EXHIBIT 10.26
STOCK PURCHASE AGREEMENT
Pursuant to the
IPG PHOTONICS
2000 INCENTIVE COMPENSATION PLAN
THIS STOCK PURCHASE AGREEMENT ("Agreement") is made this 14th day of
December, 2004, by and between IPG Photonics Corporation, a Delaware corporation
(the "Company"), and Xxxx X. Xxxxxx ("Optionee") under the IPG Photonics 2000
Incentive Compensation Plan, as amended from time to time (as amended, the
"Plan"). All capitalized terms used in this Agreement that are not otherwise
defined shall have the meanings ascribed to them in the Plan.
WHEREAS, the Company has granted to the Optionee pursuant to the Plan and
the related Stock Option Agreement, with respect to options granted on April 28,
2003 between the Company and Optionee, Options to acquire certain shares of
voting common stock ("Shares"), par value $0.0001 of the Company; and
WHEREAS, the Optionee has delivered to the Company on December 14, 2004 a
notice of exercise of such Options (the "Notice"); and
WHEREAS, the Company and the Optionee now desire to set forth the terms and
conditions under which the Shares that are the subject of the Notice shall be
acquired, held and transferred, subject to certain restrictions.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements hereinafter set forth, the parties hereto mutually
covenant and agree as follows:
1. Exercise of Option
a. Exercise. Optionee hereby purchases 100,000 Shares (the "Purchased
Shares") pursuant to the Notices of Grant and the Stock Option
Agreements, with respect to options granted on April 28, 2003 (the
"Grant Date"), under the Plan at the exercise price of $1.00 per Share
(the "Exercise Price").
b. Payment. Concurrently with the delivery of this Agreement to the
Company, Optionee shall pay the Exercise Price for the Purchased
Shares in accordance with the provisions of the Stock Option Agreement
and shall deliver such additional documents as may be required by the
Stock Option Agreement as a condition for exercise, together with a
duly-executed blank Assignment Separate from Certificate (in the form
attached to this Agreement as Exhibit I) with respect to the Purchased
Shares.
c. Stockholder Rights. Until such time as the Company exercises the Call
Right (as defined below) or the First Refusal Right (as defined
below), Optionee shall have all the rights of a holder of voting stock
(including dividend and liquidation rights) with respect to the
Purchased Shares, subject, however, to the transfer restrictions of
Sections 2 and 3.
2. Securities Law Compliance
a. Securities Matters.
i. The Purchased Shares have not been registered under the
Securities Act and are being issued to Optionee in reliance upon
the exemption from such registration provided by SEC Rule 701 for
stock issuances under compensatory benefit plans such as the
Plan. Optionee hereby confirms that Optionee has been informed
that the Purchased Shares are restricted securities under the
Securities Act and may not be resold or transferred unless the
Purchased Shares are first registered under the Federal
securities laws and applicable state securities laws or unless an
exemption from such registration is available. Accordingly,
Optionee hereby acknowledges and agrees that Optionee is prepared
to hold the Purchased Shares for an indefinite period and that
Optionee is aware that SEC Rule 144 issued under the Securities
Act which exempts certain resales of unrestricted securities is
not presently available to exempt the resale of the Purchased
Shares from the registration requirements of the Securities Act.
ii. Optionee hereby represents and warrants to the Company that
Optionee is acquiring the Purchased Shares for Optionee's own
account, for investment purposes, and not with a view to, or for
resale in connection with, the distribution of such Purchased
Shares.
b. Restrictions on Disposition of Purchased Shares. Optionee shall make
no disposition of the Purchased Shares unless and until there is
compliance with all of the following requirements:
(i) Optionee shall have provided the Company with a written summary
of the terms and conditions of the proposed disposition.
(ii) Optionee shall have complied with all requirements of this
Agreement applicable to the disposition of the Purchased Shares.
(iii) Optionee shall have provided the Company with written
assurances, including an opinion of counsel, in form and
substance satisfactory to the Company, that (a) the proposed
disposition does not require registration of the Purchased Shares
under the Securities Act or applicable state securities laws or
(b) all appropriate action necessary for compliance with the
registration requirements of the Securities Act and applicable
state securities laws or any exemption from registration
available under the Securities Act (including Rule 144) and
applicable state securities laws has been taken.
The Company shall not be required (i) to transfer on its books any
Purchased Shares which have been sold or transferred in violation of
the provisions of this Agreement or (ii) to treat as the owner or
holder of the Purchased Shares, or otherwise to
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accord voting, dividend or liquidation rights to any transferee to
whom the Purchased Shares have been transferred in contravention of
this Agreement.
c. Restrictive Legends. The stock certificates for the Purchased Shares
shall be endorsed with restrictive legends substantially as follows:
"The shares represented by this certificate are subject to
certain repurchase rights and rights of first refusal granted to
the Company and accordingly may not be sold, assigned,
transferred, encumbered, or in any manner disposed of except in
conformity with the terms of the Stock Purchase Agreement dated
December 14, 2004 between the Company and the registered holder
of the shares. A copy of such agreement is maintained at the
Company's principal corporate offices."
In addition, if shares are awarded prior to an IPO, the certificates
shall also be inscribed with the following:
"The shares of stock evidenced by this certificate have not been
registered under the Securities Act of 1933 (the "Securities
Act") or the securities laws of any state. These shares may not
be sold or transferred unless the transaction is registered under
the Securities Act and applicable state law or exempt from
registration thereunder.
3. Further Transfer Restrictions
a. Restriction on Transfer. Subject to the other provisions of this
Agreement, prior to an IPO, and for the first 6 months following the
date of grant, Optionee may not sell, exchange, or transfer the Shares
received pursuant to an exercise of Options under the Plan to anyone,
including the Company, without the prior written consent of the
Company, which consent may be withheld in its sole and absolute
discretion.
b. Transferee Obligations. Each person (other than the Company) to whom
the Purchased Shares are transferred by means of a transfer expressly
permitted under this Agreement must, as a condition precedent to the
validity of such transfer, acknowledge in writing to the Company that
such person is bound by the provisions of this Agreement and that the
transferred shares are subject to (i) the Call Right, (ii) the First
Refusal Right and (iii) the Lock-Up, to the same extent such shares
would be so subject if retained by Optionee.
c. Lock-Up.
(i) In connection with any underwritten public offering by the Company of
its equity securities pursuant to an effective registration statement
filed under the Securities Act, including the Company's initial public
offering, Optionee shall not sell, make any short sale of, loan,
hypothecate, pledge, grant any option for the purchase of, or
otherwise dispose or transfer for value or otherwise agree to engage
in any of the foregoing transactions with respect to any Purchased
Shares without the prior written consent of the
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Company or its underwriters. Such restriction (the "Lock-Up") shall be
in effect for such period of time from and after the effective date of
the final prospectus for the offering as may be requested by the
Company or such underwriters, and as may be determined by the
Committee in its discretion. Such Lock-Up shall be subject to such
other restrictions, conditions and limitations as the Committee may
impose in its discretion.
(ii) Optionee shall be subject to the Lock-Up provided and only if the
officers and directors of the Company are also subject to similar
restrictions.
4. Call Right
x. Xxxxx. Prior to the completion of an IPO, except as otherwise provided
by the Committee at or after grant, and on and after the date Optionee
terminates employment or other service provider relationship with the
Company, an Affiliate or Group Company for any reason, the Company
shall have the right to purchase, and the Optionee shall have the
corresponding obligation to sell, upon delivery of written notice to
Optionee, any or all of the Shares then owned by Optionee, ownership
of which Shares was acquired through exercise of an Option (such
repurchase rights of the Company, together with the repurchase rights
set forth in Section 4.b, being referred to hereinafter as the "Call
Rights"). In the case of termination of Optionee other than for Cause,
the purchase price of the Shares shall be the Fair Market Value of
such Shares as of the date the Company mails or otherwise delivers
such written notice to the Optionee. If Optionee is terminated for
Cause and holds Shares subject to Call Rights or First Refusal Rights,
Optionee shall not have the right to receive Fair Market Value for the
Shares, but shall receive an amount equal to the exercise price of the
Option.
b. Certain Fundamental Changes. Without regard to the completion of an
IPO, the Shares may be subject to a right of call by the Committee in
the event of termination of the Plan due to merger or acquisition of
the Company, or prior to an IPO, upon the occurrence of a Change in
Control in the Company, whether or not the Plan is terminated. If the
right to call the Shares is exercised by the Committee, such Shares
must be returned to the Company within seven (7) days of the call
notice. In such event:
(i) Optionee shall, unless otherwise determined by the Committee
pursuant to paragraph (ii) below, be entitled to receive from the
Company an amount equal to the Fair Market Value of the returned
Shares.
(ii) The Committee shall have the right to defer payment of the
proceeds under this Section 4.b pursuant to the terms and
conditions set forth in the Plan and Section 6 hereto.
5. Right of First Refusal
x. Xxxxx. Prior to an IPO, the Company shall have a right of first
refusal (the "First Refusal Right"), exercisable in connection with
any proposed transfer of the Purchased Shares, except with respect to
any Permitted Transfer (as defined below).
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b. Notice of Intended Disposition. In the event Optionee desires to
accept a bona fide third-party offer for the transfer of any or all of
the Purchased Shares (the Purchased Shares subject to such offer to be
hereinafter referred to as the "Target Shares"), Optionee shall
promptly (i) deliver to the Company written notice (the "Disposition
Notice") of the terms of the offer, including the purchase price and
the identity of the third-party offeror, and (ii) provide satisfactory
proof that the disposition of the Target Shares to such third-party
offeror would not be in contravention of the provisions set forth in
Sections 2 and 3.
c. Exercise of the First Refusal Right. The Company shall, for a period
of twenty-five (25) days following receipt of the Disposition Notice,
have the right to repurchase any or all of the Target Shares subject
to the Disposition Notice upon the same terms as those specified
therein or upon such other terms (not materially different from those
specified in the Disposition Notice) to which Optionee consents. Such
right shall be exercised by delivery of written notice (the "Exercise
Notice") to Optionee prior to the expiration of the twenty-five
(25)-day exercise period. If such right is exercised with respect to
all the Target Shares, then the Company shall effect the repurchase of
such shares, including payment of the purchase price, not more than
five (5) business days after delivery of the Exercise Notice; and at
such time the certificates representing the Target Shares shall be
delivered to the Company.
Should the purchase price specified in the Disposition Notice be
payable in property other than cash or evidences of indebtedness, the
Company shall have the right to pay the purchase price in the form of
cash equal in amount to the value of such property. If Optionee and
the Company cannot agree on such cash value within ten (10) days after
the Company's receipt of the Disposition Notice, the valuation shall
be made by an appraiser of recognized standing selected by Optionee
and the Company or, if they cannot agree on an appraiser within twenty
(20) days after the Company's receipt of the Disposition Notice, each
shall select an appraiser of recognized standing and the two (2)
appraisers shall designate a third appraiser of recognized standing,
whose appraisal shall be determinative of such value. The cost of such
appraisal shall be shared equally by Optionee and the Company. The
closing shall then be held on the later of (i) the fifth (5th)
business day following delivery of the Exercise Notice or (ii) the
fifth (5th) business day after such valuation shall have been made.
d. Non-Exercise of the First Refusal Right. In the event the Exercise
Notice is not given to Optionee prior to the expiration of the
twenty-five (25)-day exercise period, Optionee shall have a period of
thirty (30) days thereafter in which to sell or otherwise dispose of
the Target Shares to the third-party offeror identified in the
Disposition Notice upon terms (including the purchase price) no more
favorable to such third-party offeror than those specified in the
Disposition Notice; provided, however, that any such sale or
disposition must not be effected in contravention of the provisions of
Sections 2 and 3. The third-party offeror shall acquire the Target
Shares subject to the provisions of this Agreement as set forth in
Section 3.b. In the event Optionee does not effect such sale or
disposition of the Target Shares within the specified thirty (30)-day
period, the First Refusal Right shall continue to be applicable to any
subsequent disposition of the Target Shares by Optionee until such
right lapses.
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e. Partial Exercise of the First Refusal Right. In the event the Company
makes a timely exercise of the First Refusal Right with respect to a
portion, but not all, of the Target Shares specified in the
Disposition Notice, Optionee shall have the option, exercisable by
written notice to the Company delivered within five (5) business days
after Optionee's receipt of the Exercise Notice, to effect the sale of
the Target Shares pursuant to either of the following alternatives:
(i) sale or other disposition of all the Target Shares to the
third-party offeror identified in the Disposition Notice, but in
full compliance with the requirements of Section 5.d, as if the
Company did not exercise the First Refusal Right; or
(ii) sale to the Company of the portion of the Target Shares which the
Company has elected to purchase, such sale to be effected in
substantial conformity with the provisions of Paragraph 5.c. The
First Refusal Right shall continue to be applicable to any
subsequent disposition of the remaining Target Shares until such
right lapses.
Optionee's failure to deliver timely notification to the Company shall
be deemed to be an election by Optionee to sell the Target Shares
pursuant to alternative (i) above.
f. Recapitalization/Reorganization.
(i) Any new, substituted or additional securities or other property
which is by reason of any Recapitalization distributed with
respect to the Purchased Shares shall be immediately subject to
the First Refusal Right, but only to the extent the Purchased
Shares are at the time covered by such right.
(ii) In the event of a Reorganization, the First Refusal Right shall
remain in full force and effect and shall apply to the new
capital stock or other property received in exchange for the
Purchased Shares in consummation of the Reorganization, but only
to the extent the Purchased Shares are at the time covered by
such right.
g. Lapse. The First Refusal Right shall lapse upon an IPO. However, the
Lock-Up shall continue to remain in full force and effect following
the lapse of the First Refusal Right.
h. Permitted Transfer. For the purpose of Section 5(a), the term
"Permitted Transfer" shall mean, with respect to the Purchased Shares,
any sale conveyance, exchange, assignment, pledge, encumbrance, gift,
bequest, hypothecation or other transfer or disposition by any other
means, whether for value or no value and whether voluntary or
involuntary (including, without limitation, by merger or operation of
law), or any agreement to do any of the foregoing, by Optionee to
Optionee's Immediate Family. The term "Immediate Family" means, and is
limited to, Optionee's current spouse, parents, parents-in-law,
grandparents, children, siblings (and their lineal descendents), and
grandchildren. A trust, estate, family partnership, limited liability
company or corporation entitled to federal income tax treatment
pursuant to subchapter S of the Internal Revenue Code, all of the
beneficiaries, partners, members or shareholders of which consist
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of Optionee or members of Optionee's Immediate Family, shall be
considered such Optionee's Immediate Family for the purposes of this
Agreement.
6. Right to Defer Payment
a. At the discretion of the Committee, payments to Optionee may be made
by the Company in the form of a single lump sum or installments.
Installment payments shall be made in full no later than two (2) years
from the date of disposition and will, if not paid in full
immediately, be credited annually with interest using an interest rate
equal to the annual rate of interest on 30-year Treasury securities as
of the beginning of each such annual crediting period (as determined
by the Committee).
b. If Optionee engages in conduct that constitutes a breach of Optionee's
non-disclosure agreement and covenant not to compete, or other
employment agreement with the Company, or engages in conduct otherwise
determined by the Committee to be injurious to the Company, Optionee
shall not be entitled to receive any remaining installments from a
deferred payment and, in addition to any other rights the Company may
have at law or in equity, the right to any remaining payments or
installments shall immediately be forfeited and any such payments or
installments shall immediately cease.
7. General Provisions
a. Transfer; Assignment. The Optionee shall not sell, transfer, pledge,
assign or otherwise dispose of or encumber the Purchased Shares other
than as set forth in this Agreement and the Plan. Any attempted sale,
transfer, pledge, assignment or other disposition or encumbrance of
such Purchased Shares, or of Optionee's rights and obligations under
this Agreement, contrary to the provisions of this Agreement shall be
null and void. The Company may assign the Call Right and/or the First
Refusal Right to any person or entity selected by the Board, including
(without limitation) one or more stockholders of the Company.
b. Notices. Any notice which either party hereto may be required or
permitted to give to the other shall be in writing, and may be
delivered personally or by mail, postage prepaid, if to the Company,
addressed to the Company at the following address:
IPG Photonics Corporation
00 Xxx Xxxxxxx Xxxx
Xxxxxx, XX 00000
Attention: Secretary
or at any other address as the Company, by notice to the Optionee, may
designate in writing from time to time; and, if to the Optionee,
addressed to the Optionee at the Optionee's address as set forth next
to the Optionee's signature below, or at any other address as the
Optionee by notice to the Company, may designate in writing from time
to time.
c. No Waiver. No waiver by either party of the application of any term,
provision or condition of this Agreement, or a breach thereof by the
other party, shall constitute a waiver of any succeeding breach of the
same or any other provision hereof. No
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such waiver shall be valid unless executed in writing by the party
making the waiver.
d. Cancellation of Shares. If the Company shall make available, at the
time and place and in the amount and form provided in this Agreement,
the consideration for the Purchased Shares to be repurchased in
accordance with the provisions of this Agreement, then from and after
such time, the person from whom such shares are to be repurchased
shall no longer have any rights as a holder of such shares (other than
the right to receive payment of such consideration in accordance with
this Agreement). Such shares shall be deemed purchased in accordance
with the applicable provisions hereof, and the Company shall be deemed
the Optionee and holder of such shares, whether or not the
certificates therefor have been delivered as required by this
Agreement.
e. Optionee Undertaking. Optionee hereby agrees to take whatever
additional action and execute whatever additional documents the
Company may deem necessary or advisable in order to carry out or
effect one or more of the obligations or restrictions imposed on
either Optionee or the Purchased Shares pursuant to the provisions of
this Agreement.
f. Agreement Subject to Plan. The terms and conditions of the Plan as it
now exists and as it may be amended from time to time are hereby
incorporated by reference into this Agreement. The Purchased Shares
are being issued and purchased pursuant to and subject to the Plan. In
the event of any conflict between the terms of this Agreement and the
terms of the Plan, the terms of the Plan shall control. Terms used
herein that are not otherwise defined shall have the meanings ascribed
to them in the Plan.
g. Entire Agreement. This Agreement constitutes and contains the entire
agreement and understanding between the parties with respect to the
subject matter hereof and supersedes any and all prior agreements, if
any, understandings and negotiations relating thereto. No promise,
understanding, representation, inducement, condition or warranty not
set forth herein has been made or relied upon by any party hereto.
h. Governing Law. This Agreement shall be construed by, enforced in
accordance with and governed by the substantive laws of the State of
Delaware without giving effect to the conflict of laws provisions
thereof.
i. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all
of which together shall constitute one and the same instrument.
j. Successors and Assigns. Subject to the other terms hereof, this
Agreement shall be binding upon and inure to the benefit of the heirs,
beneficiaries, legal representatives and successors of the parties.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the day and
year first indicated above.
IPG PHOTONICS CORPORATION
By: /s/ Xxxxxx X. Xxxxxxxx
------------------------------------
Title: Vice President
OPTIONEE
By: /s/ Xxxx X. Xxxxxx
------------------------------------
Name: Xxxx X. Xxxxxx
Address: 0000 Xxxxxxxxxx Xxx.
XX Xxxxxxxxxx, XX 00000
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