-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Bma9KJO1jGkZKvj3l3os2SW0b9XXT3BM3WWlpQiofn84xhthnnHL9LutBwkSM4ZB w91f9no1f1MhwxIlQcrZsA== 0000912057-01-540456.txt : 20020411 0000912057-01-540456.hdr.sgml : 20020411 ACCESSION NUMBER: 0000912057-01-540456 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 10 CONFORMED PERIOD OF REPORT: 20011119 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20011119 FILER: COMPANY DATA: COMPANY CONFORMED NAME: STARMEDIA NETWORK INC CENTRAL INDEX KEY: 0001057334 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROCESSING & DATA PREPARATION [7374] IRS NUMBER: 061461770 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-31138 FILM NUMBER: 1796010 BUSINESS ADDRESS: STREET 1: 29 WEST 36TH STREET 5TH FL CITY: NEW YORK STATE: NY ZIP: 10018 BUSINESS PHONE: 2125489600 MAIL ADDRESS: STREET 1: 29 WEST 36TH STREET FIFTH FLOOR CITY: NEW YORK STATE: NY ZIP: 10018 8-K 1 a2064182z8-k.txt 8-K SECURITIES AND EXCHANGE COMMISSION Washington D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): November 19, 2001 ----------------- StarMedia Network, Inc. (Exact name of registrant as specified in its charter) Delaware 1-15015 06-1461770 - ------------------------------- ---------------- ------------------- (State or other jurisdiction of (Commission File (IRS Employer incorporation) Number) Identification No.) 29 West 36th Street New York, New York 10018 - ---------------------------------------- ---------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (212) 905-8200 -------------- 75 Varick Street, New York, New York 10013 ------------------------------------------------------------- (Former name or former address, if changed since last report) ITEM 5. OTHER EVENTS. On November 19, 2001, StarMedia Network, Inc. (the "Company") issued the two attached press releases, filed as Exhibits 99.8 and 99.9 and incorporated in this Current Report by reference. The press releases announce, among other things, that the Company plans to restate its unaudited financial statements for the quarters ended March 31 and June 30, 2001, and its audited financial statements for the fiscal year ended December 31, 2000. A Special Committee of the Company's Board of Directors is conducting an investigation of accounting issues with respect to revenue recognition by two of the company's Mexican subsidiaries, AdNet S.A. de C.V. ("AdNet") and StarMedia Mexico, S.A. de C.V. The Special Committee has retained outside counsel to assist in the investigation, which has led the Company to a preliminary conclusion that revenues aggregating approximately $10 million were improperly recognized by those subsidiaries during the period from October 1, 2000 through June 30, 2001. In addition, the press releases announce that, in connection with its April 2000 acquisition of AdNet, the Company was obligated under its agreements with respect to such acquisition to pay additional consideration in the form of the Company's common stock over a five-year period from the acquisition date, subject to AdNet meeting certain specified performance targets. In November 2001, the Company, AdNet and the former stockholders of AdNet entered into a Termination Agreement pursuant to which the Company agreed to issue to the stockholders of AdNet 8,000,000 shares of the Company's common stock, in full satisfaction of the Company's obligations under the stock purchase agreement and certain other related agreements between the Company and the former stockholders of AdNet The press releases further announce that (a) Steven J. Heller has resigned as Chief Financial Officer of the Company, effective November 15, 2001, on terms and conditions previously agreed with the Company; (b) the company terminated the employment of Justin Macedonia as General Counsel of the company earlier this month, who had filed a notice of intention to arbitrate against the Company asserting that the Company was obligated to makes tax indemnity payments to him. The company denies any obligation to make such payments, intends to vigorously defend against such claims and has pursued counterclaims against Mr. Macedonia; and (c) Susan Segal has been appointed to serve as acting Chairman of the Board, succeeding Fernando Espuelas, co-founder and former Chief Executive Officer of the Company, who, pursuant to his August 2001 agreement with the Company, resigned on November 15 as Chairman of the Board of Directors. Mr. Espuelas will continue to serve as a Director on the Company's Board. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. (a) Not applicable. (b) Not applicable. (c) Exhibits. -2- 99.1 Lease Termination Agreement, dated as of October 4, 2001, between StarMedia Network, Inc. and The Rector, Church Wardens and Vestrymen of Trinity Church in the City of New York. 99.2 Amendment to Lease, dated as of October 24, 2001, between StarMedia Network, Inc. and Clemons Management Corp. c/o Bernstein Real Estate. 99.3 Separation Agreement Including A General Release, dated as of August 7, 2001, between StarMedia Network, Inc. and Fernando J. Espuelas.* 99.4 Separation Agreement Including A General Release, dated as of August 7, 2001, between StarMedia Network, Inc. and Jack C. Chen.* 99.5 Separation Agreement Including A General Release, dated as of October 31, 2001, between StarMedia Network, Inc. and Steven J. Heller. 99.6 Termination Agreement, dated as of November 7, 2001, by and among StarMedia Network, Inc., Adnet, S. de R.L. de C.V., Grupo MVS, S.A. de C.V., Harry Moller Publicidad, S.A. de C.V. and Walther Moller. 99.7 Employment Agreement, dated as of September 21, 2001, by and between StarMedia Network, Inc. and Enrique Narciso. 99.8 Press Release of the Registrant, dated November 19, 2001. 99.9 Press Release of the Registrant, dated November 19, 2001. * The Company has requested confidential treatment for certain portions of this exhibit pursuant to Rule 24b-2 promulgated under the Securities Exchange Act of 1934, as amended. The portions of the exhibit that are subject to this confidential treatment request have been omitted and have been filed separately with the Securities and Exchange Commission. -3- SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. STARMEDIA NETWORK, INC. Date: November 19, 2001 By: /s/ Michael Hartman ----------------- ------------------------------------ Name: Michael Hartman Title: General Counsel INDEX TO EXHIBITS EXHIBIT NUMBER DESCRIPTION OF EXHIBIT 99.1 Lease Termination Agreement, dated as of October 4, 2001, between StarMedia Network, Inc. and The Rector, Church Wardens and Vestrymen of Trinity Church in the City of New York. 99.2 Amendment to Lease, dated as of October 24, 2001, between StarMedia Network, Inc. and Clemons Management Corp. c/o Bernstein Real Estate. 99.3 Separation Agreement Including A General Release, dated as of August 7, 2001, between StarMedia Network, Inc. and Fernando J. Espuelas.* 99.4 Separation Agreement Including A General Release, dated as of August 7, 2001, between StarMedia Network, Inc. and Jack C. Chen.* 99.5 Separation Agreement Including A General Release, dated as of October 31, 2001, between StarMedia Network, Inc. and Steven J. Heller. 99.6 Termination Agreement, dated as of November 7, 2001, by and among StarMedia Network, Inc., Adnet, S. de R.L. de C.V., Grupo MVS, S.A. de C.V., Harry Moller Publicidad, S.A. de C.V. and Walther Moller. 99.7 Employment Agreement, dated as of September 21, 2001, by and between StarMedia Network, Inc. and Enrique Narciso. 99.8 Press Release of the Registrant, dated November 19, 2001. 99.9 Press Release of the Registrant, dated November 19, 2001. * The Company has requested confidential treatment for certain portions of this exhibit pursuant to Rule 24b-2 promulgated under the Securities Exchange Act of 1934, as amended. The portions of the exhibit that are subject to this confidential treatment request have been omitted and have been filed separately with the Securities and Exchange Commission. EX-99.1 3 a2064182zex-99_1.txt EXHIBIT 99.1 EXHIBIT 99.1 LEASE TERMINATION AGREEMENT This LEASE TERMINATION AGREEMENT, made as of October 4, 2001, between THE RECTOR, CHURCH WARDENS AND VESTRYMEN OF TRINITY CHURCH IN THE CITY OF NEW YORK, having its office and address at 74 Trinity Place in the Borough of Manhattan, City, County and State of New York (hereinafter referred to as the "Landlord") and STARMEDIA NETWORK, INC., having an address at 75 Varick Street, New York, New York (hereinafter referred as the "Tenant"). W I T N E S S E T H: WHEREAS, the Landlord and the Tenant entered into an agreement of lease dated as of November 22, 1999 and amended as of October 5, 2000 (the "Lease"), wherein the Landlord let to Tenant and Tenant took and hired from the Landlord the entire 8th and 9th floors as described in the Lease (the "Premises"), in the building of the Landlord known as One Hudson Square and located at 75 Varick Street, New York, New York, for a term to expire on or about November 30, 2011, at the rentals and upon the other terms, covenants and conditions in such Lease set forth; WHEREAS, Landlord and Tenant have agreed to an earlier termination of the Lease, on the terms and conditions hereinafter set forth; NOW, THEREFORE, in consideration of the premises and the mutual promises of the parties hereto, Landlord and Tenant hereby agree as follows: 1. Landlord and Tenant agree that, subject to the provisions of this Agreement, the term of the Tenant in the Premises, under the Lease, shall terminate and come to an end as of 12:00 a.m. on October 5, 2001, (the "Lease Termination Date"), as if said date were the date originally specified in the Lease for the expiration of the term to the intent and purpose that all the term, right and estate of the Tenant, with respect to the Premises, shall expire on such date. Not later than the Lease Termination Date, time being of the essence, the Tenant shall quit, vacate and surrender and terminate its occupancy of the Premises and surrender the Premises to the Landlord, "broom clean" in "as is" condition. 2. (a) Simultaneously with the Lease Termination Date, the Landlord is entering into a license agreement with The Bank of New York ("BNY") relating to the Premises. The Landlord understands that BNY intends to enter into a sublicense (the "Sublicense") with the Tenant pursuant to which the Tenant will be granted a license to occupy a portion of the Premises (the "Sublicensed Space") until November 9, 2001 (the "Sublicense Termination Date"), and the Landlord hereby consents to such sublicense. (b) In connection with this Agreement and the Tenant's sublicensing the Sublicensed Space, the Landlord confirms that (i) the Tenant has paid all fixed rent and all escalations amount payable under Article Thirty of the Lease for all periods through September 30, 2001 (ii) the electric current furnished to the Tenant pursuant to the Lease does not exceed any limitation in the Lease on the Tenant's demand for, or consumption of electric current, (iii) the Landlord will make available to BNY, as the licensee of the Premises, all of the services which were previously made available to the Tenant under the terms of the Lease (it being understood that to the extent that the Lease provided for the payment to the Landlord of a separate charge for any such service, then (regardless of whether or not so provided in the License) the Landlord will only be required to furnish any such service to the extent that it receives the separate charge therefor at the rate set forth in the Lease), and (iv) to the Landlord's knowledge, the Tenant's use or occupancy of the Premises, as of the Lease Termination Date, does not presently in any manner (x) exceed the design loads for the building or exceed the capacity of the building systems providing exhaust, heating, cooling, ventilation, electrical, life safety, water, sewer or other utility or safety services to the building. (c) Paragraph (b) of Article Four of the Lease requires the Tenant to convey to the Landlord all of its right, title and interest in and to all permanent alterations, decorations, additions and improvements and other fixtures made by or on behalf of the Tenant in the Premises, (hereinafter collectively referred to as the "Tenant Improvements"). The Landlord understands that (i) the Tenant intends to transfer and convey the Tenant Improvements to BNY, and (ii) the Tenant has also agreed to sell to BNY the furniture, equipment, trade fixtures of the Tenant listed in Schedule 1 hereto (the "Tenant Personal Property"). (d) In accordance with the provisions of Lease relating to the surrender of the Premises, the Tenant agrees that, prior to the Lease Expiration Date, it will remove from the portion of the Premises which does not constitute the Sublicensed Space, all stock, furniture, machinery and equipment personal property, rubbish and debris from the Premises (other than the Tenant Personal Property, the Tenant Improvements and the "Ancillary P & E" as (defined in the Sublicense)). The Tenant shall not be required to remove any Tenant Personal Property or any such stock, furniture, -2- machinery and equipment or personal property from the Sublicensed Space. The Landlord agrees that to the extent that the Tenant is transferring any Tenant Improvement to BNY, the Landlord waives the requirement that any such Tenant Improvement be transferred to the Landlord and any requirement that the Tenant remove any such Tenant Improvement. 3. The Tenant agrees that it will fully and faithfully perform the terms and conditions of the Lease through the Lease Termination Date and will pay all amounts accruing under the Lease through the Lease Termination Date, except that the Tenant will not be required to pay fixed rent or any escalation payable pursuant to Article Thirty of the Lease which would accrue with respect to any period commencing after September 30, 2001. 4. (a) Pursaunt to Article Twenty-Nine of the Lease, the Landlord currently holds as a security for the Tenant's performance of its obligations under the Lease a letter of credit in favor of the Landlord in the amount of $5,000,000 (the "Letter of Credit"). Simultaneously with the execution of this Agreement, the Landlord agrees to execute a notice to Citibank releasing all rights the Landlord has in the Letter of Credit (the "Notice"). The Letter of Credit and the Notice shall be placed in escrow with the Tenant's attorney's, Baer, Marks & Upham, (the "Escrow Agreement"), and shall be released from such escrow upon the Tenant's vacating and surrendering the Sublicensed Space. The rights and obligations of the Escrow Agent are set forth in Schedule 2 hereto and are hereby incorporated by reference. (b) In lieu of the Letter of Credit which is being released in accordance with paragraph 4(a) above, simultaneously upon Tenant's receipt of the first installment of the Surrender Fee from BNY, as such term is defined in the Sublicense Agreement, Tenant shall deposit with the Landlord the sum of $120,000.00 to be held as security (the "Replacement Security") pursuant to Article Twenty-Nine of the Lease to insure the Tenant's payment of all electricity charges (the "Electricity Charges") accuring prior to the Lease Termination Date in accordance with the terms of the Lease. The Tenant agrees that the Letter of Credit will not be surrendered or returned to the Tenant or the issuing bank until the Replacement Security has been deposited with the Landlord. The Landlord shall deduct from the Replacement Security the Electricity Changes due and owing through the Lease Termination Date and shall promptly return the remaining balance, if any. The foregoing is without prejudice to the Tenant's right to dispute the amount of the Electricity Charges. -3- 5. The Landlord and the Tenant agree that the provisions of paragraph 12F of the Sublicense are hereby incorporated by reference. Landlord and Tenant agree to indemnify and hold one another harmless from and against all demands, liabilities, losses, causes of action, damages, costs and expenses (including, without limitation, attorneys' fees and disbursements) suffered or incurred in connection with any claims for a brokerage commission, finder's fee, consultation fees or other compensation arising out of any conversations or negotiations had by the party against whom indemnification is claimed with any broker or other party, except for Williamson Picket & Gross, Inc., and Newmark Company Real Estate Group, Inc., in connection with this Lease Termination or the Sublicense. 6. This Agreement may be signed in counterparts and delivered by facsimile transmission. IN WITNESS WHEREOF, the parties have caused these presents to be duly executed as of the day and year first above written. THE RECTOR, CHURCH WARDENS AND VESTRYMEN OF TRINITY CHURCH IN THE CITY OF NEW YORK By: /s/ Stephen D. Heyman -------------------------------- Director of Leasing STEPHEN D. HEYMAN By: /s/ Daniel Paul Matthews -------------------------------- Dr. Daniel Paul Matthews Rector STARMEDIA NETWORK, INC. By: /s/ Enrique Narciso -------------------------------- Name: Enrique Narciso Title: President/CEO -4- SCHEDULE 1 TENANT PERSONAL PROPERTY FURNITURE FIXTURES AND EQUIPMENT INVENTORY 1 HUDSON SQUARE ENTIRE 8TH AND 9TH FLOORS
- -------------------------------------------------------------------------------- QUANTITY DESCRIPTION - -------------------------------------------------------------------------------- 17 Risom Lounge Chair - -------------------------------------------------------------------------------- 27 Jamaica Barstool - -------------------------------------------------------------------------------- 6 Tulip Chair with Swivel Action - -------------------------------------------------------------------------------- 32 Aeron Single Stage Pneumatic Lift - -------------------------------------------------------------------------------- 6 Davisfur Rectangular Top 6'-0 x42" - -------------------------------------------------------------------------------- 16 Davisfur Rectangular Top 5'-0 x42" - -------------------------------------------------------------------------------- 1 Davisfur 72" diameter top - -------------------------------------------------------------------------------- 122 Vitrasea Persona Plus Manger Chair with Arms - -------------------------------------------------------------------------------- 17 Dr. No (Phillipe Starck) - -------------------------------------------------------------------------------- 61 2 High Lateral File - -------------------------------------------------------------------------------- 20 3 High Lateral File - -------------------------------------------------------------------------------- 6 4 High Lateral File - -------------------------------------------------------------------------------- 2 Chauffeuse Delta Armless Lounge Chair - -------------------------------------------------------------------------------- 1 Chauffeuse Delta Table - -------------------------------------------------------------------------------- 1 Oval Top Table - -------------------------------------------------------------------------------- 3 Webb 4 Long Back Side Chair - -------------------------------------------------------------------------------- 10 Webb 2 Mid Back Executive Chair - -------------------------------------------------------------------------------- 1 Zanotto Nanotta 3 Seater Sofa - -------------------------------------------------------------------------------- 1 Noguchi Table - -------------------------------------------------------------------------------- 1 Zepher End Table - -------------------------------------------------------------------------------- 1 Otera Rectangular Conference Table - -------------------------------------------------------------------------------- 2 Gehery Chair - -------------------------------------------------------------------------------- 1 Stadium Lounge Chair - -------------------------------------------------------------------------------- 1 Stadium Sofa - -------------------------------------------------------------------------------- 3 Prado Table - -------------------------------------------------------------------------------- 3 Attache Series Credenza - -------------------------------------------------------------------------------- 1 The 21 Hotel Format Grand Suite Collection Arm Chair - -------------------------------------------------------------------------------- 7 Gemini 60x60, 5x10 Overall with Intercept Data/Electric Unit - -------------------------------------------------------------------------------- 126 Pedestal - One Pencil Two File Drawers - -------------------------------------------------------------------------------- 9 Calida Floor Lamp - -------------------------------------------------------------------------------- 46 Lounge Chair Spring Collection - -------------------------------------------------------------------------------- 4 Sofa with Modular Back/Armrest Units - -------------------------------------------------------------------------------- 5 Arm Chair - -------------------------------------------------------------------------------- 13 End Table - -------------------------------------------------------------------------------- 1 Gemini Series 60" Diameter Top with Intercept Data/Electrical Unit - -------------------------------------------------------------------------------- 18 Coffee Table - --------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- QUANTITY DESCRIPTION - -------------------------------------------------------------------------------- 20 Lounge Chair with Casters - -------------------------------------------------------------------------------- 3 45 Degree Table - -------------------------------------------------------------------------------- 8 Elliptical End Arm Left - -------------------------------------------------------------------------------- 3 Elliptical Intermediate Arm - -------------------------------------------------------------------------------- 3 Ottoman - -------------------------------------------------------------------------------- 482 Amicus Synchro-Tilt Mid-Back Chairs - -------------------------------------------------------------------------------- 436 Chronicle Mobile Pedestal - -------------------------------------------------------------------------------- 215 Seat Cushion For Chronicle Mobile Pedestal - -------------------------------------------------------------------------------- 178 Delta Table/Right - -------------------------------------------------------------------------------- 178 Delta Table/Left - -------------------------------------------------------------------------------- 716 Open End - -------------------------------------------------------------------------------- 352 Lockable Casters - -------------------------------------------------------------------------------- 386 Modesty Panel - -------------------------------------------------------------------------------- 366 Table Rail - -------------------------------------------------------------------------------- 181 Translucent Screen - -------------------------------------------------------------------------------- 17 Flush Plate - -------------------------------------------------------------------------------- 2 Corner Gable - -------------------------------------------------------------------------------- 49 Full Gable - -------------------------------------------------------------------------------- 17 Shared Half Gable - -------------------------------------------------------------------------------- 4 Inside Modesty - -------------------------------------------------------------------------------- 17 Box/Box/File - -------------------------------------------------------------------------------- 18 File/File - -------------------------------------------------------------------------------- 45 Storage Cabinet with Hinged Doors - -------------------------------------------------------------------------------- 33 Delta Worksurface - -------------------------------------------------------------------------------- 2 Aalto Lounge Chair - -------------------------------------------------------------------------------- 1 Vertex Lecturn - -------------------------------------------------------------------------------- 10 42x84 Rectangular Table - -------------------------------------------------------------------------------- 4 30x72 Rectangular Table - -------------------------------------------------------------------------------- 1 30x60 Rectangular Table - -------------------------------------------------------------------------------- 14 30x48 Rectangular Table - -------------------------------------------------------------------------------- 14 30x42 Bean Table - -------------------------------------------------------------------------------- 14 Basic Cabinet with Lock - -------------------------------------------------------------------------------- 2 Mail Center Sorter - -------------------------------------------------------------------------------- 1 Glass Top Lafayette Table - -------------------------------------------------------------------------------- 12 Flexible Cable Duct (Wiring Accessory) - -------------------------------------------------------------------------------- Kastle Systems- Electronic Security System - -------------------------------------------------------------------------------- Kastle Systems- Silent Alarm System - -------------------------------------------------------------------------------- Kastle Systems- Video Intercom System - -------------------------------------------------------------------------------- Existing Meridian Phone System - -------------------------------------------------------------------------------- Existing 400 Telephone Sets (M3902 etc.) - -------------------------------------------------------------------------------- Voicemail system hardware and software - -------------------------------------------------------------------------------- Call pilot, desktop messaging, recorder announcers - -------------------------------------------------------------------------------- All existing horizontal and vertical cabling plant/infrastructure (fiber and - --------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- copper) - -------------------------------------------------------------------------------- Existing Data Center, UPS and air conditioning - -------------------------------------------------------------------------------- All existing kitchen fixtures - --------------------------------------------------------------------------------
SCHEDULE 2 ESCROW PROVISIONS: ----------------- (i) Escrow Agent may act upon any instrument or other writing believed by it in good faith to be genuine and to be signed and presented by the proper person without being required to determine the accuracy and correctness thereof or the authority of such person and it shall not be liable in connection with the performance of any duties imposed upon Escrow Agent by the provisions of this Agreement, except for damage caused by Escrow Agent's own gross negligence or willful default. This Agreement expressly sets forth all the duties of Escrow Agent with respect to all matters pertinent hereto and Escrow Agent shall have no implied duties or responsibilities read into this Agreement against it. Escrow Agent shall not be bound by any modification of this Agreement, unless the same is in writing and signed by the parties hereto, and, if Escrow Agent's duties hereunder are affected, unless Escrow Agent shall have given its prior written consent thereto. (ii) In the event that the Escrow Agent shall be uncertain as to the Escrow Agent's duties hereunder, or shall receive instructions from the parties which, in the Escrow Agent's opinion, are in conflict with any of the provisions hereof, the Escrow Agent shall have the right, upon written notice to the parties, but not the obligation, to refrain from taking any action, other than to continue to hold in escrow, until otherwise directed by a final Court Order or by a joint authorization. Escrow Agent shall not be obligated to, but may, institute legal proceedings of any kind, including, but not limited to, a legal proceeding or action in a court of competent jurisdiction to determine Escrow Agent's obligations hereunder; provided that Escrow Agent shall give at least five (5) days' written notice to the parties prior to instituting any such proceeding, and shall refrain from initiating such action if it receives a joint authorization from the parties to the contrary within such 5-day period. (iii) The parties hereto acknowledge and agree that Escrow Agent shall be reimbursed in equal amounts by the parties all reasonable expenses, disbursements and advances actually incurred or made by Escrow Agent, to the extent necessary, in connection with the performance of its duties under this Agreement (including reasonable fees, disbursements and expenses of its attorneys and other professionals employed by it at customary billing rates). (iv) The parties hereto shall and hereby do, severally, indemnify, defend and hold harmless Escrow Agent from and against all losses, claims, liabilities, actions, proceedings, settlements, judgments, fees, expenses and costs, including but not limited to, reasonable attorneys' fees and disbursements, arising out of, and/or incurred in connection with, the Agreement, except with respect to those arising with respect to claims based on Escrow Agent's gross negligence or willful misconduct that are successfully asserted against Escrow Agent. -1- EX-99.2 4 a2064182zex-99_2.txt EXHIBIT 99.2 EXHIBIT 99.2 AMENDMENT TO LEASE ------------------ This Agreement made as of the 24th day of October, 2001, between Clemons Management Corp., c/o Bernstein Real Estate, 855 Avenue of the Americas, New York, New YORK 10001 ("Landlord"), and StarMedia Network, Inc., having an address at 75 Varick Street, New York, New York ("Tenant"). WITNESSETH ---------- WHEREAS, by Lease dated September 15, 1997 (the "Original Lease"), Landlord leased to Tenant the entire 5th floor (the "Existing Premises") in the building known as 29-33 West 36th Street, New York, New York; and WHEREAS, the Original Lease was amended on April 8, 1998 to add the 3rd floor to the premises (the "First Amendment"), and was further amended on September 14, 1998 to include the 8th floor premises (the "Second Amendment"); and WHEREAS, by letter agreement dated July 23, 2000 (the "Letter Agreement"), the Landlord recaptured the 3rd and 8th floor premises and there remains demised under the Lease only the 5th floor Existing Premises which are now sublet to Big Fat Promotions through August 30, 2003 pursuant to a sublease approved by the Landlord (the Original Lease, said Amendments and the Letter Agreement being collectively referred to herein as the "Lease"); and WHEREAS, the Tenant now wishes to add back to the Existing Premises the 3rd floor premises (the "3rd Floor Space") and Landlord agrees to lease the same upon the terms and conditions set forth below. NOW, THEREFORE, in consideration of the mutual covenants herein contained, Ten Dollars ($10.00) (the receipt and sufficiency of which are hereby acknowledged) and other good and valuable consideration, it is agreed between the parties that the Leases shall be amended as follows: 1. DEMISED PREMISES. Effective as of the "Commencement Date," the 3rd Floor Space shall be added to the Existing Premises and shall be deemed a part of the demised premises under the Lease (said 3rd Floor Space and Existing Premises being together referred to as the "Premises"). The "Commencement Date" shall be the date on which Landlord delivers the 3rd Floor Space to Tenant in vacant, broom clean condition and with the heating and air-conditioning system in working condition. 2. RENT. The base annual rent for the 3rd Floor space shall be as follows: $162,504.00 for the period from the "Rent Commencement Date" to 10/31/02, to be paid in twelve equal consecutive monthly installments of $13,542.00 (the "Rent Commencement Date" shall be the thirty-first ("31st") day after the Commencement Date): $168,192.00 for the period from the 11/1/02 to 10/31/03 to be paid in twelve equal consecutive monthly installments of $14,016.00; and $174,084.00 for the period from 11/1/03 to 10/31/04 to be paid in twelve equal consecutive monthly installments of $14,507.00. 3. REAL ESTATE TAXES--3RD FLOOR SPACE. Supplementing Article R7(A) and R7(D) of the Lease, Tenant shall pay 8.33% of real estate tax increases pursuant thereto with respect to the 3rd Floor Space, provided that the Base Tax Year under R7(D) with respect to the 3rd Floor Space shall be 2001/2002. With respect to the Existing Premises, Tenant's base year and percentage of 8.33% with respect thereto shall not change. 4. SECURITY DEPOSIT--3RD FLOOR SPACE. Tenant shall deposit additional security in the amount of $67,710.00 to be held under the Lease with respect to the 3rd Floor Space. 5. LANDLORD'S WORK--3RD FLOOR SPACE. Landlord shall not be obligated to perform any work prior to the Commencement Date except as may be necessary to place the 3rd floor premises in the required condition as of the Commencement Date. 6. WATER CHARGES--3RD FLOOR SPACE. Effective as of November 1, 2001, Tenant shall pay an additional $25.00 per month for water charges pursuant to Article 29 and an additional $25.00 for sprinkler charges pursuant to Article 30. 7. ELECTRIC--3RD FLOOR SPACE. As with the Existing Premises, electricity for the 3rd Floor Space is directly metered and Tenant shall be responsible for the payment of same. 8. EFFECT OF PRIOR AMENDMENTS. The First Amendment no longer applies since it related to the earlier rent, real estate tax and security terms for the 3rd Floor Space and the terms of this Amendment supersede the same. The Second Amendment is not deleted in its entirety but the portions thereof which dealt with the now recaptured 8th floor space (referred to therein as the "Second Additional Space") are all deleted, as are the base rent, real estate tax and security terms therein for the 3rd Floor Space, since, as above noted, they are deemed superseded hereby. 9. EXISTING 5TH FLOOR PREMISES. Tenant and Landlord agree that the rent and additional rent with respect to the Existing Premises as set forth in the Lease shall not be modified. The term of the Lease as to the Existing Premises expires on August 31, 2003. This Lease will then continue only as to the 3rd Floor Space through October 31, 2004. Provided that Tenant is not in default of the Lease beyond any applicable cure period, Tenant shall receive the return of its security deposit now held by Landlord within 20 days after such expiration of the term relating to the Existing Premises. The security deposited hereunder shall continue as security for the remaining 3rd Floor Premises. 10. FREIGHT AND ELEVATOR. During regular building hours only, Landlord agrees that Tenant shall not be charged for freight/elevator service provided that Tenant acknowledges that the same is available on a first come first serve basis and may be subject to customary building rules regarding prior appointment. 11. RATIFICATION. Except as hereby modified, in all other respects the terms, covenants, provisions and conditions of the Lease are hereby ratified and confirmed. Landlord and Tenant each agree that the other is not in default of the Lease as of the date hereof, and that no condition exists which, with the giving of notice or the passage of time, would constitute a default thereunder. 12. ARREARS. Landlord and Tenant hereby acknowledge and agree that there is an existing dispute with regard to rental arrears for the fifth floor premises. Landlord and Tenant hereby agree to resolve the issue within ten (10) days of executing this document. IN WITNESS WHEREOF, the parties hereto have hereunder set their hands and seals as of the date and year first above written. Clemons Management Corp. StarMedia Network, Inc. By: Bernstein Management Corp. d/b/a Bernstein Real Estate, as Agent By: /s/ Enrique Narciso ------------------------------- By: /s/ Vincent Terranova Enrique Narciso -------------------------------- Vincent Terranova 2 EX-99.3 5 a2064182zex-99_3.txt EXHIBIT 99.3 EXHIBIT 99.3 August 7, 2001 Fernando Espuelas c/o StarMedia Network, Inc. 75 Varick Street New York, NY 10013 Re: SEPARATION AGREEMENT INCLUDING A GENERAL RELEASE Dear Fernando: This letter sets forth the terms of our agreement (this "Agreement") with respect to your separation from employment with StarMedia Network, Inc. and its subsidiaries (collectively, "StarMedia"), and the end of your tenure as Chief Executive Officer and Chairman of the Board of StarMedia. 1. Your final date of employment with StarMedia will be August 7, 2001 (the "Separation Date"). As of the Separation Date, except as specifically provided in this Agreement, all compensation, including bonuses, and all other benefits and perquisites of employment with StarMedia, including the vesting of Stock Options pursuant to the 1997, 1998, 1999 and 2000 StarMedia Stock Option Plans, will cease. As of the Separation Date, all of StarMedia's and your obligations, except as otherwise provided in this Agreement, under the Employment Agreement dated as of December 28, 2000 (the "Employment Agreement"), between you and StarMedia, will cease. If the terms of this Agreement are accepted by you and if you return a fully executed original of this Agreement as described below you will be entitled to the following: You may remain Chairman of the Board of Directors of StarMedia until November 7, 2001. During the period that you are Chairman (the "Transition Period"), you agree to the following: Page 2 o You will only speak about StarMedia in StarMedia scheduled and managed interviews or at public speaking events, other than to respond to questions asked of you. During StarMedia scheduled and managed interviews and public speaking events, ("StarMedia venues"), you will limit your statements to pre-written and pre-approved messages and statements provided by StarMedia ("the StarMedia messages"). In the event you are asked questions about StarMedia during non-StarMedia venues, you agree to keep your comments to the StarMedia messages. If StarMedia receives press inquiries directed at you personally and not in your capacity as a representative of StarMedia, StarMedia agrees to refer such inquiries to you; o You understand and agree that you are not entitled or authorized to and thus agree that you will not commit StarMedia to any business opportunities. o StarMedia will make available to you your current office for your use during the Transition Period to conduct StarMedia business. StarMedia will provide to you limited and reasonable administrative support from the staff of StarMedia and maintain for you an e-mail account on StarMedia's server and voicemail at your former extension which will contain an outgoing message acceptable to you and StarMedia. However, after the Transition Period you will not be entitled to maintain an office at StarMedia nor entitled to any further administrative support or any other services. (b) On or before November 7, 2001, you agree that you will resign from your position as Chairman of the Board of Directors of StarMedia. You will not receive any additional remuneration for service in that capacity. You may remain a member of the Board of Directors. (c) On or before the Separation Date, StarMedia will pay you any unpaid salary through the Separation Date and all reasonable unpaid expenses incurred by you in connection with service to the Company on or prior to the Separation Date. StarMedia will pay any and all reasonable expenses incurred by you in connection with your service as Chairman of the Board during the Transition Period or thereafter as a Director of the Company. (d) StarMedia will pay you, via wire transfer to an account designated by you, a one time payment in the amount of Six Hundred and Fifty-Thousand Dollars ($650,000.00), less applicable taxes and other legally required withholding amounts within two days of the Separation Date. Payment will be deemed made on the date you receive it. (e) In addition, in the event that you elect COBRA coverage, for the initial eighteen (18) months of the period provided pursuant to COBRA, commencing on Page 3 September 1, 2001 and ending February 28, 2003, StarMedia will pay the applicable COBRA premiums on your behalf (including your immediate family). As of March 1, 2003, you will be solely responsible for all applicable COBRA premiums. In addition, commencing on September 1, 2001 and ending February 28, 2003, StarMedia will pay all applicable premiums on your behalf (including your immediate family) to continue StarMedia's dental and vision coverage on the same terms as active employees of StarMedia to the extent such plans allow for continuation coverage. StarMedia reserves the right to alter and amend its benefit plans at any time. Your entitlement to COBRA continuation coverage paid for by StarMedia shall cease if comparable coverage is made available to you and your immediate family through your employment or your spouse's employment or if the COBRA continuation period ends sooner as provided in Section 4980(B) of the Internal Revenue Code of 1986 as amended. Likewise, your entitlement to continued dental or vision coverage shall cease if comparable dental or vision coverage is made available to you and your immediate family through your employment or your spouse's employment. (f) The Line of Credit provided pursuant to the letter agreement dated December 28, 2000 between you and StarMedia, as amended and restated by the letter agreement dated January 31, 2001, will remain in full force and effect in accordance with its terms ("The Line of Credit"). 2. You and StarMedia agree to the following General Release: (a) In return for the payments and other benefits described above as well as the mutual promises contained herein, you completely release StarMedia from all claims, other than the Excluded Claims as defined below, of any kind, known and unknown, which you may now have or have ever had against StarMedia, including claims for compensation, bonuses, severance pay, stock options, tax indemnity and all claims arising from your employment with StarMedia, whether based on contract, tort, statute, local or municipal ordinance, regulation or any comparable law in any jurisdiction ("Released Claims"). By way of example and not in limitation, the Released Claims shall include any claims arising under Title VII of the Civil Rights Act of 1964, as amended, the Americans with Disabilities Act, and the New York Human Rights Law, as well as any claims asserting wrongful termination, breach of contract, negligent or intentional infliction of emotional distress, negligent or intentional misrepresentation, negligent or intentional interference with contract, and defamation. As used in this paragraph (a), the term "Excluded Claims" means (i) any and all claims for indemnification or insurance claims, including without limitation claims under any of StarMedia's directors and officers liability insurance policies, arising out of your service to StarMedia as an officer or director pursuant to Section VIII of the Amended and Restated Certificate of Incorporation and/or Section 21 of the Employment Agreement, (ii) any claims under the Line of Credit and (iii) any and all claims arising on or after the Separation Date, Page 4 including without limitation claims arising out of this Agreement. StarMedia reserves the right to amend and alter its directors and officers liability insurance policies at any time, but in no event shall StarMedia reduce the amount of such coverage for acts or omissions prior to the Separation Date. (b) You represent that you have not filed or permitted to be filed on your behalf any claims, administrative proceedings or lawsuits against StarMedia, and you agree that you will not do so at any time in the future with respect to the subject matter of the Released Claims. Prior to December 31, 2001, you agree that you will not participate in or commence any election contest as defined in Rule 14-11 of Regulation 14A of the Securities and Exchange Act of 1934. If you violate this Agreement by instituting any such claims, proceedings or lawsuits, you agree to pay all costs and expenses incurred by StarMedia in defending against the claim, proceeding or lawsuit, including its reasonable attorneys' fees, disbursements and costs. (c) StarMedia completely releases you from any and all claims, causes of action, suits, proceedings, debts, accounts, accountings, demands, liabilities, acts, omissions, and all other controversies of every type, kind, nature, description and character whatsoever, whether known or unknown, foreseen or unforeseen, liquidated or unliquidated, and whether based upon facts now known or unknown, direct or derivative, in law, equity or bankruptcy, other than the StarMedia Excluded Claims, arising at any time on or prior to the Separation Date (collectively, the "StarMedia Released Claims"). As used in this paragraph (c), the term "StarMedia Excluded Claims" means any claims under the Line of Credit. (d) StarMedia represents that it has not filed or permitted to be filed on its behalf any claims, administrative proceedings or lawsuits against you, and it agrees that it will not do so at any time in the future with respect to the subject matter of the StarMedia Released Claims. If StarMedia violates this Agreement by instituting any such claims, proceedings or lawsuits, StarMedia agrees to pay all costs and expenses incurred by you in defending against the claim, proceeding or lawsuit, including your reasonable attorneys' fees, disbursements and costs. 3. Other than as provided in this Agreement, you understand and agree that you are not entitled to any additional severance, loan forgiveness and tax indemnity from StarMedia as originally provided under any agreement with StarMedia. You agree that you will not borrow any additional money under any agreement with StarMedia. 4. You hereby represent and warrant to StarMedia that: (a) As of the Separation Date, you were and are the record and beneficial owner of the Collateral, as such term is defined in the Line of Credit, free and clear of all liens, charges, pledges, encumbrances, restrictions on rights to sell or vote, security interests or adverse claims of any kind (collectively, "Liens"), and upon forclosure on the Collateral as provided in Page 5 the Line of Credit, you will transfer and deliver to StarMedia valid title to the Collateral free and clear of any lien.. (b) You have the full legal capacity and unrestricted power to execute and deliver this Agreement, and to perform, your obligations hereunder. Your execution and delivery of this Agreement and the consummation of the transactions contemplated hereby will not violate any provision of law, any order of any court or other agency of government, or any provision of any indenture, agreement or other instrument to which you are a party or by which you or any of your properties or assets is bound or affected, or conflict with, result in a breach of or constitute (with due notice or lapse of time or both) a default under any such indenture, agreement or other instrument, or result in the creation or imposition of any Lien of any nature whatsoever upon any of your properties or assets. (c) There is no action, suit, investigation or proceeding pending or, to your knowledge, threatened against or affecting you before any court or arbitrator or any governmental body which in any manner relates to your ownership of the Collateral. (d) This Agreement has been duly executed and delivered by you and constitutes your legal, valid and binding obligation, enforceable in accordance with its terms, except as enforceability may be limited by bankruptcy, reorganization, insolvency and similar laws, by moratorium laws from time to time in effect and by general equity principles. 5. In addition you have been granted options to purchase shares of StarMedia common stock pursuant to the several Option Agreements listed on Schedule I (collectively, the "Option Agreements"). You understand that as of the Separation Date, all vesting in all options of StarMedia under the Option Agreements will cease. You and StarMedia agree that the expiration date with respect to any and all vested stock options, including, without limitation, any stock options granted as "incentive stock options," is hereby amended to August 7, 2006 and that all such options may be exercised on or before such date. Any such exercise must be performed pursuant to the terms of the Option Agreement. 6. You agree to refrain from any disparagement, criticism, defamation or slander, whether written or oral, direct or indirect (collectively, "Disparagement"), of or relating to StarMedia, its officers or employees. You further agree not to engage in any Disparagement to anyone regarding StarMedia or its technical abilities, product plans, market plans, state of development, costs, product performance, quality or reliability of its products, management, management style or management's abilities. Likewise, StarMedia, its officers and employees agree to refrain from any Disparagement to any party of you, including without limitation with respect to your management style or abilities, or any action taken or not taken by you during your term as Chief Executive Officer or Chairman of StarMedia. StarMedia will make good faith reasonable efforts to discourage and will prohibit those officers, employees and agents that are aware of this Agreement from making any disparaging remarks. In addition, StarMedia will make good faith reasonable efforts to prevent and repair any Disparagement regarding such Page 6 matters, engaged in by others, of which the directors or those officers who are aware of this Agreement, become aware. 7. You and the Board of Directors agree to characterize your separation from employment as a resignation in order for you to pursue other interests. You and the Board of Directors will approve, in writing, language for any press release or public statement regarding your separation. Each Party may withhold such approval in its sole discretion. 8. You understand and acknowledge that as of the last day of the Transition Period, you are not authorized to represent StarMedia or to hold yourself out as an employee or representative of StarMedia. You further agree to refer all strategic inquiries regarding StarMedia to the Chief Executive Officer of StarMedia. 9. You represent that you have returned to StarMedia, all Company property (including without limitation, keys to all offices and facilities, employee handbooks, business cards, client files, corporate credit cards, telephone calling card, files, sales material) in your possession and you have not retained any reproductions of these items. You will be entitled to retain your laptop computer, desktop computer, and your two cellular telephones, so long as you arrange to have the cellular telephone accounts transferred to a personal account in your name and at your cost no later than December 1, 2001. 10. Appropriate members of StarMedia's legal and/or human resources departments will be given access to your desktop computer and laptop computer hard drives to conduct a review and removal of Company information contained on the hard drives. StarMedia will have the right to erase any confidential information contained on such hard drives and will work with you to establish a mutually acceptable review process. StarMedia agrees that the review process will be completed by August 8, 2001. 11. You agree that you will make good faith reasonable efforts to cooperate with StarMedia and its counsel (internal and external) in connection with any matter with which you were involved while employed by StarMedia or of which you have knowledge by providing information, answering questions, or appearing as a witness, and that you will make good faith reasonable efforts to cooperate in connection with any administrative proceeding or litigation relating to any matter in which you were involved or about which you have knowledge as a result of your employment with StarMedia. StarMedia agrees that it will pay your reasonable expenses incurred in connection with such cooperation, including reasonable attorney's fees. In addition to the foregoing, StarMedia will pay you a per diem of $800 per day. 12. You agree to the following restrictive covenants: (a) From the Separation Date until [information has been omitted and filed separately with the Securities and Exchange Commission in connection with a request for confidential treatment] (the "Restricted Period"), you agree that you will not, directly or indirectly, as an employee, employer, consultant, agent, principal, partner, manager, stockholder, officer, director, or in any other Page 7 individual or representative capacity, engage or participate in the ownership, management, operation or control of any Restricted Enterprise, provided that in no event shall ownership of less than four (4) percent of the outstanding equity securities of any issuer whose securities are registered on a national securities exchange be prohibited under this Section 5(a). "Restricted Enterprise" shall mean [information has been omitted and filed separately with the Securities and Exchange Commission in connection with a request for confidential treatment]. (b) During the Restricted Period, you agree that you will not, directly or indirectly, solicit for employment [information has been omitted and filed separately with the Securities and Exchange Commission in connection with a request for confidential treatment]. In the event that you hire or employ any such person during the Restricted Period (without soliciting such person in violation of this foregoing restriction), you shall pay to StarMedia $75,000, which amount represents the cost of replacing such person. (c) During the Restricted Period, you shall not solicit or take away for the benefit of any Restricted Enterprise, any person or entity which, as of the Separation Date, was a customer of StarMedia or was in negotiations to become a customer of StarMedia. (d) If any of the restrictions contained in this Section shall be deemed by any applicable court to be unenforceable by reason of the extent, duration or geographical scope thereof, or otherwise, then the parties agree that such court shall modify such restriction, only to the extent necessary to render it enforceable and, in its reduced form, such restrictions shall then be enforced, and in its reduced form this Section shall be enforceable in the manner contemplated hereby. 13. Any and all inventions, creations, ideas, improvements and software of any nature whatsoever, whether or not patentable, and developed by the you in connection with your activities and employment with StarMedia will always be the property of StarMedia 14. (a) You understand and agree that this Agreement shall be maintained by you in strict confidence, and that you shall not disclose this Agreement or any of its terms to any other person unless required by law. You represent that you have not disclosed the terms of this Agreement or the negotiations leading up to this Agreement to anyone other than Jack Chen, his tax advisors and attorneys, and your tax advisors and attorneys. (b) StarMedia understands and agrees that this Agreement shall be maintained by it in strict confidence, and that it shall not disclose, nor permit its officers, directors or employees to disclose, this Agreement or any of its terms to any other person unless required by law. StarMedia represents that neither it, nor its officers, directors or employees have disclosed the terms of this Agreement or the negotiations leading up to this Agreement to any one other than its professional advisors and Jack Chen. Page 8 15. (a) You acknowledge that your promise not to disclose confidential and proprietary information belonging to StarMedia and your promise not to disclose the terms of this Agreement are material terms of the Agreement without which StarMedia would not provide the payments and benefits discussed in this Agreement. In addition to any other remedy available to StarMedia, in the event that you file a lawsuit or administrative charge relating to any claim released by you in this Agreement, or if you disclose confidential or proprietary information or disclose the terms of the Agreement, you will pay to StarMedia liquidated damages in the amount of $25,000. (b) StarMedia acknowledges that its promise not to disclose and to cause its officers, directors and employees not to disclose the terms of this Agreement are material terms of the Agreement without which you would not agree to the termination of the Employment Agreement. In addition to any other remedy available to you, in the event that StarMedia files a lawsuit or administrative charge relating to any claim released by it in this Agreement, or if StarMedia discloses or permits its officers, directors or employees to disclose the terms of the Agreement, StarMedia will pay to you liquidated damages in the amount of $25,000. 16. This Agreement shall be governed by the laws of the State of New York, without regard for its conflict of laws principles. 17. You and StarMedia mutually agree that any controversy or claim arising out of or relating to this Agreement or its breach, or any other dispute between the parties arising from or related to your employment or position as Chief Executive Officer and Chairman of the Board of StarMedia, shall be submitted to be resolved by arbitration. The claims covered by this Agreement ("Arbitrable Claims") include, but are not limited to, claims for any compensation including stock or stock options or severance; claims for breach of any contract (including this Agreement) or covenant (express or implied); tort claims; claims for discrimination (including, but not limited to, race, sex, religion, national origin, age, marital status, medical condition, or disability); claims for benefits (except where an employee benefit or pension plan specifies that its claims procedure shall culminate in an arbitration procedure different from this one); and claims for violation of any federal, state, or other law, statute, regulation, or ordinance. The parties hereby waive any rights they may have to trial by jury in regard to Arbitrable Claims. A judgment may be entered on the arbitrator's award in any court having jurisdiction. Page 9 Arbitration under this Agreement shall be the exclusive remedy for all Arbitrable Claims. You and StarMedia agree that arbitration shall be held in or near New York, New York and shall be in accordance with the then-current Employment Dispute Resolution Rules of the American Arbitration Association, before an arbitrator licensed to practice law in the State of New York. The arbitrator shall have authority to award or grant both legal, equitable, and declaratory relief. Such arbitration shall be final and binding on the parties. The Federal Arbitration Act shall govern the interpretation and enforcement of this section pertaining to Alternative Dispute Resolution. 18. You and StarMedia also agree that this letter contains all of our agreements and understandings, and fully supersedes any prior agreements or understandings that we may have had regarding the subject matter of this Agreement; provided that, notwithstanding any provision to the contrary, the Letter of Credit shall remain in full force and effect in accordance with its terms as in effect on the date hereof. 19. You acknowledge you have been represented by counsel throughout the negotiation and drafting of this Agreement, and that you have chosen to enter into this Agreement and based upon your own judgment and not in reliance upon any promises made by StarMedia other than those contained in this Agreement. If this letter comports with your understanding of our agreement, please sign on the line provided below and return the original by hand delivery. Sincerely, /s/ Enrique Narciso ------------------------------- Enrique Narciso Chief Executive Officer I have read and understand the Agreement above and agree to be bound by its terms and conditions. /s/ Fernando Espuelas Dated: 8-7-01 - --------------------- ------ Fernando Espuelas EX-99.4 6 a2064182zex-99_4.txt EXHIBIT 99.4 EXHIBIT 99.4 August 7, 2001 Jack Chen c/o StarMedia Network, Inc. 75 Varick Street New York, NY 10013 Re: SEPARATION AGREEMENT INCLUDING A GENERAL RELEASE Dear Jack: This letter sets forth the terms of our agreement (this "Agreement") with respect to your separation from employment with StarMedia Network, Inc. and its subsidiaries (collectively, "StarMedia"), and the end of your tenure as President and Vice Chairman of the Board of StarMedia. 1. Your final date of employment with StarMedia will be August 7, 2001 (the "Separation Date"). As of the Separation Date, except as specifically provided in this Agreement, all compensation, including bonuses, and all other benefits and perquisites of employment with StarMedia, including the vesting of Stock Options pursuant to the 1997, 1998 and 2000 StarMedia Stock Option Plans, will cease. As of the Separation Date, all of StarMedia's and your obligations, except as otherwise provided Agreement, under the Employment Agreement dated as of December 28, 2000 (the "Employment Agreement"), between you and StarMedia, will cease. If the terms of this Agreement are accepted by you and if you return a fully executed original of this Agreement as described below you will be entitled to the following: Page 2 (a) You will resign from your position as Vice Chairman of the Board of Directors of StarMedia effective as of the Separation Date. On or before the Separation Date, StarMedia will pay you any unpaid salary through the Separation Date and all reasonable unpaid expenses incurred by you in connection with service to the Company on or prior to the Separation Date. You will resign as a member of the Board of Directors on or before December 31, 2001. StarMedia will pay any and all reasonable expenses incurred by you in connection with your service as a Director of the Company. You will not receive any additional remuneration for service in that capacity. (b) Until December 31, 2001, StarMedia will provide to you limited and reasonable administrative support from the staff of StarMedia and maintain for you an e-mail account on StarMedia's server and voicemail at your former extension which will contain an outgoing message mutually acceptable to you and StarMedia. However, after the Separation Date you will not be entitled to maintain an office at StarMedia. (c) StarMedia will pay you, via wire transfer to an account designated by you, a one time payment in the amount of Six Hundred and Fifty-Thousand Dollars ($650,000.00), less taxes and other legally required withholding amounts on or before August 9, 2001. Payment will be deemed made on the date you receive it. (d) In addition, in the event that you elect COBRA coverage, for the initial eighteen (18) months of the period provided pursuant to COBRA, commencing on September 1, 2001 and ending February 28, 2003, StarMedia will pay the applicable COBRA premiums on your behalf (including your immediate family). As of March 1, 2003, you will be solely responsible for all applicable COBRA premiums. In addition, commencing on September 1, 2001 and ending February 28, 2003, StarMedia will pay all applicable premiums on your behalf (including your immediate family) to continue StarMedia's dental and vision coverage on the same terms as active employees of StarMedia. StarMedia reserves the right to alter and amend its benefit plans at any time. Your entitlement to COBRA continuation coverage paid for by StarMedia shall cease if comparable coverage is made available to you and your immediate family through your employment or your spouse's employment or if the COBRA continuation coverage ends sooner as provided in Section 4980(B) of the Internal Revenue Code of 1986, as amended. Likewise, your entitlement to continued dental or vision coverage shall cease if comparable dental or vision coverage is made available to you and your immediate family through your employment or your spouse's employment. (e) The Line of Credit provided pursuant to the letter agreement dated December 28, 2000 between you and StarMedia, as amended and restated by the letter Page 3 agreement dated January 31, 2001, will remain in full force and effect in accordance with its terms ("The Line of Credit"). 2. You and StarMedia agree to the following General Release: (a) In return for the payments and other benefits described above as well as the mutual promises contained herein, you completely release StarMedia from all claims, other than the Excluded Claims as defined below, of any kind, known and unknown, which you may now have or have ever had against StarMedia, including claims for compensation, bonuses, severance pay, stock options, tax indemnity and all claims arising from your employment with StarMedia, whether based on contract, tort, statute, local or municipal ordinance, regulation or any comparable law in any jurisdiction ("Released Claims"). By way of example and not in limitation, the Released Claims shall include any claims arising under Title VII of the Civil Rights Act of 1964, as amended, the Americans with Disabilities Act, and the New York Human Rights Law, as well as any claims asserting wrongful termination, breach of contract, negligent or intentional infliction of emotional distress, negligent or intentional misrepresentation, negligent or intentional interference with contract, and defamation. As used in this paragraph (a), the term "Excluded Claims" means (i) any and all claims for indemnification or insurance claims, including without limitation claims under any of StarMedia's directors and officers liability insurance policies, arising out of your service to StarMedia as an officer or director pursuant to Section VIII of the Amended and Restated Certificate of Incorporation and/or Section 21 of the Employment Agreement, (ii) any claims under the Line of Credit and (iii) any and all claims arising on or after the Separation Date, including without limitation claims arising out of this Agreement. StarMedia reserves the right to amend and alter its directors and officers liability insurance policies at any time, but in no event shall StarMedia reduce the amount of such coverage for acts and omissions occurring prior to the Separation Date. (b) You represent that you have not filed or permitted to be filed on your behalf any claims, administrative proceedings or lawsuits against StarMedia, and you agree that you will not do so at any time in the future with respect to the subject matter of the Released Claims. Prior to December 31, 2001, you agree that you will not participate in or commence any election contest as defined in Rule 14-11 of Regulation 14A of the Securities and Exchange Act of 1934. If you violate this Agreement by instituting any such claims, proceedings or lawsuits, you agree to pay all costs and expenses incurred by StarMedia in defending against the claim, proceeding or lawsuit, including its reasonable attorneys' fees, disbursements and costs. (c) StarMedia completely releases you from any and all claims, causes of action, suits, proceedings, debts, accounts, accountings, demands, liabilities, acts, omissions, and all other controversies of every type, kind, nature, description and character whatsoever, whether known or unknown, foreseen or unforeseen, liquidated or unliquidated, and whether based upon facts now known or unknown, direct or derivative, in law, equity or bankruptcy, other than the Page 4 StarMedia Excluded Claims, arising at any time on or prior to the Separation Date (collectively, the "StarMedia Released Claims"). As used in this paragraph (c), the term "StarMedia Excluded Claims" means any claims under the Line of Credit. (d) StarMedia represents that it has not filed or permitted to be filed on its behalf any claims, administrative proceedings or lawsuits against you, and it agrees that it will not do so at any time in the future with respect to the subject matter of the StarMedia Released Claims. If StarMedia violates this Agreement by instituting any such claims, proceedings or lawsuits, StarMedia agrees to pay all costs and expenses incurred by you in defending against the claim, proceeding or lawsuit, including your reasonable attorneys' fees, disbursements and costs. 3. Other than as provided in this Agreement, you understand and agree that you are not entitled to any additional severance, loan forgiveness and tax indemnity from StarMedia as originally provided under any agreement with StarMedia. 4. You hereby represent and warrant to StarMedia that: (a) As of the Separation Date, you were and are the record and beneficial owner of the Collateral, as such term is defined in the Line of Credit, free and clear of all liens, charges, pledges, encumbrances, restrictions on rights to sell or vote, security interests or adverse claims of any kind (collectively, "Liens"), and you agree to deliver to StarMedia a stock certificate evidencing the Collateral within 30 days of the Separation Date. (b) You have the full legal capacity and unrestricted power to execute and deliver this Agreement, and to perform, your obligations hereunder. Your execution and delivery of this Agreement and the consummation of the transactions contemplated hereby will not violate any provision of law, any order of any court or other agency of government, or any provision of any indenture, agreement or other instrument to which you are a party or by which you or any of your properties or assets is bound or affected, or conflict with, result in a breach of or constitute (with due notice or lapse of time or both) a default under any such indenture, agreement or other instrument, or result in the creation or imposition of any Lien of any nature whatsoever upon any of your properties or assets. (c) There is no action, suit, investigation or proceeding pending or, to your knowledge, threatened against or affecting you before any court or arbitrator or any governmental body which in any manner relates to your ownership of the Collateral. (d) This Agreement has been duly executed and delivered by you and constitutes your legal, valid and binding obligation, enforceable in accordance with its terms, except as enforceability may be limited by bankruptcy, reorganization, insolvency and similar laws, by moratorium laws from time to time in effect and by general equity principles. Page 5 5. In addition you have been granted options to purchase shares of StarMedia common stock pursuant to the several Option Agreements listed on Schedule I (collectively, the "Option Agreements"). You understand that as of the Separation Date, all vesting in all options of StarMedia under the Option Agreements will cease. You and StarMedia agree that the expiration date with respect to any and all vested stock options, including, without limitation, any stock options granted as "incentive stock options," is hereby amended to August 7, 2006 and that all such options may be exercised on or before such date. Any such exercise must be performed pursuant to the terms of the Option Agreement. 6. You agree to refrain from any disparagement, criticism, defamation or slander, whether written or oral, direct or indirect (collectively, "Disparagement"), of or relating to StarMedia, its officers or employees. You further agree not to engage in any Disparagement to anyone regarding StarMedia or its technical abilities, product plans, market plans, state of development, costs, product performance, quality or reliability of its products, management, management style or management's abilities. Likewise, StarMedia, its officers and employees agree to refrain from any Disparagement to any party of you, including without limitation with respect to your management style or abilities, or any action taken or not taken by you during your term as President or Vice Chairman of StarMedia. StarMedia will make good faith reasonable efforts to discourage and will prohibit those officers, employees and agents that are aware of this Agreement from making any disparaging remarks. In addition, StarMedia will make good faith reasonable efforts to prevent and repair any Disparagement regarding such matters, engaged in by others, of which the directors or those officers that aware of this Agreement become aware. 7. You and the Board of Directors agree to characterize your separation from employment as a resignation in order for you to pursue other interests. You and the Board of Directors will approve, in writing, language for any press release or public statement regarding your separation. Each Party may withhold such approval in its sole discretion. 8. You understand and acknowledge that as of the Separation Date you are not authorized to represent StarMedia or to hold yourself out as an employee or representative of StarMedia. You further agree to refer all strategic inquiries regarding StarMedia to the Chairman of the Board and CEO of StarMedia. 9. You represent that you have returned to StarMedia, all Company property (including without limitation, keys to all offices and facilities, employee handbooks, business cards, client files, corporate credit cards, telephone calling card, files, sales material) in your possession and you have not retained any reproductions of these items. You will be entitled to retain your laptop computer, desktop computer, Blackberry device and your two cellular telephones, so long as you arrange to have the Blackberry and cellular telephone accounts transferred to a personal account in your name and at your cost no later than September 1, 2001. Page 6 10. Appropriate members of StarMedia's legal and/or human resources departments will be given access to your desktop computer and laptop computer hard drives to conduct a review and removal of Company information contained on the hard drives. StarMedia will have the right to erase any confidential information contained on such hard drives and will work with you to establish a mutually acceptable review process. StarMedia agrees that the review process will be completed by August 8, 2001. 11. You agree that you will make good faith reasonable efforts to cooperate with StarMedia and its counsel (internal and external) in connection with any matter with which you were involved while employed by StarMedia or of which you have knowledge by providing information, answering questions, or appearing as a witness, and that you will make good faith reasonable efforts to cooperate in connection with any administrative proceeding or litigation relating to any matter in which you were involved or about which you have knowledge as a result of your employment with StarMedia. StarMedia agrees that it will pay your reasonable expenses incurred in connection with such cooperation, including reasonable attorney's fees. In addition to the foregoing, StarMedia will pay you a per diem of $800 per day. 12. You agree to the following restrictive covenants: (a) From the Separation Date until [information has been omitted and filed separately with the Securities and Exchange Commission in connection with a request for confidential treatment] (the "Restricted Period"), you agree that you will not, directly or indirectly, as an employee, employer, consultant, agent, principal, partner, manager, stockholder, officer, director, or in any other individual or representative capacity, engage or participate in the ownership, management, operation or control of any Restricted Enterprise, provided that in no event shall ownership of less than four (4) percent of the outstanding equity securities of any issuer whose securities are registered on a national securities exchange be prohibited under this Section 5(a). "Restricted Enterprise" shall mean [information has been omitted and filed separately with the Securities and Exchange Commission in connection with a request for confidential treatment]. (b) During the Restricted Period, you agree that you will not, directly or indirectly, solicit for employment [information has been omitted and filed separately with the Securities and Exchange Commission in connection with a request for confidential treatment]. In the event that you hire or employ any such person during the Restricted Period (without soliciting such person in violation of this foregoing restriction), you shall pay to StarMedia $75,000, which amount represents the cost of replacing such person. (c) During the Restricted Period, you shall not solicit or take away for the benefit of any Restricted Enterprise, any person or entity which, as of the Separation Date, was a customer of StarMedia or was in negotiations to become a customer of StarMedia. (d) If any of the restrictions contained in this Section shall be deemed by any Page 7 applicable court to be unenforceable by reason of the extent, duration or geographical scope thereof, or otherwise, then the parties agree that such court shall modify such restriction, only to the extent necessary to render it enforceable and, in its reduced form, such restrictions shall then be enforced, and in its reduced form this Section shall be enforceable in the manner contemplated hereby. 13. Any and all inventions, creations, ideas, improvements and software of any nature whatsoever, whether or not patentable, and developed by the you in connection with your activities and employment with StarMedia will always be the property of StarMedia 14. (a) You understand and agree that this Agreement shall be maintained by you in strict confidence, and that you shall not disclose this Agreement or any of its terms to any other person unless required by law. You represent that you have not disclosed the terms of this Agreement or the negotiations leading up to this Agreement to anyone other than Fernando Espuelas, his tax advisors and attorneys, and your tax advisors and attorneys. (b) StarMedia understands and agrees that this Agreement shall be maintained by it in strict confidence, and that it shall not disclose, nor permit its officers, directors or employees to disclose, this Agreement or any of its terms to any other person unless required by law. StarMedia represents that neither it, nor its officers, directors or employees have disclosed the terms of this Agreement or the negotiations leading up to this Agreement to any one other than its professional advisors and Fernando Espuelas. 15. (a) You acknowledge that your promise not to disclose confidential and proprietary information belonging to StarMedia and your promise not to disclose the terms of this Agreement are material terms of the Agreement without which StarMedia would not provide the payments and benefits discussed in this Agreement. . In addition to any other remedy available to StarMedia, in the event that you file a lawsuit or administrative charge relating to any claim released by you in this Agreement, or if you disclose confidential or proprietary information or disclose the terms of the Agreement, you will pay to StarMedia liquidated damages in the amount of $25,000. (b) StarMedia acknowledges that its promise not to disclose and to cause its officers, directors and employees not to disclose the terms of this Agreement are material terms of the Agreement without which you would not agree to the termination of the Employment Agreement. In addition to any other remedy available to you, in the event that StarMedia files a lawsuit or administrative charge relating to any claim released by it in this Agreement, or if StarMedia discloses or permits its officers, directors or employees to disclose the terms of the Agreement, StarMedia will pay to you liquidated damages in the amount of $25,000. 16. This Agreement shall be governed by the laws of the State of New York, without regard for its conflict of laws principles. Page 8 17. You and StarMedia mutually agree that any controversy or claim arising out of or relating to this Agreement or its breach, or any other dispute between the parties arising from or related to your employment or position as Vice Chairman of the Board of StarMedia, shall be submitted to be resolved by arbitration. The claims covered by this Agreement ("Arbitrable Claims") include, but are not limited to, claims for any compensation including stock or stock options or severance; claims for breach of any contract (including this Agreement) or covenant (express or implied); tort claims; claims for discrimination (including, but not limited to, race, sex, religion, national origin, age, marital status, medical condition, or disability); claims for benefits (except where an employee benefit or pension plan specifies that its claims procedure shall culminate in an arbitration procedure different from this one); and claims for violation of any federal, state, or other law, statute, regulation, or ordinance. The parties hereby waive any rights they may have to trial by jury in regard to Arbitrable Claims. A judgment may be entered on the arbitrator's award in any court having jurisdiction. Arbitration under this Agreement shall be the exclusive remedy for all Arbitrable Claims. You and StarMedia agree that arbitration shall be held in or near New York, New York and shall be in accordance with the then-current Employment Dispute Resolution Rules of the American Arbitration Association, before an arbitrator licensed to practice law in the State of New York. The arbitrator shall have authority to award or grant both legal, equitable, and declaratory relief. Such arbitration shall be final and binding on the parties. The Federal Arbitration Act shall govern the interpretation and enforcement of this section pertaining to Alternative Dispute Resolution. 18. You and StarMedia also agree that this letter contains all of our agreements and understandings, and fully supersedes any prior agreements or understandings that we may have had regarding the subject matter of this Agreement; provided that, notwithstanding any provision to the contrary, the Letter of Credit shall remain in full force and effect in accordance with its terms as in effect on the date hereof. 19. You acknowledge you have been represented by counsel throughout the negotiation and drafting of this Agreement, and that you have chosen to enter into this Agreement and based upon your own judgment and not in reliance upon any promises made by StarMedia other than those contained in this Agreement. If this letter comports with your understanding of our agreement, please sign on the line provided below and return the original by hand delivery. Sincerely, /s/ Enrique Narciso ------------------------------- Enrique Narciso Chief Executive Officer Page 9 /s/ Fernando Espuelas -------------------------------- Fernando Espuelas Chairman of the Board of Directors I have read and understand the Agreement above and agree to be bound by its terms and conditions. /s/ Jack Chen Dated: Aug. 7, 2001 - --------------------- ------------ Jack Chen EX-99.5 7 a2064182zex-99_5.txt EXHIBIT 99.5 EXHIBIT 99.5 [STARMEDIA, INC. LETTERHEAD] October 31, 2001 Mr. Steven J. Heller 190A Duane Street, #3 New York, New York 10013 Re: SEPARATION AGREEMENT INCLUDING A GENERAL RELEASE Dear Steve: This letter (the "Agreement") sets forth the terms of our agreement with respect to your separation from employment with StarMedia Network, Inc. and its subsidiaries (collectively and with their respective successors, "StarMedia"), and the end of your tenure as Chief Financial Officer of StarMedia ("CFO"). This Agreement will become effective as of the date that you sign and return this letter in accordance with its terms (the "Effective Date"). I have enclosed a counterpart original of this letter, signed by me, for your files. 1. (a) Your final date of employment with StarMedia will be November 15, 2001 (the "Separation Date"), at which time you will be deemed to have resigned from all offices and positions, of any kind, that you then hold at StarMedia. You will cease to be the CFO, and an officer, of StarMedia on the earlier of (x) November 15, 2001 and (y) twenty-four hours prior to public disclosure by StarMedia of its results for the third quarter of 2001. Until the Separation Date, you will perform such services for StarMedia as the Chief Executive Officer ("CEO") may from time to time reasonably request. As of the Separation Date and except to the extent otherwise provided in this Agreement, all of StarMedia's and your obligations under the Employment Agreement dated as of December 28, 2000, between you and StarMedia, (the "Employment Agreement") will expire and become null and void. Without limiting the generality of the foregoing, all compensation, including bonuses, and all other benefits and perquisites of employment with StarMedia, will (as of the Separation Date and except to the extent otherwise provided in this Agreement) cease, and all stock option agreements, stock option grants and other rights heretofore granted to you to purchase or otherwise obtain equity securities of StarMedia will (as of the Separation Date) terminate and be of no further force and effect. For avoidance of doubt, you and StarMedia expressly confirm that the line of credit provided pursuant to the Employment Agreement and the related letter agreement, dated December 28, 2000, between you and StarMedia (the "Line of Credit"), will also terminate as of the Separation Date and that any liability arising out of or relating to such Line of Credit Page 2 (including without limitation any liability from you to StarMedia or from StarMedia to you) will (as of the Separation Date and except to the extent otherwise provided in this Agreement) be extinguished. (b) In consideration of StarMedia's complete discharge of all amounts owed under the Line of Credit, and in exchange therefor, and full satisfaction thereof, you further agree to deliver to StarMedia on or before the Separation Date one or more certificates, together with one or more stock powers duly endorsed for transfer to StarMedia, in the form enclosed with this letter, representing 326,000 shares of common stock of StarMedia, (collectively, the "Shares"), and to relinquish (as of the Separation Date) any and all ownership rights you may have in said Shares, which Shares (x) represent all the shares of capital stock of StarMedia, other than approximately 5,500 shares acquired under StarMedia's Employee Stock Purchase Plan, owned by you (or by trusts for your benefit) as of the date of this letter, (including, but not limited to, any additional shares, securities or equity interests obtained by virtue of stock dividends or "splits" on those shares), such Shares to be transferred to StarMedia free and clear of all contractual liens, charges, pledges, encumbrances, restrictions on rights to sell or vote, security interests or other adverse contractual claims of any kind, other than pledges, liens and repurchase rights in favor of StarMedia (collectively, "Liens"). StarMedia acknowledges and agrees (i) that the Shares are the shares referred to as collateral in the Line of Credit and (ii) all outstanding indebtedness (inclusive of interest) owed under the Line of Credit shall be fully discharged upon your delivery of the Shares pursuant to this Section 1(b). (c) If you return to StarMedia (x) a fully executed original of this Agreement on or before October 31, 2001 and (y) the certificate(s) and stock power(s) described in Section 1(b) on or before the Separation Date, you will be entitled to the following: (i) On the Separation Date, StarMedia will pay you all unpaid salary through the Separation Date and all reasonable unpaid expenses incurred by you prior to the Separation Date in connection with services for StarMedia for which you have provided appropriate documentation to StarMedia prior to the Separation Date. (ii) On the Separation Date, StarMedia will, in addition, make a one-time payment to you in the amount of Three Hundred Fifty Thousand Dollars ($350,000.00), less applicable tax withholdings as provided in Section 14(c) below. This payment will, at your election, be made by wire transfer pursuant to wire transfer instructions previously delivered by you to StarMedia or by delivering to you a check (or checks) for the amounts required, backed by sufficient funds. (d) Delivery of the Shares, stock powers and payments referred to in Sections 1(b) and 1(c) will be confirmed at a closing to be held at 12:00 noon on the Separation Date at Page 3 the Company's principal office in New York City or at such other time and place as you and the CEO may mutually agree. StarMedia will, at the appropriate time, issue you an IRS Form 1099B reporting the gain (or loss) you recognize in connection with the transfer of the Shares to StarMedia pursuant to Section 1(b). (e) In the event that either you or StarMedia materially breaches any material obligation under Section 1(b) or 1(c), this Agreement will, at the election of the non-breaching party, become null and void, and the Separation Date (and the termination of your employment) will be deemed not to have occurred. 2. You and StarMedia agree to the following General Release, and related provisions, all to become effective as of the Separation Date: (a) In return for the payments and other benefits described above as well as the mutual promises contained herein, you completely release StarMedia from all claims of any kind, known and unknown, which you may now have or have ever had against StarMedia, including claims for compensation, bonuses, severance pay, stock options, tax indemnity and all claims arising from your employment with StarMedia, whether based on contract, tort, statute, federal or state law, local or municipal ordinance, regulation or any comparable law in any jurisdiction ("Released Claims"). By way of example and not in limitation, the Released Claims shall include any claims arising under Title VII of the Civil Rights Act of 1964, as amended, the Americans with Disabilities Act, and the New York Human Rights Law, as well as any claims asserting wrongful termination, breach of contract, negligent or intentional infliction of emotional distress, negligent or intentional misrepresentation, negligent or intentional interference with contract, and defamation. The Released Claims shall not, however, include any claim that (i) is based upon willful indefensible misconduct or willful indefensible inaction, (ii) arises under, or is preserved by, this Agreement or (iii) is based on facts or events occurring after the Separation Date. (b) You represent that you have not filed or authorized to be filed on your behalf any claims, administrative proceedings or lawsuits against StarMedia, and you agree that you will not do so at any time in the future with respect to the subject matter of any Released Claim. Prior to December 31, 2001, you agree that you will not participate in or commence any election contest as defined in Rule 14-11 of Regulation 14A of the Securities and Exchange Act of 1934. If you violate this Section 2(b) by instituting a claim, proceeding or lawsuit, you will pay all costs and expenses incurred by StarMedia in defending against such claim, proceeding or lawsuit, including its reasonable attorneys' fees, disbursements and costs. (c) StarMedia completely releases you from any and all claims, causes of action, suits, proceedings, debts, accounts, accountings, demands, liabilities, acts, omissions, and all other controversies of every type, kind, nature, description and character whatsoever, at law or in equity (collectively, "Claims"). The released Claims shall not, however, include any Claim to Page 4 the extent that such Claim (i) is based upon willful indefensible misconduct or willful indefensible inaction, (ii) arises under, or is preserved by, this Agreement or (iii) is based on facts or events occurring after the Separation Date. (d) StarMedia represents that it has not filed or authorized to be filed on its behalf any claims, administrative proceedings or lawsuits against you, and StarMedia agrees that it will not do so at any time in the future with respect to the subject matter of any Claim released under Section 2(c). If StarMedia violates this Section 2(d) by instituting a claim, proceeding or lawsuit, StarMedia will pay all costs and expenses incurred by you in defending against such claim, proceeding or lawsuit, including your reasonable attorneys' fees, disbursements and costs. 3. You understand and agree that you are not entitled to any severance, debt discharge, or tax indemnity from StarMedia other than as provided in this Agreement. 4. You hereby represent and warrant to StarMedia that: (a) As of the Separation Date, you will be the beneficial owner of the Shares; will, with the cooperation of StarMedia and its transfer agent as to the proposed transfer of the Shares from your indirect to your direct ownership, be the record owner of the Shares; and will own the Shares free and clear of any Liens. (b) You have the full legal capacity and unrestricted power to execute and deliver this Agreement, and to perform, your obligations hereunder. Your execution and delivery of this Agreement and the consummation of the transactions contemplated hereby will not violate any provision of law, any order of any court or other agency of government, or any provision of any indenture, agreement or other instrument to which you are a party or by which you are bound. (c) There is, to the best of your knowledge and belief, no action, suit, investigation or proceeding pending against or affecting you before any court or arbitrator or any governmental body which in any manner relates to your ownership of the Shares. (d) This Agreement has been duly executed and delivered by you and constitutes your legal, valid and binding obligation, enforceable in accordance with its terms, except as enforceability may be limited by bankruptcy, reorganization, insolvency and similar laws, by moratorium laws from time to time in effect and by general equity principles. (e) StarMedia represents and warrants that: it is fully authorized by action of any person or body whose action is required to enter into this Agreement and to perform its obligations under it; the execution, delivery and performance of this Agreement by it does not violate any applicable law, regulation, order, judgment or decree or any agreement, plan or corporate governance document to which it is a party or by which it is bound; and upon the Page 5 execution and delivery of this Agreement by you, this Agreement will be a valid and binding obligation of StarMedia, enforceable against it in accordance with its terms, except to the extent that enforceability may be limited by applicable bankruptcy, insolvency or similar laws affecting the enforcement of creditors' rights generally. 5. You will retain any rights you may have under the terms of the applicable StarMedia 401(k) plan and the StarMedia Employee Stock Purchase Plan. In addition, (a) your statutory COBRA rights will commence as of the Separation Date and (b) you will remain entitled to reimbursement for any business expense, reasonably incurred by your prior to the Separation Date in connection with your services for StarMedia, for which you have not yet been reimbursed pursuant to Section 1(c)(i) or otherwise, with reimbursement due promptly following your submission of appropriate documentation. 6. (a) You and StarMedia agree to characterize your separation from employment with StarMedia as a resignation in order for you to pursue other interests. (b) You will not intentionally make any public statement to third parties, the public, the press, the media, or any administrative agency that disparages, or is likely to cause injury to, StarMedia. Likewise, StarMedia will instruct its directors and officers, senior executives, investor relations personnel and public relations personnel not to make any public statement to third parties, the public, the press, the media, or any administrative agency that disparages, or is likely to cause injury to, you. (c) Notwithstanding the foregoing, nothing in this Section 6 will prevent any person from making truthful public statements (i) in response to incorrect, disparaging or derogatory public statements or (ii) to the extent (x) necessary to enforce this Agreement or (y) required by law or by any court, arbitrator, administrative or legislative body (including without limitation any committee thereof), or other person or entity with apparent jurisdiction to order such person to disclose information. (d) You will be entitled to review and approve any internal announcement, and any press release or other public statement, made or issued by StarMedia in connection with the execution of this Agreement or the termination of your employment with StarMedia (which approval may not be unreasonably delayed or withheld). 7. On or before the Separation Date, you will return to StarMedia all StarMedia property (including without limitation keys to all offices and facilities, employee handbooks, business cards, client files, corporate credit cards, telephone calling cards, files, sales material, Blackberry, etc. as well as any and all reproductions thereof) that is in your possession. Notwithstanding the foregoing, you shall be entitled to retain, and StarMedia hereby transfers to you as of the Separation Date any ownership interest it may have in, your StarMedia laptop computer and your StarMedia cell phone; provided, however, that you agree that you will not Page 6 delete or destroy any computer files, e-mail or documents of any kind whatsoever prior to the Separation Date that relate to StarMedia in any way or that are saved or cached in any way on such laptop or in StarMedia's computer equipment or network, and that StarMedia shall be entitled to make a copy of the hard drive of the laptop on or prior to the Separation Date. Nothing in this Section 7 will prevent your retaining papers and other materials of a personal nature, including without limitation personal diaries, calendars and Rolodexes, documents relating to your compensation, benefits, expenses, and the like, and information reasonably believed by you to be required in connection with obtaining tax or financial advice or preparing and filing your personal tax returns. 8. (a) You agree that you will, upon a reasonable request made by the CEO or by the Board of Directors of StarMedia (the "Board") or any committee thereof, cooperate with StarMedia and its counsel (internal and external) in connection with (x) any matter with which you were involved while employed with StarMedia or of which you have knowledge as a result of your employment with StarMedia and (y) any administrative proceeding or litigation relating to any such matter, by providing information, answering questions, or appearing as a witness. (b) You further agree that, during a period of six months commencing on the Effective Date, you will, upon a reasonable request made by the CEO or the Board or any committee thereof, (x) cooperate with StarMedia in all matters relating to the smooth transition of your duties to other or new StarMedia employees and (y) will promptly cooperate with all reasonable requests for information and assistance by StarMedia relating to any matter with which you were involved while employed with StarMedia or of which you have knowledge as a result of your employment with StarMedia. (c) You agree to provide the cooperation referred to in Sections 8(a) and 8(b) at such times and places as the CEO or the Board or any committee thereof may reasonably request consistent with your other obligations, including without limitation the requirements of any new employment you undertake. StarMedia will promptly reimburse you for, or promptly advance to you, any and all properly documented costs and expenses reasonably incurred by you in connection with any cooperation referred to in this Section 8, (except to the the extent otherwise provided in Section 9), excluding the fees and disbursements and other charges of any attorney you may choose to retain. Such reimbursable costs and expenses will be reimbursed or advanced promptly after your submission to StarMedia of statements in such detail as StarMedia may reasonably require. You will not be required to render more than seventy (70) hours of cooperation pursuant to Section 8(b) after the Separation Date. 9. (a) If you are made a party to, or are threatened to be made a party to, any action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that you are or were a director, officer or employee of StarMedia or are or were serving on behalf of, or at the request of, StarMedia as director, officer, member, employee or agent of Page 7 another corporation, partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans (an "Indemnified Proceeding"), you will promptly be indemnified by StarMedia to the fullest extent permitted or authorized by its Certificate of Incorporation or Bylaws, as in effect on the Effective Date, or, if greater, by the laws of the State of Delaware, against any and all costs, expenses, liabilities and losses (including, without limitation, judgments, fines, reasonable attorney's fees, ERISA excise taxes or penalties and amounts paid or to be paid in settlement) incurred or suffered by you in connection therewith, and such indemnification will continue even though you have ceased to be a director, officer, member, employee or agent of StarMedia or any other entity and will inure to the benefit of your heirs, executors and administrators. StarMedia shall not be required to pay any amounts to you under this Section 9(a) in connection with the settlement of any claim unless StarMedia shall have consented in writing to the terms of such settlement, which consent shall not be unreasonably withheld or delayed. StarMedia will advance to you all reasonable costs and expenses incurred by you in connection with an Indemnified Proceeding within 30 days after receipt by it of a written request for such advance. Each such request shall include an itemized list that sets forth in reasonable detail such costs and expenses. In addition, as a condition to receiving an advance, each such request shall include an unconditional, full-recourse undertaking in a form reasonably satisfactory to StarMedia to repay the amount of such advance if it is ultimately determined that you are not entitled to be indemnified against such costs and expenses. Nothing in this Agreement, other than Section 9(b), shall operate to limit or restrict any rights to indemnification, advancement of expenses or contribution that you may have under StarMedia's Certificate of Incorporation or Bylaws, as in effect on the Effective Date, or under applicable law. You agree that StarMedia shall not be liable under this Section 9(a) for the fees and expenses of more than one separate counsel at a time for you in any one action, suit or proceeding, or in substantially similar actions, suits or proceedings arising out of the same or related allegations, unless you furnish a written opinion to StarMedia from respected counsel concluding that retention by you of more than one separate counsel is necessary under the circumstances. (b) If you are requested by StarMedia (x) to serve as a witness in connection with any action, suit or proceeding, whether civil, criminal, administrative or investigative, (including, without limitation, any internal investigation at StarMedia), or (y) to render cooperation at the request of StarMedia pursuant to Section 8(a) or otherwise, and if the provisions of Section 9(a) do not otherwise apply, such action, suit, proceeding or requested cooperation, shall be deemed to be an Indemnified Proceeding as to which you will be entitled to the indemnification, and advancement of expenses, set forth in Section 9(a) (subject to the terms specified therein), except that StarMedia's indemnification obligation to you under this Section 9(b) with respect to attorneys' fees and other charges of counsel will be limited to 75% of the fees and other charges you reasonably incur. For clarity's sake, StarMedia shall have no indemnification obligation under this Section 9(b) with respect to any attorneys' fees or other charges of counsel which were unreasonably incurred by you. Page 8 (c) StarMedia agrees to continue and maintain a directors' and officers' liability insurance policy (or policies) covering you at a level, and on terms and conditions, no less favorable to you than the coverage then provided to StarMedia's present or former directors and/or senior-level officers generally until the later of (x) the sixth anniversary of the Effective Date and (y) such time as StarMedia reasonably determines upon advice of counsel that there is no longer any material risk of a claim being made against you that would be covered by the policy (or policies) in question. You represent that you have received all of the written information that you have requested from StarMedia with respect to the insurance policies maintained by StarMedia covering the liabilities of its officers and directors, and StarMedia represents to you that all such written information is, to the best of StarMedia's knowledge, accurate as of the date that it was provided to you. 10. (a) You agree to the following restrictive covenants: (i) You will not, directly or indirectly and during a period of one year commencing on the Separation Date (the "One Year Period"), solicit, entice or encourage any individual who is then an employee of StarMedia to leave StarMedia or to seek other employment. In the event that you willfully hire, directly or indirectly, any such person during the One Year Period, you will pay to StarMedia $25,000, which amount represents the cost of replacing such person. (ii) You will not during the One Year Period solicit or take away for the benefit of any direct competitor of StarMedia, any person or entity that is known by you to have been, as of the Separation Date, a material customer of StarMedia or to have been, as of the Separation Date, in negotiations to become a material customer of StarMedia. (iii) You will not at any time improperly use, or improperly disclose, any confidential or proprietary information of StarMedia. (b) If any of the restrictions contained in Section 10(a) are deemed by a court or arbitrator to be unenforceable by reason of the extent, duration or geographical scope thereof, or otherwise, then the parties agree that such court or arbitrator may (x) modify such restriction to the extent necessary to render it enforceable and (y) enforce such restriction in its modified form. 11. Any and all inventions, creations, ideas, improvements and software of any nature whatsoever, whether or not patentable, developed by you prior to the Separation Date in the course of your employment with StarMedia will always be the property of StarMedia. Page 9 12. This Agreement will be governed, construed and enforced in accordance with its express terms, and otherwise in accordance with the laws of the State of New York, without regard for its conflict of laws principles. 13. You and StarMedia agree that any controversy or claim arising out of or relating to this Agreement, its breach, your employment with StarMedia, or the termination thereof, will be submitted to be resolved by confidential arbitration. You and StarMedia each waive any and all rights to trial by jury in regard to such claims. Judgment may be entered on the arbitrator's award in any court having jurisdiction thereof. Arbitration under this Agreement will be the exclusive remedy. You and StarMedia agree that any arbitration will be held in New York, New York, and will be conducted in accordance with the then-current Commercial Arbitration Rules of the American Arbitration Association, before a single arbitrator licensed to practice law in the State of New York. The arbitrator will have authority to award or grant both legal, equitable, and declaratory relief. Any arbitration award will be final and binding on the parties to it. The Federal Arbitration Act will govern the interpretation and enforcement of this Section 13. 14. MISCELLANEOUS. (a) You and StarMedia also agree that this Agreement contains all of the agreements and understandings between you and StarMedia concerning the subject matter of this Agreement, and fully supersedes any prior agreements or understandings that we may have had with respect thereto. (b) No provision in this Agreement may be amended unless such amendment is set forth in a writing that expressly refers to this Agreement and that is signed by you and by an authorized (or apparently authorized) representative of StarMedia. No waiver by any person of any breach of any condition or provision contained in this Agreement will be deemed a waiver of any similar or dissimilar condition or provision at the same or any prior or subsequent time. To be effective, any waiver must be set forth in a writing signed by the waiving person and must specifically refer to the condition(s) or provision(s) of this Agreement being waived. In the event of any inconsistency between this Agreement and the terms of any plan, program, arrangement or agreement or other document of you or StarMedia, the terms of this Agreement will govern and control. (c) StarMedia shall be entitled to withhold from any amounts or benefits payable under this Agreement or otherwise taxes that are required to be withheld by applicable law, such withholding to be at the minimum statutory rate(s) permitted by law. StarMedia acknowledges and agrees that no tax withholding is required in connection with the discharge of your obligations under the Line of Credit pursuant to Section 1(b) above. (d) You will be under no obligation to seek other employment, or to become self-employed, following the expiration of your employment with StarMedia, and there will be Page 10 no offset against amounts due you, under this Agreement or otherwise, on account of any remuneration you may subsequently receive, or on account of any claim that StarMedia may have against you (other than as expressly provided in this Agreement). (e) In the event of your death or a judicial determination of your incompetence, references in this Agreement to you will be deemed, where appropriate, to refer to your beneficiary, estate or other legal representative. (f) Neither StarMedia nor any of its affiliates (each a "Company Transferor") may assign or transfer any of its rights or obligations under this Agreement except that such rights or obligations may be assigned or transferred pursuant to a merger, consolidation or other combination in which the Company Transferor is not the continuing entity, or a sale or liquidation of all or substantially all of the business and assets of the Company Transferor, provided that the assignee or transferee is the successor to all or substantially all of the business and assets of the Company Transferor and such assignee or transferee assumes the liabilities, obligations and duties of the Company Transferor under this agreement, either expressly or by operation of law. Page 11 (g) You acknowledge you have been represented by counsel of your own choosing, and that you have chosen to enter into this Agreement and based upon your own judgment and not in reliance upon any promises made by StarMedia other than those contained in this Agreement. If this letter comports with your understanding of our agreement, please sign on the line provided below and return the original by hand delivery. Sincerely, /s/ Susan L. Segal ------------------------------- Susan L. Segal Vice Chairman of the Board of Directors I, Susan L. Segal, affirm that I have authority to execute this Agreement on behalf of StarMedia /s/ Susan L. Segal ---------------------------------- ENCLOSURES (1) signed counterpart of letter (2) form of stock power I have read and understand the agreement above and agree to be bound by its terms and conditions. /s/ Steven J. Heller Dated: 10/31/01 - -------------------- -------- Steven J. Heller STOCK POWER FOR VALUE RECEIVED, STEVEN J. HELLER, hereby sells, assigns and transfers unto STARMEDIA NETWORK, INC. (THE "COMPANY") _______ shares of the Company's common stock, standing in his name on the books of the Company represented by Certificate No.___ herewith, and does hereby irrevocably constitute and appoint American Stock Transfer & Trust Company attorney to transfer said shares on the books of the Company with full power of substitution in the premises. Dated: ---------------------------- Name: Steven J. Heller EX-99.6 8 a2064182zex-99_6.txt EXHIBIT 99.6 Exhibit 99.6 TERMINATION AGREEMENT THIS TERMINATION AGREEMENT (THIS "TERMINATION AGREEMENT") IS MADE AND EXECUTED AS OF THE 7TH DAY OF NOVEMBER 2001, BY AND AMONG STARMEDIA NETWORK, INC., A DELAWARE CORPORATION ("STARMEDIA"), ADNET, S. DE C.V. A SOCIEDAD DE RESPONSABILIDAD LIMITADA DE CAPITAL VARIABLE ORGANIZED IN MEXICO ("ADNET"), GRUPO MVS, S.A., DE C. V., A SOCIEDAD ANONIMA DE CAPITAL VARIABLE ORGANIZED IN MEXICO ("MVS"), HARRY MOLLER PUBLICIDAD, S.A. DE C.V., A SOCIEDAD ANONIMA DE CAPITAL VARIABLE ORGANIZED IN MEXICO (THE "MOLLER GROUP") (THE MVS GROUP AND THE MOLLER GROUP, TOGETHER, THE "STOCKHOLDERS"), AND WALTHER MOLLER, AN INDIVIDUAL RESIDENT OF MEXICO CITY, MEXICO ("MOLLER"). CAPITALIZED TERMS USED HEREIN BUT NOT DEFINED HEREIN SHALL HAVE THE DEFINITION SET FORTH IN THAT CERTAIN STOCK PURCHASE AGREEMENT BY AND AMONG STARMEDIA, MVS, AND MOLLER GROUP DATED AS OF JANUARY 31, 2000, AS AMENDED BY THOSE CERTAIN LETTER AGREEMENTS DATED FEBRUARY 11, 2000 AND MARCH 29, 2000 (AS SO AMENDED, THE "STOCK PURCHASE AGREEMENT"). STARMEDIA, ADNET, MVS, THE MOLLER GROUP AND MOLLER MAY HEREIN BE REFERRED TO BELOW AS THE "PARTIES" (PLURALLY) OR ANY OF THEM AS A "PARTY" (SINGULARLY). RECITALS: A. Whereas, StarMedia, Adnet and the Stockholders entered into the Stock Purchase Agreement; B. Whereas, pursuant to the Stock Purchase Agreement, at the Closing on April 6, 2000 StarMedia purchased all the capital stock of Adnet from the Stockholders and paid $5,000,000 in cash and issued to the Stockholders 469,577 shares of StarMedia Common Stock (the "Closing Shares"); C. Whereas at the Closing, (a) Adnet and Walther Moller entered into that certain Employment Agreement dated as of April 6, 2000 (the "Moller Employment Agreement"), (b) Adnet and MVS entered into that certain Advertising Services Agreement dated as of April 6, 2000 (the "MVS Advertising Agreement"), (c) Adnet and Moller Group entered into that certain Services Agreement dated as of April 6, 2000 (the "Moller Services Agreement"), and (d) StarMedia and MVS entered into that certain Advertising Services Agreement dated as of April 6, 2000 (the "StarMedia/MVS Advertising Agreement"); D. Whereas, pursuant to the earnout calculation and payment provisions contained in Sections 2.6 and 2.7 of the Stock Purchase Agreement, since the Closing, StarMedia has issued to the Stockholders an aggregate of 948,367 shares of StarMedia Common Stock as additional earnout payments with respect to revenues generated by Adnet during the period from the Closing to September 30, 2000 (the "Past Earnout Shares"); and E. Whereas, StarMedia and the Stockholders each desire to settle all current earnout payment obligations of StarMedia to the Stockholders, to terminate any future obligations of StarMedia to make additional earnout payments under the Stock Purchase Agreement, and to terminate the Moller Employment Agreement, MVS Advertising Agreement, the Moller Services Agreement, and the StarMedia/MVS Advertising Agreement under the terms set forth in this Termination Agreement; NOW THEREFORE, FOR GOOD AND VALUABLE CONSIDERATION, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: PAYMENTS; COVENANTS. 1.1 Within five business days following the date hereof, StarMedia shall issue and deliver to the Stockholders 8,000,000 shares of Common Stock (the "Final Earnout Shares") in full satisfaction of StarMedia's obligations under Sections 2.5 through 2.12, inclusive, of the Stock Purchase Agreement; PROVIDED HOWEVER, that 400,000 of the Final Earnout Shares (the "Escrow Shares") shall instead be delivered to a mutually-agreeable U.S. national bank (pursuant to an escrow agreement to be prepared by StarMedia) to act as escrow agent (the "Escrow Agent"), which shall hold the Escrow Shares until March 21, 2002, to secure the Stockholders' and Moller's obligations under this Termination Agreement. The Final Earnout Shares shall be deemed issued pursuant to Sections 2.7 and 2.8 of the Stock Purchase Agreement, and, except as modified pursuant to Section 1.2 below, shall be subject to the restrictions and covenants applicable to shares issued pursuant to the Stock Purchase Agreement; PROVIDED HOWEVER, that the Final Earnout Shares shall not be subject to the one-year restriction on resale contained in Section 2.9(b)(ii) of the Stock Purchase Agreement. Further, the Stockholders covenant and agree that they shall not sell more than (a) 1,000,000 of the Final Earnout Shares during any 14 day period or (b) in any single trading day, more than 20% of the average trading volume in StarMedia common stock for the immediately preceding five trading days. 1.2 For a period of 12 months after the date hereof, StarMedia shall, and shall use reasonable efforts to cause its officers to, and Moller and each of the Stockholders shall, and shall use reasonable efforts to cause their respective officers, directors, managers and principal employees to, provide prompt assistance as requested by StarMedia or any Stockholder, in any review of StarMedia's or Adnet's historical operations. AMENDMENTS TO STOCK PURCHASE AGREEMENT. 2.1 The Stock Purchase Agreement is hereby amended by terminating all obligations of the parties to the Stock Purchase Agreement accruing after the date hereof under each of the following sections: Sections 2.5, 2.6, 2.7, 2.8, 2.10, 2.11 and 2.12 (collectively, the "Earnout Sections"). It is hereby acknowledged and agreed that each of the parties shall be deemed to have satisfied in full their respective obligations under the Earnout Sections accrued through the date hereof. All other provisions of the Stock Purchase Agreement shall remain in full force and effect in accordance with their terms, provided, however, that StarMedia and the Stockholders acknowledge and agree that each has satisfied all their obligations accrued to date under the Stock Purchase Agreement and, except as otherwise provided hereunder and except for any Non-Release Matters, upon the execution of the transactions described in Section 1.1 hereinabove, effective May 6, 2002 all pending matters, accounts, interest and obligations between them shall be finally and definitively settled. On or prior to May 6, 2002, StarMedia shall prepare and deliver to the Stockholders a list of any matters, or description of relevant facts, relating to potential claims or liabilities that StarMedia reasonably believes relates to acts or omissions of the Stockholders or Moller (the "Non-Release Matters"). 2.2 With the exception of any claim relating to the execution of this Termination Agreement, and except for any Non-Release Matters, effective May 6, 2002 StarMedia and the Stockholders each disclaim and expressly waive forever any rights, actions, demands or claims of any nature that any of them may have, now or in the future, which have accrued to date against the other(s), and StarMedia and the Stockholders each commit not to assert against any of the other(s) any right of whatever nature accrued to date under the Stock Purchase Agreement, or any other written or oral agreements made between them in connection therewith. TERMINATION OF CERTAIN AGREEEMENTS. 3.1 Adnet and Moller hereby terminate the Moller Employment Agreement as of the date hereof, which termination shall be deemed for all purposes to be a mutually agreed upon termination. 3.2 Adnet and MVS hereby terminate the MVS Advertising Agreement as of the date hereof. 3.3 Adnet and Moller Group hereby terminate the Moller Services Agreement as of the date hereof. 3.4 StarMedia and MVS hereby terminate the StarMedia/MVS Advertising Agreement as of the date hereof. 3.5. Except for any Non-Release Matters, effective May 6, 2002 the parties acknowledge and agree that all pending matters, accounts and interest between them shall be finally and definitively settled and, accordingly, all the agreements referred to in Sections 3.1, 3.2, 3.3 and 3.4 above (the "ANCILLARY AGREEMENTS") as well as any outstanding account, bill, invoice, debt, service and/or obligation of any of the parties in connection with any such Ancillary Agreements, shall be and are hereby definitively and completely canceled and terminated without any further legal or conventional effect or binding force on the parties and without any further responsibility, obligation for or liability to any of the parties. 3.6 Except for any Non-Release Matters, effective May 6, 2002 all the parties disclaim and expressly waive forever any rights, actions, demands or claims of any nature that any of them may have, now or in the future, against any of the other parties in connection with the Ancillary Agreements and all the parties commit not to assert against any of the other parties any right of whatever nature in connection with the Ancillary Agreements, or any other written or oral agreements made between any of the parties in connection with any of such Ancillary Agreements, or in connection with any account, bill, invoice, debt, service and/or obligation of any of them relating thereto. MISCELLANEOUS. 4.1 GOVERNING LAW. This Termination Agreement shall be interpreted, construed and enforced in accordance with the laws of the State of New York, applied without giving effect to any conflicts of law principles. 4.2 CAPTIONS. The captions or headings in this Termination Agreement are made for convenience and general reference only and shall not be construed to describe, define or limit the scope or intent of the provisions of this Termination Agreement. 4.3 SEVERABILITY. The provisions of this Termination Agreement shall be deemed severable and if any portion shall be held invalid, illegal or unenforceable for any reason, the remainder of this Termination Agreement shall be effective and binding upon the parties. 4.4 ENTIRE AGREEMENT. The Stock Purchase Agreement, as amended by this Termination Agreement, contains the entire agreement of the parties hereto with respect to the subject matter contained therein and supersedes any and all prior or contemporaneous negotiations, understandings or agreements between the parties hereto, written or oral, with respect to the transactions contemplated hereby. This Termination Agreement may not be changed or terminated orally, but may only be changed by an agreement in writing signed by all parties hereto. 4.5 NO RULE OF CONSTRUCTION. The parties acknowledge that this Termination Agreement was initially prepared by StarMedia solely as a convenience and that all parties hereto and their counsel have read and fully negotiated all the language used in this Termination Agreement. The parties acknowledge and agree that because all parties hereto and their counsel participated in negotiating and drafting this Termination Agreement, no rule of construction shall apply to this Termination Agreement which construes any language, whether ambiguous, unclear or otherwise, in favor of, or against any party by reason of that party's role in drafting this Termination Agreement. 4.6 NO OMISSION. There has been no omission of material fact by any of the parties in connection with this Termination Agreement, the Stock Purchase Agreement and the Ancillary Agreements. 4.7 COUNTERPARTS. This Termination Agreement may be executed in several counterparts, each of which, when so executed, shall be deemed to be an original, and such counterparts shall, together, constitute and be one and the same instrument. 4.8 BINDING EFFECT. This Termination Agreement shall be binding on and shall inure to the benefit of the parties hereto, and their successors, and permitted assigns. Subject to the foregoing sentence, no person not a party hereto shall have any right under or by virtue of this Termination Agreement. IN WITNESS WHEREOF, the parties hereto have duly executed this Termination Agreement on the day and year first above written. StarMedia Network, Inc. By: /s/ Enrique Narciso ----------------------------------- Name: Enrique Narciso Title: President & CEO Harry Moller Publicidad, S.A. de C.V. By: /s/ Walther Moller ----------------------------------- Name: Walther Moller Title: President Adnet, S. de R.L. de C.V. By: /s/ Walther Moller ------------------------------------ Name: Walther Moller Title: General Manager Grupo MVS, S.A., de C. V. By: /s/ Adrian Vargas ------------------------------------ Name: Adrian Vargas Title: President, NYS Telecom /s/ Walther Moller Witness:_______________________ ------------------------------ Walther Moller EX-99.7 9 a2064182zex-99_7.txt EXHIBIT 99.7 EXHIBIT 99.7 EMPLOYMENT AGREEMENT THIS AGREEMENT (the "Agreement"), dated as of September 21, 2001, is between StarMedia Network, Inc. ("Company"), and Enrique Narciso, an individual ("Executive"). WHEREAS, Executive has been employed by Company on the terms and conditions set forth in an Employment Agreement, dated as of September 18, 1999, by and between Company and Executive (the "Initial Employment Agreement"); and WHEREAS, Executive and Company have terminated the Initial Employment Agreement by mutual consent; and WHEREAS, Company wishes to continue the employment of Executive under the terms and conditions provided in this Agreement, and Executive wishes to be so employed; NOW, THEREFORE, in consideration of the premises and the mutual agreements in this Agreement, the parties agree as follows: 1. POSITION, DUTIES AND RESPONSIBILITIES 1.1 POSITION. Executive will be employed by the Company to render services to the Company in the position of President and Chief Executive Officer. During the term of his employment with Company, Executive shall have such duties and responsibilities as shall be assigned to him by the Board of Directors of the Company (the "Board") in accordance with the duties and responsibilities in the Company's by-laws. Executive shall devote his full business time, energies and abilities to the business and affairs of Company and to promoting its best interests. 1.2 LOCATION OF WORK. Executive will not be required to live outside of Miami, Florida. 1.3 OTHER ACTIVITIES. Except upon the prior written consent of the Chairman of the Board, Executive will not (i) accept any other employment, or (ii) engage, directly or indirectly, in any other business activity (whether or not pursued for pecuniary advantage) that is or may be in conflict with, or that might place Executive in a conflicting business position to that of, the Company. 2. COMPENSATION, BENEFITS AND EXPENSES. 2.1 BASE SALARY. In consideration of the services to be rendered under this Agreement, while Executive remains employed by the Company, Company shall pay Executive an initial annual base salary equivalent to Two Hundred and Fifty Thousand Dollars ($250,000), less standard deductions and withholdings, payable in regular periodic payments in accordance with Company policy. 1 2.2 SIGNING BONUS. Within five (5) days of the execution and delivery of this Agreement, Executive shall receive a one-time signing bonus of One Hundred Thousand Dollars ($100,000). 2.3 PERFORMANCE BONUS. Executive will be eligible to receive an annual discretionary performance bonus in an amount to be determined by the Board. To receive the discretionary bonus, Executive must be employed by the Company on the date that the discretionary bonus is paid. If Executive remains employed by Company on December 31, 2001, Executive will receive a performance bonus of not less than One Hundred Thousand Dollars ($100,000). 2.4 BONUS FOR SALE OF COMPANY. If a Company Sale (as defined below) takes place while this Agreement is in effect, then Executive shall be entitled to the following bonus (the "Sale Bonus"): (i) if the Company Sale takes place on or before February 15, 2002, Executive will receive a bonus equal to 0.5% (one-half of one percent) of the Net Proceeds (as defined below); and (ii) if the Company Sale takes place after February 15, 2002, Executive will receive a bonus equal to 1% (one percent) of the Net Proceeds; PROVIDED, HOWEVER, that in no event shall the Sale Bonus be less than Four Hundred and Twenty-Five Thousand Dollars ($425,000). The Sale Bonus will be payable in cash regardless of whether the Net Proceeds consist of cash or other consideration, provided that, if the Net Proceeds consist entirely or partially of consideration other than cash, then, at the discretion of the Board, any Sale Bonus in excess of $425,000 may be paid in such other consideration. The Sale Bonus shall be paid at the Closing of the Company Sale. The Company hereby covenants and agrees that if Executive is terminated other than For Cause, or if there is a Constructive Discharge, and a Company Sale occurs within sixty (60) days following such termination, Executive will receive the Sale Bonus. 2.5 DEFINITION OF COMPANY SALE. "Company Sale" shall mean: (i) the sale of all or substantially all of the Company's assets; or (ii) the sale of 50% or more of the outstanding capital stock of the Company, including a sale pursuant to a tender offer or exchange offer, in a single or integrated transaction; (iii) the sale of the Company through a consolidation or merger (other than a merger of the Company with one or more of its majority-owned subsidiaries) in which either, the Company is not the surviving corporation, or the acquisition is as a result of a reverse triangular merger, provided in either case the stockholders of the Company immediately before such consolidation or merger own less than 50% of the outstanding capital stock of the surviving corporation immediately after such consolidation or merger; or (iv) any transaction similar to the foregoing which results in a majority of the members of the Board immediately preceding such transaction ceasing to be directors of the Company as a result of such transaction. 2 2.6 DEFINITION OF NET PROCEEDS. "Net Proceeds" shall mean, with respect to a Company Sale, (x) the gross amount of consideration payable to the Company or its stockholders in respect of such Company Sale, less (y) transaction fees, commissions and other similar expenses that are incurred in connection with the Company Sale and are paid by the Company or its stockholders (to the extent not already deducted in arriving at the amount referred to in clause (x) above). 2.7 STOCK OPTIONS. Executive will be granted options to purchase up to 1,500,000 shares of Company's common stock pursuant to the terms and conditions of Company's 2000 Stock Option Plan. These options will vest over a three-year period, with options to buy up to 500,000 shares of Company's common stock vesting on the first, second and third anniversaries of this Agreement, respectively. In the event of a Company Sale, fifty percent (50%) of the options that remain unvested on such date will immediately vest and become fully exercisable. With respect to the options to buy up to 385,000 shares of the Company's common stock which are currently held by Executive pursuant to the Company's 1998 and 2000 Stock Option Plans, the Company shall amend the terms governing such options to provide that fifty percent (50%) of such options remaining unvested at the time of a Company Sale will vest and become fully exercisable on such date. 2.8 BENEFITS. While this Agreement remains in effect, Executive shall be eligible to participate in the employee benefit plans and compensation programs maintained by Company applicable to other senior executives of the Company, including (without limitation) savings or profit-sharing plans, deferred compensation plans, incentive or other bonus plans, life, disability, health, accident and other insurance programs, paid vacations, and similar plans or programs, subject in each case to the generally applicable terms and conditions of the plan or program in question and to the determination of any committee administering such plan or program. Executive will also be maintained on the Company's directors and officers liability insurance policy for term of this Agreement and for seven years after his termination from employment for any reason. 2.9 EXPENSES. During the employment relationship, the Company shall reimburse the Executive for all reasonable and necessary out-of-pocket expenses incurred by him in connection with the performance of his duties hereunder, upon the presentation of proper receipts in accordance with the Company's policies. 3. AT-WILL EMPLOYMENT. Executive acknowledges and agrees that his employment status is that of an employee-at-will and that Executive's employment may be terminated by Company or Executive at any time with or without cause and with or without notice. In accepting employment with Company, Executive has not relied, and will not rely, on any statements or representations, whether oral or in writing, by any officers, employees or agents of Company concerning the duration or term of employment, grounds and procedures for discharge or termination of employment, or any other terms and conditions of employment except those specifically stated in writing and signed by both Executive and the Chairman of the Board of Directors of the Company. 3 4. TERMINATION AND SEVERANCE 4.1 TERMINATION FOR CAUSE OR VOLUNTARY TERMINATION BY EXECUTIVE. In the event that Executive is terminated For Cause (as defined below) or if Executive voluntarily terminates his employment and is not Constructively Discharged (as defined below) or if Executive's employment terminates as the result of a Company Sale, Company shall pay Executive all compensation due and owing through the last day actually worked and thereafter all of Company's obligations under this Agreement shall cease, except for the Company's obligations under Sections 2.4 and 2.8 of this Agreement. 4.2 TERMINATION NOT FOR CAUSE OR CONSTRUCTIVE DISCHARGE. If Company terminates Executive's employment for any reason other than For Cause or other than as a result of a Company Sale or if Executive is Constructively Discharged, the Company shall pay Executive all compensation due and owing through the last day actually worked as well as the Sale of the Company Bonus, if applicable. In addition, if Executive signs a release substantially in the form attached as Annex A, Executive will receive a severance payment of Four Hundred and Twenty-Five Thousand Dollars ($425,000), less applicable and authorized deductions, payable at the Company's option either as a lump sum payment or as salary continuation payments. 4.3 DEFINITION OF FOR CAUSE. The Company's termination of Executive's employment with the Company shall be "For Cause" if, in the reasonable opinion of the Board: (i) Executive breached the terms of this Agreement and such breach is not cured within ten (10) days after Executive has received written notice from the Company of such breach, (ii) Executive exhibits dishonesty, habitual neglect, persistent and serious deficiencies in performance, or gross incompetence in the performance of his duties under this Agreement, (iii) Executive is convicted of a crime other than a minor traffic violation, or (iv) Executive refuses or fails to act on any lawful directive or order from the Board. 4.4 DEFINITION OF CONSTRUCTIVE DISCHARGE. Executive's resignation from employment with the Company shall be a "constructive discharge" if Executive resigns because the Board has made a material reduction in Executive's salary or benefits which are not also required of all other senior executives. 4.5 COOPERATION IN PENDING WORK. Following any termination of Executive's employment, Executive shall reasonably cooperate with Company in all matters relating to the winding up of pending work on behalf of Company and the orderly transfer of work to other employees of Company for a period of up to 30 days following any termination. In addition, Executive shall also cooperate in the defense of any action brought by any third party against Company that relates in any way to Executive's acts or omissions while employed by Company. 4.6 RETURN OF COMPANY'S PROPERTY. Executive hereby acknowledges and agrees that all books, manuals, records, reports, notes, contracts, lists, blueprints, and other documents, or materials, or copies thereof, and equipment furnished to or prepared by Executive in the course of or incident to Executive's employment, belong to Company and shall be promptly 4 returned to Company upon termination of Executive's employment. 5. CONFIDENTIAL INFORMATION. 5.1 NONDISCLOSURE. Executive acknowledges that the Confidential Information was acquired and will continue to be acquired by the Company at great expense and constitutes trade secrets of the Company, and that irreparable injury will result to the Company from unauthorized disclosure of Confidential Information. Executive shall not use any Confidential Information or disclose, publish or otherwise make available any Confidential Information to third parties at any time during or after the term of Executive's employment, except in pursuance of the business of the Company. Executive further agrees that all Confidential Information, together with all notes and records relating thereto, and all copies, duplicates, reproductions, facsimiles or excerpts thereof in Executive's possession, are the exclusive property of the Company and will be returned promptly to the Company upon the termination of Executive's employment. In addition, Executive agrees to return promptly to the Company upon the conclusion of Executive's employment (or at the Company's option irretrievably destroy or erase) all reports, files, memoranda, records and software, credit cards, cardkey passes, door and file keys, computer access codes or disks, instructional material, and other physical or personal property which Executive received or prepared in connection with Executive's employment with the Company. Executive's obligations of confidentiality hereunder will survive the termination of this Agreement, until and unless any such Confidential Information becomes, through no fault of Executive, generally known to the public or Executive is required by law to make disclosure (after giving the Company notice and an opportunity to contest such requirement). Executive's obligations under this Section 5.1 are in addition to, and not in limitation or preemption of, all other obligations of confidentiality which Executive may have to the Company under general legal or equitable principles. 5.2 CONFIDENTIAL INFORMATION DEFINED. For the purposes hereof, the term "Confidential Information" shall include, but is not limited to, all information acquired by Executive in the course of his employment in any way concerning any existing services, hardware and software products and hardware and software in various stages of research and development, plans, projects, activities, research, know-how, trade secrets, trade practices, clients, customers, specifications, drawings, sketches, models, samples, proprietary data, client or customer lists, technology, documentation relating to software or computer systems, source code, object code methodologies, product development, distribution plans, contractual arrangements, profits, sales, pricing policies, operational methods, technical processes, business policies, practices and other business affairs and methods, plans for future developments and other technical, business and financial information, and information received from third parties that the Company is obligated to treat as confidential or proprietary, which can be communicated by any means whatsoever, including without limitation oral, visual, written and electronic transmission. Executive understands that the foregoing is not an exhaustive list and that Confidential Information will also include any other information or materials identified as confidential or proprietary or which Executive knows or has reason to know has such status; PROVIDED, HOWEVER, that Confidential Information shall not include information that is or becomes publicly known 5 through no breach of this Agreement by Executive, has been approved for release by prior written consent of the Company, or has been disclosed pursuant to a requirement of a government agency or of law. 6. INTERFERENCE WITH THE COMPANY. 6.1 COMPETITION. During Executive's employment relationship with the Company and for one (1) year after the termination of such relationship for any reason (the "Restricted Period"), Executive will not, directly or indirectly, as an employee, employer, consultant, agent, principal, partner, manager, stockholder, officer, director, or in any other individual or representative capacity, engage or participate in the ownership, management, operation or control of any Restricted Enterprise (as defined below), provided that in no event shall ownership of less than two (2) percent of the outstanding equity securities of any issuer whose securities are registered on a national securities exchange be prohibited under this Section 6.1. "Restricted Enterprise" shall mean any company which is an integrated internet media and solutions company in Latin American and U.S. Hispanic market. 6.2 SOLICITATION OF EMPLOYEES OR CUSTOMERS. During the Restricted Period, Executive will not, directly or indirectly, solicit for employment any current employee of the Company or any individual who was employed by the Company at any time during the year immediately preceding the termination of the Executive's employment. In the event that Executive hires or employs any such person during the Restricted Period (without soliciting such person in violation of this foregoing restriction), Executive shall pay to the Company Seventy-Five Thousand Dollars ($75,000), which amount represents the cost of replacing such person. During the Restricted Period, Executive shall not solicit or take away, for himself or for the benefit of any Restricted Enterprise, any person or entity which is a customer of the Company or which was in negotiations to become a customer of the Company at the time of Executive's termination. 6.3 ENFORCEABILITY. If any of the restrictions contained in this Section 6 shall be deemed by any applicable court to be unenforceable by reason of the extent, duration or geographical scope thereof, or otherwise, then the parties agree that such court shall modify such restriction, only to the extent necessary to render it enforceable and, in its reduced form, such restriction shall then be enforced. 6.4 REASONABLENESS OF COVENANTS. Executive acknowledges that the services to be rendered to the Company are of a special and unique character and that the restrictions specified in Sections 5 and 6 of this Agreement are reasonable. Executive acknowledges that the amount of compensation reflects Executive's agreement in Sections 5 and 6, and acknowledges that Executive will not be subject to undue hardship by reason of the agreements set forth in this Agreement. 7. REPRESENTATIONS, WARRANTIES, AND COVENANTS. 6 Executive represents, warrants, and covenants that Executive's performance of all the terms of this Agreement and any services to be rendered as an employee of Company do not and will not breach any fiduciary or other duty or any covenant, agreement or understanding (including, without limitation, any agreement relating to any proprietary information, knowledge or data acquired by Executive in confidence, trust or otherwise prior to Executive's employment by Company) to which Executive is a party or by the terms of which Executive may be bound. Executive covenants and agrees that Executive will not disclose to Company, or induce Company to use, any such proprietary information, knowledge or data belonging to any previous employer or others. 8. GOVERNING LAW. This Agreement shall be deemed a contract made under, and for all purposes shall be construed in accordance with, the laws of the State of New York without reference to conflict of law principal. 9. ALTERNATIVE DISPUTE RESOLUTION The Company and Executive mutually agree that any controversy or claim arising out of or relating to this Agreement or the breach thereof, or any other dispute between the parties arising from or related to Executive's employment with the Company, shall be submitted to mediation before a mutually agreeable mediator. In the event mediation is unsuccessful in resolving the claim or controversy, such claim or controversy shall be resolved by arbitration. The claims covered by this Agreement ("Arbitrable Claims") include, but are not limited to, claims for wages or other compensation due; claims for breach of any contract (including this Agreement) or covenant (express or implied); tort claims; claims for discrimination (including, but not limited to, race, sex, religion, national origin, age, marital status, medical condition, or disability); claims for benefits (except where an employee benefit or pension plan specifies that its claims procedure shall culminate in an arbitration procedure different from this one); and claims for violation of any federal, state, or other law, statute, regulation, or ordinance, except claims excluded in the following paragraph. The parties hereby waive any rights they may have to trial by jury in regard to Arbitrable Claims. Claims Executive may have for Workers' Compensation or unemployment compensation benefits are not covered by this Agreement. Also not covered is either party's right to obtain provisional remedies or interim relief from a court of competent jurisdiction. Arbitration under this Agreement shall be the exclusive remedy for all Arbitrable Claims. Company and Executive agree that arbitration shall be held in or near New York, New York, and shall be in accordance with the then current Employment Dispute Resolution Rules of the American Arbitration Association, before an arbitrator licensed to practice law in the State of New York. The arbitrator shall have authority to award or grant both legal, equitable, and declaratory relief. Such arbitration shall be final and binding on the parties. The Federal Arbitration Act shall govern the interpretation and enforcement of this section pertaining to Alternative Dispute Resolution. 7 This Agreement to mediate and arbitrate survives termination of Executive's employment. 10. ENTIRE AGREEMENT. This Agreement contains all the understandings and representations between the parties pertaining to the subject matter of this Agreement and supersedes all undertakings and agreement, whether oral or in writing, previously entered into by them, including without limitation the Initial Employment Agreement. 11. AMENDMENT, MODIFICATION, WAIVER. No provision of this Agreement may be amended or modified unless such amendment or modification is agreed to in writing and signed by the Executive and by a duly authorized representative of the Company other than the Executive. No waiver by either party of any breach by the other party of any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of a similar or dissimilar provision or condition at the same or any prior or subsequent time, nor shall the failure of or delay by either party in exercising any right, power or privilege operate as a waiver thereof to preclude any other or further exercise or the exercise of any other such right, power or privilege. 12. SEVERABILITY. Should any provision of this Agreement be held by a court of competent jurisdiction to be enforceable only if modified, such holding shall not affect the validity of the remainder of this Agreement, the balance of which shall continue to be binding upon the parties with any such modification to become a part of and treated as though originally set forth in this Agreement. The parties further agree that any such court is expressly authorized to modify any such unenforceable provision of this Agreement in lieu of severing such unenforceable provision from this Agreement in its entirety, whether by rewriting the offending provision, deleting any or all of the offending provision, adding additional language to this Agreement, or by making such other modifications as it deems warranted to carry out the intent and agreement of the parties as embodied herein to the maximum extent permitted by law. The parties expressly agree that this Agreement as so modified by the court shall be binding upon and enforceable against each of them. In any event, should one or more of the provisions of this Agreement be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provisions, and if such provision or provisions are not modified as provided above, this Agreement shall be construed as if such invalid, illegal or unenforceable provisions had never been set forth in it. 13. SURVIVORSHIP. The respective rights and obligations of the parties shall survive any termination of this Agreement to the extent necessary to the intended preservation of such rights and obligations. 8 14. TITLES. Titles of the sections and paragraphs of this Agreement are intended solely for convenience and no provision of this Agreement is to be construed by reference to the title of any section or paragraph. 15. COUNTERPARTS. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. StarMedia Network, Inc. By: /s/ Susan L. Segal ---------------------------- Name: Susan L. Segal Title: Vice Chairman Executive /s/ Enrique Narciso ---------------------- Enrique Narciso 9 RELEASE AND WAIVER OF CLAIMS In exchange for the Severance Payments and other benefits to which I would not otherwise be entitled, I hereby furnish StarMedia Network, Inc., (the "Company") with the following release and waiver. I hereby release, and forever discharge the Company, its officers, directors, agents, employees, stockholders, attorneys, successors, assigns and affiliates, of and from any and all claims, liabilities, demands, causes of action, costs, expenses, attorneys fees, damages, indemnities and obligations of every kind and nature, in law, equity, or otherwise, known and unknown, suspected and unsuspected, disclosed and undisclosed, arising at any time prior to and including the date I sign this Release with respect to any claims relating to my employment and the termination of my employment, including but not limited to: any and all such claims and demands directly or indirectly arising out of or in any way connected with my employment with the Company or the termination of that employment; claims or demands related to salary, bonuses, commissions, stock, stock options, or any other ownership interests in the Company, vacation pay, fringe benefits, expense reimbursements, sabbatical benefits, severance benefits, or any other form of compensation; claims pursuant to any federal, state or local law or cause of action including, but not limited to, the federal Civil Rights Act of 1964, as amended; the federal Age Discrimination Act of 1990; the New York Human Rights Law, the Florida Civil Rights Law as amended; tort law; contract law; wrongful discharge; discrimination; harassment; fraud; emotional distress; and breach of the implied covenant of good faith and fair dealing. [IF OVER 40 YEARS OLD] I acknowledge that, among other rights, I am waiving and releasing any rights I may have under ADEA, that this waiver and release is knowing and voluntary, and that the consideration given for this waiver and release is in addition to anything of value to which I was already entitled. I further acknowledge that I have been advised, as required by the Older Workers Benefit Protection Act, that: (a) the waiver and release granted herein does not relate to claims which may arise after this agreement is executed; (b) I have the right to consult with an attorney prior to executing this agreement (although I may choose voluntarily not to do so); (c) I have twenty-one (21) days from the date I receive this agreement, in which to consider this agreement (although I may choose voluntarily to execute this agreement earlier); (d) I have seven (7) days following the execution of this agreement to revoke my consent to the agreement; and (e) this agreement shall not be effective until the seven (7) day revocation period has expired. Date: Name: ---------------------- --------------------------------- 10 EX-99.8 10 a2064182zex-99_8.txt EXHIBIT 99.8 EXHIBIT 99.8 [STARMEDIA LOGO] STARMEDIA NETWORK ANNOUNCES INTENTION TO RESTATE PRIOR PERIOD RESULTS NEW YORK, NY, NOVEMBER 19, 2001 - StarMedia Network (NASDAQ: STRM) (www.starmedia.com), the leading integrated Internet media and solutions company targeting Spanish- and Portuguese-speaking audiences, announced today that it plans to restate its unaudited financial statements for the quarters ended March 31 and June 30, 2001, and its audited financial statements for the fiscal year ended December 31, 2000. A Special Committee of the Company's Board of Directors is conducting an investigation of accounting issues with respect to revenue recognition by two of the company's Mexican subsidiaries, AdNet S.A. de C.V. and StarMedia Mexico, S.A. de C.V. The Special Committee has retained outside counsel to assist in the investigation, which has led the Company to a preliminary conclusion that revenues aggregating approximately $10 million were improperly recognized by those subsidiaries during the period from October 1, 2000 through June 30, 2001 . At the present time, the financial statements for those periods should not be relied on. The Company is working to conclude its investigation expeditiously, and will file its Quarterly Report on Form 10-Q for the quarter ended September 30, 2001, as well as the restated reports, promptly after its investigation is completed. StarMedia does not intend to provide further information with respect to these matters prior to the completion of its investigation. Separately, the Company also announced as follows: o Steven J. Heller has resigned as Chief Financial Officer of StarMedia Network, effective November 15, 2001, on terms and conditions previously agreed with StarMedia Network. o The company terminated the employment of Justin Macedonia as General Counsel of the company earlier this month. In September 2001, Mr. Macedonia had filed a notice of intention to arbitrate against the company asserting that the company was obligated to makes tax indemnity payments to him in the amount of $1,740,588. The company denies any obligation to make such payments, intends to vigorously defend against such claims and has pursued counterclaims against Mr. Macedonia. o In connection with its April 2000 acquisition of AdNet, StarMedia Network was obligated under its agreements with respect to such acquisition to pay additional consideration in the form of the Company's common stock over a five-year period from the acquisition date, subject to AdNet meeting certain specified performance targets. In November 2001, the Company, AdNet and the former stockholders of AdNet entered into a Termination Agreement pursuant to which the Company agreed to issue to the stockholders of AdNet 8,000,000 shares of the Company's common stock, in full satisfaction of the Company's obligations under the stock purchase agreement and certain other related agreements between the Company and the former stockholders of AdNet. ABOUT STARMEDIA NETWORK, INC. StarMedia Network is the leading integrated Internet media and solutions company for Spanish- and Portuguese-speaking audiences, providing technology and services that enable consumers and businesses to take full advantage of the Internet. The company has operations in Argentina, Brazil, Chile, Colombia, Mexico, Puerto Rico, Spain, Uruguay, Venezuela, and throughout the United States. THIS PRESS RELEASE CONTAINS STATEMENTS OF A FORWARD-LOOKING NATURE WITHIN THE MEANING OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 RELATING TO FUTURE EVENTS OR FUTURE FINANCIAL RESULTS OF STARMEDIA NETWORK, INC. INVESTORS ARE CAUTIONED THAT SUCH STATEMENTS ARE ONLY PREDICTIONS AND ARE BASED ON MANAGEMENT'S CURRENT EXPECTATIONS OR BELIEFS AND ARE SUBJECT TO A NUMBER OF FACTORS THAT COULD CAUSE ACTUAL EVENTS OR RESULTS TO DIFFER MATERIALLY. IN CONSIDERING SUCH STATEMENTS, INVESTORS SHOULD SPECIFICALLY CONSIDER VARIOUS FACTORS WHICH COULD CAUSE ACTUAL EVENTS OR RESULTS TO DIFFER MATERIALLY FROM THOSE INDICATED FROM SUCH FORWARD-LOOKING STATEMENTS, INCLUDING THE MATTERS SET FORTH IN STARMEDIA NETWORK, INC.'S REPORTS AND DOCUMENTS FILED FROM TIME TO TIME WITH THE SECURITIES AND EXCHANGE COMMISSION. # # # PRESS AND INVESTOR INQUIRIES: Romi Schutzer Senior Vice President, Corporate Communications (212) 905-8269 romi.schutzer@starmedia.net - --------------------------- EX-99.9 11 a2064182zex-99_9.txt EXHIBIT 99.9 EXHIBIT 99.9 [STARMEDIA LOGO] STARMEDIA NETWORK ANNOUNCES APPOINTMENT OF SUSAN SEGAL AS ACTING CHAIRMAN OF THE BOARD OF DIRECTORS NEW YORK, NY, NOVEMBER 19, 2001 - THE BOARD OF DIRECTORS OF StarMedia Network (NASDAQ: STRM) (www.starmedia.com), the leading integrated Internet media and solutions company targeting Spanish- and Portuguese-speaking audiences, announced today that Susan Segal has been appointed to serve as acting Chairman of the Board. She succeeds Fernando Espuelas, co-founder and former Chief Executive Officer of the Company, who, pursuant to his August 2001 agreement with the Company, resigned on November 15 as Chairman of the Board of Directors. Mr. Espuelas will continue to serve as a Director on the Company's Board. ABOUT STARMEDIA NETWORK, INC. StarMedia Network is the leading integrated Internet media and solutions company for Spanish- and Portuguese-speaking audiences, providing technology and services that enable consumers and businesses to take full advantage of the Internet. The company has operations in Argentina, Brazil, Chile, Colombia, Mexico, Puerto Rico, Spain, Uruguay, Venezuela, and throughout the United States. THIS PRESS RELEASE CONTAINS STATEMENTS OF A FORWARD-LOOKING NATURE WITHIN THE MEANING OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 RELATING TO FUTURE EVENTS OR FUTURE FINANCIAL RESULTS OF STARMEDIA NETWORK, INC. INVESTORS ARE CAUTIONED THAT SUCH STATEMENTS ARE ONLY PREDICTIONS AND ARE BASED ON MANAGEMENT'S CURRENT EXPECTATIONS OR BELIEFS AND ARE SUBJECT TO A NUMBER OF FACTORS THAT COULD CAUSE ACTUAL EVENTS OR RESULTS TO DIFFER MATERIALLY. IN CONSIDERING SUCH STATEMENTS, INVESTORS SHOULD SPECIFICALLY CONSIDER VARIOUS FACTORS WHICH COULD CAUSE ACTUAL EVENTS OR RESULTS TO DIFFER MATERIALLY FROM THOSE INDICATED FROM SUCH FORWARD-LOOKING STATEMENTS, INCLUDING THE MATTERS SET FORTH IN STARMEDIA NETWORK, INC.'S REPORTS AND DOCUMENTS FILED FROM TIME TO TIME WITH THE SECURITIES AND EXCHANGE COMMISSION. # # # PRESS AND INVESTOR INQUIRIES: Romi Schutzer Senior Vice President, Corporate Communications (212) 905-8269 romi.schutzer@starmedia.net - --------------------------- -----END PRIVACY-ENHANCED MESSAGE-----