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Exhibit 10.26
MEMORANDUM OF AGREEMENT
This Memorandum of Agreement (the "Agreement") is entered into
this 27th day of April, 1999 by and between Telemundo Network Group LLC, a
California limited liability company, ("Telemundo") and ▇▇▇▇▇▇▇.▇▇▇, inc., a
Nevada corporation ("quepasa"), with reference to the following:
WHEREAS, quepasa is a Spanish-language computer internet
portal and search engine with unique capabilities relating to the creation and
maintenance of web sites directed to the Hispanic population; and
WHEREAS, Telemundo is one of the largest U.S. Spanish-language
television networks and creators of content designed to appeal to the Hispanic
population, and Telemundo desires to create and maintain its own web site.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein, the parties agree as follows:
1. Upon execution of this Agreement, quepasa agrees to issue
Telemundo 600,000 of its authorized but unissued shares of Common Stock (the
"Shares") equal to 6.2 percent (6.2%) of its currently outstanding shares of
Common Stock. For purposes of this Agreement, the parties agree that the Shares
are being valued at $10 each. The certificate representing the Shares shall
contain a customary legend reflecting that the Shares have been acquired for
investment purposes and that transfer is restricted under the Securities Act of
1933, as amended, (the "Act").
2. Upon execution of this Agreement, quepasa agrees to issue
Telemundo a Common Stock Purchase Warrant (the "Warrant") to purchase 1,000,000
of its authorized but unissued shares of Common Stock (the "Warrant Shares")
equal to 10.3 percent (10.3%) of its currently outstanding shares of Common
Stock. The Warrant shall be exercisable, in whole or in part, beginning
immediately following the effectiveness of the proposed initial public offering
of quepasa Common Stock (the "IPO") and the Warrant shall expire two (2) years
from the date it first becomes exercisable. The Warrant exercise price shall be
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equal to 120 percent (120%) of the IPO offering price to the public. The Warrant
agreement and the certificate representing the Warrant Shares shall contain a
customary legend reflecting that the securities have been acquired for
investment purposes and that transfer is restricted under the Act. Beginning six
(6) months after the IPO, Telemundo shall be entitled to registration rights to
have the Warrant and the Warrant Shares registered for sale under the Act within
thirty (30) days after giving written notice to quepasa on two (2) separate
occasions, and shall be entitled to unlimited piggyback registration rights with
respect to the Warrant and the Warrant Shares. Upon issuance hereunder, the
Warrant shall contain customary proportionate antidilution protection with
respect to all issuances by quepasa of Common Stock or securities convertible
into Common Stock except with respect to (i) the IPO, including any warrants
issued to an underwriter, and (ii) issuances of options under quepasa's 1998
Stock Option Plan, as amended. In addition upon exercise of the Warrant,
Telemundo may elect to (a) pay the exercise price in cash, (b) pay the exercise
price by having Warrant Shares otherwise deliverable upon exercise of the
Warrant withheld based upon the trading price of quepasa Common Stock, or (c)
deliver to quepasa previously acquired shares of quepasa Common Stock having a
value (without regard to whether the transfer of such shares is restricted under
the Act) equal to the exercise price.
3. Upon the latter to occur of (a) completion of the IPO or (b)
expiration of the 26-week advertising campaign which will commence on or about
August 1999, Telemundo shall make available to quepasa a $5 million credit for
advertising on the Telemundo network. Such credit may be expended at the rate of
$1 million per year spread over a 5 year term. The placement of such advertising
shall be determined by Telemundo in the exercise of its good faith business
judgment and in consultation with quepasa, provided that no more than 60% shall
be placed on a run of the schedule basis and no less than 40% shall be placed on
a program specific or product integration/program content basis. The value of
all placed advertising or equivalent shall be determined at Telemundo's then
prevailing rates.
4. The parties acknowledge that quepasa has heretofore
purchased advertising in conjunction with a 26-week advertising campaign which
will expire on or about August 1999. Promptly upon expiration of that campaign,
quepasa will purchase an additional $1 million of advertising time spread per
industry
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custom over the following 26-week period at then prevailing rates on the
Telemundo network, payment on commencement of the campaign.
5. Telemundo has advised quepasa of its intent to develop a
web site and quepasa agrees to provide its resources to the extent required in
order to design, develop and build Telemundo's website according to
specifications to be provided by Telemundo. This undertaking to develop and
build such website and in order to complete same on or before July 1, 1999 is
additional consideration for the securities issued to Telemundo under Sections 1
and 2 above. The parties shall agree on milestone deliverables and schedules for
the development of the website, and quepasa shall exercise best efforts in order
to comply with same. quepasa shall maintain and provide technical support and
enhance and refresh the site from time to time as requested by Telemundo for a
term of five (5) years commencing on the date of launch of the website.
Any materials not provided by Telemundo and utilized by
quepasa shall be owned by quepasa and utilized for the benefit of Telemundo,
subject to a perpetual license for use to Telemundo and free access thereto;
provided, however, any materials which are created uniquely for Telemundo shall
be owned by Telemundo. Telemundo will have the right to approve any
sub-contractors to be engaged by quepasa in connection with the design and
development of the Telemundo website.
6. The parties agree that they shall each link and cross
promote the other's website on their own websites, and each shall be considered
an anchor tenant on the other's website. For purposes hereof, an anchor tenant
shall mean that each party shall receive banner advertising on the home page of
the other party's website. Each party shall be exclusive in its class for a
period of six (6) months from the date of the IPO, i.e., quepasa shall not
accept any banner advertising from any other Spanish-language television
broadcaster and Telemundo shall not accept banner advertising from any other
Spanish language search engine, provided, in the event of a breach of this
exclusivity by either party, the other party's sole remedy shall be to elect to
terminate the exclusivity granted pursuant to this sentence. Banners for the
other party are to appear on each home page and, in addition, ads and pointers
will appear across other related website areas; premier placement shall appear
in each party's internet print ▇▇ ▇▇▇▇▇▇▇▇▇, if any, and front screen pop-up
advertising for all advertisers will appear
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immediately upon logging on to the respective parties home page.
7. Telemundo will provide to quepasa and quepasa shall include
in its website certain content determined by Telemundo, which may include
programming information, news and sports. Responsibility for the incorporation
of the content on the website shall be with quepasa. Such content will, however,
be the property of Telemundo, and to the extent that same is provided to
quepasa, it will be provided pursuant to a gratis license, the details of which
shall be specified in the more detailed agreements contemplated hereby.
8. Immediately upon execution of this Agreement, quepasa
agrees to elect ▇▇▇▇ ▇▇▇▇▇ as a member of its Board of Directors and in that
regard agrees to maintain director and officer liability insurance in amounts
reasonably satisfactory to Telemundo.
9. In the event the IPO is not completed within sixty (60)
days of the date of this Agreement at an initial offering price (based upon the
current capital structure of quepasa) of at least $10.00 per share, Telemundo
shall have an option during the thirty (30) days following the sixty (60) day
period to rescind this Agreement and return the Shares and the Warrant to
quepasa and thereafter, neither party to this Agreement shall have any rights or
obligations hereunder, except that quepasa's obligations under Sections 4 and 11
shall remain in full force and effect, notwithstanding the rescission.
10. quepasa agrees that prior to any filings with the
Securities and Exchange Commission (the "SEC") relating to the IPO, Telemundo
and its attorneys shall be entitled to review all disclosures relating to
Telemundo and this Agreement, and quepasa agrees to reflect any modifications to
such disclosures reasonably requested by Telemundo. quepasa agrees, however,
that Telemundo shall have no responsibility for any disclosures made in any of
said filings.
11. quepasa agrees to indemnify and hold harmless Telemundo,
its officers,directors, agents and attorneys and any persons controlling
Telemundo within the meaning of Section 15 of the Act against any and all
losses,claims, damages or liabilities, joint or several, to which they or any of
them may become subject under the Act or any other statute or at common law and
to reimburse persons indemnified as above for any legal or other expenses
(including the cost of
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any investigation and preparation) incurred by them in connection with any
litigation, whether or not resulting in any liability, but only insofar as such
losses, claims, damages, liabilities and litigation arise out of or are based
upon any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement or any amendment thereto with respect to
the IPO or any application or other document filed by quepasa or its
underwriters in order to qualify share of Common Stock under the securities laws
of the states where filings were made, if any, or the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, all as of the date when
the Registration Statement or such amendment, as the case may be, becomes
effective, or any untrue statement or alleged untrue statement of a material
fact contained in the Prospectus (as amended or supplemented if quepasa shall
have filed with the Securities and Exchange Commission any amendments thereof or
supplements thereto), or the omission or alleged omission to state therein a
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
12. Upon a default, as defined below, by either party to this
Agreement, without prejudice to its rights and remedies at law and in equity,
the non-defaulting party shall have no further obligations or liability under
this Agreement. A default is defined as (i) a breach of this Agreement by a
party which is not remedied by the defaulting party within ten (10) business
days after receiving written notice from the non-defaulting party setting forth
the specific default or (ii) the filing of a voluntary petition in bankruptcy,
the consent to the filing of a bankruptcy petition, the filing of a petition by
or against a party under the Federal Bankruptcy Code, any assignment for the
benefit of creditors, application for, or consent to, the appointment of any
receiver, trustee or custodian or similar officer or the entry into an agreement
of composition with its creditors.
13. All press releases, trade releases or other public
announcements with respect to the transactions contemplated herein shall be
jointly prepared by quepasa and Telemundo. Other than with respect to press
releases announcing the entering into of this Agreement and in filings with the
SEC, each party agrees that it will not, and its employees, agents or
representatives will not, discuss or otherwise disclose the terms of this
Agreement (including its existence) or any arrangement or other understanding
with any other party other than representatives
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of the other party required to know such information in connection with the
transactions contemplated herein, except to the extent such disclosure is
required by law; provided, however, that prior to disclosing any confidential
information as may be required by law, the party producing or directing the
production of such information will use all reasonable efforts to provide the
other party hereto with notice of such disclosure and a reasonable opportunity
to limit or contest such disclosure.
14. Each party hereto shall pay its own expenses in connection
with the transaction contemplated herein.
15. Upon execution of this Agreement, the parties agree to use
their best efforts to prepare and enter into more detailed agreements in
customary form reflecting the contents of this Memorandum of Agreement. In the
event that the parties are unable to agree on any terms or conditions not
specifically set forth herein, the parties agree to negotiate in good faith to
seek resolution consistent with the customs and practices of the industry.
Failure to reach agreement shall not invalidate this Agreement, and either party
may seek resolution by submitting all open issues to arbitration before the
American Arbitration Association in Los Angeles, California. Costs of such
arbitration are to be shared equally between the parties.
16. Notices required or permitted to be given hereunder shall
be sufficient if in writing and delivered or deposited in the mail, postage
prepaid, certified mail, return receipt requested, addressed to quepasa or
Telemundo, at their respective principal places of business. All notices
hereunder shall be effective: (a) five (5) days after deposit in the mail; or
(b) upon delivery, if delivered in person, by commercial express service or by
facsimile transmission.
17. This Agreement contains the entire agreement and
understanding by and between the parties hereto with respect to the subject
matter of this Agreement, and no representations, promises, agreements or
understandings, written or oral, not contained herein shall be of any force or
effect. No change or modification of this Agreement shall be valid or binding
unless it is in writing and signed by the parties intended to be bound.
18. In the event any dispute or controversy arising out of
this
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Agreement (other than as covered under Section 15 above) cannot be settled
by the parties hereto, such controversy or dispute, at the election of either
party hereto, by written notice to the other, shall be submitted to arbitration
before the American Arbitration Association in Los Angeles, California, and for
this purpose the parties each hereby expressly consent to such arbitration and
such place. The costs of the arbitration and the arbitrators, including
attorneys' fees of the parties, shall be borne by the non-prevailing party, as
determined by the arbitrators.
19. This Agreement shall be governed in all respects whether
as to validity, construction, capacity, performance or otherwise by the laws of
the State of California applicable to agreements to be entered into and
performed therein.
Telemundo Network Group LLC
By: /s/ ▇▇▇▇ Meadow
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SVP
▇▇▇▇▇▇▇.▇▇▇, inc.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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CEO
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