EXHIBIT 10.9
SELLING SHAREHOLDER AGREEMENT
THIS SELLING SHAREHOLDER AGREEMENT (this "Agreement") is made and
enter into on the effective date of 7th day of February, 2002 by and among Xxxx
X. Xxxxxx, and Xxxxxx X. Xxxx (collectively, "Selling Shareholders" or singly,
"Selling Shareholder"), Xxxxxx X. Xxxxxxx ("Xxxxxx"), Xxxx X. Xxxxx ("Xxxx"),
and Precis, Inc., an Oklahoma corporation ("Precis").
RECITALS
1. The Selling Shareholders in the aggregate intend to offer for sale
and sell 1,900,000 shares of Precis common stock, $0.01 pare value per share
("Common Stock") through Stonegate Securities, Inc. ("Stonegate") pursuant to
registration under the Securities Act of 1933, as amended (the "1933 Act") (such
offer to sell and sale is referred to as the "Public Offering"). The 1,900,000
shares of Common Stock will be offered in two groups, the first to be 1,333,000
shares ("Primary Shares") and 567,000 shares ("Secondary Shares"). For purposes
of this Agreement, Primary Shares and Secondary Shares are collectively referred
to as the "Shares."
2. Each Selling Shareholder intends to offer for sale pursuant to the
Public Offering the number of Primary Shares and Secondary Shares set forth
opposite each Selling Shareholder's name as follows:
NUMBER OF SHARES
-------------------------------------
PRIMARY SECONDARY TOTAL
SELLING SHAREHOLDER SHARES SHARES SHARES
------------------- -------- ------- ---------
Xxxx X. Xxxxxx 467,000 533,000 1,000,000
Xxxxxx X. Xxxx 866,000 34,000 900,000
3. Pursuant to the agreement amongst Precis, Stonegate, the Selling
Shareholders dated as of February 7, 2002 (the "Stonegate Agreement"), Xxxxxx
and, in her absence, Xxxx are appointed as the contact person for purposes of
determining those Selling Shareholders desiring to sell all or any portion of
their Primary Shares and, if applicable, Secondary Shares at the sale price
proposed by Stonegate or offered by the purchaser.
4. Precis does not require any additional capital as of the date of
this agreement; however, the Board of Directors of Precis has concluded that it
is in the best interest of Precis and its non-affiliate shareholders to take
actions to increase the number of shares of Common Stock owned by non-affiliates
(ultimately to increase the "public float" of the Common Stock) in order to
establish and maintain a more orderly market of and broaden ownership of the
Common Stock and reduce to some extent the volatility of the Common Stock in the
market place, while avoiding any additional dilution to the current shareholders
of Precis.
5. Each of the Selling Shareholders will constitute an "underwriter"
within the meaning of the 1933 Act and have the attendant liability.
6. Each Selling Shareholder desires to be (i) indemnified by Precis
for any and all liabilities and claims arising from or attributable to the offer
and sale of the Shares and (ii) receive contributions from the other Selling
Shareholders for any and all liabilities, claims and expenses arising from or
attributable to the offer and sale of the Shares on a pro rata basis based upon
the sale proceeds that each Selling Shareholder receives pursuant to the sale of
the Shares and the Public Offering.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, Selling Shareholders and Precis hereby agree as follows:
1. SELECTION OF REPRESENTATIVE. Selling Shareholders hereby appoint
and authorize Xxxxxx or in her absence, Xxxx, as their agent and representative
for all purposes under the Stonegate Agreement and for all purposes set forth
herein ("Representative").
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2. PROCEDURES FOR SALE OF SHARES. Pursuant to the Stonegate Agreement,
each offer to purchase Shares ("Purchase Offer") received by Stonegate will be
made to and through Representative.
2.1 ESTABLISHMENT OF MINIMUM PER SHARE SALE PRICES. Upon execution of
this Agreement, each Selling Shareholder shall provide to Representative in
writing the number of Primary Shares and Secondary Shares the Selling
Shareholder is willing to sell at a specific price per share ("Minimum Sale
Price"). Each Selling Shareholder shall have the right to change the previously
established Minimum Sale Price by giving Representative three days prior written
notice.
2.2 PURCHASE OFFER GREATER THAN MINIMUM SALE PRICE. In the event
Stonegate notifies Representative of an offer to purchase Shares ("Purchase
Offer") and the purchase price per share equals or exceeds the Minimum Sale
Price, Representative is hereby authorized to sell the Selling Shareholder's pro
rata portion of the Shares, giving priority to the sale of Primary Shares as set
forth below, without any further consent or notice to the Selling Shareholder.
Each Selling Shareholder shall take all necessary actions to effectuate any sale
in accordance with the provisions of this Section 2.2 and the other provisions
of this Agreement.
2.3 PURCHASE OFFER LESS THAN MINIMUM SALE PRICE. In the event the
Purchase Offer is at a per share price less than the Minimum Sale Price,
Representative shall use her best efforts to immediately notify, either orally
or in writing, the Selling Shareholder regarding the terms of the offer to
purchase Shares, the price per Share, the amount of Primary Shares or, if
applicable, Secondary Shares that the Selling Shareholder will be entitled to
sell under the Purchase Offer. Each Selling Shareholder shall have the right and
authority to accept or reject such Purchase Offer (in whole or in part). In the
event a Selling Shareholder elects, either orally or in writing, not to sell
Selling Shareholder's Primary Shares or, if applicable, Secondary Shares,
Representative shall be authorized to allocate the Shares among Selling
Shareholders, including Representative in her capacity as a Selling Shareholder,
to be sold in connection with such Purchase Offer as the Representative
determines, in Representative's sole and absolute discretion, however, giving
first priority to those Selling Shareholders that elect to accept such Purchase
Offer and that have not previously sold all of their Primary Shares until all of
their Primary Shares have been sold. Although Representative shall use her best
efforts to notify all of the other Selling Shareholders of any Purchase Offer
pursuant to this Section 2.3, Representative shall not have any liability for
failure to notify a Selling Shareholder of such Purchase Offer. The failure of a
Selling Shareholder to affirmatively accept any offer to purchase Shares within
24 hours following Representative's notice of such Purchase Offer pursuant to
this Section 2.3 shall constitute an election by such Selling Shareholder to not
accept the Purchase Offer.
2.4 PRO RATA SALE OF SHARES. Each Selling Shareholder shall have the
right, but not the obligation, to sell a proportionate number of Primary Shares
based upon the number of Primary Shares held by the Selling Shareholders at the
time of the Purchase Offer is received by the Representative that have not been
previously sold or committed to be sold by the Selling Shareholder. In the event
all of the Primary Shares have been sold or have been committed to be sold by
the Selling Shareholder, each Selling Shareholder shall have the right, but not
the obligation, to sell a proportionate number of Second Shares based upon the
number of Secondary Shares based upon the number of Secondary Shares held by the
Selling Shareholders at the time of the Purchase Offer is received by the
Representative that have not been previously sold or committed to be sold by the
Selling Shareholders.
2.4 EXPENSES OF PUBLIC OFFERING. The Selling Shareholders hereby agree
to bear all costs and expenses of the Public Offering, including without
limitation all registration and filing fees, printing expenses, fees and
disbursement of Precis' legal counsel, accounting and auditing fees and
disbursement of Precis' independent accountants, stock transfer, and sales
commissions and discounts, if any, associated with the sale of the Shares
(including the costs and expenses of Stonegate under the Stonegate Agreement and
the letter agreement dated January 31, 2002) (collectively, the "Offering
Costs"). The Offering Costs shall be born and paid by the Selling Shareholders
on a pro rata basis based upon the proceeds from sale of each Selling
Shareholder's Shares. To the extent that Precis or any Selling Shareholder pays
a Selling Shareholder's allocable share of the Offering Costs, Precis or the
Selling Shareholder that paid such Offering Costs shall be entitled to
reimbursement of such Offering Costs. Each Selling Shareholder hereby authorizes
and directs Stonegate to pay from the proceeds of sale of a Selling
Shareholder's Shares the Selling Shareholder's allocable share of the Offering
Costs. Stonegate shall not have any liability related to the payment of Offering
Costs from the proceeds of sale of a Selling Shareholder.
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3. PRECIS INDEMNIFICATION. Precis shall indemnify and hold harmless
each Selling Shareholder (the "Indemnified Party") against any and all
investigations of, preparation for or defense of any pending or threatened
liabilities, claims, judgment, fines and amounts paid in settlement and expenses
(including attorneys fees) actually and reasonably incurred by the Indemnified
Party (collectively the "Loss, Claim or Expense") in connection with any claim
or any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative ("Proceeding"), including any
action by or in the right of Precis, to which the Indemnified Party is, was or
at any time becomes a party, or is threatened to be made a party, by reason of
the fact that the Indemnified Party is, was or at any time participant in the
sale and distribution of the Shares as part of the Public Offering and by reason
of any misstatement or omissions to state a material fact by Precis. Precis
further agrees that the Indemnified Party shall not have any liability to Precis
or its affiliates, officers, directors, agents, employees, persons deemed to be
in control of Precis within the meaning of either Section 15 of the Securities
Act of 1933, as amended, or Section 20 of the Securities Exchange Act of 1934,
as amended, or shareholders for any Losses, Claims or Expenses. Precis agrees
that the provisions of this Section 3shall apply (i) whether or not the
Indemnified Party is a formally named party to or the subject or target of any
Proceeding and (ii) in addition to any liability that Precis may otherwise have
and shall be binding upon and inure to the benefit of any successors, assigns,
heirs and personal representatives of Precis or an Indemnified Party.
3.1 LIMITATIONS ON INDEMNITY. No indemnity pursuant to this
Section 3 shall be paid to the Indemnified Party (i) for the amount of
such Loss, Claim or Expense for which the Indemnified Party is
indemnified pursuant to any insurance purchased and maintained by Precis
or (ii) on account of the Indemnified Party's conduct that is finally
adjudged to have been knowingly fraudulent, deliberately dishonest or
willful misconduct.
3.2 CONTINUATION OF INDEMNIFY. The provisions of this Section 3
shall continue during the period that the Indemnified Party shall be
subject to any possible Proceeding by reason of the fact that the
Indemnified Party is, was or at any time a participant in the sale and
distribution of the Shares as part of the Public Offering.
3.3 NOTIFICATION AND DEFENSE OF CLAIM. Within 30 days after
receipt by the Indemnified Party of notice of the commencement of any
Proceeding in which the Indemnified Party has a right to indemnification
pursuant to this Section 3, the Indemnified Party shall notify Precis;
however, the omission of the Indemnified Party to timely notify Precis
shall not relieve Precis from any liability that Precis may have to the
Indemnified Party under this Section 3 or otherwise. With respect to any
such action, suit or proceeding as to which the Indemnified Party
notifies Precis of the commencement thereof
(i) Precis will be entitled to participate therein at its own
expense and
(ii) Except as otherwise provided below, to the extent that
Precis may wish, any other person similarly notified by the Indemnified
Party will be entitled to assume defense thereof, with counsel
satisfactory to the Indemnified Party. After notice from Precis of its
election to assume the defense thereof, Precis will not be liable to the
Indemnified Party under this Section for any additional legal or other
expenses subsequently incurred by the Indemnified Party in connection
with the defense thereof other than as otherwise provided below. The
Indemnified Party shall have the right to employ its own counsel in such
action, suit or proceeding; provided, however, that the fees and
expenses of such counsel incurred after notice from Precis of the
assumption of the defense thereof shall be at the expense of the
Indemnifying Party, unless (a) the employment of counsel by the
Indemnified Party has been authorized by Precis, (b) the Indemnified
Party shall have reasonably concluded that there may be a conflict of
interest between Precis and the Indemnified Party in the conduct of the
defense of such action, or (c) Precis shall not have employed counsel to
assume the defense of such action, in each of which cases the fees and
expense of counsel shall be at the expense of Precis. Precis shall not
be entitled to assume the defense of any action, suit or proceeding
brought by or on behalf of Precis or as to which the Indemnified Party
shall have made the conclusion provided for in (b) above.
Notwithstanding the foregoing, in no event shall Precis be obligated to
reimburse the fees or expenses of more than one counsel for the
Indemnified Party.
(iii) Precis shall not be liable to indemnify the Indemnified
Party under this Section 3 for any amount paid in settlement of any
Losses, Claims or Expenses and related Proceeding effected without
Precis' written consent. Precis shall not settle any Losses, Claims or
Expenses and related Proceedings in any manner that would impose any
obligation, penalty or limitation on the Indemnified Party without the
Indemnified Party's written consent. Neither Precis nor the Indemnified
Party will unreasonably withhold its consent to any proposed settlement.
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3.4 REPAYMENT OF EXPENSES. The Indemnified Party shall reimburse
Precis for all reasonable expenses paid by Precis in defending any
Proceeding against the Indemnified Party in the event and only to the
extent that it shall be ultimately determined that the Indemnified Party
is not entitled to be indemnified by Precis for such expenses under this
Agreement.
3.5 ENFORCEMENT. It is hereby acknowledged that the provisions of
this Section 3 are contained in this Agreement to induce the Indemnified
Party to participate in the Public Offering with the other Selling
Shareholders and that the Indemnified Party's participation is, in part,
in reliance upon the provisions of this Section 3. In the event the
Indemnified Party is required to bring any action to enforce the
Indemnified Party's right to collect moneys due under this Section 3 and
is successful in such action, Precis shall reimburse the Indemnified
Party for all of the Indemnified Party's attorneys fees and expenses in
bringing and pursuing such action.
3.6 JUDICIALLY IMPOSED LIMITATIONS. If for any reason the
indemnification provisions of this Section 3 are judicially determined
to be unavailable or insufficient to hold any Indemnified Party
harmless, then Precis agrees to contribute to the Losses, Claims or
Expenses for which indemnification is held unavailable in such
proportion as is appropriate to reflect not only the relative benefits
received by Precis and such Indemnified Party, but also relevant fault
of each such person or entity, as well as any relevant equitable
considerations.
4. SELLING SHAREHOLDER CONTRIBUTIONS. In recognition of the
"underwriter" status of each Selling Shareholder under the 1933 Act and the
Public Offering is the type of transaction that sometimes results in litigation,
in the event Precis fails to fully indemnify the Indemnified Parties or is
prohibited from indemnifying the Indemnified Parties with respect to any Loss,
Claim or Expense pursuant to Section 3 of this Agreement, each Selling
Shareholder (the "Contributing Shareholder") hereby agrees to contribute and
hold harmless each of the other Selling Shareholders (the "Benefitting
Shareholder") against that percent of any such Loss, Claim or Expenses
determined by dividing the sale proceeds received by the Contributing
Shareholder from sale of Shares pursuant to the Public Offering by the aggregate
sum of all proceeds received by the Selling Shareholders as s group from sale of
Shares pursuant to the Public Offering. The Contributing Shareholder agrees that
the provisions of this Section 4shall apply (i) whether or not the Benefiting
Party is a formally named party to or the subject or target of any Proceeding
and (ii) in addition to any liability that the Contributing Shareholder may
otherwise have and shall be binding upon and inure to the benefit of any
successors, assigns, heirs and personal representatives of the Contributing
Shareholder or the Benefitting Shareholder.
4.1 LIMITATIONS ON INDEMNITY. No contribution pursuant to this
Section 4 shall be paid to the Benefitting Shareholder (i) for the
amount of such Loss, Claim or Expense for which the Indemnified Party is
indemnified pursuant to any policy of insurance or (ii) on account of
the Benefitting Shareholder's conduct that is finally adjudged to have
been knowingly fraudulent, deliberately dishonest or willful misconduct.
4.2 CONTINUATION OF INDEMNIFY. The provisions of this Section 4
shall continue during the period that the Benefitting Shareholder shall
be subject to any possible Proceeding by reason of the fact that the
Indemnified Party is, was or at any time a participant in the sale and
distribution of the Shares as part of the Public Offering.
4.3 NOTIFICATION AND DEFENSE OF CLAIM. Within 30 days after
receipt by the Benefitting Shareholder of notice of the commencement of
any Proceeding in which the Benefitting Shareholder has a possible right
to contribution pursuant to this Section 4, the Benefitting Shareholder
shall notify the Contributing Shareholder; however, the omission of the
Benefitting Shareholder to timely notify the Contributing Shareholder
shall not relieve the Contributing Shareholder from any liability that
the Contributing Shareholder may have to the Benefitting Shareholder
under this Section 4 or otherwise. The Benefitting Shareholder shall
have the right to employ its own counsel in such action, suit or
proceeding; provided, however, in no event shall the Contributing
Shareholder be obligated to reimburse the fees or expenses of more than
one counsel for the Benefitting Shareholder. The Contributing
Shareholder shall not be liable for contribution to the Indemnified
Party under this Section 4 for any amount paid in settlement of any
Losses, Claims or Expenses and related Proceeding effected without the
Contributing Shareholder's written consent. The Contributing Shareholder
will not unreasonably withhold its consent to any proposed settlement.
4.4 REPAYMENT OF EXPENSES. The Benefitting Shareholder shall
reimburse the Contributing Shareholder for all reasonable expenses paid
by Contributing Shareholder, if any, in defending any Proceeding against
the
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Benefitting Shareholder in the event and only to the extent that it
shall be ultimately determined that the Benefitting Shareholder is not
entitled to receive contribution for such expenses under this
Agreement.
4.5 ENFORCEMENT. It is hereby acknowledged that the provisions of
this Section 4 are contained in this Agreement to induce the Benefitting
Shareholder to participate in the Public Offering with the other Selling
Shareholders and that the Indemnified Party's participation is, in part,
in reliance upon the provisions of this Section 4. In the event the
Indemnified Party is required to bring any action to enforce the
Benefitting Shareholder's right to collect moneys due under this Section
4 and is successful in such action, the Contributing Shareholder shall
reimburse the Benefitting Shareholder for all of the Benefitting
Shareholder's attorneys fees and expenses in bringing and pursuing such
action.
5. NOTICES. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made if and when delivered personally or by overnight courier to the parties
to this Agreement at addresses appearing below the signature of each such party
or sent by electronic transmission, with confirmation received, to the facsimile
numbers also specified below the signature of each such party (or at such other
address, facsimile or telephone number as shall be specified by like notice).
6. AMENDMENT. This Agreement may be amended by the Selling
Shareholders and Precis at any time only by an instrument in writing signed by
the parties hereto.
7. WAIVER. Any party hereto may with respect to any other party hereto
(a) extend the time for the performance of any of the obligations or other acts
or (b) waive compliance with any of the agreements or conditions contained in
this Agreement. Any such extension or waiver shall be valid if set forth in an
instrument in writing signed by the party or parties to be bound thereby. For
purposes of this Agreement, time shall be of the essence.
8. HEADINGS; CONSTRUCTION. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. In this Agreement (a) words denoting the
singular include the plural and vice versa, (b) "it" or "its" or words denoting
any gender include all genders, (c) the word "including" shall mean "including
without limitation," whether or not expressed, (d) anyreference to a statute
shall mean the statute and any regulations thereunder in force as of the date of
this Agreement, unless otherwise expressly provided, (e) any reference herein to
a Section refers to a Section of this Agreement, unless otherwise stated, (f)
when calculating the period of time within or following which any act is to be
done or steps taken, the date which is the reference day in calculating such
period shall be excluded and (g) any reference to a party's "best efforts" or
"reasonable efforts" shall not include any obligation of such party to pay, or
guarantee the payment of, money or other consideration to any third party or to
agree to the imposition on such party of any condition reasonably considered by
such party to be materially burdensome to such party.
9. SEVERABILITY. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner adverse to
any party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end that
transactions contemplated hereby are fulfilled to the extent reasonably
possible.
10. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
and supersedes all prior agreements and undertakings, both written and oral,
among the parties, or any of them, with respect to the subject matter hereof,
except as otherwise expressly provided herein.
11. ASSIGNMENT. This Agreement shall not be assigned by operation of
law or otherwise.
12. PARTIES IN INTEREST. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto, and nothing in this Agreement,
express or implied, is intended to or shall confer upon any other person any
right, benefit or remedy of any nature whatsoever under or by reason of this
Agreement, including, without limitation, by way of subrogation, other than
Sections 3 and 4 (which is intended to be for the benefit of the Indemnified
Party or Benefitting Shareholder and may be enforced by such Indemnified Party
or Benefitting Shareholder ).
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13. FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE. No failure
or delay on the part of any party hereto in the exercise of any right hereunder
shall impair such right or be construed to be a waiver of, or acquiescence in,
any breach of any covenant or agreement herein, nor shall any single or partial
exercise of any such right preclude other or further exercise thereof or of any
other right. All rights and remedies existing under this Agreement are
cumulative to, and not exclusive of, any rights or remedies otherwise available.
14. GOVERNING LAW. This Agreement shall be governed by, and construed
in accordance with, the internal laws of the State of
Oklahoma applicable to
contracts executed and fully performed within the State of
Oklahoma.
15. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
16. WAIVER OF JURY TRIAL. EACH OF THE SELLING SHAREHOLDERS AND PRECIS
HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ALL RIGHTS TO
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED UPON
CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY
OF THE TRANSACTIONS CONTEMPLATED HEREBY.
17. JURISDICTION; SERVICE OF PROCESS. Any action or proceeding seeking
to enforce any provision of, or based on any right arising out of, this
Agreement may be brought against any of the parties in the courts of the State
of
Oklahoma, County of Cleveland or, the State of Texas, County of Tarrant, the
United States District Court for the Western District of
Oklahoma or the United
States District Court for the Northern District of Texas, and each of the
parties consents to the jurisdiction of such courts (and of the appropriate
appellate courts) in any such action or proceeding and waives any objection to
venue laid therein.
IN WITNESS WHEREOF, the Selling Shareholders and Precis have caused
this Agreement to be executed as of the date first written above and with
respect to Precis by its duly authorized officers and with respect to Xxxxxx
Family Trust by its duly authorized trustee.
"Selling Shareholders
/s/XXXX X. XXXXXX
-------------------
Xxxx X. Xxxxxx
0000 Xxxxx XxXxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
/s/XXXXXX X. XXXX
-------------------
Xxxxxx X. Xxxx
Xxxx & Xxxxx
0000 Xxxxxxxx, Xxxxx 000
Xxxxxxxx Xxxx, Xxxxxxxx 00000
"Precis" PRECIS, INC.
By/s/XXXX X. XXXXXX
-----------------
Xxxx X. Xxxxxx, Chief Executive Officer
0000 Xxxxx XxXxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
"Representatives"
"Xxxxxx" /s/XXXXXX X. XXXXXXX
----------------------------
Xxxxxx X. Xxxxxxx
0000 Xxxxx Xxxxxxx 000
Xxxxx Xxxxxxx, Xxxxx 00000
"Xxxx"
/s/XXXX X. XXXXX
-------------------
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Xxxx X. Xxxxx
0000 Xxxxx Xxxxxxx 000
Xxxxx Xxxxxxx, Xxxxx 00000
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