Exhibit 10.8
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (this "Agreement") is made and entered into
as of August 28, 1996 by and between NetSat Express Inc., a Delaware Corporation
(the "Company"), and Xxxxxx Network Systems Inc., a unit of Xxxxxx Electronics
Corporation ("Investor").
W I T N E S S E T H:
WHERAS, the Company desires to sell to the Investor, and the Investor
desires to purchase from the Company, on the terms and conditions set forth in
this Agreement; shares of the Company's Class A Preferred Stock, par value $.01
per share ("Class A Preferred") having the terms set forth in the form of
Certificate of Amendment of Certificate of Incorporation annexed hereto:
NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:
1. AGREEMENT TO PURCHASE AND SELL STOCK. The Company shall sell to the
Investor at the Closing, and the Investor shall purchase from the Company
at the Closing, 190,000 shares of the Class A Preferred, at a price of
$1.32 per share. The shares of Class A Preferred Stock purchased and sold
pursuant to this Agreement will be collectively hereinafter referred to as
the "Purchased Shares."
2. OPTION TO PURCHASE COMMON STOCK. The Company further grants to the Investor
the option to purchase, at any time until 5:00 P.M., New York City time, on
July 31, 2001, up to the number specified below of fully paid and
non-assessable shares of the Company's Common Stock, $.01 par value
("Common Stock") at a price of $1.50 per share of Common Stock (the
"Exercise Price") payable in cash, by certified check or official bank
check or by wire transfer, subject to adjustment as provided below. The
shares of Common Stock which may the purchased upon exercise of such option
are collectively hereinafter referred to as the "Option Shares."
2.1. As used in this paragraph, the term "Partially Diluted Common Stock"
means the sum of (i) the number of shares of common stock actually
outstanding at the time of reference, less any shares of common stock
issued upon exercise of the option granted herein or conversion of the
Class A Preferred Stock plus (ii) the number of shares of common stock
issuable upon conversion of any outstanding convertible securities of
the Company other than the Class A Preferred Stock plus (iii) the
number of shares of common stock issuable upon exercise of all
outstanding warrants, options, or other rights to acquire common stock
other than the option granted herein. The term "Fully Diluted Common
Stock" means the sum of (i) the number of shares of common stock
actually outstanding at the time of reference, including all shares of
common stock issued upon exercise of the option granted herein or upon
conversion of the Class A Preferred Stock plus (i) the number of
shares of common stock issuable upon conversion of any outstanding
convertible securities of the Company including the Class A Preferred
Stock plus (iii) the number of shares of common stock issuable upon
exercise of all outstanding warrants, options, or other rights to
acquire common stock including the option granted herein. If the
option is exercised by the later of (x) 2
years from the date of this Agreement and (y) the first anniversary of
the commencement of commercial operations at the Company's first
commercial hub serving a multi-national market, then the number of
shares constituting the Option Shares shall be the greater of 100,000
shares and the number of shares produced by the formula specified
below (the "Formula Number"). If the option is not exercised within
the period specified in the preceding sentence, the number of shares
constituting the Option Shares shall be 100,000. The Formula Number
shall be that number which satisfies both of the following two
conditions:
2.1.1. the sum of the Formula Number and the Partially Diluted Common
Stock immediately before exercise of the option shall equal
81% of the Fully Diluted Common Stock immediately following
exercise of the option, and
2.1.2. the Formula Number shall equal 10% of the Fully Diluted Common
Stock immediately following exercises of the option.
Mathematically, the Formula Number shall be the result of solving for
FN the following two equations:
PDCS+FN=0.81*FDCS
FN=0.10*FDCS
where PDCS is Partially Diluted Common Stock immediately before
exercise of the option and FDCS is Fully Diluted Common Stock
immediately following exercise of the option.
2.2. Subdivision and Combination. In case the Company shall at any time
subdivide or combine the outstanding shares of Common Stock, the Exercise
Price shall forthwith be proportionately decreased in the case of
subdivision or increased in the case of combination.
2.3. Adjustment in Number of Shares. Upon each adjustment of the Exercise Price
pursuant to the provisions of this Section 2, the number of shares of
Common Stock issuable upon the exercise of the option shall be adjusted to
the nearest full share by multiplying the Exercise Price in effect
immediately prior to such adjustment by the number of shares of Common
Stock issuable upon exercise of the option immediately prior to such
adjustment and dividing the product so obtained by the adjusted Exercise
Price.
2.4. Reclassification, Consolidation, Merger, Etc. In case of any
reclassification or change of the outstanding shares of Common Stock (other
than a change in par value to no par value, or from no par value to par
value, or as a result of a subdivision or combination), the Investor shall
thereafter have the right to purchase the kind and number of shares of
stock and other securities and property which would have been received upon
such reclassification or change if the Investor had exercised the option
granted herein immediately prior to such transaction, at a price equal to
the product of (x) the number of shares issuable upon exercise of the
option and (y) the Exercise Price in effect immediately prior to the record
date for such reclassification or change.
3. CLOSING. The purchase and sale of the Purchased Shares will take place at
the offices of the Investor on August 2, 1996 or at such time and place as
the Company and Investor mutually agree upon (which time and place are
referred to in this Agreement as the "Closing"). At the Closing, the
Company will deliver to the Investor a certificate representing the number
of Purchased Shares that the Investor has agreed to purchase against
delivery to the Company by such Investor of the full purchase price of such
Purchased Shares paid by wire transfer of funds to the Company.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents and
warrants to the Investor that the statements in the following paragraphs of
this Section 4 are all true and correct.
4.1. Organization, Good Standing and Qualification. The Company is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and has all requisite
corporate power and authority to own its properties and assets and to
carry on its business as now conducted and as presently proposed to be
conducted. The Company is qualified to do business as a foreign
corporation in each jurisdiction where failure to be so qualified
would have a material adverse effect on its financial condition,
business, prospects or operations.
4.2. Capitalization. Immediately prior to the Closing the capitalization of
the Company will consist of 2,000,000 authorized shares of stock,
which 1,000,000 shares will be Common Stock, par value $0.01 per share
(the "Common Stock"), and 1,000,000 shares will be Class A Preferred.
Of the authorized capital, 30,000 shares of Common Stock will be
issued and outstanding. There are not outstanding any options,
warrants, rights (including conversion or preemptive rights) or
agreements for the purchase or acquisition from the Company of any
shares of its capital stock or any securities convertible into or
exchangeable for any shares of the Company's capital stock.
4.3. Due Authorization. All corporate action necessary for the
authorization, execution, and delivery of, and the performance of all
obligations of the Company under this Agreement has been taken or will
be taken prior to the Closing, and this Agreement constitutes the
valid and binding obligation of the Company, enforceable in accordance
with its term.
4.4. Valid Issuance of Stock. The Purchased Shares, when issued, sold and
delivered in accordance with the terms of this Agreement for the
consideration provided for herein, the Option Shares, when purchased
upon exercise of the option provided for herein, and the Common Stock
issuable upon conversion of the Purchased Shares will be duly and
validly issued, fully paid and non-assessable.
4.5. Governmental Consents. No consent, approval, order or authorization
of, or registration, qualification, designation, declaration or filing
with, any U.S. federal, state or local governmental authority on the
part of the Company is required in connection with the consummation of
the transactions contemplated by this Agreement.
4.6. Litigation. There is no material action, suit, proceeding, claim,
arbitration or investigation ("Action") pending (or, to the best of
the Company's knowledge, currently threatened) against the Company,
its activities, properties or assets or, to the best of the Company's
knowledge, against any officer, director or employee of the Company in
connection with such officer's, director's or employee's relationship
with, or actions taken on behalf of, the Company. The Company is not a
party to or subject to the provisions of any order, writ, injunction,
judgment or decree of any court or government agency or
instrumentality.
4.7. Status of Intellectual property. Attached hereto as Exhibit A is a
true and correct schedule which describes all of the patents, patent
applications, registered trademarks, trademark applications, copyright
registrations and applications therefor and all licenses, franchises,
permits, authorizations, agreements and arrangements that concern any
of the foregoing or that concern like items owned by others and used
by the Company. Except as indicated on such Exhibit.
4.7.1. The patents and patent applications (collectively, "patent
rights" shown on such Exhibit are owned by the Company free
and clear of all mortgages, liens, charges or encumbrances
whatsoever. No licenses have been granted with respect to
such patent rights and the Company has not received notice
of any claims by a third party suggesting that its practice
of the inventions covered by such patents rights would
infringe the patent rights of any third party.
4.7.2. The copyright registrations and pending applications shown on
such Exhibit are owned by the Company free and clear of all
mortgages, liens, charges or encumbrances whatsoever. Except
for licenses granted to end users in accordance with the
Company's standard terms, no licenses have been granted with
respect to any of the Company's copyrighted material and the
Company has not received notice of any claims by a third
party suggesting that any of its activities in the conduct
of its business as presently conducted infringe the
copyrights of any third party.
4.7.3. The trademark registrations and pending applications shown on
such Exhibit are owned by the Company free and clear of all
mortgages, liens, charges or encumbrances whatsoever. No
licenses have been granted with respect to any of such
trademarks or applications and the Company has not received
notice of any claims by a third party suggesting that any of
its activities in the conduct of its business as presently
conducted infringe the trademarks, trade names or trade
dress of any third party.
4.7.4. All technical information and know-how in possession of the
Company relating to the design or manufacture of products
sold, and services performed, by it, including without
limitation methods of manufacture, lab journals,
manufacturing, engineering and other drawings, design and
engineering specifications and similar items recording or
evidencing such information is owned by the Company free and
clear of all mortgages,
liens, charges or encumbrances whatsoever. The Company has
no obligation to pay any royalty to any third party with
respect to such information. The Company has not granted any
license or other permission with respect to the use of such
information and has not received notice of any claims by a
third party suggesting that the Company's use of such
information would infringe or misappropriate the rights of
any third party.
4.8. Compliance with Law and Charter Documents. The Company is not in
violation or default of any provisions of its Certificate of
Incorporation or Bylaws, both as amended, and except for any
violations that individually and in the aggregate would have no
material adverse impact on the Company's business, the Company is in
compliance with all applicable statutes, laws (including tax laws),
regulations and executive orders of the United States of America and
all states, foreign countries or other governmental bodies and
agencies having jurisdiction over the Company's business or
properties. The Company has not received any notice of any material
violation of such statutes, laws, regulations or orders which has
not been remedied prior to the date hereof. The execution, delivery
and performance of this Agreement and the consummation of the
transactions contemplated hereby or thereby will not result in any
such violation or default, or be in conflict with or constitute,
with or without the passage of time or the giving of notice or both,
either a default under the Company's Certificate of Incorporation or
Bylaws, or any agreement or contract of the Company, or, to the best
of the Company's knowledge, a violation of any statutes, laws,
regulations or orders, or an event which results in the creation of
any material lien, charge or encumbrance upon any asset of the
Company.
4.9. Material Agreements. The Company has not breached, nor does the
Company have any knowledge of any claim that the Company has
breached, any term or condition of any agreement that, individually
or in the aggregate, would have a material adverse effect on the
business, properties, financial condition, results of operations or
affairs or prospects of the Company.
4.10. Certificate; Bylaws. The Certificate of Incorporation and the Bylaws
of the Company are in the form previously provided to the Investor.
4.11. Title to Property and Assets. The Company owns its properties and
assets free and clear of all mortgages, deed of trust, liens,
encumbrances, security interests and claims except for statutory
liens for the payment of current taxes that are not yet delinquent
and liens, encumbrances and security interests which arise in the
ordinary course of business and which do not affect material
properties and assets of the Company. With respect to the property
and assets it leases, the Company is in compliance with such leases
and, to the best of the Company's knowledge, the Company holds valid
leasehold interests in such assets free of any liens, encumbrances,
security interests or claims of any party other than the lessors of
such property and assets.
4.12. Financial Statements. The Company is newly organized, and has no
material assets or liabilities other than current obligations to pay
compensation to certain consultants in an amount not exceeding
$5,000. The Company intends to conduct business in accordance with
the business plan previously delivered to the Investor, and to use
its best efforts to achieve the projected financial results set
forth therein. The Investor understands that such projections are
subject to inherent uncertainties and that there can be no assurance
that such projected results will be obtained.
5. REPRESENTATIONS, WARRANTIES AND CERTAIN AGREEMENTS OF INVESTOR. The
Investor hereby represents and warrants to, and agrees with, the Company,
severally and not jointly, that:
5.1. Authorization. This Agreement constitutes such Investor's valid and
legally binding obligation, enforceable in accordance with its
terms. The Investor has full corporate power and authority to enter
into this Agreement.
5.2. Due Authorization. All corporate action on the part of the Investor
necessary for the authorization, execution, and delivery of, and the
performance of its obligations under, this Agreement, has been taken
or will be taken prior to the Closing, and this agreement
constitutes the valid and legally binding obligation of the
Investor, enforceable in accordance with its terms.
5.3. Legends. It is understood that the certificates evidencing the
Purchased Shares, the Option Shares and the shares issuable upon
conversion of the Purchased Shares will bear the legends set forth
below and any others as may be required by law:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE
SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES ARE SUBJECT TO
RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE
TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE
APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR
EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE
REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN
INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY
REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO
THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN
COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
The legend set forth above shall be removed by the Company from any
certificate evidencing Purchased Shares, the Option Shares or the
shares issuable upon conversion of the Purchased Shares upon
delivery to the Company of an opinion by counsel, reasonably
satisfactory to the Company, that a registration statement
under the 1933 Act is at that time in effect with respect to the
legended security or that such security can be freely transferred in
a public sale without such a registration statement's being in
effect and that such transfer will not jeopardize the exemption or
exemptions from registration pursuant to which the Company issued
any of such shares.
6. CONDITIONS TO INVESTOR'S OBLIGATIONS AT CLOSING. The obligations of the
Investor under Section 1 of this Agreement are subject to the fulfillment
on or before the Closing, of each of the following conditions precedent or
concurrent.
6.1. Representations and Warranties True. Each of the representations and
warranties of the Company contained in Section 4 shall be true and
correct on and as of the Closing with the same effect as though such
representations and warranties had been made on and as of the date
of the Closing.
6.2. Proceedings and Documents. All corporate and other proceedings in
connection with the transactions contemplated at the Closing and all
documents incident thereto shall be reasonably satisfactory in form
and substance to the Investor and to the Investor's counsel, and
they shall have received all such counterpart originals and
certified or other copies of such documents as they may reasonably
request.
6.3. Creation of Class A Preferred Stock. The Company shall have duly
filed a certificate of amendment to its certificate of incorporation
creating the Class A Preferred Stock, and the Investor shall have
received evidence reasonably satisfactory to its of such filing.
7. CONDITIONS TO THE COMPANY'S OBLIGATIONS AT CLOSING. The obligations of the
Company to the Investor under this Agreement are subject to the
fulfillment or waiver on or before the Closing of each of the following
conditions by such Investor:
7.1. Representations and Warranties. The representations and warranties
of such Investor contained in Section 5 shall be true and correct on
the date of the Closing with the same effect as though such
representations and warranties had been made on and as of the
Closing.
7.2. Payment of Purchase Price. The investor shall have delivered to the
Company the purchase price specified in accordance with the
provisions of Section 1.
7.3. Securities Exemptions. The offer and sale of the Purchased Shares,
the Option Shares and the shares issuable upon conversion of the
Purchased Shares to the investor pursuant to this Agreement shall be
exempt from the registration requirements of the 1933 Act, and the
registration and/or qualification requirements of all applicable
state securities laws.
8. MISCELLANEOUS.
8.1. Corporate Opportunity Issues. Notwithstanding (individually or
collectively) i) this Agreement; ii) any investment the Investor may
make in the Company, iii)
any advice the Investor may give the Company; iv) any nomination to
the Company's Board of Directors which the Investor may make as
provided in this Agreement; v) any vendor or creditor relationship
that may exist between the Investor and the Company; and vi) other
dealings which the Investor may have in effecting any of the above
(collectively the Investor Dealings With the Company), the Investor
will be free, without accounting to or recourse by the Company, to:
a) invest in; b) advise; c) supply; d) provide credit to; e)
nominate members of the Board of Directors or management of, and f)
otherwise deal with any other entity, including entities that may
compete with the Company. Moreover, notwithstanding any the Investor
Dealings With the Company, the Investor may take advantage of any or
all commercial opportunities of which it becomes aware without
accounting to or recourse by the Company. The Investor will use
commercially reasonable efforts, subject to its obligations of
confidentiality, to keep the Company informed of dealings with other
companies that compete with the Company with respect to satellite
internet services.
8.2. Survival of Warranties. The representations, warranties and
covenants of the Company and the Investor contained in or made
pursuant to this Agreement shall survive the Closing for a period of
18 months.
8.3. Successors and Assigns. The terms and conditions of this Agreement
shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties.
8.4. Governing Law. This Agreement shall be governed by and construed
under the internal laws of the State of New York as applied to
agreements among New York residents entered into and to be performed
entirely within New York, without reference to principles of
conflict of laws or choice of laws.
8.5. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
8.6. Notices. Unless otherwise provided, any notice required or permitted
under this Agreement shall be given in writing and shall be deemed
effectively given upon personal delivery to the party to be notified
or upon deposit with the United States Post Office, by registered or
certified mail, postage prepaid and addressed to the party to be
notified at the address indicated for such party or at such other
address as any party or the Company may designate by giving ten (10)
days advance written notice to all other parties.
8.7. Amendments and Waivers. Any term of this Agreement may be amended
and the observance of any term of this Agreement may be waived
(either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of
the Company and the Investor. Any amendment or waiver effected in
accordance with this Section shall be binding upon the Investor each
future holder of the Purchased Shares, the shares issuable upon
conversion of the Purchased Shares and the Company.
8.8. Severability. If one or more provisions of this Agreement are held
to be unenforceable under applicable law, such provision(s) shall be
excluded from this Agreement and the balance of the Agreement shall
be interpreted as if such provision(s) were so excluded and shall be
enforceable in accordance with its terms.
8.9. Entire Agreement. This Agreement, together with all exhibits hereto,
constitutes the entire agreement and understanding of the parties
with respect to the subject matter hereof and supersedes any and all
prior negotiations, correspondence, agreements, undertakings duties
or obligations between the parties with respect to the subject mater
hereof.
8.10. Further Assurances. From and after the date of this Agreement, upon
the request of the Investor or the Company, the Company, and the
Investor shall execute and deliver such instruments, documents or
other writings as may be reasonably necessary or desirable to
confirm and carry out and to effectuate fully the intent and
purposes of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
THE COMPANY: THE INVESTOR:
NetSat Express, Inc. Xxxxxx Network Systems, Inc.
By /s/Illegible By: /s/Xxxxx Ruchese
-------------------------- ---------------------------------
Executive Vice President and
Title: Chairman & CEO Title: Chief Financial Officer
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LIST OF EXHIBITS
Exhibit A - Intellectual Property
EXHIBIT A
Intellectual Property
Trademark Application pending for "NetSat Express, Inc."
