Exhibit 10.29
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into as of April
29, 1999, by and between StarMedia Network, Inc., a Delaware corporation (the
"Company"), and Jack C. Chen (the "Employee").
RECITALS:
In entering into this Agreement, the Company desires to provide the
Employee with substantial incentives to serve the Company without distraction or
concern over minimum compensation, benefits or tenure, to develop and implement
the Company's business plan and thereafter manage the Company's future growth
and development and maximize the returns to the Company's stockholders.
NOW, THEREFORE, in consideration of the foregoing and the mutual
provisions contained herein, and for other good and valuable consideration, the
parties hereto agree with each other as follows:
1. CERTAIN DEFINITIONS
A. Certain Definitions. As used herein, the following terms have the
meanings assigned to them below:
"Active Status" means the Employee's Employment status from the
Effective Date to the Termination Date.
"Affiliate" has the meaning ascribed to that term in Exchange
Act Rule 12b-2.
"Associate" means, with reference to any Person,
(a) any corporation, firm, partnership, association,
unincorporated organization or other entity (other than the
Company or a subsidiary of the Company) of which that Person is
an officer or general partner (or officer or general partner of
a general partner) or is, directly or indirectly, the Beneficial
Owner of 10% or more of any class of its equity securities,
(b) any trust or other estate in which that Person has a
substantial beneficial interest or for or of which that Person
serves as trustee or in a similar fiduciary capacity and
(c) any relative or spouse of that Person, or any
relative of that spouse, who has the same home as that Person.
"Base Salary" means the guaranteed minimum annual salary payable
by the
Company to the Employee pursuant to Section 4.A.
"Beneficial Owner" A specified Person is deemed the "Beneficial
Owner" of, and is deemed to "beneficially own," any securities:
(a) of which that Person or any of that Person's
Affiliates or Associates, directly or indirectly, is the
"beneficial owner" (as determined pursuant to Exchange Act Rule
13d-3) or otherwise has the right to vote or dispose of,
including pursuant to any agreement, arrangement or
understanding (whether or not in writing); provided, however,
that a Person shall not be deemed the "Beneficial Owner" of, or
to "beneficially own," any security under this subparagraph (a)
as a result of an agreement, arrangement or understanding to
vote that security if that agreement, arrangement or
understanding: (1) arises solely from a revocable proxy or
consent given in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the
applicable provisions of the Exchange Act; and (2) is not then
reportable by such Person on Exchange Act Schedule 13D (or any
comparable or successor report);
(b) which that Person or any of that Person's Affiliates
or Associates, directly or indirectly, has the right or
obligation to acquire (whether that right or obligation is
exercisable or effective immediately or only after the passage
of time or the occurrence of an event) pursuant to any
agreement, arrangement or understanding (whether or not in
writing) or on the exercise of conversion rights, exchange
rights, other rights, warrants or options, or otherwise;
provided, however, that a Person shall not be deemed the
"Beneficial Owner" of, or to "beneficially own," securities
tendered pursuant to a tender or exchange offer made by that
Person or any of that Person's Affiliates or Associates until
those tendered securities are accepted for purchase or exchange;
or
(c) which are beneficially owned, directly or
indirectly, by (1) any other Person (or any Affiliate or
Associate thereof) with which the specified Person or any of the
specified Person's Affiliates or Associates has any agreement,
arrangement or understanding (whether or not in writing) for the
purpose of acquiring, holding, voting (except pursuant to a
revocable proxy or consent as described in the proviso to
subparagraph (a) of this definition) or disposing of any voting
securities of the Company or (2) any group (as that term is used
in Exchange Act Rule 13d-5(b)) of which that specified Person is
a member; provided, however, that nothing in this definition
shall cause a Person engaged in business as an underwriter of
securities to be the "Beneficial Owner" of, or to "beneficially
own," any securities acquired through such a Person's
participation in good faith in a firm commitment underwriting
until the
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expiration of forty (40) days after the date of that
acquisition. For purposes of this Agreement, " voting" a
security shall include voting, granting a proxy, acting by
consent, making a request or demand relating to corporate action
(including, calling a stockholder meeting) or otherwise giving
an authorization (within the meaning of Section 14(a) of the
Exchange Act) in respect of such security.
"Board" means herein the entire Board of Directors of the
Company, except when less than the entire Board is specified herein.
"Business Reason" for the Company's termination of the
Employee's Employment means any reason other than Cause or Disability.
"Business Reason Termination Payment" means an amount equal to
200% of the Base Salary and Minimum Bonus applicable to the calendar
year in which such termination for Business Reason takes place.
"Cause" for the Company's termination of the Employee's
Employment means:
(a) the Employee's final conviction of a felony.
(b) the Employee's continuing to engage in conduct which
has caused or is reasonably likely to cause, demonstrable and
serious injury to the Company after having been given written
notice of such determination by the Required Board Majority and
a reasonable opportunity to cure, which curative period shall
not be less than thirty (30) days;
(c) the Employee's continuing failure to substantially
perform the lawful directives of the Board (consistent with the
provisions of this Agreement) or his duties and responsibilities
in accordance with the provisions of this Agreement (except by
reason of the Employee's incapacity due to physical or mental
illness or injury) after having been given written notice of
such determination by the Required Board Majority and a
reasonable opportunity to cure, which curative period shall not
be less than thirty (30) days, which written notice specifically
identifies the provision of this Agreement which the Required
Board Majority contends that Employee has continually failed to
substantially perform or the directive that the Employee has not
followed, the bases for the Required Board Majority's
determination as set forth in the notice and the specific nature
of the corrective action that the Required Board Majority
proposes that the Employee take; provided, that for purposes of
this clause (c), the Company shall not have Cause to give
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such notice or thereafter terminate the Employee's Employment if
such act or omission was taken or omitted to be taken by an
officer or employee of the Company other than Employee or the
act or omission was taken or omitted by Employee with the
concurrence of a majority of the Board or the act or omission
was taken or omitted by the Employee in good faith with a
reasonable belief that the act or omission was authorized by a
majority of the Board or otherwise in the interest of the
Company;
(d) violation of the terms of the covenants set forth in
Sections 7A, 7B or 7C, and, in the event of a violation of the
terms of the covenants set forth in Section 7B, after having
been given written notice of such determination by the Required
Board Majority and a reasonable opportunity to cure, which
curative period shall not be less than thirty (30) days.
"Code" means the Internal Revenue Code of 1986.
"Company" means StarMedia Network, Inc., a Delaware corporation,
and any successor thereto, including, any Person that assumes the
obligations of the "Company" hereunder, by operation of law, pursuant to
Section 7(I) or otherwise.
"Compensation Plan" means any compensation arrangement, plan,
policy, practice or program established, maintained or sponsored by the
Company or any subsidiary of the Company, or to which the Company or any
subsidiary of the Company contributes, on behalf of any Executive
Officer or any member of the family of any Executive Officer,
(a) including:
(i) any "employee pension benefit plan" (as
defined in Section 3(2) of ERISA) or other "employee
benefit plan" (as defined in Section 3(3) of ERISA),
(ii) any other retirement and savings plan,
including any supplemental benefit arrangement relating
to any plan intended to be qualified under Section
401(a) of the Code or whose benefits are limited by the
Code or ERISA,
(iii) any "employee welfare plan" (as defined in
Section 3(l) of ERISA),
(iv) any arrangement, plan, policy, practice or
program providing for severance pay, deferred
compensation or insurance benefit,
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(v) any Incentive Plan, and
(vi) any arrangement, plan, policy, practice or
program:
(A) authorizing and providing for the payment or reimbursement of
expenses attributable to transportation and hotel occupancy while on business
travel or
(B) providing for the payment of business luncheon, long-distance
charges, mobile phone monthly air time or other recurring monthly charges or any
other fringe benefit, allowance or accommodation of employment but, excluding
any compensation arrangement, plan, policy, practice or program to the extent it
provides for annual Base Salary.
"Disability" of the Employee means the Employee has been determined to
be disabled (which determination shall be final and binding on all Persons,
absent manifest error), as a result of a physical or mental illness or personal
injury he has incurred, by the insurance carrier providing the disability
insurance referred to in Section 5(C).
"Effective Date" means April 29, 1999.
"Employment" means the employment of the Employee by the Company or a
subsidiary of the Company hereunder.
"ERISA" means the Employee Retirement Income Security Act of 1974.
"Exchange Act" means the Securities Exchange Act of 1934.
"Executive Officer" means any of the chairman of the board, the chief
executive officer, the chief operating officer, the chief financial officer, the
president, any executive or senior vice president or the general counsel of the
Company.
"Extension Date" means (i) July 31, 2000, if not less than 120 days
prior thereto the Company or the Employee has given the other notice of its or
his election not to continue the Employment (a "Notice of Non-Extension"), or
(ii) if no Notice of Non-Extension has been given as provided in clause (i), any
July 31 thereafter where not less than 120 days prior thereto the Company or the
Employee has given the other a Notice of Non-Extension.
"Good Reason" for the Employee's termination of his Employment means any
of the following that occurs before the Employee gives a Notice of Termination
for Good Reason and which has not been cured by the Company reasonably promptly
after receipt of a notice from the Employee stating that Employee believes that
Good Reason exists and setting forth in reasonable detail the basis therefor;
provided that any such cure that occurs after thirty (30) days of such notice
shall not be considered reasonably prompt and provided further that if such cure
occurs, Employee shall not be required to give a subsequent notice if the same
or a substantially similar Good Reason again occurs:
(a) any violation or breach by the Company, in any material
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respect, of the provisions of Section 4 of this Agreement; provided,
however, that in the event that the fact or circumstance constituting
Good Reason is the Company's violation or breach of the provisions of
Section 4 and the Company is insolvent at the time of such violation or
breach, the Company will have no obligation to pay to the Employee the
Good Reason Termination Payment;
(b) the assignment to the Employee of duties inconsistent in any
material respect with the Employee's role as a senior executive officer
of the Company (including titles, authority, duties or responsibilities
inconsistent in any material respect with such role) or the taking of
any action that is the equivalent of a constructive discharge;
(c) relocation of the Employee outside of the New York
metropolitan area without relocation of the principal executive offices
of the Company and at least 80% of the other employees of the Company
then located in the principal executive offices of the Company; or
(d) a change in the Employee's reporting relationships; or
(e) a change of control, which shall mean:
(i) The acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "Exchange
Act")) (a "Person) of beneficial ownership (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) of 20% or more
of either (A) the then outstanding shares of common stock of the
Company (the "Outstanding Company Common Stock") or (B) the
combined voting power of the then outstanding voting securities
of the Company entitled to vote generally in the election of
directors (the "Outstanding Company Voting Securities");
provided, however, that for purposes of this subsection (i), the
following acquisitions shall not constitute a Change of Control:
(w) any acquisition directly from the Company, (x) any
acquisition by the Company, (y) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the
Company or any corporation controlled by the Company or (z) any
acquisition by any corporation pursuant to a transaction which
complies with clauses (A), (B) and (C) of subsection (iii) of
this Section (e); or
(ii) Individuals who, as of the date hereof, constitute
the Board (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board; provided, however,
that any individual becoming a director subsequent to the date
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hereof whose election, or nomination for election by the
Company's shareholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board
shall be considered as though such individual were a member of
the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result
of an actual or threatened election contest with respect to the
election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person
other than the Board; or
(iii) Consummation of a reorganization, merger or
consolidation or sale or other disposition of all or
substantially all of the assets of the Company (a "Business
Combination"), in each case, unless, following such Business
Combination, (A) all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding Company Voting
Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 50% of,
respectively, the then outstanding shares of common stock and
the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting from
such Business Combination (including, without limitation, a
corporation which as a result of such transaction owns all of
the common stock of the Company or all or substantially all of
the Company's assets either directly or through one or more
subsidiaries) in substantially the same proportions as their
ownership, immediately prior to such Business Combination of the
Outstanding Company Common Stock and Outstanding Company Voting
Securities, as the case may be, (B) no Person (excluding any
corporation resulting from such Business Combination or any
employee benefit plan (or related trust) of the Company or such
corporation resulting from such Business Combination)
beneficially owns, directly or indirectly, 20% or more of,
respectively, the then outstanding shares of common stock of the
corporation resulting from such Business Combination or the
combined voting power of the then outstanding voting securities
of such corporation except to the extent that such ownership
existed prior to the Business Combination and (C) at least a
majority of the members of the board of directors of the
corporation resulting from such Business Combination were
members of the Incumbent Board at the time of the execution of
the initial agreement, or of the action of the Board, providing
for such Business Combination;
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or
(iv) Approval by the shareholders of the Company of a
complete liquidation or dissolution of the Company.
"Good Reason Termination Payment" means an amount equal to 200% of the
Base Salary and Minimum Bonus Amount applicable to the calendar year in which
such termination for Good Reason takes place.
"Incentive Plan" means any compensation arrangement, plan, policy,
practice or program established, maintained or sponsored by the Company or any
subsidiary of the Company, or to which the Company or any subsidiary of the
Company contributes, on behalf of any Executive Officer and which provides for
awards of securities or the phantom equivalent of securities, including any
stock option, stock appreciation right and restricted stock plan, but excluding
any plan intended to qualify as a plan under any one or more of Sections 401(a),
401(k) or 423 of the Code.
"Minimum Bonus Amount" means the guaranteed minimum annual bonus payable
to the Employee as determined pursuant to Section 4(B).
"Notice of Termination" to or from the Employee means a written notice
that:
(a) to the extent applicable, sets forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination
of the Employee's Employment, and
(b) if the Termination Date is other than the date of receipt of
the notice, sets forth that Termination Date.
"Person" means any natural person, sole proprietorship, corporation,
partnership of any kind having a separate legal status, limited liability
company, business trust, unincorporated organization or association, mutual
company, joint stock company, joint venture, estate, trust, union or employee
organization or governmental authority.
"Publicly Traded" with respect to shares of stock of a company means
traded on a national securities exchange or listed for quotation on NASDAQ.
"Required Board Majority" means at any time at least a majority of the
members of the Board, other than the Employee, voting at that time.
"Securities Act" means the Securities Act of 1933.
"Term" shall have the meaning set forth in Section 3.
"Termination Date" means the earlier of the Extension Date and:
(a) if the Employee's Employment is terminated by reason of
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the Employee's death, the date of that death;
(b) if the Employee's Employment is terminated by reason of the
Employee's Disability, the date of the receipt by the Company or the
Employee, as the case may be, of the Notice of Termination;
(c) if the Employee's Employment is terminated by Employee for
Good Reason, the date specified in the Notice of Termination, which
shall be not less than ten (10) business days nor more than thirty (30)
business days following the receipt by the Company of such Notice of
Termination;
(c) if the Employee's Employment is terminated by Employee for
any other reason, the date specified in the Notice of Termination, which
shall be not less than thirty (30) business days nor more than sixty
(60) business days following the receipt by the Company of such Notice
of Termination;
(d) if the Employee's Employment is terminated by the Company
for Cause, the date specified in the Notice of Termination, which shall
be not less than three (3) business days nor more than sixty (60)
business days following the receipt by the Employee of such Notice of
Termination; and
(e) if the Employee's Employment is terminated by the Company
for any Business Reason, the date specified in the Notice of
Termination, which shall be not less than thirty (30) business days nor
more than sixty (60) business days following the receipt by the Employee
of such Notice of Termination.
"Voting Shares" means:
(a) in the case of any corporation, stock of that corporation of
the class or classes having general voting power under ordinary
circumstances to elect a majority of that corporation's board of
directors; and
(b) in the case of any other entity, equity interests of the
class or classes having general voting power under ordinary
circumstances equivalent to the Voting Shares of a corporation.
B. Other Definitional Provisions.
(i) Except as otherwise specified herein, all references herein to any
statute defined or referred to herein, including the Code, ERISA, the Securities
Act and the Exchange Act, shall be deemed references to that statute or any
successor statute, as the same
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may have been or may be amended or supplemented from time to time, and any rules
or regulations promulgated thereunder.
(ii) When used in this Agreement, the words "herein," "hereof" and
"hereunder" and words of similar import shall refer to this Agreement as a whole
and not to any provision of this Agreement, and the word "Section" refers to a
Section of this Agreement unless otherwise specified.
(iii) Whenever the context so requires, the singular number includes the
plural and vice versa, and a reference to one gender includes each other gender
and the neuter.
(iv) The word "including" (and, with correlative meaning, the word
"include") means including, without limiting the generality of any description
preceding such word, and the words "shall" and "will" are used interchangeably
and have the same meaning.
2. EMPLOYMENT
A. On the terms and subject to the conditions hereinafter set forth,
beginning as of the Effective Date, the Company shall employ the Employee as
President of the Company and the Employee will serve in the Company's employ in
that position. The Employee shall perform such duties, and have such powers,
authority, functions, duties and responsibilities for the Company and
corporations Affiliated with the Company as are commensurate and consistent with
the employment as President of the Company. The Employee also shall have such
additional powers, authority, functions, duties and responsibilities as may be
assigned to him by the Board.
B. The Employee shall not, at any time during the Employment, engage in
any other business activities unless these activities do not interfere
materially with the Employee's duties and responsibilities for the Company at
that time, except that the Employee shall be entitled, subject to the provisions
of Section 7.A.:
(a) to continue with such activities as the Employee has carried
on prior to the Effective Date, including making and managing his
personal investments and participating in other business, church or
civic activities, provided that such activities do not include a
Beneficial Ownership interest in a competitor, supplier or customer of
the Company other than an investment in a Publicly Traded company of
which Employee is not an employee, officer, director or partner that
does not exceed 5% of the outstanding Voting Shares of such company;
(b) to serve on civic boards, non-profit boards, charitable
boards or committees and trade associations or similar boards or
committees.
(c) to serve on for-profit business boards of directors if the
Company's consent shall have been obtained, which consent shall not
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unreasonably be withheld or delayed.
3. TERM OF EMPLOYMENT
Subject to the provisions of Section 5, the term of the Employee's
Employment shall be for the period commencing on the Effective Date and ending
on the Termination Date (the "Term").
4. COMPENSATION
A. Base Salary. The Base Salary shall be payable to the Employee by the
Company as a guaranteed minimum annual amount hereunder for the period from the
Effective Date to the Termination Date. The Base Salary shall be payable in the
intervals consistent with the Company's normal payroll schedules (but in no
event less frequently than monthly), and shall be payable initially at the
annual rate of $150,000.00 and shall be increased, effective as of each January
1, by an amount equal to 10% of the immediately preceding Base Salary, and from
time to time by such additional amount, if any, that the Compensation Committee
of the Board shall determine.
B. Annual Bonus. The Minimum Bonus Amount shall be payable to the
Employee in January of each year from the Effective Date to the Termination
Date. The Minimum Bonus Amount shall be payable initially in the amount of
$100,000 and shall be increased, by an amount equal to 10% of the immediately
preceding Minimum Bonus Amount, and from time to time by such greater amount as
the Compensation Committee of the Board shall, in its sole discretion,
determine.
C. Other Compensation. To the extent authorized by the Compensation
Committee of the Board the Employee shall also be entitled to participate in any
additional Compensation Plans from time to time in effect during the term of
this Agreement.
D. Tax Indemnity. Should any of the payments of Base Salary, Business
Reason Termination Payment, Good Reason Termination Payment, other incentive or
supplemental compensation, benefits, allowances, awards, payments,
reimbursements or other perquisites, or any other payment in the nature of
compensation, singly, in any combination or in the aggregate, that are provided
for hereunder to be paid to or for the benefit of the Employee be determined or
alleged to be subject to an excise or similar purpose tax pursuant to Section
4999 of the Code, or any successor or other comparable Federal, state or local
tax law by reason of being a "parachute payment" (within the meaning of Section
28OG of the Code), the Company shall pay to the Employee such additional
compensation as is necessary (after taking into account all Federal, state and
local taxes payable by the Employee as a result of the receipt of such
additional compensation) to place the Employee in the same after tax position
(including Federal, state and local taxes) he would have been in had no such
excise or similar purpose tax (or interest or penalties thereon) been paid or
incurred. The Company hereby agrees to pay such additional compensation within
the earlier to occur of:
(i) five (5) business days after the Employee notifies the Company that
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the Employee intends to file a tax return taking the position that such excise
or similar purpose tax is due and payable in reliance on a written opinion of
the Employee's tax counsel (such tax counsel to be chosen by the Employee and
reasonably acceptable to the Company) that it is more likely than not that such
excise tax is due and payable or
(ii) twenty-four (24) hours of any notice of or action by the Company
that it intends to take the position that such excise or similar purpose tax is
due and payable or
(iii) five (5) business days after the Employee notifies the Company
that the IRS has taken the position that such excise or similar purpose tax is
due and payable. The costs of obtaining the tax counsel opinion referred to in
clause (i) of the preceding sentence shall be borne by the Employee, and as long
as such tax counsel was chosen by the Employee in good faith and reasonably
acceptable to the Company, the conclusions reached in such opinion shall not be
challenged or disputed by the Company. If the Employee intends to make any
payment with respect to any such excise or similar purpose tax as a result of an
adjustment to the Employee's tax liability by any federal, state or local tax
authority, the Company will pay such additional compensation by delivering its
cashier's check payable in such amount to the Employee within five (5) business
days after the Employee notifies the Company of his intention to make such
payment. Without limiting the obligation of the Company hereunder, the Employee
agrees, in the event the Employee makes any payment pursuant to the preceding
sentence, to negotiate with the Company in good faith with respect to procedures
reasonably requested by the Company which would afford the Company the ability
to contest the imposition of such excise or similar purpose tax.
5. TERMINATION, DISABILITY AND DEATH
A. Termination of Employment by the Company.
(i) The Company shall be entitled, if acting at the direction of the
Required Board Majority, to terminate the Employee's Employment at any time for
Cause or for any Business Reason.
(ii) If the Company terminates the Employee's Employment for Cause, the
Company promptly after the Termination Date, and in any event within five (5)
business days thereafter, shall pay to the Employee, without right of set off or
counterclaim, his Base Salary to and including the Termination Date , any
accrued but unpaid vacation pay and the amount of all compensation previously
deferred by the Employee (together with any accrued interest or earnings
thereon), in each case to the extent not theretofore paid, and, when that
payment is made, the Company shall have no further or other obligations
hereunder to the Employee.
(iii) If the Company terminates the Employee's Employment for a Business
Reason, the Company shall (a) promptly after the Termination Date, and in any
event within five (5) business days thereafter, pay to the Employee, without
right of set off or counterclaim, in each case to the extent not theretofore
paid, his Base Salary to and including the Termination Date, any accrued but
unpaid vacation pay and the amount of all compensation previously deferred by
the Employee, if any (together with any accrued interest or earnings thereon),
(b)
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within thirty (30) days following the Termination Date, pay to the Employee,
without right of set off or counterclaim, the Business Reason Termination
Payment and (c) continue the Employee's Company sponsored health and disability
benefits for twenty-four (24) months following the Termination Date, and, when
all such payments are made and obligations fulfilled, the Company shall have no
further or other obligations hereunder to the Employee.
B. Termination of Employment by the Employee.
(i) The Employee shall be entitled to terminate the Employment:
(a) For Good Reason. The Employee shall be entitled to terminate his
Employment for a Good Reason at any time within sixty (60) days after the facts
or circumstances constituting that Good Reason (without regard to the date of
the required notice of Good Reason by the Employee to the Company) first exist
and are known to the Employee, provided that at the time of any Notice of
Termination therefor Good Reason continues to exist. Such termination for Good
Reason shall be effective on the applicable Termination Date. In the event that
the Employee terminates his Employment for Good Reason, the Company shall (a)
promptly after the Termination Date, and in any event within five (5) business
days thereafter, pay to the Employee, without right of set off or counterclaim,
his Base Salary to and including the Termination Date, any accrued but unpaid
vacation pay and the amount of all compensation previously deferred by the
Employee, if any (together with any accrued interest or earnings thereon), (b)
within thirty (30) days following the Termination Date, pay to the Employee,
without right of set off or counterclaim, the Good Reason Termination Payment,
in each case to the extent not theretofore paid and (c) continue the Employee's
Company sponsored health and disability benefits for twenty-four (24) months
following the Termination Date, and, when all such payments are made and
obligations fulfilled, the Company shall have no further or other obligations
hereunder to the Employee.
(b) Without Good Reason. The Employee's termination of his Employment
without Good Reason and other than for Disability will be effective on the
applicable Termination Date. If the Employee terminates his Employment without
Good Reason and other than for Disability, the Company shall pay to the
Employee, promptly after the Termination Date, and in any event within five (5)
business days thereafter, an amount equal to the sum of: (i) the portion of the
Base Salary to and including the Termination Date which has not yet been paid,
(ii) all compensation previously deferred by the Employee, if any (together with
any accrued interest and earnings thereon) which has not yet been paid, and
(iii) any accrued but unpaid vacation pay, and, when all such payments are made,
the Company shall have no further or other obligations hereunder to the
Employee.
C. Termination by Reason of Disability. During the Term, the Company
shall maintain, at its expense, the individual, long-term non-cancelable
guaranteed renewal individual disability plan more particularly described in
Exhibit B. If the Employee incurs any Disability during the Term, either the
Employee or the Company may terminate the Employee's Employment during such
Disability, and the Company shall pay to the Employee, promptly after the
Termination Date, and in any event within five (5) business days thereafter, an
amount equal
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to the sum of: (i) the portion of the Base Salary to and including the
Termination Date which has not yet been paid, (ii) all compensation previously
deferred by the Employee, if any (together with any accrued interest and
earnings thereon) which has not yet been paid, and (iii) any accrued but unpaid
vacation pay, and, when all such payments are made, the Company shall have no
further or other obligations hereunder to the Employee.
D. Termination of Employment by Death. Upon the death of the Employee,
the Employment will be terminated on the applicable Termination Date. If the
Employee's Employment is terminated by reason of the Employee's death, the
Company shall pay to the Person the Employee has designated in a written notice
delivered to the Company as his beneficiary entitled to such payment, if any, or
to the Employee's estate, as applicable, promptly after the Termination Date,
and in any event within thirty (30) days thereafter, an amount equal to the sum
of: (i) the portion of the Base Salary through the end of the month in which the
Termination Date occurs which has not yet been paid, (ii) all compensation
previously deferred by the Employee, if any (together with any accrued interest
or earnings thereon) which has not yet been paid, and (iii) any accrued but
unpaid vacation pay.
E. Return of Property. On termination of the Employee's Employment,
however brought about, the Employee (or his representatives) shall promptly
deliver and return to the Company all the Company's property that is in the
possession or under the control of the Employee.
F. Stock Options. Notwithstanding any provision of this Agreement to the
contrary:
(i) except in the case of a termination of the Employee's Employment for
Cause or pursuant to Section 5(B)(i)(b), all stock options previously granted to
the Employee under Incentive Plans that have not been exercised and are
outstanding as of the time immediately prior to the Termination Date shall,
notwithstanding any contrary provision of any applicable Incentive Plan, remain
outstanding (and continue to become exercisable pursuant to their respective
terms) until exercised or the expiration of their term, whichever is earlier;
and
(ii) in the case of a termination of the Employee's Employment for Cause
or pursuant to Section 5(B)(i)(b), all stock options previously granted to
Employee under Incentive Plans that have not yet vested and are outstanding as
of the time immediately prior to the Termination Date shall, notwithstanding any
contrary provision of any applicable Incentive Plan, terminate and be of no
further force or effect as of the Termination Date.
6. OTHER EMPLOYEE RIGHTS
A. Paid Vacation; Holidays. The Employee shall be entitled to not less
than four (4) weeks of annual vacation and all legal holidays, during which
times his applicable compensation shall be paid in full.
B. Fringe Benefits. During the term of this agreement, the Employee is
entitled to participate in the same level of fringe benefits that may be
provided by the Company
14
for its key executive employees in accordance with the provisions of any such
plans, as the same may be in effect on and after the date hereof.
C. Business Expenses. The Employee is authorized to incur, and will be
entitled to receive prompt reimbursement for, all reasonable expenses incurred
by the Employee in performing his duties and carrying out his responsibilities
hereunder, including business meal, entertainment, first class air fare on
international flights and first class on domestic flights and hotels, and other
travel expenses, provided that the Employee complies in all material respects
with all reasonable policies, practices and procedures of the Company relating
to the submission of expense reports, receipts or similar documentation of those
expenses. The Company shall either pay directly or promptly reimburse the
Employee for such expenses not more than twenty (20) days after the submission
to the Company by the Employee from time to time of an itemized accounting of
such expenditures for which direct payment or reimbursement is sought. All such
direct payments and reimbursements remaining unpaid after such 20-day period
shall accrue interest in accordance with Section 7(P).
D. Support. During the Employment, the Employee shall be provided by the
Company with office space, furnishings, and facilities, administrative
assistance, supplies and other support equipment (including a computer,
facsimile machine and photocopier).
7. GENERAL PROVISIONS
A. Confidentiality. Reference is made to the Non-Disclosure and
Developments Agreement between the Employee and the Company dated as of July 25,
1997 (the "NDDA Agreement"). The provisions of Sections 1, 2, 3(a), (b) and (d)
and 4 of the NDDA Agreement are hereby incorporated herein in full by reference.
B. Non-Competition. The Employee agrees that, except as otherwise
provided herein, during the Employment and for (x) a period of two (2) years
after any Termination Date applicable to any termination of the Employment under
Section 5(A)(ii) or Section 5(B)(i)(b), and (y) a period of one (1) year after
any Termination Date applicable to any termination of the Employment under
Section 5(A)(iii), Employee will not directly or indirectly, whether or not for
compensation and whether or not as an employee, be engaged in or have any
impermissible financial interest in any business that is in fact competing with
the Company (a "competing business"). For purposes of this Agreement, the
Employee shall be deemed to be engaged in a competing business if the business
is a pan-regional, community based, consumer oriented, internet service focused
on Latin America, and Employee is an employee, officer, director, partner or
consultant of such competing business or has an impermissible financial interest
therein. For purposes of this Agreement, the Employee shall only be deemed to
have an impermissible financial interest in a competing business if Employee is
a partner or shareholder therein, except as provided hereafter. Employee shall
be deemed to have an impermissible financial interest in any competing Publicly
Traded business if Employee (i) during the Employment, beneficially or directly
owns more than one percent (1%), and (ii) following any Termination Date,
directly owns more than three percent (3%) or beneficially owns more than five
percent (5%), in each case of any class of securities of such Publicly Traded
company,
15
whether or not Employee is an officer, director, partner, employee or consultant
thereto.
C. Non-Solicitation. The Employee agrees that during the Employment and
for a period of one (1) year after any Termination Date applicable to any
termination of the Employment under Section 5(A)(ii), Employee shall not employ,
or advise or recommend to any person that they employ, any person who is
employed by the Company or any of its controlled Affiliates during the
Employment or on the Termination Date, as the case may be, or induce such person
to accept employment other than with the Company or its Affiliates, provided
that the Employee shall be permitted to respond to requests for references from
prospective employers with respect to any such employers.
D. Injunctive Relief. The Employee recognizes that a breach of his
obligations under paragraphs (A) through (C) above would cause irreparable harm
to the Company and, provided that as a precondition the Company has previously
tendered all sums that are due and payable to the Employee under the terms of
this Agreement, the Company shall be entitled to preliminary and permanent
injunctions enjoining violations thereof as a non-exclusive remedy.
E. Severability. If any one or more of the provisions of this Agreement
shall, for any reason, be held or found by final judgment of a court of
competent jurisdiction to be invalid, illegal or unenforceable in any respect,
(i) such invalidity, illegality or unenforceability shall not affect any
other provisions of this Agreement,
(ii) this Agreement shall be construed as if such invalid, illegal or
unenforceable provision had never been contained herein (except that this clause
(ii) shall not prohibit any modification allowed under Section 7(J)),
(iii) if the effect of a holding or finding that any such provision is
invalid, illegal or unenforceable is to modify to the Employee's detriment,
reduce or eliminate any compensation, reimbursement, payment, allowance or other
benefit to the Employee intended by the Company and Employee in entering into
this Agreement, the Company shall, within thirty (30) days after the date of
such finding or holding, negotiate and expeditiously enter into an agreement
with the Employee which contains alternative provisions (reasonably acceptable
to the Employee and the Company) that will restore to the Employee (to the
extent lawfully permissible) substantially the same economic, substantive and
income tax benefits and legal rights the Employee would have enjoyed had such
provision been upheld as legal, valid and enforceable, and
(iv) if any provision of this Agreement or portion hereof is so broad,
in scope or duration, as to be unenforceable, such provision or portions thereof
shall be interpreted to be only so broad as to be legal, valid and enforceable.
F. Non-exclusivity of Rights. Nothing herein shall prevent the
Employee's continuing or future participation in any Compensation Plan or,
subject to Section 5.F., limit or
16
otherwise affect such rights as the Employee may have under any other contract
or agreement with the Company. Vested benefits and other amounts to which the
Employee is or becomes entitled to receive under any Compensation Plan on or
after the Termination Date shall be payable in accordance with that Compensation
Plan, except as expressly modified hereby.
G. Full Settlement. The Company's obligations to make the payments
provided for, and otherwise to perform its undertakings, in this Agreement shall
not be affected by any right of set-off, counterclaim, recoupment, defense or
other action, claim or right the Company may have against the Employee or
others. In no event shall the Employee be obligated to seek other employment or
take any other action by way of mitigation of the amounts payable to the
Employee under any provision hereof, and those amounts shall not be reduced,
regardless of whether the Employee obtains other employment or becomes
self-employed.
H. Survival. The obligations of the parties hereto under Sections 4, 5,
6(C), 7, 8 and 9 shall survive the Termination Date.
I. Successors.
(i) This Agreement is personal to the Employee and, without the prior
written consent of the other party, is not assignable or delegable by the
Employee (otherwise than by transfer of rights by will or the laws of descent
and distribution) or by the Company.
(ii) This Agreement shall inure to the benefit of and be binding upon
the Company and its successors and permitted assigns and this Agreement shall
inure to the benefit of and be enforceable by the Employee's legal
representatives acting in their capacities as such pursuant to applicable law.
(iii) The Company shall require any successor (direct or indirect and
whether by purchase, merger, consolidation, share exchange or otherwise) to the
business, properties and assets of the Company substantially as an entirety
expressly to assume and agree to perform this Agreement in the same manner and
to the same extent the Company would have been required to perform it had no
such succession taken place.
J. Amendments; Waivers. This Agreement may not be amended or modified
except by a written agreement executed and delivered by the parties hereto or
their respective successors or legal representatives acting in their capacities
as such pursuant to applicable law.
K. Notices. All notices and other communications under this Agreement
shall be in writing and shall be given by hand delivery or by registered or
certified mail, return receipt requested, postage prepaid, addressed to the
appropriate Person at the address of such Person set forth below (or at such
other address as such Person may designate by written notice to each other party
in accordance herewith):
(i) if to the Employee, addressed as follows:
Jack C. Chen
17
18 Montgomery Lane
Greenwich, CT 06830
and
(ii) if to the Company, addressed as follows:
StarMedia Network, Inc.
29 West 36th Street
5th Floor
New York, NY 100018
In the case of any Notice of Termination for Good Reason, with copies to
each member of the Board.
L. No Waiver. The failure of the Company or the Employee to insist on
strict compliance with any provision of, or to assert any right under, this
Agreement shall not be deemed a waiver of that provision or of any other
provision of or right under this Agreement.
M. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York, without reference to any
principles of conflicts of laws.
N. Jurisdiction and Venue. The Company and the Employee irrevocably
consent with respect to any action, suit or other legal proceeding pertaining
directly to this Agreement or to the interpretation or enforcement of any of the
Company's or the Employee's right hereunder to service of process in the State
of New York and hereby waives any right to contest or oppose receipt of such
service of process in New York, provided such Person actually received such
process by mail or electronic communication. The Company and the Employee
irrevocably
(i) agree that any such action, suit or other legal proceeding may be
brought in New York, New York; and
(ii) consent to the jurisdiction of any appropriate court in such city
in any such action, suit or other legal proceeding; and
(iii) waive any objection it may have to the laying of venue of any such
action, suit or other legal proceeding in any of such courts.
O. Headings. The headings of Sections and subsections hereof are
included solely for convenience of reference and shall not control the meaning
or interpretation of any of the provisions of this Agreement.
P. Interest. If any amounts required to be paid or reimbursed to the
Employee hereunder are not so paid or reimbursed at the times provided herein,
those amounts
18
shall accrue interest compounded daily at the annual percentage rate which is
three percentage points (3%) above the interest rate announced by Citibank, N.A.
(or its successor) from time to time, as its prime lending rate for commercial
loans in New York City, from the date those amounts were required to have been
paid or reimbursed to the Employee until those amounts are finally and fully
paid or reimbursed; provided, however, that in no event shall the amount of
interest contracted for, charged or received hereunder exceed the maximum
non-usurious amount of interest allowed by applicable law.
Q. Publicity. The Company agrees with the Employee that, except to the
extent required by law or legal process (including reporting and public
disclosure contemplated under the Exchange Act and the Securities Act) and any
other law giving any Person a private right of action or suit, neither the
Company nor the Employee will make or publish, without the prior written consent
of the other, any written or oral statement concerning the terms of the
Employee's employment relationship with the Company and will not, if a Notice of
Termination is given by either the Company or the Employee for any reason,
publish or cause to be published any statement concerning the Company's
relationship with the Employee or the Employee's relationship with the Company,
including Employee's work-related performance or the reasons or basis for the
giving of that Notice of Termination.
R. Tax Withholding. Notwithstanding any other provision hereof, the
Company may withhold from amounts payable hereunder all Federal, state, local
and foreign taxes that are required to be withheld by applicable laws or
regulations.
S. Entire Agreement. The Company and the Employee agree that this
Agreement supersedes all prior written and oral agreements between them with
respect to the employment of the Employee by the Company (including the
Employment Agreement dated as of July 25, 1997), but, except as provided in
Section 5(F), has no effect on any Compensation Plan in which the Employee was
participating in prior to the Effective Date. =======
8. LITIGATION COSTS
In the event of litigation over the terms or breach of this Agreement,
the prevailing party shall be entitled to recover litigation costs and attorneys
fees from the non-prevailing party.
9. INDEMNIFICATION
The Employee shall be indemnified by the Company for all liabilities
relating to or arising from his status as an officer or a director of the
Company, and any actions committed or omitted by the Employee in such capacity,
to the maximum extent permitted by the law of Delaware, the state of the
Company's incorporation, and the law of the state of incorporation of any
subsidiary of the Company of which the Employee is a director or an officer or
employee, as the same may be in effect from time to time.
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IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the day and year indicated above.
STARMEDIA NETWORK, INC.
Name:
Title:
JACK C. CHEN