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EXHIBIT 10.17
STOCK REDEMPTION AGREEMENT
This Stock Redemption Agreement (the "Agreement") is made as of this
3rd day of May 1994, by and between John H. Marmaduke, Independent Executor of
the Estate of Sam H. Marmaduke, Deceased (the "Estate"), and Hastings Books,
Music & Video, Inc., ("Company").
W I T N E S S E T H:
WHEREAS, the Estate owns common stock of the Company and wishes to
sell a portion of such common stock to the Company pursuant to the provisions
of Internal Revenue Code Section 303 on the terms and conditions set forth
herein; and
WHEREAS, the Company deems it advisable and in its best interest for
it to acquire such common stock of the Company from the Estate, and wishes to
purchase such common stock on the terms and conditions set forth herein.
NOW, THEREFORE, for and in consideration of the mutual covenants and
conditions herein contained, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
"Annual Purchase Obligation" means the cumulative dollar value of
Shares, valued at the Valuation Price, the Estate may tender, and if tendered,
the Company will purchase, during any Year. The Annual Purchase Obligation for
each Year is shown on Exhibit "A".
"Closing" means the actual purchase of Shares each Year.
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"Cumulative Purchase Obligation" means the sum of the Annual Purchase
Obligations. The Cumulative Purchase Obligation is shown on Exhibit "A."
"Shares" means common stock of the Company now owned by the Estate.
"Valuation Price" means the price per share of common stock of the
Company for the Year applicable to such purchase, established by a fair market
evaluation of the common stock of the Company performed by an independent
third-party at the direction of the Company, as the value of the common stock
of the Company as held by the Company's Profit Sharing Plan. A. G. Edwards &
Sons, Inc., currently provides such an evaluation annually for the Company's
Profit Sharing Plan. In the event more than one evaluation is performed
annually, the evaluation immediately prior to June 1st of a Year shall be the
evaluation used for such Year. In the event the common stock of the Company
becomes publicly traded, the Valuation Price for a given Year shall be the
weighted average sales price per share of common stock of the Company for the
twenty (20) days prior to April 30th of such Year on which trading of the
common stock of the Company actually occurs. In the event no evaluation is
performed for the Company's Profit Sharing Plan and the common stock is not
publicly traded, the price per share shall be as determined by a majority of
disinterested directors of the Company.
"Year" means a calendar year.
ARTICLE II
REDEMPTION
2.1 Section 303 Redemption. The parties agree that all shares
sold by the Estate and purchased by the Company pursuant to this Agreement
shall be sold and purchased subject to the provisions of Section 303 of the
Internal Revenue Code of 1986, as amended, and that such sale
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and purchase shall comply in all respects with Internal Revenue Code Section
303 or any revision to or replacement for such section.
ARTICLE III
PURCHASE PROCEDURE
3.1 Tender. Each Year, the Estate may tender to the Company for
purchase the number of Shares with a cumulative value equal to or less than the
Annual Purchase Obligation for such Year as shown on Exhibit "A." For purposes
of determining the number of Shares that may be tendered to the Company each
Year, a Share shall be valued at the Valuation Price, regardless of any other
price or value that may be attributable to the Shares by any other person or
entity.
3.2 Purchase. The Company shall purchase all Shares tendered to
it each Year by the Estate pursuant to the terms of this Agreement, at the
Valuation Price per share for that Year.
3.3 No Obligation. The Estate is under no obligation to tender
any Shares in any Year. The election of the Estate to tender less than the
full number of Shares it is entitled to tender in a particular Year shall not
affect in any manner its right to tender Shares in subsequent Years, but the
Annual Purchase Obligation in subsequent Years shall not be increased in any
event.
3.4 Procedure. At any time on or before May 1st of each Year
during the term of this Agreement, the Estate shall notify the Company of the
number of Shares the Estate elects to tender to the Company during such Year,
and the Valuation Price of each Share. On June 1st of each Year, the Estate
shall deliver the number of Shares identified in such notice to the Company,
and the Company shall purchase such Shares.
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ARTICLE IV
CLOSING
4.1 Payment. Payment for all Shares purchased during a Year shall
occur at Closing, and shall be made in readily available funds.
4.2 Place. Closing shall occur at the principal office of the
Company.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.1 Representations and Warranties of the Estate. The Estate
represents and warrants to the Company as follows:
(a) The Estate has the power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated
hereby.
(b) The execution and delivery of this Agreement by the
Estate in the consummation of transactions contemplated hereby have
been duly authorized and approved, and no other act, approval or
proceedings on the part of the Estate or any other person is required
to authorize the execution and delivery of this Agreement by it or the
consummation of the transactions contemplated hereby.
(c) This Agreement constitutes the valid and binding
obligation of the Estate enforceable in accordance with its terms,
except as such enforcement may be limited by appropriate laws
affecting enforcement of creditor's rights generally and by general
principles of equity (whether applied in a proceeding at law or in
equity).
(d) Shares tendered to the Company will be free and clear
of any liens or encumbrances of any kind, except inchoate liens for
federal or state estate taxes not yet paid.
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5.2 Representations and Warranties by the Company. The Company
represents and warrants to the Estate as follows:
(a) The Company is a corporation duly organized, validly
existing in good standing under the laws of the State of Texas.
(b) The Company has the corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by
the Company and the consummation of the transactions contemplated
hereby have been duly authorized and approved by its Board of
Directors. No other act, approval or proceedings on the part of the
Company is required to authorize the execution and delivery of this
Agreement by the Company or consummation of the transactions
contemplated hereby.
(c) This Agreement constitutes the valid and binding
obligation of the Company enforceable in accordance with its terms,
except as such enforcement may be limited by applicable laws affecting
enforcement of creditor's rights generally and by general principals
of equity (whether applied in a proceeding at law or in equity).
ARTICLE VI
TERM
6.1 Term. This Agreement shall remain in force and effect until
the earlier of (a) the purchase by the Company of Shares with a total purchase
price equal to the Cumulative Purchase Obligation or (b) one Year following the
date the Estate has paid all federal and state estate taxes.
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ARTICLE VII
CONDITIONS TO PURCHASE
7.1 The Company's Obligation to Close. At a Closing, the
obligations of the Company to purchase Shares are subject to the following
conditions:
(a) The representations and warranties of the Estate
shall be true, complete and correct on and as of each Closing with the
same force and effect as though made on and as of each Closing;
(b) The Estate shall have delivered to the Company the
number of Shares the Estate wishes the Company to purchase. The Shares
shall be free and clear of any liens or encumbrances of any kind,
except for inchoate federal or state estate tax liens; and
(c) The Company may purchase such Shares without
violation of any applicable law or regulation.
7.2 Obligation of the Estate to Close. At a Closing, the
obligations of the Estate to sell Shares are subject to the following
condition:
(a) The representations and warranties of the Company
shall be true, complete and correct when made, and, in addition, shall
be true, complete and correct on and as of the Closing Date with the
same force and effect as though made on and as of the Closing.
ARTICLE VIII
TAXES
8.1 Liability for Taxes. The Estate shall be liable for all
income or other taxes, if any, due from or arising against the Estate as a
result of the sale of the Shares to the Company. The Estate shall indemnify
and hold the Company harmless from any and all liens for federal or state
estate taxes against any Shares purchased by the Company.
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ARTICLE IX
NOTICES
9.1 Notices. All notices which are required or may be given
pursuant to the terms of this Agreement shall be in writing and shall be
sufficient in all respects if given in writing and delivered by hand, express
delivery service, mail by registered or certified mail, postage prepaid, or
fax, as follows:
To the Company:
Hastings Books, Music & Video, Inc.
P. 0. Box 32270
Amarillo, Texas 79120
Attn: Gene P. Jones
To the Estate:
John H. Marmaduke, as Independent Executor of the Estate of
Sam H. Marmaduke, Deceased.
P. 0. Box 33251
Amarillo, Texas 79120
or such other address as any party hereto shall have designated by notice in
writing to the other party hereto. All such notices given in compliance with
the provision of this Article shall be deemed to have been given when
delivered.
ARTICLE X
MISCELLANEOUS
10.1 Assignment. This Assignment shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns.
10.2 Headings. The headings and titles of this Agreement are
inserted for convenience only and shall not be a part hereof or affect the
construction or interpretation of any provision hereof.
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10.3 Modifications and Waivers. No termination, cancellation,
modification, amendment, deletion, addition or other change in this Agreement
or any provision thereof, or waiver of any right or remedy herein provided,
shall be effective for any purpose unless specifically set forth in writing
signed by the party or parties to be bound thereby. The waiver of any right or
remedy in respect of any occurrence or event on one occasion shall not be
deemed a waiver of any such right or remedy in respect to such occurrence or
event on any other occasion.
10.4 Controlling Law. This Agreement shall be governed and
construed in accordance with the laws of the State of Texas.
10.5 Plurals. As used herein, the singular shall include the
plural and the plural shall include the singular.
10.6 Adjustments. In the event of a merger or other business
combination whereby shares of common stock of the Company no longer exist, the
terms and provisions concerning the purchase obligations of the Company may be
appropriately adjusted by a majority of disinterested directors of the Company,
or its successors and assigns.
10.7 Amendment. This Agreement may be amended on behalf of the
Company by a majority of disinterested directors of the Company without further
action by the shareholders of the Company.
10.8 Further Assurances. Each party hereby shall execute and
deliver such other instruments and take such other actions as the other party
hereto may reasonably request in order to carry out the intent and purposes of
this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and Year first written above.
/s/ JOHN H. MARMADUKE
-------------------------------------------
John H. Marmaduke,
Independent Executor of the
Estate of Sam H. Marmaduke, Deceased
HASTINGS BOOKS, MUSIC & VIDEO, INC.
By: /s/ WALTER McNEER
---------------------------------------
Name and Title
Executive Vice President
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EXHIBIT "A"
ANNUAL
PAYMENT DATE PURCHASE OBLIGATIONS
- ------------ --------------------
6/04/94 $2,000,000
6/04/95 2,000,000
6/04/96 2,000,000
6/04/97 1,500,000
6/04/98 1,500,000
6/04/99 1,500,000
6/04/00 1,500,000
6/04/01 1,500,000
6/04/02 1,000,000
6/04/03 1,000,000
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TOTAL $15,500,000**
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** Cumulative Purchase Obligations
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FIRST AMENDMENT TO STOCK REDEMPTION AGREEMENT
WHEREAS, the Company and John H. Marmaduke, as Independent Executor of
the Estate of Sam H. Marmaduke, Deceased (the "Estate"), entered into a Stock
Redemption Agreement (the "Agreement") dated April 20, 1994; and
WHEREAS, the Agreement provides that the Agreement may be amended on
behalf of the Company by majority of disinterested directors of the Company
without further action by the Shareholders of the Company; and
WHEREAS, a majority of the disinterested directors of the Company have
determined that it is in the best interest of the Company to amend the
Agreement.
NOW, THEREFORE, for and in consideration of the sum of Ten and No/100
Dollars ($10.00) and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties have agreed as
follows:
1. Article 3.4 is deleted in its entirety and the following is
substituted in its place:
At any time on or before August 1st of each year during the
term of this Agreement, the Estate may notify the Company of
the number of Shares the Estate elects to tender to the
Company during such year, and the Valuation Price of each
Share. Within thirty (30) days thereafter, the Estate shall
deliver the number of Shares identified in such notice to the
Company, and the Company shall purchase such Shares.
Additionally, at any time prior to three years and eleven
months following the date of death of Sam H. Marmaduke, the
Estate may elect to tender Shares that would otherwise be
tendered in the succeeding Year. If an early tender is made,
on or before thirty (30) days after delivery of such notice
the Estate shall deliver the number of Shares identified in
such notice to the Company, and the Company shall purchase
such Shares at the Valuation Price in effect on the date of
such tender. The Estate may elect at any time to withdraw any
tender it has made.
2. In all other respects, the Agreement as modified herein, remains in
full force and effect.
3. This Amendment shall be binding upon the parties hereto and their
respective successors and assigns.
4. This Amendment is effective as of July 1, 1997.
HASTINGS ENTERTAINMENT, INC.
By: /s/ DENNIS MCGILL
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Dennis Mcgill,
Vice President - Finance
ESTATE OF SAM H. MARMADUKE
By: /s/ JOHN H. MARMADUKE
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John H. Marmaduke, Independent
Executor