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EXHIBIT 10.1
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT dated as of March 13, 1998, by and
between XXXXXXX XXXXXX XXXXXX ("Seller") and XXXXXXX ENTERTAINMENT, INC., a
Delaware corporation (the "Company"),
W I T N E S S E T H :
WHEREAS, Seller owns the Shares (as hereinafter defined); and
WHEREAS, the Company desires to purchase from Seller, and Seller
desires to sell to the Company, the Shares, on the terms and subject to the
conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter set forth, the parties hereto hereby agree as follows:
1. Certain Definitions.
1.1. "Affiliate" of a Person means another Person directly or
indirectly controlling, controlled by, or under common control with, such
Person; for this purpose, "control" of a Person means the power (whether or not
exercised) to direct the policies, operations or activities of such Person by
virtue of the ownership of, or right to vote or direct the manner of voting of,
securities of such Person, or pursuant to agreement or law or otherwise.
1.2. "Business" means the business of providing
telecommunications products or services or telephone entertainment services, in
each case, of the type provided or contemplated by management of the Company at
any time during the preceding 12 months, paging, voice mail, long-distance
telephone services, prepaid and other mobile cellular telephone services,
secured credit cards and internet telephony, or marketing and operating
membership clubs pertaining to astrology, psychics, diet services, personals or
any other subject matter with which the Company has been engaged during the
preceding 12 months.
1.3. "Common Stock" means the common stock, par value $.001
per share, of the Company.
1.4. "Person" includes without limitation a natural person,
corporation, joint stock company, limited liability company, partnership, joint
venture, association, trust, government, governmental authority, agency or
instrumentality, or any group of the foregoing acting in concert.
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1.5. "Proceeding" means any action, suit, investigation or
proceeding at law or in equity.
1.6. "Purchase Price" means $8,165,000.
1.7. "Purchase Price Balance" means $165,000.
1.8. "Shares" means 1,969,601 shares of Common Stock owned of
record by Seller.
1.9. "Trade Right" means a patent, claim of copyright,
trademark, trade name, brand name, service xxxx, logo, symbol, trade dress or
design, or representation or expression of any thereof, or registration or
application for registration thereof, or any other invention, trade secret,
technical information, know-how, proprietary right or intellectual property.
2. Purchase of the Shares.
2.1. Concurrently herewith, Seller is selling, assigning,
transferring and delivering to the Company all of the Shares; and Seller is
delivering to the Company the certificate(s) representing the Shares, together
with a stock power duly executed for transfer in blank, and with stamps affixed
thereto evidencing payment in full of any applicable stock transfer,
documentary, excise or similar tax payable by reason of the sale of the Shares
pursuant hereto.
2.2. As payment in full for the Shares, the Company is paying
the Purchase Price to Seller, by federal funds wire transfer of such amount to
the account previously designated by Seller, as follows:
(a) $8,000,000, concurrently herewith; and
(b) the Purchase Price Balance in 12 consecutive
monthly installments of $13,750, beginning
on April 13, 1998.
3. Additional Agreements.
3.1. Concurrently herewith, the Employment Agreements
effective October 1, 1995 and dated as of January 5, 1998, respectively, between
the Company and Seller, and Seller's employment thereunder, are hereby
terminated as of the close of business on the date hereof. Seller shall have no
right to receive any salary, bonus or incentive compensation, perquisites, or
employee benefits thereunder with respect to any period commencing after the
date hereof.
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3.2. Seller and the Company acknowledge that, for the purpose
of Section 11 of the Company's Amended and Restated 1996 Stock Option Plan, the
termination of Seller's employment by the Company pursuant hereto is not
voluntary and not for cause.
3.3. Concurrently herewith, Seller is resigning as a director
of, and from all offices she has heretofore held with, the Company or any
Affiliate thereof.
3.4. Each party hereto hereby irrevocably and unconditionally
releases and discharges the other party hereto from each and every obligation or
liability of any nature whatsoever based upon or arising in connection with
Seller's employment by, or her serving as a director, officer or agent of the
Company or any Affiliate thereof, or her acquisition, ownership or disposition
of any Common Stock or other securities of the Company or any Affiliate thereof
(other than the sale of the Shares to the Company hereunder), pursuant to any
agreement, prior practice, law or otherwise, and waives each and every claim,
cause of action, right or remedy that such party may have had or asserted, or
now at any time hereafter have or be entitled to assert to enforce the same or
otherwise relating thereto, except that nothing herein shall relieve the Company
from any otherwise existing indemnity obligations to Seller relating to her
services as a director or officer of the Company or an Affiliate thereof in
accordance with the Company's or such Affiliate's by-laws or insurance coverage.
4. Certain Representations of Seller.
4.1. Seller acknowledges that she has served as a director and
executive officer of the Company; that, as such, she has had unlimited access to
the books and records of the Company and opportunity to confer with its
personnel as to all matters relating to the Company's assets, operations and
prospects; that she is fully acquainted with all matters relating to the
Company; and that, based on the foregoing, she has made a thoroughly informed
judgment as to the value of the Shares and has made her own determination to
voluntarily sell the same to the Company under the terms and conditions hereof.
Concurrently herewith, Seller is delivering a side letter to the Company
referring to certain specific transactions which may affect the value of the
Shares and with which Seller is familiar.
4.2. Seller represents and warrants to the Company that she
owns the Shares beneficially and of record, free and clear of all liens,
charges, encumbrances and adverse interests of any nature whatsoever, and has
the full right and power to sell, assign, transfer and deliver the Shares to the
Company hereunder.
5. Certain Covenants of Seller.
5.1. From and after the date hereof and for a period of two
years hereafter, Seller shall not directly or indirectly (a) engage in the
Business, or serve as a partner, member, manager, director, officer or employee
of, or consultant or advisor to, or in any
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manner own, control, manage, operate or otherwise participate or invest in, or
be connected with, any Person that engages in the Business in or from the United
States of America, or authorize the use of her name in connection therewith, or
(b) for herself or on behalf of any other Person, employ, engage or retain any
Person who at any time during the preceding 12-month period shall have been an
employee of the Company, or contact any supplier, customer or employee of the
Company for the purpose of soliciting or diverting any such supplier, customer
or employee from the Company. The foregoing provisions notwithstanding, Seller
may invest her funds in securities of an issuer if the securities of such issuer
are listed for trading on a registered securities exchange or actively traded in
the over-the-counter market and Seller's and all of Seller's Affiliates
aggregate holdings therein represent less than 3% of the total number of shares
or principal amount of the securities of such issuer then outstanding. Seller
acknowledges that the provisions of this Section, and the period of time,
geographic area and scope and type of restrictions on her activities set forth
herein, are reasonable and necessary for the protection of the Company and are
an essential inducement to the Company's purchase of the Shares.
5.2. Xxxxx Xxxxxx shall be bound by the provisions of Section
5.1 in the same manner and to the same extent as Seller, except that no
provision thereof shall prevent him from (a) engaging in the businesses
described in Exhibit A hereto or (b) engaging in internet telephony, other than
the marketing of internet telephony directly to consumers (which marketing
activities are prohibited hereunder). Xxxxx Xxxxxx acknowledges and confirms
that he is Seller's husband, that he is an Affiliate of Seller, that he will
receive a substantial and direct pecuniary benefit from the transactions
contemplated by this Agreement, including without limitation the purchase of the
Shares by the Company pursuant hereto, and that his agreement to the
restrictions on his activities as provided in this Section is an essential
condition and inducement to the Company's entering into this Agreement with
Seller and its purchase of the Shares hereunder.
5.3. From and after the date hereof, Seller shall keep
absolutely confidential all information relating to or concerned with the
Business, including without limitation all Trade Rights of the Company and its
Affiliates, product and pricing information, customer and supplier lists,
marketing and sales data and strategies, legal and regulatory compliance issues,
operational issues relating to 800 and 900 telephone numbers, consumer issues,
personnel and financing and tax matters. Seller acknowledges that the
confidentiality of all such information is absolutely essential to the operation
by the Company of the Business. Seller shall not, at any time after the date
hereof, use or disclose to any Person any such information, without the
Company's prior written consent, except as may be required by law (in which case
Seller shall promptly give notice to the Company of any demand, subpoena, order
or legal process requiring disclosure so that the Company may oppose such
disclosure or seek a protective order or other confidential treatment of such
information), unless (a) Seller can demonstrate that such information was
already known to such Person without any breach or violation of any
confidentiality agreement for the benefit of the Company or (b) such information
was otherwise generally known to the public.
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5.4. Seller shall not, at any time after the date hereof,
directly or indirectly disparage or demean, or make, encourage, support or
concur in any statement (written or oral) which disparages or demeans in any
manner, whether for a commercial purpose or otherwise, the Company or any
stockholder, director, officer, employee or agent thereof.
6. Miscellaneous.
6.1. Survival of Representations and Warranties. The
representations and warranties of each party herein shall survive the Closing,
notwithstanding any investigation or inquiry made by the other party.
6.2. Fees and Expenses. Each party hereto shall bear such fees
and expenses as may be incurred by it in connection with this Agreement and the
transactions contemplated hereby.
6.3. Notices. Any notice or demand required or permitted to be
given or made hereunder to or upon either party hereto shall be deemed to have
been duly given or made for all purposes if (a) in writing and sent by (i)
messenger or an overnight courier service against receipt, or (ii) certified or
registered mail, postage paid, return receipt requested, or (b) sent by
telegram, telecopy, telex or similar electronic means, provided that a written
copy thereof is sent on the same day by postage-paid first-class mail, to such
party at the following address:
to the Company at: Xxxxxxx Entertainment, Inc.
Xxx Xxxx Xxxx Xxxxx
Xxxxx Xxxxx, Xxx Xxxx 00000
Attention: President
Fax: (000) 000-0000
with a copy to: Feder, Kaszovitz, Isaacson,
Weber, Xxxxx & Bass LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxx, Esq.
Fax: (000) 000-0000
to Seller at: Xxxxxxx Xxxxxx Xxxxxx
000 Xxxx 00xx Xxxxxx, Xxx. 00X
Xxx Xxxx, Xxx Xxxx 00000
with a copy to: Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx Xxxxx, Esq.
Fax: (000) 000-0000
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or such other address as either party hereto may at any time, or from time to
time, direct by notice given to the other party in accordance with this Section.
The date of giving or making of any such notice or demand shall be, in the case
of clause (a) (i), the date of the receipt; in the case of clause (a) (ii), five
business days after such notice or demand is sent; and, in the case of clause
(b), the business day next following the date such notice or demand is sent.
6.4. Amendment. Except as otherwise provided herein, no
amendment of this Agreement shall be valid or effective, unless in writing and
signed by or on behalf of the parties hereto.
6.5. Waiver. No course of dealing or omission or delay on the
part of either party hereto in asserting or exercising any right hereunder shall
constitute or operate as a waiver of any such right. No waiver of any provision
hereof shall be effective, unless in writing and signed by or on behalf of the
party to be charged therewith. No waiver shall be deemed a continuing waiver or
waiver in respect of any other or subsequent breach or default, unless expressly
so stated in writing.
6.6. Governing Law. This Agreement shall be governed by, and
interpreted and enforced in accordance with, the laws of the State of New York
without regard to principles of choice of law or conflict of laws.
6.7. Jurisdiction. Each of the parties hereto hereby
irrevocably consents and submits to the jurisdiction of the Supreme Court of the
State of New York and the United States District Court for the Southern District
of New York in connection with any Proceeding arising out of or relating to this
Agreement or the transactions contemplated hereby, waives any objection to venue
in the County of New York, State of New York, or such District, and agrees that
service of any summons, complaint, notice or other process relating to such
Proceeding may be effected in the manner provided by clause (a) (ii) of Section
6.3.
6.8. Remedies. In the event of any actual or prospective
breach or default by either party hereto, the other party shall be entitled to
equitable relief, including remedies in the nature of rescission, injunction and
specific performance. All remedies hereunder are cumulative and not exclusive,
and nothing herein shall be deemed to prohibit or limit either party from
pursuing any other remedy or relief available at law or in equity for such
actual or prospective breach or default, including the recovery of damages.
6.9. Severability. The provisions hereof are severable and in
the event that any provision of this Agreement shall be determined to be invalid
or unenforceable in any respect by a court of competent jurisdiction, the
remaining provisions hereof shall not be affected, but shall, subject to the
discretion of such court, remain in full force and effect, and any invalid or
unenforceable provision shall be deemed, without further action on the part of
the parties hereto, amended and limited to the extent necessary to render the
same valid and enforceable.
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6.10. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original and which together shall
constitute one and the same agreement.
6.11. Further Assurances. Each party hereto shall promptly
execute, deliver, file or record such agreements, instruments, certificates and
other documents and perform such other and further acts as the other party
hereto may reasonably request or as may otherwise be necessary or proper to
consummate and perfect the transactions contemplated hereby.
6.12. Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns. This Agreement is not intended, and shall not be deemed, to
create or confer any right or interest for the benefit of any Person not a party
hereto.
6.13. Assignment. This Agreement, and each right, interest and
obligation hereunder, may not be assigned by either party hereto without the
prior written consent of the other party hereto, and any purported assignment
without such consent shall be void and without effect.
6.14. Titles and Captions. The titles and captions of the
Sections of this Agreement are for convenience of reference only and do not in
any way define or interpret the intent of the parties or modify or otherwise
affect any of the provisions hereof.
6.15. Grammatical Conventions. Whenever the context so
requires, each pronoun or verb used herein shall be construed in the singular or
the plural sense and each capitalized term defined herein and each pronoun used
herein shall be construed in the masculine, feminine or neuter sense.
6.16. References. The terms "herein," "hereto," "hereof,"
"hereby," and "hereunder," and other terms of similar import, refer to this
Agreement as a whole, and not to any Section or other part hereof.
6.17. No Presumptions. Each party hereto acknowledges that it
has participated, with the advice of counsel, in the preparation of this
Agreement. No party hereto is entitled to any presumption with respect to the
interpretation of any provision hereof or the resolution of any alleged
ambiguity herein based on any claim that the other party hereto drafted or
controlled the drafting of this Agreement.
6.18. Entire Agreement. This Agreement (including the side
letter referred to in Section 4.1) embodies the entire agreement of the parties
hereto with respect to the subject matter hereof and supersedes any prior
agreement, commitment or arrangement relating thereto.
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IN WITNESS WHEREOF, Seller and the Company, by its duly authorized
officer, have duly executed this Agreement on the date set forth in the Preamble
hereto.
XXXXXXX ENTERTAINMENT, INC.
By: /S/ XXXXXXX X. XXXXXXXX /S/ XXXXXXX XXXXXX XXXXXX
Name: XXXXXXX X. XXXXXXXX XXXXXXX XXXXXX XXXXXX
Title: Chairman
The undersigned agrees to the provisions of Section 5.2 hereof.
/S/ XXXXX XXXXXX
XXXXX XXXXXX
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EXHIBIT A
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INTERNET CONNECTIVITY
-- HOOKING CLIENTS UP TO THE INTERNET VIA T1 CONNECTION,
FRAME RELAY CONNECTION AND DEDICATED CIRCUITS
-- RESELLER OF THE ABOVE CONNECTIONS
ALL TYPES OF MICROSOFT AND NOVELL HARDWARE AND SOFTWARE ENGINEERING
CUSTOM DATABASE DEVELOPMENT FOR BUSINESSES
WEBSITE DEVELOPMENT WHICH INCLUDES INTRANET DEVELOPMENT AND
EXTRANET DEVELOPMENT
TELEPHONE PC AND ENGINEERING HELPDESKS
IMPLEMENTATION OF INTERNET TELEPHONY
COMPUTER CONSULTING SERVICES
