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