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EXHIBIT 10.4
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is made and
entered into as of the 29th day of August, 1997, by and between MGC
COMMUNICATIONS, INC., a Nevada corporation (the "Company") and XXXXXXXX XXXXX
("Allee").
W I T N E S S E T H T H A T:
The parties, for and in consideration of the mutual and reciprocal
covenants and agreements hereinafter contained, do contract and agree as
follows:
1. Option to Acquire Stock: The Company hereby confirms that
Allee shall have the right to purchase shares of Common Stock in the Company as
follows:
A. 200,000 shares at $2.00 per share, exercisable by payment
of the purchase price for all or a portion of such shares on or before
September 30, 1997.
B. 175,000 shares at $2.50 per share, exercisable by the
execution and delivery to the Company of a promissory note for the purchase
price for all or a portion of the shares being purchased on or before September
30, 1997. The promissory note will: (i) be secured by a pledge of the MGC stock
being purchased with such promissory note, (ii) provide for interest at the
rate of 7.5% per annum, (iii) provide for final maturity on the earlier of 45
days after Allee's termination of employment with the Company for any reason
whatsoever or September 30, 2000, (iv) require payments of principal equal to
70% of any annual bonus otherwise payable by the Company to Allee (the Company
shall have the right to apply such portion of Allee's annual bonus directly
against such payments due under the note), and (v) be prepayable at any time
without premium or penalty.
2. Company Option to Repurchase Allee's Shares.
A. The Company shall have the option to repurchase certain
shares of stock in the Company (the "Shares") owned by Allee upon the terms set
forth in this Item. The terms of Paragraph B below shall apply to all Shares
(up to 200,000) purchased by Allee under Item 1A of this Agreement at a price
of $2.00 per share and all Shares (up to 175,000) purchased by Allee under Item
1B of this Agreement at a price of $2.50 per share (collectively, the
"Restricted Shares").
B. If Allee is at any time prior to June 1, 2000, not an
employee of or regular consultant to the Company as a result of Allee's
resignation from the Company or as a result of the Company's termination of
Allee's engagement for cause as provided herein (the date of his termination
being hereinafter referred to as the "Termination Date"), then the Company
shall have the option to purchase, whereupon Allee or his legal representative
shall be obligated to sell any portion or all of the"Prorated Restricted
Shares" (as hereinafter defined) in the Company owned by Allee or any Affiliate
of his on the Termination Date, and such Prorated Restricted Shares shall be
sold free and clear of any and all liens and encumbrances. The purchase price
for all of the Prorated Restricted Shares shall be the amount per share paid by
Allee for such Prorated
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Restricted Shares (excluding any interest paid as a result of Allee's making
deferred payments for such Shares). For purposes of this Agreement, the
"Prorated Restricted Shares" shall be equal to the Restricted Shares multiplied
by a fraction the numerator of which is the number of days from the Termination
Date to May 31, 2000, and the denominator of which is 1,096.
C. The Company's right to repurchase Prorated Restricted
Shares shall in no event apply in the event Allee's engagement with the Company
is terminated as a result of his death or disability. For these purposes,
Allee's disability shall be defined as inability, as a result of a physical or
mental impairment, to perform his usual duties for the Company for a period of
more than six (6) consecutive months.
D. For purposes of this Agreement, Cause shall be defined as
any of the following: (i) Allee shall commit a felony or other act involving
moral turpitude, (ii) Allee commit any act, specifically including but not
limited to drug or alcohol abuse, which act is materially harmful to Company,
(iii) intentional or gross neglect of Allee's duties, (iv) intentional
disruption of or interference with Company's normal business operations, (v)
failure to comply with Company policies after receipt of written notice of the
violation and failure to cure such violation within ten (10) days after receipt
of such notice; or (vi) repeated failure to comply with Company policies after
receipt of written notice of any prior violation of such policies.
E. The option provided herein shall be exercised, if at all,
by delivery of written notice by the Company within ninety (90) days after the
Termination Date.
F. The closing of the purchase and sale hereunder shall occur
within thirty (30) days following the exercise of said option and at a time and
place as the Company may designate by written notice to Allee at least five (5)
days in advance of such closing. The parties hereto hereby agree to execute any
and all instruments and documents to transfer full and complete title to such
Restricted Shares to effectuate the foregoing. At the closing, the purchase
price shall be paid in cash.
G. The number of Restricted Shares and the purchase price per
Share set forth in this Item shall be adjusted appropriately in the event of
any stock split, stock dividend or other similar change in the capitalization
of the Company. The Board of Directors of the Company shall make the
determination of any such adjustments and shall provide Allee with written
notice thereof.
H. All certificates representing Restricted Shares shall bear
the following restrictive legend (in addition to any other legends required to
be placed thereon):
The Shares represented by this certificate are subject to
repurchase by the Company pursuant to the terms of a Stock
Purchase Agreement dated August 29, 1997, a copy of which
is on file with the Company.
3. Assignment: This Agreement shall inure to the benefit of and
be binding upon the Company and its successors and assigns including, without
limitation, any corporation or other entity into which the Company is merged or
which acquires all or substantially all of the outstanding common stock or
assets of the Company.
4. Invalid Provisions: The invalidity of any one or more of the
clauses or words contained in this Agreement shall not affect the reasonable
enforceability of the remaining provisions of this Agreement, all of which are
inserted herein conditionally upon being valid in law; and in the event that
one or more of the words or clauses contained herein shall be invalid, this
instrument shall be construed as if such invalid words
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or clauses had not been inserted or, alternatively, said words or clauses shall
be reasonably limited to the extent that the applicable court interpreting the
provisions of this Agreement considers to be reasonable.
5. Specific Performance: The parties hereby agree that any
violation by Allee of the agreements contained herein shall cause irreparable
damage to Company, and Company may, as a matter of course, seek specific
performance by process issued out of a court of competent jurisdiction, in
addition to any other remedies that said court may see fit to award.
6. Binding Effect: All the terms of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective legal representatives, successors and assigns.
7. Jurisdiction: Each of the undersigned further agrees that any
action or proceeding brought or initiated in respect of this Agreement may be
brought or initiated in the State Court of Xxxxx County, Nevada, and each of
the undersigned consents to the exercise of personal jurisdiction and the
placement of venue in any of such courts, or in any jurisdiction allowed by
law, in any such action or proceeding and further consents that service of
process may be effected in any such action or proceeding in such manner as may
be permitted by law. Each of the undersigned further agrees that no such action
shall be brought against any party hereunder except in one of the courts above
named.
8. Attorney's Fees: In the event an action is taken by either
party to enforce this Agreement or resolve a dispute in connection herewith,
the prevailing party shall be entitled to recover the costs incurred with the
prosecution and defense of such action, including reasonable attorney's fees.
9. Waiver of Breach or Violation Not Deemed Continuing: The
waiver by either party of any provision of this Agreement shall not operate as,
or be construed to be, a waiver of any subsequent breach hereof.
10. Entire Agreement; Law Governing: This Agreement supersedes any
and all other agreements, either oral or in writing, between the parties hereto
with respect to the subject matter hereof, by and between Company and Allee,
and contains all the covenants and agreements among the parties with respect to
such subject matter. This Agreement shall be construed in accordance with the
laws of the State of Nevada.
11. Item Headings: The item headings contained in this Agreement
are for convenience only and shall in no manner be construed as a part of this
Agreement.
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IN WITNESS WHEREOF, Company has hereunto caused this Agreement to
be executed by a duly authorized officer and its seal to be affixed and Allee
has hereunto set his hand and seal as of the day and year first above written.
[SEAL]
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XXXXXXXX XXXXX
MGC COMMUNICATIONS, INC.
By:
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President
[CORPORATE SEAL]
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