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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
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:
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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
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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
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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
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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.
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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
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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
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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.
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(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
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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
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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
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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
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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
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(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.
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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
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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,
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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;
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(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,
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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
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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
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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
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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
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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.
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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
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(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.
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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.
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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,
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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
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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
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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.
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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.
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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.
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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
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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
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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.
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(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.
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(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.
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(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
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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.
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"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.
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"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.
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"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,
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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
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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.
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"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,
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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
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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
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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
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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
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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.
* * *
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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
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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
</Table>
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<Table>
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
</Table>
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<Table>
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
</Table>
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<Table>
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>
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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
</Table>
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<Table>
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>
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