EXECUTION COPY
EXHIBIT 10.38
- --------------------------------------------------------------------------------
AMENDED AND RESTATED
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
ERESMAS INTERACTIVA S.A.
AND
STARMEDIA NETWORK, INC.
DATED AS OF JULY 1, 2002
- --------------------------------------------------------------------------------
AMENDED AND RESTATED ASSET PURCHASE AGREEMENT
This AMENDED AND RESTATED ASSET PURCHASE AGREEMENT, dated as of the 1st
day of July, 2002 (the "AGREEMENT"), by and between ERESMAS INTERACTIVA S.A., a
Spanish SOCIEDAD ANONIMA corporation (the "PURCHASER"), and STARMEDIA NETWORK,
INC., a Delaware corporation (the "SELLER"). Terms used herein and not otherwise
defined shall have the meanings set forth in Section 13.3 hereof.
RECITALS
A. The Purchaser and the Seller have entered into an Asset
Purchase Agreement, dated as of June 18, 2002 (the "ORIGINAL AGREEMENT").
B. It is the intent of the Purchaser and the Seller to amend and
restate the Original Agreement for the purposes of making certain
revisions to the Original Agreement.
C. The Seller operates, directly and indirectly through its Business
Subsidiaries, a Spanish and Portuguese language network of Internet websites,
including without limitation StarMedia.com. The Seller also operates, and will
continue to operate following the Closing, its mobile business and other
businesses.
D. The board of directors of the Purchaser has determined that it is in
the best interests of the Purchaser that the Purchaser acquire certain of the
assets used by or in connection with the Media Business, and has approved this
Agreement and the transactions contemplated hereby.
E. The parties hereto have agreed that the Seller will sell and the
Purchaser will acquire the Acquired Assets free and clear of all Liens, Claims,
Orders, and other Indebtedness other than Permitted Liens.
F. The board of directors of the Seller has determined that it is in the
best interests of the Seller and its shareholders, that the Seller sell the
Acquired Assets and, in furtherance thereof, has approved this Agreement and the
transactions contemplated hereby.
G. Contemporaneously with the execution of this Agreement, the Purchaser
and Seller are entering into a Stock Purchase Agreement (the "LATINRED STOCK
PURCHASE AGREEMENT") pursuant to which the Purchaser will acquire all of the
issued and outstanding shares of capital stock of LatinRed S.L., a Spanish
SOCIEDAD LIMITADA ("LATINRED") wholly-owned by the Seller.
H. In connection with the acquisition of the Acquired Assets, the
Purchaser has agreed to deposit a portion of the Purchase Price in the amount of
$1.0 million (the "ESCROW FUNDS") into an escrow account with Wilmington Trust
Company, and Wilmington Trust Company has agreed to serve as escrow agent (the
"ESCROW AGENT") with respect to the Escrow Funds, holding such funds upon the
terms and conditions set forth in an escrow agreement by and among the
Purchaser, the Seller, an affiliate of the Purchaser and the Escrow Agent (the
"ESCROW AGREEMENT").
I. As an inducement to the Purchaser to enter this Agreement, the Seller
has agreed to enter into a Transition Licensing Agreement, a copy of which is
attached hereto as
<Page>
EXHIBIT 8.14, pursuant to which the Seller will grant a license to the
Purchaser for certain intellectual property owned by the Seller and provide
certain services related thereto to the Purchaser following the Closing (the
"TRANSITION LICENSING AGREEMENT").
J. As further inducement to the Purchaser to enter into this Agreement,
the Seller has agreed to waive certain non-solicitation restrictions with
respect to those employees of the Seller or its Affiliates listed on SCHEDULE
5.3 attached hereto (the "BUSINESS EMPLOYEES") so that the Purchaser may offer
certain or all of such Business Employees employment with the Purchaser or any
Affiliate thereof upon terms and conditions determined by the Purchaser in its
sole discretion.
K. The Purchaser and the Seller desire to make certain
representations, warranties, covenants and agreements in connection with
the transactions contemplated by this Agreement.
NOW, THEREFORE, in consideration of the representations and warranties,
covenants and agreements, and subject to the conditions contained herein, the
Seller and the Purchaser hereby agree as follows:
ARTICLE I
PURCHASE OF ASSETS
1.1 PURCHASE AND SALE OF ACQUIRED ASSETS. Subject to the terms and
conditions of this Agreement, the Seller agrees to sell, assign, convey and
transfer to the Purchaser, and the Purchaser agrees to purchase from the Seller,
those assets used by or in connection with the Media Business, wherever located,
listed on SCHEDULE 1.1(a) attached hereto ( the "ACQUIRED ASSETS") free and
clear of any Liens, Claims, Orders and Indebtedness other than Permitted Liens.
Other than the Acquired Assets listed on SCHEDULE 1.1(a) hereto, the Purchaser
is not purchasing and will not acquire, any other assets of the Seller pursuant
to the terms of this Agreement including the assets identified on SCHEDULE
1.1(b).
1.2 ASSUMED OBLIGATIONS. At the Closing, the Purchaser shall not assume
any obligations of the Seller or the Media Business other than those obligations
of the Media Business accruing after the Closing Date under existing Contracts
of the Media Business to be acquired by the Purchaser and specifically listed on
SCHEDULE 1.2 hereto (collectively, the "ASSUMED OBLIGATIONS") pursuant to an
Assignment and Assumption Agreement substantially in the form of EXHIBIT 1.2
hereto. Each of the Contracts assumed hereunder is independently assumed subject
to the representations, warranties, covenants and conditions made herein as to
that Contract. Except as expressly set forth in this Section 1.2 and SCHEDULE
1.2 hereto, the Purchaser shall not assume or otherwise be responsible at any
time for any liability, obligation, Indebtedness, Contract or commitment of the
Media Business or any of the other businesses of the Seller, whether absolute or
contingent, accrued or unaccrued, asserted or unasserted, or otherwise,
including, but not limited to, any liabilities, obligations, debts or
commitments of the Media Business or the Seller (a) incident to, arising out of
or incurred with respect to this Agreement and the transactions contemplated
hereby, (b) which otherwise arise or are asserted or incurred by reason of
events, acts or transactions occurring, or the operation of the Media Business,
prior to or on the Closing Date, (c) relating to or arising under any Employee
Benefit Plan, (d) relating to any employees or former employees of the Seller or
any of its subsidiaries
-2-
<Page>
who are not employed by the Purchaser on or after the Closing or otherwise
relating to salaries, wages, bonuses, severance or retention pay or benefits
accruing, or relating to employment or termination from employment, on or
prior to the Closing or (e) for Taxes (except as allocated to the Purchaser
pursuant to Section 7.2(b) of this Agreement) (i) related to the Media
Business or the Acquired Assets or (ii) arising out of the income, assets or
operations of the Seller's foreign subsidiaries, in each case for all Tax
periods (or portions thereof) ending on or prior to the Closing Date
(including any and all Taxes arising out of the transactions contemplated
hereby) (collectively, the "EXCLUDED LIABILITIES"). The Seller agrees to
satisfy and discharge each of the Excluded Liabilities as the same shall
become due. The Purchaser's assumption of the Assumed Obligations shall in no
way expand the rights or remedies of third parties against the Purchaser as
compared to the rights and remedies which such parties would have had against
the Seller had this Agreement not been consummated.
1.3 METHOD OF CONVEYANCE. The sale, transfer, conveyance and assignment by
the Seller of the Acquired Assets to the Purchaser in accordance with Section
1.1 hereof shall be effected on the Closing Date by the execution and delivery
by the Seller and any Business Subsidiary as applicable, to the Purchaser of
instruments of transfer including, among others: (a) the bill of sale in
substantially the form of EXHIBIT 1.3(a) attached hereto (the "BILL OF SALE"),
and (b) the Assignment and Assumption Agreement in substantially the form of
EXHIBIT 1.2 hereto, and (c) the assignments of proprietary software, domain
names and trademarks for the Intellectual Property to be assigned to Purchaser
in substantially the form of EXHIBIT 1.3(b) attached hereto. At the Closing, all
of the Acquired Assets shall be transferred by the Seller to the Purchaser free
and clear of any and all Liens, Claims, Orders and Indebtedness other than
Permitted Liens, together with any and all consents of third parties required to
transfer such assets to the Purchaser.
1.4 PURCHASE PRICE. In consideration for the conveyance of the Acquired
Assets and in reliance on the representations and warranties, covenants and
agreements of the Seller contained herein and the documents contemplated hereby,
the Purchaser (a) on the Closing Date shall assume the Assumed Obligations and
(b) pay to the Seller an aggregate amount equal to $7.0 million in cash (the
"PURCHASE PRICE"), MINUS the Escrow Funds, MINUS, to the extent not paid by the
Seller prior to the Closing, any amounts payable on any Contract set forth on
SCHEDULE 1.2 attached hereto (such net amount being referred to as the "CLOSING
CASH"). The Closing Cash shall be paid in immediately available funds to such
account as the Seller shall have specified to the Purchaser three (3) Business
Days prior to the Closing. The Purchase Price shall be allocated in accordance
with Section 1.6 hereof.
1.5 ESCROW AGREEMENT. At the Closing, the Purchaser shall wire $1.0
million (the "ESCROW FUNDS") to the Escrow Agent for deposit as set forth in the
Escrow Agreement to be governed by the terms of the Escrow Agreement in
substantially the form of EXHIBIT 8.10 hereto (the "ESCROW AGREEMENT"). The
Escrow Funds shall be available to compensate the Purchaser, its officers,
directors, employees, agents and Affiliates for any and all losses (whether or
not involving a third party Claim), indemnifiable pursuant to Article XII
hereof.
1.6 ALLOCATION OF PURCHASE PRICE. The Seller and the Purchaser agree to
allocate the aggregate purchase price to be paid for the Acquired Assets in
accordance with Section 1060 of the Code. The Seller and the Purchaser agree
that the Purchaser shall prepare and provide to the Seller a draft allocation of
the purchase price among the Acquired Assets within ninety (90) days
-3-
<Page>
after the Closing Date. The Seller shall notify the Purchaser within thirty
(30) days of receipt of such draft allocation of any objection the Seller may
have thereto. The Seller and the Purchaser agree to resolve any disagreement
with respect to such allocation in good faith. In addition, the Seller and
Purchaser hereby undertake and agree to file timely any information that may
be required to be filed pursuant to Treasury Regulations promulgated under
Section 1060(b) of the Code, and shall use the allocation determined pursuant
to this Section 1.6 in connection with the preparation of Internal Revenue
Service Form 8594 as such form relates to the transactions contemplated by
this Agreement. Neither the Seller nor Purchaser shall file any Tax Return or
other document or otherwise take any position which is inconsistent with the
allocation determined pursuant to this Section 1.6 except as may be adjusted
by subsequent agreement following an audit by the IRS or by court decision.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller represents and warrants to the Purchaser as of the date hereof:
2.1 CORPORATE ORGANIZATION, ETC. The Seller is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization with full corporate power and authority to carry on
its business as it is now being conducted and to own, operate and lease its
properties and assets. The Seller and each Business Subsidiary is duly qualified
or licensed to do business and is in good standing in every jurisdiction in
which the conduct of its business, the ownership or lease of its properties,
require it to be so qualified or licensed. Such jurisdictions are set forth in
SCHEDULE 2.1(a) hereto. True, complete and correct copies of the Seller's
certificate of incorporation and bylaws as presently in effect are set forth in
SCHEDULE 2.1(b) hereto.
2.2 AUTHORIZATION, ETC. The Seller has full power and authority to enter
into this Agreement and the agreements contemplated hereby to which it is a
party. The execution, delivery and performance of this Agreement and all other
agreements and transactions contemplated hereby have been duly authorized by the
Board of Directors of the Seller and, other than obtaining the consent of the
holder(s) of shares of the Seller's Series A Preferred Stock and the consent of
the Seller's stockholders solely with respect to the amendment of the Seller's
certificate of incorporation to change its corporate name, no other corporate
proceedings on the part of the Seller are necessary to authorize the Seller to
enter into this Agreement and the agreements contemplated hereby and to
consummate the transactions contemplated hereby and thereby. A certified copy of
the resolutions adopted by the Seller's Board of Directors authorizing the
execution, delivery and performance of this Agreement and all other agreements
and transactions contemplated hereby is attached hereto as SCHEDULE 2.2. This
Agreement and all other agreements contemplated hereby to be entered into by the
Seller each constitutes a legal, valid and binding obligation of the Seller
enforceable against it in accordance with its terms.
2.3 NO VIOLATION. Except as set forth in SCHEDULE 2.3 hereto, the
execution, delivery and performance by the Seller of this Agreement, and all
other agreements contemplated hereby, and the fulfillment of and compliance with
the respective terms hereof and thereof by the Seller, do not and will not (a)
conflict with or result in a breach of the terms, conditions or provisions of,
(b) constitute a default or event of default under (whether with or without due
notice, the passage
-4-
<Page>
of time or both), (c) result in the creation of any Lien, Claim or Order
(other than Permitted Liens) upon the Acquired Assets or Assumed Obligations
pursuant to, (d) give any third party the right to modify, terminate or
accelerate any obligation under, (e) result in a violation of, or (f) require
any authorization, consent, approval, exemption or other action by, notice
to, or filing with any third party or Authority pursuant to, the certificate
of incorporation or bylaws of the Seller or any applicable Regulation, Order
or Contract to which the Seller, the Acquired Assets or the Media Business is
subject. The Seller has complied with all applicable Regulations and Orders
in connection with the execution, delivery and performance of this Agreement,
the agreements contemplated hereby and the transactions contemplated hereby
and thereby.
2.4 FINANCIAL STATEMENTS.
(a) Attached as SCHEDULE 2.4(a) hereto are (i) unaudited year-end
balance sheets of the Seller as of December 31, 1999, 2000 and 2001 and
statements of income, stockholders' equity and cash flow of the Seller for each
of the fiscal years then ended and (ii) the unaudited balance sheet of the
Seller as of March 31, 2002 and statements of income, stockholders' equity and
cash flow of the Seller for the period then ended. Such balance sheets fairly
present in all material respects the financial position of the Seller at the
respective dates thereof in accordance with GAAP, and such statements of income,
stockholders' equity and cash flow fairly present in all material respects the
results of operations for the periods referred to therein in accordance with
GAAP, except that the unaudited financial statements have no notes attached
thereto and do not have year-end audit adjustments (none of which would be
material or recurring). All of the foregoing financial statements were prepared
from the books and records of the Seller and the Business Subsidiaries, as
applicable. All properties used in the Media Business operations during the
period covered by the foregoing financial statements are reflected in such
financial statements in accordance with and to the extent required by GAAP. The
foregoing balance sheets and statements of income, stockholders' equity and cash
flow and the notes thereto are herein collectively referred to as the "FINANCIAL
STATEMENTS" and March 31, 2002 is herein referred to as the "FINANCIAL STATEMENT
DATE."
(b) Except as set forth in SCHEDULE 2.4(B) hereto, the Seller does
not have any Indebtedness, obligation or liability (whether accrued, absolute,
contingent, unliquidated or otherwise, known or unknown to the Seller, whether
due or to become due) arising out of transactions entered into at or prior to
the Closing Date, or any state of facts existing at or prior to the Closing
Date, other than: (i) liabilities set forth in the March 31, 2002 balance sheet
of the Seller, or (ii) liabilities and obligations that have arisen after the
Financial Statement Date in the ordinary course of business (none of which is a
liability resulting from breach of a Contract, Regulation, Order or warranty,
tort, infringement or Claim) which do not (A) individually exceed $100,000, and
(B) in the aggregate (as to amount) differ from the liabilities set forth in the
March 31, 2002 balance sheet in any material respect.
(c) Immediately prior to, and immediately subsequent to, the
consummation of the sale of the Acquired Assets pursuant to the provisions of
this Agreement, the Seller will be a solvent corporation with the ability to pay
its debts as they become due. For purposes of this Agreement, "solvent" shall
mean that the present fair saleable value of the Seller's assets is greater than
the amount that will be required to pay the liability on its existing debts as
they become absolute and matured.
-5-
<Page>
2.5 EMPLOYEES.
(a) The Media Business has been conducted in material compliance
with all Regulations and Orders affecting employment and employment practices
applicable to the Media Business, including terms and conditions of employment
and the payment of wages and hours. None of the Seller's employees is subject to
a collective bargaining agreement. At the Closing the Media Business will not
have any liability or obligation to any of its Business Employees other than for
the payment of salaries, bonuses, if any, and other benefits which are to be
paid by the Seller in the ordinary course of business or otherwise. Except as
set forth in SCHEDULE 2.5, the Seller has not taken any action, or failed to
take any action, that has or would reasonably likely to result in any Claim by
an employee of the Media Business that he has been constructively terminated or
due severance payments prior to or in connection with the Closing. Upon the
consummation of the transactions contemplated hereby and pursuant to the
agreements referred to herein, there will be no "change in control" bonus or
other obligations to any employees, consultants or other Persons performing
services for the Media Business.
(b) The Seller has not violated the Worker Adjustment Notification
Act (the "WARN ACT") or any similar state or local legal requirement.
2.6 ABSENCE OF CERTAIN CHANGES. Since the Financial Statement Date, the
Media Business has not experienced any (a) except as set forth on SCHEDULE
2.6(a), Material Adverse Change; (b) damage, destruction or loss, whether
covered by insurance or not, having a cost of $100,000 or more; (c) increase in
the compensation payable to or to become payable to any Business Employee or any
adoption of or increase in any bonus, insurance, pension or other employee
benefit plan, payment or arrangement made to, for or with any Business
Employees; (d) except as set forth on SCHEDULE 2.6(d), entry into any Contract
not in the ordinary course of business, including without limitation, any
capital expenditure; (e) change in accounting methods or principles or any
write-down, write up or revaluation of any of the Acquired Assets or Assumed
Obligations except depreciation accounted for in the ordinary course of business
and write-downs of inventory which reflect the lower of cost or market and which
are in the ordinary course of business and in accordance with GAAP; (f) failure
to promptly pay and discharge current liabilities or agree with any party to
extend the payment of any current liability with respect to the Acquired Assets
or the Assumed Obligations; (g) Lien placed on any of the Acquired Assets (other
than Permitted Liens); (h) sale, assignment, transfer, lease, license or
otherwise placement of a Lien (other than Permitted Liens) on any of the
tangible assets that constitute part of the Acquired Assets, except in the
ordinary course of business consistent with past practice, or canceled any debts
or Claims; (i) sale, assignment, transfer, lease, license or otherwise placement
of a Lien (other than Permitted Liens) on any of the Seller Intellectual
Property or other intangible assets, disclosure of any confidential information
related to the Seller Intellectual Property to any Person or abandoned or
permitted to lapse any of the Seller Intellectual Property; or (j) agreement,
whether orally or in writing, to do any of the foregoing.
2.7 CONTRACTS.
(a) Except as set forth in SCHEDULE 2.7(a) hereto, Seller is not a
party to any written or oral: (i) Contract relating to the mortgaging, pledging
or otherwise placing a Lien on any of the Acquired Assets (other than as
contemplated by the IP Licensing Agreement); (ii) Contract pursuant to which the
Purchaser will become the lessor of, or permits any third party to
-6-
<Page>
hold or operate, any of the Acquired Assets; (iii) warranty Contract with
respect to its services rendered or its products sold or leased related to
the Media Business; (iv) Contract or non-competition provision in any
Contract that would prohibit the Purchaser from freely engaging in any aspect
of the Media Business or competing anywhere in the world; (v) Contracts
related to the Media Business with independent agents, brokers, dealers or
distributors which provide for annual payments in excess of $25,000; (vi)
employment, consulting, sales, commissions, advertising or marketing
Contracts related to the Media Business; (vii) Contracts related to the Media
Business providing for "take or pay" or similar unconditional purchase or
payment obligations; (viii) Contracts related to the Media Business with
Persons with which, directly or indirectly, an Affiliate of the Seller also
has a Contract; (ix) Contract that requires the consent of any Person, or
contains any provision that would result in a modification of any rights or
obligation of any Person thereunder or which would provide any Person any
remedy (including rescission or liquidated damages), in connection with the
execution, delivery or performance of this Agreement and the agreements
contemplated hereby and the consummation of the transactions contemplated
hereby and thereby; (x) nondisclosure or confidentiality Contracts related to
the Media Business; (xi) power of attorney or other similar Contract or grant
of agency related to any of the Acquired Assets or the Assumed Obligation; or
(xii) Contract related to the Media Business the breach or termination of
which would have a Material Adverse Effect or would materially adversely
affect the Seller's ability to perform under the Transition Licensing
Agreement.
(b) The Seller has performed all material obligations required to be
performed by it and is not in default in any material respect under or in
material breach of nor in receipt of any Claim of default or breach under any
Contract included in the Acquired Assets or required by Seller to perform its
obligations under the Transition Licensing Agreement; no event has occurred
which with the passage of time or the giving of notice or both would result in a
default, breach or event of non-compliance under any such Contract; the Seller
does not have any present expectation or intention of not fully performing all
obligations under such Contracts; the Seller does not have any knowledge of any
breach or anticipated breach by the other Persons to any such Contract; and
there are no amounts outstanding, due or owing on any of the Contracts listed on
SCHEDULE 1.2 attached hereto.
(c) The Seller has delivered to the Purchaser true and complete
copies of all the Contracts which constitute part of the Acquired Assets or the
Assumed Obligations and documents listed in the schedules to this Agreement.
2.8 GOVERNMENT CONTRACTS. Neither the Seller, any Business
Subsidiary nor the Media Business is a party to any Government Contract.
2.9 TITLE AND RELATED MATTERS.
(a) The Seller has good, valid and marketable title to all of the
Acquired Assets, free and clear of all Liens, Claims, Orders and other
Indebtedness (other than Permitted Liens). Each of the Acquired Assets that
is tangible property is in good condition and repair, ordinary wear and tear
excepted and is free from material defects and damages. At the Closing, the
Seller shall convey to the Purchaser good and marketable title to the
Acquired Assets free and clear of all Liens, Claims, Orders and other
Indebtedness (other than Permitted Liens). All properties used in the Media
Business as of the Financial Statement Date are reflected in
-7-
<Page>
the Financial Statements in accordance with and to the extent required by
GAAP, except as to those assets that are leased.
(b) None of the Acquired Assets or Assumed Obligations are
leases for real or personal property.
(c) None of the Acquired Assets is or will be on the Closing Date
subject to any (i) Contracts of sale or lease, other than pursuant to this
Agreement and the agreements contemplated to be executed in connection herewith
or (ii) Liens (other than Permitted Liens).
(d) There has not been since the Financial Statement Date, and will
not be prior to the Closing Date, any sale, lease, or any other disposition or
distribution of any of the Acquired Assets, now or hereafter owned by the
Seller, except as otherwise consented to in writing by the Purchaser.
Immediately after the Closing, the Purchaser will own, or have the unrestricted
right to use, the Acquired Assets. The assignment of the Contracts constituting
an Assumed Obligation hereunder will not give any party thereto a right to alter
the terms and conditions of any such Contract absent the Purchaser's consent.
2.10 LITIGATION. Except as set forth in SCHEDULE 2.10 hereto, to the
knowledge of the Seller, there is no Claim or Order threatened against the
Seller, Media Business or any of the Acquired Assets nor is there any reasonable
basis therefor. Except as set forth on SCHEDULE 2.10 hereto, the Seller is fully
insured with respect to each of the matters set forth on SCHEDULE 2.10 and the
Seller has not received any opinion or a memorandum from legal counsel to the
effect that it is likely to incur, from a legal standpoint, any liability or
obligations which could have an adverse effect in excess of $150,000.
2.11 TAX RETURNS.
(a) TAX RETURNS. Except as set forth in SCHEDULE 2.11(a) attached
hereto, the Seller has timely filed or caused to be timely filed with the
appropriate taxing authorities all tax returns, statements, forms and reports
(including elections, declarations, disclosures, schedules, estimates and
information Tax returns) for Taxes ("TAX RETURNS") that are required to be filed
by, or with respect to the Media Business or the Acquired Assets, on or prior to
the Closing Date. Except as set forth in SCHEDULE 2.11(a) attached hereto, the
Tax Returns have accurately reflected all material liability for Taxes of the
Media Business and the Acquired Assets for the periods covered thereby.
(b) PAYMENT OF TAXES. All material Taxes and Tax liabilities due by
or with respect to the income, assets or operations of the Media Business and
the Acquired Assets for all taxable years or other taxable periods that end on
or before the Closing Date and, with respect to any taxable year or other
taxable period beginning on or before and ending after the Closing Date, the
portion of such taxable year or period ending on and including the Closing Date
("PRE-CLOSING PERIOD") have been timely paid or will be timely paid in full on
or prior to the Closing Date, accrued and adequately disclosed and fully
provided for on the Financial Statements, or with respect to taxable years or
periods (or portions thereof) beginning after the Financial Statement Date, such
Taxes and Tax liabilities were incurred in the ordinary course of business.
-8-
<Page>
(c) OTHER TAX MATTERS.
(i) Except as set forth on SCHEDULE 2.11(c)(i), the Seller
(with respect to the operation of the Media Business or the Acquired Assets) has
not: (i) been the subject of an audit or other examination of Taxes by the tax
authorities of any nation, state or locality; (ii) received any notices to the
effect that such an audit or examination of Taxes is contemplated or pending; or
(iii) received any notices from any taxing authority relating to any issue which
could affect the Tax liability of the Seller with respect to the operation of
the Media Business or the Acquired Assets.
(ii) The Seller (with respect to the operation of the Media
Business or the Acquired Assets), as of the Closing Date, (A) has not entered
into an agreement or waiver or been requested to enter into an agreement or
waiver extending any statute of limitations relating to the payment or
collection of Taxes, (B) is not presently contesting its Tax liability before
any court, tribunal or agency, (C) has not granted a power-of-attorney relating
to Tax matters to any Person and (D) has not applied for and/or received a
ruling or determination from a taxing authority regarding a past or prospective
transaction of the Seller.
(iii) Except as set forth on SCHEDULE 2.11(c)(iii) attached
hereto, all Taxes that the Seller (with respect to the operation of the Media
Business or the Acquired Assets) is (or was) required by law to withhold or
collect in connection with amounts paid or owing to any employee, independent
contractor, creditor, stockholder or other third party have been duly withheld
or collected, and have been timely paid over to the proper authorities to the
extent due and payable.
(iv) No claim has ever been made by any taxing authority in a
jurisdiction where Seller does not file Tax Returns that the Seller (in each
case with respect to the operation of the Media Business or the Acquired Assets)
is or may be subject to taxation by that jurisdiction.
(v) There are no tax sharing, allocation, indemnification or
similar agreements in effect as between the Seller or any predecessor or
Affiliate thereof and any other party under which Purchaser could be liable for
any Taxes or other claims of any party after the Closing Date.
(vi) The Seller is not a "foreign person" within the meaning
of Section 1445 of the Code.
(vii) There are no Liens or security interests (other than
Permitted Liens) on any of the Acquired Assets that arose in connection with any
failure (or alleged failure) to pay any Taxes.
2.12 COMPLIANCE WITH LAW AND CERTIFICATIONS.
(a) The Media Business and the Acquired Assets have been operated in
compliance with all applicable Regulations and Orders, including, without
limitation, all Regulations relating to the safe conduct of business,
environmental protection, quality and labeling, antitrust, consumer protection,
privacy, equal opportunity, discrimination, health, sanitation, fire, zoning,
building and occupational safety. There are no Claims pending, or
-9-
<Page>
threatened, nor has the Seller received any notice, regarding any violations
of any Regulations or Orders enforced by any Authority.
(b) The Seller holds all registrations, accreditations and other
certifications required for the conduct of the Media Business and the operation
of the Acquired Assets by any Authority or trade group, and the Media Business
and the Acquired Assets have been operated in material compliance with the terms
and conditions of all such registrations, accreditations and certifications. The
Seller has not received any notice alleging that it has failed to hold any such
registration, accreditation or other certification.
2.13 EMPLOYEE BENEFIT PLANS. SCHEDULE 2.13 hereto sets forth a complete
and accurate list of each domestic and foreign employee benefit plan (as defined
in Section 3(3) of ERISA) or material fringe benefit plan maintained or
contributed to or required to be contributed to by the Seller with respect to
any of the Business Employees ("EMPLOYEE BENEFIT PLANS"). The Seller has not
incurred, and no event has occurred and no condition or circumstance exists that
could result, directly or indirectly, in, any unsatisfied liability (including,
without limitation, any indirect, contingent or secondary liability) of the
Seller under Title IV of ERISA or Section 412 of the Code or Section 302 of
ERISA arising in connection with any employee pension benefit plan covered or
previously covered by Title IV of ERISA or such sections of the Code or ERISA.
No asset or property of the Seller is or may be subject to any Lien arising
under Section 412(n) of the Code or Section 302(f) or Section 4068 of ERISA. The
Seller has not been, and does not expect to be, required to provide any security
under Section 307 of ERISA or Section 401(a)(29) or 412(f) of the Code. The
Seller has complied in all respects with the applicable requirements of Part 6
of Subtitle B of Title I of ERISA and Section 4980B of the Code ("COBRA"),
except to the extent which could result in a material liability to the
Purchaser. Full payment has been made of all amounts which the Seller is
required under applicable Regulations or under any Employee Benefit Plan or any
agreement relating to any Employee Benefit Plan to have paid as contributions or
premiums thereunder with respect to the Business Employees as of the last day of
the most recent fiscal year of such Employee Benefit Plan ended prior to the
date hereof. The execution of this Agreement and the consummation of the
transactions contemplated hereby, do not constitute a triggering event under any
Employee Benefit Plan, policy, arrangement, statement, commitment or agreement
which (either alone or upon the occurrence of any additional or subsequent
event) will or may result in any payment (whether of severance pay or
otherwise), "parachute payment" (as such term is defined in Section 280G of the
Code), acceleration, vesting or increase in benefits to any Business Employee.
The Seller does not have any obligation under any Employee Benefit Plan or
otherwise to provide post-employment or retiree welfare benefits to any Business
Employee, except as specifically required by COBRA.
2.14 INTELLECTUAL PROPERTY.
(a) SCHEDULE 2.14(a) attached hereto sets forth a complete and
accurate list of all Seller Registered Intellectual Property.
(b) The Seller exclusively owns and otherwise has all requisite
right, title and interest in or valid and enforceable rights to practice under
or otherwise use the Seller Intellectual Property. Except as set forth in
SCHEDULE 2.14(b), each item of Seller Intellectual Property, is owned
exclusively by the Seller (excluding Intellectual Property licensed to the
-10-
<Page>
Seller under any Contracts listed on SCHEDULE 2.14(g)) and is free and clear
of any Liens, Claims, Orders and other Indebtedness (other than Permitted
Liens).
(c) To the extent that any Seller Intellectual Property has been
developed or created by any Person other than the Seller, the Seller has either
(i) obtained ownership of, and is the exclusive owner of, all such Intellectual
Property by operation of law or by valid assignment of any such rights or (ii)
has obtained a license under or to such Intellectual Property.
(d) The Seller has taken all commercially reasonable steps
consistent with the reasonable exercise of its business judgment to protect and
preserve ownership of the Seller Intellectual Property (excluding Intellectual
Property licensed to the Seller under any Contracts listed on SCHEDULE 2.14(g)).
The Seller has secured valid non-disclosure agreements and written assignments
from all consultants and employees who contributed to the creation or
development of the Seller Intellectual Property (excluding Intellectual Property
licensed to the Seller under any Contracts listed on SCHEDULE 2.14(g)). In the
event that a consultant is concurrently employed by the Seller and a third
party, the Seller has taken commercially reasonable steps to ensure that any
Seller Intellectual Property developed by such a consultant does not belong to
the third party or conflict with the third party's employment agreement (such
steps include ensuring that all work performed by such a consultant are
performed only on the facilities of the Seller and only using the resources of
the Seller).
(e) The Seller has taken all commercially reasonable steps to
protect and preserve the confidential and other proprietary information and
trade secrets used in the Media Business or provided by any other Person to the
Seller subject to a duty of confidentiality, including without limitation,
know-how, source codes, data collections, ideas, and databases. Without limiting
the generality of the foregoing, there is an enforced policy requiring each
employee, consultant and independent contractor providing services to the Media
Business relating to technology (including software and/or hardware), content or
management to execute proprietary information, confidentiality and invention and
copyright assignment Contracts containing substantially the provisions set forth
in SCHEDULE 2.14(e), all current technology, content and management employees
and current and former consultants and independent contractors working for the
benefit of the Media Business in relation to technology, content or management
have executed such a Contract; all former employees who were employed in
capacities relating to technology, content or management have signed such a
Contract, a similar Contract or are otherwise similarly bound. The Seller has
not breached any agreements of nondisclosure or confidentiality or is currently
claimed to have done so.
(f) The Seller Intellectual Property, the Intellectual Property
contemplated to be licensed to Purchaser under the Transition Licensing
Agreement and the hardware used in the operation of the Acquired Assets and
contemplated to be used under the Transition Licensing Agreement constitutes all
of the Intellectual Property necessary and material to operate the websites
listed on SCHEDULE 1.1(a) as contemplated under the Transition Licensing
Agreement, including, but not limited to the design, creation, development,
distribution, marketing, manufacture, use, import, license and sale or offering
for sale of the products, technology and services related to the Media Business.
(g) SCHEDULE 2.14(g) attached hereto sets forth a complete and
accurate list of all Contracts to which the Seller or any Business Subsidiary is
a party with respect to any Seller
-11-
<Page>
Intellectual Property including Contracts relative to the licensing of Seller
Intellectual Property to third parties or from third parties or where the
Seller or any Business Subsidiary has authorized the retention of any rights
to use any Intellectual Property that is or was Seller Intellectual Property
to any Person.
(h) The Media Business as currently conducted, including the
design, development, use, import, manufacture and sale of the products,
technology or services (including products, technology or services currently
under development and under development as of the Closing Date) does not (i)
violate, infringe, misuse, or misappropriate the Intellectual Property of any
Person, (ii) violate any term or provision of any Contract concerning such
Intellectual Property, (iii) violate the rights of any Person (including
rights to privacy or publicity), or (iv) constitute unfair competition or an
unfair trade practice under any Regulation. Except as set forth in SCHEDULE
2.14(h), which lists any proceedings or actions pending as of the date hereof
before any court or tribunal (including the U.S. patent and trademark office
or equivalent authority anywhere in the world) or threatened, related to any
of the Seller Intellectual Property, the Seller has not received written
notice, or to the best of their knowledge, other notice, from any Person
claiming or threatening to claim that the operations of the Media Business or
any act, product, technology or service (including products, technology or
services currently under development or under development as of the Closing
Date) of the Seller violates, infringes, misuses or misappropriates the
Intellectual Property of any Person or constitutes unfair competition or
trade practices under any Regulation, including notice of third party patent
or other Intellectual Property rights from a potential licensor of such
rights, and no third party claims are pending referencing the above or
asserting any opposition, abandonment, interference, invalidity or other
infirmity of any proprietary rights.
(i) Except as set forth on SCHEDULE 2.14(i) hereto, each item of
Seller Registered Intellectual Property which has been registered or issued
is valid and subsisting and has not been abandoned, cancelled and all
necessary registration, maintenance, renewal fees, annuity fees and Taxes in
connection with such Seller Registered Intellectual Property have been duly
paid and all necessary documents and certificates in connection with such
Seller Registered Intellectual Property have been filed with the relevant
patent, copyright, trademark, Internet domain name registrar or other
Authorities in the United States or foreign jurisdictions, as the case may
be, for the purposes of maintaining such Seller Registered Intellectual
Property which remain in full force and effect as of the Closing Date. The
Seller has the exclusive right to file, prosecute and maintain all
applications and registrations with respect to the Seller Registered
Intellectual Property. In each case in which the Seller has acquired
ownership of any Seller Intellectual Property rights relating to the Media
Business from any Person, the Seller has obtained a valid and enforceable
assignment sufficient to irrevocably transfer all rights in such Intellectual
Property (including the right to seek damages with respect to such
Intellectual Property) to the Seller and, to the maximum extent provided for
by and required to protect the Seller's ownership rights in and to such
Seller Intellectual Property in accordance with applicable Regulations, the
Seller has recorded each such assignment of Seller Registered Intellectual
Property with the relevant governmental or regulatory Authority, including
the U.S. Patent and Trademark Office, the U.S. Copyright Office, or their
respective equivalents in any relevant foreign jurisdiction, as the case may
be.
(j) Other than with respect to the Intellectual Property which
has been licensed to the Seller as set forth on SCHEDULE 2.14(g) attached
hereto, there are no Contracts
-12-
<Page>
between the Seller and any other Person with respect to Seller Intellectual
Property under which there is any dispute (or, to the Seller's knowledge,
facts that may reasonably lead to a dispute) regarding the scope of such
Contract, or performance under such Contract, including with respect to any
payments to be made or received by the Seller hereunder.
(k) Except as set forth on SCHEDULE 2.14(k) attached hereto, no
Person is infringing or misappropriating any Seller Intellectual Property.
Except as set forth on SCHEDULE 2.14(k) attached hereto, to the best of the
Seller's knowledge, the Seller has not made any Claim in writing of a
violation, infringement, misuse or misappropriation by any third party
(including without limitation, any employee of the Seller or any Business
Subsidiary) of its rights to, or in connection with any Seller Intellectual
Property which Claim is pending.
(l) Neither this Agreement nor any transactions to be
accomplished pursuant to this Agreement will (i) result in Purchaser's
granting any rights or Licenses with respect to the Intellectual Property of
Purchaser (including, without limitation, the Seller Intellectual Property
purchased or licensed by the Purchaser) to any Person pursuant to any
Contract to which the Seller is a party or by which any of their respective
assets and properties are bound, or (ii) cause a default or breach by the
Seller of any Contract.
(m) The IT has performed to date in all material respects as
documented by their vendors, licensors or developers (whether third party or
in-house), and in accordance with all specifications in user documentation
and has provided to date all functionality necessary and material in order to
support the Media Business as currently conducted, and (ii) are, to Seller's
knowledge, free from material defects in design, workmanship and materials
which materially affect their performance and contain no "virus", "worm",
"time-bomb", "trap door", "back door" or other device or feature designed to
disable or interfere, in any material respect with the functioning of any
software, firmware or hardware, to corrupt, destroy, encrypt, rename or hide
data or to permit unauthorized access to the same, except for documented
software keys and expiration features identified in writing to the
Purchaser's Chief Technology Officer or such other person in charge of the
Purchaser's information technology in connection with this transaction or
under the Transition Licensing Agreement.
(n) Except as set forth on SCHEDULE 2.14(n), (i) all source code
included in the Seller Intellectual Property, is and at all times has been
exclusively in the possession and control of the Seller and is not and has
not been the subject of any source code escrow arrangement nor has any such
source code been retained off the business premises of the Seller by or is in
the possession of any current or former contractor, employee, or third party,
(ii) no customers of, or Persons outside of, the Media Business have been
provided with or otherwise possess the means of accessing in any manner the
Seller's IT inventory (except insofar as members of the public may access
Seller's web sites in the ordinary course) and (iii) the Seller does not have
any obligation, duty or responsibility, under Contract or otherwise, to
maintain or support any systems, software or applications provided to or
otherwise in the possession or control of customers of, or Persons outside
of, the Media Business.
(o) Except as set forth on SCHEDULE 2.14(o), as of the Closing
Date, the internet domain names and URLs (as defined in the definition of
Intellectual Property) in the Seller Intellectual Property direct and resolve
to the appropriate internet protocol addresses and are accessible to Internet
users on those certain computers used by the Seller to make the Sites
-13-
<Page>
(as defined in the definition of Intellectual Property) so accessible
substantially twenty-four (24) hours per day, seven (7) days per week and are
operational for downloading content from the those certain computers used by
the Seller to make the Sites so accessible on a twenty-four (24) hours per
day, seven (7) days per week basis. The Seller has fully operational back-up
copies of the Sites (and all related software, databases and other
information), made from the current versions of the Sites as accessible to
Internet users. From the date hereof until the Closing Date, back-up copies
shall have been made no less frequently than every fourteen (14) days and
such back-up copies shall have been stored in a safe and secure environment,
fit for the back-up such media, and are not located at the same location of
the Server. The Seller has no reason to believe that the Sites will not
operate or will not continue to be accessible to internet users on
substantially a 24/7 basis prior to, at the time of, and, provided they are
properly maintained and operated by Purchaser, after the Closing Date.
(p) The goodwill in the Intellectual Property as carried on the
Seller's March 31, 2002 balance sheet is consistent with (i) accounting
practice in the Seller's industry; (ii) GAAP or comparable accounting
practices, in the jurisdiction where the relevant Intellectual Property is
used, and (iii) the history of the Intellectual Property.
(q) SCHEDULE 2.14(q) attached hereto sets forth a complete and
accurate list of (i) all in-house content editors and providers or third
party feeds, which are currently used by the Seller in connection with the
operation of the Media Business as contemplated to be operated under the
Transition Licensing Agreement. The Seller has all material rights necessary
to use on its Sites or otherwise any and all content provided by the content
editors and providers and third party feeds listed on SCHEDULE 2.14(q) free
and clear of any valid third party Claims.
2.15 CUSTOMER WARRANTIES. There are no existing, or to the best
knowledge of the Seller, potential Claims under or pursuant to any warranty,
whether expressed or implied, on products or services related to the Media
Business sold prior to the Closing Date. All of the services rendered by the
Seller (whether directly or indirectly through independent contractors) have
been performed in conformity with all expressed warranties and with all
applicable contractual commitments, and, the Seller does not have nor shall
have any liability for replacement, repair or modification or for other
damages relating to or arising from any such services which would have a
Material Adverse Effect. Seller has no reason to expect an increase in
warranty Claims in the future.
2.16 ENVIRONMENTAL MATTERS. Neither the Media Business nor the
operation thereof violates or has violated any applicable Environmental Law.
The Seller is not required to possess Environmental Permits for the conduct
or operation of the Media Business. The Seller does not and has not
generated, used, treated or stored, transported to or from, or released or
disposed of any Hazardous Substances on or at any of its facilities. The
Seller has not received any notice from any Authority or any private Person
that the Media Business or the operation of any of its facilities is in
violation of any Environmental Law or any Environmental Permit or that it is
responsible (or potentially responsible) for the cleanup of any Hazardous
Substances at, on or beneath any property owned or leased by the Seller in
the operation of the Media Business. The Seller has not been the subject of
any foreign, Federal, state, local, or private Claim involving a demand for
damages or other potential liability with respect to a violation of
Environmental Laws or under any common law theories relating to operations or
the condition of any facilities or property (including underlying
groundwater) owned, leased, or operated by the Seller.
-14-
<Page>
2.17 CAPITAL EXPENDITURES AND INVESTMENTS. The Seller has no budget
for capital expenditures to be made by or on behalf of the Media Business.
2.18 DEALINGS WITH AFFILIATES. There are no Contracts included in the
Acquired Assets or Assumed Obligations to which the Seller, on the one hand,
is a party and an Affiliate of the Seller, on the other hand, is also a party.
2.19 INSURANCE. The Seller has had Policies in full force and effect
that provide for coverages that are usual and customary as to amount and
scope in the Media Business. All of the Policies have been in full force and
effect, all premiums with respect thereto covering all periods up to and
including the Closing Date have been paid or accrued therefor, and no notice
of cancellation or termination has been received with respect to any Policy.
The Seller has not breached or otherwise failed to perform in any material
respect its obligations under any of the Policies nor has the Seller received
any adverse notice or communication from any of the insurers party to the
Policies with respect to any such alleged breach or failure in connection
with any of the Policies. All Policies are sufficient for compliance with all
Regulations and all Contracts to which the Media Business and the Acquired
Assets are subject are to the Seller's best knowledge valid, outstanding,
collectible and enforceable policies, and will not in any way be affected by,
or terminate or lapse by reason of, the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby.
2.20 BROKERAGE. There are no Claims for brokerage commissions,
investment banking or finders' fees or expenses or similar compensation in
connection with the transactions contemplated by this Agreement based on any
arrangement or Contract binding upon the Seller, the Acquired Assets or the
Media Business.
2.21 CUSTOMERS AND SUPPLIERS. None of the parties to any Contract
included in the Acquired Assets or the Assumed Obligations or otherwise
licensed pursuant to the Transition Licensing Agreement has advised the
Seller in writing, or to the Seller's knowledge orally notified, within the
past year that it will stop, or decrease the rate of, supplying materials, or
changed its price or terms of any products, or services to the Media
Business. No purchase order or commitment of the Media Business is in excess
of normal requirements, nor are prices provided therein in excess of current
market prices for the products or services to be provided thereunder.
2.22 PERMITS. The Permits listed on SCHEDULE 2.22 hereto are the only
material Permits that have been required for the conduct of the Media
Business in accordance with applicable Regulations and Orders of any
Authority. The Media Business has duly and validly held all such Permits, and
each such Permit has been in full force and effect and, to the best of the
knowledge of the Seller, no suspension or cancellation of any such Permit is
threatened and there is no basis for believing that such Permit will not be
renewable upon expiration.
2.23 IMPROPER AND OTHER PAYMENTS. (a) Neither the Seller nor any of its
directors, officers, or key employees, or any agent or representative of the
Media Business nor any Person acting on behalf of any of them, has made, paid
or received any unlawful bribes, kickbacks or other similar payments to or
from any Person or Authority, (b) no contributions have been made, directly
or indirectly, to a domestic or foreign political party or candidate, (c) no
improper foreign payment (as defined in the Foreign Corrupt Practices Act)
has been made, and (d) the
-15-
internal accounting controls of the Seller and each Business Subsidiary are
adequate to detect any of the foregoing under current circumstances.
2.24 DISCLOSURE. Neither this Agreement nor any of the Contracts,
exhibits, schedules, attachments, written statements, documents, certificates
or other items prepared for or supplied to the Purchaser by or on behalf of
the Seller with respect to the transactions contemplated hereby contains any
untrue statement or omits a fact necessary to make each statement contained
herein or therein not misleading except as would not have a Material Adverse
Effect or would otherwise not materially adversely affect the Seller's
ability to perform under the Transition Licensing Agreement. There is no fact
which the Seller has not disclosed to the Purchaser herein and of which the
Seller, or any of its officers, directors or executive employees is aware
which could reasonably be anticipated to have a Material Adverse Effect on
the Media Business or the ability of the Purchaser to operate the Acquired
Assets.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Seller as of the date
hereof:
3.1 CORPORATE ORGANIZATION, ETC. The Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation with full corporate authority to carry on its
business as it is now being conducted and to own, operate and lease its
properties and assets. The Purchaser is duly qualified or licensed to do
business and is in good standing in every jurisdiction in which the conduct
of its business, the ownership or lease of its properties, require it to be
so qualified or licensed. True, complete and correct copies of the
Purchaser's deed of incorporation and bylaws as presently in effect are set
forth in SCHEDULE 3.1 hereto.
3.2 AUTHORIZATION, ETC. The Purchaser has full power and authority to
enter into this Agreement and the agreements contemplated hereby to which it
is a party. The execution, delivery and performance of this Agreement and all
other agreements and transactions contemplated hereby have been duly
authorized by the Board of Directors of the Purchaser and no other corporate
proceedings on the part of the Purchaser, including the approval of the
Purchaser's stockholders, are necessary to authorize this Agreement, the
agreements contemplated hereby and the transactions contemplated hereby and
thereby. This Agreement and all other agreements contemplated hereby to be
entered into by the Purchaser each constitutes a legal, valid and binding
obligation of the Purchaser enforceable against it in accordance with its
terms.
3.3 NO VIOLATION. The execution, delivery and performance by the
Purchaser of this Agreement, and all other agreements contemplated hereby,
and the fulfillment of and compliance with the respective terms hereof and
thereof by the Purchaser, do not and will not (a) conflict with or result in
a breach of the terms, conditions or provisions of, (b) constitute a default
or event of default under (whether with or without due notice, the passage of
time or both), (c) result in the creation of any Lien, Claim or Order upon
the Purchaser's assets pursuant to, (d) give any third party the right to
modify, terminate or accelerate any obligation under, (e) result in a
violation of, or (f) require any authorization, consent, approval, exemption
or other action by,
-16-
notice to, or filing with any third party or Authority pursuant to, the deed
of incorporation or bylaws of the Purchaser or any applicable Regulation,
Order or Contract to which the Purchaser or its assets is subject. The
Purchaser has complied with all applicable Regulations and Orders in
connection with the execution, delivery and performance of this Agreement,
the agreements contemplated herby and the transactions contemplated hereby
and thereby.
3.4 BROKERAGE. Except as set forth on SCHEDULE 3.4 attached hereto,
there are no Claims for brokerage commissions, investment banking or finders'
fees or expenses or similar compensation in connection with the transactions
contemplated by this Agreement based on any arrangement or Contract binding
upon the Purchaser or its Affiliates.
ARTICLE IV
COVENANTS OF THE SELLER
Until the Closing Date, except as otherwise consented to or approved by
the Purchaser in writing, the Seller agrees that it shall act, or refrain
from acting where required hereinafter, to comply with the following:
4.1 OPERATION OF MEDIA BUSINESS. Except as contemplated by this
Agreement, during the period from the date of this Agreement to the Closing,
the Seller shall operate the Acquired Assets and conduct the Media Business
in the ordinary course of business consistent with commercially reasonable
business practices and in compliance with applicable Regulations, and use its
commercially reasonable efforts so as to preserve the current value and
integrity of the Media Business and the Acquired Assets, pay all Taxes and
accounts payable as they become due and payable, maintain in full force and
effect the existence of all Intellectual Property, maintain insurance on the
Acquired Assets (in amounts and types consistent with past practice), and use
its commercially reasonable efforts to preserve the goodwill and organization
of the Media Business and their relationships with customers, vendors,
suppliers and others having business dealings with the Seller or any Business
Subsidiary relating to the Media Business. Without limiting the generality of
the foregoing, prior to the Closing, the Seller shall not, and shall cause
each of its Affiliates and the Seller's and its Affiliates' officers,
directors, shareholders, employees, partners, representatives and agents not
to:
(a) enter into any material Contract which may be included in the
Acquired Assets or make a material change or modification to any existing
material Contract included in the Acquired Assets, except for agreements
relating to sales of inventory and purchase of inventory from suppliers in
the ordinary course of business and consistent with past practices;
(b) sell, lease, dispose of or otherwise distribute any of the
Acquired Assets, except for agreements relating to sales of inventory and
purchase of inventory from suppliers in the ordinary course of business and
consistent with past practices;
(c) mortgage or pledge any of the Acquired Assets or subject
any Acquired Assets to any Lien other than Permitted Liens;
(d) materially increase in any manner the salary, bonus,
severance or other compensation or benefits of any Business Employee;
-17-
(e) adopt any benefit plan for employees of the Media Business or
except as may be required by applicable Regulations, amend or modify any
existing Employee Benefit Plan for such employees, except for such retention
arrangements which the Purchaser shall have no obligations under;
(f) take or omit to take any action that would require disclosure
under Article II, or that would otherwise result in a breach of any of the
representations, warranties or covenants made by the Seller in this Agreement
or in any of the agreements contemplated hereby;
(g) take any action or omit to take any action which act or
omission would reasonably be anticipated to have a Material Adverse Effect on
the Media Business or the Acquired Assets except as contemplated by this
Agreement or any agreement to be executed in connection herewith or in
connection with the consummation of the transactions contemplated herein or
therein; or
(h) agree in writing or otherwise to take any of the foregoing
actions.
Additionally, from the date of this Agreement to the Closing Date, the Seller
shall promptly consult with the Purchaser about any material matters
concerning the Acquired Assets or the Media Business.
4.2 FULL ACCESS AND DISCLOSURE. The Seller shall afford to the
Purchaser and its counsel, accountants, agents and other authorized
representatives and to financial institutions specified by the Purchaser
reasonable access during business hours to the Seller's facilities,
properties, books and records in order that the Purchaser may have full
opportunity to make such reasonable investigations as they shall desire to
make of the affairs of the Media Business and the Acquired Assets. The Seller
shall cause its officers and employees, and shall use its commercially
reasonable efforts to cause its counsel and auditors to furnish such
additional financial and operating data and other information as the
Purchaser shall from time to time reasonably request including, without
limitation, any internal control recommendations made by its independent
auditors in connection with any audit of the Seller or the Media Business.
From time to time prior to the Closing Date, the Seller shall promptly
supplement or amend information previously delivered to the Purchaser with
respect to any matter hereafter arising which, if existing or occurring at
the date of this Agreement, would have been required to be set forth or
disclosed herein; provided, however, that such supplemental information shall
not be deemed to be an amendment to any schedule hereto and shall not change
the risk allocation of this Agreement between the Purchaser and the Seller.
4.3 NON-COMPETITION; NON-SOLICITATION.
(a) Except as contemplated in the Transition Licensing Agreement,
during the Restricted Period, in the Restricted Area, the Seller and each of
its Affiliates, agree not to, directly or indirectly, alone or as a partner,
officer, director, employee, consultant, agent, independent contractor,
member or stockholder of any Person, operate or develop any Internet web site
(a "SITE") targeting the general public and from which the Seller or any
Affiliate generates or intends to generate revenues principally from the sale
of advertising, including but not limited to banners, newsletters, and the
sale of any other promotional spaces in the Site,
-18-
and/or sale of content or services to the Site's users, including but not
limited to pay per view, pay per listen, pay per use content or services,
ecommerce and Internet access; PROVIDED, HOWEVER, that the foregoing shall
not prohibit Seller or its Affiliates from designing and operating (i) on
behalf of unaffiliated third parties, Sites intended for use by specific
segments of the general pubic for the purpose of marketing such third
parties' goods and services or providing services to its customers; (ii) a
Site intended for use specifically by users of mobile telephony services;
(iii) a corporate web site for internal or external use or (iv) the following
existing websites: guiarj.com.br; guiasp.com.br; paisas.com; openchile.com;
nacidade.com.br; openchile.cl; panoramas.cl; yoinvito.com; Adnet.com.mx; and
batepapo.com.br; PROVIDED FURTHER, HOWEVER, that the record or beneficial
ownership by the Seller as a passive investor of one percent (1%) or less of
the outstanding publicly traded capital stock of any such Person for
investment purposes shall not be deemed to be in violation of this Section
4.3 so long as the Seller does not breach Section 4.4.
(b) The Seller further agrees that, during the Restricted Period,
in the Restricted Area the Seller shall not in any capacity, either
separately, jointly or in association with others, directly or indirectly do
any of the following: (i) employ or seek to employ any Person or agent who is
then employed or retained by the Purchaser or its Affiliates (or who was so
employed or retained at any time within the one (1) year prior to the date
the Seller employs or seeks to employ such Person); (ii) solicit, induce, or
influence any proprietor, partner, stockholder, lender, director, officer,
employee, joint venturer, investor, consultant, agent, lessor, supplier,
customer or any other Person which has a business relationship with the
Purchaser or its Affiliates, at any time during the Restricted Period, to
discontinue or reduce or modify the extent of such relationship with the
Purchaser or its Affiliates; (iii) submit, solicit, encourage or discuss any
proposal, plan or offer to acquire an interest in any of the Purchaser's or
its Affiliates' identified potential acquisition candidates and (iv) use any
of the information contained in the users' databases related to the domains
acquired by Purchaser and included in SCHEDULE 1.1(a). The "RESTRICTED
PERIOD" shall mean eighteen (18) months after the date of this Agreement. The
"RESTRICTED AREA" shall mean worldwide.
(c) The Seller recognizes and agrees that compliance with the
covenants contained in this Section 4.3 are necessary to protect the
Purchaser, and that a breach by the Seller of any of the covenants set forth
in this Section 4.3 could cause irreparable harm to the Purchaser, that the
Purchaser's remedies at law in the event of such breach would be inadequate,
and that, accordingly, in the event of such breach, a restraining order or
injunction or both may be issued against the Seller without the requirement
that the Purchaser post a bond, in addition to any other rights and remedies
which are available to the Purchaser. If this Section 4.3 is more restrictive
than permitted by the laws of any jurisdiction in which the Purchaser seeks
enforcement hereof, this Section 4.3 shall be limited to the extent required
to permit enforcement under such laws. In particular, the parties intend that
the covenants contained in the preceding portions of this Section 4.3 shall
be construed as a series of separate covenants, one for each location
specified. Except for geographic coverage, each such separate covenant shall
be deemed identical in terms. If, in any judicial proceeding, a court shall
refuse to enforce any of the separate covenants deemed included in this
Section 4.3, then such unenforceable covenant shall be deemed eliminated from
these provisions for the purpose of those proceedings to the extent necessary
to permit the remaining separate covenants to be enforced. If any court of
competent jurisdiction shall determine the foregoing covenant to be
unenforceable with respect to the term or the scope of the subject matter or
geography covered thereby, then such covenant shall
-19-
nevertheless be enforceable by such court against the other party upon such
shorter term or within such lesser scope as may be determined by such court
to be reasonable and enforceable.
4.4 CONFIDENTIALITY.
(a) Except as provided in Section 4.4(b), after the Closing Date,
and for a period of five (5) years thereafter, the Seller agrees that it will
keep confidential and shall use its best efforts to cause its Affiliates, and
their respective officers, directors, employees and agents to keep
confidential all of the Purchaser's and its Affiliates' proprietary
information that is conveyed to the Purchaser as part of the Acquired Assets
or is assigned as part of the Assumed Obligations or is otherwise exposed to
the Seller in the course of the transactions contemplated hereby, including,
for purposes of this Section 4.4, information about the Media Business'
business plans and strategies, marketing ideas and concepts, especially with
respect to unannounced products and services, present and future product
plans, pricing, traffic volumes, volume estimates, financial data, product
enhancement information, business plans, marketing plans, sales strategies,
customer information (including customers' applications and environments),
market testing information, development plans, specifications, customer
requirements, configurations, designs, plans, drawings, apparatus, sketches,
software, hardware, data, prototypes, connecting requirements or other
technical and business information.
(b) Notwithstanding the foregoing, such proprietary information
shall not be deemed confidential and the Seller shall have no obligation with
respect to any such proprietary information that, following the Closing:
(i) is or becomes publicly known through publication,
inspection of a product, or otherwise, and through no negligence or other
wrongful act of any of the Seller;
(ii) is received by the Purchaser from a third party without
similar restriction and without breach of any agreement; or
(iii) is, subject to Section 4.4(c), required to be disclosed
under applicable Law or judicial process.
(c) If the Seller (or any of its Affiliates or officers,
directors, employees or agents) is requested or required (by oral question,
interrogatory, request for information or documents, subpoena, civil
investigative demand or similar process) to disclose any such proprietary
information, the Seller will promptly notify the Purchaser of such request or
requirement and will cooperate with the Purchaser such that the Purchaser may
seek an appropriate protective order or other appropriate remedy. If, in the
absence of a protective order or the receipt of a waiver hereunder, the
Seller (or any of its Affiliates) is in the opinion of the Seller's counsel
compelled to disclose the proprietary information or else stand liable for
contempt or suffer other censure or significant penalty, the Seller (or its
Affiliate) may disclose only so much of the proprietary information to the
party compelling disclosure as is required by law. The Seller will exercise
its (and will cause its Affiliates to exercise their) commercially reasonable
efforts to obtain a protective order or other reliable assurance that
confidential treatment will be accorded to such proprietary information.
4.5 FULFILLMENT OF CONDITIONS PRECEDENT. The Seller shall use its best
efforts to obtain at its expense all such waivers, Permits, consents,
approvals or other authorizations from third
-20-
Persons and Authorities, and to do all things as may be necessary in
connection with transactions contemplated by this Agreement.
4.6 EXCLUSIVITY. From and after the date hereof until the earlier of
the Closing Date or the termination of this Agreement, the Seller will not,
and will cause each of its Affiliates and the Seller's and its Affiliates'
officers, directors, shareholders, employees, partners, representatives and
agents not to enter into any agreement, negotiate with any other corporation,
firm or other person, or solicit, encourage, entertain, initiate, pursue or
consider any inquiries or proposals (whether written or oral) relating to (i)
the possible disposition of all or any portion of the Acquired Assets or the
Media Business (except inventory disposed of in the ordinary course of
business) or (ii) any merger, consolidation or other business combination
involving any of the Seller which would be inconsistent with the transaction
contemplated by this Agreement.
4.7 DELIVERIES AFTER CLOSING. From time to time after the Closing, at
the Purchaser's request and without further consideration from the Purchaser,
the Seller shall and shall cause any Business Subsidiary, as applicable, to
execute and deliver such other instruments of conveyance and transfer and
take such other action as the Purchaser reasonably may require to convey,
transfer to and vest in the Purchaser and to put the Purchaser in possession
of any rights or property to be sold, conveyed, transferred and delivered
hereunder. Among other things, the Seller agrees to promptly notify the
Purchaser in writing at such time as the Seller receives notification
(written or otherwise) that it must take certain actions that, if not taken,
will adversely affect the Registered Intellectual Property or the right of
the Seller (and following the Closing, the Purchaser) to use same, including
the payment of any registration, maintenance, renewal fees, annuity fees and
Taxes or the filing of any documents, applications or certificates for the
purposes of maintaining, perfecting or preserving or renewing any Seller
Registered Intellectual Property.
4.8 INTELLECTUAL PROPERTY PROTECTION. During the period from the date
of this Agreement and continuing until the earlier of (x) the termination of
this Agreement or (y) the Closing Date, the Seller agrees to take any and all
actions necessary to protect and preserve the Seller Intellectual Property,
including, without limitation, to:
(a) at its own expense, make timely payment of all post-issuance
renewal or other fees required to maintain in force its rights under all
Seller Registered Intellectual Property;
(b) use or license the use of any trademarks included in the
Seller Registered Intellectual Property in interstate commerce and to take
all such other actions as are necessary to preserve such marks as trademarks
or service marks under the laws of the United States and any other relevant
countries and, at its own expense, to diligently process and prosecute all
documents required to maintain trademark registrations, including but not
limited to affidavits of use and applications for renewals of registration in
the United States Patent and Trademark Office for all such trademarks, and
pay all fees and disbursements in connection therewith and not abandon any
such filing of affidavit of use or any such application of renewal prior to
the exhaustion of all administrative and judicial remedies without prior
written consent of the Purchaser;
(c) file copyright applications in the United States Copyright
Office (and the equivalent office in any other country) where the failure to
obtain copyright protection could
-21-
have a Material Adverse Effect on the value of the Seller Intellectual
Property) within the appropriate time periods provided under the copyright
laws of the United States (including, without limitation, those set forth in
17 U.S.C.) and such other countries, with respect to each copyrightable work
set forth in SCHEDULE 1.1(a) and with respect to any other work which is
material to the Seller Intellectual Property;
(d) diligently prosecute all applications for United States and
foreign copyrights filed pursuant to subsection (c) above and not abandon any
such application prior to exhaustion of all applicable remedies absent
written consent of the Purchaser.
4.9 ELECTRONIC DATA PROTECTION. During the period between the date of
this Agreement and the Closing Date, the Seller shall use its best efforts to
take any and all commercially reasonable actions necessary to retain all
electronic data and records relating to the Acquired Assets, including
without limitation, that electronic data, regardless of format, residing on
Seller data servers, individual employee's personal computer fixed, disk
drives, floppy and CD/DVD diskettes on or off-site data archives or backup
sites or disaster recovery locations, in any media. During this period the
Seller shall use its commercially reasonable efforts to ensure that no such
data is lost or destroyed by either electronic/magnetic or physical
destruction means including intentional loss or destruction by the Seller's
employees of data files under their control outside the ordinary course of
business or in connection with any employment terminations or employee
departures. The Seller shall use its commercially reasonable efforts to take
such steps to ensure that files and data in each employee's Seller e-mail
accounts or in storage on or ancillary to seller-owned or controlled computer
or otherwise located on a Seller's e-mail server or document server is
archived as of the date of this Agreement and that such archived data will be
stored under secured conditions to permit ready access and retrieval after
the Closing Date and that, from the date hereof, no archival storage shall be
recycled, written over, destroyed or discarded. Notwithstanding anything
contained in this Section 4.9, the Purchaser acknowledges and agrees that
some deletion of e-mails by individual users of the services provided by the
Media Business occurs in the ordinary course of the Media Business and that
such deletion shall not constitute a breach of the Seller's covenants in this
Section 4.9.
4.10 INTELLECTUAL PROPERTY. The Seller shall give the Purchaser prompt
notice that any Person shall have (a) commenced, or shall have notified the
Seller that it intends to commence, a Claim or (b) provided the Seller with
notice, in either case which allege(s) that any products or services related
to the Acquired Assets, Assumed Obligations or Transition Licensing Agreement
infringes or otherwise violates the intellectual property rights of such
Person, is available for licensing from a potential licensor providing the
notice or otherwise alleges that the Seller does not otherwise own or have
the right to exploit such Intellectual Property, including the Seller
Intellectual Property.
4.11 BOOKS AND RECORDS. Until the seventh anniversary of the Closing
Date, the Seller will, to the extent necessary in connection with any Taxes
(including, without limitation, the tax basis of any Acquired Asset) or other
matter relating to the Media Business or the Acquired Assets for any period
ending at or prior to the Closing, and without charge to Purchaser, (i)
retain and, as the Purchaser may reasonably request, permit the Purchaser and
its agents to inspect and copy all original books, records and other
documents and all electronically archived data not deliverable to the
Purchaser at Closing related to the Media Business or the Acquired Assets and
(ii) make reasonably available to the Purchaser, the officers, directors,
employees and agents of
-22-
the Seller and its Affiliates. The Seller shall, from and after the Closing
Date, preserve all such books, records and other documents related to the
Business or the Acquired Assets for such seven (7) year period, and,
thereafter, shall not destroy or dispose of or allow the destruction or
disposition of such books, records and other documents without first having
offered in writing to deliver such books, records and other documents to the
Purchaser at the Purchaser's expense. If the Purchaser fails to request such
books, records and other documents within thirty (30) days after receipt of
the notice described in the preceding sentence, the Seller may dispose of
such books, records and other documents.
4.12 COBRA. The Seller shall be solely responsible for compliance with
the requirements of COBRA, including, without limitation, the provision of
continuation coverage, with respect to all employees or former employees of
the Seller and their qualified beneficiaries for whom a qualifying event
occurs prior to or in connection with the transactions contemplated by this
Agreement. The terms "continuation coverage," "qualified beneficiaries," and
"qualifying event" are used herein with the meanings ascribed to them in
COBRA.
4.13 EMPLOYEE BENEFITS PLANS. During the period from the date of this
Agreement to the Closing Date, the Seller shall not terminate any employee
pension benefit plan subject to Title IV of ERISA maintained or contributed
to or required to be contributed to by the Seller or any subsidiary thereof.
4.14 PRESS RELEASE. As soon as reasonably practicable after the
execution of this Agreement, the Seller shall prepare, with the full
cooperation of Purchaser, a press release to publicly disclose this Agreement
and the material terms hereof. Within two (2) Business Days of the execution
of this Agreement, subject to the Purchaser's prior approval, the Seller
shall file such press release with the Securities and Exchange Commission on
Form 8-K (the "FORM 8-K").
4.15 CHARTER AMENDMENTS. During the period from the date of this
Agreement to the Closing Date, the Seller shall adopt board resolutions that
will (a) propose an amendment to its certificate of incorporation effecting a
name change, (b) recommend that the amendment be adopted, (c) propose that
the amendment be considered at the next stockholders' meeting to be held
within six (6) months of the Closing Date, and (d) approve that the Seller
file for a use of a fictitious name that shall not contain the name
"StarMedia" in Delaware, Florida and New York and any other jurisdiction in
which the Seller is qualified to do business and shall file such fictitious
name applications on the Closing Date; provided that the Seller covenants
that the foregoing amendment of its certificate of incorporation will occur
not later than six (6) months from the Closing Date. During the period from
the date of this Agreement to the Closing Date, Seller shall also take steps
to begin the process of amending the charter documents of each of its
applicable subsidiaries so that within ninety (90) days following the Closing
Date, each such organizing document shall be amended for the purpose of
adopting a corporate name not containing the name "StarMedia" or any
variation thereof. A complete and accurate list of such subsidiaries is
attached hereto as SCHEDULE 4.15. On the Closing Date, the Seller and each
subsidiary shall cease doing business under the name "StarMedia" or any
variation thereof.
-23-
ARTICLE V
COVENANTS OF THE PURCHASER
The Purchaser hereby covenants and agrees with the Seller that:
5.1 CONFIDENTIALITY. Except as may be required by lawful Order of an
Authority of competent jurisdiction, the Purchaser agrees that unless and
until the transactions contemplated hereby have been consummated, the
Purchaser and its respective representatives and Affiliates and their
representatives and advisors will hold in strict confidence all data and
information obtained from the Seller in connection with the transactions
contemplated hereby, except any of the same which (a) was, is now, or becomes
generally available to the public (but not as a result of a breach of any
duty of confidentiality by which the Purchaser and its respective
representatives and advisors are bound); (b) was known to the Purchaser prior
to its disclosure to the Purchaser as demonstrated by the Purchaser's
records; or (c) is disclosed to the Purchaser by a third party not known by
the Purchaser to be subject to any duty of confidentiality to the Seller
prior to its disclosure to the Purchaser by the Seller. The Purchaser will
use such data and information solely for the specific purpose of evaluating
the transactions contemplated hereby. If this Agreement is properly
terminated, the Purchaser and its Affiliates and their representatives and
advisors will promptly destroy all such data, information and other written
material (including all copies thereof) which has been obtained by the
Purchaser, and the Purchaser will make no further use whatsoever of any of
such or the information and knowledge contained therein or derived therefrom.
5.2 NON-SOLICITATION. (a) Except with respect to those persons listed
on SCHEDULE 5.3 hereto, the Purchaser agrees that, during the Restricted
Period, in the Restricted Area, the Purchaser shall not in any capacity,
either separately, jointly or in association with others, directly or
indirectly do any of the following: (i) employ or seek to employ any Person
or agent who is then employed or retained by the Seller or its Affiliates (or
who was so employed or retained at any time within the one (1) year prior to
the date the Purchaser employs or seeks to employ such Person); (ii) solicit,
induce, or influence any proprietor, partner, stockholder, lender, director,
officer, employee, joint venturer, investor, consultant, agent, lessor,
supplier, customer or any other Person which has a business relationship with
the Seller or its Affiliates (other than the connection with the Media
Business), at any time during the Restricted Period, to discontinue or reduce
or modify the extent of such relationship with the Seller or its Affiliates;
or (iii) submit, solicit, encourage or discuss any proposal, plan or offer to
acquire an interest in any of the Seller's or its Affiliates' identified
potential acquisition candidates.
(b) Purchaser recognizes and agree that compliance with the
covenants contained in this Section 5.2 are necessary to protect Seller, and
that a breach by Purchaser of any of the covenants set forth in this Section
5.2 could cause irreparable harm to the Seller, that the Seller's remedies of
law in the event of such breach would be inadequate, and that, accordingly,
in the event of such breach, a restraining order or injunction or both may be
issued against the Purchaser without the requirement that the Seller post a
bond, in addition to any other rights and remedies which are available to the
Seller. Notwithstanding anything contained in the foregoing to the contrary,
the Purchaser and its Affiliates may hire or cause to be hired any person
employed by the Seller or any Affiliate (i) responding to any newspaper
advertisement or the like which is directed at a broad audience and does not
mention the Purchaser by name, or
-24-
(ii) who initiates a solicitation for hire by the Purchaser; PROVIDED,
HOWEVER, the Purchaser and its Affiliates may hire or cause to be hired any
person employed or previously employed by the Seller or any Affiliate upon
entry of an order of Bankruptcy Court approving a plan of liquidation of the
Media Business or the cessation of operations of the Media Business.
5.3 BUSINESS EMPLOYEES. Prior to or following the Closing, the
Purchaser or an Affiliate of the Purchaser may offer employment to any or all
of the Business Employees identified on SCHEDULE 5.3 attached hereto. The
Seller hereby waives any and all restrictions set forth herein or otherwise
on the Purchaser or any of its Affiliates related to the Purchaser's ability
to solicit for employment any or all of the Business Employees. From the date
hereof to the Closing Date, the Seller shall upon request of the Purchaser
provide the Purchaser with reasonable access during business hours to the
Business Employees.
5.4 LICENSING AGREEMENT. Prior to the Closing, the Purchaser and the
Seller will negotiate a licensing agreement pursuant to which the Purchaser
will license certain of the Acquired Assets to the Seller in substantially
the form attached hereto as EXHIBIT 5.4 (the "IP LICENSING AGREEMENT").
ARTICLE VI
OTHER AGREEMENTS
The parties further agree as follows:
6.1 FURTHER ASSURANCES. Subject to the terms and conditions of this
Agreement, the parties hereto shall use their best efforts to take, or cause
to be taken, all action, and to do, or cause to be done, all things
necessary, proper or advisable under applicable Regulations and Orders to
consummate and make effective as promptly as possible the transactions
contemplated by this Agreement and the agreements contemplated hereby, and to
cooperate with each other in connection with the foregoing, including without
limitation using their best efforts (a) to obtain all necessary waivers,
consents, and approvals from other parties to Contracts; (b) to obtain all
necessary Permits, consents, approvals and authorizations as are required to
be obtained under any Regulation or Order; (c) to lift or rescind any
injunction or restraining order or other Order adversely affecting the
ability of the parties to consummate the transactions contemplated hereby;
(d) to effect all necessary registrations and filings; and (e) to fulfill all
conditions to the obligations of the parties under this Agreement. Each of
the Purchaser and the Seller further covenants and agrees that it shall use
its respective best efforts to prevent, with respect to a threatened or
pending preliminary or permanent injunction or other Regulation or Order the
entry, enactment or promulgation thereof, as the case may be.
6.2 PUBLIC ANNOUNCEMENTS. Except as set forth in Section 4.14, or as
required by applicable law, neither the Seller nor any Affiliate,
representative or stockholder of the Seller, shall disclose any of the terms
of this Agreement to any third party without the Purchaser's prior written
consent. The form, content and timing of all press releases, public
announcements or publicity statements with respect to this Agreement and
transactions contemplated hereby shall be subject to the prior consent and
approval of the Purchaser, which approval shall not be unreasonably withheld
or delayed. No press releases, public announcements or publicity statements
shall be released by the Seller without such prior consent.
-25-
6.3 STOCKHOLDER ACTIONS. If between the date hereof and Closing, any
stockholder of the Seller brings any action to restrain, delay or otherwise
enjoin the transactions contemplated by this Agreement, the Seller shall use
its best efforts to obtain the necessary approval or ratification of the
Seller's execution and delivery of this Agreement and the transactions
contemplated hereby.
6.4 COVENANTS. During the time period commencing on the date hereof and
continuing until the Closing Date, the Seller shall:
(a) not agree to create, incur, assume or suffer to exist any
Lien upon or with respect to any property or assets (real, personal or mixed,
tangible or intangible), whether now owned or hereafter acquired, used by the
Seller to perform its obligations under the Transition Licensing Agreement,
provided that prior to the expiration of the term of the Transition Licensing
Agreement, the Seller may negotiate and agree to sell such assets effective
as of the end of the term of the Transition Licensing Agreement;
(b) not declare or pay any dividends, or return any capital, to
its shareholders or authorize or make any other distribution, payment or
delivery of property or cash to its shareholders as such, or redeem, retire,
purchase or otherwise acquire, directly or indirectly, for any consideration,
any shares of any class of its capital stock or interest of any of its
shareholders, in each case now or hereafter outstanding (or any options or
warrants issued by the Seller with respect to its capital stock) or set aside
any funds for any of the foregoing purposes; provided that the Seller may
redeem shares of its capital stock for consideration other than cash.
(c) not, directly or indirectly, lend money or credit or make
advances to any Person, or purchase or acquire any stock, obligations or
securities of, or any other interest in, or make any capital contribution to,
any other Person or otherwise form, organize or operate any subsidiaries
(other than substantially in existence as of the date hereof), or purchase or
own a futures contract or otherwise become liable for the purchase or sale of
currency or other commodities at a future date in the nature of a futures
contract, except that the Seller may acquire and hold receivables owing to
it, if created or acquired in the ordinary course of business and payable or
dischargeable in accordance with customary commercial practice;
(d) not sell or transfer any property or assets to, or otherwise
engage in any other transactions with any Affiliate (as defined in section
101 of the Bankruptcy Code) of the Seller, other than (i) in the ordinary
course of business or (ii) in connection with the sale of assets no longer
required by the Seller to operate the Media Business or perform its
obligations under the Transition Licensing Agreement, provided in each case
that such sale or transfer shall be at prices and on terms and conditions not
less favorable to Seller than could be obtained on an arm's-length basis from
unrelated third parties;
(e) not agree in writing or otherwise to do any of the
foregoing;
(f) provide the Purchaser with (i) 48 hours prior written notice
of the Seller's intention to file a voluntary or petition concerning a
bankruptcy case and (ii) 24 hours notice of any involuntary bankruptcy filing
involving the Seller; and
(g) use its cash to pay when due the accounts payable of the
vendors listed on SCHEDULE 6.4 attached hereto.
-26-
Notwithstanding the foregoing, the Seller may from time to time
request in writing that Purchaser consent to the Seller taking one or more of
the prohibited actions set forth in this Section 6.4, and to the extent that
the action(s) desired to be taken by the Seller will not in the Purchaser's
reasonable determination have a Material Adverse Effect on the Seller's
liquidity or its ability to perform its obligations under the Transition
Licensing Agreement, the Purchaser's consent shall not be unreasonably
withheld or delayed. Failure by the Purchaser to respond to any such written
request of Seller within three (3) Business Days shall be deemed a grant of
such consent by the Purchaser.
6.5 INSURANCE. The Seller shall maintain Policies in full force and
effect that provide for coverages that are usual and customary as to amount
and scope in the Media Business through the term of the Transition Licensing
Agreement.
6.6 COMMERCIAL AGREEMENTS. The Seller and the Purchaser agree to
study the eventual joint cooperation following the Closing Date for the
following commercial or strategic projects:
(i) a content supply agreement whereby the Purchaser would
supply the Seller with content for its mobile business;
(ii) application use agreement whereby the Purchaser would offer
its customers in Latin America and Spain applications and/or mobile portals
of the Seller; and
(iii) joint development of web-wireless agreement whereby the
Purchaser and the Seller create a joint team to study, develop and implement
a web-wireless product using GPRS, UMTS, and/or i-Mode technologies;
(iv) a customer share arrangement whereby each party would offer
to its customers non-competitive products and services developed by the other
party;
(v) a program whereby the Purchaser and the Seller would provide
introductions to their respective large shareholders (Grupo AUNA, Endesa,
Santander Central Hispano and Union Fenosa in the case of the Seller and Bell
South and Primedia in the case of the Purchaser) with the intent to cross
sell services;
(vi) an ISP service arrangement whereby the Purchaser would
consider Bell South as a preferred ISP provider in the event the Purchaser
develops a need for ISP service in Latin America; and
(viii) an arrangement whereby the Purchaser and the Seller
jointly purchase from suppliers in order to increase efficiencies.
For the avoidance of doubt, neither the Seller nor the Purchaser shall
not be obligated to negotiate or enter into any of the aforementioned
arrangements.
6.7 LIMITATION OF USE. After the Closing Date, the Seller, Seller's
Affiliates and their respective directors, officers, successors, assigns,
agents and representatives shall not register, or attempt to register, and
agree that they shall not directly or indirectly use or seek to register any
Intellectual Property that includes, is identical to or is confusingly
similar to any of the trademarks,
-27-
service marks, domain names, trade names, brand names or other indicia of
origin set forth on SCHEDULE 1.1(a), anywhere in the world in any medium, nor
shall any of them challenge or assist any third party in opposing the rights
of Purchaser in any such intellectual property. Examples of uses precluded
hereby include, but are not limited to use: (i) in conjunction with goods or
services related to the Media Business or otherwise; (ii) on websites,
whether Seller's or any third parties' or (iii) in combination with any other
words or marks to act as an indicia of origin.
6.8 PERSONAL DATA AND INFORMATION. Each of the Parties hereto agrees
that while in possession of user personal data and information it shall and
shall cause its Affiliates to comply in all material respects with all
Regulations applicable to maintenance and communication of such personal data
and related information.
6.9 TAX GOOD STANDING CERTIFICATE. Within fifteen (15) Business Days
after the Closing, the Seller shall deliver to the Purchaser a certificate
issued by the appropriate agency of State of New York indicating the Seller's
good standing with respect to the payment of Taxes in such jurisdiction.
ARTICLE VII
TAX MATTERS
The parties agree as follows:
7.1 TAXES. Prior to the Closing, the Seller shall not without the prior
written consent of Purchaser (which consent shall not be unreasonably
withheld or delayed, it being understood that the Purchaser's withholding of
consent shall be deemed unreasonable if, by granting such consent, the
Purchaser's liability for Taxes would not be adversely affected): (i) file or
cause to be filed any amended Tax Returns or claims for refund with respect
to the Media Business or the Acquired Assets; (ii) prepare any Tax Returns
with respect to the Media Business or the Acquired Assets in a manner that is
inconsistent with the past practices of the Seller with respect to the
treatment of items on such Tax Returns except to the extent that any
inconsistency (x) would not materially increase the Purchaser's liability for
Taxes for any period or (y) is required by law; (iii) incur any material
liability for Taxes with respect to the Media Business or the Acquired Assets
other than in the ordinary course of business; or (iv) enter into any
settlement or closing agreement with a taxing authority that materially
increase or may materially increase the Tax liability of the Purchaser for
any period.
7.2 PAYMENT OF TAXES.
(a) The Seller shall be responsible and liable for the timely
payment of any and all Taxes imposed on or with respect to the Media Business
or the Acquired Assets for all Pre-Closing Periods, including the portion of
the taxable period beginning on or prior to the Closing Date and ending after
the Closing date (the "OVERLAP PERIOD") up to and including the Closing Date.
For purposes of this Agreement, all Taxes and Tax liabilities with respect to
the income, property or operations of the Media Business or the Acquired
Assets that relate to the Overlap Period shall be apportioned between the
Seller and the Purchaser as follows: (i) in the case of Taxes other than
income, sales and use and withholding Taxes, on a per diem basis, and (ii) in
the case of income, sales and use and withholding Taxes, as determined from
the books
-28-
and records of the Seller, as though the taxable year of the Seller,
terminated at the close of business on the Closing Date. In addition, the
Seller, on the one hand, and the Purchaser, on the other hand, shall pay the
other the amount of any Taxes allocated to it herein (to the extent that it
is liable therefor and to the extent not already paid by it) at least five
(5) Business Days prior to the due date of such Taxes.
(b) All stamp, transfer, documentary, sales and use, value added,
registration, and other such taxes and fees (including any penalties and
interest) incurred in connection with this Agreement or any transaction
contemplated hereby (collectively, the "TRANSFER TAXES") shall be paid by the
Purchaser, and the Seller shall, at its own expense, properly file on a
timely basis all necessary Tax Returns, reports, forms, and other
documentation with respect to any Transfer Tax as requested by the Purchaser.
ARTICLE VIII
CONDITIONS TO THE OBLIGATIONS OF THE PURCHASER
Each and every obligation of the Purchaser under this Agreement shall
be subject to the satisfaction, on or before the Closing Date, of each of the
following conditions unless waived in writing by the Purchaser:
8.1 REPRESENTATIONS AND WARRANTIES; PERFORMANCE. The representations
and warranties of the Seller contained in Article II and elsewhere in this
Agreement and all information contained in any exhibit or schedule hereto
delivered by, or on behalf of, the Seller, to the Purchaser, shall be true
and correct in all material respects (except for those representations and
warranties which are qualified by materiality, which shall be true and
correct in all respects) when made and on the Closing Date as though then
made. The Seller shall have performed and complied in all material respects
with all agreements, covenants and conditions required by this Agreement to
be performed and complied with by it prior to the Closing Date. The president
and the chief financial officer of the Seller shall have delivered to the
Purchaser a certificate dated the Closing Date, in substantially the form of
EXHIBIT 8.1 attached hereto, certifying to the foregoing.
8.2 CONSENTS AND APPROVALS. The Purchaser and the Seller shall have
obtained any and all consents, approvals, Orders, Permits or other
authorizations, including any stockholder approval (other than stockholder
approval relating solely to the amendment of the Seller's certificate of
incorporation and the charter amendments of its subsidiaries in accordance
with Section 4.15 hereto), required by all applicable Regulations, Orders and
Contracts involving the Seller or binding on its properties and assets, with
respect to the execution, delivery and performance of the Agreement and the
agreements contemplated hereby, the consummation of the transactions
contemplated hereby and the conduct of the Media Business in the same manner
after the Closing Date as before the Closing Date including, without
limitation, the Purchaser's receipt of the unqualified consent of the
holder(s) of shares of the Seller's Series A Preferred Stock.
8.3 OPINION OF THE SELLER'S COUNSELS. The Purchaser shall have received
the opinions of Hughes Hubbard & Reed LLP and Gibson, Dunn & Crutcher, LLP
(which will be addressed
-29-
to the Purchaser), dated as of the Closing Date, in substantially the forms
of EXHIBITS 8.3(a) AND 8.3(b) attached hereto, respectively.
8.4 NO MATERIAL ADVERSE CHANGE. There shall have been no Material
Adverse Change since the date of this Agreement. The Purchaser shall have
received certificates dated the Closing Date, of the president and the chief
financial officer of the Seller, in the form of EXHIBIT 8.4 attached hereto,
certifying to the foregoing.
8.5 NO PROCEEDING OR LITIGATION. No preliminary or permanent injunction
or other Order issued by a court of competent jurisdiction or by any
Authority, or any Regulation or Order promulgated or enacted by any Authority
shall be in effect which would prohibit, prevent or restrict the consummation
of the transactions contemplated hereby. There shall be no Claim pending or
threatened by any stockholder of the Seller alleging that the Seller failed
to obtain stockholder approval of this Agreement and the transactions
contemplated hereby. The Seller shall not have received any notification,
whether in writing or orally, from the Securities and Exchange Commission
restraining or delaying the consummation of, or requiring that the Seller
refrain from consummating, the sale of the Acquired Assets or otherwise
prohibiting, restraining or otherwise enjoining such transaction.
8.6 CONDITION OF ASSETS. None of the Acquired Assets shall have been
damaged or destroyed, prior to the Closing Date, by fire or other casualty,
whether or not fully covered by insurance in an aggregate amount of $100,000.
8.7 ACCOUNTING MATTERS. The Purchaser shall have received a
certificate, dated the Closing Date, of the Seller's chief financial officer
in the form of EXHIBIT 8.7 attached hereto, (i) as to the accuracy of all of
the Seller's Financial Statements, and (ii) that all financial information,
upon which the opinion of Gibson Dunn & Crutcher, LLP referenced in Section
8.3 is based was prepared by the Seller's management based upon the Seller's
books and records and, if applicable, upon reasonable estimates and
assumptions.
8.8 CERTIFICATES OF GOOD STANDING. At the Closing, the Seller shall
have delivered to the Purchaser certificates issued by the appropriate
governmental Authorities in those jurisdictions in which the Seller is
registered or otherwise authorized to transact business evidencing its good
standing as of a date not more than fifteen (15) days prior to the Closing
Date.
8.9 SECRETARY'S CERTIFICATE. The Purchaser shall have received
certificates, by the secretary of the Seller, as to the certificate of
incorporation and bylaws of the Seller, the resolutions adopted by the board
of directors of the Seller in connection with this Agreement, the incumbency
of certain officers of the Seller and the jurisdictions in which the Seller
are qualified to conduct business in substantially the form of EXHIBIT 8.9
attached hereto.
8.10 ESCROW AGREEMENT. The Seller shall have executed the Escrow
Agreement substantially in the form of EXHIBIT 8.10 attached hereto.
8.11 BILL OF SALE. The Seller shall have executed a Bill of Sale in
the form of EXHIBIT 1.3(a) hereto.
-30-
<Page>
8.12 ASSIGNMENT AND ASSUMPTION AGREEMENT. The Seller shall have
executed the Assignment and Assumption Agreement in the form of EXHIBIT
1.2 hereto.
8.13 INTELLECTUAL PROPERTY ASSIGNMENT AGREEMENT. The Seller shall
have executed Intellectual Property Assignment Agreements substantially in
the form of EXHIBIT 1.3(b) hereto.
8.14 TRANSITION LICENSING AGREEMENT. The Seller shall have
executed the Transition Licensing Agreement in substantially the form of
EXHIBIT 8.14 attached hereto.
8.15 LATINRED CLOSING. A closing under the LatinRed Stock Purchase
Agreement shall have occurred prior to or contemporaneously with the
Closing hereof.
8.16 OTHER DOCUMENTS. The Seller shall have furnished the Purchaser with
such other and further documents and certificates, including certificates of the
Seller's officers and others, as the Purchaser shall reasonably request to
evidence compliance with the conditions set forth in this Article VIII.
ARTICLE IX
CONDITIONS TO THE OBLIGATIONS OF THE SELLER
Each and every obligation of the Seller under this Agreement shall be
subject to the satisfaction, on or before the Closing Date, of each of the
following conditions unless waived in writing by the Seller:
9.1 REPRESENTATIONS AND WARRANTIES; PERFORMANCE. The representations and
warranties of the Purchaser contained in Article III and elsewhere in this
Agreement and all information contained in any exhibit or schedule hereto
delivered by, or on behalf of the Purchaser to Seller, shall be true and correct
in all material respects when made and on the Closing Date as though then made
except for those representations and warranties which are qualified by
materiality, which shall be true and correct in all respects. The Purchaser
shall have performed and complied in all material respects with all agreements,
covenants and conditions required by this Agreement to be performed and complied
with by it prior to the Closing Date. The president and the chief financial
officer of the Purchaser shall have delivered to the Seller a certificate dated
the Closing Date, in substantially the form of EXHIBIT 9.1 attached hereto,
certifying to the foregoing.
9.2 CONSENTS AND APPROVALS. The Purchaser shall have obtained any and all
material consents, approvals, Orders, Permits or other authorizations, required
by all applicable Regulations or Orders involving the Seller, with respect to
the execution, delivery and performance of the Agreement, and the consummation
of the transactions contemplated hereby including, without limitation, the
Seller's receipt of the consent of the holder(s) of shares of the Seller's
Series A Preferred Stock.
9.3 NO PROCEEDING OR LITIGATION. No preliminary or permanent injunction or
other Order issued by a court of competent jurisdiction or by any Authority, or
any Regulation or Order promulgated or enacted by any Authority shall be in
effect which would prohibit, prevent or restrict the consummation of the
transactions contemplated hereby.
-31-
<Page>
9.4 SECRETARY'S CERTIFICATE. The Seller shall have received a certificate,
by the secretary of the Purchaser, dated the Closing Date, as to the resolutions
adopted by the directors of the Purchaser in connection with this Agreement and
the incumbency of certain officers of the Purchaser and the jurisdictions in
which the Purchaser is qualified to conduct business in substantially the form
of EXHIBIT 9.4 attached hereto.
9.5 ESCROW AGREEMENT. The Purchaser shall have executed the
Escrow Agreement in substantially the form of EXHIBIT 8.10 attached hereto.
9.6 TRANSITION LICENSING AGREEMENT. The Purchaser shall have
executed the Transition Licensing Agreement in the form of EXHIBIT 8.14
attached hereto.
9.7 ASSIGNMENT AND ASSUMPTION AGREEMENT. The Purchaser shall have
executed the Assignment and Assumption Agreement in the form of EXHIBIT
1.2 hereto.
9.8 OPINIONS OF PURCHASER'S COUNSEL. The Seller shall have received the
opinions of White & Case LLP and the Purchaser's general counsel addressed to
the Seller, dated as of the Closing Date, in substantially the forms attached
hereto as EXHIBITS 9.8(a) and 9.8(b).
9.9 IP LICENSING AGREEMENT. The Purchaser shall have executed the
IP Licensing Agreement.
9.10 LATINRED CLOSING. A closing under the LatinRed Stock Purchase
Agreement shall have occurred prior to or contemporaneously with the
Closing hereof.
ARTICLE X
CLOSING
10.1 CLOSING. Unless this Agreement shall have been terminated or
abandoned pursuant to the provisions of Article XI hereof, a closing of the
transactions contemplated by this Agreement (the "CLOSING") shall be held on
such date and time (the "CLOSING DATE") agreed to by the Purchaser and the
Seller in the offices of the Purchaser's counsel, provided that the Closing
shall not occur, in any event, after July 18, 2002.
10.2 INTERVENING LITIGATION. If prior to the Closing Date any preliminary
or permanent injunction or other Order issued by a court of competent
jurisdiction or by any other Authority, or any notice from the Securities and
Exchange Commission shall restrain or prohibit this Agreement or the
consummation of the transactions contemplated hereby for a period of fifteen
(15) days or longer, the Closing shall be adjourned at the option of either
party for a period of not more than thirty (30) days. If at the end of such
thirty (30) day period such injunction or Order shall not have been favorably
resolved, either party may, by written notice thereof to the other, terminate
this Agreement, without liability or further obligation hereunder.
-32-
<Page>
ARTICLE XI
TERMINATION AND ABANDONMENT
11.1 METHODS OF TERMINATION. This Agreement may be terminated and
the transactions herein contemplated may be abandoned at any time:
(a) by mutual consent of the Purchaser and the Seller; or
(b) by the Purchaser or the Seller if the transactions contemplated
by this Agreement are not consummated on or before July 18, 2002 as a result of,
among other things, the failure of any of the conditions specified in Articles
VIII or IX to have been satisfied; PROVIDED THAT if any party has breached or
defaulted with respect to its obligations under this Agreement on or before such
date, such party may not terminate this Agreement pursuant to this Section
11.1(b), and each other party to this Agreement may at its option enforce its
rights against such breaching or defaulting party and seek any remedies against
such party, in either case as provided hereunder and by applicable Regulation.
11.2 PROCEDURE UPON TERMINATION. In the event of termination and
abandonment pursuant to Section 11.1 hereof, and subject to the proviso
contained in Section 11.1(b) this Agreement shall terminate and shall be
abandoned, without further action by any of the parties hereto. If this
Agreement is terminated as provided herein:
(a) each party shall either destroy or redeliver all documents and
other material of any other party relating to the transactions contemplated
hereby, whether obtained before or after the execution hereof, to the party
furnishing the same;
(b) all information received by any party hereto with respect to the
business of any other party (other than information which is a matter of public
knowledge or which has heretofore been or is hereafter published in any
publication for public distribution or filed as public information with any
governmental authority) shall not at any time be used for the advantage of, or
disclosed to third parties by, such party to the detriment of the party
furnishing such information; and
(c) other than as provided in Section 13.13, no non-breaching party
hereto shall have any liability or further obligation to any other party to this
Agreement.
ARTICLE XII
INDEMNIFICATION
12.1 SURVIVAL. All of the terms and conditions of this Agreement, together
with the representations, warranties and covenants contained herein or in any
instrument or document delivered or to be delivered pursuant to this Agreement,
shall survive the execution of this Agreement and the Closing Date until all
obligations set forth therein shall have been performed and satisfied
notwithstanding any investigation heretofore or hereafter made by or on behalf
of any party hereto as follows: (a) the representations and warranties in
Section 2.11 (Tax Returns) and Section 2.13 (Employee Benefit Plans) and their
related schedules and the covenants contained in this Agreement shall survive
until sixty (60) days after the date as of which the
-33-
<Page>
applicable statutes of limitations with respect to such matters expire (after
giving effect to any extensions or waivers thereof); (b) the representations
and warranties in Section 2.12 (Compliance with Law and Certifications) and
Section 2.16 (Environmental Matters) and their related schedules shall
terminate on the sixth anniversary of the Closing Date; (c) the
representations and warranties in Section 2.2 (Authorization, Etc.), Section
2.9 (Title and Related Matters) and Section 2.20 (Brokerage) and their
related schedules shall survive indefinitely and not terminate; and (d) all
other representations and warranties in this Agreement and their related
schedules or in any of the written statements, certificates or other items
prepared and delivered hereunder or to induce the consummation of any of the
transactions contemplated hereby, shall terminate upon the twelve (12) month
anniversary of the Closing Date; PROVIDED that the representations,
warranties and indemnities for which an indemnification Claim shall be
pending as of the end of the applicable period referred to herein shall
survive with respect to such Claim until the final disposition thereof. The
representations and warranties in this Agreement and the schedules attached
hereto or in any writing delivered in connection herewith shall in no event
be affected by any investigation, inquiry or examination made for or on
behalf of any party or be affected by the knowledge of any officer, director,
stockholder, employee, partner or agent of any party seeking indemnification
hereunder or by the acceptance of any certificate or opinion from any third
party. In addition, in no event will any disclosure of any event or
circumstance made after the date hereof and prior to the Closing serve to
amend any representation or warranty for any purpose of this Agreement.
12.2 INDEMNIFICATION BY THE SELLER. Subject to Sections 12.1 and 12.6, the
Seller agrees to, and shall indemnify the Purchaser and its officers, directors,
employees, stockholders, representatives and agents on an after-tax basis and
hold each of them harmless, against and in respect of any and all damage, loss,
deficiency, liability, obligation, commitment, cost or expense (including the
reasonable fees and expenses of counsel) resulting from, or in respect of, any
of the following:
(a) Any breach of a representation or warranty, or non-fulfillment
of any obligation on the part of the Seller under this Agreement, the Transition
Licensing Agreement, any document relating hereto or thereto or contained in any
schedule to this Agreement, or from any misrepresentation in or omission from
any certificate, schedule, other Contract or instrument delivered by the Seller
hereunder, or the failure of any representation or warranty made in this
Agreement to be true and correct as of the Closing Date.
(b) Any and all Excluded Liabilities.
(c) All liability Claims arising against or involving the Media
Business or concerning any services sold or provided by or on behalf of the
Media Business on or prior to the Closing Date related to or resulting from an
alleged defect in design, manufacture, materials or workmanship of any services
provided, sold or delivered by or on behalf of the Seller or any alleged failure
to warn, or any alleged breach of express or implied warranties or
representations.
(d) Warranty Claims relating to products manufactured or shipped or
services provided by or on behalf of the Media Business prior to the Closing
Date.
(e) All Taxes imposed on or asserted against the properties, income
or operations of the Seller for Pre-Closing Periods and any Tax liability of the
Seller arising in
-34-
<Page>
connection with the transactions contemplated hereby (except as provided by
Section 7.2(b)). Any Taxes, penalties or interest attributable to the
operations of the Seller payable as a result of an audit of any Tax Return
shall be deemed to have accrued in the period to which such Taxes, penalties
or interest are attributable.
(f) Any Claims for breaches under or penalties payable with respect
to any Contracts that are part of the Acquired Assets as a result of late
delivery of services by the Seller or its Affiliates.
(g) All environmental liability of the Seller, including federal,
state and local environmental liability, together with any interest or penalties
thereon or related thereto, that arises or accrues on or prior to the Closing
Date.
(h) Any failure of the Seller to have good, valid and marketable
title to the Acquired Assets, free and clear of all Liens (other than Permitted
Liens), Claims, Orders and Other Indebtedness.
(i) Any Claim for Seller's transaction costs and expenses (other
than as set forth in 7.2(b)).
(j) Any failure by the Seller to comply with applicable bulk
sales laws.
(k) Any Claims brought by third parties arising from the operation
of or related to the Media Business prior to the Closing Date or any Claims
brought by third parties arising from the operation of or related to that
portion of the businesses retained by the Seller following to the Closing Date.
(l) Any successor or vicarious liability of the Seller.
(m) All demands, assessments, judgments, costs and reasonable legal
and other expenses arising from, or in connection with, any action, suit,
proceeding or Claim incident to any of the foregoing.
12.3 INDEMNIFICATION BY THE PURCHASER. Subject to Sections 12.1 and 12.6,
the Purchaser agrees to, and shall, indemnify the Seller and its officers,
directors, employees, stockholders, representatives and agents and hold each
harmless, against and in respect of any and all damage, loss, deficiency,
liability, obligation, commitment, cost or expense (including the fees and
expenses of counsel) resulting from, or in respect of, any of the following:
(a) The breach of any representation or warranty and the
non-fulfillment of any obligation on the part of the Purchaser under this
Agreement, the Transition Licensing Agreement, any document relating hereto or
thereto or contained in any schedule to this Agreement, or from any
misrepresentation in or omission from any certificate, schedule, other Contract
or instrument delivered by the Purchaser hereunder, or the failure of any
representation or warranty made in this Agreement to be true and correct as of
the Closing Date.
(b) The Assumed Obligations.
-35-
<Page>
(c) All Taxes imposed on or asserted against the Acquired Assets
held by the Purchaser for Post-Closing Periods and any Tax liability of the
Purchaser arising in connection with the transactions contemplated hereby. Any
Taxes, penalties or interest attributable to the operations of the Purchaser
payable as a result of an audit of any Tax Return shall be deemed to have
accrued in the period to which such Taxes, penalties or interest are
attributable.
(d) All liability Claims arising against or involving the
StarMedia.com Business or concerning any services sold or provided by or on
behalf of the StarMedia.com Business after the Closing Date related to or
resulting from an alleged defect in design, manufacture, materials or
workmanship of any services provided, sold or delivered by or on behalf of the
Purchaser or any alleged failure to warn, or any alleged breach of express or
implied warranties or representations.
(e) Warranty Claims relating to products manufactured or shipped or
services provided by the Purchaser after the Closing Date.
(f) All demands, assessments, judgments, costs and reasonable legal
and other expenses arising from, or in connection with, any action, suit,
proceeding or Claim incident to the foregoing.
12.4 THIRD PARTY CLAIMS.
(a) The following procedures shall be applicable with respect to
indemnification for third party Claims. Promptly after receipt by the party
seeking indemnification hereunder (hereinafter referred to as the "INDEMNITEE")
of notice of the commencement of any (i) Tax audit or proceeding for the
assessment of Tax by any Taxing Authority or any other proceeding likely to
result in the imposition of a Tax liability or obligation or (ii) any action or
the assertion of any Claim, liability or obligation by a third party (whether by
legal process or otherwise), against which Claim, liability or obligation the
other party to this Agreement (hereinafter the "INDEMNITOR") is, or may be,
required under this Agreement to indemnify such Indemnitee, the Indemnitee
shall, if a Claim thereon is to be, or may be, made against the Indemnitor,
notify the Indemnitor in writing of the commencement or assertion thereof and
give the Indemnitor a copy of such Claim, process and all legal pleadings. The
Indemnitor shall have the right to (i) participate in the defense of such action
with counsel of reputable standing and (ii) assume the defense of such action by
agreeing to assume such defense within ten (10) days of transmittal of the
notice of the Claim by the Indemnitee, in writing unless such Claim (A) may
result in criminal proceedings, injunctions or other equitable remedies in
respect of the Indemnitee or its business; (B) may result in liabilities which,
taken with other then existing Claims under this Article XII, would not be fully
indemnified hereunder; (C) may have a Material Adverse Effect on the business or
financial condition of the Indemnitee after the Closing Date (including an
effect on the Tax liabilities, earnings or ongoing business relationships of the
Indemnitee); (D) is for an alleged amount of less than $25,000; (E) upon
petition by the Indemnitee, if an appropriate court rules that the Indemnitor
failed or is failing to vigorously prosecute or defend such Claim, in which
event the Indemnitee shall assume the defense; or (F) also involves the
Indemnitor or its Affiliate as a party and counsel to the Indemnitee determines
in good faith that joint representation would give rise to a conflict of
interest.
-36-
<Page>
(b) The Indemnitor and the Indemnitee shall cooperate in the defense
of any third party Claims. In the event that the Indemnitor assumes or
participates in the defense of such third party Claim as provided herein, the
Indemnitee shall make available to the Indemnitor all relevant records and take
such other action and sign such documents as are reasonably necessary to defend
such third party Claim in a timely manner. If the Indemnitee shall be required
by judgment or a settlement agreement to pay any amount in respect of any
obligation or liability against which the Indemnitor has agreed to indemnify the
Indemnitee under this Agreement, the Indemnitor shall promptly reimburse the
Indemnitee in an amount equal to the amount of such payment plus all expenses
(including legal fees and expenses) incurred by such Indemnitee in connection
with such obligation or liability subject to this Article XII. No Indemnitor, in
the defense of any such Claim, shall, except with the consent of the Indemnitee,
consent to entry of any judgment or enter into any settlement that does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such Indemnitee of a release from all liability with respect to such Claim.
In addition, with respect to a Claim for Taxes, the Indemnitor shall not enter
into any settlement or arrangement with any taxing authority without the prior
written consent of the Indemnitee, such consent not to be unreasonably withheld
or delayed. In the event that the Indemnitor does not accept the defense of any
matter for which it is entitled to assume as provided above, the Indemnitee
shall have the full right to defend such Claim.
(c) Prior to paying or settling any Claim against which an
Indemnitor is, or may be, obligated under this Agreement to indemnify an
Indemnitee, the Indemnitee must first supply the Indemnitor with a copy of a
final court judgment or decree holding the Indemnitee liable on such Claim or
failing such judgment or decree, must first receive the written approval of the
terms and conditions of such settlement from the Indemnitor, which shall not be
unreasonably withheld or delayed; provided however, that no written approval is
required from the Indemnitor as to any third party Claim (i) that results solely
in injunctions or other equitable remedies in respect of the Indemnitee or its
business; (ii) that settles liabilities, or portions thereof, that are not
subject to indemnification hereunder; or (iii) is for an amount of less than
$25,000.
(d) An Indemnitee shall have the right to employ its own counsel in
any case and the fees and expenses of such counsel shall be at the expense of
the Indemnitee unless (i) the employment of such counsel shall have been
authorized in writing by the Indemnitor in connection with the defense of such
Claim; (ii) the Indemnitor has not employed counsel in the defense of such Claim
after ten (10) days notice; or (iii) such Indemnitee has reasonably concluded
that there may be defenses available to it which are contrary to, or
inconsistent with, those available to the Indemnitor; in any of the foregoing
events such fees and expenses shall be borne by the Indemnitor.
12.5 SECURITY FOR THE INDEMNIFICATION OBLIGATION.
(a) The parties hereby agree that, subject to the following
provisions of this Section 12.5, any Claims for indemnification by the Purchaser
against the Seller hereunder shall be satisfied by the Purchaser first by
recourse against the Escrow Funds pursuant to the terms of the Escrow Agreement.
All payments for indemnifiable damages made pursuant to this Article XII shall
be treated as adjustments to the Purchase Price.
-37-
<Page>
(b) Each Indemnitor shall pay the indemnification amount claimed by
the Indemnitee in immediately available funds promptly within ten (10) days
after the Indemnitee provides the Indemnitor with written notice of a Claim
hereunder unless the Indemnitor in good faith disputes such Claim. If the
Indemnitor disputes such Claim in good faith, then promptly after the resolution
of such dispute, the amount finally determined to be due shall be paid by the
Indemnitor to the Indemnitee in immediately available funds within ten (10) days
of such dispute resolution. In the event the Indemnitor fails to pay the
Indemnitee the amount of such indemnification Claim within such ten (10) day
period the Indemnitor shall pay the Indemnitee interest on the amount of such
indemnification Claim at a rate of ten percent (10%) per annum, compounded
monthly from the date of the original written notice of such indemnification
Claim until the indemnification Claim is paid in full.
(c) If any Indemnitor fails to comply with its obligations to make
cash payments to an Indemnitee in an aggregate amount sufficient to reimburse
the Indemnitee for all losses resulting from an indemnified Claim, the
Indemnitee may pursue any and all rights and remedies against the Indemnitor
available in law or in equity, and shall be entitled to payment of its
reasonable attorneys' fees.
12.6 LIMITATIONS.
(a) Neither party shall be required to indemnify the other party
under Sections 12.2 and 12.3 until the indemnifiable damages, individually or in
the aggregate, exceed $150,000 (the "HURDLE RATE"), at which point such
indemnifying party shall be responsible for all indemnifiable damages that may
arise, irrespective of the Hurdle Rate; and provided that indemnifiable damages
shall accumulate until such time as they exceed the Hurdle Rate, whereupon the
party to be indemnified shall be entitled to seek indemnification for the full
amount of such damages.
(b) Absent fraud, the aggregate amount of indemnifiable damages for
which the Seller or the Purchaser shall be liable pursuant to this Article XII
(other than for breaches of representations and warranties contained in Sections
2.2, 2.9, 2.11, 2.13 and 3.2 or for intentional misrepresentations or breaches
of covenants and other agreements) shall not exceed the Purchase Price.
(c) The parties agree that any Claim for indemnification under the
LatinRed Stock Purchase Agreement shall be pursuant to such agreement and not
hereunder.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
13.1 AMENDMENT AND MODIFICATION. This Agreement may be amended, modified
and supplemented only by written agreement of all the parties hereto with
respect to any of the terms contained herein. No course of dealing between or
among the parties shall be deemed effective to modify, amend, waive or discharge
any part of this Agreement or any rights or obligations of any party under or by
reason of this Agreement.
13.2 WAIVER OF COMPLIANCE; CONSENTS. Any failure of any party hereto to
comply with any obligation, covenant, agreement or condition herein may be
waived in writing by the other
-38-
<Page>
parties hereto, but such waiver or failure to insist upon strict compliance
with such obligation, covenant, agreement or condition shall not operate as a
waiver of, or estoppel with respect to, any subsequent or other failure.
Whenever this Agreement requires or permits consent by or on behalf of any
party hereto, such consent shall be given in writing to be effective.
13.3 CERTAIN DEFINITIONS.
"ACQUIRED ASSETS" shall have the meaning set forth in Section 1.1.
"AFFILIATE" means, with regard to any Person, (a) any Person,
directly or indirectly, controlled by, under common control of, or controlling
such Person; (b) any Person, directly or indirectly, in which such Person holds,
of record or beneficially, five percent (5%) or more of the equity or voting
securities; (c) any Person that holds, of record or beneficially, five percent
(5%) or more of the equity or voting securities of such Person; (d) any Person
that, through Contract, relationship or otherwise, exerts a substantial
influence on the management of such Person's affairs; (e) any Person that,
through Contract, relationship or otherwise, is influenced substantially in the
management of its affairs by such Person; (f) any director, officer, partner or
individual holding a similar position in respect of such Person; or (g) as to
any natural Person, any Person related by blood, marriage or adoption and any
Person owned by such Persons, including without limitation, any spouse, parent,
grandparent, aunt, uncle, child, grandchild, sibling, cousin or in-law of such
Person; PROVIDED, HOWEVER, that for purposes hereof (except for purposes of
Section 4.4 hereof), neither BellSouth Enterprises, Inc. nor its Affiliates
(other than the Seller and any subsidiary or other entity in which the Seller or
any subsidiary thereof has an investment) shall be considered Affiliates of the
Seller.
"ASSIGNMENT OF INTELLECTUAL PROPERTY" shall have the meaning set
forth in Section 1.3.
"ASSUMED OBLIGATIONS" shall have the meaning set forth in Section
1.2.
"AUTHORITY" means any governmental, regulatory or administrative
body, agency, commission, board, arbitrator or authority, any court or judicial
authority, any public, private or industry regulatory authority, whether
international, national, federal, state or local.
"BILL OF SALE" shall have the meaning set forth in Section 1.3.
"BUSINESS DAY" means any day which is not a Saturday or Sunday or
any other day on which commercial banks are required or authorized to close in
New York, New York, Miami, Florida or Madrid, Spain.
"BUSINESS EMPLOYEES" means those persons listed on SCHEDULE 5.3
hereto.
"BUSINESS SUBSIDIARY" means the following entities wholly owned by
the Seller to the extent that it is part of the Media Business and it owns an
Acquired Asset: StarMedia Network Americas (S.A.), StarMedia do Brasil, Ltda.,
StarMedia Chile Ltda., StarMedia Argentina SRL, SMN de Mexico SRL, StarMedia
Network S.L., StarMedia SRL, StarMedia Colombia, SRL, Servicios Star Mexico S de
RL de CV, StarMedia Uruguay SRL, and LatinRed, S.L.
-39-
<Page>
"CLAIM" means any action, claim, lawsuit, demand, suit, inquiry,
hearing, investigation, notice of a violation or noncompliance, litigation,
proceeding, arbitration, appeals or other dispute, whether civil, criminal,
administrative or otherwise.
"CLOSING" shall have the meaning set forth in Section 10.1.
"CLOSING CASH" shall have the meaning set forth in Section 1.4.
"CLOSING DATE" shall have the meaning set forth in Section 10.1.
"COBRA" shall have the meaning set forth in Section 2.13.
"CODE" means the Internal Revenue Code of 1986, as amended, and the
regulations promulgated, and rulings issued, thereunder.
"CONTRACT" means any agreement, contract, commitment, instrument,
document, license and/or permit (issued by an Authority or other third party
relating to the operation of any of the Acquired Assets or conduct of the Media
Business), certificate or other binding arrangement or understanding, whether
written or oral.
"EMPLOYEE BENEFIT PLAN" shall have the meaning set forth in Section
2.13.
"ENVIRONMENTAL LAWS" means all federal, state, regional or
local statutes, laws, rules, regulations, codes, ordinances, orders,
plans, injunctions, decrees, rulings, licenses, rule of common law, and
changes thereto or judicial or administrative interpretations thereof, or
similar laws of foreign jurisdictions where the Seller conducts business,
any of which govern or relate to pollution, protection of the environment,
public health and safety, air emissions, water discharges, waste disposal,
hazardous or toxic substances, solid or hazardous waste, petroleum or
petroleum products or occupational health and safety, as any of these
terms are or may be defined in such statutes, laws, rules, regulations,
codes, orders, ordinances, plans, injunctions, decrees, rulings, licenses
and changes thereto or judicial or administrative interpretations thereof,
including, without limitation: the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 ("CERCLA"), as amended by the
Superfund Amendment and Reauthorization Act of 1986 ("SARA"), 42 U.S.C.
Section9601, ET SEQ.; the Solid Waste Disposal Act, as amended by the
Resource Conversation and Recovery Act of 1976 and subsequent Hazardous
and Solid Waste Amendments of 1984, 42 U.S.C. Section6901 ET SEQ. (herein,
collectively "RCRA"); the Hazardous Materials Transportation Act, as
amended, 49 U.S.C. Section1801, ET SEQ.; the Clean Water Act, as amended,
33 U.S.C. Section1311, ET SEQ.; the Clean Air Act, as amended, 42 U.S.C.
Section7401-7642; the Safe Drinking Water Act, as amended, 42 U.S.C.
Section300f, ET SEQ.; the Toxic Substances Control Act, as amended
("TSCA"), 15 U.S.C. Section2601 ET SEQ.; the Federal Insecticide,
Fungicide, and Rodenticide Act as amended ("FIFRA"), 7 U.S.C.
Section136-136y; the Emergency Planning and Community Right-to-Know Act of
l986, as amended ("EPCRA"), 42 U.S.C. Section11001, ET SEQ. (Title III of
SARA); the Endangered Species Act, as amended ("ESA"), 7 U.S.C.
Section136, 16 U.S.C. Section460, ET SEQ.; and the Occupational Safety and
Health Act of 1970 ("OSHA"), as amended, 29 U.S.C. Section651, ET SEQ.
"ENVIRONMENTAL PERMIT" means Permits, certificates, approvals,
licenses, decrees, consents, Orders and other authorizations relating to or
required by Environmental Law and necessary or desirable for the Seller's
business.
-40-
<Page>
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, and the Regulations issued thereunder.
"ERISA AFFILIATE" means each person (as defined in Section 3(9) of
ERISA) which together with the Seller or their respective subsidiaries would be
deemed to be a "single employer" within the meaning of Section 414 of the Code.
"ESCROW AGENT" means the Wilmington Trust Company and its successors
and assigns, as provided in the Escrow Agreement.
"ESCROW AGREEMENT" shall have the meaning set forth in Section 1.5.
"ESCROW FUNDS" shall have the meaning set forth in Section 1.5.
"EXCLUDED LIABILITIES" shall have the meaning set forth in Section
1.2.
"FINANCIAL STATEMENTS" shall have the meaning set forth in Section
2.4.
"FINANCIAL STATEMENT DATE" shall have the meaning set forth in
Section 2.4.
"GAAP" means U.S. generally accepted accounting principles,
consistently applied, as in existence at the date hereof.
"GOVERNMENT CONTRACT" means any bid, quotation, proposal, contract,
work authorization, lease, commitment or sale or purchase order of the Seller
that is with the United States government, any state, local or foreign Authority
or Government Entity to supply goods and/or services to the United States
government or any state, local or foreign Authority.
"GOVERNMENT ENTITY" means a federal, state, provincial, local,
county or municipal government, governmental, regulatory or administrative
agency, department, court or judicial entity, commission, board, bureau,
industry regulatory authority or other Authority or instrumentality, domestic or
foreign.
"GUARANTEE" means any guarantee or other contingent liability (other
than any endorsement for collection or deposit in the ordinary course of
business), direct or indirect with respect to any obligations of another Person,
through a Contract or otherwise, including, without limitation, (a) any
endorsement or discount with recourse or undertaking substantially equivalent to
or having economic effect similar to a guarantee in respect of any such
obligations and (b) any Contract (i) to purchase, or to advance or supply funds
for the payment or purchase of, any such obligations, (ii) to purchase, sell or
lease property, products, materials or supplies, or transportation or services,
in respect of enabling such other Person to pay any such obligation or to assure
the owner thereof against loss regardless of the delivery or nondelivery of the
property, products, materials or supplies or transportation or services or (iii)
to make any loan, advance or capital contribution to or other Investment in, or
to otherwise provide funds to or for, such other Person in respect of enabling
such Person to satisfy an obligation (including any liability for a dividend,
stock liquidation payment or expense) or to assure a minimum equity, working
capital or other balance sheet condition in respect of any such obligation.
-41-
<Page>
"HAZARDOUS SUBSTANCES" shall be construed broadly to include any
toxic or hazardous substance, material, or waste, any petroleum or petroleum
products or motor oil, pesticides, explosive or radioactive materials, asbestos
in any form that has or threatens to become friable, urea formaldehyde foam
insulation, dielectric fluid containing levels of polychlorinated biphenyls, and
radon gas, any chemicals, materials or substances, including raw products or raw
materials, defined or included in the definition of "hazardous materials,"
"hazardous substances," "hazardous wastes," "restricted hazardous wastes,"
"toxic substances," "toxic pollutants," or words of similar import, under any
applicable Environmental Laws, any other chemical, material, substance, mixture
or by-product, exposure to which is prohibited, limited, or regulated by any
Government Entity and any other contaminant, pollutant or constituent thereof,
whether liquid, solid, semi-solid, sludge and/or gaseous, the presence of which
requires investigation or remediation under any Environmental Law or which are
regulated, listed or controlled by, under or pursuant to any Environmental Law,
or which has been or shall be determined or interpreted at any time by any
Government Entity to be a hazardous or toxic substance regulated under any other
Regulation or Order, or which causes or poses a threat to cause contamination or
a nuisance on the premises or any adjacent premises or a hazard to the
environment or to the health or safety of persons, flora, or fauna on the
premises.
"INDEBTEDNESS" with respect to any Person means (a) any obligation
of such Person for borrowed money, including, without limitation: (i) any
obligation or liabilities incurred for all or any part of the purchase price of
property or other assets or for the cost of property or other assets constructed
or of improvements thereto, other than accounts payable included in current
liabilities and incurred in respect of property purchased in the ordinary course
of business, (whether or not such Person has assumed or become liable for the
payment of such obligation) (whether accrued, absolute, contingent, unliquidated
or otherwise, known or unknown, whether due or to become due); (ii) the face
amount of all letters of credit issued for the account of such Person and all
drafts drawn thereunder; (iii) obligations incurred for all or any part of the
purchase price of property or other assets or for the cost of property or other
assets constructed or of improvements thereto, other than accounts payable
included in current liabilities and incurred in respect of property purchased in
the ordinary course of business (whether or not such Person has assumed or
become liable for the payment of such obligation) secured by Liens; (iv)
capitalized lease obligations; and (v) all Guarantees of such Person; (b)
accounts payable of such Person that have not been paid within sixty (60) days
of their due date and are not being contested; (c) annual employee bonus
obligations that are not accrued on the Financial Statements; and (d)
retroactive insurance premium obligations.
"INDEMNITEE" shall have the meaning set forth in Section 12.4.
"INDEMNITOR" shall have the meaning set forth in Section 12.4.
"INTELLECTUAL PROPERTY" means all foreign and domestic, registered,
unregistered or pending applications for trademarks, trade names, trade dress,
service marks, service names, brand names and other indicia of origin, patents
and patent rights (including provisional applications), utility models and
utility model rights, registered, unregistered or pending applications for
copyrights, mask works, or similar materials eligible for copyright or mask work
registration, product designs, product packaging, business and product names,
logos, slogans, rights of publicity, trade secrets, inventions and methods
(whether or not patentable or reduced to practice), invention disclosures,
improvements, processes, formulae, industrial models, designs,
-42-
<Page>
specifications, moral and economic rights of authors and inventors (however
denominated), technology, methodologies, computer and electronic data, data
processing programs, computer applications and operating program software
(including all source code and object code) (including flow charts, diagrams,
descriptive texts and programs, computer printouts and similar items), firmware,
development tools, flow charts, annotations, all Web addresses, uniform resource
locators ("URLS"), internet domain names applications and registrations
therefor, and the corresponding internet sites (including any content and other
materials accessible and/or displayed thereon, collectively, the "SITES"), all
data bases and data collections and all rights therein, any other confidential
and proprietary right or information, whether or not subject to statutory
registration, and all derivatives, improvements and refinements thereof as well
as all related technical information, manufacturing, engineering and technical
drawings, know-how, and goodwill associated with any of the foregoing
trademarks, trade names, trade dress, service marks, service names, brand names,
business and product names, logos, slogans or other indicia of origin, and the
right to sue for past infringement, if any, in connection with any of the
foregoing.
"INVESTMENT" means (a) any direct or indirect ownership, purchase or
other acquisition by a Person of any notes, obligations, instruments, capital
stock, Options, securities or ownership interests (including partnership
interests and joint venture interests) of any other Person; and (b) any capital
contribution or similar obligation by a Person to any other Person.
"IP LICENSING AGREEMENT" shall have the meaning set forth in Section
5.4.
"IT" shall mean Seller's information technology to be transferred or
included in the Acquired Assets, Assumed Obligations or to be licensed under the
Transition Licensing Agreement relating to the maintenance and performance of
Seller's computer structure, including, but not limited to, hardware and/or
application technology infrastructure, computer software programs, servers and
other related inventory.
"LATINRED" shall have the meaning set forth in the Recitals.
"LATINRED STOCK PURCHASE AGREEMENT" shall have the meaning set forth
in the Recitals.
"LIEN" means any (a) security interest, lien, mortgage, pledge,
hypothecation, encumbrance, Claim, easement, charge, restriction on transfer or
otherwise, or interest of another Person of any kind or nature, including any
conditional sale or other title retention Contract or lease in the nature
thereof; (b) any filing or agreement to file a financing statement as debtor
under the Uniform Commercial Code or any similar statute; and (c) any
subordination arrangement in favor of another Person; provided that any
obligations to provide banners and other similar promotions sold by the Seller
as of the Closing Date, which obligations shall remain the sole and exclusive
responsibility of the Seller following the Closing Date, shall not constitute a
Lien for purposes hereof.
"MATERIAL ADVERSE CHANGE" means any developments or changes which
would have a Material Adverse Effect.
"MATERIAL ADVERSE EFFECT" means any circumstances, state of facts or
matters which have, or which might reasonably be expected to have, a material
adverse effect in respect
-43-
<Page>
the operations, properties, assets, liabilities, affairs, condition (financial
or otherwise) or results of the Media Business taken as a whole; PROVIDED,
HOWEVER, that the effects solely resulting from the Seller's announcement of the
transactions contemplated by this Agreement and the agreements to be executed in
connection herewith shall not constitute a Material Adverse Effect. Without
limiting the generality of the foregoing, any Claim that the Acquired Assets
(other than the Acquired Assets set forth on Schedule 2.14(i)) infringe or
require a license under the Intellectual Property of a third party shall be
deemed to have a Material Adverse Effect.
"MEDIA BUSINESS" shall mean the Seller's operation of its Spanish-
and Portuguese-language network of Internet websites, including without
limitation, StarMedia.com, and all services and assets owned or provided by the
Seller's Internet network to support and maintain those websites operated by
LatinRed. For purposes hereof, the parties agree that LatinRed, the Seller's
wireless business and the following websites operated by the Seller shall not
deemed part of the Media Business: guiarj.com.br; guiasp.com.br; paisas.com;
openchile.com; and batepapo.com.br.
"ORIGINAL AGREEMENT" shall have the meaning set forth in the
Preamble.
"OPTION" means any subscription, option, warrant, right, security,
Contract, commitment, understanding, stock appreciation right, phantom stock
option, profit participation or arrangement by which the Seller is bound to
issue any additional shares of its capital stock or an interest in the equity or
equity appreciation of the Seller or rights pursuant to which any Person has a
right to purchase shares of the Seller's capital stock or an interest in the
equity or equity appreciation of the Seller.
"ORDER" means any writ, decree, order, judgment, injunction, rule,
ruling, Lien, voting right, consent of or by a Government Entity.
"OVERLAP PERIOD" shall have the meaning set forth in Section 7.2(a).
"PERMITS" means all permits, licenses, registrations, certificates,
Orders, qualifications or approvals required by any Authority or other Person.
"PERMITTED LIENS" means Liens for Taxes not yet delinquent or being
contested by the Seller in good faith through appropriate procedures (the
payment of which Taxes shall remain the sole and exclusive responsibility of the
Seller) and any and all rights granted to the Seller upon the Closing pursuant
to the IP Licensing Agreement and the Transition Licensing Agreement.
"PERSON" means any corporation, partnership, joint venture, limited
liability company, organization, entity, Authority or natural person.
"POLICIES" means all Contracts that insure (a) the Seller's or any
of its subsidiaries' properties, plant and equipment for loss or damage; and (b)
the Seller or any of its subsidiaries, officers, directors, employees or agents
against any liabilities, losses or damages (or lost profits) for any reason or
purpose.
"POST-CLOSING PERIOD" means any taxable year or other taxable period
beginning after the Closing Date and the portion of the Overlap Period after the
Closing Date.
-44-
<Page>
"PRE-CLOSING PERIOD" shall have the meaning set forth in Section
2.11(b).
"PURCHASE PRICE" shall have the meaning set forth in Section 1.4.
"PURCHASER" shall have the meaning set forth in the Preamble.
"REGISTERED INTELLECTUAL PROPERTY" means all Seller Intellectual
Property that consists of United States, international and foreign: (a) patents
and patent applications (including provisional applications); (b) registered
trademarks and servicemarks, applications to register trademarks and
servicemarks, intent-to-use applications, other registrations or applications to
trademarks or servicemarks; (c) registered copyrights and applications for
copyright registration; (d) any mask work registrations and applications to
register mask works; and (e) any other Intellectual Property that is the subject
of an application, certificate, filing, registration or other document issued
by, filed with, or recorded by, any state, government or other public legal
authority, whether domestic or foreign, PROVIDED, HOWEVER, that Seller
Intellectual Property shall not be deemed Registered Intellectual Property
merely by reason of the filing with respect thereto of a financing statement
pursuant to the Uniform Commercial Code (or corresponding commercial statute of
the applicable jurisdiction).
"REGULATION" means any rule, law, code, statute, regulation,
ordinance, requirement, announcement, policy, guideline, rule of common law or
other binding action of or by a Governmental Entity and any judicial
interpretation thereof.
"RESTRICTED AREA" shall have the meaning set forth in Section
4.3(b).
"RESTRICTED PERIOD" shall have the meaning set forth in Section
4.3(b).
"SELLER" shall have the meaning set forth in the Preamble.
"SELLER INTELLECTUAL PROPERTY" means any and all Intellectual
Property listed on SCHEDULE 1.1(a) attached hereto.
"SELLER REGISTERED INTELLECTUAL PROPERTY" means all domestic or
foreign Registered Intellectual Property owned by, held by another for the
benefit of, filed in the name of, assigned to or applied for by, or held by a
third party for the benefit of, the Seller or any Business Subsidiary related to
the Media Business.
"SITE" shall have the meaning set forth in Section 4.3(a).
"TAX RETURNS" shall have the meaning set forth in Section 2.11(a).
"TAX" or "TAXES" means all taxes, assessments, charges, duties,
fees, levies or other governmental charges, including, without limitation, all
Federal, state, local, foreign and other income, franchise, profits, gross
receipts, capital gains, capital stock, transfer, property, sales, use,
value-added, occupation, property, excise, severance, windfall profits, stamp,
license, payroll, social security, withholding and other taxes, assessments,
charges, duties, fees, levies or other governmental charges of any kind
whatsoever, including any fees or charges due under any Environmental Permits or
Environmental Laws (whether payable directly or by withholding and whether or
not requiring the filing of a Tax Return), all estimated taxes, deficiency
assessments,
-45-
<Page>
additions to tax, penalties and interest and shall include any liability for
such amounts as a result either of being a member of a combined, consolidated,
unitary or affiliated group or of a contractual obligation to indemnify any
person or other entity.
"TAXING AUTHORITIES" means Internal Revenue Service and any other
Federal, state, or local Authority which has the right to impose Taxes on the
Seller.
"TRANSFER TAXES" shall have the meaning set forth in Section 7.2(b).
"TRANSITION LICENSING AGREEMENT" shall have the meaning set forth in
the Recitals.
13.4 NOTICES. All notices, requests and other communications hereunder
must be in writing and will be deemed to have been duly given only if delivered
personally against written receipt or by facsimile transmission against
facsimile confirmation or mailed by internationally recognized overnight courier
prepaid, to the parties at the following addresses or facsimile numbers:
(a) If to the Seller, to:
StarMedia Network, Inc.
999 Brickell Avenue, Suite 808
Miami, Florida 33131
Facsimile: (305)938-3000
Attn: President
with a copy to (which shall not constitute notice to the
Seller):
Hughes, Hubbard & Reed LLP
201 South Biscayne Boulevard
Suite 2500
Miami, FL 33131-4332
Facsimile: (305) 371-8759
Attn: Timothy J. McCarthy, Esq.
or to such other Person or address as the Seller shall furnish by notice
to the Purchaser in writing.
(b) If to the Purchaser, to:
EresMas Interactiva U.S.A., Inc.
Ribera del Sena s/n
Edificio APOT pl. 3(a)
28042 Madrid
Spain
Facsimile: 34 91 202 0541
Attn: Luis Arguello, General Counsel
-46-
<Page>
with a copy to (which shall not constitute notice to the
Purchaser):
White & Case LLP
200 South Biscayne Boulevard
Suite 4900
Miami, Florida 33131
Facsimile: (305) 358-5744
Attn: Jeffrey M. Oshinsky, Esq.
or to such other Person or address as the Purchaser shall furnish by
notice to the Seller in writing.
If to the Escrow Agent:
Wilmington Trust Company
520 Madison Avenue
New York, New York 10022
Facsimile: (212) 425-0513
Attn: James D. Nesci
All such notices, requests and other communications will (a) if delivered
personally to the address as provided in this Section 13.4, be deemed given upon
delivery, (b) if delivered by facsimile transmission to the facsimile number as
provided for in this Section 13.4, be deemed given upon facsimile confirmation,
and (c) if delivered by overnight courier to the address as provided in this
Section 13.4, be deemed given on the earlier of the first business day following
the date sent by such overnight courier or upon receipt (in each case regardless
of whether such notice, request or other communication is received by any other
Person to whom a copy of such notice is to be delivered pursuant to this Section
13.4). Any party from time to time may change its address, facsimile number or
other information for the purpose of notices to that party by giving notice
specifying such change to the other party hereto.
13.5 ASSIGNMENT. This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns, but neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto without the prior written consent of the other parties, except
that the Purchaser may, without the prior approval of the Seller, assign its
rights, interests and obligations hereunder to any Affiliate, and may grant
Liens in respect of its rights and interests hereunder to its lenders (and any
agent for the lenders), and the parties hereto consent to any exercise by such
lenders (and such agent) of their rights and remedies with respect to such
collateral. In the event of any such assignment, the Purchaser agrees that it
shall remain bound by its obligations herein.
13.6 GOVERNING LAW, SUBMISSION TO JURISDICTION. Except as and to the
extent required to consummate the transactions contemplated by this Agreement
under Delaware law, this Agreement, any ancillary agreements and any other
closing documents shall be governed by and construed in accordance with the laws
of the State of Florida as applied to Contracts entered into by Florida
residents and performed entirely in Florida, without giving effect to its
principles or rules regarding conflicts of laws, other than such principles
directing application of the laws of
-47-
<Page>
Florida. Each party hereto irrevocably agrees that any legal action or
proceeding with respect to this Agreement or for recognition and enforcement of
any judgment in respect hereof brought by another party hereto or its successors
or assigns may be brought and determined by either a state court or federal
court sitting in the Southern District of Florida and each party hereto hereby
irrevocably submits with regard to any such action or proceeding for itself and
in respect to its property, generally and unconditionally, to the nonexclusive
jurisdiction of the aforesaid courts. Each party hereto hereby irrevocably
waives, and agrees not to assert, by way of motion, as a defense, counterclaim
or otherwise, in any action or proceeding with respect to this Agreement, (a)
any Claim that it is not personally subject to the jurisdiction of the
above-named courts for any reason other than the failure to serve process in
accordance with this Section 13.6, (b) that it or its property is exempt or
immune from jurisdiction of any such court or from any legal process commenced
in such courts (whether through service of notice, attachment prior to judgment,
attachment in aid of execution of judgment, execution of judgment or otherwise),
and (c) to the fullest extent permitted by applicable law, that (i) the suit,
action or proceeding in any such court is brought in an inconvenient forum, (ii)
the venue of such suit, action or proceeding is improper and (iii) this
Agreement, or the subject matter hereof, may not be enforced in or by such
courts.
13.7 COUNTERPARTS. This Agreement may be executed in two or more
counterparts (including by means of telecopied signature pages), each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument. Counterpart signatures need not be on the same page and
shall be deemed effective upon receipt.
13.8 HEADINGS. The article and section headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
13.9 ENTIRE AGREEMENT. This Agreement, including the schedules and
exhibits hereto and the contracts, documents, certificates and instruments
referred to herein, embodies the entire agreement and understanding of the
parties hereto in respect of the transactions contemplated by this Agreement and
supersedes all prior contracts, representations, warranties, promises,
covenants, arrangements, communications and understandings, oral or written,
express or implied, between the parties with respect to such transactions. There
are no contracts, representations, warranties, promises, covenants, arrangements
or understandings between the parties with respect to the transactions
contemplated hereby, other than those expressly set forth or referred to herein.
13.10 INJUNCTIVE RELIEF. The parties hereto agree that in the event of a
breach of any provision of this Agreement or a failure by a party to perform in
accordance with the specific terms herein, the aggrieved party or parties may be
damaged irreparably and without an adequate remedy at law. The parties therefore
agree that in the event of a breach of any provision of this Agreement, the
aggrieved party or parties may elect to institute and prosecute proceedings in
any court of competent jurisdiction to enforce specific performance or to enjoin
the continuing breach of such provision without the requirement of posting a
bond, as well as to obtain damages for breach of this Agreement. By seeking or
obtaining any such relief, the aggrieved party shall not be precluded from
seeking or obtaining any other relief to which it may be entitled.
13.11 DELAYS OR OMISSIONS. No delay or omission to exercise any right,
power or remedy accruing to any party hereto, upon any breach or default of any
other party under this
-48-
<Page>
Agreement, shall impair any such right, power or remedy of such party nor shall
it be construed to be a waiver of any such breach or default, or an acquiescence
therein, or of or in any similar breach or default thereafter occurring; nor
shall any waiver of any single breach or default be deemed a waiver of any other
breach or default theretofore or thereafter occurring. Any waiver, permit,
consent or approval of any kind or character on the part of any party hereto of
any breach or default under this Agreement, or any waiver on the part of any
party of any provisions or conditions of this Agreement must be made in writing
and shall be effective only to the extent specifically set forth in such
writing. All remedies, either under this Agreement or by law or otherwise
afforded to any party, shall be cumulative and not alternative.
13.12 SEVERABILITY. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable Regulations, but if any provision of this Agreement or the
application of any such provision to any Person or circumstance shall be held to
be prohibited by, illegal or unenforceable under applicable law in any respect
by a court of competent jurisdiction, such provision shall be ineffective only
to the extent of such prohibition or illegality or unenforceability, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.
13.13 EXPENSES. Each of the parties shall bear its own expenses, including
without limitation, brokerage or investment banking, accounting and legal fees
and expenses, with respect to this Agreement and the transactions contemplated
hereby. If any legal action or other proceeding relating to this Agreement, the
agreements contemplated hereby, the transactions contemplated hereby or thereby
or the enforcement of any provision of this Agreement or the agreements
contemplated hereby is brought against any party, the prevailing party in such
action or proceeding shall be entitled to recover all reasonable expenses
relating thereto (including reasonable attorney's fees and expenses) from the
party against which such action or proceeding is brought in addition to any
other relief to which such prevailing party may be entitled.
13.14 NO THIRD PARTY BENEFICIARIES. This Agreement is for the sole benefit
of the parties and their permitted successors and assigns and nothing herein
express or implied shall be construed to give any person, other than the parties
of such permitted successors and assigns, any legal or equitable rights
hereunder.
13.15 SCHEDULES. No exceptions to any representations or warranties
disclosed on one schedule shall constitute an exception to any other
representation or warranties made in this Agreement unless the substance of such
exception is disclosed as provided herein on each such applicable schedule or a
specific cross reference to a disclosure on another schedule is made. All
schedules and exhibits attached hereto or referred to herein are hereby
incorporated in and made a part of this Agreement as if set forth in full
herein.
13.16 NO STRICT CONSTRUCTION. The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties, 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.
13.17 CONSTRUCTION. Unless the context of this Agreement otherwise
requires, (i) words of any gender include each other gender and the neuter, (ii)
words using the singular or plural
-49-
<Page>
number also include the plural or singular number, respectively, (iii) the terms
"hereof," "herein," "hereby" and derivative or similar words refer to this
entire Agreement as a whole and not to any particular Article, Section or other
subdivision, (iv) the terms "Article" or "Section" or other subdivision refer to
the specified Article, Section or other subdivision of the body of this
Agreement, (v) the phrases "ordinary course of business" and "ordinary course of
business consistent with past practice" refer to the Media Business and practice
of the Seller and the Media Business, (vi) the words "include," "includes" and
"including" shall be deemed to be followed by the phrase "without limitation,"
and (vii) when a reference is made in this Agreement to exhibits, such reference
shall be to an exhibit to this Agreement unless otherwise indicated. All
accounting terms used herein and not expressly defined herein shall have the
meanings given to them under GAAP. When used herein, the terms "party" or
"parties" refer to the Seller, on the one hand, and the Purchaser, on the other,
and the terms "third party" or "third parties" refers to Persons other than the
Seller or the Purchaser.
13.18 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN
CONNECTION WITH, THIS AGREEMENT OR ANY SCHEDULE OR EXHIBIT HERETO, OR ANY COURSE
OF CONDUCT, COURSE OF DEALING OR STATEMENTS (WHETHER VERBAL OR WRITTEN) RELATING
TO THE FOREGOING. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES HERETO
TO ENTER INTO THIS AGREEMENT.
* * *
-50-
<Page>
IN WITNESS WHEREOF, the parties hereto have made and entered into this
Amended and Restated Asset Purchase Agreement the date first hereinabove set
forth.
ERESMAS INTERACTIVA S.A.
By:
----------------------------------------
Antonio Anguita Ruiz
Chief Executive Officer
STARMEDIA NETWORK, INC.
By:
----------------------------------------
Jose Manuel Tost
President
-51-
<Page>
TABLE OF CONTENTS
<Table>
<Caption>
Page
----
ARTICLE I PURCHASE OF ASSETS..................................................2
1.1 Purchase and Sale of Acquired Assets................................2
1.2 Assumed Obligations.................................................2
1.3 Method of Conveyance................................................3
1.4 Purchase Price......................................................3
1.5 Escrow Agreement....................................................3
1.6 Allocation of Purchase Price........................................3
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE SELLER........................4
2.1 Corporate Organization, Etc.........................................4
2.2 Authorization, Etc..................................................4
2.3 No Violation........................................................4
2.4 Financial Statements................................................5
2.5 Employees...........................................................6
2.6 Absence of Certain Changes..........................................6
2.7 Contracts...........................................................6
2.8 Government Contracts................................................7
2.9 Title and Related Matters...........................................7
2.10 Litigation..........................................................8
2.11 Tax Returns.........................................................8
2.12 Compliance with Law and Certifications..............................9
2.13 Employee Benefit Plans.............................................10
2.14 Intellectual Property..............................................10
2.15 Customer Warranties................................................14
2.16 Environmental Matters..............................................14
2.17 Capital Expenditures and Investments...............................15
2.18 Dealings with Affiliates...........................................15
2.19 Insurance..........................................................15
2.20 Brokerage..........................................................15
2.21 Customers and Suppliers............................................15
2.22 Permits............................................................15
2.23 Improper and Other Payments........................................15
2.24 Disclosure.........................................................16
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE PURCHASER....................16
3.1 Corporate Organization, Etc........................................16
3.2 Authorization, Etc.................................................16
3.3 No Violation.......................................................16
3.4 Brokerage..........................................................17
ARTICLE IV COVENANTS OF THE SELLER............................................17
4.1 Operation of Media Business........................................17
-i-
<Page>
4.2 Full Access and Disclosure.........................................18
4.3 Non-Competition; Non-Solicitation..................................18
4.4 Confidentiality....................................................20
4.5 Fulfillment of Conditions Precedent................................20
4.6 Exclusivity........................................................21
4.7 Deliveries After Closing...........................................21
4.8 Intellectual Property Protection...................................21
4.9 Electronic Data Protection.........................................22
4.10 Intellectual Property..............................................22
4.11 Books and Records..................................................22
4.12 COBRA..............................................................23
4.13 Employee Benefits Plans............................................23
4.14 Press Release......................................................23
4.15 Charter Amendments.................................................23
ARTICLE V COVENANTS OF THE PURCHASER.........................................24
5.1 Confidentiality....................................................24
5.2 Non-Solicitation...................................................24
5.3 Business Employees.................................................25
5.4 Licensing Agreement................................................25
ARTICLE VI OTHER AGREEMENTS...................................................25
6.1 Further Assurances.................................................25
6.2 Public Announcements...............................................25
6.3 Stockholder Actions................................................26
6.4 Covenants..........................................................26
6.5 Insurance..........................................................27
6.6 Commercial Agreements..............................................27
6.7 Limitation of Use..................................................27
6.8 Personal Data and Information......................................28
6.9 Tax Good Standing Certificate......................................28
ARTICLE VII TAX MATTERS........................................................28
7.1 Taxes..............................................................28
7.2 Payment of Taxes...................................................28
ARTICLE VIII CONDITIONS TO THE OBLIGATIONS OF THE PURCHASER.....................29
8.1 Representations and Warranties; Performance........................29
8.2 Consents and Approvals.............................................29
8.3 Opinion of the Seller's Counsels...................................29
8.4 No Material Adverse Change.........................................30
8.5 No Proceeding or Litigation........................................30
8.6 Condition of Assets................................................30
8.7 Accounting Matters.................................................30
8.8 Certificates of Good Standing......................................30
8.9 Secretary's Certificate............................................30
8.10 Escrow Agreement...................................................30
-ii-
<Page>
8.11 Bill of Sale.......................................................30
8.12 Assignment and Assumption Agreement................................31
8.13 Intellectual Property Assignment Agreement.........................31
8.14 Transition Licensing Agreement.....................................31
8.15 LatinRed Closing...................................................31
8.16 Other Documents....................................................31
ARTICLE IX CONDITIONS TO THE OBLIGATIONS OF THE SELLER........................31
9.1 Representations and Warranties; Performance........................31
9.2 Consents and Approvals.............................................31
9.3 No Proceeding or Litigation........................................31
9.4 Secretary's Certificate............................................32
9.5 Escrow Agreement...................................................32
9.6 Transition Licensing Agreement.....................................32
9.7 Assignment and Assumption Agreement................................32
9.8 Opinions of Purchaser's Counsel....................................32
9.9 IP Licensing Agreement.............................................32
9.10 LatinRed Closing...................................................32
ARTICLE X CLOSING............................................................32
10.1 Closing............................................................32
10.2 Intervening Litigation.............................................32
ARTICLE XI TERMINATION AND ABANDONMENT........................................33
11.1 Methods of Termination.............................................33
11.2 Procedure Upon Termination.........................................33
ARTICLE XII INDEMNIFICATION....................................................33
12.1 Survival...........................................................33
12.2 Indemnification by the Seller......................................34
12.3 Indemnification by the Purchaser...................................35
12.4 Third Party Claims.................................................36
12.5 Security for the Indemnification Obligation........................37
12.6 Limitations........................................................38
ARTICLE XIII MISCELLANEOUS PROVISIONS...........................................38
13.1 Amendment and Modification.........................................38
13.2 Waiver of Compliance; Consents.....................................38
13.3 Certain Definitions................................................39
13.4 Notices............................................................46
13.5 Assignment.........................................................47
13.6 Governing Law, Submission to Jurisdiction..........................47
13.7 Counterparts.......................................................48
13.8 Headings...........................................................48
13.9 Entire Agreement...................................................48
13.10 Injunctive Relief..................................................48
13.11 Delays or Omissions................................................48
-iii-
<Page>
13.12 Severability.......................................................49
13.13 Expenses...........................................................49
13.14 No Third Party Beneficiaries.......................................49
13.15 Schedules..........................................................49
13.16 No Strict Construction.............................................49
13.17 Construction.......................................................49
13.18 WAIVER OF JURY TRIAL...............................................50
</Table>
-iv-
<Page>
SCHEDULES AND EXHIBITS
<Table>
<Caption>
SCHEDULE RESPONSIBILITY
- -------- ("SELLER" OR "PURCHASER")
-------------------------
1.1 Acquired Assets....................................................................P
1.2 Assumed Obligations................................................................P
1.6 Allocation of Purchase Price.......................................................P/S
2.1(a) Foreign Qualifications of the Seller...............................................S
2.1(b) Certificate of Incorporation and Bylaws of the Seller..............................S
2.2 Seller Board of Director's Resolution..............................................S
2.3 No Violation.......................................................................S
2.4(a) Financial Statements...............................................................S
2.4(b) Indebtedness.......................................................................S
2.5 Employee Matters...................................................................S
2.6(a) Absence of Certain Change..........................................................S
2.6(d) Contracts Not in the Ordinary Course of Business...................................S
2.7(a) Contracts..........................................................................S
2.10 Litigation.........................................................................S
2.11 Tax Returns........................................................................S
2.13 ERISA Matters List of Plans........................................................S
2.14(a) Seller Registered Intellectual Property............................................S
2.14(b) Licensed Intellectual Property.....................................................S
2.14(e) Form of Seller's Confidentiality Agreement.........................................S
2.14(g) Third Party Licenses...............................................................S
2.14(h) IP Litigation......................................................................S
2.14(i) Maintenance........................................................................S
2.14(k) Infringement.......................................................................S
2.14(n) Source Codes.......................................................................S
2.14(o) Site Operations....................................................................S
2.14(q) Content Providers..................................................................S
2.22 Permits............................................................................S
3.1 Deed of Incorporation and Bylaws of the Purchaser..................................P
3.4 Brokerage..........................................................................P
4.15 Charter Amendments.................................................................S
5.3 Business Employees.................................................................P
6.4 Critical Vendors...................................................................P
</Table>
<Table>
<Caption>
EXHIBIT RESPONSIBILITY
------- --------------
1.2 Form of Assignment and Assumption Agreement.........................P
1.3(a) Form of Bill of Sale................................................P
1.3(b) Form of Intellectual Property Assignment Agreement..................P
5.4 Form of IP Licensing Agreement......................................S
8.1 Form of Officer's Certificate - Seller..............................P
8.3(a) Form of Hughes Hubbard & Reed Opinion...............................P
8.3(b) Form of Gibson, Dunn & Crutcher Opinion.............................S/P
-v-
<Page>
8.4 Form of Officer's Certificate - No Material Adverse Change..........P
8.7 Form of Accounting Certificate......................................P
8.9 Form of Secretary's Certificate - Seller............................P
8.10 Form of Escrow Agreement............................................P
8.14 Transition Licensing Agreement......................................P
9.1 Form of Officer's Certificate - Purchaser...........................P
9.4 Form of Secretary's Certificate - Purchaser.........................P
9.8(a) Form of White & Case Opinion........................................P
9.8(b) Form of Purchaser's General Counsel Opinion.........................P
</Table>
-vi-