Exhibit 10.6
FORM OF NON-COMPETITION AGREEMENT
NON-COMPETITION AGREEMENT, dated as of ______________, 1998 (this
"Agreement"), between Califa Entertainment Group, Inc., a California
corporation ("Newco"), and Directrix, Inc., a Delaware corporation ("Subco").
WHEREAS, Newco and Spice Entertainment Companies, Inc., a Delaware
corporation and the parent of Subco as of the date hereof ("Spice"), have
entered into an Asset Purchase Agreement, dated as of May 29, 1998 (the "Asset
Purchase Agreement"), wherein, among other things, Spice has agreed to transfer
certain assets and related liabilities to Newco in accordance with the terms and
conditions thereof.
WHEREAS, all capitalized terms used but not otherwise defined herein
shall have the meanings ascribed to them in the Asset Purchase Agreement.
WHEREAS, Spice and Subco have entered into a Transfer and Redemption
Agreement, dated as of _____________, 1998 (the "Transfer and Redemption
Agreement"), wherein, among other things, Spice has agreed to transfer certain
assets and related liabilities to Subco in accordance with the terms and
conditions thereof.
WHEREAS, in order to obtain the intended benefits of the transactions
contemplated by the Transfer and Redemption Agreement, Subco wishes to obtain
the protections contained in this Agreement, and each party acknowledges that,
but for the protections provided in this Agreement, the transactions
contemplated by the Transfer and Redemption Agreement would not have been
entered into by Subco.
WHEREAS, accordingly, it is a condition precedent to the closing of the
transactions contemplated by the Transfer and Redemption Agreement that the
parties enter into this Agreement.
WHEREAS, the Board of Directors of each of the parties hereto have
approved this Agreement.
NOW, THEREFORE, in consideration of the premises, and of the respective
representations, warranties, covenants and agreements set forth in this
Agreement, the parties hereto hereby agree as follows:
1. Non-Competition.
(a) Newco. Through the Restricted Period, Newco will not
directly or indirectly, (i) engage in the Explicit C-Band Business for its own
account, (ii) enter the employ of, or render or provide any material goods or
services, to any Person engaged in the Explicit C-Band Business, which
employment, goods or services are directly related to the Explicit C-Band
Business, (iii) interfere in any material respect with the business
relationships between Subco and customers or suppliers of Subco, which
interference shall be known, or should reasonably have been known, by Newco, or
(iv) (A) acquire more than a 5% financial interest in any Person engaged
primarily in the Explicit C-Band Business, or (B) otherwise become involved in
any material respect with any Person engaged in the Explicit C-Band Business,
directly or indirectly, as an individual entity, partner, shareholder,
principal, agent, trustee, consultant or otherwise, except, in the case of
clause (B) above, to the extent that such involvement relates to a business or
activity other than the Explicit C-Band Business.
(b) Public Investments. Notwithstanding anything to the
contrary in this Agreement, Newco may, directly or indirectly own, solely as an
investment, securities of any Person which are publicly traded on a national or
regional stock exchange or on the over-the-counter market if Newco (i) is not a
controlling Person of, or a member of a group which controls, such Person and
(ii) does not, directly or indirectly, own 2% or more of any class of securities
of such Person.
(c) Employee and Related Matters. During the five year
period commencing on the date hereof, Newco will not, directly or indirectly,
(w) interfere in any material respect with the relationships of Subco with any
of its employees, agents or similar representatives, (x) interfere in any
material respect with the relationship of Subco with any of its consultants
under contract, joint venturers or other partners, which interference shall be
known, or should reasonably have been known, by Newco, (y) solicit or encourage
any employee of Subco to leave the employment of Subco, or otherwise hire,
retain, employ or engage in any business with any employee of Subco, or (z) hire
any employee who has left the employment of Subco within one year after the
termination of such employee's employment with Subco.
(d) Additional Covenants. Notwithstanding the generality of
the foregoing provisions contained in this Section 1 (including the definitions
of all terms contained therein as set forth in Section 4), Newco hereby agrees
that it will not directly or indirectly, enter into any agreement or other
arrangement to acquire any licensing, distribution or transmission rights with
respect to any Explicit Programming or Explicit Still Images for transmission
during the Restricted Period via C-Band.
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(e) Subsidiaries. The parties hereto agree that for purposes
of Sections 1, 2 and 7(c), all references to Newco shall also include a
reference to all of its Subsidiaries and the entities of which it is a direct or
indirect Subsidiary and the other direct and indirect Subsidiaries of such
entities.
(f) Vivid. Notwithstanding anything to the contrary
contained herein, nothing in Sections 1 or 2 shall be read to restrict any
businesses or activities of Vivid Video, Inc. or its Subsidiaries or affiliates;
provided that the foregoing part of this Section 1(f) shall not be read to
include Newco or any new Subsidiary of Newco.
2. Confidentiality. Newco shall hold, and shall cause its respective
subsidiaries, affiliates, employees, agents, consultants and advisors to hold,
in strict confidence, all confidential or proprietary information concerning the
business of Subco in its possession (except to the extent that such information
has been (i) in the public domain or becomes publicly known through no wrongful
act of Newco or its employees, agents, consultants or advisors, (ii) received
from a party under no confidentiality or secrecy obligation with respect
thereto, or (iii) disclosed pursuant to governmental, judicial or other legal
requirements; provided, that, in the case of clause (iii) above, Newco shall
provide Subco, to the extent practicable, with adequate prior notice to allow
Subco to seek an appropriate protective order and Newco shall cooperate
therein).
3. (a) Acknowledgments. Newco acknowledges that (i) it has
throughly reviewed the terms of this Agreement; (ii) it has been represented
by and had ample opportunity to consult with legal counsel in connection with
the negotiation and execution of this Agreement; and (iii) it believes the
provisions contained in Sections 1, 2 and 7(c) herein (each, a "Restrictive
Covenant") to be reasonable (in geographical and temporal scope and in all
other respects) and enforceable by all applicable law.
(b) Blue-Pencilling. It is expressly understood and agreed
that if a final judicial determination is made by a court of competent
jurisdiction that the time or territory or any other restriction contained in
this Agreement is an unenforceable restriction against Newco, the provisions of
this Agreement shall not be rendered void but shall be deemed amended to apply
as to such maximum time and territory and to such maximum extent as such court
may judicially determine or indicate to be enforceable. Alternatively, if any
court of competent jurisdiction finds that any restriction contained in this
Agreement is unenforceable, and such restriction cannot be amended so as to make
it enforceable, such finding shall not affect the enforceability of any of the
other restrictions contained herein.
(c) Enforceability in Jurisdictions. The parties hereto intend
to and hereby confer jurisdiction to enforce each Restrictive Covenant upon the
courts
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of any jurisdiction within the geographical scope of such Restrictive Covenant
for breaches occurring within such jurisdiction. If the courts of any one or
more of such jurisdictions hold any Restrictive Covenant unenforceable by reason
of the breadth of such scope or otherwise, it is the intention of the parties
hereto that such determination not bar or in any way affect the right of any
such party to the relief provided in the courts of any other jurisdiction within
the geographical scope of such Restrictive Covenant, as to breaches of such
Restrictive Covenant in such other respective jurisdictions, each Restrictive
Covenant as it relates to each jurisdiction being, for this purpose, severable
into diverse and independent covenants.
(d) Additional Covenants; Waiver. Notwithstanding anything
contained herein, Newco (i) hereby covenants that it will not argue or otherwise
claim in any jurisdiction or under any applicable law that the terms hereof are
not enforceable for any reason and (ii) hereby waives to the fullest extent
permissible by applicable law any right it may have under such law to void or
otherwise modify any of the terms of this Agreement.
(e) Specific Performance. Newco hereto acknowledges and
agrees that Subco's remedies at law for a breach or threatened breach of any of
the provisions of Sections 1, 2 or 7(c) would be inadequate and, in recognition
of this fact, Newco agrees that, in the event of such a breach or threatened
breach, in addition to any remedies at law, Subco, without posting any bond,
shall be entitled to obtain equitable relief in the form of specific
performance, temporary restraining order, temporary or permanent injunction or
any other equitable remedy which may then be available.
4. Definitions. For purposes of this Agreement, the following terms
shall have the following meanings:
"Adult Programming" means Explicit Programming, Non-Explicit
Programming, Explicit Still Images and Non-Explicit Still Images.
"C-Band Ancillary Activities" includes, only editing, reproducing
and making dubbed and/or translated variations of Explicit Programming or
Explicit Still Images, as the case may be (provided that any programming or
still image so edited or varied continues to constitute "Explicit Programming"
or an "Explicit Still Image" (as defined herein), as the case may be),
advertising, promoting and marketing the Explicit C-Band Business (provided that
such advertisement does not disparage Newco), and engaging in such other
incidental activities consistent with the foregoing to the extent reasonably
necessary to exploit the business of providing transmission of Explicit
Programming or Explicit Still Images, as the case may be, via C-Band.
"EM" means Emerald Media, Inc.
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"Explicit C-Band Business" means the business of (i) providing
transmission of Explicit Programming and/or Explicit Still Images via C-Band and
(ii) licensing and distributing Explicit Programming and/or Explicit Still
Images for transmission via C-Band, including, in connection with the foregoing,
all C-Band Ancillary Activities.
"Explicit Programming" means any movies and other programming the
content of which would generally be considered in the adult industry to be that
of "explicit" adult movies or programming and more explicit than "hot cable" or
"cable" programming and which are otherwise substantially similar in content and
degree of explicitness to the movies and related programming currently featured
on the C-Band channels maintained by EM.
"Explicit Still Images" means any still images the content of which
would generally be considered in the adult industry to be that of "adult" still
images and equally as explicit as, or more explicit than, "hot cable" still
images and which are otherwise substantially similar in content and degree of
explicitness to the still images currently featured on the Internet sites
maintained by EM.
"Non-Explicit Programming" means any movies and other programming
(other than Explicit Programming) the content of which would generally be
considered in the adult industry to be that of "adult" movies or programming and
which is not Rated Programming, including, without limitation, movies or
programming the content of which would generally be considered in the adult
industry to be equally as explicit as, or less explicit than, "hot cable" or
"cable" programming or which are otherwise substantially similar in content and
degree of explicitness to the movies and related programming currently featured
on the Spice and Spice Hot channels.
"Non-Explicit Still Images" means any still images the content of
which would generally be considered in the adult industry to be "adult" still
images (other than Explicit Still Images), including, without limitation, any
still images the content of which would generally be considered in the adult
industry to be less explicit than "hot cable" still images or equally as
explicit as "cable" still images.
"Rated Programming" means any movies or other programming which (a)
is included in an advertiser supported basic cable service, (b) is rated by a
generally recognized and accepted ratings authority and bears an "R" rating or
any rating less restrictive, (c) is rated "NC-17," so long as such rating is not
based primarily on sexual content, nudity or similarly explicit content, or (d)
is substantially similar in content and degree of explicitness to programming
which is covered by clause (a), (b) or (c) above.
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"Restricted Period" means the period of time commencing immediately
following the Closing and continuing through __________, 2005.
"Subsidiary" means, as to any Person, a corporation, partnership
or other entity of which shares of stock or other ownership interests having
ordinary voting power (other than stock or such other ownership interests having
such power only by reason of the happening of a contingency) to elect a majority
of the board of directors or other managers of such corporation, partnership or
other entity are at the time owned, or the management of which is otherwise
controlled, directly or indirectly through one or more intermediaries, or both,
by such Person.
"Territory" means the United States and Canada (including all
territories and possessions of the foregoing) and the islands of the Caribbean.
"via C-Band" means via C-Band satellite, in either the analog or
digital format, intended and otherwise authorized solely for reception by C-Band
subscribers, located solely within the Territory.
5. [Intentionally omitted.]
6. Representations and Warranties of Newco. Newco represents and
warrants to Subco as follows:
(a) Corporate Existence; Power. Newco is a corporation duly
organized, validly existing and in good standing under the laws of the State of
California, and it has the requisite corporate power and authority to execute,
deliver and perform its obligations under this Agreement and each other Related
Document to which it is a party.
(b) Authorization; Binding Effect. The execution, delivery
and performance by Newco of this Agreement, the other Related Documents to which
it is a party and the transactions contemplated hereby and thereby have been
duly autho rized by all necessary corporate action of Newco. Each of this
Agreement and the other Related Documents to which Newco is a party has been
duly executed and delivered by Newco, and constitutes the legal, valid and
binding obligation of Newco enforceable against Newco in accordance with its
terms.
7. Miscellaneous.
(a) Waiver and Amendments; Remedies; No Third Party
Beneficiaries. This Agreement may be amended, superseded, canceled, renewed or
extended, and the terms hereof may be waived, only by a written instrument
signed by the parties, or in the case of a waiver, by the party waiving
compliance. No delay on
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the part of any party in exercising any right, power or privilege hereunder
shall operate as a waiver thereof, nor shall any waiver on the part of any party
of any such right, power or privilege, nor any single or partial exercise of any
such right, power or privilege, preclude any further exercise thereof or the
exercise of any other such right, power or privilege. The rights and remedies
herein provided are cumulative and are not exclusive of any rights or remedies
that any party may otherwise have at law or in equity. Nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any Person
other than the parties hereto and their respective successors and assigns any
legal or equitable right, remedy or claim under or in or in respect of this
Agreement or any provision herein contained.
(b) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE WITHOUT REGARD TO
CONFLICTS OF LAW PRINCIPLES THEREOF.
(c) Binding Effect; No Assignment. This Agreement shall be
binding upon and shall inure to the benefit of the parties and their respective
successors, assigns and legal representatives. Neither party hereto may assign
this Agreement without the prior written consent of the other party, except that
either party may assign this Agreement to any successor to all or substantially
all of its assets or business. Newco may not directly or indirectly, transfer
any substantial asset or business relating to the Explicit C-Band Business or
the Newco Network to another Person, unless such Person agrees in writing to be
bound by the terms of this Agreement to the same extent that Newco is so bound.
(d) Entire Agreement. This Agreement, the Asset Purchase
Agreement, the other Related Documents (including the exhibits and schedules
hereto and thereto) and any collateral documents executed in connection with the
transactions contemplated thereby contain the entire agreement among the parties
with respect to the transactions contemplated hereby and thereby and supersede
all prior agreements, written or oral, with respect thereto.
(e) Severability. If any provision of this Agreement shall be
declared to be invalid, illegal or unenforceable, such provision shall survive
to the extent it is not so declared, and the validity, legality and
enforceability of the other provisions hereof shall not in any way be affected
or impaired thereby, unless such action would substantially impair the benefits
to either party of the remaining provisions of this Agreement.
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(f) Table of Contents; Headings. The table of contents and
headings in this Agreement are solely for convenience of reference and shall not
affect the interpretation or construction of any of the provisions hereof.
(g) Notices. All notices, requests, demands and other
communications required or permitted hereunder shall be in writing and shall be
deemed to have been duly given if delivered by hand or mailed, certified or
registered mail, with postage prepaid as follows:
If to Newco: Califa Entertainment Group, Inc.
Attention: [ ]
Facsimile: [ ]
with a copy to: Lipsitz, Green, Fahringer, Roll, Salisbury
& Cambria LLP
42 Delaware Avenue, Suite 300
Buffalo, New York 14202
Attention: Paul J. Cambria, Jr.
Facsimile: (716) 855-1580
or to such other Person or address as Newco shall furnish to Subco in writing.
If to Subco to: Directrix, Inc.
536 Broadway, 10th Floor
New York, New York 10012
Attention: J. Roger Faherty
Facsimile: [ ]
with a copy to: Kramer, Levin, Naftalis & Frankel
919 Third Avenue
New York, New York 10022
Attention: Paul S. Pearlman, Esq.
Facsimile: (212) 715-8000
or to such other Person or address as Subco shall furnish to Newco in writing.
(h) Counterparts. This Agreement may be executed in two
counterparts, each of which shall be deemed an original, but both of which
together shall constitute one and the same original.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
CALIFA ENTERTAINMENT GROUP, INC.
By:
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Name:
Title:
DIRECTRIX, INC.
By:
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Name:
Title:
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