STOCK PURCHASE AGREEMENT
BY AND AMONG
STARMEDIA NETWORK, INC.,
GRUPO MVS, S.A. DE C.V.,
XXXXX XXXXXX PUBLICIDAD, S.A. DE C.V.
AND
THE REPRESENTATIVE NAMED HEREIN,
DATED AS OF
JANUARY 31, 2000
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (this "AGREEMENT") is made as of the
31st day of January, 2000, by and among StarMedia Network, Inc., a Delaware
corporation ("PURCHASER"), Grupo MVS, S.A. de C.V., a SOCIEDAD ANONIMA DE
CAPITAL VARIABLE organized in Mexico (the "MVS GROUP"), Xxxxx Xxxxxx Publicidad,
S.A. de C.V., a SOCIEDAD ANONIMA DE CAPITAL VARIABLE organized in Mexico (the
"MOLLER GROUP")(the MVS Group and the Moller Group, together, the
"STOCKHOLDERS"), and the representative named herein (the "REPRESENTATIVE").
W I T N E S S E T H
WHEREAS, Purchaser desires to purchase from the Stockholders the
partnership interests resulting from the conversion of all of the outstanding
(i) ordinary fixed shares, 100.00 Mexican pesos, par value per share (the "FIXED
SHARES"), and (ii) variable shares, 100.00 Mexican pesos, par value per share
(the "VARIABLE SHARES"), in each case, of Adnet, S.A. de C.V., a SOCIEDAD
ANONIMA DE CAPITAL VARIABLE organized in Mexico (the "COMPANY"), into
partnership interests of the fixed and variable portions of the equity interests
of the Company, and the Stockholders desire to sell or to cause the sale of such
equity interests to Purchaser, on the terms and conditions hereinafter set
forth.
NOW THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements contained herein, and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, and intending to be legally bound hereby, the parties
hereto hereby agree as follows:
ARTICLE I
GENERALLY
Section 1.1. CERTAIN DEFINITIONS. Certain capitalized terms used in
this Agreement, in any Exhibit hereto or in the Schedules have the meanings
specified in Exhibit A hereto (which is hereby incorporated by reference into
this Agreement).
Section 1.2. TERMS GENERALLY. (a) Words in the singular shall be
held to include the plural and vice versa and words of one gender shall be held
to include the other genders as the context requires, (b) the terms "hereof,"
"herein," "hereto" and "herewith" and words of similar import shall, unless
otherwise stated, be construed to refer to this Agreement as a whole (including
all of the Exhibits hereto) and not to any particular provision of this
Agreement, and Article, Section, paragraph and Exhibit references are to the
Articles, Sections, paragraphs and Exhibits to this Agreement unless otherwise
specified, (c) the word "including" and words of similar import when used in
this Agreement shall mean "including, without limitation," unless otherwise
specified, (d) the word "or" shall not be exclusive, (e) the phrases "DATE OF
THIS AGREEMENT" and "DATE HEREOF" and any other phrases of similar import shall
mean January 31, 2000, (f) the term "DOLLARS" or the character "$" shall, unless
otherwise expressly provided, mean United States dollars, (g) provisions shall
apply, when appropriate, to successive events and transactions and (h) defined
terms not found in Exhibit A are defined elsewhere in this Agreement.
ARTICLE II
SALE AND PURCHASE OF SHARES
Section 2.1. SALE AND PURCHASE. Upon the terms and subject to the
conditions set forth in this Agreement, at the Closing, the Stockholders shall
sell to Purchaser, and Purchaser shall purchase from the Stockholders the
partnership interests resulting from the conversion (the "CONVERSION") of (a)
130 Fixed Shares and 520 Variable Shares from the MVS Group and 125 Fixed Shares
and 500 Variable Shares from the Moller Group (collectively, the "GROUP A
SHARES") and (b) 125 Fixed Shares and 500 Variable Shares from the MVS Group and
120 Fixed Shares and 480 Variable Shares from the Moller Group (collectively,
the "GROUP B SHARES"), into partnership interests of the fixed and variable
portions of the equity interests of the Company which shall constitute all of
the equity interests of the Company following the Conversion of the Company from
a SOCIEDAD anonima to an SRL in accordance with Section 6.1(h) hereof. The
purchase price for the Group A Shares shall be the Initial Aggregate
Consideration (as such term is defined in Section 2.2 below). The purchase price
for the Group B Shares shall be as set forth in Section 2.6 below. The Group A
Shares and the Group B Shares are collectively, the "COMPANY SHARES." After the
Conversion referred to in Section 6.1(h) is completed, any reference in this
Agreement to "Stockholders" and "Shares" with respect to any time period from
and after such Conversion shall be deemed to be made to "Partners" and
"Partnership Interests," respectively.
Section 2.2. MANNER OF PAYMENT. The aggregate consideration for the
Partnership Interests resulting from the Conversion of the Group A Shares
payable to the Stockholders by Purchaser shall be paid as follows: (a) at the
Closing, (i) $5.0 million in cash in U.S. Dollars (the "CASH CONSIDERATION"), by
wire transfer of immediately available funds to Representative on behalf of the
Stockholders to Representative's account which shall be designated in writing by
the Representative to Purchaser at least two business days prior to the Closing;
and (ii) 469,577 shares of StarMedia Common Stock (the "INITIAL SHARE
CONSIDERATION"), subject to reduction in accordance with Section 2.4 below, by
delivery of such shares to Representative on behalf of the Stockholders; and (b)
within five days after the final determination of Company Revenues (in
accordance with Section 2.5) for each of the calendar quarters during the
calendar year ending December 31, 2000, the number of shares of StarMedia Common
Stock having a value (determined as set forth below in Section 2.8) equal to two
times the Final Company Revenues (as defined in Section 2.5(d)) for each such
calendar quarter (a "CONTINGENT EARNOUT PAYMENT"), subject to reduction in
accordance with Section 2.5(e) below, by delivery of such shares to
Representative on behalf of the Stockholders (the Cash Consideration, the
Initial Share Consideration and the Contingent Earnout Payment, collectively,
the "INITIAL AGGREGATE CONSIDERATION"). Each Stockholder shall receive from the
Representative such Person's pro rata portion of each component of the Initial
Aggregate Consideration in accordance with the applicable percentage set forth
opposite such Person's name on Schedule 1.
Section 2.3. TIME AND PLACE OF CLOSING. (a) The Closing shall take
place on (i) February 28, 2000, or (ii) such later date no later than March 31,
2000 mutually satisfactory to the Representative and Purchaser which is no later
than the fifth business day after satisfaction (or waiver) of the conditions to
the Closing set forth in Articles VII and VIII hereof (other than those
conditions which require the delivery of any documents or the taking of other
action at the Closing) at 10:00 a.m., Mexico City time, at the offices of
Xxxxxx, Ringe & Xxxxxx, Xxxxx xx xxx Xxxxxxxxxx, 000-X, 9 Piso, Bosque de las
Xxxxx, Xxxxxx Xxxx 00000, Xxxxxx.
(b) In addition to the other things required to be done hereby, at
the Closing, the Stockholders shall deliver or cause to be delivered to
Purchaser the following: (i) evidence of entry in the register of the Company
that title to all of the equity interests of the Company has been transferred to
Purchaser; (ii) a copy of the resolutions of each of the Stockholders
authorizing the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby, all of the foregoing
certified to have been duly adopted and to be in full force and effect as of the
Closing Date by such Stockholders; (iii) a copy of the resolutions of the board
of directors (CONSEJO DE GERENTES) of the Company authorizing the execution,
delivery and performance by the Company of any agreements and instruments to be
executed by the Company in connection with this Agreement (collectively, the
"TRANSACTION DOCUMENTS"), all of the foregoing certified to have been duly
adopted and to be in full force and effect as of the Closing Date by the
Company's Secretary or Assistant Secretary and duly notarized by a Notary Public
in Mexico; (iv) a copy of the resolutions of the partners' meeting of the
Company approving and authorizing any and all acts carried out by its directors
in connection with the transactions contemplated hereby, including a general
release from the Company in favor of each director and officer of the Company;
(v) resignations as director of each director of the Company and an irrevocable,
general release from each of the Stockholders and each director or officer of
the Company in favor of the Company, duly executed by each such person, all in
form and substance satisfactory to Purchaser and its counsel; (vi) evidence of
election to the board of directors of the Company of persons designated by
Purchaser; (vii) evidence satisfactory to Purchaser that the Company has duly
increased its capital in accordance with Section 6.1(g); (viii) a certificate of
liens issued by the Public Commercial Registry as of a recent date, with respect
to the Company; (ix) a list of the Contracts of the Company in effect as of the
Closing Date that the Stockholders believe qualify for inclusion as of such date
for purposes of "Year 2000 Firm Revenues" (as defined in Section 2.5(a) below);
(x) a certified copy of the power of attorney granted to each of the individuals
signing this Agreement on behalf of each of the Stockholders authorizing such
individuals to execute this Agreement; and (xi) if not previously delivered to
Purchaser, all other certificates and such other instruments, agreements,
releases, and documents required pursuant hereto to be delivered by or on behalf
of the Stockholders or the Company at or prior to the Closing pursuant to
Article VIII or otherwise required, or reasonably requested by Purchaser, in
connection herewith.
(c) In addition to the other things required to be done hereby, at
the Closing, Purchaser shall deliver to the Representative on behalf of the
Stockholders the following: (i) the Cash Consideration, by wire transfer of
immediately available funds of U.S. Dollars to a bank account (specified in
writing by the Representative at least two business days prior to the Closing
Date); (ii) the Initial Share Consideration; (iii) a copy of the resolutions of
the board of directors (or Merger and Acquisition Committee of the board of
directors) of Purchaser authorizing the execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated hereby, and
a certificate of Purchaser's secretary, dated as of the Closing Date, that the
resolutions referred to in this clause (c)(iii) were duly adopted and are in
full force and effect; and (iv) if not previously delivered to the
Representative, all other certificates and such other instruments and documents
required pursuant hereto to be delivered by or on behalf of Purchaser at or
prior to the Closing pursuant to Article VIII or otherwise required, or
reasonably requested by the Representative, in connection herewith.
Section 2.4. ADJUSTMENT OF STOCKHOLDERS' EQUITY.
(a) At least five business days prior to the Closing Date,
Representative shall deliver to Purchaser a schedule setting forth, in
reasonable detail, the Stockholders' good faith written estimate of the
Stockholders' Equity along with a balance sheet of the Company as of the open of
business on the Closing Date. The Stockholders shall make available to Purchaser
the appropriate personnel, books and records used in the preparation of the
Stockholders' estimate of the Stockholders' Equity. Purchaser shall have the
right to review and approve the Stockholders' estimate of the Stockholders'
Equity. The Stockholders' estimate of the Stockholders' Equity, with any
adjustment thereto proposed by Purchaser and agreed to by Representative prior
to the Closing Date shall be referred to as the "ESTIMATED STOCKHOLDERS'
EQUITY". If the Base Stockholders' Equity is greater than the Estimated
Stockholders' Equity, the Initial Share Consideration shall be decreased by the
amount of such excess. For purposes of making any adjustments pursuant to this
Section 2.4, each share of StarMedia Common Stock shall be deemed to have a
value equal to U.S.$31.94 per share. The amount by which the Base Stockholders'
Equity exceeds the Estimated Stockholders' Equity is referred to herein as the
"ESTIMATED STOCKHOLDERS' EQUITY ADJUSTMENT." To the extent there is no such
excess, the Estimated Stockholders' Equity Adjustment shall be deemed to be
zero.
(b) As soon as practicable after the Closing, but in no event later
than 90 days after the Closing Date, Purchaser shall prepare and deliver to the
Representative a schedule (the "PURCHASER STOCKHOLDERS' EQUITY DETERMINATION
NOTICE") setting forth in reasonable detail Purchaser's calculation of
Stockholders' Equity. Purchaser Stockholders' Equity Determination Notice shall
also show any differences between Purchaser's calculation of Stockholders'
Equity and the Estimated Stockholders' Equity. The Stockholders shall cooperate
and assist Purchaser to the extent requested to prepare Purchaser Stockholders'
Equity Determination Notice. Purchaser will provide the Stockholders and their
respective representatives with access during normal business hours to the
appropriate personnel, books and records used in the preparation of Purchaser
Stockholders' Equity Determination Notice. The Representative shall notify
Purchaser in writing (the "STOCKHOLDERS' EQUITY DISPUTE NOTICE") within 30 days
after receiving the Purchaser Stockholders' Equity Determination Notice if the
Stockholders disagree with Purchaser's calculation of the Stockholders' Equity,
which notice shall set forth in reasonable detail the basis for such dispute and
the dollar amounts involved and Representative's good faith estimate of the
Stockholders' Equity. If no Stockholders' Equity Dispute Notice is received by
Purchaser within such 30-day period, then Purchaser's determination of the
Stockholders' Equity, set forth in the Purchaser Stockholders' Equity
Determination Notice shall be final and binding upon the parties.
(c) Upon receipt of a Stockholders' Equity Dispute Notice, Purchaser
and Representative shall negotiate in good faith to resolve any disagreement
with respect to the final Stockholders' Equity. To the extent Purchaser and
Representative are unable to agree with respect to the final Stockholders'
Equity, within 30 days after either Person notifies the other of a disagreement
with respect thereto, PriceWaterhouseCoopers LLP ("PWC"), or such other Person
mutually acceptable to Purchaser and Representative, shall act as arbitrator to
resolve the dispute within 30 days from submission by either party. The
resolution of PWC, or such other Person mutually acceptable to Purchaser and
Representative, shall be binding and final on the parties. The cost of such
accounting firm shall be paid one half by Purchaser and one half by the
Stockholders. The final amount of the Stockholders' Equity as agreed upon by
Purchaser and Representative, as deemed agreed upon pursuant to this Section 2.4
or as determined by arbitration pursuant to this Section 2.4 shall be termed the
"FINAL STOCKHOLDERS' EQUITY." The amount by which the Base Stockholders' Equity
exceeds the Final Stockholders' Equity is referred to herein as the "FINAL
STOCKHOLDERS' EQUITY ADJUSTMENT." To the extent there is no such excess, the
Final Stockholders' Equity Adjustment shall be deemed to be zero.
(d) Upon the determination of the Final Stockholders' Equity in
accordance herewith, if the Estimated Stockholders' Equity Adjustment is greater
than the Final Stockholders' Equity Adjustment, Purchaser shall pay
Representative on behalf of the Stockholders an amount in cash equal to such
excess, together with interest thereon at a rate equal to Prime plus 1%,
calculated on the basis of the actual number of days elapsed over 365, from the
Closing Date to the date of payment. If the Final Stockholders' Equity
Adjustment is greater than the Estimated Stockholders' Equity Adjustment, then
Representative on behalf of the Stockholders shall pay to Purchaser an amount in
cash equal to such excess, together with interest thereon at a rate equal to
Prime plus 1%, calculated on the basis of the actual number of days elapsed over
365, from the Closing Date to the date of payment.
(e) The payment to be made pursuant to Section 2.4(d) shall be made
by wire transfer of immediately available funds to a bank account designated by
Representative or Purchaser, as the case may be, to the other party within five
business days after the final Stockholders' Equity becomes final and binding on
the parties hereto.
Section 2.5. FINAL DETERMINATION OF CONTINGENT EARNOUT PAYMENT.
(a) Within 45 days after the end of each calendar quarter of the
year 2000, Purchaser shall notify Representative in writing ("PURCHASER
CONTINGENT EARNOUT DETERMINATION") of its determination of the Company Revenues
attributable to the immediately preceding calendar quarter, which determination
shall set forth in reasonable detail the basis for such determination. The
Stockholders shall cooperate and assist Purchaser to the extent requested to
prepare Purchaser Contingent Earnout Determination. Purchaser will provide to
Representative and its representatives with access during normal business hours
to the Company's personnel, books and records to assist the Representative in
its review of the Purchaser Contingent Earnout Determination. In addition, the
Purchaser Contingent Earnout Determination for the quarter ending December 31,
2000 shall also set forth Purchaser's determination of the Year 2000 Firm
Revenues. For purposes of this Agreement, "YEAR 2000 FIRM REVENUES" shall mean
the amount of Company's Revenues actually received by the Company during
calendar year 2000 attributable to advertising inventory pre-sold for calendar
year 2000 by the Company pursuant to valid and binding contracts with Persons
not affiliated with the Stockholders that are in effect as of March 31, 2000.
(b) Representative shall notify Purchaser in writing (the
"CONTINGENT EARNOUT DISPUTE NOTICE") within ten days after receiving the
Purchaser Contingent Earnout Determination, if Representative disagrees with
Purchaser's calculation of Company Revenues attributable to the applicable
calendar quarter and/or Year 2000 Firm Revenues, as the case may be, which
notice shall set forth in reasonable detail the basis for such dispute and the
dollar amounts involved and Representative's good faith estimate of the Company
Revenues attributable to the applicable calendar quarter and/or Year 2000 Firm
Revenues, as the case may be. If no Contingent Earnout Dispute Notice is
received by Purchaser within such ten-day period, then the Purchaser Contingent
Earnout Determination of Company Revenues attributable to the applicable
calendar quarter and/or the Year 2000 Firm Revenues, as the case may be, set
forth in the applicable Determination notice shall be the Final Company Revenues
(as defined in Section 2.5(d) below) for such quarter, and/or Year 2000 Firm
Revenues, as the case may be, and shall be final and binding upon the parties.
(c) Upon receipt of a Contingent Earnout Dispute Notice, Purchaser
and Representative shall negotiate in good faith to resolve any disagreement
with respect to the Company Revenues attributable to the applicable calendar
quarter and/or Year 2000 Firm Revenues, as the case may be. To the extent
Purchaser and Representative are unable to agree with respect to the Company
Revenues attributable to the applicable calendar quarter and/or Year 2000 Firm
Revenues, as the case may be, within 15 days after either party notifies the
other of a disagreement with respect thereto, PWC, or such other Person mutually
acceptable to Purchaser and Representative, shall act as arbitrator to resolve
the dispute within 30 days from submission by either party. The resolution of
PWC, or such other Person mutually acceptable to Purchaser and Representative,
shall be binding and final on the parties. The cost of such accounting firm
shall be paid one half by Purchaser and one half by the Stockholders.
(d) Upon the final determination of Company Revenues attributable to
the applicable calendar quarter in accordance herewith (each such determination
of Company Revenues herein referred to as the applicable "FINAL COMPANY
REVENUES"), Purchaser will make the applicable Contingent Earnout Payment to
Representative within five business days of such final determination, subject to
reduction in accordance with Section 2.5(e) below.
(e) Notwithstanding anything to the contrary contained herein, to
the extent that the Year 2000 Firm Revenues after the final determination
thereof in accordance with this Section 2.5, are less than U.S.$6.0 million,
Purchaser shall be entitled to reduce the Contingent Earnout Payments and the
Group B Shares Payments (as such term is defined in Section 2.6 below) due to
the Stockholders by $3.00 for every $1.00 of such deficiency. Such offset shall
commence with any Contingent Earnout payments due for the last quarter of the
year 2000 and shall continue thereafter from future subsequent Contingent
Earnout Payments and future subsequent Group B Shares Payments until such entire
deficiency has been repaid by the Stockholders by virtue of such reductions.
Section 2.6. PAYMENT FOR GROUP B SHARES.
(a) From time to time after the Closing, on the terms and subject to
the conditions set forth herein, Purchaser shall pay the Representative on
behalf of the Stockholders for the Partnership Interests resulting from the
Conversion of the Group B Shares an amount determined as provided below (each, a
"GROUP B SHARES PAYMENT," and collectively, the "GROUP B SHARES PAYMENTS").
(b) Within 30 days after the end of each of quarter commencing on
March 31, 2001 and ending on December 31, 2004, Purchaser shall deliver to
Representative a schedule (the "QUARTERLY REVENUE SCHEDULE") setting forth
Purchaser's good faith estimate of the Company Revenues for the immediately
preceding quarter. The Stockholders shall cooperate and assist Purchaser to the
extent requested to prepare the Quarterly Revenue Schedules.
(c) Following the end of each calendar quarter during the year 2001,
on a date determined in accordance with Section 2.6(h), Purchaser shall make a
Group B Shares Payment to the Representative on behalf of the Stockholders as
follows: The payment for each such calendar quarter shall be the number of
shares of StarMedia Common Stock having a value (determined as set forth below
in Section 2.8) equal to 1.75 (the "YEAR 2001 MULTIPLIER") times the Company's
Revenues for each such quarter (the "YEAR 2001 QUARTERLY ESTIMATED PAYMENT"),
subject to adjustments pursuant to Sections 2.5(e), 2.6(g) and 2.7, which
aggregate purchase price shall be allocated between the Stockholders by the
Representative on a pro rata basis in accordance with the percentages set forth
on Schedule 1 hereto.
(d) Following the end of each calendar quarter during the year 2002,
on a date determined in accordance with Section 2.6(h), Purchaser shall make a
Group B Shares Payment to the Representative on behalf of the Stockholders as
follows: The payment for each such calendar quarter shall be the number of
shares of StarMedia Common Stock having a value (determined as set forth below
in Section 2.8) equal to 1.75 (the "YEAR 2002 MULTIPLIER") times the Company's
Revenues for each such quarter (the "YEAR 2002 QUARTERLY ESTIMATED PAYMENT"),
subject to adjustments pursuant to Sections 2.5(e), 2.6(g) and 2.7, which
aggregate purchase price shall be allocated between the Stockholders by the
Representative on a pro rata basis in accordance with the percentages set forth
on Schedule 1 hereto.
(e) Following the end of each calendar quarter during the year 2003,
on a date determined in accordance with Section 2.6(h), Purchaser shall make a
Group B Shares Payment to the Representative on behalf of the Stockholders as
follows: The payment for each such calendar quarter shall be the number of
shares of StarMedia Common Stock having a value (determined as set forth below
in Section 2.8) equal to 1.5 (the "YEAR 2003 MULTIPLIER") times the Company's
Revenues for each such quarter (the "YEAR 2003 QUARTERLY ESTIMATED PAYMENT"),
subject to adjustments pursuant to Sections 2.5(e), 2.6(g) and 2.7, which
aggregate purchase price shall be allocated between the Stockholders by the
Representative on a pro rata basis in accordance with the percentages set forth
on Schedule 1 hereto.
(f) Following the end of each calendar quarter during the year 2004,
on a date determined in accordance with Section 2.6(h), Purchaser shall make a
Group B Shares Payment to the Representative on behalf of the Stockholders as
follows: The payment for each such calendar quarter shall be the number of
shares of StarMedia Common Stock having a value (determined as set forth below
in Section 2.8) equal to 1.5 (the "YEAR 2004 MULTIPLIER") times the Company's
Revenues for each such quarter (the "YEAR 2004 QUARTERLY ESTIMATED PAYMENT"),
subject to adjustments pursuant to Sections 2.5(e), 2.6(g) and 2.7, which
aggregate purchase price shall be allocated between the Stockholders by the
Representative on a pro rata basis in accordance with the percentages set forth
on Schedule 1 hereto. The Year 2001 Multiplier, the Year 2002 Multiplier, the
Year 2003 Multiplier and the Year 2004 Multiplier may each be individually
referred to as a "Multiplier" and collectively, as the "Multipliers." The
"Estimated Purchase Price" for a given calendar year shall equal (i) the sum of
each of the four Year 2001 Quarterly Estimated Payments for calendar year 2001,
(ii) the sum of each of the four Year 2002 Quarterly Estimated Payments for
calendar year 2002, (iii) the sum of each of the four Year 2003 Quarterly
Estimated Payments for calendar year 2003 or (iv) the sum of each of the four
Year 2004 Quarterly Estimated Payments for calendar year 2004, as the case may
be.
(g) In determining the final Group B Shares Payment for any given
calendar year, if the actual Company Revenues for such calendar year vary from
the Company's Projected Revenues for the applicable calendar year by more than
10%, the applicable Group B Shares Payment shall be recomputed as provided in
Section 2.7 using the following adjusted Multipliers:
(i) if actual Company Revenues for the applicable calendar
year are between 10% and 25% below the Projected Revenues for the
applicable calendar year, 0.20 will be subtracted from the
applicable Multiplier;
(ii) if actual Company Revenues for the applicable calendar
year are between 10% and 25% above the Projected Revenues for the
applicable calendar year, 0.20 will be added to the applicable
Multiplier;
(iii) if actual Company Revenues for the applicable calendar
year are 25% or more below the Projected Revenues for the applicable
calendar year, 0.30 will be subtracted from the applicable
Multiplier; and
(iv) if actual Company Revenues for the applicable calendar
year are 25% above the Projected Revenues for the applicable
calendar year, 0.30 will be added to the applicable Multiplier.
(h) Each Group B Shares Payment described in this Section 2.6 shall
take place (i) on the third business day after the delivery by Purchaser to
Representative of the applicable Quarterly Revenue Schedule, or (ii) on such
other date agreed to by the Representative and Purchaser (such date, a "PAYMENT
DATE").
Section 2.7. FINAL DETERMINATION OF COMPANY REVENUES FOR GROUP B
SHARES PAYMENTS. (a) Within 90 days after the end of each of the calendar years
ending December 31, 2001 through December 31, 2004, Purchaser shall deliver to
Representative a schedule (a "PURCHASER SUBSEQUENT PAYMENT NOTICE") setting
forth the total Company Revenues reported by Purchaser to Representative during
the prior calendar year pursuant to Section 2.6(b). The Stockholders shall
cooperate and assist Purchaser to the extent requested to prepare Purchaser
Subsequent Payment Notice. Purchaser will provide to Representative and its
representatives with access during normal business hours to the Company's
personnel, books and records to assist the Representative in its review of the
applicable Purchaser Subsequent Payment Notice.
(b) Representative shall notify Purchaser in writing (the
"SUBSEQUENT PAYMENT DISPUTE NOTICE") within 20 days after receiving the
applicable Purchaser Subsequent Payment Notice, if Representative disagrees with
Purchaser's calculation of Company Revenues attributable to the applicable
calendar year, which notice shall set forth in reasonable detail the basis for
such dispute and the dollar amounts involved and Representative's good faith
estimate of the Company Revenues attributable to the applicable calendar year.
If no Subsequent Payment Dispute Notice is received by Purchaser within such
20-day period, then the Company Revenues attributable to the applicable calendar
year set forth in the applicable Purchaser Subsequent Payment Notice shall be
final and binding upon the parties.
(c) Upon receipt of a Subsequent Payment Dispute Notice, Purchaser
and Representative shall negotiate in good faith to resolve any disagreement
with respect to the Company Revenues attributable to the applicable calendar
year. To the extent Purchaser and Representative are unable to agree with
respect to the Company Revenues attributable to the applicable calendar year
within 30 days after either party notifies the other of a disagreement with
respect thereto, PWC, or such other Person mutually acceptable to Purchaser and
Representative, shall act as arbitrator to resolve the dispute within 30 days
from submission by either party. The resolution of PWC, or such other Person
mutually acceptable to Purchaser and Representative, shall be binding and final
on the parties. The cost of such accounting firm shall be paid one half by
Purchaser and one half by the Stockholders.
(d) Within ten days after the final determination of the Company
Revenues attributable to the applicable calendar year in accordance with this
Section 2.7, Purchaser shall deliver to Representative a schedule (a "FINAL
ANNUAL CLOSING SCHEDULE") setting forth the final Company Revenues for the
applicable calendar year (the "FINAL SUBSEQUENT PAYMENT COMPANY REVENUES"), the
applicable Multiplier adjusted to the extent required under Section 2.6(g) (a
"FINAL MULTIPLIER") and the "Final Purchase Price" for the applicable calendar
year which shall be determined by multiplying the applicable Final Multiplier by
the applicable Final Subsequent Payment Company Revenues.
(e) If the Final Purchase Price for an applicable calendar year is
greater than the Estimated Purchase Price (without giving effect to any
reduction pursuant to Section 2.5(e)) for that given calendar year,
substantially contemporaneously with the delivery of the applicable Final Annual
Closing Schedule, Purchaser shall deliver to the Representative on behalf of the
Stockholders the number of shares of StarMedia Common Stock, rounded to the
nearest whole share, with a value as determined in Section 2.7(g) equal to the
amount of such excess. Representative shall allocate such shares between the
Stockholders on a pro rata basis in accordance with the applicable percentage
set forth opposite each Stockholder's name on Schedule 1 hereto.
(f) If the Final Purchase Price for an applicable calendar year is
less than the Estimated Purchase Price (without giving effect to any reduction
pursuant to Section 2.5(e)) for that given calendar year, within three days of
the delivery of the applicable Final Annual Closing Schedule, Representative
shall deliver to Purchaser on behalf of the Stockholders the number of shares of
StarMedia Common Stock, rounded to the nearest whole share, with a value as
determined in Section 2.7(g) equal to the amount of such deficiency.
Representative shall obtain such shares to be returned to Purchaser from the
Stockholders on a pro rata basis in accordance with the applicable percentage
set forth opposite each Stockholder's name on Schedule 1 hereto.
(g) For purposes of Section 2.7(e) and (f), shares of StarMedia
Common Stock shall be valued based on the average of the four Closing Share
Prices (as defined in Section 2.8) for StarMedia Common Stock determined during
the applicable calendar year in accordance with Section 2.8.
Section 2.8. STARMEDIA COMMON STOCK.
(a) For purposes of this Agreement, other than for purposes of
Sections 2.4(a), 2.4(d), 2.7(e), 2.7(f), and 2.12, a share of StarMedia Common
Stock shall be valued at an amount equal to the average Closing Market Price of
StarMedia Common Stock on the thirty Trading Days immediately prior to the
applicable payment date (such average, the "CLOSING SHARE PRICE").
(b) No fractional share of StarMedia Common Stock shall be issued in
connection with the transactions contemplated herein. The Stockholders shall be
entitled to receive in lieu of any fractional share of StarMedia Common Stock to
which the Stockholders otherwise would have been entitled pursuant to Sections
2.2, 2.4 or 2.6 a cash payment in an amount equal to the product of (i) the
fractional interest of a share of StarMedia Common Stock to which the
Stockholders otherwise would have been entitled and (ii) the amount per share at
which StarMedia Common Stock was valued pursuant to this Section 2.8 or, if
applicable, Section 2.4 in relation to the particular purchase price payment in
question.
(c) If StarMedia Common Stock is converted into any securities or
other property, or if any of Purchaser's securities or other property (in each
case, other than cash or additional shares of StarMedia Common Stock) are
distributed, issued or exchanged with respect to any shares of StarMedia Common
Stock upon any recapitalization, reclassification, merger, consolidation, stock
split, stock dividend or the like (Purchaser being permitted to do all of the
foregoing), the parties hereto shall negotiate in good faith, and execute and
deliver, such modifications to this Agreement as are appropriate, if any, to
account for such transactions, in accordance with the principles underlying the
provisions of this Agreement and achieve equivalent value. This Section 2.8(c)
shall apply, MUTATIS MUTANDIS, to successive transactions of the nature
described in this Section 2.8(c).
Section 2.9. STOCK LEGEND; LOCK-UP.
(a) The Stockholders acknowledge and agree that the StarMedia Common
Stock acquired by them pursuant to this Agreement may not be sold, and that they
will not directly or indirectly offer or sell any of such StarMedia Common
Stock, other than in compliance with the Securities Act and all other applicable
state or foreign securities Laws.
(b) Without limiting the Stockholders' obligations under this
Section 2.9, the Stockholders agree that they shall not sell, assign or
otherwise convey any StarMedia Common issued to them pursuant to this Agreement,
except as follows:
(i) Any shares of StarMedia Common Stock delivered on the
Closing Date pursuant to Section 2.2 hereof may be sold, subject to
compliance with Section 2.9(a) above, at any time after the first
anniversary of the Closing Date.
(ii) Any shares of StarMedia Common Stock delivered pursuant
to Section 2.6 hereof may be sold, subject to compliance with
Section 2.9(a) above, at any time after the first anniversary of the
date on which the shares were delivered.
(c) In addition, without the prior written consent of Purchaser, the
Stockholders shall not, directly or indirectly, make any short sale, pledge, or
otherwise dispose of or transfer any such shares of StarMedia Common Stock
acquired pursuant to this Agreement or, in any manner, transfer all or a portion
of the economic consequences associated with the ownership of such StarMedia
Common Stock (including, without limitation, by way of equity swap, hedging, or
any other form of derivative transaction), in each case for a period of one year
from the date of the receipt of such shares pursuant to this Agreement;
PROVIDED, HOWEVER, that the Stockholders, subject to their compliance with
Section 2.9(a) above, may effect a hedge transaction or pledge with an
Investment Institution (as defined below) with respect to such number of shares
of StarMedia Common Stock as required to generate the funds required by the
Stockholders for the exclusive purpose of paying Taxes levied by a Mexican
Government Entity in connection with the sale of the Group A or Group B Shares
to Purchaser pursuant to this Agreement. To the extent the Stockholders effect a
hedge with respect to or a pledge of any shares of StarMedia Common Stock in
accordance with the preceding sentence, the Stockholders agree to use only the
following investment institutions: Xxxxxxx Xxxxx & Co., Xxxxxx Xxxxxxx Xxxx
Xxxxxx & Co., Citibank N.A., Deutsche Bank Securities, Inc., X.X. Xxxxxx & Co.
Incorporated, Xxxxxx Brothers Holdings, Inc. and The Chase Manhattan Corporation
(the "INVESTMENT INSTITUTION(S)") and the Stockholders shall cause the
Investment Institutions to comply with the terms of this Section 2.9.
(d) In order to put third parties on notice of the provisions of
this Section 2.9, the Stockholders agree that the StarMedia Common Stock
delivered pursuant to this Agreement, will contain 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 REASONABLY
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.
THESE SECURITIES ARE SUBJECT TO THE RESTRICTIONS ON SALE AND TRANSFER SET
FORTH IN SECTION 2.9 OF THAT CERTAIN STOCK PURCHASE AGREEMENT DATED
JANUARY 31, 2000 AMONG STARMEDIA NETWORK, INC., GRUPO MVS, S.A. DE C.V.,
XXXXX XXXXXX PUBLICIDAD, S.A. DE C.V., AND THE REPRESENTATIVE NAMED
THEREIN, AS IT MAY BE AMENDED FROM TIME TO TIME. A COPY OF SUCH
RESTRICTIONS MAY BE REQUESTED FROM STARMEDIA NETWORK, INC.
Section 2.10. CERTAIN COVENANTS IN RELATION TO THE CONTINGENT
EARNOUT PAYMENT AND GROUP B SHARES PAYMENTS. (a) If Purchaser shall terminate
the "Term" under the Employment Agreement without "Cause" (as such terms are
defined in the Employment Agreement) and the effective date of such termination
is prior to December 31, 2004, then the Company's Projected Revenues for each
applicable calendar quarter through the calendar year ending December 31, 2004
(such amount to be determined by dividing the Company's Projected Revenues for
such applicable calendar year by four) occurring after such termination's
effective date will be deemed to have been met on each such applicable calendar
quarter and the corresponding Contingent Earnout Payment and Group B Shares
Payments shall be paid in accordance with Sections 2.5 and 2.6 at the times when
such payments would otherwise be due; provided, however, that if such
termination occurs during a calendar year, the actual Company Revenues shall be
utilized for the calendar quarter in which the termination occurs and the
Company's Projected Revenues for such calendar year shall be pro rated for any
applicable remaining calendar quarters. In the case of the utilization of such
Projected Revenues, no final determination of Final Company Revenues in
accordance with Section 2.5 shall be made for such calendar quarter. During the
period commencing on the Closing Date and ending December 31, 2004, in the event
that Xxxxxxx Xxxxxx Ubando is removed from his position under the Employment
Agreement in case of death, "Cause" (except if the basis for such "Cause"
termination is Xxxxxxx Xxxxxx Xxxxxx'x taking any actions in violation of
Section 2.10(b)), or disability (as such terms are defined or used in the
Employment Agreement), the Stockholders and Purchaser shall mutually agree on a
successor.
(b) During the period commencing on the Closing Date and ending
December 31, 2004, Xxxxxxx Xxxxxx Ubando, pursuant to his position under the
Employment Agreement (and subject to Purchaser's and Stockholders' right to
appoint another individual to replace him in case of death, "Cause" (as defined
in the Employment Agreement), except as provided in Section 2.10(a), or
disability) shall retain day-to-day operational control of the Company, subject
only to (i) the terms of the Employment Agreement, which also shall be complied
with by the Company, and (ii) the directions which may be given him in good
faith from time to time by the board of directors of the Company or senior
management of Purchaser. The foregoing notwithstanding, Xxxxxxx Xxxxxx Xxxxxx
shall not be permitted, without prior approval of the board of directors
(CONSEJO DE GERENTES) of the Company (which shall be comprised solely of
designees of Purchaser) or senior management of Purchaser, to cause the Company
(i) to deviate from the Business Plan, (ii) to deviate from the Budget or (iii)
to cause the Company to take (x) any extraordinary action or any other action of
a nature that customarily would require the approval of the board of directors
of a comparably situated Mexican entity (including without limitation any
incurrence of indebtedness for borrowed money (or other comparable liability),
or any sale, license or other disposition of any assets of the Company) or (y)
without limitation of sub-clause (x), any action listed or described in Schedule
2.10(b)(y) hereto. If Xxxxxxx Xxxxxx Ubando takes any actions that he is not
permitted to take pursuant to this Section 2.10(b), then Purchaser may at any
time thereafter terminate Xxxxxxx Xxxxxx Xxxxxx'x operational control of the
Company and his employment with the Company and the Stockholders shall no longer
have any right hereunder or otherwise to appoint a replacement for him or
otherwise have any role relating to the operation of the Company.
(c) Notwithstanding anything to the contrary contained herein or in
the Employment Agreement, if (i) the EBITDA of the Company for any calendar year
from the Closing Date until December 31, 2004 is less than the EBITDA forecast
in the Budget for any such applicable calendar year by 10% or more, or (ii) the
EBITDA of the Company for any calendar quarter from the Closing Date until
December 31, 2004 is less than the EBITDA forecast in the Budget for any such
applicable quarter by 30% or more, then Purchaser may at any time thereafter
terminate Xxxxxxx Xxxxxx Ubando's operational control of the Company and his
employment with the Company and the Stockholders shall no longer have any right
hereunder or otherwise to appoint a replacement for him or otherwise have any
role relating to the operation of the Company.
From and after relieving Xxxxxxx Xxxxxx Xxxxxx of operational
control of the Company and his employment with the Company pursuant to Section
2.10 and through December 31, 2004, Purchaser shall act in good faith with
respect to the Company in relation to the Contingent Earnout Payment and any
Group B Shares Payments. Notwithstanding anything to the contrary contained
herein, including the prior sentence, from the Closing Date to December 31,
2004, Purchaser shall reserve the right to voluntarily wind down, dissolve, shut
down, liquidate, or file bankruptcy with respect to the Company or the Company's
business if it deems, in good faith, such winding down, dissolution, shut down,
liquidation, or bankruptcy filing to be a commercially reasonable action to be
taken by Purchaser under the applicable circumstances (such events being
individually referred to as a "PERMITTED TERMINATION" and collectively, as
"PERMITTED TERMINATIONS"). Without limiting other situations in which Purchaser
may be deemed to have taken commercially reasonable actions, the parties hereto
agree that it would be a commercially reasonable action for Purchaser to wind
down, dissolve, shut down, liquidate, or file bankruptcy with respect to the
Company or the Company's business if at any time during the period from the
Closing Date to December 31, 2004, either the Company's cumulative cash flow
from operations at the end of any calendar month determined in accordance with
GAAP is less than zero, or if at the end of any calendar month during such
period, the Company is unable to pay its debts as they become due. From and
after the occurrence of any Permitted Termination, Purchaser shall not be
required to make any further payments to the Representative or the Stockholders
pursuant to this Agreement, including with respect to the Partnership Interests
resulting from the Conversion of the Group A Shares and the Group B Shares and,
if Purchaser has not previously done so, Purchaser may at any time thereafter
terminate Xxxxxxx Xxxxxx Ubando's operational control of the Company and his
employment with the Company and the Stockholders shall no longer have any right
hereunder or otherwise to appoint a replacement for him or otherwise have any
role relating to the operation of the Company.
(d) Purchaser will work with the Company in good faith to place
links to the Company's website with a view to maximizing Internet traffic to the
Company. Notwithstanding anything to the contrary contained herein, including
the prior sentence, Purchaser shall not be required to contribute or lend (or
cause to be contributed or loaned) to the Company any funds or to make (or cause
to be made) any capital contributions to the Company.
(e) If Xxxxxxx Xxxxxx Xxxxxx fails in any material respect at any
time to carry out, perform, comply with, satisfy or discharge any of his
covenants, agreements, undertakings, liabilities or obligations set forth in the
Employment Agreement, and if such failure either shall not be capable of being
fully cured or is in fact not fully cured within 10 days of notice thereof to
Xxxxxxx Xxxxxx Ubando and to the Company, then Purchaser may at any time
thereafter terminate Xxxxxxx Xxxxxx Xxxxxx'x operational control of the Company
and his employment with the Company and the Stockholders shall no longer have
any right hereunder or otherwise to appoint a replacement for him or otherwise
have any role relating to the operation of the Company.
(f) Except only as set forth in Section 2.10(a), the sole liability
of Purchaser for any breach by it of this Section 2.10, if such breach either
shall not be capable of being cured or is in fact not cured within 30 days of
notice thereof to Purchaser, shall be for Purchaser to pay to the Company (by
delivery of StarMedia Common Stock) an amount equal to the Company's Projected
Revenues for the applicable calendar quarter during which the breach occurs
(such amount to be determined by dividing the Company's Projected Revenues for
the applicable calendar year by four).
(g) At the Closing, each of the Stockholders shall enter into a
service agreement (collectively, the "COMPANY SERVICE AGREEMENTS") with the
Company in form and substance satisfactory to Purchaser which will provide,
among other things, that, (1) from the Closing Date until the tenth anniversary
of the Closing Date, at the request of the Company, each of the Stockholders and
their Affiliates will provide certain support and other goods and services
including, without limitation, the provision by the Moller Group of product
development, advertising sales and marketing services and the provision by the
MVS Group of administrative services, advertising on radio and television for
the Company, advertising sales and access to and use by the Company of MVS
Group's television and radio content for use by the Company; (2) during the
first five years after the Closing Date, the Company will not be able to
purchase any of the goods and services pursuant to the Company Service
Agreements without Purchaser's consent, except to the extent specifically
provided in the Business Plan and Budget; (3) the Company will pay for the goods
and services provided by the Stockholders and their Affiliates at rates that are
not substantially different from the rates agreed upon between the Company and
the Stockholders during the 18 months prior to the date of this Agreement
(copies of the records with respect to such rates have been provided by the
Stockholders to Purchaser prior to the date of this Agreement), or in the case
of the provision of advertising by the MVS Group, the rates charged to the
Company shall be equal to the lesser of the rates charged by the MVS Group to
its Affiliates for advertising or 70% of the average rates paid by MVS Group's
advertisers as of the applicable date; and (4) during the five years after the
Closing Date, the Company, upon request of the Stockholders, will provide
certain consulting services at to be agreed upon rates to the Stockholders on
the following, among others, terms and conditions: (i) the Company shall not
provide any such services unless the Stockholders have paid for such services in
advance; (ii) upon payment for such services, the Stockholders shall deliver to
the Company a receipt acknowledging that the Company has provided all of the
consulting services for which the Stockholders have paid; (iii) the Stockholders
will reimburse the Company for (x) any payments the Company is required to make
under any profit sharing plan as a result of the receipt of any payments made by
the Stockholders to Purchaser under this paragraph (4) (the "PAYMENTS") and (y)
all Taxes imposed on the Company with respect to the receipt of any Payments
(including any Taxes imposed on reimbursements under this clause (iii)), which
Taxes shall be calculated at an assumed effective tax rate of 35% and without
giving effect to any net operating loss carryforwards to which the Company may
be entitled; (iv) the Company shall not be permitted, without Purchaser's
consent, to provide more than $1.0 million of consulting services under this
paragraph (4); and (v) the Company shall not be required to provide any
consulting services under this paragraph (4) after the end of the second year
after the Closing Date if either of the Stockholders has requested that the
Company provide such services in two consecutive calendar quarters.
If the Company Service Agreements are not executed by the Closing and
Purchaser waives the condition contained in Section 7.10, then the parties
hereto agree that the provisions of this Section 2.10(g) shall constitute the
terms and conditions under which the goods and services contemplated by the
Company Service Agreements will be provided notwithstanding that no Company
Service Agreements have been executed.
(h) At the Closing, the MVS Group shall enter into a service
agreement (the "PURCHASER SERVICE AGREEMENT") with Purchaser in form and
substance satisfactory to Purchaser which will provide, among other things,
that, during the first five years after the Closing Date, at the request of
Purchaser, the MVS Group and its Affiliates will provide to Purchaser certain
support and other goods and services including, without limitation, advertising
on radio and television for Purchaser and advertising sales at the same rates
charged to the Company for such goods and services under the Company Service
Agreements.
If the Purchaser Service Agreement is not executed by the Closing and
Purchaser waives the condition contained in Section 7.11, then the parties
hereto agree that the provisions of this Section 2.10(h) shall constitute the
terms and conditions under which the goods and services contemplated by the
Purchaser Service Agreement will be provided notwithstanding that no Purchaser
Service Agreement has been executed.
Section 2.11. EVENT OF COMPANY'S DISSOLUTION OR LIQUIDATION. Except
in the event of a Permitted Termination, if from the Closing Date until December
31, 2004, the Company is voluntarily wound down, shut down, dissolved,
liquidated or a bankruptcy filing is made with respect to the Company, then the
Company's Projected Revenues for each applicable calendar quarter through the
calendar year ending December 31, 2004 (such amount to be determined by dividing
the Company's Projected Revenues for such applicable calendar year by four)
occurring after the effective date of any such winding down, shut down,
dissolution, liquidation or bankruptcy filing, other than a Permitted
Termination, will be deemed to have been met on each such applicable calendar
quarter and the corresponding Contingent Earnout Payment and Group B Shares
Payments shall be paid in accordance with Sections 2.5 and 2.6 at the times when
such payments would otherwise be due; provided, however, that if such winding
down, shut down, dissolution, liquidation or bankruptcy filing, other than a
Permitted Termination, occurs during a calendar year, the actual Company
Revenues shall be utilized for the calendar quarter in which such winding down,
shut down, dissolution, liquidation or bankruptcy filing, other than a Permitted
Termination, occurs and the Company's Projected Revenues for such calendar year
shall be pro rated for any applicable remaining calendar quarters. In the case
of the utilization of such Projected Revenues, no final determination of Final
Company Revenues in accordance with Section 2.5 shall be made for such calendar
quarter.
Section 2.12. MAXIMUM TOTAL CONSIDERATION. Notwithstanding anything
to the contrary contained in this Agreement, in no event shall the Stockholders
be entitled to receive total consideration for the Partnership Interests
resulting from the Conversion of the Group A Shares and the Group B Shares in
excess of U.S.$200.0 million (whether in shares of StarMedia Common Stock, in
cash, or both). For purposes of this Section 2.12, all shares of StarMedia
Common Stock shall be valued at the share price used in determining the value of
such shares at the time such shares were issued to the Stockholders. In the
event that the sum of the Initial Aggregate Consideration and the Group Shares
Payments exceeds U.S.$200.0 million, Purchaser's payment obligations to the
Stockholders pursuant to this Agreement shall terminate upon Purchaser's payment
to the Stockholders of U.S.$200.0 million. From and after Purchaser's payment of
U.S.$200.0 million to the Stockholders, Purchaser shall not be required to make
any further payments pursuant to this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS RELATING TO THE COMPANY
The Stockholders hereby jointly and severally represent and warrant
to and for the benefit of Purchaser as follows:
Section 3.1. INCORPORATION; AUTHORIZATION; CAPITALIZATION. (a) The
Company is a private SOCIEDAD ANONIMA, and as of the Closing, will be an SRL,
duly organized in Mexico, validly existing and in good standing under the laws
of Mexico. The Company (i) has all requisite power to own its properties and
assets and to carry on its business as it is now being conducted and (ii) is in
good standing and is duly qualified to transact business in each jurisdiction in
which the nature of property owned or leased by it or the conduct of its
business requires it to be so qualified, except where the failure to be in good
standing or to be duly qualified to transact business would not, individually or
in the aggregate, have a Material Adverse Effect on the Company. The Company has
previously delivered to Purchaser true and correct copies of the ESTATUTOS
SOCIALES (Bylaws) of the Company. The Company has no Subsidiaries. The Company
has no investments in, or joint venture arrangements with, any other Person.
Prior to the Closing, the Stockholders shall deliver to Purchaser a true and
correct copy of the organizational documents of the Company in its SRL form
which shall be in form and substance satisfactory to Purchaser.
(b) The execution, delivery, and performance by the Stockholders of
this Agreement and the other Transaction Documents to which the Stockholders and
the Company are a party does not, and the consummation by the Stockholders and
the Company of the transactions contemplated hereby and thereby, will not, (i)
violate, conflict with or result in the breach of any provision of the ESTATUTOS
SOCIALES (Bylaws) (or comparable governing document with a different name) of
the Company or (ii) violate, conflict with, result in a breach of, or constitute
a default (or an event which would, with the passage of time or the giving of
notice or both, constitute a default) under, require any consent under, or
result in or permit the termination, amendment, modification, acceleration,
suspension, revocation or cancellation of, or result in the creation or
imposition of any Lien of any nature whatsoever upon any of the assets of the
Company or give to others any interests or rights therein under (1) any
Contract, or (2) any judgment, injunction, writ, award, decree, restriction,
ruling, or order of any court, arbitrator or other Governmental Entity or any
applicable constitution or Law, to which the Company is subject or which is
applicable to any of the Company's assets.
(c) The authorized capital stock of the Company consists of (i) 500
Fixed Shares, of which 500 Fixed Shares are issued and outstanding, and (ii) an
unlimited number of Variable Shares, of which 2,000 Variable Shares are issued
and outstanding. As of the Closing, the Company will have partnership interests
owned by the Stockholders in the same proportion as the Company Shares are
currently owned. All of the outstanding shares of capital stock, and as of the
Closing, partnership interests, of the Company have been duly authorized,
validly issued, are fully paid and non-assessable, and have not been issued in
violation of any preemptive rights created by statute, regulation, or the
ESTATUTOS SOCIALES (Bylaws) of the Company or any agreement to which the Company
is a party or by which it is bound, or in violation of any federal or state
securities laws. Except for the capital increase contemplated by Section 6.1(g),
as disclosed in this Section 3.1(c), and for the transactions contemplated by
this Agreement, there is no security, option, warrant, right (including
preemptive rights), put, call, subscription, agreement, commitment,
understanding or claim of any nature whatsoever, fixed or contingent, that
directly or indirectly (i) calls for the issuance, sale, pledge, delivery or
other disposition of any securities or partnership interests of the Company or
any securities convertible into, or other rights to acquire, any securities of
the Company, (ii) relates to the voting or control of any securities or
partnership interests of the Company or (iii) obligates the Company or any of
its Affiliates to grant, offer or enter into any of the foregoing.
(d) Schedule 3.1(d) contains a complete and correct list of the
record and beneficial ownership of the Fixed Shares and the Variable Shares,
and, as of the Closing, the partnership interests, as the case may be, of the
Company by each stockholder of the Company, designating each officer and
director of the Company and the current mailing address of each such
stockholder.
Section 3.2. FINANCIAL STATEMENTS. (a) Attached hereto as Schedule
3.2(a) are true, correct and complete copies of (i) the audited balance sheet of
the Company as of December 31, 1997 and as of December 31, 1998 and the related
audited income and cash flow statements for the Company for the twelve-month
periods ended December 31, 1997 and December 31, 1998 and (ii) the unaudited
balance sheet of the Company as of December 31, 1999 and the related unaudited
income and cash flow statements for the Company for the twelve-month period then
ended. The foregoing financial statements are collectively referred to as the
"FINANCIAL STATEMENTS."
(b) The Financial Statements were prepared in accordance with the
books and records of the Company and in accordance with GAAP, and fairly present
in all material respects the financial position of the Company as of the
respective dates thereof or the results of operations and cash flows of the
Company for the respective periods then ended, as the case may be.
Section 3.3. UNDISCLOSED LIABILITIES. The Company has no liabilities
or obligations of any nature (whether known or unknown, due or to become due,
absolute, accrued, contingent or otherwise, and whether or not determined or
determinable), and there is no existing condition, situation or set of
circumstances which could reasonably be expected to result in such a liability
or obligation, including any liabilities or obligations under Environmental Laws
or any unfunded obligation under any Benefit Plan, except as (i) disclosed in
the Financial Statements, or (ii) incurred in the ordinary course of business
since December 31, 1999 and which could not individually or in the aggregate
have a Material Adverse Effect on the Company taken as a whole.
Section 3.4. PROPERTIES. (a) The Company does not own, or has ever
owned, any interest in real property. The Company is not in violation of, nor
has ever violated in any material respect , any Environmental Laws.
(b) Schedule 3.4(b) hereto contains a true, complete and accurate
list of all leases, subleases, licenses or other occupancy agreements relating
to any real property and to which the Company is a party or pursuant to which
the Company uses or occupies any real property. The real property (including all
buildings and structures) being leased by the Company (i) is adequate for the
uses for which it is used by the Company, (ii) is not the subject of any pending
condemnation, eminent domain or inverse condemnation proceedings, except, in the
case of each of the foregoing clauses, for such matters as would not reasonably
be expected to have, individually or in the aggregate, a Material Adverse Effect
on the Company.
(c) Schedule 3.4(c)(A) hereto contains descriptions of all items of
tangible personal property of every kind or description owned by the Company
having a current net book value in excess of $5,000.00. No later than February
7, 2000, Stockholders will provide Purchaser with Schedule 3.4(c)(B) which shall
be a true and correct list of all items of tangible personal property of every
kind or description owned by the Company having a current net book value in
excess of $2,500.00. The Company has good and marketable title to, or holds by
valid and existing lease or license, all assets and properties (including
without limitation all assets reflected on the Financial Statements (other than
Intellectual Property, which is the subject of the corresponding representation
set forth in Section 3.8 below)), free and clear of all Liens.
(d) All tangible assets of every kind or description owned or leased
by the Company are in good operating condition and repair, ordinary wear and
tear excepted.
(e) The Company's assets include all assets which are necessary or
required to conduct the business of the Company, as presently conducted or
proposed to be conducted. The Company has good and marketable title to, or
leases, all of its assets, in each case free and clear of all Liens.
Section 3.5. ABSENCE OF CERTAIN CHANGES. Except for the Conversion
contemplated by Sections 6.1(h) and 7.8, since December 31, 1998, there has been
no:
(a) event or occurrence that individually or in the aggregate has
caused or is reasonably likely to cause a Material Adverse Effect;
(b) physical damage, destruction or loss in an amount exceeding
$50,000 in the aggregate affecting the Company not remedied within 30 days;
(c) increase in compensation payable or to become payable to any
employee, independent contractor, consultant or director of the Company, or any
bonus payment made or promised to any employee, independent contractor,
consultant or director of the Company, or any material change in personnel
policies, insurance benefits, Benefit Plans or other compensation arrangements
affecting the employees, independent contractors, consultants or directors of
the Company (other than increases in wages and salaries or bonus payments made
in the ordinary course of business and consistent with past practice);
(d) waiver of any rights by the Company under any Contract, which
waivers, individually or in the aggregate, could have a Material Adverse Effect
on the Company;
(e) mortgage, pledge or subjection to any Lien of any of the
properties or assets owned by the Company, except for sales or dispositions in
the ordinary course of business or dispositions of obsolete properties or
assets;
(f) sale or transfer of the properties or assets of the Company,
including Intellectual Property;
(g) change in any method of accounting or accounting practice except
as required by GAAP as in effect from time to time;
(h) dividend or other distribution paid or declared by the Company
in respect of any of its capital stock, and the Company has not, directly or
indirectly, purchased, acquired or redeemed or split, combined or reclassified
any shares of its capital stock;
(i) entrance into any material transaction or Contract involving a
total commitment by or to any party thereto of more than $50,000 on an annual
basis or more than $200,000 on its remaining term which cannot be terminated on
no more than 60 days' notice without penalty or additional cost to the Company
as the terminating party; or
(j) material tax election or change in tax accounting by the
Company.
Section 3.6. TAXES. (a) The Company (which, for purposes of this
Section 3.6, shall include any predecessor of the Company) has timely filed
(taking into account timely filed extensions) all Returns which are required to
be filed, and all Taxes shown to be due on such Returns have been timely paid to
the extent that such Taxes have become due and are not being contested in good
faith and for which adequate reserves have been set aside. All such Returns are
true, accurate and complete. The Company has provided Purchaser with complete
and accurate copies of all Returns filed by the Company for periods for which
the applicable statute of limitations is still open. The Company has paid all
Taxes required to be paid. The Company has not been included in any
consolidated, combined or unitary Returns, other than inclusion in the
consolidated Returns of MVS Comunicaciones, S.A. de C.V. ("MVS"), the Company's
Parent. The Company does not have in effect, nor has been requested to make, any
waiver or extension of any statute of limitations with respect to Taxes.
(b) The Company is not and has not been engaged in a trade or
business in the United States and is not and has not been subject to U.S.
Federal income taxation.
(c) The Company has complied in all material respects with all
applicable laws, rules and regulations relating to information reporting with
respect to payments made to third parties and the withholding of and payment of
withheld Taxes and has timely withheld from employee wages and other payments to
third parties and paid over to the proper taxing authorities all amounts
required to be so withheld and paid over for all periods under all applicable
laws.
(d) There are no pending, proposed, or, to the knowledge of the
Company or the Stockholders, threatened, audits, Actions, assessments or
deficiencies, asserted with respect to Taxes of the Company. There is no
pending, proposed, or, to the knowledge of the Company or the Stockholders,
threatened, claim by any Taxing Authority in any jurisdiction in which the
Company does not pay Taxes or file Returns that the Company is required to pay
Taxes or file Returns.
(e) The Company does not have any liability under any tax sharing
agreement or tax indemnity agreement nor is it otherwise liable for taxes of any
other Person pursuant to a tax indemnity agreement or otherwise.
(f) All deficiencies asserted or assessments made as a result of any
examination of Returns referred to in Section 3.6(a) have been paid in full.
Section 3.7. LITIGATION; ORDERS. There is no Action pending, or to
the knowledge of the Company or the Stockholders, threatened, against the
Company by or before any court, arbitrator, panel or other Government Entity
that would prevent the consummation of any of the transactions contemplated
hereby. There is no Action pending, or to the knowledge of the Company or the
Stockholders, threatened, against or affecting the Company or its business,
properties or rights by or before any court, arbitrator, panel or other
Government Entity. There are no judgments, orders, injunctions, decrees,
stipulations or awards rendered by any Government Entity or arbitrator against
the Company or any of its properties.
Section 3.8. INTELLECTUAL PROPERTY. (a) Schedule 3.8(a) contains a
true, accurate and complete list of all patents, patent applications, trademarks
and service marks and corresponding registrations and applications for
registration thereof, and copyright registrations and applications for
registration of copyrights, worldwide, as are now owned, used or held for use by
the Company. Schedule 3.8(a)(i) further sets forth a true, accurate and complete
list as of the date hereof of all Outstanding IP Licenses (other than
non-negotiated IP Licenses to the Company for Shrink Wrap Software having a
license fee, in the aggregate for all copies licensed, of less than
$5,000)("NON-COMMODITY SOFTWARE"), identifying the other parties thereto and the
subject matter and date thereof, any royalty or other payment obligations, the
term thereof, and any exclusivity obligations. The Company has sole and
exclusive beneficial and record ownership and legal title of all subject matter
set forth therein, free and clear of Liens (including any rights or claims of
present or former employees, consultants, officers and directors of the Company
or any other Persons) and of any obligations to pay royalties or other
remuneration to any Person. There are no Outstanding IP Licenses other than as
identified in Schedule 3.8(a)(i), oral or written, and no Outstanding IP License
requires any payment of any nature, cash or noncash, or approval from, any past
or present officer, director, shareholder or Affiliate of the Company.
(b) The Company has sufficient title, ownership or IP Licenses of
Intellectual Property Rights (whether or not listed in Schedule 3.8(a)(i))
necessary for its business as now conducted without any conflict with or
infringement of the rights of others, and such rights will not be adversely
affected by the execution and delivery of this Agreement or the consummation of
the transactions contemplated hereby.
(c) The Company has not been nor is now interfering with, infringing
upon, misappropriating, or otherwise in conflict with or violating any
Intellectual Property Rights of other Persons, nor has the Company received any
communications alleging that the Company has violated or, by conducting its
business, would violate any of the Intellectual Property Rights of any other
Person, nor to the knowledge of the Company or the Stockholders, is there any
basis for the making of any such allegation.
(d) Schedule 3.8(d) sets forth a list of all patents relating to any
field of business or proposed business of the Company as to which the Company
has either sought an opinion of counsel or been advised that it should seek an
opinion of counsel.
(e) There is not pending, nor to the knowledge of the Company or the
Stockholders, has there been threatened, any Action to contest, oppose, cancel
or otherwise challenge the validity, ownership or enforceability of any of the
Company's Intellectual Property.
(f) Neither the Company nor any Stockholder has knowledge that any
Person is infringing any of its Intellectual Property.
(g) Neither the Company nor any Stockholder is aware after due
inquiry of the Company's employees that any of the employees of the Company is
obligated under any contract (including IP Licenses, Licenses, covenants or
commitments of any nature) or other agreement, or subject to any judgment,
decree or order of any Governmental Entity, that would interfere with the use of
the best efforts of such employee to promote the interests of the Company or
that would conflict with the Company's business as currently conducted. The
Company is not aware after due inquiry of its consultants that any of its
consultants is obligated under any contract (including IP Licenses, Licenses,
covenants or commitments of any nature) or other agreement, or subject to any
judgment, decree or order of any Governmental Entity, that would interfere with
such consultant's performance of its contractual obligations or other currently
contemplated duties to the Company. Neither the execution nor delivery of this
Agreement or the consummation of the transactions contemplated hereby, nor the
carrying on of the Company's business by the employees of and the consultants to
the Company, nor the conduct of the Company's business, will, to the knowledge
of the Company or the Stockholders after due inquiry of the employees and
consultants of the Company, conflict with or result in a breach of the terms,
conditions or provisions of, or constitute a default under, any law, contract,
covenant or instrument to or under which any of such employees or consultants is
now subject to or obligated. The Company does not believe that it is or will be
necessary to utilize any inventions of any of their employees or consultants (or
Persons it currently intends to hire or retain as consultants) made prior to
their employment or engagement by the Company.
(h) Schedule 3.8(h) sets forth a complete list of all Internet
domain names now used by the Company. All such domain names are currently
registered and in good standing, and the Company is shown on the records of the
registrar thereof as the sole owner thereof. The Company has not received notice
or communication stating that any Person is challenging the right of the Company
to use any such domain name.
(i) All Software which has been used and which is now being used by
the Company has and is being used in compliance with all applicable IP License
requirements.
(j) All the Company's employees and consultants (other than certain
temporary research and development consultants to whom no material disclosures
of any proprietary information of the Company was made) have signed an
undertaking to maintain secrecy with respect to the Company, and the Company
undertakes to continue to act in such manner in the future.
(k) Each of the Programs included in the Company's Non-Commodity
Software is free from any significant software defect or programming or
documentation error, operates and runs in a reasonable and efficient business
manner, and conforms in all material respects to the specifications therefor. No
significant "bugs", and no "viruses" or "time bombs", exist with respect to any
of the Programs included in the Non-Commodity Software.
(l) As to all Software in which the Company purports to own the
Intellectual Property Rights, the Company has obtained signed, written documents
from each of the Persons engaged in the design or development thereof (A)
waiving their respective moral rights in such Software to the extent permitted
by applicable law, (B) acknowledging the Company's exclusive ownership of such
Software, and (C) (without limiting the representations and warranties set forth
in subsection (j) above) agreeing to maintain all Source Code and related
technical information regarding the Software Product in confidence for the
exclusive benefit of the Company (collectively, the "EMPLOYEE TECHNOLOGY
CONVEYANCE AGREEMENTS"), copies of which have been provided to Purchaser prior
to the date of this Agreement.
(m) In its operation of Software and related systems, and the use of
information collected in connection therewith, the Company has at all times
complied in all material respects with legal and contractual obligations under
Mexican, U.S. and other laws worldwide in which such Software or systems are
used regarding the privacy of end users who have used such Software or systems
or supplied information to the Company, and the present use of such Software and
systems information collected in connection therewith by the Company and the
present conduct of its business continues to be in such compliance. The
Stockholders know of no reason after appropriate inquiry why certification of
the operations of the Company would not be granted by the Truste privacy
program, if such operations were to be submitted for such certification by way
of a properly completed and submitted application.
Section 3.9. LICENSES, APPROVALS, OTHER AUTHORIZATIONS, CONSENTS,
REPORTS, ETC. (a) The Company has all licenses, permits, franchises,
registrations, certificates, consents, and other authorizations of any
Government Entity possessed by or granted to the Company necessary to the
conduct of the business of the Company as currently conducted (the "LICENSES"),
except where such failure to have any such license, permit, franchise,
registration, consent or other authorization, individually and in the aggregate,
would not have a Material Adverse Effect. All Licenses are in full force and
effect. No Action is pending or, to the knowledge of the Company or the
Stockholders, threatened, by or before any court, arbitrator, panel or other
Government Entity seeking the revocation, modification or limitation of any
License.
(b) No filing, consent, waiver, approval or authorization of any
Government Entity or of any third party on the part of the Company is required
in connection with the execution, delivery and performance by the Company of the
Transaction Documents to which it is a party or the consummation of any of the
transactions contemplated by this Agreement or by the other Transaction
Documents, except in connection with or in compliance with the Mexican LEY
FEDERAL DE COMPETENCIA ECONOMICA (Federal Economic Competition Law).
(c) During the years ended December 31, 1998 and December 31, 1999,
the Company and its Subsidiaries, taken as a whole, (i) did not hold assets
located in the United States having an aggregate book value of $15 million or
more, and (ii) did not make aggregate sales in or into the United States of $25
million or more.
Section 3.10. LABOR MATTERS.
(a) Schedule 3.10(a) sets forth a complete and correct list of all
employees of the Company, including for each such employee his or her (i) name;
(ii) job title; (iii) status as a full-time or part-time employee; and (iv) base
salary or wage rate. Schedule 3.10(a) also lists each employee of the Company
who is not actively at work for any reason other than vacation, and the reason
for such absence.
(b) Schedule 3.10(b) sets forth a complete and correct list of all
individuals who perform services for the Company as an independent contractor,
the services they perform, and their rate of compensation.
(c) No employees of the Company are covered by a collective
bargaining agreement. No employees of the Company are, or within the last three
years have been, represented by a union or other bargaining agent, and, to the
knowledge of the Company or the Stockholders, no employee organizing efforts are
pending with respect to employees of the Company. There has been no strike, work
slowdown or other material labor dispute with respect to employees of the
Company, nor to the knowledge of the Company or the Stockholders, is any strike,
work slowdown or other material labor dispute pending. The Company is not
involved in nor, to the knowledge of the Company or the Stockholders, threatened
with any arbitration, lawsuit or administrative proceeding relating to labor
matters involving the employees of the Company.
(d) Except as disclosed in Schedule 3.10(d):
(i) The Company is in compliance with all applicable
labor, social security and other applicable Laws and employment agreements and
has paid all social security, profit sharing, savings fund, housing fund and all
other charges and contributions required by applicable Laws;
(ii) There is no pending social security or labor
complaint involving the Company or, to the knowledge of the Company and the
Stockholders, threatened, before any Governmental Entity from which an
obligation or liability may arise or be asserted against the Company;
(iii) There is no pending labor dispute or, to the
knowledge of the Company and the Stockholders, threatened, against the Company
from which an obligation or liability may arise or be asserted against the
Company; and
(iv) No Action has been filed or, to the knowledge of
the Company and the Stockholders, threatened, by any labor union seeking to
enter into a collective bargaining agreement with the Company.
Section 3.11. COMPLIANCE WITH LAWS. The conduct of the business of
the Company has complied with, and the Company and its properties are in
compliance with all Laws applicable thereto other than Laws, the violations of
which would not, individually or in the aggregate, have a Material Adverse
Effect on the Company.
Section 3.12. INSURANCE. Schedule 3.12 lists all insurance policies
owned or held by the Company. The Company's insurance policies afford coverage
to the Company and its assets or business in amounts and against all risks
normally insured against by Persons possessing similar assets or operating
similar businesses in similar locations. All such policies are in full force and
effect, all premiums with respect thereto have been paid to the extent due, and
no notice of cancellation or termination has been received with respect to any
such policy.
Section 3.13. CONTRACTS. Schedule 3.13 sets forth a list of all
written, and a description of all oral, employment Contracts, regardless of
amount, and all other Contracts, except for individual unrelated Contracts which
could not involve the payment or receipt by the Company of more than $10,000 per
calendar year; PROVIDED, HOWEVER, that (i) such schedule also sets forth those
Contracts which do not satisfy the $10,000 threshold but are otherwise material
to the Company, and (ii) the Company is not a party to Contracts not listed on
Schedule 3.13 which in aggregate could obligate the Company to pay or receive in
the aggregate more than $40,000. Except for all failures to be valid, binding
and enforceable and breaches, defaults, events, waivers and disputes which would
not, individually or in the aggregate, have a Material Adverse Effect on the
Company, (a) all of the Contracts are valid and binding on and enforceable
against the Company, in accordance with their terms and, to the knowledge of the
Company or the Stockholders, on and against the other parties thereto, (b)
neither the Company, nor to the knowledge of the Company or the Stockholders,
any other party to any Contract, is in breach or default under any Contract, (c)
the Company has not waived any material right under any Contract, (d) no event
has occurred that, with the giving of notice or the lapse of time or both, would
constitute a breach or default by the Company, or to the knowledge of the
Company or the Stockholders, by any other party thereto, under any Contract, and
(e) there are no unresolved disputes under any of the Contracts. True and
complete copies of all written, and accurate summaries of all oral, Contracts
set forth on Schedule 3.13 have been provided to Purchaser prior to the date of
this Agreement.
Section 3.14. TRANSACTIONS WITH AFFILIATES. Schedule 3.14 sets forth
a complete and accurate (a) list of all Contracts to which any Stockholder,
director or officer of the Company, or any of their Affiliates, Associates or
Relatives (collectively, the "INSIDERS"), on the one hand, and the Company, on
the other hand, is a party and (b) description of all transactions which are not
the subject of the agreements described in clause (a) above (the "INSIDER
TRANSACTIONS") between the Company, on one hand, and any Insider, on the other
hand, that have occurred since the incorporation of the Company.
Section 3.15. EMPLOYEE BENEFITS.
(a) Schedule 3.15(a) sets forth a complete and correct list of (i)
any employee benefit plan, arrangement or policy, including without limitation,
any stock option, stock purchase, stock award, stock appreciation, phantom
stock, deferred compensation, pension, retirement, savings, profit sharing,
incentive, bonus, health, life insurance, cafeteria, flexible spending,
dependent care, fringe benefit, vacation pay, holiday pay, disability, sick pay,
workers compensation, unemployment, severance, employee loan or educational
assistance plan, arrangement or policy, and (ii) any employment,
indemnification, consulting, severance or change-in-control agreement, in each
case, which is sponsored or maintained by the Company or any of its Affiliates,
or to which the Company or any of its Affiliates contributes or is required to
contribute, on behalf of current or former employees, consultants or directors
of the Company or their beneficiaries or dependents, whether or not written
("BENEFIT PLANS"). Neither the Company nor any of its Affiliates has
communicated to present or former employees of the Company or formally adopted
or authorized any additional Benefit Plan or any change in or termination of any
existing Benefit Plan. No Benefit Plan covers employees other than employees of
the Company.
(b) The Company has delivered to Purchaser complete and correct
copies of each Benefit Plan, or written summaries of any unwritten Benefit Plan,
any employee handbook applicable to employees of the Company, and, with respect
to each Benefit Plan, any plan description distributed to employees, any related
trust agreements or insurance contracts, and the last three annual financial
statements.
(c) Each Benefit Plan is and has been operated and administered in
accordance with its terms and all applicable laws in all material respects.
(d) All contributions and premium payments required to have been
paid under or with respect to any Benefit Plan have been timely paid.
(e) No Benefit Plan is funded with, or provides for benefits in the
form of, stock or other securities of the Company.
(f) Since January 1, 1999, there has been no change in any Benefit
Plan, or its related funding vehicle, which would significantly increase the
Company's cost, or the benefits payable, with respect to such plan.
(g) The Company has never maintained or contributed to an employee
benefit plan, arrangement or policy subject to Title I or Title IV of the
Employee Retirement Income Security Act of 1974, as amended, and the Company has
no liability with respect to any such plan, arrangement or policy.
(h) The Company has no liability with respect to any employee for
termination of his or her employment other than as may be specifically provided
by the Mexican Federal Labor Law.
(i) There are no actions, suits, or claims (other than routine
claims for benefits in the ordinary course) with respect to any Benefit Plan
pending which could give rise to a material liability, or to the knowledge of
the Company or the Stockholders, threatened, and neither the Company nor the
Stockholders has any knowledge of any facts which reasonably could be expected
to give rise to any such actions, suits or claims (other than routine claims for
benefits in the ordinary course). No Benefit Plan is currently under any
governmental investigation or audit.
(j) Neither the execution of this Agreement nor the consummation of
the transactions contemplated by this Agreement will (i) increase the amount of
benefits otherwise payable under any Benefit Plan, (ii) result in the
acceleration of the time of payment, exercisability, funding or vesting of any
such benefits, or (iii) result in any payment (whether severance pay or
otherwise) becoming due to, or with respect to, any current or former employee,
consultant, or director of the Company. No payment or transfer of property that
would constitute a "parachute payment" (within the meaning of Section 280G of
the Code) has been made or will be made by the Company, directly or indirectly,
to any employee, consultant or director in connection with the execution of this
Agreement or as a result of the consummation of the transactions contemplated
hereby.
(k) Substantially adequate and complete records have been and are
maintained with respect to each Benefit Plan and are in the custody of the
Company or a third party service provider retained by the Company.
Section 3.16. YEAR 2000. The "YEAR 2000" problem, consisting of the
inability of certain computer applications to recognize and properly perform
date-sensitive functions involving dates on or about or subsequent to December
31, 1999, will not have a Material Adverse Effect on the Company. The Company
reasonably anticipates that all computer applications which are material to its
business will, in a timely basis, be able to properly perform date-sensitive
functions for all dates on and after January 1, 2000. The Software and related
services used by the Company (except for off-the-shelf, Shrink-Wrap Software
that is commercially available for retail purchase) and/or sold or licensed by
the Company will not require any additional expenditures in order to be "YEAR
2000 COMPLIANT," which term shall include the following capabilities: (a)
accurately processing date information before, during and after January 1, 2000,
including, but not limited to, accepting date input, providing date output and
performing calculations on dates or portions of dates; (b) functioning
accurately and without interruption before, during and after January 1, 2000,
without any change in operations associated with the advent of the new century;
(c) responding to two-digit year date input in a way that resolves the ambiguity
as to century in a disclosed, defined and predetermined manner; and (d) storing
and providing output of date information in ways that are unambiguous as to
century. The Company has contacted its principal vendors of hardware, Software
and services, and other Persons with whom the Company has material business
relationships, and all such vendors and other Persons have notified the Company
that their hardware, Software and services are Year 2000 Compliant to the extent
affecting the Company.
Section 3.17. BROKERS, FINDERS, ETC. Except for Deutsche Banc Alex.
Xxxxx, whose fees shall be the sole responsibility of the Stockholders, no
broker, finder or investment banker is entitled to any brokerage, finder's or
other fee or commission in connection with this Agreement or the transactions
contemplated hereby based upon any agreements, written or oral, made by or on
behalf of the Company or by or on behalf of any director, officer, employee,
agent or Affiliate of the Company.
Section 3.18. DISCLOSURE. No representation, warranty or statement
made by a Stockholder in this Agreement or the other Transaction Documents
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained herein or therein not
misleading in light of the circumstances under which they were made.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF EACH STOCKHOLDER INDIVIDUALLY
Each Stockholder hereby severally represents and warrants as to
itself to and for the benefit of Purchaser as follows:
Section 4.1. AUTHORIZATION, ENFORCEABILITY.
(a) Such Stockholder has full power and authority to execute,
deliver and perform this Agreement, and the other Transaction Documents to which
such Stockholder is a party. This Agreement has been duly executed and delivered
by such Stockholder and, as of the Closing Date, the other Transaction Documents
to which such Stockholder is a party will be duly executed and delivered by such
Stockholder. This Agreement constitutes, and each other Transaction Document to
which such Stockholder is a party, when executed and delivered by such
Stockholder, will constitute, a legal, valid and binding obligation of each such
Stockholder, enforceable against such Stockholder in accordance with its terms,
except as such enforceability may be limited by applicable laws relating to
bankruptcy, insolvency, fraudulent conveyance, reorganization or affecting
creditors' rights generally and except to the extent that injunctive or other
equitable relief is within the discretion of a court.
(b) The execution, delivery, and performance by such Stockholder of
this Agreement and the other Transaction Documents to which such Stockholder is
a party do not, and the consummation by such Stockholder of the transactions
contemplated hereby and thereby, will not (i) violate, conflict with, result in
a breach of any provision of the ESTATUTOS SOCIALES (Bylaws) of such
Stockholder, or (ii) violate, conflict with, result in a breach of, or
constitute a default (or an event which would, with the passage of time or the
giving of notice or both, constitute a default) under, require any consent
under, or result in or permit the termination, amendment, modification,
acceleration, suspension, revocation or cancellation of, or result in the
creation or imposition of any Lien of any nature whatsoever upon any of the
assets of such Stockholder or give to others any interests or rights therein
under (1) any indenture, mortgage, loan or credit agreement, license,
instrument, lease, contract, plan, permit or other agreement or commitment, oral
or written, to which such Stockholder is a party, or by which any such
Stockholder is bound or by which any of such Stockholder's assets may be bound
or affected, or (2) any judgment, injunction, writ, award, decree, restriction,
ruling, or order of any court, arbitrator or other Governmental Entity or any
applicable constitution or Law, to which such Stockholder is subject or which is
applicable to any of such Stockholder's assets, except for such violations,
conflicts, breaches, defaults, failures to obtain consents, terminations,
amendments, modifications, accelerations, suspensions, revocations and
cancellations as would not individually or in the aggregate have a material
adverse effect on such Stockholder's ability to perform its obligations under
this Agreement and the other Transaction Documents.
Section 4.2. CONSENTS, ETC. No filing, consent, waiver, approval or
authorization of any Government Entity or of any third party on the part of any
Stockholder is required in connection with the execution, delivery and
performance by such Stockholder of this Agreement or the other Transaction
Documents or the consummation by such Stockholder of any of the transactions
contemplated hereby or thereby, except for the notification to Mexico's Federal
Competition Commission pursuant to the Mexican LEY FEDERAL DE COMPETENCIA
ECONOMICA (Federal Economic Competition Law).
Section 4.3. OWNERSHIP. Such Stockholder owns of record, and has
good and marketable title to, the number of Company Shares, or partnership
interests, as the case may be, set forth opposite its name on Schedule 1, free
and clear of all Liens. The Company Shares owned by each Stockholder are, and as
of the Closing, the applicable partnership interests will be, properly
registered in the stock or partnership interest transfer book of the Company.
Such shares, or partnership interests, as the case may be, are the only
securities, or rights to acquire securities, of the Company and its Affiliates
that are owned of record or beneficially owned by such Stockholder or any
Affiliate of such Person.
Section 4.4. BROKERS, FINDERS, ETC. Except for Deutsche Banc Alex.
Xxxxx, whose fees shall be the sole responsibility of the Stockholders, no
broker, finder or investment banker is entitled to any brokerage, finder's or
other fee or commission in connection with this Agreement, the other Transaction
Documents or the transactions contemplated hereby or thereby based upon any
agreements, written or oral, made by or on behalf of such Stockholder.
Section 4.5. ACCESS TO INFORMATION. Such Stockholder has had the
opportunity to review this Agreement and to ask questions of and receive answers
from Purchaser and its management concerning the terms and conditions of this
Agreement. Such Stockholder has received all information that such Stockholder
believes is necessary for such Stockholder to evaluate the transactions
contemplated by this Agreement.
Section 4.6. PRIVATE PLACEMENT.
(a) Such Stockholder qualifies as an "accredited investor" within
the meaning of Regulation D promulgated under the 1933 Act;
(b) Such Stockholder will acquire the StarMedia Common Stock to be
acquired by such Stockholder pursuant to this Agreement for such Stockholder's
own account;
(c) Such Stockholder is acquiring the StarMedia Common Stock under
this Agreement for such Stockholder's own account and not with a view to any
distributions thereof within the meaning of the 1933 Act; and
(d) Such Stockholder acknowledges and agrees that the StarMedia
Common Stock acquired pursuant to this Agreement has not been and, except as
provided in Section 9.2 hereof, will not be registered under the Securities Act
(or any state or foreign securities Laws).
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to the Stockholders as follows:
Section 5.1 INCORPORATION; AUTHORIZATION; CAPITALIZATION. (a)
Purchaser is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Delaware. Purchaser has all requisite
corporate power and authority to own its properties and assets and to carry on
its business as it is now being conducted.
(b) Purchaser has full power and authority (corporate or otherwise)
to execute, deliver and perform this Agreement and the other Transaction
Documents to which Purchaser is a party. The execution, delivery and performance
by Purchaser of this Agreement and the other Transaction Documents to which
Purchaser is a party have been duly authorized by all necessary action
(corporate or otherwise) on the part of Purchaser. This Agreement has been duly
executed and delivered by Purchaser and, as of the Closing Date, the other
Transaction Documents to which Purchaser is a party will be duly executed and
delivered by Purchaser. This Agreement constitutes, and each other Transaction
Document to which Purchaser is a party, when executed and delivered by
Purchaser, will constitute, a legal, valid and binding obligation of Purchaser,
enforceable against it in accordance with its terms, except as such
enforceability may be limited by applicable laws relating to bankruptcy,
insolvency, fraudulent conveyance, reorganization or affecting creditors' rights
generally and except to the extent that injunctive or other equitable relief is
within the discretion of a court.
(c) The execution, delivery, and performance by Purchaser of this
Agreement, and the other Transaction Documents to which Purchaser is a party do
not, and the consummation by Purchaser of the transactions contemplated hereby
and thereby, will not, (i) violate, conflict with or result in the breach of any
provision of the certificate of incorporation or by-laws of Purchaser or (ii)
violate, conflict with, result in a breach of, or constitute a default (or an
event which would, with the passage of time or the giving of notice or both,
constitute a default) under, require any consent under, or result in or permit
the termination, amendment, modification, acceleration, suspension, revocation
or cancellation of, (1) any indenture, mortgage, loan or credit agreement,
license, instrument, lease, contract, plan, permit or other agreement or
commitment, oral or written, to which Purchaser is a party, or (2) any judgment,
injunction, writ, award, decree, restriction, ruling, or order of any court,
arbitrator or Governmental Entity or any applicable constitution, or Law, to
which Purchaser is subject, except for such violations, conflicts, breaches,
defaults, failures to obtain consents, terminations, amendments, modifications,
accelerations, suspensions, revocations and cancellations as would not
individually or in the aggregate have a material adverse effect on Purchaser's
ability to perform its obligations under this Agreement.
(d) The shares of StarMedia Common Stock to be delivered to the
Stockholders in accordance with this Agreement, when so delivered in accordance
with the terms of this Agreement, will have been duly authorized, validly
issued, fully paid and non-assessable, and, assuming that the representations
and warranties of the Stockholders set forth in Section 4.6 are correct, will
not have been issued in violation of any preemptive rights or any U.S. federal
or state securities laws.
(e) Purchaser is acquiring the Company Shares pursuant to this
Agreement for Purchaser's own account and not with a view to any distributions
in violation of any U.S. federal or state securities laws.
Section 5.2. CONSENTS, ETC. Assuming that the representations and
warranties of the Stockholders set forth in Section 4.6 are correct, no filing,
consent, waiver, approval or authorization of any United States Government
Entity or of any third party on the part of Purchaser is required in connection
with the execution, delivery and performance by Purchaser of this Agreement or
the other Transaction Documents to which Purchaser is a party or the
consummation by Purchaser of any of the transactions contemplated hereby or
thereby.
Section 5.3. SEC DOCUMENTS. Purchaser has made available to the
Stockholders a true and complete copy of (i) Amendment No. 3 to Purchaser's
Registration Statement for Secondary Offering dated October 14, 1999, and (ii)
Purchaser's report on Form 10-Q for the quarter ended September 30, 1999, filed
by Purchaser with the Securities and Exchange Commission (the "SEC")
(collectively, the "SEC DOCUMENTS"). As of their respective dates, the SEC
Documents complied in all material respects with the requirements of the
Securities Act or the Exchange Act, as the case may be, and the rules and
regulations of the SEC thereunder applicable to such SEC Documents, and did not,
as of their respective dates, contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading. The audited consolidated financial statements and
unaudited interim financial statements of Purchaser included in the SEC
Documents (collectively, the "PURCHASER FINANCIAL STATEMENTS") were prepared in
accordance with U.S. GAAP (except as may be indicated therein or in the notes
thereto) and fairly present in all material respects the financial position of
Purchaser as of the respective dates thereof, or the results of operations and
cash flows for the respective periods then ended, as the case may be, subject,
in the case of unaudited interim financial statements, to normal year-end audit
adjustments.
Section 5.4. BROKERS, FINDERS, ETC. Except for Xxxxxxx, Sachs & Co.,
whose fees shall be the sole responsibility of Purchaser, no broker, finder or
investment banker is entitled to any brokerage, finder's or other fee or
commission in connection with this Agreement or the transactions contemplated
hereby and thereby based upon any agreements, written or oral, made by or on
behalf of Purchaser or any of its Affiliates or by or on behalf of any director,
officer, employee, agent or Purchaser or any Affiliate of Purchaser.
ARTICLE VI
COVENANTS
Section 6.1. COVENANTS OF THE STOCKHOLDERS. The Stockholders agree
to observe and perform the following covenants and agreements:
(a) CONDUCT OF THE BUSINESS PRIOR TO THE CLOSING DATE. Except as
contemplated in this Agreement, prior to the Closing, the Stockholders will
conduct, and shall cause the Company to conduct, the Company's business only in
the Ordinary Course of Business, and, without limitation of the foregoing, will:
(1) not, and will cause the Company not to, make or permit any
material change in the general nature of the Company's business;
(2) maintain the Company's business in accordance with prudent
business judgment and consistent with past practice and policy, and
maintain the Company's assets in good repair, order and condition,
reasonable wear and tear excepted;
(3) preserve the Company as an ongoing business and use
reasonable efforts to maintain the goodwill associated with the
Company;
(4) preserve all of the Company's Licenses;
(5) cause the Company not to, enter into any material
transaction or Contract involving a total commitment by or to any
party thereto of more than $1,000 on an annual basis or more than
$1,000 for its remaining term which cannot be terminated on no more
than 60 days' notice without penalty or additional cost to the
Company as the terminating party;
(6) cause the Company not to, purchase, sell, lease, dispose
of or otherwise transfer or make any contract for the purchase,
sale, lease, disposition or transfer of, or subject to Lien, any of
the assets of the Company, including without limitation,
Intellectual Property, except for such dispositions in the ordinary
course of business, which in the aggregate are not material, or
dispositions of obsolete assets;
(7) cause the Company not to, make any changes in financial
policies or practices, or strategic or operating policies or
practices of the Company;
(8) cause the Company to comply in all material respects with
all applicable Laws and permits, including without limitation those
relating to the filing of reports and the payment of Taxes due to be
paid prior to the Closing, other than those contested in good faith;
(9) cause the Company not to, grant any increase or change in
total compensation, benefits or pay any bonus to any employee,
independent contractor, director or consultant of the Company;
(10) cause the Company not to, grant or enter into or extend
the term of any Contract with respect to continued employment or
service for any employee, independent contractor, officer, director
or consultant of the Company;
(11) cause the Company not to, make any loan or advance to any
Person other than to any officer, director, stockholder or employee
of the Company in the Ordinary Course of Business;
(12) cause the Company not to, amend any of the Company's
organizational documents;
(13) cause the Company not to, incur any indebtedness in
excess of $1,000; and
(14) cause the Company not to, enter into any Contract
committing the Company to do any of the foregoing.
From and after date hereof and prior to the Closing, the cash and cash
equivalents of the Company will be expended only in the Ordinary Course of
Business and, without limitation of the foregoing, (i) no cash or cash
equivalents of the Company will be paid to any Insider (other than any employees
of the Company, as such) for any reason (including repayment of advances), and
(ii) no cash or cash equivalents of the Company will be expended to pay any
expenses related to the transactions contemplated herein.
(b) ACCESS TO THE COMPANY'S OFFICES, PROPERTIES AND RECORDS;
UPDATING INFORMATION.
(1) From and after the date hereof and until the Closing Date,
the Stockholders shall permit Purchaser and its representatives to
have, on reasonable notice and at reasonable times, reasonable
access to such of the offices, properties and employees of the
Company, and shall disclose, and make available to Purchaser and its
representatives all books, papers and records to the extent that
they relate to the ownership, operation, obligations and liabilities
of or pertaining to the Company, its business, assets and
liabilities. Without limiting the application of the Confidentiality
Agreement dated August 13, 1999 between the Company and Purchaser
(the "CONFIDENTIALITY AGREEMENT"), all documents or information
furnished by the Company hereunder shall be subject to the
Confidentiality Agreement.
(2) The Stockholders will notify Purchaser as promptly as
practicable of any significant change in the operation of the
Company and of any material complaints, investigations or hearings
(or communications indicating that the same may be contemplated) by
any Governmental Entity, or the institution or overt threat or
settlement of any material Action involving or affecting the Company
or the transactions contemplated by this Agreement, and shall use
reasonable best efforts to keep Purchaser fully informed of such
events and permit Purchaser's representatives access to all
materials prepared in connection therewith.
(3) As promptly as practicable after Purchaser's request, the
Stockholders will furnish such financial and operating data and
other information pertaining to the Company and its business and
assets as Purchaser may reasonably request.
(c) APPROVALS AND CONSENTS. The Stockholders will use their
reasonable best efforts to obtain all necessary consents, approvals and waivers
from any Person required in connection with the transactions contemplated
hereby.
(d) DIVIDENDS. Prior to the Closing, the Stockholders shall cause
the Company not to: (i) declare or pay any dividends on or make other
distributions in respect of any of its capital stock; or (ii) redeem, repurchase
or otherwise acquire any shares of its capital stock.
(e) ISSUANCE OF SECURITIES. Except with respect to the capital
increase referred to in 6.1(g) below, prior to the Closing, the Stockholders
shall cause the Company not to issue, agree to issue, deliver, sell, award,
pledge, dispose of or otherwise encumber or authorize or propose the issuance,
delivery, sale, award, pledge, disposal or other encumbrance of, any shares of
its capital stock of any class or any securities convertible into or
exchangeable for, or any rights, warrants or options to acquire, any such shares
or convertible or exchangeable securities.
(f) ACCOUNTING AND TAX. Prior to the Closing, the Stockholders shall
cause the Company not to (i) make any changes in its accounting methods,
principles or practices except as required by law, rule, regulation or GAAP or
(ii) make any changes in tax elections, methods or practices, except as required
by law.
(g) CAPITAL INCREASE. As soon as practicable after the execution of
this Agreement, but in any event, prior to the Closing and prior to the
Conversion contemplated by Section 6.1(h), the Stockholders shall (i) authorize
the Company to increase its capital from 250,000 Mexican pesos to at least the
amount required so that, after giving effect to the capitalization, the
Company's stockholders' equity as of the Closing, determined in accordance with
GAAP, is equal to or greater than zero, plus the equivalent in Mexican pesos of
U.S.$331,000, and (ii) subscribe and pay for such capital increase in full in
exchange for Fixed Shares or Variable Shares of the Company. Upon consummation
of the Closing, the Company will have at least U.S.$331,000 in cash.
(h) CONVERSION TO SRL. Prior to the Closing, the Stockholders shall
cause the Company to have been duly converted into an SRL, which shall have the
same capital as the Company after the capital increase contemplated by Section
6.1(g) above is effected, in compliance with applicable Mexican Laws and
pursuant to agreements and instruments which are in form and substance
satisfactory to Purchaser.
(i) RESIGNATIONS. The Stockholders shall cause each of the current
directors and officers of the Company to resign from their positions in the
Company before the Closing.
(j) BUSINESS PLAN. Prior to the Closing, the Stockholders shall
prepare and deliver to Purchaser a Business Plan which is consistent with this
Agreement and the Budget.
Section 6.2. ADDITIONAL AGREEMENTS.
(a) FURTHER ASSURANCES. Each of Purchaser and the Stockholders
agrees to take all such reasonable and lawful action as may be necessary or
appropriate in order to effectuate the transactions contemplated by this
Agreement as promptly as possible, including, but not limited to, using their
reasonable best efforts to obtain all necessary consents, approvals and waivers
from any Person required in connection with the transactions contemplated
hereby. If, at any time after the execution hereof, any such further action is
necessary or desirable to carry out the purpose of this Agreement and to vest
the Purchaser with full right, title and possession to the Company Shares, the
Stockholders shall take all such lawful and necessary action and will use their
reasonable best combined efforts to obtain all necessary consents, approvals and
waivers from any Person required in connection with the transactions
contemplated hereby and shall cause the Company to implement all necessary
consents and acts, or refrain to implement any act, as the case may be,
necessary to consummate the transactions contemplated by this Agreement.
(b) PUBLIC ANNOUNCEMENTS. Prior to the Closing, neither the
Stockholders nor Purchaser will disclose or permit their respective agents or
Affiliates to disclose to any third parties the fact of the proposed
transactions, issue, or permit any of their respective agents or Affiliates to
issue, any press releases or otherwise make, or permit any of their respective
agents or Affiliates to make, any public or other statements, or to release any
information intended for or reasonably likely to result in public or other
dissemination thereof, with respect to this Agreement and the transactions
contemplated hereby without the prior written consent of all the other parties
hereto, except as may be required by law or by the rules of the NASDAQ Stock
Market.
Section 6.3. EXCLUSIVITY. From the date of this Agreement until the
earlier of the date of termination of this Agreement or the Closing, the
Stockholders will not, and will cause the Company and the Insiders not to, take
any action, directly or indirectly, to encourage, solicit, initiate, engage in
or continue discussions or negotiations with, or provide any information to, any
Person, group or other entity, other than Purchaser, concerning any purchase of
any capital stock or assets of the Company or any merger or similar transaction
involving the Company.
Section 6.4. EMPLOYEE MATTERS. Nothing in this Agreement shall be
construed to require Purchaser or any of its Affiliates to hire, or continue the
employment of, any employee of the Company or to continue in effect any employee
benefit plan or arrangement.
Section 6.5. FINANCIAL STATEMENTS TO BE PROVIDED. Upon Purchaser's
request, the Stockholders shall, and shall cause the Company to, (i) provide to
Purchaser audited and unaudited financial statements required to be included in
any filings to be made by Purchaser with the SEC in connection with this
Agreement and the other Transaction Documents and the transactions contemplated
herein and therein, and (ii) cause the Company's and the Stockholders'
independent accountants to deliver to Purchaser the required consents in
connection therewith.
ARTICLE VII
CONDITIONS TO PURCHASER'S OBLIGATIONS
Purchaser's obligations to consummate the Closing and effect the
transactions contemplated herein shall be subject to the satisfaction at or
prior to the Closing, or waiver by Purchaser, of each of the following
conditions (any of which may be waived by Purchaser in its sole discretion):
Section 7.1. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
STOCKHOLDERS. Each of the representations and warranties of the Stockholders
contained in this Agreement or in any Schedule, certificate, document or
instrument delivered in connection herewith shall be true and correct in all
material respects on and as of the date of this Agreement and on and as of the
Closing, except for representations and warranties that speak as of a specific
date or time other than the Closing (which need only be true and correct in all
material respects as of such date or time); PROVIDED, HOWEVER, that if any
portion of any such representation or warranty is already qualified by
materiality, for purposes of determining whether this condition has been
satisfied with respect to such portion of such representation or warranty, such
portion of such representation or warranty as so qualified shall be true and
correct in all respects. The Stockholders shall have performed and complied in
all material respects with all covenants and agreements required by this
Agreement to be performed or complied with by them at or prior to the Closing.
The Stockholders shall deliver to Purchaser a certificate, dated the Closing
Date, to the effect that the conditions set forth in this Section 7.1 have been
satisfied.
Section 7.2. FILINGS; CONSENTS. All registrations, filings,
applications, notices, consents, releases, approvals, orders, qualifications and
waivers required in connection with the consummation of the transactions
contemplated hereby and authorization, including, without limitation, from
Mexico's Federal Competition Commission shall have been filed, made, obtained or
received.
Section 7.3. NO INJUNCTION. (a) There shall be no injunction,
restraining order or decree of any nature of any court or other Government
Entity of competent jurisdiction that is in effect that restrains or prohibits
the consummation of the transactions contemplated hereby, (b) no Action shall
have been instituted by or before any court, panel, arbitrator or other
Government Entity or any other Person to restrain or prohibit, or to obtain
substantial damages in respect of, the consummation of the transactions
contemplated hereby, and (c) none of the parties hereto shall have received
notice from any Government Entity or any other Person of (i) its intention to
institute any Action to restrain or enjoin or nullify this Agreement or the
consummation of the transactions contemplated hereby or to commence any
investigation into the consummation of the transactions contemplated hereby or
(ii) the actual commencement of such an investigation.
Section 7.4. EMPLOYMENT AGREEMENT. Xxxxxxx Xxxxxx Xxxxxx and the
Company shall have entered into the Employment Agreement. Xxxxxxx Xxxxxx Ubando
shall have agreed to and executed the Spanish translation of the Employment
Agreement prior to Closing.
Section 7.5. GENERAL RELEASE. The Stockholders and each director and
officer of the Company shall have executed an irrevocable general release in
favor of the Company in the form attached hereto as Exhibit B1.
Section 7.6. RESIGNATIONS/ELECTION. Each of the current directors
and officers of the Company shall have resigned from their positions in the
Company and Purchaser shall have received evidence of the election to the board
of directors of the Company of persons designated by Purchaser.
Section 7.7. INCREASE OF CAPITAL. The Company's capital shall have
been increased in accordance with Section 6.1(g) hereof.
Section 7.8. CONVERSION TO SRL. The Company shall have been duly
converted into an SRL, which shall have the same capital as the Company after
the capital increase contemplated by Section 6.1(g) above is effected, in
compliance with applicable Mexican Laws and pursuant to agreements and
instruments which are in form and substance satisfactory to Purchaser.
Section 7.9. INDUCEMENT AGREEMENT. Xxxxxxx Xxxxxx Xxxxxx shall have
entered into the Inducement Agreement.
Section 7.10. COMPANY SERVICE AGREEMENTS. The Stockholders shall
have entered into the Company Service Agreements.
Section 7.11. PURCHASER SERVICE AGREEMENT. The MVS Group shall have
entered into the Purchaser Service Agreement.
Section 7.12. BUSINESS PLAN. The Stockholders shall have delivered
to Purchaser the Business Plan in form and substance satisfactory to Purchaser.
Section 7.13. DOCUMENTS. The Stockholders shall have delivered to
Purchaser at the Closing such other documents and instruments as shall be
reasonably necessary to effectuate the transactions contemplated by this
Agreement. The Stockholders shall have delivered all the certificates,
instruments, contracts and other documents specified to be delivered by each
such person hereunder.
ARTICLE VIII
CONDITIONS TO THE STOCKHOLDERS' OBLIGATIONS
The Stockholders' obligation to consummate the Closing and effect
the transactions contemplated herein is subject to the satisfaction at or prior
to the Closing, or waiver by the Representative, of all of the following
conditions (any of which may be waived by the Representative in its sole
discretion):
Section 8.1. REPRESENTATIONS, WARRANTIES AND COVENANTS OF PURCHASER.
Each of the representations and warranties of Purchaser contained in this
Agreement or in any Schedule, certificate, document or instrument delivered in
connection herewith, shall be true and correct in all material respects on and
as of the date of this Agreement and on and as of the Closing Date, except for
representations and warranties that speak as of a specific date or time other
than the Closing Date (which need only be true and correct in all material
respects as of such date or time); PROVIDED, HOWEVER, that if any portion of any
such representation or warranty is already qualified by materiality, for
purposes of determining whether this condition has been satisfied with respect
to such portion of such representation or warranty, such portion of such
representation or warranty as so qualified shall be true and correct in all
respects. Purchaser shall have performed and complied in all material respects
with all covenants and agreements required by this Agreement to be performed or
complied with by it at or prior to the Closing Date. Purchaser shall deliver to
the Representative a certificate, dated the Closing Date and signed by an
officer of Purchaser, to the effect that the conditions set forth in this
Section 8.1 have been satisfied.
Section 8.2. NO INJUNCTION. (a) There shall be no injunction,
restraining order or decree of any nature of any court or other Government
Entity of competent jurisdiction that is in effect that restrains or prohibits
the consummation of the transactions contemplated hereby, (b) no Action shall
have been instituted by or before any court, panel, arbitrator or other
Government Entity or any other Person to restrain or prohibit, or to obtain
substantial damages against the Stockholders in respect of, the consummation of
the transactions contemplated hereby, and (c) none of the parties hereto shall
have received notice from any Government Entity or any other Person of (i) its
intention to institute any Action to restrain or enjoin or nullify this
Agreement or the consummation of the transactions contemplated hereby or to
commence any investigation into the consummation of the transactions
contemplated hereby or (ii) the actual commencement of such an investigation.
Section 8.3. FILINGS; CONSENTS. All consents or approvals required
by Mexico's Federal Competition Commission in connection with the consummation
of the transactions contemplated hereby, shall have been obtained or received.
Section 8.4. RELEASE OF STOCKHOLDERS. The Company shall have
executed an irrevocable general release in favor of the Stockholders in the form
attached hereto as Exhibit B2.
ARTICLE IX
ADDITIONAL COVENANTS
Section 9.1. STRATEGIC AGREEMENTS. At or prior to the Closing,
Purchaser shall, and the Stockholders shall cause MVS to, negotiate in good
faith to reach an agreement with respect to the undertaking of a business for
the purpose of the creation and distribution of Internet content via broadband
networks throughout Latin America (the "STRATEGIC AGREEMENTS"). Purchaser and
the Moller Group further agree that they will discuss in good faith future
potential business opportunities. Nothing in this Section 9.1 shall create an
obligation for any party to enter into a definitive agreement.
Section 9.2. PIGGYBACK RIGHTS. Purchaser shall provide to the
Stockholders the following registration rights with respect to the resale by the
Stockholders of StarMedia Common Stock issuable pursuant to this Agreement (the
"STARMEDIA SHARES"):
(a) From and after the end of the applicable lock-up period provided
pursuant to Section 2.9 until the second anniversary of the end of such
applicable lock-up period, each time that Purchaser intends to proceed with the
actual preparation and filing of a registration statement under the Securities
Act in connection with the proposed offer and sale, for its own account, for
money, of any securities of Purchaser (other than a registration statement on
Form S-4 or Form S-8), Purchaser will give at least ten days written notice of
its intention to do so to the Representative on behalf of the Stockholders. Upon
the written request of the Representative to Purchaser given within 20 days
after receipt of any such notice from Purchaser, Purchaser will use its
reasonable best efforts to cause all StarMedia Shares for which the
Representative has requested registration to be included in such registration
statement, all to the extent requisite to permit the sale or other disposition
by the Stockholders of the StarMedia Shares to be so registered; PROVIDED,
HOWEVER, that (i) nothing herein shall prevent Purchaser from, at any time,
abandoning or delaying any such registration initiated by it; (ii) if Purchaser
determines not to proceed with a registration after the registration statement
has been filed with the SEC, Purchaser shall complete the registration for the
benefit of the Stockholders if the Stockholders wish to proceed with an offering
of such StarMedia Shares and agree to bear their pro rata share of all expenses
incurred by Purchaser as the result of such registration of such StarMedia
Shares after Purchaser has decided not to proceed; and (iii) if any registration
is an underwritten registration for which this Section 9.2 is applicable, and
the managing underwriters advise Purchaser in writing that in their opinion the
number of securities requested to be included in such registration exceeds the
number which can be sold in an orderly manner in such offering within an
acceptable price range, Purchaser shall include in such registration (1) first,
the securities of the Purchaser requested to be included therein by the holders
requesting such registration, (2) second, the securities of any other holder of
securities of Purchaser who has registration rights as of the date of this
Agreement and who has requested that such securities be included in such
registration, and (3) lastly, the securities requested to be included in such
registration by the Stockholders.
If any registration pursuant to this Section 9.2 shall be
underwritten in whole or in part, Purchaser may require that the StarMedia
Shares requested for inclusion pursuant to this Section 9.2 be included in the
underwriting on the same terms and conditions as the StarMedia Shares otherwise
being sold through the underwriters.
(b) Purchaser's obligations to the Stockholders under this Section
9.2 will be conditioned on the Stockholders' compliance with the following:
(i) The Stockholders will cooperate with Purchaser in
connection with the preparation of the applicable registration statement,
and for so long as such registration statement is effective, the
Stockholders will provide to Purchaser, in writing in a timely manner, for
use in such registration statement (and expressly identified in writing as
such), all information regarding the Stockholders, the Company and their
respective Affiliates and such other information as may be necessary and
required by applicable law to enable Purchaser to prepare such
registration statement and the related prospectus covering the applicable
StarMedia Shares owned by the Stockholders and to maintain the currency
and effectiveness thereof;
(ii) The Stockholders will permit Purchaser and its
representatives and agents to examine such documents and records and will
supply in a timely manner any information as they may reasonably request
in connection with the offering or other distribution of StarMedia Shares
by the Stockholders;
(iii) The Stockholders will enter into such agreements with
Purchaser and any broker-dealer or similar securities industry
professional containing representations, warranties, indemnities and
agreements as are customarily entered into and made by a seller of
securities with respect to secondary distributions under similar
circumstances, and the Stockholders will use their reasonable best efforts
to cause their counsel to give any legal opinions customarily given, in
connection with secondary distributions under similar circumstances; and
(iv) during such time as the Stockholders may be engaged in a
distribution of the StarMedia Shares, the Stockholders will comply with
all applicable laws, including Regulation M promulgated under the Exchange
Act, and, to the extent required by such laws, will, among other things:
(A) not engage in any stabilization activity in connection with the
securities of Purchaser in contravention of such rules; (B) distribute the
StarMedia Shares acquired by it solely in the manner described in the
applicable registration statement; (C) if required by applicable law,
rules or regulations, cause to be furnished to each agent or broker-dealer
to or through whom such StarMedia Shares may be offered, or to the offeree
if an offer is made directly by the Stockholders, such copies of the
applicable prospectus (as amended and supplemented to such date) and
documents incorporated by reference therein as may be required by such
agent, broker-dealer or offeree, provided that Purchaser shall provide the
Stockholders with an adequate number of copies thereof; and (D) not bid
for or purchase any securities of Purchaser.
(c) Except as otherwise expressly provided in Section 9.2(a) with
respect to registrations terminated by Purchaser, Purchaser shall bear the
following fees, costs and expenses in connection with its obligations under this
Section 9.2: all registration, filing fees, printing expenses, all internal
Purchaser expenses, the premiums and other costs of policies of insurance
against liability arising out of the public offering, and all legal fees and
disbursements and other expenses of complying with state securities or blue sky
laws of any jurisdiction in which StarMedia Shares to be offered are to be
registered or qualified. Fees and disbursements of counsel and accountants for
the Stockholders, underwriting discounts and commissions and transfer taxes for
the Stockholders and any other expenses incurred by the Stockholders and their
Affiliates not expressly included above shall be borne by the Stockholders.
(d) The piggyback rights granted to the Stockholders pursuant to
this Section 9.2 are not assignable. Any purported assignment shall be null and
void AB INITIO.
Section 9.3. STOCKHOLDERS' REGISTERED AGENT. As soon as practicable
after the execution of this Agreement, but in any event prior to the Closing,
the Stockholders shall evidence the appointment of Corporation Trust Center as
their registered agent for service of process in the United States by granting
an irrevocable power of attorney in a public instrument (ESCRITURA PUBLICA)
executed before a Notary Public in Mexico in conformity with Article 2596 of the
Civil Code of the Federal District and the 1958 Protocol on the Uniformity of
Powers of Attorney to be Granted Abroad.
Section 9.4. DEVELOPMENT OF NEW INTERNET PRODUCTS. The Moller Group
agrees that for a period of five years after the Closing, in the event that the
Moller Group or any of its Affiliates develops any new Internet products (the
"PRODUCTS") with respect to which any of such Persons seeks any third-party
equity or debt financing, the Moller Group shall offer Purchaser, for a period
of 30 days, the opportunity to invest in the Product(s) and/or in any entities
developing the Products before it allows any third-party the opportunity to
invest. To the extent the third-party wants to invest in the Product(s), the
Moller Group will provide Purchaser with a right of first refusal exercisable
for 15 days to invest on the same terms and conditions proposed by such
third-party. The Moller Group shall provide Purchaser with written notice of any
such proposal it receives during such five-year period.
ARTICLE X
SURVIVAL; INDEMNIFICATION
Section 10.1. SURVIVAL. All of the representations, warranties,
covenants and agreements of the parties contained in this Agreement or in any
Exhibit or Schedule hereto, or in any other Transaction Document, shall survive
(and not be affected in any respect by) the Closing, any investigation or
inquiry conducted (or omitted) by any party hereto and any information which any
party may have received or may at any time hereafter receive. Notwithstanding
the foregoing, the representations and warranties contained in or made pursuant
to this Agreement shall terminate on, and no claim or Action with respect
thereto may be brought after, the second anniversary of the Closing Date, except
that (i) the representations and warranties contained in Sections 3.6 and 3.15
shall survive until 30 days after the expiration of the applicable statute of
limitations (or extensions or waivers thereof) and (ii) the representations and
warranties contained in Sections 3.1, 3.8 and 5.1 and Article IV shall survive
indefinitely. The representations and warranties which terminate on the second
anniversary of the Closing Date and the representations and warranties contained
in Sections 3.6 and 3.15, and the liability of the Stockholders with respect
thereto, shall not terminate with respect to any claim for indemnification,
whether or not fixed as to liability or liquidated as to amount, with respect to
which the Representative has been given written notice prior to the second
anniversary of the Closing Date, or 30 days after such expiration of the
applicable statute of limitations (or extensions or waivers thereof), as the
case may be.
Section 10.2. STOCKHOLDERS INDEMNIFICATION OBLIGATION.
(a) The Stockholders hereby jointly and severally indemnify (except
for Losses described in (ii) below as to which indemnification is several, but
not joint) and hold harmless, and agree to indemnify and hold harmless,
Purchaser, its Affiliates and the respective directors, officers, employees and
agents of the foregoing Persons (collectively, the "PURCHASER INDEMNIFIED
PARTIES") from and against any and all Losses which exist, or which are imposed
on, incurred by or asserted against any one or more of the Purchaser Indemnified
Parties, based upon, arising out of, resulting from, or otherwise in respect of:
(i) any breach or inaccuracy as of the date of this Agreement or as
of the Closing of any of the representations and warranties made jointly
and severally by the Stockholders in or pursuant to this Agreement or in
any instrument or certificate delivered by the Stockholders at the Closing
in accordance herewith (it being understood and agreed that,
notwithstanding anything to the contrary contained in this Agreement, to
determine if there had been an inaccuracy or breach of a representation or
warranty of the Stockholders and the Losses arising from such inaccuracy
or breach, such representation and warranty shall be read as if it were
not qualified by materiality, including, without limitation,
qualifications indicating accuracy in all material respects, or accuracy
except to the extent the inaccuracy will not have a Material Adverse
Effect); or
(ii) any breach or inaccuracy as of the date of this Agreement or as
of the Closing of any of the representations and warranties made severally
by such Stockholder in or pursuant to this Agreement or in any instrument
or certificate delivered by such Stockholder at the Closing in accordance
herewith (it being understood and agreed that, notwithstanding anything to
the contrary contained in this Agreement, to determine if there had been
an inaccuracy or breach of a representation or warranty of the Stockholder
and the Losses arising from such inaccuracy or breach, such representation
and warranty shall be read as if it were not qualified by materiality,
including, without limitation, qualifications indicating accuracy in all
material respects, or accuracy except to the extent the inaccuracy will
not have a material adverse effect on the ability of the Stockholders to
perform their obligations hereunder and under the other Transaction
Documents); or
(iii) any failure by the Stockholders at any time to carry out,
perform, comply with, satisfy and discharge any of their respective
covenants, agreements, undertakings, liabilities or obligations under this
Agreement, or under any other Transaction Document; or
(iv) any Taxes imposed by any Governmental Entity in Mexico in
connection with the transfer of the Company Shares or partnership
interests, as the case may be, to Purchaser pursuant to this Agreement; or
(v) the Contingent Earnout Payments and the Group B Shares Payments
being insufficient to repay the entire deficiency resulting from amounts
repayable by the Stockholders pursuant to Section 2.5(e); or
(vi) any action taken by Xxxxxxx Xxxxxx Xxxxxx which he was not
permitted to take pursuant to Section 2.10(b) or (e) hereof, including,
without limitation, any Losses incurred as a result of the Company undoing
such an action (for example, the costs to the Company for the termination
of a contract which Xxxxxxx Xxxxxx Ubando caused the Company to enter into
in violation of Section 2.10(b)); or
(vii) the resignations of the Company's officers and directors
contemplated by Section 6.1(i) hereof.
(b) In the event that Purchaser becomes entitled to any
indemnification from the Stockholders under or by virtue of this Agreement,
whether pursuant to Section 10.2(a) hereof or otherwise, such indemnification
may, in Purchaser's sole discretion, be set off, in whole or in part, against
any obligations owed by Purchaser to the Stockholders under this Agreement.
Section 10.3. PURCHASER'S INDEMNIFICATION OBLIGATION.
(a) Purchaser hereby indemnifies and holds harmless, and agrees to
indemnify and hold harmless, the Stockholders and their Affiliates and the
respective directors, officers, employees and agents of each of the foregoing
Persons (collectively, the "STOCKHOLDERS INDEMNIFIED PARTIES") from and against
any and all Losses which exist, or which are imposed on, incurred by or asserted
against any one or more of the Stockholders Indemnified Parties, based upon,
arising out of, resulting from, or otherwise in respect of:
(i) any breach or inaccuracy as of the date of this Agreement or as
of the Closing of any of the representations and warranties made by
Purchaser in or pursuant to this Agreement, or in any instrument or
certificate delivered by Purchaser at the Closing in accordance herewith
(it being understood and agreed that, notwithstanding anything to the
contrary contained in this Agreement, to determine if there had been an
inaccuracy or breach of a representation or warranty of Purchaser and the
Losses arising from such inaccuracy or breach, such representation and
warranty shall be read as if it were not qualified by materiality,
including, without limitation, qualifications indicating accuracy in all
material respects, or accuracy except to the extent the inaccuracy will
not have a material adverse effect on the ability of Purchaser to perform
its obligations under this Agreement); or
(ii) any failure by the Purchaser at any time to carry out, perform,
comply with, satisfy and discharge any of its covenants, agreements,
undertakings, liabilities or obligations under this Agreement (except for
Purchaser's covenants set forth in Section 2.10 hereof) or under any other
Transaction Document.
Section 10.4. PROCEDURE FOR INDEMNIFICATION CLAIMS.
(a) If any Purchaser Indemnified Party, on the one hand, or
Stockholders Indemnified Party, on the other hand (the "INDEMNIFIED PARTY"), has
a claim or potential claim or receives notice of any claim, potential claim or
the commencement of any action or proceeding which could give rise to an
obligation on the part of the Stockholders or Purchaser, as the case may be, to
provide indemnification (the "INDEMNIFYING PARTY") pursuant to Section 10.2 or
10.3, respectively, the Indemnified Party shall promptly give the Indemnifying
Party or the Representative, as the case may be, written notice thereof (an
"INDEMNIFICATION CLAIM"); PROVIDED, HOWEVER, that the failure to give such
prompt notice shall not prevent any Indemnified Party from being indemnified
hereunder for any Losses, except to the extent that the failure to so promptly
notify the Indemnifying Party or Representative, if the Stockholders are the
Indemnifying Party, actually damages the Indemnifying Party. All determinations
under this Agreement to be made by the Stockholders shall be made by the
Representative and the Representative's decisions shall be binding on the
Stockholders.
(b) In the event of a claim, a potential claim or the commencement
of any action or proceeding by a third party which could give rise to an
obligation to provide indemnification pursuant to Sections 10.2 or 10.3, the
Indemnified Party will give the Indemnifying Party or if the Stockholders are
the Indemnifying Party, Representative, prompt written notice thereof (the
"THIRD PARTY INDEMNIFICATION CLAIM"); PROVIDED, HOWEVER, that the failure of the
Indemnified Party to so promptly notify the Indemnifying Party, or the
Representative, as the case may be, shall not prevent any Indemnified Party from
being indemnified for any Losses, except to the extent that the failure to so
promptly notify actually damages the Indemnifying Party.
(c) If the Indemnifying Party (or if the Stockholders are the
Indemnifying Party, the Representative) confirms in writing to the Indemnified
Party within 15 days after receipt of the Third Party Indemnification Claim the
Indemnifying Party's responsibility to indemnify and hold harmless the
Indemnified Party therefor in accordance herewith and within such 15-day period
demonstrates to the Indemnified Party's reasonable satisfaction that, as of such
time, the Indemnifying Party has sufficient financial resources in order to
indemnify for the full amount of any potential liability in connection with such
claim, the Indemnifying Party (or if the Stockholders are the Indemnifying
Party, the Representative) may elect to compromise or defend, at such
Indemnifying Party's own expense and by such Indemnifying Party's own counsel,
which counsel shall be reasonably satisfactory to the Indemnified Party, any
such matter involving the asserted liability of the Indemnified Party. If the
Indemnifying Party (or if the Stockholders are the Indemnifying Party, the
Representative) elects to compromise or defend any such asserted liability in
accordance herewith, it shall within 15 days (or sooner, if the nature of the
asserted liability so requires) notify the Indemnified Party of its intent to do
so, and the Indemnified Party shall cooperate, at the expense of the
Indemnifying Party, in the compromise of, or defense against, any such asserted
liability; PROVIDED THAT (i) the Indemnified Party may, if it so desires, employ
counsel at its own expense to assist in the handling of any such third party
claim, (ii) the Indemnifying Party or Representative, as applicable, shall keep
the Indemnified Party (or if the Stockholders are the Indemnified Party, the
Representative) advised of all material events with respect to any such third
party claim, (iii) the Indemnifying Party (or if the Stockholders are the
Indemnifying Party, the Representative) shall obtain the prior written approval
of the Indemnified Party (or if the Stockholders are the Indemnified Party, the
Representative) (which approval may not be unreasonably withheld), before
ceasing to defend against such third party claim or entering into any
settlement, adjustment or compromise of such third party claim involving
injunctive or similar equitable relief being asserted against any Indemnified
Party or any of its Affiliates and (iv) no Indemnifying Party or the
Representative, as applicable, will, without the prior written consent of each
Indemnified Party or Representative, if the Stockholders are the Indemnified
Party, settle or compromise or consent to the entry of any judgment in any
pending or threatened demand, claim, action or cause of action, suit or
proceeding in respect of which indemnification may be sought hereunder, unless
such settlement, compromise or consent includes an unconditional release of all
Purchaser Indemnified Parties (if the Indemnifying Party is the Stockholders) or
all Stockholders Indemnified Parties (if the Indemnifying Party is Purchaser)
from all liability arising out of such claim, action, suit or proceeding.
Notwithstanding anything contained herein to the contrary, the Indemnifying
Party shall not be entitled to have, and the Indemnified Party shall have, sole
control over the defense, settlement, adjustment or compromise of any third
party non-monetary claim that seeks an order, injunction or other equitable
relief against any Indemnified Party or its Affiliates which, if successful,
could materially interfere with the business, assets, liabilities, obligations,
financial condition or results of operations of the Indemnified Party or any of
its Affiliates. If the Indemnifying Party elects not to compromise or defend
against the asserted liability, or fails to notify the Indemnified Party or
Representative, if the Stockholders are the Indemnified Party, of its election
as herein provided, the Indemnified Party may, at the Indemnifying Party's
expense, pay, compromise or defend against such asserted liability.
(d) Notwithstanding Section 10.4(c) above, Purchaser shall have the
right to control the conduct of any audit or administrative or court proceeding
relating to Taxes of the Company. Purchaser shall keep the Representative
informed on a current basis of the progress of any such audit or proceeding the
outcome of which could require the Stockholders to indemnify any Purchaser
Indemnified Party (including, without limitation, providing upon request copies
of correspondence received from the IRS or any taxing authority, domestic or
foreign) and shall permit the Representative to participate at its own expense
in the preparation of any briefs, memoranda or other similar materials to be
submitted in connection with such audit or proceeding. Purchaser shall not agree
to compromise or settle any such audit or proceeding without the prior written
consent of the Representative, which consent shall not be unreasonably withheld
or delayed.
Section 10.5. NO CONTRIBUTION FROM THE COMPANY. Notwithstanding
anything contained in this Agreement or any other Transaction Documents to the
contrary, the Stockholders acknowledge and agree that they do not have any right
of contribution from or remedy against the Company as a result of any
indemnification the Stockholders are required to make under this Agreement or
any other Transaction Document, and the Stockholders hereby release, waive and
forever discharge any right to indemnification, reimbursement or contribution
that they may have at any time against the Company arising out of the
representations, warranties, covenants and agreements contained in this
Agreement or any other Transaction Document.
ARTICLE XI
TERMINATION
Section 11.1. TERMINATION. This Agreement may be terminated at any
time prior to the Closing by:
(a) the mutual written consent of the Representative and Purchaser;
or
(b) the Representative or Purchaser, if the Closing has not occurred
by the close of business on March 31, 2000; PROVIDED, that neither the
Stockholders, in the case of termination by the Representative, or Purchaser, in
the case of termination by Purchaser, is in material default hereunder.
Section 11.2. PROCEDURE AND EFFECT OF TERMINATION. In the event of
termination of this Agreement pursuant to Section 11.1, written notice thereof
shall forthwith be given by the terminating party to the other party or parties
hereto, and this Agreement shall thereupon terminate and become void and have no
effect, and the transactions contemplated hereby shall be abandoned without
further action by the parties hereto, except that the provisions of this Section
11.2 and of Sections 12.8, 12.9 and 12.13 shall survive the termination of this
Agreement; PROVIDED, HOWEVER, that such termination shall not relieve any party
hereto of any liability for any breach of this Agreement.
ARTICLE XII
MISCELLANEOUS
Section 12.1. ENTIRE AGREEMENT. This Agreement and the other
Transaction Documents constitute the entire agreement between the parties hereto
pertaining to the subject matter hereof, and supersede all prior and
contemporaneous agreements, understandings, negotiations and discussions of the
parties, whether oral or written.
Section 12.2. BENEFIT; ASSIGNMENT. This Agreement shall be binding
upon and inure to the benefit of and shall be enforceable by the parties hereto
and their respective successors and permitted assigns. This Agreement shall not
be assigned by any party hereto without the prior written consent of the other
parties hereto; PROVIDED, HOWEVER, that Purchaser may assign any of its rights
and obligations under this Agreement to any of its Subsidiaries without the
prior written consent of any party hereto as long as Purchaser guarantees full
performance of Purchaser's obligations hereunder by the applicable Subsidiary or
Subsidiaries. Any assignment of this Agreement in violation of the terms hereof
shall be null and void AB INITIO.
Section 12.3. NO PRESUMPTION. The Stockholders, Representative and
Purchaser have participated jointly in the negotiation and drafting of this
Agreement. In the event any ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as if drafted jointly by the
Stockholders, Representative and Purchaser and no presumption or burden of proof
shall arise favoring or disfavoring any party by virtue of the authorship of any
of the provisions of this Agreement.
Section 12.4. NOTICES. All notices, requests, demands and other
communications to be given or delivered under or by reason of the provisions of
this Agreement shall be in writing (which shall include notice by telecopy or
like transmission) and shall be deemed given (i) on the day it is received when
delivered personally against receipt (or if that day is a Saturday or a Sunday
or is not a day on which commercial banks are open for business in the city
specified in the address for notice provided by the recipient (a "LOCAL BUSINESS
DAY"), or if delivered after the close of business on a Local Business Day, on
the first following day that is a Local Business Day), (ii) on the day it is
received when sent by internationally recognized air courier, (iii) on the day
when transmittal confirmation is received if sent by telecopy (or if that day is
not a Local Business Day, or if after the close of business on a Local Business
Day, on the first following day that is a Local Business Day) and (iv) on the
third Local Business Day after it is mailed (if the recipient's address for
notice is in the same country as the place of mailing, otherwise, on the seventh
Local Business Day after it is mailed) by certified or registered first-class
mail (airmail, if overseas) to the recipient party at the address indicated for
such party below (or to such other address as the recipient party may have
specified by notice given to the other party hereto pursuant to this provision):
If to Purchaser: StarMedia Network, Inc.
00 Xxxx 00xx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
Telecopier: (000) 000-0000
Attn: Xxxxxx X. Macedonia
With a copy to: Xxxxxx Xxxxxxx & Xxxx LLP
Xxx Xxxxxxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier: (000) 000-0000
Attn: Xxxxxxx X. Xxxxxxxxx
If to Stockholders or Representative: Grupo MVS, S.A. de C.V.
Blvd. Xxxxxx Xxxxx Xxxxxxx #147
Col. Xxxxxxxxxxx Xxxxxxx
Xxxxxx, X.X. 00000
Telecopier: (000)000-0000
Attn: Xxxxxx Xxxxxx
With a copy to: Xxxx Xxxxxxx y Xxxxx Xxxxxx
Canoa #71
Colonia Tizapan San Angel
Xxxxxx Xxxxxxx,
Mexico, D.F.
Attn: Xxxxxxx Xxxxx and Xxxxxxx
Xxxxx
Telecopier: (000) 000-0000
Section 12.5. HEADINGS. The Article and Section headings in this
Agreement are inserted for convenience of reference only and shall not
constitute a part hereof or affect in any way the meaning or interpretation of
this Agreement.
Section 12.6. SEVERABILITY. If any term, provision, clause or part
of this Agreement or the application thereof under certain circumstances is held
invalid, illegal or incapable of being enforced by any Law or public policy, all
other terms, provisions and parts of this Agreement shall nevertheless remain in
full force and effect so long as the economic and legal substance of the
transactions contemplated hereby is not affected in any manner materially
adverse to any party. Upon such determination that any term, provision or part
of this Agreement is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible in an
acceptable manner in order that the transactions contemplated hereby are
consummated as originally contemplated to the greatest extent possible. To the
extent permitted by applicable Law, each party waives any provision of Law which
renders any provision of this Agreement invalid, illegal or unenforceable in any
respect.
Section 12.7. NO RELIANCE. Except for any assignees permitted by
Section 12.2 of this Agreement:
(a) no third party is entitled to rely on any of the
representations, warranties or agreements of the parties hereto contained in
this Agreement; and
(b) the parties hereto assume no liability to any third party
because of any reliance on the representations, warranties or agreements of such
parties contained in this Agreement.
Section 12.8. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without regard to
principles of conflicts of laws.
Section 12.9. SUBMISSION TO JURISDICTION; WAIVERS. The parties
hereto hereby irrevocably and unconditionally agree that:
(a) Each party hereto hereby irrevocably and unconditionally
submits, for itself and its property, to the exclusive jurisdiction of any New
York State court sitting in the County of New York or any federal court of the
United States of America sitting in the Southern District of New York, as the
party instituting suit shall elect in its sole discretion, and any appellate
court from any such court, in any suit, action or proceeding arising out of or
relating to this Agreement or the other Transaction Documents or for recognition
or enforcement of any judgment relating hereto or thereto. Each party hereto
hereby irrevocably and unconditionally agrees that any suit, action or
proceeding against it by any other party hereto with respect to this Agreement
or the other Transaction Documents may be instituted, and that any suit, action
or proceeding shall be instituted only in any New York State court sitting in
the County of New York or any federal court sitting in the Southern District of
New York, and any appellate court from any such court, as the party hereto
instituting such suit, action or proceeding may elect in its sole discretion.
Each party hereto also hereby irrevocably and unconditionally agrees that a
final judgment in any such suit, action or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law.
(b) Each party hereto hereby irrevocably and unconditionally waives,
to the fullest extent it may legally and effectively do so, any objection which
it may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement or the other Transaction
Documents in any New York State court sitting in the County of New York or any
federal court sitting in the Southern District of New York, and any applicable
court for such court. Each party hereto hereby irrevocably waives, to the
fullest extent permitted by law, the defense of an inconvenient forum to the
maintenance of such suit, action or proceeding in any such court and further
waives the right to object, with respect to such suit, action or proceeding,
that such court does not have jurisdiction over such party. Each party hereto
hereby irrevocably waives the right to a jury trial in any suit, action or
proceeding arising out of or relating to this Agreement or the other Transaction
Documents.
(c) The parties hereto hereby irrevocably and unconditionally
consent to service of process in the manner provided for the giving of notices
pursuant to this Agreement. In the case of the Stockholders, service of process
shall also be made by personal delivery to Corporation Trust Center, 000 Xxxxxx
Xxxxxx, Xxx Xxxx, XX 00000. Nothing in this Agreement or the other Transaction
Documents shall affect the right of either party to serve process in any other
manner permitted by law.
(d) Each of the Stockholders hereby irrevocably appoints Corporation
Trust Center as its authorized agent for service of process in any suit, action
or proceeding arising out or relating to this Agreement or the Transaction
Documents and agrees to maintain such appointment until the tenth anniversary of
the Closing. The Stockholders shall further evidence such appointment by
granting, prior to or at the Closing, an irrevocable power of attorney in a
public instrument (ESCRITURA PUBLICA) executed before a Notary Public in Mexico
in conformity with Article 2596 of the Civil Code of the Federal District and
the 1958 Protocol on the Uniformity of Powers of Attorney to be Granted Abroad.
Section 12.10. WAIVER. Any party to this Agreement may (a) extend
the time for the performance of any of the obligations or other acts of the
other parties, (b) waive any inaccuracies in the representations and warranties
of the other parties contained herein or in any document delivered by the other
parties pursuant hereto or (c) waive compliance with any of the agreements or
conditions of the other parties contained herein. Any such extension or waiver
shall be valid only if set forth in an instrument in writing signed by the party
to be bound thereby. Any waiver of any term or condition shall not be construed
as a waiver of any subsequent breach or a subsequent waiver of the same term or
condition, or a waiver of any other term or condition, of this Agreement. The
failure of any party to assert any of its rights hereunder shall not constitute
a waiver of any such rights.
Section 12.11. AMENDMENT. This Agreement may not be amended,
modified or supplemented except by an instrument in writing signed by, or on
behalf of, each of the parties hereto.
Section 12.12. SPECIFIC PERFORMANCE. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or equity.
Section 12.13. EXPENSES. Except as otherwise provided herein, all
legal expenses and all other costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such costs and expenses. All expenses incurred by the Company on or
prior to the Closing Date in connection with this Agreement and the other
Transaction Documents and the transactions contemplated hereby and thereby shall
be borne by the Stockholders.
Section 12.14. THE REPRESENTATIVE. (a) The Stockholders hereby
appoint MVS Group as their Representative and authorize and direct the
Representative to take such action, and to exercise such rights, power and
authority, as are authorized, delegated and granted to the Representative
hereunder in connection with the transactions contemplated hereby, and to
exercise such rights, power and authority, as are incidental thereto. Execution
of this Agreement by the Stockholders shall constitute an irrevocable agreement
by the Stockholders to be bound by the actions of the Representative taken
hereunder and under the other Transaction Documents.
(b) Subject to the provisions of this Section 12.14(b), the
Representative shall serve as the Representative from the date hereof until the
earlier of such Person's removal or the completion of such Person's obligations
hereunder and under the other Transaction Documents. The parties hereto
acknowledge and agree that, as to all matters arising under this Agreement and
under the other Transaction Documents, the Representative shall act for and on
behalf of the Stockholders. When this Agreement or the other Transaction
Documents provide that a determination or any other action or event is
conclusive and binding upon the Stockholders, such determination, action or
event shall be conclusive and binding upon the Representative. In addition, the
Representative shall have all such incidental powers as may be necessary or
desirable to carry into effect the provisions of this Section 12.14. In the
event that the Person who is acting as the Representative is terminated by the
Stockholders or is unable or unwilling to continue to serve as the
Representative, or otherwise ceases to be the Representative, such Person's
successor shall be appointed in accordance with this Section 12.14; PROVIDED,
that (i) Purchaser shall not have withheld its approval of the appointment of
such successor as the Representative, which approval shall not be unreasonably
withheld, and (ii) the Representative shall not voluntarily resign without the
Stockholders first selecting a successor Representative reasonably satisfactory
to Purchaser in accordance with this Section 12.14. Upon the termination or
resignation of any Representative, a successor Representative (and, if
necessary, further successor Representatives), reasonably satisfactory to
Purchaser, shall be appointed by the Stockholders by a majority vote of the
equity interests in the Company held by such Persons immediately prior to the
Closing Date. Any successor to a Representative shall for purposes of this
Agreement be deemed to be, from the time of the appointment thereof, a
Representative and from and after such time, the term "REPRESENTATIVE" as used
herein shall be deemed to refer to any successor. No appointment of a successor
shall be effective unless such successor agrees in writing to be bound by the
terms of this Agreement.
(c) The Stockholders agree that the provisions set forth in this
Section 12.14 shall in no way impose any obligations on Purchaser other than
those explicitly set forth in this Agreement. In particular, notwithstanding in
any case any notice received by Purchaser to the contrary, Purchaser shall be
fully protected in relying upon and shall be entitled (i) to rely upon actions,
decisions and determinations of the Representative and (ii) to assume that all
actions, decisions and determinations of the Representative are fully authorized
and binding upon the Representative and the Stockholders.
(d) The Representative shall not be liable to the Stockholders for
the performance of any act or the failure to act so long as he acted or failed
to act in good faith and such action or inaction did not constitute willful
misconduct or gross negligence.
(e) To the extent Representative is liable to pay any amounts
hereunder, Representative shall pay for all such amounts personally.
Section 12.15. BUDGET UPDATES. No later than November 30 of each
year, commencing on November 30, 2000 through November 30, 2003, the
Stockholders will provide Purchaser with a quarterly break-down of all items of
the Budget for the upcoming calendar year utilizing the full calendar year
numbers contained in the then-applicable Budget for such calendar year.
ARTICLE XIII
COVENANT NOT TO COMPETE
Section 13.1. COVENANT NOT TO COMPETE. (a) The Stockholders hereby
covenant that during the period commencing on the Closing Date and ending on the
sixth anniversary of the Closing Date (the "RESTRICTED PERIOD"), except solely
by virtue of performance of Stockholders' obligations under the Strategic
Agreements, no Stockholder will (whether for its own account, as an employee or
otherwise on behalf of any other Person, or in any other capacity), and each
Stockholder will cause its Affiliates not to, directly or indirectly, (i) engage
in any of the Restricted Activities (as such term is defined in 13.1(b) below),
anywhere in the world, or (ii) without limitation of clause (i), (x) become or
remain a stockholder of a corporation or a member of a partnership, limited
liability company or any other Person, or otherwise own any equity interest in
any Person, engaged in any of the Restricted Activities anywhere in the world,
(y) act as a consultant to any Person or otherwise provide any other assistance
to any Person, with respect to any Restricted Activities anywhere in the world,
or (z) directly or indirectly make an investment in, or otherwise own any equity
interest in, make any strategic agreement with, make any investment in any new
project or partnership with, or otherwise do business with, any Person listed on
Exhibit C, without notifying Purchaser of the Stockholder's intent to do so and
providing Purchaser with the right to purchase a pro-rata interest, or otherwise
participate in, such Person's business or assets on the same terms and
conditions as the investing or participating Stockholder (it being understood
and agreed that, in the event that Purchaser is unwilling or unable to invest or
participate, the Stockholders shall be free to invest or participate in such
Person's business or assets on the same terms and conditions offered to
Purchaser); PROVIDED, HOWEVER, that, notwithstanding the foregoing, (1) the
Stockholders and their respective Affiliates may own in the aggregate up to one
percent of the outstanding shares of stock of any corporation whose shares are
publicly traded on a United States or foreign stock exchange, the NASDAQ Stock
Market or any over-the-counter public securities market in the United States,
and (2) Grupo MVS may (A) without any restrictions (including the restrictions
set forth in this Section 13.1) sell, lease, assign or otherwise transfer, in
whole or in part, equity, rights or any other interests in and to the MMDS
Licenses or the Person that owns, or has lawful title, to the MMDS Licenses, and
in the ordinary course of its business, sell, lease, assign or otherwise
transfer the use of the MMDS Licenses, in whole or in part, to any third-party
and (B) in the ordinary course of its business, sell advertising and provide
content to any third-party. It is the desire and intent of the parties that the
provisions of this Article XIII shall be enforced to the fullest extent
permitted under the laws and public policies of each jurisdiction in which
enforcement is sought. If any court determines that any provision of this
Article XIII is unenforceable, such court shall have the power to reduce the
duration or scope of such provision, as the case may be, and, in its reduced
form, such provision shall be enforceable; it is the intention of the parties
that the foregoing restrictions shall not be terminated but shall be deemed
amended to the extent required to render them valid and enforceable, such
amendment to only apply with respect to the operation of this Article XIII in
the jurisdiction of the court that has made the adjudication.
(b) For purposes of this Agreement, the term "RESTRICTED ACTIVITIES"
shall mean activities which are substantially similar with the primary business
of the Company conducted as of the date of this Agreement or as of the Closing,
it being understood and agreed that the Company's primary business consists of
activities related to the development of a directory of internet pages (search
engine) that provides supplementary community service (including e-mail and user
affinity points) to its user base.
Section 13.2. NO SOLICITATION. For a period of six years commencing
on the date hereof, none of the Stockholders shall, directly or indirectly,
solicit for employment or hire either as an employee or as a consultant any
person who is an employee of the Company, Purchaser or any of Purchaser's
Affiliates.
Section 13.3. INJUNCTIVE RELIEF. The parties acknowledge and agree
that the restrictions contained in Sections 13.1 and 13.2 are a reasonable and
necessary protection of the immediate interests of Purchaser, and any violation
of these restrictions would cause substantial injury to Purchaser and that
Purchaser would not have entered into this Agreement without receiving the
additional consideration offered by the Stockholders in binding themselves to
these restrictions. In the event of a breach or a threatened breach by any
Stockholders of these restrictions, Purchaser shall be entitled to apply to any
court of competent jurisdiction for an injunction restraining such Person from
such breach or threatened breach; PROVIDED, HOWEVER, that the right to apply for
injunctive relief shall not be construed as prohibiting Purchaser from pursuing
any other available remedies for such breach or threatened breach.
IN WITNESS WHEREOF, this Agreement has been signed by or on behalf
of each of the parties as of the day first above written.
STARMEDIA NETWORK, INC.
By: ___________________________________________
Name:
Title:
GRUPO MVS, S.A. de C.V.
By: ___________________________________________
Name:
Title:
XXXXX XXXXXX PUBLICIDAD, S.A. de C.V.
By: ___________________________________________
Name:
Title:
GRUPO MVS, S.A. de C.V. as the REPRESENTATIVE
By: ___________________________________________
Name:
Title:
EXHIBIT A
DEFINITIONS
1. For purposes of this Agreement, the following terms shall have the
following meanings:
"ACTION" shall mean any actual or threatened action (at law or in
equity), suit, arbitration, review, inquiry, proceeding or investigation.
"AFFILIATE" (and, with a correlative meaning, "AFFILIATED") shall
mean, with respect to any Person, any other Person that directly, or through one
or more intermediaries, controls or is controlled by or is under common control
with such first Person. As used in this definition, "control" (including, with
correlative meanings, "controlled by" and "under common control with") shall
mean possession, directly or indirectly, of the power to direct or cause the
direction of management or policies (whether through ownership of securities or
partnership or other ownership interests, by contract or otherwise); provided,
however, that Hicks, Muse, Xxxx & Xxxxx shall not be deemed to be an Affiliate
of the MVS Group for purposes of Section 13.1 hereof.
"ASSOCIATES" of a specified Person shall mean (i) a corporation or
other organization of which such Person is a director, officer or partner or is,
directly or indirectly, the beneficial owner of 5% of more of any class of
equity securities, (ii) any trust or other estate in which such Person has such
a substantial beneficial interest or as to which such Person serves as trustee
or in a similar capacity and (iii) any Relative of such Person who has the same
home as such Person.
"BASE STOCKHOLDERS' EQUITY" shall mean U.S.$331,000.00.
"BUDGET" shall mean the budget for the Company prepared by the
Stockholders and approved by Purchaser that is attached hereto as Exhibit D, as
it may be amended from time to time as approved by Purchaser and the
Stockholders.
"BUSINESS PLAN" shall mean the business plan for the Company to be
prepared and delivered by the Stockholders and approved by Purchaser at Closing,
as it may be amended from time to time as approved by Purchaser and the
Stockholders.
"CLOSING MARKET PRICE" of StarMedia Common Stock for any day shall
mean the last reported sale price for such security on the principal exchange or
quotation system on which such security is listed or traded. If the security is
not admitted for trading on any national securities exchange or the NASDAQ
National Market, "Closing Market Price" shall mean the average of the last
reported closing bid and asked prices reported by the NASDAQ as furnished by any
member in good standing of the National Association of Securities Dealers, Inc.,
selected from time to time by Purchaser for that purpose, or as quoted by the
National Quotation Bureau Incorporated. In the event that no such quotation is
available for such day, the Closing Market Price shall be the average of the
quotations for the last five Trading Days for which a quotation is available
within the last 30 Trading Days prior to such day. In the event that five such
quotations are not available within such 30-Trading Day period, the Board of
Directors of Purchaser shall be entitled to determine the Closing Market Price
on the basis of such quotations as it reasonably considers appropriate.
"CODE" shall mean the Internal Revenue Code of 1986, as amended, and
any successor thereto.
"COMPANY'S REVENUES" shall mean the Company's reported accounting
revenues attributable to advertising inventory sold by the Company pursuant to
valid and binding Contracts with Persons not affiliated with the Stockholders
(provided, however, that for any given quarter, up to 12% of the Company
Revenues may constitute barter revenues), expressed in U.S. Dollars, determined
according to GAAP (both for the recognition of revenues and for the conversion
of such revenues into U.S. Dollars) and consistent with the determination of
revenues for the Company as reported by Purchaser in its filings with the SEC;
PROVIDED, HOWEVER, that the term "Company's Revenues" shall not include (i) any
income or revenues received by the Company under the Company Service Agreements
or any income deemed revenue under the Company Service Agreements, in each case,
irrespective of whether such income or revenues are recognized for GAAP
purposes; (ii) any income or revenue resulting from the transactions
contemplated by Sections 6.1(g) or (h); or (iii) any revenues directly or
indirectly derived or received from the Stockholders or any of their Affiliates.
"CONTRACTS" shall mean all contracts, agreements, leases,
arrangements, commitments or understandings, whether oral or written, to or by
which the Company is a party or is otherwise bound.
"EBITDA" shall mean earnings before interest, tax, depreciation and
amortization of the Company, determined in a manner consistent with the manner
in which the EBITDA was determined in the Budget, which shall reflect normal and
recurring transactions as contained in the Budget, but shall not include (i)
transactions such as gains or losses from dispositions of assets or similar
transactions not in the ordinary course of business or (ii) any revenue
recognized under GAAP as a result of payments made to the Company under the
Company Service Agreements.
"EMPLOYMENT AGREEMENT" shall mean an agreement between the Company
and Xxxxxxx Xxxxxx Ubando in the form attached hereto as Exhibit E.
"ENVIRONMENTAL LAWS" shall mean all Mexican federal, state and local
statutes and codes or regulations, rules or ordinances issued, promulgated, or
approved thereunder (including those with respect to asbestos or
asbestos-containing material or exposure to asbestos or asbestos-containing
material) relating to (i) emissions, discharges, releases or threatened releases
of pollutants, contaminants, chemicals or industrial toxic or hazardous
constituents, substances or wastes, including any Hazardous Material, any
petroleum (including crude oil or any fraction thereof), any petroleum product
or any other waste, chemicals or substances regulated by any Government Entity,
into the environment (including ambient air, surface water, ground water, land
surface or subsurface strata), (ii) the manufacture, processing, distribution,
use, generation, treatment, storage, disposal, transport or handling of any
Hazardous Material, any petroleum (including crude oil or any fraction thereof),
petroleum product or any other waste, chemicals or substances regulated by any
Government Entity, and (iii) underground storage tanks and related piping, and
emissions, discharges and releases or, threatened any releases therefrom.
"EXCHANGE ACT" shall mean the United States Securities Exchange Act
of 1934, as amended, or any successor law, and regulations and rules issued by
the SEC pursuant to that act or any successor law.
"GAAP" shall mean generally accepted accounting principles in the
United States as in effect from time to time, consistently applied.
"GOVERNMENTAL ENTITY" OR "GOVERNMENT ENTITY" shall mean (i) any
multinational, federal, provincial, state, municipal, local or other
governmental or public department, court, commission, board, bureau, agency or
instrumentality, domestic or foreign; (ii) any subdivision, agent, commission or
board of any of the foregoing; or (iii) any quasi-governmental or private body
exercising any regulatory, expropriation or taxing authority under or for the
account of any of the foregoing.
"HAZARDOUS MATERIALS" shall mean any substance, material or waste
that is regulated under any Environmental Law or is deemed or defined by any Law
or Governmental Entity to be "hazardous," "toxic," a "contaminant," "waste," a
"pollutant" or words with similar meaning and shall include, without limitation,
petroleum and petroleum products, PCBs, PCB wastes, asbestos, asbestos
containing products and radioactive substances.
"IP LICENSE" shall mean any option, license, or agreement of any
kind relating to the exercise, use, non-use, registration, enforcement,
non-enforcement of or remuneration for any Intellectual Property or Software.
"IRS" shall mean the Internal Revenue Service.
"INDUCEMENT AGREEMENT" shall mean an agreement between the Purchaser
and Xxxxxxx Xxxxxx Xxxxxx in the form attached hereto as Exhibit F.
"INSIDER" shall mean (i) any Person that is, directly or indirectly,
the beneficial owner of 5% or more or any class of equity securities of the
Company, (ii) any director or officer of the Company, or (iii) any Affiliate,
Associate or Relative of any Person described in sub-clause (i) or (ii).
"INTELLECTUAL PROPERTY" means the Intellectual Property Rights
identified in Schedule 3.8, together with all other Intellectual Property Rights
owned, used or held for use in connection with the business of the Company as
currently conducted.
"INTELLECTUAL PROPERTY RIGHTS" shall mean all (i) patents,
copyrights, trademarks, service marks, trade identification, trade dress, trade
names, copyrights, trade secrets, know-how, proprietary information (including
without limitation proprietary software algorithms and designs), mask work
rights, database rights, publicity rights, privacy rights, moral rights and
other rights of a similar nature for which legal protection may be obtained, in
the United States and/or any other country or jurisdiction; (ii) pending
applications to register or otherwise obtain legal protection for any of the
foregoing; (iii) rights to make application in the future to register or
otherwise obtain legal protection for any of the foregoing; (iv) rights of
priority under national laws and international conventions with respect to any
of the foregoing; (v) continuations, continuations-in-part, divisions, renewals,
extensions, patents of addition, reexaminations, or reissues of any of the
foregoing and all related applications therefor; (vi) goodwill associated with
any of said trademarks, service marks, trade identification, trade dress and
trade names; and (vii) rights to xxx with respect to past and future
infringements of any of the foregoing.
"LAWS" shall mean all statutes, codes, ordinances, decrees, rules,
regulations, municipal by-laws, judicial or arbitral or administrative or
ministerial or departmental or regulatory judgments, orders, decisions, rulings
or awards, policies, voluntary restraints, guidelines, or any provisions or
interpretations of the foregoing, including general principles of common and
civil law and equity, binding on or affecting the Person referred to in the
context in which such word is used.
"LIEN" shall mean any lien (including, without limitation,
environmental and tax liens) charge, claim, pledge, security interest,
conditional sale agreement or other title retention agreement, lease, mortgage,
security agreement, right of first refusal or other purchase rights of third
parties, option, tenancy, license, real estate covenant, right of way or
easement, any filing of, or agreement to give, any financing statement under the
Uniform Commercial Code or statute or law of any jurisdiction, or any
restriction on voting, transfer or receipt of income.
"LOSSES" shall mean and include (i) any losses, costs, expenses,
damages (including compensatory, exemplary, or punitive damages, Taxes,
penalties, fines, charges, demands, liabilities, obligations and claims of any
kind (including interest, penalties and reasonable attorneys' and consultants'
fees, expenses and disbursements) and (ii) without limitation of clause (i), any
cost or expense reasonably incurred by a Purchaser Indemnified Party or a
Stockholders Indemnified Party in enforcing its rights under Section 10.2 or
10.3, respectively.
"MMDS LICENSES" shall mean any and all rights, concessions and
licenses that the MVS Group, its Affiliates or Subsidiaries owns, has lawful
title to or has rights to, directly or indirectly, in part or in whole, and may
in the future own, to provide radio and wireless services within a given
territory.
"MATERIAL ADVERSE EFFECT" shall mean (i) a significant risk that
Purchaser, in any material respect, will not, commencing immediately after the
Closing and continuing indefinitely thereafter, be able to own, possess, use,
lease, hold, occupy and operate the business of the Company as currently and (in
any event) normally (in the Ordinary Course of Business) owned, possessed, used,
leased, held, occupied and operated by the Company, (ii) without limitation of
clause (i), an effect that is materially adverse to, or a material adverse
change in, the business, operations, financial condition or results of
operations of the Company or (iii) a significant risk of the imposition of
criminal liability on Purchaser or any of its Affiliates (prior to, at or after
the Closing).
"OBJECT CODE" shall mean (i) machine executable programming
instructions, substantially in binary form, which are intended to be directly
executable by a processor after suitable processing and linking but without the
intervening steps of compilation or assembly, or (ii) other executable code
(E.G., "byte code" and other intermediate code forms in connection with
interpretive languages).
"ORDINARY COURSE OF BUSINESS" shall mean in the ordinary course of
the normal day-to-day operations of the Company and consistent with past
practices of the Company and, in any event, without regard to the transactions
contemplated by this Agreement.
"OUTSTANDING IP LICENSE" shall mean any IP License by or to the
Company or to which the Company is otherwise a party, or by which the Company or
any of its Intellectual Property, Software or other property is subject or
bound.
"PERSON" shall mean any individual, corporation, partnership,
limited liability company, joint venture, trust, unincorporated organization,
other form of business or legal entity or Government Entity.
"PRIME" shall mean the announced prime rate of Citibank, N.A. as in
effect from time to time.
"PROGRAM" shall mean, with respect to an item of Software, the
complete set of the machine-readable and executable computer instructions and
all related data files necessary to perform on a computer system one or more of
the functions performed by such item of Software.
"PROJECTED REVENUES" shall mean, (a) for the calendar year ended
December 31, 2001: $12,300,000; (b) for the calendar year ended December 31,
2002: $14,050,000; (c) for the calendar year ended December 31, 2003:
$15,650,000; and (d) for the calendar year ended December 31, 2004: $17,150,000.
"RETURN" shall mean any return, declaration, report, claim for
refund, or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof, filed or
required to be filed with any Taxing Authority in connection with the
determination, assessment or collection of any Tax or the administration of any
laws, regulations or administrative requirements relating to any Tax, or any
statement required to be furnished to any Person under any Tax law.
"SEC" shall mean the United States Securities and Exchange
Commission.
"SRL" shall mean SOCIEDAD DE RESPONSABILIDAD LIMITADA (Limited
Liability Company).
"SECURITIES ACT" shall mean the United States Securities Act of
1933, as amended, or any successor law, and regulations and rules issued by the
SEC pursuant to that act or any successor law.
"SHRINK-WRAP SOFTWARE" shall mean the current shipping versions of
software applications and utilities generally available "off the shelf" on a
commercially reasonable basis.
"SOFTWARE" shall mean any and all (i) "computer programs" (as
defined in Section 101 of the U.S. Copyright Act), including any and all
software implementations of algorithms, models and methodologies, whether in
Source Code or Object Code; (ii) databases and compilations, including any and
all data and collections of data, whether machine readable or otherwise, (iii)
descriptions, flow-charts and other work product used to design, plan, organize
and develop any of the foregoing, and (iv) all documentation, including user
manuals and training materials, relating to any of the foregoing.
"SOURCE CODE" shall mean the human readable form in which programs
have been written and related technical documentation, including comments
internal to such code and descriptions external to such code that are useful for
understanding and maintaining said programs (for example, logic manuals, flow
charts and principles of operation), and further includes without limitation all
associated header and make files.
"STARMEDIA COMMON STOCK" shall mean the common stock, par value
$0.001 per share, of Purchaser.
"STOCKHOLDERS' EQUITY" shall mean the Company's stockholders'
equity, or partners' equity, as the case may be, as of the open of business on
the Closing Date, after giving effect to the Conversion, determined in
accordance with GAAP.
"SUBSIDIARY" shall mean, with respect to any specified Person, any
other corporation, partnership, joint venture, association or other entity in
respect of which such specified Person directly, or indirectly through one or
more other subsidiaries, owns not less than 50% of the overall economic equity.
"TAXES" shall mean (a) all taxes (whether federal, state, county,
local or foreign), fees, levies, customs duties, assessments, or charges of any
kind whatsoever, including without limitation, social security contributions,
general duties, special improvement contributions, gross income, net income,
gross receipts, profits, windfall profits, sales, use, occupation, value-added,
AD VALOREM, transfer, license, franchise, withholding, payroll, employment,
excise, estimated, stamp, premium, capital stock, production, net worth,
alternative or add-on minimum, environmental, business and occupation,
disability, severance, or real or personal property taxes, together with any
interest, penalties, or additions to tax imposed with respect thereto and (b)
any obligations under any tax sharing, tax allocation, or tax indemnity
agreements or arrangements with respect to any Taxes described in clause (a)
above.
"TAXING AUTHORITY" shall mean any Government Entity having
jurisdiction over the assessment, determination, collection, or other imposition
of any Tax.
"TRADING DAY" shall mean any day on which the securities in question
are traded on the NYSE or, if such securities are not listed or admitted for
trading on the NYSE, on the principal national securities exchange on which such
securities are listed or admitted or, if not listed or admitted for trading on
any national securities exchange, on the NASDAQ National Market or, if such
securities are not quoted thereon, in the applicable securities market in which
the securities are traded.
EXHIBIT B1
GENERAL RELEASE
GENERAL RELEASE
This general release (the "GENERAL RELEASE") is made as of this ___
day of ______, 2000, by Grupo MVS, S.A. de C.V., Xxxxx Xxxxxx Publicidad, S.A.
de C.V. (together, the "STOCKHOLDERS"), each a stockholder of Adnet, S.A. de
C.V., a SOCIEDAD ANONIMA DE CAPITAL VARIABLE organized in Mexico (the
"COMPANY"), Xxxxxxx Xxxxxx Xxxxxxxx, Xxxxxxx Xxxxxx Xxxxxx, Xxxxxx Xxxxxx
Xxxxxxxx, and Xxxxxx Xxxxxx Xxxxxx.
WHEREAS, StarMedia Network, Inc., a Delaware corporation
("PURCHASER") and the Stockholders have entered into a Stock Purchase Agreement
dated as of January 31, 2000 (the "STOCK PURCHASE AGREEMENT") which provides,
among other things, for the acquisition by Purchaser of all of the equity
interests of the Company;
WHEREAS, it is a condition to Purchaser's obligations to consummate
the Closing that the Stockholders and all of the officers and directors of the
Company enter into this General Release; and
WHEREAS, capitalized terms used herein without definition shall have
the meaning assigned to them in the Stock Purchase Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements contained herein, and intending to be legally bound
hereby, the parties hereto agree as follows:
1. The undersigned do hereby remise, release, acquit, satisfy and
forever discharge the Company and its officers, directors, employees and
affiliates of and from all actions, causes of action, suits, debts, dues, sums
of money, accounts, reckonings, bonds, bills, specialties, covenants, contracts,
controversies, agreements, promises, duties, obligations, undertakings,
variances, trespasses, damages, judgments, executions, claims and demands
whatsoever in law or in equity which any of the undersigned now have, or ever
had, for, upon or by reason of any matter, cause or thing whatsoever, from the
beginning of time to the date of this General Release, except for the Company's
obligations to perform under the Company Service Agreements.
2. This General Release may be executed in one or more counterparts,
and by the different parties hereto in separate counterparts, each of which when
executed shall be deemed an original, but all of which taken together shall
constitute one and the same document.
3. This General Release shall be governed by and construed in
accordance with the laws of the State of New York without regard to its conflict
of law rules and principles.
4. If any term, provision, clause or part of this General Release or
the application thereof under certain circumstances is held invalid, illegal or
incapable of being enforced by any law or public policy, all other terms,
provisions and parts of this General Release shall nevertheless remain in full
force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this General
Release to be duly executed as of the day and year first written above.
GRUPO MVS, S.A. DE C.V. XXXXX XXXXXX PUBLICIDAD, S.A. DE C.V.
By: ______________________________ By: ______________________________
Name: Name:
Title: Title:
OFFICERS AND DIRECTORS OF
ADNET, S.A. DE C.V.
_________________________________ _________________________________
Xxxxxxx Xxxxxx Xxxxxxxx Xxxxxxx Xxxxxx Ubando
_________________________________ _________________________________
Xxxxxx Xxxxxx Xxxxxxxx Xxxxxx Xxxxxx Ubando
EXHIBIT B2
RELEASE OF STOCKHOLDERS
GENERAL RELEASE
This general release (the "GENERAL RELEASE") is made as of this ___
day of ______, 2000, by Adnet, S.A. de C.V., a SOCIEDAD ANONIMA DE CAPITAL
VARIABLE organized in Mexico (the "COMPANY").
WHEREAS, StarMedia Network, Inc., a Delaware corporation
("PURCHASER") and Grupo MVS, S.A. de C.V. and Xxxxx Xxxxxx Publicidad, S.A. de
C.V. (together, the "STOCKHOLDERS") have entered into a Stock Purchase Agreement
dated as of January 31, 2000 (the "STOCK PURCHASE AGREEMENT") which provides,
among other things, for the acquisition by Purchaser of all of the equity
interests of the Company;
WHEREAS, it is a condition to the Stockholders' obligations to
consummate the Closing that the Company enter into this General Release; and
WHEREAS, capitalized terms used herein without definition shall have
the meaning assigned to them in the Stock Purchase Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements contained herein, and intending to be legally bound
hereby, the parties hereto agree as follows:
1. The undersigned does hereby remise, release, acquit, satisfy and
forever discharge the Stockholders of and from all actions, causes of action,
suits, debts, dues, sums of money, accounts, reckonings, bonds, bills,
specialties, covenants, contracts, controversies, agreements, promises, duties,
obligations, undertakings, variances, trespasses, damages, judgments,
executions, claims and demands whatsoever in law or in equity which any of the
undersigned now have, or ever had, for, upon or by reason of any matter, cause
or thing whatsoever, from the beginning of time to the date of this General
Release, except for (a) amounts owed by the Stockholders with respect to
services provided by the Company to the Stockholders and (b) the Stockholders'
obligations to perform under the Company Service Agreements.
2. This General Release shall be governed by and construed in
accordance with the laws of the State of New York without regard to its conflict
of law rules and principles.
3. If any term, provision, clause or part of this General Release or
the application thereof under certain circumstances is held invalid, illegal or
incapable of being enforced by any law or public policy, all other terms,
provisions and parts of this General Release shall nevertheless remain in full
force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this General
Release to be duly executed as of the day and year first written above.
ADNET, S.A. DE C.V.
By: ______________________________
Name:
Title:
EXHIBIT C
STARMEDIA COMPETITORS
With respect to the Moller Group and its Affiliates:
1. America Online Inc. (AOL)
2. Universo Online (UOL)
3. Yahoo! Inc.
4. El Sitio, Inc.
5. Xxxx.xxx
6. Lycos, Inc.
7. Microsoft Corporation (XXX.xxx)
8. Prodigy Communications Corporation
9. Terra Networks
10. Any Affiliate and/or Subsidiary of the above listed entities or their
successors
With respect to the MVS Group and its Affiliates:
1. Universo Online (UOL)
2. Yahoo! Inc.
3. El Sitio, Inc.
4. Xxxx.xxx
5. Lycos, Inc.
6. Any Affiliate and/or Subsidiary of the above listed entities or their
successors
EXHIBIT D
BUDGET
See attached.
ADNET S.A. DE CV
FISCAL YEAR 2000 QUARTERLY BUDGET
(FIGURES IN US$)
Q1 Q2 Q3 Q4 FULL YEAR
SALES 3/31/00 6/30/00 9/30/00 12/31/00 12/31/00
----- ------- ------- ------- -------- --------
MVS CLIENTS 474,000 474,000 474,000 474,000 1,896,000
HM CLIENTS 462,000 462,000 462,000 462,000 1,848,000
BARTER 783,845 247,530 127,891 123,765 1,283,031
CIA 375,000 375,000 375,000 375,000 1,500,000
MAILADNET 255,000 115,000 110,000 120,000 600,000
LOCAL SEARCHERS 75,000 135,000 180,000 140,000 530,000
NATIONAL SEARCH 1,132,000 656,560 203,760 339,600 2,331,920
CHANNELS 126,000 126,000 126,000 126,000 504,000
NEW PRODUCTS 0 0 200,000 0 200,000
-------------------------------------------------------
REVENUE 3,682,845 2,591,090 2,258,651 2,160,365 10,692,951
COST OF SALES
-------------
COMISSIONS REAL MEDIA 93,750 93,750 93,750 93,750 375,000
25.0%
COMISSIONS ON CASH 340,740 265,756 237,028 224,316 1,067,839
13.5%
COMISSIONS ON BARTER 50,950 16,089 8,313 8,045 83,397
6.5%
OPERATING EXPENSES
-----------------------
CONTENT PAYMENTS 37,800 37,800 37,800 37,800 151,200
BARTER 783,845 247,530 127,891 123,765 1,283,031
PAYROLL 180,000 350,000 405,000 405,000 1,340,000
MVS MEDIA 474,000 474,000 474,000 474,000 1,896,000
HM/product/mktg/agency/media 462,000 462,000 462,000 462,000 1,848,000
MANAGEMENT EXPENSES 114,584 114,584 114,584 114,584 458,336
MKTG expenses 239,805 166,162 143,967 137,569 687,504
ADVERTISING 1,338,300 446,100 0 0 1,784,400
-------------------------------------------------------
SUBTOTAL 3,630,334 2,298,176 1,765,242 1,754,718 9,448,470
EBITDA -432,929 -82,681 154,319 79,536 -281,756
EBITDA Margin -11.8% -3.2% 6.8% 3.7% -2.6%
----------
(a) The development of new products include among others: Club Industrial Adnet
which is a vertical portal for Industrial activities and B to B- oriented.
Within these portal we will include chats and broadband applications. Local
searchers for each local city in Mexico and will outgrow for US Hispanic cities.
Adnet Americas which includes a local directory for Latin countries.
ADNET S.A. DE CV
ANNUAL BUDGET (FISCAL YEAR 2000 - 2004)
(FIGURES IN US$)
SALES 2000 2001 2002 2003 2004
----------------------------------------------------------
MVS CLIENTS 1,896,000 1,950,000 2,250,000 2,350,000 2,350,000
HM CLIENTS 1,848,000 1,900,000 2,200,000 2,300,000 2,300,000
BARTER 1,283,031 1,476,000 1,686,000 1,878,000 2,058,000
CIA 1,500,000 1,700,000 1,700,000 1,800,000 1,800,000
MAILADNET 600,000 900,000 1,200,000 1,500,000 1,500,000
LOCAL SEARCHERS 530,000 750,000 1,000,000 1,300,000 1,500,000
NATIONAL SEARCH 2,331,920 2,524,000 2,414,000 2,622,000 2,942,000
CHANNELS 504,000 600,000 800,000 1,000,000 1,500,000
NEW PRODUCTS 200,000 500,000 800,000 900,000 1,200,000
----------------------------------------------------------
REVENUE 10,692,951 12,300,000 14,050,000 15,650,000 17,150,000
COST OF SALES
-------------
COMISSIONS REAL MEDIA 375,000 425,000 425,000 450,000 450,000
25.0%
COMISSIONS ON CASH 1,067,839 1,231,740 1,439,640 1,616,220 1,794,420
13.5%
COMISSIONS ON BARTER 83,397 95,940 109,590 122,070 133,770
6.5%
OPERATING EXPENSES
-----------------------
CONTENT PAYMENTS 151,200 300,000 400,000 500,000 750,000
BARTER 1,283,031 1,476,000 1,686,000 1,878,000 2,058,000
PAYROLL 1,340,000 1,485,000 1,580,000 1,656,000 1,712,000
MVS MEDIA 1,896,000 1,950,000 2,250,000 2,350,000 2,300,000
HM/product/mktg/agency/media 1,848,000 1,900,000 2,200,000 2,300,000 2,300,000
MANAGEMENT EXPENSES 458,336 527,366 603,789 673,086 738,591
MKTG expenses 687,504 738,312 845,304 942,320 1,034,027
ADVERTISING 1,784,400 2,224,000 2,364,000 2,472,000 2,742,000
---------------------------------------------------------
SUBTOTAL 9,448,470 10,600,678 11,929,092 12,771,405 13,684,617
EBITDA -281,756 -53,358 146,678 690,305 1,087,193
EBITDA Margin -3.07% -0.51% 1.21% 5.13% 7.36%
----------
(a) The development of new products include among others: Club Industrial Adnet
which is a vertical portal for Industrial activities and B to B- oriented.
Within these portal we will include chats and broadband applications. Local
searchers for each local city in Mexico and will outgrow for US Hispanic cities.
Adnet Americas which includes a local directory for Latin countries.
EXHIBIT E
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement"), dated as of __________, 2000,
is entered into by and between Adnet, S.A. de C.V. (the "Company") as employer,
herein represented by ____________________, and Xxxxxxx Xxxxxx Xxxxxx (the
"Executive"), as employee, on his own right, pursuant to the following:
R E P R E S E N T A T I O N S
I. The Company hereby represents that it is a corporation duly organized and
existing pursuant to Mexican Law with an address at Blvd. Xxxxxx Xxxxx Xxxxxxx
No. 147, Col. Chapultepec Xxxxxxx, Mexico, D.F., C.P. 11510, and is mainly
engaged in the business of providing Internet services, selling advertising on
the Internet, and providing other commercial, communication and information
services over the Internet.
II. Due to the temporary nature of the work, the Company needs to hire a person
with the experience, knowledge and abilities required for the position of
General Manager, during the period from the date hereof through December 31,
2004, during which time the Company would need the Executive's services to
effectuate a new commercial transaction that the Company has previously entered
into as well as to manage the day-to-day operations of the Company's business.
III. The Executive hereby represents that he has the necessary capacity and
expertise required by the Company to render services in accordance with the
terms described in Representation II and Section 1 of this Agreement and is
available through December 31, 2004.
IN VIEW OF THE FOREGOING, the parties execute this Agreement pursuant to
the following:
SECTIONS
SECTION 1. DESCRIPTION OF PERSONAL SERVICES.
1.1 POSITION. The Executive hereby agrees to render his personal services to the
Company in the position of General Manager, which position the Executive agrees
to perform at all times with the utmost diligence and efficiency. Executive
shall, except during periods of vacation, sick leave or other duly authorized
leave of absence, devote substantially all his business time, attention, skill
and energy to the Company and will cooperate fully with the board of directors
and senior management of the Company in the advancement of the best interests of
the Company. It is understood and agreed by the parties hereto that Executive
shall be free to work in his current positions for Xxxxx Xxxxxx Publicidad, S.A.
de C.V., Control Media, S.A. de C.V., BrandsBank Network and RM Internet, S.A.
de C.V. (collectively, the "Permitted Companies"), so long as his activities in
the Permitted Companies do not interfere with and are not inconsistent with
Executive's duties and obligations under this Agreement. Additionally, Executive
shall be free to engage in additional activities in connection with personal
investments and community affairs that are not inconsistent with Executive's
duties and obligations under this Agreement.
1.2 FUNCTIONS AND DUTIES. The Executive's main duties shall include, but not be
limited to, all the activities, duties and responsibilities which are generally
necessary or incidental to the position of General Manager, such as managing the
day-to-day operations of the Company's business subject to the supervision of
the Board of Directors of the Company and the provisions of the Stock Purchase
Agreement, dated January 31, 2000 (the "Stock Purchase Agreement"), by and among
StarMedia Network, Inc., Grupo MVS, S.A. de C.V., Xxxxx Xxxxxx Publicidad, S.A.
de C.V. and the Representative named therein. In addition to the above, the
Executive shall also perform any other activity connected or related to his main
duties, even though said activities may be required to be performed outside of
the workplace. The Executive understands and agrees that he may be required to
work together and coordinate efforts with other companies or affiliates of the
Company. The Executive acknowledges and expressly agrees, however, that, except
for Executive's current positions in the Permitted Companies and subject to the
limitations set forth in Section 1.1, he is not and will not become, under any
circumstance, an executive or employee of any entity other than the Company,
whether or not affiliated with the Company, and expressly acknowledges that the
only existing relationship is with the Company.
1.3 ADDITIONAL FUNCTIONS. It is expressly agreed and understood that the
Executive will only and exclusively report to the Company's board of directors,
that the above listing of functions, duties and responsibilities are not
exhaustive, and that the Executive must comply with all other functions, duties
and responsibilities, limitations or instructions given by the Company from time
to time or which are derived from, or related to, this Agreement or the Stock
Purchase Agreement. The Executive acknowledges that the Company has the right to
modify, at its discretion the functions, duties and responsibilities of the
Executive, provided that said modifications do not adversely affect the nature
of the Executive's position.
1.4 OBSERVANCE OF LAWS AND COMPANY'S POLICIES/FOREIGN CORRUPT PRACTICES ACT. The
Executive expressly agrees to adhere to all of the Company's professional
conduct and ethical business practices and work standards while on duty and to
comply with all applicable Mexican laws. The Executive further expressly agrees
that, during the Term (as defined in Section 17), he shall comply with the
Foreign Corrupt Practices Act.
SECTION 2. EXCLUSIVITY OF SERVICES.
The Executive expressly agrees that, except for Executive's current positions in
the Permitted Companies but only to the extent permitted by Section 1.1, he will
render his services exclusively to the Company and expressly acknowledges that
Executive's only existing employment relationship is with the Company. For the
duration of this Agreement, the Executive agrees that he shall not undertake,
whether for compensation or for no compensation, either directly or indirectly
(through any third parties, be it individuals or legal entities), activities
similar or analogous to those contemplated in this Agreement, or those which are
undertaken by the Company, for parties other than the Company, unless otherwise
specifically instructed by the Company and except for Executive's current
positions in the Permitted Companies but only to the extent permitted by Section
1.1. Furthermore, the Executive agrees not to invest in or acquire an interest,
shares and/or participation, directly or indirectly, in companies, entities,
assets, enterprises, business, ventures and/or institutions which conduct
activities analogous or similar to those contemplated in this Agreement or those
which constitute the corporate purposes of the Company, whether as owner,
part-owner, stockholder, partner, director, officer, trustee, representative,
agent, consultant or in any other capacity, on Executive's own behalf or on
behalf of any corporation, partnership or other business organization, or
recruit, or otherwise solicit or induce a person who is an employee or
consultant of the Company to terminate his or her employment with, or otherwise
cease his or her relationship with, the Company.
SECTION 3. CONFIDENTIAL EMPLOYEE.
Considering the confidential nature of the work to be performed by the
Executive, and that the legal requirements therefor are met, both parties
acknowledge and agree that the Executive is, and for all legal purposes, shall
be considered as a confidential employee.
SECTION 4. PROFIT SHARING.
The Executive understands and expressly agrees that given that he is the
employee of the highest level in the Company, he shall have no right to share in
the Company's profits, in accordance with Article 127 (I) of the Federal Labor
Law. Therefore, the Executive will have no right to claim any additional payment
on account of profit sharing.
SECTION 5. WORKPLACE.
Both parties agree that the place where the Executive shall provide his services
will be the Company's address set forth above. The Company and the Executive may
mutually agree on the relocation of the Executive to any area within the
Republic of Mexico or abroad.
SECTION 6. WORK SCHEDULE.
The Executive's work schedule shall be 40 hours per week, to be allocated by the
Executive along a five-day week in accordance with the needs of the Company, so
as to attain the greatest use of the human and material resources of the Company
and to allow the Executive to enjoy Saturday and Sunday as days of rest. The
Executive and the Company may mutually agree to modify said work schedule or the
form of allocation of working hours, in accordance to the Company's needs,
without liability for the Company, since the Executive expressly agrees that his
work schedule will be variable. Due to the nature and the duties to be performed
by the Executive, he shall not be subject to any attendance control.
SECTION 7. COMPENSATION.
7.1 GROSS ANNUAL SALARY. The Executive shall, while this Agreement remains in
effect, receive from the Company as compensation for the services to be rendered
and the obligations assumed hereunder, a gross annual salary of US$120,000
(One-hundred and twenty thousand 00/100 dollars of the United State of America),
comprised as follows:
Base annual salary $113,424.67
Christmas bonus (15 days) $ 4,931.50
Vacation premium (25%) $ 1,643.83
Total gross annual salary $120,000.00
Such compensation shall be payable in monthly installments, in arrears, on the
fifteenth and on the last day of every month (hereinafter a "Payday"). In the
event that a Payday is not a business day in Mexico, then the compensation shall
be paid on the preceding business day. Both parties expressly agree that the
Executive's compensation will be reviewed by the Company no later than December
31 of each year, to determine in its sole discretion whether any increase
thereof is warranted.
7.2 METHOD OF PAYMENT. The Executive expressly agrees that the Company may pay
the compensation by depositing his salary and any other amounts in the bank
account designated by the Executive, after all applicable withholdings, taxes
and reductions are effected.
7.3 CURRENCY OF PAYMENT. It is expressly agreed between the parties hereto that
all payments to be made by the Company to the Executive, including all payments
of compensation provided for in this Agreement, will be made in Mexican pesos
and shall be paid at the official rate of exchange in effect at the time payment
is made, unless otherwise agreed in writing by both parties.
SECTION 8. WEEKLY REST.
The Executive shall be entitled to one paid day-of-rest per week, which shall be
determined by the Company according to its needs. Said rest days will normally
be Saturdays and Sundays, though they can be modified if the Company's needs so
require. The parties agree that the compensation for such days of rest is
included in the compensation contemplated in Section 7 above, since said
compensation represents the total monthly compensation to the Executive.
SECTION 9. MANDATORY DAYS OFF.
The Executive shall have the right to enjoy the mandatory holidays provided in
Article 74 of the Federal Labor Law, with the salary for such holidays also
included in the salary set forth above, since said salary represents the total
annual compensation to the Executive.
SECTION 10. VACATIONS.
The Executive will be entitled to enjoy an annual vacation period of 20 days
during each full calendar year of this Agreedment (prorated for partial calendar
years); said days will be distributed during the year and determined according
to the Company's needs. It is expressly understood that such days shall not
accumulate each year in any manner. Should the Executive not enjoy said days in
each period, he may not claim such days afterwards, since the term for
exercising such right will have elapsed. The Executive shall request said
vacation period by written notice given to the Company's board of directors at
least two days in advance to the commencement of the vacation period. The salary
for such period and the vacation premium is also included within the gross
annual compensation set forth in Section 7 above.
SECTION 11. OVERTIME.
The Executive is prohibited from working overtime, except with the prior consent
of, and upon written instructions from the Company's chairman of the board. If
for any reason the Executive must work more hours than those included in the
work schedule contemplated in Section 6 above, the Executive shall first obtain
the Company's written instructions and consent therefor; otherwise, no amount
shall be paid to the Executive for any such overtime work.
SECTION 12. CHRISTMAS BONUS.
The Executive shall enjoy a Christmas bonus equivalent to 15 days' base salary,
payable no later than the twentieth day of December each year, pursuant to
Article 87 of the Federal Labor Law. Such amount that is also included within
the gross annual compensation set forth above established in Section 7 above.
SECTION 13. INTENTIONALLY OMITTED
SECTION 14. THE EXECUTIVE'S RECEIPT.
On each Payday, the Executive agrees to issue to the Company a receipt covering
the total amount of the compensation earned up through that date. The Executive
acknowledges and expressly agrees that the signature of said receipt shall be
deemed as an acknowledgment by the Executive that the compensation so received
covers the work performed theretofore, without any right by the Executive to
later require the payment of any accrued benefits in arrears for the respective
period. The signing of said receipt shall constitute a full release for the
Company of all salary and all other accred benefits in arrears for the
respective period to which the Executive may have been entitled for the services
performed through that date, regardless of whether the receipt omits a statement
to that effect.
SECTION 15. CONFIDENTIALITY.
15.1 The Executive understands that (a) prior to the date hereof, he has had
access to information and materials relating to the Company, and (b) after the
date hereof, before, and during the course of his employment hereunder, he may
have access to information and materials relating to the Company, as well as
other information and materials, not generally known in the trade that the
Company considers proprietary, confidential and to contain trades secrets. Such
information and materials ("Confidential Information") may include any
information relating to contractual negotiations, work-in-process, product
plans, customer lists, supplier contacts, computer programs, algorithms,
systems, business or financial affairs, methods of operation, transactions,
internal controls or security procedures, of either the Company, any of its
affiliates, or any existing or prospective vendor or customer of the Company or
any of its affiliates. Furthermore, the Executive understands that Confidential
Information may be such regardless of whether such information and materials
were furnished to the Executive by the Company or any of its affiliates or
developed in connection with or as a result of the Executive's performance of
services for the Company.
15.2 The Executive agrees during the course of his employment hereunder and
following termination thereof: (a) to treat all Confidential Information as
strictly confidential (b) not to disclose it or allow it to be disclosed to
anyone not having a "need to how" it on behalf of the Company, and not to anyone
outside of the direct employ of the Company, without the prior written consent
of the Chairman of the Board of Directors of the Company; (c) not to use any
Confidential Information except as required for the performance of his duties
for the Company; (d) not to copy any documents or media containing any
Confidential Information, or remove them from the premises of the Company or
premises where the Company is performing services, except as required in the
performance of his duties for the Company, in which event the Executive shall,
at all times, take all reasonable measures to prevent the disclosure or
non-authorized use of such Confidential Information. In the event the Executive
shall copy any such documents or media as may be permitted in accordance with
the foregoing, the copyright and other proprietary notices of the Company shall
be faithfully reproduced in all such copies. The Executive further agrees to
pre-clear with the Company any scholarly, educational or technical publications
or lectures written or prepared by him during the employment period or within
six months thereafter pertaining in any manner to his duties for or the research
and development of the Company.
15.3 After cessation of the Executive's employment hereunder, the Executive will
promptly return to the Company any and all documents, media and other materials
in tangible form containing any Confidential Information, without retaining any
copies thereof whatsoever, together with any and all other property and keys of
the Company, within his possession or control.
15.4 The Executive agrees to comply with all security procedures of the Company
including, without limitation, those regarding computer security and passwords;
not to access any computer of the Company, or of any client or vendor of the
Company or any of its affiliates, except as authorized; and not to access any
such computers in any manner after the cessation of the Executive's employment
hereunder. The Executive agrees to advise the Company promptly in the event he
learns of any such violation or unauthorized entry by others of any unauthorized
use, reproduction of, or tampering with the software, or other research and
development materials or equipment, of the Company or any of its affiliates by
others.
15.5 Attached here to as EXHIBIT A is a complete list of all inventions
discoveries, writings, developments, materials, techniques and development tools
predating the Executive's employment with the Company ("Pre-existing Executive
Developments") in which the Executive claims any intellectual property rights,
and the Executive warrants and agrees that (a) except as so listed, there are no
such Pre-existing Executive Developments, and (b) the Executive does not claim
any intellectual property rights in any of the Company's assets. The Executive
shall not use any of his own such Pre-existing Executive Developments in
connection with any work for the Company without prior disclosure thereof to the
Company and the Company's prior written consent, and the Company shall in any
event have a perpetual, royalty-free right to use, modify and distribute the
same as component of and/or to support the products of the Company and shall
have ownership of all derivative works and/or improvements conceived,
implemented or prepared by others based thereon.
15.6 The Executive acknowledges and agrees that all business opportunities (in
any way related to the then-existing or proposed business of the Company whether
or not then known by the Executive) presented to the Executive during the
employment period are and shall be owned by and belong exclusively to the
Company, and the Executive shall (a) promptly disclose any such business
opportunity to the Company and (b) execute and deliver to the Company, without
additional compensation, such instruments as the Company may require from time
to time to evidence its ownership of such business opportunity.
SECTION 16. TRAINING.
The Company agrees to train the Executive or to cause the Executive to be
trained, under the Training and Teaching Plan and Programs duly recorded with
the competent authorities.
SECTION 17. TERM.
The term (the "Term") of this Agreement commences on the execution hereof and
ends on December 31, 2004. From and after December 31, 2004, this Agreement
shall automatically and legally terminate, thereby terminating any employment
relationship between the Company and the Executive.
This Agreement is for a definite term and may only be suspended, rescinded or
terminated as provided by the Mexican Federal Labor Law, by the mutual agreement
of the parties hereto or as provided hereunder.
Both parties agree that the Company will have the discretionary right to
evaluate at any time the performance of Executive pursuant to the conditions and
requirements that the commercial transactions and day-to-day operations of the
Company's business requires. Therefore, the parties hereto agree that the
Executive's failure to fulfill his obligations hereunder would be a justified
cause for termination ("Cause"). Notwithstanding anything contained herein, the
parties hereto agree that the Company has the right to terminate Executive
without Cause or if Executive is deemed "disabled" under applicable Mexican law,
provided that, in each case, the Company pays Executive any severance payments
that are required to be paid to him under applicable Mexican law as a result of
his termination hereunder due to such reason.
SECTION 18. GOVERNING LAW AND ARBITRATION.
Both parties agree that, except as provided for herein, the provisions of the
Mexican Federal Labor Law shall apply. The parties expressly submit to the
jurisdiction of the State Conciliation and Arbitration Board for the Federal
District in connection with any dispute arising in connection with the
interpretation, enforcement of, and compliance with this Agreement.
SECTION 19. EXPENSES REIMBURSEMENT.
All costs and expenses incurred by the Executive in the performance of this
Agreement including all transportation, lodging and representation expenses,
shall be paid by the Company, so long as the Company has given Executive written
approval prior to the incurrence of the expenses in accordance with the
Company's policies and so long as Executive presents the Company with the
corresponding receipts.
SECTION 20. OTHER AGREEMENTS.
This Agreement prevails over, and supersedes, any other agreement entered in the
past, orally or in writing, between the Company and the Executive for the
services of the Executive.
SECTION 21. CONFLICTS OF INTEREST.
The Executive specifically covenants, warrants and represents to the Company
that the Executive has the full and complete right and authority to enter into
this Agreement, that the Executive has no agreement, duty, commitment or
responsibility of any kind or nature whatsoever with any corporation,
partnership, firm, company, joint venture or other entity or other person which
would conflict in any manner whatsoever with any of the Executive's duties,
obligations or responsibilities to the Company pursuant to this Agreement, that
the Executive is not in possession of any document or other tangible property of
any other person of a confidential or proprietary nature which would conflict in
any matter whatsoever with any of the Executive's duties, obligations or
responsibilities to the Company pursuant to this Agreement, and that the
Executive is fully ready, willing and able to perform each and all of the
Executive's duties, obligations and responsibilities to the Company pursuant to
this Agreement.
SECTION 22. NO WAIVER.
No omission, delay or failure on the part of either party in exercising any
rights hereunder, and no partial or single exercise thereof, will constitute a
waiver of such rights or of any other rights.
SECTION 23. RECITALS.
The Executive warrants that the representations contained in this Agreement as
they relate to the Executive are true and accurate representations and form an
integral part of this Agreement.
SECTION 24. INDEPENDENT LEGAL ADVICE.
The Executive acknowledges that he has been advised to obtain, and that he has
obtained, independent legal advice with respect to this Agreement and that he
understands the nature and legal consequences of this Agreement.
The Executive may not assign or delegate, in whole or in part, any of his
rights, duties, or covenants under this Agreement.
SECTION 25. WITHHOLDING OF TAXES AND OTHER DEDUCTIONS.
Any payments to the Executive pursuant to the terms of this Agreement shall be
reduced by such amounts as are required to be withheld with respect thereto
under all present and future federal, state and local tax laws and regulations
and other applicable laws and regulations.
SECTION 26. AMENDMENT.
This Agreement may be amended only by a written document signed by the parties
hereto.
SECTION 27. REPRESENTATIONS BY THE COMPANY.
For purposes of the Federal Labor Law, the Company represents that it is a
business corporation duly incorporated according to the laws of Mexico, engaged
in the business of providing Internet services, selling advertising on the
Internet and providing other commercial, communication and information services
over the Internet; that its principal place of business is Blvd. Xxxxxx Xxxxx
Xxxxxxx No. 147, Col. Chapultepec Xxxxxxx, Mexico, D.F., C.P. 11510. In turn,
the Executive represents that he is a Mexican national, of 39 years of age,
married, and that his address is 0 xx xx Xxxxx 000, Xxxxxxxxx X. Xxxxxx.
SECTION 29. PREVAILING LANGUAGE.
This Agreement has been executed in both English and Spanish; in case of any
conflict, the Spanish version shall prevail.
IN WITNESS WHEREOF, the parties having read and being well aware of its
contents and legal force have, executed this Agreement in Mexico City, Federal
District, on __________, 2000, in the presence of the undersigned witnesses.
THE "COMPANY" THE "EXECUTIVE"
ADNET, S.A. DE X.X. Xxxxxxx Moller Ubando
By: ________________________________ __________________________
Mr.______________
Legal Representative
WITNESS WITNESS
________________________________ ___________________________
EXHIBIT A
LIST OF PRE-EXISTING MATTER IN WHICH EXECUTIVE
CLAIMS INTELLECTUAL PROPERTY RIGHTS
The undersigned hereby certifies that the foregoing list is complete
and accurate in all respects, and understands that leaving the above space blank
will be understood as a certification that the undersigned has no such
pre-existing inventions, discoveries, writings, developments, materials,
techniques or development tools as are described in Section 15 of the attached
Agreement.
EXECUTIVE
Signature:____________________________
Xxxxxxx Xxxxxx Xxxxxx
EXHIBIT F
INDUCEMENT AGREEMENT
INDUCEMENT AGREEMENT
INDUCEMENT AGREEMENT, dated as of ___________, 2000 (this
"AGREEMENT"), by and among StarMedia Network, Inc., a Delaware corporation
("STARMEDIA"), and Xxxxxxx Xxxxxx Ubando ("MOLLER"). Capitalized terms used
herein without definition shall have the meanings assigned to them in the Stock
Purchase Agreement (as defined below).
W I T N E S S E T H
WHEREAS, Moller is an officer and key employee of Adnet, S.A. de C.
V., a SOCIEDAD ANONIMA DE CAPITAL VARIABLE organized in Mexico ("ADNET");
WHEREAS, Moller desires that StarMedia consummate the transactions
contemplated by that certain Stock Purchase Agreement, dated as of January 31,
2000, by and among StarMedia and the stockholders of Adnet (the "STOCK PURCHASE
AGREEMENT") pursuant to which StarMedia will purchase all of the outstanding
equity interests of Adnet;
WHEREAS, StarMedia is not willing to consummate the transactions
contemplated by the Stock Purchase Agreement unless Moller enters into this
Agreement; and
WHEREAS, StarMedia needs certain protections in order, INTER ALIA,
to prevent competitors of Adnet from gaining an unfair competitive advantage
over Adnet and/or diverting goodwill from Adnet.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained and in order to induce StarMedia to
consummate the transactions contemplated by the Stock Purchase Agreement, and
intending to be legally bound hereby, the parties hereto hereby agree as
follows:
ARTICLE I
REPRESENTATIONS AND WARRANTIES OF STOCKHOLDER
Moller hereby represents and warrants to and for the benefit of
StarMedia as follows:
Section 1.1. AUTHORIZATION, ENFORCEABILITY.
(a) Moller has full power and authority to execute, deliver and
perform this Agreement. This Agreement has been duly executed and delivered by
Moller. This Agreement constitutes a legal, valid and binding obligation of
Moller, enforceable against him in accordance with its terms, except as such
enforceability may be limited by applicable laws relating to bankruptcy,
insolvency, fraudulent conveyance, reorganization or affecting creditors' rights
generally and except to the extent that injunctive or other equitable relief is
within the discretion of a court.
(b) The execution, delivery, and performance by Moller of this
Agreement do not, and the consummation by Moller of the transactions
contemplated hereby, will not violate, conflict with, result in a breach of, or
constitute a default (or an event which would, with the passage of time or the
giving of notice or both, constitute a default) under, require any consent
under, or result in or permit the termination, amendment, modification,
acceleration, suspension, revocation or cancellation of, or result in the
creation or imposition of any Lien of any nature whatsoever upon any of the
assets of Moller or give to others any interests or rights therein under (1) any
indenture, mortgage, loan or credit agreement, license, instrument, lease,
contract, plan, permit or other agreement or commitment, oral or written, to
which Moller is a party, or by which Moller is bound or by which any of Moller's
assets may be bound or affected, or (2) any judgment, injunction, writ, award,
decree, restriction, ruling, or order of any court, arbitrator or other
Governmental Entity or any applicable constitution or Law, to which Moller is
subject or which is applicable to any of Moller's assets, except for such
violations, conflicts, breaches, defaults, failures to obtain consents,
terminations, amendments, modifications, accelerations, suspensions, revocations
and cancellations as would not individually or in the aggregate have a material
adverse effect on Moller's ability to perform his obligations under this
Agreement.
Section 1.2. CONSENTS, ETC. No filing, consent, waiver, approval or
authorization of any Government Entity or of any third party on the part of
Moller is required in connection with the execution, delivery and performance by
Moller of this Agreement.
ARTICLE II
CERTAIN RESTRICTIVE COVENANTS
Section 2. CERTAIN RESTRICTIVE COVENANTS.
(a) Moller hereby covenants that (i) during the period (the "INITIAL
RESTRICTED PERIOD") commencing as of the date of this Agreement and ending on
December 31, 2004 (except solely by virtue of the performance of Moller's
obligations under an employment agreement (the "EMPLOYMENT AGREEMENT") of even
date herewith between Moller and Adnet) and (ii) during the Additional
Restricted Period (as defined below) ((i) and (ii), collectively, the
"RESTRICTED PERIOD"), Moller will not (whether for his own account, as an
employee or otherwise on behalf of any other Person, or in any other capacity),
and will cause his Affiliates (as defined below) not to, directly or indirectly,
(x) engage in any of the Restricted Activities, in any country of the world in
which Adnet is then (or, during the Additional Restricted Period, was as of the
end of the Initial Restricted Period) engaged, or proposes (or, during the
Additional Restricted Period, proposed as of the end of the Initial Restricted
Period) imminently to be engaged, in such Restricted Activities or (y) without
limitation of clause (x), become or remain a stockholder of a corporation or a
member of a partnership, limited liability company or any other Person, or
otherwise own any equity interest in any Person, engaged in any of the
Restricted Activities in any such country, act as a consultant to any Person
with respect to any Restricted Activities in any such country or otherwise
provide any other assistance to any Person with respect to any Restricted
Activities in any such country; PROVIDED, however, that, notwithstanding the
foregoing, Moller and his Affiliates may own in the aggregate less than one
percent of the outstanding shares of stock of any corporation whose shares are
publicly traded on a United States or foreign stock exchange, the NASDAQ Stock
Market or any over-the-counter public securities market in the United States.
(b) In addition to and not in limitation of Section 2(a) hereof,
Moller covenants that during the Restricted Period, Moller will not, and will
cause his Affiliates not to, directly or indirectly, induce or attempt to induce
any customer, supplier, distributor, franchisee, licensee or other Person having
a business relationship with Adnet to cease doing business with Adnet. Further,
Moller covenants that during the Restricted Period he will not, and will cause
his Affiliates (except for Xxxxx Xxxxxx Publicidad, S.A. de C.V., Control Media,
S.A. de C.V., BrandsBank Network and RM Internet, S.A. de C.V.) not to, directly
or indirectly, solicit any customers of Adnet to do business with any Person
other than Adnet.
(c) Moller covenants that during the Restricted Period he will not,
and will cause his Affiliates not to, directly or indirectly, solicit any
individual that is, or within the prior six months prior thereto has been, an
officer or employee of Adnet to join the employ of, perform services for or
otherwise become associated with Moller or any other Person, or otherwise to
leave the employ of Adnet. Advertisements in newspapers or periodicals, and
other similar general solicitations, that are not specifically directed at
employees of Adnet shall not be deemed to constitute solicitations for the
purposes of this Section 2(c).
(d) In addition to and not in limitation of Section 2(c) hereof,
Moller covenants that during the Restricted Period, Moller will not, and will
cause his Affiliates not to, directly or indirectly, employ, hire or retain any
individual that is, or within the six months prior thereto has been, an officer
or employee of Adnet.
(e) The parties intend, and agree, that in addition to the foregoing
provisions of this Section 2, each of the covenants contained in Sections 2(a),
2(b), 2(c) and 2(d) shall be construed as a series of separate covenants: (i) in
the case of Section 2(a), one for each country of the world, one for each
province, state or similar subdivision in each such country, one for each county
and city included within each such state, province or similar political
subdivision, and, for each such country, state, province or similar subdivision,
county or city, one for the Initial Restricted Period and one for each one-year
period of the Additional Restricted Period, and (ii) in the case of Sections
2(a), 2(b) and 2(c), one for each one-year period of the Restricted Period.
(f) Moller hereby expressly recognizes that the provisions of
Sections 2(a), 2(b), 2(c), 2(d) and 2(e) (collectively, the "RESTRICTIVE
COVENANTS") are a reasonable and necessary protection of the immediate interests
of StarMedia and are of the essence of the Stock Purchase Agreement, and that
StarMedia would not consummate the transactions contemplated by the Stock
Purchase Agreement, and that StarMedia would not enter into this Agreement
without the inclusion of the Restrictive Covenants.
(g) If Moller (either directly or by virtue of the activities of any
of his Affiliates, as the case may be) breaches, or threatens to commit a breach
of, any of the Restrictive Covenants, StarMedia shall have the right and remedy,
which right and remedy is in addition to, and not in lieu of, any other rights
and remedies available to StarMedia under law or in equity, to have the
Restrictive Covenants specifically enforced by any court having jurisdiction,
including by temporary or permanent injunction, it being acknowledged and agreed
that any such breach or threatened breach will cause irreparable harm to
StarMedia and that money damages will not provide an adequate remedy to
StarMedia. Moller hereby confers non-exclusive jurisdiction to enforce the
Restrictive Covenants upon the courts of any jurisdiction within the
geographical scope of such Restrictive Covenants. Nothing in this Section 2(g)
shall be construed to limit the right of StarMedia to collect money damages in
the event of a breach of any Restrictive Covenant.
(h) Moller acknowledges and agrees that the Restrictive Covenants
are reasonable and valid in scope (geographical, temporal and otherwise) and in
all other respects and that it shall not raise any issue of reasonableness as a
defense in any proceeding to enforce any such Restrictive Covenants. In the
event that, notwithstanding the foregoing, a Restrictive Covenant shall be
deemed by any court to be unreasonably broad in any respect, it shall be
modified in order to make it reasonable and shall be enforced accordingly
provided that such modification shall provide for the maximum duration, scope or
area as will be enforceable. Without limitation of, and notwithstanding the
foregoing, in the event that, in any judicial proceeding, a court shall refuse
to enforce any provision of the Restrictive Covenants, then the unenforceable
provision shall be deemed eliminated from the provisions of the Restrictive
Covenants for the purpose of those proceedings to the extent necessary to permit
the remaining provisions of the Restrictive Covenants to be enforced. If any one
or more of the provisions of the Restrictive Covenants shall be held to be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality or
enforceability of the remaining provisions of the Restrictive Covenants in such
jurisdiction, or of the Restrictive Covenants in any other jurisdiction, shall
not be affected thereby.
(i) For purposes of this Agreement, the "ADDITIONAL RESTRICTED
PERIOD" shall mean (i) if Moller's employment with Adnet under the Employment
Agreement is terminated by Adnet for cause or by reason of disability at any
time, or if the employment is terminated by Adnet without cause at any time
after the second anniversary of the Closing Date, the period from the end of the
employment period (after giving effect to any such termination) through the
later of the fourth anniversary of the date of this Agreement or the second
anniversary of the end of the employment period, (ii) if Moller's employment
with Adnet under the Employment Agreement is terminated by Adnet without cause
between the first and second anniversaries of the Closing Date, the period from
the end of the employment period (after giving effect to any such termination)
through the first anniversary of the end of the employment period, or (iii) if
Moller resigns during the term of the Employment Agreement, the period from the
date of such resignation until the later of the fourth anniversary of the date
of this Agreement or the second anniversary of the end of the employment period,
it being understood that if the employment is terminated by Adnet without cause
prior to the first anniversary of the Closing Date, then there shall not be any
Additional Restricted Period.
(j) For purposes of this Agreement, the term "RESTRICTED ACTIVITIES"
shall mean activities which are substantially similar with the primary business
of Adnet conducted during Moller's employment by the Company, it being
understood and agreed that Adnet's current primary business consists of
activities related to the development of a directory of internet pages (search
engine) that provides supplementary community service (including e-mail and user
affinity points) to its user base. For purposes of this Agreement, the term
"AFFILIATE" (and, with a correlative meaning, "AFFILIATED") shall mean, with
respect to any Person, any other Person that directly, or through one or more
intermediaries, controls or is controlled by or is under common control with
such first Person. As used in this definition, "control" (including, with
correlative meanings, "controlled by" and "under common control with") shall
mean possession, directly or indirectly, of the power to direct or cause the
direction of management or policies (whether through ownership of securities or
partnership or other ownership interests, by contract or otherwise). For
purposes of this Agreement, the term "PERSON" shall mean any individual,
corporation, partnership, limited liability company, joint venture, trust,
unincorporated organization, other form of business or legal entity or
governmental entity.
(k) Moller acknowledges that the Employment Agreement contains
separate restrictive covenants, relating to Moller's employment relationship
with Adnet. Moller further acknowledges and agrees that such restrictive
covenants are not in limitation to any extent of the Restrictive Covenants.
ARTICLE III
MISCELLANEOUS
Section 3.1. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between the parties hereto pertaining to the subject matter hereof,
and supersedes all prior and agreements, understandings, negotiations and
discussions between the parties, whether oral or written, with respect to the
subject matter hereof.
Section 3.2. BENEFIT; ASSIGNMENT. This Agreement shall be binding
upon and inure to the benefit of and shall be enforceable by the parties hereto
and their respective successors and permitted assigns; PROVIDED, HOWEVER, that
Moller may not assign any of his rights hereunder without the consent of
StarMedia. Any assignment in violation of this Section 3.2 shall be null and
void AB INITIO.
Section 3.3. NO PRESUMPTION. StarMedia and Moller have participated
jointly in the negotiation and drafting of this Agreement. In the event any
ambiguity or question of intent or interpretation arises, this Agreement shall
be construed as if drafted jointly by StarMedia and Moller and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any of the provisions of this Agreement.
Section 3.4. NOTICES. All notices, requests, claims, demands and
other communications provided for herein shall be in writing and shall be deemed
given only if delivered to the party personally or sent to the party by
telecopy, by registered or certified mail (return receipt requested) with
postage and registration or certification fees thereon prepaid, or by any
nationally recognized overnight courier, addressed to the party at its address
set forth below:
If to StarMedia: StarMedia Network, Inc.
00 Xxxx 00xx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
Telecopier: (000) 000-0000
Attn: Xxxxxx X. Macedonia
If to Moller: Xxxxxxx Xxxxxx Xxxxxx
Blvd. Xxxxxx Xxxxx Xxxxxxx #147
Col. Xxxxxxxxxxx Xxxxxxx
Xxxxxx, X.X. 00000
Telecopier: (000) 000-0000
or to such other address as a party may from time to time designate in writing.
All notices, requests, claims, demands and other communications given to any
party hereto in accordance with the provisions of this Agreement shall be deemed
to have been given on the date of receipt.
Section 3.5. COUNTERPARTS; HEADINGS; DELIVERY BY FACSIMILE. This
Agreement may be executed in one or more counterparts, and by the different
parties hereto in separate counterparts, each of which when executed shall be
deemed an original, but all of which taken together shall constitute one and the
same Agreement. The Article and Section headings in this Agreement are inserted
for convenience of reference only and shall not constitute a part hereof or
affect in any way the meaning or interpretation of this Agreement. This
Agreement and any amendments hereto, to the extent signed and delivered by means
of a facsimile machine, shall be treated in all manner and respects as an
original agreement and shall be considered to have the same binding legal effect
as if it were the original signed version thereof delivered in person. At the
request of a party hereto, the other party hereto shall reexecute original forms
thereof and deliver them to the requesting party. No party hereto or to any such
amendment shall raise the use of a facsimile machine to deliver a signature or
the fact that any signature or agreement was transmitted or communicated through
the use of a facsimile machine as a defense to the formation or enforceability
of a contract and each such party forever waives any such defense.
Section 3.6. SEVERABILITY. If any term, provision, clause or part of
this Agreement or the application thereof under certain circumstances is held
invalid, illegal or incapable of being enforced by any Law or public policy, all
other terms, provisions and parts of this Agreement shall nevertheless remain in
full force and effect. Upon such determination that any term, provision or part
of this Agreement is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible in an
acceptable manner in order that the transactions contemplated hereby are
consummated as originally contemplated to the greatest extent possible. To the
extent permitted by applicable Law, each party waives any provision of Law which
renders any provision of this Agreement invalid, illegal or unenforceable in any
respect. Nothing in this Section 3.6 is intended to, or shall, limit (i) the
ability of any party to such document to appeal any court ruling or effect of
any favorable relying on appeal or (ii) the intended effect of Sections 2(h) or
3.7 hereof.
Section 3.7. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAWS. It is intended that Section 5-1401 of the New
York General Obligations Law shall apply to the choice of law contained in the
preceding sentence.
Section 3.8. SUBMISSION TO JURISDICTION; WAIVERS. The parties hereto
hereby irrevocably and unconditionally agree that:
(a) All suits, actions and proceedings arising out of or relating to
this Agreement shall be heard and determined in any New York state or Federal
court sitting in the City of New York and any appellate court from any thereof,
and each of the parties hereto hereby irrevocably submits to the exclusive
jurisdiction of such courts in any such suit, action or proceeding and
irrevocably waives, to the fullest extent it may effectively do so, the defense
of an inconvenient forum to the maintenance of any such suit, action or
proceeding and any objection to any such suit action or proceeding whether on
the grounds of venue, residence or domicile. A final judgment in any such suit,
action, or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or any other manner provided by law.
(b) Service of process in any such suit, action or proceeding may be
effected by mailing a copy thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to such party at its
address as provided in Section 3.4.
(c) The parties hereto hereby irrevocably and unconditionally
consent to service of process in the manner provided for the giving of notices
pursuant to this Agreement. In the case of Moller, service of process shall also
be made by personal delivery to Corporation Trust Center, 000 Xxxxxx Xxxxxx, Xxx
Xxxx, XX 00000. Nothing in this Agreement shall affect the right of either party
to serve process in any other manner permitted by law.
(d) Moller hereby irrevocably appoints Corporation Trust Center as
his authorized agent for service of process in any suit, action or proceeding
arising out or relating to this Agreement and agrees to maintain such
appointment until the tenth anniversary of the date hereof. Moller shall further
evidence such appointment by granting, prior to or at the Closing, an
irrevocable power of attorney in a public instrument (ESCRITURA PUBLICA)
executed before a Notary Public in Mexico in conformity with Article 2596 of the
Civil Code of the Federal District and the 1958 Protocol on the Uniformity of
Powers of Attorney to be Granted Abroad.
(e) Nothing in this Section 3.8(e) limits the right of StarMedia
under Section 2(g) to bring or maintain any suit, action or proceeding against
Moller in any court it desires.
Section 3.9. WAIVER. Any waiver with respect to this Agreement shall
be valid only if set forth in an instrument in writing signed by the party to be
bound thereby. Any waiver of any term or condition shall not be construed as a
waiver of any subsequent breach or a subsequent waiver of the same term or
condition, or a waiver of any other term or condition, of this Agreement. The
failure of any party to assert any of its rights hereunder shall not constitute
a waiver of any such rights.
Section 3.10. AMENDMENT. This Agreement may not be amended, modified
or supplemented except by an instrument in writing signed by, or on behalf of,
each of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first written above.
STARMEDIA NETWORK, INC.
By:___________________________________
Name:
Title:
XXXXXXX XXXXXX XXXXXX:
___________________________________
Xxxxxxx Xxxxxx Ubando
SCHEDULE 1
STOCKHOLDER NUMBER OF NUMBER % OF
FIXED SHARES OF VARIABLE COMPANY
OWNED SHARES OWNED
OWNED
Grupo MVS 255 1,020 51%
Xxxxx Xxxxxx 245 980 49%
Publicidad
SCHEDULE 2.10(b)(y)
1. the approval or amendment of the terms of any contract, agreement,
commitment or arrangement pursuant to which the Company grants, is to
grant or may be obligated to grant any security or additional security for
(x) any indebtedness for borrowed money (or other comparable liability) of
any Person or (y) the performance of any other material obligation of any
Person.
2. the issuance of any securities, options or other rights to acquire
securities by the Company.
3. approval or amendment of the terms of any contract, agreement,
commitment or arrangement pursuant to which the Company makes, is to make
or may be obligated to make any loan, or advance in the nature of a loan,
to any Person.
4. engaging in any business other than that contemplated by the Business
Plan, or any material change in the conduct of such business.
5. the commencement or abandonment by the Company of any litigation or
arbitration, or the settlement of any Company litigation or arbitration.
6. the approval or amendment of the terms of any contract, agreement,
commitment or arrangement in respect of any transaction between the
Company, on the one hand, and any officer or employee of the Company, or
any Affiliate or Associate of any such officer or employee, on the other
hand.
7. the hiring or termination of any officer of the Company.
8. the approval or amendment of any contract, agreement, commitment or
arrangement involving aggregate expenditures by the Company of more than
$50,000.
9. the approval or amendment by the Company of any employment contract or
the taking of any action by the Company under any employment agreement.
10. the approval of compensation for any Company employee whose annualized
compensation (including bonuses) could reasonably be expected to be in
excess of $80,000 per annum.
11. the approval of any contract, agreement, commitment or arrangement
pursuant to which the Company is or may be obligated to perform for a
period longer than one year.
12. engaging in any activities that will cause the current ratio (current
assets divided by current liabilities) of the Company as of the end of any
calendar quarter to be less than .8.
13. engaging in any activities that will cause the Company's stockholders'
equity, or partners' equity, as the case may be, as of the end of any
calendar quarter determined in accordance with GAAP, to be negative.
14. the creation of any subsidiaries of the Company or any of its
subsidiaries or issuance of any securities or other rights to acquire
securities in such entity.
15. taking any action by the Company under any of the Company Service
Agreements.
Note: References herein to the "Company" include the corporations or other
Persons, or divisions thereof, from time to time making up the Company.
SCHEDULE 3.1(d)
O CURRENT EQUITY OWNERSHIP OF ADNET:
FIXED SHARES VARIABLE SHARES TOTAL % OWNERSHIP
Grupo MVS, S.A. de C.V. 255 1,020 1,275 51%
Xxxxx Xxxxxx Publicidad 245 980 1,225 49%
TOTAL 500 2,000 2,000 100%
O PARTNERSHIP INTERESTS OF ADNET AS OF THE CLOSING DATE:
PARTNERSHIP INTERESTS TOTAL PESOS % OWNERSHIP
FIXED VARIABLE
Grupo MVS, 1 1 2 $1.581MM 51%
S.A. de C.V.
Xxxxx Xxxxxx 1 1 2 1.519MM 49%
Publicidad
TOTAL 2 2 4 $3.100MM 100%
O ADDRESSES OF CURRENT STOCKHOLDERS OF ADNET:
GRUPO MVS, S.A. DE C.V.
BLVD. XXXXXX XXXXX XXXXXXX NO. 147
COL. CHAPULTEPEC LOS XXXXXXX
X.X. 00000, XXXXXX, X.X.
XXXXXX
PH.: (000) 0-00-00-00
FAX.: (000) 0-00-00-00
XXXXX XXXXXX PUBLICIDAD, S.A DE C.V.
REFORMA NO. 3009
CUAJIMALPA, C.P. 00000
XXXXXX, D.F., MEXICO
Ph.: (000) 000-00-00
FAX: (000) 000-00-00
O CURRENT BOARD OF DIRECTORS OF ADNET:
Xx. Xxxxxxx Xxxxxx Xxxxxxxx President
Xx. Xxxxxxx Moller Ubando Vicepresident
Xx. Xxxxxx Xxxxxx Xxxxxxxx Secretary
Xx. Xxxxxx Xxxxxx Ubando VocalV2
SCHEDULE 3.2(a)
See attached list.
ADNET, S.A. DE C.V.
ESTADOS DE SITUACION FINANCIERA
AL 31 DE DICIEMBRE DE 1999 Y 1998
(EN MILES DE PESOS DE PODER ADQUISITIVO AL 31 DE DICIEMBRE DE 1999)
1999 % 1998 %
ACTIVO TOTAL 10,983 100% 9,089 100%
ACTIVO CIRCULANTE 2,784 25% 4,719 52%
EFECTIVO E INVESIONES TEMPORALES 377 3% 1,864 21%
CLIENTES Y DOCUMENTOS POR COBRAR (NETO) 709 6% 1,639 18%
OTRAS CUENTAS Y DOCUMENTOS POR COBRAR (NETO) 1,656 15% 1,216 13%
INVENTARIOS 0 0% 0 0%
OTROS ACTIVOS CIRCULANTES 42 0% 0 0%
XXXXX XXXXX 0 0% 0 0%
CUENTAS Y DOCUMENTOS POR COBRAR (NETO) 0 0% 0 0%
INVERSIONES EN ACCIONES DE SUBSIDIARIAS Y 0 0% 0 0%
ASOCIADOS NO CONSOLIDADES 0 0% 0 0%
OTRAS INVERSIONES 0 0% 0 0%
INMUEBLES, PLANTA Y EQUIPO (NETO) 2,973 27% 2,746 30%
INMUEBLES 0 0% 0 0%
MAQUINARIA Y EQUIPO INDUSTRIAL 0 0% 0 0%
OTROS EQUIPOS 3,773 34% 3,291 36%
DEPRECIACION ACUMULADA -800 -7% -545 -6%
CONSTRUCCIONES EN PROCESO 0 0% 0 0%
ACTIVO DIFERIDO (NETO) 5,226 48% 1,624 18%
XXXXX XXXXXXX 0 0% 0 0%
PASIVO TOTAL 15,701 100% 15,420 100%
PASIVO CIRCULANTE 4,916 31% 8,827 57%
PROVEEDORES 0 0% 0 0%
CREDITOS BANCARIOS 0 0% 0 0%
CREDITOS BURSATILES 0 0% 0 0%
IMPUESTOS POR PAGAR 39 0% 398 3%
OTROS PASIVOS CIRCULANTES 4,877 31% 8,429 55%
PASIVO A XXXXX XXXXX 0 0% 0 0%
CREDITOS BANCARIOS 0 0% 0 0%
CREDITOS BURSATILES 0 0% 0 0%
OTROS CREDITOS 0 0% 0 0%
CREDITOS DIFERIDOS 10,785 69% 6,592 43%
XXXXX XXXXXXX 0 0% 0 0%
CAPITAL CONTABLE -4,718 100% -6,330 100%
CAPITAL CONTRIBUIDO 1,393 -30% 404 -6%
CAPITAL SOCIAL PAGADO (NOMINAL) 1,230 -26% 281 -4%
ACTUALIZACION CAPITAL SOCIAL PAGADO 163 -3% 123 -2%
PRIMA EN VENTA DE ACCIONES 0 0
APORTACION PARA FUTUROS AUMENTOS DE CAPITAL 0 0
CAPITAL GANADO (PERDIDO) -6,112 130% -6,734 106%
RESULTADOS XXXXXXXXXX X XXXXXXX XX XXXXXXX -0,000 140% -2,205 35%
RESERVA PARA RECOMPRA DE ACCIONES 0 0% 0
EXCESO (INSUFICIENCIA) EN LA ACTUALIZACION DE
CAPITAL CONTABLE 0 0% 0 -0%
RESULTADO NETO DEL EJERCICIO 506 -11% -4,529 72%
0 0
ADNET, S.A. DE C.V.
ESTADO DE RESULTADOS COMPARATIVO
DEL 1 DE ENERO AL 31 DE DICIEMBRE DE 1999 - 1998
( EN MILES DE PESOS DE PODER ADQUISITIVO AL 31 DE DICIEMBRE DE 1999 )
REAL REAL
1999 % 1998 %
INGRESOS 26,302,739 67.34% 10,697,634 100.00%
Suscriptores 0 0.00% 0 0.00%
Publicidad 26,302,739 67.34% 10,697,634 100.00%
Equipos receptores y materiales 0 0.00% 0 0.00%
Senal 0 0.00% 0 0.00%
Xxxxx 0 0.00% 0 0.00%
INTERCOMPANIAS 12,755,100 32.66% 0 0.00%
Suscriptores 0 0.00% 0 0.00%
Publicidad 12,755,100 32.66% 0 0.00%
Equipos receptores y materiales 0 0.00% 0 0.00%
Senal 0 0.00% 0 0.00%
Xxxxx 0 0.00% 0 0.00%
TOTAL DE INGRESOS 39,057,839 100.00% 10,697,634 100.00%
COSTOS 1,514,659 3.88% 1,615,287 15.10%
Costo de transmision 1,514,659 3.88% 1,615,287 15.10%
Intercompanias 0 0.00% 0 0.00%
UTILIDAD BRUTA 37,543,180 96.12% 9,082,347 84.90%
GASTOS DE OPERACION
GASTOS DE OPERACION Y VENTA 23,749,437 60.81% 11,352,632 106.12%
Participaciones 0 0.00% 0 0.00%
Gastos laborales 2,598,174 6.65% 2,628,012 24.57%
Comisiones pagadas 2,006,236 5.14% 2,739,605 25.61%
Promocion y publicidad 16,577,941 42.44% 4,228,066 39.52%
Diversos 2,567,086 6.57% 1,756,949 16.42%
GASTOS DE ADMINISTRACION 2,214,889 5.67% 2,266,755 21.19%
Gastos laborales 1,261,475 3.23% 1,302,277 12.17%
Estimacion para cuentas malas 0 0.00% 0 0.00%
Mantenimiento 39,502 0.10% 133,330 1.25%
Honorarios 131,368 0.34% 146,420 1.37%
Diversos 782,545 2.00% 684,727 6.40%
TOTAL DE GASTOS 25,964,327 66.48% 13,619,387 127.31%
GASTOS INTERCOMPANIAS 10,500,000 26.88% 0 0.00%
TOTAL DE GASTOS DE OPERACION 36,464,327 93.36% 13,619,387 127.31%
EBITDA 1,078,853 2.76% -4,537,040 -42.41%
Depreciacion y amortizacion en costo de 0 0.00% 0 0.00%
transmision
Depreciacion y amortizacion en gastos de 790,758 2.02% 809,247 7.56%
operacion
TOTAL DEPRECIACION 790,758 2.02% 809,247 7.56%
UTILIDAD DE OPERACION 288,096 0.74% -5,346,287 -49.98%
COSTO INTEGRAL DE FINANCIAMIENTO -37,415 -0.10% -794,192 -7.42%
Intereses ganados -28,221 -0.07% -299,374 -2.80%
Intereses pagados 0 0.00% 0 0.00%
Fluctuacion cambiaria xxxx 3,868 0.00% 4,844 0.05%
Resultado por posicion monetaria -47,519 -0.12% -532,763 -4.98%
Intercompanias 34,457 0.09% 33,100 0.31%
OTROS GASTOS Y OTROS PRODUCTOS -180,172 -0.46% -146,501 -1.37%
Diversos -180,172 -0.46% -146,501 -1.37%
Intercompanias 0 0.00% 0 0.00%
IMPUESTOS POR PAGAR 0 0.00% 123,488 1.15%
ISR o IMPAC 0 0.00% 70,960 0.66%
PTU 0 0.00% 52,528 0.49%
UTILIDAD XXXX 505,683 1.29% -4,529,082 -42.34%
SCHEDULE 3.4(b)
None.
SCHEDULE 3.4(c)(A)
See attached list.
ADNET, S.A. DE C.V.
LISTA DE EQUIPOS CON IMPORTE MAYOR A $ 50,000.00
AL 31 DE ENERO DEL 2000
FIGURES IN MEXICAN PESOS AS OF DECEMBER 31, 1999
FECHA N(0) NOMBRE IMPORTE IMPORTE
ADQ. FACTURA PROVEEDOR CONCEPTO CONTABLE ADQUISICION
12/19/96 2670 SILICON GRAPHICS SA. DE C.V. INDY, 000 XXX X0000XX, XXX00, 64MB, 2.0GB 15,546.43 141,331.20
XXXXXXXXXX,000 XXX X0000XX XZ, 128MB, 2.0GB 23,557.51 214,159.20
CHALLENGE S 200MHZ R4400SC, OPORCE WS-1605 14,985.43 136,231.20
XXXXXXX, X0 0000-0000 9,891.53 89,923.00
INDIG02 HIGH IMPACT GRAPHICS, 250MHZ/2HB 38,170.44 347,004.00
EXTERNAL 4.0GB 4MM DIGITAL AUDIO SCSI TAPE
COSMO SUITE INCLUDES COSMO CREATE 1.0 COSMO
MPEG & CINEPAK ENCODERS FOR IRIX 5.3.
CENTRONICS 50-PIN SCSI-2 TO CENTRONICS
10/30/98 4135 SPERSA MEXICO, S.A. DE C.V. HEWLETT PACKARD NETSERVER MOD LH3, 2 PROCESAD 89,473.15 137,651.00
INTEL PENTIUM 000 XXX, 000 XXXXXXXXX XX MEM RAM
EXPANDIBLE 1 GIGABYTE CD-ROM 24X TECLADO MOUSE
FLOPPY DE 1.44MB TARJETA RED 10/100 BASE TX
NAVIGATOR PARA DIAGNOSTICO DEL SERVD, REMOT
XXXXXX XX XXXXX XXXXXXXXXX, 0 XXXXXX XXXXX
XXXX XX 4.2. GIGABYTES PARA SOPORTE DE RAID 5 POR
HARDWARE UNIDAD DE CINTA DAT DE 8 GIGABYTES
MONITOR ULTRA VGA COLOR DE 14
8/31/99 5119 ACER COMPUTEC MEXICO, S.A. C.V. AA9100B D PII400,256MB,5X4GB,4 PZ 89,995.50 99,995.00
AA9100B D PII400,256MB,5X4GB,4 PZ 89,995.50 99,995.00
GRAN TOTAL 371,615.50 1,266,289.60
========== ============
SCHEDULE 3.4(c)(B)
[To be provided by the Stockholders to Purchaser no later than February 7,
2000.]
SCHEDULE 3.4 (C)(B)
ADNET, S.A. DE C.V.
LISTA DE EQUIPOS CON IMPORTE MAYOR A US$2,500.00
AL 31 DE ENERO DEL 2000
IMPORTE IMPORTE
FECHA N(0) CONTABLE ADQUISICION
ADQ. FACTURA NOMBRE PROVEEDOR CONCEPTO (PESOS) (PESOS)
12/19/96 2670 SILICON GRAPHICS SA. DE C.V. INDY, 000 XXX X0000XX, XXX00, 64MB, 2.0GB 15,546.43 141,331.20
XXXXXXXXXX,000 XXX X0000XX XZ, 128MB,2.0GB 23,557.51 214,159.20
CHALLENGE S 200MHZ R4400SC, OPORCE WS-1605 14,985.43 136,231.20
XXXXXXX, X0 0000-0000 9,891.53 89,923.00
INDIG02 HIGH IMPACT GRAPHICS, 250MHZ/2HB 38,170.44 347,004.00
EXTERNAL 4.0GB 4MM DIGITAL AUDIO SCSI TAPE
COSMO SUITE INCLUDES COSMO CREATE 1.0 COSMO
MPEG & CINEPAK ENCODERS FOR IRIX 5.3.
CENTRONICS 50-PIN SCSI-2 TO CENTRONICS
10/30/98 4135 SPERSA MEXICO, S.A. DE C.V. HEWLETT PACKARD NETSERVER MOD LH3, 2 PROCESAD. 89,473.15 137,651.00
INTEL PENTIUM 000 XXX, 000 XXXXXXXXX XX MEM
RAM EXPANDIBLE 1 GIGABYTE CD-ROM 24X TECLADO
MOUSE FLOPPY DE 1.44MB TARJETA RED 10/100 BASE
TX NAVIGATOR PARA DIAGNOSTICO DEL SERVD,
REMOT XXXXXX XX XXXXX XXXXXXXXXX, 0 XXXXXX
XXXXX XXXX XX 4.2. GIGABYTES PARA SOPORTE DE
RAID 5 POR HARDWARE UNIDAD DE CINTA DAT DE 8
GIGABYTES MONITOR ULTRA VGA COLOR DE 14
8/31/99 5119 ACER COMPUTEC MEXICO, S.A. C.V. AA9100B D PII400,256MB,5X4GB,4 PZ 89,995.50 99,995.00
AA9100B D PII400,256MB,5X4GB,4 PZ 89,995.50 99,995.00
----------
7/29/99 104114 FOTO RIVIERA, S.A. DE C.V. PROYECTOR KODAK DIGITAL KDK DP-850 33,725.00 35,500.00
9/21/98 94294 RICOH MEXICANA, S.A. DE C.V. DIGITAL COPIER AFICIO 200 52,800.00 60,000.00
GRAN TOTAL 458,140.50 1,361,789.60
==========================
SCHEDULE 3.8(a)
List of patents, brands, Adnet copyrights and copyrights used by Adnet.
Brands: Adnet (registered in Mexico)
Mailadnet (registration in process in Mexico)
Patents: None
Adnet copyrights: None
Copyrights used by Adnet: None
SCHEDULE 3.8(a)(i)
None.
SCHEDULE 3.8(d)
None.
SCHEDULE 3.8(h)
Domains used by Adnet.
xxx.xxxxx.xxx.xx
xxx.xxxxxxxxx.xxx
xxx.xxxxxxxxx.xxx.xx
SCHEDULE 3.10(a)
See attached list.
ADNET, S.A. DE C.V.
RELACION DEL PERSONAL AL 31 DE ENERO DEL 2000.
NOMBRES PUESTO FECH_ING SUELDO OBSERVACION
XXXXXXX XXXXX XXXXXX XXXXX AUXILIAR CONTABLE 8/9/99 3,000.00
XXXXXXXXXX XXXXXXX XXXXXXXXX N. EJECUTIVO DE VENTAS 7/16/97 4,427.00
DE LA XXXX XXXXXXX XXXXXXXXX X. EJECUTIVO DE VENTAS 11/1/97 5,300.00 MAS COMISION
XXXXXXXX XXXX XXXXX XXXXXXX GERENTE COMERCIAL 1/1/97 5,300.00 MAS COMISION
XXXXX XXXXXXXX XXXXXX EJECUTIVO DE VENTAS 11/10/98 5,300.00 MAS COMISION
XXXXXXXX XXXXXXXX XXXXXXXX EJECUTIVO DE VENTAS 4/1/98 5,300.00 MAS COMISION
XXX XXXXXX XXXXXXX XXXXXX X. EJECUTIVO DE VENTAS 12/1/98 5,300.00 MAS COMISION
XXXX XXXXX XXXX GERENTE ADMINISTRATIVO 6/28/99 10,000.00
XXXXX XXXXXXX XXXXX XXXXXXX EJECUTIVO DE VENTAS 1/13/99 5,300.00 MAS COMISION
XXXXXX XXXXXXX XXXXXXXX SECRETARIA 5/1/98 6,000.00
XXXXX XXXXX XXXXXX GERENTE COMERCIAL 4/27/98 5,300.00 MAS COMISION
XXXXXXX XXXXXX XXXXXX CORDINADORA DE EVENTOS 7/12/99 7,800.00
XXXXXXX XXXXXX XXXXXX EJECUTIVO DE VENTAS 4/27/98 5,300.00 MAS COMISION
XXXXX XXXXX XXXXXXXXX RECEPCIONISTA 7/15/98 2,300.00
XXXXX XXXXX XXXXXX DIRECTOR COMERCIAL 3/18/97 13,600.00 MAS COMISION
XXXXXX XXXXXX XXXXXXXXX MENSAJERO 1/11/99 1,380.00
XXXXX SACRAMENTO XXXXXXX EJECUTIVO DE VENTAS 12/1/98 5,300.00 MAS COMISION
XXXXXXX AVILUZ XXXXX XXXXXXX EJECUTIVO DE VENTAS 5/1/99 5,300.00 MAS COMISION
SCHEDULE 3.10(b)
Independent contractors employed by Adnet.
Xxxxx Xxxxxx. Horoscope writer.
SCHEDULE 3.10(d)
None.
SCHEDULE 3.12
The Company has insurance policies with the following terms:
Seguros Tepeyac, S.A.
Ps.2,500,000 for Electronic Equipment
Ps. 350,000 for Multiple
SCHEDULE 3.13
List of verbal contracts with third parties.
Contracts with:
Microsoft
Xxxxx.xxx
Notimex
CNI canal 40
Consucorp
Artes y Letras de Mexico
Comunica Finanzas
Compaq
Oracle
Solar
Avantel
Adetel
SCHEDULE 3.14
None.
SCHEDULE 3.15(a)
The Company provides to its employees the benefits pertaining medical insurance
and retirement plans as mandated by Mexican law.
