Ex. 10.13
EXECUTION COPY
STOCK PURCHASE AGREEMENT
between
STARMEDIA NETWORK, INC.
and
HEARST COMMUNICATIONS, INC.
Dated as of April 30, 1999
TABLE OF CONTENTS
PAGE
ARTICLE I
THE PURCHASED SHARES
Section 1.1 Issuance, Sale and Delivery of the Purchased Shares.................... 1
Section 1.2 Closing................................................................ 1
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 2.1 Organization; Corporate Power.......................................... 1
Section 2.2 Authorization of Agreement............................................. 2
Section 2.3 Validity............................................................... 2
Section 2.4 Authorized Capital Stock............................................... 2
Section 2.5 Financial Statements................................................... 2
Section 2.6 Litigation; Compliance with Law........................................ 3
Section 2.7 Intellectual Property.................................................. 3
Section 2.8 Taxes.................................................................. 3
Section 2.9 Governmental Approvals................................................. 3
Section 2.10 Brokers................................................................ 3
Section 2.11 Foreign Corrupt Practices Act.......................................... 4
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Section 3.1 Organization; Corporate Power.......................................... 4
Section 3.2 Authorization of Agreements............................................ 4
Section 3.3 Validity............................................................... 4
Section 3.4 Accredited Investor.................................................... 4
Section 3.5 Sufficient Knowledge................................................... 5
Section 3.6 Investment............................................................. 5
Section 3.7 No Registration........................................................ 5
Section 3.8 Brokers................................................................ 5
ARTICLE IV
CONDITIONS TO THE OBLIGATIONS OF THE PURCHASER
AND THE COMPANY
Section 4.1 Conditions to the Obligations of the Purchaser on the Closing Date..... 5
(a) Representations and Warranties to be True and Correct.............. 5
(b) Performance........................................................ 5
(c) Supporting Documents............................................... 6
(d) Registration Rights Agreement...................................... 6
Section 4.2 Condition to the Obligations of the Company on the Closing Date........ 6
(a) Representations and Warranties to be True and Correct.............. 6
(b) Performance........................................................ 6
(c) Lockup Agreement................................................... 7
ARTICLE V
MISCELLANEOUS
Section 5.1 Registration Rights Agreement.......................................... 7
Section 5.2 Lockup Agreement....................................................... 7
Section 5.3 Expenses............................................................... 7
Section 5.4 Brokerage.............................................................. 7
Section 5.5 Notices................................................................ 7
Section 5.6 Governing Law.......................................................... 8
Section 5.7 Entire Agreement....................................................... 8
Section 5.8 Counterparts........................................................... 8
Section 5.9 Amendments............................................................. 8
Section 5.10 Severability........................................................... 8
Section 5.11 Titles and Subtitles................................................... 8
Section 5.12 Certain Defined Terms.................................................. 8
STOCK PURCHASE AGREEMENT dated as of April 30, 1999, between StarMedia
Network, Inc., a Delaware corporation (the "Company"), and Hearst
Communications, Inc. (the "Purchaser").
WHEREAS, the Company wishes to issue and sell to the Purchaser an
aggregate of 909,091 shares (the "Purchased Shares") of the authorized but
unissued common stock, $0.001 par value, of the Company (the "Common Stock");
and
WHEREAS, the Purchaser wishes to purchase the Purchased Shares on the
terms and subject to the conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained in this Agreement, the parties agree as follows:
THE PURCHASED SHARES
ISSUANCE, SALE AND DELIVERY OF THE PURCHASED SHARES.
The Company agrees to issue and sell to the Purchaser, and the Purchaser
hereby agrees to purchase from the Company, the Purchased Shares in exchange for
an amount equal to $10,000,000 (the "Purchase Price").
CLOSING.
The closing (the "Closing") shall take place at the offices of Winthrop,
Stimson, Putnam and Roberts, One Battery Park Plaza, New York, New York 10004 on
April 30, 1999, at 10:00 a.m., New York time, or at such other date and time as
may be agreed upon between the Purchaser and the Company (the "Closing Date").
At the Closing, the Company shall issue and deliver to the Purchaser a
stock certificate or certificates in definitive form, registered in the name of
the Purchaser representing the Purchased Shares. As payment in full for the
Purchased Shares, and against delivery of the stock certificate or certificates
therefor as aforesaid, on the Closing Date the Purchaser shall deliver to the
Company the Purchase Price, payable by (i) delivery to the Company of a
certified check payable to the order of the Company, or (ii) wire transfer of
immediately available funds to the account of the Company.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Purchaser that, except as
set forth in the Disclosure Schedule attached as SCHEDULE I:
ORGANIZATION; CORPORATE POWER.
The Company is a corporation duly incorporated, validly existing and in
good standing under the laws of the jurisdiction in which it is incorporated and
has the corporate power and authority to execute and deliver this Agreement, and
perform its obligations hereunder.
AUTHORIZATION OF AGREEMENT.
The execution and delivery by the Company of this Agreement and the
performance by the Company of its obligations hereunder have been duly
authorized by all requisite corporate action and will not violate any provision
of law, any order of any court or other agency of government, the Certificate of
Incorporation of the Company, as amended (the "Charter"), or the By-laws of the
Company, as amended.
The Purchased Shares have been duly authorized and, when issued and
delivered in accordance with this Agreement, will be validly issued, fully paid
and nonassessable shares of Common Stock and will be free and clear of all
liens, charges, restrictions, claims and encumbrances ("Liens") imposed by or
through the Company.
VALIDITY.
This Agreement has been duly executed and delivered by the Company and
constitutes the legal, valid and binding obligation of the Company, enforceable
in accordance with its terms, except (i) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium and other laws of general application
affecting enforcement of creditors' rights generally and (ii) as limited by
general equitable principles.
AUTHORIZED CAPITAL STOCK.
The authorized capital stock of the Company consists of (i) 60,000,000
shares of Preferred Stock, $0.001 par value (the "Preferred Stock"), of which
7,330,000 shares have been designated Series A Convertible Preferred Stock,
8,000,000 shares have been designated Series B Convertible Preferred Stock and
16,666,667 shares have been designated Series C Convertible Preferred Stock, and
(ii) 100,000,000 shares of Common Stock, $0.001 par value. Prior to the Closing
and to any other sale of Common Stock occurring on the Closing Date, (A)
10,427,000 shares of Common Stock will be validly issued and outstanding, fully
paid and nonassessable, (B) 7,330,000 shares of Series A Convertible Preferred
Stock, 8,000,000 shares of Series B Convertible Preferred Stock and 16,666,667
shares of Series C Convertible Preferred Stock will
be validly issued and outstanding, fully paid and non-assessable. An aggregate
of 31,996,667 shares of Common Stock has been reserved for issuance upon
conversion of the Series A Convertible Preferred Stock, the Series B Convertible
Preferred Stock and the Series C Convertible Preferred Stock. Options to
purchase 8,579,100 shares of Common Stock have been granted and are currently
outstanding. The designations, powers, preferences, rights, qualifications,
limitation and restrictions in respect of each class and series of authorized
capital stock of the Company are as set forth in the Charter.
FINANCIAL STATEMENTS.
The Company has furnished to the Purchaser (i) the audited balance sheet of
the Company as of December 31, 1998 (the "Balance Sheet"), and the related
audited statements of income and stockholders' equity for the year then ended,
and (ii) the unaudited balance sheet of the Company as of March 30, 1999 and the
related unaudited statements of income and stockholders' equity for the three
months then ended (the "Unaudited Balance Sheet," and together with the Balance
Sheet, the "Financial Statements"). The Financial Statements have been prepared
in accordance with generally accepted accounting principles consistently applied
and fairly present the financial position of the Company and its results of
operation for and as of the dates set fort h therein. Since the date of the
Unaudited Balance Sheet, there has been no material adverse change in the
assets, liabilities or financial condition of the Company from that reflected in
the Unaudited Balance Sheet, except for changes in the ordinary course of
business.
LITIGATION; COMPLIANCE WITH LAW.
There is no action, suit, claim or proceeding pending or, to the Company's
knowledge, threatened against the Company or any of its subsidiaries, at law or
in equity, or before or by any foreign or domestic Federal, state, municipal or
other governmental department, commission, board, bureau agency or
instrumentality, except to the extent that any of the foregoing, if determined
adversely to the Company, would not have a material and adverse effect on the
business, financial condition, operations or property of the Company or any of
its subsidiaries ("Material Adverse Effect"). The Company and each of its
subsidiaries (i) has complied with all foreign and domestic laws, rules,
regulations and orders applicable to its business, operations, properties,
assets, products and services, (ii) has all necessary permits, licenses and
other authorizations required to conduct its business as conducted, and (iii)
has been operating its business pursuant to and in compliance with the terms of
all such permits, licenses and other authorizations, except to the extent that
the failure to do any of the foregoing would not have a Material Adverse Effect.
INTELLECTUAL PROPERTY.
The Company has the right to use all Intellectual Property (as defined
below) used by the Company or necessary in connection with the operation of the
Company's business, without, to the best knowledge of the Company, infringing on
or otherwise acting adversely to the rights of any person.
Except as set forth in the Disclosure Schedule, no claim is pending or, to
the best of the Company's knowledge, threatened to the effect that any domestic
or foreign patents, patent rights, patent applications, trademarks, trademark
applications, service marks, service mark
applications, trade names or copyrights ("Intellectual Property") owned or
licensed by the Company or any of its subsidiaries or which the Company or any
of its subsidiaries otherwise has the right to use, is invalid or unenforceable
by the Company or any such subsidiary, except to the extent that any of the
foregoing, if determined adversely to the Company, would not have a Material
Adverse Effect.
TAXES.
The Company and each of its subsidiaries has filed all tax returns,
Federal, state, foreign, county and local, required to be filed by it, and the
Company and each of its subsidiaries has paid all taxes shown to be due by such
returns as well as all other taxes, assessments and governmental charges which
have become due or payable, other than those being contested in good faith. The
Company and each of its subsidiaries has established adequate reserves for all
taxes accrued but not yet payable.
GOVERNMENTAL APPROVALS.
Subject to the accuracy of the representations and warranties of the
Purchaser set forth in Article III, no registration or filing with, or consent
or approval of or other action by, any foreign or domestic Federal, state or
other governmental agency or instrumentality is or will be necessary for the
valid execution, delivery and performance by the Company of its obligations
hereunder, other than filings pursuant to Federal and state securities laws in
connection with the sale of the Purchased Shares.
BROKERS.
Except as set forth on the Disclosure Schedule, the Company has no
contract, arrangement or understanding with any broker, finder or similar agent
with respect to the transactions contemplated by this Agreement.
FOREIGN CORRUPT PRACTICES ACT.
Neither the Company nor any of its subsidiaries has taken any action which
would cause it to be in violation of the Foreign Corrupt Practices Act of 1977,
as amended, or any rules and regulations thereunder. To the best of the
Company's knowledge, there is not now, and there has never been, any employment
by the Company or any of its subsidiaries of, or beneficial ownership in the
Company or any of its subsidiaries by, any governmental or political official in
any country in the world.
Subsidiaries.
Each of the Company's subsidiaries is a corporation duly organized, validly
existing and in good stnading under the laws of its jurisdiction of
incorporation, and has full corporate power and authority to conduct its
business as and to the extent now conducted and to own, use and lease its assets
and properties. Each such subsidiary is duly qualified, licensed or admitted to
do business and is in good standing in those jurisdictions in which the
ownership, use or leasing of such subsidiary's assets and properties, or the
nature of its business, makes such qualification, licensing or admission
necessary, except to
the extent the failure of any such subsidiary to be so qualified, licensed or
admitted would not have a Material Adverse Effect. All of the outstanding shares
of capital stock of each subsidiary of the Company are owned, beneficially and
of record, by the Company or other subsidiaries of the Company, free and clear
of all Liens. There are no outstanding options to purchase any capital stock of
any subsidiary of the Company.
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Company that:
ORGANIZATION; CORPORATE POWER.
The Purchaser is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization and has the power and
authority to execute, deliver and perform its obligations under this Agreement.
AUTHORIZATION OF AGREEMENTS.
The execution and delivery by the Purchaser of this Agreement, and the
performance by the Purchaser of its obligations hereunder have been duly
authorized by all requisite corporate action and will not violate any provision
of law, any order of any court or other agency of government, or the Purchaser's
organizational documents.
VALIDITY.
This Agreement has been duly executed and delivered by the Purchaser and
constitutes the legal, valid and binding obligation of the Purchaser,
enforceable in accordance with its terms, except (i) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting enforcement of creditors' rights generally and (ii) as
limited by general equitable principles.
ACCREDITED INVESTOR.
The Purchaser is an "accredited investor" within the meaning of Rule 501
under the Securities Act of 1933 (the "Securities Act") and was not organized
for the specific purpose of acquiring the Purchased Shares.
SUFFICIENT KNOWLEDGE.
The Purchaser has sufficient knowledge and experience in investing in
companies similar to the Company in terms of the Company's stage of development
so as to be able to evaluate the risks and merits of its investment in the
Company and it is able financially to bear the risks thereof. The Purchaser has
had an opportunity to discuss the Company's business, management and financial
affairs with the Company's management.
INVESTMENT.
The Purchaser is acquiring the Purchased Shares being purchased by it
hereunder for its own account, not as a nominee or agent, for the purpose of
investment and not with a view to the resale or distribution of any part
thereof, and the Purchaser does not have any contract, undertaking, agreement or
arrangement with any person to sell, transfer or grant participations to such
person or to any third person, with respect to any of the Purchased Shares.
NO REGISTRATION.
The Purchaser understands that (i) the Purchased Shares have not been
registered under the Securities Act by reason of their issuance in a transaction
exempt from the registration requirements of the Securities Act pursuant to
Section 4(2) thereof or Rule 506 promulgated under the Securities Act, (ii) the
Purchased Shares must be held indefinitely unless a subsequent disposition
thereof is registered under the Securities Act or is exempt from such
registration, (iii) the Purchased Shares will bear a legend to such effect and
(iv) the Company will make a notation on its transfer books to such effect.
BROKERS.
The Purchaser has no contract, arrangement or understanding with any
broker, finder or similar agent with respect to the transactions contemplated by
this Agreement.
CONDITIONS TO THE OBLIGATIONS OF THE PURCHASER
AND THE COMPANY
CONDITIONS TO THE OBLIGATIONS OF THE PURCHASER ON THE CLOSING
DATE.
The obligation of the Purchaser to purchase the Purchased Shares from the
Company on the Closing Date is subject to the satisfaction or waiver, on or
before the Closing Date, of the following conditions:
REPRESENTATIONS AND WARRANTIES TO BE TRUE AND CORRECT.
The representations and warranties contained in Article II shall be true,
complete and correct in all material respects on and as of the Closing Date with
the same effect as though such representations and warranties had been made on
and as of such date, and the President and Treasurer of the Company shall have
certified to such effect to the Purchaser in writing.
PERFORMANCE.
The Company shall have performed and complied with all agreements contained
herein required to be performed or complied with by it prior to or on the
Closing Date, and the
President and Treasurer of the Company shall have certified to the Purchaser in
writing to such effect and to the further effect that all of the conditions set
forth in this Section 4.1 have been satisfied.
SUPPORTING DOCUMENTS.
The Purchaser shall have received copies of the following documents:
(A) the Charter, certified as of a recent date by the Secretary of
State of the State of Delaware, (B) a certificate of said Secretary, dated
as of a recent date, as to the due incorporation and good standing of the
Company, the payment of all excise taxes by the Company and listing all
documents of the Company on file with said Secretary and (C) a certificate
of the Secretary of State of the State of New York, dated as of a recent
date, as to the good standing of the Company in such state; and
a certificate of the Secretary or an Assistant Secretary of the
Company dated the Closing Date and certifying: (A) that attached thereto is
a true and complete copy of the By-laws of the Company as in effect on the
date of such certification; (B) that attached thereto is a true and complete
copy of all resolutions adopted by the Board of Directors or the
stockholders of the Company authorizing the execution, delivery and
performance of this Agreement, the Lockup Agreement and the Registration
Rights Agreement, including the issuance, sale and delivery of the Purchased
Shares, and that all such resolutions are in full force and effect and are
all the resolutions adopted in connection with the transactions contemplated
hereby; (C) that the Charter has not been amended since the date of the last
amendment referred to in the certificate delivered pursuant to clause (i)(B)
above; and (D) to the incumbency and specimen signature of each officer of
the Company executing this Agreement, the stock certificates representing
the Purchased Shares and any certificate or instrument furnished pursuant
hereto, and a certification by another officer of the Company as to the
incumbency and signature of the officer signing the certificate referred to
in this clause (ii).
REGISTRATION RIGHTS AGREEMENT.
The Company shall have executed and delivered to the Purchaser a
registration rights agreement substantially in the form attached hereto as
EXHIBIT A (the "Registration Rights Agreement").
CONDITION TO THE OBLIGATIONS OF THE COMPANY ON THE CLOSING DATE.
The obligation of the Company to sell the Purchased Shares to the Purchaser
is subject to the satisfaction or waiver, on or before the Closing Date, of the
following conditions:
REPRESENTATIONS AND WARRANTIES TO BE TRUE AND CORRECT.
The representations and warranties contained in Article III shall be true,
complete and correct in all material respects on and as of the Closing Date with
the same effect as though such representations and warranties had been made on
and as of such date, and the Purchaser shall have certified to such effect to
the Company in writing.
PERFORMANCE.
The Purchaser shall have performed and complied with all agreements
contained herein required to be performed or complied with by it prior to or at
the Closing Date, and the Purchaser shall have certified to the Company in
writing to such effect and to the further effect that all of the conditions set
forth in this Section 4.2 have been satisfied.
LOCKUP AGREEMENT.
The Purchaser shall have executed and delivered to the Company a lockup
agreement substantially in the form attached hereto as EXHIBIT B (the "Lockup
Agreement").
MISCELLANEOUS
REGISTRATION RIGHTS AGREEMENT.
On or prior to the Closing Date, the Company shall execute and deliver to
the Purchaser the Registration Rights Agreement.
LOCKUP AGREEMENT.
On or prior to the Closing Date, the Purchaser shall execute and deliver to
the Company the Lockup Agreement.
EXPENSES.
Each party hereto will pay its own expenses in connection with the
transactions contemplated hereby, whether or not such transactions shall be
consummated; PROVIDED, HOWEVER, that the Company shall pay the reasonable legal
fees and expenses of Purchaser's counsel incurred in connection with the
transactions contemplated hereby, up to a maximum of $10,000.
BROKERAGE.
Each party hereto will indemnify and hold harmless the other against and in
respect of any claim for brokerage or other commissions relative to this
Agreement or to the transactions
contemplated hereby, based in any way on agreements, arrangements or
understandings made or claimed to have been made by such party with any third
party, other than as described in Section 2.10 of the Disclosure Schedule.
NOTICES.
All notices, requests, consents and other communications hereunder shall be
in writing and shall be delivered in person, mailed by certified or registered
mail, return receipt requested, or sent by telecopier, addressed as follows:
To the Company:
StarMedia Network, Inc.
29 West 36th Street
5th Floor New York,
New York 10018
Attention: President
Fax Number: 212-631-9100
To the Purchaser:
Hearst Communications, Inc
959 Eighth Avenue
New York, New York 10019
Attention: _______________
Fax Number: ____________
with a copy to:
Rogers & Wells LLP
200 Park Avenue
New York, NY 10166
Attention: Steven A. Hobbs
Fax Number: 212-631-9100
or at such other address or fax number or to the attention of such other person
as the party to whom such information pertains may hereafter specify.
GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York.
ENTIRE AGREEMENT.
This Agreement, including the Schedules and Exhibits hereto, constitutes
the sole and
entire agreement of the parties with respect to the subject matter hereof. All
Schedules and Exhibits hereto are hereby incorporated herein by reference.
COUNTERPARTS.
This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
AMENDMENTS.
This Agreement may not be amended or modified, and no provisions hereof may
be waived, without the written consent of the Company and the Purchaser.
SEVERABILITY.
If any provision of this Agreement shall be declared void or unenforceable
by any judicial or administrative authority, the validity of any other provision
and of the entire Agreement shall not be affected thereby.
TITLES AND SUBTITLES.
The titles and subtitles used in this Agreement are for convenience only
and are not to be considered in construing or interpreting any term or provision
of this Agreement.
CERTAIN DEFINED TERMS.
As used in this Agreement, the following terms shall have the following
meanings (such meanings to be equally applicable to both the singular and plural
forms of the terms defined):
"PERSON" shall mean an individual, corporation, trust, partnership,
joint venture, unincorporated organization, government or any agency or
political subdivision thereof, or other entity.
"SUBSIDIARY" shall mean, as to the Company, any corporation of which
more than 50% of the outstanding stock having ordinary voting power to
elect a majority of the Board of Directors of such corporation
(irrespective of whether or not at the time stock of any other class or
classes of such corporation shall have or might have voting power by reason
of the happening of any contingency) is at the time directly or indirectly
owned by the Company, or by one or more of its subsidiaries, or by the
Company and one or more of its subsidiaries.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
STARMEDIA NETWORK, INC.
By:
Name:
Title:
HEARST COMMUNICATIONS, INC.
By:
Name:
Title:
As a result of the Class C preferred stock contingent issuance obligation
settlement, Mr. Whitman and the following persons or entities below, all
associated with Mr. Whitman, will receive upon the closing of this offering an
issuance of 1,782,000 shares of Class A common stock in the following amounts:
Shares of Class A
Common Stock
------------
John Whitman............................................. 1,800
The Whitman Children Irrevocable Trust(1)................ 1,800
Subir Ray (2)............................................ 400
Peter Gerry(2)........................................... 1,800
Kilin To (2)............................................. 7,100
CitiGrowth Fund II, Offshore L.P.(3)..................... 137,400
CG Asian-American Fund L.P.(3)........................... 137,400
Pnneetai Global Fund L.P.(2)............................. 68,700
Total............................... 356,500
- ----------
(1) The Whitman Children Irrevocable Trust, is a trust for the benefit of Mr.
Whitman's children.
(2) Mr. Whitman has been granted with a power of attorney
for these shareholders.
(3) Mr. Whitman holds a minority interest in the entities that control these
limited partnerships.