Non-Competition and Cooperation Agreement - Terra Networks Mexico SA de CV and Alejandro Junco de la Vega
NON-COMPETITION AND COOPERATION AGREEMENT
Non-Competition and Cooperation Agreement, entered into on this fifth day of
October of 1999, [by] Mr. Alejandro Junco De la Vega, in his own right and
representing the companies listed in Appendix A which, signed by the Parties, is
attached to this Agreement (hereinafter "Grupo Reforma") and Terra Networks
Mexico, S.A. de C.V., a Mexican corporation represented by Mr. Arturo de Jesus
Galvan Contreras (hereinafter "Terra") in accordance with the following
declarations and clauses.
DECLARATIONS
I. Grupo Reforma and Terra declare, personally or through their representatives:
A. That on October 5, 1999, Terra entered into a Stock Purchase
Agreement through which Terra acquired from the different companies
of Grupo Reforma and individuals who are shareholders of Informacion
Selectiva S.A. de C.V., a Mexican corporation (hereinafter the
"Subsidiary"), all but one of the shares issued by the Subsidiary.
B. That the Subsidiary carries out, in Mexico and the United States,
activities related to Internet businesses such as "Internet Service
Provider" ("ISP" or Internet access provider)," "Portal" (Internet
site with comprehensive electronic content, communication,
community, and business services, both "Business to Consumer" and
"Consumer to Consumer"), Electronic Financial Information Services
(defined later), and electronic "Business to Business" services, all
focused on residential, "Small Office, Home Office" ("SOHO"),
financial and corporate markets.
C. That they wish to enter into this Agreement to define the
obligations with respect to non-competition, confidentiality, and
cooperation among Terra, its shareholders or subsidiaries, and Grupo
Reforma, stemming from or related to the different transactions
recently entered into between Grupo Reforma and Terra, pursuant to
the following Definitions and Clauses.
II. Terra declares, through its representative:
A. That it is a Mexican corporation whose line of business includes,
but is not limited to, Internet businesses for residential and
"Small Office, Home Office" ("SOHO") segments, known as "ISP"
(Internet access provision), and "Portal" (Internet site with
comprehensive electronic content, communication, community, and
business services, both "Business to Consumer" and "Consumer to
Consumer"), Electronic Financial Information Services (defined
later), and electronic
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"Business to Business" services, all focused on residential, SOHO,
financial, and corporate markets in Mexico and the United States.
B. That it is interested in formalizing this Agreement (hereinafter the
"Agreement") to govern the non-competition of the previous owners of
Infosel, pursuant to the terms and conditions specified herein.
III. Grupo Reforma declares through its representative:
A. That Mr. Alejandro Junco de la Vega owns the majority of shares of,
or exercises control by different methods over, the corporations
identified on the list which, signed by the Parties, is attached as
Appendix A.
B. That he wishes to enter into this Agreement to ensure that during
its term it [Grupo Reforma] shall not compete with Terra, its
shareholders or subsidiaries in the Business which is the
Subsidiary's [Corporate] Purpose.
DEFINITIONS
For purposes of this Agreement, barring express indications to the contrary, the
terms, phrases, and words listed below shall have the meanings given:
"ASC" means ASC Asociados en Consultoria, S.C., a Mexican professional
partnership currently providing services to the Subsidiary.
"Business to Business" means electronic business activities conducted between
companies through the Internet.
"Business to Consumer" means electronic business activities conducted between
companies and consumers through the Internet.
"Agreement" means this Non-Competition and Cooperation Agreement.
"Consumer to Consumer" means electronic business activities conducted between
consumers through the Internet.
"Controlling Company" shall mean any company that owns the majority of the
shares of another company to which this term refers [sic].
"Affiliates" [means] any companies with a common Controlling Company.
"Grupo Reforma" is used in this contract to jointly designate (i) Mr. Alejandro
Junco de la Vega, (ii) the companies controlled by him and identified in the
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list attached as Appendix A, and (iii) the professional partnerships,
corporations, or legal entities of any nature and nationality over which Mr.
Alejandro Junco de la Vega exercises control by any means during the term of
this Agreement.
"Confidential Information" shall have the meaning set forth in Clause 3.1 of
this Agreement.
"Internet" means the network comprised of millions of computers or servers
interconnected at the worldwide level by telephonic or other cabling, including
compatible digital communication protocols, and constituting a bidirectional and
interactive medium of electronic interchange and distribution of digital
materials such as text and hypertext, sound, video, animation, and software, as
well as electronic mail services, access to information databases, electronic
business, inquiry services, and general communication services, among other
applications.
"Mexico" means the United Mexican States.
"Excluded Businesses" means the businesses carried out by the current or future
Grupo Reforma newspapers, consisting of offering, on their Internet sites,
various news and business content, including that relative to world news and
editorials regarding politics, the economy, finance, sports, entertainment,
business, culture and the arts, classified notices, display ads, and those that
are published in said newspapers.
"Business which is the Subsidiary's [Corporate] Purpose" means the Internet
businesses for the residential and "Small Office, Home Office" ("SOHO")
segments, known as "ISP" (Internet access provision), and "Portal" (Internet
site with comprehensive electronic content, communication, community, and
business services, both "Business to Consumer" and "Consumer to Consumer"),
Electronic Financial Information Services (defined later), and electronic
business services, "Business to Business," all focused on residential, SOHO,
financial and corporate markets in Mexico and the United States.
"Parties" means Terra and Grupo Reforma.
"Portal" means an integrating Internet site whose function is to provide
comprehensive electronic content, communication, community, and business
services to Internet users under the Business to Consumer or Consumer to
Consumer modalities.
"Electronic Financial Information Services" means information services
(especially news, prices and quotes, analyses and commentaries, tools and
databases) from the financial markets, collected directly from the sources that
generate them (securities exchanges, brokers, news agencies, etc.), processed
and distributed through telecommunication networks and computer equipment.
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"SOHO" or "Small Office, Home Office" refers to the segment of Internet users
consisting of small offices or offices in private residences.
"Subsidiary" means Informacion Selectiva, S.A. de C.V., a corporation
established under Mexican law.
"Direct Subsidiary" shall mean any Corporation whose shares are owned by another
corporation to which this term refers [sic].
"Terra" means Terra Networks Mexico, S.A. de C.V., a Mexican corporation,
established pursuant to public document number 6232, executed before Mr. Eduardo
Manautou Ayala, Notary Public Number 123 for the City of Monterrey, Nuevo Leon,
on September 10, 1999, the first certified copy of which is duly entered in the
Public Registry of Property and Commerce of the City of Monterrey, Nuevo Leon,
under Number 2468, unnumbered page, Volume 431, Book No. 3, Second Ledger of
Corporate Documents, Business Section.
"TI" shall have the meaning set forth in the introductory paragraph of this
contract [sic].
CLAUSES
Pursuant to the agreements and pacts set forth herein, the Parties express their
will in the following terms:
First clause. Non-competition agreement.
Each member of Grupo Reforma hereby agrees to not compete with Terra, its
Controlling Company and Subsidiaries with respect to the Business which is
Subsidiary's [Corporate] Purpose for a period of four (4) years in Mexico and
three (3) years in the United States, counting from the date of this Contract.
In accordance with the above, Grupo Reforma jointly and each of its members,
directly or indirectly through any Affiliate, Direct Subsidiary, Controlling
Company, or intermediary shall not, during the aforementioned period, engage in
any of the following actions:
1.1 Business which is the [Corporate] Purpose of Terra and the Subsidiary. Any
activity of a commercial, professional, or any other nature, which is
comparable to any of the activities included as part of the Business which
is the Subsidiary's [Corporate] Purpose.
1.2 Hiring of Personnel. Make work offers [to] or hire as employees, service
providers, or consultants, the people who are currently employees of the
Subsidiary or employees, shareholders, or members of ASC, absent an
agreement to the contrary between the Parties.
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1.3 Consultancy to Third Parties. Provide advice, consulting, or services of
any kind, paid or unpaid, to any third party that participates directly or
indirectly in activities comparable to any of the activities included as
part of the Business which is the Subsidiary's [Corporate] Purpose, in
Mexico or abroad.
1.4. Shareholdings: Acquire, directly or indirectly, share holdings or capital
of any legal entity, Mexican or foreign, that performs activities
comparable to any of the activities included as part of the Business which
is the Subsidiary's [Corporate] Purpose, except for the acquisition of (i)
shares on stock exchanges when the shareholding does not exceed 5% of the
corporation's capital, or (ii) the case of a Controlling Company or
Affiliate of Terra or the Subsidiary.
The non-competition agreement to which this clause refers is not applicable to
the Excluded Businesses.
Second Clause. Consequences of Competition.
Grupo Reforma acknowledges that the consideration paid by Terra for acquisition
of its interest in the Subsidiary was based in large part on the non-competition
agreement which Grupo Reforma undertakes under the terms of the preceding
Clause. Therefore, the members of Grupo Reforma, jointly and severally, agree to
compensate Terra for any and all damages suffered by Terra as a result of
non-compliance by any member of Grupo Reforma with its non-competition
obligations under the terms of the First Clause of this Agreement.
Third Clause. Confidentiality.
3.1 Confidential Information. Each member of Grupo Reforma acknowledges that
on the basis of its direct relationship in the past with the Subsidiary,
they acquired or could [have] acquired from it: (i) confidential or secret
information, (ii) business information, (iii) technical knowledge, (iv)
information regarding procedures, (v) operating manuals, (vi) software,
(vii) source codes, (viii) systems, (ix) confidential reports, (x) client
lists, (xi) financial information, (xii) business plans, and (xiii) other
information that could be valuable to the Subsidiary (this knowledge and
information shall hereinafter be jointly referred to as the "Confidential
Information").
3.2 Disclosure of Confidential Information. Each member of Grupo Reforma
agrees, jointly and severally, to not disclose, disseminate, communicate,
transmit, or in any other way make Confidential Information available to
third parties. If any of the members of Grupo Reforma fails to comply with
this obligation in any way, the members of Grupo Reforma shall be jointly
and severally liable to Terra for the damages suffered by Terra, its
Controlling Company, or Subsidiaries resulting from such non-compliance.
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Fourth Clause. Cooperation.
Given the experience of Mr. Alejandro Junco de la Vega in connection with the
Business which is the Subsidiary's [Corporate] Purpose, Mr. Alejandro Junco de
la Vega agrees to cooperate with Terra and its Controlling Company [by
providing] his recommendations and advice, if necessary, to facilitate the
startup of activities of the Subsidiary under its new management.
Fifth Clause. General Provisions.
5.1 Cooperation. Each of the Parties to this agreement shall make its
best effort to perform or ensure the performance of all actions, and
to cooperate with the other Party to this agreement as necessary
therefor; and to execute or ensure the execution, in accordance with
the applicable laws, of whatever is necessary, appropriate, or
advisable to perform and ensure the performance of the operations
provided for by this Contract.
5.2 Waivers. Failure of Grupo Reforma to comply with any of its
obligations or [any of the] agreements set forth herein may be
waived only by Terra in writing. Failure of Terra to comply with its
obligations or [the] agreements set forth herein may be waived only
by Grupo Reforma in writing. Waiver of the obligations of each Party
may only be made with the written consent of the other Party.
5.3 Notifications. All notifications and other communications that are
required or permitted in accordance with this Contract shall be made
in writing and sent to the addressee by telefax, which shall be
confirmed by means of the original document signed by an authorized
representative of the Party making the notification or
communication. These shall be sent by DHL, Federal Express, or
another worldwide express messenger service that offers delivery
times equal to or better than those of the aforementioned companies,
with the understanding that the communication or notification shall
become effective on the date the telefax is sent, but only if the
original signed notification or communication is delivered to the
addressee within two (2) Business Days of the date it is telefaxed.
If the original notification or communication is not received within
said time period, it shall become effective on the Business Day on
which such original notification or communication is delivered. Such
notifications or communications shall in all cases be sent to the
following domiciles:
(i) If addressed to Grupo Reforma:
Lic. Alejandro Junco de la Vega
Washington No. 629 Ote.
64000 Monterrey, N.L.
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(ii) If addressed to Terra:
Terra Networks Mexico S.A. de C.V.
Oficinas en el Parque - Piso 10
Blvd. Antonio L. Rodriguez 1884 Pte.
64650 Monterrey, Nuevo Leon
Atencion: Secretario del Consejo [Attention: Secretary of the
Board of Directors]
Said names and addresses may be changed by written notification to each of the
above individuals.
The above notwithstanding, the Parties may choose to make any notification or
communication by personal delivery of the respective document to the appropriate
domicile, in which case such communication or notification shall become
effective on the date of its delivery. A signature acknowledging receipt shall
be obtained from the addressee's receiving employee or representative.
5.4 Applicable Laws and Conflict Resolution. This Contract shall be governed
[by] and interpreted under the laws of Mexico.
5.4.1 Any dispute, complaint, or controversy arising as a result of this
Contract or related thereto, or regarding the interpretation or
violation thereof, shall be submitted to arbitration pursuant to the
regulations of the International Chamber of Commerce of Paris, to
the extent that said regulations are not incompatible with this
paragraph. The decision on the arbitrators' award may be approved by
any competent court, or it may be requested that said court approve
the award so that it may be implemented, as appropriate. The request
for arbitration shall be made within a reasonable time counted from
the time the complaint, dispute, or any other question arises, and
in no case shall it be made after the date on which the institution
[addressing] the legal or equity proceedings based on such
complaint, dispute, or any other question, has prescribed under the
applicable statute of limitations.
5.4.2 The panel shall be comprised of three arbitrators. Each of the
Parties to this Contract shall name one of said arbitrators, and the
two arbitrators so named shall designate a third: with the
understanding, however, that if the two arbitrators fail to reach
agreement regarding naming the third arbitrator, either of the
arbitrators may request that the International Chamber of Commerce
of Paris make the designation;
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5.4.3 The place of arbitration shall be Dallas, Texas, and it shall be
conducted in Spanish and/or English.
5.4.4 For the present, each Party waives the requirement for
hand-delivered notification of arbitration, and agrees that
notification may be made in writing, by registered mail, with
acknowledgement of receipt, to the address provided in this
Contract, and any request made in this manner shall be considered
effected on the tenth Business Day after such request has been
mailed.
5.4.5 Any judicial proceeding brought as support for the arbitration with
respect to this Contract, including precautionary measures, shall be
submitted to the competent judicial authority. Each Party to this
Contract (a) accepts, generally and unconditionally, the exclusive
competence of said court and any related appeals court, and
irrevocably waives any objection it may have, now or in the future,
with respect to the forum of any litigation, legal action, or
proceeding brought in said courts, or [objection with respect to]
said courts being an inappropriate forum.
5.5 Copies. This contract may be signed simultaneously in one or more copies,
each of which shall be considered an original, but all together they shall
constitute a single unique instrument.
5.6 Headings. The headings of this Contract's different clauses are for
reference purposes only, and shall not affect the meaning or
interpretation of this Contract in any way.
5.7 Indivisible Contract. This Contract, including its appendices and the
documents mentioned herein, constitute the entire Contract and the
agreements of the Parties thereto with respect to its purpose. There are
no restrictions, promises, declarations, absolute warranties, guarantees,
or commitments other than those expressly stipulated or mentioned herein.
This Contract replaces all previous contracts and agreements between the
Parties with respect to said purpose.
5.8 Amendments and Modifications. This Contract may only be amended or
modified by written agreement of the Parties.
5.9 Mandatory nature: Benefits. This Contract shall be to the benefit of the
Parties thereto and their respective successors and assignees, and shall
be obligatory for them; nothing expressly or implicitly included in this
Contract is intended to confer on any person other than the Parties
thereto
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or their respective successors and assignees, any right, option,
obligation, or responsibility under or resulting from this Contract.
5.10 Transfer. This Contract may not be transferred by any of the Parties
thereto, except with the prior written agreement of the other Parties
thereto.
IN WITNESS WHEREOF, the Parties have signed this Contract on the date shown at
the beginning hereof.
[handwritten: TERRA NETWORKS MEXICO, S.A. de C.V.]
[illegible signature]
Mr. Arturo de Jesus Galvan Contreras
General Director
GRUPO REFORMA:
[illegible signature]
Mr. Alejandro Junco de la Vega
As an individual and representing the companies
comprising Grupo Reforma, as defined herein.
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APPENDIX A
Appendix A of the Non-Competition and Cooperation Agreement, entered into on
this fifth day of October of 1999, by Mr. Alejandro Junco De la Vega, in his own
right and representing the companies listed below as members of Grupo Reforma
and Terra Networks Mexico, S.A. de C.V.
Editora El Sol, S.A. de C.V.
Ediciones Del Norte, S.A. de C.V.
Servicios Motociclistas, S.A. de C.V.
Inmobiliaria Macro, S.A. de C.V.
Consorcio Interamericano de Comunicacion, S.A. de C.V.
Apoyo Aereo, S.A. de C.V.
Comunicacion Integrada de Occidente, S.A. de C.V.
Inversiones Grupo Reforma, S.A. de C.V.
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