EXHIBIT 10.17
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of December 27, 2000, by and between
StarMedia Network, Inc. (the "Company"), and Fernando J. Espuelas (the
"Executive").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the Company desires to continue the employment of the
Executive under the terms and conditions provided in this Agreement; and
WHEREAS, the Executive wishes to be so employed;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter set forth, the parties hereto hereby agree as follows:
1. EMPLOYMENT.
The Company agrees to employ the Executive, and the Executive agrees
to serve in the employ of the Company in the position and with the
responsibilities, duties and authority set forth in Section 2 and on the other
terms and conditions set forth in this Agreement. The Executive acknowledges and
agrees that he is an employee at will and that both the Executive and the
Company have the right to terminate the employment relationship at any time for
any lawful reason. The Executive acknowledges and agrees that no representative
of the Company may verbally change the at will employment relationship between
the Executive and the Company.
2. POSITION, DUTIES.
The Company shall employ the Executive as Chief Executive Officer of
the Company and the Executive will serve in the Company's employ in that
position. The Executive shall perform such duties, and have such powers,
authority, functions, duties and responsibilities for the Company as are
commensurate and consistent with the employment as Chief Executive Officer of
the Company. The Executive also shall have such additional powers, authority,
functions, duties and responsibilities as may reasonably be assigned to him by
the Company's Board of Directors (the "Board").
3. COMPENSATION.
3.1 SALARY. In consideration of the performance by the Executive of
the services set forth in Section 2 and his observance of the other covenants
set forth herein, the Company shall pay to the Executive, and the Executive
shall accept, a base salary (the "Base Salary") at an initial rate of $350,000
per annum, payable on a semi-monthly basis in accordance with the standard
payroll practices of the Company, which amount shall be increased, effective as
of each January 1 commencing in 2002, by an amount equal to 10% of the
immediately preceding Base Salary, and from time to time by such additional
amount, if any, that the Compensation Committee of the Board shall determine.
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3.2 PERFORMANCE BONUS. The Executive will be eligible to receive a
bonus (the "Performance Bonus") for each calendar year of employment, provided
he is in the employment of the Company through the last day of the year, payable
on or before March 31 of the following year. The Performance Bonus shall be
payable in the minimum amount of at least $150,000 upon the Executive's
achievement of objectives mutually agreed upon by the Executive and the
Compensation Committee of the Board in January of each calendar year.
3.3 TAX INDEMNITY. Should any of the payments of the Base Salary,
other incentive or supplemental compensation, benefits, allowances, awards,
payments (including the payment referred to in the following sentence),
reimbursements or other perquisites, or any other arrangement in the nature of
compensation (including the vesting of any awards or the acceleration of any
payments), singly, in any combination or in the aggregate, provided to the
Executive by the Company, whether or not provided for hereunder, be subject (as
determined below) to an excise or similar purpose tax pursuant to Section 4999
of the Code, or any successor or other comparable Federal, state or local tax
law by reason of being a "parachute payment" (within the meaning of Section 280G
of the Code) ("excise tax"), the Company shall pay to the Executive such
additional compensation as is necessary (after taking into account all Federal,
state and local taxes, including excise taxes, payable by the Executive as a
result of the receipt of such additional compensation) to place the Executive in
the same after tax position he would have been in had no such excise tax (or
interest or penalties thereon) been paid or incurred; provided, however, that no
such additional compensation shall be payable with respect to the Retention
Bonus payable pursuant to Section 9.1 hereof. In addition, but without
duplication of the benefit provided under the previous sentence, should the
Executive recognize income on account of the making and/or forgiveness of the
Credit referred to in Section 3.4 hereof (or any installment thereof) , the
Company shall pay to the Executive such additional compensation as is necessary
(after taking into account all Federal, state and local taxes payable by the
Executive as a result of the receipt of such additional compensation) to place
the Executive in the same after tax position he would have been in had the
making and forgiveness of the Credit not given rise to income recognition by the
Executive. In the case additional compensation is payable under either or both
of the preceding sentences, the Company shall pay such additional compensation
within the earliest to occur of:
(i) five (5) business days after the Executive notifies the Company
that the Executive intends to file a tax return taking the position that
such tax is due and payable in reliance on a written opinion of the
Executive's tax counsel (such tax counsel to be chosen by the Executive and
reasonably acceptable to the Company) that it is more likely than not that
such tax is due and payable; or
(ii) twenty-four (24) hours of any notice of or action by the Company
that it intends to take the position that such tax is due and payable; or
(iii) five (5) business days after the Executive notifies the Company
that any federal, state or local tax authority has taken the position that
such tax is due and payable and that the Executive intends to pay the tax.
The costs of obtaining the tax counsel opinion referred to in clause (i) of the
preceding sentence shall be borne by the Executive, and as long as such tax
counsel was chosen by the Executive in good faith and reasonably acceptable to
the Company, the conclusions reached in such opinion
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shall not be challenged or disputed by the Company. Without limiting the
obligation of the Company hereunder, the Executive agrees, in the event the
Company makes any payment pursuant to clause (iii) above, to negotiate with the
Company in good faith with respect to procedures reasonably requested by the
Company which would afford the Company the ability to contest the imposition of
such tax. If, after a payment of additional compensation under this Section 3.3,
it is subsequently determined that all or some portion of the excise tax or
income tax, as the case may be, is not payable by the Executive, the Executive
shall repay to the Company the amount of any overpayment of additional
compensation.
3.4 LINE OF CREDIT. (a) During the employment relationship, the
Company shall make available to the Executive a revolving line of credit (the
"Credit") in an amount up to $1,000,000, which shall bear interest from the date
upon which the Credit is issued to the Executive until repaid by the Executive
at a rate of 6.75%. The Credit issued to the Executive will be secured to the
extent permitted by Regulation U by shares of Company common stock owned by the
Executive, and otherwise will be non-recourse to the Executive. The Credit
issued to the Executive and any interest thereon will be forgiven by the Company
upon a Change of Control, provided the Executive is in the employ of the Company
on that date. The Company and the Executive shall enter into a loan agreement
substantially in the form of Exhibit A attached hereto setting forth the terms
of the Credit.
(b) For purposes hereof, "Change of Control" shall mean: (i) The
acquisition by any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) (a "Person") of beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) of greater than 50% by one Person
(or of at least 25% by one Person, or at least 35% by not more than four
unrelated Persons within a ninety (90) day period, when applicable to a Change
of Control referred to in Section 6 herein) of either (A) the then outstanding
shares of common stock of the Company (the "Outstanding Company Common Stock")
or (B) the combined voting power of the then outstanding voting securities of
the Company entitled to vote generally in the election of directors (the
"Outstanding Company Voting Securities"), or the making of any agreement with
the Company to effect the foregoing; provided, however, that for purposes of
this subsection (i), the acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any corporation controlled by
the Company shall not constitute a Change of Control; or
(ii) Individuals who, as of the date hereof, constitute the Board
(the "Incumbent Board") cease for any reason to constitute at least a majority
of the Board; or
(iii) The Company enters into an agreement with respect to a
reorganization, merger or consolidation or sale or other disposition of all or
substantially all of the assets of the Company (a "Business Combination"), in
each case, unless, following such Business Combination, (A) all or substantially
all of the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Common Stock and Outstanding Company
Voting Securities immediately prior to such Business Combination beneficially
own, directly or indirectly, more than 50% of, respectively, the then
outstanding shares of common stock and the combined voting power of the then
outstanding voting securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting from such Business
Combination (including, without limitation, a corporation which as a result of
such
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transaction owns all of the common stock of the Company or all or substantially
all of the Company's assets either directly or through one or more subsidiaries)
in substantially the same proportions as their ownership, immediately prior to
such Business Combination of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (B) no person,
company or other entity (excluding any corporation resulting from such Business
Combination or any employee benefit plan (or related trust) of the Company or
such corporation resulting from such Business Combination) beneficially owns,
directly or indirectly, 20% or more of, respectively, the then outstanding
shares of common stock of the corporation resulting from such Business
Combination or the combined voting power of the then outstanding voting
securities of such corporation except to the extent that such ownership existed
in the Company prior to the Business Combination and (C) at least a majority of
the members of the board of directors of the corporation resulting from such
Business Combination were members of the Incumbent Board at the time of the
execution of the initial agreement, or of the action of the Board, providing for
such Business Combination; or
(iv) Approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
4. EXPENSE REIMBURSEMENT.
During the employment relationship, the Company shall reimburse the
Executive for all reasonable and necessary out-of-pocket expenses incurred by
him in connection with the performance of his duties hereunder, upon the
presentation of proper accounts therefor in accordance with the Company's
policies.
5. BENEFITS.
During the employment relationship, the Executive will be eligible to
participate in all Executive benefit plans and programs offered by the Company
from time to time to its employees of comparable seniority, subject to the
provisions of such plans and programs as in effect from time to time.
6. TERMINATION OF EMPLOYMENT.
6.1 DEATH. In the event of the death of the Executive, the Company
shall, within five (5) business days following the date of termination, pay to
the estate or other legal representative of the Executive the Base Salary and
Performance Bonus provided for in Section 3, together with all other amounts
payable to the Executive hereunder, in each case to the extent accrued to the
date of the Executive's death and not theretofore paid. Rights and benefits of
the estate or other legal representative of the Executive under the benefit
plans and programs of the Company shall be determined in accordance with the
terms and conditions of such plans and programs. The estate or other legal
representative will not be required to repay any outstanding balance of the
Credit issued to the Executive, or any interest relating thereto, and shall be
entitled to the tax indemnity related to the Credit as described in Section 3.3.
Neither the estate or other legal representative of the Executive nor the
Company shall have any further rights or obligations under this Agreement.
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6.2 DISABILITY. If the Executive shall be unable to perform the
essential functions of his position, with or without reasonable accommodation,
by reason of a physical or mental impairment that is reasonably expected to be
permanent, this Agreement shall terminate immediately upon written notice to the
Executive. In the event of such termination, the Company shall, within five (5)
business days following the date of termination, pay to the Executive the Base
Salary and Performance Bonus provided for in Section 3, together with all other
amounts payable to the Executive hereunder, in each case to the extent accrued
to the date of such termination and not theretofore paid. Rights and benefits of
the Executive under the benefit plans and programs of the Company shall be
determined in accordance with the terms and conditions of such plans and
programs. If the Executive elects to continue participation in the Company's
health insurance coverage under the Consolidated Omnibus Budget Reconciliation
Act of 1986 ("COBRA"), the Company shall pay all premiums necessary to continue
the Executive's health insurance coverage for one (1) year after the date of the
Executive's termination of employment. The Executive will be required to repay
to the Company any outstanding balance of the Credit issued to the Executive,
and any interest related thereto, within sixty (60) days of such termination of
his employment. Neither the Executive nor the Company shall have any further
rights or obligations under this Agreement, except as provided in Section 7.
6.3 DUE CAUSE. (a) The employment of the Executive hereunder may be
terminated by the Company at any time for Due Cause (as hereinafter defined)
upon written notice to the Executive. If the Company terminates the Executive's
employment for Due Cause, the Executive shall have no further rights hereunder
after the date of termination, all obligations of the Company to provide
compensation and benefits (including, without limitation, the obligation to pay
the Base Salary and the Performance Bonus) shall cease, effective as of the date
of termination, except that any Base Salary and Performance Bonus, together with
all other amounts payable to the Executive hereunder, accrued as of such date
and not theretofore paid shall, within five (5) business days following the date
of termination, be paid to the Executive. The Executive will be required to
repay to the Company any outstanding balance of the Credit issued to the
Executive, and any interest related thereto, within thirty (30) days of the
termination of his employment for Due Cause. Rights and benefits of the
Executive under the benefit plans and programs of the Company shall be
determined in accordance with the terms and conditions of such plans and
programs. Neither the Executive nor the Company shall have any further rights or
obligations under this Agreement, except as provided in Sections 7 and 8.
(b) For purposes hereof, "Due Cause" shall mean (i) the Executive's
final conviction of a felony; (ii) the Executive's continuing to engage in
conduct which has caused or is reasonably likely to cause, demonstrable and
serious injury to the Company after having been given written notice of such
determination by the majority of the Board and a reasonable opportunity to cure,
which curative period shall not be less than sixty (60) days; or (iii) the
Executive's continuing failure to substantially perform the lawful directives of
the Board (consistent with the provisions of this Agreement) or his duties and
responsibilities in accordance with the provisions of this Agreement (except by
reason of the Executive's incapacity due to physical or mental illness or
injury) after having been given written notice of such determination by the
majority of the Board and a reasonable opportunity to cure, which curative
period shall not be less than sixty (60) days, which written notice specifically
identifies the provision of this Agreement which the Company contends that the
Executive has continually failed to
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substantially perform or the directive that the Executive has not followed, the
bases for the majority of the Board's determination as set forth in the notice
and the specific nature of the corrective action that the majority of the Board
proposes that the Executive take; provided, that for purposes of this clause,
the Company shall not have Due Cause to give such notice or thereafter terminate
the Executive's employment if such act or omission was taken or omitted to be
taken by an officer or employee of the Company other than the Executive or the
act or omission was taken or omitted by the Executive with the concurrence of a
majority of the Board or the act or omission was taken or omitted by the
Executive in good faith with a reasonable belief that the act or omission was
authorized by a majority of the Board or otherwise in the interest of the
Company.
6.4 TERMINATION BY THE COMPANY WITHOUT DUE CAUSE. (a) The Company may
terminate the Executive's employment at any time for whatever reason it deems
appropriate or without reason; provided, however, that in the event that such
termination is not pursuant to Section 6.1 (Death), 6.2 (Disability), or 6.3
(Due Cause):
(i) The Company shall, within five (5) business days following
the date of termination, pay to the Executive the Base Salary and Performance
Bonus provided for in Section 3, together with all other amounts payable to the
Executive hereunder, in each case to the extent accrued to the date of
termination and not theretofore paid to the Executive;
(ii) The Executive will not be required to repay any outstanding
balance of the Credit issued to the Executive, or any interest relating thereto,
and the Company shall, within five (5) business days following the date of
termination, pay to the Executive an amount equal to: 200% of the sum of (A) the
Executive's Base Salary applicable to the calendar year in which such
termination takes place and (B) the most recent Performance Bonus paid to the
Executive; or 300% of the sum of (A) the Executive's Base Salary applicable to
the calendar year in which such termination takes place and (B) the most recent
Performance Bonus paid to the Executive, if such termination occurs after a
Change of Control; and
(iii) The Company shall permit the Executive to exercise, for a
period of not less than 12 months following the date of termination, any vested
stock options which have a strike price greater than 50 cents per share.
(b) If the Company terminates the Executive's employment in accordance
with this Section 6.4, the rights and benefits of the Executive under the
benefit plans and programs of the Company shall be determined in accordance with
the terms and conditions of such plans and programs. If the Executive elects to
continue participation in the Company's health insurance coverage under the
Consolidated Omnibus Budget Reconciliation Act of 1986 ("COBRA"), the Company
shall pay all premiums necessary to continue the Executive's health insurance
coverage for one (1) year after the date of the Executive's termination of
employment. Neither the Executive nor the Company shall have any further rights
or obligations under this Agreement, except as provided in Section 7.
6.5 TERMINATION BY THE EXECUTIVE FOR GOOD REASON. (a) The employment
of the Executive hereunder may be terminated by the Executive for Good Reason
(as hereinafter defined) upon sixty (60) days written notice to the Company;
provided, however, that this Agreement may not be terminated by the Executive
for Good Reason, if the Company has cured
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the breach of which it has been notified prior to the expiration of said sixty
(60) days. If the Executive terminates his employment for Good Reason:
(i) The Company shall, within five (5) business days following
the date of termination, pay to the Executive the Base Salary and Performance
Bonus provided for in Section 3, together with all other amounts payable to the
Executive hereunder, in each case to the extent accrued to the date of
termination and not theretofore paid to the Executive;
(ii) The Executive will not be required to repay any outstanding
balance of the Credit issued to the Executive, or any interest relating thereto,
and the Company shall, within five (5) business days following the date of
termination, pay to the Executive an amount equal to: 200% of the sum of (A) the
Executive's Base Salary applicable to the calendar year in which such
termination takes place and (B) the most recent Performance Bonus paid to the
Executive; or 300% of the sum of (A) the Executive's Base Salary applicable to
the calendar year in which such termination takes place and (B) the most recent
Performance Bonus paid to the Executive, if such termination occurs after a
Change of Control; and
(iii) The Company shall permit the Executive to exercise, for a
period of not less than 12 months following the date of termination, any vested
stock options which have a strike price greater than 50 cents per share.
(b) If the Executive terminates his employment in accordance with this
Section 6.5, the rights and benefits of the Executive under the benefit plans
and programs of the Company shall be determined in accordance with the terms and
conditions of such plans and programs. If the Executive elects to continue
participation in the Company's health insurance coverage under the Consolidated
Omnibus Budget Reconciliation Act of 1986 ("COBRA"), the Company shall pay all
premiums necessary to continue the Executive's health insurance coverage for one
(1) year after the date of the Executive's termination of employment. Neither
the Executive nor the Company shall have any further rights or obligations under
this Agreement, except as provided in Section 7.
(c) For purposes hereof, "Good Reason" shall mean: (i) any violation
or breach by the Company, in any material respect, of the provisions of Sections
3 or 9 of this Agreement; (ii) the assignment to the Executive of duties
inconsistent in any material respect with the Executive's role with the Company
(including titles, authority, duties or responsibilities inconsistent in any
material respect with such role) or the taking of any action that is the
equivalent of a constructive discharge; (iii) relocation of the Executive
outside of the New York metropolitan area; or (iv) a change in the Executive's
reporting relationships.
6.6 TERMINATION BY THE EXECUTIVE WITHOUT GOOD REASON. If the Executive
terminates his employment with the Company for a reason other than for Good
Reason, the Executive shall have no further rights hereunder after the date of
termination, all obligations of the Company to provide compensation and benefits
(including, without limitation, the obligation to pay the Base Salary and the
Performance Bonus) shall cease, effective as of the date of termination, except
that any unpaid Base Salary and Performance Bonus, together with all other
amounts payable to the Executive hereunder, in each case to the extent accrued
as of such date and not theretofore paid shall be paid to the Executive within
five (5) business days following such termination. The Executive will be
required to repay to the Company any outstanding
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balance of the Credit issued to the Executive, and any interest related thereto,
within thirty (30) days of the termination of his employment. Rights and
benefits of the Executive under the benefit plans and programs of the Company
shall be determined in accordance with the terms and conditions of such plans
and programs. Neither the Executive nor the Company shall have any further
rights or obligations under this Agreement, except as provided in Section 7.
7. CONFIDENTIAL INFORMATION.
7.1 NONDISCLOSURE. The Executive acknowledges that the Confidential
Information was acquired and will continue to be acquired by the Company at
great expense and constitutes trade secrets of the Company, and that irreparable
injury will result to the Company from unauthorized disclosure of Confidential
Information. The Executive shall not use any Confidential Information or
disclose, publish or otherwise make available any Confidential Information to
third parties at any time during or after the term of the Executive's
employment, except in pursuance of the business of the Company. The Executive
further agrees that all Confidential Information, together with all notes and
records relating thereto, and all copies, duplicates, reproductions, facsimiles
or excerpts thereof in the Executive's possession, are the exclusive property of
the Company and will be returned promptly to the Company upon the termination of
the Executive's employment. In addition, the Executive agrees to return promptly
to the Company upon the conclusion of the Executive's employment (or at the
Company's option irretrievably destroy or erase) all reports, files, memoranda,
records and software, credit cards, cardkey passes, door and file keys, computer
access codes or disks, instructional material, and other physical or personal
property which the Executive received or prepared in connection with the
Executive's employment with the Company. The Executive's obligations of
confidentiality hereunder will survive the termination of this Agreement, until
and unless any such Confidential Information becomes, through no fault of the
Executive, generally known to the public or the Executive is required by law to
make disclosure (after giving the Company notice and an opportunity to contest
such requirement). The Executive's obligations under this Section are in
addition to, and not in limitation or preemption of, all other obligations of
confidentiality which the Executive may have to the Company under general legal
or equitable principles.
7.2 CONFIDENTIAL INFORMATION DEFINED. For the purposes hereof, the
term "Confidential Information" shall include, but is not limited to, all
information acquired by the Executive in the course of his employment in any way
concerning any existing services, hardware and software products and hardware
and software in various stages of research and development, plans, projects,
activities, research, know-how, trade secrets, trade practices, clients,
customers, specifications, drawings, sketches, models, samples, proprietary
data, client or customer lists, technology, documentation relating to software
or computer systems, source code, object code methodologies, product
development, distribution plans, contractual arrangements, profits, sales,
pricing policies, operational methods, technical processes, business policies,
practices and other business affairs and methods, plans for future developments
and other technical, business and financial information, and information
received from third parties that the Company is obligated to treat as
confidential or proprietary, which can be communicated by any means whatsoever,
including without limitation oral, visual, written and electronic transmission.
The Executive understands that the foregoing is not an exhaustive list and that
Confidential Information will also include any other information or materials
identified as confidential or proprietary or which the Executive knows or has
reason to know has such status; PROVIDED,
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HOWEVER, that Confidential Information shall not include information that is or
becomes publicly known through no breach of this Agreement by the Executive, has
been approved for release by prior written consent of the Company, or has been
disclosed pursuant to a requirement of a government agency or of law.
8. INTERFERENCE WITH THE COMPANY.
8.1 COMPETITION. The Executive agrees that during the employment
relationship with the Company, and for a period of one (1) year after the
termination of such employment if the Executive is terminated for Due Cause (as
provided in Section 6.3), the Executive will not, directly or indirectly, engage
in a competing business. For purposes of this Agreement, the Executive shall be
deemed to be engaged in a competing business only if the business is a
pan-regional, community based, consumer oriented, internet service focused
primarily on Latin America, and the Executive is an employee, officer, director,
partner or consultant of such competing business or has an impermissible
financial interest therein. For purposes of this Agreement, the Executive shall
be deemed to have an impermissible financial interest in a competing business
only if Executive is a partner or shareholder therein; PROVIDED, HOWEVER, that
the Executive shall not be deemed to have an impermissible financial interest in
a competing business if the Executive (i) during the employment relationship
with the Company, beneficially owns less than one percent (1%) of the voting
securities of such competing business and such business is publicly traded, and
(ii) following the termination of such employment relationship, beneficially
owns (A) less than five percent (5%) of the voting securities of such competing
business, if such business is publicly traded, or (B) less than three percent
(3%) of the voting securities of such competing business, if such business is
not publicly traded.
8.2 EXTENSION. In the event of the Executive's non-compliance with any
of the obligations under this Section, the duration of such obligations shall be
extended by the duration of the period of non-compliance.
8.3 REASONABLENESS OF COVENANTS. The Executive acknowledges that the
services to be rendered to the Company are of a special and unique character and
that the restrictions specified in Sections 7 and 8 of this Agreement are
reasonable. The Executive acknowledges that the amount of compensation reflects
the Executive's agreement in Sections 7 and 8, and acknowledges that the
Executive will not be subject to undue hardship by reason of the agreements set
forth in this Agreement.
8.4 REMEDIES. The Executive recognizes that a breach of his
obligations under Sections 7 or 8 of this Agreement would cause irreparable harm
to the Company and, provided that as a precondition the Company has complied
with all of its obligations under this Agreement, including, without limitation,
the payment of all sums that are due and payable to the Executive hereunder, the
Company shall be entitled to a preliminary injunction enjoining any violations
thereof as a non-exclusive remedy.
9. SPECIAL EVENT BONUSES.
9.1 CHANGE OF CONTROL. In the event of a Change of Control, the
Executive shall receive a bonus (the "Retention Bonus") in an amount equal to
300% of the sum of: (A) the Executive's Base Salary applicable to the calendar
year in which the Retention Bonus is paid and
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(B) the most recent Performance Bonus paid to the Executive, payable if the
Executive remains in the active employ of the Company until the first
anniversary of the Change of Control.
9.2 INVESTMENT IN THE COMPANY. In the event that the Company receives
cash from any source, other than from sales in the ordinary course of its
business or from the incurrence of debt, in an amount of not less than
$50,000,000 in the aggregate, the Executive shall receive a bonus (the "Success
Bonus") in an amount of $50,000.
10. SUCCESSORS AND ASSIGNS.
10.1 ASSIGNMENT BY THE COMPANY. The Company may assign this Agreement
to any successor (whether direct or indirect, by purchase, merger, consolidation
or otherwise) to all or substantially all of the business and/or assets of the
Company. As used in this Agreement, the "Company" shall mean the Company as
herein before defined and any successor to its business and/or assets as
aforesaid which otherwise becomes bound by all the terms and provisions of this
Agreement by operation of law and this Agreement shall be binding upon, and
inure to the benefit of, the Company, as so defined.
10.2 ASSIGNMENT BY THE EXECUTIVE. The Executive may not assign this
Agreement or any part hereof without the prior written consent of a majority of
the Board; provided, however, that nothing herein shall preclude one or more
beneficiaries of the Executive from receiving any amount that may be payable
following the occurrence of his legal incompetency or his death and shall not
preclude the legal representative of his estate from receiving such amount or
from assigning any right hereunder to the person or persons entitled thereto
under his will or, in the case of intestacy, to the person or persons entitled
thereto under the laws of intestacy applicable to his estate. The term
"beneficiaries", as used in this Agreement, shall mean a beneficiary or
beneficiaries so designated to receive any such amount or, if no beneficiary has
been so designated, the legal representative of the Executive (in the event of
his incompetency) or the Executive's estate.
11. GOVERNING LAW.
This Agreement shall be deemed a contract made under, and for all
purposes shall be construed in accordance with, the laws of the State of New
York. Any dispute, claim or controversy between the parties with respect to the
performance or interpretation of this Agreement or as regards matters which are
the subject of this Agreement shall be finally resolved by a binding arbitration
to be conducted by a single arbitrator under the auspices of and in accordance
with the Commercial Arbitration Rules of the American Arbitration Association at
a mutually acceptable place in New York, New York. The arbitrator shall be bound
by the terms and conditions of this Agreement and shall have no power, in
rendering the award, to alter or depart from any express provision of this
Agreement. The decision of the arbitrator shall be final, conclusive and binding
on both parties and enforceable in any court of competent jurisdiction. Each
party shall bear the expenses of its own attorneys and experts in connection
with the arbitration proceeding. The fees, costs, charges, and expenses of the
arbitrator and the arbitration association shall be borne by the parties
equally.
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12. ENTIRE AGREEMENT.
This Agreement contains all the understandings and representations
between the parties hereto pertaining to the subject matter hereof and
supersedes all undertakings and agreement, whether oral or in writing, if any
there be, previously entered into by them with respect thereto.
13. AMENDMENT, MODIFICATION, WAIVER.
No provision of this Agreement may be amended or modified unless such
amendment or modification is agreed to in writing and signed by the Executive
and by a duly authorized representative of the Company other than the Executive.
No waiver by either party hereto of any breach by the other party hereto of any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of a similar or dissimilar provision or condition at
the same or any prior or subsequent time, nor shall the failure of or delay by
either party hereto in exercising any right, power or privilege hereunder
operate as a waiver thereof to preclude any other or further exercise thereof or
the exercise of any other such right, power or privilege.
14. NOTICES.
Any notice to be given hereunder shall be in writing and delivered via
overnight courier or via facsimile (in which case with a copy sent via overnight
courier) addressed to the party concerned at the address indicated below or at
such other address as such party may subsequently designate by like notice:
If to the Company:
StarMedia Network, Inc.
75 Varick Street
New York, NY 10013
Attention: Justin K. Macedonia, Esq.
If to the Executive:
StarMedia Network, Inc.
75 Varick Street
New York, NY 10013
Attention: Fernando J. Espuelas
15. SEVERABILITY.
Should any provision of this Agreement be held by a court of competent
jurisdiction to be enforceable only if modified, such holding shall not affect
the validity of the remainder of this Agreement, the balance of which shall
continue to be binding upon the parties hereto with any such modification to
become a part hereof and treated as though originally set forth in this
Agreement. The parties further agree that any such court is expressly authorized
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to modify any such unenforceable provision of this Agreement in lieu of severing
such unenforceable provision from this Agreement in its entirety, whether by
rewriting the offending provision, deleting any or all of the offending
provision, adding additional language to this Agreement, or by making such other
modifications as it deems warranted to carry out the intent and agreement of the
parties as embodied herein to the maximum extent permitted by law. The parties
expressly agree that this Agreement as so modified by the court shall be binding
upon and enforceable against each of them. In any event, should one or more of
the provisions of this Agreement be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not affect
any other provisions hereof, and if such provision or provisions are not
modified as provided above, this Agreement shall be construed as if such
invalid, illegal or unenforceable provisions had never been set forth herein.
16. WITHHOLDING.
Anything to the contrary notwithstanding, all payments required to be
made by the Company hereunder to the Executive, his transferee or his
beneficiaries, including his estate, shall be subject to withholding of such
amounts relating to taxes as the Company may reasonably determine it should
withhold pursuant to any applicable law or regulation.
17. SURVIVORSHIP.
The respective rights and obligations of the parties hereunder shall
survive any termination of this Agreement to the extent necessary to the
intended preservation of such rights and obligations.
18. NO RESTRAINT.
In the event that the Executive is in possession of any confidential
non-public information by virtue of his prior employment, the Executive
represents and warrants that he will not engage in any activity that is
inconsistent with the rights of such prior employer which could subject the
Company to liability.
19. TITLES.
Titles of the sections and paragraphs of this Agreement are intended
solely for convenience and no provision of this Agreement is to be construed by
reference to the title of any section or paragraph.
20. COUNTERPARTS.
This Agreement may be executed in counterparts, each of which
shall be deemed an original, but all of which taken together shall constitute
one and the same instrument.
21. INDEMNIFICATION.
In furtherance of any other rights to indemnification and not in
limitation thereof, the Executive shall be indemnified by the Company for all
liabilities (including, without limitation, attorneys' fees and expenses)
relating to or arising from his status as an officer or a director of the
Company (or as an officer, director, employee or agent of any other corporation
or
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any partnership, joint venture, trust or other enterprise, to the extent serving
as such at the request of the Company), and any actions committed or omitted by
the Executive in such capacity, to the maximum extent permitted by applicable
law, as the same may be in effect from time to time.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
StarMedia Network, Inc.
By: /s/ JUSTIN K. MACEDONIA
---------------------------------
Name: Justin K. Macedonia
Title: Senior Vice President,
General Counsel
/s/ FERNANDO J. ESPUELAS
--------------------------------
Fernando J. Espuelas