Exhibit 10.33
PUT AND CALL AGREEMENT
among
STARMEDIA NETWORK, INC.
and
THE SEVERAL NOTEHOLDERS NAMED IN SCHEDULE I HERETO
Dated as of September 28, 2000
THIS AGREEMENT AND THE RIGHTS TO ACQUIRE (THE "RIGHTS") THE SHARES OF COMMON
STOCK, PAR VALUE, $0.001 PER SHARE, OF STARMEDIA NETWORK, INC. PURSUANT TO THIS
AGREEMENT (OR ANY OTHER SECURITY ISSUED IN SUBSTITUTION OF SUCH SHARES) HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE
SECURITIES LAWS OF ANY STATES, AND THESE RIGHTS MAY NOT BE SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION
THEREFROM UNDER SAID ACT AND LAWS, IF APPLICABLE. THE COMPANY, PRIOR TO
PERMITTING A TRANSFER OF THESE RIGHTS MAY REQUIRE AN OPINION OF COUNSEL OR OTHER
ASSURANCE IN FORM AND SUBSTANCE SATISFACTORY TO IT AS TO COMPLIANCE WITH, OR
EXEMPTION FROM, SUCH ACT AND LAWS.
TABLE OF CONTENTS
PAGE
ARTICLE I
PUT AND CALL OF GRATIS1 NOTES AND GRATIS1 WARRANTS
Section 1.1. Put and Call of the Gratis1 Notes Upon a Negotiated Change of Control.......... 1
Section 1.2. Put and Call of the Gratis1 Notes Upon a Hostile Change of Control............. 2
Section 1.3. Put or Call of Portion of Gratis1 Note......................................... 2
Section 1.4. Closing........................................................................ 3
Section 1.5 Non-Discriminatory Treatment................................................... 4
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 2.1. Organization, Qualifications and Corporate Power............................... 4
Section 2.2. Authorization of Agreements, Etc............................................... 5
Section 2.3. Validity....................................................................... 5
Section 2.4. SEC Reports.................................................................... 5
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE NOTEHOLDERS
Section 3.1. Corporate Power, Authorization, Validity....................................... 5
Section 3.2. Accredited Investor............................................................ 6
Section 3.3. Experience..................................................................... 6
Section 3.4. Access to Data................................................................. 6
Section 3.5. Investment..................................................................... 6
Section 3.6. Restricted Securities.......................................................... 7
ARTICLE IV
MISCELLANEOUS
Section 4.1. Expenses....................................................................... 7
Section 4.2. Survival of Agreements......................................................... 7
Section 4.3. Successors and Assigns......................................................... 7
Section 4.4. Notices........................................................................ 7
Section 4.5. Governing Law; Jurisdiction.................................................... 8
Section 4.6. Entire Agreement............................................................... 8
Section 4.7. Counterparts................................................................... 8
Section 4.8. Amendments..................................................................... 8
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TABLE OF CONTENTS
(continued)
PAGE
Section 4.9. Severability................................................................... 8
Section 4.10. Titles and Subtitles........................................................... 8
Section 4.11. Certain Defined Terms.......................................................... 9
Section 4.12. Legends........................................................................ 11
Section 4.13. WAIVER OF JURY TRIAL........................................................... 12
Section 4.14. Expiration of Options.......................................................... 12
SCHEDULE I Noteholders
ii
PUT AND CALL AGREEMENT, dated as of September 26, 2000 (this
"AGREEMENT"), by and among STARMEDIA NETWORK, INC., a Delaware corporation (the
"COMPANY"), and the several noteholders named in the attached Schedule I
(individually a "NOTEHOLDER" and collectively the "Noteholders"). Unless
otherwise defined herein, capitalized terms used herein shall have the meaning
set forth in Section 4.11 of this Agreement.
WHEREAS, pursuant to [the Note and Warrant Purchase Agreement, dated as
of July 18, 2000 (as amended or modified from time to time, the "NOTE PURCHASE
AGREEMENT"), among Gratis1, Inc., a Delaware corporation ("Gratis1"), and the
Purchasers listed in Annex I thereto,] the Noteholders, along with the other
Purchasers, have agreed to purchase from Gratis1 from time to time those certain
12% Convertible Promissory Notes in the aggregate principal amount of up to
$16,000,000 (collectively, the "12% NOTES") on the terms and conditions
contained therein;
WHEREAS, the Company owns a majority of the outstanding capital stock
of Gratis1 and will derive substantial direct and indirect benefits from the
transactions contemplated by the Note Purchase Agreement; and
WHEREAS, in order to induce the Noteholders to purchase from Gratis1
from time to time, on or after the date of this Agreement, 12% Notes in the
aggregate principal amount of up to $7,000,000 (collectively, the "GRATIS1
NOTES"), the Company has agreed, on the terms and conditions contained herein,
to purchase the Gratis1 Notes from the Noteholders in consideration for a
certain number of shares of the Company's Common Stock, $0.001 par value per
share, to be issued by the Company to the Noteholders (the "COMMON SHARES") or
such other assets or property in lieu of such Common Shares as provided in this
Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained in this Agreement, the parties agree as follows:
ARTICLE I
PUT AND CALL OF GRATIS1 NOTES AND GRATIS1 WARRANTS
Section 1.1. PUT AND CALL OF THE GRATIS1 NOTES UPON A NEGOTIATED CHANGE
OF CONTROL. (a) Not less than 12 Business Days prior to the proposed date for
the consummation of a Negotiated Change in Control, the Company shall send a
written notice (the "NOTICE OF NEGOTIATED CHANGE IN CONTROL") to each of the
Noteholders stating that a Negotiated Change of Control is scheduled to occur
and setting forth the proposed date of such Negotiated Change of Control and the
terms of any agreements with respect to such Negotiated Change of Control. Each
Noteholder may, by written notice to the Company on or before the date that is 5
Business Days after its receipt of the Notice of Negotiated Change in Control
(the "NEGOTIATED CHANGE IN CONTROL PUT NOTICE"), require the Company to purchase
all or any portion of the Gratis1 Notes held by such Noteholder. Any such
purchase shall be effected by the Company paying to such Noteholder the Note
Purchase Price for each such Gratis1 Note designated by such Noteholder in
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the Negotiated Change of Control Put Notice, on the date on which such
Negotiated Change in Control shall be consummated (the "NEGOTIATED CHANGE OF
CONTROL CLOSING DATE").
(b) If any Noteholder fails to deliver a Negotiated Change in
Control Put Notice with respect to any Gratis1 Note pursuant to Section 1.1(a)
above, then the Company may, by written notice to such Noteholder not less than
5 Business Days prior to the proposed date for such Negotiated Change of Control
(the "NEGOTIATED CHANGE IN CONTROL CALL NOTICE"), require such Noteholder to
sell to the Company all or any portion of the Gratis1 Notes held by such
Noteholder. Any such purchase shall be effected by the Company paying to such
Noteholder the Note Purchase Price for each such Gratis1 Note on the Negotiated
Change of Control Closing Date.
(c) In the event that the terms of the Negotiated Change in
Control set forth in the Notice of Negotiated Change of Control change in any
material respect, the Company shall send out a new notice and the Noteholders
shall have a period equal to the greater of 5 days or 3 Business Days from the
date of such new Notice of Negotiated Change in Control (i) to exercise their
option to cause the Company to purchase their Gratis1 Notes or (ii) in the event
any such Noteholder has previously elected to exercise its option, to rescind
such election, provided, however, that if such period expires other than on a
Business Day, the period shall be extended to the next occurring Business Day.
Section 1.2. PUT AND CALL OF THE GRATIS1 NOTES UPON A HOSTILE CHANGE OF
CONTROL. (a) Upon the occurrence of a Hostile Change in Control, the Company
shall promptly upon obtaining actual knowledge of such Change in Control, send a
written notice (the "NOTICE OF A HOSTILE CHANGE OF CONTROL") to each of the
Noteholders stating that a Hostile Change in Control has occurred. Each
Noteholder may, by written notice (the "HOSTILE CHANGE IN CONTROL PUT NOTICE")
to the Company on or before the date that is 5 Business Days after its receipt
of the Notice of a Hostile Change in Control, require the Company to purchase
all or any portion of the Gratis1 Notes held by such Noteholder. Any such
purchase shall be effected by the Company paying to such Noteholder, the Note
Purchase Price for each such Gratis1 Note, on the date which is the 5th day
following the date of the Hostile Change in Control Put Notice, or, if such day
is not a Business Day, on the next following Business Day (the "PUT CLOSING
DATE").
(b) If any Noteholder fails to deliver a Hostile Change in
Control Put Notice with respect to any Gratis1 Note pursuant to Section 1.2(a)
above, then the Company may, by written notice (the "HOSTILE CHANGE IN CONTROL
CALL NOTICE") to such Noteholder within 10 Business Days after the date of the
Notice of a Hostile Change in Control, require such Noteholder to sell to the
Company all or any portion of the Gratis1 Notes held by such Noteholder. Any
such purchase shall be effected by the Company paying to such Noteholder the
Note Purchase Price for each such Gratis1 Note, on the date which is the 5th day
following the date of the Hostile Change in Control Call Notice, or, if such day
is not a Business Day, on the next following Business Day (the "CALL CLOSING
DATE").
Section 1.3. PUT OR CALL OF PORTION OF GRATIS1 NOTE. In the event a
Noteholder or the Company desires to sell or purchase pursuant to Sections 1.1
and 1.2, as the case may be, only a
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portion of the Gratis1 Notes of such Noteholder, Noteholder hereby agrees, that
prior to any such sale or purchase, such Noteholder shall exchange its Gratis1
Note with Gratis1, for a Gratis1 Note in the principal amount (the "Purchased
Portion") being sold or purchased pursuant to Sections 1.1 and 1.2 and a Gratis1
Note in the principal amount equal to the excess of the original Gratis1 Note
over the Purchased Portion with respect to such Gratis1 Note.
Section 1.4. CLOSING. (a) If a Put Notice or Call Notice is delivered,
as the case may be, then the Company and the Noteholders shall proceed with the
closings of the purchase of the Gratis1 Notes on the applicable Negotiated
Change of Control Closing Date, Put Closing Date or Call Closing Date, as the
case may be (individually, a "CLOSING" and collectively the "CLOSINGS"). Each
Closing shall take place at the offices of Hughes Hubbard & Reed LLP, One
Battery Park Plaza, New York, New York 10004, at 10:00 a.m., New York time, on
the applicable Negotiated Change of Control Closing Date, Put Closing Date or
Call Closing Date, as the case may be, or at such other date and time as may be
agreed upon between the applicable Noteholder and the Company (each such date of
a Closing being referred to herein as a "CLOSING DATE").
(b) At each Closing, the applicable Noteholder shall deliver
to the Company the original Gratis1 Notes held by such Noteholder, free and
clear of all liens and encumbrances, duly endorsed to the Company or accompanied
by a duly executed instrument of transfer, together with the Noteholder Payment
Amount applicable to such Noteholder. As payment in full for such Gratis1 Notes
being purchased by it on a Closing Date under this Agreement, and against
delivery of the original Gratis1 Notes as aforesaid and Noteholder Payment
Amount on such Closing Date, the Company shall pay to such Noteholder the Note
Purchase Price. To the extent the Note Purchase Price includes securities, such
securities will contain an applicable securities law legend substantially
similar to the one set forth in Section 4.12.
(c) (i) The obligation of the Company to purchase and pay for
any Gratis1 Notes of any Noteholder on a Closing Date is, at its option, subject
to the satisfaction, on or before such Closing Date, of the following
conditions:
(A) The offer and sale of the Exchange
Shares (or any other securities issued in substitution
thereof) to such Noteholder at such Closing pursuant to this
Agreement shall be exempt from the registration requirements
of the Securities Act and the registration and/or
qualification requirements of all other applicable state
securities laws.
(B) Such Noteholder shall have delivered to
the Company the original Gratis1 Note, in each case free and
clear of all liens and encumbrances, duly endorsed to the
Company or accompanied by a duly executed instrument of
transfer and the Noteholder Payment Amount.
(ii) The obligation of each Noteholder to deliver its
Gratis1 Note to the Company is, at its option, subject to the satisfaction, on
or before the appropriate Closing Date, of the following conditions:
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(A) The Company shall have delivered to such
Noteholder the Note Purchase Price specified for such Gratis1
Note.
(B) The offer and sale of the Gratis1 Notes
to the Company at such Closing pursuant to this Agreement
shall be exempt from the registration requirements of the
Securities Act and the registration and/or qualification
requirements of all other applicable state securities Laws.
(d) The Company shall not be obligated to purchase, and the
Noteholders shall not be obligated to sell, any Gratis1 Notes to the extent that
such purchase or sale would violate any law, rule or regulation applicable to
the Company or the Noteholders or their respective businesses or assets, or
subject any of the foregoing to any injunction or other equitable remedy of any
court or government entity, PROVIDED, HOWEVER, that the Company or any
Noteholder, as applicable, shall have used its commercially reasonable efforts
to prevent the entry of any such injunction or other order and to appeal as
promptly as possible any such injunction or other order that may be entered;
PROVIDED FURTHER, HOWEVER, that if the Company or the Noteholder, as the case
may be, shall be legally prevented from making such purchase or sale at any
time, then the Company and the Noteholders, shall consummate the transactions
contemplated hereby within 10 days of being legally permitted to do so. The
Company and the Noteholders shall each use all reasonable efforts in cooperation
with each other to make promptly all filings, give all notices and secure all
consents, approvals and waivers that may be required in connection with the
purchase and sale of the Gratis1 Notes.
Section 1.5. NON-DISCRIMINATORY TREATMENT. With respect to any Gratis1
Notes subject to a Call Notice or Put Notice, in connection with any Change in
Control, the Company shall use its commercially reasonable efforts to cause the
Noteholders to receive the same consideration (whether cash, securities or other
rights and privileges) from such Change of Control as the other stockholders of
the Company.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Noteholders that:
Section 2.1. ORGANIZATION, QUALIFICATIONS AND CORPORATE POWER. The
Company is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Delaware and is duly licensed or
qualified to transact business as a foreign corporation and is in good standing
as a foreign corporation in each jurisdiction in which the nature of the
business transacted by it or the character of the properties owned or leased by
it requires such licensing or qualification, except for such failures to be so
qualified and in good standing which would not have a Material Adverse Effect.
The Company has the requisite corporate power and authority to own, lease and
operate its assets and properties and to carry on its business as now conducted
and to execute, deliver and perform this Agreement.
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Section 2.2. AUTHORIZATION OF AGREEMENTS, ETC. The execution and
delivery by the Company of this Agreement, the performance by the Company of its
obligations hereunder and the purchase of the Gratis1 Notes pursuant to this
Agreement have been duly authorized by all requisite corporate action on the
part of the Company, and do not violate (i) any provision of existing law
(assuming that the representations and warranties of the Noteholders contained
in Sections 3.2, 3.3, 3.4, 3.5 and 3.6 are true and correct), (ii) any existing
order of any court or other agency of government, (iii) the certificate of
incorporation or by-laws of the Company, or (iv) any provision of any indenture,
agreement or other instrument to which the Company or any of its properties or
assets is currently bound, or conflict with, result in a breach of, or
constitute (with due notice or lapse of time or both) a default under any such
indenture, agreement or other instrument, or result in the creation or
imposition of any lien, charge, restriction, claim or encumbrance of any nature
whatsoever (each a "LIEN") upon any of the Company's assets under any such
indenture, agreement or other instrument, or result in the creation or
imposition of any Lien upon any of the properties or assets of the Company,
except, with respect to the foregoing clause (iv) only, for such violations,
conflicts, breaches, defaults, or Liens which do not and could not reasonably be
expected to have a Material Adverse Effect.
Section 2.3. VALIDITY. This Agreement has been duly executed and
delivered by the Company and constitutes the legal, valid and binding obligation
of the Company, enforceable against the Company in accordance with its terms,
except as may be limited by bankruptcy, insolvency, fraudulent transfer or other
similar laws affecting creditors' rights generally and subject to general
principles of equity (including possible unavailability of specific performance
or injunctive relief and the general discretion of the court considering the
matter), regardless of whether enforceability is considered in a proceeding in
equity or at law.
Section 2.4. SEC REPORTS. The Company has made available to the
Noteholders the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1999 and Quarterly Reports on Form 10-Q for the fiscal quarters
ended March 31, 2000 and June 30, 2000 (collectively, the "SEC REPORTS"). The
SEC Reports, as of the date of filing thereof with the Securities and Exchange
Commission (or if amended or superseded by a filing prior to the date of this
Agreement, on the date of such filing), did not contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. Since June 30, 2000,
there has been no material adverse change in the business, financial condition
or results of operations of the Company and its subsidiaries, taken as a whole.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE NOTEHOLDERS
Each Noteholder, severally and not jointly, represents and warrants to
the Company that:
Section 3.1. CORPORATE POWER, AUTHORIZATION, VALIDITY. Such Noteholder
has the requisite power and authority to execute, deliver and perform this
Agreement. The execution and delivery by such Noteholder of this Agreement, the
performance by such Noteholder of its
6
obligations hereunder, and the sale of the Gratis1 Notes held by such Noteholder
pursuant to the terms of this Agreement, have been duly authorized by all
requisite action (corporate or otherwise) on the part of such Noteholder and do
not violate (i) any provision of existing law, (ii) any existing order of any
court or other agency of government, (iii) the certificate of incorporation or
by-laws (or similar governing instruments with different names) of such
Noteholder, or (iv) any provision of any indenture, agreement or other
instrument to which such Noteholder or any of its properties or assets is
currently bound, or conflict with, result in a breach of, or constitute (with
due notice or lapse of time or both), a default under any such indenture,
agreement or other instrument, or result in the creation or imposition of any
Lien upon any such Noteholder's assets under any such indenture, agreement or
other instrument, or result in the creation or imposition of any Lien upon any
of the properties or assets of such Noteholder except, with respect to the
foregoing clause (iv) only, for such violations, conflicts, breaches, defaults
or Liens which do not and could not reasonably be expected to have a material
adverse effect on the ability of such Noteholder to perform its obligations
hereunder. This Agreement has been duly executed and delivered by such
Noteholder and constitutes the legal, valid and binding obligation of such
Noteholder, enforceable against such Noteholder in accordance with its terms,
except as may be limited by bankruptcy, insolvency, fraudulent transfer or other
similar laws affecting creditors' rights generally and subject to general
principles of equity (including possible unavailability of specific performance
or injunctive relief and the general discretion of the court considering the
matter), regardless of whether enforceability is considered in a proceeding in
equity or at law.
Section 3.2. ACCREDITED INVESTOR. Such Noteholder is an "ACCREDITED
INVESTOR" within the meaning of Rule 501(a) of Regulation D promulgated under
the Securities Act of 1933, as amended (the "SECURITIES ACT"), and was not
organized for the specific purpose of acquiring the Exchange Shares (or any
other securities issued in substitution thereof).
Section 3.3. EXPERIENCE. Such Noteholder has sufficient knowledge and
experience in investing in companies similar to the Company in terms of the
Company's stage of development so as to be able to evaluate the risks and merits
of its investment in the Company and it is able financially to bear the risks
thereof.
Section 3.4. ACCESS TO DATA. Such Noteholder has had an opportunity to
discuss the Company's business, management and financial affairs with the
Company's management.
Section 3.5. INVESTMENT. Any securities that are issued to such
Noteholder pursuant to this Agreement will be acquired for its own account, not
as a nominee or agent, for the purpose of investment and not with a view to or
for sale in connection with any distribution thereof in violation of any federal
or state securities laws. Such Noteholder understands that (i) any such
securities may not have been registered under the Securities Act by reason of
their issuance in a transaction exempt from the registration requirements of the
Securities Act pursuant to Section 4(2) thereof or Rule 505 or 506 promulgated
under the Securities Act, (ii) such securities may have to be held indefinitely
unless a subsequent disposition thereof is registered under the Securities Act
or is exempt from such registration, (iii) such securities shall bear the legend
to
7
this effect as such legend is set forth in Section 4.12 hereof, and (iv) the
Company will make a notation on its transfer books to that effect.
Section 3.6. RESTRICTED SECURITIES. Such Noteholder understands that
the Exchange Shares (or any other securities issued in substitution thereof) may
be characterized as "restricted securities" under the Securities Act inasmuch as
they are being acquired from the Company or other applicable person in a
transaction not involving a public offering and that under the Securities Act
and applicable regulations thereunder, such securities may be resold without
registration under the Securities Act only in certain limited circumstances. In
this connection, such Noteholder represents that such Noteholder is familiar
with Rules 144 and 144A of the Securities and Exchange Commission, as presently
in effect, and understands that the Company is under no obligation to register
any of the securities issued hereunder.
ARTICLE IV
MISCELLANEOUS
Section 4.1. EXPENSES. Each party hereto will pay its own expenses in
connection with the transactions contemplated hereby, whether or not such
transactions shall be consummated.
Section 4.2. SURVIVAL OF AGREEMENTS. All covenants, agreements,
representations and warranties made in this Agreement shall survive (and not be
affected by) any Closing.
Section 4.3. SUCCESSORS AND ASSIGNS. All representations, covenants and
agreements contained in this Agreement by or on behalf of any of the parties
hereto shall bind and inure to the benefit of the respective successors and
assigns of the parties hereto whether so expressed or not; PROVIDED, HOWEVER,
that no Noteholder may transfer or assign any of its rights or obligations under
this Agreement in violation of applicable securities law and unless the Company
is given written notice by such Noteholder and its assignee of such transfer or
assignment and any such assignee shall, as a condition to such transfer or
assignment, execute and deliver to the Company a written instrument, in form and
substance acceptable to the Company, by which such assignee (i) represents that
such transfer or assignment is exempt from the registration requirements of the
Securities Act, (ii) agrees to become, and be bound by the obligations of, and
entitled to the benefits of, a Noteholder under this Agreement; and (iii) such
assignee shall make representations and warranties comparable to those contained
in Article III hereof; and PROVIDED FURTHER, HOWEVER, that the Company may not
assign its rights or obligations hereunder without the prior written consent of
the Noteholders.
Section 4.4. NOTICES. All notices, requests, consents and other
communications hereunder shall be in writing and shall be delivered in person,
mailed by certified or registered mail, return receipt requested, or sent by
telecopier or telex, addressed as follows:
(a) if to the Company, to it at StarMedia Network, Inc.
75 Varick Street, New York, New York 10013, Attention: General Counsel,
with a copy to Kenneth
8
Lefkowitz, Esq., Hughes Hubbard & Reed LLP, One Battery Park Plaza,
New York, New York 10004; and
(b) if to any Noteholder, at the address of such Noteholder
set forth in Schedule I, with a copy to Michael J. O'Brien, Esq.,
O'Sullivan Graev & Karabell, LLP, 30 Rockefeller Plaza, New York,
New York 10112;
or, in any such case, at such other address or addresses as shall have been
furnished in writing by such party to the others.
Section 4.5. GOVERNING LAW; JURISDICTION. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York.
Each of the Company and the Noteholders irrevocably submits to the exclusive
jurisdiction of (a) the Supreme Court of the State of New York, New York County,
and (b) the United States District Court for the Southern District of New York,
and the appellate courts therefrom, for the purposes of any suit, action or
other proceeding arising out of this Agreement or any transaction contemplated
hereby. Each of the Company and the Noteholders further agrees that service of
any process, summons, notice or document by U.S. registered mail to such party's
respective address set forth in Section 4.4 shall be effective service of
process for any action, suit or proceeding in New York with respect to any
matters to which it has submitted to jurisdiction in this Section 4.5. Each of
the Company and the Noteholders agrees not to plead or claim in any such court
that any such action, suit or proceeding brought in any such court has been
brought in an inconvenient forum.
Section 4.6. ENTIRE AGREEMENT. This Agreement, including the Schedule
hereto, constitutes the sole and entire agreement of the parties with respect to
the subject matter hereof and supersedes all prior agreements or understandings
between the parties, except any prior agreements relating to confidentiality of
disclosed information. The Schedule hereto is hereby incorporated herein by
reference.
Section 4.7. COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Section 4.8. AMENDMENTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same Noteholders.
Section 4.9. SEVERABILITY. If any provision of this Agreement shall be
declared void or unenforceable by any judicial or administrative authority, the
validity of any other provision and of the entire Agreement shall not be
affected thereby.
Section 4.10. TITLES AND SUBTITLES. The titles and subtitles used in
this Agreement are for convenience only and are not to be considered in
construing or interpreting any term or provision of this Agreement.
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Section 4.11. CERTAIN DEFINED TERMS. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined).
(a) "ACCRUED INTEREST" shall mean, on any Closing Date with
respect to a Gratis1 Note, the accrued and unpaid interest on such
Gratis1 Note as of such Closing Date.
(b) "BUSINESS DAY" shall mean any day that is not a Saturday,
Sunday, or legal holiday in the State of New York.
(c) "CALL NOTICE" shall mean either a Hostile Change in
Control Call Notice or a Negotiated Change in Control Call Notice
(d) A "CHANGE IN CONTROL" shall be deemed to occur on:
(1) the date that any person or group deemed a person
under Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act of
1934, as amended (the "EXCHANGE ACT"), other than the Company and its
Subsidiaries as determined immediately prior to that date or an
employee benefit plan of the Company or its Subsidiaries, has become
the beneficial owner, directly or indirectly (with beneficial ownership
determined as provided in Rule 13d-3, or any successor rule, under the
Exchange Act) of securities of the Company representing more than 50%
of the total combined voting power of all classes of stock of the
Company having the right under ordinary circumstances to vote at an
election of the Board of Directors of the Company (the "BOARD");
(2) the date on which any person or group deemed a
person under Sections 3(a)(9) and 13(d)(3) of the Exchange Act
(provided that neither the Company nor any of its Subsidiaries as
determined immediately prior to that date, nor an employee benefit plan
of the Company or its Subsidiaries shall be deemed such a person or
group), elects a majority of the members of the Board of Directors of
the Company;
(3) the date of consummation of the merger or
consolidation of the Company with another corporation where (i) the
stockholders of the Company, immediately prior to the merger or
consolidation, would not beneficially own, immediately after the merger
or consolidation, shares entitling such stockholders to more than 50%
of all votes (without consideration of the rights of any class of stock
to elect directors by a separate class vote) to which all stockholders
of the surviving corporation would be entitled in the election of
directors, or (ii) the members of the Board, immediately prior to the
merger or consolidation, would not, immediately after the merger or
consolidation, constitute a majority of the board of directors of the
surviving corporation; or
(4) the date on which the Company consummates a sale
of all or substantially all of its assets determined on a
consolidated basis.
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(e) "CURRENT MARKET PRICE" shall mean the average of the
reported last sales prices of a Common Share for the five consecutive
Trading Days before the date of the applicable Put Notice or Call
Notice, as the case may be. The reported last sales price of a Common
Share for each Trading Day shall be: (i) the reported last sales price
as reported on the National Market tier of The Nasdaq Stock Market; or
(ii) if the Common Shares are not listed or admitted to trading on the
National Market tier of the Nasdaq Stock Market at such time, in the
principal consolidated or composite transaction reporting system on the
principal national securities exchange on which the Common Shares are
listed or admitted to trading; or (iii) if the Common Shares are not
quoted on such National Market tier or any national securities
exchange, the average of the highest bid and lowest asked prices on
such day as reported on The Nasdaq Stock Market. Notwithstanding
anything to the contrary contained herein, the "Current Market Price"
for purposes of this Agreement shall in no event be less than $7.00 per
Common Share (subject to any adjustment for any stocksplits, dividends,
combination and similar events).
(f) "EXCHANGE SHARES" shall mean the Common Shares (or other
securities issued in substitution thereof) issued to the Noteholders
pursuant to Section 1.1(a) or 1.1(b) hereof.
(g) "HOSTILE CHANGE IN CONTROL" shall mean a Change in Control
resulting from any transaction, event or agreement to which the Company
has not consented and which has not been approved by the Board of
Directors of the Company as constituted immediately prior to that
Change of Control.
(h) "MATERIAL ADVERSE EFFECT" shall mean, when used with
respect to any representation, an occurrence, event or condition that
individually or in the aggregate is reasonably likely to be materially
adverse to the business, financial condition or results of operations
of the Company and its subsidiaries, taken as a whole.
(i) "NEGOTIATED CHANGE IN CONTROL" shall mean a Change in
Control resulting from a transaction, event or agreement negotiated by
the Company with any person and approved by the Board of Directors of
the Company.
(j) "NOTE PURCHASE PRICE" shall mean, on any Closing Date with
respect to a Gratis1 Note held by any Noteholder (i) in the event of a
Change in Control pursuant to clause (3) of the definition of "Change
in Control", the Post-Merger Consideration with respect to such Gratis1
Note or (ii) in all other circumstances, such number of Common Shares
equal to the quotient of (x) the sum of (A) the outstanding principal
amount of such Gratis1 Note, (B) Accrued Interest with respect to such
Gratis1 Note and (C) the Premium due with respect to such Gratis1 Note
DIVIDED BY (y) the Current Market Price, in each case as of such
Closing Date.
(k) "NOTEHOLDER PAYMENT AMOUNT" shall mean, on any Closing
Date with respect to any Gratis1 Note, an amount equal to the product
of (x) the par value of any Exchange Shares (or any other securities
issued in substitution of such shares) received
11
by such Noteholder multiplied by (y) the number of Exchange Shares (or
other securities issued in substitution of such shares) to be issued to
such Noteholder hereunder on such Closing Date with respect to such
Gratis1 Note.
(l) "PERSON" shall mean an individual, corporation, trust,
partnership, limited liability company, joint venture, unincorporated
organization, government agency or any agency or political subdivision
thereof, or other entity.
(m) "POST-MERGER CONSIDERATION" shall mean, with respect to a
Gratis1 Note held by any Noteholder, in the event of a Change in
Control under clause (3) of such definition (A) relating to any sale or
purchase pursuant to Section 1.1 in which the consideration to be
received by the holders of Common Stock in connection with such Change
in Control consists solely of cash, the outstanding principal amount of
such Gratis1 Note, plus the Accrued Interest with respect to such
Gratis 1 Note, plus the Premium with respect to such Gratis1 Note and
(B) in all other cases, such securities of the surviving entity
(and/or, if applicable, cash or other property) that such Noteholder
would have received if, immediately prior to such Change in Control,
such Noteholder held the number of Common Shares attributable to the
Note Purchase Price as determined in accordance with clause (ii) of the
definition of "Note Purchase Price".
(n) "PREMIUM" shall mean, on any Closing Date with respect to
any Gratis1 Note, the excess of (x) the amount of interest that such
Gratis1 Note would have accrued from the date of issuance thereof to
such Closing Date if the interest rate on such Gratis1 Note was 25% per
annum over (y) the amount of interest actually accrued on such Gratis1
Note from the date of issuance thereof to such Closing Date.
(o) "PUT NOTICE" shall mean either a Hostile Change in Control
Put Notice or a Negotiated Change in Control Put Notice.
(p) "TRADING DAY" shall mean a day on which each national
securities exchange on which the Common Shares are listed and The
Nasdaq Stock Market are open for business, PROVIDED that if no sales of
Common Shares take place on such day on the relevant exchange or stock
market determined hereunder, such day shall not be a Trading Day.
Section 4.12. LEGENDS. It is understood that the certificates
evidencing the Exchange Shares will the legends set forth below:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR THE SECURITIES LAWS OF ANY STATES, AND THESE SECURITIES
MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT AND LAWS, IF APPLICABLE.
THE COMPANY, PRIOR TO PERMITTING A TRANSFER OF THESE SECURITIES MAY REQUIRE AN
OPINION OF COUNSEL OR OTHER ASSURANCE IN FORM AND SUBSTANCE
12
SATISFACTORY TO IT AS TO COMPLIANCE WITH, OR EXEMPTION FROM, SUCH ACT AND LAWS.
The legend set forth in the immediately preceding paragraph above shall be
removed by the Company or other applicable person from any certificate
evidencing Exchange Shares upon delivery to the Company or other applicable
person of an opinion by counsel, reasonably satisfactory to the Company or other
applicable person, that a registration statement under the Securities Act is at
that time in effect with respect to the legended security or that such security
can be freely transferred in a public sale without such a registration statement
being in effect and that such transfer will not jeopardize the exemption or
exemptions from registration pursuant to which the Company or other applicable
person issued the Exchange Shares.
Section 4.13. WAIVER OF JURY TRIAL. Each of the Company and the
Noteholders hereby waives all right to trial by jury in any action, proceeding
or counterclaim with respect to, in connection with, or arising out of the
transactions contemplated by this Agreement or any document or instrument
delivered hereunder. ANY SUCH PERSON MAY FILE AN ORIGINAL COUNTERPART OR A COPY
OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE
PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
Section 4.14. EXPIRATION OF OPTIONS. The rights of a Noteholder to
cause the Company to purchase, and the right of the Company to cause the
Noteholders to sell, such Noteholder's Gratis1 Note, shall expire on September
26, 2002.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the Company and the Noteholders have executed this
Agreement as of the day and year first above written.
STARMEDIA NETWORK, INC.
By:
----------------------------------
Name:
Title:
CHASE EQUITY ASSOCIATES, LP
By: CHASE CAPITAL PARTNERS,
as Investment Manager
By:
----------------------------------
Name:
Title:
THE FLATIRON FUND 2000 LLC
By:
----------------------------------
Name:
Title:
FLATIRON ASSOCIATES II LLC
By:
----------------------------------
Name:
Title:
SCHEDULE I
NOTEHOLDERS
NAME AND ADDRESS:
- ----------------
Chase Equity Associates, LP
c/o Chase Capital Partners
1221 Avenue of the Americas
40th Floor
New York, New York 10022
Telephone: (212) 899-3470
Telecopy: (212) 899-3528
Attention: Susan Segal
The Flatiron Fund 2000 LLC
c/o Flatiron Partners LLC
257 Park Avenue South
12th Floor
New York, New York 10010
Telephone: (212) 228-3800
Telecopy: (212) 228-0552
Attention: Fred Wilson
Flatiron Associates II LLC
c/o Flatiron Partners LLC
257 Park Avenue South
12th Floor
New York, New York 10010
Telephone: (212) 228-3800
Telecopy: (212) 228-0552
Attention: Fred Wilson