Exhibit 10.13
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STOCK PURCHASE AGREEMENT
AGREEMENT effective as of the 24th day of July, 1998 between Prodigy, Inc.,
a Delaware corporation ("Prodigy"), and Telefonos de Mexico, S.A. de C.V., a
Mexican corporation ("Telmex").
In consideration of the mutual promises hereinafter set forth and other
good and valuable consideration, the receipt of which is hereby acknowledged,
the parties hereby agree as follows:
1. Purchase and Sale of the Shares. Prodigy agrees to issue and sell to
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Telmex, and Telmex agrees to purchase from Prodigy, 24,500,000 shares (the
"Shares") of Common Stock, $.01 par value per share ("Common Stock"), of Prodigy
for a purchase price of U.S. $2.00 per Share for an aggregate purchase price of
U.S. $49,000,000.
2. Use of Proceeds. Prodigy will use the proceeds from the sale of the
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Shares, together with the proceeds from the contemporaneous sale of 5,500,000
shares to Carso Global Telecom, S.A. de C.V., a Mexican corporation ("Carso
Global"), as follows: U.S. $26,400,000 to repay indebtedness owed to Banco
Inbursa, S.A. and the balance for general corporate purposes.
3. The Initial Closing. The closing (the "Initial Closing") of the
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transactions contemplated hereby shall take place as soon as practicable after
satisfaction or waiver of the conditions specified in Sections 7 and 8 below.
4. HSR Act.
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(a) Prodigy and Telmex, as promptly as practicable after the date
hereof, shall prepare and file all Notification and Report Forms and related
material that they are required to file with the U.S. Federal Trade Commission
and the Antitrust Division of the U.S. Department of Justice under the ▇▇▇▇-
▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the "HSR Act"),
with respect to the transactions contemplated hereby, and shall use their
respective best efforts to obtain an early termination of the applicable waiting
period and shall make any further filings or information submissions pursuant
thereto that may be necessary, proper or advisable. Prodigy shall pay all
applicable filing fees under the HSR Act.
(b) At the Initial Closing, the following events shall occur:
(i) Telmex shall pay Prodigy the amount of U.S. $49,000,000 by
wire transfer or other form of payment acceptable to Prodigy; and
(ii) Prodigy shall execute and deliver to Telmex a Promissory
Note substantially in the form attached hereto as Exhibit A (the "Note").
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(c) Subject to Section 4(d), the final closing shall occur upon the
termination or expiration of the applicable waiting period pursuant to the HSR
Act (the "Final Closing"). At the Final Closing, Prodigy shall issue and
deliver to Telmex an original stock certificate representing the Shares and
Telmex shall return to Prodigy the original Note marked "cancelled" in return
for the transfer of the Shares to Telmex.
(d) Notwithstanding the foregoing, in the event that the Note is not
repaid in full on or before the 60th day after Telmex has filed its Notification
and Report Form and any related material required to be filed by it under the
HSR Act in accordance with Section 4(a), the Note shall bear interest at an
annual rate of nine percent (9%), accruing from the Initial Closing. The Note
may be prepaid in
whole or in part, at any time and from time to time at the election of Prodigy,
but in any event the principal amount of the Note, together with accrued
interest, shall be due in full on December 31, 1999.
5. Representations and Warranties of Prodigy. Prodigy represents and
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warrants as follows:
5.1 Authorization and Binding Nature. The execution, delivery and
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performance by Prodigy of this Agreement and the Note has been duly authorized
by all requisite corporate action and each of this Agreement and the Note
constitutes the valid and legally binding obligation of Prodigy, enforceable
against Prodigy in accordance with its terms.
5.2 Non-Contravention. The execution, delivery and performance by
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Prodigy of this Agreement and the Note will not, with or without the giving of
notice or the passage of time or both, (a) violate the provisions of any law,
rule or regulation applicable to Prodigy, (b) violate the provisions of the
charter documents of Prodigy, (c) violate any judgment, decree, order or award
of any court, governmental body or arbitrator applicable to Prodigy, or (d)
conflict with or violate any agreement to which Prodigy is a party or by which
it is bound.
5.3 Capitalization. The authorized capital stock of Prodigy consists
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of 280,000,000 shares of Common Stock, of which 150,225,727 shares are issued
and outstanding (excluding the shares to be issued to Carso Global as
contemplated by Section 2 above), and 10,000,000 shares of Preferred Stock, $.01
par value per share, of which no shares are issued or outstanding. All of the
issued and outstanding shares of Common Stock have been duly authorized and
validly issued and are fully paid and nonassessable. When issued, sold and
delivered against payment therefor in accordance with the provisions of this
Agreement, the Shares will be duly and validly issued, fully paid and
nonassessable. There are not outstanding any warrants, options or other rights
granted by Prodigy to purchase or acquire any capital stock of Prodigy, except
for (a) options granted under Prodigy's 1996 Stock option Plan to purchase up to
12,500,000 shares of Common Stock, (b) warrants granted by Prodigy to purchase
an aggregate of 437,389 shares of Common Stock and (c) the rights of IBM and
Sears under the 8% Contingent Convertible Promissory Notes and the Contingent
Common Stock Purchase Warrants, each dated November 5, 1997.
5.4 Financial Statements. Prodigy has furnished to Telmex (i) the
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unaudited consolidated financial statements of Prodigy and its subsidiaries as
of and for periods ended December 31, 1997 (the "Prodigy Financial Statements")
and (ii) the unaudited financial statements of Prodigy Services Corporation, a
wholly-owned subsidiary of Prodigy ("PSC"), as of and for periods ended June 30,
1998 (the "PSC Financial Statements"). The Prodigy Financial Statements are
complete and correct in all material respects, present fairly the consolidated
financial condition and results of operations of Prodigy and its subsidiaries as
at the dates and for the periods indicated, and have been prepared in accordance
with generally accepted accounting principles ("GAAP") consistently applied,
except that the Prodigy Financial Statements are subject to normal year-end
audit adjustments which in the aggregate will not be material. The PSC
Statements are complete and correct in all material respects, present fairly the
financial condition and results of operations of PSC as at the dates and for the
periods indicated, and have been prepared in accordance with GAAP consistently
applied, except that the PSC Financial Statements are subject to normal year-end
audit adjustments which in the aggregate will not be material and do not contain
footnotes normally contained in audited financial statements.
6. Representations and Warranties of Telmex. Telmex represents and
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warrants as follows:
6.1 Investment. Telmex is acquiring the Shares for its own account
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for investment, not for resale to any other person and not with a view to or in
connection with any resale or distribution. Telmex understands that the Shares
have not been registered under the securities laws of the United States or any
other jurisdiction and cannot be transferred or resold except as permitted
pursuant to a valid
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registration statement or an applicable exemption from registration. Telmex
acknowledges that Prodigy has not made any representations with respect to
registration of the Shares under applicable securities laws, that there can be
no assurance that there will be any market for the Common Stock in the
foreseeable future and that, as a result, Telmex must be prepared to bear the
economic risk of its investment for an indefinite period of time. Telmex
understands that the certificate representing the Shares shall bear a legend
substantially in the following form:
"The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended, and may not be sold,
exchanged, transferred, pledged, hypothecated or otherwise disposed of
unless and until such securities are registered under such Act or an
opinion of counsel satisfactory to the issuer is obtained to the effect
that such registration is not required."
6.2 Authorization and Binding Nature. The execution, delivery and
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performance by Telmex of this Agreement has been duly authorized by all
requisite corporate action and this Agreement constitutes the valid and legally
binding obligation of Telmex, enforceable against Telmex in accordance with its
terms.
6.3 Non-Contravention. The execution, delivery and performance by
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Telmex of this Agreement will not, with or without the giving of notice or the
passage of time or both, (a) violate the provisions of any law, rule or
regulation applicable to Telmex, (b) violate the provisions of the charter
documents of Telmex, (c) violate any judgment, decree, order or award of any
court, governmental body or arbitrator applicable to Telmex, or (d) conflict
with or violate any agreement to which Telmex is a party or by which it is
bound.
6.4 Control by Carso Global. Carso Global controls Telmex (within
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the meaning of the Securities Act of 1933, as amended, and the rules and
regulations thereunder).
6.5 Access to Information. Telmex has substantial knowledge and
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experience in making investment decisions of this type and is capable of
evaluating the merits and risks of its investment in Prodigy. Carso Global has
made available to Telmex all documents and other information necessary for
Telmex to evaluate the merits and risks of its investment in Prodigy. Prodigy
has made available to Telmex all documents requested and has provided answers to
all of its questions relating to an investment in Prodigy. In evaluating the
suitability of an investment in Prodigy, Telmex has not relied upon any
representations (whether oral or written) other than as set forth herein.
Telmex has had an opportunity to discuss this investment with representatives of
Prodigy and to ask questions of them. Telmex understands that an investment in
Prodigy involves significant risks.
7. Telmex's Conditions to Closing. The obligation of Telmex to
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consummate the transactions contemplated hereby is subject to the following
conditions only, each of which may be waived in the sole discretion of Telmex:
7.1 Representations and Covenants. The representations and
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warranties of Prodigy contained in this Agreement shall be true as of the
Initial Closing and Prodigy shall have performed the covenants and agreements to
be performed by it under this Agreement at or prior to the Initial Closing and
at or prior to the Final Closing, as applicable.
7.2 Government Approvals. The transactions contemplated hereby shall
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have been approved by all United States government agencies from whom such
approval is required (except for any approval required under the HSR Act, which
is addressed by Section 4 above).
7.3 Execution of Note. Prodigy shall have executed and delivered the
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Note.
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7.4 Closing of ▇▇▇▇/Telmex Agreement. The Initial Closing (as
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defined therein) under the Stock Purchase Agreement of even date hereof among
Telmex, Prodigy, Carso Global and ▇▇▇▇ ▇. ▇▇▇▇ shall have been consummated.
7.5 Closing of ▇▇▇▇▇▇▇/Telmex Agreement. The Initial Closing (as
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defined therein) under the Stock Purchase Agreement of even date hereof among
Telmex, Prodigy, Carso Global and Rolling Breeze, LLC (▇▇▇▇ ▇. ▇▇▇▇▇▇▇) shall
have been consummated.
8. Prodigy's Conditions to Closing. The obligation of Prodigy to
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consummate the transactions contemplated hereby is subject to the following
conditions only, each of which may be waived in the sole discretion of Prodigy:
8.1 Representations and Covenants. The representations and
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warranties of Telmex contained in this Agreement shall be true as of the Initial
Closing and Telmex shall have performed the respective covenants and agreements
to be performed by them under this Agreement at or prior to the Initial Closing
and at or prior to the Final Closing, as applicable.
8.2 Government Approvals. The transactions contemplated hereby shall
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have been approved by all United States government agencies from whom such
approval is required (except for any approval required under the HSR Act, which
is addressed by Section 4 above).
8.3 Fairness Opinion. Prodigy's Board of Directors shall have
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received a written opinion, from an investment banking firm of its selection and
satisfactory to Prodigy's Board of Directors in form and substance, to the
effect that the terms of the purchase and sale of the Shares as contemplated
hereby are fair, from a financial point of view, to Prodigy.
9. Termination of Agreement.
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9.1 By Prodigy. Prodigy may terminate this Agreement, without
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liability to Telmex, if the Initial Closing has not occurred by July 24, 1998
due to the failure of any of the conditions specified in Section 8 hereof to be
satisfied.
9.2 By Telmex. Telmex may terminate this Agreement, without
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liability to Prodigy, if the Initial Closing has not occurred by July 24, 1998
due to the failure of any of the conditions specified in Section 7 hereof to be
satisfied.
10. Notices. Any notices or other communications required or permitted
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hereunder shall be in the English language and shall be sufficiently given if
delivered personally or sent by telecopy or via a reputable express courier,
with charges prepaid, to the address set forth below or to such other address of
which the parties may have given notice. Unless otherwise specified herein,
such notices or other communications shall be deemed received one business day
after personal delivery or delivery by telecopy, or three business days after
being sent, if sent by reputable express courier.
If to Prodigy:
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President
with a copy to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
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▇▇▇▇ and ▇▇▇▇ LLP
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
If to Telmex:
Parque Via 190
Officina 1016
Colonia ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Cleary, Gottlieb, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
11. Successors and Assigns. No party may assign its obligations hereunder
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without the prior written consent of the other party, except that Telmex may
assign its rights and obligations hereunder to any affiliate of Telmex. Telmex
intends to cause its wholly-owned subsidiary, Sercotel, S.A. de C.V., to
purchase the Shares hereunder. Subject to the foregoing, this Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns. Any assignment in contravention of this
provision shall be void.
12. Entire Agreement. This Agreement, including Exhibit A attached
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hereto, represents the entire understanding and agreement between the parties
hereto with respect to the subject matter hereof and supersedes all prior oral
and written and all contemporaneous oral negotiations, commitments and
understandings between such parties. The parties may amend or modify this
Agreement, in such manner as may be agreed upon, only by a written instrument
executed by the parties hereto.
13. Expenses. Each party shall pay its own expenses in connection with
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this Agreement and the transactions contemplated hereby; provided, however, that
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Prodigy shall reimburse Telmex for any filing fees paid by Telmex in connection
with the filings to be made by Telmex under the HSR Act, pursuant to Section
4(a) above.
14. Governing Law. This Agreement shall be governed by and construed in
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accordance with the laws of the State of Delaware in the United States, without
reference to conflict of laws principles, and the parties hereby consent to the
jurisdiction of the courts of the State of Delaware.
15. Section Headings. The section headings are for the convenience of the
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parties and in no way alter, modify, amend, limit or restrict the contractual
obligations of the parties.
16. Severability. The invalidity or unenforceability of any provision of
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this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
17. Counterparts. This Agreement may be executed in two or more
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counterparts, each of which shall be deemed to be an original, but all of which
shall be one and the same document.
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IN WITNESS WHEREOF, this Agreement has been duly executed by the parties
hereto as of and on the date first above written.
PRODIGY, INC.
/s/
By:---------------------------------
Title:______________________________
TELEFONOS DE MEXICO, S.A. DE C.V.
/s/
By:---------------------------------
Title:______________________________
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