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EXHIBIT 10.40
[PEROTSYSTEMS LETTERHEAD]
September 26, 1997
NationsBank of Texas, N.A. Xxxxxxx X. Xxxxx
Professional & Executive Banking 00000 Xxxx Xxxx
0000 Xxx Xxxxxx, 0xx Xxxxx Xxxxxx, Xxxxx 00000
P.O. Box 831101
Dallas, TX 75283-1101
Attn: Xx. Xxxxxx Xxxxxx
Re: Xxxxx Systems Class A Common Stock Purchase
Dear Madam or Sir:
1. The purpose of this letter is to provide for the agreement among Xxxxx
Systems Corporation ("PSC"), NationsBank of Texas, N.A. ("NationsBank")
and Xxxxxxx X. Xxxxx ("Associate") with respect to the purchase by
Associate of 105,000 shares (the "Shares") of Xxxxx Systems Class A
Common Stock ("Common Stock"), where some or all of the payment price
for such Shares is being borrowed by Associate from NationsBank. The
Shares are being purchased from PSC pursuant to the Restricted Stock
Agreement, dated as of September 26, 1997, between PSC and Associate
(the "Stock Agreement").
2. Each of the parties recognizes that Associate is obtaining funding
from NationsBank in the original principal amount of $325,808.53 (the
"NB Principal") pursuant to a promissory note, dated as of September
26, 1997, by Associate payable to the order of NationsBank (the "NB
Promissory Note"), secured by a security agreement of even date with
the NB Promissory Note (the "NB Security
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NationsBank of Texas, N.A.
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Agreement"). In addition, each of the parties recognizes that
Associate is obtaining funding from PSC (in the original principal
amount of $196,875 (the "PSC Principal") pursuant to a promissory
note, dated as of September 26, 1997, executed by Associate payable to
the order of PSC (the "PSC Promissory Note") and secured by a pledge
agreement of even date with the PSC Promissory Note (the "PSC Pledge
Agreement").
3. Each of the parties hereby agrees that if PSC repurchases any Shares
from Associate pursuant to the Stock Agreement, that it will distribute
the repurchase price to PSC and to NationsBank pro-rata in accordance
with the relative amounts of the unpaid NB Principal and the PSC
Principal (if any) to apply to any amounts outstanding under the NB
Promissory Note and under the PSC Promissory Note (if any). When PSC
has been paid in full under the PSC Promissory Note (if any) it will
send the entire balance of the repayment directly to NationsBank,
regardless of the size of that amount (and even if in excess of the
NationsBank Principal), unless and until it receives a signed
authorization from Associate and NationsBank instructing it to send any
additional funds directly to Associate.
4. If, by the later of June 30, 1998 or the date of the maturity of the NB
Promissory Note, PSC has not completed an initial public offering (the
"IPO") whereby the Common Stock (or any successor security) is listed
on a registered national securities exchange or approved for quotation
in the National Association of Securities Dealers Automated Quotation
System, then PSC will, within thirty days of NationsBank's written
request, purchase the outstanding NB Promissory Note from NationsBank,
for the then outstanding principal (which shall never exceed the
original NB Principal) plus accrued but unpaid interest thereunder. In
connection with such sale, NationsBank will endorse without recourse
the NB Promissory Note to the order of PSC, transfer to PSC good title
to the NB Security Agreement, under which the Shares shall be pledged,
deliver any and all Shares in its possession owned by Associate, along
with any signed stock powers thereto, and which Shares shall be free
and clear of additional liens and encumbrances created by, through, or
under NationsBank other than the NB Security Agreement, which shall be
assigned to PSC.
5. If the Associate sells a portion of the Shares as part of the IPO or
thereafter (with XxxxxxxXxxx's and PSC's consent, if needed), then
Associate agrees to use the sale proceeds (after estimated income tax)
to prepay the NB Promissory Note and the PSC Promissory Note (if any),
in the same manner as provided in the third paragraph of this letter
until principal and interest under both Notes have been paid in full.
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NationsBank of Texas, N.A.
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6. If the IPO occurs before the maturity of the NB Promissory Note but the
Associate wishes to retain ownership of all Shares of publicly traded
stock, the Associate will agree to collateralize the NB Promissory Note
with such PSC vested Shares or other acceptable marketable securities
that have a market value equal to or exceeding 150% of the loan balance
outstanding under the NB Promissory Note, and NationsBank and the
Associate will execute a NationsBank collateral maintenance agreement
that will control the continuing need for shares pledged as collateral
and any adjustments thereto. This paragraph will not affect the PSC
Promissory Note or the PSC Pledge Agreement. PSC will give notice to
NationsBank from time to time of the principal outstanding under the
PSC Promissory Note.
7. The parties agree that, if there is PSC Principal, Associate will
execute both the NB Security Agreement and the PSC Pledge Agreement.
Associate agrees to execute a stock power in blank for each certificate
evidencing any of the Shares and to deliver all such certificates with
stock powers to PSC or NationsBank as appropriate (after the IPO,
NationsBank will hold the certificates representing vested Shares to
the extent needed under Paragraph 6). Notwithstanding anything in those
agreements to the contrary, the parties agree that NationsBank and PSC
will both have a security interest in the Shares and whichever of PSC
or NationsBank holds such Shares under the PSC Pledge Agreement or the
NB Security Agreement shall hold the Shares for the benefit of both and
PSC and NationsBank will cooperate with one another to enforce their
respective rights under the NB Security Agreement and the PSC Pledge
Agreement, and will share in any proceeds as set forth herein, until
the amounts due under one of the PSC or NB Promissory Notes have been
paid in full, and thereafter the balance will revert to the holder of
the other Promissory Note until the amounts due under that Promissory
Note have been paid in full except all proceeds received from the sale
by NationsBank or by sale with NationsBank's consent of PSC publicly
held shares subsequent to the IPO shall first be applied to payment of
debt owed under the NB Promissory Note before any amounts shall revert
to or be distributed to PSC. The Associate shall not be deemed to have
violated either the PSC Pledge Agreement or the NB Security Agreement,
or to have breached any representations, warranties or covenants
therein, solely by virtue of signing both Agreements.
By signature below, Associate irrevocably authorizes PSC and
NationsBank to make the payments as provided in this letter, and agrees to
indemnify and hold PSC and NationsBank harmless against any loss, damage or
claim in connection with making payments as provided above.
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NationsBank of Texas, N.A.
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For purposes of notice under this letter, the parties' addresses shall
be deemed the addresses as provided above in this letter, unless the other
parties receive written notice, at least 15 days in advance, of a new address.
If the terms of this letter are acceptable to you, please execute your
consent below.
Very truly yours,
/s/ [ILLEGIBLE]
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Title: Ass't Sec'y
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AGREED: AGREED:
NATIONSBANK OF TEXAS, N.A. ASSOCIATE
By: /s/ [ILLEGIBLE] /s/ XXXXXXX X. XXXXX
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Name: [ILLEGIBLE] Name: XXXXXXX X. XXXXX
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Title: Vice President
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Date: [ILLEGIBLE] Date: 9/26/97
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