Exhibit 10.3
MICROSTRATEGY INCORPORATED
STOCK PURCHASE AGREEMENT
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THIS STOCK PURCHASE AGREEMENT ("Agreement"), by and between
MICROSTRATEGY INCORPORATED, a Delaware corporation (the "Corporation"), Xxxxxxx
X. Xxxxxx ("Xxxxxx") of Fairfax County, Virginia and Xxxxxxx X. Xxxxxxx of
Alexandria, Virginia ("Purchaser") is being entered into on the 28th day of
February, 1995.
WHEREAS, Xxxxxx has caused the Corporation to be formed for
the purpose of being a full service provider of decision support software,
support and service and related activities and any other lawful business as
determined by the Board of Directors of the Corporation and of the majority
shareholder of the Corporation; and
WHEREAS, Purchaser wishes to become a shareholder in the
Corporation subject to the terms and conditions of this Agreement;
NOW THEREFORE, for the mutual promises, covenants,
understandings, representations, warranties and benefits contained herein, the
parties hereto agree as follows:
1. Subscription for Shares.
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Purchaser agrees to purchase such number of shares of the
authorized common stock of the Corporation ("Shares") (of which there are 1,000
shares authorized and
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184 shares issued and outstanding as of the date hereof) at such price
("Purchase Price") as is more particularly described in Exhibit A attached here.
2. Payment for Shares.
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(a) Concurrent with the execution of this Stock Purchase
Agreement, Purchaser shall pay into the Corporation, as paid in capital and/or
surplus, in exchange for the capital stock of the Corporation, the Purchase
Price.
(b) The Purchase Price shall be paid in four installments
as follows: twenty-five percent (25%) of the Purchase Price shall be payable
upon the receipt of the Shares (the "Down Payment"). The remaining seventy-five
percent (75%) of the Purchase Price shall be payable in three equal installments
(the "Succeeding Installment(s)") without interest as follows:
Due December 31, 1995 25%
Due December 31, 1996 25%
Due December 31, 1997 25%
Provided, however, that if the Purchaser's Shares are
subject to redemption pursuant to Paragraph 2 of a Shareholders' Buy/Sell
Agreement by and among Xxxxxxx X. Xxxxxx, the Shareholder and MicroStrategy
Incorporated dated as of the date hereof, the amount of any unpaid Succeeding
Installments shall be reduced and offset against the Redemption Price (as
defined in the aforementioned Shareholders' Buy/Sell Agreement) and such
Redemption Price shall be reduced accordingly.
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(c) Upon the payment by the Purchaser of the down
Payment, twenty-five per cent (25%) of the Shares purchased shall be deemed to
be "Vested Shares" for the purpose of this agreement and the Shareholders'
Buy/Sell Agreement described in paragraph 3 hereof. Upon the payment of each
Succeeding Installment, an additional twenty-five percent (25%) of the Shares
purchased shall be deemed to be "Vested Shares."
(d) Should Purchaser fail to pay any of the Succeeding
Installments in a timely fashion ("Default") so long as he remains an employee
of the Corporation, then and in that case he shall forfeit and return to the
Corporation all of the Shares purchased whether they be Vested Shares or
otherwise whereupon Purchaser shall have no further liability to the Corporation
except as provided in Paragraph 5 herein. Should the Purchaser in case of a
Default fail to return his Shares to the Corporation, the Corporation shall take
such action as is appropriate and necessary to void any and all outstanding
Shares owned by Purchaser. In the case of a Default, the indemnification as
described in paragraph 5 of this Agreement shall continue.
3. Shareholders' Buy/Sell Agreement. The Parties to this
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agreement agree to execute and be bound by a Shareholders' Buy/Sell Agreement in
the form substantially similar to that attached hereto as Exhibit B.
4. Representations of Parties.
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(a) Purchaser represents and warrants as follows:
(i) That he has received and carefully read this
Agreement including all of its attachments.
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(ii) That he is purchasing Shares of the Corporation
without being furnished any offering literature or prospectus other than this
Agreement.
(iii) That he recognizes that the Shares have not
been registered under the Securities Act of 1933, as amended (the "Act"), or
under the securities laws of any state and, therefore, cannot be resold unless
they are registered under the Act and applicable state securities laws or unless
an exemption from registration is available. Purchaser recognizes that he has no
rights to require such registration. He also recognizes that no public agency
has passed upon the accuracy or adequacy of the information contained in this
Agreement or the fairness of the terms of the subscription.
(iv) That he is acquiring Shares for his own account
for a long term investment and not with a view toward resale, fractionalization,
division, or distribution thereof. The parties do not presently have any reason
to anticipate any change in the Purchaser's circumstances, financial or
otherwise, or any particular occasion or event which would necessitate or
require the sale or distribution of the Purchaser's Shares. No one other than
the parties hereto have any beneficial interest in the Purchaser's Shares.
(v) That he recognizes the transfer of his Shares
is subject to a Shareholders' Buy/Sell Agreement which agreement severely
restricts his ability to sell or otherwise dispose of the Shares, and among
other provisions, provides further, under certain circumstances, for the
mandatory sale of his Shares to the Corporation and/or Xxxxxx.
(vi) That he recognizes that the Corporation is in
the development stage, has a limited history of operations or earnings, is a
speculative venture, and the total
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amount of funds tendered to purchase his Shares, including any debt of the
Corporation guaranteed by him, is placed at the risk of the business and may be
completely lost.
(vii) That he has been provided with access to all
information requested in addition to the Agreement for evaluating his purchase
of the Shares, none of which was contrary to the information contained in this
Agreement.
(viii) That he has been presented with and has acted
upon the opportunity to ask questions and receive answers from the officers of
the Corporation as to the terms and conditions of the purchase of his Shares, to
consult with legal counsel and to obtain any additional information necessary
to verify the accuracy of the information made available to him.
(ix) That he recognizes he is a minority
Shareholder in the Corporation and that, as such, pursuant to the General
Corporation Law of the State of Delaware ("GCL") his rights to control, operate,
and manage the Corporation are limited, and that as the majority Shareholder,
Xxxxxx, by virtue of his ability to elect directors as provided by the GCL, by
virtue of his ability to cause the Corporation to issue additional shares
pursuant to the GCL, and by virtue of his ability to vote his Shares pursuant to
the GCL, has substantial control over the operations, management and activities
of the Corporation.
(b) The Corporation represents and warrants as follows:
(i) That it is a Corporation, duly organized,
validly existing and in good standing under the laws of the State of Delaware,
and has all requisite corporate
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power and authority, and has taken all requisite corporate action, to authorize
the execution and delivery of this Agreement and the Shareholders' Buy/Sell
Agreement and perform its obligations thereunder.
(ii) That the execution, delivery, and performance
under this Agreement and the Shareholders' Buy/Sell Agreement will not violate,
contravene, be inconsistent with, or cause a default under the Corporation's
Certificate of Incorporation, the Corporation's bylaws, or any other
certificate, instrument or agreement to which the Corporation is a party or by
which it is bound or which relates to the Shares.
(iii) That upon full payment therefore by Purchaser,
the Shares that are issued to Purchaser will be duly authorized and validly
issued and will be fully paid and nonassessable. The Purchaser's Shares will not
be subject to any lien, restriction, limitation, or other encumbrances except as
provided by this Agreement and the Shareholders' Buy/Sell Agreement.
5. Indemnification. Purchaser agrees to indemnify and
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hold harmless the Corporation and its affiliates, and Xxxxxx from any and all
damages, losses, costs and expenses (including reasonable attorney's fees) any
of which may be incurred by reason of any inaccuracy or breach of the
representations and warranties made by him in this Agreement, or in any document
provided by him to the Corporation or to its affiliates making express reference
to this Agreement.
6. Applicable Law. This Agreement shall be deemed to
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have been made in the State of Delaware, shall become valid when executed by the
parties, and shall be
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governed and construed in accordance with the laws of such State, which laws
shall prevail in the event of any conflict of laws.
7. Severability. If for any reason any portion of this
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Agreement is held to be invalid, contrary to or in conflict with any applicable
present or future law or regulation in a final, unappealable ruling issued by
any court, agency or tribunal of competent jurisdiction in a proceeding to which
the Corporation, Xxxxxx and Purchaser are a party, that ruling shall not impair
the operation of, or having any effect upon, such other portions of this
Agreement as may remain otherwise enforceable, which shall continue to be given
full force and effect and bind the parties hereto, although any portion held to
be invalid shall be deemed not be a part of the Agreement when the time for
appeal expires, or upon the receipt, by either party, of notice of
non-enforcement thereof.
8. Binding Effect. This Agreement is binding upon the
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parties hereto and their respective executors, administrators, heirs, assigns
and successors in interest.
9. Construction. The preambles are a part of this
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Agreement and are expressly incorporated herein.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year aforesaid.
ATTEST MICROSTRATEGY INCORPORATED
/s/ Xxxxxxx X. Xxxxxx By: /s/ Xxxxxxx X. Xxxxxx (Seal)
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Secretary President
WITNESS: Purchaser
[SIGNATURE APPEARS HERE] [SIGNATURE APPEARS HERE] (Seal)
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WITNESS:
[SIGNATURE APPEARS HERE] /s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx
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EXHIBIT A
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SUBSCRIPTION OF SHARES
OF
MICROSTRATEGY INCORPORATED
Total
Price Purchaser
Name Shares Per Share Price
---- ------ --------- ---------
Xxxxxxx X. Xxxxxxx 2.7650505 $17,136.85 $47,384.25
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EXHIBIT B
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MICROSTRATEGY INCORPORATED
SHAREHOLDERS BUY/SELL AGREEMENT
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THIS AGREEMENT, made this 28th day of February, 1995, by and
among Xxxxxxx X. Xxxxxx, ("Xxxxxx"), and Xxxxxxx X. Xxxxxxx ("Shareholder"), and
MICROSTRATEGY INCORPORATED, a Delaware corporation, ("Corporation").
WITNESSETH:
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WHEREAS, the Shareholder is the owner of certain Shares of
the authorized common stock of Corporation ("Shares"); and
WHEREAS, Xxxxxx is the majority shareholder of the
Corporation; and
WHEREAS, the parties to this agreement believe that it is in
their mutual best interests to provide continuity in the management and policies
of the Corporation, and therefore the purpose of this agreement is to impose
certain restrictions and obligations with respect to the disposition of the
Shares owned by the Shareholder and to provide for the purchase by the
Corporation of the Shareholder's Shares under certain circumstances;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and conditions herein contained, and for other good and
valuable consideration, receipt of which is hereby acknowledged, the parties
hereto, intending to be legally bound hereby, mutually covenant and agree as
follows:
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1. RIGHT OF FIRST PURCHASE:
The Shareholder agrees that he will not sell, give, encumber,
pledge or otherwise transfer, assign, or dispose of either voluntarily or
involuntarily, or by operation of law (collectively a "Transfer"), all or any
part of the Shares which he now owns or may hereafter acquire (except as
otherwise permitted or required herein) without the consent of the Corporation.
2. TERMINATION OF EMPLOYMENT; DEATH:
(a) Mandatory Sale:
If any Shareholder's employment with the Corporation
terminates or is terminated for any reason including death, such Shareholder or
the Shareholder's estate, as the case may be, shall, within ninety (90) days
thereof, offer for sale to the Corporation all of the Shares owned by him at
that time at a redemption price ("Redemption Price") determined and paid in
accordance with the terms contained herein, and the Corporation shall purchase
the aforesaid Shares in accordance herewith.
(b) Redemption Price:
The Redemption Price for any Vested Shares (as defined in the
Stock Purchase Agreement among the parties dated as of the date hereof) shall be
calculated as follows:
The gross revenues of the Corporation for the preceding
fiscal year as reported on line 1(c) of IRS Form 1120S (or its successor) times
.75 divided by the total Shares outstanding times the number of Vested Shares
being sold to the Corporation.
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The Redemption Price for all other Shares shall be the
Purchase Price (as defined in a Stock Purchase Agreement) reduced by any unpaid
Succeeding Installments (as defined in the Stock Purchase Agreement) as of the
date of the said termination.
The total Redemption Price for all Vested Shares and all
other Shares shall be paid in four equal installments as follows: Twenty-five
percent (25%) within thirty (30) days of the date on which the Shares are
offered for sale pursuant to paragraph (a) above, and the remaining seventy-five
percent (75%) in three equal installments ("Installment Payment(s)"). The first
Installment Payment is due and payable one year from the date of termination or
death, as the case may be; the second Installment Payment is due and payable two
years from the date of termination or death, as the case may be; and the third
and final Installment Payment is due and payable three years from the date of
termination or death, as the case may be. There shall be no interest affixed to
any unpaid Installment Payment unless such installment is late, in which case
interest on the unpaid amount shall accrue at the rate of 12% per annum from the
date on which such installment was due until paid in full.
3. ANTIDILUTION PROVISIONS:
Xxxxxx and the Corporation both agree that should at any time
the Corporation issue or cause to be issued additional Shares of its capital
stock, including options, warrants, or any other stock equivalents or
derivatives ("Additional Shares"), to or for the benefit of Xxxxxx, or any of
his relatives, or to be held in trust for Xxxxxx or any of his relatives, then
and in that case, the Corporation shall notify Shareholder of the proposed
issuance of Additional Shares, and Shareholder shall, at that time, have the
opportunity and right to purchase such
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number of Shares or share equivalents or derivatives ("Additional Shareholder
Shares") as are necessary to maintain Shareholder's ownership in the Corporation
in the same relative proportion to Xxxxxx'x ownership (i.e. the fraction
determined by dividing Shareholder's Shares by Sailor's Shares shall be constant
under such circumstances). In determining the number of Shares owned by Xxxxxx
in calculating the anti-dilution provisions of this paragraph, all Shares issued
for his benefit or to his relatives, including Shares held by trusts for the
benefit of Xxxxxx or his relatives, shall be included. The purchase price for
such Additional Shareholder Shares to be purchased by Shareholder shall be the
same purchase price and, paid upon the same terms and conditions, as the
Corporation is offering and accepting from Xxxxxx for such Additional
Shareholder Shares. If Xxxxxx shall receive such Additional Shareholder Shares
for services, or if for any reason Xxxxxx is not required to tender any cash or
other tangible consideration for his Shares, Shareholder shall, in consideration
for his agreement to sell his Shares to the Corporation pursuant to the
Agreement, be entitled to receive from the Corporation, at no additional cash
cost to him, the requisite number of Shares to maintain his percentage ownership
of the Corporation constant. A Waiver by Shareholder of his right to purchase
Additional Shareholder Shares at any given time shall not be construed as a
waiver of Shareholder's rights to purchase Additional Shareholder Shares in the
future.
4. DISTRIBUTIONS:
The Corporation and Xxxxxx agree to cause the Corporation to
distribute annually or pay or cause to be distributed or paid to Shareholder,
for as long as Shareholder
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may own stock in the Corporation, such amounts of cash as are necessary to
approximate his additional tax liability attributable to his share of the
reportable, taxable earnings of the Corporation as a result of its sub-chapter S
tax status. The Corporation agrees to make such distributions or payments prior
to the time that Shareholder is required to make tax payments relating to the
Corporation's earnings.
5. PUBLIC OFFERING:
In the event the Corporation shall have a public offering of
its Shares, Shareholder shall have no fewer or less beneficial rights with
regard to registration of his Shares, sale of his Shares, or any other rights,
than does any other shareholder of the Corporation. Upon the occurrence of a
public offering, all restrictions or limitations with respect to Shareholder's
right to Transfer his Shares as contained in this Shareholders' Buy/Sell
Agreement shall be null and void.
6. SUB-CHAPTER S ELECTION:
(a) Transfers:
Prior to making any Transfer of the Shares under this
agreement, the transferring Shareholder shall obtain from the Corporation a
written certification that neither such Transfer nor any transaction
contemplated with respect to such Transfer (including, without limitation, the
foreclosure of any lien or encumbrance or, in case of a Transfer in trust, the
termination of such trust or the taking of any action by any beneficiary of such
trust) will or may result in the termination of the Corporation's Sub-Chapter S
Election should such election be then in effect ("S Election"). The Corporation
may require, as a
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condition to any such certification to be provided by the Corporation under this
agreement, a legal opinion of counsel of its choice as to the matters to be
contained in such certification, satisfactory in form and substance to the
Corporation, and arrangements satisfactory to the Corporation to ensure that any
transferee shall take any actions necessary to maintain the Corporation's S
Election (including, without limitation, with respect to any Transfer in trust,
the timely filing of an election to treat such trust as a qualified sub-chapter
S trust ("QSST") under Section 1361(d) of the Internal Revenue Code, if
applicable). Should it be necessary for the Corporation to obtain legal opinion
concerning the impact of a Shareholder's actions on the Corporation's S Election
status, the Corporation will conclude its legal analysis within thirty (30) days
after receiving the request from the Shareholder.
(b) Consent:
No Shareholder shall take any action which would result in
the termination of the Corporation's S Election without the prior written
consent of the holder(s) of a majority of the Shares.
(c) Waiver:
If any Shareholder makes any Transfer or takes any other
action that causes termination of the Corporation's S Election, the Board of
Directors may direct the appropriate officers of the Corporation to attempt to
obtain a waiver from the Internal Revenue Service of the terminating event on
grounds of inadvertency or to commence the appropriate procedure to obtain
approval from the Internal Revenue Service to file a new
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election to be treated as an S corporation before the 5-year waiting period
after termination of an S Election has expired.
(d) Termination of Sub-Chapter S Election:
Nothing in this agreement shall be construed to prevent the
Corporation or the holder(s) of a majority of the Corporation's Shares from
terminating the Corporation's S Election, if the Corporation's board of
directors and such holder(s) determine that such termination is desirable.
7. ENDORSEMENT ON STOCK CERTIFICATES:
Upon the execution of this agreement, the certificates of
stock subject hereto shall be surrendered to the Corporation and endorsed as
follows:
This certificate is transferable only upon
compliance with the provisions of an agreement dated
_______, 19__ among Xxxxxxx X. Xxxxxx, Xxxxxxx X. Xxxxxxx and
MicroStrategy Incorporated, a copy of which together with all
amendments thereto is on file in the office of the Secretary
of the Corporation.
After endorsement the certificate shall be returned to the
Shareholder who shall, subject to the terms of this agreement, be entitled to
exercise all rights of ownership of the Shares owned by him.
All Shares hereafter issued to the Shareholder shall be
subject to all of its terms and conditions, and bear the same or similar
endorsement.
8. TERMINATION OF AGREEMENT:
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This agreement shall terminate upon the occurrence
of any of the following events:
(i) Dissolution of the Corporation.
(ii) The voluntary agreement of all
parties who are then bound by the terms hereof.
Upon the termination of this agreement, each
Shareholder shall surrender to the Corporation the certificate for his stock and
the Corporation shall issue to him in lieu thereof new certificates for an equal
number of Shares without the endorsement set forth in paragraph 7.
9. TRANSFER OF SHARES IN VIOLATION OF THE AGREEMENT
Any Transfer of Shares or attempted Transfer of Shares in
violation of this agreement shall be deemed null and void, and, at the election
of the Corporation or any Shareholder, be deemed to be an offer to sell the
transferor's Shares according to the provisions and procedures of paragraph 2
of this agreement.
10. ENFORCEMENT:
Since the parties will suffer irreparable harm and damage in
the event this agreement is not exactly carried out, it is stipulated:
(i) If any dispute arises concerning the
Transfer of Shares, an injunction may be issued restraining any Transfer pending
determination of the dispute; and
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(ii) If any dispute arises concerning the
right or duty to buy or sell, then the right or duty shall be enforceable in a
court of equity by a decree of specific performance after the determination of
the dispute.
These remedies, however, shall be cumulative and not
exclusive and shall be in addition to any other remedy which the parties may
have.
11. BINDING UPON:
This agreement shall be for the benefit of and binding upon
the parties hereto, their heirs, administrators, executors, successors and
assigns, and the parties hereto do covenant and agree that they, themselves,
and their heirs, executors, administrators, successors and assigns, will execute
any and all instruments, releases, assignments and consents that may be required
of them in accordance with the provisions of this agreement.
12. MISCELLANEOUS:
(a) Communications:
All offers, acceptances, notifications and other
communications contemplated by this agreement shall be sent by Registered Mail,
return receipt requested, to the appropriate party at the then current address
contained in the files of the Corporation, and shall be effective upon delivery
or upon refusal.
(b) Endorsement of Shares:
Any Shareholder who either desires or is required to sell his
Shares pursuant to this agreement shall duly endorse and deliver all of the
Shares upon receipt of any initial payment.
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13. CONSTRUCTION:
This agreement shall be construed under the laws of the State
of Delaware.
14. PRIOR AGREEMENT:
To the extent that any prior agreements, commitments or
understandings, whether oral or in writing may have existed covering the same or
similar subject matter, the said prior agreements, commitments or understandings
are hereby terminated and declared null and void, and this agreement is the
entire agreement between the parties with respect to the same or similar subject
matter.
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IN WITNESS WHEREOF, the parties, for themselves, their heirs,
executors, administrators, successors and assigns, have hereunto set their hands
and seals the day and date first above written.
WITNESS:
[SIGNATURE APPEARS HERE] [SIGNATURE APPEARS HERE]
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Shareholder
[SIGNATURE APPEARS HERE] /s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx
MICROSTRATEGY INCORPORATED
By: /s/ Xxxxxxx X. Xxxxxx
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ATTEST
By: /s/ Xxxxxxx X. Xxxxxx
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Secretary
[CORPORATE SEAL]
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