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EXHIBIT 10.11
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement") is dated as of August
20, 1992, between ▇▇▇▇▇ Systems Corporation, a Texas corporation (the
"Company"), and ▇▇▇▇▇▇▇▇ Family Limited Partnership, a Texas limited
partnership (the "Buyer").
WHEREAS, the Company desires that the Company issue and sell to the
Buyer, and the Buyer desires to purchase from the Company, 2,000,000 shares of
the Company's Common Stock, $.O1 par value per share (the "Shares"), on the
terms and conditions set forth in this Agreement;
NOW, THEREFORE, the Company and the Buyer hereby agree as follows:
1. Purchase and Sale of the Shares.
(a) Subject to the terms and conditions of this
Agreement and based upon the representations contained herein, the
Company hereby issues and sells the Shares to the Buyer and the Buyer
hereby purchases the Shares from the Company.
(b) The Company hereby delivers to the Buyer a duly
executed stock certificate representing all of the Shares.
(c) In full consideration for the purchase of the Shares,
the Buyer agrees, concurrently with the issuance and transfer of the
Shares, to pay or cause to be paid $3,000,000, payable by a wire
transfer in federal or other same-day funds to the Company.
2. Representations of the Company. The Company hereby represents to
the Buyer (which representations shall survive the purchase and sale hereunder)
as follows:
(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of Texas.
(b) The execution, delivery and performance of this
Agreement and the transactions contemplated hereby have been duly
authorized by all necessary action on the part of the Company. This
Agreement has been duly executed
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and delivered by the Company and constitutes the legal, valid and
binding agreement of the Company, enforceable against it in accordance
with its terms.
(c) The authorized capital stock of the Company consists
solely of 20,000,000 shares of Common Stock, $.O1 par value per
share, of which 3,930,380 shares were issued and outstanding as of
July 31, 1992 and 8,000,000 shares of Liquidation Preference Common
Stock, par value $.O1 per share, of which 8,000,000 shares were issued
and outstanding as of July 31, 1992, and 2,000,000 shares of Series A
Preferred Stock, par value $4.25 per share, none of which shares are
issued and outstanding. Each of the issued and outstanding shares of
Common Stock and Liquidation Preference Common Stock of the Company
is, and upon issuance hereunder the Shares will be, validly issued,
fully paid, and non-assessable and not issued in violation of the
preemptive rights of any person. Except for options granted pursuant
to the Company's 1989 Pioneer Stock Option Plan and the Company's 1991
Stock Option Plan, there are no outstanding options, warrants, or
other rights or agreements obligating the Company to issue or sell any
shares of its capital stock or securities convertible into its capital
stock. To the best of the Company's knowledge, there are no voting
trusts, voting agreements or other agreements or understandings with
respect to the capital stock of the Company.
3. Representations of the Buyer. The Buyer hereby represents to the
Company (which representations shall survive the purchase and sale hereunder)
as follows:
(a) The Buyer is a partnership duly formed and validly
existing under the laws of the State of Texas.
(b) The execution, delivery and performance of this
Agreement and the transactions contemplated hereby have been duly
authorized by all necessary action on the part of the Buyer. This
Agreement has been duly executed and delivered by the Buyer and
constitutes a legal, valid and binding agreement of the Buyer,
enforceable against it in accordance with its terms.
(c) The Buyer is acquiring the Shares for its own
account for investment purposes and not with a view to the
distribution thereof within the meaning of the Securities Act of 1933,
as amended (the "Securities Act"), or applicable state securities
laws.
(d) The Buyer represents that it has such knowledge and
experience in financial and business matters as to be capable of
evaluating the merits and risks of its
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investment in the Company, and has the ability to bear the economic
risks of such investment. The Buyer further represents it has had
access to information about the Company and it has had the opportunity
to ask questions of, and to receive answers from, employees of the
Company concerning the Company and that no information it has
requested has been denied or withheld.
4. Compliance with Securities Laws. The Buyer understands that the
offer and sale of the Shares acquired by it hereunder have not been registered
under the Securities Act or applicable state securities laws. The Buyer
understands that the Shares being acquired by it hereunder may not be sold,
transferred or otherwise disposed of without registration under the Securities
Act and applicable state securities laws, or the availability of an exemption
therefrom, and that in the absence of an effective registration statement or
the availability of such an exemption covering the offer and sale of the
Shares, that the Shares must be held indefinitely, and that the Buyer holding
same must bear the economic risks of such investment indefinitely. The Buyer
agrees that it will not sell or otherwise transfer any of the Shares in any way
that may result in a violation of any federal or state securities laws or
regulations. The certificates representing the Shares may bear appropriate
legends to such effect.
5. Covenants of the Company. The Company agrees to make cash
payments to the Buyer or any person or entity affiliated or related to the
Buyer, including ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ (the Buyer and each such person or entity
the "Taxpayer"), in the event that the Taxpayer owes federal income tax as a
result of the purchase of Shares contemplated by this Agreement, in an amount
equal to the lesser of (i) the amount of any tax (plus penalties and interest)
actually paid by Taxpayer in all years as a result thereof and as a result of
receiving the payment contemplated by this paragraph, and (ii) the amount of
tax savings (including interest) actually realized by the Company in all years
as a result thereof. Each Taxpayer shall be an intended third-party
beneficiary of this Section 5.
6. Stock Repurchase.
(a) Subject to Section 6(e) below, if ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
("▇▇▇▇▇▇▇▇") voluntarily resigns from his position as Chairman of the
Board and Chief Executive Officer of the Company and if ▇▇▇▇▇▇▇▇ and
the Company do not reach a mutually agreeable arrangement for ▇▇▇▇▇▇▇▇
to remain with the Company (collectively, the "Buyback Event"), the
Company shall have the right to repurchase from the Buyer all or a
portion of the Shares for the
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Buyback Amount (as defined below) or to receive from the Buyer cash in
lieu thereof in the circumstances provided below (collectively, the
"Buyback").
(b) Upon the occurrence of a Buyback Event, the Company shall
have 30 days to give written notice (the "Buyback Notice") to the
Buyer of the Company's decision to cause the Buyback. The Buyback
Notice shall state the number of shares of the Company's common stock
that the Company desires to repurchase, but in no event shall such
number exceed the Maximum Amount (as defined below). Subject to
Section 6(c) below, the Buyer shall then have 30 days to deliver to
the Company stock certificates representing the number of shares of
the Company's Common Stock equal to the number of shares set forth in
the Buyback Notice in exchange for the payment by the Company to the
Buyer of the Buyback Amount, with payment to be made by wire transfer
of same-day funds.
(c) To the extent that the Buyer owns an insufficient
number of shares to tender to the Company pursuant to a Buyback Notice
required by Section 6(b) above or refuses to so tender such shares
(such difference is referred to herein as the "Shortfall Amount"),
then the Buyer shall tender to the Company so many of the number of
shares actually owned by the Buyer in accordance with Section 6(b)
above in exchange for payment by the Company in accordance with
Section 6(b) above that it so wishes to tender, and the Buyer shall be
obligated to pay to the Company, within one year after the date of the
Buyback Event, cash in an amount equal to the Fair Market Value (as
defined below) of the number of shares represented by the Shortfall
Amount less the Buyback Amount for such number of shares represented
by the Shortfall Amount, provided that interest required to be paid
pursuant to the Buyback Amount shall be computed not to the date of
the Buyback Event but instead to the date of the cash payment
required to be made by the Buyer pursuant to this Section 6(c).
(d) For purposes of this Section 6, the following terms shall
be defined as set forth below:
(i) "Buyback Amount" means the product of (i) the
number of shares of the Company's Common Stock actually tendered
by the Buyer to the Company pursuant to the Buyback and (ii) the
sum of $1.50 and interest on such $1.50 at an interest rate of
6.5% per annum, compounded annually, and computed from the date
of this Agreement to the date of the Buyback.
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(ii) "Maximum Amount" means a number of shares of
the Company's common stock equal to the product of 2,000,000
and
| x | Where x equals the number of full months that ▇▇▇▇▇▇▇▇ remains
| 1 - ---- | as Chairman of the Board and Chief Executive Officer of the Company,
| 60 | commencing June 1, 1992,
but in the event the Maximum Amount shall be less than 0, then
the Maximum Amount shall be deemed to be 0.
(iii) "Fair Market Value" means an amount
representing the value of a number of shares of the Company's
Common Stock as mutually agreed upon by the Company and the
Buyer; but if they cannot agree within 60 days prior to the
date requiring payment of such amount, then each of the
Company and the Buyer shall select an independent,
third-party, reputable appraiser, and the two appraisers shall
select a third independent, third-party, reputable appraiser
who shall make a determination as to such value, and the
determination of such third appraiser shall be binding on the
Company and the Buyer. In making a determination, the third
appraiser shall not take into account any control premium or
minority discount with respect to the shares being valued.
(e) Notwithstanding anything in this Section 6 to the
contrary, ▇▇▇▇▇▇▇▇ shall not have voluntarily resigned from the
Company if his decision to resign from the Company (or his inability
to continue to serve the Company in such capacity) is caused by one or
more of the following events:
(i) the death or disability of ▇▇▇▇▇▇▇▇ or the
termination of ▇▇▇▇▇▇▇▇ by the Company from his position as
Chairman of the Board and Chief Executive Officer (and
disability shall occur upon the mental or physical disability
of ▇▇▇▇▇▇▇▇ that will permanently prevent ▇▇▇▇▇▇▇▇ from
performing his duties for the Company);
(ii) a request to provide full-time services to
the U.S. government or an agency thereof or one working for
such government or agency and after consulting with ▇▇▇▇▇▇▇▇,
the Company's Board of
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Directors agrees to permit ▇▇▇▇▇▇▇▇ to leave his position as
Chairman of the Board and Chief Executive Officer of the
Company;
(iii) ▇▇▇▇▇▇▇▇ is constructively terminated from
his position, such as being assigned tasks to perform work not
suitable for a chief executive officer;
(iv) the Company requests ▇▇▇▇▇▇▇▇ to relocate
from the City of Dallas;
(v) the Company demands excessive travel from
▇▇▇▇▇▇▇▇;
(vi) the Company, its Board of Directors, or one
of the Company's officers requests ▇▇▇▇▇▇▇▇ to engage in any
conduct that is not moral or ethical or in violation of law;
or
(vii) the Board of Directors of the Company makes
a major change in corporate policy or has decided that the
Company should engage in a significant corporate development
or transaction and ▇▇▇▇▇▇▇▇ has voted against such decision or
▇▇▇▇▇▇▇▇ is not present at the meeting where the decision is
made; provided that (a) ▇▇▇▇▇▇▇▇ has delivered written notice
to each of the members of the Board of Directors within 5 days
of the date of the Board decision (or if ▇▇▇▇▇▇▇▇ is not
present at the meeting when the decision is made, within 5
days of notice from the Board to him of its decision),
requesting the Board to reverse its decision and informing the
Board that he intends to resign because of such decision and
(b) the Board has not reversed its decision and so informed
▇▇▇▇▇▇▇▇ within 30 days of the receipt of the notice given by
▇▇▇▇▇▇▇▇. This provision will not apply to the refusal by the
Board of Directors to approve a policy, development or
transaction recommended by ▇▇▇▇▇▇▇▇.
(f) ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ hereby agrees that, to the extent
the Buyer fails to meet any of its obligations to the Company pursuant
to Section 6(c) hereof, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ will be liable for, and
agrees to pay to the Company, any deficiency in the amount to be paid
to the Company pursuant to such section (the "Guaranteed
Obligations"). ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ also waives all demands and notices
of every kind in connection with the Guaranteed Obligations and this
guarantee, including without limitation notice of acceptance of this
guarantee and notice of the occurrence of any breach or default by
Buyer with respect to the Guaranteed Obligations, and
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ further waives diligence, presentment, protest and
suit on the part of Company. This guarantee is a primary,
unconditional guarantee of payment and performance and not a guarantee
of collection. The guarantee is not subject to any counterclaim,
setoff, deduction, reduction or other defense for any reason
whatsoever.
(g) Except as provided in subsection 6(f) with respect
to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, the obligations of the Buyer under this Section
6 shall be non-recourse to the partners of the Buyer.
7. Registration Rights.
(a) Subject to Section 7(i) below, if the Company
proposes to register for sale for cash in an offering to the public
any shares of its stock ("Stock") under the Securities Act on Form
▇-▇, ▇-▇, or S-3, or any successor registration form at the time in
effect, it will at such time give written notice to the Holders (as
defined below) of its intention to do so. Upon written request of the
Holder, given within fifteen days after the giving of any such notice
by the Company, the Company will use its best efforts to cause the
shares of Stock acquired hereby held by the respective Holders for
which registration is requested (the "Piggy-Back Registrable Shares")
(the "Requesting Holders") to be registered under the Securities Act
as part of the offering being made by the Company and under the same
registration statement proposed to be filed by the Company; provided,
however, if the offering to which the proposed registration statement
relates is to be distributed by or through an underwriter approved by
the Company, the Requesting Holders shall agree to sell the Piggy-Back
Registrable Shares through such underwriter on the same terms and
conditions as the under-writer agrees to sell the other securities;
and provided further, that the Company shall not be required to
include part or all of the Piggy-Back Registrable Shares if the
Company is advised in writing by the managing underwriter for the
proposed offering that the inclusion of such Piggy-Back Registrable
Shares together with the Stock requested to be registered by other
owners (the "Other Owners") of shares of Stock (the "Other Registrable
Shares") pursuant to agreements between such Other Owners and the
Company which contain registration rights comparable to those
contained herein (the Piggy-Back Registrable Shares and the Other
Registrable Shares are sometimes hereinafter referred to as the
"Aggregate Registrable Shares") would in its opinion have a material
adverse effect on such proposed offering. In such event, the Company
shall include in the proposed offering that number of Piggy-Back
Registrable Shares equal to the Requesting
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Holders, pro rata portion of the total number of Aggregate Registrable
Shares which may be registered in the opinion of the managing
underwriter referred to in the preceding sentence. The term "Holder"
means the Buyer or any Related Party of the Buyer, but only during the
period or periods of time any of such persons or entities own stock
which may qualify as "Piggy-Back Registrable Shares". The term
"Related Party" means any limited partner of the Buyer, ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, the parents of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and
the mother of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ (cumulatively, the "Parents"), any
descendants of the Parents, any trust which includes as a beneficiary
any of the persons or entities above and any corporation, partnership
or other entity of which a majority of the voting shares or equity
interest is controlled directly or indirectly by any of the
above-mentioned persons or entities, to the extent such persons or
entities continue to so control such corporation, partnership or other
entity.
(b) Notwithstanding anything to the contrary contained
in Section 7(a) hereof, the Company shall have no obligation to
register the Piggy-Back Registrable Shares if, within twenty days from
the receipt of a request to register the Piggy-Back Registrable Shares
pursuant to Section 7(a) hereof, the Company shall have delivered to
the Buyer an opinion of experienced securities counsel for the Company
to the effect that no registration of the Piggy-Back Registrable
Shares is required for their sale on the terms on which the Requesting
Holder desires to sell those shares.
(c) The Requesting Holders and the Company shall in
connection with any registration of any Piggy-Back Registrable
Shares contemplated by this Section 7 enter into an appropriate
underwriting agreement containing terms and provisions (including
reasonable provisions as to opinions of counsel, comfort letters and
indemnification) customary in such agreements.
(d) The Company shall prepare and file with the
Securities and Exchange Commission all amendments, post-effective
amendments and supplements to a registration statement containing any
Piggy-Back Registrable Shares pursuant to Section 7(a) hereof as may
be necessary under the Securities Act and the regulations of the
Securities and Exchange Commission to permit the sale of such
Piggy-Back Registrable Shares to the public.
(e) The Company shall use its best efforts to register
or qualify the Piggy-Back Registrable Shares covered by a registration
statement filed pursuant to
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Section 7(a) hereof under blue sky or other state securities laws, in
such states or jurisdictions as shall reasonably be requested by the
Requesting Holders, and do any and all other reasonable acts or things
which may be necessary to enable the Requesting Holders to consummate
the public sale or other disposition of Registrable Shares in such
jurisdictions; provided, however, that the Company shall not be
obligated to qualify as a foreign corporation to do business under the
laws of any jurisdiction in which it is not then qualified or to file
any general consent to service of process.
(f) The Company will bear all expenses related to a
registration pursuant to this Section 7, except for amounts reflecting
the increase in expenses directly attributable to the inclusion of the
portion of the Piggy-Back Registrable Shares so registered, which
increase in expenses shall be borne by the appropriate Requesting
Holder. In connection with any registration undertaken by the Company
hereunder, the Company and the Requesting Holders shall indemnify each
other against violations of law in customary form and shall execute
such other agreements in connection with the underwriting as shall
reasonably be requested by the Company.
(g) The Requesting Holders shall promptly furnish the
Company, upon request, with all information required in the opinion of
the Company's securities counsel to be included in the registration
statement, or any amendment or supplement thereto.
(h) The Holder's rights and obligations pursuant to this
Section 7 may be exercised only by the Holders.
(i) Notwithstanding anything to, the contrary in this
Section 7, for a registration of the Company's Stock in an initial
public offering, the, Holders shall not have any right to request the
Company to register any Piggy-Back Registrable Shares unless the
Company is registering Stock held by owners other than the Company as
a part of such offering.
8. Miscellaneous.
(a) This Agreement and the attachments hereto contain
the entire agreement among the parties with respect to the subject
matter hereof and supersede all prior agreements, written or oral, and
all contemporaneous oral agreements, with respect thereto.
(b) This Agreement shall be binding upon and inure to the
benefit of the parties and their respective successors, assigns and
legal representatives.
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(c) Except as expressly provided in Section 5 and Section
7 of this Agreement, nothing in this Agreement is intended or shall be
construed to give any person, other then the parties hereto, any legal
or equitable right, remedy or claim under or in respect of this
Agreement or any provision contained herein.
(d) The Company and the Buyer shall execute such
documents and take such further actions as may be reasonably required
or desirable to carry out the provisions hereof and the transactions
contemplated hereby.
(e) This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas.
(f) This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which
together shall constitute one instrument.
(g) Any notice to be given hereunder shall be given by
personal delivery or by first-class U.S. mail, postage prepaid, to
the parties hereto at the following address:
If to the Company, to:
▇▇▇▇▇ Systems Corporation
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: General Counsel
If to the Buyer, to:
▇▇▇▇▇▇▇▇ Family Limited Partnership
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
A party hereto may change the address for receipt of notices by giving notice
to the other party in the manner provided for in this Section 8(g).
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
▇▇▇▇▇ SYSTEMS CORPORATION
Name: /s/ J. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------
Title: President
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▇▇▇▇▇▇▇▇ FAMILY LIMITED PARTNERSHIP
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, General
Partner
Consent and Agreement:
The undersigned hereby executes this Agreement for the purpose of
consenting to, and agreeing to be bound by, the provisions of Section 6(f) of
this Agreement.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇
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