except as set forth on Schedule 3.16(b) hereto, (i) all Contracts
constitute valid and binding agreements of the Company or the Company
Subsidiaries, as applicable, and, to the knowledge of Seller, each other party
thereto, (ii) with respect to the Contracts there are no existing material
defaults by the Company or the Company Subsidiaries, as applicable, or to the
knowledge of Seller, by any other party thereto and there is no event which
(whether with or without notice, lapse of time or the happening or occurrence of
any other event including the consummation of the transactions contemplated
hereby) would constitute a material default under the Contracts by the Company
or the Company Subsidiaries, as applicable, or, to the knowledge of Seller, by
any other party thereto, and (iii) with respect to the Contracts set forth as
items 1, 2, 3, 4, 5, 6, 7, 16, 17, 19, 20, 21, 22, 25 and 26 on Schedule 3.23,
there are no existing defaults by the Company or the Company Subsidiaries, as
applicable, or to the knowledge of Seller, by any other party thereto and there
is no event which (whether with or without notice, lapse of time or the
happening or occurrence of any other event including the consummation of the
transactions contemplated hereby) would constitute a default under such
Contracts by the Company or the Company Subsidiaries, as applicable, or, to the
knowledge of Seller, by any other party thereto,
Section 3.17 Intellectual Property.
(a) Except as set forth on Schedule 3.17(a)(i), the Company and the Company
Subsidiaries own good and marketable title to, the Company Owned IP, free and
clear of all Liens. Except as previously disclosed to Buyer, Seller and the
Company are not aware of any material information that any Company Intellectual
Property set forth on Schedule 3.17(a)(ii) is or is likely invalid or
unenforceable. The Company and the Company Subsidiaries, as applicable, have
paid all fees, annuities and all other payments which have heretofore become due
to any Governmental Authority for the registration thereof with respect to the
registration, or application for registration, of any Patents, Trademarks and
Copyrights that are the subject of such registration or application for
registration.
(b) Schedule 3.17(b) sets forth a complete and accurate list of the
following Company Owned IP and other material Company Intellectual Property: (A)
all registered Patents and applications to register Patents; (B) all registered
Trademarks and applications to register Trademarks and material unregistered
Trademarks; and (C) all registered Copyrights and all applications to register
Copyrights including Copyrights related to the Software.
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(c) Except as set forth in Schedule 3.17(c) and, with respect to Patents to
the knowledge of Seller and the Company, (i) there is not now, and has not been
during the past six (6) years, any infringement, misappropriation, or other
violation by the Company or any Company Subsidiary of any Intellectual Property
that is owned by any third party, and (ii) there is not now, and there has not
been during the past three (3) years, any existing or, to the knowledge of
Seller, threatened material Claim against the Company or any Company Subsidiary
of infringement, misappropriation, or other violation of any Intellectual
Property by any third party which has not been resolved without materially
limiting the Company's business, and (iii) there is no, and there has not been
during the past three (3) years, any pending or threatened material Claim by the
Company against others for infringement, misappropriation, or other violation of
any Company Intellectual Property which has not been resolved without materially
limiting the Company's business, nor to knowledge of Seller is there any basis
for any such Claim.
(d) Except as set forth in Schedule 3.17(d), Seller and its Affiliates do
not own any rights, title or interest in or to the Company Intellectual
Property.
(e) Except as set forth in Schedule 3.17(e), no university, government
agency (federal or state) or other organization sponsored any research or
development conducted by the Company or the Company Subsidiaries or has any
right, title or interest in or to, or any Lien on, any Company Intellectual
Property.
Section 3.18 Privacy Matters. Except as set forth on Schedule 3.18, the
Company has not received notice of any material Claims and no material Claims
have been brought or, to the knowledge of Seller, threatened against the Company
or any Company Subsidiary with respect to any violation by the Company or a
Company Subsidiary of any rules, policies and procedures established by the
Company relating to privacy, data protection and the collection and use of
personal information gathered or used by the Company and the Company
Subsidiaries or in connection with any such rules, policies and procedures or in
connection with any Software placed by the Company or any Company Subsidiary on
any computing device.
Section 3.19 Insurance. All material properties and risks associated with
the business of the Company and the Company Subsidiaries are covered by valid
and currently effective insurance policies or binders of insurance or programs
of self-insurance in such types and amounts as are consistent with customary
practices and standards in the Company's industry. Schedule 3.19 contains a
complete list of all material liability, property, accident, casualty, fire,
flood, workers' compensation, key man group life or health or other insurance
policies and arrangements affecting or relating to the ownership, use or
operations of the assets or the Company Business.
Section 3.20 Environmental Matters. The Company currently holds all the
permits, licenses and approvals of Governmental Authorities required under
Environmental Laws, except for such permits, licenses and approvals the absence
of which would not, individually or in the aggregate, have a Material Adverse
Effect. The Company is not in violation of any of such permits, licenses, and
approvals, except for such violations which would not, individually or in the
aggregate, have a Material Adverse Effect. The Company is not in violation of
any
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Environmental Laws, except for violations which would not, individually or in
the aggregate, have a Material Adverse Effect.
Section 3.21 Employees, Labor Matters, etc. The Company is not a party to
or bound by any collective bargaining agreement and there are no labor unions or
other organizations representing, purporting to represent or attempting to
represent any employees of the Company. Except as set forth on Schedule 3.21,
there are currently no labor disputes for which a grievance, arbitration or
litigation has been filed and there is no representation petition pending or, to
the knowledge of Seller, threatened with respect to any employee of the Company
that could reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect. A true and complete copy of the Company's Employee
Handbook has been made available to Buyer.
Section 3.22 Employee Benefit Plans and Related Matters.
(a) Schedule 3.22(a) contains a list of all "employee benefit plans" (as
defined in Section 3(3) of ERISA), and all bonus, stock option, stock purchase,
deferred compensation plans and arrangements and other employee fringe benefit
plans and any individual employment, severance, consulting or similar
arrangement, in any case, maintained or contributed to, or required to be
contributed to, or entered into, by the Company or any Company Subsidiary for
the benefit of any current or former employee of the Company or any Company
Subsidiary (all of the foregoing, collectively, "Employee Benefit Plans"). The
Company has made available to Buyer true, correct and complete copies of all
plan documents, summary plan descriptions, insurance contracts, third party
administration contracts and all other documentation created to embody all
Employee Benefit Plans, the most recent filings required to be made with any
governmental authority with respect to any Employee Benefit Plan, the most
recent determination letter received from the Internal Revenue Service with
respect to any Employee Benefit Plan intended to be qualified under Section
401(a) of the Code, plus descriptions of any Employee Benefit Plans that have
not been reduced to writing.
(b) All Employee Benefit Plans have been administered in compliance in all
material respects with their terms and all Applicable Laws, including ERISA and
the Code. No material default exists with respect to the obligations of the
Company or any Subsidiary under any Employee Benefit Plan.
(c) No material liability relating to any Employee Benefit Plan has been or
is expected to be incurred by the Company or any Subsidiary under or pursuant to
the Code or Title I of ERISA or the penalty, excise tax or joint and several
liability provisions of the Code or ERISA.
(d) Each Employee Benefit Plan that is an "employee pension benefit plan"
as defined in Section 3(2) of ERISA (each, a "Pension Plan") that is intended to
meet the requirements of Section 401(a) of the Code meets such requirements, and
nothing has occurred and no condition exists that is reasonably likely to
adversely affect the qualified status of any such Pension Plan. The IRS has
issued a favorable determination letter with respect to the qualification under
the Code of each such Pension Plan and the IRS has not taken any action to
revoke any such letter. Moreover, nothing has occurred and no condition has
existed since the
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date of the most recent IRS favorable determination letter that would reasonably
be expected to cause the loss of such qualification.
(e) At no time during the past six years has the Company or any ERISA
Affiliate contributed to or been required to contribute to any pension plan
subject to Title IV of ERISA or any multiemployer plan as defined in Section
3(37) of ERISA.
(f) Except as set forth in Schedule 3.22(f), there are no investigations,
currently in progress or, to the knowledge of Seller, expected to be instituted
in the future, relating to any Employee Benefit Plan, by any administrative
agency, whether local, state or federal.
(g) Except as set forth on Schedule 3.22(g), no Employee Benefit Plan
provides medical, surgical, hospitalization, death or similar benefits (whether
or not insured) for employees or former employees of the Company or any Company
Subsidiary for periods extending beyond their retirement or other termination of
service, other than (i) coverage mandated by applicable law, (ii) death benefits
under any "pension plan," or (iii) benefits the full cost of which is borne by
the current or former employee (or his beneficiary).
(h) Except as set forth on Schedule 3.22(h), the consummation of the
transactions contemplated by this Agreement will not, either alone or in
combination with another event, (i) entitle any current or former employee or
officer of the Company or any ERISA Affiliate to severance pay, unemployment
compensation or any other payment, except as expressly provided in this
Agreement, or (ii) accelerate the time of payment or vesting, or increase the
amount of compensation due any such employee or officer. No amounts payable
under the Employee Benefit Plans will fail to be deductible for federal income
tax purposes by virtue of section 280G of the Code.
Section 3.23 Dealings with Affiliates. Schedule 3.23 sets forth a complete
list (including the parties) of all written contracts, arrangements or other
agreements in excess of $300,000 between the Company or any Company Subsidiary
or any of their respective Affiliates, officers or directors, on the one hand,
and Seller, the Retained Assets or any of their respective Affiliates, on the
other hand, existing at any time since the date of the Company's formation.
Seller heretofore has delivered or made available to Buyer true and complete
copies of each such contract, arrangement or other agreement.
Section 3.24 Brokerage. No broker, finder or investment banker is entitled
to any brokerage, finder's or other fee or commission from the Company or any of
the Company Subsidiaries in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of the Company.
Section 3.25 Lycos Asia. Except as set forth on Schedule 3.25, there are no
contractual obligations preventing the Company and the Company Subsidiaries from
engaging in any line of business or competing with any other Person or entity in
China, Japan, Korea and Southeast Asia.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as of the date of this Agreement
(or, if made as of a specified date, as of such date), and as of the Closing
Date as though made on the Closing Date:
Section 4.1 Corporate Status. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the Republic of Korea.
Section 4.2 Authorization, etc.
(a) Buyer has the requisite power and authority (corporate or otherwise) to
execute and deliver this Agreement, to perform fully its obligations hereunder,
and to consummate the transactions contemplated hereby. The execution, delivery
and performance by Buyer of this Agreement, and the consummation of the
transactions contemplated hereby, have been duly authorized by the board of
directors of Buyer and no other corporate action on the part of Buyer is
necessary to authorize the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby.
(b) This Agreement has been duly and validly executed by Buyer and
constitutes a legal, valid and binding obligation of Buyer, enforceable against
it in accordance with its terms, except that such enforcement may be subject to
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to creditors' rights generally or to general principles of equity
(regardless of whether enforcement is sought in a proceeding at equity or at
law).
Section 4.3 No Conflicts, etc. The execution, delivery and performance by
Buyer of this Agreement, and the consummation of the transactions contemplated
hereby, do not and will not conflict with or result in a violation of or under
(with or without the giving of notice or the lapse of time or both) or result in
the acceleration of or give rise to any party the right to terminate, modify or
cancel under, or result in the loss of any rights, privileges, options or
alternatives under, or result in the creation of any Lien on any of the
properties or assets of Buyer under (i) the certificate of incorporation or
bylaws of Buyer, (ii) any Applicable Law applicable to Buyer or any of its
properties or assets, or (iii) any contract, agreement or other instrument
applicable to Buyer or any of its properties or assets, except for violations
and defaults that, individually and in the aggregate, are not reasonably likely
to materially impair the ability of Buyer to perform its obligations under this
Agreement or consummate the transactions contemplated hereby. Except as required
under the HSR Act and the Foreign Exchange Transaction Law of Korea, no
Governmental Approval or other Consent is required to be obtained or made by
Buyer in connection with the execution and delivery of this Agreement by Buyer
or the consummation by Buyer of the transactions contemplated hereby.
Section 4.4 Litigation. There is no Claim pending, or to Buyer's knowledge
threatened, by or against or affecting Buyer in connection with or relating to
the transactions contemplated by this Agreement or of any action taken or to be
taken in connection herewith or the consummation of the transactions
contemplated hereby.
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Section 4.5 Ability to Perform Obligations. Buyer is not a party to,
subject to, or bound by any agreement or Applicable Law that would be reasonably
likely to prevent or materially impair (i) the performance of its obligations
under this Agreement, or (ii) the consummation of the sale and purchase of the
Purchased Shares.
Section 4.6 Independent Investigation. In making the decision to enter into
this Agreement and to consummate the transactions contemplated hereby, other
than reliance on the representations, warranties, covenants and obligations of
Seller set forth in this Agreement, Buyer has relied solely on its own
independent investigation, analysis and evaluation of the Company (including
Buyer's own estimate and appraisal of the value of the business, financial
condition, assets, operations and prospects of the Company). Buyer confirms to
Seller that Buyer is sophisticated, knowledgeable and is capable of evaluating
the matters set forth above.
Section 4.7 Financing. Buyer has, and at the Closing will have, sufficient
cash resources and binding financing commitments in each case reasonably
satisfactory to Seller that provide sufficient funds in the aggregate to pay in
cash any and all amounts necessary to consummate the transactions contemplated
in this Agreement.
Section 4.8 Securities Matters.
(a) The Shares are being purchased for Buyer's own account and not with a
view to, or for sale in connection with, any distribution or public offering
thereof within the meaning of the Securities Act or any applicable state
securities laws. Buyer understands that the Shares have not been registered
under the Securities Act or any state securities laws by reason of their
contemplated transfer in a transaction exempt from the registration requirements
thereof and that the reliance of Seller upon such exemption is predicated in
part on Buyer's representations herein. No other Person has any right with
respect to or interest in the Shares acquired by Buyer, nor has Buyer agreed to
give any Person any such interest or right in the future.
(b) Buyer has such knowledge and experience in financial and business
matters such that it is capable of evaluating the merits and risks of the
investment contemplated by this Agreement and Buyer is able to bear the economic
risk of its investment in the Company (including a complete loss of its
investment). Buyer represents it is an "accredited investor" as that term is
defined in Regulation D promulgated under the Securities Act.
(c) Buyer recognizes that no public market exists for the Shares, and no
representation has been made to Buyer that any such public market will exist in
the future. Buyer understands that it must bear the economic risk of its
investment in the Company indefinitely unless the Purchased Shares are
registered pursuant to the Securities Act or an exemption from such registration
is available.
ARTICLE V
COVENANTS
Section 5.1 Covenants of Seller.
(a) Public Announcements. Seller shall not, and shall not permit the
Company, the Company's Affiliates or any of Seller's Affiliates or
representatives to, make any public
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announcement in respect of this Agreement or the transactions contemplated
hereby without the prior written consent of Buyer except as required by
Applicable Law (in which case Buyer will be provided prior notice and shall be
allowed reasonable time to comment on any such announcement prior to
dissemination to the public).
(b) Conduct of Business. From the date hereof to the Closing Date, except
as set forth on Schedule 5.1(b) or as otherwise contemplated by this Agreement
or as otherwise consented to by Buyer in writing, Seller shall cause the Company
and the Company Subsidiaries to:
(i) carry on the Company Business in the ordinary course;
(ii) not enter into any new employment agreement or collective
bargaining agreement or commitment or make any material changes to
employment terms (including, but without limitation, any commitment to pay
retirement or employee benefits other than those relating to the Stock
Plans) to or with any of the employees of the Company, except in the
ordinary course of business;
(iii) not (A) enter into or terminate any Lease, (B) create any Liens
on any of the assets of the Company or the Company Subsidiaries except
Permitted Liens, or (C) enter into, or make any modifications of or changes
in or terminate, any material Contract if such action would be adverse to
the Company, unless such modification, change or termination has been
consented to by Buyer (such consent not to be unreasonably withheld);
(iv) not sell, transfer, lease to others or otherwise dispose of any
assets other than as expressly provided in this Agreement, except for such
licenses and leases granted in the ordinary course of business and
consistent with past practice or canceled or compromise any debtor claim,
or waive or release any right of substantial value;
(v) not dispose of or permit to lapse any material rights to the use
of any material Company Intellectual Property in material markets (North
America, Europe and East Asia), or dispose of or disclose to any Person any
trade secret, formula, process, know-how or other Company Intellectual
Property not theretofore a matter of public knowledge other than to
representatives of Buyer or any other Person in connection with the current
sale of the Company or in the ordinary course of business pursuant to a
confidentiality agreement substantially in the form attached hereto as
Schedule 3.11(g);
(vi) not make any commitment for capital expenditures;
(vii) not make any change in the accounting or auditing methods,
practices or principles of the Company or make or rescind any Tax election
or change any method of accounting for Tax purposes other than as required
by accounting rules and regulations;
(viii) maintain in full force and effect the existing insurance
described on Schedule 3.19.
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(ix) not cause any change in the composition of its board of directors
and its officers, except as set forth on Schedule 5.1(b);
(x) not write-off or take any action to accelerate the payment of
accounts receivable, including the grant of discounts, waivers or offsets
as an incentive to payment of such amounts except in the ordinary course of
business and consistent with past business practice;
(xi) pay all trade payables of the Company and its Subsidiaries in the
ordinary course of business consistent with past practice;
(xii) not take any action to obtain a refund of any prepaid expenses;
(xiii) not enter into any transactions with Seller or its Affiliates
except as expressly provided for in Article II hereof; and
(xiv) not agree or consent, whether in writing or otherwise, to take
any action in violation of this Section 5.1.
(c) Further Actions. As promptly as practicable, Seller shall use
commercially reasonable efforts: (i) to take all actions and to do all things
necessary, proper or advisable to consummate the transactions contemplated
hereby by the Closing Date; and (ii) to use all reasonable efforts to obtain, or
cause to be obtained, all Consents (including all Governmental Approvals and any
Consents required under any Contract) necessary to be obtained by it in order to
consummate the transactions contemplated pursuant to this Agreement.
(d) Further Assurances. Following the Closing, Seller shall from time to
time, execute and deliver such additional instruments, documents, conveyances or
assurances and take such other actions as shall be necessary, or otherwise
reasonably requested by Buyer, to confirm and assure the rights and obligations
provided for in this Agreement and render effective the consummation of the
transactions contemplated hereby. At Buyer's expense for Seller's reasonable
third party expenses and at Buyer's reasonable request, for a period not to
exceed 12 months from the date of the Closing, Seller shall cooperate with
Buyer, including by providing Buyer and Buyer's accountants reasonable access
during normal business hours to information and to Seller's accountants, in the
preparation of any financial statements required to be prepared by the Company
or Buyer in connection with Buyer's filings and with any Governmental Authority.
(e) Dividends, Issuance of, or Changes in Securities. Except as
contemplated by Section 2.4, Seller will not and will not allow the Company to:
(i) declare or pay any dividends on or make other distributions to Seller
(whether in cash, shares or property), (ii) issue, deliver, sell, or authorize,
propose, or agree to, or commit to the issuance, delivery, or sale of any shares
of its capital stock of any class, any securities convertible into or
exchangeable for its capital stock, or any options, warrants, calls, conversion
rights, commitments, agreements, contracts, understandings, restrictions,
arrangements or rights of any character obligating the Company to issue any such
shares or other convertible or exchangeable securities; (iii) split, combine or
reclassify any of its capital stock or issue or authorize the issuance of any
other securities in respect of, in lieu of or in substitution for shares of
capital stock of the Company, (iv) repurchase
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or otherwise acquire, directly or indirectly, any shares of its capital stock or
options or warrants related thereto, or (v) propose any of the foregoing.
(f) Governing Documents. From the date hereof to the Closing, Seller shall
not allow the Company or any Company Subsidiary to amend its articles of
incorporation or by-laws or merge with or into or consolidate with any other
Person or change or agree to change in any manner the rights of its outstanding
capital stock or the character of its business.
(g) Access to Information. From the date hereof to Closing, Seller shall
afford Buyer, at reasonable times, with access to all books, records, data and
information as may be reasonably requested in connection with the transactions
contemplated herein, provided that all information received by Buyer and given
by or on behalf of Seller, the Company or the Company Subsidiaries in connection
with this Agreement and the transactions contemplated hereby will be held by
Buyer and its Affiliates, agents and representatives as Confidential
Information, as defined in, and pursuant to the terms of, the Confidentiality
Agreement.
(h) No Other Negotiation. From the date hereof to the Closing Date, Seller
and its directors, officers, employee, agents and representation shall not
directly or indirectly (i) engage in negotiations with third parties or respond
to solicitations by third parties relating to the sale of the Shares or the
assets or properties of the Company or Company Subsidiaries, other than Retained
Assets; provided, however, that nothing in this provision shall prohibit Xxxxxx
Brothers from contacting former bidders to apprise them of the transactions
contemplated herein, provided, further, that Xxxxxx Brothers shall not disclose
the identity of Buyer or the terms and conditions of this Agreement unless
otherwise disclosed by the parties hereto in a press release or (ii) enter into
any agreement or commitment (whether or not binding) with respect to any of the
foregoing transactions.
(i) Notice of Certain Matters. Seller shall give notice to Buyer promptly
after becoming aware of (i) the occurrence or non-occurrence of any event whose
occurrence or non-occurrence would cause either (A) any representation or
warranty contained in this Agreement to be untrue or inaccurate in any material
respect at any time from the date hereof to the Closing Date or (B) any
condition set forth in Article VI to be unsatisfied in any material respect at
any time from the date hereof to the Closing Date and (ii) any material failure
by Seller, the Company or any Company Subsidiary or any officer, director,
employee or agent thereof, to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder; provided, however,
that the delivery of any notice pursuant to this section shall not limit or
otherwise affect the remedies available hereunder to the party receiving such
notice.
Section 5.2 Covenants of Buyer.
(a) Public Announcements. Buyer shall not, and shall not permit its
Affiliates to, make any public announcement in respect of this Agreement or the
transactions contemplated hereby without the prior written consent of Seller
except as required by Applicable Law (in which case Seller shall be provided
prior notice and be allowed reasonable time to comment prior to dissemination to
the public).
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(b) Further Actions. As promptly as practicable, Buyer shall (i) use
commercially reasonable efforts to take all actions and to do all things
necessary, proper or advisable to consummate the transactions contemplated
hereby by the Closing Date; and (ii) use all reasonable efforts to obtain, or
cause to be obtained, all Consents (including all Governmental Approvals and any
Consents required under any Contract) necessary to be obtained by it in order to
consummate the transactions contemplated pursuant to this Agreement. Buyer shall
use its commercially reasonable efforts, following Closing and thereafter, to
eliminate or reduce the amount of Taxes as to which Seller may otherwise have an
obligation to indemnify Buyer or the Company, provided, that Buyer shall not
take any action without the consent of Seller which might jeopardize the
interest of Seller, provided further, that Buyer and the Company shall not be
required to expend any money to accomplish such efforts or pay such Taxes and,
provided, further, that the provisions of Section 5.6(c) shall govern contests,
audits and proceedings described in such section.
(c) Further Assurances. Following the Closing, Buyer shall, from time to
time, execute and deliver such additional instruments, documents, conveyances or
assurances and take such other actions as shall be necessary, or otherwise
reasonably requested by Seller, to confirm and assure the rights and obligations
provided for in this Agreement and render effective the consummation of the
transactions contemplated hereby. At Seller's expense for Buyer's reasonable
third party expenses and at Seller's reasonable request, for a period not to
exceed 12 months from the date of the Closing, Buyer shall cooperate with
Seller, including by providing Seller and Seller's accountants reasonable access
during normal business hours to information and to Buyer's accountants, in the
preparation of any financial statements required to be prepared by Seller in
connection with Seller's filings and with any Governmental Authority.
(d) Representations and Warranties. From the date hereof to the Closing
Date, Buyer shall not take any action or omit to take any action that would
cause any of the representations or warranties contained in Article IV not to be
true and correct at any time between the date hereof and the Closing Date.
(e) Acquiring Corporation. Buyer shall cause there to be organized a
corporation under the laws of a State of the United States to directly acquire
the shares of the Company from Seller ("Acquiring Corporation"). For the taxable
period commencing immediately after the end of the day which is the Closing Date
(within the meaning of Treasury Regulation Section 1.1502-76(b)(1)(ii)),
Acquiring Corporation will include the Company in a consolidated return which
will be filed by the Acquiring Corporation. In furtherance thereof, Acquiring
Corporation shall cause the Company to file a Form 1122 to be attached to the
consolidated return for the taxable year commencing on the day immediately
following the Closing Date filed by the Acquiring Corporation in accordance with
the requirements of Regulation Section 1.1502-75T(h)(2). For any period prior to
the inclusion of the Company in the consolidated group of the Acquiring
Corporation, Acquiring Corporation will not permit the Company or the Company
Subsidiaries to generate any income or earnings and profits, other than in the
ordinary course of the Company's or Company Subsidiaries' trade or businesses.
Not in limitation of the foregoing, Buyer shall not permit the Company or the
Company Subsidiaries to file an election pursuant to Section 338(g) of the Code.
- 29 -
(f) Restricted Cash. Buyer covenants and agrees that, commencing on the
Closing Date, Buyer shall not, and shall not permit the Company or, to the
extent within Buyer's or the Company's control, any third party to, create,
incur, assume or permit to exist any Lien upon the Restricted Cash, the bank
account where the Restricted Cash is held, or any Permitted Investments in
respect of the Restricted Cash, or upon the Company's, the Buyer's or Seller's
rights with respect to the Restricted Cash, the bank account where the
Restricted Cash is held, or any Permitted Investments in respect of the
Restricted Cash, or sell or assign Buyer's, Seller's or the Company's interest
in the Restricted Cash, the bank account where the Restricted Cash is held, or
any Permitted Investments in respect of the Restricted Cash, other than any Lien
that exists upon the Restricted Cash, the bank account where the Restricted Cash
is held, or any Permitted Investments in respect of the Restricted Cash on the
Closing Date. In addition, Buyer covenants and agrees that, commencing on the
Closing Date and for as long as it controls investment decisions with respect to
Restricted Cash, the Restricted Cash will be invested solely in Permitted
Investments, until such time as the balance of the Purchase Price is paid to
Seller pursuant to the provisions of Section 2.2(a) hereof; provided that, in
investing the Restricted Cash in Permitted Investments, no such investment shall
cause the Restricted Cash to be insufficient for Buyer to pay to Seller amounts
specified in Section 2.2(a) hereof as when such amounts become due and payable.
Section 5.3 HSR Act Filing. In addition to and without limiting Seller's
and Buyer's covenants contained in Sections 5.1 and 5.2, respectively, each of
Seller and Buyer shall promptly, but in no event later than ten (10) business
days from the date of this Agreement, make the filings required of Seller and
Buyer, respectively, under the HSR Act, comply at the earliest practicable date
with any request for additional information received by Seller or Buyer from the
Federal Trade Commission or the Antitrust Division of the Department of Justice
pursuant to the HSR Act and cooperate with each other in connection with the
other's filing under the HSR Act and in connection with resolving any
investigation or other regulatory inquiry concerning the transactions
contemplated by this Agreement commenced by either the Federal Trade Commission
or the Antitrust Division of the Department of Justice.
Section 5.4 Books and Records. Buyer shall, following the Closing, give
Seller and its authorized representatives such reasonable access, during normal
business hours and upon prior notice, to books and records of the Company
(including without limitation all tax records) for periods ending on or before
the Closing Date as Seller may reasonably request. Buyer shall preserve all such
books and records for a period of seven years after the Closing; provided,
however, that Buyer shall have the right at any time to return any of such books
and records to Seller.
Section 5.5 Employee and Employee Benefit Matters.
(a) As of the Closing Date, Buyer shall cause the Company and each of the
Company Subsidiaries to continue the employment of each of their respective
employees, regardless of whether or not actively employed on the immediately
preceding business day (each a "Transferred Employee"). For the one-year period
immediately following the Closing Date, Buyer shall provide the Transferred
Employees with base salary, commissions and employee benefits (including health
and welfare benefits and retirement programs) that are, in the aggregate, no
less favorable than those provided to the Transferred Employees as of the date
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hereof. To the extent a Transferred Employee is entitled to any bonus payment in
accordance with the bonus plan in effect as of the date hereof, Buyer shall
cause the Company to pay such bonus payment, pro rated as of the Closing Date,
in accordance with the terms of the plan. Nothing in this Agreement shall be
construed as prohibiting Buyer or any of its Affiliates from terminating the
employment of any Transferred Employee for any reason (or for no reason)
following the Closing Date, provided that Buyer shall be fully responsible, and
shall indemnify Seller, for any liability or obligation arising from such
termination, including any liability and or obligation under the Worker
Adjustment and Retraining Notification Act ("WARN") arising in whole or in part
as a result of such termination.
(b) Severance.
(i) Effective as of the Closing Date and for at least one year
thereafter, Buyer shall cause the Company or a Company Subsidiary to
provide to each Transferred Employee other than those listed on Schedule
5.5(b) whose employment is terminated severance benefits and payments that
are no less favorable than the severance benefit and payment arrangements
to which such Transferred Employee is entitled as of the date hereof.
(ii) Effective as of and following the Closing, Seller shall pay and
shall assume all of the obligations of the Company and the Company
Subsidiaries under the agreements listed on Schedule 5.5(b). Seller and its
successors and assigns shall indemnify and hold harmless Buyer, the Company
and their Affiliates for any and all claims relating to such obligations.
(c) Vacation. Buyer shall cause the Company or a Company Subsidiary to
provide each Transferred Employee with any accrued and unused vacation days that
he or she is eligible to take in calendar year 2004 in accordance with the
vacation policy of the Company or the relevant Subsidiary as in effect as of the
date hereof and calculated up to immediately prior to the Closing Date to the
extent that such accrued and unused vacation time is properly accrued for on the
Company's balance sheet.
(d) Stock Plans. The parties hereto each acknowledge and agree that none of
the Stock Plans, and no award issued thereunder, is to be assumed by Buyer in
connection with the transactions contemplated hereby, and all obligations and
liabilities under such plans and such awards shall remain the sole
responsibility of Seller and its Affiliates. Notwithstanding the foregoing, at
Seller's sole cost and expense and provided that in no event shall Buyer, the
Company or their Affiliates be obligated to pay or have to incur any liability
with respect thereto, Buyer shall cause the Company to take all commercially
reasonable steps at the written instruction of Seller to facilitate and process
any exercises after the Closing of options granted under the Stock Plans to the
extent such options are then exercisable (the determination of such
exercisability to be made by Seller and communicated to the Company). Such steps
shall include, but shall not be limited to, appropriate communications with
optionees, the acceptance and processing of exercise notices and payments, and
the delivery of Seller ADSs pursuant to the exercise of such options (provided,
however, that the Company shall not be required to deliver a cumulative number
of ADSs on and after the Closing Date that exceeds the number of ADSs
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held in custody as of the Closing Date and provided to the Company). Buyer shall
cause the Company to transmit to Seller any proceeds received by the Company
from the exercise of such options as soon as practicable after the receipt
thereof.
Section 5.6 Tax Matters.
(a) Seller shall cause the Company to prepare and file on a timely basis
all Tax Returns of the Company and its Subsidiaries due on or prior to the
Closing Date. Seller shall, at the reasonable cost and expense of the Company,
prepare (and, to the extent permitted by law, timely file) all income Tax
Returns of the Company and its Subsidiaries (and any other Tax Return of the
Company for which the Tax obligation is determined at the shareholder level)
that are due after the Closing Date, but which relate to taxable periods ending
on or prior to the Closing Date. Such Tax Returns shall be prepared in a manner
consistent with past practice and in accordance with the requirements of
Applicable Law. To the extent any Tax Return prepared by Seller pursuant to the
preceding sentence is required to be filed by the Company, Seller shall deliver
such Tax Return to the Company no later than ten (10) business days prior to the
date such Tax Return is due, together with any Taxes required to be paid in
connection with such Tax Return, and Buyer shall remit such Taxes and cause the
Company to file such Tax Return on a timely basis. Buyer shall cause the Company
and the Company Subsidiaries to prepare and file on a timely basis all Tax
Returns that relate to taxable periods ending after the Closing Date; provided
that Seller shall be liable for Taxes of the Company and the Company
Subsidiaries relating to the portion of any Straddle Period ending on the
Closing Date, and shall pay all such Taxes to Buyer no later than five (5) days
after receipt of a copy of the Tax Return to be filed in connection with such
Taxes; provided, further, that such Straddle Period Tax Returns shall be
prepared in a manner consistent with past practice and in accordance with the
requirements of Applicable Law. To the extent any Tax Return prepared by the
Company pursuant to the preceding sentence is required to be filed by the
Company, Buyer shall deliver such Tax Return to Seller no later than ten (10)
business days prior to the date such Tax Return is filed. Buyer shall not amend
a Tax Return for any tax years ending on or before the Closing Date without the
prior written permission of Seller (which will not be unreasonably withheld).
(b) Buyer, the Company and Seller shall provide each other with such
assistance as may reasonably be requested by the others in connection with the
preparation of any return or report of Taxes, any audit or other examination by
any taxing authority, or any judicial or administrative proceedings relating to
liabilities for Taxes. Such assistance shall include making employees available
on a mutually convenient basis to provide additional information or explanation
of material provided hereunder and shall include providing copies of relevant
tax returns and supporting material. The party requesting assistance hereunder
shall reimburse the assisting party for reasonable out-of-pocket expenses
incurred in providing assistance. Buyer, the Company and Seller will retain for
the full period of any statute of limitations and provide the others with any
records or information which may be relevant to such preparation, audit,
examination, proceeding or determination.
(c) As soon as practicable after Buyer or the Company receives official
notice of any Tax contest, audit, or other proceeding of the Company for any
period for which Seller may be required to indemnify Buyer or the Company
pursuant to this Agreement, but in all events within five (5) business days of
the receipt of notice, Buyer shall notify or cause the Company to notify
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Seller in writing of such contest, audit, or other proceeding. In any case where
the Company is responsible under Applicable Law for the defense of such contest,
audit, or other proceeding, provided that Seller acknowledges in writing its
liability under this Agreement to hold Buyer and the Company harmless against
the full amount of any adjustment which may be made as a result of such audit or
proceeding, Seller shall have the right to conduct the defense at its expense,
whether such contest, audit, or other proceeding commenced before or commences
after the Closing, provided that Buyer shall be entitled to participate in such
audit or proceeding with a representative at Buyer's cost. Notwithstanding
Seller's obligations under this Agreement, Seller shall have no obligation to
pay or to indemnify or hold Buyer or the Company harmless from any Tax imposed
or assessed (1) in the event of a failure of Buyer or the Company to notify
Seller as required by this paragraph, or (2) in the event that Buyer or the
Company shall take any action with respect to any contest, audit, or other
proceeding without Seller's written consent, but only to the extent Seller is
prejudiced by such failure to notify or such action. If Seller does not assume
the defense of any such audit or proceeding, Buyer may defend the same in such
manner as it may deem appropriate, including, but not limited to, settling such
audit or proceeding after giving ten (10) days' prior written notice to Seller
setting forth the terms and conditions of settlement. Neither Buyer nor Seller
shall enter into any compromise or agree to settle any claim pursuant to any Tax
audit or proceeding which would adversely affect the other party for such year
or a subsequent year without the written consent of the other party, which
consent may not be unreasonably withheld or delayed, unless the party proposing
to enter into such compromise or settlement indemnifies the other party against
such adverse effect.
(d) All refunds, plus interest thereon, for Taxes for periods ending on or
before the Closing Date shall be property of Seller and such refunds, plus any
interest earned in connection with the refund, shall be paid to Seller by the
Company promptly upon receipt, to the extent not attributable to Tax losses
generated in any period ending after the Closing Date.
(e) Seller shall indemnify, defend and hold harmless Buyer, the Company and
the Company Subsidiaries against, and shall reimburse Buyer, the Company and the
Company Subsidiaries for, any and all Losses arising out of, based upon or
relating or attributable to (without duplication) all Taxes imposed on the
Company and the Company Subsidiaries relating or attributable to any tax period
ending prior to the Closing Date and the portion of any Straddle Period ending
immediately prior to the Closing, except to the extent that such amounts are
specifically taken into account in determining the Purchase Price, as such
Purchase Price is adjusted pursuant to the provisions of Sections 2.2 and 2.3.
The amount of Losses for which indemnification is available hereunder shall be
determined based upon the principles of Section 8.5(d).
Section 5.7 Intercompany Arrangements. Except as set forth on Schedule 5.7,
on or prior to the Closing Date, all intercompany accounts between the Company
and the Company Subsidiaries, on the one hand, and Seller and its Affiliates, on
the other hand, shall be paid off or otherwise eliminated. In addition, except
as otherwise contemplated by the Transition Services Agreement or as set forth
in Schedule 5.7, all agreements and commitments, whether written or oral, which
are solely between the Company and the Company Subsidiaries, on the one hand,
and Seller, its Affiliates and the Retained Assets, on the other hand, shall be
terminated and of no further effect, simultaneously with the Closing and without
any further action or liability on the
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part of the parties thereto. For the avoidance of doubt, each such Contract set
forth in Schedule 5.7 shall remain in full force and effect.
Section 5.8 Directors' and Officers' Insurance. During the five-year period
following the Closing Date, Buyer shall cause the Company: (i) to maintain
run-off directors' and officers' liability insurance policies (including
directors' and officers' liability, employee practice liability, and pension
trust liability) for the past and current officers and directors of the Company
and the Company Subsidiaries who are employees of the Company or any Company
Subsidiary at any time prior to the Closing Date with terms and coverage amounts
at least as favorable as the terms and coverage amounts of the directors' and
officers' insurance applicable to such past and current officers and directors
as of the date hereof; provided, however, that in no event shall Buyer or the
Company be required to pay aggregate premiums for insurance under this Section
5.8 in excess of 200% of the aggregate premiums paid for such insurance by
Seller or the Company, provided, further, that if such insurance is unavailable
at such cost, Buyer or the Company shall purchase the maximum insurance coverage
that is available at such cost, and (ii) not to amend the certificate of
incorporation, by-laws or analogous organizational document of the Company or
its Subsidiaries in any way to reduce or eliminate the level of indemnification
provided by any Company or Company Subsidiary to such past and current officers
and directors of the Company or any Company Subsidiary. As soon as practicable,
Buyer shall cause the Company to provide Seller with a copy of such insurance
policies or evidence of such coverage and renewals thereof.
ARTICLE VI
CONDITIONS PRECEDENT
Section 6.1 Conditions to Obligations of Each Party. The obligations of the
Parties to consummate the transactions contemplated hereby shall be subject to
the fulfillment on or prior to the Closing Date of the following conditions:
(a) No Injunction, etc. Consummation of the transactions contemplated
hereby shall not have been restrained, enjoined or otherwise prohibited by any
Applicable Law, including any order, injunction, decree or judgment of any court
or other Governmental Authority. No court or other Governmental Authority shall
have determined that any Applicable Law makes illegal the consummation of the
transactions contemplated hereby, and no proceeding with respect to the
application of any such Applicable Law to such effect shall be pending.
(b) All Requisite Governmental Approvals. All Governmental Approvals
necessary to permit the consummation of the transactions contemplated by this
Agreement and which are set forth on Schedule 6.1(b) shall have been obtained
and any waiting period (and any extension thereof) applicable to the
consummation of the transactions contemplated by this Agreement shall have
expired or been terminated.
Section 6.2 Conditions to Obligations of Buyer. The obligations of Buyer to
consummate the transactions contemplated hereby shall be subject to the
fulfillment (or waiver by Buyer) on or prior to the Closing Date of the
following additional conditions:
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(a) Representations; Performance. The representations and warranties of
Seller set forth in this Agreement shall be true and correct, without giving
effect to any qualification as to materiality or Material Adverse Effect
contained in any particular representation or warranty, as of the date of this
Agreement and as of the Closing Date (except for those representations and
warranties that address matters only as of a particular date, which need only be
true and correct as of such date) except to the extent any such breach together
with all other such breaches would not have a Material Adverse Effect.
(b) Officers' Certificates. Seller shall have delivered to Buyer a
certificate, dated the Closing Date and signed by its Chairman or Chief
Executive Officer, in a form reasonably satisfactory to both Parties, and a
certificate, dated the Closing Date and executed by the Secretary or an
Assistant Secretary, in a form reasonably satisfactory to both Parties.
(c) Consents. Seller shall have obtained and shall have delivered to Buyer
copies of all Governmental Approvals and Consents required to be obtained by
Seller in connection with the execution and delivery of the Agreement and the
consummation of the transactions contemplated hereby the absence of which would
have a Material Adverse Effect.
(d) Resignations. The sole director of the Company shall have tendered his
resignation, effective as of the Closing.
(e) Good Standing. Buyer shall have received a certificate of the State
Corporation Commission of the Commonwealth of Virginia dated as of a recent date
as to the due incorporation and good standing of the Company and the payment of
all excise taxes by the Company. Buyer shall have received a certificate from
the jurisdiction of incorporation of each Company Subsidiary listed on Schedule
6.2(e) dated as of a recent date as to the due incorporation and good standing
of such Company Subsidiary and the payment by it of all excise taxes.
Section 6.3 Conditions to Obligations of Seller. The obligation of Seller
to consummate the transactions contemplated hereby shall be subject to the
fulfillment (or waiver by Seller), on or prior to the Closing Date, of the
following additional conditions:
(a) Representations; Performance. The representations and warranties of
Buyer set forth in this Agreement shall be true and correct, without giving
effect to any qualification as to knowledge, materiality or Material Adverse
Effect (or any variation of such terms) contained in any particular
representation or warranty, as of the date of this Agreement and as of the
Closing Date (except for those representations and warranties that address
matters only as of a particular date, which need only be true and correct as of
such date) except to the extent any such breach together with all other such
breaches could not reasonably be expected to materially impair Buyer's ability
to consummate the transactions contemplated by this Agreement.
(b) Officers' Certificates. Buyer shall have delivered to Seller a
certificate, dated the Closing Date and signed by its President, in a form
reasonably satisfactory to both Parties.
(c) Consents. Buyer shall have obtained and shall have delivered to Seller
copies of all Governmental Approvals and Consents required to be obtained by
Buyer in connection with
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the execution and delivery of the Agreement and the consummation of the
transactions contemplated hereby.
ARTICLE VII
TERMINATION
Section 7.1 Termination. This Agreement may be terminated at any time prior
to the Closing Date:
(a) by the written agreement of Buyer and Seller;
(b) by Seller or Buyer by written notice to the other Party if the
transactions contemplated hereby shall not have been consummated pursuant hereto
by 5:00 p.m. Eastern Daylight Saving Time on October 1, 2004, provided that the
terminating Party shall not be in breach of this Agreement;
(c) by Buyer by written notice to Seller if any of the conditions set forth
in Section 6.1 or 6.2 shall not have been, or if it becomes apparent that any of
such conditions will not be, fulfilled by 5:00 p.m. Eastern Daylight Saving Time
on October 1, 2004, unless such failure shall be due to the failure of Buyer to
perform or comply with any of the covenants, agreements or conditions hereof to
be performed or complied with by it prior to the Closing; or
(d) by Seller by written notice to Buyer if any of the conditions set forth
in Section 6.1 or 6.3 shall not have been, or if it becomes apparent that any of
such conditions will not be, fulfilled by 5:00 p.m. Eastern Daylight Saving Time
on October 1, 2004, unless such failure shall be due to the failure of either
Seller to perform or comply with any of the covenants, agreements or conditions
hereof to be performed or complied with by it prior to the Closing.
Section 7.2 Effect of Termination. If this Agreement is terminated pursuant
to the provisions of Section 7.1, then this Agreement shall become void and have
no effect, without any liability to any Person in respect hereof or of the
transactions contemplated hereby on the part of any Party, or any of its
directors, officers, employees, agents, consultants, representatives, advisers,
stockholders or Affiliates, except (x) for any liability resulting from such
party's breach or default of this Agreement, or (y) the provisions of Sections
5.1(a), 5.2(a) and 7.3, Article VIII and Article IX and this Section 7.2 will
survive any such termination.
Section 7.3 Dispute Resolution. It is the intention of the Parties to
settle amicably by negotiation all disagreements and differences of opinion on
matters of performance, procedure and management arising out of this Agreement.
Accordingly it is agreed that the following procedure shall be followed prior to
the serving of written notice terminating this Agreement in accordance with this
Article VII or resorting to litigation in relation to any matter of dispute
between the Parties hereto concerning performance, procedure or management.
Subject to the provisions of Article VIII, in the event that any disagreement or
difference of opinion arises out of this Agreement the matter shall be disposed
of thus:
(a) the General Counsels and/or Chief Executive Officers of both Seller and
Buyer, shall meet to attempt resolution. Should they not meet within ten (10)
days of the date on which
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either Party requests a meeting to resolve the matter or should they not be able
to resolve the matter within ten (10) days of their first meeting, then
(b) the matter shall promptly be referred by either Party to the Chief
Executive Officer or Executive Chairman of Seller and Buyer, respectively, for
immediate resolution. If, within ten (10) days of the matter first having been
referred to Chief Executive Officer or Executive Chairman of Seller and Buyer,
no agreement has been reached as to the resolution of the matter in dispute, the
dispute resolution process shall be deemed to have been exhausted in respect of
the matter in dispute, and each Party shall be free to pursue the rights granted
to it by this Agreement in respect of such matter without further reference to
the dispute resolution process.
ARTICLE VIII
INDEMNIFICATION
Section 8.1 Survival of Obligations.
(a) Except as set forth in paragraph (b) below, the representations,
warranties, covenants and agreements in this Agreement or any certificate
delivered pursuant hereto shall survive the Closing for a period of one year and
shall terminate and be of no further force or effect as of the date that is one
year after the Closing Date, except that (i) the representations and warranties
set forth in Sections 3.1, 3.2(a), 3.3, shall not terminate, (ii) the
representations and warranties set forth in Sections 3.10(a) shall survive the
Closing and shall terminate 90 days following the expiration of the relevant
statute of limitations, and (iii) covenants that by their terms survive the
Closing shall survive the Closing in accordance with their terms.
(b) Notwithstanding Section 8.1(a), (i) following the Closing, for as long
as such representations and warranties survive, any representation or warranty
that speaks as of a particular date shall continue to address matters only as of
such date and all other representations and warranties shall continue to address
matters as of the date hereof and as of the Closing Date and (ii) any claims
made pursuant to this Article VIII prior to the termination of any
representation and warranty but not resolved upon such termination shall survive
with respect to such claim until resolution of such claim.
(c) No investigation by, or furnishing of information to, either Party
shall affect the right of the other Party to rely on the representations,
warranties, covenants and agreements of the other Party set forth herein.
Section 8.2 Seller's Obligation to Indemnify. Subject to the provisions of
this Article VIII, subsequent to the Closing Seller shall indemnify and hold
harmless Buyer, the Company, the Company Subsidiaries and their respective
directors, officers, employees, agents, Affiliates and assigns (collectively,
the "Buyer Indemnified Persons") from and against all losses, liabilities,
damages, deficiencies, Taxes, costs or expenses, including interest and
penalties imposed or assessed by any judicial or administrative body and
reasonable attorneys' fees, accountants fees or other expert witnesses, whether
or not arising out of third-party claims and including all amounts paid in
investigation, defense or settlement of the foregoing (collectively, "Losses")
suffered or incurred by any Buyer Indemnified Person based upon, arising out of
or
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otherwise in respect of (a) any inaccuracy in or breach of any representation or
warranty of Seller in this Agreement or in any document or certificate delivered
pursuant hereto, (b) any breach of any covenant or agreement of Seller in this
Agreement, or (c) any Loss to the extent such Loss relates to the Retained
Assets, (d) any Loss related to the exercise, settlement, acceleration,
termination or expiration of any award granted under any of the Stock Plans
prior to the Closing until all such awards have been exercised or terminated,
(e) any Loss related to the Overture Litigation, net of any collection by the
Company on the accounts receivable received after the Closing Date from Overture
or its Affiliates, until such litigation is finally settled and all amounts
owing thereunder have been paid in full, (f) any Loss related to the termination
or assignment of the agreement with Manchester United which is referred to as
item 16 on Schedule 3.12, or (g) any Loss related to the arbitration proceedings
in Malaysia in connection with the work force reduction implemented by Lycos
Asia Limited in 2001 which is referred to on Schedule 3.21.
Section 8.3 Buyer's Obligation to Indemnify. Subject to the provision of
this Article VIII, subsequent to the Closing Buyer shall indemnify and hold
harmless Seller and its directors, officers, employees, agents, Affiliates and
assigns (collectively, the "Seller Indemnified Persons") from and against all
Losses suffered or incurred by any Seller Indemnified Person based upon, arising
out of or otherwise in respect of (i) any inaccuracy in or breach of any
representation or warranty of Buyer in this Agreement or in any document or
certificate delivered pursuant hereto, (ii) any breach of any covenant or
agreement of Buyer in this Agreement, (iii) any Losses of the Company or a
Company Subsidiary incurred as a result of any acts or omissions of the Company
or Buyer occurring or circumstances or conditions created by the Company or
Buyer in connection with the Company after the Closing Date.
Section 8.4 Limitations on Indemnification.
(a) Subject to Section 8.4(b), (i) Seller shall have no obligation to
indemnify Buyer Indemnified Persons pursuant to Section 8.2(a), unless and until
their aggregate amount of Losses exceeds $250,000, after which the obligation of
Seller shall be to indemnify the Buyer Indemnified Persons to the full extent of
such Losses and (ii) Buyer shall have no obligation to indemnify Seller
Indemnified Persons pursuant to Section 8.3(a) unless and until their aggregate
amount of Losses exceeds $250,000, after which the obligation of Buyer shall be
to indemnify the Seller Indemnified Persons to the full extent of such Losses.
(b) The limitations in Sections 8.4(a) and 8.4(c) shall not apply with
respect to (i) any Loss arising from a breach of any representation or warranty
made in Sections 3.1, 3.2(a), 3.3, 4.1 or 4.2(a), (ii) indemnification sought
pursuant to Section 8.2(d) and (e), (iii) indemnification sought pursuant to
Section 8.2(c), (iv) any Loss arising from a breach of any representation or
warranty made in Section 3.10(a), (v) any breach of Section 5.6 (except to the
extent such Loss arose from any action taken after the Closing Date by the
Company or its Affiliates, (vi) any Loss arising from any breach of Sections
2.2(a) or 5.2(f), or (vii) any fraudulent or intentional misrepresentation or
breach. The limitation in Section 8.4(a) shall not apply with respect to
indemnification sought pursuant to Section 8.2(g).
(c) No party shall be responsible to indemnify the other hereunder to the
extent that claims against the Indemnifying Party exceed $15,000,000.
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(d) Each Party will only be liable for actual Losses, and in no event shall
an Indemnifying Party have any liability for speculative, punitive,
consequential or multiple-based damages or for lost profits or lost business
opportunities, with regard to indemnification or other claims hereunder, except
to the extent that the Loss is to a third party that has become entitled to such
damages.
(e) Seller shall have no obligation to indemnify Buyer Indemnified Persons
for a breach of Section 3.16(b)(iii) except to the extent any party to the
Contracts referred to therein recovers Losses from the Company and the Company
Subsidiaries for any breach of such Contracts that occurred prior to the Closing
Date.
Section 8.5 Procedures Relating to Indemnification.(a) An indemnified
person under Sections 8.2 or 8.3 (the "Indemnified Party") shall give prompt
written notice to the indemnifying party (the "Indemnifying Party") of any Loss
in respect of which such Indemnified Party is seeking indemnification under
Section 8.2 or 8.3, specifying in reasonable detail the nature of such Loss and
the amount of such Loss (or if not then determinable, its best estimate of the
amount of such Loss), except that any delay or failure so to notify the
Indemnifying Party shall not relieve the Indemnifying Party of its obligations
hereunder unless it is unreasonably prejudiced by reason of such delay or
failure.
(b) If a Loss is suffered or incurred for or on account of or arises from
or in connection with any demand, claim, suit, action, cause of action,
investigation or inquiry by a person not party to this Agreement (a "Third Party
Claim"), the Indemnifying Party shall be entitled, if it so elects, to assume
the defense thereof by delivering a notice to the Indemnified Party within ten
(10) business days of receipt of the Indemnified Party's notice thereof,
including the employment of counsel reasonably satisfactory to the Indemnified
Party and the payment of all expenses. The Indemnified Party shall have the
right to employ separate counsel in such Third Party Claim and participate in
such defense thereof, but the fees and expenses of such counsel shall be at the
expense of the Indemnified Party unless (i) the employment of counsel by the
Indemnified Party has been authorized by the Indemnifying Party, or (ii) under
applicable standards of professional conduct, a material conflict or other
conflict in violation of ethical rules of professional conduct, between the
Indemnifying Party and the Indemnified Party exists with respect to such Third
Party Claim; in each such case the Indemnifying Party shall be responsible for
the fees and expenses of such separate counsel. The Indemnifying Party shall
not, without the Indemnified Party's prior written consent, settle or compromise
any Third Party Claim or consent to the entry of any judgment with respect to
any Third Party Claim which would have a material adverse effect on the
Indemnified Party, except that the Indemnifying Party may, without the
Indemnified Party's prior written consent, compromise or settle any such Third
Party Claim or consent to entry of any judgment with respect to any Third Party
Claim which requires solely money damages paid by the Indemnifying Party, and
which includes as an unconditional term thereof the release by the claimant or
the plaintiff of the Indemnified Party from all liability in respect of such
Third Party Claim.
(c) If the Indemnifying Party fails to assume the defense of any Third
Party Claim after notice thereof in accordance with this Section 8.5, the
Indemnified Party shall have the right to undertake the defense, compromise or
settlement of such Third Party Claim for the account of the Indemnifying Party,
subject to the right of the Indemnifying Party to assume the defense of
- 39 -
such Third Party Claim with counsel reasonably satisfactory to the Indemnified
Party at any time prior to the compromise, settlement or final determination
thereof. No Indemnified Party shall, without the Indemnifying Party's prior
written consent, which consent shall not be unreasonably withheld or delayed,
settle or compromise any Third Party Claim or consent to the entry of any
judgment with respect to any Third Party Claim unless such Indemnified Party has
undertaken the defense, compromise or settlement of such Third Party Claim in
accordance with this Section 8.5(c) and the compromise or settlement of such
Third Party Claim requires the Indemnifying Party to be responsible solely for
money damages, and which includes as an unconditional term thereof the release
by the claimant or the plaintiff of the Indemnifying Party from all liability in
respect of such Third Party Claim. The Indemnifying Party shall pay for any Loss
suffered or incurred for or on account of or arising from or in connection with
any Third Party Claim with respect to which an Indemnified Party has undertaken
the defense, compromise or settlement in accordance with this Section 8.5(c),
subject to the limitations set forth in this Agreement.
(d) The amount of any Losses for which indemnification is available
hereunder shall be an amount: (i) net of any Tax benefit actually realized by
the applicable Indemnified Party in the Tax year in which such amount is paid to
such Indemnified Party, and (ii) net of any insurance proceeds and any
indemnity, contribution or other similar payment paid by any third party with
respect thereto, and (iii) net of any reserves for such Losses which were taken
into account for purposes of determining the Purchase Price as such Purchase
Price is adjusted pursuant to the provisions of Sections 2.2 and 2.3. The amount
of the Tax benefits actually realized shall be determined by assuming that
available Tax losses, Tax deductions and other Tax attributes of the Indemnified
Party and its Subsidiaries from all other sources (including from prior Tax
years) shall be deemed to be utilized on a "first generated/first used" basis.
(e) To the extent that any provision of this Section 8.5 is in conflict
with any provision in Section 5.6 (c), the provisions of Section 5.6(c) shall
govern.
Section 8.6 Losses relating to the CMU License and Retained Assets.
Notwithstanding anything herein to the contrary, the Parties agree and
acknowledge that in no event shall Seller be required to indemnify Buyer
pursuant to this Article VIII for
(i) any Losses directly related to that certain License Agreement by
and between Carnegie Mellon University, CMG Information Services, Inc., CMG
@Ventures, L.P. and Lycos, Inc., dated as of June 16, 1995, as amended by
that certain Amendment and Waiver to License Agreement, dated February 9,
1996 (the "CMU License"), a true and complete copy of which was previously
delivered to Buyer, except to the extent such Losses arise from the failure
of Seller to disclose prior to the Closing Date any notification from CMU
of termination or alleged failure to pay royalty amounts under the CMU
License other than those relating to the items set forth on Schedule 8.6;
and
(ii) any Losses relating to the Retained Assets to the extent such
Losses arose from the failure of the Company or its Affiliates to perform
(i) after the Closing Date, any of their respective obligations under any
contract to which any of them is a party, other than the Lycos Europe
Agreements, or (ii) at any time prior to, on, or after the Closing Date,
any of their respective obligations with respect to the Lycos Europe
Agreements.
- 40 -
Section 8.7 Exclusive Remedy. Except as expressly provided for in Sections
5.5(b) and 5.6(e), the indemnification provided for in this Article VIII shall
be the sole and exclusive post-Closing remedies available to any party against
any other party for any claims under or based upon this Agreement.
ARTICLE IX
MISCELLANEOUS
Section 9.1 Summaries, Memoranda not Representations or Warranties. Buyer
acknowledges and agrees that neither Seller, any of its representatives nor any
other Person has made any representation or warranty, express or implied, as to
the accuracy or completeness of any memoranda, charts, summaries or schedules
heretofore made available by Seller or its representatives to Buyer or any of
its representatives or any information that is not included in this Agreement or
the Schedules hereto, and neither Seller, any of its representatives nor any
other Person will have or be subject to any liability to Buyer or any of its
representatives resulting from the distribution of any such information to, or
the use of any such information by, Buyer or any of its agents, consultants,
accountants, counsel or other representatives.
Section 9.2 Expenses. Except to the extent otherwise provided hereby, each
Party shall bear and be solely responsible for payment of its own expenses,
costs and fees (including attorneys' and auditors' fees and any brokerage,
finder's or other fee or commission incurred by it to any broker, finder or
investment banker retained by it in connection with the transactions
contemplated by this Agreement) incident to preparing for, entering into and
carrying out this Agreement and the consummation of the transactions
contemplated hereby, whether or not the transactions contemplated hereby shall
be consummated.
Section 9.3 Severability. If any provision of this Agreement, including any
phrase, sentence, clause, Section or subsection is inoperative or unenforceable
for any reason, such circumstances shall not have the effect of rendering the
provision in question inoperative or unenforceable in any other case or
circumstance, or of rendering any other provision or provisions herein contained
invalid, inoperative or unenforceable to any extent whatsoever and such
provision will be modified rather than voided, if possible, in order to achieve
the intent of the Parties to the extent possible. In any event, all other
provisions of this Agreement will be deemed valid and enforceable to the full
extent.
Section 9.4 Notices. All notices, requests, demands, approvals, consents,
waivers and other communications required or permitted to be given under this
Agreement (each, a "Notice") shall be in writing and shall be (a) delivered
personally, (b) mailed by first-class, registered or certified mail, return
receipt requested, postage prepaid, (c) sent by next-day or overnight mail or
delivery, or (d) sent by facsimile transmission, provided that the original copy
thereof also is sent by method (b) or (c).
if to Buyer, to:
Xxxx Communications Corp.
12th Floor, Dacom Xxxx.
000-0 Xxxxxxx-xxxx,
- 00 -
Xxxxxxx-xx, Xxxxx 135-987
Attention: Xxx-xxxxx Xxx
Facsimile: (00-0) 0000-0000
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxxx Xxxxxx, Esq.
Facsimile: (000) 000-0000
if to Seller, to:
Executive Chairman
Terra Networks, X.X.
Xxxxx Xxxxxxxxx, 00
00000 Xxxxxxxxx,
Xxxxx
Facsimile: (00-00) 000-0000
with a copy to:
General Counsel
Terra Networks, S.A.,
Xxx xx xxx Xxx Xxxxxxxxx, 00
Edit. Xxxxx 0
00000 Xxxxxxx xx Xxxxxxx
Xxxxxx
Xxxxx
Facsimile: (00-00) 000-0000
or, in each case, at such other address as may be specified in a Notice to
the other party hereto. All Notices shall be deemed effective and given upon
receipt or refusal of receipt.
Section 9.5 Attorneys' Fees. Subject to Article VIII, if any Party
initiates any legal action arising out of or in connection with this Agreement,
the court shall apportion all attorneys' fees, expert witness fees and expenses
incurred by the Parties in connection therewith as it deems fair and equitable.
Section 9.6 Headings. The headings contained in this Agreement are for
purposes of convenience only and shall not affect the meaning or interpretation
of this Agreement.
Section 9.7 Entire Agreement. This Agreement (including the Schedules and
Exhibits hereto) constitutes the entire agreement and supersedes all prior
agreements and understandings, both written and oral, between the Parties with
respect to the subject matter hereof, except for the Confidentiality Agreement
and written agreements executed by both Parties as of and following the date
hereof which will remain in full force and effect for the term provided for
therein.
- 42 -
Section 9.8 Counterparts. This Agreement may be executed (including by
facsimile transmission) with counterpart signature pages or in several
counterparts, each of which shall be deemed an original and all of which shall
together constitute one and the same instrument.
Section 9.9 Drafting History. In resolving any dispute or construing any
provision in this Agreement, there shall be no presumption made or inference
drawn (a) because the attorneys for one of the Parties drafted such provision of
this Agreement or (b) because of the inclusion of a provision not contained in a
prior draft or the deletion of a provision contained in a prior draft. The
Parties acknowledge and agree that this Agreement was negotiated and drafted
with each Party being represented by counsel of its choice and with each Party
having an equal opportunity to participate in the drafting of the provisions
hereof and shall therefore be construed as if drafted jointly by the Parties.
Section 9.10 Governing Law, etc. THIS AGREEMENT SHALL BE GOVERNED IN ALL
RESPECTS, INCLUDING AS TO VALIDITY, INTERPRETATION AND EFFECT, BY THE INTERNAL
LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS
RULES THEREOF. Each of the Parties hereby irrevocably submits to the
jurisdiction of the courts of the State of New York, and the Federal court of
the United States of America located in the Southern District of New York,
solely in respect of the interpretation and enforcement of the provisions of
this Agreement and of the documents referred to in this Agreement, and hereby
waives, and agrees not to assert, as a defense in any action, suit or proceeding
for the interpretation or enforcement hereof or of any such document, that it is
not subject thereto or that such action, suit or proceeding may not be brought
or is not maintainable in said courts or that the venue thereof may not be
appropriate or that this Agreement or any of such documents may not be enforced
in or by said courts, and the Parties hereto irrevocably agree that all claims
with respect to such action or proceeding shall be heard and determined in such
a New York or Federal court. Each of the Parties hereby consents to and grants
any such court jurisdiction over the person of such party and over the subject
matter of any such dispute and agrees that mailing of process or other papers in
connection with any such action or proceeding in the manner provided in Section
9.4, or in such other manner as may be permitted by law, shall be valid and
sufficient service thereof. EACH OF BUYER AND SELLER HEREBY IRREVOCABLY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY LAW, ALL RIGHTS TO TRIAL BY JURY IN ANY
ACTION, PROCEEDING, OR COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT OR
OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE
TRANSACTIONS CONTEMPLATED HEREBY.
Section 9.11 Service of Process. The Parties hereto agree to receive
service by personal delivery or by registered mail of all process in any
Proceeding of any nature arising out of or relating to this Agreement at their
respective addresses specified in Section 9.4, such service being hereby
acknowledged by the Parties to be effective and binding service in every
respect. The Parties hereby agree that service upon them by mail shall
constitute sufficient notice. Notices delivered by mail hereunder shall be
presumed received as evidenced by a delivery receipt furnished by the United
States or Spanish Postal Service or any commercial delivery service. The Parties
hereto also irrevocably consent to the service of process out of any of the
aforementioned courts in any such Proceeding by the mailing of copies thereof by
registered or
- 43 -
certified mail, postage prepaid, to such Parties at their respective addresses
specified in Section 9.4.
Section 9.12 Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the Parties and their respective heirs, successors and
permitted assigns.
Section 9.13 Assignment. This Agreement shall not be assignable or
otherwise transferable, by operation of law or otherwise, by Buyer or Seller
without the prior written consent of the other Party hereto; provided, however,
that either Party may assign or transfer, by operation of law or otherwise, this
Agreement to any of its wholly owned Subsidiaries or direct or indirect parent
(it being understood and agreed that no such assignment or transfer by either
Party pursuant to this proviso shall relieve either Party of any of its
obligations hereunder). Any attempted assignment in violation of this Section
9.13 will be voidable and will entitle the other Party, to terminate this
Agreement at its option.
Section 9.14 No Third Party Beneficiaries. Nothing in this Agreement shall
confer any rights upon any Person other than the Parties and their respective
legal representatives, successors and permitted assigns.
Section 9.15 Amendment; Waivers, etc. No discharge of this Agreement, and
no waiver hereunder, shall be valid or binding unless set forth in writing and
duly executed by the Party against whom enforcement of the discharge or waiver
is sought. Any such waiver shall constitute a waiver only with respect to the
specific matter described in such writing and shall in no way impair the rights
of the Party granting such waiver in any other respect or at any other time.
Neither the waiver by any of the Parties of a breach of or a default under any
of the provisions of this Agreement, nor the failure by any of the Parties, on
one or more occasions, to enforce any of the provisions of this Agreement or to
exercise any right or privilege hereunder, shall be construed as a waiver of any
other breach or default of a similar nature, or as a waiver of any of such
provisions, rights or privileges hereunder. No amendment to this Agreement shall
be valid or binding unless set forth in writing and duly executed by all the
Parties.
Section 9.16 Transfer, Sales, Documentary, Stamp and Other Similar Taxes.
Any and all federal, state, local, foreign and other transfer, sales, use,
documentary, stamp and other similar Taxes imposed or arising out of the
transactions contemplated by this Agreement will be shared equally by Buyer and
Seller.
Section 9.17 Failure to Close. If for any reason this Agreement is
terminated prior to the Closing Date, Buyer shall return to Seller all documents
and other information, including all originals and all copies thereof,
theretofore delivered in connection with the transaction contemplated hereunder
to Buyer or Seller. Buyer shall not retain copies of any such documents or other
information, and shall not thereafter for a period of five years disclose to any
person for any purpose or use any information conveyed to Buyer in connection
with the transactions contemplated by this Agreement, except for such
information that: (a) was possessed by Buyer without an obligation of
confidentiality prior to the disclosure thereof by the Company or Seller; (b)
was disclosed to Buyer by an independent third party without a violation of any
obligation of confidentiality on the part of such third party to the Company or
Seller; (c) is ascertainable from
- 44 -
public or published information or trade sources; or (d) is required to be
disclosed by law or court order.
Section 9.18 No Solicitation. From the date hereof until the Closing Date
(or the earlier termination of this Agreement), Buyer shall not, and shall not
authorize or permit its Subsidiaries to, directly or indirectly, solicit,
initiate or encourage any officers or employees of the Company to enter into any
employment, management, consulting or other similar type of agreements with
Buyer or a Subsidiary of Buyer other than general solicitations of employment
not specifically directed at such officers or employees of the Company. In the
event of an early termination of this Agreement for whatever reason, the
foregoing non-solicitation obligation set forth in this Section 9.18 shall be
extended until the third anniversary of such early termination.
- 45 -
IN WITNESS WHEREOF, the Parties have duly executed this Agreement as of the
date first above written.
TERRA NETWORKS, S.A.
By: /s/ Xxxxxxx Xxxxx
-------------------------------
Name: Xxxxxxx Xxxxx
Title: Executive Chairman
XXXX COMMUNICATIONS, CORP.
By: /s/ Xxx Xxxxx-Xxx
-------------------------------
Name: Xxx Xxxxx-Xxx
Title: Chief Executive Officer
SELLER
STOCK PURCHASE AGREEMENT
DISCLOSURE SCHEDULE
This Disclosure Schedule (the "Disclosure Schedule") is being
delivered pursuant to the Stock Purchase Agreement dated as of July 30, 2004
(the "Agreement") between Terra Networks, S.A., a corporation organized and
existing under the laws of the Kingdom of Spain ("Seller"), and Daun
Communications, Corp., a corporation organized and existing under the laws of
Korea (the "Buyer"). Capitalized terms used but not defined herein shall have
the meanings ascribed to them in the Agreement.
The Section numbers in this Disclosure Schedule correspond to the
Section numbers in the Agreement. Disclosure of any information or document
herein is not a statement or admission that it is material or required to be
disclosed herein. References to any document do not purport to be complete and
are qualified in their entirety by the document itself.
Schedule 1.1(a)
Company Intellectual Property
1. Search 8 (The LycoPedia): A suite of technology designed to aggregate
and process web documents into a searchable index. A content
processing and presentation capability that includes intelligent
document chunking, chunk categorization and topic disambiguation.
2. Lycos Circles: Circles is a technology authoring, collaboration and
content management suite enabling users to keep in touch with the
groups of people they are able to define and discover.
3. Biz Manager: Biz Manager is a product that provides a user interface
that allows advertising buyers the ability to manage and optimize
multiple online acquisition campaigns and also generates different
reporting.
Schedule 1.1(b)
Short Term Investments
As of July 28, 2004, Lycos, Inc. owns the following interests*:
Agreements
Cost of the Governing
Name Percentage Interest Investment Investment
--------------------------------------------------------------------------------
Dynabazaar 2.52% (724,823 shares) $0 None
(formerly Fairmarket)
Total Sports Online ASA 1.47% (141,279 shares) $105,323 None
Cross Media, Inc. 0.03% (13,073 shares) $101,316 None
(formerly Lifeminders)
Autobytel, Inc. 0.24% (98,344 shares) $6,753,550 Stockholders
(formerly Autoweb) Agreement,
dated April
18, 2000
--------------
*Retained Assets
Schedule 2.2(b)
Certificate on Working Capital, Debt and Accrued Tax Liabilities
See Attached.
Column A Column B
---------------- --------------
___/30/2004 Closing Closing date
$__/30/2004 Adjustments Adjusted for SPA Date Adjustments Adjusted for SPA Notes
------------ ----------- ---------------- ------- ----------- ---------------- -----------
Adjusted to
exclude
Accounts Receivable 9,197,266 (946,305) 8,248,951 XXX XXX TBD Overture
Allowance for Doubtful Accounts (1,024,034) -- (1,024,034) XXX XXX TBD
Proceeds and Other Current Assets 4,201,001 -- 4,201,001 XXX XXX TBD
------------ ----------- ---------------- ------- ----------- ---------------- -----------
TOTAL CURRENT ASSETS 12,455,094 -- $1,504,700 XXX XXX TBD
Cash Clearing - ADP Exp. Reimb. 52,012 -- 52,012 XXX XXX
FICA - Employee Bonuses 109,189 -- 109,198 XXX XXX
Fed Unemploy WH-Foreign Tax WH 17,320 -- 17,320 XXX XXX
Flex Spending Print. Withheld 30,294 -- 30,294 XXX XXX
Stock Purchase Plan Withheld 13,777 -- 13,777 XXX XXX
Accrued Credit Card Fees 39,275 -- 39,275 XXX XXX
Adjusted to
exclude
Accr Royalties - Partner Content 931,229 (93,020) 838,209 XXX XXX TBD Overture
Security Deposit Payable 90,223 -- 90,223 XXX XXX
Accrued Rent 225,676 -- 225,876 XXX XXX
Accrued Losses 79,876 -- 79,864 XXX XXX
Accrued Consulting 81,944 -- 61,944 XXX XXX
Accrued Utilities 275,291 -- 270,201 XXX XXX
Accrued Bandwidth 179,615 -- 179,615 XXX XXX
Adjusted to
exclude
Accrued Content and Product Dvl. 2,630,037 (2,570,280) 100,567 XXX XXX TBD Overture
Accrued Wages 661,054 -- 667,068 XXX XXX
Accrued Travel & Entertainment 164,001 -- 164,061 XXX XXX
Accrued Vacation 818,248 -- 818,240 XXX XXX
Accrued Advertising 1,387,718 -- 1,387,718 XXX XXX
Accrued Insurance 28,118 -- 20,110 XXX XXX
Accrued Audit 109,008 -- 109,060 XXX XXX
Adjusted to
exclude
Accrued Legal 4,880,879 (3,000,000) 1,860,878 XXX XXX TBD Overture
Accrued On-Line Services 11,784 -- 11,764 XXX XXX
Accrued Commissions 120,000 -- 120,000 XXX XXX
Accrued Employee Motivational 31,454 31,464 XXX XXX
Xxxxxx X Xxxxxx X
---------------- --------------
___/30/2004 Closing Closing date
$__/30/2004 Adjustments Adjusted for SPA Date Adjustments Adjusted for SPA Notes
------------ ----------- ---------------- ------- ----------- ---------------- -----------
Accrued Traffic 1,226,393 1,226,393 XXX XXX
Accrued Ad Server 466,025 466,026 XXX XXX
Accrued Lic. & Maintenance Fees 579,535 679,535 XXX XXX
Accrued Bonus 972,239 972,239 XXX XXX
Accrued Severance 2,545,442 2,545,442 XXX XXX
Other Accrued Liab. Curr. Grp. Co. 707,991 707,091 XXX XXX
Other Accrued Expenses 452,989 402,000 XXX XXX
------------ ----------- ---------------- ------- ----------- ---------------- -----------
TOTAL Accrued Expenses (including
tax-related) 20,491,586 14,728,288 XXX XXX
Accounts Payable 80,722 60,722 XXX XXX
Deferred Revenue 3,291,394 3,291,394 XXX XXX
TOTAL CURRENT LIABILITIES 14,100,402
WORKING CAPITAL (4,593,413)
Purchase Price Adjustment Calculation
Restricted Cash
Less: NPV Adjustment to
Restricted Cash1
Less: Decrease in w/c Column A
less Column B
Less: Debt
Total Purchase Price Adj. (if positive, purchase price adjusted up; if negative,
purchase price adjusted down)
(1) NPV Adjustment to Restricted Cash based on calculation in Schedule
2.2(o)(o)
Schedule 2.2(b)(i)
Certificate on Restricted Cash
See Attached.
Lycos, Inc.
Restricted Cash Analysis
(figures in US$)
LOC # Beneficiary 5/1/04 6/1/04 7/1/04 8/1/04 9/1/04 10/1/04 11/01/04 12/1/04
------- ---------------------- ---------- ---------- ---------- ---------- ---------- --------- --------- ---------
1141117 Prospect Hill 3,290,000 3,290,000 3,290,000 3,290,000 3,290,000 3,290,000 3,290,000 3,290,000
1295830 CSI 4,500,000 4,500,000 2,750,000 2,750,000 2,750,000 1,000,000 1,000,000 -
BJW Associates, NY 468,000 468,000 468,000 468,000 468,000 468,000 468,000 468,000
---------- ---------- ---------- ---------- ---------- --------- --------- ---------
Fleet Subtotal 8,258,000 8,258,000 6,508,000 6,508,000 6,508,000 4,758,000 4,758,000 3,758,000
---------- ---------- ---------- ---------- ---------- --------- --------- ---------
Fleet Pledge Amount* 11,797,143 11,797,143 9,297,143 6,508,000 6,508,000 4,758,000 4,758,000 3,758,000
BOA 4,027,000 4,027,000 4,027,000 4,027,000 4,027,000 1,715,743 1,715,743 na
Dividends 163,589 167,050
---------- ---------- ---------- ---------- ---------- --------- --------- ---------
Total BOA 4,190,869 4,194,050 4,027,000 4,027,000 4,027,000 1,715,743 1,715,743 -
---------- ---------- ---------- ---------- ---------- --------- --------- ---------
Total Restricted Cash 15,988,012 15,991,193 13,324,143 10,535,000 10,535,000 6,473,743 6,473,743 3,758,000
========== ========== ========== ========== ========== ========= ========= =========
Amounts Becoming Unrestricted
and to be paid to
Terra Networks 4,061,257 - 2,715,743
Discount Rate for payments on
6/30/05, 12/31/05 and 6/30/06
LOC # Beneficiary 1/1/05 2/1/05 6/30/05 12/31/05 6/30/06
------- ------------------------------------ ----------- --------- --------- --------- ---------
1141117 Prospect Hill 3,290,000 3,290,000 1,096,667 1,096,667 1,096,667 Expires 5/9/2006
1295830 CSI - -
BJW Associates, NY 468,000 468,000 156,000 156,000 156,000 Expires 6/30/2009
----------- --------- --------- --------- ---------
Fleet Subtotal 3,758,000 3,758,000 1,252,667 1,252,667 1,252,667
Fleet Pledge Amount* 3,758,000 3,758,000 1,252,667 1,252,667 1,252,667
BOA na na na na na
Dividends
----------- --------- --------- --------- ---------
Total BOA - - - - -
----------- --------- --------- --------- ---------
Total Restricted Cash 3,758,000 3,758,000 1,252,667 1,252,667 1,252,667
=========== ========= ========= ========= =========
Amounts Becoming Unrestricted
and to be paid to
Terra Networks - - 1,617,621 1,052,825 1,088,748
Discount Rate for payments on
6/30/05, 12/31/05 and 6/30/06 7%
NPV Adjustment to Restricted Cash 596,906
*Prior to mid-July, actual amount owed on the letters of credit was 30% less
than this number. Until that point, required to leave the total amount under the
letter of credits divided by a factor of .7.
Schedule 2.4
Exclusion of Certain Assets
1 Terra Networks U.S.A. LLC, and Subsidiaries
2. LE Holding Corp. and/or shares of Lycos Europe, N.V. held by Lycos,
Inc. or its Subsidiaries and agreements with respect to the equity of
such entity.
3. Loan from Lycos Business Trust I to Terra Networks, S.A. in the
principal amount of $130,000,000, plus all accrued interest pursuant
to Loan Agreement dated as of May 13, 2004.
4. Intercompany accounts receivables due from Terra Networks, S.A. or its
Affiliates to Lycos, Inc. or its Affiliates in respect of services
rendered other than pursuant to agreements listed Items 1-9 in
Schedule 5.7 or such accounts receivable which are terminated prior to
Closing.
6. Minority Interests in certain entities as described on Schedule 1.1(b)
as the same may exist on the Closing Date and equity related
agreements thereto.
7. All intercompany receivables owing by Terra Networks USA, Inc. to
Lycos, Inc. or its Affiliates as of the Closing Date.
8. All amounts owed by XxxXxxxxx.xxx, Inc. to Lycos, Inc. pursuant to the
following loan agreements:
a. Loan made by Lycos, Inc. to XxxXxxxxx.xxx, Inc. on November 21,
2003 in the principal amount of $299,574
b. Loan made by Lycos, Inc. to XxxXxxxxx.xxx, Inc. on March 6, 2004
in the principal amount of $349,020
c. Loan made by Lycos, Inc. to XxxXxxxxx.xxx, Inc. on April 29, 2004
in the principal amount of $232,680
9 Cash except Restricted Cash.
Schedule 3.2(b)
Company's Status and Xxxxxxxxxxxxx
0 Xxxxx xx Xxx Xxxx
0 Commonwealth of Virginia
3. Commonwealth of Massachusetts (to be completed prior to Closing)
4. Lycos Asia Limited and its Subsidiaries have not filed their statutory
accounts for the fiscal years 2002 and 2003. Lycos Asia Limited is in
the process of preparing the annual accounts and will use all
commercially reasonable efforts to complete such filings prior to
closing. Seller shall be responsible for all Taxes and fines
associated with such filings.
Schedule 3.4
Company Subsidiaries and Investments
(a)
Percentage
Owned
Name Jurisdiction of Organization by Lycos, Inc.
Wired Ventures, Inc. State of Delaware 100%
Lycos Japan, Inc. State of Delaware 100%
Lycos Americas I, Inc. State of Delaware 100%
Lycos Americas II, Inc. State of Delaware 100%
Lycos Intangibles, LLC State of Delaware 100%
Lycos (Australia) Pty Limited Commonwealth of Australia 100%
Tripod (Australia) Pty Limited Commonwealth of Australia 100%
Wired Digital, Inc. State of Delaware 100%
Wired Japan, YK Japan 100%
Lycos de Argentina, SRL Argentine Republic 100%
Lycos Business Trust I Commonwealth of Massachusetts 100%
Lycos Business Trust II Commonwealth of Massachusetts l00%
Quote LLC State of Delaware 100%
Lycos Asia Limited Singapore 100%
Subsidiaries of Lycos Asia Limited
Percentage
Owned by
Jurisdiction of Lycos Asia
Name Organization Limited
Lycos Asia (Singapore) Pte. Ltd. Singapore 100%
Lycos Asia (HK) Limited Hong Kong *50%
Mailcityasia (HK) Limited Hong Kong *50%
Tripod Asia (HK) Limited Hong Kong *50%
Pacific Harbour Investment Limited Hong Kong *50%
Triweb Resources Limited British Virgin Islands 100%
Cyber Rapid Developments Limited British Virgin Islands 100/o
Lycos Asia (M) Sdn Bhd Malaysia 100%
Lycos Asia Internet(Thailand) Limited Thailand 99.9%**
Lycos Asia Internet Private Limited Bangalore, India 50% by Lycos Asia
Limited
50% by Lycos Asia
(Singapore) Pt.
Ltd*
PT Lycos Asia Indonesia Indonesia 99.9%*
* 50% owned by Evergold Nominees Limited in trust for Lycos Asia Limited
** 1 share each held by Xxxx Xxx, Xxxxx Low, Xxxxxxx Xxxx, Xxxxxxx Xxxxx, Tan
Yew Sang, Xxx Xxx San and Nipa Wongyeekul.
*** Xxxx Xxx holds 375 shares. In accordance with the Stock Purchase Agreement
between Lycos, Inc. and Singtel, dated March 2004, Xx. Xxx is obligated to
transfer such shares to a designee of Lycos.
Affiliates
Percentage Owned by
Name Jurisdiction of Organization Lycos, Inc.
Terra Lycos Ventures, LP State of Delaware 13.2%
*Lycos Europe, N.V. Kingdom of Netherlands 32.1%
(b) Non-Affiliates/Minority Interests: As of July 28, 2004, Lycos, Inc. owns
the following interests*:
Agreements
Percentage Cost of the Governing
Name Interest Investment Investment
Dynabazaar (formerly 2.52% $0 None
Fairmarket) (724,823 shares)
Total Sports Online 1.47% $105,323 None
ASA (141,279 shares)
Cross Media, Inc. 0.03% $101,316 None
(formerly (13,073 shares)
Lifeminders)
Autobytel, Inc. 0.24% $6,753,550 Stockholders
(formerly Autoweb) (98,344 shares) Agreement, dated
April 18, 2000
* Retained Assets
Schedule 3.8
Accounts Receivable
None.
Schedule 3.9
Bank Accounts
Bank name Address Account # Account name
----------------- -------------------------------------------------------- --------------- ------------------------------------
Fleet Bank 000 Xxxxxxx Xxxxxx. MADE 12802B, Xxxxxx, XX 00000 937372-7094 Xxxxx, Inc.
Fleet Bank 100 Federal Street, MADE 12802B, Xxxxxx, XX 00000 942777-7370 Disbursement ZBA Acct
Fleet Bank 000 Xxxxxxx Xxxxxx. MADE 12802B. Xxxxxx, XX 00000 942838-0500 Xxxxxxxxxx.xxx
Fleet Bank 000 Xxxxxxx Xxxxxx, XXXX 00000X. Xxxxxx, XX 00000 942775-2894 Lycos HR Expense Acct
Fleet Bank 100 Federal Street, MADE 12802B, Xxxxxx, XX 00000 942913-7780 Lycos Homepages
Fleet Bank 100 Federal Street, MADE 12802B, Xxxxxx, XX 00000 942913-7801 Lycos Mali & search
HSBC Bank Xxxxx 000, 0xx Xxxxx, Xxxxxxxx Xx. Xxxxxxxx VLT 05 Malta 026066498401 Lycos Intangibles, LLC
South Trust Bank 000 Xxxxxxxx Xxx, Xxxxx 000, Xxxxxx, Xxxxx 00000 71021526 Lycos, Inc.
Comerica Bank X.X. Xxx 0000, Xxx, Xxxx, XX 00000-0000 1891571380 Xxxxx.xxx, Inc.
Fleet Bank 100 Federal Street, MADE 12802B, Xxxxxx, XX 00000 00-0000000 MM custodian for Lycos GS
Fleet Bank 100 Federal Street, MADE 12802B. Xxxxxx, XX 00000 04-3277338LC Loan Collateral Acct
Fleet Bank 000 Xxxxxxx Xxxxxx. MADE 12802B. Xxxxxx, XX 00000 0004443870 Custodian for Lycos Securities Corp.
Bank of America X.X. Xxx 00000, Xxxx# 0000, Xxx Xxxxxxxxx, XX 00000-0000 037105005089551 Collateral account for Lycos
Xxxxx Xxxx and Xxxxx Xxxxxxxx are authorized to make withdrawals
on all accounts.
Schedule 3.10
Tax Returns
(a)
(i)
ENTITIES JURISDICTION YEAR COMMENT
----------------------------- --------------------- -------- ----------------------
Lycos, Inc. and Subsidiaries Federal 2003 Extended until 9/15/04
California 2003 Extended until 9/15/04
Florida 2003 Extended until 9/15/04
Massachusetts 2003 Extended until 9/15/04
New York State 2003 Extended until 9/15/04
New York City 2003 Extended until 9/15/04
Washington D.C. 2003 Extended until 9/15/04
Georgia 2003 Extended until 9/15/04
New Jersey 2003 Extended until 9/15/04
Pennsylvania 2003 Extended until 9/15/04
Lycos, Inc. Washington D.C. 2003 Extended until 9/15/04
Georgia 2003 Extended until 9/15/04
New Jersey 2003 Extended until 9/15/04
Pennsylvania 2003 Extended until 9/15/04
Wired Digital, Inc. Washington D.C. 2003 Extended until 9/15/04
Lycos Business Trust I Massachusetts 2003 Extended until 9/15/04
Lycos Business Trust II Massachusetts 2003 Extended until 9/15/04
Quote LLC California 2003 Extended until 9/15/04
(ii) AUDITS
ENTITIES JURISDICTION YEAR(s) COMMENTS
----------------------------- --------------------- -------- ----------------------
Lycos, Inc. & Subsidiaries New York State 8/1/98 - Period of assessment
7/31/00 extends to 12/15/04
(iii) Lycos, Inc. received a Commonwealth of Massachusetts Excise Tax
Audit from July 31, 1998 - July 31, 2000 from the Department of Revenue. Lycos,
Inc. received the Excise Tax Audit by letters dated July 14, 2004 and July 19,
2004, Lycos, Inc. and was informed of anticipated "Notices of Intention to
Assess" against Lycos, Inc. and its Subsidiaries in the aggregate amount of
$508,563, plus interest and penalties.
(vi)
1. Letter Agreement between Xxxxxxx Xxxxx and Lycos, Inc., dated
as of June 12, 2000, amended June 29, 2002 and July 17, 2003.
2. Letter Agreement between Xxxxxx X. Xxxxxxxx and Lycos, Inc.,
dated as of October 1, 2002, amended August 15, 2003 and May 14, 2004.
(b) See attachment,
LYCOS, INC. & SUBSIDIARIES
NOL CARRYOVER SUMMARY
Net Operating Losses Through 2003
---------------------------------------------------------
Total By Group
------------ -------------------------------------------
NOLS TWO NOLS*
Through Other Allocated to 2004 Estimated** Lycos NOLs
Year 12/31/2003 Lycos & Subs Terra USA Acquisitions Seller NOL Usage a/f Transaction
---------------------- ------------ ------------- ------------ ------------ -------------- ----------------- ---------------
2003 - est. 87,815,988 87,815,988 (40,563,968) 47,252,020
2002 50,687,125 50,687,125 (44,675,667) 5,991,458
12/31/2001 63,785,603 15,960,716 47,824,887 (31,590,502) 32,195,101
7/31/2001 231,342,926 158,157,584 73,185,342 231,342,926
2000 50,960,650 35,501,298 52,564 17,406,790 (259,940) 50,700,710
1999 111,964,216 78,138,931 33,825,285 (5,490,281) 106,473,935
1998 37,826,935 22,261,934 15,565,001 (37,826,935) -
1997 15,887,892 - 15,887,892 (15,887,892) -
1996 4,282,170 - 4,282,170 (4,282,170) -
1995 1,426,108 - 1,426,108 (1,426,108) -
1994 86,614 - 86,614 (86,614) -
------------ ------------- ------------ ------------ -------------- ----------------- ---------------
TOTAL
(includes fiscal year
ends) 656,046,227 446,503,674 121,062,793 88,479,860 (117,090,077) (65,000,000) 473,956,150
NOLS TO TNO INC 117,090,077
NOLS TO BUYER 473,956,150
TOTAL NOLS 591,046,227
--------------------
NOLS ACQUIRED BY SELLER WHICH ARE NOT SUBJECT TO SECTION 382 LIMITATIONS | |
SINCE 10/30/00 | |
THIS DOES NOT INCLUDE NOL LIMITATIONS FROM THE BUYER ACQUISITION | 325,200,000 est. |
--------------------
* NOLs to be allocated to TNO Inc. pursuant to Treas. Reg. 1.1502-21.
** Lycos is anticipating a $65 million taxable income for 2004 which
includes the gain from the redeemed assets prior to the sale.
TO THE BEST OF THE KNOWLEDGE AND BELIEF OF THE COMPANY, NONE OF THE
REMAINING LOSSES ARE SUBJECT TO SRLY RESTRICTIONS.
NET OPERATING LOSS SUMMARY STATES
Year Total Losses CA FL ILL MA NY DC GA NJ PA ACQUIRED
----------- ------------ ---------- --------- --------- ----------- ---------- ------- ------- ------ --------- ----------
2003 - est. 43,774,688 7,975,978 7,369,679 313,127 17,362,548 8,409,088 86,042 100,078 28,601 2,129,549
2002 33,208,466 7,281,367 - 285,857 15,850,481 7,676,759 76,549 91,362 - 1,944,901
12/31/2001 30,654,818 2,308,729 - 194,194 25,656,401 1,646,730 220,101 354,405 - 275,258 -
7/31/2001 173,495,804 18,184,753 - 3,063,591 137,902,990 10,662,251 56,325 317,089 - 3,308,805
2000 25,940,025 5,335,835 - - - 2,730,407 65,658 - - 401,335 17,406,790
1999 48,780,851 9,955,941 - - - 484,759 - - - 4,514,866 33,625,285
1998 15,565,001 - - - - - - - - - 15,565,001
1997 15,887,892 - - - - - - - - - 15,887,892
1996 4,282,170 - - - - - - - - - 4,282,170
1995 1,426,108 - - - - - - - - 1,426,108
1994 86,614 - - - - - - - - - 86,614
------------ ---------- --------- --------- ----------- ---------- ------- ------- ------ --------- ----------
TOTAL
(includes
fiscal
year ends) 393,102,437 51,042,603 7,369,679 3,856,769 196,772,420 31,606,994 506,675 662,934 28,601 12,573,904 88,479,660
NOTE: MA AND NY NOLS HAVE BEEN CARRIED FORWARD ON THIS SCHEDULE "POST
APPORTIONMENT" FOR INFORMATIONAL PURPOSES ONLY.
Schedule 3.11
Absence of Changes
a)
1. Overture has filed counterclaims in the litigation disclosed on Item 2
of Schedule 3.12.
2. Lycos, Inc. performed a restructuring commencing in February 2004,
including, inter alia, a reduction in force, incurring a substantial charge
associated with the restructuring, outsourcing its sales organization, and
reducing it product offerings.
3. Beginning no later than January 1, 2004, Lycos, Inc. implemented a
policy of rejecting advertisements relating to online gambling operations.
4. Pursuant to letters dated June 9, 2004, Google Inc. has, with respect to
certain third party traffic and software applications, ceased providing services
under the Google Order Form and Google Services Agreement between Lycos, Inc.
and Google Inc., effective October 15, 2003, as amended as of October 30, 2003
and July 28, 2004.
b)
1. Loan Agreement, dated as of May 13, 2004 between Lycos Business Trust I
and Terra Networks, S.A.
2. See Item 2 of Schedule 3.11(a)
3. See Schedule 5.5(b)
4. Letter of Guaranty, dated as of March 10, 2004 between Lycos, Inc. and
Singapore Telecommunications Corporation.
5. See Item 2 of Schedule 3.10(a)(vi)
c) None
d)
1. Lycos, Inc. has liquidated a substantial amount of its equity portfolio
in companies in which it held a less than 20% interest in and which were
non-affiliates of Lycos, Inc.
2. The Company has, in the ordinary course of business, settled claims
and/or released claims of less than $500,000 each (including, without
limitation, GeekTech, Inc. v. Lycos, Inc. and Xxxxxx Xxxx v. Lycos, Inc.).
3. Email Services Agreement, dated as of April 30, 2004 between Lycos
Intangibles, LLC and SK Communications Co. Limited.
4. Redemption Agreement, dated as of June 30, 2004 between Lycos, Inc. and
Lycos Triangle Partners, LLC.
5. Lycos Asia Limited consummated a transaction on April 19, 2004 pursuant
to which Lycos Asia Limited sold Lycos Asia (China) Limited, including its
subsidiaries, to Intrepid Technology, Inc.
6. License Agreement between Lycos, Inc. and Lycos Asia (China) Ltd. dated
as of April 19, 2004.
e) Pursuant to letters dated June 9, 2004, Google has, with respect to
Sidesearch and ClearSearch, exercised its option to cease providing certain
services under the Google Order Form and Google Services Agreement between
Lycos, Inc. and Google Inc. effective October 15, 2003, as amended as of October
30, 2003.
f)
1. Pursuant to a Settlement Agreement and Amendment Number Two between
Lycos, Inc. and Google Inc., dated as of July 28, 2004, Lycos, Inc. now receives
approximately a 72% revenue share of the monetizable distributions under the
Google Order Form and Google Services Agreement effective October 15, 2003, as
amended October 30, 2003.
2. See Item 2 on Schedule 3.12.
g)
1. The domain name Xxxxx.xxx expired June 27, 2004 and was registered by a
third party, Asia Ventures, Inc.
2. See the i) Transition Services Agreement attached as Exhibit A to the
Agreement, ii) Work for Hire Agreement attached as Exhibit B to the Agreement,
and iii) Service Agreement attached as Exhibit C to the Agreement.
3. Since December 31, 2003, the following domain names have lapsed:
(A) Xxxxxxx.xxx
(B) XxxxxXxxxxxxxx.xxx
(C) Xxxxxxxxxxxxx.xxx
(D) Xxxxx-xxxxx.xxx
(E) Xxxxx0.xxx
(F) Xxxxx.xxx.xx
4. See above Items 3 and 6 of Schedule 3.11(d).
5. Redirect Agreement between Lycos, Inc. and Rakuten, Inc. dated as of
April 27, 2004.
h) None
i)
1) Terra Networks, S.A. and/or Lycos, Inc. amended the employment
agreements for the individuals disclosed on Schedule 5.5(b).
2) In connection with the termination of all of its employees, Lycos Asia
Limited has provided severance benefits to certain employees. Except for certain
obligations to Xxxxxxx Xxxxx described in the contract set forth on Items I and
2 in Schedule 5.5(b), all payments and other obligations have been fully
satisfied.
3) In connection with reduction of workforce referred to in Item 2 of
Schedule 3.11(a) above, Lycos, Inc. provided severance benefits to the employees
subject to such reduction.
4) See Item 2 of Schedule 3.10(a)(vi)
5) Amended and Restated Letter Agreement dated as of May 10, 2004 between
Lycos, Inc. and Xxxxxx Xxxxx.
j) See Items 18 and 19 of Schedule 3.16(a).
k) None
1) None
m)
1) Lycos Asia's Limited Chief Executive Officer, Xxxxxxx Xxxxx, left Lycos
Asia Limited in February 2004 and has not been replaced. In March 2004, Lycos
Asia Limited dismissed Xxx Xxx, the country manager of its China operations.
2) Lycos Asia Limited has terminated or allowed to resign all of the staff
in its Singapore office. Currently, Lycos Asia Limited contracts the services of
two individuals for finance and operational needs.
3) Other than Schedules 3.1 1(m)(1) and (2), there have been no material
changes in relations with employee base in the aggregate. For changes with
customers and suppliers, see Schedule 3.11(a).
n) None
o) See Schedule 3.11(i).
p) None except as described in this Schedule 3.11.
Schedule 3.11(g)
Confidentiality Agreement
FORM OF MUTUAL CONFIDENTIALITY AND NON-DISCLOSURE
AGREEMENT
AGREEMENT dated and effective as of the ____ day of________ 200_ by and
between Lycos, Inc. and ____________________ (each of which may be referred to
herein as the "Owner" and/or the "Recipient", as the case may be, of
information).
WHEREAS, the parties have entered into discussions concerning a possible
business relationship or transaction and may determine to enter into such a
relationship or transaction (the "Transaction");
WHEREAS , to further these ends, an Owner may disclose to a Recipient
certain of the Owner's Proprietary Information (as hereinafter defined) for the
purpose of enabling the Recipient to evaluate the Transaction and perform
thereunder, if the Transaction is consummated; and
WHEREAS, the parties agree that the Owner's information is proprietary and
confidential property of the Owner.
NOW THEREFORE, in consideration of the mutual covenants hereinafter set
forth and for other good and valuable consideration, the acceptance and
sufficiency of which are hereby acknowledged, each of the parties hereto,
intending to be legally bound, does hereby agree as follows:
1. Proprietary Information. In the course of evaluating the Transaction,
and if consummated, performing in accordance with the terms to be negotiated for
the Transaction, the Recipient will have access to, among other things, certain
of the Owner's confidential and proprietary business documents and information,
including, but not limited to, marketing data, financial information, sources of
supply, technologies, products, know-how, product specifications, trade secrets,
current and future product marketing plans, current and future research and
development, and product characteristics and specifications, all of which are or
may be deemed to be confidential and proprietary and are owned and used by or
are exclusively licensed to the Owner. Such information shall be referred to
hereinafter as "Proprietary Information" and shall also include any and all
other confidential and proprietary information relating to the business
conducted by the Owner; the terms or details of the Transaction, the fact that
the parties have entered into discussions regarding the Transaction, and the
details of such discussions; provided, however, that the following information
shall not be deemed Proprietary Information: (i) information which has become
publicly available (unless made publicly available
by either (a) breach hereunder by the Recipient or (b) a Representative), (ii)
information which was rightfully received by the Recipient from a source not
under obligation of confidentiality to the Owner, (iii) information in the
possession of the Recipient, in written or other recorded form, prior to
disclosure by the Owner, (iv) information which is developed by the Recipient
independent of any Proprietary Information, and (v) information which the Owner
has approved in writing for release by the Recipient without restriction.
Notwithstanding the foregoing, it shall not be a breach of this Agreement for
either party to disclose Proprietary Information of the other party if required
to do so under law or in a judicial or other governmental investigation or
proceeding, provided the other party has been given prior notice and the
disclosing party has sought all available safeguards against widespread
dissemination prior to such disclosure. Proprietary Information may be
preliminary or incomplete and relate to products under development or planned
for development. PROPRIETARY INFORMATION IS PROVIDED "AS IS." NO WARRANTIES ARE
MADE BY EITHER PARTY. THE OWNER ACCEPTS NO RESPONSIBILITY FOR ANY EXPENSES,
LOSSES OR ACTIONS INCURRED OR UNDERTAKEN BY RECIPIENT AS A RESULT OF RECIPIENT'S
USE OF PROPRIETARY INFORMATION. Recipient acquires no intellectual property
rights under this Agreement except the limited rights necessary to evaluate the
Transaction and to perform thereunder if the Transaction is consummated.
2. Protection of Proprietary Information. The Recipient acknowledges that
the Owner has protected the secrecy of all Proprietary Information, that said
Proprietary Information is of critical importance to the Owner, that a violation
of this Agreement would seriously and irreparably impair and damage the Owner's
business, and that the Recipient shall keep all Proprietary Information in a
fiduciary capacity for the sole benefit of the Owner. If the Owner is a
publicly-held company, the Recipient understands that the Owner's Proprietary
Information may be considered material, non-public information under Federal and
state securities laws and the Recipient could be found in violation thereof if
the Recipient takes advantage of such information by (i) trading in the Owner's
or any other entity's stock, or (ii) furnishing information to others in
connection with the trading of such stock.
3. Non-Use and Non-Disclosure. The Recipient shall hold the Proprietary
Information in secrecy and confidence in accordance with the provisions of this
Agreement and shall use the Proprietary Information solely for the purpose of
evaluating whether to enter into the Transaction and to perform thereunder if
the Transaction is consummated. The Recipient shall not disclose, divulge,
provide or otherwise make available any Proprietary information, or any portion
or summary thereof, to any person, firm, corporation or other entity other than
to Recipient's officers, directors, employees, shareholders, accountants,
attorneys and agents ("Representatives") on a need-to-know basis, if such
persons are bound in writing to Recipient by confidentiality obligations at
least as restrictive as the terms of this Agreement, in order to permit those
people to assist
the Recipient to evaluate the Transaction and to perform thereunder if the
Transaction is consummated. In the event that the Owner requests in writing, the
Recipient shall deliver to the Owner all documents and other recordings
containing Proprietary Information supplied to the Recipient and all copies
thereof and agrees to destroy all notes, summaries, analyses and compilations
prepared by the Recipient or for the Recipient's use containing or reflecting
any such Proprietary Information.
4. Non-Compete and Other Restrictions. The Recipient shall not use,
directly or indirectly, any Proprietary Information in connection with or for
the purpose of competing with the Owner in the Owner's line of business.
5. Ownership of Proprietary Information. All Proprietary Information shall
remain the exclusive property of the Owner and nothing in this Agreement, or any
course of conduct between the parties shall be deemed to grant to the Recipient
any rights in or to the Proprietary Information of the Owner, or any part
thereof, other than as expressly granted herein.
6. Remedies. It is specifically understood and agreed that any breach of
this Agreement is likely to result in irreparable injury to the Owner and that
the remedy at law alone will be an inadequate remedy for such breach, and that
in addition to any other remedy it may have, the Owner shall be entitled to seek
the specific performance of this Agreement by the Recipient and to seek both
temporary and permanent injunctive relief (to the extent permitted by law)
without the necessity of proving actual damages.
7. Governing Law. This Agreement shall be construed under and governed by
the laws of the Commonwealth of Massachusetts. Each party hereby consents to the
personal jurisdiction of the Commonwealth of Massachusetts, acknowledges that
venue is proper in any state or Federal court in the Commonwealth of
Massachusetts, agrees that any action related to this Agreement must be brought
in a state or Federal court in the Commonwealth of Massachusetts, and waives any
objection that may exist, now or in the future, with respect to any of the
foregoing.
8. Waiver; Severability. The waiver by either party of a breach or a
default of any provision of this Agreement by the other party shall not be
construed as a waiver of any succeeding breach of the same or any other
provision, nor shall any delay or omission on the part of either party to
exercise or avail itself of any right, power or privilege that it has, or may
have hereunder, operate as a waiver of any right, power or privilege by such
party. No waiver of any provision of this Agreement shall be effective unless in
writing and executed by the party waiving the right. If any provision of this
Agreement, or the application thereof to any person or circumstance shall, for
any reason or to any extent, be invalid or unenforceable, the remainder of this
Agreement and the application of such provision to other persons or
circumstances shall not be
affected thereby, but rather shall be enforced to the fullest extent permitted
by law.
9. Definitive Agreement. Neither party is legally obligated to go forward
with the Transaction or any other business transaction. Either party may
terminate discussions or negotiations with the other party at any time. Either
party may engage in discussions or negotiations with third parties, even if such
discussions or negotiations relate to possible business transactions similar or
identical to the Transaction.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
a binding contract under seal as of the day and year first above written.
LYCOS, INC.
By:
------------------------------------
Name:
Title:
-----------------------------------------
By:
------------------------------------
Name:
Title:
Schedule 3.12
Litigation
1. Xxxx Xxxxxx, et al. v. Lycos, Inc., et al. The plaintiffs brought suit
against Lycos, Inc. ("Lycos") in the United States District Court for the
Northern District of California, alleging that Lycos breached a written
contract and an implied covenant of good faith and fair dealing, tortiously
interfered with a prospective business advantage and engaged in unfair
business practices by failing to make an "earn-out" payment allegedly due
and owing under a merger agreement between, among others, Lycos and IMDI.
The complaint asserts that the "earn-out" clause of the contract required
Lycos to make a payment to the former shareholders of IMDI of up to
$15,000,000. The complaint seeks compensatory and punitive damages in an
amount to be determined at trial. Lycos has answered the complaint and
denied the relevant allegations. Discovery has commenced and the parties
have engaged in motion practice with respect to, inter alia, plaintiffs
jury demand.
2. Lycos. Inc. v. Overture Services, Inc. v. XxxxXxxx.xxx, Inc. Lycos, Inc.
brought a complaint against Overture Services, Inc. ("Overture") in the
United States District Court for the District of Massachusetts. The
complaint alleges that Overture breached the anti-assignment,
confidentiality, and payment provisions of a services agreement between the
parties in connection with Overture's merger with a key competitor of
Lycos, Yahoo!, Inc. The complaint seeks declaratory relief and damages in
an amount to be determined at trial. Overture brought counter-claims
against Lycos for breath of contract and breach of implied covenant of good
faith and fair dealing. Overture also brought a claim for patent
infringement against Lycos and a third party, XxxxXxxx.xxx, Inc. The
parties have engaged in settlement negotiations pursuant to which certain
commercial arrangements between Lycos, Inc., Overture, Inktomi and Fast may
be amended.
3. Sherwood Partners, Inc. v. Lycos, Inc. On May 18, 2001, Sherwood Partners,
Inc., as the Assignee for the Benefit of Creditors (the "Assignee") for
International Thinklink Corporation (the "Debtor"), filed a complaint
against Lycos in the Superior Court for Los Angeles County, California. The
Assignee seeks to recover a payment of $1,000,000 made to Lycos by the
Debtor in December 2000. The Assignee asserts that the payment constituted
a preferential transfer that the Assignee is authorized to recover under
California Civil Code Section 1800. On June 19, 2001, Lycos removed the
action from the State Court to the United States District Court for the
Central District of California. On November 18, 2002, the Assignee moved
for summary judgment in its favor on its preference claim against Lycos,
and on January 10, 2003, the District
Court granted the Assignee's motion. On January 16, 2003, the District
Court entered judgment in favor of the Assignee and against Lycos in the
amount of $1,000,000 together with pre-judgment interest of $131,697.90.
Lycos' appeal of the judgment has been fully briefed and is pending before
the Ninth Circuit Court of Appeals.
4. IDT Corp. V. Telefonica, S.A., Terra Networks, SA., and Lycos, Inc. On June
22, 2001 IDT Corp. ("IDT") filed a claim in the United States District
Court, District of New Jersey, in connection with a joint venture in which
IDT, Telefonica, S.A. ("Telefonica") and Terra Networks, S.A. were parties.
The plaintiffs allege tortious interference with prospective economic
advantage against Lycos, Inc. for damages in amount to be determined at
trial, punitive damages and prejudgment and post-judgment interest. Since
January 1, 2003, the parties have continued to engage in pretrial
discovery, which is essentially complete with the exception of discovery
related to expert witnesses. This aspect of pretrial discovery will proceed
after the court rules on the pending motions for summary judgment discussed
below. In July 2003, the defendants filed motions with the court asking
that summary judgment be granted as to all of IDT's claim, including those
asserted against Telefonica. In addition, in June 2003, defendant Terra
Networks, S.A. filed various counterclaims against IDT, and IDT has moved
to dismiss the counterclaims. The court has not yet ruled on the motions
for summary judgment or on IDT's motion to dismiss. The court has not yet
ruled on Telefonica's objections to the September 2002 ruling of a
magistrate judge granting IDT permission to amend its second amended
complaint to include a claim against Telefonica under Section 20(a) of the
Securities Exchange Act.
5. Neoplanet Demand Letter dated September 24, 2003. NeoPlanet, Inc.
("NeoPlanet") has demanded payment under an Integration Agreement between
NeoPlanet and Lycos. On September 24, 2003, NeoPlanet alleged that Lycos
owes $199,920.25. On October 24, 2003, NeoPlanet increased that amount
$214,147.22. In addition, NeoPlanet stated that if Lycos was unable to
demonstrate that it had provided advertising impressions for which
NeoPlanet had paid $1,300,000, it should refund that amount.
6. Breach Notices and Demand Letters to Google and Google Breach Notices:1
a) Notification of Breach Letter from Lycos, Inc. to Google Inc. dated
February 5, 2004
b) Letter from Lycos, Inc. to Google Inc. dated May 3, 2004
-----------------------------
1 See Item I of Schedule 3.11(f).
c) Notification of Breach Letter from Google Inc. to Lycos, Inc. dated
May 7, 2004.
d) Letter to Google Inc. from Lycos, Inc. dated May 13, 2004.
7. Carnegie Mellon University ("CMU") Demand Letters dated October 2, 2000 and
June 15, 2004. On October 2, 2000 and June 15, 2004, CMU requested payments
by Lycos of royalties due from use of the registered trademark Lycos(R)
pursuant to the license agreement between CMU and Lycos dated June 16, 1995
and amended February 6, 1996.
8. Universal Communication Systems, Inc., Xxxxxxx X. Xxxxxxx, et al. v. Lycos,
Inc. and Terra Lycos, Inc. d/b/a The Lycos Network. The class action case
was filed July 7, 2004 in the United States District Court for the Southern
District of Florida and Lycos has been served in the action. The complaint
alleges consumer fraud, cyber stalking and trade name dilution against
Lycos and the Lycos Network. The plaintiffs seek $300,000,000 in actual and
consequential damages and a mandatory injunction requiring the defendants
to delete all postings on its "Raging Bull" website that appear on the
Universal Communication Systems, Inc. ("USCY") message board, delete the
USCY message board, and enjoin the defendants from creating and maintaining
a USCY message board.
9. United States Grand Jury Subpoena (E.D. Mo) dated December 11, 2003 seeking
documents related to commercial advertising of offshore Internet Gambling
business.
10. Xxxxxx & Xxxxxxxx Demand Letter (counsel to Nikolai Riesenkainpff) dated
July 5, 2004, seeking payment of commission relating to Lycos' entry into
the Google Ad Sense Agreement (as referenced in Item 3 of Schedule
3.16(a)).
11. Letters dated July 20, 2004 and July 21, 2004 from Portal Player alleging
unlawful interference with a confidentiality agreement with former employee
and disclosure of trade secrets in connection with publication of a Wired
News story appearing on July 20, 2004.
12. Global Crossing Invoice dated March 23, 2004.
13. Xxxxxx Xxxxx v. Terra Networks USA, Inc. The case was tiled in the Circuit
Court in and for Miami Dade County. Terra has filed a petition to remove it
to the District Court for the Southern District of Florida, and it has been
assigned a different case number. Fiffe brought an action for
discrimination under Title VII of the Civil Rights Act of 1964 (as amended
by the Pregnancy Discrimination Act of 1976) and for an alleged violation
of the Florida Civil Rights Act.
14. County of Dallas v. Lycos, Inc. The case was filed on November 21, 2003,
and Lycos filed its answer on February 6, 2004. The most recent statement
for alleged taxes due from the year 2000 reflects a total amount due of
$87,893.36.
15. Commonwealth of Massachusetts Franchise Tax Audit from July 31, 1998-July
31. 2000 from Department of Revenue. By letters dated July 14, 2004 and
July 19, 2004, Lycos, Inc. was informed of anticipated "Notices of
Intention to Assess" against Lycos, Inc. and its Subsidiaries in the
aggregate amount of $508,563, plus interest and penalties.
16. In connection with the termination of the Promotion and Services Agreement
dated as of May 17, 2002 between Lycos, Inc., Lycos Asia Limited, Lycos
Europe, N.V. and Manchester United PLC, Lycos Asia Limited has been in
discussions with Manchester United relating to a $750,000 prepayment made
by Manchester United to Lycos Asia Limited. See Schedule 3.21 regarding
Lycos Asia Limited.
17. Lycos Asia Limited is involved in an arbitration proceedings in Malaysia
relating to the work force reduction implemented by Lycos Asia Limited in
2001.
Schedule 3.13(b)
Compliance with Laws
Governmental Approval and Consents
See Item 4 of Schedule 3.2 regarding Lycos Asia Limited's compliance with
local requirements to the annual reports.
Schedule 3.14
Permitted Liens
1. See the Master Services Agreement referenced in Item 11 of Schedule 3.16
for rights that could give rise to Liens.
2. See the Global Services Agreement referenced in Item 10 of Schedule 3.16
for rights that could give rise to Liens.
3. See County of Dallas v. Lycos, Inc. referenced in Item 14 of Schedule 3.12.
Schedule 3.15
Leases
Real Estate Leases
Party Location Termination Date
-------------------------------- -------------------------------- ---------------------------
Winter Management Corp 000 0xx Xxx. August 31, 2009
Xxx Xxxx, XX 00000
Prospect Hill Acquisition Trust 000 0xx Xxx. March 31, 2008
Xxxxxxx, XX 00000
Global HQ 1230 Avenue of the Americas New January 19, 2005
Xxxx, XX 00000
Storage Networks, Inc. 000 0xx Xxx. January 12, 2005
Xxxxxxx, XX 00000
Xxxx Partners, LLC 000 0xx Xxxxxx December 31, 2004
Xxx Xxxxxxxxx, XX 00000
HRC Corporation 000 0xx Xxxxxx Xxx Xxxx, XX 00000 August 31, 2004
3, Tampines Grande,
XX Xxxxxxx (Tampines) AIA Tampines
Pte Ltd #02-04 May 15, 2005
Xxxxxxxxx 000000
Real Estate Subleases
Party Location Termination Date
-------------------------------- -------------------------------- ---------------------------
Once Labs, Inc. 000 0xx Xxxxxx March 31, 2008
Xxxxxxx, XX 00000
Office Tiger, LLC 000 Xxxxx Xxxxxx Xxxxxx 00, 0000
Xxx Xxxx, XX 00000
Xxxxxxx Xxxxxxx Architects 000 Xxxxx Xxxxxx Xxxxxx 00, 0000
Xxx Xxxx, XX 00000
Equipment Leases
Party Location Termination Date
-------------------------------- -------------------------------- ---------------------------
Bank of America Various computer equipment November 1, 2004
CSI Various computer equipment November 1, 2004
Schedule 3.16
Contracts
(a)
1. Google Order Form and Google Services Agreement between Lycos, Inc.
and Google Inc., effective October 15, 2003, as amended as of October
30, 2003
2. Google Settlement Agreement and Amendment Number Two to Google Order
Form and Google Services Agreement between Lycos, Inc. and Google
Inc., dated as of July 28, 2004
3. Google Services Agreement Content Targeted Advertising Program (Ad
Sense) Order Form and Google Services Agreement between Lycos, Inc.
and Google Inc., effective August 20, 2003, as amended as of October
15, 2003
4. Syndication Agreement by and between Lycos, Inc. and LookSmart, Ltd.,
dated as of July 8, 2003, amended as of May 1, 2004
5. Content Agreement by and between Lycos, Inc. and Monster, Inc., dated
as of November 13, 2003
6. E-Commerce Agreement by and between Lycos, Inc. and XxxXxxx.xxx, Inc.,
dated as of April 4, 2003, as amended
7. Oracle License and Services Agreement between Lycos, Inc. and Oracle
Corporation and purchase order dated as of November 21, 2001
8. License Agreement by and between Carnegie Mellon University, CMG
information Services, Inc., CMG @Ventures, L.P. and Lycos, Inc., dated
as of June 16,1995, as amended February 9,1996
9. Paymentech Merchant Services, Inc. Credit Card Processing Services
Agreement between Lycos, Inc. and Paymentech LP, dated as of January
22, 1999, as amended as of November 1, 2002 and as of June 4, 2004
10. Amended and Restated Agreement by and between Lycos, Inc. and Verizon
New Media Services, Inc., dated as of August 1, 2001, as amended July
1, 2003
11. Global Services Agreement between Cable & Wireless USA, Inc., and
Lycos, Inc., dated as of April 9, 2002 and as amended June 6, 2003,
and the Letter Agreements from Lycos, Inc. to Telefonica Data USA,
Inc. dated October 22, 2003 (the letters memorialize Lycos, Inc.'s
agreement with Telefonica Data to use its best efforts to facilitate
the assignment of Global Services Agreement)
12. Master Services Agreement by and between Lycos, Inc. and Telefonica
Data USA, Inc., and letter agreement related thereto, each dated as of
November 18, 2003
13. Private Label Services Agreement by and between Lycos, Inc. and
XxxxXxxx.xxx, dated as of July 29, 2002
14. 24/7 Real Media, Inc. and Lycos, Inc. Services Agreement, dated as of
February 2004
15. Technology Services Agreement by and between Lycos, Inc. and 24/7 Real
Media, dated as of February 2004
16. Amended and Restated Services Agreement by and between Position
Technologies, Inc. and Lycos, Inc., dated as of February 19, 2004
17. Amended and Restated Pilot and License Agreement by and between Lycos,
Inc. and Argo Technology, Inc., dated as of January 13, 2004, as
amended as of February 27, 2004
18. Professional Services Agreement by and between Fast Search & Transfer
International AS and Lycos, Inc., dated as of May 7, 2004
19. Fast Data Search Enterprise License Agreement Order Form by and
between Lycos, Inc. and Fast Search & Transfer International AS, dated
as of January 30, 2004 and amended as of May 7, 2004
20. Information Services Agreement, dated as of July 1, 2001, as amended
by Amendment #1 to Information Services Agreement dated as of December
16, 2002 between Terra Networks, S.A. and Inktomi Corporation (note
that the term of this contract has expired according to its terms, but
Lycos still receives algorithmic results from Inktomi and pays Inktomi
according to the terms of this contract)
21. Inktomi Search Submit Reseller Agreement, dated as of November 4, 2002
between Lycos, Inc. and Inktomi Corporation
22. Agreement, dated as of February 21, 2002, as amended by Amendment No.
1 dated as of June 14, 2002 and Amendment No.
2 dated as of April 21, 2003 between Lycos, Inc. and Fast Search &
Transfer
23. Internet Services Order Form between Lycos, Inc. and Reuters America,
LLC, dated as of July 1, 2004
24. SPC Information Distribution License Agreement by and between Standard
& Poor's Xxxxxxxx, Inc. and Lycos, Inc., dated as of September 24,
2002
25. NY Stock Exchange Agreement for Receipt and Use of Market Data between
Xxxxx.xxx and NYSE, dated as of September 17, 1997
26. NASDAQ Stock Market, Inc. Vendor Agreement, and Distributor Agreement
by and between NASDAQ and Xxxxx.xxx, dated as of August 29, 2002
27. AP Digital Current News License Agreement between Press Association,
Inc. and Lycos, Inc., dated as of July 28, 2004
28. Distribution Agreement between Dow Xxxxx & Company, Inc. and
Xxxxx.xxx, dated as of October 2, 1996
29. Email Services Agreement between SK Communications Co. Limited and
Lycos Intangibles, LLC, dated as of April 30, 2004.
30. License Agreement (Lycos) between Lycos Intangibles, LLC and Lycos
Korea, Inc., dated as of August 14, 2002 (this Agreement will expire
on August 14, 2004)
31. License Agreement (Tripod) between Lycos Intangibles, LLC and Lycos
Korea, Inc., dated as of August 14, 2002 (this Agreement will expire
on August 14, 2004)
32. Letter Agreement between Lycos, Inc. and Lycos Korea, Inc., dated as
of August 14, 2002 (relating to the guaranty of the obligations of
Lycos Intangibles, LLC by Lycos, Inc.)
33. Indemnification Letter Agreement between Lycos, Inc. and Lycos Korea,
Inc., dated as of August 14, 2002
34. Agreement for the Purchase and Sale of Economic Rights between Lycos,
Inc. and Lycos Intangibles, LLC dated as of August 13, 2002
35. License Agreement (Tripod) between Tripod, Inc. and Lycos Europe,
N.V., effective as of February 29, 2000
36. European License Agreement (Hotbot) between Wired Digital, Inc. and
Lycos Europe, N.V., effective as of February 29, 2000, as amended
November 26, 2001
37. European License Agreement (Angelfire) between WhoWere? Inc. and Lycos
Europe, N.V., effective as of February 29, 2000
38. European License Agreement (MyLycos) between Lycos, Inc. and Lycos
Europe, N.V., dated as of February 18, 2000
39. Guaranty Letters by Lycos, Inc. to Lycos Europe, N.V., dated as of
February 18, 2000 (with respect to the obligations of its subsidiaries
regarding the aforementioned licenses with Lycos Europe, N.V.)
40. Shareholders Agreement by and among Lycos, Inc., Bertelsmann Internet
Holding GmbH, Xxxxxxxxx Xxxx Internet Holding GmbH, Fireball Internet
GmbH, dated as of February 18, 2000, as amended February 7, 2002 and
January 27, 2003
41. Guaranty Letter by Lycos, Inc, to Singapore Telecommunications
Corporation, dated as of March 10, 2004
42. Letter Agreement regarding certain intellectual property developments
between Lycos, Inc. and Singapore Telecommunications Corporation,
dated as of March 10, 2004
43. Redirect Agreement between Lycos, Inc. and Rakuten, Inc., dated as of
April 27, 2004
44. License Agreement between Lycos, Inc. and Lycos Asia (China) Ltd.,
dated as of April 19, 2004
45. Enterprise License Schedule between Terra Networks, S.A. and Vignette
Ltd., dated as of October 22, 1999, as amended dated June 30, 2004
(pending signature)
46. Master Services Agreement and Attachments between DoubleClick, Inc.
and Terra Networks, S.A., dated as of January 1, 2002, as amended by
Global Addendum. dated December 1, 2003
47. Participation Agreement between Lycos, Inc. and Lycos Asia Limited,
dated as of May 17, 2002, related to the Promotion and Services
Agreement and Website Site Development and Hosting Services Agreement
referenced in Items 48 and 49 on this Schedule 3.16.
48. Promotion and Services Agreement by and among Lycos, Inc., Lycos Asia
Limited, Lycos Europe, N.V. and Manchester United PLC dated May 17,
2002
49. Website Production Development and Hosting Services Agreement dated
May 17, 2002 between Manchester United Interactive Limited and Lycos
Asia Limited
50. Commercial Agreement between Bertlesmann AG, Terra Networks, S.A. and
Lycos, Inc., dated as of June 1, 2003
51. Trademark License and URL Ownership Agreement between Advance Magazine
Publishers Inc. and Wired Ventures Inc., dated as of June 15, 1998 and
the associated agreements previously provided to Xxxx Communications
Corp.
52. See Items 1 and 2 of Schedule 3.10(a) (vi)
53. Waiver and Agreement between Lycos, Inc. and Lycos Europe, N.V., dated
as of June 4, 2003
54. License Agreement (Lycos Search Service), dated as of February 16,
2000 and amended November 26, 2001 between Lycos, Inc. and Lycos
Europe, N.V.
55. Lycos China Intellectual Property Assignment Agreement between Lycos
Information Services (Shanghai) Co. Ltd and Lycos, Inc., dated as of
April 19, 2004
56. Lycos China Domain Names Assignment Agreement between Lycos
Information Services (Shanghai) Co. Ltd and Lycos, Inc., dated as of
April 19, 2004
57. Lycos China Domain Names Assignment Agreement between Shanghai Lycos
Internet Co. Ltd and Lycos, Inc.
58. Indemnification Letter made by Lycos, Inc. to Xxxx Xxx dated Xxxxx 00,
0000
(x) None.
Schedule 3.18
Privacy Matters
1. See Item 8 of Schedule 3.l2 regarding Universal Communication Systems,
Inc. and Xxxxxxx Xxxxxxx v. Lycos, Inc. and Terra Lycos, Inc.
2. In the ordinary course of its business the Company and Company
Subsidiaries receive complaints from individual consumers regarding, among other
issues: (1) alleged violations of Lycos' Terms of Service; (2) Privacy Policies;
(3) Subscription Agreements; and (4) Subscription billing practices.
Schedule 3.19
Insurance
Line of Insurance Carrier Policy Number Policy Period
--------------------------- -------------------------------- -------------------- -------------------
Property Allianz CLP 300728 03/31/04 - 03/31/05
Earthquake - California Essex Insurance - 1st Excess ESPW20I2 03/31/04 - 03/31/05
Earthquake - California Westchester Surplus - 2nd Excess I20634509 03/31/04 - 03/31/05
Professional Liability AIG 000-00-00 05/31/04 - 05/31/05
General Liability Lexington Insurance Co. 743287 05/31/04- 05/31/05
Umbrella Liability National Union Insurance Co. BE 5494231 05/1/04 - 05/1/05
Workers Compensation Wassau Insurance Co. WCCY91531546013 06/30/04- 06/15/05
EPL AIG-Primary 5110126 01/01/04-01/01/05
EPL Chubb-1st Excess 8170-6802 01/01/04-01/1/05
EPL St. Xxxx - 2nd Excess 568CM1775 01/01/04 -01/01/05
Crime Travelers 104238134 01/01/04 -01/01/05
Fiduciary Liability Travelers 104238133 01/01/04 -01/01/05
D&O National Union Insurance Co. 000-00-00 10/30/03 - 10/30/04
Primary
D&O St. Xxxx - 1st Excess 568CM1297 10/17/00 - 10/30/06
D&O - Runoff Lycos National Union Insurance Co. - 000-00-00 10/30/00 - 10/30/06
Primary
D&O - Runoff Lycos Lloyds - 1st Excess FF015240Z002 10/30/00 - 10/30/06
D&O - Runoff Lycos National Union Insurance Co. - 000-00-00 10/30/00 - 10/30/06
2nd Excess
D&O - Runoff Lycos Lloyds - 3rd Excess FK015250Z002 10/30/00 - 10/30/06
D&O - Runoff Lycos Liberty Mutual -4th Excess LN073597/010 10/30/00- 10/30/06
D&O - Runoff Lycos Royal Insurance - 5th Excess PSF002534 10/30/00 - 10/30/06
D&O - Runoff Wired Ventures Executive Risk - Primary 000-000000-00 03/31/99 - 06/30/05
D&O - Runoff Wired Ventures Lloyds - 1st Excess DOE 200531 03/31/99 - 06/30/05
D&O - Runoff Wired Ventures Executive Risk - 2nd Excess 000-000000-00 03/31/99-06/30/05
D&O - Runoff Who Where? Lloyds - Primary DOM 3000638 11/06/97-12/31/04
D&O - Runoff Who Where? TIG - 1st Excess XD03800 17 12 11/06/97 - 12/31/04
D&O/EPL - Runoff Lloyds 90002057 11/05/99 - 07/31/06
Xxxxxxxxxxx.xxx
Schedule 3.22
Employee Benefit Plans and Related Matters
(a)
1. Lycos, Inc. Health Plan (fully insured by Blue Cross Blue Shield of
Massachusetts)
2.. Lycos, Inc. Dental Plan (fully insured by Guardian Life Insurance
Company
3. Lycos, Inc. Life, AD & D (basic life, voluntary life and AD & D
insured with UNUM Life Insurance Company of America)
4. Lycos, Inc. Disability Plan (Long-term Disability fully insured by
UNUM Life Insurance Company of America and Short-term Disability is
self-insured with ASO contract by UNUM Life Insurance Company of
America)
5. Lycos, Inc. Vision Plan (fully insured by Vision Service Plan)
6. Lycos, Inc. Business Travel Accident Plan (fully insured by UNUM Life
Insurance Company of America)
7. Lycos, Inc. Group Legal Plan (insured through Hyatt Legal (MetLife)
Plans)
8. Lycos, Inc. Health Care & Dependent Reimbursement Plans (self-funded,
administered by Benefit Concepts)
9. Lycos, Inc. Savings & Retirement 401k Plan (administered by Vanguard)
10. Lycos, Inc. COBRA program (administered through Benefit Concepts)
11. Lycos, Inc. MetPay Program (self-funded auto & home insurance through
MetLife)
12. Lycos, Inc. Tuition Reimbursement Program
13. Lycos, Inc. Employee Assistance Program (administered by Xxxxx and
Xxxxxx)
14. Lycos, Inc. Credit Union (self-funded through Digital Credit Union)
15. Lycos, Inc. 2004 Incentive Bonus Program
16. Lycos, Inc. Fiscal Year 2004 Commission Plan
17. Lycos Inc. Vacation/Time Off Programs
18. Xxxxxxxxxx.xxx, Inc. 1999 Stock Option and Incentive Plan
19. Lycos, Inc. 1996 Stock Option Plan
20. Lycos, Inc. 2000 Stock Option Plan
21. Xxxxxxxxxx.xxx, Inc. 1999 Incentive Stock Plan
22. Xxxxx.xxx, Incorporated 1996 Stock Option Plan
23. Tripod, Inc. 1995 Stock Option Plan
24. U.S. Program Under Phase II of the Terra Networks, S.A. Stock Option
Plan
25. Valent Software Corporation 1998 Stock Option/Stock Issuance Plan
26. Whowhere? Inc. 1995 Stock Plan
27. Wisewire Corporation 1995 Amended and Restated Stock Option Plan
28. Wisewire Corporation 1996 Amended and Restated Non-Employee Stock
Option Plan
29. Agreements with employees identified on Schedule 5.5(b)
(f) The Lycos Savings and Retirement 401(k) Plan is under review by the U.S.
Department of Labor Employee Benefit Security Administration.
(g) Agreements with employees identified on Schedule 5.5(b).
(h) Agreements with employees identified on Schedule 5.5(b).
Schedule 3.23
Dealings with Affiliates
1. Transition Services Agreement in the form of Exhibit A between Terra
Networks, S.A. and Lycos, Inc. to be executed in connection with the
consummation of the Stock Purchase Agreement
2. Work for Hire Agreement in the form of Exhibit B between Terra Networks,
S.A. and Lycos, Inc. to be executed in connection with the execution of the
Stock Purchase Agreement
3. Service Agreement in the form of Exhibit C between Terra Networks, S.A. and
Lycos, Inc. to be executed in connection with the consummation of the Stock
Purchase Agreement
4. *Loan Agreement, dated as of May 13, 2004 between Lycos Business Trust I
and Terra Networks, S.A.
5. *Loan Agreement, dated as of November 8, 2001 between Lycos Business Trust
I and Terra Networks USA, Inc. in the principal amount of $151,552,952.10
plus accrued interest
6. *Management Fee Agreement, dated as of September 10, 2002 between Lycos,
Inc. and Terra Xxxxxxxx, X,X.
7. License Agreement (Lycos Search Service), dated as of February 16, 2000 and
amended November 26, 2001 between Lycos, Inc. and Lycos Europe, N.V.
8. European License Agreement (Tripod), dated as of February 29, 2000 between
Tripod, Inc. and Lycos Europe, N.V.
9. European License Agreement (Angelfire), dated as of February 29, 2000
between WhoWhere? Inc. and Lycos Europe, N.V.
10. European License Agreement (Hotbot), dated as of February 29, 2000 and
amended November 26, 2001 between Lycos, Inc. and Lycos Europe, N.V.
11. License Agreement (Sonique), dated as of February 29, 2000 between Internet
Music Distribution, Inc. and Lycos Europe, N.V.
*Retained Asset
12. European License Agreement (MyLycos), dated as of February 18, 2000 between
Lycos, Inc. and Lycos Europe, N.V.
13. Preferred Promotion and Linking Agreement (Lycos Gainesville), dated as of
February 18, 2000 between Lycos, Inc. and Lycos Europe, N.V.
14. Waiver and Agreement (Lycos Search and Logo), dated as of June 4, 2003
between Lycos, Inc. and Lycos Europe, N.V.
15. Sales Commission Agreement, dated March 15, 2002 between Lycos, Inc. and
Lycos Europe, N.V.
16. Content Agreement, dated as of August 5, 2003, as amended August 28, 2003
between Lycos, Inc. and XxxXxxxxx.xxx, Inc.
17. Master Services Agreement and a related side letter, dated as of November
18, 2003 between Lycos, Inc. and Telefonica Data USA, Inc.
18. Amended and Restated License(s), dated as of February 18, 2000 between
Lycos, Inc. and Lycos Europe, N.V.
19. *Loan Agreement, dated as of November 21, 2003 from Lycos, Inc. to
XxxXxxxxx.xxx, Inc. in an aggregate principal amount of $299,574
20. *Loan Agreement, dated as of March 16, 2004 from Lycos, Inc. to
XxxXxxxxx.xxx, Inc. in an aggregate principal amount of $349,020
21. *Loan Agreement, dated as of April 20, 2004 from Lycos, Inc. to
XxxXxxxxx.xxx, Inc. in an aggregate principal amount of $232,680
22. *Loan Agreement, dated as of October 17, 2001 by and among Lycos, Inc.,
Singapore Telecommunications Limited and Lycos Asia Limited (there are no
amounts owing or obligations outstanding to Singapore Telecommunications
Limited under the Loan Agreement)
23. *Loan Agreement, dated as of February 11, 2002 between Lycos, Inc. and
Lycos Asia Limited
24. *Loan Agreement, dated as of March 15, 2002 between Lycos Business Trust I
and Lycos Asia Limited
*Retained Asset or terminated prior to Closing
25. *Loan Agreement, dated as of May 26, 2002 by and among Lycos Business Trust
I, Lycos, Inc., Singapore Telecommunications Limited and Lycos Asia
Limited, as amended December 12, 2002 and April 2, 2003 (there are no
amounts owing or obligations outstanding to Singapore Telecommunications
Limited under the Loan Agreement)
26. *Loan Agreement, dated as of June 9, 2003 by and among Lycos Business Trust
I, Lycos, Inc., Singapore Telecommunications Limited and Lycos Asia Limited
(there are no amounts owing or obligations outstanding to Singapore
Telecommunications Limited under the Loan Agreement)
In addition, Lycos receives certain services pursuant to contracts between Terra
Networks, S.A. and third parties:
a. Information Services Agreement dated as of July 1, 2001, as amended by
Amendment #1 to Information Services Agreement dated as of December
16, 2002 between Terra Networks, S.A. and Inktomi Corporation (as
discussed in Schedule 3.16, this contract has expired according to its
terms, but Lycos still receives algorithmic results from Inktomi and
pays Inktomi according to the terms of this contract)
b. Master Services Agreement between DoubleClick, Inc. and Terra
Networks, S.A., dated as of January 1, 2002, as amended by Global
Addendum dated December 1, 2003
*Retained Asset or terminated prior to Closing
Schedule 3.25
Lycos Asia
1. Email Services Agreement between SK Communications Co. Limited and
Lycos Intangibles, LLC dated as of April 30, 2004 (this Agreement will
expire August 14, 2006)
2. License Agreement (Lycos) between Lycos Intangibles, LLC and Lycos
Korea, Inc. dated as of August 14, 2002 (this Agreement will expire on
August 14, 2004)
3. License Agreement (Tripod) between Lycos Intangibles, LLC and Lycos
Korea, Inc. dated as of August 14, 2002 (this Agreement will expire on
August 14, 2004)
4. Agreement for the Purchase and Sale of Economic Rights between Lycos,
Inc. and Lycos Intangibles, LLC dated as of August 13, 2002 (this
Agreement does not have a termination date)
5. Redirect Agreement between Lycos, Inc. and Rakuten, Inc. dated as of
April 27, 2004 (this Agreement has a month to month term)
6. License Agreement between Lycos, Inc. and Lycos Asia (China) Ltd.
dated as of April 19, 2004 (this Agreement will expire 270 days from
the commencement date)
Schedule 5.1(b)
Conduct of Business
1. Between signing and closing, Xxxxxx Xxxxxxxx and board members
affiliated with Singapore Telecommunications Limited will resign from
the Board of Directors of Lycos Asia Limited and all its Subsidiaries
and will be replaced by a person designated by Lycos, Inc. and
consented to by Xxxx Communications, Corp.
2. Prior to closing, Lycos, Inc. shall capitalize, cancel or eliminate
all amounts owed to Lycos, Inc. by Terra Networks USA, Inc. other than
Retained Assets, including but not limited to, amounts outstanding
under the Loan Agreement between Terra Networks USA, Inc. and Lycos
Business Trust I, Inc. dated November 8, 2001 in the principal amount
of $151,552,952.10 plus all interest thereon.
3. Prior to closing, Lycos, Inc. agrees to cancel, terminate or otherwise
eliminate the Loan Agreements and all amounts owing or other
obligations outstanding with respect to the Loan Agreements set forth
on Items 22-26 on Schedule 3.23.
4. Prior to closing and in accordance with Section 2.2, Lycos, Inc. may
transfer all of its shares in Lycos Europe, N.Y. to LE Holding Corp.
5. In connection with terminating the Manchester United Agreements with
Lycos Asia Limited identified in Schedule 3.16, Lycos Asia Limited may
transfer certain hardware, software and domain names held by it, but
used exclusively in connection with those agreements to Manchester
United or a third party identified with Manchester United.
6. Any transaction relating to the transfer of Retained Assets to Terra
Networks, S.A. or its Affiliates.
Schedule 5.5(b)
Employee and Employee Benefit Matters
1. Amended and Restated Letter Agreement, dated as of March 29, 2004, and
amended July 21, 2004, between Xxxx Xxxxxxx and Lycos, Inc.
2. Incentive Fee Letter Agreement, dated as May 10, 2004, between Xxxx
Xxxxxxx and Lycos, Inc.
3. Amended and Restated Letter Agreement, dated as of March 29, 2004 and
amended July 21, 2004, between Xxxxxx X. Xxxxxxxx and Lycos, Inc.
4. Amended and Restated Letter Agreement, dated as of March 29, 2004 and
amended July 21, 2004 between Xxxxx Lucy and Lycos, Inc.
5. Amended and Restated Letter Agreement, dated as of May 10, 2004 and
amended July 21, 2004, between Xxxxxx Xxxxxxx and Lycos, Inc.
6. Amended and Restated Letter Agreement, dated as of May 10, 2004 and
amended July 21, 2004, between Xxxxxx Xxxxx and Lycos, Inc.
7. Amended and Restated Letter Agreement, dated as of May 10, 2004,
between Xxxxxx Xxxxx and Lycos, Inc.
Schedule 5.7
Intercompany Arrangements
1. License Agreement (Tripod) between Tripod, Inc. and Lycos Europe,
N.V., effective as of February 29, 2000
2. European License Agreement (Hotbot) between Wired Digital, Inc. and
Lycos Europe, N.V., effective as of February 29, 2000, as amended
November 26, 2001
3. European License Agreement (Angelfire) between WhoWhere? Inc. and
Lycos Europe, N.V., effective as of February 29, 2000
4. European License Agreement (MyLycos) between Lycos, Inc. and Lycos
Europe, N.V., dated as of February 18, 2000
5. Guaranty Letters by Lycos, Inc. to Lycos Europe, N.V., dated as of
February 18, 2000 (with respect to the obligations of its subsidiaries
regarding the aforementioned licenses with Lycos Europe, N.V.)
6. Shareholders Agreement by and among Lycos, Inc., Bertelsmann Internet
Holding GMbH, Xxxxxxxxx Xxxx Internet Holding GmbH, Fireball Internet
GmbH, dated as of February 18, 2000, as amended February 7, 2002 and
January 27, 2003
7. Master Services Agreement by and between Lycos, Inc. and Telefonica
Data USA, Inc., and letter agreement related thereto, each dated as of
November 18, 2003
8. Content Agreement, dated as of August 5, 2003, as amended August 28,
2003 between Lycos, Inc. and XxxXxxxxx.xxx, Inc.
9. License Agreement (Lycos Search Service), dated as of February 16,
2000 and amended November 26, 2001 between Lycos, Inc. and Lycos
Europe, N.V.
10. Work for Hire Agreement in the form of Exhibit B between Terra
Networks, S.A. and Lycos, Inc. to be executed in connection with
execution of the Stock Purchase Agreement
11. Service Agreement in the form of Exhibit C between Terra Networks,
S.A. and Lycos, Inc. to be executed in connection with the
consummation of the Stock Purchase Agreement
Schedule 6.1(b)
Conditions to Obligations of Each Party;
All Requisite Governmental Approvals
1. The Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended.
Schedule 6.2(e)
Conditions to Obligations of Buyer; Good Standings
1. Lycos, Inc.
a) Commonwealth of Massachusetts
b) State of New York
c) Commonwealth of Virginia
2. Wired Ventures, Inc. - State of Delaware
3. Lycos Japan, Inc. - State of Delaware
4. Lycos Americas I, Inc. - State of Delaware
5. Lycos Americas II, Inc. - State of Delaware
6. Lycos Intangibles, LLC - State of Delaware
7. Wired Digital, Inc. - State of Delaware
8. Lycos Business Trust I - Commonwealth of Massachusetts
9. Lycos Business Trust II- Commonwealth of Massachusetts
10. Quote LLC - State of Delaware
Schedule 8.6
Losses relating to the CMU License and Retained Assets
1. Carnegie Mellon University ("CMU") Demand Letters dated October 2,
2000 and June 15, 2004. On October 2, 2000 and June 15, 2004, CMU
requested payments by Lycos of royalties due from use of the
registered trademark Lycos(R) pursuant to the license agreement
between CMU and Lycos dated June 16, 1995 and amended February 6,
1996.
EXHIBIT A
TRANSITION SERVICES AGREEMENT
TRANSITION SERVICES AGREEMENT dated as of [CLOSING DATE] (the
"Effective Date") between Lycos, Inc, a Virginia corporation ("Lycos"), and
Terra Networks, S.A., a Spanish corporation ("Terra"). Capitalized terms used
but not defined in this Agreement shall have the respective meanings assigned
such terms in the Stock Purchase Agreement described below.
WITNESSETH:
WHEREAS, pursuant to the terms of that certain Stock Purchase
Agreement, dated as of July [*], 2004 (the "Stock Purchase Agreement"), between
Xxxx Communications Corp., a Korean corporation ("Xxxx") and Terra, Lycos is
transferring to Terra the Retained Assets in consideration for the Redeemed
Shares and Terra is selling to Xxxx all Purchased Shares of Lycos; and
WHEREAS, in connection with the Stock Purchase Agreement, Lycos is
willing, on the terms and subject to the conditions hereinafter set forth, to
provide for the duration of the Transition Period (as hereinafter defined)
certain transition services requested by Terra in connection with the transfer
of the Retained Assets and sale of the Purchased Shares pursuant to the Stock
Purchase Agreement; and
WHEREAS, in connection with the Stock Purchase Agreement, Terra is
willing, on the terms and subject to the conditions hereinafter set forth, to
provide for the duration of the Transition Period (as hereinafter defined)
certain transition services requested by Lycos in connection with the transfer
of the Retained Assets and sale of the Purchased Shares pursuant to the Stock
Purchase Agreement.
NOW THEREFORE, in consideration of the premises and the mutual
agreements and covenants hereinafter set forth, the parties hereto agree as
follows:
ARTICLE 1
Transition Services and Transition Period
1.1. Transition Services.
(a) Lycos shall provide to Terra and/or certain Terra Subsidiaries (as
detailed in Schedule 1) the transition services described in Schedule 1-A
attached hereto (the "Terra Transition Services"). Terra shall provide to Lycos
and/or certain Lycos Subsidiaries (as detailed in Schedule 1) the transition
services described in Schedule 1-B attached hereto (the "Lycos Transition
Services"). As used herein, (i) "Terra Subsidiaries" shall mean any corporation
in which Terra owns or controls, directly or indirectly, capital stock or other
equity interests representing at least 50% of the outstanding voting stock or
other equity interests; (ii) "Lycos Subsidiaries" shall mean the Company
Subsidiaries as defined in the Stock Purchase
Agreement; and (iii) the Terra Transition Services and the Lycos Transition
Services are hereinafter referred to as the "Transition Services".
(b) Lycos shall provide the Terra Transition Services in the same
general manner and according to the same general standards that similar services
are performed by it for its own operations. Nothing herein shall be construed to
require Lycos to provide any Transition Services to Terra beyond the scope and
content of the business of Lycos and its Subsidiaries (as defined in the Stock
Purchase Agreement) immediately prior to the Closing Date. Terra shall provide
the Lycos Transition Services in the same general manner and according to the
same general standards that similar services are performed by it for its own
operations. Nothing herein shall be construed to require Terra to provide any
Transition Services to Lycos beyond the scope and content of the business of
Lycos and its Subsidiaries (as defined in the Stock Purchase Agreement)
immediately prior to the Closing Date.
If either party becomes aware of a material deficiency in the performance of a
Transition Service provided or procured hereunder (a "Service Level Breach"),
such party may deliver a written notice of the Service Level Breach to the
providing party. Upon receipt of such notice, the providing party shall use
commercially reasonable efforts to remedy the Service Level Breach as soon as
reasonably possible.
(c) Lycos shall use its commercially reasonable efforts to assist Terra
and/or Terra Subsidiaries, in finalizing the transfer of the Retained Assets
(including without limitation Terra Networks Operations, Inc. ("Terra USA"))
with the goal of achieving a seamless transition of Terra USA's business as it
relates to its employees, customers, suppliers, governmental entities, and other
business relationships. Similarly, Lycos shall work in good faith with any Terra
and/or Terra Subsidiaries to schedule and accomplish a timely, smooth and
organized migration or discontinuation of any ongoing services being provided by
Lycos to Terra and the Terra Subsidiaries and its respective end-users. Terra
shall use its commercially reasonable efforts to assist Lycos, in procuring the
services provided under the Lycos Transition Services directly from other third
party providers with the goal of achieving a seamless transition.
(d) Each party shall deliver to the other party copies of such
documents, records and information as are reasonably necessary to achieve a
seamless transition; provided, that in no event shall Lycos be required to
provide Terra with third party confidential information or with any books,
records or other documents relating to the operations of Lycos following the
Closing Date and which do not relate to the Transition Services provided
hereunder. In addition, upon the termination of this Agreement, Lycos promptly
shall deliver to Terra and/or Terra Subsidiaries, as applicable, copies of all
records in Lycos' possession that may be reasonably necessary for Terra and/or
Terra Subsidiaries to assume complete internal responsibility for all of the
services being transitioned hereunder.
(e) Terra shall, promptly after the date hereof, cease using the name
"LYCOS," any other trademark that is part of the Company Intellectual Property,
or any confusingly similar xxxx or name (collectively, the "LYCOS" xxxx) in any
prominent manner (e.g., use of the name on splash screens, advertising
collateral (where the name is prominently featured), domain names, etc.). Terra
shall, reasonably after the date hereof but no later than February 1, 2005,
cease all uses of the "LYCOS" xxxx in any manner.
1.2. Transition Period. Lycos shall provide the Transition Services
from the Closing Date until the expiration of the periods of time set forth on
Schedule 1 next to each Terra Transition Service and Terra shall provide the
Lycos Transition Services from the Closing Date until the expiration of the
periods of time set forth on Schedule 1 next to each Transition Service (the
latest of such date, the "Transition Period").
1.3. Additional Services. In addition to the Terra Transition Services
to be provided in accordance with Section 1.1(a), if requested by Terra and as
needed by Terra and/or Terra Subsidiaries, to conduct its business during the
Terra Transition Period, Lycos shall provide reasonable additional services to
Terra and/or Terra Subsidiaries. In addition to the Lycos Transition Services to
be provided in accordance with Section 1.1(a), if requested by Lycos and as
needed by Lycos and/or Lycos Subsidiaries, to conduct its business during the
Lycos Transition Period, Terra shall provide reasonable additional services to
Lycos and/or Lycos Subsidiaries. The scope of any such services, as well as the
term, costs, and other terms and conditions applicable to such services, shall
be as mutually agreed by Lycos and Terra.
ARTICLE 2
Consideration for the Transition Services
2.1. Consideration for Transition Services.
(a) Terra shall pay, or shall cause the relevant Terra Subsidiary to
pay, the amounts set forth on Schedule 2-A (the "Terra Transition Fees") for
each Terra Transition Service. Lycos will invoice Terra, or the relevant Terra
Subsidiary as identified on Schedule 1 or as otherwise designated by Terra, on a
monthly basis covering all fees for Terra Transition Services provided during
the previous month to the invoice, and payment in full by wire transfer of
immediately available funds to a bank account designated by Lycos will be due
within sixty (60) days of the date of the invoice.
(b) Lycos shall pay, or shall cause the relevant Lycos Subsidiary to
pay, the amounts set forth on Schedule 2-B (the "Lycos Transition Fees") for
each Lycos Transition Service. Terra will invoice Lycos, or the relevant Lycos
Subsidiary as identified on Schedule 1 or as otherwise designated by Lycos, for
Lycos Transition Services provided during the previous month to the invoice
received for the services from the third party to the agreements set forth on
Schedule 1-B and payment in full by wire transfer of immediately available funds
to a bank account designated by TERRA will be due within sixty (60) days of the
date of the invoice.
2.2. Taxes. Contemporaneously with the payment by Terra or a Terra
Subsidiary of any monetary amount due hereunder, Terra or the relevant Terra
Subsidiary will be responsible for the payment of any sales and/or use tax
properly required by any governmental taxing authority in connection therewith.
In addition to any other amounts payable to Lycos, Terra or the relevant Terra
Subsidiary shall promptly reimburse Lycos for any taxes, excises, imposts,
duties, levies, withholdings or other similar charges (collectively, "Taxes")
(excepting any Taxes based on net income), provided however that Lycos shall
cooperate with Terra and any Terra Subsidiaries to avoid or minimize any tax
withholdings consistent with the past practice of Lycos. For such purposes,
Lycos shall deliver to Terra or the relevant Terra
Subsidiary the appropriate tax certificates or documentation provided same is
duly and timely requested by Terra.
ARTICLE 3
No Warranties; Limitation on Liability; Force Majeure
3.1. No Representations and Warranties. THERE ARE NO EXPRESS
REPRESENTATIONS OR WARRANTIES BY EITHER PARTY AND NO REPRESENTATION OR WARRANTY
SHALL BE IMPLIED UNDER THIS AGREEMENT OR AT LAW, INCLUDING WITHOUT LIMITATION
WARRANTY OF MERCHANTABILITY OR WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE AS
TO THE TRANSITION SERVICES TO BE PERFORMED HEREUNDER.
3.2. Limitation on Liability. In no event shall either party be liable
for any special, indirect, punitive, incidental or consequential damages
(including without limitation lost profits or loss of goodwill) to the other
party arising from the provision of Transition Services by it hereunder, whether
or not caused by or resulting from negligence or breach of obligations hereunder
unless such negligence may be characterized as gross negligence or willful
misconduct. The maximum liability of either party hereunder shall be limited to
amounts due to be paid during the term of this Agreement. Notwithstanding
anything to the contrary in the foregoing, and not exclusive of any other remedy
available to Terra, in the event of a substantial and continuing failure on the
part of Lycos to provide or procure any Transition Services, where such failure
is reasonably expected to have a material adverse effect on Terra and/or Terra
Subsidiaries, Terra shall be entitled to seek specific performance to cause
Lycos to provide or procure such Transition Services.
3.3. Force Majeure. The obligations of either Party hereunder shall be
suspended to the extent that the performance of its obligations is delayed or
prevented, in whole or in part, by acts of God or public enemy, war, inclement
weather, fire, floods, major accidents, strikes, lockouts, labor disputes, labor
shortages, riots, demonstrations, sabotage, laws, rules and regulations of
governmental bodies or agencies, governmental action or inaction, order or
restraints of governmental or other competent authorities, inability to obtain
or unavoidable delay in obtaining necessary materials, facilities and/or
equipment in the open market, interruption or unavoidable delay in communication
or transportation, or any other cause, whether similar or dissimilar to those
specifically enumerated above, which shall be beyond its reasonable control.
ARTICLE 4
Indemnification
4.1. Indemnification. Terra agrees to indemnify, defend and hold
harmless Lycos, its affiliates and their respective directors, officers,
employees, agents and representatives (each a "Terra Indemnified Party"), from
and against any and all claims, actions, demands, judgments, losses, costs,
expenses, damages and liabilities (including but not limited to reasonable
attorney's fees and other expenses of litigation, costs, assessments, interest
and any penalties) in any way relating to, in connection with, or in any way
arising out of: (i) any gross
negligence or willful misconduct by Terra or a Terra Subsidiary arising out of
the use of the Transition Services supplied under this Agreement or otherwise
related to this Agreement; (ii) any Terra and/or Terra Subsidiary act or
omission connected with the provision of any Transition Service by Lycos in the
performance of this Agreement; (iii) any event or circumstance which would not
have occurred but for the gross negligence or willful acts of Terra or any Terra
Subsidiaries, or any of their respective directors, officers, employees, agents,
or representatives, (iv) any Terra or Terra Subsidiary product or information
provided to Lycos in connection with the Transition Services; or (v) the
business or operations of Terra; except in each case to the extent caused by
Lycos' gross negligence or willful misconduct. The indemnity obligations of
Terra hereunder shall apply to claims, actions and demands for which any
Indemnified Party may be, or may be claimed to be, partially or solely liable.
All indemnification payments under this Agreement shall be made promptly by wire
transfer of immediately available funds to a bank account designated by the
Indemnified Party.
Lycos agrees to indemnify, defend and hold harmless Terra, its
affiliates and their respective directors, officers, employees, agents and
representatives (each a "Lycos Indemnified Party" and together with the Terra
Indemnified Parties, each an "Indemnified Party"), from and against any and all
claims, actions, demands, judgments, losses, costs, expenses, damages and
liabilities (including but not limited to reasonable attorney's fees and other
expenses of litigation, costs, assessments, interest and any penalties) in any
way relating to, in connection with, or in any way arising out of Lycos' gross
negligence or willful misconduct, or that of any of Lycos' directors, officers,
employees, agents, or representatives, in connection with the provision of any
Lycos Transition Service under this Agreement. All indemnification payments
under this Agreement shall be made promptly by wire transfer of immediately
available funds to a bank account designated by the Indemnified Party.
4.2. Third Party Claims. The Indemnified Party shall promptly notify
the indemnifying party in writing of any third party (including without
limitation any Terra Subsidiary) claim, action or demand for which any
Indemnified Party intends to claim indemnification hereunder; provided, however,
that failure to give such notice shall not relieve the indemnifying party from
its indemnity obligations hereunder except to the extent it is actually
prejudiced thereby. Upon receipt of such written notice, the indemnifying party
may, at its option, assume the defense of the Indemnified Party against such
claim, action or demand (including the employment of counsel reasonably
satisfactory to the Indemnified Party, and the payment of expenses), and
Indemnified Party will reasonably cooperate with the indemnifying party in
connection therewith. The Indemnified Party will permit the indemnifying party
to settle any claim, action or demand and agrees that Terra will control such
settlement; provided, however, that such settlement is for monetary relief only,
does not adversely affect the Indemnified Party's rights under this Agreement or
impose any obligations on the Indemnified Party in addition to those stated in
this Agreement. The indemnifying party, in the defense of any claims, actions or
demands, will not consent to entry of any judgment or enter into any settlement
which does not include as an unconditional term the giving by the claimant or
plaintiff to the Indemnified Party of a release from all liability with respect
to the claim, action or demand.
The Indemnified Party shall have the right to employ separate counsel
in any such claim, action or demand and to participate in the defense thereof,
but the fees and expenses of such
counsel shall not be at the expense of the indemnifying party unless (i) the
indemnifying party shall have failed, within 10 days after having been notified
by the Indemnified Party of the existence of such claim, action or demand, to
assume the defense thereof or to notify the Indemnified Party in writing that it
will assume the defense of such claim, action or demand, (ii) the employment of
such counsel has been specifically authorized in writing by the indemnifying
party, or (iii) the named parties to any such claim, action, or demand
(including any impleaded parties) include both the Indemnified Party and
indemnifying party, and the Indemnified Party shall have been advised by such
counsel that there may be one or more legal defenses available to the
indemnifying party which are not available to, or the assertion of which would
be adverse to the interests of the Indemnified Party. The indemnifying party
shall not be liable to indemnify the Indemnified Party for any settlement of any
such claim or action effected without its prior written consent, which consent
shall not be unreasonably withheld or delayed.
4.3. Other Matters. The provisions of this Article 4 shall be in
addition to any and all other obligations and liabilities that Terra and Lycos
may have to any Indemnified Party at common law, and shall survive the
expiration or earlier termination of this Agreement.
ARTICLE 5
Termination; Early Termination; Consequences of Termination
5.1. Termination. This Agreement shall expire at the end of the
Transition Period. Notwithstanding the foregoing, (i) upon Terra's reasonable
request and not less than 15 days prior written notice to the end of a
Transition Period for any given Terra Transition Service, Lycos shall extend
that Transition Period for such Terra Transition Service for an additional 45
day period, subject to the payment of a single lump sum covering all fees for
Terra Transition Services to be provided during the extended transition period,
and (ii) upon Lycos' reasonable request and not less than 15 days prior written
notice to the end of a Transition Period for any given Lycos Transition Service,
Terra shall extend that Transition Period for such Lycos Transition Service for
an additional 45 day period, subject to the payment of the Lycos Transition Fees
in accordance with Section 2.1.
5.2. Early Termination. Terra or any Terra Subsidiary shall have the
right to reduce or terminate at any time the provision of any Terra Transition
Service rendered to them with 30 days prior written notice to that effect. Lycos
shall have the right to reduce or terminate at any time the Lycos Transition
Services it receives from Terra with 30 days prior written notice to that effect
with the only obligation of payment of the amounts owed as of the day of the
termination. Terra may exercise the early termination right with regard to all,
at the same time, or to any, individually, of the Services listed in the
Schedule 1-A.
5.3. Consequences of Termination. Termination of this Agreement will
not affect the rights of the party providing the Transition Service to receive
all amounts owed to it hereunder for any and all Transition Services rendered
prior to the termination of this Agreement.
ARTICLE 6
Licenses & Third Party Consents
6.1. Separation. With respect to any hardware or software licenses that
are utilized as of the date hereof in connection with the Transition Services,
Lycos and Terra agree to cooperate and use their reasonable efforts to cause, on
or before the expiration of the relevant terms hereunder, such licenses to be
separated and allocated between the parties so that Terra and/or any Terra
Subsidiary receives a number of such licenses that is consistent with the
historical usage of the licensed hardware or software by Terra and/or the Terra
Subsidiaries and Lycos and/or any Lycos Subsidiary receives a number of such
licenses that is consistent with the historical usage of the licensed hardware
or software by Lycos and/or the Lycos Subsidiaries.
6.2. Third Party Consents. Each Party's obligations to deliver and
provide any Transition Services described in this Agreement is conditioned upon
its obtaining the consent, where necessary, of any relevant third party
provider; provided, however, that if such consent cannot be obtained, the
parties shall use their respective reasonable efforts to arrange for alternative
methods of delivering such service.
ARTICLE 7
Miscellaneous
7.1. Cooperation. The parties hereto shall cooperate with each other
and shall cause their officers, employees, agents, auditors and representatives
to cooperate with each other during the Transition Period in order to minimize
any disruption to their respective businesses, including without limitation,
producing on a timely basis all information that is reasonably requested with
respect to the performance of the services and the transition at the end of the
Term.
7.2. Relationship of the Parties. Nothing herein shall constitute, be
construed to be, or create a partnership, joint venture or similar relationship
between them, and that any actions performed by or on behalf of another party
hereunder shall be as an agent for such other party. Lycos does not have the
right or authority to enter into any contract, warranty, guarantee or other
undertaking in the name or for the account of Terra, or any Terra Subsidiary, or
to assume or create any obligation or liability of any kind, express or implied,
on behalf of Terra, or any Terra Subsidiary, or to bind Terra, or any Terra
Subsidiary, in any manner whatsoever, or to hold itself out as having any right,
power or authority to create any such obligation or liability on behalf of, or
to bind in any manner whatsoever, Terra, or any Terra Subsidiary (except as to
any actions taken by Lycos at the express written request and direction of
Terra).
7.3. No Implied Assignments or Licenses. Nothing in this Agreement is
to be construed as an assignment or grant of any right, title or interest in any
trademark, copyright, design or tradedress, patent right or other intellectual
or industrial property right.
7.4. Amendments. This Agreement may be amended, supplemented or waived
only by a subsequent writing signed by all of the parties hereto.
7.5. Successors and Assigns. All terms and conditions of this Agreement
shall be binding upon and inure to the benefit of and be enforceable by the
successors and permitted assigns of the parties hereto.
7.6. Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the law of the State of New York, without regard
to the principles of conflict of laws thereunder. Terra hereby irrevocably
submits to the jurisdiction of the courts of the State of New York, and the
Federal court of the United States of America located in the Southern District
of New York, solely in respect of the interpretation and enforcement of the
provisions of this Agreement and of the documents referred to in this Agreement,
and hereby waives, and agrees not to assert, as a defense in any action, suit or
proceeding for the interpretation or enforcement hereof or of any such document,
that it is not subject thereto or that such action, suit or proceeding may not
be brought or is not maintainable in said courts or that the venue thereof may
not be appropriate or that this Agreement or any of such documents may not be
enforced in or by said courts, and the Parties hereto irrevocably agree that all
claims with respect to such action or proceeding shall be heard and determined
in such a New York or Federal court. Each of the Parties hereby consents to and
grants any such court jurisdiction over the person of such party and over the
subject matter of any such dispute and agrees that mailing of process or other
papers in connection with any such action or proceeding in the manner provided
in this Agreement, or in such other manner as may be permitted by law, shall be
valid and sufficient service thereof.
7.7. Notices. All notices, consents, requests, waivers or other
communications required or permitted under this Agreement (each a "Notice")
shall be in writing and shall be sufficiently given: (a) if hand delivered or
sent by telecopy; (b) if sent by nationally recognized overnight courier; or (c)
if sent by registered or certified mail, postage prepaid, return receipt
requested; and in each case addressed as follows:
If to Lycos: Att: General Counsel
Lycos, Inc.
000 Xxxxx Xxxxxx
Xxxxxxx, XX 00000
X.X.X.
If to Terra: Att: General Counsel
Terra Networks, S.A.
Xxx xx xxx Xxx Xxxxxxxxx 00, Xxxxxxxx Xxxxx 0
28224 Pozuelo xx Xxxxxxx, Madrid
Spain
or such other address as shall be furnished by any of the parties in a Notice.
Any Notice shall be deemed given upon receipt.
7.8. Counterparts. This Agreement may be executed with counterpart signature
pages or in one or more counterparts, all of which shall be one and the same
Agreement, and shall become effective when one or more counterparts have been
signed by each of the parties and delivered to all the parties hereto.
7.9. Severability. If any provision of this Agreement or the
application thereof to any person or circumstance is determined by a court of
competent jurisdiction to be invalid, void or unenforceable, the remaining
provisions hereof, or the application of such provision to persons or
circumstances other than those as to which it has been held invalid or
unenforceable, shall remain in full force and effect and in no way be affected,
impaired or invalidated thereby, so long as the economic or legal substance of
the transaction contemplated hereby is not affected in any manner adverse to any
party.
7.10. Headings. The headings in this Agreement are for convenience only
and shall not affect the construction or interpretation of this Agreement.
7.11. Entire Agreement. This Agreement (including the Schedules
attached hereto) constitutes the entire understanding between and among the
parties with respect to the subject matter hereof and shall supersede any prior
agreements and understandings (whether written or oral) among the parties with
respect to such subject matter.
7.12. Disputes. Terra and Lycos agree that, prior to commencing any
litigation against the other concerning any matter with respect to which such
party intends to make a claim or demand with regard to this Agreement, officers
of each, shall meet in a timely manner and attempt in good faith to negotiate a
settlement of such dispute and to disclose to the other all relevant information
relating to such dispute.
7.13. Third Party Beneficiaries. No provision of this Agreement shall
create any third party beneficiary rights in any person, other than the Terra
Subsidiaries and the Indemnified Party.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
Lycos, Inc.
By: ______________________________________
Name:
Title:
Terra Networks, S.A.
By: ______________________________________
Name:
Title:
By: ______________________________________
Name:
Title:
Schedule 1-A
Terra Transition Services and Transition Periods
------------------------------------------------------------------------------------------------------------------------------------
Service Term of Service Terra or Terra Subsidiaries
------------------------------------------------------------------------------------------------------------------------------------
1. Saber/Hotstats: Continued access to, and use of this 6 months All Terra Subsidiaries using
tool to monitor and extract reports of audience metrics Saber/Hotstats as of Closing (Terra USA,
(page views, unique visitors, etc.). Lycos shall host Terra Colombia, Terra Venezuela, Terra
the platform related to Saber/Hotstats being Peru, Terra Argentina, Terra Central
responsible of managing all technical and operational America and Caribe)
aspects related to this platform, including without
limitation backups of all current information as well
as backup at end of Transition Period; provide
cooperation and assistance to Terra in the migration of
data stored therein upon the expiration of the
Transition Period or earlier as requested by Terra. The
parties shall cooperate to prohibit Terra's access to
Lycos' data and Lycos' access to Terra's data.
------------------------------------------------------------------------------------------------------------------------------------
2. Tripod Chile: Continued insertion of the relevant 6 months Terra Chile
"taggs" on web pages of the Chilean Tripod site and
assignment of all web traffic statistics (unique
visitors, page views, etc.) for the purpose of any
local audience monitoring entity. Terra Chile may link
from its portal to Tripod Chile. Lycos shall provide
operational and technical maintenance and support with
regard to this Service.
------------------------------------------------------------------------------------------------------------------------------------
3. PeopleSoft: Lycos shall provide: Continued access 6 months Terra USA
and use of this ERP and all information stored and
processed therein, including without limitation
continued connectivity to CORIO; technical support in
connection this service (e.g. modification to accounts,
creation of new accounts, etc.); and storage of
historical data for period of at least 3 years
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Service Term of Service Terra or Terra Subsidiaries
------------------------------------------------------------------------------------------------------------------------------------
or until such stored data can be migrated to Terra USA,
subject to the ability to segragate Lycos and Terra data.
------------------------------------------------------------------------------------------------------------------------------------
4. SendMail: Redirect of all "xxxx.xxxxxxxxxx.xxx" and 6 months Terra USA and Terra Colombia
any other corporate email accounts to the corresponding
Terra Subsidiary; continued access to and use of all
elements currently integrated with SendMail including
without limitation spam filtering (with relation to
Lotus Notes) and direct synchronization. Lycos shall
host the Terra domains that may be used during the
Transition Period including, but not limited to the
domain names for Terra USA and Terra Colombia domain
names. Lycos shall continue to provide technical
support as tofor SendMail and shall provided this
service to the corporate mails hosted in the USA.
------------------------------------------------------------------------------------------------------------------------------------
5. WiredNews Online Content: Continued right to 6 months All Terra Subsidiaries translating
translate into Spanish and Portuguese the Wired content and posting WiredNews Online Content as
and posted in certain Terra portals with Wired and of Closing (Terra USA, Terra Brazil,
Terra look and feel. Terra Argentina, Terra Central America
and Caribe)
------------------------------------------------------------------------------------------------------------------------------------
6. Public Relations: public relations services from 3 months Terra USA
Lycos and Lycos' contractors and employees (including
former Terra USA employee Xx. Xxx Xxxxxxx).
------------------------------------------------------------------------------------------------------------------------------------
7. Email Backup: Continued physical backup of corporate 6 months Terra USA and Terra Colombia
email for Terra USA and Terra Colombia to Terra servers
located in Waltham; cooperation and assistance in
delivery of such Terra servers to Miami.
------------------------------------------------------------------------------------------------------------------------------------
8. Off-Site Storage: Lycos will assist Terra with 6 months Terra USA
regard to off site storage until Terra e-mail servers
are relocated to Miami. Lycos
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Service Term of Service Terra or Terra Subsidiaries
------------------------------------------------------------------------------------------------------------------------------------
will cooperate with Terra until Terra can enter
into a new agreement with Iron Mountain for off-site
storage of Terra USA's DLT back-up tapes.
------------------------------------------------------------------------------------------------------------------------------------
9. Lotus Notes Support: Continued access to and use of Until the expiration of Terra USA
Lotus Notes Passport and Knowledge Base support. the current support term
------------------------------------------------------------------------------------------------------------------------------------
10. [FAS (Fix Asset System): Continued access to and 3 months Terra USA
use of this service until such time as Terra USA
establishes its own service; cooperation and assistance
from Lycos in migration of all Terra USA information
contained therein to new Miami service.]
------------------------------------------------------------------------------------------------------------------------------------
11. ADP (Payroll System): Continued access to and use 3 months Terra USA
of this service until such time as Terra USA procures a
new agreement with ADP; cooperation and assistance from
Lycos in migration of all Terra USA information
contained therein to new Miami service. Terra USA shall
use commercially reasonable efforts to enter into an
agreement with ADP.
------------------------------------------------------------------------------------------------------------------------------------
12. Messenger: Continued access to and use of domain 6 months All Terra Subsidiaries
xx.xxxxx.xxx in connection with Messenger; continued
provision of service, including without limitation
engineering and operations support, until the date of
migration of Messenger platform to Terra USA
environment; cooperation and assistance in migration of
platform and knowledge transfer.
------------------------------------------------------------------------------------------------------------------------------------
13. WAN support: Continued WAN support to all Terra USA 3 months Terra USA
offices, including without limitation, reconfiguration
of routers, ACLs, and troubleshooting.
------------------------------------------------------------------------------------------------------------------------------------
14. Terra USA Sales Documentation: 3 months Terra USA
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Service Term of Service Terra or Terra Subsidiaries
------------------------------------------------------------------------------------------------------------------------------------
Lycos to provide Terra with Terra USA
sales documentation.
------------------------------------------------------------------------------------------------------------------------------------
Schedule 1-B
Lycos Transition Services and Transition Periods
The benefits of the services provided under the following contracts [to the extent allowable under the
applicable current agreements]:
------------------------------------------------------------------------------------------------------------------------------------
Service Term of Service Lycos or Lycos Subsidiaries
------------------------------------------------------------------------------------------------------------------------------------
[Enterprise License Schedule between Terra The earlier of 6 months or Lycos and its Subsidiaries
Networks, S.A. and Vignette Ltd. dated as of such time that Lycos enters
October 22, 1999, and amended by the new into a new contract for such services
Enterprise Schedule dated June 30, 2004]
------------------------------------------------------------------------------------------------------------------------------------
[Master Services Agreement between DoubleClick, The earlier of 6 months or Lycos and its Subsidiaries
Inc. and Terra Networks, S.A. dated as of January such time that Lycos enters
1, 2002, as amended by Global Addendum dated into a new contract for
December 1, 2003.] such services
------------------------------------------------------------------------------------------------------------------------------------
A-15
Schedule 2-A
Terra Transition Fees
----------------------------------------------------------------------
Service TransitionFee ($)
----------------------------------------------------------------------
1. Omitted intentionally
----------------------------------------------------------------------
2. Saber/Hotstats $3,000
----------------------------------------------------------------------
3. Tripod Chile $4,900/month
including
withholding taxes
----------------------------------------------------------------------
4. PeopleSoft $7,100/month
----------------------------------------------------------------------
5. SendMail $2,000/month
----------------------------------------------------------------------
6. WiredNews Online Content $1,666/month
----------------------------------------------------------------------
7. Public Relations $2,400/month
----------------------------------------------------------------------
8. Email Backup: direct cost plus 5%
----------------------------------------------------------------------
9. Off-Site Storage (Iron Mountain direct cost plus 5%
Assignment)
----------------------------------------------------------------------
10. Lotus Notes Support direct cost plus 5%
----------------------------------------------------------------------
11. FAS (Fix Asset System) direct cost plus 5%
----------------------------------------------------------------------
12. ADP (Payroll System) direct cost plus 5%
----------------------------------------------------------------------
13. Messenger Support direct cost plus 5%
----------------------------------------------------------------------
14. WAN Support direct cost plus 5%
----------------------------------------------------------------------
15. Terra USA Sales direct cost plus 5%
Documentation Interface
----------------------------------------------------------------------
Schedule 2-B
Lycos Transition Fees
--------------------------------------------------------------------------------
Service TransitionFee ($)
--------------------------------------------------------------------------------
Vignette [Pro rated post-Closing maintenance and
upgrade fees paid to Vignette; in no
event shall Transition Fees include
reimbursement for any prepaid amounts
under such contract]
--------------------------------------------------------------------------------
DoubleClick [Pro rated post-Closing maintenance and
upgrade fees paid to DoubleClick (if
any); in no event shall Transition Fees
include reimbursement for any prepaid
amounts under such contract.]
--------------------------------------------------------------------------------
[PeopleSoft] [pro rated maintenance]
--------------------------------------------------------------------------------
[Portal] [pro rated maintenance]
--------------------------------------------------------------------------------
[Other - to confirm]
--------------------------------------------------------------------------------
EXHIBIT B
WORK FOR HIRE AGREEMENT
This Work for Hire Agreement (the "Agreement") is made and entered into
as of July 30, 2004 ("Effective Date") by and between LYCOS, INC., a corporation
organized under the laws of the State of Virginia, U.S.A. ("Lycos"), and TERRA
NETWORKS, S.A., a corporation organized under the laws of the Kingdom of Spain
("Terra").
RECITALS
WHEREAS Lycos personnel developed, pursuant to the instructions of and
for the benefit of Terra, computer software, not including any third party
intellectual property that may be integrated or otherwise embodied therein, (the
"Subject Software"), described in the functional specifications contained in
Schedule A attached hereto and incorporated by reference, as "work for hire"
products.
NOW THEREFORE, in consideration of the mutual covenants contained
herein, and for other valuable consideration received, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Rights and Payment. Lycos and Terra confirm and agree that it was
the intention of the parties that the Subject Software was developed for Terra
by Lycos as a "work for hire" (as such term is defined in the United States
Copyright Act) and as such, ab initio, was and continues to be the property of
Terra, and Terra hereby agrees, subject to the terms and conditions of this
Agreement, as consideration for the prior development of the Subject Software,
to pay to Lycos the amounts described on Schedule B attached hereto, which
amounts shall be paid to Lycos within fifteen (15) days from the Effective Date.
Notwithstanding the foregoing and for the avoidance of doubt, Lycos hereby
confirms that it intended to and did assign and sell to Terra all right, title
and interest in the Subject Software together with all patents, copyrights,
trade secrets and other proprietary rights created by Lycos in creating the
Subject Software by Lycos. Terra hereby agrees, as consideration for the prior
assignment and sale of the Subject Software, to pay to Lycos the amounts
described on Schedule B attached hereto, which amounts shall be paid to Lycos
within fifteen (15) days from the Effective Date. For purposes of clarity, the
amounts on Schedule B shall only be paid once. In either case, whether the
Subject Software is transferred according to the first or second sentence of
this Section 1, (i) the Subject Software shall be delivered to Terra in object
code and source code along with all associated existing documentation, (ii)
Lycos shall execute and aid in the preparation of any documents necessary to
secure any copyright, patent, or other intellectual property rights in the
Subject Software at no charge to Terra (except that Terra will pay for all
out-of-pocket costs and expenses related thereto), and (iii) immediately upon
receipt of the payment referenced in Schedule B, Lycos hereby acknowledges that
Lycos shall have no ownership interest in, or right to use, the Subject
Software.
2. Acceptance by Terra. Terra acknowledges that it has had sufficient
opportunity to test the Subject Software and agrees that the Subject Software
conforms with the specifications provided by Terra to Lycos, and hereby accepts
the Subject Software. Lycos has no further
development, maintenance or other support obligation with respect to the Subject
Software, and Terra shall be responsible for the further development,
maintenance and other support of the Subject Software.
3. Third Party Intellectual Property. Terra acknowledges that Lycos is
not assigning or granting any rights to any third party intellectual property,
including, without limitation, any third party intellectual property listed on
Schedule A, which may be necessary for the operation of the Subject Software.
Upon request, each party will reasonably cooperate with the other party in
identifying any third party rights that are necessary for use of the Subject
Software. Terra will, at its own expense, obtain and maintain any and all
governmental or other authorizations, licenses, registrations and filings that
may be required under any applicable laws or third party contractual agreements
for Terra to use the Subject Software in accordance with the terms of this
Agreement.
4. DISCLAIMER. NEITHER PARTY MAKES ANY REPRESENTATIONS OR WARRANTIES OF
ANY KIND, EITHER EXPRESS OR IMPLIED, AS TO ANY MATTER INCLUDING, BUT NOT LIMITED
TO, IMPLIED WARRANTIES OF FITNESS FOR A PARTICULAR PURPOSE, MERCHANTABILITY,
NON-INFRINGEMENT, TITLE OR OTHERWISE. TERRA ACCEPTS THE SUBJECT SOFTWARE AS IS.
5. Indemnification. Terra shall hold harmless, defend and indemnify
Lycos and its Affiliates, and their directors, officers, employees, agents and
contractors, against any and all claims, actions, proceedings and suits brought
or made by any third party and all third party liabilities, damages,
settlements, penalties, fines, costs or expenses (including, without limitation,
reasonable attorneys' fees and other litigation expenses) incurred by Lycos
arising out of or related to the creation or use by Terra or a Terra Affiliate
of the Subject Software, including, without limitation, any development or
enhancement thereof or integration with other software.
6. Confidentiality.
6.1. Confidentiality. During the term of this Agreement and thereafter
in perpetuity, each party shall keep strictly confidential, and shall not
disclose (other than to an Affiliate or any advisers, each on a confidential
basis), any confidential information of the other party or any of its Affiliates
received under or in connection with this Agreement, including without
limitation the source code of the Subject Software or any information, written
or oral, relating to costs, profits, markets, sales, products, product
development, key personnel, pricing policies, operational methods, technology,
know-how, technical processes, formulae or plans for future development;
provided, however, that confidential information shall not include, and the
disclosure restrictions of this Section 6.1 shall not apply to, any information
received by either party from the other which:
(a) was already known to the recipient (through no wrongful act) at the
time of receipt from its own independent sources as evidenced by such party's
written records and which was not acquired, directly or indirectly, from the
other party, except that the foregoing exclusion from confidentiality will not
apply to the Subject Software or associated documentation obtained by a party
through its affiliate relationship with the other party;
(b) was at the time of receipt, or thereafter becomes, in the public
domain through no wrongful act of the recipient;
(c) is rightfully received by the recipient from a third party legally
entitled to disclose such information free of confidentiality restrictions;
(d) is disclosed by the recipient pursuant to the order of any court or
in connection with any legal proceeding commenced by or against the recipient,
provided that prior to any such disclosure the recipient shall give the other
party a reasonable opportunity to seek a protective order with respect to any
such disclosure; or
(e) is disclosed by the recipient, or any Affiliate of the recipient,
as required under any applicable securities laws.
"Affiliate" means any entity controlled by, under common control with,
or which controls a party. Upon the expiration or termination of this Agreement,
each party shall either destroy or return to the other party all memoranda,
notes, records, reports and other documents (including all copies thereof)
containing any confidential information of such other party and in such other
party's possession or under its control at the time of such expiration or
termination, and shall give written certification of compliance with this
paragraph to such other party.
7. Limitation of Liability. EXCEPT FOR THIRD PARTY DAMAGES PAYABLE
PURSUANT TO SECTION 6 (INDEMNIFICATION), TO THE EXTENT PERMITTED BY APPLICABLE
LAW, UNDER NO CIRCUMSTANCES SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR
INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL OR EXEMPLARY DAMAGES (EVEN IF THAT
PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES), ARISING FROM
PERFORMANCE UNDER OR FAILURE OF PERFORMANCE OF ANY PROVISION OF THIS AGREEMENT
(INCLUDING SUCH DAMAGES INCURRED BY THIRD PARTIES), SUCH AS, BUT NOT LIMITED TO,
LOSS OF REVENUE OR ANTICIPATED PROFITS OR LOST BUSINESS. EXCEPT FOR ASSIGNMENT
FEE PAYMENT OBLIGATIONS AND INDEMNIFICATION OBLIGATIONS UNDER SECTION 6
(INDEMNIFICATION), TO THE EXTENT PERMITTED BY APPLICABLE LAW, IN NO EVENT SHALL
EITHER PARTY BE LIABLE FOR DAMAGES IN EXCESS OF THE AMOUNTS PAID UNDER THIS
AGREEMENT.
8. Miscellaneous.
8.1. Notices. Any notice, request, demand, approval or consent required
or permitted under this Agreement shall be in writing and shall be effective
upon actual receipt when delivered by (a) registered mail, postage prepaid,
return receipt requested, (b) personal delivery, (c) an overnight courier of
recognized reputation (such as DHL or Federal Express), or (d) transmission by
facsimile (with confirmation by mail), in each case addressed as follows:
If to Lycos: Lycos, Inc.
000 Xxxxx Xxxxxx
Xxxxxxx, XX 00000, U.S.A
Attention: General Counsel
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to Licensee: Terra Networks, S.A.
Xxx xx xxx Xxx Xxxxxxxxx 00, Xxxxxxxx Xxxxx 0
28224 Pozuelo de Alarcon, Madrid, Spain
Attention: General Counsel
Either party may change its address or facsimile number for notice purposes by
notice given to the other party in accordance with this Section 8.1.
8.2. Entire Agreement. This Agreement, including the schedules referred
to herein, which are hereby incorporated in and made a part of this Agreement,
constitutes the entire contract between the parties with respect to the subject
matter covered by this Agreement. This Agreement supersedes all previous letters
of intent, agreements and understandings, if any, by and between the parties
with respect to the subject matter covered by this Agreement. This Agreement may
not be amended, changed or modified except by a writing duly executed by the
parties hereto.
8.3. Severability. If any provision of this Agreement is held by a
court of competent jurisdiction to be unenforceable, invalid or void in any
respect, no other provision of this Agreement shall be affected thereby, all
other provisions of this Agreement shall nevertheless be carried into effect and
the parties shall amend this Agreement to modify the unenforceable, invalid or
void provision to give effect to the intentions of the parties to the extent
possible in a manner which is valid and enforceable.
8.4. Remedies and Waivers. All rights and remedies of the parties are
separate and cumulative, and no one of them, whether exercised or not, shall be
deemed to be to the exclusion of or to limit or prejudice any other rights or
remedies which the parties may have. The parties shall not be deemed to waive
any of their rights or remedies under this Agreement, unless such waiver is in
writing and signed by the party to be bound. No delay or omission on the part of
either party in exercising any right or remedy shall operate as a waiver of such
right or remedy or any other right or remedy. A waiver on any one occasion shall
not be construed as a bar to or waiver of any right or remedy on any future
occasion.
8.5. Governing Law. This Agreement shall be governed, in all respects,
including as to validity, interpretation and effect, by, and interpreted in
accordance with, the internal laws of the State of New York in the United States
of America without giving effect to the conflict of laws rules thereof. The
parties hereby irrevocably consent (i) to the exclusive jurisdiction of the
United States federal and state courts located in the State of New York and
irrevocably waive any rights to assert forum non conveniens, and (ii) to the
service of process by mail or such other means as may be permitted by applicable
law.
8.6. Counterparts and Facsimile. This Agreement may be executed in
counterparts, each of which shall constitute an original, but all of which
together shall constitute one and the same agreement. Transmission of facsimile
copies of signed original signature pages of this Agreement shall have the same
effect as delivery of the signed originals.
8.7. Controlling Language. This Agreement has been prepared, negotiated
and signed in English, and English is the controlling language of this
Agreement.
8.8. Third Party Beneficiary. This Agreement is not intended to and
does not confer any rights on any third party, and no such third party shall be
a third party beneficiary under or in respect of this Agreement.
8.9. Survival. All terms of this Agreement, which by their nature
extend beyond its termination, remain in effect until fulfilled and apply to
respective successors and assigns.
8.10. Binding Effect. Terra may not assign this Agreement (including
without limitation by operation of law, change in ownership (other than by
merger) or otherwise) or any of its rights or delegate any of its duties under
this Agreement without the prior written consent of Lycos. Any such attempted
assignment will be null and void.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
LYCOS, INC.,
a corporation organized under the laws of
Virginia, USA
By: _____________________________________
Its: ____________________________________
TERRA NETWORKS, S.A.
a corporation organized under the laws of
the Kingdom of Spain
By: ____________________________________
Its: ___________________________________
SCHEDULES
SCHEDULE #A# Subject Software
SCHEDULE #B# Consideration
SCHEDULE #A#
SUBJECT SOFTWARE
The Subject Software comprises all software set forth below that is owned by
Lycos. Third party software is not included, and any third party software listed
is included for informational purposes only.
TIME TRACKER
Time Tracker is a processes and activities tracking system. Based on the
following subsystems:
o Authentication, based on intranet Windows NT 'trusted domains'
o Web based application with ASP technology over IIS web server.
o SQL Server database with the following tablespaces:
- Enact: 2 Tables
- Agreementation: table with the users profiles. Slightly
integrated with documentation. (The parties agree that such
component is NOT TO BE TRANSFERRED TO Terra.)
o Reporting system. Based on Microsoft Analysis Server, part of SQL
Server product.
XXXXXXXXXX.XXX WEB SITE
o The content and graphical design (and backup of all the historical
data and designs) of Terra Lycos' corporate web site, located as of
the Effective Date at xxx.xxxxxxxxxx.xxx.
TERRA MESSENGER
Terra Lycos Messenger ("TLM") is an instant messaging platform designed to
support multiple languages and brands on a common system. The service supports
both Terra Lycos employees and external users and is free to use. All TLM users
are able to IM with one another; the service is not partitioned into separate
communities, though each brand or language can have its own web portal to
promote and complement the IM service. Usernames on TLM have the form
"xxxx@xxxxxx.xxx", where "xxxxxx.xxx" indicates (for most features) the brand
and language to present to that user.
TLM version 4.0
Component Technologies & Dependencies
Operating System(s): Windows 2000 for the core IM servers and web sites; Red Hat
Linux for the authentication and database server
Licensed Software: IBM Sametime 3.1, including Lotus Domino
Open-Source/Free Software: OpenLDAP (LDAP-based authentication server);
PostgreSQL (database); IIS (webserver); Tomcat (app server, 4.0 only).
In-House (Proprietary) Software: the Windows-based TLM desktop client itself
(Developed by Telefonica I+D)
custom modifications (in C) to OpenLDAP for authentication (Developed by Lycos
based on Opensource)
ASPs that generate all the web portals and serve a central XML resource file
requested by the client at the start of each session (Developed by Lycos)
the Java-based Notification Engine that processes text alerts sent by external
services to TLM users (Developed by Lycos based on IBM Sametime tech.)
the Java-based Presence Engine that allows services, including the web portals,
to determine whether a user is online or not (Developed by Lycos based on IBM
Sametime tech.)
[4.0 version only] Java servlets and JSPs for the TLM client's nav bar server
(Developed by Telefonica I+D)
Additional Dependencies: TLM does not perform authentications solely on its own;
the OpenLDAP server makes requests to other authentication systems depending on
the domain of the user attempting to login. Typically, OpenLDAP will make an
HTTP request to a local country's proprietary auth system for any user whose
domain corresponds to that country (e.g. @xxxxx.xxx.xx users are authenticated
by OpenLDAP against Terra Brazil's TLPSI/Bridge system).
Details
The major components of the TLM architecture interact as follows:
Desktop client: The client sends and receives instant messages through the
Sametime software. When a user logs on, it also requests an XML file from a
frontend URL that describes particular client settings for that user.
Web/MUX servers: These frontend Win 2K servers, managed by a load balancer,
serve all web requests (including the nav bar servlets and JSPs starting with
4.0) and also handle the initial connections from clients. They run IIS and the
Sametime MUX software (and Tomcat with 4.0). Following the initial connection to
a MUX, clients are directed to a backend Sametime server. The CGI scripts hosted
on these servers also connect to the PostgreSQL database for user profile
information and nav bar settings.
Sametime servers: These Win 2K backend servers manage client connections and
presence information through additional Sametime software and Domino storage.
For authentication, they make requests to the OpenLDAP server via the LDAP
protocol.
LDAP/Database server: This Red Hat Linux server, currently a standalone, is
where the PostgreSQL user database and the customized OpenLDAP server run.
SCHEDULE #B#
CONSIDERATION
$US ___ 300,000
EXHIBIT C
SEARCH SERVICE AGREEMENT
This Search Service Agreement (the "Agreement") is made and entered
into as of ___, 2004 (subject to Section 11.12 below, "Effective Date") by and
between LYCOS, INC., a corporation organized under the laws of the State of
Virginia, U.S.A. ("Lycos"), and TERRA NETWORKS, S.A., a corporation organized
under the laws of the Kingdom of Spain ("Terra").
CERTAIN DEFINITIONS
"Lycos Software" is the object code and related documentation for a set
of software components described in Schedule A attached hereto and incorporated
by reference.
"Internet Search Service" is an online service whereby Users can enter
Queries in a search box and receive Search Results.
"Search Results Providers" are parties with whom Terra has a license to
receive search results ("Search Results") in response to Queries.
"Users" are users of the Terra Web Sites on which a search box appears.
"Terra Web Sites" are the URLs listed in Schedule B attached hereto and
incorporated by reference.
"Queries" are words entered into a search box by Users.
RECITALS
WHEREAS Lycos owns the Lycos Software and Lycos agrees to provide Terra
with certain services and rights with respect to the Lycos Software according to
the terms of this Agreement.
WHEREAS Terra wishes to receive from Lycos certain services and rights
with respect to the Lycos Software according to the terms of this Agreement.
NOW THEREFORE, in consideration of the mutual covenants contained
herein, and for other valuable consideration received, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Services. Subject to the terms and conditions of this Agreement, Lycos hereby
provides to Terra, on behalf of itself and the Terra Entities (as defined
below), and Terra, on behalf of itself and the Terra Entities, hereby accepts
from Lycos, the Lycos Software solely so that Terra and the Terra Entities may,
anywhere the web sites listed in Schedule B are operated by Terra Entities as of
the Effective Date of the Agreement and during the Term, (i) pass Queries to
Search Results Providers, (ii) receive the resultant Search Results, and (iii)
display on Terra Web Sites Search Results to Users. Terra may not license,
transfer, or assign the Lycos Software, nor may Terra operate the Lycos Software
on behalf of, or for the benefit of
any third party, as an application service provider, service bureau, outsourcer,
consultant or other service provider. In no event may Terra provide access to or
the benefit of the Subject Software to any competitor of Lycos. Except as
expressly set forth herein, no other right or interest is granted to Terra, and
all such other rights and interests are expressly reserved by Lycos. Lycos shall
retain all rights of ownership to the Lycos Software and all intellectual
property comprising the Lycos Software, including any permitted modifications,
enhancements, derivative works and/or improvements to the Lycos Software made by
Terra or a Terra Entity. Terra shall notify Lycos of any proposed modifications,
enhancements, derivative works and/or improvements to be made by Terra, or a
Terra Entity, to the Lycos Software. Lycos may approve such proposed
modifications, enhancements, derivative works and/or improvements in its sole
discretion. "Terra Entities" are Terra and any entities controlled by, under
common control with, or which controls Terra.
2. Supporting, Hosting, Personnel.
(a) Lycos shall provide technical support to Terra with respect to the
Lycos Software during the Term. Such technical support shall be provided in the
same scope and manner and according to the same general standards as such
services were being performed by Lycos for Terra with respect to the Terra
activities set forth in Section 1 of this Agreement prior to the Effective Date.
The parties hereto acknowledge that such support consisted generally of "second
level" support for Terra's use of the Lycos Software. Terra will provide all
necessary hosting, power, bandwidth and any other resources (e.g., hardware)
necessary to deploy and maintain the Internet Search Service. Terra will provide
all necessary product, engineering, operations and any other personnel necessary
to deploy and maintain the Internet Search Service in accordance with this
Agreement.
(b) Additionally, Lycos acknowledges that Terra is migrating the search
services platform from its current location to a different Terra USA
environment, and that Lycos agrees to provide operation and engineering support
for such migration that is reasonably required to be obtained from Lycos before,
during and for a reasonable shake-down period after migration to the Terra USA
environment (but in no event after the end of the Term), provided that such
support does not materially increase the manpower and other resources
historically dedicated by Lycos to Terra in connection with the support
described in Section 2(a) immediately above.
3. Service Fee. Terra shall pay to Lycos the sum of seven thousand
dollars (US$7000) per month covering the services expressly set forth herein to
be provided during the Term of this Agreement. Lycos will invoice Terra, or the
relevant Terra Subsidiary as identified on Schedule B or as otherwise designated
by Terra, on a monthly basis covering all fees for the Service to be provided
during the previous month to the invoice, and payment in full by wire transfer
of immediately available funds to a bank account designated by Lycos will be due
within sixty (60) days of the date of the invoice.
4. Third Party Intellectual Property. Terra acknowledges that Lycos is
not granting any rights to any third party intellectual property, including,
without limitation, any third party intellectual property included in the
software listed on Schedule A, or which may be necessary for the operation of
the Lycos Software. Upon request, Lycos will reasonably
cooperate with Terra in identifying any third party rights that are necessary
for use of the Lycos Software. Lycos will inform Terra within 30 days of any
claim of infringement filed by third parties as to the use of any of the Lycos
Software so that Terra may take appropriate action with respect to Terra's
activities.
5. Representations and Warranties. Terra, on behalf of itself and the
Terra Entities, represents and warrants that (i) it has the full and exclusive
right to grant or otherwise permit Lycos to access the Terra (and each of the
Terra Entities') network of websites solely as necessary for Lycos to perform
its obligations and exercise its rights under this Agreement, and (ii) to its
knowledge it is unaware of any claims by any third parties adverse to any of
such intellectual property rights. Each party will, at its own expense, obtain
and maintain any and all governmental authorizations, licenses, registrations
and filings that may be required under any applicable laws to execute or perform
this Agreement, except that Terra will be responsible for obtaining all
governmental authorizations, licenses, registrations necessary in outside of the
United States of America.
6. DISCLAIMER. EXCEPT FOR THE FOREGOING REPRESENTATIONS AND WARRANTIES,
NEITHER PARTY MAKES ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND, EITHER
EXPRESS OR IMPLIED, AS TO ANY MATTER INCLUDING, BUT NOT LIMITED TO, IMPLIED
WARRANTIES OF FITNESS FOR A PARTICULAR PURPOSE, MERCHANTABILITY, QUALITY,
NON-INFRINGEMENT, TITLE OR OTHERWISE WHICH WOULD EXTEND BEYOND THE EXPRESS
REPRESENTATIONS AND WARRANTIES CONTAINED HEREIN. TERRA, ON BEHALF OF ITSELF AND
THE TERRA ENTITIES, ACCEPTS THE LYCOS SOFTWARE AND SUPPORT SERVICES UNDER THIS
AGREEMENT AS IS. LYCOS WILL BE FREE FROM ANY LIABILITY FOR DAMAGES AND LOSSES OF
ANY NATURE ARISING FROM OR RELATED TO THE LACK OF AVAILABILITY OR CONTINUITY OF
THE SERVERS OR WEBSITES OF TERRA OR THE TERRA ENTITIES, OR THE SERVERS OF THE
SEARCH RESULTS PROVIDERS.
7. Indemnification. Terra shall hold harmless, defend and indemnify
Lycos and its affiliates, and their directors, officers, employees, agents and
contractors, against any and all claims, actions, proceedings and suits brought
or made by any third party and all third party liabilities, damages,
settlements, penalties, fines, costs or expenses (including, without limitation,
reasonable attorneys' fees and other litigation expenses) incurred by Lycos,
arising out of or related to the provision of the Lycos Software, and Terra's
use of the Lycos Software, including, without limitation, any development or
enhancement thereof or integration with other software.
8. Confidentiality.
8.1. Confidentiality. During the Term of this Agreement and thereafter,
each party shall keep strictly confidential, shall use solely for the purposes
of this Agreement, and shall not disclose (other than to an Affiliate or any
advisers on a confidential basis), any confidential information of the other
party or any of its Affiliates received under or in connection with this
Agreement, including without limitation any information, written or oral,
relating to costs, profits, markets, sales, products, product development, key
personnel, pricing policies,
operational methods, technology, know-how, technical processes, formulae or
plans for future development; provided, however, that confidential information
shall not include, and the disclosure restrictions of this Section 8.1 shall not
apply to, any information received by either party from the other which:
(a) was already known to the recipient (through no wrongful act) at the
time of receipt from its own independent sources as evidenced by such party's
written records and which was not acquired, directly or indirectly, from the
other party, except that the foregoing exclusion from confidentiality will not
apply to the Lycos Software or associated documentation obtained by Terra
through its affiliate relationship with Lycos;
(b) was at the time of receipt, or thereafter becomes, in the public
domain through no wrongful act of the recipient;
(c) is rightfully received by the recipient from a third party legally
entitled to disclose such information free of confidentiality restrictions;
(d) is disclosed by the recipient pursuant to the order of any court or
in connection with any legal proceeding commenced by or against the recipient,
provided that prior to any such disclosure the recipient shall give the other
party a reasonable opportunity to seek a protective order with respect to any
such disclosure; or
(e) is disclosed by the recipient, or any Affiliate of the recipient,
as required under any applicable securities laws.
"Affiliate" means any entity controlled by, under common control with, or which
controls a party. Upon the expiration or termination of this Agreement, each
party shall either destroy or return to the other party all memoranda, notes,
records, reports and other documents (including all copies thereof) containing
any confidential information of such other party and in such other party's
possession or under its control at the time of such expiration or termination,
and shall give written certification of compliance with this paragraph to such
other party.
9. Term and Termination. The term ("Term") of this Agreement shall
commence on the Effective Date and continue for six (6) months unless terminated
earlier as provided below. Either party may terminate this Agreement (a) if the
other party files a petition for bankruptcy, becomes insolvent, or makes an
assignment for the benefit of its creditors, or a receiver is appointed for the
other party or its business; or (b) upon the occurrence of a material breach of
a material provision by the other party if such breach is not cured within
thirty (30) days after written notice is received by the breaching party
identifying the matter constituting the material breach. In addition, (i) Terra
may terminate this Agreement at any time upon thirty (30) days prior written
notice to Lycos and shall be obligated to pay the service fee only through the
date of termination and (ii) Lycos may terminate this Agreement or suspend its
performance under this Agreement, which termination or suspension shall take
immediate effect, if the operation of Terra or a Terra Entity, including,
without limitation, its web page content and the management thereof, violates or
fails to comply with any applicable law or regulation.
10. Limitation of Liability. EXCEPT FOR THIRD PARTY DAMAGES PAYABLE
PURSUANT TO SECTION 7 HEREOF, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, UNDER NO CIRCUMSTANCES SHALL EITHER PARTY BE LIABLE TO THE OTHER
PARTY FOR INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL OR EXEMPLARY DAMAGES
(EVEN IF THAT PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES),
ARISING FROM PERFORMANCE UNDER OR FAILURE OF PERFORMANCE OF ANY PROVISION OF
THIS AGREEMENT (INCLUDING SUCH DAMAGES INCURRED BY THIRD PARTIES), SUCH AS, BUT
NOT LIMITED TO, LOSS OF REVENUE OR ANTICIPATED PROFITS OR LOST BUSINESS. EXCEPT
FOR SERVICE FEE PAYMENT OBLIGATIONS AND INDEMNIFICATION OBLIGATIONS UNDER
SECTION 7, TO THE EXTENT PERMITTED BY APPLICABLE LAW, IN NO EVENT SHALL EITHER
PARTY BE LIABLE FOR DAMAGES IN EXCESS OF THE FEES PAID UNDER THIS AGREEMENT.
11. Miscellaneous.
11.1. Notices. Any notice, request, demand, approval or consent required or
permitted under this Agreement shall be in writing and shall be effective upon
actual receipt when delivered by (a) registered mail, postage prepaid, return
receipt requested, (b) personal delivery, (c) an overnight courier of recognized
reputation (such as DHL or Federal Express), or (d) transmission by facsimile
(with confirmation by mail), in each case addressed as follows:
If to Lycos: Lycos, Inc.
000 Xxxxx Xxxxxx
Xxxxxxx, XX 00000, U.S.A
Attention: General Counsel
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to Terra: Terra Networks, S.A.
Xxx xx xxx Xxx Xxxxxxxxx 00, Xxxxxxxx Xxxxx 0
28224 Pozuelo de Alarcon, Madrid, Spain
Attention: General Counsel
Either party may change its address or facsimile number for notice purposes by
notice given to the other party in accordance with this Section 11.1.
11.2. Entire Agreement. This Agreement, including the schedules
referred to herein, which are hereby incorporated in and made a part of this
Agreement, constitutes the entire contract between the parties with respect to
the subject matter covered by this Agreement. This Agreement supersedes all
previous letters of intent, agreements and understandings, if any, by and
between the parties with respect to the subject matter covered by this
Agreement. This Agreement may not be amended, changed or modified except by a
writing duly executed by the parties hereto.
11.3. Severability. If any provision of this Agreement is held by a
court of competent jurisdiction to be unenforceable, invalid or void in any
respect, no other provision of this Agreement shall be affected thereby, all
other provisions of this Agreement shall nevertheless be carried into effect and
the parties shall amend this Agreement to modify the
unenforceable, invalid or void provision to give effect to the intentions of the
parties to the extent possible in a manner which is valid and enforceable.
11.4. Remedies and Waivers. All rights and remedies of the parties are
separate and cumulative, and no one of them, whether exercised or not, shall be
deemed to be to the exclusion of or to limit or prejudice any other rights or
remedies which the parties may have. The parties shall not be deemed to waive
any of their rights or remedies under this Agreement, unless such waiver is in
writing and signed by the party to be bound. No delay or omission on the part of
either party in exercising any right or remedy shall operate as a waiver of such
right or remedy or any other right or remedy. A waiver on any one occasion shall
not be construed as a bar to or waiver of any right or remedy on any future
occasion.
11.5. Governing Law. This Agreement shall be governed, in all respects,
including as to validity, interpretation and effect, by, and interpreted in
accordance with, the internal laws of the State of New York in the United States
of America without giving effect to the conflict of laws rules thereof. The
parties hereby irrevocably consent (i) to the exclusive jurisdiction of the
United States federal and state courts located in the State of New York and
irrevocably waive any rights to assert forum non conveniens, and (ii) to the
service of process by mail or such other means as may be permitted by applicable
law.
11.6. Counterparts and Facsimile. This Agreement may be executed in
counterparts, each of which shall constitute an original, but all of which
together shall constitute one and the same agreement. Transmission of facsimile
copies of signed original signature pages of this Agreement shall have the same
effect as delivery of the signed originals.
11.7. Controlling Language. This Agreement has been prepared,
negotiated and signed in English, and English is the controlling language of
this Agreement.
11.8. Third Party Beneficiary. This Agreement is not intended to and
does not confer any rights on any third party, and no such third party shall be
a third party beneficiary under or in respect of this Agreement.
11.9. Survival. All terms of this Agreement, which by their nature
extend beyond its termination, remain in effect until fulfilled and apply to
respective successors and assigns.
11.10. Binding Effect. Terra may not assign this Agreement (including
without limitation by operation of law, change in ownership (other than by
merger) or otherwise) or any of its rights or delegate any of its duties under
this Agreement without the prior written consent of Lycos. Any such attempted
assignment will be null and void.
11.11. Effective Date. Notwithstanding anything to the contrary herein,
this Agreement shall not be effective until the closing of that certain Stock
Purchase Agreement dated as of on or about July 30, 2004 between Terra Networks,
S.A., a corporation organized and existing under the laws of Spain ("Seller"),
and Xxxx Communications, Corp., a corporation organized and existing under the
laws of Korea ("Buyer"), under which Buyer shall purchase from Seller all of the
issued and outstanding shares of common stock of Lycos.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
LYCOS, INC.,
a corporation organized under the laws of
Virginia, USA
By:
--------------------------------------
Its:
-------------------------------------
TERRA NETWORKS, S.A.
a corporation organized under the laws of
the Kingdom of Spain
By:
--------------------------------------
Its:
-------------------------------------
SCHEDULES
SCHEDULE #A# Lycos Software
SCHEDULE #B# Terra Web Sites
SCHEDULE #A#
LYCOS SOFTWARE
Supported Operating System
Microsoft Windows 2000
Software Components
Terra Search Doctree
- This includes all application-specific files for all regional Terra Search
implementations. These ASP, CSS, XML, and XSLT files implement the specific
business logic and user interface requirements of buscador.terra.* sites.
Search Toolkit 1.4.6
- The Search Toolkit is a collection of tools to facilitate the building of
search engine websites. It is primarily written in Microsoft ASP/JScript with
some supporting COM objects to provide functionality not generally available to
scripting. The core functions of the toolkit center on using a user's query
input for fetching results in XML asynchronously from an arbitrary number of
sources and rendering them in the application web page through the application
of XSLT.
Search Service 1.4.6
- The Search Service is a collection of tools to facilitate the building of
search engine websites. It is primarily written in Microsoft ASP/JScript with
some supporting COM objects to provide functionality not generally available to
scripting. The Search Service acts as a middle tier, mediating between front-end
applications and data sources on the back end.
Intercept Object 10.0.0.4
- The Intercept object is a COM DLL. The Intercept object is used to perform
analysis on user input. It is used to categorize a user's query and, thereby,
provides the underpinning for the Nightsurf and TPI integrations.
Documentation
Terra Search Documentation
Documentation for Terra Search will include existing release notes for Terra
Search, and existing release notes and user guides for Search Toolkit and Search
Service.
SCHEDULE B
xxx.xxxxx.xx
xxx.xxxxx.xxx.xx
xxx.xxxxx.xxx.xx
xxx.xxxxx.xxx
xxx.xxxxx.xxx.xx
xxx.xxxxx.xx
xxx.xxxxx.xxx.xx
xxx.xxxxx.xxx.xx
xxx.xxxxx.xxx.xx
xxx.xxxxx.xxx.xx
xxx.xxxxx.xx.xx
xxx.xxxxx.xxx.xx
xxx.xxxxx.xxx.xx
xxx.xxxxx.xxx.xx
xxx.xxxxx.xxx.xx
xxx.xxxxx.xxx.xx
xxx.xxxxx.xxx.xx
EXHIBIT D
SOFTWARE LICENSING AGREEMENT
This Software License Agreement (the "Agreement") is made and entered
into as of August 5___, 2004 by and between LYCOS, INC., a corporation organized
under the laws of the State of Virginia, U.S.A. ("Lycos"), and TERRA NETWORKS,
S.A., a corporation organized under the laws of the Kingdom of Spain ("Terra").
RECITALS
WHEREAS, Terra desires to use in its business certain computer software
described in Schedule A attached hereto, to the extent owned by Lycos (the
"Subject Software"), and hereby incorporated by reference.
NOW, Therefore, in consideration of the mutual covenants contained
herein, and for other valuable consideration received, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. License. Subject to the terms and conditions of this Agreement,
Lycos hereby grants Terra a global, perpetual, license to use each of the
Subject Software solely for its internal business purposes. Terra may sublicense
the Subject Software solely to its Affiliates solely for use for their internal
business purposes and upon the terms of this Agreement. "Affiliate" of any
entity means any other entity controlled by, under common control with, or which
controls such entity. Each Terra Affiliate's access to or use of the Subject
Software shall constitute its agreement to be bound by the terms and conditions
of this Agreement. Notwithstanding the foregoing, in no event may Terra (a)
provide access to or the benefit of the Subject Software to any third party,
including without limitation any competitor of Lycos, (b) operate the Lycos
Software on behalf or for the benefit of any third party, as an application
service provider, service bureau, outsourcer, consultant or otherwise or (c) use
the Lycos Software to compete with Lycos or (c) otherwise exploit the Subject
Software to generate revenue (other than such revenue as may be generated
indirectly through the use of the Subject Software to support Terra's and its
Affiliates' businesses). The Subject Software licensed under this Agreement
shall be delivered to Terra in object code and source code along with all of
Lycos' existing associated documentation. Terra shall have the right to further
develop, enhance or integrate with other software the Subject Software, subject
to Terra obtaining all necessary third party rights. Terra acknowledges that it
has no rights to, and Lycos has no obligation to provide, any updates,
enhancements or other derivative works or replacements of the Subject Software.
Lycos shall retain all right, title and interest in and to the Subject Software
and all intellectual property comprising the Subject Software. Except as
expressly set forth herein, no other right or interest is granted to Terra, and
all such other rights and interests are expressly reserved by Lycos.
2. Limited Maintenance. During the first three (3) months after the
Effective Date, Lycos will provide reasonable "second level" bug fix support
substantially the same in scope and manner, and according to the same general
standards, as such services are performed by Lycos for itself. Beyond that date,
Lycos shall not be obliged to provide Terra with any maintenance or
support services, and Terra shall be responsible for the further maintenance and
support of the Subject Software.
3. Maintenance & License Fees. In consideration for the use of the
Subject Software as set forth herein, Terra shall pay to Lycos the license fees
described on Schedule B attached hereto (the "License Fee"), which amounts shall
be paid to Lycos within fifteen days from the Effective Date. In consideration
for the maintenance support set forth in Section 2 above, Terra shall pay to
Lycos the fully burdened costs therefor, plus five percent (5%) (the
"Maintenance Fee"), which amounts shall be paid to Lycos on a monthly basis as
incurred, with amounts due net thirty (30) days from date of invoice.
4. Third Party Intellectual Property. Terra acknowledges that Lycos is
not granting any rights to any third party intellectual property, including,
without limitation, any third party intellectual property included in the
software listed on Schedule A, or which may be necessary for the operation of
the Subject Software. Upon request, Lycos will reasonably cooperate with Terra
in identifying any third party rights that are necessary for use of the Subject
Software. Terra will, at its own expense, obtain and maintain any and all
governmental or other authorizations, licenses, registrations and filings that
may be required under any applicable laws or third party contractual agreements
for Terra to use the Subject Software in accordance with the terms and
conditions of this Agreement. During the first six (6) years after the Effective
Date, Lycos will inform Terra within 30 days of becoming aware of any claim of
infringement filed by third parties as to the use of any of the Subject Software
so that Terra may take appropriate action.
5. DISCLAIMER. NEITHER PARTY MAKES ANY REPRESENTATIONS OR WARRANTIES OF
ANY KIND, EITHER EXPRESS OR IMPLIED, AS TO ANY MATTER INCLUDING, BUT NOT LIMITED
TO, IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE,
QUALITY, NON-INFRINGEMENT, TITLE OR OTHERWISE. TERRA ACCEPTS THE SUBJECT
SOFTWARE AND SUPPORT SERVICES UNDER THIS AGREEMENT AS IS.
6. Indemnification. Terra shall hold harmless, defend and indemnify
Lycos and its affiliates, and their directors, officers, employees, agents and
contractors, against any and all claims, actions, proceedings and suits brought
or made by any third party and all third party liabilities, damages,
settlements, penalties, fines, costs or expenses (including, without limitation,
reasonable attorneys' fees and other litigation expenses) incurred by Lycos,
arising out of or related to the grant of rights to Lycos Software under this
Agreement, and Terra's use of the Subject Software, including, without
limitation, any development or enhancement thereof or integration with other
software.
7. Confidentiality.
7.1. Confidentiality. During the term of this Agreement and thereafter
in perpetuity, each party shall keep strictly confidential, shall use solely as
permitted by this Agreement and shall not disclose (other than to an Affiliate
bound by this Agreement or any advisers, each on a confidential basis), any
confidential information of the other party or any of its Affiliates received
under or in connection with this Agreement, including without limitation
the source code of the Subject Software or any information, written or oral,
relating to costs, profits, markets, sales, products, product development, key
personnel, pricing policies, operational methods, technology, know-how,
technical processes, formulae or plans for future development; provided,
however, that confidential information shall not include, and the disclosure
restrictions of this Section 7.1 shall not apply to, any information received by
either party from the other which:
(a) was already known to the recipient (through no wrongful act) at the
time of receipt from its own independent sources as evidenced by such party's
written records and which was not acquired, directly or indirectly, from the
other party, except that the foregoing exclusion from confidentiality will not
apply to the Subject Software or associated documentation obtained by Terra
through its affiliate relationship with Lycos;
(b) was at the time of receipt, or thereafter becomes, in the public
domain through no wrongful act of the recipient;
(c) is rightfully received by the recipient from a third party legally
entitled to disclose such information free of confidentiality restrictions;
(d) is disclosed by the recipient pursuant to the order of any court or
in connection with any legal proceeding commenced by or against the recipient,
provided that prior to any such disclosure the recipient shall give the other
party a reasonable opportunity to seek a protective order with respect to any
such disclosure; or
(e) is disclosed by the recipient, or any Affiliate of the recipient,
as required under any applicable securities laws.
Upon the expiration or termination of this Agreement, each party shall either
destroy or return to the other party all memoranda, notes, records, reports and
other documents (including all copies thereof) containing any confidential
information of such other party and in such other party's possession or under
its control at the time of such expiration or termination, and shall give
written certification of compliance with this paragraph to such other party.
8. Limitation of Liability. EXCEPT FOR BREACHES OF SECTION 7 HEREOF
(CONFIDENTIALITY), AND THIRD PARTY DAMAGES PAYABLE PURSUANT TO SECTION 6
(INDEMNIFICATION), TO THE EXTENT PERMITTED BY APPLICABLE LAW, UNDER NO
CIRCUMSTANCES SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR INDIRECT,
INCIDENTAL, CONSEQUENTIAL, SPECIAL OR EXEMPLARY DAMAGES (EVEN IF THAT PARTY HAS
BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES), ARISING FROM PERFORMANCE UNDER
OR FAILURE OF PERFORMANCE OF ANY PROVISION OF THIS AGREEMENT (INCLUDING SUCH
DAMAGES INCURRED BY THIRD PARTIES), SUCH AS, BUT NOT LIMITED TO, LOSS OF REVENUE
OR ANTICIPATED PROFITS OR LOST BUSINESS. EXCEPT FOR BREACHES OF SECTION 7
HEREOF, LICENSE FEE PAYMENT OBLIGATIONS AND INDEMNIFICATION OBLIGATIONS UNDER
SECTION 6, TO THE EXTENT PERMITTED BY APPLICABLE LAW, IN NO EVENT SHALL EITHER
PARTY
BE LIABLE FOR DAMAGES IN EXCESS OF THE FEES PAID UNDER THIS AGREEMENT.
9. Termination. Lycos may terminate this Agreement, or any portion of
this Agreement, upon written notice to Terra (i) in the event of a material
breach by Terra of any material provision of this Agreement that remains uncured
for thirty (30) days after Terra's receipt of written notice of such breach,
(ii) in the event Terra (or any permitted successor organization) ceases to do
business as a going concern, makes an assignment for the benefit of creditors,
admits in writing to its inability to pay its debts as they become due, or is
insolvent or the subject of receivership and (iii) in the event of any change of
control of Terra to any Lycos competitor, or any attempted assignment by Terra
of any of its rights or delegation any of its duties (including without
limitation by operation of law, change of control or otherwise) under this
Agreement to any Lycos competitor. For the purposes of this section, the parties
recognize that a merger between Terra and another entity will result in a
permitted successor organization and is not deemed to be a cessation of doing
business by Terra.
10. Miscellaneous.
10.1. Notices. Any notice, request, demand, approval or consent
required or permitted under this Agreement shall be in writing and shall be
effective upon actual receipt when delivered by (a) registered mail, postage
prepaid, return receipt requested, (b) personal delivery, (c) an overnight
courier of recognized reputation (such as DHL or Federal Express), or (d)
transmission by facsimile (with confirmation by mail), in each case addressed as
follows:
If to Lycos: Lycos, Inc.
000 Xxxxx Xxxxxx
Xxxxxxx, XX 00000, X.X.X.
Attention: General Counsel
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to Licensee: Terra Networks, S.A.
Xxx xx xxx Xxx Xxxxxxxxx 00, Xxxxxxxx Xxxxx 0
28224 Pozuelo de Alarcon, Madrid, Spain
Attention: General Counsel
Either party may change its address or facsimile number for notice purposes by
notice given to the other party in accordance with this Section 10.1.
10.2. Entire Agreement. This Agreement, including the schedules
referred herein, which are hereby incorporated in and made a part of this
Agreement, constitutes the entire contract between the parties with respect to
the subject matter covered by this Agreement. This Agreement supersedes all
previous letters of intent, agreements and understandings, if any, by and
between the parties with respect to the subject matter covered by this
Agreement. This Agreement may not be amended, changed or modified except by a
writing duly executed by the parties hereto.
10.3. Severability. If any provision of this Agreement is held by a
court of competent jurisdiction to be unenforceable, invalid or void in any
respect, no other provision of this Agreement shall be affected thereby, all
other provisions of this Agreement shall nevertheless be carried into effect and
the parties shall amend this Agreement to modify the unenforceable, invalid or
void provision to give effect to the intentions of the parties to the extent
possible in a manner which is valid and enforceable.
10.4. Remedies and Waivers. All rights and remedies of the parties are
separate and cumulative, and no one of them, whether exercised or not, shall be
deemed to be to the exclusion of or to limit or prejudice any other rights or
remedies which the parties may have. The parties shall not be deemed to waive
any of their rights or remedies under this Agreement, unless such waiver is in
writing and signed by the party to be bound. No delay or omission on the part of
either party in exercising any right or remedy shall operate as a waiver of such
right or remedy or any other right or remedy. A waiver on any one occasion shall
not be construed as a bar to or waiver of any right or remedy on any future
occasion.
10.5. Governing Law. This Agreement shall be governed, in all respects,
including as to validity, interpretation and effect, by, and interpreted in
accordance with, the internal laws of the State of New York in the United States
of America without giving effect to the conflict of laws rules thereof. The
parties hereby irrevocably consent (i) to the exclusive jurisdiction of the
United States federal and state courts located in the State of New York and
irrevocably waive any rights to assert forum non conveniens, and (ii) to the
service of process by mail or such other means as may be permitted by applicable
law.
10.6. Counterparts and Facsimile. This Agreement may be executed in
counterparts, each of which shall constitute an original, but all of which
together shall constitute one and the same agreement. Transmission of facsimile
copies of signed original signature pages of this Agreement shall have the same
effect as delivery of the signed originals.
10.7. Controlling Language. This Agreement has been prepared,
negotiated and signed in English, and English is the controlling language of
this Agreement.
10.8. Third Party Beneficiary. This Agreement is not intended to and
does not confer any rights on any third party, and no such third party shall be
a third party beneficiary under or in respect of this Agreement.
10.9. Survival. All terms of this Agreement, which by their nature
extend beyond its termination, remain in effect until fulfilled and apply to
respective successors and assigns.
10.10. Binding Effect. Terra may not assign this Agreement (including
without limitation by operation of law, change in ownership or otherwise) or any
of its rights or delegate any of its duties under this Agreement without the
prior written consent of Lycos. Any such attempted assignment will be null and
void.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
LYCOS, INC.,
a corporation organized under the laws of
Virginia, USA
By:
------------------------------------
Its:
-----------------------------------
TERRA NETWORKS, S.A.
a corporation organized under the laws of
the Kingdom of Spain
By:
------------------------------------
Its:
------------------------------------
SCHEDULES
SCHEDULE #A# Subject Software
SCHEDULE #B# License Fee
SCHEDULE # A #
[XXXX TO CONFIRM]
SUBJECT SOFTWARE
The Subject Software comprises all software set forth below that is
owned by Lycos. Third party software is not included, and any third party
software listed is included for informational purposes only.
PANGEA
Pangea is a back-office application to facilitate Site Management, the content
and processes a site requires to run.
Pangea provides the framework to address the many, varied processes of Site
Management including:
o Process Workflow - how content is integrated into the production
environment
o User Workflow - who enters content, who checks content, who releases
content
o Release Workflow - how content is formally released into the
production environment
Content is created by a process, or more often a user. It is modelled in Pangea
as a component. A collection of components is referred to as a page. All content
is defined by template objects that specify both what content to collect, and
what output to produce.
Component Technologies & Dependencies
o Operating System(s):
o Windows 2000 Server
o Licensed Software:
o Microsoft IIS
o MS SQL Server
o Vignette
o Open-Source Software:
o N/A
o In-House (Proprietary) Software:
o WorkFlow Server 2.1
o Additional Dependencies:
o N/A
CATMAN
Catman is an acronym that stands for Centralized Ad Tag MANagement. Without
centrally managed ad tags, a lot of engineering and ad tech effort is spent
making the same changes to ad tags on many different sites. Centrally managing
ad tags means reducing that effort to a small fraction, with changes occurring
dramatically faster with fewer errors. Catman achieved this goal by providing
the following features;
[ ] Centralize ad tag data, removing the onus of ad tag maintenance from
the Portal front ends
[ ] Centralize the business logic for determining which ad tags to
display, under which conditions
[ ] Minimize dependencies on any one Ad serving vendor
[ ] A browser based GUI for managing ad tags and business logic
Catman is for internal use only. It is an infrastructure used by the ad
technology team and has no direct user interactions.
Component Technologies & Dependencies
o Operating System(s): Windows IIS for ServerSide Catman and any
platform for Clientside Catman. Windows .NET Server for Catman
mid-tier.
o licensed Software: IIS Webserver, SqlServer 2000 Database
o Open-Source Software: None
o In-House (Proprietary) Software: WorkFlow Server, AXIS (.NET
WebServices), Proprietary JavaScript compiler
o Additional Dependencies: WorkFlow Server, AXIS
Details
The diagram below describe the Catman architecture:
o Catman Admin UI - A user interface to add/modify the rules in the
Catman database.
o Ad data tier - Ad data-tier is the database where all rules are
stored. This is a backend only database. Ad data-tier includes stored
procedures that is used to interface with the UI.
o Workflow Server - Workflow server is used to release changes from the
database to production Catman MT and Catman Scripts server. Workflows
are invoked from the Catman Admin UI vis the HTTP interface.
o Ad Middle-Tier - Ad Middle-tier creates XML/XSLT files from the
database depending on the rules set by the UI.
o Catman Middle-Tier - Catman Middle-tier provides a pre-processed XML
and XSLT files pre-processed by the Ad MT. These files and templates
are used by the server side Catman.
o Catman Script Server - Catman Script server holds Javascript files
preprocessed by the Ad MT and used by the Client-side Catman.
o Catman Toolkit (Server-side) - Catman Toolkit with API called from the
ASP pages that needs Catman integration.
o Catman Toolkit (Client-side) - Catman Toolkit for Javascript includes
for client-side Catman integration.
WORK FLOW SERVER
The WorkFow Server is a back-office application to automate process.
WorkFlow Server serves as the backbone to many parts of the new content
management system. It provides flexibility, scalability, and efficiency to
operations that enhance or maintain content in live service. Its primary
advantage is that the implementation has been abstracted into a set of available
functions, called tasks, and that these tasks can be configured and organized in
any manner the user chooses through the use of simple XML configurations. It
allows Terra-Lycos to adapt to most business needs without having to release a
single compiled module, resulting in time-to-market of products being
dramatically reduced. Some examples of WorkFlows include:
o receive news articles from Reuters IDS, verify the articles are
composed of only valid XHTML, post the articles on a TIBCO bus
o receive sports score updates from FOXSports via HTTP GET every 15
seconds, verify the scores updates are composed of only valid XML,
load the scores update into an XML DOM and add our teamcodes via a
dictionary object, store the scores update in a MS SQLServer database
o extract the latest advertising rules from a MS SQLServer database,
transform the rules from our abstract rules language into valid
JavaScript, push the JavaScript to production servers via secure FTP
Component Technologies & Dependencies
o Operating System(s):
o Windows 2000 Server
o RedHat Linux
o Licensed Software:
o Microsoft IIS - for administration
o Microsoft SOAP Toolkit 3.0 - for administration
o MS SQL Server - for logging-only
o Open-Source Software:
o Sun Java 1.4
o Apache Ant 1.5
o Mind Electric GLUE - for administration
o In-House (Proprietary) Software:
o N/A
o Additional Dependencies:
o Licensed technologies that WorkFlows automate such as interaction
with Perforce, MS SQL, Oracle, TIBCO
o Open-Source technologies that WorkFlows automate such as
interaction MySQL
Details
The WorkflowServer has two main conceptual objects. The first is called a
workflow, which is an organized collection of tasks that are arranged to achieve
an objective. For example, an objective could be "build a partner catalog from a
comma delimited feed that is available on their FTP server", or "transform a set
of possible malformed XML for public consumption". The objective is broken into
a series of steps, or tasks, which are available through the WorkflowServer. The
tasks are then arranged through the use of dependencies, or statements
indicating that a step requires a previous step or steps to be executed. Upon
successful configuration and execution of a workflow, the objective should be
achieved.
The other conceptual object of the WorkflowServer is an activator. An activator
is an object which listens for an event and responds to that event by starting a
set of workflows. Events that
an activator can listen for can range from a message available on the TIB to the
system clock reaching a specific date and/or time. Activators are used to
trigger workflows in a known and periodic manner. In other words, we use
activators when there is a specific schedule or set of criteria when a set of
workflows should start.
A series of separate JAR files define the WorkFlow Architecture:
o WorkFlow Implementation Library
o WorkFlow Tasks Library - the actual tasks such as Web Fetching, FTP,
SQL, email ...
o WorkFlow Task Framework Library - defines interface Task and the
methods a Task must implement
The separation allows other programs to use our classes and methods without
inheriting the workflow architecture. Additionally, the distribution facilitates
extension such as the definition of new tasks.
WorkFlows are written as XML documents. WorkFlows have a root element
"workflow", then any number of "job" elements underneath. A "job" is an
individual instance of a task, where the type of task is a fully qualified JAVA
class path. The underlying elements to a "job" make up the task's configuration.
Internally, WorkFlow configurations are transformed into pure XSL stylesheets.
Jobs are placed as children of an XSL template match statement. This allows us
to have "interlaced" XSL in our workflows later while maintaining backwards
compatibility.
AXIS
Axis is a Xxxxxxxxx.XXX based data service driver which allows data to be
queried and retrieved from any number of defined data sources. It provides
mechanisms to serialize the data into XML, and to transform, merge, and
otherwise manipulate the data before sending it back to the client.
A primary goal of Axis is to allow such a data service to be defined
declaratively rather than programmatically through a simple configuration file.
An Axis service is accessed (typically) by the client via HTTP (i.e. it runs as
a Web service) so querying an Axis based Web service simply requires hitting an
URL with the desired query-string parameters. Most commonly, Axis based services
will return XML, but the return of plain text and binary data (i.e. images) is
also supported.
Axis is driven by a configuration file, which itself is an XML file. Each config
file is used to define a single data service which supports any number of
"methods" which can retrieve, manipulate, and return data based upon specified
arguments. A single instance of an Axis Web service can serve any number of
separate services, each controlled by its own config file. A single master Axis
XML config file (axis.xml) is used to define the Web services, each named and
referring to its own config file.
Component Technologies & Dependencies
o Operating System(s): Windows .NET Server.
o licensed Software: IIS Webserver
o Open-Source Software: None
o In-House (Proprietary) Software: None
o Additional Dependencies: None
Details
This diagram is a visual overview of the basic Axis architecture followed by a
brief description of the various components.
Here are some things to notice.
o HTTP Web Interface
Axis provides a way to build Web services, i.e. a way to query a Web
server for data (typically, but not limited to, XML) based on a given
request. Queries to Axis can be in the form of an HTTP GET. The
request contains the name of the Axis service and method within that
service, as well as any arguments as name/value pairs. An Axis service
is defined by an XML config file. The Axis engine does its thing based
on the request and the Axis service config file and
returns the response to the client; typically this is XML, but it can
also be straight text or even binary data.
o Axis Config File
The Axis config XML is what you, as the Web service provider,
implement. There is one config file per service, each may contain any
one or more methods. Multiple services may exist under a single Axis
Web site.
There are two different mechanisms Axis can use to discover service
config files. Either (1) an axis.xml file is used to define and refer
to all of the known services, or (2) the axis sub-directory is
searched for sub-directory containing a config.xml file - these are
assumed to be Axis services which are named for the sub-directory.
When an Axis service is first referenced, its config file is loaded,
parsed and is decomposed into internal named objects - data-sources,
data-queries, data-serializers, methods. Thereafter, the actual config
file is no longer accessed. Note however that Axis does "watch" the
file for changes and when it is updated, it will automatically be
reloaded no IIS restarts!
o Data Sources
Axis data-sources are used to define the source for some data, for
example, an URL via HTTP, a Database, or a Lycos Catalog via CMD. Axis
has built-in support for exactly these three data-sources. Other
data-sources can be defined via plug-ins using the IDataSource
interface. The three built-in data-sources can be defined in the
config file using the http-source, database-source, and catalog-source
elements.
o Data Queries
Axis data-queries are used to define basic queries for data, for
example, an URL for HTTP, SQL for Database, or a CMD query for a Lycos
Catalog. Axis has built-in support for exactly these three
data-queries. Other data-queries can be defined via plug-ins using the
IDataQuery interface. The three built-in data-queries can be defined
in the config file using the http-query, database-query, and
catalog-query elements.
o Data Serializers
Axis data-serializers are used to define a mapping from the actual raw
data from data-fetch, to XML. Axis has built-in support for
transforming or "serializing" the result of a database-fetch and a
catalog-fetch to XML. Other data-serializers can be defined via
plug-ins using the IDataSerializer interface. The two built-in
data-serializers can be defined in the config file using the
database-serializer, and catalog-serializer elements.
o Data Fetchers
Axis data-fetchers are used to retrieve data (typically and by
default, XML) from a given named data-source, using a given named
data-query, and applying a given
data-serializer, if any. If explicitly specified, non-XML, i.e. text
(e.g. badly formed HTML), or binary (e.g. a JPEG image) may also be
retrieved.
o Data Writers
Axis data-writers can also be used to write data, specifically, to a
database.
o Data Outputer
Nothing is actually sent back to the client without explicitly
requesting that it be output. A data-output element allows this to be
done. For convenience it is also possible to simply set an output
attribute on a data-fetch to be true.
o Data Providers
As is shown in the diagram, Axis currently supports three kinds of
data providers databases (SQL Server & Oracle), HTTP, and Lycos
Catalog (CMD). We've just added simple file support as well but it's
not yet in the latest official release.
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